Law commission

Law Commission Releases Final Report on Class Actions and Litigation Funding

The Law Commission released its final report on class actions and litigation funding on Monday, June 27. The report is the culmination of the Law Commission’s review, which began in December 2020 and included rounds of consultation with industry stakeholders.

A new statutory class action regime

As previously reported, the Law Commission has recommended new class action law which it says will be clearer and more accessible than the existing common law regime that has developed around representative proceedings under Rule 4.24. High Court rules. Key features proposed in the new legislative regime include:

  • Class actions will generally be brought in the High Court. The Commission recommended that the government also consider developing class action rules for employment jurisdiction, however, it is not recommended that class actions be available in district court, city court. environment or the Maori Land Court.

  • A requirement that a proceeding must be certified before it can proceed as a class action. The proposed criterion for certification closely mirrors the courts’ current approach to determining whether a proceeding can continue as a representative proceeding.

  • A mechanism for dealing with competing or competing class actions. While the proposed regime does not preclude concurrent class actions if the court is satisfied that more than one action should be certified, a 90-day time limit to commence a concurrent class action is proposed.

  • Preservation of opt-in and opt-out class actions in New Zealand, with no presumption in favor of either approach. The court would assess what is appropriate in the circumstances, based on the recommended statutory factors. This reflects somewhat of a change from what the Supreme Court had suggested in Ross vs. Southern Responsewhich was that there must be a presumption in favor of the plaintiff’s choice of approach.

  • Court supervision and approval of settlement and discontinuance of class actions. This is not surprising given the approach in comparable foreign jurisdictions and the perceived need to protect the interests of class members who are not before the court, particularly in the context of opt-out class actions.

  • One of the most innovative recommendations: allow the court to make an assessment of the overall monetary compensation to which a group is entitled, rather than requiring each member of the group to prove their individual loss. If implemented, it would represent a significant change from the status quo (where each member of the group must prove all individual issues, including the loss).

The role of the plaintiff’s representative

The report also emphasizes the role of the representative plaintiff in a class action and recommends that the new law include specific provisions in this regard, including that the representative plaintiff should:

  • be responsible for making decisions about the conduct of the class action and for giving instructions to the attorney acting for them and to the class;
  • have a primary duty to act in what they believe to be the best interests of the class; and
  • have legal immunity from claims by a Class Member with respect to their duties, unless they have acted recklessly or in willful default or in bad faith.

Interestingly, the Law Commission also recommends that there be a difference between the role of the representative plaintiff and the governance arrangements of the class (such as a plaintiffs’ committee). This reflects the Law Commission’s view that, while a plaintiffs’ committee can be a useful way to support the representative plaintiff in their role, the decision-making responsibility for the conduct of the class action should rest only to the representative applicant.

Lawyers involved in class actions

The Law Commission considers that after certification, counsel for the representative plaintiff should be considered counsel for all class members, rather than the sole representative plaintiff. It recommends that the Lawyers and Conveyancers Act 2006 be amended to mandate this relationship and that the New Zealand Law Society consider amending the Lawyers and Conveyancers (Lawyers: Conduct and Client Care) Rules 2008 to clarify the obligations of lawyers acting for the group in this guy. of action.

What about litigation funding?

As well as looking at the class action regime itself, the Law Commission has also considered how best to further regulate and oversee litigation funding in New Zealand. Although it considered more formal models, including licensing and an appropriate regulatory body, the Law Commission ultimately ruled in favor of recommendations broadly consistent with current practice. Specific recommendations in this area include:

  • In line with recent action in Australia, the Law Commission has recommended that the court supervise funding agreements – the court will only approve a funding agreement if it deems it to be fair and reasonable and the representative plaintiff has received advice independent legal representatives on the agreement. .

  • He recommended that the court be empowered to make “cost-sharing orders” (i.e. orders requiring class members to contribute a portion of their proceeds from a settlement or judgment to legal fees and financing of a class action). This could include what are commonly referred to as “pooled fund orders” and “funding equalization orders”. The recommendation for express power is probably informed in part by the Australian experience, where there have been a number of disputes over the court’s jurisdiction to make such orders.

  • It is important to note that the Law Commission suggests the creation of a public action fund to increase access to justice for claimants and relieve pressure on the legal aid system. It has been suggested that this could be funded initially by the government and then possibly through levies on future class action settlements.

A copy of the full report can be viewed here.