Coro Mainstreet (Incorporated) v Thames-Coromandel Council
[2013] NZHC 2685
•15 October 2013
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2012-419-001113 [2013] NZHC 2685
UNDER the Judicature Amendment Act 1972 IN THE MATTER
of a decision pursuant to Sections 95A and 95D of the Resource Management Act 1991 not to notify an application for resource consent
BETWEEN
CORO MAINSTREET (INCORPORATED)
Applicant
AND
THE THAMES-COROMANDEL COUNCIL
First Respondent
AND
THE NATIONAL TRADING COMPANY OF NEW ZEALAND LIMITED
Second Respondent
| Hearing: | 7 October 2013 |
Appearances: | R Brabant for Applicant D Clay for Second Respondent |
Judgment: | 15 October 2013 |
JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 15 October 2013 at 4:30 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
CORO MAINSTREET (INCORPORATED) v THE THAMES-COROMANDEL COUNCIL [2013] NZHC 2685
[15 October 2013]
Background
[1] On 17 October 2011, the National Trading Company of New Zealand Limited (“NTC”) applied to the Thames-Coromandel District Council (“the Council”) for resource consent to remove an existing motel from a site at 50 Wharf Road, Coromandel; to construct a new 720 m2 building on the site; and to operate the new building as a Four Square convenience store. The Council decided on 5 April 2012, pursuant to s 95A of the Resource Management Act 1991, that the application would not be notified.
[2] The applicant in this proceeding (“the Society”) is an incorporated society formed by concerned residents of the Thames-Coromandel district. It sought judicial review of the Council’s decision.
[3] The Society’s application failed. In a judgment delivered on 21 May 2013,1 Wylie J decided that the Council’s decision not to notify the application was not effected by any error of law: the Council did not fail to take into account relevant considerations; the decision did not rely on insufficient and/or inadequate information; and it could not be said that the decision was manifestly unreasonable.
[4] In a separate judgment,2 Wylie J ordered the Society to pay costs to NTC in the sum of $17,193.60 plus disbursements of $108.80. Costs were also awarded in favour of the Council for a total sum of $21,851.10.
[5] The Society has appealed to the Court of Appeal against Wylie J’s judgment dismissing the application and against the costs judgment. The Society has paid security for costs on the appeal and is ready to argue the matter, but has been advised that a fixture is not likely to be available before March 2014.
Application for stay of execution on costs order
[6] This judgment concerns an application by the Society under r 12 of the Court of Appeal (Civil) Rules 2005 for a stay of execution on the costs judgment. The
1 Coro Mainstreet (Inc) v The Thames Coromandel District Council [2013] NZHC 1163.
2 Coro Mainstreet (Inc) v The Thames Coromandel District Council [2013] NZHC 1527.
application was prompted by service on the Society of statutory demands under s 289 of the Companies Act 1993 for the payment of the costs from both the Council (on 31 July 2013) and from NTC (on 1 August 2013). The sums demanded were the amount of the cost orders less the share each defendant received of the sum paid into this Court as security for costs on the judicial review application.
Other relevant background facts
[7] The Society is not well resourced financially. It relied upon donations to meet the cost of the judicial review application but such financial contributions did not provide sufficient funds to meet the costs awards made by Wylie J, except to the extent of the security for costs paid into Court.
[8] The Society also sought donations to meet its costs on the appeal, and to pay security for costs to ensure that the appeal could proceed. The sum of approximately
$29,000 raised in this way was sought and received for the express purposes of funding the appeal and I am satisfied those funds cannot be used, without the consent of the donors, to satisfy the demands for payment of the High Court costs orders.
[9] Thus, the Society is ready to argue the appeal and has the resources to do so but it cannot presently meet the High Court costs orders. Nor does it have funds to meet any costs which may be ordered by the Court of Appeal, if the appeal is unsuccessful, to the extent that such an order is greater than the amount paid into the Court of Appeal by way of security.
[10] The Council has indicated that, although it served a statutory demand on the Society, it does not oppose the granting of a stay.
Rule 12(3) and 12(4) of the Court of Appeal (Civil) Rules 2005
[11] Rule 12(3) and 12(4) of the Court of Appeal (Civil) Rules 2005 provide:
12 Stay of proceedings and execution
...
(3)Pending the determination of an application for leave to appeal or an appeal, the court appealed from or the Court may, on application,—
(a)order a stay of the proceeding in which the decision was given or a stay of the execution of the decision; or
(b)grant any interim relief.
(4)An order or a grant under subclause (3) may—
(a)relate to execution of the whole or part of the decision or to a particular form of execution:
(b)be subject to any conditions that the court appealed from or the Court thinks fit, including conditions relating to security for costs.
....
Applicable principles
[12] There is no dispute about the principles to be applied to the exercise of the Court’s discretion to order a stay. The Court is required to conduct a balancing exercise between the rights of a successful litigant to the fruits of the judgment and
the interests of an appellant in preserving its position in case the appeal is successful.3
[13] In Keung v GBR Investment Limited, the Court of Appeal accepted that the factors to be taken into account include:4
(a)whether the appeal may be rendered nugatory by the lack of a stay;
(b)the bona fides of the applicant as to the prosecution of the appeal;
(c)whether the successful party will be injuriously affected by the stay;
(d)the effect on third parties;
(e)the novelty and importance of the questions involved;
3 Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (CA) at 87.
4 Keung v GBR Investment Limited [2010] NZCA 396, [2012] NZAR 17 at [11].
(f)the public interest in the proceedings; and
(g)the overall balance of convenience.
[14] This is not a comprehensive list and a further factor, which assumes some importance in this case, is the apparent strength of the appeal.5
[15] Mr Brabant did not seriously argue that there were novel or important questions involved in the appeal, but there is no doubt that the Society is genuinely seeking to overturn the High Court judgment on appeal and it is sufficiently resourced and ready to argue the case as soon as a fixture is allocated. Although the applicant is motivated by public interest considerations, there is no particular public interest element in this proceeding which does not address, except in a peripheral fashion, the substantive issues concerning the proposed development. It is not suggested either that any third party interests would be affected by a stay.
[16] The factors requiring particular consideration in respect of the stay application, therefore, are the effect of a stay or the refusal of a stay on the positions of the Society and NTC respectively; the overall balance of convenience; and, as a factor touching on all issues, the apparent strength of the appeal.
Arguments for the applicant
[17] The applicant’s primary submission is that it is evident that the purpose of NTC issuing a statutory demand for payment of the costs awarded to it is to force the Society into liquidation and thereby bring the Society’s appeal to the Court of Appeal to an end. This is so, it is said, because NTC cannot have any reasonable expectation that the Society is in a position to make payment of the costs award.
[18] Mr Brabant equates the Society’s position to that of a plaintiff seeking to appeal a substantive judgment in a civil claim where an appellant would be deprived of its right of appeal by being forced into liquidation because of its inability to pay a judgment sum. He says that public interest considerations apply with greater force
5 Ibid.
in the present case because the issues on appeal relate to public administrative law, involving issues of the right of citizens to exercise such rights of objection to the planning proposal as might be available to them if the resource consent application were publicly notified. Mr Brabant suggests that the Court should be particularly hesitant to allow NTC to effectively stifle an attempt to establish the right of members of the public to participate fully in the decision-making on a resource consent application which has full discretionary activity status.
[19] Mr Brabant was pressed during oral argument to indicate whether it was a reasonable inference from the applicant’s position that not only was it not currently in a position to meet the costs award but that it would never be so placed. Mr Brabant was able to go only so far as indicating that the Society had not said it would not endeavour to meet the balance of the High Court costs award if its appeal failed.
Second respondent’s submissions
[20] NTC does not accept that a refusal to grant a stay on the costs award would render the applicant’s appeal nugatory. Mr Clay did not seriously dispute that the evidence filed by the Society in support of its application establishing that the funds held to meet its costs on the appeal are not readily available to meet NTC’s costs award. But he argues that it is simply unfair for the Society to claim relief from meeting its obligations on that basis. Mr Clay submits that there is no unfairness in requiring the Society to put itself in the position to meet its obligations under the High Court’s judgment. The Society had the ability to arrange funding of a significantly higher sum for its own legal costs.
[21] Mr Clay acknowledged that the sum of approximately $15,000 which is outstanding on the costs award is of little financial significance to NTC in the context of the costs of the overall development project. He made the point, however, that the applicant should not be permitted to pursue litigation, when it has caused considerable expense to NTC not only in legal costs but particularly in the cost of delay of its project, while protesting that it is unable to meet an award of costs in the event that its proceeding should fail.
[22] Mr Clay acknowledged, however, that the delay in the hearing of the appeal and the consequential financial cost to NTC was the result of the Court of Appeal’s inability to provide a hearing time until at least March 2014 and that the Society has not contributed to that delay.
Apparent strength of the appeal
[23] Wylie J delivered a fully-reasoned judgment addressing the Society’s claims that the Council’s decision not to notify the resource consent application was founded on errors of law, failed to take account of relevant considerations, was based on irrelevant considerations, and was manifestly unreasonable. The Judge was satisfied that no error of law arose from the fact that a Council officer to whom the notification decision had been delegated was properly authorised to make the decision and that she genuinely considered the merits of the issue. Second, the Judge was satisfied that the Council had adequate information before it on relevant pedestrian and vehicle movements. Further, the Court held that the Council officer concerned had adequate expert and independent information before her to make a fully informed decision about the potential adverse effects of NTC’s application in terms of the heritage issues arising from it. The Judge also accepted the proposition that a proper interpretation of the rules relating to controlled or discretionary activities under the Coromandel Heritage Design Criteria was that they should be interpreted in such a way as to enable the Council to treat the rules as guidelines rather than imposing mandatory conditions upon discretionary activities.
[24] In oral argument in support of a stay, Mr Brabant developed the central issue on the appeal which relates to the proposition that NTC should be permitted to construct a building which does not fully occupy the width of the site, consistently with historical development along the street frontage, save for a relatively narrow pedestrian access no greater than 1.2 metres wide. The proposed development provides for full width vehicular access to the rear of the site as part of a one-way traffic management system. Although I understand that the applicant’s position does not challenge the appearance of the building as not reasonably meeting heritage concerns, it is the width of the vehicle access which is said to offend heritage considerations and in particular breach the relevant rule.
[25] The nub of the appeal concerns a nice point of interpretation resolved by Wylie J in favour of the Council and NTC. Rule 855.1.1 of the Coromandel Heritage Design Criteria reads:
855.1 BUILDINGS
.1 Setback, orientation and yards
There shall be no setback from the street boundary and buildings shall address the street. Buildings should occupy the full width of the site unless there is a pedestrian pathway no greater than 1.2 metres.
[26] The argument for the applicant to be advanced on appeal is that the rule provides three mandatory criteria relating to setback, frontage and the occupation of the site. Wylie J regarded the criteria as being a guide rather than mandatory and in particular noted the use of the word “should” in respect of the coverage issue as a matter to be assessed and taken into account in evaluating a proposal for a discretionary activity. The Judge said that the word “shall” can mean “may” and the word “should” is not of itself necessarily prescriptive.
[27] I do not think it can be said that the Society has a strong case in respect of any of the proposed grounds of appeal. The argument as to the authority of the Council officer and the adequacy of the information upon which the Council’s decision was based appear to have been substantially and properly disposed of by the judgment on the review application. I am not persuaded, however, that the applicant’s argument on the interpretation issue is as weak. Although it seems to me that it is unlikely that the Council would have intended the criteria in dispute to be mandatory conditions for the granting of consent to a discretionary activity, the wording of the criteria suggests that the point which the applicant wishes to argue is at least arguable, if not strongly so.
Will refusal of stay render right of appeal nugatory?
[28] I am not persuaded that refusing to grant a stay on the costs award would render the Society’s right of appeal nugatory, except to the extent that immediate enforcement of the costs award by liquidation proceedings may have that effect. The Society is not seeking to stay the execution of a substantive judgment in
circumstances where the refusal of a stay will effectively determine the issues on appeal. The applicant’s position is that it has obtained sufficient resources to pay security for costs and argue the appeal, but no more. It does not say, however, that it is incapable of finding sufficient funds to meet the High Court costs award, whether by seeking further donations or by obtaining the consent of existing donors to applying to the High Court costs part of the funds raised specifically for its own costs on the appeal.
Balancing the effects of a stay or the refusal of a stay
[29] The primary principle applied to awards of costs in the High Court is that an unsuccessful party should pay costs.6 Any plaintiff embarking on litigation, whether or not claiming to be acting in the wider public interest, should be mindful of the likely consequence of not succeeding. I have no doubt that the Society was aware that a challenge to the Council’s decision not to notify the resource consent application carried the risk of having to meet an award of costs on behalf of both
NTC and the Council.
[30] The consequence for the Society of a refusal of a stay, therefore, is that it will be required to make an election between finding the resources necessary to meet its costs obligations to NTC out of existing or further resources or running the risk that it will be held to be insolvent.
[31] For NTC, the consequence of a stay is that it will have no assurance that it will ever receive the costs awarded in its favour on the judicial review application, but that it will be obliged to spend further resources resisting the appeal likely to be significantly in excess of any costs awarded in its favour in the event that the appeal is dismissed. While Mr Brabant is right that the Society has not said that it would not make efforts to satisfy the High Court costs order in favour of NTC if its appeal fails, it has not said that it would strive to do so. Given that the applicant’s appeal has limited merit, I consider the lack of commitment to meeting the obligation to pay costs on the review application assumes some significance in considering the exercise of the Court’s discretion.
Decision
[32] In those circumstances, therefore, I consider that the principles related to this application weigh against a stay. Nevertheless, I am prepared to give the Society an opportunity to make an election about arranging the resources to meet NTC’s costs award and to do so without the Damoclean sword of liquidation hanging over it. Staying execution of the costs award for a period of three months will not disadvantage NTC in circumstances where the appeal is not due to be heard until at least March 2014.
Order
[33] I order that execution of the order for payment of costs in favour of the second respondent, the National Trading Company of New Zealand Limited, by Wylie J in Coro Mainstreet Inc v Thames District Council7 be stayed until 5:00 pm, Friday 17 January 2014.
Costs
[34] The second respondent is entitled to costs on this application. Any application for costs shall be made by memorandum filed and served on or before 12 November 2013. Any memorandum by the applicant in reply shall be filed and served on or before 10 December 2013. Costs will then be dealt with on the papers unless I determine that further submissions should be received.
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Toogood J
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