LCQ3: Introduction of a mechanism for class actions
Following is a question by the Hon Holden Chow and a reply by the Acting Secretary for Commerce and Economic Development, Dr Bernard Chan, in the Legislative Council today (December 13):
The Law Reform Commission of Hong Kong (LRC) published a report in May 2012 proposing the introduction of a mechanism for class actions in Hong Kong. A cross-sector working group established by the Department of Justice commenced in February 2013 a study on the proposals of the report, but it has not published the results of the study so far. Furthermore, the report proposed phasing the implementation of a class action mechanism by starting with consumer cases, with funding made available through the Consumer Legal Action Fund (the Fund) managed by the Consumer Council for class action proceedings arising from consumer claims and, upon experience accrued, making assessments on whether and when the class action mechanism should be extended to other types of cases. In this connection, will the Government inform this Council:
(1) whether it knows the number of proceedings subsidised by the Fund in the past three years and, among them, the number of class action proceedings;
(2) as there are comments that the vetting and approval procedure of the Fund is complicated, whether the Government knows if the Consumer Council has reviewed the existing vetting and approval procedure and made improvements; if the Consumer Council has, of the improvement measures; if not, the reasons for that; and
(3) given that the Government has not yet announced a timetable for the implementation of a class action mechanism, whether the authorities have assessed how this affects the rights of the general public to obtain judicial relief; if so, of the details?
My consolidated reply to the first two parts of the question is as follows:
The Consumer Legal Action Fund (the Fund) is a trust fund set up to provide greater consumer access to legal remedies by providing financial support and legal assistance. The Consumer Council (the Trustee) is the trustee of the Fund. The Board of Administrators of the Fund (the Board) is responsible for the overall administration of the Fund, and it approves or rejects an application based on the recommendation of the Management Committee of the Fund (the Management Committee).
In considering applications to the Fund, factors for consideration include whether significant public interest and injustice are involved, the number of consumers affected, the chance of success in litigation, and whether there would be deterrent effect on unscrupulous business practices. Legal assistance may be in the form of advice, assistance and representation by a solicitor and counsel.
Consumers may apply directly to the Fund or through referral by the Consumer Council. An applicant may first lodge a complaint at one of the Complaints and Advice Centres of the Consumer Council in person, in writing or by telephone. The Consumer Council would ascertain the facts of the case, contact the party being complained against and try to resolve the dispute through conciliation. If the case could not be resolved, and the complaint is substantiated and meets the criteria of the Fund, the staff of the Consumer Council will assist the applicant to fill in the application, answer any enquiries, and refer the case to the Management Committee for consideration.
Since the Fund was established in 1994 and up to March 2017, the Fund processed 1 329 applications, of which 175 cases were resolved during the application process, while assistance was granted by the Fund to 700 cases, and 210 of these cases resulted in compensation being granted. During the past three years (April 2014 to March 2017), the Fund received 46 applications and granted assistance to 13 cases. The average number of assisted cases being handled by the Fund in the past three years (including cases continued to be assisted and newly assisted cases) is 12 per year. Since there is no class action regime in Hong Kong at present, the cases assisted by the Fund are not class action cases. Nevertheless, from time to time the Fund receives cases with similar causes of action or claims. In the past three years there have been eight applications with similar causes of action and the Fund arranged for the cases to be heard at the same time.
The Fund is mainly funded by public money. Given the fact that resources are limited and based on the principle of prudent use of public money, the Fund must vet each application rigorously through robust procedures. To avoid overcomplicating vetting procedures, the Consumer Council and the Board have reviewed the procedures numerous times to ensure that each application would be considered thoroughly and comprehensively, so that they are processed appropriately in keeping with the objectives of the Fund's establishment. In the past seven years, the Fund implemented many measures to expedite the vetting process. For example, before submitting the applications to the Management Committee for consideration and discussion, the staff of the Trustee would make preliminary screening and categorisation in accordance with established standards, and simplify the processing of cases that obviously lack legal basis or when the applicants' demands are clearly unreasonable. The Management Committee could on this basis shorten the discussion time spent on these cases. This measure could concentrate resources on cases that merit assistance by the Fund. The Consumer Council and the Board will continue to review the operation of the Fund from time to time and make improvements when necessary.
My reply to the third part of the question, having consulted the Department of Justice, is as follows:
Under our current legal system, people may seek judicial remedies through various avenues, with assistance provided by the Government and various organisations (such as the Hong Kong Bar Association and the Law Society of Hong Kong). Taking consumer cases as an example, as mentioned above, the Consumer Council and its Consumer Legal Action Fund may provide financial and legal support to consumers who wish to seek judicial remedies. In addition, eligible persons may apply for legal aid from the Legal Aid Department, whose legal aid schemes cover types of legal disputes that may be encountered by consumers, such as breach of contract and professional negligence. The right to seek judicial remedies is adequately protected under our existing system. The Law Reform Commission's proposed class actions scheme only seeks to provide an additional avenue for potential claimants to bring their claims to the court, and class action scheme will not affect claimants' substantive legal rights. Besides, not every case involving consumers' right is suitable to be dealt with by class actions. Further, the Department of Justice together with other Government bureaux/departments and different organisations also encourage the use of channel other than litigation, such as mediation, to resolve disputes.
Ends/Wednesday, December 13, 2017