Discussion Paper - Law Reform Commission of Western Australia

4.43 The relevant legislative provision in relation to settlement and discontinuance
is s 33V of the Federal Court of Australia Act 1976 (Cth), which reads as follows:
33V Settlement and discontinuance—representative proceeding
(1) A representative proceeding may not be settled or discontinued without the
approval of the Court.
(2) If the Court gives such an approval, it may make such orders as are just with
respect to the distribution of any money paid under a settlement or paid into the
Court.
4.44 The nature and extent of settlement of representative actions is covered in
substantial detail by many commentators. 34 As Cashman has indicated:
[C]lass action settlements raise unique and complex issues for a number of reasons.
Unlike with traditional settlements in conventional litigation, group members in
class actions who will be bound by the settlement agreement if it is approved by the
Court, will usually not have participated in the settlement negotiations and not have
consented to, or often be aware of, the proposed terms of settlement. 35
4.45 The present legislative provision contains no statutory guidance or criteria
that a court should take into account when considering whether to approve the
settlement or discontinuance of an action.
4.46 Another issue that arises from the brevity of the legislative provision relating
to settlements is the extent to which persons other than the lawyers for the group
members ought to communicate with them about resolution of a group member’s
claim. Clark and Harris argue that ‘[f]rom a respondent’s perspective, direct
communication with unrepresented group members is consistent with a desire for
the early resolution of claims’. 36 The contrary view is that if reform is contemplated
in this area, there should be clear guidelines requiring all settlement communications
to take place only through the solicitors instructed to represent the class. 37
4.47 The Commission considers that it is desirable to achieve as much uniformity
as possible between jurisdictions in relation to the way in which settlements of
representative action proceedings are effected. This will reduce forum shopping
and provide benefits in terms of consistency of judicial approach. Having regard
to the similarity of the approach in the jurisdictions with legislative schemes, it is
the view of the Commission that any framework adopted by Western Australia in
relation to the settlement of claims should be substantially based on the provisions
of Part IVA.
34. See, eg, Murphy B & Cameron C, ‘Access to Justice and the Evolution of Class Action Litigation’ (2006) 30 Melbourne University Law
Review 399, 427–31; Grave & Adams, ibid, ch 13; Cashman P, Class Action Law and Practice (Sydney: Federation Press, 2007) ch 6.
35. Cashman, ibid. See also Morabito V, ‘An Australian Perspective on Class Action Settlements’ (2006) 69 Modern Law Review 347.
36. Clark S & Harris C, ‘The Push to Reform Class Action Procedure in Australia : Evolution or Revolution’ (2008) 32 Melbourne University Law
Review 775, 819.
37. Murphy B & Cameron C, ‘Access to Justice and the Evolution of Class Action Litigation’ (2006) 30 Melbourne University Law Review 399,
431.
Chapter 4: Comparison of Models 51