On 17 November 2020 the Supreme Court issued its judgment in Southern Response Earthquake Services v Ross, an appeal featuring a large contingent from Bankside Chambers. Southern Response was appealing against a landmark September 2019 decision of the Court of Appeal, allowing Brendan and Colleen Ross to bring an “opt-out” class action against Southern Response on behalf of around 3,000 former policyholders. The “opt-out” class action is the first of its kind in New Zealand.
The main question in the Supreme Court was whether the Ross case, and class actions more generally, should proceed on an opt-in or opt-out basis. Until the Ross case, opt-in had been the normal approach in New Zealand. The Court of Appeal held that Mr and Mrs Ross’ case should proceed on an opt-out basis, and that opt-out should generally be “the norm” in class actions. Southern Response was granted leave to appeal to the Supreme Court. The New Zealand Law Society, the New Zealand Bar Association and a local litigation funder were granted leave to appear as interveners.
The Supreme Court unanimously dismissed Southern Response’s appeal. The Court held that class actions have three objectives: improving access to justice, facilitating judicial efficiency, and incentivising compliance with the law. An opt-out approach was consistent with those objectives, particularly access to justice, and was also consistent with the objectives of the High Court Rules: the just, speedy and inexpensive determination of proceedings.
The Court did not consider it necessary to wait for detailed legislation before allowing opt-out proceedings. In the absence of legislative guidance, the court should “fill the void” by developing procedures for class actions. The Court held that the New Zealand courts have the power to supervise notices, settlements and litigation funding arrangements in class actions, and should require court approval of any settlement as a condition of permitting a class action to go ahead.
The Court provided guidance as to when a class action should be allowed to proceed on an opt-in or opt-out basis. Generally the procedure sought by the applicant (whether opt-in or opt-out) should be adopted unless there was a good reason to depart from that choice. Applying those principles, the Court of Appeal was correct to find that an opt-out approach was appropriate in the Ross case.
The Supreme Court’s decision is significant for class actions in New Zealand. It confirms that class actions can be brought on an opt-out basis (as in Australia, Canada and the United States) and that the New Zealand courts are willing and able to supervise class actions to ensure that they are conducted fairly. The decision will likely have a real impact on consumer protection and environmental claims, and other types of claims dealing with alleged widespread harms.
Tom Weston QC appeared for Southern Response, Philip Skelton QC, Kelly Quinn and Carter Pearce of Bankside Chambers appeared as counsel for Mr and Mrs Ross, and Kate Davenport QC appeared for the New Zealand Bar Association.