The Commonwealth, through Centrelink, was ordered by the Court to send Group Members a “Notice of Proposed Settlement” by 25 January 2021. Most Group Members will receive the Notice in their MyGov inbox.
The Notice explains the proposed settlement of the Robodebt Class Action and the steps that the Court has ordered take place prior to the approval hearing scheduled for 6 & 7 May 2021.
The Notice also explains the process that Group Members can follow if they wish to object to the proposed settlement.
If you do not wish to object to the proposed settlement, there is nothing further that you need to do at this stage, apart from reading the Notice.
A settlement is an agreement reached between parties to a dispute outside of Court. The settlement must be approved by the Court in order for it to proceed. The Court will hear the settlement approval application on 6-7 May 2021.
The Court may approve the settlement if it considers it to be in the interests of Group Members as a whole.
If the settlement is approved, the settlement will determine the rights of the Group Members who did not opt out of the class action.
Part of the Court approval process involves all Group Members being formally notified of the settlement and given the opportunity to object if they do not think the settlement is in their best interests. The “Notice of Proposed Settlement” explains this process.
Now that a settlement has been reached, there is no need for a trial to take place, unless the settlement agreement is not approved by the Court.
The Court approval process will take place in two steps
STEP ONE: Notification Process
The Court ordered that Centrelink send Group Members a “Notice of Proposed Settlement”.
Most Group Members will receive their Notice in their MyGov inbox. A smaller number of Group Members will be sent letters by Centrelink, for example, if they don’t have a MyGov account.
The Notice describes the terms of the proposed settlement. The Notice also sets out how Group Members can object to the settlement if they wish to.
Group Members who do not wish to object do need to do anything further at this stage, after reading the Notice.
STEP TWO: Approval Hearing
The Court will hear the settlement approval on 6-7 May 2021. After that hearing, the Court will make a decision about approving the proposed settlement.
The Court has appointed experts to assist it to make its decision.
The Court has appointed a senior barrister to act as a ‘Contradictor’ at the settlement approval hearing. The role of the Contradictor is to independently represent Group Members during the settlement approval process. Gordon Legal fully supported the Court’s proposal that a Contradictor be appointed.
The Court has also appointed an independent Costs Referee, who will provide the Court with an independent assessment of the Representative Applicants’ reasonable legal costs. That assessment will include the costs of conducting the class action, achieving the proposed settlement and the costs of the settlement process. Gordon Legal also fully supported the Court’s proposal that an independent costs referee be appointed. We believe it is important that Group Members understand that the legal costs of the class action will be independently assessed.
Independent Costs Referees or Contradictors are often and increasingly appointed by Courts during the approval process for very large class actions.
At the approval hearing, the Court will consider the views of the Contradictor and the Costs Referee. The Court will also consider the views of the solicitors for the Representative Applicants and Group Members (Gordon Legal) and the barristers who conducted the case on their behalf, who will recommend that the proposed settlement be approved.
The Court will also take into account any objections to the proposed settlement filed by Group Members when making its decision.
If the Court approves the settlement, a Settlement Distribution Scheme will come into operation.
If approval is granted, we expect that payments will be made to eligible Group Members by the end of 2021.
In summary, the settlement involves the Commonwealth paying a further $112 million in compensation in addition to the refunds it agreed to make after the commencement of the Robodebt Class Action.
The Commonwealth has agreed to refund and ‘zero’ approximately 470,000 Robodebts worth more than $751 million.
The terms of the settlement ensure that every Group Member who had a debt raised and paid money back to Centrelink based on Centrelink’s use of averages derived from annual ATO income data will be refunded the money they paid or had taken from them for the Robodebt and be additionally compensated with a further settlement payment.
Subject to Court approval, we expect that settlement payments may be made in 2021.
While all Group Members are bound by the settlement, not all Group Members will be entitled to the benefit of a declaration that their debt has been zeroed, repayment of the amounts they have already paid or a settlement payment.
Group Members have been allocated into different categories in the class action, depending on their individual circumstances, including the information used to calculate their debt and what happened to the debt after it was raised. This has been done to reflect the reality that not everybody’s experience of the Robodebt System was the same.
Group Members who had a debt calculated based on averages derived from annual ATO income data but never made any repayments towards that debt, will have their debt ‘zeroed’ and they will not have to repay it, but they will not be paid a refund or a settlement payment. This is because they did not pay any of the debt claimed by Centrelink based on ATO averages in the first place.
Group Members whose debts were calculated by reference to payslip or bank statement information, and not on ATO income averages, will not be paid a refund or a settlement payment. This is because these Group Members’ debts were determined by Centrelink based on actual income information provided by the Group Member in response to a Centrelink request. ATO income averages were not used by Centrelink to assert a debt against these people. For these people, the settlement will mean that they will receive confirmation that their debts were not raised using ATO income averages.
Yes. Whilst we understand that the settlement agreement, if approved by the Court, will not provide financial redress for all Group Members and does not achieve all of the ambitions of every individual Group Member, on balance we believe it represents a fair and reasonable outcome for Group Members.
The settlement will only be approved if the Court determines that it represents a fair and reasonable compromise of Group Member’s claims, and before it does so all Group Members will have the opportunity to have any objections to the settlement agreement, or any aspect of it, considered by the Court.
All court proceedings involve risks. When the Court considers whether the settlement should be approved it will do so in light of the risks that liability could not be established in this case or that a higher amount of compensation could not be achieved through a trial.
It is also important to understand that the Federal Court does not have power in this proceeding to Order that the Government provide a further apology to Group Members.
Gordon Legal’s Robodebt Legal Team and the Representative Applicants have given deep consideration to how the Robodebt Class Action litigation could achieve the best possible result within the limitations of the legal system that we operate within, for all Group Members.
However, in such a large class of people, opinions about the proposed Settlement Agreement are naturally diverse – it is inevitable that not everyone will agree.
In our view, the Robodebt Class Action has secured an important result by ensuring that, if the settlement is approved, all Group Members who were deprived of money as a result of invalid Robodebts will be refunded amounts paid on their debts and receive additional compensation. For those Group Members who do not receive refunds or settlement payments, they at least now have certainty that their debts were not calculated by the invalid Robodebt System.
As a civil legal claim, the Robodebt Class Action’s focus was on financially assisting Group Members and providing greater legal certainty for people who were affected by invalid Robodebts, not on forcing political outcomes. We understand and support the calls for greater accountability and hope that the Parliament will continue to question how the Robodebt System was allowed to cause so much harm to so many people.
Group Members should carefully read the “Notice of Proposed Settlement” when it is sent to them.
Group Members will be contacted with further information and details about their eligibility for payments under the settlement in the event it is approved by the Court. As a part of that process, Group Members will be told what category they fall into under the settlement, and why.
If approved by the Court, the settlement will directly benefit Group Members in the following three categories:
Group Members whose debts were based on ATO averages
Group Members who
will receive a settlement payment in addition to a refund that they have already received or will receive.
Group Members whose debts were initially based on ATO averages, but then were recalculated using payslips or bank statements
Group Members who:
will receive a settlement payment but will not receive a refund.
Group Members whose debts were based on ATO averages but those debts have not been repaid at all
Group Members who:
will be notified by Centrelink that the debts raised against them will not be pursued.
Gordon Legal’s Robodebt Legal Team and the Representative Applicants gave deep consideration to how the Robodebt Class Action litigation could achieve the best possible result within the limitations of the legal system that we operate within, for all Group Members.
The Representative Applicants in the Robodebt Class Action entered into the settlement agreement because they believe that the terms of the agreement achieve an excellent outcome for all Group Members.
This is because, on balance, we believe that the proposed settlement represents a fair and reasonable outcome for Group Members.
One of the complications in the Robodebt Class Action is that not all debts raised by Centrelink were calculated using the same method.
Most Group Members were issued with a debt that was raised as a result of Centrelink assuming that they had earnt money during the time they were receiving payments in equal, consistent amounts each fortnight. In some cases that method was used for the whole of the asserted debt period, in others it was only used for part of the asserted period.
Under the settlement, all debts raised through the averaging method, whether wholly or partially, will be refunded and each Group Member who had such a debt will receive a settlement payment.
A smaller number of debts were raised on the basis of actual income information, usually after payslips or bank statements were provided by the Group Member or otherwise obtained by Centrelink. Centrelink used actual evidence to calculate those debts and Centrelink is lawfully entitled to claim those amounts.
The settlement of the Robodebt Class Action has therefore assisted people who were targeted by Centrelink for debts that were calculated based on averages derived from annual ATO income data. As such, the Group Members who received debts that were calculated using actual income information will not be refunded or receive settlement payments, and their debts must be repaid.
Some Group Members had a debt that was initially calculated on the basis of ATO income averages, but then recalculated after payslips or bank statements were provided by them, resulting in the debt amount being changed to a different amount. Those Group Members who paid back money prior to the recalculation that was more than the amount of the debt when recalculated will not be refunded but will receive a settlement payment. That payment will reflect the disadvantage those Group Members experienced as a result of having more money recovered from them than they actually owed, prior to the recalculation using actual evidence.
We understand that there is some complexity in the settlement because there are different categories of Group Members and not all Group Members will receive a settlement payment.
Don’t worry if you are unsure about where you stand. You do not have to do anything now. You will be contacted and you will be provided with information about your rights under the Settlement Distribution Scheme (if it is approved by the Court).
If the settlement is approved by the Court, a Scheme Assurer will be appointed to assist with the process. The Scheme Assurer will be responsible for:
Gordon Legal will verify the work of the Scheme Assurer to make sure that its calculations are accurate.
If a Group Member does not agree with their assessment by the Scheme Assurer, they will have the opportunity to seek further information as to their assessment from Centrelink. If a Group Member has sought that advice and remains unsatisfied, they can seek legal advice regarding their assessment, including from Gordon Legal.
Centrelink will also operate a phone line for Group Members to use to get answers to questions they have about how the settlement affects them.
The amount that eligible Group Members will receive will be calculated and paid by Centrelink, with oversight from the independent Scheme Assurer and Gordon Legal.
Every eligible Group Members’ circumstances will be different, so it is not possible to give a precise indication of the amount that any individual will receive.
Put broadly, each eligible Group Members’ settlement payment will be calculated considering:
There are a number of steps that need to take place before Group Members will receive settlement payments, including Court approval of the settlement, Group Member assessment, verification, and calculation of the settlement payments.
If the settlement is approved we estimate that payments will be finalised by the end of 2021.
Yes. As part of the settlement approval process all Group Members have the opportunity to lodge an objection to the settlement.
The Court will consider the objections when it determines whether or not to approve the settlement.
A Group Member wanting to object must follow the instructions set out in the Notice of Proposed Settlement.
Group Members may want to seek further legal advice about whether or not to object and the objection process. Gordon Legal cannot provide Group Members with legal advice about their objections. This is because the Representative Applicants and Gordon Legal are recommending to the Court that the proposed settlement be approved.
For more information about the objection process please refer to the Notice of Proposed Settlement.
If your debt still stands because it was calculated on the basis of actual fortnightly income information (i.e. bank statements and payslips) and not on averages derived from ATO income information, the settlement does not stop you from requesting that Centrelink review your debt if you believe that your debt amount has been incorrectly calculated. While the debt may have been based on information that can validly support a debt, there may still be other errors or issues that Centrelink can resolve.
If you request an internal review, we recommend asking that an Authorised Review Officer conduct the review. This can be done in the following ways:
If an ARO reviews your debt and you still think the debt is wrong, you can review the debt at the Administrative Appeals Tribunal.
There are a small number of people that Centrelink has identified who are eligible for a refund, but Centrelink has not been able to contact them. If you think you may be eligible for a refund, but you have not been contacted by Centrelink, you should get in touch with them. If the settlement is approved, there will be a cut-off date by which you will need to contact Centrelink to be entitled to any refund owing to you. If you miss the cut-off date, you will not be paid a refund.
The Court will be asked to order that the legal costs of the class action, the costs that will be incurred to verify the work of the Scheme Administrator and the costs to provide advice to Group Members about their entitlements under the Settlement Distribution Scheme, be deducted from the total settlement amount offered under the settlement (i.e. $112 million).
The Court will determine how much in legal costs can be deducted, keeping in mind that legal costs must be fair and reasonable. The Court has appointed an independent Costs Referee to assist it to determine how much it is fair and reasonable to deduct from the settlement sum. After legal costs are deducted from the total settlement amount paid by the Commonwealth under the Settlement Distribution Scheme, the balance of that sum will be available for the payment of settlement payments to eligible Group Members.
No, if the settlement is approved by the Court, Group Members who have not opted out of the class action will not be able to pursue any legal claim made in the class action against the Commonwealth.
The Court process is not over. The Court still needs to make a decision about approving the settlement.
Group Members will be contacted with further information and details about their eligibility for payments under the settlement if it is approved by the Court.
We expect the Court Approval process to be completed in May 2021 and that administration of the Settlement Distribution Scheme will be completed in 2021.
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