IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE	
CIV-2018-409-000361
[2021] NZHC 632	

BETWEEN	BRENDAN MILES ROSS and COLLEEN ANNE ROSS
Plaintiffs	
AND	SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED
Defendant	

Hearing:	11 February 2021 (by telephone conference)	
Appearances:	P G Skelton QC and C B Pearce for Plaintiffs
T C Weston QC, K-M M Paterson and E D Peers for Defendant J Miles QC for LPF Group and E D Nilsson for LPF Group Ltd (seeking to intervene)	
Judgment:	11 February 2021	
Reasons:	26 March 2021	

REASONS JUDGMENT OF OSBORNE J
(Intervention application)

This judgment was delivered by me on 26 March 2021 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

ROSS v SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED [2021] NZHC 632 [11 February 2021]

The plaintiffs’ representative claim

[1]	The plaintiffs, Brendan and Colleen Ross, through this proceeding seek settlement of a claim they have against Southern Response Earthquake Services Ltd (Southern Response). Their home suffered damage in the Canterbury Earthquake Sequence.1 Southern Response entered into settlement negotiations with the Rosses and many others. During negotiations, Southern Response provided the Rosses with different versions of a document now generally referred to as a DRA (Detailed Rebuild/Repair Analysis). The Rosses settled their insurance claim in December 2013.

[2]	In this proceeding, the Rosses assert that Southern Response in its dealings with them wronged them in a number of ways, stemming from the fact that they were provided with an abridged DRA which did not reflect the complete estimate of rebuilding costs set out in a full version of the DRA.

[3]	The Rosses pursue their claim (by leave) as a representative claim, not only on their own behalf but on behalf of a class of persons affected by a similar process involving DRAs.

[4]	Their proceeding was filed on 25 May 2018, accompanied by their interlocutory application for leave (under r 4.24 High Court Rules 2016) to proceed with a representative action. They indicated the likely number of persons they would represent is approximately 3,000.

[5]	That was the start of a number of interlocutory (and appeal) matters that have since affected this proceeding.

The Dodds litigation

[6]	In the meantime, another couple (the Dodds) had commenced their own proceeding for damages based on similar causes of action. In August 2019, the Dodds

1	The Rosses were insured with AMI Insurance Ltd (AMI). Southern Response, a Crown-owned company, took over responsibility for dealing with claims by AMI customers for such damage.

succeeded in their claim for special damages, with damages of $178,894.30 awarded.2 A judgment of the Court of Appeal in September 2020 allowed one aspect of appeal, reducing the damages by $10,656.44.3

[7]	Following the release of the Court of Appeal judgment in Dodds v Southern Response Earthquake Services Ltd (Dodds), the Crown and Southern Response made statements indicating that, with greater clarity afforded by the Court of Appeal judgment, Southern Response was now looking to respond to other policy holders in a similar situation to the Dodds.

This litigation — the interlocutory and appeal proceedings

[8]	This proceeding in the meantime had been tied up with interlocutory and related appeal issues.

[9]	While Southern Response did not oppose the Rosses’ proceeding by way of a representative action, there was dispute as to whether the proceeding should be on an opt in or opt out basis. This Court determined in December 2018 Ross v Southern Response Earthquake Services Ltd (Ross HC) that the proceeding should be on an opt in basis.4 In September 2019, the Court of Appeal Ross v Southern Response Earthquake Services Ltd (Ross CA) allowed the Rosses’ appeal on the opt out issue (and another issue as to the claimant class) and amended the High Court orders accordingly.5 In November 2020, the Supreme Court (having granted leave to Southern Response to appeal) Southern Response Earthquake Services Ltd v Ross (Ross SC) dismissed Southern Response’s appeal, leaving the proceeding on an opt out basis.6

[10]	Accordingly, in November 2020 the Rosses (through their solicitors) were for the first time in a position to take the next procedural steps in this proceeding, beginning with the process of obtaining this Court’s approval of notification orders.

2	Dodds v Southern Response Earthquake Services Ltd [2019] NZHC 2016, [2019] 3 NZLR 826 [Dodds] at [207] and [225].
3	Southern Response Earthquake Services Ltd v Dodds [2020] NZCA 395 at [195].
4	Ross v Southern Response Earthquake Services Ltd [2018] NZHC 3288 [Ross HC].
5	Ross v Southern Response Earthquake Services Ltd [2019] NZCA 431, (2019) 25 PRNZ 33 [Ross CA].
6	Southern Response Earthquake Services Ltd v Ross [2020] NZSC 126 [Ross SC].

Their solicitors filed an amended notice of interlocutory application for notification orders on 4 December 2020.7

Pending interlocutory applications

[11]	Following the delivery of the Supreme Court’s judgment in Ross SC, and at the request of counsel for both parties, this Court then made directions for the plaintiffs’ applications for notification orders and for a common fund order. In the meantime, Southern Response also filed an application for directions in relation to its communications with individual potential class members (the communication application).

[12]	Hearing dates were subsequently allocated as follows:

(a)	Communication application — 15 February 2021 (one day allocated).

(b)	Notification order application — 22 March 2021 (two days allocated).8

[13]	The common fund order application has yet to be allocated a hearing date.

[14]	By the date of this hearing, the defendant’s and plaintiffs’ documents for the 15 February 2021 hearing had all been filed, with the exception of the plaintiffs’ submissions which were due that day, and were duly filed that day.

LPF’s application to intervene

[15]	On 1 February 2021, an interlocutory application was filed by LPF Group Ltd (LPF), which is described in its supporting affidavit as New Zealand’s largest litigation funder, established in 2009. At this point, LPF does not have a funding arrangement with any person with a claim of the nature of the Rosses’ claim.

7	The amended notice replaced an original application filed 25 May 2018.
8	For scheduling reasons, the hearing date of the notification order application was since altered to 13 April 2021 (two days allocated).

[16]	LPF applies for leave to intervene in this proceeding as follows:

…to be heard in respect of the defendant’s interlocutory application for directions dated 14 December 2020, including by appearing at the hearing of that application currently scheduled for 15 February 2021.

[17]	LPF sought a further direction that a case management conference be allocated for the purpose of making directions in relation to other representative plaintiffs. (Those directions would include the date by which any such claimant would have to file its statement of claim).

[18]	LPF’s application was supported by an affidavit of its executive director, Jonathan Woodhams.

[19]	On 5 February 2021, counsel for LPF filed a memorandum which is in the nature of a synopsis of submissions on leave to intervene. At the hearing of LPF’s application on 11 February 2021, Mr Miles QC elaborated upon those submissions.

[20]	On 5 February 2021, Mr Skelton QC, on behalf of the Rosses, filed a memorandum in response. Given the urgency of the situation, I dispensed with the need for a notice of opposition. Mr Skelton’s memorandum succinctly set out the Rosses’ points of opposition. Mr Skelton at the hearing spoke to and developed upon that document.

The Court’s powers in relation to intervention

[21]	LPF invoked the provisions of r 7.43A(1)(d)–(e) High Court Rules and the inherent jurisdiction of the Court.

[22]	Rule 7.43A may appropriately be described as containing the Court’s general direction-making powers. It has regularly been invoked to support an application by a non-party to intervene.

[23]	As enunciated by the Court of Appeal in Ngāti Whātuā Ōrākei Trust v Attorney-General, the relevant principles when considering granting leave to intervene include:9
(a)	The power is broad in nature but should be exercised with restraint to avoid the risk of expanding issues, elongation of hearings and increasing the costs of litigation: Hawke v Accident Compensation Corporation.10

(b)	In an appeal involving issues of general and wide importance the court may grant leave when satisfied that it would be assisted by submissions from the intervener: Hawke v Accident Compensation Corporation at [9(b)].

(c)	The fact that the case raises issues of principles transcending the particular facts is not in itself sufficient to extend rights of hearing beyond the parties: New Zealand Fire Service Commission v Ivamy.11

(d)	The Court will take into account the relevant expertise or the unique position of an intended intervener as well as the impact of the intervention on appeal: Copyright Licensing Ltd v University of Auckland.12

[24]	The case law indicates, in accordance with the breadth of the discretion involved, that it is the overall interests of justice which will underpin the court’s decision.13

[25]	The facts of individual cases may cause particular considerations to have greater or less significance. It has, for instance, been recognised that that commercial, financial or reputational interests in the outcome will be sufficient to warrant intervention only in exceptional circumstances — of much greater significance is when an applicant can establish that its legal rights against all liabilities in relation to the subject-matter will be directly affected.14 A useful test for the court is to ask itself

9	Ngāti Whātuā Ōrākei Trust v Attorney-General [2017] NZCA 183, [2017] NZAR 627 at [11] — the powers exercised by the Court of Appeal under r 48(1) (Court of Appeal (Civil) Rules 2005) being equivalent to those exercised by this Court under r 7.43A(1) High Court Rules 2016: Borrowdale v Director-General of Health [2020] NZHC 1379, (2020) 25 PRNZ 273 at [20].
10	Hawke v Accident Compensation Corporation [2014] NZCA 552, [2015] NZAR 31 at [9(a)].
11	New Zealand Fire Service Commission v Ivamy (1995) 8 PRNZ 632 (CA) at 633.
12	Copyright Licensing Ltd v University of Auckland [2015] NZCA 123, [2016] 2 NZLR 1 at [46].
13 See Mohamed v Guardians of New Zealand Superannuation [2020] NZHC 1324, (2020) 25 PRNZ 205 at [2].
14 Capital and Merchant Finance Ltd (in rec and in liq) v Perpetual Trust Ltd [2014] NZHC 3205, [2015] NZAR 228 at [41]; and Bartle Group Ltd v New Zealand Transport Agency [2019] NZHC 2168, (2019) 25 PRNZ 14 at [10].

whether it would be unjust to adjudicate on the matter in dispute without the intervenor being heard.15

[26]	On any intervention application, the overall assessment by the court involves weighing the likelihood the intervenor will assist the court against the risk of prejudice or unfairness to the parties.16

LPF’s grounds for intervention

[27]	LPF seeks to intervene in a particular aspect of this proceeding, namely the hearing of Southern Response’s application for directions in relation to the communications Southern Response might have with members of the class which the Rosses represent.

[28]	The basis of LPF’s desire to so intervene was explained in counsels’ memorandum thus:

2.	LPF has a legitimate interest in being heard in relation to these matters. It is New Zealand’s largest litigation funder and is currently offering to fund an alternative representative action for the open class of claimants now represented by the plaintiffs following the Supreme Court’s decision …

3.	LPF says that the terms of funding and representation that it is offering are lawful, and will likely deliver substantially greater return to individual class members. Its proposed action will therefore provide more efficient access to justice, and it is therefore in the interests of justice that it be given carriage of claims against the defendant on behalf of the open class.

4.	However, in order to facilitate a proper evaluation of competing options, both for the Court and the class members, it is important that there be clarity in respect of lines of direct communication with class members who are not directly represented by the plaintiffs’ solicitors, and that directions are now made for the orderly determination of the intended carriage motion, before further substantive steps are taken in the proceeding.

[29]	The second aspect of LPF’s application for leave to intervene was to then obtain directions for an application challenging the Rosses’ standing as representatives

15	McClintock v Attorney-General [2015] NZHC 1280 at [44].
16	Alpha Dairy NZ Ltd v Auckland Council [2019] NZHC 2263 at [4].

of the open class of claimants. Hence the reference in counsels’ memorandum (above at [28]) to “the intended carriage motion”.

[30]	At this hearing, Mr Miles referred to carriage motions as “orthodox and standard”, particularly by reference to the judgment of the Federal Court of Australia (on appeal) in Perera v GetSwift Ltd.17 There the Court was considering appropriate procedural orders where three different law firms supported by three different litigation funders had commenced three competing open shareholder class actions within a short time of each other. The Court referred to the Canadian experience with carriage motions.18 The Court accepted that there was an analogy to be drawn between an application to stay one of several competing class actions and the procedure adopted under Canadian carriage motions, but with some important differences.19

[31]	Against that background, Mr Miles submitted that there relevantly arise four main issues in relation to an application to intervene on a representative proceeding conducted on an opt out basis, those being:

(a)	the presiding Judge will be involved in ongoing and careful supervision of the representative proceeding;

(b)	the Court has a wide discretion in deciding whether there should be leave to intervene;

(c)	the Australian approach, in accordance with the “orthodox and standard” Canadian procedure of carriage motions, is to determine the most beneficial course for the claimants; and

(d)	the primary concern of the Court is what is in the best interests of all group members.20

17	Perera v GetSwift Ltd [2018] FCAFC 202, (2018) 263 FCR 92.
18	At [188]–[197].
19	Perera v GetSwift Ltd, above n 17, at [189]; referring to McKay Super Solutions Pty Ltd v Bellamy’s Australia Ltd [2017] FCA 947 at [49] and following.
20	Perera v GetSwift Ltd, above n 17, at [189].

[32]	I note that in Perera v GetSwift, the Federal Court of Australia stated the predominant theme underpinning the decision as to which proceeding (on a carriage motion) goes forward is what is in the best interests of all group members, although fairness to the respondent is a consideration.21

The facts underlying LPF’s application

[33]	As I have stated, LPF’s application was supported by an affidavit of its Executive Director, Mr Woodhams (a qualified lawyer).

[34]	Mr Woodhams introduced his affidavit by referring to the case management directions which LPF would seek (if granted leave to intervene) as being in the nature of the application generally referred to in Canada as a “carriage motion”. Because the present proceeding is the first in New Zealand to progress on an opt out basis, Mr Woodhams identifies this proceeding also as the first in which a carriage motion is a realistic prospect.

[35]	Mr Woodhams states that LPF is New Zealand’s largest litigation funder. It is one of the funders originally approached by the Rosses’ lawyers to provide funding for this proceeding. Mr Woodhams deposes that LPF declined to provide funding for this proceeding primarily because of the success fee arrangement included in the Rosses’ lawyers’ terms of engagement with class members. In his affidavit, Mr Woodhams goes into more detail as to the structure of the litigation funding arrangements into which the Rosses have entered with Claims Funding Australia Pty Ltd (CFA). Mr Woodhams deposes that LPF has concerns that the CFA agreement contains elements which are unlawful and abusive of process, and do not facilitate sufficient access to justice for the represented class. Mr Woodhams states that “a number of class members” have raised such concerns with LPF about the CFA agreement.

[36]	Mr Woodhams continues that LPF is currently discussing with a number of class members who have registered an interest to be involved in an alternative

21	Perera v GetSwift Ltd, above n 17, at [195] citing Locking v Armtec Infrastructure Inc [2013] ONSC 331 at [7] and [8], per Molloy J.

represented proceeding. He states that “many of these class members” have raised concerns as to uncertainties created by the current representation order and the impact on cost if class members do not opt out. Mr Woodhams indicates that such class members are therefore unable to make “an informed decision” about participation in the represented proceeding or a decision to “join an alternative action”.

[37]	Mr Woodhams concludes:

14.	For that reason, the intended carriage motion will be accompanied by an application for a common fund order for the purposes of providing certainty, at the outset, of the extent of LPF’s share of any sums recovered, and thereby allow class members, and the Court, to make an informed choice as to which representative action provides the most efficient access to justice.

15.	LPF believes that it is appropriate that this assessment is made as soon as possible, and before further substantive steps are taken in this proceeding. To avoid unnecessary delay, directions relating to the intended carriage motion are sought now, to preserve all parties’ positions, and while the funding arrangements are being finalised and an alternative action commenced.

LPF’s immediate concern with the communication issue

[38]	Mr Miles explained that the matter of Southern Response communicating with class members is as much a problem for LPF as it is for the Rosses’ solicitors. LPF shares the position that Southern Response should have no communication directly with claimants. Mr Miles however described the issue in relation to communication as being more complex and less straightforward an issue than identified by counsel for the Rosses. Mr Miles stated that conflicting authorities (across the Canadian, United States and Australian jurisdictions) exist, with the underlying principles by no means clear.

[39]	Finally, Mr Miles emphasised that LPF is independently represented on this application (by Mr Miles instructed by Lee Salmon Long) separately from the representation of the potential plaintiffs who would be funded by LPF (and represented by Mr Davey Salmon, instructed by Meredith Connell).

LPF’s prior involvement in the Ross litigation

[40]	LPF has intervened previously in the course of the Rosses’ litigation. In particular, LPF was granted leave to intervene in the appeal heard by the Supreme Court.22 That leave was granted after a director of LPF (Philip Newland) had deposed that LPF’s concern was that, on the important issue before the Supreme Court, the Court should have available to it “an outside perspective from a party with no interest in the substantive outcome of this case, and who has direct experience in book building and class actions in New Zealand”.

[41]	That basis of intervention — that the intervenor is an independent entity with expertise in the area but with no personal interest — clearly does not apply in the present circumstances where LPF’s intention (if granted leave to intervene) is to bring a carriage motion based on the funding arrangements it would have with class members.

Neutral position of Southern Response

[42]	Ahead of this hearing, counsel for Southern Response by memorandum informed the Court that Southern Response does not oppose LPF’s applications and would abide the decision of the Court.

The Rosses’ opposition to LPF’s intervention

[43]	The Rosses opposed both the application for leave to intervene and for the convening of a case management conference to make directions in relation to a carriage motion.

[44]	In the memorandum filed by Mr Skelton QC and Mr Quinn, LPF’s application was described as “opportunistic and tactical”. Counsel noted that the point has been reached where, after nearly three years of effort, the legal and commercial risk in the proceeding is now substantially reduced. The Rosses (after appeal rights had been exhausted) have the entitlement to represent the full class on an opt out basis. Southern Response as defendant has publicly announced an intention to pay compensation

22	Ross SC, above n 6.

(making a “top-up” payment to policy holders who did not receive their full entitlement when their claims were previously “settled”).

[45]	Mr Skelton presented detailed submissions in opposition to both aspects of LPF’s application. As I am in substance accepting those submissions, I will not set them out separately. They are taken into account in the reasons which follow.

Reasons for declining LPF’s applications

[46]	It is convenient to reverse the order of LPF’s stated applications and to refer first to the application for a case management conference to be convened to make directions in relation to a carriage motion.

[47]	Directions in relation to a carriage motion would be premature. Counsel for LPF, despite detailed analysis and reference to the experience of carriage motions and stay applications in overseas jurisdictions, have referred to no authority in support of the proposition that a court should make timetabling directions in relation to the carriage of “competing” representative proceedings when a second (or subsequent) proceeding has yet to be and may not be commenced.

[48]	There might arise a truly exceptional case where the court might contemplate convening a conference to make some directions ahead of the filing of a separate proceeding. Conceivably, for instance, a firm retained by clients might be able to provide to the court a full suite set of documents about to be filed as a proceeding. The present situation in which LPF is involved falls far short of being so exceptional. In terms of LPF’s commercial interests, on its own evidence it is at this point simply a litigation funder aspiring to represent claimants at some future point in relation to claims already covered by the Rosses’ existing representative proceeding.

[49]	The contrast between LPF’s interested position here, where it intends to become the funder of a group of claimants, with its declared disinterested position when intervening in the Supreme Court appeal hearing is obvious.

[50]	If and when LPF comes to fund litigation on the subject-matter covered by the Rosses’ claims then the solicitors acting for those funded claimants (not the solicitors

acting for LPF) will be in a position to bring a stay application or other application in the nature of a carriage motion. But that is not the point such claimants are at.

[51]	My conclusion in relation to LPF’s intervention at the hearing of the communication application is driven by substantially the same considerations. Both the plaintiffs and the defendant had senior representation in relation to the communication issue on which the Court was to (and did) hear submissions on 15 February 2021. There is no suggestion that those representing the Rosses (who in turn represent the class) have not done so competently to date. In relation to issues of communication, counsel for both the Rosses and Southern Response may be relied upon to draw to the attention of the Court not only the authorities which are in support of the positions they advance but also all relevant and significant law known to them whether the material supports their client’s case or not.23

[52]	Had LPF sought to intervene in relation to this interlocutory proceeding upon the same basis as it did on the Supreme Court appeal — that is as a truly impartial participant — I would likely have viewed its application more favourably. But that is not the position here. Instead, LPF in advance of other claimants filing a proceeding funded by LPF, seeks to become engaged in whether and to what extent Southern Response as a defendant in the Rosses’ proceeding might be allowed to communicate with members of the class. That is a stand taken not purely by reason of contributing to the quality of legal argument and outcome but at least significantly influenced by its own interests as the potential funder of a separate representative claim against Southern Response in relation to precisely the same issues. Precisely because there are no actual plaintiffs funded by LPF at this point in relation to existing proceedings, LPF’s clients will not be bound by the determination reached in relation to rights as between Southern Response and the Rosses. It is appropriate to respect privity of those plaintiffs and defendant in the context of this proceeding in the particular circumstances of this case.

23	In accordance with Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 13.11.

Outcome

[53]	I therefore dismissed LPF’s applications, with LPF to pay the defendant’s costs and disbursements.24

Osborne J

Solicitors:
GCA Lawyers, Christchurch for Plaintiff
Counsel: P G Skelton QC, Auckland
Buddle Findlay, Christchurch for Defendant
Counsel: T C Weston QC, Christchurch
Lee Salmon Long, Auckland for LPF Group
Counsel: J Miles QC, Auckland

24	Ross v Southern Response Earthquake Services Ltd [2021] NZHC 142.