Federal Court of Australia

Preece v Aristocrat Leisure Limited [2025] FCA 742

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to confer and submit proposed minutes of orders to give effect to the reasons for judgment.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ANDERSON J:

1.    Introduction

1    The applicant, by interlocutory application dated 24 April 2025 (applicant’s IA), seeks orders for approval and distribution of opt out notices to group members, and orders for the respondents to provide the applicant information about group members’ purchases on the online game platform apps that are the subject of the claims to facilitate mediation.

2    The respondents, by interlocutory application dated 19 May 2025 (respondents’ IA) seek orders for distribution of notices to group members for both opt out and registration which foreshadow the respondents’ intent, in the event of a future settlement, to seek orders that only those group members who have registered may benefit from any settlement (often referred to as “soft class closure” orders).

3    The respondents’ IA also seeks orders that some of the information to be provided to the applicant for mediation is limited to information about group members who have registered pursuant to the respondents’ proposed regime.

4    The applicant, in support of the orders sought, relies on the affidavits of Bill Petrovski, dated 24 April 2025 (Petrovski 1) and 5 June 2025 (Petrovski 2) and an affidavit of Joseph Braverman, dated 23 June 2025.

5    The respondents, in support of their proposed orders, rely upon three affidavits of Moira Saville, two dated 19 May 2025 (Saville 1 and Saville 2, respectively), and a third dated 18 June 2025 (Saville 3).

6    The central dispute between the parties concerns whether the Court should make orders for registration and the approval of a notice to group members foreshadowing the respondents’ intent to seek soft class closure orders in the event of a future settlement. The applicant resists such orders on the basis that (i) the respondents’ records, particularly about the quantum of likely group members losses, are sufficient to allow the parties to effectively participate in a mediation; (ii) the information sought by the respondents as part of the registration process will be inutile as an aid to mediation; and (iii) the proposed registration regime is likely to result in significant costs being incurred for no or immaterial benefit.

2.    Background

7    The nature of the claims advanced in the proceeding were outlined at [8]-[18] of the applicant’s written submissions, dated 10 June 2025 (AS), which the respondents agreed were adequately summarised in their written submissions, dated 18 June 2025 (RS) at [4]. The applicant’s outline of the claims are reproduced below.

8    The proceeding is an open class action. The applicant brings the claim on her own behalf, and on behalf of persons who, between 22 December 2017 and 12 December 2024 (Relevant Period) and while physically present in Australia, have played “Social Casino Games” and purchased “Virtual Currency” while playing those games. The Social Casino Games are poker machine style games offered on online game platform apps (Apps) which it is alleged the respondents developed. Many of the Social Casino Games are adapted from land-based gaming machines (colloquially known as “pokies”) distributed in Australia. Some are aesthetically almost indistinguishable from their pokies-equivalent, and have the same name (for example, “Queen of the Nile”).

9    All of the Apps are accessible on mobile phones, computers and other electronic devices (such as tablets), and are available to be downloaded for free using an “app store” for the particular device (such as Apple App Store, Google Play Store and Amazon Appstore). Some of the Apps are accessible via links from the websites of the second and third respondents (Product Madness Inc. and Big Fish Inc.), and via Facebook.

10    The focus of the applicant’s claim is the virtual chips, coins, currency which are available for purchase on the Apps (Virtual Currency). The applicant alleges that when playing the Social Casino Games, each turn of a game costs an amount of Virtual Currency. Users allocate or risk an amount of Virtual Currency to play each turn of the game, and for each turn, a user will either win or lose. A win results in additional Virtual Currency being allocated to the user’s profile on the App, while a loss results in the amount of Virtual Currency that was risked being deducted from the user’s profile.

11    When a user has insufficient Virtual Currency remaining on their profile on the App, the user can continue to play the Social Casino Game by purchasing additional Virtual Currency within the App by the payment of real money. The applicant alleges, in summary, that the Social Casino Games are played for something “of value”, as the Virtual Currency which may be won by a user extends the privilege of playing the games without additional cost to the user. Users who have spent real money are, in a very real sense, chancing that money to win something which they would otherwise have to pay for.

12    The applicant alleges that the Social Casino Games offered on the Apps are prohibited interactive gambling services within the meaning of the Interactive Gambling Act 2001 (Cth). She says that by offering the Social Casino Games on the Apps, each of the respondents has contravened that Act.

13    The applicant brings a claim in restitution, on behalf of all group members, to recover from each of the Respondents the moneys paid to them by users of the Apps for the purchase of Virtual Currency (referred to herein as the illegality claim).

14    The applicant also brings claims for contravention of s 18 of the Australian Consumer Law (misleading or deceptive conduct), in respect of all users who have accessed the Apps via Apple App Store, Google Play Store or Amazon Appstore or Facebook. The applicant claims that when submitting the Apps to those app stores and Facebook, Product Madness and Big Fish represented that the Apps complied with Australian law, which was misleading or deceptive. The applicant says that by reason of those representations, the Apps were available to users via those channels. Recovery is sought of the amount of Virtual Currency paid by group members who accessed the Apps via any of those channels.

15    Finally, the applicant brings claims for statutory unconscionable conduct on behalf of “Vulnerable Persons” (a subset of the group members), defined as persons who, when playing the games and purchasing Virtual Currency during the Relevant Period:

(a)    were under 18 years of age;

(b)    have been clinically diagnosed as suffering from a gambling disorder in accordance with the diagnostic criteria in DSM-5: Gambling Disorder;

(c)    satisfied the diagnostic criteria for a gambling disorder in accordance with the diagnostic criteria in DSM-5: Gambling Disorder, but have not been clinically diagnosed; or

(d)    would attain a score of 3 to 7 (moderate risk gambler) or 8 and above (problem gambler) in accordance with the Problem Gambling Severity Index.

16    The applicant alleges that the respondents’ conduct in developing the Apps for distribution in Australia and thereby making them accessible to Vulnerable Persons; marketing the Apps in Australia to existing and potential users who were Vulnerable Persons; and (only in respect of Product Madness and Big Fish) distributing the Apps in Australia and thereby making them accessible to Vulnerable Persons, was unconscionable within the meaning of s 21 of the Australian Consumer Law. No additional or different loss is claimed for the unconscionability claims beyond the loss claimed for the illegality claims.

17    The respondents deny the allegations of contravention, and the applicant’s and group members’ entitlement to recover the amounts paid for Virtual Currency.

3.    Proposed notices and orders

18    The parties are agreed that orders should be made for the approval and distribution of notices which advise group members of their right to opt out of the proceeding. The parties also agreed that, for the purpose of mediation, the respondents should provide the applicant with information about purchases made by group members while playing the Apps.

19    The substantive differences between the parties’ respective orders may be summarised as follows.

3.1    Registration and soft class closure

20    The applicant submits that the notices should only address group members’ right to opt out of the proceeding.

21    By contrast, the respondents seek approval of a notice which also advises group members of an ability to register their claim in the proceeding, and also states that upon any settlement of the proceeding, the respondents may seek an order which, if made, would have the effect of providing that any group member who, by the registration deadline has not registered or opted out, will remain a group member but, subject to court order, not be permitted to seek any benefit pursuant to the settlement.

22    The respondents’ proposed registration form also requires group members to provide information including responses to the following questions (derived from the language used in the applicant’s Statement of Claim), for which the options for responsive answers are “yes”, “no” or “unsure” and are stated to “help to determine if you are a group member who was vulnerable to harm, including financial harm, from using the Apps and spending real money on the Apps”:

4.    Do you satisfy all of the following criteria:

(a)    You played any of the Social Casino Games that are listed in any of Schedules A, B or C attached to this registration form between 22 December 2017 and 12 December 2024 (Relevant Period); and

(b)    You made purchases using real money and were physically present in Australia while playing the Social Casino Games during the Relevant Period.

5.    Were you under 18 years of age at the time of the conduct referred to in paragraphs 4(a) and (b)?

6.    Had you been clinically diagnosed as suffering from a gambling disorder in accordance with the diagnostic criteria in DSM-5: Gambling Disorder at the time of the conduct referred to in paragraphs 4(a) and (b)?

7.    Did you satisfy the diagnostic criteria for a gambling disorder in accordance with the diagnostic criteria in DSM-5: Gambling Disorder but had not been clinically diagnosed at the time of the conduct referred to in paragraphs 4(a) and (b)?

8.    Would you have attained a score of 3 to 7 (moderate risk gambler) or 8 and above (problem gambler) in accordance with the Problem Gambling Severity Index at the time of the conduct referred to in paragraphs 4(a) and (b) above?

23    The respondents seek orders that they be provided with the personal contact details of all persons who register, in addition to the information provided by the group member in response to the Vulnerable Harm questions.

24    The applicant opposes the Vulnerable Harm questions on the basis that the information sought as part of the registration process is not going to assist at mediation and will result in significant costs being incurred for no material benefit. The applicant submits that asking vulnerable people to answer a questionnaire concerning problem gambling is likely to produce completely unreliable information that will not assist a mediation.

3.2    Form of distribution

25    The parties are agreed that there should be four forms of notice approved, adapted for different forms of distribution: (a) the main notice; (b) the cover letter; (c) the newspaper notice and (d) the App notice. The parties are agreed that the main notice should be provided by the applicant to any funded group members, the newspaper notice should be distributed by advertisements in national newspapers, and the main notice should be displayed on the websites of the applicant’s solicitors and the Federal Court.

26    The applicant submits that the main notice and cover letter should also be distributed via email to those group members for whom the respondents have email addresses. In addition, the applicant submits that the App notice should be published by the respondents as a notification within each currently available App which is to appear on each occasion a user accesses the App until the opt out deadline.

27    The respondents resist orders for any notices to be sent by email, and for the App notice to be displayed as a pop-up notification. Instead, they seek orders that they are to cause the App notice to be made available to the App “inbox” associated with the friend code / game ID account of each person who satisfies the group member definition.

3.3    Information to be provided to the applicant

28    The parties are agreed that the respondents will provide the applicant with a list of the friend codes and/or game account ID(s) for users who, based on the second and third respondents’ records, are likely to satisfy the group member definition. The purpose of providing this information is to allow the applicant’s solicitors to resolve queries from potential group members which might arise following provision of the notices.

29    For the purpose of mediation, the applicant also seeks information about the aggregate of all purchases received by the respondents during the Relevant Period, for each identified user account (i.e. for all group members). The respondents instead propose to provide information about the aggregate of purchases made only by registered group members.

30    The respondents also propose to provide information about the aggregate value of all payments received by the second and third respondents for purchases of Virtual Currency in the Relevant Period through Australian App Stores, the Product Madness website, Big Fish Games website, Facebook and “store” websites for the Apps. The applicant agrees with this proposal.

4.    Legal principles

31    The relevant legal principles may be shortly stated as follows.

32    The relevant sections of the Federal Court of Australia Act 1976 (Cth) concerning orders for opt out and registration are sections 33J, 33X, 33Y and 33ZF.

33    Section 33J(1) relevantly provides that the Court must fix a date before which a group member may opt out of a representative proceeding.

34    Section 33X concerns notices to group members. Section 33X(1)(a) provides that notice must be given to group members about the right of group members to opt out of the proceeding before a specified date. Section 33X(5) provides, “The Court may, at any stage, order that notice of any matter be given to a group member or group members”.

35    Section 33Y provides for the form and content of any notice to be approved by the Court, and the way in which the notice is to be given must be specified by the Court (which may include by press advertisement or by any other means).

36    Section 33ZF provides for a general power of the Court to make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.

37    As already noted, the parties are agreed that the Court should make orders for notices to be given regarding group members’ entitlement to opt out. The central dispute between the parties concerns whether notices should be approved providing for registration and the approval of a notice to group members foreshadowing the respondents’ intent to seek soft class closure orders in the event of a future settlement.

38    It is not in dispute that the Court has power to order the giving of a notice for registration and “soft class closure” (in the sense of notifying group members that one or other party may seek an order that the class be closed to registrants upon a settlement being reached): FCA, s 33X(5); Lendlease Corporation Ltd v Pallas (2025) 99 ALJR 834; [2025] HCA 19, [3], [38]-[41] (Gageler CJ, Gleeson and Jagot JJ); [87] (Gordon and Steward JJ).

39    A soft class closure order does not “transmogrify” an open class action into a closed class action but rather creates a demarcation between registered and unregistered group members that may have effect if the settlement is later reached by the parties and approved by the Court: Parkin v Boral (2022) 291 FCR 116; [2022] FCAFC 47 (Murphy, Beach and Lee JJ), at [8] (Murphy and Lee JJ, Beach J agreeing).

40    The question before the Court is whether it is an appropriate exercise of that power in the circumstances of this proceeding. The relevant matters for the Court to take into account in exercising its power will differ in each case, with there being no “one size fits all” approach. The courts have found that relevant considerations can include:

(a)    whether it is in the interests of group members as a whole to require registration before any prospective settlement is on the table;

(b)    the point at which the proceeding has reached;

(c)    the attitude of the parties;

(d)    the complexity and likely duration of the case;

(e)    whether group members have adequate notice and a reasonable time to decide whether to register;

(f)    whether an estimate of the size and number of claims can be made; and

(g)    the extent to which a registration process is likely to improve the prospects of achieving a reasonable settlement: J Wisbey & Associates Pty Ltd v UBS AG (No 2) [2024] FCA 147 (Beach J), [69]-[70]; Alford v AMP Superannuation Ltd (No 2) [2024] FCA 423 (Murphy J), [4].

5.    Registration and soft class closure

5.1    Submissions

41    The respondents submit that while the High Court’s decision in Lendlease concerned the power of the Court to make an order of the kind sought by the respondents, the decision recognised the desirability of notices of the kind contended for by the respondents being given to group members. The respondents note, in particular, the following observations of the High Court (as apply in the context of the FCA) which they submit support the giving of their proposed notice.

42    The giving of a proposed notice has the following two purposes:

(a)    to encourage unregistered group members either to opt out of the group prior to any mediation or to opt in to avoid the risk of missing out on the benefit of any settlement which might be agreed before final judgment; and

(b)    to arm the respondent to the proceeding (and also the applicant as the representative party) with an argument to be made to any judge called upon to approve any settlement pursuant to s 33V of the FCA that non-registered group members should not be permitted to participate in the fruits of any settlement on the footing that they had been given the choice of opting out or opting in prior to the settlement and had not availed themselves of that opportunity: Lendlease at [16] (Gageler CJ, Gleeson and Jagot JJ).

43    A representative applicant and their lawyers have an interest in being able to estimate the number of group members with a reasonable degree of accuracy for several purposes, which include:

(a)    negotiating an appropriate settlement (for example, to ensure that the settlement negotiated involves an amount appropriate for distribution between all participating group members);

(b)    facilitating the Court approving the settlement;

(c)    facilitating the Court making such orders as are just with respect to the distribution of any money paid under the settlement; and

(d)    if the case does not settle, facilitating the Court working out the award of damages and making orders for the payment or distribution of money to the group members entitled: Lendlease at [18] (Gageler CJ, Gleeson and Jagot JJ).

44    The respondent and its lawyers also have an interest in being able to estimate the number of group members with a reasonable degree of accuracy for the same reasons as the applicant and for the additional reason of taking maximum advantage of the effect of s 33ZB(b) of the FCA: Lendlease at [19] (Gageler CJ, Gleeson and Jagot JJ). From a respondent’s perspective, facilitating registration of group members’ participation in a representative proceeding enables the respondent and its lawyers, in particular, to:

(a)    better estimate the respondent’s total potential liability to those who are group members (and its potential liability to those who opt out of the representative proceeding in order to preserve their own cause of action against the respondent);

(b)    negotiate a settlement with the representative applicant with greater confidence as to that total potential liability, including by minimising the risk of group members who neither registered their participation in nor opted out of the representative proceeding, after settlement, seeking to benefit from the terms of the settlement; and

(c)    by maximising the number of group members known to the respondent and its lawyers before a settlement is negotiated, ensuring the settlement can be tailored accordingly and ensuring that the maximum number of group members are bound by any approved settlement in accordance with s 33ZB(b) of the FCA: Lendlease at [19] (Gageler CJ, Gleeson and Jagot JJ).

45    It is only if a material number of group members do not register or opt out in response to the proposed notice (the primary purpose of giving the notice) that a respondent also has an interest in having given the notice to provide it with a forensic advantage in being able to argue on settlement that those group members should not obtain any benefit from the settlement but should be bound by the judgment approving the settlement: Lendlease at [21] (Gageler CJ, Gleeson and Jagot JJ).

46    Even an opt out model, especially in the case of an open class, will require group members at some point to provide information in order to share in the benefit of any settlement or judgment. Whilst ordinarily that takes place after settlement of an action, or the obtaining of a favourable judgment, there will be cases where it will be in the interests of a just, quick and cheap resolution of the real issues for such information to be supplied at an earlier stage. Whether a particular representative proceeding is such a case will be a matter for the trial judge of the representative proceeding: Lendlease at [97] (Gordon and Steward JJ).

47    The purpose of s 33X is to “ensure that group members are kept informed of all matters relevant to them in the representative proceeding”: Lendlease at [40] (Gageler CJ, Gleeson and Jagot JJ). The intention of a party to seek orders excluding unregistered group members from seeking any benefit under a settlement is relevant to group members: Lendlease at [39], [43] (Gageler CJ, Gleeson and Jagot JJ), at [81] (Gordon and Steward JJ). Accordingly, giving notice to group members of that intention fulfils the purpose of s 33X: Lendlease at [43] (Gageler CJ, Gleeson and Jagot JJ), at [94] (Gordon and Steward JJ). The doing of justice between the parties includes ensuring group members are kept informed of matters relevant to them in the representative proceeding: Lendlease at [39] (Gageler CJ, Gleeson and Jagot JJ).

48    The giving of such a notice does not constrain the manner in which the parties may ultimately negotiate: Lendlease at [148] (Beech-Jones J). Nor does the giving of such a notice require or imply that the Court will necessarily make the order sought upon settlement: Lendlease at [45] (Gageler CJ, Gleeson and Jagot JJ).

49    Insofar as the giving of notice also promotes the prospects of a settlement being achieved, that too is consistent with the interests of the parties and group members and the objects of Part 4A of the FCA: Lendlease at [94], [99] per (Gordon and Steward JJ).

50    The respondents submit that in Lendlease at [80], Gordon and Steward JJ (with whom Edelman J agreed) went so far as to say that “it is clear that — even without the proposed order — the [representative parties] would need, in discharge of their duty to act in the best interests of group members, to inform them of [the defendant’s] plans in any event”. Beech-Jones J gave reasons to the same effect at [149]: “having been apprised of [the defendant’s] intention to seek that order, the representative parties are under an obligation to inform group members of the appellants’ intention”.

51    The respondents also submit that the applicant’s proposition that it is rare for such orders to be made without the support of the applicant is not consistent with recent authority, referring to the decisions of Fox v Westpac [2023] VSC 414 (Nichols J); Anderson-Vaughan v AAI Ltd (No 2) [2024] VSC 65 (Delany J); Wisbey v UBS.

52    The respondents note that upon any settlement of the proceeding reached within three months after mediation, they intend to seek orders that group members who have neither registered nor opted out of the proceeding not be entitled to seek a benefit under the settlement absent leave of the Court, but that they otherwise be bound by the settlement. The respondents submit that, as each member of the High Court recognised in Lendlease, that intention is a matter relevant to the interests of group members in the proceeding, and of which they ought to be informed. The respondents submit that the fact that the applicant does not herself share that intention does not detract from the reasoning in Lendlease.

53    The respondents submit that at present, the number of group members within the representative class is not known, and that all that is known is that there are approximately 1.6 million unique friend codes / game account IDs associated with customers of the second and third respondents who were physically located in Australia at the time they played on the relevant apps and made purchases of Virtual Currency during the relevant period. The respondent submits that there are likely to be multiple friend codes and game account IDs associated with individual customers, such that the friend codes / game account IDs alone do not provide a reliable indicator of the number of group members. The respondents further submit, and the applicant accepts, that there are also likely to be many customers with de minimis or very small claims, who would not have any incentive to pursue any claims against the respondent. The respondent submits that, in these circumstances, there is currently no data upon which the respondents can reliably estimate the likely participation rate of group members in the proceeding so as to be in a position to effectively participate in a mediation.

54    The respondents also refer to the three claims advanced in the proceeding, being the restitution claim, the misleading or deceptive conduct claim, and the unconscionable conduct claim. While the restitution claim and the misleading or deceptive conduct claim are advanced on behalf of all group members and premised on the allegation that the Social Casino Games are prohibited interactive gaming services, the unconscionable conduct claim is advanced only on behalf of Vulnerable Persons. The respondents submit that the unconscionable conduct claim could conceivably succeed even if the other claims did not. The respondents submit that the parties have no means of knowing how many Vulnerable Persons there are, how large their claims are likely to be, and what portion of the total cohort of group members they may represent.

55    The respondents submit that where the restitution and misleading or deceptive conduct claims will turn largely upon the construction of the Interactive Gambling Act, the unconscionable conduct claim involves the application of an evaluative norm of conduct which they submit is an inherently fact-rich inquiry, and which may require inquiry into the circumstances of individual group members. The respondents submit that the prospects of the claims are liable to differ markedly, and each Vulnerable Person may ultimately require individuated evidence. The respondents further submit that the costs of advancing, and defending, such claims to judgment are also likely to be markedly different.

56    In such circumstances, the respondents submit that a process which encourages registration of claims by group members is likely to facilitate settlement of the proceeding by enabling the parties to better understand the number and value of the Vulnerable Persons’ unconscionable conduct claims in advance of mediation.

57    The respondents also note their perception that there are likely to be real difficulties in settling the restitution and misleading or deceptive conduct claims in circumstances where the second and third respondents continue to make the Social Casino Games available. The respondents submit that any settlement of the claims of group members (which run up to 12 December 2024) would be highly likely to invite “copycat” actions seeking to make claims on behalf of later cohorts of players.

58    The applicants resist the respondents’ orders for a notice providing a process for registration and soft class closure for the following reasons. The applicants also submit that the High Court’s reasons in Lendlease must be considered in context. Particularly, the question in Lendlease was whether the Court had power to make orders notifying group members of a party’s intent to seek soft class closure orders upon any future settlement. The applicants also submit that the claim was a shareholder class action where registration orders are typically made with the agreement of all parties.

59    First, the applicant submits that the respondents have records of information which will be sufficient for the parties to conduct an effective mediation. The respondents currently have information from which the aggregate value of group members’ claims could be reasonably estimated for the purposes of mediation, and it is agreed that the respondents will provide that information to the applicant for the purposes of the mediation. The applicant submits that this aggregate quantum information is the critical information for the purpose of a productive mediation, as it allows the parties to understand the upper band of the value of the group’s claims.

60    The applicant submits further that it also appears that the respondents have sufficient information from which the amount of loss attributable to each friend code / game account ID could be reasonably estimated. While the applicant accepts that a user may have more than one such code or ID, the applicant submits that the information would nonetheless provide useful data to estimate the likely quantum of individual claims and the distribution of claims across group members. The applicants also submit that it is an inevitable feature of class actions that a defendant will be faced with uncertainty about the potential quantum of a class action, yet such class actions nonetheless often resolve at mediation. The applicants submit that settlements can be structured to account for such uncertainty, by placing caps on the total amount to be paid and caps on individual claims.

61    The respondents submit, in response, that the fact that the parties may have an understanding of the upper band of the value of the group’s claim does not mean that the parties have sufficient information to conduct a useful mediation. The respondents submit that such an upper band is only useful in a mediation if the claims are comparable in nature and prospects, which as noted above, the respondents submit is not the case here.

62    Second, the applicant submits that information about the claims of Vulnerable Persons is not necessary for the conduct of a mediation. The applicant submits that while the parties are not presently able to separately estimate the loss attributable to the unconscionability claims, no additional loss is claimed on behalf of Vulnerable Persons and thus it is not necessary to identify the quantum of loss likely to be claimed by those persons for the purpose of mediation.

63    Third, the applicant submits that the proposed registration process is potentially oppressive to group members who are Vulnerable Persons, while also being very unlikely to produce accurate or useful information about the claims of Vulnerable Persons. The applicant relies upon the observations of Beach J at [47] in Wisbey v UBS, that it is important that notices do not contain information which may have the potential to either confuse or intimidate persons to whom it is addressed.

64    The applicant submits that it is unlikely that the information sought by the respondents in respect of Vulnerable Persons would be able to be readily provided without taking further, potentially burdensome, steps and that there are likely to be substantial barriers to group members providing accurate information in response to the questions. For example, the applicants note that to respond to the question of whether, during the Relevant Period, a group member suffered from a gambling disorder in accordance with DSM-5, the group member would either have to self-diagnose or procure a clinical diagnosis.

65    The respondents submit that such complexities are of the applicant’s own making, given that the questions reflect the manner in which the sub-group is defined. Additionally, the respondents submit that insofar as there are particular complaints about the form of the notice or registration form, they are better addressed by amendment rather than by withholding information from group members as to the respondents’ intended application upon settlement.

66    Fourth, the applicant submits that the shame and stigma associated with gambling is likely to negatively impact registration by group members, particularly those who are Vulnerable Persons. The respondents submit that such concerns can be addressed if and when a settlement is reached and the respondents seek their foreshadowed orders. The respondents also submit that the impact of such shame and stigma will necessarily arise at some point in the proceeding, when group members are required to come forward.

67    Fifth, the applicant submits that the costs of a registration process in which even a small proportion of group members participate is likely to be very high. The applicant submits that even if 10% of group members register (based on a conservative estimate of 400,000 group members), the costs of any registration are likely to be in the order of several millions of dollars: Petrovsky 2 at [36]-[42]. The respondents submit that the cost estimations of the applicant are at the higher end, and through the use of technology such as online registration forms, the registration process ought not cost millions of dollars: Saville 3 at [10]. The respondents also submit that registration is a cost which will need to be incurred at some point in the proceeding if there is a settlement.

68    Sixth, the applicant submits that to devote such costs to the registration for Vulnerable Persons would be wasted entirely if the matter proceeds to judgment and the applicant succeeds on the illegality claims, since the loss claimed by the Vulnerable Persons is the same for the illegality and unconscionability claims. As a consequence, it would not be necessary to identify the Vulnerable Persons. The applicant submits that this is not a case where the costs of registration will inevitably need to be incurred at some stage. The respondents submit that the applicant’s submission is mistaken in that the orders sought by the respondents do not relate only to Vulnerable Persons, but invite all group members to register their claims. The respondents submit that the possibility of late registrants is a matter that can be considered on any settlement approval hearing.

69    Seventh, the applicant submits that based on experience in other cases, there is a sound basis to consider that registration rates will likely be higher after a settlement is reached (assuming a registration process is necessary at all). The applicant submits that with an incentive to register, more people typically come forward.

70    Eighth, the applicant submits that there is a real risk that group members will not be sufficiently notified of their ability to register in the proceeding and the implications of this. The applicant submits that this risk is heightened if the respondents’ orders for the distribution of notices are made.

71    Ninth, the applicant submits that the respondents’ solicitor’s assertion that in the absence of registration, she considers the matter unlikely to be capable of settlement (Saville 1 at [54]), should be given little weight and ought to be viewed against the respondents’ self-interest in minimising group member participation. The applicant relies upon the observations of Beach J in Wisbey v UBS at [55], where his Honour observed that:

[T]he Court should usually not exercise the discretion to make a class closure order based merely on a respondent’s assertion that it is unwilling to discuss settlement unless such an order is made. Such an assertion may be tainted by natural self-interest in not only rendering financial exposure more certain, but also in minimising it by forcing group members to make a choice about participation before any settlement offers have been made.

72    In this context, the applicant also submits that the respondents’ evidence should be given limited weight since the first and third respondent settled a class action in the United States in 2020 which made similar allegations about the illegality of the online social casino games in Washington State without pre-settlement registration of group members’ claims. A regime for group members to register their claims after the settlement was agreed and ordered.

73    The applicant also relies upon the observations of Murphy J in Alford v AMP at [62] where his Honour stated:

[I]t must be kept in mind that the effect of a soft class closure order is that, if group members do not register, they will be bound into any settlement that is able to be reached but precluded from sharing in the benefits of the settlement. The plain legislative intent of an opt out regime indicates that the Court should be cautious in making class closure orders and before doing so it must be satisfied that it is in the interests of group members as a whole. There must be a good reason to make such orders.

74    The applicants submit that orders in aid of future soft class closure are generally made on the joint application of the parties although there have been some exceptions: Wisbey v UBS [90] (Beach J). The applicant submits that the Court has recognised that “real caution” is appropriate where an application for soft class closure is opposed by an applicant, in light of the applicant’s obligations to represent group members’ interests and the fact that respondents’ interests are inimical to those interests: Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (2017) 252 FCR 1; [2017] FCAFC 98 [79] (Jagot, Yates and Murphy JJ); Alford v AMP, [4(a)], [58], [64]-[69] (Murphy J).

75    The applicant refers to the observations of Murphy J at [67] in Alford v AMP where his Honour said that it is generally appropriate to accord the applicants’ views as to what is in group members best interests substantially greater weight than the views expressed by the respondent in that regard.

5.2    Consideration

76    Having considered the evidence of the applicant’s solicitor, Mr Petrovski, and the evidence of the respondents’ solicitor, Ms Saville, I am not satisfied that the respondents’ proposed orders for registration and soft class closure are necessary to facilitate the mediation of this proceeding for the following reasons.

77    First, based on the matters deposed to by Ms Saville in her three affidavits, I am satisfied that the respondents, from their records, can reasonably estimate the aggregate value of group members’ claims for the purpose of participating in a productive mediation. The respondents have agreed to provide this aggregate quantum information to the applicant for the purpose of the mediation. This information will allow the parties to understand the upper band of the value of the group members’ claims. That information will provide a starting point for negotiation by the parties, taking into account their assessment of the respective strengths and weaknesses of each party’s case.

78    In addition to the aggregate quantum information, the respondents also have information concerning the number of friend codes / game account IDs, which will provide data to estimate the likely quantum of individual claims notwithstanding that a user may have more than one code or ID.

79    Uncertainty about the quantum in class actions such as the present is a common feature and, of itself, does not mean that the parties cannot achieve a resolution at mediation.

80    Second, I am not satisfied that the respondents’ questions regarding the claims of Vulnerable Persons is necessary for the conduct of the mediation. The questions themselves are not straightforward and require, in some cases, self-diagnosis of a clinical gaming disorder. The information obtained is unlikely to be reliable and it is far from clear that such information would promote a settlement of the proceeding at mediation. This is particularly the case in circumstances where the unconscionability claims of Vulnerable Persons seek no additional loss and thus it is not necessary to identify the quantum of loss likely to be claimed by those persons for the purpose of the mediation. Furthermore, senior counsel for the applicant has informed me that the applicant intends to mediate in respect of the claims of all group members and not just a subset of group members, being the Vulnerable Persons.

81    Third, Mr Petrovski, the applicant’s solicitor, in his second affidavit, dated 5 June 2025, has deposed to his view as to the significant cost of the respondents’ proposed registration regime. Whilst the respondents challenge Mr Petrovski’s estimate of $2,000,000 in operating a call centre to deal with group member enquiries and to process the registration forms submitted by group members, I am satisfied that the cost is likely to be substantial and not warranted when assessing whether it is likely to aid the settlement of the proceeding at mediation.

82    Fourth, I place little weight on the respondents’ view that, in the absence of registration, the matter is unlikely to be capable of settlement: Saville 1 at [54]. Such an assertion must be viewed against the respondents’ self-interest in minimising group member participation: Wisbey v UBS at [55] (Beach J).

83    For these reasons, I reject the respondents’ registration process as I am not satisfied it is likely to improve the prospects of achieving a settlement, and it is not in the interests of group members as a whole.

6.    Form of distribution

84    As noted earlier in these reasons, there remain some narrower matters in dispute between the parties, including as to the manner in which the proposed notice should be distributed.

6.1    Email

85    The applicant submits that the main notice and the cover letter should also be distributed via email to those group members for whom the respondents have email addresses. The applicant submits that sending the notices via email is likely to be an effective way to bring the notices to those group members’ attention.

86    The respondents oppose distribution of the main notice and the cover letter by email on the basis that the respondents consider that it is only likely to reach 10-30% of group members. The evidence is that the respondents have around 160,000 email addresses provided by users of the Apps: Saville 1 [35]-[36].

87    There is no good reason why the main notice and covering letter should not be distributed via email to those group members for whom the respondents have email addresses. That not all group members can be contacted by email is not a reason for not contacting any group members that way. While the cost, estimated by the applicant to be $25,000, is not insignificant, emailing the notices using the email addresses provided by users to the respondents is likely to be an effective way of bringing the notices to the attention of those group members: Petrovski 2 at [48]. I note that while the respondents provided a much higher cost estimate of $96,000 (Saville 1 at [57(b)]), the cost estimated by the applicant appears more reasonable, being based on a quote obtained from a large claims management company. The parties agree that email distribution should occur through a third-party distribution agent.

6.2    In-App notification

88    The parties are agreed that some form of in-App notification should be given. The applicant seeks an order that the App notice, in the form of a “pop-up”, appear each time a group member accesses an App until the opt out deadline. The respondents seek orders for the App notice to be delivered to an “inbox” within the Apps, and which appears as an icon on the home page of the Apps.

89    The applicant resists the provision of the App notice via App inboxes due to concerns that the notices will not come to the attention of all current users who are likely to be group members.

90    The evidence is that a pop-up notice contended for by the applicant would obscure a group-members’ screen on each occasion that they access the App. The respondents are concerned that a pop-up notification of that kind is likely to be off-putting to their customers and have a detrimental effect on their revenues and profits, noting that similar forms of notifications (in respect of an updated terms of service notice) caused 2-3% decline in revenue in the month following its implementation: Saville 1 at [59].

91    While the applicant submits that the loss of revenue should not be inferred to be the result of the pop-up notice, I accept the respondents’ submission that the Court should not take such a step in the absence of compelling evidence that the pop-up notice will be materially more effective than the inbox notice. I am satisfied, based on the respondents’ affidavit evidence, that the App notice delivered to an inbox within the App is likely to be effective in bringing the App notice to the attention of group members: Saville 1 at [60]; Saville 3 at [20]. The Court should be astute to avoid visiting commercial harm on an ongoing business prior to any determination of the merits of the case: see Petersen Superannuation Fund Pty Ltd v Bank of Queensland Ltd (No 2) [2017] FCA 1231 at [19] (Yates J).

92    I will order that the App notice be delivered to an “inbox” within the Apps as proposed by the respondents.

7.    Information to be provided to the applicant for the purposes of mediation

93    The parties are in substantial agreement as to the information which the respondents will provide the applicant for the purposes of the mediation. This includes a list of the friend codes and/or game account IDs for users who are likely to satisfy the group member definition. It also includes the aggregate value of all payments received by the second and third respondents for purchases of Virtual Currency in the Relevant Period through Australian App Stores, the Product Madness website, Big Fish Games website, Facebook and “store” websites for the Apps.

94    The remaining dispute concerns the applicant’s request that the respondents provide, in respect of all group members, individual data of aggregate payments received in respect of each friend code/account ID. The respondents proposed that any such aggregated information, to the extent available, should be limited to registered group members. Naturally, given that I have rejected the respondents’ proposal for a registration process, the remaining question is whether the respondents should be required to provide information regarding the aggregate of all purchases received by the respondents during the Relevant Period for each identified user account (ie, all group members).

95    The respondents’ evidence is that their records do not contain aggregated payments received in respect of each friend code/account ID: Saville 2 at [16]-[39]. The applicant’s request would require the respondents to undertake substantial work to collate the information sought in respect of approximately 1.6 million friend codes/account IDs by interrogating the records of every recorded transaction involving the purchase of Virtual Currency throughout the Relevant Period. I am not satisfied of the utility in requiring the respondents to be put to the trouble and expense of producing this additional information for the purpose of the parties being able to conduct a meaningful mediation. For this reason, I will not order that the respondents provide the aggregated information sought by the applicant in the second row of Schedule E to the applicant’s IA.

8.    Disposition

96    The parties are to confer and submit proposed minutes of orders to give effect to these reasons for judgment. Once that occurs, I will make the necessary orders in Chambers.

Associate:

Dated:    8 July 2025