Parkin v Boral Limited (Class Closure)

Link copied
Case Copied 78 min read

FEDERAL COURT OF AUSTRALIA

Parkin v Boral Limited (Class Closure) [2022] FCAFC 47

File number: NSD 602 of 2020
Judgment of: MURPHY, BEACH AND LEE JJ
Date of judgment: 28 March 2022
Catchwords: REPRESENTATIVE PROCEEDINGS – class closure orders – two questions reserved for determination – first question as to whether Court has power under s 33ZF of the Federal Court of Australia Act 1976 (Cth) to order that unless group members register or opt out by a certain date they will remain a group member but will not be able to seek any benefit pursuant to any settlement (subject to Court approval) that occurs before final judgment – second question as to whether Court has power under s 33X(5) to order that group members register or opt out by a certain date and that group members be given notice that, if a settlement is reached, the applicant then intends to seek an order that those group members who neither opted out nor registered will remain a group member but will not be able to seek any benefit pursuant to any settlement (subject to Court approval) that occurs before final judgment – consideration of the origins of class closure orders – distinction between “hard closure” and “soft closure” orders – consideration of the reasoning of the Court of Appeal of New South Wales in Haselhurst v Toyota [2020] [2020] NSWCA 66; 101 NSWLR 890 and Wigmans v AMP Ltd [2020] NSWCA 104; 102 NSWLR 199 – fact specific inquiry – no extinguishment of group member rights upon the making of an order in terms of the second question – order in terms of second question merely gives notice that at the time of settlement the Court may exercise its powers to distribute any settlement to those group members who have registered their interest – settlement still subject to court approval pursuant to s 33V – claims of group members determined at the time of settlement approval or judgment and the making of s 33ZB order – order within power
Legislation:

Federal Court of Australia Act 1976 (Cth) Pts IVA, VB; ss 22, 25, 33C, 33E, 33J, 33H, 33K, 33V, 33X, 33Y, 33X, 33ZB, 33ZF

Federal Court Rules 2011 (Cth) r 30.01

Civil Procedure Act 2005 (NSW) Pt 10; s 183

Supreme Court Act 1986 (Vic) Pt 4A, ss 33ZB, 33ZF, 33ZG
Cases cited:

Abbott v Zoetis Australia Pty Ltd (No 2) [2019] FCA 462; 369 ALR 512

Asirifi-Otchere v Swann Insurance (Aust) Pty Ltd (No 3) [2020] FCA 1885; 385 ALR 625

BHP Group Ltd v Impiombato [2021] FCAFC 93; 151 ACSR 634

Blairgowrie Trading Ltd v Allco Finance Group Ltd (in liq) [2015] FCA 811; 325 ALR 539

BMW Australia Ltd v Brewster [2019] HCA 45; 269 CLR 574

CAL No 14 Pty Ltd v Motor Accidents Insurance Board [2009] HCA 47; 239 CLR 390

Capic v Ford Motor Company (No 2) [2016] FCA 1178

Cantor v Audi Australia Pty Ltd…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Parkin v Boral Limited (Class Closure) and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2022] FCAFC 47
Decision Date

CaseChat Overview and Summary

In Parkin v Boral Limited, the Federal Court of Australia addressed two pivotal questions concerning class closure orders in the context of a class action proceeding. The first question revolved around whether the Court had the authority under section 33ZF of the Federal Court of Australia Act 1976 (Cth) to order that group members who neither registered nor opted out by a specified date would remain group members but would be barred from seeking any benefit from a settlement reached before final judgment. The second question inquired whether the Court had the power under section 33X(5) to mandate that group members must register or opt out by a certain date and to notify them that the applicant intended to seek an order excluding non-opting and non-registering group members from benefiting from any settlement before final judgment. The court's decision was grounded in the origins and distinctions between "hard closure" and "soft closure" orders, drawing on precedents such as Haselhurst v Toyota and Wigmans v AMP Ltd.

The Court examined the legislative framework and the rationale behind class closure orders, highlighting the importance of facilitating settlements and achieving finality in class actions. The reasoning underscored that the proposed orders did not extinguish the rights of group members but rather provided notice of the potential exclusion from benefits if they did not register or opt out. The court concluded that the orders were within the power of the Court, subject to the group members' claims being determined at the time of settlement approval or judgment and the making of an order under section 33ZB. The final orders affirmed the Court's power to approve the notice under section 33X(5) but did not find the power under section 33ZF to be applicable in the specific context of this case.

Orders

Orders of the court

1. The questions reserved pursuant to s 25(6) of the Federal Court of Australia Act 1976 (Cth) (Act) and r 30.01 of the Federal Court Rules 2011 (Cth) arising in relation to the applicant’s amended interlocutory application filed 14 December 2021 and the respondent’s interlocutory application filed 24 February 2021 be answered as follows:

1 Does the Federal Court of Australia have power pursuant to s 33ZF of the [Act] or otherwise to make an order in terms of prayer 9 of the Interlocutory Application (or in substantially similar terms), which has the effect of providing that any Group Member who by the Class Deadline (as defined in the Interlocutory Application): (i) has not registered in accordance with the orders of the Court; or (ii) has not opted out of this proceeding in accordance with the orders made by the Court, will remain a Group Member for all purposes of this proceeding but shall not, without leave of the Court, be permitted to seek any benefit pursuant to any settlement (subject to Court approval) of this proceeding that occurs before final judgment?

Answer: This question is inappropriate to answer in the abstract, but in the present case, and given the availability of the specific power available under s 33X(5) of the Act to give a notice to group members in the form contemplated by Question 2, no power under s 33ZF is enlivened.

2 Does the Federal Court of Australia have power to approve a notice to Group Members giving notice to the Group Members that upon any settlement of this proceeding Mr Parkin will seek an order, which, if made, has the effect of providing that any Group Member who by a registration date: (i) has not registered; or (ii) has not opted out in accordance with the orders made by the Court, will remain a Group Member for all purposes of this proceeding but shall not, without leave of the Court, be permitted to seek any benefit pursuant to any settlement (subject to Court approval) of this proceeding that occurs before final judgment?

Answer: Yes, pursuant to s 33X(5) of the Act.

2. There be no order as to costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The balance of these reasons will be divided into the following sections:·B THE EVIDENCE·C THE KEY LEGISLATIVE PROVISIONS·D THE “HINTERLAND” – HOW PT IVA DEALS WITH CLAIMS·E CLASS CLOSURE ORDERS GENERALLY AND THE CASES·F THE CONTRADICTOR’S SUBMISSIONS·G CONSIDERATION·H ORDERS AND CONCLUSIONB THE EVIDENCE The parties rely on the affidavits of Julian Schimmel, a principal of Maurice Blackburn, the solicitors for Mr Parkin, affirmed 7 February 2022, and of Jason Betts, a partner of Herbert Smith Freehills, the solicitors for Boral, affirmed 8 February 2022. Although we are presently concerned with issues of power, and the utility of the proposed orders is a distinct consideration, the evidence adduced does provide part of the context in which the power to make the orders is sought to be invoked. Further, and more specifically, the evidence allows the Full Court to consider when a pre-condition to the exercise of power under s 33ZF exists: that is, whether the proposed order can be conceived of as being “appropriate or necessary to ensure that justice is done in the proceeding” (being words of limitation on the exercise of this “gap filling” power). Both Mr Betts and Mr Schimmel are experienced class action lawyers, and their evidence broadly reflects the rationale for the making of class closure orders evident in the remarks of the Full Court in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 98; 252 FCR 1 (at [74]–[75] per Jagot, Yates and Murphy JJ). They were not cross-examined and we accept their evidence. They deposed that in an open class action like the present case (in which the group definition does not have a limiting criterion such as having registered with or entered a retainer or a funding agreement with a particular firm of solicitors or litigation funder):(a)the identity of all eligible group members is not known or knowable to the parties; and(b)even if the identity of all eligible group members were in fact known to the parties, it would always be necessary for group members to take an active step to identify themselves if a settlement is reached so that their share of any settlement monies can be calculated and payment of such monies to them can be effected. They gave evidence that an order in the terms of prayer 9 will facilitate settlement of the proceeding by defining the population of participating group members and enabling their losses to be better assessed before mediation, and by allowing greater finality of litigation for Boral upon any settlement. Mr Schimmel and/or Mr Betts also deposed that:(a)such an order will advance the prospects of settlement as it will allow the parties to have a better understanding of the total quantum of group members’ claims, and will allow offers and counter-offers by the parties to be made on a more secure footing;(b)the assessment of aggregate claim value allowed by such an order is important for Mr Parkin’s lawyers as it allows them to have more confidence that they are in a position to recommend a settlement offer to Mr Parkin. Such an order will also permit the lawyers to have more confidence in assessing whether, in the circumstances of the case, any proposed settlement is fair and reasonable and in the interests of group members such that it is likely to be approved by the Court. On Boral’s side, Mr Betts’ evidence is that in the absence of a class closure order, many respondents are unwilling to countenance settlement;(c)unless such an order is made, Mr Parkin’s lawyers will be in the dark as to the number of group members who might later make claims against the settlement fund and the estimated quantum of their claims. This requires assumptions to be made about the likely “participation rate” of group members in any settlement before Mr Parkin’s lawyers can be in a position to recommend a settlement. Such assessments are rife with uncertainty and, when wrong, can seriously reduce the parties’ preparedness to settle a class action (thus reducing the utility of the regime). For example, on the applicant’s side, if more group members participate in the settlement than was estimated to be likely, that will dilute group member’s entitlements, perhaps to the point that the applicant’s lawyers no longer regard the proposed settlement as fair and reasonable, or to the point that the Court is not prepared to approve it. Mr Betts referred to the available techniques for structuring a settlement of an “open” class action but gave evidence that they all involve considerable uncertainty as to the number and value of alleged claims of group members at the time of mediation, and accordingly involve a significantly increased risk that the mediation will be unsuccessful; and(d)such an order will assist Boral in achieving finality (to the extent the Pt IVA regime allows); it will mean that Boral can resolve the universe of potential claims against it (save for the claims of group members who opt out) which avoids the prospect of another class action and reduces the prospect of a slew of individual claims.C THE KEY LEGISLATIVE PROVISIONS

Decision

Reasons for decision

It was also submitted that the scheme of Pt IVA is that group members who do not opt out are bound by any settlement or judgment through a s 33ZB order, and they are not required to take any anterior positive step. That submission was said to be founded on the following passage in Mobil Oil (at [40]) where the plurality (Gaudron, Gummow and Hayne JJ) said of the Victorian class action regime (which is analogous to Pt IVA) that:…Pt4A provides for what is sometimes called an ‘opt out’ rather than an ‘opt in’, procedure. That is, persons who are group members may opt out of the proceeding and, if they do, they are taken never to have been a group member (unless the Court otherwise orders). Group members, however, need take no positive step in the prosecution of the proceeding to judgment to gain whatever benefit its prosecution may bring.(Emphasis added and citations omitted). In Brewster (at [73]) the plurality cited that passage with approval in stating:As this Court has noted, the opt out model adopted by Pt IVA of the FCA and Pt 10 of the CPA is designed so that a representative proceeding may continue even if group members are unaware of it [Mobil Oil at [38]-[40]]; and group members “are under no obligation to identify themselves” [P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd [No 2] [2010] FCA 176 at [31] per Finkelstein J]. That said, both legislative schemes do allow identification of all group members (as far as is possible) in order to distribute any proceeds. That this is so is apparent from s 33V, 33X(3)-(4), 33Z and s33ZA of the FCA. Reference to the terms of these provisions confirms that the legislative scheme contemplates that the occasion for the making of orders in relation to distribution of the proceeds of the action is its successful completion. Then in Haselhurst (at [53]–[54]) Payne JA cited the above passage from Mobil Oil with approval and said the plurality in that case found an “evident legislative intent” that group members need take “no positive step” in the prosecution of a representative proceeding to judgment to gain whatever benefit its prosecution may bring, whether that arises by a settlement or judgment. In Wigmans (at [77]–[79]) the Court also cited Mobil Oil with approval; and said (at [79]) that the proposed orders were:… prima facie contrary to a fundamental precept of Pt 10, as confirmed by the joint judgments in Mobil Oil and Brewster, and inherent in the legislative choice of an opt-out regime. If what is contemplated by [the parties] comes to pass, group members who take no positive step will gain no benefit from any settlement and will have their rights extinguished. On this argument, the scheme of Pt IVA is that group members who do not opt out “are to have the benefit (or indeed the burden) of any settlement or judgment”: Haselhurst (at [14] per Payne JA). The statutory scheme provides that “the claims in the proceeding are litigated on behalf of all of them, and orders in the proceeding bind all of them. Subject to the creation of sub-groups and the determination of individual questions, the statutory scheme treats them as one group”: Brewster (at [86] per the plurality (citations omitted)). Or as Gageler J put it in Brewster (at [108]) “they sink or swim together.”

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.