Waterhouse v Contractors Bonding Ltd

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-3074 [2012] NZHC 566

BETWEEN  GODFREY WATERHOUSE First Plaintiff

ANDROBERT WATERHOUSE Second Plaintiff

ANDCONTRACTORS BONDING LIMITED Defendant

Hearing:         2 December 2011

Counsel:         S Grant for Plaintiffs

R E Harrison QC for Defendant

Judgment:      3 August 2012

JUDGMENT OF POTTER

on defendant’s applications for summary judgment

and striking out

In accordance with r 11.5 High Court Rules

I direct the Registrar to endorse this judgment with a delivery time of 2.30 p.m. on 3 August 2012.

Solicitors:           Harmos Horton Lusk Ltd, Auckland –   Manning, Auckland –  [e-mail]

Copy to:            S Grant, Auckland –  [e-mail]

R E Harrison QC, Auckland –  [e-mail]

WATERHOUSE V CONTRACTORS BONDING LIMITED HC AK CIV-2010-404-3074 [3 August 2012]

Table of Contents

Introduction  [1] Summary judgment principles  [8] Strike out principles  [10] Pleadings   [12] Statement of claim  [15]

Deceit  [19] Negligent misstatement  [22] Breach of fiduciary duty  [24]

Statement of defence  [26] CBL’s interlocutory application  [28] Notice of opposition  [30] Affirmative defences  [31] Is the proceeding statute barred?  [33] Approach to choice of law  [38] Double actionability  [39]

Step one: is there a conflict of laws?  [42] Step two:what is the lex causae?  [48] Application  [52] The exception in Baxter  [53] Lex loci delicti  [56] Conclusion  [60]

Is the limitation period governed by the lex fori or the

lex causae?  [61]

Do the plaintiffs have standing to sue CBL?  [78]

The underwriting agreement  [85] Authorities  [98] Conclusions  [103]

Causes of action  [107]

Deceit  [108] Negligent misstatement  [116] Breach of fiduciary duty  [126]

Result  [133] Next steps  [134] Costs  [135]

Introduction

[1]      The  first  plaintiff  owned  a  company,  Phoenix  Brokers  Inc  (Phoenix), registered  in  Georgia  USA which  carried  on  business  in  livery  insurance.    In December 2000 Phoenix entered into an agreement with the defendant Contractors Bonding Ltd (CBL), a New Zealand company,  for the underwriting by CBL of insurance policies in Georgia.

[2]      In about 2002, as a consequence of amendments to the Georgia Insurance

Code, CBL became ineligible to issue insurance policies in Georgia.

[3]      The plaintiffs allege that Mr Peter Harris of CBL advised the first plaintiff, Mr Godfrey Waterhouse, that CBL was acquiring, and subsequently, that CBL had acquired, Mark Solofa Insurance (MSI) located in American Samoa, which qualified as a foreign underwriter under the Georgia Insurance Code.  The plaintiffs say that in reliance  on  this  advice  they  arranged  for  Phoenix  to  transfer  its  underwriting business to MSI.  However, CBL had not acquired MSI.

[4]      In 2005 the second plaintiff was arrested.  The plaintiffs were charged with numerous fraud-related charges arising from the issue of insurance policies in the name of MSI, a non-existent insurer, assets were seized and the first plaintiff’s licence to operate as an insurance broker was revoked.   Phoenix was dissolved in January 2009.1

[5]      The plaintiffs issued these proceedings on 21 May 2010 without protest to jurisdiction by CBL.  They claim against CBL in deceit, negligent misstatement and breach of fiduciary duty.  They seek to recover personal losses they claim to have

suffered…