Morley v The Earthquake Commission

[2013] NZHC 770

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-1630 [2013] NZHC 770

IN THE MATTER OF     the Declaratory Judgments Act 1908

BETWEEN  SUNNY ALISON JUNE MORLEY AND NEW ZEALAND TRUSTEE SERVICES LIMITED

First Plaintiffs

ANDMT VISION LIMITED Second Plaintiff

ANDTHE EARTHQUAKE COMMISSION Defendant

Hearing:         On the papers

Appearances: G M Brodie for the Plaintiffs

J A Knight and A Neris for the Defendants

Judgment:      16 April 2013

COSTS JUDGMENT OF PRIESTLEY J

Counsel:

G Brodie, Barrister, Christchurch. Email: [email protected]

J A Knight, Chapman Tripp, Wellington. Email: [email protected]

A Neris, Chapman Tripp, Wellington. Email: [email protected]

MORLEY V THE EARTHQUAKE COMMISSION HC CHCH CIV-2012-409-1630 [16 April 2013]

[1]      I delivered a reserved judgment relating to declarations under the Declaratory

Judgments Act 1908 on 18 February 2013.

[2]      Two proceedings were heard together.  The focus of the proceedings was essentially  a  question  of  statutory  interpretation;  whether  various  residential boarding houses owned by two sets of plaintiffs were covered by the definition of “residential buildings” for the purposes of s 18(1) of the Earthquake Commission Act 1993.

[3]      Both sets of plaintiffs were successful and, as I understand it, the Earthquake Commission (EQC) has accepted my judgment and has not appealed.   Paragraphs [72] – [74] of my judgment expressed the view that the plaintiffs in both proceedings were clearly entitled to costs.  I urged counsel to resolve costs without the need for further judicial intervention.   I directed that if costs could not be resolved by 31

March 2013 short submissions were to be filed by the parties (not to exceed three A4 pages).

[4]      One set of plaintiffs seeks uplifted costs, preferably indemnity costs.  EQC resists that application but accepts that an award of category 2B costs is appropriate. EQC’s submissions occupied the stipulated three pages.   Mr Brodie’s submissions ran to six pages plus an annexure.

[5]      Inclusive  of  GST  and  disbursements,  Mr  Brodie’s  fee  note  (he  being  a barrister sole) to the plaintiffs totals $25,616.80.  Costs and disbursements on the 2B category basis total $11,997.60.

[6]      If the claim for indemnity costs is rejected, Mr Brodie submits that the Court should instead contemplate costs on either the category 3B basis or alternatively a category 2C basis.

[7]      Various reasons were advanced to support these submissions. They are:

(a)      In  June  and  July  2012  EQC  solicitors  advised  that  they  would themselves be bringing a declaratory judgment to try to resolve issues over the definition of residential buildings, but failed to do so, leaving it instead to the plaintiffs.

(b)      The litigation was essentially a test case. (c)     The litigation was for the benefit of EQC.

(d)      Because the proceeding was a test case greater complexity resulted. (e)        The history of the litigation needed to be researched.

(f)       Running the proceeding in tandem with another similar proceeding added to the time and complexity involved.

[8]      Mr Knight accepts that  the proceeding was in  the nature of a test  case. However, the authorities cited by Mr Brodie, which I do not need to replicate for the purpose of this judgment, do not create a discernible rule that indemnity costs, nor indeed uplifted costs, will be awarded in favour of the successful party in a test case. Indemnity costs are usually reserved for situations where there is something unacceptable about the litigation or where one party’s conduct has been unmeritorious. This is not such a case.

[9]      In  terms  of  r 14.3  of  the  High  Court  Rules,  category 2  proceedings  are proceedings of average complexity requiring counsel’s skill and experience considered average in the High Court.  Category 3 proceedings are proceedings that, because of their complexity or significance, require counsel to have special skill and experience in the High Court.

[10]     Although the other set of plaintiffs (with whom I presume costs have been settled) were represented by a Queen’s Counsel I do not consider this proceeding fits inside category 3.   The central issue was one of statutory interpretation.   There is nothing about the proceeding which would require counsel to have special skill and experience, thus bringing the proceeding inside the higher category.

[11]     On the issue of whether category 2C should apply, rather than category 2B, I note, in terms of r 14.5(2)(c) that band C applies to a comparatively large amount of time for the particular step.  I discern no such factor except in the area of researching the legislative history of the Earthquake Commission Act.   That history was dealt with extensively in my judgment.  I note, at [24] of my judgment, I commented that both Mr Knight and Mr Brodie had helpfully traced the legislative history, which inevitably involved policy formulation and drafting over a period of five years.  It is apparent from Mr Brodie’s itemised bill of costs that some time (unquantified) was spent in discussions with Parliamentary Counsel and researching Hansard.

[12]     Rule 14.1(1), now extensively qualified by subsequent costs rules, provides that costs remain discretionary.  On the 2B scale the plaintiff is entitled to 1.5 days ($2,985) for the item of preparation of submissions.   The somewhat tortuous legislative history of the Act, in my view, made the central statutory interpretation issue more time-consuming than would otherwise have been the case where normal interpretation approaches apply.  In the exercise of my discretion I am therefore prepared to uplift that item from $2,985 to $3,750, that being the only permitted adjustment to the category 2B figures contained in [24] of Mr Brodie’s submissions on costs.

[13]     Counsel appear to disagree on one other item.  Mr Brodie claims $966.80 by way of Court filing fees as a disbursement.  Mr Knight submits that the proper figure for filing fees should have been $725.10.  Mr Knight’s submission is based on the schedule of filing fees properly payable under the High Court Fees Regulations

2001.  Counsel are directed to confer with the Registrar of the Christchurch High Court in that regard, who is in turn directed to determine the correct amount of filing fees which the plaintiff should have paid, and to arrange a refund if in fact there was an  unwitting  overpayment.    The  disbursement  figure  must  clearly  be  the  sum properly paid by way of filing fees.

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Priestley J