Zygadlo v Earthquake Commission - [2016] NZHC 1699

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2013-409-1363 [2016] NZHC 1699

BETWEEN
B & FA ZYGADLO

Plaintiffs

AND

THE EARTHQUAKE COMMISSION First Defendant (discontinued)

SOUTHERN RESPONSE EARTHQUAKE SERVICES LIMITED Second Defendant

Hearing: On the papers

Counsel:

G D R Shand and J S Morriss for the Plaintiffs
R M Dixon for the First Defendant
C R Johnstone and R J Hargreaves for the Second Defendant

Judgment:

26 July 2016

JUDGMENT OF NICHOLAS DAVIDSON J (as to costs)

A. INTRODUCTION

[1] Overall settlement has been reached between the parties, but they ask the court to determine costs.

[2] Mr and Mrs Zygadlo (the plaintiffs) seek orders for costs and disbursements against The Earthquake Commission (EQC) and Southern Response Earthquake Services Ltd (Southern Response). EQC and Southern Response resist an award
against them and seek costs from the plaintiffs.

ZYGADLO v THE EARTHQUAKE COMMISSION AND SOUTHERN RESPONSE EARTHQUAKE SERVICES LTD [2016] NZHC 1699 [26 July 2016]

[3] The plaintiffs commenced proceedings in August 2013 arising out of earthquake damage to their home in South New Brighton, Christchurch. The action was set down for a five day trial to begin on 7 March 2016. Settlement was reached prior to trial: with EQC in August 2015, and with Southern Response in early March 2016.

[4] The plaintiffs claim $52,918 in costs and $44,200.67 in disbursements (after factoring in the disbursements no longer claimed), from the first and second defendants in terms of Schedules 1 and 2 attached.

[5] The plaintiffs say that they have achieved substantial success by settlement as the result of the proceedings. They point to the settlement with EQC for a cap payment,1 and total payments by the two defendants of $499,626.71, substantially more than the initially assessed costs to remediate by EQC and Southern Response, before and after the commencement of proceedings.

[6] EQC says that it should not pay the plaintiffs’ costs, and instead claims certain costs against the plaintiffs for what it says is the expense caused it by the way the plaintiffs have conducted the litigation. Failing that argument, EQC says that the plaintiffs have claimed inflated costs, or should not be awarded costs which were not incurred in their personal capacity.

[7] Southern Response argues that it should not pay the plaintiffs’ costs. It claims costs against the plaintiffs, primarily on the basis that the plaintiffs have not obtained judgment and having discontinued proceedings, the presumption in r 15.23 of the High Court Rules should apply. Further, Southern Response says it was always willing to meet its liability if the claim was over cap, and it recognised that was the case before EQC reached that position.

[8] Both defendants say that the expert witness conferral, which was designed to expedite proceedings by clarifying the issues and bring early resolution, was
frustrated by the plaintiffs’ engaging then disengaging some experts.

1 Cap, over cap and under cap refer to the statutory maximum the EQC is bound to pay…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] NZHC 1699
Decision Date: 26 July 2016

CaseChat Overview and Summary

In Zygadlo v Earthquake Commission, the plaintiffs sought costs and disbursements against the Earthquake Commission (EQC) and Southern Response Earthquake Services Ltd (Southern Response) after settlements were reached. The plaintiffs claimed $52,918 in costs and $44,200.67 in disbursements, while EQC and Southern Response resisted an award of costs against them and sought costs from the plaintiffs. The High Court was required to decide whether the plaintiffs had achieved substantial success by bringing proceedings, and if so, whether any reduction in the costs claimed should be made on account of the plaintiffs' conduct. The Court also needed to determine whether the presumption in r 15.23 of the High Court Rules should apply given the discontinuance of proceedings by the plaintiffs.

The Court held that the plaintiffs had achieved substantial success by bringing proceedings, as they secured payments from EQC and Southern Response that were substantially more than they would have received had they not done so. The Court did not accept that the plaintiffs' conduct in the proceedings disqualified them from an award of costs. The Court did, however, reduce the costs and disbursements claimed by the plaintiffs on account of their conduct during the expert conferral process and otherwise in the engagement of experts. The Court also made adjustments to the costs and disbursements claimed reflecting its judgment as to appropriate banding under the High Court Rules and the days, or part days, applicable.

The Court ordered that EQC pay to the plaintiffs $7,163.25 in costs and $5,047.02 in disbursements, and that Southern Response pay to the plaintiffs $16,326.00 in costs and $28,965.56 in disbursements. The Court held that it did not consider the plaintiffs' conduct in the proceedings to have been wholly or substantially unsuccessful, and therefore, the presumption in r 15.23 did not apply in favour of the defendants. The Court also held that it did not consider the defendants' claimed costs and disbursements to be justified.

Orders