GCA Lawyers New Zealand
Maurice Blackburn Lawyers
Claims Funding Australia

Southern Response Concealment

Class Action - New Zealand

Yet another Court loss for Southern Response

On 15 February 2021, the High Court heard an application brought by Southern Response.  Yesterday Justice Osborne rejected Southern Response’s application and indicated that Southern Response should pay costs.

Southern Response has failed in its efforts to avoid Court scrutiny and oversight of its proposed communications to policy holders.  Southern Response and its lawyers denied that they were required to obtain Court approval before attempting communications, but yesterday the High Court ruled otherwise.

The background to this decision is that in November last year, the Supreme Court unanimously rejected Southern Response’s last-ditch attempt to stop Mr and Mrs Ross from bringing this claim as an opt-out class action on behalf of all 3,000 or so policyholders who settled with Southern Response prior to 1 October 2014 and were misled and deceived by Southern Response’s “two DRAs” scheme.

On 14 December 2020, shortly after the Supreme Court’s decision, Southern Response announced that it wished to make a settlement offer to all class members.  However, rather than settling the class action in the way that the Supreme Court had indicated was appropriate, by entering into a settlement with Mr and Mrs Ross that would then need to be approved by the High Court, Southern Response planned to divide and conquer the class by negotiating on an individual basis with thousands of class members.  Southern Response claimed that it did not need (and would not seek) the High Court’s approval.

Mr and Mrs Ross welcome the news that Southern Response finally intends to resolve all class members’ claims, something that should have been done years ago.  But they have serious concerns about Southern Response’s proposed settlement process.  First, class members could be misled or taken advantage of a second time.  Second, Southern Response wanted to bypass the Court’s role in supervising the settlement to protect class members’ interests.  Why was Southern Response so keen to avoid scrutiny?  Third, Southern Response seemed to want to create unfairness between class members by lumping all of the costs onto a few class members.

Southern Response applied to the High Court for directions that it could negotiate and settle claims directly with class members, without any oversight by the Court or involvement by Mr and Mrs Ross.  In its decision yesterday the High Court has refused those directions.  It has further directed that if Southern Response wishes to communicate with class members, it needs to apply to the Court for approval first.

Mr and Mrs Ross will oppose any scheme by Southern Response that seeks to avoid the Court’s scrutiny and does not treat all class members fairly and equally.  In particular, the costs of bringing the class action will need to be approved by the Court and spread fairly across all class members who benefit.  That will likely bring the costs per class member down dramatically, and most importantly any costs that are deducted from settlement amounts will be what the High Court has determined to be fair and reasonable.