NEW ZEALAND Law and Practice Contributed by: Kirsten Massey and Chris Curran, Russell McVeagh
group members (eg, liability) and issues that differ for each class member (eg, reliance and loss). 3.7 Length and Timetable for Proceedings The time taken for a representative proceeding to progress to trial varies from case to case. However, given the lack of a formal set of procedural rules, rep- resentative proceedings often involve complex proce- dural issues and resulting interlocutory applications (that may generate multiple appeals), and may take several years to reach trial. 3.8 Mechanisms for Changes to Length/ Timetable/Disposal of Proceedings As there is no formal set of class action rules in Aotearoa New Zealand, representative proceedings are subject to management under the existing pro- cedural rules and the court’s inherent jurisdiction. Given this, all the usual procedural mechanisms for the management of the proceedings are available and could be exercised if appropriate in the context of the particular proceeding. These will include trials of preliminary issues, split trials and summary judgment or dismissal. 3.9 Funding and Costs Costs in Class Action Proceedings There are no special cost rules applying to class action-style proceedings in Aotearoa New Zealand. The usual civil procedure rules apply, including the requirement that an unsuccessful party will usually be liable for the costs of the successful party. Costs are set by reference to a prescribed scale, which applies notional daily rates and time allocations for particular steps in the proceeding, depending on its complexity and the skill and experience required of counsel. An award of scale costs is not intended to fully compen- sate the successful party, and, particularly in com- plex representative proceedings, costs recovered may reflect only a small proportion of the actual costs incurred in the proceeding. The court may increase costs from the standard scale amount where the conduct of a party or the nature of the proceeding justifies it. Indemnity costs may also be awarded, which compensate for costs actu- ally incurred, but are only available in limited circum- stances.
In a representative proceeding, it is the representative plaintiff or plaintiffs who will be liable for the defend- ant’s costs if the claim is unsuccessful, as the wider group members are technically not considered parties to the proceeding. As a result, representative plain- tiffs may seek indemnification from members of the class or, more commonly, will seek third-party litiga- tion funding and an indemnification from the funder in respect of adverse costs. As New Zealand’s costs regime allows third-party costs awards in certain cir- cumstances, litigation funders have also occasionally been found liable for a successful defendant’s costs. Due to the potentially significant costs associated with awards in representative proceedings, defendants fre- quently seek security for costs, which courts almost always grant. Third-Party Litigation Funding The use of litigation funding is growing in Aotearoa New Zealand. As with the representative action pro- cedure more generally, there are currently no formal rules governing funding arrangements; however, the principles to be applied have been developed in the recent case law. The courts have cautiously permitted litigation fund- ing where it is seen as promoting access to justice for plaintiffs, however that permission comes with active judicial scrutiny to ensure that the objectives of jus- tice are met (Ross v Southern Response Earthquake Services Limited [2019] NZCA 431 at [104] to [105]; Saunders v Houghton (No 1) [2010] 3 NZLR 331 at [24]). If a representative proceeding is financed by a third- party litigation funder, the following information should be disclosed to both the other parties to the proceed- ing and the court at the time the proceeding is filed: • the existence of the funder; • their identity and location; and, if relevant for appli- cations regarding security for costs, • whether they are subject to the jurisdiction of the New Zealand courts. There is no general requirement that the funding agreement itself be disclosed, although disclosure
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