Sanderson v IAG New Zealand Limited
[2024] NZHC 1003
•30 April 2024
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-817
[2024] NZHC 1003
BETWEEN WAYNE PETER SANDERSON, GARY NEIL SANDERSON and PAUL JOSEPH
RUTLEDGE as trustees of the No Money No Honey Family Trust
Plaintiffs
AND
IAG NEW ZEALAND LIMITED
First Defendant
VERO INSURANCE NEW ZEALAND LIMITED
Second Defendant… continued over
Hearing: On the papers Counsel:
L J Lindsay and G J Ryan for Plaintiffs
B R D Cuff, A L Sherriff and N S P Laing for First, Second and Third Defendants
S D Munro and C M O’Brien for Fourth and Sixth Defendants A G Hazelton for Fifth Defendant
Judgment:
30 April 2024
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 30 April 2024 at 12.50 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date:
SANDERSON v IAG NEW ZEALAND LIMITED [2024] NZHC 1003 [30 April 2024]
ALLIANZ NEW ZEALAND LIMITED
Third Defendant
BARRY O’CONNOR CONSTRUCTION LIMITED
Fourth Defendant
QBE INSURANCE (AUSTRALIA) LIMITED
Fifth Defendant
BARRY O’CONNOR CONSTRUCTION
Sixth Defendant
[1] This judgment concerns an opposed application by the plaintiffs for leave pursuant to r 7.7 of the High Court Rules 2016 to file applications against the first to third defendants (the insurers) for further particulars of their defence and further discovery after the close of pleadings date.
[2] The plaintiffs are the trustees of the No Money No Honey Family Trust, the owner of a property at Woolston, Christchurch which was damaged in the Christchurch earthquakes. The plaintiffs allege that the insurers elected to repair the property and were responsible for those repairs. The original repairs, they say, were carried out defectively which resulted in further damage and the property now requires further repairs. The plaintiffs sue the insurers alleging breach of their policy, breach of an implied term of good faith, and breach of a duty of care they owed the plaintiffs in carrying out the works.
Some procedural history
[3] The proceeding has a long history, having been commenced in 2018. It has been set down for a lengthy trial commencing 19 May 2025.
[4] On 4 August 2023, Associate Judge Lester made pre-trial directions by consent, which included the following:
(a)the plaintiffs were to file and serve an amended statement of claim by 14 August 2023;
(b)the defendants were to file and serve statements of defence to the amended claim by 4 September 2023;
(c)the plaintiffs were to file and serve any reply by 18 September 2023;
(d)the parties were to provide any further updated discovery arising from the amended pleadings by 25 October 2023;
(e)the close of pleadings date was 22 December 2023;
(f)the plaintiffs were to serve their briefs of evidence by 1 April 2024;
(g)the defendants were to serve their briefs of evidence by 3 July 2024; and
(h)the plaintiffs were to serve their reply briefs of evidence by 26 August 2024.
[5] The parties agreed to informal discovery. It appears the adequacy of the insurers’ discovery has been an issue of concern to the plaintiffs for some time. The plaintiffs raised the matter in correspondence between the parties’ solicitors in the period 28 April 2023 to 21 June 2023, including in relation to whether the insurers had requested documents from certain third parties whom the plaintiffs considered were engaged on the insurers’ behalf in relation to the claim.
[6] As far as the plaintiffs’ request for further particulars is concerned, this was foreshadowed in September 2023 and the plaintiffs served a formal notice of their request upon the insurers’ solicitors on 8 December 2023. While the notice required a response within five working days,1 it was on 21 December 2023 (the day before close of pleadings) that the insurers’ solicitors provided a draft response to the request largely refusing to provide the particulars sought and inviting a response from the plaintiffs’ solicitors by 19 January 2024.
[7] Following the Christmas vacation there were discussions between counsel in respect to the plaintiffs’ request for particulars and discovery which did not resolve matters.
On 5 March 2024, the plaintiffs filed an interlocutory application seeking:
(a)leave to bring an interlocutory application after the close of pleadings;
(b)requiring further particulars of the insurers’ latest statement of defence; and
1 High Court Rules 2016, r 5.21(3).
(c)seeking further discovery from the insurers.
[9] The matter was called before me at a telephone conference on 14 March 2024. There was a difference of opinion between counsel for the plaintiffs and the insurers as to how the application should be dealt with. The plaintiffs’ position was that the application for leave and substantive applications for particulars/discovery should be dealt with together for reasons of efficiency. The insurers considered the application for leave should be heard first. I directed that I would first deal with the application for leave on the papers and made timetable directions accordingly. Submissions have now been filed by counsel for the plaintiffs and the insurers. The fourth to six defendants take no position in respect to the matter.
[10] For completeness, I note that on 18 April 2024 Preston J made a direction altering the existing timetable so that:2
(a)the plaintiffs’ evidence is now due 1 May 2024;
(b)the defendants’ evidence is due 31 July 2024; and
(c)the plaintiffs’ reply briefs of evidence are due 23 September 2024.
Principles
[11]Rule 7 of the High Court Rule 2016 provides:
7.7 Steps after close of pleadings date restricted
(1)No statement of defence or amended pleading or affidavit may be filed, and no interlocutory application may be made or step taken, after the close of pleadings date without the leave of a Judge.
(2)Subclause (1) does not apply to—
(a)an application for leave under that subclause; or
(b)a pleading or an affidavit that merely brings up to date the information before the court; or
2 The plaintiffs’ counsel acknowledged in a memorandum of 16 April 2024 that if the plaintiffs obtain leave the timetable may need to be revised further.
(c)an application for amendment of a defect or an error under rule 1.9.
[12] There is no dispute as to the relevant principles that apply to an application for leave under r 7.7.3 A helpful summary of them was set out in Body Corporate 355492 v Queenstown Lakes District Council, where Osborne J said:4
[45] The well-settled principles accepted by both counsel require the applicant to surmount the “three formidable hurdles” identified by the Court of Appeal in Elders Pastoral Ltd v Marr. The applicant must show:
(a)the order sought will be in the interests of justice;
(b)it will not significantly prejudice the other party; and
(c)it will not cause significant delay.
If those hurdles are surmounted, any concept of denunciation of the applicant for its late application has little part to play.
[46] In recent years, this Court has consistently applied the three basic Marr principles in a slightly more nuanced way, as articulated by Katz J in Body Corporate 325,261 v McDonough (McDonough). That formulation may be summarised as follows:
(a)The paramount consideration is that the parties should have every opportunity to ensure that the real controversy goes to trial so as to secure the just determination of the proceeding.
(b)Due regard must also be had to whether the proposed amendment will cause significant delay or prejudice another party.
(c)Even where serious prejudice and significant delay will arise, an amended pleading may nevertheless be permitted if the proposed claim has substantial merit and will not cause injustice to the defendants.
(d)The Court should consider the merit, or absence thereof, in a proposed amended pleading.
[47] The vast majority of applications for leave under r 7.7 relate to proposed amendments to pleadings, the amendments being frequently late or even at trial. Such applications often turn on the extent to which an entirely new claim would be introduced that requires the plaintiffs to deal factually and/or legally with that new matter as trial approaches.
[48] The difference that may arise with an interlocutory application, as it does in this case, is that the interlocutory application if successful may serve
3 Elders Pastoral Ltd v Marr (1987) 2 PRNZ 383 (CA) at 385; Body Corporate 172108 v Gundry
[2014] NZHC 954 at [40].
4 Body Corporate 355492 v Queenstown Lakes District Council [2022] NZHC 1494
to reduce (rather than extend) the factual and/or legal issues for trial. Both situations (amendment of pleadings and interlocutory applications) may nevertheless share the potential to cause prejudice and/or expense to the other party in their preparation for trial.
(footnotes omitted)
[13] The plaintiffs’ counsel submits, and I accept, that ultimately the issue of whether to grant leave is an exercise of discretion, balancing on the one hand the general concern that parties to litigation comply with procedural requirements and on the other the particular interest in each case of ensuring that the case before the court is justly determined.5 The inquiry is highly fact and context dependent.6 The farther an application for leave is filed from trial the less formidable the hurdles are that the applicant will need to overcome.7
The insurers’ grounds of opposition
[14] The insurers say the interests of justice are not served by granting the plaintiffs leave to make their further applications for several reasons.
[15] They take issue with the way the plaintiffs proceeded with this application. They say the plaintiffs should have properly obtained leave before making the applications for further particulars and discovery and that the approach they have taken has had cost consequences for the insurers.
[16] They argue the plaintiffs have not provided an explanation for the failure to file the applications for further particulars and discovery before the close of pleadings, and have appeared to consider the issue of obtaining leave a mere formality.
[17] The insurers submit the plaintiffs clearly could have filed their applications earlier as their own evidence is that the issues of particulars and discovery have been discussed for months, yet the plaintiffs agreed to have the case set down for trial and agreed a timetable for the close of pleadings and exchange of evidence.
5 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR7.7.02] citing Whakatane District Council v Bay of Plenty Regional Council (2008) 19 PRNZ 91 at [10]; Body Corporate 366567 v Auckland Council [2021] NZHC 491 at [26].
6 Body Corporate 366567 v Auckland Council [2021] NZHC 3578 at [4].
7 Lyttelton Port Co Ltd v Aon New Zealand [2019] NZHC 726 at [22].
[18] It is said the insurers will be prejudiced if leave is granted because that will ultimately disrupt the existing timetable. Further, the insurers argue that the applications lack merit and resolution of them is not critical to the case or necessary to ensure the real controversy between the parties goes to trial. They say the proceeding has advanced to the trial preparation phase which is demanding work and should not be disrupted and, in contrast, there will be no prejudice to the plaintiffs if leave is refused as they appear to be “on track” to file their evidence.
My analysis
[19] Despite all that has been said on the insurers’ behalf, I am in no doubt that the plaintiffs should be granted leave to make their further applications.
[20] I do not accept the insurers’ criticisms of the way in which the plaintiffs proceeded with this application. I consider there was nothing wrong, in the circumstances of this case, in the plaintiffs combining their applications for leave and substantive orders in the one application and seeking an immediate telephone conference to deal with the matter. It was clearly desirable that any applications be dealt with promptly. I also do not see how in doing so they have prejudiced the insurers.
[21] Insofar as the insurers say the plaintiffs have not provided an explanation for the failure to file the applications before the close of pleadings, I was referred to Fordham v Xcentrix Communications Ltd where it was said the Court declined to grant leave where there was no acceptable reason for delay.8 While I accept that in Fordham Fisher J referred to the “magnitude of the delay”, there was a range of other issues in play and it bears little resemblance to the facts of this case.9
[22] The plaintiffs’ explanation for not having made their applications earlier appears from the circumstances I have described. The issues of discovery and further particulars were live issues well before the close of pleadings date. There was a delay in the insurers responding to the request for particulars, and then what they did provide
8 Fordham v Xcentrex Communications Ltd (1996) 9 PRNZ 682 (HC).
9 At 686.
was a draft inviting a response from the plaintiffs after the Christmas vacation (and after the close of pleadings). There followed efforts to resolve the matters in issue by agreement, and when it was clear they could not be resolved the plaintiffs filed their applications promptly.
[23] The plaintiffs’ position is that if they are to be criticised it is because they afforded the insurers too many opportunities to engage reasonably and placed too much reliance on the insurers’ willingness to engage in good faith. I consider the plaintiffs could, and should, have made their applications earlier but, that said, there was ongoing engagement between counsel and the delay in applying was not great.
[24] I accept (as do the plaintiffs) that if leave is granted that will disrupt the timetable for the exchange of evidence. However, that needs to be considered in context and here the relevant context is that the case is not going to be heard for another 12 months. The plaintiffs argue, and again I accept, the disruption to the timetable will not result in any delay in the trial and such disruption as occurs should not be significant and will not prejudice the parties.
[25] I also do not accept the insurers’ submission that the proposed applications lack merit. The insurers’ argument in relation to the particulars application focused on delay rather than the merits. In contrast, the plaintiffs’ counsel has explained why the particulars are necessary and will narrow the issues. I am satisfied that the application for particulars is arguable, and has the potential to assist the parties and the Court by narrowing the issues in dispute and thus promoting the just resolution of the proceeding.
[26] In relation to the discovery application the insurers’ position is curious. Their counsel’s submissions recognise that what is being sought by the plaintiffs are further discrete documents the plaintiffs consider are within the insurers’ control but held by third parties relating to the plaintiffs’ insurance claim. The insurers do not state clearly whether they have sought these documents from the third parties, although I can infer they have not as counsel’s submissions conclude “[t]hese documents (if they exist) are irrelevant and are also not in the possession or control of insurers”. This response raises questions as to how the insurers know that any documents that exist are
irrelevant, and on what basis it is said that any documents that do exist are not in the insurers’ control. The plaintiffs’ discovery application is also arguable, in my view, and has the potential to result in the disclosure of documents sufficiently relevant to the issues that I consider the plaintiffs should be allowed to pursue it.
[27] In summary, the interests of justice are served by granting the plaintiffs leave to pursue their applications after the close of pleadings because their delay in seeking leave was not great, the applications have merit and I do not consider the insurers will be prejudiced by the granting of leave. While I accept that in granting leave there will be disruption to the existing timetable, that disruption will neither be significant nor put the trial in jeopardy.
Result
[28] The plaintiffs are granted leave pursuant to r 7.7(1) of the High Court Rules to proceed with the applications for further particulars and discovery of 5 March 2024.
[29] It is necessary to timetable the applications to hearing, and I make the following further directions:
(a)the applications shall be set down for hearing on 28 May 2024;
(b)the insurers shall file any opposition to the applications by 10 May 2024;
(c)the plaintiffs shall file any submissions in support of the applications and an indexed and paginated common bundle of relevant documents by 17 May 2024; and
(d)the insurers shall file any submissions in opposition to the applications by 23 May 2024.
[30] I have made the directions in [29] without input from counsel, and I reserve leave for counsel to apply to vary them by memorandum if that is necessary.
[31] Costs on the application for leave are reserved to be dealt with at the time of hearing of the substantive applications.
O G Paulsen Associate Judge
Solicitors:
White Fox & Jones, Christchurch Duncan Cotterill, Wellington
Anderson Lloyd, Christchurch Hazelton Law, Wellington
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