Van Limburg v Earthquake Commission

The case of Van Limburg v Earthquake Commission involved the plaintiff, Mr. van Limburg, who owned a semi-detached flat in Woolston, Christchurch, that was damaged in the February 2011 earthquake. Mr. van Limburg sought compensation from the Earthquake Commission (EQC), claiming that they had failed to ascertain the cost of repairs in a timely manner, resulting in an entitlement under the Earthquake Commission Act 1993 of $113,850. EQC initially paid Mr. van Limburg $85,050, which was accepted as full settlement of the claim. However, it was later revealed that the flat's insurance covered only $75,000 (excluding GST). Mr. van Limburg subsequently filed a notice of discontinuance against EQC and applied for costs against them.

The legal issues before the court were whether it was reasonable for Mr. van Limburg to bring the proceeding, whether it was reasonable for EQC to defend the proceeding, why the proceedings were discontinued, whether the merits of the case were obvious, and if the plaintiff had displaced the presumption under rule 15.23. EQC conceded that the presumption was displaced but argued that costs should lie where they fall. The court considered the initial assessment by EQC to be inadequate and found that it was reasonable for Mr. van Limburg to bring the proceeding. The merits of the case were not obvious, as it required resolving complex points of fact and law. The court granted Mr. van Limburg's application for costs to the extent of 50 per cent of costs calculated on a category 2, band B, basis up to 26 August 2013, together with reasonable disbursements up to that point. The final amount payable shall be agreed in accordance with this judgment or be fixed by the Registrar.

The court's reasoning was that it was reasonable for Mr. van Limburg to bring the proceeding, as EQC's initial assessment of the repairs cost was inadequate, and they had concluded that the cost of repairs would be $262,194 after subsequent inspections. EQC also had an arguable defence to Mr. van Limburg's claim, as they rejected the assertion that they were obliged to pay at the time of filing. The proceedings were discontinued once EQC accepted that the claim was over cap, and Mr. van Limburg received his full statutory entitlement. The merits of the case were not obvious, as it required resolving complex points of fact and law. However, the court awarded 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. This was because EQC conceded that the presumption in r 15.23 was displaced. Costs in relation to this application, and the earlier premature application, will lie where they fall, thus the one netting off the other.