Overview of the New Zealand legal system

New Zealand's legal system is based on English common law and the country's own laws and statutes, which are always evolving. This “Westminster” style system means there is often foundational legislation for a subject set created by its elected body (parliament) while interpreting and applying the law in the event of disputes is left to independent judges. New Zealand and England’s systems have diverged over the last generation; England, being part of the UK, before Brexit had converged to some extent with applicable European-wide directives, while New Zealand, in a completely different context, has continued to incorporate the principles of the Treaty of Waitangi into its legal framework. New Zealand’s common law (law created and developed by judges rather than parliament) has also diverged from England over time.

Here is a brief overview of the legal framework of New Zealand:

Constitutional Law: New Zealand is a constitutional monarchy with a parliamentary democracy. The reigning monarch of the United Kingdom is its head of state. The Constitution Act 1986 is the principal legislation that governs the operation of the New Zealand government, including the roles and powers of the monarch, the Governor-General, and parliament. The Treaty of Waitangi, created in 1840, is an important source of constitutional obligations between the state and the Tangata Whenua of Aotearoa. The Constitution Act is functional legislation that talks about how things work. It is not a source of constitutional obligations in itself.

New Zealand has an unwritten constitution which is greater than the sum total of its parts. Those parts are: the Bill of Rights Act 1990 (see below), its electoral system inclusive of its traditional customs and procedures, its judicature legislation (see below) and other relevant legislation such as the Human Rights Act 1993 (see below).

Electoral system: New Zealand is a democracy. It has a general election every three years. It is a “mixed-member proportional (MMP) system where there are a fixed number of electorates, 60, and then an adjustment to reflect the overall vote. This usually results in a parliament comprising 120 members. A political party must receive at least 5% of the total votes before getting getting a seat if it does not win an electorate seat.

Court system: The High Court is a superior court of unlimited jurisdiction whose function is to administer the laws of New Zealand within the boundaries set by the Senior Courts Act 2016. Its broad jurisdiction includes: public law; applications to review a decision made by a public/ state body, writs of habeus corpus, appeals from inferior courts/ tribunals, applications for declarations as to rights and remedies under legal documents and statute, the hearing of certain criminal trials, and common law civil claims such as tort and contract. The Court of Appeal is an intermediate court of appeal which considers appeals against High Court decisions. The final court of appeal is the Supreme Court, whose initial permission is needed to bring an appeal.

The inferior court is the District Court. Unlike the High Court, it has no inherent jurisdiction. Its powers are explicitly set out in the District Courts Act 2016 and related regulations. As discussed further below, it deals with all criminal proceedings except the most serious. Its monetary jurisdiction to hear civil claims is fixed (at the time of writing: NZ$350,000). The Family Court is part of the District Court (see below).

Human Rights Law: The New Zealand Bill of Rights Act 1990 outlines the fundamental human rights and freedoms for people in New Zealand. It is ordinary, not enshrined, legislation. The Human Rights Act 1993 prohibits discrimination on the basis of race, gender, age, religion, sexual orientation, and other factors. The Human Rights Commission is responsible for promoting and protecting human rights in New Zealand.

Criminal Law: The Crimes Act 1961 records serious criminal offences, as well as the penalties for these offences. The Ministry of Justice oversees the criminal justice system and works to ensure that it operates fairly and efficiently. The courts are responsible for determining guilt and sentencing offenders. Most criminal law is dealt with in New Zealand’s District Court. Serious crime, such as murder, is dealt with in the High Court.

Family Law: The Family Court of New Zealand handles a range of family law matters, including divorce, custody, and child support. The Care of Children Act 2004 outlines the legal responsibilities and rights of parents and other caregivers in relation to children. The Property (Relationships) Act 1976 (the PRA) regulates what happens to property upon separation. The PRA is intended to be a code of all of the applicable law affecting this subject matter. (Whether it has that effect is debatable—a subject for another time.) The PRA is scheduled to have a watershed law reform. At the time of writing, this has not occurred, but is predicted to occur within the next two parliamentary term, so by 2029.

Employment Law: The Employment Relations Act 2000 governs the relationship between employers and employees in New Zealand, including minimum wage rates, holiday and sick leave entitlements, and the right to join a union. MBIE is responsible for enforcing employment laws and ensuring that employees are treated fairly, from a regulatory perspective. The Employment Relations Act 2000 is intended to be a code. This means it is intended to be a complete record of all employment law.

Commercial Law: The Companies Act 1993 outlines the legal requirements for setting up and running a company in New Zealand, including registering a company, issuing shares, and filing financial statements. The Commerce Commission is responsible for promoting competition and protecting consumers in New Zealand's markets. The Contract and Commercial Law Act 2017 is close to a code for the law of contract in New Zealand. The Fair Trading Act 1986 contains laws prohibiting misleading conduct in trade. It provides for civil remedies as well as offences which can be enforced by the Commerce Commission.

Environmental Law: The Resource Management Act 1991 (the RMA) outlines the legal framework for managing New Zealand's natural and physical resources, including land, water, and air. The Ministry for the Environment is responsible for developing and implementing environmental policy, while regional councils are responsible for managing local environmental issues. The RMA is due to have a substantial reform. It is not imminent but should occur within the next 5 to 10 years.

Intellectual Property Law: The Intellectual Property Office of New Zealand oversees the registration and protection of trademarks, patents, and other intellectual property rights in New Zealand. Legislation regulating trademarks is the Trademarks Act 2002. The Copyright Act 1994 outlines the legal rights and responsibilities of creators and users of copyrighted material. The Fair Trading Act’s prohibition on misleading conduct is a vehicle by which people sometimes protect IP rights, as is the common law tort of passing off.

IAG v QBE: a Case of No Interest

Interest is intended to reflect the wrongdoers’s use of money pending judgment while the claimant has been out of pocket. This intention reveals the true nature of an award of interest. It is restitutionary. Its restitutionary nature is intended to address the passage of time between the event giving rise to primary liability to the date a Court determines the existence of that liability. At the time primary liability accrues, the claimant is worse off. The intention of a judgment is to, as far as legal theory allows, make the claimant whole. A claimant may do things that unduly delay the date of determination. During these periods, the clock is paused. This makes sense seeing as the liability to pay interest is contingent upon a determination which at that time has not yet occurred. The claimant in this sense does not sit on an accrued obligation awaiting vindication but rather he has elongated the passage of time. Money matters. Time matters. It is the combination of money’s objective value and also the passage of time which compel a restitutionary award of interest.

The High Court in Sleight v Beckia Holdings Ltd [2020] 2020 2851 (the substantive decision regarding primary liability) and [2021] NZHC 456 (the decision considering interest and legal costs) grappled with this topic in a claim against an insurer responsible for rebuilding an insured’s residential dwelling after damage caused by the Canterbury earthquakes. Following the earthquakes, the insurer, IAG, entered into a contractual partnering-type arrangement with a construction company, Hawkins. The then dire circumstances dictated this kind of arrangement because without it the insurer would have found it impossible to meet its commitments to its many affected customers. A builder, Farrells, rebuilt the property under the auspices of this IAG/ Hawkins arrangement. The repairs proved to be defective. A debate about who was responsible ensued. In the end, the insureds sued; the builder, Hawkins’ liability insurer QBE seeing as Hawkins was by that time in liquidation, and IAG.

There was a trial in July 2020. The necessary remedial works had not occurred.

The HC Court determined that Farrells was liable to the insureds in contract and in negligence as well as under the Consumer Guarantees Act 1993 for its defective and inadequate repair work. Judgment was entered for the cost of the remedial work using present-day rates. IAG was liable under the insurance policy. The High Court awarded interest back-dated to 2015 when the repairs were carried out.

In IAG v QBE [2022] NZCA 208, the Court of Appeal disagreed with the interest award. It noted that the monetary award to the insureds was on the basis of current (i.e., around the time of trial in mid 2020) rates, not 2015 rates. There is a line of authority which holds that where present-day costs are awarded, interest should not run from the earlier relevant period. The reasoning is that an award of interest would duplicate an allowance already built into the damages calculation. The gain to the defendant is removed because it has to pay a higher sum now that it would have had to earlier and the loss to the plaintiff is removed because it will recover more than the loss at the time it became entitled to payment initially. Call this the balancing principle.

The Court of Appeal decision records that the insureds contended that notwithstanding this line of authority, an award was possible in accordance with the Court’s broad jurisdiction under the then applicable s. 87 of the Judicature Act 1908 (which is carried forward into its successor legislation). The Court was not satisfied that there should be any departure from the balancing principle just described. It allowed the appeal. No interest.

This is unfortunate. While application of the balancing principle addressed the financial aspect, it did not address the temporal aspect. The subject matter of the claim was the insured’s home, the full enjoyment of which they were deprived for many years. Reasoning that it makes no difference because the cost of the works has increased in the meantime (reflected in an increased monetary award) has an unfortunate air of sophistry about it. An award of interest was necessary to make the claimants whole.

It’s times like this that you lean back in your chair and ask yourself: what would Lord Cooke of Thorndon have done? One is moved to suppose that he would not have felt so constrained, preferring instead to permit the judge at first instance to exercise a discretion to do justice in the particular case before him.

This is not to criticise the insurer. There was a genuine issue to be tested about the rights and responsibilities between the parties. It is far from a sure thing, in my opinion, that the insurance company had the responsibility the Court found it did. It funded the works and did everything it could. If it could turn back time there is nothing it could have done differently. However, once the law was revealed, a necessary conclusion was that the insureds had been deprived of something to which they otherwise would have enjoyed, the full use of their home. Under New Zealand law, this could not be addressed fully by an award for stress and inconvenience. Awards in New Zealand have always been…what is the word. Thrifty. Interest is the legal tool that best assists.

The balancing principle lacks cogency in this situation. The damages award was higher because of the price inflation of building costs. It is fallacious to say that the detriment to the insureds was obviated. They had to wait five years to get the situation sorted. Time has a value. Time had passed. This detriment should be recognised.

In the image below, children play ball; unencumbered by these questions.

Civil Litigation for Non-Lawyers: a new book

Access to Justice

It has been my pleasure to edit and publish via The Legal Drive a book written by Hamilton barrister Martin Dillon called Civil Litigation for Non-Lawyers. It does what is says on the packet. You can buy it as an e-book or as a hard copy on Amazon. If you are buying a hard copy order it from the US (.com) Amazon site.

See link below.

Civil Litigation for Non-Lawyers: a plain English guide to civil Court cases in New Zealand

By L. Dillon, Martin

Buy on Amazon

Technology and the Legal Profession – An exciting new frontier

There’s nothing like a global pandemic to provide a shift in perspective! For many years the legal sector has lagged behind other professions in regards to adopting technology.

However, in a post pandemic world many of those in the legal profession have realised just how important technology can be. From the astronomical rise of Zoom to the necessary emersion of virtual legal services such as document attestation, we now see the legal profession gaining a foothold in the technological world. This poses an important question – where to next?

Here are three key technological realms the legal profession is predicted to move into:

1.     Artificial Intelligence – From AI Chatbots to filter legal assistance requests to using AI to comb through or create contracts, this newly emerging industry presents many potential uses for the legal sector.

2.     Virtual Practices – The pandemic has highlighted to many that a physical office is becoming less and less of a necessity. Want to save yourself some expensive city centre rent? Many practices are now opting to move completely virtual with all staff working from home!

3.     Legal Research – Online databases, Organisation software and search term technology have all revolutionised legal research. This are is predicted to grow significantly as more efficient software emerges following significant investment in the area.

Not So Fine Wine, Till Now

Schaeffer v Murren [2020] NZSC 98 is a judgment from the New Zealand Supreme Court dated 22 September 2020. The case dealt with an amalgamation of laws including civil procedure, private international law, and negligent misstatement in the context of an investment in a vineyard.

The Applicant, Mr Scaeffer, applied for leave to appeal to the Supreme Court to argue that the High Court, at trial, should have determined whether New Zealand or Nevada law applied.[1] This argument was intended to be asked to the Supreme Court despite no party pleading that Nevada law applied.[2]

The Supreme Court dismissed this application for leave to appeal as it was not in the interests of justice to do so.[3].

Facts

Mr Schaeffer, Mr Murren and Mr Lee were residents of Nevada, United States.[4] Mr Schaeffer supposedly acquired 80% of an interest in a Nelson vineyard through a Nevada limited partnership.

Mr Murren invested more than a million dollars and Mr Lee more than half a million dollars.[5] Agreements in 2002 and 2006 stipulated the terms of the limited partnership.[6] Not only did the Mr Murren and Mr Lee lose their investments, but what also came to the fore was that Mr Schaeffer had not transferred his 80% interest to the limited partnership. Despite this, Mr Schaeffer treated the assets, planned to be owned by the limited partnership, as his.[7].

Background

In 2015, Mr Murren and Mr Lee initiated proceedings against Mr Schaeffer in the New Zealand High Court.[8] Mr Schaeffer’s protest to jurisdiction and dismissal or stay application were rejected in this forum.[9]

The High Court, the case went ahead with New Zealand law being applied.[10] The Court found for Mr Murren and Mr Lee in the regard of Mr Schaeffer being liable for negligent misstatement under the Fair Trading Act 1986 and the Nevada Deceptive Trade Practices Act NRS 598.[11]

Mr Schaeffer exercised his right to appeal to the Court of Appeal. The ground of appeal was that the High Court should have applied Nevada law and, since applicability of Nevada law was unproved by Mr Murren and Mr Lee, their claims should have been dismissed.[12] The Court of Appeal dismissed the appeal.[13]

Supreme Court

The application for leave was based the argument that the issues were matters were of general and public importance. And that if leave was not granted, a substantial miscarriage of justice would occur.[14]

After relevant considerations, the Supreme Court confidently concluded that the applicant’s argument in intending to appeal had an insufficient chance of success. As such, the cost and expense of an appeal was unjustified.

Concluding Remarks

An interesting case which displayed the confidence of the Supreme Court. Although Mr Murren and Mr Lee lost their respective investments in the Nelson vineyards, now that litigation has reached the highest level, they can perhaps sit back and enjoy a wine or two.

Copyright Steve Keall, all rights reserved, 2020

[1] Schaeffer v Murren [2020] NZSC 98 at [7].

[2] At [4] and [9].

[3] At [15].

[4] At [2].

[5] At [2].

[6] At [2].

[7] At [2].

[8] At [3].

[9] At [3] and Murren v Schaeffer [2015] NZHC 2759 (Associate Judge Matthews).

[10] Schaeffer v Murren, above n 1, at [4].

[11] Murren v Schaeffer [2018] NZHC 3176 (Collins J) at [236].

[12] Schaeffer v Murren [2020] NZCA 224 at [7].

[13] Schaeffer v Murren, above n 1, at [6].

[14] At [8].

Privacy Act 2020: Key Pointers

Traditionally, laws have been relatively slow to keep up with modern advances in technology and data information privacy. Data privacy is a topical issue and discussions about it are likely to continue into the foreseeable future, for the better. The upcoming Privacy Act 2020 (the Act), which comes into force on 1 December 2020, is a timely update to the Privacy Act 1993.

Although the laws will largely remain the same, there are some key changes that practitioners and organisations should note.

Reporting

Currently, the Office of the Privacy Commissioner encourages agencies to advise them of privacy breaches.

Under the upcoming update, there will be mandatory reporting requirements. A privacy breach that results in, or could result in, serious harm to the affected individual will need to be reported both to the Office of the Privacy Commissioner and that individual.[1]

Broadly, a privacy breach is:[2]

(i) unauthorised or accidental access to, or disclosure, alteration, loss, or destruction of, the personal information; or

(ii) an action that prevents the agency from accessing the information on either a temporary or permanent basis.

Enforcement

The upcoming update is set to have a stronger enforcement regime.

Failure to notify the Office of the Privacy Commissioner, without reasonable excuse, will be an offence attracting a liability on conviction to a fine not exceeding $10,000.[3]

As to defences, it will not be a defence for an agency to say that it or they have taken steps to address the privacy breach or breaches.[4] It, however, can be a defence for the agency to say that it or they did not consider the privacy breach to be a notifiable privacy breach.[5] The agency would only be able to say this if not considering the privacy breach to be a notifiable privacy breach would have been reasonable to do so in the circumstances.[6] 

The Privacy Commissioner will also have powers to issue compliance notices to organisations.[7] These notices will require organisations to do something, or stop doing something, to comply with the Act.

Territorial scope

The new rules will be applicable to New Zealand and overseas organisations in the context of the collection of information while conducting business in New Zealand. The rules apply to events prior to the personal information of New Zealander’s being disclosed to an overseas entity or entities.[8] The rule will be that the New Zealand organisation must ensure that the overseas entity or entities have a similar level of privacy protection compared to the New Zealand organisation.[9]

Concluding Remarks

For agencies and those affected by the Act, it would be highly beneficial to update policies and reporting processes before the new rules come into effect.

Copyright Steve Keall, all rights reserved, 2020

[1] Privacy Act 2020, sections 114 and 115.

[2] Section 112.

[3] Section 118(1).

[4] Section 118(2).

[5] Section 118(3).

[6] Section 118(3).

[7] Section 123 and 124.

[8] Section 22, Information privacy principle 12.

[9] Section 22, Information privacy principle 12.

Where Should Justice be Sought?

In the pursuit of justice, if the merits of a case offer good reason for court action, one may decide to have their day in court. Within the bigger picture of having one’s day in court, one must not overlook the details and, specifically, the starting point. The starting is always the point of “jurisdiction”. In other words – which particular authority, tribunal, or court would be the most appropriate forum to hear and decide a particular case.

Relatively recent cases have commented on the issue of jurisdiction. This article, specifically, will address the respective jurisdictional boundaries of the Employment Relations Authority (ERA), Employment Court, and High Court.

General Points

The High Court has an inherent jurisdiction. Quite distinct to an inherent jurisdiction, the ERA’s exclusive jurisdiction is prescribed by section 161 of the Employment Relations Act 2000 (the Act).[1]

Section 161(1)(r) states “The Authority has exclusive jurisdiction to make determinations about employment relationship problems generally, including any other action (being an action that is not directly within the jurisdiction of the court) arising from or related to the employment relationship or related to the interpretation of this Act (other than an action founded on tort)”.[2]

The ERA’s jurisdiction is not based on specific causes of actions. Therefore, what it can hear and determine partly depends on argumentation and interpretation of what the employment legislative framework should encompass from both a coverage and technical perspective.

Cases and Comments

Cases

Listed below are a handful of cases that have analysed the issue of jurisdiction, to varying extents. 

BDM Grange Limited v Parkers & Ors [2006] 1 NZLR 353;

Aztec Packaging Ltd v Malevris [2012] NZHC 243;

Hibernian Catholic Benefit Society v Hagai [2014] NZHC 24;

JP Morgan Chase Bank NA v Lewis [2015] NZCA 255;

 Comments

From BDM Grange Limited, and several cases preceding this decision, the position was that:

(a)    The ERA did have jurisdiction to determine:[2]

(i)     Claims that were based on employment laws;

(ii)    The granting remedies stipulated in the Act. This included a broad power to grant relief for breaches of contract. Excluded, however, was the ability to grant equitable reliefs.

(b)   The ERA did not have jurisdiction to determine:[4]

(i)     Causes of action based in tort; and

(ii)    Factual scenarios that involved a non-employee or non-former-employee defendants, subject to exceptions. 

Aztec and Hibernian were subsequent cases that altered this position. The factual similarity of these two cases was that the employer attempted to recover money that was stolen by a former employee. It was held in both cases that irrespective of how the claim was pleaded, it came within the ambit of the ERA’s jurisdiction.[5] This meant the claim could not be brought in the High Court.

For both cases to have reached this result, a wider interpretation of “…arising from or related to…” was taken, as compared to BDM Grange Limited. One underlying assumption of the decisions was that the ERA could grant remedies equivalent to the High Court in the context of equitable causes of actions. There are practical consequences with a wider interpretation, within this context. If an employer plaintiff wanted to seek recovery from a former employee and a third party, it would have to file separate proceedings across both jurisdictions against the parties from which it seeks recovery.

From a broader perspective, the contrast between the decisions of BDM Grange Limited and Aztec and Hibernian have, to an extent, caused the jurisdictional boundaries between the High Court and employment arena to tangle, creating more complication than certainty.

The result of the JP Morgan litigation in the Court of Appeal was noteworthy. The Court commented that the Employment Court was:[6]

(a)    Right, in law, to hold that it had jurisdiction to hear a challenge to a determination of the Employment Relations Authority pursuant to ss 179(1) and 187(1) of the Act in circumstances where the determination related to a claim about an alleged breach of a settlement agreement whereas the claim before the Employment Court was based on an alleged variation to the employment agreement;

(b)   Wrong, in law, to say that it has jurisdiction to award damages for breach of a settlement agreement; and

(c)    Wrong, in law, to hold that the written agreement dated 4 March 2010 was capable of being characterised either wholly or in part as a variation to an employment agreement.

Concluding Remarks

Much before the story of a litigation begins and takes its relatively uncertain course, the premise of where the hearing should be heard, must first be established. Sometimes it is clear and conclusive. Other times, the hazy fog needs to be delicately lifted, to see the path that one is traversing. Developments and issues in this area of the law should be followed with interest.

 Copyright Steve Keall, all rights reserved, 2020

[1] Employment Relations Act 2001, s 161.

[2] Section 161(r).

[3] BDM Grange Limited v Parkers & Ors [2006] 1 NZLR 353 at 369 and 370.

[4] At 354, 364, 369, and 376.

[5] Aztec Packaging Ltd v Malevris [2012] NZHC 243 at [12]; Hibernian Catholic Benefit Society v Hagai [2014] NZHC 24 at [28] and [42].

[6] JP Morgan Chase Bank NA v Lewis [2015] NZCA 255 at [118].

The Unsettling Settlement

Southern Response Earthquake Services Limited v Dodds [2020] NZCA 395 (7 September 2020)

This judgment is a recent decision of the Court of Appeal.

Background

The Dodds’ house sustained damage beyond economic repair in the February 2011 earthquake in Christchurch. [1] The Dodds’ had insured this house on a replacement basis with Southern Response Earthquake Services Ltd (SRES), previously known as AMI Insurance Ltd. [2] The insurance policy offered the Dodds’ several options to settle their claim. Of the options, the Dodds’ chose to buy another house. Under the policy, SRES were to pay the cost of buying that other house capped at the cost of “rebuilding your house on its present site” [3] This cost was to be determined by an estimate of what the cost would be to rebuild the house on the present site.

Arrow International (Arrow) provided the Dodds’ with an Abridged Detailed Repair/Rebuild analysis (Abridged DRA), which stated a total figure of $895,937.78 for House & Outside EQC Scope (including GST). [4] SRES advised the Dodds that if they exercised the option to buy another house, the maximum amount available to them was $894,937. [6]

The Dodds discovered that a more comprehensive DRA (Complete DRA) had been prepared by Arrow and provided to SRES. [6] The Complete DRA indicated that SRES would incur additional costs of $205,000. [7] SRES did not disclose three things to the Dodds before settlement. One, the Complete DRA. Two, that the amount in the Abridged DRA excluded certain costs that SRES would incur if the house was rebuilt on its existing site. [8] And three, why SRES considered that those items were irrelevant when determining the maximum payable under the settlement option the Dodds chose. [9]

Litigation

The Dodds and St Martins Trustee Services Ltd sued SRES successfully in the High Court, recovering the difference of approximately $205,000. [10] SRES were found to have been misleading and deceptive in settling the claim with the Dodds. [11]

SRES appealed the latter finding to the Court of Appeal. [12]

The issues on appeal were: [13]

Misrepresentation

(a)   What representations (if any) did SRES make to the Dodds?

(b)   Were those representations false?

(c)    Were the Dodds induced to enter into the Settlement Agreement by those representations?

(d)   What damages are the Dodds entitled to under s 35 of the Contract and Commercial Law Act 2017 (CCLA)? Can the Dodds recover general damages for inconvenience and stress?

Fair Trading Act 1986 (FTA)

(e)    Did SRES engage in misleading and deceptive conduct in breach of s 9 of the FTA?

(f)     Did the Dodds suffer loss or damage because of any misleading conduct on the part of SRES?

(g)    What remedy should be awarded under s 43 of the FTA?

Breach of duty of good faith

(h)   Did SRES owe a duty of good faith to the Dodds in connection with the settling their claim?

(i)     If SRES owed a duty of good faith to the Dodds, was that duty breached?

(j)     What is the appropriate remedy in respect of any such breach?

In summary, although the Court of Appeal allowed SRES’s appeal in part and the damages awarded to the Dodds in the High Court were reduced, the Court found that SRES made misrepresentations to the Dodds about two things. One, its estimate of the cost of rebuilding the house. And two, the absence of any other report from Arrow that stipulated a different rebuild cost. [14] The Court affirmed that the Dodds’ loss was the difference between the true value of their rights under the policy and the sum they were persuaded to accept in exchange for surrendering these rights; a loss recoverable under both the CCLA and the FTA. [15]

Lessons

There are a few important lessons to be learnt from this case.

One, a reasonably held honest opinion by an insurer regarding the insured’s entitlement under a policy does not necessarily make the insurer liable for a claim in dishonesty or bad faith. If SRES had shown the Complete DRA to the Dodds, it would be unlikely for the Dodds to have a legal claim.

Two, the extent of the insurer’s duty to disclose information must be limited to the disclosure of material facts. This duty is not boundary-less.

Three, in terms of the duty of good faith, the Court commented that it is likely more productive to consider what obligations are implied by law or that can be implied in fact in the context of particular dealings between the insurer and the insured. [16] The Court had recently affirmed this approach in Taylor v Asteron Life Ltd. [17]. The Court of Appeal did not engage in an indepth considering of this interesting topic: seemingly to be left for another occasion.

Copyright Steve Keall, all rights reserved, 2020

[1] Southern Response Earthquake Services Limited v Dodds [2020] NZCA 395 (7 September 2020) at [1].

[2] At [1].

[3] At [1].

[4] At [2].

[5] At [2].

[6] At [4].

[7] At [4].

[8] At [4].

[9] At [4].

[10] At [6].

[11] At [6].

[12] At [8].

[13] At [107].

[14] At [9].

[15] At [10].

[16] At [194].

[16] Taylor v Asteron Life Ltd [2020] NZCA 354.

Litigants must put best case at trial

Kumar v Saily [2020] NZCA 376 (31 August 2020)

This case reaffirmed the well-established principles governing adducing further evidence in a civil appeal. [1]

The facts of the case involved Navdeep Kumar and Neeraj Saily, first cousins, who, in embarking on a joint business venture, became embroiled in a dispute with one another, which then extended to their respective families and cultural community.

The idea of the joint venture was to buy a section from a developer on terms enabling Kumar and Saily to take possession of the land on payment of the deposit, pay for the construction of a house, and then pay the balance of the purchase price. [2]

In October 2015, Kumar and Saily incorporated New Venture Capital Ltd, which was nominated to be the purchaser of the property. The same month, construction of the house began. In March 2016, construction was completed. A subsequent valuation of the house showed the property was worth more than the purchase price, such to an extent that the bank did not require Kumar or Saily to contribute any of their own funds towards the purchase price. The next step was to refinance - so that the loan could be transferred to New Venture Ltd and secured over the property. [3]

In April 2016, Kumar and Saily’s families became involved when Kumar’s father discovered that the family home, previously owned by him, his wife, and Mr Kumar, had been mortgaged without him knowing. On 25 April 2016, two angry meetings between the two families were held. Tensions continued to rise in the months that followed. [4]

In December 2016, both families met in a Hindu temple. This meeting was organised by some of the temple trustees in an effort to resolve the dispute. The outcome of this meeting was a written agreement signed by Kumar and Saily and witnessed by 15 members of the temple community. The agreement stipulated that the equity in the property would be shared 65/35, in favour of Kumar, with Saily having the first option to purchase. In mid-December 2016, Saily exercised this right. [5]

In September 2017, Kumar, in disputing Saily’s right, issued proceedings in the High Court. He sought specific performance of an alleged oral agreement reached in April 2016. [6]

The issues in the High Court were: [7]

(1)   Did Kumar and Saily enter into a binding oral agreement on 25 April 2016. If so, what were the terms?

(2)   Did Kumar sign the December 2016 agreement, in the temple meeting, under duress?

(3)   If not, what were the terms of the December agreement? Was this agreement unenforceable because of an absence of a reference to New Venture Ltd?

Regarding the first issue, a binding oral agreement was not found due to a lack of credible evidence. For largely the same reason, the claim of duress was not accepted. Finally, with the third issue, the December 2016 agreement was found to be enforceable and Saily was found to have validly exercised his option. [8]

Disappointed with the result, Kumar wished to adduce new evidence at the substantive appeal hearing. On this point, the Court of Appeal affirmed that the constraints of admission of further evidence are very strict. The two tests were restated. One, that new evidence must be fresh, credible, and cogent. And two, that evidence that is not fresh is only to be admitted in exceptional and compelling circumstances and needs to meet the standards of credibility and cogency. [9]

It was concluded that the evidence intended to be adduced was not fresh and, with reasonable diligence, could have been produced at trial. [10]

Admitting the evidence intended to be adduced would result in a substantial rehearing; a reality beyond the scope of r 45 of the Court of Appeal (Civil) Rules 2005. The Court reaffirmed that litigants must put their best case at trial. [11]

As such, Kumar’s application to adduce new evidence was declined.

Copyright Steve Keall, all rights reserved, 2020

[1] Kumar v Saily [2020] NZCA 376.

[2] At [4].

[3] At [6] to [9].

[4] At [10].

[5] At [12] to [13].

[6] At [14].

[7] At [16].

[8] At [17] to [21].

[9] At [26].

[10] At [27].

[11] At [32].