Dewes v IAG New Zealand Limited
[2019] NZHC 2899
•7 November 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-409-662
[2019] NZHC 2899
BETWEEN CATHERINE FRANCES DEWES, ROBERT DENTON GREEN and DIANA
ROSEMARY SHAND (as trustees of the Dewes Green Family Trust)
PlaintiffsAND
IAG NEW ZEALAND LIMITED
First Defendant
AND
MAX CONTRACTS LIMITED
Second Defendant
AND
MAX EQ LIMITED
Third Defendant
AND
ORANGE H MANAGEMENT LIMITED
(formerly Hawkins Management Limited) (In Receivership and in Liquidation)
First Third Party
AND
ORANGE H GROUP LIMITED (formerly
Hawkins Management Limited) (In Receivership and in Liquidation) Second Third Party
AND
MAX CONTRACTS LIMITED
Third Third Party
AND
QBE INSURANCE (AUSTRALIA) LIMITED
Fourth Third Party
Hearing: 31 October 2019 (telephone conference) and on the papers Appearances:
C F Dewes for Plaintiffs
N S Gedye QC and O Collette-Moxon for First Defendant
R Smedley for Second and Third Defendants and Third Third PartyNo appearance for First Third Party and Second Third Party D McLellan QC and L R Green for Fourth Third Party
DEWES v IAG NEW ZEALAND LIMITED [2019] NZHC 2899 [7 November 2019]
Judgment: 7 November 2019
JUDGMENT OF ASSOCIATE JUDGE LESTER
This judgment was delivered by me on 7 November 2019 at 2.00pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar 7 November 2019
[1] The fourth third party, QBE Insurance (Australia) Ltd (“QBE”) applies for leave to appeal my decision transferring this proceeding to the Canterbury Earthquakes Insurance Tribunal (“the Tribunal”). QBE has argued in the transfer application that the third party proceedings it faces should be recognised as a standalone proceeding. Once seen as a standalone proceeding, QBE’s submission is that the proceeding against it is not one eligible for transfer to the Tribunal pursuant to the terms of the Canterbury Earthquakes Insurance Tribunal Act 2019 (“the Act”).
[2] That ineligibility arises from the fact that the third party claim against QBE is not a claim between a policy holder and an insurer, that being one of the eligibility criteria under s 8 of the Act. The claim QBE faces is based on the Law Reform Act 1936.
[3] I took the view that in enacting the Act, Parliament did not intend to use the term “proceedings” in s 16 of the Act which governs transfer of proceedings to the Tribunal in the nuanced way adopted by QBE and that the jurisdiction to transfer in s 16 relates to an entire proceeding and does not permit a proceeding to be transferred in part.
Leave to appeal
[4] Leave is required by virtue of s 56(3) of the Senior Courts Act 2016. Counsel were agreed on the applicable principles and I adopt Mr McLennan QC’s, counsel for QBE’s, summary:
4.The provision was considered by Dobson J in A v Minister of Internal Affairs who identified the following (obiter) considerations:
(a)A high threshold exists for the granting of leave. An allegation of error of law or fact is generally insufficient. An application should raise an arguable error.
(b)Leave should only be granted where the circumstances warrant incurring further delay.
(c)The alleged error should be of general or public importance that requires determination, or otherwise be of sufficient importance to the applicant to outweigh the lack of any general or precedential importance.
These observations were adopted and elaborated on by Fitzgerald J in
Finewood Upholstery Ltd v Vaughan:
(a)The requirement for leave to appeal should serve as a “filtering mechanism” to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally do not unnecessarily delay the proceedings in which the orders were made.
(b)Ultimately, the court hearing an application for leave to appeal from an interlocutory order will need to stand back and assess, in a pragmatic and realistic way, whether the interests of justice are served by granting leave to appeal.
6.In Li v CE, MBIE, Palmer J summarised the approaches taken in the above cases and added the observation that “the wider purpose behind s 56(3) is to lessen tactical delays and enhance the efficiency of the administration of justice”. His Honour considered that an application is likely to be granted if:
(a)the appeal is not likely to be overtaken by the substantive hearing or cannot otherwise be considered as effectively in the context of an appeal of the substantive decision; or
(b)the appellant is likely to be prejudiced by a postponement to the substantive appeal; or
(c)the appeal may be dispositive of the case in law or as a practical matter; and
(d)the arguments in the appeal are capable of bona fide and serious argument; and
(e)the issue on appeal concerns a decision of sufficient significance to the parties or a question of law or general principle of sufficient importance as to outweigh the cost and delay of the appeal.
(footnotes omitted)
Assessing the application
[5] Gendall J in Smith v Claims Resolution Services Ltd, said in respect of assessing applications for leave to appeal:1
There is always an inherent tension in being the Judge who delivered the judgments at issue and then being required to consider whether those judgments raise arguable errors of law or fact.
1 Smith v Claims Resolution Service Ltd [2019] NZHC 2738 at [29].
[6] In assessing this application, I have to consider the merits of the appeal, so much being inherent in the leave process being a filter, but not apply so fine a filter as to exclude a reasonably arguable appeal.
[7]QBE wishes to raise two points:
(1)that there is no jurisdiction under s 16(2) of the Act to transfer the third party claim against QBE to the Tribunal as it is not a qualifying claim under the Act; and
(2)even if jurisdiction exists, the discretion to transfer should have been exercised in QBE’s favour.
[8] The first proposition above is that it is not possible at all to transfer a third party claim to the Tribunal.
[9] The second proposition assumes that there is jurisdiction to transfer part of a proceeding to the Tribunal leaving the third party claim in this Court while the claim between the home owner and their insurer goes to the Tribunal.
[10] In my judgment, I held there was no jurisdiction to transfer a proceeding in part.2 If there was to be a transfer then the proceeding in its entirety was transferred, including all third party claims.
[11] I set out again s 16(2) of the Act, in the same manner as I did in my first judgment:
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 …); and
(b)the other party or parties to the proceedings have been given a reasonable opportunity to comment; and
2 Dewes v IAG New Zealand Ltd & Ors [2019] NZHC 2270.
(c)the Judge making the order believes that the transfer is in the interests of justice.
(emphasis added)
[12] I concluded that the highlighted words above were not restricted to other defendants, as suggested by QBE, but included all parties. I noted that under the High Court Rules 2016 a third party is a party to the proceeding to which they have been added.3
[13] I found support for my view that s 16 did not create the ability to transfer part of a proceeding in s 27(1)(d) of the Act, which confers on the Tribunal the power to “decide whether parties need to be joined or removed and, if so, make an order under section 11 to this effect”.
[14] Counsel for IAG, in opposing the present application, referred to s 11(1) of the Act which provides:
If the tribunal considers it necessary for the fair and speedy resolution of a claim, it may order that –
(a)a person be joined as a third party respondent:
(b)a party be removed.
[15] In my view, if the only claim that could be transferred to the Tribunal is that between a policy holder and their insurer (QBE’s position), it would mean s 11(1)(b) could only apply to third parties who had already been joined by the Tribunal under s 11(1)(a).
[16] IAG also relied on s 45 of the Act which provides that the Tribunal may decide any liability of any party to any other party.
[17] IAG referred to a Minute issued by the Tribunal in this matter where the Tribunal noted that proceedings in the Tribunal are not as “linear” as they are in this Court, it not being possible in this Court for a plaintiff to obtain relief directly against a third party.
3 High Court Rules 2016, r 4.7(1).
[18] Accordingly, in my view, the Act contemplates the presence of third parties in the Tribunal. With the Act being passed at a time when there had been litigation before the Courts in some cases for years (the present case having commenced in September 2017), that such proceedings may have involved third parties would have been known to Parliament.
[19] Can it have been intended by Parliament that on a transfer of proceedings all third parties would drop off with there then to be a further process in the Tribunal to join them back in?
[20] In my view, that process would be inconsistent with what is the guiding principle of the Tribunal, that is the fair and speedy resolution of claims. It would also potentially prejudice defendants who had joined third parties as of right in this Court but would not have that right in the Tribunal.
[21] Mr McLennan in oral submissions developed an example based on the assumption that QBE had in a case joined its reinsurer. The argument was that the determination of QBE’s claim against a (say) London based reinsurer in the Tribunal would be stretching the purposes of the Act to breaking point. Having such a claim in the Tribunal, it was said. would be inconsistent with the fair and speedy resolution of the homeowner’s claim.
[22] Mr McLennan said that there was no legal difference between the hypothetical case involving the joinder of a reinsurer and the present case involving the joinder of QBE.
[23] However, in my view the situation mooted by Mr McLennan is directly addressed by s 11(1)(b) of the Act.
[24] I consider Parliament intended that it would be the Tribunal that makes the decision whether removing a third party is necessary for the fair and speedy resolution of the claim. In my view, the structure of the Act means that it is not for this Court to proceed on the basis that Parliament intended that existing third party claims cannot be transferred to the Tribunal. That is because the Act, in my view, contemplates
transfer and the future role of third parties in the proceeding (if any) being determined by the Tribunal.
[25] I remind myself it is not my role to determine the merits of the proposed appeal and I am only to determine whether it is reasonably arguable. However, I do not find in the applicant’s submissions an answer to the statutory context points raised in my judgment and in IAG’s submissions.
[26] I do not consider the reference to the Parliamentary materials, raised for the first time in QBE’s submissions, inconsistent with the view I have adopted. QBE submitted the following statutory materials to support its position:
18.In the In-Committee debate of 8 May 2019 Stuart Nash explained that the purpose of the Tribunal was to resolve disputes between insurers and policyholders, not third parties. The context to the comment was that another Member had raised an issue that, under what is now s 11 of the Act, if two or more parties are removed from the Tribunal so that only a third party claim remains, that third party claim cannot be dealt with by the Tribunal. Mr Smith wanted the Bill amended so that the Tribunal would retain jurisdiction over third party claims if the insured-insurer claim was removed.
19.In response Mr Nash explained the purpose behind s 11 and why the government would not amend it:
“Hon STUART NASH: OK. Let me continue. Supplementary Order Paper 227-we do not support this either. Let me outline the reasons why. The intent of the tribunal is to primarily resolve disputes between insurers and policyholders, not third parties. …
The intent of the tribunal is to primarily resolve disputes between insurers and policyholders, not third parties. If the main dispute involved a third party, and does not involve a policyholder or an insurer or EQC, this disputed should be dealt with in another forum.
(Emphasis added)
20.This passage is consistent with, and assists to contextualise, the purpose of the Act as set out in section 3, which is to provide “fair, speedy, flexible, and cost-effective services for resolving disputes about insurance claims … arising from the Canterbury earthquakes”. A third party dispute between an insurer and its project coordinator is not ‘a dispute about an insurance claim’.
[27] The Act contemplates in s 11(1) that the presence of third parties may not be consistent with the fair, speedy and flexible determination of a policy holder’s claim and thus the Tribunal is expressly empowered in those circumstances to remove that party. The Act itself provides the answer to the submission made by QBE. If a proceeding did primarily involve a dispute between a policy holder and an insurer, then nonetheless it is still the policy holder’s decision to transfer such to the Tribunal. As transfer of a proceeding in this Court can only be initiated by a policy holder it is up to them to assess whether the presence of third parties will make transfer to the Tribunal undesirable. That will not impact on the Tribunal’s powers under s 11(1) but the fact that a policy holder is content to seek transfer of a proceeding which involved third parties is a practical answer to the submission that transfer with third parties will prevent policy holders achieving the fair and speedy resolution of their claims.
[28] Nor can I see it having been intended by Parliament that the starting position for a defendant in a transferred proceeding to the Tribunal would be to conduct proceedings in the Tribunal and the third party proceedings in the Court from which the transfer occurred. That would create significant practical case management difficulties for the third party proceedings requiring the proceedings in both Tribunals to proceed at the same rate. That a defendant being asked to consent to an application to transfer would be put into that position in a case where they joined a third party may also create a disincentive for a defendant to consent to transfer. Such a defendant may well argue that it is unjust that they should lose the benefit of a claim against a third party which they were able to commence as of right when in the Tribunal they do not have a similar right.
[29] QBE also relied on commentary on the Bill as reported from the Governance and Administration Committee and its reference to what is now s 16 of the Act. The commentary said:
We also recommend amending clause 16 to allow applications to be made where there are more than two parties (such as multiple plaintiffs or defendants), but this would not extend to class actions.
[30]QBE submitted:
While not conclusive, this passage is consistent with QBE’s submission that “parties” in clause 16 (and now s 16) is to be construed as meaning other plaintiffs or defendants, as opposed to parties against whom the plaintiff seeks no remedy. At the very least, the argument is a serious one that requires full argument in the Court of Appeal.
[31] I do not accept QBE’s submission. For a start, even in the commentary the reference is only “such as”. Had Parliament intended s 16(2) to only apply to defendants then that is what the Act would have said. I appreciate that QBE does not put this point forward as being conclusive, but in my view the language of s 16(2)(a) is clear. It is parties additional to those referred to in s 8. The parties in s 8(1) are the policy holders and insurers. It is the policy holders and insurers who will be the plaintiff and the defendant. Parties in addition to the policy holder or insurer cannot then be the plaintiff or defendant as they are the parties named in s 8(1). The language in the section to me is plain and I do not see the Parliamentary materials as altering that plain meaning.
[32] Are the purposes of the Act better served by construing the Act as enabling the Court to decline to transfer third party proceedings to the Tribunal? The purposes of the Act are expressly stated in s 3 which provides as follows:
The purpose of this Act is to provide fair, speedy, flexible, and cost-effective services for resolving disputes about insurance claims for physical loss or damage to residential buildings, property, and land arising from the Canterbury earthquakes.
[33] Is this Court better placed than the Tribunal to determine whether a third party claim should be heard with the policy holder’s claim? I do not think it is reasonably arguable that the objectives of the Act are better served by that decision being able to be made in this Court. This Court is not attuned to the case management processes of the Tribunal nor its ability to adopt inquisitive processes.
[34] Again, the Act in s 11 provides a safeguard to policy holders should the presence of additional parties be inconsistent with the purposes of the Act. In my view, the Act is geared towards the role of third parties in the Tribunal being determined by the Tribunal and it is more efficient that the Tribunal exercise that role on the entire
proceeding being transferred to the Tribunal rather than third party claims being approached piecemeal.
[35] I have not been persuaded that there is a reasonably arguable case that s 16(2) prohibits the transfer of third party proceedings to the Tribunal. Nor am I persuaded that there is a reasonably arguable case that s 16(2) permits this Court to transfer part of a proceeding to the Tribunal.
[36] To the extent that QBE’s alternative ground of appeal depended on there being the ability to transfer part of a proceeding then that ground in my view is not arguable for the reasons just given.
[37] If the alternative argument is that on the meaning I gave the Act, my decision to transfer was nevertheless wrong, I do not accept that that argument warrants a second appeal. QBE submitted that I failed to consider the prejudice to the plaintiffs that resulted from the transfer of the third party proceeding. I do not accept that is arguable. The plaintiffs initiated the transfer of the proceeding to the Tribunal and were aware of the debate relating to the third parties and took no stance on that. The plaintiffs are now self-represented and attended the telephone conference at which counsel addressed their submissions in support of the application for transfer and made no submissions in respect of the application for leave. In those circumstances, I can only conclude that the plaintiffs have no concern with the third parties being involved in the proceeding.
[38] QBE then makes the submission that in my judgment I failed to recognise that QBE would be bound by the Tribunal’s findings. At para [25] of the judgment I said that whether a finding in the Tribunal would as a matter of law bind QBE was something I did not need to determine, but then referred to the practical benefits of having QBE as a party, including in relation to alternative dispute resolution.
[39] There is then the submission that on appeal QBE would submit that I erred by effectively disregarding the split trial arrangements that had been ordered in this Court. In this Court, IAG and QBE had agreed by way of joint memorandum that the third party proceedings would be determined separately from the plaintiffs’ claim against
IAG. That was the position at the time I issued my decision QBE seeks to appeal. IAG has recently reversed its position regarding the split trial. That IAG has changed its position in that regard after my judgment does not make my judgment in respect of that issue wrong. That there had been an agreement to the staged hearing of the third party claim was known at the time of my judgment and at para [21] I referred to the Tribunal’s wide-ranging case management powers being wide enough for the Tribunal to direct a separate or staged hearing of issues.
[40]QBE submitted:
… it is arguable that this Court erred by allowing the plaintiffs’ transfer application to disturb the Court’s order that issues between IAG and QBE be tried separately.
[41] I do not accept that. Once a proceeding is transferred to the Tribunal, case management directions in this Court are overtaken by that fact. The Tribunal’s hands are not tied by existing case management directions in this Court given the different procedures in the Tribunal.
[42] In respect of this aspect of the application for leave, I do not accept that the issue as to my exercising a discretion to transfer the proceeding raises an issue of general or public importance that requires determination.
[43] In respect of the first issue, that is the meaning of the Act, I do consider that to be a matter of general or public importance as I accept the point made at para 2(c)(i) of the application for leave to appeal that my decision has set a precedent effectively requiring that each time a policy holder seeks an order transferring a proceeding that the entire proceeding, including third party claims, will be transferred.
[44] Returning to the alternative ground of appeal, as I have said, I do not consider the exercise of my discretion in this particular case to be a matter of general or public importance or that it would warrant the delay of an appeal (noting QBE’s undertaking to advance such an appeal expeditiously). In respect of this issue, I do not consider that the interests of justice would be served by granting leave to appeal.
[45]It follows that the application for leave to appeal is dismissed.
[46]Costs are reserved.
Associate Judge Lester
Solicitors:
Lane Neave, Christchurch Duncan Cotterill, Auckland Anthony Harper, Christchurch Hazelton Law, Wellington
Copy to counsel:
N S Gedye QC, Auckland
L R Green, Barrister, Auckland
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