Paul Fletcher (Bradfield, Liberal Party, Shadow Minister for Government Services and the Digital Economy) Share this | Link to this | Hansard source

I rise to speak on the Australian Human Rights Commission Amendment (Costs Protection) Bill 2023. It is appropriate to start by reflecting on the genesis of this bill and the objectives it should be setting out to achieve. This is a bill that should be implementing recommendation 25 of the Respect@Work report. The Respect@Work report made 55 recommendations across a range of areas, the bulk of which have now become law with coalition support. Recommendation 25 came in the context of the discussion about barriers and disincentives to pursuing sexual harassment matters in federal jurisdiction.

It is found in section 5.4 of the Respect@Work report, which is described as examining 'the Sex Discrimination Act and state and territory anti-discrimination laws'. The discussion in the report is short but clear and deals with a few key points.

It's worth reflecting on those points, which should be guiding our discussion today. First, the Commissioner noted submissions recommending a costs protection provision in the Australian Human Rights Commission Act, which would:

… provide that applicants and respondents should bear their own costs unless an exception applies—if the court is satisfied that the party instituted proceedings vexatiously or without reasonable cause.

Second, the report cited submissions to the effect that the general rule that costs follow the event:

… operates as a disincentive to pursuing sexual harassment matters under the Sex Discrimination Act.

Third, in response to those submissions, the Commissioner acknowledged:

… the risk of a costs order acts as a disincentive to pursuing sexual harassment matters in the federal jurisdiction.

The report specifically recommended a new provision along the lines of section 570 of the Fair Work Act, which establishes a cost-neutrality model. Critically, it noted the intended effect of such a provision was:

Such a provision should ensure costs may only be ordered against a party by the court if satisfied that the party instituted the proceedings vexatiously or without reasonable cause, or if the court is satisfied that a party’s unreasonable act or omission caused the other party to incur costs.

In other words, the Respect@Work report specifically proposed the hard-costs neutrality model in the Fair Work Act. The discussion in the report specifically and expressly made clear that the provision was about limiting the circumstances in which a complainant can be made to pay costs. It establishes a default position that each party bears their own costs except where they act vexatiously or unreasonably. It is protective.

This bill takes a very different approach to what was recommended in the Respect@Work report. This bill does not implement a regime that is directed only towards harassment and discrimination claims under the Sex Discrimination Act. The bill would apply to all discrimination matters under federal law and not solely matters under the Sex Discrimination Act. In due course, it would apply to religious institutions and schools if this parliament sees fit to pass a religious discrimination bill. This bill does not implement a provision modelled on section 570 of the Fair Work Act. Instead, the bill implements what the government has called a 'modified equal access model', and the words 'equal access' are also in quotation marks in the government's own materials.

The truth is that there is nothing equal about it. The truth is that the provisions of this bill are not protective. They do not remove barriers in a way that preserves the integrity of litigation and the discretion of the courts. Instead, they are designed to achieve the objective that, in court, the balance is tilted in favour of complainants regardless of the nature of complaint or the conduct of proceedings.

This bill takes an extraordinary approach that goes further than any other Australian jurisdiction and any other comparable nation. It is appropriate to run through how this bill will work in practice. For simplicity and clarity, I will refer to the person commencing the litigation as 'the complainant'. The courts at present make costs orders to reflect on the conduct of the proceedings, the merits of the parties' positions and the ultimate outcome. The courts at present, therefore, make costs orders that best give effect to justice in the case.

We know that our judges do not take that responsibility lightly. But this bill takes that discretion away from them. Instead, this bill says that the court must award costs to a complainant if they are successful on one or more grounds. This rule applies in all cases except in relation to costs incurred as a result of a complainant's unreasonable act or omission. It also says that the court must not award costs against the complainant unless some very narrow exceptions are met.

What are those exceptions? Well, the court is permitted to exercise a discretion to award costs to a respondent—that's to say against a complainant—only where the complainant instituted the proceedings vexatiously or without reasonable cause or the complainant's unreasonable acts or omissions caused the respondent to incur costs or the respondent is successful in the proceedings, does not have a 'significant power advantage' and does not have 'significant financial or other resources' relative to the complainant. Crucially, the bill would apply to class-action proceedings and actions brought by trade unions. And, extraordinarily, the drafting of the provisions leaves open the very real possibility that the respondent must pay the costs incurred by the complainant even in respect of grounds that were unsuccessful.

What does this mean in practice? In short, the bill incentivises litigation and disincentivises negotiated outcomes. It removes all real risks from the complainant, provided only that they avoid being found to act unreasonably—and that is not a very difficult thing to achieve. This bill even removes the provision that expressly allows the court to take into account offers to settle. This is an unprecedented change to the dynamics of settlement negotiations. At present, if a person rejects a settlement offer they may have their costs reduced if they're successful in the court case but the court determines that they rejected a reasonable offer. Alternatively, at present a litigant may be ordered to pay additional costs if they reject a reasonable offer and subsequently lose.

This bill removes the provision that gives the courts the discretion to take these matters into account. It sends a clear message that a complainant who rejects a reasonable settlement offer should not be at risk of an adverse court costs order. Further, the bill leaves open the possibility that the respondent must pay even in respect of grounds that are unsuccessful, because they are all part of the same proceeding. This may very well incentivise plaintiffs to include speculative and low-prospect claims in their statement of claim, driving up costs for respondents. To the contrary, a plaintiff who pursues a claim that has low prospects may do so knowing that the worst outcome they'll face is having to pay their own costs and that if they're successful on any ground they will be awarded costs. There is no downside, under the regime that this bill establishes, to pressing ahead with a low-prospect claim. Crucially, this can be exploited in class actions.

This bill is a litigation funder's dream. It is a class-action lawyer's meal ticket. It is a trade union's golden pathway. You need only look at the number of Labor parliamentarians who started their careers with class-action law firms and at the scale of the donations provided to the Labor Party by class-action law firms, and of course by trade unions, to gain an insight into the government's motivation as to introducing these extraordinary provisions.

The effect of these provisions is that all you need to do is drum up a low-value or speculative complaint and then resist all attempts at conciliation in the Australian Human Rights Commission.

Then, once you're in the courts, you simply press ahead with your ambit, low-value and speculative claim. Then, so long as you're not unreasonable or vexatious, you can slowly lead the respondent through costs that they will be forced to bear as you drag out the litigation, knowing it is unlikely there will be any consequences for rejecting settlement offer after settlement offer. Ultimately, if you make 20 claims and then succeed on one, the bill leaves open the possibility that the respondent will be forced to pay for all of them, and, at worst, so long as you're not unreasonable, you just walk away bearing your own costs.

Of course, there's nothing in this bill to prevent these types of actions being brought collaterally to support whatever other objectives the trade union or class-action law firm is trying to pursue on a particular day. It is not appropriate in this chamber to speculate on motives. It's enough to say that it's for the Attorney-General and for the Australian Labor Party to explain what impact this bill will have on the hundreds of businesses and organisations who are now plainly in the sights of activist lawyers. It's for the Attorney-General and Labor Party to explain why they've made such a mockery of the recommendations in the Respect@Work report. It's for the Attorney-General and the Labor Party to explain why the approach to costs in this bill goes further than that of any of the states and territories and any international peer jurisdictions, as set out in the materials prepared by the Attorney-General's own department. It's for the Attorney-General and the Labor Party to explain why it was considered appropriate by this Attorney-General to go further in relation to this remarkable cost regime than even the human rights advocate lawyers that his department commissioned to conduct research on the issue were calling for.

But we can in this place reflect on what this bill should have been. It should have been a bill that implemented recommendation 25 of the Respect@Work report. It should have been a bill that had support across the chamber. It should have been a bill creating a simple cost-neutral jurisdiction in our federal courts to remove barriers to people, primarily women, wishing to pursue complaints about harassment and discrimination. Instead, we have a model which goes further than that of any comparable jurisdiction. The overreach is inexplicable. The bill needs to be carefully scrutinised. A better way forward should be found. This is not a bill and set of provisions that the coalition could support in its current form. I thank the House.

Debate adjourned.