The Attorney-General’s department has been questioned about the constitutionality of planned class action reform. 

Under the proposed reforms, class action payouts available to litigation funders and lawyers would be capped at 30 per cent, and common fund orders would be limited.

The government says that by restricting class action funders and lawyers to a maximum 30 per cent of any payout, it will be able to curb “disproportionate” returns at the expense of ordinary Australians involved in claims.

The reforms would also give judges enhanced power to approve or vary the share of proceeds to ensure the distribution is fair and reasonable. Also, funders may be required to pick up the bill for any independent expert used by a court.

But legal experts say the government does not have the constitutional right to make such laws.

Labor Senator Deborah O’Neill demanded this week that the Attorney-General’s office either show that it has the power to carry out the plans or re-write the legislation.

However, Albin Smrdel, an Assistant Secretary of the department, could not easily she the constitutionality of the plans, despite receiving seven separate pieces of legal advice on the issue.

This was because Attorney-General Michaelia Cash made a public interest immunity claim over the pieces of advice.

“It’s a terrible piece of legislation,” Senator O’Neill said. 

“It’s been roundly condemned by people who would be plaintiffs, people who would be respondents, and as yet, has no clear constitutional basis,” she said.

“The truth is that if the government were confident about the constitutional basis of these people tell us what the constitutional basis is. It does that all the time in relation to lots of bills, without reference to legal advice and without any risk of waiving privilege or advice.”

“To be clear, Mr Smrdel, you’re refusing to provide this committee with an answer to a question about the fundamental constitutionality of this bill?” Senator O’Neill asked.

“Despite 11 advices ... of which seven were constitutional legal advisors, despite all of that you still cannot point to a head of power?”

Dr Smrdel said the heads of power were covered by Senator Cash’s public immunity claim, so he could not answer. 

Independent senator Rex Patrick accused the Attorney-General’s department of “advice shopping”. 

Principal of Marland Law, Tom Marland, appeared before the committee this week too. He said the bill had “constitutional problems”.

“From a practical point of view”, the bill’s enactment would face “great difficulties”, he said, suggesting it may push cases out of the Federal Court as plaintiffs search for state jurisdictions with less stringent funding barriers.

“If this bill is passed, class actions will just be running state jurisdictions and the federal government needs to reach some sort of arrangement with states before they even contemplate passing this bill because it will simply be pushed to different jurisdictions,” Mr Marland said.

“And that will be a great loss to our class action regime because our federal courts, the federal judges, are the most experienced, the most resourced, and the ones that should be presiding over these class actions to make sure they’re done economically and efficiently, and in the best interests of both plaintiffs and defendants.”