Contentious: Class Action Tsunami On The Horizon

The Federal Government has announced that it will shortly draft regulations which carve out funded class actions from the definition of "managed investment scheme" under the Corporations Act 2001. The announcement is in response to the decision of the Federal Court in Brookfield Multiplex Limited v International Litigation Funding Partners Pty Limited [2009] FCAFC 147, which found that funded class actions were managed investment schemes as defined by the Corporations Act. This announcement and the pending regulations will potentially open the floodgates for any class actions that have been postponed following the Brookfield decision.

The Brookfield decision

On 20 October 2009, the majority of the Full Court of the Federal Court in Brookfield found that the litigation funding arrangement before the Court constituted a managed investment scheme under the Corporations Act. The Court carefully considered the application of the definition of "managed investment