New Zealand Law Society - Law Commission seeking views on Class Actions and Litigation Funding

Law Commission seeking views on Class Actions and Litigation Funding

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Te Aka Matua o te Ture | Law Commission is undertaking a first principles review of class actions and litigation funding. The Commission released an Issues Paper earlier this month seeking public feedback.  

The review is part of wider and ongoing efforts to improve the affordability and efficiency of litigation and raises issues that will be of significant interest to the profession.  

The Law Society has advocated for reform in the area of class actions and litigation funding, regarding it as a high priority for a first principles review. We will be preparing a submission to the Law Commission.

Class actions allow claimants with factual or legal issues in common are able to group their claims together in a single proceeding so they can be resolved together, and litigation funding by a commercial funder may facilitate access to civil justice by covering claimants' legal costs in exchange for an agreed percentage of compensation awards.  

Class actions and litigation funding have attracted some criticism in comparable jurisdictions on issues such as litigation funders’ commissions and the impact of class actions on the business environment.

The Commission says the crucial question is whether the potential benefits of class actions and litigation funding can be realised in a way that manages the risks and outweighs any disadvantages. The Issues Paper summarises the issues and explores some options for addressing them.  

The Commission's preliminary view is that Aotearoa New Zealand needs a statutory class actions regime, the key advantages being to improve access to justice, promote efficiency and economy of litigation, and improve incentives to comply with the law. Several matters would need to be addressed, including the scope of a class actions regime and the broad principles underpinning it. The Commission has also come to the preliminary view that litigation funding is desirable in principle and should be expressly permitted, provided certain concerns can be adequately managed.  

“In our view, class actions and litigation funding can improve access to justice. But there are risks and costs with both and these need to be carefully managed” says Commission President Amokura Kawharu lead commissioner on the review.

The Law Commission is accepting submissions until 11 March 2021. If the Commission confirms its current view that a statutory class actions regime and regulation of litigation funding are desirable, it will develop its proposals and may provide a further opportunity for consultation. The final report on class actions and litigation funding is due in the first half of 2022.  

The Law Society committees considering the Issues Paper welcome comments from the profession, and these can be sent to by 22 February 2021. The Law Society's recent submissions to the Supreme Court as a neutral intervenor in the Southern Response v Ross appeal set out its initial views on some of the issues involved in developing this area of the law. 

See here for an Executive Summary of the Issues Paper, and here for more information about the review.

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