Mark Dreyfus MP

Member for Isaacs
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Inquiry Into Class Actions - Mark Dreyfus QC MP

13 May 2020

Response to Government referral of new inquiry into class actions to the Parliamentary Joint Committee on Corporations and Financial Services


Response to Government referral of new inquiry into class actions to the Parliamentary Joint Committee on Corporations and Financial Services

13 MAY 2020

Litigation funding and class actions provide a vital path to justice for ordinary Australians trying to uphold their rights against wealthy defendants with vastly greater resources.

And I did give as an example in that media release yesterday, when we saw this inquiry was about to be launched, I did give the example that just last November, the Federal Court ruled in favor of the three lead applicants in a class action of more than 1350 women who sued Johnson & Johnson and two subsidiaries for negligence in relation to pelvic mesh implants.

These were hundreds of Australian women left in debilitating pain for years because of a faulty product, banding together through a class action to achieve some measure of justice. And just like many, many litigants they would not have been able to obtain redress, they would not have been able to obtain justice, were it not for the class actions process.

And I waited for those 15 minutes of the Attorney-General's rant against class actions generally, and against litigation funders, to hear him refer to the Government's own inquiry report, which we have been waiting 17 months for a response to.

And that's the really pathetic thing about this hapless Government. That having commissioned the Law Reform Commission to do an inquiry into litigation funding and class actions they have not yet, 17 months on, responded to the detailed recommendations of the Law Reform Commission Report and that's because they didn't like the outcome.

Does anyone think it's a coincidence that this new inquiry into class actions - and make no mistake this is not confined to litigation funding, this is a general inquiry with very broad terms of reference into class actions as well - does anyone think it a coincidence that this new inquiry to be carried out by a Government-dominated committee was first proposed by the Attorney General in the first week of March, just days after some 10,000 victims of the Morrison Governments cruel Robodebt scheme signed up to a class action to sue the Government for the harm this terrible illegal scheme inflicted on them?

I'd remind the house that the Robodebt scheme is not only cruel, the Federal Court has found it to be unlawful. Under that scheme, the Morrison Government sought to intimidate innocent and vulnerable Australians into paying debts they did not owe. Perversely, the Morrison Government has called this extortion racket an economic measure, and now rather than taking responsibility for its unlawful conduct, the Morrison Government wants to make it harder for victims of Robodebt to seek redress.

And when Australian consumers were ripped off and injured by predatory companies selling dodgy financial products and dangerous consumer items, the Morrison Government would also like to deny those Australian consumers any legal recourse unless they have millions of dollars lying around to pay for a legal action against a huge company with limitless legal resources.

There's been a lot of commentary in recent days about this proposed inquiry and lots of dodgy statistics have been thrown around by those opposite, just today by the Attorney-General. But contrary to Government claims - and they need to listen to this - research by the commercial law firm Allens found that the total number of class action filings was actually down 20% in 2019. Shareholder class actions - which they seem to have particular concern about - were actually down 63% last year. So far this year - this is another matter that is featured in their publicity - so far this year we're only aware of three new shareholder class actions, none of which relate to COVID-19 matters.

Significantly, the biggest source of new class action cases in 2019 came from consumer actions arising from the Banking Royal Commission, the same royal commission that the Government voted against 26 times.

The Government's been crying for years that there was no point in inquiring into misconduct by the banks because there was nothing to see. But to the surprise of nobody but the Government the inquiry revealed a litany of abuse by the big banks against their customers, against ordinary Australians who trusted them.

The Morrison Government then wrung its hands, cried crocodile tears saying how could we have known? and then they got their marketing people into gear. The Prime Minister talked about a tough response. The minister likes to talk and this Prime Minister does like to talk tough, but he's delivered little more than a few focus-group tested lines. And now the Morrison Government is delaying action again, because they say they're too busy with COVID-19 but apparently they're not so busy they can launch a new inquiry to stymie class actions against predatory companies, because for them, that's a priority.

In opposing this inquiry Labor's not suggesting that the legal regime governing class action proceedings is perfect. But we do not need another inquiry to tell us how to improve it. What we need is some actual governing by this hapless Government and an actual response to the Australian Law Reform Commission inquiry that this Government commissioned, which got one mention in the Attorney-General's 15 minutes speech today.

After a comprehensive inquiry lasting a year, involving consultations with some 60 key stakeholders, the Australian Law Reform Commission completed its 339 page report on class action proceedings and third party litigation funders in December 2018.

It was this Government that commissioned that report. This Government that received that report on the 21st of December 2018. And in January 2019, it was this Government that said that it would carefully consider each of the reports 24 recommendations and provide a response.

So where is the Government's response? You might have thought that the Attorney- General might provide it today. But it's nowhere. 17 months and not a word. And why? Because that independent report by the Australian Law Reform Commission into the same subject matter as this new referral to a parliamentary inquiry didn't give the Government the answers that it wanted. Even today, the Attorney-General is not responding to the lengthy report of the Government's own inquiry.

We've also seen that the Government's tried to claim that this new inquiry is urgent because of the increased risk of shareholder class actions against listed companies for breach of continuous disclosure requirements during the COVID-19 crisis. But why then has the Government ignored, for some 17 months, the 2018 recommendation of the Australian Law Reform Commission and I quote:

The Australian Government should commission a review of the legal and economic impact of the operation enforcement and effects of continuous disclosure obligations and those relating to misleading and deceptive conduct contained in the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001.

It's abundantly clear that the Government's agenda in establishing this new inquiry is far broader and far more ideologically driven than the discrete issue of reform to the class action regime in relation to litigation funding or reform in relation to shareholder actions against listed companies for breach of continuous disclosure obligations. Nor is the COVID-19 pandemic the reason for this Government's inquiry. If they refer to it, it is simply an excuse.

If the impetus for this inquiry really was the narrow and specific purpose of responding to the risk of critical reactions against listed companies during the COVID-19 crisis, then Labor would, as always, be willing to engage in a constructive way. But that is not what this inquiry is about.

So I say again, while Labor does not oppose sensible law reform and believes reform must be an ongoing task, the Australian Law Reform Commission completed a comprehensive report in relation to the matters the subject of this proposed parliamentary inquiry less than 18 months ago.

What we now need is a comprehensive response from the Morrison Government to the Commission's 339 page report and to its 24 recommendations for reform.

Labor does not support this Government-controlled parliamentary inquiry created to stack the deck against ordinary Australians trying to uphold their rights in court.