AUSTRALIA Law and Practice Contributed by: Greg Williams, Alexandra Rose and Caitlin Sheehy, Clayton Utz
sation because their vehicles were worth less than they paid for them at the time of purchase. This theory of loss was clarified in November 2024 by a decision handed down by the High Court of Australia on appeal from two federal court class actions. The High Court of Australia confirmed that the reduction in the value of goods must be assessed at the time of supply, by reference to the best available information known about the defect at the time of trial (including “availability” of a suitable fix/repair, as well as when, how, and at what cost a repair might take place). The test to be applied is the value that a hypothetical reasonable consumer fully acquainted with the true state and condition of the goods – but with knowledge about what repairs might be available – would assign to the goods. Further Claims In addition, there have been a number of highly con - tentious toxic tort class actions relating to bushfires and floods – some of which resulted in significant multimillion-dollar settlements. Separately, the ACCC has also been active in recent years, particularly in its oversight of product recalls and allegedly unsafe products. 3. Recent Policy Changes and Outlook 3.1 Trends in Product Liability and Product Safety Policy The maximum penalties for breach of the Australian Consumer Law, as set out in 1.5 Penalties for Breach of Product Safety Obligations , doubled in 2026 and substantially increased the penalties available (the previous maximum corporate penalty for a breach of the Australian Consumer Law was AUD50 million). Even apart from these amendments, the penalties being imposed by courts for breaches of the Compe - tition and Consumer Act 2010 (Cth) (including but not limited to those relating to product safety breaches) have been steadily increasing, with a new high being set by the AUD438 million penalty mentioned in 1.5 Penalties for Breach of Product Safety Obligations . This trend is expected to continue with the application
of the new penalty regime. Liability under the Compe - tition and Consumer Act 2010 (Cth) extends in some cases to damages for psychiatric injuries. During the past seven years, class action procedure – in particular, as it relates to litigation funders – has been the subject of considerable activity by the court and the federal legislature. The power of the courts to regulate funding arrangements for class actions and to make procedural orders that facilitate funding arrangements continues to be the subject of judicial consideration. By way of example, in May 2025, the High Court overturned a decision of the New South Wales Court of Appeal that had held that the New South Wales Supreme Court did not have the power to make a “soft closure” order, which is an order that temporarily closes an otherwise open class to facili - tate settlement discussions. One Australian jurisdiction has legislated to allow true contingency fees in class actions. A plaintiff in a Vic - torian Supreme Court class action may apply for a “group costs order”, which – if granted – will allow that plaintiff’s lawyers to recover a percentage of any settlement or judgment in the class action, in lieu of the usual time-costed fees. In response, in July 2024, the Full Court of the Federal Court of Australia held that sections 33V(2) and 33Z(1) (g) of the Federal Court Act 1976 (Cth) empower the court to make solicitors’ common fund orders at the time of settlement or judgment. A solicitors’ common fund order has a similar effect to the Victorian group costs order, in that it permits the solicitors acting for the plaintiff to be remunerated by taking a percentage of the settlement or judgment. The difference is that a group costs order is made at an early stage of a proceeding, whereas a solicitors’ common fund order may only be made as part of a settlement approval or judgment. This decision was appealed to the High Court of Aus - tralia. The High Court of Australia determined that the Federal Court of Australia has no power to make com - mon fund orders for solicitors. In relation to product liability, the current product liabil - ity regime has remained relatively unchanged since
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