Ramage v Earthquake Commission
[2016] NZHC 2327
•30 September 2016
IN THE HIG H COURT O F NEW ZEALAND CHRISTCHURCH REG ISTRY
CIV-2013-409-1302 [2016] NZHC 2327
BETWEEN JOHN RAMAGE AND
MARY ANN RAMAGE Plaintiff
AND
EARTHQUAKE COMMISSION First Defendant
SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED Second Defendant
Hearing: 27 July 2016 Appearances:
AJD Ferguson and J S Morriss for Plaintiffs
No appearance by or for First Defendant
BRD Cuff and S K Swinerd for Second DefendantJudgment:
30 September 2016
JUDGMENT O F MANDER J
[1] As a result of for mal mediation between the plaintiffs, Mr and Mrs Ramage (the Ramages), and the second defendant, Southern Response Earthquake Services Li mited (Souther n Response), agreement was reached i n respect of the Ramages’ insurance claim arising from damage to their property as a result of the Canterbur y earthquakes. As part of that settlement costs and disbursements were to be fixed by the Court. This judgment addresses that issue w hich was not otherwise able to be agreed between them.
Background
[2] The Ramages own a property i n New Brighton that suffered damage during the Canterbur y earthquakes. The y made claims in respect of that damage which
were accepted by the Earthquake Commission (EQC) and Southern Response. The
RAMAGE v EARTHQUAKE COMMISSION & ANOR [2016] NZHC 2327 [30 September 2016]
Ramages and EQC were not able to reach agreement rega rding the remediation of the damage, and in particular whether the scope of the damage exceeded the statutor y EQC cap of $100,000 plus GST. EQC maintained the cost of remediation was under cap.
[3] The Ramages commenced proceedings against both EQC and So uther n Response i n July 2013 seeking the sum of $792,136.08. Both EQC and Souther n Response defended the proceeding.
[4] In December 2015, EQC resiled from its origi nal position and notified the Ramages it now considered the cost of repairing the damage to be over the statutor y cap. Proceedings were discontinued agai nst EQC after that concession was made. Thereafter, Southern Response accepted liability for all amounts exceeding the EQC payment, however, there remained dispute as to how much that was.
[5] The proceeding was settled at mediation on 13 April 2016. Souther n Response’s offer to pay the Ramages $205,000 was accepted. It was agreed that costs and disbursements were to be fixed by the Cour t. The proceeding against Southern Response was discontinued.
[6] EQC has paid the Ramages $32,677.51 in costs. This sum represents 50 per cent of the total costs based on reasonable 2B costs and disbursements.
The part ies’ respective positions
Submissions for the Ramages
[7] The Ramages submi tted the position taken by Southern Response prior to them commencing their proceeding was that it had no liability apart from damage to driveways and paths (out of scope exter nal works). Once proceedings were commenced, Souther n Response mai ntained the damage to their house was under the EQC cap and therefore it did not have any liability, potential or otherwise.
[8] The Ramages contend that because Souther n Response has now paid in excess of $230,000 it is apparent its original stance was erroneous, and onl y by
commencing the proceeding have the Ramages achieved that result. While it is acknowledged the Ramages did not recover the figure originally sought, the proceedings have sustained their original fundamental position that Souther n Response was liable under the insurance policy for dama ge incurred as a result of the earthquakes and they therefore have been successful. The Ramages submitted that accepting the settlement sum should not be equated with abandonment of their original position that the house should have been rebuilt.
[9] The proceedings are appropriately categorised as 2 under r 14.3, and band B should be applied to all steps in the proceeding. An i nitial submission by the Ramages that band C should be applied to witness statement preparation was abandoned. In summary, the Ramages submi tted that it was just and equitable that Southern Response be ordered to pay costs and disbursements in the sum of
$38,251.46.
Submissions for Southern Response
[10] In response, Southern Response sought to emphasise that at the ti me the proceedings were filed by the Ramages no for mal claim had been lodged with Southern Response for building damage i n excess of the EQC cap. The onl y clai m received by the insurance company from the Ramages was for EQC out of scope exter nal works. As a resul t, Souther n Response at the ti me it was served with the proceedings had not undertaken any inspection or assessment of building damage, other than i n respect of the out of scope external works.
[11] Southern Response submi tted it had been in regular communication with the Ramages prior to the proceedings being filed in relation to the out of scope external works claim. It contended that at no ti me had the Ramages raised any issue in relation to EQC’s repair strategy, nor had they indicated to Southern Response their belief the damage to their home was over cap. It submitted the filing of the proceedings was premature and that Souther n Response was entitled to defend the proceeding given the circumstances in w hich they were initiated.
[12] Southern Response submitted that costs s hould lie where they fall because the settlement reached at for mal mediation was a compromise where both parties could
be considered to have obtained a level of success. It argued that i t was successful on the key issue in dispute, namely whether the Rama ges house was required to be repaired rather than replaced under the insurance policy. The settlement reached at mediation was based on Souther n Response’s repair strategy.
[13] Immediately prior to the mediation the Ramages’ position was that their home needed to be rebuilt at a cost of $683,395.00. Souther n Response took the position the house could be repaired at a cost of $219,054.00. The ulti mate figure agreed of $205,000 (not incl uding the EQC payments) represented a compromise by both parties as a result of the mediation which both parties agreed to enter into.
Relevant principles
[14] In Earthquake Commission v Whiting the Court of Appeal considered a number of appeals from EQC where costs had been awarded against it after discontinuances were filed.1 The Court observed that the starti ng point whe n assessing the issue of costs after a discontinuance is r 15.23:
15.23 Costs
Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.
[15] The application of the rule is subject to the defendant agreeing otherwise or the court ordering to the contrary. There is an onus on the plaintiff to persuade the court that it should order otherwise.2
[16] The Court’s discretion may be exercised where it is “just and equitable to displace the [r 15.23] presumption”. 3 When deter mini ng whether it is just and
equitable to exercise its discretion, the cour t may consider:4
1 Earthquake Commission v Whiting [2015] NZCA 144.
2 At [68].
3 At [66], citing Kroma Colour Prints Ltd v Tridonicato NZ Ltd [2008] NZCA 150, (2008) 18
PRNZ 973 at [12] and [29].
4 At [68], citing Kroma Colour Prints Ltd v Tridonicato NZ Ltd , above n 3, at [12] and [29];
Powell v Hally Labels Ltd [2014] NZCA 572 at [22]; Andrew Beck and others McGechan on Procedure (online looseleaf ed, Brookers) at [HRPt15.23.01]; and G E Dal Pont Law of Costs (3rd ed, LexisNexis Butterworths, Chatswood (NSW) 2013) at [14.64].
…the parties’ conduct in the matter and the reasonableness of the parties’ respective stances, including the reasons why the plaintiff brought and continued the proceeding and the defendant opposed it.
[17] If one of the parties had acted unreasonably or were almost certain to have been unsuccessful, then that party may be ordered to pay the costs. 5 However, the court should not undertake a review of the merits of the plaintiff’s claim unless they are immediately apparent. 6
[18] The predecessor to r 15.23 was previously held by the Court of Appeal to be aimed largely at unilateral discontinuances, rather than those resulting from settlement.7 Dal Pont on Law of Costs exami ned the situation where proceedings are settled prior to the hearing and the difficulties which arise in the Court attempti ng to award costs:8
14.66 Where a suit is compromised before hearing, and the parties have reached no agreement as to costs, the issue may arise as to whether, and if so how, a court can exercise its costs discret ion in the absence of a full hearin g on the merits. The lack of such a hearing deprives the court of the main factor that determines whether or how it will make a costs order: the ultimate outcome of the case. It is tempting as a starting point to simply say that the appropriate course is that each party bear its own costs. There is, to this end, considerable case authority supportive of the view that it is rarely appropriate, without a trial on the merits, for a court to seek to determine a case on the merits for the purpose of making a costs order, particularly if such a trial would involve complex factual matters where credit could be an issue…
It follows that, at least in cases where the conduct of each party in the litigation has been reasonable, and there is no satisfactory basis upon which the court can make an assessment of the merits, each party will ordinarily be ordered to bear his or her own costs.
(Citations omitted)
[19] Accordingl y, where proceedings have been discontinued by agreement costs generally will lie where they fall, unless:
(a) one of the parties has clearly been successful; or
5 Earthquake Commission v Whiting, above n 1, at [70].
6 At [71], citing Powell v Hally Labels Ltd, above n 4, at [23]-[24].
7 Uttinger v Baycity New Zealand Ltd [2008] NZCA 330, (2008) 19 PRNZ 54 at [12].
8 Dal Pont, above n 4..
(b) one of the parties has acted unreasonably. I will consider each of those questions in turn.
Were the Ramages successful?
[20] The Ramages sought to draw support for their argument they had been successful in the litigation by reference to two analogous cases of Zygadlo v Earthquake Commission and Driessen v Earthquake Commission.9
[21] In Zygadlo, the plaintiffs commenced proceedings agai nst EQC and Souther n Response in Augus t 2013 before reaching settlement with EQC i n August 2015 and, finally, with Souther n Response in March the following year. Davidson J held that notwithstandi ng the i nsurance company havi ng achieved a settlement less than a third of what had been clai med, the plaintiff was the successful party. However, the costs award was reduced due to the “unsatisfactory marshalling” of the plaintiffs’
experts which caused the defendants to i ncur unnecessary costs. 10 Fur ther reductions
and adjustments were also made to reflect the plaintiffs’ conduct i n the
proceedings.11
[22] In ter ms of the division of liability between EQC and Southern Response, Davidson J held EQC was only jointl y liable for costs up until the date proceedings were discontinued against it.12 However, because signi ficant costs were incurred while EQC delayed its decision, EQC was liable for a greater proportion of those costs than Southern Response. Ul ti mately, a two-thirds/one-third split was considered appropriate.13
[23] In the earlier decision of Driessen, Davidson J dealt with a si milar situation. The proceedings had been commenced i n November 2013. EQC acknowledged it was over the cap in May 2015 and in Februar y 2016, i mmediatel y prior to trial,
settlement was reached with Souther n Response. Davidson J a gai n held the fact the
9 Zygadlo v Earthquake Commission [2016] NZHC 1699; Driessen v Earthquake Commission
[2016] NZHC 1048.
10 At [49].
11 At [60].12 At [53].
13 At [61].
plaintiff came up shor t of the i nitial claim did not negate a costs order.14 In reachi ng that decision the Court concluded the plaintiff was entitled to be considered successful where it had achieved a settlement far in excess of the position adopted by both defendants at the outset of the proceedings. The defendants’ decision to press on with the litigation was ulti mately vi ndicated.
[24] Davidson J did not accept the plaintiff should have waited before issuing proceedings against Southern Response until she had settled with EQC. The ulti mate result in that case, as with the present one, demonstrated that the property required repairs well in excess of EQC’s liability which necessarily required joining both EQC and Souther n Response as defendants. Davidson J held that a 50 per cent award against EQC was appropriate and consistent with authority. 15
[25] In Littlejohn v Southern Response Earthquake Services Ltd, Miller J took a different approach. 16 In that case the Court refused to award costs where the plainti ff and Southern Response had managed to reach settlement. The fi gure was for substantially more than what the defendant had initially offered:
[2] …Costs are sought on the footing that the plaintiffs won, since the defendant has agreed to pay them a sum of money which they say is not far short of the amount originally claimed and substantially more than the defendant initially offered.
…
[4] Costs are always in the Court’s discretion, but it will not ordinarily speculate about what would have happened had there been a trial. Only in exceptional cases will the Court take a different view: Auckland City Council v Southborne Holdings Ltd HC Ak CIV-2010-404-4076, 8
November 2011. I do not think this case is sufficiently exceptional. It is not enough to compare amounts initially claimed against those offered. All of that might have changed by the time of trial. The reasons for any disparity between the claim and the amount paid might also be relevant, as might the defendant’s reasons for not paying before action.
[26] The approach taken by the Court in Littlejohn is consistent with the commentar y I have cited at [18] from Dal Pont on Law of Costs. In the absence of it
being clear that one party would almost have certainly succeeded had the matter
14 Driessen v Earthquake Commission, above n 10, at [23].
15 At [34].
16 Littlejohn v Southern Response Earthquake Services Ltd [2013] NZHC 1072.
proceeded to judgment, or where the ter ms of the settlement essentially vindicate s the case advanced by one of the parties and one party has effectively capitulated to the other, caution is required because settlement ter ms “may not necessarily equate to the outcome as adjudicated by the Court.” 17 Absent that type of situation, it woul d appear that notwithstanding the discretionar y nature of costs, it will not usually be just for a Court to make an award where a settlement has been achieved where the conduct of each party to the litigation has been reasonable unless an accurate and infor med assessment of what may have happened at trial can be made.
[27] Assessing success where proceedings have been disconti nued agai nst EQC is likely to involve a simpler exercise because success in that context is essentially binary: either EQC has conceded the claim to be above cap in which case the plaintiffs case is vindicated or the plaintiff concedes the claim to be below cap in which case EQC’s defence will have been sustained. The plaintiffs can do no better when liti gati ng against EQC than to obtai n the concession the claim is over cap. In respect of a private i nsurer the evaluation of success is necessarily more complex, particularly where the essential dispute is focussed on quantum and both parties have compromised their position to achieve a settlement. In the absence of success being clear to the extent that a party can be viewed as having essentially capitulated upon settlement, a Cour t should be wary of assessing the merits of each par ty’s case.
[28] I do not consider the present case to be one where it can be said that either party has capitulated to the other. The Ramages’ decision to bring proceed ings against EQC was vindicated w hen EQC fi nally acknowledged the Ramages’ claim was above cap. The Ramages therefore achieved complete success in obtaini ng that concession. I also accept the Ramages’ decision to bring proceedings against Southern Response can be held to have been vi ndicated to the extent it achieved settlement above that w hich Souther n Response had previously assessed the damage to the property to be, about which I will say more later in this judgment.
[29] However, Southern Response’s decision to defend the proceedings also
proved to be justi fied, at least to the extent that i t achieved settlement for a figure
17 See Thomson v Mosman Council [1999] NSWLEC 86 at [61]; Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302; Dal Pont, above n 4, at [14.69], citing Aussie Red Equipment Pty Ltd v Antsent Pty Ltd [2001] FCA 1641.
less than the plaintiffs’ original claim. Notably its position that the house could be repaired rather than rebuilt appears to have remained intact. Both parties therefore achieved a measure of success, and neither can be said to have capitulated in their approaches to the litigation.
[30] It follows that i n the circumstances the Court is not realistically in a position to accuratel y assess the merits of each party’s respective positions. It will therefore be necessary in order for the Ramages to succeed in i ts claim for costs to show that Southern Response’s conduct duri ng the course of the proceedings, or at least at some stage in the proceedings, was unreasonable in order for a costs award to be made.
Did Sout hern Response act unreasonably?
Southern Response’s conduct prior to proceedings being filed
[31] The liti gation manager for Souther n Response, Ms Elizabeth Fi fe, provided an affidavit in opposition to the application for costs. Ms Fife deposed that the Ramages had not made any approach to resolve their claim with Southern Response prior to the service of the statement of clai m. Southern Response’s onl y involvement with them was for the out of scope external works claim which had been lodged in March 2011 and subsequentl y settled in October 2014.
[32] Ms Fife deposed that Souther n Response only became aware of the difficulties the Ramages were experiencing i n relation to the damage to their house when i t was served with the proceedings. Souther n Response s ubmitted that, rather than issuing proceedings, the Ramages could have made a for mal claim with it based on their belief the damage was over the EQC cap. If that had occurred, Ms Fife ’s evidence was that i t would have arranged for an i nitial assessment of the damage to be carried out within Souther n Response’s repair programme to deter mine w hether the claim should be managed by it or remain with EQC. If there was disagreement between Southern Response and EQC’s experts, further investi gations would have taken place to clarify the position.
[33] The Ramages disputed that Southern Response was unaware of the issue relating to earthquake damage to their house prior to the commencement of proceedings. They referred to an email sent by their representatives to Souther n Response on 11 June 2013. The email reads:
The property is severely damaged.
A repair strategy is non-compliant. The damage to the property is such that a rebuild is required to produce the property in new condition.
Attached is a rebuild costing for $528,019.05.
Please organise settlement of this claim by 25 June 2013. Otherwise the insured will probably commence court proceedings.
[34] The email demonstrates that Southern Response was for mally notified pr ior to the commencement of the civil action, however, notice was provided effectively onl y on the eve of the commencement of proceedings. The email took the for m of a demand for payment of a claim that Southern Response had not previously been made aware and had not been able to investi gate in the absence of any knowledge of such a clai m. Al though the email placed Souther n Response on notice , it was not realistic to consider Souther n Response would have been able to investi gate the claim and meet the stated deadline.
[35] While I accept the Ramages were entitled to joi n Souther n Response to the proceedings against EQC, on the i nfor mation available there is little, if anythi ng, to suggest the insurance company’s conduct prior to the proceedings being commenced was deficient. Once the proceedings were started, Souther n Response had little realistic option but to defend the proceeding until it had the opportuni ty to undertake its own investi gations and assess the merits of the Ramages’ claim.
Southern Response’s conduct post proceedings being filed
[36] The statement of claim filed by the Ramages sought $792,136.08 to remediate the damage to the house. Of this, EQC would be liable for $113,85 018 (inclusive of GST), in accordance with its statutor y liability, and Southern Response
for the balance, bei ng $676.936.08.19 The Ramages also sought $50,000 in general damages from Souther n Response.
[37] Southern Response filed a statement of defence on 20 August 2013. It acknowledged its liability for the out of scope exter nal works but denied liability to remediate damage to the house.
[38] On 29 and 30 August, Souther n Response’s agent, Arrow International (Arrow), undertook its first evaluation of the damage to the home itself. A visual and and non-intr usive inspection was conducted and a detailed repair analysis (DRA) prepared. The first DRA, DRA Rev A, assessed the damage to the house as
$82,096.86 including GST, not incl uding “below the line” costs such as project
conti ngency, design and i nter nal admi nistration. If those costs were included the total sum assessment would have been $164,214.25, not i ncludi ng the out of scope exter nal works costs. In April 2015, the DRA Rev C calculated a reparation figure for the damage to the house of $100,551.77 not i ncludi ng below the line costs, or
$179,707.91 including those additional costs.
[39] After hearing oral argument on the costs application, I sought further infor mation from the parties about the DRA documents Souther n Response had disclosed to the Ramages prior to settlement. The Ramages had submitted Souther n Response onl y provided them with two DRA documents; DRA Rev B, by email on
14 November 2013, and DRA Rev D, by email on 2 June 2015. Importantly, neither
of the DRA documents disclosed referred to the “below the line” fi gures.
[40] The remedial costs set out in DRA Rev B were shown as:
(a) cost of house repair - $81,196.03 ($70,605.24 excluding GST); (b) out of scope repairs - $25,232.15 ($21,941.00 excluding GST);
(c) total house and out of scope repairs - $106,428.18 ($92,546.24 excludi ng GST).
[41] DRA Rev D provided the following remedial costs:
(a) cost of house repair - $100,551.77 ($87,436.32 excluding GST); (b) out of scope repairs - $30,947.94 ($26,911.25 excluding GST);
(c) total house and out of scope repairs - $131,499.71 ($114,347.57 excludi ng GST).
[42] It is apparent the fi gures provided to the Ramages indicated the damage to their house as assessed by Souther n Response was under cap and was being treated accordingly.
[43] Ms Fife gave evidence about the nature of a DRA. She deposed that not all the DRAs were provided to the Ramages because they wer e not offers of settlement but simpl y records of Souther n Response’s investigations undertaken at the particular time stated. Ms Fife described a DRA as a “living document” and that there would often be more than one revision of a DRA prepared as further infor mation was received. She observed the first DRA is often prepared without the input of engi neers. Its objective was to provide an initial view of the extent of damage to a house and what further inspections would likely be required. Ms Fife described the central purpose of the i nitial DRA as providing Souther n Response and its customer with an i nitial view as to whether the house was going to be repairable or not, and whether the cost of repairing the damage was likely to exceed $100,000. It was not intended as a final repair strategy.
[44] Southern Response submi tted that i mmediatel y prior to mediation it was of the view the house could be effectively and economically repaired for a cost of
$219,000.54. In the absence of completi ng its repair strategy, it would not have been appropriate to have made a settlement offer. Because EQC was treating the claim as being below the statutor y cap, Souther n Response, in its submission, was essentially hamstrung and unable to take ownership of the claim.
[45] Somewhat s urprisingl y given the approach taken by Souther n Response until EQC’s concession that the Ramages’ claim was over the cap, Ms Fife deposed that “Southern Response had, from its first i nspection after being served with the proceeding, been of the view this was an over cap EQC repair”. However, it does not appear this position was ever articulated to the Ramages by Southern Response. They were not provided with fi gures which included the below the line costs. The figures disclosed to the Ramages, on their face, showed the repair figure as assessed by Arrow as being under the EQC cap.
[46] I am not aware of any reason why Souther n Response could not have advised the Ramages of its assessment that the clai m was over cap if that had always been its position. Instead, it appears to have internally taken one position w hile exter nally conveying a different position. I can onl y conclude that approach was taken for the purpose of litigation strategy. No evidence was provided to me of any efforts on the part of Southern Response to communicate that it disagreed with EQC’s assessment of the repairs being under cap, nor of any attempt by i t to dissuade EQC that its stance was not realistic in light of its own assessment.
[47] I accept that because of the statutory framewor k an insurer is in an unusual position. The insurance company’s liability relates to the difference between the maxi mum amount payable by the EQC and the sum insured under the policy. When EQC is unwilling to recognise a claim to be over cap, the insurance company is not realistically in a position to effect a settlement with the insured until the dispute with EQC is resolved. However, I do not accept the insurer can do nothing in that situation. Ms Fife herself made clear in her affidavit that ordinaril y where the insurer ’s experts disagree with EQC’s experts, a joint review exercise is undertaken. If the i nsurer disagrees with EQC’s assessment, I do not understand there to be any impedi ment to the insurance company communicati ng to its client that in its assessment the clai m is over cap. There is no evidence of this having occurred. Southern Response appears to have essentially been content to accept EQC’s position and, i ndeed, to have adopted it for the purpose of the liti gation.
[48] In a joint memorandum filed for the purpose of a telephone conference before
Wylie J on 9 June 2015, EQC and Souther n Response provided cost estimates based
on their respective engineers’ remediation strategies. EQC’s cost esti mate was
$99,490.30 (inclusive of GST). Souther n Response’s cost estimate was $131,499.71 (inclusive of GST), but which was stipulated as including $26,911.25 (exclusive of GST) for out of scope external works. It is apparent therefore that Souther n Response was representing, as at 9 June 2015, that its cost esti mate based on its engineer ’s remediation strategy was below cap. Onl y after EQC conceded the Ramages’ claim to be over the statutory cap did Souther n Response acknowledge that position.
[49] I need to assess whether Souther n Response’s conduct as a party to the litigation up until December 2015 when EQC accepted the Ramages’ claim was over the statutory cap j ustifies a cost award being made against it.
[50] I have already acknowledged Southern Response was entitled to consider itself caught by surprise when the proceedings were filed with mi ni mal notice and i n the absence of a for mal claim having been made by the Ramages under the i nsurance policy. Si milarly, I have recognised that Southern Response’s legal liability arises in respect of the cost of remediation over the statutory amount for which EQC is liable. However, I am satisfied Southern Response chose, for over two years, to approach the litigation by effectively adopti ng EQC’s stance that the Ramages’ claim was under cap. Instead of providing them with the full content of the DRAs, they left the Ramages with the i mpression the clai m was being treated as under cap. As noted, there is no evidence of Southern Response actively engagi ng with EQC to disabuse it of the fact its assessments showed the cost of repairs went beyond the statutory cap. It did not infor m the Ramages nor the Court of that position. To the contrary, i n June
2015, it was formally representi ng, in line with EQC’s approach, that its cost
estimate based on its engineer ’s remediation strategy was below cap.
[51] For that reason, I consider Souther n Response’s conduct was sufficientl y unreasonable to justify a cost award being made agai nst it. The extent of that award must be miti gated by the fact that once EQC accepted the claim a s being over cap it moved swiftly to obtain a negotiated settlement. I consider Souther n Response’s conduct warrants a 25 per cent award of reasonable costs and disb ursements being
made against it notwithstandi ng the negotiated compromise settlement that was achieved between the parties.
The award
[52] The Ramages seek an award of costs and disbur sements in the sum of
$38,251.46.
[53] Southern Response disputes the calculation of costs and disbursements claimed by the Ramages. In summar y, it disputes:
(a) certain costs sought by the Ramages as being claimable as full scale costs;
(b) the Ramages have inappropriately included some invoices in their claim for disbursements; and
(c) the Ramages inappropriately sought costs on certain steps in the proceeding on a band C basis. That clai m was abandoned at the hearing of the application.
[54] Southern Response submi tted that, should an award of costs and disbursements be made in favour of the Ramages, they should be based on a percentage fi gure allocated from the total sum calculated unde r the Hi gh Cour t scale. Similarly, in respect of disbursements which Southern Response calculates should be taken from a total fi gure of $36,303.02.
Costs
[55] In elaboration of its objections, Souther n Response identified a number of items which I now review and make ruli ngs upon:
(a) Conference attendance: The Ramages claim for the attendance at four conferences. Souther n Response has objected on the basis there were only two teleconferences. From a review of the file it appears there was a teleconference on 27 Febr uary 2014 and a further
conference on 11 June 2015. Accordingl y, I allow for recovery of onl y two conferences.
(b) Discovery costs: Southern Response submitted that full-scale costs in relation to discovery should not be allowed because no formal discovery process took place and the Ramages did not prepare a for mal list of affidavits or documents. I accept that objection is justified. The ti me allocation listed in sch 3 of the High Court Rules for discovery is based upon a ti me consumi ng for mal discovery process having been completed. Where that has not occurred an adjustment to scale costs will be required. The Ramages will be allowed 1.5 days for discovery.
(c) Preparation of briefs or affidavits: Ini tially, the Ramages took the position the band B allowance of 2.5 days for preparation of briefs or affidavits was inadequate because they served ni ne witness statements in chief. Seven of these statements were expert witness statements and the other two lay witnesses. Although numerous, the briefs are a ll reasonably shor t in length and in respect of two witnesses comprised a covering statement to which the expert’s report was annexed. Had the claim not been abandoned, I would not have considered it appropriate to depart from the band B allowance in any case.
(d) Inspection: The Ramages also claimed twice for the inspection of documents. Reasons were not provided as to why they had claimed this item twice. They will be allowed 1.5 days for inspection.
[56] Allowing for these adjustments, the total sum of scale costs is $24,377.00. Of this, I consider Souther n Response should be liable for 25 per cent, which would amount to an award of $6,094.25.
Disbursements
[57] Southern Response disputes that Mr John Johnston qualifies as an expert. It mai ntains the High Court has previousl y made such a r uling. In Jardin v Earthquake
Commission, Kos J in a pre-trial decision held that Mr Johnston was an exper t in ter ms of his experience as a loss adjuster and claims investi gator. 20 The Cour t, however, did not consider Mr Johnsto n had demonstrated expertise beyond those disciplines, “for instance i n constr uction and remediation of damaged buildings”. 21
The i nvoicing in question, in the sum of $6,069.01, is for:
Site attendances for inspections, photography, meetings. Scala penetrometer testing. Plotting off 3rd party drawings to make clean floor plan drawings for plotting of calculated spot heights and slopes. Drawing of dam[a]ge location plan, Review of multiple 3rd party reports and preparation of rebuttal notes. Preparation of a witness statement for filing in the High Court. Review and updating of exhibit notes.
[58] From the infor mation made available to me it is difficult to assess how much of Mr Johnston’s evidence was pertinent to his expertise as a loss adjustor and claims investigator. From the narration provided in the i nvoice there are arguments that can be made both ways i n ter ms of whether the work undertaken falls within or outside Mr Johnston’s expertise as recognised by the Court.
[59] Applyi ng the principle that the deter mination of costs should be predictable and expeditious,22 and that it is not possible to under take a full assessment of the evidence of Mr Johnston which would be contrary to this principle, arbitrary as it may be, I consider the 25 per cent allowance applied across all costs and disbursements sufficientl y provides for the concerns expressed by Souther n Response.
[60] Southern Response also submitted that the USS Engineering fee and the 8D QS fee were not reasonably necessary for the proceeding, and that a d eduction of
50 per cent should be made. Again, it is not realistic to engage in a detailed
assessment of the relevant merits of each piece of evidence, particularly when that evidence was not ulti matel y required. To do so would be contrary to principle.
[61] A fur ther disbursement objected to by Souther n Response was a small claim of $57.50 for service. Souther n Response maintains service was effected
20 In Jardin v Earthquake Commission [2015] NZHC 204 at [6].
21 At [6].
22 High Court Rules, r 14.2(g).
electronically. In the absence of any invoice relating to that disbursement, I accept it is not recoverable.
[62] The total sum for disbursements is $42,372.03. Of this, Souther n Response is liable for 25 per cent, being $10,593.01.
Orders
[63] Accordingl y, I make an order that Southern Response is to pay the Rama ges costs in the sum of $6,094.25, together with disbursements totalling $10,593.01, being a total sum of $16,687.26. A schedule of those costs and disbursements is annexed and for ms part of this judgment.
[64] The Ramages also sought to recover costs on this application which required the convening of a half day hearing. Both parties can claim some success on the defended costs application, however, the Ramages have been vindicated i n their claim of being entitled to an award of costs. In the circumstances I consider they should recover costs on the application. Certifyi ng for second counsel on a half day hearing, that amounts to $1,672.50.
[65] I make an order that Southern Response is to pay the Ramages costs in the sum of $1,672.50 on this application.
Solicitors:
Grant Shand, Auckland
DLA Piper, Wellington
| COSTS | ||||||
| Item | Step | Daily rate | Days | Amount | ||
| 1 | Commencement | $1,990 | 3 | $5,970.00 | ||
| 10 | Preparation for conference | $1,990 | 0.4 | $796.00 | ||
| 11 | Filing memorandum | $1,990 | 0.4 x 5 | $3,980.00 | ||
| 11 | Filing memorandum | $2,230 | 0.4 | $892.00. | ||
| 13 | Attend conference | $1,990 | 0.3 x 2 | $1,194.00 | ||
| 20 | Discovery | $1,990 | 1.5 | $2,985.00 | ||
| 21 | Inspection | $1,990 | 1.5 | $2,985.00 | ||
| 30 | Briefs | $2,230 | 2.5 | $5,575.00 | ||
| TOTAL $24,377.00 | ||||||
| AWARD $24,377 x 0.25 $6,094.25 | ||||||
| DISBURSEMENTS | |
| Claimed disbursement | Amount |
| Certificate of title | $5.95 |
| Filing fee | $1,350 |
| Scheduling fee | $1,600 |
| Sturek Engi neering Ltd | $7,158.75 |
| Geoconsult | $5,750 |
| Grant Hunt | $9,799.67 |
| USS engineering | $6,957.50 |
| 8D QS | $2,967.00 |
| Garlick | $714.15 |
| John Johnstone | $6,069.01 |
| TOTAL | $42,372.03 |
| AWARD $42,372.03 x 0.25 | $10,593.01 |
| COSTS ON APPLICATION | ||||||
| Item | Step | Daily rate | Days | Amount | ||
| 26 | Appearance of principal counsel | $2,230 | 0.5 | $1,115.00 | ||
| 10 | Second and subsequent counsel | $2,230 | 0.25 | $557.50 | ||
| AWARD $1,672.50 | ||||||
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