IDEAL INVESTMENTS LTD v EARTHQUAKE COMMISSION [2023] NZCA 388

IDEAL INVESTMENTS LTD v EARTHQUAKE COMMISSION [2023] NZCA 388 [24 August 2023]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA292/2022[2023] NZCA 388BETWEEN IDEAL INVESTMENTS LIMITEDApplicantAND EARTHQUAKE COMMISSIONRespondentCourt: Cooper P, Goddard and Katz JJCounsel: G D R Shand for ApplicantN L Walker and C J Curran for RespondentJudgment:(On the papers)24 August 2023 at 11:30 amJUDGMENT OF THE COURTA The application for recall is declined.B The applicant must pay the respondent costs for a standard application ona band A basis with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Katz J)Introduction[1] Ideal Investments Ltd (Ideal) filed a proceeding against the EarthquakeCommission | Toka Tū Ake (EQC) making various claims on its own behalf.1 It also1 The proceeding was subsequently transferred to the High Court by consent: Ideal Investments Ltdv Earthquake Commission [2022] NZHC 400 [High Court decision] at [9].filed an application seeking orders enabling it to bring the same or similar claimsin a representative capacity. Associate Judge Lester dismissed that application(the High Court decision).2[2] Pursuant to s 56(3) and (5) of the Senior Courts Act 2016, an appeal can onlybe brought from an interlocutory decision of the High Court with leave of either theHigh Court or, if the High Court declines leave, this Court. However, decisionsstriking out or dismissing the whole or part of a proceeding, claim or defence may beappealed to this Court without leave under s 56(4).[3] Ideal's application to the High Court for leave to appeal was declined,3 as wasits subsequent application to this Court for leave (the leave decision).4 Ideal has nowfiled an application seeking:(a) recall of the leave decision; and(b) an extension of time to appeal the High Court decision on the groundsthat it has a right of appeal because either:(i) (contrary to the approach taken by Ideal to date) the High Courtdecision is not interlocutory in nature; or(ii) the High Court effectively determined at least part of theproceeding, and Ideal is therefore entitled to appeal the decisionpursuant to s 56(4).The recall applicationLegal principles[4] A judgment, once delivered, must stand for better or worse, subject to appeal.A decision to recall a judgment will only be made in exceptional circumstances.2 High Court decision, above n 1.3 Ideal Investments Ltd v Earthquake Commission [2022] NZHC 1079 [High Court leave decision].4 Ideal Investments Ltd v Earthquake Commission [2022] NZCA 641 [Court of Appeal leavedecision].The limited grounds on which a court may recall a decision (other than under the sliprule) are well-established:5(a) where, since the hearing, there has been an amendment to a relevantstatute or regulation or a new judicial decision of relevance and highauthority;(b) where counsel have failed to direct the court's attention to a legislativeprovision or authoritative decision of plain relevance; or(c) where for some other very special reason justice requires that thejudgment be recalled.[5] A recall application cannot be used to relitigate the reasons provided in a leavedecision. Nor can it be a means of collateral attack on a decision.6 A judgment shouldnot be recalled in order to consider a challenge to substantive findings of fact or law,nor to allow a party to recast arguments previously made or advance arguments thatcould have been raised earlier but were not.7 Recall applications that do not engagewith the established grounds for recall but rather attempt to re-open the merits of thejudgment sought to be recalled are an abuse of process and will be dismissed on thatbasis.8Should the recall application be granted?[6] With one possible exception (discussed below) Ideal does not engage with(or even expressly refer to) the recognised grounds of recall. Rather, Ideal's primarysubmission is that the leave decision should be recalled because it "is founded onincorrect evidence and law". Ideal claims that the Court made various factual andlegal errors, including by ignoring, misunderstanding or otherwise failing to follow5 Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633; approved in Saxmere Co Ltdv Wool Board Disestablishment Co Ltd (No 2) [2009] NZSC 122, [2010] 1 NZLR 76[Saxmere (No 2)] at [2].6 S (SC 39/2017) v R [2022] NZSC 7 at [3]; and Horowhenua County v Nash (No 2), above n 5,at 633.7 Navaratnam v HG Metal Manufacturing Ltd [2023] NZCA 10 at [9]; Nottingham v Real EstateAgents Authority [2017] NZCA 145 at [9]; and Wu v Stalix Property Ltd [2022] NZCA 549 at [7].8 Wu v Stalix Property Ltd, above n 7, at [7]–[8].relevant case law. In short, Ideal says that this Court should recall the leave decisionbecause, in Ideal's view, it is wrong.[7] Ideal expands on these various assertions at some length, including repeatinga number of arguments that were unsuccessful in the High Court, this Court, or both.With one exception (addressed further below) the grounds advanced do not fall withinthe recognised categories for recall. Rather, Ideal is seeking to collaterally attack theleave decision by challenging the substantive findings of fact and law made in thatdecision and taking issue with aspects of this Court's reasoning. As set out above, thisis impermissible and inappropriate in a recall application.[8] The only matter raised by Ideal which could potentially constitute a"very special reason" why justice requires that the leave decision be recalled is itsallegation that the panel who delivered the leave decision, Goddard and Katz JJ,were both biased in favour of EQC.[9] Judges are obliged to sit on any case allocated to them unless grounds fordisqualification exist. A judge is disqualified from sitting if in the circumstances thereis a real possibility that in the eyes of a fair-minded and fully informed lay observerthe Judge may not be impartial in reaching a decision in the case.9 The question is oneof possibility, not probability. However, the possibility of bias must be "real", not"remote".10 The test is a two-step one requiring consideration of the following:11(a) what are the circumstances relevant to the possible need for recusalbecause of apparent bias; and(b) whether those circumstances lead to a reasonable apprehension thejudge may not be impartial.9 Saxmere Co Ltd v Wool Board Disestablishment Co Ltd [2009] NZSC 72, [2010] 1 NZLR 35[Saxmere] at [3] per Blanchard J, [37] per Tipping J, [89] per McGrath J and [127] per Anderson J.See also Saxmere (No 2), above n 5, at [4]; Minister of Justice v Kim [2020] NZSC 18, [2020]1 NZLR 38 at [36]; and Jones v New Zealand Bloodstock Finance and Leasing Ltd [2023]NZSC 98 at [12].10 Saxmere, above n 9, at [4] per Blanchard J and [81] per McGrath J, citing Ebner v Official Trusteein Bankruptcy [2000] HCA 63, (2000) 205 CLR 337 at [7].11 Minister of Justice v Kim, above n 9, at [36].[10] The circumstances Ideal points to as giving rise to apparent bias are thatGoddard and Katz JJ both previously worked at law firms (Chapman Tripp and/orRussell McVeagh) "that represent/represented EQC for many years".[11] Katz J last worked at Chapman Tripp, as an employed solicitor, 33 years ago.While there she undertook some low-level work (primarily discovery) on at least oneEQC file, as either a law clerk or junior solicitor. Katz J was a Russell McVeaghpartner from 2003 until her appointment to the High Court Bench eleven years ago.She cannot recall undertaking any work for EQC during her time at Russell McVeagh.[12] Goddard J was formerly a partner of Chapman Tripp, but left that firm over23 years ago. Goddard J provided advice to EQC on various matters when he was apartner at Chapman Tripp in the 1990s. When he was in practice as a barrister, afterleaving that firm, he advised a number of clients with claims against EQC and actedfor parties in proceedings against EQC.12 To the extent that he has had anyinvolvement in matters relating to EQC over the last 20 years, it has been as counselfor parties with interests adverse to EQC.[13] Goddard and Katz JJ's associations with the relevant firms are entirelyhistorical. There is no suggestion, or possibility, that they could have had anyinvolvement through their connection to those firms in relation to the subject matterof the present proceeding.[14] Ideal is required to identify a logical connection between Goddard andKatz JJ's historical connections to the relevant firms and their alleged lack ofimpartiality in this case.13 Although it is not entirely clear, we infer that Ideal'sargument is that a historical connection between a judge and a law firm will predisposethe judge to a favourable outcome for a party that is (or was previously) a client of therelevant firm.[15] In our view it is both far-fetched and fanciful to suggest that the remote andhistorical connections outlined above could give rise to a reasonable apprehension of12 See for example Re Earthquake Commission [2011] 3 NZLR 695 (HC).13 Saxmere, above n 9, at [4] per Blanchard J, and [93] and [111] per McGrath J.bias. There is simply no basis on which a fair-minded and fully informed lay observercould reasonably apprehend that Goddard and Katz JJ might have abdicated theirresponsibility to decide the leave application on the merits, and instead simplyfavoured the interests of a client (or former client) of a law firm they had an associationwith many years ago. Ideal's submissions do not refer to any cases in which areasonable apprehension of bias has been found to arise in circumstances remotelysimilar to the current situation.[16] Obviously, each case must be assessed on its own merits. Any suggestion,however, that an historical association (as an employee or partner) with a law firm willautomatically preclude a judge from presiding over a case involving a party that is acurrent or former client of that law firm is novel and would be unworkable in practice.[17] For the reasons outlined, the application to recall the leave decision is entirelydevoid of merit and is declined.Is the High Court decision interlocutory in nature?[18] Having failed to obtain leave to appeal the High Court decision from either theHigh Court or this Court, due to the lack of merit of the proposed appeal, Ideal nowseeks to pursue an alternative procedural course. It contends, in effect, that it erred inpreviously seeking leave to appeal, because it is entitled to pursue an appeal as of right.Due to the lapse of time, however, it requires an extension of time to bring such anappeal, which it now seeks.[19] Section 56 of the Senior Courts Act relevantly provides as follows:56 Jurisdiction(1) The Court of Appeal may hear and determine appeals—(a) from a judgment, decree, or order of the High Court:(2) Subsection (1) is subject to subsections (3) and (5) and to rules madeunder section 148.(3) No appeal, except an appeal under subsection (4), lies from any orderor decision of the High Court made on an interlocutory application inrespect of any civil proceeding unless leave to appeal to the Court ofAppeal is given by the High Court on application made within 20working days after the date of that order or decision or within anyfurther time that the High Court may allow.(4) Any party to any proceedings may appeal without leave to the Courtof Appeal against any order or decision of the High Court—(a) striking out or dismissing the whole or part of a proceeding,claim, or defence; or(b) granting summary judgment.(5) If the High Court refuses leave to appeal under subsection (3), theCourt of Appeal may grant that leave on application made to the Courtof Appeal within 20 working days after the date of the refusal of leaveby the High Court.(6) If leave to appeal under subsection (3) or (5) is refused in respect ofan order or a decision of the High Court made on an interlocutoryapplication, nothing in this section prevents any point raised in theapplication for leave to appeal from being raised in an appeal againstthe substantive High Court decision.[20] The term "interlocutory application" is defined in s 4(1) of the Senior CourtsAct as follows:interlocutory application—(a) means any application to the High Court in any civil proceedings orcriminal proceedings, or intended civil proceedings or intendedcriminal proceedings, for—(i) an order or a direction relating to a matter of procedure; or(ii) in the case of civil proceedings, for some relief ancillary tothat claimed in a pleading; and(b) includes an application to review an order made, or a direction given,on any application to which paragraph (a) applies[21] Ideal argues that its application for representative orders was not aninterlocutory application because it did not relate to a matter of procedure or seek somerelief ancillary to that claimed in the proceeding.[22] We reject that submission. EQC, in its submissions in opposition, notes thatIdeal itself intituled its application for representative orders as an "interlocutoryapplication by plaintiff to sue as representative under rule 4.24" (emphasis added).Ideal maintained the view that the application (and resulting decision) wasinterlocutory in nature until it had failed in its leave applications to both the High Courtand this Court.[23] The representative orders application clearly related to a matter of procedure.Rule 4.24 of the High Court Rules 2016 provides a procedural mechanism for aplaintiff to seek orders enabling them to sue in a representative capacity.14 The ordersought is procedural in nature. As EQC noted in its submissions, appellate courts haverepeatedly referred to r 4.24 and its equivalents as providing for a "representativeprocedure".15[24] The High Court decision was interlocutory in nature. The standard (and in ourview, correct) approach is for a party to seek leave to appeal against decisions relatingto representative orders.16 Such an approach is also consistent with the conduct of thislitigation to date.17Is there an appeal as of right?[25] Ideal further submits (presumably in the alternative) that there is an appeal asof right because the effect of the High Court decision was to finally dispose of thewhole or part of the proceeding.[26] Mr Shand, counsel for Ideal, recently advanced a similar argument(unsuccessfully) in Sneesby v Southern Response Earthquake Services Ltd.18 In thatcase Mr Sneesby had also unsuccessfully applied to the High Court for representativeorders. Mr Sneesby sought leave from this Court to appeal that decision. Although14 The application was made by reference to r 4.24 of the District Court Rules 2014, but wasdetermined under r 4.24 of the High Court Rules 2016 as the proceeding was subsequentlytransferred to the High Court by consent: see High Court decision, above n 1, at [8]–[9].15 See Credit Suisse Private Equity LLC v Houghton [2014] NZSC 37, [2014] 1 NZLR 541 at [4],[21] and [55] per Elias CJ and Anderson J, and [120] and [161] per McGrath, Glazebrook andArnold JJ; and Southern Response Earthquake Services Ltd v Ross [2020] NZSC 126, [2021]1 NZLR 117 at [32]. See also, in the United Kingdom context, Lloyd v Google LLC [2021] UKSC50, [2022] AC 1217 at [8], [23], [33], [47], [65], [67] and [71].16 See for example Sneesby v Southern Response Earthquake Services Ltd [2022] NZHC 2100 at [1]and [6]–[8]; Smith v Claims Resolution Service Ltd [2019] NZHC 2738 at [4]; Simons v ANZ BankNew Zealand Ltd [2022] NZHC 2842 at [1]–[2] and [6]; Body Corporate Number DPS 91535 v3A Composites GmbH [2022] NZHC 2912 at [1]–[3]; and Harris v Smith [2022] NZCA 313 at[7]–[9].17 High Court leave decision, above n 3, at [3], [5] and [7]; and Court of Appeal leave decision,above n 4, at [13]–[14].18 See Sneesby v Southern Response Earthquake Services Ltd [2023] NZCA 206 at [4]–[8].Mr Shand acknowledged that the High Court decision did not fall within s 56(4), hesubmitted that an appeal was nevertheless available as of right because the decisionhad the effect of finally resolving the substantive proceeding.19 This Court rejectedthat submission, stating that "[i]t is clear from s 56(3) that only those decisionsidentified in s 56(4) may be the subject of an appeal as of right."20 The Court alsoreiterated the following observations made by Goddard J in Dokad Trustees Ltd vAuckland Council:21[10] The scheme of s 56 is that appeals as of right are reserved for finaldeterminations in respect of a proceeding. A leave filter applies to appealsfrom decisions on interlocutory applications in order to avoid delay andunnecessary cost. The underlying assumption is that such decisions are madein the course of a proceeding, and appeal rights should be exercised when theproceeding comes to an end. If a procedural decision has affected the ultimateoutcome, that issue can be raised in an appeal against the substantiveHigh Court decision that concludes the proceeding: see s 56(6). I considerthat s 56(4) must be interpreted purposively, to apply to decisions that havethe effect of bringing to an end the whole of a proceeding. Such a decision is,for the purposes of s 56(4), a decision that dismisses the proceeding.[27] Those observations are equally apt here. The High Court decision is aninterlocutory one that does not give rise to an automatic right of appeal. Ideal'ssubstantive proceeding remains on foot and has not been finally disposed of. Nor doesthe High Court decision finally determine the rights of potential class members ordispose of any claims they may have. Ideal's application to represent other potentialclass members has been declined, but any substantive rights those persons may haveremain unaffected.[28] Because we have found that Ideal does not have an appeal as of right, it isunnecessary to deal with its application for an extension of time.Costs[29] As the successful party, EQC is entitled to an award of costs. EQC submitsthat "[g]iven the abusive and unmeritorious nature of the applications, there may be19 At [5].20 At [6] and [8].21 At [7], quoting Dokad Trustees Ltd v Auckland Council [2022] NZCA 177.grounds for increased or indemnity costs." It seeks leave to file a memorandum oncosts following delivery of this judgment.[30] It is not the practice of this Court to deal separately with costs after determiningan application. Any submissions on costs should generally be included in thesubmissions on the relevant application, absent special reasons justifying a differentapproach (such as the making of a Calderbank offer).22[31] Here, we acknowledge that there may possibly be grounds to seek increasedcosts, but neither party has addressed that issue in any detail in their submissions. Wedo not consider that the delay and cost that would result from granting leave to theparties to file further costs submissions is warranted in this case. We therefore proposeto award costs on the usual basis.Result[32] The application for recall is declined.[33] The applicant must pay the respondent costs for a standard application on aband A basis with usual disbursements.Solicitors:Grant Shand, Auckland for ApplicantRussell McVeagh, Wellington for Respondent22 See Calderbank v Calderbank [1976] Fam 93 (CA).