Ginivan v Southern Response Earthquake Services Limited

[2021] NZHC 1997

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2017-409-116

[2021] NZHC 1997

BETWEEN

WILLIAM FRANCIS GINIVAN,

CAMERON DAVID BAILEY as trustees of the Gift Trust

First Plaintiffs

AND

WILLIAM FRANCIS GINIVAN AND DIANE SHIRLEY CARSON

Second Plaintiffs

AND

SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED

Defendant

On the papers
Counsel:	G A Cooper for Plaintiffs M A Powell for Defendant
Judgment:	4 August 2021

COSTS JUDGMENT OF ELLIS J

[1]                   The plaintiffs’ application for review of interlocutory “unless” orders made by Associate Judge Paulsen on 14 November 2019 came before me for hearing on      18 March 2021. An agreement was reached between the parties during the hearing and recorded by me in a minute dated 22 March 2021. But there is now a dispute about costs.

GINIVAN v SOUTHERN RESPONSE EARTHQUAKE SERVICES LTD [2021] NZHC 1997 [4 August 2021]

Background

[2]                   The background to this very fractious matter was briefly summarised by Associate Judge Paulsen in his decision of 26 June 2020 declining the plaintiffs leave to appeal his 2019 orders. He explained:1

[1]        This   proceeding   concerns   the   first    plaintiffs’    property    at 24 Thorrington Road, Cashmere, Christchurch which was insured with the defendant and damaged by earthquake. The plaintiffs have elected under their policy of insurance to rebuild the house on the property, but their claim is not resolved.

[2]        On 19 February 2019, Whata J ordered the defendant be given access to the property to carry out an inspection at a time to be agreed by the parties. The plaintiffs did not allow the inspection. On three further occasions the court has required the plaintiffs to allow the inspection. The plaintiffs have not complied with those orders either.

[3]        On the last such occasion, on 14 November 2019, relying on r 7.48(1) High Court Rules I ordered that unless the defendant was given access to the property by 14 December 2019 this proceeding was stayed pending further order of the court. …

[3]                   As noted earlier, in that judgment Associate Judge Paulsen declined the plaintiffs leave to appeal the unless orders he had made in November 2019. The plaintiffs then sought leave from the Court of Appeal.

[4]                   Both the plaintiffs’ applications for leave (to the High Court and to the Court of Appeal) were predicated on the mistaken belief that the proceeding was governed by the Senior Courts Act 2016 (the SCA).

[5]                   Upon receipt of the plaintiffs’ (second) application for leave the Court of Appeal identified the jurisdictional error; because the proceeding had been commenced before the SCA had come into force, the Judicature Act 1908 applied. But the Court also itself erred in then suggesting that the plaintiffs did not need leave to appeal. The Court invited the plaintiffs simply to file an appeal, which they did on  14 August 2020.

[6]                   After that appeal had been scheduled to be heard in March 2021 by a divisional panel (of which I was a member) the Court of Appeal identified its earlier mistake.

1      Ginivan v Southern Response Earthquake Services Ltd [2020] NZHC 1469.

The parties were advised that because the Associate Judge’s orders were interlocutory ones, made by him in chambers, there was no right of appeal at all: an application for review to the High Court should have been made. As a matter of indulgence it was then agreed that I—sitting as a Judge in the High Court during my divisional week— should hear the appeal as if it had been filed in the High Court as an application for review.

[7]                   By the time of the hearing, well over a year had elapsed since the Associate Judge’s decision. Two years had elapsed between the original orders made by Whata J. It was those orders that were merely confirmed by Associate Judge Paulsen, in “unless” form.

[8]                   As noted earlier, the application for review was ultimately resolved by agreement, on terms set out in my 22 March minute. I indicated in my minute that I would determine the issue of costs (which counsel had indicated was the subject of dispute) on the papers.

[9]                   Submissions were subsequently filed and referred to me. Both sides say they should receive costs. Indeed, Southern Response Earthquake Services Ltd (Southern Response) seeks an award on an indemnity basis.

Who was the successful party?

[10]               It is trite that costs ordinarily follow the event and, so, are awarded to the party that has largely or wholly succeeded in the underlying matter. As will be evident from the background narrative above, however, there was in this case no such “event”. And as just noted, the parties are not agreed about who the “successful” party was. The Court’s task is not, therefore, a straightforward one.

[11]               That said, I am surprised at the plaintiffs’ suggestion that they are deserving of costs as the successful party here. As I made abundantly clear at the hearing in March they were at least arguably in contempt of numerous orders previously made by this Court. They had, quite simply, failed to comply with the orders made by at least three different Judges. They did not appeal Whata J’s orders; they chose not to comply with them. They did not seek a review of Associate Judge Lester’s orders; they chose not

to comply with them. And while they did seek to appeal Associate Judge Paulsen’s orders, the jurisdictional errors outlined above meant that the matter was not resolved for well over a year after those orders were made. The delays caused by the plaintiffs in terms of progressing the substantive claim seem to me to be significant.

[12]               On behalf of the plaintiffs, Mr Cooper nonetheless submitted that the agreement reached at the hearing before me—which modified some of the orders that were the subject of the application for review—should be seen as the resolution of an “impasse” between the parties. The resolution shows that the plaintiffs were justified in bringing their application and, indeed, had essentially succeeded on it. Mr Cooper said:

The respondent fails to acknowledge that the claim was at a standstill. The proceeding was effectively stayed because of Associate Judge Paulsen’s order requiring the applicants to authorise a site visit, despite this not being a necessary step to progress the matter.

[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.2 So, too, “standstill”. The proceedings were only “effectively stayed” because of the plaintiffs’ actions (or inaction). And while the agreement reached in March this year may have resulted in a modification of the previously orders made, that cannot be taken to mean that there was any merit in the plaintiffs’ application; the most that can be said is that it was a compromise reached in an attempt to move the matter forward.

[14]               Although it cannot be said that I heard full argument on the review application I nonetheless gained a reasonably clear sense of some quite significant impediments to the plaintiffs’ position.

[15]               First, as I made clear to Mr Cooper at the hearing, the plaintiffs’ choice to flout the earlier decisions, rather than to challenge them in a timely way, meant that they were in a weak position, had a decision on the review application been required.

2 That the plaintiffs were deliberately refusing to comply was also noted by Associate Judge Paulsen in both his minute of 14 November 2019 and his decision declining leave to appeal: above n 1 at [52].

[16]               And secondly, there was the question of timeliness. Even putting to one side the significant delay caused by the jurisdictional errors discussed earlier, the reality was that Associate Judge Paulsen had done no more than confirm orders that had been made almost a year before, by Whata J. In my view there was real force in the submission that the failure to appeal those original orders militated strongly against allowing the review.

[17]               And lastly, as counsel for Southern Response submitted, the agreement reached at the hearing was, in substance, little more than an agreement to follow a process that had earlier been the subject of orders made by Gendall J on 12 September 2018.3 It would be wrong to view it as reflecting some new and game-changing concession by Southern Response.

[18]               So, for the reasons just given, I am in no doubt that the plaintiffs should not properly be viewed as the successful party. The only remaining question is whether Southern Response is entitled to indemnity costs.

Indemnity costs

Legal principles

[19]               Rule 14.6 of the High Court Rules 2016 permits the Court to order indemnity costs if a party has:

(a)acted   vexatiously,   frivolously,    improperly    or    unnecessarily    in commencing or defending a proceeding; or

(b)where a party has ignored or disobeyed an order or direction of the Court or has breached an undertaking given to another party.

[20]               The Court of Appeal in Bradbury v Westpac Banking Corporation held that indemnity costs may be ordered where a party has acted badly or very unreasonably.4

3      Ginivan v Southern Response Earthquake Services Ltd [2018] NZHC 2403.

4      Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA) at [27].

The Court referred to a number of circumstances in which indemnity costs might be warranted:5

(a)particular misconduct causing loss of time to the court and to other parties;

(b)acting in wilful disregard of known facts or clearly established law; or

(c)making allegations that should not have been made, or otherwise unduly prolonging a case with groundless contentions.

[21]               The test is two-staged: first, whether there is a principled ground for ordering indemnity costs, and second, whether the claimed costs are reasonable.

Discussion

[22]               Southern Response says that the plaintiffs’ application for review must be seen in the context of their continued refusal to comply with Court directions, and the fact that they did not seek to challenge the earlier orders to the same effect. The submission is that the plaintiffs’ repeated, deliberate, disregard for Court orders, and very belated challenge to the last of them, constitutes vexatious, frivolous, improper and/or unnecessary conduct.

[23]               As will be evident from my earlier discussion of these matters, I have considerable sympathy for Southern Response’s position. That said, however, I am conscious that I am being asked to determine costs issues in relation to a proceeding that did not result in a decision by me (or by any other Judge). Despite my relatively clear view on the matters to which I have already referred, I did not hear fully from the parties on the merits. Rather, the parties reached an agreement that obviated the need for the hearing to be completed or for a decision.

[24]               I am inclined to agree with Mr Cooper that it would be most unusual to make an award of indemnity costs in those circumstances and I decline to do so.  I am,

5 At [29].

however, prepared to order an uplift on 2B costs of 20 per cent, to take account of the extra time and cost resulting from the jurisdictional errors and the delays they occasioned. By way of example only, Mr Powell said that the mistaken filing in the Court of Appeal meant additional work was required hyperlinking submissions to the electronic bundle that would not have been required had the matter proceeded as it should have, by way of review in this Court.

Result

[25]               The plaintiffs are to pay Southern Response’s costs on the appeal/application for review, calculated on a 2B basis with a 20 per cent uplift, together with disbursements of $699.94.

Rebecca Ellis J

Solicitors:

Cavell Leitch, Christchurch for Plaintiffs Bell Gully, Auckland for Defendant