Thursday, 18 June 2020

 Mr BARTON (Eastern Metropolitan) (14:29): President, congratulations. One of the primary reasons we have a properly functioning class action mechanism is because it helps resolve large disputes in a more efficient manner. Can you imagine what a drain on the courts it would be if there were 7000 individual claims to manage instead of one class action? As things stand, there are only a handful of class actions run in Victoria in any given year—in fact I believe it was only five last year—and even if this was to rise as a result of more people being able to have worthy cases heard, the number of cases will still be extremely low. This bill is a response to the independent research showing that, if anything, the Victorian regime is underutilised at the moment, meaning too many people are locked out of the justice system when they need it.

Everyone in this place knows that I have had issues with this government’s approach in a number of different areas that have come before us. I did vote against the CFA bill and against Transurban matters, but on this bill the government has got it right. But my support and endorsement are merely a sensible recognition of the many independent and expert views already formed by multiple reviews into this area of law, all of which drew the same conclusion that this was a sensible, prudent reform and one that should be enacted. People want their government to take action, and there can be no criticism of the process here.

The government is simply delivering on a recommendation given to it to improve how we offer justice services here in Victoria. For those unfamiliar, removing the ban on contingency fee billing has been strongly endorsed and recommended by no less than three independent peak bodies that have looked into this matter since 2014. First, there was the Productivity Commission, which in its 2014 Access to Justice Arrangements report looked at the economics of how justice could be served better and served via class actions, and it made a clear statement on lifting the ban on contingency fee billing in Australia. In chapter 18 of that report the recommendation was this:

The Australian, State and Territory Governments should remove restrictions on damages-based billing (contingency fees).

The Productivity Commission had examined the evidence and found that a contingency fee model would lower the cost to consumers, increase returns to consumers and ultimately facilitate better access to justice as a result.

Then came the review undertaken by the Victorian Law Reform Commission (VLRC) tabled in Parliament in June 2018. The Access to Justice: Litigation Funding and Group Proceedings report recommended changes to increase access to justice for class actions. This, the report said, could be achieved by regulating litigation funding at a national level, lifting the ban on contingency fees and increasing the Victorian Supreme Court’s role in managing class actions. At point 33 of the executive summary the report notes:

As a matter of principle, the Commission considers that lawyers should be able to charge contingency fees, as it provides another avenue of funding for clients who may be otherwise unable to pursue proceedings due to the cost.

Cost should be no barrier to people of all means being able to access justice. Justice and the law should not be just for the wealthy and the powerful; justice is for all.

Most recently was the federal review into the same issues around class actions—how they work and how they can work better. The Australian Law Reform Commission, headed by Justice Sarah Derrington, who was appointed by George Brandis, also found that on evidence contingency fee billing would improve conditions for class action clients compared to the current situation. In chapter 7 of the ALRC report, ‘Solicitors’ fees and conflicts of interest’, recommendation 17 clearly says:

Confined to solicitors acting for the representative plaintiff in representative proceedings, statutes regulating the legal profession should permit solicitors to enter into ‘percentage-based fee agreements’.

Now, to understand why three major reports into the issues have all come back independently making the same evidence-based findings saying contingency fees are a better way to go you need to ask: better than what? What is the issue that has caused three major independent review organisations to have cause to undertake such intensive reviews? Well, for the uninitiated, to those opposing the bill who have teamed up with corporate lobbyists to come into this place and peddle disinformation in a bid to block this important justice reform, this bill is not about lax regulation of powerful corporate interests and it is not about trying to help major corporations and organisations evade scrutiny when they trample over the rights and dignity of everyday people; it is about ensuring the little people, everyday individuals and small business owners—people like the taxi and hire car drivers I represent—get an equal opportunity to stand up for what is right and in the best possible terms.

Given that this point about court resources is a peripheral argument that has been pushed by corporate lobbyists the Australian Industry Group in their bid to derail this important reform, let me say this about the matter before I move on: the Australian Industry Group (AIG) did not make a submission to the Productivity Commission, the Victorian Law Reform Commission or the Australian Law Reform Commission during the multiple reviews into this issue, so their last-minute interest in opposing the bill seems a little disingenuous.

How much of this opposition comes because the AIG had worked out that class actions might be used to recover underpayment of wages? Does anyone believe that the Australian Industry Group or the Australian Institute of Company Directors or those aligned to the American chamber of commerce Institute for Legal Reform have the best interests of wronged individuals at heart, when they lobby relentlessly against this bill and the accountability it will bring to the powerful?

This bill is about protecting people, not protecting bad business. This bill will go a long way to unlocking access to justice for more Victorians. It will be better for the people trying to protect their rights and it will do more to address the behaviour of bad businesses and organisations.

Aside from the very, very clear benefit that this simple legislative change will enable, delivering on the recommendations made by the VLRC to the government, the bill ensures there are very important safeguards at play to ensure the courts have appropriate controls and oversight of class actions and the contingency fee arrangements. So as to avoid some of the supposed consequences those opposed appear to be fearful of, let me help allay some of those fears with the use of facts.

Safeguard 1: contingency fees will only be permitted in class actions. This is not a widespread introduction of contingency fees but specifically limited to the area of legal practice where they will provide the most benefit and will be subject to the most control.

Safeguard 2: contingency fees will only be permitted if approved by the Supreme Court. Under the bill the Supreme Court has the ultimate powers to decide if there should be a contingency fee and to set it at an appropriate level. The Supreme Court already has extensive power over the conduct of class actions and exercises it regularly and appropriately; having that powerful check and balance is crucial.

Safeguard 3: contingency fees will only be permitted where the lawyer has agreed to pay the defendant’s costs if the class action loses. A plaintiff’s lawyer’s interest in careful merit investigation and case selection is even stronger in the context of a contingency fee arrangement because the lawyer would not want to be unremunerated for the work if the case fails but also faces the prospect of paying an adverse cost order, a risk that runs into the millions of dollars.

Finally, because I feel so strongly that this is such an important and logical bill to pass and deliver to the people of Victoria, and what three expert reports have recommended should happen, I must address some of the misinformation that has been peddled about by those opposed to it, with vested interests in lowering the bar of accountability on big business. It is clear from what I have read in the media and in recent times and what I have heard in the information briefings from lobbyists opposed to this bill that these lobbyists and the Liberal opposition are in lockstep about why they do not want this bill. The only problem is that when one of them peddles misinformation, the rest follow. That same script reveals them to simply be making the same mistakes, and when you pull it apart armed with the facts the opposition to this bill does not stack up.

Mr O’Donohue made a strident argument in the pages of the Australian newspaper on Friday, 28 February, where he outlined what he saw as the issues with the bill. Now, I will not pick apart every part of the argument, because a lot of it is opinion that I think he misled the public on, but I will focus on a few as a favour to help impart some of the knowledge. I found it astounding that early in the article Mr O’Donohue blamed the existence of many class actions on the emergence of large litigation funders, which he claimed were limiting the financial exposure of lawyers acting in these cases and therefore lessening the risk. Then moments later in the same column Mr O’Donohue found it convenient to suggest that the role of litigation funders was crucial as a check and balance in the regime. My friend and colleague seems to be having a bet each way.

It should surprise no-one of an objective mind that the solution to both the issues that Mr O’Donohue has tried unsuccessfully to exploit here lies in the recommendations of the Productivity Commission, the VLRC and the ALRC and is exactly what this important bill proposes. Lifting the ban on contingency fees would overcome both issues. It exposes lawyers running class actions to greater financial risk and only enhances the mitigating effects of questionable case selection and prosecution. How then does he not support the bill?

A common argument put by those opposed, and again by Mr O’Donohue and their lobbyists, is that class actions will hurt investment and business. To that I would say this: the class action regime has been around for 28 years, and in that time the only businesses that have suffered from it have been those that have broken the law or inflicted mass harm on people by selling dodgy products or providing deceptive investment advice and those complicit in their negligent behaviour, leading to devastating floods and fires, among other things. This bill will be bad for businesses that rip off consumers and businesses who sell faulty products that maim, injure and worse, but it will actually be good for all those businesses who do the right thing, who want to treat their customers and suppliers fairly and who take their safety obligations seriously.

By helping hold wrongdoers to account, this bill will help good businesses. That is my strong view. Importantly it is also the view of one of the world’s leading authorities in this area. Eminent US judge Jed Rakoff, who in 2015 spoke to Fairfax Media while he was out in Australia talking about corporate conduct issues, said:

Class actions and suits brought by regulators help the economy because the public’s trust in the honesty and fairness of financial markets is one of the “greatest assets” a nation can have …

Finally, on that point about the impact on businesses, it is worth knowing this: the facts show that less than half of 1 per cent of ASX-listed companies have faced shareholder class actions in any given year. The alternative is to allow unscrupulous corporate conduct to flourish unchecked. There are now countless examples from the financial services royal commission which show just how dangerous this would be. So to all of the taxi and hire car drivers seeking justice today and to all the people who have been or will in the future be stung by dodgy products or deceptive investment advice or who have suffered loss or tragedy through flood, fire and disasters caused by human folly, this bill will make things better for you. This bill is about people, it is about justice and it is about doing what we can to ensure a level playing field is available through the legal system for everyday Victorians, like those blokes who drive taxi and hire cars, when things go wrong. I commend this bill to the house.

 Mr RICH-PHILLIPS (South Eastern Metropolitan) (14:42): I am pleased to rise to make some remarks on this bill, and in doing so I would like to place on the record my congratulations to Mr Elasmar on his election as President. I think it is important that whoever holds the office of President in this chamber has the confidence and the respect of the house, and I have no doubt that Mr Elasmar has that. His elevation to that office has been a long time coming. It is certainly something I welcome and I think the whole house welcomes. Likewise, I would like to place on record my congratulations to Mr Leane on his conduct as President. When he was elected to that office 18 months ago it required of him quite a different style to what we had seen from him as a member of the government backbench, and Mr Leane stepped up to that task. I think he has acquitted himself very well in the office of President over the last 18 months.

The bill before the house this afternoon is not about access to justice. It is an omnibus bill—it covers many things—but the critical area which most of the second-reading debate is focused on is the element of the bill which relates to class actions and allows for the introduction of group costs orders. This is not a measure that is related to access to justice. This is a measure about allowing the snouts of plaintiff law firms to go deeper into the trough. We have seen this sort of conduct over many years across many areas of the law around litigation and around our statutory insurance schemes. And this is just the latest example of that type of conduct, aided and abetted by the Labor Party in this state, who of course are beneficiaries of donations from the major plaintiff firms. Many had their careers start at the plaintiff firms, and there are very strong relationships between the plaintiff firms and the Labor Party.

Of course, we know that former Premier of Victoria Steve Bracks is the chairman of Maurice Blackburn. There is a very close relationship between the Labor Party and that firm, and this legislation in the house this afternoon is very much serving the interests of those large plaintiff law firms and not serving the interests of people who are seeking access to justice, be it through class actions or other mechanisms.

It is worth remembering that when an individual, or a class in the case of a class action, brings an action and receives a settlement which is agreed by the court or is the subject of an award made by the court, that is to compensate that person for a wrong. That is to make good what has happened to them, what injury has occurred to them, be it physical injury, as is the case quite often with matters of litigation, or other injury. It is about righting a wrong through a settlement or an award in favour of the plaintiff. So whenever that award or settlement is reduced, as it will be by way of contingency fees under this mechanism that will be introduced, it is to the detriment of the plaintiff. Awards are not pots of gold. They are not Tattslotto wins. They are made by courts and settlements are approved by courts on the basis of damage that has occurred and the need to compensate a party for that damage and in some cases recognise punitive damages. But it is not a lotto win. It is not something that can be handed out to lawyers—50 per cent to the lawyers, 20 per cent to legal funders. The amount of the award is actually to compensate the plaintiff, to make good the damage that has occurred to the plaintiff, and a mechanism like this proposed today, which allows the fees charged by a plaintiff firm to be tied to that award, ignores that fundamental fact of the reason a plaintiff or, in this case, a class of plaintiffs goes to court and the reason that an award or a settlement is made to a class of plaintiffs.

The fundamental concern the coalition has with this bill is the provision which will allow for the making of group costs orders. This is for two reasons. One is that, as I indicate, it will allow a proportion of a settlement or award to be claimed as legal fees, not necessarily with any correlation with the cost of running a case, not necessarily reflecting in any way the effort that is required on the part of a plaintiff firm or the resources that a plaintiff firm puts in place, but tied to the outcome. The second element of concern around this provision, and equally of concern, is that the effect will be to allow class action lawsuits to proceed with a lead plaintiff without identifying necessarily the rest of the class. With class actions to date, firms have needed to effectively build a book of plaintiffs who are affected by the subject of a class action, have them sign up and then proceed with the action. The way the mechanism will work in Victoria if this legislation passes is effectively that a class action can be brought with a lead plaintiff without actually identifying who the other participating plaintiffs are. So people can be part of a class action without actually knowing they are part of a class action, and the very conduct of that class action may jeopardise their rights to receive relief in other ways, without them knowing about their participation in that class action.

One of the big challenges we have seen in the legal system in Australia in the last decade or 15 years has been the rise of class actions and, more recently, the rise of litigation funders. The concept of a class action, where a group of people with a common injury can group together in one action against the defendant and achieve an outcome on a common question, is a good one, except where it is misused—except where class actions are put together by plaintiff firms who are seeking low-hanging fruit for their own advantage and who seek to drum up classes of injured parties and seek to prosecute class action cases simply from the focus of gaining fee revenue, because it is seen as low-hanging fruit, rather than for the achievement of justice for injured parties.

We are seeing now, with the recent introduction of litigation funders in Australia over the last five to 10 years, that that is having a very significant impact on what plaintiffs actually receive off the back of class actions. A report called Litigation Nation, which was produced recently by the Menzies Research Centre, found that for class actions in 2019 the return on investment for litigation funders was 165 per cent—165 per cent for third-party funders who see a class action as a good deal and stump up some funds to run it. Now, that was never the intent of class actions. It has never been the intent of the justice system that actions in court are a honey pot for people who want to make a quick buck. Yet we have seen the introduction of litigation funders, who in 2019 received a return of 165 per cent on the class actions that they funded.

The same report found that, again in 2019, for funded class actions where litigation funders had participated, $6 out of every $10 awarded was consumed by legal and funding costs, so 60 per cent. The victims in a class action, the class of victims, who have brought the action to seek relief actually got only 40 per cent of the amount which was awarded or settled, so the lawyers and the funders got the bulk of the money. That is not the intent of a class action and that is not the intent of any civil litigation—that the person who has been injured ends up with only 40 per cent of the compensation that they have been approved or awarded by the court. That is not access to justice; that is a perversion of justice. That is what we have seen with litigation funders, and that is what we will see with plaintiff law firms acting individually if these provisions are allowed to pass and we see group costs orders allowing contingency fees to be admitted as part of practice in Victoria.

We hear the members on the other side often talking about access to justice and talking about plaintiff firms being there to stand up for people who are downtrodden, yet the reality is quite different. The best example of this has been the way in which the Labor Party and the plaintiff firms have acted with our statutory insurance schemes. I refer in particular to the Transport Accident Commission (TAC) and the Victorian WorkCover Authority, which have a range of statutory benefits that are paid to people who are injured at work or injured on the road, but there is also an element of those schemes which allow common-law claims. In the case of the TAC, in 2017–18 common-law claims under that scheme amounted to $473 million, but the legal fees which were paid to plaintiff firms—that is, fees that were lost to the injured road accident victims—amounted to $70 million. So a further $70 million which could have gone to parties injured on the road ended up in the pockets of, actually, three law firms: Slater and Gordon was one of them, Maurice Blackburn were in the top two and there was a third plaintiff firm that got a relatively small proportion of the fees.

In 2013 when the previous government sought to introduce legislation to have a fixed-cost model for those legal fees to minimise the amount of compensation that ended up in the pockets of lawyers and maximise the amount of compensation that ended up in the pockets of road accident victims, those opposite opposed it. It was not a scheme that would have changed the way in which common-law claims operated. A person who met the threshold could still have initiated a common-law claim under the TAC scheme. The only change would have been how much money ended up in the pockets of lawyers—and those opposite opposed it. They would not come at a model that restricted the amount of money going to their mates at the plaintiff firms. They were not interested in access to justice for road accident victims through common-law claims. They were only interested in the amount of cash flowing to the plaintiff firms. So they opposed that measure in 2013, and that was at a time when we had seen the average legal costs of a common-law claim under TAC blow out from $20 000 to $40 000, and it now exceeds $50 000 per claim. So the Labor Party has form in not supporting any sort of reform that actually benefits plaintiffs at the cost of the plaintiff firms, and this legislation is no different.

Before the bill proceeds to committee it is the coalition’s intention to move a referral motion to the Legal and Social Issues Committee and, on behalf of Mr O’Donohue, I would ask if that amendment could be circulated now. Likewise, in order to limit the extent of the benefit that can flow from this mechanism to lawyers rather than to plaintiffs, if the bill reaches committee today, it is the coalition’s intention to move amendments which would cap—consistent with recommendations from the Law Institute of Victoria and other parties—the extent of any legal fees against an award at 35 per cent. I would ask that the amendments, also in Mr O’Donohue’s name, be circulated now.

Opposition amendments circulated by Mr RICH-PHILLIPS pursuant to standing orders.

Mr RICH-PHILLIPS: The provisions related to contingency fees are bad. They do not serve the interests of access to justice; they serve the interests of plaintiff law firms. They will result in less money in the pockets of injured parties and more money in the pockets of lawyers, and for that reason the coalition will oppose them.

 Ms PATTEN (Northern Metropolitan) (14:58): I rise to speak relatively briefly on the Justice Legislation Miscellaneous Amendments Bill 2019. This bill does a variety of things of a fairly technical nature across the range of justice acts, but most significantly, as we have been debating today, it amends the Supreme Court Act 1986 to provide for group costs orders or, in other words, allow contingency fees for law firms in class actions.

I think maybe at this point in the day it is worth reminding ourselves what a class action is. It is a legal proceeding in which one person brings a claim on behalf of a wider group of people who have been affected in a similar way or by the same conduct—the general thesis being that a wrongdoer is believed to have caused widespread harm. Contingency fees are lawyers’ fees paid as a percentage of the settlement or amount recovered, as opposed to ordinary legal fees, which are charged for work done, most often at an hourly rate.

Now, the government in promoting this bill say that the changes that they are making in this bill allow contingency fees or group costs orders as determined by the bill and that this will enhance access to justice and pave the way for class actions to proceed where otherwise they may not have, such as class actions for silicosis or wage theft. I note the opposition to this bill comes from a wide range of groups, but probably with a narrow list of reasons for their opposition. They say that it will lead to more speculative class actions being filed in pursuit of lawyer payouts and will benefit lawyers at the expense of plaintiffs. They also say it creates a conflict of interest for the plaintiff firms or for the lawyers themselves.

This bill has been before us and has been on our notice paper for quite some months, so I have had the opportunity to meet with people from both sides of this argument. I and the Reason Party and my office have really considered the details of this proposal quite closely and quite thoroughly, and despite the good work of Mr O’Donohue and the various briefings that he has provided me, I am actually certain of one thing, and that is that improving access to justice is important.

It has been interesting listening to the people opposing this bill talking about the role of litigation funders in this sphere, and for many of them it has been how greedy and desperate these litigation funders have been and how they have been stealing the money from the poor people who have been disadvantaged who were taking this class action. So their argument to protect us from these funders is to stay the same, to not change anything. Now, to me that does not make a lot of sense if there is something wrong with the system and if we think people are getting ripped off. Let us look at who these litigation funders are. They are usually global companies. They are usually foreign owned, possibly locally created, but usually investing on behalf of offshore funds. They are involved in more than 70 per cent of class proceedings, and as we have heard from the opposition to this bill, it is a lucrative business. Litigation funders usually charge a commission of 30 per cent of the proceeds recovered—at least 30 per cent. I think Mr Rich-Phillips was talking about an example where it was a much higher percentage than that.

The reality of the existing system is that plaintiffs who have suffered harm to the extent that they are awarded a payout by our courts hand over, let us say, a 30 per cent contingency fee to the litigation funder and then pay their law fees to their representatives on top of that. Despite hearing how terrible this system is and how people are being disadvantaged by this system, the end argument was, ‘Let’s keep it that way’. And that, to me, does not make a great deal of sense.

On the other hand, this bill proposes that we cut out the middleman—that is, the litigation funder—and we require the Supreme Court of Victoria, which does not have a self-interest, to set the contingency fee or the group costs order. So we get the Supreme Court of Victoria to decide how much the plaintiffs will pay. That fee set by the court with the interest of the plaintiff in mind will be less than 30 per cent, no doubt.

This means that the person who has silicosis, who has been the victim of misleading and deceptive conduct by a company, who has a defective pacemaker or defective breast implants, whose land has been contaminated or who has cancer caused by unsafe employment conditions will give away less of their award. And that is by far and away the most important thing—that the person who is harmed benefits by their award to the greatest extent. That is the nub of it.

Mr O’Donohue has suggested that the Legal and Social Issues Committee conduct an inquiry into this. As chair of that committee, as delighted as I would be to take on another inquiry just to see us right through to probably the next term, I do not feel I have the same expertise as the Victorian Law Reform Commission or the Australian Law Reform Commission or the Productivity Commission. You know, maybe I am selling myself short, but I just do not think that I could do it better than they could.

And they were all very clear about this. They were all very clear that lifting the ban on lawyers charging contingency fees would create a significant source of new funding over and above that provided by litigation funders, and that it would be better for the plaintiffs—that the plaintiffs would see more benefit from their award.

They believe that lawyers may be better placed to assess risk and to fund a broader range of meritorious claims than those which fall within a litigation funder’s commercial parameters. And that is it: the funders at the moment take a gamble. They do not particularly care about the purpose of it; they take a gamble. Now, I would actually like to see a wider range of people being able to say, ‘No, we think you have got a case. We think this is important and we will go out there and support it’.

The Victorian Law Reform Commission in their report, Access to Justice—Litigation Funding and Group Proceedings, recommended these changes to increase access to justice for class action litigants, lifting the ban on contingency fees and increasing the Victorian Supreme Court’s role in managing class actions. And to me, that is the nub of it. We are actually giving the power to the Victorian Supreme Court to decide on how much people get paid—how much the lawyers get paid and, more importantly, how much the victims get paid as a result.

The fact that this reform has the support of the Productivity Commission and, as I said, the Australian and Victorian law reform commissions, from my perspective, abrogates any need for a parliamentary inquiry. And on that basis, I commend this bill to the house.

 Dr BACH (Eastern Metropolitan) (15:08): I rise to join the debate on the Justice Legislation Miscellaneous Amendments Bill 2019. This bill, as we have heard, makes a number of changes, many of them technical in nature, to existing legislation—again, many of which look innocuous enough at first glance. Yet considering the current context, I find one of the measures contained in this bill deeply concerning.

The reversal of a long-held legal status quo in a way that favours a small group of Labor-aligned plaintiff law firms in the name of access to justice is in fact another attempt to increase Labor Party power in this state. The bill would make Victoria the national capital of class action lawsuits by introducing contingency fees for plaintiff lawyers in class actions. And we have heard in this debate that this would be unique among Australian jurisdictions. My contribution will focus on this part of the bill.

As I have said, context is important. The muddy dynamic that the public is slowly being exposed to between the Labor Party that dominates this Parliament and the previously hidden network, the subterranean network, that supports that party is a matter of grave alarm to all Victorians of goodwill. The fact that this bill, if passed, would be a potential financial boon for law firms that are huge donors to the Victorian branch of the ALP only adds to that sense of alarm.

There are plenty of lawyers in this chamber, some of whom, by the by, have represented firms who will directly benefit from this bill. Those lawyers would all be able to talk to us about the fact that their paramount duty is to the court—to assist the court in ensuring that justice prevails in our legal system. This includes properly representing clients with integrity. It also includes ensuring that they are providing, within their capabilities, the very highest standard of service for an appropriate fee. That is why contingency payments or group costs orders are not prevalent in the Australian legal system—because they bear no resemblance to the actual cost of running a case. They are a financial mechanism that can then inform business decisions in regard to clients and class actions. Where class actions represent some of the most vulnerable clients—those, for example, who suffered devastation during the Black Saturday bushfires—rather than taking on the action to ensure individuals are duly represented and to properly administer justice, an action could be taken because of its good financial prospects.

The government will claim, indeed it has claimed, that this bill and this change will improve access to justice—a noble aim, an important aim. But there is no evidence to suggest that we have a situation in Victoria in which a seriously and legitimately aggrieved class of plaintiff cannot gain access to justice due to a lack of funding for its action. For one, there is already intense competition between litigation funders in Victoria for cases, leading to increased accessibility. The industry reports that cost structures for these funders are consistently reducing and commission rates are falling, and we have seen multiple funders starting proceedings on the same issue because there is such intense competition.

Additionally, those firms with close ties to the Labor Party are running many of these actions on a no-win, no-fee basis, such as the Kilmore East bushfire class action. Several firms can do this because of their size and their resources. But now there is a push to run the same types of actions that these firms are already taking up consistently and successfully, promising no-win, no-fee, on a contingency basis. This takes away, in my view, any argument in favour of the need for contingencies by these firms on the basis of accessibility. Indeed it is very clear that though some firms may say they fight for fair, in reality they want greater latitude to fight for fees.

Now, the claim that a further aim of this change is to increase competition in the class action market also does not bear scrutiny. I can see there is a reason of course why only a small number of firms do this work. The resources required to fund an action for years, requiring intense manpower and months of trial time, are beyond many firms. For example, Maurice Blackburn representing a plaintiff in the Kilmore East bushfire class action spent $30 million internally and $28 million on other incurred costs. Commonly these actions require spending in the millions of dollars and last two or three years. These firms have already shown a willingness and a capacity to take on these risks. There is no evidence to suggest that this radical proposed change to the fee structure will increase competition or even encourage a change in operations of the main litigators at present.

When firms make a decision to take on an action, that decision should be based upon the merits of the action, and in the case of a class action a large part of that relates to the need to see justice served for a class of people. This legislation, however, will encourage firms to make financial decisions instead. This is not a proper way for justice to be administered in our state, and on that basis I do not support it.

 Mr LIMBRICK (South Eastern Metropolitan) (15:14): This bill has a bit of a story for us. When it was first presented to us and we first started listening to the arguments on either side, it appeared to be some epic power struggle between Labor and Liberal party supporters and donors and all that sort of thing. But here is the thing: we were not really interested in any of that. What we were interested in was: what were the merits of this legislation? The other thing that was interesting about this was: why prioritise it? We were a bit puzzled by that. Out of all of the things that the government could be doing to better this state, this legislation, which is going to allow contingency fees for these large firms, was being brought in. This was quite puzzling at the time.

Our team went away and we looked at this legislation in detail. We listened to the arguments from both sides. We listened to lots of people. Like everyone else on the crossbench, we were lobbied very hard on this. Clearly there is a lot of money at stake. There are a lot of people who have got a lot of money at stake.

Ms Terpstra: A lot of justice at stake.

Mr LIMBRICK: Well, that was what people were saying it was about: they wanted justice. There are lots of these arguments. We considered this very, very carefully, and the conclusion that we came to was that we actually did not have a really good reason to oppose it. We were sort of not really happy about it but we were not going to oppose it, and that is what happened. We made these decisions a few months ago when this bill was first brought up and the second-reading debate started.

However, over the last week there have been a lot of events happen, as everyone will know. I woke up this morning and I had a very, very bad feeling about what we were doing here today with this bill. I am often the sort of person that relies on cold, rational thought, but today I relied on my instincts. I woke up this morning and I had a really bad feeling. I spoke to my colleague Mr Quilty and I spoke to my team. After what we have seen over the last week, and everyone knows about the revelations on 60 Minutes on Sunday night, the government’s response—this is not the state government’s response, federal Labor’s response—was to bring in someone to try and clean up Victoria. One of those people is the chairman of Maurice Blackburn, one of the beneficiaries of this bill, and yet a few days later here we are debating this bill that apparently they are going to benefit from. I mean, how does this look? To the average person in Victoria, how does this look?

Then last night I got an amendment sent to me on this bill. It had nothing to do with contingency fees or anything like that. It is an amendment about IBAC. What they want to do with IBAC is give IBAC new powers. Now, Mr Quilty and I have been arguing to give IBAC new powers for months, for ages. We want them to have greater powers for police oversight and to fight corruption and all that sort of thing. But this amendment had nothing to do with police oversight or anything like that. In fact it explicitly did not have anything to do with police. It was giving IBAC the ability to arrest someone that they think might skip the state.

You put all this together and something does not smell right here. This is a very, very bad idea to have all of these things come together. I just do not think that the general public would accept that this is the right state of affairs. I have got lots of questions. I do not know, as a member of the general public, all of these power machinations that people keep referring to. I do not know what is happening behind the scenes. I do not know all of this. I do not know, but something does not smell right. So the Liberal Democrats will not be supporting this bill.

 Ms BATH (Eastern Victoria) (15:18): I rise and make my contribution on the Justice Legislation Miscellaneous Amendments Bill 2019, and in doing so I have been listening to people make their contributions today and reflecting on my constituents and really my involvement in the law system, which is not that considerable. What I often reflect on is that there are two institutions that you should try and stay out of: one is the hospital system and the other is the law courts. In the hospital system at least there are friendly professionals who will stem the bleeding, stem the flow of blood and work to stitch up and heal the wounds and support you back into good health. But in the law system and the law courts I know my constituents often feel that they are bled dry through incredible costs, have been potentially stitched up from time to time by the justice system and indeed come out of there feeling much worse for wear.

Indeed litigation seems to be on the rise. We see environmental groups litigating at the drop of a hat—at the drop of a Twitter comment—and it seems that those who need to defend are certainly back-pedalling all the time and end up being bled dry. We see that in many cases constituents come in quite bereft and concerned about the litigation costs and just the financial costs in terms of meeting their legal requirements in defending a case.

I will go on to speak about a number of clauses, but much debate has been had today by my colleagues in this place. I will not reverberate all of their commentary, but I do want to make some comments on clause 7. It talks about reserve magistrates and looks to insert a new section into the Magistrates’ Court Act 1989 to validate the decisions and acts of affected magistrates who continue, in effect, past their use-by date, past their appointed time—to provide that support and validity to them. I know in regional Victoria the Magistrates Courts are often clogged. They are much valued in many ways, that system, but also many good magistrates stay on and provide a mentorship to new magistrates or indeed those coming through the system.

One of my frustrations, though, in working in this place is listening to constituents who have felt that they have been stitched up by magistrates. There is no greater—or smaller—case really than Mr John Gommans, who felt that the magistrate significantly misunderstood the severity of the case before him and significantly lacked knowledge around the agricultural industry and the importance of livestock and the issue at hand at the time, where activists came onto a farm and stole livestock, for himself and his business. So I think it is a very important role the magistrates play, but there also needs to be back upstream a greater level of training and understanding and education through the Judicial College of Victoria. There needs to be training of those magistrates who work in the regional circuits so that they are well equipped to deal properly with the cases before them.

Another section that has really played on my mind throughout this debate is indeed in part 2, clause 5: the group costs order in a class action. This bill would seek to allow the Supreme Court of Victoria to make group costs orders within that class action—those legal costs payable to the law practice and those representing the lead plaintiff and the other members of that group—to be calculated on a percentage of any amount received in the proceedings. These costs are then shared through by the lead plaintiff and the group. So in effect the greater the win, the greater the share. But—and I have heard very eloquently my colleague Mr O’Donohue put our case through his great research on this area—that is not going to be the case, and those groups can actually be far worse off than this government would have us believe.

Indeed the major area of concern that I have relates to the legislation. The government really is looking to say, ‘Look, don’t worry. Trust us. This will be a win-win situation, and it’ll be fairer for consumers and workers and other individuals by improving fairer and more equitable access’. ‘Equitable access’ I have heard considerably this afternoon, but the truth is that what will happen is that there will be certainly a boom in class actions. The government would have us believe that there will be a greater playing field, but the concern I have is that it will actually create riskier class actions that would otherwise not have the flavour were these contingency fees not included in that way. And the government argues that it would (a) improve access to justice and (b) reduce costs to plaintiffs and class action participants, but that will not be the reality.

Indeed we will see some of the large firms—the big four, we will say—end up benefiting from this bill, this legislation before us today: Maurice Blackburn and Slater and Gordon, Shine and Phi Finney McDonald. They will be the winners out of this. They are already winners in many ways. You look at other examples where we hear this rhetoric around, ‘The smaller units, the smaller industries, the smaller companies will be able to win out of this’, and we have seen it still in the building industry in regional Victoria, where still the unions end up being able to engage in a way and put the bar up so high, for a whole raft of reasons which I will not go into today, that those smaller building companies just cannot compete. And I think this will again be a similar scenario in relation to this bill.

But these are not just my words; we have had professional opinion, and there have been many professional opinions come forward and state the case that this will not be a net benefit for Victorians. I heard today, just before, various proponents on the other side say, ‘But X and Y say “Great”’. Well, the Law Council of Australia president, Pauline Wright, says ‘Not great’. I quote the media article from 13 May:

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

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

This is president Pauline Wright:

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

…

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

And I go on and close her remarks:

Percentage-based fee agreements would only benefit large law firms that are already billing via conditional fee arrangements—generating a higher premium with no commensurate increase in risk.

Now, I know that Mr O’Donohue, through Mr Rich-Phillips, has put up a number of amendments. May I say that I certainly support all of those, including the 35 per cent cap on contingency fees, if that is the point at which we can gain some traction. I hope—and I have talked to a couple of the crossbenchers today—that they are interested in sending this bill to the Legal and Social Issues Committee, and I hope that that is acceptable as well. So we will work through the list.

Finally, the justice bill is likely to create an environment where Victoria will be the justice litigation capital of Australia. I am sure if COVID restrictions of state borders continue much into the future or continue again next year, we will see a case where there will be people piling up at the gates ready to come into Victoria to try their luck on this.

Finally, the government often will say, and we will hear it in committee—we know what will be said today will be a ‘trust us’ mentality—‘Trust us, all will be well. Trust us, people will be better off’. We have seen—and it is coming to fruition at the end of this month—where the CFA and the Fire Rescue Victoria legislation will come into force, will be enacted, will be created on the ground. I have had multiple, multiple emails this week in the lead-up from very stressed CFA volunteers saying that the government said in this house and Mr Jennings said in this house, ‘Trust us, all be well’, and they feel that they have been severely stabbed in the back. They feel that this FRV will not lead to greater support for Victorians, greater outcomes for Victorians, greater safety for Victorians. They feel that there will be a huge let-down of volunteers. And so when we hear the government saying again today, ‘Trust us’, well, I do not trust them.

 Mr FINN (Western Metropolitan) (15:30): I rise this afternoon to speak on the Justice Legislation Miscellaneous Amendments Bill 2019. I come from a view that tells us that, as we often hear, there are two places that one should keep out of: one is hospital, the other one is the courts, because once one gets into the courts, generally speaking it is likely to cost you an arm and a leg. There is a view in this country that the courts do not dispense justice; they just provide for those who can buy the best lawyers. Now, whether that is so or not is probably debatable, but the fact is there is that perception in the community and something has to really be done about that.

I do not think this bill will do that at all. Certainly we have to find a way of improving the public perception of our justice system—or our legal system as we have in Victoria; very little justice but plenty of legality. As I said, there needs to be a way of improving the public perception of the court system, but this is not the way to do it. I am hoping that one day somebody will come up with a way to do it. I am hoping that the next Attorney-General of Victoria, who has just walked into the chamber—Mr O’Donohue—will be in a position to do that very soon. I look forward to him doing that, and I look forward to offering him some friendly advice on the subject from time to time, which I am sure he is really looking forward to. I can tell by the expression on his face just how thrilled he is at the prospect of receiving some friendly advice from me on this particular subject!

Now, as we have discussed earlier today, this place has copped a fair flogging this week in terms of public perception. MPs, politicians—call us what you want—are not held in high regard by the general public. We are held in much lower regard on Thursday of this week than we were on Thursday of last week. Now, without going into the details of what has caused that, the corruption within the government, the corruption within the ALP, we now have a bill—whether it is a timely bill or just a coincidence—which is going to pour millions and millions and millions of dollars into the pockets of some of the greatest donors to the government. Now, this is, as they say in the classics, as dodgy as all get-out. That is without doubt something that does not pass that well-known pub test. If you were to walk into any pub—perhaps next week when you can actually walk into a pub and have a beer—go up to the bar and ask people at that bar what they think of a government that is legislating to change the law to allow their mates in the Labor law firms to get richer, what you think people would say? I have got a fair idea, and I do not think it would be all that parliamentary. I think the reaction from the average person, whether they be at the bar or elsewhere—

Mr O’Donohue: Similar to Mr Byrne.

Mr FINN: Indeed it would be. I do not know whether Mr Byrne would be offering advice or taking notes—one or the other. But certainly the reaction to that sort of proposition I think would—

Mr O’Donohue: Elicit the same sort of language.

Mr FINN: Certainly it would be the same sort of language. From what I gather, it has to be said it is not just Mr Byrne who uses that sort of language. We have seen some very colourful exchanges over recent days from very high-profile members of the ALP, invariably speaking out about each other. What on God’s earth they say about us I cannot even begin to imagine if that is what they say about each other. Nonetheless, that is something that would occur if we walked into the pub or a bar and tried that pub test. If you walked in and you told people that we have here in Victoria a government which is passing legislation to make their mates—their donors—richer so that they can make bigger donations next time—

Mr O’Donohue: Half a million is not enough. Half a million was not enough.

Mr FINN: Look, over there they might think that half a million is not enough. I tell you, I would not mind half a million, but over there, clearly they want more. They have not had the lecture about greed, but they want more, and that is what we have now.

If you were to take that further and you were to speak to those people—I will not say gentlemen, but people in the bar—and you were to say to them—

Mr O’Donohue interjected.

Mr FINN: Now, Mr Melhem has walked in. Here is a man that knows about lawyers; here is a man that knows about the court system.

Members interjecting.

Mr FINN: No, look, he can tell us. I am looking forward to his contribution to this particular bill, because if he was on contingency fees he would probably be a lot wealthier himself than he has been up to this point.

But as I was saying, if you spoke to those same people that you had just told that the government was legislating to make their mates richer and you said to them that the new chairman of one of the law firms that is going to be richer is a man who was just been appointed to run the ALP in Victoria—a former Labor Premier—what would they say? I suggest to you that the language would be even worse. They would be confounded that such a thing could be allowed to happen. I think it would be most stomach churning, I have to say to you. They would be appalled. But that is what we have before the house today. This Labor government legislating to make its mates—its major donors—richer. Hey, that is payback. We know that Labor like to pay their debts, and they are doing it big time today. And unfortunately they are using this Parliament to do it.

A member: It is about the worker, Bernie.

Mr FINN: Oh, the worker. These blokes getting around in their Mercedes and their BMWs and living in their townhouses in South Yarra and Toorak, they are the workers all right, aren’t they? They would not work in an iron lung, most of them. But that is what we are told by members of the government. With the fact that these people are going to be enriched, genuinely enriched, by this legislation and the fact that they owe their loyalty to the ALP—more than their loyalty; they contribute significantly to the ALP—I am sure they will tell us it has nothing at all to do with the fact that this legislation is being proposed and nothing at all to do with the fact that the government is allowing a piece of legislation to be put forward which will make them all much, much richer. There is nothing like a chardonnay socialist to tell the lie about the commitment to the workers, because quite frankly they do not care about the workers, they are just out for themselves. That is what it is about. It does not matter whether it is the Labor Party here, it does not matter whether it is the chardonnay socialists down in King Street or William Street and it does not matter who they are or where they are. Is it King Street? Where is the other place?

A member: Lonsdale Street. Some of them are in Lonsdale Street.

Mr FINN: Lonsdale Street. Yes, there are a few of them around. They are all going to do very, very nicely out of this legislation, and no doubt they will show their gratitude; they will show undying gratitude in folding stuff to their political masters.

Now, I am a great believer that without a strong justice system our society is in trouble. I have to say, I think society in Victoria at the moment is in a lot of trouble, because what we have in Victoria at the moment is almost an industry comprised of lawyers, judges and politicians. They are almost interchangeable, and they are all of the same attitude—they are all of the same view—and with the judges that is largely because for the last 17 of 21 years every judicial appointment in this state has been made by a Labor attorney-general. For 11 of those years it was Rob Hulls, which would explain why the judiciary in this state is not highly regarded. It is a fact that Mr Hulls used his time as Attorney-General to appoint people that, well, reflected his view of life—and his view of life, in my view, left a fair bit to be desired—and as a result we now have a judiciary which has let the side down. This legislation is not going to do anything to fix that, and that is a great pity.

As has been mentioned a couple of times in this debate, the federal government is currently having a review of the very thing that we are talking about today. Now, you would imagine that if the federal government was having a review—they were taking all sides into consideration, taking all views and coming up with a consensus and doing all the things that the federal government does—the state government, the Andrews government, if it was fair dinkum about getting the best result possible, would actually wait for this review to report. They would actually wait to get the results and to see what the federal government was suggesting. They would wait to see what was happening around the other states of Australia. But no—oh no, no, no, no. The federal government’s review might actually recommend the wrong things. They might actually recommend things that will improve justice but not make Labor mates rich. ‘We can’t have that, can we? We can’t have that. You’ve got to look after your mates. When it comes to justice or mates, give me mates every time’, say the Labor Party. That is just the way they operate. I mean, mateship is a great thing, a great part of Australia, but I think the Labor Party has taken it to a degree that is a little bit beyond the pale.

I heard Mr Barton earlier. I listened very carefully to Mr Barton’s contribution in this debate, and I have to say he was very sincere, and he had some very good points, I thought. There were a couple of times there he nearly had me. But the fact of the matter is that justice is not going to be served by making a few lawyers richer. It is just not going to work. It is not going to happen, and that is the simple fact of the matter. I want to see justice in this state for everybody. I do not want to see justice for rich, leftie lawyers who drive silver BMWs and live in townhouses in South Melbourne and South Yarra and Toorak and so forth. I want to see justice for everyone, not just the select few who will be enriched by this legislation today.

I think that is important—that we as legislators always put our desire for justice first. That is something that is to my way of thinking absolutely crucial. We have a responsibility here to every Victorian to provide the sort of justice that they need and, more importantly, that they deserve. This legislation is not doing that. This legislation is helping out a handful of people. It is making a handful of people very, very rich. It will make a handful of people very, very rich—or richer, should I say, because most of them are already very, very rich—and it is doing nothing to help the workers. It is doing nothing to help those who need that help, who need that support more than anybody else.

I support the amendments that have been put forward, and obviously we will be going to the committee stage very soon with those. I support Mr O’Donohue’s reasoned amendment, which I think is an exceptionally good reasoned amendment. I suggest to members of the crossbench that if they are keen to see justice in this state in its purest form, then they should support Mr O’Donohue’s reasoned amendment, because that would provide the sort of result that would be not just good for a small group of rich, leftie lawyers but great for every Victorian.

 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 are 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 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 to nationally?

The fact of the matter is that we are also bringing about a house amendment which deals with summons powers in respect of 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 that 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:

 Mr O’DONOHUE (Eastern Victoria) (16:09): I move:

That the Justice Legislation Miscellaneous Amendments Bill 2019 be referred to the Legal and Social Issues Committee for inquiry, consideration and report by Monday, 30 November 2020.

House divided on motion:

 Ms TIERNEY (Western Victoria—Minister for Training and Skills, Minister for Higher Education) (16:13): I move:

That it be an instruction to the committee that they have power to consider amendments and new clauses to amend the Independent Broad-based Anti-corruption Commission Act 2011 to enable arrest warrants to be applied for and issued in further circumstances relating to witness summonses.

 Mr O’DONOHUE (Eastern Victoria) (16:14): President, congratulations on your election. The opposition will not oppose the instruction motion, but we are concerned that these significant legislative changes are being brought at such short notice. We understand and appreciate that these are at the request of an external agency to government, but by the same token it puts the committee in a difficult position.

I also just wish to place on record that it was the opposition’s preference for these amendments to be placed with the Sentencing Amendment (Emergency Worker Harm) Bill 2020, which is the next item of government business, because that is a piece of legislation the opposition does not oppose. Whilst we will debate the amendments the minister is seeking to move through this instruction motion, ultimately it puts the opposition in an invidious position dealing with very serious matters about the powers of IBAC at a time when our position on the legislation has been clearly articulated for months—that we are opposed to it. So I just wish to put that on the record. I do appreciate the challenges sometimes. Government has to bring matters forward, but it does put the opposition in an invidious position, and it is regrettable the amendment could not have been placed in the emergency worker bill or as a separate bill. Be that as it may, I just wish to make those comments in relation to the instruction motion.

 Ms TIERNEY (Western Victoria—Minister for Training and Skills, Minister for Higher Education) (16:16): President, it is my first opportunity to formally congratulate you. I think it is a fantastic appointment, and I hope you enjoy the proceedings as well as the hard work.

In respect of the matters raised by Mr O’Donohue, if we had known about these issues earlier, we would have incorporated them in the bill. There has been a request by IBAC for this operational process. We have been working with the clerks to try and work out the most appropriate vehicle. It was actually our preference too that it be attached to the Sentencing Amendment (Emergency Worker Harm) Bill 2020 before the house later today, but the advice of the clerks is they believe that this would be more within the scope than the emergency worker bill. I do understand that we would have preferred to have this amendment go into a piece of legislation that the opposition would have been able to support more easily, and I put that on the record.

Motion agreed to.

Committed.

Clause 1 (16:18)

Mr O’DONOHUE: Minister, why was this legislation prioritised today, which deals with basically contingency fees and lawyers fees, ahead of the Sentencing Amendment (Emergency Worker Harm) Bill 2020, which is seeking to close a loophole involving attacks on emergency services workers so that emergency services workers are given the legislative protection they deserve?

Ms TIERNEY: This was just a matter that was determined in terms of the leadership of the business of the house. We will get to emergency services workers today, and we are looking very much forward to acquitting that bill as well as this one today—or tonight or, indeed, tomorrow.

Mr O’DONOHUE: Thank you, Minister, and thank you for that answer—as does the opposition. We are surprised that this legislation to assist a small number of large plaintiff law firms is more of a priority for government than the emergency services workers legislation, particularly given the commitments the Premier made on the steps of Parliament, I think it was a couple of years ago nearly now, with the head of Police Association Victoria, the head of the Victorian Ambulance Union, the United Firefighters Union and others, making a rock-solid guarantee which proved to be false and wrong.

I will move on. Minister, who was consulted as part of the development of this bill? Specifically, could you advise which law practices were consulted?

Ms TIERNEY: I am advised that the main organisation was the Law Institute of Victoria.

Mr O’DONOHUE: ‘Which legal practices’ was the question, Minister.

Ms TIERNEY: Sorry, what was the question?

Mr O’DONOHUE: Which legal practices were consulted in the development of this legislation?

Ms TIERNEY: The law institute represents all law practices in this state.

Mr O’DONOHUE: Indeed it does, but it is not a legal practice itself. So, Minister, which legal practices were consulted as part of the development or consultation process for this legislation, either formally or informally?

Ms TIERNEY: The advice I received is that the law institute actually coordinated the consultation around the development of the bill.

Mr O’DONOHUE: Were public servants present at any consultation involving Labor Party donors?

Ms TIERNEY: Public servants were, as I am advised, at the consultations, as were plaintiff and defendant firms.

Mr O’DONOHUE: And, Minister, are any of the law firms likely to benefit from the passage of this legislation members of Progressive Business?

Ms TIERNEY: I simply would not know. I do not know who members of Progressive Business are, and I would suggest that that has got nothing to do with the contents of the bill.

Mr O’DONOHUE: I am happy for you to take that on notice, Minister, if you wish. Specifically, are Maurice Blackburn or Slater and Gordon members of Progressive Business?

Ms TIERNEY: I do not know.

Ms SHING: Minister, were any firms that are a member of the Institute of Public Affairs (IPA) part of this consultation?

Ms TIERNEY: I do not know.

Mr O’DONOHUE: Minister, would you be able to take my question on notice and provide an answer to the committee prior to the conclusion of this committee?

Ms TIERNEY: I will attempt to try and find out whether organisations were members of both Progressive Business and the IPA.

Mr O’DONOHUE: Minister, does the government accept that it has a conflict of interest in bringing this legislation when the main beneficiaries of it will be a small number of Labor-aligned law firms, particularly noting that the chairman of Maurice Blackburn is Mr Steve Bracks?

Ms TIERNEY: No. The main beneficiaries will be ordinary Victorians wanting to access justice.

Mr O’DONOHUE: How will that be measured, Minister?

Ms TIERNEY: In what sense, Mr O’Donohue? How would they be measured how? What do you mean?

Mr O’DONOHUE: The claim from those supporting this legislation is that access to justice will improve. How will that be measured?

Ms TIERNEY: It will be measured over time when the facts come to bear that if there was not class action there would have been a whole range of people that would have been denied access to justice because they would not have been able to afford the up-front costs.

Mr O’DONOHUE: So will there be a formal process to measure the effectiveness of these changes if this legislation passes?

Ms TIERNEY: No.

Mr O’DONOHUE: It will be in the vibe, will it, Minister? The vibe and the feel of it is how it will be measured, is it, Minister? So there will be no process to measure the effectiveness of this; it will just be in the general feel of things. Is that correct?

Ms TIERNEY: I will not respond to editorial comment.

Mr O’DONOHUE: Well, I think it is disappointing that the government, in being so strident in its view that this legislation will improve access to justice, is not prepared to commit to a process to measure the outcomes of the changes that will flow if this legislation passes. I think the government has heard from many about the scepticism of the opposition, but there is scepticism of many in the community about the motivations for this legislative change—and that scepticism is only heightened by the corruption allegations of recent days involving the Labor Party that have seen three ministers resign and that have seen a government engulfed in scandal. So, Minister, you may not wish to respond to my comments, but that does not stop me from making the points that I think are relevant to this bill. So I put on record the opposition’s disappointment that the government has no process, has identified no way to measure the claimed benefits of this legislation it will pass and has wiped its hands of this issue.

In a similar vein to the improvements to access to justice, you just referred in your previous answer to those that are missing out on justice now. Who are those? Can you define the cohorts or groups of people that are not able to access justice now because of the current system?

Ms TIERNEY: Well, to be on topic, victims of wage theft are one class or group of people. Another is silicosis. I mentioned them in my summation. These are areas that are very contemporary, that are very live.

Mr O’DONOHUE: Your summation actually focused on successful class actions that have taken place, which I think confirms that the class action system does serve access to justice and does provide an opportunity for people to seek appropriate redress if they have been wronged and for groups to come together as part of the class action system. So I do not quite understand the definition of the cohorts that you say are missing out. To Mr Barton’s point in his second-reading contribution, he spoke about his direct experience, which I think again demonstrates the class action system actually is functioning and functioning appropriately when there are many cohorts who are accessing justice through these processes that exist as they are today. So I again ask: which cohorts of people are unable to access justice because of the current system?

Minister, thank you for your non-answer—your refusal to answer the question. You have confirmed that the government has no identified process to evaluate the legislation when this bill passes, or if it passes, and you are unable to identify defined cohorts of people that are missing out on justice now, despite the main contention of the bill being that it will improve access to justice. You cannot identify who is missing out. Thank you, Minister, for confirming to the committee the suspicions of the opposition, which further heightens our concerns that the motivations for this legislation are not indeed to improve access to justice but are party political in their nature—to help significant financial donors to the Labor Party, including Maurice Blackburn, which has donated over half a million dollars to Labor in recent times.

Minister, when the Labor Party now needs funding and resources, who will Steve Bracks talk to at Maurice Blackburn about donations to the Labor Party? Will he talk to himself? If Steve Bracks asks Steve Bracks, will he put his hat on as a Labor Party administrator to say to Steve Bracks the chairman of Maurice Blackburn, ‘I need money for my Labor Party campaign. I’ll take off my hat as a Labor Party administrator and put on my hat as the Maurice Blackburn chairman and agree to a significant donation’? Presumably his capacity to agree to such a significant donation will be enhanced with the passage of this legislation. Would you agree with that proposition?

Ms TIERNEY: We are probably going to have lots of hours along these lines. The fact of the matter is that what you are purporting is just not part of the bill.

Mr O’DONOHUE: Minister, you are correct that it is not written in the bill, but it is very much part of the bill itself. It is very much part of the issues that are in contention today, because as Mrs McArthur and others have said in their second-reading contributions, Maurice Blackburn is the largest non-union contributor to the Labor Party coffers. So, Minister, to just dismiss that as an irrelevance or not part of these deliberations is to not live in the real world. It is to not own up to the fact that the Labor government of which you are a minister is mired in a deep corruption scandal and that the passage of this legislation only heightens the concerns of the community that you are putting yourselves first—the government’s political interests—and your political allies first, not the broader community. Your failure to identify cohorts who are unable to access justice and your confirmation that there is no plan to evaluate the outcomes of this legislation simply reinforces those concerns—simply heightens those concerns. I will give you another opportunity to respond, Minister. Your silence, Minister, says more sometimes than your words.

Ms TIERNEY: These are irrelevant issues. The fact of the matter is that this bill will cover all law firms in this state, not one, two or three. In relation to the people that will benefit from this bill, it has been brought about because litigation funders tend to invest in large claims that are low risk and have high potential for maximum returns, generally confining themselves to commercial claims such as shareholder and investor claims. They tend not to fund class actions for the benefit of vulnerable people. Smaller claims will be funded.

Mr O’DONOHUE: Smaller claims will be funded?

Ms TIERNEY: Ordinary people, smaller claims.

Mr O’DONOHUE: What evidence do you provide to support that proposition?

Ms TIERNEY: I covered off this in my summation.

Mr O’DONOHUE: Minister, I have got a lot of questions, but I just want to take you to a couple of other things you said in your summation. You said that the passage of this legislation will not generate a honey-pot effect, as I and others in the broader community have made the point that it would. And then I think in a quite disingenuous way you referred to the total number of actions brought in the Victorian court system versus the number of class actions brought, without any recognition or acknowledgement of the difference between a small Magistrates Court matter that takes the court half an hour to dispense with and an in no way comparable large class action that consumes the full-time resources of a court, with dozens of lawyers and hundreds of litigants, and may proceed for years and years. I think the numbers you provided in your summation were disingenuous and misleading, and I put it to you, Minister, that particularly for corporate class actions, where litigants have the luxury or the benefit of choosing the jurisdiction of their choosing and where litigants come from multiple jurisdictions, there will be a clear honey-pot effect. My question to you, Minister, is: what modelling has the government or Court Services Victoria done to assess the potential impact on the court system of the passage of this legislation and what I would suggest is a very clear likely consequence of the honey-pot effect of driving class action litigation to Victoria?

Ms TIERNEY: Sorry, I missed that bit—the phone went off.

Mr O’DONOHUE: What analysis has the government, through the Department of Justice and Community Safety or Court Services Victoria, done to analyse the potential impact on court resourcing of the passage of this legislation, given the huge resource demands of class action matters and the ability of plaintiffs to choose a jurisdiction, when plaintiffs, often in larger class action matters, come from multiple Australian jurisdictions?

Ms TIERNEY: There are a couple of points here. One is that there needs to be a connection to Victoria. The other element of it is the statistics that I and other people have used in terms of it being evidenced that there have been very few class actions, we believe. After discussions with the institute and everyone else involved, we are of the firm belief that there will not be a so-called honey pot.

Mr O’DONOHUE: With respect, Minister, I do not think it is within the law institute’s purview to flag concerns about a honey-pot effect. They represent their members, as you said. They would welcome additional business to Victoria, and the legal practices represent an important part of the economy. But my question to you is: what work has the department or Court Services Victoria done to analyse the impact on the court system?

And to go to your point, Minister, that there must be a connection with the jurisdiction, the class actions that you refer to against the banks or the class actions we have seen against large ASX businesses—members of the class invariably live in every Australian jurisdiction, so the capacity to choose the jurisdiction is quite a straightforward one. It is not a complex matter when you are litigating against a bank or an insurance company or a large Australia-wide business, because there will be plaintiffs domiciled in the Victorian jurisdiction, guaranteed.

So that is not a problem for those types of matters. And the fact is we have seen significant growth in class actions in recent times—significant growth in the last couple of years. Again, Minister, I will put a proposition and you tell me if I am wrong. I take it from your answer there has been no analysis of the impact on the courts from the passage of this legislation.

Ms TIERNEY: Of course there has been work that has been carried out, and the advice is that it can be done within current resources. What I can also advise the member is that the Department of Justice and Community Safety will monitor the effects of the amendment and work with the courts if there is a significant increase.

Mr O’DONOHUE: Thank you, Minister. So does the government recognise there could be an impact on court resourcing, from your answer?

Ms TIERNEY: When there is a change, there is obviously potential for a range of things to happen. Of course the department is cognisant of potential change, and it has committed the resources and has committed to a monitoring process.

Mr O’DONOHUE: Thank you, Minister. And I am happy to pass to other colleagues, either from the coalition or other parties if they wish, but I just want to again pursue a couple of points in your summation before getting to my other questions that I had earlier. Minister, in your summation you raised the issue of the ability to opt in and opt out of class actions. Mr Rich-Phillips addressed this in some detail in his second-reading contribution. I believe Mrs McArthur did as well. The issue is that currently a book must be built for a class action to proceed, but after the passage of this legislation you will be deemed to be part of a class unless you opt out.

You said, Minister, that there will be a notice published and therefore people will know. Can you describe where the notice will be published, how prominent it will be, how often it will be published and whether there will be any direct communication with potential members of a class required to notify them they may exist as part of a class action?

Ms TIERNEY: The notification will be published in newspapers routinely as part of the process.

Mr O’DONOHUE: Thank you, Minister. Again I think that is the concern that I had previously from your comments in the summation—that most people under the age that I am I do not think read the hard copy newspapers much these days. What is the likelihood of members of a potential class happening to read a notice on the back pages of the Herald Sun or the Age? They are extremely unlikely, first of all, to identify themselves as a potential member of the class in the first case. They may not know a problem exists. And then second of all, them happening to see it and happening to recognise that they are a potential member of the class, I put it to you, Minister, is extremely unlikely. So the almost inevitable outcome is there will be scores of litigants who have no idea they are part of a litigation and have no capacity to have input into the process of that litigation, which will simply empower the lawyers who are operating the litigation to operate it basically as they deem appropriate, not at the direction of the litigants themselves.

Ms TIERNEY: The advice is that the courts will require the notice to be widely published. It is not just in the printed form; it will be online as well, Mr O’Donohue.

Mr O’DONOHUE: Minister, will there be any targeted communications with potential class members as a requirement of this legislation? For example, one of the high-profile class actions has involved a particular motor company and some deficient parts. Would there be a requirement, as a result of this legislation, to formally notify all people who bought a particular vehicle for a defined period?

Ms TIERNEY: I have to take that on notice, Mr O’Donohue.

Mr O’DONOHUE: Thank you, Minister. I will just ask one final question in response to your summation, then I will perhaps give other colleagues an opportunity to ask some questions. You said in your summation the Law Institute of Victoria, I think, support the legislation. It is noteworthy—and I do not think a single government member or person who spoke in favour of the bill mentioned it—that the peak body for lawyers in Australia is opposed to the legislation. What consultation at a national level has occurred either with the federal government or with peak bodies representing lawyers, particularly those who have expressed their opposition to this legislation?

Ms TIERNEY: There were consultations obviously with the Law Institute of Victoria, which is a member of the national body.

Mr O’DONOHUE: That is true, Minister, and the press release from the Law Council of Australia from 13 March says:

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

So are you saying, Minister, that the Law Council of Australia is wrong in their opposition to your legislation and the objectives that you say will be achieved by it?

Ms TIERNEY: That is a matter for them, but their own members in Victoria support it.

Mr O’DONOHUE: Minister, I think when this bill was mooted there was some comment through the Attorney-General, Christian Porter, that the minister, the Attorney-General, had not spoken to him or engaged with the federal government about this legislation. Given that the reports that government members and others in support of this legislation cite in support of this bill all called for a national scheme and all spoke against a state-based scheme, why hasn’t the government worked with Christian Porter and the federal government to seek to advance its belief that the policy changes in this legislation are the right course?

Ms TIERNEY: The Victorian Law Reform Commission (VLRC) did not say that it had to be national. The fact of the matter is that we are a government that wants to deliver, we want to get on with it, we do know that there is activity happening at a national level and we are happy for that obviously to continue, but we do not see that that should be a reason as to why we do not progress this bill at this stage.

Mr O’DONOHUE: Minister, given that the way lawyers have been regulated and the current way they are remunerated have existed for nigh on 200 years, what is the urgency for the passage of this legislation today, when the federal inquiry on foot, which you referred to, is only months away from handing down its final report?

Ms TIERNEY: Thank you. The fact of the matter is that there has been review upon review, this is the most recent one, we are not waiting around, we want to get on with it and this is a government that delivers.

Mr O’DONOHUE: But all of those reviews, Minister, have preferred a national approach. Your characterisation of the VLRC recommendation, with respect, is wrong. It spoke in favour of any reform to be done at a national level. There is not a single report and there is not a single expert that has said that state-based regulation in this space is the way to go, because the legal market operates at a national level and we have been moving towards national regulation since the agreement between New South Wales and Victoria was signed by then Attorney-General Robert Clark to introduce the uniform law. So, Minister, why is Victoria walking away from the national law and walking away from a national law approach and ignoring the reports of the VLRC, the Productivity Commission and the ALRC, who all call for national-based reform?

Ms TIERNEY: Simply, it is taking too long. We just want to get on with it, and that is what we are doing today.

Mr O’DONOHUE: The way that lawyers are remunerated has been fundamentally the same for a couple of hundred years; what is the risk in delaying for a few months until the federal government concludes its report?

Ms TIERNEY: Again it has been a bit of a never-ending story. There are no guarantees as to when the national exercise is going to be concluded or indeed legislation is being dealt with at a national level; we are going ahead with it.

Mr O’DONOHUE: I just do not accept that, Minister, and it could create—in a similar vein to the bill that passed on Tuesday—a serious conflict of laws issue that would be a lawyers picnic when the federal government moves in this space after it has finalised the committee process that is currently on foot.

I just want to raise one other issue, Minister, and then I will sit down and let others have a turn. I know two of my colleagues here and Dr Cumming wish to raise some issues. That issue is around the billing process. Currently lawyers bill for time, and the principle behind that is they must be dispassionate in the provision of legal service and objective and not be swayed in their advice to their clients by financial reward. In your summation you addressed that issue by saying that lawyers have duties to the court, ethical obligations and regulations that bind them with which they must comply, and that will keep everything all fine. I put it to you, Minister, that by linking the remuneration of lawyers with the settlement outcome from a class action on a percentage basis, not a time basis for work undertaken, it creates at the absolute minimum and possibly more a risk of a conflict of interest that the advice the lawyers are giving is tainted by the potential payday that may be coming. That is not to say lawyers are corrupt or they do not act ethically. As a former practitioner myself—and there are many in this chamber—lawyers go above and beyond in the vast majority of cases to serve their clients and seek justice. But just as with members of Parliament and others, we must be free of not only conflict but the perception of conflict.

Surely the government accepts there is at an absolute minimum the risk of a potential for a perceived conflict of interest. When lawyer ABC is advising his or her clients that the settlement offered by the defendant is $100 million and the lawyer thinks their law firm might get $20 million or $30 million or whatever of that, and the law firm is struggling financially, surely there is a serious risk, as I say, at the minimum, of a potential conflict of interest that this bill introduces that changes the way lawyers have operated for generations and is a real risk to the way lawyers are regarded in the community at a time when many of our institutions, including those that serve justice, have a diminished standing in the community.

Ms TIERNEY: Any application for group costs orders will be very closely scrutinised by the Supreme Court, as I mentioned in my summation. Such an order can only be made once the Supreme Court approves it and determines it fair. Indeed class action members may receive more money back in a settlement under this legislation than under other types of fee arrangements. In his submission to the commonwealth inquiry Professor Morabito said that contingency fees and 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.

This is because many class actions require the backing of litigation funders to make them viable. Under this arrangement class action members will only be liable for fees to their lawyers, not both the lawyers and the litigation funders.

Then there is the issue that you raised about the potential for conflict of interest. It is no different under a group costs order where the plaintiff lawyers are liable for adverse costs if the proceedings are unsuccessful. And of course, as I said, the Supreme Court has strict oversight of the conduct of class actions and will have a similar strict oversight over group costs orders, which will assist in protecting class members from potential unfairness. It is possible that lawyers might receive more on a time basis than under a group costs order.

Mr O’DONOHUE: I will finish with this remark and hand across to someone else. That does not address the fundamental question, Minister, that charging by time or for service is a very different proposition to charging a percentage, and whether that is overseen by the court—I have got questions to explore on that at a later point—the changing of fee for service or by time to a percentage outcome introduces at a minimum the potential for the perception of a conflict of interest. I will hand over to someone else.

Dr CUMMING: In rising to make a contribution in clause 1 and having listened intently to the debate today I would first like to acknowledge Mr Edward O’Donohue for his tireless and very thorough briefing that he gave me, the amount of emails and the way he has actually represented his views today. I would also like to acknowledge Mr Barton’s contribution, his very personal contribution, and the way he presented his debate before lunch, after lunch, during a new presidency election. I would like to acknowledge those two very strong contributions that I heard today, as well as others—Mrs McArthur and others—that I had heard today.

But—it is a big but—this is the Justice Legislation Miscellaneous Amendments Bill 2019, and you would think from today’s debate that it only actually changes one act, which is the Supreme Court Act 1986, because that is the vast majority of the debate that I have heard today, when it actually changes the Criminal Procedure Act 2009, the Evidence Act 2008, the Evidence (Miscellaneous Provisions) Act 1958, the Local Government Act 1989, the Magistrates’ Court Act 1989, the Oaths and Affirmations Act 2018, the Professional Standards Act 2003, the Sentencing Act 1991 and the Supreme Court Act 1986.

In going into those different acts and all of the different amendments and what this Justice Legislation Miscellaneous Amendments Bill 2019 is, I must say that some of what they are considering minor amendments are to me major errors that have obviously been sitting around for a very long time, one being, as I understand, a very, very important section. Let me get my notes. I hope I am not on the clock. I could give a brief summary of it, but I will go to the notes. In one section the bill also amends provisions that relate to sexual offence proceedings involving a complainant who is a child or a cognitively impaired person to clarify that a committal hearing cannot be held in any proceedings in which a child or a person with cognitive impairment is the complainant for a sexual offence charge, and it allows the court in such cases to order for the cross-examination of an adult complainant before the trial and clarifies that the accused may apply for leave to have an adult complainant cross-examined before the trial about their sexual activities other than those to which the charge in dispute is related.

Just to summarise what that actually means for someone with a disability, a child with a disability, it actually means the amendment of the Criminal Procedure Act 2009 to clarify when a witness is considered to be cognitively impaired for the purpose of accessing the immediate Pivot program. It is actually a really important amendment that I feel part of the debate should have got to and we should have spoken about, because that is very, very important.

Again, we only just did the Local Government Act just recently, in the last sitting in March, and here we have already the second amendment to the Local Government Act—the second sitting. With this amendment, even though some here might consider it a minor amendment, clause 6 of the bill will insert new section 252 into the Local Government Act 1989 to validate the decisions of the Municipal Electoral Tribunals, which is METs, where improperly established and to provide affected persons with the appropriate individual immunity. In other words this actually gives teeth to a right and fair hearing. From what I understand and from what I have read of Gavin Jennings’s second-reading contribution in February of this year, where he has actually put this on the record in this place, this bill:

… amends the Local Government Act 1989 to ensure the validity and enforceability of decisions made by METs that were improperly established due to administrative irregularities. The Bill also provides members of METs with the individual immunity that they would have enjoyed had the METs been properly established.

These might be considered just minor technical amendments, but they are far reaching and they are things that in this house are done with an understanding that there are nine acts that we are amending today—not just one but nine. And what some others may consider minor amendments or administrative irregularities have far-reaching considerations for the courts as things that were obviously glaring holes.

So, yes, others here have really gone into a lot of detail about class actions and group costs orders and the discussion around percentages rather than being paid by an hourly rate and great detail about what that means for them and how they feel it will change the legal system, but we have to also understand that today with this Justice Legislation Miscellaneous Amendments Bill 2019 we amend the Local Government Act, we amend the Magistrates’ Court Act and we also amend the Criminal Procedure Act 2009. Within that Criminal Procedure Act we are talking about sexual offence cases—

The DEPUTY PRESIDENT: Order! Member, your time has expired. Can I just ask, to clarify: was there a question in that, or should the minister just take that as a statement?

Dr CUMMING: It was my contribution to clause 1, and there will be questions.

Mrs McARTHUR: Minister, you say that there has not been an explosion of class actions. Let me detail for you over the last five years the actual numbers: in 2013, 22 actions; 2014, 21 actions; 2015, 44 actions; 2016, 37 actions; 2017, 38 actions; 2018, 59 actions; 2019, 59 actions. Minister, is 59 higher than 22, and therefore would you agree with me that the numbers of class actions have more than doubled over the last six years?

Ms TIERNEY: Certainly I would not classify that as an explosion, nor would I consider five on average in Victoria per annum and 55 last year Australia-wide in total.

Mrs McARTHUR: Thank you, Minister. Well, more than doubling it seems to me an explosion. You know, it may not mean much to you, but it does to many people. So, Minister, has the government consulted with the Victorian Legal Services Board and the commissioner regarding this bill and the impact it will have upon the assessments undertaken by the legal services admissions board regarding whether practitioners will be meeting their professional obligations each year in line with the Legal Profession Uniform Law?

Ms TIERNEY: This bill does not change any of those obligations, and can I say that in terms of five in Victoria and 55 nationally and even if it is so-called doubling a base at a point in time, as you mentioned, that compared to the thousands and thousands of legal proceedings that are undertaken in this country, is a very small set of numbers.

Mrs McARTHUR: Minister, has the government received any advice from the solicitor-general on the ability of lawyers charging contingency fees to comply with the Legal Profession Uniform Law?

Ms TIERNEY: I am advised that we do not comment on solicitor-general advice.

Mr O’DONOHUE: Well, Minister, another way: is the government confident that the legislation is sound?

Ms TIERNEY: Yes, we are.

Mrs McARTHUR: Minister, you quoted Professor Vince Morabito extensively. In fact it seems the government has relied on him for their talking points. Minister, do you know who funds and provides resources to Professor Morabito’s research?

Ms TIERNEY: That is not within the scope of this bill.

Mrs McARTHUR: Well, Minister, you have referred to this professor extensively, so perhaps you should know a bit more about Professor Morabito’s funding for his research. Well, let me help you. Professor Morabito’s research is funded by Maurice Blackburn, Slater and Gordon and the CFMEU. Do you have a comment on that, Minister?

Ms TIERNEY: The professor is an academic at Monash University and is considered across the board an expert in class action.

Mrs McARTHUR: Well, Minister, it is always important to know who funds the researchers. I am sure you will happily quote them when a business is funding some research in a university for other areas. But anyway, Minister, it is Professor Morabito’s figures which I used before to demonstrate that class actions have exploded. Why did you not see these in the research you have so extensively quoted?

Ms TIERNEY: The dispute that I have with you, Mrs McArthur, is your definition of ‘explosion’ and ‘massive numbers’. As I said in a previous answer, this does not back up the claim that there has been an explosion. When there are thousands and thousands of legal proceedings in this country and indeed this state, when we are talking about five on average in Victoria and there has been a slight increase, it is certainly not an explosion. It is fearmongering, unfortunately, from your side.

Mrs McARTHUR: Well, Minister, you have accused the opposition of being here for vested interests, yet you quote the research funded by a professor supported by Maurice Blackburn, Slater and Gordon and the CFMEU. Is that not a case of vested interests?

Ms TIERNEY: The professor is highly regarded; he is a well-known academic, he specialises in class action and he is known in all academic circles as one of the best authorities.

Mrs McARTHUR: Well, it is extraordinary how you can quote from one source, yet the main body in Australia does not seem to rate. Anyway, moving on, Minister, the Justice Legislation Miscellaneous Amendments Bill was introduced by the Attorney-General on 26 November 2019 with provisions which allow lawyers to charge commissions on the basis of a common fund order, which permits lawyers to bring the class action on behalf of people without requiring their knowledge and to charge them a contingency fee commission without requiring their consent. One week later the High Court rejected the use of common fund orders, saying the court has no power to make them and that the commercial returns of litigation funders and sufficient financial inducement to run proceedings was outside the concern of the court. So, Minister, I ask: why has the government pressed forward with a bill when the heart of the bill has been called into question by the High Court of Australia?

Ms TIERNEY: The High Court decision will not impact on the operation of the proposed group costs order provision as the decision is relevant only to common fund orders made under a separate supplementary provision of section 33ZF of the Supreme Court Act 1986.

Mrs McARTHUR: Did the ALP introduce the bill in an attempt to get it in before the High Court ruling?

Ms TIERNEY: No.

Mrs McARTHUR: Thank you, Minister. What justification does the government give for bringing lawsuits on behalf of people without their knowledge or consent?

Ms TIERNEY: This goes back to the opt-in/opt-out issue, so it is not the government. It is contained in the bill. I have outlined what is happening, and I have outlined what happens in terms of the court ruling. There is publication of it, and it is on the website as well as in newspapers.

Mrs McARTHUR: Well, Minister, if the government has nothing to do with the bill, who has got something to do with the bill?

Ms TIERNEY: I will treat that as a comment.

Mrs McARTHUR: Well, Minister, you made the statement. You need to justify what you have just said, that the government has nothing to do with the bill. Well, we note that the Minister does not want to answer. Who is in charge of the bill if the government is not? We can only assume that those outside the government with vested interests have been in charge of this bill.

So another question, Minister—see if you can answer this one: why has the government made no effort to re-examine the core of this bill in light of the High Court decision?

Ms TIERNEY: I have already provided an answer to that.

Mrs McARTHUR: Minister, is it correct that a lawyer has certain fundamental obligations or duties, first, to the court, and second, a fiduciary duty to their client?

Ms TIERNEY: This bill does not change obligations. I have said that before. I am not going to repeat it again.

Mrs McARTHUR: Minister, is it correct that the lawyer’s fiduciary duty obliges the lawyer to put the interests of the client ahead of their own?

Ms TIERNEY: Again, nothing changes. And I will go through it yet again. Conflict between a law firm’s commercial interests and the interests of a client is inherent in the provision of legal services generally and is routinely managed. In a class action where plaintiff lawyers act on a no-win, no-fee basis they stand to lose a significant amount of money if the proceedings are not successful. And a conflict of interest may arise in determining if and for how much the class action settles. The potential for conflict of interest is no different under a group costs order where the plaintiff lawyers are liable for adverse costs if proceedings are unsuccessful. I have covered off on this before.

Lawyers in class actions and more broadly have wideranging responsibilities that assist the management of conflicts of interest, including fundamental duties to the court and the administration of justice, professional obligations under the Legal Profession Uniform Law, fiduciary responsibilities and the significant responsibilities relating to the disclosure of charging legal costs. And further, as I have said now for about the fourth time, the Supreme Court have strict oversight of the conduct of class actions, and they have similarly strict oversight over group costs orders, which may assist in protecting class members from potential unfairness.

Mr O’DONOHUE: Minister, I think you were fundamentally wrong in the initial part of your answer where you said that there are inherent conflicts for lawyers in all arrangements. In an arrangement where either a litigation funder or through other external resources a law firm is retained to act in a class action and bills at the end of every month or has in their trust account anticipated billings for the next three or six months and issues those bills and is then paid from moneys retained in a trust account or from an external funder, there is no conflict. The work is done on a time or cost-for-service basis and that bill is paid, just like any other service provider would do. To say that that is no different to the notion that ‘I’ll get X percentage of the outcome if we get this settlement’ is just frankly, Minister, an absolute nonsense and demonstrates a remarkable and concerning lack of understanding about how the system works.

Ms TIERNEY: I will take it as a comment.

Mrs McARTHUR: Your silence is golden, Minister, and most revealing. Minister, does a lawyer acting for the plaintiffs in a class action owe a fiduciary duty to all class members, even if they do not have a formal retainer agreement with the class member?

Ms TIERNEY: I am advised that we are happy to take that on notice.

Mr O’DONOHUE: So as a follow-up to Mrs McArthur’s question, which is a very interesting and important line of questioning, if you are unable to tell us whether there is a cross-agreement between the members of the class and the lawyer, on what basis are any members of the class to be provided information about the potential legal costs? And please, Minister, do not tell us that that is just a matter for the court. Surely, since the Legal Practice Act in the 1990s was passed the requirement for signed cost agreements has been a key part of the regulation of the legal profession. Will that be maintained if this bill is passed?

Ms TIERNEY: Well, Mr O’Donohue, I am going to disappoint you, because my answer is the same answer that I have been giving all along: it will be determined by the Supreme Court.

Mr O’DONOHUE: It is quite a remarkable departure, Minister, from the accepted practice of regulating lawyers’ costs for decades. Even in no-win, no-fee arrangements the estimated costs if a matter is settled or a judgement is given must be quantified with an estimate of the cost and the basis upon which that estimate is made—generally a cost-time basis. To say that is being walked away from now is deregulating how legal costs are calculated and leaves the litigants involved in an extremely vulnerable position, particularly, Minister, when an application can be brought by the plaintiff law firm, as I understand it, at any stage through the legal proceeding and without notifying the class involved. Can you confirm, please, Minister, that a group costs order can be brought at any juncture throughout a class action proceeding?

Ms TIERNEY: Yes.

Mr O’DONOHUE: And who needs to be consulted amongst the class, Minister, before that application is made?

Ms TIERNEY: The court will develop a practice note, Mr O’Donohue.

Mr O’DONOHUE: So in other words, Minister, you do not know and you cannot tell me.

Ms TIERNEY: No, I have told you. The court will develop a practice note.

Mr O’DONOHUE: So the bill is abrogating the way legal practices have been regulated for decades with, before legal work can commence, a signed cost agreement and an estimate of the legal costs. That is being washed away for this class action litigation for the first time in decades, an absolutely retrograde step, and you cannot tell me, Minister, because the work has not been done, about the practice note by the court or not only how legal costs will be measured but who will be told about an application for a group costs order brought by the plaintiff law firm. Minister, do you accept that this legislation is putting enormous power into the hands of the plaintiff law firms that will bring these class actions and reduce the rights of members of the class actions that they will bring?

Ms TIERNEY: I completely reject the position that has been put forward by Mr O’Donohue, and I do have regard that the courts will develop the appropriate practices.

Mr O’DONOHUE: Well, Minister, this is a new area for the court. If there is a dispute about legal costs at the moment, the court can order that to be taxed, generally by external experts, and that is again generally on the basis upon which the fee agreement—the executed, agreed fee agreement—has been reached. So that provides the parameters of any dispute over legal costs, and that is generally around fee for service or time. So currently if there is a dispute about legal costs, as there can be when matters are settled or when a judgement is made, an external expert can be brought in, tax the file and make an assessment of the reasonable costs based on the work that has been undertaken, based on the fee agreement that has been executed. The notion this legislation is advancing is that there will be no fee agreement and there will be no agreement that measures fee for service, and it introduces a nebulous ‘percentage possible’ award. Whilst I have the highest regard for the capacity of our judges and our courts, this is not an expertise that the courts currently have. How will this expertise be developed? Will the Judicial College of Victoria be requested to undertake detailed training about financial analysis and costing of legal files? And, Minister, if that is to occur, what will be the basis of the measurement of the reasonable costs of the law firm?

Ms TIERNEY: Mr O’Donohue keeps asserting that this process is new. The process followed in class actions is not contained within this bill, and it is not changing. You keep on thinking that so many things are changing; there is so much that just does not change as a result of this bill.

Mr O’DONOHUE: Well, Minister, I beg to differ given the way this is now passing off the charging of legal costs and the appropriateness of legal costs to the court in a new way and a different way. So I disagree with you on that point, Minister, but I take you back to my question: who will be responsible for providing the necessary detailed training to the court about how to make an appropriate costs order? Will that be the judicial college? Who will be doing that?

Ms TIERNEY: The Judicial College of Victoria, Mr O’Donohue.

Mr O’DONOHUE: And what sorts of criteria, what factors, will be considered in making an assessment of legal costs. Particularly, I think this question is important in that the government’s bill deliberately puts no cap on the costs that could be awarded, so it is passing a significant responsibility and obligation to the court. And as I said before, I do not diminish the capacity of the court in any way, but this is a new function and a skill that is different to the traditional skills of the court. So what will be the process, what will be the factors that will be considered, in determining the appropriate legal remuneration for the lawyers in these matters?

Ms TIERNEY: I am advised that the courts do this all the time to assess fees, and this will be developed.

Mrs McARTHUR: Minister, I am sorry that it is such a trial for you to answer these questions, but this is groundbreaking legislation and you need to be able to provide us with detailed answers. So will a lawyer acting for the plaintiffs in a class action have the same obligation to place the class members’ interests ahead of their own even if they do not have a formal client agreement, a retainer agreement, with the class member?

Ms TIERNEY: It does not change anything.

Mrs McARTHUR: Can you explain that, Minister? What does not change anything?

Ms TIERNEY: What occurs at the moment does not change.

Mrs McARTHUR: We have a bill here that is changing everything, and yet you say nothing is changing. Why have we got a bill before us to change everything?

Ms TIERNEY: For, I think, about the fifth time, the answer is this bill does not change the obligations that lawyers have. There is no change.

Mrs McARTHUR: Thank you, Minister. Can you guarantee that all Victorian lawyers who act for class members and seek a costs order under the provisions of the bill will honour their fiduciary obligations to their clients and other class members?

Ms TIERNEY: Again, the fiduciary obligations do not change under this bill.

Mrs McARTHUR: Minister, how will you ensure that all Victorians will act in the best interests of their clients and class members, given the alleged misconduct on the part of some Victorian lawyers that has come to light in the Banksia class action?

Ms TIERNEY: It is the same answer. The fact of the matter is that in respect to this nothing changes as a result of this bill.

Mr RICH-PHILLIPS: Minister, I would like to take you back to some of the first principles of this bill, particularly some of the statements that the minister has made in the second-reading speech. I note in your summing-up you referred to the fact that there was a relatively small number of class actions in Victoria as a proportion of the total number of litigation actions, and you discussed with Mrs McArthur the numbers of class actions on an annual basis. The second-reading speech at the top of page 2 says:

In an average year, five or fewer class actions are filed in the Supreme Court—

obviously in reference to Victoria. Can you indicate to the committee which plaintiff firms are filing those class actions? For the last two or three years, five actions a year—which plaintiff firms have been filing the actions?

Ms TIERNEY: I do not have that information.

Mr RICH-PHILLIPS: Really? There have only been four to five class actions a year. We have a bill to completely change the way in which plaintiff firms are paid under class actions, and the government claims not to know which plaintiff firms have participated in those four or five cases a year for the last few years?

Ms TIERNEY: You have asked me that question, and I do not have the details available to me.

Mr RICH-PHILLIPS: Well, Minister, do your advisers in the box have that information? Because I am staggered that the government could be bringing forward this legislation while claiming not to know anything about what it claims is only four or five actions year, as to which firms bring them.

Ms TIERNEY: I am advised that we do not have that information.

Mr RICH-PHILLIPS: Minister, in your earlier comments in response to Mr O’Donohue about consultation, you indicated that the government had consulted through the law institute with relevant plaintiff firms and that relevant firms have been consulted. If the government does not know who those firms are, how do they know they have been consulted?

Ms TIERNEY: As I said, the peak organisation was in charge of organising the consultations across their membership in terms of the actual list of people involved in those consultations, and the department worked with them to organise that with a range of legal firms. I do not understand the point you are trying to make, Mr Rich-Phillips.

Mr RICH-PHILLIPS: Minister, the fundamental point is the government is stating this is a very small class of actions—that class actions are a very small subset of total actions in the Supreme Court. The government is saying these amendments are required to make access to justice, access to class actions, more available. Yet you are now saying you do not know anything about the class actions which are actually taking place in the Supreme Court or which have taken place in the Supreme Court in the last couple of years. Despite saying there are only four or five, you are saying you cannot even tell the committee which firms were involved, and that beggars belief—that the government is saying, ‘This reform is required; we need to change the way in which class actions work to make them more available’, at the same time as saying, ‘But we actually don’t know who’s been involved in them. There are only four or five a year, but we haven’t bothered to check who’s actually involved in them, which firms are actually bringing the actions, and to understand their rationale’. The government is trying to say, ‘We need to change the basis on which firms can charge fees to a contingency fee basis, yet we actually don’t know who these firms are’. Is that your proposition—that the government does not know who the firms are, but to increase access to justice we need to change the way in which they can recover fees?

Ms TIERNEY: This is not about law firms or legal firms. What this bill is about is ensuring that those people that would not necessarily take legal action, because of financial barriers, are able to undertake legal action. It is in relation to those groups of people that have found themselves in very difficult circumstances—you know, very vulnerable people—whether it be about medical devices have been fitted into their body and there is leakage and various other things or about—

Mr O’Donohue interjected.

Ms TIERNEY: It is about people that have got asbestosis and various other things. There are general wage theft issues in terms of large groupings. It is those sorts of people who have not necessarily got the automatic financial resources to be able to think even about what they can do in terms of getting a financial, legal remedy to their situation, and that is the basis of what this bill is about.

Mr RICH-PHILLIPS: Thank you, Minister. I will approach the question in a slightly different way, then. I take the point you make about the types or classes of people that bring class actions and the nature of those class actions. In respect of the samples the government has referred to, the four or five class actions a year the government refers to in its second-reading speech, in any of those class actions was the lead plaintiff held personally liable for the costs? Or were they indemnified by the plaintiff firm in respect of all those class actions on a no-win, no-fee basis?

Ms TIERNEY: Mr Rich-Phillips, I do not have the degree of detail that you are seeking, but what I can say is that the government is acting on the recommendations of the Victorian Law Reform Commission and the significant number of people—albeit I understand you are representing a cohort that do not support this bill—in the legal profession and in the social services that believe that this is an important bill in terms of improving access to justice, particularly for those vulnerable Victorians.

Mr RICH-PHILLIPS: Minister, thank you for that answer. I appreciate this is not your speech—it is the Attorney-General’s speech that makes these statements—but you do have the Attorney-General’s advisers and you do have the Department of Justice and Community Safety advisers in the box with you today. The speech has made the claim that if a class action is unsuccessful the lead plaintiff might be held personally liable, so I would like to know: in the four or five cases you have said occur annually has that been the case? Have the lead plaintiffs been personally liable and not indemnified by the plaintiff firms that have represented them? Because my understanding is all those class actions that have taken place have been on a no-win, no-fee basis.

Ms TIERNEY: We are really trying to assist here, but cost agreements are confidential, Mr Rich-Phillips, as I am informed, and so there is real difficulty in being able to source the information that you are requesting.

Mr RICH-PHILLIPS: Thank you, Minister, but the obvious question to follow with that, then, is: if they are confidential and you do not know what they are, how do you know there is a problem?

Ms TIERNEY: The department does know. It is the smaller claims that are not being run, and that is the objective—to ensure that there is that serious chance of people being able to access the justice system as a result.

Mr RICH-PHILLIPS: Why are these class actions not being run on a no-win, no-fee basis as many, if not all, of the existing class actions are being run?

Ms TIERNEY: I covered off on this earlier today. They are often not big enough for litigation funders to fund them.

Mr RICH-PHILLIPS: Thank you, Minister. So essentially what you are saying is it is a question of return to the lawyers, not return to the plaintiff. You are essentially saying the litigation funder—or in this case, with group costs orders, the plaintiff firm—does not get a big enough return and that is why they are not running the class actions that you referred to. So this is essentially a proposition about increasing the return to the law firm rather than increasing the prospect of a plaintiff getting to court.

Ms TIERNEY: Again, I raised this in my summation, and that is the fact that members, because they do not have to pay for the lawyer and the funder, will essentially, by and large, I am advised, get more as a result of the action.

Mr RICH-PHILLIPS: Minister, that option is available now with a no-win, no-fee scenario. You refer to smaller class actions, i.e. class actions where a litigation funder is not required to underwrite, so the option is there for a plaintiff firm to take those cases now. So the only fundamental difference this legislation will create is that there will be more going into the pocket of the plaintiff firm than would otherwise be the case under existing no-win, no-fee arrangements.

Ms TIERNEY: There will be more going to the members of the action.

A member: What does that mean?

Ms TIERNEY: What it means is exactly what I said in answer to the question before the last.

Mr RICH-PHILLIPS: Minister, can I refer you to the next paragraph in the second-reading speech, which says it is:

… an important access to justice reform because it will pave the way for class actions to proceed where they otherwise may not have been viable …

What does ‘viable’ mean in that context?

Ms TIERNEY: Viable in that context is financially viable.

Mr RICH-PHILLIPS: Thank you, Minister, and that goes to the point of it: viability, financially viable, profitability. Essentially what the government is saying in this is that this will increase the number of class actions which are profitable to the plaintiff firms. It is about the underlying profitability to the plaintiff firms, not about access to justice by an injured plaintiff.

Ms TIERNEY: No, the underlying aspect is that the members of the action have more of a chance of getting a larger settlement.

Mr RICH-PHILLIPS: How, Minister?

Ms TIERNEY: Because they will not be having to pay for the funder and the lawyer.

Mr RICH-PHILLIPS: Minister, but this is effectively a circular argument. You earlier said the class actions that will come under this provision are the smaller ones which are not being funded now because they are too small and it is not worth it for the litigation funders because they are happy with their 165 per cent ROI they are getting on the big class actions—they do not want to touch these small class actions. So litigation funders are not a function of these smaller class actions you say will occur under this model.

Ms TIERNEY: Again, as I have said, the law firm may receive more, but the underlying thing is that the people involved in the actual action and the members of the action will receive more. That is the important underlying point.

Mr LIMBRICK: If it pleases the minister, I would like to ask some questions about the IBAC amendments at this point. It is my understanding from the short time that we have had to review this that a judge who is issuing a warrant must be satisfied of the evidentiary or intelligence value of the information being sought. So the judge will have been satisfied that IBAC has some legitimate evidence that they want to collect from this person. What safeguards are there that once they are arrested that is in fact what they will be questioned about?

Ms TIERNEY: Thank you, Mr Limbrick, for your question. The proposed amendment comes with stringent safeguards, including that IBAC must satisfy a Supreme Court judge on a number of grounds that a warrant should be issued; that the person obviously needs to be over the age of 18; that if the person in question were not arrested, their evidence would be lost; that the warrant is reasonable to issue the arrest warrant in light of the evidence or intelligence sought; and that if the person is remanded after their arrest, that remand is to be reconsidered every 24 hours. The ongoing review of detention ensures a person is not remanded in custody for any longer than necessary to ensure their attendance at an examination and that IBAC is taking all reasonable steps to hold that examination as quickly as possible.

Mr LIMBRICK: I thank the minister for her answer. I am aware of those safeguards, but I did not hear any safeguards about questioning people about unrelated matters, and my concern is that those safeguards do not actually exist. So the situation that I am concerned about is where someone is arrested in seeking certain evidence and then they are held and questioned and intelligence gathered about something totally unrelated.

Ms TIERNEY: My advice is that the warrant does not specify a particular thing—it is very broad—and that they can be asked a range of questions. It simply brings forward the questions that would have been asked otherwise.

Mr LIMBRICK: I thank the minister for her answer. So just to clarify, this amendment will enable someone to be arrested on one thing and then intelligence can be gathered from that person on anything that IBAC chooses.

Ms TIERNEY: Again, the warrant does not specify the exact sort of issue as such; it is a broad warrant to stop someone fleeing. So the questions that can be asked can be wideranging.

Mr LIMBRICK: I thank the minister for her answer, but it is my understanding that the judge must be satisfied having regard to the evidentiary or intelligence value of information—or the age, which you have already pointed out. So when a warrant application is considered, the judge must presumably have some insight into the type of intelligence or evidence that IBAC is seeking to collect. My concern is that the judge in considering that—which may be totally valid evidence to want to collect—once the warrant is granted and the person is arrested there are no safeguards to ensure that the reasons for which the judge said ‘I will give you the warrant’ are actually what happens once they are arrested or what they are questioned about or intelligence gathered.

Ms TIERNEY: The point is that it is a warrant because there is an assessment made that this person is going to flee, so that is the basis of the warrant. Obviously it is of a reasonably serious nature for the judge to grant that.

Mr LIMBRICK: I thank the minister for her answer. On another issue, with regard to the timing of this, what is the urgent nature of this? We were provided with this last night. I wonder if the minister could please provide some insight into what is the urgent nature of this amendment that has come through.

Ms TIERNEY: I have done that in part in my summation. If the government had its choice, it would have incorporated something like this in the actual bill. It was not until, I think, the last sitting week that we became aware from IBAC themselves that they were requesting this and that they were requesting this in terms of a current operational matter. The issue then was dialogue between the government and the clerks in particular as to what would be the most appropriate justice bill to attach this amendment to. There was some serious discussion; in fact I think the opposition and the government would have preferred for it to be attached to the emergency worker legislation, which we are going to deal with later today, for a whole range of different reasons. It would have made it a bit easier in terms of the opposition as well because it would have been part of a bill that they would have felt more comfortable in supporting, but the information and advice from the clerks was that essentially this sat a little bit more comfortably within the scope of this bill than it would with the emergency worker legislation.

Mrs McARTHUR: Minister, earlier in your answer you said that the situation will not change for lawyers. How do you reconcile those comments with the findings of Justice Hasluck in Bowen v. Stott? I quote:

… the integrity of the legal process and of the Court function might be undermined if it were thought that solicitors or counsel did not possess the objectivity and independence which their professional responsibilities and obligations to the Court require of them.

The most obvious case in that regard would be a situation in which a solicitor had some direct pecuniary interest in the outcome. It might seem to an independent observer that a solicitor, notwithstanding his best efforts to be impartial and objective, might adjust his evidence in some way to procure a result that suited his interest.

Mr O’DONOHUE: I will just add to the same question an extract from the Australian Solicitors Conduct Rules, which on page 7 says:

CONFLICT CONCERNING A SOLICITOR’S OWN INTERESTS

12.1   A solicitor must not act for a client where there is a conflict between the duty to serve the best interests of a client and the interests of the solicitor or an associate of the solicitor, except as permitted by this Rule—

Which, I think, goes to the same point that Mrs McArthur is making.

Ms TIERNEY: Thank you. Those opposite have again asked questions that relate to the responsibilities of a lawyer in a class action setting, and again I state for the benefit of members that this bill does not change the responsibilities of a lawyer in a class action setting and this bill does not change the responsibilities of a firm in a class action setting.

The DEPUTY PRESIDENT: The minister has just asked, to assist her as it is not her bill, if we could try to keep things a little bit themed. If you have got questions on IBAC, could we stick to that and then move off. It just assists her in her line of thinking. If it is possible, she would like that. Of course we will not stop anyone asking a question that they need to, but you can ask it again a little bit later in the clause if you like.

Mrs McARTHUR: Deputy President, my apologies. I thought Mr Limbrick had finished his line of questioning on IBAC and that we had moved back to general questions. Minister, perhaps we can go to another highly respected High Court justice, Michael Kirby, who stated in 2002:

The bottom line is that law is not just a business. Never was. Never can be so. It is a special profession. Its only claim to public respect is the commitment of each and every one of us to equal justice under law.

There is an award that every Australian lawyer can aspire to. It is hard to win. It requires long hours of devotion and care. But when it is won, it is special. It is the prize of respect and gratitude of the ordinary client for a job done with skill, courtesy and at no more than proper cost. Every lawyer, every day, should endeavour to win that prize. It does not usually come with a glittering ceremony. But in our hearts we know it is the most precious award of all.

Why, contrary to the advice of former High Court justice Michael Kirby, will you allow through this bill lawyers to charge improper costs to clients through the taking of contingency fees?

Ms TIERNEY: Again, nothing will change. Lawyers will continue to act ethically, and I will take the rest of Mrs McArthur’s contribution as comment.

Mr O’DONOHUE: Minister, I appreciate that there are many issues in this bill. It is an omnibus bill, and therefore we will try to stick to themes, as you suggest, because I think that is only reasonable. I wish to just return to the issues around class actions and just explore in a little bit more detail the opt-in-and-opt-out issue under these reforms. Rather than build a book, as we discussed before, of known members of the class, the class can have one member and then proceed with a whole class of people who do not know they are part of that class action. We discussed the absence of cost agreements, we discussed what I would call the haphazard and inexact way that members of the class will be identified. I want to move forward now. If there is a resolution, how will members of a class know if a settlement has taken place if it is not an opt-in basis, and how will they receive their just compensation as part of a member of that class if they do not know it exists?

Ms TIERNEY: They will receive notice or it will be publicised widely. The moneys will be held by the courts and people will essentially be notified. If they are not notified individually, there will be notifications that a settlement had been reached.

Mr O’DONOHUE: Thank you, Minister. So the notification at the end of the process will be similar to the notification at the start. Is that a fair summation? Even with the best will and intention it is quite possible that there will be some possibly significant numbers of members of that class who will not know about the settlement. How long will those settlement moneys be held for, and what will happen to those settlement moneys that are not claimed in that time frame?

Ms TIERNEY: The bill does not change opt in or opt out. Common fund order processes will continue as they do at the moment, I am advised.

Mr O’DONOHUE: For the benefit of the committee, Minister, can you answer the question? For those members of the class that are unknown, what happens to their settlement moneys?

Ms TIERNEY: In terms of the details that you are seeking, the team are pretty confident that they will be able to get that information during the dinner break.

Mr O’DONOHUE: I appreciate that and I appreciate the advisers are doing their best, but I would also make the point, Minister, that these are pretty fundamental and simple questions that I am asking about the operation of the scheme. How will members of the class get their money? You cannot tell me. I think that says something about the shambolic nature of this legislation. It has been on the notice paper for months, and for simple questions like ‘How will a member of a class action get their money?’ you have to go away and find the answer during the dinner break. Honestly, it does not give much confidence.

Minister, in a similar vein to that process, if the court awards a percentage under these changes, is the percentage awarded to the law firm a percentage of the total quantum awarded or is it a percentage of the compensation that is paid out? That could be quite a big difference. So, for example, is it 35 per cent or 40 per cent or 20 per cent or 50 per cent of the money paid out to the known members of the class, or is it the percentage of the total quantum awarded?

Ms TIERNEY: It is a percentage of the total award, I am advised.

Mrs McARTHUR: Minister, I refer to the Legal Profession Uniform Law Application Act 2014, part 2, division 1, clause 12:

Dealing with unclaimed money

For the purposes of section 167 of the Legal Profession Uniform Law (Victoria), unclaimed money is to be dealt with in accordance with the Unclaimed Money Act 2008.

What happens in the event that group costs orders are made on behalf of people who are not aware they are in the action and in actual fact cannot be contacted to receive their settlement?

Ms TIERNEY: The question that Mrs McArthur asks is very much related to the question raised by Mr O’Donohue, and that is also part and parcel of what he has asked. As I said, the team will pull that information together over the dinner break.

Mr RICH-PHILLIPS: Minister, in another related question, how will the court determine the size of an award or whether approving a settlement is appropriate if it does not know the size of the class? I will give an example: a class action that is brought by a lead plaintiff in relation to PFAS contamination, which is obviously a fairly topical subject for class actions at the moment. If there is no book billed, if the class is never positively identified—it is only an opt-out basis so the court does not know how big the class is, but there is a class, there is a lead plaintiff—how will the court determine what the appropriate size of an award should be without knowing the extent of the size of the class?

Ms TIERNEY: As is often the case, at the end of the proceedings they will know the size of the class.

Mr RICH-PHILLIPS: Well, Minister, they will only know the members of the class who have identified themselves, and the reality is this mechanism provides for opting out, so everyone is in the class unless they opt out, whether they know about the action or not. So are you saying that settlement will only be made in respect of those members of the class who have identified themselves to the plaintiff firm, therefore excluding anyone who has not positively identified themselves to the action?

Ms TIERNEY: Again, what will occur is no different to what happens now. By going through the hearings and the process, the court will get more of an idea about the extent of the issue and indeed the potential in terms of how big the size of the class might be. There is experience in the courts in making these sorts of determinations. Again, I reiterate this process will not change.

Mr RICH-PHILLIPS: But, Minister, this process is fundamentally different. With a current class action the plaintiff firm, the lead plaintiff, seeks expressions of interest, for want of a better term, for people to join the class, people who are in a similar situation to join the class. Now, there is an example—I think it is the shareholder action, the AMP action, which was I think launched in New South Wales by Maurice Blackburn. They advertised extensively for people to join that class. They knew exactly how many participants there were in the class because they signed up for the action. So when it gets to a point of settlement they will be able to very clearly articulate to the court that there are 500, 1000, 1500—whatever it is—participants in that class.

The mechanism you are creating is the reverse of that. Everybody is in unless they exclude themselves, whether or not they know they are in, so there is no way to know the size of the class. I mean, a class action could be brought in respect of asbestos contamination in Trentham in the 1950s, where everyone who lived in Trentham in the 1950s is eligible to join the class and you have got one lead plaintiff who takes the action. You have got no idea how many people lived in Trentham in the 1950s and were affected, yet they are all now part of this class whether they know it or not. How on earth is the court going to identify the level of award to make without having any idea of how many people could actually be in that class?

Ms TIERNEY: Mr Rich-Phillips, the advice I am receiving is that the process in terms of opt in, opt out is not new—that it has actually been the practice for 20 years or more, so it has not changed.

Mr O’DONOHUE: Minister, my understanding from reading the legislation is there is change, as Mr Rich-Phillips has articulated, to the need to build a book. Are you saying, Minister, that you do not need to build a book at the moment for a class action? Is that what you are saying? Is the proposition correct that for a class action to get going you need to build a book of litigants who sign up to an arrangement? In your previous answers to me you said that is not necessary—no cost agreement and an undefined class. These are pretty simple and fundamental questions, and it is very concerning if the government cannot answer them.

Ms TIERNEY: I have already dealt with this in my previous response.

Mr O’DONOHUE: I think for the benefit of the committee, Minister, if you have already dealt with it, perhaps you could wrap it all up in a simple answer and respond to the proposition Mr Rich-Phillips put. And, Minister, the fact that you took on notice the question I put to you contradicts your statement that nothing has changed. I have put to you: what happens to the settlement moneys for those who are not identified as part of the class? You do not know. Your advisers do not know, and with the greatest respect to the advisers in the box, if they cannot give you a simple answer to that question, the government does not know what this bill does. And it is contradictory to your statement, ‘Nothing has changed’, because if nothing has changed it would be exactly the same, but you are telling me they are going to go find the answers over the dinner break. Which one is it, Minister? Which one is it?

Ms TIERNEY: No amount of badgering will get you what you particularly are seeking. What I can say to you is that my answer remains. In terms of seeking information during the dinner break, that is in relation to specific detailed information that is being sought, and we have undertaken to seek that information.

Mr O’DONOHUE: Minister, I will move on to a different proposition. The proposition advanced by the supporters of this legislation, including the government, is that it will improve access to justice. We have had a discussion previously about which cohorts that will impact, and you were unable to answer that question. But let me put forward to you the proposition that there is a risk that this legislation will actually reduce access to justice by restricting the plaintiff law firms that have the financial capacity to initiate the class actions. In your evidence, in your statements and responses to questions, you have emphasised the point that the lead plaintiff will be indemnified by the lawyer bringing the matter. That increases the risk for the law firm, notwithstanding the line of questioning Mr Rich-Phillips pursued and the inability of the government to provide an answer.

Leaving that aside, the proposition the government has advanced is, because the lead plaintiff will no longer carry the risk of costs orders against him or her, that risk will be transferred to the law firm bringing the class action. That increases the risk for the law firm bringing the class action. Therefore I put to you, Minister, that there will be a small number of plaintiff law firms that have the capacity to carry that risk, which will reduce access to justice, because there will be a smaller marketplace, which will lead to less cost competition and less competition between those plaintiff law firms, which could lead them to choosing the most lucrative and easy class actions to pursue. I would invite you to respond to that proposition.

Ms TIERNEY: The fact of the matter is that this bill allows all law firms to access class action.

Mr O’DONOHUE: Do you accept the proposition, though, that by transferring the risk, which you have emphasised in previous answers, from the lead plaintiff to the law firm, that will reduce the appetite in the marketplace and therefore it will favour the very large plaintiff law firms that have the balance sheet and capacity to carry that risk? Smaller law firms simply will not have the resources and risk appetite to commence those proceedings.

Ms TIERNEY: I will not be entertaining hypotheticals, Mr O’Donohue.

Mr O’DONOHUE: I am actually, Minister, giving you the opportunity to rebut a fundamental proposition, and I am using your answers to advance my proposition. Again, Minister, if you choose to just ignore what I am saying, I think it says much about the government’s own confidence in its bill and understanding of what this legislation may actually result in in practice.

Minister, on the eve of the break for dinner I again implore the government to consider the option of splitting the IBAC components from this bill. There are so many unanswered very, very simple, fundamental questions about how the bill should operate, and it is deeply concerning to the opposition that we are being pressed to urgently pass amendments to the IBAC legislation that will give significant extra powers to the commissioner on a bill that is not timely and on which you are unable to answer the most simple and fundamental questions about its operation. I implore the government to reconsider during the dinner break another way to pass the IBAC amendments this evening.

Mr LIMBRICK: I would like to ask a related question to something Mr O’Donohue asked before. He brought up the question about what would happen if a plaintiff in a class action could not be found and they could not give the money to them. The government will provide an answer after the dinner break. What happens to the money where a member of the class action might not be aware that they are a member of the class action? They are later identified by the legal firm and presumably the legal firm says to the class action participant, ‘Oh, by the way, you’re a member of this class action and we’ve got some money for you’. There may be a whole range of reasons why that person may not want to accept that money. They may have ethical concerns, maybe it is their boss that they are suing or whatever. There could be a whole bunch of reasons. What happens to that money when the person refuses the award from the class action?

Ms TIERNEY: Essentially it is unclaimed moneys and would be treated as unclaimed moneys, but I will seek clarification for you. It is consistent with the line of questioning that Mr O’Donohue sought.

Mr LIMBRICK: I thank the minister for her answer. But with the firm, the defendant and the company that is being sued through the class action, if we have a situation where a person who is a member of a class action that has been taken on their behalf and they have chosen not to accept that money, surely it should go back to the company that was being sued, shouldn’t it, if they have chosen to not take part in that?

Ms TIERNEY: Now I understand. It is people that have deliberately chosen to opt out and do not want to participate at all and do not want to receive any benefit. Is that right? Is that the class of people you are talking about?

Mr LIMBRICK: Yes, effectively. So there would have been an award, so they contact the person to say, you know, ‘We’ve taken this action on your behalf, we’ve got this money for you’, and they say after the award has happened, so presumably the money is sitting somewhere, that they do not want the money. Where does that money then go? Does it go to unclaimed moneys, does it sit with the legal firm or does it go back to the entity being sued?

Ms TIERNEY: As I said, that will be pursued during the dinner break.

Mrs McARTHUR: Minister, is it not the fact that Commissioner Hayne warned in his final report of the banking royal commission that the prospect of receiving significant financial benefits would inevitably override the fiduciary obligations of advisers and that those advisers were in the same position as plaintiff lawyers acting on a contingency basis?

The DEPUTY PRESIDENT: The minister is going to take that as a comment.

Sitting suspended 6.29 pm until 7.36 pm.

Mrs McARTHUR: Minister, what is an acceptable return on invested capital for a lawyer acting on a contingency fee basis? I will just clarify that: not the percentage of the settlement sum to be taken by the lawyer, the percentage on return.

Ms TIERNEY: I consider that to be beyond the scope of the bill before us tonight. I take this opportunity to report back to the house on a number of issues that were raised prior to the dinner break. I will go through a couple of them.

Mr O’Donohue has identified that there is a need to progress this legislation this evening, but I do reject the assertions that he has made about the government’s preparedness of the bill. This legislation has come directly from the Victorian Law Reform Commission’s report recommendation. That recommendation was supported with similar recommendations by both the Australian Law Reform Commission and the Productivity Commission. It is not an ill-thought-out bill. This is a considered piece of legislation that has significant access to justice benefits. It is simply the case that those opposite do not like this legislation and they have made it very clear. However, I will not continue to answer questions that are ideologically based and problems that he in fact has with the class action system in Australia and Victoria.

This answer outlines the process that is used and outlined in the Supreme Court practice notes on class actions, and all members are able to access that on the internet. I will provide these answers once and then I will no longer be willing to answer questions that are outside the scope of this bill. So far I have answered questions about lawyers’ obligations to clients, which is outside the scope of the bill; firms’ obligations to class actions, also outside the scope of this bill; and now I have been asked to outline a process of class actions that is not changing. Mr O’Donohue misunderstands the nature of the legislation before us, and he believes it makes changes which it does not. This bill changes nothing about the way the class actions work in practice. They have been working this way for 20 years in Victoria and 28 years Australia-wide. The bill just does not change a thing.

Members interjecting.

The DEPUTY PRESIDENT: Order! The minister has the floor. Mr Ondarchie, take your seat.

Ms TIERNEY: An opt-out class action works by having a person who has experienced a wrong of some kind, in common with other people, be able to be subject to a legal process and benefit from that process until they identify they do not want to be involved. However, prior to or just following a settlement being made there is a point where a person will need to raise their hand to ask to be counted. This process is colloquially known as a process of class closure. This process is required because the court has to be satisfied that you have obtained enough in the settlement for the group.

This decision includes the judge firstly determining whether the settlement amount is sufficient; secondly, approving the lawyers fees—in brackets I say to you this is the only thing that I have described that will be changing under the legislation—as they will if the legislation passes be a percentage of the total award rather than staying an hourly-based dollar amount; and then of course approving the settlement administration scheme and how the settlement will be distributed. This class closure process means that there is not a pool of funds that sit in one place waiting for people to come forward. In some of the big settlement processes the judge might even oversee that settlement scheme and have the scheme report back every few months. The only difference will be that instead of charging fees the fees will be as a percentage.

Now turning to Mr Limbrick’s questions in relation to this, he asked a question regarding what would happen if a person no longer wanted to be subject to the settlement amount. So if they do decide, following the distribution of funds, that there may be a need for that funding to be distributed to a charity or some similar agreed organisation, that will be dealt with by the administration of the fund.

Mrs McARTHUR: Thank you, Minister. I am going now to conflicts of interests. So the conflicts that arise in the class action context are significant and pervading and pose the biggest challenge to the integrity of the class action regime. The lack of regulation and oversight of the litigation funding industry has enabled potential conflicts of interest to arise between the interests of litigation funders, plaintiff lawyers, the representative plaintiff and group members. Given the existing problem with conflicts, how are conflicts going to be addressed in this bill?

Ms TIERNEY: I have answered this.

Mrs McARTHUR: Minister, if you have answered it, are you prepared to repeat your answer?

Ms TIERNEY: No.

Mrs McARTHUR: Thank you. So, Minister, if the lawyer becomes the funder, how can conflicts of interest be addressed in the bill?

Ms TIERNEY: Again, I have answered that question several times and also dealt with it right at the beginning.

Mrs McARTHUR: Minister, given that the bill in no way addresses how clients will agree to fee arrangements, how will class members negotiate and ensure they are adequately protected in any fee arrangements?

Ms TIERNEY: I have also addressed that previously.

Mrs McARTHUR: All of these issues raised in my previous questions indicate that the existing conflict management requirements are unlikely to be sufficient for the unique conflicts that arise in the context of litigation funding and contingency fees. This is something that will need to be given more detailed consideration as part of any legislative or regulatory intervention to tailor the operation of the standard provision. Why does the bill not address these important issues?

Ms TIERNEY: I have dealt with these matters in previous answers.

Mr LIMBRICK: I thank the minister for obtaining an answer on my question. It sounds like if someone has some ethical reason for not accepting the money that it would go to charity. Can I just clarify something, though. If my reason for not accepting money, if I was part of the class action which I did not choose to be part of—I became part of the class action against my knowledge or against my will—and the reason that I chose that I would not have become part of that class action is that I did not want to cause harm to the entity being sued, can I just confirm there is actually no mechanism through which I can prevent the entity being caused harm on my behalf? Even though that money may go to charity, is there no mechanism?

Ms TIERNEY: Mr Limbrick, the mechanism is that you have the ability to opt out, and that is what you would do. You would opt out. If you do not want to be party to legal action against the entity, opt out.

Mr LIMBRICK: I thank the minister for her answer, but I am referring to the situation where the matter has already been concluded in court. You would not know until that has succeeded and they try and contact you and the law firm says, ‘Hey, you’ve won some money through this court action’, and you say, ‘Well, actually, I didn’t want that money’. Is there no way for that class action participant who did not choose to become part of that class action to stop harm going to the entity being sued?

Ms TIERNEY: So this is in the answer about the closure. So you need to put your hand up, and if you have not put your hand up at that point then you will not be provided with any money.

Mr O’DONOHUE: Minister, can I ask as a follow-up question, what rights do you have if you were not part of that group and you subsequently asked for the litigation or there has been closure and you become aware of the class action or the issue that has given rise to the class action? Are you able to commence separate litigation, or is the matter then dealt with?

Ms TIERNEY: So again, I have dealt with this, but for the record this time, again, the person would be open to making application to the court.

Mr O’DONOHUE: By way of separate litigation or after the closure of the class action by way of separate action; is that what you mean, Minister?

Ms TIERNEY: My understanding is, yes, they can—a separate action afterwards. But, again, this is beyond the scope of the bill.

Mrs McARTHUR: I will go to common fund orders now, Minister. The High Court in BMW Australia Ltd v. Brewster and Westpac Banking Corporation v. Lenthall [2019] confirmed that there is no power to make common fund orders under the current regime. At the heart of the contingency fee bill is a common fund order of the type which the High Court found was beyond the power of courts. Why does this government believe that taking commissions from class members without their consent in a manner which offends the High Court decision is appropriate?

Ms TIERNEY: Again, I have already dealt with this matter.

Mrs McARTHUR: Common fund orders have led to an increase in multiple litigation funders commencing competing open class actions in which multiple law firms/funders file class actions concerning identical or similar alleged misconduct on behalf of largely if not entirely the same group members, leading to an increase in the expense and delay of class actions and requiring courts to engage in the speculative exercise of determining the appropriate commercial return for litigation funders or plaintiff firms. This should not be a task for the court, whose role is to determine the issues in the dispute between the group members and the defendant. Why, given these points, would the Victorian government press ahead with this bill?

Ms TIERNEY: Again, this has got nothing to do with the bill. We are not changing the class action regime.

The DEPUTY PRESIDENT: If there are no further general questions on clause 1, I invite the minister to move her amendment 1, which is a test for all her remaining amendments.

Ms TIERNEY: I move:

1.   Clause 1, page 2, after line 9 insert—

“(ca) to amend the Independent Broad-based Anti-corruption Commission Act 2011 to enable arrest warrants to be applied for and issued in further circumstances relating to witness summonses; and”.

Mr O’DONOHUE: As this is a test for all of the minister’s amendments relating to the change to the IBAC, I wish to again note the circumstances in which these changes are coming before the house. They are being attached to a bill that basically has nothing to do with IBAC. Whilst it is an omnibus bill, it does not deal with any other matters concerning the integrity regime as it exists in Victoria, and it has only been attached to this bill because it is a general justice bill. It is regrettable that these amendments are coming before the house at this time, because it gives all members, including the opposition, no time for consultation with stakeholders to seek feedback about any issues that may exist in the legislation.

We are strong supporters on this side of the house of IBAC. In fact it was the coalition government that established IBAC despite strong opposition from the previous Labor government and the spaghetti junction integrity regime. IBAC is an essential part of the integrity regime in Victoria to fight corruption—something we must always be vigilant to prevent and stop. The proposition advanced to allow IBAC to make arrests of certain people in certain circumstances to stop them from fleeing the jurisdiction is understandable, and in that simple sense we accept that notion. We are being asked, however, to take on face value and on trust from the government the way the clauses have been drafted—that they do, without proper testing and time to do proper testing and analysis, what the government is suggesting they do—and the opposition is concerned to ensure that the extra powers given to IBAC are balanced appropriately given the significance of them and the seriousness of them.

Now, the fact that the arrest warrant needs to be issued by the Supreme Court is obviously an important test, and we have faith in the Supreme Court and its analysis of the test that is established and the need for there to be a belief that corrupt conduct has taken place and a reasonable belief that the person who is the subject of the requested arrest warrant has committed corrupt conduct.

Beyond those general observations, however, we are unable to provide meaningful feedback to the committee because we simply have not had the time to analyse and review and seek consultation on these important changes. We do not wish to hold up the progression of these provisions because of operational reasons, and we respect those. I wish to put on record the concerns of the opposition, our understanding of these amendments and why we are not opposing them, but the fact that we are being requested in effect to take on trust from government their need, the way the scheme has been drafted and that it strikes the appropriate balance in preventing someone from fleeing the jurisdiction while also preserving the rights and liberties of that individual, the subject of that arrest warrant request.

Mr LIMBRICK: I share many of Mr O’Donohue’s concerns. In the 24 hours since we have seen this amendment my team has already identified an issue that we think is a serious issue, which we spoke about in committee, with regard to protecting the liberties of those who may be the subject of these warrants. I do accept that there may be a need for this type of legislation to prevent someone fleeing the jurisdiction and escaping justice, however the minister through my questioning in committee has not satisfied me that there are sufficient protections, and therefore the Liberal Democrats will not be supporting this amendment.

Ms TIERNEY: I have canvassed the issues in respect of this IBAC amendment earlier in the proceedings, but again I reinforce the fact that this is not the choice, really, of the government. Our choice would have been to actually have this incorporated in the bill at an earlier stage. It was not until fairly recently that IBAC made contact with the government to let us know that they have a particular current operational matter that needs to be dealt with that relates to this particular issue. We would have preferred it to also have been connected to the emergency worker legislation, but on the advice of the clerks, this particular bill has better scope than the emergency services worker legislation. Indeed, as I have previously said, we would have preferred to have had it attached to another justice bill that the opposition would have far more easily wanted to vote in support for to make it easier for them as well, but unfortunately that was not consistent with the advice. So we have the matter before us. I have already gone through what it is about, but it is a request from IBAC and it is about a current, contemporary operational issue that they have that they want to be able to act upon.

Committee divided on amendment:

Clause 5 (20:08)

Mr O’DONOHUE: I move:

1.   Clause 5, line 24, after “percentage” insert “(not exceeding 35%)”.

2.   Clause 5, page 4, line 15, after “(1)(a)” insert “, provided that the amended percentage does not exceed 35% of the amount of any award or settlement that may be recovered in the proceeding”.

The purpose of these amendments is to ensure that the members of any class action receive, at an absolute minimum, 65 per cent of the proceeds of the class action. Of course in most cases we would hope that it would be significantly more.

We believe there is a fundamental flaw in the bill and in the Parliament not expressing a view about a maximum amount that the lawyers and funders should receive. The government’s perspective, as the minister articulated in her summation and then during committee, is that this is entirely a matter for the court. Well, my proposition and the opposition’s proposition is that it is completely reasonable for the Parliament to express a view on the upper limit available to the funders and the lawyers and the absolute minimum that should be in the hands of the aggrieved and the class action members.

The minister has spoken and Mr Rich-Phillips has spoken about particular class action types—invariably people who have been wronged and who have suffered significant harm—and the litigation is designed to at least assist them if not put them back to the place they were, which is often not possible. The ability to assist those members of the class action is greatly diminished if the majority of the funds is gobbled up with funding fees and lawyers fees. It is absolutely appropriate for the Parliament to express a view on the absolute maximum that should be available to the funders and lawyers, and so that is why this amendment is being moved.

In doing so I just wish to refer to an article from 17 May from Lawyers Weekly, ‘Class-action inquiry set to impact the future of litigation funders’, by Tony Zhang. It talks about the federal inquiry. In the article, towards the end of the article, he says:

According to an analysis by HSF, 61 per cent of the class action compensation awarded in Australia last year …

Let me say that again:

… 61 per cent of the class action compensation awarded in Australia last year went to litigation funders and lawyers, up from 41 per cent in 2016, leaving just under 40 per cent for the plaintiffs.

Now, we know there is an issue with the litigation funders because Chris Bowen deregulated it when he was the minister several years ago, at the urging of Maurice Blackburn and others, and that just leaves this, in the financial realm, as one of the last unregulated areas of the financial marketplace. That is a matter for the federal government, and I hope, through the inquiry on foot at the moment and the recommendations and hopefully legislation that flow from that, that the regulation of litigation funders will be seriously looked at, because it simply should not be left unregulated, as Chris Bowen made it following representations from the Labor law firms. It has had a significant impact on the marketplace, and consumers are the poorer both literally and in a regulatory sense without that oversight and regulation.

That is an alarming figure: 61 per cent of compensation was gobbled up by groups other than those actually in the litigation. It makes you question what the litigation was started for, if the beneficiaries are funders and lawyers. And Mr Rich-Phillips spoke about some of the remarkable, ridiculous returns some of those funders have achieved.

Now, this amendment, an absolute maximum of 35 per cent—or 65 per cent in the hands of the class members—includes funding costs and legal costs, to be absolutely clear, as per the definition in the act, as per the advice to me from the office of parliamentary counsel. Finally, that is the absolute maximum. We would all hope—or I would hope, the opposition would hope—that in most class actions, the vast majority of class actions, more than 65 per cent goes into the pockets of those aggrieved, those who needed that help, those who have been wronged. I think this is an important amendment. It recognises that the main purpose of the litigation in the first place is to help people, not to help lawyers and funders, and it is right for the Parliament to express an opinion about that through this amendment and hold to account those who seek to make super profits from class action litigation.

Mr LIMBRICK: The Liberal Democrats oppose this bill in totality. Although I appreciate Mr O’Donohue’s concerns for the litigants, as we oppose it in totality we do not wish to express a view on the percentage of compensation. Therefore we will not be supporting this amendment.

Mr ONDARCHIE: This legislation should never be about propping up litigation funders’ or lawyers’ P and L, and so I rise to support Mr O’Donohue’s amendments. I think it is appropriate that the government take a position to see maximum returns for those deeply affected and less for those who simply fund this or act on their behalf.

Mrs McARTHUR: Minister, I would like to add my comments on Mr O’Donohue’s amendment and comment on the material that was presented to the Australian Law Reform Commission in 2018. The focus in relation to the quantum of the fees was squarely on the percentage that class action lawyers and litigation funders are receiving from any monetary amount that is awarded as a result of a court decision or a settlement. Class action lawyers and litigation funders argued that in relation to the overall damages awarded the percentage charged in both funder and legal fees is low when compared to the percentage of fees charged to damages recovered in, for example, personal injury litigation claims. They argued that the level of fee payment in relation to damages recovered is a lower percentage and that it follows that the fees are fair and reasonable. It is certainly common in personal injury claims for some law firms to charge up to 50 per cent of the damages recovered. However, it does not follow that if litigation funders and class action lawyers are proportionately charging a lower percentage the fees are fair. These percentage comparisons are misleading, and we support Mr O’Donohue’s amendment.

Ms TIERNEY: The government will be opposing Mr O’Donohue’s amendment. The simple reason is that the percentage amount lawyers can receive under this bill may be much less than 35 per cent. We believe it is best for it to be determined by a judge on a case-by-case basis, scrutinising closely all the costs. And of course no two cases are the same, and that is why it is far better to leave it to the courts. We simply do not want that amount being the default amount.

Mr RICH-PHILLIPS: Just in response to the minister’s answer, I will just comment on the amendment. Considering Mr O’Donohue’s amendment, given the government is not going to support the amendment, does the government believe it would be appropriate for a court to determine that the percentage going to the law firm was 80 per cent of the judgement?

Ms TIERNEY: As I have said, it is to be determined by the judge on a case-by-case basis.

Mr RICH-PHILLIPS: Minister, given you will not cap it, would the government be satisfied if a court awarded 80 per cent of a settlement to the plaintiff firm or 90 per cent to the plaintiff firm?

Ms TIERNEY: It is not up to the government to have an opinion on that. It is a matter for the court.

Mr RICH-PHILLIPS: Well, Minister, you said at the outset of this committee stage that the purpose of this legislation was to improve access to justice. The government has hung its hat on this bill being about access to justice. Now you are saying the government does not have a view on or care whether a legal firm gets 80 per cent of a settlement or a plaintiff lawyer gets 90 per cent of a settlement. You talk about access to justice, you claim this is about access to justice, but you are doing nothing to ensure that the proportion of a settlement going to a plaintiff is maximised. In fact you are not willing to express a view on whether 80 per cent of an award going to a law firm or 90 per cent of an award going to a law firm is in fact appropriate.

Ms TIERNEY: Currently courts do scrutinise this area very, very closely, and that will continue.

Mr O’DONOHUE: Further to your answer, Minister, in response to Mr Rich-Phillips, I made the point with that article I quoted from that currently 61 per cent of class action compensation awarded in Australia is going to litigation funders and lawyers under that tight scrutiny you referred to. Is the government comfortable with 61 per cent of compensation going to lawyers and funders and only 39 per cent going to the actual litigants?

Ms TIERNEY: I have answered that question.