MS TIERNEY (Western Victoria—Minister for Training and Skills, Minister for Higher Education) (15:45): I am pleased to provide a summation from the government’s side. This bill is about delivering access to justice for ordinary Victorians by making it easier to bring class actions for things like silicosis, wage theft, consumer harm and other forms of corporate wrongdoing. The bill will pave the way for class actions to proceed where they otherwise may not be viable because of financial risks to plaintiffs in legal costs.
Many ordinary Victorians have benefited immensely from class actions. These include victims of the Black Saturday fires, bank customers who were sold worthless financial products and patients suffering complications from unsafe medical treatments. Invariably they were taking on incredibly well-resourced defendants. Professor Vince Morabito, in a submission to the Victorian Law Reform Commission’s 2018 inquiry into access to justice and litigation funding in group proceedings, found that over $1 billion had gone to over 28 000 class action members in Victoria. Without class actions, the risks and costs of legal action would have been prohibitive, not just for claimants but for the defendants and the courts. This is because class actions create efficiencies, ensuring that potentially thousands of individual claims can be heard together. But we know the class action regime can be improved to give more people access to justice, which is exactly what this bill is all about.
The bill implements a recommendation of the Victorian Law Reform Commission from its 2018 report called Access to Justice—Litigation Funding and Group Proceedings. The Victorian Law Reform Commission found that Victoria’s class action regime had been an effective means of providing access to justice but that it was under-utilised, with only five class actions issued in Victoria each year. These reforms will pave the way for class actions, including cases of silicosis, wage theft and corporate wrongdoing, which I mentioned before. Basically, they would proceed where they would otherwise not have been able to under traditional litigation funding models.
The bill will allow lawyers to receive a fee that is calculated as a percentage of the settlement. It is often, as we have heard through this debate, called a contingency fee. This is achieved by enabling the Supreme Court to make orders called group costs orders. This will shift the burden of cost risks from the lead plaintiff in a class action to the plaintiff lawyers in return for the lawyers receiving a percentage of any amount recovered as payment of their costs. Under these new group costs orders and consistent with the law reform commission’s recommendations, lawyers would be required to indemnify the lead plaintiff for any adverse costs orders and provide security of costs if ordered, and the Supreme Court will continue to have strong powers to monitor and approve all legal costs in class action proceedings.
These are the facts the opposition is conveniently ignoring. I note that the Supreme Court of Victoria was consulted on the bill. Obviously, given the court’s independent role in the separation of powers, the court does not take a view on the bill itself. However, we are confident that the bill is workable and will improve access to justice in class actions.
This bill has the support of many people in the legal profession as an access to justice measure. The Law Institute of Victoria supports the bill, as does the Consumer Action Law Centre and the Australian Lawyers Alliance. In his submission to the commonwealth inquiry into litigation funding and the regulation of the class action industry, dated 10 June 2020, Professor Morabito, a class action expert, has written on page 5 that contingency fees in class actions, and I quote:
… can potentially enhance access to justice for a greater number of claimants and provide a greater percentage of damages and settlement proceeds than is possible under funded class actions.
He also has written, and I quote:
The Victorian government is seeking to follow the advice of its own law reform commission in implementing, with respect to class actions in the State’s Supreme Court, a contingency fee model.
I am disappointed by the opposition’s position on this bill. This is such an important opportunity to improve access to justice, and I would urge all of those opposite to reconsider their position, given the significant elements of this bill.
I do want to respond to some of the arguments made against this bill. The first is that the bill will have a honey-pot effect or there will be an explosion of class actions. This side does not accept that, and we do not believe that has any basis in reality. As I mentioned, there have only been five class actions on average filed in the Supreme Court in Victoria every year. In fact the majority of class actions in Australia are filed in the Federal Court, which deals mostly with investor and shareholder class actions. According to the class actions expert, Professor Morabito, there were 54 class actions in 2019 in Australia and 66 in 2018—54 out of the many thousands of cases brought to our courts every year. It is simply wrong to call this an explosion of class actions.
The Victorian Law Reform Commission said in its 2018 report that Victoria’s class action system is under-utilised and could be reformed to assist people with claims that are not currently run. These include claims for silicosis, wage theft and of course cases of dodgy consumer practices. Further, a connection to Victoria is required for a class action to be issued in the Supreme Court. Victoria will not be swamped with claims that should be brought in other jurisdictions. Victoria must be an appropriate jurisdiction for a case before a class action can be issued here. Further, the Supreme Court has a strong case-management power or control in its processes and can transfer proceedings to the Federal Court or the Supreme Court of another state. All of these factors reduce the likelihood of claims being brought in Victoria when they should be brought elsewhere.
Another argument made was that there will be conflicts of interest for lawyers motivated by profits and that will diminish the legal profession. We believe that is complete nonsense. This bill does not change the ethical obligations lawyers have to their clients and to the court, which will continue, as they are fundamental. Lawyers already routinely manage conflicts between their firm’s commercial interests and the interests of their clients. Lawyers’ obligations under our bill are no different to those under the current class action fee arrangements. Where a lawyer acts in a no-win, no-fee case, they must give advice on when to settle a claim and they stand to lose money if the proceedings are unsuccessful. Under this bill plaintiff lawyers will be liable for adverse costs if the proceedings are unsuccessful. Lawyers have wideranging responsibilities to assist and manage conflicts of interest, including fundamental duties to the court, professional obligations under the Legal Professional Uniform Law and a range of other requirements to disclose costs.
The argument that we will see exorbitant payments paid to lawyers and that people will be exploited is again not evidenced. Those making this argument have completely ignored the text of the bill. Clause 5 of the bill states that the court must be satisfied in making a group costs order that it is appropriate or necessary to ensure that justice is done in the proceedings. Under this bill the Supreme Court will have strict oversight of group costs orders, including power under clause 5 to vary the percentage amount to be received by the plaintiff lawyers at any stage of the proceedings. The Supreme Court will not make a group costs order unless it is in the interests of group members. Courts heavily scrutinise all legal costs, particularly in class actions, and all class action settlements require the approval of the Supreme Court. Lawyers cannot get windfall gains because the court must be satisfied that a settlement is fair and in the interests of class action members, not lawyers, and the bill does not change this. Class action members can always object to any settlement before it is made. The bill does not change this either. Finally, under the arrangements in the bill class action members are only paying their lawyer, not their lawyer and the litigation funder. This means that class action members may receive more in a class action run under the arrangements in this bill.
It has also been said that people could get caught up in this who did not know that they were being included. That is not how class actions are run in Australia. Class actions are run on an opt-out basis, and the courts require that an opt-out notice is to be published, which gives people the opportunity to no longer be part of any class action. From the outset class members can obtain all relevant information.
There is a very important reason why class actions are to run on an opt-out basis. People may discover later that they have suffered injuries from a dodgy medical device or have asbestosis, and an opt-out system means that they do not miss out on the potential benefits of a case. People can choose to opt out of a class action. If they do not opt out, all this means is that they can take advantage of any favourable outcome. If a matter is unsuccessful, class action members who do not opt out are not up for any costs.
To suggest that this bill is going to make our legal system look like America’s is untrue. Australian litigation is nothing like litigation in the US. Unlike the United States, in Australia the losing party pays the other side’s costs. If a claim is unsuccessful, a costs order will still be made against the losing side. This bill does not change that fact. In fact the bill takes it further and says that the law firm must take on all the risks of costs orders themselves; they cannot pass any of those costs on to members of a class action. Law firms will need to take the financial burden of providing security for the defendant’s costs if ordered. These are going to be cases where there is a likelihood of success.
Suggestions that this bill will mean that the economy will further suffer during the economic downturn is absurd. The government recognises that the economy is being affected by COVID-19. That is why we have invested record amounts in stimulus and social and economic supports to keep Victorians working and to look after the most vulnerable. But injured workers, workers who have been victims of wage theft and people whose lives have been ruined by dodgy medical devices deserve justice, and that is what this bill is about. We cannot not ignore the plight of people who have been victims of corporate fraud and other forms of wrongdoing, and class actions are an important way for these people to receive justice.
We also reject the point that this reform should be pursued nationally. The Victorian Law Reform Commission did not say that this recommendation had to be done first on a national basis. In its report the commission wrote on page 63 that:
Independently of any decision to remove the prohibition on lawyers charging contingency fees nationally, there is scope to improve access to justice by permitting lawyers to be paid a contingency fee in class actions, subject to certain conditions being met and the supervision of the court.
How on earth would any government get change if all policy had to be agreed nationally?
The fact of the matter is that we are also bringing about a house amendment which deals with summons powers in respect to IBAC, and I think that other people will be dealing with this a little later. But essentially this is a request on behalf of IBAC, and the reason it is being located in this session of the proceedings today is because we needed a vehicle to actually address and carry the amendment. It is a mechanical operational thing that will be dealt with by the house shortly, but I just wanted to raise it now so that people did not think that we had forgotten this very important point.
Government amendments circulated by Ms TIERNEY pursuant to standing orders.
Ms TIERNEY: In summary, this bill is about delivering access to justice, making it easier to bring class actions for all of the important things that I have mentioned. This bill will allow actions to proceed where otherwise they may not be viable because of the financial risks to plaintiffs and the legal costs. I do urge the chamber to take an important step today in passing this legislation for all Victorians. I do commend this bill and remind the house that if the bill is passed it will cover all legal companies, all law firms, not just restricted to those that are mentioned continuously by those on the other side.
House divided on amendment:
| Ayes, 16 | ||
| Atkinson, Mr | Finn, Mr | McArthur, Mrs |
| Bach, Dr | Grimley, Mr | O’Donohue, Mr |
| Bath, Ms | Limbrick, Mr | Ondarchie, Mr |
| Bourman, Mr | Lovell, Ms | Quilty, Mr |
| Crozier, Ms | Maxwell, Ms | Rich-Phillips, Mr |
| Davis, Mr | ||
| Noes, 22 | ||
| Barton, Mr | Leane, Mr | Stitt, Ms |
| Cumming, Dr | Meddick, Mr | Symes, Ms |
| Elasmar, Mr | Melhem, Mr | Tarlamis, Mr |
| Erdogan, Mr | Mikakos, Ms | Taylor, Ms |
| Garrett, Ms | Patten, Ms | Terpstra, Ms |
| Gepp, Mr | Pulford, Ms | Tierney, Ms |
| Hayes, Mr | Shing, Ms | Vaghela, Ms |
| Kieu, Dr | ||
| Ayes, 16 | ||
| Atkinson, Mr | Finn, Mr | McArthur, Mrs |
| Bach, Dr | Grimley, Mr | O’Donohue, Mr |
| Bath, Ms | Limbrick, Mr | Ondarchie, Mr |
| Bourman, Mr | Lovell, Ms | Quilty, Mr |
| Crozier, Ms | Maxwell, Ms | Rich-Phillips, Mr |
| Davis, Mr | ||
| Noes, 22 | ||
| Barton, Mr | Leane, Mr | Stitt, Ms |
| Cumming, Dr | Meddick, Mr | Symes, Ms |
| Elasmar, Mr | Melhem, Mr | Tarlamis, Mr |
| Erdogan, Mr | Mikakos, Ms | Taylor, Ms |
| Garrett, Ms | Patten, Ms | Terpstra, Ms |
| Gepp, Mr | Pulford, Ms | Tierney, Ms |
| Hayes, Mr | Shing, Ms | Vaghela, Ms |
| Kieu, Dr | ||
| Ayes, 16 | ||
| Atkinson, Mr | Finn, Mr | McArthur, Mrs |
| Bach, Dr | Grimley, Mr | O’Donohue, Mr |
| Bath, Ms | Limbrick, Mr | Ondarchie, Mr |
| Bourman, Mr | Lovell, Ms | Quilty, Mr |
| Crozier, Ms | Maxwell, Ms | Rich-Phillips, Mr |
| Davis, Mr | ||
| Noes, 22 | ||
| Barton, Mr | Leane, Mr | Stitt, Ms |
| Cumming, Dr | Meddick, Mr | Symes, Ms |
| Elasmar, Mr | Melhem, Mr | Tarlamis, Mr |
| Erdogan, Mr | Mikakos, Ms | Taylor, Ms |
| Garrett, Ms | Patten, Ms | Terpstra, Ms |
| Gepp, Mr | Pulford, Ms | Tierney, Ms |
| Hayes, Mr | Shing, Ms | Vaghela, Ms |
| Kieu, Dr | ||
