Enforcing an exclusive choice of court clause in a policy of insurance under the Trans-Tasman Proceedings Act 2010 (Cth)
Australian Gourmet Pastes Pty Ltd v Endeavour Packaging Pty Ltd & Anor  VCC 455
In the recent decision of Australian Gourmet Pastes Pty Ltd v Endeavour Packaging Pty Ltd & Anor  VCC 455, the County Court of Victoria stayed a proceeding to give effect to an exclusive choice of court and choice of law clause in an insurance policy issued by a New Zealand insurer covering an Australian company.
Australian Gourmet Pastes Pty Ltd (AGP) commenced proceedings against Endeavour Packaging Pty Ltd (Endeavour). Endeavour was insured by IAG New Zealand Ltd (IAG NZ) and, relevantly, was also in administration and subject to a deed of company arrangement (deed).
AGP joined IAG NZ to the proceeding, asserting that the deed permitted AGP to claim directly on Endeavour’s policy of insurance with IAG NZ (policy) despite neither being an insured under the policy nor meeting any of the other recognised criteria for direct claims by third parties under policies of insurance.
IAG NZ applied to stay the proceeding on the basis that a New Zealand court was the more appropriate court to determine the matters in issue between the parties under the Trans-Tasman Proceedings Act 2010 (Cth) (TPP Act).
IAG NZ’s contentions
IAG NZ contended that an exclusive choice of court and choice of law clause in the policy required the Court to stay the proceeding under the TPP Act. The clause stated:
The law of New Zealand applies to disputes about this policy, and the New Zealand Courts have exclusive jurisdiction.
IAG NZ also contended, in the alternative, that the proceeding should be stayed due to certain factors of which the TPP Act mandates consideration and which would result in a New Zealand court being the more appropriate forum.
In light of the matters required to be considered under the TPP Act, the Court upheld the application of the exclusive choice of court and choice of law clause and also found that a New Zealand court was the more appropriate court to determine the matters in issue between AGP and IAG NZ. The proceeding was stayed.
The decision is the first to consider the TPP Act in the context of an exclusive choice of court and choice of law clause in an insurance policy. Insurers operating on both sides of the Tasman can gain comfort that Australian courts will give effect to such clauses to stay proceedings issued in Australia, which more appropriately should have been issued in New Zealand.
The decision confirms that the TPP Act, and therefore its mirror New Zealand legislation, is more prescriptive than similar Australian “cross-vesting” legislation that exists as to which Australian state a proceeding ought be heard. It also appears that existing High Court authority on such clauses in insurance policies may have been superseded by the TPP Act where trans-Tasman policy disputes are involved.
Gilchrist Connell acted for IAG NZ in its application.
Date: 2 May 2016
Please note: The analysis contained in this Limelight has been significantly affected by the recent Victorian Court of Appeal decision in Australian Gourmet Pastes Pty Ltd v IAG New Zealand Ltd  VSCA 155