Omni Bridgeway assists New Zealand claimants to bring an action against overseas insurers in Australia
- Gavin Beardsell
- Senior Investment Manager and Legal Counsel - Australia
Mr Koper is the registered proprietor of a residential unit in a block of apartments in Auckland, New Zealand (the Victopia Apartments), which was designed and constructed by a NZ company, Brookfield Multiplex Constructions (NZ) Ltd (BMX NZ). In 2017, Mr Koper and other registered proprietors of units within the Victopia Apartments successfully obtained a NZD53 million judgment in the High Court of New Zealand against BMX NZ in respect of defective design and construction of the building. BMX NZ went into liquidation and its overseas professional indemnity insurers declined to indemnify BMX NZ in respect of the judgment.
With the benefit of funding provided by Omni Bridgeway, Mr Koper, on his own behalf and on behalf of other registered proprietors of units within the Victopia Apartments, commenced a class action for compensation in the New South Wales Supreme Court against Zurich Insurance Company Ltd (Zurich) and Aspen Insurance UK Ltd (Aspen), which are two of BMX’s overseas professional indemnity insurers. Mr Koper sought leave to bring the representative proceeding directly against these insurers, under s 4 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the Claims Act). This relatively recent State legislation entitles a claimant to bring a claim in a New South Wales court directly against an insurer of a person who has an insured liability to the claimant, to recover from the insurer the amount of any indemnity payable by the insurer pursuant to a contract of insurance.Mr Koper’s reasons for pursuing the insurers in New South Wales rather than New Zealand included that the NZ statute which enables claimants to sue insurers directly in a NZ court when the insured is insolvent has been held by NZ courts to apply only when the insurers are based in New Zealand. Mr Koper relied on the Trans-Tasman Proceedings Act 2010 (Cth) (the TTPA). The TTPA is the Commonwealth legislation which implements a bilateral agreement between Australian and New Zealand to streamline the process for resolving civil proceedings with a trans-Tasman element. Section 9 of the TTPA permits an initiating document issued by an Australian court that relates to a civil proceeding in that court to be served in New Zealand, and it is not necessary for the Australian court to give leave for the service or be satisfied that there is a connection between the proceeding and Australia. Section 10 of the TTPA provides that service of an initiating document in New Zealand has the same effect, and gives rise to the same proceeding, as if the document had been served in the place of issue.
The Court’s decision
The primary judge in the NSW Supreme Court, 3 judges in the NSW Court of Appeal and then 7 judges in the High Court of Australia rejected the insurers’ argument that ss 9 and 10 of the TTPA could not validly apply to an initiating document issued by the NSW Supreme Court that relates to a civil proceeding in a matter in State jurisdiction.In the High Court of Australia, 4 Justices held that the service of process in proceedings involving the exercise of jurisdiction by a State court is within the legislative power of the Commonwealth Parliament under the
Constitution of Australia, regardless of whether the jurisdiction to be exercised by the State court is federal jurisdiction or State jurisdiction.
In their separate joint judgment, Gordon, Edelman and Stewart JJ agreed that the insurers’ appeal must be dismissed. They held that the proper approach to the Claims Act is not whether, notionally, Mr Koper could properly have commenced proceedings against BMX NZ in the NSW Supreme Court, but rather whether the claim against BMX NZ or the insurers has a NSW connection, which it does because the jurisdiction clause in the insurance policy specifies the exclusive place of jurisdiction as the Commonwealth of Australia, and Aspen is resident in NSW.It follows that Mr Koper is able now to proceed with the class action in the NSW Supreme Court against the insurers, with continued funding provided by Omni Bridgeway.
ImplicationsThe decision of the High Court of Australia is significant for both NZ claimants and insurers which write business in NZ. Claimants in NZ often have meritorious claims, but they are unable to recover compensation in NZ because the defendant is insolvent and its insurer is not based in NZ. Overseas insurers which conduct insurance business in NZ are now exposed to litigation in NSW brought by NZ claimants, where the claim has a NSW connection.