Abstract

Article

THE FINALITY OF SETTLEMENTS IN CLASS ACTIONS

How a group member’s claim is determined in whole or in part?

In class actions in the Federal Court, under Pt IVA of the Federal Court of Australia Act 1976 (Cth) the finality of settlement of a group member’s claim is usually determined after an initial trial of common issues. After that, orders are made pursuant to s 33ZB, which is the most important provision within Pt IVA. Gill v Ethicon Sàrl (No 3) (2019) 369 ALR 175; [2019] FCA 587. It requires a judgment in a representative proceeding to describe or otherwise identify the affected members and binds all other than any who has opted-out of the proceeding under s 33J. This is, in one sense, the pivotal provision in Pt IVA. Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 at [25]. Statutory estoppel arising upon the making of the order binds non-party group members by the determination, which might resolve an individual claim,  depending upon its nature, and the nature of the answer. If the answer is not determinative, it will be necessary for the claim to be determined, usually after a declassing order.

Exceptions include the position of sample group of members, if it is useful and consistent with the process’ overarching purpose to separate out and determine before all other issues a common issue which might determine a claim of a group member. Then, absent leave to the contrary, Pt IVA contains a protection by which such a separate determination of a final issue could not occur without giving the group members a right to opt out: s 33J(4). But if the court not just identifies whether a group member has a claim but further determines whether, following hearing evidence and submissions, it amounts to a right or entitlement, it amounts to a determination of a justiciable controversy between the group member and the respondent. It may be determined without hearing from a non-party group member only to the extent that it involves only common issues since the statutory estoppel binds the group member and the applicant only in relation to the common issues. The applicant is not a privy in interest of the group members with respect to their individual claims, so that the applicant’s representative capacity is limited. Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212at [39], [53]–[54]).  If a group member’s claim is to be determined in advance of a trial without the determination of common issues, this step must be noted as  occurring, the member must have notice that it is occurring, and must have an opportunity of adducing evidence and making submissions as to the merits of the claim. Dyczynski v Gibson [2020] FCAFC 120; (2020) 381 ALR 1.

 

 

A s 33ZF order might be appropriate in a class action involving a relatively small number of represented group members if group members have given individualised instructions to give releases beyond the subject claims. Issues of authority of the representative cannot then arise. Or it might possibly be appropriate if a representative applicant has authority to give releases authorised by the court to a privy of the respondent. Newstart 123 Pty Ltd (at [57]); Melbourne City Investments Pty Ltd (now called ACN 161 046 304 Pty Ltd) v Treasury Wine Estates Ltd [2019] FCA 804 at [59]–[62]).

This approach is preferable when a group member has a privity of interest with an applicant in the subject claim and so must claim under or through the person of whom he is  a privy: Timbercorp at [53]–[54]; Dillon (No 2) (at [39]); Ramsay v Pigram (1968) 118 CLR 271 at 279.

A s 33V settlement should not be approved unless accompanied by a s 33ZB order  or a s 33ZF order of this type, but this does not mean that group members in a class action settled without it would be somehow free to agitate a claims. As the privy of the member settled the case after notice was provided to the member, and does nothing, it is unlikely that he would be entitled to assert that the settlement does not bind him. The s 33ZB order is fundamental to the class action process in  Dillon v RBS Group (Australia) Pty Ltd (2017) 252 FCR 150 at 157. The consequence of the statutory estoppel created by it results in the creation of rights by estopping any of the released claims against the respondents.

This is not the case in every jurisdiction with A class action process may differ in different jurisdictions: see s 33KA of the Supreme Court Act 1986 (Vic), which is unique to the Victorian legislation. Murray v Great Southern Managers Australia Ltd (Receivers and Mangers Appointed) (in liq) [2018] VSC 416 (at [15]. It seems that the Legislature thought it appropriate in some circumstances to protect a group member who was unaware of the fact that a judgment had been entered.  But the system requires finality and there is an implication that notification by the Court of the right to opt out and the notice provisions generally are adequate to bring matters to the attention of members before their rights are affected. The system must work not only for the benefit of the respondent as well as that of the applicant and members. Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 4) [2021] FCA 459

The absence of any equivalent provision under Pt IVA of the Federal Court of Australia Act 1976 (Cth) means the relevant orders cannot be modified after judgment or the approval of a settlement in order to exclude group members from its operation. Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 4) [2021] FCA 459,applying BMW Australia Ltd v Brewster [2019] HCA 45; (2019) 374 ALR 627.

So although unders 33E of the Act a class action can be commenced without the consent of a group member, at some stage during the process a member has to join or depart. Unless there is a proceeding in rem, or some public remedy, he must take steps to advance his individual claim or participate in a settlement. Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 4) [2021] FCA 459.