Not yet. A settlement is an agreement reached between parties to a dispute outside of Court.
The settlement determines how the dispute will be resolved.
Subject to its approval by the Court, the settlement agreement binds the parties to the agreement and will determine the rights of the Group Members, who did not opt out of the proceedings by 29 June 2020. Now that a settlement has been reached, there is no need for a trial to take place.
However, the settlement must be approved by the Court in order for it to proceed.
The Court may approve the settlement if it considers it to be in the interests of Group Members as a whole for the settlement to proceed.
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.
Amongst other matters, the Court will also be required to approve the amount of legal costs claimed by Gordon Legal after it considers the expert evidence of an independent costs consultant, who will conduct an independent review of the legal costs claimed.
Subject to any orders that the Court may make, it is intended that the Court approval process will take place in two steps.
STEP ONE: Notification Process
The Court will be asked to make orders to ensure that all Group Members are notified of the terms of the proposed settlement, how it may affect their individual claim and how they can object to the settlement proposal if they wish to do so.
The Court will also set down a date on which the application for Approval of the proposed settlement will be made. When making these orders the Court will set out the information which must be provided to Group Members and how and when it is to be provided.
This means that in the meantime Group Members do not need to do anything as you will be contacted with further information once the Court makes the notification orders.
When the time comes, Group Members will be contacted so that they have all the information they need and so they understand exactly how the settlement affects them.
Group Members will also be provided with information on their rights under the settlement.
STEP TWO: Approval Hearing
We expect that at the hearing date regarding the notification process referred to in Step 1, the Court will also fix a date to determine whether it should approve the settlement.
We currently expect the Approval Hearing to take place in early 2021, and we will update the Gordon Legal website when further information on the timetable can be released.
It will not be necessary for Group Members to do anything prior to the Approval Hearing, unless they wish to object to the settlement or some aspect of it.
If the Court approves the settlement, a Settlement Distribution Scheme will come into operation.
A summary of the proposed Settlement Distribution Scheme is below, and more detail will be provided as part of the Group Member notification process (described at Step 1 above).
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 already agreed to refund and ‘zero’ approximately 470,000 Robodebts worth around $720 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 ATO income averaging 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 covered 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 ATO averages 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 Robodebt notification. 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 and 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 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 Robodebt, 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 on so many people.
Group Members do not need to do anything now.
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.
For Group Members who will be eligible for a settlement payment under the Settlement Distribution Scheme (if approved), the settlement involves the following three key elements:
Group Members whose debts were based on ATO averages
will receive a settlement payment.
Group Members whose debts were initially based on ATO averages, but then were recalculated using payslips or bank statements
will receive a settlement payment.
Group Members whose debts were based on ATO averages but those debts have not been repaid at all
will be notified by Centrelink that the debts raised against them will not be pursued.
The 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.
One of the complications in the Robodebt Class Action is that not all debts raised by Centrelink were raised using the same information.
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 asserted debt period, in others it was only used for part of the asserted period.
In settling the class action, the Commonwealth has not admitted that it was legally liable to Group Members.
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 those debts are actually owed.
The settlement of the Robodebt Class Action has therefore assisted people who were targeted by Centrelink for debts that were calculated using the averaging method. 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 Services Australia. 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.
We estimate that payments will not be made to eligible Group Members until 2021.
Yes. The next stage of the settlement process involves all Group Members being formally notified of the terms of the settlement. You will receive a letter that will provide you with details of how you can lodge an objection to the 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 ATO averages, 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, should 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 to ensure that those costs are fair and reasonable. 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 Distribution Scheme 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 Settlement Distribution Scheme still needs to be considered by the Court and the Court will need 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 by early 2021 and that administration of the Settlement Distribution Scheme will be completed in 2021.