Thursday, 18 June 2020

 Mrs McARTHUR (Western Victoria) (10:57): I rise today to speak in strong opposition to the Justice Legislation Miscellaneous Amendments Bill 2019. This bill is a shameful disgrace and shows exactly who pulls the strings of the Andrews government. It is a kowtow to some of the largest donors to the Labor Party. It is a bill to line the pockets of ambulance-chasing lawyers. This bill is anti-victim, anti-plaintiff, anti-justice and anti-business, and at a time when all governments are calling on business to create jobs, this government is intent on making that task even harder.

The legislation, if passed, removes the more than 200-year-old prohibition that lawyers are only able to charge a fair and reasonable fee for their services. Instead Victoria will become the mecca of litigators, where they will charge massive commissions on the damages awarded to the very victims they are meant to represent. This practice is currently banned in all Australian jurisdictions. But more so, in their intent to grow the pool and therefore the commission that these lawyers can charge, this bill allows a lawyer to take a share of the proceeds of class members who have never been told that it might happen, have never agreed to such an arrangement, have never had the opportunity to negotiate a better or different deal and in many cases will not even know it is happening. The intent of this would be laughable if it was not so serious.

Under this new regime this bill creates conflicts of interest never seen before, at the expense of the victims who have been most wronged in our community. This bill makes it clear that class actions can be run in the name of Victorians on an opt-out basis rather than an opt-in basis. A class action can be run in your name without your knowledge.

Let me clarify: class actions have a noble aim, which I support wholeheartedly. They are a vehicle that allows plaintiffs to join together collectively with a shared view of being wronged. Members of the action share the risks and costs, and this allows for an efficient and effective way to seek justice. When run in their purest form they have delivered many great outcomes, and what comes to mind most vividly are the victims of the Black Saturday bushfires.

But unfortunately class actions in this country have been hijacked. They are no longer a vehicle of justice but instead a vehicle for profits. Their noble intention has been completely corrupted by predatory practices at the expense of victims and justice. This bill flies in the face of the fundamental obligation of a lawyer to place the interests of their client above their own and belittles their judiciary obligations. Do not just take my word for it; the Victorian Law Reform Commission noted that introducing:

… contingency fees would intensify the risk that the lawyer’s financial interest in the outcome of litigation will prevail over their duty to their client.

And financial interest is what this legislation is about. Last year Maurice Blackburn donated $554 805 to the Australian Labor Party and affiliated entities. In the last financial year Maurice Blackburn made 39 separate contributions to the Victorian ALP totalling $122 887. This made them the largest non-union donor to the Labor Party. And then—surprise, surprise—this bill turns up. Maurice Blackburn are the largest filers of class actions in the country and file over two and a half times the amount of class action lawsuits as their closest competitors. I have heard, and believe it to be true, that the most concerted lobbying of the crossbench on this bill was done by none other than representatives of Maurice Blackburn. The ambulance chasers—whose spin is about fighting for fair but in reality are fighting for fees—have been out and about in this place to lobby for support for this legislation and to make their lives better.

I have with me here their briefing note that is trying to hoodwink crossbenchers into believing that in actual fact this bill is all about access to justice and increasing the returns for class members. This is complete nonsense, and if any of my crossbench colleagues in this house believe them, I ask them this: what stakeholder comes into this place and lobbies you, saying, ‘Please pass this bill so that we can make less money’? That is right—actually no-one. Buried deep in the fine print of the document that they provided is a detail claiming that the victims would have been better off under a 25 per cent contingency fee arrangement on class actions run by Maurice Blackburn. It is puzzling because point 27.4 of submission 13 to the Victorian Law Reform Commission’s review of litigation funding and group proceedings, the report of which was published in 2018, reads:

… we would support:

(a)   consideration to capping the percentage for the contingency fee. As the empirical evidence above demonstrates a cap of 30% or 35% would produce better outcomes on average …

Who was it that made this submission pushing for a 30 per cent to 35 per cent commission on damages awarded to successful plaintiffs of class actions? None other than Maurice Blackburn: the very people who present to the crossbench this bald-faced lie that they are the only seeking 25 per cent. That in itself is alarming. For the information of my colleagues, I have had experts make calculations, based on Maurice Blackburn’s own numbers that they presented to crossbenchers, which showed that under a 25 per cent contingency fee arrangement they would have made $78 million more in profits. If allowed, with a 35 per cent contingency fee as proposed in this submission to the Victorian Law Reform Commission, their profits would have increased by an additional $224.8 million—remember: $224.8 million extra profit. Time and time again the wealthy legal professionals on La Trobe Street prove themselves to be fighting not for increased access to justice but for increased fees. This startling information should serve to remind this chamber of the vested interests with close financial links to the government, who are seeking more profits at the expense of victims and justice.

For me, the appalling nature of this bill is best demonstrated by examining the class action I mentioned earlier: the action run by Maurice Blackburn on behalf of the Black Saturday bushfire victims who had lost everything—tragically in some cases even the lives of their family members.

In that class action, by the way, Maurice Blackburn charged administrative costs of $1 million every month and withheld the settlement money from victims for over two years. Of the $794 million settlement, it is reported that Maurice Blackburn charged $100 million in legal fees. If this bill had been passed at the time of settlement and Maurice Blackburn had been allowed to charge what they submitted to the Victorian Law Reform Commission, this figure would have been $270 million—an extra $170 million if this legislation was in place when they got their $100 million. This bill would have given them access to that extra $170 million out of the pockets of the people who had lost everything. It is not just not fair for this legislation to pass; anyone who votes for this bill is seriously misguided, not by the facts but by the fiction of the government and one of their largest donors.

You only need to look at the explosion of offshore litigation funders to know where this bill is taking us. Data shows that in 2016 successful class members took home on average 59 per cent of the proceeds awarded to them in class actions backed by a funder. By 2019 this percentage had reduced to just 39 per cent. The Australian Law Reform Commission found that without a funder involved class members received on average 85 per cent of the damages awarded to them. The intent of this bill solidifies those low returns for the people who have been wronged by injustices. It is unfair and allows for massive profits at their expense. The returns of litigation funders backing Australian class actions are 17 times the average returns of investing in the Australian stock exchange and 212 times the benchmark returns earned by US hedge funds. As Chris Merritt recently wrote in the Australian:

Increased access to justice? Give me a break. This is all about increased access to the latest BMW.

Everything else is marketing.

In an investor presentation Omni Bridgeway, the largest litigation funder in Australia, revealed that they made 3.7 times more on Australian cases compared to those backed in the United States and that their deployed investments have increased from around $100 million in financial year 2015 to around $650 million in half-financial year 2020. The standout of the presentation, though, is the revelation that if this bill passes, Omni is considering going head to head with the likes of Maurice Blackburn and Slater and Gordon for contingency fees by, quote, establishing ‘its own law firm and seeking contingency fee returns’.

There also remain very real questions about what discussions have gone on behind closed doors regarding this bill. Three months ago I sought information through freedom-of-information requests detailing any meetings between the Attorney-General, the Premier and the Department of Justice and Community Safety and Maurice Blackburn on this bill. This is extremely important information considering the significant financial contributions they make to the Labor Party and the increased profits they will make if this bill passes. Still to this day, and notably well outside reporting time frames, I am yet to receive that information. On this matter I can confirm to the house that, given the serious questions that need to be answered on the genesis of this legislation and having not received the information, I have referred the unwillingness of the government to provide me with the information to the Independent Broad-based Anti-corruption Commission and the Office of the Victorian Information Commissioner for investigation. It is a disgrace that this information has not been provided prior to the debate on this legislation. Victorians rightly deserve the answers to these questions, especially under the current clouds of corruption and branch stacking in the Labor Party.

In my first 17 months in this Parliament I have seen this government propose some appalling legislation, but this one takes the cake. This bill ignores the unconscionable returns on investments that are already earned through funding litigation in this way. It will reduce the damages going to victims most wronged in our community. It will not improve access to justice; it will improve access to fees. It will create more serious conflicts of interest between plaintiff lawyers and the people they are representing. It will mean a class action can be run in your name without your prior consent, and it will throw out more than 200 years of practice that a lawyer can only charge you a fair and reasonable fee. Class members will receive less money. The Labor law firms will receive more. Nothing is clearer to me than that this bill must be rejected by this house, and anyone who seeks to enable its practice does not have the interests of justice in mind.

I implore all members of the crossbench to vote against this bill, especially those on the crossbench who have been targeted by vested interests in the most spectacular way. If the past week’s events have shown us anything, it is that this Labor government is entirely beholden to faceless men and backroom deals. It has shown us that they are corrupt, have a complete disregard for the laws of our state and are willing to use taxpayer-employed staffers to do whatever bidding they please. Members of the crossbench, do not be complicit in enabling more dodgy backroom deals to the benefit of more faceless men, by voting down this legislation. The Victorian Parliament has an opportunity here to demonstrate that, unlike ministers of this government, we are beholden to the people of the state—the people of Victoria, those silent people out there who think that we are doing what is right and in their best interests—and beholden to justice and transparency. We should not be beholden to big donors, vested interests and secrecy. I implore the crossbench and all members to vote against this unjust bill.

 Ms TERPSTRA (Eastern Metropolitan) (11:12): I rise to make a contribution in support of this bill but also in opposition to the reasoned amendment that has been proposed. While I was listening to Mrs McArthur’s contribution I took my time to really consider strongly what she was saying in regard to this matter, because I find it quite interesting just looking at what the Liberal Party actually stands for. I actually googled this as I was sitting in the chamber and think that some of the contributions that Mrs McArthur has just made are quite contradictory to what the Liberal Party stands for. I might just quickly take a moment to talk about this because it seems to be contrary to what the purpose of this bill actually is about—improving access to justice. This is what the Liberal Party believes:

In equal opportunity for all Australians; and the encouragement and facilitation of wealth so that all may enjoy the highest possible standards of living, health, education and social justice.

… wherever possible, government should not compete with an efficient private sector; and that businesses and individuals—not government—are the true creators of wealth and employment.

…

In short, we simply believe in individual freedom and free enterprise; and if you share this belief, then ours is the Party for you.

Well, let me say that it is curious to me that law firms such as the ones that Mrs McArthur has mentioned are obviously very, very successful and, in relation to free enterprise, have made many gains in terms of their own creations of their own businesses and wealth. Might I add that in doing so they have actually been helping ordinary Victorians get access to justice—Victorians who would not ordinarily have had the wealth or the means to fund or support litigation where perhaps their human rights have been abused or any other rights have been abused.

On Tuesday we passed in this chamber some very important legislation that will give people access to justice in regard to wage theft. I find it very curious that it is only when it suits those who are the elites and those that are the few rather than the many that we see contributions from those opposite that do not support people getting access to wealth and that do not support people getting access to justice. As I said, this bill is about delivering access to justice for ordinary Victorians. It will make it easier for them to bring class actions for things like silicosis—you know, people who work in sectors where they are exposed to occupational health and safety risks who would ordinarily never be able to afford to bring expensive litigation against corporate giants who expose them to serious occupational health and safety risks while on the job—and things like wage theft, as I have just mentioned, and we talked about this in the chamber this week, which is a systemic and difficult problem. We see across a range of industries—like in the hospitality sector, the retail sector and other sectors—systemic wage theft, a business model that involves ripping people off, consumer harm and all other forms of corporate wrongdoing.

There are some really significant overseas examples, and I will give you one that just comes to mind. It was a long time ago, it is from the memory banks, but some people in this chamber may remember this. Union Carbide in India, for example, had a devastating impact on local communities when there was a toxic chemical release that actually killed people and damaged waterways. There are many, many, many other examples where class actions are very important to ensure that local people and communities, some of whom might be very poor, have access to justice. This bill will pave the way for class actions to proceed where they would otherwise not be viable because of financial risk to plaintiffs—contrary to what Mrs McArthur said in regard to legal costs. So again, in relation to silicosis, the government has acted decisively by banning the dry cutting of engineered stone to protect workers from deadly silica dust. The new regulations will dramatically cut workers’ exposure to this and reduce their likelihood of developing silicosis.

I will come back to some of my comments in a moment, but as I said, the purpose of this bill has a number of functions: not only will it make access to class actions easier, there are also a number of other minor and technical amendments to other pieces of legislation. It will amend the Supreme Court Act 1986 to give effect to recommendation 8 of the Victorian Law Reform Commission’s report Access to Justice: Litigation Funding and Group Proceedings, March 2018. It will also amend the Local Government Act 2020 and the Magistrates’ Court Act 1989 to validate the improperly established Municipal Electoral Tribunal and provide for reserve magistrates who continue sitting after their appointments have expired and provide the affected persons with individual immunity for any decisions that they have made. The other pieces of legislation that will be amended by this bill include the Crimes Act 1958, the Criminal Procedure Act 2009, the Evidence Act 2008, the Evidence (Miscellaneous Provisions) Act 1958, the Professional Standards Act 2003, the Oaths and Affirmations Act 2018 and the Sentencing Act 1991. So there are a range of important technical amendments that need to be made there.

Just in terms of the reasoned amendment, I might touch on that very quickly to say that, as I said earlier, we do oppose the opposition amendment, the reasoned amendment, on this bill because we oppose the removal of the group costs orders part of the bill. Now, the heart of this bill, as I said, is about access to justice. The opposition’s amendment to remove the group costs order will not assist litigants at all. What we can always count on is the opposition to do the bidding of big tobacco and big coal over the interests of ordinary people and injured workers. So the amendments proposed in this bill will ensure that people will have increased access to justice and enhanced access to justice.

We do not support the referral of this bill to a committee. I understand the reasoned amendment seeks to refer this bill to the Legal and Social Issues Committee. We do not want to delay a bill that will deliver important access to justice outcomes for Victorians. This legislation needs to be enacted so that people can have access to justice. Referring it to a committee is not going to do anything other than delay access to justice. We also do not support placing a cap on legal costs, because it will simply hurt ordinary class action members, and the simple reason for this is that the percentage amount that lawyers can receive under this bill may be much less than 35 per cent. It is appropriate that we follow the recommendations of the Victorian Law Reform Commission in this regard, and what they said is:

The Commission considers that, as the court would determine the amount of the fee, a statutory cap is not necessary. It is preferable for the fee to be based on the features of the particular class action.

Again that is an appropriate way for the court to deal with this matter. They look at the facts and circumstances of a particular to case and make a decision accordingly. That is the job of the courts, and we should not seek to fetter the discretion of the courts in this regard.

Just turning back to the substance of the bill, as I said, these are very important reforms and they seek to affect everyday Victorians. What the government wants to use is all the tools at its disposal to support workers and consumers in our class action laws, and this bill will go a very long way towards that.

Just to touch on the class action amendments, as I said, they are an important tool but we believe that the class action laws are underutilised. The Victorian Law Reform Commission found in its 2018 report Access to Justice: Litigation Funding and Group Proceedings, in an average year only five class actions are filed in the Supreme Court. And contrary to what has been put in this chamber today, we will not see a flood of litigation opened up by people seeking to access justice. The bottom line is: if you do not do anything wrong, you have nothing to fear. But what is important is that large corporations, such as some of the ones I have mentioned—things like tobacco and coal—be held accountable for their actions if they harm people.

In group litigation it can be hard to find a person to act as a lead or representative plaintiff on behalf of a group of claimants. And often plaintiffs fear that they will face the burden of legal costs individually if the matter is unsuccessful, because they might be made personally liable for meeting the costs of the other side. This acts as a major deterrent to ordinary people bringing cases against big corporations. So our laws can be improved so that Victorians can have access to justice. This is very significant and important. In some cases the risk can be addressed by a law practice acting on a no-win, no-fee basis or through the involvement of a litigation funder. However, where this is not the case the risk of personal liability may act as a major barrier to bringing that class action.

So again, this bill will allow lawyers to receive a fee that is calculated as a percentage of the settlement of damages, and this will be achieved by enabling the Supreme Court to make what is called a group costs order. This will shift the burden of cost risk from the lead plaintiff to the plaintiff lawyers in return for the lawyers receiving a percentage of any amount recovered as a payment of their costs. So it is a mechanism that shifts the risks and ensures that people gain access to justice. 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 for costs if ordered.

Many in the legal profession support this bill as an access to justice initiative. Just to touch on a number of bodies that have indicated their support, the Consumer Action Law Centre, for one, backs this bill and has stated that it:

… will reduce barriers to class actions by allowing lawyers to receive a ‘contingency fee’, a fee that is calculated as a percentage of the settlement of damages.

The Consumer Action Law Centre’s chief executive officer, Gerard Brody, noted that:

Too often class actions do not proceed because the economics don’t stack up for litigation funders. And regulators and other dispute forums, while important aspects of an effective justice system, can’t respond to all misconduct.

The changes in this bill should mean that more class actions are able to proceed. We see so much misconduct affecting vulnerable people by businesses such as payday lenders, debt management firms and even energy companies and telcos. Too often, significant harm goes unremedied.

So this is a really important mechanism. You know, when you let the free market rip and big business—as I touched on before, talking about letting the market rip—there are always winners and there are always losers unfortunately, and the consumers and ordinary Victorians should not be those ones that are always on the losing end. And when that corporate behaviour becomes so egregious, there needs to be an important mechanism, something that ordinary people can access without risking significant financial imposts.

I can say, as a former solicitor and someone who has been involved in some litigation, it never ceases to amaze me that some of the tactics that are engaged in litigation are deliberately designed to delay, to inflate costs and to drag out matters so that costs are simply inflated. So again, this is important. It indemnifies individual plaintiffs. It indemnifies individuals from having to contemplate potentially footing the bill for significant costs. So this arrangement will be a relatively simple one for class members to understand and is subject to strict supervision by the Supreme Court. The bill will allow the court to vary an order, including the percentage for the amount of legal costs, at any time during the proceedings. It is important that the court has full discretion in making the assessment about the percentage of legal costs involved. The bill will improve transparency for clients and provide safeguards for class actions for members.

So again, as I touched on earlier in my contribution, it is really critically important that ordinary Victorians be protected from free market largesse or poor free market or corporate behaviour. And this bill provides an access to justice and an avenue for that to occur.

I will briefly touch on contingency fees for a moment. I mentioned it slightly a little bit there earlier in my contribution. For the first time in Australia this type of reform has been introduced. This is historic. This government is serious about delivering access to justice and does not shy away from these reforms. Contingency or percentage-based fees have historically been prohibited in Australia under the Legal Profession Uniform Law. This bill is not inconsistent with the uniform law prohibition on contingency fees, because it does not prohibit the Supreme Court from making a group costs order, nor does it prohibit lawyers from receiving their legal costs in the form of fees calculated on the percentage of settlement as ordered by the court. So out of an abundance of caution the bill provides that the new group costs order provision applies despite anything to the contrary in the uniform law, which would apply in the unlikely event of any inconsistency.

And as I touched on earlier, despite the cries from the opposition benches that the floodgates will open and that Victoria will be besieged with class actions, nothing could be further from the truth. It will not lead to a spate of unmeritorious class actions or US-style litigation. In Australia, unlike the US, the losing party in litigation generally has to pay the other’s costs, so this is a major factor in people bringing only cases that have a shot at winning. Again, if corporations do the right thing by people, corporations have absolutely nothing to fear, so nobody should fear these bills. If you have nothing to hide, you have nothing to fear. I conclude my contribution there in commending this bill to the house but encourage the crossbenchers to oppose the reasoned amendment as proposed by the opposition.

 Ms CROZIER (Southern Metropolitan) (11:27): I am very pleased to be able to rise this morning and speak to the Justice Legislation Miscellaneous Amendments Bill 2019. I know that it is now June 2020, and this is a bill that the government has wanted to push through the Parliament. They want to get it through into law so that their supporters and those big firms will be the beneficiaries of what this entails. But I know that my colleagues who have spoken on this bill previously—Mr O’Donohue, I think it was in March, spoke on this bill, and Mrs McArthur has just spoken very succinctly in relation to the issues that the opposition has with this bill—have laid out the argument of why this legislation, this bill, should not be supported. I know that the government is putting forward house amendments, and they have come into the Parliament this week.

This bill, as I said, has been around since last year, and what it does is:

•   amend the Supreme Court Act 1986 to provide the Supreme Court of Victoria with the power to make a group costs order, which—

the stated claim is—

would improve access to justice for plaintiffs bringing class actions in the Supreme Court;

•   amend the Local Government Act 1989 and the Magistrates’ Court Act 1989 to ensure the validity and enforceability of actions and decisions by improperly established Municipal Electoral Tribunals (METs) and affected reserve magistrates; and

•   make a number of minor and technical amendments to justice Acts to correct errors …

So that is okay, but the crux of this bill goes to the very heart of what the government is trying to achieve here, and that is the group costs orders. There has been, I know, as other speakers have said, a great deal of discussion and a great deal of debate in relation to this, but we know that the government have a very strong view of group costs, and what they want to do is feather the pockets of those bigger law firms that are very supportive of the government.

But group costs in reality are the vehicle to introduce percentage legal contingency fees recovered from successful damages settlements from a group of plaintiffs, which would be sanctioned in Victoria. And the point here is that this is for the first time in Australia. Contingency fees are currently banned in all Australian jurisdictions, and this is, I think, the crux of the very real issue that the opposition has with this bill. Lawyers in Australia can currently only charge a fair and proper fee based on the work they complete.

As has been pointed out by my colleagues in relation to the justice element of this, as Mrs McArthur said, what are we talking about here? We are talking about justice and fairness and how it will disadvantage many people. Certainly it has been pointed out by the Law Council of Australia, the national body of lawyers, who have very succinctly pointed out their issues in not supporting such a move in relation to contingency fees. In fact the AustralianFinancial Review in an article sometime ago states:

Law Council of Australia president Stuart Clark said the decision against the change … followed an intensive debate.

I make that note because it has. There is a wide variety of views on this issue, which is absolutely fine, and we need to have those views aired and we need that debate. But what the law council, this national body—and I am quoting from this article that has reported on this proposal that we are debating on this legislation—says is that:

Everyone agrees with the premise of increasing access to justice but contingency fees could create conflicts of interest for lawyers, including in relation to their fiduciary duties to clients, as well [as] lead to more unmeritorious litigation.

He went on to say:

We need to get the rules right.

So I think that is absolutely essential. We need to get it right, but we do not want to be disadvantaging and we do not want to be creating conflicts for lawyers, the very people who are trying to in many instances represent those who are in very stressful circumstances and require the need for legal representation. What this legislation does is it does not allow that to occur. In fact it is just going to be, as I said, giving more power to those larger firms, like those ones that support the Labor Party—the Slater and Gordons, the Maurice Blackburns and all of those lawyers that have a fair bit to say in relation to supporting this government. There are very many issues that have come before—

Mrs McArthur: They put their money where their mouth is—behind the government.

Ms CROZIER: Yes, they do, Mrs McArthur. Mrs McArthur makes a very good point. They put their money where their mouth is, and that is behind the government. They support them in so many ways and in terms of financial and other means. That is exactly right, and we are seeing that play out—talking of putting their money where their mouth is—with what is happening in relation to the government’s own internal woes about money and branch stacking and all sorts of other unsavoury behaviour that has been going on. It is disappointing that the government is in such shambolic disarray in relation to where the state is at the moment. We are battling economic issues and we are battling health-related issues while we remain in a state of emergency and under extensive restrictions and we have got this carry-on going on behind the scenes. You wonder where those lawyers are. Those people are going to have a field day, I suspect, with some of these people—

Mrs McArthur: They’re lining up.

Ms CROZIER: They are lining up to have a go with—

Mr O’Donohue: They have already started some in anticipation.

Ms CROZIER: They have started some in anticipation, Mr O’Donohue. I am sure they going to have a field day with all of these issues that have been highlighted so extraordinarily over our airwaves and in our papers and by the exposé of 60 Minutes on Sunday night. What an extraordinary exposé that was, and it goes to the heart, the very culture, of the Labor Party. You would think that they would have learned from the red shirts saga all of those issues, but clearly not. Did they get advice from these very lawyers to not cooperate with the investigating authorities back at that time? Who gave them that advice? Was it these lawyers that are going to benefit from this legislation today? It is going to line their pockets, and they are going to be very happy to see this legislation passed, I am sure, but there are many other good lawyers out there that represent so many businesses, and those businesses that are going to be the commercial element—those businesses and others who require the independence of their representation—do not need these contingency fees and what this group costs order is going to do in terms of how they operate.

In relation to that I will not seek to debate this any further. In the debate so far from the opposition we have heard from Mr O’Donohue and Mrs McArthur, and I know Mr Ondarchie is keen to speak on this, as a number of my colleagues are, because it is an important bill. We are very firm in our view on this bill and that has been absolutely laid out clearly in relation to what we think is going on with this bill. I think it is a great shame. The government have done their best to try and push this through the house. They tried to do that back in March, and here we are in the last sitting day before a seven-week break where they are pushing this through now.

 Ms MAXWELL (Northern Victoria) (11:36): I rise to speak on the Justice Legislation Miscellaneous Amendments Bill 2019. I do not propose to make a particularly long speech, but I do want to place on the record the main reasoning of Derryn Hinch’s Justice Party for our position on this bill. Mr Grimley and I have both received significant lobbying on this legislation, and no-one would be surprised to hear me say that all of that lobbying has focused exclusively on issues related to the contingency fees. On each of the other components of the bill we happily concur with others that they are completely uncontroversial changes. I only wish our decision on contingency fees might have been so straightforward.

There are actually many worthwhile arguments on both sides of this debate, and we have appreciated the time that a number of people have spent with us in order to talk us through the many and varied positions they collectively have on this legislation. From among those views we do accept the proposition that the current number of class actions in the state is low and that there is a lot to be said for making such actions more accessible to many Victorians. Recommendation 8 of the Victorian Law Reform Commission’s (VLRC) Access to Justice: Litigation Funding and Group Proceedings report of 2018 also speaks to the potential value of class actions that are more efficiently structured, including as this relates to the introduction of contingency fees for lawyers. However, Mr Grimley and I have also been presented with various alternative forms of evidence and argument that have left us concerned about the practical impacts of the establishment of a new regime under which lawyers can charge contingency fees. Not the least of these is the High Court judgement in the Westpac v. Lenthall case.

We also struggle to support this bill when we look into it specifically from the perspective of many of the victims of crime that we feel we are in here to represent. It is difficult for us to see how those victims will not be worse off, and in some circumstances considerably worse off, when we consider how much extra money they are now likely to be required to hand over to lawyers even when they happen to win their cases. As others have said, the removal of the existing nationwide prohibition on law firms charging contingency fees is also not something that is currently supported by any other state or territory in Australia or by the commonwealth itself.

In turn, those problems are magnified by the wording of recommendations 7, 12 and 13 in particular in the same VLRC report to which I just referred. That report makes it very clear that even in those areas of law where in principle it supports the potential charging by lawyers of contingency fees, this is a matter which should be developed nationally in the interests of consistency. I would add at this point that the VLRC report should hardly be regarded as an outlier or rogue document of any kind. I say that because it was after all specifically commissioned by the Victorian government itself.

In the Justice Party we do accept the notion that reaching interstate and/or national agreements is very difficult on this particular issue of contingency fees because most, if not all, of the other jurisdictions have taken a very different position on this to Victoria. However, to us that is actually a very instructive point in itself. In turn we very much appreciated some discussions we had with the Attorney-General’s office about this, but we also unfortunately still feel some apprehension about the issue of how much of an expansion in court activity there might be in Victoria as a consequence of these proposed changes. In our view there is already far too much clogging of the court system in this state as it is, without potentially subjecting the existing system to a new set of very large and intensive cases, especially ones that sometimes might otherwise have been heard in another part of the country. There is currently a comprehensive federal inquiry process underway, the results of which will likely inform that important national, and nationally consistent, approach about which the VLRC itself spoke.

Given the reasons I have just outlined, Mr Grimley and I will be voting against this bill, and we would hope that the government would hit the pause button on introducing the changes in relation to contingency fees that are such a key element of the bill. We hope they do that at the very least until, as the VLRC has explicitly recommended, there is some meaningful agreement and consistency between the Victorian approach and the one followed by governments elsewhere in Australia.

 Mr ONDARCHIE (Northern Metropolitan) (11:41): I rise to speak on the Justice Legislation Miscellaneous Amendments Bill 2019. The purpose of this bill is to amend the Supreme Court Act 1986 to provide the Supreme Court of Victoria with the power to make a group costs order, with the stated claim that it would improve access to justice for plaintiffs bringing class actions in the Supreme Court; to amend the Local Government Act 1989 and the Magistrates’ Court Act 1989 to ensure the validity and enforceability of actions and decisions by improperly established municipal electoral tribunals and affected reserve magistrates; and to make to various justice acts a number of minor and technical amendments to correct errors and clarify the operation of various provisions.

But in a sense this Justice Legislation Miscellaneous Amendments Bill 2019 is really the ‘Let’s Look After Our Labor Mates Bill 2019’. That is really what this is all about. There have been a number of concerns raised in wideranging consultation that has been undertaken by Mr O’Donohue, Mrs McArthur and many others around the validity of this bill, and one of the areas of concern that was raised about this bill is in relation to the group costs order and the percentage contingency legal fee provisions for class actions. Business groups are particularly concerned at the potential for law firms to monetarily be encouraged to take on smaller or riskier class actions in a range of industries that may not be as attractive without the benefit of percentage contingency fees recovered from client damages awarded. Special advice provided through Mr O’Donohue to the state opposition has cast serious doubts on the efficacy of the group costs order, the contingency fee provisions of the bill and the reasons being proffered for their need.

When you look at some of the firms involved in those sorts of activities in the current market, currently there are only four key firms: Maurice Blackburn—I wonder who they are aligned to; Slater and Gordon, similarly; Shine; and Phi Finney McDonald. However, there is serious concern that allowing percentage contingency fees will only entrench the market power of those firms. Plaintiff costs of class actions can be significant. It is estimated that the costs that were taken on by Maurice Blackburn in the Black Saturday Kilmore East fire class action were in the order of internal fees of around $30 million and $28 million in other disbursements. Other class actions have incurred legal fees of on average between $6 million and $15 million over two to three years and trials that have lasted between four and 12 weeks. If you add to that fact a percentage contingency fee, this could be a significant windfall gain for some of these legal companies.

It should be noted there are serious concerns that litigation funders, which Victorian class action lawyers seek to replace through this legislation, are earning well above average returns on their investment. Those here who watch the investment market could be easily swayed by the changes in this bill. We were advised, for example, that in the recent Murray Goulburn class action in the Federal Court of Australia the litigation funder has earned a return on its investment in excess of 500 per cent per annum. I wonder, as Mr O’Donohue and Mrs McArthur have expressed, what is driving this. On average, litigation funders can earn returns of in excess of 45 to 50 per cent per annum on the funds invested in funding class action proceedings—if we reflect on the Murray Goulburn investment, 500 per cent per annum return.

I want to reflect now on commentary outside the political spectrum. What is business saying about this? What is the Law Council of Australia saying about this? The spokesperson for the Australian Industry Group’s (AIG) Victorian branch, Tim Piper, said this, and I quote:

The Victorian Government’s Justice Legislation Miscellaneous Amendments Bill 2019, which would allow ‘contingency fees’ to be charged in class action law suits, needs to be abandoned …

He goes on to say:

Businesses are currently being targeted in a class action boom that is being driven by unregulated overseas litigation funding firms chasing super-profits. The Victorian Government’s Bill—

Mr Piper goes on to say—

would make the problems worse, not better.

Further, he says:

The Bill would allow plaintiff law firms to achieve similar super-profits as the litigation funders through charging ‘contingency fees’—a fee charged as a percentage of the settlement amount.

He goes on to tell us—Tim Piper, the head of Victoria’s AIG—that:

The huge recent increase in class action law suits has led to insurance premiums going through the roof for businesses. These wasted millions would have been better spent on employment and investment, rather than increasing the profits of litigation funders and law firms.

Employment and investment are the two things this state desperately needs, and it seems to me that when it comes to jobs in this state the only jobs that the Labor government are interested in are their own. Mr Piper goes on to say:

Arguments that the Bill is in the interests of claimants are not correct.

So the AIG, representing business in this state, has said this is a bad bill and it should be abandoned. And those opposite on the government benches would say, ‘Well, of course business would say that’. But what are the lawyers saying? What are the lawyers saying about this bill? Well, the Law Council of Australia said recently:

At a recent board meeting of the Law Council, directors resolved to oppose contingency fees as a matter of principle.

This is the lawyers saying that. The law Council continued:

At the meeting a fundamental concern was expressed that contingency fees could not be introduced without adversely affecting litigants’ interests and lawyers’ ethical duties.

The Law Council of Australia president, Pauline Wright, said:

I am a passionate advocate of promoting access to justice, but I do not accept that contingency fees will promote that objective.

Ms Wright went on to say:

Should any government in Australia propose any contingency fee arrangements, the Law Council will have to carefully consider that proposal as against all the legal profession’s fundamental obligations.

The Law Council of Australia said:

It was considered that the model proposed could create a conflict of interest between the solicitor and the client, requiring solicitors to run the risk of adverse costs orders and security for costs.

Ms Wright went on to say:

In most jurisdictions in Australia a ‘no win—no fee’ arrangement is available that enables civil claims matters to be taken on for clients without deep pockets and matters that merit litigation in the public interest.

Ms Wright, on behalf of the Law Council of Australia, said:

Public interest cases would not benefit from the introduction of percentage-based fee agreements, and neither would low income matters.

It brings me back to the start of my contribution, when I suggested this bill was more about supporting Labor mates than supporting the needs of Victorians.

Interestingly enough, those very active in supporting this are Maurice Blackburn, who I note through Mr O’Donohue’s advice is a major contributor to the Labor Party, and Slater and Gordon, equally another contributor and donor to the Labor Party. They are very supportive of this, and we now know why. In making their case to support this legislation, the advocates fail to mention the explosion in class actions in recent years on the back of the emergence of large domestic and international litigation funders, which have allowed lawyers to limit their financial exposure, reduce their risk and take on many more lucrative class actions. The current no-win, no-fee model is mature. It is guided by strict and clear and understood rules that allow agreed members of the community with few resources but a good cause of action to litigate successfully.

I do note that currently the federal Parliament has a joint committee on corporations and financial services inquiring into litigation funding, and that is now well underway and is considering many of the issues that are already contained in this bill. It would be appropriate that the government then put this bill on hold awaiting the responses from the federal government’s Parliamentary Joint Committee on Corporations and Financial Services inquiry to see what they have to say. We are just getting a bit ahead of the game here, and I just wonder if the motivation for this is not a genuine one but more about quickly getting this through to support these sorts of Labor donors that I have mentioned earlier.

The bill does not currently propose a cap and there are concerns that a new contingency fee regime could see excessive legal fees claimed from plaintiff settlements without a cap. That is why I support Mr O’Donohue’s amendment today, the effect of which is to propose an amendment to clause 5, which inserts section 33ZDA into the Supreme Court Act 1986, for a 35 per cent maximum percentage cap limit on contingency fees payable to plaintiff lawyers as a part of any group order costs. If this government were genuine—and we have seen plenty of evidence since 8.30 on Sunday night on the Nine Network that this government is not genuine—this government today would support Mr O’Donohue’s amendment. What we do not want to see here is people exploiting hardworking, tax-paying, good Victorians who are looking to lodge a claim and find that certain law firms will just rip them off here, that will set up a strategy to ensure that it optimises their returns, perhaps at the success or the benefit of their clients. That is why I join with my colleagues on this side of the house to oppose the bill but support Mr O’Donohue’s amendments.

 Mr BARTON (Eastern Metropolitan) (11:52): I rise today to speak on the Justice Legislation Miscellaneous Amendments Bill 2019. My position is somewhat unique, in that I am one of the relatively few people who have been through the process of bringing a class action for a group of people who have been wronged. I have led the charge on behalf of my constituents to seek a way to pursue justice for my taxi and hire car industry colleagues that have had their livelihoods trashed unfairly by big business. The Transport Matters Party evolved out of what I increasingly saw throughout my time in that industry to ensure that individuals and small business owners do not get trampled on by powerful entities out to damage their livelihoods and wellbeing.

Transport Matters was born out of a belief that everybody, regardless of your wealth, position or power, should have proper representation of their rights and their issues in society, including politics. That is what led me to this Parliament and that is a value that informs my views on what I consider to be a very important piece of legislation that is before us. Along with around 7000 other affected people, I am a participant in a class action to pursue the type of justice that I think we deserve for what we have suffered as a result of misconduct by a corporate interest. Specifically, the class action claim developed and brought forward by my colleagues and me relates to the loss of income and loss of licence values for participants in the taxi and hire car, limousine and charter vehicle industries during the period in which Uber and their driver partners traded without proper regulatory approvals, permissions or licensing.

The idea which now forms the basis of the class action was formed a long time before there was even a proposal of a claim getting filed and getting to court. The reality for individuals who pursue this type of justice is a long hard journey just to get to the starting line. If you are fortunate enough to find good, helpful advice, as I was, there are many thresholds and hurdles that even a potentially strong class action must overcome so that even the best firms can get the case off the ground. This is partly because the cases are large, expensive, hard to run and hard to win—and if you lose, unlike in the USA, we here in Australia have a loser pays model, where those that bring class actions are on the hook, not only for the millions of dollars of their own costs that they have to plough into the case just to keep up with the well-resourced defendants, but they are also on the hook for the costs of the opposing side. Furthermore, it is the lead plaintiff who must bear that burden alone.

Due to cases being so expensive to run and so laden with risk, many only get off the ground with the financial support of a litigation funder. These litigation funders enable cases to see the light of day, but it comes at a price. For indemnifying the lead plaintiff and paying all or most of the case costs along the way, these funders understandably expect a return on their money in the event of a successful outcome down the track.

That commission is typically around 30 per cent or more or what is often a settlement amount in successful cases. In addition to that commission, the lawyers who actually run the case have to get paid for their work. Together the two compulsory fees often come to around 50 per cent of the total resolution—that is, 50 per cent of any settlement goes straight out the door before any money can be given back to the people who need it most: the individuals that have been wronged.

While the proportion of the overall settlement that is ultimately received in compensation is not ideal, this outcome is a lot better than what happened in many cases that have merit but may not stack up in being financially viable. They do not ever get a chance to see the light of day. These people who feel they have been wronged and wish to pursue justice are left with no real avenue to mount their case; the financial burden and risk is simply prohibitive. This bill is a critical step in the right direction for the people of Victoria as it will ensure that this Parliament can proudly say it has made one of the single biggest contributions to all Victorians in ensuring that they have the best opportunity to have their voices heard and their rights protected when large powerful organisations cause them wrong.

Why is that? It is because this bill will introduce a way to ensure more people can access their rights through the courts, making the pursuit of legal rights more affordable to the everyday person, the type of people I represent—good, decent, hardworking people who drive politicians, our friends and families around this great state but who too often get locked out of aspects of our society such as accessing their legal rights when they encounter a problem. The laws we make in here are for everybody; they are not just for the wealthy and the powerful.

This bill takes a big step forward and says to the people in our state that this Parliament cares about every single person and that we will do what we can to make sure every Victorian gets every chance they deserve to access legal recourse when they need it by introducing the option for lawyers in class actions—and I emphasise the point that this is only for class actions, which by their nature affect huge groups of people that have suffered damage—to simplify how clients are charged and bill on a contingency-fee basis. This Parliament can know it is taking the single-biggest step possible in driving down the cost of accessing legal help for Victorians statewide. Not only will it improve access to justice for all, but it will be this Parliament that can rest proud in the knowledge it has ensured that when people access this legal help more of the recovery than ever will go back into their own pockets.

For the class action I am part of I can say with absolute certainty that for the group members in this matter, whilst hugely appreciative that a class action specialist law firm and a litigation funder believed in us and our struggle and the strength of our case enough to pull everything together that was needed to pursue it, it would have been a whole lot simpler and it would have been a whole lot cheaper if this bill had been in place and had allowed a simple contingency fee split between the lawyer and the client, as opposed to the complicated arrangement we have had to use just to get this case off the ground. Many of my constituents and many members of the action have limited language skills—English is not their first language—and have limited education, so imagine the difficulty they have had in wading through the dense funding agreements with endless clauses and complicated funding arrangements that shift depending on a wide range of factors. Instead we could have had a simple split that everyone understood, where the lawyers that run the case are entitled to, say, 20 per cent or 25 per cent for their work and we knew that we would be getting 75 or 80 per cent of whatever the return was upon success. That is clearly a simpler equation for people, and it would leave us much better off financially.

The bill also ensures that the interests of group members of the class action and the interests of the lawyers are more aligned than ever. For starters, this bill would mean that lawyers are better incentivised than they are now to go and get better results faster, rather than potentially just billing more, and that is a boon on a number of fronts. It promotes a more efficient resolution. It could see more money going back faster to those who have suffered. The more money that can be recovered, the better it is for the clients, and the difference in how much better off the group members are just grows and grows. The point I mentioned about greater efficiency, which was the key reason, flows to other things, such as dispelling this notion being peddled by some opposed to the bill, such as the Australian Industry Group, that there is a legitimate concern about clogging the resources of the courts.

Business interrupted pursuant to sessional orders.