Vince Morabito, a professor at Monash University is one of the key academics in the inquiry who has been cited by many funders and plaintiff firms.

Professor Morabito said that the number of class actions filed in Australian courts fell in the 12 months to the end of June.

“According to my data in the 2020 financial year we had a total of 53 class actions filed and that is a drop because in the 2019 financial year in Australia I’ve got 59 class actions,” Professor Morabito said.

The professor stated there were 56 class actions filed in the year before that.

“It’s not a major drop, but at least it shows the upward trend has stopped,” he said.

“Whilst the government has announced these changes for the purpose of protecting class members, my concern is that it is likely to have the opposite effect”.

Lawyers Weekly understands Treasurer Frydenberg did not provide a source for his claim when he made it on Tuesday.

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The question of which data is more correct has played out as a factor in the previous hearing concerning controversial data from Herbert Smith Freehills used by the Menzies Center.

Yet HSF clarified to Lawyers Weekly that the information was an overview for the purpose of a continuing legal education session rather than an empirical analysis.

The Treasurer’s recent data showed an increase from eight class actions filed in the 2008-09 financial year to 34 in 2018-19 – an increase of 325 per cent over a decade – but it only covered cases filed in one jurisdiction, the Federal Court.

Lawyers Weekly understands that Treasurer Frydenberg’s spokesperson said that “other reports have indicated a similar increase”, pointing to a 2019 report by King & Wood Mallesons.

Professor Morabito hit back saying that class action filings in the Federal Court peaked at 39 in the 2018 calendar year and dropped slightly to 36 new cases last year.

“There was also a drop in the 2019 class actions across the country,” he said.

He said using the Attorney-General Department’s figures to suggest a 325 per cent rise over a decade was also not the correct way to compare the trends in volumes.

Shareholder class actions still a central issue 

Though plaintiffs and litigation funders have asserted that rises in shareholder class actions reflect corporate misconduct, firm Herbert Smith Freehills said it doesn’t hold up.

Herbert Smith Freehills reiterated its call for important reforms to address the incidence of competing or “copycat” class actions against listed Australian entities.

HSF partners and class action veterans Jason Betts and Christine Tran told Lawyers Weekly that the growth of shareholder class actions has been taken very seriously and addressed responsibly by boards and executives of Australian listed entities for many years.

“Australian companies are fully conscious of the rise in shareholder class actions and, especially over the last five years, have developed complex, sophisticated and careful corporate governance protocols to reflect the increasingly challenging regulatory and class action environments in which they operate,” they said.

“The narrative being put forward by some in our market that the exponential growth in class actions is the result of greater levels of corporate misconduct is nonsensical. 

“There simply has not been a sudden deterioration in the continuous disclosure standards in Australia over recent years that would justify this type of growth. In fact, the opposite is true.”

This is in contrast to comments from Maurice Blackburn, which said there is no “explosion” of class actions nor has there ever been an “opening of floodgates”.

“However, despite the views of the great majority, the fears and misgivings of a small but powerful number of opponents of class actions who call for the regime to be increasingly restricted still manage to get traction with the [government],” the firm said.

Funding giant Omnibridgeway chief executive Andrew Saker had also stated that rising shareholder class actions are not the fault of litigators but corporations simply breaking the law.

Class Action Australia, an alliance of plaintiff firms running the Keep Corporations Honest campaign, fears that the ramifications of the regulations could be significant.

Class Actions Australia spokesperson and head of class actions at Slater and Gordon Ben Hardwick stressed that class actions were not “investment schemes” and to suddenly define them as such makes zero sense unless your motive was to stymie class actions.

“If the [committee] is concerned to reduce the incidence of class actions in Australia, it should tell corporate giants and executive governments to obey the law,” he said.

Mr Frydenberg had announced his intention to introduce the new regulations just days after meeting with the US Chamber of Commerce, which is reportedly lobbying to limit Australian class actions that affect its multinational members.

“I suspect Mr Frydenberg knows what he has done is not in the interests of ordinary Australians. His hope is that it’s all so complicated that in the midst of a pandemic no one will notice,” he said.