Ross v Southern Response Earthquake Services Ltd
[2021] NZHC 253
•23 February 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-361
[2021] NZHC 253
BETWEEN BRENDAN MILES ROSS and COLLEEN ANNE ROSS
Plaintiffs
AND
SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED
Defendant
Hearing: 15 February 2021 Appearances:
P G Skelton QC and C B Pearce for Plaintiffs (Respondents)
T C Weston QC, K-M M Paterson and E D Peers for Defendant (Applicant)
Judgment:
23 February 2021
JUDGMENT OF OSBORNE J
[on defendant’s communications] [Result]
This judgment was delivered by me on 23 February 2021 at 12.30 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
ROSS v SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED [2021] NZHC 253 [23 February 2021]
Introduction
[1] In this proceeding, in which Brendan and Colleen Ross, are bringing (by leave) a representative claim against Southern Response Earthquake Services Ltd (Southern Response), an issue has arisen as to communications which Southern Response proposes to initiate with individual potential members of the class represented by the Rosses.
[2] I have heard Southern Response’s opposed application for directions which would permit it and its legal advisers to communicate directly with individual potential class members in relation to the settlement of their claims. I am issuing this as a results judgment, with a brief explanation as to the reasons. A full reasons judgment will follow but not in the immediate future. The Court’s intention is that counsel for the respective parties should be able to prepare for the next interlocutory hearing, scheduled for 13–14 April 2021, in the knowledge of the outcome of this present application.
[3] An important aspect of the present issue is that the Rosses elected to bring no cross-application. They themselves pursued no declaration as to any of the rights involved.
The substantive litigation
[4] The Rosses, by this substantive proceeding, are bringing a representative claim against Southern Response. The claim relates to a settlement agreement that Mr and Mrs Ross entered into within Southern Response in relation to their insurance claim for damage to their house caused in the Canterbury Earthquake Sequence. 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.
[5] Initially, leave to pursue a representative claim was granted by this Court on an opt in basis.1 The Court of Appeal allowed the Rosses’ appeal, substituting an opt
1 Ross v Southern Response Earthquake Services Ltd [2018] NZHC 3288.
out procedure for the opt in procedure.2 The Supreme Court subsequently dismissed Southern Response’s appeal against the opt out procedure.3
[6] The judgment of the Supreme Court was delivered on 17 November 2020. Upon the request of counsel for both parties, this Court then made directions for the plaintiffs’ applications for notification orders (that is settling the form and details relating to an opt out notice) and for a common fund order. In the meantime, Southern Response filed this present urgent application for directions in relation to its communications with individual potential class members (“the communication application”).
[7] I have now heard the communication application, with the hearing of the notification order application to follow (in April 2021). The common fund order application has yet to be allocated a hearing date.
The context of this application
[8] The context in which Southern Response has applied for directions in relation to its proposed communications is that the Rosses have made their application to the Court for notification orders which is to be heard in April 2021. The Rosses’ application for directions invokes the Court’s powers of supervision in relation to the conduct of representative proceedings. In the Supreme Court judgment, Ellen France J (giving the Court’s reasons) recorded that courts have exercised control, to varying degrees, over communication with group members.4
[9] Here, Southern Response as defendant wishes itself and/or through its lawyers to have direct contact with potential members of the class represented by the Rosses so as to seek to settle the claims of such persons in the light of the outcome of the High
2 Ross v Southern Response Earthquake Services Ltd [2019] NZCA 431, (2019) 25 PRNZ 33.
3 Southern Response Earthquake Services Ltd v Ross [Ross SC] [2020] NZSC 126.
4 Ross SC, at [70], citing King v AG Australia Holdings Ltd [2002] FCA 872, (2002) 121 FCR 480 at [28]; Courtney v Medtel Pty Ltd [2002] FCA 957, (2002) 122 FCR 168, at [52]; Damien Grave, Ken Adams and Jason Betts (eds) Class Actions in Australia (2nd ed, Thompson Reuters, Pyrmont (NSW), 2012) at 568–570.
Court and Court of Appeal judgments in a separate (non-representative) proceeding in which Southern Response were sued by Mr and Mrs Dodds.5
[10] The Rosses, through their lawyers, dispute the entitlement of Southern Response to have such communications and negotiations. When correspondence between the solicitors did not resolve that dispute, Southern Response elected to bring the present application.
Directions sought by Southern Response
[11]Southern Response seeks directions that:
(a)the defendant, including its employees, officers and directors, be at liberty to communicate, engage, negotiate, and/or settle claims directly with individual potential class members in this proceeding; and
(b)the defendant’s legal advisors be at liberty to communicate directly with individual potential class members in this proceeding, except those potential class members that have retained GCA Lawyers.
[12] Southern Response invoked this Court’s supervisory jurisdiction in relation to representative proceedings.
The Rosses’ opposition
[13] The Rosses by their notice of opposition opposed both directions sought by Southern Response. They, too, invoked the Court’s jurisdiction to supervise and control representative proceedings. For the Rosses, Mr Skelton QC, observed that the submissions for Southern Response indicate that Southern Response does not seek Court approval of the substance of its settlement package. He submitted that the Court ought not to sanction direct communication by Southern Response with class members regarding a settlement when the settlement would amount to a settlement of the class
5 Dodds v Southern Response Earthquake Services Ltd [2019] NZHC 2016, [2019] 3 NZLR 826;
Southern Response Earthquake Services v Dodds [2020] NZCA 395.
action (without the approval of the Court) rather than settlement with a few individual class members or a sub-group of such members.6
[14]As I have noted, the Rosses did not cross-apply for any directions.
Findings leading to my results decision
[15]The (limited) findings which lead to my results decision below are as follows:
(a)The Court’s supervisory powers in relation to representative proceedings attach to communications between a defendant (and its legal representatives) and members of the class as they do to a plaintiff (and their legal representatives) and members of the class.
(b)In relation to both situations, the Court’s powers extend to all aspects of any communication including form, content and timing.
(c)In appropriate cases, the Court may require a party to obtain to seek from the Court prior approval in relation to its proposed communication/s.
Result
Discussion
[16] Southern Response’s application for directions as to an entitlement to communicate directly with individual potential class members cannot appropriately be granted in its present form. The point which this proceeding has reached — with the Court about to consider the Rosses’ application in relation to an opt out notice, and the Dodds’ litigation being at an end — reasonably require that if there is to be any communication between the defendant (and/or its legal representatives) and class members that the communication be in a form which has received the prior approval
6 The distinction between settlement of claims of individual group members and settlements which have the substantive effect of resolving the entire representative proceeding is footnoted in Ross SC, above n 3, at n 111, by reference to the statutory provision in Australian jurisdiction with statutory class action regimes.
of this Court and has regard to communications the Court is about to consider as between the plaintiffs and members. The appropriate context in which the Court, in these circumstances, should consider objections to particular communications or aspects of communication in this developing area of the law will be if and when Southern Response applies to this Court for approval of particular communications. Until and unless particular communications are approved, remaining matters identified by Southern Response, such as negotiation, remain moot.
[17] The two directions sought in the present application will therefore be refused but without prejudice to the entitlement of Southern Response to bring before the Court for consideration particular draft communications and details in relation to their form and timing whether through an amended application (leave to amend hereby granted) or through a fresh application.
Order
[18] I order the directions sought at paragraph 1(c) of the defendant’s application dated 14 December 2020 are refused.
Case management direction
[19] In the event the defendant (by itself or through its legal representatives) wishes to communicate with class members, it is to file and serve (either by an amended notice or a fresh notice) any application for approval of communications in draft form and for such other specified steps following initial communication as Southern Response might seek approval of.
Costs
[20] I reserve the costs and disbursements of this application to date. My tentative view is that the defendant, having failed to obtain the directions sought in their present form, should pay the costs and disbursements of the proceeding to date on a 2B basis.7 In the event that the parties are unable to resolve the question of costs and disbursements, the matter will be determined on the papers, with the plaintiffs to file
7 High Court Rules, Category 2 under r 14.3(1) and band B under r 14.5(2).
and serve their memorandum first to be followed by the defendant within five working days thereafter (four page limit in each case).
Osborne J
Solicitors:
GCA Lawyers, Christchurch for Plaintiff
Counsel: P G Skelton QC, AucklandBuddle Findlay, Christchurch for Defendant
Counsel: T C Weston QC, Christchurch
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