Morgan v Sovereign Assurance Co Ltd

[2013] NZHC 1195

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2012-412-000957 [2013] NZHC 1195

BETWEEN  KATHRYN ANN MORGAN Plaintiff

ANDSOVEREIGN ASSURANCE CO LTD Defendant

Hearing:         22 May 2013 (by telephone)

(Heard at Christchurch)

Appearances: G J Peachey for Applicant/Defendant

A C Beck for Respondent/Plaintiff

Judgment:      23 May 2013

JUDGMENT OF ASSOCIATE JUDGE OSBORNE [as to venue]

[1]      The plaintiff, Ms Morgan, is suing the defendant, Sovereign Assurance Co

Ltd (“Sovereign”) for repudiation of a contract of disability insurance. [2]    She filed the proceeding in the Dunedin Registry.

The application

[3]      Sovereign applies for an order transferring the proceeding to the Auckland Registry.  It says that that should happen because the statement of claim was filed in the wrong Registry in the first place and, in any event, the Auckland Registry would be more convenient to the parties.

[4]      Ms Morgan opposes the application.  She says that there is justification for the identification of Dunedin as the correct Registry.   She says, in any event, that

MORGAN V SOVEREIGN ASSURANCE CO LTD HC DUN CIV-2012-412-000957 [23 May 2013]

Sovereign waived any irregularity as to proper Registry by filing its statement of defence and counterclaim before making this application.  Furthermore, she says that Dunedin will be more convenient, by reason of one overwhelming factor.  That is that she suffers a disability which renders her unable to live a normal life.  She says that she is dependent on others to assist in basic tasks.   Although she lives in Queensland, having left Dunedin in 2005, she would be able to live with her parents in Dunedin during a trial.  She deposes that without the assistance of her parents, she would not be able to manage her daily life or the other activities necessary to allow her to take part in a hearing.

The issue as to proper Registry

[5]      The identification of the proper Registry in which to file a proceeding is contained in r 5.1 High Court Rules.

[6]      By  r  5.1(a),  this  proceeding  would  normally  be  commenced  against Sovereign, as a company with its principal place of business in Auckland, in that Registry.

[7]      Alternatively, under r 5.1(2) the proceeding might have been issued, if the place where the cause of action sued on, or a material part of it, arose nearer to where the plaintiff resides, in the Registry of that place.

[8]      The implication of the affidavit filed by Ms Morgan in support of her filing the proceeding in Dunedin is that her parents’ place of residence in Dunedin should be treated as Ms Morgan’s place of residence for the purpose of this proceeding.  I say “implication” because Ms Morgan, in breach of r 5.1(3), did not state that the cause of action had arisen in Dunedin and that Dunedin is nearer to the place where she resides than to the place where Sovereign is based.  On the facts of this case, Ms Morgan could not make a statement of the kind required by r 5.1(3), because she is a resident of Queensland, and Auckland is closer to her residence than Dunedin is.

[9]     Therefore, there were two irregularities in this case, the first being the insufficient  affidavit  filed  by  Ms  Morgan  and  the  second  being  the  Court’s acceptance of the proceeding for filing.

[10]     Regardless of arguments as to where the cause of action may have arisen, which I do not need to determine, this is a proceeding which had Auckland as its proper Registry and ought to have been filed there.

[11]     In reaching this conclusion I have taken into account the judgment in Overton Holdings Ltd v APN New Zealand Ltd.1   Notwithstanding my finding to the contrary in  Inder  v  Commissioner  of  Crown  Lands,  Ms  Peachey  invited  me  to  adopt  a different approach to that taken in Inder.2     In Overton Holdings, Associate Judge Gendall found that the proceeding had been filed in the incorrect Registry.   He ordered that it be transferred to the proper Registry.  Before doing so, he noted under a heading “Waiver” that the possible issue of waiver had not been argued before him. His Honour referred to the relevant commentary in McGechan on Procedure,3 which includes the comment:

HR5.1.16        Challenge to registry chosen by plaintiff — waiver by statement of defence

A defendant who wishes to challenge the registry nominated must apply for transfer  under  r  5.1(4)  or  (5)  either  before,  or  contemporaneously  with, taking any other steps: Inder v Commissioner of Crown Lands HC Christchurch CIV-2009-409-1219, 27 November 2009. Otherwise, the statutory waiver of the irregularity, as provided in r 5.1(4), will take effect.

Filing a statement of defence will amount to a waiver of any irregularity in place  of commencement:  Richards v NZ  Newspapers  [1931] NZLR 623 (SC); Inder v Commissioner of Crown Lands.

Where necessary, the application for transfer could seek an additional order extending time for filing a statement of defence. Any plaintiff bold enough to enter judgment by default in the face of such an application still pending could hardly expect to hold on to such default judgment.

In Madden Drilling Ltd v Fenwick Enterprises Ltd HC Dunedin CP128/89,

17 May 1990, the Master held that the equivalent of r 5.1(2) favours a plaintiff, but the equivalent of r 5.1(1) was not a bias in favour of the

1      Overton Holdings Ltd v APN New Zealand Ltd [2013] NZHC 754.

2      Inder v Commissioner of Crown Lands HC Christchurch, CIV-2009-409-1219, 27 November

2009.

3      McGechan on Procedure (online ed.) at HR [5.1.16].

defendant,  and  that  it  was  appropriate  for  the  defendant  to  make  an application under r 5.1 before taking any steps in the case.

Likewise,  in  Cadbury  Confectionery  Ltd  v  Regina  (1988)  Ltd  (1992)  6

PRNZ 47 HC, the defendant was held to have waived the benefit of r 107(1) (the predecessor to r 5.1(1)) by filing a statement of defence in the registry of

the Court selected by the plaintiff.

His Honour noted that the statement of defence had not been made contemporaneously with the application to transfer.   The defence was filed on 22

February 2013 whereas the application was filed on 28 February 2013.  His Honour then concluded:4

That said, and given all the circumstances prevailing in this case, I am satisfied that the present transfer application was filed close to and nearly contemporaneously with APN’s statement of defence, and thus a deemed waiver of the registry irregularity has not occurred here.

[12]     I respectfully decline to follow the Overton Holdings decision in that regard. I adhere to the conclusion reached in Inder v The Commissioner of Crown Lands that any subsequent application, no matter how much or little later, is too late (assuming the defendant was unaware of the irregularity when filing his or her statement of defence).5

Irregularities

[13]     Ms Morgan’s failure to comply with the requirement of the rules is to be

treated as an irregularity: r 1.5(1)(a) High Court Rules.

[14]     The Court is empowered, where a statement of claim has been filed in the wrong Registry, to direct that the documents on the file be transferred to the proper Registry: r 5.1(4).

[15]     That rule is subject to the provisions of r 1.5(4) which creates a form of statutory waiver of any irregularity, by providing:

The  court  must  not  set  aside  any  proceeding  or  any  step  taken  in  a proceeding or any document, judgment, or order in any proceeding on the

ground of a failure to which subclause (1) applies on the application of a party unless the application is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.

Discussion of waiver in this case

[16]     In Inder v Commissioner of Crown Lands, I determined with reference to r

1.5(4)  that  there  are  only two  possible  timings  for  a  valid  transfer  application, namely:6

(a)       An application for transfer made before the next step is taken – the application under r 1.5(4) may be granted.

(b)       An application filed contemporaneously with the defendant’s other documents  –  there  is  no  waiver.  See  BNZ  Nominees  Ltd  v Boddendijk per Master Williams QC at [58] – [59] and N Z Food Group (1992) Ltd v Diverse Holdings Limited HC CHCH CP34/00

27 June 2000 (Master Venning) at [23], both applying Royal Oak

Mall Limited v Savory Holdings Ltd CA106/89, 2 November 1989.

[17]     I accordingly held that, from the point the defendant filed a pleading without first or at the same time applying for an order of transfer, there was a waiver of the irregularity.  I said in particular:7

(c)       An application filed after the defendant’s “fresh step” documents have been filed – there is a waiver: see A G and L A Thomson Ltd v Victor Industries Limited (1989) 3 PRNZ 581 (Hardie Boys J) applying  Richards  v  New  Zealand  Newspapers  Ltd.  This  is  so

whether the other documents are filed before the application by one day,  one  month  or  one  year  –  I  note  that  in  the  Cadbury Confectionary case at [49], the Master observed that the defendant had waived the registry irregularity by filing its defence and counterclaim well before the application to transfer. If intended to leave open the possibility that an application filed shortly afterwards may be granted, the observation should be viewed as obiter. I would respectfully not follow it. Any subsequent application, no matter whether much or little later, is too late.

[18]     I adopt those conclusions, which I note are supported by the extensive review of authorities contained in Inder v The Commissioner of Crown Lands.  This analysis

also accords, in somewhat expanded form, with the summary of law in Laws of New

Zealand Civil Procedure: High Court.8

[19]     There is an additional requirement under r 1.5(4) before a fresh step will constitute a waiver, which I did not need to discuss in Inder v Commissioner of Crown Lands.  That is the requirement that for a waiver to take place the defendant must have first “become aware of the irregularity”.   In relation to an irregularity concerning the filing in the incorrect Registry, the defendant will almost invariably have such knowledge from receipt of the claim.  The defendant will have received documents issued out of the wrong Registry.  The fact that it is the wrong Registry will usually be clear, because the defendant does not reside near the Registry in which the proceeding has been issued, and the defendant and its solicitors will know, both  as  a  matter  of  background  and  from  the  plaintiff’s  place  of  residence  as described in the statement of claim that the plaintiff ’s claim does not come within the alternative Registry provision under r 5.1(2).

[20]     In  her  submissions  for  Sovereign,  Ms  Peachey  suggested  that,  with  Ms Morgan’s absence from New Zealand since 2005, some aspect of Ms Morgan’s circumstances relevant to determining the proper Registry may have been unknown to Sovereign.  There is no evidence filed by Sovereign to support that suggestion. On the balance of probabilities, Sovereign (or its solicitors) would have been aware of the irregularity.

[21]     This conclusion is supported by information Ms Peachey has provided from the Bar as to commencing an informal discussion with counsel for Ms Morgan before filing the application for transfer.  Sovereign and its solicitors appreciated that there was a proper Registry issue from the outset.

[22]     The chronology of filing is this:

4 December 2012 - Ms Morgan issues this proceeding out of the Dunedin

Registry with an affidavit as to cause of action.

8      Laws of New Zealand Civil Procedure: High Court, at [93].

21  February  2013  -  Sovereign  files  its  statement  of  defence  and counterclaim.

28   February   2013   -   Sovereign   records   in   its   initial   conference

memorandum that it intends to pursue a transfer.

28 March 2013 - Sovereign files this application for directions as to

transfer.

[23]  The application for transfer was accordingly not filed before or contemporaneously with the formal step taken by the defendant in the proceeding, namely the filing of the statement of defence and counterclaim.  There has therefore been a waiver under r 1.5(4) and the Court has no power to set aside the proceeding upon the basis of Sovereign’s first ground of application.

Transfer on the basis of convenience to the parties

The rule

[24]     Rule 5.1(5) permits a transfer on grounds of convenience by providing:

If it appears to a Judge, on application made, that a different registry of the court would be more convenient to the parties, he or she may direct that the statement of claim or all documents be transferred to that registry and that registry becomes the proper registry.

Factors of convenience against transfer

[25]     I have summarised Ms Morgan’s circumstances as she described them in her affidavit.9     Mr Beck described Ms Morgan’s circumstances and her need for accommodation with and support by her parents as “the overwhelming factor” in favour of a transfer under r 5.1(5).

[26]     There is a secondary factor, very much secondary.  Mr Beck as her counsel

(although based in Wellington) is able to absorb some of the Dunedin costs which

9 Above at [4].

would normally fall on Ms Morgan, such as in relation to his accommodation in

Dunedin during the trial. That does not apply in relation to a trial in Auckland.

Factors of convenience in favour of transfer

[27]     Ms Peachey emphasised as the starting point the proper Registry of this proceeding has all along been Auckland.  That reflects the fact both that Sovereign is based  in  Auckland  (albeit  doing  business  throughout  New  Zealand)  and  that Auckland is, in fact, closer to Ms Morgan’s place of residence in Queensland than Dunedin is.

[28]     These circumstances in turn have relevance to the cost of the proceeding to the parties.  Most, if not all, of Ms Morgan’s medical assessments have taken place over recent years in Queensland.  It is very likely that experts will be called from Queensland. There may be a need for travel, not only for trial, but for briefing.

[29]     Sovereign’s solicitors are based in Auckland with Sovereign.  Mr Beck, on

the other hand, is based in Wellington (and, relevantly, not in Dunedin).

[30]     Finally, Ms Morgan is legally aided in this proceeding.   To the extent that decisions are made in relation to the convenience of the parties, Ms Peachey submits that the court must take into account the fact that the imposition of additional costs upon Sovereign through having to take its counsel, officers and witnesses to Dunedin for a trial, will be unlikely to be recovered, even if Sovereign is fully successful at trial.10

The balancing

[31]     The first factual assessment for the Court, against this background, is to determine what will be “more convenient to the parties” in terms of r 5.1(5). That, in turn, requires an assessment not only of physical, financial and any other matters

affecting convenience but also the overall justice of the case.

10     Legal Services Act 2011, ss 45–46.

[32]     The appropriate decision in this case very much in the balance.  Counsel have not referred me to any case dealing with a transfer application where a party faced physical circumstances similar to those of Ms Morgan.  Ms Peachey notes that the extent of Ms Morgan’s disabilities is likely to be one of the very issues in the proceeding and was one of the factors which led to the cancellation of Ms Morgan’s insurance.  That said, Ms Morgan has deposed to her disabilities and the extent to which she needs the support of her parents.  In this summary context, her affidavit must be taken to be a genuine statement as to the support she will need at a trial.

[33]     Sovereign has commendably, through counsel, offered something of a half- way house.   Ms Peachey notified Mr Beck as a way of resolving this application informally that Sovereign would be prepared to absorb, for the time being, the costs of return air travel for a support person to Auckland and the costs of motel accommodation for the trial.  Ms Peachey has confirmed that that offer is still “on the table”.  It would be subject to Sovereign’s entitlement, if successful at trial, to obtain an order for the payment of disbursements including those two sets of disbursements.  But, for the time being, it would provide a means for Ms Morgan to have one of her parents supporting her in accommodation in Auckland.

[34]     I have taken that offer into account, but am not satisfied that it is reasonable in the circumstances of this case to require a person with Ms Morgan’s deposed disabilities to have to accommodate herself with one parent’s support in a motel in Auckland  for  the  duration  of  the  trial.    It  is  too  early  at  this  point  to  predict accurately trial duration, but counsel at present anticipate, without the benefit of knowing exactly how many witnesses including experts will be required, that a trial of four days might be needed.   The interests of the parties, assessed in terms of convenience, are in direct competition in this case.  I am satisfied, just satisfied, that the greater convenience assessed across the parties is that the trial be conducted at Dunedin.

[35]     Ms  Peachey  had  suggested  an  alternative  form  of  order  whereby  the proceeding be transferred to Auckland for the purposes of interlocutory issues.  That sort of splitting of the management of the file is unattractive.  Particularly under the

modern case management regime, unified management of the proceeding is to be favoured.

Outcome

[36]     The application falls to be dismissed on both grounds.

[37]     This is an ordinary interlocutory proceeding and costs must follow the event.

Orders

[38]     I order:

(a)       The defendant’s application for transfer is dismissed.

(b)The defendant is to pay the costs of the application on a 2B basis together with disbursements to be fixed by the Registrar.

Associate Judge Osborne

Solicitors:

Peter Sara, PO Box 5995, Moray Place, Dunedin Counsel: A C Beck, PO Box 98, Greytown Chapman Tripp, PO Box 2206, Auckland 1140