Class Closure Orders: The Story So Far…

By Bill Petrovski and Paige Findley

In class actions, the “class” or group member definition is often limited to include persons who have registered for the class action, who have retained a law firm or who have signed litigation funding agreements. This means that the class is effectively “closed” only to include those people.

In 2017, the power to make a “class closure” order was held to be available to the Court in the case of Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (2017) 252 FCR 1 (“Treasury Wines”).

In Treasury Wines, the Full Court of the Federal Court considered that s 33ZF of the Federal Court of Australia Act 1976 (Cth) creates the power to make such a class closure order. Section 33ZF gives the Court the power to make any order the Court considers appropriate or necessary to ensure that justice is done in the proceeding.

The Full Court, in Treasury Wines held that “if a class closure order operates to facilitate the desirable end of settlement, it may be reasonably adapted to the purpose of seeking or obtaining justice in the proceeding and therefore appropriate under s 33ZF of the Act” (at paragraph [74]).

In April 2020, a five-judge bench of the NSW Court of Appeal, in Haselhurst v Toyota Motor Corporation [2020] NSWCA 66 (“Haselhurst”), held that class closure orders could not be made in light of the High Court decision of BMW Australia Ltd v Brewster (2019) 94 ALJR 51.

The class closure order proposed in Haselhurst sought to exclude group members from participating in the distribution of settlement proceeds if they did not register and that the group members be barred from making any claim against the defendant. Such an order would effectively extinguish these group members’ rights to the claim. The Full Court did not consider that this was an order “appropriate or necessary to ensure that justice is done in the proceeding.”

Is there a power to make class closure orders in light of Haselhurst?

The power to make a class closure order was subsequently considered in Wigmans v AMP Ltd & Others (2020) 381 ALR 100 (“Wigmans”) in the NSW Court of Appeal.

In Wigmans, the plurality concluded that the proposed orders were “based on the idea that group members should be prevailed upon to register lest they lose rights to participate in a settlement, and have any rights they might have against AMP extinguished” (at paragraph [132]). As such, there was no power to make the order under s 183 of the Civil Procedure Act 2005 (NSW) (the cognate provision to s 33ZF in NSW).

Payne JJA in Haselhurst at paragraphs [70] – [71], however, seemed to accept that the power to redefine the class to exclude those who had not registered, not retained a law firm or entered into a litigation funding agreement, continues to be available to the Court.

As such, it remains to be seen whether class closure orders under s 33ZF or s 183 is available in circumstances where the group members’ claims have not been extinguished as in Wigmans and other cases that have followed Haselhurst. Those in the class actions space will have to wait and see if any further authority will provide such guidance in the near future.