NO LONGER PART OF THE GROUP: IT MAY NOT BE TOO LATE

Legal Directions

Murray v Great Southern Managers Australia Ltd [2018] VSC 416

Facts

In August 2011, a group proceeding was commenced on behalf of investors in schemes managed by Great Southern Managers Australia Ltd (Receivers and Managers appointed) (in liquidation).

Prior to judgment being delivered, the parties entered into a deed of settlement dated 23 July 2014. The deed included that the lead plaintiffs, on behalf of themselves and all group members, acknowledged and admitted the validity and enforceability of their loan deeds. On 11 December 2014, the court approved the deed.

Bendigo & Adelaide Bank Ltd commenced proceedings to enforce the deed against the applicant. The proceedings were served on the applicant in Singapore on
6 July 2017, as the result of which he became aware for the first time of the group proceeding.

The applicant then applied in the group proceeding for an order extending the time by which he could opt out of the proceeding, pursuant to s33J(3) of the Supreme Court Act 1986 (Vic) (the Act) or, alternatively, that he cease to be a group member pursuant to s33KA(1) of the Act.

The applicant’s uncontroverted evidence was that he had moved to Singapore in 2011 and that he had almost completely severed his ties to Australia. Further, that the
opt out notice sent to group members was never received by him.

Extension of time to opt out

Section 33J(3) provides that the court, on the application of a group member, the plaintiff or the defendant, may extend the period in which a group member may opt out of the proceeding.

Croft J held that where cessation of group membership was sought more than three years after settlement of the proceeding, it was inappropriate to extend the period in which that group member can opt out

Order that a person cease to be a group member

Section 33KA(1) provides that 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 that a person cease to be a group member, or that a person not become a group member..

Section 33KA(2) provides that the court may make an order under sub‑s(1) if it is of the opinion that the person does not have sufficient connection with Australia to justify inclusion as a group member, or for any other reason it is just or expedient that the person should not be or should not become a group member.

Croft J noted that s33KA was unique to the Victorian legislation. He stated that it appeared to protect in some circumstances, the wholly unknowing group member ‘at any time, whether before or after judgment’. He said that the legislature has only really directed the court to exercise its power on the basis of the group member’s connection with Australia.

Croft J did not accept the respondent’s submission that the applicant’s purpose in asking the Court to exercise its power under s33KA was to avoid the binding settlement approved by the Court. He stated that s33KA appeared to have been drafted with circumstances at least similar to the applicant’s in mind.

He also stated that while the exercise of neither s33J nor s33KA is subject to an express time limit, reading the provisions of part 4A of the Act together, the legislature seemed to have intended that s33J should apply to group members opting out prior to the beginning of trial, s33K (headed ‘[C]auses of action accruing after commencement’) should apply when group membership becomes apparent during the course of the trial, and s33KA should apply to instances such as those in the present application.

Croft J held that despite the applicant only having the express standing to bring the application under s33J(3), the Court should of its own motion order that the applicant cease to be a group member.

Conclusion

This decision may cause insurers some uncertainty about when they can close their books in relation to a claim made against an insured in a class action proceeding. It may also raise an issue for insureds in circumstances where the policy limit has been exhausted, and other litigants subsequently come out of the woodwork.

Further information / assistance regarding the issues raised in this article is available from the author, Greg King, Special Counsel, or your usual contact at Moray & Agnew.


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