Brooker v IAG New Zealand Ltd
[2019] NZHC 1225
•31 May 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-000349
[2019] NZHC 1225
BETWEEN TONI JOANNE BROOKER
Plaintiff
AND
IAG NEW ZEALAND LIMITED
First Defendant
AND
HAH LIMITED (in liq) (previously Holloway Builders Limited) Second Defendant
AND
CRESCO ENGINEERS NEW ZEALAND LIMITED
First Third Party
AND
CORNWALL CIVIL ENGINEERING LIMITED
Second Third Party
Hearing: 15 May 2019 Appearances:
P M Smith for First Defendant (Applicant) D J Ballantyne for Plaintiff (Respondent)
D H McLellan QC and S D Galloway for QBE Insurance (Australia) Ltd (in opposition)
Appearances of third parties (abiding) excused
Judgment:
31 May 2019
JUDGMENT OF OSBORNE J
(on joinder application)
Introduction
[1] The plaintiff, Toni Brooker, insured her home in Wainoni, Christchurch, with the first defendant, IAG New Zealand Ltd (IAG). The home suffered significant
BROOKER v IAG NEW ZEALAND LIMITED [2019] NZHC 1225 [31 May 2019]
damage in the Canterbury Earthquake Sequence. IAG accepted Ms Brooker’s claim under her policy, which required repair or rebuilding (as the case may be to an “as new” standard).
[2] Pursuant to arrangements with IAG, Ms Brooker in 2014 entered into a contract with the second defendant, Holloway Builders Ltd (now in liquidation) (Holloway) for the repair works.
[3] Holloway provided a Notice of Practical Completion in February 2016 but Ms Brooker had a number of issues concerning the work carried out by Holloway. In relation to some of those issues (painting issues) IAG paid Ms Brooker $119,041.81 in December 2016.
[4] In 2017, Ms Brooker obtained a building report containing findings as to issues with the house in the interior (11 issues), exterior (five issues) and other (five) issues.
[5] Following an exchange between respective solicitors, IAG denied it had any further liability and stated that if further work was required to rectify any defective work, Ms Brooker’s policy would not respond to those costs.
[6] Ms Brooker also made demand of Holloway in relation to the issues identified in the building report. Holloway denied that there was any poor workmanship or that it had any responsibility for the issues.
[7] By her statement of claim (which remains in its form as filed) Ms Brooker sues IAG for breach of contract, asserting that she is entitled to have IAG pay the sum required to repair the home to its condition as new or alternatively a declaration that IAG must perform its obligations under the policy and repair the home to an acceptable standard in accordance with the policy. Secondly, Ms Brooker sued Holloway for breach of contract, claiming the amount determined to repair the damage attributed to Holloway’s poor workmanship.
[8] Upon service of the proceeding, Holloway joined as third parties Cresco Engineers New Zealand Ltd (Cresco), which had been engaged by Holloway to
provide engineering services in relation to the house and Cornwall Civil Engineering Ltd (Cornwall) which had provided certification that Holloway’s work had been completed in accordance with the relevant requirements of the building consent.
[9]The third parties each filed statements of defence (in September 2018).
[10] In the meantime, IAG signalled to the other parties and to the Court that it (or Ms Brooker) had a claim against Orange H Management Ltd (formerly known as Hawkins Management Ltd (Hawkins)) which had project-managed the repair work. Hawkins had been placed into liquidation in July 2018 but with a policy of insurance with QBE Insurance (International) Pty Ltd. QBE Insurance (Australia) Limited (QBE) now stands in the place of QBE Insurance (International) Pty Ltd. IAG intended to seek leave under s 9 of the Law Reform Act 1936 to join QBE to the proceeding.
[11] After that, IAG obtained QBE’s consent to being joined as a third party. Such joinder has not occurred because IAG preferred instead to commence an application for leave to join and an order of joinder of QBE as third defendant. It has not in the alternative sought leave to commence a third party claim against QBE. QBE is accordingly not at this point a third party.
[12] On 28 March 2019, Holloway was put into liquidation. The liquidator has informed the Court that Holloway will not be continuing active involvement in the proceeding (although discontinuances of the third party claims have yet to be filed). Pursuant to s 248(1)(c)(i) Companies Act 1993, the plaintiff’s claim against Holloway is stayed. Accordingly, at this point the only active, substantive part of this proceeding is Ms Brooker’s claim against IAG.
IAG’s joinder application
[13] Rather than pursue leave to join QBE as a third party, IAG brings this application for leave under s 9(4) Law Reform Act 1936 for the plaintiff to commence action against QBE and for an order joining QBE as a defendant.
[14]IAG, in its application, states as its grounds:
(a)QBE ought to be joined as a defendant, and their presence before the Court as a defendant is necessary to adjudicate on and settle all questions involved in this proceeding; because:
(i)QBE provided insurance cover during the relevant periods for the companies Orange H Management Limited and Orange H Group Limited, together “Hawkins Entities” which provided or guaranteed project management services in relation to earthquake damage repairs to the plaintiffs property at 21 Wainoni Road, Wainoni, Christchurch (Property), which is the subject matter of this proceeding.
(ii)Both Hawkins Entities are now in liquidation, and neither is a perfectly good common law defendant.
(b)The plaintiff has a clear right of direct action against QBE, as:
(i)The plaintiff has a prima facie case against each of the Hawkins Entities.
(ii)Each of the Hawkins Entities has a prima facie claim under one or more of policies of insurance with QBE in connection with the subject matter of these proceedings.
(iii)The Hawkins Entities are in liquidation and neither is a perfectly good common law defendant.
(c)If IAG is liable to the plaintiff (which is denied), it would acquire rights of subrogation against the proposed defendants and would be entitled to exercise such rights in the name of the plaintiff against QBE.
(d)The proposed orders for Joinder will not unreasonably delay the proceeding.
(e)It is in the interests of justice for leave to be granted.
[15]The application for joinder was opposed by both QBE and Ms Brooker.
[16]QBE stated as its grounds of opposition:
(a)The presence of the proposed third defendant before the Court as a defendant is not necessary to adjudicate on or settle any of the questions in the proceeding.
(b)The first defendant has already sought the consent of the proposed third defendant to be joined as a third party to these proceedings and the proposed third defendant has consented to joinder on that basis.
(c)The proposed third defendant was appointed by the first defendant pursuant to a written contract to provide certain project management services in respect of repair solutions for the first defendant’s customers.
(d)The work carried out by the proposed third defendant does not form the basis of the claim by the plaintiff against the first defendant.
(e)The basis of the plaintiff’s claim against the first defendant is that the first defendant has failed:
(i)or refused to discharge its obligations to the plaintiff under the policy;
(ii)to process the claim within a reasonable period of time;
(iii)to act reasonably in handling the claim under the policy; and
(iv)to pay the valid claim within a reasonable time.
(f)The plaintiff is seeking:
(i)judgment for the sum required to repair the home to a condition as new (being the repair cost less EQC’s payment); or in the alternative
(ii)a declaration that the first defendant must perform its obligations under the policy and repair the home to an acceptable standard in accordance with the policy.
(g)These are issues between the plaintiff and the first defendant, not the proposed third defendant, which did not owe any obligations to the plaintiff pursuant to the policy.
(h)The plaintiff is opposed to the defendant joinder applications.
[17]Ms Brooker’s notice of opposition identifies as her grounds:
(a)The proposed third defendant’s (QBE) presence before the Court as a third defendant is not necessary to adjudicate on and settle all questions involved in the proceeding.
(b)The first defendant has previously sought the consent of all of the parties to the proceeding to join QBE as a third party. All parties, including QBE, have consented and this is the appropriate course. QBE intends to oppose the first defendant’s application to join it as third defendant.
(c)The plaintiff has insufficient information about the relationship between the first defendant and QBE to competently prepare and plead a case against QBE.
(d)The issues raised by the first defendant are issues between the first defendant and QBE.
(e)The plaintiff should not be required to prove a case against a party she does not wish to pursue and from evidence (to be) provided by other defendants.
(f)Joining QBE would put the plaintiff to undue cost and inconvenience, and would cause unjustified delay to the proceeding.
(g)The balance of convenience favours the first defendant bringing a third party claim against QBE itself, rather than the plaintiff.
Joinder of a defendant: the general principles
[18] Rule 4.56 High Court Rules provides for the joinder of (amongst others) defendants in the following terms:
4.56 Striking out and adding parties
(1)A Judge may, at any stage of a proceeding, order that—
(a)the name of a party be struck out as a plaintiff or defendant because the party was improperly or mistakenly joined; or
(b)the name of a person be added as a plaintiff or defendant because—
the person ought to have been joined; or
(ii)the person's presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.
(2)An order does not require an application and may be made on terms the court considers just.
(3)Despite subclause (1)(b), no person may be added as a plaintiff without that person's consent.
[19] Rule 4.56 is to be read in conjunction with r 4.3(1) which provides that a defendant is a person:1
… against whom it is alleged there is a right to relief in respect of, or arising out of, the same transaction, matter, event, instrument, document, series of documents, enactment, or bylaw.
[20] The operation of the rule must also be informed by r 1.2 which states that the objective of the High Court Rules is secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.
[21] In short, there are two grounds upon which a party may be joined as a defendant, namely that:
(a)they ought to have been joined as a defendant; and
(b)their presence may be necessary to enable the Court to adjudicate on and settle all questions in the proceeding.
1 See Fonterra Co-operative Group Ltd v Waikato Coldstorage Ltd HC Hamilton CIV-2010-419- 855, 22 December 2010 at [16].
[22] Whether one or both of these limbs is satisfied is what determines whether the Court has jurisdiction to order joinder. Those requirements are technically distinct from the Court’s discretion to then allow joinder (assuming jurisdiction to exist), although in practice questions informing both jurisdiction and the Court’s discretion tend to overlap.2
Liberal interpretation of r 4.56
[23] It has been long recognised, as reflected in the Court of Appeal’s judgment in Newhaven Waldorf Management Ltd v Allen, that the approach taken in New Zealand to joinder is liberal.3 Put another way, there is a “fairly low threshold”.4 As explained by the Court of Appeal in Newhaven, the liberality of approach is particularly applicable to what is now the second limb of r 4.56(1)(b).5
Relationship between the two limbs of r 4.56(1)(b)
[24]The authors of McGechan on Procedure record:6
The tendency has been to regard persons as parties who “ought to have been joined” if the presence of such parties before the Court is necessary to enable the Court to adjudicate upon the precise issues raised in the proceeding.
[25]In Newhaven, the Court of Appeal, in adopting (by footnote) that McGechan
commentary observed:7
We note that the first limb of r 4.56(1)(b) – “person ought to have been joined”
– addresses persons whose presence is necessary for the Court to adjudicate the exact issues arising on the pleadings. The second limb, with which we are concerned here, has other and more extensive work to do.
(footnote omitted).
2 See A C Beck and others McGechan on Procedure (online ed, Thomson Reuters) at [HR4.56.08] as quoted below at [26]. See also Bridgeway Projects Ltd v Webb HC Auckland CIV-2003-404- 1965, 7 July 2003 at [9].
3 Newhaven Waldorf Management Ltd v Allen [2015] NZCA 204, [2015] NZAR 1173 at [44].
4 Beattie v Premier Events Group Ltd [2012] NZCA 257 at [24].
5 At [45].
6 McGechan on Procedure, above n 2, at [HR4.56.07].
7 Newhaven, above n 3, at [42].
Operation of the second limb of r 4.56(1)(b)
[26]The authors of McGechan observe as to the threshold under r 4.56(1)(b):
HR4.56.08 “The person’s presence before the court may be necessary”
The scope of the phrase “the person’s presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding” raises some difficulties. First, there is a jurisdictional question, whether the application concerned is made by plaintiff, defendant, or otherwise. It is an objective question, which does not depend upon the identity of the applicant. If jurisdiction exists, there is secondly a discretionary question as to whether joinder should be ordered. However, the jurisdictional question has tended to become intertwined with the discretionary questions, particularly the different approaches as to exercise of discretion depending upon whether application is made by plaintiff, defendant, or otherwise.
[27] As observed by Rodney Hansen J in Fonterra Co-operative Group Ltd v Waikato Coldstorage Ltd, that paragraph is a helpful summary.8 It enables parties to be joined who would not come within the first limb, whether they would be directly or indirectly affected by an order in the proceeding.
[28] Master Williams QC, in Knight v Attorney-General, after reviewing a number of authorities set out a helpful statement of how the joinder rule (at that time, r 97(1)(b)) works.9 I adopt his Honour’s explanation of what is now r 4.56(1)(b)(ii):10
That criterion is broader than the wishes or the interests of any existing party. It permits joinder if such may be necessary to enable complete and effectual adjudication upon not just the issues raised in the pleadings at the date of joinder but all questions involved in the case. That broad phrasing must be assumed to be intentional.
Factors relevant to the exercise of the Court’s discretion
[29] There cannot be a list of prescribed considerations. A review of the decided cases indicates how fact-specific they generally are.
8 Fonterra Co-operative Group Ltd v Waikato Coldstorage Ltd, above n 1, at [17].
9 Knight v Attorney-General HC Wellington CP566/92, 29 October 1992.
10 At 9.
Balancing
[30] As Mr Smith, for IAG, put it, ultimately the Court in the exercise of its discretion will usually perform a balancing act. That will be particularly so where issues of prejudice are put forward both in support and in opposition to the application. In this instance, Mr Smith invites the Court to find that any prejudice to the plaintiff (which he asserts would be minimal) is outweighed by the benefit or convenience of joinder.
The plaintiff’s wishes
[31] Historically, before the period of more active case management on the part of the Court itself, the plaintiff’s wishes were given some primacy on any joinder application – reflected in the plaintiff’s identification as “dominus litus” and the person therefore entitled to decide whom he or she would sue.11 By the 1980s, that approach had changed, as reflected in the judgment of Barker J in Mainzeal Corporation Ltd v Contractors Bonding Ltd.12 There his Honour observed:13
I think that the plaintiff's wishes and its possible liability for additional costs are factors in the exercise of the Court’s discretion.
[32] To those two considerations, his Honour might equally have added “its possible exposure to a delayed proceeding or much longer trial”.
[33] Subsequently, in Paccar Inc v Four Ways Trucking Inc, Barker J referred to his earlier decision in Mainzeal, in deciding not to grant a defendant’s application for joinder of additional defendants. His Honour explained:14
…I am not convinced this is a case for displacing the prima facie presumption (I would call it no more than a presumption and not elevate it to the status of a rule) that plaintiffs can sue whom the plaintiffs wish.
[34] Accordingly, the plaintiff’s wishes are an important consideration in the exercise of the Court’s discretion. That said, when jurisdiction is established those
11 See, for example, Knight v Attorney-General, above n 9, at 8.
12 Mainzeal Corporation Ltd v Contractors Bonding Ltd (1989) 2 PRNZ 47, 50-1.
13 At 50.
14 Paccar Inc v Four Ways Trucking Inc [1995] 2 NZLR 492 (HC) at 496 – 497.
wishes may be overridden by the Court where the interests of justice direct that outcome.15
[35] Many joinder decisions flow from plaintiff’s applications and many of those, understandably, contain observations as to the Court’s liberal approach to joinder. Where a defendant’s application is opposed by the plaintiff, the Court’s generally liberal approach has to be tempered by consideration of the plaintiff’s wishes (and the reasons underlying those).
Delay and prejudice to other parties
[36] In the exercise of its discretion, the Court will consider issues of delay and prejudice to existing parties.16 By its nature, prejudice may include exposure to additional litigation costs in the course of the proceeding or exposure to adverse costs awards.
[37] The comparative organisational and financial positions of the applicant and respondent (for joinder) may be relevant to the Court’s consideration of prejudice. So, too, may the value of the plaintiff’s claim.
Delay and prejudice to the applicant
[38] The applicant’s side of the outcome also has to be weighed – if the r 4.56(1)(b)(ii) threshold is satisfied, there may well be issues of delay and additional cost for the applicant if it is unable to have the identified questions involving the proposed defendant heard in the existing proceeding.
Expansion of issues
[39] The threshold test under r 4.56(1)(b)(ii) is expressly focussed on the “questions involved in the proceeding”. The Court in the exercise of its discretion will consider the extent to which the issues which would arise in a newly formulated claim against
15 Robin v IAG New Zealand Ltd [2018] NZHC 204 at [13] (partly reversed on review but not affecting this point – Robin v IAG New Zealand Ltd [2018] NZHC 1464).
16 Body Corporate 78462 v IAG New Zealand Ltd [2016] NZHC 320 at [25].
the proposed defendant are directly or indirectly related to the questions raised by the plaintiff’s already identified claim.
[40] As a Judge involved with the Christchurch Earthquake List, it is clear to me that a relevant consideration in relation to a proceeding based on a homeowner’s claim on their insurance policy may arise in relation to the value of that claim. The costs and complexity of an earthquake claim based on contractual rights alone can be high. That is without the added complication of pursuing a claim based in tort or in breach of statutory duty.
Involvement as third party
[41] The courts, in the exercise of the discretion, have taken into account, the fact that the proposed defendant is already a third party in the proceeding.17 That may be relevant for a number of reasons including because of an overlap between the claims made on the third party claim and the claims that would be made on the amended statement of claim. On the other hand, the availability of the third party remedy has frequently been a factor in the refusal of a defendant’s application for joinder of a further defendant, leaving the existing defendant to pursue its claimed entitlements by a third party claim.18
The evidence
Approach to factual issues
[42] In relation to an application by plaintiffs to join additional defendants, this Court in Bridgeway Projects Ltd v Webb accepted as correct that:19
… an applicant for joinder must show a tenable cause of action in the sense that the cause of action would be sufficient to survive a strike out application on the well known principles established in Electricity Corporation Ltd v Geotherm Energy Ltd…20
…[o]rdinarily, the court accepts the plaintiffs’ factual assertions relevant to the proposed cause of action against the party to be joined.
17 See for example Mainland Products Ltd v BIL (NZ Holdings) Ltd HC Wellington CP192/01, 9 April 2002.
18 Mainland Products, above n 17, at [33].
19 Bridgeway Projects Ltd v Webb, above n 2, at [10]–[11].
20 Electricity Corporation Ltd v Geotherm Energy Ltd [1992] 2 NZLR 641 (CA) at 645.
…
It is usual for the plaintiff to file an affidavit in support of an application for joinder but the court will not ordinarily attempt to embark upon an assessment of disputed facts.
(footnote added)
[43]I respectfully adopt that as the correct approach.
IAG’s evidence
[44] IAG filed an affidavit of Séamus Donegan in support of the joinder application. Mr Donegan is Special Counsel for IAG, with primary responsibility for the conduct of IAG’s defence.
[45] Mr Donegan exhibits a contract entitled “Rebuild Solution Master Agreement” (RSMA) which IAG entered into with Hawkins in August 2012. Under the RSMA, Hawkins carried out contractual and project management functions in relation to earthquake repairs and rebuilds for IAG customers, including Ms Brooker.
[46] Mr Donegan deposes that Hawkins at all material times had liability policies of insurance with QBE. He deposes that he is unaware of any reason why the policies would not respond to any claim that Hawkins might have against QBE under their insurance cover had they not subsequently been put into liquidation.
[47] IAG filed a second affidavit in support, from Martin Roche. Mr Roche is a registered master builder and qualifies himself as an expert in construction industry matters.
[48] On the basis of a review of various construction documents, he identifies what tasks were carried out by Hawkins in relation to the property.
[49]He deposes under a heading “my views on the repair work” that:
… it is my opinion that Hawkins Management was responsible for preparing the scope of works. In addition they were responsible for performing the role of project manager for the repair works. That included ensuring that the contractor and subcontractors carrying out the work did so in accordance with
the building consent drawings and in line with reasonable standards of trade practice.
[50] Mr Roche then refers to eight sets of construction issues which he has noted either from Ms Brooker’s statement of claim or from reports prepared by a licensed building practitioner for Ms Brooker in 2017.
[51] Mr Roche then continues that in his opinion Hawkins was responsible for inspecting the work and certifying it for payment only if Hawkins was satisfied that the work had been completed in accordance with standard trade practice. He concludes that it is likely that a number or all of the “alleged defects” should have been identified by or seen and rectified at the behest of any project manager if they had been performing their role properly.
Evidence for QBE
[52] QBE filed a brief affidavit in opposition, evidencing QBE’s agreement to be joined as a third party before this application was filed.
Evidence of Ms Brooker
[53]Ms Brooker filed a brief affidavit in opposition.
[54] She sets out the requirements upon IAG to pay either the repair cost for the damaged part of her home or the rebuilding cost to an “as new” standard.
[55] She deposes that it is her position that IAG has not met its obligations for the proper repair or replacement of her home in accordance with that policy.
[56] She explains that her opposition to QBE’s presence in the proceeding as a third defendant is based on the fact that her claim against IAG is fundamentally one of failure to fulfil its contract of insurance. She does not wish to pursue a claim against QBE and considers that IAG’s concerns can adequately be met by QBE’s presence as a third party.
[57] She deposes that she does not have sufficient information about the relationship between QBE and IAG in order to prepare and plead a case against QBE. She records that if required to join QBE as a third defendant, it would cause her to incur significantly more costs in the proceeding, further stress, inconvenience and undue delay.
[58] She records that IAG’s previous request of her was to consent to QBE’s joinder as a third party, to which she consented.
[59] She records that IAG’s delay in joining QBE has taken an extended amount of time, during which time she has been living in an unrepaired and inadequate home. She is concerned as to the further delay.
[60] Finally, she records her concern that a claim against QBE would cause her to incur further costs, including the potential for a costs award against her should she be unsuccessful.
Reply evidence
[61]Mr Donegan filed a reply affidavit.
[62] Mr Donegan corrects Ms Brooker’s statement that she had previously consented to QBE’s joinder as a third party. Mr Donegan exhibits November 2018 correspondence from Ms Brooker’s solicitors recording that they anticipated obtaining instructions to consent to QBE’s joinder (as third party) shortly, but deposes that such consent was not received before the joinder application was filed.
[63] Mr Donegan then refers to the nature of the claim which IAG might have through subrogation against QBE, by reference to pleadings filed in other High Court proceedings. He deposes:
In those cases, QBE has pleaded (as an affirmative defence) that an exclusion in QBE’s insurance policy precludes QBE’s liability to IAG for assumed or contractual liability, including liability to IAG under the IAG-Hawkins Rebuild Solution Master Agreement dated 13 August 2012 (which is annexed as exhibit A to my previous affidavit).
IAG denies that this affirmative defence applies but the Courts have not yet had to decide the issue. However, IAG says that the plaintiff also has a claim against Hawkins (and therefore its insurer QBE) either in tort and/or under the Consumer Guarantees Act 1993…
If IAG is found liable to the plaintiff, it would then obtain subrogation rights to enable it to pursue these claims against the Hawkins entities/QBE. However, those are different claims from the contractual claims which IAG can bring against QBE as a third party. It is for this reason that IAG believes it is appropriate to join QBE as a defendant (rather than just a third party).
Submissions for IAG
The prospective claim against QBE
[64] Mr Smith observed that by reason of its liquidation and receivership, Hawkins is no longer a perfectly good common law defendant. He noted that, by reason of the consent of the other parties to QBE’s joinder as a third party, the appropriateness of there being leave to join QBE does not seem to be an issue. The purpose of s 9 Law Reform Act 1936 is to enable a party to pursue a charge on insurance monies by way of an action in such circumstances in the same way and in the same Court as if the action were an action to recover damages or compensation from the insured (that is, Hawkins).
[65] Here it is IAG’s assertion, based on Mr Roche’s evidence, that Hawkins owed common law duties of care to the plaintiff in carrying out its project management and inspection roles with due care and skill. Mr Smith referred to Body Corporate 185960 v North Shore City Council as a case in which this Court recognised that a project manager may be in no different legal position from any contractor or subcontractor who performs a role in the construction process which is capable of affecting the quality of the result.21
[66] Mr Smith submits that there is a reasonable basis for the assertion that Hawkins may be found liable for damages in relation to its certification of payments either upon the basis of negligence or through a breach of ss 28 or 29 Consumer Guarantees Act 1993.
21 Body Corporate 185960 v North Shore City Council (2008) 2 NZTR 18-032 (HC) at [102].
Applicable principles
[67] Mr Smith referred to the case law in relation to r 4.56 High Court Rules, which I have taken into account in stating the applicable principles as above.
[68]Mr Smith, in his submissions, put emphasis upon this Court’s decision in
Mainzeal.22
[69] Mr Smith submitted that Mainzeal represents the usually liberal approach adopted to joinder in New Zealand where a reasonable basis for joinder has been shown.
[70] Mainzeal involved a claim arising from a construction contract at Wiri. The defendant had provided a bond guaranteeing the performance of work undertaken by the construction company, which had subsequently gone into liquidation. The plaintiff sued the defendant as the bond issuer.
[71] The defendant sought to have the construction company added as a further defendant. The plaintiff opposed joinder, asserting a right to sue the parties of its choice.
[72] Mr Smith noted the Court’s conclusion that the plaintiff’s wishes were a factor but were not determinative. He noted the Court’s reasoning as including:23
(a)in terms of the rule, the presence of the construction company was necessary to ensure that all matters in dispute amongst the parties might be effectively and completely determined;
(b)there was an unassailable case for joinder as a third party so that, from the point of view of length of the hearing, the construction company’s capacity was immaterial; and
22 Mainzeal, above n 12.
23 At 51.
(c)the existing defendant’s defence depended on the presence of the construction company.
[73] In Mr Smith’s submission, part of the Court’s consideration in Mainzeal must have been that it cannot be preferred to have one party (in that case, the bondholder) answer for the work of another (the construction company) in the abstract and without their presence before the Court.
[74] Mr Smith, by reference to particular cases, invited the Court to view as relevant a number of further factors:
(a)In the absence of special considerations, all necessary parties should be joined who can be joined without actual injustice so as to have the litigation concluded as speedily as possible.24
(b)IAG is entitled (subject only to leave under the Law Reform Act 1936) to join QBE as a third party.
(c)It is important to avoid the duplicity of proceedings and the possibility of different results.
Application in this case
[75] Mr Smith submits that the Court must in this case, on a balancing exercise, find that the benefit of joinder is considerable while the prejudice (of joinder) to the plaintiff would be minimal.
[76] Mr Smith submits that there are five matters to consider in relation to convenience:
(a)Against a background in which the plaintiff alleges that repair work has been incomplete or defective, IAG as the insurer was an
24 Westfield Freezing Co Ltd v Sayer & Co (New Zealand) Ltd [1972] NZLR 137 (CA) at 146 per Turner J.
“intermediary”, did not carry out the construction work or project management, and has no direct knowledge of those things.
(b)Unless QBE’s liability to Ms Brooker (as opposed to any liability owed to IAG) is determined in this proceeding, IAG will not be able to pursue its subrogated rights upon the outcome of this proceeding, instead having to commence a fresh action against QBE if Ms Brooker has succeeded against IAG.
(c)The fact that IAG’s subrogation rights do not arise until or unless IAG is obliged to make payment under the policy should not be an impediment to joinder. Mr Smith invited the Court to follow this approach as adopted in the review judgment in Robin v IAG New Zealand Ltd.25 There, Gendall J viewed the contingency of the subrogation claim as no different from a guarantee or indemnity claim.
(d)All factual issues should be determined in one action.
(e)The Court’s wide discretion in relation to costs means that, if Ms Brooker is unsuccessful against QBE after a joinder at IAG’s behest, Ms Brooker will not necessarily be ordered to pay QBE’s costs.
[77] Mr Smith next submitted that there was an “absence of prejudice” for Ms Brooker through joinder for six reasons:
(a)For all intents and purposes, the merits of Ms Brooker’s claims against QBE are based on the same facts as her claims against IAG and Holloway (Holloway having already been joined). Any additional evidence such as the project management documentation will be available through discovery.
25 Robin v IAG New Zealand Ltd [2018] NZHC 1464, at [24].
(b)If IAG is liable to Ms Brooker under the policy, then she will likely succeed in a direct claim against QBE. Consequences of that would be that:
(i)Ms Brooker ends up better off, with judgments against both IAG and QBE;
(ii)Ms Brooker will have a claim for costs against QBE;
(iii)IAG will be entitled to the subrogated benefit of Ms Brooker’s judgment against QBE, avoiding a second proceeding;
(iv)the subrogation process will be straightforward in practice – IAG, upon paying to Ms Brooker the amount of the policy indemnity ordered by the Court, can then enforce Ms Brooker’s judgment against other defendants to that extent;
(v)Ms Brooker loses nothing because by the time IAG exercises its subrogation right, it will already have paid Ms Brooker; and
(vi)by contrast, if QBE is joined only as a third party, it is likely to raise a contractual defence as between IAG and itself, which defence QBE would not be able to assert against Ms Brooker in response to the proposed claims in negligence and under the Consumer Guarantees Act. In this regard, Mr Smith refers to the affirmative defences raised in previous proceedings by QBE and based upon limitation provisions in the RSMA.
[78] Mr Smith submitted that the claim against QBE would traverse many of the same facts as Ms Brooker’s existing claims against the defendants and that, therefore, the joinder of QBE as a defendant will not unreasonably delay this proceeding.
[79] In his written synopsis, Mr Smith recorded that the liquidator of Holloway has confirmed that he wishes to discontinue Holloway’s third party claims. Mr Smith recorded that IAG is considering making its own claims against those first and second
third parties, a possibility which will take time to resolve. Mr Smith suggested that progress could be made on those third party joinder issues while QBE is joined and files its pleadings.
[80] Mr Smith concluded his submissions by recording that otherwise IAG would seek to have QBE joined as a third party.
Submissions for QBE
Application of principles
[81] Mr McLellan QC for QBE, accepted that the requirements of r 4.56 and the applicable principles are well-settled. He submitted that that limb of r 4.56(1)(b)(i) “ought to have been joined” is not applicable as the basis of Ms Brooker’s claim against IAG is that the work carried out and paid for by IAG does not meet the policy standard. The claim against IAG is not required to and does not assert defective repairs. It is instead a claim for breach of an insurance contract.
[82] Mr McLellan submits that the second limb (person’s presence is necessary) is also not applicable because QBE’s presence isn’t necessary to adjudicate on and settle questions in relation to breach of the insurance contract. Mr McLellan submits that the purpose for which QBE’s presence is required is as a third party in order to resolve all issues as between IAG and QBE pursuant to their contractual arrangements. Hawkins’ provision of services to IAG does not form the basis of any aspect of the claim which Ms Brooker makes against IAG. Mr McLellan submits that the lack of relationship between Ms Brooker’s claim and IAG’s proposed claim is reflected in the fact that the former arises under an insurance contract whereas the latter focus on breaches of alleged duties of care whether in tort or under the Consumer Guarantees Act.
[83] Mr McLellan drew support for the careful and distinguishing consideration of the difference between the existing and proposed claims from Master Venning’s judgment in Mainland Products.26 In that case, the plaintiff had purchased the
26 Mainland Products, above n 18.
defendants’ shares in a company with significant assets. The plaintiff sued the two defendants upon the basis that asset values had been misrepresented through financial statements and other representations. The plaintiff sued for contractual misrepresentation under the Contractual Remedies Act and breach of the Fair Trading Act 1986.
[84] The defendants in Mainzeal applied for orders joining DTZ Darroch (Darroch) as a third defendant in the proceeding or, alternatively, as a third party. Darroch had some time before the subject sale provided a market valuation report to the vendors, which they had in turn provided to the plaintiff before the sale contract was entered into.
[85] Master Venning found that the first limb of the predecessor to r 4.56 was not established as the plaintiff was claiming in its capacity as purchaser against the defendants as vendors, so that justice could be done between the existing parties on the pleadings as they stood without the joinder of Darroch.
[86] Turning to the second limb, his Honour found that the proceeding was not one in which the plaintiff would be deprived of their right to judgment by lack of an appropriate defendant. The plaintiff’s claim as purchaser was against the defendants as vendors. Nor was it strictly necessary for Darroch to be a party to enable a complete and effectual adjudication of all questions in the case.27
[87] The Master observed that the only possible issue of concern might be a duplication of hearings if the defendants were subsequently to pursue Darroch in a subsequent proceeding, which his Honour found was answered by the third party claim.28 His Honour concluded that joinder of Darroch as a defendant was not necessary to enable the Court to effectually and completely adjudicate and settle all questions involved in the proceeding.
27 At [19].
28 At [20].
[88] His Honour then turned to the discretion. In this case, Mr McLellan for QBE puts particular emphasis on the Master’s focus on the nature of the claim involved. Master Venning observed:29
While the accuracy of the valuation will need to be examined in the context of the claim, the Plaintiff’s claim against the Defendants is properly brought as against the Defendants rather than Darroch. The nature of the Plaintiff’s claim is as purchaser against a vendor based on misrepresentation and misleading conduct under the Fair Trading Act. Those issues can be determined without the need for the Plaintiff to consider any further claim against Darroch directly.
[89] Master Venning distinguished two cases relied upon by the applicant defendant:30
The claim is of a different nature to The Home Mortgage…31 case relied upon by the Applicant Defendants. In that case the direct contracting parties were the plaintiff Home Mortgage Company and HCNZ. It was, with respect to Priestley J, entirely appropriate for joinder to be ordered in that case of HCNZ, the other contracting party.
(footnote added)
[90]Equally in the Mainzeal case:32
The defendant’s liability was dependent upon the actions of an engineering company. It was again entirely appropriate for the engineering company to be joined as a party to the proceeding given the defendant’s position as guarantor. In the present case such a relationship does not exist between the Plaintiff and Darroch.
[91] Mr McLellan submitted, adopting the reasoning in Mainland Products, that the appropriate question to be framed on this application is whether Hawkins’ and QBE’s liability to either the plaintiff or IAG in respect of the subject-matter of the proceeding will be directly affected by any order made in the proceeding. Mr McLellan submits that the answer is clearly “no”. If Ms Brooker’s claim fails, there can be no issue concerning Hawkins’/QBE’s position. If the plaintiff’s claim succeeds, it will succeed on the basis that the work carried out and paid for by IAG does not meet the policy standard, not that the repairs were defective.
29 At [24].
30 At [25].
31 The Home Mortgage Co Ltd v Aon Consulting NZ Ltd HC Auckland CP584-SD/00, 13/12/01.
32 Mainzeal, above n 12.
[92] Mr McLellan further submitted, by further reference to Mainland Products, that there was no need to join Darroch in this proceeding. IAG is entitled to pursue its direct contractual rights against Hawkins and QBE through the third party procedure, as the applicant defendant was able to do in Mainland Products. On the basis of these matters, Mr McLellan submits that IAG has failed to establish the threshold requirements under either limb of r 4.56(1)(b).
[93] Mr McLellan then turned to an alternative submission as to why QBE’s joinder is unnecessary, based on the nature of any potential right of IAG to subrogation.
[94] Mr McLellan notes that in the contract, IAG will only recover from QBE/Hawkins such additional costs as were attributable to Hawkins’ breaches. He submits that the position will be parallel in relation to claims both in tort and under the Consumer Guarantees Act, because the plaintiff (and therefore IAG) can recover only the costs involved in remedying any defective work that Hawkins had a responsibility to prevent. Therefore, if Hawkins’ liability to the plaintiff is coterminous with its liability to IAG, then having QBE as a defendant in the proceeding will not advantage IAG in any economic sense. He submits that it cannot be suggested here that Hawkins owed IAG a duty of care which was wider than Hawkins’ contractual functions under the 2012 RSMA.
[95] Mr McLellan then referred to what he submits is the complex series of obstacles which IAG must first navigate.33 Mr McLellan noted:
(a)The doctrine of subrogation has both contractual and equitable elements, with its purpose being to prevent one person being unjustly enriched at the expense of another. To the extent that a right of subrogation arises in equity, the exercise of that right may be subject to equitable principles and equitable defences.
33 I omit reference to the detailed case law which Mr McLellan included in his synopsis in support of his propositions.
(b)It would be inequitable of IAG to obtain more through subrogation than it was prepared to pay for in contract. Such a result would operate to unjustly enrich IAG.
(c)If Hawkins were held to be liable to Ms Brooker in tort for breach of duties which are wider than Hawkins’ contractual duties to IAG, that could only be because IAG did not make its insured customers aware of Hawkins’ limited role under the 2012 RSMA. In those circumstances, it would be inequitable for IAG to derive a windfall through subrogation.
(d)By executing the 2012 RSMA, IAG can be taken to have elected to forego rights of subrogation against Hawkins in the event that an IAG insured made a claim under its policy with IAG. The parties cannot have intended that IAG would have rights against Hawkins under the RSMA which deliberately apportioned risk and reward according to the parties’ contracting intentions as well as wider subrogation rights.
[96] Mr McLellan emphasised that none of these issues are legally straightforward and each will require determination at trial. If QBE is joined as a defendant then either the subrogation issues will need to be shoehorned into a single trial to the inconvenience of Ms Brooker and QBE and Hawkins (because it would be unnecessary to determine the subrogation rights if Ms Brooker’s claim fails) or a separate trial will be needed to determine the nature and extent of IAG’s subrogation rights.
[97] Of those two courses, Mr McLellan submits that contrary to IAG’s assertions, there would be considerably added complexity to the proceeding. If the second course is adopted, that would defeat the central purpose of IAG’s application, namely to avoid a multiplicity of hearings. Mr McLellan submits that accordingly the better course is to defer subrogation arguments until after IAG’s liability to the plaintiff has been determined.
[98] Mr McLellan submitted that an approach similar to that he proposes was adopted in Bruce v IAG.34 There, the insured homeowner sued IAG for breach of policy obligations. IAG in turn sued Hawkins for breach of contract. The parties agreed to have a split trial, the first trial determining IAG’s liability to the plaintiff (now under appeal) and the second trial left to determine any liability of Hawkins to IAG. Mr McLellan submits that the desirability of that approach is reinforced by the fact that the allegations against Hawkins are able to be refined in the light of the findings of fact of the first trial and addressed by reference to establish fact rather than in the abstract.
[99] Mr McLellan notes also the unhappy nature of what IAG seeks to do by its joinder application, which is to force the plaintiff to bring a claim the nature of which is contrary to IAG’s own pleaded position. Mr McLellan refers particularly to a clause in the building contract in which it is recorded that neither Hawkins nor IAG gives any warranty or undertaking concerning the works (including the performance of any person). IAG has pleaded that contractual provision in its defence.
[100] Mr McLellan accepts that in some cases there is clearly a benefit to having all liability pathways before the Court so as to justify the joinder of additional defendants. He submits however that this proceeding illustrates the situation in which a single trial would become intolerably artificial. Here, joiner would result in multiple parties adopting inconsistent positions. He notes that in order for IAG to obtain rights of subrogation:
(a)Ms Brooker will have to establish at trial, against her wishes, that Hawkins owed a duty of care in either tort or under the Consumer Guarantees Act;
(b)the Court would then have to find (contrary to IAG’s pleaded position), that the terms of the building contract are not inconsistent with a duty of care;
34 Bruce v IAG [2018] NZHC 3444.
(c)the Court would have to find, contrary to IAG’s pleaded position, that IAG’s policy required IAG to meet the cost of rectifying defective remedial works; and
(d)the Court would have to find, contrary to IAG’s pleaded assertion, that Hawkins is liable to indemnify it under the 2012 RSMA and that Ms Brooker’s rights against Hawkins are in fact wider than IAG’s.
[101] Mr McLellan contrasts that with the third party procedure which he submits avoids all these potential contradictions and will sufficiently advance IAG’s position as against Hawkins and QBE.
[102] Finally, in this regard, Mr McLellan referred to the proceedings in Robin v IAG.35 In that proceeding, Gendall J on review reversed the Associate Judge’s judgment, so as to join various contractors as defendants against the plaintiff’s wishes. Significantly, the Associate Judge in Robin v IAG at the same time dismissed IAG’s application to join Hawkins as a defendant. That aspect of the Associate Judge’s decision was not the subject of IAG’s review, suggesting that IAG must have been content to rely on the third party procedure as against Hawkins.
Submissions for Ms Brooker
[103] Although Mr Ballantyne, for Ms Brooker, had filed a brief synopsis of submissions he at the hearing was content to adopt the submissions as presented by Mr McLellan. He did not add to those upon the basis that, upon reserving my judgment, I would have the opportunity to review his synopsis. The points made in his synopsis closely follow the grounds of opposition (as summarised above at [17]). In his synopsis, Mr Ballantyne emphasised the prima facie entitlement of the plaintiff to choose who to sue, as recognised in the case law and implicit in the High Court Rules. He referred to that entitlement of the plaintiff as a “paramount consideration” which is only displaced where an applicant establishes a compelling case as to the need for the new defendant’s presence.
35 Robin v IAG, above n 25.
[104] Mr Ballantyne notes that IAG’s denial of liability to Ms Brooker is on two principal bases:
(a)Ms Brooker’s insurance policy covers earthquake damage, in relation to which IAG puts her to the proof of establishing further or unrepaired earthquake damage.
(b)Ms Brooker’s insurance policy does not cover the cost of rectifying defective work by builders and others.
[105] Mr Ballantyne submits that those defences do not require an examination of Hawkins’ role in providing its services under its contract to IAG.
[106] In relation to the proposed claim against QBE, Mr Ballantyne submits that the information held by Ms Brooker is insufficient to enable counsel to competently prepare and plead a claim by Ms Brooker against QBE/Hawkins. To the extent that Ms Brooker would have to rely on evidence to be provided by other defendants, such as IAG, Mr Ballantyne submits that that would impose an inappropriate requirement on Ms Brooker.
Discussion
Jurisdiction under r 4.56(1)(b)(i)?
[107] Under this limb, the Court is required to determine whether QBE ought to have been joined as a defendant by Ms Brooker?
[108] The answer is plainly in the negative. The test I must apply is to the first limb of r 4.56(1)(b) is that succinctly identified by the Court of Appeal in Newhaven.36 The test is whether the presence of the proposed defendant is necessary for the Court to adjudicate on the exact issues arising on the pleadings.
[109]On that test, QBE does not qualify.
36 Newhaven, above n 3, at [42].
[110] For the purpose of providing herself with the assurance that her home would be repaired in the event of earthquake damage, Ms Brooker had entered a contract of insurance with IAG. Her claim arises from her allegation that IAG is in breach of that contract. As Mr Ballantyne submits, her claim is essentially for specific performance of the contract of insurance.
[111] Significantly, that is the surviving part of her proceeding. It is the case that, while Holloway was not in liquidation, Ms Brooker had commenced a proceeding in relation to the repair contract which she had entered into with Holloway. That aspect of her claim, stayed on account of the liquidation, is effectively defunct. Any analysis of causation and responsibility for defects which might have been required in relation to the claim against Holloway has fallen away.
[112] Accordingly, as matters stand, the remaining question in the proceeding (as between Ms Brooker and IAG) relates to whether IAG is in breach of contract by not repairing the property to an as-new condition.
Jurisdiction under r 4.56(1)(b)(ii)?
[113] Although Mr Smith, for IAG, invoked both limbs of r 4.56, his submissions on jurisdiction focused on the second limb, with particular reliance on Mainzeal, in which the order of joinder was made on the basis of the second limb.37
[114] On the other hand, Mr McLellan, for Ms Brooker, put his emphasis upon Master Venning’s analysis in Mainland Products. As noted at [86] above, his Honour there found that the second limb was not established on the basis that it was not strictly necessary for the valuer (Darroch) to be a party to enable a complete and effectual adjudication of all questions in the case.
[115] Of the cases cited by counsel, Mainland Products is perhaps the most helpful. There, Darroch’s liability to either the plaintiff or the defendants in respect of the subject-matter of the proceedings was found to be not directly affected by any order to be made in the proceeding.38
37 Mainzeal, above n 12.
38 Mainland Products, above n 18, at [17]–[18].
[116] I am not convinced that IAG has established the threshold requirement under r 4.56(1)(b)(ii). I will briefly explain the reasons for that but ultimately do not determine this application at the jurisdictional level. What ultimately stands in the way of IAG’s application is that this is plainly not a case for the discretion to be exercised in favour of joinder (even assuming jurisdiction to exist).
[117] The role of Hawkins (and thereby QBE) in relation to matters relating to Ms Brooker’s property has close analogy to the role of Darroch in the Mainland Products case determined by Master Venning. There, the plaintiff was suing the defendants on the basis of their contractual dealings and the rights flowing from those. The defendants wished to have Darroch joined on the basis that the plaintiff would have had tortious remedies against Darroch also. Nothing before the Court required Darroch’s involvement as a defendant to enable a complete and effectual adjudication of all questions in the case.
[118]That situation was analogous and is a helpful precedent.
[119] The decision in Robin v IAG, invoked by Mr Smith, is less relevant to the present case.39 Mr Smith cited Robin v IAG particularly for the proposition that it should not count against joinder that the subrogation rights invoked do not arise until or unless an existing defendant is obliged to make payment under an insurance policy. The most significant feature of the joinder orders made in Robin v IAG – flowing from consideration of the parties whose presence is necessary to settle all questions involved in the proceeding – is that the various contractors who were joined by the Court’s order had, like the existing second defendant, carried out repairs to the house which the plaintiff by her statement of claim alleged to have been defective.
[120] Here, Ms Brooker’s claim against Holloway has fallen away. This is no longer a claim of the plaintiff against anyone involved in providing defective repairs.
[121] Furthermore, it is material to note, as Mr McLellan identified, that the review judgment in Robin v IAG went only as far as joining the other contractors. In Robin v
39 Robin v IAG, above n 25.
IAG, IAG had a parallel claim against Hawkins with which IAG had contracted to project-manage repair work, as in the present case. The first instance decision in Robin v IAG records that IAG in that case elected to join the Hawkins companies as third parties (not as an additional defendant).40
[122] Implicitly, IAG in the Robin v IAG case must have taken the view that the questions which arose from the plaintiff’s claims in Robin v IAG could be adjudicated on and settled adequately through IAG seeking any relief by itself joining Hawkins under the third party procedure.
[123] As I understood Mr Smith’s submissions, the difficulty he identifies for IAG through not having QBE in this proceeding as a defendant (for the purposes of pursuing IAG’s alleged subrogation rights) is that IAG potentially has limitation issues with its claim against Hawkins and QBE. Those arise because IAG elected to enter into a contract with Hawkins which contains limitation provisions. Mr Smith’s submission is that IAG will be able to avoid those limitation provisions if it is Ms Brooker who pursues a tortious claim against Hawkins and QBE, to which (Mr Smith submits) a limitation defence will not be available. In my assessment, while these submissions of Mr Smith provide explanation for why IAG wishes to now in the one proceeding move forward a potential subrogation claim, they are issues at a distinct remove from the questions which are involved in this proceeding as it stands.
[124] It is on this basis that I am not convinced that IAG has established the threshold requirement under r 4.56(1)(b)(ii).
The discretion
[125] The matters affecting the exercise of the discretion in this case (assuming jurisdiction were established) are strongly against requiring Ms Brooker to join QBE as a defendant.
40 Robin v IAG [2018] NZHC 204 at [3].
[126] In this context, I remind myself that the generally liberal approach to joinder has to be tempered to have reasonable regard to the plaintiff’s wishes, particularly where those wishes can be demonstrated to be the product of reasonable concerns.
[127] Here, an insurer accepted premiums from a houseowner who wished to obtain assurance that she would have contractual rights to have her house restored in the event of damage covered by the policy. Her claim against IAG is in contract and upon the basis that IAG has yet to commit to paying the full sum required to repair the home to its condition as new.
[128] Faced with the obligations IAG had following the Canterbury Earthquake Sequence, IAG elected to enter into a contract with Hawkins for the broader repair programme. By its contract with Hawkins, IAG accepted the basis upon which Hawkins would be responsible for managing the repair programme. Contrary to Mr Smith’s submissions, IAG was not an “intermediary” between Ms Brooker and Hawkins – rather IAG had directly and contractually engaged Hawkins to manage its repair programme on agreed terms.
[129] It transpires that IAG is no longer content with its contractual rights against Hawkins and QBE, apparently primarily because of the terms of the contract which it entered into with Hawkins. It therefore wishes to utilise rights which Ms Brooker might arguably have to sue Hawkins and QBE in tort to overcome limitations in IAG’s contractual rights.
[130] For reasons explained in some detail by Mr McLellan in his submissions, the rights of subrogation have a significantly greater complexity than might at first appear. Mr McLellan has identified a number of lines of argument which QBE has. Were Ms Brooker to sue QBE, she and her legal advisers would have to anticipate that QBE would mount a full set of arguments against the tort claim which she does not wish to pursue.
[131] Additionally, Mr McLellan identifies the significant advantage which IAG has, as the party who made the arrangements for Hawkins to be the manager of the repair programme, in knowing exactly what evidence will assist in any claim against
Hawkins; whether it relates to documents which have already been fully or partly explored; and the oral discussions which will have undoubtedly occurred. It is IAG personnel, not Ms Brooker, who know about those matters.
[132] IAG has already obtained the ability to join QBE as a third party. As in the Mainland Products case, the existing defendant therefore has its contractual rights to obtain from the third party such relief as is appropriate for any breach of contract by the third party.41
[133] I recognise that, as in most cases where it is argued that the interests of the competing parties are balanced, there is a potential issue of additional cost (and even possibly inconsistent verdicts although that appears unlikely in this case) if the third party is not also joined as defendant. But on the facts of this case, that consideration is far outweighed by the considerations I have just discussed and by the cost and potential delay which Ms Brooker is likely to have to carry for a significant time.
[134] There will be inevitable delay for Ms Brooker if her solicitors have to engage with the documents IAG would from Ms Brooker rely on in order to pursue a claim against QBE. And then there is the access her solicitor may want to what IAG’s staff may know or understand which is not wholly contained in the documents themselves.
[135] Then there is the cost to Ms Brooker of mounting her claim against QBE. The negligence claim, with its focus on Hawkins’ alleged duties and breaches of duty, will require an extent of analysis and evidence (including a likelihood of expert evidence) which will take her case well beyond its present parameters. After her additional evidence is obtained and her amended pleadings filed, she will be faced with dealing with the defence which will inevitably be filed. These are significant costs for a private individual to absorb.
[136] When submissions were initially being presented at the hearing, Ms Brooker was facing as an additional prejudice the prospect of later being ordered to pay QBE’s costs and disbursements should her tort claim fail. IAG’s rather dismissive stance on that prejudice was that the Court has a “wide discretion” in costs matters, and if Ms
41 Mainland Products, above n 18.
Brooker were unsuccessful against QBE, “she will not necessarily be ordered to pay their costs”. Upon exchange during the course of submissions, IAG wisely relented from that stance and offered an undertaking to meet any orders for costs and disbursements incurred by Ms Brooker as a consequence of QBE’s joinder. That was a prudent gambit and one which, in the circumstances of the case, ought to have been offered at the time IAG’s application was made. In the event, although the undertaking would serve to remove one element of potential prejudice from the balancing, that particular prejudice was but one element for consideration in the balancing exercise. IAG’s now offered undertaking does not overcome the weight of factors against QBE’s joinder as a defendant.
[137] For these reasons, I am not satisfied (assuming jurisdiction to join QBE were established) that it would be just to require Ms Brooker to sue QBE.
[138]The application is therefore declined.
Orders
[139]I order:
(a)The application of the first defendant for an order joining QBE Insurance (Australia) Pty Ltd (QBE) is dismissed.
(b)The first defendant has leave to join QBE as a third party, with the third party documents to be filed and served within 15 working days.
(c)The first defendant is to pay to QBE and to the plaintiff each the costs of the application (fixed on a 2B42 basis) together with disbursements to be fixed by the Registrar.
Osborne J
Solicitors:
Duncan Cotterill, Christchurch Canterbury Legal, Christchurch Hazleton Law, Wellington
42 High Court Rules, Category 2 under r 14.3(1) and band B under r 14.5(2).
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