Hoju v Earthquake Commission - [2018] NZHC 2138

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2016-409-001096

[2018] NZHC 2138

BETWEEN PETRU HOJU and ANDREEA MONICA WILSON
Plaintiffs

AND

EARTHQUAKE COMMISSION

First Defendant

AND

SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED

Second Defendant

Hearing: 15 August 2018

Appearances:

C Halliday for Second Defendant (applicant for costs)

S P Rennie and R C Harris for Plaintiffs (respondents on costs) (Appearance by First Defendant excused)

Judgment:

17 August 2018

JUDGMENT OF ASSOCIATE JUDGE OSBORNE [COSTS]

Introduction

[1] The plaintiffs’ house suffered damaged in the Canterbury Earthquake Sequence in 2010-2011. They lodged claims with both the Earthquake Commission (“EQC”) with whom they were insured up to the statutory cap of $100,000 plus GST (per natural disaster event) and Southern Response Earthquake Services Limited (“Southern Response”). Southern Response is the company responsible for settling claims by AMI policy holders. EQC undertook some repairs and by 2014 viewed the repair as complete. Southern Response cash-settled the plaintiffs’ claim for earthquake damage to out of EQC scope items.

HOJU v EARTHQUAKE COMMISSION [2018] NZHC 2138 [17 August 2018]

[2] Thereafter there was disagreement as to the extent of any further repair required. The plaintiffs, on advice, maintained that the entire concrete slab beneath the house was required to be replaced. Such work would have taken the claim above EQC’s statutory cap and brought into play Southern Response’s liability.

[3] In November 2016 the plaintiffs commenced this proceeding against both EQC and Southern Response. Usual steps (in terms of proceedings on the Earthquake List) followed. Defences were filed. By consent, directions were made for the exchange of experts’ reports, the conferencing of experts and their joint reporting. The defendants effected some savings by sharing the briefing and payment of two sets of experts.

[4] By late 2017 there was a stark difference in the position adopted by the plaintiffs and the defendant. This was largely due to the expert advice they had received. The plaintiffs served a repair costing at $472,604. The separate repair costings served by EQC and Southern Response were $12,154.60 and $13,442 owed to respectively. Shortly before those costings were exchanged the plaintiffs had changed their solicitors.

[5] Soon after the exchange of costings, but still in December 2017, Southern Response initiated discussions with the plaintiffs with a view to having the plaintiffs’ claim against Southern Response discontinued. Matters relating to Southern Response’s costs following discontinuance were not resolved. By May 2018 the plaintiffs had decided to accept that their claim was under the EQC cap. That month they discontinued the proceeding against Southern Response, with costs reserved.

The costs application

[6] The proceeding was determined to be a Category 2 proceeding. Southern Response applies for its costs and disbursements following the discontinuance. It seeks costs on a 2B basis,1 and its usual disbursements together with full recovery of the fees it paid to its two experts (which reflect in their amounts the fact that they were shared between EQC and Southern Response).

1 High…

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 2138
Decision Date: 17 August 2018

CaseChat Overview and Summary

The plaintiffs, Petru Hoju and Andreea Monica Wilson, sought to recover damages from the Earthquake Commission (EQC) and Southern Response Earthquake Services Limited, stemming from earthquake damage to their house in the Canterbury Earthquake Sequence of 2010-2011. The EQC had already undertaken some repairs, but the plaintiffs believed further work was necessary, including replacing the entire concrete slab beneath the house, which would exceed the EQC's statutory cap of $100,000 plus GST. The plaintiffs' claim against Southern Response, which settled claims by AMI policyholders, was based on the belief that the total repair costs would exceed the EQC cap.

The primary legal issue before the court was whether Southern Response was entitled to costs following the discontinuance of the plaintiffs' claim against it. The plaintiffs opposed the awarding of costs, arguing that the costs should be determined alongside the remaining claim against EQC, or that there should be a refusal of costs on the basis that Southern Response unnecessarily maintained separate legal representation from EQC.

The court applied the presumption under High Court Rule 15.23 that a plaintiff who discontinues a proceeding must pay the defendant's costs up to and including the discontinuance, unless the court otherwise orders. The plaintiffs needed to persuade the court that it was just and equitable to order otherwise. The court found that the plaintiffs had not provided sufficient grounds to displace the presumption, especially considering the difficulty in accurately predicting the amount in issue in earthquake litigation. The court also rejected the plaintiffs' argument that Southern Response should not be awarded costs due to its separate representation, noting that the two defendants had distinct responsibilities and potential conflicts of interest.

The court ordered the plaintiffs to pay Southern Response $12,934 in costs and $15,537.28 in disbursements, excluding the GST content of the disbursements. The court determined that the general approach of Southern Response's calculation of costs and disbursements was understandable but made adjustments for certain items based on the appropriate cost bands and the nature of the disbursements.

Orders