BARNES V QBE INSURANCE (INTERNATIONAL) LIMITED HC AK CIV 2010-404-5651

BARNES V QBE INSURANCE (INTERNATIONAL) LIMITED HC AK CIV 2010-404-5651 4 April 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2010-404-5651IN THE MATTER OF the Weathertight Homes ResolutionServices Act 2006BETWEEN DESMOND NOEL BARNESAppellantAND QBE INSURANCE (INTERNATIONAL)LIMITEDRespondentHearing: 24 March 2011Counsel: MJW Lenihan for appellantSRJ Hamilton for respondentJudgment: 4 April 2011 at 4:03 PMJUDGMENT OF FAIRE JSolicitors: King Gerrard Partners, PO Box 327, PukekoheKennedys, PO Box 3158, AucklandIntroduction[1] The appellant appeals pursuant to s 93 of the Weathertight Homes Resolution Services Act 2006 from the decision of the Weathertight Homes Tribunal in Osborne v Auckland City Council to dismiss an application by the appellant, Mr Barnes, to join the respondent, QBE Insurance (International) Ltd, as a respondent in adjudication proceedings commenced against him.1 The decision is referred to as Procedural Order 4.[2] The Tribunal had, in a previous decision, referred to as Procedural Order 2, ordered that the application for joinder be made on an on notice basis. There is no appeal against that decision.Background[3] In the adjudication proceedings to which the application for joinder and this appeal relate, the claimants, Mr and Mrs Osborne, claim against, amongst others, the appellant, in respect of their property at 1 Maui Grove, Remuera, Auckland. Theappellant was served with the claimants' claim in April 2010. The Tribunal recorded,however, that claim as having been filed on 14 February 2007.2 The claim relates to a report he completed in respect of the property, dated 13 December 1998, and his subsequent attendances, the last of which appears to have been in February 2000. It is alleged that the appellant was negligent in:(a) Inspecting the claimants' property;(b) Recommending a scope of remedial works for the property; and(c) Inspecting and/or supervising remedial works during the course of those works.1 Osborne v Auckland City Council NZWHT TRI-2010-100-24, 3 August 2010.2 At [32].[4] The appellant's company, Complete Building Assessments Ltd, held aprofessional indemnity insurance policy from the respondent. The period of insurance was from 15 January 2002 to 15 January 2003, with a retroactive date of 15 January 1998. The appellant claims he is entitled to an indemnity from therespondent for any legal liability arising from the claimants' claim for compensation pursuant to this policy.[5] The respondent accepts the appellant falls within the definition of an―insured under the policy. The policy indemnifies the appellant for legal liabilityarising from any claim for compensation, and attendant costs and expenses, in respect of any civil liability arising out of the business conducted by the insured (specified as property inspection consultancy) being a valid claim in terms of the policy.[6] The policy defines a valid claim as:any Claim that is:(a) first made against the Insured during the Period of Insurance; and(b) notified in writing to QBE by the Insured during the Period of Insurance; and(c) arising out of any act, error, omission or conduct which occurred subsequent to the Retroactive Date specified in the Policy Schedulein connection with the Insured's Professional Business Practice.Claims that do not accord with all of (a), (b) and (c) of this definition shall not be covered under this Policy.[7] The policy defines a claim as:(a) legal proceedings instituted and served upon the Insured; or(b) any threat or intimation that legal proceedings will be issued against the Insured.[8] Section 5 of the policy sets out certain claims conditions. Clauses 5.1 and 5.2 provide:5.1 REPORTING AND NOTICEThe Insured shall give to QBE immediate notice in writing of:(a) any Claim made against them; or(b) the receipt of notice from or information as to any intention by any party to claim against them;irrespective of the quantum and Provided always that such notice in writing is given to QBE during the Period of Insurance or within twenty eight (28) days after its expiry. Provided always that such Claim was made against the Insured during the Period of Insurance.5.2 NOTIFICATION OF CIRCUMSTANCESThe Insured may notify QBE of any circumstances which may (inthe opinion of a reasonable practitioner of the Insured's business)give rise to a claim and such circumstances will be treated by QBE as a claim.[9] No claim was made against the appellant during the period of insurance. The appellant received no notice from or information as to any intention by any party to claim against him during the period of insurance. Clause 5.1 does not apply.[10] Rather the appellant relies on cl 5.2. By letter of 15 January 2003 he purported to notify the respondent pursuant to that clause of ―circumstances which may give rise to a claim. 15 January 2003 was the last day of the period ofinsurance. The appellant wrote:Between 15th January 1998 and 15th January 2003, Complete Building Assessments Limited (―CBA) completed various building assessmentreports in respect of the buildings listed in the enclosed schedule. Each of the buildings listed in the schedule employs a monolithic cladding or similar construction methodology. Buildings constructed where the monolithic cladding is attached directly to the structural framing of the building prior to the date where cavity type construction is now required for this type ofcladding i.e. ―Compressed fibre cement sheet products, expanded EPScladding and solid stucco plaster claddings.As a result of publicity since January 2002 concerning widespread ―leaky building problems appearing in buildings of similar construction to those inthe schedule giving rise to claims against other building certification firms. CBA now believes that its reports relating to these buildings may give rise to possible claims against CBA in the future.Accordingly, CBA now gives notice pursuant to section 5.2 of the above policy that circumstances exist in relation to the properties listed in the schedule, which may give rise to claims against CBA.For the avoidance of doubt, CBA confirms that, to date it has not been served with any legal proceeding in respect of any of the buildings listed in the schedule nor has it received any notice that such a proceeding has been threatened or is pending.[11] The enclosed schedule listed 54 properties, including the claimants'.[12] By facsimile of 22 January 2003 the respondent purported to decline toaccept the appellant's letter as notification pursuant to cl 5.2 on the basis that no specific claims appeared to have made against him or his company.[13] It is the appellant's position that his letter was a valid notification in terms ofcl 5.2. He applied accordingly to the Tribunal for an order joining the respondent as a respondent in the adjudication proceedings commenced against him pursuant to s 111 of the Act. The Tribunal, as noted earlier, dismissed his application and it is against that decision that he now appeals.The Tribunal's decision[14] The Tribunal considered, in summary:(a) The applicant for joinder must show an arguable factual foundation that the insurer is liable under the policy before an order for joinder is made. This required a consideration of cl 5.2 of the policy.(b) The test as to whether the notification was sufficient to fall within the extended definition of a claim under cl 5.2 was an objective one. Thatmeans that a reasonable person in the insured's position wouldconsider that there was a reasonable possibility of a claim. That can be contrasted with the position that a claim is considered remote or unlikely.(c) There must be sufficient compelling evidence to establish that the claim against the party to be joined, here the insurer, will succeed.(d) The purported notification was filed with the respondent within the terms of the insurance cover.(e) There was a causal connection between the purported notification and the eventual claim.(f) Having regard to J Rothschild Assurance Plc v Collyear3 a blanket notification could be a valid claim but the facts of that case were distinguishable. That was because wide publicity of the leaky homes syndrome in 2003 was quite different from the circumstance relied upon in J Rothschild Assurance Plc v Collyear being the regulatory framework and the scrutiny undertaken by independent professionals at the time notice was given.(g) The appellant's letter, by simply listing his business activities butgiving no real or definite signal of a possible claim, did not amount to the required circumstances that would bring his case within the operation of cl 5.2. In particular:4The purported notification was no more than a list of mere business activities undertaken by the insured with monolithic clad buildings and the highlighting of the then emerging concern around the leaky building problem. There was no assertion of a claim against the insured or sufficientinformation for a reasonable practitioner in the insured'sbusiness to form an opinion that that particular circumstance on its own may given rise to a claim.The correct approach to an application for joinder pursuant to s 111[15] In Procedural Order 2 the Tribunal deemed the application for joinder to be an application for leave pursuant to s 9(4) of the Law Reform Act 1936. The application is not such an application. This position was acknowledged by the Tribunal in Procedural Order 4.[16] The starting point in determining the correct approach to an application for joinder pursuant to s 111 of the Act is, of course, the section itself. Section 111 provides:3 J Rothschild Assurance Plc v Collyear [1999] 1 Lloyds Rep IR 6 (QB).4 At [49].111 Joinder of parties(1) The tribunal may order that a person be joined as a respondent in adjudication proceedings if it considers that—(a) the person ought to be bound by, or have the benefit of, an order of the tribunal; or(b) the person's interests are affected by the proceedings; or(c) for any other reason it is desirable that the person should be joined as a respondent.(2) The tribunal may make an order under subsection (1) on the application of any party or on its own initiative.(3) If the tribunal makes an order under subsection (1),—(a) it must also order the claimant to serve a notice that complies with section 62(2)(a), (3), and (4) on—(i) the person joined as a respondent; and(ii) the other parties to the adjudication; and(iii) the Department; and(b) section 66 then applies to the person joined as a respondent.(4) Subsection (3)(a) does not require a claimant to give a copy of the assessor's report to any person other than the newly joined respondent, or to pay a further fee under section 62(2)(b).[17] It is helpful to consider the provision made under the rules of this Court for the joinder of third parties in analogous circumstances. Rule 4.4(1)(a) of the High Court Rules provides for the issue of a third party notice if a defendant claims it is entitled to a contribution or an indemnity from a person who is not a party to the proceedings. In the present case the appellant claims he is entitled to an indemnity from the respondent and applies to have it joined as a respondent accordingly.[18] Third party notices issued within 10 working days after the expiry of the timefor filing the defendant's statement of defence are, subject to two exceptions whichare of no concern, issued as of right.5 Of relevance in the present case is the courts'approach to applications for leave to issue a third party notice out of time6 and to5 High Court Rules, r 4.4(2)(a). See also the exceptions in r 4.4(3).6 High Court Rules, r 4.4(2)(b).applications by a third party to have a third party notice set aside.7 This approach, I consider, assists a Tribunal in determining an application for joinder pursuant to s 111 of the Act.[19] Both applications are approached by reference to the principles applying to applications to strike out pleadings pursuant to r 15.1 of the High Court Rules.8 The principles applying to such applications were succinctly stated by the Court of Appeal in Attorney-General v Prince and Gardner in the following terms:9A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true. That is so even although they are not or may not be admitted. It is well settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed (R Lucas & Son (Nelson Mail) Ltd v O'Brien [1978] 2 NZLR 289 at pp 294 – 295; Takaro Properties Ltd (in receivership) v Rowling [1978] 2 NZLR 314 at pp 316 – 317); the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material (Gartside v Sheffield, Young & Ellis [1983] NZLR 37 at p 45; Electricity Corporation Ltd v Geotherm Energy Ltd [1992] 2 NZLR 641); but the fact that applications to strike out raise difficult questions of law, and require extensive argument does not exclude jurisdiction (Gartside v Sheffield, Young & Ellis).[20] I also refer to the decision of this Court in Auckland City Council v Weathertight Homes Resolution Service.10 That case was decided under the Weathertight Homes Resolution Services Act 2002. In that case the Court considered an application to review the decision of an adjudicator to dismiss an application by the Auckland City Council to add five other parties to the claim against it, including the developer and the designer of the relevant property. The relevant provision of the 2002 Act was s 33. It is in all material respects identical to s 111 of the 2006 Act.[21] Harrison J first identified the jurisdictional threshold whereby an applicant must prove its application for joinder meets one or more of the three statutory7 High Court Rules, r 4.16.8 See Just Sounds Ltd v Watt HC Auckland CP506/97, 12 November 1998 at 3 and EquiticorpIndustries Group Ltd (in statutory management) v Hawkins (1992) 5 PRNZ 484 (HC) at 484.9 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA) at 267.10 Auckland City Council v Weathertight Homes Resolution Service HC Auckland CIV-2004-404-4407, 28 September 2004.criteria in s 33(1) (analogous to s 111(1)).11 That is, that the proposed respondentought to be bound by or have the benefit of the adjudicator's order, or the person'sinterests are affected by the adjudication, or the person's interests are affected by the adjudication, or if for any other reason it is desirable that person be joined as a respondent. It is only once this jurisdictional threshold is met that that discretionary factors become relevant.12[22] In that case the applicant applied for joinder on the premise that multiple participation in the design and construction of a building may lead to joint and several liability in tort with consequential rights of cross-claim for indemnity and contribution amongst respondents.13 Harrison J, however, found this legal proposition of little use without an arguable factual foundation. He observed:14A proposition that one or more of the other parties involved in the project may have owed and breached duties to the Dennerlys was insufficient to justify joinder. Council was bound to point the adjudicator to tenable evidence both of breach by the architects and of a causative link to theestimated costs of remedial work. A cursory evaluation of the assessor'sreport indicates that less than 50% of the remedial expense might possibly be attributable to architectural negligence. Council's failure to satisfy any ofthe statutory criteria through an analytical and reasoned argument before the adjudicator was fatal.[23] Harrison J did not regard the statutory criteria as met and, satisfied the adjudicator was legally entitled (and indeed obliged) to dismiss the application for joinder on this basis, dismissed the application for review.15[24] I approach the present application as follows. There is a jurisdictional threshold the appellant must meet. He must establish that the respondent ought to bebound by or have the benefit of the adjudicator's order, or that its interests are affected by the adjudication, or that for any other reason it is desirable it be joined as a respondent. To do so in the present case requires him to establish a tenable cause11 At [26].12 At [27]. As to the discretion see [29].13 At [27].14 At [28].15 At [30] and [32].of action; that is, establish that the respondent is arguably liable to indemnify him under the policy.[25] I find the appellant does not meet this threshold and it is therefore unnecessary to consider discretionary factors.[26] The immediate question may be posed as follows. Has the appellant established that the respondent is arguably liable to indemnify him under the policy?Analysis[27] The appellant's policy indemnifies him, broadly speaking, for claims madeand notified during the period of insurance and subsequent claims made arising out of circumstances notified during the period of insurance. The present case concerns the latter.[28] The relevant clause is cl 5.2. I reproduce cl 5.2 in [8] above. By letter of 15 January 2003 the appellant purported to notify the respondent pursuant to thatclause of ―circumstances which may give rise to a claim.[29] I turn then to the notified circumstances and their materiality. The test of materiality is objective. For present purposes the issue may be stated thus: were the notified circumstances such that a reasonable property inspection consultant could arguably form the opinion that they may give rise to a claim? If not, the letter of 15 January 2003 was unarguably invalid as a purported notice under cl 5.2 of thepolicy and the respondent will not be liable thereunder. The appellant's applicationfor joinder will not have met the jurisdictional threshold and his appeal against it having been dismissed by the Tribunal will fail.[30] I begin by discussing the commentary and authorities to which I have been referred by counsel."Circumstances"[31] The authors of Kelly and Ball Principles of Insurance Law consider thequestion of what constitutes ―circumstances for the purpose of a policy allowing for(as here) or requiring notification to the insurer.16 They state:There is authority for the proposition that a letter or other intimation from athird party that he or she is concerned about the insured's conduct does not itself constitute the circumstances. It is the underlying reason for the letter or other intimation – the alleged conduct of the insured that gave rise to the concern – that is to be notified. A subsequent claim is only covered if it arises from the circumstances notified. That claim cannot be regarded asarising from an indication of concern about the insured's conduct, but onlyfrom the alleged conduct itself. However, statements to that effect need to be treated with caution. Where the insured becomes aware independently that his or her conduct may have been negligent or may for some other reason give rise to a claim, the underlying facts will be critical in identifying the possible claim.[32] The authors continue to observe that causal connection is the governing consideration in determining whether notified circumstances cover a subsequent claim: does the claim made arise out of notified circumstances? The immediate focus is slightly different. Here the materiality of the notified circumstances themselves are in issue, as going to the validity of the purported notice. The enquiry is forward- rather than backward-looking: are the notified circumstances arguably―circumstances which may give rise to a claim. To mirror the language in theabove, can a possible claim be identified from the notified facts?[33] I turn to consider what are circumstances which may give rise to a claim. Some assistance may be gained from cases in which the courts have interpreted policy terms requiring (rather than allowing) notification of circumstances that may give rise to a claim, or similar. Counsel have referred to several cases. Both counsel have referred to the decision of this Court in Attorney-General v Aon New Zealand Ltd.17 In that case Mallon J cited the following from the decision of the Federal16 David St L Kelly and Michael Ball Kelly and Ball Principles of Insurance Law (looseleaf ed,Butterworths) at [14.0090].17 Attorney-General v Aon New Zealand Ltd HC Wellington CIV-2005-485-1814, 10 April 2008.Court of Australia in FAI General Insurance Co Ltd v McSweeney.18 The FederalCourt had said circumstances ―may give rise to a claim if they:19 would, as at the time of the proposing of the insurance, immediately suggest to a reasonable person in the proponent insured's position who reflected upon those known circumstances, that the bringing of a claimagainst the insured in respect of them was a ―definite risk' or a ―real possibility or ―on the cards. Perhaps the notion of the ―springing to mindof the making of a claim also appropriately expresses the shade of meaning intended.[34] In Attorney-General v Aon New Zealand Ltd the words ―circumstances which could give rise to a claim were in issue. Mallon J, drawing support from the above statement in FAI General Insurance Co Ltd v McSweeney, said:20[T]he test is an objective one, requiring notice when a reasonable person inthe insured's position would consider that there was a reasonable possibilityof a claim. Notice is not required if the possibility of a claim is remote or unlikely. However, providing there is a real or definite risk of a claim, notice is required even if the claim is not probable.[35] Both counsel accept the above statement correctly states the test as it appliesto the phrase ―circumstances which may give rise to a claim in the present case.I return to this point at [53].[36] Counsel for the respondent also referred to the decision of the Supreme Court of Queensland in Holts Corrosion Control Pty Ltd v CML Fire & General Insurance Co Ltd.21 Macrossan J considered the phrase ―occurrence in respect of which there may arise liability under the Policy. He said:22I am disposed to think that that the event which calls for notice in the presentcase, even when it is regarded as falling under the word ―occurrence, islikely to involve at least the assertion of a claim against the assured. I think that the occurrence must involve more than mere activity about to be undertaken by the insured which might thereafter result in some demand being made upon him in connection with damage which may be caused. I think the concept involves even more than the occurrence of damage to18 FAI General Insurance Co Ltd v McSweeney (1999) 10 ANZ Insurance Cases ¶61-443 (FCA).19 At 75,033-75,034.20 At [66].21 Holts Corrosion Control Pty Ltd v CML Fire & General Insurance Co Ltd (1984) 3 ANZInsurance Cases ¶60-559 (QSC).22 At 78,372.property which might thereafter result in a demand being made upon the insured.(Emphasis added.)[37] It is the emphasised of the above on which counsel for the respondent relies. But clearly it is of limited assistance in the present case. Clause 5.2 envisages the notification of circumstances falling short of those involving the assertion of a claim against the insured. This is made clear by reading cl 5.2 with cl 5.1 which makes provision for (indeed requires as a precondition of cover) notification of intended claims.[38] Counsel for the respondent also referred to the decision of the Court of Appeal in Sinclair Horder O'Malley & Co v National Insurance Co of New ZealandLtd.23 The Court in that case considered the phrase ―likely to give rise to a claim against them. McKay J, agreeing with Tipping J, considered the word ―likely in that context, having regard to the purpose of the condition, ―means such as raises areal risk of a claim being made against them, or such that a claim could well bemade.24[39] This is of similarly little assistance. The Court in that case consideredcircumstances ―likely to give rise to a claim, not circumstances which ―may giverise to a claim. It is an important distinction. The test of materiality in the first is stronger than that in the second, as adverted to in the decision of the High Court of England and Wales in J Rothschild Assurance Plc v Collyear.25[40] I turn finally to that latter decision and discuss it in some depth. The plaintiff, a life assurance company, sought to be indemnified by its professional indemnity insurance underwriters for losses sustained by reason of the need to compensate investors for mis-selling of pensions to them. Its policy required it to give notice of circumstances of which it became aware which might give rise to a claim against it, whereupon any claim to which that circumstance gave rise, even23 Sinclair Horder O'Malley & Co v National Insurance Co of New Zealand Ltd [1995] 2 NZLR257 (CA).24 At 269 per McKay J.25 At 22. See also Kelly and Ball Principles of Insurance Law at [14.0020] n 20.though made after the expiry of the period of insurance, would be deemed to have been made within it.[41] The relevant clause was referred to as General Condition 2. It provided:262. THE ASSUREDS shall as a CONDITION PRECEDENT to their right to be indemnified under this Policy give to the Underwriters notice as soon as possible during the period of this Policy as set forth in the Schedule: -(a) of any circumstances of which THE ASSUREDS shall become aware which may give rise to a claim or loss against them or any of them;(b) of the receipt of any notice from any person whether written or oral of an intention to make a claim against any of them;Such notice having been given to Underwriters THE ASSUREDS shall give to the Underwriters as soon as possible full details in writing of the circumstances which may give rise to a claim or loss against them or any of them. Any claim or loss to which that circumstance has given rise which is subsequently made after the expiration of the period specified in the First Schedule shall be deemed for the purpose of this Policy to have been made during the subsistence hereof.[42] Pension mis-selling in England came to light in late 1993. KPMG Peat Marwick reported to the Securities and Investment Board on the problem in December 1993. Lautro (the Life Assurance and Unit Trust Regulatory Organisation), of which the plaintiff was a member for the purpose of regulation under the relevant legislation, wrote to its members saying the KPMG reportdisclosed a ―problem which needs to be tackled. The letter referred to a proposedreview by the Securities and Investment Board envisaging each insurer identifying instances of mis-selling and paying compensation to investors where they had suffered loss.[43] On 27 January 1994 the plaintiff's solicitors purported to notify the underwriters, pursuant to General Condition 2 of the plaintiff's policy, of circumstances which ―may give rise to a claim against them. It referred to some 2,500 pension transfer policies it had effected. It attached the KPMG report and the26 At 6.Lautro letter. The plaintiff's solicitors' letter stated ―[t]he circumstances set outabove may, in respect of each policy identified and to be identified, give rise to aclaim by each client against any of the Assured.[44] By mid-1998 the plaintiff had compensated or offered compensation to investors in some 400 cases. It sought indemnification from its professional indemnity insurance underwriters as above. In issue was whether by its solicitors'letter of 27 January 1994 valid notice had been given of the circumstances ultimately giving rise to the claims.[45] Counsel for the defendant had submitted:27The words ―which may give rise to a claim laid down an objective test,which required that there must be a real, or material, risk, something more than a de minimus risk, something more than a negligible, fanciful or speculative risk, that the circumstance notified may lead to a claim.[46] Rix J was not persuaded:28In my judgment, however, these submissions were not persuasive. While it istrue that GC2 gives to an assured a significant extension of cover, a ‗claims made' policy could hardly work on any other basis. Otherwise, by the timethat a claim came to be made, it is quite likely that it would have become impossible to obtain cover for it, either at all or on any but prohibitive terms. Therefore as or more significant than the extension of cover itself are the factors, first, that the test of materiality for notice is a weak one — ‗which may give rise to a claim', not ‗which is likely to give rise to a claim'; andsecondly, that the price of the extension of cover is notification of such circumstances, which is a condition precedent to a right to be indemnified. That latter factor is important, for, together with the additional requirementthat the assured shall give underwriters ‗as soon as possible full details in writing of the circumstances which may give rise to a claim', it enablesunderwriters to adopt or require such immediate steps as they think appropriate to minimise or avert any potential loss. I do not think, therefore, that there is any justification for demanding too much of the test that thenotified circumstance ‗may' give rise to a claim.[47] He continued to consider whether the plaintiff was justified in saying that there were circumstances which might give rise to a claim in the identification of the problems which KPMG had reported on and which the regulator had provisionally27 At 22.28 At 22.determined would have to lead to a review and provision of financial remedies. He observed:29In this connection I believe that it is legitimate to test a view of what the future may bring, where that view has been contemporaneously and prophetically expressed, against what happened in due course. In this case, the future showed that JRA were more than justified in saying that there were circumstances which might give rise to a claim against them in the identification of the problems which KPMG had reported on and which SIB had provisionally determined would have to lead to a review of past business and the provision of financial remedies. Where a prediction based not only on objective evidence which has itself been under scrutiny by independent professionals, but also on the concern of regulatory authorities, turns out to have been entirely justified by events, it seems to me to be unrealistic to say that that prediction was invalid and unjustified merely because there was much other evidence which was not yet to hand, even though that evidence was of particular relevance to an important aspect of the prediction. This must be a fortiori the case where the prediction has to be not of what will be but only of what might be.[48] Rix J held the letter was a valid notification within the terms of General Condition 2.The submissions of counsel[49] Counsel for the appellant relies on J Rothschild Assurance Plc v Collyear. He emphasises the wording of the clauses are similar (in that both talk ofcircumstances which ―may give rise to a claim) and the Judge's finding that the testof materiality for notice is a weak one. The circumstances, as here, were industry- wide rather than specific to the insured in each case. The notification, as here, was made on the eve of the expiry of the policy and was of numerous possible instances in respect of each of which a claim was said to be possible, despite no claim or complaint having actually been made.[50] Counsel also emphasises that in that case, as here, the letter was prescient. The appellant referred to publicity concerning ―leaky building problems inbuildings of similar construction to those he listed. He expressed a belief that hiscompany's reports relating to those buildings may give rise to possible claims29 At 23.against it in the future. The future showed he was more than justified in doing so. Counsel submits, in short, that J Rothschild Assurance Plc v Collyear is directly on point.[51] Counsel for the respondent submits J Rothschild Assurance Plc v Collyear is distinguishable. He notes the plaintiff in that case attached the KPMG report and the Lautro letter. All the appellant did in the present case was list all of the properties in respect of which his company prepared building assessment reports. He had not received any correspondence to suggest there was any reason to believe work done on these properties might one day lead to a claim.[52] Counsel submits, more broadly, the letter did not notify circumstances on the basis of which a reasonable property inspection consultant could form the opinion they may give rise to a claim, in that there was a real risk of the same. Heemphasises there was no claim, actual or threatened. The ―leaky home syndromeitself was not a circumstance which might give rise to a claim. The insurer, counsel submits, is entitled to something more specific than reference to generic failings – it must be able to identify the basis of a specific claim, not a large group of mere possible claims that might one day eventuate.Decision[53] The first question, to adopt the words of Rix J in J Rothschild Assurance Plc v Collyear, is as to the proper ―test of materiality. Both counsel agreed what was required was a real or definite risk of a claim, even if the claim is not probable. I referred to this in [35]. I note this would appear to set a higher test than that inJ Rothschild Assurance Plc v Collyear. I am, however, content to proceed on the basis agreed by counsel. I make no further comment on which is to be preferred other than to indicate that it does not affect my conclusion in this case.[54] The notified circumstances in the present case are simply these: that publicity had surrounded widespread leaky building problems appearing in buildings of similar construction to those in respect of which the appellant had completed reports.The appellant continued to express his belief his company's reports relating to thosebuildings may give rise to possible claims against it in the future.[55] Could a reasonable property inspection consultant arguably have formed the same opinion on the circumstances as notified? In my view it is unnecessary to call expert evidence in answering this question in the negative.[56] The notified circumstances disclosed no objective justification for the opinion expressed. This is in marked contrast to the notified circumstances in J Rothschild Assurance Plc v Collyear. In that case the prediction was based on objective evidence subject to scrutiny by independent professionals, and the concern ofregulatory authorities. The Judge's reasoning, and in particular his reliance on these aspects, makes clear, in my view, that he would not have reached the sameconclusion had the plaintiff relied in its solicitors' letter merely on the publicity thensurrounding the mis-selling of pensions.[57] There is, therefore, no objective justification for the appellant's purportednotification by his letter of 15 January 2003. There were simply no notified circumstances by reference to which it could be arguably opined by a reasonable property inspection consultant that a claim may arise. A vague reference to publicity surrounding leaky buildings of similar construction to those in respect of which the appellant had completed reports does not fall within that category.[58] I accept the appellant's opinion was prescient in the sense that a claim was ultimately made in respect of one of the properties listed. But I note that while the letter is dated 15 January 2003, a claim was only filed in respect of the building in 2007. The appellant was not served with a claim until 2010.[59] I find, in summary, the circumstances disclosed in the appellant's letter of15 January 2003 disclosed no objective justification for the opinion expressed. It follows that I find his letter of 15 January 2003 was not a valid notification in terms of cl 5.2 of the policy. On this basis, his claim against the respondent is untenable. He has not established the respondent is arguably liable to indemnify him under the policy.[60] The appellant has not met the jurisdictional threshold of establishing his application for joinder and met one or more of the statutory criteria in s 111. His application for joinder was properly dismissed.[61] The appellant's appeal is, accordingly, dismissed.Costs[62] Both counsel agreed the successful party on the appeal should be awardedcosts on a 2B basis. I order accordingly that the appellant pay the respondent's costson a 2B basis together with disbursements as fixed by the Registrar._____________________JA Faire J