Law commission

New Zealand Law Commission recommends class action law – Class Actions

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New Zealand is set to move closer to a statutory class action proceeding after the New Zealand Law Commission’s recent publication (NZLC) final report on Class Actions and Litigation Funding. The report indicates that class actions and litigation funding can make important contributions to improving access to justice. In particular, the NZLC has recognized that:

“The growing number of large representative proceedings…demonstrates a clear need for a class litigation mechanism that can resolve claims fairly and efficiently. It has also revealed the shortcomings of the current procedure.”

Access to justice and efficiency were key drivers in establishing Australia’s class redress framework – principles that continue to be tested today by various stakeholders, including the Court, members of the legal profession, third-party funders, and federal and state law reform commissions.

Middle ground

The NZLC recommendations include some features already familiar to the Australian system, including:

  • court approval of class action settlements if the court is satisfied that the settlement is “fair, reasonable and in the best interests of the class”; and

  • a judgment on common issues that binds all members of the group who have not taken steps to exclude themselves from the proceeding.

A number of the NZLC’s recommendations draw on recommendations identified by an Australian Parliamentary Joint Committee in its December 2020 report (which is referenced by the NZLC), including:

  • with respect to the multiplicity issue, set a 90-day “standstill period” so that any other competing or multiple class actions can be properly considered and filed; and

  • with respect to third-party funding, subjecting litigation funding to specific regulation and increased court oversight – with a litigation funding agreement only applicable if approved by the Court.

Public Fund for Class Actions?

Another notable recommendation from the NZLC was the call to establish a

“public class action fund” (public fund) that can compensate the representative plaintiff in a class action for adverse costs and provide funding for legal costs. The main objective of the Public Fund is to “improving access to justice” by addressing “the lack of funding available for public interest class actions and class actions seeking non-monetary relief”.

These reforms are likely to spur debate on both sides of Tasmania and we will be following the legislative debate closely to see what reforms, if any, are ultimately passed by the New Zealand government.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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