Class Action Settlement Distribution in Australia: Compensation on the Merits or Rough Justice?

Abstract

Class actions by nature involve litigation on behalf of numerous group members. When class actions settle the settlement must be distributed amongst the group members who have suffered loss. The settlement distribution process must be approved by the court and is guided by two requirements: compensation on the merits and efficiency. Compensation on the merits focuses on the substantive law and the underlying compensation principle. Efficiency, or rough justice, involves simplifying the distribution process to make it less costly and quicker by ignoring some group member circumstances relevant to the quantum of the recovery they should make. This article explains those requirements and the manner in which they compete. The article argues that settled class action can only ever use the compensation principle and substantive law as a guide and strict adherence may give rise to harmful cost and delay. However, to ready an acceptance of rough justice in the name of efficiency can harm both group members and the reputation of the class action procedure.

Keywords: class actions, settlement distribution, compensation, rough justice