In its decision to reject a proposed class settlement, the Federal Court of Australia looked to ALI’s endorsement of a class member’s right to opt out of the class after learning about the actual terms of a settlement, citing the Principles of the Law, Aggregate Litigation.
The case, Kelly v. Willmott Forests Ltd., involved a settlement that included binding admissions by representatives for certain class members that all class members’ loan agreements with the defendant lenders were valid and enforceable. After agreeing to the admissions, the class members would be precluded from defending loan-enforcement proceedings by the lenders on any basis, including claims and defenses that might be raised in individual, and not class action, circumstances. This restriction would be imposed without the knowledge of any unique circumstances to an individual class member.
In weighing the benefits of finality for the lenders against each class member’s interest, Judge Bernard Michael Murphy found that the binding loan-enforceability admissions coupled with the failure/refusal to provide class members an opportunity to opt out of the settlements gave too much weight to finality.