Mathias v The Earthquake Commission
[2023] NZHC 705
•31 March 2023
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2021-009-2441
[2023] NZHC 705
BETWEEN CAROL ANN MATHIAS
Plaintiff
AND
THE EARTHQUAKE COMMISSION
Defendant
Hearing: 22 March 2023 Appearances:
G D R Shand for Plaintiff
C J Curran and M G Alison for Defendant
Judgment:
31 March 2023
JUDGMENT OF ASSOCIATE JUDGE LESTER
(application for leave to appeal)
MATHIAS v THE EARTHQUAKE COMMISSION [2023] NZHC 705 [31 March 2023]
[1] Ms Mathias purchased a property in September 2015 that had been damaged in the Canterbury earthquakes but which she understood had been repaired by the Earthquake Commission (EQC). Ms Mathias says that, after purchasing the property, she discovered the EQC repairs did not repair the property to the standard required by the Earthquake Commission Act 1993 (the Act), and the additional repairs to bring the work up to the standard under the Act exceed the statutory cap. Ms Mathias brings a claim in negligence against EQC.
[2] In a judgment dated 23 August 2022, Ms Mathias was granted leave on an unopposed basis to sue as a representative plaintiff (the August 2022 Judgment).1
[3]The August 2022 Judgment recorded:
[2] While the application is not opposed by The Earthquake Commission (EQC), it is clear that the final form of the application represents significant input from EQC resulting in Ms Mathias amending her application to address EQC’s concerns.
[4] The August 2022 Judgment also recorded that the Class for whom Ms Mathias was to sue as representative had been worked through by the parties. The Class was set out in a schedule to the August 2022 Judgment.
[5] In essence, the parties came to Court in August 2022 with an agreed position. While that agreement did not bind the Court, nonetheless, the fact that the parties had reached an agreed position was unsurprisingly a significant factor in leave being granted for Ms Mathias to sue as a representative.
[6] The next step in the process was a hearing in November 2022 to determine the notice to be provided to the Class members. Ms Mathias also applied to vary the Class.
The 25 November 2022 Judgment
[7] The issues addressed in the 25 November 2022 Judgment (the November 2022 Judgment)2 were the terms of the Class Member Notice to make the public aware of their right to opt-in to the Class action, the process for giving that notification, that is,
1 Mathias v The Earthquake Commission [2022] NZHC 2097.
2 Mathias v The Earthquake Commission [2022] NZHC 3105.
the types of advertisement and whether there should be a direct mail out, and the terms of the Opt-in Form.
[8] In addition, Ms Mathias applied to vary the Class to change the opening words of the Class from “the owner” to “an owner”, which would allow intermediate property owners who retained the right to claim against EQC to join the Class. At the moment, only the final owner of the property qualifies for the class. That variation was opposed by EQC.
[9] The November 2022 Judgment declined the application to amend the Class and made various orders in relation to the procedural aspects of the representative action described above at [7].
[10] Ms Mathias seeks leave to appeal against all aspects of the November 2022 Judgment which went against the orders she sought. The application for leave to appeal is opposed.
Principles that apply to the granting of leave
[11] Mr Curran, counsel for EQC, submitted the matters subject to the November 2022 Judgment were matters of discretion or case-specific case management issues.
[12]Mr Curran referred to:3
[13] But this Court has more recently indicated that it prefers the formulation in May v May [1982] 1 NZFLR 165 at 170, to that of the Court in Fitzgerald v Beattie. See Harris v McIntosh CA279,98, 30 September 1999 4-5. That formulation reads:
an appellant must show that the Judge acted on a wrong principle; or that he failed to take into account some relevant matter or that he took account of some irrelevant matter or that he was plainly wrong.
[14] The significant difference is that the latter test omits any reference to the Judge having given undue weight to some factor or insufficient weight to another. Weighing and balancing the various factors is an integral part of a Judge’s exercise of his or her discretion. This Court will not repeat that exercise unless the Judge has given excessive weight to some factor or such patently inadequate weight to another as to be “plainly wrong”. The problem is that, if the phrases “undue weight” and “insufficient weight” have this
3 Alex Harvey Industries Ltd v Commissioner of Inland Revenue (2001) 15 PRNZ 361 (CA).
meaning, they are tautologous and unnecessary. If, on the other hand, they do not have that meaning they suggest that the Court will be prepared to substitute its view for that of the Judge – which it will not do.
[13] Mr Curran noted that the Supreme Court in Kacem v Bashir essentially adopted the same tests.4
[14] To the extent that the case involves case management decisions, that is, decisions relating to the conduct of the proceeding, Mr Curran relied on the following paragraphs from Houghton v Saunders:5
[48]In Ashmore v Corp of Lloyd’s Lord Templeman observed:6
… the appellate court should be reluctant to entertain complaints about a judge who controls the conduct of proceedings and limits the time and scope of evidence and argument. So too, where a judge, for reasons which are not plainly wrong makes an interlocutory decision or makes a decision in the course of a trial the decision should be respected by the parties and if not respected should be upheld by an appellate court unless the judge was plainly wrong.
[49]Ashmore was cited by this Court in Knauf Insulation Ltd v Tasman Insulation New Zealand Ltd where it was said:7
[10] Third, both interlocutory judgments relate to matters of case management which are appropriately resolved by the trial court and nothing raised before u suggests the Judge has adopted the wrong approach. Appellate courts should be, and traditionally have been, reluctant to interfere with an interlocutory decision unless it is such as to effectively resolve the case or has such a substantial impact on the trial that it would be unfair to require the appellant to wait until after the trial to pursue it. That is not the case here.
[15] Finally, in relation to the principles guiding the granting of leave, Mr Curran referred to Greendrake v The District Court of New Zealand. Greendrake involved an application for leave to appeal to the Court of Appeal (leave having been declined in the High Court). The matter sought to be appealed was whether a third party had been wrongly joined to the proceeding as an additional respondent.8 The Court said that question was essentially a matter of case management, meaning the application
4 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1.
5 Houghton v Saunders [2019] NZCA 506.
6 Citing Ashmore v Corp of Lloyd’s [1992] 1 WLR 446 (HL) at [453]-[454].
7 Citing Knauf Insulation Ltd v Tasman New Zealand Ltd [2013] NZCA 427, (2013) 21 PRNZ 535.
8 Greendrake v The District Court of New Zealand [2020] NZCA 122.
did not raise an issue of precedent which warranted leave for appeal, nor did the case have any issues of substance for Mr Greendrake.
[16] The Court in Greendrake also set out the test that applies to the granting of an application for leave as follows:9
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delay; and
(e)the ultimate question is whether the interests of justice are served by granting leave.
[17] Mr Shand, counsel for Ms Mathias, relied on Venning J’s decision in Simons v ANZ Bank New Zealand Ltd.10 In that case, his Honour was dealing with an application for leave to appeal and referred to the test for granting leave in Finewood Upholstery Ltd v Vaughan,11 which is repeated in Greendrake as set out above. Mr Shand relied, in particular, on the following passage in Simons:12
The ANZ plaintiffs’ application was an interlocutory application in form, but the effect of the decision is to prevent a number of ANZ customers with existing loans from being represented in these proceedings as they are currently constituted before the Court. To that extent, I consider the appropriate threshold for leave in the present case to be less than for example, an application in relation to a discovery or privilege application. As noted, applications which otherwise have substantive effect such as summary judgment or strike out do not require leave.13 While I do not overlook ANZ’s submission that it would still be open to the proposed claimants to identify a representative and apply again I consider the nature of the application and the potential effect of the judgment support a lesser threshold for leave in this case.
(emphasis added)
9 At [6].
10 Simons v ANZ Bank New Zealand Ltd [2022] NZHC 2842.
11 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679.
12 At [2].
13 Citing the Senior Courts Act 2016, s 56(4).
[18] Mr Shand submitted the above principles are directly applicable to this case as the effect of the refusal to amend the Class prevents intermediate owners from joining the Class to similar effect as in the decision subject to the leave application in Simons, which prevented a number of customers being represented.
[19] Mr Shand also referred to Dokad Trustees Ltd v Auckland Council.14 I find that authority of lesser assistance given it concerned whether a direct right of appeal lay to the Court of Appeal under s 56(4) of the Senior Courts Act 2016.
[20] Mr Curran took issue with Mr Shand’s characterisation of Venning J’s decision in Simons as meaning Ms Mathias only had to meet a low threshold to be granted leave.
[21] With respect to Venning J, I accept the correctness of his Honour’s approach. In my view, Venning J’s approach is consistent with the final criteria from Greendrake, that is, the need to assess whether the interests of justice are served by granting leave.
[22] As I will discuss below, I do not consider this is an application for leave that turns on fine grained distinctions as to the standard to be met by Ms Mathias.
The application to vary the Class
[23] As recorded in the November 2022 Judgment, Mr Shand relied on the August 2022 Judgment reserving leave to the parties to apply to rescind and/or vary the orders made. I concluded the leave reserved did not permit Mr Mathias to seek to amend fundamental aspects of the Class agreed with EQC.
[24] Mr Shand asserted that he had made an error in agreeing to the Class referring to “the” owner rather than “an” owner. As Mr Curran submitted, Mr Shand’s assertion that he made an error is hard to reconcile with the fact that the first three versions of Ms Mathias’ application to sue as a representative all refer to “the” owner.15
14 Dokad Trustees Ltd v Auckland Council [2022] NZCA 177.
15 Interlocutory application by first plaintiff for representative orders, dated 3 June 2021; Plaintiff’s revised Schedule A for application for representative orders, dated 2 September 2021; and Plaintiff’s revised Schedule A for application for representative orders, dated 11 May 2022.
If Mr Shand made an error, as he asserts, then he will need to look to his own position, but that is an issue for another day.
[25] Be that as it may, Mr Shand’s assertion that the application to amend the Class was due to his oversight means there has not been a change of circumstances in respect of the proceeding or the law. Mr Shand simply seeks to revisit the arrangements he made on behalf of Ms Mathias.
[26] As recorded in the November 2022 Judgment, Mr Shand referred to the circumstances of homeowners who were forced to sell their home because of the way EQC dealt with earthquake repairs to their house. Those people are the Garveys, who have now issued their own proceedings against EQC.
[27] The first request in this proceeding that previous owners be included in the Class, was made on 25 October 2022 being when Ms Mathias notified this Court and EQC of the intended application. Mr Curran submitted former owners would only gain limitation protection from 25 October 2022. Mr Shand submitted that former owners would gain limitation protection from when Ms Mathias originally applied to be a representative on 3 June 2021.
[28] EQC, in the separate proceedings brought by the Garveys, pleads limitation defences.
[29] Accordingly, the effect of the variation sought by Mr Shand is that, on his view, the Court should impose a variation on EQC of the agreement it reached with Ms Mathias when that variation may deprive EQC of a limitation defence it has pleaded against the Garveys.
The principles that apply to the variation of consent orders
[30] Ms Mathias’ application to vary the Class was declined for two reasons. First, changing the substance of the Class was not within the leave reserved to vary the orders and, even if it had been, the proposed variation created conflicts of interest between potential Class members.
[31] In support of his application for leave to appeal, Mr Shand submitted that my approach to the question of the leave was arguably wrong.
[32] My focus on the scope of the leave reserved to apply to vary the orders may arguably have been too narrow given a party can apply to set aside or vary a consent order even if leave is not reserved. Whether a variation to a consent order is sought pursuant to leave or pursuant to a party’s right to simply apply for a variation, at the end of the day, the question is whether the variation or setting aside sought is in the interests of justice.
[33] Mr Shand invoked the interests of justice as being the basis upon which he sought the variation.
[34] Wylie J, in the recent decision of McNamara v McNamara, discussed the Court’s approach to applications to set aside or vary consent orders.16 As to the setting aside of an order, Wylie J said:
[72] The Courts have recognised that any application to set aside a consent order should be treated with considerable caution because consent orders follow on from an agreement or contract made between the parties to the underlying litigation. Judges should only set aside consent orders if the interests of justice require it and only if a good ground (or grounds) is established.17 The grounds on which consent orders can be set aside are not however confined to the grounds which can justify setting aside a contract. The jurisdiction has been exercised on grounds such as the emergence of fresh evidence, non-compliance with procedural rules, lack of authority by an agent with ostensible authority and unilateral mistaken unknown to the other party.18
[35]As to varying a consent order, Wylie J noted:
[73] In Stead v The Ship Ocean Quest of Arne, Thomas J, in this Court, held that in appropriate cases, the Court has jurisdiction not only to set aside a consent order but also to vary such order where the interests of justice require it, notwithstanding that the agreement on which the order had been based might be contractually inviolate.19 He observed as follows:20
16 McNamara v McNamara [2022] NZHC 547.
17 Citing Butcher v Finnigan [2012] NZCA 250 at [6]; and see Kain v Hutton [2007] NZCA 199, [2007] 3 NZLR 349 at [230]-[231]; Phillips v Phillips [1993] 3 NZLR 159 (CA) at 172; and Waitemata City Council v MacKenzie [1988] 2 NZLR 242 (CA) at 249.
18 Citing Bullivant v ENZA Ltd [2001] 1 NZLR 498 (HC) at [12]-[14]; and Ryde Holdings Ltd v Sorenson (1995) 8 PRNZ 339 (HC) at 343-344.
19 Stead v The Ship Ocean Quest of Arne [1995] 3 NZLR 415 (HC) at 421.
20 Citing Stead v The Ship Ocean Quest of Arne, above n 19, at 421. See also Zhang v King David Investments Ltd (in liq) [2016] NZHC 3018 at [35]; and Kain v Hutton, above n 17, at [230].
“Ultimately, the parties submit their proceeding to the Court’s jurisdiction and enter into consent orders within that jurisdiction. The Court, having the inherent power to control its own proceedings, necessarily must have jurisdiction to ensure that the dictates of justice are served, particularly in respect of the procedure which is followed. In the appropriate case, therefore, the Court can assume jurisdiction to revoke or vary a consent order in the interests of justice, notwithstanding that no ground exists on which the underlying contract might be varied. Whether or not it does so will depend on the circumstances.”
[36] Wylie J noted that a unilateral mistake had founded the setting aside of a consent order in one case.21
[37] Assuming Mr Shand’s assertion of a mistake is correct, he does not seek the setting aside of the August 2022 orders. Mr Shand seeks to retain the gains achieved through the agreement with EQC and to expand those gains relying on his own error.
[38] Here, there has been no change in circumstances since the August 2022 orders that warrant a variation. There has been no failure to comply with the orders by EQC that would warrant some departure from those orders.
[39] I accept Mr Curran’s submission that the interests of justice also include the Court encouraging parties to reach agreed positions where possible. So much, in my view, is reflected in the considerable caution that the Court applies to applications to set aside or vary consent orders noted by Wylie J.
[40] Put colloquially, Mr Shand has “buyers remorse” over the agreement he struck with EQC. Simply wishing to revisit an agreed position to have it varied to what Mr Shand wishes it had contained is not, in my view, even arguably in the interests of justice.
[41] The reason why a unliteral mistake might found the setting aside of a consent order is that, again, colloquially, it would mean “all bets were off” and each party would be free to revisit their agreed position. The matter subject of the revoked consent order would be dealt with afresh.
21 At [72], citing Bullivant v ENZA Ltd, above n 18.
[42] I find Mr Shand has not identified an arguable error of law or fact in relation to this point. His claimed error does not make varying the orders in the interests of justice. Mr Shand did not refer to any authority where a claimed unilateral mistake could justify a variation of a consent order that could cause prejudice to the other party.
The practical implications of the proposed variation
[43] The November 2022 judgment, from [15]-[21], discussed the potential for the variation proposed by Mr Shand to create conflict between Class members.
[44] If the Class was varied then intermediate owners as well as the present owner would be in the Class. I said that raised the question of which of the owners suffered the loss or, if they have both suffered loss, how it was to be apportioned. I said:22
A current owner of a property would have no way of knowing at the time they opt into the class whether a previous owner of the property had already opted-in or might do so in the future. That subsequent owner would therefore have to make a decision whether to opt-in without knowing whether doing so had the potential to expose them to being in conflict with a prior owner.
[45]I also said at [19]:
The amendment of the class also has the potential to create an injustice or at least considerable delay to a current owner who does not opt-in but where a previous owner has. EQC would then face a claim from a previous owner through the class action but also potentially a direct approach from the current owner to resolve the unrepaired loss through negotiations with EQC. That would see EQC facing two claimants resulting in the current owner having the processing of their direct approach to EQC deferred until the class action was resolved.
[46] Mr Shand’s submissions in support of the application for leave to appeal focused on a point I acknowledged in the November Judgment, that is, quantum issues as between different owners of the same property could potentially be resolved at a stage 2 exercise. However, Mr Shand’s submissions in support of the leave application did not address the above conflict issues. The concerns I identified relate to whether an owner will decide to opt-in, but also the potential for a current owner who prefers to deal directly with EQC being frustrated through discovering that a previous owner has opted to join the Class. These are not stage 2 issues pertaining
22 At [15].
to quantum but relate to practical difficulties which the proposed variation would create for homeowners and solicitors trying to advise them at the outset of the class action.
[47] I do not consider it to be in the interests of justice to order a variation of the class that would have such effects. I find Mr Shand has not demonstrated an arguable error of fact or law on this issue.
[48] It is not a matter of the Court “impeding” the objectives of class actions nor of the Court being “obstructive”, as submitted by Mr Shand. At the heart of the Class variation request, on Mr Shand’s case, is his own error. Mr Shand does not ask for the orders in the August 2022 Judgment to be set aside in their entirety so that they can be renegotiated with EQC afresh. Nor is there any significance in Mr Shand’s submission as follows:
[2] The judgment delivered only 11 days after the hearing did not follow judicial authorities/rules appliable to the High Court; there were 33 tabs of cases/rules/statutes/texts, Lester AJ only referred to two Ross judgements in the judgment. Notably he did not follow Ross v Southern Response Earthquake Services Ltd [2021] NZHC 2452 … about notification.
[49] The writing of judgments is not an exercise in generating footnotes. The principles being applied in the November 2022 Judgment were not in issue. Much of the November 2022 Judgment involved resolving disputes concerning the Notice to be provided to Class members and other, essentially procedural, issues. Nor do I understand the point Mr Shand seeks to make in the judgment being released promptly. These points do not take the application for leave any further.
The issues with the giving of notice to class members that Mr Shand wishes to appeal
[50]The issues are as follows:
(a)The extent of personal service.
(b)Whether the Notice of opt-in should refer to the ability to negotiate directly with EQC.
(c)Whether the Notice should refer to the conditions of the Crown’s on-sold policy.
(d)The opt-in period.
[51] Mr Curran said all of these matters were in the nature of case specific case management issues in which an appellate court is reluctant to interfere.
[52] In relation to some of the issues, in particular the opt-in period and the extent of personal service, in modifying the orders originally sought by Mr Shand and EQC, there was a corresponding increase in the level of advertising from that proposed by EQC. At [45] of the November 2022 Judgment, I said the intention was to provide “saturation” coverage of the class action early on to reach the largest number of class members.
Rejection of personal service to all owners of “on-sold” properties
[53] The November 2022 Judgment, at [51] to [68], directed that there be direct notice to 2,653 homeowners. The breakdown of how that figure was arrived at is described in the November 2022 Judgment.
[54] Mr Shand submitted it was an error to limit direct notice of the right to opt-in to 2,653 homeowners.
[55] Mr Shand emphasised the importance of giving notice to the Class, particularly where, here, each Class member could have potentially significant claims.
[56] Mr Shand submitted that it was illogical that when EQC promoted its own on-sold scheme, it did a direct mail-out to 44,000 homeowners. In short, Mr Shand’s point was, if it was good enough for EQC to give direct notice by post to 44,000 homeowners who might qualify to claim under the “on-sold” scheme, then logically the same notice should be given of this Class action.
[57] Mr Shand emphasised that with Ms Mathias agreeing to pay for the cost of personal service, cost issues fall away.
[58] The key point in rejecting Mr Shand’s submission was that of the 44,000 homeowners given notice by post of EQC’s on-sold over-cap programme, just over 5,500 homeowners applied to join the programme. What then is the point of writing to the remaining nearly 39,000 homeowners again? I rejected the blanket mail-out proposed by Ms Mathias as being too wide. I also noted that the absence of a mail-out as sought by Mr Shand was one of the reasons why the frequency of advertising was greater than that sought by EQC. I note Mr Shand does not suggest a corresponding alteration to the frequency of advertising.
[59] I consider this to be a case specific case management issue. Mr Shand has not, in my view, demonstrated a reasonably arguable error in the advertising approach ordered or the reasons for that approach. Mr Shand simply wishes a different conclusion was reached with his submissions in support of leave being a re-run of those he presented in November 2022, rather than being focused on why the November 2022 orders were in error.
[60] Accordingly, I do not consider that an error has been demonstrated in relation to the extent of personal service and the methods of giving notice.
[61] Residents of Christchurch, particularly someone living in an earthquake damaged home that was poorly repaired, will be quick to pick up on the directed “saturation advertising”.
Notice of alternative settlement options and on-sold policy conditions
[62] I deal with the next items together, that is, the changes to the notice of opt-in rights where it refers to EQC’s “alternative settlement pathways”, and the reference to conditions that attach to the Crown’s on-sold policy.
[63] I am not convinced arguable errors in these issues have been identified. In any event, these are case management matters and indeed, true matters of detail that certainly do not warrant an appeal nor the delay of an appeal.
[64]Leave is declined in respect of these matters.
The opt-in period
[65] The opt-in period is discussed in the November 2022 Judgment at [33]-[39]. Ms Mathias sought an opt-in period of six months. EQC sought a period of three months. During the hearing, Mr Walker counsel for EQC, suggested a four and a half month period. I adopted that and recorded that it was not simply as a compromise between the parties’ two positions but:
… to ensure that a homeowner who is prompted to confront the issue of unrepaired earthquake to their home for the first time has a reasonable time to address their claim directly with EQC, take legal advice and possibly expert advice about their home and to consider whether to opt-in.
[66] I left open the possibility for the opt-in period to be extended if EQC were unable to deal promptly with direct enquiries from homeowners who wished to settle directly with EQC, which could leave a homeowner in a quandary as to what action to take.
[67] This time period was also linked to the “saturation” advertising which was to be more intensive in the initial period of the opt-in period.
[68] Mr Shand has not demonstrated that the four and a half month time period was arguably wrong. Again, Mr Shand’s submission for leave to appeal this point was him repeating his preference for the six month period.
[69]Mr Shand’s application for leave to appeal on this point is declined.
[70] Leave having been declined in respect of all the points Mr Shand wished to raise on appeal, his application is dismissed.
Costs
[71] There is no reason why costs should not follow the event on a 2B basis plus disbursements as fixed by the Registrar.
Associate Judge Lester
Solicitors:
Grant Shand, Auckland (for Plaintiff)
Russell McVeagh, Wellington (for Defendant)
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