Law commission

Law Commission Releases Report on Class Actions and Litigation Funding

A new law on class actions should be drafted to improve access to justice and the efficiency of litigation, concludes Te Aka Matua o te Ture | Law Commission in its report, Ko ngā Hunga Take Whaipānga me ngā Pūtea Tautiringa |
Class Actions and Litigation Funding,
presented to Parliament today. The Law Commission also concluded that regulation and oversight of litigation funding is needed in Aotearoa, New Zealand.

Amokura Kawharu, Chairman of the Law Commission and Senior Commissioner for the review, said:

“There are significant barriers to accessing civil justice in Aotearoa New Zealand, including costs associated with litigation. Class action lawsuits and litigation funding are not a silver bullet to these problems, but we believe they can both make an important contribution.

“While class litigation is currently brought in Aotearoa New Zealand under the representative actions rule, our review found that this rule is insufficient for modern class litigation. The overwhelming feedback we received was that class action law is needed. »

“Class actions can improve access to justice and be an effective way to manage many individual claims. We recognize that there are certain risks and costs associated with class actions and have made recommendations for managing them.

“Litigation funding can help address the problems caused by the rising costs of legal advice and litigation in Aotearoa New Zealand. While litigation funding can improve access to justice, we have identified some concerns that require regulation. We considered a range of models for regulating litigation funding and concluded that court oversight, combined with professional regulation of lawyers, is the best option.

The report makes 121 recommendations for class action and litigation funding reform. This includes recommendations for the provisions of a new Class Actions Act, new rules in the High Court Rules 2016 and amendments to the Solicitors and Conveyors Act 2006.

Key recommendations include:

  • There should be a new law called the Class Actions Act as the primary source of class action law.
  • A case should require court approval to proceed as a class action, a process known as certification.
  • Opt-in and opt-out class actions should be allowed at Aotearoa New Zealand. An opt-in class action requires individuals to actively enroll in the class action to be a member of the class. In an opt-out class action, people who fall within the class definition are part of the class action unless they opt out before the required date.
  • Additional judicial oversight is necessary in class actions to ensure that the interests of class members are protected. For example, a class action settlement should only be binding if approved by the court.
  • In funded class actions, a litigation funding agreement should only be enforceable by a funder if it has been approved by the court. The court should not approve the litigation funding agreement unless it is satisfied that the agreement is fair and reasonable and the representative plaintiff has received independent legal advice.
  • A public class action fund should be created to provide funding to complainants.

In developing its recommendations, the Commission relied on its consultations, including with government agencies, members of the legal profession, litigation funders, business and community organizations, and academics. . The review considered relevant New Zealand legislation as well as foreign approaches to class actions and litigation funding regulation.
The government will now consider the Commission’s recommendations and decide whether to reform the law.

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