NSW Supreme Court dismisses claims of late registered group members in class action brought by passengers following on board engine failure

16 October 2016


The New South Wales Supreme Court has dismissed for good the claims of group members in a class action who did not register on time with the plaintiff’s solicitors in accordance with earlier Court orders. The class action has been brought by passengers that were on board an international flight departing Singapore on 4 November 2010, who allege that they sustained psychological injury after an engine failure.

The practical effect of the decision was to reduce the number of group members in the case by 84. At a broader level, the decision gives companies faced with class actions and similar circumstances in the future, as well as their insurers, the opportunity to pursue identical orders to reduce the number of class action claimants that they might be liable to pay.

Procedural history

This was the fifth decision made in this class action litigation. Major progress toward the dismissal orders made began on 19 February 2015 with Beech-Jones J in Lam v Rolls Royce PLC (No 3) [2015] NSWSC 83 making “class closure” orders (orders that require members to identify themselves as having an interest in any judgment or settlement before a set date or else risk extinguishment of their claim). His Honour ruled that passengers with overseas contact details who did not register on time with the Plaintiff’s solicitors would be removed from the class, and that Australian passengers who failed to do so would remain in the class but be required to obtain leave of the Court to share in any settlement or judgement.

On 27 March 2015, the Court set a deadline of 3 June 2015 for group members to register with the Plaintiff’s solicitors and ordered opt-out notices be sent to notify all group members of the substance and practical effect of the “class closure” orders.

On 16 June 2016, the Court set a deadline of 1 August 2016 for unregistered group members to apply for leave of the Court to pursue a claim. It ordered that another round of notices be sent to unregistered group members explaining the consequences of this development and established a detailed regime for registered group members to provide particulars and material in support of their claims.

None of the eligible 84 unregistered group members filed an application for leave by the 1 August 2016 deadline. In view of this, Rolls Royce sought orders to dismiss any claims such group members might have and an order that such action operates as a final determination of their rights to claim damages and relief against the company.

The law

Rolls Royce was unable to point to any express power in Part 10 of the Civil Procedure Act 2005 (NSW) (Act), which governs the operation of class actions, that allowed the Court to make the orders that it sought. Instead, it argued that the Court could use its general power in section 183 of the Act to make orders in class actions that it sees as appropriate or necessary to ensure that justice is done.

Beech-Jones J agreed that section 183 of the Act gave the Court the power to make orders dismissing class member’s claims, including in circumstances where the representative plaintiff’s case is yet to be determined. His Honour accepted that such a dismissal operates as a final determination and made the orders sought. Presented with a number of decisions where orders with a similar practical effect were made, His Honour noted that it would ‘significantly undermine’ the class action regime if orders of the kind requested by Rolls Royce could not be made, and recognised the need for defendants to ‘attain the certainty of knowing that, if circumstances warrant it, group member’s claims have been dismissed.’

Key takeaways

As mentioned earlier, this case is important because it provides companies and their insurers with a precedent to argue for similar orders to potentially limit the number of group members that they face in a class action. The certainty that a decision like this provides is valuable to class action defendants as a planning tool to help them decide how to conduct a matter and what reserves need to be set aside. It also benefits registered group members by removing one further source of potential delay, putting them in a position to resolve their collective claims more quickly.

The key to any future success in seeking orders of this kind is whether similar circumstances arise. Beech-Jones J noted that the unregistered group members here were given ‘every opportunity to notify of their intention to make a claim and bring forward material to support it’, and stated that the time had come ‘when the Court can proceed on the basis that the unregistered group members either do not wish to pursue a claim or do not have the material they wish to put forward in support of a claim’.

In this case, the time gap between the incident that gave rise to potential claims and the call for registration was approximately 5 years and multiple efforts were made to allow unregistered group members to participate in proceedings. It will be interesting to see how far Courts will be willing to extend the circumstances in which they will make similar orders or whether this case is exceptional.

HWL Ebsworth’s National Aviation team specialises in advising airlines and insurers with resolving claims and defending against prosecutions. For further information on this topic, or to speak with a member of our team, please contact us.

This article was written by Simon Liddy, Partner, and David Derbyshire, Graduate-at-Law.

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