GINIVAN v SOUTHERN RESPONSE EARTHQUAKE SERVICES (Costs Judgment) [2021] NZHC 2354

GINIVAN v SOUTHERN RESPONSE EARTHQUAKE SERVICES (Costs Judgment) [2021] NZHC 2354[9 September 2021]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2017-409-000116[2021] NZHC 2354BETWEEN WILLIAM FRANCIS GINIVAN andBRETT WILLIAM REID as trustees of theGIFT TRUSTFirst PlaintiffsAND WILLIAM FRANCIS GINIVAN andDIANE SHIRLEY CARSONSecond PlaintiffsAND SOUTHERN RESPONSE EARTHQUAKESERVICESDefendantHearing: On the papersCounsel: G A Cooper for PlaintiffsM A Powell and R A Morris for DefendantJudgment: 9 September 2021COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 9 September 2021 at 3.00 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[1] This proceeding is an earthquake claim in respect of the first plaintiffs'property at Cashmere. On four occasions the plaintiffs refused to comply withdirections of the Court to allow the defendant access to carry out inspections of theproperty. As a consequence, on 14 November 2019, I made an unless order that thedefendant was to be given access to the property by 14 December 2019 failing whichthe proceeding was stayed pending further order of the Court.1[2] The plaintiffs applied for leave to appeal the order made on 14 November 2019,ostensibly pursuant to s 56(3) of the Senior Courts Act 2016. That application wasopposed. In a reserved judgment of 26 June 2020, I dismissed the application anddirected counsel to confer on costs.2 Agreement could not be reached and counselfiled written submissions as to the parties' respective positions.[3] Unsatisfied with my decision of 26 June 2020, the plaintiffs sought leave fromthe Court of Appeal to appeal from the order of 14 November 2019. The issue of costsfollowing my judgment of 26 June 2020 was put on hold.[4] What then followed is set out in a judgment of Ellis J of 4 August 2021.3 Insummary, it was identified in the Court of Appeal that the plaintiffs' applications forleave to appeal (both in this Court and the Court of Appeal) were predicated on amistaken belief the proceeding was covered by the Senior Courts Act. There was, infact, no right of appeal from the decision of 14 November 2019. The correct coursewas for the plaintiffs to seek a review of that decision. As an indulgence it was agreedthat Ellis J, sitting as a Judge of the High Court, would hear the appeal as if it had beenfiled in the High Court as an application for review.[5] When the matter came before Ellis J, the application for review was resolvedby agreement save in relation to costs.4 In her judgment of 4 August 2021, Ellis Jdealt with costs on the review and awarded costs to the defendant on a 2B basis witha 20 per cent uplift.51 Ginivan v Southern Response Earthquake Services Ltd HC Christchurch CIV-2017-409-116,14 November 2019 (Minute).2 Ginivan v Southern Response Earthquake Services Ltd [2020] NZHC 1469.3 Ginivan v Southern Response Earthquake Services Ltd [2021] NZHC 1997 at [4]-[9].4 Ginivan v Southern Response Earthquake Services Ltd, above n 3.5 At [24].[6] The parties are now agreed that I should determine costs on my judgment of26 June 2020 based on the submissions that were filed following that hearing.The positions of the partiesThe defendant[7] The defendant argues it is entitled to indemnity costs under r 14.6 of the HighCourt Rules 2016 because:(a) the plaintiffs acted vexatiously, frivolously, improperly orunnecessarily in bringing the application for leave to appeal; and(b) the application for leave to appeal arose from the plaintiffs' continuedrefusal to comply with directions of the Court.[8] The defendant refers to findings made in my judgment that the plaintiffs'refusal to comply with the Court's directions was deliberate and my rejection of all ofthe plaintiffs' grounds for seeking leave to appeal as having no merit.[9] The defendant's indemnity costs and disbursements amount to $18,214.15which it contends are reasonable because:(a) fees were kept to a minimum by the use, where possible, of juniorsolicitors and law clerks to undertake work;(b) the application raised nine different alleged errors of fact or law all ofwhich required consideration but not all of which were pursued at thehearing; and(c) the plaintiffs nominated a substantial amount of documentation to formpart of the common bundle despite it being irrelevant to the questionbefore the Court.The plaintiffs' position[10] The plaintiffs' position is that:(a) costs should be reserved pending the outcome of the substantiveproceeding; or(b) in the alternative, 2B costs are appropriate; and(c) in the event the Court considers costs should be awarded on anindemnity basis, the amount claimed by the defendant is excessive andunreasonable.[11] In support of their submission that costs should be reserved, the plaintiffs arguethere are special reasons to depart from the general rule costs on opposed applicationsshould be fixed when the application is determined. They say they have been deprivedof their insurance entitlements for over 10 years, the ultimate outcome of theproceeding will result in a substantial payment being made to them and the making ofan award of costs would disadvantage them financially in their ability to prosecute theclaim. They argue the major impediment to progress of the claim has beendisagreement whether a fee estimate provided by Warren & Mahoney is reasonablewhich remains a live issue. They contend if, ultimately, they are successful on thatissue the application for leave to appeal should never have been necessary.[12] In support of their alternative position that 2B costs are appropriate, theplaintiffs argue that indemnity costs should rarely be awarded and that their conductin seeking leave to appeal was not unreasonable. They contend there was no badbehaviour on their part in pursuing the application for leave to appeal and there wascooperation between counsel to comply with the Court's timetable directions toprogress that application promptly to a hearing. Furthermore, the application for leaveto appeal was not of any special complexity and, once again, they submit they arevulnerable in comparison to the defendant and an award of costs would prejudice thecontinuation of their claim.Discussion[13] The general principles in relation to costs are well-established. They includethat all matters of costs are discretionary but the discretion must be exercised on aprincipled basis.6 The determination of costs, so far as possible, should be bothpredictable and expeditious.7 The party who has lost should pay the costs of the partythat has won unless there are exceptional reasons to the contrary.8 Costs on an opposedinterlocutory application should, in the absence of special reasons to the contrary, befixed and payable at the time the application is determined.9 Generally, costs awardsshould reflect the complexity and significance of the proceeding and be assessed byapplying the appropriate daily rate to the time considered reasonable for each steprequired in relation to the proceeding.10[14] The defendant was clearly the successful party in relation to the plaintiffs'application for leave to appeal and prima facie entitled to costs. I can see no reasonwhy it should not be awarded costs nor why costs should not be fixed and payablenow. The plaintiffs' position that costs should await the outcome of the substantiveproceeding is largely based on delays that have occurred in resolving their insuranceclaim. This is a surprising stance given this proceeding has been delayed for over twoyears because they refused to comply with Court directions. This same point wasmade by Ellis J in her judgment of 4 August 2021.11 In response to a submission forthe plaintiffs that the agreement reached before the hearing should be seen as aresolution of an "impasse" between the parties, Ellis J said:[13] These submissions are disingenuous. The "impasse" here was entirelyof the plaintiffs making. Southern Response could not inspect the propertybecause the plaintiffs deliberately defied orders previously made by the Court.So, too, "standstill". The proceedings were only "effectively stayed" becauseof the plaintiffs' actions (or inaction) (footnote omitted)6 High Court Rules 2016, r 14.1(1).7 Rule 14.2(1)(g).8 Rule 14.2(1)(a) and Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 2 NZLR523 at [19].9 Rule 14.8.10 Rule 14.2(b) and (c).11 Ginivan v Southern Response Earthquake Services Ltd, above n 3.[15] The plaintiffs submit an early determination of costs would disadvantage themfinancially but there is no evidence of that and, in any event, if that is correct, theyhave brought it upon themselves.[16] In relation to the defendant's claim for indemnity costs, the position is finelybalanced but in my view indemnity costs should not be awarded. The refusal of theplaintiffs to comply with the Court's directions to allow the defendant access to theirproperty has already had costs consequences. Specifically, in my minute of14 November 2019, I ordered the plaintiffs to pay indemnity costs to the defendant.12If indemnity costs were again awarded against them there is an argument the plaintiffswere being penalised twice for the same misconduct. I also accept the plaintiffs wereentitled to challenge (but not appeal) the making of the unless order and that at leastin relation to the application for leave to appeal there was co-operation betweencounsel and compliance with the Court's timetable directions.[17] However, whilst I'm not prepared to award indemnity costs, I consider thedefendant is entitled to an uplift on scale costs. Relevantly, r 14.6(3) provides theCourt may order a party to pay increased costs if the party:(a) takes or pursues an unnecessary step or an argument that lacks merit;or(b) some other reason exists which justifies the Court making an order forincreased costs despite the principle that the determination of costsshould be predictable and expeditious.[18] There are three reasons justifying an uplift on scale costs. First, the applicationfor leave to appeal advanced nine alleged errors of fact or law, not all of which werepursued at the hearing but which the defendant was required to consider in preparationfor it. Second, the arguments advanced in support of the application lacked anysubstantive merit. Third, the application was predicated on a mistaken understandingas to the plaintiffs' entitlement to appeal. That was a matter that should have been12 Ginivan v Southern Response Earthquake Services CIV-2017-409-111 (Minute 14 November2019).properly researched prior to filing the application. In the circumstances, I considerthat an uplift of 20 per cent on scale 2B costs is appropriate to take account of thesematters.An additional issue[19] In a memorandum of 10 July 2020, the defendant asked me to fix costs awardedto the defendant in my minute of 14 November 2019. It is not clear whether that issueremains outstanding. I see no reason why the costs sought should not be fixed in theamount claimed by the defendant but will reserve leave for the parties to refer back tome should a determination on the issue need to be made.Result[20] The plaintiffs are to pay the defendant costs on the application for leave toappeal calculated on a 2B basis with a 20 per cent uplift together with reasonabledisbursements. For the avoidance of doubt the amount payable includes costs on thepreparation of submissions in relation to costs and specifically the memorandum forthe defendant of 10 July 2020.[21] I reserve leave to the parties to refer back to the Court if it is necessary to fixthe amount of costs payable by the plaintiffs awarded in my minute of 14 November2019._______________________O G PaulsenAssociate JudgeSolicitors:Cavell, Leitch (G A Cooper), ChristchurchBell Gully, Auckland