立法會
Legislative Council
LC Paper No. CB(2)2541/11-12(02)Ref: CB2/PL/AJLS
Panel on Administration of Justice and Legal Services
Background brief prepared by the Legislative Council Secretariat
for the meeting on 10 July 2012
Law Reform Commission Report on Class Actions

Purpose1.
This paper gives an account of the discussions held by the Panel on
Administration of Justice and Legal Services ("the AJLS Panel") on theConsultation Paper on Class Actions published by the Class Actions
Subcommittee of the Law Reform Commission ("LRC").
Background2.
Under the current law in Hong Kong, the sole machinery for dealing withmulti-party proceedings in Hong Kong is a rule on representative proceedings
under the Rules of the High Court (Cap. 4A) which was criticized as restrictive
and inadequate by the Chief Justice's Working Party on Civil Justice Reform. In
its Final Report in March 2004, the Working Party recommended that a scheme
for multi-party litigation (i.e. class actions) should be adopted in principle.
3.
The Class Actions Subcommittee ("the Subcommittee") under thechairmanship of Mr Anthony NEOH, SC was appointed in November 2006 toconsider whether a scheme for multi-party litigation should be adopted in Hong
Kong and to make proposals to LRC for reform. Both the Director of Legal Aid("DLA") and the Consumer Council were consulted. The Subcommittee
published a Consultation Paper on Class Actions ("the Consultation Paper") on 5
November 2009.
4.
Arising from the incident related to Lehman Brothers' minibonds in whicha large number of consumer investors would need to take legal action individuallyfor their losses, the AJLS Panel had requested the former Research and LibraryServices Division of the Legislative Council ("LegCo") Secretariat to conduct aresearch on the relevant schemes implemented in selected overseas jurisdictions.

- 2 -The research report entitled "Class action in selected places" (RP01/09-10) waspublished on 18 November 2009.
Relevant discussions held by the AJLS Panel5.
At the invitation of the AJLS Panel, the Subcommittee Chairman briefed
members on the recommendations contained in the Consultation Paper at themeeting on 23 November 2009. The issues raised by members at the meeting aresummarized below.
Claims to be dealt with under class actions
6.
In response to Dr Margaret NG's enquiry as to whether the disputes
concerning the Lehman Brothers-related minibonds were suited to be dealt with bya class action procedure, the Subcommittee Chairman explained that in a classaction, a representative plaintiff sued on his own behalf and on behalf of the otherpersons ("the class") who had a claim to a remedy for the same or a similar alleged
wrong to that alleged by the representative plaintiff, and who had claims thatshared questions of law or fact in common with those of the representativeplaintiff. Hence, it would depend on whether the complainants shared the samequestions of law or fact. For example, while the complainants sharing the samecause of action of alleged misrepresentation of the investment products in theprospectus might be able to take class action, complaints against alleged
mis-selling of products by individual staff of retail banks might not be suitable fora class action procedure having regard to the differences in individual
circumstances pertaining to each case.
Safeguards against potential abuses
7.
While expressing support for the introduction of a class action regime, Dr
Philip WONG expressed concern about potential abuse of the class action
procedure. The Subcommittee Chairman advised that a class action regime might
unduly encourage litigation and therefore procedural safeguards should beestablished to avoid potential abuse. One of the major procedural safeguards was
the proposed certification system for class actions, under which the court would
examine whether certain criteria were fulfilled before authorizing thecommencement of a class proceeding. The Subcommittee had recommended thatthe "costs follow the event" rule be retained in the proposed class action regime inHong Kong, which would help discourage unnecessary and unmeritoriouslitigation. To guard against potential abuse of the process of the court, theSubcommittee had also recommended that a cautious approach be adopted in
implementing the class action regime, with the extension of the District Court

- 3 -

jurisdiction to hear class actions be deferred for a period of at least five years untila body of case law of the Court of First Instance on the new procedure had beenestablished.
8.
According to the Consultation Paper, one potential risk of adopting a classaction regime was the considerably higher litigation costs for class action
proceedings than individual proceedings, which might wipe out the amount of any
compensation and expose the plaintiffs to the potential liability for large amount ofcosts. There was also the risk that the successful defendant would not be able torecover his costs from an impecunious plaintiff acting as the class representative.
Dr Margaret NG enquired how the Subcommittee proposed to tackle suchproblems.
9.
The Subcommittee Chairman advised that under the proposed system, thecourt would play a major role in filtering out cases which were not suitable for classactions. A certification process would be incorporated whereby the court would begranted the power to decide if a class action should proceed. To minimize potential
abuse of the process, the representative plaintiff would have to satisfy the court offive major certification criteria before the class action could proceed, including thecriterion that the representative plaintiff should have adequate standing and ability
to represent the interests of the class of claimants and the so-called "superiority"
criterion that the class action was the most appropriate legal vehicle to resolve theissues in dispute.
Funding for the class action regime
10. Members considered that litigation cost was a crucial issue in class action
proceedings and little could be achieved by a class action regime unless suitablemeans could be found to fund plaintiffs of limited means. Members noted that theSubcommittee had proposed in the Consultation Paper that the Consumer Legal
Action Fund be extended to cover class action litigation in consumer claims.
11. The Subcommittee Chairman advised that consumer claims wereparticularly suitable for class action litigation and priority should be given tofunding class action litigation in this area. As an established mechanism hadalready been in place under the Consumer Legal Action Fund to provide financial
support and legal assistance for aggrieved consumers to obtain legal remedies, theSubcommittee proposed that, in the short term, consideration be given toexpanding the scope of the Fund to provide legal assistance in class actions
proceedings in consumer claims, with additional resources to the Fund to beprovided by the Administration. The existing legal aid regime could also provide a
viable source of funding for class actions in the short term in cases where the- 4 -representative plaintiff was eligible for legal aid; but the DLA would only be
responsible for the costs attributable to the legally aided plaintiff.
12. Mr TAM Yiu-chung considered that the proposed class action regime wouldenable consumers and small investors of similar background to take collectiveaction against a large multinational corporation or a governmental body. In order
to expedite the introduction of a class action regime, he suggested that sectorial
funds should be set up to fund class actions in different sectors as a first step. The
Subcommittee Chairman considered the suggestion viable and that theAdministration could set up funds in certain sectors first to test out the operation ofclass actions.
Treatment of public law cases
13. Dr Margaret NG expressed concern about the impact of the introduction of aclass action regime to public law cases on the current constitutional position inrelation to the interpretation of Basic Law ("BL"). For example, when theStanding Committee of the National People's Congress ("NPCSC") issued aninterpretation of the relevant provisions of BL which had the effect of reversing an
earlier decision of the Court of Final Appeal ("CFA"), the principle that judgments
previously rendered would not be affected by the interpretation of NPCSC only
applied to the actual parties to concluded litigation.
14. According to the Subcommittee Chairman, in the light of the special
constitutional position in Hong Kong, there were arguments for and against theexclusion of public law cases from the class action regime. It had been suggested
that a class action regime adopting an opt-out model would effectively deprive aninterpretation of the NPCSC of any particular effect, as all potential claimants
would automatically be parties to the judgment previously rendered unless theyopted out. This would amount to a radical constitutional change. On the otherhand, it might be argued that a class action regime with an opt-out model would notaffect the constitutional status or validity of an interpretation by NPCSC, which
would apply to future litigation and was binding on the Hong Kong Special
Administrative Region courts. To this end, the Subcommittee had put forth in theConsultation Paper four options for the treatment of public law cases in a classaction regime to deal with the special constitutional situation in Hong Kong.
15. Dr Margaret NG considered that there were both pros and cons for using aclass action procedure. In the right of abode cases, individuals with similar claims
but who were not parties to the CFA proceedings would have benefited from theCFA judgment and would have been unaffected by the subsequent interpretation ofNPCSC had the class action procedure rather than the "test cases" approach beenused. However, in other cases, it might be more beneficial to use individual

- 5 -proceedings.
She sought clarification on whether individuals could choose
between class action or individual proceedings under the proposed class action
regime.
16. According to the Subcommittee Chairman, under the "opt-out" approach
recommended by the Subcommittee, once the court certified that a case wassuitable for a class action, any member of the class could opt out of the class action
within the time limit prescribed by the court order. The court would make adecision on whether a class action procedure should be adopted only upon theapplication of the relevant parties.
Recent development
17. The LRC Report on Class Actions proposing that a mechanism for classactions should be adopted in Hong Kong was published in May 2012. The AJLS
Panel is scheduled to discuss the recommendations contained in the Report with theSubcommittee Chairman at its regular meeting in July 2012.
Relevant papers
18. A list of relevant papers available(http://www.legco.gov.hk) is in Appendix.

Council Business Division 2
Legislative Council Secretariat
6 July 2012ontheLegCowebsite

Appendix
Relevant papers on Law Reform Commission Report on Class Actions

Meeting
Panel onAdministration of
Justice and LegalServices

Date of meetingPaper

14.10.2008(Item III)

AgendaMinutes

23.11.2009(Item IV)

AgendaMinutesRP01/09-10

24.1.2011(Item IV)

AgendaMinutes

28.3.2011(Item IV)

AgendaMinutesCouncil Business Division 2
Legislative Council Secretariat
6 July 2012