Class Actions On A Growth Path Making Policy Reform Urgent

Class actions are on a growth trajectory in New Zealand, fuelled by a mix of factors including increased interest from offshore funders, growing share market activism, increasing data security risk, and a stronger consumer focus in commercial regulation, says Chapman Tripp in a publication released today: Class Actions in New Zealand.

“This trend was anticipated by the Law Commission which recommended in June 2022 that New Zealand establish a statutory class action regime supported by a formal litigation funding framework,” said Chapman Tripp Partner Laura Fraser.

“But, although the Government has endorsed the Commission’s report and indicated that it will be progressed, we seem now to be idling at the lights with the prospect of a green light seeming to diminish the closer we get to the elections."

“The courts are stepping in to fill the gap, but there is an urgent need for greater clarity, particularly to provide appropriate protections for self-reporting entities and parties entering into settlements, as well as leniency applicants,” Laura said.

Litigation funders will typically seek out cases with a potentially large plaintiff class where each plaintiff’s claim may be small but the aggregate amounts will be material; where the unlawful conduct is clear or easily proved or must be reported to the regulator, with the outcome made public; and where the defendants have deep pockets.

“New Zealand has yet to have a class action triggered by a data breach but they are already becoming well-established in Australia and research by the Privacy Commissioner’s Office shows that anxiety around data security in New Zealand is emerging as a hot button issue.”

The risks for data holders are large – they will feel the heat from consumers if their privacy is breached; they are increasingly likely to be the victims of cybercrime; and insurance cover for data breaches can be tricky.

“While we endure the long wait for reform, it is timely to take stock of the class action landscape in New Zealand and to identify key trends and future risk areas for business. We hope our analysis will make a useful contribution to the debate and will assist businesses to develop appropriate management and mitigation strategies.”

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