FIBRETECH HOLDINGS LTD v VERO INSURANCE NEW ZEALAND LTD [2021] NZHC 3104

FIBRETECH HOLDINGS LTD v VERO INSURANCE NEW ZEALAND LTD [2021] NZHC 3104 [18November 2021]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2021-409-000136[2021] NZHC 3104BETWEEN FIBRETECH HOLDINGS LIMITEDAppellantAND VERO INSURANCE NEW ZEALANDLIMITEDRespondentHearing: 27 October 2021Appearances: J E Bayley and F H Scrase for the AppellantP J L Hunt and L O Fernandez for the RespondentC M Keall, in-house counsel for the RespondentJudgment: 18 November 2021JUDGMENT OF NATION J[1] The appellant (FibreTech) owned an industrial building in Christchurch whichwas damaged in the 2010/2011 Canterbury earthquake sequence (2010/2011earthquakes). It was insured with the respondent (Vero).[2] FibreTech made a claim under the policy after the 4 September 2010earthquake.[3] FibreTech and Vero entered into a settlement on 11 May 2018 for an amountwhich included recognition of FibreTech's building having been damaged to the extentof it being a total loss through the damage suffered in the 2010/2011 earthquakes.[4] The settlement agreement recorded a clause:The Settlement Sum is paid by Vero and accepted by the Insured in full andfinal settlement and discharge of the Claim and any claims, rights, demandsand set-offs against Vero arising directly or indirectly out of, or in connectionwith the Earthquake Activity and/or the Earthquake Losses and/or the MaterialDamage Cover and/or the Policy whether such claims arise under statute,common law, or equity; [5] FibreTech issued proceedings in the District Court claiming $93,856.93 for thepremiums paid under its insurance policy for the years 2013 to 2017 on the basisFibreTech received no benefit from its policy over those years.[6] In a judgment of 18 March 2020, Judge Kellar in the District Court refused tostrike out FibreTech's claim but issued summary judgment for Vero on the basis thesettlement agreement provided a complete legal defence to the claim.1[7] FibreTech appeals the summary judgment in favour of Vero. Vero cross-appeals the decision refusing the strike out.Principles on Appeal[8] The appropriate appeal route in this matter is the general right of appealconferred by s 124 District Court Act 2016.2 FibreTech is therefore entitled tojudgment in accordance with the opinion of this Court by way of re-hearing.3[9] The principles of summary judgment were discussed in the District Courtjudgment, and are set out in r 12.2 of the District Court Rules 2014, as shown below:412.2 Judgment when there is no defence or when no cause of action cansucceed(1) The court may give judgment against a defendant if the plaintiffsatisfies the court that the defendant has no defence to a cause of actionin the statement of claim or to a particular part of any such cause ofaction.(2) The court may give judgment against a plaintiff if the defendantsatisfies the court that none of the causes of action in the plaintiff'sstatement of claim can succeed.1 Fibretech Holdings Ltd v Vero Insurance New Zealand Ltd [2021] NZDC 4829.2 Auckland Council v Hill [2018] NZHC 3315.3 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].4 See High Court Rules 2016, r 12.2.[10] Vero filed its cross-appeal under r 15.1 of the District Court Rules 2014. Therelevant principles pertaining to strike out are set out at [60] below.The District Court decision[11] The Judge referred to various judicial statements as to the approach to be takento the interpretation of contracts, and particularly release clauses, recording asettlement between the parties.5[12] The Judge noted that the settlement here was primarily targeted towardssettling FibreTech's claims in respect of earthquake damage under the policy. Theclaim for refund of premiums related to a different dispute. In contrast to the situationsdealt with by the Court of Appeal in Prattley6 and Yarrow,7 he held it was "not equallyclear that the claim relates to the subject matter of the settlement agreement".8 On thatbasis, he found FibreTech's claim was reasonably arguable so declined to strike outthe claim.[13] The District Court Judge accepted that, at the time of settlement, FibreTechwas unaware of a claim it could make as to recovery of the premiums paid but heldthat they could have been aware of such a claim. He held the settlement agreementwas primarily directed towards earthquake damage but was also equally directedtowards achieving finality in relation to potential claims in connection with the policy.He held the claim in respect of the premiums was clearly connected to the insurancepolicy. He found the background supported the notion that the parties wished toachieve finality in respect of the policy and claims that might arise in connection withit. Overall, he considered that Vero had a complete legal answer to FibreTech's claimin the form of the release clause, the language of the clause and the background inwhich the bargain was struck. He was satisfied that none of the causes of action in5 Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432; TagPacific Ltd v The Habitat Group Ltd (1999) 19 NZTC 15,069 (CA); Bank of Credit and CommerceInternational SA (in liq) v Ali [2001] UKHL 8, [2002] 1 AC 251 [Ali]; Prattley Enterprises Ltd vVero Insurance New Zealand Ltd [2016] NZCA 67, [2016] 2 NZLR 750; Yarrow v Yarrow HCNew Plymouth CIV-2008-443-72, 14 August 2009; Finnigan v Auckland Council [2014] NZHC1390.6 Prattley Enterprises Ltd, above n 5.7 Yarrow v Yarrow, above n 5.8 Fibretech Holdings Ltd, above n 1.FibreTech's statement of claim could succeed. On that basis, he entered summaryjudgment in favour of Vero.Submissions for FibreTech[14] FibreTech contended that the settlement agreement released Vero from claimsonly in respect of the earthquake damage which was the subject of the claim relatingto damages from the 2010/2011 earthquakes and any other claim under the policy.FibreTech argued that its claim in the District Court was for monies received forpremiums paid under the separate contracts of insurance entered into after 2011, whichwere void due to Vero's failure to provide any consideration or benefit in return for thepremiums. They submitted this was because the building was a total loss as a resultof the damages caused by the 2010/2011 earthquakes. FibreTech could not makesuccessive claims in respect of that loss so there was no value to them in the insurancepolicy for which they had paid the premiums they were seeking to recover. FibreTechsubmitted the claim for return of premiums was thus outside the scope of the releaseclause in the settlement agreement.Submissions for Vero[15] Vero submitted that the terms of the settlement agreement were drafted in termsthat released Vero from any liability arising out of the damage from the 2010/2011earthquakes to FibreTech's building. Vero also submitted that, until the settlementagreement was entered into, there was potential for FibreTech to be entitled toindemnity or a further payment from Vero for damage to its building that might havebeen suffered in the years for which they were insured so that they did obtain a benefitin return for the premiums they paid.[16] Vero argued the claim FibreTech was making was connected to the earthquakedamage which had been the subject of the original claim because it was only as a resultof the loss suffered through that damage that FibreTech claimed they received nobenefit from the policy for which they had paid premiums over subsequent years.They said, in any event, FibreTech had agreed with the settlement not to make anyclaim arising directly or indirectly out of, or in connection with, the policy. Verocontended that, with the terms of settlement, Vero had an unarguable legal defence tothe claim so there was no error in the Judge entering summary judgment for them.They also submitted that, for that reason and because the bringing of a claim in breachof a settlement is an abuse of the court process, the claim could and should have beenstruck out.Analysis[17] The Judge in the District Court noted that, if premiums had not been paid, itwould have jeopardised coverage under the policy.9[18] The sum insured under the policy in 2011 was $2,715,000 plus GST. Thepolicy stipulated an estimated reinstatement or replacement cost of $2,565,000 plus anallowance for demolition of $150,000 and an indemnity value of $2,140,000.[19] As FibreTech acknowledged, an insurer could be liable, depending on thepolicy, for successive losses during the period of cover even though the aggregateamounts of a loss exceeded the ceiling on the actual loss recoverable.10 Theysubmitted the amount of insurance reduced by a claim under the policy wasautomatically reinstated.11 It was an event-based policy depending on whether thebuilding was destroyed. If one event caused damage that was repairable, then themeasure was restoration of the damaged portion to a "condition substantially the sameas, but not better than, its condition when new". If the building was then destroyed ina subsequent event, the measure was replaced with an equivalent building.[20] The Judge noted that Vero obtained multiple reports estimating the cost ofrepairs/reinstatement:12(a) Cunningham Lindsey repair estimate dated 23 May 2011 - $263,062.54;(b) Mainzeal Property and Construction Ltd estimate dated 27 February 2012- $554,011;9 Fibretech Holdings Ltd, above n 1, at [56].10 Malcolm A Clarke, Julian M Burling and Robert L Purves, The Law of Insurance Contracts (6thed, Informa UK Ltd, London 2009) at 28.1A.11 Citing QBE Insurance (International) Ltd v Wild South Holdings Ltd [2014] NZCA 447, [2015] 2NZLR 24 at [83].12 Fibretech Holdings Ltd, above n 1, at [4].(c) Mainzeal Property and Construction Ltd estimate dated 27 March 2012 -$473,653;(d) Whyte Construction Ltd estimate dated 29 July 2015 - $1,805,400; and(e) PHC Quantity Surveyors estimate dated 6 July 2017 - $3,550,000.[21] The Judge also recorded that:[5] The parties settled the claim on a replacement cost basis pursuant to awritten Vero Commercial Settlement Agreement ("the settlement agreement")on 10 May 2018. The settlement agreement recorded that on 8 January 2018the defendant paid the sum of $4,060,256 to the plaintiff, which was calculatedas follows:Depreciated replacement cost $3,115,000.00GST $ 467,250.00Less excess at 2.5 per cent -$ 89,556.253.25 years interest at 5 per cent $ 567,562.74____________Total $4,060,256.50____________[22] In written submissions, counsel for FibreTech said the Judge had erred inreferring to the $4,060,256.50 as being "intended to cover the replacement cost".13Counsel submitted there was nothing in the agreement to indicate this was the agreedreplacement cost or that replacement was the ceiling. I do not consider there was anymaterial error in the way the Judge referred to this. It was an amount that was paid onaccount of the replacement cost paid and which FibreTech accepted as being onaccount of the replacement cost.[23] It was only with the settlement agreement that Vero treated the 2010/2011earthquakes as having caused a total loss, requiring replacement of the building. Untilthen, Vero had provided coverage under the policy in respect of damage that mightresult from subsequent insured events. With the information they had as to theestimated cost of repairs/reinstatement, Vero potentially would have had a liabilityunder the policy for damage caused by subsequent events that was additional to thatsuffered in the 2010/2011 earthquakes. In renewing the insurance over the intervening13 Fibretech Holdings Ltd, above n 1.years, FibreTech obviously considered there would be a benefit to them in havingcontinued coverage under the policy, the benefit FibreTech obtained through payingthe premiums over that period.[24] Both FibreTech and Vero considered that FibreTech had material damage coverunder the policy for the period through to settlement. Clause 6 of the settlementagreement recorded "the insured agrees that the material damage cover will terminatewith immediate effect from the date of the agreement".[25] Counsel for FibreTech did not cite any authority for the proposition that, wherethere is a failure of consideration, the contract or agreement to which it relates is void.[26] They referred instead to the relevant passage from the Laws of New Zealandwhich states:14Money paid pursuant to a transaction which is, or later becomes, ineffectivemay be recovered if the thing the claimant expected in return did notmaterialise. The action is for money had and received on the grounds of a"total failure of consideration". Retention of the payment would be unjustbecause the transfer was conditional and the condition has not been met.The traditional rule has been that a restitutionary remedy will not be availableif the claimant received any part of the expected benefit.[27] FibreTech's argument is that, with the settlement, it turned out FibreTech'sbuilding was damaged to the extent of being a total loss in the 2010/2011 earthquakes.There was thus no value in the coverage provided by the insurance contracts in thesubsequent years.[28] In Goss v Chilcott, the Privy Council endorsed an earlier statement made bythe House of Lords that:15[w]hen one is considering the law of failure of consideration and of the quasi-contractual right to recover money on that ground, it is, generally speaking,not the promise which is referred to as the consideration, but the performanceof the promise.14 Mark O'Regan (ed) The Laws of New Zealand: The doctrine of total failure of consideration,(Online ed, LexisNexis).15 Goss v Chilcott [1996] 3 NZLR 385 (PC), citing Fibrosa Spolka Akcyjna v Fairbairn LawsonCombe Barbour Ltd [1943] AC 32 (HL).[29] Here, Vero provided the insurance cover which FibreTech had contracted foreach year with the renewed policy. Vero had thus performed the promise which hadbeen contracted for.[30] I thus reject the submission for FibreTech that the policy was void as from thetime its building was damaged in the 2010/2011 earthquakes.[31] The District Court Judge did not make that determination and was not requiredto in reaching his decisions. The determination I have just made is also not essentialto the decision I have reached as to whether there was any error in the ultimatedecisions the Judge made as to both strike out and summary judgment in the DistrictCourt.[32] The Vero Commercial Settlement Agreement included the following:PARTIESFibretech Holdings Limited a duly incorporated company having itsregistered office at 22 Kennaway Road, Woolston, Christchurch, New Zealandand any other party entitled to insurance cover under policy number HO BSP3855005 (the Insured); andVero Insurance New Zealand Limited a duly incorporated company havingits registered office at 48 Shortland Street, Auckland, carrying on business asan insurer (Vero).BACKGROUNDE. The Insured has a BrokerWeb Material Damage Insurance policy whichis underwritten by Vero, Policy Number HO BSP 3855005, (the Policy).Material Damage cover is provided under the Policy to the structures andvarious other items situated at the Property, as specified in the Policy (theInsured Property), up to a sum insured of $2,715,000 (the MaterialDamage Cover).F. On or about 4 September 2010 there was an earthquake in the Canterburyregion and a number of subsequent earthquakes and/or aftershocksfollowed including various major earthquakes and/or aftershocks. The 4September 2010 earthquake and all subsequent earthquakes and/oraftershocks up to the date that Vero signs this agreement (the Date of theAgreement) are referred to as the Earthquake Activity. The EarthquakeActivity resulted in substantial damage to the Insured Property (theInsured Property Damage). The Insured Property Damage shall bereferred to as the Earthquake Losses.G. The Insured has made a claim under the Policy for its Earthquake Losses(the Claim).H. On 8 January 2018 Vero paid the insured the indemnity value of theproperty plus interest less excess calculated as:Estimated depreciated replacement cost $3,115,000.00Plus GST $467,250.00$3,582,250.00Less excess @ 2.5% of the loss $89,556.25Total $3,492,693.80Plus interest – 3.25 years1 @ 5% $567,562.74Total payment $4,060,256.50I. The parties have agreed that Vero will make a cash payment to the Insuredin full and final settlement of the Claim on the terms set out below.Terms of the Settlement Agreement2 The Insured and the owners of the underlying land and buildings willindemnify and hold harmless Vero against all claims (including alldefence costs) that may be made against Vero by any person or entity(including without limitation the parties to this agreement), alleging thatthey have an interest in the Insured Property and/or the EarthquakeLosses and/or any right to any benefit under the Policy in relation to theClaim.3 The Insured has offered to accept the sum of $1,000,000 dollars plusGST, which Vero has agreed to pay (the Settlement Sum).4 Releasea) The Settlement Sum is paid by Vero and accepted by the Insured infull and final settlement and discharge of the Claim and any claims,rights, demands and set-offs against Vero arising directly orindirectly out of, or in connection with the Earthquake Activityand/or the Earthquake Losses and/or the Material Damage Coverand/or the Policy whether such claims arise under statute, commonlaw, or equity; are in existence now or may arise sometime in thefuture; are known or unknown; in the contemplation of the partiesor otherwise. For the avoidance of doubt, this clause applies to anysuch claim in circumstances where the Insured and/or Vero weremistaken about the existence and/or validity of such a claim. Thedischarge provided for in this clause also applies to any further claimunder the Material Damage Cover for damage, loss or otherentitlement under the Material Damage Cover occurring subsequentto the date the Insured Property Damage occurred, whether or notthat further claim has been notified to Vero.b) The Insured agrees, on behalf of itself and on behalf of the Insured'sassigns, transferees, representatives, principals, agents, officers ortrustees not to sue, commence, voluntarily aid in any way, prosecuteor cause to be commenced or prosecuted against Vero or its advisers,reinsurers, agents or representatives any action, suit or otherproceeding concerning or relating to the Claim, in this jurisdictionor any other.5 The Insured, Susan Jane Sheldon, Peter Jarvis Sheldon and Maurice JohnWalker are responsible for any costs, expenses or liability related to theInsured Property including but not limited to the demolition of theInsured Property and the removal of debris.6 The Insured agrees that the Material Damage Cover will terminate withimmediate effect from the Date of the Agreement.12 The parties agree that all discussions and communications between theparties and/or their respective representatives, agents or advisers, arisingin any way howsoever from the Earthquake Activity, and the terms ofboth the settlement and this agreement (but not the fact that settlementhas been reached nor the fact of this agreement being entered into) areconfidential to the parties and their agents and advisers, except(a) to the extent that any of the parties are required to disclose them bylaw;(b) to the extent that Vero is required to disclose them in connection withreinsurance arrangements or to earthquake authorities, including butnot limited to the Earthquake Commission and/or the CanterburyEarthquake Recovery Authority;(c) for the purposes of raising the settlement as a defence to anysubsequent proceedings;(d) for the purpose of enforcing the agreement;(e) to the extent that the parties agree otherwise in writing.[33] The Judge's review of judicial statements as to how contracts, and in particularrelease clauses in settlement agreements, are interpreted by courts was careful andcomprehensive. FibreTech does not suggest the Judge made any error in referring tothe approach to be taken. It argued the Judge erred in applying those principles to thefacts of this case and, in particular, the settlement agreement and release clause heconsidered.[34] In written submissions, counsel for FibreTech suggested the Judge had erredin referring to the payment of $1 million as a payment to "induce entry into the releaseclause". Counsel submitted there was no evidence as to what the basis for the paymentof $1 million had been and thus no basis for the Judge to find that $1 million had beenpaid as an inducement.[35] I do not accept there was any material error in the way the Judge referred tothis payment.[36] Clause 3 referred to FibreTech offering to accept $1 million plus GST and Veroagreeing to pay that amount (the settlement sum). The very next clause, 4a, was therelease clause recording that this sum was accepted by FibreTech "in full and finalsettlement and discharge of the [c]laim and any claims, rights, demands and set-offsagainst Vero". The payment of $1 million was clearly in consideration of the releasegiven to Vero by FibreTech.[37] As the District Court Judge noted:16[19] The leading case on contract interpretation in New Zealand is Firm PILtd v Zurich Australian Insurance Ltd. The approach to interpretation is anobjective one, the aim being to ascertain: the meaning which the document would convey to a reasonable personhaving all the background knowledge which would reasonably have beenavailable to the parties in the situation in which they were at the time of thecontract.[20] If the text, construed in the context of the contract as a whole, has anordinary and natural meaning, that will be a powerful, albeit not conclusive,indicator of what the parties meant. The wider context may point to someinterpretation other than the most obvious one, although a purposive orcontextual interpretation is not dependent on there being an ambiguity in thecontractual language.[38] Under the general rule of construction, courts will be slow to infer a releaseclause as relinquishing a claim that a party is unaware of.1716 Footnotes omitted.17 Tag Pacific Ltd v The Habitat Group Ltd, above n 5; and Ali, above n 5, per Lord Bingham at [9]and [10]; per Lord Nichols at [27] and [28].[39] As the Judge noted, the Court of Appeal has held the ultimate focus is on thewords used by the parties. An intention to relinquish a claim that a party was unawareof at the time will be found if it is clearly demonstrated by the words used.18[40] In BCCI v Ali, in the House of Lords, it was noted that parties in a compromiseagreement, supported by valuable consideration, can agree to release claims or rightsof which a party is unaware of, even in circumstances when they could not have beenaware of such claims or rights.19[41] In Prattley Enterprises Ltd v Vero Insurance Ltd, our Court of Appeal foundthere is no policy reason to resist an agreement that exchanges money for a full andfinal settlement of any possible claim.20 The Court acknowledged that parties canenter such agreements to achieve finality and, from the releasee's perspective, to guardagainst the risk of further claims emerging that are not known at the time.21[42] I agree with the District Court Judge that the settlement was primarily aboutsettlement of the claim relating to the damage to FibreTech's building caused by the2010/2011 earthquakes.[43] Consistent with that, in the recitals to the settlement agreement, the partiesreferred to the earthquake on 4 September 2010 and all subsequent earthquakes and/oraftershocks up to the date of the settlement agreement. All that activity was referredto in the settlement agreement as the earthquake activity. The parties acknowledgedthe earthquake activity resulted in substantial damage to the insured property (theinsured property damage). The insured property damage was referred to in theagreement as the earthquake losses.[44] A number of clauses in the settlement agreement, such as cls 1 and 2, referredexpressly to the settlement being in respect of claims for earthquake losses.18 Fibretech Holdings Ltd, above n 1, at [21], citing Tag Pacific Ltd v The Habitat Group Ltd, aboven 5.19 Ali, above n 5, per Lord Bingham at [9] and [10]; Lord Nicholls at [27] and [28].20 Prattley Enterprises Ltd v Vero Insurance Ltd, above n 5, at [64].21 At [63]−[64].[45] The release clause however expressly went further than this and dealt withmore than just the claims that had been made in respect of earthquake damage.FibreTech accepted the settlement sum of $1 million in full and final settlement anddischarge of the claim (the claim it had made under the policy for its earthquake losses)but also of: any claims, rights, demands and set-offs against Vero arising directly orindirectly out of, or in connection with, the Earthquake Activity and/or thePolicy, whether such claims arise under statute, common law, or equity; are inexistence now or may arise sometime in the future; are known or unknown; inthe contemplation of the parties or otherwise.[46] The policy referred to in that clause was policy HO BSP 3855005. FibreTech'sclaim was for recovery of the premiums paid in respect of that policy. That was clearlya claim arising directly or indirectly out of, or in connection with, the policy.[47] In the District Court, the Judge said:[58] It would strain the language into the realm of nonsensicality to adoptthe view that the premiums were not connected to the policy. The backgrounddoes not require such a departure, in fact, it supports the notion that the partieswishes [sic] to achieve finality in respect of the policy and claims that mayarise in connection with it. Unlike the decision in Finnigan, there is clearly acommon thread between the subject matter of the disputes: the policy.[48] I agree with that analysis.[49] In Prattley Enterprises, the Court of Appeal recognised that general releaseclauses can be worded to achieved finality so that the risk that further claims mightlater emerge, is a risk that the person giving the release took upon themselves.22[50] The Court of Appeal said that:[64] Where such is the parties' objectively ascertained intention, courtsreadily give effect to it, recognising that finality facilitates settlements. Thereis no policy reason to resist an agreement that exchanges money for a full andfinal settlement of any possible claim.22 Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd, above n 5, at [64] with reference toLord Nichols in Ali, above n 5.[51] I consider that, interpreted objectively, this is what the release clause wasintended to achieve for these parties. Consistent with that, Vero no longer had anyobligations to FibreTech in connection with the policy. The material damage coverunder the policy terminated from the date of the agreement. The release clause wasintended to end the relationship between FibreTech and Vero.[52] Through written submissions, FibreTech contended the Judge had inferred thatFibreTech had agreed to relinquish future claims in consideration of the payment itwas receiving. It was submitted that an inference is a matter of an interpretation. Anintention to release an unknown claim would not lightly be inferred and should not beinferred without some express provision to that. It was argued that, if there had beenan intention to exclude a claim for premiums paid under the policy, there would havebeen express reference to that in the settlement agreement.[53] I do not accept that submission. Given the apparent all-embracing nature ofthe release clause, it could have been expected that, if FibreTech wished to retain theright to bring a claim in respect of premiums paid, it would have required reference tothis in the agreement. There was no challenge to the Judge's observation that, althoughFibreTech had not known of this potential claim at the time of settlement, it could havedone so. Proof of that was a document in the common bundle which showed that, asat 16 September 2014, FibreTech had obtained an estimate for the cost of repairs andreinstatement of $3,990,531.07 exclusive of GST. This would have been consistentwith the building being a total loss under the policy and Vero being required to pay thefull insurance amount for replacement.[54] The wording of the release clause expressly discharged Vero from any liabilityfor both existing and future claims, known or unknown, or in the contemplation of theparties or otherwise. The settlement agreement thus did expressly provide for theJudge to draw the inference that FibreTech had intended to relinquish all claims.[55] In written submissions, FibreTech also contended that the reference to thepolicy in clause 4a was arguably a catch-all aimed at "any other claim under thepolicy",23 for example a claim for which there might arguably have been cover underthe policy, and not a claim that premiums had been paid in respect of the policy.FibreTech suggested this was the more natural meaning of clause 4a.[56] I do not accept that an objective interpretation of the release clause is consistentwith that submission. The express wording of the release clause was much wider thanthat. I accept that the release clause and its reference to claims directly or indirectlyout of, or in connection with, the policy was part of a catch-all clause to ensure therelationship between Vero and FibreTech was brought to an end and Vero would faceno future claim arising out of that relationship, that relationship having beendetermined by the insurance policy which FibreTech had contracted for with Vero overthe relevant years. The release clause expressly released Vero from any potentialclaims relating to the policy which was significantly wider than claims "under" thepolicy.[57] There was thus no error in the District Court Judge deciding that the releaseclause provided a complete answer to FibreTech's claim and none of the causes ofaction in FibreTech's claim could succeed so that Vero was entitled to summaryjudgment.[58] That determination is sufficient to dispose of the appeal but, for completeness,I also consider Vero's argument that, with the release clause, FibreTech had dischargedVero from any claim in respect of the premiums paid through agreeing they would notmake any claim against Vero arising directly or indirectly out of, or in connection with,the earthquake losses and/or the material damage cover.[59] FibreTech's argument was that, with the settlement, FibreTech had suffered atotal loss of the building requiring full reinstatement to the ceiling insured value sothat it obtained no benefit from the continuation of the policy after the earthquakedamage had been suffered. The claim to recover subsequent premiums was thus aclaim arising directly or indirectly and in connection with the earthquake losses and/or23 Emphasis added.the material damage cover. But for that damage and the cover which FibreTech hadin respect of it, FibreTech could not have argued there was no consideration in returnfor the contracts of insurance and the payment of premiums in the years 2011 to 2017.Had it been necessary, I would also have found that, on this ground, by reason of thosewords in the release clause, Vero also had a complete answer to FibreTech's claim.The cross-appeal/strike out[60] As was submitted for Vero, the general principles for striking out a statementof claim are well settled:24(a) for the purposes of the strike out application, it is assumed that the factspleaded in the statement of claim are true;(b) before this Court may strike out the proceedings, the causes of action mustbe so clearly untenable that they cannot possibly succeed;(c) jurisdiction is exercised sparingly and only in a clear case where the Courtis satisfied it has the requisite material; and(d) the fact that an application raises difficult questions of law and requiresextensive argument does not exclude jurisdiction.[61] The District Court Judge refused to strike out the statement of claim on thebasis it was arguable the release clause related only to a discharge of FibreTech'sclaims or rights with regard to earthquake property damage. In his consideration as tosummary judgment, the Judge however went on to find that the release clausedischarged Vero from any claim arising directly or indirectly out of, or in connectionwith, the policy. With that determination, over which there was no error, the Judgefound that the release clause did discharge Vero from any liability for the claimFibreTech had made.[62] FibreTech acknowledged that the Judge's conclusion in this regard wasinconsistent with the Judge holding that the same clause provided a complete answerto the claim.24 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA), at 267.[63] For the reasons just discussed, the Judge could also have found that Vero wasdischarged from any such claim because it arose directly or indirectly out of or inconnection with the earthquake losses and the material damage cover.[64] I thus consider that, on the Judge's own analysis, he was in error in saying itwas not clear that FibreTech's claim related to the subject matter of the settlementagreement. The settlement agreement did relate primarily to the claim for earthquakedamage but it also related to the claim for premiums paid under the policy.Accordingly, the Judge could and should have found that FibreTech's cause of actionwas so clearly untenable that it could not possibly succeed, and consequently struckout the proceeding.[65] I accept that, where parties have entered into a settlement, as here, with thebenefit of independent legal advice, the courts should be amenable to striking out aclaim or proceedings which is clearly in breach of that settlement agreement.[66] In Nandro Homes Ltd v Datt, Asher J held that the respondents' claim was inbreach of a settlement of earlier proceedings as recorded in a settlement agreement.25Asher J said:[69] It is an abuse of process to bring proceedings which will destroy asettlement reached in earlier proceedings. To use Lord Millett's phrase, theCourt will protect the integrity of the settlement. I conclude that the secondproceedings damage the integrity of the settlement agreement, and are anabuse of process.[67] Asher J's reference to Lord Millett's statement was as to his statement in theHouse of Lords in Johnson v Gorewood & Co,26 where Lord Millett was discussingabuse of process, and stated:In one respect, however, the principle goes further than the strict doctrine ofres judicata or the formulation adopted by Sir James Wigram V C, for I agreethat it is capable of applying even where the first action concluded in asettlement. Here it is necessary to protect the integrity of the settlement andto prevent the defendant from being misled into believing that he wasachieving a complete settlement of the matter in dispute when an unsuspectedpart remained outstanding.25 Nandro Homes Ltd v Datt HC Auckland, CIV-2008-404-6676, 16 March 2009.26 Johnson v Gorewood & Co [2001] 1 All ER 481 (emphasis added).[68] Consistent with that, in Prattley, the Court of Appeal said, where the partiesobjectively ascertained intention is to achieve finality through releasing a party fromany future claim, "courts readily give effect to it, recognising that finality facilitatessettlements".[69] In this case, the way in which Vero had a complete answer to FibreTech's claimwas apparent from the terms of the settlement agreement itself without the Courthaving to rely on contentious evidence.[70] In these circumstances, strike out would have been appropriate.[71] In that sense, Vero has been successful on its cross-appeal.[72] It is not however necessary for me to formally allow the cross-appeal and orderthat the proceedings in the District Court be struck out. Vero obtained similar relief inthe District Court through obtaining summary judgment in that Court. Consistent withthe approach taken by Asher J in Nandro Homes, it is sufficient that Vero obtainedsummary judgment in the proceedings.27 There is thus no need for me to allow thecross-appeal and order that the proceedings be struck out.Result[73] Accordingly, FibreTech's appeal is dismissed.[74] Vero is entitled to costs on a 2B basis. If there is no agreement over thequantum of costs, Vero is to file a memorandum as to the costs it seeks by 26November 2021. FibreTech is to file a memorandum in reply by 10 December 2021.Vero can file a memorandum in reply by 17 December 2021. I will determine anyissue as to costs on the papers.Solicitors:Rhodes & Co., ChristchurchMcElroys, Auckland.27 Nandro Homes Ltd v Datt, above n 25, at [72]−[75].