Nielsen v Earthquake Commission
[2019] NZHC 629
•28 March 2019
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2016-409-763
[2019] NZHC 629
BETWEEN GLORIA DIANNE NIELSEN and ANNAS CHRISTIAN NIELSON
PlaintiffsAND
THE EARTHQUAKE COMMISSION
First Defendant
AND
SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED
Second Defendant
Hearing: 25 March 2019 Appearances:
Plaintiffs in person
No appearance for First Defendant
S Campbell and B Entwistle for Second DefendantsJudgment:
28 March 2019
JUDGMENT OF ASSOCIATE JUDGE LESTER
[1] This is an application for wasted costs brought by the second defendant, Southern Response Earthquake Services Ltd (“Southern Response”), against the plaintiffs arising from what Southern Response says are the wasted costs of a joint experts’ report process.
NIELSEN & ANOR v THE EARTHQUAKE COMMISSION & ANOR [2019] NZHC 629 [28 March 2019].
[2] The wasted costs are said to arise because following the completion of a joint experts’ report filed on 1 November 2017, the plaintiffs in August 2018 advised they were changing their expert to Mr Blyth of TM Consultants Ltd. The costs said to have been wasted include the costs incurred in the joint experts site visit on 22 May 2017 and the work associated with Southern Response’s expert being involved.
[3] Southern Response’s submission in short is that by the plaintiffs changing their expert, the joint experts’ report process has been wasted and the costs incurred in respect of that process have been “thrown away”.
[4] Southern Response says that in its application it has isolated the direct costs of Southern Response having to participate in the mandatory process of participating in the joint experts’ report and that none of the costs it claims relate to their experts’ preparation of their original report.
[5]Southern Response submits:
The plaintiffs are free to run their case as they see fit. …. but that freedom to run the case does not mean the plaintiffs have an immunity for the consequences of doing so.
[6] Counsel for Southern Response refer to the memorandum filed for case management purposes on 28 August 2018. In that memorandum. Southern Response’s counsel accepted the advice that the plaintiffs no longer relied on the evidence of their previous expert. However, at para 10 of the memorandum, Southern Response’s counsel said:
The second defendant reserves its position on bringing the wasted costs application flowing from the plaintiff[s] (sic) changing their engineer. It is likely that such an application will be brought.
[7] Nation J in a Minute of 31 August 2018 reserved leave to the defendants to make such an application. The wasted costs application was brought on 13 December 2018. The plaintiffs oppose the application.
[8] An “unless” order in relation to the provision of the plaintiffs’ new expert engineering evidence was not pursued.
Legal principles
[9] Mr Campbell for Southern Response highlighted the discretionary nature of the fixing of costs and referred to Venning J’s decision in EBR Holdings Ltd (in liq) v van Duyn as follows:1
A wasted cost award is to compensate a party who has incurred costs that are wasted and for which any ultimate cost award will not compensate. It recognises that the issues will need to be revisited and some steps repeated. Hence the Judge’s reference to costs “thrown away”. There is generally no obligation to exclude the steps considered in the granting of the wasted costs award from the ultimate costs award made at the end of the trial. The two awards are distinct in nature. In some cases it may, however, be appropriate to deduct the amount of a wasted costs order from the sum ultimately payable. Heath J did so in the present case.
[10] The plaintiffs, who are self-represented, did not take issue with the legal principles outlined by Southern Response’s counsel.
Summary of Southern Response’s case
[11] Southern Response’s position can be shortly stated. With the plaintiffs changing the engineer who participated in the joint experts’ report process, it says the steps taken as part of the joint experts’ report have been wasted. The submission is that the consequences of the plaintiffs changing their expert should not fall on Southern Response. Mr Campbell submitted that the traditional means of ensuring that the consequences of a decision were borne by the appropriate party was through costs. What Southern Response sought was to be reimbursed for costs thrown away on one isolated step, that is the joint experts’ report process.
[12] Because Southern Response says that the wasted costs were a result of the change of expert notified in August 2018, it says matters that postdate that decision by the plaintiffs are beside the point.
Plaintiffs’ arguments
[13] At the time the joint experts’ report was prepared the plaintiffs were represented by Canterbury Legal with Ms Noor instructed as counsel. On
1 EBR Holdings Ltd (in liq) v van Duyn [2018] NZHC 1065 at [14].
17 August 2018 Parry Field, solicitors of Christchurch, filed a notice that they had been instructed.
[14] The plaintiffs say that effectively at the insistence of Parry Field, they decided to not proceed with the expert who had anticipated in the joint experts’ report, but to instruct a new expert, Mr Blyth of TM Consultants Ltd.
[15] Mr Blyth’s report was timetabled to be filed by 19 October 2018 but by agreement time was extended to 7 December 2018. As it happened, the report from Mr Blyth was served on 19 December 2018.
[16] The plaintiffs’ submissions linked the claim for wasted costs application with the late filing of Mr Blyth’s report. The plaintiffs submit that there is no correlation between the 10 day delay and the wasted costs that were sought.
[17] The plaintiffs were critical of Southern Response, submitting that the bringing of the wasted costs application was in retaliation for Mr Blyth’s report taking a different approach to what was required for remediation from that which may have been previously contemplated by Southern Response. The plaintiffs go so far as to submit that there was some tacit agreement between their solicitors and the solicitors for Southern Response aimed at having the remediation work completed to a standard less than “as new” standard which the plaintiffs say is required by their policy. The existence of this tacit agreement was put by Mr Nielsen as a hypothesis. The plaintiffs suggest that had they not signalled that they were going to argue for a different remediation standard from that which may have been signalled on their behalf previously that Southern Response would not have brought the wasted costs application and the case may well have settled albeit based on a lower repair standard than the plaintiffs say is the correct repair standard. Thus, the submission was that the wasted costs application was in retaliation for the plaintiffs insisting on what they say is the correct contractual repair standard.
[18] Southern Response’s counsel disputed any such tacit agreement. Mr Campbell provided a chronology of the progress of the case, referring to a history of delays and non-compliance with timetable directions.
[19] Mr Campbell acknowledged there may have been something of “the straw that broke the camel’s back” in relation to the advice that the plaintiffs were going to argue for an “as new” standard but emphasised that litigation was ultimately adversarial and that there was nothing in the nature of an abuse of process in the application being brought given it was foreshadowed in August 2018.
Discussion
[20] An email from Southern Response’s solicitors to Parry Field, upon being advised of the plaintiffs’ view of the correct repair standard, can be read as there having been some discussion between counsel about that issue. Assuming such discussions occurred, there is nothing objectionable in that regard. Counsel routinely discuss a range of matters relating to litigation. Whether such discussion amounts to a “tacit agreement” need not be resolved as the practical point is Southern Response does not suggest that the plaintiffs’ solicitors entered any binding agreement on their behalf in relation to any aspect of the litigation.
[21] I also accept the argument that whatever happened between Parry Field and Wynn Williams postdates the change of expert and so is not relevant to the wasted costs issue. Even if the costs application was to some extent borne from some frustration, this does not disqualify Southern Response from pursuing the wasted costs application foreshadowed in August 2018. The circumstances do not amount to an abuse of process
[22] That a wasted costs application was foreshadowed in August 2018 was a reasonably conventional response to a party changing experts with the result that the directed joint experts’ report process was rendered redundant.
[23] The wasted costs arose through the work put into the joint experts’ report being thrown away when one of the participants in the joint experts’ report ceased to be involved in the litigation.
[24] The joint experts’ report is required to set out the opinions of the individual experts involved. The authors of the report will be the experts who give evidence at the hearing, albeit that the report is intended to narrow the matters in issue.
[25] Mr Nielsen said that the joint report was not wasted at least insofar as it set out the damage that it records because the new expert does not disagree with the previous description of the damage, at least in terms of the “big ticket items”.
[26] However, there is merit in Mr Campbell’s submission that the joint experts’ report process has the benefit of the experts conferring and sharing their opinions. The discussions between the experts are a key part of the process.
[27] The instruction given by the plaintiffs’ previous solicitors to Mr Blyth is really beside the point. Whether the plaintiffs agree with those instructions or not is not relevant to whether the value of the prior joint experts’ report has been lost.
[28] I agree with Ms Entwistle’s submission that what went on between the plaintiffs and their then counsel and engineers is not Southern Response’s problem. In any event, all such interaction post-dated the change of engineer in August 2018.
[29] Nor does the plaintiffs’ assertion that Southern Response has adopted the incorrect standard of repair in its engineer’s report assist them. If Southern Response has incorrectly instructed their expert as to the repair standard, that will have implications at trial. But the standard adopted by Southern Response is not why the plaintiffs changed their expert. The plaintiffs express that they changed expert as a result of what they say was persuasion from their solicitor.
[30] The points raised by the plaintiffs ultimately do not engage with or counter the fundamental point for Southern Response that the joint experts’ report process has been rendered worthless through the change of experts.
[31] I find that Southern Response has incurred wasted costs as a result. There is nothing unreasonable in the plaintiffs having to bear the consequences of their tactical decision to change engineer. While they say that decision was as a result of being persuaded by their solicitor, that is ultimately a matter between the plaintiffs and their solicitor.
Quantum of wasted costs
[32]The defendants sought the following wasted costs:
(a)Disbursements by way of invoices from BlueBarn Consulting Engineers Limited (“BlueBarn”), totalling $1,840 including GST.
(b)Disbursements by way of invoices from Arrow International (NZ) Limited (“Arrow”), totalling $1,050 including GST.
(c)Legal fees in the amount of $3,683.45 plus GST.
(A schedule of the costs in (a) was produced (and is set out at Schedule 1 of this judgment) and Southern Response offered to make available details of the costs in (b) and (c) if sought).
[33] The plaintiffs did not have any specific criticism of these figures, beyond the general submission that the costs application was retaliatory.
[34] The Arrow costs at [32](b) above, are wasted as Arrow costed the repair methodology that came out of the joint experts’ report.
[35] In the absence of any particular objection to the quantum claimed, I accept counsel for Southern Response’s calculation of the amount said to be thrown away.
[36]Accordingly, the plaintiffs are to pay to Southern Response the sum of
$6,573.45 being the wasted costs set out above.
Costs on this application
[37] The defendants have sought costs on bringing this application. There is no reason why costs should not follow the event. Costs ordered to the defendants on a 2B basis together with disbursements as fixed by the Registrar.
Associate Judge Lester
Solicitors:
Wynn Williams, Christchurch G Nielsen for Plaintiffs
SCHEDULE 1
Blue Barn invoices
Invoice no. Date Description Amount
(GST inclusive)
1004505 20/6/2017 Site visit with engineers $644 1004649 20/7/2017 Preparing joint report $368 100714 20/8/2017 Reviewing joint report $184 1004776 20/09/2017 Reviewing and signing off final
joint report
$368 1004866 20/10/2017 Discussion and summary of
joint report with solicitors due to delay
$276 Total $1,840
1