QBE Insurance (Australia) Limited v Gas Unlimited Limited

[2021] NZHC 299

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-637

[2021] NZHC 299

IN THE MATTER

of an application in relation to section 9 of the Law Reform Act 1936

BETWEEN

QBE INSURANCE (AUSTRALIA) LIMITED

Applicant

AND

GAS UNLIMITED LIMITED

Respondent

Hearing:

(Determined on the papers)

Counsel:

B A Alcorn for the Applicant

C J Hlavac for IAG New Zealand Limited G K Riach for the Respondent

Judgment:

26 February 2021

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 26 February 2021 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 26 February 2021

QBE INSURANCE (AUSTRALIA) LIMITED v GAS UNLIMITED LIMITED [2021] NZHC 299

[26 February 2021]

[1]                  The applicant, QBE Insurance (Australia) Limited (QBE), seeks directions under the Law Reform Act 1936 in relation to the distribution of the proceeds of an insurance policy held by the respondent, Gas Unlimited Limited.

[2]                  This proceeding relates to a gas explosion that occurred at 9 Marble Court, Northwood, Christchurch, on 19 July 2019, damaging numerous properties and vehicles. The claims made to date for damage arising from that explosion exceed the level of cover under the policy by some margin. Hence QBE brings this application to set a deadline for the bringing of claims by those affected and to seek a direction that the insurance monies be distributed pro rata amongst those who have lodged claims for compensation, once the claims have been reviewed and accepted.

[3]                  There are two procedural applications before the Court. The first is for leave to bring this proceeding by way of originating application. The second is that IAG New Zealand Limited (IAG) has, by memorandum dated 12 February 2021, sought to intervene in QBE’s application.

[4]                  IAG is the insurer of the property where the gas explosion occurred. It also insures 77 other properties in the area that were damaged, together with providing insurance cover for contents and vehicles that were damaged.

[5]                  Counsel for QBE, having had the opportunity to consider IAG’s request to intervene, does not oppose that application. Neither does the respondent oppose IAG’s application. Accordingly, IAG is granted leave to intervene in this proceeding.

Use of originating application procedure

[6]                  I am satisfied this is a case where it is appropriate that the originating application procedure be used. Leave is required as the application is not one that can be brought as of right by originating application. This is not an application where interlocutory applications will be required and, as I set out below, the matter was able to be resolved at the first call through discussions between counsel for IAG and QBE. That the matter was able to be dealt with in short order reinforces my conclusion that the originating application procedure is suitable for this matter and leave is granted accordingly.

Section 9(1) of the Law Reform Act 1936

[7]                  Counsel for QBE explains that the respondent held a public liability policy with QBE. Following the respondent working on the Marble Court property, there was an explosion at that property which destroyed that house and damaged other properties and vehicles in the vicinity.

[8]                  The respondent and its director have pleaded guilty to charges laid by WorkSafe New Zealand arising from the explosion.

[9]                  Given the estimated combined quantum of the claims arising from the explosion significantly exceeds the available cover, QBE has sought a direction that it call for notification of claims from those claiming to have suffered loss. The intent is that QBE will place advertisements in The Christchurch Press which will call for claims to be notified within 25 working days from the publication of the last advertisement. Upon the expiry of that period, the class of claimants who might be entitled to share in the insurance proceeds will be closed, permitting QBE to distribute the insurance monies pro rata to those who have established their claims.

[10]              To facilitate that objective, QBE seeks orders that it be directed to call upon those parties who have already been in touch to lodge claims and to provide sufficient information to enable QBE to assess those claims within 25 working days of its last advertisement in The Christchurch Press (a draft advertisement is annexed to the application). The application then provides that, once QBE has assessed the claims, it will notify the claimants of the pro rata allocation claimants will receive and, if any third party wishes to object to that allocation, they will be able to do so. QBE suggested any party opposing the pro rata allocation once notified be obliged to seek further directions from the court within five working days of the date of notification. I consider that timeframe too tight and I amend that to 15 working days.

[11]              IAG supports the orders sought at paras 1.3 to 1.8 of the originating application dated 17 December 2020 which deal with how QBE will call for claims to be made and the distribution of the funds to successful claimants.

[12]              Counsel for IAG raises the further matter of the process QBE intends to adopt to assess the validity and quantum of claims.

[13]              Counsel for IAG suggests it is appropriate the Court direct a process for assessing such claims. The majority of claims notified to date appear to involve subrogated recoveries on behalf of insurers  in  which IAG suggests (and I accept)    a reasonably robust assessment is likely to have already been carried out. However, there is the potential for uninsured losses to be sought which will not yet have been subject to any critical assessment.

[14]              In response to Mr Hlavac’s memorandum on behalf of IAG, counsel for QBE suggested the addition of the following clause to the orders sought:

(a)Upon receipt of the claims notified to the applicant pursuant to the steps set out in paragraphs 1.4 and 1.5 of the originating application (including full details and supporting documents) the applicant’s loss adjuster and legal counsel will undertake a desktop assessment of each valid claim. That assessment will address the legal liability of the respondent for each claim and the reasonableness of the quantum of each claim.

[15]              Mr Hlavac confirmed that the addition of the above paragraph met his client’s concerns.

Discussion

[16]              I am satisfied that the orders sought are necessary to allow QBE to advance the distribution of the available insurance fund. It is appropriate that public notice be given in the manner proposed, that is, by four advertisements in The Christchurch Press over a period of two months.

[17]              Accordingly, I make orders in terms of paragraphs 1.4(a) to 1.8 of the originating application dated 21 December 2020, with the addition of the order set out at [14] above and the modification at [10].

[18]              As discussed with counsel, the proposed public notice attached to the originating application is approved with the following additions:

(a)Above the words “Gas explosion 19 July 2019 Christchurch: notice to claimants”, there is to appear in bold type “Important Notice”.

(b)After the last paragraph and before the solicitors’ address, the following words are to be inserted: “If you have any doubt as to whether this Notice applies to you, you should take legal advice as a matter of urgency.”

[19]              Counsel for the respondent has confirmed that, on the basis no costs are sought, the respondent does not intend to oppose the application. Counsel for the applicant has confirmed no costs are sought in relation to the application. No costs issues were raised on behalf of IAG. Accordingly, there is no order as to costs.

Associate Judge Lester

Solicitors:

Fee Langstone, Auckland Young Hunter, Christchurch