Zurich Insurance Public Limited Company

[2024] NZHC 888

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-000426

[2024] NZHC 888

IN THE MATTER

of an application under the High Court Rules 2016 to use documents in another proceeding

BETWEEN

ZURICH INSURANCE PUBLIC LIMITED COMPANY

First Applicant

AND

LIBERTY MUTUAL INSURANCE EUROPE SE

Second Applicant

ASPEN INSURANCE UK LIMITED
Third Applicant

Cont’d overleaf

Hearing:

17 April 2024

Appearances:

A L Holloway, M A Karlsen for Applicants

D T Broadmore for Brookfield Multiplex Constructions (NZ) Limited

Judgment:

22 April 2024

JUDGMENT OF ANDERSON J

This judgment was delivered by me on 22 April 2023 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules 2016.

………………………………

Registrar/Deputy Registrar

Solicitors:
Wotton Kearney, Auckland

ZURICH INSURANCE PUBLIC LIMITED COMPANY v LIBERTY MUTUAL INSURANCE EUROPE SE [2024] NZHC 888 [22 April 2024]

ALLIANZ GLOBAL CORPORATE & SPECIALITY SE

Fourth Applicant

AMERICAN INTERNATIONAL GROUP (UK) LIMITED

Fifth Applicant

ARCH MANAGING AGENCY LIMITED
Sixth Applicant

GREAT LAKES INSURANCE SE
Seventh Applicant

SWISS RE INTERNATIONAL SE
Eighth Applicant

ALLIED WORLD MANAGING AGENCY LIMITED
Ninth Applicant

CHUBB UNDERWRITING AGENCIES LIMITED

Tenth Applicant

STAR MANAGING AGENTS LIMITED
Eleventh Applicant

[1]    The applicants are insurers who declined cover to Brookfield Multiplex Constructions (NZ) Ltd (in liq) (BMX) under its insurance policies in respect to defective building claims made against it concerning the “Victopia” and “Century on Anzac” apartment buildings in Auckland. The claims resulted in BMX being liable for substantial judgment debt in two Auckland High Court proceedings (NZ Proceedings).1

[2]    In connection with these NZ Proceedings, BMX made certain information and documents available to the applicants in support of BMX’s claims for indemnity under the insurance policies. This included information served and exchanged by the parties in the proceedings.

[3]    The applicants are now defendants in two proceedings in the Supreme Court of New South Wales in Australia in which their decision to decline insurance cover is challenged (the NSW Proceedings). The Koper proceeding2 is a claim by a representative owner of a unit in Victopia challenging the declinature in that proceeding. The BMX proceeding3 is a claim by BMX challenging the declinature in connection with both NZ Proceedings. In both NSW Proceedings, the question is whether the applicants were entitled to rely on certain exclusion clauses for defective workmanship.

[4]    The applicants have documents in their possession that were discovered or served in the NZ Proceedings or documents of this character may be disclosed to them in discovery in the NSW Proceedings. Many of these documents will not have been disclosed in open court. The applicants seek orders from this Court that they and the other parties to the NSW Proceedings are permitted to use such documents for the purposes of the NSW Proceedings. When applying for discovery in the NSW Proceedings, the applicants also undertook to the Supreme Court of New South Wales that they would seek an order to this effect.

1      Body Corporate 346799 v KNZ International Co Ltd [2017] NZHC 511, Body Corporate 324371 v Clark Brown Architects Ltd [2021] NZHC 2379.

2      Koper v Zurich Insurance Public Ltd Co (No. 2021/224418).

3      Brookfield Multiplex Constructions (NZ) Ltd (in liq) v Zurich Insurance Public Ltd Co (No. 2023/23990).

Why are the orders needed?

[5]    The need for the orders sought arises because of the obligation on parties before the courts to use documents they obtain because of proceedings only for the purposes of the proceeding and not for any collateral purpose.

[6]In New Zealand, this obligation is codified by the High Court Rules 2016.4

(a)Rule 8.30(4) provides that a party which obtains a document by way of inspection or who makes a copy of a document under this rule (a) may use that document or copy only for the purposes of the proceeding; and

(b)    except for the purposes of the proceeding, must not make it available to any other person (unless it has been read out in open court).

(b) Rule 9.14(e) provides that nothing in  pt  9 of the High Court Rules  allows a brief served under the Rules but not given in evidence to be made available for use for another purpose or proceeding.

[7]    In Australia, the obligation remains a matter of common law. It is referred to as the “Harman undertaking” or “implied undertaking”, derived from Harman v Secretary of State for Home Dept.5

[8]    Recognising that discovery involves an invasion of privacy and is provided under compulsion, the obligation balances the competing interests of a party’s right to privacy in relation to its own documents with the public interest in ensuring that all relevant information is before the Court when it adjudicates on a claim. This protection against collateral use of discovered documents is critical to maintaining confidence in the integrity of the discovery process and helps ensure that parties comply with their discovery obligations.6

4      High Court Rules 2016, rr 8.30(4) and 9.14(e).

5      Harman v Secretary of State for Home Dept [1983] 1 AC 280. The extent of the Harman undertaking was stated by the High Court of Australia in Hearne v Street [2008] HCA 36, [2008] 235 CLR 125 at [96].

6      Dotcom v Attorney-General [2016] NZHC 2251 at [8].

[9]    The implied undertaking is not absolute. The Court may give permission for use of documents for a collateral purpose in its inherent jurisdiction.7 There is no exhaustive test or list of considerations relevant to when the Court will exercise its inherent power because each case is fact specific. However, for exposition purposes, I adopt the following list of guiding principles set out in the applicants’ submissions:

(a)An applicant should attempt to obtain consent of the other parties.8

(b)A strong factual connection between the proceedings may tend in favour of granting permission.9 An application to use material for a purpose not related to the subject matter of the proceeding is unlikely to be successful.10

(c)Whether there are other avenues for obtaining the documents that have not been exhausted may be relevant.11

(d)The Court will not generally release or modify the obligation unless “special circumstances” exist and where it would not cause injustice to the other party.12 This reflects that the Court is wary of the exceptions overwhelming the rule.13

(e)The Court will need to ensure that fair trial rights are respected.14

[10]   For the reasons I set out below, release from the implied undertaking is justified in the present case. I address the reasons for this in turn.

7      Wilson v White [2005] 3 NZLR 619 (CA) at [47]; Hally Labels Ltd v Powell [2013] NZHC 900 at [27]–[29]; and Taylor v Attorney-General [2021] NZHC 1546 at [36].

8      Hally Labels Ltd v Powell, above n 7, at [29]–[30].

9      At [44]–[45] referring to Hunter Grain Ltd v Price HC Tauranga CIV-2008-470-000192, 23 April 2018 and Telstra New Zealand Ltd v Telecom New Zealand Ltd (2000) 14 PRNZ 541 (HC).

10     Cayman Spectrum (NZ) Co v Spark New Zealand Trading Ltd [2023] NZHC 1094 at [14] citing

Hunter Grain Ltd v Price HC Tauranga CIV-2008-470-192, 18 August 2010 at [13].

11     Dotcom v Attorney-General, above n 6.

12     Cayman Spectrum (NZ) Co v Spark New Zealand Trading Ltd, above n 10, at [14].

13     Wilson v White, above n 7, at [64].

14     See, for example, Dotcom v Attorney-General, above n 6, at [8].

Consent of other parties

[11]   BMX supports the application. So too does Mr Koper as representative of the plaintiff unit owners in the Victopia proceeding.

[12]   Powell J made directions on 11 March 2024 as to service on such other parties to the NZ Proceedings that may have an interest in the outcome of this application. Recognising the passage of time and the fact that some parties took no role or were involved simply as insurers, orders as to service were made on the following parties being:

(a)parties that still exist (that is, remain registered on the Companies Office Register);

(b)were involved in the design and/or the construction of the building; and

(c)took evidential steps in the NZ Proceedings.

[13]   Six parties were identified and served on this basis. There is no opposition to the application by any of these parties.

Close factual connection

[14]   Commonly the applicants would have been joined in as parties to the NZ Proceedings on the basis that they declined insurance cover. For various reasons this did not occur, but it underlines the connection between the NZ Proceedings and the NSW Proceedings in which the declinatures are challenged.

[15]   The issue in the NSW Proceedings is whether the insurance policy exclusions for defective workmanship were wrongly applied. That issue necessarily involves careful examination of the evidence disclosed, served and exchanged which touches on the design and construction of the buildings, and ultimately the causes of the defects which prompted the judgment liabilities against BMX. The best evidence of the true nature and causes of the building defects will be grounded in the documents that are the subject of this application.

[16]   I am satisfied that there is a strong connection and justification for using this material in the NSW Proceedings.

Other    avenues    for   obtaining    the    documents    are    unduly   onerous    and impracticable

[17]   The applicants responsibly point to two alternate potential avenues for obtaining documents. One is access to Court documents via the Senior Courts (Access to Court Documents) Rules 2017. In fact, an application was made by the applicants under those rules in June 2023, but it has not yet been determined.

[18]   While that is another avenue for obtaining the documents required, it is a blunt and unreliable means of doing so. It would not address the scope of documents sought in this application because there will be a multitude of documents that were not filed in court.

[19]   The other potential avenue identified for obtaining documents is via non-party discovery orders from the New South Wales Supreme Court on parties in New Zealand. This would give rise to a range of complications. It would put the non-parties to considerable inconvenience. It would be costly and involve unnecessary delay.

[20]   I accept that these other potential means of gathering documents do not stand in the way of permission being given.

Permission is unlikely to cause any injustice to the parties to the NZ Proceedings

[21]   I referred earlier to the Harman undertaking at common law which continues to govern the collateral use of documents in New South Wales. Any documents released from the undertaking in this Court will be released only for the purpose of use in the NSW Proceedings. They will in turn be subject to the implied undertaking in the New South Wales jurisdiction.

[22]   Putting to one side the New South Wales equivalent constraint on use of documents, there is no realistic concern that the documents could be used, for example, to pursue any parties involved in the construction of the buildings. Any new proceeding is almost inevitably barred under the Limitation Act 2010 and/or the

Limitation Act 1950. As well, liability has already been determined or settled for parties to the NZ Proceedings. The applicants have communicated their views to this effect to the parties served with copies of the application.

[23]   Another potential prejudice is that some of the documents are subject to confidentiality orders in this Court particularly relating to settlement terms reached. This potential prejudice has been dealt with by way of confidentiality undertakings by the applicants; and by their undertakings to pursue confidentiality of the relevant material in the New South Wales Supreme Court if (as seems unlikely) these confidential documents are sought to be relied upon in the NSW proceedings.

Permission is consistent with fair trial rights

[24]   I accept Mr Holloway’s submission that it is appropriate, if not essential, for the applicants to have access and ability to use the documents in the NSW Proceedings from the point of view of their right to defend the NSW Proceedings effectively.

Conclusion

[25]   I am satisfied that I should make the orders sought for permission to use documents from the NZ Proceedings in the NSW Proceedings.

[26]   I make orders as sought in paragraphs 1.2 and 1.3 of the application as set out below:

(a)That the parties (including their legal advisers and experts) to o the following civil proceedings in the Supreme Court of New South Wales, Australia:

(i)Case Number 2021/00224418: Dariusz Koper v Zurich Insurance Company Ltd and Ors; and

(ii)Case Number 2023/00093220: Brookfield Multiplex Constructions (NZ) Ltd (in liquidation) v Zurich Insurance Public Limited Company and Ors;

(together the NSW Proceedings)

be granted permission to make available to each other and use documents (and be released from rr 8.30(4) and 9.14(e) of the High Court Rules and any implied undertaking concerning use) relating to the proceedings

CIV-2012-404-6290 and CIV 2012-404-5664 (where “documents” as defined means (a) documents made available for inspection in those proceedings; (b) documents served by any party on other parties to those proceedings (including briefs of evidence and the exhibits to briefs of evidence); (c) documents filed by any party to those proceedings) in the NSW Proceedings.

(b)That the parties (including their legal advisers and experts) to the NSW Proceedings be granted permission to access, use and make available to each other and the NSW Supreme Court any documents that are the subject of the following confidentiality orders:

(i)The minute of Thomas J dated 15 December 2016 in proceeding CIV-2012-404-6290; and

(ii)The minute of Woolford J dated 25 September 2019 in proceeding CIV-2012-404-5664.

Anderson J