Yarrall v Earthquake Commission
[2015] NZHC 1451
•25 June 2015
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2013-409-001451 [2015] NZHC 1451
BETWEEN P J YARRALL AND A STEPHENS
Applicants
AND
EARTHQUAKE COMMISSION Respondent
Hearing: On the papers Appearances:
A McKenzie for Applicants
A Neris for RespondentJudgment:
25 June 2015
JUDGMENT OF WYLIE J (COSTS)
This judgment was delivered by Justice Wylie on 25 June 2015 at 4.30pm
pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:………………………………………
YARRALL & STEPHENS v EARTHQUAKE COMMISSION [2015] NZHC 1451 [25 June 2015]
Introduction
[1] In August 2013 the applicants filed judicial review proceedings. They challenged EQC’s decision apportioning the damage to their residential house in Woodham Street, Christchurch between the February and June 2011 earthquakes.
[2] A notice of discontinuance was filed by the applicants on 23 May 2014. It was not however served on the respondent. Indeed it has still not been served on the respondent. The respondent only became aware that the proceedings have been discontinued when it approached the Registrar earlier this year with a view to advancing the proceedings.
[3] The respondent now seeks costs pursuant to r 15.23 of the High Court Rules.
[4] The applicants resist any costs award. They suggest that costs should lie where they fall.
Background
[5] As noted, the application for judicial review was filed in August 2013. The respondent filed a statement of defence relatively promptly in October 2013.
[6] The proceedings first came before the Court by way of a face to face conference in November 2013. At that conference, the Court was advised that both parties anticipated that the matter could be resolved at mediation. Timetable directions were made to ensure that all relevant evidence was exchanged and to ensure that the applicants’ insurer was made aware of the proceedings. The orders were breached by the applicants. They were late in filing their affidavits in support of their application for review. The respondent was due to file affidavits supporting its position by 21 January 2014. Given the delay by the applicants, it sought an extension of time. The applicants’ counsel agreed to this and the extension was approved by the Court in a minute issued on 18 February 2014.
[7] The matter was next due for a telephone conference in March 2014. A joint memorandum from counsel was filed. It recorded that counsel had agreed that a
meeting should take place between counsel later in March 2014, with an agenda to be prepared by the applicants’ counsel. At the meeting, counsel were to discuss whether mediation was required. The memorandum recorded that if the meeting did not successfully resolve matters, there should be a further telephone conference in May 2014. This was intended to allow time for any mediation to take place.
[8] Following the joint memorandum, counsel for EQC was unable to engage substantively with the applicants’ counsel. The matter did not progress either to a meeting or mediation.
[9] In May 2014 one of the applicants, Mr Yarrall, telephoned counsel for EQC personally. He said that he had been unable to contact his counsel and that he did not know what was happening with the matter. He expressed a willingness to meet with EQC, but said that he was only available on one particular day. EQC could not accommodate this suggestion at short notice.
[10] A telephone conference was scheduled for 8 May 2014. Counsel for the applicants filed a memorandum seeking a judicial settlement conference. Counsel for the respondent filed a memorandum complaining about the failure of the applicants’ counsel to comply with Court directions, and explaining why in its view, the relief sought by the applicants was of no practical value to them. In brief it was noted that the applicants’ insurer had accepted the respondent’s apportionment and that the insurer intended to replace the applicants’ house. It was noted that even if the respondent were to alter the apportionment, the only beneficiary would be the applicants’ insurer. Given that the insurer accepted the apportionment and that it did not wish to participate in the judicial review, it was suggested that the proceedings were nothing more than an academic exercise. Counsel for the respondent suggested that the applicants should discontinue the proceeding.
[11] At the teleconference, counsel for the applicants accepted the criticisms made in relation to his lack of communication, and his failure to reply in a timely matter to the respondent’s requests.
[12] In a minute issued following the telephone conference, I recorded the proceeding had made little progress. I also recorded that it appeared from the memoranda filed that there was no prejudice to the applicants arising from EQC’s apportionment, and noted that the Court would not become involved in an academic debate which served no purpose. I directed that on or before 23 May 2014, the applicants were to advise the Court and the respondent whether they wished to discontinue the proceedings, and that if no advice to this effect was received, the matter was to be set down for a judicial settlement conference.
[13] It now transpires that a notice of discontinuance was filed on 23 May 2014. The respondent however was unaware of it. Contrary to the directions made by me, the applicants did not advise the respondent that they were discontinuing the proceedings. Counsel for the respondent wrote to the applicants’ counsel by email on 28 May 2014 noting that the applicants were due to advise the Court and the respondent whether they wished to discontinue their claim by 23 May, and that no such advice had been received. No response was received to this email. Further correspondence was sent by counsel for the respondent in September 2014. Again, no response was received.
[14] On 1 February 2015, counsel for EQC wrote to the Registry, advising that a telephone conference for the matter had not been held since May 2014 and asking that the matter be advanced. In response, the Registry advised that the Court’s database showed that the notice of discontinuance had been filed.
Rule 15.23
[15] Rule 15.23 provides as follows:
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.
[16] The effect of the Rule is to establish a mandatory obligation on a plaintiff who discontinues. He or she must pay costs to the defendant, unless the defendant
otherwise agrees, or the Court otherwise orders. Unless one or other of these exceptions applies, costs follow the event when a notice of discontinuance is filed.1
[17] Here the defendant does not otherwise agree. Is it appropriate to make an order rebutting the presumption in the present case?
[18] First, I observe that there are good reasons for the presumption in r 15.23:
(a) First, a discontinuance is ordinarily tantamount to a judgment for the defendant.2 It is trite law that the successful party in litigation is normally entitled to costs;
(b) Secondly, a plaintiff has a choice whether to sue a defendant or not.
In contrast, a defendant has no choice as to whether he or she is sued. Where a plaintiff unilaterally discontinues litigation, it will ordinarily be just that the plaintiff should bear at least some responsibility for the unnecessary litigation expenses to which the defendant has been put by the plaintiff’s actions;
(c) Thirdly, a plaintiff who has discontinued can bring fresh proceedings against the defendant on substantially the same facts, so long as the plaintiff pays any costs ordered on the discontinuance.3 If there is to be a second proceeding to try the same controversy, the defendant’s costs of defending the plaintiff’s first attempt to try the matter will usually be wasted if r 15.23 did not apply. It would be unfair that the defendant should have to bear the wasted expenditure.
[19] Secondly, I acknowledge that the Court has a discretion to order that costs should lie where they fall, or even that the defendant should pay the costs of the plaintiff in whole or in part. That discretion reflects the general rule that all matters
relating to costs are at the discretion of the Court.4 The Court of Appeal has
1 Earthquake Commission v Whiting [2015] NZCA 144 at [63].
2 Powell v Hally Labels Ltd [2014] NZCA 572 at [19].
3 High Court Rules, r 15.24.
4 Rule 14.1; Earthquake Commission v Whiting, above n 1, at [65]. However, this discretion is not unfettered but is qualified by the specific costs rules.
recognised that the discretion to order “otherwise” may be exercised in the interests of justice where it is just and equitable to displace the r 15.23 presumption.5 Where the Court is asked to exercise the discretion to rebut the presumption, the onus is on the plaintiff to persuade the Court to that end.6 The Court, for example, may be persuaded to exercise the discretion when the defendant’s acts or omissions have caused the litigation, and then rendered them unnecessary, or where an intervening governmental or third party decision has rendered the proceeding redundant.7 Where one of the parties has acted unreasonably, or was almost certain to be unsuccessful if the proceeding had not been discontinued, that party may be ordered to pay the costs of the proceeding. However the Court will not undertake a review of the merits of the plaintiff’s claim unless they are immediately apparent.8
[20] I turn to consider the present proceedings against these principles. [21] I note as follows:
(a) The respondent apportioned the damage between the various earthquakes the subject of the applicants’ claims at an early stage. The applicants received a capped payment from EQC. The apportionment did not compromise or affect the applicants’ rights against their insurer;
(b)The applicants did not establish that the respondent had any additional liability to them under the Earthquake Commission Act 1993;
(c) The affidavit filed by the applicants was inadequate. It did little more than recite the personal views of one of the applicants, Mr Yarrall;
(d) The respondent was successful in resisting the applicants’ pleaded
claim for a revision of its apportionment decision. It did not change its apportionment;
5 Earthquake Commission v Whiting, above n 1, at [66]-[67].
6 At [68].
7 At [69].
8 Powell v Hally Labels Ltd, above n 2, at [23]-[24], Earthquake Commission v Whiting, above n
1, at [71].
(e) There was no change of circumstances during the course of the proceeding that might have warranted the displacement of the usual cost presumption. The applicants’ insurer proceeded at all material times on the basis of the respondent’s apportionment decision;
(f) The insurer had agreed to replace the applicants’ home as early as January 2012, well before the commencement of the proceeding. In my judgment, the proceeding was misconceived from the outset; and
(g)The repeated failures by the applicants, through their counsel, to comply with Court orders, and their failure to respond to the respondent in a timely manner, or at all, exacerbates the position.
[22] There is one additional matter I should mention. The applicants assert that in the course of the telephone conference on 8 May 2014, I indicated that if matters were to be discontinued by 23 May 2014, costs would not be an issue.
[23] I have no recollection of making that comment. The minute issued does not record the comment, and counsel for the respondent has no recollection of it either. It is intrinsically unlikely that I would have made it, because of course it was not for me to decide whether or not costs would be sought if the proceedings were discontinued. I also note as follows:
(a) I was not called upon to determine a costs application during the teleconference. Whether or not the remark was made cannot affect the respondent’s right to make an application for costs on the discontinuance. The applicants’ counsel should have been alive to this and he should have advised the applicants accordingly. I note that in the minute issued, I recorded that counsel was to discuss matters generally with the applicants and advise them in relation to the same;
(b)The applicants assert that one of them – Mr Yarrall – immediately raised the issue of who would pay their costs, and that I paused, before replying that I was unable to assist Mr Yarrall in that respect.
This assertion appears inconsistent with the earlier assertion attributed to me - namely that I said that costs would not be an issue. Rather it is consistent with a refusal by me to engage on costs during the telephone conference;
(c) Thirdly, a plaintiff discontinues a proceeding by filing a notice of discontinuance, and serving a copy of the notice on every other party to the proceeding.9 I expressly so directed in my minute. Here it appears from the Court file that the notice of discontinuance was filed with the Registry on 23 May 2014, but it was not, and has not to date been, served on the respondent. Even if the remark was made by me, the applicants have failed to comply with the precondition – namely discontinuing the proceedings in accordance with the rules.
[24] The applicants have submitted that during the course of the proceeding, and as a result of it, the insurer altered its position.
[25] It is clear that this assertion is incorrect. At the outset, I directed that this insurer should be served with a copy of the proceeding, because for some reason, the applicants had brought separate proceedings against the respondent and against their insurer. The insurer by email dated 10 April 2014 confirmed that in either late 2013 or early 2014, it had advised that it accepted the respondent’s apportionment and that it wished to take no part in the judicial review proceedings.
[26] Further it is clear from the statement of claim filed in October 2013 by the applicants against their insurer that the insurer had, as early as January 2012, signed an agreement with the applicants recording that it would rebuild their home. The proceedings between the applicants and the insurer were not as to whether or not there should be a rebuild, but rather whether or not the rebuild had to incorporate various specialist historic features, such as heart rimu tongue and groove floors, utilise New Zealand native hard oak and rimu doors, replace a cast iron foot claw
bath, and the like.
9 Rule 15.19(1)(a).
[27] The apportionment decision did not affect the insurer’s stance at all and there is nothing to suggest that the insurer altered its position consequent upon the judicial review proceedings being commenced.
[28] I am satisfied that it is appropriate to award costs in the respondent’s favour on a 2B basis, together with the respondent’s reasonable disbursements.
[29] I make an order that the applicants must pay the respondent’s costs, including in relation to this application on a 2B basis, in the amount of $23,482.00. I adopt the schedule prepared by the respondent, a copy of which is annexed to this judgment. In addition, the applicants must pay the respondent’s reasonable disbursements in the
sum of $121.40.
Solicitors:
SB Law, Christchurch for Applicants
Chapman Tripp, Wellington for Respondent
Wylie J
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