The Emergence and Reform of the New Zealand Class Action : The Second Empirical Study

The civil procedure framework that governs the management of class action litigation in New Zealand is ripe for reform. Although parties can commence class-wide litigation in New Zealand in a number of ways, the most commonly utilised, and non-issue specific way, is by the ‘representative rule’ derived from the United Kingdom and contained in High Court Rule 4.24 (HCR 4.24). Unfortunately, HCR 4.24 contains no further procedural guidance on the management of class-wide litigation than merely providing that a representative plaintiff can sue on behalf of persons with the same interest in the subject matter of a proceeding, either by consent of all plaintiffs represented, or by leave of the court. This failure to provide procedural guidance has put the New Zealand judiciary in a problematic position. On the one hand, there are clear advantages in allowing class-wide litigation. On the other hand, the judiciary has to rely on a rule that was never intended to bear the burden of managing class actions. Courts are in essence forced to allow opt-in class actions while simultaneously developing class action procedure through their inherent powers on a case by case basis. Consequentially, all class action stakeholders are disadvantaged. The management of class actions is uneconomic, inefficient and uncertain. The issue is becoming acute. Empirical evidence suggests that class-wide actions have increased over the last four decades. Litigation funders, which are currently unregulated, have now entered the New Zealand market. The need for reform is pressing. When considering reform options, New Zealand can look to overseas models. The United States, Canada and Australia have all adopted comprehensive statutory based class action civil procedure rules. The United Kingdom has gone down a different path by instead allowing for Group Litigation Orders. As New Zealand sits at a cross-road, what is the best option for reform? This chapter addresses both the development of the opt-in class action in New Zealand from its emergence in the ‘representative rule’ and the problems stakeholders face under the current civil procedure regime. It also evaluates the options for reform measured against the purposes and aims of class action litigation. Specifically, Section 1 contains an overview of the legal system and the civil procedure framework in New Zealand. Section 2 addresses the history of the ‘representative rule’ which is used to allow opt-in class actions. Section 3 discusses the current state of opt-in class actions in New Zealand, including empirical data on the types of class actions, the plaintiff class sizes and financing mechanisms utilised. Section 4 concludes with an overview of the issues likely to arise in the future and sets out reform recommendations.Please note that a later version of this chapter was accepted for publication by Cambridge Press. This is a draft