HEALE v IAG NEW ZEALAND LTD [2019] NZHC 2829

HEALE v IAG NEW ZEALAND LTD [2019] NZHC 2829 [1 November 2019]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2018-409-000166[2019] NZHC 2829BETWEEN THOMAS EDWARD FAIRFAX HEALEand ANTHEA CLARE HEALEPlaintiffsAND IAG NEW ZEALAND LIMITEDDefendantAND QBE INSURANCE (AUSTRALIA)LIMITEDProposed First Third PartyAND BUILDTECH RESTORATIONS LIMITEDProposed Second Third PartyAND ENGINEERING DESIGN CONSULTANTSLIMITEDProposed Third Third PartyHearing: 24 September 2019Appearances: A N Riches for PlaintiffsN S Gedye QC and B R Cuff for DefendantD McLellan QC for Proposed First Third PartyP A Cowey and D Bell for Proposed Second Third PartyJ M Morrison for Proposed Third Third PartyJudgment: 1 November 2019JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 1 November 2019 at 4.00 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Introduction[1] This judgment concerns three applications as follows:(a) an application by IAG New Zealand Ltd (IAG) for leave under s 9(4) ofthe Law Reform Act 1936 to join QBE Insurance (Australia) Ltd (QBE)as the first third party;(b) related to (a) above, an application by QBE objecting to the admissibilityof the affidavits of Craig Harvett; and(c) an application by IAG for leave to join Buildtech Restorations Ltd(Buildtech) and Engineering Design Consultants Ltd (EDC) as thesecond third party and third third party respectively.Background and the third party claims[2] The plaintiffs' (the Heales) home at 9 Snowdon Road, Christchurch wasdamaged in the September 2010 and February 2011 earthquakes. They were insuredunder a policy of insurance underwritten by IAG (the policy), providing that IAGwould pay the cost of repairing or rebuilding their home. The Heales made a claimunder the policy and elected to repair their home. IAG accepted the claim.[3] IAG entered into a Rebuild Solution Master Agreement (RSMA) dated13 August 2012 (as amended on 17 November 2014) with Hawkins Management Ltdand Hawkins Group Ltd (Hawkins) for Hawkins to manage the reinstatement ofearthquake damage on behalf of IAG's clients. This was known as the CanterburyHome Repair Scheme.[4] At all material times, Hawkins held professional indemnity and generalliability policies of insurance underwritten by QBE.1 Hawkins is now in liquidation.[5] The Heales took part in the Canterbury Home Repair Scheme. They enteredinto a building contract with Buildtech, dated 4 December 2013, to repair their home1 The policies were in fact issued by QBE Insurance (International) Limited, but QBE has assumedall outstanding obligations under the policies.(the building contract). IAG was not a party to the building contract, but it paid forthe repairs as they were completed.[6] EDC was engaged by Buildtech to provide it with engineering advice inrelation to a geotechnical assessment of the Heales' property, the foundations andrepairs to be carried out to the foundations and other structural elements.[7] The repairs were completed by Buildtech in around March 2015.The Heales' claim against IAG[8] In March 2018, the Heales commenced this action against IAG. They pleadfour causes of action, alleging breach of the policy, breach of the Fair Trading Act1986, negligence and loss of a chance.2[9] There is much factual overlap between the causes of action. In this context, itis more useful to focus on the Heales' complaints. These can be summarised as:(a) they were not advised (or were negligently advised) of the appropriateoptions available to them under the policy;(b) IAG recommended Buildtech to do the repairs, but Buildtech was notcompetent or properly resourced to do so;(c) the repair process was not managed properly;(d) there were serious delays in completing the repairs which were expectedto be completed in 20 weeks, but took over a year;(e) the scope of works was deficient, and the Heales were misled by it;(f) the defective scope of works meant that the Heales had to pay large costsfor works outside the insurance budget;2 The loss of a chance claim is pleaded as a cause of action but is in reality a separately pleadedhead of damage.(g) because of the delays, the policy entitlements for alternativeaccommodation and landscaping were inadequate; and(h) the financial pressure consequent upon the delays, and from being forcedto incur costs that should have been covered under the policy, meant theHeales had no option but to sell their home at an under-value withouttesting the market.[10] In respect of all causes of action, the Heales seek damages in a sum to bequantified at trial, but plead that they have suffered losses of:(a) accommodation costs of $16,042;(b) building costs paid above their insurance budget of $116,929; and(c) loss on the sale of their home of $500,000.IAG's claims against the proposed third parties[11] IAG's application to join third parties is founded on an assertion that theHeales' complaints all involve acts or omissions of Hawkins, Buildtech and EDC, whohad the direct physical responsibility for, and involvement in, the repair of the Heales'home. This is because:(a) Hawkins's project management role was acknowledged in the buildingcontract and comprehensively set out in the terms of the RSMA. It hadresponsibility in relation to the Heales' allegations concerning builderrecommendation, the scope of works, ensuring the implementation andcompletion of the repairs and certifying payments.(b) Buildtech contracted directly with the Heales to do the repairs and wasprimarily responsible for any delays and was, allegedly, generallyincompetent.(c) EDC undertook a geotechnical assessment of the property and a technicalassessment of the extent of the structural damage and reviewed theremediation works proposed by Buildtech, including to the foundations.The Heales allege deficiencies in the foundation requirements. Buildtechidentifies a need to vary the foundation repair as one of two causes ofdelays in the completion of the repairs.[12] In its draft statement of claim against the proposed third parties, IAG makesclaims directly against each of them and, by means of causes of action seekingdeclarations, it is also concerned with the liability of the proposed third parties to theHeales. Mr Gedye submitted that by determining the "nature and extent and causalpotency" of liabilities of Hawkins, Buildtech and EDC to the Heales, the Court maymake an appropriate apportionment of liability between them and IAG. In addition,and assuming IAG is found liable to the Heales under the policy, the declarationswould allow IAG to enforce its rights of subrogation, without further determinationsof the Court.[13] As noted earlier, Hawkins in is liquidation. The first three of IAG's causes ofaction against QBE seek to enforce a charge over all insurance moneys that are or maybecome payable in respect of Hawkins's liability to IAG under s 9 of the Law ReformAct 1936. The first two of these causes of action rely on the terms of the RSMA,which, it is alleged, create indemnity obligations on behalf of Hawkins in respect ofany liability that IAG may be found to have to the Heales. The third cause of actionclaims contribution for any sums IAG is found to owe the Heales as a co-tortfeasorunder s 17(1)(c) of the Law Reform Act 1936 or as equitable contribution, in relianceupon the principles in Hotchin v New Zealand Guardian Trust Company Ltd.3 IAG'sfourth and fifth causes of action against QBE seek declarations that, should the Healesprove their claims against IAG, Hawkins will similarly be liable to them for breachesof a duty of care or the Consumer Guarantees Act 1993, and that QBE must indemnifythem for such loss as they have suffered.[14] Against Buildtech and EDC, IAG pleads the same two contribution pathways.IAG also seeks declarations against Buildtech that it is directly liable to the Heales incontract, in negligence and under the Consumer Guarantees Act 1993. Against EDC,3 Hotchin v New Zealand Guardian Trust Company Ltd [2016] NZSC 24, [2016] 1 NZLR 906.IAG seeks declarations that it is liable to the Heales in negligence and under theConsumer Guarantees Act 1993.Legal principles[15] Rule 4.4 of the High Court Rules 2016 provides:4.4 Third parties(1) A defendant may issue a third party notice if the defendant claims anyor all of the following:(a) that the defendant is entitled to a contribution or an indemnityfrom a person who is not a party to the proceeding (a thirdparty):(b) that the defendant is entitled to relief or a remedy relating to, orconnected with, the subject matter of the proceeding from a thirdparty and the relief or remedy is substantially the same as thatclaimed by the plaintiff against the defendant:(c) that a question or issue in the proceeding ought to be determinednot only between the plaintiff and the defendant but also between–(i) the plaintiff, the defendant, and the third party; or(ii) the defendant and the third party; or(iii) the plaintiff and the third party:(d) that there is a question or an issue between the defendant and thethird party relating to, or connected with, the subject matter ofthe proceeding that is substantially the same as a question or anissue arising between the plaintiff and the defendant.(2) A third party notice must be issued within –(a) 10 working days after the expiry of the time for filing thedefendant's statement of defence; or(b) a longer time given by leave of the court.(3) A third party notice may be issued only with the leave of the court if anapplication for judgment is pending under rule 12.2 or 12.3.[16] Rule 4.8 provides:4.8 Court's power and discretion(1) On an application seeking leave to issue a third, fourth, or subsequentparty notice, the court must have regard to all relevant circumstances,including delay to the plaintiff.(2) On the making of an application of that kind, the court may grant orrefuse leave or grant leave on just terms.[17] Mr Gedye submitted that underlying applications to join third parties is theimportant principle that all persons potentially responsible for a loss should be partiesand present in the same action and at the same trial. The one-action, one-trial principleis supported, he said, by two main considerations: practicalities and justice. The firstconsideration is important, but the latter is the overarching consideration. It is unjust,he argued, that one party should face a claim, and potentially have judgment entered,for all of the loss which other parties have caused or contributed to, and it would beunjust, also, that the parties responsible for a plaintiff's loss should escaperesponsibility, or that their liability should be determined a long time later and in adifferent proceeding and/or trial.[18] I accept Mr Gedye's submissions, which are consistent with the functions ofthird party proceedings identified by Associate Judge Osborne in TSB Bank Ltd vBurgess, as follows:4(a) to safeguard against differing results, and to ensure that the third party isbound by the decision between the plaintiff and the defendant;(b) to ensure the question between the defendant and the third party isdecided as soon as possible after the decision between the plaintiff andthe defendant; and(c) to save the expense of two trials.4 TSB Bank Ltd v Burgess [2013] NZHC 1228 at [36], citing Barclays Bank Ltd v Tom [1923] 1 KB221 (CA) at 224.[19] In TSB Bank, with reference to third party proceedings, Associate JudgeOsborne noted the following relevant principles:5(h) The justification of a third party notice under any one of the heads ofr 4.4(1), such as there being a common issue or question, is closelyrelated to the desirability of comprehensively dealing with MammoetShipping B V v Compter but such considerations may have to yield toothers including the weighing of the convenience to the parties,including in relation to matters such as unreasonable delay..(j) The weighing of the convenience to the parties will involveconsiderations such as whether the third party will, if the third partynotice is sustained, be idly involved in a trial involving issues asbetween the plaintiff and defendant, and vice versa.(k) The weighing of the convenience to the parties will includeconsiderations of any delay to the plaintiff – this is an expressconsideration arising under r 4.8(1) when the Court is considering anapplication for leave to issue a third party notice. The context of theconsideration of delay was explained by Smellie J in Nissan DatsunHoldings Ltd v R Savory Ltd:It [the determination of whether to grant leave to issue a thirdparty notice] is a question of weighing the respective interestof the parties and in this case comparing the prejudice of delayand possible escalation of issues to be argued so far as thePlaintiff is concerned against the danger faced by theDefendant of having to conduct two trials with possibleinconsistent results.(l) The Court should be forward-looking when considering delay to theplaintiff. What matters is the prospect of future delay.(m) When all the circumstances of a proposed third party joinder have beentaken into account, the overriding consideration is the interests ofjustice. In KPMG Peat Marwick v Cory-Wright & Salmon Ltd (in Rec)the Court of Appeal said:The interests of justice between all parties must be paramount if there is delay it will be regrettable but the attainmentof justice by the most efficient means has to be the overridingconsideration.[20] This final point was made also in Turpin v Direct Transport Ltd when CookeJ observed:65 At [38] (footnotes omitted). Whilst Associate Judge Osborne was concerned with applications toset aside third party notices under r 4.16, the principles are applicable in the present context also.6 Turpin v Direct Transport Ltd [1975] 2 NZLR 172 (SC).Ultimately the determining considerations seems [sic] to be to me therequirements of justice to all parties and a reasonably speedy and convenientresolution of all issues.Applications to join Buildtech and EDC as third parties[21] It is convenient to deal first with IAG's application to join Buildtech and EDCas third parties. The application to join QBE raises discrete considerations.[22] As IAG did not issue third party notices to Buildtech and EDC within10 working days after the expiry of time for filing its statement of defence, it mustnow seek leave of the Court to do so.7[23] Based on the principles noted above, the issues that arise in relation to theseapplications are as follows:(a) Are IAG's claims covered by one of the four grounds set out in r 4.4(1)of the High Court Rules 2016?(b) Should the Court exercise its discretion to join Buildtech and/or EDChaving regard to all relevant circumstances, including delay to theHeales?Does r 4.4(1) apply?[24] It was not seriously contended that jurisdiction under r 4.4(1) to join Buildtechand EDC as third parties was not established. The real dispute is whether the Courtshould do so having regard to discretionary factors. Nevertheless, I address thejurisdiction question.[25] A defendant may issue a third party notice where any one of the four groundsset out in r 4.4(1) applies. Mr Gedye's submissions focused on r 4.4(1)(a); that IAGis entitled to a contribution or an indemnity from Buildtech and EDC. Rule 4.4(1)(a)is clearly engaged. In my view rr. 4.4(1)(c) and (d) apply also, as there is a great deal7 High Court Rules 2016, R 4.4(2).of overlap of both facts and issues between the Heales' claims and IAG's third partyclaims.[26] The Heales have sued IAG under the policy, under the Fair Trading Act 1986and as a tortfeasor (for negligence). IAG pleads that both Buildtech and EDC owedand breached a duty of care to the Heales to exercise reasonable care and skill in theperformance of the repair work and that it is entitled to claim contribution from themas co-tortfeasors under s 17(1)(c) of the Law Reform Act 1936. I am satisfied thatsuch a claim is clearly arguable on the facts and the law.[27] In addition, IAG claims contribution in equity in accordance with the principlesenunciated in Hotchin.8 In this regard, it is not necessary that contributors be liable toa plaintiff in tort. Persons sued in contract or under statute, as IAG is in this case, canclaim contribution from others who are responsible for the same damage regardless ofthe source of their obligation.9 The essence of the right lies in the liability to a commondemand. Elias CJ stated in Hotchin:[152] Contribution is an equitable principle which expresses natural justicein its recognition that it is unjust for the burden of meeting a loss for whichothers share responsibility to be borne by one party, to the benefit of thosewho escape liability. The obligations need not be identical in their source orextent. Nor is it necessary that they have the same legal character. It is enoughthat the responsibility for the harm is shared. This is an inquiry that is practicaland directed at the substance of the matter in the particular case. Although thebasis on which contribution is made has often been elaborated in "particularpockets of doctrine" (such as in respect of co-insurance, co-sureties, andtrustees), as Kirby J noted in Burke v LFOT Pty Ltd, the cases rest on moregeneral principles of justice.[153] I consider that the statutory requirement of liability for the "samedamage" adopted in s 17(1)(c) of the Law Reform Act, reflects the principlesof the common law of contribution, from which it was derived. "Coordinateliability" in this context is liability for the same harm. It is sufficient forcontribution if parties are liable to another person in respect of the samedamage. On that view, the reform achieved by s 17(1)(c) and its predecessorswas simply to remove the impediment formerly presented by Merryweather vNixan, leaving the principles on which contribution is based equallyapplicable whether contribution falls within s 17(1)(c) or the common law.8 Hotchin v New Zealand Guardian Trust Company Ltd, above n 3 (footnotes omitted).9 Goff and Jones The Law of Restitution (7th ed, 2007) at 385.[28] The same damage requirement is met in this case. The Heales claim to havesuffered damage represented by accommodation costs, building costs and loss of valueon sale of their home. These are the same forms of damage IAG claims that Buildtechand EDC are liable for.Discretionary considerationsBuildtech[29] It was argued that the Heales' claims against IAG are primarily for breaches ofthe policy and for misrepresentation of the repair timeframes. These claims, it wassubmitted, do not involve Buildtech. For this reason, it was argued, Buildtech will notbe involved in most of the factual and legal matters in issue.[30] The Heales' election to frame IAG as solely responsible for their complaintswas not accepted by IAG and is unrealistic. It ignores, and seeks to evade, the buildingcontract (which was with Buildtech), the Heales' pleadings (making many allegationsagainst Buildtech), and email correspondence between Mr Heale, Buildtech and IAG(to which I shall refer in the context of the application to join QBE). The trial of theHeales' claims will necessarily involve a detailed analysis of Buildtech's acts andomissions in undertaking the repairs on the Heales' home.[31] To illustrate the point, paragraphs 16, 18, 19, 20, 21 31, 35 and 39 of thestatement of claim contain allegations against or concerning Buildtech. At paragraph21, the Heales plead that IAG and Buildtech breached the building contract (despiteIAG not being a party to it) and provide 21 subparagraphs of particulars of the breach.Many of those relate to Buildtech and include allegations of delay, incompetence, lackof communication, demands for unexpected payments, and oppressive behaviour.These allegations against Buildtech were supplemented by the Heales' responses to arequest by IAG for further particulars. IAG's statement of defence puts all contentionsregarding Buildtech in issue.[32] At trial, the building contract between Buildtech and the Heales willnecessarily come under close-scrutiny. Buildtech's documents and its interactionswith the Heales, Hawkins, IAG and EDC are all inseparably linked with the Heales'claim against IAG. It is to be expected that Buildtech will be substantially involvedin the proceeding, whether it is joined as a third party or not, as discovery of itsdocuments will be required and its personnel will likely be required as witnesses.[33] The Heales and Buildtech relied upon Self-Realization Meditation and HealingCentre Charitable Trust (New Zealand) v IAG New Zealand Ltd, which involvedsuccessful applications to strike out third party notices against builders. 10 One of thereasons for that was the risk that the third parties would sit idly while the plaintiff'sclaim against the defendant took up the preponderance of preparation and trial time.Self-Realization does not represent, as I understood was suggested, a change ofapproach to third party joinder in the post-earthquake environment. Cases wherejoinder applications are refused due to discretionary considerations inevitably turn ontheir own facts. The facts of the present case are quite different from those in Self-Realization where the third party builders had very little involvement in the work thatwas the subject of the claim and very few of the allegations made involved them.11That is not the case with Buildtech.[34] Buildtech argued that IAG carried an onus to provide a reason for a 13-monthdelay in making this application and the inference should be drawn that this applicationrepresents a change in its litigation strategy. Delay is not a matter that Buildtech canrely on for two reasons. First, it has not been involved in the proceeding to date andhas not been affected by the delay. Second, there is a reasonable explanation for thedelay. A perusal of the court file reveals that progress of this claim was been slowedby Mr Heale's ill-health, the Heales' change of counsel and because until late March2019 it appeared that the Heales might consent to the joinder of third parties.12 Whenit was clear the Heales would not consent, IAG moved promptly to join additionalparties in accordance with a direction of the Court of 25 March 2019.[35] The Heales argued that the joinder of third parties would cause future delaybecause of the need for the third parties to provide discovery and undertake inspection10 Self-Realization Meditation and Healing Centre Charitable Trust (New Zealand) v IAG NewZealand Ltd [2018] NZHC 2077 (2018 decision); Self-Realization Meditation and Healing CentreCharitable Trust (New Zealand) v IAG New Zealand Ltd [2019] NZHC 763 (2019 decision).11 2018 decision, above n 10, at [65]-[66].12 I understand the Heales originally did not oppose the joinder of QBE but have now changed theirposition.and that the trial would be extended from three to 10 days. In reliance upon TSB BankLtd v Burgess, it was argued that the joinder of additional parties creates a greater riskof appeals.13 These submissions do not have significant weight in this case. Theconcerns about discovery and inspection can be assuaged through appropriate casemanagement. The case is still at a relatively early stage, no trial date has been allocatedand there will be sufficient time for interlocutory steps to be completed by third partieswithout delaying the trial. The estimation of the duration of the trial of just three daysis unrealistic when one considers the issues that IAG intends to raise in defence. In sofar as the duration of the trial is extended, this can be compensated in costs. I also donot accept that the joinder of additional parties increases the risk of an appeal. It couldbe convincingly argued that additional parties increase the likelihood of settlement bybringing all potentially liable parties to the negotiating table.[36] It was argued that joining third parties will result in an escalation of the issuesfrom those presently pleaded by the Heales. I accept this is so, notably in relation toIAG's claims against QBE, but its significance should not be overstated. This isbecause the submission wrongly characterised the Heales' claim as being basedprimarily upon the policy and thereby failed to recognise Buildtech's role (andpotentially, liability for) the matters the Heales complain about. The following issuesthat Buildtech identified as issue escalations are in fact matters that will necessarily bethe subject of the hearing between the Heales and IAG:(a) the interpretation of the building contract;(b) whether Buildtech acted negligently;(c) what contractual obligations Hawkins, as project manager, owed to theHeales, and whether those were breached;(d) whether Hawkins acted negligently; and(e) whether EDC acted negligently.13 TSB Bank Limited v Burgess, above n 4, at [70].[37] In reliance upon Self-Realization, it was submitted that uncertainty as to IAG'sentitlement to declaratory relief is a factor the Court should consider in exercising itsdiscretion to disallow joinder. The strength of IAG's case against the proposed thirdparties is a relevant factor to be considered but IAG does not seek only declaratoryrelief.[38] It was submitted that there is no risk of inconsistent findings if the proposedthird parties are not joined. I do not accept that submission. The Heales' case is notspecific in nature or confined to enforcing their rights under the policy. It involves arange of legal and factual issues involving not only IAG but Hawkins, Buildtech andEDC. To take an example, at trial it will be in issue whether and to what extent IAGis responsible for acts and omissions of Buildtech and whether those acts andomissions were causative of the Heales' claimed losses. If Buildtech is not joined asa party, it will not be bound by the findings of the Court and there is a clear risk ofdiffering results in any later proceedings between it and IAG.[39] It was submitted it is significant that the Heales have chosen to proceed againstonly IAG and that if third parties are joined the Heales and the proposed third partieswill be unfairly pressured to settle. In Self-Realization, Nation J noted:14The well-recognised risks, costs and burdens of litigation are often a majorinducement to settle proceedings such as these. Joining Onward as a thirdparty would create a risk that, through the costs and burden of being a party tothe proceedings, Onward could be unfairly pressured to contribute to asettlement of a dispute which, in essence, is between Self-Realization andIAG, and now between IAG and QBE. The potential for the joinder of a thirdparty to cause unfair pressure to be put on a party to resolve its part inproceedings in a way that might be unjust was a factor which McGechan Jtook into account in declining leave to allow a third party in Mammoet.[40] Mr Gedye argued that IAG must be entitled to assert and adduce evidence onthe true substantive issues and causes of alleged harm, regardless of any "artfulframing" of their case by the Heales. He also argued against the adoption of a principlethat joinder may be refused where the third party may be unfairly pressured to settle,which he said is dubious and not supported by the leading authorities. There is supportfor such a principle in Mammoet Shipping BV v Compter, to which Nation J referred,14 2019 decision, above n 10, at [109] (footnotes omitted).but I accept that was a very different case from the present. 15 The concern there wasthat if the Watersiders Workers' Union was joined as a third party, the plaintiff, whowas part of a major shipping line, could be subject to industrial pressure and forced togive up its claim.[41] What Nation J was concerned with in Self-Realization was the prospect of thebuilders being pressured to settle rather than bear the costs and burden of litigationwhich to a large extent did not concern them. He emphasised this at [109] when hesaid the dispute, "in essence, is between Self-Realization and IAG, and now betweenIAG and QBE." In this case, the acts and omissions of Buildtech will be the focus ofa great deal of the hearing. I have no reason to believe that if Buildtech (or EDC forthat matter) is joined, any party will be unfairly pressured to settle other than on themerits.[42] It was argued that IAG may bring its claims against Buildtech in otherproceedings. That would be inefficient, run the risk of inconsistent decisions andwould not bind Buildtech to findings made in this proceeding. These are all resultsthat the third party procedure is intended to avoid.EDC[43] In admirably focused submissions, Mr Morrison argued that r 4.4 was anenabling procedure of convenience. The Heales' claims were founded upon thepolicy, he said, and IAG's third party claim against EDC was not identical with theHeales' claim against IAG nor so closely related as to require EDC to be a party to it.The argument that EDC owed the Heales a duty of care in respect of delay could notstand in the absence of a stipulation of time for performance in the contractualarrangements between Buildtech and EDC. EDC had very little involvement with thematters in issue and such involvement as it did have could not be construed ascausative of any loss claimed by the Heales. EDC should not therefore be put to thecost and inconvenience of being joined as a third party.15 Mammoet Shipping BV v Compter HC Whangarei CP13/86, 6 July 1987.[44] It is the case that EDC had less involvement in the repair work than eitherHawkins or Buildtech. EDC has filed an affidavit of Mr Learman as to EDC's limitedinvolvement and denies that EDC approved the foundation works or a re-level designand says it did not cause or contribute to delays. However, Mr Learman had onlyperipheral involvement with the work and his evidence is disputed and not easy toreconcile with the facts that EDC undoubtedly provided geotechnical and structuralengineering reports to Buildtech in September and October 2013 and advice in respectof the repair strategy and foundation works proposed by Buildtech. Mr Morrisonresponsibly accepted that there are factual disputes, including as to EDC's contractualarrangement with Buildtech, which cannot be determined on this application.[45] In my view, IAG has laid an adequate evidential foundation to show that EDCdid contribute in a more than peripheral way to delays in the repairs and the extent towhich it caused delays will form a not insignificant part of the trial evidence and theCourt's findings.Conclusion[46] There are significant benefits to IAG, but also to the Heales, Buildtech andEDC, and in respect of the efficient use of the Court's resources, in making ordersjoining Buildtech and EDC as third parties. To refuse the application would mean:(a) the loss of opportunity to have all issues as between all the partiesresolved in one trial;(b) the consequential possibility that inconsistent decisions occur;(c) the reality that separate proceedings will result in a duplication of costs;(d) the avoidance of confusion, prejudice or oppression for individualparties; and(e) a higher prospect of a final resolution by alternative dispute resolutionshould all relevant parties be involved.[47] I accept that joining third parties may result in some delays and escalation ofthe issues to be determined at trial. However, in circumstances where the attainmentof justice by the most efficient means is the overriding consideration, I am satisfiedBuildtech and EDC should be joined as third parties.Application for leave to join QBE as a third party[48] At material times, Hawkins held professional indemnity and general liabilitypolicies of insurance with QBE. Hawkins is in liquidation and cannot meet itsliabilities. IAG claims that it has a charge on the insurance monies that are or maybecome payable in respect of Hawkins's liability to IAG under s 9(1) of the LawReform Act 1936. IAG requires leave to join QBE as a third party.[49] Relevantly, ss 9(1) and (4) of the Law Reform Act 1936 provide:(1) If any person (hereinafter in this Part referred to as the insured) has,whether before or after the passing of this Act, entered into a contractof insurance by which he is indemnified against liability to pay anydamages or compensation, the amount of his liability shall, on thehappening of the event giving rise to the claim for damages orcompensation, and notwithstanding that the amount of such liabilitymay not then have been determined, be a charge on all insurancemoneys that are or may become payable in respect of that liability.(4) Every such charge as aforesaid shall be enforceable by way of an actionagainst the insurer in the same way and in the same court as if the actionwere an action to recover damages or compensation from the insured;and in respect of any such action and of the judgment given therein theparties shall, to the extent of the charge, have the same rights andliabilities, and the court shall have the same powers, as if the actionwere against the insured:provided that, except where the provisions of subsection (2) apply, nosuch action shall be commenced in any court except with the leave ofthat court.[50] For present purposes, the relevant insurance policy between QBE and Hawkinsis professional indemnity policy number 800039638PLI. It is a claims-made-and-notified policy. The insuring clause reads as follows:The Insurer agrees to indemnify the Insured for any sum or sums which theInsured may become legally liable to pay to third parties arising from anyClaim first made against the Insured during the Period of Insurance andnotified to the Insurer during the same period, arising out of any act, error oromission in connection with the Professional Activities and Duties of theInsured.[51] A "Claim" is defined under the policy as follows:"Claim" shall mean:(a) the receipt by the Insured of any written notice or demand forcompensation made against the Insured; or(b) any writ, statement of claim, summons, application or other originatinglegal or arbitral process, cross-claim, counterclaim or third or similarparty notice served upon the Insured; or(c) any circumstances of which the Insured shall become aware during thePeriod of Insurance which may give rise to a claim under (a) or (b)above against the Insured.[52] In the event of any Claim, Hawkins's duties under the policy were to givenotice to QBE as soon as practicable during the Period of Insurance and within 28days of the end of the Period of Insurance of any Claim under the Insuring Clause,notify circumstances which might give rise to a Claim under the Insuring Clauseduring the Period of Insurance and not to admit any liability or settle or make orpromise any payment in respect of any Claim which may be the subject of anindemnity under the policy without QBE's written consent.[53] It is common ground that Hawkins did not notify QBE of any circumstancethat might give rise to a Claim under the policy during the Period of Insurance (orwithin 28 days of the end of the Period of Insurance) in respect of the repair work at9 Snowdon Road. For present purposes this is not material. The effect of s 9 of theInsurance Law Reform Act 1977 is that an insurer can only decline cover on the basisof an insured breaching a policy condition requiring the insurer to be notified of aclaim in a particular manner or within a particular time, if the insurer has not been soprejudiced by the insured's failure that it would be inequitable if the provision did notbind the insured.16 QBE did not raise the question of prejudice in response to thisapplication.[54] It is agreed that to obtain leave under s 9(4), a claimant must satisfy thefollowing three criteria:16 Sinclair Horder O'Malley v National Insurance Company of New Zealand Ltd [1992] 2 NZLR706 (HC) at 714.(a) there is a prima facie claim against the insured;(b) the insured has a prima facie claim under the policy of insurance; and(c) the insured is not a perfectly good common law defendant.[55] QBE accepted that criteria (a) and (c) are met in this case. Only criterion (b) isin issue.[56] The relationship between IAG and Hawkins at the relevant times was foundedon the RSMA. QBE accepted that Hawkins's performance of its functions under theRSMA falls within the policy's definition of Professional Activities and Duties of theInsured.[57] At trial there will be differences between IAG and QBE as to the scope ofHawkins's responsibility under the RSMA. I understand that it is accepted that it isnot appropriate, nor necessary, to review the nature and extent of Hawkins's role underthe RSMA in any detail because a proper analysis can only be undertaken at trialwithin the relevant factual matrix. Mr McLellan submitted that IAG's applicationshould proceed on the assumption that IAG's pleadings are accepted.[58] Against this background, the key issue is whether, during the relevant Periodsof Insurance, Hawkins became aware of circumstances in relation to 9 Snowdon Roadwhich may have given rise to a Claim against it.[59] Before turning to consider that issue, it is necessary to deal with an objectionby QBE to the affidavits of Craig Harvett filed on behalf of IAG in support of itsapplication.Affidavits of Craig Harvett[60] Mr Harvett has experience and qualifications in project management in theconstruction sector. He made a substantive affidavit dated 23 August 2019, whichwas updated on 16 September 2019. He was asked by IAG to provide expert opinionon issues surrounding the project at 9 Snowdon Road and specifically:(a) What responsibilities did Hawkins have in its capacity as projectmanager for the repair work?(b) What parts of the Heales' complaints contained in their statement ofclaim relate to areas which Hawkins was responsible for?(c) What would Mr Harvett's response have been to emails that were sentby Mr Heale with complaints during the repair project (to which I willsoon refer in more detail)?[61] QBE argued that Mr Harvett's affidavits should be ruled inadmissible becausethe Court is unlikely to obtain any substantial help from his evidence in understandingthe other evidence or in ascertaining any fact that is of consequence to thedetermination of the proceeding.[62] IAG argued that Mr Harvett's affidavits are admissible as a relatively high-level summary of Hawkins's role and responsibilities in the repair process and usefulalso to give the Court an understanding whether a reasonable project manager inHawkins's position would have been aware of circumstances that might give rise to aclaim. To the extent that there might be criticisms of Mr Harvett's evidence, it wassubmitted that these go to weight rather than admissibility.[63] On the view I have taken, the admissibility of Mr Harvett's affidavits makesno difference to the outcome of this application and therefore I shall state my viewson QBE's objection briefly.[64] The starting point is s 25 of the Evidence Act 2006 which states:(1) An opinion by an expert that is part of expert evidence offered in aproceeding is admissible if the fact-finder is likely to obtain substantialhelp from the opinion in understanding other evidence in the proceedingor in ascertaining any fact that is of consequence to the determinationof the proceeding.(2) An opinion by an expert is not inadmissible simply because it is about–(a) an ultimate issue to be determined in a proceeding; or(b) a matter of common knowledge.[65] Mr McLellan also relied on r 9.43 of the High Court Rules 2016 and the Codeof Conduct for Expert Witnesses in sch 4. The requirements of the Code include that:(a) an expert has an overriding duty to assist the court impartially on relevantmatters within the expert's area of expertise;(b) an expert is not an advocate for the party who engages the witness;(c) in any evidence given by an expert witness, the expert witness must:(i) state the issues the evidence of the expert witness addresses andthat the evidence is within the expert's area of expertise;(ii) state the facts and assumptions on which the opinions of the expertwitness are based; and(iii) state the reasons for the opinions given by the expert witness.[66] In providing his opinion, Mr Harvett reviewed several documents, all of whichare before the Court. Ultimately, at trial these documents will be subject to detailedanalysis to determine exactly what obligations Hawkins owed to the Heales and IAG.On this application, the Court is well-equipped to analyse those documents for itself(without the benefit of expert opinion) bearing in mind also that it is accepted by QBEthe Court should proceed on the assumption that IAG's pleadings are accepted.[67] In so far as Mr Harvett expresses a view as to how he would have respondedto Mr Heale's emails, that evidence is clearly unhelpful in circumstances where (as Ishall come to) the test to be applied is what a reasonable person standing in Hawkins'sshoes would have understood from them. In addition to that, what is particularlytroubling about Mr Harvett's affidavits are his strong and prejudicial factualconclusions combined with pejorative language that indicates a lack of independence.Mr McLellan submitted, and I accept, that expressions in Mr Harvett's affidavit areillustrative of an extravagant and, against the limited information he has reviewed,partial attitude to his role. I do not find Mr Harvett's affidavits helpful and do nothave regard to them in reaching my conclusions on this application.Circumstances and emails[68] Both parties agree that the relevant test of what amounts to a notifiablecircumstance is as set out in Attorney-General v AON New Zealand Ltd where,following a review of the authorities, Mallon J said:17 the 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 orunlikely. However, providing there is a real or definite risk of a claim, noticeis required even if the claim is not probable.[69] In J Rothschild Assurance plc & Ors v Collyear & Ors, Rix J noted the dualpurposes of provisions that either require or permit the insured to notify its insurer ofcircumstances that may give rise to a claim.18 First, these provisions are essential tothe operation of a claims-made policy because otherwise, by the time a claim came tobe made, it is quite likely that it would have become impossible to obtain cover, eitherat all or on any but prohibitive terms. Second, these provisions enable underwriters toadopt or require such immediate steps as they think appropriate to minimise or avoidany potential loss. Rix J considered that the test for materiality for notice is a weakone – "which may give rise to a claim", not "which is likely to give rise to a claim."[70] In Ministry of Education v McKee Fehl Constructors Ltd, the Minister ofEducation sued a range of parties when a school developed water leaks.19 The partiesincluded RDT, which was the project manager of the school construction. One of theallegations was that the roofing membrane used in the construction was different fromthat specified in the plans. RDT wanted to argue that the architect for the project owedit a duty of care to ensure that it did not use the wrong roofing membrane. By the timeof the litigation, the architect no longer existed and RDT wished to pursue its insurersunder s 9(4) of the Law Reform Act 1936. The insurers resisted the application byarguing that the architect did not know of any circumstances during the policy periodthat it should have notified.17 Attorney-General v AON New Zealand Ltd HC Wellington CIV-2005-485-1814, 10 April 2008 at[66]. The test has been applied in Minister of Education v McKee Fehl Constructors Ltd [2018]NZHC 1177, [2018] NZAR 970 at [42] and Barnes v QBE Insurance (International) Ltd HCAuckland CIV-2010-404-5651, 4 April 2011.18 J Rothschild Assurance plc v Collyear [1998] All ER (D) 431, [1999] Lloyd's Rep IR 6.19 Minister of Education v McKee Fehl Constructors Ltd, above n 17.[71] Thomas J undertook an analysis of the authorities and of the evidence andfound that during the currency of the relevant insurance policy the architect hadeffective notice that the school had developed a weathertightness issue, that the projectmanager had asked the architect whether it had approved a change of roofingmembrane and that the Ministry of Education was considering legal action. She wassatisfied, given this information, that a reasonable person in the architect's positionwould have considered that a claim was a definite risk or real possibility, as opposedto a remote possibility. She stated:20[The architect's] knowledge of potential liability was considerably more thangeneral knowledge of a product defect or class action in respect of a defectiveproduct. The information before [the architect] was project and contract-specific, having the effect of identifying a breach of its contractual obligations.The prospect of a claim clearly sprang to Mr Watson's mind, leading him toenquire about legal action.[72] Most recently in Euro Pools plc v Royal v Royal & Sun Alliance Insurance plc,the Court of Appeal in England considered the principles relevant to determiningwhether there had been a notification of circumstances for the purposes of an insurancepolicy.21 Euro Pools claimed to be entitled to indemnities under policies ofprofessional indemnity insurance that had been in operation between 2006 and 2008in respect of swimming pools it had installed for third parties. The issue that arosewas whether expenses incurred in installing a new hydraulic system to power movablebooms at several pools were incurred to mitigate potential claims arising fromcircumstances notified by Euro Pools during the first 2006/2007 policy of insuranceor whether they arose from circumstances notified under the second policy ofinsurance. This was relevant because different limits of indemnity applied.[73] In her judgment, Dame Gloster noted "a provision which refers tocircumstances that 'may" give rise to claims' sets a deliberately undemanding test."2220 At [57].21 Euro Pools plc v Royal & Sun Alliance Insurance plc [2019] EWCA Civ 808, [2019] All ER (D)85.22 At [39].[74] Males LJ observed:23"Circumstances" is a broad term. Sometimes the insured will be able tospecify with a high degree of precision what it is that gives rise to thepossibility of a Claim. On other occasions, however, it may be able to do littlemore than to point to the fact that something is not working for a reason whichhas yet to be ascertained – sometimes referred to as a "can of worms" or"hornet's nest" notification. Provided that this is something which mightreasonably be expected to produce a Claim by a customer for which the insurermay (not necessarily will, but may) be liable under the policy, there is noreason in principle why a notification should not be in these terms.[75] In the case of HLB Kidsons (a firm) v Lloyds Underwriters, the generalapproach to an analysis of a notification clause was set out by Toulson LJ.24 Notably,at [134] he said:There are two parts to that phrase: the awareness of a circumstance, which isa pure matter of fact, and the characterisation of the circumstance as one whichmay give rise to a claim against the insured.[76] To similar effect, in Minister of Education v McKee Fehl Constructors Ltd,Thomas J considered that the two questions that the Court needed to consider were:25(a) what was the Insured's position; and(b) would a reasonable person in that position consider there was areasonable possibility of a claim?[77] Against that background, it is now convenient to turn to emails sent byMr Heale to Buildtech, IAG and Hawkins which IAG says put Hawkins on notice thatthere was a real and definite risk of a claim being made against it arising out of therepair project at 9 Snowdon Road.[78] The emails begin with a chain between Mr Alvin Wade, project manager ofBuildtech, and Mr Heale between 6 March 2014 and 10 March 2014. AMr McCallum, of Hawkins, was blind-copied into this email chain by Mr Heale. Thebuilding contract had been signed but work had not begun. Mr Heale was unhappywith Buildtech. In his 10 March 2014 email, he said that he was hurried to sign thebuilding contract and posited he may have been "deliberately duped into signing that23 At [94].24 HLB Kidsons (a firm) v Lloyds Underwriters [2008] EWCA Civ 1206 at [134] – [142].25 Minister of Education v McKee Fehl Constructors Ltd, above n 17, at [43].contract." He said he had suffered "detriment and loss" and that there was no way thatBuildtech could finish the work on time. He disbelieved Buildtech's assertion that ithad been waiting on an asbestos report before it could commence work. Mr Healesaid that he would provide an "accurate costing" of the amount per week that he wouldseek to recover from Buildtech for delay, to be assessed at the end of the project. Hecomplained of unnecessary upheaval, pointless expense, distress, anxiety and acomplete inability to make plans "all inflicted through casual indifference."[79] On 10 March 2014 also, Mr Heale emailed Mr McCallum and complained thatBuildtech had not been keeping him informed (but misinformed), did not enjoy hisconfidence and, "I do not think the [building contract] can any longer be consideredas binding on me." He asked whether Hawkins had another firm of builders who couldtake over the project.[80] There was then a gap in the Heales' complaints until August 2014. There wasan email chain from 8 August 2014 to 19 August 2014 between the Heales, IAG,Hawkins and Buildtech. Mr Heale was disbelieving of a report from Buildtech thatinternal works were "progressing well." Mr Heale was concerned about the lack ofprogress and communication. He complained that no-one had been on the propertyover the last week. It appears that relations with Buildtech had not improved.[81] On 2 September 2014, Mr Heale emailed IAG and Hawkins complaining aboutdelays and an absence of understanding of their cause. He also complained about alack of communication, pointedly noting, "we should be quite clear that in exchangefor no information we now receive wrong information". He noted that littleprogress had taken place over the last month and that the project was to be finished bythe end of June 2014, but he had been told the house would be finished by the end ofOctober 2014. He was seeking confirmation that this date was "real" because "if thecurrent rate of work progress continues the house will, of course, never be repaired."He noted the delays were incurring inconvenience and costs.[82] On 8 September 2014, Mr Heale emailed IAG, Hawkins and Buildtech.Mr Heale complained of falsified timesheets, referred to financial loss and said, "thereis no way that I am prepared to bear any of the costs incurred through thisdiscrepancy."[83] On 17 September 2014, Hawkins was copied into an email Mr Heale sent theprevious day to his insurance broker and lawyer. This had been forwarded to IAG andthen emailed by Sharon Moore, at IAG, to Mr Cunningham and to Buildtech.Ms Moore was plainly concerned at the possibility that the Heales would take legalaction. She stated, "we need to report urgently as the customer is looking to go legal."She had sympathy for Mr Heale's complaints and referred to his significant financialhardship. The 16 September 2014 email, which had caused this concern, was a tirade.It referred to 9 Snowdon Road being a total constructive loss and the house being nouse to the Heales. Mr Heale complained of the delays and referred to quality issues.He referred twice to advice that he had received from "our engineer" thus indicatingthat he had retained expert advice on issues of concern to him. He referred repeatedlyto compensation and stated, "the house is a total loss. I want this ended" and finishes,"we look forward to our trust being justified preferably with a cheque from [IAG]for the full amount."[84] On 29 November 2014, Mr Heale emailed Mr Burling of IAG. This wasforwarded to Hawkins the next day. He continued to be aggrieved about delays, costsand management of the repair project. He noted that he had told his broker that hewanted to make a claim, "for a total loss on the house."[85] On 3 March 2015, Mr Heale sent an email to Mr Burling complaining aboutBuildtech and costs and the need to contain the situation. Mr Burling told him hewould discuss these matters with the manager at Hawkins.IAG's position[86] IAG argued that Mr Heale was vocally and justifiably aggrieved about manyaspects of the repair project over a long period. Mr Heale's experience with Buildtechwas highly unsatisfactory and there was mention on several occasions by Mr Heale oflosses and/or compensation. The repair project on the Heales' home had undeniablygone badly, and Mr Heale was disputatious, resourceful and articulate and a personwho, from all appearances, was more, rather than less, likely to pursue claims.Hawkins had a central role in pre-qualifying and recommending Buildtech, monitoringaspects of its work and inspecting work and certifying payments. Hawkins had anobvious exposure to complaints about any aspect of Buildtech's work. IAG arguedthat these factors, in combination with the email chain, particularly the 17 September2014 email from IAG and the 16 September 2014 email from Mr Heale to his brokerand his lawyer, met the required test for circumstances that may give rise to a claim.QBE's position[87] Mr McLellan submitted that the circumstances must disclose a definite risk, orreasonable possibility, of a claim. The possibility of a claim must be more than remoteor unlikely and where an insured purports to give notice in relation to a project, and isnot able to identify any systemic failure, there must be some specificity in thecircumstances which discloses a real risk of a claim in relation to that project. Hesubmitted that there were no such notifiable circumstances during the relevant periodsof insurance for several reasons.[88] First, in Mr Heale's email correspondence there was no criticism of Hawkinsand nothing, Mr McLellan submitted, to indicate that Hawkins had or might receive ademand for damages and/or compensation or be held liable for any of the Heales'losses. He submitted that Hawkins was only copied into correspondence to assist inco-ordinating a response to Mr Heale's concerns.[89] Second, Mr McLellan relied upon Rothschild, where Rix J expressed the viewthat, " it is legitimate to test a view of what the future may bring, where that viewhas been contemporaneously and prophetically expressed, against what happened indue course."26 In this case, Mr McLellan said, the opposite is true because the futurehas clearly demonstrated that the Heales were never intending to issue legalproceedings against Hawkins and did not see a connection between Hawkins andBuildtech as IAG asserted. He relied upon Mr Heale's affidavit of 21 June 2019.26 J Rothschild Assurance plc v Collyear, above n 18.[90] Third, Mr McLellan argued that it is significant that the Heales' complaintswere made during the construction process, but they subsequently signed a notice ofpractical completion on 9 March 2015 and no claim was then made for several years.This served to confirm that no notifiable circumstances existed during the period reliedon.[91] Fourth, Mr McLellan countered an argument for IAG that because ofHawkins's contractual obligations to IAG, a claim against Hawkins by IAG was anequally obvious prospect in any case where the owner was aggrieved, by referring tothe RSMA which notably contained, at cl 18.3, that IAG had no recourse to Hawkinsand Hawkins no liability to IAG for any loss, costs, damages or otherwise whatsoeverfor any delays in reinstating any particular project.[92] Fifth, Mr McLellan argued that it is highly significant that notice of a potentialclaim in respect of 9 Snowdon Road was first provided by IAG to QBE on 6 July 2018after the lapse of Hawkins's insurance policies. He submitted that, if in the periodMarch 2014 to March 2015 there really were circumstances indicating a claim by IAGagainst Hawkins, it would be expected that IAG would have given notice to Hawkinsearlier than four years after the period identified as relevant by IAG.[93] Sixth, Mr McLellan argued that the key issue in the application can be testedby considering whether, had Hawkins given timely notification to QBE of all thecircumstances relied upon by IAG, QBE would have been able to reject the purportednotification. He submitted that all Hawkins would have been able to tell its insurerduring the policy periods relied upon by IAG was that one of the homeowners wasslightly concerned about some of the workmanship of its builder and vocally aggrievedabout substantial delays in the repair process, which was not an uncommon complaintin the context of the Christchurch Rebuild. Hawkins would not, he contended, havebeen able to point to any specific complaint that had been levelled against it, or anyfactual allegation that indirectly implicated Hawkins. On this analysis, thecorrespondence would not have met Rix J's weak test for materiality of notice inRothschild.Discussion[94] In the present context, IAG is not required to definitively prove that the policyresponds to IAG's claim against Hawkins. This will ultimately be a question for trial,where the parties will have the benefit of discovery and, presumably, after hearingevidence from the Heales as well as Buildtech's and Hawkins's personnel.Mr McLellan has accepted this approach and reserves QBE's position under s 9 of theInsurance Law Reform Act 1997 and has not advanced any evidence or argumentabout late notification prejudice. All IAG presently needs to show is a prima faciecase that notifiable circumstances arose during the relevant period of insurance.[95] The kernel of Mr McLellan's argument was that in all the circumstances,including the content of Mr Heale's emails, there was never any specific complaint orsuggestion of a potential claim against Hawkins. Based on the authorities, particularlyRothschild and Euro Pools, I do not accept that there needed to be an express referenceto a complaint or claim against Hawkins to satisfy the relevant test. Subparagraphs(a) and (b) of the definition of "Claims" in the policy deal with the circumstance wherea specific complaint or claim is made, but subparagraph (c) must include facts fallingshort of express advice of a potential claim or express advice of alleged wrongdoing.[96] In my view, in circumstances where threats of seeking compensation againstBuildtech had been made repeatedly, involving aspects of the project over whichHawkins had a central involvement, it would be reasonable to assume that if any claimeventuated the Heales might also look to Hawkins. Mr Gedye pointed out, correctlyin my view, that it is apparent from Mr Heale's email to Hawkins of 10 March 2014that he regarded Hawkins responsible for builder selection which was one of his majorcomplaints. It is also significant that Mr Heale copied Hawkins in on these complaints.While Mr McLellan submitted this was because he was looking to Hawkins to assistin co-ordinating Buildtech's response, it is equally likely that he regarded Hawkins ashaving a responsibility for the situation that had developed.[97] I do not find Mr Heale's evidence that he and his wife "have no complaint orclaim against Hawkins" and have "no knowledge of actions which would give rise toa claim against Hawkins" at all convincing. Mr McLellan accepts that the evidence isnot determinative. There is much in Mr Heale's affidavit which I do not accept ascontrary to the contemporaneous documents and his own email correspondence. Hisefforts to distance his complaints from Buildtech is one example.[98] I do not accept, either, the view of Rix J in Rothschild that it is helpful to haveregard to what happened when assessing objectively whether circumstances existed ata relevant time in the past. That is a logical fallacy. But in any event, Mr Gedye iscorrect that IAG did in fact bring a claim against Hawkins derived from the delays andthe other complaints voiced by Mr Heale in 2004 and 2005.[99] I am not assisted by Mr McLellan's argument that the key issue can be testedby considering whether QBE could have, or would have, rejected a notification fromHawkins at the relevant time. That is just a restatement of the key issue in anotherguise. How QBE might have responded to that notification had it been made isirrelevant. IAG does not need to show that QBE would have agreed with Hawkins'sview on the possibility of a claim at the time.[100] Whilst Mr McLellan relied on the generality in Mr Heale's complaints, itappears to me that there was adequate specificity in them to demonstrate that a claimwas reasonably possible and that such claim could be brought against Hawkins byeither the Heales, IAG or indeed Buildtech. Hawkins's contractual role in projectmanaging the work, coupled with the repeated nature of the Heales' complaints, whichwere specifically directed to aspects of the project for which Hawkins hadresponsibility, was sufficient to put it on notice that there was a very serious problemwith Buildtech's performance which might result in a claim. By 17 September 2014,Hawkins was aware that matters had escalated to the point where the Heales hadinvolved their lawyer. Hawkins knew a great deal more than that the Heales were"slightly concerned" about some aspects of the workmanship of its builder and"vocally aggrieved" about substantial delays in the repair process. Mr Heale was,from the very start of the contract, under the belief that he had been duped, thatBuildtech was not up to the job and should be replaced and that the delays and otherfaults had cost him losses for which he was intending to seek compensation. Theinformation was project and contract-specific and identified breaches of contract byBuildtech that involved Hawkins. The prospect of a claim was obvious to IAG andthat was notified to Hawkins.[101] IAG has, at this interlocutory stage, satisfied me that there is an arguable casethat notifiable circumstances existed during the relevant period of insurance. IAG willaccordingly be given leave to commence proceedings against QBE.Result[102] IAG is granted leave under s 9(4) of the Law Reform Act 1936 to continue itsthird party statement of claim dated 31 August 2018 against QBE Insurance(Australia) Ltd and to join QBE as the first third party.[103] IAG is also granted leave pursuant to r 4.4 of the High Court Rules 2016:(a) joining Buildtech Restorations Ltd as the second third party in thisproceeding;(b) joining Engineering Design Consultants Ltd as the third third party inthis proceeding; and(c) that the third party notice and the statement of claim by IAG againstBuildtech and EDC is to be filed within 10 working days of this orderand served upon Buildtech and EDC as soon as reasonably practicablethereafter.[104] If any party seeks costs, memoranda should be filed within 14 days with 14days to reply. I will determine any issue of costs on the papers.[105] The case will be set down for a telephone conference at 2.15 pm onWednesday, 4 December 2019. Counsel should file memoranda at least threeworking days prior to the conference. The issues for discussion at the conference shallbe all matters listed in sch 5 of the High Court Rules 2016._______________________O G PaulsenAssociate JudgeSolicitors:Saunders & Co, ChristchurchDLA Piper, WellingtonHazelton Law, WellingtonParry Field Lawyers, ChristchurchRainey Collins, Wellington