Smith v Claims Resolution Service Ltd - [2021] NZHC 3106

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-643

[2021] NZHC 3106

BETWEEN
KARLIE MARGARET SMITH

Plaintiff/First Counterclaim Defendant

AND

CLAIMS RESOLUTION SERVICE LTD

First Defendant/Counterclaim Plaintiff

AND

GRANT SHAND BARRISTERS AND SOLICITORS

Second Defendant

AND

SHARON MARGARET SMITH

Second Counterclaim Defendant

Counsel:
G A Cameron and R J Lynn for Plaintiff/First Counterclaim Defendant and for Second Counterclaim Defendant
A R B Barker QC and G P Davis for First Defendant/Counterclaim Plaintiff

A B Darroch and B A Mathers for Second Defendant

Judgment:

18 November 2021

(Determined on the papers)

JUDGMENT OF OSBORNE J

[Freezing order]

This judgment was delivered by me on 18 November 2021 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

SMITH v CLAIMS RESOLUTION SERVICE LTD [2021] NZHC 3106 [18 November 2021]

Introduction

[1] Claims Resolution Service Ltd (CRS) is the first defendant and counterclaim plaintiff in this proceeding. CRS applies for a freezing order restraining the plaintiff/first counterclaim defendant, Karlie Smith, from dealing with her residential property or, alternatively, a portion of the proceeds of sale.

[2] The application is made without notice upon the basis that requiring CRS to proceed on notice would cause CRS undue delay or prejudice.

This proceeding

[3] The background to this proceeding lies in damage suffered by Ms Smith’s home in the Canterbury Earthquake Sequence. She entered into a contract with CRS for claims resolution funding and advocacy services and with the second defendant for legal representation in relation to a civil proceeding against her insurer.

[4] Ms Smith asserts in this proceeding against the two defendants that she settled her insurance claim for significantly less than the sum the defendants had identified and advocated to be the full and true value of those claims. She alleges breaches of fiduciary duty by both CRS and the second defendant. She also asserts that her contract with CRS was an unconscionable bargain. She seeks declarations to that effect. She also seeks declarations that the contracts are void and/or that it would be inequitable for the defendants to recover money under those contracts.

[5] The defendants each filed statements of defence. CRS included a counterclaim for monies it alleged are due and owing under its contract with the plaintiff, Ms Smith, (and the second counterclaim defendant, Sharon Smith).

[6] The counterclaim defendants deny liability by reason of the matters referred to at [4] above.

[7] In February 2019, Ms Smith was granted leave for this proceeding to proceed as a representative claim on an opt-in basis.1

[8] Subsequently, steps have been taken to advance procedural matters concerning the opt-in process, culminating in the Court’s approval of the opt-in consent notice in July this year.

[9] At that time, it became apparent that Ms Smith no longer wished to continue the proceeding as representative plaintiff and to date no one has been substituted as plaintiff. (An opposed application in that regard has yet to be heard).

[10]…

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: [2021] NZHC 3106
Decision Date: 18 November 2021

CaseChat Overview and Summary

The High Court of New Zealand considered an application by Claims Resolution Service Ltd (CRS) for a freezing order against Karlie Smith. CRS sought to restrain Ms Smith from dealing with her residential property or the net proceeds of sale, up to $200,000. This application was made without notice due to the risk of undue delay and prejudice if notice were required. The proceedings stemmed from the Canterbury Earthquake Sequence, where Ms Smith's home was damaged, and she engaged CRS for claims resolution funding and advocacy services. Ms Smith alleged breaches of fiduciary duty by CRS and sought various declarations and remedies. The court assessed CRS's application for a freezing order under the High Court Rules, considering the requirements for such an order, including a good arguable case, applicable assets, and a real risk of dissipation of assets. The court found that CRS had satisfied all the necessary criteria for a freezing order, leading to the granting of the order as requested. The order restrained Ms Smith from dealing with her property or up to $200,000 of the proceeds of sale, pending the outcome of the proceeding.

Orders