Cogle v IAG New Zealand Limited
[2019] NZHC 3049
•21 November 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-258
[2019] NZHC 3049
BETWEEN STEPHEN COGLE and ALEXIS COGLE
Plaintiffs
AND
IAG NEW ZEALAND LIMITED
Defendant
Hearing: 19 November 2019
(By way of telephone conference plus on the papers)
Counsel:
J W Goddard for Plaintiffs
R W Raymond QC for Defendant
Judgment:
21 November 2019
JUDGMENT OF ASSOCIATE JUDGE LESTER
This judgment was delivered by me on 21 November 2019 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar 21 November 2019
COGLE v IAG NEW ZEALAND LIMITED [2019] NZHC 3049 [21 November 2019]
[1] The plaintiffs by memorandum dated 25 October 2019 (being the prescribed initiating process) have applied to transfer this proceeding to the Canterbury Earthquakes Insurance Tribunal (“the Tribunal”) pursuant to s 16 of the Canterbury Earthquakes Insurance Tribunal Act 2019 (“the Act”).
[2]Sections 16(1) and 16(2) of the Act provide:
16 Claim brought by transfer of proceedings from court
(1)If a person who is a policyholder or an insured person (or both) is a plaintiff in court proceedings relating to an insurance claim in dispute, a Judge may, on the application of that person or on the Judge’s own motion, order that the proceedings be transferred to the tribunal.
(2)An order to transfer proceedings may be made under subsection (1) only if—
(a)the proceedings meet the eligibility criteria for a claim under section 9 (however, the proceedings may also include additional parties to those referred to in section 8, but may not include a class action—see clause 6(2) of Schedule 2); and
(b)the other party or parties to the proceedings have been given a reasonable opportunity to comment; and
(c)the Judge making the order believes that the transfer is in the interests of justice.
[3] In order to be eligible to be transferred, a claim must meet the criteria under s 9 of the Act. Section 9(1) provides:
9 Eligibility criteria to bring claim before tribunal
(1)The eligibility criteria to bring a claim before the tribunal are that the claim—
(a)must arise from a dispute between the parties under section 8; and
(b)must seek resolution of liability, or remedies, or both; and
(c)must be within the jurisdiction of the tribunal to make an order under section 46.
[4]Section 8(1) of the Act provides:
This Act applies to disputes between policyholders and insurers about insurance claims for physical loss or damage arising from the Canterbury earthquakes to a residential building or residential property.
[5] The application to transfer is accepted by the plaintiffs to have been filed in response to an application by the defendant that its positive defences be determined at a separate trial, in effect as a preliminary issue. The defendant sought the separate hearing by memorandum dated 10 October 2019.
[6] As Associate Judge Osborne (as he then was) observed in a Minute dated 15 August 2018:
… a fundamental issue in the litigation is whether IAG was entitled to declare the plaintiffs’ policy unenforceable by reason of fraud or dishonesty on the part of the plaintiffs.
[7] The defendant accepts that if its positive defence fails then the plaintiffs’ proceeding becomes a “standard earthquake claim” where the issue will be scope of works and quantum.
[8] The defendant has estimated 10 hearing days being required to determine its positive defence. It appears common ground that if both the positive defence and issues of quantum are to be determined in the one hearing, then on present estimates four hearing weeks would be required.
[9]Counsel for the defendant submits:
… that the IAG defences are not disputes about “insurance claims for physical loss or damage” arising from the earthquakes. The disputes do not fall within section 8. The eligibility requirement in section 9 is not therefore met.
[10] I do not accept this submission. As I have already noted, the defendant accepts that if its defences fail then the claim is a standard earthquake claim and by implication would meet the eligibility criteria to bring a claim before the Tribunal. I do not accept that the nature of a defence by an insurer can convert what was an eligible claim into a non-eligible claim. This is not a case where the plaintiffs’ claim, including quantum,
is accepted and where the only issue is a positive defence, even then I am not convinced a home owner’s claim would not be eligible.
[11] When s 8(1) says the Act applies to disputes between policy holders and insurers “about insurance claims for physical loss”, the reference to “physical loss” qualifies the nature of the insurance claim, not the nature of the dispute.
[12] Ultimately, I consider the issue to be whether the interests of justice favour the determination of the positive defences in this Court or whether the entire proceeding should be transferred to the Tribunal.
[13] The defendant has signalled its willingness to have the plaintiffs’ claim, should it survive the preliminary issue, referred to the Tribunal and I will return to that possibility.
[14] From the defendant’s point of view, no further interlocutory steps are contemplated, save for a site visit by the defendant should its positive defences not succeed. The plaintiffs have not suggested any further applications are contemplated. The defendant accepts that if its positive defence is to be determined as a preliminary issue, then it would go first.
[15] One of the factors relied on by the plaintiffs in support of the application for transfer is that in the Tribunal there are no hearing fees payable. In my view, the plaintiffs would not be paying hearing fees in respect of the separate hearing requested by the defendant. If the defendant wants its positive defence to be determined in this Court, then that should not be at the plaintiff’s cost. Mr Raymond QC for the defendant agreed (albeit without instructions) that was a reasonable proposition.
[16] The plaintiffs rely on the fact that a forensic computer expert’s report obtained by the defendant found that there is no direct evidence that shows that the plaintiffs were responsible for fabricating evidence. I do not consider that the merits of either the plaintiffs’ claim or the defendant’s positive defences are relevant to this application.
[17] An advantage of there being a separate determination of the positive defence in this Court, and of the timetable steps proposed by the defendant, is that it will, through the provision of its briefs of evidence, spell out to the plaintiffs the factual foundation of its fraud claim. The defendant proposes to call eight to 10 witnesses, only one of whom is an expert, being the computer analyst.
[18] Logically, the determination of the positive defences should come first. There is no point in the parties preparing detailed evidence as to quantum which will be wasted should the positive defences succeed. The plaintiffs rely on the power imbalance between the parties and note that their ability to borrow money against their property is frustrated by their insurance claim remaining unresolved and that the unresolved fraud complaint impacts on their ability to work as they cannot obtain a positive Police vetting report. However, despite this, the plaintiffs prefer to commit to a four week hearing versus a two week hearing (assuming hearing times in the Tribunal would be approximately the same).
[19] The plaintiffs rely on the availability of alternative dispute resolution processes in the Tribunal. However, the “all or nothing” nature of the defences raised by the defendant are not suitable for alternative dispute resolution. As the defendant says, the plaintiffs have either committed fraud, or they have not.
[20] I recognise that the Tribunal’s processes are flexible enough to allow it to direct a separate determination of the defendant’s claims. The defendant submits:
The inquisitorial nature of the Tribunal is an inappropriate process for assessment of the Cogles’ alleged conduct. The matters at issue are ill suited to the “flexible” more informal processes of the Tribunal. The Rules of Evidence which will apply in the High Court will afford greater protection for the Cogles than the Tribunal will.
[21] As to the last proposition, if the Cogles wish to waive the benefit of the application to the Rules of Evidence that is for them. Nor am I convinced that the Tribunal could not adopt procedures and processes suitable to the nature of the allegations made by the defendant.
[22] The plaintiffs were not able to advise when an eight to 10 day hearing would be available in the Tribunal so it is not clear that the matter could be dealt with more promptly in the Tribunal.
[23] Ultimately, the matter is balanced. There is no clear advantage in the transfer of the positive defence to the Tribunal which, as I have said, should be resolved first. The nature of the defence means an adversarial approach is likely to be adopted and to the flexibility of the Tribunal may not be a factor in favour of transfer. The separate hearing in this Court is ready to be timetabled rather than the matter having to wait for a case management conference in the Tribunal which, given the time of year, may not be until early 2020.
[24] What is unexplained by the plaintiffs is why the defendant’s application for a separate hearing should have been the prompt for the application to transfer to the Tribunal. As noted, the plaintiffs acknowledge that their application is a response to that application. When otherwise faced with a hearing of up to four weeks in this Court, a transfer application was only made when the defendant sought to advance its positive defences.
[25] I am left with the impression that the plaintiffs’ application to transfer is not prompted by any particular desire to utilise the benefits of the Tribunal discussed in other cases, but by a desire to avoid the unalloyed scrutiny on their conduct that the separate determination of the defendant’s positive defence would involve.1
[26] To order transfer to the Tribunal, I have to be satisfied that the transfer is in the interests of justice. I am not persuaded that granting what I consider to be a “tactical” application, acknowledged as being intended to defeat the request for a separate trial in this Court, is in the interests of justice.
[27] Accordingly, the application to transfer the proceeding to the Tribunal at this point in time is declined. However, given the defendant has expressed a willingness for the proceeding to be transferred to the Tribunal should its defences fail, leave is
1 Busby v IAG [2019] NZHC 1852; Kitchen v AA Insurance Ltd [2019] NZHC 1902.
reserved to the plaintiffs to re-apply for transfer to the Tribunal once the defendant’s positive defences have been determined.
[28] That leaves the defendant’s application for determination of the defences as a separate issue. The only response raised by the plaintiffs to that application was the application to transfer. No additional opposition was raised by the plaintiffs’ counsel during the telephone conference held on 19 November 2019. The positive defences need to be resolved and accordingly there is an order that the defendant’s positive defences are to be determined at a preliminary hearing. That is on the basis that the defendant will pay the setting down and hearing fees in respect of that particular hearing.
[29] The steps proposed by Mr Raymond QC on behalf of the defendant in his memorandum dated 10 October 2019 at para [13] were:
(a)the defendant serves its briefs of evidence together with an index of the documents it wishes to include in the common bundle;
(b)the plaintiffs serve their briefs of evidence together with an index of the documents that they wish to include in the common bundle;
(c)the defendant serves its reply briefs together with any additional index of documents that it wishes to include in the common bundle;
(d)the defendant will then file and serve the common bundle;
(e)an agreed list of issues is to be filed by the defendant; and
(f)an agreed chronology of facts to be filed and served by the defendant.
[30] These steps are appropriate. The reality is an eight to 10 day hearing in this Court is some time off. However, the plaintiffs would benefit from having the defendant articulate the basis of the allegation of fraud, just as the defendant would benefit from having the plaintiffs answer to the defendant’s evidence. Once the evidence is in, the hearing estimate can be revisited.
[31] I leave it to counsel to agree the timetable for the above steps and file a joint memorandum. If agreement cannot be reached, then counsel are to file their separate proposed timetables and brief memoranda (no more than three pages) and I will determine the timetable.
[32] The Registrar is to set down the determination of the defendant’s positive defence for a ten day hearing.
Associate Judge Lester
Solicitors:
WCM Legal, Wellington Duncan Cotterill, Auckland
Copy to counsel: R W Raymond QC, Christchurch
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