The Law Commission is considering a statutory regime to govern class actions – including the litigation funders who bankroll actions in return for a cut of the damages award. (Content partnership)

Bell Gully partner Sophie East says the Law Commission review is prompted by a real growth in class actions in New Zealand.

These include the kiwifruit growers’ claims against the Ministry for Primary Industries over the Psa virus incursion; claims in Canterbury against Southern Response and the Earthquake Commission, and the long-running Feltex shareholders’ claim.

Until now, claimants and defendants have been reliant on one flexible High Court rule; in the future there may be a detailed law that includes regulation of litigation funders.

East agrees there is place for litigation funders, who take a cut of any award. They can help provide access to justice for those who couldn’t otherwise afford it.

“On the other hand, that needs to be balanced against the fact that they are taking a very large proportion of the claim proceeds,” she says. “The studies out of Australia have shown that over 50 percent of the claim recovery that people are getting in class actions are going back to litigation funders.”

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Newsroom Pro managing editor Jonathan Milne covers business, politics and the economy.

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