Ballantyne Barker Holdings Limited v Queenstown Lakes District Council

[2020] NZHC 49

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2018-425-000079

[2020] NZHC 49

BETWEEN

BALLANTYNE BARKER HOLDINGS LIMITED
Appellant

AND

QUEENSTOWN LAKES DISTRICT COUNCIL

Respondent

Hearing:	On the papers
Appearances:	M Baker-Galloway and S McArthur for Appellant B Watts for Respondent
Judgment:	31 January 2020

JUDGMENT OF DUNNINGHAM J RE: COSTS DECISION

Introduction

[1]    Ballantyne Barker Holdings Ltd (the appellant) applies for costs against Queenstown Lakes District Council (the respondent). The application follows the appellant’s successful appeal of an Environment Court decision which granted resource consent to the appellant, but not on the terms proposed by the appellant.1 On appeal, I found that the Environment Court had erred in law and remitted the application back to that Court for reconsideration.2 The appellant now seeks an order for 2B costs and disbursements as well as increased costs.

1      Ballantyne Barker Holdings Ltd v Queenstown Lakes District Council [2018] NZEnvC 181.

2      Ballantyne Barker Holdings Ltd v Queenstown Lakes District Council [2019] NZHC 2844.

BALLANTYNE BARKER HOLDINGS LIMITED v QUEENSTOWN LAKES DISTRICT COUNCIL [2020] NZHC 49 [31 January 2020]

Background

[2]    The proceedings relate to the appellant’s resource consent application to the respondent to subdivide Lot 8 DP 27696 (the site). The consent application was originally declined at the Council hearing. The appellant appealed that decision to the Environment Court and, before the hearing, negotiated  with the  respondent and  two submitters who joined the proceedings under s 274 Resource Management Act 1991. As a result of those negotiations, the application before the Environment Court was for:

(a)seven lots between 0.8 ha to 1.55 ha, each with a residential building platform;

(b)a balance lot of 40.87 ha, with one residential building platform;

(c)the boundaries, building platforms and landscaping in accordance with updated plans; and

(d)upon the conditions proposed by the appellant.

[3]    The Environment Court cancelled the respondent’s decision and, subject to two orders relating to amendments of the plans and conditions, granted resource consent to subdivide the site into four smaller lots (Lots 1, 2, 6 and 9) and one large balance lot (Lot 10) with building platforms on each.

[4]    The appellant appealed to the High Court on  the  basis  that  the  Environment Court had made a number of errors of law. I found that the Environment Court had erred in law by rejecting the proposed consent notice and either of the proposed no-subdivision conditions, and directed that the application be remitted to the Environment Court for reconsideration. I rejected all other grounds of appeal.

Submissions

Appellant’s submissions

[5]The appellant seeks category 2B costs plus disbursements, totalling

$17,617.25. It submits it is entitled to costs pursuant to r 14.2 of the High Court Rules 2016 (the Rules) given it was the successful party to a proceeding.

[6]    In addition, the appellant seeks an order for increased costs, being an uplift from 2B scale costs of 50 per cent. It refers to r 14.6(3)(b)(v) which provides that the Court may order increased costs where a party has contributed unnecessarily to the time or expense of the proceeding by failing, without reasonable justification, to accept an offer of settlement.

[7]    The appellant submits that it made multiple attempts to settle the matter with the respondent, both before and after the Environment Court decision was heard. In particular the appellant refers to an offer made on 16 August 2019, in which it advised that it had a strong position on appeal but nevertheless set out a substantive proposal for resolution as well as suggested mechanics for settlement, in order to ensure no undesirable precedent was set for the respondent. The respondent refused that offer in a letter dated 23 August. The appellant contends that it was unreasonable for the respondent to refuse that offer and to make no attempt at further negotiation. The respondent further refused to narrow the scope of issues to just those in contention. The appellant argues that these refusals resulted in the appellant incurring significantly greater costs in having to prepare for, and attend, the hearing in Christchurch. It asks that the Court award increased costs of 50 per cent on that basis.

[8]    The appellant further seeks costs for this present application, given the respondent’s opposition.

Respondent’s submissions

[9]    The respondent acknowledges that the appellant’s appeal was allowed, but submits that this is a case where that outcome is not representative of the relative successes and failures of the parties on appeal. The appellant advanced 11 grounds of

appeal and was unsuccessful on all but one of those grounds, a number of which had significant precedent value for the respondent. It is not certain whether the one ground on which the appellant succeeded will have any effect on the substantive outcome. The respondent therefore submits that, given a “realistic appraisal of the end result”, costs should lie where they fall.3

[10]   Furthermore, the respondent submits that the appellant failed to abandon a number of grounds of appeal that were clearly baseless, and which were not mentioned in the appellant’s costs memorandum. The respondent had no choice but to prepare for and fully argue those grounds. It submits that this further disentitles the appellant to costs.

[11]   In regard to the appellant’s claim for increased costs, the respondent submits that the correspondence on which that claim is based is inadmissible. Section 57 Evidence Act 2006 provides that parties in civil disputes have a privilege in respect of communications that were intended to be confidential and were made in connection with an attempt to settle the dispute. The respondent refers to a House of Lords case in which it was held that settlement correspondence marked as “without prejudice” should be protected from disclosure.4 The New Zealand Court of Appeal adopted that same principle, quoting the House of Lords in its statement that “the Court should be very slow to lift the umbrella [of protection] unless the case for doing so is absolutely plain”.5 The respondent therefore argues that, given the letters were marked “without prejudice”, they are inadmissible and cannot be relied on to support an uplift.

[12]   The respondent accepts there is a statutory exception in s 57(3)(c) Evidence Act, reflected in rr 14.10 and 14.6(3)(b)(v) of the Rules, where the offer of settlement is stated as being “without prejudice except as to costs”. It argues this exception does not apply to the letters because they were simply marked “without prejudice”.

[13]   In the event the Court admits the letters, the respondent submits that they do not justify any award of costs, let alone increased costs. It says the appellant offered

3      Waxman v Crouch (No 2) [2016] NZHC 2913 at [4].

4      Ofulue v Bossert [2009] UKHL 16, [2009] 1 AC 990 at [2].

5      Morgan v Whanganui College Board of Trustees [2014] NZCA 340, [2014] 3 NZLR 713 at [12], citing Ofulue v Bossert, above n 4, at [2].

to settle on the basis that the Environment Court had erred by rejecting Lots 4 and 5 because none of the expert witnesses had objected to those particular lots. The respondent declined that offer because it did not expect the High Court to agree that the Environment Court had erred in that respect; and, in fact, the High Court did not. The respondent therefore submits that the appellant is inviting the Court to punish the respondent for declining to agree that the Environment Court erred in a way that the High Court has since stated it did not.

[14]   The respondent submits that it should be awarded costs in respect of the appellant’s costs application, given the appellant’s breach of confidence in disclosing the letters to the Court put the respondent to unnecessary cost.

Appellant’s response

[15]   The appellant filed a further memorandum in response to the matters raised by the respondent. It submits that there is no basis not to award costs given the majority of time in the appeal was spent on its successful ground. It argues its further grounds were not “clearly baseless”, but rather they were important when considering the decision as a whole.

[16]   In response to the respondent’s submissions about privilege, the appellant contends that the two authorities relied on by the respondent did not regard a costs decision, but rather evidence in a substantive hearing and/or for the purposes of determining liability. They can therefore be distinguished from the present case. Furthermore, the appellant submits it is a well established exception that without prejudice material can be relied on for costs purposes.6 It would undermine the rationale of the Rules in providing for unreasonable refusals as a basis for increased costs if an application were precluded on the basis that the letters were marked “without prejudice” rather than “without prejudice except as to costs”. McGechan on Procedure states that those precise words are “unnecessary provided that the basis of the offer is made clear”.7

6      With reference to High Court Rules 2016, r 14.10 and Evidence Act 2006, s 57(3)(c).

7      McGechan on Procedure (online ed, Thomson Reuters) at [HR14.10.02(3)].

Discussion

Scale costs

[17]   It is settled law that the losing party in a proceeding should pay the costs of the party that won.8 In a case where the winning party has had only a partial success, the starting point is  that  “success on  more limited  terms  is  still  success”.9  However, r 14.7(d) gives the Court discretion to refuse to award costs to the successful party if “that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs”. That rule also justifies a reduction in costs.

[18]   I am satisfied that the appellant was the successful party on appeal. The appellant was correct in arguing that the Environment Court made errors of law and the starting point is therefore that the respondent should pay the appellant’s costs.

[19]   I also accept that the appellant did fail on the balance of its grounds of appeal. That does not mean the appellant should lose its status as the successful party, but rather that recognition should be given to that factor by a reduction in costs otherwise payable or by an order that costs should lie where they fall.10 I do not believe this is a case where the appellant’s success has been so negated by its failures that it should not receive any award of costs. The judgment gave a clear result in the appellant’s favour and the appellant succeeded on the ground it focused on most closely.

[20]   However, I accept that the appellant advanced multiple other grounds that had to be addressed by the respondent, even though the appellant did not elaborate on some of these at all at hearing. The extensive number of grounds advanced, and on which it failed, warrants a modest reduction in the costs made. I therefore reduce costs to the appellant by 25 per cent to $13,212.94.

8      High Court Rules 2016, r 14.2(a).

9      Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 at [26].

10     Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36 at [13].

Increased costs

[21]   The respondent argues that the appellant’s settlement offer is inadmissible because it was marked “without prejudice” as opposed to “without prejudice except as to costs”, which is the required wording for the exception to the privilege under    s 57(3)(c) Evidence Act. Precisely the same issue was considered in Blakesfield Ltd v Foote, where the successful party had sent a settlement offer to the unsuccessful party marked “without prejudice”.11 The unsuccessful party argued the letter was inadmissible on the question of costs because it lacked the express phrasing “except as to costs”. Mander J found that argument to be “undoubtedly correct”.12

[22]He noted that:13

Where a settlement offer is expressed to be without prejudice, absent any reservation, the offeree is entitled to proceed on the basis the offer will not subsequently be relied upon in resolving costs. If not, the policy underpinning the regime would be undermined.

[23]   He also noted that s 57 of the Evidence Act 2006 underscored this by providing, as an express exception, to privilege for settlement negotiations,

(c)the use in a proceeding, solely for the purposes of an award of costs, of a written offer that –

(i)is expressly stated to be without prejudice except as to costs; and

(ii)relates to an issue in the proceeding.

[24]   In addition, r 14.10 of the High Court Rules emphasises that the without prejudice offer needs to be explicit if it is sought to be relied upon for the purpose of costs.

[25]   It is clear, therefore, that without prejudice communications must be put to one side where they are not expressly marked as being “except as to costs”.14 The privilege cannot be unilaterally waived by one party, and the respondent has not

11     Blakesfield Ltd v Foote [2016] NZHC 1354, [2016] NZAR 1112.

12 At [15].

13 At [18].

14     At [20]-[21].

waived its privilege.15 The settlement communications between the parties are therefore inadmissible, and the appellant has no basis upon which to claim increased costs.

Costs for present application

[26]   The appellant seeks costs in respect of its costs application as the successful party. Both arguments have merit and in the circumstances I have decided that costs should lie where they fall as regards the present application.

Conclusion

[27]   The appellant is entitled to costs as the successful party on appeal.  However, I have decided to make a modest reduction to the costs payable in recognition of the expense to which the respondent was put in arguing a number of grounds on which the appellant was unsuccessful. The appellant is awarded 75 per cent of its claim for 2B costs and disbursements. The amount awarded is $13,212.94.

[28]Costs lie where they fall on the present application.

Solicitors:

Anderson Lloyd, Queenstown Meredith Connell, Auckland

15     Evidence Act 2006, s 57(1); Soma v Nath [2019] NZHC 2119 at [13].