Proposed Class Action and Litigation Funding Regime

Over recent years, the growing number of funded representative actions has resulted in much wrangling in court with procedural issues adding to the cost and delay of already challenging proceedings. In order to address these issues, the Law Commission has released its final recommendations to create a statutory class action regime and regulate litigation funding.

The class action regime will be available to all civil claims in the High Court involving a representative plaintiff and at least two other persons with a common issue of fact or law. A separate class action regime may be created for employment claims.

All class actions will have to be certified by the High Court before they can proceed. The representative plaintiff will have to establish that they have a reasonably arguable cause of action, that they are suitable and will fairly and adequately represent the class, and that a class action proceeding is an appropriate procedure for the efficient resolution of the claims of the class members.

Class actions would proceed on an opt-in or opt-out basis. Opt-in requires class members to actively sign up to the proceeding, whereas in an opt-out claim any person falling within the class definition will be a member unless they expressly exclude themselves.

Agreements for litigation funding will have to be approved by the court if they are to be enforceable. The court would need to be satisfied that the agreement is fair and reasonable, including on such bases as whether the funder can terminate the agreement and whether the agreement diminishes the plaintiff’s control over the proceedings.

The court may make a “cost sharing order” to spread the costs of a class action equitably among all class members, particularly for opt-out proceedings in which agreements between class members and the funder is unlikely.

All settlements of class actions will need to be approved by the court on the basis that they are fair, reasonable and in the interests of the class.

Once a class action is filed and notice published, any similar class actions covering the same issues will have to be filed within 90 days. The court will then determine which competing class action is to proceed.

In order to improve access to justice, the recommendations also ask the government to consider the creation of a public class action fund that could indemnify a representative plaintiff for legal costs in public interest litigation.

The Commission’s recommendations are an important step forward in improving access to justice and the efficient management of multiple claims. The Government will now consider whether to accept or reject the recommendations and then undertake the preparation and introduction of a new Bill.