Janet Albrechtsen: ‘Stolen wage' cases must be seen for what they are

The Australian

3 days ago

'Stolen wages' is a non-legal label attached to a spate of class actions brought by groups of Indigenous people against state and federal governments for claims of unpaid or underpaid wages between the mid to late 1930s up until the early 1970s.
Although these appear to be legal claims, the judgments in these cases – which have yielded damages awards running into the hundreds of millions of dollars – unwittingly reveal they are no such thing. In each case, the judge admitted there is not enough ­evidence to support the various 'stolen wages' claims.
Given there is little chance of establishing legal liability, the stolen wages claims are political, not legal, in nature.
It follows that the law, our legal system, is not the right place for governments to make these enormous taxpayer-funded settlements.
And yet there is now a troubling pattern of governments doing precisely that, reaching huge settlements paid for by taxpayers to Indigenous groups under the auspices of a cosy insiders club comprising a bevy of defendant and plaintiff solicitors and barristers, myriad other experts, litigation funders, of course, and judges.
This elite club is allowing the legal system to be co-opted for political purposes.
To be clear, lest what follows be misunderstood, there is nothing inherently wrong with Indigenous people making political claims for receiving little or no wages in the early decades of the last century.
The fault lies with the political and legal club that is responsible for handing out taxpayer money under the cloak of the court system when in fact the claims are nothing short of a legal daydream.
Australians have over many decades shown a commitment to supporting measures that genuinely improve Indigenous disadvantage. That much is clear from the fact that spending on Indigenous issues is rarely a mainstream election barney.
However, if settlements are to be made to recompense Indigenous people for historical wrongs, they ought to be done in a transparent, honest and rigorous ­manner. Instead, judges are overseeing an unseemly and faux legal dance where a small group of legal insiders make whoopie with ­taxpayers' money. McDonald v the Commonwealth
Perhaps one day a senior judge will call for an end to the ruse of stolen wages class action settlements. Alas, that did not happen in the most recent case of ­McDonald v the Commonwealth.
Otherwise known as the Northern Territory Stolen Wages Class Action, this case was brought by a group of Aboriginal and Torres Strait Islander people and, where they have died, by their descendants, who claimed unpaid or underpaid wages while working on pastoral stations, other private workplaces, Aboriginal institutions and missions, or government-run stations from June 1933 until November 1971.
The commonwealth governed the NT during that period.
The claim was brought by Shine Lawyers on behalf of the plaintiffs, and was funded by litigation funders Litigation Lending Services.
In April this year, Federal Court of Australia Chief Justice Debra Mortimer said that 'on any view of the pleadings and the filed material, the narrative of the claimed experiences of Aboriginal and Torres Strait Islander people in the Northern Territory casts a shameful shadow on the actions of government, government officials and other historic participants in the alleged exploitation of the labour of Aboriginal and Torres Strait Islander people'.
Mortimer approved a settlement of $180m by the commonwealth to members of this class action as 'fair and reasonable'. The sum was calculated by multiplying $18,000 by the number of eligible claimants – up to 10,000.
The legal conundrum arose when the Chief Justice focused on liability. Mortimer said that it would have been very difficult for the plaintiffs to establish that the commonwealth was legally liable for the alleged claims.
'The risks – in terms of proving liability and quantifying proof of loss – are plainly considerable,' Mortimer said.
Surely something jars – legally – in the minds of curious people when plaintiffs, with little or no chance of succeeding at trial, receive a taxpayer-funded settlement of $180m that is duly signed off with much fanfare, and some highly critical historical commentary, by a judge as 'fair and reasonable'.
The NT stolen wages case follows a familiar pattern of earlier stolen wages class action cases.
In a case brought against the West Australian government by a group of Indigenous people – using Shine lawyers and the same litigation funders, LLS Fund Services Pty Ltd – in 2024, the plaintiffs and the WA government agreed to a $180.4m settlement.
Another class action, brought against the state of Queensland a few years earlier and funded by Litigation Lending Services Ltd, led to a $190m settlement.
Justice Bernard Murphy delivered judgment in both cases after hearing evidence in each that a group of Indigenous people in each state had not been paid, or had been underpaid, over a period of about 50 years. Murphy said that the class action members had been treated badly by government policies and had suffered shocking disadvantage.
In each case, Murphy said that it would have been unlikely that the plaintiffs would have succeeded in establishing that the respective government was legally liable for the unpaid or underpaid wages had the class action gone to trial.
'I am satisfied that there is a significant risk that if the case proceeds to trial, the applicants' and class members' claims will fail,' Murphy said in 2024 when approving the $180.4m settlement in Street v State of Western ­Australia.
Similarly, when approving the $190m settlement in the 2020 case of Pearson v The State of Queensland, Murphy said that: 'In my view the proceeding faced real risks and difficulties on liability and quantum, such that it was impossible for the applicants' lawyers to be confident of succeeding in the causes of action pleaded or, if they did succeed, obtaining any better result than the proposed settlement.'
Settlements of legal claims between plaintiffs and defendants are, of course, not uncommon. The parties may choose to settle their case for a range of reasons, rather than go to court.
Take a case of commercial litigation, for example, where a plaintiff is claiming damages for $100m. Even with decent prospects of winning at trial, a plaintiff may agree to take a haircut on the amount claimed. Litigation is a lottery, even for a plaintiff with a strong case. The prospect of a maverick judge at trial, the time, and legal costs in preparing a case, executive time and stress involved in giving evidence, possible bad media before and during the trial – even if you ultimately win — make a Pyrrhic victory likely.
These and other reasons will often lead a plaintiff to settle a claim at a discount before trial.
For a defendant, the same factors apply in reverse. Facing a $100m claim, a defendant may be prepared to pay, say, $20m to bring the matter to an end. The concept of 'go away' money is very real in commercial litigation.
However, in the stolen wages cases, state and federal governments have agreed to settlements close to $200m even though there is no prospect of the plaintiff class action members establishing legal liability against the state or commonwealth at trial. Given this, it is not unreasonable then to suggest that the McDonald case, like other stolen wages cases settled by governments in recent years, appear to be poorly disguised backdoor ways of paying reparations to Indigenous groups.
This begs a few obvious questions. If these claims are not legal in nature, but political, why are judges in each case essentially celebrating a legal farce by lauding the outcome? Need for transparency
The other question is, why are governments using the court system to make enormous taxpayer-funded settlements where there is no legal liability to do so? One reason is that it is very easy spending other people's money.
But still, if the government of the day – state or federal – genuinely believes taxpayers should stump up for stolen wages claims, then it should be done in a more honest and ­accountable way.
If taxpayer-funded payments of this type are to be made by governments to Indigenous groups, they should be done openly as matters of public policy, not as a legal pretence. Governments could agree to pay reparations or make ex gratia payments to Indigenous people, rather than hiding behind the legal system and seeking out the imprimatur of a judge. That way, governments would avoid the expense and complexity of the court system.
This direct route is not only honourable and honest but would cut out the middlemen of class action lawyers and litigation funders in each case making a motza from these faux class actions and allow more money to be paid to Indigenous people who have suffered historical wrongs. In the recent McDonald case, litigation funders LLS Fund Services Pty Limited received $30m for their work while Shine lawyers received upwards of $15m.
Cowardice likely explains why governments are making these mammoth taxpayer-funded settlements under the cloak of the courts. Getting a settlement stamped by a judge means a government can avoid political accountability. Making the case for reparations to voters and taxpayers is a harder ask. Paying reparations for past alleged sins is far more politically controversial than lauding a settlement signed off by a Federal Court judge.
This is not to criticise the practice of settling contested cases. Doing so in cases of genuine contest, and for a reasonable amount, is a laudable way to avoid clogging up the court system. Except that in the recent stolen wages cases, it is clear from the judgments that the plaintiffs would fail to prove in the respective cases that commonwealth or state government was legally liable for the wrongs claimed. And even in the unlikely event of success, the plaintiffs would not have recovered anything like the enormous sums agreed to.
At the end of her judgment approving the commonwealth settlement for stolen wages in April, Chief Justice Mortimer said the 'enormous body of material' – meaning testimony of disadvantage suffered by Indigenous people – 'cannot fail to move the reader'.
Her sentiments are, without question, sincere. But they are just that – sentiments. The legal system is concerned with who is ­liable for legal wrongs. While the Federal Court has powers under the Federal Court Act to approve settlements, it is disconcerting to see judges stamping their approval on settlements that look suspiciously like they are being reached for political purposes.
At the end of her judgment, Mortimer made another observation. Having been critical about some of the conduct by Shine lawyers, and the litigation funder, she said: 'It seems to me a not inconsiderable number of people in Aboriginal and Torres Strait Islander communities in the Northern Territory would look at the figures being paid to the lawyers and to the funder … and then look at what their family members are getting at an individual level, and they would be frustrated, and likely mystified about how city-based non-Indigenous participants in this proceeding come out with so much money compared to their family and friends.'
Instead of attacking lawyers and litigation funders, the Federal Court's most senior judge could have raised concerns the legal system is being co-opted for apparently unseemly political purposes.
The only real winners are the lawyers and the litigation funders. And those judges who use the ­settlements as opportunities to express their deeply felt feelings.
But those observations will have to wait for another judge. Janet Albrechtsen Columnist
Janet Albrechtsen is an opinion columnist with The Australian. She has worked as a solicitor in commercial law, and attained a Doctorate of Juridical Studies from the University of Sydney. She has written for numerous other publications including the Australian Financial Review, The Age, The Sydney Morning Herald, The Sunday Age, and The Wall Street Journal. Inquirer
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