Heale v IAG New Zealand Limited
[2020] NZHC 352
•3 March 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-000166
[2020] NZHC 352
BETWEEN THOMAS EDWARD FAIRFAX HEALE and ANTHEA CLARE HEALE
Plaintiffs
AND
IAG NEW ZEALAND LIMITED
Defendant
AND
QBE INSURANCE (AUSTRALIA) LIMITED
First Third Party
AND
BUILDTECH RESTORATIONS LIMITED
Second Third Party
AND
ENGINEERING DESIGN CONSULTANTS LIMITED
Third Third Party
Hearing: Determined on the papers Counsel:
A N Riches for Plaintiffs
N S Gedye QC, B R Cuff and M K Booth for Defendant
D H McLellan QC, G N Gallaway and G T Carter for First Third PartyP A Cowey and D L Bell for Second Third Party J M Morrison for Third Third Party
Judgment:
3 March 2020
COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 3 March 2020 at 9.00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/ Deputy Registrar Date:
HEALE v IAG NEW ZEALAND LTD [2020] NZHC 352 [3 March 2020]
The application for costs
[1] On 1 November 20191 on IAG New Zealand Ltd’s (IAG) application I made the following orders:
(a)granting IAG leave under s 9(4) of the Law Reform Act 1936 to continue its third party statement of claim dated 31 August 2008 against QBE Insurance (Australia) Ltd (QBE) and to join QBE as first third party; and
(b)granting IAG leave under r 4.4 High Court Rules to join Buildtech Restorations Ltd (Buildtech) as second third party and Engineering Design Consultants Ltd (EDC) as third third party.
[2] The plaintiffs (the Heales) opposed the making of the orders in [1](a) and (b). QBE opposed the making of the order in [1](a). Buildtech and EDC opposed the making of the orders in [1](b) in so far as they applied to them.
[3] IAG now seeks costs arguing it was wholly successful on its applications. In response the other parties argue they should get costs on unsuccessful applications by IAG to join QBE, Buildtech and EDC as defendants.
Background
[4] The Heales were the owners of a property at 9 Snowdon Road, Christchurch that was damaged by earthquake. They made an insurance claim with IAG and their house was repaired. They remained unsatisfied and filed this proceeding against IAG alleging breaches of their insurance policy, negligence and breach of the Fair Trading Act 1986.
[5] IAG defended the Heales’ claim and applied to join additional parties. The basis for this is set out in the judgment of 1 November 2019. Those applications proceeded as follows:
1 Heale v IAG New Zealand Ltd [2019] NZHC 2829.
(a)On 9 April 2019, IAG made an application to:
(i)join Buildtech and EDC as defendants; and
(ii)for leave under s 9(4) of the Law Reform Act 1936 to commence an action against QBE as a third party.
(b)The application of 9 April 2019 was opposed by the other parties. Notices of opposition and affidavits were filed.
(c)On 30 May 2019, a telephone conference was convened before Whata J. IAG indicated it proposed to file an amended application for joinder. A timetable was put in place.
(d)On 10 June 2019, IAG filed an amended application:
(i)for leave under s 9(4) of the Law Reform Act 1936 to continue its third party statement of claim against QBE and join QBE as a fourth defendant; and
(ii)to join Buildtech and EDC as defendants.
(e)On 10 June 2019, also, IAG filed an application to join Buildtech and EDC as third parties. The application to join Buildtech and EDC as third parties was not immediately served upon them.
(f)The Heales filed notices of opposition to both of IAG’s applications of 10 June 2019. QBE filed a notice of opposition to the amended application of 10 June 2019 only.
(g)On 28 May 2019, there was to be a further telephone conference before Associate Judge Matthews, but he issued directions on the papers that Buildtech and EDC were to be served with the applications to join them as third parties. He also made other directions to have IAG’s applications set down for hearing.
(h)Buildtech and EDC were served. Buildtech (on 26 July) and EDC (on 24 July) filed oppositions to IAG’s application to join them as third parties.
(i)On 9 August 2019, IAG’s counsel filed a memorandum with the Court “to update the Court on its applications to join parties as defendants”. Counsel advised that IAG would not pursue its application to join QBE, Buildtech or EDC as defendants. This narrowed the issues to be determined to:
(i)whether leave should be granted for IAG to proceed under s 9(4) of the Law Reform Act 1936 against QBE as a third party; and
(ii)whether Buildtech and EDC should be joined as third parties.
(j)On 19 August 2019, Associate Judge Lester noted that IAG’s application to join defendants would not be pursued and set the remaining matters down for hearing on 24 September 2019.
(k)On 24 September 2019, I heard the applications on a defended basis and issued my judgment on 1 November 2019.
IAG says it was successful
[6] IAG argues that costs should generally be fixed when interlocutory applications are determined and the overriding principle is that a party who fails with respect to an interlocutory application should pay costs to the party who succeeds. It also submits that here costs should be determined on a Category 2B basis. These matters are uncontentious.
[7] IAG then claims to have been wholly successful on its applications to join third parties. It calculates its fair and reasonable costs and reasonable disbursements total
$17,792 in respect of which the other parties should contribute in the following proportions:
(a) QBE $8,227
(b) Buildtech $3,188
(c) EDC $3,188
(d) Heales $3,188
[8] QBE takes issue with IAG’s calculations in certain respects. In addition, as noted, the other parties (including QBE) argue that IAG should pay costs on its abandoned applications to join QBE, Buildtech and EDC as defendants.
Discussion
[9]I proceed in three stages:
(a)first, I shall determine what costs IAG is entitled to on its successful applications to join third parties;
(b)second, I shall determine what (if any) costs the other parties are entitled to in respect of IAG’s abandoned applications; and
(c)third, I consider where the liability for costs should lie recognising that all matters in relation to costs are at the discretion of the Court.2
IAG’s calculations
[10] IAG’s calculation of its claimed costs are set out in the scheduled attached as A.
[11] IAG claims costs on filing three interlocutory applications and the filing fees on two applications. I can see no justification for that. Three applications were filed but this was because of changes in IAG’s position. It should have made one application correctly. IAG is entitled to costs on one application and one filing fee.
2 High Court Rules 2016, r 14.1(1).
[12] IAG claims costs for filing memoranda for case management conferences or mentions hearings.3 IAG refers to memoranda dated 24 June 2019 and 9 August 2019. The memorandum dated 24 June 2019 was a joint memorandum, but it appears to have been prepared by the Heales’ counsel. It was not filed for a case management conference or mentions hearing but to seek an amendment of the timetable made by Whata J on 30 May 2019. The memorandum of 9 August 2019 was prepared by IAG’s counsel but not for a case management conference or mentions hearing. It was to advise the Court that IAG was not pursuing its applications to join QBE, Buildtech and EDC as defendants and, consequently, to seek a timetable in respect to its remaining applications. I disallow these claims.
[13] QBE raises an issue concerning IAG’s apportionment of costs between the other parties. It argues the Heales should contribute a greater share towards IAG’s costs as they alone opposed both successful applications. Whilst this is correct, in relation to the application to join QBE the Heales involvement was insignificant and very much in a supporting role to QBE. On balance I consider the apportionments adopted by IAG are appropriate.
[14] Attached to this ruling as schedule B is my calculation of IAG’s entitlement to costs on its successful applications.
[15]I find IAG’s fair and reasonable costs and reasonable disbursements total
$12,832 and, adopting IAG’s approach, the other parties should contribute in the following proportions:
(a) QBE $6,416.
(b) Buildtech $2,138.67
(c) EDC $2,138.67
(d) Heales $2,138.67
3 High Court Rules, sch 3, item 11.
The other parties’ costs
[16] IAG’s applications to join QBE, Buildtech and EDC as defendants were formally opposed and IAG abandoned them. IAG must be considered an unsuccessful party in relation to those applications. I cannot see why it should not pay costs on the same basis it has claimed them.
[17] I consider it was reasonable for the other parties to be separately represented and that each is entitled to an award of costs. Whilst they were united in opposition to IAG’s applications, their interests in the substantive proceeding are not aligned in all respects. They could not be represented by the same counsel.
[18] Attached to this ruling as schedule C and D are my calculations of the other parties’ entitlements to costs on the abandoned applications.
[19]I have disallowed some of the other parties’ claims as follows:
(a)The Heales sought costs for filing two notices of opposition in response to IAG’s application of 9 April 2019 and its amended application of 10 June 2019. The notices of oppositions were materially the same and do not justify an additional award of costs. I do allow the Heales two filing fees which I consider reasonably incurred.
(b)The Heales have claimed costs for filing a memorandum dated 29 May 2019 for a case management conference. I can find no record of that memorandum and disallow the claim.
(c)Buildtech has claimed costs for filing memoranda dated 29 May 2019 and 20 June 2019 for case management conferences. The memorandum of 29 May 2019 is just four lines agreeing to orders sought by IAG. It does not justify an award of costs. The memorandum of 20 June 2019 was a joint memorandum on behalf of the Heales, EDC and Buildtech prepared by EDC’s counsel. It concerned all IAG’s
applications, including the successful ones, and I regard it as neutral for costs purposes for that reason.
(d)Buildtech has claimed for the costs of filing its memorandum in relation to costs. Any entitlement must be dependent upon the result of this judgment and I deal with it below.
(e)EDC sought costs for filing the memorandum of 20 June 2020 which I disallow for the reasons given in (c) above.
[20] I find the other parties fair and reasonable costs and disbursements in respect of IAG’s abandoned applications total $2,227 for the Heales and $2,117 for QBE, Buildtech and EDC.
Discretion
[21] It will be observed that the costs to which the Heales, Buildtech and EDC are entitled almost exactly off-set IAG’s entitlement. Before IAG sought costs it was aware that the other parties entitlement to costs on the abandoned applications would be put in issue. Surprisingly it did not raise the matter when claiming costs. It plainly was in a position to do so if it opposed those claims.
[22] Mr Morrison for EDC wrote to IAG’s counsel pointing out that IAG had not factored in EDC’s entitlement to costs on the abandoned applications and said:
It is nickel and dime nonsense to go into costs any further when the difference in “entitlement” would be a few hundred dollars at best.
Accordingly rather than you file a memorandum in terms of your draft and I respond as outlined above I suggest we simply agree that costs on the application for third party joinder and earlier application for joinder as defendant (as between your client and EDC) lie where they fall …
[23] Mr Morrison’s approach was sensible but not accepted. It applied equally to the positions of the Heales and Buildtech. There is an argument there should be some costs consequence. However, on reflection a fair result in all the circumstances is that costs as between IAG and the Heales, Buildtech and EDC should lie where they fall.
[24] QBE is in a different position. Even allowing for its entitlement to costs on the abandoned applications there is a significant sum owing to IAG. I can see no reason it should not pay that sum.
[25] QBE submitted it had some success upon its objection to affidavits of Mr Harvett filed in support of IAG’s applications which was the subject of substantive submissions and a ruling.4 That is correct but as QBE acknowledges, ultimately it made no difference to the outcome and I do not consider IAG’s entitlement to costs should be reduced as a consequence.5
Result
[26] As between IAG and the Heales, Buildtech and EDC costs on IAG’s applications for joinder of defendants and third parties shall lie where they fall.
[27] As between IAG and QBE, I find IAG is entitled to costs and disbursement on its application to join QBE as a third party in the sum of $6,416. QBE is entitled to costs on IAG’s abandoned applications to join QBE as a defendant in the sum of
$2,117. Pursuant to r 14.17 the cost awards should be set-off against each other. QBE is therefore ordered to pay IAG the sum of $4,299.
O G Paulsen Associate Judge
Solicitors:
Saunders & Co, Christchurch DLA Piper, Wellington Chapman Tripp, Christchurch
Parry Field Lawyers, Christchurch Rainey Collins, Wellington
4 Heale v IAG New Zealand Ltd, above n1, at [60] – [67].
5 High Court Rules, r 14.17.
A
SCHEDULE OF COSTS AND DISBURSEMENTS
QBE interlocutory application
Item Description Allocated days or part days Appropriate daily recovery rate Total 22 Filing interlocutory application 0.6 $2,230 $1,338.00 24 Preparation of written submissions 1.5 $2,390 $3,585.00 26 Appearance at hearing of defended application for sole or principal counsel 0.5 $2,390 $1,195.00 Sub-Total $6,118.00 Disbursements Filing fee $500 Total $6,618.00
EDC and Buildtech interlocutory applications
Item Description Allocated days or part days Appropriate daily recovery
rate
Total 22 Filing interlocutory application x 2 1.2 $2,230 $2,676.00 24 Preparation of written submissions 1.5 $2,390 $3,585.00 26 Appearance at hearing of defended application for sole or principal counsel 0.5 $2,390 $1,195.00 Sub-Total $7,456.00
Disbursements Filing fee $500 Total $7,956.00
Shared costs of consolidated case management and hearing
Item Description Allocated days or part days Appropriate daily recovery rate Total 11 Filing memorandum for first or subsequent case management conference or mentions hearing x 2 0.8 $2,230 $1,784.00 25 Preparation by applicant of bundle for hearing 0.6 $2,390 $1,434.00 Sub-Total $3,218.00
B
SCHEDULE OF COSTS AND DISBURSEMENTS
QBE interlocutory application
Item Description Allocated days or part days Appropriate daily recovery rate Total 24 Preparation of written submissions 1.5 $2,390 $3,585.00 26 Appearance at hearing of defended application for sole or principal counsel 0.5 $2,390 $1,195.00 Total $4,780.00
EDC and Buildtech interlocutory applications
Item Description Allocated days or part days Appropriate daily recovery Total 24 Preparation of written submissions 1.5 $2,390 $3,585.00 26 Appearance at hearing of defended application for sole or principal counsel 0.5 $2,390 $1,195.00 Total $4,780.00
Shared costs of hearing
Item Description Allocated days or part days Appropriate daily recovery rate Total 22 Filing interlocutory application 0.6 $2,230 $1,338.00 25 Preparation by applicant of bundle for hearing 0.6 $2,390 $1,434.00 Sub-Total $2,772.00 Disbursements Filing fee $500 Total $3,272.00
C
SCHEDULE OF COSTS AND DISBURSEMENTS OF QBE, BUILDTECH AND EDC
IAG applications to join defendants
Item Description Allocated days or part days Appropriate daily recovery
rate
Total 23 Filing opposition to
interlocutory application
0.6 $2,230 $1,338 24 Appearance at case
management conference on 30 May 2018
0.3 $2,230 $669 Sub-Total $2,007 Disbursements Filing fee on notice of opposition $110 Total $2,117
D
SCHEDULE OF COSTS AND DISBURSEMENTS OF THE HEALES
IAG application to join defendants
Item Description Allocated days or part days Appropriate daily recovery rate Total 23 Filing opposition to
interlocutory application
0.6 $2,230 $1,338 24 Appearance at case
management conference on 30 May 2018
0.3 $2,230 $669 26 Appearance at hearing of defended application for sole or principal counsel Sub-Total $2,007 Disbursements Filing fee on notice of opposition (x2) $220 Total $2,227
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