Dariusz Koper v Zurich Insurance PLC

Supreme Court of NSW|2021-11-12|Before: Rein J

Supreme Court Rules 1970 (NSW) Trans-Tasman Proceedings Act 2010 (Cth) Trans-Tasman Proceedings Bill 2009 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Antico v Heath Fielding Australia Pty Ltd (1997) 188 CLR 652 ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 Backhouse v Moderana (1904) 1 CLR 676 Barcelo v Electrolytic Zinc Co of Australasia Limited (1932) 48 CLR 391 Barker v Palmer (1881) 8 QBD 9 Baxter v Commissioners of Taxation (NSW); Flint v Webb (1907) 4 CLR 1087 Body Corporate 326421 v Auckland Council [2013] NZHC 753 Body Corporate 346799 v KNZ International Co Ltd [2017] NZHC 511 Burns v Corbett (2018) 265 CLR 304 Cambridge Credit Corporation Ltd v Lissenden (1987) 8 NSWLR 411 CGU Insurance Ltd v Blakeley (2016) 259 CLR 339 Chubb Insurance Company of Australia Limited v Moore [2013] NSWCA 212 Crosby v Kelly (2012) 203 FCR 451 Dixon v Royal Insurance Australia Ltd (1991) 105 ACTR 1 Doyle's Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) [2021] NSWCA 246 DSHE Holdings Ltd (recs and mgrs apptd) (in liq) v Abboud [2017] NSWSC 579 Ex parte Bucknell (1867) 6 SCR 96 Federal Capital Commission v Laristan Building and Investment Co Pty Ltd (1929) 42 CLR 582 Felton v Mulligan (1971) 124 CLR 367 Fencott v Muller (1983) 152 CLR 570 Flaherty v Girgis (1987) 162 CLR 574 Fleming v Marshall [2011] NSWCA 86 Garsec v His Majesty the Sultan of Brunei [2008] NSWCA 211 Gosper v Sawyer (1985) 160 CLR 548 Habib v Commonwealth (2010) 183 FCR 62 Insight Vacations v Young (2011) 243 CLR 149 John Russell & Co Ltd v Cayzer, Irvine & Co Ltd [1916] 2 AC 298 Laurie v Carroll (1958) 98 CLR 310 Le Mesurier v Connor (1929) 42 CLR 481 Lipohar v The Queen (1999) 200 CLR 485 Ludgater Holdings Ltd v Gerling Australia Insurance Co Pty Ltd [2010] 3 NZLR 713 Luke v Mayoh (1921) 29 CLR 435 McCullagh v Underwriters Severally [2015] NZHC 1384 McDonald v Mabee (1917) 243 US 90 McNamara (McGrath) v Consumer Trader & Tenancy Tribunal (2005) 221 CLR 646 Meyer Heine Pty Ltd v China Navigation Co Ltd (1966) 115 CLR 10 Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 Murphy, McCarthy & Associates Pty Limited v Zurich Australian Insurance Limited [2018] NSWSC 627 Neilson v Overseas Projects Corp of Victoria (2005) 223 CLR 331 New South Wales v Commonwealth (1975) 135 CLR 337 Noyce v Parnell Property Investments Ltd [2015] NZHC 2037 Obeid v R (2015) 91 NSWLR 226 Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197 Peacock v Newtown, Marrickville and General Co-operative Building Society (No 4) Ltd (1943) 67 CLR 25 Petterson v McConnell Dowell Constructors Ltd [2018] NZHC 2379 R v Hughes (2000) 202 CLR 535 R v Kirby; Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254 R v Reid [1999] VSCA 98 R v Schildkamp [1969] 3 All ER 1640 Re Macks; Ex parte Saint (2000) 204 CLR 158 Re Wakim; Ex parte McNally (1999) 198 CLR 511 Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491 Renton v Renton (1918) 25 CLR 291 Rizeq v Western Australia (2017) 262 CLR 1 Robinson v Vogelsang (No 1) [2015] NSWSC 1670 Ruhani v Director of Police (2005) 222 CLR 489 Tana v Baxter (1986) 160 CLR 572 The Commonwealth v Dalton (1924) 33 CLR 452 The Grain Pool of Western Australia v The Commonwealth (2000) 202 CLR 479 The Ombudsman v Moroney [1983] 1 NSWLR 317 Truong v The Queen (2004) 223 CLR 122 Victoria v Commonwealth (1996) 187 CLR 416 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 Wayland v Bird [2017] NSWCA 26 Webster v Brewer [2020] FCA 622 Westpac Banking Corporation v ASIC (2009) 181 FCR 379 XYZ v The Commonwealth (2006) 227 CLR 532 Texts Cited: D C Pearce, Statutory Interpretation in Australia (7th ed, 2011, LexisNexis) James Stellios, The Federal Judicature - Chapter III of the Constitution (2nd ed, 2020, LexisNexis) Leslie Zines, The High Court and The Constitution (5th ed, 2008, The Federation Press) Mark Leeming, Authority to Decide - The Law of Jurisdiction in Australia (2nd ed, 2020, The Federation Press) N Rein, "Choosing your life raft: A review of Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 6 and its analogues" (2007) 81 ALJ 180 North (ed), Cheshire Private International Law (9th ed, 1974, Butterworth) R D Giles, "Reflections on Section 6" (1996) 7 Insurance Law Journal 152 Second Reading Speech, Trans-Tasman Proceedings Bill 2009 (Hansard, House of Representatives, 25 November 2009, 12769-71) Category: Principal judgment Parties: Dariusz Koper (Plaintiff) Zurich Insurance PLC (First Defendant) Aspen Insurance UK Limited (Second Defendant) Representation: Counsel: Mr P Braham SC with Mr B O'Connor and Ms M Caristo (Plaintiff)

Solicitors: Piper Alderman (Plaintiff)

Australian Government Solicitor (Intervener) File Number(s): 2021/91398 Publication restriction: Nil

Judgment

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").
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.
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.
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.
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".
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.
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. the claimant is a New Zealand resident with no connection with Australia; 2. the insured is a New Zealand company with no presence in Australia; 3. Zurich has no presence in Australia; and 4. proceedings against the insured have been commenced and determined in a New Zealand court.
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.
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): "The interpretation of the terms conditions and exclusions of this Policy (and any phrase or word contained therein) shall be governed and construed in accordance with the law of the Commonwealth of Australia and the Insurers and the Insured hereby agree to submit to the exclusive jurisdiction of any competent Court in the Commonwealth of Australia. Any dispute or Claim arising out of or in connection with this insurance, its formation or existence or the breach, termination or validity thereof shall be settled in accordance with the law of the Commonwealth of Australia."
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].
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. 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. 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".
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. as a matter of construction, the TTPA is not available in the present circumstances; and 2. if it otherwise is to be interpreted as giving power, it is an invalid exercise of Commonwealth legislative power ("the Constitutional Issue").
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").
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.
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").
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).
The principal questions which I am called on to decide in this case are, in essence: 1. What is the territorial reach of the Claims Act? 2. Is the territorial reach established by the commencement of proceedings in this Court against the insurer? 3. Does Chubb support the contentions of the Plaintiff or Zurich? 4. What is the precedential status of Chubb? 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. 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. If the answer to [17(6)] is yes, should the Court nevertheless refuse leave on the basis of the inconsistency point?
The Plaintiff contends that: 1. the commencement of proceedings against Zurich under the Claims Act is sufficient; 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. 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. 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".
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.
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

The legislation and related materials are these: 1. Sections 3-10 of the Claims Act, which provide: "3 Definitions (1) In this Act: claimant - see section 4. court means a court or tribunal of New South Wales. insured liability means a liability in respect of which an insured person is entitled to be indemnified by the insurer. insured person means a person who is, in respect of a liability to a third party, entitled to indemnity pursuant to the terms of a contract of insurance, and includes a person who is not a party to the contract of insurance but is specified or referred to in the contract, whether by name or otherwise, as a person to whom the benefit of the insurance cover provided by the contract extends. liability means a liability to pay damages, compensation or costs. Note - The Interpretation Act 1987 contains definitions and other provisions that affect the interpretation and application of this Act. (2) Notes included in this Act do not form part of this Act. 4 Claimant may recover from insurer in certain circumstances (1) If an insured person has an insured liability to a person (the claimant), the claimant may, subject to this Act, recover the amount of the insured liability from the insurer in proceedings before a court. (2) The amount of the insured liability is the amount of indemnity (if any) payable pursuant to the terms of the contract of insurance in respect of the insured person's liability to the claimant. (3) In proceedings brought by a claimant against an insurer under this section, the insurer stands in the place of the insured person as if the proceedings were proceedings to recover damages, compensation or costs from the insured person. Accordingly (but subject to this Act), the parties have the same rights and liabilities, and the court has the same powers, as if the proceedings were proceedings brought against the insured person. (4) This section does not entitle a claimant to recover any amount from a re-insurer under a contract or arrangement for re-insurance. 5 Leave to proceed (1) Proceedings may not be brought, or continued, against an insurer under section 4 except by leave of the court in which the proceedings are to be, or have been, commenced. (2) An application for leave may be made before or after proceedings under section 4 have been commenced. (3) Subject to subsection (4), the court may grant or refuse the claimant's application for leave. (4) Leave must be refused if the insurer can establish that it is entitled to disclaim liability under the contract of insurance or under any Act or law. 6 Time for commencing proceedings (1) Proceedings to recover an amount from the insurer under section 4 must be commenced within the same limitation period that applies under the Limitation Act 1969 or other Act to the claimant's cause of action against the insured person in respect of the insured liability. (2) Subsection (1) does not apply if the claimant has brought proceedings against the insured person in respect of the insured liability before the expiry of the limitation period applying to those proceedings, including any extension of the limitation period granted under the Limitation Act 1969 or other Act by a court. 7 Matters on which insurer may rely In proceedings brought under section 4, the insurer is entitled to rely on any defence or any other matter in answer to the claim or in reduction of its liability to the claimant: (a) that the insurer would have been entitled to rely on in a claim made by the insured person under the contract of insurance, or (b) that the insured person would have been entitled to rely on in proceedings brought by the claimant against the insured person in respect of the insured liability. 8 Judgment against insured person no bar to claim against insurer A judgment or order for damages, compensation or costs in favour of the claimant against the insured person in respect of an insured liability does not prevent the claimant from recovering an amount for the damages, compensation or costs under section 4, except to the extent that the judgment or order has been satisfied. 9 Discharge of insurer's liability Any payment made by the insurer to the claimant under this Act in respect of an insured liability discharges, to the extent of the payment, the liability of the insurer to make a payment to the insured person under the contract of insurance in respect of the insured liability. 10 Effect of payments made by insurer to insured person An insurer's liability to a claimant under this Act is not reduced, discharged or otherwise affected by: (a) any compromise or settlement between the insurer and the insured person in respect of the insured liability, or (b) any payment by the insurer to the insured person in respect of the insured liability unless and to the extent that the amount of the payment is or has been paid by the insured person to the claimant in respect of the insured liability." 1. Section 6 of the LRMPA, which provides: "6 Amount of liability to be charge on insurance moneys payable against that liability (1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person's liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability. (2) If, on the happening of the event giving rise to any claim for damages or compensation as aforesaid, the insured (being a corporation) is being wound up, or if any subsequent winding-up of the insured (being a corporation) is deemed to have commenced not later than the happening of that event, the provisions of subsection (1) shall apply notwithstanding the winding-up. (3) Every charge created by this section shall have priority over all other charges affecting the said insurance moneys, and where the same insurance moneys are subject to two or more charges by virtue of this Part those charges shall have priority between themselves in the order of the dates of the events out of which the liability arose, or, if such charges arise out of events happening on the same date, they shall rank equally between themselves. (4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured: Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken. (5) Such an action may be brought although judgment has been already recovered against the insured for damages or compensation in respect of the same matter. (6) Any payment made by the insurer under the contract of insurance without actual notice of the existence of any such charge shall to the extent of that payment be a valid discharge to the insurer, notwithstanding anything in this Part contained. (7) No insurer shall be liable under this Part for any greater sum than that fixed by the contract of insurance between the insurer and the insured. (8) Nothing in this section shall affect the operation of any of the provisions of the Workers Compensation Act 1987 or the Motor Vehicles (Third Party Insurance) Act 1942. (9) Despite subsection (8), this section applies in relation to a policy of workers compensation insurance entered into by an employer (whether entered into before or after the commencement of this subsection), where the employer: (a) being a natural person, has died, or is permanently resident outside the Commonwealth and its Territories, or cannot after due inquiry and search be found, or (b) being a corporation (other than a company that has commenced to be wound up), has ceased to exist, or (c) being a company, corporation, society, association or other body (other than a company that has commenced to be wound up), was at the time when it commenced to employ workers to which the policy relates incorporated outside the Commonwealth and its Territories and registered as a foreign company under the laws of any State or Territory and is not so registered under any such law, or (d) being a company, is in the course of being wound up." 1. Rules 11.3-11.5 of the UCPR, which provide: "11.3 Division does not apply to service in New Zealand of documents for or in certain trans-Tasman proceedings This Division (which contains rules on service outside of Australia) does not apply to service in New Zealand of an originating process for, or of any other document to be served in or for, a proceeding an originating process for which may be served in New Zealand under Division 2 of Part 2 of the Trans-Tasman Proceedings Act 2010 of the Commonwealth. 11.4 Cases for service of originating process (1) Originating process may be served outside of Australia without leave in the circumstances referred to in Schedule 6. (2) This rule extends to originating process to be served outside Australia in accordance with the Hague Convention. 11.5 When allowed with leave (1) In any proceeding when service is not allowed under Schedule 6, an originating process may be served outside of Australia with the leave of the court. (2) An application for leave under this rule must be made on notice to every party other than the person intended to be served. (3) A sealed copy of every order made under this rule must be served with the document to which it relates. (4) An application for leave under this rule must be supported by an affidavit stating any facts or matters related to the desirability of the court assuming jurisdiction, including the place or country in which the person to be served is or possibly may be found, and whether or not the person to be served is an Australian citizen. (5) The court may grant an application for leave if satisfied that - (a) the claim has a real and substantial connection with Australia, and (b) Australia is an appropriate forum for the trial, and (c) in all the circumstances the court should assume jurisdiction." 1. Schedule 6 of the UCPR, which provides: "Schedule 6 Service outside of Australia without leave An originating process may be served outside of Australia without leave in the following cases - (a) when the claim is founded on a tortious act or omission - (i) which was done or which occurred wholly or partly in Australia, or (ii) in respect of which the damage was sustained wholly or partly in Australia, (b) when the claim is for the enforcement, rescission, dissolution, annulment, cancellation, rectification, interpretation or other treatment of, or for damages or other relief in respect of a breach of, a contract which - (i) was made or entered into in Australia, or (ii) was made by or through an agent trading or residing within Australia, or (iii) was to be wholly or in part performed in Australia, or (iv) was by its terms or by implication to be governed by Australian law or to be enforceable or cognizable in an Australian court, (c) when the claim is in respect of a breach in Australia of any contract, wherever made, whether or not that breach was preceded or accompanied by a breach outside of Australia that rendered impossible the performance of that part of the contract that ought to have been performed in Australia, (d) when the claim - (i) is for an injunction to compel or restrain the performance of any act in Australia, or (ii) is for interim or ancillary relief in respect of any matter or thing in or connected with Australia, where such relief is sought in relation to judicial or arbitral proceedings commenced or to be commenced, or an arbitration agreement made, in or outside Australia (including without limitation interim or ancillary relief in relation to any proceedings under the International Arbitration Act 1974 of the Commonwealth or the Commercial Arbitration Act 2010), or (iii) without limiting subparagraph (ii), is an application for a freezing order or ancillary order under Division 2 of Part 25 in respect of any matter or thing in or connected with Australia, (e) when the subject matter of the claim is land or other property situated in Australia, or any act, deed, will, instrument, or thing affecting such land or property, or the proceeding is for the perpetuation of testimony relating to such land or property, (f) when the claim relates to the carrying out or discharge of the trusts of any written instrument of which the person to be served is a trustee and which ought to be carried out or discharged according to Australian law, (g) when any relief is sought against any person domiciled or ordinarily or habitually resident in Australia (whether present in Australia or not), (h) when any person outside of Australia is - (i) a necessary or proper party to a proceeding properly brought against another person served or to be served (whether within Australia or outside Australia) under any other provision of these rules, or (ii) a defendant to a claim for contribution or indemnity in respect of a liability enforceable by a proceeding in the court, (i) when the claim is for the administration of the estate of any deceased person who at the time of his or her death was domiciled in Australia or is for any relief or remedy which might be obtained in any such proceeding, (j) when the claim arises under an Australian enactment and - (i) any act or omission to which the claim relates was done or occurred in Australia, or (ii) any loss or damage to which the claim relates was sustained in Australia, or (iii) the enactment applies expressly or by implication to an act or omission that was done or occurred outside Australia in the circumstances alleged, or (iv) the enactment expressly or by implication confers jurisdiction on the court over persons outside Australia (in which case any requirements of the enactment relating to service must be complied with), (k) when the person to be served has submitted to the jurisdiction of the court, (l) when a claim is made for restitution or for the remedy of constructive trust and the alleged liability of the person to be served arises out of an act or omission that was done or occurred wholly or partly in Australia, (m) when it is sought to recognise or enforce any judgment, (n) when the claim is founded on a cause of action arising in Australia, (o) when the claim affects the person to be served in respect of his or her membership of a corporation incorporated in Australia, or of a partnership or an association formed or carrying on any part of its affairs in Australia, (p) when the claim concerns the construction, effect or enforcement of an Australian enactment, (q) when the claim - (i) relates to an arbitration held in Australia or governed by Australian law, or (ii) is to enforce in Australia an arbitral award wherever made, or (iii) is for orders necessary or convenient for carrying into effect in Australia the whole or any part of an arbitral award wherever made, (r) when the claim is for relief relating to the custody, guardianship, protection or welfare of a minor present in Australia or who is domiciled or ordinarily or habitually resident in Australia (whether present in Australia or not), (s) when the claim, so far as it concerns the person to be served, falls partly within one or more of the above paragraphs and, as to the residue, within one or more of the others of the above paragraphs." 1. Relevant parts of sections 3, 4, 8, 9, 10, 17 and 20 of the TTPA, which read: "3 Purpose of, and guide to, this Act The purpose of this Act is to: (a) streamline the process for resolving civil proceedings with a trans‑Tasman element in order to reduce costs and improve efficiency… 4 Definitions … Australian court means: (a) a federal court; or (b) a court of a State or Territory. … civil proceeding means a proceeding that is not a criminal proceeding. … excluded matter means: (a) the dissolution of a marriage; or (b) the enforcement of: (i) an obligation under Australian law to maintain a spouse or a de facto partner (within the meaning of the Acts Interpretation Act 1901); or (ii) an obligation under New Zealand law to maintain a spouse, a civil union partner (within the meaning of the Civil Union Act 2004 of New Zealand) or a de facto partner (within the meaning of the Property (Relationships) Act 1976 of New Zealand); or (c) the enforcement of a child support obligation. … 8 Application of this Part (1) This Part applies to: (a) a civil proceeding commenced in an Australian court; and (b) a civil proceeding commenced in an Australian tribunal, but only if: (i) the tribunal's procedural rules permit an initiating document relating to the proceeding to be served outside Australia; and (ii) the tribunal is prescribed by the regulations. (2) However, this Part does not apply to: (a) a civil proceeding that relates wholly or partly to an excluded matter; or (b) a civil proceeding that relates wholly or partly to an action in rem; or (c) a civil proceeding in an Australian tribunal, being a civil proceeding of a kind prescribed by the regulations; or (d) a civil proceeding that relates to a matter of a kind prescribed by the regulations. (3) For the purposes of subparagraph (1)(b)(ii), the regulations must not prescribe a tribunal unless, at the time of making the regulations, the tribunal is declared under section 55 of the NZ Act to be a tribunal to which subpart 5 of Part 2 of that Act applies. 9 Service of initiating documents in New Zealand (1) An initiating document issued by an Australian court or tribunal that relates to the proceeding may be served in New Zealand under this Part. (2) However, the document must be served in New Zealand in the same way that the document is required or permitted, under the procedural rules of the Australian court or tribunal, to be served in the place of issue. Note: For service of the initiating document in New Zealand under this Part, it is not necessary for the Australian court or tribunal: (a) to give leave for the service; or (b) to be satisfied that there is a connection between the proceeding and Australia. 10 Effect of service under section 9 Service of an initiating document in New Zealand under section 9: (a) has the same effect; and (b) gives rise to the same proceeding; as if the initiating document had been served in the place of issue. Note: For initiating documents issued by an Australian court, the defendant may apply to the Australian court to stay the proceeding on the grounds that a New Zealand court is the more appropriate court: see Part 3. In some cases, the defendant and the defendant's lawyer may appear remotely in that stay proceeding without the court's leave: see subsection 18(4). … 17 Application to stay Australian proceeding on forum grounds (1) A defendant in a civil proceeding in an Australian court may apply to the court for an order staying the proceeding on the grounds that a New Zealand court is the more appropriate court to determine the matters in issue. (2) The application must be made within: (a) 30 working days of the Australian court after the day on which the defendant was served with the initiating document for the proceeding; or (b) if, before or after the end of that period, the plaintiff or defendant applies to the Australian court for a shorter or longer period - any shorter or longer period the Australian court considers appropriate. … 20 Exclusive choice of court agreements (1) On application under section 17 (and despite section 19), the Australian court: (a) must, by order, stay the proceeding, if satisfied that an exclusive choice of court agreement designates a New Zealand court as the court to determine the matters in issue; and (b) must not, by order, stay the proceeding, if satisfied that an exclusive choice of court agreement designates an Australian court as the court to determine those matters. (2) Paragraph (1)(a) does not apply to an exclusive choice of court agreement if the Australian court is satisfied that: (a) it is null and void under New Zealand law (including the rules of private international law); or (b) a party to it lacked the capacity to conclude it under Australian law; or (c) giving effect to it would lead to a manifest injustice or would be manifestly contrary to Australian public policy; or (d) for exceptional reasons beyond the control of the parties to it, it cannot reasonably be performed; or (e) the court designated by it as the court to determine the matters in issue between the parties to the proceeding has decided not to determine those matters. (2A) Paragraph (1)(b) does not apply to an exclusive choice of court agreement if the Australian court is satisfied that it is null and void under Australian law (including the rules of private international law). (3) Exclusive choice of court agreement, in relation to matters in issue between parties to a proceeding, means a written agreement between those parties that: (a) designates the courts, or a specified court or courts, of a specified country, to the exclusion of any other courts, as the court or courts to determine disputes between those parties that are or include those matters; and (b) is not an agreement the parties to which are or include an individual acting primarily for personal, family, or household purposes; and (c) is not a contract of employment." 1. Sections 51(xxiv), 51(xxix), 71, 75, 76 and 77 of the Constitution, which read: "51 Legislative powers of the Parliament The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: … (xxiv) the service and execution throughout the Commonwealth of the civil and criminal process and the judgments of the courts of the States; … (xxix) external affairs; … 71 Judicial power and Courts The judicial power of the Commonwealth shall be vested in a Federal Supreme Court, to be called the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction. The High Court shall consist of a Chief Justice, and so many other Justices, not less than two, as the Parliament prescribes. … 75 Original jurisdiction of High Court In all matters: (i) arising under any treaty; (ii) affecting consuls or other representatives of other countries; (iii) in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party; (iv) between States, or between residents of different States, or between a State and a resident of another State; (v) in which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth; the High Court shall have original jurisdiction. 76 Additional original jurisdiction The Parliament may make laws conferring original jurisdiction on the High Court in any matter: (i) arising under this Constitution, or involving its interpretation; (ii) arising under any laws made by the Parliament; (iii) of Admiralty and maritime jurisdiction; (iv) relating to the same subject‑matter claimed under the laws of different States. 77 Power to define jurisdiction With respect to any of the matters mentioned in the last two sections the Parliament may make laws: (i) defining the jurisdiction of any federal court other than the High Court; (ii) defining the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in the courts of the States; (iii) investing any court of a State with federal jurisdiction.
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

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: "7. In 2002 the first defendant, KNZ [International Co Limited], engaged ADC Architects to prepare designs for the construction of the Building being a 16 level (including two basement levels) 203 unit apartment building at the Property to be known as Victopia Apartments. 8. In 2002/2003 ADC Architects prepared plans and a specification for the construction of the Building. KNZ engaged Tonkin & Taylor to provide a geotechnical report and the engineer Stephen Mitchell to provide structural designs for the Building. 9. In July 2003 KNZ took title to the Property. 10. On 1 November 2003 KNZ entered into a contract with [Brookfield] Multiplex [Constructions (NZ) Limited (In Liquidation)] to construct the Building (the Contract). KNZ engaged Brian Duffy of Contrado Ltd as engineer to the Contract. 11. On 21 July 2003 ADC Architects applied to the [Auckland City] Council on behalf of KNZ for building consent for stage one of the Building, being the basement structure up to podium level. On 15 September 2003, the Council issued a building consent for the stage one works. 12. On 22 September 2003 Multiplex applied to the Council on behalf of KNZ for a building consent for stage two of the Building, being the structure and fire report. On 7 November 2003 the Council issued building consent for the stage two works. 13. On 8 December 2003 Multiplex applied to the Council on behalf of KNZ for a building consent for stage three of the Building, being the architectural building services and balance of structure (roof and canopies). On 27 May 2004 the Council issued building consent for the stage three works. It is the stage three works which are the subject of the claims in this proceeding. 14. In the period from July 2003 until May 2005, Multiplex and its subcontractors constructed the Building. The Council undertook inspections. 15. On 17 May 2005 the Council issued Code Compliance Certificates (CCCs) for the construction of the Building. 16. In November 2011, the first plaintiff, Victopia body corporate 346799 (the Body Corporate), engaged Maynard Marks Building Consultants to investigate defects in the Building including cracking to the exterior cladding and leaks in the podium and level 14 balconies. The Body Corporate asked Maynard Marks to advise on the remedial works necessary to remedy the defects and to prepare designs for the remedial work. 17. From 2012 until 2015 Maynard Marks and its subconsultants undertook investigations of the Building. They identified four main defects, the cracking of the Eterpanel cladding system (one of three cladding systems on the Building), the failure of the balcony membranes, defective waterproofing to the ground level podium (carpark) and passive fire (fire stopping) defects. 18. The plaintiffs issued proceedings against the defendants on 19 October 2012."
On 3 December 2012, BMX was placed into liquidation.
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.
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: "The Insurer shall not be liable under this Policy to indemnify the Insured in respect of any Claim: … 9. arising out of defective workmanship by or on behalf of the Insured, defective materials, manual labour operations, or any defective materials, workmanship or production techniques used in the actual manufacture of any product. This Exclusion shall not apply where such liability is otherwise indemnifiable hereunder and arises from: (a) an act of neglect or error or omission with respect to the design or specification of materials; or (b) an act of neglect or error or omission with respect to advice given in connection with the selection of materials undertaken by professionally qualified persons or personnel as per item a) of Definition of Professional Activities and Duties"
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

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.
The Plaintiff relies in his submissions on the following paragraph of the Report: "4.59 The NSW Court of Appeal has recently expressed the view that s 6 applies to an action that a plaintiff brings in a NSW court; however, it did not do so "without doubt", questioning, in particular, how the section might apply under cross-vesting arrangements. Recommendation 11 confirms the Court of Appeal's position. It is implemented by the definition of "court" in cl 6 of the Draft Bill." (citations omitted) Footnote 38 to the Report, which is contained in paragraph 4.59, refers to [197]-[206] of Chubb: see page 42 of the Report.

The Jurisdictional Point

Zurich's contentions can be summarised as follows: 1. This Court has no jurisdiction to deal with a s 4 claim because: 1. BMX is not resident in New South Wales (or Australia); 2. the Plaintiff is not resident in New South Wales (or Australia); 3. the property the subject matter of the proceedings is not in New South Wales (or Australia); 4. the tortious claims and the claims for breach of contract on which the Plaintiff sued BMX occurred in New Zealand and nowhere else; 5. the judgment obtained was one in New Zealand; and 6. the Claims Act is limited to claims against insurers where the claimant has sued the insured in New South Wales or could properly have brought proceedings in New South Wales against the insured.
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

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.
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.
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.
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].
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. The territorial scope of legislation is, in the absence of an express provision, a question of construction: [144]. 2. The primary rule of construction requires one to have regard to the context and subject matter of the legislation in question: [144]. 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. What the Court said at [145]: 1. "A basic canon of statutory interpretation is that legislation is presumed not to have extra-territorial effect"; 2. "Under the general law, there is a presumption that legislation does not apply to persons and matters outside the territory of the legislature that enacted the legislation"; and 3. "Since s 6 is silent about any extra-territorial application or restriction, the extra-territorial application of s 6 should be construed as being limited in its operation to New South Wales". 1. 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]. 2. 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: "in the absence of any countervailing consideration, general words should not be understood as extending to cases that, according to the rules of private international law, are governed by foreign law (see Wanganui-Rangitikei Electric Power Board v Australian Mutual Providence Society [1934] HCA 3; (1934) 50 CLR 581 at 601 (Wanganui))." 1. What the Court said at [147]: "The ambit of particular legislation is not a question of constitutional power but one of statutory interpretation. The question is not what the Parliament of New South Wales could have done but what, as a matter of construction, it has done, in enacting the relevant legislation."
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. that the law governing the claimant's cause of action against Great Southern was New South Wales law; 2. that the event giving rise to the claim for damages occurred in New South Wales; 3. that the proper law of the contract of insurance was the law of New South Wales; 4. the contract of insurance had its closest connection with New South Wales; 5. the situs of the insured's choses in action under the policies of insurance was New South Wales; and 6. the statutory cause of action is "a derivative of, and dependent on, the contract of insurance": see [191].
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").
The Court of Appeal rejected each of the matters referred to in [37] as determinative either alone or collectively and held at [200]-[205]: "200. The reference in s 6(4) to "an action ... in the same court" is directed partly at the jurisdictional limit, as between courts within New South Wales, that applies to the statutory cause of action. That indicates that s 6 is directed at claims instituted in New South Wales courts, and that that is the territorial connection with New South Wales that is required for s 6 to operate. 201. Assuming that a claim against an insurer was within the jurisdiction of a court, the parties to that proceeding would have such rights and liabilities, and the court would have such powers, as would be applicable to a proceeding in that court. It is unlikely that the Parliament of New South Wales would endeavour to confer rights and impose liabilities, or confer judicial power, in respect of a proceeding conducted in a court other than a court of New South Wales, over which the New South Wales legislature had no control. It is unlikely that the New South Wales Parliament would purport to confer rights and impose liabilities on parties in a proceeding in a court other than a court of New South Wales. Apart from anything else, there would be a question as to the constitutional validity of the provision if the reference to "the same court" encompassed the courts of other states so as to confer jurisdiction upon the courts of other states or to direct the manner in which they should exercise their jurisdiction (see Re Wakim; ex parte McNally [1999] HCA 27; (1999) 198 CLR 511 at [108]). 202.The fundamental legislative purpose behind s 6 is to protect claimants who have obtained a judgment or settlement, or who are entitled to obtain a judgment, and to secure the payment of that judgment or settlement when the defendant is insured from moneys that would otherwise be payable to the insured in respect of that judgment or settlement. It is difficult to see why the New South Wales legislature would not have intended to protect any person who properly brings a claim in New South Wales, even where that claim is governed by some other law, given the focus in s 6(4) upon the powers of the court in the s 6 enforcement process. Section 6(4) provides the essential enforcement mechanism, by the claimant against the insurer, without which the claimant will not be protected by s 6. Put another way, s 6 may be described as a procedural mechanism by which that fundamental purpose is achieved. At the heart of that mechanism is s 6(4). The s 6(4) enforcement mechanism is the hinge or central concern of s 6, and the references to courts in s 6(4) referred to above indicate that s 6 is focused on New South Wales courts. 203. On the other hand, it is not obvious that the New South Wales Parliament would have intended that s 6 should protect any claimant who chose to bring a claim against an insurer elsewhere, even if that claim is in relation to a contract of insurance the proper law of which is New South Wales. 204. In all of the circumstances, the preferable approach is to treat s 6 as applying to all claims brought in a court of New South Wales, and as not applying to a claim brought in a court that is not a court of New South Wales. None of the Great Southern Proceedings has been brought in a New South Wales court. It follows that s 6 has no application to any of the claims being prosecuted in the Great Southern Proceedings. 205. Question 1 is not without its difficulties and the answer suggested above is certainly not without doubt. The answers advanced by the various parties discussed above have some merit, despite the anomalies that may result. Indeed, no doubt there are anomalies in the approach suggested above. Nevertheless, the suggested approach accords with the language and policy of s 6 and has the additional merit of providing, despite the complexity and opacity of s 6, some measure of certainty as to whether s 6 will apply in any particular case." (emphasis added)
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].
Mr Braham placed particular emphasis on the following words in Chubb: "[a]t the heart of that mechanism is s 6(4). The s 6(4) enforcement mechanism is the hinge or central concern of s 6, and the references to courts in s 6(4) referred to above indicate that s 6 is focused on New South Wales courts" found in [202], and he submitted that the Court of Appeal was determining that the territorial limit of the section was thereby linked or tied to one thing and one thing only: the commencement of proceedings under s 6 of the LRMPA. He contended that that reasoning is pertinent to the Claims Act. Whilst the Claims Act does not make any reference to a charge (the mechanism used in s 6) and removes the words "in the same way and in the same court", it is otherwise very similar. Mr Braham also draws attention to the fact that the Law Reform Commission saw the new provision as "confirming the Court of Appeal's position" in Chubb.
Mr Rich pointed to the words earlier in [202] of Chubb and placed particular reliance on the word "properly" in that paragraph.
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.
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.
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: "It follows that the New Zealand courts have no subject-matter jurisdiction in respect of the monies payable by the Underwriters under the policy."
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]): "a New Zealand court is not empowered to make orders pursuant to s 6 of the New South Wales legislation. The powers conferred by s 6 on "the Court" are conferred on the court in New South Wales".
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.
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]): "However, it is difficult to see why the New South Wales Parliament would have been concerned about the place of payment. Further, the place of payment can be manipulated in the same way that the proper law of the contract can be manipulated."
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.
On the question of jurisdiction, several important matters were raised by Mr Braham.
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): "Jurisdiction divides into subject-matter and personal jurisdiction: see PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2012) 247 CLR 240; [2012] HCA 33 at [14]-[17]. A court must, if it is to have authority to decide a controversy, have jurisdiction both over the parties and also in respect of its subject matter."
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.
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.
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.
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.
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.
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.
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.
The steps in Zurich's argument were these: 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. 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. 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. 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. 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.
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.
The CAG's argument has these steps: 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. 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. 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: "The better textual construction of s 4(3), having regard to that longstanding drafting technique, is that in proceedings brought by a claimant against an insurer under s 4(3), the court is required to proceed on the fictional hypothesis that the proceedings were proceedings to recover from the insured person and that the proceedings were proceedings brought against the insured person. It does not call for any inquiry into whether or how such fictional proceedings could have been brought "properly". Such an inquiry would in fact be inconsistent with the text of s 4(3) which states the assumption that must be made in applying the provision, rather than any precondition to the application of the provision. That is, there is no scope for the Court to deny the statutory fiction. It is just that: a fiction, by reference to which the parties' rights are defined and a fiction on which the Court must therefore proceed." (emphasis in original) 1. No inquiry is required, therefore, as to whether the insured may or may not have submitted to the jurisdiction of the court. 2. On this approach, no consideration needs to be given to whether BMX could have been sued in a New South Wales court.
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.
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.
That contention then raises the following questions: 1. What is the territorial reach of s 4(1) - i.e. which insureds or insurers are the subject of the Claims Act? 2. Should s 4(1) be seen as the key to the jurisdictional reach of s 4? 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?
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. 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. the Court must have reference to the "central concern of the legislation"; and 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.
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.
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. 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. 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.
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.
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.
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.
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: "It would be an error to treat what was said in construing one statute as necessarily controlling the construction of another; the judicial task in statutory construction differs from that in distilling the common law from past decisions." (citation omitted)
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.
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).
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.
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.
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?".
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?

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.
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.
I will first explain the genesis of the TTPA.
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").
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: "A regime, modelled on the Service and Execution of Process Act 1992 (Cth), should be introduced between Australia and New Zealand to allow: civil initiating process issued out of any Australian federal, State or Territory court to be served in New Zealand, and civil initiating process issued out of any New Zealand court to be served in any Australian State or Territory. Service should have the same effect and give rise to the same proceedings as if service had occurred in the jurisdiction of issue. The regime should have the following features: the plaintiff would not have to establish any particular connection between the proceedings and the forum to be allowed to serve the proceedings in the other country the defendant could apply for a stay of proceedings on the basis that a court in the other country is the more appropriate court for the proceeding" (emphasis added)
In its reasons for the first recommendation, the Working Group relevantly said: "The proposed trans-Tasman regime is based on the Service and Execution of Process Act 1992 (Cth) model, which has resolved some of the practical difficulties with serving process and enforcing judgments between the States and Territories within Australia. It is simple, streamlined and cost-effective. We recommend allowing initiating process in civil proceedings begun in any Australian federal, State or Territory court, or any New Zealand court to be served in the other country without leave. Service would have the same effect as if it had occurred in the place where the proceedings were filed. The defendant would be able to challenge the jurisdiction of the court of issue by applying for a stay of proceedings on the grounds that a court in the other country is the more appropriate court to decide the dispute. … Consideration was given to excluding small debt recovery matters, so as to ensure that they are commenced in the debtor's home country. There is already the potential for larger debt collection firms to engage in 'forum shopping' to the detriment of small debtors within Australia under the Service and Execution of Process Act 1992 (Cth). For example, at present, proceedings to recover a debt for any amount may be brought in the Northern Territory when the defendant resides in Tasmania. There is little concrete evidence that this has been a problem under the Service and Execution of Process Act 1992 (Cth). There is also no reason to think that problems would necessarily be more acute under a trans-Tasman regime than within Australia. … We identified certain matters in the discussion paper that should not be covered by the proposed trans-Tasman regime. Actions in rem We are of the view that actions in rem should be excluded from the proposed trans-Tasman regime. Actions in rem focus on the property in dispute and bind third parties as well. The regime will only apply to actions in personam which only bind the parties to the proceeding."
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)): "A plaintiff to a proceeding in the court in which the initiating process is issued shall not be required to establish any particular connection between the proceedings and the forum in order to render service under this Article."
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: "Part 2 [of the Trans-Tasman Proceedings Bill 2009 (Cth)] implements Article 4 of the Agreement. It simplifies arrangements for serving the documents commencing a proceeding in Australia on a defendant in NZ. Most significantly, it will no longer be necessary for the plaintiff to establish a particular connection between the proceeding and Australia, or to seek leave of the court to serve documents in NZ." (emphasis added)
The following can be distilled from the preceding material: 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. 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. 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. 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. 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

The Plaintiff submits that: 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. The Supreme Court of New South Wales has jurisdiction to hear claims involving all torts with no monetary limit. 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. 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.
Zurich contends that: 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. 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. 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.
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).
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

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: "Given that: A. the Trans-Tasman Proceedings Act 2010 (Cth) (the TTPA) is a law of the Commonwealth; B. the Commonwealth Parliament does not have the power to confer jurisdiction on a State court except under s 77(iii) of the Constitution, which empowers it to invest State courts with federal jurisdiction; and C. the Constitution thus empowers the Commonwealth Parliament to invest State courts with federal jurisdiction in respect of the classes of 'matters' enumerated in ss 75 and 76 of the Constitution; the following questions arise: 1. Are ss 9 and 10 of the TTPA supported by the "external affairs" power in s 51(xxix) of the Constitution subject to Ch III? The Plaintiff, the First Defendant, and the Attorney-General agree that the answer is "yes". 2. In their application to the courts of the States, are ss 9 and 10 of the TTPA a law that purports to invest State courts with federal jurisdiction, in the sense in which that term is used in s 77(iii) of the Constitution, otherwise than with respect with to the matters identified in ss 75 and 76 of the Constitution? The First Defendant contends that the answer is "yes". The Plaintiff and the Attorney-General contend that the answer is "no" because: (a) ss 9 and 10 of the TTPA are not a law that purports to invest State courts with federal jurisdiction, in the sense in which that term is used in s 77(iii) of the Constitution; and (b) in the alternative, if ss 9 and 10 of the TTPA are such a law, the effect of ss 9 and 10 of the TTPA, on their proper construction, is also to create substantive rights and obligations by reference to the content of State law, such that any federal jurisdiction conferred is with respect to matters arising under the TTPA itself, consistent with s 76(ii) of the Constitution. The parties agree that if question 2 is answered "yes", then the Plaintiff could not have brought proceedings against BMX in reliance upon the TTPA because the relevant operation of the TTPA required to be relied on by the Plaintiff would be outside the legislative power of the Commonwealth. No question of reading down therefore arises in the circumstances of this case. In the context of Question 2, all parties referred to Flaherty v Girgis (1987) 162 CLR 574. In the Court's consideration of the reasoning in the judgments of the High Court in this case, the following question may arise: 3. Does s 51(xxiv) of the Constitution, which supports the Service and Execution of Process Act 1992 (Cth) and its predecessors, operate as a power additional to Ch III so as to support Commonwealth laws expanding the personal jurisdiction of State courts throughout the Commonwealth? Or is s 51(xxiv) instead "subject to" Ch III and therefore not a source of power to invest courts with federal jurisdiction? The First Defendant contends that s 51(xxiv) operates as a power additional to Ch III so as to support Commonwealth laws expanding the personal jurisdiction of State courts throughout the Commonwealth (and so the reasoning in Flaherty v Girgis is not applicable to the TTPA). The Plaintiff and the Attorney-General contend that s 51(xxiv) is "subject to" Ch III and therefore not a source of power to invest courts with federal jurisdiction (and so the reasoning in Flaherty v Girgis is directly applicable to the TTPA)." (emphasis in original)
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.
Zurich's argument on constitutional invalidity has these elements: 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. Disputes involving alleged negligence between residents of New Zealand or residents of Australia and New Zealand are not federal matters. 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. 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. 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. 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. 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. "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. 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.
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.
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.
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).
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.
At 598, the majority said: "It is true to say, as was said by this Court in Laurie v. Carroll, that where an action is in personam and transitory, the jurisdiction of a court of unlimited jurisdiction does not depend upon subject-matter but upon the amenability of the defendant to the writ expressing the Sovereign's command. At common law the writ does not run beyond the limits of the State. If extraterritorial service is permitted the territorial jurisdiction of the court is extended. But there is a distinction to be drawn between territorial jurisdiction and jurisdiction over the subject-matter of the action, the latter being determined otherwise than by the rules governing service. The distinction is recognized in s. 13 of the Service and Execution of Process Act which provides that Pt II of that Act does not confer on any court jurisdiction to hear or determine any suit which it would not have jurisdiction to hear and determine if the writ of summons had been served within the State or part of the Commonwealth in which it was issued. Whilst the determination of any question under the Service and Execution of Process Act regarding service involves the exercise of federal jurisdiction, jurisdiction over the subject-matter of the action, once service has validly been effected, derives from the same source whether or not the service is extraterritorial. It is only if the authority of the court to decide the matter, questions of service apart, is derived from federal law that it will be exercising federal jurisdiction in determining the matter. Section 51(xxiv) of the Constitution, under which the Service and Execution of Process Act is enacted, envisages an extension in the reach of the process of the courts of the States and does not speak in terms of the investiture of the State courts with a new substantive jurisdiction. It is in conformity with that legislative power that the provisions of the federal Act are framed as they are." (emphasis added)
The majority also said, at 590: "It is also to be remembered that the legislative power conferred on the Commonwealth by s. 51 (xxiv) did not authorize the Parliament to cover the entire field of extraterritorial service of the process of State courts. That power was limited to the service and execution throughout the Commonwealth of the process and judgments of such courts and did not extend to the service of civil process beyond the Commonwealth."
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: "Although s. 4(1) authorizes extraterritorial service within the Commonwealth of any writ, the Act does not confer jurisdiction on or affirm the jurisdiction of the court out of which the writ is issued to entertain every action commenced by the issue of a writ thus served. In any case in which the defendant does not appear, s. 11 requires a plaintiff to obtain liberty to proceed and limits the categories of cases in which liberty to proceed can be ordered. If the defendant appears or liberty to proceed is ordered, the court out of which the writ is issued has jurisdiction to hear and determine the action. Then, a judgment founded on extraterritorial service under the Act has the effect which the judgment would have had if the writ had been served on the defendant within the jurisdiction of the court of issue: s. 12. Thus the validity of any judgment of a State court of record in a personal action would be recognized by the courts of other States if the judgment were founded on service of a writ under the Act. The problem of non-recognition of a judgment founded on extraterritorial service of the writ is overcome by Pt II. But if, after service of a writ under the Act, the defendant does not appear and liberty to proceed is not or cannot be ordered, the Act creates no jurisdiction to hear and determine the action founded on that service." (emphasis added) and at 603, his Honour said: "The jurisdiction of a State court which is founded on extraterritorial service under the Act does not flow from any curial power to order extraterritorial service of the writ. No curial order in that behalf is necessary or appropriate. No jurisdiction is conferred or affirmed by the Act merely upon extraterritorial service of the writ: jurisdiction under the Act depends on service under the Act and on satisfaction of one or other of the conditions prescribed by s. 11. The categories of cases mentioned in s. 11 therefore become material only if the defendant does not appear: if there is no appearance, the court's jurisdiction under the Act is limited by those categories, but if the defendant appears the categories are immaterial." and Deane J said (at 609): "Section 5l(xxiv) of the Constitution confers on the Parliament of the Commonwealth legislative power with respect to the service and execution throughout the Commonwealth of the process and the judgments of State courts. Where questions of service outside territorial jurisdiction are concerned, jurisdiction in an action in personam ordinarily depends upon effective service: see Gasper v. Sawyer. That being so, a valid law of the Commonwealth conferring or restricting authority to serve the initiating process of a State court outside the territory of the State effectively extends or confines the jurisdiction of that court. Where such a valid law of the Commonwealth requires, as an element of effective service of the originating process of a State court outside the territorial limits of the State, the exercise by the State court of judicial functions, those functions will be exercised under the Commonwealth law and will involve an exercise by the State court of federal jurisdiction. Once that federal jurisdiction in relation to service has been exercised and service has been effected however, it is State jurisdiction which is subsequently exercised pursuant to that service except, of course, to the extent that the determination of the substantive issues involves an exercise of federal jurisdiction." (emphasis added)
There are several points concerning Flaherty v Girgis to which I must draw attention: 1. In Flaherty v Girgis, it was not asserted that SEPA was an invalid exercise of Parliament's legislative authority. 2. Matters arising between residents of different States is clearly a federal matter: see s 75(iv) of the Constitution. 3. Interstate service is specifically mentioned as a head of power: s 51(xxiv). 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.
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.
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.
The contest between the Plaintiff and the CAG on the one hand, and Zurich on the other, became centred on two issues: 1. what is encompassed in the words "federal jurisdiction" found in s 77(iii) of the Constitution; and 2. is the answer to that question and the invalidity point determined by Flaherty v Girgis?
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.
At page 4, Leeming JA notes that: "whilst the core notion is authority to decide "jurisdiction" is often used to refer to the dispute which falls within the Court's authority to decide - that is to say, the subject matter upon which a Court's authority is exercised. That is principally because the key limitation upon the authority of courts to decide controversies is their subject matter." (emphasis in original) He considers that "federal jurisdiction" is, itself, an ambiguous phrase and at page 13, defines "federal jurisdiction" as: "the authority to decide justiciable controversies by the exercise of the judicial power of the Commonwealth. It is normally used in contradistinction to the non-federal jurisdiction, the authority to decide controversies by the exercise of the judicial power of a State or a Territory. But quite often "federal jurisdiction" does not refer to the source of the authority, but instead to the fact that the subject matter of the controversy is a Chapter III matter, that is to say, it is one of the nine classes of matters enumerated in ss 75 and 76 of the Constitution." (emphasis in original)
In his work The Federal Judicature - Chapter III of the Constitution (2nd ed, 2020, LexisNexis) at [7.2], Dr James Stellios points out: "'Jurisdiction' and 'judicial power' are distinct concepts. This was recognised as early as Ah Yick v Lehmert (see 4.4). The expression 'federal jurisdiction', Griffith CJ said (at 603), means the 'authority to exercise the judicial power of the Commonwealth'; it is 'the authority to adjudicate derived from the Commonwealth Constitution and laws'. It is, thus, also distinct from State jurisdiction which is 'the authority which State Courts possess to adjudicate under the State Constitution and laws'." (citations omitted) (emphasis in original)
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.
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.
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.
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.
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.
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").
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.
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.
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): "Sec. 77 of the Commonwealth Constitution expressly confers upon the Parliament power to make laws investing the Courts of the States with Federal jurisdiction. But the provisions of sec. 77 and sec. 79, which explicitly give legislative power to the Commonwealth in respect of State Courts, make it plain that the general powers of the Parliament to legislate with respect to the subjects confided to it, like the similar powers of Congress, must not be interpreted as authorizing legislation giving' jurisdiction to State Courts. … The power conferred by sec. 77 (III.) is expressed in terms which confine it to making laws investing State Courts with Federal jurisdiction. Like all other grants of legislative power this carries with it whatever is necessary to give effect to the power itself. But the power is to confer additional judicial authority upon a Court fully established by or under another legislature. Such a power is exercised and its purpose is achieved when the Parliament has chosen an existing Court and has bestowed upon it part of the judicial power belonging to the Commonwealth." These paragraphs link to the point referred to in [93(6)] above.
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): "To find the limits of the jurisdiction of a State Court, we have to examine its constitution, which determines its character, the subject matter with which it is authorized to deal, the locality within which it may act or in respect of which it may adjudicate, the persons over whom its authority extends, and any other prescribed regulations limiting its exercise of judicial power. The totality of these provisions mark out the area of curial jurisdiction, and therefore define the limits of the jurisdiction as adopted by the Federal Parliament for the purposes of Federal jurisdiction. The Federal jurisdiction conferred by sec. 39(2) automatically covers the area occupied by State jurisdiction so adopted, and does not exceed those limits."
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).
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): "The authority to adjudicate comprised in the conferral of federal jurisdiction is authority to exercise, within the limits permitted by or under s 75, s 76 or s 77, the judicial power of the Commonwealth, which s 71 provides is to be vested in the High Court, in such other federal courts as the Parliament creates and in such other courts as it invests with federal jurisdiction. The essential character of judicial power, as has repeatedly been emphasised, stems from the unique and essential function that judicial power performs by quelling controversies about legal rights and legal obligations through ascertainment of facts, application of law and exercise, where appropriate, of judicial discretion." (citations omitted) The "judicial power", so described, Mr Lim submitted, is not apt to describe what is conferred by the TTPA on State courts.
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.
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): "When the Commonwealth legislates with respect to investing judicial power in a State court, it is bound by the limitations imposed by the grant of power found in s. 77 of the Constitution. [The Court then referred to and quoted R v Federal Court of Bankruptcy; Ex parte Lowenstein (1938) 59 CLR 556 at 586 per Dixon and Evatt JJ]. … It does not follow that in legislating pursuant to one of the heads of power in s. 51 the Commonwealth lacks power to make laws directing the way in which a State court exercises State jurisdiction. … However, again it does not follow that the Commonwealth cannot direct State courts as to the proof of matters within their State jurisdictions if it is within the head of power found in s. 51 or incidental to such a power to do so. (See, for example, s. 400 of the Navigation Act 1912.) … There are limitations upon the power of the Commonwealth to legislate with respect to State courts. However, in our opinion no decided case goes as far as the applicant requires. Chapter III of the Constitution is not the sole source of power of any Commonwealth law which touches or affects proceedings in State courts." (emphasis added)
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.
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. The Court drew a clear distinction between subject matter jurisdiction and territorial jurisdiction. 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. 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): "It is only if the authority of the court to decide the matter, questions of service apart, is derived from federal law that it will be exercising federal jurisdiction in determining the matter." (and see Deane J at 609). I take the Court to be treating service and its federal aspect as quite distinct from the subject matter. 1. 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.
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): "the circumstance that an accused person was brought into a State by processes provided in federal law for extraditions to Australia does not render the subsequent State curial processes an exercise by the State court of federal jurisdiction. That no federal jurisdiction is exercised merely by reason of those antecedent federal processes follows from the reasoning in Flaherty v Girgis and Lipohar v The Queen." (citations omitted)
In Lipohar v The Queen (1999) 200 CLR 485, the plurality (Gaudron, Gummow and Hayne JJ) ("Lipohar") said (at 514): "It is necessary for the exercise by the Supreme Court of its authority to try and punish those accused of indictable offences that they be brought before the Supreme Court, there being no trial in absentia at common law in the ordinary course. In the present case this was achieved by the operation of the Service and Execution of Process Act 1992 (Cth), apparently pursuant to the provisions of Pt 5 Div 1 (ss 81-90). However, such legislation does not expand the ''subject matter'' as distinct from the ''territorial'' jurisdiction of the State court. Nor does it have the consequence that the State court is exercising federal jurisdiction at the trial of persons in the position of the appellants. The legislation operates ''in aid of the functions of the States and does not relate to what otherwise is a function of the Commonwealth''." (citations omitted)
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.
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.
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

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.
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.
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").
Section 312 of the NZ Companies Act provides: "312 Preferential claims (1) The liquidator must pay out of the assets of the company the expenses, fees, and claims set out in Schedule 7 to the extent and in the order of priority specified in that schedule and that schedule applies to the payment of those expenses, fees, and claims according to its tenor. (2) Without limiting clause 2(1)(b) of Schedule 7, the term assets in subsection (1) does not include assets subject to a charge unless the charge is surrendered or taken to be surrendered or redeemed under section 305." (emphasis in original)
Schedule 7 of the NZ Companies Act relevantly reads: "(1) The liquidator must first pay, in the order of priority in which they are listed, - … (e) to any creditor who protects, preserves the value of, or recovers assets of the company for the benefit of the company's creditors by the payment of money or the giving of an indemnity, - (i) the amount received by the liquidator by the realisation of those assets, up to the value of that creditor's unsecured debt; and (ii) the amount of the costs incurred by that creditor in protecting, preserving the value of, or recovering those assets."
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.
The evidence given by Mr Chisholm and Ms Cooper can be summarised as follows: 1. The NZ Companies Act governs the liquidation of companies in New Zealand. 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. 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")): 1. The creditor must have "paid money or given an indemnity". A contribution of some other form, including the provision of goods or services, will not suffice. 2. The creditor must protect, preserve or recover "assets of the company", which does not include assets subject to a charge unless the charge is surrendered or taken to be surrendered or redeemed under s 305 of the NZ Companies Act: see s 312 of the NZ Companies Act. In protecting, preserving or recovering "assets of the company", the creditor is required (see Petterson at [28] per R M Bell AsJ): "to show that their payments or indemnity did result in protection, value preservation or recovery of assets for the benefit of all creditors." 1. The creditor must show that the payment or indemnity was for the benefit of the general body of creditors, rather than with a view to seeking to securing the net recovery for the sole benefit of the creditor or an entity related to it. Additionally, the creditor must show that the purpose of the payment or indemnity was to benefit creditors other than themselves. Although it need not be the sole or main purpose, it ought to have been a significant purpose. 1. 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: 1. firstly, because the Plaintiff has a litigation funder, he (and the other group members) are not providing any payment of money or indemnity towards the litigation; and 2. secondly, the purpose of the Commercial List Proceedings is to obtain recovery of the amount of the insured liability for the sole benefit of the Plaintiff (and the other group members).
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: "(1) Where a company is, under a contract of insurance (not being a contract of reinsurance) entered into before the relevant date, insured against liability to third parties, then, if such a liability is incurred by the company (whether before or after the relevant date) and an amount in respect of that liability has been or is received by the company or the liquidator from the insurer, the amount must, after deducting any expenses of or incidental to getting in that amount, be paid by the liquidator to the third party in respect of whom the liability was incurred to the extent necessary to discharge that liability, or any part of that liability remaining undischarged, in priority to all payments in respect of the debts mentioned in section 556."
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.
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]): "Why should the Victopia Claimants be placed in a privileged position, relative to these other claimants, when, in the ordinary course under New Zealand law, any moneys payable under the Primary Policy would be distributed amongst all the unsecured creditors of BMX NZ, including those claimants, on a pari passu basis? No less importantly, why should this Court facilitate the Victopia Claimants being placed in such a preferential position by granting leave for them to invoke a mechanism unavailable to them under the law that governs the winding up of BMX NZ?"
The Plaintiff's submissions in reply can be summarised as follows: 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: 1. there is no inconsistency between the Claims Act and the New Zealand insolvency regime; and 2. Zurich's argument is entirely hypothetical. Further, and in any event, significant doubt has been cast upon the application of principles of comity when considering issues of international law. For instance, in Neilson v Overseas Projects Corp of Victoria (2005) 223 CLR 331 Gummow and Hayne JJ relevantly said (at 363, citing North (ed), Cheshire Private International Law (9th ed, 1974, Butterworth) at p. 4): "comity is "either meaningless or misleading"; it is "a matter for sovereigns, not for judges required to decide a case according to the rights of the parties"." The Plaintiff also directs the Court's attention to what was said by Perram J in Habib v Commonwealth (2010) 183 FCR 62 at 77: "No doubt comity between the nations is a fine and proper thing but it provides no basis whatsoever for this Court declining to exercise the jurisdiction conferred on it by Parliament." 1. Secondly, there would be no inconsistency between an application of the Claims Act and New Zealand insolvency law for the following reasons: 1. All proceeds of a judgment in the Commercial List Proceedings will flow directly to the Plaintiff and will not form part of BMX's assets, thus not interfering with BMX's liquidation in New Zealand. 2. Zurich's submission that an application of the Claims Act in these (and the primary) proceedings would be inconsistent with the New Zealand insolvency regime is hypothetical. The liquidators have taken no steps to challenge the declinature of indemnity since 28 August 2018, including by applying to be joined to these proceedings to resist the Plaintiff's application, and moreover, do not have the means to challenge the declinature. There is thus no tangible risk of inconsistency or interference, which Zurich bears the onus of establishing. 3. Any judgment in favour of the Plaintiff in the Commercial List Proceedings would be entirely consistent with the insolvency regime in New Zealand because the Plaintiff would rank in priority to the general body of unsecured creditors if he chose to fund the liquidators to commence proceedings in New Zealand. That the Plaintiff would rank in priority to the general body of unsecured creditors in those circumstances was accepted by both experts in their joint report, where they said (at (6.5]): "6.5 the only way that the proceeds of the litigation would be paid to the liquidators/BMX is if the liquidators had procured BMX (as the insured) to commence the proceeding against the insurer. If a portion of the company's creditors had been funding such a recovery action by the liquidators, potentially those creditors could still have utilised a litigation funder and also obtained the priority afforded by clause 1.1(e). This could theoretically be achieved as follows: (a) the creditors would agree to pay the liquidators' litigation costs to conduct the litigation in the company's name and indemnify the liquidators for any cost exposure. (b) the creditors would enter into a separate funding agreement with a litigation funder to pay a sum equivalent to the creditors' funding/indemnity liabilities to the liquidators." 1. 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.
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. In March 2021, the liquidator was made aware that the Plaintiff was taking steps to pursue his claim against Zurich in Australia. 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. On 27 October 2021, the material sought by the liquidator was sent to the liquidator's solicitors. 4. On 9 November 2021, Zurich's solicitors enquired as to the liquidator's intentions. 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".
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.
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. 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. 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. 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. 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

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

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. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 December 2021

Trans-Taman Proceedings Act 2010(Cth)

Australian Constitution Civil Liability (Third Party Claims Against Insurers) Act 2017(NSW)

(NZ) Corporations Act 2001(Cth)

Inter-State Destitute Persons Relief Act 1910(SA)

(NZ) Law Reform (Miscellaneous Provisions) Act 1946(NSW)

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