New Zealand: Class Actions Comparative Guide

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 New Zealand, representative actions – like all civil proceedings – are tried by a judge alone. Defamation proceedings are the exception to this rule: they may be tried before either a judge alone or a jury.

3.3 Is there any opportunity for class action forum shopping in your jurisdiction? If so, what are the implications?

There is currently no known practice of representative action forum shopping in New Zealand. However, it is quite common for individuals in New Zealand to have standing to opt in or out of Australian class actions. A common example concerns shareholder/securities class actions. For example, a New Zealander may own shares in an Australian Securities Exchange listed company and therefore have standing as a class member in a shareholder/securities class action being brought in the Australian courts. Similarly, the same principles would apply to Australians who own shares in a company listed on New Zealand's Exchange subject to a shareholder/securities representative action in the New Zealand High Court.

4 Bringing a class action

4.1 What is the limitation period for bringing a class action in your jurisdiction? What requirements and restrictions apply in this regard?

In New Zealand, limitation periods are generally prescribed under the Limitation Act 2010 and some specific statutes. These general time limits apply to all civil proceedings, including representative actions. Limitation periods stop running when a proceeding is commenced. Representative actions must be commenced before the relevant limitation periods applicable to the representative plaintiff (and class members) expire.

The most common applicable limitation period is for 'money claims', which are claims for monetary relief at common law, in equity and under an enactment. Such a claim must be brought within six years of the alleged civil wrong (Limitation Act 2010, Section 11). Various other limitation periods apply for other types of specific claims.

The lack of a statutory class action regime has led to some uncertainty as to how limitation periods apply to class members, given that those persons do not themselves technically file a statement of claim to commence a representative action.

The Supreme Court considered this issue in Credit Suisse Private Equity v Houghton [2014] NZSC 37, [2014] 1 NZLR 541, with the majority holding that time stops running when a statement of claim for a representative action is filed; and that this applies both to the representative plaintiff and class members at the time and to potential class members. To combat this, defendants in representative actions will often seek an order from the court that any persons that wish to opt in must do so by a deadline.

4.2 Do collective actions require certification? If so, what requirements must be met to obtain certification?

Most overseas class action regimes require a court to consider and approve that the claim may proceed as a class action. This process is generally known as certification. Currently, Rule 4.24 of the High Court Rules (HCR) does not require certification per se and provides that such an action can be commenced either:

• with the consent of all class members with the same interest in the subject matter of the proceeding; or
• as directed by the court on an application by a party (or intending party).

The second option above is similar to a certification requirement and if such an application is made (which is rare), the court will consider whether the parties have sufficient common interest in the resolution of any question of law or fact arising in the proceeding. The applicant must also provide the court with a written outline as to how the representative action will be conducted. The court will consider the impacts of this practical litigation plan on the defendant(s) and consider expedition and appropriate use of judicial resources to decide whether to make an order a representative order.

4.3 What are the formal requirements for bringing a class action?

As noted in questions 2.1 and 4.2, the formal requirements for bringing a representative action are found in HCR Rule 4.24 and the common law developed by the courts as to the flexible interpretation of that rule.

4.4 What are the procedural and substantive requirements for bringing a class action? Do any minimum thresholds apply in this regard?

If the requirements of HCR Rule 4.24 are met, as detailed in questions 2.1 and 4.2, the representative plaintiff will usually proceed to file:

• a notice of proceeding;
• a statement of claim detailing the nature of the claim(s) and the relief sought;
• an interlocutory application for leave to bring a representative action and for approval of a litigation funder and litigation funding agreement (if, as is common, a litigation funder is involved); and
• affidavits in support of the interlocutory application for leave (including, usually, from the representative plaintiff and the litigation funder).

4.5 How are potential class members notified of the proceedings? Is there a deadline by which they must join the class action?

The process of notifying potential class members differs depending on whether the court adopts an opt-in or opt-out approach.

The HCR do not specify how notice should be given; but the court in Ross v Southern Response [2021] NZHC 2452 (at [30]) noted that the objective is "to find the most economical means of ensuring that [class members] are informed of the proceeding and their rights". The court directed that notice be given to potential class members by publication in four newspapers, publication on Facebook, by post and by email.

With an opt-in approach, the representative plaintiff typically advertises for potential class members to join the claim by filling in a form and agreeing to the terms of a funding agreement and a legal services agreement. Generally, the courts will direct that class members must opt in to a representative action by a certain date; if they fail to do so, they cannot join the claim.

With an opt-out approach, class members are part of the representative action class by default unless they take positive steps to remove themselves by a certain date. The representative plaintiff must usually give adequate notice to members, explaining their right to opt out and not be bound by the court's determination. There are also other practical difficulties with an opt-out approach, as class members will not necessarily know the terms of, or agree to, a litigation funding agreement and a legal services agreement.

4.6 How is jurisdiction over the class action determined?

If a representative claim is filed in New Zealand and New Zealand is the most appropriate venue for the legal claim, then subject to any forum non conveniens issues, the New Zealand courts have jurisdiction over the representative action.

4.7 How is the applicable law determined?

See question 4.6.

4.8 Under what circumstances (if any) must security for costs be provided?

HCR Rule 5.45 allows the court to order a plaintiff (including a representative plaintiff) to pay security for costs if:

• it is just; and
• either:
• • the plaintiff is not resident of or, if a company, is not incorporated in, New Zealand; or
  • there is reason to believe it would be unable to meet any adverse costs order.

Where the court orders that security be posted, the plaintiff must pay that sum to the court or provide security by other means to the court or court registrar's satisfaction. The court may stay the proceeding until the sum is paid or the security is given.

More specifically, with representative actions, despite HCR Rule 5.45, the court has inherent jurisdiction to order a litigation funder to post security even if the representative claimant is resident in New Zealand (Saunders v Houghton [2009] NZCA 610, [2010] 3 NZLR 331 at [35]-[36]). Such security will usually be reasonably full and include disbursements. A security for costs application in a representative action also gives the defendant(s) the opportunity to obtain disclosure of any litigation funding arrangements in place, as that is relevant to the defendant's likely recovery of adverse costs should it successfully defend the representative action.

5 Disclosure and privilege

5.1 What rules apply to disclosure in your jurisdiction? Do any exceptions apply?

The procedure for disclosure of documents in representative actions is generally the same as the procedure in relation to ordinary civil proceedings:

• A representative plaintiff must, at the same time as filing the proceeding, serve on the defendant a bundle of key documents ('initial disclosure') relied on to prepare the pleading.
• Similarly, when the defendant files its statement of defence, it must also serve a bundle of initial disclosure.
• Once the representative action is active, and usually after the final opt-in or opt-out date, the court will make discovery orders detailing whether general discovery or agreed ('tailored') discovery is required.
• The parties can also apply to the court for orders that non-parties discover relevant documents.

Interestingly, the disclosure obligations generally fall on the representative plaintiff, not the class members, unless otherwise directed by the court. Similarly, any other persons involved in organising the representative action must usually discover relevant documents in their control.

The usual evidentiary exceptions apply and allow the parties to withhold documents that are subject to privilege (legal professional, litigation, settlement privilege) and, on occasion, confidentiality.

5.2 What rules on third-party disclosure apply in your jurisdiction? Do any exceptions apply?

As noted in question 5.1, in New Zealand, third-party (or 'non-party') disclosure is available on application to the court under Rule 8.21 of the High Court Rules. The court may order a person to file an affidavit of documents – and to serve those documents listed in the affidavit – on the parties to a proceeding (ordinary or representative) if it considers that documents held by the non-party would be properly 'discoverable' if the non-party were in fact a party to the proceeding.

Again, the usual evidentiary exceptions apply and allow the parties to refuse to disclose documents that are subject to privilege (legal professional, litigation, settlement privilege) and, on occasion, confidentiality.

5.3 What rules on privilege apply in your jurisdiction? Do any exceptions apply?

Under the Evidence Act 2006, a party is not required to disclose certain types of documents if they are subject to legal professional privilege, litigation privilege and settlement privilege (Sections, 54, 56 and 57, respectively).

5.4 What are the specific implications of the rules on disclosure and privilege in class action proceedings?

Further to question 5.3, in the context of a representative action, unless a class member has a direct solicitor-client relationship with the representative plaintiff's lawyers, the class member cannot properly assert legal professional privilege over communications with those lawyers. Such communications would, however, be protected by litigation privilege if the class member can show that the communication with the representative plaintiff's lawyers was for the 'dominant purpose' of giving or obtaining legal advice in relation to the representative action.

6 Evidence

6.1 What types of evidence are permissible in your jurisdiction? Is expert evidence accepted?

Both factual and expert witness statements (written outlines of evidence) are filed and served before trial and must comply with various rules of evidence. The same process applies to ordinary civil proceedings as to representative proceedings:

• All 'relevant' evidence is admissible in a proceeding unless it is inadmissible or excluded under the Evidence Act 2006 (Section 7) or any other enactment. For example, there are the usual rules around hearsay evidence and opinion evidence. Evidence is to be of fact – that is, what a witness relevantly did, saw or heard based upon his or her independent and personal knowledge.
• Expert evidence is permissible, but must be:
• • relevant and of probative value (Evidence Act 2006, Sections 7 and 8); and
  • of substantial help to the court to understand other evidence in the proceeding, or to ascertain any fact that is of consequence to the determination of the proceeding (Evidence Act 2006, Section 25).

6.2 What is the applicable standard of proof in your jurisdiction?

In New Zealand, the civil standard of proof requires facts to be provided on the balance of probabilities, which simply means more probable than not. This standard is flexibly applied (Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1).

6.3 On whom does the burden of proof rest in class action proceedings?

In New Zealand, the burden of proof in all civil proceedings, including representative proceedings, lies with the plaintiff prosecuting the claim.

6.4 What are the specific implications of the rules on evidence in class action proceedings?

The same rules on evidence apply to representative actions as apply to all other civil proceedings.

7 Settlement

7.1 Can the class action proceedings be discontinued without a full trial? If so, how, and what are the implications?

As with an ordinary civil proceeding, a representative action can be discontinued without a full trial if:

• the parties agree to settle the matter without seeking the court's determination (eg, James Hardie 'white litigation'); or
• the court strikes out the claim because it:
• • fails to disclose a reasonably arguable cause of action;
  • is likely to cause prejudice or delay;
  • is frivolous or vexatious; and/or
  • is otherwise an abuse of process.

In terms of settlement, if a litigation funder is involved, the funding agreement will usually contain provisions which set out when and how settlement can occur, including provision as to what level of approval is required for such settlement by the class members.

7.2 Is court approval of the settlement required? If so, what factors will the court consider in this regard?

Currently in New Zealand, court approval of a settlement of a representative action is not required. However, the Supreme Court recently held in Southern Response v Ross [2020] NZSC 126 that the court does in fact have the power to approve settlements. The Supreme Court mentioned factors such as considering the extent to which the settlement prejudices individual class members; and said that generally, the need for court approval of a settlement should be a precondition for granting leave to bring a representative action on an opt-out basis. The class action reforms discussed in question 1.1 propose to address this issue in detail.

8 Court proceedings

8.1 Are court proceedings in your jurisdiction public or private? If the former, are any options available to the parties to keep the proceedings or related information confidential?

In New Zealand, in the interests of open justice, both civil and criminal court proceedings are generally heard in open court. The underlying rationale is that open and transparent court proceedings encourage public confidence in the administration of justice. Therefore, generally, both the public and media representatives may attend civil and criminal hearings. The courts also have the inherent power to limit the publicity of proceedings and:

• can order that certain proceedings be heard in chambers (without public or media present); and
• prohibit reporting on proceedings or aspects of them (Erceg v Erceg [2016] NZSC 135).

This is generally to protect vulnerable parties and such restrictions do not generally apply to civil proceedings such as representative actions.

8.2 What approaches do the courts typically take to class action proceedings? Are preliminary issues commonly tried first, or are test cases commonly heard? What are the implications of these different approaches for the proceedings?

Representative actions are often heard in two stages (ie, two separate hearings), with the first hearing covering common issues (and sometimes also the entirety of the representative plaintiff's individual claim) and the second addressing individual issues. However, a staged approach is not mandatory under Rule 4.24 of the High Court Rules (HCR), and it will depend on the nature of the particular representative action (LDC Finance Ltd v Miller [2016] NZHC 567 at [30]). Often staged hearings, and the issues for determination at those hearings, are agreed by the parties. If the parties cannot agree and one party seeks to have the matter heard in stages, it must apply under HCR Rule 10.15, which gives the court the power to order on a separate question. The starting point, however, is the presumption that all matters must be determined at one trial, so any application to have staged hearings must disprove that presumption. The class action reforms discussed in question 1.1 contemplate amending the presumption to be in favour of staged hearings for representative actions.

8.3 How do class action proceedings unfold in your jurisdiction?

See questions 2.1, 4.2, 4.4, 5.1 and 8.2.

8.4 What is the typical timeframe for class action proceedings?

Representative actions are usually large high-value cases, which involve large numbers of parties (class members, defendants and third parties). They also involve complex procedural and evidential issues. In New Zealand, these cases often take considerable time to reach determination or otherwise, with some taking over 10 years, such as the Feltex shareholder claim (see question 13.1).

8.5 Is the decision issued in class action proceedings binding on all members of the class?

Yes, the court's decision in a representative action is binding on all class members.

9 Remedies

9.1 What remedies are available in class actions in your jurisdiction?

Both monetary and non-monetary remedies are available in representative actions in New Zealand. Compensatory damages or orders are a common form of relief sought and awarded, and are available for a wide range of civil wrongs, including:

• negligence;
• breach of contract; and
• breach of statutory duty.

9.2 Are punitive damages awarded in your jurisdiction?

Punitive or exemplary damages are available in New Zealand, but are very rarely awarded and are usually nominal.

9.3 What factors will the courts consider in deciding on the quantum of damages?

When deciding on the quantum of compensatory damages, the courts consider:

• principles of causation and remoteness;
• the fact and amount of the damage suffered;
• contributory negligence; and
• the plaintiff's duty to mitigate loss.

9.4 How are damages allocated among the members of the class?

The conventional approach to allocating damages among the class members is to find an objective yardstick to assess against. There are, however, difficulties in allocating damages among class members where there is no uniform loss. The New Zealand courts have not yet had to address quantification of damages where the loss is not uniform across the class members. It is likely that in such cases, each class member will need to have his or her individual loss assessed independently before damages are allocated.

10 Appeals

10.1 Can the court's decision in the class action be appealed? If so, on what grounds and what is the process for doing so?

The same general rights of appeal that apply to ordinary civil proceedings also apply to representative actions.

The High Court primarily determines representative claims and its decisions can usually be appealed as of right (without leave) to the Court of Appeal within 20 working days of the date of the decision appealed against. The appeal is conducted as a 'rehearing' but is heard (mainly) by reference to the tested evidence given and heard during the High Court trial.

Further appeals of Court of Appeal decisions to the Supreme Court – New Zealand's highest court – can:

• only be heard with leave of the court; and
• then only if:
• • the appeal involves a matter of general public importance;
  • a substantial miscarriage of justice may have occurred, or may occur unless the appeal is heard;
  • the appeal involves a matter of general commercial significance; and/or
  • the appeal involves a significant issue relating to the Treaty of Waitangi.

11 Costs and fees

11.1 What costs and fees are incurred when litigating in your jurisdiction? Can the winning party recover its costs?

Class actions are expensive and, in the absence of contingency fee arrangements in New Zealand, usually rely on litigation funders. The primary costs and fees incurred when litigating are legal costs, expert fees and court filing fees.

Recovery of costs (and disbursements) is governed by Part 14 of the High Court Rules (HCR) and is ultimately at the court's discretion (HCR Rule 14.1). The general rule is that the unsuccessful party must pay 'scale costs' (as defined in the HCR) to the successful party. Scale costs are determined according to pre-defined notional daily recovery rates and time allocations for particular tasks in court proceedings based on the complexity of the case and/or the complexity of work involved in each part of the litigation process (eg, statements of defence or discovery and inspection). The courts may also make an order for increased and indemnity (actual) costs to unreasonable litigation conduct from the other party, although these are exceptional. A successful party can usually also recover reasonable disbursements such as court filing fees and expert witness fees.

11.2 How are the costs and fees allocated among the members of the class?

The representative plaintiff, as the party to the representative action, is generally liable for any costs and fees. Class members are generally not subject to any adverse costs order (Ross v Southern Response Earthquake Services Ltd [2019] NZCA 431, (2019) 25 PRNZ 33 at [108]; Houghton v Saunders (2011) 20 PRNZ 509 (HC) at [211]; Houghton v Saunders HC Christchurch CIV-2008-409-348, 26 May 2010 at [43]; and Houghton v Saunders (2008) 19 PRNZ 173 (HC) at [164]). In rare circumstances, litigation funders may also be liable to pay an adverse costs order even in the absence of any impropriety or abuse of process – usually on the basis that, although not a party, they promote and fund the representative action for their own benefit and exercise control over its conduct (Waterhouse v Contractors Bonding Ltd [2013] NZSC 89 at [52]). For example, in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No. 2) [2004] UKPC 39, [2005] 1 NZLR 145 at [33]), the Privy Council stated:

11.3 What happens if the claim of a class member is withdrawn before the proceedings have terminated?

HCR Rule 15.23 states generally that unless the defendant otherwise agrees or the court otherwise orders, a plaintiff that discontinues a civil proceeding against a defendant must pay the defendant's costs incurred in the proceeding up to and including the discontinuance. This same rule currently applies to representative actions.

11.4 Do the courts manage costs during the proceedings?

The courts generally assess and award costs following determination of the matter or other disposal of the proceeding (eg, discontinuance). However, costs in relation to any interlocutory applications may be assessed and fixed when the application is determined.

11.5 How do the courts assess the costs and fees at the end of the proceedings?

Please see questions 11.1 and 11.2.

12 Funding

12.1 Is legal aid available for class actions in your jurisdiction? If so, what requirements and restrictions apply in this regard?

In New Zealand, legal aid is available in very limited circumstances and not in representative actions. As a result, litigation funders are often relied on to provide funding.

12.2 Are contingency fees and similar arrangements permitted in your jurisdiction? If so, what requirements and restrictions apply in this regard?

Contingency fee agreements – where the lawyer stands to earn a percentage of any damages award obtained for the client, while at the same time running the litigation – are not permitted in New Zealand. However, 'conditional' fee agreements based on the success of litigation are permitted, provided that the lawyer's remuneration is normal, being fair and reasonable having regard to the interests of the client and lawyer in light of the reasonable fee factors set out in Rule 9.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, or normal plus a reasonable premium.

12.3 Is third-party funding permitted in your jurisdiction? If so, what requirements and restrictions apply in this regard?

Yes, third-party funding is permitted in New Zealand. There are no statutory requirements or restrictions under Rule 4.24 of the High Court Rules (HCR) or elsewhere in the HCR governing litigation funding. The courts have developed applicable principles from existing rules and have so far adopted a cautiously permissive approach to litigation funding. However, the courts do not have the power to approve funding arrangements or otherwise act as a general regulator of them (Waterhouse v Contractors Bonding Ltd [2013] NZSC 89 at [28]; Southern Response Earthquake Services Ltd v Southern Response Unresolved Claims Group [2017] NZCA 489 at [79]). Instead, the courts' role is to adjudicate any applications brought before them to which the existence and terms of a litigation funding arrangement may be relevant (Waterhouse v Contractors Bonding Ltd [2013] NZSC 89 at [29]).

12.4 What are the specific implications of such various funding arrangements in class action proceedings?

The uncertainty about the parameters of litigation funding may impact the cost and increase the risk of challenges to funding agreements, and lead to delay resolving claims. Given the increasingly important role of litigation funders, this may then impact access to justice for plaintiffs. There may also be inadequate accountability and transparency around the operation of litigation funders and funding arrangements.

13 Trends and predictions

13.1 In which areas are class actions most commonly brought? Have there been any major cases of note in recent years?

In the last 10 years, there has been a significant uptick in the number of representative actions being brought in New Zealand. The subject matter has included:

• breaches of consumer law, securities law and competition law;
• insurance contracts;
• unreasonable bank fee charges;
• negligence claims against manufacturers of cladding used in building works; and
• negligence claims against the New Zealand government.

Some of the more recent major representative actions include the following:

• Feltex shareholder claim: In 2008 a representative action was filed by shareholders arising from the collapse of NZX listed company Feltex Carpets Ltd after its initial public offering.
• Bank fees claims: In 2013, representation actions were filed against the four major New Zealand banks – BNZ, Kiwibank, Westpac and ANZ – on behalf of bank customers, alleging unreasonable bank fee charges.
• Kiwifruit claim: In 2017, kiwifruit growers filed a representative action against the New Zealand government alleging that it had been negligent in undertaking biosecurity checks and measures.
• Southern Response claims: Christchurch homeowners with unresolved insurance claims arising from the Christchurch earthquakes filed representative actions against their insurer.
• James Hardie claims: Several representative actions have been filed by consumers against James Hardie and Studorp Ltd alleging cladding systems they manufacture are defective.
• CBL claims: Two separate representative actions have been filed by shareholders arising from the collapse of CBL Corporation Limited.

13.2 How would you describe the current class action landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The current class action landscape is reasonably active, and such litigation only looks set to increase with the increased presence of litigation funders and the class action reforms (see question 1.1) on the horizon.

14 Tips and traps

14.1 What would be your recommendations for the smooth progress of class actions in your jurisdiction and what potential pitfalls would you highlight?

The courts are conscious of the significant time and cost involved for defendants in defending large-scale representative actions. A representative plaintiff must ensure that its case is considered and well formed at the outset, including being satisfied that it is the appropriate person to be the representative plaintiff. A developed litigation plan should be provided to the court to address and define common issues beyond what is pleaded. The concept of proportionality cuts both ways. If the representative action in question seeks a large damages award (which is usual), the court will expect that significant time and cost will be expended by the representative plaintiff in meeting procedural requirements. Filing a wide-ranging, amorphous representative action is unlikely to achieve a substantial settlement with commercial (and often insured) defendants. The common law gloss on Rule 4.24 of the High Court Rules, coupled with the class action law reforms (see question 1.1), is placing a greater emphasis on representative plaintiffs (and litigation funders) being required to focus their claims at the outset, as well as managing competing or overlapping class actions (eg, the CBL Claims). Defendants should ensure that substantive security for costs is posted at a very early stage in any proceeding.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.