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NSW Government Bulletin

26 May 2020

#Government, #COVID-19

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NSW Government Bulletin

New rules for litigation funders as Australia sees a significant increase in class actions

The number of class actions in Australia has increased significantly over the past decade and there is concern that, in the wake of the current economic crisis arising out of the COVID-19 health crisis, there will be a rush of class actions that will hamper Australia’s economic recovery. In the last few years there have been multiple class actions brought against the NSW Government, including in relation to Opal Towers, by business owners along the route of the Sydney Light Rail and Australia’s first privacy class action, to name a few. Defending, and in some cases settling, these class actions have been at great cost to the NSW Government.

Most, if not all, of such class actions are funded by litigation funders and over the past few weeks, the Federal Government has announced initiatives focused on the “extraordinary profits” of litigation funders and the “booming litigation funding industry”.   

On 13 May 2020, the Federal Government announced that the Parliamentary Joint Committee on Corporations and Financial Services will examine all aspects of the class action system, including the enormous profits being made by litigation funders. A link to the announcement can be viewed here and a Notice of Motion setting out the terms of the inquiry can be found here. Submissions to the Committee close on 11 June 2020.

Following that announcement, on 22 May 2020, Federal Treasurer Josh Frydenberg announced that the Federal Government will impose new rules on litigation funders with those rules to come into effect by August 2020. A link to that announcement can be viewed here. The new rules will require litigation funders to hold an Australian Financial Services Licence. This will open litigation funders to scrutiny by the Australian Securities and Investments Commission (ASIC) and will require them to act honestly, efficiently and fairly, maintain appropriate levels of resources and be competent to provide financial services under licence. It is also proposed that the new rules will require litigation funders to comply with the managed investment scheme rules, including registering every class action with ASIC, having a responsible entity, as well as a constitution and a compliance plan.

These proposals are controversial, with litigation funders and plaintiff class action lawyers claiming that the government is going too far with these new rules and that they could have detrimental effects on competition in the litigation funding market and a chilling effect on litigation funding. Labor has accused the Morrison government of a shameless attempt to deny justice for ordinary Australians and there are allegations these new rules amount to cronyism as they will allow company directors to hide bad information from investors.

Drawing such controversy, it will be interesting to see what effect the new rules have on class actions, including those against the NSW Government.

Author: Susan Goodman

  • Susan specialises in large complex commercial litigation and alternative dispute resolution, including class action, and has over 20 years’ experience in advising and representing corporations, government departments and professional services firms in a wide range of commercial disputes.

In the media

NSW Privacy Commissioner Statement on use of Commonwealth mobile tracing app data for managing the COVID-19 pandemic
The NSW Privacy Commissioner, in an updated statement saying noteworthy elements of the app are that the information will be used for a narrow purpose, which is for contact tracing by health authorities where someone has been diagnosed with COVID-19 and the preclusion on the ability to use the data for a law enforcement purpose (20 May 2020).  More...

NSW Privacy Commissioner reports on Service NSW Privacy Breach
The Commissioner has advised by Service NSW of a privacy breach affecting some of its customers It is a timely reminder to everyone in the community to be vigilant and not open emails from unknown or unverified sources (14 May 2020).  More...

Improving justice outcomes for class action members
Ensuring Australians get their fair share of legal settlements will be the focus of a parliamentary committee inquiry which will examine all aspect of the class action system, including the enormous profits being made by litigation funders (13 May 2020).  More...

Law Council President, Pauline Wright, statement on the release of COVIDSafe source code
The Australian Government’s release of the COVIDSafe app source code on the weekend is welcomed by the Law Council of Australia, giving all Australians the chance to satisfy themselves that the app will be used in the way that it is intended (11 May 2020).  More...

Practice and courts


DCJ Statements
Important inmate-family links maintained during CV-19
Last published on 15 May 2020
COVID-19 Parliament to consider pandemic reforms
Last published on 12 May 2020
COVID-19 Safety paramount as District Court jury trials resume
Last published on 11 May 2020

COVID-19: Information for attending Court
The New South Wales Bar Association’s consolidated guide to COVID-19-related court arrangements has again been updated in terms of recent developments and includes updates (21 May 2020).

NCAT: Further tenancy law changes for COVID-19 impacted tenants
From 14 May 2020, tenants who are unable to negotiate a rent reduction with their landlord can seek to terminate their lease through NCAT. Download and complete the tenancy application form clearly identifying you are making an urgent application under section 228C of the Residential Tenancies Act 2010 (15 May 2020).  

Statutory review of the Crimes (Serious Crime Prevention Orders) Act 2016
The NSW Department of Communities and Justice is conducting a review of the Crimes (Serious Crime Prevention Orders) Act 2016 to determine whether the policy objectives remain valid and the terms remain appropriate for securing those objectives. Submissions close on 22 May 2020.  

Published – articles, papers, reports

Australian Bureau of Statistics
06/05/2020 Public Consultation - How do you use Census data, 2020
Tell us about how your use of Census data has resulted in better outcomes for individuals, families and communities.  More...


Taylor v Destination NSW [2020] NSWCATAD 137
ADMINISTRATIVE LAW — Freedom of information — Reviews and appeals – GIPA – whether systemic issue - referral to Information Commissioner

Henri Eparaima v Industrial Relations Secretary, on behalf of the Department of Communities and Justice (Corrective Services) [2020] NSWIRComm 1038
PUBLIC SECTOR DISCIPLINARY APPEAL – assault on detainee – serious misconduct – officer dismissed -disciplinary sanction warranted

Pemberton v Commissioner of Police [2020] NSWCATAD 135
FREEDOM OF INFORMATION – government information – workplace investigation – prejudice to supply of confidential information and to an agency’s functions – deliberative processes - information obtained in confidence – personal information – personal factors of applicant – allegations of misconduct

Cavallaro v Commissioner of Police [2020] NSWCATAD 132
ADMINISTRATIVE REVIEW - government information - reviewable decision - exempt information - personal factors - balancing of public interests 
ADMINISTRATIVE REVIEW - privacy - personal information - exemption for agency - policing and investigative functions - administrative and educative functions
SUMMONS - production of documents - partial production – relevance 

Myers v Registrar, Births, Deaths and Marriages [2020] NSWCATAD 131
ADMINISTRATIVE LAW – registration of birth – whether Registrar should correct the applicant’s name recorded in the Register

Ferella v Chief Commissioner of State Revenue [2020] NSWCATAD 128
ADMINISTRATIVE LAW – Civil and Administrative Tribunal (NSW) – applications not in compliance with the statutory scheme for reviewing taxation decisions – applications lodged late – no extension of time granted – application for review seeking to re-litigate a matter previously determined on the merits – cause of action estoppel


Proclamations commencing Acts
Education Amendment (School Safety) Act 2017 No 58 (2020-198) — published LW 14 May 2020

Regulations and other miscellaneous instruments
Children’s Guardian (Transitional) Amendment Regulation 2020 (2020-205) — published LW 15 May 2020

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

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