Class action regime under review

NZILA President’s message – Myles Noble

The New Zealand Law Commission is currently considering submissions to its review of class actions and litigation funding.

The commission has formed a preliminary view that class actions and litigation funding can improve access to justice. However, it acknowledges there are “risks and costs with both and these need to be carefully managed”.

Late last year the commission released an issues paper and invited feedback on 60 questions. Submissions closed in March and the commission will now consider those before it forms a final view on whether to recommend class actions and litigation funding. If its decision is affirmative, the commission will then develop proposals and potentially provide a further opportunity for consultation.

Its final report on class actions and litigation funding is due in the first half of 2022.

The decision will have major ramifications for the insurance industry. Currently class actions are run as representative actions but, as the commission points out,  they can be “inefficient and expensive as the courts need to determine complex procedural issues without the benefit of a statutory framework”.

High Court Rule 4.24 enables representative actions to proceed.

Minter Ellison Rudd Watts partners Nick Frith and Andrew Horne outline the issues in an online article. They point out that class actions are of “significant interest” to insurers, because of their potential exposure (for example, Ross v Southern Response) and from a liability insurance perspective for D&O and product liability claims.

In the Ross case, the Supreme Court – New Zealand’s highest – ruled that a representative action against the Ross’s insurer, Southern Cross could proceed on an opt-out basis, rather than opt-in.

That effectively broadened the number of plaintiffs considerably.

McElroys principal Joanna Stafford writes that two High Court decisions by Justice Osborne in Christchurch illustrate that the court “is not shying away from exercising its supervisory jurisdiction when called upon to deal with issues not currently provided for in the High Court Rules”.

In decisions that stem from the Ross litigation, Justice Osborne found Southern Response and its lawyers could not communicate, engage, negotiate, and/or settle claims directly with potential class members.

He also decided that litigation funder LPF could not participate in the proceedings. Ms Stafford says that ruling “demonstrates that attempts by litigation funders to have a say in litigation in which they are not actively involved may not be accommodated by the court”.

Class actions and litigation funding will have major ramifications for the insurance industry so we await the outcome of the Law Commission’s deliberations with great interest.

Dr Bridgette Toy-Cronin, a Director and Senior Lecturer in the Faculty of Law, University of Otago, explores related issues in an article in this edition of Resolve about how power can influence litigation and she considers policy proposals that might minimise that influence.

Dr Toy-Cronin was scheduled to deliver a lecture to NZILA members on the topic, but the event was unable to proceed because of pandemic restrictions. She has instead written an article that will be published in Policy Quarterly.

Upcoming events

Meet the Leaders – Christchurch, 7 May
Meet the Leaders – Wellington, 17 May
Business interruption webinar – 11 May (9am)

Click here to view all upcoming events and webinars.

NZILA 2021 Conference – Queenstown 15-17 September

“Raising the Bar” – to set a higher standard for others to follow…

Join NZILA as we raise the bar on professional education and knowledge sharing for the industry. We also raise the social functions bar to 1,187m at Coronet Peak for the conference dinner and to Skyline for amazing views over Queenstown for the long lunch.

With 8.5 CPD hours and three fantastic networking events, this conference is not to be missed.

Registrations are now open with the added optional benefit of accommodation nights included from four hotel providers.

Click here for more information or to register.

With the trans-Tasman travel bubble now operating between Australia and New Zealand, we hope to welcome many colleagues from ‘across the ditch’ to the 2021 NZILA annual conference.

I look forward to welcoming plenty of NZILA and AILA members to Queenstown.