Niven v IAG New Zealand Limited

[2018] NZHC 2492

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-000472

[2018] NZHC 2492

BETWEEN

GARY RONALD NIVEN and RACHEL ANNE NIVEN
Plaintiffs

AND

IAG NEW ZEALAND LIMITED

Defendant

Hearing:	20 September 2018
Appearances:	P F Whiteside QC and A J Summerlee for Plaintiffs A L Holloway for Defendant
Judgment:	25 September 2018

JUDGMENT OF COURTNEY J

NIVEN v IAG NEW ZEALAND LTD [2018] NZHC 2492 [25 September 2018]

Introduction

[1]    Mr and Mrs Niven’s Christchurch house was damaged in the 2011 earthquake. Their insurer, IAG New Zealand Ltd, accepts that the house cannot be repaired economically. The Nivens say that they agreed with IAG that they would engage quantity surveyors, Harrisons, to price the rebuild and that IAG would accept the Harrisons estimate as establishing the quantum of the claim. IAG does not accept that it agreed to accept the Harrisons estimate. Mr and Mrs Niven say that IAG is estopped from denying the existence of the pleaded agreement. They have applied for an order that these issues be determined as a separate question.

[2]    The application came  before  me  in  a  case  management  conference  on  20 September 2018 on the basis of counsels’ memoranda. Mr Holloway, for IAG, objected to my hearing the application in that forum and proposed that Mr and Mrs Niven be required to file a formal interlocutory application. I declined to take that course. I was satisfied that both parties were in a position to argue the issue.

Determination of separate questions

[3]    Under r 10.15, the court may direct that any question be determined separately from any other question. A question includes any question or issue in the proceeding whether of fact or law or partly fact and partly law.1

[4]    In general, it is assumed that all matters in issue will be determined in one trial, which is usually the most efficient means of disposing of a proceeding. Judicial warnings about split trials are common; judges recognise the risk that what might appear to be a straightforward way of disposing of an issue can easily result in an expensive quagmire that ultimately leads to greater delay than would otherwise have been the case.2

[5]    The approach to determining such an application is set out in Turners & Growers Ltd v Zespri Group Ltd, in which White J summarised the criteria that have been recognised as helpful and relevant in other cases:3

1      High Court Rules, r 10.14.

2      See e.g. the cases referred to by Wylie J in NZ Iron Sands Holdings Ltd v Toward Industries Ltd

[2018] NZHC 1571.

3      Turners & Growers Ltd v Zespri Group Ltd HC Auckland, CIV-2009-404-004392 at [10]–[13].

(a)The likelihood of delay in finally resolving the proceeding.

(b)The probable length of the hearings if there was a split trial.

(c)Whether a decision one way or the other on the separate questions would end the litigation.

(d)The impact on the length of any subsequent hearings.

(e)The balance of the advantages to the parties and the public interest in shortening litigation as against any disadvantages asserted by parties opposing a split trial;

(f)Demarcation difficulties in defining the issues to be addressed at the first trial;

(g)Resulting difficulties of issue estoppel;

(h)Inadvertent disqualification of a Judge who has expressed views at the first trial on matters for decision at the second trial;

(i)Inadvertent findings at the first trial upon matters that are for full evidence and argument at the second hearing;

(j)The need to recall some witnesses at the second hearing;

(k)The duplication of time involved in the Court and counsel “coming up to speed” again for the second hearing;

(l)The prospect of multiple appeals;

(m)A second round of discovery or other interlocutories and amended pleadings following the first trial;

(n)Rostering difficulties in ensuring that the same Judge is available for the second hearing.

Present application

[6]    Mr Whiteside QC, for Mr and Mrs Niven, outlined the case against IAG. He explained that, from the outset, Mr and Mrs Niven were determined to avoid protracted argument and delay. IAG offered them the option of rebuilding their home to a different design and they accepted that offer. Then, in order to ensure that there was not ongoing dispute as to the scope and cost of the rebuild, they secured IAG’s agreement to engage Harrisons and for both parties to proceed to the rebuild on the basis of the Harrisons estimate. The agreement is recorded in a small number of emails between Mr Niven and IAG. The Harrisons’ estimate is slightly over $4.3m. Mr and Mrs Niven believe that IAG have changed their position because the estimate was much greater than it had anticipated.

[7]    Mr and Mrs Niven also seek general damages for the distress and inconvenience occasioned to them as a result of the delay in rebuilding their damaged home, in which they have been living since the earthquake.

[8]    Mr Whiteside considered that the evidence required to resolve the issues would be very limited. With legal submissions, he thought two days might be required at the most.

[9]    Mr Holloway argued that the determination of these issues would be much more extensive than Mr Whiteside envisaged. He said that, although most of the communications were email, there were a great many emails. There were also some (five) telephone conversations. Significantly, IAG’s approach would focus on the context in which these exchanges took place; it would be inviting the court to take a broader view, looking at what else was happening at the time the various emails were exchanged. Mr Holloway considered that there might be around eight witnesses, more or less.

[10]   Mr Whiteside emphasised that if Mr and Mrs Niven were successful on this issue then the result would finally determine matters between the parties and the rebuild could begin without further delay. On the other hand, he warned that if the proceeding continued with all matters at issue heard together, the trial would be much longer and potentially wasteful and, very significantly from Mr and Mrs Niven’s perspective, there would be even greater delay in obtaining a resolution to what has been  a  very  distressing  and  long-standing  state  of  affairs.   As  against  that,   Mr Holloway pointed out that if the contractual and estoppel issues are not determined in Mr and Mrs Niven’s favour then the diversion to a separate question hearing will generate even more delay. Also, by allowing IAG to explore the basis for the Harrisons estimate by obtaining expert advice for itself, it is possible that IAG would accept the Harrisons estimation as reasonable and would hasten resolution between the parties.

[11]   I see the following factors as relevant. First, given IAG’s intended approach to the issue, two days will not be adequate. My estimate for this kind of issue on a stand-alone basis would be five days. Secondly, regardless of the outcome of the separate question, there are strong prospects of an appeal. Neither counsel referred to this aspect but the size of the claim makes it unlikely that either party will accept an

adverse outcome. An appeal would significantly delay the overall resolution of the claim, which is not to Mr and Mrs Niven’s advantage.

[12]   Thirdly, requiring all the issues to be dealt with together will involve IAG making its own assessment of the rebuild estimate  at an earlier stage and I accept  Mr Holloway’s submission that this could enhance the likelihood of settlement. It seems very unlikely that IAG will engage in negotiations until it has independent advice of its own regarding the rebuild cost.

[13]   Finally, although not essential, it is desirable in a case such as this for the same Judge to hear all the evidence. Unfortunately, rostering difficulties mean that there is a real risk of further delay to ensure that the same Judge is available for the second part of the hearing. Again, this is not to Mr and Mrs Niven’s advantage.

[14]   I am not persuaded that determining the plaintiffs’ allegation of a binding contract for a rebuild based on the Harrison’s estimate by way of a separate question will serve the parties’ best interests.

Result

[15]The application is dismissed.

[16]   A further case management conference is to be allocated as soon as possible so that a suitable timetable can be put in place.

P Courtney J