Legal Research
Cases
Claims Resolution Service Ltd v Smith

Claims Resolution Service Ltd v Smith

Case [2020] NZCA 664 18 December 2020

Representative Proceedings

Class Actions

Jurisdiction

Fiduciary Duty

Unconscionable Conduct

Breach of Contract

Civil Litigation & Procedure

Type to search within this case.

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA583/2019
[2020] NZCA 664

BETWEEN	CLAIMS RESOLUTION SERVICE LIMITED Appellant
AND	KARLIE MARGARET SMITH Respondent

CA582/2019
BETWEEN	GRANT SHAND BARRISTERS AND SOLICITORS Appellant
AND	KARLIE MARGARET SMITH Respondent

Hearing:	15 October 2020
Court:	Kós P, Cooper and Clifford JJ
Counsel:	A R B Barker QC and G P Davis for Claims Resolution Service Ltd A B Darroch and J W Thomson for Grant Shand Barristers and Solicitors M S Smith and J A Tocher for Respondent
Judgment:	18 December 2020 at 11.30 am

JUDGMENT OF THE COURT

AThe application for leave to adduce further evidence is granted.
BThe appeals are dismissed.
CThe cross-appeals are allowed to the extent specified at [46].
DThe appellants are to pay the respondent one set of costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Clifford J)

Introduction

Ms Smith, the respondent, owns a home damaged in the Canterbury earthquake sequence of 2010–2011. Claims Resolution Service Ltd (CRS), the appellant in CA583/2019, provided services to Ms Smith to assist her to pursue her private insurer for the settlement of her claim for the damage caused by the earthquakes. A part of those services was the engagement of Grant Shand Barristers and Solicitors (Shand Solicitors), the appellant in CA582/2019, to assist in that process.
In her High Court proceedings Ms Smith claims that CRS and Shand Solicitors each separately owed her, and breached, fiduciary duties and that her contract with CRS was an unconscionable bargain. By way of relief Ms Smith claims damages and a declaration that the terms of the CRS contracts requiring her to pay commission, third party costs and expenses, including Shand Solicitors’ legal fees, are void and unenforceable.
A large number of other Christchurch homeowners contracted with CRS for those services on similar terms and were represented by Shand Solicitors pursuant to those contracts. Gendall J granted Ms Smith leave pursuant to r 4.24 of the High Court Rules 2016 to bring her claims against CRS and Shand Solicitors on a representative basis: that is, not only on her own behalf but on behalf of all persons who, like her, engaged CRS and were represented by Shand Solicitors to help resolve their claims.[1] In a related decision the Judge set certain of the terms of that representative proceeding.[2]
[1]Smith v Claims Resolution Services Ltd [2019] NZHC 127 [Leave judgment].
[2]Smith v Claims Resolution Service Ltd [2019] NZHC 1013 [Conditions judgment].
This is an appeal by CRS and Shand Solicitors against those decisions.[3] At the same time Ms Smith cross-appeals two aspects of the High Court’s decisions: one ruling inadmissible for the purpose of her application for representative status evidence from other CRS/Shand Solicitors’ clients, the other declining to require the advertising of her representative proceeding on CRS’ Facebook page.[4]

Background

[3]The High Court granted leave to appeal: Smith v Claims Resolution Service Ltd [2019] NZHC…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Claims Resolution Service Ltd v Smith

Details

AGLC: Claims Resolution Service Limited v Smith [2020] NZCA 664
Case: [2020] NZCA 664
Decision Date: 18 December 2020 at 11.30 am

CaseChat Overview and Summary

The Court of Appeal of New Zealand was called upon to determine whether Claims Resolution Service Ltd (CRS) and Shand Solicitors could appeal the High Court's decision to allow Karlie Margaret Smith to bring a representative proceeding against them on behalf of Christchurch homeowners who contracted with CRS for claims resolution services. Smith claimed that CRS and Shand Solicitors owed her and other homeowners fiduciary duties and breached those duties by not disclosing the full nature of their joint venture arrangements and associated conflicts of interest. Smith sought damages and a declaration that the terms of the CRS contracts requiring her to pay commission, third party costs and expenses, including Shand Solicitors' legal fees, were void and unenforceable.

The Court found that the High Court's decision to grant Smith leave to proceed on a representative basis was correct. The Court emphasised the importance of commonality of interest, access to justice, and efficiency in the legal process. The shared experience of the homeowners, their vulnerability when contracting with CRS and dealing with Shand Solicitors, and the potential for a representative proceeding to guide the resolution of other materially similar claims supported the grant of leave. The Court also dismissed the appellants' requests for the initial notification of the representative action to include specification of the way in which the claim would be funded and to require the provision to the appellants of security for unpaid fees.

On the cross-appeals, the Court granted leave to admit certain affidavit evidence filed by Smith and allowed the cross-appeals to the extent of granting the application that the approved opt-in notice be published on CRS' Facebook page. The Court found that CRS' Facebook page was being used to advance its interest in the litigation and that it was appropriate to use the page to publish the Court-approved opt-in notice to provide a summary of the action alongside the more partisan commentary offered by CRS itself.

The Court dismissed the appeals, allowed the cross-appeals to the extent specified, and ordered the appellants to pay Smith one set of costs for a standard appeal on a band A basis and usual disbursements.

Orders