Van Limburg v Earthquake Commission

[2014] NZHC 2764

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-1245 [2014] NZHC 2764

BETWEEN

WILCO VAN LIMBURG

Plaintiffs

AND

THE EARTHQUAKE COMMISSION First Defendant

TOWER INSURANCE LIMITED Second Defendant

In Chambers:	On papers
Judgment:	6 November 2014

JUDGMENT OF THE HON JUSTICE KÓS (Costs on discontinuance)

[1]      Mr van Limburg owns a semi-detached flat in Woolston, Christchurch.   It was badly damaged in the February 2011 earthquake.

[2]      On 24 June 2013 he filed proceedings in this Court claiming the cost of repairs was over cap, the Earthquake Commission (EQC) had failed to ascertain that as “soon as reasonably practicable”1  and that EQC had therefore failed to pay him his statutory entitlement under the Earthquake Commission Act 1993 (the Act) of

$113,850.

[3]      On 26 August 2013 EQC paid Mr van Limburg $85,050.2    That sum was accepted as full settlement of the claim because it emerged that Mr van Limburg’s

1      Section 29(4) of the Act.

2      Counsel for EQC said that it only paid $84,375.  But Mr van Limberg says it was $85,055.55 and has provided a letter from EQC dated 28 August 2013 that bears that figure. And Mr Stiven (an EQC employee) also gives that figure in his affidavit.

flat was insured for a specified EQC sum of only $75,000 (excluding GST).3

[4]      In March 2014 Mr van Limburg made a premature, informal application for costs which I declined, without prejudice to reconsideration of the issue upon discontinuance.4

[5]      Mr van Limburg filed a notice of discontinuance against EQC on 26 March

2014.  He now applies for costs against EQC.

[6]      EQC concedes that costs should lie where they fall, despite the usual rule that costs should be awarded against the discontinuing party.  EQC does however oppose Mr van Limburg’s submission that I go further and award costs against EQC.

Legal principles

[7]      This decision is to be read in conjunction with a decision which I am also delivering  today:  Ryde  v  Earthquake  Commission.5      The  reasons  I  give  in  this decision can be brief for that reason.

Was it reasonable to bring this proceeding?

[8]      It was reasonable for Mr van Limberg to bring this proceeding.

[9]      EQC produced a scope of works after inspecting the flat in September 2011. It priced the repairs at $74,783.  It concluded the claim was under cap.  The flat was referred to the CHRP programme in December 2011.  After subsequent inspections (complicated by the fact that this was a multi-unit building) on 6 August 2013, EQC concluded that the cost of repairs would be $262,194.   EQC’s September 2011 assessment, albeit not final, was woefully inadequate.

[10]     Mr van Limburg filed proceedings on 24 June 2013.  At the time of filing, he had an arguable claim that EQC had breached its obligations under s 29 of the Act.

3      Earthquake Commission Act 1993, s 18(1)(b).

4      van Limberg v Earthquake Commission [2014] NZHC 502. I regret the typographical error in nomenclature in that judgment.

5      Ryde v Earthquake Commission [2014] NZHC 2763.

Was it reasonable for EQC to defend this proceeding?

[11]     EQC also had an arguable defence to Mr van Limburg’s claim.  It accepted that it would have to pay Mr van Limburg some amount for earthquake damage (or conduct the repairs itself), but rejected the assertion that it was obliged pay as at the time of filing.   It is also clear now that the claim was misconceived in seeking payment of a sum in excess of Mr van Limburg’s entitlement under s 18(1)(b) of the

Act.6

Why were the proceedings discontinued?

[12]     Mr van Limburg wanted a concession that the claim was over cap so that he could get on with claiming from his private insurer and repairing his house.7   Once EQC accepted that his claim was over cap there was no practical purpose in continuing proceedings.  He received his full statutory entitlement in August 2013. Discontinuance was not an acknowledgement of defeat.

Are the merits so obvious that they should influence the costs outcome?

[13]     The merits of this case are not obvious.   There is a fairly strong inference available that the original scope of works was less than satisfactory.8   However it is not clear that the issue of proceedings caused the shift in EQC’s position.  It is not clear that EQC had infringed s 29(4) of the Act either.  And Mr van Limburg’s claim was excessive.

[14]     The primary point to be made is that deciding the merits of this case requires resolving complex points of fact and law, without the benefit of oral evidence, in particular.   As I have said in Ryde, a papers costs decision is no place to resolve factual issues under s 29(4) of the Act.

Has the plaintiff displaced the r 15.23 presumption?

6 See [3] above.

7      I  note that Mr van Limburg did not file a  claim with his insurer Tower until after  filing proceedings.  Whilst that is peculiar, Tower has since accepted the claim and has concluded that a total rebuild of the flat is necessary.

8 See [9] above.

[15]     EQC concedes that the presumption in r 15.23 is displaced.  But it says costs should lie where they fall.

Does the outcome represent vindication of the plaintiffs commencement of proceedings?

[16]     I repeat what I have said in [14] above.   And I repeat my observations in Ryde, at [44]. Bearing in mind the deficiency in the initial assessment, the just exercise of my discretion as to costs here is, as it was in Ryde, to award Mr van Limburg half his costs on a category 2, band B basis, together with reasonable disbursements, up to the date he was paid his statutory entitlement.  That is, to 26

August 2013.  Costs otherwise will lie where they fall.  The award is as to half costs only, because EQC is one of two defendants.

Conclusion

[17]     The plaintiff ’s application for costs is granted to the extent of 50 per cent of costs calculated on a category 2, band B, basis up to 26 August 2013 (together with his reasonable disbursements up to that point also).

[18]     The  final  amount  payable  shall  now  be  agreed  in  accordance  with  this judgment or be fixed by the Registrar.

[19]     Costs in relation to this application, and the earlier premature application, will lie where they fall, thus the one netting off the other.

Stephen Kós J

Solicitors:

Grant Shand, Christchurch for Plaintiff

Chapman Tripp, Wellington for First Defendant