Zurich Insurance Company Ltd v Koper [2023] HCA 25

Summary of Case

The High Court has held that sections 9 and 10 of the Trans-Tasman Proceedings Act 2010 (Cth) (TTPA) apply in accordance with their terms to any initiating document (originating process, or order for joinder) issued by a State court in relation to any civil proceeding in that Court. That is so whether the subject matter of the proceeding is in federal or State jurisdiction.

Background

The Respondent, Mr Koper (Koper), was the representative plaintiff in class action proceedings in the High Court of New Zealand. He and his fellow class members were the registered proprietors of residential units in the ‘Victopia Apartments’ in Auckland, which were designed and constructed by Brookfield Multiplex Constructions (NZ) Limited (BMX NZ). The NZHC proceedings concerned alleged defects in the design and construction of the apartments and were concluded by findings in Koper’s favour as well as an award of damages in the sum of $53 million NZD.

BMX NZ then went into liquidation, leaving a substantial portion of the judgment outstanding. Reprising his role as a representative plaintiff, Koper then commenced proceedings in the NSW Supreme Court against BMX NZ’s insurers, including Zurich Insurance Company Ltd (Zurich).

The Legislative Backdrop

In New South Wales, proceedings may be brought directly against a defendant’s insurer subject to the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the Third-Party Claims Act). Section 4 of the Third-Party Claims Act creates a statutory entitlement for a claimant, to whom an insured person has a contractual liability in respect of which the insurer person is entitled to be indemnified by an insurer, to recover the amount of indemnity in proceedings before a New South Wales Court. Such proceedings are commenced subject to a grant of leave under section 5 of the Third-Party Claims Act.

It was common ground between the parties that proceedings could only be brought under the Third-Party Claims Act if the insured could properly be sued in New South Wales, and BMX NZ was a New Zealand company without any connection to the State. Accordingly, it was necessary for Koper to rely on the TTPA to provide an avenue for connecting BMX NZ to the Supreme Court in NSW.

Section 9 of the TTPA provides for the service of initiating documents issued by Australian courts and tribunals in New Zealand without leave. An initiating document is a document by which a civil proceeding is commenced (or by which a person becomes a party to existing civil proceedings). Section 10 of the TTPA provides that the service of an initiating document in New Zealand under section 9 has the same effect, and gives rise to the same proceeding, as if the initiating document had been served in the place of issue.

The High Court’s Decision

The plurality (Kiefel CJ, Gageler, Gleeson and Jagot JJ) identified the central issue in the proceedings as being whether sections 9 and 10 of the TTPA have a valid application to an initiating document issued by a State court that relates to a civil proceeding in a matter in State jurisdiction, as distinct from a civil proceeding in a matter within federal jurisdiction invested in that State court.

The issue of validity arose because, on Zurich’s case, there is an implied constitutional limitation on the capacity of the Commonwealth Parliament to alter the scope and reach of State judicial power (except as expressly provided for in the Constitution in section 51(xxiv), relating to the service throughout the Commonwealth of civil process of the courts of the States, and in sections 77(ii) and (iii), relating to the investiture of a State court with federal jurisdiction). The plurality identified that, in essence, Zurich’s contention was that while the Commonwealth Parliament may make laws with respect to the service throughout the Commonwealth of the process of State courts in relation to matters that would not engage federal jurisdiction, the Parliament lacks power to make laws with respect to the service of such process outside the territory of the Commonwealth.

The plurality rejected Zurich’s implied constitutional limitation, finding that, as a wholly structural implied constitutional limitation on the Parliament, it must be logically or practically necessary for the preservation of the integrity of the constitutional structure. Their Honours found that it was neither (at [29]).

The plurality held that constitutional references to ‘jurisdiction’ (be it federal or State) are to the authority of a court to adjudicate, with the difference between them being the source of the authority (at [33]). Separate to that concept is the notion of ‘territorial’ or ‘personal’ jurisdiction, which are aspects of a court’s remit but not that which Constitution refers to at sections 71 and 76(ii) and (iii) as the jurisdiction which may be either ‘federal’ or ‘State’. The plurality embraced Bell CJ’s observation in the Court of Appeal below that ‘personal jurisdiction is not a constitutional concept’ (at [34]).

So understood, a law such as the TTPA which purports to adapt the territorial or personal jurisdiction of a State court is not one which infringes on State jurisdiction within the meaning of the Constitution. The plurality further identified section 51(xxiv) of the Constitution as demonstrative that Commonwealth legislation extending the reach of the process of a State court in a proceeding in State jurisdiction is wholly consistent with the structure of the Constitution (at [37]). The distinction sought to be drawn by Zurich between inter-State and international extension was artificial (at [25]).

The minority (Gordon, Edelman and Steward JJ) agreed that Zurich’s appeal should be dismissed, for different reasons. Their Honours cavilled with the notion of a strictly ‘structural’ implied constitutional limitation, preferring to read the ‘or’ between ‘terms’ and ‘structures’ in Brennan CJ’s judgment in McGinty v Western Australia (1996) 186 CLR 140 as conjunctive rather than disjunctive (at [43]). In support of that view, their Honours referred to the contemporaneous decisions in Lange v Australian Broadcasting Corporation (1996) 186 CLR 140 and Gerner v Victoria (1997) 189 CLR 520 and held that there are not two different types of implication which are subject to different rules (at [45]).

Taking up the distinction between ‘types’ of jurisdiction, the minority noted that the expression is used with more than one meaning in the Constitution itself, as in the description of subject matter in ‘original’ ‘appellate’ and ‘admiralty and maritime’ jurisdictions in sections 73, 75 and 76. Nevertheless, the minority observed that the TTPA expressly preserves aspects of a State court’s jurisdiction (by way of allowing for stays on forum non conveniens grounds or others, and expressly providing that the fact that service is effected under the TTPA has no effect on the nature of the proceeding itself once commenced), and as such neither sections 9 nor 10 of the Act confer or engage the subject matter dimension of jurisdiction; rather, they are concerned only with the personal dimension of jurisdiction (at [51]).

The High Court’s decision in Zurich Insurance Ltd v Koper has clarified the operation of the TTPA on matters of State jurisdiction, and no doubt insurers who trade in New South Wales but who have policyholders in New Zealand will be closely examining their exposure. BN