Bailey v Auckland Council
[2023] NZHC 3146
•10 November 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1801
[2023] NZHC 3146
BETWEEN GORDON MARTIN ROSS BAILEY
First Plaintiff
COOPER SCIENCE CONSULTING LIMITED
Second PlaintiffAND
AUCKLAND COUNCIL
First Respondent
JOHN BARRY BOLLAND and JUSTIN MARK JAMES WYBOURN
Second Respondents
Hearing: On the papers Counsel:
A J Sherlock for the Plaintiffs L Bielby for First Respondent
D M Salmon KC and R M Keane for Second Respondent
Judgment:
10 November 2023
JUDGMENT OF ANDERSON J
(Costs on discontinuance)
This judgment was delivered by me on 10 November 2023 at 10:00 am pursuant to Rule 11.5 of the High Court Rules 2016.
……………………………… Registrar/Deputy Registrar
Solicitors: Hesketh Henry, Auckland
Lee Salmon Long, Auckland
BAILEY v AUCKLAND COUNCIL [2023] NZHC 3146 [10 November 2023]
Introduction
[1] This is an application regarding the incidence of costs on discontinuance as between the plaintiffs and the first respondent (the Council). The proceeding related to the second respondents’ proposed development of a swimming pool, cabana and boat shed plus related works at their Herne Bay property. The Council had decided that resource consents for the works could proceed on a non-notified basis. The works were to include, among other things, the second respondents completing earthworks and pruning the branches of pōhutukawa trees.
[2] The first plaintiff, Mr Bailey, is the registered owner as bare trustee of a neighbouring property. His company, Cooper Science Consulting Ltd (the second plaintiff) held the benefit of an encumbrance over the second respondents’ property relating to protection of existing native trees. By applications dated 22 September 2022, the plaintiffs sought to enforce that encumbrance against the second respondents and judicially review the Council’s limited notification decision with respect to the resource consents for the boat shed and related works.
[3] On 12 October 2022, Duffy J granted the plaintiffs’ application for an interim injunction preventing the second respondents from undertaking or progressing the proposed works and any cutting of pōhutukawa trees.1 The Council was not heard on this application.
[4] Amended pleadings were filed at the end of 2022 which included a challenge to the Council’s public notification decision in relation to the boat shed and related works and a challenge to the Council’s limited notification decision for grant of consent to a new swimming pool and cabana.
Discontinuance
[5] On 4 September 2023, the plaintiffs filed a notice of discontinuance. The plaintiffs advise that the sole reason for the discontinuance is that the first plaintiff has entered into an unconditional sale and purchase agreement with an unrelated third
1 Bailey v Auckland Council [2022] NZHC 2632, (2022) 23 NZCPR 739.
party for the sale of his property. There is no issue as to costs between the plaintiffs and the second respondents. The plaintiffs and the Council have been unable to agree costs.
[6] The plaintiffs seek an order that costs should lie where they fall. The Council seeks an order that the plaintiffs pay scale costs on a 2B basis in the sum of $14,101.
Applicable law
[7] The starting point is that costs are at the Court’s discretion.2 Although the discretion is wide, it is not unfettered. Rule 14.2 sets out the general principles which include that “the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds”.
[8] Rule 15.23 of the Rules provides that on discontinuance, the default procedure will be that the plaintiff pays the defendant costs:
15.23 Costs
Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.
[9] A court may displace the r 15.23 presumption where it is just and equitable to do so.3 Guiding principles in relation to the court’s discretion in r 15.23 were brought together in FM Custodians Ltd v Pati where Associate Judge Abbott stated:4
[11] The Court is not limited in the factors that can be taken into account when considering whether the presumption is displaced, but the following are matters which are taken into consideration:
(a)As the general rule the Court will not consider the merits of the respective cases (unless they are so obvious that they should influence the costs issue).
(b)The Court will consider the reasonableness of the stance of both parties in the proceeding (whether it was reasonable for the plaintiff
2 High Court Rules 2016, r 14.1.
3 Earthquake Commission v Whiting [2015] NZCA 144, (2015) 23 PRNZ 411 at [66] citing Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973 at [12] and [29]; and Powell v Hally Labels Ltd [2014] NZCA 572 at [22].
4 FM Custodians Ltd v Pati [2012] NZHC 1902 (footnotes omitted).
to bring and continue the proceeding, and for the defendant to oppose and continue to oppose it, up to the point of discontinuance).
(c)Conduct prior to the commencement of the proceeding may be relevant (for example, if any conduct by a defendant has precipitated the litigation), as may be the reason for discontinuing (for example, where a change of circumstances has made the proceedings unnecessary).
[10]Further, in Earthquake Commission v Whiting the Court of Appeal stated that:5
[68] … In deciding whether it is just and equitable to exercise the discretion, the Court may consider the parties’ conduct in the matter and the reasonableness of the parties’ respective stances, including the reasons why the plaintiff brought and continued the proceeding and the defendant opposed it.
[69]Courts have been persuaded to exercise the discretion when:
(a)the defendant’s acts or omissions have caused the litigation and then rendered it unnecessary; and
(b)an intervening governmental or third party decision has rendered the proceeding redundant.
[70] As Australian authorities recognise, when a proceeding is discontinued as a result of a supervening event the proper exercise of the discretion may ordinarily be to make no order for costs. At the same time, however, where one of the parties has acted unreasonably or was almost certain to have been unsuccessful if the proceeding had not been rendered unnecessary, that party may be ordered to pay the costs of the proceeding.
[71] At the same time, however, the Court has also made clear that it will not undertake a review of the merits of the plaintiff’s claim unless they are immediately apparent. To undertake a disputed merits review would result in a trial which would be contrary to the object of r 15.23.
[11] In the “Australian authorities” referenced by the Court of Appeal, “supervening event” denotes “where proceedings are discontinued due to the subject matter of the action ceasing to exist through the lawful actions of a third party, or the proceedings have otherwise been rendered futile by external events”.6
5 Earthquake Commission v Whiting, above n 3 (footnotes omitted).
6 See G E Dal Pont Law of Costs (5th ed, LexisNexis, Australia, 2021) at [14.68]. An earlier edition of this text was cited in Earthquake Commission v Whiting, above n 3, at [67], [68], [69] and [70].
Submissions
[12] In seeking an order that costs should lie where they fall, the plaintiffs submit they have discharged the onus in r 15.23 of the High Court Rules 2016 (the Rules).
[13] The plaintiffs say that on the current facts there can be no implication that they discontinued based on a belief that they would be unsuccessful. To the contrary, the plaintiffs say that the merits of the case in the plaintiffs’ favour are immediately apparent and on that basis, it is just and equitable that costs should lie where they fall:
(a)They point to dicta in the interim injunction decision of Duffy J on the merits of the substance of the claim as filed. They also refer to the Council’s pleaded admission that its reporting planner incorrectly identified the Council as having the benefit of the encumbrance relating to tree protection rather than the second plaintiff.
(b)In respect to the additional claim regarding public notification, the plaintiffs rely on a recent decision of Council (through its delegated hearing commissioner) that required public notification in the same or similar factual context to the present (a boat shed located in the common coastal area in Herne Bay). They say this demonstrates that the Council is now taking a new, and the correct, approach to such structures.
[14] Alternatively, the plaintiffs submit that the presumption in r 15.23 only needs to be rebutted not reversed. They say that it is sufficient to demonstrate that the case was equally as likely to succeed as against the first respondent’s case. Because the proceeding was discontinued due to a “supervening event”, it is not necessary to show that the first respondent’s conduct or position was unreasonable, only that the parties’ stances were equally reasonable. The plaintiffs say that this case is similar to Maehl v Auckland Council where Whata J made an order that costs should lie where they fall.7
7 Maehl v Auckland Council [2017] NZHC 1902.
Discussion
[15]I am not satisfied that the plaintiffs have displaced the presumption in r 15.23.
[16] This case does not fall into the categories of case where the courts have been persuaded that the r 15.23 presumption has been displaced. I accept the Council’s submission that it did not relevantly “cause” the litigation nor bring about the circumstances that obviated the need for the proceeding.
[17] I do not agree that the discontinuance has followed a “superseding event” in the sense referenced by the Court of Appeal in Whiting. The sale of the property was initiated by the plaintiffs. It was not an external event or the consequence of an action of a third party. There was no intervening governmental or third party decision that rendered the proceeding nugatory. What obviated the need for the proceeding was a step taken by the plaintiffs at their own election.
[18] Nor do I consider this a case where the merits of one party are so obvious that this should impact the costs outcome.8 While the plaintiffs were successful in seeking interim relief in this proceeding, the Court did not engage in a “detailed discussion of the merits of the application, beyond the limited purposes for which the merits are relevant to interim relief”.9 In addition, the Council did not appear before the Court for the purposes of that interlocutory hearing. The merit in the plaintiffs’ case (or lack thereof in the Council’s) is not so obvious as to be treated as a determining factor when considering costs.
[19] The Council says that it intended to advance arguments in the substantive proceedings against a private encumbrance of this nature being a matter which the Council must take into account. I do not consider this is a rare case where I should carry out a review of the merits of that contention or the wider case. The merits are not so immediately apparent to me on the limited notification as they appear to be to the plaintiffs. Nor has there been any court consideration of the public notification decision, which I do not regard as an open and shut case.
8 See Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR15.23.01(c)(i)].
9 Bailey v Auckland Council, above n 1, at [13].
[20] I consider that both parties prima facie had a proper basis for commencing and opposing the proceeding. Prima facie both parties acted reasonably. Another defendant was involved. I do not accept that in this state of affairs, the onus is discharged under r 15.23 on the grounds that the plaintiffs have chosen to sell the property.
[21] The plaintiffs’ position is not advanced by reference to Maehl v Auckland Council. In Maehl, the applicants sought to judicially review two resource consents. The resource consents were withdrawn by the consent holder. The Court emphasised that it is not usually necessary or appropriate for the Court to make a determination of success when a matter is discontinued or the proceedings are otherwise rendered futile. Whata J confirmed that he did not intend to depart from this norm.10 He did make some tentative views of the Council’s case simply because the applicants were claiming they had achieved de facto “success” and the substantive argument had been heard already.11 Whata J rejected that there was any basis for a costs award founded on the applicant being successful in its litigation objectives.12 He therefore rejected the applicant’s contention they should be entitled to costs. He ordered that costs should lie where they fall. This was not a course opposed by the Council.13 These facts are very different to the present scenario.
[22] Ultimately the Court must determine what is fair and just in the circumstances. Unlike Whata J, Duffy J did not have the benefit of full argument. Nor do I, and nor do I seek it.14 In this case, the event rendering the proceeding futile arose because of the deliberate action of the plaintiffs in electing to sell the property and discontinue the proceeding. By the time of discontinuance, the respondent had already incurred considerable expenditure in defending the proceeding. I consider it appropriate for the default position in r 15.23 to apply.15 The plaintiffs should pay the respondent costs on a 2B basis.
10 Maehl v Auckland Council, above n 7, at [39].
11 At [40].
12 At [42]–[43].
13 At [54].
14 In their submissions, the plaintiffs asked for leave to file a reply in response to the Council’s submission. I do not consider leave is justified.
15 Jessica Gorman and others, above n 8, at [HR15.23.01(b)].
Order
[23]I decline to grant the orders sought by the plaintiffs.
[24] The plaintiffs are to pay to the first respondent costs in the sum of $14,101 being costs on a 2B basis.
Anderson J
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