Sneesby v Southern Response Earthquake Services Limited

[2023] NZHC 1316

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2021-009-1694

[2023] NZHC 1316

BETWEEN

JOHN ARTHUR SNEESBY

Plaintiff

AND

SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED

Defendant

Hearing:	17 May 2023
Appearances:	G D R Shand for Plaintiff and Mr Ressels (applicant to be joined) T Weston KC and N Elliot for Defendant
Judgment:	30 May 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

SNEESBY v SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED [2023] NZHC 1316 [30 May 2023]

[1]                Mr Ressels seeks leave to appeal my decision declining his application to be joined as a further plaintiff in this proceeding (the February judgment).1 I do not repeat the circumstances leading to Mr Ressels making his application to be joined as a plaintiff, such are set out at paragraphs [2]-[13] of the February judgment.

[2]                I held Mr Ressels’ application was governed by r 4.56 of the High Court Rules 2016 (the Rules) and not r 4.2 also relied on by Mr Ressels. I did not accept an alternative submission advanced by Mr Shand, counsel for Mr Ressels, that rr 1.2 and

1.6 provided an alternative pathway to joinder if rr 4.2 and/or 4.56 did not apply.

[3]                Mr Ressels, in addition to applying to be joined as plaintiff, applied for leave to bring his claim as a representative plaintiff. As Mr Ressels’ application to be joined as a plaintiff was dismissed, I did not address his application to sue as a representative plaintiff.

Principles applying to an application for leave

[4]                I adopt Mr Weston KC’s, counsel for Southern Response Earthquake  Services Limited (Southern Response) summary of the principles.

[5]                Section 56 of the Senior Courts Act 2016 (the Act), governs the position in relation to appeals from decisions of the High Court made on interlocutory applications.2 Section 56 does not set out the legal test to be applied;3 this instead has been formulated by case law. The parties are largely in agreement as to the applicable principles.

1      Sneesby v Southern Response Earthquake Services Limited [2023] NZHC 246.

2      Robert Osborne (ed) McGechan on Procedure (online ed, Thomson Reuters) at [SC56.01].

3      Li v Chief Executive, Ministry of Business, Innovation and Employment [2018] NZHC 1171; [2018] NZAR 1134 at [9].

[6]                A high threshold exists for the granting of leave under the Act.4 The High Court in Finewood Upholstery Ltd v Vaughan succinctly outlined the purpose of s 56 of the Act as:5

[13]      The requirement for leave to appeal should serve as a “filtering mechanism”, to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance  to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made.

[14] Ultimately, and taking into account those considerations set out at [9] above, the court hearing an application for leave to appeal from an interlocutory order will need to stand back and assess, in a pragmatic and realistic way, whether the interests of justice are served by granting leave to appeal. (Emphasis added)

[7]                The Court of Appeal has subsequently confirmed that “there is no doubt that s 56(3) was intended to reduce the volume of appeals to this Court from interlocutory decisions in the High Court”.6

[8]                The relevant considerations in determining an application for leave to appeal have been consistently confirmed as:7

(a)the applicant must identify an arguable error of fact or law;

(b)the alleged error should be of general importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;

(c)the circumstances must warrant incurring further delay; and

(d)the ultimate question is whether the interests of justice are served by granting leave.

4      Greendrake v District Court of New Zealand [2020] NZCA 122 at [6(a)] and [16].

5      Finewood Upholstery Limited v Vaughan [2017] NZHC 1679 at [13] and [14].

6      Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [15].

7      Finewood, above n 5, at [9]. Affirmed in Greendrake v District Court of New Zealand, above n 4 at [6]; and more recently in Ding v James [2021] NZCA 578 at [18].

[9]More recently, the Court of Appeal has framed the test as being:8

… leave to appeal should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as a matter of precedent, warrants the further delay which the appeal process would involve. (Emphasis added)

[10]            In essence, the Court must undertake a balancing exercise to determine whether the factors weighing in favour of granting leave to appeal outweigh those against.9

[11]            Mr Shand, counsel for Mr Sneesby and Mr Ressels, submitted that deciding Mr Ressels had no right to be added as a plaintiff in this proceeding ended Mr Ressels’ involvement in this proceeding. Mr Shand submitted:

So, it may be that Mr Ressels has a right of appeal under s 56(4) of the Senior Courts Act 2016 without requiring leave.

[12]            Mr Shand also noted that the Court has recognised that where a judgment has the effect of excluding a party from a proceeding, that is a factor that may be taken into account in assessing the overall justice of the application for joinder.10

[13]            Mr Ressels’ right to bring his claim against Southern Response has not been affected. On 19 April 2023, Mr Ressels commenced proceedings against Southern Response in the District Court in respect of the claim he sought to bring in this proceeding.

The arguable errors of law or fact asserted by Mr Ressels

[14]Mr Shand submits the February decision:

(i)“wrongly fails to even consider the application by Mr Ressels to be    a representative under r 4.24”;

8      Ngai Te Hapu v Bay of Plenty Regional Council, above n 6, at [17].

9      Finewood, above n 5, at [15(e)].

10  Parkinson  v  O’Brien  [2021]  NZCA  309  at  [32]  with  reference  to  Simons  v  ANZ   Bank  New Zealand Ltd [2022] NZHC 1836 and Mathias v The Earthquake Commission [2022] NZHC 2941.

(ii)that the decision is contrary to rr 1.2 and 1.6 and contrary to “common sense”;

(iii)incorrectly applied joinder rules;

(iv)“has the effect that Mr Ressels has to commence a separate proceeding and bring a fresh representative application with limitation issues and duplicate time and cost”; and

(v)is inconsistent with the Australian approach.

[15]            Before addressing the matters alleged to be errors, I observe that to a large extent Mr Shand’s submissions were conclusionary in their style, that is, errors were asserted without explaining why the conclusions said to be errors were arguably wrong. That said, I address the matters said to be errors to the extent Mr Ressels gives reasons.

Failure to consider application to be a representative plaintiff

[16]            I see no arguable error on this point. Mr Ressels’ application to be joined as  a plaintiff failed, therefore no question of him being a representative plaintiff arose.

[17]            Mr Shand submits that Mr Ressels’ application to be a representative plaintiff would have met the criteria under r 4.24 and as Mr Ressels would have qualified as  a a suitable representative plaintiff, it is in the interests of justice for him to be joined as plaintiff.

[18]            In my view,  the argument is circular. It is clear that in order to be joined as   a party under r 4.56, an applicant must satisfy the jurisdictional requirements of that Rule. That Mr Shand considers Mr Ressels would qualify as a representative plaintiff does not mean he meets the jurisdiction threshold for Mr Ressels to be joined to     Mr Sneesby’s proceeding.

Failure to apply rr 1.2 and 1.6 of the Rules

Decision contrary to rr 1.2 and 1.6

[19]Rules 1.2 and 1.6 provide:

1.2      Objective

The objective of these rules is to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.

…

1.6      Cases not provided for

(1)If any case arises for which no form of procedure is prescribed by any Act or rules or regulations or by these rules, the court must dispose of the case as nearly as may be practicable in accordance with the provisions of these rules affecting any similar case.

(2)If there are no such rules, it must be disposed of in the manner that the court thinks is best calculated to promote the objective of these rules (see rule 1.2).

[20]            I held r 1.6 has no application given joinder of parties is governed by r 4.56 once proceedings are underway.11 Mr Shand does not explain why my conclusion in relation to r 1.6 was wrong.

[21]            As to r 1.2, I accepted the submission of Mr Weston that r 1.2 was not a proviso available every time the rigor of a rule prevented an applicant meeting the jurisdictional requirements for the orders they sought.

[22]Mr Shand submitted:

Lester AJ had HCR 1.2, 1.6, 4.2, 4.24 and 4.56 at his disposal. By failing to properly following the rules, Lester AJ has created multiplicity of proceedings and wasted time and money. That is the opposite of the objective of r 1.2. Lester AJ’s approach has been contrary to the principles of the rules.

[23]            This is an example of Mr Shand’s conclusionary submissions. Underlying this submission is the idea that all the rules he referred to were applicable to Mr Ressels’ application when that is not the case, save for r 4.56.

11     Smith v Noble Investments Limited [2017] NZHC 447 at [25]-[28].

[24]I have already referred to rr 1.2 and 1.6.

[25]            Rule  4.2  does  not  apply  as  that  rule  applies  at  the  commencement  of   a proceeding. Again, Mr Shand’s written submissions do not explain why my conclusion on r 4.2 not applying was arguably  wrong.  Simply saying not joining  Mr Ressels to the proceeding is contrary to rr 4.2 and 1.2 takes Mr Ressels’ application for leave no further.   Nor does the fact Mr Ressels was informally mentioned as      a potential additional plaintiff  in  February  2022,  make  r  4.2  applicable  when  Mr Sneesby’s proceeding was commenced in July 2021. Mr Ressels being named as a potential further plaintiff before Mr Sneesby’s application to be a representative plaintiff was heard, is irrelevant.

[26]            Rule 4.24, which governs representative actions, does not apply unless and until Mr Ressels is a plaintiff. I do not consider Mr Shand has identified arguable errors in relation to the application of the Rules.

Decision contrary to common sense

[27]Mr Shand submitted:

It cannot be correct that Mr Ressels meets the requirements of r 4.24 but is unable to be added as a plaintiff under r 4.56(1)(b)(i); Mr Ressels’ claim has merit so he ought to be joined. It is contrary to common sense.

[28]            This is another example of Mr Shand’s conclusionary submissions; it is not supported by authority. Simply asserting there was an error or that an aspect of the decision was contrary to “common sense” does not advance the application for leave.

[29]            As submitted by Mr Weston, Mr Shand focused on what he saw as the merits of the proposed representative action, submitting the circumstances favoured such an action being brought. Therefore, Mr Shand submitted that Mr Ressels should be added as a plaintiff to allow the representative action to proceed.

[30]            The difficulty with this circular submission is that it seeks to sidestep the jurisdictional requirements of r 4.56 hence Mr Shand’s alternative submission addressed in the February judgment that recourse to rr 1.2 and 1.6 could save the day.

[31]No arguable error in respect of this ground exists.

Incorrect application of r 4.56

[32]            The first issue under this head is whether rr 4.2 or 4.56 applied. I have already said I do not consider there to be an arguable error as to the joinder application being governed by r 4.56 and not r 4.2.

[33]As to whether r 4.56 was correctly applied, Mr Shand submits:

If Lester AJ is correct that r 4.56 applies instead of r 4.2, then Mr Ressels satisfies the requirements of r 4.56(1)(b)(i) and (ii).

[34]            Mr Shand submits that I wrongly interpreted the  test  in  Brooker  v  IAG New Zealand Ltd.12

[35]            Mr Shand submits Mr Ressels presence as a plaintiff is necessary to enable complete and effectual adjudication on all the questions raised in Mr Sneesby’s case. Mr Shand refers to the fact I considered Mr Sneesby’s claim to be meritless due to    a comprehensive settlement agreement Mr Sneesby reached with Southern Response. Mr Shand submits:

If Mr Sneesby’s claim does indeed fail due to being barred by a settlement agreement, then the other questions in this proceeding will not be resolved. Those questions include, (but are not limited to);

(a)Did [Southern Response] misrepresent the maximum entitlement under the policy;

(b)Did the insured rely on the (mis)representation(s) and suffer loss from it;

(c)Is [Southern Response] required to pay P&G on Out of Scope items;

(d)Is [Southern Response] required to pay professional fees;

(e)Is [Southern Response] required to pay general damages.

12     Brooker v IAG New Zealand Ltd [2019] NZHC 1225.

[36]Mr Shand further submits:

Mr Ressels signed no settlement agreement. So, Mr Ressels presence would enable all questions involved in the case to be adjudicated on (emphasis added).

Here, the case is Mr Sneesby’s case. This argument is, in my view, also without merit. If Mr Sneesby’s claim fails because he entered a full and final settlement agreement with Southern Response then that will be the end of his proceeding. The other issues in Mr Sneesby’s claim will become moot and will not be subject to a decision. It is not necessary to join Mr Ressels  to  Mr Sneesby’s  proceeding  to  guard  against  Mr Sneesby’s proceeding  failing  on  the ground  of the settlement  as,  in  terms  of r 4.56(1)(b)(ii), there will be no further issues for the Court to “… adjudicate on…” and no other question in the proceeding to be settled.

[37]            In any event, the submission assumes Mr Ressels and Mr Sneesby are in exactly the same situation in relation to whether there was a misrepresentation, reliance and loss, which I did not accept for the reasons given in the February judgment at paragraphs [30]-[34].

[38]            Mr Shand’s submissions in his support of his application for leave do not engage with discussion of the authorities in the February judgment at paragraphs

[24] – [29], other than the assertion noted at [34] above.13 Again, I am not satisfied

an arguable error has been identified.

Inconsistent with the Australian approach

[39]              Mr Shand took me to two Australian cases; Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd,14 and Bray v F Hoffman-La Roche Ltd.15 In both cases, representative actions were underway and the Court was concerned with applications to substitute new representative plaintiffs.

13   Mr Shand referred to Taranaki Farmers’ Meat Co Ltd v Morgan [1925] NZLR 513 in support of his submission that r 4.56 should have been seen as having wider application. Morgan has been overtaken by more recent authority and the outcome was clearly influenced by the parties who were joined being excluded for what appears to have been a procedural error at the commencement of the proceeding.

14 Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd [2010] FCA 1302.

15 Bray v F Hoffman-La Roche Ltd [2003] FCA 1505.

[40]In Auskay, the Court said at [9]:

I consider that the court has the power to make the orders sought, both under s 33Z(1)(g) of the Act and O 6, rr 8 and 9. Given the availability of alternative applicants who are willing to ensure that all issues in dispute are prosecuted in the proceeding, Auskay is no longer to be regarded as a necessary party. In the circumstances, it is just and appropriate that the two willing parties should be substituted as Applicants.

[41]              The Court there referred to rr 8 and 9 of Order 6 of the now repealed Federal Court Rules.  Order 6 is headed “Parties – Causes of action and interveners”.  Rules 8 and 9 provide:

8Addition of parties

(1)Where a person who is not a party:

(a)    ought to have been joined as a party; or

(b)    is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined and adjudicated upon;

The Court may order that the person be added as a party and make orders for the further conduct of the proceeding.

(2)A person shall not be added as an applicant without the person’s consent.

9Removal of parties

If a person:

(a)    has  been  improperly  or  unnecessarily  joined  as  a  party  to   a proceeding; or

(b)    has ceased to be a proper or necessary party to a proceeding;

the Court may order that the person cease to be a party and make orders for the further conduct of the proceeding.

[42]In Auskay, an order was made substituting a new representative plaintiff.

[43]Mr Shand also relied on paragraph [14] from Bray which provides:

Under the Federal Court Rules the Court has a general discretion to make orders amending the parties to a proceeding (Order 6) and amending pleadings (Order 13). Ordinarily, a bona fide application for an amendment, which complies with the relevant rules, should be granted, subject to proper terms, unless the proposed amendment is futile or would cause substantial injustice

which cannot be compensated for: see for example Advanced Switching Services Pty Limited v State Bank of New South Wales T/as Colonial State Bank (2001) 23 ATPR 41-848 at 43,486 [8].

[44]              Mr Shand’s point was that r 8, set out above, is very similar to r 4.56 of the Rules. Mr Shand submits I was wrong not to give r 4.56 the same breadth as it seems to have been given in the above cases.

[45]In relation to Bray, Mr Shand submitted:

It is clear the Court was not too concerned about specifying exactly what power it relied on but ultimately the Court ordered substitution.

[46]              In determining whether Mr Ressels met the jurisdictional requirements under r 4.56 to be joined as an additional plaintiff, I applied the principles set out in Capital and Merchant Finance Ltd (in rec and liq) v Perpetual Trust Ltd where in turn, her Honour Thomas J applied the test laid down by the Privy Council for joinder which had previously been adopted in New Zealand.16

[47]              I do not consider reference to the Australian authorities raises an arguable error in relation to my application of the law as it stands in New Zealand. Neither Australian case contains a detailed discussion of the legal principles applying to joinder.

[48]              I therefore do not consider that Mr Shand’s reference to the Australian authorities raises an arguable issue of law in this case where no representative action is underway.

Representative actions – a developing area of the law

[49]              Mr Shand submitted that the issues in respect of the intended representative action are of public importance and that the area of group action litigation is growing in prominence. That may well be true, but the issue in this case is the jurisdiction to join Mr Ressels as a party. The principles governing joinder are settled. This is another example of Mr Shand arguing from the conclusion he advocates for, that is,

16     Capital and Merchant Finance Ltd (in rec and liq) v Perpetual Trust Ltd [2014] NZHC 3205, [2015] NZAR 228.

Mr Ressels being a representative plaintiff rather than focusing on the jurisdictional thresholds Mr Ressels had to meet to be added as a plaintiff.

Mr Ressels has to commence a separate proceeding

[50]              Mr Shand notes that if the order that Mr Ressels not be joined to Mr Sneesby’s proceeding stands, the Court will have to deal with each of their claims separately. Mr Shand submits that approach is inconsistent with r 1.2.

[51]              Again, recourse to r 1.2 is not a substitute for whether Mr Ressels meets the jurisdictional requirements for joinder. Mr Shand submitted it was wrong to conclude that were it not for  the  difficulties  Mr Sneesby  faced  in  his  applications,  then  Mr Ressels would not have sought to be added as a party. The fact is, Mr Ressels came on the scene as a potential further plaintiff after Southern Response served its notice of opposition to Mr Sneesby’s application to be a representative plaintiff, which relied on Mr Sneesby’s full and final settlement with Southern Response. In any event, my observation in this regard was hardly critical to the conclusion in my judgment.

[52]              Mr Shand submits I was wrong to state at paragraph [30] of the February judgment that Mr Ressels will not be bound by the outcome of Mr Sneesby’s proceeding. Mr Shand submits I misunderstood or failed to consider that limitation is a live issue with Mr Ressels.

[53]              If Mr Ressels was joined as a separate plaintiff to Mr Sneesby’s claim then Mr Ressels would be pleading new causes of action against Southern Response. Whether Mr Sneesby commences a separate proceeding (as he has), or whether his causes of action are brought as new claims in an existing proceeding, the limitation issues are the same, absent there being an extant representative proceeding. When as long ago as September 2021, Southern Response raised issues with Mr Sneesby being a representative plaintiff, why Mr Ressels did not commence his proceeding then is unexplained. If there are limitation issues then that is a consequence of Mr Ressels delaying in issuing his own proceedings.

Exceptional circumstances

[54]              Mr Shand argues there are exceptional circumstances in this case. The reference to exceptional circumstances comes from Capital and Merchant Finance, referred to in the February judgment at paragraphs [26]-[28]. However, I accept Southern Response’s submissions that the commercial, financial or reputational interests that Mr Ressels wishes to rely on go to the proposed representative proceeding generally, and not his own personal interests. Mr Ressels has filed his own proceeding to protect his own interests.

[55]              For limitation reasons, Mr Shand wants to preserve the ability to apply to have Mr Sneesby’s proceeding be a representative one. The two avenues Mr Shand pursues to achieve that object are an application for leave to the Court of Appeal to appeal my dismissal of Mr Sneesby’s application to be a representative plaintiff and secondly, the joinder of Mr Ressels to Mr Sneesby’s proceeding. The two pathways are distinct. Failure of Mr Sneesby’s application for leave to appeal (should that be the case) does not alter the merits of Mr Ressels’ joinder application.

Observation as to Mr Shand’s submissions

[56]Mr Shand, in his written submissions, said:

The recent practice of Lester AJ making quick judicial decisions favourable to Crown funded entities caused a consideration of a request for recusal here.

[57]              No request for recusal was made. In the absence of such a request, what this submission was intended to achieve is unclear. Mr Weston, in his oral submissions, repeated the call made in his written submissions for Mr Shand to withdraw this submission. Mr Shand did not respond to that call in his reply having made no reference to the above paragraph in his oral submissions.

[58]              Mr Shand in another application for leave to appeal commented on the judgment sought to be appealed being delivered “only 11 days after the hearing”.17 In the decision dealing with that leave application, I said that I did not understand the point Mr Shand sought to make through referring to the judgment being released

17     Mathias v The Earthquake Commission [2023] NZHC 705, at [48].

promptly.18 Again, I do not understand the point Mr Shand wishes to make in his submission above.

Decision

[59]Mr Shand submits:

Previous representative applications with other Judges have gone to the Court of Appeal without issue. Mr Ressels’ application should be no different.

[60]              No doubt leave was granted in those cases based on the merits of the leave application – I decline Mr Shand’s application for leave on the same basis.

Costs

[61]              Mr Ressels will pay Southern Response costs on a 2B basis together with disbursements as fixed by the Registrar.

Associate Judge Lester

Solicitors:

Grant Shand, Auckland (for Plaintiff and Mr Ressels) Buddle Findlay, Christchurch (for Defendant)

Copy to counsel:
T Weston KC, Barrister, Tai Tapu, Christchurch (for Defendant)

18 At [49].