In early 2026, the New Zealand High Court made a procedural decision that fundamentally shifted the commercial reality of class action litigation in this country.
The case, Gielen v Johnson & Johnson (New Zealand) Ltd, involves a claim that certain Codral, Sudafed, and Benadryl products containing the ingredient phenylephrine (PE) were ineffective as oral nasal decongestants. The plaintiffs allege breaches of the Consumer Guarantees Act and the Fair Trading Act. Because these over-the-counter products were sold widely between 2005 and 2025, the potential class size is massive, estimated to include hundreds of thousands of New Zealanders.
For the team at Tempest, and the broader litigation funding sector, the most critical aspect of this case is not the pharmaceutical science, but the Court’s structural approach to the litigation.
The Economics of “Low-Value” Harm
Historically, the New Zealand legal system struggled to address widespread, low-value consumer harm. If a consumer loses $30 on an ineffective product, they are not going to mount a High Court challenge. The Court in Gielen explicitly acknowledged this, noting that requiring individuals to sue on their own would make the enforcement of their rights practically impossible.
To solve this, the High Court allowed the case to proceed as an “opt-out” representative action. This means every New Zealander who bought these products is automatically included in the claim unless they actively choose to remove themselves.
Crucially, the Court also approved a Common Fund Order (CFO) at the very outset of the proceedings.
Why the Common Fund Order Matters
For litigation funders, a Common Fund Order is the engine that makes large-scale consumer actions commercially viable.
In a traditional “opt-in” model, funders have to spend massive amounts of time and money just building the book, marketing to individuals and convincing them to sign funding agreements. A CFO bypasses this attrition. It dictates that if the litigation is successful, the funder’s commission and costs are deducted from the aggregate settlement pool before it is distributed to the class.
By granting this order early, the High Court has provided the commercial certainty required for funders to back complex, long-running litigation. As noted by legal commentators, the Court adopted a structure specifically designed to make these types of claims economically viable.
A Maturing Ecosystem
The Gielen decision fits into a wider, rapidly maturing ecosystem in New Zealand. Following the landmark Southern Response case (which confirmed the availability of opt-out orders) and the recent Simons v ANZ Bank decision (which confirmed the jurisdiction for CFOs), New Zealand courts are increasingly willing to manage complex aggregate litigation rather than shut it down.
For commercial defendants, particularly in the consumer goods, life sciences, and financial sectors, this signals a heightened level of litigation risk. The barrier to entry for consumers holding corporations to account has been drastically lowered.
At Tempest, we are closely watching this maturation. We are positioned to deploy capital to support meritorious claims, ensuring that access to justice is not restricted by the size of the defendant or the complexity of the legal structure. When the courts are prepared to manage the complexity of scale, we are prepared to fund it.
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