Justice Beech-Jones has made orders in the recent decision of Lam v Rolls Royce PLC (No 5), dismissing the claims of group members where they had failed to take steps to register their claims. This is the first occasion where the Court has explicitly confirmed its power to make orders dismissing the claims of some group members in advance of the final determination of the proceedings, and is one of the few cases where claims have been ordered to be extinguished at such an early stage of the proceedings.
This class action was brought against Rolls Royce PLC, as manufacturer of an engine that is said to have failed on a Qantas flight that departed from Singapore on 4 November 2010, on behalf of the approximately 470 passengers on board the flight who are alleged to have suffered psychological injury as a result. This decision concerns an application by Rolls Royce for dismissal of the claims of unregistered group members.
The Court had previously decided that passengers with overseas contact details who did not register with the plaintiff’s solicitors would not be permitted to participate in the settlement without the leave of the Court. Orders were made in March 2015 requiring group members to register their participation in the action within a timeframe of about 3 months and to subsequently provide basic particulars of their claims.
In June 2016, orders were made establishing a regime for group members to provide further particulars and some evidence in support of their claims. As an additional safeguard to group members’ rights, those orders also provided non-registered group members with the option of making an application for leave to pursue their claim by 1 August 2016, with the plaintiff’s solicitors obliged to inform them of this option and that they would lose the right to claim compensation arising from the flight if they did not seek and obtain that leave. No applications for leave were filed by unregistered group members.
Power of Court to dismiss claims of unregistered group members
In this application, Rolls Royce sought orders:
- dismissing the claims of the remaining 84 unregistered group members; and
- confirming that the dismissal of those claims would operate “as a final determination” of the rights of those unregistered group members “to claim damages or relief” against Rolls Royce.
Noting that Part 10 of the Civil Procedure Act 2005 (NSW) (the Act) does not expressly confer a power on the Court to make an order dismissing a group member’s claim in advance of its determination, the Court accepted Rolls Royce’s submission that section 183 of the Act (which permits the Court to make any order it thinks “appropriate or necessary to ensure that justice is done in the proceedings”) permitted this.
Justice Beech-Jones further accepted that the Court can determine that the dismissal of claims operates as a final determination, noting that:
"It would significantly undermine the regime for representative actions provided for in Part 10 of the CPA if a Court could not make an Order that had the effect of finally determining a group member's rights and could not do so in advance of the representative party's own case being determined".
In making the relevant orders, the Court identified that the terms of section 182 lend support to its power to make such orders. Section 182, which pertains to the suspension of limitation periods, makes reference to "finally disposing" of a group member's claim and as such the Court noted that its power under the Act must extend to either upholding or dismissing a claim in such a way as to finally determine it.
Implications: imposing an active onus on group members
Closing the class, after adequate notice has been given, so that unregistered group members would then be precluded from benefiting from any future compensation that might be awarded when the substantive issues in the representative proceedings were subsequently determined, is a common procedure in class actions.
This decision however went further, in that it was the first instance in which the Court has discussed the basis upon which it is empowered to make orders finally disposing of claims (and dismissing them ahead of the determination of the substantive proceedings). Even so, Justice Beech-Jones considered that the Courts had always operated on the assumption that they were empowered to do so. His Honour suggested that decisions such as King v AG Australia Holdings Limited and Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2), which appeared to dismiss / finally determine a group member’s claim following class closure, likely considered the principle to be so obvious that it did not require discussion.
The decision nevertheless represents one of the few occasions on which the Court has been willing to dismiss and finally determine the claims of certain group members before the substantive hearing of the proceeding.