James Hardie New Zealand Limited v Zurich Australia Insurance Limited
[2024] NZHC 3126
•25 October 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-2791
[2024] NZHC 3126
UNDER the Trans-Tasman Proceedings Act 2010 BETWEEN
JAMES HARDIE NEW ZEALAND LIMITED
First Plaintiff
Continued …
AND
ZURICH AUSTRALIAN INSURANCE LIMITED
Defendant
CIV-2023-404-2914 BETWEEN
JAMES HARDIE NEW ZEALAND LIMITED
First Plaintiff
STUDORP LIMITED
Second PlaintiffAND
ZURICH AUSTRALIA INSURANCE LIMITED
Defendant
Hearing: 15 October 2024 Appearances:
M G Ring KC, E S Scorgie and R D Hutchinson for the Plaintiffs/Respondents
C T Walker KC and L G Wells for the Defendant/Applicant
Judgment:
25 October 2024
JUDGMENT OF BLANCHARD J
JAMES HARDIE NEW ZEALAND LIMITED v ZURICH AUSTRALIAN INSURANCE LIMITED [2024] NZHC 3126 [25 October 2024]
This judgment was delivered by me on Friday, 25 October 2024 at 3.00 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Continued …
CIV-2023-404-2791
STUDORP LIMITED
Second Plaintiff
JAMES HARDIE NZ HOLDINGS LIIMITED
Third Plaintiff
RCI HOLDINGS PTY LIMITED
Fourth Plaintiff
JAMES HARDIE AUSTRALIA PTY LIMITED
Fifth Plaintiff
JAMES HARDIE NZ RESEARCH PTY. LIIMITED
Sixth Plaintiff
JAMES HARDIE INDUSTRIES PLC
Seventh Plaintiff
[1] Zurich Australian Insurance Ltd applies for stays of these proceedings under the Trans-Tasman Proceedings Act 2010. In the proceedings the plaintiffs, which I will refer to collectively as “James Hardie”, claim for indemnity under two multiyear, multiline insurance policies issued by Zurich. The claims are for indemnity in respect of legal costs incurred by James Hardie in successfully defending two multi-property weathertightness proceedings in which more than $300 million was claimed. The legal fees and disbursements James Hardie seeks to recover total approximately
$32.5 million.
The policies
[2] There are two relevant insurance policies. The first is for the period from 31 March 1998 to 31 March 2001. The second is for the period from 31 March 2001 to 31 March 2004.
[3] For present purposes, the policies are materially the same. Each policy includes cover for “Casualty”. This cover includes that Zurich will indemnify James Hardie for liability to pay compensation in respect of “Property Damage” during the period of insurance as a result of an “Occurrence” happening in connection with James Hardie’s business or products (the General Liability cover). The cover also includes that Zurich will indemnify against such claims as James Hardie shall become legally liable to pay in regard to claims reported during the period of insurance for breach of professional conduct and execution of professional activities and duties (the Errors and Omissions cover).
[4] The General Liability cover is occurrence-based whereas the Errors and Omissions cover is claims-made.
[5] The limit of liability for Casualty is AUD 150 million for the 1998–2001 policy and USD 75 million for the 2001–2004 policy.
[6] Under the Casualty section of each policy, Zurich also agrees to “defend any suit against the Insured alleging liability insured under the provisions of” the coverage.
The Protocol
[7] In around October 2002, James Hardie first notified Zurich of a claim arising from watertightness issues relating to their exterior cladding products. In around February 2004, James Hardie purported to notify circumstances that might give rise to future weathertightness claims, including all future New Zealand weathertightness claims.
[8] Difficulties arose in administering the claims. There were two difficulties in particular. The first was in determining when Property Damage occurred. This was relevant to determining which, if either, of the two periods of insurance the claims fell within and therefore which policy applied. The second issue was whether the indemnity was under the General Liability cover or the Errors and Omissions cover.
[9] Between around June 2004 and September 2007 there was a series of communications between representatives of James Hardie and Zurich to attempt to agree principles to simplify the administration of the claims. This resulted in what the parties refer to as “the Protocol”. The scope, effect and application of the Protocol are in dispute between the parties.
[10] Both parties provided affidavit evidence regarding their understanding of the Protocol. The evidence for Zurich was that the following points were agreed in the Protocol:
(a)weathertightness claims would be dealt with under the General Liability cover rather than under the Errors and Omissions cover;
(b)when Property Damage first occurred would be determined in three sequential steps:
(i)step one — if the claim alleged that substantial water damage in respect of a property first occurred on a certain date, that would be used as the date of loss;
(ii)step two — if no such allegation was made in the pleadings, where an evidentiary timeline suggested that damage occurred on or after a certain date, that date would be used as the date of loss;
(iii)step three — if neither of the above applied, the date two years after the date on which the Code Compliance Certificate (CCC) for the building was first requested or issued (or refused) would be used as the date of loss;
(c)Zurich would indemnify James Hardie for 85 per cent of third-party losses for accepted weathertightness claims;
(d)Zurich would indemnify James Hardie for 100 per cent of its legal fees for any accepted weathertightness claims;
(e)Zurich would not defend the claims and James Hardie would instruct its own counsel to do so; and
(f)Zurich would be kept informed of material developments and James Hardie would seek Zurich’s authority to settle any claims.
[11] Importantly, Zurich says that the Protocol did not create cover where it did not otherwise exist. It was still necessary for there to be Property Damage occurring during the period of insurance as a result of an Occurrence happening in connection with the insured’s business or products. The sequential steps were simply a method for deeming when such Property Damage first occurred.
[12] James Hardie says it disagrees with Zurich’s understanding of the Protocol in two key respects. First, Zurich says the three steps in the Protocol for establishing the date of loss are to be applied sequentially, looking first at the statement of claim, then at whether there was an evidentiary timeline, and finally, at the CCC date. But James Hardie says that the first two steps were to be considered together. However, in fact there is no practical difference here because the statements of claim in the two
proceedings at issue did not plead the date on which substantial water damage first occurred.
[13] Second, and more importantly, James Hardie disagrees that, before applying the Protocol, it was still necessary for Zurich to determine whether there had been an Occurrence resulting in Property Damage. James Hardie says that the claims were all weathertightness claims, so there was invariably an allegation that property was damaged by water ingress. That was sufficient to activate the Protocol. Further, it is artificial to separate the questions of Occurrence and Property Damage from the use of the Protocol because a key issue the Protocol addressed was to find an agreed, practical process for determining when Property Damage occurred, which determined whether James Hardie had cover.
[14] Everything seems to have proceeded reasonably smoothly until 2012. Until then, the parties were happy that the claims were being managed in accordance with the Protocol. At that time, however, James Hardie alleged that Zurich had been failing to comply with the Protocol. Correspondence was exchanged about this in February and March 2013 without a resolution being reached.
[15] Zurich blames the problem on James Hardie. It says that in 2012 it advised James Hardie that the Casualty limit of the indemnity under the 2001–2004 policy was nearly exhausted (whereas the Casualty limit of indemnity under the 1998–2001 policy was largely undisturbed). Zurich says that, thereafter, James Hardie pushed for a different interpretation of the Protocol or to vary the Protocol. James Hardie denies these allegations.
The weathertightness proceedings
[16] In 2015, the two proceedings which underlie the present claims for indemnity were issued.
[17] The first, referred to as “Cridge”, involved 151 properties. The claim was dismissed,1 and the defendants were awarded costs of $6.4 million.2 The plaintiffs’ appeal against liability was recently dismissed.3
[18] The second proceeding, referred to as “White”, involved 1,022 properties. The plaintiffs discontinued the White proceeding in July 2021, during the High Court trial, and James Hardie received the security for costs of $1.25 million paid by the plaintiffs.
[19] The total amount claimed against James Hardie across the two proceedings was in excess of $300 million.
[20] As James Hardie successfully defended the claims, the claims against Zurich are not for indemnity for underlying liability of James Hardie. They are solely claims for the costs of the successful defence of the two proceedings.
James Hardie’s claims
[21] The first notification to Zurich in relation to the Cridge proceeding was in around August 2015. The first notification in relation to the White proceeding was in around December 2015.
[22] By letters sent in November 2022 and October 2023, James Hardie sought indemnity for its defence costs in the two proceedings.
[23] James Hardie makes the claim for indemnity in relation to the defence costs in Cridge in CIV-2023-404-2914 and White in CIV-2023-404-2791. Both proceedings were filed on 22 November 2023. In both, Zurich is sued under the 1998–2001 policy and/or the 2001–2004 policy (both as varied by the Protocol). In the Cridge proceeding James Hardie seeks to recover $16,563,424 and in the White proceeding James Hardie seeks to recover $16,145,895.
1 Cridge v Studorp Ltd [2021] NZHC 2077, [2022] 2 NZLR 309.
2 Cridge v Studorp Ltd [2022] NZHC 2024.
3 Cridge v Studorp Ltd [2024] NZCA 483.
Trans-Tasman Proceedings Act 2010
[24] Zurich’s stay applications are made under s 22 of the Trans-Tasman Proceedings Act (the Act). It seeks to stay the proceedings on the ground that there is an “exclusive choice of court agreement” that designates an Australian court as the court to determine the matters in issue. Where there is such an agreement, the Court must stay the proceedings, unless certain exceptions apply which are inapplicable here.4
[25] An “exclusive choice of court agreement” is an agreement in writing that “designates the courts, or a specified court or courts, of a specified country, to the exclusion of any other courts, as the court or courts to determine disputes between” parties to a proceeding.5
[26] Alternatively, Zurich says that the proceedings should be stayed because an Australian court has jurisdiction to determine the matters in issue and it is the more appropriate court to do so. It is common ground that an Australian court has jurisdiction to determine the matters in issue. At issue is whether an Australian court is the more appropriate court to determine the proceedings. In making that assessment, a New Zealand court must have regard to the matters in s 24(2) of the Act.
[27]The relevant matters in s 24(2) are:
(a)the principal places of business of the parties;
(b)the places of residence of the witnesses likely to be called in the proceeding;
(c)the place where the subject matter of the proceeding is situated;
(d)any agreement between the parties about the court or place in which the matters in dispute should be determined or the proceeding should be instituted (other than an exclusive choice of court agreement); and
4 Trans-Tasman Proceedings Act 2010, s 25(1) and (2).
5 Section 25(4).
(e)the law that would be most appropriate to apply in the proceeding.
Should the proceedings be stayed because there is an exclusive choice of court agreement?
[28]The policies provide as follows in relation to law and jurisdiction:
This contract of insurance will be governed by the laws of Australia.
In the event of dispute in relation to the terms of this contract of insurance, at the request of the Insured, [the Insurer] agrees to submit to the jurisdiction of any Australian Court of competent jurisdiction.
Where requested by the Insured, [the Insurer] will nominate an agent within the jurisdiction in which proceedings are commenced by the Insured to accept service of any notice, summons or process.
If proceedings are commenced against [the Insurer], with respect to any disputes in relation to this contract of insurance [the Insurer] agrees that they will be bound by the final decision of the Court (or any appeal).
[29] Nowhere does it say that proceedings may only be issued in Australia, but Zurich says this is implied.
[30] In the clause Zurich agrees, at James Hardie’s request, to submit to the jurisdiction of “any Australian Court of competent jurisdiction”. Zurich submits that this necessarily entails that Zurich does not have to submit to the jurisdiction of any other court.
[31] Zurich further says that its agreement to nominate an agent within the jurisdiction in which proceedings are issued is impliedly premised on proceedings only being issued in an Australian jurisdiction. Zurich cannot be taken to be agreeing to nominate an agent in any jurisdiction the insured chooses to sue in. It can therefore be inferred that the parties agree that proceedings would only be issued in Australia.
[32]Finally, Zurich says that its agreement to be bound by the “final decision of the
Court” (Zurich’s emphasis) refers back to the jurisdiction clause and refers to an “Australian Court”. This entails Zurich not agreeing to be bound by the final decision of any non-Australian court.
[33] In contrast, James Hardie says that an exclusive choice of court agreement is one that designates a court or courts “to the exclusion of any other courts”. James Hardie submits that the clause here is non-exclusive and unilateral. The clause binds Zurich to submit to the jurisdiction of any Australian court of competent jurisdiction, should James Hardie request that it do so. No such request has been made.
[34] James Hardie further submits that the clause does not bind James Hardie to sue in any particular jurisdiction. It is entirely silent on the forum options open to James Hardie. Merely identifying courts to which Zurich must submit (but not James Hardie) does not imply that only those courts are available. Nor do the references to the appointment of service agents or Zurich’s agreement to be bound by the decisions of any particular court. Neither of those provisions are “impliedly premised” on only Australian courts being available.
[35] Under the Service and Execution of Process Act 1992 (Cth), appointment of an agent for the purposes of service is unnecessary where proceedings are commenced in one Australian state against a company incorporated in another state.6 Based on this, James Hardie submits that an agent for service is only likely to be practically relevant where proceedings are commenced outside Australia. This is a further pointer to the non-exclusivity of the clause.
[36] In my view, the clause is not an exclusive choice of court clause. For the reasons advanced by James Hardie, I agree that exclusivity cannot be implied. I would add that Zurich’s argument based on the “C” in “Court” in the final part of the clause, places too much weight on the capitalisation. Lawyers often capitalise the “c” in court for no particular reason. The capital “C” in “any Australian Court of competent jurisdiction” is in fact an example of this. No specific Australian court is being referred to, so a lowercase “c” should have been used. Further, it would have been very easy to expressly provide for exclusive jurisdiction. The distinction between exclusive and non-exclusive jurisdiction clauses is a basic one. Had the drafters intended to provide for exclusive jurisdiction, they would have done so expressly.
6 Service and Execution of Process Act 1992 (Cth), ss 9, 15 and 16.
Should the proceedings be stayed under s 24(1)?
Principal places of business of the parties
[37] The first to third plaintiffs have New Zealand as their principal place of business. The principal place of business of the fourth to sixth plaintiffs is Australia. The principal place of business of the seventh plaintiff is Ireland. Zurich has its principal place of business in Sydney. However, it is also registered in New Zealand as an overseas ASIC company, with its principal place of business in New Zealand located in Auckland, although the weathertightness claims in question have been managed from Sydney. Standing back and looking at this mixed picture, I see this as a neutral factor.
Places of residence of likely witnesses
[38] The witnesses likely to be called form two groups. First, those who will give evidence regarding the Protocol. This includes the parties on both sides who were involved in the communications regarding the Protocol. If the hearing is conducted in New Zealand, it will include witnesses who give evidence regarding Australian law. The second group is witnesses who will give evidence regarding the Cridge and White proceedings and the properties they related to. This will include evidence about the nature of the claims, the Property Damage and date of loss, and the conduct of the proceedings.
[39] The witnesses who will give evidence about the Protocol, with one exception, reside in Sydney or elsewhere in New South Wales. The exception is a witness who lives in the United States of America. If the proceedings take place in New Zealand, there will need to be witnesses on each side who give evidence regarding Australian law. As discussed below, Zurich have filed an affidavit on Australian law from David Lloyd SC. He resides in Sydney. James Hardie have not filed any evidence on Australian law, but it seems likely that their expert would also reside in Sydney.
[40] On the other hand, the witnesses who will give evidence on the Cridge and White proceedings and the properties they related to are likely to all come from New Zealand.
[41] A significant area of disagreement concerns how extensive the evidence will need to be regarding the Property Damage and the date of loss.
[42] James Hardie suggested that the witnesses who give evidence regarding these matters will likely include witnesses of fact (owners or occupiers of the properties), as well as expert building surveyors and possibly other expert witnesses such as microbiologists, metallurgists and experts on sealants. The witnesses who will give evidence regarding the conduct of the underlying proceedings, and the costs incurred in relation to them, will likely include the lawyers who acted for James Hardie in relation to the proceedings.
[43] Zurich disputes that all these witnesses will be required. It says that all that James Hardie would need to call is a building surveyor to give evidence regarding the Property Damage.
[44] However, I do not think I can rule out the possibility that James Hardie is correct that other witnesses will be required. Further, even if only expert building surveyor evidence is required, as the evidence would be required in relation to each of the 1,173 properties, a huge amount of building surveyor evidence would be needed. It is most unlikely that one person could carry out the work, so a team of building surveyors will be required.
[45] Zurich also says that, on James Hardie’s view of the world, the evidence regarding the Property Damage and date of loss should be limited. This is for two reasons.
[46] First, James Hardie says the Protocol applies to the Cridge and White proceedings and, if this is correct, establishing liability will be a simple matter of applying the Protocol.
[47] Second, James Hardie argues that it need only show that one of the properties in each of the two proceedings was subject to Property Damage for all the legal costs in both proceedings to be recoverable. This is based on the Privy Counsel’s decision
in New Zealand Forest Products Ltd v New Zealand Insurance Co Ltd,7 which was followed by the New South Wales Court of Appeal in Vero Insurance Ltd v Baycorp Advantage Ltd.8
[48] However, Zurich disputes James Hardie’s position in relation to both these points. It disputes that the Protocol applies to the Cridge and White proceedings and it disputes James Hardie’s position in relation to apportionment of defence costs. Because James Hardie cannot be sure that it will be successful in relation to these points and as so much money is at stake, it will inevitably need to prepare its evidence so that it is covered if Zurich prevails in relation to these points.
[49] James Hardie may also be correct that, even if its position in relation to the Protocol prevails so that it is not necessary for it to prove that there was an Occurrence resulting in Property Damage, the evidence that James Hardie will be required to call will still be very extensive. Steps one and three in the Protocol are straight forward, but step one does not apply, and it is not possible to get to step three without first dealing with step two. Step two requires consideration of the “evidentiary timeline” to consider whether damage occurred on or after a certain date. The evidence required to determine the “evidentiary timeline” in relation to each property may be very extensive.
[50] Zurich also submitted that even if it is strictly necessary for evidence to be called regarding when Property Damage occurred for each property, “it is unlikely that the parties would go to the cost and expense of proving damage in such a way by calling witnesses in court proceedings, as opposed to agreeing a practical alternative or resolving the dispute in another forum.”
[51] However, while I would hope that the parties would agree to practical measures, I do not think I can assume that this will necessarily occur, given the failure of the parties to agree on practical steps thus far and the very large sum in dispute.
7 New Zealand Forest Products Ltd v New Zealand Insurance Co Ltd [1997] 3 NZLR 1 (PC).
8 Vero Insurance Ltd v Baycorp Advantage Ltd [2004] NSWCA 390, (2005) 23 ACLC 199. See also Newcastle Resources Pty Ltd (formerly known as SCE Resources Pty Ltd) v Certain Underwriters at Lloyd’s Syndicate CVS 1919 subscribing to policies numbered LS00100XL, LS00100BU and STA0222BU [2022] NSWSC 1485 at [90]–[92]; and Australasian Correctional Services Pty Ltd v AIG Australia Ltd [2018] FCA 2043 at [24], [25] and [42].
[52] For these reasons, I agree with James Hardie that the evidence regarding the Protocol and Australian law is likely to be much less extensive than the New Zealand based evidence regarding the properties and the conduct of the proceedings. I agree with James Hardie that this factor strongly favours New Zealand as the appropriate jurisdiction.
Place of the subject matter of the proceedings
[53] The subject matter of the proceedings is partly Australian and partly New Zealand based. The policies and the negotiation and agreement of the Protocol are connected to Australia. However, the claim for indemnity in respect of legal costs relates to proceedings conducted in New Zealand that concerned properties based in New Zealand. Considering this mixed picture, I see this as a neutral factor.
Agreement on jurisdiction
[54] I have found that the jurisdiction clause is non-exclusive. Zurich is required to submit to the jurisdiction of any competent Australian court, but nothing requires James Hardie to commence proceedings in any particular jurisdiction. I see this as a factor in favour of Australia, but not strongly so.
The most appropriate law
[55] James Hardie accepts that the policies and by association the Protocol are governed by Australian law. This is a factor pointing in favour of Australia as the more appropriate jurisdiction. However, the question is how strongly it points in favour of Australia.
[56] It has been said that it is a “given” that Australian and New Zealand courts are competent to apply each other’s law.9 Where the laws of the two jurisdictions are relatively similar, or proceed on similar principles, the desirability of a court applying its own law carries less weight.10 On the other hand, where the relevant Australian
9 Whyte v The a2 Milk Company Ltd [2023] NZHC 22, [2023] 2 NZLR 486 at [68].
10 See Addleman v Lambie Trustee Ltd [2021] NZHC 2504 at [43]; and Skelton v Z487 Ltd [2014] NZHC 707 at [45].
law is unsettled, that will favour the dispute being determined in an Australian court.11 The same applies where the relevant area is subject to jurisdiction-specific regulatory or statutory regimes, or professional or ethical standards.12 But, in the absence of significant questions of unsettled law or jurisdiction specific regulatory or statutory regimes, choice of law carries less weight.13
[57] Zurich has raised a long list of potential legal issues that may need to be resolved in the proceedings. These are in the areas of contract, insurance and limitation law. Zurich has provided Mr Lloyd’s affidavit, which contains a helpful summary of the law in the relevant areas.
[58] Based on Mr Lloyd’s affidavit, there are some material differences between the New Zealand and Australian approaches to interpretation of contracts. But I do not think a New Zealand court would find it difficult to apply the Australian law. The main relevant difference is that in Australia subsequent conduct is only considered to determine whether a contract has been reached and cannot be considered as part of the interpretation of the contract. However, I do not think this difference will pose any difficulty. After all, it was not that long ago that in New Zealand subsequent conduct was not taken into account. The Australian approach to contractual interpretation is also well-settled.
[59] The relevant insurance law concerns the meaning of Occurrence, the question of when Property Damage occurs, apportionment of defence costs, entitlement to interest, and non-disclosure.
[60] The Australian position on the nature and meaning of “Occurrence” is settled.14 It is the same as the New Zealand position.15
11 Lifestyles Investment Group v Coral Investments Securities Ltd [2016] NZHC 2262 [Lifestyles — 2016] at [48] and [62]; Lifestyles Investment Group v Coral Investments Securities Ltd [2017] NZHC 1639, [2017] NZAR 1377 at [40]–[41]; and Drink Tank Ltd v Morrows Pty Ltd [2020] NZHC 1391, [2020] 3 NZLR 443 at [97].
12 Drink Tank Ltd v Morrows Pty Ltd, above n 11, at [82]; and Lifestyles — 2016, above n 11, at [46].
13 See Addleman v Lambie Trustee Ltd, above n 10, at [43]; and Skelton v Z487 Ltd, above n 10, at [45].
14 Gio General Ltd t/as Gio Australia v Newcastle City Council [1996] 38 NSWLR 558 (CA); and
Australian Rail Track Corp Ltd v QBE Insurance (Europe) Ltd [2013] NSWCA 175.
15 IAG New Zealand Ltd v Moore [2020] NZSC 122.
[61] Mr Lloyd’s evidence is that there is some divergence between the approach adopted in decisions in Australia on the question of when Property Damage occurred. However, the only issue referred to in the affidavit is a possible question about whether Property Damage occurs when there is an injury-in-fact or when the damage becomes manifest. I agree with James Hardie that the affidavit overstates the extent to which “manifestation” as a trigger is supported in Australian authority. Mr Lloyd contrasts AXA Global Risks (UK) Ltd v Haskins Contractors Pty Ltd16 with Arrow International Ltd v QBE Insurance (International) Ltd.17 He suggests that there is a difference of approach in these cases which is yet to be considered by an Australian intermediate appellate court. However, I agree with James Hardie (and MacKenzie J in Arrow)18 that Mason P in AXA was not intending to suggest a manifestation trigger for Property Damage.
[62] Mr Lloyd says that the authorities on apportionment of defence costs are “sparce”. This may be so, but the authorities Mr Lloyd refers to all take the same approach.19 That approach is based on New Zealand authority.20
[63] Entitlement to interest is subject to s 57 of the Insurance Contracts Act 1984 (Cth) (ICA). Mr Lloyd’s discussion does not suggest that there is any difficulty here. The approach appears straightforward and settled.
[64] A defence of failure to notify is subject to the common law as modified by s 54 of the ICA. Section 54 of the ICA occupies similar ground to s 11 of the Insurance Law Reform Act 1977, but the sections work differently. While Mr Lloyd suggests that the law in this area presents “some complexity”, he does not suggest that it is unsettled. My impression looking at s 54 and the authorities Mr Lloyd refers to is that a New Zealand court would be able to apply the law appropriately.
16 AXA Global Risks (UK) Ltd v Haskins Contractors Pty Ltd [2004] NSWCA 138, (2004) 13 ANZ Ins Cas 61-611.
17 Arrow International Ltd v QBE Insurance (International) Ltd [2009] 3 NZLR 650 (HC).
18 At [57].
19 Vero Insurance Ltd v Baycorp Advantage Ltd, above n 8; Newcastle Resources Pty Ltd, above n 8; and Australasian Correctional Services Pty Ltd v AIG Australia Ltd, above n 8.
20 New Zealand Forest Products Ltd v New Zealand Insurance Co Ltd, above n 7.
[65] Under s 13 of the ICA, a duty to act with utmost good faith is imposed into every contract of insurance. At present the duty of good faith is a matter of common law in New Zealand. A statutorily imposed duty is proposed in the Contracts of Insurance Bill.21 Looking at the authorities referred to by Mr Lloyd, I do not think a New Zealand court would have difficulty applying the Australian law.
[66] The Australian law of limitation is generally based on an accrual approach. This is different to the New Zealand approach under the Limitation Act 2010. However, the accrual approach is familiar in New Zealand from the Limitation Act 1950.
Conclusion
[67] In summary, the jurisdiction clause and the fact that Australian law applies favour an Australian jurisdiction. But the likely extent of the New Zealand based property-related evidence strongly points to New Zealand as the most appropriate jurisdiction. On balance, my conclusion is that New Zealand is the more appropriate jurisdiction. Having carefully considered Mr Lloyd’s affidavit and the authorities referred to in it, I believe that a New Zealand court would be able to apply the Australian law appropriately, whereas, if the litigation were to take place in Australia, the need to obtain extensive property-related evidence from New Zealand would cause considerable practical difficulties.
Result
[68]The applications are dismissed.
[69]If the parties cannot agree on costs, then I direct as follows:
(a)James Hardie is to file and serve a memorandum within 20 working days of this judgment; and
21 Contracts of Insurance Bill 2024 (41–2), cl 63(2).
(b)Zurich is to file and serve a memorandum in response within a further 10 working days.
Blanchard J
Solicitors: Chapman Tripp, Auckland
Wotton Kearney, Wellington
Counsel:M G Ring KC, Auckland C Walker KC, Auckland
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