The Law Reform Commission's Class Actions Sub-committee published a consultation paper this month proposing the introduction of a mechanism for multi-party litigation in Hong Kong, which will have a great impact in Hong Kong courts if implemented.

Under the current law of Hong Kong, the sole machinery for dealing with multi-party proceedings is a rule on representative proceedings under the Rules of the High Court (Chapter 4 A).

The latest proposal enhances a plaintiff's access to justice. On the other hand, defendants could avoid multiple related lawsuits.

1. "Opt-in" vs "Opt-out"

The sub-committee recommends that the new class action regime should adopt an "opt-out" approach. In other words, once the court certifies that a case is suitable for a class action, any member of the class, as defined by the order of court, would be automatically bound by the subsequent litigation, unless he "opts out" of the class action within the time limits prescribed by the court order.

But the author prefers the "opt-in" procedure. Where the proceedings involve parties from outside Hong Kong, a person will not be included in the class litigation unless they take active steps to "opt in" to the litigation, with discretion given to the court to adopt an "opt-out" procedure if the particular circumstances of the case warrant.

2.Funding proposal is a breakthrough

In class action proceedings, according to the proposal, a legally aided person should not lose his right to legal aid funding by agreeing to act as a representative plaintiff in a class action, but he should be funded or protected only to the same extent as he would be if he were pursuing a personal action.

In this design, a further means of funding class litigation is by the establishment of a class action fund (CAF), which would be empowered to make discretionary grants. That discretion might extend to the financial resources of applicants. There might be a means test on applications or a stipulation that a part of the proceeds for a successful action be rendered as repayment. In the author's view, this funding proposal is a breakthrough to help "middle lower class" plaintiffs who are not entitled to legal aid to access justice.

The author moved a motion in the Legislative Council in February to advocate relaxation of the "means test" for legal aid which required the applicant to have assets or cash equivalent amounting to less than HK$165,700. The standard is completely outdated and in that under its mandate, a typical "middle class" applicant will be deprived of any chance to receive legal aid under a law-suit which might entail at least a few millions in legal costs.

3.Enhancing access to justice for the needy

The sub-committee also recommends that in order to filter out cases that are clearly not suitable, class action proceedings should only be allowed to continue as collective proceedings if they have been certified by the court.

It should be noted that this new regime is to be introduced first in the Court of First Instance. It is suggested that it not be extended to the District Court within five years until a body of case law on the new procedures has been established.

It is the author's view that the introduction of a comprehensive regime for multi-party litigation would enhance the access of needy persons to the justice system and would provide a more efficient, well-defined, money saving and workable mechanism to solve heated disputes between employers and employees especially those who could not enjoy legal aid.

The author is a member of the Legislative Council and associate professor of School of Law, City University of Hong Kong

(HK Edition 11/19/2009 page1)