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Ross v Southern Response Earthquake Services Ltd

Ross v Southern Response Earthquake Services Ltd

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Case Copied 16 September 2019 82 min read

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA150/2019
[2019] NZCA 431

BETWEEN	BRENDAN MILES ROSS AND COLLEEN ANNE ROSS Appellants
AND	SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED Respondent

Hearing:	13–14 August 2019
Court:	Miller, Courtney and Goddard JJ
Counsel:	P G Skelton QC, K M Quinn and C B Pearce for Appellants T C Weston QC, K M Paterson and O D Peers for Respondent
Judgment:	16 September 2019 at 11.00 am

JUDGMENT OF THE COURT

A The appeal is allowed.
BThe orders made by the High Court on 13 December 2018 are amended in the manner set out at [135] to [138].
CThe respondent must pay costs to the appellants for a standard appeal on a band B basis together with usual disbursements. We certify for second counsel.

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Table of Contents

Para No

Introduction

Overview of the claim by Mr and Mrs Ross

The background to the claim
The four causes of action
Southern Response’s defence to the claim
The representative claim
The claim will be heard in two stages
Claimants will need to opt in to stage 2
Litigation funding arrangements
Claimants who have registered an interest in the proceedings

Representative proceedings: an overview

Issue 1: opt out or opt in approach?

High Court decision on opt out/opt in in the present case
Submissions of Mr and Mrs Ross supporting opt out approach
Submissions of Southern Response opposing opt out approach

Analysis
Conclusion — opt out orders are available
An opt out approach is appropriate in this case

Issue 2: Should repair customers be included in the class?

High Court decision
Submissions of Mr and Mrs Ross
Submissions of Southern Response

Analysis

Result

REASONS OF THE COURT

(Given by Goddard J)

Introduction

The main issue before us is whether this representative claim can proceed on an opt out basis. We conclude that it can, and should.
In May 2018, Mr and Mrs Ross began these proceedings against Southern Response. The claim relates to the settlement agreement that Mr and Mrs Ross entered into with Southern Response in relation to their insurance claim for damage to their house caused by the Canterbury earthquakes (the settlement agreement). In short, they say that Southern Response provided them with incomplete information about the cost of remedying earthquake damage to their home. As a result, they settled on a less favourable basis than they otherwise would have.
Mr and Mrs Ross say that many policyholders settled claims in similar circumstances, and as a result have the same claims against Southern Response. Mr and Mrs Ross applied to the High Court for leave to bring the proceedings as representatives of the class of around 3,000 policyholders who entered into settlement agreements in these circumstances.
Mr and Mrs Ross sought leave to bring the representative claim on an opt out basis: that means they would bring the claim on behalf of every member of the group as defined, apart from any members who expressly chose to opt…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] NZCA 431
Decision Date: 16 September 2019 at 11.00 am

CaseChat Overview and Summary

- **Introduction**
The appeal was brought by Mr and Mrs Ross against Southern Response Earthquake Services Limited, who had settled an insurance claim with them on the basis of an incomplete estimate of the cost of repairing their home. The Rosses alleged that Southern Response provided them with misleading information and thus induced them to settle for a lower amount than they would have otherwise. They brought proceedings on behalf of a large number of other policyholders who had been similarly affected. The appeal related to two issues: (a) whether the representative claim could proceed on an opt-out basis; and (b) whether repair customers should be included in the class of policyholders who were subject to the claim.

- **Legal issues**
The appeal raised two issues: (a) whether the representative claim could proceed on an opt-out basis; and (b) whether repair customers should be included in the class of policyholders who were subject to the claim.

- **Court's reasoning and outcome**
The Court held that there was no jurisdictional barrier to the making of an opt-out order under r 4.24, and that the courts should adopt the same liberal and flexible approach to r 4.24 that was adopted in the context of similar rules in Australia and Canada. The absence of detailed legislation in relation to representative claims was not a sufficient reason to decline to entertain such claims, or to decline to make whatever procedural orders will best serve the three purposes of r 4.24. The Court held that the opt-out approach was appropriate in this case because the class was large and many more of them would have their claims heard and determined by the court if an opt-out order was made. The Court also held that repair customers had the same interest in the proceedings for the purposes of r 4.24, and that it would be more consistent with the goals of efficiency and fairness for them to be included in the claimant class in this proceeding.

- **Final orders**
The Court allowed the appeal on both the opt-out issue and the repair customer issue. The Court amended the orders made by the High Court by deleting order 2 and replacing it with an order that a class member may elect to opt out of the proceeding by completing an opt-out election form approved by the High Court. The Court also inserted a new order 2A that the plaintiffs may discontinue this proceeding only with the leave of the Court. The Court deleted order 1(c) made by the High Court, which had the effect of removing the limit to rebuild customers only.

Orders