On 28 June 2021, the AICD lodge a submission to Treasury’s consultation on guaranteeing a minimum return of class action proceeds to class members.
The consultation comes in response to recommendations made in the final report of the Parliamentary Joint Committee on Corporations and Financial Services’ Inquiry (PJC) into Litigation Funding and the Regulation of the Class Actions Industry (PJC Report) which raised significant issues about Australia’s litigation funding regime.
The AICD acknowledges that litigation funding can provide necessary capital required to fund litigation and help facilitate access to justice for class members. It is appropriate, however, that regulatory settings ensure that returns to class members are fair and equitable.
In summary, the AICD:
- supports, in principle, a guaranteed minimum return of gross proceeds of a class action to class members. While we do not have a fixed view on the level of minimum return, we consider that the majority of judgment or settlement proceeds should be returned to class members. We consider this might be best achieved via a Court-overseen graduated approach;
- supports proposals to enhance the powers of the Federal Court of Australia, including a requirement for the Court to approve a litigation funding agreement in order for it to be enforceable, and a power to reject, vary or amend the terms of any litigation funding agreement if it considers the funding fee is not fair or reasonable; and
- encourages the Government to consider further reform recommendations put forward in the final report of the Australian Law Reform Commission’s (ALRC) Inquiry into Class Action Proceedings and Third-Party Litigation Funders and the PJC Report on related issues such as legal costs, conflicts of interest and alternative methods of redress to ensure that class actions operate as efficiently and fairly as possible.
You can read a copy of our submission here