HEALE v IAG NEW ZEALAND LTD [2020] NZHC 352

HEALE v IAG NEW ZEALAND LTD [2020] NZHC 352 [3 March 2020]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2018-409-000166[2020] NZHC 352BETWEEN THOMAS EDWARD FAIRFAX HEALEand ANTHEA CLARE HEALEPlaintiffsAND IAG NEW ZEALAND LIMITEDDefendantAND QBE INSURANCE (AUSTRALIA)LIMITEDFirst Third PartyAND BUILDTECH RESTORATIONS LIMITEDSecond Third PartyAND ENGINEERING DESIGN CONSULTANTSLIMITEDThird Third PartyHearing: Determined on the papersCounsel: A N Riches for PlaintiffsN S Gedye QC, B R Cuff and M K Booth for DefendantD H McLellan QC, G N Gallaway and G T Carter for First ThirdPartyP A Cowey and D L Bell for Second Third PartyJ M Morrison for Third Third PartyJudgment: 3 March 2020COSTS JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 3 March 2020 at 9.00 ampursuant to Rule 11.5 of the High Court RulesRegistrar/ Deputy RegistrarDate:The application for costs[1] On 1 November 20191 on IAG New Zealand Ltd's (IAG) application I madethe following orders:(a) granting IAG leave under s 9(4) of the Law Reform Act 1936 tocontinue its third party statement of claim dated 31 August 2008 againstQBE Insurance (Australia) Ltd (QBE) and to join QBE as first thirdparty; and(b) granting IAG leave under r 4.4 High Court Rules to join BuildtechRestorations Ltd (Buildtech) as second third party and EngineeringDesign Consultants Ltd (EDC) as third third party.[2] The plaintiffs (the Heales) opposed the making of the orders in [1](a) and (b).QBE opposed the making of the order in [1](a). Buildtech and EDC opposed themaking of the orders in [1](b) in so far as they applied to them.[3] IAG now seeks costs arguing it was wholly successful on its applications. Inresponse the other parties argue they should get costs on unsuccessful applications byIAG to join QBE, Buildtech and EDC as defendants.Background[4] The Heales were the owners of a property at 9 Snowdon Road, Christchurchthat was damaged by earthquake. They made an insurance claim with IAG and theirhouse was repaired. They remained unsatisfied and filed this proceeding against IAGalleging breaches of their insurance policy, negligence and breach of the Fair TradingAct 1986.[5] IAG defended the Heales' claim and applied to join additional parties. Thebasis for this is set out in the judgment of 1 November 2019. Those applicationsproceeded as follows:1 Heale v IAG New Zealand Ltd [2019] NZHC 2829.(a) On 9 April 2019, IAG made an application to:(i) join Buildtech and EDC as defendants; and(ii) for leave under s 9(4) of the Law Reform Act 1936 to commencean action against QBE as a third party.(b) The application of 9 April 2019 was opposed by the other parties.Notices of opposition and affidavits were filed.(c) On 30 May 2019, a telephone conference was convened beforeWhata J. IAG indicated it proposed to file an amended application forjoinder. A timetable was put in place.(d) On 10 June 2019, IAG filed an amended application:(i) for leave under s 9(4) of the Law Reform Act 1936 to continue itsthird party statement of claim against QBE and join QBE as afourth defendant; and(ii) to join Buildtech and EDC as defendants.(e) On 10 June 2019, also, IAG filed an application to join Buildtech andEDC as third parties. The application to join Buildtech and EDC asthird parties was not immediately served upon them.(f) The Heales filed notices of opposition to both of IAG's applications of10 June 2019. QBE filed a notice of opposition to the amendedapplication of 10 June 2019 only.(g) On 28 May 2019, there was to be a further telephone conference beforeAssociate Judge Matthews, but he issued directions on the papers thatBuildtech and EDC were to be served with the applications to join themas third parties. He also made other directions to have IAG'sapplications set down for hearing.(h) Buildtech and EDC were served. Buildtech (on 26 July) and EDC (on24 July) filed oppositions to IAG's application to join them as thirdparties.(i) On 9 August 2019, IAG's counsel filed a memorandum with the Court"to update the Court on its applications to join parties as defendants".Counsel advised that IAG would not pursue its application to join QBE,Buildtech or EDC as defendants. This narrowed the issues to bedetermined to:(i) whether leave should be granted for IAG to proceed under s 9(4)of the Law Reform Act 1936 against QBE as a third party; and(ii) whether Buildtech and EDC should be joined as third parties.(j) On 19 August 2019, Associate Judge Lester noted that IAG'sapplication to join defendants would not be pursued and set theremaining matters down for hearing on 24 September 2019.(k) On 24 September 2019, I heard the applications on a defended basisand issued my judgment on 1 November 2019.IAG says it was successful[6] IAG argues that costs should generally be fixed when interlocutoryapplications are determined and the overriding principle is that a party who fails withrespect to an interlocutory application should pay costs to the party who succeeds. Italso submits that here costs should be determined on a Category 2B basis. Thesematters are uncontentious.[7] IAG then claims to have been wholly successful on its applications to join thirdparties. It calculates its fair and reasonable costs and reasonable disbursements total$17,792 in respect of which the other parties should contribute in the followingproportions:(a) QBE $8,227(b) Buildtech $3,188(c) EDC $3,188(d) Heales $3,188[8] QBE takes issue with IAG's calculations in certain respects. In addition, asnoted, the other parties (including QBE) argue that IAG should pay costs on itsabandoned applications to join QBE, Buildtech and EDC as defendants.Discussion[9] I proceed in three stages:(a) first, I shall determine what costs IAG is entitled to on its successfulapplications to join third parties;(b) second, I shall determine what (if any) costs the other parties areentitled to in respect of IAG's abandoned applications; and(c) third, I consider where the liability for costs should lie recognising thatall matters in relation to costs are at the discretion of the Court.2IAG's calculations[10] IAG's calculation of its claimed costs are set out in the scheduled attached asA.[11] IAG claims costs on filing three interlocutory applications and the filing feeson two applications. I can see no justification for that. Three applications were filedbut this was because of changes in IAG's position. It should have made oneapplication correctly. IAG is entitled to costs on one application and one filing fee.2 High Court Rules 2016, r 14.1(1).[12] IAG claims costs for filing memoranda for case management conferences ormentions hearings.3 IAG refers to memoranda dated 24 June 2019 and 9 August 2019.The memorandum dated 24 June 2019 was a joint memorandum, but it appears to havebeen prepared by the Heales' counsel. It was not filed for a case managementconference or mentions hearing but to seek an amendment of the timetable made byWhata J on 30 May 2019. The memorandum of 9 August 2019 was prepared by IAG'scounsel but not for a case management conference or mentions hearing. It was toadvise the Court that IAG was not pursuing its applications to join QBE, Buildtechand EDC as defendants and, consequently, to seek a timetable in respect to itsremaining applications. I disallow these claims.[13] QBE raises an issue concerning IAG's apportionment of costs between theother parties. It argues the Heales should contribute a greater share towards IAG'scosts as they alone opposed both successful applications. Whilst this is correct, inrelation to the application to join QBE the Heales involvement was insignificant andvery much in a supporting role to QBE. On balance I consider the apportionmentsadopted by IAG are appropriate.[14] Attached to this ruling as schedule B is my calculation of IAG's entitlement tocosts on its successful applications.[15] I find IAG's fair and reasonable costs and reasonable disbursements total$12,832 and, adopting IAG's approach, the other parties should contribute in thefollowing proportions:(a) QBE $6,416.(b) Buildtech $2,138.67(c) EDC $2,138.67(d) Heales $2,138.673 High Court Rules, sch 3, item 11.The other parties' costs[16] IAG's applications to join QBE, Buildtech and EDC as defendants wereformally opposed and IAG abandoned them. IAG must be considered an unsuccessfulparty in relation to those applications. I cannot see why it should not pay costs on thesame basis it has claimed them.[17] I consider it was reasonable for the other parties to be separately representedand that each is entitled to an award of costs. Whilst they were united in oppositionto IAG's applications, their interests in the substantive proceeding are not aligned inall respects. They could not be represented by the same counsel.[18] Attached to this ruling as schedule C and D are my calculations of the otherparties' entitlements to costs on the abandoned applications.[19] I have disallowed some of the other parties' claims as follows:(a) The Heales sought costs for filing two notices of opposition in responseto IAG's application of 9 April 2019 and its amended application of10 June 2019. The notices of oppositions were materially the same anddo not justify an additional award of costs. I do allow the Heales twofiling fees which I consider reasonably incurred.(b) The Heales have claimed costs for filing a memorandum dated 29 May2019 for a case management conference. I can find no record of thatmemorandum and disallow the claim.(c) Buildtech has claimed costs for filing memoranda dated 29 May 2019and 20 June 2019 for case management conferences. Thememorandum of 29 May 2019 is just four lines agreeing to orderssought by IAG. It does not justify an award of costs. The memorandumof 20 June 2019 was a joint memorandum on behalf of the Heales, EDCand Buildtech prepared by EDC's counsel. It concerned all IAG'sapplications, including the successful ones, and I regard it as neutral forcosts purposes for that reason.(d) Buildtech has claimed for the costs of filing its memorandum in relationto costs. Any entitlement must be dependent upon the result of thisjudgment and I deal with it below.(e) EDC sought costs for filing the memorandum of 20 June 2020 which Idisallow for the reasons given in (c) above.[20] I find the other parties fair and reasonable costs and disbursements in respectof IAG's abandoned applications total $2,227 for the Heales and $2,117 for QBE,Buildtech and EDC.Discretion[21] It will be observed that the costs to which the Heales, Buildtech and EDC areentitled almost exactly off-set IAG's entitlement. Before IAG sought costs it wasaware that the other parties entitlement to costs on the abandoned applications wouldbe put in issue. Surprisingly it did not raise the matter when claiming costs. It plainlywas in a position to do so if it opposed those claims.[22] Mr Morrison for EDC wrote to IAG's counsel pointing out that IAG had notfactored in EDC's entitlement to costs on the abandoned applications and said:It is nickel and dime nonsense to go into costs any further when the differencein "entitlement" would be a few hundred dollars at best.Accordingly rather than you file a memorandum in terms of your draft and Irespond as outlined above I suggest we simply agree that costs on theapplication for third party joinder and earlier application for joinder asdefendant (as between your client and EDC) lie where they fall [23] Mr Morrison's approach was sensible but not accepted. It applied equally tothe positions of the Heales and Buildtech. There is an argument there should be somecosts consequence. However, on reflection a fair result in all the circumstances is thatcosts as between IAG and the Heales, Buildtech and EDC should lie where they fall.[24] QBE is in a different position. Even allowing for its entitlement to costs on theabandoned applications there is a significant sum owing to IAG. I can see no reasonit should not pay that sum.[25] QBE submitted it had some success upon its objection to affidavits ofMr Harvett filed in support of IAG's applications which was the subject of substantivesubmissions and a ruling.4 That is correct but as QBE acknowledges, ultimately itmade no difference to the outcome and I do not consider IAG's entitlement to costsshould be reduced as a consequence.5Result[26] As between IAG and the Heales, Buildtech and EDC costs on IAG'sapplications for joinder of defendants and third parties shall lie where they fall.[27] As between IAG and QBE, I find IAG is entitled to costs and disbursement onits application to join QBE as a third party in the sum of $6,416. QBE is entitled tocosts on IAG's abandoned applications to join QBE as a defendant in the sum of$2,117. Pursuant to r 14.17 the cost awards should be set-off against each other. QBEis therefore ordered to pay IAG the sum of $4,299._______________________O G PaulsenAssociate JudgeSolicitors:Saunders & Co, ChristchurchDLA Piper, WellingtonChapman Tripp, ChristchurchParry Field Lawyers, ChristchurchRainey Collins, Wellington4 Heale v IAG New Zealand Ltd, above n1, at [60] – [67].5 High Court Rules, r 14.17.ASCHEDULE OF COSTS AND DISBURSEMENTSQBE interlocutory applicationItem Description Allocateddays orpart daysAppropriatedailyrecoveryrateTotal22 Filing interlocutory application 0.6 $2,230 $1,338.0024 Preparation of writtensubmissions1.5 $2,390 $3,585.0026 Appearance at hearing ofdefended application for sole orprincipal counsel0.5 $2,390 $1,195.00Sub-Total $6,118.00DisbursementsFiling fee $500Total $6,618.00EDC and Buildtech interlocutory applicationsItem Description Allocateddays or partdaysAppropriatedailyrecoveryrateTotal22 Filing interlocutoryapplication x 21.2 $2,230 $2,676.0024 Preparation of writtensubmissions1.5 $2,390 $3,585.0026 Appearance at hearing ofdefended application for soleor principal counsel0.5 $2,390 $1,195.00Sub-Total $7,456.00DisbursementsFiling fee $500Total $7,956.00Shared costs of consolidated case management and hearingItem Description Allocateddays or partdaysAppropriatedaily recoveryrateTotal11 Filing memorandum forfirst or subsequent casemanagement conferenceor mentions hearing x 20.8 $2,230 $1,784.0025 Preparation by applicantof bundle for hearing0.6 $2,390 $1,434.00Sub-Total $3,218.00BSCHEDULE OF COSTS AND DISBURSEMENTSQBE interlocutory applicationItem Description Allocateddays or partdaysAppropriatedailyrecovery rateTotal24 Preparation of writtensubmissions1.5 $2,390 $3,585.0026 Appearance at hearing ofdefended application forsole or principal counsel0.5 $2,390 $1,195.00Total $4,780.00EDC and Buildtech interlocutory applicationsItem Description Allocateddays orpart daysAppropriatedailyrecoveryTotal24 Preparation of writtensubmissions1.5 $2,390 $3,585.0026 Appearance at hearing ofdefended application forsole or principal counsel0.5 $2,390 $1,195.00Total $4,780.00Shared costs of hearingItem Description Allocateddays orpart daysAppropriatedailyrecovery rateTotal22 Filing interlocutory application 0.6 $2,230 $1,338.0025 Preparation by applicant ofbundle for hearing0.6 $2,390 $1,434.00Sub-Total $2,772.00DisbursementsFiling fee $500Total $3,272.00CSCHEDULE OF COSTS AND DISBURSEMENTSOF QBE, BUILDTECH AND EDCIAG applications to join defendantsItem Description Allocateddays orpart daysAppropriatedailyrecoveryrateTotal23 Filing opposition tointerlocutory application0.6 $2,230 $1,33824 Appearance at casemanagement conference on 30May 20180.3 $2,230 $669Sub-Total $2,007DisbursementsFiling fee on notice ofopposition$110Total $2,117DSCHEDULE OF COSTS AND DISBURSEMENTSOF THE HEALESIAG application to join defendantsItem Description Allocateddays orpart daysAppropriatedailyrecoveryrateTotal23 Filing opposition tointerlocutory application0.6 $2,230 $1,33824 Appearance at casemanagement conference on 30May 20180.3 $2,230 $66926 Appearance at hearing ofdefended application for sole orprincipal counselSub-Total $2,007DisbursementsFiling fee on notice ofopposition (x2)$220Total $2,227