The Australian Government is considering the merits of legislating a minimum return to group members in funded class actions, potentially as high as 70 per cent of gross proceeds. The introduction of a 70 per cent minimum would be a completely arbitrary measure and is not supported by reference to any analysis of the negative implications for the funding of class actions or the risks being assumed by litigation funders.
Brick by brick, the claim that funded class actions are the primary driver of rising directors’ liability insurance premiums is being dismantled. Even more precarious is the claim that the Commonwealth Government’s continuous disclosure reforms are the answer and will result in enormous savings for Australian business.
So much for the so-called ‘explosion’ in shareholder class actions backed by unscrupulous litigation funders. This claim, used liberally by sections of corporate Australia and their US big business allies to justify self-serving attacks on the litigation funding industry, was always based on dubious accounting. But now we have incontestable evidence that the ‘explosion’ is nothing more than a myth.
The Supreme Court of New Zealand has dismissed an application for leave to appeal an “unless” order striking out the proceedings unless the claimants’ provided security for costs by a certain date. The case was a multi-party action brought on behalf of some 3,600 investors in the failed carpet-maker, Feltex Carpets Ltd (Feltex). Despite the case being funded, the security was never provided and the Supreme Court’s refusal to grant leave has effectively brought the case to an end.
Litigation funding is becoming a more regular feature of the legal landscape in New Zealand, particularly in the funding of large multi-party actions. However, there are no specific legislative or regulatory provisions that apply to litigation funding and no statutory class actions regime.
A number of sensible reforms to Australia’s 30-year-old class action system are underway, with the ‘light touch’ regulatory regime that has drawn legitimate criticism starting to get a little heavier.
The Omni Bridgeway-funded class action against the manufacturer and suppliers of certain polyethylene (PE) core cladding has commenced in the High Court of New Zealand. The action seeks compensation for New Zealand property owners and lease holders who have suffered or will suffer financial loss in relation to the Alucobond PE and Alucobond Plus cladding products which are or were affixed to their buildings.
This week, the members of the Williamtown Contamination Class Action received some good news in the run up to Christmas: $57m in compensation was distributed by their settlement scheme administrator, Ben Allen of Dentons. The distributions followed from the landmark settlement achieved in February 2019 by Omni Bridgeway’s funded class action.
A recent decision of the Supreme Court of Queensland (Court of Appeal) held that the funding agreements between a funder and the members of a class action were not unenforceable as being against public policy and recognises the public benefit to be derived from class actions funded by a third party litigation funder.
Building owners, bodies corporate and public bodies of properties in Australia who believe their buildings may be affected by combustible cladding will find important information on Omni Bridgeway’s Australian Combustible Cladding Class Actions webpage. The webpage contains Notices for likely class members that have been approved by the Federal Court of Australia and full details of the online registration process.
Omni Bridgeway is pleased to be the first company in Australia to be granted a litigation funding Australian Financial Services Licence (AFSL). The AFSL means we are able to fund Australian class actions in compliance with the new regulations that came into force last month.
In Australia, shareholder class actions are one mechanism that can be deployed when other safeguards have failed to protect shareholder rights, enhance long-term value and change behaviour for the better.
To improve confidence and fairness in the Australian class action system, Omni Bridgeway has recommended the introduction of a minimum return to group members of no less than 50 per cent of the proceeds from a successful action. We believe this would strike the right balance.
Omni Bridgeway supports the introduction of a licensing regime for litigation funders operating in Australia that includes minimum onshore capital adequacy requirements. This would increase confidence in the Australian class actions system and benefit all parties – class members, defendants and the courts.
The role of litigation funders in the Australian class action system is currently under assault from a number of vocal pro-business advocates. Their motive is clear: remove the funders and you remove class actions against large companies.
Pro-business advocates have used ‘circularity’ arguments in their attempts to discredit shareholder class actions in Australia and prevent investors from seeking justice. In our latest blog we examine these arguments and the many significant benefits of these actions for shareholders and more broadly for Australia’s financial markets.
Watch Omni Bridgeway’s Gavin Beardsell in this interview with Amanda Farmer, founder of Your Strata Property, discussing two Australian class actions Omni Bridgeway is funding against manufacturers of combustible cladding products, as well as a potential combustible cladding class action in New Zealand.
Litigation funding not only provides access to justice for claimants in Australian class actions but provides protection to defendants who know their costs will be paid in the event the action is unsuccessful. Funded class actions also have a number of other benefits.
The Murray Goulburn class action, taken on behalf of aggrieved unit holders in the dairy business and which settled late last year, has been cited repeatedly in the current Australian Parliamentary inquiry into class actions and litigation funding. To some, the returns generated by Omni Bridgeway, which funded the successful action, were too high. To others – including the one person in the best position to judge – they were reasonable. This article explains a number of critical factors that need to be considered.
