Division Description Changes — Regulations and Determinations — Corporations Amendment (Litigation Funding) Regulations 2020; Disallowance — 2nd Dec 2020

Change	Division
senate vote 2020-12-02#10 Edited by mackay staff on 2022-07-29 12:48:57	Title ~~Regulations and Determinations — Corporations Amendment (Litigation Funding) Regulations 2020; Disallowance~~ Regulations and Determinations - Corporations Amendment (Litigation Funding) Regulations 2020 - Disallowance Description ~~<p class="speaker">Deborah O'Neill</p>~~ ~~<p>I move:</p>~~ The same number of senators voted for and against the [motion](https://www.openaustralia.org.au/senate/?id=2020-12-02.247.2), which means it failed. ### Motion text > That the [Corporations Amendment (Litigation Funding) Regulations 2020](https://www.legislation.gov.au/Details/F2020L00942), made under the Corporations Act 2001, be disallowed. To disallow a legislative instrument - like these Regulations - is to stop it from having legal force. <p class="italic">That the Corporations Amendment (Litigation Funding) Regulations 2020, made under the <i>Corporations Act 2001</i>, be disallowed.</p> <p>In moving this motion on the Corporations Amendment (Litigation Funding) Regulations 2020 made under the Corporations Act 2001, I will argue that the regulations should be disallowed by the parliamentarians in this parliament. I hark back to the contributions of my colleagues recently with regard to the scrutiny of bills committee and the work that has been undertaken there, because this is a perfect example of government by regulation and of what is wrong with that.</p> <p>The regulations that I seek the support of the Senate to disallow today were arbitrarily determined and advanced without warning by the Treasurer, Mr Josh Frydenberg. The regulations as they stand apply to all Australians. They are not fit for purpose, and they prejudged the report of a committee of inquiry that the government itself set up. These regulations that I'm asking the Senate to disallow today are rushed and careless and will only make it more difficult for ordinary Australians to access justice against deep-pocketed corporates.</p> <p>I want to thank members of the crossbench for their many conversations with me in recent weeks in seeking their support to disallow the action of the Treasurer, Mr Frydenberg. I particularly want to thank Senator Stirling Griff, Senator Rex Patrick and Senator Jacqui Lambie for taking a position that indicates that they really are aware how much this is costing in terms of people's access to justice and that it is a piece of regulation made on the fly by the Treasurer. The Treasurer established an inquiry into litigation funding on 13 May and, only nine days later, on 22 May, stood up and brought in these regulations. There's a famous saying: 'The doors of justice are just like the doors of the Ritz Carlton—anybody can walk in, but money determines who can stay.'</p> <p>Litigation funders enable ordinary Australians to get their day in court. They're critical in helping launch class actions on wage theft, on the poisoning of farmlands and on properties and businesses affected by poor flood controls, and they've been instrumental in enabling justice for citizens who were affected by the PFAS contaminations and had to fight their own government. In addition, litigation funders support consumers who are ripped off by big corporates. Litigation funders give access to justice to those ordinarily unable to afford it and deter the government and other deep-pocketed entities from reckless and harmful behaviour. Labor believes that litigation funders should be regulated, but only by an appropriate and fit-for-purpose regime that keeps their vital purpose intact and allows for healthy competition between funders.</p> <p>I remind members of the crossbench that the government established the inquiry to deliver its report on this matter on 13 May. Just a few days later, on 22 May, the government changed its mind and brought in this regulation that I'm asking you to disallow this afternoon. The government's approach has been to impose regulations that will reduce competition in the industry and frustrate and deter ordinary Australians who look to our justice system to right wrongs and secure compensation. This is for people in difficult circumstances who find themselves up against the giants of the corporate world and their own government.</p> <p>Instead of waiting for the joint committee inquiry, which the government itself set up, to run its natural course, instead of acting on the recommendations of the Australian Law Reform Commission report into class actions and litigation, which, again, this government commissioned, Josh Frydenberg has rushed these regulations through in a chaotic and thoughtless way. Using the cover of the pandemic, the Treasurer decided to pass legislation through to change the regulation of litigation funders to that of a managed investment scheme as well as to require them to obtain an Australian financial services licence. Funded class actions were never meant to be considered as a managed investment scheme and overseen by ASIC in that form. The funders themselves say that the onerous regulatory burden will force funders out of the market, lessen competition and increase the cost of access to justice.</p> ~~<p class="italic">Senator Patrick interjecting—</p>~~ <p>Indeed, Senator Patrick, I'll take that interjection. ASIC did not want this regulation to be established in that way. We're on the record, on many occasions, as saying a managed investment scheme was an entirely inappropriate way to manage this activity of litigation funders. The regulations as they now stand, because of this disallowance, appear to lack the support of Pauline Hanson's One Nation. I do worry in these uncertain times for many businesses and many Australians right across this country that having a limitation on their access to justice and the continuation of a managed investment scheme structure, and AFSLs, which were constructed without consultation, is not a good outcome for the Australian people—like the Michel's Patisserie franchisees who are seeking recompense in a class action against exorbitant fees forced on them by their franchisors as investors in a managed investment scheme.</p> <p>Senator Hanson hasn't declared her position at this point of time in the Senate, and I'll still continue to seek her support for my disallowance, to give the Australian people some certainty in the coming period, making sure that no money, time or energy continues to be spent on delivering a managed investment scheme, which we know is an entirely inappropriate vehicle for litigation funding. We want no further uncertainty or limitation of access to justice, or continuance in the haphazard way that the government has gone about this so far. If this disallowance isn't passed this evening it will hurt organisations like the Australian Farmers Fighting Fund, which supports class actions that affect their members, such as in the class actions against the live export ban. It will also hurt workers seeking their only avenue for justice in wage theft cases, because the government cravenly refuses to pass appropriate wage theft laws.</p> <p>Mr Robert Gibson, a former stockbroker, a director of three stockbroking firms and the lead plaintiff in the landmark Murray Goulburn class action, gave evidence to the PJC inquiry. I want to give voice to his evidence, because he debunked the government's narrative that naive Australians are being ripped off by rapacious funders and being denied their access to justice. Large amounts of money are involved in litigation funded cases, that is true, but they could be excellently considered structures to make sure that Australians get the best value out of those decisions and get the majority of the allocation of any awards that might be determined by the court. I know that Senator Hanson is interested in that matter, and I'm very keen to make sure that that outcome is delivered too. That's why I'll continue to say that today we should disallow this regulation by Mr Frydenberg. We should give Australians certainty and we should make sure that this government, which has acted arbitrarily and dangerously in this regard comes back and puts something that has been considered carefully on the table early in the new year.</p> ~~<p>Mr Gibson said:</p>~~ <p class="italic">… I've been in this business of investing for quite a long time. I've been around the block a few times. I'm not going to get corralled into anything I don't want to be corralled into. No pressure was put on me whatsoever.</p> ~~<p class="italic">…   …   …</p>~~ <p class="italic">If you try to get rid of litigation funders, you're going to be cutting off the only avenue of redress that 99 per cent of people have, because most of us can't afford to launch actions against corporates.</p> ~~<p>Mr Gibson went on to say, in answer to my question as to whether the class members had a negative experience of litigation funding:</p>~~ <p class="italic">… not one of them objected, yes. We're talking over 1,300. They had every opportunity to object if they thought it was insufficient, and not one of them thought it was insufficient.</p> ~~<p>Mr Gibson is a businessman who knew exactly what he was getting into with a litigation funder. He trusted the wisdom of the judge and he was able to receive recompense for his ill.</p>~~ <p>The inquiry should listen to these individuals who've actually interacted with class action funders. We have listened, and we're at a point now where I believe that it's clear that the government's ill-conceived scheme, introduced as regulation, is not fit for purpose and should not be allowed to continue. The government even managed to bungle the rollout of this scheme which they've imposed on us by first giving ASIC, the Australian Securities Investment Commission, only a single day's notice before announcing the changes. They forgot to release the required statement regarding the impacts of the regulatory change on business and individuals. These errors alone from this government show how poorly conceived this idea was and how rushed, how sloppy and how damaging regulatory leadership by the Treasurer is proving to be.</p> <p>These regulations were not the sober reflection of a government following a commission, report or inquiry. They're merely the scribblings in the margins of a party manifesto or a cliff note scrawled on the back of a lobbyist's card discreetly tucked into a minister's pocket. They're heavy on ideology but utterly scant on detail. Is this really what should be at the top of this government's priorities during a global pandemic? These regulations also go against the advice that Treasury gave to then Treasurer Scott Morrison in a review that it conducted in 2015, where it said there was:</p> ~~<p class="italic">… no reason to believe that Parliament ever intended that litigation funding schemes should be regulated as a financial product under the Corporations Act.</p>~~ <p>When the court case called Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd unintentionally captured litigation funders in the AFSL regime and the MIS provisions of the Corporations Act, ASIC then swiftly moved to grant them relief from these requirements because ASIC believed the plaintiffs would 'suffer considerable delay, expense, uncertainty and disruption as a consequence of the decision'. That is why senators, particularly those on the crossbench who I'm calling on to support my disallowance motion, should support what I'm asking them to do today: these regulations will cause delay, they will cause expense, they are causing uncertainty and they are disrupting the litigation funding action in this country.</p> <p>Far from listening to his own department or the responsible agency, Treasurer Frydenberg has even refused to make available to the inquiry the decision-making process behind these rushed, alarming, regulatory reforms. He has refused to release key documentation between ASIC and the Treasurer's office to the government's inquiry into these very changes, claiming public interest immunity—that we shouldn't know the conversations that were going on in the background that led the Treasurer of Australia to one day announce an inquiry and a mere nine days later ignore his own direction and come in with regulations over the top. Why is there such secrecy? If the Treasurer has nothing to hide, if his motives are pure and he's acting in the best interest of the Australian public, why on earth would he try to hide that from the joint committee? Secrecy, speed and sloppiness are the three hallmarks of these regulatory changes. You cannot trust this government's future promises of support or reform.</p> <p>As a member of the committee that delivered the bipartisan report into whistleblowers, I note that the government promised to act on that the urgent need for protections. They made that promise three years ago. We are still waiting. I was also a member of the Senate Education and Employment References Committee, that released the landmark report on industrial manslaughter two years ago. We reported, and people were here in the gallery—mothers and fathers in tears for the loss of their children, their husbands, their partners. For two years the government has done nothing. They had the power. They had two whole years to do something. They did nothing to help. You cannot trust the word of this government. You cannot trust their promises. You can only draw the appropriate conclusions from their actions.</p> <p>The only supporters for this change in regulation are foreign pressure groups such as the US Chamber of Commerce Institute for Legal Reform, large corporates, lobbyists and insurance companies. The government would have you believe that litigation funders are a bunch of ambulance chasers helping find funds for spurious class actions. But they are giving people access to justice. The regulations as they stand do not protect everyday Australians. I know from my professional conversations with Senator Hanson that she, like me, wants Australians to get access to justice and also to be able to get their fair share of whatever the court decides.</p> <p>I know that that's your intention, Senator Hanson. I urge you to stand on the side of the Australian people: disallow this motion and give them some comfort. Do not trust this government, who have been found so wanting in delivering the promises they have made in this place, time after time, day after day, year after year. I urge you to act in the interests of the Australian people.</p> ~~<p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>~~

~~Deborah O'Neill~~
~~I move:~~
The same number of senators voted for and against the [motion](https://www.openaustralia.org.au/senate/?id=2020-12-02.247.2), which means it failed.
### Motion text
> *That the [Corporations Amendment (Litigation Funding) Regulations 2020](https://www.legislation.gov.au/Details/F2020L00942), made under the Corporations Act 2001, be disallowed.*
To disallow a legislative instrument - like these Regulations - is to stop it from having legal force.
That the Corporations Amendment (Litigation Funding) Regulations 2020, made under the Corporations Act 2001, be disallowed.
In moving this motion on the Corporations Amendment (Litigation Funding) Regulations 2020 made under the Corporations Act 2001, I will argue that the regulations should be disallowed by the parliamentarians in this parliament. I hark back to the contributions of my colleagues recently with regard to the scrutiny of bills committee and the work that has been undertaken there, because this is a perfect example of government by regulation and of what is wrong with that.
The regulations that I seek the support of the Senate to disallow today were arbitrarily determined and advanced without warning by the Treasurer, Mr Josh Frydenberg. The regulations as they stand apply to all Australians. They are not fit for purpose, and they prejudged the report of a committee of inquiry that the government itself set up. These regulations that I'm asking the Senate to disallow today are rushed and careless and will only make it more difficult for ordinary Australians to access justice against deep-pocketed corporates.
I want to thank members of the crossbench for their many conversations with me in recent weeks in seeking their support to disallow the action of the Treasurer, Mr Frydenberg. I particularly want to thank Senator Stirling Griff, Senator Rex Patrick and Senator Jacqui Lambie for taking a position that indicates that they really are aware how much this is costing in terms of people's access to justice and that it is a piece of regulation made on the fly by the Treasurer. The Treasurer established an inquiry into litigation funding on 13 May and, only nine days later, on 22 May, stood up and brought in these regulations. There's a famous saying: 'The doors of justice are just like the doors of the Ritz Carlton—anybody can walk in, but money determines who can stay.'
Litigation funders enable ordinary Australians to get their day in court. They're critical in helping launch class actions on wage theft, on the poisoning of farmlands and on properties and businesses affected by poor flood controls, and they've been instrumental in enabling justice for citizens who were affected by the PFAS contaminations and had to fight their own government. In addition, litigation funders support consumers who are ripped off by big corporates. Litigation funders give access to justice to those ordinarily unable to afford it and deter the government and other deep-pocketed entities from reckless and harmful behaviour. Labor believes that litigation funders should be regulated, but only by an appropriate and fit-for-purpose regime that keeps their vital purpose intact and allows for healthy competition between funders.
I remind members of the crossbench that the government established the inquiry to deliver its report on this matter on 13 May. Just a few days later, on 22 May, the government changed its mind and brought in this regulation that I'm asking you to disallow this afternoon. The government's approach has been to impose regulations that will reduce competition in the industry and frustrate and deter ordinary Australians who look to our justice system to right wrongs and secure compensation. This is for people in difficult circumstances who find themselves up against the giants of the corporate world and their own government.
Instead of waiting for the joint committee inquiry, which the government itself set up, to run its natural course, instead of acting on the recommendations of the Australian Law Reform Commission report into class actions and litigation, which, again, this government commissioned, Josh Frydenberg has rushed these regulations through in a chaotic and thoughtless way. Using the cover of the pandemic, the Treasurer decided to pass legislation through to change the regulation of litigation funders to that of a managed investment scheme as well as to require them to obtain an Australian financial services licence. Funded class actions were never meant to be considered as a managed investment scheme and overseen by ASIC in that form. The funders themselves say that the onerous regulatory burden will force funders out of the market, lessen competition and increase the cost of access to justice.
~~Senator Patrick interjecting—~~
Indeed, Senator Patrick, I'll take that interjection. ASIC did not want this regulation to be established in that way. We're on the record, on many occasions, as saying a managed investment scheme was an entirely inappropriate way to manage this activity of litigation funders. The regulations as they now stand, because of this disallowance, appear to lack the support of Pauline Hanson's One Nation. I do worry in these uncertain times for many businesses and many Australians right across this country that having a limitation on their access to justice and the continuation of a managed investment scheme structure, and AFSLs, which were constructed without consultation, is not a good outcome for the Australian people—like the Michel's Patisserie franchisees who are seeking recompense in a class action against exorbitant fees forced on them by their franchisors as investors in a managed investment scheme.
Senator Hanson hasn't declared her position at this point of time in the Senate, and I'll still continue to seek her support for my disallowance, to give the Australian people some certainty in the coming period, making sure that no money, time or energy continues to be spent on delivering a managed investment scheme, which we know is an entirely inappropriate vehicle for litigation funding. We want no further uncertainty or limitation of access to justice, or continuance in the haphazard way that the government has gone about this so far. If this disallowance isn't passed this evening it will hurt organisations like the Australian Farmers Fighting Fund, which supports class actions that affect their members, such as in the class actions against the live export ban. It will also hurt workers seeking their only avenue for justice in wage theft cases, because the government cravenly refuses to pass appropriate wage theft laws.
Mr Robert Gibson, a former stockbroker, a director of three stockbroking firms and the lead plaintiff in the landmark Murray Goulburn class action, gave evidence to the PJC inquiry. I want to give voice to his evidence, because he debunked the government's narrative that naive Australians are being ripped off by rapacious funders and being denied their access to justice. Large amounts of money are involved in litigation funded cases, that is true, but they could be excellently considered structures to make sure that Australians get the best value out of those decisions and get the majority of the allocation of any awards that might be determined by the court. I know that Senator Hanson is interested in that matter, and I'm very keen to make sure that that outcome is delivered too. That's why I'll continue to say that today we should disallow this regulation by Mr Frydenberg. We should give Australians certainty and we should make sure that this government, which has acted arbitrarily and dangerously in this regard comes back and puts something that has been considered carefully on the table early in the new year.
~~Mr Gibson said:~~
… I've been in this business of investing for quite a long time. I've been around the block a few times. I'm not going to get corralled into anything I don't want to be corralled into. No pressure was put on me whatsoever.
~~…   …   …~~
If you try to get rid of litigation funders, you're going to be cutting off the only avenue of redress that 99 per cent of people have, because most of us can't afford to launch actions against corporates.
~~Mr Gibson went on to say, in answer to my question as to whether the class members had a negative experience of litigation funding:~~
… not one of them objected, yes. We're talking over 1,300. They had every opportunity to object if they thought it was insufficient, and not one of them thought it was insufficient.
~~Mr Gibson is a businessman who knew exactly what he was getting into with a litigation funder. He trusted the wisdom of the judge and he was able to receive recompense for his ill.~~
The inquiry should listen to these individuals who've actually interacted with class action funders. We have listened, and we're at a point now where I believe that it's clear that the government's ill-conceived scheme, introduced as regulation, is not fit for purpose and should not be allowed to continue. The government even managed to bungle the rollout of this scheme which they've imposed on us by first giving ASIC, the Australian Securities Investment Commission, only a single day's notice before announcing the changes. They forgot to release the required statement regarding the impacts of the regulatory change on business and individuals. These errors alone from this government show how poorly conceived this idea was and how rushed, how sloppy and how damaging regulatory leadership by the Treasurer is proving to be.
These regulations were not the sober reflection of a government following a commission, report or inquiry. They're merely the scribblings in the margins of a party manifesto or a cliff note scrawled on the back of a lobbyist's card discreetly tucked into a minister's pocket. They're heavy on ideology but utterly scant on detail. Is this really what should be at the top of this government's priorities during a global pandemic? These regulations also go against the advice that Treasury gave to then Treasurer Scott Morrison in a review that it conducted in 2015, where it said there was:
~~… no reason to believe that Parliament ever intended that litigation funding schemes should be regulated as a financial product under the Corporations Act.~~
When the court case called Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd unintentionally captured litigation funders in the AFSL regime and the MIS provisions of the Corporations Act, ASIC then swiftly moved to grant them relief from these requirements because ASIC believed the plaintiffs would 'suffer considerable delay, expense, uncertainty and disruption as a consequence of the decision'. That is why senators, particularly those on the crossbench who I'm calling on to support my disallowance motion, should support what I'm asking them to do today: these regulations will cause delay, they will cause expense, they are causing uncertainty and they are disrupting the litigation funding action in this country.
Far from listening to his own department or the responsible agency, Treasurer Frydenberg has even refused to make available to the inquiry the decision-making process behind these rushed, alarming, regulatory reforms. He has refused to release key documentation between ASIC and the Treasurer's office to the government's inquiry into these very changes, claiming public interest immunity—that we shouldn't know the conversations that were going on in the background that led the Treasurer of Australia to one day announce an inquiry and a mere nine days later ignore his own direction and come in with regulations over the top. Why is there such secrecy? If the Treasurer has nothing to hide, if his motives are pure and he's acting in the best interest of the Australian public, why on earth would he try to hide that from the joint committee? Secrecy, speed and sloppiness are the three hallmarks of these regulatory changes. You cannot trust this government's future promises of support or reform.
As a member of the committee that delivered the bipartisan report into whistleblowers, I note that the government promised to act on that the urgent need for protections. They made that promise three years ago. We are still waiting. I was also a member of the Senate Education and Employment References Committee, that released the landmark report on industrial manslaughter two years ago. We reported, and people were here in the gallery—mothers and fathers in tears for the loss of their children, their husbands, their partners. For two years the government has done nothing. They had the power. They had two whole years to do something. They did nothing to help. You cannot trust the word of this government. You cannot trust their promises. You can only draw the appropriate conclusions from their actions.
The only supporters for this change in regulation are foreign pressure groups such as the US Chamber of Commerce Institute for Legal Reform, large corporates, lobbyists and insurance companies. The government would have you believe that litigation funders are a bunch of ambulance chasers helping find funds for spurious class actions. But they are giving people access to justice. The regulations as they stand do not protect everyday Australians. I know from my professional conversations with Senator Hanson that she, like me, wants Australians to get access to justice and also to be able to get their fair share of whatever the court decides.
I know that that's your intention, Senator Hanson. I urge you to stand on the side of the Australian people: disallow this motion and give them some comfort. Do not trust this government, who have been found so wanting in delivering the promises they have made in this place, time after time, day after day, year after year. I urge you to act in the interests of the Australian people.
~~Long debate text truncated.~~