NEW ZEALAND Law and Practice Contributed by: Shane Campbell and Thomas Westaway, Campbell Westaway
retainer and to advise promptly if an estimate is likely to be exceeded. Contingency fees are prohibited. Conditional fee arrangements, under which fees are payable only on success, are permitted and may include a premium, provided that premium is not calculated by reference to the amount recovered. The New Zealand Law Soci- ety, as the profession’s statutory regulatory and rep- resentative body, handles complaints relating to fees Third-party litigation funding is permitted but operates without a dedicated statutory framework. The com- mon law torts of maintenance and champerty have not been abolished but are applied with restraint and have not been invoked to prevent funded litigation from proceeding. The courts’ approach is cautiously permissive. The Law Commission’s 2022 report recommended a specific statutory regime governing litigation funding, alongside a new class actions framework. The gov- ernment expressed in-principle support. No imple- menting legislation has been enacted as at the date of this publication. and professional conduct. 5.2 Third-Party Funding Funding arrangements are governed through general case management mechanisms, including the courts’ powers to stay proceedings and order security for costs, together with disclosure obligations. A funded party is required to disclose the existence and identity of its funder. In representative proceedings, funding arrangements attract greater court supervision. The most significant recent development is Simons v ANZ Bank New Zealand Ltd [2024] NZCA 330, con- firming that New Zealand courts have jurisdiction to make common fund orders binding all class members to the representative plaintiffs’ funding agreement. 5.3 Contingency Fee Arrangement Contingency fees are prohibited in New Zealand. Con- ditional fee arrangements are permitted, subject to the requirements set out in 5.1 Legal Fees . All areas of civil practice other than criminal, immigration, and
family law are, in principle, open to conditional fee arrangements. 5.4 Insurance Insurance coverage for dispute resolution costs is available in two principal forms. After-the-event (ATE) insurance protects a party against the risk of an adverse costs order if unsuccessful and is primarily associated with litigation, though cover for arbitra- tion proceedings may be available depending on the insurer and the nature of the dispute. ATE insurance is increasingly used in funded representative proceed- ings, where litigation funders commonly obtain such cover as part of their risk management arrangements. ATE insurance premiums cannot generally be recov- ered as a disbursement from the other party in the event of success, unlike the position in some other jurisdictions. Before-the-event legal expenses insurance is avail- able and may be included in professional indemnity policies, covering legal costs for certain types of dis- pute arising after the policy is taken out. Cover for arbitration and ADR processes will depend on the terms of the individual policy. 5.5 Costs The general principle in New Zealand civil litigation is that costs follow the event: the unsuccessful party pays costs to the successful party. In the High Court, costs are awarded by reference to the scale set out in the High Court Rules 2016, which establishes time allowances and recovery rates for each step in a pro- ceeding across four complexity bands. Scale costs represent a portion of a party’s actual legal costs; full solicitor-client costs are not ordinarily recoverable, though the court retains discretion to award indemnity costs in appropriate cases. In arbitration, costs are at the discretion of the tri- bunal. Consistent with litigation, costs generally fol- low the event, with the successful party recovering a substantial portion of its reasonable legal and arbitral costs. The costs of mediation and other ADR pro- cesses are generally borne equally by the parties as agreed in the absence of any contrary arrangement.
388 CHAMBERS.COM
Powered by FlippingBook