Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

I'm pleased to be speaking on this Orwellian named bill, the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021. Once again we see the experience of the government bringing a bill before the House which says it is going to do one thing but in practice does the exact opposite. The bill concerns the funding arrangements for class action litigation. It's a part of what currently amounts to a three-part assault on class action proceedings in the government's obvious attempt to frustrate, limit and minimise the capacity of litigants who would otherwise have very little access to justice and very little access to a redress arrangement from having their day in court. Ordinary Australians are pitted against much larger, deep pockets when seeking nothing more than their capacity to test the strength of their argument to get redress for their loss. The government seems to be, at every angle, taking the side of the defendants in these matters instead of the little people who do so much to deserve a better deal from this government.

The bill is an attack on the capacity for matters to be brought before a court. It will do this in two ways. The first is by providing a mechanism by which the court must approve or vary the distribution of proceeds of a claim, such that the distribution is fair and reasonable. It sets, in effect, a ceiling. Where more than 30 per cent of the proceeds of an award made by a court go to non-members of a class action—that is, in costs, such as for lawyers or class action funders—the bill effectively requires the court to hear legal debate about the distribution of the funds.

It has a superficial attraction to it. Thirty per cent might sound like a big number. However, the operative effect of this provision will be, quite simply, to ensure that certain matters never find their way to court. Simple, straightforward class actions can often have costs which are much less than five per cent, let alone 30 per cent. But there are some matters which are brought before the court in the form of a class action which will be much more costly. Perhaps it's a matter which requires an investigation going back several decades. Perhaps it's a matter which involves a respondent who is a well-heeled, well-represented, lawyered-up, deep-pocketed corporation—perhaps a foreign corporation—with every trick in the book, which will put plaintiffs to the test such that an artificial 30 per cent cap on the proceeds going to costs effectively means that they set a target for the defendant and they know exactly what they've got to do to ensure that the proceeding never gets on, or they know how to run up costs such that there is a forced settlement far beyond what is fair and reasonable on the part of the plaintiffs.

So it has a superficial attraction, but its operative effect is going to limit the ability of ordinary Australians to have their day in court, and it will have perverse effects. The 30 per cent will not be the ceiling; it will become the target for costs. It will become the default provision by which awards are distributed between costs and benefits to the plaintiffs. So, as is so often the case with legislation proposed before this parliament, you have to look to the impact of what this legislation will do, and what we discover is that what might look superficially attractive is something which is going to have a deleterious effect on ordinary Australians.

The second mechanism that the government is applying through this bill is to upend the current opt-out system for gathering plaintiffs into class action groups and turning that into an opt-in system. In other words, rather than being an automatic beneficiary of a successful class action, potential plaintiffs need to formally join the class action before it gets to court.

Labor will be vigorously opposing this bill, and I foreshadow now that I will be moving a second reading amendment at the close of my contribution to this second reading debate. It's clear to us that the changes contained in this bill are part of a pattern of hostility from the coalition to those in our community who seek justice via class action lawsuits. Though the stated intent of the bill is to protect the interests of such plaintiffs, it's clear to us that they haven't thought it through. The setting of limits that I have just described will have the effect of doing the exact opposite. As one submitter to the just-completed inquiry into this bill put it:

That the Government is seeking to present this reform as a consumer protection measure is Orwellian gaslighting.

I could not have put it better myself.

Indeed, the so-called inquiry in which those comments were made reveals much about the serious deficiencies in this bill and the government's attempts to cover them up. It gave just one week of public engagement for members of the community to make submissions. It tried to pass the inquiry off as independent despite the fact that the government had the numbers on the inquiry and used those numbers to ram through a majority but not a unanimous report. When a government engages in these sorts of clumsy attempts to hide its intentions and smother dissent, you know that something's seriously amiss, and that's indeed the case here.

The government's laughably short public consultation period backfired on them, rather than stifling discontent with the changes, because the majority of submissions to the inquiry made clear that the effect of this bill is to jeopardise the interests of both plaintiffs and defendants. I'll get to the defendants in a moment. Let me repeat: it will jeopardise the interests of both the plaintiffs and the defendants, not—as the government's Orwellian title claims it will do—protect them. This was not only the view of the plaintiff lawyers, who many might say have a pecuniary interest, an economic interest, in ensuring that legislation such as this never finds its way through both houses of this parliament. You'd expect them, perhaps, to argue such a case. But it should prick up your interest when the defendant law companies have made exactly the same argument. It was the view not only of the plaintiff law firms who bring class actions but also of those who traditionally represent the defendants, the respondents, in such actions. When you have both of those groups speaking up against these changes, it gets very difficult to find a friend for this legislation.

The fact that the government has an active campaign against class actions is now bleedingly obvious. It doesn't want to protect plaintiffs, and it's actually doing damage to the defendants on the way through. It wants to protect—or it purports to protect—the wealthy and powerful defendants. This will constrict the path to justice for those who have been wronged, for example, by the actions of large multinational corporations, and, where an action is successful, it will limit the financial penalty on those who have been found to be responsible for causing harm. Let me explain in detail how this is the case.

The basis of the current opt-out system was a recommendation from the Australian Law Reform Commission—an exhaustive inquiry such as the ALRC always conducts in these matters. It's not an inquiry over a couple of weeks or even a couple of months. Generally, they go through an exhaustive evidence-gathering exercise and an exhaustive consultation process and then produce a report, as they did, with recommendations. They recommended the retention of the existing opt-out system. It also refers to the system as 'open class actions', which is actually a good way of talking about it because this system opens class actions to anyone who may have been on the wrong end of a particular event or action. It is commonly the case, where there are large numbers of potential plaintiffs in a class action, that identifying each individual at the outset is difficult, if not impossible.

An example, and a case in point, might be the recent action that was taken on behalf of Aboriginal and Torres Strait Islander people in Queensland for the underpayment of wages. In many cases, wages were underpaid over a considerable period of time; the record-keeping of the firms, the government and the businesses—the respondents—was lacklustre; and tracking down many of those plaintiffs was difficult indeed. They did all the normal things—the advertising, the discussion through community forums, the raising through advocacy groups and Aboriginal and Torres Strait Islander land corporations, and all the regular things that you would do for an action such as this—but it was incredibly difficult to track down all of the people who had a legitimate cause of action through underpayment of wages. It was an incredibly expensive operation to go through for those taking the action, funding it and supporting it. I don't think any member in this place could argue that it wasn't a just cause. Aboriginal and Torres Strait Islanders working in the services industry, working in the pastoral industry, working under conditions which may often be described today as akin to slave labour—nobody in this place, whether you represent a political party or not, would argue this is not a just cause. The capacity to ensure that each and every one of those persons has access to justice and the rewards which flow through that is a good thing. Often these matters are dealt with on a pro bono basis if the action is unsuccessful, but the costs can be considerable.

Under the provision that is before the House today, under the 30 per cent cap rule, that action simply would not have proceeded. It was done on the basis of a litigation funding arrangement but it would not have proceeded, because, due to the risks involved in commencing such an action, nobody would have funded it. A bank wouldn't have funded it. A litigation firm wouldn't have funded it. A litigation funding firm wouldn't have funded it. Nobody would have funded it, because nobody could have quantified at the beginning of the action whether or not the cost would accrue to more than 30 per cent of the potential award. They just wouldn't have done it. And the consequence of that is something that we look back on now as an incredibly just cause and incredibly just action. We can all be proud of the fact that our legal system facilitates the bringing of such actions and redress for intergenerational inequality and injustice. We can all rejoice in the fact that our legal system currently has the processes in place which enabled this to occur. It does not stand alone. I have in mind an action that was commenced against the Morrison government's shameful and illegal robodebt scheme. The action was made up of 430,000 members. The effect of this bill would have required each and every one of them to be identified and to physically opt in to the class action to benefit from the $1.7 billion the Morrison government has paid in restitution.

I want to say something in particular to members of this place who represent regional, rural and remote constituents. These are the constituents who have the most to lose. These are the people who will, quite simply, be beyond the reach and the capacity of lawyers. Let's face it: the plaintiff law firms and the defence law firms will largely be based in large cities or large regional centres, and the costs involved in reaching out to clients and potential plaintiffs who would legitimately form part of a class action in remote and regional areas will be too prohibitive for those matters to be brought on. Members of regional and rural electorates, members who represent the interests of the poor and the under-trodden in regional and rural electorates, should take note of this bill. It will disadvantage the people that they come to this place to represent.

There is a modicum of self-interest in the bill before the House. I have used the robodebt scandal as an example. The government has an immediate and direct pecuniary interest in ensuring that its wrongdoings do not seek redress, or, to the extent they have redress, that it is limited. In essence, the Prime Minister ripped off 430,000 Australians. They took him to court. They won; he lost. And he is now trying to convince us that this bill is about protecting the interests of those 430,000 people to whom the courts just made him pay $1.7 billion because of an illegal scheme he designed when he was the minister responsible. Colour me suspicious, but that's just the way he operates. This is a mean and tricky Prime Minister leading a mean and tricky government. Not everyone in the government—I'm sure there are well-meaning people, including yourself, Mr Speaker, and the minister at the bar table, who are in essence good people. But, if the minister has convinced you that this bill does what its label says it's going to do, he has done to you what he has done to so many other Australians—that is, he has misled you. And the Prime Minister has backed him up, because that's the way the Prime Minister rolls. Look at the detail: it does not do what the label says it's going to do. It actually disadvantages ordinary Australians, particularly ordinary Australians who live in regional and rural and remote Australia.

I have mentioned the robodebt action. Each and every one of those involved has been the recipient of a government payment. Each and every one of them has been, or was, living on a very low income. These are the people who this bill is designed to disadvantage, many of whom not only would have been in remote communities but would have come from linguistically diverse or disadvantaged communities. Their capacity to get the sort of advice necessary to sign up to such a scheme which the government contemplates is simply nonexistent. Clearly reaching all of those 430,000 people from that spread of living circumstances to obtain their written opt-in consent would have been inefficient, unworkable and, most of all, unjust, and that's exactly what the Prime Minister intends.

Let's be clear: this is not an unintended consequence. It's not an unintended consequence; it's a design feature. This is precisely what the Prime Minister intends with this legislation. Open class actions benefit defendants too. It's in their interest to defend a claim as a simple job lot. The alternative is—and let's be very clear about this—that they face a claim by one group of plaintiffs; they settle it, perhaps in court, perhaps out of court or perhaps a combination of both in the shadow of the court, as is often the case. As a former litigant myself, I know a hell of a lot of stuff gets dealt with in the minutes before the first mention comes on. But, if this matter is brought forward, a defendant in one of these big litigations now faces the prospect that they'll be doing that time and time and time again. As each group of individual plaintiffs brings their separate claim, it's going to cost defendants more as well. It's as simple as that. It will cost defendants more because the open versus the closed action is just a more expensive way of doing it—a point that the defendant law firms made in the ever-abridged inquiry.

It is conceivable, if not likely, that under this system defendants will face near identical litigation multiple times over the same single tortious or negligent event. And we've got to ask ourselves: How is this in the interests of the efficient administration of justice? Is it the most efficient use of precious court time and judicial resources? Clearly, in many respects, it's going to be a windfall for both defendant law firms and plaintiff law firms. But it's not the most efficient way to get around business, and we know that. And I suspect the government knows that too.

There's speculation around this place, and I can't confirm it—I certainly don't have the knowledge available; perhaps the minister will respond to these second reading remarks and be able to answer this question—but it has been said that this bill comes before the House arising out of a deal with the One Nation political party. It's been said that it didn't arise out of the Attorney-General's Department and it certainly didn't arise out of the Treasury; it arose out of an agreement between the One Nation political party and the government. God knows what the price of it was. But we do know what the cost will be to plaintiffs, and we do know what the cost will be to the judicial system.

So I'd invite the minister representing the minister, when he comes back into the House, to make this clear: what's the deal they've done with One Nation? No sensible person—nobody who's thought about this for more than 30 seconds—would bring such a bill before the House, so what is the deal that they've done with One Nation? I'd encourage government speakers and other speakers in this debate to be cautious about the comments they make, because so often the deals that are made with that particular political party melt and fall apart quicker than an ice cream in the midday sun. So I'd be cautious about making brave statements in the debate about the virtue or otherwise of this particular piece of legislation, because you don't know the deal that underpins it. The one thing that we can be certain of is that it will be pretty dirty, pretty dodgy and something you don't want to put your name to. We know that it's going to disadvantage people in rural and regional Australia, we know that it's going to clog up and be a burden to our judicial system, we know that it's going to disadvantage plaintiffs and we know that it's going to cost defendants more. So, against that background, it beggars belief that somebody would want to speak in favour of the bill, and it is even more astonishing that somebody would want to vote in favour of the bill.

So we encourage the government to withdraw the matter. We encourage government members of goodwill—and there are many of them—and all of the members of the crossbench to think about this: it disadvantages members in remote, rural and regional Australia; it will exclude from justice people who would otherwise have had access to justice; it will cost defendants more; it will clog up our judicial system; and it will lead to the most inefficient way of bringing a matter before the courts and adjudicating a matter. Why on God's earth is this government insisting on this bill when there is so much other important business that should be before the House?

With those very brief comments, I formally move:

That all words after "That" be omitted with a view to substituting the following words:

"the House declines to give this bill a second reading and calls on the Government to stop its ongoing attempts to prevent Australian consumers and businesses from being able to access justice through class actions".

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