Class actions and litigation funding – end of year update

2017 has been another active year for “class actions” and litigation funding.  The courts have continued to exercise a liberal and flexible approach to permitting claims to be brought together as class actions.  In this update, we set out some of the latest decisions and issues that have arisen in this complex and developing area of litigation.

James Hardie class action – Supreme Court refuses to grant leave

The Supreme Court has refused to grant leave to Studorp Limited and James Hardie New Zealand (James Hardie) to appeal the Court of Appeal’s decision allowing individuals to bring their claims against James Hardie regarding defective cladding as a class action.  The claimants are current and former owners of leaky buildings who are alleging that defects in cladding systems manufactured by James Hardie have caused buildings to leak.

A link to the case is available here.  Our update on the Court of Appeal’s decision is available here.

What did James Hardie argue?

James Hardie sought leave to appeal on the basis that the Court of Appeal was wrong to find the respondents had the “same interest” in the subject matter of the proceedings.  Instead, James Hardie emphasised the case did not arise from a “single event” or “single source”.[1]  James Hardie also sought leave to appeal against the Court of Appeal’s finding that a two-stage trial would be “just, speedy or inexpensive”, as required under the High Court Rules.

What did the Supreme Court decide?

The Supreme Court declined leave to appeal the Court of Appeal’s decision.  It stated that it was not in the interests of justice as any of the points raised by James Hardie could be dealt with at trial.

Southern Response action proceeds

Earlier this month, the Court of Appeal allowed the Southern Response Unresolved Claims group to proceed with its class action against Southern Response Earthquake Services Limited for alleged breaches of contract and good faith.  A link to our update on that decision is available here.

Litigation funder lays complaint against Chief Justice for litigation funding comments

Recently, litigation funder LPF Group Limited (LPF), laid a complaint with the Judicial Conduct Commissioner against the Chief Justice – Elias CJ.  The complaint was in relation to three grounds that arose from Her Honour’s minority judgment in PwC v Walker & Ors [2017] NZSC 151.

In that case, the Supreme Court took the unusual step of giving judgment after the matter had been settled.  The majority did so on the basis that the appeal involved important legal issues around litigation funding in New Zealand.  Elias CJ dissented, and did not consider that the SC should give a decision following settlement.

LPF brought the complaint on the grounds of a breach of natural justice, judicial bias, and a failure to disclose potential conflicts of interest.  LPF stated in a press release that Her Honour “offered a series of unfair and unjustified opinions which were not related to the legal questions before the Court, and made incorrect and highly concerning remarks about the legitimacy of litigation funding in New Zealand.”

Law Commission to review class actions and litigation funding

Earlier this year, then Justice Minister Amy Adams directed the Law Commission to consult on class actions and litigation funding.  The Law Commission will do so early next year.

Such a review is timely given that New Zealand does not have a formal class action procedure and the rules are largely judge-made.  This is particularly so, given the Supreme Court’s observation in Credit Suisse Private Equity LLC & Anor v Hougton & Ors[2] that rule 4.24 of the High Court Rules, which allows for class actions, is a “nineteenth century model” being required to “bear a weight for which it was not designed”.[3]  It has also been observed that an “expansive view” has been taken of the concept of “same interest”.[4]

Our view on recent developments

Class actions and litigation funding have become a familiar fixture in the New Zealand litigation landscape.  Given this, the time is ripe for the development of a formal procedure for class actions and litigation funding.  The Law Commission’s review of this is timely.

We are likely to see another busy class action litigation year in 2018 with the decision on the first stage of the Kiwifruit litigation expected and the next stages of the Southern Response and James Hardie class actions.  If you have any questions in relation to representative or class actions, or need specific advice, please contact one of our experts.

Footnotes

[1] Studorp Limited & Anor v Cridge & Unwin & Ors [2017] NZSC 178, at [11].

[2] Credit Suisse Private Equity LLC & Anor v Houghton & Ors [2014] 1 NZLR 541.

[3] Ibid at [49].

[4] Ibid at [65].

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