When will a Court transfer a proceeding to the Canterbury Earthquakes Insurance Tribunal?

Key Points


  • The Court will transfer proceedings when it is in the interests of justice to do so
  • This involves an examination of whether the transfer meets the purpose set out in s 3 Canterbury Earthquakes Insurance Tribunal Act (the Act)
  • The Tribunal has jurisdiction to determine policy disputes, including where the insurer’s defence is that there is no earthquake damage to which the policy responds. The fact that the insurer denies that the policy responds does not affect the Tribunal’s jurisdiction to hear the dispute
  • The Tribunal is able to consider complex and novel arguments. The fact the Tribunal may refer a question of law to the High Court has no bearing on whether a matter ought to be transferred from the High Court to the Tribunal.

Background


The Tribunal recently opened its doors, leaving both policyholders and insurers contemplating the practical effect of its stated purpose: “to provide fair, speedy, flexible, and cost-effective services for resolving disputes about insurance claims for physical loss or damage to residential buildings, property, and land arising from the Canterbury earthquakes”.

The Court’s approach to transfer of a proceeding to the Tribunal was illustrated when the Plaintiffs in Busby applied for such a transfer. The Plaintiffs’ property had suffered both differential and global settlement in the Canterbury earthquake. The issues between the parties were: the extent of damage; the appropriate repair strategy; and the costs of that strategy. Importantly, the insurers also argued that the policy did not respond to the global settlement. It maintained this was damage to the land and not to the building.

High Court Decision


IAG opposed the transfer.  It argued that the Plaintiffs’ claim was not eligible under the Act’s criteria.  To be eligible, a Plaintiff must show “physical loss or damage arising from the Canterbury earthquake to residential building or residential property”.  IAG argued global settlement is damage to land so is not damage to a residential building or residential property.  As a result, the Plaintiffs’ claim was ineligible under the Act, so transfer was not available.

On this ground, the Court held that the insurers had proceeded in their submissions on the assumption that their position was correct.  It found that the true issue was whether the policy would respond to global damage to land, and whether the policy would respond or not, is not a jurisdictional issue but an aspect of the insurer’s defence to the Plaintiffs’ claim.  The Tribunal has jurisdiction to hear claims where the defence is that the claim is not for physical damage to property to which a policy responds.

IAG also opposed transfer on the ground that the proceeding involved complex and novel matters of fact and law.  It argued the proceeding was best heard in the High Court and that it would end up in that forum anyway given the Tribunal’s ability to refer questions of law to the High Court.

The Court acknowledged that unresolved earthquake cases may well involve complex factual, expert or legal issues.  These, it said, are the very cases that Parliament intended the Tribunal to give policyholders assistance with.  Factual or legal complexities do not in themselves prevent a transfer to the Tribunal.

The Court held that although the Tribunal has the power to refer questions of law to the High Court for an opinion under s 53, that did not mean IAG’s eligibility issue would require referral.  It would be up to the Tribunal to decide whether it will refer a matter to the Court.  This had no bearing on whether the proceeding could be transferred to the Tribunal.

In the circumstances, the Court was not convinced that it would not be in the interests of justice to transfer the proceeding to the Tribunal.

Comment


This case demonstrates the Court’s willingness to transfer proceedings to the Tribunal.  The Tribunal has the power to make its own jurisdictional determinations.  It has the ability to consider complex and novel cases.  When considering whether a transfer would be contrary to the interests of justice, the Tribunal’s flexible procedures, its ability to instruct independent experts, the absence of hearing fees and its ability to closely manage cases will likely militate in favour of transfer.

Read the case here


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