Hood v Earthquake Commission
[2018] NZHC 2393
•12 September 2018
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2016-409-001024
[2018] NZHC 2393
BETWEEN RACHEL MARY HOOD
Plaintiff
AND
THE EARTHQUAKE COMMISSION
First Defendant
AND
IAG NEW ZEALAND LIMITED
Second Defendant
Hearing: 11 September 2018 (Determined on the papers) Counsel:
G D R Shand for Plaintiff (Applicant for costs)
K Rouch for First Defendant (Respondent on costs application)
Judgment:
12 September 2018
COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
[1] This claim is derived from the Christchurch earthquakes. The claim has settled in all respects except for costs. Ms Hood’s claim against IAG New Zealand Limited (IAG) has been settled on the basis that costs will not be paid. Ms Hood seeks costs against The Earthquake Commission (EQC).
[2] Ms Hood’s house was insured for replacement. EQC’s initial assessment was that it would cost $10,729 to repair the house. It was not until March 2018 that EQC accepted that Ms Hood’s claim exceeded its maximum liability of $100,000 plus GST, a point which the assessed cost of repairs was $438,292.63.
[3]Ms Hood through her solicitor claims costs of $21,631 and disbursements of
$9,418.45 making a total of $31,049.45. No allowance is made in this total for any costs to be awarded against, or paid by, IAG. Subject to a payment made on account
HOOD v THE EARTHQUAKE COMMISSION [2018] NZHC 2393 [12 September 2018]
Ms Hood claims from EQC the entire scale costs which might be awarded in a case of this kind, by her calculation, and all her disbursements.
[4] EQC has paid the sum of $12,179.37 to Ms Hood towards her costs. Thus Ms Hood now seeks an order for payment of the balance of $18,870.08. EQC’s payment was assessed as 50 per cent of the scale fee for commencement of the proceeding, 50 per cent of the scale fees for three memoranda, 50 per cent of one day at scale rates in respect of discovery, and 50 per cent of the costs of the scale fee for inspection for one day. EQC has also paid 50 per cent of all disbursements claimed.
[5] Assessment of costs in earthquake cases has come before this Court frequently. Where there are two defendants, it is established that as a general guideline, an award of costs against each defendant will be for half the overall costs payable to the plaintiff.
As Davidson J said in Deo Gratias Developments Ltd v Tower Insurance Ltd:1
[31] … While an award of costs is discretionary, the need for a consistent approach is important, particularly in the context of the many claims which have a similar narrative and features as in the Earthquake List in the Christchurch High Court Registry.
[32] The well settled guideline is readily applied in earthquake list cases to avoid the need for parties to come to court seeking costs orders, and only when differentiating features are identified should it not apply.
[6] The guideline referred to by his Honour does not prescribe a rigid approach to costs on discontinuance in earthquake list cases. It is, however, a practice endorsed by the Court of Appeal.2
[7] The task of the Court on the present application is to consider whether this guideline should apply in the present case.
[8] For the plaintiff Mr Shand noted the substantial change of position by EQC from an assessment of some $10,000 to repair her house to eventual acceptance that the remedial cost was over four times its statutory cap. Mr Shand says that almost immediately after EQC accepted that the claim was over cap, and paid accordingly, settlement was achieved with IAG. Thus he says that the costs of the litigation, which
1 Deo Gratias Developments Ltd v Tower Insurance Ltd [2018] NZHC 1881.
2 Earthquake Commission v Whiting [2015] NZCA 144.
was required in order to bring about this change of position, should fall on EQC. He says there is no sensible reason why EQC could not have accepted the position much earlier, allowing the claim to be resolved without delay and in particular without litigation.
[9] EQC takes issue with a number of elements of Mr Shand’s summary of events between the earthquakes and ultimate resolution, and aspects of the conduct of the plaintiff’s case. What it does not appear to do is proffer any reason why it took the view it would cost only $10,000 or so to repair the house, and then took years to reach a position where it accepted that was not the case. It notes, however, that the Court does not generally take into account the conduct of the parties prior to issue of proceedings and it points out that although the earthquakes occurred early in 2011, the proceedings were not issued until October 2016.
[10] EQC says that no explanation has been given as to why part of the plaintiff’s costs were not recovered from IAG, it says that IAG and the plaintiff could have settled earlier (which Mr Shand denies) and it takes issue with some aspects of Mr Shand’s calculation of costs.
Discussion
[11] The first issue is whether the 50 per cent guideline should be applied in this case. Whilst one cannot help but have some sympathy for the position of the plaintiff who, in unfortunate personal circumstances, had to wait over seven years for EQC to accept her claim was over cap (as it transpires, more than four times cap and forty times its initial assessment) and thus her case to be resolved, not all of that is the responsibility of EQC. The proceedings could have been issued some years earlier, though there may have been sound reasons for that not having occurred. It is difficult to reach a firm conclusion on the rights and wrongs of delays in this field of litigation and the Court is mindful of the vast number of cases which EQC was handling, the substantial number of cases handled by the plaintiff’s solicitors, and the extreme pressure on experts to make assessments, produce reports and confer with their opposite numbers for EQC and insurers. Five years passed after the earthquakes before this case was commenced.
[12] I am also mindful of the difference in the submissions of Mr Shand and those of Ms Rouch on whether IAG should have paid out under the policy at an earlier date without waiting for EQC to finally assess the claim as over cap. IAG is not a party to this costs application so the Court cannot make any finding on the point. Certainly it is the experience of the Court that insurers do not pay, and are firmly of the view that they are not obliged to pay, until EQC has accepted that a claim is over cap and paid out accordingly.
[13] In the end, and despite the extraordinary early assessment by EQC, I am not persuaded that there is any reason not to apply the general guideline of each defendant being responsible for 50 per cent of the costs of the case.
[14] The plaintiff claims costs in four categories. The first is commencement of the proceeding. EQC accepts that it should pay 50 per cent of this item. Likewise, it accepts that it should pay 50 per cent of the scale costs for conference memoranda. I agree with this for the same reason.
[15] There is a difference in view between the parties, however, in relation to costs for discovery. The plaintiff claims 2.5 days, being the time allocation for this step, in band B. EQC assesses that one day should be allowed for discovery and it accepts responsibility for paying 50 per cent of that.
[16] I do not accept that is a correct assessment. Although discovery of documents by the plaintiff was limited in extent, that is not of itself sufficient reason to depart from the scale. The band for costs was stipulated and should be followed. The plaintiff is entitled to costs for discovery of 2.5 days. Accordingly EQC must pay costs for
1.25 days. At a daily rate of $2,230, this equates to $2,787.50.
[17] So far as inspection is concerned, the plaintiff claims two fees for inspection, each at 1.5 days in accordance with the scale. Whilst I accept the principle that where there are multiple parties a fee for inspection may properly be claimed and awarded in respect of each defendant, that is not the case here because the second defendant did not provide formal discovery. Thus, only EQC has any liability to pay costs for inspection. On this point I consider both parties to be in error. The plaintiff incorrectly
claimed for two inspections, when one of the defendants did not give discovery. EQC was correct to accept one cost allowance for inspection, but then incorrect to halve it when the entire inspection process involved only EQC.
[18]As a result, for inspection the plaintiff is entitled to costs for 1.5 days, $3,345.
[19] The plaintiff is therefore entitled to costs against EQC for the following number of days:
Commencement of proceeding : 1.50 Conference memoranda :
0.60
Discovery
1.25
Inspection
1.50
4.85
[20]
This translates to $10,815.50.
[21]
Total disbursements are $9,418. The
plaintiff is entitled to half, $4,709.23,
which EQC has paid.
[22]Therefore costs and disbursements in favour of the plaintiff amount to:
$10,815.50 $4,709.23 $15,524.73 Less paid $12,179.73 Payable $3,345.00
[23] Each side claimed costs on this application. Neither side has been entirely successful but each has prevailed to some extent. In the circumstances there will be no award of costs on this application.
Outcome
[24]EQC will pay to the plaintiff the sum of $3,345.00 by way of additional costs.
[25]There are no costs on this application.
J G Matthews Associate Judge
Solicitors:
Grant Shand, Auckland
Chapman Tripp, Wellington
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