Lam v Rolls Royce PLC (No 5)

HIS HONOUR: This judgment concerns an application by the defendant, Rolls Royce PLC (“Rolls Royce”), for the dismissal of the claims of some group members of a representative action who have not registered their claims against Rolls Royce in accordance with the Court's orders. One of the orders sought is that the dismissal operates as a final determination of those claims.

The nature and scope of the proceedings was described in Lam v Rolls Royce PLC [2013] NSWSC 805 at [3] to [5]. Rolls Royce is sued as the entity responsible for the manufacture of an engine that is said to have failed on a Qantas fight that departed from Changi airport in Singapore on 4 November 2010. The action was brought on behalf of those persons who were onboard the flight and who suffered a psychological injury as a result of their experiences consequent upon the engine failing.

The number of persons aboard the flight was approximately 470. Over time, the number of persons said to fall within the relevant group has been reduced as various passengers have opted out. Further, for the reasons given in Lam v Rolls Royce PLC (No 3) [2015] NSWSC 83 (“Lam (No 3)”), I made orders to give effect to what is sometimes described as "class closure". In Matthews v SPI Electricity Pty Ltd (2013) 39 VR 255; [2013] VSC 17 at 23, Forrest J succinctly described this concept as follows:

In Lam (No 3) I determined that passengers with overseas contact details who did not register with the plaintiff's solicitors would be removed from the class (at [29] to [30]). I also determined that passengers with Australian contact details who did not register with the plaintiff's solicitors were to remain in the class, but they could not participate in any settlement or resolution without the leave of the Court (at [31]).

To that end, on 27 March 2015, orders were made requiring persons to register with the plaintiff's solicitors by 3 June 2015 and thereafter provide certain basic particulars of their claims. Those orders provided, inter alia, that group members who did not register "shall not, without leave of the Court, be entitled to claim compensation pursuant to any settlement." To facilitate these orders, the opt-out notices that were sent to group members stated, inter alia:

Otherwise, the proceedings have continued at a relatively slow pace since Lam (No 3). An attempt to have the proper law of the plaintiff's claim judicially determined was aborted, but it was eventually agreed that the relevant law was that of England and Wales (see Lam v Rolls Royce (No 4) [2016] NSWSC 487 at [11]). Further, at some point Rolls Royce admitted, for the purposes of these proceedings only, that its manufacture of the engine was not undertaken to the appropriate standard and that that was the cause of the engine's failure. In practical terms, that admission meant that the only remaining issue for the plaintiff and the group members who wished to claim compensation was whether each of them could establish that they had suffered a recognisable psychiatric illness as a result of the events consequent upon the engine failure and, if so, the level of damages they could recover. This development was not, however, sufficient to lead to a settlement of proceedings. Instead, on 10 June 2016, orders were made establishing a detailed regime for registered group members to provide particulars and some material in support of their claims.

In respect of non-registered group members, those orders enabled them to apply for leave to pursue a claim by filing an application to that effect by 1 August 2016. Further, the plaintiff's solicitors were ordered to forward notices to the non-registered group members, advising them of the effect of the orders that were made. The notice made it clear to the recipients that there was a deadline of 1 August 2016 to make any application for leave to pursue a claim. The notice also stated,

In the end result, none of the unregistered group members filed an application for leave. Hence, in an effort to achieve some certainty for its position, Rolls Royce now seeks orders dismissing the claims of the remaining 84 unregistered group members and also seeks an order confirming that it "operates as a final determination" of their rights "to claim damages or relief" against Rolls Royce.

Nothing in Part 10 of the Civil Procedure Act 2005 (NSW) (“CPA”) expressly confers a power on the Court to make an order dismissing a group member's claim in advance of the determination of the claim of the representative plaintiff or to determine that it is a final resolution of that claim in respect of the events pleaded. Rolls Royce nevertheless contends that s 183 of the CPA empowers the Court to make the orders sought. That section provides:

I agree that s 183 enables the Court to make orders dismissing group members' claims, including orders dismissing them in advance of a determination of the representative plaintiff's case. The entire representative action procedure would be undermined if a defendant could not attain the certainty of knowing that, if circumstances warrant it, group members' claims have been dismissed. Further, I accept that the Court can determine that the dismissal operates as a final determination.

In his written submissions, counsel for Rolls Royce, Mr Chen, traced through some decisions in a number of other representative actions, identifying instances where notices were sent to group members advising them that if they did not either register their claims or bring forward material to support their claim, or both, their right to claim compensation would be extinguished (see for example King v AG Australia Holdings Limited [2002] FCA 1560 at [6] and Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 2) [2003] VSC 212 at [65]). Mr Chen also identified instances where orders were made which on their face appeared to finally determine (adversely) a group member's claim (see, for example, Matthews v SPI Electricity Pty Ltd (2013) 39 VR 255; [2013] VSC 17 at [29], and the examples cited at [31]).

That said, none of these decisions extended to discuss the basis upon which those orders were being made. This may be because the matter was so obvious it did not warrant further consideration. Otherwise, I would certainly not proceed on the basis that for a significant period of time other Courts have been issuing idle threats to members of representative actions that if they do not register or bring forward material, their claims to compensation would be extinguished. It would significantly undermine the regime for representative actions provided for in Part 10 of the CPA if a Court could not make an order that had the effect of finally determining a group member's rights and could not do so in advance of the representative party's own case being determined.

Some textual support for the powers to make the orders sought is derived from s 182 of the CPA, which provides:

Subsection 182(2) appears to contemplate the Court finally determining a group member's claim and that must extend to either upholding it or dismissing it in such a way as to finally determine it.

In this case, unregistered group members have had every opportunity to notify of their intention to make a claim and bring forward material to support it. The incident that gave rise to the liability occurred in November 2010. In 2015, they were advised of the need to register and the potential consequences if they chose not to. They were given a further opportunity to that effect over some months this year, but none have taken it up. In my view, the time has 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 material they wish to put forward in support of a claim and that any claims they have should now be extinguished.

Accordingly, I make the following orders: