The Full Federal Court of Australia provides important clarity on the "empty group" problem in class actions – a decision with important implications for class action applicants, defendants, and their lawyers.

The Full Federal Court’s recent decision in Cannan v Dollarama Australia Pty Limited [2026] FCAFC 41 has tackled fundamental questions about when a class action proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) is validly commenced and whether a failed first attempt can later be “converted” into a class action - issues with important implications for class action applicants, defendants, and their lawyers.

What was the case about?

Bradley Cannan filed an underpayments class action against Dollarama Australia (formerly The Reject Shop) on behalf of store managers who were (purportedly) covered by the General Retail Industry Award (Award).

However, the original group definition was flawed in a critical respect: a criterion of group membership was the application of the Award to each employee. However, it was later conceded that the Award did not apply (and had never applied) to the employment of any store managers, as they were instead covered by a separate enterprise agreement. The upshot was a group definition that did not capture anyone - the class was “empty”. The result was that the gateway criteria for commencement of a class action (namely, ss 33C and 33H of the FCA Act) had not been satisfied. This led to a procedural tangle: could the group definition (and the underlying claims) be amended to fix this fundamental issue, and if so, from what date should the fix take effect?

The primary judge (Snaden J) allowed amendments to the group definition and the claim, but ordered they take effect from the date the amendment application was filed (16 June 2025), not from the original commencement date (in 2023) or an earlier failed amendment attempt (in 2024).[1] The lead applicant appealed, seeking an earlier relation-back date, while Dollarama cross-appealed, arguing that no valid class action existed at all until the amendments were made (i.e. the date the amended claim was actually filed on 15 August 2025).
While the Full Court recognised neither side had properly raised the fundamental issue regarding the constitution of the class, or its implications, before the primary judge, the Full Court considered it was necessary to resolve the issue on appeal given its practical significance and the lack of any authoritative consideration of the issue at the intermediate appellate level.

Outcome

• Cannan was given limited leave to appeal, but the appeal was dismissed.

• Dollarama’s cross-appeal succeeded (in part): the Court set aside the order that gave the amendments retrospective effect to 16 June 2025, confirming they only took effect from the date the amended claim was filed (15 August 2025).

What Did the Full Court Decide?

In a nutshell

• The Full Court (Lee, Shariff and Dowling JJ, each delivering separate judgments) confirmed that a representative proceeding under Part IVA of the FCA Act requires, from the outset, a properly constituted class – at least seven identifiable people with claims sharing common issues. If, as here, the group definition is “empty” from the start, there is no valid class action under Part IVA.

• However, the Court has the power to permit amendments to the pleadings, outside the confines of Part IVA. Once an amendment creates a valid class, the proceeding can be “commenced” as a class action from the date the amended documents are filed. [2]

• The amendments could not, however, “relate back” to the original commencement date or the date of filing the amendment application (which is customary in the context of other types of amendments); they can only take effect from the day the valid class action is constituted (in this case, 15 August 2025, when the amended claim was filed).

• To address a potential divergence in the authorities, Lee J also provided guidance to class action applicants regarding the appropriate formulation of the group definition, where a central criterion of group membership turns on the resolution of an issue in dispute (for example, casually connected loss) (i.e. the 'collapsing class' problem). Consistent with his Honour's earlier reasons in the GetSwift class action, his Honour suggests that the conceptual problem that arises as a result of defining a class by reference to a contested issue of fact or law would be resolved if such criteria were expressly identified (from the outset) as allegations.[3]

Why is this decision important for class actions in Australia?

This judgment provides critical clarification for class action litigators:

1. No “class action by accident”: If the group definition is defective and there are no group members, there is no class action – no matter what you call it. Further, while interlocutory attacks on pleadings are still discouraged, care should be taken to ensure appropriate distinctions are drawn between such attacks (be they technical or tactical) and bone fide controversies concerning the proper institution of a class action. The later should be resolved with celerity; it is not a matter which can be left for later forensic development.

2. Amendment is possible, but not retroactive: Courts can allow class action applicants to fix their pleadings and convert an ordinary single party proceeding into a class action, but the class action only starts from the date the amended claim is filed (unless there are cogent reasons, supported by admissible evidence, supporting an earlier date).

3. Draft carefully, from the start: The decision is a warning shot for applicant lawyers (particularly those seeking to use Part IVA as a vehicle for the determination of employment and non-commercial disputes): "Representative applicants should mean what they say". Care must be taken when defining the class. If the group definition depends on a contested legal or factual issue, and it turns out to be wrong, they risk having no class action at all. Those advising respondents should be similarly alive to such issues.

4. Limitation periods and prejudice: The date a class action is validly constituted will affect limitation periods for group members’ claims. Lawyers must be alert to potential prejudice to group members from delays in getting the group definition right. However, real unfairness proven by admissible evidence is required for it to influence the Court's discretion in granting an amendment application and setting the effective date for any amendment.

Summary

Cannan v Dollarama clarifies an important uncertainty in Australian class action practice: a defective or “empty” group definition means there is no representative proceeding until it is fixed. Amendments can convert a proceeding into a class action, but the class action only begins from the date the amendment is filed. The decision underscores the importance of precision and care at the outset of class action litigation, and will shape the strategic approach of all parties, including the Courts, in representative proceedings.

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[1] See Cannan v The Reject Shop Ltd (No 2) [2025] FCA 879 (Snaden J). That decision followed an earlier decision of Snaden J in Cannan v The Reject Shop Ltd [2024] FCA 1429, which found (despite the proceeding remaining on foot) that the legal premise upon which the purported group definition depended was unsustainable.

[2] FCA Act, ss 33C and 33H.

[3] See [51] – [58] of Lee J's reasons and earlier decisions: Perera v GetSwift Ltd [2018] FCA 732 (Lee J) at [76] – [81]; El-Helou v Mercedes [2025] VSC 211 (Nichols J) at [35]–[39]; Green v Graincorp Oilseeds Pty Ltd [2023] VSC 395 (John Dixon J) at [32]; King v GIO Australia Holdings Ltd [2000] FCA 617 (Moore J) and King v GIO Australia Holdings Ltd [2000] FCA 1543 (Lehane, Merkel and Wilcox JJ).