Pemberton Asset Limited v Porter Parts Limited
[2025] NZHC 3273
•31 October 2025
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2024-419-238
[2025] NZHC 3273
BETWEEN PEMBERTON ASSET LIMITED
Plaintiff
AND
PORTER PARTS LIMITED
First Defendant
THE HOLLARD INSURANCE COMPANY PTY LIMITED
Proposed Second Defendant
AND
ROBUR ATTACHMENTS LIMITED
Third Party
Hearing: On the papers Counsel:
V Whitfield and M Meier for the Plaintiff
No memorandum filed for The Hollard Insurance Company Pty Limited (abiding the Court’s decision)
Judgment:
31 October 2025
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 31 October 2025 at 4 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Gallie Miles, Te Awamutu
PEMBERTON ASSET LIMITED v PORTER PARTS LIMITED [2025] NZHC 3273 [31 October 2025]
Introduction
[1] Pemberton Asset Limited (Pemberton) has brought a claim against Porter Parts Limited (PPL) for loss caused following its purchase of a faulty double lock coupler from PPL.
[2] The plaintiff now seeks to plead in an amended statement of claim that the defect with the coupler was due to a hydraulic cylinder manufactured by ZX Corporation Limited (in liquidation) (ZXC) that wrongly contained metal filings.
[3] This judgment determines Pemberton’s application pursuant to s 9 of the Law Reform Act 1936 for leave to commence proceedings against the insurer of ZXC. The insurer, The Hollard Insurance Company Pty Ltd (Insurer), does not oppose the application.
Relevant law
[4]Section 9(1) and (4) of the Law Reform Act 1936 provides:
9 Amount of liability to be charge on insurance moneys payable against that liability
(1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the passing of this Act, entered into a contract of insurance by which he is indemnified against liability to pay any damages or compensation, the amount of his liability shall, on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability.
…
(4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured: provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court.”
[5] The Supreme Court in Ludgater Holdings Ltd v Gerling Australia Insurance Company Pty Ltd discussed the rationale behind s 9 and observed that both s 9 and its predecessor responded to “the obvious unfairness in the denial by the common law of priority for an injured plaintiff’s claim to insurance proceeds received by or payable to an insolvent insured defendant.”1
[6] Section 9(4) provides for enforcement of the charge created by s 9(1) against the insurer and requires a party seeking to enforce a charge to obtain leave before commencing proceedings against the insurer. The purpose of the leave requirement is to prevent a plaintiff from taking unnecessary or inappropriate proceedings against the insurer.
[7] A party seeking leave under s 9(4) of the Law Reform Act 1936 must demonstrate that:2
(a)there is a prima facie claim against the insured;
(b)the insured has a prima facie claim under the insurance policy; and
(c)the insured is not a perfectly good common law defendant.
[8] The onus is on the plaintiff to make out a reasonably arguable case against the insured but the threshold is not high.3 In Clark's Pacific Ltd v Trucks & Trailers Ltd Associate Judge Faire commented that an application under s 9(4) should be dealt with in a similar way to an application for strike-out. That is, facts pleaded against the proposed defendant should generally be taken as true and the claim should not be rejected unless it is clearly untenable, frivolous, vexatious or an abuse of process.4
1 Ludgater Holdings Ltd v Gerling Australia Insurance Company Pty Ltd [2010] NZSC 49 at [14].
2 Chow v Thomson HC Auckland CIV-2009-404-4765, 15 March 2012 at [13] as cited recently in Minister of Education v McKee Fehl Constructors Ltd [2018] NZHC 1177 at [24]. See also Heale v IAG New Zealand Ltd [2019] NZHC 2829 at [54].
3 Plastic Recoveries & Manufacturing Ltd v Wright Machinery Ltd HC Auckland CP1131/86, 30 April 1991 at 6–7 and FAI (NZ) General Insurance Company Ltd v Blundell and Brown Ltd [1994] 1 NZLR 11 (CA) at 15 and 21.
4 Clark's Pacific Ltd v Trucks & Trailers Ltd HC Auckland CIV-2016-404-3033, 20 April 2007 at [19]–[21] and Chang v Lumley General Insurance (NZ) Ltd HC Auckland CIV-2009-404-7820, 23 August 2010 at [22].
[9] The Court has a general discretion to grant or refuse leave. However, if the insurer clearly has a “cast-iron” defence to the proposed claim under the insurance policy, the Court may decline to grant leave.5 If there is doubt as to whether the defence will succeed, leave should be granted so the issue can be argued at trial.6
Is there a prima facie claim against ZXC?
[10] An affidavit has been filed in support of the application by Anthony Burman dated 12 August 2025. Mr Burman attaches a draft amended statement of claim adding the Insurer as the second defendant and gives evidence that:
(a)ZXC manufactured a hydraulic cylinder that wrongly contained metal filings. The hydraulic cylinder was incorporated into a Double Lock Coupler.
(b)On 13 July 2023, that Double Lock Coupler was purchased and uplifted by Pemberton to attach to Pemberton’s new Hitachi excavator (Excavator).
(c)On 23 August 2023, the Excavator (with the Double Lock Coupler) was taken to site and after minutes of use, the Double Lock Coupler jammed and was stuck. When it continued to fail, the presence of the metal fillings was detected.
(d)As a result of the metal filings both the Coupler and the Excavator were damaged and inoperable as the filings had travelled to all hydraulic components.
(e)The hydraulic cylinder that ZXC supplied contained the metal filings that caused the damage.
5 Body Corporate 368533 v Napier City Council [2016] NZHC 1470 at [48], citing Body Corporate 195843 v North Shore City Council [2011] 2 NZLR 222 (HC) at [34].
6 Registered Securities Ltd (in liq) v Brockett HC Christchurch CP293/87, 17 October 1991 at 8.
[11] The draft amended statement of claim alleges that Pemberton has a claim against ZXC in negligence. Counsel for the plaintiff summarises the claim as follows:
(a)As manufacturer of hydraulic cylinders intended for use as key components in construction or earthmoving equipment, ZXC owed a duty of care to Pemberton, as owner of the equipment. The duty is to exercise reasonable care and skill in the preparation, manufacturing, assembling and supply of the product so as to prevent loss from damage to the equipment caused by metal fillings.
(b)Had ZXC exercised reasonable skill and care, the hydraulic cylinder would not have contained the metal filings.
(c)As a result of the metal filings in the hydraulic system, the excavator and double lock coupler are inoperable as the filings had travelled to all hydraulic components.
(d)As a consequence of the breaches of duty of care by ZXC, Pemberton has suffered loss.
[12] I am satisfied the draft amended statement of claim discloses a prima facie claim against ZXC.
Does ZXC have a prima facie claim under the insurance policy?
[13]Pemberton’s evidence, as set out in Mr Burman’s affidavit, is that:
(a)At all material times, ZXC was insured by the Insurer for amounts that ZXC becomes liable to pay by way of compensation for property damage caused by an occurrence, as defined by the policy.
(b)The Policy is enforceable by ZXC against the Insurer because the claim by Pemberton is an occurrence covered by the policy.
[14] Pemberton therefore pleads that ZXC has a claim under the policy to be indemnified by the Insurer for the claim by Pemberton.
[15] The copy of the policy annexed to Mr Burman’s affidavit does not include the schedule. However, correspondence is annexed showing that ZXC had made a claim on the Insurer and, although not accepted, the claim has not been declined.
[16] In addition the application has been served on the Insurer and it does not oppose the application.
[17] On this basis I consider there is a prima facie claim available to ZXC under the insurance policy.
Is ZXC a perfectly good common law defendant?
[18] Counsel for Pemberton submits the real purpose for requiring leave is to ensure that a plaintiff does not take direct action against an insurer where there is a perfectly good common law defendant available. If the insured is apparently impecunious there can be no justification for postponing recourse against the insurer.7
[19] The most recent liquidator’s report confirms that Pemberton’s prospect of practical recovery from ZXC is unlikely.
[20] This means that ZXC is no longer a perfectly good common law defendant, satisfying the third requirement for leave.
Conclusion
[21] For the reasons set out above, leave to commence proceedings against the Insurer is appropriate.
7 FAI (NZ) General Insurance Co Ltd v Blundell and Brown Ltd, above n 3, at 15.
Result
[22] The plaintiff’s application pursuant to s 9 of the Law Reform Act 1936 for leave to commence proceedings against the Insurer as the second defendant is granted.
Costs
[23] I ask the parties to confer and only if costs are not able to be agreed for memoranda to be filed, on behalf of the plaintiff by 7 November 2025 and the Insurer by 14 November 2025.
Associate Judge Sussock
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