Australia's booming class action sector was in desperate need of an overhaul to stop litigation funders and lawyers pocketing "obscene" sums that should be paid to victims, a lawyer who negotiated directly with the federal government over PFAS contamination believes.
The dust is still settling the Federal Court's approval of an historic $212.5 million class action settlement for PFAS contamination at Williamtown, Oakey and Katherine that will see $86 million, or 41 per cent, of the gross amount taken in costs.
Adair Donaldson, who last year negotiated an individual settlement after his father's property was contaminated by PFAS from the Oakey RAAF base, is one of a number of legal professionals and community representatives who have spoken out about the need to reform class action cost structures.
"They (the costs) are obscene; I appreciate that the judge has said that it (the cost percentage) is perfectly normal, but I still don't think it passes the pub test," Mr Donaldson, who is preparing a submission to the federal government's parliamentary inquiry into litigation funding,Mr Donaldson said.
"I'm going to be saying that as a community we seriously need to be looking at the level of fees that are being charged by class action lawyers and litigation funders."
In March Attorney-General Christian Porter said in many cases, funders were "leaving the members of the action to fight over the scraps that remain" once legal fees and other costs were paid.
"That is clear evidence that the system is not delivering fair and equitable outcomes for those mums and dads who join class actions and it demonstrates why an inquiry into all aspects of the system is needed," he said.
Omni Bridgeway, which funded the three PFAS class actions, will collect $53.1 million in profits and $940,000 for out of pocket costs.
In response to criticism about the size of its cut, the investment outfit pointed out that it had taken $35 million less than what it was contractually entitled to from the case.
Lawyers from Dentons and Shine law firms will receive $30.1 million in costs. The court heard this figure was about $1 million less than what would have been considered reasonable by the industry.
Another $2 million will be used to distribute the funds and more than $100,000 will go to grassroots community leaders.
The largest class action payout to date in Australia is $500 million, which was paid to the 10,000 survivors of Victoria's 2009 bushfires and the 119 people who died. SP AusNet and Utility Services Group were found responsible for a faulty electricity cable which caused the start of the fire.
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2018-19 was the busiest year since class action litigation began in Australia in 1992. The year saw 62 new class actions commence compared to an average of 32 annually over the previous five years.
The litigation frenzy was led by National Australia Bank customers who sued over excessive fees on their super accounts. Also, four biotechnology companies paid a collective $150million to settle shareholder lawsuits over business practices.
The Federal Court heard last Friday that Williamtown residents had settled their case for 97 per cent of the maximum amount they could have won at trial, while for Oakey the figure was 103 per cent and Katherine 109 per cent.
While he ultimately declared the settlement to be fair and reasonable, Justice Michael Lee acknowledged many in the community would consider the cost component to be "staggering".
He also noted a growing disquiet about the role of class action litigation funders, adding the phrase "access to justice" was often used to disguise what was "a commercial endeavour to make money".
Justice Lee repeatedly expressed the view that it would have been more efficient and cost effective to have run a single class action rather than three.
"The reason I feel a degree of frustration about this is that the reason for running it as individual proceedings seems far more directed at the convenience of the funder and the lawyers rather than the people involved."
Legal counsel for the class actions disputed the assertion and argued most of the work that would have been required for one proceeding would been the same as was done for the three proceedings.
Despite his concerns about the costs, Justice Lee conceded it would have been virtually impossible for the cases to proceed without an external funding source.
Williamtown class action spokesman Lindsay Clout agreed.
"There has been a focus on the class action system in the last few weeks. We are the first communities in Australia to take a class action and such discussion is no bad thing," Mr Clout said in a statement.
"All I can say is that without access to funding and a dedicated legal team, Williamtown would have been left to rot."
He added the ultimate outcome should not distract from the community's fight for justice.
"Communities should not need to take the very people charged with protecting them and representing their interests to court," he said.
Salt Ash resident Rob Roseworne, who was among a number of class action members in the three communities who urged the judge to reject the settlement, said he did not have a problem with external funders, but rather their influence on how cases were run.
"I don't have a problem with them making a profit," he said.
"The problem is where they start to influence the actions of lawyers."