Development
The Albanese Government has just released draft regulations which unwind the previous government’s Corporations Amendment (Litigation Funding) Regulations 2020 and the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) requiring an Australian Financial Services Licence for litigation funders.
The exposure draft regulations and explanatory statement are available on the Treasury website. Submissions are now open and conclude on 30 September 2022.
The Full Federal Court decision in LCM Funding Pty Ltd v Stanwell Corporation Limited [2022] FCAFC 103 set the scene for the anticipated legislative changes by the Albanese Government. Simply put, the Full Court found that litigation funding schemes were not managed investment schemes (MIS) for the purposes of the Corporations Act 2001 (Cth). The effect of the decision also put into conflict and undermined the Corporations Amendment (Litigation Funding) Regulations 2020 and the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth).
The draft regulations seek to reinstate the longstanding exemptions from the Australian Financial Services Licence, managed investment scheme and other corporate regulatory regimes for litigation funders that existed prior to the August 2020 changes.
The Albanese Government is also considering recommendations by the Australian Law Reform Commission to clarify and strengthen the powers of the Federal Court to ensure fair and reasonable returns to class action members.
What this means for the Commonwealth
The impact of these draft regulations will likely create a more diverse and deeper pool of funding options for Applicant classes and a greater proliferation of class actions in Australia.
There is likely to be a shift to less refined class actions due to increased accessibility to litigation funders and an increase in the occurrence of competing class actions based on the same cause of action.
The Commonwealth, as one of the most common respondents to class action litigation in Australia, can reasonably expect to be the subject of a significant increase in future class action litigation.
Our Team
Our Team can help.
We understand the high level of collaboration required between multiple government agencies and departments with class action litigation and the need to act quickly.
In our experience, acting only for Class Action Respondents, the paradigm of engaging in a class action as a Respondent necessitates an early and vigilant focus on resourcing and planning for surge events, such as strict and challenging timelines for discovery and evidence (involving in many cases, the review of and listing of many millions of documents).
Our team, led by class action specialist Craig Powell, Partner and supported by Commonwealth Government litigation specialists Stephen Coyle, Partner, and Michael Palfrey, Partner, have the skills and experience needed to represent the Commonwealth’s interests effectively as the number of class actions continues to grow in Australia.
This article was written by Stephen Coyle, Partner, Michael Palfrey, Partner and Craig Powell, Partner.
