Environmental Protection Authority v BW Offshore Singapore Pte Ltd
[2021] NZHC 2577
•29 September 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2021-485-136
CIV-2020-485-153 [2021] NZHC 2577
UNDER the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (EEZ Act) IN THE MATTER
Of an appeal under sections 129 and 131 of the Act and section 299 of the Resource Management Act 1991
BETWEEN
ENVIRONMENTAL PROTECTION AUTHORITY
Appellant
AND
BW OFFSHORE SINGAPORE PTE LTD
Respondents
Hearing: 17 August 2021 Appearances:
V Casey QC and M A Sampson for the Appellant
M G Conway and H P Harwood for the Respondents
Judgment:
29 September 2021
JUDGMENT OF COOKE J
(Appeal from costs award)
Table of Contents
Factual background[2]
Basis of appeal[9]
Costs in the Environment Court[16]
The costs decision here[20]
An unusual restriction[22]
Suggested whole of Government approach[29]
Neutral approach[32]
Level of costs award[38]
Costs of stay application[41]
ENVIRONMENTAL PROTECTION AUTHORITY v BW OFFSHORE SINGAPORE PTE LTD [2021] NZHC
2577 [29 September 2021]
Conclusion on appeal[44]
Costs in this Court[46]
Conclusion[56]
[1] The Environmental Protection Authority (EPA) appeals from the decision of the Environment Court awarding BW Offshore Singapore Pte Ltd (BWO) $110,000 in costs in relation to a two day hearing in that Court.1 The EPA also applies for costs in this Court following its earlier successful application for a stay of an earlier Environment Court decision in the same proceedings,2 and its further successful opposition to BWO’s application for leave to appeal to the Court of Appeal.3
Factual background
[2] The factual background of what has become a procedurally complex set of proceedings is set out in the earlier decisions of this Court and the Environment Court.
[3] BW Offshore’s vessel the Umuroa is a floating production storage and offtake installation — essentially a moored vessel that takes oil from an oil well located on the seabed through a system of pipes. It had commercial arrangements with a New Zealand company, Tamarind Taranaki Ltd (TTL), to take oil from the Tui oilfield off the coast of Taranaki. TTL held the relevant oil mining permit. The undersea mining took place within New Zealand’s exclusive economic zone in accordance with provisions in the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (the EEZ Act).
[4] Under s 162 of the EEZ Act the EPA was empowered to provide a ruling that certain effects from particular oil mining activities were likely to be minor or less than minor. This included the removal of existing submarine oil pipelines. If such a ruling was issued a marine consent under the EEZ Act was not required for the activity. By ruling dated 3 October 2017 the EPA issued such a ruling allowing the disconnection of the Umuroa from the submarine pipeline and mooring cables. This gave BWO the
1 BW Offshore Singapore Pte Ltd v Environmental Protection Authority [2021] NZEnvC 015.
2 Environmental Protection Authority v BW Offshore Singapore Pte Ltd [2020] NZHC 704, (2020) 21 ELRNZ 770.
3 BW Offshore Singapore Pte Ltd v Environmental Protection Authority [2020] NZHC 1117.
ability to disconnect its vessel from the oil mining operation without the need to apply for a marine consent.
[5] BWO sought to act in accordance with the ruling in late 2019, but at that stage the EPA issued abatement notices under the EEZ Act on the basis that the factual position had changed, and that the ruling should no longer authorise the disconnection activities. Two key matters had occurred subsequent to the issuing of the ruling. First TTL had gone into receivership and liquidation and no longer had the financial ability to deal with any issues. Secondly, a part of the undersea pipelines had torn and there was concern about the state of the pipelines leading to the potential for adverse environmental effects. The abatement notices effectively prevented the Umuroa disconnecting and leaving New Zealand waters.
[6] BWO had a right of appeal to the Environment Court from the issuing of an abatement notice. It lodged an appeal, and at the same time applied to the Environment Court for a stay of the abatement notices. The Environment Court granted BWO the stay.4 This meant the Umuroa was permitted to disconnect and leave. The EPA then had a right of appeal to the High Court. It lodged such an appeal, and at the same time applied for a stay of the Environment Court’s decision (in effect a stay of the stay). I granted that application.5 BWO then unsuccessfully applied for leave to appeal to the Court of Appeal.6 So the Umuroa was again effectively prevented from leaving.
[7] The Crown had taken ownership and possession of the undersea assets of TTL and through the Ministry of Business, Innovation and Employment (MBIE) it supported BWO’s applications to the EPA for a further ruling that the activities be permitted notwithstanding the changed circumstances. The EPA did not issue such a ruling saying it needed more information. Notwithstanding that this application had not been finally determined, BWO pursued its appeal to the Environment Court against the earlier issuing of the abatement notices. The Environment Court allowed
4 BW Offshore Singapore Pte Ltd v Environmental Protection Authority [2020] NZEnvC 033.
5 Environmental Protection Authority v BW Offshore Singapore Pte Ltd, above n 2. Both the hearing in the High Court, and that in the Environment Court occurred by telephone as they occurred during the first Covid-19 lockdown.
6 BW Offshore Singapore Pte Ltd v Environmental Protection Authority, above n 3.
that appeal.7 This rendered EPA’s further ruling redundant, and the Umuroa was allowed to leave New Zealand waters.
[8] BWO then successfully applied for costs in the Environment Court. This is the decision under appeal. The EPA has also applied for costs in this Court, and by minute dated 3 May 2021 I directed that the appeal from the Environment Court’s costs decision, and the question of costs in this Court would be addressed together.
Basis of appeal
[9] Section 285(1) of the Resource Management Act 1991 (the RMA) provides that the Environment Court may order a party to pay the costs and expenses of another party that the Court considers reasonable. Other than the further provisions set out in s 285 there are no other prescribed rules in relation to the award of costs such as the rules applicable in the District Court and the Senior Courts, although there is a Practice Note which refers to certain principles relevant to costs awards.8
[10] There are two key conclusions of the Environment Court that are challenged by the EPA on appeal. The first is its conclusion that the presumption against statutory decision-makers being held liable for costs should not apply in the circumstances of the case. The second is the Court’s conclusion that BWO should be awarded increased costs.
[11] As to the first conclusion the Environment Court summarised its approach in the following way:
[24] Emma Jane Ltd v Christchurch City Council9 establishes the “threshold of blameworthiness” test to the effect that the Court will not order costs against the first instance decision maker/consent authority unless its actions were in some way blameworthy. As I discuss there are matters in this case that satisfy me that the threshold is overcome in this case:
a)Section 6.6(c) of the Environment Court Practice note contemplates that costs may be awarded against a public body decision-maker where the decision appealed against would have imposed an unusual restriction upon the Appellant’s rights and the restriction was not upheld. In the decision the Court
7 BW Offshore Singapore Pte Ltd v Environmental Protection Authority [2020] NZEnvC 181.
8 See Environment Court of New Zealand Practice Note 2014 at [6.6].
9 Emma Jane Ltd v Christchurch City Council NZEnvC 020/2009, 2 April 2009.
discuss the fact that decisions under section 162(2) of the EEZ Act have significant consequences in restraining the vessel from activities within the EEZ area.
b)Rulings create a level of certainty for operators, and there is a legitimate expectation by companies that the ruling will endure unless there is a clear reason for departure.
c)As noted in the decision it appears to be common ground that disconnection from anchor cables and the like is permitted, and thus it is only the abatement notices that prevented the FPSO from disconnecting and sailing away from the Tui Field. It is for these reasons that I consider the abatement notices imposed an unusual restriction on BW Offshore, and with cancellation of the abatement notices this restriction was not upheld.
d)The EPA’s case demonstrated a narrow focus, the EPA did not adapt to the changes that occurred between issuing of the abatement notices and the hearing. In particular detailed evidence as to the security of the field was provided to the EPA well before this hearing.
e)In Aitchison v Wellington City Council10 the High Court held that in cases where a council appears as a neutral party, costs may not be appropriate. I accept the submission that the EPA did not take a neutral approach, the EPA took an active role in the proceedings. Although not essential to this case I note the general tenor of the EPA case was that they were the controlling authority and the decision was therefore not reviewable by this Court. This is discussed at paragraph [14] were Mr Carter submitted there was no power of appeal for a section 162 ruling.
[25] I consider that the EPA did not fulfil its role properly. No experts were called by the EPA, and the Profac report relied on by the EPA had not been reviewed in light of expert evidence from BW Offshore. As noted in the Court’s decision there was no evidence advanced, either in the abatement notices or any time prior or since, that there are effects from the disconnection that are more than minor, or that the change in circumstances suggested by the EPA vitiate the 2017 Ruling.
[26] I am satisfied that in the circumstances of this proceeding the presumption against costs does not arise. I consider an award of costs against the EPA is possible.
[12]These conclusions were elaborated upon in the following paragraphs.
[13] On the second question relating to quantum the Court applied what are referred to in the Environment Court as the “Bielby factors” in deciding that higher than normal costs were appropriate. This is a reference to a decision of the High Court in
10 Aitchison v Wellington City Council [2018] NZHC 1674.
Development Finance Corporation of New Zealand Ltd v Bielby which summarised the approach to uplifted costs under the provisions then scheduled to the High Court Rules.11
[14] The Court held that there were a number of factors warranting an uplift from the normal award of a percentage of actual legal expenditure. The Court held:
[41] I find that the arguments the EPA advanced were unmeritorious, the EPA’s case was poorly presented with no expert evidence, the way it was pursued even when MBIE sought disconnection put BW Offshore to unnecessary cost, and the EPA failed to explore the possibility of resolution when that was clearly the expectation of all involved.
…
[45] Unlike in other Courts, there is no costs scale that applies in the Environment Court. I do not consider comparison to the High Court costs scale provide a meaningful guide when attempting to assess the reasonableness of BW Offshore’s costs, particularly in this case as BW Offshore were effectively forced to participate by nature of the proceedings, and had to conduct their own analysis of the 2017 Ruling to demonstrate that abatement notices should be cancelled.
…
[52] While not justifying indemnity costs, I consider a higher than normal payment is justified having identified a number of Bielby factors. I consider an award of just over 50 per cent is reasonable and appropriate in the, circumstances. In this regard the change in circumstances after May 2020 and the further evidence of BW Offshore must be seen as significant.
[15] The EPA’s right of appeal arises under s 299 of the Resource Management Act.12 Such an appeal is approached on a similar basis to an appeal against a discretionary decision.13 An appeal will only succeed if it is demonstrated that the Court erred in principle, took into account irrelevant considerations, overlooked a relevant consideration, or arrived at a costs decision that is clearly wrong.14 That approach is consistent with earlier authority of this Court which has addressed appeals against costs decisions of the Environment Court.15
11 Development Finance Corporation of New Zealand Ltd v Bielby [1991] 1 NZLR 587 (HC).
12 By virtue of s 129 of the EEZ Act.
13 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].
14 Scarborough v Micron Security Products Ltd [2016] NZCA 54 at [6]; Commerce Commission v Southern Cross Medical Care Society [2004] 1 NZLR 491 at [12] (CA).
15 Walmsley Enterprises v Aitchison [2017] NZHC 1504, [2018] NZRMA 117 at [29]; St Heliers Capital Ltd v Kapiti Coast District Council [2015] NZHC 596 at [26].
Costs in the Environment Court
[16] The award of costs in the Environment Court is controlled by s 285 of the RMA. This section gives the Court a wide discretion.16 But at the same time the discretion should not be exercised inconsistently with well-established principles relating to costs.
[17] One well-established principle is that costs will not be awarded against a statutory decision-maker in the absence of special circumstances.17 This principle is recognised in the Environment Court’s 2014 Practice Note.18 The Practice Note can only be taken to provide general guidance and should not be understood to create the relevant principle or identify its scope.19 Decisions of the Environment Court have also considered the principle.20 But the decisions of the Court of Appeal and High Court perhaps provide the most assistance on the nature and scope of the general principle. The underlying reason for it as explained in those authorities is important, including for the purpose of identifying when it might be departed from. In particular, when a decision-making body exercises statutory powers, it may be appropriate for it to appear and address evidence and submissions justifying its decision, particularly when there is no opposing party. As the Court of Appeal explained in Southern Cross, it would be a matter of real concern if an exposure to costs operated as a disincentive to that form of participation.21 This would damage the public interest associated with the due exercise of the relevant statutory powers, and the public interest in having a court fully informed when conducting appeal or review functions. The Court here applied a “threshold of blameworthiness” test derived from an earlier Environment
16 Tairua Marine Ltd and Pacific Paradise Ltd v Waikato Regional Council [2006] NZRMA 485 (HC); McKenzie v Taupo District Council [1996] NZRMA 237 (HC). Peninsula Watchdog Group (Inc) v Coeur Gold NZ Ltd [1997] NZRMA 501 at 507, Richards v Goldwater High Court Auckland, CIV-2003-485-2566, 5 May 2004, Randerson J.
17 Commerce Commission v Southern Cross Medical Care Society, above n 14, at [17]–[21] (CA);
Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494 at [20]–
[24] (CA); Auckland Regional Council v Waiheke Island Airport Resort Ltd HC Auckland, CIV- 2010-404-309, 21 December 2010 at [68].
18 Practice Note, above n 8 at [6.6(c)].
19 Tairua Marine Ltd and Pacific Paradise Ltd v Waikato Regional Council, above n 16. Canterbury Regional Council v Waimakariri District Council [2004] NZRMA 289 at [21]. Practice Notes would not normally set out principles of substantive law.
20 Emma Jane Ltd v Christchurch City Council, above n 9.
21 Commerce Commission v Southern Cross Medical Care Society, above n 14, at [17].
Court decision.22 But this formulation may not be an accurate encapsulation of the relevant principle, and the basis for departing from it.
[18] The second matter of general principle relates to the circumstances when the Courts award higher than usual amounts by way of costs. There is a practice in the Environment Court of applying the factors outlined by the High Court in Development Finance Corporation New Zealand Ltd v Bielby when considering whether to uplift costs. The factors referred to in that decision are sound ones,23 yet they emerge from a first instance High Court decision from 1990 which involved the costs schedule to the High Court Rules in effect at that time. A more up to date and complete set of principles relating to the potential uplift, or reduction in costs awards can be found in the present High Court and District Court Rules. As Asher J said in Tairua Marine Ltd reference by the Environment Court to the current Rules would involve a “rational and principled exercise of its discretion” in relation to costs.24
[19] Both these matters might be said to reflect a more general point. The Environment Court exercises a specialised jurisdiction. It can be expected to develop approaches appropriate to that jurisdiction. But care should be taken that it reflect the current state of the general law. There are particular factors relating to its jurisdiction that will be relevant to the determination of costs, including the desirability of participation in resource management decisions not being deterred by the possibility of costs awards.25 For that reason there is no presumption that costs will be awarded to a successful party as there is with other civil litigation. Such circumstances, and the broad discretion in relation to costs in s 285 are important. But at the same time the Court is part of a wider civil justice system, and it should take into account more general principles that have been developed by the Courts when they are relevant.
The costs decision here
[20] EPA’s notice of appeal involved no less than 18 grounds of appeal. Ten were addressed in written submissions with four categorised as fundamental.
22 Emma Jane Ltd v Christchurch City Council, above n 9.
23 Page v Whanganui District Council [2018] NZHC 332.
24 Tairua Marine Ltd and Pacific Paradise Ltd v Waikato Regional Council, above n 16, at [36]– [38].
25 At [42]–[45].
[21] I see no reason to break down EPA’s challenge to such an extent. I accept Ms Casey’s overall submission that the Court’s costs decision here should be set aside on appeal. I do not accept Mr Conway’s submission that the Environment Court took a principled approach consistent with the broad discretion given by s 285. For the reasons explained below the decision is not consistent with principle, involved a failure to take into account relevant considerations, and the ultimate decision is plainly wrong.
An unusual restriction
[22] A key reason for the Court’s decision to award costs is that the decision of the EPA involved an unusual restriction on BWO. This is referred to in [24(a), (b) and (c)] of the summary of its reasons. This factor is taken from paragraph [6.6(c)] of the Practice Note. I do not consider that the application of that factor by the Court involved a correct application of the relevant principle that costs are not awarded against statutory decision-makers in the absence of special reasons.
[23] This case certainly involved unusual circumstances. But the underlying difficulty was that the legislation did not directly address the situation that had emerged. Under s 162 of the EEZ Act existing oil industry participants were able to obtain a ruling that an anticipated future activity — here the disconnection of BWO’s vessel — could take place in the EEZ without the need to apply for a marine consent under the Act (with all the delays and uncertainties that that might involve). A ruling was duly issued. But what the legislation did not address was what would happen if there was a potentially significant change in circumstances. What happens if there is such a change, and the EPA forms the view that there may now be adverse environmental effects arising from the activity? Given the absence of provisions dealing with this situation, the EPA effectively concluded that BWO should not be able to engage in the activity unless it satisfied the EPA that the activities were still likely to be minor or less than minor under a new ruling under s 162, and that BWO had the burden to show this in a new application for a ruling. It concluded that it could issue an abatement notice under s 125 pending a new ruling. The Environment Court took a different view. It concluded that the burden was on the EPA to demonstrate that there were now adverse effects from the activities that were not minor, and that it had to
demonstrate what there were in order to justify issuing the abatement notices under s 125, and in not then subsequently withdrawing them.
[24] The Environment Court’s costs decision does not properly recognise the underlying difficulty with the legislation, or acknowledge that the EPA were making a good faith attempt to apply the EEZ Act in circumstances that were not directly addressed by the legislative provisions. The Environment Court simply concluded that the EPA was wrong, and in a “blameworthy” way. It is notable that the Court’s decision allowing the appeal and setting aside the abatement notices does not identify what the statutory provisions which regulate a change in circumstances actually are, or how they do so. The Court’s decision appears to proceed on the basis that there may be some changes in circumstances that could warrant the issuing of an abatement notice, but there is no clear identification of how statutory provisions control this situation.26
[25] I should not be taken to disagree with the Court’s ultimate conclusion. The EPA did not appeal from the Environment Court’s decision. I have not heard full argument on the question, but it seems to me that the Court’s conclusion is likely the correct one. In the absence of legislative provisions that expressly regulate the question of change in circumstances, the starting point may be the ruling issued under s 162, with administrative law constraints then applying to any decision to use discretionary powers to issue abatement notices under s 125. The s 125 power remains available notwithstanding a s 162 ruling. But the constraints on the exercise of that power would recognise that an abatement notice should not be issued to prevent activities covered by a s 125 ruling when, (a) the potential adverse effects were expressly contemplated by the ruling, and (b) there has been no material change in circumstances since that ruling to justify issuing the notice. Any appeal to the Environment Court would then involve addressing the suggested different or changed adverse effects. In effect that involves applying the standards set out in s 325(5) and
(6) of the RMA by analogy, albeit through administrative law constraints on the exercise of the discretionary power under s 125.27 It would not be appropriate for the
26 See BW Offshore Singapore Pte Ltd v Environmental Protection Authority, above n 7 at [44]–[45] and [54]–[55].
27 See Environmental Protection Authority v BW Offshore Singapore Pte Ltd, above n 2, at [21]– [27]. Neither party agreed with this analysis before the Environment Court – BW Offshore
EPA to simply retreat to the precautionary principles under the EEZ Act, or to proceed as if the earlier s 162 ruling did not exist, or was no longer relevant.
[26] But notwithstanding my agreement with the Court’s conclusion, it cannot be said that the EPA reached an obviously unreasonable decision, or that it was a situation where a decision-maker “obdurately opposes an appeal against a decision that is clearly unsustainable”.28 Rather it was a situation where there was considerable uncertainty on how the legislation regulated this situation, what tests were relevant, and even what procedures should be followed. There is inadequate recognition by the Environment Court of these circumstances.
[27] The same point arises in relation to the Environment Court’s concern that the EPA did not modify its approach as circumstances developed, including following the Crown’s assumption of responsibility for the undersea oil mining infrastructure through MBIE, and MBIE’s support of BWO’s application to EPA allowing the vessel to leave. The significance of those circumstances, and the Crown’s position, depends on the statutory provisions that were applicable, and the tests then relevant to those circumstances. Until one is clear about the legal framework one cannot be clear on the significance of particular circumstances. The Court was also wrong to find that the EPA erred because it “failed to explore earlier settlement opportunities” given these developments.29 I do not accept Mr Conway’s submission that this is a proper consideration arising from an assessment of the reasonableness of EPA’s approach. Settlement is not a relevant concept for the exercise of these statutory powers and functions.
[28] As I say, this should not be taken in indicating any disagreement with the Environment Court’s ultimate conclusion. But the real problem here was the inherent ambiguity over how the legislation controlled the circumstances.
Singapore Pte Ltd v Environmental Protection Authority, above n 7, at [12]. But there needs to be some legal framework applied.
28 Auckland Regional Council v Waiheke Island Airport Resort Ltd, above n 17, at [68].
29 At [32].
Suggested whole of Government approach
[29] The Court also erred in assessing the extent of the responsibility of the EPA. The Court said:
[38] Finally, I want to note that through the period for the initial stay application to the hearing of this appeal the responsibility for deconstruction of the Tui Field fell to the Government, in particular MBIE. Their website made it clear that the first priority was to disconnect the FPSO. Thus, two government departments became engaged in discussions over the Tui Field at continuing costs to the ratepayer. The failure to resolve the issue prior to the hearing makes it clear that costs against the government [could] have been considered by a whole government approach.
[39] I accept that BW Offshore went to some lengths to try and avoid proceedings and was ultimately left with no option but to appeal. On that basis, I also consider some recompense of costs is appropriate in this case.
[30] The judicial member of the Court also addressed this issue with Ms Michelle Ward, the EPA’s General Manager of Climate, Land and Oceans Group, during the hearing of the appeal. Over six and a half pages of the transcript he put a series of propositions to her directed to the idea that the Government now owned the Tui oil field, through the relevant Crown bodies it had complete control of the situation, it could be assumed that the Government would comply with its own law, and that it could even pass special legislation to solve the problem if it wanted to.
[31] I accept Ms Casey’s submission that this questioning, and the paragraphs of the judgment above, involve a misunderstanding of the statutory position of EPA. The EPA is not a government department. It is established as a Crown entity by s 7 of the Environmental Protection Authority Act 2011. Whilst it is not classified as an independent Crown entity it is nevertheless obliged to act independently of the Crown when exercising its decision-making functions.30 Section 8 of the EEZ Act makes it clear that the Crown is subject to EEZ Act. It would be required to apply to the EPA for a marine permit if it wished to engage in activities regulated by the Act, and it can be prosecuted for failure to comply with the Act. It is quite wrong to treat the EPA and “the Government” as essentially one entity, or to assume that Crown will comply with the Act that the EPA are charged with administering. It is also constitutionally incorrect to suggest that the Government could simply pass new legislation to resolve
30 Crown Entities Act 2004, s 113.
the problem as the Judge suggested during questioning of the EPA’s witness. This approach is wrong in principle.
Neutral approach
[32] At paragraph [24(e)] of the Court’s decision, the Court referred to Aitchison v Wellington City Council where this Court had said that where a council appeared as a neutral party costs may not be appropriate.31 The Environment Court then said that the EPA did not take a neutral approach, and identified this as one of the reasons why a costs award against it were appropriate.
[33] I accept in Ms Casey’s submission that this involves a misunderstanding of the Court’s decision in Aitchison v Wellington City Council. That case involved a boundary dispute between two neighbours who were the opposing parties to the proceeding. The Council was the relevant decision-making authority. The Council nevertheless elected to participate in the proceedings aligning itself with one of the parties. Clark J held that the “part taken by the Council was not analogous to the role of a primary consent authority explaining to the Environment Court a decision it had taken in that capacity”.32
[34] That case has no application here precisely because this case does not involve a dispute between two parties. There was no party other than BWO. The statutory role played by the EPA requires it to address other interests in its decision making. As the Court of Appeal explained in Southern Cross there is a public interest in a statutory decision-maker taking an active role where there would otherwise be no opposition to an appeal.33 The Court in Aitchison recognised that very principle. So the decision of the Environment Court involves a misinterpretation of Aitchison, and a misapplication of this principle.
[35] The Environment Court further concluded that the EPA did not fulfil its role properly because no experts were called by it to justify its decision. I accept Ms Casey’s submission that this proposition is inconsistent with the Court’s criticism
31 Aitchison v Wellington City Council, above n 10.
32 At [25].
33 Commerce Commission v Southern Cross Medical Care Society, above n 14, at [17].
that it did not remain a neutral party. More importantly, however, the EPA did not call expert evidence because it had formed the view that other provisions of the EEZ Act applied, and that BWO needed to go through a further procedure to demonstrate that any adverse effects would still be minor or less than minor under a new ruling under s 162. It was going through that process, involving expert evidence and its normal decision-making procedures. This view on the appropriate way forward arose because of the underlying difficulties with the legislation that I have already addressed. Again this is not a case where a decision-maker is unreasonably insisting on a decision that has no proper foundation.
[36] The Court’s related criticism that “the general tenor of the EPA case was that they were the controlling authority and the decision was therefore not reviewable by this Court” is unjustified.34 Counsel for EPA properly pointed out that whilst there was an appeal to the Environment Court on the issuing of an abatement notice, there was no right of appeal in relation to the issuing of a ruling under s 162. But the written submissions to the Environment Court went on and stated:
26.Having regard to the broad remedial powers of the Environment Court discussed above, the nature of an appeal against EEZA abatement notices is by conducting a de novo or completely fresh hearing where the continuing of cancellation of abatement notices is assessed on the updated information as at the date of hearing in the Environment Court. The Environment Court reviews all the material relevant to both the issue of the abatement notices and the grounds of appeal. This may include, as in this appeal, hearing any new evidence about the activity and its effects that either the appellant or authority wishes to call. The subject matter of an appeal is the abatement notice rather than the decision to issue that notice.
[37] It is accordingly incorrect to suggest that the EPA’s submission was that their decision was not reviewable by the Environment Court. The submission was to the opposite effect.
Level of costs award
[38] For the above reasons I have concluded that the Court’s decision to award costs against the EPA cannot be justified in accordance with normal principles, and that the Court erred in its approach. This conclusion means that I do not need to directly
34 BW Offshore Singapore Pte Ltd v Environmental Protection Authority, above n 1, at [24(e)].
address the additional argument concerning the uplifted costs award made by the Court. But I have also concluded that the costs award in itself could not be justified because of the size of the costs awarded.
[39] I accept Mr Conway’s submission that actual legal expenditure can be taken into account in assessing costs under s 285(1).35 The terms of s 285 contemplate this. But the hearing before the Environment Court here took two days. Under the High Court Rules by my rough calculations an appeal of that length in this Court might have involved a costs award of something in the order of $25,000 for a Category 2 proceeding, or $37,000 for a Category 3 proceeding. Any uplifts then involved would usually be based on a percentage of the conventional costs award.36 In those circumstances an award of $110,000 appears excessive.
[40] The schedules to the High Court Rules are not, of course, binding on the Environment Court. But one of the reasons why they might be regarded as something that is usefully taken into account is that they have been formulated as a consequence of the decisions of the Rules Committee established under s 155 of the Senior Courts Act 2016.37 As I have indicated they may provide more up to date guidance than the High Court decision in Bielby.38 The Environment Court exercises a statutory power when awarding costs and there is no costs scale, but the provisions in the High Court and District Court Rules nevertheless provide helpful guidance on costs decisions.
Costs of stay application
[41] Finally the EPA challenges the Environment Court’s decision not to address the costs of BWO’s earlier stay application to the Environment Court which had initially been granted by the Court, but which was effectively overturned by the High Court.
35 See, for example, Walmsley Enterprises v Aitchison, above n 15, at [63]–[66].
36 Holdfast NZ Ltd v Selleys Pty Ltd (2005) 17 PRNZ 897 (CA) at [46]–[48].
37 The members of which being senior members of the Judiciary and Ministry together with representatives of the relevant stakeholders involved in civil litigation.
38 Development Finance Corporation New Zealand Ltd v Bielby, above n 11. See [18] above. See generally Tairua Marine Ltd and Pacific Paradise Ltd v Waikato Regional Council, above n 16, at [35]–[36].
[42] EPA sought costs of $11,011.57 for that hearing, being 33 per cent of its actual costs. The Court held that it would not consider the application because “the application for stay was decided on a different basis and is a separate procedure commenced and supported by different affidavits”.39
[43] I accept Ms Casey’s submission that this approach was not appropriate. As she submitted these were the costs of an interlocutory application in the same proceeding. The Court was determining the costs of the proceedings. It is inexplicable not to deal with this matter at the same time, or to require some other application for these costs. I do not accept Mr Conway’s submission that the High Court did not overturn that decision such that costs should still be considered on the basis the decision was undisturbed. In substance the decision was overturned on appeal. I address the significance of this further error below.
Conclusion on appeal
[44] For these reasons I accept that the Environment Court erred in awarding BWO costs. The normal principle that statutory decision-makers should not be subjected to costs awards for appearing and explaining its decision to the appeal Court applied in this case, particularly as there is no opposing party. Although I agree with the Environment Court’s ultimate conclusion that the abatement notices were properly set aside on appeal it could not be said that the EPA had acted improperly, or in any other way that justified a costs award against it, particularly given the inherent uncertainty in the legislative provisions.
[45] For these reasons the appeal will be allowed and the Environment Court’s costs award will be set aside, and an order will be made that the costs of the appeal in that Court should lie where they fall.
Costs in this Court
[46] As indicated, the EPA applies for costs in this Court for the two hearings — the successful challenge to the stay of the abatement notices that had been issued by
39 BW Offshore Singapore Pte Ltd v Environmental Protection Authority, above n 1, at [15].
the Environment Court, and its successful opposition to BWO’s application for leave to appeal to the Court of Appeal.
[47] The EPA sought costs in the amount of $11,591.50 (for the stay application) and $7,468 (for the application for leave to appeal) by memorandum dated 10 December 2020. This was responded to by counsel for the BWO on 5 March 2021. By minute dated 31 March I indicated a preliminary view that EPA would be entitled to costs on a 2B basis and I timetabled the filing of further memoranda.
[48] By memorandum dated 9 April 2021 counsel for BWO submitted that r 14.8 applied, and that no costs award was appropriate as they had not been addressed and awarded at the time. BWO also submitted that in all circumstances costs should lie where they fall, including because of the cancellation of the abatement notices by the Environment Court, and the need to consider the proceedings in their totality. By memorandum dated 13 April counsel for EPA argued that r 14.8 did not prevent costs being assessed at a later point in time, and that any argument that costs should lie where they fall was contrary to the stance taken in the Environment Court where BWO had sought and obtained an order for costs against the EPA. Ms Casey argued that a totality approach would require costs to lie where they fell in both forums.
[49] I agree that r 14.8 does not prevent costs of an interlocutory step being determined at a later point in time. This rule does no more than provide that costs of interlocutory steps should be determined at the time of the decision unless there are special reasons. Costs were not so assessed at the time here. The main argument occurred in the first few days of New Zealand’s first Covid-19 lockdown. This does not prevent them being assessed at a later time. A party that would normally be awarded costs does not become disqualified from later seeking them by the terms of r 14.8.
[50] In Air New Zealand v Commerce Commission the Court of Appeal held that the principle that decision-makers did not have costs awarded against them unless special circumstances arose did not prevent those decision-makers recovering costs.40 Because the EPA succeeded on both matters the starting point is that it is entitled to
40 Air New Zealand Ltd v Commerce Commission, above n 17.
costs. But having now considered the position more broadly I am now of the view that r 14.7 of the High Court Rules 2016 applies to displace the normal rule that the successful party is entitled to costs. It provides:
14.7 Refusal of, or reduction in, costs
Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if—
…
(e) the proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding; or
…
[51] That principle applies here for two related reasons. First, as I indicated in the earlier judgments, the EPA’s role in the present case where no marine permits are sought involves it protecting the wider public interest in relation to environmental issues within New Zealand’s exclusive economic zone.41 Parties such as regional authorities, iwi and hapū, or public interest groups are not involved. It is the EPA’s role to take account of the interests that would otherwise be represented by such bodies. Here it was concerned about the potential for adverse environmental effect arising from BWO’s activities. So the litigation clearly involved interests beyond the private interests of BWO. Secondly, the underlying difficulty with this case was that the legislation did not address potential changes in circumstances following the issue of an earlier s 162 ruling. The litigation has arisen because of a lack of clarity in the legislative regime.
[52] Whilst EPA properly pursued the litigation before the Court, the issues have ultimately been determined in BWO’s favour. A conclusion has been reached that the abatement notices issued by EPA should be set aside as there are no adverse effects that are more than minor arising from the change in circumstances such that the 2017 ruling does not apply.
[53] BWO has been drawn into proceedings where EPA has been seeking to protect the wider public interest in circumstances where the relevant legislative framework is
41 Environmental Protection Authority v BW Offshore Singapore Pte Ltd, above n 2, at [35].
ambiguous. BWO has also acted reasonably in the conduct of the proceedings. These factors are reflected in the judgment in which leave to appeal to the Court of Appeal was declined where I said:42
[12] I accept BWO’s point that there are important issues of law, capable of bona fide argument, concerning the correct approach to the relevant provisions of the Act. The underlying questions have not been previously addressed by any earlier authority, they are not straightforward, and there is room for different views. It is also apparent that these underlying issues affect more than BWO such that there is a wider public interest in the correct interpretation and application of the Act which could be assisted by a decision by the Court of Appeal.
[54] In light of these factors I have concluded that costs in this Court should also lie where they fall. This is appropriate not only because of the public interest factors, but also because the EPA was ultimately unsuccessful in the substantive proceeding, and given the decision that costs should lie where they fall on BWO’s appeal to the Environment Court.
[55] For the same reasons the costs of the earlier stay application in the Environment Court, where BWO was initially successful but where the decision was effectively overturned on appeal, should also lie where they fall.
Conclusion
[56] For these reasons EPA’s appeal against the costs order is allowed, with the costs awarded by the Environment Court set aside, and substituted with an order that costs in the Environment Court should lie where they fall.
[57]On EPA’s application for costs in this Court, costs will lie where they fall.
[58] For the costs in the Environment Court of BWO’s stay application, costs will also lie where they fall.
[59] In terms of the costs of this hearing the parties should seek to agree on the appropriate outcome. My preliminary view is that these costs should also lie where
42 BW Offshore Singapore Pte Ltd v Environmental Protection Authority, above n 3, at [12] (footnote omitted).
they fall given the measure of success on both sides, and given the points of principle that needed to be considered with the benefit of full argument. If the parties cannot agree I will receive memoranda (no more than five pages each).
Cooke J
Solicitors:
Simpson Grierson, Wellington for the Applicants
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