Class actions in flux: The trends shaping the next 12 months

On the former, the number of class action filings dropped from 80 in 2024–25 to 46 in 2025–26. While the lowest figure since 2016–17, the 2023–24 period recorded just 47 – which itself was a drop from the 54 in 2022–23 and the 57 the year prior. Looking at this data only serves to reinforce that there has “always been volatility year in, year out”.

Speaking to Lawyers Weekly, Mallesons dispute resolution and litigation partner Alex Morris said he would not “draw too much” from a reduction of 10-15 class actions a year, but the fall from 80 to 46 was a “marked drop”. It has opened up questions about what the next big area of class actions might be, the way financial services and consumer class actions have propped up the numbers over the last few years.

“We have seen growth in employment class actions, we have seen a growth in what you would call public policy class actions – so racial discrimination, sexual discrimination, land remediation, etcetera. People are obviously innovative and out there looking for new topic areas. There’s been a lot of innovation in recent years, but maybe there’s a cap to how much innovation can drive class actions,” he said.

Morris also pointed out that the fall in the number of filings is down to levels seen prior to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Looking ahead, Morris said it was likely the market would “move back to a slightly more normative zone” after last year’s surge, “particularly in circumstances where there’s really less barriers to entry, with group cost orders (GCO) and common fund orders (CFO) now available”.

Despite the declining filing numbers, more than $1.65 billion in settlements were approved, the second-highest annual total recorded by Mallesons. Around $548 million came out of government liability matters, followed by $377 million in consumer action, $257 million in financial products, and $233 million in securities claims.

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Further, five of the 20 settlements approved last year were worth $100 million; those being the robodebt action at $548 million, followed by Westpac’s car loan flex commissions, the Victorian junior doctors class action, the BHP Brazilian mine disaster, and super fees from Colonial.

According to Morris, the gap between the declining filings and the soaring settlement values can be chalked up to two things.

“One, class actions in this country are almost universally resolved by settlements. Secondly, when you look at the quantum of the settlements relative to the substance of the claim, and when you compare with other jurisdictions, it’s high. Effectively, the kind of proportion of claims that the settlements represent are quite high when compared to, for example, the United States,” Morris said.

The class actions report identified two significant judgments in favour of plaintiffs on the issues of causation and loss: Brambles in April and Worley in May. The former issued the first Australian class actions judgment that found a company’s breach of its continuous disclosure obligations caused shareholders quantifiable loss.

In Worley, the full Federal Court upheld the remitter judge’s findings on liability and found in favour of the applicant on both causation and loss, becoming “the first appellate court to confirm the availability of market-based causation”, Mallesons explained. The court also rejected the argument that an applicant must prove the market impact of a specific counterfactual disclosure in order to establish loss.

Brambles and Worley are particularly significant because they followed repeated failures by applicants to prove loss or damage. Mallesons said further developments will follow as Brambles goes to appeal and the High Court determines an application for special leave in Worley.

Then there is the upcoming decision in Zonia, which Mallesons said concerns a claim arising from the contraventions of the continuous disclosure provisions in respect of non-financial risks. The High Court’s decision could trigger more securities class actions.

Partner Moira Saville said: “The fall in filings [does] not tell the full story. Brambles and Worley mark an important shift after a series of unsuccessful shareholder cases, and the High Court’s decision in Zonia could materially influence what comes next.”

Ongoing, new, and emerging trends

The second-most predominant category of new class actions was employment-related, with 13 new proceedings filed during the review period. Within this space, three themes stood out: underpayment and entitlement claims following Coles and Woolworths litigation; junior doctors’ underpayment claims remained the largest cohort; and workplace sexual harassment emerged as a major growth area.

Conduct-related class actions, such as those related to sexual harassment, will continue to rise, Mallesons predicted, particularly in environments that are traditionally male-dominated and hierarchical. Discrimination may also increase, noting the Royal Commission on Antisemitism and Social Cohesion “may heighten focus” on these risks.

Payday superannuation legislation, commenced on 1 July, could also shepherd in action focused on “previously hidden shortfalls”.

Morris said the broader trend is employment-related action tends to run “in parallel” with regulatory action, “even when those regulatory proceedings have potential remedies that could come out of them”.

Class actions born out of regulatory action are “nothing new”, with Morris explaining he was involved in “one of the first major funded securities class actions” back in 2007 that grew out of an ASIC investigation: “We settled the ASIC investigation and then, a couple [of] days later, Maurice Blackburn commenced a proceeding.”

“I think the interesting point here is, if you look at the employment ones, they were circumstances where, out of a regulatory regime, you might have expected there was kind of an available remedy that would inexorably flow to the employees,” Morris added.

“But what we’re seeing are these kinds of class actions that are starting up in parallel and, in some cases, pushing far more aggressive case theories than might have been pushed otherwise.”

Looking at potential new claims, Mallesons said they tend to emerge following “domestic triggers, such as the introduction of statutory regimes, shifts in regulatory enforcement priorities, and the findings of royal commissions and public inquiries”. This does not necessarily need to be the case, particularly as the Australian class action arena sees the filing of claims “in other areas of social concern”.

The three types of claims expected to be tested in the coming years are consumer claims for unfair trading practices, the novel duty of care in climate and environment cases, and a digital duty of care. The report also identified “bluewashing” claims, cyber security and data breaches, racial discrimination and vilification, and artificial intelligence.

On the latter, Morris said AI raises “risk allocation issues”. With class actions the obvious vehicle to test them, Morris said there will be “quite interesting issues to emerge as to where the risk lies”.

“So, where a service provider uses AI, does the buck stop with them? Or are AI companies and AI providers taking risks onto their own balance sheets? And equally, their consumers are using AI products [for] general applications, so what occurs there?” Morris said.

“The classic example of that would be using AI tools of general application for investment advice. Some of the AI models will now filter out those questions, others won’t, and there are some quite interesting risk allocation issues to be identified there.”

Another emerging trend to expect in the next 12 months is within securities class actions, with Morris pointing specifically to Zonia and the High Court’s determination on the question of causation.

“It might be anticipated that, for a lot of companies, this is a very important decision because securities class actions are well-established on an earnings-based case, if I can put it that way. If I said ‘I was going to earn $1,000 at some point during the year, it became obvious I could only earn $700 and I didn’t tell the market terribly quick about that’, it’s a well-establish[ed] kind of causation model,” Morris said.

Morris added there has been a “checkered history” with the qualitative disclosure cases, particularly around companies that might lead with arguments like “I had a risk system that largely removed, not wholly removed, and one of those risks has crystallised”.

“What is the measure of proving causation and quantifying the causation of loss because the event-study methodology isn’t as neat there. I think everyone is watching the High Court in that regard.”

The influence of overseas class actions markets

Mallesons partner Peta Stevenson said plaintiff firms and litigation funders are “increasingly looking to new regulatory regimes in Australia and claims being tested overseas for the next areas of opportunity”. This is particularly the case in the United States, which is now testing AI failures, ESG commitments and workplace culture.

While Australia has not yet seen significant AI litigation or shareholder class actions, the US has “multiple securities class actions” concerning representations about AI use and its supposed benefits. Mallesons said the proceedings have typically targeted current developers, AI infrastructure suppliers, and businesses developing new tools.

“Given the prevalence of AI use in Australia, and the emerging trend of AI litigation in the United States, companies should be cognisant of the risks of the new technology and pay close attention to their disclosures in respect of AI capabilities and growth predictions,” the firm said.

Within the ESG space, recent additions include “anti-ESG” proceedings that alleged a company has implemented the initiatives without adequate risk disclosures, Mallesons’ report noted.

Similar proceedings have been commenced in England, with institutional and retail investors in Boohoo Group alleging that public revelations of unethical supply chain practices “caused a significant decline in share price value and revealed ‘bluewashing’”. Bluewashing refers to the human and social element of ESG practices.

Workplace claims brought in the US tend to focus on the organisation’s knowledge and statements regarding handling of alleged misconduct, as is the case in action taken against Activision Blizzard.

Morris explained that trends observed overseas tend to make their way into the Australian class actions market “fairly quickly”.

“That’s particularly the case in the technology space, so AI risks but also social media and the like. You can certainly see in the social media space, there [have] been a couple of significant decisions in the United States in the last 18 months, and it is to be anticipated from looking at plaintiff firms that we will see copycat-style claims,” Morris said.

Victoria’s GCO regime reshaping jurisdictional attractiveness

The Federal Court remained the “jurisdiction of choice”, with 28 of the 46 new actions filed, but it is closely followed by Victoria. Mallesons attributes this to the GCO regime, which allows lawyers to claim contingency fees, which constitute a certain percentage of the settlement “over and above” remuneration for legal services.

Morris said that prior to the GCO, Victoria was “well behind” in terms of popular jurisdictions. While it may not have moved into the lead or number two spot, Morris said it is “very near number two”.

Morris said the wider class action space would be watching to see whether other superior courts will introduce similar regimes.

Plaintiff solicitors in Kain attempted to implement a solicitor’s GCO into the Federal Court, but this was unanimously shut down by the High Court. The court held there was no power to make CFOs of any kind in favour of solicitors, “because of the prohibition on contingency fee arrangements in state and territory legal profession laws”.

Following Kain, Attorney-General Michelle Rowland indicated the commonwealth was considering replicating the Victorian GCO model, but there is currently no draft legislation before Parliament.

Mallesons said there are indications within NSW to establish a form of GCO, which has the support of NSW Supreme Court’s Justice Ian Pike – the upcoming Class Actions List Judge. The Association of Litigation Funders of Australia has also advocated for various non-GCO reforms in submissions made to Attorney-General Michael Daley.

“If I were a betting person, I would think that if we were to see that spread to another state in the next 12 months – which isn’t beyond the realm of possibility – we will see a real shake-up in the market,” Morris said.

“I think that will also lead to broader questions about the relationship between litigation funding and contingency fees for law firms, and there are some interesting questions of if law firms are to be pursuing this group costs order model of doing business moving forward, how do they capitalise themselves and what capital is the court going to expect from a law firm who is running this sort of business model across a large book of claims?

“You’re almost running what is, in essence, a litigation funding business or a reverse insurance business. How do you capitalise on that in a world where, traditionally, law firms aren’t heavily capitalised?”