Asirifi-Otchere v Swann Insurance

6 In relation to Mr Kilsby and those group members who did not appear, they remain group members: see [4] above. In relation to the position of Mr Holland, Mr Hancock, Mr Meller and Ms Bell, I must determine their application. 7 Given issues were raised as to the power of the Court to allow these group members to opt out at the hearing on 12 March 2021, I formed the view that the most appropriate course was to adjourn the applications part-heard, and for the parties to file supplementary submissions. 8 The applications were listed again before me today, 23 April 2021. Based on the helpful written submissions filed by the parties and the oral exchange today, I have come to the conclusion that none of the four group members that appeared at the hearing on 12 March 2021 should, in effect, be allowed to opt out. In addressing why this is the case, it is first necessary to revisit some important aspects of principle.

B The finality of settlements 9 The applicable law was recently set out by the Full Court in Dyczynski v Gibson [2020] FCAFC 120; (2020) 381 ALR 1. In that case (at 79-80 [288]-[392]), I described how the claim of a group member is determined in whole or in part: G.4 How is the claim of a group member determined in whole or in part? Focussing more specifically on when Pt IVA contemplates that a group member claim is determined, the scheme contemplates that this usually occurs after an initial trial of common issues. Following the determination of common issues, orders are made pursuant to s 33ZB. In Gill v Ethicon Sàrl (No 3) (2019) 369 ALR 175; [2019] FCA 587, I described s 33ZB as being the most important provision within Pt IVA, noting (at [4]) that: ... (t)his provision provides that a judgment given in a representative proceeding must describe or otherwise identify the group members affected by it and binds all such persons other than any person who has opted-out of the proceeding under s 33J. This provision was described by the Full Court in Femcare Ltd v Bright (2000) 100 FCR 331; 172 ALR 713; [2000] FCA 512 at [25] (Black CJ, Sackville and Emmett JJ) as, in one sense, the "pivotal provision" in Pt IVA. The "statutory estoppel" arising upon the making of a s 33ZB order is the mechanism by which non-party group members are bound by the determination of common questions. The answer to the common questions might (but might not) determine the individual claims of group members. This will depend upon the nature of the claim, and the nature of the answer. In the common circumstance when the answer to a common question or questions is not determinative, it will be necessary for the group members' claims to be determined, usually following a "declassing" order. But there can be departures from this norm: apart from the position of "sample" group members already referred to, it might be that the Court considers it utile and consistent with the overarching purpose to separate out and determine before all other issues a common issue, which might be determinative of a claim of a group member. In this case, Pt IVA contains a protection: absent leave being granted to the contrary, 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 what if the Court decides to not just identify whether a group member has a claim (as that concept has been explained above) but to go further to determine whether that claim, following hearing evidence and submissions, amounts to a right or entitlement? By stating the question in this way, it becomes obvious that this amounts to a determination of a justiciable controversy between one actor (the group member) and another (the respondent). Such a controversy is only allowed to be determined without hearing from a non-party group member to the extent the controversy involves only common issues. This is because the statutory estoppel binds the group member and the applicant is heard in relation to the common issues. As was explained by French CJ, Kiefel, Keane and Nettle JJ in Timbercorp Finance Pty Ltd (in liq) v Collins (2016) 259 CLR 212; 339 ALR 11; [2016] HCA 44 (Timbercorp) (at [39], [53]-[54]), the applicant in a class action is not a privy in interest of the group members with respect to the group members' individual claims, meaning the applicant's representative capacity is limited. If, unusually, the claim of the group member is to be determined in advance of a trial and otherwise than by determination of purely common issues, it is necessary for orders to be made identifying that this step is occurring, that the group member has notice it is occurring, and has the opportunity of adducing evidence and making submissions as to the merits of the claim. 10 I then turned to the question of settlements and finality (at 89-92 [389]-[400]): … section [33ZB] is in the following terms: 33ZB Effect of judgment 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. The term judgment is defined in s 4 of the Act as follows: judgment means: (a) a judgment, decree or order, whether final or interlocutory; or (b) a sentence; and includes a conviction. Properly analysed, the way that the statutory scheme works to bind non-parties to an order made by the Court, is by operation of s 33ZB. Orders made settling a class action under s 33V should, in order to bind group members in relation to the individual claims, be accompanied by s 33ZB orders: see Courtney (in a representative capacity on behalf of the persons referred to in paragraph 1 of the eighth amended statement of claim) v Medtel Pty Ltd (No 5) (2004) 212 ALR 311; [2004] FCA 1406 (Courtney v Medtel) (at [54] per Sackville J); Dillon v RBS Group (Australia) Pty Ltd (No 2) [2018] FCA 395 (Dillon (No 2)) (at [48]-[49] per Lee J). As I observed in Clark v National Australia Bank Ltd (No 2) [2020] FCA 652 (at [24]) in relation to group member claims the subject of a s 33V settlement, the: … non-party claims are "settled" not through the operation of common law principles upon dismissal of a proceeding, but through the operation of statute. The reason why the group members although non-parties are bound to the s 33V settlement order is by the making of a s 33ZB order, which means the settlement order binds group members who did not opt-out. I am aware that there has been some differences in approach to the binding of group members to a settlement. In the early days of Pt IVA, it was common for respondents to seek contractual releases from group members or procure deed polls. The releases and indemnities procured sometimes purported to seek releases for claims that went beyond the scope of the claim the subject of the class action. This practice has been deprecated (see Dillon (No 2) (at [58]-[59])) and seems to have thankfully fallen into desuetude. But despite the operation of s 33ZB in its application to settlements binding group members being explained by Sackville J 16 years ago in Courtney v Medtel, there appears to remain some residual confusion. It is not unusual to see applicants executing deeds which require them to seek orders pursuant to s 33ZF of Act purporting to authorise applicants "nunc pro tunc to enter and give effect to" a settlement deed for and on behalf of group members, which deed includes releases and indemnities. Such orders can be seen in cases such as Laszczuk v Bendigo & Adelaide Bank Ltd [2020] VSCA 17 (at [49]-[62] per Whelan, Hargrave and Emerton JJA); Newstart 123 Pty Ltd v Billabong International Ltd (2016) 343 ALR 662; [2016] FCA 1194 (Newstart 123 Pty Ltd) (at [55]-[62] per Beach J); Camilleri v Trust Company (Nominees) Ltd [2015] FCA 1468 (per Moshinsky J) and in City of Swan v McGraw-Hill Companies, Inc (2016) 112 ACSR 65 at 75; [2016] FCA 343 (per Wigney J). An order of this type was also sought and made in Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (recs and mgrs apptd) (in liq) [2014] VSC 516 (per Croft J) and was later considered by the Victorian Court of Appeal in Byrne v Javelin Asset Management Pty Ltd [2016] VSCA 214 (Byrne) (at [55]-[58] per Hansen, Ferguson and McLeish JJA) and Bendigo and Adelaide Bank Ltd v Pekell Delaire Holdings Pty Ltd (2017) 118 ACSR 592; [2017] VSCA 51 (Pekell) (at [58] per Santamaria, Ferguson and McLeish JJA). In Byrne (at [55]-[56]), the Victorian Court of Appeal observed: Section 3(1) of the Supreme Court Act defines 'judgment' to include an 'order'. The parties contended that an order approving a settlement under s 33V is therefore a 'judgment given in a group proceeding' within the meaning of s 33ZB, with the result that when an order approving a settlement is made group members are bound, not only by the order, but by the settlement itself. There is obviously much to commend this result, as it is not to be supposed that the legislature contemplated that a settlement approved by the Court would not bind group members, in the same way as a judgment would have if the proceeding had not been compromised. That was also the view taken by Sackville J in Courtney v Medtel Pty Ltd (No 5). At the same time, it is common for orders to be made declaring that a plaintiff, group members and other parties are bound by the settlement pursuant to s 33ZF, which provides for the Court to make any order it thinks 'appropriate or necessary to ensure that justice is done in the proceeding'. Alternatively, there are many instances, of which the present case is one, where the Court has made an order authorising a plaintiff to enter into and give effect to the settlement on behalf of group members. Again, s 33ZF is an available source of power for such an order. In approving the present deed of settlement, Croft J ordered, among other things, that the plaintiffs in the group proceedings 'have the authority' of the group members 'nunc pro tunc, to enter into and give effect to the deed of settlement and the transactions contemplated thereby for and on behalf of' the group members. In the circumstances, it is not necessary to decide whether, in the absence of an order such as those that might be made under s 33ZF, a settlement of a group proceeding is binding upon group members once approved by the Court, by operation of s 33ZB. It suffices that the present settlement was binding on group members by virtue of the orders made by the Court in this particular case. (citations omitted) Further, in Pekell (at [58]), the Court noted that a s 33ZF order supplies the privity which would otherwise be absent in respect of a judgment binding group members, with the result that the group proceedings may be settled "on whatever terms the parties have agreed and the Court has approved". For my part, and with respect to the Victorian Court of Appeal who appeared to harbour some doubts as to the issue, I do not think there is any doubt whatsoever about the operation of s 33ZB in binding group members to a settlement. Further, the notion that it is open for applicants to settle claims of group members beyond the claim the subject of a class action is not one which can be reconciled with the foundational notion that an applicant is only entitled to deal with any other person's rights to the extent that the applicant is representing those rights, and that it is wrong in principle for an applicant to presume to deal with the rights of third parties except to the extent that they are empowered by statute to deal with those rights: see Dillon (No 2) (at [60]-[61]). Those rights can be adequately dealt with upon a settlement by the quelling of the claim of a group member by the making of a s 33ZB order. It is inconsistent with the nature of the role of a representative party under Pt IVA of the Act, as part of seeking to resolve a representative proceeding, to seek to settle all individual claims of group members howsoever arising against a respondent (in contradistinction to the claim the subject of the class action). Returning more specifically to the practice of seeking s 33ZF orders, if a s 33ZB order is made, then these s 33ZF orders are at best surplusage, and should be seen as inconsistent with the statutory scheme. Indeed, they appear often to be sought as a mechanism or device whereby releases can be procured by a respondent which may go further than the claim (as the word is to be understood in its s 33C sense). Having said this, two points of qualification should be made as to where s 33ZF orders could be appropriate. First, there may, of course, be cases, perhaps in class actions involving a relatively small number of group members who are represented, where the Court can be satisfied that individualised instructions have been given by group members to give releases which travel beyond the claims the subject of the proceeding. Questions of authority of the representative do not then arise. Secondly, there may also be cases where it may be within the scope of the authority of a representative applicant to give releases authorised by the Court to a privy of the respondent, but this complication need not be explored: see for example the discussion in Newstart 123 Pty Ltd (at [57]); see also Melbourne City Investments Pty Ltd (now called ACN 161 046 304 Pty Ltd) v Treasury Wine Estates Ltd [2019] FCA 804 (per Foster J at [59]-[62]). This preferable approach of making s 33ZB orders is consistent with what the High Court was saying in Timbercorp (at [53]-[54]) where, as I noted in Dillon (No 2) (at [39]), the plurality explained that a group member has a privity of interest with an applicant in the claim the subject of the class action and so "must claim under or through the person of whom he is said to be a privy": see also Ramsay v Pigram (1968) 118 CLR 271 at 279; [1968] ALR 419 (per Barwick CJ). Before leaving this topic, I should note that although some s 33V settlement approvals do not appear to have been accompanied by a s 33ZB order (a course which, in my view, should be deprecated) or even a s 33ZF order of the type identified above, this does not mean that group members in those settled class actions would be somehow free to agitate their claims. The privy of those group members settled the case and, in most of those cases, after notice was provided to group members. Although it is not possible to generalise, it is difficult to see why a group member who has been notified of a proposed s 33V application by his privy and does nothing, would be entitled to assert that the settlement does not bind him. 11 Murphy and Colvin JJ agreed with these observations (at 58 [247] and 59 [249]). 12 This case is a good illustration of the need for there to be precision in matters of this type. The s 33ZB order is fundamental to the way in which the class action regime operates; it is the "keystone provision" of Pt IVA: see Dillon v RBS Group (Australia) Pty Ltd [2017] FCA 896; (2017) 252 FCR 150 (at 157 [31]). The consequence of the statutory estoppel created by the making of s 33ZB orders has now resulted in the creation of rights. That statutory estoppel precludes the maintenance of any of the released claims against the respondents and, importantly, allows the respondents to prevent such claims being maintained. 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. 13 This is not the case in every jurisdiction with a class action regime. Indeed, s 33KA of the Supreme Court Act 1986 (Vic) uniquely provides: 33KA Court powers concerning group membership (1) On the application of a party to a group proceeding or of its own motion, the Court may at any time, whether before or after judgment, order - (a) that a person cease to be a group member; (b) that a person not become a group member. (2) The Court may make an order under subsection (1) if of the opinion that - (a) the person does not have sufficient connection with Australia to justify inclusion as a group member; or (b) for any other reason it is just or expedient that the person should not be or should not become a group member. (3) If the Court orders that a person cease to be a group member, then, if the Court so orders, the person must be taken never to have been a group member. 14 In Murray v Great Southern Managers Australia Ltd (Receivers and Mangers Appointed) (in liq) [2018] VSC 416 (at [15]), Croft J noted that s 33KA is an "outlier" and "unique to the Victorian legislation". 15 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. This approach is entirely consistent with the way in which s 33ZF was considered by the majority of the High Court in BMW Australia Ltd v Brewster [2019] HCA 45; (2019) 374 ALR 627 (at 643 [69]-[70] per Kiefel CJ, Bell and Keane JJ, at 657 [124] per Nettle J, and at 633 [147] per Gordon J). 16 No doubt the reasoning behind s 33KA of the Victorian legislation was that it was thought appropriate by that Legislature to protect, in some circumstances, a group member who was unaware of the fact that a judgment had been entered. But it is a curious provision. The class action system works because finality can be provided and because it has an unstated premise that notification by the Court of the right to opt out and the notice provisions generally are regarded as being adequate in bringing matters to the attention of group members before their rights are affected. The class action regime must work not only for the benefit of the applicant and group members, but also for the respondent. It is necessary through the settlement process that respondents obtain certainty. Such certainty also promotes the resolution of these often unwieldy and large matters with a considerable saving of court time and private and public cost. 17 At the end of the day, although a class action can be commenced without the consent of a group member (see s 33E of the Act), at some stage during the process a group member has to, to put it colloquially, fish or cut bait. Absent some declaratory or other relief sought in the class action which might operate in rem, or circumstances where there might be some public remedy sought, a group member is always going to have to bring forward the necessary information to advance their individual claim or participate in a settlement. To allow group members to come out of the woodwork after settlements would, in some cases, cause some mischief.

C.1 The state of play as at the settlement approval hearing 18 When this matter came before me for settlement approval on 17 December 2020, the group members fell into six distinct categories: (1) Group members who had not opted out and were to be bound by any settlement and whose position raised no complications. (2) 24 group members who had lodged notices with the solicitors for the applicant (JWS) directly prior to the last of a twice-extended opt out date of 2 September 2020 (opt out date) which were not recorded in the list of opt out notices kept by the Registry. At the settlement approval hearing, the applicant submitted that these group members should be treated as having opted out and the Court accepted that submission. (3) One group member who had lodged an opt out notice with JWS directly after the opt out date which was not recorded in the list of opt out notices kept by the Registry. The applicant submitted in writing that this group member's opt out notice should not be treated as valid, in circumstances where there was no evidence as to why the notice was received after the opt out date. I agreed with this submission and no order was made deeming this group member's opt out to be effective. (4) 108 group members who had sent emails to JWS indicating a desire to opt out before the opt out date. The applicant submitted that, with one exception, these persons should not be treated as having opted out (the exception being one group member, Mr Lacy, who had relevantly not received a response to two emails sent to JWS in July and August 2020 expressing a desire to opt out). I accepted these submissions and only permitted Mr Lacy to opt out. (5) Four group members who had sent emails or made telephone calls to JWS indicating a desire to opt out after the opt out date but prior to the settlement approval hearing. The applicant submitted that, consistently with the approach that I had taken concerning persons who had sent emails to JWS, these persons should not be permitted to opt out and, again, I accepted that submission. (6) There was one group member, Mr Haywood, who lodged an opt out notice with the Court and it was received by the Court some two days before the settlement approval hearing on 17 December 2020. After hearing submissions in relation to Mr Haywood's application, I ordered that he be deemed to have opted out. Importantly, this order was made in the absence of any opposition by the respondents and was made in circumstances where I was persuaded insofar as that group member was concerned that he had acted reasonably and had also gone to the trouble of appearing at the settlement approval hearing on 17 December 2020 to evince his desire to opt out. 19 It follows from the above analysis that my intention at the settlement approval hearing was not to allow everyone who had lodged late opt out notices before the settlement approval hearing to opt out. 20 What has caused me some pause in determining this application is that it was not drawn to my attention at the settlement approval hearing that an additional 23 group members had purported to lodge opt out notices with the Court after the opt out date but before the settlement approval hearing (being 14 group members who had purported to lodge opt out notices between 8 September and 19 October 2020 and an additional nine group members who had purported to lodge opt out notices between 19 October and 17 December 2020). This was in circumstances where none of these group members attended the hearing on 17 December 2020. 21 Mr Hancock is one of these 23 people. He, unlike Mr Holland, Mr Meller and Ms Bell, lodged an opt out notice on 23 November 2020.

C.2 The slip rule and Mr Hancock 22 In these circumstances, I raised with the parties whether it was appropriate for me to make the necessary orders to reflect that a slip had been made so as to result in Mr Hancock being considered to have opted out. 23 I have formed the view that it would be inappropriate for me to proceed to vary the judgment or orders so as to provide for this result. In explaining why this is so, it is appropriate first to restate some fundamental propositions concerning how the slip rule operates. 24 The slip rule is a convenient shorthand expression for r 39.05 of the Federal Court Rules 2011 (Cth) (FCR), which is relevantly in the following terms: 39 Varying or setting aside judgment or order after it has been entered 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. 25 The rule was recently considered by the Full Court (Rares, Markovic and Charlesworth JJ) in Endresz v Commonwealth [2019] FCAFC 197; (2019) 273 FCR 286. As the parties correctly submitted in an agreed note, five principles inform the principled application of the rule: (1) The starting point is that the slip rule is available to vary an order to address an accidental slip or omission arising from the inadvertence of the Court or a party. The purpose of the rule is to avoid injustice to the parties by ensuring the Court's orders reflect its intention at the time the orders were made or reflect the intention that the Court would have had but for the accidental slip or omission: Endresz (at 312 [73]). (2) The Court retains a discretion to refuse to make an order by invoking the slip rule if something has intervened which would mean that it is "inexpedient or inequitable that it be made": Endresz (at 312 [73]), citing L Shaddock & Associates Pty Ltd v Council of the City of Parramatta (No 2) (1982) 151 CLR 590 (at 597 per Mason ACJ, Wilson and Deane JJ). (3) Courts have been careful to ensure that the application of the slip rule is kept within principled constraints, given the public interest in the finality of litigation: Endresz (at 312 [74]). (4) Particular complexity arises where it is sought to rely on the slip rule to vary or add an order that is the product of an independent discretion: Endresz (at [74]). In such cases, the question of how the discretion would have been exercised but for the suggested slip or omission becomes the relevant factor: Endresz (at [74]). (5) Depending upon the circumstances of the case, hindsight reasoning may not enable an inference to be drawn as to the intention of the Court at the time of the making of the relevant order: Endresz (at [87]); see also Flint v Richard Busuttil & Company Pty Ltd [2013] FCAFC 131; (2013) 216 FCR 375 (at 384 [46] per Allsop CJ, Katzmann and Perry JJ). 26 It is unnecessary for me to wade into the issue of whether the intention in FCR 39.05(e) is confined to the Court's actual intention, save as to note that the balance of the authorities support the position that the "intention" is that which the Court actually had, as well as the intention that the Court would have had but for a failure caused by inadvertence on the part of the Court or a party: see Luck v University of Southern Queensland [2018] FCAFC 102; (2018) 265 FCR 304 (at 314-5 [56] per Mortimer J, with whom Logan J generally agreed at 306 [3]); Construction, Forestry, Mining and Energy Union v Mammoet Australia Pty Ltd (No 2) [2012] FCA 1404; (2012) 209 FCR 123 (at 126 [10] per Gilmour J). 27 When determining whether to approve the settlement, the power I was exercising under s 33V(1) involved consideration of a large range of circumstances, including the approval of a settlement deed in particular terms (Deed). Part of the bargain involved cl 4.2 of the Deed, which, in effect, provided that the respondents could rescind the conditional Deed in the event that the Court allowed the 23 group members to opt out who had purported to lodge opt out notices with the Court between 8 September 2020 and the date of the settlement approval hearing. It is very far from clear to me, notwithstanding any apparent expediency, that I would have allowed Mr Hancock and others to opt out if I had been apprised of the situation of these group members. 28 This seems to me to be determinative. This is not a case where it was incumbent upon me to exercise the discretion I was exercising in a particular way. As was noted in Endresz (at 314 [81]), 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". In these circumstances, the slip rule has no operation.

C.3 Mr Holland, Mr Meller and Ms Bell 29 In relation to the position of Mr Holland, Mr Meller and Ms Bell, the conclusions I have reached relating to power are sufficient to determine their applications. Notwithstanding I am grateful for each of these individuals taking the trouble to assist the Court by appearing and explaining their personal circumstances, and any feelings of sympathy I have in relation to their understandable concern that they have remained in a class action when they have belatedly taken attempts to opt out, when the statutory scheme is properly understood, I am bereft of power to give them the relief that they desire.

D CONCLUSION AND ORDERS 30 Given the reasons I have outlined, the relevant applications of the group members cannot succeed and I will make orders accordingly. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.