Pioneering The Class Actions Regime: Supreme Court Of New Zealand Takes Notes From Canada's Approach To Class Actions Legislative Reform

• Published date: 03 December 2020
• Subject Matter: Litigation, Mediation & Arbitration, Class Actions, Trials & Appeals & Compensation
• Law Firm: McCarthy Tétrault LLP
• Author: Canadian Appeals Monitor and Adriana Forest

In most Canadian jurisdictions, there is now comprehensive class actions legislation governing the supervision and procedure of representative actions in the Courts. The same is true in the United Stated and Australia. In some jurisdictions, however, no such legislation exists. In New Zealand, for example, there is not yet a legislative regime governing the conduct of class actions.

In the recent decision of the New Zealand ("NZ") Supreme Court in Southern Response Earthquake Services Ltd. v. Brendan Miles Ross et. al., the respondents' proposed representative opt-out proceeding was approved. The decision represents a departure from the New Zealand Courts' prior status quo, which was to grant leave for representative actions on an opt-in basis rather than an opt-out basis. In an opt-in proceeding, class members must take the necessary steps to become a plaintiff. In an opt-out proceeding, on the other hand, plaintiffs are automatically included if they fall within the class definition (and until they take steps to "opt out"). The opt-out regime is what is commonly referred to as a "class action" and governed by class proceedings legislation across Canada.

In dismissing Southern Response's appeal and approving the proposed opt-out representative proceeding, the NZ Supreme Court looked to the Canadian approach for guidance and support. This decision may spark class actions reform in NZ similar to what occurred in Canada over the past couple of decades. The Canadian approach will likely inform the NZ Courts' (and legislatures') approach in years to come.

Summary of the Case in Southern Response:

The respondents, Brendan and Colleen Ross (the representative plaintiffs), brought a claim against the appellant, Southern Response Earthquake Services Ltd., their insurer, on the basis that they agreed to settle a claim on a less favourable basis than they should have after Southern Response gave them incomplete information about their claim. It was claimed by the respondents that some 3,000 other policyholders settled their insurance claims with Southern Response in similar circumstances, and were also entitled to damages. The claims all resulted from earthquakes in the Canterbury, NZ region from 2010-2012.

The respondents applied to the NZ High Court for leave to bring their proceeding as an opt-out representative claim on behalf of the 3,000 policyholders. Southern Response opposed the application, arguing that the representative action should be brought on an...