City Financial Investment Company (New Zealand) Limited v Transpower New Zealand Limited

[2018] NZHC 1981

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2017-485-657

[2018] NZHC 1981

UNDER

the Judicial Review Procedure Act 2016

IN THE MATTER OF

an application for review of a decision of the Electricity Authority under reg 11 of the

Electricity Industry (Enforcement) Regulations 2010

BETWEEN

CITY FINANCIAL INVESTMENT COMPANY (NEW ZEALAND) LIMITED

Applicant

AND

TRANSPOWER NEW ZEALAND LIMITED

First Respondent

THE ELECTRICITY AUTHORITY

Second Respondent

CIV-2017-485-658

BETWEEN

CITY FINANCIAL INVESTMENT COMPANY (NEW ZEALAND) LIMITED
Appellant

AND

TRANSPOWER NEW ZEALAND LIMITED

First Respondent

THE ELECTRICITY AUTHORITY

Second Respondent

Hearing:

On the papers

Counsel:

J V Ormsby, S S R Meares and J I Taylor for Applicant/Appellant T D Smith and J Y T Moran for First Respondent

L A O’Gorman for Second Respondent

Judgment:

6 August 2018

CITY FINANCIAL INVESTMENT COMPANY (NEW ZEALAND) LIMITED v TRANSPOWER NEW ZEALAND LIMITED [2018] NZHC 1981

JUDGMENT OF COOKE J

(Costs)

[1]                  In my judgment of 21 June I reserved leave for the parties to file memoranda in relation to costs if they could not be agreed, giving preliminary indications of my views. The parties have been unable to agree on costs, and memoranda have been filed. I will address the key issues in dispute raised in the parties’ memoranda.

Categorisation

[2]                  In my decision I indicated a preliminary view that this was a Category 3 proceeding. When doing so I was unaware that the parties had agreed in a joint memorandum dated 5 October 2017 that it was a Category 2 proceeding.

[3]                  Transpower and the Authority argue that the proceedings should now be re- categorised as a Category 3 proceeding, at least with respect to the steps in the proceeding after the joint memorandum was filed. City Financial disagrees and says that the Category 2 categorisation should apply.

[4]                  Under r 14.3(2) of the High Court Rules 2016 an initial categorisation applies to all subsequent determinations of costs in the proceedings “unless there are special reasons to the contrary”. Part of the reason for this rule is it allows questions of costs to be clear and predictable.1 That is particularly so when the categorisation has been agreed by all parties, as they have expressly agreed on the rules of engagement between them.

[5]                  I do not accept that any of the factors raised by Transpower or the Authority amount to special reasons as contemplated by the rule. The factors that might have justified this proceeding being given a Category 3 case were apparent from the outset. The subsequent developments in the proceeding did not change its fundamental character. There accordingly is no reason to depart from the categorisation that the

1      See Delegat v Norman [2014] NZHC 1099 at [17]–[18].

parties agreed to at the outset. Costs will accordingly be determined on the basis of a Category 2 categorisation.

Reduction in costs

[6]                  City Financial sought a reduction in Transpower’s costs award by 50 per cent under r 14.7(f)(ii) and (g) of the Rules on the basis that the Court upheld Transpower’s position for a reason other than that advanced by Transpower, and that Transpower advanced arguments that the Court did not then need to address.

[7]                  I see no merit in City Financial’s contention. Whilst it is true that the conclusion the Court reached was not identical to that advanced by Transpower, it was closely related. Transpower argued that aggregate capacity was mandated, whereas the Court concluded that aggregate capacity was permitted, and had been lawfully established. The effect was that Transpower succeeded. The other arguments addressed by Transpower that the Court did not need to confront were also not only closely related, but they were also raised by City Financial. This comes nowhere near the proposition contemplated by the rules that Transpower was “taking or pursuing an unnecessary step or an argument that lacks merit”.

[8]                  City Financial also contends that there should be a 50 per cent reduction in the Authority’s award because of the Court’s observations that the Authority had not provided adequate reasons for its decisions. It contends that if the reasons had been made apparent it “may have been satisfied that the Code had not been breached and it would not have pursued its complaint”. The ground for reduction is under r 14.7(g) – that there is some other reason for a cost reduction.

[9]                  Again, there is no merit in this argument. City Financial did not base its challenge on inadequacy of reasons. Nor was there any complaint by City Financial to this effect. I do not accept that City Financial may have been satisfied that the Code had not been breached had fuller reasons been provided. Moreover, in the end what really mattered was the correct meaning and application of the Code, which was what this proceeding turned upon. The lack of fuller reasons was unhelpful, but did not have any significant cost implications.

Band allocations

[10]              The parties could not agree on certain time band allocations for some of the steps in the proceeding.

[11]              The Authority sought an allocation under Band C for item 33 – Preparation for hearing. City Financial disagrees with that claim.

[12]              For the reasons outlined in my preliminary views in the principal judgment, the Authority is entitled to costs in defending the judicial review action, but is not entitled to any additional costs attributed to the appeal. As the decision-maker it would not have been appropriate for it to have participated in the appeal, particularly in circumstances where there was an active opponent. And it did not do so in this case. An indirect claim for such costs through the Band allocation would not be appropriate. For these reasons the Authority is only entitled to claim under item 33 on a Band B basis.

[13]              Transpower claims Band C in relation to the commencement of its defence to the judicial review claim under item 2. This is in addition to its response to the appeal under item 53, which it calculated on a Band B basis. In my view Transpower is entitled to an allocation under Band C in relation to the appeal under item 53, which results in a one day allocation. To then seek Band C in relation to preparing the defence to the judicial review claim – resulting in a six day allocation – is disproportionate and not reasonable. It should only be allowed an allocation under Band B for commencing the defence under item 2.

[14]              Transpower seeks an allocation under Band C for the preparation of affidavits in relation to the judicial review claims. City Financial opposes. It seems to me that this claim is justified. There were significant affidavits filed in this proceeding, which arose from the affidavits filed by City Financial, and which really related to the appeal as much as the judicial review. Transpower is accordingly entitled to an allocation of five days under Band C.

[15]              Transpower seeks a Band C allowance for the preparation of written submissions on the appeal. City Financial opposes. Again given the complexity of

the case, it seems to reasonable for Transpower to receive a Band C allocation for this step.

[16]              Finally, City Financial objects to certain items claimed by Transpower for item 55 (preparation of the case on appeal) and item 32 (preparing list of issues, authorities, and common bundle on the judicial review). Whilst City Financial had the responsibility to prepare the case on appeal, the contents of the case here went well beyond the record before the decision-maker and would have required the input of Transpower. Accordingly Transpower is entitled to the claimed allowance. Transpower is also entitled to the claimed allowance under item 32, which includes a list of inclusive steps associated with preparation for a defended hearing, and although Transpower did not do all those steps for this case, it did incur some such costs.

[17]              I presume the parties will be able to make the respective calculations arising from these rulings. If they cannot be agreed any residual issues can be determined by the Registrar.

Cooke J

Solicitors:

Wynn Williams, Christchurch for applicant/appellant Chapman Tripp, Wellington for first respondent Buddle Findlay, Auckland for second respondent