This was a class action concerning the sale of ‘add on’ insurance products to consumers across Australia with respect to new motor vehicles purchased from dealers over a period spanning from 2008 to 2017.
On 17 December 2020 Lee J made orders approving a settlement of the proceeding, which included an order under s 33ZB of the Federal Court of Australia Act 1976 (Cth) (FCAA) to the effect that all class members other than those who had opted out be bound by the settlement (Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) (2020) 385 ALR 625;  FCA 1885).
In this judgment, Lee J dismissed an application by four class members to belatedly opt out of the proceeding. Three of these class members applied to opt out after the settlement approval order had been made. His Honour held that he did not have power to allow them to do so because of the operation of s 33ZB of the FCAA, which provides that:
A judgment given in a representative proceeding:
(a) must describe or otherwise identify the group members who will be affected by it; and
(b) binds all such persons other than any person who has opted out of the proceeding under section 33J.
His Honour said that the statutory estoppel created by s 33ZB orders precludes the maintenance of any of the released claims against the respondents and allows the respondents to prevent such claims being made, and (at ):
When this is understood, the superficial pragmatic attraction of making orders under a provision such as s 33ZF allowing a group member, after an approved settlement, to opt out, is shown to be contrary to the principled approach to dealing with approved settlements accompanied, as they should be, by a s 33ZB order.
His Honour observed that this does not apply to every jurisdiction with a class action regime. For example, s 33KA of the Supreme Court Act 1986 (Vic) confers power on the Supreme Court of Victoria to order, before or after judgment, that a person cease to be a class member. However, his Honour said (at ):
The absence of any equivalent provision under Pt IVA means that s 33ZB takes effect according to its terms and the relevant orders cannot be modified after judgment or the approval of a settlement so as to exclude group members from its reach. To proceed otherwise using a broad power such as s 33ZF would not only pay insufficient regard to the text and structure of the Act, which demonstrates an intention to give effect to the statutory estoppel, but would also destroy substantive rights and entitlements that the respondents now enjoy by virtue of the order made which gave rise to the statutory estoppel.
The fourth class member who sought to opt out late was in a different position. He lodged an opt out notice after the opt out date but before the settlement approval hearing. In these circumstances, his Honour considered whether it was appropriate to vary the settlement approval orders to allow him to opt out pursuant to the ‘slip rule’ in r 39.05 of the Federal Court Rules 2011 (Cth) (FCR), which provides that:
The Court may vary or set aside a judgment or order after it has been entered if … (e) it does not reflect the intention of the Court; or … (h) there is an error arising in a judgment or order from an accidental slip or omission.
His Honour held that the slip rule had no operation in the circumstances because:
in exercising the power to approve the settlement under s 33V(1) of the FCAA, his Honour had considered a range of factors, including the terms of the settlement deed (Deed). Relevantly, the Deed provided that the respondents could rescind the Deed if the Court allowed class members to opt out who had lodged opt out notices after the opt out date but before the settlement approval hearing. In these circumstances, his Honour said it was “very far from clear” that he would have allowed the class member to opt out if he had been apprised of his situation at the settlement approval hearing (at ); and
it was not incumbent upon his Honour to exercise the discretion he was exercising in any particular way, and, as was noted by the Full Court in Endresz v Commonwealth of Australia (2019) 273 FCR 286;  FCAFC 197 (at ), if there is any room for debate as to the outcome of the exercise of the discretion, “it is difficult to see how the slip rule could be engaged”.
As a result, his Honour dismissed the fourth class member’s application to opt out late.
Federal Court of Australia, Lee J,
23 April 2021
Applicant’s Solicitors: Johnson Winter & Slattery;
Respondents’ Solicitors: King & Wood Mallesons;
Applicant’s Funder: Balance Legal Capital I UK Ltd
Austlii link: Accessible here
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