Central Plains Water Limited v Thompson HC Christchurch CIV 2010-409-1167
[2010] NZHC 1528
•16 August 2010
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2010-409-1167
UNDER the Resource Management Act 1991
IN THE MATTER OF an appeal under section 299 of the
Resource Management Act 1991
BETWEEN CENTRAL PLAINS WATER LIMITED Appellant
AND BRIAN IVAN THOMPSON AND HELEN DAVEY
Respondents
Hearing: 2 August 2010
Appearances: R Dunningham for the appellant
A Hughes-Johnson QC for the respondents
Judgment: 16 August 2010
JUDGMENT OF CLIFFORD J
Introduction
[1] Central Plains Water Limited (“Central Plains”) appeals against a decision of the Environment Court awarding the respondents, Mr Thompson and Ms Davey, “near indemnity” costs of $46,000 against it in connection with an application by them under s 185 of the Resource Management Act 1991.
Background
[2] Mr Thompson and Ms Davey together own a 316 hectare sheep and deer farm in the Waianiwaniwa Valley in Canterbury.
CENTRAL PLAINS WATER TRUST LIMITED V THOMPSON AND DAVEY HC CHCH CIV-2010-409-
1167 16 August 2010
[3] Central Plains is a requiring authority under s 167 of the Resource Management Act 1991 (“the Act”) being, as I understand matters, a network utility operation which undertakes or proposes to undertake the distribution of water for irrigation purposes on the “central plains” of the Canterbury region. As such, on 11
November 2006 Central Plains gave public notice that it had given Selwyn District Council, the relevant local authority, a notice of requirement under s 168 of the Act for a designation for an irrigation project to be located between the Waimakarere and Rakaia Rivers northwest of State Highway One. The notice of requirement applied to the large scale components of the proposed project, including what were described as the Waianiwaniwa Dam and storage reservoir in the Waianiwaniwa Valley.
[4] Just prior to the time the notice of designation was publicly notified, Mr Thompson and Ms Davey had decided to subdivide part of their farm into two, approximately 20 hectare, blocks. They wanted to sell those blocks to eliminate farm debt. Both blocks were subject to the notice of designation. On the assumption that the dam associated with the irrigation scheme was built and filled to the highest level, small parts of that land would have been inundated. Use of larger parts of that land would have been subject to controls designed to protect the operation of the irrigation scheme. The land would also have been affected by associated roading works, the access road which formed a boundary of both blocks needing to be relocated to run through both blocks.
[5] The impact on Mr Thompson and Ms Davey of Central Plains’ notice of requirement, and intended development, can be summarised as follows.
[6] Sections 168 to 173 of the Act provide a process whereby the relevant local authority considers a notice of a requirement for a designation, in like manner as it would consider an application for a resource consent under the Act. As a result of that process, it is not however for the territorial authority to approve or decline the requirement for a notice of designation. Rather the territorial authority makes a decision whereby it recommends to the requiring authority that the requiring authority confirm or modify the requirement, impose conditions on it or withdraw it. A requiring authority may accept or reject that recommendation. Persons affected may then appeal to the Environment Court.
[7] Pending the outcome of that process, and pursuant to s 178(2), “no person may do anything that would prevent or hinder the public work, project, or work to which the designation relates unless the person has the prior written consent of the requiring authority”. Section 176(1)(b) applies to similar effect once a designation is included in the relevant district plan.
[8] Once notice is given of the requirement for a designation by such a requiring authority, therefore, affected landowners’ rights as regards their land are subject to the requirements of s 178(2). Those landowners also know that the requiring authority may – at some point in the future – move to compulsorily acquire their affected land under s 186(1) of the Act for the purposes of the relevant work or project.
[9] Section 195, as the Court of Appeal observed in Queenstown Airport Corporation Ltd v Skipworth,[1] provides the form of relief contemplated by Parliament for an owner whose land is made subject to a designation or requirement:
[1] Queenstown Airport Corporation Ltd v Skipworth [2001] 2 NZLR 621 at [4].
… The owner may seek an order obliging the requiring authority responsible for the designation or requirement to acquire or lease the land, or part of the land, under the Public Works Act 1981. To warrant an order being made the Environment Court must be satisfied of the matters set out in subs (3), which may be shortly summarised as follows:
The owner has tried but been unable to sell the land at a price not less than the market value without the designation or requirement (subs 3(1)(a)); and
The designation or requirement prevents the reasonable use of the land (subs
(3)(1)(b)(ii)); or
The applicant was the owner at the time the designation or requirement was created (subs 3(1)(b)(ii)).
[10] In Mr Thompson’s and Ms Davey’s case, as in Skipworth, it would not have been necessary to focus on the question of the reasonable use of the land pursuant to subs (3)(1)(b)(i) as it was common ground that they were the owner at the time the requirement in question was created.
[11] In terms of those various provisions, having decided to subdivide and sell land subject to the notice of designation Mr Thompson and Ms Davey:
a) in March 2007 sought and obtained the permission of Central Plains under s 178(2) to sell the land; and
b)in January 2009 applied to the Environment Court for an order under s 185 that Central Plains be required to acquire the two lots.
[12] Ultimately, Mr Thompson and Ms Davey’s application was set down to be heard in the Environment Court, commencing Monday 20 July 2009. By that time, one of the lots had been sold.
[13] Central Plains indicated it would defend Mr Thompson’s and Ms Davey’s application on the basis that they had neither undertaken sufficient marketing efforts, nor were they in a position to prove that they could not achieve a price equal to the market value of the land if it had not been subject to the designation or requirement.
[14] The various affidavits filed in the proceeding were largely directed to those matters.
[15] At the same time as that application was at large between the parties, Central Plains’ notice was being considered by the Selwyn District Council. I understood from counsel that a significant hearing took place.
[16] On 1 April 2009, part way through that hearing, the Commissioners released a minute in which they indicated they would not be recommending the confirmation of that part of the notice of requirement relating to the Waianiwaniwa Reservoir and the associated dam at Colgate. Subsequently, on 10 July 2009 they issued a further, and detailed, minute setting out the reasons for that conclusion which as a matter of law, pending the final decision they made on the notice and associated resource consent application, was required to be a preliminary conclusion.
[17] On 17 July Central Plains by memorandum advised the Environment Court that it would accept that decision and would withdraw the notice of requirement accordingly. Mr Thompson and Ms Davey’s land was, in effect, no longer subject to the designation and the jurisdictional basis upon which the Environment Court might have ordered acquisition by Central Plains under s 185 in effect no longer existed. Therefore, Mr Thompson’s and Ms Davey’s application was never heard.
The Environment Court’s costs decision
[18] Unable to reach agreement with Central Plains, Mr Thompson and Ms Davey subsequently applied for costs. That application was considered by the Environment Court on the papers. On 13 May 2010 the Environment Court released its decision. As noted, it awarded costs of $46,000 to Mr Thompson and Ms Davey. In doing so the Environment Court acknowledged that those costs were on a near indemnity basis.
[19] In its decision, after summarising the background, the Environment Court first set out the contentions that had been advanced by the parties. Very much in summary:
a) Mr Thompson and Ms Davey argued:
i) that their application would have been successful;
ii)that the withdrawal of the notice of requirement was clear evidence that the notice of requirement should not have been imposed, and was not reasonably necessary; and
iii)Central Plains had caused significant delays to their marketing efforts, and the value of the two lots had decreased substantially during that period, reinforcing their view that an award close to indemnity should be made.
b)Central Plains, whilst acknowledging that some award of costs (in the vicinity of $13,000 to $16,000 as a starting point) was appropriate, argued that:
i)the costs application should not be decided on the basis of bald assertions by Mr Thompson and Ms Davey of their prospects of success;
ii)in effect, Mr Thompson and Ms Davey were seeking compensation, and the subsequent decline in the property market which had impacted their sales prospects should not be taken account of; and
iii)moreover, Central Plains had not caused any significant delays.
[20] The relevant part of the Court’s decision then provides:
[20] Under section 285 of the Act the court’s discretion to award costs is broad. There is no general rule that costs should follow the event. Costs are not awarded as a penalty but in the interests of “compensation where that is just”.
[21] The courts and former tribunals have established a number of relevant circumstances when considering a costs application:
(a) whether arguments are advanced which are without substance; (b) where the process of the court is abused;
(c)where the case is poorly pleaded or presented, including conducting a case in such a manner as to unnecessarily lengthen a hearing;
(d)where it becomes apparent that a party has failed to explore the possibility of settlement where compromise could have been reasonably expected;
(e) where a party takes a technical or unmeritorious point.
[22] In these proceedings grounds (a) – (c) and (e), or variations of them, are relevant. First I consider that I should assume that the grounds for the requirement were without substance, or at least premature, since Central Plains withdrew the requirement without testing them. Central Plains chose to become a requiring authority with all the powers that gives to take
people’s land away from them under the Public Works Act 1981. If it chose to exercise those technical powers before being sure it needed to, then it may need to face the consequences of that when it causes costs for the affected landowners.
[23] Secondly, the applicants have been put to unnecessary expense in these proceedings. They claim to have lost value in their land because of the requirement. Even if true, this court can do nothing about that. Indeed, Mr Smith pointed out for Central Plains that loss may be something that the applicants have to wear since the timing of the sale was their choice. However, costs are a different issue. I have power to order that they be recompensed for costs unnecessarily incurred.
[24] Questions of timing are irrelevant provided some reasonable attempt at marketing was made before the application was made to the court and I am satisfied it was. Nor should I have to go into the questions as to the adequacy of the market in deciding this application.
[25] Accordingly in my discretion I find the applicants should be recompensed for their costs if they are reasonable. I now turn to consider quantum.
[21] The Environment Court then concluded that Mr Thompson’s and Ms Davey’s costs as sought were reasonable, and made its award accordingly. There is no challenge to the Court’s factual finding as to the reasonableness of the costs incurred by Mr Thompson and Ms Davey, in respect of which the Environment Court’s order was made.
This appeal
[22] Section 299 of the Act allows for appeals on questions of law to this Court against any decision, report or recommendation of the Environment Court.
[23] Central Plains, as it did before the Environment Court, acknowledges that some award of costs against it is appropriate. Before me, Ms Dunningham expressed this as being in the range of $13,000 to $23,000. Nevertheless, and in essence, in this appeal Central Plains argues that in reaching its decision to award near indemnity costs the Environment Court:
a) took a view on the substantive merits of the s 185 proceedings that was not available to it, and thus erred in law;
b)regarded as relevant the fact that Central Plains had withdrawn its notice of requirement, when that consideration was irrelevant, and therefore also erred in law; and
c) erred in law in awarding certain parts of its costs award, namely those relating to personal costs incurred by Mr Thompson and Ms Davey, the costs of real estate agents that would have been incurred in any event to sell the land in question and the costs of the costs application itself.
[24] The following comments of the High Court in Canterbury Regional Council v Waimakariri District Council properly set out the role of this Court on this appeal:[2]
[2] Canterbury Regional Council v Waimakariri District Council [2004] NZRMA 289 at [49].
Before discussing this final aspect we shall record and amplify our interpretation of the appellate function in a costs context. The Court of Appeal decision in Wellington City Council v Norwich Union Life Insurance (Court of Appeal, CA 97/87, 20 November 1987) remains authority for the proposition that appeals relating to costs are not to be encouraged. Cooke P in delivering the judgment of the Court said as much as p 2 of the decision, and added that an appellate Court should only intervene if a true question of principle or a true injustice has emerged.
[25] That approach has been followed by the High Court subsequently, not only in Canterbury Regional Council itself, but also, for example, in Matthews v Marlborough District Council.[3]
[3] Matthews v Marlborough District Council HC Wellington CIV-2002-485-232, 23 April 2004, Goddard and Wild JJ.
[26] I proceed accordingly.
Discussion
[27] The jurisdiction of the Environment Court to award costs is found in s 285 of the Act. The discretion is expressed in general terms:
(1)The Environment Court may order any party to proceedings before it to pay any other party the costs and expenses (including witness
expenses) incurred by the other party that the Court considers reasonable.
…
(6)The Environment Court may order a party who fails to proceed with a hearing at the time the Court arranges … to pay to any other party or to the Crown any of the costs and expenses incurred by the other party or the Crown.
[28] In McKenzie v Taupo District Council,[4] the High Court described the discretion of the Environment Court under s 285 of the Act as being “unfettered”. At the same time, it is clear that that unfettered discretion is to be exercised in a lawful and principled way.
[4] McKenzie v Taupo District Council [1996] NZRMA 237 at 238.
[29] The Environment Court’s general approach to costs awards under s 285 was well described in Foodstuffs v Dunedin City,[5] by reference to the then Planning Tribunal’s authority under that section, in the following terms:
[5] Foodstuffs v Dunedin City (1996) 2 ELRNZ 138 at 147.
There is no scale of costs for Planning Tribunal proceedings, nor is there any general practice that costs follow the event, that an unsuccessful party has to pay a successful party’s costs. Costs are not awarded as a penalty, nor to encourage or discourage resort to the Tribunal in different classes of case; but as compensation where that is just. Decisions on claims for costs are made in exercise of judicial discretion, having regard to the circumstances of the individual case.
[30] The Environment Court has confirmed that approach. See, for example, Aero Vista Holdings Ltd v Transit New Zealand[6]citing the High Court’s approval of that approach (by the Full Court) in Matthews v Marlborough District Council.
[6] Aero Vista Holdings Ltd v Transit New Zealand ENC Auckland A081/2004, 11 June 2004 at [7].
[31] The Environment Court has itself published a consolidated Practice Note in which, amongst many other things, the question of awards of costs is discussed. The Practice Note does not, however, deal comprehensively with the question of costs. Rather it observes that where appeals under the First Schedule of the Act proceed to a hearing, costs will not normally be awarded to any party. Where an appeal is withdrawn after being set down for hearing, the Court would normally award costs against the appellant in favour of the other parties in respect of their preparation for
hearing. In some cases, costs may be awarded following appeal hearings which take place. An example given is where the decision appealed against would have imposed an unusual restriction on the appellant’s rights and the restriction is not upheld. The Practice Note comments that on other appeals, the Court will not normally award costs against the public body whose decision is the subject of the appeal. As acknowledged before me, that Practice Notice is not therefore of direct help in resolving this appeal. In any event, and as noted in Canterbury Regional
Council v Waimakariri District Council,[7] the Practice Notice does not found an
[7] At [21].
inflexible rule regarding costs as they may be awarded by the Environment Court.
[32] Therefore there cannot be, and was not, any criticism of the Judge’s general description in [20] of the decision on appeal as to the nature of the Environment Court’s costs jurisdiction.
[33] Following those general remarks, the Judge then referred, as the Environment Court has on many occasions, to what are known as the Bielby factors.[8] In the High Court, these factors are generally accepted as guiding the Court where it considers the question of whether increased or indemnity costs should be awarded. In the Environment Court, those factors are considered relevant to the more general question as to whether costs should be awarded against a party at all. As this Court observed in Canterbury Regional Council v Waimakariri District Council:[9]
[8] Development Finance Corporation of New Zealand Ltd v Bielby [1991] 1 NZLR 587.
[9] At [24].
Reference by the Environment Court to Development Finance Corporation v Bielby prompted the appellant to raise its second point of law. According to the appellant the factors listed in that decision (which concerned whether or not above-scale costs should be awarded in the High Court) do not apply to public interest litigation in the Environment Court, especially in a situation like this where the regional Council was discharging its responsibility by putting to the test a proposal to build a satellite town capable of having huge energy, land and transport implications. We do not accept that the Bielby factors are not relevant to costs in the present context. Such factors are capable of providing a useful, though not necessarily comprehensive, framework for considering costs in the Environment Court. Gendall J took a similar view in Matthews v Marlborough District Council.
[34] The Judge’s general reference to those factors does not, therefore, in and of itself give rise to any error of law. I consider below Central Plains’ contention that the Judge erred in law in the way he applied those factors in his decision.
[35] I note further that the Environment Court has also considered those factors as relevant when ordering indemnity costs. See Kapiti Island Watching Interests Incorporated v The Kapiti Coast District Council.[10]
[10] Kapiti Island Watching Interests Incorporated v The Kapiti Coast District Council ENC Wellington W71/2004, 2 September 2004.
[36] There are I think three further matters of principle that are relevant. These are the questions of the proper approach to costs on s 185 applications, the general approach to costs where proceedings are discontinued and the status of local bodies where they are the possible subject of costs orders.
[37] The Environment Court has held, in Sigversten Builders Limited v The Thames Coromandel District Council,[11] that a successful applicant for an order under s 185 should in general be entitled to a more generous award than the party and party costs normally application in civil litigation.
[11] Sigversten Builders Limited v The Thames Coromandel District Council PT A2/94, 7 January 1994.
[38] In doing so, the Environment Court applied the reasoning of the Court of Appeal in Minister of Works v Cromwell Farm Machinery Limited,[12] a case concerning compensation and costs under ss 60 and 91 respectively of the Public Works Act 19891. There, as reflected in the Environment Court’s decision in Sigversten, the Court of Appeal concluded:[13]
[12] Minister of Works v Cromwell Farm Machinery Limited [1986] 2 NZLR.
[13] At 36.
We think that the proper balancing of ss 60 and 90 of the Public Works Act
1981 should result in awards of costs which, while not providing a full indemnity to the claimant on a solicitor and client basis, represent a more generous approach than is adopted or allowed in ordinary civil litigation.
[39] The Court had earlier observed that two factors distinguished claims for compensation under the Public Works Act, and I think it can fairly be said for compulsory purchase under s 185, from two other kinds of civil litigation. The first
was that citizens became litigants not because of a voluntary act on their part but because of the exercise of the Crown of a statutory power, in the case of the Public Works Act, of expropriation, over which they had no control. Here, subject to rights of appeal, the compulsory act is that of designation. Furthermore, under the Public Works Act, as under the Resource Management Act, there is no scale of party and party costs to which the Environment Court must have regard. The legislature has chosen not to limit the award of costs under either of the Public Works Act or the Resource Management Act by reference to any scale except, in the case of the Public Works Act explicitly, that of reasonableness. Similarly, the unfettered jurisdiction contained in s 285 is to award costs “that the Court considers reasonable”. There should, in my opinion, be no difference between the two approaches, particularly as a successful application under s 185 then engages Public Works Act procedures.
[40] It is, of course, immediately apparent that the Court of Appeal in Cromwell Farm Machinery indicated that the normal approach awarding costs following a s 185 application was not to provide full indemnity to a successful claimant on a solicitor and client basis. Given the Environment Court’s recognition that it was awarding near indemnity costs to Mr Thompson and Ms Davey, the clear issue is whether it erred to the extent that such an award goes further than the “more generous” approach. As Ms Dunningham put it, was the Environment Court correct to order that Mr Thompson and Ms Davey should be paid greater costs by Central Plains than would normally have been the case if, their application having been heard by the Environment Court, they had succeeded?
[41] Here there was no hearing of Mr Thompson’s and Ms Davey’s s 184 application.
[42] A not dissimilar circumstance has been considered by the Court of Appeal.
[43] In Queenstown Airport Corporation v Skipworth the Court of Appeal considered the substantive question of when the Environment Court has jurisdiction
to make an order under s 185 of the Act.[14] There the QAC had withdrawn a designation before the Environment Court had considered Mrs Skipworth’s s 185 application. Notwithstanding that, the Environment Court and High Court had considered that the jurisdiction to consider that application, and to make an order requiring purchase, still existed. The Court of Appeal upheld QAC’s appeal against those decisions. The Court nevertheless awarded Mrs Skipworth costs on that appeal. In doing so the Court commented:[15]
[14] Queenstown Airport Corporation v Skipworth [2001] 2 NZLR 621.
[15] At [43], [46]-[47].
…The section does not allow the Environment Court to order a compulsory purchase or, indeed, any other compensation, on account of the inconvenience or loss occasioned to the intending vendor by the temporary existence of the now withdrawn requirement. …
We realise that this decision bears harshly on Mrs Skipworth. Through no fault of her own, the QAC prevented her from developing her property on the basis of a requirement that is now no longer required. That advice was not given until the eleventh hour. We would be inclined to award Mrs Skipworth damages representing the costs which she has incurred in respect of her frustrated development and in seeking an order under s 185, together with a reasonable sum for general damages. But the Court has no power to do so. Should Mrs Skipworth have no legal redress the matter must rest on the sense of fair play with which one would hope the QAC are imbued.
The appeal is therefore allowed. In the circumstances Mrs Skipworth is entitled to costs in this Court and in the Courts below amounting in total to
$25,000, together with disbursements, including travelling and accommodation expenses, which failing agreement are to be fixed by the
Registrar. Appeal allowed.
[44] There is no further explanation of the basis upon which the Court of Appeal fixed those costs.
[45] What is clear is that the fact and circumstances of QAC having withdrawn its designation were regarded by the Court of Appeal as relevant. Moreover, a consideration of those circumstances resulted in a substantial costs award in Mrs Skipworth’s favour. In my view it cannot therefore be argued, as Central Plains did, that the fact of and circumstances in which it withdrew its notice of designation affecting Mr Thompson’s and Ms Davey’s land are irrelevant. Rather, in my view, it
is of central relevance to the question of an appropriate award of costs in these circumstances.
[46] By withdrawing the designation in the way that it did, Central Plains can also be seen as having discontinued that part of the process whereby, ultimately, the requirement for the designation could have been considered by the Environment Court. Although Mr Thompson and Ms Davey were the applicants in the s 185 proceedings, Central Plains’ actions effectively discontinued, or at least removed the jurisdictional basis for, those proceedings as well. In those circumstances, the approach taken to the question of costs where proceedings are discontinued may be of relevance. As Ms Dunningham for Central Plains submitted, in Port Nelson
Limited v Gleneagles Limited the Environment Court,[16] in a carefully considered
[16] Port Nelson Limited v Gleneagles Limited 18/8/04 ENC Wellington W65/2004, 18 August 2004.
decision as to costs, reviewed its jurisdiction under s 285 where the respondent, Glen Eagles Limited, sought full indemnity costs following the withdrawal by Port Nelson Limited of an application for an enforcement. The Court there declined to award indemnity costs. It did so by a consideration of the Bielby factors. It ultimately awarded costs of $30,000, relative to the sum of $50,000 that had been sought on an indemnity basis. In doing so the Court observed that the late withdrawal of proceedings was relevant, but did not invite a conclusion that the proceeding was entirely without merit. The Court observed that it was not in a position to make that conclusion given that the pleadings had not been heard and the pleadings identified a prima facie case. This is similar to the approach taken by the High Court. In the absence of agreement or a Court order to the contrary, r 15.23 requires a discontinuing plaintiff to pay the defendant’s costs up to the point of discontinuance. Generally, the Court does not speculate on the merits of a case it never heard. Only in an exceptional case where the merits are clear would they influence the Court’s costs decision upon a discontinuance. The question of the reasonableness of the stance taken by the parties does, however, have to be considered.
[47] In this context, the terms of s 285(6) of the Act are, perhaps, relevant. There, where a party fails to proceed with the hearing at the time the Court arranges (as it might be thought Central Plains effectively did here), then the Court may order a
party to pay to any other party “any of the costs and expenses incurred by the other party or the Crown”. The equivalent wording in s 285(1) is that the Court may order the payment of such costs and expenses as “the Court considers reasonable”. The interesting question is whether the terms of s 285(6), by not repeating the words “the Court considers reasonable”, mean the discretion under s 285(6) is in some way more generous than that under s 285(1). I do not take that point any further, as it was not referred to before me by either party.
[48] A further matter of relevance where the Environment Court is considering costs can be the status of the party who might otherwise be ordered to pay costs as a public body carrying out a public function. As the High Court observed in Canterbury Regional Council v Waimakariri District Council,[17] “Our consideration
[17] Canterbury Regional Council v Waimakariri District Council [2004] NZRMA 289 at [56].
… leads us to the conclusion that the Court erred in not having regard to the regional
council’s status as a publicly funded body charged with a regional resource management function”.
[49] A consideration of that factor will, therefore, be relevant to costs decisions. In my view, however, that factor is not relevant here. As the Commissioners observed in their minute, Central Plains is not a public authority, but rather a privately owned company. At paragraph 12.9 the Commissioners observed:
The requiring authority (Central Plains Water Limited) is a privately owned company. CPWL is responsible to its farmer shareholders to deliver water to them (presumably) in as reliable and cost-effect way that can be achieved.
[50] Further, at paragraph 12.11, it observed as follows:
Although we fully accept that the storage provided by the valley would provide economic benefits to the region, we do not see this as community infrastructure or a community project. Although the beneficiaries of the Trust are the people of Canterbury, the Requiring Authority is a private company and its shareholders are the farmers who would benefit from the increased irrigation. There would be no direct benefit flowing to the beneficiaries of the Trust.
[51] I turn now to consider Central Plains’ principal arguments.
[52] Ms Dunningham based a large part of her argument on the proposition that the Environment Court’s decision involved an inappropriate application for Bielby principles to the merits Mr Thompson’s and Ms Davey’s s 185 proceedings. Her submission was that, given the substantive issues at large between the parties in that proceeding, it was an error of principle to award Mr Thompson and Ms Davey near indemnity costs. In my view, however, and as I observed at the hearing of this appeal, I do not think that is what the Environment Court decision was based on. It seems clear to me that the Judge did not in any material way assess the substantive merits of the s 185 proceedings by reference to the Bielby factors. Rather, he limited his observations regarding those proceedings to the comments he made in [24] of his decision. There he said the questions of timing were irrelevant, provided some reasonable attempt at marketing had been made, and he was satisfied that it had. Further, he thought that he did not have to go into questions as to “the adequacy of the market” in deciding the costs applications. In my view, in making those observations he was, in effect, saying that Mr Thompson’s and Ms Davey’s application under s 185 was not so hopeless as to mean that they should not be awarded costs.
[53] Where I think the Judge did have in mind the Bielby factors, or as he puts it variations of them, is when he assessed the significance of Central Plains’ decision to withdraw the designation as it affected Mr Thompson’s and Ms Davey’s land.
[54] There are, I think, two reasons relied on by the Judge in reaching his decision on costs.
[55] The first is that the Commissioners’ expressed significant criticisms of those parts of Central Plains’ designation which related to the dam to be built, and the reservoir that would have been formed. Any reading of the Commissioners’ minute makes that plain. Although formally expressed as preliminary observations, the Commissioners made it plain that their final decision would not differ from the “technically” preliminary views they had expressed. Furthermore, on receiving that minute, Central Plains’ as a matter of fact did not further pursue that part of the designation. That is what I think the Judge was referring to when he commented that Central Plains had withdrawn “the requirement without testing them”.
[56] The second element of the Judge’s decision was his observation that Mr Thompson and Ms Davey had, as a matter of fact, been put to “unnecessary expense in these proceedings”.
[57] The point to be considered, therefore, is whether the Judge’s final decision, relative to Central Plains’ actions in withdrawing the notice of requirement and the implications of that for Mr Thompson and Ms Daley, involved a true error of principle or a true injustice.
[58] As Ms Dunningham’s principal submission on this point was that the action of Central Plains in withdrawing that designation was irrelevant, she did not address the significance of that in any great detail. In my judgment, the issue raised by this appeal involves precisely that point.
[59] As regards the significance of Central Plains’ decision to accept the Commissioners’ recommendation for its act in giving notice of the designation in the first place, I accept that the Judge may have expressed himself somewhat infelicitously when he said that he thought he should assume that the grounds for the requirement were without substance, based on Central Plains’ subsequent actions. Here, in distinction to the normal situation of discontinuance, there are the significantly adverse comments by the Commissioners, which provide some basis for the Environment Court to take a view on the merits of Central Plains’ designation requirements. At the same time Central Plains’ actions in withdrawing the designation do not necessarily represent an acceptance of those comments in their entirety, nor – in my judgment – mean that it is necessarily appropriate to assume, to use the Judge’s phrase, that the requirement was without substance. Be that as it may, however, and as a matter of fact, Central Plains did withdraw its notice of designation following the receipt of those critical comments. Moreover, I also note that Central Plains is – as I understand matters – proceeding with its designation for an irrigation system without the dam or reservoir. That matter is also, in my view, the reason for the Judge observing that Central Plains may have exercised designation powers which, again as a matter of fact, it would now appear not to need, albeit it may have preferred the scheme it first proposed.
[60] On that basis, I conclude that, as I have somewhat infelicitously expressed, I do not consider the Judge erred in principle, or made a decision that results in a true injustice, by in effect concluding that Central Plains’ actions in withdrawing the designation were of considerable significance to what was an appropriate award of costs in this case.
[61] As noted, the second element of the Judge’s decision was his conclusion as to the unnecessary expenses Mr Thompson and Ms Davey had been put to.
[62] In my view, there can be no criticism of that conclusion. When Central Plains withdrew its notice of designation, the application that Mr Thompson and Ms Davey made came to an end. All the costs they had incurred with respect to that application had as a matter of fact been unnecessary. They were not only unnecessary, they can be seen simply as wasted costs.
[63] In those circumstances, I do not think the Judge was wrong in principle to make an award which meant that the reasonable costs they had incurred, as the Judge found them to be, should be paid to them. As the Court of Appeal observed in Minister of Works v Cromwell Farm, Mr Thompson and Ms Davey became litigants, not because of any contracts or arrangements into which they had entered, or relationships which they had formed giving rise to an action in tort, but because of the exercise by Central Plains of a statutory power which they could not stop, but only challenge subsequently. Furthermore, and distinguishing the position of Mr Thompson and Ms Davey from applicants for compensation under the Public Works Act, or parties who have had the opportunity to bring a s 185 application and succeed, here Mr Thompson and Ms Davey were left with no further rights against Central Plains, notwithstanding the impact the designation would have had on them and on their land while it was being pursued.
[64] In these circumstances, I do not think the Judge can be said to have erred in law in reaching his decision. In particular, I do not see the Judge’s decision depending, as does a decision awarding indemnity costs in the High Court, on this being a case where the actions of Central Plains in giving the notice of designation were so flawed from the outset as to justify an award of indemnity costs in terms of
the High Court principles. Rather, I think the Judge – who noted that costs in the Environment Court are not awarded to punish – was assessing what was reasonable and just in a particular situation. Whilst not all Judges would necessarily have reached the view that the Judge did here, that is not the point.
[65] There is, however, one minor aspect of that decision that I consider to be wrong in principle. This relates to the Judge ordering Central Plains to pay to Mr Thompson and Ms Davey the real estate agents’ costs they incurred in selling the one lot. The Judge, on that point, concluded that the real estate agents’ costs were reasonably put on Central Plains “given the blight that its requirement imposed on the applicants’ land”. Mr Thompson and Ms Davey, albeit I accept under some financial pressure, decided to sell one lot at what they regarded as a disadvantageous price. In those circumstances, I do not think it is correct in principle for Central Plains to have to pay the relevant land agents’ costs.
[66] This appeal is therefore dismissed, subject only to the costs ordered by the Environment Court being reduced by the amount of real estate agents’ costs incurred by Mr Thompson and Ms Davey in selling the one lot.
[67] In terms of costs on this appeal, Mr Thompson and Ms Davey have succeeded, save on that one very narrow point. In these circumstances I consider that costs should follow the event on a 2B basis in the normal way, with Central Plains paying costs on that basis to Mr Thompson and Ms Davey on this appeal.
“Clifford J”
Solicitors: Buddle Findlay, P O Box 322, Christchurch for the appellant (rachel.dunningham@
buddlefindlay.com)
Ian McNish, P O Box 174, Kaiapoi for the respondents (Counsel: AC Hughes-Johnson QC:
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