Crossing the Ditch? – Zurich Insurance Company Ltd & Anor v Koper [2023] HCA25

The High Court of Australia has recently handed down a decision clarifying the constitutional implications of effecting service of process.

Background

Dariusz Koper (Koper), as representative of proprietors of apartments in New Zealand, commenced proceedings in the New Zealand High Court alleging that Brookfield Multiplex Constructions (NZ) Limited (in Liquidation) (the Builder’s) design and construction of the subject apartments was defective.

The New Zealand High Court handed down a judgment in favour of Koper in the amount of approximately NZ$53 M. The Builder went into liquidation and left approximately NZ$23 M of the judgment sum outstanding.

To recover the balance, Koper sought leave to commence proceedings against the Builder’s professional indemnity insurers (the Insurers) in the NSW Supreme Court pursuant to the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the Claims Act).

Earlier Decisions

The matter was heard at first instance by Rein J (NSWSC). Relevantly:

1. His Honour considered that the operation of the Claims Act depended on the ‘central concern‘ or ‘hinge‘ of the legislation. Rein J considered himself bound by the NSW Court of Appeal’s decision in Chubb Insurance Company of Australia Limited v Moore [2013] NSWCA 212 (the Chubb decision) to determine that the ‘hinge‘ of the Claims Act was whether the underlying claim against the insured could be properly brought in NSW. His Honour commended ‘… the Claims Act should (absent the impact of Chubb) be interpreted as requiring for its operation a New South Wales connection’; and
2. Rein J determined that ss 9 and 10 of the Trans-Tasman Proceedings Act 2010 (Cth) (the TTPA) (- which relevantly permit service in New Zealand of originating process issued by an Australian Court without the need for leave or a connection between the proceedings and Australia) to commence proceedings against the Builder in the NSW Supreme Court.

The Insurers appealed to the NSW Court of Appeal. In dismissing the Insurers’ appeal, the Court of Appeal held that:

1. The heads of power set out in s 51 of the Constitution should be given a ‘… broad plenary construction … legislation on the topic of service of process should not be treated as being exhausted by s 51(xxiv) on some form of an expressio unius principle of constitutional interpretation‘; and
2. ‘The argument advanced by the Insurers…has as an essential premise that chapter III is concerned with, amongst other matters, the vesting or conferral of personal jurisdiction. The short point… is that it is not. … Personal jurisdiction is not a constitutional concept’.

The Insurers appealed to the High Court, submitting that ss9 and 10 of TTPA were constitutionally invalid insofar as they purported to confer non-federal jurisdiction on a State Court.

The Decision of High Court Majority

The High Court unanimously dismissed the Insurers’ appeal.

Kiefel CJ, Gageler, Gleeson and Jagot JJ (the Majority) characterised the Insurers’ position as submitting that there was ‘… a hitherto unrecognised implied constitutional limitation on the capacity of the Commonwealth Parliament … to “alter the scope and reach of State judicial power”…‘.

The Majority dismissed the Insurers’ position on the basis that:

1. The Majority distinguished between personal jurisdiction (- whether a person can be served with process) and subject-matter jurisdiction (- the subject matter for determination in legal proceedings). Chapter III of the Constitution relates to subject-matter jurisdiction but not personal jurisdiction. The Insurers’ position impermissibly conflated the two concepts; and
2. There can be no implied limitation as submitted by the Insurers as the Constitution expressly empowers the Commonwealth to make laws with respect to the service and execution of process of the Courts of the States (- see Section 51(xxiv) of the Constitution).

The Decision of the High Court Minority

While agreeing with the conclusion reached by the Majority, Gordon, Edelman and Steward JJ (the Minority) handed down a concurrent judgment stating as follows:

1. The Minority questioned whether the Chubb decision should be followed as it had considered the predecessor legislation to the Claims Act;
2. The Court should consider whether an implication arises from ‘… the text and structure of the Constitution or other contextual matters‘; and
3. The TTPA ‘… does not confer or engage the subject matter dimension of a jurisdiction. They are concerned with the personal dimension of jurisdiction‘.

Key Learnings

The Claims Act now allows for proceedings to be commenced in NSW Courts even if the insured and the insured event do not have a connection with New South Wales, potentially leading to more litigation in NSW.

There is scope to clarify the ‘hinge‘ necessary to rely on the Claims Act.

This article was written by Nicholas Matkovich, Partner, and Vignesh Iyer, Senior Associate.