Can I get legal costs when I settle out of Court? 05 Jun 2019

Can I get legal costs when I settle out of court?

Since the limitation period of 6 years became a live issue for insurance claims arising from the Canterbury earthquakes homeowners have had a difficult choice, begging for an extension of time or pay the extra cost of filing court proceedings.

The High Court, in Black Rock Administration Ltd v IAG New Zealand Limited[1], shows that an insurer’s decision to refuse a limitation extension will carry adverse consequences.

In Black Rock, proceedings were commenced after IAG wrote to Black Rock’s solicitors denying cover to a significant part of property claimed by Black Rock for earthquake damage, and after IAG expressly declined a Limitation extension.  Ultimately, IAG accepted cover, and paid Black Rock for its repair costs. The Court found that “the need for Black Rock to initiate proceedings was precipitated by IAG’s refusal to waive its rights under the limitation statutes.”[2] 

This led the High Court to conclude that “it is indisputable that Black Rock had to initiate the proceeding as a result of how matters stood between the parties prior to its commencement.”[3]  While the High Court accepted that IAG’s decision to reserve its limitation rights  was “a legitimate choice”, that choice “has ultimately carried with it, consequences.”[4]  In this case, costs against IAG.

Who is the successful party where the dispute settles out of Court? The relevant issue is “the position between the parties at the time the proceeding commenced, rather than the history of the matter to that point.”[5] 

The Court found that the amount Black Rock obtained after filing its claim was “significantly more than was on offer at the time the proceeding was commenced.”[6]

IAG’s decisions to both deny cover and not offer a limitation extension, were relevant factors in determining that costs should be awarded against IAG.

IAG had already agreed to pay the repair costs, plus $20,535.86 claims preparation costs.  In addition it was ordered to pay Black Rock’s legal Court costs of $26,495,.

 

Should you need any assistance with these, or with any other Dispute matters, please contact Paul Cowey at Parry Field Lawyers (+64 3 348 8480).

 

 

[1] [2018] NZHC 3450.

[2] At [17].

[3] At [21].

[4] At [23].[5] At [22].

[6] At [20].