Class Actions update | Australia
04 Jun 2018 Reshaping the class actions landscape - what's on the law reform agenda?
Inquiry into Class Action Proceedings and Third-Party Litigation Funders - Australian Law Reform Commission Discussion Paper 85
What you need to know
- The Australian Law Reform Commission has published a discussion paper setting out a number of proposals for the regulation of third-party litigation funders and increasing the role of the Court in supervising class actions.
- The proposals include: a regulatory regime for litigation funders; Court supervised contingency fees for class actions; and new rules to prevent competing class actions, a problem dealt with in the recent decision Perera v GetSwift Limited [2018] FCA 732 (read our update here).
- In the context of shareholder class actions it is also proposed that the Australian Government should commission a review of the legal and economic impact of the continuous disclosure obligations of listed companies and the misleading or deceptive conduct provisions of the Corporations Act and the ASIC Act.
What you need to do
- Submissions in response to the discussion paper are due by 30 July 2018.
What does the discussion paper say?
Thirty years after the Australian Law Reform Commission (ALRC) published the report which led to the introduction of the current Australian class action regime, the ALRC again is looking at some of the most controversial issues in class actions.
In December 2017, the Attorney-General asked the ALRC to inquire into class action proceedings and third party litigation funders.
The ALRC has now published a Discussion Paper which makes a series of proposals summarised in the table below, and raises a number of questions for consideration.
ALRC Proposals | |
---|---|
Shareholder class actions | Commission a review of the legal and economic impact of continuous disclosure and misleading or deceptive conduct laws |
Litigation funding licenses |
|
Alternatively, enhancement to current regulation |
|
Commission and legal fees |
|
Competing class actions |
|
Settlement approval and distribution | Court appointed referees to assess the reasonableness of costs and efficiency of work before a settlement approval |
Collective redress scheme | Consider establishing a collective redress scheme to enable class members to access a remedy without litigation of general law or statutory claims |
Why is class action law reform on the agenda?
The discussion paper recognises a level of disquiet in the Australian market about the economic impact of shareholder class actions, including the increasing cost of D&O insurance.
The proposals to regulate litigation funders and class action lawyers, permit contingency fees and have referees assess the reasonableness of costs echo themes recently canvassed by the Victorian Law Reform Commission, whose report has been delivered and is due to be released when tabled in Parliament. That review was commissioned following public discussion of a settlement that was said to benefit a third-party funder and law firm more than class members.
Recent instances of multiple open security class actions may have reduced the cost of third-party litigation funding due to competition, but overlapping class actions are currently causing delay, inefficiency and greater overall costs. The decision in Perera v GetSwift Limited [2018] FCA 732 promises to alleviate these problems to some extent. Given the existence of equivalent class action regimes in New South Wales, Victoria and Queensland, the ALRC's proposals may necessitate co-operation between State and Federal governments.
What will happen next?
The ALRC has invited stakeholders to meet with it to discuss these issues and requires that any written submissions be made by 30 July 2018.
The ALRC's report is due by 21 December 2018.
Authors: John Pavlakis, Partner; Andrew Westcott, Senior Expertise Lawyer.
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Sign upThe information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying it to specific issues or transactions.