NEW ZEALAND Trends and Developments Contributed by: Kate Cornegé and Jessica Phillips, Tompkins Wake
A Sophisticated and Increasingly Active Jurisdiction for Collective Redress Overview
financing risk and is expected to pave the way for larger classes. The Court of Appeal’s confirmation that CFOs should be made at an early stage of the pro- ceeding provides greater clarity for class members and funders about the expected costs and returns of the litigation. In addition to these specific class-action develop- ments, the ongoing aim of the courts to enhance access to justice will receive a boost on 1 January 2026, when significant amendments to the High Court procedural rules will take effect. The amendments are designed to speed up litigation, focus on the key documents, and enhance co-operation. While the key rule allowing a representative action will remain unaf- fected, it is likely that these changes will assist repre- sentative actions to move more quickly through to a settlement or trial. Common fund orders – a game-changing procedural development The Court of Appeal’s decision in relation to CFOs was made in the context of one of New Zealand’s largest class actions to date, brought on behalf of 150,000 consumers against two major Australian-owned banks operating in the New Zealand retail market. The claim alleges breaches of disclosure obligations under the Credit Contracts and Consumer Finance Act 2003 (CCCFA), the principal statute regulating consumer credit contracts in New Zealand. The plaintiffs sought more than NZD300 million in damages to be repaid on the basis that the banks should repay all fees and charges incurred while the banks were not compliant with their obligations. The bank defendants argued that they had already com- pensated customers appropriately when the breach was identified and that the plaintiffs’ argument was totally out of proportion with the technical legal breach. In 2022, the plaintiffs applied to the High Court for various procedural orders, including CFOs. CFOs pro- vide for the litigation funder’s remuneration to be fixed as a proportion of the litigation proceeds, for all class members to bear a proportionate share of that liability, and for the liability for the litigation funder’s remunera- tion to be paid first from any amounts received. The High Court considered that the Court had jurisdiction
The landscape in New Zealand has continued to evolve and mature, with class actions now covering a broad- er range of subject matter and the litigation funding market also maturing. Although some class actions have been substantially similar to cases brought in Australia, the United States or Europe, New Zealand has also seen homegrown class actions concerning banking, discrimination and environmental claims. Traditionally, damages awards in New Zealand have been modest. Class actions allow claimants with rela- tively low individual losses to aggregate their claims and create sufficient economic scale to pursue com- plex or high-cost litigation. They provide a procedural mechanism for addressing widespread harm that would otherwise go unremedied, particularly where losses are diffused or defendants are large institu- tional actors. For defendants, they create incentives to improve compliance systems and manage repu- tational and financial exposure proactively. The rep- resentative proceeding framework therefore plays an increasingly important role in maintaining market integrity and consumer confidence, which is particu- larly important in a comparatively small market with fewer competition-related constraints. There have been no notable government initiatives in the years following the Law Commission’s 2022 report on class actions and litigation funding, leaving the pol- icy landscape largely unchanged. Development of this area has therefore been in the hands of the courts, but the Law Commission’s recommendations continue to influence judicial reasoning and case management practice. Courts have effectively stepped into the legislative vacuum, refining procedural safeguards to maintain fairness and transparency. The decisions made by the courts so far suggest a flexible, innovative approach to this developing area of law and procedure, illustrated by the Supreme Court’s 2020 decision permitting “opt-out” class actions and the Court of Appeal’s 2024 decision, confirming the High Court’s jurisdiction to make common fund orders (CFOs) (addressed further below). The combination of these two significant appellate authorities lowers
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