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Written by Peter Carter

December 5, 2013

As a member of the International Practice Committee of the American Association for Justice headquartered in Washington DC, Peter Carter provides periodic reports to the committee on the legislative and jurisprudential landscape in Australia. He also reports in the other direction – to the Australian Lawyers’ Alliance – about similar developments in other nations represented at the AAJ: the US, UK, the Netherlands, Canada, Germany, France and Italy. He serves as one of two Governors representing Australia on the AAJ board. Here are some excerpts from Peter’s December report to the Committee.

Class actions

Contingency litigation – charging the plaintiff only in the event of success – is commonplace in Australian personal injury litigation but lawyers must not charge a proportion or percentage of the amount recovered. Fees must be time-based, calculated according to and item scale or by way of “event charging”.

Non-lawyer “litigation funders” may however operate on a pure contingent basis with fees set as a percentage (approved by the court and usually at least 25%) of the total recovery. For class actions, funding by such third-party corporations in this manner is now the usual practice.

Corporate Australia is now fuelling a campaign against litigation funding. It “may encourage meritless lawsuits, increase the cost and duration of litigation and create conflicts of interest”, says big business.
To boost its rhetoric, the Australian Chamber of Commerce & Industry recently recruited Lisa Ricard, president of the US Chamber Institute for Legal Reform, to author and promote a polemic titled Third-Party Litigation Financing in Australia: Class Actions, Conflicts and Controversy.

Such views have found favour with our brand-new federal conservative government which, is likely to introduce licensing and prudential requirements for third-party funders – a measure rejected by the previous government on the grounds that it would impede access to justice.

Accompanying this development is a counter-campaign by some national plaintiff law firms for the removal of the ban on lawyers themselves charging a proportion of a recovered settlement.

All this comes as two very large actions are starting. The first is a series of eight against major banks over transaction fees that the plaintiff side allege are de facto illegal penalties and hence, void at common law. Cheque dishonour fees for example, at $40 in each instance, are said to be disproportionate to the bank’s actual processing cost and are of a punitive nature notwithstanding a customer’s contractual agreement to pay them.

The defendant in the first of the bank actions is ANZ. The total value of the eight proposed bank actions is said to exceed AUD$5 billion. The second major action, also expected to be filed shortly, is against the state of Queensland for negligent management of a dam that resulted in avoidable inundation to over 30,000 homes and businesses in the cities of Brisbane and Ipswich in January 2011.

All the above claims are funded by a publicly listed “litigation funding” company, IMF (Australia) Ltd.

Workplace injury compensation

With blitzkrieg timing and precision, Queensland’s new conservative government has imposed major curbs on worker’s claims for common law damages against employers. Announced on the Monday, the Bill was presented to Parliament on Tuesday and passed into law two days later. No consultation or public debate whatsoever.

Workers injured on-the-job on and from the date the Bill was presented (15 October) are barred from bringing any common law claim unless the extent of their bodily impairment – as determined by a government bureaucracy – exceeds 5%.

It is estimated that this measure will reduce the number of workplace damages claims by about 50%. Workers who are assessed at 5% or less will only receive small lump sum payments ($5,000 – $20,000) to cover what might represent a life long occupational deficit.

This is despite Queensland having a 98% general return to work rate, 3.1% disputation rate and the second-lowest employer premiums in Australia at an average of 1.49% of payroll. The Government body operating the scheme recorded a $500 million profit in the preceding financial year. There was obviously no financial case for the changes. At 1.49% of payroll, the industry can really not complain about the cover extended.

The change appears to have been driven simply by resentment against claimants – mainly from the construction and fabrication sectors – where many business owners have the ear of senior ministers. If the history of other states is anything to go by, the change will prove a financial drain on the state and businesses themselves. There will be an inevitable increase in the size of the public service to adjudicate the 5% “threshold” impairment and the paperwork burden for businesses associated with a heightened involvement in statutory claims, will increase.

The immunity from lawsuits that the changes bring will also subsidise careless workplaces at the expense of those that invest in safety. As part of the October law, job applicants are compelled to disclose all pre-existing injuries and medical conditions if the employer makes a written request and if the application form carries a written statement about the duties the worker will need to perform as well as a warning of the legal consequences of non-disclosure.

Any worker who gives misleading information about their injury history as it is relevant to the particular job from October 15, will – somewhat vindictively – be denied all injury compensation (statutory benefits) and damages (even if the impairment exceeds 5%), from any “event” in which an aggravation of the non-disclosed prior injury occurs.

Exclusion of liability clauses in recreational injuries

The (federal) Australian Consumer Law imposes a statutory guarantee in s 60 that services “will be rendered with due care and skill”. Section 64 renders void any term or contract that purports to “exclude restrict or modify” the effect of s 60.

However, as part of the response to the so-called “insurance crisis” that followed the September 11 terrorist event, an antidote to the anti-avoidance provision was introduced in relation to “recreational services”. This term includes sporting and leisure pursuits.

Under the Trade Practices Act this took the form of s 68B and under the Competition and Consumer Act (and the annexed Australian Consumer Law) which replaced the TPA from 2011, it is contained in CCA section 139A.

The New South Wales Court of Appeal recently ruled that, in the case of an injury occurring in 2007, the recreational services antidote in s 68B could not apply for the benefit of a motorcycle racing company sued by a participant for injuries whose competition contract included an exclusion of liability for “death or personal injury or property damage”.

It identified a number of ways in which an exclusion clause – that on the face of it was would meet the description in s 68B – could actually fall foul of it, because the clause did not “only” restrict “the application of s 74 to the supply of recreational services”. (TPA section 74 is the predecessor to ACL s 60.)

For example the contract may also purport to also exclude liability for the supply of goods; or other services.

Likewise if the clause purported to exclude liability for things other than “death or personal injury” it would – given the plain meaning of the words in the section, “so long as” – also be beyond s 68B’s neutralising reach.

The inclusion of the additional words “or property damage” meant in this case, that the exclusion clause went too far and was incapable of attracting s 68B exculpation.

The antidote was ineffective, s 68 continued to apply to preserve the operation of s 74, and the exclusion clause was therefore void: Motorcycling Events Group Australia Pty Ltd v Kelly Basten JA Meagher JA Gleeson JA [2013] NSWCA 361 29/10/13. view decision

The same interpretation is likely in respect of CCA 139A and thus there remains potential to avoid at least one of the overly harsh contra-consumer measures that have been so popular with governments here over the last decade. 4 December 2013

Categories: Opinonian

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