In the Boral class action, two questions arose and were reserved for determination by the Full Court:
A Full Court comprising Murphy, Beach and Lee JJ held that the answers to those questions were, respectively, as follows:
Justices Murphy and Lee delivered the leading judgment, with which Beach J concurred.
The applicant had filed an interlocutory application seeking, inter alia, a ‘soft’ class closure order, being that any class member who fails to register or opt out prior to a Court deadline not be permitted to seek any benefit pursuant to any settlement before final judgment.
The respondent sought the same order as the applicant and, in the alternative, if the Court concluded that s 33ZF is not a source of power to make the order sought, an order that a notice be distributed which states that upon any settlement, the applicant will seek an order for class closure.
The evidence of the parties’ solicitors, Mr Schimmel and Mr Betts, was that a soft class closure order would advance the prospects of settlement as it would allow the parties to have a better understanding of the total quantum of class members’ claims.
In Section E of the judgment, their Honours set out the divergence in authority on the Court’s power to make soft class closure orders, including that:
A Court-appointed contradictor embraced the conclusions of Haselhurst and Wigmans, submitting that a soft class closure order would operate to compel class members to take a positive step, prior to settlement or judgment, if they are to benefit in the outcome of the class action, and will cause a division between class members and a conflict of their interests.
The contradictor also submitted that a proper construction of s 33ZF of the FCAA does not empower the Court to make a soft class closure order because the Court could not be satisfied that such an order was appropriate or necessary to ensure that justice is done in the proceeding.
Concerning the question of notice, the contradictor submitted that the Court should be slow to exercise power under s 33X(5) of the FCAA to give notice to class members of a matter inconsistent with the ‘fundamental precept’ that class members are entitled to remain ‘totally passive’ until such time as a proceeding is settled or judgment is given.
Their Honours first considered whether Haselhurst and Wigmans were distinguishable, holding that Haselhurst was so, on the basis that class member claims were not barred or extinguished here by the exercise of power (c.f. Haselhurst) but that Wigmans could not be distinguished on the question of power to give notice.
Their Honours held that Wigmans was plainly wrong and declined to follow it, on a number of grounds. First, the breadth of the matters the Court is empowered to give notice of by s 33X(5) of the FCAA. Second, because the absolutism of the ‘fundamental precept’ is unhelpful in determining the question. Third, there are numerous decisions in which class members had been compelled by court order, prior to settlement or the first stage trial of the class action, to take a positive step in the proceeding. Fourth, any potential conflict as between the interests of class members which may arise is not insuperable.
However, having found that power existed pursuant to s 33X(5) of the FCAA to give notice of the proposed soft class closure order, the Court declined to answer the more fundamental question of whether power existed to make the order itself, on the basis that step quelled the immediate concern and therefore an exercise of power under s 33ZF was not required to ensure that justice is done in the proceeding.
Federal Court of Australia, Murphy, Beach and Lee JJ,
28 March 2022
Applicant’s Solicitors: Maurice Blackburn;
Respondent’s Solicitors: Herbert Smith Freehills;
Applicant’s Funder: N/A
Austlii Link: Available here
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