Discussion Paper - Law Reform Commission of Western Australia

(Cth)’. 23 Ultimately, the ‘opt-out’ process was accepted and it is now reflected in all
three jurisdictions with legislative representative proceedings provisions.
4.31 It is important at this juncture to make clear the difference between the two
mechanisms traditionally used for participating in a representative action.
4.32
The first is to opt in to a representative action.
[Opting in] is used to describe the means of determining the members of the group
where the persons represented must consent in writing before the commencement
of the proceeding (or with leave thereafter) in order to receive the benefit of any
judgment. 24
4.33 Opting out, however, is a process where group members who fit the ‘related
circumstances’ criteria are automatically deemed to be part of the group, even if
they have not given their consent, but can formally elect not to continue as group
members if they wish, and then pursue their own claim.
4.34 The recent report of the Law Reform Commission of Hong Kong observed
that ‘law reform agencies in other jurisdictions have regularly acknowledged that the
choice between an opt-in and an opt-out regime is possibly the most controversial
issue in the design of a multi-party litigation regime’. 25 The differences between
an opt-out procedure (where a party is required to make a conscious decision not
to belong to the proceeding) and an opt-in process were discussed in detail by the
Australian Law Reform Commission (ALRC) in its 1988 report, 26 which concluded
that:
Subject to the provision of appropriate protection, it should be possible to
commence a group member’s proceeding without first obtaining consent of that
group member. Provision should be made to ensure that group members are notified
of the proceedings and that a group member can discontinue his or her proceeding
or continue it independently. The rights of persons should not be prejudiced by the
commencement of proceedings without consent. 27
4.35 The opt-out model was considered by the ALRC to enhance access to legal
remedies and reduce costs while increasing efficiency. 28
4.36 An effective opt-out regime requires strong provision for notification to
advise potential group members that they have ability to opt out of the proceeding
by a specified date. Grave and Adams note that:
It is important that the notice contain sufficient information to enable group
members to exercise their rights in relation to the proceeding and the content of
any notice be clear and easy to understand. There needs to be balance between
the sometimes conflicting objectives of accuracy, simplicity and the avoidance of
unnecessary distress to the recipients. 29
23. Grave D & Adams K, Class Actions in Australia (Sydney: Law Book Company, 2005) [8.100].
24. Ibid [8.100].
25. Law Reform Commission of Hong Kong, Report on Class Actions (2012) 110, [4.1]. The competing arguments in relation to adopting
the opt-out approach model are also set out very neatly in the Law Reform Commission of Hong Kong Report as adapted from Professor
Mulheron’s text: see Mulerhon R, The Class Action in Common Law Legal Systems, A Comparative Perspective (Oxford: Hart Publishing,
2004) 37–8.
26. See ALRC, Grouped Proceedings in the Federal Court, Report No 46 (1988) ch 4.
27. Ibid [127] (footnotes omitted).
28. Ibid [108].
29. Grave D & Adams K, Class Actions in Australia (Sydney: Law Book Company, 2005) [8.120].
Chapter 4: Comparison of Models 49