Thomson v Earthquake Commission

[2015] NZHC 1037

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-001740 [2015] NZHC 1037

BETWEEN

KATHERINE ROSE THOMSON

Plaintiff

AND

THE EARTHQUAKE COMMISSION First Defendant

AND

IAG NEW ZEALAND LIMITED Second Defendant

Hearing:	15 May 2015 (On the papers)
Appearances:	A Ferguson and J Morriss for Plaintiff R Hargreaves for Defendant
Judgment:	15 May 2015

JUDGMENT OF DUNNINGHAM J

[1]      This is an application for costs arising as a consequence of the plaintiff filing new evidence shortly before the scheduled hearing, and effectively doubling the quantum of her claim, thereby necessitating the adjournment of the hearing to give the second defendant an opportunity to respond.

[2]      In deciding to adjourn the hearing I noted:

(a)      The Christchurch earthquake list is subject to a case management procedure which is designed to benefit both plaintiffs and defendants alike.  It is aimed at identifying the expert evidence which is relied on to support the basis and quantum of any claim, and to ensure it is exchanged at an early stage so that the parties can determine areas of agreement and focus their evidence on those areas of disagreement

which may have a bearing on the outcome of the case.

THOMSON v THE EARTHQUAKE COMMISSION AND ANOR [2015] NZHC 1037 [15 May 2015]

(b)It is abundantly clear that the directions of Wylie J and Kós J were made with this end in mind and yet the timetabling directions have been breached by the plaintiff on multiple occasions.  It is not in the interests of justice to provide evidence which effectively doubles the quantum of the claim less than 10 working days before the outset of the hearing.  It is clear that the defendant is prejudiced, particularly when its own expert quantity surveyor will not have time in the two working days between his return from leave and the commencement of the trial, to consider and respond to the doubling of the plaintiff ’s claim.

(c)      In  deciding  how  to  proceed  I  must  have  regard  to  the  potential prejudice  to  either  party.    I  accept  that  if  I  refuse  to  allow  this evidence in, the plaintiff may be prejudiced, but equally the defendant is prejudiced if it is not afforded sufficient time to respond to this evidence if admitted.

[3]      I concluded that, unless the plaintiff withdrew the evidence, then in order to balance the interests of the plaintiff against the interests of the defendant I had to adjourn  the  hearing,  despite  the  waste  of  judicial  resources  this  represented. However, I stated that the defendant was entitled to any wasted costs it had incurred as a result of the late filing of this evidence and they were to be determined independently of the costs of the substantive application.

[4]     The second defendant now seeks a total of $18,203.73 in costs and disbursements.  These are sought on the basis that the adjournment meant it would need to duplicate its pre-trial preparation, and that of its engineering and mould expert witnesses, once a new trial is set down.   It has however conceded that a percentage of its pre-trial preparation will not have to be repeated for the new trial so has discounted those costs by 50 per cent in accordance with standard practice.

[5]      In response, the plaintiff submits that she should not have to pay any wasted costs of the defendant, saying she was successful in having the evidence admitted so should be entitled to costs in relation to the memorandum filed.  In any event, she

cannot see how any costs have been wasted, as any preparation conducted from

2 April onwards would be directly relevant to the new trial whenever it is set down.

Discussion

[6]      I begin with the plaintiff’s submission that effectively she was the successful party because she was permitted to admit the further evidence.   This submission plainly cannot be substantiated.   The evidence was admitted as a significant indulgence, and as the Courts have repeatedly held, costs are often awarded against a successful applicant who has been granted an indulgence.1   The indulgence was only granted to ensure that the plaintiff was not prejudiced in the proceedings by refusing to admit this evidence, but on the basis that the defendant should be compensated for wasted cost.  I therefore turn to the issue of the jurisdiction to award wasted costs.

[7]      McGechan on Procedure states that the jurisdiction to award wasted costs is well established although not provided for in the High Court Rules.2  It gives two rationales for the jurisdiction:3

(a)       To compensate the other party or parties not in default who have wasted costs (including disbursements and the fees of expert witnesses).

(b)       To impose a sanction on the defaulting party, in an effort to avoid future   wastage   of   costs   and   of   judicial   and   court   resources,   and inconvenience   to   other   parties   awaiting   fixtures   in   the   court:   refer particularly to Marley New Zealand Ltd v Skellerup Rubber Services Ltd [2013] NZHC 3040 at [11]; Jeffreys v Morgenstern at [31] and Fu Hao Construction Ltd v Landco Albany Ltd HC Auckland CIV-2004-6608, 23

May 2008 at [10].

Both rationales are applicable to this case.

[8]      In Jeffreys v Morgenstern, Venning J further defined the principles relating to wasted costs:4

[31]     I turn to consider the issue of wasted costs.   It follows from my discussion above I accept the plaintiffs’ submission that the trial was vacated because of the defendants’ default.  The plaintiffs have inevitably incurred wasted costs as a result of that.  This Court has jurisdiction to make an order

1      See for example Wu v Moncur [2014] NZHC 2776.

2      McGechan on Procedure (online looseleaf ed, Brookers) at [HRPt14.16A].

3      At [HRPt14.16A].

4      Jeffreys v Morgenstern [2013] NZHC 1361.

for wasted costs.  As this Court has previously observed in the case of Fu Hao Construction Ltd v Landco Albany Ltd default that leads to vacation of fixtures leads to inconvenience and costs not only to the other parties to that proceedings but to other parties awaiting fixtures in the Court.   Fixtures allocated by this Court are commitments of limited judicial and Court resources.  Time is booked for the case.  Other parties who might otherwise have had their cases allocated hearing time are disadvantaged by default which leads to late vacation of fixtures.

[32]      That is a further reason which supports an award of wasted costs. The Court should apply sanctions to parties who, through their own default, cause fixtures to be vacated.

…

[34]      I agree with the approach of Chisholm J in Simpson v Hubbard that in cases of this nature, where the Court is required to consider wasted costs, it involves a matter of impression and best judgment of the Court at the time.

…

[39]      I am satisfied that it is also appropriate for there to be an allowance for the wasted costs of the experts’ fees. Rule 14.12 applies.  Expert witness fees are disbursements which the Court can approve where they are paid or incurred.  I accept that witness expenses have been incurred to date and that on the basis of the information before the Court additional costs will be incurred as a direct result of the vacation of the fixture.  Again, however, I am not satisfied a full recovery based on those estimates is appropriate. I take 50% of the lower of the two estimates in each case.

[9]      Costs that are recoverable for an adjourned or vacated proceeding are those which are “directly thrown away or wasted, at least in part, because they will have to be redone again for the purposes of trial and on a refocused basis.”5

[10]     The main objection of the plaintiff to paying wasted costs is that is that the preparation that occurred between 2 April and 15 April was not wasted and will be relevant to the resumed trial when it is set down.   However, as has already been stated, jurisdiction for wasted costs is well established, particularly for vacated or adjourned proceedings.  It is likely to be sometime before the hearing is rescheduled and logically, much of the preparation will have to be redone given the passage of

time.

5      Jeffreys v Morgenstern, above n 4, at [37].

[11]     Furthermore, any utility arising out of the preparation for an adjourned trial is usually taken into account by discounting the costs appropriately. In this case, the second defendant has applied a 50 per cent reduction where appropriate.

[12]     I also note there is the purpose of sanctioning the party which has failed to comply with timetabling orders.   The plaintiff has violated timetabling orders throughout the proceeding and a sanction is therefore appropriate.   It is not clear whether the defaults were those of the plaintiff herself, or were incurred due to the failings of her lawyer.   It is assumed that if they are the latter, however, the costs would be borne by them, not her.

Costs award in this case

[13]     The decision to award wasted costs must inevitably be case specific.  I accept that the costs of flying to Christchurch to urgently brief the defendants engineering and mould experts is a cost which would have flowed in any event, regardless of the adjournment (although perhaps the airfares would not have been quite as high). However,  I  do  not  accept  that  the  costs  incurred  on  the  application  should  be ignored.  They were necessitated by the plaintiff ’s application for an indulgence and the defendant is entitled to claim them.  Furthermore, I accept that it is very much a matter of judgment as to what extent of the pre-trial preparation is wasted, although inevitably a significant portion of it will have to be repeated in advance of the new trial date, given the likely delay.

[14]     Accordingly, although noting that the plaintiff has already discounted the preparation costs incurred by 50 per cent, looked at in the round, and taking into account the plaintiff’s submissions, I award the second defendant a total sum of

$15,000 to cover the wasted costs and disbursements.

Solicitors:

Grand Shand, Christchurch

Fortune Manning, Auckland

Dunningham J