Ross v Southern Response Earthquake Services Limited
[2021] NZHC 3497
•16 December 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-000361
[2021] NZHC 3497
BETWEEN BRENDAN MILES ROSS and COLLEEN ANNE ROSS
Plaintiffs
AND
SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED
Defendant
Hearing: 29 November 2021 Appearances:
P G Skelton QC and C B Pearce for Plaintiffs
T C Weston QC, K-M M Paterson and E D Peers for Defendant G D R Shand (by VMR) for B & L Vickers & ors (Intervening) K G Dodds (in person) as a class member
M W Bond (in person) as a class member
Judgment:
16 December 2021
JUDGMENT OF OSBORNE J
[leave to discontinue a representative proceeding]
This judgment was delivered by me on 16 December 2021 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date
ROSS v SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED [2021] NZHC 3497 [16 December 2021]
[1] The plaintiffs seek leave to discontinue their claim in this representative proceeding.1 It was a condition of their leave to proceed as representative plaintiffs that they may discontinue the proceeding only by leave.2
[2] The plaintiffs and the defendant have now agreed on an extra-judicial process by which the claims of class members will be resolved. The grant of leave to discontinue is accordingly supported by the defendant.
[3] In this judgment, I grant leave to the plaintiffs to discontinue and do so for the following (summarised) reasons:
(a)the standard I apply is whether discontinuance, on the terms of the settlement, will be a fair and reasonable resolution of the plaintiffs’ claims in the interests of the members as a whole, both as between claimants and the defendant, and as between the claimants themselves; and
(b)that standard is met on the facts of the case, subject to additional conditions.
Background
[4]I summarise the background to this litigation.3
[5] The plaintiffs’ proceeding arises out of the settlement of their insurance claim arising out of the Canterbury Earthquake Sequence with the defendant (formerly known as AMI Insurance Ltd). The plaintiffs’ house was deemed to be beyond economic repair. They elected the “buy another house” option under their policy to settle their insurance claim, the result of which was that the defendant made them a cash settlement of $242,495 (in addition to the sum of $119,860 paid by the Earthquake Commission).
1 The proceeding is brought representatively under r 4.24(b) High Court Rules 2016.
2 Ross v Southern Response Earthquake Services Ltd [2019] NZCA 431, (2019) 25 PRNZ 33 [Ross CA], aff’d [2020] NZSC 126, [2021] 1 NZLR 117 [Ross SC].
3 For a more detailed background see Ross v Southern Response Earthquake Services Ltd [2018] NZHC 3288 [Ross HC] at [7]–[20].
[6] In this proceeding the plaintiffs claim there was a misrepresentation by the defendant in that a Detailed Repair/Rebuild Analysis (DRA) document provided by the defendant misled them to accept a lower settlement than what they were entitled to.4 They claim damages pursuant to s 35 of the Contract and Commercial Law Act 2017 that reflect the difference between the settlement sum received by each class member and the full estimate prepared for the class member’s claim. The plaintiffs additionally seek general damages of $25,000 per class member. They also claim interest and costs.
[7] The plaintiffs were granted leave to bring this proceeding as a representative proceeding under r 4.24 High Court Rules 2016 on behalf of other policyholders who settled their claims in similar circumstances.5 There are estimated to be 3000 policyholders in the class.
[8] The proceeding, although filed in 2018, was delayed by an interlocutory issue as to whether it was to proceed on an opt-out or opt-in basis, ultimately resolved in favour of an opt-out procedure.6
[9] In the meantime, a Mr and Mrs Dodds had been pursuing their own proceeding against the defendant, also commenced in 2018 (the Dodds litigation). The Dodds’ based their claim on similar circumstances to those of the Rosses, having cash settled with Southern Response on the basis of a DRA. The Dodds did not pursue their claim representatively. Following a trial in March 2019, they obtained a High Court judgment largely in line with their claim.7 The defendant unsuccessfully (except as to a relatively minor item of damages) appealed the High Court judgment, the Court of Appeal delivering its judgment in September 2020.8 The defendant has not appealed the Court of Appeal judgment and has paid the judgment sum (as determined by the Court of Appeal) to Mr and Mrs Dodds.
4 The plaintiffs’ four causes of action are described in Ross CA, above n 2, at [21].
5 Ross HC, above n 3.
6 Ross HC, above n 3, Ross CA, above n 2, Ross SC, above n 2, at [108].
7 Dodds v Southern Response Earthquake Services Ltd [2019] NZHC 2016, [2019] 3 NZLR 826.
8 Southern Response Earthquake Services Ltd v Dodds [2020] NZCA 395, [2020] 3 NZLR 383.
[10] In September 2019, the Crown (as the defendant’s shareholder) announced, (subject to obtaining clarity through an appeal to the Court of Appeal in the Dodds litigation), that the defendant would respond to other policyholders who were in similar situations to Mr and Mrs Dodds. There would be “a proactive solution” based on the outcome of the appeal in the Dodds litigation.
[11] Following the Court of Appeal’s judgment in the Dodds litigation, the defendant (with the Crown’s support) then wished to advertise and communicate a settlement package (the Package) to policyholders affected by the Dodds decisions. The Package was intended to put affected policyholders who had cash-settled before October 2014 effectively in the same position as those who had settled after that date, by paying additional allowances. The plaintiffs in this proceeding objected to the defendant having direct communication with class members concerning the Package. The defendant therefore applied for Court direction as to whether it was permitted to communicate directly with class members in respect of the Package. That application, although initially dismissed,9 was subsequently granted in an amended form, the Court making orders as to the form and timing of communications.10
[12] The defendant’s amended application for directions was heard together with the plaintiffs’ application for notification orders (for approval of the notice to class members of the proceeding in relation to their opt-out rights) and a further application for orders requiring the defendant to set aside 15 per cent of any settlement reached with a class member. Judgments on those applications were released on 20 September 2021.11
[13] The plaintiffs’ notice to class members was approved with amendments. An opt-out date of 20 December 2021 was set. The plaintiffs’ application for a set aside order was dismissed.
9 Ross v Southern Response Earthquake Services Ltd [2021] NZHC 253 [Result Judgment – Defendant’s Communications]; and Ross v Southern Response Earthquake Services Ltd [2021] NZHC 2451 (Defendant’s Communications).
10 Ross v Southern Response Earthquake Services Ltd [2021] NZHC 2453 [Communications Judgment (No 2)].
11 Ross v Southern Response Earthquake Services Ltd [2021] NZHC 2452 [Notification Judgment]; and Ross v Southern Response Earthquake Services Ltd [2021] NZHC 2454 [Setting Aside Judgment].
.
[14] The plaintiffs have applied for leave to appeal all three judgments, but the application for leave to appeal has been stayed pending determination of this application which, if granted, would resolve this proceeding.
The Deed of Discontinuance
[15] Following the release of the Court’s judgments in September 2021, the parties, with the assistance of senior counsel for each party, engaged in negotiations for a two- week period. The plaintiffs’ litigation funder, Claims Funding Australia Ltd (CFA), was also involved.
[16] The parties and CFA reached an agreement to end this representative proceeding. It has been recorded in a deed dated 8 October 2021 (Deed).
[17]The key terms of the Deed are:
(a)the defendant will offer all eligible class members the right to participate fully in and receive the benefit of the Package for a period of at least 18 months from the date of the Deed, the commitment being enforceable by each class member;
(b)the plaintiffs will discontinue the proceeding, subject to leave being granted by the Court;
(c)within five working days of such leave being granted, the defendant will make an agreed lump sum payment to CFA;
(d)on receipt of such payment, CFA will not seek to recover any sums from class members (whether those class members are funded or unfunded); and
(e)if the Court refuses leave to discontinue the proceeding, the settlement recorded in the Deed will be at an end, and timetable directions will be obtained for the continuation of the proceeding.
[18] Two affidavits have been filed in support of the application. Grant Cameron of GCA Lawyers, the solicitor for the plaintiffs, has referred to earlier affidavits detailing the history of the proceeding. He has exhibited the Deed. He explained its essential features, identified the benefits for class members and concluded the agreement constitutes a very favourable outcome for the class as a whole.
[19] Casey Hurren, the Chief Executive of the defendant, also referred to his previous affidavits filed in the proceeding. He referred to the steps taken to communicate the proposed discontinuance to class members and the outcome of those steps. He explained in detail how the defendant calculates its offers to eligible policyholders under the Package and the process the defendant follows in its dealings with policyholders concerning the Package.
Notice of the application for leave
The provision of notice
[20] In October 2021, Nation J made directions (as requested by counsel for the plaintiffs and the defendant) for bringing this application to the attention of class members. Those included the defendant placing newspaper advertisements and, in addition, posting and emailing to all known or potential class members at their last- known address an approved notice. This notice explained in detail the nature and background of the proceeding, the availability of the Package, the terms of the Deed and the right of class members to support or oppose the proposed discontinuance and to be heard on that.
Responses to the notice
[21]No one has filed opposition to the application for leave to discontinue.
[22] A number of class members notified the Court they supported discontinuance. I have considered each of those communications received, including the more detailed explanation that some provided as to their background and their reasons.
[23]There were, in addition, three more detailed sets of submissions filed.
[24] As well, a number of class members have filed notices of their election to opt- out of the proceeding. To date 142 opt-out notices have been filed.
Grant Shand
[25] Mr Shand has appeared for intervenors in relation to interlocutory issues in this proceeding.
[26] Mr Shand filed a detailed memorandum together with an affidavit of Stewart Harrison, a registered quantity surveyor.
[27] Mr Shand confirmed at the hearing that those he represents do not oppose the granting of leave to discontinue but wish to be heard on seven issues:
(a)the defendant’s Package allowance of six per cent for professional fees instead of 10 per cent;
(b)the defendant’s Package calculation of a Preliminary & General (P&G) allowance based on a lower build cost than Mr Shand and Mr Harrison would accept as appropriate;
(c)an inflexibility which Mr Shand considers the defendant has adopted in relation to considering settlements under the Package;
(d)the restricted role which has been taken by the Independent Oversight Committee (IOC) appointed by the Crown in relation to the Package;
(e)a disparity of treatment which Mr Harrison calculates has been afforded to the defendant’s policyholders who settled before or after 1 October 2014;
(f)a request that the amount of the payment to CFA under the Deed be made known (and not redacted) so as to assist with future represented proceedings and to let former clients of GCA Lawyers and CFA know what was paid; and
(g)the absence of any undertaking by Mr Hurren on behalf of the defendant to not raise any limitation defence should class members reject the Package and wish to pursue a claim against the defendant.
Karl Dodds
[28]Mr Dodds, with his wife, was the successful plaintiff in the Dodds litigation.
[29] He presented a detailed written submission entitled “[R]eflections on factors surrounding the proposed discontinuance of the Ross representative proceeding”. He spoke to these matters at the hearing.
[30] The focus of Mr Dodds’ submission was two-fold — first in relation to the way in which the defendant operates and, secondly, as to flaws in the Package.
[31] Mr Dodds explained that he considers he and his wife (and others) have been poorly treated by the defendant since the completion of the Dodds litigation (albeit on matters which do not have a direct bearing on this proceeding). His concerns focus on what Mr Dodds refers to as a “third” DRA. This was a document which counsel for the parties here indicate is in fact not a DRA of the defendant, but a working document of Arrow International Ltd (Arrow) —the defendant having contracted Arrow to provide (amongst other services) an estimate of repair and rebuilding costs.
[32] Mr Dodds is also concerned, with his experience of dealing with the defendant, that even under the Package the defendant cannot be relied on to fairly and transparently deal with policyholders. He views the Independent Oversight Committee (IOC) as “lacking in teeth” and “window dressing incapable of policing [the defendant]”. Mr Dodds submitted that the Court should remain involved in supervising progress towards outcomes under the Package, to ensure there is a consistent and fair resolution.
Monique Bond
[33] Mrs Bond also spoke to a submission she had filed. Her central concern, also arising from the discovery of the “third DRA” and from her dealings with the
defendant, is that the defendant will be unable to fairly administer the Package. She provided a copy of a statement of claim that she and Mr Bond have filed (in September 2021) in the District Court. By that claim, the Bonds seek an unspecified sum on account of the difference between a figure in the “third DRA” and the figures used to arrive at a settlement with the defendant in September 2015.
[34]Mrs Bond’s concerns are very similar to those of Mr Dodds.
Approach to the policyholders’ concerns
[35] Mr Weston QC, for the defendant, noted that those making submissions as, or on behalf of, former policyholders may no longer be members of the class represented by the plaintiffs by reason of earlier or (in the case of Mr Shand) very recent settlements under the Package. However, Mr Weston recognised those making submissions may have received notice of this application containing advice of an entitlement to make submissions on the application. He therefore did not submit this group should not be heard by reason of a lack of standing.
[36] In the somewhat unusual situation which arises here — not approval of a settlement to be immediately effected but approval of a discontinuance to allow a settlement process to be implemented by the defendant — I found it appropriate and helpful that the Court should have before it the concerns of persons who have been affected by the defendant’s handling of DRA issues. This is particularly so in the absence of a formal contradictor.
[37] That said, I recognise (apart from through the evidence of Mr Harrison in relation to specific calculations concerning professional fees and P & G allowances) the non-parties who have addressed the Court have done so through submissions and their genuine views as to the history and the facts. But they have not adduced affidavit evidence on matters they refer to.
[38] The submissions made nevertheless provided a helpful, additional perspective in relation to the submissions of Mr Skelton QC and Mr Weston, which I will shortly consider.
[39]I will first establish the legal principles to be applied on this application.
Leave to discontinue — the principles
The need for leave
[40] The need for leave to discontinue this proceeding arises through the condition to that effect imposed by the Court of Appeal in this case, as confirmed by the Supreme Court.12
[41] The Supreme Court, in Southern Response Earthquake Services Ltd v Ross (Ross SC), observed that (in the absence of comprehensive legislation) proceedings conducted on an opt-out basis should be subject to a general rule requiring court approval of a settlement or a discontinuance.13
[42] The Law Commission Te Aka Matua o te Ture has very recently (September 2021) published its Issues Paper 48, Class Actions and Litigation Funding Supplementary Issues Paper (Law Commission Issues Paper 48). The Commission sets out draft settlement provisions, including a requirement that the settlement of a representative proceeding must be approved by a court.14 That suggested approach, for understandable reasons, would convert the Supreme Court’s “general rule” to a requirement.
[43] The Law Commission notes the Supreme Court’s conclusion that there should also be a requirement of court approval to discontinue proceedings, at least in opt-out proceedings. The Commission considers it would be uncontroversial to have a provision requiring court approval for discontinuance (as well as settlement).15 The Commission explains that the requirement of such approval has not been included in the draft provisions relating to settlement of a class action because the draft includes
12 Ross CA, above n 2, at [136]; and Ross SC, above n 2, at [83] and [109].
13 Ross SC, above n 2, at [83], the Court also noting (at fn 156) that where proceedings are brought on an opt-in basis, consideration should also be given to making court approval a term of giving leave under r 4.24(b) High Court Rules.
14 Law Commission Class Actions and Litigation Funding: Supplementary Issues Paper ǀ Ko ngā Hunga Take Whaipānga me ngā Pūtea Tautiringa (NZLC IP 48, 2021) [Law Commission Issues Paper 48] at [6.14].
15 At [6.10].
detailed procedures for court approval of settlements that will not all be applicable to discontinuance.16
[44] The fact the proposed discontinuance in this case is not a unilateral discontinuance but what I will refer to as a “settling discontinuance” (see below at [61]–[62]) serves to underscore the appropriateness of having the same leave requirement for this discontinuance as applies to settlement.
The standard for leave — the position in Australia and Ontario
[45] The Supreme Court in Ross SC considered a number of questions about the Court’s role concerning the settlement and discontinuance of opt-out claims.17 The Court found it helpful, in assessing counsels’ submissions, to begin by considering the approach in comparable jurisdictions, focusing on the position in Australia and Ontario as the most helpful examples.18
[46] The courts in Australia and Canada have identified, in the context of the settlement or discontinuance of representative proceedings, three permutations, being:
(a)a settlement;
(b)a discontinuance mandated by terms of settlement — what I will call “settling discontinuance”; and
(c)a unilateral discontinuance.
[47] The three concepts involved were discussed in the Federal Court of Australia in Babscay Pty Ltd v Pitcher Partners (Babscay) where Anastassiou J observed:19
24.The task of the Court when considering whether to give approval to the settlement is to determine whether the settlement represents “a fair and reasonable compromise of the claims made on behalf of the Group Members”: Lopez v Star World Enterprises [1999] FCA 104 at [15] (Finkelstein J). Plainly, that is not apt to describe the function of the
16 At [6.10].
17 Ross SC, above n 2, from [64].
18 At [66] and fn 107.
19 Babscay Pty Ltd v Pitcher Partners [2020] FCA 1610 [Babscay].
Court in the case of a unilateral discontinuance of a representative proceeding. It is important not to conflate a settlement agreement, which, by its terms, mandates the discontinuance of the representative proceeding, with a unilateral discontinuance with which this application is concerned. A settlement agreement which requires performance on the part of the applicant by discontinuing the proceeding is no different in principle to an agreement which requires the applicant consent to orders dismissing the proceeding.
Settlement
[48] In Ross SC Ellen France J, delivering the judgment of the Court, reviewed the criteria or standard to be applied by the Court when considering approval of a settlement. A standard had been developed (consistently) by both the Australian and Ontario Courts.20 The standard for settlement approval in Ontario, now codified in the Smarter and Stronger Justice Act SO 2020, codifies the standard that was developed through case law.
[49] The Supreme Court in Ross SC identified that under Australian case law the main task for the Court is to assess whether the settlement is a fair and reasonable compromise of the (plaintiff’s) claims in the interests of the members as a whole.21 Under the Australian case law, the Court will consider whether the settlement is fair and reasonable not only as between the class members and the defendants (the inter partes aspect) but also as between the class members themselves (the inter se aspects).22
[50] In Ross SC the Supreme Court observed that the courts in Ontario determined the standard was whether the settlement was “fair, reasonable and in the best interests of the class”.23 As noted, that standard is now codified in the Ontario legislation.24
20 Ross SC, above n 2, at [67]–[75].
21 At [71], citing Camilleri v The Trust Company (Nominees) Ltd [2015] FCA 1468 at [5(a)]. See also Australian Competition & Consumer Commission v Chats House Investments Pty Ltd (1996) 71 FCR 250 at 258; Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925, (2000) 180 ALR 459 [Williams] at [19]–[23]; and Lopez v Star World Enterprises Pty Ltd [1999] FCA 104 at [15].
22 Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) [2006] FCA 1388, (2006) 236 ALR 322; and Camilleri v The Trust Company (Nominees) Ltd, above n 21, at [5(b)].
23 Ross SC, above n 2, at [73], citing Law Commission of Ontario Class Actions: Objectives, Experiences, and Reforms: Final Report (July 2019) at 55.
24 Above n [48].
[51] In New Zealand, in the Law Commission Issues Paper 48, the draft settlement provision relating to the standard reads that “[t]he court must not approve the settlement unless it is satisfied that it is fair, reasonable, and in the interests of the class as a whole” after taking into account a number of factors.25 One of the factors to be considered (in the draft) is “whether class members are treated equitably in relation to each other”. These draft provisions reflect the standards applied under the Australian and Canadian regimes, as discussed by the Commission earlier in the Issues Paper.26
[52] I consider the Commission’s draft settlement provisions to which I have referred reflect the Australian and Ontario standards (as implicitly approved in Ross SC). I find they represent the appropriate standard in relation to the Court’s approval of a settlement.
[53] In both Australia and Ontario, the Courts have emphasised that reasonableness is “a range” rather than a single point.27 The Court is required to determine whether the proposed settlement is within a reasonable range, not whether it is the best outcome which might have been achieved.28
Unilateral discontinuance
[54] In the recent decision of the Federal Court of Australia in Babscay, Anastassiou J approved a discontinuance. In the passage set out at [47] above, he recognised the three permutations of outcome which may require a court approval. He also identified the distinct nature of unilateral discontinuance — the plaintiff is thereby free to commence a new proceeding if so advised; the doctrine of merger does not apply because there has been no compromise; and there is no res judicata or issue estoppel (in the absence of any judicial determination).29
25 Law Commission Issues Paper 48, above n 14, at [6.142], Draft Provision 6(5).
26 At [6.43]–[6.50].
27 Warren K Winkler and others The Law of Class Actions in Canada (Thomson Reuters, Toronto, 2014) at 305; Blairgowrie Trading Ltd v Allco Finance Group Ltd (No 3) [2017] FCA 330, (2017) 343 ALR 476 at [82]; and Stanford v DePuy International Ltd (No 6) [2016] FCA 1452 [Stanford] at [117].
28 Darwalla, above n 22, at [50]; and Stanford, above n 27, at [117].
29 Babscay, above n 19, at [22].
[55] For the standard the Court should apply to a unilateral discontinuance, Anastassiou J adopted principles which had been articulated by Dixon J in Laine v Thiess Pty Ltd (Laine).30 The standard recognised is that the discontinuance must not be unfair, unreasonable or adverse to the interests of group members.31 In other words, the test may be considered in terms of whether the group members would be disadvantaged rather than whether discontinuance would be positively in their interests.
[56] This has been recognised as a less stringent standard than that applying to the approval of settlements.32 In Francis (Trustee) v Oculus Accounting Pty Ltd (No 2), Derrington J found force in the (Babscay) view which prefers the less stringent standard.
[57] There are similarly Canadian authorities which recognise a standard in terms of there being no disadvantage, rather than in terms of positive benefit (as applies to settlements). The authors of The Law of Class Actions in Canada collect authorities to that effect from both Ontario and other provinces.33
[58] There is also New Zealand case law which supports a focus on disadvantage. In Ross SC the Supreme Court referred to the 1902 case of Nireaha Tamaki v Baker,34 an early example of a representative proceeding. The representative plaintiff in that case applied to discontinue his proceeding against the wishes of another claimant. The Supreme Court (predecessor of the High Court) set aside the discontinuance and joined the other claimant as plaintiff. Referring to the predecessor provision to r 4.24,35 one of the judges, Edward J observed:36
It is impossible, I think, to read the rule as authorising a person suing or defending in a representative capacity to prejudice or alter the rights of those whom he represents.
30 At [26]–[28], citing Laine v Thiess Pty Ltd [2016] VSC 689 [Laine] at [34]. See also Turner v Bayer Australia Ltd [2021] VSC 241 at [49].
31 At [26] and [28].
32 Francis (Trustee) v Oculus Accounting Pty Ltd (No 2) [2021] FCA 1275 [Francis].
33 Winkler, above n 27, at 222.
34 Nireaha Tamaki v Baker (1902) 22 NZLR 97 (SC).
35 Rule 79 of the Code of Civil Procedure.
36 Nireana Tamaki v Baker, above n 34, at [103].
[59] Reference may also be made to the discontinuance requirements under r 15.20(3) High Court Rules — the rule prohibiting a plaintiff from discontinuing where there is more than one plaintiff unless all plaintiffs consent or the Court grants leave. That is one of several situations covered by r 15.20 where the Court’s leave to discontinue may be required. The High Court has identified the avoidance of injustice (to other parties) as the basis upon which a party’s (usual) right to discontinue may be constrained.37
[60] Having regard to the different consequences of discontinuance (as against settlement), as articulated by Anastassiou J in Babscay, I consider there is a powerful argument for the different standard to apply in relation to a unilateral discontinuance. But it is unnecessary for me to determine that definitively as in my view the nature of the discontinuance here calls for the standard applying to a settlement.
Settling discontinuance
[61] As recognised by Anastassiou J in Babscay — in the passage set out at [47] above — it is important not to conflate a settlement agreement which, by its terms, mandates the discontinuance of the representative proceeding, with a unilateral discontinuance. This variety of discontinuance — “settling discontinuance” as I have called it — logically falls to be considered by reference to the same considerations as apply to a settlement. I find no reason to approach the approval of such a discontinuance on a different standard to that applying to settlements.
[62] In this case the settlement involved is exceptional in that it takes the form of class members having access to the Package — a settlement process instituted by the Crown and the defendant with the right for policyholders to fall back on their civil claims if not satisfied with the offer they receive under the Package. The fact the litigation settlement, of which the discontinuance is a part of effectively steers claimants into an extra-judicial process for ultimate resolution of their claims should not ordinarily alter the Court’s adoption of the usual range of factors or considerations applying to settlement approval.
37 Perpetual Trust Ltd v Mainzeal Property and Construction Ltd [2012] NZHC 223.
The criteria or factors relevant to assessment
[63] In Ross SC, the Supreme Court recognised that the position adopted in Australia and Ontario in relation to the factors or considerations which a Court should take into account (as well as the standard itself) is a helpful starting point for consideration.38
[64] For the factors considered in Australia, the Supreme Court referred to the judgment of Goldberg J in Williams v FAI Home Security Pty Ltd (No 4) (Williams).39 There, the Judge, having referred to the standard (as referred to above at [47], continued:40
Ordinarily in such circumstances the Court will take into account the amount offered to each group member, the prospects of success in the proceeding, the likelihood of the group members obtaining judgment for an amount significantly in excess of the settlement offer, the terms of any advice received from counsel and from any independent expert in relation to the issues which arise in the proceeding, the likely duration and cost of the proceeding if continued to judgment, and the attitude of the group members to the settlement. …
Goldberg J then referred to the “nine-factor test” used by United States courts, which his Honour found to be a useful guide in considering a settlement.41
[65] The nine-factor test was identified by the United States Court of Appeals for the Third Circuit in General Motors Corp Pick-Up Truck Fuel Tank Products Liability Litigation as follows:42
… to help district courts structure their final decisions to approve settlements as fair, reasonable and adequate as required by Rule 23(e) [which requires court approval for settlement of class actions]. See Girsh v Jepson 521 F 2d 153, 157 (3d Cir 1975). Those factors are:
(1)the complexity and duration of the litigation;
(2)the reaction of the class to the settlement;
(3)the stage of the proceedings;
38 Ross SC, above n 2, at [66] and fn 107.
39 Williams, above n 21.
40 At [19].
41 At [19].
42 General Motors Corp Pick-Up Truck Fuel Tank Products Liability litigation 55 F 3d 768 (3d Cir 1995) at 785.
(4)the risks of establishing liability;
(5)the risks of establishing damages;
(6)the risks of maintaining a class action;
(7)the ability of the defendants to withstand a greater judgment;
(8)the range of reasonableness of the settlement in light of the best recovery; and
(9)the range of reasonableness of the settlement in light of all the attendant risks of litigation.
[66] As the Supreme Court noted in Ross SC, the Federal Court of Australia has since issued a practice note setting out similar factors in an attempt to centralise the practical considerations relating to settlement approval.43
[67] For the approach in Ontario, the Supreme Court in Ross SC referred (with implicit approval) to the factors (commonly referred to as “the Dabbs factors”), identified by Sharpe J in Dabbs v Sun Life Assurance Co of Canada.44 The authors of The Law of Class Actions in Canada have brought together 11 criteria or factors that may be considered by the Court when deciding whether to approve a negotiated settlement:45
(1)likelihood of recovery or likelihood of success;
(2)amount and nature of discovery, evidence or investigation;
(3)settlement terms and conditions;
(4)recommendation and experience of counsel;
(5)future expense and likely duration of litigation and risk;
(6)recommendation of neutral parties, if any;
(7)number of objectors and nature of objections;
(8)the presence of good faith, arms-length bargaining and the absence of collusion;
43 Ross SC, above n 2, at fn 119, citing Federal Court of Australia “Class Actions Practice Note (GPN-CA)” (December 2019).
44 Ross SC, above n 2, at [73], citing Dabbs v Sun Life Assurance Co of Canada (1998) 40 OR (3d) 429 (CJ), the subject of appeal but not on this point in Dabbs v Sun Life Assurance Co of Canada (1998) 41 OR (3d) 97 (CA), with leave to appeal to the Supreme Court declined: MacLean v Dabbs SCCA (No 372).
45 Winkler, above n 27, at 305–306. See fn 28 for the decisions relied upon.
(9)the degree and nature of communications by counsel and the representative plaintiffs with class members during the litigation;
(10)information conveying to the court the dynamics of and the positions taken by the parties during the negotiation;
(11)if counsel fees were negotiated in the settlement, and if so, how big a factor are they?
To this list, I would add a further factor, recognised in some authorities:
(12)whether class members were given timely notice of the essential elements of this settlement.
[68] The (New Zealand) Law Commission, in the draft provision for settlement of a class action contained in its Issues Paper 48, has adopted a shorter list of (five) factors, together with a catch-all of “any other relevant factors”, as follows:46
(a)the terms and conditions of the settlement, including —
(i)any relief that will be provided to class members; and
(ii)whether class members are treated equitably in relation to each other; and
(iii)the proposed method of distributing any settlement amounts to class members; and
(iv)the proposed method of dealing with any unclaimed settlement amounts; and
(b)any legal fees and litigation funding fees that may be deducted from the relief payable to class members; and
(c)any information that is readily available to the court about the potential risks, costs, and benefits of continuing with the proceeding; and
(d)any views of class members; and
(e)the process by which the settlement was reached, including whether any potential conflicts of interest were properly managed; and
(f)any other factors it considers relevant.
[69] For the purpose of this application, I find that the list of criteria set out in The Law of Class Actions in Canada (above at [67]) provides a useful (albeit not exhaustive) check list of relevant factors.
46 Law Commission Issues Paper 48, above n 14, at [6.142], Draft Provision 6(5).
The agreement as to implementation of the Package
[70] The plaintiffs pursued relief as set out at [6] above. They now wish to discontinue their claims because of the agreement reached in the Deed (above at [15]– [17]). That agreement will see the Package implemented.
[71] The background to and nature of the Package has been the subject of evidence before the Court in earlier interlocutory proceedings. The Package came about through a decision of the Crown to work with the defendant to find a resolution for the claims that policyholders would have based on the outcome of the Dodds litigation. Once the decision of the Court of Appeal was released in the Dodds litigation, and the Crown accepted that outcome, the Crown and the defendant made public statements as to the imminent availability of the Package.
The Package — independent oversight
[72] The operational and governance arrangements between the Crown and the defendant for the implementation and delivery of the Package include:
(a)the creation of a new operational unit within the defendant, separate from its “business as usual” operations, to implement and deliver the Package (Unit);
(b)the appointment by the Crown of the IOC to oversee the implementation and delivery of the Package and to report to both the defendant’s Board and to the Crown in accordance with the Terms of Reference; and
(c)the appointment of a manager to manage the day-to-day operations of the Unit and report to the defendant’s general manager and to the IOC in accordance with the Terms of Reference.
[73]The IOC, under its Terms of Reference, is to:
(a)provide independent oversight of the defendant’s decision-making in respect of the implementation and delivery of the Package;
(b)seek independent advice or peer review on key issues;
(c)conduct an independent periodic review of the defendant’s processes and decision-making in respect of the implementation and delivery of the Package;
(d)provide advice and recommendations to the defendant’s Board and to the Crown on matters relating to the interests of the policyholders of the defendant and relevant to the implementation and delivery of the Package;
(e)report to affected policyholders on the Package through a public reporting process; and
(f)report directly to the Board and Crown.
[74] Under the IOC’s Terms of Reference, the reporting to the Crown and the Board are mandatory, whereas the public reporting is at the discretion of the IOC.
[75] Specifically excluded from the role of the IOC is the consideration of individual policyholder complaints or the provision of a dispute resolution body.
[76] The four members of the IOC are David Ayers (formerly mayor of the Waimakariri District Council), Nina Khouri (lawyer/mediator), Sandra Manderson (formerly New Zealand Police District Commander and International Liaison Officer) and Fiona Mules (an audit and risk director).
[77] Mr Hurren has, both in his previous affidavits and his most recent affidavit, discussed these arrangements. He deposes that the defendant is now developing a Package review process for policyholders that enables them to request a review of
their Package offer if they are concerned the Package has not been applied correctly to their claim or a calculation error may have been made. Mr Hurren explains that the Package review process will not be final or binding and policyholders will be free to pursue other options. He explains that the IOC will need to approve the Terms of Reference for this review process, which is expected to be available in the New Year (2022).
[78] The only example before the Court as to the working of the IOC to date is in the form of an email exchange between Mr Shand and Mr Ayers (of the IOC). Mr Shand raised some issues relating to the calculation of the P & G allowance and the percentage allowance for professional fees. In response, Mr Ayers explained the IOC’s role relates to the implementation and delivery of the Package. Mr Ayers suggested that matters specific to Mr Shand’s clients’ claims were best addressed to the defendant, observing that the IOC’s Terms of Reference do not involve communicating directly or privately with individual policyholders (or their advocate). On my reading of the exchange, the IOC response reflects the somewhat limited nature of its supervision, a matter now to be potentially addressed through the Package review process which Mr Hurren has referred to (providing for specific policyholder complaints as to incorrect application of the Package or possible calculation error). The Package review process would evidently remain internal within the defendant, without the elements of independence possessed by the IOC. Mr Ayers, in his email response to Mr Shand, recorded that the IOC is still working with Treasury on finding a way of reporting to policyholders as a group, and that such reports may well address issues raised by policyholders and their representatives. It would therefore appear in prospect that the IOC would have some oversight of the detail of claims processes, both by the Unit and through the Package review process. An amendment to the IOC’s Terms of Reference to include oversight of, and monthly reporting from, the head of the Package review process would appear to be a logical extension of the importance attached by the Crown to the independent oversight of the implementation of the Package.
The Package — what it covers
[79] The brief history of the development of the Package is summarised in the judgment on “Defendant’s Communications”.47 I there quoted from an earlier affidavit of Mr Hurren which explained the purpose of the Package in this way:48
The overarching objective of the Package is to put policyholders who cash settled prior to 1 October 2014 (without receiving professional fees and contingency) in the same position as policyholders who settled immediately after that date and therefore did receive those allowances. It is Southern Response’s intention effectively to pay eligible policyholders the same cost components that the Dodds received.
In other words, the package was designed to deliver to the policyholders who had settled with the defendant before October 2014 the allowances for professional fees and contingencies contained in the first DRA, but which had been omitted from the later DRA which formed the basis of their settlement.
[80] Additionally, payments on the Package will include interest on the additional payments from the date of the original settlement. The Package also includes an allowance of $2000 (inclusive of GST) for reimbursement of legal fees which a policyholder may incur in taking advice in relation to the Package.
[81] For this hearing, Mr Hurren provided (through an appendix) an explanation of the calculation steps and formulae used to apply the principles of the Package. This is an explanatory document that the defendant has been providing to policyholders who have applied under the Package. In relation to matters which are of some complexity, there has been no suggestion that the explanatory information is less than comprehensible or helpful. Mr Hurren has provided sample copies of two Calculation Documents which have already been issued under the Package. The two offers in question are for totals of $149,828.28 and $100,603.22. They contain all of the relevant calculations but with personal details of the policyholders redacted. They clearly show how the defendant will now be accounting for the professional fees, the contingency allowance and the interest allowance.
47 Defendant’s Communications, above n 9.
48 At [25].
The Package — what it does not cover
[82] In the Dodds litigation, the plaintiffs made an unsuccessful claim for general damages (of $15,000 each). Such damages were refused in the High Court, Gendall J finding there to be no evidence of significant distress.49 The Court of Appeal agreed with that conclusion but also did not determine whether the case was legally one in which general damages for stress and inconvenience could be awarded.50
[83] Accordingly, as the authorities currently stand in relation to a claim for general damages in the specific context of the defendant’s settlements with its policyholders, the legal position is uncertain. There would also remain in each case the need for a policyholder to establish a causal link between the breach complained of and any inconvenience or stress suffered.
[84] One remaining head of possible claim for policyholders relates to demolition costs. Neither the plaintiffs in the Dodds litigation nor the plaintiffs in this case pursued a claim for demolition expenses. But counsel here recognise it as at least a theoretical possibility for other policyholders. That said, Mr Weston has advised me from the bar that the officers of the defendant are at present unaware of any instance where a policyholder would have had a claim under this head — none of the policyholders who have come forward in response to the Package to date have raised such an issue. Mr Weston anticipates the defendant, in the event a policyholder had a legitimate claim for demolition costs, would give good faith consideration to the claim.
[85] The issue in relation to demolition costs would arise if policyholders received a cash settlement without the defendant demolishing the house, leaving the policyholder to bear the cost of demolition. On the other hand, no duty to pay demolition costs would arise where the defendant demolished the house at the defendant’s cost — as occurred in the Dodds litigation and in Avonside Holdings Ltd v Southern Response Earthquake Services Ltd.51
49 Dodds HC, above n 7, at [223].
50 Dodds CA, above n 8, at [191]. The Court of Appeal also left open the same issue in Bruce v IAG New Zealand Ltd [2019] NZCA 590 at [58]–[60].
51 Avonside Holdings Ltd v Southern Response Earthquake Services Ltd [2013] NZHC 1433; Avonside Holdings Ltd v Southern Response Earthquake Services Ltd [2014] NZCA 483; and Southern Response Earthquake Services Ltd v Avonside Holdings Ltd [2015] NZSC 110, [2017] 1 NZLR 141.
[86] For those policyholders who themselves bore the cost of demolition, a claim under their policy would clearly have been tenable. Mr Skelton informed me that the plaintiffs believe that if there were policyholders in that category it will be only a small subset of class members.
Limitation issues
[87] Should this proceeding be discontinued, there are potentially limitation issues for policyholders who wish to pursue claims arising out of pre-October 2014 cash settlements.
[88] Counsel responsibly presented submissions as to the how a New Zealand court might determine the limitation period which applies to such claims. Mr Skelton concluded that there is a significant uncertainty as to whether such claims would already be limitation-barred. Mr Weston submitted it is probable the time for such claims, suspended in May 2018 when this proceeding was commenced, would begin to run again.
[89] This question would require full argument and it is unnecessary that I determine the point. That is because the defendant, through Mr Weston, has now confirmed that during 18 months after the date on which leave to discontinue is granted (assuming it is) the defendant will not raise or rely on any defence under the Limitation Act 1950 or the Limitation Act 2010 (or any analogous limitation defence) in respect of any claim by any former class member in relation to the original cash settlement for professional fees (including Arrow Contract and Arrow Construction costs allowed in the Dodds litigation, contingency allowances, and interest).
[90] This confirmation is accepted by the Court as an undertaking on the part of the defendant.
Analysis — is the settlement fair and reasonable?
[91] I have previously found, in the context of directions sought by the defendant in relation to offering the Package, that it was open to the defendant to communicate the Package to class members without obtaining the Court’s approval of the Package.
That was subject — extra-ordinarily — to the Court supervising the content of defendant’s communications.52
[92] What has now changed is that the representative plaintiffs wish to discontinue this proceeding partly upon the basis that the Package will provide an effective, fair and reasonable means of resolving class members’ claims. Because the plaintiffs’ proposed discontinuance is on that basis — what I have referred to as a “settling discontinuance” — I am now required to assess whether the terms of settlement as a whole meet the standard for such a discontinuance.
[93] As indicated at [69] above, I adopt as an appropriate checklist the criteria identified in The Law of Class Actions in Canada.53
A — Likelihood of recovery or likelihood of success
[94] The questions here are whether the claims made by the plaintiffs in this proceeding are likely to succeed and, if so, whether the judgment sum is likely to be recoverable.
[95] By reason of the outcome of the Dodds litigation there is a high level of assurance, if not guarantee, that the representative proceeding would have resulted in judgment for the claimed shortfalls of payment relating to professional fees, contingency allowances and interest. Recovery of the judgment sum from the defendant appears similarly assured.
[96] There was no prospect of the recovery of sums based on increased percentage allowances for P & G and professional costs (of the nature identified by Mr Shand). Any arguments as to adjustments which should have been made in that regard are not claims made by the plaintiffs in this case, which focussed on the DRA issues which were the subject of the Dodds litigation. Mr Skelton noted that these additional claims identified by Mr Shand form no part of this litigation. He further noted that had any particular claimant wished to revisit the amount of such allowances (over and beyond
52 Defendant’s Communications – Reasons, above n 9, at [169]–[171].
53 Winkler, above n 27.
any DRA issues) such a claim would have involved a claim for an order setting aside the existing settlement. That is not what the plaintiffs seek here.
[97] The only significant item of damage therefore “omitted” from the Package is general damages for distress and inconvenience. In the context of this representative proceeding, that head of damage would have been dealt with through the individual evidence adduced at a Stage 2 hearing. The Court has no information before it to assess, in an informed manner, whether such a claim would have had a factual basis in relation to individual claimants. Given the outcome in the Dodds litigation — where those particular plaintiffs did not establish the necessary causal link for an award of damages — there must be significant doubt as to prospects of recovery (assuming such damages are available as a matter of law).
[98] There then remains the uncertainty, recognised at the level of the Court of Appeal, as to whether general damages are available as a matter of law on a claim of the nature pursued by the plaintiffs.54
[99] With these uncertainties and the amounts involved (claims for $25,000 each), the recommendation and experience of counsel for the plaintiffs (below at [117]– [118]) is a factor of great importance.
B — Amount and nature of discovery, evidence or investigation
[100] Against the background of the outcome of the Dodds litigation, achieving a successful outcome at a Stage 1 hearing would not be particularly burdensome for the plaintiffs. Little further discovery or investigation of the plaintiff’s claims would be required. But what counsel recognise is that the Stage 2 hearing would involve (for individual claimants) the delay and expense of preparing for their own Stage 2 hearings in order to recover sums which are modest by reference to the costs of litigation.
54 Bruce v IAG New Zealand Ltd, above n 50, at [58]–[60].
C – Settlement terms and conditions
[101] The distinguishing feature of the settlement which gives rise to the proposed discontinuance is that its primary benefit for the plaintiffs is a claims resolution process by which class members’ individual entitlements will be assessed and individual offers made. Counsel recognise the practice in overseas jurisdictions is that the Court should receive evidence about the claims resolution process so it can assess how the scheme will be administered and how benefits will be delivered to class members.55 As identified by Winkler J in Baxter v Canada (Attorney-General) a settlement is unlikely to be approved if class members receive nothing more than the “opportunity to litigate their claims in an extra-judicial process that offers no material advantages over normal course litigation”.56 What is required is evidence indicating the procedure that must be followed for class members to obtain benefits, along with an administration plan demonstrating that resources are in place, or will be in place, to ensure the benefits are delivered in a timely manner.57
[102] In Baxter the proposed settlement involved the defendant funding an administrative scheme for the payment of compensation to class members, with the defendant itself as administrator. Winkler J observed there must be a “clear line of demarcation between the defendant as litigant and the defendant as neutral administrator”.58 Also the administrative function must be completely isolated from the litigation function with an autonomous supervisor or supervisory board reporting ultimately to the Court.
[103] In Baxter, Winkler J resolved the need for an appropriate measure of independence and neutrality on the part of the administrator of the scheme thus:59
… the requisite independence and neutrality can be achieved by ensuring that the person, or persons, appointed by Canada with authority over the administration of the settlement shall ultimately report to and take direction, where necessary, from the courts and not from the government.
55 Baxter v Canada (Attorney-General) (2006) 83 OR (3d) 481 (ONSC).
56 At [29].
57 At [30].
58 At [37].
59 At [38].
[104] For the plaintiffs, Mr Skelton recognised the Package, as put in place by the defendant, does not involve ongoing Court supervision to ensure the process is fairly administered and the expected benefits are delivered to class members.
[105] Mr Weston submitted the lack of ongoing Court supervision is not of material consequence because the Crown has appointed the IOC precisely to oversee implementation and delivery of the Package. Mr Weston noted the sense of assurance which can be derived from the credentials of the members of the IOC.
[106] In terms of the internal functioning of the defendant, Mr Weston emphasised the establishment of the Unit (for the implementation and delivery of the Package) which would function as a smaller unit separated from the defendant’s business as usual operations. And, in addition to that, there will be the Package review process which Mr Hurren has discussed.
[107] Mr Weston observed no policyholder is locked in to obtaining compensation only through the Package — with the extension of the limitation period all policyholders will have the option of going to court to establish a greater entitlement.
[108] Mr Skelton submitted that it would be appropriate in this case to adopt at least a requirement of reporting to this Court — he did not suggest in the circumstances of this case that it would be appropriate or necessary to reserve to the Court a power of direction.
[109] On the view I take of the evidence before me, it is clear the Crown and the defendant have endeavoured to maximise the independence and neutrality of those charged with administering the Package, while working with the need for the detailed processes of calculation and discussion to be worked through by those with knowledge of the issues. The alternative — establishing a completely separate body whose personnel would have to process claims — would be administratively (and economically) impracticable. There has been no offer from anyone to fund such a body if one were available.
[110] That said, a requirement of regular reporting to this Court, as suggested by Mr Skelton, would introduce into the arrangements a further level of independent scrutiny which may serve to instil greater confidence in the neutrality of those processing claims under the Package. Given the somewhat limited role of the IOC, a condition whereby what Mr Hurren refers to as the “Package review process” be set up is appropriate. The reporting to the Court should then appropriately be by both the IOC and the manager in charge of the Package review process.
[111] Subject to the conditions I impose in relation to reporting matters, I am satisfied that the Package will constitute an appropriate administrative scheme.
[112] Mr Skelton raised a concern as to whether the defendant was promptly processing claims under the Package. He reserved the right of the plaintiffs to apply for an adjournment of the hearing of this application should there remain any issues as to the timeliness of processing at the time of the scheduled hearing. By reason of the subsequent progress evident by late-November 2021, Mr Skelton indicated that an adjournment would not be required.
[113] The evidence as to progress was first provided by Mr Hurren through details in a spreadsheet entitled “POPP Registrations Dashboard” for the period to November 2021. At that date of 1,179 registrations submitted (as claims), 66 had been settled and one closed.
[114] Mr Weston was able, at the hearing, to provide an updated version of the POPP Registrations Dashboard covering an additional week. That indicated that total registrations submitted were now 1,294, with 75 settled and one closed. An additional 117 were the subject of settlement but awaiting completion.
[115] I am satisfied on the evidence that the processing of claims under the Package is proceeding satisfactorily when the volume of claims made (and likely to be made) is taken into account.
[116] The other key aspect of the settlement between the plaintiffs and the defendant is that class members will keep 100 per cent of any compensation they receive from
the defendant (save for any legal fees they incur beyond the $2000 reimbursement provided under the Package and in terms of the Deed). For funded class members that outcome is, as Mr Skelton submits, very likely better than their best-case scenario in court. For unfunded class members it avoids the legal uncertainty which arises from uncertainty as to the entitlement of the plaintiffs to obtain contribution from other class members towards the costs of the representative proceeding.60
D – Recommendation and experience of counsel
[117] Senior counsel, with substantial experience in relation to representative proceedings, and in relation to insurance issues arising out of the Canterbury Earthquake Sequence, have had the conduct of this litigation for the plaintiffs and the defendant respectively. They have been supported by junior counsel (and solicitors) also with significant experience in these areas.
[118] The Court has the utmost confidence in the exercise of judgement that both Mr Skelton and Mr Weston have exercised in advising the parties when entering into the Deed and making and supporting this application. Their assessments based on their detailed knowledge of the issues and the evidence, as is well recognised in the case law, counts significantly in the Court’s assessment as to the reasonableness of the settlement.
E — Future expense and likely duration of litigation and risk
[119] I have already touched on these aspects of the assessment, particularly in relation to the Stage 2 issues which would lie ahead if the proceeding is not discontinued. If the single live issue that remained were to be that relating to general damages, the policyholders involved face the real prospect that their claims might be unsuccessful, with costs following the event.
F — Recommendation of neutral parties, if any
[120] The positive support of a few policyholders for the discontinuance of the proceeding is properly to be taken into account. I record in particular the observation
60 See Setting aside Judgment, above n 11.
of one policyholder who records her belief that the plaintiffs have fought a long, hard battle and that they, and all eligible policyholders affected, need some closure. This comes from a policyholder who has received full information in relation to the Package.
G — Number of objectors and nature of objections
[121] No class member with an outstanding claim in terms of the issues covered by the Dodds litigation has opposed the application for leave to discontinue.
[122] There are two aspects to the concerns raised by Mr Dodds and Mrs Bond. The first aspect — relating to the “third DRA” — falls outside the scope of the plaintiffs’ claims in this proceeding and cannot affect my assessment of the reasonableness of the settlement. The second — relating to the policyholders’ ability to trust the resolution process under the Package — is on my assessment appropriately addressed through arrangements as to the supervision of the Package, which will be addressed in the orders I make.
H — The presence of good faith, arms-length bargaining and the absence of collusion
[123] I am satisfied on the evidence that the settlement provided for in the Deed has been reached in good faith by the parties through arms-length negotiation. There is no suggestion of collusion.
I — The degree and nature of communications by counsel and the representative plaintiffs with class members during the litigation
[124] In the course of interlocutory proceedings the Court has been apprised of steps taken by GCA Lawyers to update class members of progress, particularly through the maintenance of a website. I am satisfied there has been appropriate communication in that regard.
J — Information conveying to the Court the dynamics and the positions taken by the parties during the negotiation
[125] Given that the Deed provides for the implementation of the Package to process class members’ claims and the Package is designed to address the outcomes of the
Dodds litigation, there is not the same need for the Court to be informed of the dynamics of the negotiation as would apply in other cases. The rationale of the settlement contained in the Deed has been well explained.
K — If counsel fees were negotiated in the settlement, and if so, how big a factor are they?
[126] The fees and disbursements payable to the lawyers in this case, together with the payment to the funder (CFA), are dealt with in the Deed as a single lump sum payment to be made by the defendant. They represent a positive aspect of the settlement in that the payment to GCA Lawyers and CFA permits the plaintiffs and other class members to receive their settlement moneys free of any deduction for such fees or disbursements. While this has a particular benefit for the funded class members, it also removes any possibility that any other class member might have to contribute to such costs and disbursements.
M — Whether class members were given timely notice of the essential elements of the settlement
[127] The essential elements of the Deed were set out in the application to discontinue this proceeding, which the Court ordered the defendant to send to class members by 29 October 2021 and, in addition, to advertise in specified newspapers.
[128]Mr Hurren has deposed as to the numbers of deliveries (and non-deliveries).
[129] I am satisfied that all class members who were directly contactable have been given timely notice. The public advertising and the availability of information on the website of GCA Lawyers, which has also being undertaken in a timely manner, is the best means by which “non-contactable class members” may also have been alerted to this proceeding.
Conclusion
[130] I am satisfied the terms of settlement contained in the Deed constitute a fair and reasonable resolution of the plaintiffs’ claims in the interests of the class members as a whole, both as between claimants and the defendant and as between the claimants
themselves. The plaintiffs should be granted leave to discontinue, subject to the conditions I will impose. Those conditions, for the most part, are designed to secure more certainty for the class members in relation to the degree of independent oversight and neutrality of processing which, on the defendant’s own evidence, is a key aspect of the Package.
Order
[131]I order:
(a)the plaintiffs have leave to discontinue this proceeding by filing a notice of discontinuance;
(b)the leave is subject to the following conditions:
(i)the defendant’s Settlement Package (Package), as referred to in a Deed of Discontinuance dated 8 October 2021, is to remain available to the plaintiffs and all other class members at least until 8 April 2023;
(ii)the defendant shall ensure that the Independent Oversight Committee (IOC) is enabled to perform its role pursuant to its Terms of Reference, subject to the additional reporting requirements that are a condition of this order and, in the event the IOC is not so performing, the defendant (upon becoming aware of the situation) is promptly to file a Memorandum informing the Court of that situation;
(iii)the defendant is to procure the cooperation of the IOC in filing in Court a copy of each of the IOC’s reports to the Board of the defendant and/or to the Crown under the IOC’s Terms of Reference, promptly upon such reports being presented to the addressee/s, but reserving leave to the defendant and/or the IOC to request redaction of any sensitive material in such a report;
(iv)the defendant shall cause to be implemented a Package review process, under a manager, of the nature referred to in the affidavit of Casey Hurren dated 24 November 2021, with written Terms of Reference and, immediately upon the Package review process being in place, is to file in Court a Memorandum confirming that such arrangements are in place and exhibiting the Terms of Reference;
(v)for the duration of the defendant’s offering of the Package, the defendant shall file in Court an up to date version of its “POPP Registrations Dashboard” document (exhibit G to the said affidavit of Mr Hurren) at three-monthly intervals commencing 16 March 2022;
(vi)in the event the Court, upon either receiving the above memoranda or such memoranda not being filed, requests additional information or the appearance of counsel, the defendant is promptly to provide such information and/or instruct counsel to appear; and
(vii)in the event the Court issues a Minute arising from the information before it, the Chief Executive of the defendant shall in good faith consider the contents of such Minute and by Memorandum filed, provide the defendant’s response to such contents.
(c)in the event the plaintiff files its notice of discontinuance:
(i)there will be no further order as to the costs and disbursements of the proceeding; and
(ii)the plaintiffs’ applications for leave to appeal previous interlocutory judgments will stand dismissed.
Access to documents
[132] For this hearing the parties provided to the Court an unredacted version of the Deed which included the sum to be paid by the defendant to CFA. The defendant seeks an order that the unredacted version of the Deed not be available for inspection by a non-party.
[133] I am satisfied that the commercial sensitivity of the amount of the payment justifies a direction that will protect the parties’ legitimate interest in preserving its confidentiality.
[134]I direct:
(a)the Deputy Registrar is to return to counsel for the plaintiff the unredacted version of the Deed as handed up to the Court at the hearing; and
(b)the redacted version of the Deed as produced in affidavit evidence is to remain on the Court file.
Osborne J
Solicitors:
GCA Lawyers, Christchurch for Plaintiff
Counsel: P G Skelton QC, Auckland and C B Pearce, Barrister, Auckland Buddle Findlay, Christchurch for Defendant
Counsel: T C Weston QC, Christchurch G D R Shand, Christchurch
Copy to: K G Dodds
M W Bond
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