Joint Committee Report of Australian Parliament on Class Actions
Australia’s rise in class actions has caused alarm in many circles. In addition to plaintiffs, big business, government, and legal professionals all have a stake in how class actions are funded, managed, and adjudicated. Lexology details that a Joint Parliamentary Committee on Corporations and Financial Services was formed to investigate the effectiveness of the current levels of regulation in the industry. The committee was formed in response to concerns from businesses and various class members that fair and equitable outcomes are becoming more rare. Australia has already required licensing and specific disclosures with regard to funders and funding agreements. The committee has suggested several more improvements to oversight—some of which will not please funders. Among the proposed changes are indemnity for plaintiffs in the event of an adverse costs order. Also, funding agreements would require court approval in order to be enforceable, and the courts may reject all or part of any agreement. It’s also suggested that Federal Courts be able to appoint an assessor to vet funding fees, and that courts be empowered to order that litigation funders pay costs in some instances. The Federal Government should, according to the JPC, determine a minimum return on class action proceeds and offer a guaranteed minimum amount that would go to class members. Shareholder class actions have been of particular concern in Australia, which has prompted changes to the Corporations Act with regard to continuous disclosure. A 2020 amendment states that liability can only be shown if the lack of disclosure was knowing, reckless, or negligent—and materially impacted the security’s price or value. This was to be a temporary amendment, spurred by COVID. But the JPC has suggested that it be made permanent. Adopting these laws would ostensibly curb meritless class actions—if indeed that is what is happening.
