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Supreme Court Civil Procedure Amendment Bill 2018 - Second Reading

29 November 2018
Rosalie Woodruff MP

Dr WOODRUFF (Franklin) - Mr Deputy Speaker, the Greens support the Supreme 
Court Civil Procedure Amendment Bill 2018.

I understand that all the amendments contained within it were prepared at 
the request of the Chief Justice and that, amongst other things, it 
removes references to a long since defunct Colonial Courts of Admiralty 
Act 1890, that it will allow the Supreme Court when requiring payment of 
an amount of money that it may carry interest in relation to that amount.

I understand this would apply in a very limited number of circumstances 
and that change was also recommended by the Chief Justice.

The expanded administrative powers of the Associate Judge contained within 
the amendment bill will allow Supreme Court judges more time to consider 
substantial matters, which is clearly a relevant and useful use of their 
expertise. It also inserts provisions for class actions or representative 
proceedings which were not available when there were class actions of 
seven or more persons.

I want to make some comments about the provisions for class actions and 
ask a question of the Attorney-General, who may have more information 
about this than I have been able to find out. It relates to the access to 
funding for litigation, which has become a critical component of class 
action cases in Australia because it provides the financing that is needed 
for what can be very expensive and complex litigation.

At the moment, as I understand it - and perhaps the minister can correct 
me if this is not true in Tasmania or it is already regulated - it is 
still unregulated to the extent that it can expose consumers to the risk 
of a funder becoming insolvent or simply failing to pay legal fees, or if 
a class action is lost, failing to pay the defendant's costs.

Associate Professor of Law of the University of New South Wales Michael 
Legg wrote about this matter in 2017. He notes that two important 
regulatory pillars, licensing and capital adequacy [?? 5:12:18], are 
missing in regulations in state laws, despite the Productivity Commission 
recommending in 2014 that both regulations in relation to licensing and 
capital adequacy are introduced. The lack of a licensing regime, he says, 
means that anyone or any entity can fund litigation in Australia except 
for lawyers, as contingency fees are illegal. Without capital adequacy 
requirements there is no protection for claimants or defendants to ensure 
the funder has sufficient resources to be able to pay legal fees and meet 
any adverse costs order. He says this creates the potential for 
inadequately resourced funders to litigate for profit but avoid the costs 
if they are unsuccessful. Currently funders can protect themselves by 
being based offshore and/or by using subsidiaries with limited financial 
resources to undertake funding obligations.

There is only partial protection against a funder with inadequate capital 
at the moment. This involves a court order for security for costs and 
this requires the funder to take steps to make funds or assets available 
at the beginning of litigation to pay the defendant's costs in the event 
the litigation fails. He says, however, that it is common practice that 
the amount of security a court requires to be posted is substantially 
lower than the costs the defendant actually incurs, so the claimant 
bringing the case may still be liable for those costs.

I understand that the Federal Court has taken significant steps to 
reassert that court access is primarily for the people who have been 
harmed. That court says that it has the power to supervise litigation 
funding charges in class actions. In your view, minister, would it be 
useful for the Tasmanian Law Reform Institute to undertake an assessment 
of this issue in Tasmania? In Victoria the Attorney-General referred a 
matter such as this to the Victorian Law Reform Commission and that body 
produced a risks and cost burdens in class actions paper that provided 
guidance to the Victorian Government on this matter.

It is really a question of whether we need to create regulations in 
Tasmania to cover this. Perhaps they already exist in insufficient form, 
but if we need to we should create regulations so that courts and 
regulators need to pay attention to unsuccessful class actions where the 
funder is required to honour obligations to claimants to pay legal fees 
and the defendant's costs, but where that does not occur some tracking, 
monitoring or auditing of what has happened before is possibly useful in 
this matter.

Other than that issue, I do not have any other comments to make about this 
bill and we are happy to support the content within it.