INSURANCE BROKERS ASSOCIATION OF NEW ZEALAND INCORPORATED V NEW ZEALAND FIRE SERVICE COMMISSION HC AK CIV 2011-404-003468

INSURANCE BROKERS ASSOCIATION OF NEW ZEALAND INCORPORATED V NEW ZEALAND FIRE SERVICE COMMISSION HC AK CIV 2011-404-003468 9 September 2011IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2011-404-003468BETWEEN INSURANCE BROKERS ASSOCIATIONOF NEW ZEALAND INCORPORATEDPlaintiffAND NEW ZEALAND FIRE SERVICECOMMISSIONDefendantHearing: 6 September 2011Counsel: R G Simpson and S P Elliott for PlaintiffC M Stevens for DefendantJudgment: 9 September 2011JUDGMENT OF FOGARTY JThe judgment was delivered on 9 September 2011 at 1.00 pm pursuant to Rule 11.5 of the High Court Rules.....................................Registrar/Deputy RegistrarIntroduction[1] As its name suggests, the plaintiff is an associate representing the interests of insurance brokers in New Zealand. The defendant is the commission which funds the New Zealand Fire Service. The funds are provided by levies on persons who insure their property against fire. The plaintiff association identifies with the interests of the insurers. The plaintiff and the defendant have long been in disagreement as to the way in which levies to be paid by insurers are to be fixed under the Fire Service Act 1975.[2] The plaintiff has issued proceedings seeking a declaratory judgment. It is common ground that this is a banco action. No witnesses need be called. The contextual background can be presented to the Court by counsel in submissions. It is at heart an issue of statutory interpretation informed, as always, by an understanding of the context. The plaintiff estimates one day of hearing. The defendant says it might go over one day.[3] The preparation for the hearing is principally going to be preparation of the legal argument. The proceedings were commenced in Auckland in June of this yearwith the plaintiff‟s solicitors expecting that the case would be heard within a coupleof months of filing. Nearly three months later the Court is considering an application by the defendant that the proceedings be transferred to the Wellington Registry on the ground that they were wrongly filed in Auckland; and an application by the plaintiff. That application was filed virtually immediately after the commencement of the proceedings. Similarly, the plaintiff immediately filed an application for directions as to how the case should be managed towards a hearing. The parties agreed to stay the plaintiff‟s application for directions until the issue of correct Registry was decided.[4] Both counsel regret the consequences of these procedural steps. But for these procedural steps Mr Simpson for the plaintiff says that the case could have been allocated a fixture by now in Auckland, being of such short duration. Similarly, Mr Stevens said that had the case been filed in Wellington in the first instance it would have a hearing by now as Wellington is able to offer banco fixtures faster than Auckland.[5] The ability of this case to be stalled by a narrow argument as to the correct Registry is because of the fact that this proceeding is not a paradigm proceeding of the sort contemplated in the prescriptive rules as to filing and to Registry, r 5, and because r 1.6 Cases not provided for, require the Court to dispose of the issue:... as near as may be practicable in accordance with the provision of these rules affecting any similar case.[6] Only through this hurdle can the Court dispose of interlocutory issues in the manner the Court thinks best calculated to promote the objective of the rules (namely, just, speedy and inexpensive determination of the issue dividing the parties– see r 1.6(2) and r 1.2).Application of r 5.1 – Identification of proper Registry[7] By r 5.1(1)(a) the proper Registry is firstly the Registry nearest the principal place of business of the defendant, here Wellington. However, sub-rule (2) gives the plaintiff an election between the Wellington Registry or the Auckland Registry if:... the cause of action sued on, or some material part of it, arose nearer to Auckland.[8] When filing in Auckland the plaintiff considered it had the benefit of the selection because a material number of the policies falling within the two classes of insurance the subject of the dispute were negotiated, drafted and issued out of Auckland.[9] This thinking builds on an interpretation of material part as not depending on that part being a material factor in the argument to resolve the issue. As I have already mentioned, in this case there will be no evidence. It is utterly immaterial as to whether the subject insurance policies were issued out of Auckland, Wellington, Christchurch, Dunedin or elsewhere in New Zealand. The argument is complicatedby the fact that the phrase "cause of action" has its origins in common law causes of action which depend on the proof of material facts almost inevitably by witness actions. That makes the qualification in the rules material.[10] When a plaintiff issues proceedings against a defendant the defendant is brought to Court whether the defendant wants to come or not. The state lends its coercive power to the plaintiff for that purpose. It is therefore just that the defendant should have to travel the least distance involuntarily to the Court nearest where the defendant resides. On the other hand, if all the witnesses, or the majority of them, live closer to where the plaintiff resides then it makes more sense or at least an equivalent sense of justice for the trial to be at the Registry closest to the plaintiff.[11] None of these considerations underlining the commonsense of this rule apply to this case. The problem, however, is that it is virtually impossible to escape r 5because the rule presupposes that there has to be a "proper" Registry. No cases sofar have suggested that r 5 or its predecessor r 107 can simply be ignored because it is inappropriate for banco non-witness actions.[12] Mr Simpson argued a fine distinction. He argued that to fall within the scope of r 5.1(2) a material part of the cause of action must have arisen. However, the fact that it arose in Auckland need not be material. He illustrated this by arguing that if a contract was entered into near Auckland that is sufficient even if the place where the contract was entered into will have absolutely nothing to do with resolution of thecause of action. The plaintiff relied upon the "accepted practice" of Auckland basedtaxpayers issuing tax challenging proceedings in Auckland in reliance on the rule. He also relied directly on TBNZ Ltd v Commissioner of Inland Revenue (2005) 17 PRNZ 650.[13] Keane J held at [35] that Westpac‟s „cause of action‟, to be effective, mustjustify the remedy sought (i.e. the setting aside of the assessment). In order to do that, it must comprehend all of the background facts relevant to the assessment, including the underlying transactions on which it was based. His Honour concluded at [38]:To advance its challenge at trial WBC will have to recapture these transactions from first concept and show that in his critical conclusions, the Commissioner was wrong. Some part of that penumbra will...lie in Wellington where the documents were executed, but much, even the greater part, will lie in Auckland where the critical preliminary work was done. Inthat sense I find a „material part of WBC‟s cause of action lies there.[14] It is often not possible at an interlocutory stage to know what part of the facts are material. That will explain the tolerance for plaintiffs filing near their own Registry. It is also a fact that in commercial litigation in New Zealand it is common place for at least one of the parties to travel. The losing party inevitably bears the cost of the travel and accommodation disbursements of the winning party.[15] I distinguish TBNZ and another case relied upon by Mr Stevens going the other way: Apple Fields Limited v New Zealand Apple and Pear Marketing Board(1993) 7 PRNZ 184. In both cases the question of avoidance or abuse of market power generated the need for witnesses. These witnesses would come from nearby the Registry of the plaintiff.[16] What stands out is that this is a banco action. It is not based on a cause of action. It is an application for interpretation of statute. It is not possible to say that some material part of the argument arose nearer to Auckland than to Wellington. I find r 5.1(2) does not apply. It follows that technically the claim has been filed in the wrong Registry. It does not follow that the file should be transferred to the Wellington Registry. Rule 5.1(4) reserves a discretion. Rule 5.1(4) and (5) provide:5.1 Identification of proper registry...(4) If it appears to a Judge, on application made, that the statement of claim has been filed in the wrong registry of the court, he or she may direct that the statement of claim or all documents filed in the proceeding be transferred to the proper registry.(5) If it appears to a Judge, on application made, that a different registry of the court would be more convenient to the parties, he or she may direct that the statement of claim or all documents be transferred to that registry and that registry becomes the proper registry.[17] In the previous rule, r 107, these two propositions were combined. In the case of AIC Retail Finance Ltd v Savill [1986] 2 NZLR 679 Chilwell J held that the discretion only existed where a different Registry of the Court would be convenient to the parties. That proposition cannot be sustained now that the one clause has beensplit into (4) and (5) and the word "may" is included in (4), gives clearly a discretion. The discretion in sub-rule (4) is narrower than the discretion in (5). Where a different Registry of the Court would be convenient to the parties it is difficult to see how a Judge would refuse an application.[18] The discretion in sub-rule (4) has to be read to give effect to r 5 but also to give effect to r 1.2, which is the cornerstone rule of the whole of the High Court Rules. The only documents left to be filed in this case are the submissions and perhaps an affidavit by the defendant.[19] Both counsel now regret the delay that has in fact ensued. Had this case been accepted as a one day case it could in fact have been heard today, rather than entangling the Court in fine points relating to r 5 of the High Court Rules.[20] To further prolong the procedural agony of this case would, in my view, be completely in conflict with r 1.2 which deserves to be stated in full:1.2 ObjectiveThe objective of these rules is to secure the just, speedy, and inexpensive determination of any proceeding or interlocutory application.[21] For these reasons the case will remain in the Auckland Registry.[22] I turn to the application for directions. The parties have now agreed that the plaintiff will file its submissions within 14 days and the defendant file its submissions within 28 days later. The defendant also has leave to file an affidavit.[23] Counsel have requested that an enquiry be made as to whether or not Wellington can offer an earlier fixture date for two dates than Auckland, in which case counsel would accept a hearing in Wellington rather than Auckland. Counsel prefer a firm fixture date to be allocated for the case but in addition do agree that thecase be treated as a backup fixture for an earlier date, subject to counsel‟savailability.[24] Given the unfortunate lapse of three months on what I consider to be a needless interlocutory I would hope that an early fixture can be found for this case. Having heard some of the argument of it this morning my own estimate is that the case is likely to be capable of argument within one day. It would only partly go into the second day. Therefore allocating a Judge to the case for two days would enable both hearing and work on the judgment.[25] The application for transfer of Registry has failed. The plaintiff is entitled to costs on a 2B basis. I approve of Mr Simpson appearing with Mr Elliott, as good practice in the interests of the profession and thereby in the public interest, but this case does not warrant a certificate for second counsel. The quantum of costs is reserved, if counsel cannot agree.Solicitors:Phillips Fox, Wellington, for PlaintiffBell Gully, Auckland, for Defendant