Part IVA - The Form and Content of an Opt-Out Notice
13 Part IVA of the Federal Court Act provides for the manner in which a "representative proceeding" may be commenced and further provides for the manner in which such a proceeding is to be thereafter conducted.
14 Of present relevance are sections 33J, 33X and 33Y.
15 Section 33J provides as follows:
Right of group member to opt out
(1) The Court must fix a date before which a group member may opt out of a representative proceeding.
(2) A group member may opt out of the representative proceeding by written notice given under the Rules of Court before the date so fixed.
(3) The Court, on the application of a group member, the representative party or the respondent in the proceeding, may fix another date so as to extend the period during which a group member may opt out of the representative proceeding.
(4) Except with the leave of the Court, the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out of the proceeding.
16 Division 3 of Part IVA thereafter deals with the form and content of notices to be given to group members. Section 33X(1) provides in relevant part as follows:
Notice must be given to group members of the following matters in relation to a representative proceeding:
(a) the commencement of the proceeding and the right of the group members to opt out of the proceeding before a specified date, being the date fixed under subsection 33J(1); …
The remaining provisions of s 33X(1) deal with applications for dismissal of a proceeding for want of prosecution and an application to withdraw under s 33W. Those provisions are of no present relevance. Of relevance, however, are the terms of s 33Y which provides as follows:
Notices - ancillary provisions
(1) This section is concerned with notices under section 33X.
(2) The form and content of a notice must be as approved by the Court.
(3) The Court must, by order, specify:
(a) who is to give the notice; and
(b) the way in which the notice is to be given;
and the order may include provision:
(c) directing a party to provide information relevant to the giving of the notice; and
(d) relating to the costs of notice.
(4) An order under subsection (3) may require that notice be given by means of press advertisement, radio or television broadcast, or by any other means.
(5) The Court may not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so.
(6) A notice that concerns a matter for which the Court's leave or approval is required must specify the period within which a group member or other person may apply to the Court, or take some other step, in relation to the matter.
(7) A notice that includes or concerns conditions must specify the conditions and the period, if any, for compliance.
(8) The failure of a group member to receive or respond to a notice does not affect a step taken, an order made, or a judgment given, in a proceeding.
On 28 June 2010 the current Chief Justice of this Court issued Practice Note CM 17. It commenced on 5 July 2010 and applies, as far as circumstances permit, to both existing representative proceedings and future such proceedings. That Practice Note usefully sets forth a "sample form" of notice.
17 The opt-out requirements of Part IVA are "an important element of the scheme laid down by that part of the Act": Vernon v Village Life Ltd [2009] FCA 516 at [59] per Jacobson J. The ability to opt out of a representative proceeding assumes particular relevance because the consent of a person to be a group member is not required, except in specified circumstances not of present relevance: s 33E. See also: Australian Competition and Consumer Commission v Chats House Investments Pty Limited (1996) 71 FCR 250 at 252 per Branson J; Guglielmin v Trescowthick (No 2) [2005] FCA 138 at [14], 220 ALR 515 at 519 per Mansfield J.
18 Section 33X(1)(a), it will be noted, does not make express provision for the point of time at which the notice required by that provision is to be given. That point of time will be dictated by the facts and circumstances of each individual proceeding. Where amendments to the causes of actions being advanced for resolution are being contemplated, or where the very definition of the "group members" may itself change, it may be appropriate to defer the giving of any notice until those matters have been resolved. It may also be appropriate to defer the giving of any notice until after any Notices of Motion seeking to have a proceeding stayed or dismissed are resolved. To do so may limit the extent to which further notices to group members may be required.
19 It is also of importance that the notice given accurately informs persons of the "right … to opt out of the proceeding" before the date specified under s 33J(1) and be drafted in a manner so as not to mislead: King v GIO Australia Holdings Ltd [2001] FCA 270. Sackville, Hely and Stone JJ there amended the form of notice that had been approved by the primary Judge in King v GIO Australia Holdings Ltd [2000] FCA 1869. There in issue was the liability of a group member to pay legal costs to the Applicant's solicitors, Maurice Blackburn Cashman. When addressing this issue their Honours concluded:
[14] In our opinion, the notice in its current form is capable of creating a misleading impression in group members who receive it. In particular, they may be led to believe that MBC will act on behalf of the applicant, insofar as he seeks damages and other relief on behalf of group members, to the point of judgment. This impression would not be accurate, since MBC will act on behalf of a group member to establish the individual elements of his or her cause of action (notably reliance, causation and loss or damages) only if that group member enters into a Fee and Retainer Agreement. In other words, in the absence of a global settlement approved by the Court, an individual group member cannot obtain a favourable judgment without engaging a lawyer or representing himself or herself.
[15] This misleading impression might well affect the decision of a group member whether or not to opt out of the proceedings. The principal purpose of the notice given under s33X(1)(a) and s33Y(2) is to ensure that group members can make an informed decision concerning their rights: see Law Reform Commission, Grouped Proceedings in the Federal Court (Report No 46, 1988), para188, para190; Femcare Ltd v Bright (2000) 100 FCR 331, at 336-337, 349. We do not think it is an answer, as Mr Burnside QC (who appeared with Ms Hanscombe for the applicant) suggested it was, that a group member who is misled by the form of notice approved by the Court could apply for and expect to receive an extension of the period during which he or she can opt out of the representative proceeding: s33J(3). The represented group is large and group members are likely to have widely varying degrees of understanding of the claims made on their behalf and the possible outcomes of representative proceedings. It is important that any decision they make concerning opting out of the proceedings not be based on a notice that is apt to mislead them.
[16] We agree with the primary Judge that clarity and simplicity are essential if a notice is to have its intended effect. We also agree that an attempt to provide detailed information is likely to create more difficulties than it resolves. Nonetheless, we think that, in order to remove the misleading impression to which we have referred, group members should be informed that, unless the proceedings are settled, MBC will not represent them to the point of judgment unless they assume a responsibility for their own legal fees.
It is "imperative that any communications made to group members, … be accurate": Williams v FAI Home Security Pty Ltd (No. 3) [2000] FCA 1438 at [24] per Goldberg J.
20 When approving the form and content of an opt-out notice it is also of importance for the Court to ensure that the notice is written in "plain English": Courtney v Medtel Pty Ltd [2001] FCA 1037 ("Courtney"). Sackville J there relevantly observed:
[10] It is also important to bear in mind that, as was said by Wilcox J in McMullin v ICI Australia Operations Pty Ltd (1998) 156 ALR 257, at 260:
"Any notice that is to be issued to members of the public in connection with a representative proceeding must be readily comprehensible by non-lawyers. It should be written in plain English."
[11] I would add a further observation. Any opt-out notice should be framed so as not to cause unnecessary alarm or distress to intended recipients. Practising lawyers, and for that matter judges, may tend to underestimate the impact that publication or service of a Court ordered notice may have on members of the represented group. The recipients of a notice under s33X of the Federal Court Act may become anxious when they learn for the first time of legal proceedings which may affect their legal rights and in respect of which they must decide whether or not to participate. They may be concerned by technical language that is difficult to understand. The notice may also alert them, particularly in personal injury cases, to the possibility that they are at risk of future harm. People who are at risk of harm or who are otherwise vulnerable, such as elderly persons, may be particularly susceptible to anxiety or distress. Notices must be accurate but should be drafted with sensitivity to these considerations.
It is, accordingly, of importance to ensure that a notice does not contain unnecessary information which may simply have the potential to either confuse or intimidate the persons to whom it is addressed. The nature of the information being communicated may well depend upon the issues being advanced for resolution in the representative proceeding itself - the more complex a proceeding may be, the greater may be the need to include more rather than less information. Inevitably a balance may have to be struck when approval is sought in respect to each individual proceeding.
21 As was also observed by Sackville J in Courtney, when approving the form and content of an opt-out notice, consideration should also be given to the category of persons who are group members. What may be an appropriate manner in which to convey information to group members better qualified to understand that information may be inappropriate (and may have to be differently expressed) where it may be expected that group members are less able to understand the information sought to be conveyed. There would be little point in expressing an opt-out notice in terms which a lawyer may well understand but in terms totally confusing to the intended recipient.
22 The date "before which a group member may opt out of a representative proceeding" for the purposes of s 33J must also be dictated by the facts and circumstances of each individual proceeding. Again, s 33J is largely silent as to when such a date is to be fixed or at the stage of the proceeding when it is be fixed. An express constraint is that imposed by s 33J(4), namely that the hearing of a representative proceeding must not commence earlier than the date before which a group member may opt out except with the leave of the Court. Subject to the potential application of that constraint, when fixing that date, it is otherwise of importance to ensure that there is sufficient time given to a group member to make an informed decision. Adequate time must thus be allowed between the receiving of the notice and the date by which a recipient has to make a decision. By way of example, in Crawford v Bank of Western Australia Ltd [2005] FCA 949 Lee J referred to orders previously made that the notice be given by 2 April and 7 May of the same year be fixed as the date by which a group member could opt out. Where a little more time will not impact upon the preparation of a case for hearing, or potentially impede any forthcoming mediation, perhaps a little more time should be permitted.
23 In summary form, and subject to the power of the Court to dispense with requirements otherwise imposed, the task of the Court when approving the form and content of a notice pursuant to s 33Y(2) is to ensure that the notice:
· contains such information as has been prescribed by the Legislature in the Federal Court Act;
· complies with Practice Note CM 17, except where a departure from the "sample form" set forth in that Practice Note is considered appropriate;
· sets forth that information in a manner which is as readily understandable to those to whom it is addressed as is possible in the circumstances of any individual proceeding;
· sets forth that information in a manner which is not misleading; and
· sets forth that information in a manner which is otherwise appropriate to promote the object and purpose for which it is being given.
When fixing a date pursuant to s 33J(1), the task of the Court is to
· fix a date before which a group member may opt out, that date being a date sufficiently after the giving of the notice as permits an informed decision to be made.
24 It should finally be noted that the Court retains an important and continuing role in managing representative proceedings in the public interest: Johnstone v HIH Ltd [2004] FCA 190. Tamberlin J there said:
[105] The Court has an important and continuing role in managing representative proceedings in the public interest to rectify any potentially misleading communications to class members or potential class members, in order to ensure that there is no misunderstanding engendered by such communications, particularly when they emanate from legal advisers, as to rights and obligations and procedures to be followed by recipients of such communications.
In an appropriate case, an order may thus be made that a correcting notice may be issued to remedy any misstatements that may be made during the course of a proceeding: Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2008] FCA 575.