12 Feb 2019

New Zealand's 'dormant' class action litigation 'crying out' for reform

Class action litigation in New Zealand is relatively rare according to new research, as The New Zealand Law Society highlights issue.


The New Zealand Law Society states its position on class actions is that it is an area ‘crying out for reform which it supports.’ Class actions are relatively dormant in New Zealand according to research from University of Auckland Law School lecturer Nikki Chamberlain, in her thesis ‘Contracting-out of Class Action Litigation: Lessons from the United States.’

On the rise

The research cites comparison the United States, noting an empirical study of Class Action Settlements and their Fee Awards by the Brian T Fitzpatrick of Vanderbilt Law School which found that class action settlements from 2006 and 2007 resulted in district court judges approving 688 class action settlements over that two year period. That involved nearly $US33 billion, and roughly $US5 billion was awarded to class action lawyers, or about 15 per cent of the total. Despite being ‘largely invisible,’ Ms Chamberlain explains the use of class action procedure is on the rise in New Zealand. But unlike the United States, she says New Zealand does not have comprehensive legislation that administers how class action litigation is to be managed. She says it only has the High Court Rule (HCR) 4.2411 which provides that ‘one or more persons may sue or be sued on behalf of, or for the benefit of, all persons with the same interest in the subject matter of a proceeding’ by consent of all persons with the same interest, or as directed by the court upon an application by a party or intended party. Ms Chamberlain writes that the Rules Committee drafted a Class Action Bill to expand on class action procedure about a decade ago. Regrettably, she says, the Class Action Bill was never enacted.

Common law development

Ms Chamberlain notes, ‘the consequence is that class action procedure is currently being developed through the common law - an undesirable outcome where justice, efficiency and economy are of primary importance in the judicial system.’ She concludes that ‘the lack of consistency and certainty in class action procedure in New Zealand is likely to result in corporate defendants mimicking their American counterparts by attempting to contract-out of class action litigation.’ She adds ‘class action legislation would enhance consistency and certainty in class action litigation procedure for the benefit of all class action stakeholders, which, in the end, is fundamental to the credibility of New Zealand’s legal system.’