28 Jun 2022

Recommended class action reforms 'fill in a lot of the gaps', lawyers say

7:49 pm on 28 June 2022

A leading commercial lawyer says recommendations to reform class action and litigation funding laws strikes the right balance.

Judge talking with lawyers to make a decision in the court room

Photo: 123rf.com

The Law Commission has issued its 483-page report, making 121 recommendations.

About 40 countries have a class action regime, but New Zealand does not, meaning there was few rules or guidance on how the cases should proceed.

Among the key recommendations put forward was the establishment of a Class Actions Act, which would serve as the principal source of law on class actions.

It also said that a case should require court approval to proceed, and additional court oversight combined with regulation of lawyers was needed in class actions to ensure the interests of class members were protected.

Law Commission president Amokura Kawharu said there were significant barriers to accessing civil justice in New Zealand, including the costs associated with litigation.

"Class actions and litigation funding are not a silver bullet for those issues, but we think they can both make important contributions."

"While group litigation is currently being brought in Aotearoa New Zealand under the representative actions rule, our review has found this rule is insufficient for modern group litigation."

The overwhelming feedback we received was that a class actions statute is necessary, she said.

Other major recommendations include the creation of a public class action fund, which would support public interest cases and those seeking non-financial claims.

These types of cases typically do not appeal litigation funders.

Simpson Grierson commercial litigation partner Nina Blomfield said the recommendations struck the right balance.

"I think it still leaves the flexibility for the courts to be able to operate it.

"It's not too prescriptive but it does fill in a lot of the gaps that we have been missing as to how these mechanisms should operate."

It would also provide plaintiffs with a better structure to seek relief and for it provided much more certainty to bigger corporate entities, who tended to be the defendant, she said.

"On both sides of the fence we are seeing some better clarity and focus that can be brought to these sorts of cases."

She said the surprise recommendation was the proposal to create a public class action fund, as it was not something that the commission had consulted on or signalled it would be recommending.

"There's certainly merit in it, but I think we'll need to work through in a lot more detail how that will operate before we could take it further."

The government will now consider the report before acting on its recommendations.

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