Procedurei Types of action availableRepresentative plaintiff
For proceedings involving a representative plaintiff, RHC Order 15, Rule 12 provides that where numerous persons have the 'same interest', they may commence proceedings by nominating a representative plaintiff to represent all of them. The only exceptions are proceedings involving: (1) the estate of a deceased person; (2) property subject to a trust; and (3) construction of a written instrument including legislation, each of which is excluded from the representative proceedings regime.
The crucial element in considering whether RHC Order 15, Rule 12 has been satisfied is whether the representative plaintiff has the 'same interest' as the other plaintiffs. The Hong Kong courts have identified a 'three-fold test' to assess whether the 'same interest' threshold is met: (1) common interest; (2) common grievance; and (3) seeking a remedy that is beneficial to all.
The 'common interest' element was traditionally extremely difficult to satisfy. The representative plaintiff originally had to establish that: (1) the same contract applied between all members of the represented class and the defendant; (2) the defendant would rely on the same defences against all members of the class; and (3) the same relief was being claimed by all the class members. If, for example, the defendant could show that he or she had a separate defence against even one of the members, then the 'common interest' part of the test would not be satisfied. Further, the requirement that the same relief shall be claimed by each plaintiff meant that in practice, equitable relief (and not damages, which would more than likely be different for each plaintiff) was the only relief that could effectively be granted in representative proceedings.
The courts have since moved to relax the strict interpretation with the aim of making representative actions 'not a rigid matter of principle but a flexible tool of convenience to facilitate the administration of justice'.
Instead of requiring a 'common interest', it is now sufficient that there is a 'common ingredient' or some 'common element' in the causes of action of the represented class members. If the representative plaintiff succeeds in his or her claim, then the defendant would be barred from challenging those common ingredients or elements on the principle of res judicata. The other class members would only need to establish the other elements in their own separate proceedings. The 'same contract' requirement is also no longer a prerequisite to commencing representative proceedings and it is accepted that members within the represented group may have different degree of interest. The impediment of a defendant raising separate defences against different class members is also no longer a bar to bringing representative proceedings.
If a representative plaintiff discontinues his or her individual claim for any reason, the court may add or substitute him or her with any person in the represented class. To avoid the claim being time-barred if the addition or substitution occurs after the limitation period for the relevant claim has expired, the new plaintiff is treated as being the representative plaintiff at the date of the original writ.Representative defendant
The 'same interest' requirement also applies to the appointment of a representative defendant. Therefore, the legal principles discussed above for representative plaintiffs are equally applicable to representative defendants. However, where separate defences exist for some but not all members, the same interest requirement will not be met.
The appointment of the representative defendant may only be made by the court on the application of the plaintiffs (discussed in greater detail below).ii Commencing proceedingsRepresentative plaintiff
The individual (or individuals) claiming to represent others with the same interest should commence proceedings as the representative plaintiff or plaintiffs. The representative plaintiff is not required to seek leave of the court or an order of the court to act as the representative plaintiff. He or she may also act as the representative plaintiff on his or her own volition without first seeking the consent of those he or she purports to represent. The representative plaintiff's writ must clearly and precisely define the 'class' being represented. The court must also be satisfied that the 'same interest' test has been met. The court will continually review whether the same interest test is met as the case develops and may order the representative proceedings be dismissed if it is not.
A representative plaintiff action is suitable if there is a large number of plaintiffs with the same interest. If there are only a few members in the defined class, then, in the absence of any other acceptable justification, the court may order that all members be added as plaintiffs to the action instead. There is no set number required, but a class that consists of five or fewer members is unlikely to suffice.
If a person who falls within the member class is to be excluded, that fact has to be included in the description of the class and the excluded persons must be made parties in their personal capacity. It is not possible to state in the writ that the representative plaintiff acts for some of the members of the class without specifying who those members are.Representative defendant
An application for the appointment of a representative defendant can be made by the plaintiffs at any stage of the court proceedings. The application must be made by a writ of summons and the representative capacity of the defendant should be endorsed on the writ. The representative application would usually be heard before a master, as opposed to a judge.
Similar to the criteria for representative plaintiffs, the court will consider whether there are sufficiently numerous defendants with the same interest such that it is appropriate to make the representative order.
The court retains the ultimate discretion in selecting the representative and will make a representation order to those it considers most proper, even if it is inconsistent with the choice made by the plaintiffs and defendants. The court has the power to compel a defendant to be the representative defendant if it determines that defendant is the most suitable candidate, irrespective of whether that defendant wishes to be the representative defendant.iii Defining the 'class'
The potential plaintiffs must satisfy the court that their choice of candidate for representative plaintiff or representative defendant has sufficient interests in common with the class of individuals the potential plaintiffs contend the representative plaintiff or representative defendant represents. It is possible, in principle, for overseas plaintiffs to be included provided that they share the same interest as the representative plaintiff.iv Binding effect on the class
A judgment or order given in a representative proceeding will be binding on all members represented by the representative plaintiff or representative defendant. This also applies to judgments in default as well as judgments delivered after trial. However, an individual bound by the judgment in default could apply to be added to the action and then apply for the judgment in default to be set aside. In contrast, a judgment properly rendered at trial can only be challenged by the represented member on appeal.
The binding nature of the representative proceedings together with the lack of consent required from class members before a representative plaintiff commences proceedings mean that it will fall upon the individual members to opt out by ensuring they are specifically excluded from the representative action when the writ is served.v Procedural rulesEnforcement
Leave of the court is required to enforce a judgment against an individual who is not a party to the proceedings but who is a member being represented. The application for leave will be made by way of summons before a master and must be served personally on the individual against whom the judgment is to be enforced.
The individual member cannot challenge the validity or binding nature of the judgment. Nor can he or she put forward any defence that could have been (but was not) raised in the proceedings. He or she can only challenge enforceability on the ground that the facts and matters in his or her particular case meant he or she, in fact, fell outside the definition of the class being represented and therefore the judgment should not be binding on him or her.Size of the class
The size of the class should be determined at the outset by the plaintiffs' use of a clear definition of the 'class' being represented. The definition will be put forward when serving the writ through the representative plaintiff, or when making the representative application for appointment of a representative defendant. The court's concern generally is whether the represented class is large enough such that it is appropriate to make use of the representative proceedings mechanism. As discussed in subsection ii, a class consisting of five or fewer members is likely too small. If the class is too small, the definition is not clearly defined or the court otherwise concludes that the representative method is wholly inappropriate in the circumstances, then the court may order that the proceedings be dismissed.Judge or jury
Apart from cases involving defamation, all civil actions in Hong Kong are heard by a single judge.Speed of the litigation
The speed of the litigation for the representative proceedings will vary depending on the usual factors, such as the cause of action, the issues, the facts and the court diary. One of the principal aims of representative proceedings is to save time and resources by having the representative action be binding on all represented members such that, once that judgment is obtained, represented members are estopped from re-litigating common elements in their own proceedings.Liability and quantum
As discussed above, in the past it was not possible to bring a representative action for damages. Those actions were instead confined to seeking equitable relief. The recent trend has been for the courts to relax this rigid approach, with the effect that the losing party to a representative proceeding is estopped from challenging the common elements for establishing liability (or lack thereof) in subsequent proceedings. The winning side need only establish the remaining elements (if any) in subsequent proceedings. The quantum for each class member, except the representative party, will also be determined in the subsequent separate proceedings. While that may save time in the overall process, the substantive hearing itself is likely to take as long as other litigation and, perhaps, even longer in the event there are disputes about the definition of the class or identity of the representative parties.Damages and costs
In civil claims, the damages to be awarded will be determined by the presiding judge (save in defamation cases that are tried by jury, where the jury also determines the level of damages). Ordinary principles for assessment of damages will apply with the aim of compensating the plaintiff for loss suffered or putting him or her back in the same position as he or she would have been had the defendant not committed the wrong. In special cases, for example where the defendant's profits exceed the loss suffered or where there is a strong need for deterrence, the court may disgorge the defendant's profits or impose punitive damages.
Hong Kong still maintains the common law offences of champerty and maintenance. This position has been reaffirmed by the highest court in Hong Kong, the Court of Final Appeal. Therefore, success fee arrangements for recovery of costs, such as conditional or contingency fees, are not permitted except under three limited exceptions, namely where: (1) a person may have a legitimate common interest in the outcome of the litigation to sufficiently justify him supporting the litigation; (2) it is in the interests of promoting access to justice to fund a plaintiff who would otherwise be unable to pursue litigation owing to a lack of funds; and (3) funding is provided to a liquidator to pursue litigation that may improve the return to creditors. Hence, litigants funded by the Ordinary Legal Aid Scheme or the Supplementary Legal Aid Scheme, aimed at ensuring those without the means still have access to justice, are required to make a contribution out of their recovered proceeds back into the scheme fund.
The LRC Report has recommended that a general class actions fund, similar to the Supplementary Legal Aid Scheme fund, be set up to provide financial support to means-tested eligible class action plaintiffs, who must in turn contribute part of their recovered proceeds back into the fund.Settlement
The representative plaintiff is the individual who has a real interest in the outcome of a case and, prior to the rendering of the court's judgment, may choose to settle and discontinue his or her action. In such an event, the rights of the represented members are not extinguished and they may commence proceedings in their own name. The court can also add or substitute an unnamed member of the class as the plaintiff of the action, who will be treated as being brought in at the date of the original writ.