Government senators have asked for changes to a bill dealing with class actions before it is passed by the parliament.
The Senate's economics legislation committee on Thursday released its report on a bill aimed at ensuring that people who seek justice through class actions receive a fair and reasonable portion of the proceeds of successful class actions supported by a litigation funder.
The bill came out of concerns that third-party litigation funders were claiming a disproportionate share of successful actions relative to their costs and risks, at the expense of class action members, and may encourage speculative claims.
The committee received conflicting evidence about the merits of the bill, with some arguing it would cut the number of class actions able to be funded and others saying it would increase competition in the market.
However, it backed one key change to the bill, which would ensure the court would be allowed to consider "other relevant factors" when determining whether a claim proceeds distribution model is fair and reasonable in the circumstances of a particular case.
In a dissenting report, Labor senators noted there were serious questions about the bill's constitutionality.
Key concerns included whether the corporations power of the constitution could support the bill, whether it weakened the capacity of state courts to exercise their constitutional powers and whether it effectively repealed parts of the Federal Court of Australia Act.
The Law Council argued in its submission that it was "inevitable" the bill, if passed, would be challenged in the High Court.
Attorney-General Michaelia Cash's department told the committee the government was confident in the bill's constitutionality, but declined to release her legal advice or disclose the heads of power on which the bill relied.
"It is impossible to escape the conclusion that the government does not have confidence in the constitutionality of its own bill," the Labor senators said.
"Regardless of what one thinks of what the bill is seeking to achieve as a matter of policy, the Senate should not endorse a bill that is on such a shaky constitutional footing."
