HIH Casualty, re (in liq) HC Auckland CIV 2009-404-3637
[2010] NZHC 1709
•10 September 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2009-404-003637
IN THE MATTER OF section 284 of the Companies Act 1993
AND
IN THE MATTER OF HIH Casualty and General Insurance (NZ) Limited (in liquidation)
AND
IN THE MATTER OF FAI (NZ) General Insurance Company (in liquidation)
AND
IN THE MATTER OF an application for directions by KM Downey and WG Black
KERRYN MARK DOWNEY AND WILLIAM GUY BLACK Applicants
Hearing: 23 November and 9 December 2009, 30 March and 1 September 2010
Counsel: MV Robinson and JA Craig for applicants
Judgment: 10 September 2010 at 4:45pm
JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for directions]
Solicitors: Simpson Grierson, Private Bag 92 518, Auckland 1141
RE HIH CASUALTY & GENERAL INSURANCE LTD (IN LIQUIDATION) AND FAI (NZ) GENERAL INSURANCE COMPANY (IN LIQUIDATION) HC AK CIV 2009-404-003637 10 September 2010
The application
[1] The liquidators of HIH Casualty & General Insurance (NZ) Ltd (in liquidation) referred to as “C&GNZ” and FAI (NZ) General Insurance Company Ltd (in liquidation) referred to as “FAI NZ” apply to the court for directions. The directions are sought to assist the liquidators to seek and determine claims by C&GNZ policy holders and FAI NZ policy holders. It involves communication with the policy holders to elicit their claims (if any) and procedure to establish the amounts of unliquidated or contingent claims within the framework of the Companies Act 1993, Part 16. This judgment will discuss each of the directions sought.
Directions as to service of the originating application
[2] Associate Judge Christiansen, in an order made on 18 June 2009, gave specific directions as to how notification of this application was to be given to interested parties. Affidavits by Mr DJF Taylford, an associate director of a firm, McGrath Nicholl which the two applicant liquidators are partners of, and Mr AP Hoy, managing director of Simpsons Data Plus Mail, have confirmed the steps taken in compliance with the orders made. The position was summarised for me in counsel’s memorandum. Approximately 7,900 letters have been sent to policy holders and/or the insurance brokers advising them of the originating application. Copies of the letters were also sent to the Insurance Council of New Zealand and the Insurance Brokers Association of New Zealand. The process has resulted in approximately fifty-one persons contacting the liquidators. No persons have indicated to the liquidators that they wish to be heard in respect of the application. No person has expressed opposition to the orders which are sought.
Background - The liquidations
[3] The applicants, Messrs KM Downey and WG Black, are the current liquidators of C&GNZ and FAI NZ. They are partners in McGrath Nicholl, a firm which specialises in corporate recovery work. Mr Downey and Mr AR Isaac were
appointed interim liquidators of C&GNZ by the High Court on 6 June 2001. They were appointed permanent liquidators of C&GNZ on 19 July 2001 and of FAI NZ on
31 August 2001. Mr Isaac resigned and was subsequently replaced by Mr Black as one of the liquidators.
[4] Mr Downey and Mr Black are currently liquidators in New Zealand of related companies, the significance of which I will explain, namely HIH Holdings (NZ) Ltd, HIH Insurance Holdings (NZ) Ltd and FAI Home Security Holdings (NZ) Ltd as well as the two companies which are the subject of this application.
[5] C&GNZ was a general insurance company. The ultimate holding company of C&GNZ is an Australian company, HIH Insurance Ltd, which is also in liquidation. The HIH group is made up of HIH Insurance Ltd and 274 subsidiary companies in Australia and a number of other jurisdictions, including the United States of America, the United Kingdom, Hong Kong and New Zealand. The HIH group sold a range of insurance products, including fire and material damage, accident, marine, motor, trade credit, business interruption, professional indemnity and public liability insurance. C&GNZ was the main trading vehicle for the HIH group’s insurance business in New Zealand.
[6] On 15 March 2001 the Supreme Court of New South Wales appointed provisional liquidators of HIH Insurance Ltd along with seventeen of its Australian subsidiaries. The interim liquidators were appointed permanent liquidators by the court on 27 August 2001. Most of the companies in the HIH group around the world are in some form of administration.
[7] C&GNZ’s sole shareholder is HIH Insurance Holdings (NZ) Ltd (in liquidation). HIH Insurance Holdings (NZ) Ltd’s sole shareholder is HIH Holdings (NZ) Ltd (in liquidation). Both are New Zealand companies and, as already recorded, have Messrs Downey and Black as their liquidators. HIH Holdings (NZ) Ltd’s sole shareholder is the Australian company HIH (Overseas) Holdings Ltd, which is also in liquidation.
Background – C&GNZ’s history
[8] The HIH group had its beginnings in New South Wales in the late 1960s. C&GNZ was incorporated on 2 May 1986 under a different name. It was the underwriting company and main trading entity for the HIH group’s business in New Zealand. It initially specialised in professional indemnity insurance. Its business expanded and included a number of other types of insurance. Its operation grew from a small office in Auckland, employing a handful of staff, to a countrywide network of branches with approximately 120 staff. Some of the growth was achieved by buying other businesses and by forming strategic alliances. Two significant acquisitions were the general insurance arm of the Colonial Mutual Group of companies in New Zealand, which wrote mainly domestic and small commercial business, in 1997 and FAI NZ, which wrote a wide range of domestic, commercial and corporate insurance, in 1999. C&GNZ exercised management control over the New Zealand operations. It, of course, was effectively controlled by the HIH group in Australia.
[9] On assuming management control over FAI NZ, C&GNZ assumed the liabilities of FAI NZ and effectively took over its business on 1 July 1999. That was by a transaction known as portfolio assumption. FAI NZ effectively ceased trading in its own right. It simply held limited assets and liabilities.
[10] FAI NZ had been a wholesale insurance company underwriting corporate and large commercial risks through a network of brokers. The acquisition of FAI NZ introduced C&GNZ to new distribution channels which were used for domestic insurance and small commercial business. On 24 May 2001 C&GNZ sold the rights of renewal for the majority of its business to QBE Insurance (International) Ltd, which I shall refer to as QBE International. QBE International is an Australian company. It assumed the insurance liabilities of C&GNZ in exchange for assets of equal value by way of portfolio assumption. Some parts of C&GNZ’s business were not acquired by QBE International. The policies which were assumed by QBE International following the portfolio assumption are not affected by the directions which are sought. That is because, as a consequence of the assumption and the
indemnity, C&GNZ was intended to have no liability in respect of the policies, which were assumed by QBE International following the portfolio assumption.
[11] C&GNZ has not written any new insurance policies since the High Court appointed the applicants as interim liquidators on 6 July 2001. FAI NZ has not written any new insurance policies since its insurance business was assumed by C&GNZ in July 1999.
[12] The parts of the C&GNZ’s business which were not acquired by QBE International are referred to as “excluded liabilities” in the portfolio assumption deed. They remain the responsibility of C&GNZ. One important area of excluded liabilities were contracts issued by FAI NZ.
Previous High Court directions
[13] The liquidators applied to the court for directions pursuant to the Companies Act 1993, s 284. That application was the subject of a reserved judgment of Paterson J on 17 December 2003 in proceedings CIV 2003-404-2838.[1]
[1] Re HIH Casualty and General Insurance (NZ) Ltd HC Auckland CIV 2003-404-2838, 17 December 2003.
[14] For the purposes of this judgment, Mr Robinson summarised the directions in the following way:
23.1These directions confirm, inter alia, that in providing $35 million for former FAI NZ claims reserves at 90% probability of sufficiency, the applicants could proceed to make one or more interim distributions to C&GNZ policyholders, the applicants did not need to communicate with policyholders whose policies were assumed by QBE International in May 2001 (the Assumed Policyholders), and the applicants could value claims by such Assumed Policyholders at zero. Leave was reserved for the applicants to apply to the Court for further directions as required. Also, importantly for the purposes of the present application, an order was made in para. 34 of Justice Paterson’s judgment that the applicants take no steps to conclude the liquidation of C&GNZ in accordance with s249 of the Companies Act without first obtaining the leave of the Court.
[15] On 30 April 2008 in proceeding CIV 2007-404-3775[2] Associate Judge Robinson made further directions. The purpose of those directions was to cover the position where a claimant became a creditor subsequent to the date of liquidation. The Companies Act 1993, s 311(2) makes provision for the payment of interest where surplus assets remain after the payment of all admitted claims. The court directed that, in respect of those debts occurring after the liquidation, interest was to be paid at the prescribed rate within the meaning of the Judicature Act 1908, s 87(3), calculated from the date of liability and not the date of liquidation.
[2] HIH Casualty & General Insurance (NZ) Ltd (in liq) v Downey HC Auckland CIV 2007-404-3775,
30 April 2008.
Current position of the liquidations
[16] The liquidators have almost completed the liquidations of C&GNZ and FAI NZ, including the preservation and enhancement of the insurance recoveries and recovery of amounts owed by Australian companies in the HIH group as assigned loans and dealing with claims by creditors and policy holders.
[17] As at 30 April 2009, Mr Downey estimated that C&GNZ would have a surplus. He anticipated that the range was, in a worst case to best case scenario, between $62.7 million and $74.4 million. That discloses a substantial improvement on the position reported at 31 January 2002. That report contained a range of a shortfall of $19.2 million in the worst case scenario, and a best case scenario of
$53.8 million.
[18] As at 30 April 2009 Mr Downey estimated that FAI NZ would likewise be in a surplus position. He estimated that the range from a worst to best case scenario was from $10.5 million to $19.8 million. That assessment discloses that the funds retained are substantially more than that which were required to be retained pursuant to the decision in Re HIH Casualty and General Insurance (NZ) Ltd.[3]
[19] Mr Downey and his co-liquidator expect to complete the major issues outstanding in the C&GNZ liquidation by, approximately, the end of December
2010. He reports that the FAI NZ liquidation is largely complete.
[3] Re HIH Casualty and General Insurance (NZ) Ltd, above n 1.
[20] The completion of the liquidations is subject to determining and ascertaining the remaining entitlement (if any) of the policy holders. The liquidators are seeking these directions so that they can complete the administrations. That was a requirement of the judgment of Justice Paterson.
Exposure to policy holders
[21] An insurance company’s liabilities may continue to arise in respect of policies written prior to liquidation for some time after the liquidation has begun. Mr Downey identifies the two broad categories of insurance business, namely, “short tail” and “long tail”. The distinction is that long tail insurance means that claims are not always notified in the course of the year that the policy and premium relate to. Short tail business, by contrast, means that claims are normally notified during the term of the insurance policy. Professional indemnity insurance “PI” and public liability “PL" tend to have long tail characteristics. The circumstances giving rise to loss, and therefore a claim by the insured, may occur a considerable time before any actual loss occurs and is notified to the insurer. PI policies are generally written on a claims made and notified basis. The policy holders are required to notify the insurer during the currency of the policy of any claim first made against the policy or of any circumstance the policy holder reasonably believes may give rise to a claim if the policy holder seeks indemnification under the policy.
[22] PL policies are written on an occurrence basis. The insurer will be liable to indemnify an insured if the circumstances giving rise to a claim arose during the currency of the insurance policy notwithstanding that the loss may not have occurred by the end of the policy period. That means that a policy holder could report a circumstance at a future date in respect of events which have occurred in an earlier policy period but which only became a claim in a subsequent period. That means that claims under the public liability policies, while subject to the relevant limitation periods, could occur some years after the policy was issued.
[23] I have noted the times when both companies ceased writing business and the dates of their liquidation. It is unlikely that the liquidators will receive any claims in the future in respect of short tail business, that is, claims that should have been made during or shortly after the term of the insurance policy. The liquidators do have a concern, however, about C&GNZ’s liability in respect of long tail policies. They are particularly concerned about PI and PL policies, which were written by FAI NZ prior to C&GNZ exercising management control in February 1999. Here the particular problem lies in the policies written by FAI NZ. As I have already recorded, the policies recorded by C&GNZ were assumed by QBE International under the portfolio assumption. The same did not occur in respect of policies written by FAI NZ.
[24] FAI NZ wrote both PI policies and PL policies between 1984 and 1999. There were approximately 20,000 policy holders. The FAI NZ policies were written on a “claims made and notified” basis. Notification therefore had to be made during the term of any policy of any claim or, at least, in circumstances which the policy holder reasonably believed might give rise to a claim.
[25] FAI New Zealand’ PL policies were written on an “occurrence” basis. The result is that the insurer, who would be FAI NZ or C&GNZ, may be liable to holders of PL policies in respect of insured events that occurred during the term of the policy notwithstanding that the policy holder may not have become aware of the loss suffered as a result of the insured event until some time after the term of the PL has expired.
[26] Most of FAI NZ PI and PL policies were written for a twelve month term. In the earlier periods, some were written for varying terms up to as much as thirty-six months.
[27] As a result, FAI NZ and C&GNZ may have contingent liabilities to the FAI NZ policy holders and the C&GNZ policy holders that have been incurred but not yet reported, as a result of:
a) Insured events having occurred of which the policy holders remain unaware, or which for some other reason, the policy holders have not yet notified the liquidators about;
b)Claims which the policy holders have notified FAI New Zealand about but which the liquidators have been unable properly to administer due to a lack of proper records; and
c) There not being a proper application of one or other of the Limitation Act 1950, the Building Acts 1991 and 2004 or the Insurance Law Reform Act 1977 to a potential claim situation.
[28] It was said of the contingent claims in Re HIH Casualty and General
Insurance (NZ) Ltd:[4]
[4] Ibid, at [19].
A contingent claim is founded on an obligation incurred by an insolvent company before it is put in liquidation which will crystallise on the happening of some future event into a present debt or liability provable in the liquidation: see Re William Hockley Ltd [1962] 1 WLR 555; [1962]
2 All ER 111. Liquidators are obliged to accept contingent claims: Hoffmann J in Transit Casualty Co. & Anor v The Policyholders Protection
Board & ors [1992] 2 Lloyds Reports 358 at 359, noted the law in the
United Kingdom as it related to unliquidated and contingent claims in the winding up of an insurance company. Such claims fall to be valued in
accordance with the general law. Liquidators are required to make a “just
estimate” of the value of such claims as do not bear a certain value. The valuation of contingent debts is to be at the date of the winding up order, but
subsequent events are taken into account for the purposes of retrospective
adjustment of the value of the estimate. There are thus obvious difficulties for liquidators in completing the liquidation of an insurance company as policy holders may make claims which the liquidators are required to accept, after the date that the liquidation has commenced. There are in the United Kingdom specific regulations dealing with the valuation of contingent claims including those made in respect of insurance policies. There are no similar regulations in New Zealand.
[29] Mr Robinson, in his submissions observed that the liquidation of an insurance company with many contingent claims does not fit readily into the statutory regime prescribed under the Companies Act 1993 and the Companies Act 1993 Liquidation Regulations 1994. He noted that the difficulties inherent in conducting the liquidation of an insurance company, particularly in the treatment of contingent
claims, create issues for liquidators in other jurisdictions. He reviewed the position in the United Kingdom and the United States.
[30] In the New Zealand legislation, claims in a liquidation are dealt with pursuant to the Companies Act 1993, ss 303 to 307 and the Companies Act 1993 Liquidation Regulations 1994, regs 12 to 16.
[31] The Companies Act 1993, s 301(1) confirms that contingent claims may be admitted as a claim against a company in liquidation.
[32] The methods of a creditor making the claim and the duties of a liquidator in assessing the claim in respect of an unsecured creditor are prescribed in the Companies Act 1993, s 304. Section 305 deals with the position in relation to secured creditors. Section 306 requires the amount of the claim to be ascertained. Section 307 deals with the position where a claim is subject to a contingency, or is for damages, or for some other reason the claimant is not certain how that is to be approached.
[33] The Companies Act 1993 Liquidation Regulations 1994, reg 12, sets out the notice which the liquidator must give in calling for claims. Regulation 13 deals with the failure to make a claim by a fixed day. Subregulation (2) does have some importance for this application. It provides:
13 Failure to claim by day fixed for claims
(1) …
(2)A creditor who makes a claim after the day fixed in accordance with regulation 12 of these regulations and whose claim is admitted shall be entitled to receive the benefit of any distribution from which the creditor was previously excluded if any assets remain, or, in the opinion of the liquidator, are likely to remain, available for distribution.
[34] If a distribution has been made to creditors or to shareholders, for that matter, a claimant proving late may not recover from such persons: Re Armstrong Whitworth Securities Co Ltd.[5] That position must be contrasted with the liquidators’ duty in the
[5] Re Armstrong Whitworth Securities Co Ltd [1947] Ch 673; [1947] 2 All ER 479.
ascertainment of claimants. The position is summarised in Brookers Insolvency Law
& Practice[6] as follows:
[6] Linday Hampton & Others (eds) Brookers Insolvency Law & Practice (looseleaf ed, Brookers) at [CA304.03(1)].
CA304.03 Liquidator’s duty
(1) Duty to creditors
Section 313(1) provides that after paying the preferential creditors in accordance with s 312 the liquidator must apply the assets of the company in satisfaction of all other claims. As part of this statutory duty a liquidator is also under a duty to ascertain from the company’s books and papers the creditors of the company and contact “known creditors” who have yet to file a claim to determine whether they wish to do so. A liquidator may be found to have acted negligently in the discharge of his or her duties and liable for damages for unpaid creditors if he or she knows of creditors who have not proved their claims and fails to make sufficient efforts to see that they are dealt with: James Smith & Sons (Norwood) Ltd v Goodman [1936] Ch 216; [1935] All ER Rep 697.
What period should be allowed for future claims?
[35] FAI NZ's PI policies were written on a “claims made and notified basis”. Accordingly the policy holder was required to notify C&GNZ or FAI NZ during the term of the policy of any claim or circumstance which the policy holder reasonably believed may give rise to a claim. The chances therefore of a claim being received under a FAI NZ PI policy are now extremely slim. The policy holder would have had to notify its claim during the term of the policy, that is, before February 2000. That is because the policies were written up until February 1999 and for a twelve- month term. Mr Robinson drew attention to the fact that there had been circumstances where an insured has notified their insurer after the currency of their PI cover has expired. The insurer, in that case, will only be liable if, in fact, there is no prejudice to the insurer, having regard to the Insurance Law Reform Act 1999, s 9(1)(b). A number of cases have applied that provision in practice. Mr Robinson referred to Sinclair Horder O’Malley & Co v National Insurance Co of New
ZealandLtd[7] and Bradley West Clarke List v Keeman.[8] Bearing in mind that FAI NZ
ceased writing cover in its own right in February 1999, the liquidators correctly, in
my view, asserts that the passage of time would be a significant issue, if any new PI claims are made at this stage. I accept the proposition advanced on their behalf that the chances of a claim under the PI policies are now extremely slim.
[7] Sinclair Horder O’Malley & Co v National Insurance Co of New Zealand Ltd [1995] 2 NZLR 257 (CA).
[8] Bradley West Clarke List v Keeman 9 ANZ Insurance Cases 61-342 (HC).
[36] The FAI NZ PL policies were written on an “occurrence” basis. Under those policies FAI NZ and/or C&GNZ may be liable to holders of PL policies in respect of insured events that occurred during the term of the policy notwithstanding that a policy holder may not have become aware of the loss suffered as a result of the insured event until some time after the term of the PL policy has expired. In the case of a leaky home case, the damage which gives rise to the claim, for example cladding being inappropriately installed by a builder, would have to occur during the policy period for a claim to be made.
[37] The normal six-year limitation period prescribed by the Limitation Act 1950, s 4 for claims in contract and tort will have expired by now. In the case of building claims, time will not commence running for the purposes of calculating limitation periods until the defective work is discovered, or reasonably discoverable:
Invercargill City Council v Hamlin.[9] However, under the Building Act 2004, s 393(2)
and its predecessor the Building Act 1991, s 91,civil proceedings relating to building work may not be brought against a person after ten years from the act or omission on which the proceedings are based. Although it is unclear when the ten-year period commences running, generally it is recognised that the latest date is when the building works were completed, that is the date a Code Compliance Certificate was issued. This would effectively take the date for receiving PL building claims up to March 2010. If allowance is made for maximum time for service of any proceeding issued up to that date, as prescribed by r 5.72 of the High Court Rules, a further twelve months should be added bringing the date to March 2011. This is on the basis that the claims would have to relate to work completed in the period up to the end of February 2000. The ten-year long stop for the building work under the Building Act would therefore expire at the end of February 2010. A claim that would not be defeated by a limitation argument would therefore have to be filed prior to the end of February 2010. At the very latest, it would have to be served on a policy holder by the end of February 2011. That seems to me to be a reasonable date to adopt as the close off date for PL policy claims save for two areas.
[9] Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC).
[38] Mr Robinson drew my attention to the first area which might raise a reservation about the proposition just stated. It arises where a cross-claim by a defendant has been issued seeking contribution under the Law Reform Act 1936, s 17(1)(c). Rule 4.18 of the High Court Rules permits a claim between defendants to be filed at any time before the setting down date for the proceeding. There is conflicting authority on whether the ten-year long stop for building cases as prescribed in the Building Acts applies in this situation. In Cromwell Plumbing Drainage
& Services Ltd v de Geest Brothers Construction Ltd[10] it was held that a claim for
contribution was not subject to the long stop period imposed by the Building Act 1991, s 91(2). In Dustin v Weathertight Homes Resolution Service[11] Courtney J disagreed with Hansen J’s decision. She observed that the effect of the Building Act 1991, s 91(2) is that if the proceeding concerned is a civil proceeding and relates to building work, then it is subject to the long stop period. Her Honour’s analysis was adopted in Carter Holt Harvey Ltd v Genesis Power Ltd (No 8)[12] and Davidson v Banks.[13]
[10] Cromwell Plumbing Drainage & Services Ltd v de Geest Brothers Construction Ltd (1995) 9 PRNZ 218 (HC).
[11] Dustin v Weathertight Homes Resolution Services HC Auckland CIV 2006-404-0276, 25 May 2006.
[12] Carter Holt Harvey Ltd v Genesis Power Ltd (No 8) HC Auckland CIV 2008-404-1974, 29 August 2008.
[13] Davidson v Banks HC Auckland CIV 2006-404-6150, 23 March 2009.
[39] I adopt the analysis of Courtney J. The effect is that time will not continue to run past the ten-year long stop in the Building Acts for contribution claims, plus a further year covering the service issue as prescribed by r 5.72 of the High Court Rules.
[40] The second area requires a consideration of Kells v Auckland City Council.[14]
[14] Kells v Auckland City Council HC Auckland CIV 2008-404-1812, 30 May 2008.
That raises a reservation about the proposition stated in [37] of this judgment. Asher J held that if a claim was filed under the Weathertight Homes Resolution Services Act 2002 within the ten-year period, further parties could be joined to the claim at a later date without limitation concerns. In his judgment he referred to the conflicting views expressed in Cromwell Plumbing Drainage & Services Ltd v de Geest Brothers Construction Ltd[15] and Dustin v Weathertight Homes Resolution Service.[16] He was there dealing with an appeal against a decision of the Weathertight Homes Tribunal refusing
to strike out the appellants from the proceeding. In that case a development was constructed in the second half of 1996 and the Council issued an interim Code Compliance Certificate in relation to the construction on 12 May 1997. The owners of the property became aware of problems in the building in December 2004 and on 2 March 2005 they applied to have the property assessed for weathertightness pursuant to the Weathertight Homes Resolution Services Act 2002. An extensive report was prepared. The report identified design and construction problems in the building, which led to water ingress and consequential damage. The property owners filed a notice of adjudication naming the Auckland City Council as respondent on 21 November 2005. Following that the Tribunal made procedural orders. On
19 November 2007 the Auckland City Council applied for an order that the appellants be joined as respondents. It was alleged by the Auckland City Council that the appellants had exercised control over the developments and therefore owed a non-delegable duty of care to all subsequent purchasers to ensure that the construction was carried out properly and complied with the Building Code. It will be observed that the joinder of the appellants occurred more than ten years after the interim Code Compliance Certificate in relation to the construction was issued by the Council. The appellants applied to be struck out from the claim. They relied on the Building Act 2004, s 393(2). They asserted that they had been joined some ten years and six months after the date when the work was completed, as evidenced by the Code Compliance Certificate. The strike out application was refused. The Tribunal held that the date of the commencement of the initial proceedings in the Tribunal, rather than the date of joinder, was the relevant date for measuring compliance with the limitation requirement.
[15] Cromwell Plumbing Drainage & Services Ltd v de Geest Brothers Construction Ltd, above n 10.
[16] Dustin v Weathertight Homes Resolution Service, above n 11.
[41] Counsel’s submissions originally sought to distinguish the decision in Kells v
Auckland City Council.[17]
[17] Kells v Auckland City Council, above n 14.
[42] In the course of preparing judgment I was concerned as to the position adopted by counsel in relation to this decision and issued a minute on 26 November
2009 as follows:
1.In the course of preparing judgment on the liquidators’ application I discovered that one aspect had not been properly canvassed in submissions during the hearing.
2.It concerns the position of a policy holder joined to an adjudication under the Weathertight Homes Resolution Services Act 2006.
3.The procedure is initiated by virtue of s 62 by an application to the Tribunal in writing which is approved by the Chair and which is served on the other party or parties to the adjudication and the Department.
4. Section 37 of the Weathertight Homes Resolution Services Act
2006, however, provides that the making of an application under s 32(1) has effect as if it were the filing of a proceeding in a Court.
Section 32 provides for an application to the Chief Executive to have an assessor’s report prepared in respect of a dwelling house. That
process does not require the naming of the other party until the adjudication process under s 62 is commenced.
5.If one assumes a notice is given by the owner of a dwelling house under s 32 within ten years of the event giving rise to a potential claim, but the adjudication itself is not initiated in terms of s 62 until after the lapse of the ten-year period, the question arises: is there a finite date by which a public liability policy holder must receive notice of an adjudication claim so that the claim is within limitation periods? This question requires a determination of whether the decision of Asher J in Kells & Anor v Auckland City Council & Ors HC AK CIV 2008-404-1812 30 May 2008 is correct.
6.The examination of the position in Dustin v Weathertight Homes Resolution Service & Ors HC AK CIV 2006-404-0276 25 May 2006 was obiter. The particular provisions which lead to a contrary result in relation to proceedings before the Weathertight Homes Tribunal as analysed in Kells reviewed provisions of the Weathertight Homes Resolution Services Act 2006 which were not considered in Dustin. It must be borne in mind that the two decisions were considering different Acts, although the sections concerned are substantially the same in both Acts. Dustin was involved with the Weathertight Homes Resolution Services Act 2002 whereas Kells considered the provisions of the replacement Act Weathertight Homes Resolution Services Act 2006. The Kells decision, however, is based on an application of ss 32 and 37 of the Weathertight Homes Resolution Services Act 2006. The comparable provisions of the Weathertight Homes Resolution Services Act 2002 were ss 9 and 55 respectively. Sections 9 and 55 were not considered in the analysis undertaken in Dustin.
7. For completeness sake, I should mention that my decision in
Davidson & Ors v Banks & Ors HC AK CIV 2006-404-6150 23
March 2009 dealt with an application in the High Court by a third party for the granting of summary judgment or striking out a claim because of the defence provided by the Building Act limitation provision which was either s 392(2) of the Building Act 2004 or s 29(1)(2) of the Building Act 1991. It therefore does not assist in the particular question that I have posed for consideration. Further the decision of Randerson J in Carter Holt Harvey Ltd v Genesis Power Ltd & Ors (No 8) HC AK CIV 2008-404-1974 29 August
2008 deals with proceedings in the High Court and also does not assist in the answer to the question I have posed in paragraph 5.
8.The result of the analysis undertaken in Kells is that if there is an application made for a report pursuant to s 32 within the ten-year long stop period that will defeat, by the operation of s 37, any limitation defence which might be raised by a party joined to an adjudication process. Counsel will need also to consider the effect of ss 111 and 112 of the Weathertight Homes Resolution Services Act 2006, which deals specifically with the joinder of parties and the removal of parties.
9.I invite counsel to consider this problem and to file a memorandum which either identifies a specific limitation time or otherwise indicates , however, adjudication claims should be made provision for in the directions which are sought. If counsel seek an oral hearing on the matter, they should indicate as soon as possible and I will instruct the Court to arrange time for a short hearing on the point before me.
[43] Counsel helpfully filed memoranda and further conferences were held with counsel.
[44] Counsel advised me that they no longer challenged the decision in Kells.[18] At the hearing on 30 March 2010 I expressed my remaining concern as to what provision, if any, should be made for those policy holders whom might be notified in the future that they are parties to a proceeding which has been commenced in time under the Weathertight Homes Resolution Services Act 2006. Mr Robinson, after taking instructions, helpfully offered to file a further memorandum with amended directions and also affidavit evidence from an actuary. The object of that exercise was to give expert opinion as to what provision, if any, should be made in respect of these contingent claims.
[18] Ibid, above n14.
[45] Although counsel anticipated that this further material would be available shortly, it could not, in fact, be provided until 30 August 2010 and shortly before a mention call of this proceeding scheduled for 31 August 2010. Because time was short on 31 August 2010 I adjourned the matter so that full argument could be addressed to me by counsel on
1 September 2010.
[46] The applicants have now filed two further affidavits. The first is from Mr Gibbs from KPMG in Sydney. He has carried out an actuarial review which gives an assessment of what provision should be made by the applicants to deal with the possibility of any further claims by policy holders of FAI NZ relating to possible claims that might be commenced under the Weathertight Homes Resolution Services Act 2006. Mr Gibbs’ affidavit has been the subject of peer review in a second
affidavit from Mr NR Christie, an actuary from Melville Jessop Weaver, in
Auckland.
[47] The reports are comprehensive. They were helpfully summarised by
Mr Robinson in his memorandum to me.
[48] Mr Gibbs has assessed the total outstanding claims liability for claims by FAI NZ policy holders, which potentially arise from claims under the Weathertight Homes Resolution Services Act 2006 as:
a) $527,463 is a central estimate, that is, if the statistical mean or expectation is used;
b)$1,067,955 if a 75 per cent probability of sufficiency of reserves is adopted; and
c) $1,927,531 if a 90 per cent probability of sufficiency is adopted.
[49] In his judgment of 17 December 2003[19] (referred to in [13] of this judgment) Paterson J explained “central estimate” and “prudential margin” as follows:
… [T]he"central estimate" [is] a realistic assessment without any bias to optimism or pessimism. The inclusion of a prudential margin [ie 75 or 90% PoS] increases the probability that the actual provision held will be sufficient to cover the future cost of claims. It recognises the fact that estimates of outstanding claims liabilities are subject to uncertainty arising from a wide range of different sources.
[19] Re HIH Casualty and General Insurance (NZ) Ltd, above n 1 at [25].
[50] Mr Gibbs’ assessment is based on an assumption of a 100 per cent distribution to insurance creditors. He has not discounted the liabilities or made allowance for unallocated claims handling costs. The figures are net of GST.
[51] In his peer review, Mr Christie advises:
Having carried out the independent peer review as described in this report, nothing has come to my attention that would lead me to believe that the PA's valuation results are unreasonable.
[52] In providing his report, Mr Gibbs and his staff had the benefit of meeting with, and obtaining data from, the Department of Building and Housing. Data was also obtained from the Weathertight Homes Tribunal. Mr Gibbs reflects on the favourable claims experienced to date on C&GNZ and FAI NZ and points out that there have been no large claims arising under the Weathertight Homes Resolution Services Act 2006 procedure in the liquidations to date. He notes that during the whole course of the liquidations of C&GNZ and FAI NZ there have only been twenty-two leaky building claims reported as at 31 March 2010 and, of those, only seven have resulted in costs in the liquidations amounting to only $143,031 in total.
[53] It is appropriate, nevertheless, to record that Mr Gibbs notes that there is a significant degree of uncertainty regarding liabilities. Even adopting a 90 per cent probability of sufficiency that means that one-in-ten of all possible outcomes will sit above the 90 per cent figure of $1,927,531, with the result that a final outcome above this figure is possible. In other words, the 90 per cent probability of sufficiency estimate is the amount that is estimated to have a 90 per cent probability of being sufficient to meet the unknown future cost of claims.
[54] The question that I need to resolve is: what provision should be made to deal with the prospect of joinder of FAI New Zealand policy holders as parties to Weathertight Homes Resolution Services Act 2006 claims?
[55] Mr Robinson helpfully drew attention to the directions made in Re HIH Casualty and General Insurance (NZ) Ltd.[20] His Honour there adopted the 90 per cent probability of sufficiency assessment of the actuaries of the time. That was for a sum of $30,000,000. He added a further $5,000,000 buffer. That had been advanced by the applicants at the time to deal with uncertainty and also conflicting actuarial advice. That led to a provision of $35,000,000 being ordered. On a percentage basis, the buffer put forward was one-sixth.
[20] Re HIH Casualty and General Insurance (NZ) Ltd, above n 1.
[56] Mr Robinson invited me to adopt a similar approach. Using the
20 percentage that would require the addition of a further $321,255.16, or a total provision of $2,248,786.10.
[57] Mr Robinson submitted that I might consider, out of an abundance of caution and to reflect reasonable remuneration and administration, which cannot be accurately assessed, expanding the provision to $2,500,000. In short, he submitted that a provision for Weathertight Homes Resolution Services Act 2006 claims be set at $2,500,000 and that sum be placed in trust for a period of two years from the final date for claims to be made in the liquidations, which I will discuss again shortly but which will be March 2011.
[58] That recommendation, that is the two-year period for the trust, raises yet a further issue about which there can be no precise certain date. It is simply a question of the court considering the provisions of the Weathertight Homes Resolution Services Act 2006 and the workings of claims in that jurisdiction. Mr Robinson provided me with yet a further supplementary memorandum when I raised the issue in the course of submissions. I set out what he placed before me because, in my view, his submission on this point is valid and I accept it. It is as follows:
7.1Section 3 of the WHRSA 2006 notes that the intention of the legislation is for ‘speedy’ resolution of disputes.
7.2Section 56 provides for the chief executive of the Department of Building & Housing, if he or she believes that a claimant who has not yet applied to the tribunal to have a claim adjudicated is not making enough effort to resolve it, to give the claimant written notice that the chief executive will terminate it unless within
20 working days (or any longer period stated in the notice) the claimant either—(a) satisfies the chief executive that enough effort to resolve it is being made; or (b) applies to the tribunal to have it adjudicated.
7.3The Weathertight Homes Tribunal states that the model timeframe for resolving adjudications from the time of application to the Tribunal to the time of the Tribunal’s decision is 60 working days (i.e. 25 working days for a response to the claim under section 66 of the WHRSA 2006, and 35 working days for resolution under section
89), plus up to 40 working days for mediation (section 82 of the
WHRSA 2006) (para. 36.6 of our 7 December 2009 submissions).
[59] These time periods I would anticipate to be completed by March 2013, taking into account the fact that the process would have commenced no later than the end of February 2011 when all claims for assessment under the Weathertight Homes Resolution Services Act 2006 had to be filed. The time allowed is more than sufficient, in my view, to protect these potential policy claimants.
[60] An additional matter that I raised with Mr Robinson was whether some cap on the expenses of the trustees of the proposed trust, referred to in the directions which I will shortly set out, should be set. On reflection, I accept his submission that that is probably unnecessary. That is because, in the directions that are sought which seek to terminate the liquidations, there is likely to be a saving in administration costs. The trustees will simply have to administer the sum of $2,500,000 compared with the much larger sums that were requiring administration in this liquidation. There is an excess over the buffer figure, on a percentage basis, that was found
acceptable in the directions in Re HIH Casualty and General Insurance (NZ) Ltd.[21]
[21] Ibid.
[61] A further consideration that requires brief comment is the issue of GST. Mr Robinson invited me to proceed on the basis that a liability for GST is unlikely to arise because the payments out would be the payments of damages. There was placed before me no detailed analysis of this issue, other than the general submission that I have just recorded. From a practical point of view, however, I do not consider the issue as one likely to lead to an insufficient available fund to meet the policy holders’ claims when one considers that the additional sum over the sum representing 90 per cent probability of sufficiency is 29.7 per cent of that sum.
Jurisdiction
[62] This application is brought pursuant to the Companies Act 1993, s 284. Section 284 empowers the court to give directions in relation to any matter arising in connection with a liquidation. It is not appropriate for liquidators to seek directions in relation to matters which are within their jurisdiction merely to gain a protection that is provided by the Companies Act 1993, s 284(3). This is an unusual situation. In the first place, the orders made in Re HIH Casualty and General Insurance (NZ)
Ltd[22] required the liquidators to seek directions from the court. In the second place,
this is a situation where there is no statutory framework for dealing with the liquidation of an insurance company. Because of that absence, the applicants are
seeking, properly in my view, confirmation from the court that the procedure that they intended to adopt is the appropriate mechanism for ensuring that known creditors with accepted claims are paid promptly and that contingent creditor claims are dealt with and that the administration is conducted in the most efficient and cost- effective manner possible. That, of course, is all designed to see that all creditors receive a maximum dividend so that any surplus can then be returned to the shareholders. I accordingly conclude that it is proper for the court to exercise its jurisdiction in this case.
[22] Ibid.
[63] Mr Robinson, as a result of the matters that have been traversed in this judgment, helpfully provided me with amended directions in a document filed on
30 August 2010. But for amendments that I discussed with him in the hearing which take account of the effect of the twelve-month service rule provided by r 5.72, which I set out below are the specific orders that are sought.
[64] The orders that are now sought with the date amendment that I have mentioned are as follows:
a) That (without limiting the directions in paragraph 1 of the orders of Justice Paterson of the Auckland High Court on 17 December 2003 in proceeding CIV 2003-404-2838 (the 2003 court directions)) in order to ascertain the amount (if any) of any outstanding liability of HIH Casualty and General Insurance (NZ) Ltd (in liquidation) (C&GNZ) and/or FAI (NZ) General Insurance Company Ltd (in liquidation) (FAI NZ) to the holders of insurance policies issued by C&GNZ or FAI NZ, the applicants are to:
i)Send a letter by 30 September 2010 by standard post in substantially the form attached and marked "A" to each of the holders of insurance policies (as known to the applicants), other than those which are a "Contract" as referred to in paragraph 1 of the 2003 court directions, written by C&GNZ (C&GNZ policy holders) and FAI NZ (FAI NZ policy holders; and, together with the C&GNZ policy holders, referred to as
the policy holders), at their last known address or the last known address of the insurance broker through whom the relevant insurance policy was negotiated, provided that only one attempt need be made to send such a letter to each policy holder.
ii)Place an advertisement by 30 September 2010 in substantially the form attached and marked "B" making a further and final call for claims by creditors in the liquidation of C&GNZ and FAI NZ on two occasions for each of the New Zealand publications below, and on one occasion for each of the Australian and other countries publications below:
New Zealand
i) The New Zealand Gazette; ii) The New Zealand Herald; iii) The Dominion Post;
iv) The Press;
v) The Otago Daily Times;
Australia
vi) The Australian;
vii) The Sydney Morning Herald;
viii) The Australian Financial Review;
Other Countries
ix) South China Morning Post (Hong Kong);
x) Samoa News (American Samoa); xi) Samoa Observer (Western Samoa); xii) Cook Islands News (Cook Islands); xiii) Fiji Times (Fiji);
xiv) Pacific Daily News (Guam);
xv) Marshall Islands Journal (Marshall Islands);
xvi) Papua New Guinea Post-Courier (Papua New Guinea);
xvii) Saipan Tribune (Saipan);
xviii) Solomon Star (Solomon Islands);
xix) Times of Tonga (Tonga);
xx) Financial Times (United Kingdom);
xxi) Vanuatu Daily Post (Vanuatu).
iii)Fix 1 March 2011 (being, in the case of C&GNZ, effectively an extension from 7 November 2003 as referred to in paragraph 2 of the 2003 court directions, and in the case of FAI NZ effectively an extension from 28 January 2008) as the day on or before which the creditors of C&GNZ and FAI NZ (respectively) are to make their claims in the liquidations of C&GNZ and FAI NZ (as the case may be) and to establish any priority which the claims may have under the Companies Act
1993, s 312 (the Companies Act).
b)That (without limiting paragraph 2 of the 2003 court directions), having taken the steps described in (a) above, the applicants shall have sufficiently complied with the Companies Act 1993 Liquidation Regulations 1994, reg 12 (the Regulations) in respect of giving notice to creditors of C&GNZ and FAI NZ to make their claims, and to establish any priority their claims may have, in the liquidation of C&GNZ or FAI NZ (as the case may be), whether or not any creditor actually received any such letter or saw any such advertisement.
c) That the policy holders be advised in the letter attached and marked "A" that if any of them wish to file a claim in respect of a contingent liability or otherwise for an unliquidated amount, they are, to the best of their ability, to estimate the amount of their claim and to provide the best available evidence in support of the claim and the estimation.
d)That, in respect of claims received by the relevant applicants on or before the date fixed by those applicants for the purposes of paragraph (a)(iii) of these directions, those applicants may:
i) admit the claim (in whole or in part);
ii) reject the claim (in whole or in part); or
iii)where a claim is in respect of a contingent liability or in an amount which is otherwise unliquidated, estimate the amount of the claim on a provisional basis (in accordance with the process described below), and may advise relevant claimants of the applicants' provisional decision in this regard.
e) That the relevant applicants are to inform any policy holder whose claim falls within category (iii) of (d) above that:
i)The policy holder may, within 20 working days of being notified of the applicants' provisional decision in respect of that creditor's claim, seek in writing a review of the applicants' provisional decision as to estimation of the amount of the claim, such review to be undertaken by Michael Ring QC (or another senior counsel of equal standing), on the basis that Mr Ring QC's (or the other senior counsel's) costs will be paid as disbursements in the liquidation of C&GNZ or FAI NZ (as the case may be);
ii)Where the policy holder does not seek such a review within that time period, then the relevant applicants' provisional decision as to estimation of the amount of the claim shall at that point be deemed to be the applicants' final decision as to such an amount;
iii)The relevant applicants will consider the outcome of Mr Ring QC's (or the other senior counsel's) review in forming a final decision as to the amount of the relevant claim;
iv)A policy holder may appeal the applicants' final decision (whether in terms of paragraphs (d)(ii), (e)(ii) or (e)(iii) of these directions) on making an application to this court
pursuant to of the Companies Act, ss 287 or 307, on the basis that the court will have the usual discretion to award costs in respect of any application in accordance with the High Court rules.
f) That any application to the court by a creditor in respect of the relevant applicants' decision as to the rejection or amount of a claim is to be made within 20 working days of (as applicable):
i)Receipt by the claimant of notice from the relevant applicants of a rejection as referred to in (d)(ii) of these directions; or
ii)Receipt by the claimant of notice of the relevant applicants' final decision as referred to in (e)(iii) of these directions; or
iii)In the circumstances referred to in paragraph (e)(ii) of these directions, the date upon which the relevant applicants' provisional decision is deemed to have become final.
g) That the procedure set out in paragraphs (d) to (f) above shall be without prejudice to the rights of the applicants under the Companies Act, s 307(1)(b) (whether in relation to individual claims or classes of claims).
h)That once the relevant applicants are satisfied that all claims have been dealt with (and all accepted claims ascertained), in accordance with paragraphs (d) to (g) of these directions, the relevant applicants will be entitled to make distributions in respect of those claims in accordance with paragraphs (i) to (l) and (p) of these directions, provided that no such distributions shall be made before 1 March
2011 and subject to paragraphs (n) to (o) below.
i) That if there are insufficient assets available in the liquidation of
C&GNZ or FAI NZ (as the case may be) to make a distribution to pay
in full all accepted claims, the relevant applicants will make distributions on a pari passu basis. In the event that a surplus remains in the liquidation of C&GNZ or FAI NZ, then statutory interest will be paid on all accepted claims at the prescribed rate under the Judicature Act 1908, s 87 from the date the claims are filed to the date of payment, if necessary, on a pari passu basis.
j)That if a creditor of C&GNZ or FAI NZ (as the case may be) does not make a claim on or before 1 March 2011, the applicants as liquidators of C&GNZ or FAI NZ (as the case may be) may exclude the creditor from the benefit of any distribution (including a final distribution) made to the creditors of C&GNZ or FAI NZ or to other entitled persons (including shareholders), save as is provided in the Liquidation Regulations, reg 13(2) and subject to paragraphs (n) to (o) below.
k)That if a creditor of C&GNZ or FAI NZ (as the case may be) fails to establish any priority that his or her claim may have before 1 March
2011, the creditor may be excluded from objecting to any distribution (including a final distribution) made in respect of C&GNZ or FAI NZ before the priority of his or her claim is established, save as is provided in the Liquidation Regulations, reg 14(3) and subject to paragraphs (n) to (o) below.
l)That, without limiting the directions in paragraph 1 of the 2003 court directions, the valuing by the relevant applicants for all purposes in relation to the liquidations of C&GNZ and FAI NZ of the amount of any claim by, and the liability of C&GNZ or FAI NZ to, any person in respect of a "Contract" (as referred to in paragraph 1 of the 2003 court directions) at zero is confirmed, and the decision of the relevant applicants to exclude all such claims from any distributions is also confirmed.
m)That from 1 March 2011, the provision referred to in paragraphs 5-7 of the 2003 court directions need no longer be maintained, and such assets as retained for the purposes of such provision need no longer be so retained and shall form part of the general pool of assets of C&GNZ to be dealt with in accordance with these directions and the Companies Act 1993. This is subject to paragraphs (n) to (o) below.
n)That, following the completion of the call for claims process set out in the preceding paragraphs above, the applicants shall set aside the sum of $2,500,000 as a provision (the Provision) only for any contingent claims by FAI NZ policy holders who are joined as a party to a claim filed under the Weathertight Homes Resolution Services Act 2006 after 1 March 2011 but before 1 March 2013 (Late Claimants). All other claims are to be dealt with under the process set out in the preceding paragraphs above.
o)That the provision set aside by the applicants under paragraph (n) above shall be placed into a separate trust with the applicants (or any replacement liquidators of C&GNZ) as trustees. The trustees will hold the provision for the benefit of initial beneficiaries (being any Late Claimants to the extent that their claims are accepted by the trustees as representing what would have been a valid claim in the liquidations of C&GNZ or FAI NZ, or as the court may order), and thereafter for the residual beneficiaries (being the liquidators of HIH Insurance Holdings (NZ) Ltd (in liquidation) or (where the liquidation of that company has been terminated as at 1 March 2013) the liquidators of HIH Holdings (NZ) Ltd (in liquidation), in either case to be distributed as an asset in the relevant liquidation). The provision may also be applied to meet the trustees' reasonable remuneration and administration expenses. Unless otherwise ordered by the court, the trust shall be wound up, and its proceeds (if any) distributed to the residual beneficiaries with effect as of 1 March 2013.
p)That once all distributions to creditors have been made, and the provision made and trust established under paragraphs (n) to (o) above, the applicants may terminate the liquidations of C&GNZ and FAI NZ, distribute any surplus in accordance with the Companies Act
1993, s 313(4), and the applicants are hereby granted leave thereafter to take the steps under the Companies Act 1993, s 249 to enable the removal of those companies from the register of companies in accordance with the Companies Act 1993, ss 257 and 318.
q)That after completing their respective duties as liquidators, the applicants be exempted pursuant to the Companies Act 1993, s 257(2)(a) from compliance with the provisions of the Companies Act 1993, s 257(1), but on the basis that they post a copy of the document referred to the Companies Act 1993, s 257(1)(a)(i) on the McGrathNicol (New Zealand and Australian) website for a period of not less than six months and send a copy of such document to the Registrar of Companies for registration.
Insurance Companies Deposits Act 1953
r) That, based on the directions in paragraph (l) above and on the expectation that all accepted claims from C&GNZ policy holders and FAI NZ policy holders will be able to be met in full from the existing assets of C&GNZ and FAI NZ, the applicants' determination that the distribution to which each "policy holder" (within the meaning of the Insurance Companies Deposits Act 1953, ss 12B and 12C) would be entitled pursuant to the Insurance Companies Deposits Act 1953, s 12(C)(2) is zero is appropriate, provided that the applicants shall retain an amount of not less than the relevant deposits until the provision is made and trust is established under paragraphs (n) to (o) above.
s)That the applicants be granted leave to apply for further directions as required.
[65] Annexed to this judgment are the proposed notice to creditors referred to in the directions marked “A” together with the proposed advertisement referred to in the directions marked “B”.
Orders
[66] Accordingly, I make orders in terms of the revised directions referred to above and incorporating the draft notice to policy holders and draft advertisement.
JA Faire
Associate Judge
"A"
[date]
[policyholder name] [address]
Notice to Creditors to Make Claims
• FAI (NZ) General Insurance Company Limited (in liquidation)
• HIH Casualty and General Insurance (N.Z.) Limited (in liquidation)
Background
Kerryn Mark Downey and William Guy Black (Liquidators) are the liquidators of both FAI (NZ) General Insurance Company Limited (in liquidation) (FAINZ) and HIH Casualty and General Insurance (N.Z.) Limited (in liquidation) (HIHC&G).
FAINZ and HIHC&G (together, the Companies, and each a Company) were placed in liquidation in 2001 and, with the assistance of the High Court of New Zealand (High Court), the Liquidators of each of the Companies are proposing to make final distributions and to complete the liquidations of the Companies.
According to the records of the Companies, you may have held one or more policies of insurance issued by FAINZ or HIHC&G prior to the commencement of their respective liquidations.
The Liquidators of FAINZ and HIHC&G have made previous calls for claims in the liquidations of FAINZ and HIHC&G, but did not receive a claim from you.
Notice to Make Claims
The Liquidators of each of FAINZ and HIHC&G hereby fix [date] as the day on or before which the creditors of FAINZ and HIHC&G (respectively) are to make their claims in the liquidations of FAINZ and HIHC&G (as the case may be) and to establish any priority which their claims may have under section
312 of the Companies Act 1993.
If a creditor of FAINZ or HIHC&G does not make a claim on or before [date], the Liquidators of the relevant Company may exclude the creditor from the
benefit of any distribution made to the creditors of that Company or to other entitled persons before the creditor has made his or her claim.
If a creditor of FAINZ or HIHC&G fails to establish any priority that his or her claim may have on or before [date], the creditor may be excluded from objecting to any distribution made in respect of that Company before the priority of his or her claim is established.
Please note that, if a creditor of FAINZ or HIHC&G wishes to make a claim in respect of a contingent liability or otherwise for an unliquidated amount, they are to the best of their ability to value the amount of their claim and to provide the best available evidence in support of the valuation and the claim.
Claim forms in respect of each of FAINZ and HIHC&G are attached for the purposes of making claims.
Process for Dealing with Claims
In respect of claims received by the Liquidators on or before [date], the
Liquidators may:
admit the claim (in whole or in part);
reject the claim (in whole or in part); or
where a claim (or part of a claim) is for an amount which is not certain, make an estimate of the amount of the claim or refer the matter to the High Court for a decision on the amount of the claim.
The Liquidators have, with the approval of the High Court, established a process to deal with the estimation of claims, where necessary. That process will be explained in more detail to claimants to whom that process will apply.
Other Matters
After the liquidators have completed their respective duties in relation to the liquidations of FAINZ and HIHC&G, a copy of the final report referred to in section 257(1)(a)(i) of the Companies Act 1993 in relation to each liquidation will be available for inspection on the McGrathNicol (New Zealand and Australian) website " for a period of not less than six months.
As a separate matter, please note that (as the other assets of the Companies are expected to be sufficient to meet in full all accepted claims), for the very limited purposes of section
12B of the Insurance Companies' Deposits Act 1953 (Deposits Act)¹ the Liquidators of each of the Companies have determined² that the amount of the liability of each Company
to any policyholder (including you), in respect of each policy of insurance to which that
section applies, is $0.
Dated at Auckland this [ ] day of [ ] 2010
Kerryn Mark Downey
Joint and Several Liquidator
FAI (NZ) General Insurance Company Limited (in liquidation)HIH Casualty and General Insurance (N.Z.) Limited (in liquidation)
Address of Liquidators:
c/- McGrathNicol
[ ] Floor
Auckland Club Tower Telephone 09 [ ] [ ] Shortland Street Facsimile 09 [ ] AUCKLAND [ ] [ ]
Notes:
1. In this context those purposes only relate to a relatively small deposit paid by each of the Companies to
Public Trust under the Deposits Act
2. This determination is made for formal purposes only in the context of the Deposits Act. It is without prejudice to, and has no relevance for any other purpose nor is it any indication of the Liquidators' potential view or assessment of, any claim which you may make in the liquidation of either or both of the Companies (see also section 12C(4) of the Deposits Act). The Liquidators have determined that the liability of FAINZ or HIHC&G (as the case may be) to all policyholders in respect of each policy of insurance to which section 12B of the Deposits Act applies shall, for the purposes of that section, be $0.
"B"
IN THE MATTER OF THE COMPANIES ACT 1993 AND
IN THE MATTER OF HIH CASUALTY AND GENERAL INSURANCE (N.Z.) LIMITED (IN LIQUIDATION) AND FAI (NZ) GENERAL INSURANCE COMPANY LIMITED (IN LIQUIDATION)
FURTHER AND FINAL CALL FOR CLAIMS BY CREDITORS IN THE LIQUIDATION OF HIH CASUALTY AND GENERAL INSURANCE (N.Z.) LIMITED (IN LIQUIDATION) ("HIHC&G") AND FAI (NZ) GENERAL INSURANCE COMPANY LIMITED (IN LIQUIDATION) ("FAINZ")
KERRYN MARK DOWNEY and WILLIAM GUY BLACK, the Liquidators of each of FAINZ and HIHC&G (together, the Companies, and each a Company), hereby fix [date] as the day on or before which the creditors of FAINZ and HIHC&G (respectively) are to make their claims in the liquidations of FAINZ and HIHC&G (as the case may be) and to establish any priority which their claims may have under section 312 of the Companies Act 1993.
If a creditor of FAINZ or HIHC&G (as the case may be) does not make a claim on or before [date], the Liquidators of the relevant Company may exclude the creditor from the benefit of any distribution made to the creditors of that Company or to other entitled persons before the creditor has made his or her claim.
If a creditor of FAINZ or HIHC&G (as the case may be) fails to establish any priority that his or her claim may have on or before [date], the creditor may be excluded from objecting to any distribution made in respect of that Company before the priority of his or her claim is established.
Please note that, if a creditor of FAINZ or HIHC&G wishes to make a claim in respect of a contingent liability or otherwise for an unliquidated amount, they are to the best of their ability to value the amount of their claim and to provide the best available evidence in support of the valuation and the claim. Claim forms in respect of each of FAINZ and HIHC&G may be obtained from the Liquidators (details below).
In respect of claims received by the Liquidators on or before [date], the Liquidators may:
admit the claim (in whole or in part);
reject the claim (in whole or in part); or
where a claim (or part of a claim) is for an amount which is not certain, make an estimate of the amount of the claim or refer the matter to the High Court for a decision on the amount of the claim.
The Liquidators have, with the approval of the High Court, established a process to deal with the estimation of claims, where necessary. That process will be explained in more detail to claimants to whom that process will apply.
DATED at Auckland this [ ] day of [ ] 2010 Kerryn Mark Downey
Joint and Several Liquidator
Address of Liquidators:
c/- McGrathNicol
[ ] Floor
Auckland Club Tower Telephone 09 [ ] [ ] Shortland Street Facsimile 09 [ ] AUCKLAND, NEW ZEALAND E-mail [ ]
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