jesseApter aM, December 2020 Wellington, New Zealand Issues Paper | He Puka Kaupapa 45 Class Actions and Litigation Funding Ko ngā Hunga Take Whaipānga me ngā Pūtea Tautiringa Te Aka Matua o te Ture | Law Commission is an independent Crown Entity operating under the Law Commission Act 1985. The Commission was established to deliver the purpose set out in the Act, which is to “promote the systematic review, reform and development of the law of New Zealand”. The Commissioners are: Amokura Kawharu – Tumu Whakarae | President Helen McQueen – Tumu Whakarae Tuarua | Deputy President Donna Buckingham – Kaikōmihana | Commissioner Te Aka Matua o te Ture | Law Commission is located at: Level 9, Solnet House, 70 The Terrace Wellington 6011 Postal address: PO Box 2590, Wellington 6140, Aotearoa New Zealand Document Exchange Number: SP 23534 Telephone: 04 473 3453 Email: [email protected] Internet: www.lawcom.govt.nz The Māori language version of this Issues Paper’s title was developed for Te Aka Matua o te Ture | Law Commission by Kiwa Hammond. Kei te pātengi raraunga o Te Puna Mātauranga o Aotearoa te whakarārangi o tēnei pukapuka. A catalogue record for this title is available from the National Library of New Zealand. ISBN 978-1-877569-98-2 (Online) ISSN 1177-7877 (Online) This title may be cited as NZLC IP45. This title is available on the internet at the website of Te Aka Matua o te Ture | Law Commission: www.lawcom.govt.nz Copyright © 2020 Te Aka Matua o te Ture | Law Commission. This work is licensed under the Creative Commons Attribution 4.0 International licence. In essence, you are free to copy, distribute and adapt the work, as long as you attribute the work to Te Aka Matua o te Ture | Law Commission and abide by other licence terms. To view a copy of this licence, visit https://creativecommons.org/licenses/by/4.0 iii FOREWORD Foreword Democratic society is defined not only by the existence and stability of its legal institutions but by their accessibility to citizens. In Aotearoa New Zealand, addressing procedural, financial and other barriers to accessing civil justice is a pressing contemporary policy challenge. Te Aka Matua o te Ture | Law Commission is undertaking a first principles review of class actions and litigation funding. Our review forms part of wider and ongoing efforts to improve the affordability and efficiency of litigation. As a mechanism for collective redress, class actions offer the prospect that claimants with a factual or legal issue in common can group their claims together into a single proceeding. Litigation funding provided by a commercial funder may facilitate access to civil justice by covering some or all of a claimant’s legal costs in exchange for an agreed percentage of any compensation awarded. At the same time, class actions and litigation funding have attracted some public notoriety in comparable jurisdictions overseas, where media attention has focussed on issues such as the wider impacts of class actions on the business environment and litigation funders’ commissions. The crucial question is whether the potential benefits of class actions and litigation funding in terms of promoting access to civil justice can be realised in a way that manages the risks and outweighs any disadvantages they may give rise to. This Issues Paper summarises the various issues that arise and explores some of the options for addressing them. We seek submissions and comment from interested parties. The Commission is committed to taking into account te ao Māori across all of its law reform work. The class action, as a mechanism for facilitating collective redress, may be particularly amenable to analysis from Māori perspectives and we welcome submissions and comment in that regard. The Commission will take into account the feedback we receive in response to this Issues Paper as we develop our recommendations. If the weight of submissions and our further analysis favours proceeding with class actions and/or litigation funding, we expect to publish a further paper with more detailed proposals for regulation in these areas. Amokura Kawharu Tumu Whakarae | President iv HAVE YOUR SAY Have your say This Issues Paper sets out issues we have identified in relation to class actions and litigation funding. It is available online at www.lawcom.govt.nz. We want to know what you think about the issues covered in this paper. Do you agree or disagree with the way the issues have been articulated? Are there additional issues you think should be considered? Please also explain the reasons for your views. Submissions or comments (formal or informal) on our Issues Paper should be received by 11 March 2021. You can email your submission to [email protected]. You can post your submission to Review of Class Actions and Litigation Funding Law Commission PO Box 2590 Wellington 6140 WHAT HAPPENS TO YOUR SUBMISSION? Te Aka Matua o te Ture | Law Commission will use your submission to inform our review and we may refer to your submission in our publications. We may publish all or part of your submission on our website. We will also keep all submissions as part of our official records. Information supplied to the Commission is subject to the Official Information Act 1982. If someone requests a copy of your submission, the Commission must consider whether we are required to release it. Only your name or your organisation’s name is required on a submission. You may wish to keep your contact details separate, as if they are included on the submission they will become publicly available if the submission is published on our website. If you do not want us to release identifying information within your submission (or any other part of your submission), or do not want your submission to be referred to in our publications, please explain in your submission which parts should be withheld and the reasons. We will take your views into account in deciding: • whether to withhold or release any information requested under the Official Information Act; • if and how to make your submission publicly available on our website; and • if and how to refer to your submission in our publications. Te Aka Matua o te Ture | Law Commission complies with the Privacy Act 2020, which governs how it collects, holds, uses and discloses personal information you provide. You have the right to access and correct your personal information. 1 CONTENTS LAW COMMISSION Contents Foreword ..................................................................................................................................................... iii Have your say ........................................................................................................................................... iv Glossary....................................................................................................................................................... 5 Executive summary .................................................................................................................................. 8 List of questions ...................................................................................................................................... 17 Chapter 1: Introduction ......................................................................................................................... 26 Why this review? ......................................................................................................................................... 26 Intersections between class actions and litigation funding ........................................................... 27 Access to justice .......................................................................................................................................... 27 Other studies and overseas comparisons ........................................................................................... 30 Purpose and scope of this Issues Paper ............................................................................................... 31 Structure of this Issues Paper .................................................................................................................. 32 PART A – CLASS ACTIONS ...................................................................................................................... Chapter 2: Introduction to class actions ......................................................................................... 34 Introduction ................................................................................................................................................... 34 Definition and key features of class actions ....................................................................................... 34 Class actions regimes in comparable jurisdictions ........................................................................... 39 Context of overseas class actions regimes is important ................................................................ 45 Chapter 3: Group litigation in Aotearoa New Zealand ................................................................ 48 Introduction ................................................................................................................................................... 48 Representative actions under HCR 4.24 .............................................................................................. 48 Civil procedure techniques for bringing group claims ....................................................................