DEWES v IAG NEW ZEALAND LTD & ORS [2019] NZHC 2270

DEWES v IAG NEW ZEALAND LTD & ORS [2019] NZHC 2270 [11 September 2019]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2017-409-662[2019] NZHC 2270BETWEEN CATHERINE FRANCES DEWES,ROBERT DENTON GREEN and DIANAROSEMARY SHAND as trustees of theDewes Green Family TrustPlaintiffsAND IAG NEW ZEALAND LIMITEDFirst DefendantAND MAX CONTRACTS LIMITEDSecond DefendantAND MAX EQ LIMITEDThird DefendantAND ORANGE H MANAGEMENT LIMITED(formerly Hawkins Management Limited)(In Receivership and in Liquidation)First Third PartyAND ORANGE H GROUP LIMITED (formerlyHawkins Management Limited) (InReceivership and in Liquidation)Second Third PartyAND MAX CONTRACTS LIMITEDThird Third PartyAND QBE INSURANCE (AUSTRALIA)LIMITEDFourth Third PartyHearing: 5 September 2019By Telephone ConferenceCounsel: B Frowein for PlaintiffsO Collette-Moxon for First DefendantR Smedley for Second and Third Defendants andThird Third PartyNo appearance for First Third Party and Second Third PartyD McLellan QC and S Galloway for Fourth Third PartyJudgment: 11 September 2019JUDGMENT OF ASSOCIATE JUDGE LESTER(in respect of Plaintiffs' application to transfer proceeding to CanterburyEarthquake Insurance Tribunal)This judgment was delivered by me on 11 September 2019 at 11.00 ampursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy Registrar.[1] The plaintiffs have applied to transfer these proceedings to the CanterburyEarthquakes Insurance Tribunal ("the Tribunal"), pursuant to s 16 of the CanterburyEarthquakes Insurance Tribunal Act 2019 ("the Act").[2] The first defendant, IAG New Zealand Ltd ("IAG") does not oppose thetransfer.[3] The plaintiffs' proceeding relates to the defective repair of their home,including damage that was not repaired at all, or only partly repaired. The second andthird defendants carried out the allegedly defective work. IAG, who was the plaintiffs'insurer, engaged Hawkins Construction (the first and second third parties) to projectmanage the repair work. With the Hawkins companies being in receivership and inliquidation, IAG has also claimed against their insurer, QBE Insurance (Australia) Ltd(QBE), the fourth third party, under the Law Reform Act 1936.[4] Section 16 of the Act governs the transfer of proceedings from a court to theTribunal. It is common ground given the consent of all parties to the transfer of theplaintiffs' claim to the Tribunal that the claim satisfies s 16(1) of the Act.[5] Section 16(2) of the Act provides:An order to transfer proceedings may be made under subsection (1) only if –(a) the proceedings meet the eligibility criteria for a claim undersection 9 (however, the proceedings may also include additionalparties to those referred to in section 8, but may not include a classaction ); and(b) the other party or parties to the proceedings have been given areasonable opportunity to comment; and(c) the Judge making the order believes that the transfer is in the interestsof justice.[emphasis added][6] QBE's position is that it does not object to the plaintiffs' claim against IAGbeing transferred to the Tribunal but submits that it is appropriate that IAG's thirdparty claim against QBE be dealt with in the second hearing in this Court ascontemplated by the direction that there be a split hearing.[7] All parties have in the course of the earlier case management of the proceedingagreed that IAG's third party claim against QBE would be determined after thedetermination of the plaintiffs' issues against IAG in a separate hearing.Jurisdiction to transfer "part" of the present proceeding[8] QBE submitted that the claim by IAG against QBE is not a dispute between apolicyholder1 and an insurer about an insurance claim, that being the touchstone as towhether a proceeding meets the eligibility criteria for the Tribunal.2 Mr McLellan QCsubmitted that the litigation as it stands in this Court consists of two proceedings albeitmanaged under the one Court reference number. The first is the plaintiff's claimagainst the defendants, and the second is the third party proceedings brought by IAGagainst the third parties. In support of this submission, reference was made toMcGechan on Procedure which says:3Third party proceedings can have a life of their own, independent of the mainproceeding between the plaintiff and defendant. Thus, if the defendant hadsought contribution or indemnity by the third party and the plaintiff's claimagainst the defendant fails, the third party proceeding will die with the mainproceeding, as there will be nothing left in respect of which the defendantcould seek indemnity. However, a claim against a third party for contributioncan continue despite the settlement of the proceeding between plaintiff anddefendant. In this regard, r 15.25 provides that, where a plaintiff discontinuesa proceeding in which a defendant has issued a third party notice, thediscontinuance does not affect the continuation of the proceeding in relationto the third party notice.[9] Accordingly, based on the proposition that the present proceeding involves twoseparate proceedings, one which is eligible for transfer and one which is not, QBEsays there is no jurisdiction to transfer the present proceeding in its entirety.[10] IAG submits that the proceeding to be transferred is the proceeding as it iscurrently configured, that is the plaintiff's claim against the defendants and the firstdefendant's claim against the third parties. The plaintiffs say that where the Actcontemplates the transfer of "court proceedings" it is referring to a proceeding in its1 IAG brought its claim under the Law Reform Act 1936. It does not hold a contract of insurancewith QBE so is not a policyholder under s 5 of the Canterbury Earthquakes Insurance TribunalAct.2 Canterbury Earthquakes Insurance Tribunal Act, s 8.3 McGechan on Procedure (online loose-leaf ed, Thomson Reuters) at [HR4.4.10].ordinary sense as incorporating all aspects of the claims, cross-claims and any thirdparty claim rather than only parts of a claim.Discussion[11] I raised with Mr McLellan that s 16(2) permits proceedings to be transferredeven if the proceeding includes additional parties to those referred to in s 8. Isuggested to him that this indicated that Parliament intended that an entire proceedinghowever constituted could be transferred provided the plaintiff's claim qualified.[12] Mr McLellan's response was that the reference to "additional parties" ins 16(2)(a) should be read as "additional defendants in the plaintiff's proceeding" andnot third parties.[13] I do not accept that the scope of s 16(2)(a) was intended to be as narrow asMr McLellan submits. Had Parliament intended that s 16(2) would only permit thetransfer of proceedings with additional defendants as opposed to additional partiesthen it would have used the term "defendants" rather than the general term "parties".[14] High Court Rule 4.7(1) provides:A third, fourth, or subsequent party is a party to the proceeding from the timea notice is served on that party.[15] Accordingly, whether or not Mr McLellan's argument that third party claimsare separate proceedings is correct, a third party is a party to "the proceeding" whichin context means the proceeding to which they have been added.[16] Nor am I convinced that Parliament intended to refer to proceedings in s 16 inthe nuanced way submitted by Mr McLellan. The ordinary meaning of proceedingscontemplates all claims, cross-claims and third party claims brought by the parties.[17] Accordingly, I find s 16 confers on the Court the jurisdiction to transfer theproceeding in its entirety including claims made against third and other parties.[18] I note s 27(1)(d) of the Act, referring to the Tribunal deciding "whether partiesneed to be joined or removed" is at least consistent with all parties to a Courtproceeding being subject to an order of transfer to the Tribunal. Once the proceedingis in the Tribunal the "removal" of a party caught up in a transfer is a matter for theTribunal.[19] I do not read s 16(1) as creating a jurisdiction to transfer part of a proceedingonly. Even if I considered there was such a jurisdiction I would not have ordered thatthe claim by IAG against the third parties remain in this Court. I would have declinedto make that direction for the following reasons.[20] Counsel for IAG says that splitting the hearing would cause: needless duplication, unnecessary additional time and expense, and thestark possibility of inconsistent findings.I agree.[21] The Tribunal is given wide-ranging case management powers.4 Those powersare wide enough for the Tribunal to direct a separate or staged hearing of issuesbetween the plaintiffs and the defendants and the third parties and such may well bethe most efficient and cost-effective approach.[22] The touchstone for whether a proceeding should be transferred is whether thetransfer is in the interests of justice. The plaintiffs' memorandum submits thefollowing:Had the Tribunal existed as an option for the plaintiffs in 2016, they haveadvised they would have opted for this route instead of resorting to legalproceedings. The investigative powers vested in the [Tribunal]'s processesand its non-adversarial process, are much more conducive to a quicker,cheaper, less stressful, just and independent resolution to the dispute. It wouldalso enable the plaintiffs to represent themselves in parts of the claim relatingto articulating the history of the condition of the house, the defective andincomplete repairs, and their treatment by all parties .[23] Again, both IAG and QBE consent to the plaintiffs' claim being transferredand that consent is understandable given the plaintiffs' memorandum.4 Canterbury Earthquakes Insurance Tribunal Act, ss 24, 26 and 27.[24] IAG made the claim that if the third party claim was to remain in this Courtthere would be the risk of inconsistent findings between the Tribunal and the HighCourt. Mr McLellan sought to meet this by confirming that his client would be boundby the findings in the Tribunal in relation to the damage to the plaintiff's property.[25] Whether a finding in the Tribunal would as a matter of law bind a non-party issomething I need not determine. However, having QBE in the Tribunal has practicalbenefits including in relation to any attempt by the Tribunal's efforts to get the partiesinvolved in alternative dispute resolution.[26] No compelling reason is advanced as to why the issues as between IAG andQBE would have to be in this Court. Indeed, given they arise from the plaintiffs' claimwhich all accept is suitable to go to the Tribunal, there would have to be someparticular quality about the issues raised by the third party claims to override theinterests of justice that all agree favour the plaintiffs' claim going to the Tribunal. Ihave not overlooked Mr McLellan's submission that his clients would suffer asignificant prejudice in transfer, that being the loss of the ability to claim costs inrelation to costs incurred in the Tribunal because of the limitations on the Tribunalgranting costs created by s 47 of the Act.[27] However, I accept the submission made by Mr Gedye for IAG to the effect thatthe restricted right to claim costs is not a qualifying prejudice for the purposes of s 16as it is a factor common to all parties whose proceeding is transferred to the Tribunal.The restricted ability to claim costs is in one sense a prejudice to a party in the Tribunal– or on the other hand there is the corresponding protection for adverse costs. Therestriction on the ability to claim costs is one of the characteristics of the Tribunal. Ido not consider that the rules relating to costs in the Tribunal of themselves take atransfer to the Tribunal outside the interests of justice for the purposes of s16(2). I donot accept the only non-jurisdictional reason raised by QBE for resisting transfer tothe Tribunal.[28] I direct that this proceeding is transferred to the Tribunal. Costs of the transferapplication are reserved. I have not overlooked that Mr McLellan foreshadowed thepossibility that his client may request the Tribunal to exercise its power under s 53 ofthe Act to refer questions of law arising in the third party claim against QBE to thisCourt for determination. The Tribunal can deal with any such application if made butthat a proceeding may raise potentially complex legal issues is not of itself groundsnot to transfer a case to the Tribunal.5_______________________________Associate Judge LesterSolicitors:Lane Neave, ChristchurchDuncan Cotterill, AucklandAnthony Harper, ChristchurchHazelton Law, Wellington5 Busby v IAG New Zealand Ltd [2019] NZHC 1852.