Dariusz Koper v Zurich Insurance PLC

1. [1]

   The Plaintiff in these proceedings owns (or owned) an apartment in Auckland, New Zealand, in a complex known as the Victopia Apartments. The complex suffered from significant building defects. The Plaintiff, as representative of all the other affected owners, sued, inter alia, the builder, Brookfield Multiplex Constructions (NZ) Limited (in Liquidation) (“BMX”), in the New Zealand High Court and recovered a judgment of NZD 53,124,719.76 against BMX. The judgment of the New Zealand High Court is recorded in Body Corporate 346799 v KNZ International Co Ltd [2017] NZHC 511, and I shall refer to that judgment as “the New Zealand Judgment”. BMX is a wholly owned subsidiary of Multiplex Constructions Pty Ltd (formerly known as Brookfield Multiplex Pty Ltd) (“BMPL”).

2. [2]

   A portion of the New Zealand Judgment debt was paid by the Auckland City Council, possibly as part of a settlement, and BMX subsequently went into liquidation. NZD 23,124,719.76 remains owing by BMX under the New Zealand Judgment to the Plaintiff and the group members whom he represents. There are significant other debts owed by BMX and the total of those debts is said to be approximately NZD 83,000,000. Some of those debts arise out of claims of a similar kind to those brought by the Plaintiff against BMX but in respect of another building in New Zealand known as Century on Anzac. As at 3 December 2020, BMX had a cash balance of NZD 1,716,519: see page 429 of Exhibit ASM-1.

3. [3]

   It is no secret that the litigation brought by the Plaintiff has been funded by a litigation funder. That the Plaintiff’s representation is funded by a litigation funder was raised by the Defendants on the Plaintiff’s application for leave pursuant to s 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (“the Claims Act”). I shall return to the significance of the ligation funding later in these reasons.

4. [4]

   BMX is a named insured in a policy of insurance effected by BMPL with Zurich Insurance PLC (“Zurich”) as lead insurer. There are many other insurers who are named in that policy, but I shall refer to Zurich in the balance of these reasons as comprehending all of them unless the context requires otherwise. After the hearing on 30 and 31 August 2021, the Plaintiff amended its claim to join Aspen Insurance UK Limited (“Aspen Insurance”), one of the other insurers. This proposed amendment was not opposed by Zurich.

5. [5]

   In August 2021, the Plaintiff commenced proceedings against Zurich in the Commercial List, a List within the Equity Division, seeking to recover the balance of the judgment debt from Zurich relying on the provisions of the Claims Act. I shall refer to those proceedings as “the Commercial List Proceedings”.

6. [6]

   Mr P Braham SC with Mr B O’Connor and Ms M Caristo appeared for the Plaintiff. Mr G Rich SC with Mr G Ng appeared for Zurich.

7. [7]

   The Claims Act requires a person who wishes to claim against an insurer pursuant to that Act to obtain leave of the Court. The Plaintiff, by these proceedings in the General List, seeks the leave required by the Claims Act. Zurich resists the application for leave. Its primary and fundamental opposition is based on its contention that this Court has no jurisdiction to entertain proceedings under the Claims Act given that:

   1. (1)

      the claimant is a New Zealand resident with no connection with Australia;

   2. (2)

      the insured is a New Zealand company with no presence in Australia;

   3. (3)

      Zurich has no presence in Australia; and

   4. (4)

      proceedings against the insured have been commenced and determined in a New Zealand court.

8. [8]

   There is no contest that each of [7(1)], [7(2)] and [7(4)] are correct. Item [7(3)] applies to Zurich itself but does not apply to Aspen Insurance (and possibly some other named insurers), which does have a presence in New South Wales.

9. [9]

   On the question of connection with New South Wales, there is one further matter of potential importance; namely, that the insurance policy issued by Zurich provides (see CB 156):

10. [10]

    The parties are agreed that to obtain leave pursuant to s 5 of the Claims Act, a claimant must establish that he has an arguable case that the insured is liable to him, that the policy responds and that the insured is not able to meet his claim in full: see Murphy, McCarthy & Associates Pty Limited v Zurich Australian Insurance Limited [2018] NSWSC 627 at [17] per Hammerschlag J (“Murphy”). However, even where these conditions are met, there still exists a “residual discretion to refuse leave”: Murphy at [17].

11. [11]

    Zurich accepts that the three conditions referred to in [10] are met but advances the following reasons why the Plaintiff’s Summons should be dismissed:

    1. (1)

       The Claims Act does not cover a claim against an insurer by a New Zealand resident in respect of a tort committed in New Zealand by a New Zealand tortfeasor and where all the loss and damage suffered by the claimant is in New Zealand – i.e. the present case does not fall within the territorial scope of the Claims Act. BMX, it asserts, could not have been properly sued in New South Wales. I shall refer to this as “the jurisdictional point”.

    2. (2)

       Even if the first proposition is not accepted, the residual discretion to refuse leave pursuant to s 5 of the Claims Act should be exercised against the Plaintiff because these proceedings would involve an intrusion into the New Zealand insolvency scheme which would undermine the New Zealand insolvency legislation producing a result which is inconsistent with that scheme. I shall refer to this point as “the inconsistency point”.

12. [12]

    The jurisdictional point has two aspects. The first is whether all that is required is that a claimant commence proceedings in a New South Wales court (as the Plaintiff contends) as a matter of construction of the section and whether that is supported by the authority of the Court of Appeal’s decision in Chubb Insurance Company of Australia Limited v Moore [2013] NSWCA 212 (“Chubb”). The second aspect is that Zurich contends that the Plaintiff could not have brought proceedings against BMX because BMX is a New Zealand resident and none of the events the subject of the Commercial List Proceedings have a New South Wales element and because Schedule 6 to the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) provides no basis for service on BMX. The Plaintiff contends that Schedule 6 is not relevant because, he asserts, the relevant provisions are ss 8-10 of the Trans-Tasman Proceedings Act 2010 (Cth) (“TTPA”). Zurich contends that:

    1. (1)

       as a matter of construction, the TTPA is not available in the present circumstances; and

    2. (2)

       if it otherwise is to be interpreted as giving power, it is an invalid exercise of Commonwealth legislative power (“the Constitutional Issue”).

13. [13]

    At the heart of the dispute with which the Court is now concerned are the terms of the Claims Act, which I shall set out below in conjunction with other pieces of legislation and rules which do, or may, have a bearing on the matter, but before doing so, I should make reference to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (“the LRMPA”). That enactment was the predecessor to the Claims Act and is a piece of legislation which gave rise to much litigation. There are a number of articles on the Claims Act and, in “Choosing your life raft: A review of Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 6 and its analogues” (2007) 81 ALJ 180, I sought to summarise the effect of the Act and in an earlier article, “Reflections on Section 6” (1996) 7 Insurance Law Journal 152, R D Giles, writing extrajudicially, explained, in his characteristically lucid fashion, the intricacies of the legislation and called for its reform. Included in the legislative material are the terms of relevant sections of the TTPA and sections of the Australian Constitution (“Constitution”).

14. [14]

    The LRMPA is important not only because it is the direct progenitor of the Claims Act but because, in a five judge bench, the Court of Appeal, in Chubb, expressed views on the section’s operation on which both parties in this litigation rely as applicable to the Claims Act.

15. [15]

    As a result of the constitutional issue which has arisen, several s 78B notices have been given to the Attorneys-General of the States, Territories and Commonwealth. The Commonwealth has decided to intervene pursuant to s 78A of the Judiciary Act 1903 (Cth) (“Judiciary Act”) and issued its own s 78B notice. Mr B Lim of Counsel appeared for the Commonwealth Attorney-General (“CAG”).

16. [16]

    There is no dispute that the Claims Act introduces a new statutory cause of action. The cause of action is based on X having been damaged by the tortious act of Y and permits X to sue Y’s insurer directly. In that suit, X has all the rights against Y’s insurer as X has against Y and Y’s insurer has all the rights that Y has against X and can run all of the defences against X that it (as insurer) could have run against Y (such as non-disclosure or absence of cover for the particular claim or breach of terms of the insurance contract).

17. [17]

    The principal questions which I am called on to decide in this case are, in essence:

    1. (1)

       What is the territorial reach of the Claims Act?

    2. (2)

       Is the territorial reach established by the commencement of proceedings in this Court against the insurer?

    3. (3)

       Does Chubb support the contentions of the Plaintiff or Zurich?

    4. (4)

       What is the precedential status of Chubb?

    5. (5)

       If the answer to [17(2)] is no, does the Plaintiff have to establish that he could have sued BMX in New South Wales?

    6. (6)

       If the answer to [17(5)] is yes, would the Plaintiff have been able to rely on the TTPA to have sued BMX in New South Wales with the consequence that the proceedings against Zurich are within the territorial reach of the Claims Act?

    7. (7)

       If the answer to [17(6)] is yes, should the Court nevertheless refuse leave on the basis of the inconsistency point?

18. [18]

    The Plaintiff contends that:

    1. (1)

       the commencement of proceedings against Zurich under the Claims Act is sufficient;

    2. (2)

       alternatively, if Zurich’s first contention is accepted (that is, that the Plaintiff must establish that he could have sued BMX in New South Wales), he could have sued BMX in New South Wales;

    3. (3)

       he can sue Aspen in New South Wales because Aspen has a corporate presence in the jurisdiction (and hence can join the other insurers by virtue of Schedule 6 of the UCPR); and

    4. (4)

       he can sue Zurich and all the other insurers because, by the policy, the parties have agreed that Australian courts are to have exclusive jurisdiction and that the contract of insurance is governed by and to be construed in accordance “with the law of the Commonwealth”.

19. [19]

    The Plaintiff accepts that Chubb does not support [18(3)] or [18(4)] above, but wishes to preserve that argument should an appeal need to be brought.

20. [20]

    The case, it will be recognised, is one of some complexity and I wish to record my appreciation of the extensive assistance which all Counsel and their instructing solicitors have provided to the Court in this matter.

Legislative Background to the Dispute

1. [21]

   The legislation and related materials are these:

   1. (1)

      Sections 3-10 of the Claims Act, which provide:

   2. (2)

      Section 6 of the LRMPA, which provides:

   3. (3)

      Rules 11.3-11.5 of the UCPR, which provide:

   4. (4)

      Schedule 6 of the UCPR, which provides:

   5. (5)

      Relevant parts of sections 3, 4, 8, 9, 10, 17 and 20 of the TTPA, which read:

   6. (6)

      Sections 51(xxiv), 51(xxix), 71, 75, 76 and 77 of the Constitution, which read:

2. [22]

   It will be observed that the Claims Act, in contrast to s 6 of the LRMPA, does not rely on the concept of charge at all. The right is a right to sue the insurer directly and, unlike s 6 of the LRMPA, s 4 of the Claims Act does not specify that the proceedings against the insurer must be brought in the same court as if the action were one to recover damages.

Factual Background

1. [23]

   Sufficient factual background to the underlying dispute that led to the New Zealand Judgment is conveniently found in the summary by Thomas J (as her Honour then was) at [7]-[18] of the New Zealand Judgment:

2. [24]

   On 3 December 2012, BMX was placed into liquidation.

3. [25]

   For the period from 31 March 2012 to 31 March 2013, Zurich issued various professional indemnity policies to BMPL and its subsidiaries, including BMX, which constituted what has been described as a professional indemnity “tower” of insurance for BMPL and its subsidiaries, with the First Excess Policy, the Second Excess Policy and the Third Excess Policy “following form” with the Primary Policy. The Primary Policy was a “claims made and notified” policy of insurance. The total amount of cover under all layers is £40,000,000: see T58.21 at the hearing on 30 August 2021.

4. [26]

   Although the Primary Policy contained many exclusions, only exclusion 9 is relevant to the present dispute. That exclusion is referred to as the “defective workmanship exclusion” and provides:

5. [27]

   Zurich claims that any problems with the Plaintiffs’ apartment and the building were as a result of defective workmanship either wholly or in part and the Plaintiff contends that the cause was defective design. I am not required to consider that issue further because Zurich, as I have noted, accepts that the Plaintiff has an arguable case that the exclusion does not apply.

The Law Reform’s Report

1. [28]

   I have earlier set out the terms of s 6 of the LRMPA. In November 2016, the New South Wales Law Reform Commission delivered its review of s 6 of the LRMPA in “Report 143 - Third Party Claims on Insurance Money: Review of s 6 of the Law Reform (Miscellaneous Provisions) Act 1946” (“the Report”), by which the Commission recommended the abolition of s 6 of the LRMPA and the enactment of new legislative provisions which recommendations were adopted in large measure by the New South Wales Government leading to the enactment of the Claims Act.

2. [29]

   The Plaintiff relies in his submissions on the following paragraph of the Report:

The Jurisdictional Point

1. [30]

   Zurich’s contentions can be summarised as follows:

   1. (1)

      This Court has no jurisdiction to deal with a s 4 claim because:

2. [31]

   The Plaintiff’s response to these points is that the only limit imposed by s 4 of the Claims Act is that proceedings must be commenced against the insurer in New South Wales; that is, the Plaintiff contends on the basis of Chubb, sufficient. A further point made is that the Claims Act, like the LRMPA, is remedial legislation which should be beneficially construed so as to give the most complete remedy consistent with the actual language used; reference being made in support of that proposition to Antico v Heath Fielding Australia Pty Ltd (1997) 188 CLR 652.

The Decision in Chubb

1. [32]

   Chubb was concerned with two sets of proceedings. The Plaintiffs, investors in agricultural schemes, sued directors and executives of Great Southern Limited and Great Southern Managers Australia Limited, to both of which I shall refer as “Great Southern”, in the Supreme Court of Western Australia (in respect of what were described as the Transform Proceedings) and in the Supreme Court of Victoria (in what were described as the PDS Proceedings). Chubb Insurance Company of Australia Limited and other insurers commenced proceedings in the Commercial List of the Equity Division of this Court and the Commercial List Judge referred the matter to the Court of Appeal.

2. [33]

   In Chubb, the insurers not only had not denied liability to its insured but were funding the defence of the claims against the insureds as the policy included cover for legal costs. The claimants in the two sets of proceedings contended that the insurers should not be extending funding to the insureds because that was reducing the amount of cover available under the policy and from which they hoped to obtain recompense if successful in the proceedings. Because of the contentions advanced by the claimants and their claim that the insurers were acting in a manner which did not properly reflect the charge imposed by reason of s 6 of the LRMPA, the insurers felt it necessary to seek declaratory relief as to whether s 6 applied to the policy and its effect.

3. [34]

   A number of issues concerning the operation of s 6 of the LRMPA were ventilated, most of which are not pertinent to the present dispute. A critical matter however is that amongst the questions referred to the Court of Appeal was whether s 6 had any application to the claims made by the plaintiffs in the Transform and PDS Proceedings.

4. [35]

   The Court of Appeal (Emmett JA and Ball J, with whom Bathurst CJ, Beazley P (as her Excellency then was) and Macfarlan JA concurred) unanimously held that s 6 did not apply to the claims made by the claimants: see [206].

5. [36]

   Whatever the significance of the conclusion in Chubb to the outcome in the present case, a matter to which I shall return, in approaching the question of the territorial ambit of s 6 of the LRMPA, the Court of Appeal in Chubb referred to some important matters of principle, to which I must adhere in considering the issue of the territorial reach of s 4 of the Claims Act:

   1. (1)

      The territorial scope of legislation is, in the absence of an express provision, a question of construction: [144].

   2. (2)

      The primary rule of construction requires one to have regard to the context and subject matter of the legislation in question: [144].

   3. (3)

      The Court must therefore focus on what is the central concern of the relevant legislation or that on which the legislation is shown to “hinge”, citing Insight Vacations v Young (2011) 243 CLR 149 at 159-160 and 162 per French CJ, Gummow, Hayne, Kiefel (as her Honour then was) and Bell JJ (“Insight Vacations”): [144].

   4. (4)

      What the Court said at [145]:

   5. (5)

      The presumption that legislation does not apply to persons and matters outside the territory of the legislature “must be applied … by reference to the central concern of the legislation or hinge”: [146].

   6. (6)

      Where the territorial limits of state legislation cannot be determined from its context and subject matter, the general rule of construction is to be adopted that:

   7. (7)

      What the Court said at [147]:

6. [37]

   Of importance to the present dispute is the fact that each of the parties in Chubb put forward contentions concerning various matters that should, they submitted, be accepted as producing the result that s 6 of the LRMPA did apply to the claims. These various factors or matters included singly or collectively:

   1. (1)

      that the law governing the claimant’s cause of action against Great Southern was New South Wales law;

   2. (2)

      that the event giving rise to the claim for damages occurred in New South Wales;

   3. (3)

      that the proper law of the contract of insurance was the law of New South Wales;

   4. (4)

      the contract of insurance had its closest connection with New South Wales;

   5. (5)

      the situs of the insured’s choses in action under the policies of insurance was New South Wales; and

   6. (6)

      the statutory cause of action is “a derivative of, and dependent on, the contract of insurance”: see [191].

7. [38]

   Further, the insurers in Chubb submitted that s 6 of the LRMPA was limited by s 562 of the Corporations Act 2001 (Cth) (“Corporations Act”).

8. [39]

   The Court of Appeal rejected each of the matters referred to in [37] as determinative either alone or collectively and held at [200]-[205]:

9. [40]

   The Court of Appeal noted the insurers’ contentions that s 6 of the LRMPA provided a more beneficial outcome to claimants than s 562 of the Corporations Act but the Court did not appear to accept that as a reason to read down s 6: see [200]-[205].

10. [41]

    Mr Braham placed particular emphasis on the following words in Chubb:

11. [42]

    Mr Rich pointed to the words earlier in [202] of Chubb and placed particular reliance on the word “properly” in that paragraph.

12. [43]

    There are five other cases to which my attention has been drawn in which the issue of the territorial scope of s 6 of the LRMPA and its New Zealand equivalent have been considered.

13. [44]

    In Ludgater Holdings Ltd v Gerling Australia Insurance Co Pty Ltd [2010] 3 NZLR 713 (“Ludgater”), the plaintiff (“Ludgater”), the owner of a building in New Zealand, purchased from a Victorian registered company, Atco Controls Pty Ltd, fluorescent lights. A fire causing substantial damage broke out on the property owned by Ludgater and it claimed that the fire was caused in the property by reason of the defective capacitors used in the lights. Ludgater claimed that the capacitors were negligently manufactured or supplied. Atco went into liquidation shortly after the fire. Atco had a policy with Gerling Australia Insurance Company Pty Ltd (“Gerling”). Ludgater brought proceedings under s 9 of the Law Reform Act 1936 (NZ) (“LRA”) against Gerling. Section 9 of the LRA is in very similar terms to s 6 of the LRMPA. The Supreme Court of New Zealand held that s 9 could not be relied on by Ludgater because the situs of the insurers’ obligation to Atco was Australia – that was where the insured was entitled to be paid rather than New Zealand. The Court held that s 9 had to be interpreted in accordance with the rules of private international law and would not be read as applicable where the transaction was according to the relevant choice of law governed by foreign law. That foreign law, and in particular s 562 of the Corporations Act, required application to proceeds in a different form to the priorities found in the LRA.

14. [45]

    In Body Corporate 326421 v Auckland Council [2013] NZHC 753, Gilbert J considered, inter alia, an application by the owners of another New Zealand building constructed by BMX (Nautilus) to join the insurers under a similar policy as here. The application was made under s 9 of the LRA and s 6 of the LRMPA. His Honour rejected the first claim on the authority of Ludgater as none of the insurers were resident in New Zealand. The owners corporation sought to distinguish Ludgater on the basis that the proceeds of the policy were payable in New Zealand because BMX was a New Zealand company and the insurance debt would be payable to it in New Zealand. Gilbert J held that the situs of the debt was London, not New Zealand, and at [23] said:

15. [46]

    The claim made under s 6 of the LRMPA was also rejected because the debt was not payable in New South Wales and further, because (see [25]):

16. [47]

    In McCullagh v Underwriters Severally [2015] NZHC 1384, Wylie J held that s 9 of the LRA did not apply because, on the authority of Ludgater, the Act did not apply to overseas insurance companies. The applicants in that case were the liquidators of BMX and the claims with which the Court was concerned included the Victopia proceedings, the Century on Anzac proceedings and the Sylvia Park proceedings.

17. [48]

    Cambridge Credit Corporation Ltd v Lissenden (1987) 8 NSWLR 411 and Dixon v Royal Insurance Australia Ltd (1991) 105 ACTR 1 are two cases in which the Supreme Court of New South Wales and the Supreme Court of the Australian Capital Territory considered that for the purposes of s 6 of the LRMPA (and its ACT equivalent), the territorial scope of the Act was determined by where the indemnity under the insurance policy was payable and not where the negligent act of the insured had occurred. These cases, it appears, were not cited in Chubb but, at [196] of Chubb, the Court of Appeal commented on the contentions of some of the defendants that s 6 applies only to insurance monies that are or may be payable in New South Wales in the following terms (at [196]):

18. [49]

    A decision on s 6 of the LRMPA which referred to Chubb is Robinson v Vogelsang (No 1) [2015] NSWSC 1670. That was a case in which the plaintiff sought leave to join the insurer of one of the defendants. Although the case concerned an accident in South Australia, the proceedings against alleged tortfeasors were on foot in New South Wales and extra-territoriality was not an issue.

19. [50]

    On the question of jurisdiction, several important matters were raised by Mr Braham.

20. [51]

    In Obeid v R (2015) 91 NSWLR 226 (“Obeid”), the Court of Criminal Appeal pointed out that (at 230 per Bathurst CJ, Beazley P and Leeming JA):

21. [52]

    This topic is discussed by Justice Leeming in his work Authority to Decide – The Law of Jurisdiction in Australia (2nd ed, 2020, The Federation Press) at [6.1] (“Authority to Decide”) and the learned author draws attention to the fact that many State courts have no or few limitations as opposed to the nature of the controversy. In Federal Capital Commission v Laristan Building and Investment Co Pty Ltd (1929) 42 CLR 582, Dixon J (as his Honour then was) expressed the view that jurisdiction “depends in the main on service of process and not upon subject matter”: see 586.

22. [53]

    The theme that jurisdiction is generally defined by the rules of service finds expression in Luke v Mayoh (1921) 29 CLR 435 at 439 per Knox CJ, Rich and Starke JJ (“Luke v Mayoh”), Laurie v Carroll (1958) 98 CLR 310 at 323-4 per Dixon CJ, Williams and Webb JJ (“Laurie v Carroll”) and Gosper v Sawyer (1985) 160 CLR 548 at 557-8 per Gibbs CJ, Wilson and Dawson JJ (“Gosper”), in which Mason and Deane JJ referred to the fact that “a court’s power to authorize service of its writs is ordinarily a measure of its jurisdiction in an action in personam”: at 564. There are matters which were once the province of the Supreme Court such as matrimonial causes and bankruptcy which have now been removed by statute. There are limits to the jurisdiction of lower courts in the judicial system which deprive those courts from entering judgment in excess of their jurisdictional limits. Absent some statutory enactment, the Supreme Court of New South Wales has “subject matter” jurisdiction over most matters and for present purposes, certainly torts and contractual claims.

23. [54]

    The distinction between subject matter jurisdiction and territorial jurisdiction was discussed in Flaherty v Girgis (1987) 162 CLR 574 (“Flaherty v Girgis”). This case has assumed considerable importance in the present dispute, and I shall return to it later in these reasons.

24. [55]

    In Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491 (“Regie”), the High Court confirmed that the Supreme Court of New South Wales had jurisdiction to hear a claim in tort against the manufacturer of Renault cars in connection with an accident in Noumea. This was because the plaintiff was a resident of New South Wales and suffered damage that would continue in New South Wales and hence, the case fell within the long-arm jurisdiction of the Court; that is, within Schedule 6 of the UCPR, which specifies the basis on which writs can be served outside of New South Wales.

25. [56]

    I should emphasise that whether or not there is jurisdiction entails different issues to whether or not that jurisdiction should be exercised. It is open to a defendant properly served with a writ to contend that the Supreme Court of New South Wales is not a convenient venue for the case to be heard. Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 sets out the criteria which should generally be applied to such a contest: see also Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. No issue of forum non conveniens has been raised in this case. The Claims Act, by s 5(3), itself recognises that even in a case that falls within the statute, the Court may refuse leave to proceed. Section 20 of the TTPA prohibits a stay of proceedings if the Court is satisfied that a choice of court agreement designates an Australian court as the court to determine a matter.

26. [57]

    The Plaintiff’s contention is that the Supreme Court has jurisdiction to hear a claim based on s 4 of the Claims Act by any person (wherever he resides or is domiciled) in respect of any tort wherever committed and in respect of any damage wherever incurred. Thus, Mr Braham submitted in answer to an enquiry of mine, a Spanish citizen who has a claim against a Spanish insolvent defendant who has a policy of insurance with a Spanish insurer can bring a claim against the Spanish insurer under s 4 of the Claims Act and the Court has jurisdiction because the Claims Act confers jurisdiction on the Court. All it requires is an application for leave to be launched in this Court pursuant to s 5.

27. [58]

    Mr Braham, whilst conceding that the result might be a “surprising outcome” and also might “be eyebrow raising” (see T70.20 and T71.1), submitted that this result was supported by the conclusion reached by the Court of Appeal in Chubb, since the Court rejected any need for the parties to have a connection with New South Wales, to have a policy of insurance that made New South Wales law the law of the contract, for the tort to have been committed in New South Wales or for the damage to be suffered in New South Wales.

28. [59]

    The steps in Zurich’s argument were these:

    1. (1)

       Where an Act of Parliament is reliant on its territorial operation, it should not be interpreted as having an ambit beyond the borders of the State of New South Wales: see Meyer Heine Pty Ltd v China Navigation Co Ltd (1966) 115 CLR 10 at 23 per Kitto J, 30-1 per Taylor J, 38 per Menzies J and 43 per Windeyer J.

    2. (2)

       Although the Claims Act does not expressly state what the territorial limitations of its scope are by stating that the insurer stands in the place of the insured as if the proceedings were proceedings to recover damages, compensation or costs from the insured person and that the parties have the same rights and liabilities, this must carry the restriction that the claimant cannot bring proceedings against the insurer if he could not bring proceedings in New South Wales against the insured in respect of the principal claim.

    3. (3)

       The claimant here (i.e. the Plaintiff) could not bring proceedings in respect of the principal claim because the principal claim involved a tort in New Zealand committed by a New Zealand company against a New Zealand citizen with damage to a New Zealand property. That claim has no connection whatsoever with New South Wales and the claimant could not establish that this claim falls within any of the subparagraphs of Schedule 6 of the UCPR. There is thus no personal jurisdiction even if there is subject matter jurisdiction.

    4. (4)

       Chubb precludes reliance both on the fact that one of the insurers is resident in New South Wales and on the exclusive jurisdiction clause.

    5. (5)

       The Plaintiff relies on the TTPA in seeking to establish that a claim against BMX could properly have been brought in New South Wales but the TTPA should be narrowly construed or is invalid because it exceeds the scope of the Constitution.

29. [60]

    I have referred to Mr Lim’s involvement in the present case. Mr Lim has provided, on behalf of the CAG, two sets of detailed submissions on the constitutional issues, but in the course of those submissions, he put forward an argument which he asserted, if accepted, would effectively avoid the need for any consideration of the Constitutional Issue. The Constitutional Issue relates to whether or not the TTPA is a valid exercise of Commonwealth power. The Plaintiff relies on the TTPA to support its case that if there is any requirement to meet the test advanced by Zurich, which the Plaintiff does not accept, then the test is met by virtue of the TTPA. Zurich contends that the TTPA infringes the constitutional limitations on Commonwealth power because it confers on State courts State jurisdiction when the Commonwealth is only permitted to confer jurisdiction in federal matters. I shall return to this issue later in these reasons, but I shall, at this point, refer to the argument advanced by the Commonwealth as to how s 4 of the Claims Act should be interpreted. That an intervener can put arguments that are not strictly constitutional was considered recently and resolved in the affirmative in Doyle’s Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) [2021] NSWCA 246 at [22] per Leeming JA, with whom Bathurst CJ and Bell P agreed.

30. [61]

    The CAG’s argument has these steps:

    1. (1)

       Section 4(3) uses the phrase “as if” twice – first in the phrase “as if the proceedings were proceedings to recover damages, compensation or costs” and secondly, in the phrase “as if the proceedings were proceedings brought against the insured person”.

    2. (2)

       The phrase “as if” is a drafting technique also used in the TTPA and it creates a statutory fiction for the purpose of reducing the “verbiage” of an enactment: R v Hughes (2000) 202 CLR 535 at 550-1 [23]-[24]; and see Re Macks; Ex parte Saint (2000) 204 CLR 158 at 203 per McHugh J.

    3. (3)

       In the context of s 4 of the Claims Act, the statutory fiction is that the proceedings are proceedings to recover from the insured person and are proceedings brought against the insured person. Mr Lim then submits:

    4. (4)

       No inquiry is required, therefore, as to whether the insured may or may not have submitted to the jurisdiction of the court.

    5. (5)

       On this approach, no consideration needs to be given to whether BMX could have been sued in a New South Wales court.

31. [62]

    It will be observed that whilst the result for which the CAG contends is the same result as that advanced by the Plaintiff, the reasoning is quite different.

32. [63]

    The Attorney-General’s approach does not offer any answer to the question of what is the territorial reach of s 4 but it does implicitly assert that there is no qualification to the Court’s power to deal with a claim against an insurer by reason of s 4(3) and that argument must, therefore, entail the proposition that the words “the same rights and liabilities” does not include a right that could have been advanced by the insured that the Court had no jurisdiction. Mr Braham embraced this proposition.

33. [64]

    That contention then raises the following questions:

    1. (1)

       What is the territorial reach of s 4(1) – i.e. which insureds or insurers are the subject of the Claims Act?

    2. (2)

       Should s 4(1) be seen as the key to the jurisdictional reach of s 4?

    3. (3)

       If the answer to [64(2)] is yes, then is there a tension between ss 4(1) and 4(3) because s 4(3) literally permits the insurer to raise any point the insured could have raised?

34. [65]

    I will deal with [64(1)] first. To answer this question, I need to apply the approach to statutory interpretation set out in Chubb: see [36] above. Of particular relevance, it seems to me, are these matters:

    1. (1)

       the basic canon of statutory interpretation is that the legislation is presumed not to have extra-territorial effect (see also s 12(1)(b) and 31(1) of the Interpretation Act 1987 (NSW); Barcelo v Electrolytic Zinc Co of Australasia Limited (1932) 48 CLR 391 at 410 per Starke J, 423-4 per Dixon J, 443 per McTiernan J; Insight Vacations at 159-60);

    2. (2)

       the Court must have reference to the “central concern of the legislation”; and

    3. (3)

       if the territorial limits of State legislation cannot be determined from its context and subject matter, the general rule is that the legislation should not be understood as extending to cases that, according to the rules of private international law, are governed by foreign law.

35. [66]

    On this basis, and for the moment putting aside the effect of Chubb on the substantive issue, the Claims Act does not make clear to which insurers and insureds it is intended to apply. It is presumed, therefore, not to have extra-territorial effect, and it should not be understood as extending to cases that are governed by foreign law. Regard needs to be had to the discernible purpose of the legislation which is to ensure that persons who have suffered loss and damage by reason of the negligence of a tortfeasor are able to obtain the benefits of the insurance held by the tortfeasor even if the tortfeasor has become insolvent.

36. [67]

    In my view, the Claims Act should (absent the impact of Chubb) be interpreted as requiring for its operation a New South Wales connection and I would frame its operation as follows: the Claims Act applies if the claim against the insured, or the insurer, has a New South Wales connection because either:

    1. (1)

       the event giving rise to liability occurred in New South Wales or because the insured is located in New South Wales or will suffer damage in New South Wales; or

    2. (2)

       the insurer is resident in New South Wales, or the insurance policy issued is governed by New South Wales law or at least Australian law.

37. [68]

    Turning now to the issue identified in [65(2)] and [65(3)] above, in my view, once jurisdiction of the Claims Act is bestowed through s 4(1) it cannot be challenged through s 4(3) and the reference to “same rights and liabilities” in s 4(3) should not be read as including the ability of an insurer to contend that there is no jurisdiction to hear the claim against it. I say this because I view s 4(1) as the gateway, not s 4(3), and because s 4(3) is predicated upon the assumption that there is jurisdiction.

38. [69]

    If the view of the Claims Act I have outlined were adopted, then the Plaintiff would be able to proceed with his claim because of the exclusive jurisdiction clause and because Aspen is resident in the jurisdiction, bringing into play (g) and (h) of Schedule 6 of the UCPR.

39. [70]

    I have mentioned that the view I have expressed in [66]-[68] is without regard to Chubb. I accept that Chubb rejected the location of the insurer and the choice of jurisdiction clause in the insurance policy as relevant. I entirely agree, with respect, with the view that an insurer should not be able to exclude the operation of the Claims Act by a choice of jurisdiction clause, but the approach which I favour precludes that course. I am, with the greatest respect, inclined to the view that the location of an insurer in New South Wales or a choice of jurisdiction of New South Wales or Australia would be sufficient to bring the matter within the ambit of the Claims Act. Put in another way, whilst I agree that an insurer in New South Wales cannot use a choice of law clause to opt out of the Claims Act regime, I think it is appropriate that where the proper law of the contract is, or includes, New South Wales law, to treat the Claims Act as applicable. I should note here that no issue was raised by the parties as to the use of the phrase “competent Court in the Commonwealth of Australia” and the selection of the “law of the Commonwealth of Australia” in the policy of insurance as opposed to “Court in New South Wales” and/or “law of New South Wales”, or to the fact that a number of Australian states do not have legislation similar to the Claims Act or the LRMPA.

40. [71]

    Given that Chubb was concerned with s 6 LRMPA and not the Claims Act, there is a real question as to the extent to which the conclusion in Chubb is binding in respect of the Claims Act. There are differences in the approach of the two acts to the underlying problem, not least the fact that s 6 of the LRMPA concerned a charge, which is a right in rem, whereas s 4 of the Claims Act confers a statutory cause of action, which is a right in personam. I am conscious too of the High Court’s warning at [40] of McNamara (McGrath) v Consumer Trader & Tenancy Tribunal (2005) 221 CLR 646 per McHugh, Gummow and Heydon JJ:

41. [72]

    The potentially difficult question of whether the reasoning in Chubb ought to be applied here as a matter of precedent need not be determined because both Mr Braham and Mr Rich placed emphasis on the fact that the Law Reform Commission had clearly framed the draft of the Claims Act on the basis that it reflected the views of the Court in Chubb. I accept their submissions that it would not be appropriate in this case to proceed upon the basis that I am free to determine what s 4 of the Claims Act means without reference to Chubb’s conclusions because those conclusions have so clearly been embraced by the authors of the Report. I therefore proceed on the basis, irrespective of my own view, that each of the matters which were rejected as relevant by Chubb to s 6 of the LRMPA are not to be regarded as relevant for the purpose of the Claims Act and that the “hinge” which the Court of Appeal identified in Chubb is the “hinge” for the Claims Act. What that hinge so determined is, however, is a matter of significant dispute between the Plaintiff and Zurich. The Report clearly accepts the approach taken in Chubb and hence, some of the matters which might have been regarded as important are clearly not available (such as choice of law or residence of the insurer) but [197]-[206] contain, according to each of the Plaintiff and Zurich, support for their respective cases.

42. [73]

    The Plaintiff contended that the additional condition advanced by Zurich – that is, that for s 4 of the Claims Act to apply, the primary proceedings against the insured must be proceedings which can or could properly be brought in a court of New South Wales – is contrary to the Court of Appeal’s reasoned analysis in Chubb, “which construed the remedial legislation as a provision of procedure applicable so long as the proceedings were instituted in a New South Wales Court” (see [27] of the Plaintiff’s Submissions on Jurisdiction).

43. [74]

    I do not accept the Plaintiff’s argument that merely by commencing proceedings against an insurer (i.e. here, Zurich) in New South Wales is the “hinge” that enlivens the operation of s 4 of the Claims Act, nor do I accept that the Court of Appeal intended that result. Neither s 6 of the LRMPA, nor s 4 of the Claims Act should, in my view, be interpreted as extending its operation to any victim of a tort wherever the tort has occurred and wherever damage has been suffered. To view as sufficient the commencement of proceedings against an insurer (as opposed to the insured), with no New South Wales residence or connection, appears to me, in effect, to treat the Claims Act as having no territorial limit whatsoever. I think that had the Court in Chubb considered that bringing a claim against the insurer in New South Wales is what would bring the claim within the territorial scope of the legislation, they would not have needed to refer in [206] to the fact that claims in the Great Southern Proceedings were being prosecuted in other States against insureds. I think the Court in Chubb must be taken to have meant that the underlying claim against the insured (not the claim under s 6 against the insurer) had to be one brought in New South Wales or one that could properly have been brought in New South Wales and the reference in [200] in Chubb to “claims instituted in New South Wales courts” is clearly a reference to the underlying claims against the insured. It must be borne in mind that Chubb was a case in which the claimants had commenced proceedings in, and were pursuing claims against an insured in, courts other than in New South Wales and yet contending that the LRMPA applied.

44. [75]

    On the basis that the only relevant matter for the purpose of the territorial application of the Claims Act is that identified by Chubb for the purpose of the LRMPA, and on the basis of my view expressed in [74], the question which must now be answered is: could the Plaintiff properly have commenced proceedings against BMX in this Court? Zurich accepts that, subject to the inconsistency point, whether or not leave should be granted to the Plaintiff to proceed with the Commercial List Proceedings against Zurich is to be determined by whether or not the TTPA could have been relied on by the Plaintiff to bring BMX before this Court.

45. [76]

    It should be noted that if the TTPA does apply, Schedule 6 of the UCPR does not and if the TTPA does not apply, recourse may be had to Schedule 6. If Schedule 6 of the UCPR applies, however, importantly, the Plaintiff would have to establish that one of subparagraphs (a)-(s) would have founded a claim against BMX. That the Plaintiff could point to a basis for a claim against Zurich or some of the insurers to found the claim against them under s 4 is not to the point if the test is “could he have sued BMX here?”.

46. [77]

    Mr Braham contended that if, contrary to his case, the TTPA is invalid and Schedule 6 applies, there is always the possibility that an insured such as BMX could consent to service. I do not think that determination of whether proceedings could have been properly brought in New South Wales can be determined on the basis of a possibility that a New Zealand builder sued by a New Zealand resident in respect of a building in New Zealand might agree to accept service. A second argument advanced was that if BMX had been sued in New South Wales, it would have been able to bring a cross-claim against its insurer Zurich because of the exclusive jurisdiction clause in the policy and because Aspen is resident in the jurisdiction. That ability to cross-claim would only arise, however, if BMX had been properly joined, so I do not think this argument assists the Plaintiff. A third argument advanced was that Schedule 6 and s 11(1)(b) of SEPA are in similar terms and it has been held that a claim for relief by a third party in respect of a contract between other parties can give jurisdiction under SEPA; reference being made to Tana v Baxter (1986) 160 CLR 572 in the High Court in which it was held that s 11(b) of SEPA provided jurisdiction for a claim against a resident of Western Australia, notwithstanding that the appellant was not a party to the contract upon which the respondents relied. Zurich responded to that contention by asserting that the Plaintiff can only rely upon the policy of insurance (i.e. the contract) if the Claims Act applies. If the Claims Act does not apply, then the Plaintiff will not be able to seek the enforcement of, or other relief in respect of, the policy of insurance and thus, paragraph (b) of Schedule 6 of the UCPR would not apply. As will become apparent, it will not be necessary to consider any of these alternative points further.

Can (or Could) the Plaintiff Bring (or Have Brought) Proceedings Against BMX in the Supreme Court of New South Wales?

1. [78]

   As I have explained, one of Zurich’s primary contentions is that the Plaintiff cannot avail himself of the statutory cause of action conferred by s 4 of the Claims Act unless he can prove that he could have properly brought proceedings against the insured in respect of the principal claim (that is, the negligence claim) in a court in New South Wales, which Zurich contends he cannot do. The Plaintiff, as Zurich points out, in fact did commence proceedings not in New South Wales but in New Zealand and indeed, obtained a judgment against BMX in the New Zealand High Court.

2. [79]

   The Plaintiff contends that if, contrary to his primary case, it is necessary for him to establish that he could have brought a claim against BMX in New South Wales (as Zurich contends), then ss 9 and 10 of the TTPA permit such proceedings to have been brought in New South Wales, since s 9 of the TTPA permits service of an initiating document issued by an Australian court (which, by definition, includes this Court), and since s 10 of the TTPA confers personal jurisdiction upon this Court to determine the primary proceedings. The Plaintiff also draws the Court’s attention to the fact that Zurich has not made an application for a stay of these or the Commercial List Proceedings pursuant to s 17 of the TTPA. Zurich, as I shall explain, disputes that the Plaintiff can rely on the TTPA.

3. [80]

   I will first explain the genesis of the TTPA.

4. [81]

   In 2003, the Hon John Howard MP and the Rt Hon Helen Clark MP, as Prime Ministers of Australia and New Zealand respectively, established the Trans-Tasman Working Group on Court Proceedings and Regulatory Enforcement (“the Working Group”). The Working Group’s Terms of Reference required it to “examine the effectiveness and appropriateness of current arrangements that relate to civil (including family) proceedings, civil penalty proceedings and criminal proceedings (where those proceedings relate to regulatory matters)”: see “Trans-Tasman Court Proceedings and Regulatory Enforcement – A Report by the Trans-Tasman Working Group” (December 2006) page 2 (“the Working Group Report”).

5. [82]

   The Working Group published the Working Group Report in December 2006, by which it made 10 recommendations. Only Recommendation 1 has present relevance and it, which is titled “Service of process and recognition and enforcement of judgments”, was in the following relevant terms:

6. [83]

   In its reasons for the first recommendation, the Working Group relevantly said:

7. [84]

   In 2007, the Commonwealth Government agreed to implement the recommendations of the Working Group and, on 24 July 2008, the Commonwealth Government entered into the “Agreement between the Government of Australia and the Government of New Zealand on Trans-Tasman Court Proceedings and Regulatory Enforcement 2008” (“the TTP Agreement”). By the TTP Agreement, the Commonwealth Government agreed, inter alia (see art 4(3)):

8. [85]

   The Explanatory Memorandum to the Trans-Tasman Proceedings Bill 2009 (Cth) (“the Explanatory Memorandum”), contained the following statement reflective of art 4(3) of the TTP Agreement:

9. [86]

   The following can be distilled from the preceding material:

   1. (1)

      Insofar as it concerns the service of an initiating document, the TTPA was intended to mirror the Service and Execution of Process Act 1992 (Cth) (“SEPA 1992”), such that service of an initiating document (save for an initiating document in an excluded matter as defined in the TTPA) issued by an Australian court would be effective in New Zealand akin to how service of an initiating document issued by this Court is effective in another State or Territory of the Commonwealth.

   2. (2)

      There is no obligation upon a party serving an initiating document issued by an Australian court in New Zealand to first seek leave of the court from which the initiating document was issued.

   3. (3)

      The Working Group considered the possibility of forum shopping between Australian and New Zealand courts specifically in respect of “small debt recovery matters” and concluded that, notwithstanding that possibility, the likelihood of forum shopping was low. The Working Group thus clearly contemplated expanding the personal jurisdiction of this Court (and other “Australian courts”) in respect of an action the subject matter for which this Court has authority to decide.

   4. (4)

      There is no obligation upon a plaintiff to establish a relationship between the jurisdiction in which the proceedings have commenced and the jurisdiction in which the plaintiff serves the initiating document.

   5. (5)

      Service of an initiating document issued by this Court in New Zealand has the same effect as if the initiating document was served within the territorial bounds of New South Wales.

The Effect of Section 9 of the TTPA

1. [87]

   The Plaintiff submits that:

   1. (1)

      The TTPA is very similar in scope to SEPA 1992 providing only a means of service of process issued out of Australian courts. It does not confer or purport to confer jurisdiction on Australian courts that the courts do not have. So, for example, service of a claim in New Zealand for which the District Court of New South Wales does not have jurisdiction does not thereby bestow jurisdiction on the District Court of New South Wales.

   2. (2)

      The Supreme Court of New South Wales has jurisdiction to hear claims involving all torts with no monetary limit.

   3. (3)

      The TTPA contains no restrictions on what writs can be issued out of an Australian court and indeed there is a notation that a connection between the proceeding and Australia need not be established.

   4. (4)

      Accordingly, the Plaintiff could have commenced proceedings and could have served BMX in New Zealand and the Supreme Court could have heard that case. The Plaintiff accepts that forum non conveniens could have been raised but that possibility does not mean that the proceedings were not within jurisdiction of the Court and hence validly, and therefore properly, brought.

2. [88]

   Zurich contends that:

   1. (1)

      The TTPA should be construed as limited to proceedings having a Trans-Tasman element where the defendants are present in New Zealand and would otherwise be beyond the reach of the Court: see paragraph 21 of the Defendant’s Submissions in Reply on Jurisdiction.

   2. (2)

      The TTPA should be read down as investing State courts with the ability to serve persons in New Zealand with processes issued out of State courts, but only in federal matters, so “civil proceedings in an Australian court” should be read as “civil proceedings in federal jurisdiction in an Australian court”.

   3. (3)

      If neither [88(1)] or [88(2)] is accepted, then Zurich submits that the TTPA is an invalid exercise of power by the Commonwealth Parliament infringing the Constitution.

3. [89]

   In my view, there is no warrant to restrict the words of the TTPA to cases which have a trans-Tasman element. I can see that an argument could have been made for the Parliament to restrict the ambit of the Treaty and the TTPA, but no such restriction is found in the TTPA. That the TTPA does permit service in such circumstances is established by the absence of any qualifying words in s 9 and the note to s 9. Regard can be had to notes in determining legislative intent: see The Ombudsman v Moroney [1983] 1 NSWLR 317 at 324-5 per Street CJ with whom Moffitt P agreed; R v Schildkamp [1969] 3 All ER 1640 at 1641 per Lord Reid; s 15AB of the Acts Interpretation Act 1901 (Cth); Westpac Banking Corporation v ASIC (2009) 181 FCR 379 at 381 per Rares J; and see D C Pearce, Statutory Interpretation in Australia (7th ed, 2011, LexisNexis). The Second Reading Speech on 25 November 2009 and the Explanatory Memorandum only reinforces the proposition: see Second Reading Speech, Trans-Tasman Proceedings Bill 2009 (Hansard, House of Representatives, 25 November 2009, 12769-71).

4. [90]

   In relation to the second argument, whilst it is clear that an Act can be read down so as to avoid infringing the Constitution (see, eg, Burns v Corbett (2018) 265 CLR 304 (“Burns v Corbett”)), here, it is necessary to determine whether the Act in question does infringe the restraints imposed by the Constitution.

The Constitutional Issue

1. [91]

   In connection with the issue identified at [88(3)] above and as required by s 78B of the Judiciary Act, Zurich issued a Notice to the Attorneys-General of the Commonwealth and all of the States and Territories. Later, an Amended Notice was served. The CAG has also issued a Notice. The issuing of Notices led to delays whilst submissions were being exchanged and the consequent setting down of a date for the CAG and the parties to be heard on the Constitutional Issue. At my request, Counsel for the Plaintiff, Zurich and the CAG have prepared a summary of issues arising out of the various notices being the issues which I am required to determine and those which are not in dispute (“the Summary of Issues”). I set out the helpful summary in full:

2. [92]

   The Plaintiff and Zurich agreed, and the CAG’s primary position was, that the TTPA does not purport to bestow on State courts “subject matter” jurisdiction – that is to say, the power to decide cases, for example, in tort and contract or cases involving breach of federal legislation such as the Australian Consumer Law. The TTPA expands the territorial reach for service and as is clear from Flaherty v Girgis, the TTPA does bestow federal jurisdiction if the Court is required to determine whether service has been validly effected. There are provisions of the TTPA dealing with federal jurisdiction: see ss 81, 89 and 92 dealing with Part 8 matters (i.e. Trans-Tasman market proceedings), and s 105 which is of a general nature.

3. [93]

   Zurich’s argument on constitutional invalidity has these elements:

   1. (1)

      The TTPA confers jurisdiction on State courts to hear cases involving New Zealand residents and irrespective of whether any federal matter is involved.

   2. (2)

      Disputes involving alleged negligence between residents of New Zealand or residents of Australia and New Zealand are not federal matters.

   3. (3)

      The Constitution permits the Commonwealth Parliament to enact laws under any head specified in s 51 but the Parliament’s power to confer jurisdiction on State courts must be in conformity with Chapter III: see R v Kirby; Ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254 at 269-70 (“Boilermakers”); and see Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 575 per Gummow and Hayne JJ; Ruhani v Director of Police (2005) 222 CLR 489 at 498-9 per Gleeson CJ, 512 per McHugh J and 530-1 per Gummow and Hayne JJ (“Ruhani”). Chapter III provides an “exhaustive statement of the manner in which the judicial power of the Commonwealth is or may be vested”: Boilermakers at 270 per Dixon CJ, McTiernan, Fullagar and Kitto JJ, quoted in Ruhani at 497 per Gleeson CJ; and see Ruhani at 512 per McHugh J and 530-1 per Gummow and Hayne JJ.

   4. (4)

      The one qualification to the restriction imposed by Ch III is s 51(xxiv) because it expressly empowers the Commonwealth Parliament to make laws with respect to service and execution of processes throughout the Commonwealth.

   5. (5)

      The grant of power in s 51(xxix) is a power subject to the Constitution. The external affairs power cannot support a grant of jurisdiction if it is not within the ambit of Chapter III.

   6. (6)

      Chapter III grants the Parliament power to confer jurisdiction to hear federal matters on both federal and State courts and the investiture of federal jurisdiction can be as wide or narrow as the Parliament pleases and can extend or limit the jurisdiction of a State court in respect of persons, locality, amount in dispute or otherwise (see Peacock v Newtown, Marrickville and General Co-operative Building Society (No 4) Ltd (1943) 67 CLR 25 at 37 per Latham CJ (“Peacock”)), but there is no power to confer jurisdiction on a State court to hear non-federal matters.

   7. (7)

      Chapter III permits the grant of jurisdiction to State courts, but that jurisdiction must be jurisdiction limited to “federal jurisdiction” (the term used in s 77(iii)) pursuant to either a matter identified in ss 75 or 76. In this case, the only relevant matter is one conferred by reason of an Act of the Commonwealth Parliament, thus engaging s 76(ii).

   8. (8)

      “Jurisdiction”, and hence “federal jurisdiction”, includes both elements of what is understood to be jurisdiction; i.e. personal jurisdiction (also known as territorial jurisdiction) as well as subject matter jurisdiction.

   9. (9)

      The TTPA, by its terms, is purporting to grant to State courts the power to determine non-federal matters by permitting service outside of Australia of proceedings issued in courts of the Australian States in non-federal matters, which is inconsistent with Chapter III of the Constitution since only federal jurisdiction can be bestowed on State courts by the Commonwealth Government.

4. [94]

   The Plaintiff and CAG accept [93(1)], [93(2)] and [93(3)], but the balance of the contentions are disputed or subject, on their approach, to important qualifications. They do not dispute that, as Professor Zines noted in The High Court and The Constitution (5th ed, 2008, The Federation Press) at 213, Boilermakers is authority for the proposition that no judicial power can be conferred on a court referred to in s 71 that does not come within the terms of Ch III.

5. [95]

   Mr Rich candidly accepted at T5.9-18 at the hearing in November 2021 that if “federal jurisdiction” meant “subject matter” jurisdiction only, then Chapter III does not preclude bestowal through the TTPA of territorial or personal jurisdiction: see also T4.28-T5.8 for context.

6. [96]

   The Plaintiff and CAG submit that Flaherty v Girgis is supportive of their position that the enactment of the TTPA involves no infringement of the Constitution. Zurich contends that the reasoning in Flaherty v Girgis is not applicable to the TTPA. Before entering into the heavy jungle of that debate, I should first summarise Flaherty v Girgis and cite key passages in the decision of the majority (Mason ACJ, Wilson and Dawson JJ) and the judgment in dissent of Brennan J (with whom Deane J, in a separate judgment, concurred).

7. [97]

   Girgis, a New South Wales resident, brought proceedings against Flaherty, a Queensland resident, in respect of a motor vehicle accident in Queensland caused, so she alleged, by Flaherty’s negligence. The writ was endorsed with the endorsement required by the Service and Execution of Process Act 1901 (Cth) (“SEPA”) and served on Flaherty in Queensland. The claim did not fall within the categories in s 11 of SEPA, which permitted service outside the State, and it was, therefore, open to Flaherty to challenge the jurisdiction of the Supreme Court of New South Wales to hear the matter. Girgis relied on Part 10 rule 1 of the Supreme Court Rules 1970 (NSW) (“Supreme Court Rules”) (the predecessor to Schedule 6 to the UCPR), which did grant jurisdiction to the Supreme Court of New South Wales. Flaherty contended that since service had been effected under SEPA it was not open to Girgis to rely on Part 10 rule 1, a view which was rejected by the trial judge, the majority of the Court of Appeal (Kirby P and Samuels JA) and the majority of the High Court. All members of the High Court were of the view that there was no inconsistency between SEPA and the Supreme Court Rules merely because they both dealt with service outside the jurisdiction of the State or at least per Brennan J, on the authority of Luke v Mayoh, that that view ought be accepted. The minority were of the view that because service had been expressly noted to be effected under SEPA, there was an inconsistency between Part 10 rule 1 and SEPA, and the latter by reason of s 109 of the Constitution had to prevail, which meant that there was no jurisdiction to hear the dispute. The majority, however, held that there was no inconsistency between the two sets of provisions.

8. [98]

   At 598, the majority said:

9. [99]

   The majority also said, at 590:

10. [100]

    I do not read Brennan or Deane JJ as saying anything to contradict that analysis. Indeed, at 599-601, Brennan J expressed views on this point consonant with the majority. At 601, his Honour said:

11. [101]

    There are several points concerning Flaherty v Girgis to which I must draw attention:

    1. (1)

       In Flaherty v Girgis, it was not asserted that SEPA was an invalid exercise of Parliament’s legislative authority.

    2. (2)

       Matters arising between residents of different States is clearly a federal matter: see s 75(iv) of the Constitution.

    3. (3)

       Interstate service is specifically mentioned as a head of power: s 51(xxiv).

    4. (4)

       In Flaherty v Girgis, the real question for determination was whether there was an inconsistency between the State law (i.e. Part 10 rule 1 of the Supreme Court Rules) on the one hand, and federal law (i.e. SEPA) on the other.

12. [102]

    The Supreme Court Rules, which were enacted under State law, granted the Supreme Court of New South Wales jurisdiction to hear the matter and SEPA did not because it provided that service could be effected on a resident of another State outside the issuing State only in limited categories of subject matter. The majority in Flaherty v Girgis held that there was no inconsistency.

13. [103]

    Zurich accepts (as the Summary of Issues notes) that s 51(xxix) of the Constitution, the external affairs power, supports ss 9 and 10 of the TTPA. The wide ambit of the external affairs power can be seen in XYZ v The Commonwealth (2006) 227 CLR 532 at 538-9 per Gleeson CJ, Victoria v Commonwealth (1996) 187 CLR 416 at 482-7 per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ, The Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 at 492 per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ and New South Wales v Commonwealth (1975) 135 CLR 337 at 471 per Mason J and 497 per Jacobs J. Zurich contends, however, that every grant of power in s 51, save for s 51(xxiv), is subject to the Constitution and that means that the only powers that can be bestowed on State courts are in respect of federal matters, being the matters discernible in ss 75 and 76 of the Constitution. This is because s 77(iii) of the Constitution permits the bestowal on State courts of “federal jurisdiction” and nothing more. Zurich contends that s 51(xxiv), by reason of its content, is not caught by that limitation.

14. [104]

    The contest between the Plaintiff and the CAG on the one hand, and Zurich on the other, became centred on two issues:

    1. (1)

       what is encompassed in the words “federal jurisdiction” found in s 77(iii) of the Constitution; and

    2. (2)

       is the answer to that question and the invalidity point determined by Flaherty v Girgis?

15. [105]

    In his text “Authority to Decide”, Leeming JA draws attention to the range of meanings of “jurisdiction”: see pages 1-12. The learned author proposes that in a legal context, the primary meaning is “authority to decide” and cites many High Court cases to support this conclusion, including CGU Insurance Ltd v Blakeley (2016) 259 CLR 339 at 353 per French CJ, Kiefel (as her Honour then was), Bell and Keane JJ (“CGU”), and “authority to adjudicate” per Isaacs J in Baxter v Commissioners of Taxation (NSW); Flint v Webb (1907) 4 CLR 1087 at 1142, and “encompasses authority to adjudicate such a controversy through the exercise of judicial power”: Burns v Corbett at 346 per Gageler J.

16. [106]

    At page 4, Leeming JA notes that:

17. [107]

    In his work The Federal Judicature – Chapter III of the Constitution (2nd ed, 2020, LexisNexis) at [7.2], Dr James Stellios points out:

18. [108]

    There can be no doubt that a court will only have authority to decide a matter if the subject matter of the dispute is one within the court’s power to determine and if the defendant has been validly served in accordance with the relevant rules of service: see Obeid. This Court, for example, no longer has jurisdiction to determine matrimonial disputes, bankruptcy or patent infringements. In relation to the second requirement, in Ex parte Bucknell (1867) 6 SCR 96, a judgment was quashed because the defendant against whom judgment had been given had not been validly served: and see Authority to Decide at pages 196-7 and Laurie v Carroll and the cases there mentioned, including John Russell & Co Ltd v Cayzer, Irvine & Co Ltd [1916] 2 AC 298 and McDonald v Mabee (1917) 243 US 90. Where service has been effected but not strictly in accordance with the rules, this may provide a ground of appeal rather than a prohibition: see Barker v Palmer (1881) 8 QBD 9; Backhouse v Moderana (1904) 1 CLR 676.

19. [109]

    Mr Rich contended that “jurisdiction” means authority to decide and that encompasses both subject matter jurisdiction and personal jurisdiction, since there is no authority to decide without both.

20. [110]

    Mr Lim, supported by Mr Braham, contends that the TTPA does not confer judicial power in the sense of any of the federal matters referred to in ss 75 and 76 and it bestows no new judicial power on the State courts that they did not have prior to the enactment of the legislation – but rather, the TTPA is merely conferring on the State courts the power to issue processes to be served in New Zealand in precisely the same way that SEPA 1992 confers on State courts the ability to issues process for service in another State.

21. [111]

    Mr Lim contested the application of s 77(iii) not on the basis that s 77(iii) is really concerned with subject matter jurisdiction rather than personal jurisdiction, but rather, that the question is whether the TTPA invests in State courts with the authority to be exercised by the judicial power of the Commonwealth.

22. [112]

    Mr Braham contended that there was really a short point involved here and that is that in Flaherty v Girgis made it clear that once any issue of service under SEPA was out of the way, the State court would not be exercising federal jurisdiction and that Zurich’s argument is, in effect, an argument rejected in Flaherty because there, the Court held that subject matter jurisdiction was not bestowed on the State court by SEPA. It follows, therefore, that the only federal jurisdiction conferred on a State court is in respect of the determination as to whether there has been compliance with the TTPA’s requirements for service and there is, therefore, no relevant subject-matter jurisdiction within the meaning of s 77(iii) of the Constitution bestowed on State courts.

23. [113]

    Before returning to Flaherty v Girgis, I should mention that several other cases were relied on by the CAG and Zurich, namely, The Commonwealth v Dalton (1924) 33 CLR 452 (“Commonwealth v Dalton”); Le Mesurier v Connor (1929) 42 CLR 481 (“Le Mesurier”); Renton v Renton (1918) 25 CLR 291 (“Renton v Renton”); Ruhani; Burns v Corbett; Rizeq v Western Australia (2017) 262 CLR 1 (“Rizeq”); R v Reid [1999] VSCA 98 (“R v Reid”).

24. [114]

    The CAG contends that Zurich’s argument is inconsistent with the High Court’s decision in Renton v Renton. In that case, a wife made a claim under the Inter-State Destitute Persons Relief Act 1910 (SA) against her husband for payment on the basis that he had left her without adequate means of support. The writ was issued out of a court in South Australia under the hand of a Justice of the Peace and when the matter came before the Special Magistrate, the husband contended that the Magistrate had no jurisdiction to hear the matter because the couple had been living in New South Wales, he had gone to Queensland to work and she had returned to South Australia. The Magistrate set out a stated case for determination by the Supreme Court of South Australia which held that the Summons was not lawfully issued because the matter was one between residents of different States and the Summons was therefore justiciable according to the laws of the Commonwealth and, not having been issued by a Magistrate, it was of no effect. The High Court unanimously upheld the appeal. Barton J (with whom Gavan Duffy J agreed) held that in issuing the Summons, the Justice of the Peace was “not acting as a Court acts”: at 296. Isaacs J, in a separate judgment, agreed.

25. [115]

    Renton v Renton may be seen as lending support for the view that what is contemplated by federal jurisdiction is the authority to decide the underlying controversy rather than by whom the Summons has been issued, but the ratio of the case is very narrow and I do not think the observations of the Court preclude Zurich’s arguments.

26. [116]

    Le Mesurier was a case concerning the administration of bankruptcy matters in State courts in which it was held that the person appointed to execute the office of Registrar of the District Court of Western Australia had no authority – the Constitution required that State courts had to be taken as it found them. In the course of their judgment, Knox CJ, Rich and Dixon JJ said (at 496):

27. [117]

    Commonwealth v Dalton concerned a challenge to the competency of the Tasmanian Court of Requests to make a garnishee order attaching the salary of a Commonwealth official. The High Court unanimously held that the Tasmanian Court was a competent court and had been invested within the limits of its jurisdiction with federal jurisdiction pursuant to s 39(2) of the Judiciary Act. In the course of their joint judgment, Isaacs and Rich JJ said (at 456):

28. [118]

    I do not read these words as inconsistent with what was said in Flaherty v Girgis many years later. The limits of jurisdiction under consideration were those of the State court in order to determine whether the Tasmanian Court was a competent court to deal with applications under s 64 of the Commonwealth Public Service Act 1922 (Cth).

29. [119]

    In Riqez, the accused contended that because he was a resident of New South Wales who was being prosecuted in Western Australia under the Misuse of Drugs Act 1981 (WA), the District Court of Western Australia was exercising federal jurisdiction and that had the consequence that the Criminal Procedure Act 2004 (WA) (which permitted conviction where 11 of 12 jurors concurred) did not apply and s 80 of the Constitution applied. The Court unanimously rejected the appeal. The plurality (Bell, Gageler, Keane, Nettle and Gordon JJ) based their decision on the fact that the existence of federal jurisdiction depended on the grant of authority to adjudicate, rather than upon the law to be applied. The court below was exercising a single composite body of federal and non-federal law applicable to cases determined in the exercise of federal jurisdiction. Section 79 of the Judiciary Act picks up the text of State law governing the exercise of State jurisdiction and applying that text as a Commonwealth law to govern the manner of exercising federal jurisdiction: at 22-23 and 26. The plurality held (at 23):

30. [120]

    In R v Reid, the Victorian Court of Appeal (Winneke P, Buchanan and Chernov JJA) dealt with an accused’s contention that the Foreign Evidence Act 1994 (Cth) (“Foreign Evidence Act”) was unconstitutional because it purported to prescribe the rules of evidence in a State court and no such power was found in the Constitution to do so; the only source of power for the Commonwealth to legislate in respect to State courts was to be found in s 77 of the Constitution and that, it was said, does no more than empower the Commonwealth to invest State courts with federal jurisdiction and define the extent to which the jurisdiction of any federal court is to be exclusive of the jurisdiction of State courts.

31. [121]

    The Court held that s 20(2) of the Foreign Evidence Act was a valid exercise of the power found in s 51(xxix) of the Constitution. In coming to that view, the Court said (at 613-4):

32. [122]

    The constitutional arguments advanced in R v Reid have some similarity to that advanced here and although the case was concerned with the application of legislation dealing with rules of evidence rather than service, it is nevertheless instructive and supports the position of the Plaintiff and the CAG.

33. [123]

    Whilst in Flaherty v Girgis there was no assertion that SEPA was invalid, but rather, a contest over whether there was a conflict between SEPA and the Supreme Court Rules, the Court, in expressing its views on the contentions of inconsistency between SEPA and the Supreme Court Rules, outlined an approach which, in my view, undermines the contentions of Zurich in this case:

    1. (1)

       The Court drew a clear distinction between subject matter jurisdiction and territorial jurisdiction.

    2. (2)

       In Felton v Mulligan (1971) 124 CLR 367 it was held that once federal jurisdiction is enlivened, the Court is not exercising State jurisdiction: at 413 per Walsh J (with whom Barwick CJ (at 372) and Windeyer J (at 384) agreed); see also Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457. In Flaherty v Girgis, the Court accepted that the territorial jurisdiction conferred by SEPA, a federal law, and the Supreme Court Rules, made pursuant to a State law, could be exercised concurrently. Since there is no room for concurrent operation of federal and State jurisdiction, the conclusion supports the conclusion that “federal jurisdiction” was not bestowed by SEPA on State courts in breach of the requirements of Chapter III.

    3. (3)

       The Court accepted that if there was no dispute as to service, the State court in proceeding would not be exercising federal jurisdiction, but rather, would be exercising the powers given by the State law to determine the dispute. The Court was clear that in determining whether service under SEPA was effective if that was challenged, the Court would be exercising federal jurisdiction but in saying so, the majority commented (at 598):

    4. (4)

       Whilst it is true that there was a specific power in s 51 to permit laws relating to interstate service, that power is, like all heads of power, “subject to [the] Constitution”: see the chapeau to s 51 of the Constitution. The High Court did not view Chapter III as an impediment to the grant of power to permit service to be effected on interstate residents.

34. [124]

    In Truong v The Queen (2004) 223 CLR 122 (“Truong”), a case dealing with the terms of the Extradition Act 1988 (Cth) (“Extradition Act”) by means of which the accused had been surrendered to Australia by the United Kingdom authorities, the accused contended that there had been a miscarriage of justice because the trial had contravened s 42 of the Extradition Act because he had been surrendered on the basis of charges of conspiracy to kidnap and murder and not charges of kidnap and murder. In their judgment, two of the majority, Gummow and Callinan JJ, said (at 156):

35. [125]

    In Lipohar v The Queen (1999) 200 CLR 485, the plurality (Gaudron, Gummow and Hayne JJ) (“Lipohar”) said (at 514):

36. [126]

    I accept the proposition that the High Court’s acceptance in Flaherty v Girgis that there was no conflict between SEPA and the Supreme Court Rules, and that both could operate concurrently and the explanations as to how federal jurisdiction operates in R v Reid, Lipohar and Truong are inconsistent with the acceptance of Zurich’s contentions in this case.

37. [127]

    Further support for the conclusion that there is no constitutional invalidity, if it were needed, can be found in the fact that ss 75, 76 and 77 all utilise the word “matter” in their chapeaus and a “matter” has been held authoritatively to encompass the requirement of “justiciability”; that is, “a justiciable controversy, identifiable independently of the proceedings which are brought for its determination and encompassing all claims made within the scope of the controversy”: Fencott v Muller (1983) 152 CLR 570 at 603 per Mason, Murphy, Brennan and Deane JJ, cited in CGU at 352 per French CJ, Kiefel (as her Honour then was), Bell and Keane JJ. Service is no part of the controversy, but rather, concerned with how the proceedings to determine the controversy are commenced: see also in this connection ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 584-5 and 589-90 per Gleeson CJ, Gaudron and Gummow JJ.

38. [128]

    Against the possibility that the Court might, contrary to the primary contentions of the CAG and the Plaintiff, hold that s 77(iii)’s reference to jurisdiction in the phrase “federal jurisdiction” included territorial jurisdiction, Mr Lim advanced an alternative argument that ss 9 and 10 of the TTPA have created new rights by reference to State and Territory laws and conferred jurisdiction to adjudicate those rights. Mr Lim acknowledged that there were some hurdles which would need to be overcome and there were other matters identified by Zurich in its submissions of 15 October 2021 that would need to be considered, but in view of my conclusion set out at [126]-[127] above, I do not need to venture into this topic further and do not need to consider Crosby v Kelly (2012) 203 FCR 451 or Webster v Brewer [2020] FCA 622 which deal with what has sometimes been described as “surrogate” federal law.

Conflicting Insolvency Regimes

1. [129]

   At [10] above, I referred to Zurich’s contention that even if the conditions for leave have been met by the Plaintiff, the Court should nevertheless refuse to grant leave in the exercise of its residual discretion. The Court should exercise its discretion to refuse leave, in Zurich’s submission, because if the Court were to grant leave, it would be interfering with New Zealand’s insolvency regime.

2. [130]

   The Court retains a residual discretion to refuse leave under s 5 of the Claims Act, notwithstanding that the criteria for leave have been met: see Murphy at [17]; see also Wayland v Bird [2017] NSWCA 26 at [26] per Ward JA (as her Honour then was) with whom Macfarlan JA and Emmett AJA agreed; DSHE Holdings Ltd (recs and mgrs apptd) (in liq) v Abboud [2017] NSWSC 579 at [20]-[21] per Stevenson J (“DSHE”). That discretion “must be exercised for the purpose for which it was conferred; namely, to ensure that insurers are not exposed to unnecessary, unwarranted or inappropriate claims”: DSHE at [21]. The Court ought also have regard, as Stevenson J acknowledged in DSHE, to the issue of “whether it is reasonable for the insurer to be joined”: DSHE at [22]. The matters to which the Court can have regard in assessing the reasonableness of joining an insurer are not closed.

3. [131]

   Zurich submits that it would not be appropriate, nor reasonable, for the Court to exercise its discretion in joining Zurich in circumstances where the primary claim has the purpose or practical effect of avoiding the operation of the insolvency regime that governs the winding up of BMX. That insolvency regime is relevantly contained in the Companies Act 1993 (NZ) (“NZ Companies Act”).

4. [132]

   Section 312 of the NZ Companies Act provides:

5. [133]

   Schedule 7 of the NZ Companies Act relevantly reads:

6. [134]

   Expert evidence was relied upon by both parties in support of their respective submissions on the operation of the NZ Companies Act and s 9 of the LRA. Mr David John Chisholm QC was engaged by the Plaintiff and Ms Jennifer Sarah Cooper QC was engaged by Zurich. Both experts provided independent expert reports. A joint report was also later provided by the experts.

7. [135]

   The evidence given by Mr Chisholm and Ms Cooper can be summarised as follows:

   1. (1)

      The NZ Companies Act governs the liquidation of companies in New Zealand.

   2. (2)

      In the distribution of the companies’ assets, the liquidator must first make payment of all preferential claims, the priority of which is set out in Schedule 7 to the NZ Companies Act. All unsecured creditors will, thereafter, share equally in the distribution of the company’s assets in accordance with the pari passu principle.

   3. (3)

      For clause 1(1)(e) of Schedule 7 to the NZ Companies Act to apply, the following criteria must be met (which are expressly set out in that clause and supported (at least in part) by Noyce v Parnell Property Investments Ltd [2015] NZHC 2037 and Petterson v McConnell Dowell Constructors Ltd [2018] NZHC 2379 (“Petterson”)):

   4. (4)

      The experts were of the opinion that clause 1(1)(e) of Schedule 7 to the NZ Companies Act would not have any application to the sum, if any, awarded to the Plaintiff in its claim against Zurich in the Commercial List Proceedings. That is because the sum (again, if any) payable to the Plaintiff would not pass through the hands of the liquidator. If the proceeds of the litigation were paid to the liquidator, the Plaintiff would not be entitled to any preference under clause 1(1)(e) of the NZ Companies Act for the following reasons:

8. [136]

   Zurich submits that the insolvency regime contained within the NZ Companies Act, and helpfully clarified by both experts, produce a result quite distinct to that consequent upon an application of s 562(1) of the Corporations Act. That section reads:

9. [137]

   Section 562(1) of the Corporations Act is clearly congruent with the way in which insurance proceeds are paid to claimants under the Claims Act. Section 312 and clause 1(1)(e) of Schedule 7 to the NZ Companies Act do not, however, share that congruency because, as the Commercial List Proceedings are currently constituted, the Plaintiff (and the other group members) would not enjoy a right of priority over other unsecured creditors should the funds be paid to the liquidator of BMX. Zurich thus submits that the proper course is for the liquidators to bring those claims, such that any proceeds recovered from Zurich may be distributed by them pursuant to the provisions of the NZ Companies Act.

10. [138]

    Chief among Zurich’s contentions on this issue are the following two rhetorical questions contained in its submissions on the Plaintiff’s application for leave (at [57]):

11. [139]

    The Plaintiff’s submissions in reply can be summarised as follows:

    1. (1)

       Firstly, notwithstanding that Zurich’s submissions are not expressly advanced as an application of the principle that statutes should be construed in conformity with the comity of nations, that principle is central to Zurich’s submissions on this issue. The Court should be circumspect in accepting Zurich’s submission in the Court’s exercise of its discretion to refuse leave, not least because:

    2. (2)

       Secondly, there would be no inconsistency between an application of the Claims Act and New Zealand insolvency law for the following reasons:

    3. (3)

       Thirdly, Zurich has not given any evidence that it will not rely on the exclusive jurisdiction clause in the Primary Policy in proceedings commenced in New Zealand.

12. [140]

    On the last day of the hearing, Zurich tendered some correspondence between its solicitors and the liquidator’s solicitors (see Exhibit 2) and the Plaintiff tendered other correspondence (which was heavily redacted to avoid any complaint by the liquidator that common interest privilege had been imperilled) between his solicitors and the liquidators. The correspondence establishes that:

    1. (1)

       In March 2021, the liquidator was made aware that the Plaintiff was taking steps to pursue his claim against Zurich in Australia.

    2. (2)

       In October 2021, the liquidator sought copies of the pleadings, application for leave and submissions filed in these and the Commercial List Proceedings.

    3. (3)

       On 27 October 2021, the material sought by the liquidator was sent to the liquidator’s solicitors.

    4. (4)

       On 9 November 2021, Zurich’s solicitors enquired as to the liquidator’s intentions.

    5. (5)

       On 10 November 2021, the liquidator’s solicitors advised Zurich’s solicitors that they had only recently become aware that proceedings had been commenced but did not intend to take any steps in the current proceedings. The solicitors for the liquidator advised that it was the liquidator’s intention to commence proceedings against Zurich in respect of both the Victopia Apartments and Century on Anzac, “subject to funding”.

13. [141]

    It should be noted that whilst the statement “they only discovered that the proceedings had been commenced when a third party drew their attention to a media statement” seems to imply that the liquidator had no knowledge of the proceedings, the content of [140(1)] above makes it clear that the liquidator was well aware of the Plaintiff’s intention to commence these proceedings by March, even if they did not know that in fact the proceedings as foreshadowed had been commenced.

14. [142]

    I do not regard it as appropriate for the Court to exercise a discretion to prevent the Commercial List Proceedings from continuing for these reasons:

    1. (1)

       The liquidator has not, to date, brought any proceeding against Zurich in New Zealand or Australia; BMX was placed in liquidation in December 2012 and cover was declined by Zurich in 2018. That is the short answer to the contention that these proceedings will interfere with New Zealand insolvency provisions. It seems clear that lack of funding for the liquidator is an issue in that regard and there is no explanation of how funding, not previously obtained, will now be obtained. If the liquidator were to continue to be unable to obtain funding and leave was refused to the Plaintiff, Zurich would benefit since, even if otherwise liable on the policy to indemnify BMX, it would never have to pay out to BMX, the general creditors of BMX, the Plaintiff or the claimants in the Century on Anzac case. If the liquidator was able to obtain funding, we know that he would only be able to pursue claims on behalf of creditors in Australia (because of the exclusive jurisdiction clause). The commencement of such proceedings, were that to occur, could itself give rise to the question of whether such proceedings should be consolidated with the Plaintiff’s proceedings and as to how the two claims inter se should be dealt with. These questions, interesting as they may be, do not presently, and may never, arise.

    2. (2)

       Whilst New Zealand insolvency law has a different operation to Australian insolvency law in relation to insurance proceeds, the effect of s 6 of the LRMPA and its analogues and the Claims Act is one recognised in New Zealand itself. If the Plaintiff could have brought his claim in New Zealand against Zurich under the LRA, the insurance monies would not have passed through the hands of the liquidator. The same will be the position here.

    3. (3)

       Both New South Wales law and New Zealand law provide for claims against insurers where the insured has become insolvent. The Supreme Court of New Zealand has held that the Plaintiff cannot bring a claim based on the LRA because Zurich is not resident in New Zealand. In taking the view that the situs of the debt (and also an exclusive jurisdiction clause) is a matter of significance, the Supreme Court of New Zealand has taken a position contrary to that adopted in Chubb. If this Court were to refuse leave on discretionary grounds, then the Plaintiff would have no redress from legislation enacted in both New Zealand and New South Wales designed to ensure that the insurer meets claims of persons who have suffered loss and damage caused by an insured who holds insurance to cover the insured for that type of claim because, on the authority of Ludgater, the occurrence of the tort and the bringing of proceedings against the insured in New Zealand is insufficient and on the basis of Chubb as applied to the Claims Act, the exclusive jurisdiction clause and residency of one of the insurers (i.e. Aspen) is insufficient. That would be a most jarring result in my opinion.

    4. (4)

       As Mr Braham pointed out, no application has been made by Zurich for a stay under s 17 of the TTPA. If it were, it would face the obstacle of s 20. The inconsistency point has the appearance of a backdoor s 17 application. I am inclined to think that s 20 cannot be evaded in this way, but on the assumption that s 20 does not apply, the fact that the insurance contract has an exclusive jurisdiction clause nominating Australian law and Australian courts is still a relevant matter on the issue of discretion, as is the fact that the only forum in which the relief sought by the Plaintiff (by means of a statutory claim against BMX’s insurer) is available is an Australian forum. The latter point is regarded as a relevant matter in the forum non conveniens context (see Garsec v His Majesty the Sultan of Brunei [2008] NSWCA 211 at [18]; Fleming v Marshall [2011] NSWCA 86 at [74]) and I think it is of importance here as well.

Conclusion

1. [143]

   It follows that leave, pursuant to s 5 of the Claims Act, should be granted to the Plaintiff to proceed with his proceedings in the Commercial List.

Costs

1. [144]

   The parties were agreed that the issue of costs should be dealt with only after the substantive issues have been determined. I will arrange for the matter to be listed for directions to ascertain the extent of issues in respect of costs and to fix a date for determination of that issue.