Federal Court dismisses bid for soft class closure in AMP superannuation class action

In Alford v AMP Superannuation Limited (No 2) [2024] FCA 423, the Federal Court dismissed the trustee respondents’ application for orders in relation to the form, timing, and distribution of an opt out and registration notice, a registration process prior to a pending mediation, and what has become known as a ‘soft’ class closure order, pursuant to ss 33J, 33X, 33Y and 33ZF of the Federal Court of Australia Act 1976 (Cth). 

What are soft class closure orders?

‘Soft class closure’ is a description given to orders which typically have the following features:

• Group members are required to register to participate in the class action prior to mediation.
• If the class action settles at mediation, then only those group members who registered are entitled to share in the benefits of the settlement. Those group members who did not register will not receive the benefits of the settlement but will otherwise be bound.  
• If settlement does not occur at mediation, then non-registering group members are not prevented from taking the benefit of a judgment in favour of the plaintiff on the common issues.  

Soft class closure orders can help facilitate settlement because they allow both parties to have a better understanding of group members’ claims, including the potential quantum, and can assist in achieving finality and certainty.

What did the Court say in Alford?

Murphy J considered the Court should be cautious in making class closure orders and before doing so must be satisfied the orders are in the interests of group members as a whole.¹ Given the particular circumstances of the case and the evidence relied on by the parties, Murphy J ultimately found the proposed orders were not in the interests of group members as a whole in light of some of the following reasons:

1. It was appropriate to give weight to the applicants’ views as to what is in group members’ interests and in this instance the soft class closure orders were “strenuously opposed” by the applicants.
2. Class closure was not necessary to facilitate settlement in circumstances where Murphy J considered the respondents could obtain a sufficient understanding of group members’ claims and their aggregate value from their own records.
3. The costs of the proposed registration regime were likely to be substantial.
4. There was likely to be a very low level of group member registration, given superannuation fund members typically have a low level of engagement with their superannuation.
5. Registration was not necessary in order for a great majority of group members (who were in a fiduciary relationship with the respondents) to be paid a share of any settlement or judgment in circumstances where proceeds could be applied to the accounts of current super fund members.

The Court’s consideration of recent examples of soft class closure

Murphy J noted three recent decisions in the Supreme Court of Victoria and Federal Court where soft class closure orders had been made in circumstances where the applications were contested, Fox v Westpac; O’Brien v ANZ; Nathan v Macquarie [2023] VSC 414, J Wisbey & Associates Pty Ltd v UBS AG (No 2) [2024] FCA 147, and Anderson-Vaughan v AAI Limited (No 2) [2024] VSC 65.

• In Fox, the defendants were able to make global assessments of the value of pooled claims in the proceedings based on available group member contract data. Notwithstanding this, the Court considered the registration of group members would improve the parties’ ability to reach agreement on quantum, which would help facilitate settlement and in turn help produce a tangible benefit for group members.²
• In J Wisbey, the precise number and identity of the group members was unknown and the identity of a significant proportion of group members was unascertainable, partly because group members were not required to have had a trading relationship with the respondents. While some public information was available to the parties to help inform their estimates, the Court considered it was insufficient. The identification of group members was particularly important given: (i) some group members may have had alleged losses offset by other gains and; (ii) the potential overlap with group members who had already been compensated in related overseas proceedings.³ The Court also considered that a registration process would be necessary at a later stage of the proceeding in any event, given group members would need to identify themselves in order to receive any settlement money.⁴ The Court ultimately held that group member registration was appropriate in the circumstances because quantum could not otherwise be reliably estimated.
• In Anderson-Vaughan, the parties were in possession of detailed group member data sufficient to enable them to form assessments as to the global loss for all group members.⁵ In granting a soft class closure order, the Court gave weight to a number of factors including; (i) the size of the class, in circumstances where a low registration rate compared to a high registration rate would make a significant difference to the defendants’ exposure; and (ii) the composition of the group, in circumstances where certain group members had already been remediated.⁶

Murphy J found the facts in Alford were distinguishable from those in Fox, J Wisbey and Anderson-Vaughan. Moreover, Murphy J noted that the decisions in the Supreme Court of Victoria were grounded in the express power in s33ZG in Part 4A of the Supreme Court Act 1986 (Vic) which specifically enables a court to impose a requirement for group members to take a step prior to settlement or judgment.⁷     

1. Alford v AMP Superannuation Limited (No 2) [2024] FCA 423, [62]
2. Fox v Westpac; O'Brien v ANZ; Nathan v Macquarie [2023] VSC 414, [102]
3. J Wisbey & Associates Pty Ltd v UBS AG [2024] FCA 147, [122], ,[123]
4. Ibid, [147]
5. Anderson-Vaughan v AAI Limited (No 2) [2024] VSC 65, [61]
6. Ibid, [66], [68]
7. Alford v AMP Superannuation Limited (No 2) [2024] FCA 423 [90]