IAG New Zealand Limited v Chip N Repair Limited

[2022] NZHC 495

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-002372

[2022] NZHC 495

BETWEEN

IAG NEW ZEALAND LIMITED

Applicant

AND

CHIP N REPAIR LIMITED

Respondent

Hearing:	On the papers
Judgment:	17 March 2022

JUDGMENT OF WYLIE J

[Costs]

This judgment was delivered by Justice Wylie On 17 March at 11.00 am

Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel: Bell Gully, Auckland

Grant Shand, Auckland

IAG NEW ZEALAND v CHIP N REPAIR [2022] NZHC 495 [17 March 2022]

Introduction

[1]    On 16 February 2022, by consent, I transferred these proceedings from the District Court to this Court. The parties could not agree on costs in relation to the transfer and I directed that memoranda be filed.

[2]    I have now received those memoranda. The applicant, IAG New Zealand Ltd (IAG), seeks costs in the sum of $6,214, together with disbursements in the sum of

$469.57. The respondent, Chip N Repair Ltd (Chip N Repair), says that the application was unnecessary. It opposes any costs order. In the alternative, it says that, if there is an award of costs, it ought to be in accordance with the District Court cost rules.

Procedural background

[3]    These proceedings are dated 31 August 2021 but insofar as I can tell from the file, they were filed by Chip N Repair in the District Court at Auckland on 29 September 2021 and served at about that time or perhaps a little later. They allege breach of s 13(1) of the Fair Trading Act 1986. Chip N Repair claims that IAG directed an individual insured with it to use the services of particular vehicle windscreen repairers and not the services of Chip N Repair. The amount claimed is $25,772.25, together with interest.

[4]    On 12 October 2021, Chip N Repair’s solicitors sent a letter to IAG’s solicitors, proposing that IAG should have two weeks to consider its position before being required to make any substantive response to the claim. On 13 October 2021, IAG’s solicitors responded that they were happy to proceed on this basis. They went on to suggest that if the matter was progressed thereafter, the solicitors should discuss and agree a timetable.

[5]    At some stage (when is not clear from the file) Chip N Repair made an interlocutory application under r 4.24 of the District Court Rules 2014 seeking leave to sue as a representative of other business owners engaged in the repair or replacement of vehicle windscreens.

[6]    The two week grace period ran its course and, on 26 October 2021, Chip N Repair’s solicitors wrote to IAG’s solicitors asking what was happening.

[7]    On 29 October 2021, IAG’s solicitors responded, saying that IAG had reviewed both the claim and Chip N Repair’s application for representative orders. They asserted that there was no basis for the claim and that the matters raised were not appropriate for representative action. They advised that the claim would be vigorously defended. They also suggested that the proceedings should be transferred to this Court, on the basis that this Court is best suited to dealing with a representative action as proposed by Chip N Repair. The solicitors expressly advised that IAG would be applying to transfer the proceeding to this Court and asked whether or not Chip N Repair would consent to the transfer.

[8]    Later that day, Chip N Repair’s solicitors responded saying that they preferred that IAG file and serve its statement of defence in the District Court. They did not respond to the request that Chip N Repair consent to the transfer of the proceedings.

[9]    On 3 November 2021, IAG, through its solicitors, advised that it would be applying to this Court to transfer the proceedings and that it would at the same time file a statement of defence and opposition to the application for representative orders in the District Court. IAG suggested that the relevant papers be filed and served by 1 December 2021. Chip N Repair, through its solicitors, responded that any statement of defence was required to be filed by 4 November 2021.

[10]   IAG filed its statement of defence in the District Court on 4 November 2021. At the same time, it filed a memorandum recording that the statement of defence had been filed to preserve its position. It sought a timetable order under which it would file an amended statement of defence and a notice of opposition to the application for representative orders by 1 December 2021. It also sought an order that it should file its application to transfer the proceedings to this Court by the same date.

[11]   In response, Chip N Repair filed a further interlocutory application seeking a more explicit statement of defence.

[12]   On 30 November 2021, IAG filed an amended station of defence and a notice of opposition to the application for representative orders in the District Court and an originating application in this Court seeking that the proceedings be transferred to this Court.

[13]   IAG’s documents, including its originating application seeking to transfer the proceedings to this Court, were served on Chip N Repair’s solicitors on 30 November 2021. They responded with an email asking whether Chip N Repair had ever been asked to agree to the transfer sought. IAG, in response, referred to its email dated 29 October 2021.

[14]   On 23 December 2021, Chip N Repair advised that it would consent to a transfer of the proceedings by the District Court rather than by this Court. IAG responded that given that the application had been filed in this Court, the proper course would be to file a consent memorandum in this Court.

[15]   On 17 January 2022, Chip N Repair filed a response advising that it did not oppose the transfer of the proceedings to this Court but did oppose any award of costs.

Submissions

[16]   IAG says that it has incurred the costs of preparing and filing an originating application for transfer and a supporting affidavit. It says that these steps were necessary because Chip N Repair did not initially consent and that, by the time Chip N Repair consented, the papers had already been filed. It says that costs should follow the event and they should be awarded on a 2B basis, in accordance with the normal practice in this Court.

[17]   Chip N Repair responds that by asserting that it never opposed the transfer, and that all that it asked was that IAG file a statement of defence in the District Court so that the issues in dispute could be crystallised. It says that when IAG filed its statement of defence in the District Court on 4 November 2021, it did not then raise the possibility of transfer, and that any application for transfer could have been dealt with in the District Court in late January 2022, without costs being incurred by either party.

Analysis

[18]   The present costs application is unfortunate. Transfer to this Court could have been dealt with by consent, without the necessity for any costs to be incurred. Nevertheless, this did not happen and, as a result, the Court now has to examine what did happen and fix the costs consequences which follow.

[19]   IAG indicated on 29 October 2021 that it wished to transfer the proceedings to this Court. It expressly asked whether or not Chip N Repair would consent to that transfer. Chip N Repair did not respond to this question. It simply asserted that it preferred that IAG file and serve its statement of defence in the District Court.

[20]   IAG complied with Chip N Repair’s preference and filed a statement of defence in the District Court on 4 November 2021. At the same time, it filed and served a supporting memorandum which again indicated that it would be filing, in this Court, an application to transfer the proceedings by 1 December 2021. Again, Chip N Repair did not respond to this indication. Rather, it sought a more explicit statement of defence.

[21]   In the circumstances, IAG had no alternative but to file an application seeking to transfer the proceedings to this Court. Ultimately, Chip N Repair did not oppose the application but, given that IAG’s request for consent and indication that it would be filing in this Court were ignored, IAG had no alternative but to make the application if it wished to transfer the proceedings.

[22]   IAG filed its application for transfer in this Court and not in the District Court. It cannot be criticised for doing so.

[23]The District Court Act 2016 provides as follows:

87Transfer of proceeding in which amount or value of  claim does   not exceed $90,000

(1)This section applies to a proceeding in which the amount of the claim or the value of the property or relief claimed or in issue does not exceed $90,000.

(2)A Judge may, on application by a defendant in the proceeding, transfer the proceeding to the High Court if the Judge is satisfied that—

(a)an important question of law or fact is likely to arise; or

(b)a question of title to a hereditament is likely to arise other than incidentally.

[24]   As can be seen, the power of a District Court Judge to transfer proceedings to this Court, where the amount claimed is less than $90,000, is constrained. A defendant cannot seek transfer as of right.

[25]   Section 89 of the District Courts Act also deals with the transfer of proceedings. Relevantly, it provides as follows:

89 High Court Judge may order removal  of  proceeding into High Court

(1)A High Court Judge may, on application by a party to a proceeding, order the removal of the proceeding into the High Court if the Judge is satisfied that it is desirable to do so.

(2)In deciding whether to make an order under subsection (1), the Judge must have regard to the following factors:

(a)the nature of the case:

(b)the complexity of the case:

(c)the general or public importance of the case:

(d)the amount in issue:

(e)the likely length of the hearing:

(f)the financial resources of the parties:

(g)whether it is otherwise in the interests of justice to make the order.

…

[26]   The enquiry permitted under s 87 is much narrower than that permitted by s 89 and a High Court Judge is given a much more extensive power to order transfer than a District Court Judge.1 A defendant considering an application to transfer needs to take into account the limits imposed on District Court Judges and decide whether the

1      Wilkinson v Wilkinson [1990] 6 FRNZ 483 (HC).

wider grounds able to be considered by a Judge of this Court under s 89 provide a greater chance of success.

[27]   Presumably, IAG considered that it had a better chance of success if its application was brought in this Court. I can understand why. Chip N Repair’s statement of claim does not, at first sight, involve an important question of law or fact. Rather, it involves a factual enquiry – what did the IAG staff member say to the insured

– and a question of law – what are the consequences of whatever was said. Had Chip N Repair not consented, a Judge in this Court could have considered the nature of the case, in particular, that Chip N Repair is seeking to bring representative proceedings.

[28]   In the event, it was not necessary to consider the various matters dealt with in s 89. Chip N Repair consented and IAG’s application was granted. While ultimately, it did not consent in time so as to avoid the filing of an application and the supporting affidavit, despite a request that it do so.

[29]   As a result, I am satisfied that it is appropriate to award costs in IAG’s favour. The application was filed in this Court and the costs regime set out in Part 14 of the High Court Rules 2016 applies. I am satisfied that it is appropriate to award costs on a 2B basis, and notwithstanding the limited amount in dispute. I have checked the cost calculations prepared by IAG’s solicitors. Costs have been properly calculated and Chip N Repair does not take issue with them.

[30]Accordingly, I award costs in IAG’s favour, and against Chip N Repair, of

$6,214, together with disbursements of $469.57.

Wylie J