Australia opens the door for Kiwis to sue overseas insurers

August 2023

Earlier this year the Australian government made it easier for New Zealanders to obtain Australian citizenship.  Now in a landmark decision, Australia’s highest court has opened the door for New Zealanders to sue overseas-based insurers in Australian courts.

The decision concerned the Victopia Apartments claim, in which Grimshaw & Co Lawyers acted for the body corporate and owners.  In 2017 the owners secured judgment in the High Court at Auckland against the builder of the apartments, Brookfield Multiplex (BMX), in the sum of $53 million.  BMX subsequently went into liquidation, leaving a substantial portion of the judgment outstanding.

BMX was insured by overseas insurers in respect of the claim.  The issue became whether the Victopia owners could access this insurance money.  Although New Zealand has a statute which enables plaintiffs to sue insurers directly when the insured is insolvent, New Zealand Courts have held this law cannot be used to sue overseas-based insurers in New Zealand. 

A solution was found involving a clause in the insurance contract granting jurisdiction to Australian courts, the fact one of the insurers resides in Australia, and a plaintiff-friendly New South Wales statute which allows claims directly against insurers (the Civil Liability (Third Party Claims Against Insurers) Act 2017).

Grimshaw & Co enlisted leading international litigation funders, Omni Bridgeway, to fund an action against the insurers in New South Wales under this statute. 

The action required leave of the Supreme Court of New South Wales to proceed.  In 2021 the Supreme Court considered the leave question. It decided the key issue or “hinge” was whether the owners could have brought an action against BMX in New South Wales courts, taking into account the operation of the Trans-Tasman Proceedings Act 2010.  The Supreme Court decided they could have, and it granted leave.  

BMX’s insurers appealed the Supreme Court decision, arguing the owners could not have brought such a claim.  In 2022 the Court of Appeal of New South Wales rejected the insurers’ appeal.  The insurers appealed again, this time to the High Court of Australia in Canberra. 

In a judgment released on 8 August 2023, a full bench of the High Court of Australia, comprising all seven Justices, issued a unanimous decision rejecting the insurers’ appeal.  The judgment traversed a number of complex constitutional arguments but ultimately upheld the findings of the Courts below.  With leave now confirmed, the claim by the Victopia owners may proceed in the Supreme Court of New South Wales. 

The decision of the High Court of Australia is cited as Zurich Insurance Company Ltd v Koper [2023] HCA 25 (8 August 2023). 

This decision is significant for litigants in New Zealand.  It is often the case that plaintiffs in New Zealand with meritorious claims are deprived of a remedy because the defendant is insolvent, and the insurer is based overseas.  This decision and the New South Wales statute provide an attractive option for New Zealand litigants, particularly where the defendant’s insurer has a connection to Australia.