Southern Response Unresolved Claims Group v Southern Response Earthquake Services Limited
[2016] NZHC 2224
•20 September 2016
6
IN THE HIGH COURT OF NEW ZEALAND
REGISTRY
CIV-2015-409-000530 [2016] NZHC 2224
BETWEEN THE SOUTHERN RESPONSE
UNRESOLVED CLAIMS GROUP AN UNINCORPORATED BODY OF PERSONS SUING BY THEIR REPRESENTATIVE
CAMERON JAMES PRESTON Plaintiff
AND
SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED Defendant
Hearing: 19 September 2016 Appearances:
M S Smith for Plaintiff
D J Friar for Defendants
D A Webb for IntervenorsJudgment:
20 September 2016
JUDGMENT OF GENDALL J
[1] Before the Court is an application (the intervention application) by two former members of the plaintiff group, Simon Paul Kingham and Ann Kathleen Taylor (the interveners) who seek an order from this Court granting them leave to be joined to this proceeding as interveners. This is with respect to an application brought by the plaintiff for leave to bring a substantive proceeding against the defendant as a representative action under r 4.24 High Court Rules (the leave application).
[2] The present intervention application concerns solely the issue set out in paragraph 3(q) of a Notice of Opposition to the leave application filed by the
defendant, Southern Response Earthquake Services Limited. This particular ground
SOUTHERN RESPONSE UNRESOLVED CLAIMS GROUP v SOUTHERN RESPONSE EARTHQUAKE SERVICES LTD [2016] NZHC 2224 [20 September 2016]
of opposition is that “group members (of the plaintiff) did not receive the required
disclosure under the Credit Contracts and Consumer Finance Act 2003”.
[3] Ultimately it is said this particular issue raises questions of:
(a) Whether the litigation funding agreement (arranged for the pursuit by the plaintiff of the leave application and the substantive claim against the defendant) is a consumer credit contract pursuant to the Credit Contracts and Consumer Finance Act 2003 (the CCCFA); and
(b) Whether disclosure properly occurred pursuant to the CCCFA. [4] Summarising the arguments advanced by the interveners, they say:
(a) The matter in issue directly affects the contractual rights and obligations of the interveners.
(b)The question of whether the funding agreement is a consumer credit contract is an important one, both for the interveners and for the wider application to bring the claim as a representative action.
(c) It would be fundamentally unjust to adjudicate on this question without the interveners being heard and accordingly the interests of justice are best served by allowing the intervention.
(d)The degree of intervention can be tailored by the Court to meet the interests of justice for all parties.
(e) There is considerable merit, it is said, in the ground of opposition and therefore it justifies proper consideration by the Court from all affected parties.
[5] The defendant, Southern Response Earthquake Services Limited, does not oppose this application to intervene to the extent that the intervention on the part of the interveners:
(a) Is limited to the hearing of the plaintiff’s application for leave to bring
the proceeding as a representative action; and
(b)Is limited to relevant issues relating to the question of whether the plaintiff's funding agreement should be approved.
[6] The plaintiff opposes the intervention application. In doing so it contends:
(a) Given that this is said to be an unusual application for intervention, the interveners do not come within the rules allowing them to be involved in this proceeding and can only be allowed to intervene if they can establish exceptional circumstances under the inherent jurisdiction of the Court.
(b)No such exceptional circumstances exist here and the interveners do not meet the test. The questions involved in what is said to be a new argument, that the CCCFA applies to the litigation funding arrangements here and the requirements of that legislation were not met, are both factually and legally complex. The plaintiff says there is no prospect of such issues being determined during the plaintiff's leave application, nor will there be any need for any definitive findings to be made on this issue. In addition, the plaintiff says the Court will not have before it, the evidence or the necessary parties (including the litigation funder itself and the plaintiff’s solicitors) or the time when hearing the leave application, to determine these issues. It is said that this is simply an intrusion on the plaintiff's case for which there is no justification.
(c) The plaintiff maintains that, even if the interveners have a direct interest in the question whether the CCCFA applies to the litigation funding agreement, the relevance of the terms of this arrangement to the leave application is of significantly more limited scope, in relation to which it is argued the interveners have no legitimate interest. The interveners elected to no longer be a part of the plaintiff group seeking
leave to be able to proceed here as a representative action, so it is said they can no longer have any legitimate interest in the question whether leave is granted.
(d)In addition, as the interveners have chosen to leave the plaintiff group, it is therefore highly improper for them to be able to intervene in the leave application to extend and delay matters unnecessarily and to be allowed to actively oppose the interests of the group itself.
[7] In jurisdiction terms, although r 4.56 High Court Rules expressly provides that the Court may join plaintiffs and defendants to proceedings and is silent on the specific question of adding an interested party or intervener, it is clear that the same principles are broadly applicable – Capital & Merchant Finance Ltd (In Receivership
and Liquidation) v Perpetual Trust Ltd.1 The ability to add an interested party or
intervener to a proceeding is a well recognised part of the Court’s inherent
jurisdiction.
[8] The general principles applicable to whether or not to grant an application to intervene, as distilled by Thomas J in Capital & Merchant Finance Ltd at [41], are as follows:
(a) An applicant must show that its legal rights against or liabilities in relation to the subject matter will be directly affected. Commercial, financial, or reputational interests in the outcome will only be sufficient in exceptional circumstances.
(b) If the intending intervener’s presence before the Court will not improve the quality of information before the Court, that will count heavily against its addition to the proceedings.
(c) A relevant consideration is the extent to which the proposed intervener can rely on one of the parties to protect its rights and obligations.
(d) If either party would be prejudiced by the intervention, or if the intervention would create an impression of partiality, the application will not be granted.
1 Capital & Merchant Finance Ltd (In Receivership and Liquidation) v Perpetual Trust Ltd [2014] NZHC 3205.
(e) In cases where development of the law is likely, the application is more likely to be granted if the proposed intervener has special expertise to assist the Court on wider public policy issues.
(f) The underlying issue is whether it would be unjust to adjudicate on the matter in dispute without the intervener being heard. Several of the factors mentioned above tie into this issue.
(g) Where intervention is justified, the degree of participation granted to the intervener should be the minimum necessary to protect the intervener’s interests.
[9] In the present case, the interveners contend that the CCCFA applies to the contract they entered into with the litigation funder and the requirements of the CCCFA were not met. The primary basis for the intervention is said to be the prospect that determining the question of whether or not the CCCFA applies will directly affect the intervener’s rights.
[10] Given this, I am satisfied that intervention in this case could only be justified if there is a real prospect the Court will finally determine that the CCCFA does not apply to the litigation funding agreement when it determines the plaintiff's leave application. Before me Mr Smith for the plaintiff contended that this would not occur. He maintained there was simply no need for the Court to make a final determination and indeed before me he confirmed that this was not the outcome sought by the plaintiff group in the context of the leave application.
[11] Again, Mr Smith noted that the leave application in issue was one directed simply to the question as to whether this matter could proceed under r 4.24 as a representative action. He maintained the issue the interveners raised here, concerning a final determination that the CCCFA either does or does not apply to the litigation funding contract, could only be decided in other proceedings involving all parties (including the litigation funder LLS itself and the plaintiff ’s lawyers GCA Lawyers) and with appropriate pleadings.
[12] Notwithstanding the direction made at para [6](b) of my minute of 9 June
2016 no application for approval of the funder and funding agreement has been filed in this Court on behalf of the plaintiffs. Indeed, before me Mr Smith made clear that so far as the plaintiff is concerned, no such formal application is appropriate and he
confirmed that the issues the interveners endeavour to raise here will not be finally decided on the hearing of the leave application. He was adamant it could only be decided in other proceedings. As I understand the approach taken by Mr Smith, if the Court finally determines that leave to proceed with this matter as a representative action can only be granted (if at all) on a conditional basis, with CCCFA matters to be determined later, then so be it.
[13] Given these concessions, it is my view that the interveners are not able to show here that their legal rights in relation to the litigation funding agreement and whether or not in this case the CCCFA does apply, will be directly affected by the outcome of the r 4.24 leave application.
[14] As submissions advanced before me on behalf of the defendant have confirmed, there can be no doubt that the defendant will be endeavouring to raise all relevant arguments concerning the CCCFA at the hearing of the leave application. To that extent some reliance can be placed on them by the interveners. Further, I am not satisfied the intending interveners’ presence would improve the quality of any relevant information the Court needed in discussions relating to the leave application itself, nor that the interveners could say they would be prejudiced if their presence is refused at such a hearing.
[15] I conclude that in all the circumstances here, there can be no question of injustice to the interveners if a Court decision on the leave application proceeds without them being present. They will not be prevented from arguing in different proceedings for some other outcome by way of a definitive decision on the CCCFA issue. In my judgment, it could not be said here that the interveners’ rights are, or may be, directly or indirectly affected by the leave application.
[16] Finally, there seems to be little doubt that before me all parties accepted that the argument that the CCCFA might apply here to the litigation funding agreement was one of factual and legal complexity. The hearing of the plaintiff’s leave application, for some time has been allocated for one day to take place on 19 October
2016. Issues over unnecessarily complicating and extending this hearing time must arise.
[17] Although the Court of Appeal in Saunders v Houghton2 observed that, when a representative action is premised on litigation funding, the appropriateness of the arrangements should be considered, Mr Smith, as I have noted, in his submissions before me accepted that no definitive decision on this question was sought or could be given on hearing the present leave application. At most it seems Mr Smith suggested that the Court could reach a conclusion in relation to the leave application and the CCCFA issue that either that Act might or might not apply in this case. This may well go to the issue of what Mr Smith accepted could be a conditional leave order being granted. Such a conclusion, according to the plaintiff, does nothing to damage the ultimate position of the interveners here with respect to any liability they may have under the litigation funding agreement. I agree.
[18] For all these reasons I find that it is not appropriate here for the interveners to be joined as interveners in this proceeding. I am not satisfied they would assist the Court, nor that a refusal to allow them to intervene here would prejudice them in any way.
[19] The present intervention application fails and is dismissed.
[20] Costs are reserved. If counsel are unable to resolve the issue of costs between them they may file memoranda sequentially which are to be referred to me. In this event, in the absence of either party indicating they wish to be heard on the question of costs, I will decide the issue of costs based on the material then before the Court.
...................................................
Gendall J
Solicitors:
Grant Cameron, Christchurch
Bell Gully, Auckland
Lane Neave, Christchurch
Copy to:
Matthew Smith, Wellington
2 Saunders v Houghton [2010] 3 NZLR 331.
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