Eagles View Queenstown Ltd v Queenstown Lakes District Council

[2020] NZHC 2282

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2020-425-31

[2020] NZHC 2282

UNDER

the Judicial Review Procedure Act 2016

BETWEEN

EAGLES VIEW QUEENSTOWN LIMITED

First Applicant

AND

DANEN TRUSTEE LIMITED

Second Applicant

AND

QUEENSTOWN LAKES DISTRICT COUNCIL

First Respondent

AND

TSQ LIMITED PARTNERSHIP

Second Respondent

Hearing:

On the papers

Counsel:

P J Page and J J Y R Pierce for First and Second Applicants K L Hockly and H L Baillie for First Respondent

J M G Leckie and A R C Hawkins for Second Respondent

Judgment:

3 September 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 3 September 2020 at 11am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 3 September 2020

EAGLES VIEW QUEENSTOWN LIMITED v QUEENSTOWN LAKES DISTRICT COUNCIL [2020]

NZHC 2282 [3 September 2020]

[1]    On 18 June 2020, the applicants filed judicial review proceedings in the Invercargill High Court challenging a resource consent that the second respondent, TSQ Limited Partnership (TSQ), obtained on 12 December 2019 from the first respondent, Queenstown Lakes District Council (the Council), authorising the redevelopment of TSQ’s property in Queenstown.

[2]    On 7 February 2020, the Council and TSQ received a letter written by the applicants’ solicitors, setting out why the applicants believed the Council had made errors in its decision to grant the consent on a non-notified basis. The reasons why the applicants’ solicitors considered the Council’s decision was in error were set out.

[3]    The letter advised that the solicitors had instructions to initiate judicial review proceedings, seeking an order quashing the Council’s notification and consent decision. The letter to TSQ sought its agreement to not exercise the consent until the proceeding was determined.

[4]    I am not told if there was a reply to the letter from either party – the letters being in similar terms.

[5]    The statement of claim was served and the statements of defence due to be filed by 31 July 2020. On 30 July 2020, TSQ advised that it was surrendering the consent challenged in the proceeding.

[6]    The proceeding therefore became redundant and the applicants filed a notice of discontinuance on 11 August 2020, along with a memorandum seeking costs against the Council and TSQ.

[7]    Counsel agreed with the applicants’ summary of the applicable general principles at paras 2 and 3 of the applicants’ submissions, as do I.

[8]    The principles governing the Court’s discretion to award costs are now well established:1

(a)The discretion has not been unfettered. It is qualified by the specific costs rules rr 14.2 – 14.10, and is exercisable only in situations not contemplated by those specific rules, or which are not fairly recognised by them.

(b)The costs regime is of a regulatory character and it is important that its integrity be maintained.

(c)There is accordingly a strong implication that the Court is to apply the regime in the absence of some reason to the contrary.

(d)Any departure must be a considered and particularised exercise of the discretion.

(e)Although the Court does not need to give reasons for a cost order that applies the regime, reasons (albeit brief) must be given for any departure.

[9]The general principles to be applied to a determination of costs are:2

(a)The party who fails should pay costs to the party who succeeds;

(b)An award of costs should reflect the complexity and significance of the proceeding;

1      High Court Rules 2016, r 14.1; Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305, (2012) 21 PRNZ 186 at [7] and [16]; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606, (2004) 16 PRNZ 1047 (CA) at [21] – [24] and [28]; Mansfield  Drycleaners td v Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (2002) 16 PRNZ 662 (CA) at [27].

2      High Court Rules 2016, r 14.2.

(c)Costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required.

The competing positions

[10]   The applicants say that, in substance, the proceeding was successful as the surrender of the consent achieved the relief they sought in the statement of claim. They say that they were required to initiate the proceeding to bring about that outcome and as the successful party, costs should follow the event.

[11]   The Council and TSQ resist the application for costs. They point to the fact that under r 15.23 of the High Court Rules 2016, the applicants having discontinued, that unless the respondents agree, or the Court otherwise orders, the starting position is that the applicants are liable for costs.

[12]   While there has been a change of circumstances here, namely the surrender of the consent, the respondents submit that where a proceeding is discontinued due to   a change of circumstances, to displace the presumption in r 15.23, it must be clear that the applicant would have succeeded but for the change in circumstances. In support of that proposition counsel for TSQ relies on The Star Trust v Hamilton City Council.3

[13]   Counsel for each respondent referred to Maehl v Auckland Council, where the surrender of a resource consent did not mean the applicant for judicial review of that consent was successful for the purposes of a costs award.4 Both counsel also rely on the Maehl decision as authority for the proposition that ordinarily it would not be necessary or appropriate  for the Court to  make a determination of success where     a matter is discontinued or the proceedings were otherwise rendered futile.

[14]   Further, both respondents query whether it was reasonable for the applicants to bring the proceedings, relying on the fact that the applicants’ counsel simply notified the respondents by letter that instructions had been received to initiate judicial review proceedings. Counsel for TSQ submits “[t]he letter illustrates an unwillingness to

3      The Star Trust v Hamilton City Council [2016] NZHC 821 at [10].

4      Maehl v Auckland Council [2017] NZHC 1902 at [43].

provide any opportunity to resolve the applicants’ concerns prior to bring [sic] the proceedings.”. Counsel for the Council adopts those submissions.

Discussion

[15]   I address this last point first, as it seems to me to be at the heart of the costs issue.

[16]   I consider the characterisation of the letter from the applicants’ counsel as illustrating an unwillingness to provide an opportunity to resolve the applicants’ concerns as unrealistic. Again, the letter was sent on 7 February 2020. The letter referred to the applicants seeking expert evidence. The proceedings were not filed until 18 June 2020.

[17]   As I have said, there is no evidence of any reply and certainly no suggestion that the respondents indicated a willingness to discuss the applicants’ concerns, or to explore alternative dispute resolution options. Met with silence, the applicants can hardly be criticised for following through on their statement that they would issue proceedings.

[18]   Counsel for the Council describes the surrender of the consent as a “strategic step open to  [TSQ] in the face of litigation”.   That  may well  be true, but  it is        a strategic step that amounted to the respondents conceding the relief sought by the applicants.

[19]   That “strategic step” it seems was prompted by the Council advising TSQ that it did not intend to defend the decision in the proceeding. TSQ’s counsel advises that, while TSQ did not consider that the Council had made errors in the decision, “TSQ did not consider it prudent or practical in terms of ongoing costs and litigation risk to defend the Decision, effectively on the Council’s behalf.”

[20]   Counsel for the Council does not explain in their costs memorandum what led to the Council’s decision not to defend the decision. The Council’s position is simply that the surrender of a consent does not equate to success. I am unable to accept that in the context of this proceeding. In the absence of an explanation as to why the

Council was not  prepared  to  defend  its  own  decision,  I  am  entitled  to  draw  the inference that the Council had determined the application was likely to succeed.

[21]The facts in this case are very different from those that confronted Whata J in

Maehl.

[22]   Here, the applicants set out the grounds for their challenge to the resource consent and stated they were going to issue proceedings. The respondents apparently did not accept those reasons, neither do they suggest they offered to engage with the applicants to address their concerns outside of the court process. This was despite  the fact that it was some months between the applicants’ letter of 7 February 2020 and the issuing of proceedings. On the day before the statement of defence was due to be filed the resource consent was surrendered. It was surrendered because the Council advised TSQ that the Council did not intend to defend the decision.

[23]   Given the surrender of the resource consent made the judicial review redundant, I am quite satisfied that this is not a case where the presumption in r 15.23 should apply. This was not a change of circumstance such as a change in legislation making a judicial review redundant – the change here was TSQ giving up the consent challenged in the proceeding. The applicants would only have been criticised had they sought to continue the judicial review application or, on the respondents’ argument, for the applicants to claim costs they should have requested their proceeding to be set down for a formal proof hearing, notwithstanding it had become moot. At its most basic, the applicants were forced to issue proceedings to achieve the setting aside of the resource consent. I am not satisfied that it is just for the applicants to bear the costs of having to take that step.

[24]   I consider it appropriate that there be a costs award on a 2B basis against the respondents jointly and severally.

Challenge to quantum of costs

[25]The applicants claim 2B costs of $12,906 and disbursements of $16,485.19.

[26]   As to the scale costs, the respondents dispute item 37 of the Schedule “Filing supporting affidavits of $4,780”. They also dispute the claim for experts fees for the preparation of a substantial affidavit filed in support of the application.

[27]   There is also a challenge to the claiming of a memorandum fee in respect of the setting of costs and I will deal with that at the end of this judgment.

[28]   Counsel for each respondent submit affidavits are not required to commence judicial review proceedings.

[29]   Counsel for the second respondent submits that the expert fees were not reasonably necessary as such was not a necessary step for the commencement of the proceedings. Ultimately, it was for counsel, not a planner, to determine whether there were grounds for commencement of the judicial review application.

[30]   Counsel for TSQ notes authorities where the court has been critical of the filing of “voluminous affidavits by planners seeking to criticise or support the Council’s decision”.5

[31]   Until the applicants received a statement of defence, they did not know what matters were going to be in issue. Until they know what matters are in issue, they could not properly determine what evidence would be required at trial.

[32]   Having elected to incur the expert fee upfront, in circumstances where such an affidavit is not required for the commencement of a judicial review, I am not satisfied that it is reasonable for those costs to be visited on the respondents. The respondents may have elected, having received notice of an intention by the applicants to seek judicial review, to “sit tight” and wait and see if such an application would be filed and then decide what steps to take upon receipt of the proceedings if filed. In doing so they could reasonably expect to be exposing themselves to the risk of costs on a 2B basis for a judicial review if they decided not to defend. One of the objectives of the costs regime is to make costs predictable – for that to be so, a party facing the threat

5      Tasti Products Ltd v Auckland Council [2016] NZHC 1673 (2016) 19 ELRNZ 555 at [75]. See also Trilane Industries Limited v Queenstown Lakes District Council [2020] NZHC 1647 at [53].

of litigation is entitled to factor into their decision making the risk of adverse costs against them.

[33]   While the applicants in their letter of 7 February 2020 signalled that the applicants were preparing expert evidence, the respondents were entitled, for want of a better term, to run the risk that the proceeding would be filed with potential adverse costs consequences on the basis of proceedings as prescribed by the High Court Rules. As the affidavit was not necessary for the proceedings to be filed, I do not consider the respondents  should  have  to  meet  the  costs  of  the  affidavit,  notwithstanding   the applicants signalled that it was being prepared.

[34]   I do not allow the expert fee or disbursements, nor the claim for the filing of affidavits.

[35]   I do, however, allow the preparation of the memoranda as to costs. The application for costs was not straightforward.

[36]   As to the disbursements, office expenses, title searches, courier et cetera,       I accept such may be allowed if they are linked to the proceeding, but counsel for TSQ submits evidence of these matters have not been produced. They should not be allowed.

[37]   That is an issue “not worth the candle”. It is inevitable in the preparation of proceedings such as these that title searches and associated costs would be incurred.  I do not consider it appropriate to put the parties to the costs of scrutinising individual disbursements totalling $556.46. Adopting the robust approach applicable to determining costs, I allow this disbursement.6

[38]   Accordingly, in terms of the Schedule of Costs attached to the applicants’ submissions in respect of the 2B claimed, items 1 and 11 are allowed. In respect of

6      Andrew Beck (ed) McGechan on Procedure (online ed, Thomson Reuters) [HR14.6.03(3)(e)(iv)].

disbursements, all disbursements, save the expert fees, are allowed. There is an order

accordingly.

Addendum

[39]   After counsel were advised by the Registry that this decision was being released, counsel for the applicants filed reply submissions.

[40]Having read those submissions, I have not amended this judgment.

Associate Judge Lester

Solicitors:

Gallaway Cook Allan, Dunedin (for Applicants)

Queenstown Lakes District Council (first Respondent) Lane Neave, Queenstown (for Second Respondent)