Opposition-backed robodebt lawsuit must ‘break new ground’ in High Court to succeed

By Stephen Easton

September 19, 2019

Some said it couldn’t be done but after a chat with Bill Shorten, Gordon Legal has announced a class action lawsuit against the federal government on behalf of robodebt recipients.

The idea has been thrown around a few times over the past few years but was reportedly dismissed as very unlikely to succeed by several leading class-action law firms.

“Other legal actions by robodebt victims have invariably resulted in the Government entirely waiving or dramatically reducing the claimed debt, and settling the action,” noted Shorten. “But the individual nature of the actions has meant the legality of robodebt generally has not been tested.”

The shadow minister for government services said he formed the view that robodebt was built on “shaky legal foundations” since taking on the portfolio.

Peter Gordon, senior partner at Gordon Legal, thinks there will be hundreds of thousands of individual claims against the system that are similar enough for the case to proceed. The firm estimates $200-300 million plus penalties has been “wrongly taken” and will seek to claim it back plus interest and damages, but admits the case will probably have to “break new ground” to succeed.

“What is innovative about this is to bring a claim against the government for damages for unjust enrichment that will require the High Court to recognise legal principles which are hardly recognised in other common law countries, particularly the United Kingdom,” Gordon said.

Peter Gordon. Image: Gordon Legal.

He decided to go ahead after talking to Shorten, who compared robodebt to Thalidomide, asbestos and tobacco — all very harmful products whose makers have all been sued — and described it as an example of “the excesses and recklessness of powerful institutions” that had caused a “trail of carnage” including suicides.

“The people in this class action were not gaming the system,” the lawyer said. “They had honest claims to payments and allowances that Robodebt wrongly assessed, penalised and pursued with harsh consequences.”

Shorten argues the current system was “put in place” in mid-2016 under the Coalition. His opposite number, Stuart Robert, says the legal case is a political stunt based on incorrect claims about how the system works, and maintains the government’s position that a similar process occurred under the Labor party.

Shorten’s statement pre-emptively rejected the implication that his party had backflipped: “Labor supports legitimate debt recovery and data matching provided it has proper human oversight. Robodebt is none of these things.”

The minister initially ridiculed the prospective case for having no papers filed and no plaintiffs, but 24 hours later the law firm said it had about 1200 enquiries from potential class members.

The argument continues over what counts as an error and the difference between actual debts and the income reviews, which precede each debt that is raised.

“Minister Stuart Robert admits an error rate of at least one-in-five. Insiders know it is malfunctioning and are covering it up because the Government wants the revenue apparently at any cost,” said the shadow minister.

“The victims of robodebt need their day in court so it can be determined whether what appears to be a bureaucratic standover racket has any proper legal foundation whatsoever.”

The minister again argues the error rate is actually under 1% – the number of cases overturned on formal appeal – and says the 20% of cases where people prove they were never really overpaid are not errors; they simply show “the process working as it is intended”.

Gordon argues many thousands of people among the remaining majority may also have been saddled with spurious or inaccurate debts, that a discrepancy between tax and welfare records alone cannot prove a debt exists beyond any doubt, and that wildly inaccurate results can come from the practice of averaging income out across the year, in the absence of proof of when the money was earned.

In particular his team will contest the legal basis for the government actively seizing or withholding money to repay the debts.

“We think that before the Government docked the pensions or took the tax refunds of widows and carers and aged pensioners it needed to have better evidence, it needed to consider each case individually,” Gordon said.

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