A High Court judge has ordered AMI Insurance to contribute towards the $111,000 legal costs of a man it claimed deliberately set fire to his leak-blighted home.
However, Justice Graham Lang has refused to order indemnity or increased costs against the insurer.
In August Justice Lang ruled in the High Court at Auckland that AMI should pay for damage to the Epsom property that was deliberately set alight in April last year.
The cost of the damage to the Coronation Road property has yet to be assessed.
AMI had refused to pay out on an insurance claim by the owners, the Devcich family trust.
It alleged that business broker Paul Devcich had deliberately torched the property himself because of moisture problems.
He and his wife had been trying unsuccessfully to sell the home for $890,000.
AMI had claimed that arson was a convenient way of getting rid of the problem.
The insurance firm had claimed that Mr Devcich had lit the fire himself, using some sort of timing device after he left for work, while his wife was away in Australia.
The judge accepted AMI's argument that Mr Devcich had a motive for starting the blaze.
However, he had concerns about the timing of the fire, because he had concluded that Mr Devcich left the property 15-20 minutes before the fire ignited.
There was absolutely no evidence of a timing device being used or the assistance of another person.
The judge had said he could not discount the possibility that an intruder lit the fire.
Following the decision, the Devciches applied for indemnity or increased costs because they said that AMI had refused offers to settle before, and during the trial.
They pointed to expert forensic evidence that showed signs a window having been forced and a photograph taken shortly after the fire that showed that particular window was open.
Instead of accepting the offer, which included a contribution by AMI to their costs and a formal withdrawal of the allegations against Mr Devcich, AMI "elected to proceed to trial in an endeavour to persuade the court that Mr Devcich was responsible for lighting the fire that partially destroyed the plaintiffs' house," the judge said.
The Devciches said AMI knew that it would have no prospect of success but had acted "vexatiously, frivolously, improperly or unnecessarily" in continuing to defend the proceeding.
However, Justice Lang rejected the application for indemnity or increased costs.
He said the case had been "finely balanced".
Had it not been for the forensic evidence that emerged just before the trial, it was likely that AMI would have succeeded in defending the action, the judge said.
"Although that evidence ultimately tipped the scales in favour of the plaintiffs, I accept that it emerged so late in the piece that AMI could not reasonably have been expected to appreciate that that would be the case."
AMI was fully entitled to defend the proceeding, he said.
