2019 Litigation Forecast - Class actions – change coming, but slowly…
New Zealand’s class action regime is in its infancy and lacks a tailored set of procedural rules.
The New Zealand Law Commission announced a project to examine “class actions and litigation funding” early in 2018 only then, unexpectedly, to put the project on hold pending resource availability and due to the priority of other law reform projects. The Commission’s project will consider whether a formal procedural regime (and regulation of litigation funders) is required in New Zealand.
Looking ahead to 2019, we predict some progress. The High Court’s Rules Committee is consulting on proposed new rules intended to “clarify and formalise” the current procedure for representative proceedings, which will operate as the default in the absence of a properly developed class actions regime.
We expect the year ahead to bring:
- continued dialogue over what a developed class actions regime for New Zealand ought to look like (with an eye to recent reviews and reforms in Australia);
- further development of the case law as pending representative actions progress; and
- several ‘watch-this-space’ group claims in the pipeline.
There is a compelling case for reform. Even with the status quo, the procedural rules and principles governing representative proceedings must be gleaned from a growing body of cases in which the courts, using the common law, have been filling the gap left by the absence of detailed class actions rules.
The Rules Committee’s proposed new rules to codify the current position will be a useful and important step forward, and likely to improve certainty and accessibility for those bringing or – to a degree – defending group litigation.
The Rules Committee is not, however, considering matters of policy or design (such as whether an opt-in or opt-out regime is more appropriate, or whether regulation governing litigation funders is needed).
Change through legislation is still desirable, in our view, requiring thought, careful analysis and consultation – and so the status of the Law Commission’s review remains a key focus for future reform.
“Our laws are lagging behind other jurisdictions we usually compare ourselves with, such as Australia and the United Kingdom.”
An eye on Australian developments
Australia’s class actions regime is much more developed and mature than New Zealand's, however it is still evolving.
Developments across the Tasman signal potential areas for refinement when considering the design for a better class actions framework for New Zealand. In 2018, there were two reviews conducted of the Australian rules:
- one by the Victorian Law Reform Commission of Victoria’s state-level rules, released in March 2018
- one by the Australian Law Reform Commission (ALRC) of the Australian Federal rules to be reported to the Attorney General in December 2018, released on 24 January 2019.
‘Watch this space” group claims
Plantiffs had some success in a few actions in 2018. The Kiwifruit growers successfully argued, at a “stage 1” hearing, for a novel duty of care owed and breached by MPI in allowing the PSA bacteria into New Zealand. This result could have a broad impact on the Crown’s operational activities – although the decision is under appeal to the Court of Appeal. Also, in the long-running Feltex case, the shareholders had a measure of success in the Supreme Court, with certain issues to be remitted to the High Court.