Australia’s leading academic expert on class actions has hit back at aggressive questioning from a government backbencher during a torrid federal parliamentary inquiry.
“My God, is this going to be the standard of the questioning today,” Vince Morabito, a professor at Monash University, said after being peppered with queries from Jason Falinski, a Liberal MP from NSW.
Falinski’s attacks on Morabito drew a warning from the inquiry’s chairman, the Victorian Liberal senator James Paterson, that witnesses should be treated with courtesy.
The West Australian Labor senator Louise Pratt also complained that Falinski was verballing the witness, which Falinski denied.
Falinski accused Morabito on Friday of “cherry-picking” numbers to show that there had been a slight decline in the number of class actions filed in recent years, contrary to claims made by the treasurer, Josh Frydemberg.
“No, I’m not,” Morabito said. He said the terms of reference of the parliamentary inquiry included examining what had happened since the Australian Law Reform Commission looked at the issue in 2018.
“Since the commission delivered its report in 2018, that is 2019 and 2020, there has been a slight decrease in a), the overall volume of class action litigation, b) the percentage of shareholder class actions, c) the involvement of litigation funders,” he said.
Falinski asked if the 2020 figure was relevant, because there had been a coronavirus pandemic.
“Yes it is, because one of the claims that has been made is that things have deteriorated to such an extent that urgent class action reform is required,” Morabito said.
Frydenberg in May used the pandemic to justify clamping down on class actions, saying it “also exposes companies to the threat of opportunistic class actions for allegedly falling foul of their continuous disclosure obligations if their forecasts are found to be inaccurate”.
The inquiry has been marked by acrimony. Last week, Labor senator Deborah O’Neill tore into a submission from Liberal thinktank the Menzies Research Centre, describing it as an “undergraduate essay that would fail”. She accused the submission’s author, James Mathias, of misquoting a federal court judge.
It is also the second time in as many weeks Falinski has berated a witness during a parliamentary hearing dealing with class actions.
Last week, he talked over Australian Securities and Investments Commission (Asic) commissioner Karen Chester as she tried to give evidence about what the regulator knew in advance of a May decision by Frydenberg to force litigation funders to hold a financial services license.
Asic was only told of the decision the day before Frydenberg announced it.
Falinski was also part of a group of backbenchers who laid into Asic commissioners in September 2019 over the regulator’s decision to appeal a federal court case it lost about responsible lending standards that was dubbed the “wagyu and shiraz” ruling.
Asic went on to lose its appeal to the full court of the federal court and on Wednesday announced it would not pursue the matter to the high court.
Morabito is widely regarded as Australia’s leading expert on class action numbers. He regularly publishes research based on a large database of class actions filed across Australia, which he maintains.
Earlier in the week, Morabito disputed a claim by Frydenberg that class action numbers had tripled in recent years.
He said new figures he had compiled showed the number of class actions filed actually fell slightly in the year to the end of June.
In May, following lobbying from business groups, Frydenberg announced the licence requirement for litigation funders and another move that watered-down rules requiring listed companies to keep the market fully informed about their financial position.
Asic opposed the change, Guardian Australia reported this week.
Business groups have told the parliamentary inquiry the changes should be made permanent.
However, a coalition of law firms and litigation funders hit back earlier this month, saying a crackdown on class actions could let big business run rampant without being held accountable for wrongdoing.
