Earthquake Commission v Insurance Council of New Zealand Inc
[2015] NZHC 457
•12 March 2015
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV2014-485-005698 [2015] NZHC 457
UNDER the Declaratory Judgments Act 1908 BETWEEN
EARTHQUAKE COMMISSION Plaintiff
AND
INSURANCE COUNCIL OF NEW ZEALAND INCORPORATED
First Defendant
CHRISTCHURCH CITY COUNCIL Second Defendant
SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED Third Defendant
Hearing: (on the papers) Court: Counsel:
Heath, Kós and Gilbert JJ
J E Hodder QC, B A Scott and T D Smith for the Plaintiff
D J Goddard QC and J D Every-Palmer for the First Defendant
J Shackleton for the Second Defendant
D J Friar for the Third Defendant
T C Weston QC and K L Clark QC, amici curiae
D A Webb and S E Goodwin for the Flockton Cluster Group
(Intervener)
G D R Shand for D M Culf (Intervener)Judgment:
12 March 2015
JUDGMENT OF THE COURT [Costs]
This judgment was delivered by me on 12 March 2015 at 4.00pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
EARTHQUAKE COMMISSION v INSURANCE COUNCIL OF NEW ZEALAND INCORPORATED [2015] NZHC 457 [12 March 2015]
Introduction
[1] In a judgment delivered on 10 December 2014, we determined various issues concerning the scope of statutory cover available under the Earthquake Commission Act 1993 and the validity of a policy developed by the Earthquake Commission (“the Commission”) for dealing with claims arising out of increased flooding vulnerability.1 We reserved the question of costs.
[2] All parties agree that costs should lie where they fall. The interveners take a different position. They seek an order requiring the Commission to pay costs to them.
Legal Principles
[3] The interveners’ application is made pursuant to s 99A of the
Judicature Act 1908 which relevantly provides:
(1) Where the Attorney-General or Solicitor-General or any other person appears in any civil proceedings or in any proceedings on any appeal and argues any question of law or of fact arising in the proceedings, the Court may, subject to the provisions of any other Act, make such order as it thinks just −
(a) As to the payment by any party to the proceedings of the costs incurred by the Attorney-General or the Solicitor-General in so doing; or
(b) As to the payment by any party to the proceedings or out of public funds of the costs incurred by any other person in doing so; or
(c) As to the payment by the Attorney-General or the Solicitor-General or that other person of any costs incurred by any of those parties by reason of his so doing.
[4] Section 99A(1)(b), on which the interveners rely, distinguishes between a “party to the proceedings” and “any other person” who appears in the proceeding to argue any question of law or fact arising in the proceeding. The section does not
deal with party and party costs which are determined in accordance with Part 14 of
1 Earthquake Commission v Insurance Council of New Zealand Incorporated [2014] NZHC 3138, [2015] 2 NZLR 383.
the High Court Rules. Section 99A is solely concerned with the costs payable to or by the Attorney-General or the Solicitor-General or any other person who appears for the purpose of arguing a question of law or fact in the proceeding but who is not a party.
[5] Section 99A confers a broad discretion on the Court in relation to such costs. The discretion must be exercised on a principled basis but it is not possible to define the circumstances in which an award will be appropriate. The enquiry will always
depend on the particular circumstances of the given case.
h
[7] Most of the cases decided under s 99A have involved applications for the payment of costs from public funds. Cases in which costs have been awarded
[6]
whet
The er an
(a)
authorities indicate that the following factors are likely to be relevant to order under s 99A is appropriate:2
Whether the case involves a matter of substantial public importance.
This will be critical if costs are sought to be paid from public funds. (b)
Whether the applicant represents a field of interest relevant to the proceeding beyond their private or personal viewpoint.
(c)
Whether the applicant has provided material assistance to the Court by presenting evidence or submissions on an issue or issues not
adequately covered by other parties or at all. (d)
Whether any of the principles guiding an award of costs under Part 14
of the High Court Rules may be applicable by analogy. This may be
particularly relevant in cases where an order is sought against a party
rather than from public funds. against a party in favour of an intervener are comparatively rare. The leading case is
2 New Zealand Fishing Industry Board v Attorney General (1992) 6 PRNZ 500 (HC); New
Zealand Recreational Fishing Council Inc v New Zealand Federation of Commercial Fishermen
Diagnostic Medlab v Auckland District Health Board which concerned the validity of a long-term contract entered into by three District Health Boards for the provision of regional laboratory testing services.3 Harbour Primary Health Organisation was given leave to intervene in the proceeding on the basis that it had the confidence and support of the majority of general medical practitioners in the Auckland region and was able to present a unique perspective on the issue of whether the District Health Boards should have consulted before signing the agreement.
[8] The Court accepted that the intervener’s submissions were effectively made on behalf of all primary health organisations in the region. Its participation was confined to whether the District Health Boards had a duty to consult and if so whether they discharged this duty. The intervener was successful on these issues. Asher J concluded that it was appropriate to award costs to the intervener against the District Health Boards because it had a “unique position to present” on an issue that could not be covered adequately by any other party and that it was therefore a “necessary party” to the proceedings. The judge described the intervener’s contribution to the proceeding as “significant and unique”.
[9] More recently, in Hall v Wellington Standards Committee (No 2),Woodhouse J ordered the appellant to pay costs to an intervener in circumstances where the appellant had unsuccessfully sought to overturn the decision of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal on an important point of principle directly affecting the intervener’s rights.4 The intervener was the holder of privilege in certain documents before the Tribunal, and had been permitted to intervene in that forum. The Court considered that the Tribunal’s decision was plainly correct and that the appellant’s approach had been
unreasonable.
[10] The facts of these cases can be contrasted with those in Levin v Lawrence
where the intervener was unsuccessful in its application for costs against a party.5
That case concerned an application by a creditor to prevent a debtor company being removed from the Register of Companies and for an order directing the liquidators of
3 Diagnostic Medlab v Auckland District Health Board, above n 2.
4 Hall v Wellington Standards Committee (No 2) [2013] NZHC 1867.
5 Levin v Lawrence [2012] NZHC 2166.
the debtor company to permit the creditor to inspect its records. The debtor company was the vehicle for a joint venture between three companies for the operation of a franchise business. One of the joint venturers was given leave to appear as an intervener. It appeared at the hearing and made submissions but did not call any evidence or cross-examine any of the witnesses.
[11] The Court accepted that the intervener was the ultimate target of the creditor’s application which was brought with the aim of determining whether there was evidence to suggest that the joint venturers had received preferential treatment in the liquidation or whether the liquidators had elected, without good cause, not to pursue claims against them. The intervener was entitled to be heard because its interests were at stake. While it was successful, Toogood J nevertheless declined to make an order for costs in its favour because the intervener’s interests and those of the liquidators were similar and overlapping. The intervener largely repeated the arguments presented by the liquidators and the judge considered that it could have arranged for any additional arguments to be incorporated in the liquidator’s submissions.
Should the Commission be ordered to pay costs to the interveners?
Joinder of interveners
[12] The Commission commenced this proceeding seeking declarations as to the correct interpretation of certain provisions of the Earthquake Commission Act and as to the validity of a policy it had developed for dealing with claims under the Act. Before doing so, it coordinated with the Insurance Council of New Zealand which represents the major insurance companies in New Zealand affected by the Canterbury earthquake sequence. The Commission proposed the appointment of separate amici curiae to represent the interests of insured owners of residential properties and to assist the Court on any issue on which argument would not otherwise be heard. It proposed Mr Weston QC and Ms Clark QC for these roles, and they were subsequently appointed by the Court.
[13] The Commission also proposed that the proceeding be served on all
New Zealand private insurers of residential property that did not authorise the
Insurance Council to represent them, the Canterbury Earthquake Recovery Authority and the Attorney-General on the basis that anyone served with the proceeding could apply to be joined as a defendant.
[14] The orders were made accordingly and the Commission was also directed to serve Christchurch City Council.
[15] Christchurch City Council and Southern Response Earthquake Services Ltd applied to be joined as defendants. The Court was advised that neither the Attorney- General nor the Canterbury Earthquake Recovery Authority wished to be joined.
[16] The Flockton Cluster Group, an unincorporated community group of home owners from the Flockton area of Christchurch which is particularly susceptible to flooding, applied for two of its representatives to be joined to the proceeding on behalf of the group, not as defendants, but as interveners.
[17] At the case management conference held on 3 June 2014, Mr Shand advised that Ms Culf wished to be joined in her own right as an intervener. Ms Culf lives in an affected property in the red zone.
[18] The Flockton Cluster Group and Ms Culf were directly affected and had a right to be heard. They did not wish to be joined as defendants because that would leave them potentially exposed to an adverse costs award. There was no opposition and orders were made accordingly joining them as interveners on the express basis that they would not be liable for costs in any event.
Grounds of applications
[19] Mr Webb argues that an award of costs should be made against the
Commission in favour of the Flockton Cluster Group for the following reasons:
(a) The proceeding concerned a matter of considerable public interest directly affecting large numbers of home owners and has the potential to affect all home owners.
(b)The Flockton Cluster Group’s participation was necessary to enable the Court to be fully informed and reach a proper determination of the issues.
(c) The Flockton Cluster Group’s participation provided a “direct line” from affected homeowners to the Court lending legitimacy to the proceedings that they would not otherwise have had.
(d)The Flockton Cluster Group presented arguments on two issues that differed from those made by Mr Weston on behalf of homeowners generally. These were whether land was insured on a reinstatement basis and whether movement of a dwelling constituted damage to the building as well as the land.
(e) The Flockton Cluster Group made a valuable contribution to the hearing even though its submissions did not prevail in every instance.
[20] Mr Shand submitted that a costs award should also be made in favour of
Ms Culf for the following reasons:
(a) It was “essential” that an actual Christchurch landowner have a presence at the hearing and Ms Culf filled that need.
(b) The presence of Ms Culf offered the Court the benefit of “real life”
focus and submissions.
(c) It would be “unfair to deprive Ms Culf of an award of costs”, particularly given that she was ultimately successful on the issues most important to her and other similar land owners, namely, whether increased vulnerability to flooding amounts to land damage for the purposes of the Act and also whether rights under the Act can be vindicated by way of an ordinary action.
Analysis
[21] We are not persuaded by Mr Shand’s submission that the presence of the interveners was essential. The interveners were joined after the amici curiae had been appointed and after the competing positions to be advanced by the Commission and the Insurance Council were known. All of the bases were already covered.
[22] We also reject Mr Webb’s submission that without the participation of the interveners, the proceedings would have lacked legitimacy. The case concerned questions of statutory interpretation and whether the Commission’s policy was consistent with its obligations under the Act. The presence before the Court of directly affected individuals was not required to enable the Court to reach a legitimate determination of these issues.
[23] Although this case undoubtedly involved a matter of considerable public importance and the interveners represented the interests of others, they participated in the hearing primarily to promote their private property-related interests. This is not intended as a criticism but it is a factor telling against an award of costs in their favour.
[24] We consider that it is also relevant that the interveners were granted protection against an adverse costs award at the time they were joined. Those who pursue their own interests in litigation do not normally receive such protection. Having been insulated from the risk of having to pay costs, one would not normally expect that such persons would be entitled to receive an award of costs.
[25] This is not a case where it could be said that the interveners made a significant and unique contribution in the sense explained by Asher J in Diagnostic Medlab. With one exception, they supported the position most favourable to them on each of the issues. In each case this position was fully covered by one or more of the other parties or by Mr Weston or Ms Clark. The exception was in relation to whether land is insured under the Act on a reinstatement basis, not merely for any loss of value. The interveners were unsuccessful on this issue. They were also unsuccessful on the issue promoted by Mr Weston of whether there is damage to the building in terms of the Act in cases where the underlying land has reduced in height
relative to sea level but there has been no physical change to the materials or structure of the building. Contrary to the submissions advanced by Mr Weston and supported by the interveners, we concluded that in these circumstances there is land damage but no damage to the building for the purposes of the Act.
[26] Mr Shand submits that it would be “unfair to deprive” Ms Culf of an award of costs. This submission is premised on the false assumption that by participating in the proceeding, Ms Culf would be entitled to receive an award of costs. We agree with Mr Hodder QC, for the Commission, that the fact that the interveners were given the opportunity to present submissions at the hearing does not of itself indicate that they are entitled to costs, and no expectation of costs was created by permitting intervention.
[27] The principle expressed in r 14.7(e) of the High Court Rules is also relevant. This rule recognises that it may be appropriate for the Court to refuse to make an order for costs against a party which has acted reasonably in the conduct of a proceeding concerning a matter of public interest. The Commission brought the proceeding in the public interest and took appropriate steps to ensure that the Court was presented with full argument on all of the relevant issues. There can be no suggestion that the Commission did not act reasonably throughout in the way it initiated and conducted this proceeding.
[28] We also take into account that the Commission achieved a considerable measure of success in the proceeding. The only major issue on which it failed concerned whether challenges to its decisions were confined to judicial review or whether rights under the Act could be vindicated by ordinary action. Given the Commission’s overall level of success in the proceeding and the fact that it acted reasonably throughout, it would not normally be expected to have to pay costs.
[29] Taking all these factors into account, we do not consider that it would be appropriate to make an order for costs against the Commission in favour of the interveners. We agree with the common position adopted by the parties that there should be no order for costs in this case.
Result
[30] The interveners’ applications for costs are dismissed.
[31] All costs in the proceeding are to lie where they fall.
P R Heath J For the Court
Delivered at 4.00pm on 12 March 2015
Solicitors:
Chapman Tripp, Wellington
DLA Phillips Fox, WellingtonBell Gully, Auckland
Simpson Grierson, Wellington
Lane Neave, ChristchurchGrant Shand, Auckland
Counsel:
J E Hodder QC, WellingtonD J Goddard QC, Wellington
T C Weston QC, Wellington
K L Clark QC, Wellington
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