Class suits legislation still 'in purgatory', Appeal Court judge says

Justice Forrest Miller, who sits on the Court of Appeal, says class actions provide an extra avenue to help enforce the Commerce Act, but legislation governing the way they should be run is still "in purgatory."

Speaking to the Commerce Commission's annual two-day conference in Wellington last Friday, Justice Miller said class actions were "obviously" a way to enhance the regulatory regime, providing an avenue for consumers who were victims of cartels to band together "to get compensation for some wrong that has affected them in an independently modest, but collectively significant way." The judge was part of a panel discussion on the role of class suits as a way to enforce the Commerce Act.

While private class actions have a role to play in enforcement, Justice Miller said there are still issues to keep in mind to prevent over-reaching, such as how a private suit could piggyback on earlier enforcement taken by the regulator and what information could be shared, whether the prospect of large damages awards would pressure defendants to settle, and if those claims would lead to a significant increase in the number of cases taken.

"Class actions do have potential, but we shouldn't assume they will solve the market," Justice Miller said.

Class suits have evolved through court rules, where the judiciary has allowed representative actions be taken, but the progress of legislation to govern such actions has stalled, with law yet to be put to Parliament.

Justice Miller said a lot of work had been done on the draft law by the rules committee, but it hasn't progressed any further.

"It's in purgatory," he said. "It seems nothing is currently happening with it."

Justice Miller said a lack of clarity around some of the procedural rules created a significant barrier to some actions, which that had to be teased out on a case-by-case basis, and allowed for "interlocutory warfare" to create delays.

The government had expected to complete the policy work for the legislation in 2012, adopting one of the recommendations in a parliamentary select committee report into the spate of finance company collapses through the second half of last year.

John Dixon, a barrister at Shortland Chambers, told the Commerce Commission panel the draft law would align New Zealand's rules with Australia.

(BusinessDesk)