Judgment: Southern Response Class Action

COURT OF APPEAL OF NEW ZEALAND

TE KŌTI PĪRA O AOTEAROA

30 October 2017

MEDIA RELEASE

SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED V SOUTHERN RESPONSE UNRESOLVED CLAIMS GROUP

(CA37/2017) [2017] NZCA 489

PRESS SUMMARY

This summary is provided to assist in the understanding of the Court’s judgment. It does not comprise part of the reasons for that judgment. The full judgment with reasons is the only authoritative document. The full text of the judgment and reasons can be found at www.courtsofnz.govt.nz.

1. The Court of Appeal today released a judgment allowing a group of earthquake insurance claimants, the Southern Response Unresolved Claims Group (the Group), to bring a representative proceeding against their insurer, Southern Response Earthquake Services Ltd (Southern Response). A representative proceeding is like a class action in other jurisdictions, and allows multiple claimants to be represented by one or more representative plaintiffs when they have similar claims. Southern Response had sought to have the representative action barred primarily on the grounds that the different claims by the individuals in the Group were not sufficiently similar to be dealt with in this way. The Court of Appeal rejected this argument.

Background

2. Southern Response handles claims relating to the Canterbury earthquakes made under insurance policies with AMI Insurance Ltd. After the earthquakes AMI did not have sufficient funds to cover these claims, so the Government intervened, setting up Southern Response to manage the claims.

3. The Group consists of individuals who have outstanding insurance claims with Southern Response. The Group alleges that Southern Response operates a “strategy” of delaying and misleading conduct which breaches Southern Response’s contractual obligations. It alleges that this strategy is used by Southern Response to minimise the amounts it has to pay out to cover the insurance claims. Southern Response strongly denies these allegations.

The Judgment

4. The Court dismissed the appeal by Southern Response against the grant of leave to bring a representative proceeding. The Court held that the representative action would be an efficient way to determine similar claims by a number of different individuals against Southern Response, and that without a representative proceeding those individuals might not be able to bring some of their claims.

5. In allowing the representative proceeding, the Court did not rule on the merits of the representative action against Southern Response. The Court only had to be satisfied that the claim as pleaded was arguable. That threshold had been met.

6. The Court also allowed in part a cross-appeal brought by the Group against conditions that had been imposed by the High Court on the grant of leave. The conditions were imposed to meet a concern that some of the material used to promote the representative proceeding might have been misleading.

7. The Court of Appeal assessed the material for itself. It found that the conditions imposed in the High Court on the grant of leave were too broad. While some of the material was ill-advised because it created the potential for confusion and misunderstanding, undertakings provided by the litigation funder had addressed that concern for most claimants.

8. However the Court found that the undertaking did not address the concern in respect of a particular sub-group of claimants. The Court therefore made leave to bring the representative proceeding conditional on the High Court being satisfied that this sub-group would not be worse off because they had joined the proceeding.

Full judgment [PDF]

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