Maryville Courts Trust Board v Earthquake Commission
[2013] NZHC 1575
•27 June 2013
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2013-409-000400 [2013] NZHC 1575
BETWEEN MARYVILLE COURTS TRUST BOARD Plaintiff AND
EARTHQUAKE COMMISSION Defendant
Hearing: 13 June 2013 Appearances:
D M Lester for Plaintiff
N S Wood for DefendantJudgment:
27 June 2013
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
[as to plaintiff ’s summary judgment application]
Introduction
[1] The plaintiff (“Maryville”) operates what is known as the Maryville Courts Retirement Village (“the Village”) in Christchurch. Maryville comprises a community centre, 65 villas and 35 garages.
[2] The Village was damaged in the Christchurch earthquakes of September 2010 and February 2011.
[3] Maryville had a comprehensive insurance cover of Maryville with ACS Ltd, formerly known as ANSVAR (“ANSVAR”).
[4] As the Village is a residential property insured against fire, the Village was deemed to be insured against earthquake and other natural disaster under the Earthquake Commission Act 1993 (“the EQ Act”). Maryville made a claim against the defendant (“EQC”) for earthquake cover. It was common ground that Maryville
had earthquake cover.
MARYVILLE COURTS TRUST BOARD v EARTHQUAKE COMMISSION [2013] NZHC 1575 [27 June
2013]
[5] Both Maryville and EQC had work completed in relation to the assessment of damage and repair and the cost of repair. Discussions took place in relation to those matters. There were also discussions as to the apportionment of damage as between the two earthquake events.
[6] This litigation concerns the outcome of investigations into the earthquake damage to Maryville and discussions which occurred between those looking after Maryville’s interests and those assisting EQC. The most relevant personnel for the purposes of this application were two loss adjusters. John Bell, a loss adjuster, appointed initially by Maryville’s insurer, ANSVAR, also had a role in looking after Maryville’s interests. Keith Penny was the loss adjuster appointed by EQC.
[7] The application before the Court requires the Court to determine whether statements made by Mr Penny following discussions which occurred particularly between the loss adjusters constituted, beyond argument, a decision of EQC. If it did, did it thereby create an enforceable obligation upon EQC to pay to Maryville
$5,468,999.84 in relation to earthquake damage? A payment was subsequently made by EQC of $4,267,184.19. Maryville now claims that there is still a balance owing of $1,201,815.
[8] Maryville was looking to ANSVAR for the balance of its insured loss. It accordingly wanted to know, when it came to dealing with ANSVAR, both how much EQC was paying and the apportionment of damage between the September and February quakes. The concluding statements and calculations of Mr Penny proceeded on a 49 per cent (for September) and 51 per cent (for February) apportionment. That apportionment was later (4 December 2012) before any payment was made to Maryville, revised by EQC to be 10 per cent (for September) and 90 per cent (for February). The consequential calculations led to the difference of $1,201,815 for which Maryville now sues.
Two causes of action
[9] Maryville pleads two causes of action. It first says that the statements made by Mr Penny constituted a decision binding upon EQC from which EQC cannot now
resile. Alternatively, Maryville says that EQC is in equity estopped from resiling from its statements.
The plaintiff ’s summary judgment application – the principles
[10] The starting point for a plaintiff’s summary judgment application is r 12.2(1) High Court Rules, which requires that the plaintiff satisfy the Court that the defendant has no defence to any cause of action in the statement of claim or to a particular cause of action.
[11] I summarise the general principles which I adopt in relation to this application:
(a) Commonsense, flexibility and a sense of justice are required.1
(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.
(c) The Court will not hesitate to decide questions of law where appropriate.
(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.
(e) In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.
(f) In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation.
1 Haines v Carter [2001] 2 NZLR 167 (CA) at [97].
(g) In weighing these matters, the Court will take a robust approach and
enter judgment even where there may be differences on certain factual
matters if the lack of a tenable defence is plain on the material before the Court. (h)
Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required
for the protection of the integrity of the summary judgment process. (i)
Once the Court is satisfied that there is no defence, the Court retains a
discretion to refuse summary judgment but does so in the context of
the general purpose of the High Court Rules which provide for the
just, speedy and inexpensive determination of proceedings. [12]
The
Court’s jurisdiction to grant summary judgment includes in relation to
relief by way of declaratory order under the Declaratory Judgments Act 1908. An initial legislative exclusion of such relief no longer applies.2 On any such application, the range of factors which come into play in deciding whether a declaration should issue are wide and will make it very difficult in principle to obtain such a declaration on summary judgment.3
Relevant aspects of the scheme of statutory natural disaster insurance
[13] The aspects of the statutory scheme under the EQ Act relevant to Maryville’s
claim are:
s 19 – persons with fire insurance deemed to be insured under Act for
natural disaster damage
s 22 – empowering EQC to enter into contracts of insurance on
application (not applicable to this case)
2 As explained in McGechan on Procedure at HR12.1.05.
3 Wright v Chief Executive of The Ministry of Fisheries HC Auckland cp 662-IMOO, 4 April 2001 per Hammond J at [38].
s 29(2) – EQC shall settle any claim (by payment, replacement, or reinstatement at the option of EQC) to the extent to which it is liable
under the Act
s 29(4) – EQC to make payments required under the Act as soon as reasonably practicable and not later than one year after the amount of the damage has been duly determined, which determination should be made
as soon as reasonably practicable.
The legal nature of EQC’s liability
[14] The liability of EQC in a given case is not generally contractual.4 Nor is it tortious.5 EQC’s settlement obligations derive from the statute, which provides a scheme of statutory insurance.6
[15] As Mr Wood submitted, and Mr Lester accepted, Maryville’s first cause of action is therefore not in contract (or tort) law. It is instead a claim for breach of a duty to pay insurance pursuant to a statutory scheme.
[16] A claim for cover under the EQ Act may arise in at least two ways. First, the plaintiff may seek to establish EQC’s liability by reason of particular damage. Such would almost inevitably require evidence at trial. Secondly, if relevant damage is already proved or accepted, a plaintiff may assert that EQC is bound by a determination EQC has reached. Maryville asserts in this case that an agreement reached by EQC and Maryville constituted on EQC’s part a final decision from which EQC is not permitted to unilaterally withdraw.
[17] The concept of finality in relation to an administrative decision was discussed and required by the Court of Appeal in Goulding v Chief Executive of the Ministry of
4 Earthquake Commission v Disputes Tribunal [1997] NZAR 115 (HC) per Eichelbaum CJ at 116.
5 At 116.
6 AMP Fire and General Insurance Co (NZ) Ltd v The Earthquake and War Damage Commission (1983) 2 ANZ Insurance cases 78,016 (HC) at 78,018; Earthquake & War Damage Commission v Waitaki International Ltd [1992] 1 NZLR 513 (PC) at 514; Earthquake Commission v Disputes Tribunal, above n 4 at 116.
Fisheries.7 McGrath J, in delivering the judgment of the Court, referred to United
Kingdom authority and principles before concluding:8
…the rule has been developed that it is only on communication that an administrative decision is perfected so as to be both an effective and a final decision. Until that point it is provisional. By analogy with the rules governing when judgments of a Court may be set aside, once an administrative decision has been perfected it may no longer, save in an exceptional case, be revoked or varied by the decision maker. Professor Campbell has said:
Where the governing legislation does not prescribe any particular mode for perfecting a decision, the general rule seems to be that the decision is perfected once it is communicated to the person or persons to whom the decision relates. The communication may be made orally or in writing. The important thing is that the decision should have been communicated, and communicated in such a way as to indicate that the decision is not merely tentative or provisional.9
[18] McGrath J then further summarised the principle in the following way:10
The common law principle applicable to the present case can accordingly be summarised in this way. A valid administrative decision in the exercise of a statutory power, which is the outcome of a completed process, but which has not been formally communicated to interested parties, has not been perfected. It may be revoked and a fresh decision substituted at any time prior to communication of it to affected persons in a manner which indicates intended finality. Once such a decision is so communicated to the persons to whom it relates, in a way that makes it clear the decision is not of a preliminary or provisional kind, it is final. A final decision which is made in the exercise of a power which affects legal rights, including those arising from the grant of a licence, is irrevocable. So is any other decision made under a statutory power where the Act explicitly or implicitly provides that once finally exercised the power of decision is spent. That is the position under the common law. We must, however, also consider the relevant provisions of the interpretation statutes.
[19] On the facts of Goulding’s case, the Court of Appeal upheld the High Court judgment. The High Court had found that it was lawful for the Chief Executive of the Ministry of Fisheries to withdraw a decision before it was formally
communicated.
7 Goulding v Chief Executive of the Ministry of Fisheries [2004] 3 NZLR 173 (CA).
8 At [30].
9 McGrath J quoting from Enid Campbell, “Revocation and Variation of Administrative
Decisions” (1996) 22 Monash University Law Review 30, at 40.
10 Goulding v Chief Executive of the Ministry of Fisheries, above n 7, at [43].
[20] The outcome in Goulding’s case may be contrasted with the outcome in In re
56 Denton Road, Twickenham,11 a Chancery division judgment reviewed by the
Court of Appeal in Goulding’s case.
[21] In the Denton Road case, the (United Kingdom) War Damage Commission had, in 1945, classified the plaintiff’s property as a partial loss, having reviewed an earlier preliminary classification of total loss. The partial loss assessment involved an advantage to the plaintiff as it gave her an entitlement to a payment based on cost of works rather than one based on the value of the property. The plaintiff was asked if she agreed to the classification and she wrote back saying that she did. In the following year, the Commission decided that the partial loss decision “set an
awkward precedent”12 and wrote to the plaintiff saying that it had been decided to
revert to the total loss classification. This led Vaisey J to enunciate the principle of finality which the Court of Appeal in Goulding’s case adopted (although the principle was found not to apply to the facts in Goulding’s case).
[22] The appropriateness of applying such a principle of irrevocability in the present statutory setting is reinforced by the concept of election which applies in (contractual) insurance law in relation to an insurer’s communicated decision to pay as on the total loss.13 In Lake v Hartford Fire Insurance Co Ltd a plea of estoppel failed as the plaintiff had not acted to his detriment in reliance on any representation by the insurer. The majority of the Court held that the insurer was nevertheless
bound by his election and unable to reverse it. The doctrine of election means, as Lord Kenyon once explained it in the vernacular, that the party who makes an election cannot “blow hot and cold”.14 In this case, Maryville finds it unacceptable that EQC’s breath as it reached Maryville turned from hot in May and June 2012 to
distinctly cold by December 2012.
11 In re 56 Denton Road, Twickenham, [1953] Ch 51.
12 At 57.
13 For examples of cases involving election see Lake v Hartford Fire Insurance Co Ltd [1966] WAR 161 (SC); Bowes v The National Fire and Marine Company of New Zealand (1888) 7
NZLR 27 at 33; Robson v New Zealand Insurance Co Ltd [1931] NZLR 35 (SC); See also AA Tarr & J A Kennedy Insurance Law in New Zealand (2nd ed, The Lawbook Co, Sydney, 1992) p
223.
14 Smith’s Leading Cases Vol 2 13th ed, p 147.
[23] Given that the Court’s enquiry on the first cause of action is as to whether there has been a determination by EQC, rather than a contract entered into between EQC and Maryville, the Court’s enquiry is not focussed on the necessary ingredients of contract. But some matters relevant to a contractual analysis, such as authority or agency and certainty, may remain relevant in relation to statutory insurance obligations.
[24] The Court is required, in a case such as the present, to consider whether EQC had communicated a final decision as to a (49 per cent/51 per cent) apportionment between the quakes and as to a total quantum to be paid on both quakes ($5,468,979.84).
[25] Questions relevant to the determination of those issues are:
(a) Did Mr Penny have approval – actual or apparent – to bind EQC in communicating a determination?
(b) Were any of the communications pleaded by Maryville (on 10 May
2012, 14 May 2012, 19 July 2012) intended individually or collectively to communicate a final decision?
(c) If so, did any of those communications clearly communicate such a final decision?
[26] The relevant steps in this case are accordingly:
(a) Maryville insures the Village against fire – accepted;
(b) September 2010 and February 2012 quakes cause damage – accepted; (c) Maryville makes timely claims – accepted;
(d) EQC is required to make a determination - accepted;
(e) EQC makes a determination – disputed as to authority and timing; and
(f) when EQC’s relevant determination is made, it is then required to pay
under ss 29(2) and 29(4) – accepted.
The factual background – first cause of action
Evidence as to Mr Penny’s authority
[27] Maryville alleges that Mr Penny communicated the relevant decision to
Maryville. I begin with Mr Penny and his authority.
[28] Mr Penny is a chartered loss adjuster and a principal of Keith Penny & Associates Ltd. He says that he was contracted to provide loss adjusting services to EQC. He deposes that his role was to enquire on EQC’s behalf into claims that insured persons make on EQC and to assist EQC in assessing the claim by gathering information and liaising with insured persons and (where appropriate) with any private insurer involved. He says that, once he has completed gathering the information which EQC has asked him to gather (along with any other information he believes would be useful), it remains for EQC to consider the claims made and to make a decision about how the claim should be settled. He says that he will usually make a recommendation about how he believes EQC should settle a claim, but that the final decision on settlement is for EQC. He is aware that certain internal approvals are required depending on the amount of the claim.
[29] He deposes that, in relation to Maryville’s claim, he did not have authority to commit EQC to a final decision in his dealings with people from Maryville. He says that he did not represent himself as having that authority. Most importantly, in a summary judgment context, he concludes:
To the contrary, I made it clear during meetings with Maryville Courts people that any recommendation I made was subject to final sign-off at EQC and that I was not the one writing the cheques.
[30] Mr Penny refers to evidence from Mr Bell in which Mr Bell said that there had been no suggestion by Mr Penny that he did not have authority to settle on behalf of EQC. Mr Penny denies that, stating:
… I believe I made it quite clear to Mr Bell that the final sign-off would be required from EQC for any settlement decision.
[31] Mr Penny finally refers to the practice of loss adjusters. He states:
Mr Bell is himself a chartered loss adjuster. As such, he should know that a chartered loss adjuster needs approval from the insurer they represent before committing to settlement of a claim on the insurer’s behalf.
[32] That final sentence in Mr Penny’s affidavit (quoted at [31] above) appears to have been carefully drafted and stated – Mr Penny is not denying that loss adjusters from time to time communicate the insurer’s final decision. Rather, he is stating that the loss adjuster in that situation needs the insurer’s approval before doing so.
[33] EQC’s usual authorisation levels were the subject of evidence given by Ian Simpson, the chief executive of EQC. Mr Simpson produced two extracts from EQC’s manual on Delegated Authorities which, he deposed, applied between November 2011 and June 2012, and July 2012 respectively.
[34] Mr Simpson deposed that Mr Penny did not have authority to bind EQC to any settlement in relation to the Maryville claims. Mr Simpson, as chief executive, is recorded as having a delegation set at a level sufficient to allow him to approve all payments. The officer next below him, described as “General Manager, Customer Services” had an authority up to $500,000. It appears from the Tables, although Mr Simpson did not speak directly to this aspect, that a person described as “Contracted Loss Adjuster acting as Catastrophe Claims Manager” was authorised to approve claims up to $400,000. The consequence of these differing levels of delegation is that it is the chief executive alone who has delegated authority beyond $500,000.
[35] In his evidence Mr Penny does not state what his relevant title for delegation purposes was, what his maximum delegation figure was, or what level of claims he in fact approved during 2012.
[36] It appears on the evidence that disbursements, even significant disbursements, in some way fell within Mr Penny’s delegated authority. By February 2012 Opus (the consultants appointed by Maryville as the project manager to assess damage at the Village) had rendered fees totalling $111,443.88. Some
debate took place between Mr Penny and Mr Bell as to the appropriate proportion of those fees which EQC should accept. Between them, it appears that Mr Penny and Mr Bell sorted the figure out. There is no suggestion in the evidence of EQC that Mr Penny acted outside his delegated authority in that regard.
[37] Maryville’s case is that Mr Penny had apparent authority to represent EQC and to communicate EQC’s decision. Maryville does not assert that Mr Penny had actual authority, an assertion which would be inconsistent with Mr Simpson’s evidence and cannot avail Maryville in this summary judgment context.
[38] Mr Glubb, the chairman of Maryville’s Trust Board, deposed that the negotiations which took place with EQC were with Mr Penny. Mr Glubb says that at a meeting held between the parties and the various representatives on 23 November
2011, it was agreed that Mr Penny was to be the direct contact for EQC. He says that that proved to be the case. Mr Penny’s “direct contact for EQC” role was recorded in a Minute of the November meeting.
[39] Mr Lester, for Maryville, relies upon two documents which reinforced Mr Penny’s authority. First, Mr Penny produced to Mr Bell as his business card an EQC business card bearing Mr Penny’s name and contact details. Secondly, all Mr Penny’s emails dealing with the Maryville insurance issues carried as Mr Penny’s details:
Keith W Penny,
Senior Associate ANZIF ACLA ANZIM FIFAA QPI, Chartered Loss Adjuster,
Earthquake Commission,
Auckland, New Zealand
(Phone, fax and mobile details then appear)
[40] In his submissions for EQC, Mr Wood noted that none of the email correspondence relied upon by Maryville was on its face copied to any other officer of EQC. There was no passive holding out of Mr Penny by EQC in that way. On the other hand, EQC has presented no evidence as to how Mr Penny reported to EQC on the progress and outcome of his discussions and negotiations. It appears inevitable
that reporting was taking place sometimes, if not regularly, but EQC has chosen not to provide to the Court in this setting evidence as to what reporting occurred.
Statutory provisions relevant to Mr Penny’s authority
[41] Mr Wood submitted that by reason of EQC’s governing statute, there is no room for apparent authority to be argued. Mr Penny invoked cl 7(5), Schedule 3, Earthquake Commission Act 1993 which provides:
The Commission may appoint any person as its agent to receive any notices under this clause and to inquire into claims, but no settlement may be effected without the authority of the Commission …
[42] At the hearing, Mr Lester responded to that written submission by referring me to the Crown Entities Act 2004 (“the CE Act”). EQC is a Crown entity: s 4 of the Act. It is an entity named in Schedule 1 of the Act. By s 4(2) of the CE Act, the CE Act applies to EQC except to the extent that the EQ Act expressly provides otherwise. The EQ Act does not provide otherwise in relation to the provisions I am about to discuss. Section 19(1) of the CE Act provides that the act of a statutory entity is invalid unless s 20 applies if the act in question is outside the authority of an Act. (In this case it is EQC’s contention that on the evidence properly analysed, Maryville is not entitled to the sum it seeks by way of settlement of its insurance claim) and that therefore the settlement claimed by Maryville is outside EQC’s authority. Section 20 of the CE Act protects what are referred to as “some natural person acts” performed by statutory entities. Generally, such acts are protected:
… unless the person dealing with the entity had, or ought reasonably to have had, knowledge of an express restriction in an Act that makes the act contrary to, or outside the authority of, the Act; or that the act is done otherwise and for the purpose of performing the entity’s functions.
By s 23 of the CE Act a statutory entity may not assert against a person dealing with the statutory entity a lack of authority to exercise the power that the statutory entity holds him or her out as having.
[43] As Mr Lester submitted, the combined effect of the provisions under the CE Act is to recognise, in relation to statutory entities, a doctrine of apparent authority, notwithstanding provisions such as contained in cl 7(5) Schedule 3 of the EQ Act.15
[44] Central to the concept of apparent authority, both in terms of s 23(1)(a)(iii) CE Act and at common law, is a holding-out by the principal of a third person to act on the principal’s behalf:16
It is the principal’s representation that creates the authority; not the agent’s
assertion that he has that authority.
[45] Whether an agent has apparent authority to do an act is judged from the viewpoint of a reasonable person dealing with the alleged agent.17
Discussion as to Mr Penny’s authority
[46] It is Maryville’s case that Mr Penny was held out as having responsibility for at least two roles. First, there was the role of investigation of the impact of the quakes, including the nature and costs of repair. Secondly, there was the decision- making as to the amount to be paid by EQC and the conveying of that decision to its insured, Maryville.
[47] There can be no dispute as to Mr Penny’s apparent authority to carry out the investigation. Indeed, the evidence establishes that he had actual authority to do that.
[48] When the focus shifts to EQC’s decision as to the sum for settlement, I cannot find that it is beyond argument that EQC either held out or permitted Mr Penny to be held out as one having authority to reach a determination on the claim. A number of things said by Mr Penny in the course of discussions and email exchanges which subsequently occurred may well have led those representing Maryville to understand that Mr Penny had authority to settle the claim. I will return
to those. It may be that that will lead, as Mr Lester tentatively suggested in his
15 See above at [41].
16 Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 (PC) at 305.
17 Credit Services Investments Ltd v Evans [1974] 2 NZLR 683 (CA); Contractors Bonding Ltd v
Snee [1992] 2 NZLR 157 (CA); Laws of New Zealand, Agency at 37, n 9.
submissions, to the joinder of Mr Penny as a defendant in this proceeding, but Mr
Penny’s own representations do not constitute a holding-out by the principal itself.18
[49] EQC is entitled on the evidence at present before the Court to argue that any conduct of alleged holding-out by EQC (such as providing Mr Penny with an EQC business card and allowing Mr Penny to conduct email correspondence on behalf of EQC) was at most equivocal in relation as to the extent of Mr Penny’s authority. The examination of what a reasonable person would have understood Mr Penny to be representing must be a matter for trial.
[50] Similarly for trial must be a determination as to whether Mr Penny in fact said what he deposes to having said during meetings with Maryville Courts people, namely that what he discussed was subject to final sign-off with EQC and that he was not the one writing the cheques. If Mr Penny’s evidence in that regard were to be accepted at trial, the statements made would cut across any apparent authority.
Evidence as to Mr Bell’s authority
[51] Just as the communication by EQC of its determination, to be binding upon EQC, had to be communicated by a person with EQC’s actual or apparent authority, so too the communication has to be received by Maryville’s Trust Board or someone with Maryville’s actual or apparent authority. (I refer in this context to authority to receive the insurer’s communication). It is not necessary to identify authority to enter into an agreement as, by reason of the statutory scheme as I have explained it,19 a contractual analysis is not in point.
[52] For Mr Bell’s authority for Maryville, Mr Lester referred to some evidence of actual authority, before the event and by ratification. However, Maryville’s initial evidence in support of the summary judgment application did not directly touch on actual authority or ratification. Mr Glubb as chairman of the Trust Board initially deposed that:
Mr Bell is a Loss Adjuster from Godfreys and he represented ANSVAR Insurance.
18 See above at [44].
19 See above at [14]-[23].
Similarly, Mr Bell deposed:
TPA/Godfreys were appointed by ANSVAR Insurance to assess ANSVAR’s
liability in respect of damage at Maryville Courts in Christchurch.
[53] EQC, particularly through Mr Penny’s evidence in opposition, raised the question of Mr Bell’s authority and of loss adjusters generally.
[54] In reply evidence, Mr Glubb deposed:
Because of the complexity of the claim and the Board’s lack of direct experience in insurance/construction matters, John Bell offered to co- ordinate Maryville’s response to the various parties on a pro bono basis. While his introduction to the Board of the plaintiff was as a Loss Adjuster for the insurers, his professional approach enabled him to deal with all parties on Maryville’s behalf without compromising his responsibility to the insurers. There is no issue as to Mr Bell’s authority to have acted on behalf of Maryville and, even if there had been (which is not accepted), the plaintiff has adopted and ratified his actions.
[55] For EQC, Mr Wood submitted that the way in which Maryville’s evidence had developed between the time of the application and the filing of reply evidence, left as at least arguable in a summary judgment context the question of Mr Bell’s authority. He submitted this was so even allowing for the confirmation by Mr Glubb that the Maryville Trust Board ratified Mr Bell’s actions.
[56] While it is strictly unnecessary that I determine the arguability of Mr Bell’s authority by reason of my finding in relation to the argument as to Mr Penny’s authority, I have concluded it is also arguable that Mr Bell lacked the authority at the relevant time.
[57] Mr Glubb, in his reply evidence, did not identify the date of any ratification by Maryville’s Trust Board. To be effective, it is at least arguable that Maryville would have to have ratified Mr Bell’s actions before EQC withdrew any incomplete communication. It is arguable that in June 2012 EQC was already communicating its need to complete the internal process of determination before any settlement
would occur. As I will come to,20 responses by Maryville’s manager, Ms Reynen, in
20 Below at [79].
June and July 2012 indicated at least arguably an awareness amongst Maryville
personnel that EQC’s internal determination process had yet to be completed.
[58] Mr Glubb does not depose to how and when Maryville ratified Mr Bell’s actions. The evidence leaves open the possibility that that has come subsequently, with the benefit of knowing that in this litigation issues have arisen with regard to authority. The evidence leaves open the possibility that the ratification came too late to be effective.
[59] For this reason, I find that the arguable issue of authority both in relation to Mr Penny and in relation to Mr Bell precludes summary judgment on the first cause of action.
Evidence as to Mr Penny’s communication of an EQC determination
[60] Having regard to my findings in relation to the authority of Mr Penny and Mr Bell respectively, it is unnecessary for the Court to determine whether (but for issues as to authority) the communications which passed between Mr Penny and Mr Bell constituted the communication of an EQC determination of Maryville’s claim. Put another way, I do not need to determine whether Mr Penny’s communications were clearly intended to represent determinations of EQC itself.
[61] I therefore record Maryville’s pleadings as to Mr Penny’s communications,
and the principal arguments advanced as to those communications.
[62] Maryville pleaded:
At a meeting held on Thursday 10 May 2012 agreement was reached between the plaintiff, the defendant and the plaintiff’s insurer as to the amounts to be paid by the defendant to the plaintiff towards the damage to Maryville Courts.
Particulars
Email of 14 May 2012 from Keith Penny of EQC to John Bell on behalf of
ANSVAR and Graeme Robinson, Structural Engineer for EQC:
“John, to confirm our discussions from our meeting last Thursday; EQC agrees with the figures as per the email from Glen of Opus Consultants Limited dated the 1st May 2012.
The figures nominated are GST exclusive. (emphasis added)
Email from John Bell dated Tuesday 15 May to Graeme Robinson and Keith Penny, EQC’s contribution was calculated at $5,468,999.84 including GST (“the agreed sum”).
Email from John Bell to Keith Penny dated 19 July 2012 advised:
“Just to let you know that insurers have agreed on overall settlement for all the Catholic Dioceses claims, subject to ratification. I understand that the EQC payment for Maryville is still outstanding, so it would be great to get all the payments made. Do you have any idea of when the agreed moneys will be released.”
Email from Keith Penny to John Bell dated 19 July 2012 advised:
“With regard to Maryville, I sense about 10+ days should see the claim wrapped up and payment made.”
[63] In his submissions for Maryville, Mr Lester put communications during May
2012 into the context of earlier discussions between Mr Bell and Mr Penny dating from December 2012. The exchanges he referred to were all contained in emails and, in that sense, speak for themselves. Mr Lester refers to a number of email exchanges in which Mr Bell and Mr Penny appear to be working towards a result based on their own conclusions. For instance, Mr Penny in March 2012, referring to calculations presented by the respective engineers, says:
It all hinges on the Engineers agreeing and then you and I endorsing it.
[64] Through this period and into May and June 2012, Mr Penny made no reference in his emails to the approval of anyone else at EQC to a final sign-off.
[65] In relation to the central Penny email pleaded by Maryville dated 14 May
2012 (particular (a), recited above at [62]), Mr Lester places reliance on the fact that Mr Penny’s statement is that “EQC agrees with the figures …” rather than that he (Mr Penny) agrees with the figures.
[66] Omitted from the quotation of the Penny 14 May 2012 email in the statement of claim are references in that email to two further calculations to be undertaken, namely in relation to emergency repair invoices in EQC’s system and calculations flowing from the allocation of garages to dwellings. Mr Lester submitted that these calculations were “fine tuning”. He submitted in his written submissions:
…at this time, for EQC’s contribution to have been calculated, the basis of its liability must have been agreed, with the quantum being a matter of working through the detailed spreadsheet.
[67] Mr Lester referred to subsequent emails in which he submitted that the final aspects of quantum were agreed.
[68] EQC does not accept that the “agreed sum” of $5,468,999.84 was in fact ever agreed. Mr Wood refers to email exchanges which took place later on 15 May 2012 in which there is a continuing (albeit minor) difference in relation to the calculations relating to damage to garages.
[69] As already indicated, I do not determine this summary judgment application by reason of a conclusion as to the clarity or otherwise of these exchanges. If the matter goes to trial, it will be for a trial Judge to make that determination.
Outcome in relation to the first cause of action
[70] The plaintiff has not discharged the onus upon it to satisfy the Court that the defendant has no arguable defence to the first cause of action. On that basis, the summary judgment application based on that cause of action.
The second cause of action – estoppel
Maryville’s estoppel claims
[71] Maryville, in its statement of claim, pleads as a second cause of action estoppel.
[72] Maryville, for its first cause of action, had pleaded that on 10 May 2012 an agreement was reached between the parties (as to the amounts to be paid by EQC to Maryville) and provided what were indicated to be particulars of that agreement by reference to four communications between 14 May and 19 July, (set out above (at [62]).
[73] Maryville pleads four facts as creating an estoppel. The facts are:
(a) EQC was aware that Maryville was relying on receipt of the agreed payments. (b)
EQC discussed an agreed apportionment of damage between the earthquakes was relevant to the amount that Maryville would recover
from ANSVAR. (c)
Maryville altered its position in reliance on the agreement by settling
with ANSVAR (as notified to EQC). (d)
It is inequitable for EQC to resile from the representation made that it
agreed to pay Maryville the now disputed settlement sum. [74]
In hi
s written submissions, Mr Lester indicated that the concept of estoppel
by representation was invoked.
Equitable estoppel: the elements
[75] I adopt as a correct summary of the law, the identification of four elements of equitable estoppel as appearing Equity and Trusts in New Zealand by Andrew Butler:21
(a) A belief or expression has been created or encouraged through some action, representation, or omission to act by the party against whom the estoppel is alleged;
(b) The belief or expectation has been reasonably relied on by the party alleging the estoppel;
(c) Detriment will be suffered if the belief or expectation is departed from; and
(d) It would be unconscionable for the party against whom the estoppel is alleged to depart from the belief or expectation.
A missing element in this case: reasonable reliance
[76] Maryville’s case is that Mr Penny’s statements to Maryville’s representatives
from 14 May 2013 to 19 July 2013, taken together, constitute a representation as to
21 Andrew Butler (ed), Equity & Trusts in New Zealand (2nd ed, Brookers, Wellington, 2009) 613-
614.
the amount that would be paid ($5,468,999.84) and as to EQC’s ability to make the payment promptly (within “about two weeks”). Within EQC’s assessed figure would be also an assessment of apportionment of damage between the two quakes (49 per cent for September and 51 per cent for February).
[77] Mr Glubb deposed as to the importance to Maryville of first settling the EQC
figure (including the apportionment). He said:
… we saw it as being an essential precursor to resolving our claim with the insurers ANSVAR, as irrespective of the quantum agreed to by EQC the insurance would be paying out the balance of the loss. With quantum agreed with Mr Penny, the ANSVAR settlement could soon follow and we could commence planning for the repairs/rebuild.
… Maryville was fully insured with ANSVAR and ANSVAR was going to settle any amount of loss in excess of the EQC payout. However if EQC now fails to meet the agreed payout then that shortfall becomes irrecoverable for Maryville because of the full and final settlement done with ANSVAR. Maryville would not have settled with ANSVAR if there was any doubt as to the finality of the settlement with EQC.
[78] Mr Glubb’s evidence is light on detail of Maryville’s subsequent settlement with ANSVAR. He produces no correspondence or other documentation covering the ANSVAR settlement. He does not identify the date of the settlement.
[79] To assess whether Maryville reasonably relied on an EQC representation as to the settlement sum and apportionment, when settling with ANSVAR, I begin with a summary of the communications mostly between the Maryville manager, Susan Reynen (who has not given evidence), and Mr Penny. Those communications date from 30 May 2012. I refer also to some communications between Mr Bell and Mr Penny.
Date Event 30 May 2012 Email Reynen to Penny – “Would it be possible to advise me about the
settlement we are expecting at Maryville?”
30 May 2012 Email Penny to Reynen – “I anticipate receiving confirmation of my
settlement recommendations within seven days. Will revert then when
I have any news”.
30 May 2012 Email Reynen to Penny – “Thank [sic] Keith.” 12 Jun 2012 Email Reynen to Penny – “I was wondering if there was any further
advice to hand as to when our EQC payment was to be expected?”
14 Jun 2012 Email Penny to Reynen – “They are pushing this through as fast as
they can in Christchurch. I don’t know if we can make the 30th June
2012 though. This is still a long process behind the scenes to
complete.” 15 Jun 2012 Email Reynen to Penny – “In regard to my communication requesting
urgency for our settlement from EQC, we are also looking at some level of certainty in what we will definitely receive from you, as this
information is vital to our impending negotiation with our Insurer.
Can you provide me with a firm figure?”
15 Jun 2012 Email Reynen to Penny – “I have checked the status of these claims
and can confirm that there is an URGENT status loaded into the
system, for settlement review to be completed ASAP.”
25 Jun 2012 Email Reynen to Penny – “I have a Board meeting today and I have
been asked by the Trustees to enquire as to a settlement date. Can you
assist?”
25 Jun 2012 Email Penny to Reynen – “I can not [sic] offer you any more
conforting [sic] words, than have already been provided. I do know that they are actively working their way through these claims and there
is an urgent request flagged on the system.”
26 Jun 2012 Email Reynen to Penny– “In regard to your question about our insurer,
ACS (NZ) LTD, the discussions are advancing and are positive. They also take into account our agreed EQC contribution.”
10 Jul 2012 Email Reynen to Penny – “We really can move no further until we
receive some certainty around the figure we are to receive from EQC
and or when the settlement will occur. I know that you have responded that our claim status is urgent & for the review to be done ASAP … but I think we in central Christchurch have reason to be cautious if not cynical. Can you please use your considerable powers of communication & persuasion to assist us?”
12 Jul 2012 Email Penny to Reynen – “I am in final dialogue with the Settlement
Team in Christchurch. It may very well be that they can confirm my
interpretations within the next two weeks.”
19 Jul 2012 Email Bell to Penny – “Just to let you know that insurers [Ansvar]
have agreed an overall settlement for all the Catholic Diocese claims,
subject to ratification”
19 Jul 2012 Email Penny to Bell – “With regard to Maryville, I sense about another
10 x days should see the claim wrapped up and payment made”
30 Jul 2012 Email Reynen to Penny – “I am just wondering if you have received
any updates recently?”
31 Jul 2012 Email Penny to Reynen – “I have this morning been advised that the
person dealing with this has been away sick for the last week. However, it has now been released to the management team to review
and approve settlement.”
[80] A number of these exchanges render it at least arguable that Maryville could not have reasonably relied on a view that it held as to a final determination having been reached by EQC around May/June 2012. Mr Penny, on 14 June 2012 indicated was that there was then still a “long process to complete”. Ms Reynen, on 10 July
2012, recorded Maryville’s inability to move further until the EQC figure was received. Mr Penny responded on 12 July 2012 by saying that EQC might confirm his interpretations within the next two weeks. In his 19 July 2012 email, Mr Bell said that at that date Maryville had yet to finalise its claim with ANSVAR. It is at
least arguable that during this period it was communicated to Maryville that EQC’s
determination was yet to be finalised.
[81] In the light of this evident impediment to summary judgment, Mr Lester understandably did not press the summary judgment application based on the estoppel cause of action. I consider his approach appropriate on the evidence as I have reviewed it.
[82] There is an argument that Maryville was not reasonably relying on a representation as to the settlement of the claim, I am not satisfied that EQC has no arguable defence to the summary judgment application. By reason of the reliance aspect of estoppel alone, Maryville is not entitled to summary judgment on this cause of action.
[83] In these circumstances, it is unnecessary that I determine whether the representations relied upon by Maryville were indisputably unequivocal. In parallel with the position I have adopted in relation to the first cause of action, I leave such considerations for trial.
Overall outcome
[84] Maryville has not established in relation to either of its two causes of action that EQC has no arguable defence.
[85] This decision is not reached lightly or without careful reflection. The Court must have some sympathy for the Board members of Maryville. Their retirement complex had suffered huge damage. The urgency of the situation for the residents of its 65 villas was obvious. The Board would have been gratified by:
(a) the way in which their statutory insurer EQC and their private insurer ANSVAR seemed content to leave the loss adjusters to get on with the analysis of the engineering evidence and the negotiation on critical insurance issues such as apportionment;
(b)the absence of any warnings by Mr Penny that there was a process to go through after he reached his decision and got Mr Bell to approve the figures;
(c) Mr Penny’s stated sense that the claim would be wrapped up and paid in 10+ days;
[86] On this summary judgment application I have found for EQC strictly by reason of the high threshold that confronts a plaintiff on a summary judgment application. However, I recognise that at trial, when the full context of the dealings between EQC and Maryville is in evidence and examined, EQC may be found to have reached and communicated a determination which binds it.
[87] The summary judgment application must be dismissed for the reasons given.
[88] Counsel accepted that, in this event, costs would be reserved in accordance with the usual practice.
Orders
[89] I order:
(a) The plaintiff’s application for summary judgment is dismissed.
(b) The costs of the application are reserved.
(c) The plaintiff is to file and serve any amended statement of claim, including amendments as to quantum, within five working days.
(d)The defendant, within 10 working days after service of any amended statement of claim or (in the absence of such amended defence) within
15 working days from today is to file and serve its statement of defence (or amended statement of defence).
(e) When serving their pleadings as directed, the parties are to provide, to the extent not previously provided, the documents they would be obliged to provide by way of initial disclosure under r 8.4 High Court Rules.
(f) Counsel are to confer within five working days after the filing of the defendant’s statement of defence as to the possibility and extent of tailored discovery under r 8.8.
First case management conference
[90] I convene a first case management conference at 12 noon, 7 August 2013 (Associate Judge Matthews). The conference is to be an in person conference with leading counsel for either side in attendance together with the responsible officers of the plaintiff and defendant. Counsel and the parties should anticipate that a trial date will be allocated at the first case management conference.
[91] The agenda for the first case management conference will be the matters set out in Schedule 5 High Court Rules.
Associate Judge Osborne
Solicitors:
D M Lester, Barrister, Christchurch
Chapman Tripp, Wellington
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