Life Auto Takata Airbag class action funder taken to High Court over payout entitlements
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Takata Airbag class action funder taken to High Court over payout entitlements

takata airbags class action
The case against car manufacturers is Australia's largest class action. Photo: Getty
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The company bankrolling what is expected to be largest class action lawsuit in Australian history will face a legal test in the High Court on Tuesday, which could slash its entitlement to a large share of the compensation offered to former owners of Takata Airbags.

The faulty airbags have been blamed for one death in Australia, along with 20 others and countless injuries worldwide.

A massive class action against car manufacturers including BMW, Honda, Mazda, Nissan, Subaru and Toyota could involve up to two million claimants.

The case has been financed by litigation funder Regency Funding, but BMW is challenging an order made by the NSW Supreme Court requiring anybody receiving a payout from the class action to hand over 25 per cent of the money to Regency Funding, as compensation for bankrolling the court case.

Lawyers for the car maker argue the ruling, known as a common fund order, requires people who benefit from the class action to pay Regency Funding even if they have not formally joined the case.

They argue such orders are unconstitutional because they amount to an acquisition on “other than just terms”.

takata airbags class action
BMW is challenging an order in the NSW Supreme Court. Photo: Getty

A similar Federal Court case involving claimants who have sued Westpac over allegedly inflated prices for life insurance policies is also being included in the High Court hearing.

That case has already made legal history with a joint sitting between the NSW Court of Appeal and the Federal Court in March this year when Westpac and BMW first challenged the orders, without success.

In the Westpac case a company called JustKapital Litigation (JKL) funded the legal action, which was estimated to cost up to $9 million dollars.

About 80,000 people were believed to have been affected, and a common fund order entitled JKL to a portion of each payout.

But in submissions to the High Court, lawyers for Westpac pointed out that in the US, where the common fund approach emerged, legal representatives were only entitled to a reasonable attorney’s fee.

Lawyers for the bank argued the Federal Court ruling against Westpac was out of kilter with the intended use of such a fund.

“The order imposed a liability on group members … and its immediate and binding effect was to confer on JKL a right to part of the fruits of group members’ interests in any judgment or settlement,” the submissions said.

The High Court documents also pointed out that in the case of the Westpac challenge only four people had formally joined the class action.

Out of 200,000 people potentially able to join the action against BMW, just 33 had joined the case by October 2018, with another 116 expressing interest.

Lawyers for the claimants said common fund orders served an important role, because they gave those who would otherwise be denied justice access to the courts.

The funders said the order was not just about a common cost, but a common benefit.

The Commonwealth, Victoria, Western Australia and Queensland have all intervened in the case to support the claimants.

-ABC