Claim for costs upheld where primary causes of action failed at trial

Where an insurance claim is litigated, the potential for an award of costs against the unsuccessful party is a central consideration. The general rule is that costs should follow the event, which is to say an award of costs will generally flow with the result of the litigation. The loser pays the winner’s costs in accordance with the costs rules. However, it is not always the case that the winner receives its costs as demonstrated in the recent case of Robinson v Whangarei Heads Enterprises Ltd & Freakley [2015] NZHC 2403.

In this case the High Court considered whether a plaintiff should be regarded as having been successful at trial, triggering an entitlement to recover his legal costs, even though his primary claim had failed.

The primary claim was that the first defendant, a company, had misled the Court in relation to an earlier application by the company to have the plaintiff arrested.

At trial, the plaintiff was initially self-represented. He advanced the claim as abuse of process and malicious prosecution in relation to the arrest application.

By the the time of trial, the plaintiff was represented by counsel. Counsel sought and was granted leave to advance an additional claim seeking compensatory damages pursuant to an undertaking provided by the company in support of the arrest application.

At trial, the Court found that the company had failed to make appropriate necessary disclosure in relation to the arrest application. If it had done so, the arrest order would not have been made. This meant that the plaintiff was entitled to compensatory damages pursuant to the undertaking.

So, while the primary claims had failed, the plaintiff’s rights had been substantially vindicated due to a finding that the company had in fact misled the Court. The plaintiff was therefore regarded as successful and he was entitled to his costs.

Steve Keall
8 October 2015

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