On 7 May 2025, the High Court of Australia (HCA) delivered a highly anticipated judgment regarding group member registration in class actions. In a unanimous decision, the High Court held that the Supreme Court of NSW has the power to make orders for notice to be given to group members in representative proceedings that require them to register their interest, in advance of a class closure application. In previous decisions, the NSW Court of Appeal (in contrast with the Full Court of the Federal Court in Parkin v Boral (2022) 291 FCR 116) had taken the view that that the Supreme Court did not have the power to order that such a notice be given. The principal reasoning driving this conclusion was that the proposed notice would subvert the statutory 'opt-out' scheme by effectively requiring group members to take a positive step and therefore 'opt-in' to benefit from a settlement or judgment.
The HCA held that the NSW Court of Appeal construed the statutory powers in Pt 10 of the Civil Procedure Act 2005 (NSW) (CPA) too narrowly. While Gageler CJ, Gleeson, and Jagot JJ accepted that such a notice creates a new inconsistency of interest for representative plaintiffs, this was categorised within the broader inconsistencies of interest inherent in the statutory scheme. The plurality held that concerns about inconsistencies of interest are better dealt with by the relevant legislative provisions (including ss 166(1)(d) and 171(1) of the CPA), which recognise their existence and take a "functional rather than reflexively preclusive approach to their management."
Their Honours disagreed that the proposed notice would transform the opt-out scheme into an impermissible opt-in scheme. The purpose of the proposed notice was to inform group members that if they did not opt out or register their participation by a specified date and the class action settled between the parties, the respondent and the group members' representatives would seek an order that those group members would be bound by the settlement (thereby extinguishing their individual rights against the respondent) but would not be permitted to benefit from the settlement without leave. Their Honours held that giving notice does not transform the scheme into an opt-in system but rather informs group members of the consequences of not opting out or registering, without altering the class action process.
Gordon and Steward JJ held that where group members "do nothing" (i.e. do not respond to the notice) they will remain group members, and the Court has a number of options in place to ensure the fairness of any settlement for these passive group members, including: allowing them another chance to register, appointing a separate representative to act on behalf of unregistered group members, and requiring the respondent to take steps to protect the interests of unregistered members. Responding to the invitation to register does not cause any detriment to the group member. Edelman J agreed with this reasoning and emphasised that the broad context, text and purpose of s 183 (the equivalent provision considered in BMW Australia v Brewster, which empowers the Court to make any order it thinks appropriate or necessary to ensure justice is done in the proceedings) cannot be transplanted to s 175(5) of the CPA which, in a more confined manner, empowers the Court to order that notice "of any matter" be given to group members.
Beech-Jones J emphasised that Part 10 of the CPA allows the Court to direct group members to participate actively. In his Honour's view, the fact that first instance judges have from time to time made a practical judgment that such orders should be made to provide documents or particulars illustrates the caution that should be exercised before implying restrictions on court powers based on a supposed "fundamental precept" or "basic principle" (in this case, that group members should not be required to take any positive steps in order to benefit from a settlement).
Impact of the decision
The decision provides greater certainty for class action practitioners in negotiating and assessing what is a fair and reasonable settlement, by allowing the size of the class to be ascertained in advance of mediation and therefore providing clarity on the collective value of alleged claims.
Furthermore, the decision provides certainty for parties that requiring group members to register ahead of mediation is not inconsistent with the 'opt-out' regime in Australia. The High Court's ruling confirms that such a requirement does not transform the opt-out scheme into an impermissible opt-in scheme. Instead, it ensures that group members are adequately informed about the consequences of not opting out or registering their participation. This approach maintains the integrity of the opt-out system while ensuring that group members are aware of their rights and the potential impact of their decisions on the settlement process.
* Lendlease Corporation Ltd v Pallas [2025] HCA 19
MinterEllison instructed the Contradictor in this matter.
To ensure you are fully informed and protected, it is crucial to register your interest in class actions in advance of a class closure application. This step helps maintain the integrity of the opt-out system, ensures you are aware of the consequences of not opting out or registering, and aids in achieving fair and reasonable settlements.
