Ginivan v Southern Response Earthquake Services
[2021] NZHC 2354
•9 September 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-409-000116
[2021] NZHC 2354
BETWEEN WILLIAM FRANCIS GINIVAN and
BRETT WILLIAM REID as trustees of the GIFT TRUST
First Plaintiffs
AND
WILLIAM FRANCIS GINIVAN and DIANE SHIRLEY CARSON
Second Plaintiffs
AND
SOUTHERN RESPONSE EARTHQUAKE SERVICES
Defendant
Hearing: On the papers Counsel:
G A Cooper for Plaintiffs
M A Powell and R A Morris for Defendant
Judgment:
9 September 2021
COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 9 September 2021 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
GINIVAN v SOUTHERN RESPONSE EARTHQUAKE SERVICES (Costs Judgment) [2021] NZHC 2354
[9 September 2021]
[1] This proceeding is an earthquake claim in respect of the first plaintiffs’ property at Cashmere. On four occasions the plaintiffs refused to comply with directions of the Court to allow the defendant access to carry out inspections of the property. As a consequence, on 14 November 2019, I made an unless order that the defendant was to be given access to the property by 14 December 2019 failing which the proceeding was stayed pending further order of the Court.1
[2] The plaintiffs applied for leave to appeal the order made on 14 November 2019, ostensibly pursuant to s 56(3) of the Senior Courts Act 2016. That application was opposed. In a reserved judgment of 26 June 2020, I dismissed the application and directed counsel to confer on costs.2 Agreement could not be reached and counsel filed written submissions as to the parties’ respective positions.
[3] Unsatisfied with my decision of 26 June 2020, the plaintiffs sought leave from the Court of Appeal to appeal from the order of 14 November 2019. The issue of costs following my judgment of 26 June 2020 was put on hold.
[4] What then followed is set out in a judgment of Ellis J of 4 August 2021.3 In summary, it was identified in the Court of Appeal that the plaintiffs’ applications for leave to appeal (both in this Court and the Court of Appeal) were predicated on a mistaken belief the proceeding was covered by the Senior Courts Act. There was, in fact, no right of appeal from the decision of 14 November 2019. The correct course was for the plaintiffs to seek a review of that decision. As an indulgence it was agreed that Ellis J, sitting as a Judge of the High Court, would hear the appeal as if it had been filed in the High Court as an application for review.
[5] When the matter came before Ellis J, the application for review was resolved by agreement save in relation to costs.4 In her judgment of 4 August 2021, Ellis J dealt with costs on the review and awarded costs to the defendant on a 2B basis with a 20 per cent uplift.5
1 Ginivan v Southern Response Earthquake Services Ltd HC Christchurch CIV-2017-409-116, 14 November 2019 (Minute).
2 Ginivan v Southern Response Earthquake Services Ltd [2020] NZHC 1469.
3 Ginivan v Southern Response Earthquake Services Ltd [2021] NZHC 1997 at [4]-[9].
4 Ginivan v Southern Response Earthquake Services Ltd, above n 3.
5 At [24].
[6] The parties are now agreed that I should determine costs on my judgment of 26 June 2020 based on the submissions that were filed following that hearing.
The positions of the parties
The defendant
[7] The defendant argues it is entitled to indemnity costs under r 14.6 of the High Court Rules 2016 because:
(a)the plaintiffs acted vexatiously, frivolously, improperly or unnecessarily in bringing the application for leave to appeal; and
(b)the application for leave to appeal arose from the plaintiffs’ continued refusal to comply with directions of the Court.
[8] The defendant refers to findings made in my judgment that the plaintiffs’ refusal to comply with the Court’s directions was deliberate and my rejection of all of the plaintiffs’ grounds for seeking leave to appeal as having no merit.
[9] The defendant’s indemnity costs and disbursements amount to $18,214.15 which it contends are reasonable because:
(a)fees were kept to a minimum by the use, where possible, of junior solicitors and law clerks to undertake work;
(b)the application raised nine different alleged errors of fact or law all of which required consideration but not all of which were pursued at the hearing; and
(c)the plaintiffs nominated a substantial amount of documentation to form part of the common bundle despite it being irrelevant to the question before the Court.
The plaintiffs’ position
[10]The plaintiffs’ position is that:
(a)costs should be reserved pending the outcome of the substantive proceeding; or
(b)in the alternative, 2B costs are appropriate; and
(c)in the event the Court considers costs should be awarded on an indemnity basis, the amount claimed by the defendant is excessive and unreasonable.
[11] In support of their submission that costs should be reserved, the plaintiffs argue there are special reasons to depart from the general rule costs on opposed applications should be fixed when the application is determined. They say they have been deprived of their insurance entitlements for over 10 years, the ultimate outcome of the proceeding will result in a substantial payment being made to them and the making of an award of costs would disadvantage them financially in their ability to prosecute the claim. They argue the major impediment to progress of the claim has been disagreement whether a fee estimate provided by Warren & Mahoney is reasonable which remains a live issue. They contend if, ultimately, they are successful on that issue the application for leave to appeal should never have been necessary.
[12] In support of their alternative position that 2B costs are appropriate, the plaintiffs argue that indemnity costs should rarely be awarded and that their conduct in seeking leave to appeal was not unreasonable. They contend there was no bad behaviour on their part in pursuing the application for leave to appeal and there was cooperation between counsel to comply with the Court’s timetable directions to progress that application promptly to a hearing. Furthermore, the application for leave to appeal was not of any special complexity and, once again, they submit they are vulnerable in comparison to the defendant and an award of costs would prejudice the continuation of their claim.
Discussion
[13] The general principles in relation to costs are well-established. They include that all matters of costs are discretionary but the discretion must be exercised on a principled basis.6 The determination of costs, so far as possible, should be both predictable and expeditious.7 The party who has lost should pay the costs of the party that has won unless there are exceptional reasons to the contrary.8 Costs on an opposed interlocutory application should, in the absence of special reasons to the contrary, be fixed and payable at the time the application is determined.9 Generally, costs awards should reflect the complexity and significance of the proceeding and be assessed by applying the appropriate daily rate to the time considered reasonable for each step required in relation to the proceeding.10
[14] The defendant was clearly the successful party in relation to the plaintiffs’ application for leave to appeal and prima facie entitled to costs. I can see no reason why it should not be awarded costs nor why costs should not be fixed and payable now. The plaintiffs’ position that costs should await the outcome of the substantive proceeding is largely based on delays that have occurred in resolving their insurance claim. This is a surprising stance given this proceeding has been delayed for over two years because they refused to comply with Court directions. This same point was made by Ellis J in her judgment of 4 August 2021.11 In response to a submission for the plaintiffs that the agreement reached before the hearing should be seen as a resolution of an “impasse” between the parties, Ellis J said:
[13] These submissions are disingenuous. The “impasse” here was entirely of the plaintiffs making. Southern Response could not inspect the property because the plaintiffs deliberately defied orders previously made by the Court. So, too, “standstill”. The proceedings were only “effectively stayed” because of the plaintiffs’ actions (or inaction) … (footnote omitted)
6 High Court Rules 2016, r 14.1(1).
7 Rule 14.2(1)(g).
8 Rule 14.2(1)(a) and Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 2 NZLR 523 at [19].
9 Rule 14.8.
10 Rule 14.2(b) and (c).
11 Ginivan v Southern Response Earthquake Services Ltd, above n 3.
[15] The plaintiffs submit an early determination of costs would disadvantage them financially but there is no evidence of that and, in any event, if that is correct, they have brought it upon themselves.
[16] In relation to the defendant’s claim for indemnity costs, the position is finely balanced but in my view indemnity costs should not be awarded. The refusal of the plaintiffs to comply with the Court’s directions to allow the defendant access to their property has already had costs consequences. Specifically, in my minute of 14 November 2019, I ordered the plaintiffs to pay indemnity costs to the defendant.12 If indemnity costs were again awarded against them there is an argument the plaintiffs were being penalised twice for the same misconduct. I also accept the plaintiffs were entitled to challenge (but not appeal) the making of the unless order and that at least in relation to the application for leave to appeal there was co-operation between counsel and compliance with the Court’s timetable directions.
[17] However, whilst I’m not prepared to award indemnity costs, I consider the defendant is entitled to an uplift on scale costs. Relevantly, r 14.6(3) provides the Court may order a party to pay increased costs if the party:
(a)takes or pursues an unnecessary step or an argument that lacks merit; or
(b)some other reason exists which justifies the Court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
[18] There are three reasons justifying an uplift on scale costs. First, the application for leave to appeal advanced nine alleged errors of fact or law, not all of which were pursued at the hearing but which the defendant was required to consider in preparation for it. Second, the arguments advanced in support of the application lacked any substantive merit. Third, the application was predicated on a mistaken understanding as to the plaintiffs’ entitlement to appeal. That was a matter that should have been
12 Ginivan v Southern Response Earthquake Services CIV-2017-409-111 (Minute 14 November 2019).
properly researched prior to filing the application. In the circumstances, I consider that an uplift of 20 per cent on scale 2B costs is appropriate to take account of these matters.
An additional issue
[19] In a memorandum of 10 July 2020, the defendant asked me to fix costs awarded to the defendant in my minute of 14 November 2019. It is not clear whether that issue remains outstanding. I see no reason why the costs sought should not be fixed in the amount claimed by the defendant but will reserve leave for the parties to refer back to me should a determination on the issue need to be made.
Result
[20] The plaintiffs are to pay the defendant costs on the application for leave to appeal calculated on a 2B basis with a 20 per cent uplift together with reasonable disbursements. For the avoidance of doubt the amount payable includes costs on the preparation of submissions in relation to costs and specifically the memorandum for the defendant of 10 July 2020.
[21] I reserve leave to the parties to refer back to the Court if it is necessary to fix the amount of costs payable by the plaintiffs awarded in my minute of 14 November 2019.
O G Paulsen Associate Judge
Solicitors:
Cavell, Leitch (G A Cooper), Christchurch
Bell Gully, Auckland
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