Class Actions Comparative Guide

• Law Firm: Fee Langstone
• Subject Matter: Litigation, Mediation & Arbitration, Class Actions, Trials & Appeals & Compensation
• Author: Mr Philippa Fee and Russell Stewart
• Published date: 02 May 2023

1 Legal framework

1.1 Is there a dedicated class action regime in your jurisdiction? If not, how is collective action typically brought?

A class action is a court proceeding in which a group with similar interests collectively sue one or more defendants and have their claims determined in one legal proceeding.

New Zealand does not currently have a dedicated class action regime or statutory framework, which leads to some uncertainty.

The New Zealand Law Commission has completed a review of class actions and litigation funding in New Zealand (NZLC R147, 2022). The report was presented to Parliament on 27 June 2022 and recommends a new enactment called the Class Action Act as a principal source of law on class actions.

Currently, claims that might be initiated in other jurisdictions by way of class action are brought in New Zealand under both Rule 4.24 of the High Court Rules 2016 (HCR) and the High Court's inherent jurisdiction, by a representative plaintiff on behalf of the class of persons or members with the same interest in the subject matter of the proceeding (commonly referred to as a 'representative action', which we use interchangeably with the term 'class action'). HCR Rule 4.24 therefore provides "a form of what elsewhere are called class action orders" and aims to:

• facilitate judicial economy;
• avoid duplication of proceedings;
• facilitate the sharing of costs; and
• promote access to justice (Saunders v Houghton [2009] NZCA 610, [2010] 3 NZLR 331 at [10] (Baragwanath J)).

1.2 Do any special regimes apply in specific sectors?

No special class action regimes apply to specific sectors. Further, the class action reforms discussed in question 1.1 do not envisage sector-specific regimes and propose a general class action regime that will apply to all group claims.

1.3 Are the courts in your jurisdiction generally considered sympathetic to class actions?

As noted in question 1.1, given the lack of a statutory class action regime in New Zealand, it is arguable that the courts are sympathetic to class actions through their willingness to interpret with considerable flexibility and extend HCR Rule 4.24 to allow representative actions. The common rationale behind this is 'access to justice'. The lack of a statutory class action regime and the related procedural uncertainties have usually been resolved in favour of the representative plaintiff and class members, rather than the defendants.

2 Parties

2.1 Who has standing to bring a class action in your jurisdiction?

As with general proceedings, a representative plaintiff must have personal standing to bring a representative action and may do so on behalf of class members if they each have the same interest in the subject matter of the proceeding. This is known as the 'commonality test'. The courts have developed the following relevant principles (Credit Suisse Private Equity LLC v Houghton [2014] NZSC 37, [2014] 1 NZLR 541):

• The 'same interest' requirement is a low threshold and requires only a significant common interest in the resolution of any question of law or fact arising in the representative action.
• A flexible approach should be taken.
• The common issue need not lead to the complete resolution of the representative action or even determine liability.

A representative action can proceed:

• with the consent of all represented class members; or
• as directed by the court on application by a party or intended party to the representative action.

If the representative plaintiff has all class members' consent, it can bring the representative action as of right. The court does not currently require proof of such consent, but proof strengthens the representative plaintiff's position.

A representative plaintiff will rarely have obtained all necessary consents before commencing proceedings. In such circumstances, the representative plaintiff must apply to the court for a representative order, which will then provide directions as to how and when persons can become class members by electing:

• to join, known as 'opting in'; or
• not to remain a class member, known as 'opting out'.

2.2 Can representative bodies bring class actions in your jurisdiction? If so, which bodies may do so and what is the applicable procedure?

As discussed in question 2.1, under Rule 4.24 of the High Court Rules (HCR), the representative plaintiff is essentially a representative body bringing the claim on behalf of themselves and class members who have the required 'same interest' and seek to have a common issue determined.

However, representative bodies, such as professional commercial plaintiffs, cannot purchase plaintiff or class members' claims to obtain a share of any damages awarded by the court. All plaintiffs and class members must have standing to satisfy the 'same interest' or 'commonality' test. However, options are available to legitimate plaintiffs (and class members) to obtain third-party litigation funding.

2.3 Can parties outside the jurisdiction be members of a class action? What requirements and restrictions apply in this regard?

A party outside of New Zealand can be a plaintiff, or a class member, in a representative action, provided that it meets the required threshold of having the same interest in the subject matter of a proceeding under the commonality test. This is subject to any objections based on forum non coveniens, which is essentially an argument that an overseas court is the more appropriate venue to determine the claim in question. To date, such issues have not been considered by the New Zealand courts in the context of representative actions.

2.4 Which parties may be the target of a class action? Can parties outside the jurisdiction be the target of a class action? What requirements and restrictions apply in this regard?

In New Zealand, the representative plaintiff and its lawyers, and/or litigation funders which are organising a representative action or class action, will usually advertise for class members before filing proceedings and request that they enter into both a funding agreement and a legal services agreement. The advertisements are usually published in newspapers and online.

There are no current requirements or restrictions which are relevant to targeting potential class members outside of New Zealand. Practically, there is nothing to stop an interested potential class member from seeing such an advertisement - likely online - and then electing to opt in to the representative action or class action. Further, where the court has allowed a representative proceeding to proceed as an opt-out proceeding (eg, a shareholder/securities claim), it is quite likely that some of the class members (being shareholders) will reside outside of New Zealand.

2.5 Do class actions proceed on an opt-in or opt-out basis?

The New Zealand courts currently allow class membership for representative actions to be determined on both an opt-in and an opt-out basis. Early representative action cases in New Zealand were brought on a 'universal basis', which meant everyone who came within the defined represented group was bound by the court's judgment or any settlement reached. Subsequent cases were brought on an opt-in basis, which meant members had to choose actively to join the class group. Recently, the Supreme Court in Southern Response v Ross [2020] NZSC 126 held (agreeing with the Court of Appeal's earlier decision) that HCR Rule 4.24 also permits representative actions to be brought on an opt-out basis, which requires potential class members to actively remove themselves from the class group by a certain date if they do not wish to be bound by the court's decision or any settlement agreement. We observe that New Zealand has a small population, and this tends to support more naturally an opt-in rather than opt-out regime.

3 Forum

3.1 In what forum(s) are class actions heard in your jurisdiction?

The High Court of New Zealand is the superior court of New Zealand and has general jurisdiction and responsibility under the Senior Courts Act 2016, as well as the High Court Rules (HCR), for the administration of justice throughout New Zealand. The High Court, through the representative action under HCR Rule 4.24, is the principal forum to hear class actions in New Zealand. A decision of the High Court is final unless appealed to the Court of Appeal and then the Supreme Court.

3.2 Who hears class actions in your jurisdiction (eg, judges or juries)?

In...