Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for the Republic) Share this | Hansard source

The effect of the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 is to make class actions beyond the reach of many Australians and therefore make access to justice beyond their reach as well. It's clear that this bill is primarily aimed at making class actions more difficult for plaintiffs and protecting the interests of wealthy and powerful defendants. It's part of a continued pattern of hostility on the part of this government to the ability of individuals to access justice through class action lawsuits.

This bill is supposed to protect the interests of plaintiffs in class actions by setting limits on litigation funding schemes. The intention is to do this, firstly, by providing that the court must approve or vary the distribution of claimed proceeds as fair and reasonable and, secondly, by imposing a rebuttable presumption that a proposed distribution will not be fair and reasonable if less than 70 per cent of the proceeds go to the plaintiffs.

The bill was subject to a short inquiry through the Parliamentary Joint Committee on Corporations and Financial Services, but it was rushed and it wasn't adequate consideration of the details and the effects of this proposed law. Firstly, members of the public were given less than one week to review an exposure draft of this complex legislation and make submissions to the Treasury. Secondly, after ignoring most of the feedback Treasury received from those submitters, the government introduced the bill into parliament on 27 October and gave this government-controlled committee three weeks to conduct its inquiry.

The committee gave members of the public only seven days to make submissions, citing the three-week time frame for the inquiry as the reason. The government controlled committee held one public hearing, on 12 November, and gave witnesses less than two business days to respond to questions on notice. Throughout the inquiry process the majority of submitters, including lawyers who specialise in representing plaintiffs and defendants in class actions, made it clear that the bill could jeopardise the interests of both class action plaintiffs and defendants. It would do this by discouraging plaintiffs and defendants from settling disputes, thus delaying the resolution of a particular court action and making class actions more expensive. It will also promote uncertainty around the availability of common funds orders. By requiring class action members to agree in writing to be members of a funded class action, the proposed approach would lead to increases in closed actions, potentially increasing the number of multiple class actions for any given event. It's for these reasons that Labor is strongly opposed to this bill.

I have been involved in financial services for many, many years now, particularly when I started in the parliament, through the Trio Capital collapse and the inquiry that was undertaken into that particular financial scandal. The Parliamentary Joint Committee on Corporations and Financial Services inquiry heard some harrowing evidence from victims of financial fraud and misconduct, people who were encouraged to spend their life savings in particular managed investment schemes and, not only that, were encouraged to mortgage their homes that they had paid off already to buy further shares into these managed investment schemes, after people had retired—absolutely crazy financial advice that was given to working people—and, when the scheme collapsed, they lost the lot. Not only did they lose their life savings and their house; they also squandered their kids' inheritance.

There were criminal prosecutions that came from the collapse of Trio Capital. I think one person went to jail. A number of people were disqualified and a number were suspended from providing financial advice and auditing. But there are many people who, because they had invested through a self-managed super fund and therefore were not in a regulated superannuation scheme, lost the opportunity to make a claim against the scheme that the government has set up to ensure that people who are the victims of financial fraud through the regulated superannuation system can recover in circumstances where there is misconduct and fraud, as there was in Trio Capital.

Many of those people were in self-managed super funds—they weren't in the regulated superannuation industry—and they lost the lot. Sending someone to jail doesn't help them, when they lost their life savings. They can't access the regulated compensation scheme because they are not part of a regulated superannuation fund. They were the ones who were, if you like, swimming outside the flags—and they lost the lot. Why would you want to make it harder for people like that to be involved in a class action, when that's all that they have left? That is all they potentially have left to try and get some justice. When all of the other systems—ASIC, other regulators, what is now AFCA, but the preceding bodies that were set up to investigate financial fraud and look at complaints on behalf of applicants—couldn't give them justice, all that is left is the court system. But we know that the court system is quite expensive. And let's face it: taking a matter to the Federal Court around a financial fraud is not an easy thing to do. You need legal representation if you are going to be effective in recovery. The effect of this particular bill is to make it harder for those people to be involved in a class action—the only way people like that can get justice for the wrongdoings that are perpetrated on them, when all of the other government bodies that have been established to assist people in making complaints through this system have failed.

The point about Trio Capital was that there was no money left, so there was nothing for them to recover. Sure, you could have gone to AFCA and AFCA could have said, 'Yes, you've been wronged. It was fraud. There's a claim that you have'—but there was no-one there to pay it. There's no money for them to recover. That is why people like that need access to the justice system and need the protection of being able to be involved in class actions and to have access to litigation funders. There's no way in the world they would be able to fund and be involved in legal matters on their own. That is why this is particularly important.

I suspect that this government has an ideological bent, particularly against people who take matters to court associated with environmental issues and protection of the environment. It will be hardworking Australians who end up in situations of financial fraud and lose the lot who will be disadvantaged by this proposal and, once again, left in the lurch by this government. It won't affect big corporations or wealthy individuals, who'll be able to afford to take matters to court on a solo basis, who'll be able to pay expensive lawyers and barristers to do their work. It will be the poor Australian worker who doesn't have the financial means to support action in the court who will be disadvantaged by this proposal. That is why it is bad law. It removes access to justice for people who rely on class actions to get access to justice. In that respect this proposal is unfair; and in that respect it should be opposed by this parliament.

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