Australian Appeal Court Endorses Class Action Closure Process But With Warnings

In Short

The Background: Australian courts have made "class closure" orders which require group members to come forward and register their interest. The orders may also provide that failure to register means that the group member cannot participate in any recovery, whether by settlement or judgment, but the group member's claim is extinguished or barred.

The Issue: Do Australian courts have power to make "class closure" orders and what factors should they consider in exercising their discretion?

The Outcome: A class closure order that facilitates the desirable goal of settlement may be permitted under s33ZF of the Federal Court of Australia Act 1976 (Cth). However, if settlement is not achieved, an order extinguishing the claims of group members who did not respond is not permitted. More generally, consideration should be given to the point the case has reached, the attitude of the parties, and the complexity and likely duration of the case.