Anzide Properties Limited v Dunedin City Council

[2012] NZHC 3046

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2011-412-269 [2012] NZHC 3046

UNDER  the Judicature Amendment Act 1972

IN THE MATTER OF     a decision under s 181(3) of the Resource

Management Act 1991

BETWEEN  ANZIDE PROPERTIES LIMITED First Plaintiff

ANDHALL BROTHERS TRANSPORT LIMITED

Second Plaintiff

ANDDUNEDIN CRANE HIRE (2005) LIMITED

Third Plaintiff

ANDDUNEDIN CITY COUNCIL Defendant

Hearing:         On the papers

Counsel:         J A Farrow and M H Hayes for Plaintiffs

M B Couling for Defendant
J A Knight for New Zealand Transport Agency

Judgment:      15 November 2012

In accordance with r 11.5 I direct that the delivery time of this judgment is 4.15pm on the 15th day of November 2012.

COSTS JUDGMENT OF MACKENZIE J

ANZIDE PROPERTIES LIMITED V DUNEDIN CITY COUNCIL HC DUN CIV-2011-412-269 [15 November

2012]

Background

[1]      The plaintiffs seek a costs order in these proceedings.

[2]      The first plaintiff (Anzide) is the owner of properties 70, 76 and 80 Anzac Avenue Dunedin.   The second and the third plaintiffs operate businesses on these properties (the affected land).   From about 2007, the defendant (the Council) developed a proposal to upgrade and realign roads adjacent to the affected land, by constructing an arterial road, to form part of a realignment of State Highways 1 and 88.   In June 2008 the Council issued a notice of requirement for the proposed arterial.   Anzide  was  listed  as  an  affected  party.    In  January 2009  the  Council confirmed the designation of the affected land as required for roading purposes. There were dealings between Anzide and the Council over the acquisition of the affected land by the Council.

[3]      Subsequently, in June 2010, the Council decided to realign the route for the proposed arterial so that it ran adjacent to the affected land but did not cross it.  It consequently decided to alter the designation, in such a way that it would not need to acquire the affected land.   It did not notify any of the plaintiffs of its intention to make that change.  It now accepts that it should have done so.  A decision to give effect to this change of plan was made in June 2010 following consideration by an independent commissioner appointed  by the Council.   The designation  over the affected land was removed in August 2010 consequent on the June decision.

[4]      Though  the  route  no  longer  crossed  the  affected  land,  access  to  it  was affected by the new road. As soon as they became aware of the Council’s new plans, the plaintiffs raised safety concerns about the configuration of the new road.   The road was built, and opened on 5 April 2011 without the safety issues raised by the plaintiffs having been met to their satisfaction.

[5]      This proceeding, an application for review of the Council’s decision made on

30 June 2010 to alter the original designation, was commenced on 27 April 2011. The substantive relief sought was a declaration that the decision was invalid, and the

quashing of that decision.   The plaintiffs applied for urgent interim relief.   They sought orders to give effect to a temporary access solution which their experts had devised.  That would allow the new road to remain open while allowing access to the affected land in a way which had regard to the safety issues.  The temporary access solution proposed by the plaintiffs was given effect in an interim solution agreed between   the   parties   following   a   telephone   conference   with   Chisholm J,   in accordance with his minutes dated 2  and 3  May 2011.   That  temporary access solution allowed the partial use of the road, but restricted full implementation of the entire roading scheme planned for the new road.

[6]      The interim arrangement was to apply until further order of the Court.   A fixture for the substantive matter was set for 9 and 10 June 2011.   That was later deferred. The interim access arrangement remained in place.

[7]      The Council filed its statement of defence on 23 September 2011.  In that, it admitted that the plaintiffs were not notified of the intention to alter the original designation before the decision on the alteration requirement was made, and that they should have been.   The statement of defence acknowledged that the decision challenged  by the plaintiffs  was  invalid.    It consented to  a declaration that the decision is invalid and to an order quashing or setting aside the decision.

[8]      That did not finally resolve the issues in this proceeding.  There remained a dispute over the consequential relief sought by the plaintiff.   That relief was an injunction or order in the nature of prohibition preventing the Council from taking steps in reliance on the altered designation, and requiring the Council to create a temporary vehicle lane for traffic to and from the plaintiffs’ sites.  The statement of defence denied that claim for relief, and pleaded that the interim solution to apply until the substantive matter was resolved by agreement or determined by the Court had been recorded in the consent order.  The statement of defence further pleaded “the defendant seeks the interim order to be set aside and State Highway 88 to be operated as  intended  with  full  traffic lights  and  phasing at  the Frederick Street intersection with access provided to and from the land through the traffic lights, phasing and Frederick Street access way.”

[9]      After the filing of the statement of defence, the proceedings were progressed on a timetable intended to lead to a two day fixture on 26 October 2011.  Timetable directions were given by Associate Judge Matthews on 3 October 2011 for the filing of evidence.  He made an order that New Zealand Transport Agency could elect to join the proceeding and file evidence.  The Agency’s interest arose from the fact that the road formed part of the state highway network.   In October 2011 the Council filed affidavit evidence directed towards achieving the outcome that the temporary access solution which had been agreed in the consent orders should be removed and the Frederick Street traffic lights activated.

[10]     The October fixture was deferred, at the request of the parties.  In a minute dated 24 October 2011, Chisholm J vacated the fixture for 26 and 27 October and directed that a further date was to be allocated.   He made, by consent, an order declaring invalid the decision of the independent commissioner dated 30 June 2010 altering the designation, and quashing that decision.  He also made a consent order that the existing temporary access arrangements were to remain in place until agreement or further order of the Court.

[11]     There  were  further  lengthy  exchanges  between  the  parties  and  their respective experts leading to a proposal by the Council in February 2012.   That would have replaced the temporary access solution and had the Frederick Street traffic lights activated. The plaintiffs did not agree to that proposal.

[12]     The hearing ultimately conducted by me was set down for 26 and 27 April

2012.  The parties agreed on the issue for determination at that hearing, and that was confirmed  by  Chisholm J  in  a  minute  dated  1 March  2012.     The  issue  for determination was:

What temporary access solution should remain in place until the outcome of the Respondent’s publicly notified application for an alternation to the designation is known and any appeal rights are exhausted:

a.         the current temporary access solution;  or

b.        a temporary access solution to be proposed by the Respondent?

[13]     That formulation of the issue did not clearly specify on which party the onus rested to satisfy the Court as to what temporary access was appropriate.  The consent order was to remain in force until further agreement or order.  Therefore, the onus of establishing that there should be a change must rest on the party proposing the change.  It was the Council that was asserting at the hearing in April 2012 that there should  be  an  alteration  to  the  status  quo.    However,  counsel  for  the  Council contended that the Council’s solution should be implemented, and that the onus was on the plaintiffs to establish why the consent order should continue.  That contention on behalf of the Council became apparent to me when the hearing on 26 April 2012 commenced in Court, following a view which I had, at the request of the parties, and in accordance with a direction by Chisholm J, undertaken earlier.  In effect, counsel for the Council was contending that the future configuration of the road adjacent to the properties, including the operation of the lights as proposed by the Council, was to be subject to a de novo consideration at that hearing.  The Council’s position was that there should be no presumption that the temporary access arrangement in the consent order would continue.

[14]     I questioned counsel to clarify why that should be so, in the light of the consent orders.  No time limit had been imposed on the duration of the consent order, and there was no formal application by the Council, or the plaintiffs, to vary the consent order.  I did not receive an answer which satisfied me on that point, in a way which would have enabled me to continue with the hearing to determine the agreed issue.   However, that became unnecessary when counsel sought an opportunity to have further discussions with a view to reaching some accommodation on the future access arrangements.  Those discussions led to the request to the Court to make the consent orders recorded in [2] of my minute of 26 April 2012.

The application for costs

[15]     The order in [2](b) of the minute records the parties’ consent to costs being resolved, following an exchange of submissions, “in relation to both the application for judicial review and all disputes regarding the temporary access arrangement”. Submissions have been filed in accordance with the timetable fixed in the consent

order.  As envisaged by that order, the submissions address costs in respect of the proceedings as a whole, not just costs on the hearing before me.

[16]     I have some reservations as to the appropriateness of the course which the parties have agreed for determining costs.  These proceedings are not formally at an end so as to require that costs be finally fixed.   There has not been a judicial resolution of any of the issues involved, as all of the orders made have been consent orders.  Neither I, nor any other Judge, is well placed to make an assessment of an appropriate award of costs of the proceedings as a whole.

[17]     Despite those reservations, I have formed the view that I should proceed to deal with costs in the way contemplated by the consent order, and in accordance with the submissions of the parties.  While the proceedings have not been finally disposed of,  the issues  raised  in them  have been  substantially resolved,  even  though the overall situation of the road remains unresolved.   The principal substantive relief sought has been granted, by the consent orders setting aside the Council’s decision. The  interim  position  has  also  been  determined,  by  the  consent  orders  made originally, and confirmed in April 2012.  The setting aside of the Council’s decision leaves the legal status of the road unresolved.   That is not an issue which can be resolved in these proceedings, as they are presently constituted.  For these reasons, I consider that it is appropriate to address the issue of costs at this stage.

Discussion

[18]     I deal first with the plaintiffs’ claim for indemnity costs.   Indemnity costs may be ordered if a party has acted vexatiously, frivolously, improperly or unnecessarily in defending a proceeding.[1]    An award of indemnity costs must be

[1] High Court Rules, r 14.6(4)(a).

related to conduct in relation to the proceedings.[2]   In support of their submission that

[2] Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160].

the Council has so acted, the plaintiffs rely on the background which I have briefly described.

[19]     The Council has proceeded to build the road which affects their properties and their businesses, in reliance upon a decision of the Council which it has accepted was improperly made. The road is, it seems, in place with no proper legal basis. The plaintiffs have had to bring proceedings to protect their rights.   There may be an issue as to whether in these circumstances the plaintiffs may have a legal basis for a claim against the Council to recover, as damages, the costs incurred in these proceedings, and in obtaining the extensive expert advice which the plaintiffs have obtained.  That is not, however, an issue which is before me.  Any such claim must be left for separate consideration in some appropriate way.

[20]     On the present application, I confine my consideration to conduct on the part of the Council in relation to the proceedings.  That approach makes it unnecessary for me to address the extensive submissions of counsel for the Council as to the merits of the parties’ stances on the interim access issues.  I consider that all parties have adopted positions which they believed to be reasonable in attempting to achieve a workable access arrangement.  It is not necessary or appropriate for me to venture any view on that aspect.   When regard is had only to conduct in relation to the proceedings, I consider that the conduct is not such as to justify an award of indemnity costs.  I decline to order indemnity costs.

[21]     I next consider scale costs.  In doing so, I apply the general principle in r 14.2 of the High Court Rules.   Under (a) the costs should follow the event.   For the purposes of that principle, the plaintiffs are the successful party.  Under (b) the costs should reflect the complexity and significance of the proceeding.   Under (g) the determination of costs should be predictable and expeditious.

[22]     Counsel for the plaintiffs has submitted a schedule calculating costs on a scale basis for the various steps involved.  That schedule categorises the proceedings as category 2.  It fixes some steps at Band B, and some at Band C.  Counsel for the Council accepts that the plaintiffs are entitled to costs on a 2B basis.  So far as scale costs are concerned, therefore, the parties differ only in respect of those steps which the plaintiffs have submitted should be in Band C.  Those steps are, in general terms, the commencement of the proceedings and incidental steps taken in the initial stages. There was a considerable degree of urgency arising from the opening of the road

without the plaintiffs’ concerns having been addressed.   The interim access issue added considerable complexity.  Under r 14.5(2)(c), a comparatively large amount of time for these steps is reasonable.  I allow the plaintiffs’ claim for the claimed steps in Band C.

[23]     Counsel for the Council submits that the plaintiffs should not receive costs for  the  21 October 2011  case  management  conference,  because  the  plaintiffs’ application for leave to cross-examine Council witnesses was unsuccessful.   That teleconference addressed a number of matters.   It resulted in the Court making consent orders declaring the Council decision invalid, and reaffirming the interim order.  I consider that the plaintiffs are entitled to costs on this step.

[24]     On  that  basis,  I consider  that  scale  costs,  as  calculated  by  the  plaintiff, totalling $53,016, are appropriate.

[25]     As  an  alternative  to  the  claim  for  indemnity  costs,  the  plaintiffs  seek increased costs on the grounds:

(a)      the defendant has contributed unnecessarily to the time and expense of the proceedings by taking steps and pursuing arguments that lacked merit;

(b)the defendant has contributed unnecessarily to the time and expense of  the  proceedings  by  failing,  without  reasonable  justification,  to accept offers to dispose of the proceedings;

(c)      the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the plaintiffs to bring the proceedings in the interests of those affected;  and

(d)the nature of the proceeding is such that the time required to progress the  proceedings  substantially  exceeded  the  time  allocated  under Band C.

[26]     Counsel for the plaintiff further submits that increased costs may be ordered where  there  is  a  failure  by  the  paying  party to  act  reasonably  and  relies  upon Bradbury v Westpac Banking Corporation.[3]

[3] Bradbury v Westpac Banking Corporation [2009] NZCA 234, [2009] 3 NZLR 400.

[27]     I  consider  that  an  award  of  increased  costs  is  justified  in  this  case, particularly on  grounds  (a)  and  (d).   As  I  have  already discussed,  the  Council accepted that its decision was invalid.  It agreed in April 2011 to an interim access arrangement. An interim access arrangement had to continue until the legal status of the road could be regularised.   The interim orders reflected that.   If the Council sought to change those orders, then the onus was, as I have held, on the Council to obtain the agreement of the plaintiffs to a changed access arrangement, or to apply to the Court for a variation of the interim orders.  The Council’s approach, evident by its stance at the hearing before me, was to contend that the burden of upholding the existing interim arrangement was on the plaintiffs.   That approach has required considerable additional work on the part of the plaintiffs.  Much of the expenditure incurred has been a necessary consequence of the Council’s attempts to achieve a different outcome from that which it had agreed, despite the Council having taken no formal steps to vary the consent orders.  I consider that approach by the Council has contributed significantly to the costs and has contributed unnecessarily to the time and expense of the proceedings, under ground (a).  The Council’s approach has also meant that the nature of the proceeding has been such that the time required to process the proceedings substantially exceeded the time which is reflected in the formal steps able to be compensated under the scale, under ground (d).  I consider that an uplift of 50 per cent as sought by the plaintiffs, taking total costs to $79,524, is appropriate.

[28]     The plaintiffs also claim, as disbursements, substantial experts’ fees.  These total $95,605.26.  In the circumstances, those expenses were reasonably incurred by the plaintiffs in making the proposals which it did for interim access and in responding to the Council’s endeavours to vary those arrangements.  I allow those amounts in full.  I also allow the sum of $10,489.77 for disbursements incurred by

the plaintiffs’ solicitors as itemised in schedule B.

Result

[29]     There will be an order that the defendant pay the plaintiffs’ costs in the sum

of $79,524, plus experts’ fees of $95,605.26 and other disbursements of $10,489.77.

Postscript

[30]     I have referred to the principle that so far as possible the determination of costs should be expeditious.  The delivery of this judgment has fallen short of that objective, as it has taken longer than desirable since the receipt of final submissions on 5 July 2012.  That is a consequence of the need for me to review the papers in some detail.   My other commitments have meant that this has taken longer than I

would have wished.  I express my regret for this delay.

Solicitors:           Webb Farry, Dunedin, for Plaintiffs

Anderson Lloyd, Dunedin, for Defendant

“A D MacKenzie J”