ASIC Class Order [CO 14/571] [F2014L00977] -Concluded matters [2014] AUSStaCSDLM 186 (24 September 2014)

• ASIC Class Order [CO 14/571] [F2014L00977]

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ASIC Class Order [CO 14/571] [F2014L00977]

Purpose	Extends the date of ASIC Class Order [CO 13/898] to 12 July 2016
Last day to disallow	25 September 2014
Authorising legislation	Corporations Act 2001
Department	Treasury

Background:

In 2009, the Full Court of the Federal Court held in Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd [2009] FCAFC 147 that a funded representative action and solicitors' retainers for two representative proceedings against Brookfield Multiplex Ltd in the Federal Court were a managed investment scheme that should have been registered for the purposes of the Corporations Act 2001 (the Act).

Issue:

Timetable for making of substantive amendments to principal legislation

Scrutiny principle (d) of the committee's terms of reference require the committee to consider whether an instrument contains matters more appropriate for parliamentary enactment (that is, matters that should be enacted via principal rather than delegated legislation). This may include instruments which extend relief from compliance with principal legislation.

The ES for the instrument states that it was made to allow time for consideration of whether to exempt representative proceedings and proof-of-debt arrangements that are subject to a conditional costs agreement from the definition of 'managed investment scheme' in certain provisions and parts of the Act.

Class Order [CO 14/571] extends the relief in [CO 13/898] until 12 July 2016 to allow further time for the government to consider its position on whether to exempt litigation funding arrangements and proof-of-debt funding arrangements under similar terms as those in [CO 13/898] (in light of the High Court's finding).

The committee notes that the current order effectively extends the relief from the Act by a further two years. The committee generally prefers that relief from compliance with an Act effected via legislative instrument does not operate as a de facto amendment to the principal legislation [the committee sought the minister's advice as to the progress of consideration of whether to exempt litigation funding arrangements and proof-of-debt funding arrangements; and the appropriateness of continuing to provide relief from the Act via legislative instrument in this case].

MINISTER'S RESPONSE:

The Minister for Finance and Acting Assistant Treasurer advised ASIC would review the Class Orders after the Australian government had considered recommendations from the Productivity Commission inquiry into the civil dispute resolution system. The minister further advised the Class Orders were necessary to provide continued timely and affordable access to justice for consumers:

ASIC is an independent statutory authority responsible for the administration of the National Consumer Credit Protection Act 2009 and the Corporations Act 2001, as well as related legislation. Under its governing statute —the Australian Securities and Investments Commission Act 2001—ASIC performs its day-to-day functions at arm's-length from the executive government.
I am advised by ASIC that the Class Orders are interim measures that will be reviewed once the Government finalises its policy position on litigation funding. Litigation funding is the subject of the Productivity Commission's inquiry into Australia's system of civil dispute resolution, Access to Justice Arrangements. The final report is due to be released in late September and the Government will consider the recommendations in due course.
In deciding to extend the interim relief in the Class Orders, ASIC was also mindful of the Government's Financial System Inquiry—due to report in November 2014—and the current moratorium on any significant financial services regulation. The Government will consider the recommendations from the Financial System Inquiry in due course.
If the interim relief in the Class Orders were not provided, a significant disruption to consumers' ability to access timely and affordable justice could have occurred.

COMMITTEE RESPONSE:

The committee thanks the minister for his response and has concluded its interest in this matter.