QBE INSURANCE (INTERNATIONAL) LIMITED v WILD SOUTH HOLDINGS LIMITED AND MAXIMS FASHIONS LIMITED CA776/2013 [2015] NZCA 39

QBE INSURANCE (INTERNATIONAL) LIMITED v WILD SOUTH HOLDINGS LIMITED AND MAXIMS FASHIONS LIMITED CA776/2013 [2015] NZCA 39 [2 March 2015]IN THE COURT OF APPEAL OF NEW ZEALANDCA776/2013[2015] NZCA 39BETWEEN QBE INSURANCE (INTERNATIONAL)LIMITEDAppellantAND WILD SOUTH HOLDINGS LIMITEDAND MAXIMS FASHIONS LIMITEDRespondentCA881/2013AND BETWEEN PETER STANLEY MARRIOTT ANDEUNICE ANN MARRIOTTAppellantAND VERO INSURANCE NEW ZEALANDLIMITEDRespondentCA65/2014AND BETWEEN CRYSTAL IMPORTS LIMITEDAppellantAND CERTAIN UNDERWRITERS ATLLOYDS OF LONDONFirst RespondentSIRIUS INTERNATIONALINSURANCE GROUP LIMITEDSecond RespondentCourt: Wild, French and Miller JJCounsel: M G Ring QC and F W Rose for QBE Insurance (International)LtdN R Campbell QC and S P Rennie for Wild South Holdings Ltd,Maxims Fashions Ltd and P S and E A MarriottD J Goddard QC and PJL Hunt for Vero Insurance New ZealandLtdZ G Kennedy and I Rosic for Crystal Imports LtdB D Gray QC and K Pengelly for Certain Underwriters atLloyds of London and Sirius International Insurance Group LtdJudgment:(On the papers)2 March 2015 at 4.00 pmJUDGMENT OF THE COURTA The insurers in each appeal must pay the respective insured parties' costsfor a complex appeal on a band B basis plus usual disbursements in accordance with [10] of this judgment. We certify for second counsel.B Absent agreement, we direct the High Court to reconsider costs in that Court in respect of the CA776/2013 and CA881/2013 proceedings, in light of our judgment of 10 September 2014 and this costs judgment.____________________________________________________________________REASONS OF THE COURT(Given by Miller J)[1] The parties enjoyed mixed success in our judgment of 10 September 2014.1They have been unable to agree costs, and we have received memoranda.[2] The parties agree that the appeals should be categorised as complex. We concur. Some differ on whether costs should be calculated on a band A or B basis. We adopt band B, given the scope and complexity of the appeals and the preparation required for three days of argument.[3] Each insured in the three proceedings succeeded on what was unquestionably the primary issue: the interpretation of the automatic reinstatement clause. Prima facie, therefore, the insured parties are entitled to costs.1 QBE Insurance (International) Ltd v Wild South Holdings Ltd [2014] NZCA 447, [2015] 2 NZLR 24 at [151].[4] Some parties submitted that the reinstatement issue was sufficiently important to categorise the appeals as a test case.2 The procedural history, in particular the articulation of separate questions, and the wider ramifications of thiscase supports that contention. But here the insurers are the tester. The Court's viewon reinstatement has significance for them beyond the current proceedings. We do not accept that the insureds should be treated as if they were a litigation funder, or that the use of the separate questions procedure makes any difference in this regard. In the ordinary way the tester is ordered to pay costs regardless of the outcome.3 As we are satisfied that in the round, the insured parties were successful, it is not necessary to fix costs on a test case basis.[5] We are not satisfied a reduction or uplift, as the case may be, is warranted pursuant to rr 53E(2)(c) or 53F(e) of the Court of Appeal (Civil) Rules 2005 on the basis the appeals concerned a matter of public interest. In respect of r 53E(2)(c) we are not persuaded that it was reasonably necessary for the insured parties to participate in the interests of a section of the public; although the reinstatement issue is of wider significance, they acted in their private commercial interests. In respect of r 53F(e), the issue is not one of public interest generally but rather of particular interest to the insurers.[6] Some reductions in costs are warranted, however, for the insurers in two appeals. In the Wild South proceeding the parties enjoyed mixed success on the deductible point. A reduction of 10 per cent in the costs payable is appropriate to reflect that.[7] In the Marriott proceeding the insurer won on the destroyed issue and no clarification was required on indemnity entitlement. There was also mixed successon the deductible point. Vero's success warrants a reduction of 30 per cent in thecosts payable.2 Those parties were two sets of insured parties, Wild South and Maxim Fashions and the Marriotts, and one set of insurers, Lloyds and Sirius International.3 New Zealand Fire Service Commission v Insurance Brokers Association of New Zealand Inc[2014] NZCA 179, [2014] 3 NZLR 541 at [80].[8] We do not think any reduction in costs is appropriate in the Crystal Imports proceeding. It cannot be said that Crystal Imports lost on any of the issues argued before us. Although Crystal Imports argued for a construction that would allow it to profit on reinstatement, it nonetheless won on the reinstatement issue. Other matters raised by counsel for the insurers were not the subject of the appeal, which was directed to deciding preliminary questions. The application of our judgment in the light of the particular facts of that case is for another day.[9] Counsel for Vero suggested that the common costs of counsel for the insured parties in the Wild South and Marriott proceedings should be divided on the basis that the Wild South proceeding involved two insured parties. We reject that submission. No meaningful additional cost was incurred by reason of the two parties. The insurers in those proceedings are jointly liable in equal shares for any costs and disbursements incurred once.[10] The insurers in each case must pay the respective insured parties' costs for acomplex appeal on a band B basis, with provision for second counsel, plus usual disbursements. The liability for costs is reduced by 10 per cent in CA776/2013 and 30 per cent in CA881/2013. Counsel should be able to quantify the costs and agree on how they will be shared to the extent that they are common. Against the remote possibility that counsel cannot agree, there will be leave to apply.[11] The parties in the CA776/2013 and CA881/2013 proceedings asked that, failing agreement, the High Court revisit any costs orders in light of our substantive judgment. We order accordingly.Solicitors:Keegan Alexander, Auckland for QBE Insurance (International) LtdRhodes & Co, Christchurch for Wild South Holdings Ltd, Maxims Fashions Ltd and P S and E A MarriottMcElroys, Auckland for Vero Insurance New Zealand LtdMinter Ellison Rudd Watts, Auckland for Crystal Imports LtdDLA Phillips Fox, Auckland for Certain Underwriters at Lloyds of London and Sirius International Group Ltd