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Appeal against the decision of Justice Lee in Turner v Tesa Mining

"UK litigation funder Augusta Ventures has filed an application in the Federal Court for leave to appeal the important decision of Justice Lee in Turner v Tesa Mining [2019] FCA 1644. The appeal is seeking to challenge the power and discretion of the Court to order a litigation funder to provide security for costs, including for claims under the Fair Work Act where parties typically pay their own costs regardless of the outcome," Ai Group Chief Executive, Innes Willox, said today.

"In the decision that Augusta Ventures is endeavouring to have overturned, Justice Lee of the Federal Court decided that Augusta Ventures must provide security up-front for the costs likely to be expended by the relevant employers in defending the class action.

"As held by Justice Lee, a litigation funder that is pursuing claims for financial reward should not have access to the 'no costs' arrangements that apply to most parties under the Fair Work Act. Justice Lee said: ‘There is no compelling textual or contextual argument which would suggest that this protection should be somehow extended to non-party funders who are using these claims to their perceived commercial advantage.’

"The materials filed with Augusta Ventures’ application for leave to appeal appear to disclose that under the Litigation Funding Agreement (LFA) that plaintiffs who wish to participate in the class action are required to sign:

  • Augusta Ventures is entitled to a return of the greater of 3 times its outlay or 25% of the claim proceeds;
  • Augusta Ventures must be paid first from any claim proceeds;
  • The lawyers (i.e. Adero Law) must be paid second from any claim proceeds; and
  • The plaintiffs receive what is left over after Augusta Ventures and Adero have been paid.”

"Even though a Court would be unlikely to allow a blatantly unfair outcome for plaintiffs, there should be a legislative requirement that funding arrangements are fair, rather than relying on Courts to be the sole assessor of this. Also, litigation funders should be regulated like any other organisations that offer financial products, to ensure that appropriate standards are maintained. The Courts are ill-equipped to unravel the details of often highly complex litigation funding arrangements to ensure that plaintiffs are not being disadvantaged,” Ai Group Chief Executive, Innes Willox said.

"An Australian Law Reform Commission report last year on Class Actions Proceedings and Third-Party Litigation Funders reported that, in cases involving litigation funders, the median return to plaintiffs is only 51% of the amount awarded, while in cases not involving litigation funders the median return to plaintiffs is 85%. This highlights that the current arrangements are not benefiting plaintiffs and that reforms are urgently needed," Mr Willox said. 

Media enquiries:
Tony Melville – 0419 190 347