Deo Gratias Developments Ltd v Tower Insurance Ltd - [2018] NZHC 1881

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2015-404-2088

[2018] NZHC 1881

BETWEEN
DEO GRATIAS DEVELOPMENTS LTD

Plaintiff

AND

TOWER INSURANCE LTD

First Defendant

THE EARTHQUAKE COMMISSION

Second Defendant

CIV-2016-404-1786

BETWEEN

ANGELA STANTON AULD and ANDREW ROBER AULD

Plaintiffs

AND

IAG NEW ZEALAND LTD

First Defendant

THE EARTHQUAKE COMMISSION

Second Defendant

CIV-2016-409-722

BETWEEN

KEVIN BYRON THORPE and YVONNE TERESA THORPE
Plaintiffs

AND

THE EARTHQUAKE COMMISSION

First Defendant

AA INSURANCE LTD

Second Defendant

DEO GRATIAS DEVELOPMENTS LTD v TOWER INSURANCE LTD [2018] NZHC 1881 [27 July 2018]

CIV-2016-404-984

BETWEEN

JAMES EDWARD FRAMPTON and ANN CHARLOTTE VANSCHEVENSTEEN

Plaintiffs

AND

TOWER INSURANCE LTD

First Defendant

THE EARTHQUAKE COMMISSION

Second Defendant

Hearing: 12 July 2018

Appearances:

G D R Shand and N T P Lala for Plaintiffs

M H Hayes for EQC (named as Second Defendant in one proceeding and First Defendant in three other proceedings)

Judgment:

27 July 2018

JUDGMENT OF NICHOLAS DAVIDSON J (REVIEW OF COSTS JUDGMENT)

A.INTRODUCTION

[1] The intituling reflects four Canterbury earthquake related proceedings, all of which involve the Earthquake Commission (“EQC”), with three insurer defendants, IAG New Zealand Limited (“IAG”), Tower Insurance Limited (“Tower”) and AA Insurance Limited (“AA”). This judgment involves EQC and the plaintiffs only, and constitutes a separate judgment in each proceeding, to be filed as such.

[2] All four proceedings were discontinued as the result of settlement, but as in a number of such cases, there remained a question of costs for determination by the Court.

[3] The Associate Judge delivered a costs judgment on 23 April 2018.1 He ordered that EQC pay 75 per cent Scale costs to the plaintiffs AS and AR Auld (“the Aulds”), and 50 per cent Scale costs to the other three sets of plaintiffs. They had all sought more than 50 per cent of Scale costs but only the Aulds were successful. All plaintiffs were awarded costs, as the “successful” parties in the costs argument, despite losing on the percentage of costs argument, except in that one case.

First ground of review

[4] EQC on this review contends that the Aulds should only have been awarded 50 per cent of their Scale costs, and EQC should have been awarded costs on all the plaintiffs’ costs applications because EQC “succeeded,” or should have succeeded in the case of the Aulds, in its contention that the plaintiffs should have only 50 per cent of their costs.

[5] There is an established but not rigid approach to costs on discontinuance in earthquake list cases, endorsed by the Court of Appeal in Earthquake Commission v Whiting.2 EQC through counsel Ms Hayes says that the Court endorsed practice is that where EQC and an insurer are defendants and a plaintiff is “successful” in settlement, each defendant is liable for only 50 per cent of the plaintiff’s costs unless there is a reason to increase the contribution of one of them.3

[6] The Judge accepted…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] NZHC 1881
Decision Date: 27 July 2018

CaseChat Overview and Summary

The High Court of New Zealand was asked to review a costs judgment regarding four earthquake-related proceedings, all of which involved the Earthquake Commission (EQC) and various insurers. EQC sought a review of the Associate Judge's costs decision, arguing that the Aulds should only be awarded 50 per cent of their Scale costs, as was the case with the other plaintiffs. EQC also argued that it should have been awarded costs on all the plaintiffs' costs applications because it had "succeeded" or should have succeeded in its contention that the plaintiffs should only receive 50 per cent of their costs.

The Court found that while the 50 per cent approach is "readily understandable" and will "usually be the just outcome where EQC and an insurer have actively defended a proceeding," it was not the only possible outcome. The Court held that in the case of the Aulds, there was a "reliable inference" that EQC's litigation stance had held up overall settlement, so that once it accepted an over-cap position, settlement followed. However, the Court concluded that there was no principled basis to say that the insurer may refuse to make a payment until EQC makes an over-cap payment. The primary obligation of the insurer is to cover the insured for accidental loss less the amounts covered by the EQC Act.

Ultimately, the Court found that the award of costs against EQC should be set at 50 per cent rather than 75 per cent in the case of the Aulds, and that the costs awards made by the Judge would stand. The Court also found that the costs and disbursements ordered would otherwise stand, both those on the substantive proceedings and the "costs on costs" award.

Orders