We are pleased to report that the Supreme Court hearing on 15th and 16th of June 2020 went extremely well.
After the Court of Appeal confirmed that an Opt-Out Notice should issue in this class action, Southern Response appealed to the Supreme Court. Southern Response argued that it would be more appropriate to issue an Opt-In order. Potentially, there could be a significant difference in the size of the class that will finally proceed through the courts with this action.
Prior to this case NZ courts have only issued Opt-In Notices to class members. This means that a prospective class member in a court proceeding would have to respond to the court notice by signing a form confirming that they want to ‘opt-in’ and that the court can treat them as both, members of the class and of the action.
In contrast, were the court to issue an Opt-Out Notice to affected policyholders then they will automatically be included in the action (their interests represented by Mr and Mrs Ross) without the need for them to return a form or to formally register with the court. This form of notice means that only policyholder who wanted to opt-out, would have to take direct steps to notify the court and to step out of the action. All those remaining will be covered by the action and will enjoy any ultimate benefits.
International experience has shown that if courts use Opt-In Notices, often only 10% of affected persons will elect to remain in the action. This means that 90% can often lose out on their entitlements because it is often too expensive for an individual to sue the defendant on their own.
Many overseas courts have decided to generally use Opt-Out Notices so that the majority of affected persons will automatically be covered and will get any remedies that the court may later issue. This method is thought preferable because:
- It provides more effective access to justice for persons who couldn’t otherwise pursue their legal rights on their own;
- By ensuring that most affected persons will be included in a class, the court avoids the possibility of many separate actions being filed in the courts about the same issues i.e. it is much more efficient in terms of court resources;
- If defendants are later held liable then they face having to pay the true cost of their wrong-doing (instead of say, just 10%, as might be the case with an Opt-In Notice approach) and so this much greater liability will operate as a deterrence to large organisations who might be considering some unlawful action.
We presented these arguments to the Supreme Court and argued that this class action should proceed after the High Court issues an Opt-Out Notice. We were supported in these arguments by the NZ Law Society and the NZ Bar Association (an association of NZ barristers). The court had earlier asked these organisations to make submissions as the issues here are very important for future cases, so and we were pleased that these eminent bodies agreed with our position.
Although it is always imprudent to try and anticipate what a court judgment might say, we remain optimistic given that Southern Response’s arguments remained much the same as those already dealt with in the Court of Appeal.
Towards the end of the hearing Chief Justice Winkelmann, asked respective counsel to make further written submissions on the procedural issues that may arise should the Supreme Court reject Southern Response’s appeal. Although policyholders can’t rely on this development as indicating the likely outcome, there would be little purpose in the Supreme Court seeking these further submissions if the Southern Response appeal was to be upheld.
We can’t predict how long it may take for the Supreme Court judgment to issue but are confident that it should be available before Christmas. If our position is upheld, then Brendan and Colleen Ross will represent roughly 3,000 policyholders in now proceeding to trial. Although some people might choose to opt-out we think that is unlikely because the time, cost, stress and litigation risk is so high for individuals.
Although we think there are very good reasons why this government should settle these claims, there has been consistent bureaucratic reluctance to confront the issues and to do the right thing. Perhaps the people of Christchurch will note that when it comes to making electoral choices later in the year.