Body Corporate 97010 v Auckland City Council

IN THE COURT OF APPEAL OF NEW ZEALAND

CA234/00

BETWEEN	BODY CORPORATE 97010
Appellant

AND	AUCKLAND CITY COUNCIL
First Respondent

AND	SOUTHERN TRADING COMPANY LIMITED
Second Respondent

Hearing:	16 August 2001
Coram:	Richardson P Keith J Blanchard J
Appearances:	D J Chisholm and R B Enright for Appellant W S Loutit for First Respondent K R M Littlejohn for Second Respondent
Judgment:	30 August 2001

JUDGMENT OF THE COURT DELIVERED BY BLANCHARD J

Body Corporate 97010 sought judicial review in respect of a series of resource consent decisions by the Auckland City Council relating to a proposed high-rise residential development by the second respondent, Southern Trading Company Limited (STC), in The Strand, Parnell. It challenged:

The non-notification of STC’s application for resource consent (s94 of the Resource Management Act 1991 (the Act));
The granting of that consent by the Council on 1 October 1997 (and thus with an expiry date for the consent of 1 October 1999);
The non-notification of STC’s application under s127 of the Act to vary the resource consent by changing the design of the development;
The granting of the variation consent on 26 January 1999; and
The granting of STC’s application under s125 of the Act to extend the time for carrying out the development until April 2002, and thus of about two and a half years beyond the previous expiry date of the varied consent. (Under s125 there is no requirement for any notification of an application for an extension.)

In the High Court the Body Corporate was entirely unsuccessful. Randerson J’s decision is reported at [2000] NZRMA 202. The Judge subsequently awarded each of the Council and STC scale costs of $26,980 plus disbursements and, in STC’s case, expert witness expenses, which the Judge fixed in the global sum of $7,500.
Because the greater part of the costs had been incurred after the new High Court scale came into force on 1 January 2000, the Judge found it appropriate to treat the entire matter as being governed by the new regime. No party has taken any exception to that.
The Body Corporate appealed to this Court against the substantive decision. The matters argued related only to the two non-notification decisions and the granting of the extension. This Court upheld the High Court’s decision in respect of both non-notification decisions but allowed the appeal in respect of the extension decision and set it aside. We also dismissed a cross-appeal by STC concerning the appropriate relief for the appellant.
We have been advised that since our earlier decision STC has re-applied to the Council under s125 and has been granted an extension. We understand that building work may now have commenced.
Our judgment, reported at [2000] 3 NZLR 513, concluded:
[87] In circumstances in which the appellant has succeeded in part only, it is awarded costs of $2000 against each respondent ($4000 in total) together with its reasonable disbursements, including travel and accommodation costs of counsel, as fixed by the Registrar of this Court. The disbursements are to be borne equally by the respondents. Costs in the High Court are to be fixed in that Court in light of this judgment.
Randerson J was accordingly requested to fix costs in the High Court, which he did by way of two Minutes issued after receipt of written submissions from counsel. In the first Minute of 6 October 2000 the Judge observed that the Body Corporate had challenged five separate Council decisions and had been successful in respect of one of them only. Even on that issue, the Judge said, the Court of Appeal’s decision found that the Council had erred only in respect of one of the several issues arising under s125.
The Body Corporate had submitted that its scale costs on a category IIIB basis would amount to $31,730. It sought a contribution of $20,000 towards those costs. The defendants had submitted that a contribution towards the plaintiff’s costs should be “of the order of $5,000 to $6,000”. They had made reference to rule 48D(d) of the High Court rules.
The Judge agreed that an approach of one-fifth of the scale costs as calculated by the plaintiff was appropriate, “even generous in the circumstances”. That amounted to $6,346 which he awarded on the basis that it should be shared equally between the defendants. He also awarded one-fifth of the claimed disbursements for filing fees, court hearing fees, service fees and photocopying, the award being $935.35. Thus the total amount ordered to be paid equally by the two defendants came to $7,281.35.
The Judge noted in his first Minute that counsel had not referred to the status of the costs which he had awarded against the Body Corporate before the appeal to this Court and asked whether he was to assume that these should remain in force. In response to that query, further memoranda of counsel were submitted and the Judge issued a second Minute dated 19 October 2000. In that Minute he said that he did not accept that there had been any express or implied direction in this Court’s judgment concerning the way in which High Court costs should be fixed. As the Judge saw it, the costs in the High Court were to be fixed in the light of our finding that the plaintiff succeeded in part only with its appeal. “The fact that the Court of Appeal chose to simply reduce the costs which would otherwise be awarded to the plaintiff on account of the partial success, does not bind this Court in awarding costs”.
The Judge accepted that the normal position in the New Zealand Courts was that they do not generally make separate costs orders on a final judgment which are then set-off against each other but, rather, one overall award of costs, generally in favour of the successful party. But here, he said, it could not be said that the plaintiff had succeeded overall. The case had been argued on an issue by issue basis and there was no direct connection between the separate decisions challenged. Each raised separate issues. In any event, the Judge said, the Court has an overriding discretion in relation to costs under r46, which was a discretion to be exercised to achieve justice between the parties on the facts of the particular case. He was satisfied that it would be unjust not to award the defendants costs in relation to those issues on which they succeeded in the High Court and which were not upset on appeal.
Accordingly, the Judge determined that the costs orders previously made against the plaintiff in favour of the defendants were to stand and that the costs awarded in favour of the plaintiff against the defendants by the Minute of 6 October were to be set-off against the earlier costs order. The Minute of 19 October concluded with the following comment:
I could have made one overall costs order in favour of the defendants. If I had done so, it would have been on the basis that they should receive an amount equivalent to the net costs payable in terms of this judgment after one is set-off against the other.
The net effect of the costs orders has been that the original orders in favour of the respondents were reduced only by $3,640.68 each. Mr Chisholm, for the Body Corporate, has calculated that the reduction was approximately 11.8% below the full scale costs of each respondent.
Although the present appeal by the Body Corporate is against both costs orders, Mr Chisholm did not seek any increase in the award in his client’s favour. He accepted also that such order is to be taken into account in some manner in determining the proper overall costs position between the parties. He further accepted that he was seeking to disturb an exercise of discretion by the High Court and that he was required to show that the Judge had acted on a wrong principle or had failed to take into account some relevant matter or taken into account some irrelevant matter or had been plainly wrong (May v May (1982) 1 NZFLR 165, 170).
Counsel argued that the effect of this Court’s judgment was that the original costs order in favour of the respondents had been set aside; that costs in the High Court were at large again and should have been considered afresh by Randerson J. He said that, as a result of the appeal, the Body Corporate had been successful in obtaining judicial review and that, in accordance with usual practice, confirmed in r47(a), the party failing should pay costs to the party who had succeeded. It was accepted, however, that in accordance with r48D(d) a reduction could be made or even a refusal of any costs, if the party successful overall had failed in relation to a cause of action or an issue which had significantly increased the opposing party’s costs.
Mr Chisholm submitted that by awarding the defendants, in net terms, more than 88% of their costs when they had lost on the s125 issue, the Judge had gone well beyond this, and had erred in principle. The “resurrection” of the original costs orders had been illogical and unjust. Counsel said that it had been inappropriate to look at the matter on an issue by issue basis as the Judge had appeared to do. This was said not to be a common practice in New Zealand and one which has been criticised in England (R v Cripps, ex parte Muldoon [1983] 3 All ER 71). The Judge’s orders had also had insufficient regard for the element of test case or public interest in the appellant’s proceedings, which Mr Chisholm said had clarified the law regarding the granting of resource consents.
Responding to these arguments, Mr Loutit, for the Council, submitted that it could not really be said that the appellant had succeeded overall. There had been five issues in dispute and the Body Corporate had succeeded in respect of one of them only (or in respect of two if the question of exercise of discretion to grant relief was counted). Furthermore, the issues were truly separate. The appellant had been seeking to set aside separate decisions of the Council. It was not a situation of trying to achieve the same objective by differing means (e.g. where damages are claimed under several heads). In the end, all the plaintiff had achieved was the setting aside of an administrative decision to extend a consent which was still current and which itself had not been set aside.
Supporting that argument, Mr Littlejohn, for STC, drew attention to the Judge’s final words in his last Minute (para [12] above) which indicated that he had turned his mind to the position on the basis that costs were at large. He had therefore taken account of the directions given by this Court. He had a general discretion under r46 and the net awards reflected that the success of the appellant was slight.
Whilst r46 gives the High Court an overriding discretion in relation to costs, that discretion is to be exercised generally in accordance with rr47 to 48G. A successful party will usually be entitled to costs against an unsuccessful party (r47(a)). But costs may be reduced, or no order made in favour of the party successful overall, if that party “has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs” (r48D(d)). Similarly, there may be a reduction, or even no order at all, where conduct of the party claiming costs has contributed unnecessarily to the time or expense of the proceeding, or a step therein, in any of the ways specified in r48D(e). Also to be noted is r48D(f) which provides for refusal or reduction of costs if some other reason exists justifying that course “despite the principle that the determination of costs should be predictable and expeditious”.
In England it has been said by the Court of Appeal that where the successful party raises issues or makes allegations improperly or unreasonably, “the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs”, from which it is implicit that “a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party’s costs” (In re Elgindata Ltd (No. 2) [1992] 1 WLR 1207, 1214).
In this country there is, as we have observed, a general discretion and, although it is qualified by the specific rules, we do not understand the drafter of those rules to have attempted the impossible task of covering every possibility. We consider, therefore, that in an extreme case an award of costs could be made in favour of an unsuccessful party, as envisaged in Elgindata. But this is far from being such a case.
We are obliged to say that the Judge appears to have misread what we think was a tolerably plain indication in our judgment that he should proceed to re-fix costs in the High Court on the basis that they were at large; that his earlier order was to be regarded as vacated. Instead, he has left his order intact and has offset it with an order in favour of the appellant. He has said that the outcome is the same as he would have arrived at by an overall costs order, but he has not articulated the route whereby that might have been accomplished.
We do not accept the criticism that it was necessarily wrong for the Judge to look at the matter issue by issue. Indeed we ourselves approached the matter somewhat in that way in fixing the costs in this Court at a sum rather less than might have been awarded if the appeal had succeeded against two respondents in relation to one or both of the non-notification decisions. (The number of issues in this Court was of course fewer than that in the High Court.) The case truly involved a number of separate challenges to separate decisions. It was not a grouping of challenges to the same matter seeking the same result on differing grounds.
The appropriate starting point is that the Body Corporate succeeded in obtaining relief in respect of one of the Council’s decisions. If it had sought that relief alone – and had not attacked the decisions which preceded the granting of the s125 extension – it would nevertheless have had to bring before the Court evidence to explain those prior decisions, including the terms of the decisions and the general physical and planning background. This would have been necessary in order for the Court to have a proper appreciation of STC’s position vis-à-vis the proposed extension at the time when the s125 application was being considered by the Council. There was need for evidence concerning how the proposed development would affect the proprietors of the Body Corporate.
To be balanced against those considerations, however, was the Body Corporate’s failure to establish any error by the Council in respect of the earlier decisions. Defending the non-notification of the original application and the variation application and, to a lesser extent, the granting of the consents themselves, has obviously put the respondents to significant expense which they would not have incurred if those decisions had not been impugned. However, it cannot be said that those allegations by the appellant were made improperly or unreasonably. There were certainly well arguable points, particularly in relation to the variation. The Body Corporate could legitimately see itself as significantly disadvantaged if STC’s development was to proceed. It was not unreasonable for it to oppose consents which had been given without public notification, particularly when some of the questions in issue had not been the subject of prior judicial consideration.
Taking these factors into account, we do not think that it was a proper exercise of discretion to award costs to defendants against whom some relief had been granted. On the other hand, however, the appellant’s success in comparison to the separate claims which it made was sufficiently minor that it was not deserving of an award of costs. In other words, we have reached the view that the appropriate exercise of discretion was to let costs in the High Court lie where they had fallen.
In order now to achieve this position it would be possible for us to reduce the awards in favour of the respondents to sums which in aggregate would off-set the award made in favour of the appellant, but we think that it is simpler to approach the matter more directly, notwithstanding the absence of any cross-appeal by the respondents, and to vacate both the costs orders made in the Minutes of 6 October and 19 October 2000. This we now do by allowing the appeal and ordering that there is to be no costs award in the High Court.
The appellant is entitled to costs of $1,500 against each respondent ($3,000 in total) in connection with this appeal, together with its reasonable disbursements, including travel and accommodation costs of one counsel, as fixed by the Registrar of this Court. The disbursements are also to be born equally by the respondents.

Solicitors:

KPMG Legal, Auckland for Appellant

Simpson Grierson, Auckland for First Respondent
Martelli McKegg Wells & Cormack, Auckland for Second Respondent

[2001] NZCA 345

30 August 2001