Canterbury Earthquakes Insurance Tribunal Bill

That brings us to Part 2, which is debate on clauses 29 to 52, and Schedule 2.

I thank you, Madam Chair, for the opportunity to stand and speak in the debate on Part 2 of this bill. Basically, the purpose of the bill is to provide a fair, speedy, flexible, and cost-effective service to resolve disputes about insurance claims, and Part 2, basically, clarifies the definition of mediation and other procedures which are in this Part 2.

The application clause in Subpart 1 applies where the tribunal directs the parties to mediation. Mediation is an easy way of resolving a dispute, where experts can sit down with both parties and talk about how to resolve the issues which are outstanding. The chief executive must employ or engage a person to provide mediation services that are fair, speedy, flexible, and cost-effective to assist parties to resolve the claims quickly. That’s the main purpose of the bill, and that continues over here, where the mediation service is provided and the chief executive has got that authority to appoint a person who can be a mediator. The bill doesn’t prevent any person from seeking and using a mediation service other than that provided by the chief executive under this subpart to settle a dispute to which this bill could apply.

The independence of the mediators is a very important part because they are the people who will decide if this can resolve the dispute between both the parties. The mediator must be a person of independence, who independently can decide how to deal with the particular claim or aspects of it. They must be independent of any other parties to whom the mediator provides the mediation, so he or she should not be related to any of the parties which are subject to this mediation. That is important because the independence will provide justice to both the parties, without any dispute.

It clarifies in this bill that a mediator who has got a conflict of interest has to disclose to both the parties that he or she has got this conflict and must—unless the other party agrees otherwise—refuse to act or withdraw from acting in relation to the claim. That person has to withdraw himself or herself if he or she is related to any of the parties and one of the other parties objects to it. A party who agrees to the mediator’s acting forfeits any right to object to the mediator acting on the basis of the conflict of interest that was disclosed by the mediator. If both the parties have already agreed that this person can be a mediator, then, later on, it can’t be claimed that this person had a conflict of interest.

So the procedure in relation to this mediation is also specified over here, and I understand that Stuart Smith has got a few more Supplementary Order Papers related to this part, which he will be debating. I hope that the Minister will consider that this bill should provide a mediation service where both the parties can be able to resolve their disputes, which have been outstanding for a long time.

Thank you, Madam Chair. I know that we’re on to Part 2 now and that the numbering of these Supplementary Order Papers has been quite confusing, but we’re right now.

I’m going to speak to Supplementary Order Paper 226 in my name, which is ensuring that the bill doesn’t interfere with the right to restrict the ability to call and cross-examine expert witnesses, which the Minister in the chair has already had a bit of a speech on. Nevertheless, I’ll call on him to come back and have another go as well, because I think this is a really important issue because it goes to natural justice, and actually, I can’t understand at all how the officials let this one through either.

I think all this goes back to the confusion around the Weathertight Homes Tribunal, which was a cut-and-paste for this bill, essentially. That’s where all of the structure of this bill came from, and the issue is, of course, that the Weathertight Homes Tribunal operates under tort law. This is contract law—quite different—and I’m sure the officials are well aware of that and I know that the Cabinet papers are well aware of it. In fact, the advice to the Minister was quite critical. I’ve never seen that before in my relatively short—I admit—parliamentary career, but it’s quite damning to see a Cabinet paper telling a Minister that they’ve got it completely wrong with their bill.

It is such an important issue. It seems a minor one, and I understand the intent—it doesn’t want to delay things—but, under the weathertight homes legislation, it was all about malpractice and people not living up to what they were paid to do, essentially, and this one is completely different. It’s about the details of the contract and whether the damage constitutes what’s in the contract or not, and that is where there’s always going to be an issue, obviously, because the claimant wants as much as possible and the insurance company wants to pay as little as possible. Everyone who’s got a policy doesn’t want them to pay more than they have to, because, in fact, it impacts on their policy, but justice has to be done and there has to be a fair line found there.

Of course, in insurance contracts, it’s not the insurance company broker who makes a decision on whether they’re going to make a payout or not; it’s all based on expert witnesses. It’s expert evidence. They get people who are, most often, contracted to insurance companies to actually assess the damages. If an insured person doesn’t agree with that, they have the right to hire their own expert and say, “Well, actually, it’s not going to cost $50,000 to fix. It’s going to cost $100,000 to fix.”, or whatever the numbers are. That’s where expert evidence is really important, and under the way this bill is structured, the tribunal can limit that.

Not only is it important to have expert witnesses; it’s important to test their evidence, and that’s what cross-examination is all about. We’re in New Zealand, not in Iran, not in some Third World country. We deserve justice in this country, and natural justice is an important part of it.

I’m absolutely appalled that this is in the bill. I can’t understand how anyone with a law degree could allow that to be in the bill—it’s 101 stuff. It’s not complex law. They are quite different—tort law and contract law are completely different—and everyone with a law degree would know that. So I can’t see why that’s in the bill, and I’m really going to listen with great interest to the Minister’s explanation on this.

In fact, I think the New Zealand Bill of Rights Act says it quite well here, in section 27(1) of the New Zealand Bill of Rights Act: “Every person has the right to the observance of the principles of natural justice by any tribunal or other public authority which has the power to make a determination in respect of that person’s rights, obligations, or interests protected or recognised by law.” Natural justice demands that there be an ability to test the evidence of a witness—particularly an expert—and that requires cross-examination, and it also requires that people have the right to call for an expert witness. Thank you.

Thank you very much, Madam Chair. Now that I’m talking on the right part of this bill, I will outline the Government’s opposition to Supplementary Order Paper 226, put up by the honourable member Stuart Smith, with regard to clause 37 and the use of experts in cross-examination. We don’t agree that pursuing procedural fairness, or natural justice, more broadly, means that the use of experts in cross-examination should be permitted in every case as of right. Clause 37 requires the tribunal to comply with the principles of natural justice when managing claims. However, this does not require the tribunal to permit the use of experts if the tribunal considers this unnecessary, or permit cross-examination of a party or person. In terms of the use of experts, the default assumption is that parties can use experts and have them provide evidence. The tribunal can already limit the use of experts, including their number, if it considers they are unnecessary—for example, when a party has multiple experts of the same discipline. That’s in clauses 20 and 27, and I know that is Part 1 of the bill, though.

In terms of cross-examination, natural justice does not always require a right to cross-examination in tribunals. For example, the Law Commission’s 2008 report titled Tribunals in New Zealand noted that this requirement for tribunals to comply with natural justice normally requires a right to call witnesses and present evidence in support of their case, but does not always require a right to cross-examination. The tribunal is not as formal as the courts and does not apply the formal rules of evidence. Information is accepted on the basis of relevance rather than technical admissibility. Therefore, cross-examination does not need to play as significant a role in proceedings. It is likely that cross-examination will be allowed rather than not. However, allowing the tribunal discretion may be appropriate to address an imbalance between the parties in certain cases—for example, when only one party has a lawyer.

Cross-examination is not the only way to test evidence in the tribunal. The tribunal has powers to manage the use of experts, hold expert conferences, and use independent expert advisers that can help assess expert evidence. Cross-examination should be determined on a case by case basis with regard to the purpose of the tribunal to be fair, speedy, flexible, and cost-effective.

Thank you, Madam Chair. I want to just talk a little bit about my colleague Stuart Smith’s Supplementary Order Paper (SOP) 226 on this. The matter of permitting expert witnesses was something that we grilled officials on quite extensively in the select committee stage of this bill, and Mr Smith’s SOP, I’d argue, is incredibly constructive because it doesn’t seek to simply relitigate the matter that we raised in select committee, which was that the ability to exclude expert witnesses and cross-examination could hinder a fair and reasonable process in the tribunal.

Mr Smith actually wants to ensure that those that want to have expert witnesses can have them, but he’s absolutely shifting some management of that back to the tribunal to enable the tribunal to limit the number of expert witnesses. Obviously, the idea is there that, particularly from the insurance side, they’re not loading up the process with hordes or multiple expert witnesses either to slow the process down or to use the weight of expert opinion to somehow sway the tribunal. So that sort of reinforces the point that Mr Smith was trying to make, which is that in fairness for both or all parties within the proceedings, it is absolutely appropriate that any party should be able to call at least one expert witness, but to allow the tribunal to have the ability to limit that ensures that that doesn’t get out of hand.

That is a point of difference from the argument or the discussion that was had in select committee, but I think it is a very fair way of addressing a balance. Maybe it is not a perfect balance, but I’m not certain that that’s exactly what we’re looking, necessarily, to achieve here. It is a recognition that in the interests of justice and natural justice, or just in fairness in a tribunal process, everyone should be able to rely on experts to argue or to help to substantiate their particular arguments in the matter before the tribunal but also to make sure that that doesn’t go overboard.

I listened to the Minister. I will admit I wasn’t here for all of his call, but I listened to probably half of that, and I take his point. But I would argue that this is not simply a case of Mr Smith seeking to say “I tried this argument in select committee and was unsuccessful, so I’m going to use the committee of the whole House stage to simply try to relitigate it.” He’s actually shifted the position, which says that this is important from our perspective. We think it’s important certainly for insurers but, in the overall fairness of the tribunal proceedings, arguably, it’s a fairness thing for all parties concerned.

But he has moderated the position to say that if the argument from officials at least in part was “Well, we don’t want the tribunal to be weighed under by too many expert witnesses.”, then explicitly putting that provision in there allows the tribunal to effectively cap that and to manage that, and it’s not a set number, by the way. It is at the discretion or the consideration of the tribunal members. But that way would allow satisfying both considerations or both arguments: the idea of ensuring that justice can be seen to be done and ensuring that fairness can be argued for all parties concerned, but, equally, ensuring that the tribunal proceedings don’t get smothered or overburdened with too many expert witnesses being able to be called.

So I’d ask the Minister just to briefly reflect on that. The officials are, obviously, behind him at the moment and might consider the specifics, not just to the fact that Mr Smith has called for an assurance that an expert witness can be called no matter who the party is but that by placing that locus of control back on to the tribunal members, it will ensure that it doesn’t and can’t get out of hand and we have, therefore, fair access to expert opinion for every party in the proceedings, but it’s done in a way that means that no one party—and I’d admit that’s probably more likely to be the insurers than any other party—can completely start to take over or overburden the proceedings with a raft of expert opinions which might just either slow it down or simply seek to use the idea of having the weight of expert opinion to try and sway a decision and an outcome.

So I’d focus the Minister on that particular part of the SOP: the idea that within that, the tribunal would still have the control to limit it. I would ask him to briefly reconsider it again and perhaps change the position, because I think it is actually a good point. It was a good point made in the Governance and Administration Committee, but this is a better way of moderating that position. It is different to what we discussed in select committee.

Thank you, Madam Chair. I do not claim to be an expert in legal issues. Actually, I have no background in legal issues. However, because this is a very important point and because the tribunal will have wide-ranging powers, which we support because we do want to have a very speedy process to resolve the backlog, particularly for those 2,233 outstanding claims—we want these claims to be resolved as soon as possible—I want to bring the Minister back to the purpose of this particular bill. It says it is “to provide fair, speedy, flexible, and cost-effective services” to help resolve claims between policyholders, insurers, and the Earthquake Commission. So they are fair, speedy, flexible, and cost-effective services. The first word is “fair”, so fairness is key to this particular process. I find it hard to see fairness if we are not able to really cross-examine expert evidence.

I bring this to the committee’s attention because this reminds me of my past experience as an academic at the University of Auckland. I was the director of the postgraduate programme at the department of political studies and then became associate dean in charge of postgraduates. In in those years, it was my responsibility to make sure that the work of each student was examined fairly. So, initially, we had one examiner that was, basically, the supervisor, but the supervisor could be biased either towards or against the particular student, and then, in the end, we actually had two examiners and we removed the supervisor from the examination process. We had two examiners: one from the University of Auckland—internal—and one from another university so they could be external. So, in the process, if there was a disagreement between the two examiners, we would call upon a third examiner to make a final assessment. So it was, basically, trying to examine everyone’s assessment to see whether it’s really a fair assessment. That is natural justice for students.

So, in this case, I find it hard to believe that we should restrict the ability of parties to call or cross-examine expert evidence. It is only when you are able to really challenge other people’s views or assessments will we be able to really make sure this is a fair process, so I would really like the Minister to further explain why cross-examination should be restricted. Why shouldn’t any claimants be able to have a chance to challenge other people’s views to make sure that we have a fair understanding of a particular case? Thank you, Madam Chair.

The question was put that the amendments set out on Supplementary Order Paper 225 in the name of the Hon Andrew Little to Part 2 be agreed to.

Amendments agreed to.

Stuart Smith’s amendments to Part 2 set out on Supplementary Order Paper 229 are out of order as being contingent on an amendment that has been negatived.

The question was put that the amendment set out on Supplementary Order Paper 226 in the name of Stuart Smith to clause 37 be agreed to.