The Rules Committee (Te Komiti mō ngā Tikanga) released its Improving Access to Civil Justice report in November 2022. If implemented, the report’s recommendations will create widespread changes in litigation procedure in the High Court, District Court, and Disputes Tribunal for most civil cases. In this article, we consider some of the anticipated impacts of the report on insurance disputes in Aotearoa New Zealand.
The Committee’s recommendations
The proposed recommendations are wide-sweeping and are likely to have significant impacts on the conduct of insurance-related litigation. Below, we summarise the thrust of the proposed changes in the High Court, District Court and the Disputes Tribunal.
High Court
The recommendations propose significant changes to the High Court Rules. If implemented, proportionality will be included as a guiding principle. Other changes include narrowing the scope of witness evidence and document discovery, requiring the exchange of more limited written evidence at an earlier stage and increased focus of genuinely disputed facts in the proceeding.
District Court
The recommendations aim to reinvigorate the District Court’s civil jurisdiction. The proposed appointment of a Principal Civil District Court Judge and part-time deputy judges from the bar aim to strengthen the expertise of the court’s civil registry and improve case management.
Disputes Tribunal
The recommendations propose substantially increasing the jurisdiction of the Disputes Tribunal from NZD30,000 to NZD70,000 (or NZD100,000 with the consent of the parties). The aim of this recommendation is to increase the efficiency and proportionality of justice for smaller disputes to improve access for litigants.
Changes to High Court Procedure
Due to the size and complexity of commercial insurance disputes, we consider that the procedural changes with the greatest impact in this practice area will be those made to the High Court Rules. The proposed changes reflect a desire to streamline evidence and discovery processes in the High Court, as it is these costs that are usually most costly for both plaintiffs and defendants.
Initial disclosure and discovery
The rules propose expanding initial disclosure to include adverse documents known to the parties. Parties will not have to search for adverse documents to provide initial disclosure. However, all known adverse documents will be required to be provided from the outset. This proposed change is expected to give parties a better understanding of the merits of the dispute at an earlier stage in the proceeding.
As a result of increased initial disclosure obligations, it is proposed that subsequent discovery will only be ordered at a judicial issues conference where it is considered necessary and proportionate.
Evidence
In connection with increased initial disclosure obligations, it is proposed to serve evidence at a much earlier stage in the proceeding. Importantly, evidence will be provided prior to any subsequent discovery orders. Additionally, briefs of evidence will be replaced by witness statements that are intended to be more limited in scope. Parties will also be limited to providing the evidence of one expert per speciality, with experts required to engage in joint conferral prior to trial.
Impact on insurance disputes
We expect that these proposed reforms, if implemented, will ensure greater access to justice by reducing the cost and increasing the speed of proceedings in complex insurance disputes. This is important because it is commonplace for insurance disputes to persist for many years, often long after the event causing loss occurred. This can unnecessarily leave insureds out of pocket or divert insurer resources.
However, it will be important to ensure that the proposed reforms enable parties to fully make their case and examine the evidence of other parties. Given the complexity of insurance disputes, reducing the scale and complexity of expert briefs may be impractical and undesirable as it may cause important evidence to go unheard. Additionally, streamlined disclosure requirements may result in important evidence remaining undiscovered by parties. As cases, which are typically covered by defence costs cover, often generate significant document volumes, a streamlined discovery process will only be effective if safeguards remain in place to ensure discovery is proportional to the size and complexity of the proceeding. This is especially so in the context of large insurance disputes, where parties often negotiate bespoke arrangements on the basis of commercial relationships dating back many years.
Disputes Tribunal
Proposed changes to the Disputes Tribunal rules are likely to make subrogated recovery claims easier, quicker and cheaper.
- The proposed increase to the Disputes Tribunal’s jurisdictional cap to: (a) NZD70,000 as of right; and (b) NZD100,000 by consent will open up most motor claims to the Disputes Tribunal.
- There is no change to the current rules regarding representation in the Disputes Tribunal. So insurers can still be represented by their own personnel.
- Costs will continue to lie where they fall other than in exceptional circumstances. So there is no real costs burden to consider.
- Importantly, referees to be legally qualified. This is a major step in the right direction in terms of reliable outcomes.
- Consideration is be given by the District Court to more effective and straightforward enforcement. So more efficient and effective enforcement may be on the horizon.
The role of arbitration and mediation
In light of the mentioned reforms, we anticipate that arbitration and mediation will serve a greater role in the resolution of insurance disputes and those covered by defence costs.
Arbitration as a dispute resolution process has numerous benefits. Subject to limited exceptions, arbitrations are private and confidential. They tend to result in quicker resolution than High Court proceedings, and some procedures can be adapted to suit the requirements and needs of the party. Importantly, appointed arbitrators are usually individuals with expertise or a particular knowledge within a specific field. In the insurance arena, the benefit of having an arbitrator specialising in insurance may mitigate any evidential deficits resulting from the truncated procedural requirements of the proposed High Court Rule changes.
Arbitration as a dispute resolution process has numerous benefits.
Participating in mediations may also provide increased benefits in insurance disputes. For large commercial organisations, mediations are a cost and time-effective way to solve communication, evidentiary, and procedural issues between parties without incurring court expenses. In light of the streamlined discovery and evidentiary requirements proposed by the Rules Committee, mediation may become particularly useful to resolve common issues in insurances disputes (for example, the interpretation of policy wording) with the assistance of a neutral third-party facilitator.
Our view
Overall, we consider that the changes proposed by the Rules Committee are likely to improve access to justice and streamline defences work, by reducing the costs involved in lengthy Court proceedings. This will likely benefit insurers involved in disputes to secure speedier resolutions. Additionally, we commend the Rules Committee for their commitment to facilitating access to justice on a more equitable basis. Consideration will need to be given to the proposed discovery and evidential rules should they come into effect (to ensure that they do not impede justice by preventing consideration of the issues in light of all the evidence). In the meantime, we consider that arbitration and mediation proceedings will become more popular forums for the resolution of complex commercial insurance disputes.
This article was co-auhtored by Siobhan Pike, a solicitor in our Litigation and Dispute Resolution team.
