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
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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)  NSWIRComm 1038
PUBLIC SECTOR DISCIPLINARY APPEAL – assault on detainee – serious misconduct – officer dismissed -disciplinary sanction warranted
Pemberton v Commissioner of Police  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  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  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  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
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