QBE INSURANCE (AUSTRALIA) LIMITED v GAS UNLIMITED LIMITED [2021] NZHC 299 [26 February 2021]

QBE INSURANCE (AUSTRALIA) LIMITED v GAS UNLIMITED LIMITED [2021] NZHC 299[26 February 2021]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2020-409-637[2021] NZHC 299IN THE MATTER of an application in relation to section 9 ofthe Law Reform Act 1936BETWEEN QBE INSURANCE (AUSTRALIA)LIMITEDApplicantAND GAS UNLIMITED LIMITEDRespondentHearing: (Determined on the papers)Counsel: B A Alcorn for the ApplicantC J Hlavac for IAG New Zealand LimitedG K Riach for the RespondentJudgment: 26 February 2021JUDGMENT OF ASSOCIATE JUDGE LESTERThis judgment was delivered by me on 26 February 2021 at 3.00 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy Registrar26 February 2021[1] The applicant, QBE Insurance (Australia) Limited (QBE), seeks directionsunder the Law Reform Act 1936 in relation to the distribution of the proceeds of aninsurance policy held by the respondent, Gas Unlimited Limited.[2] This proceeding relates to a gas explosion that occurred at 9 Marble Court,Northwood, Christchurch, on 19 July 2019, damaging numerous properties andvehicles. The claims made to date for damage arising from that explosion exceed thelevel of cover under the policy by some margin. Hence QBE brings this applicationto set a deadline for the bringing of claims by those affected and to seek a directionthat the insurance monies be distributed pro rata amongst those who have lodgedclaims for compensation, once the claims have been reviewed and accepted.[3] There are two procedural applications before the Court. The first is for leaveto bring this proceeding by way of originating application. The second is that IAGNew Zealand Limited (IAG) has, by memorandum dated 12 February 2021, sought tointervene in QBE's application.[4] IAG is the insurer of the property where the gas explosion occurred. It alsoinsures 77 other properties in the area that were damaged, together with providinginsurance cover for contents and vehicles that were damaged.[5] Counsel for QBE, having had the opportunity to consider IAG's request tointervene, does not oppose that application. Neither does the respondent oppose IAG'sapplication. Accordingly, IAG is granted leave to intervene in this proceeding.Use of originating application procedure[6] I am satisfied this is a case where it is appropriate that the originatingapplication procedure be used. Leave is required as the application is not one that canbe brought as of right by originating application. This is not an application whereinterlocutory applications will be required and, as I set out below, the matter was ableto be resolved at the first call through discussions between counsel for IAG and QBE.That the matter was able to be dealt with in short order reinforces my conclusion thatthe originating application procedure is suitable for this matter and leave is grantedaccordingly.Section 9(1) of the Law Reform Act 1936[7] Counsel for QBE explains that the respondent held a public liability policywith QBE. Following the respondent working on the Marble Court property, therewas an explosion at that property which destroyed that house and damaged otherproperties and vehicles in the vicinity.[8] The respondent and its director have pleaded guilty to charges laid byWorkSafe New Zealand arising from the explosion.[9] Given the estimated combined quantum of the claims arising from theexplosion significantly exceeds the available cover, QBE has sought a direction that itcall for notification of claims from those claiming to have suffered loss. The intent isthat QBE will place advertisements in The Christchurch Press which will call forclaims to be notified within 25 working days from the publication of the lastadvertisement. Upon the expiry of that period, the class of claimants who might beentitled to share in the insurance proceeds will be closed, permitting QBE to distributethe insurance monies pro rata to those who have established their claims.[10] To facilitate that objective, QBE seeks orders that it be directed to call uponthose parties who have already been in touch to lodge claims and to provide sufficientinformation to enable QBE to assess those claims within 25 working days of its lastadvertisement in The Christchurch Press (a draft advertisement is annexed to theapplication). The application then provides that, once QBE has assessed the claims, itwill notify the claimants of the pro rata allocation claimants will receive and, if anythird party wishes to object to that allocation, they will be able to do so. QBEsuggested any party opposing the pro rata allocation once notified be obliged to seekfurther directions from the court within five working days of the date of notification.I consider that timeframe too tight and I amend that to 15 working days.[11] IAG supports the orders sought at paras 1.3 to 1.8 of the originating applicationdated 17 December 2020 which deal with how QBE will call for claims to be madeand the distribution of the funds to successful claimants.[12] Counsel for IAG raises the further matter of the process QBE intends to adoptto assess the validity and quantum of claims.[13] Counsel for IAG suggests it is appropriate the Court direct a process forassessing such claims. The majority of claims notified to date appear to involvesubrogated recoveries on behalf of insurers in which IAG suggests (and I accept)a reasonably robust assessment is likely to have already been carried out. However,there is the potential for uninsured losses to be sought which will not yet have beensubject to any critical assessment.[14] In response to Mr Hlavac's memorandum on behalf of IAG, counsel for QBEsuggested the addition of the following clause to the orders sought:(a) Upon receipt of the claims notified to the applicant pursuant to the stepsset out in paragraphs 1.4 and 1.5 of the originating application(including full details and supporting documents) the applicant's lossadjuster and legal counsel will undertake a desktop assessment of eachvalid claim. That assessment will address the legal liability of therespondent for each claim and the reasonableness of the quantum ofeach claim.[15] Mr Hlavac confirmed that the addition of the above paragraph met his client'sconcerns.Discussion[16] I am satisfied that the orders sought are necessary to allow QBE to advance thedistribution of the available insurance fund. It is appropriate that public notice begiven in the manner proposed, that is, by four advertisements in The ChristchurchPress over a period of two months.[17] Accordingly, I make orders in terms of paragraphs 1.4(a) to 1.8 of theoriginating application dated 21 December 2020, with the addition of the order set outat [14] above and the modification at [10].[18] As discussed with counsel, the proposed public notice attached to theoriginating application is approved with the following additions:(a) Above the words "Gas explosion 19 July 2019 Christchurch: noticeto claimants", there is to appear in bold type "Important Notice".(b) After the last paragraph and before the solicitors' address, the followingwords are to be inserted: "If you have any doubt as to whether thisNotice applies to you, you should take legal advice as a matter ofurgency."[19] Counsel for the respondent has confirmed that, on the basis no costs are sought,the respondent does not intend to oppose the application. Counsel for the applicanthas confirmed no costs are sought in relation to the application. No costs issues wereraised on behalf of IAG. Accordingly, there is no order as to costs.____________________________Associate Judge LesterSolicitors:Fee Langstone, AucklandYoung Hunter, Christchurch