Environmental Protection Authority v Chatham Rock Phosphate Ltd
[2016] NZHC 2079
•2 September 2016
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2015-485-997 [2016] NZHC 2079
UNDER the Exclusive Economic Zone and
Continental Shelf (Environment Effects) Act 2012
BETWEEN
THE ENVIRONMENTAL PROTECTION AUTHORITY
Plaintiff
AND
CHATHAM ROCK PHOSPHATE LIMITED
Defendant
Hearing: 8 March 2016 Counsel:
A Beck and M Carambas for the Plaintiff
J Shackleton and J Pannett for the DefendantJudgment:
2 September 2016
JUDGMENT OF ASSOCIATE JUDGE SMITH
THE ENVIRONMENTAL PROTECTION AUTHORITY v CHATHAM ROCK PHOSPHATE LIMITED [2016] NZHC 2079 [2 September 2016]
Contents
The application ............................................................................................................................. [1] Background ................................................................................................................................... [3] Costs recoverable by the EPA – the statutory framework ............................................................ [10]
The Act.......................................................................................................................................... [10]
The Regulations ............................................................................................................................ [19]
Other documents relating to the charges made by the EPA ......................................................... [24] (1) The Cabinet Paper dated 6 December 2012 ............................................................................ [24] (2) The EPA’s cost recovery policy document ................................................................................ [29]
Chatham Rock’s specific complaints over the charges and the EPA’s responses ........................... [36] Summary judgment applications – legal principles...................................................................... [38] The issues to be decided ............................................................................................................. [41]
Issue 1 – Is it open to a marine consent applicant such as Chatham Rock to challenge the
lawfulness of costs charged to it by the EPA for processing a marine consent application, by pleading the unlawfulness in its defence to a civil claim brought by the EPA for recovery of its costs (or must any such challenge be made in a separate proceeding for judicial review)? .................. [43]
The EPA’s submissions................................................................................................................... [43] Chatham Rock’s submissions ........................................................................................................ [54] Discussion and conclusions on Issue 1 .......................................................................................... [57]
Issue 2 – Do the Review, and the costs credits subsequently given by the EPA, preclude
Chatham Rock from mounting any further challenges to the charges? ........................................ [78]
EPA’s submissions ......................................................................................................................... [79] Chatham Rock’s submissions ........................................................................................................ [80] Discussion and conclusions on Issue 2 .......................................................................................... [81]
Issue 3.1 – is it reasonably arguable for Chatham rock that the charges are unlawful to the extent they were covered by a Parliamentary appropriation (s 143(1) of the Act and reg 5(2) of the Regulations) ................................................................................................................................ [84]
Chatham Rock’s submissions ........................................................................................................ [85] The EPA’s submissions................................................................................................................... [88] Discussion and conclusions on issue 3.1 ....................................................................................... [89]
Issue 3.2 – Is it reasonably arguable for Chatham Rock that all or part of the amounts charged by the EPA were not authorised by the Act or regulation 4 of the Regulations? If so, which of the charges or parts of the charges were arguably not so authorised, and what is the effect of any such unauthorised charging on the quantum of the EPA’s claim? ........................................................ [98]
Issue 4 – Is it reasonably arguable for Chatham Rock that some of the charges, being charges which were lawfully made under the Act and the Regulations, are irrecoverable because they were not
made in accordance with the Policy? ........................................................................................ [100]
Issue 5 – Should summary judgment be refused because Chatham Rock has not received sufficient information about the charges, or because it wishes to obtain an order for discovery against the EPA? .......................................................................................................................................... [100]
Issue 6 – Are there any reasons to exercise my discretion against the granting of summary judgment?................................................................................................................................. [101]
Result ........................................................................................................................................ [106] Appendix....................................................................................................................................... [1]
(1) Specific charges that are disputed by Chatham Rock as not incurred by the EPA in performing
its functions and providing its services under the Act, and/or not reasonably incurred..................[1] (a) Hearing costs - $92,579..............................................................................................................[1] (b) Hamilton hearing costs ..............................................................................................................[8] (c) EPA staff reports ...................................................................................................................... [11] (d) Duplication of work ................................................................................................................. [17] (e) Charges for Wellington meetings ............................................................................................ [20] (f) Venue hire in Auckland............................................................................................................. [23] (g) Costs of audio-visual equipment ............................................................................................. [25] (h) Rental cars in Wellington......................................................................................................... [28] (i) EPA staff time ........................................................................................................................... [30]
(2) Specific charges that are disputed as not incurred by the EPA in performing its functions and providing services under the Act, and/or not actually incurred.................................................... [36]
(a) GST overcharged ..................................................................................................................... [36] (b) Amounts charged in error ....................................................................................................... [38] (3) Specific charges that are disputed by Chatham Rock as not reasonable in amount ............... [41] (a) Consultants’ charges ............................................................................................................... [41] (b) Travel related costs of out-of-town contractors ...................................................................... [55] (c) Excessive airfare costs ............................................................................................................. [62] (d) Taxi fares ................................................................................................................................. [65]
(4) Charges challenged on the basis that insufficient information has been provided to allow
Chatham Rock to assess the legality of the charges. .................................................................... [71]
The application
[1] The plaintiff (the EPA) is a Crown Entity established under the Environmental Protection Authority Act 2011. One of its functions is to decide applications for marine consents under the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (the Act).
[2] The EPA now applies for summary judgment for the sum of $795,310.05, being the balance of fees said to be owing on an unsuccessful application by the defendant (Chatham Rock) for a marine consent under the Act.
Background
[3] Chatham Rock’s application (the application) was for consent to undertake rock phosphate mining from the seabed of Chatham Rise, off the coast of the Chatham Islands. The application was filed in May 2014, and was publicly notified on 12 June 2014. A statutory period for public submissions ran from 12 June 2014 until 10 July 2014, and the application was heard over 26 sitting days starting on
25 September 2014. The hearing concluded on 19 November 2014, and the decision declining the application was given on 11 February 2015.
[4] The total costs invoiced by the EPA in respect of the application were
$2,694,599.45, including GST. Chatham Rock has paid $1,859,972.18 of the amount invoiced, but it refuses to pay any more. Of the unpaid sum, Chatham Rock says that $352,413.41 (excluding GST) reflects costs that were not reasonably incurred by the EPA, and/or were not incurred in performing its functions or providing services under the Act.
[5] In addition to its contention that $352,413.41 of the amount invoiced to it has been charged unlawfully, Chatham Rock says that it has a cross-claim, currently assessed at $532,135.95 (excluding GST), in respect of costs it has already paid the EPA which it says it should not have been charged. It seeks to set off this cross- claim as an additional defence to the EPA’s claim.
[6] The EPA issued monthly fees invoices to Chatham Rock. Chatham Rock paid the invoices until December 2014. Chatham Rock says that it had become concerned with the amounts being charged by the EPA before it stopped making payments, but continued to make payments in order not to prejudice its application for the marine consent.
[7] Since the application was refused, the parties have attempted to resolve the dispute. The EPA says that Chatham Rock has demanded a “line by line analysis” of the charges, and has generally demanded a level of detail which it says it is not obliged to provide. However the EPA did undertake a review of the costs which had been charged to Chatham Rock. This review was undertaken by senior managers of the EPA who had not been involved with the application. The EPA says that the review took into account all matters which had been raised by Chatham Rock.
[8] On 6 November 2015 the EPA provided Chatham Rock with a document (the Review) setting out its detailed response to Chatham Rock’s queries over the fees. In the Review, the EPA accepted that there were some charges which should not have been billed to Chatham Rock. However those incorrect charges were relatively minor in the context of the total billings – the credit note issued by the EPA was for the sum of $38,052.27.
[9] Chatham Rock was dissatisfied with the Review, and the parties have been unable to resolve the matter. The EPA then commenced this proceeding. It says that Chatham Rock can have no arguable defence to its claims, and asks for summary judgment on the basis of the affidavits filed.
Costs recoverable by the EPA – the statutory framework
The Act
[10] Section 143(1) of the Act provides that the EPA must take all reasonable steps to recover so much of the direct and indirect costs incurred in performing its functions and providing services under the Act as are not provided for by money appropriated by Parliament for the purpose.
[11] The functions and services for which the EPA is required to charge include those set out at s 143(2) of the Act. The list of functions and services set out in s
143(2) includes:
(b) Receiving, processing, and deciding applications for marine consents.
[12] Section 144 of the Act provides that costs may be recovered for the purpose of s 143(1) by one or more of the following methods:
…
(a) fixed charges:
(b) charges based on a scale or formula or at a rate determined on an hourly or other unit basis:
(c) charges for actual and reasonable costs spent in or associated with the performance of a function or service:
(d) estimated charges, or charges based on estimated costs, paid before the performance of the function or service, followed by reconciliation and an appropriate further payment or refund after performance of the function or service:
(e) refundable or non-refundable deposits paid before performance of the function or service.
[13] In determining the most appropriate method of cost recovery under s 144, and its level, in any particular case, s 143(3) provides that the Minister must have regard, as far as is reasonably practicable, to the following criteria:
(a) equity, in that funding for a particular function or service or a particular class of function or service should generally, and to the extent practicable, be recovered from—
(i) the person, or class of persons, who benefits from the performance of the function or service and at a level proportional to the person’s or class of persons’ benefit from the function or service; or
(ii) the person, or class of persons, whose action or inaction gives rise to the exercise of the function at a level proportional to the person’s or class of persons’ contribution to the cost of performing the function:
(b) efficiency, in that costs should generally be allocated and recovered in order to ensure that maximum benefits are delivered at minimum cost:
(c) justification, in that costs should be collected only to meet the actual and reasonable costs (including indirect costs) of the performance of the relevant function or service:
(d) transparency, in that costs should be identified and allocated as closely as practicable in relation to a function or service for the recovery period in which the function or service is performed.
[14] Section 143(4) of the Act provides:
(4) Nothing in this section requires a strict apportionment of the costs to be recovered for a particular function or service based on usage, and, without limiting the way in which charges may be set, a charge may be set at a level or in a way that–
(a) is determined by calculations that involve an averaging of costs or potential costs:
(b) takes into account costs or potential costs of functions or services that do not directly benefit the person who pays the charge, but which are an indirect or potential costs arising from the performance of the function or service to a class of persons.
[15] Section 30 of the Act provides generally for the making of regulations (on the recommendation of the Minister for the Environment) for a number of purposes, including prescribing the amounts of charges payable or the method by which they are to be assessed or calculated, and the persons liable to pay the charges.
[16] Section 146 of the Act contains specific provisions for the making of regulations which prescribe charges for the purposes of the Act. Charges may be prescribed using any one or more of the methods in s 144 of the Act, and they may:1
(a) differ depending on whether a special or urgent function or service is performed:
(b) include more than 1 level of charge for the same function or service provided in different ways, or provided in or in respect of different places:
(c) differ for otherwise similar functions or services provided in different ways:
(d) differ depending on the time taken to perform the function or service required or the components of the function or service required for the particular person or class of persons.
1 Section 146(3).
[17] Section 145 of the Act materially provides:
(1) Any regulations that prescribe a charge that applies in any financial year—
(a) must have been made before the start of the financial year;
but
(b) apply in that year and all subsequent years until revoked or replaced, except as the regulations may otherwise provide.
…
(5) In any financial year, recovery may be made of any shortfall in cost recovery for any of the preceding 4 financial years, and allowance may be made for any over-recovery of costs in those years (including any estimated shortfall or over-recovery for the immediately preceding financial year).
[18] A charge or part of a charge that is not paid by the due date is deemed to be a debt due to the EPA, which is recoverable in any court of competent jurisdiction.2
The Regulations
[19] Regulations have been made under ss 30 and 146 of the Act, prescribing charges for marine consents. The regulations are the Exclusive Economic Zone and Continental Shelf (Fees and Charges) Regulations 2013 (the Regulations).
[20] Regulation 4 of the Regulations provides:
4 Recovery of costs by Environmental Protection Authority
(1) For the purpose of recovering the costs incurred in performing its functions and providing services under the Act, the EPA must charge—
(a) the following charge-out rates for EPA staff:
(i) for a principal technical advisor, $290 per hour: (ii) for a project leader, $140.80 per hour:
(iii) for a senior advisor, $116.12 per hour: (iv) for an advisor, $103.75 per hour:
(v) for an administrator, $97.43 per hour; and
2 Section 147(1) and (2) of the Act.
(b) actual and reasonable costs for any other expenses that the
EPA reasonably incurs.
(2) The rates prescribed in subclause (1)(a) are exclusive of any goods and services tax payable.
[21] Regulation 4 is expressly made subject to Regulations 5.3 Under Regulation
5(2) the EPA must not charge for any function or service to the extent the function or service has been specifically provided for by money appropriated by Parliament for the purpose.
[22] Regulation 6 of the Regulations provides:
6 Persons liable to pay charges
The person who must pay a charge is,—
(a) for assistance with the preparation of an application for a marine consent, the person who requests the assistance:
(b) for an application for a marine consent, the person who applies for the consent:
…
[23] An applicant for a marine consent may object to a decision of the EPA to commission any review or report, or to seek advice under s 44 of the Act, or to return an incomplete application under s 41,4 but beyond that there is no general right of objection in respect of charges invoiced to an applicant.
Other documents relating to the charges made by the EPA
(1) The Cabinet Paper dated 6 December 2012
[24] The subject of EPA charging for marine consent applications had been discussed in a Cabinet Paper dated 6 December 2012, where it was stated:
I consider the following functions to have private benefit, because they are driven by the operator carrying out the activity. Accordingly, I propose these functions are cost recovered from the operator.
3 Regulation 5(3).
4 Under s 101(1)(b) of the Act.
a. All marine consent functions, including pre- application assistance, processing and deciding marine consents, transfer, review and cancellation…
[25] At para 76, the Cabinet Paper stated:
I propose to recover actual and reasonable costs in line with how the EPA recovers costs for Nationally Significant Proposals under the [Resource Management Act 1991].
[26] At para 77, the Cabinet Paper set out a proposed methodology for costs chargeable on a marine consent application. The calculation of the costs would include charging 100 per cent of any direct costs incurred by the EPA, such as the fees of expert advisors, decision maker costs, travel costs, site visits costs, hearing costs, printing costs, notification costs, the costs of circulation of documents and the provision of facilitation and transcription services, the costs of fixed term contractors, and any other costs resulting from the necessity to carry out the EPA’s functions.
[27] Para 77 included details of the proposed hourly rates to be charged for EPA
staff time.
[28] The EPA’s position is that the Cabinet Paper shows that the EPA’s costs were to be recovered in full from the applicant. No appropriation was intended to be made by Parliament to cover costs incurred in processing marine consent applications.
(2) The EPA’s cost recovery policy document
[29] The EPA has issued a cost recovery policy document (the Policy), setting out how it operates the cost recovery regime for marine consent applications.5 The Policy appears to have no statutory basis; it was compiled by EPA officials to assist
with the implementation of the cost recovery regime.
5 Environmental Protection Authority, Cost Recovery Policy for the Exclusive Economic Zone and Continental Shelf Environmental Effects) Act 2012 and Regulations, (Ministry for the Environment, EDA059, June 2013).
[30] The Policy explains how the EPA determines and records costs to ensure they are reasonable. It states that estimates will be provided to applicants in advance, and that invoices are payable on the 20th of the month following the invoice.
[31] The Policy states that the EPA will only recover those costs from a person that are allowed for under the Act. Evidence of actual costs incurred by the EPA is to be recorded in a number of ways. One of them is that “EPA staff will fill in weekly timesheets reporting their time spent on an application/marine consent”.6 Timesheets are to be signed off by the relevant manager.
[32] The Policy provides that all costs should be reasonable and relate to a particular function.7 The actual time taken for each task is to be recorded and annotated to identify the nature of the activities undertaken. Additional time taken due to training new staff members, or internal system faults that have resulted in delays or duplication of effort, are not to be charged.
[33] The Policy contains a statement that it is important that costs should be transparent.8 This is to be achieved by the publication of staff charge-out rates in the Regulations, having the Policy publicly available, providing applicants with costs estimates on request, describing clearly the basis on which costs are calculated, and accurately tracking time spent and costs incurred throughout the process. Explanatory information on the reasons for the costs charged is to be provided on request.
[34] The Policy also notes the importance of costs charged to applicants being predictable, so that a person can obtain information about what they might be charged for. Included among the stated means for achieving the goal of predictability are:9
Providing estimates of likely costs on request, which should include a total, costs for major tasks and any assumptions behind the cost estimates.
6 Cost Recovery Policy, above n 5, at [11].
7 At [12].
8 At [14].
9 At [15].
Providing revised estimates of costs before significant additional costs are incurred or where there are significant changes to previous estimates.
[35] The Policy also states:10
The Act does not provide for applicants to object to the costs they are being charged for under [the Policy]. However, where costs are disputed, the EPA will engage in good faith with the applicant on a case-by-case basis.
Chatham Rock’s specific complaints over the charges and the EPA’s responses
[36] Chatham Rock groups its specific challenges to the EPA’s invoices, under
four separate headings:
1.specific charges that are disputed as not incurred by the EPA in performing its functions and providing its services under the Act, and/or not reasonably incurred;
2.specific charges that are disputed as not incurred by the EPA in performing its functions and providing its services under the Act, and/or not actually incurred;
3.specific charges that are disputed by Chatham Rock as not reasonable in amount;
4.charges challenged on the basis that insufficient information has been provided to allow Chatham Rock to assess the legality of the charges.
[37] A summary of Chatham Rock’s claims, and the EPA’s responses, under each
head of claim, is set out in the appendix to this judgment.
Summary judgment applications – legal principles
[38] The application is made under r 12.2(1) of the High Court Rules. That rule provides:
12.2Judgment when there is no defence or when no cause of action can succeed
10 Cost Recovery Policy, above n 5, at [39].
(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to [a cause of action in the statement of claim or to a particular part of any such cause of action].
[39] There is no dispute on the proper approach to be taken to such applications. In Krukziener v Hanover Finance Limited, the Court of Appeal said:11
The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1; at p 3; p 185. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331; [1979] 3 WLR
373 (PC), at p 341; p 381. In the end the Court’s assessment of the evidence
is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ
84 (CA).
[40] The plaintiffs must comply with the requisite formalities required in summary judgment applications, and put forward sufficient evidence for the Court to be confident that there is no defence. It is then for the defendant to provide some evidential foundation for a bona fide defence, otherwise the plaintiff’s verified claim
ought to be accepted unless it is patently wrong.12
The issues to be decided
[41] The following issues arise:
1.Is it open to a marine consent applicant such as Chatham Rock to challenge the lawfulness of costs charged to it by the EPA for processing a marine consent application, by pleading the unlawfulness
in its defence to a civil claim brought by the EPA for recovery of its
11 Krukziener v Hanover Finance Limited [2008] NZCA 187.
12 Doyles Trading Co Ltd v Westend Services Ltd [1989] 1 NZLR 38 (CA); Australian Guarantee
Corporation NZ Ltd v McBeth [1992] 3 NZLR 54 (CA) at 548.
costs (or must any such challenge be made in a separate proceeding for judicial review)?
2.Do the Review, and the costs credits subsequently given by the EPA, preclude Chatham Rock from mounting any further challenges to the charges?
3.If it is open to Chatham Rock to challenge the lawfulness of the costs charged to it in this proceeding:
3.1Is it reasonably arguable for Chatham Rock that the charges are unlawful to the extent they were covered by a Parliamentary appropriation (s 143(1) of the Act and reg 5(2) of the Regulations).
3.2Is it reasonably arguable for Chatham Rock that all or part of the amounts charged by the EPA were not authorised by the Act or regulation 4 of the Regulations? If so, which of the charges or parts of the charges were arguably not so authorised, and what is the effect of any such unauthorised charging on the quantum of the EPA’s claim?
4.Is it reasonably arguable for Chatham Rock that some of the charges, being charges which were lawfully made under the Act and the Regulations, are irrecoverable because they were not made in accordance with the Policy?
5.Should summary judgment be refused because Chatham Rock has not received sufficient information about the charges, or because it wishes to obtain an order for discovery against the EPA?
6.Are there any reasons to exercise my discretion against the entry of summary judgment?
[42] I will address each issue in turn.
Issue 1 – Is it open to a marine consent applicant such as Chatham Rock to challenge the lawfulness of costs charged to it by the EPA for processing a marine consent application, by pleading the unlawfulness in its defence to a civil claim brought by the EPA for recovery of its costs (or must any such challenge be made in a separate proceeding for judicial review)?
The EPA’s submissions
[43] Mr Beck submits that a Court proceeding in which the EPA is seeking to recover its costs from an applicant is not the appropriate forum for determining whether the costs claimed are reasonable. The amount claimed is a “debt due” to the EPA under s 147(1) of the Act, and it would completely undermine the statutory scheme to permit an applicant to refuse to pay a statutory debt on the basis that it was entitled to question each item of expenditure for which it was invoiced. The cost recovery regime was designed as a simple mechanism for passing on to applicant’s costs that have already been incurred in processing applications. He submits that the marine consent scheme would become unworkable if every applicant were allowed to dispute the EPA’s charges in the way Chatham Rock has in this case.
[44] Mr Beck compares the costs recovery regime under the Act with the way in which the courts have dealt with cost recovery claims under the Resource Management Act 1991 (the RMA), which has similar cost recovery provisions. Section 149ZD of the RMA empowers local authorities, the Minister and the EPA to recover their “actual and reasonable” costs associated with carrying out their respective functions under pt 6AA of the RMA, relating to nationally significant proposals. Section 36 of the RMA contains more general cost recovery provisions, including a power for the local authority to levy an “additional charge” where the local authority’s schedule of charges for the relevant activity is inadequate to enable the local authority to recover its actual and reasonable costs in respect of
the matter concerned.13
13 Resource Management Act 1991, s 36(3).
[45] Mr Beck notes that the RMA does not mandate full recovery of a local authority’s costs. The Act, on the other hand, clearly requires full cost recovery by the EPA – it has no discretion to recover a different rate from that specified in the legislation, and there is no discretion to “not” recover costs associated with the processing of the marine consent application.
[46] Mr Beck refers to three decisions of the courts under the RMA, namely Canterbury Regional Council v Peacocke,14 Manawatu-Wanganui Regional Council v PFDL (5) Ltd,15 and Whangarei District Council v Northern Regional Council.16
[47] In the Canterbury Regional Council case, the Council sought to recover fees incurred in connection with consent applications under the RMA. The defendants argued that the charges were unreasonable and unlawful. The Court held that the statutory regime did not allow the Court to review the reasonableness of the charges in the course of a civil proceeding brought by the territorial authority to recover the amounts charged. Any challenge to the reasonableness of the amounts charged had to be brought by appeal under pt 11 of the RMA, or by way of an application for judicial review of the decision made under the RMA. The Court likened the charges for processing resource consent applications to provisions imposing liability for other statutory charges, such as rates and taxes. Once liability was fixed under the statute, the liable party has remedies under the statute to challenge the liability. That aside, the liable party has no remedy outside of the statute (barring judicial review).
[48] In Canterbury Regional Council, the objections raised by the defendants had been considered in a full and reasoned decision by a commissioner, who had remitted part of the fees.
[49] The Canterbury Regional Council case was applied by the District Court in Manawatu-Wanganui Regional Council v PFDL (5) Ltd. The District Court granted summary judgment for unpaid resource consent charges, holding that there was no
arguable defence to the claim for the charges.
14 Canterbury Regional Council v Peacocke [2015] NZHC 1464.
15 Manawatu-Wanganui Regional Council v PFDL (5) Ltd [2015] NZDC 20550.
16 Whangarei District Council v Northern Regional Council [1996] NZRMA 445.
[50] In the Whangarei District Council case, the High Court considered that it would be unrealistic, and therefore contrary to Parliament’s intention, to require the adoption of a refined approach to the reasonableness or otherwise of a territorial authority’s charges. The Court considered that meticulous analysis was not required (that is why scales or charges were permissible). Nevertheless, the Court considered that there had to be some reasonable, if broad, basis for the ascription of costs to a particular class of users.
[51] Mr Beck does acknowledge one respect in which the costs recovery regimes under the RMA and the Act differ: while the RMA contains express rights of objection to “additional charges” made by a local authority or the EPA,17 there is no equivalent right of objection in the Act. In Mr Beck’s submission the absence of any rights of objection and/or appeal in the Act was deliberate, and reflects Parliament’s intention that charges imposed by the EPA under the Act could not be challenged in a
proceeding such as the present.
[52] Mr Beck submits that the costs recovery scheme under the Act is equivalent to that in the RMA, and the same result should follow as that reached by the Court in the Canterbury Regional Council case: there is no jurisdiction for the Court to consider the reasonableness or otherwise of the charges in a civil proceeding by the charging authority to recover those charges.
[53] Mr Beck stopped short of submitting that charges made by the EPA under the Regulations are totally immune from challenge. He submitted that if the EPA had acted unlawfully in making the charges, Chatham Rock’s proper recourse would have been to apply for judicial review of the charges under the Judicature Amendment Act 1972. It has not done that, and in those circumstances the charges cannot now be challenged.
Chatham Rock’s submissions
[54] Mr Shackleton submits that the charges can only be “debt due” under
s 147(1) of the Act if the charges are lawful. He notes that there is no provision in
17 Resource Management Act 1991, s 357B.
the Act for an applicant for a marine consent to challenge the EPA’s charges, and submits that in those circumstances it must be for the Court to determine whether the charges are properly payable.
[55] To be recoverable, the costs charged must have been incurred by the EPA in performing its functions and providing its services under the Act.18 Charges for expenses (other than EPA staff time, which is separately chargeable under reg 4) must be: 19
(i) for actual and reasonable costs, that
(ii) the EPA has reasonably incurred.
[56] Mr Shackleton refers to the decision of Winkelman J in Dark v Weenink & Ors, a case which was concerned with costs charged by a solicitor, in which the learned judge observed:20
… One party cannot call upon another to subsidise extravagance and foolishness. Therefore the Court must be satisfied that the costs actually incurred fall within a reasonable range.
Discussion and conclusions on Issue 1
[57] First, I do not think that cases decided under the RMA, such as Canterbury Regional Council v Peacocke and Manawatu-Wanganui Regional Council v PFDL(5) Ltd, assist. The existence of a right under the RMA to challenge resource consent costs imposed by a council was fundamental to the view taken in those cases there is no remedy (barring judicial review) outside of the RMA challenge procedures. That factor sets those cases apart from the present case, where there is no right of objection or appeal against the costs charged to an applicant. The task here is to decide whether the absence of any appeal right in the Act does or does not point to a legislative intention that marine consent applicants should be entitled to challenge the EPA’s charges as unlawful, in defence to a recovery action commenced
by the EPA.
18 Section 143(1) of the Act, and reg 4(1) of the Regulations.
19 Reg 4(1)(b) of the Regulations.
20 Dark v Weenink & Ors HC Auckland CIV-2003-404-5846, 16 April 2007.
[58] Secondly, the use of the expressions “reasonable”, and “reasonably incurred”, in Reg 4(1)(b) makes it quite clear that the EPA is not entitled to pass on any and all expenses it may incur, regardless of whether those expenses were sensibly incurred in providing the service, or reasonable in amount. If an applicant had no ability to challenge expenses charged under Reg 4(1)(b) as being unreasonable in amount, or as having been unreasonably incurred, the expressions “reasonable” and “reasonably incurred” as used in Reg 4(1)(b) would appear to serve no useful purpose.
[59] Clearly that could not have been intended, so the real question on this issue is whether an applicant is required to commence a judicial review proceeding to challenge charges it considers unlawful, or whether it is entitled to wait for the EPA to sue for recovery of the charges, and defend the action on the basis that the charges are unlawful.
[60] It is apparent that the grounds raised in opposition are grounds which could
have been raised in administrative review proceedings.21
[61] The defence of invalidity raised by Chatham Rock is effectively a collateral attack on the EPA’s decisions to impose the charges which are in issue. Such collateral attacks have been considered by the courts on a number of occasions.22
The general approach in New Zealand has been to allow collateral challenges as an alternative mechanism to judicial review, to achieve supervisory jurisdiction over administrative action.23
[62] But that is not a universal rule. In Brady v Northland Regional Council Elias
J (as she then was) said: 24
When collateral challenge will be permitted is, as Wade & Forsyth suggests (at p 326), probably incapable of determination by hard and fast rules: “in some situations it will be suitable and in others it will be unsuitable, and no classification of the cases is likely to prove exhaustive.” The only reliable
21 Possible grounds for judicial review include “error of law” and “failure to take into account
relevant considerations/ taking into account irrelevant considerations”.
22 See for example Brady v Northland Regional Council [2008] NZAR 505; Harwood v Thames- Coromandel District Council [2008] NZAR 518; and Dunedin Airport Ltd v Mt Cook Group Ltd. HC Dunedin, CP 34/96. See also the article by Dean Knight “Ameliorating the Collateral Damage Caused by Collaterial Attack in Administrative Law” (2006) 4 NZ JPIL 117.
23 Attorney-General v P F Sugrue Ltd [2004] 1 NZLR 207 (CA) at [47] – [49].
24 Brady v Northland Regional Council, above n 22, at 21.
pointers will be the seriousness of the error in all the circumstances of the case and whether the challenge is central to the case actually before the court.
[63] And while the starting point might be that a defendant will usually be able to challenge the lawfulness of some relevant step taken by a public authority as a defence to a criminal charge, that “starting point” must give way to any contrary indication in the relevant legislation.25 Sometimes a public interest in orderly administration will mean that the scope for challenging unlawful conduct by a public body has to be circumscribed. In every case it will be necessary to examine the particular statutory context.26
[64] The House of Lords decisions in Wicks and Boddington were followed by Randerson J in Harwood v Thames-Coromandel District Council,27 a case in which the council prosecuted Mr Harwood for failure to pay the dog registration fees which the council had fixed under the provisions of the Dog Control Act 1996. Mr Harwood’s only defence was an allegation that the fees were unreasonable, and therefore unlawful. Randerson J referred to the importance of the statutory context,
as exemplified by Wicks and Boddington, concluding that the statutory context under the Dog Control Act and other statutory provisions (which included certain provisions of the Local Government Act 1974) displaced the general principle that an accused person is entitled in criminal proceedings to challenge the validity or lawfulness of a public act or decision upon which his conviction depends.28
[65] The learned Judge in Harwood considered a number of factors pointed against allowing Mr Harwood to mount his challenge to the lawfulness of the Council’s fees. One of them was that, in the context of a recovery action where the Council only had to prove that the dog was in the possession of the person charged, the onus of proof then moving to the defendant) permitting Mr Harwood’s collateral
challenge to the setting of the fees would undermine the efficient administration of
25 R v Wicks [1998] AC 92; [1997] 2 ALL ER 801 (HL).
26 Boddington v British Transport Police [1999] 2 AC 143 (HL), per Irvine L J at 152.
27 Harwood v Thames-Coromandel District Council, above n 22.
28 At [29].
the legislation, and have the potential to render the dogs registration and control system unworkable.29
[66] The features of the legislative context that particularly stand out in this case are the absence of any right to object to, or appeal against, the EPA’s charges, and the provision in s 147(1) of the Act that an unpaid charge is deemed to be “debt due” to the EPA, recoverable in any court of competent jurisdiction.
[67] Neither counsel was able to refer me to any preparatory report, Select Committee report, or any other document which might have shed light on Parliament’s apparent decision to allow appeals against fees charged by the EPA under s 149ZD of the RMA,30 but not against charges made under the Act. But I think the absence of any right of appeal in the Act must have been deliberate. Parliament could not have been unaware of the similar provision for the EPA to
recover its costs under the RMA, and the availability of an appeal right against the
EPA’s charges under that s 149ZD.
[68] In my view there is force in Mr Beck’s submission that allowing applicants for marine consents to sit back and wait to be sued before raising illegality issues, would be likely to render the whole system of cost recovery for marine consent applications unworkable. The Act and Regulations reflect a statutory objective of achieving efficient cost recovery by the EPA (which may perhaps be compared with the importance of the efficiency and practical operation of the dog registration and control system in Harwood), and I think that intention could easily be defeated if marine consent applicants were able to refuse to pay the EPA’s charges on the basis of alleged illegality, without themselves initiating any court action to challenge the validity of the charges. Nor could it have been intended that marine consent applicants would be entitled to demand something akin to discovery of the EPA’s records relating to the charges, before deciding whether particular costs were or were
not reasonably incurred (or reasonable) and therefore should or should not be paid.
29 At [29].
30 Resource Management Act 1991, ss 149ZD(7) and 357B.
[69] I think the characterisation of the EPA’s charges as a “debt due” recoverable in any court of competent jurisdiction, also supports the EPA’s position that any challenge to the lawfulness of its charges under the Act must be raised by way of application for judicial review. “Debt due”, and “recoverable” are expressions which are suggestive of prompt and efficient recovery of the EPA’s costs. I think that view is also consistent with the so-called doctrine of “relative invalidity” (or “legal” “relativity”), under which unlawful decisions are treated as valid until successfully
challenged.31
[70] In their joint judgment in Air New Zealand Ltd v Wellington International
Airport Ltd Chambers and Arnold JJ said: 32
We think there is a strong argument that a charging decision by a statutory body should be treated as being lawful until declared unlawful, so that if an entity wants to be relieved of the obligation to pay until a judicial review challenge is determined, it should apply for interim relief under s 8 [of the Judicature Amendment Act 1972].
[71] The third member of the Court of Appeal in Air New Zealand, Baragwanath J, agreed that s 8 of the Judicature Amendment Act provided the appropriate procedure for an interim challenge to allegedly unlawful charges.33
[72] The question in Air New Zealand was in fact similar to the question posed in this case. Wellington International Airport Limited (WIAL) applied for summary judgment to recover landing charges it had set under the Airport Authorities Act
1986. The appellant airlines had sought judicial review of the decisions setting of the charges on various grounds. Chambers and Arnold JJ summarised the issue before the Court as follows:
Where a body, whose pricing decisions are potentially susceptible to judicial review, seeks to enforce a pricing decision against a non-payer by issuing proceedings and seeking summary judgment, can the non-payer resist summary judgment on the basis that he or she has issued, or will issue, judicial review proceedings challenging the decision?
31 See the discussion in Philip Joseph Constitutional and Administrative Law in New Zealand (3rd ed Thomson Reuters, Wellington, 2007) at [21.9.3] – [21.9.5], referred to in the joint judgment of Chambers and Arnold JJ in Air New Zealand Ltd v Wellington International Airport Ltd [2009] NZCA 259 at [84].
32 At [86].
33 At [106].
[73] As noted above, all members of the Court of Appeal in Air New Zealand took the view that WIAL’s charges should be treated as being lawful until declared unlawful, and it was for the airlines to apply for interim relief under s 8 of the Judicature Amendment Act if they wanted to be relieved of their obligations to pay until their judicial review challenge had been determined.34
[74] The Court of Appeal in Air New Zealand declined to follow the Court’s earlier decision in Waipa District Council v Electricity Corporation of New Zealand,35 a case which Wild J, sitting at first instance in Air New Zealand,36 had regarded as requiring him to refuse WIAL’s summary judgment application on the basis that granting the summary judgment application would effectively foreclose the airlines’ judicial review proceedings. (Had it not been for the Waipa District Council decision, Wild J would have granted WIAL’s application for summary
judgment.)
[75] In the Court of Appeal, Chambers and Arnold JJ noted that the Court in Waipa District Council did not refer to s 8 of the Judicature Amendment Act 1972. Their Honours considered that the availability of interim relief under s 8 justified a different approach from what the Court of Appeal had adopted in Waipa District Council. Chambers and Arnold JJ went on to note that if a defendant facing a summary judgment application by a statutory body seeking the recovery of its charges failed to apply for interim relief under s 8 of the Judicature Amendment Act 1972, that defendant was at risk of having summary judgment entered against
it.37 Chambers and Arnold JJ did not finally determine the issue in Air New Zealand,
as the question was not the primary focus of the arguments put to the Court. Their Honours, noted, however, that “it should not be assumed that we will necessarily continue to apply the approach the adopted in the Waipa District Council case”.38
[76] All other things being equal, I cannot see any reason why the Court’s
approach to an application by the EPA to recover its charges made under the Act and
34 Air New Zealand, above n 31, at [86], per Chambers and Arnold JJ.
35 Waipa District Council v Electricity Corporation of New Zealand [1992] 5 PRNZ 1 (CA).
36 Air New Zealand Ltd v Wellington International Airport Ltd [2009] NZCCLR 15 (HC).
37 Air New Zealand, above n 31, at [86].
38 At [87].
Regulations should be treated differently on this point from the charges fixed by an airport company under the Airport Authorities Act 1986.
[77] For the foregoing reasons, I conclude on issue 1 that it was not open to Chatham Rock to raise its illegality arguments in opposition to the EPA’s summary judgment application. It’s proper course was to file a separate proceeding for judicial review of the charges, and (in the event of the EPA taking enforcement action) apply for appropriate interim relief under s 8 of the Judicature Amendment Act (effectively staying the enforcement proceeding pending the determination of the judicial review proceeding).
Issue 2 – Do the Review, and the costs credits subsequently given by the EPA, preclude Chatham Rock from mounting any further challenges to the charges?
[78] In light of the conclusion I have reached on Issue 1, the issue under this head is whether the conduct of the Review and Chatham Rock’s participation in it, effectively foreclosed the possibility of the Court setting aside some or all of the charges on a judicial review application.
EPA’s submissions
[79] Mr Beck submits that the proper place to raise disputes of the kind Chatham Rock seeks to raise was under the EPA’s cost recovery policy procedures, and in particular the Review. Those procedures have been applied, and the EPA has given detailed consideration to the issues raised by Chatham Rock. It gave a fully reasoned explanation of its decisions on all items that had been challenged, and made adjustments to the charges where that seemed appropriate. That process having been completed, the balance claimed by the EPA is a statutory debt which it is entitled to recover from Chatham Rock.
Chatham Rock’s submissions
[80] Mr Shackleton submits that the Review cannot provide a solution to the dispute over the charges. He points to the absence of any statutory right for applicants for marine consents to appeal, or seek a review of charges imposed by the EPA (contrasting the position under the Act with that under s 35B of the RMA), and
submits that it would be wholly unsatisfactory if the EPA were the only body with power to police or review its own charges. Chatham Rock should not have to accept the outcome of an internal review conducted by the EPA, and the outcome of the Review therefore cannot be determinative of the lawfulness of the EPA’s charges. The lawfulness (or otherwise) of the charges can be determined by the Court.
Discussion and conclusions on Issue 2
[81] I accept Mr Shackleton’s submissions on this issue.
[82] Neither the Act nor the Regulations makes any provision for the EPA to act as final arbiter in disputes over the lawfulness of its charges, and if Parliament intended applicants to have access to the courts for redress in the event of unlawful charging by the EPA (which I have held to be the case by way of application for judicial review), that right of access could not be taken away by the EPA implementing its own review process, outside of the Act and the Regulations.
[83] For completeness, I record that Mr Beck did not mount any argument that Chatham Rock, having received from the EPA a copy of the Policy near the beginning of the process, somehow bound itself to accept (contractually or otherwise) a process under which its sole avenue of redress in respect of any unlawful charging of fees by the EPA would be to submit to the EPA’s own internal review process. I think Mr Beck was clearly correct in not running any such argument. The Policy itself does not describe the review process as anything akin to an arbitration – it merely states the EPAs willingness “to engage on a case by case
basis” with an applicant that has concerns over the fees charged to it.39 That is not
the language of finality, or purported ouster of the Court’s jurisdiction.
Issue 3.1 – is it reasonably arguable for Chatham rock that the charges are unlawful to the extent they were covered by a Parliamentary appropriation (s 143(1) of the Act and reg 5(2) of the Regulations)
[84] In light of the conclusion I have reached on issue 1 it may not be strictly necessary to answer this question. I will however express some preliminary views
39 Cost Recovery Policy, above n 5, at [39].
on the question, not only out of reference to counsel’s arguments on the issue but because those preliminary views do affect my view on what the result of the summary judgment application should be. Specifically, it seems to me that Chatham Rock has put forward sufficient under this heading to show that a judicial review application, if Chatham Rock is given time to make one, might not be entirely without merit.
Chatham Rock’s submissions
[85] Chatham Rock says that the effect of s 143(1) of the Act is that the EPA is to take all reasonable steps to recover only so much of its direct and indirect costs incurred in performing its functions and providing services under the Act as are not provided for by money appropriated by Parliament for the purpose (emphasis added).
[86] Mr Shackleton produced at the hearing (without objection from Mr Beck) a copy of the EPA’s Statement of Performance Expectations for the 2015-2016 year.40
The document states that the EPA is funded through a mix of Crown funding and third party revenue. “Decision making” is described as one of the three “output classes” covered by Crown appropriations, and the estimated actual appropriation for the 2014-2015 year is shown at $9,631,000 for that output class. A forecast statement of expenditure for 2015-2016 for (inter alia) “EEZ Decision making” shows that $2,502,000 of the total forecast costs of $4,725,000 were expected to be funded by the Crown. Fees and other revenue were forecast to contribute
$2,211,000.
[87] Mr Shackleton submits that the Statement of Performance Expectations shows that money has been appropriated by Parliament to cover some or all of the costs the EPA now seeks to recover, and the effect of s 143(1) is to render the EPA’s
charges unlawful to that extent.
40 Produced by the EPA pursuant to its obligations under ss 149B–149M of the
Crown Entities Act 2004.
The EPA’s submissions
[88] Mr Johnson, the EPA’s applications manager, stated in his evidence that his understanding was that no appropriation has been received by the EPA from Parliament for the processes with which this case is concerned. For that reason, the EPA considered that it was entitled to recover all of its actual and reasonable costs associated with the processing of the application.
Discussion and conclusions on issue 3.1
[89] Under s 145(1) of the Act, regulations setting charges must be made before the start of the financial year. Quite clearly the EPA cannot know at that stage how many applications will be filed in the upcoming financial year, and exactly what proportion of its costs in that year it will be able to recover by charges made under the Regulations. It seems inevitable that there will be some disparity between the total amount recovered by way of fees charged in the year and the costs incurred by the EPA in performing its functions and providing its services (being costs which are not covered by an appropriation from Parliament).
[90] The EPA is also required under the Crown Entities Act 2004 to identify its expected revenue and proposed expenses in respect of each class of outputs (which would include the “decision making” class of outputs), before the financial year commences.41 Presumably Parliamentary appropriations are made having regard to those forecasts.
[91] I did not hear any detailed argument from counsel on the point, but it would seem to make little sense if applicants were permitted to challenge the charges they were required to pay under the Regulations on the grounds that, at year end, it could be seen that the EPA’s charges under the Regulations (on all applications it had processed during the year) exceeded its (non-government-funded) costs in that year.
[92] The answer may lie in the combined effect of s 143(4) and s 145(5) of the
Act. Under s 143(4), a strict apportionment of the costs to be recovered for a particular function or service need not be based on usage, and the charges may be set
41 Crown Entities Act 2004, s 149E
at a level or in a way that is determined by calculations that involve an averaging of costs or potential costs (emphasis added). I think that interpretation would be consistent with s 145(5), which expressly contemplates the possibility of an over- recovery of costs in any given financial year. If there is a costs-recovery shortfall in a financial year, that shortfall may be recovered in any of the ensuing four financial years. Similarly, the EPA may make allowance for any over-recovery of costs in a given financial year, in any of the ensuing four financial years after the year in which the over-recovery is made.
[93] Regulation 5(2) of the Regulations must be read consistently with those sections of the Act, and it seems at least arguable that the intention must have been that the regulation would apply both generally to a particular EPA function or service, and prospectively, viewed at the commencement of the relevant charging year. For example, if in a financial year (ending 30 June) a particular EPA function or service was to be funded partly by recoveries from applicants and partly by Parliamentary appropriation, and it became clear by (say) March of that year that actual costs would be significantly lower than had been estimated, so that the year’s costs had already been covered by the appropriation and recoveries made to date, it seems improbable that the intent of reg 5(2) was that an applicant filing in, say, March should have his or her application processed free of charge. Any such interpretation would appear to involve applicants filing early in the financial year effectively subsidising those who filed late in the year, an outcome which clearly could not have been intended.
[94] I think the likely answer is that reg 5(2) was intended to be applied generally and prospectively. An example will illustrate what I mean. If in a hypothetical year the performance of a hypothetical EPA function was expected to cost $4m, and was to be funded by a Parliamentary appropriation of $3m and expected recoveries from users of $1m, the application of reg 5(2) might require the EPA to reduce the hourly staff rates prescribed in reg 4(1) if it calculated that charging those rates would result in recoveries from users which exceeded $1m. Any actual over-recovery or under- recovery could be picked up in subsequent years, under s 145(5) of the Act.
[95] While that might be how reg 5(2) was intended to be applied, it is not at all clear from the evidence in this case that there was no Parliamentary appropriation covering decision-making on marine consent applications in the 2014 - 2015 year, which is the position Mr Johnson understood to be the case. That might have been the intention of the Executive as stated in the 2012 Cabinet paper referred to in paras [24] – [28] above, but the EPA’s Statement of Performance Expectations for the
2015 – 2016 year does appear to suggest that there was a Parliamentary appropriation for the 2014 - 2015 year, which arguably would have affected the charges the EPA was entitled to make. Mr Johnson did not address that document in his evidence, and the evidence is simply not clear enough for me to conclude that there is nothing in the circumstances that Chatham Rock might not reasonably pursue on a judicial review application.
[96] I emphasise that I am not making any findings on these possible arguments – that exercise would properly belong in a properly constituted judicial review proceeding. The issue with which I am concerned here and to which I return below, is whether I should refrain from entering summary judgment for a sufficient period to allow Chatham Rock time to file a judicial review proceeding (and obtain interim relief in it which would have the effect of staying the EPA’s claims pending the outcome of the judicial review proceeding).
[97] I am also conscious of the fact that the evidence presented on the summary judgment application may have been incomplete on this issue. If on consideration of all of the evidence it turns out that there was in fact no Parliamentary appropriation covering part or all of the services provided to Chatham Rock, there would be no argument on this issue. I find only that, on the evidence provided, I can not rule out the possibility that Chatham Rock may have a reasonable argument under this head.
Issue 3.2 – Is it reasonably arguable for Chatham Rock that all or part of the amounts charged by the EPA were not authorised by the Act or regulation 4 of the Regulations? If so, which of the charges or parts of the charges were arguably not so authorised, and what is the effect of any such unauthorised charging on the quantum of the EPA’s claim?
[98] In the view to which I have come, I do not think it is necessary for me to go through the various arguments which are summarised in the Appendix to this
judgment. Whether any of the charges were unlawful is a matter to be determined in a judicial review proceeding, and I am satisfied that Chatham Rock should have an opportunity to commence such a proceeding if it wishes in the particular circumstance of this case to do so.
[99] The fact that I have not specifically identified any issue under this head which might justify consideration in a judicial review application should not be taken by the parties as an indication that I think there are no such issues – the view that I have come to on issue 3.1 simply means that it is unnecessary for me to address that question.
Issue 4 – Is it reasonably arguable for Chatham Rock that some of the charges, being charges which were lawfully made under the Act and the Regulations, are irrecoverable because they were not made in accordance with the Policy?
Issue 5 – Should summary judgment be refused because Chatham Rock has not received sufficient information about the charges, or because it wishes to obtain an order for discovery against the EPA?
[100] Again, the conclusions I have reached on other issues mean that no answers are required on these two issues.
Issue 6 – Are there any reasons to exercise my discretion against the entry of summary judgment?
[101] I consider that I have jurisdiction to decline the enter judgment, or at least to adjourn the summary judgment application for a period sufficient to allow Chatham Rock to file any application for judicial review it may wish to file, and to obtain interim relief under s 8 if it can.
[102] In the Waipa District Council case,42 Master Gambrill exercised her discretion to decline to enter summary judgment in circumstances where the defendant had filed a judicial review proceeding which addressed issues relevant to the summary judgment application. The Master’s exercise of her discretion was not
upset on appeal. McKay J, delivering the judgment of the Court of Appeal, said:43
42 Waipa District Council v Electricity Corporation of NZ Ltd HC Hamilton CPI/91, 17 June 1991.
43 Waipa District Council, above n 35, 6.
The present respondent would have no remedy if its proceedings for review were to be pre-empted by the entry of summary judgment. If summary judgment were allowed to be entered that would seem to amount to a final determination of the respondent’s liability. It is difficult to see how, in the face of such a judgment, the respondent could maintain review proceedings for the recovery of the rates from that ratepayer and seek summary judgment. Counsel suggested that if as a result of review proceedings the rate was held to be invalid, the summary judgment could be set aside. He was unable, however, to suggest any recognised principle on which an application to set aside could be based.
[103] I think similar considerations apply in this case. The entry of summary judgment would effectively pre-empt any public law rights Chatham Rock may have, to have the charges set aside on a judicial review application.44 There would be a distinct risk of injustice to Chatham Rock if that were to occur simply because it had not adopted the correct procedure for challenging the charges. I take into account that this is a fairly new piece of legislation, and as far as I am aware the question of
“collateral challenge” to the validity of the EPA’s charges has not been addressed by the Court before. This is not a case where Chatham Rock has sat on its hand and only belatedly raised its concerns, and of course the New Zealand cases show that challenges to the validity of administrative steps which underpin a public body’s claims often have been allowed to be raised in defence of such claims.
[104] It is true that the Court of Appeal in Air New Zealand did signal a likely move away from the Waipa District Council approach on the point with which I am concerned. But Waipa District Council was not overruled, and I think the language used by Chambers and Arnold JJ in their joint judgment (a defendant facing a summary judgment application who has not applied for interim relief “is at risk of having summary judgment entered against it should the statutory body seek to
enforce its charges”45) does leave it open to the Court to adjourn a summary
judgment application to allow the defendant to obtain interim relief under s 8, where the justice of the particular case so requires.
[105] Having regard to all those considerations, I think the justice of the case requires that I refrain from entering summary judgment for a sufficient period to
allow Chatham Rock to commence any judicial review proceeding it may wish to
44 Waipa District Council v Electricity Corporation of New Zealand, above n 35, at 6.
45 Air New Zealand Ltd v Wellington International Airport Ltd, above n 36 at [86].
commence, and to obtain (if it can) appropriate interim relief under s 8 of the
Judicature Amendment Act 1972.
Result
[106] The summary judgment application is adjourned for mention at 11am on
8 November 2016 to allow Chatham Rock to:
(a) Commence any proceeding for judicial review challenging the
validity of the EPA’s charges; and
(b)Obtain any interim order it may be able to obtain under s 8 of the Judicature Amendment Act 1972 having the effect of prohibiting or staying the present proceeding pending the determination of the judicial review proceeding.
[107] If no such interim order has been obtained by 8 November 2016, judgment is likely to be entered for the EPA for the full amount of its claims.
[108] The costs of the present application are reserved.
Associate Judge Smith
Appendix
Chatham Rock’s specific claims and the EPA’s responses
(1) Specific charges that are disputed by Chatham Rock as not incurred by the EPA in performing its functions and providing its services under the Act, and/or not reasonably incurred
(a) Hearing costs - $92,579
[1] In November 2014 the “decision making committee” (DMC) appointed to deal with Chatham Rock’s application held a three-hour hearing in the Chatham Islands. The EPA charged Chatham Rock $92,579 in respect of this hearing.
[2] Chatham Rock contends that this hearing could have and should have been conducted by video link, with a significant saving in costs. Chatham Rock notes that it was charged for two EPA staff members undertaking a preparatory trip to the Islands, and travel and accommodation for five DMC members, two EPA staff, at least one contractor and two audio visual technicians, to stay on the Islands for three nights. Costs were also incurred in bringing two presenters to the Chatham Islands for the hearing, when those presenters lived on mainland New Zealand.
[3] In his reply affidavit for the EPA, Mr Johnson stated that the decision to hold part of the hearing in the Chatham Islands was made because the Chatham Islands is the closest place to the area in which the proposed activity would take place. Holding a hearing is a statutory requirement, and the EPA’s intention to hold a hearing in the Chatham Islands, and the resources that would be required for the hearing, were raised with Chatham Rock fairly early in the piece, without objection.
[4] Mr Johnson stated that there were issues with available flights to and from the Chatham Islands, which resulted in staff having to take earlier flights to ensure that all attendees at the hearing would be there in time. As for the use of a video link in lieu of an in-person hearing, Mr Johnson said that technology solutions were
considered by the EPA at the time, but were found to be unsuitable: internet availability at the hearing venue was insufficient to support video link technology.
[5] Chatham Rock contends that these explanations are unsatisfactory. It points out that two other hearings were held in mainland New Zealand (in Wellington and Hamilton), and that the EPA has not explained why information gathered at the Chatham Islands hearing could not have been obtained at either of the New Zealand hearings. There is no statutory requirement that a hearing under the Act should be held in or near the area where a proposed activity will take place.
[6] Chatham Rock acknowledges that it did not object to the EPA’s proposal to hold a hearing in the Chatham Islands, but says that its failure to object to the proposal cannot be determinative on the question of whether the costs associated with the hearing were reasonably incurred.
[7] Chatham Rock says that the costs charged in respect of the Chatham Islands hearing were not addressed satisfactorily by the EPA in the Review, with the result that it has been charged for costs that were much higher than were required. It says that those costs cannot be said to have been reasonably incurred.
(b) Hamilton hearing costs
[8] There is a small dispute over charges for the hiring of furniture for the Hamilton hearing. The EPA hired furniture in Wellington, and then arranged for the furniture to be transported to Hamilton. Chatham Rock says that it would have been more cost-effective to hire the furniture in Hamilton, if hiring furniture was necessary at all. Chatham Rock challenges the reasonableness of the EPA’s charges of $3,472.
[9] In his evidence, Mr Johnson stated that it was more economical to use a Wellington furniture provider than a local Hamilton supplier, notwithstanding the freight cost. The issue was also dealt with in the Review.
[10] Chatham Rock’s rejoinder is that the EPA has not provided any comparative evidence showing that alternative options were more expensive. It wishes to test the point at trial.
(c) EPA staff reports
[11] The EPA has charged $130,118.72 for the preparation of two EPA staff reports completed in August and October 2014.
[12] Chatham Rock says that these reports cannot be said to have been incurred by the EPA in performing its functions under the Act, and/or were not reasonably incurred, because the reports failed to take into account subsequent relevant information received during the consent process. It contends that the reports would have been of little if any use to the DMC in its final deliberations.
[13] Chatham Rock’s solicitors also expressed concern to the DMC that certain actions of the staff member who completed the first report gave rise to a presumption of bias on the part of the author, and called into question the objectivity of the report and its conclusions. They also contended that there were inaccuracies and errors in the first report which would be likely to mislead the DMC as to the true nature of Chatham Rock’s proposed operations.
[14] Chatham Rock submits that the second staff report was commissioned to correct the omissions and errors in the original report, and it should not have to incur the costs of the second report. It invokes the provision in the Policy which provides that the EPA will not charge for additional time taken due to internal system faults which result in delay or duplication of effort.
[15] Mr Johnson’s evidence was that the reports were properly commissioned under s 44(1)(b) of the Act. Staff involved in preparing the staff reports documented their time in the EPA’s time recording system against specific time codes, and the time they spent was clearly identifiable. Mr Beck further submits that
Chatham Rock had the right to object to the commissioning of these reports,46 but it
46 Under s 101 of the Act.
did not make any objection. Not having exercised its right to object, Chatham Rock
cannot raise a “backdoor objection” by challenging the charges for the report.
[16] In response, Chatham Rock submits that, in respect of the first report, its grounds for complaint could not have been known at the time it had a right to object. And in any event, the failure of an applicant to object to a decision to commission a report cannot affect its entitlement to challenge the lawfulness of costs associated with the report once it has been completed.
(d) Duplication of work
[17] Chatham Rock says that the EPA has charged $7,615.65 for a “Completeness and Gaps Analysis” of invoices from Environmental Management Services, relating to work that had been subcontracted to Cawthron Institute.
[18] In her affidavit sworn for Chatham Rock, Ms Hatchwell, who is a director of Chatham Rock, stated that it was unclear what this charge was for, but it appeared to be a duplication. Her contention was that costs incurred by a contractor in checking for completeness (or not) in a subcontractor’s work, were not costs which could be considered as having been reasonably incurred. Chatham Rock had been charged for tasks already performed and charged for.
[19] Mr Johnson rejected this challenge. He said that his understanding was that Environmental Management Services and Cawthron Institute worked jointly on the preparation of a report commissioned in accordance with s 44 of the Act. Chatham Rock did not object to the commissioning of that report.
(e) Charges for Wellington meetings
[20] The EPA charged a total of $13,560.50 for venue hire and catering services in Wellington. Chatham Rock says that it was reasonably entitled to expect that the EPA would have sufficient meeting rooms at its own premises, so that there would be no need to rent space from third party providers.
[21] Mr Johnson stated that Chatham Rock’s concerns about charges for the Wellington meetings were addressed in the Review. The Review confirmed that DMC meetings, a pre-hearing meeting, and deliberation meetings were held for the purpose of processing and deciding on Chatham Rock’s application. The authors of the Review noted that while the EPA’s own offices had occasionally been used for DMC meetings, it was the EPA’s standard practice to hold DMC meetings off-site. The Review referred to a shortage of rooms at EPA’s premises, and the restrictions which would be imposed on EPA staff if meeting rooms were tied up for a day-long meeting. The Review considered the EPA’s standard practice in relation to venue hire and catering, including its approach to venue hire and catering on previous marine consent applications, and it concluded that the costs incurred in catering for the five DMC meetings were reasonable. However it recommended that catering costs attributable to some of the attendees at the meetings should not be recovered from Chatham Rock. The result was a credit of $3,101.85 to Chatham Rock.
[22] Chatham Rock does not accept these explanations. It submits that the EPA would be unlikely to employ such external services if it were responsible for payment of the services itself, and that it should find a solution to address any space and/or confidentiality issues it might have if meetings were held at the EPA’s own premises, that does not cause cost to applicants. Chatham Rock submits that the catering costs which were incurred at the meetings were excessive. While some of those costs were credited following the Review, it says that the lack of detail provided by the EPA does not allow it to reconcile the credited amount with the EPA’s invoices.
(f) Venue hire in Auckland
[23] The EPA on-charged meeting costs billed by two Auckland hotels, to Chatham Rock. The total amount charged was $1,507.07. Mr Johnson explained that a DMC meeting was to be held on 27 and 28 November 2014, and it was more convenient to hold the meeting in Auckland given that one DMC member was based in Auckland, another was in Auckland at the time, and the decision writer who was employed to assist the DMC was also based in Auckland. Costs of flights would
have been incurred in any event, whether the meeting was held in Wellington or
Auckland.
[24] Chatham Rock submits that some of these costs could have been eliminated, or at least reduced, had the meetings been held at the EPA’s offices and a video link used. It says that these costs cannot be considered to have been incurred by the EPA in performing its functions in connection with the application, and/or were not reasonably incurred.
(g) Costs of audio-visual equipment
[25] The total charged by VidCom Ltd for the main hearing in Wellington was
$94,168.10, which included an equipment hire charge of $59,493.29. In her evidence, Ms Hatchwell contended that the VidCom charges were overstated by an amount somewhere in the range of $24,000 - $27,500, largely attributable to charges for days which were not actual hearing days. When Chatham Rock raised these concerns with the EPA, the EPA advised in response that VidCom had offered a credit of approximately $320. Chatham Rock says it has not been possible to reconcile that credit with the documents the EPA has so far provided to Chatham Rock.
[26] Chatham Rock says that two estimates were provided to it for costs associated with the audio-visual equipment hire. The estimates predicted costs of
$40,000 (estimate given on 18 March 2014), and $65,000 (revised estimate given on
3 September 2014). Chatham Rock says that the EPA has given no explanation for the costs increase. If costs have been on-charged for services which are not related to the application, those costs cannot be said to have been incurred in the performance by the EPA of its functions, and cannot be said to have been reasonably incurred. Chatham Rock says that it should have the opportunity to challenge these costs at trial.
[27] In response, Mr Johnson stated that the EPA provided several estimates throughout the process, and the dispute was also considered in the Review (he referred to a credit note issued following the Review, which credited Chatham Rock with $320 in respect of a “damage waiver”).
(h) Rental cars in Wellington
[28] The EPA charged Chatham Rock $4,597.55 for the cost of rental cars in Wellington. Chatham Rock contends that these costs cannot be considered to have been reasonably incurred in the processing and evaluation of the application. EPA staff members are likely to live in Wellington.
[29] Rental car charges of $4,354.64 were in fact reversed by credit note following the Review. However Chatham Rock says that it has identified a total of $4,597.55 charged for rental car hire. It says that it should not be responsible for the difference, being $242.91.
(i) EPA staff time
[30] The EPA charged a total of $666,061.86 for time spent by staff in receiving, processing and deciding the application. Chatham Rock challenges $263,647.74 of these costs.
[31] Of the challenged amount, $198,940.72 relates to staff time which Chatham Rock says has been supported only by a workbook which contains no details about how staff time was spent, by whom, and for what purpose. Chatham Rock challenges these costs, saying that it has been unable to determine whether the charges are lawful.
[32] The balance of Chatham Rock’s complaint relating to staff time derives from the fact that daily time records for staff involved with the application show many instances of staff recording eight or more hours per day. Chatham Rock alleges that instead of recovering its actual and reasonable costs of staff employed, the EPA appears to have been leveraging its staff and passing on the costs to Chatham Rock.
[33] Chatham Rock refers to the Policy, which provides that charge-out rates for EPA staff time are based on the “average salary for each category of employee, plus overhead costs…divided by an average of 1,365 working hours per staff member per annum”. Taking an average 230 working days per annum for each staff member (based on 20 days annual leave and 11 statutory days), Chatham Rock says that the
rates set out in reg 4 of the Regulations would allow recovery of only 5.93 hours per day of chargeable time for each of the EPA’s employees.
[34] Chatham Rock contends that it should not have to bear the cost of EPA staff in excess of six hours per day. It submits that charging for more than six hours per day for a staff member allowed the EPA to recover more than the cost of employing that staff member, and making the amounts charged unreasonable.
[35] Chatham Rock’s challenge is to the charges for time spent by staff members
over and above six hours per day. The total amount challenged on this basis is
$64,707.02.
(2) Specific charges that are disputed as not incurred by the EPA in performing its functions and providing services under the Act, and/or not actually incurred
(a) GST overcharged
[36] Chatham Rock contends that there has been overcharging and/or double charging of GST on invoices.
[37] The EPA did identify in the Review two instances of GST overcharging, and those GST overcharges were duly credited. But Chatham Rock says that it has identified further invoices where there have been double charges or overcharges, including (i) double charging as a result of GST charged on individual disbursements, later being incorporated into supplier invoices where GST has been charged on the total amount invoiced, (ii) the inclusion of a GST component in invoices which should have been GST-exclusive, and (iii) GST being charged where the relevant services were zero rated. Chatham Rock says it has not been able to quantify the alleged GST overcharges.
(b) Amounts charged in error
[38] Ms Hatchwell stated that there were calculation errors in the invoices from a number of companies, totalling $39,683.58. The identified overcharges were listed in a spreadsheet which Chatham Rock provided to the EPA on 12 October 2015. Chatham Rock says that there may be further calculation errors, but it has been
unable to check whether this is the case, as significant portions of documents have information that has either been omitted or redacted.
[39] Mr Johnson stated that these concerns were all considered and addressed in the Review, with the result that $2,707.41 was credited back to Chatham Rock.
[40] In its submissions, Chatham Rock acknowledges a credit for $1,044.80 given following the Review, but maintains its position that a further $38,638.79 has been invoiced in error.
(3) Specific charges that are disputed by Chatham Rock as not reasonable in amount
(a) Consultants’ charges
[41] Chatham Rock contends that there are a number of costs which have been charged to it which were for amounts that cannot be considered reasonable. The first item in this category is charges made for the services of consultants from four companies, each of whom was retained by the EPA to carry out services which Chatham Rock says fall within the core competencies of the EPA. These charges are said to exceed $267,350.
[42] Chatham Rock says that services provided by these contractors included administrative tasks, managing the submission process, updating the EPA’s website, recording Minutes of DMC meetings, drafting letters, and transcribing and processing submissions. While Chatham Rock agrees that it was necessary to have those tasks carried out, it says that the cost of using private sector consultants was not reasonable; the tasks should have been carried out by EPA staff members. Chatham Rock identifies in particular charges of $158,425.09 rendered by MWH Ltd for the provision of a secretary to the DMC. Chatham Rock says that the tasks undertaken in this type of role would typically not result in costs that high, and it is unreasonable for Chatham Rock to have to meet the costs.
[43] Further, Chatham Rock says that there is no information available to it or the Court to assess whether the consultants’ fees are reasonable having regard to the experience and qualifications of the people undertaking the particular tasks, and
whether it was reasonable for an external contractor of that experience to carry out the tasks for which the charges were made. Short of this information being made available, Chatham Rock contends that the Court cannot be satisfied that the fees for consultants are reasonable.
[44] In his reply affidavit, Mr Johnson stated that these concerns were all considered in the Review.
[45] The Review found that outside contractors were used in order to process the application, to an appropriate standard, within the statutory timeframes required by the Act. It noted that the EPA operating model works on a mix of contractor/staff time, and concluded that it would not have been cost-effective to have sufficient permanent staff, and a broader skill set, to cater for peak work. The mixed staff/contractor mode is in fact more efficient.
[46] The authors of the Review further noted that all applications being processed by the EPA at the time the application was being processed were resourced using a mix of staff and contractors. All applicants were given cost estimates that showed the expected costs of the contractors.
[47] At the time the application was being processed, the EPA was also busy with other cases. The increased demand was met first by recruiting four additional full- time staff, appointing a fixed term project manager, and seconding four staff from within the EPA. But that additional resource was not enough on its own; work flow pressures and the timing of consent process tasks required the EPA to procure a limited number of contractors to deal with the application.
[48] MWH Ltd were contracted to provide a dedicated, experienced support writer to the DMC for the duration of the marine consent process. The Review authors noted that it had been a standard part of the EPA’s administrative procedures under the Act to appoint an external contractor as a DMC “ghost writer”.
[49] In addition, two planners were recruited from Hill Young Cooper for a short period, to cover EPA senior advisor roles. Mitchell Partnerships were commissioned
to produce a technical analysis of submissions report, within a short timeframe, and temporary staff from GBL were recruited to fulfil short-duration administrative tasks.
[50] The authors of the Review concluded that the application could not have been processed in a timely and effective way without engaging the external contractors. The contractors were appointed in accordance with the EPA’s procurement policy, and, with the exception of GBL, were appointed from the EPA’s supply panel, in accordance with standard tender processes.
[51] The Review authors noted that the level and nature of the use of contractors was similar to the way in which previous marine consent applications had been resourced by the EPA. They referred to one such application, in which the EPA recruited a planner to provide senior advisor support during the hearing process, temporary staff from GBL to process submissions, and the same support writer for the DMC who was employed in the Chatham Rock case. An external provider also prepared an analysis of the applicant’s submissions in that case.
[52] The Review authors noted that there was only a minor additional overall cost to Chatham Rock arising from the use of external contractors, over what would have been charged if the EPA had used its own staff and charged for their time at the rates prescribed by the Regulations. They noted that there was in fact a costs saving of
$15,436.05 in the use of GBL personnel (hourly rate $30.62 versus the hourly rate of
$97.43 prescribed by the Regulations for an EPA administrator).
[53] The Review authors also noted that the previous experience the MWH support writer had gained working with the DMC meant that she was well qualified and experienced for the role.
[54] Having regard to those matters, Mr Beck submits that the consultants’ charges were charges for actual costs incurred by the EPA which were addressed in detail in the Review. He refers to the decision of the Environment Court in Hill
Country Corporation Ltd v Hastings District Council,47 submitting that what is
1 Hill County Corporation Ltd v Hastings District Council [2010] NZEnvC 88, [2010] NZRMA
331.
reasonable will depend on the circumstances of the particular case. (In that case, the Court noted that the Council’s resources were not sufficient to process the proposal within the timeframe being asked of it, while at the same time continuing with the Council’s other work. The applicant in the case had accepted the Council’s decision to appoint consultants who had no background knowledge of the relevant application, and had to spend time getting up to speed. It acquiesced in the Council’s use of the external consultants, knowing that the costs would be passed on to it. The Environment Court considered that the fact that the external consultants had no prior knowledge of the application did not of itself make their charges unreasonable.)
(b) Travel related costs of out-of-town contractors
[55] Chatham Rock has identified costs totalling $38,539.20 under this head which it says should not have been charged to it. It contends that the charges are not reasonable in circumstances where specialists in the Wellington region could have performed the same function with commensurately lower costs (as travel time would have been avoided). It argues that the EPA has failed to address whether alternative specialists in the Wellington region were available.
[56] In addition, Chatham Rock contends that there are inconsistencies in the times for which charges have been made. In the case of one supplier, it says that the time charged to travel the same route on different days varied between 0.75 hours and 5.75 hours.
[57] The Review dealt with this dispute, noting that it covered the charges of four different out-of-town contractors. These contractors were procured from the EPA’s supply panel in accordance with the EPA’s procurement policy.
[58] The authors of the Review stated that suppliers to the EPA are assessed against a number of criteria, including relevant skills and experience. Cost associated with the location of a supplier is only one factor, and out-of-town contractors had been used on previous marine consent applications. Where disbursements are allowed by the relevant supply contract, it is standard practice for the EPA to recover from applicants travel and accommodation costs charged by out- of-town contractors.
[59] The Review concluded that the disbursements were reasonable expenses in relation to the application.
[60] In his reply affidavit, Mr Johnson acknowledged that there was a discrepancy between the amounts charged for travel by two suppliers, but the discrepancy arose from a delayed flight into Wellington.
[61] Chatham Rock says that even if that was the case the charges were not reasonable, as the costs incurred for the delay were outside the control of both Chatham Rock and the EPA.
(c) Excessive airfare costs
[62] Chatham Rock says that it appears that the EPA has booked airfares at the highest “flexiplus” rates, and has also taken the insurance available from the airline. It contends that while that may have been justified in some instances, a significant portion of air travel could reasonably have taken advantage of cheaper fares available due to the planning and pre-setting of meetings and hearing dates. It contends that the on-charging of the highest rate airfares is contrary to the requirements in the Policy and the Regulations that costs charged should be reasonable. It says that it has been unable to form a final view of the extent of the excess cost of airfares, due to a lack of supporting information. It wants to obtain further information on discovery.
[63] In his reply affidavit, Mr Johnson again referred to the Review, where this issue was addressed. The authors of the Review stated that the EPA complied with its own travel policy, which applies to DMC members, staff, and third parties engaged by the EPA who undertake travel on the EPA’s behalf while carrying out their contractual obligations. The travel policy states that “wherever possible, domestic travel on EPA business will be booked on the cheapest flights available. However for users who are likely to make changes, it may be more cost effective to purchase the initially more expensive flexible fare.”
[64] The Review authors considered that the nature of the marine consent process meant that the purchase of flexi-fares was often more cost-effective, because there
are frequent changes in travel plans for marine consent hearings. The cheapest fares do not allow changes, so if any changes are required the cost will be greater than the flexi-fare. The purchase of flexi-fares allowed the EPA to make last minute changes to travel arrangements that resulted in cost savings to Chatham Rock (for example, in relation to the early conclusion of the Hamilton hearing).
(d) Taxi fares
[65] This complaint relates to taxi fare costs incurred by Wellington-based EPA staff members. Chatham Rock says that they should have used public transport, and it should not be expected to meet costs which are higher than alternative available travel options. Chatham Rock refers to the Audit Office document “Controlling Sensitive Expenditure: Guidelines for Public Entities”, which provides that use of taxis should be moderate, conservative, and cost-effective, and the State Services Commission document “SSC Guidance: Travel Policy” at p 8, which provides that taxis should only be used for official travel and should be avoided where it is practicable to use public transport or shuttle services.
[66] Chatham Rock says that it has been unable to evaluate the reasonableness of taxi charges in this case, due to a lack of information provided by the EPA.
[67] In his reply affidavit, Mr Johnson referred to para 4.11 of the Audit Office document, which provides:
We expect the use of taxis to be moderate, conservative, and cost-effective relative to other forms of transport available to the entity. Entity-funded taxis ought not to be used for travel between home and office, unless the reason for the travel is because of work past a reasonable hour, a safety concern, or similar justification, and prior approval for the travel has been given where practicable.
[68] Mr Johnson stated that, as far as he was aware, EPA staff complied with that guideline. For example, staff would often share taxis to a hearing venue when attendance at the hearing was required.
[69] Mr Johnson also considered that the EPA had provided all information sought by Chatham Rock in relation to taxi fares. It had provided all consolidated tax
invoices and financial statements received from TaxiCharge New Zealand Ltd, which would have given Chatham Rock details such as the EPA staff member’s name, date of travel, pick-up and drop-off locations, and the total cost. He said that the majority of staff taxi fares recovered from Chatham Rock would have been identified in the statements from TaxiCharge New Zealand Ltd, because staff members would either have a taxi card or be provided with taxi chits, and the fares would be reflected in the statements. Where taxi fares were paid for by credit card, the receipts which were subsequently submitted to the EPA by staff members as expense claims were provided to Chatham Rock.
[70] Mr Johnson also stated that the EPA provided additional information about the taxi fares recovered from Chatham Rock in a letter dated 7 July 2015. The information included time of pick-up, cost, and the name of the relevant person who rode in the taxi.
(4) Charges challenged on the basis that insufficient information has been provided to allow Chatham Rock to assess the legality of the charges.
[71] More generally, Chatham Rock complains that it has found it difficult to obtain information showing how the EPA has calculated all invoiced amounts. Ms Hatchwell referred to a number of problems, including omitted or redacted information from EPA staff timesheets and third party contractor invoices, no supporting detail for amounts charged by third party contractors or suppliers, supplier invoices with insufficient detail to ascertain what functions were being performed or services being provided under the Act, supplier invoices without cost breakdowns, supplier invoices that did not include sufficient detail about charge-out rates or hours charged, and a failure to provide explanations for high catering and minibar costs, which appeared unreasonable. As Ms Hatchwell put it in her affidavit, there were supplier invoices which contained insufficient detail to ascertain what they related to, whether they had been reasonably incurred, or whether GST had been correctly accounted for.
[72] Chatham Rock contends that there are numerous instances of redacted information which do appear to relate to the application. It says that the redactions on supplier invoices and EPA staff timesheets prevent it from assessing:
(a) how charges have been calculated; and
(b) whether errors which have been previously identified by
Chatham Rock or the EPA have been repeated.
[73] Chatham Rock denies that it has received all the information it has requested from the EPA. In his written submissions, Mr Shackleton set out a table listing the requested information which is said to be still outstanding. The table refers to requests made by Chatham Rock for information on 27 March 2015, 6 May 2015, 28
June 2015, 21 July 2015, 27 July 2015, 11 August 2015, 2 September 2015, 22
September 2015, 28 September 2015, and 11 October 2015.
[74] Chatham Rock wants discovery of the following documents which it asserts
are in the EPA’s control:
(a) unredacted copies of documents supplied;
(b)complete and legible copies of all supplier invoices, including all cost breakdowns;
(c) documents showing all catering charges, sufficient to inform
Chatham Rock of what was being charged and for whom;
(d)documents showing details of EPA staff involved in the consent process, sufficient to inform Chatham Rock of the roles those staff played in the process, including staff timesheets and time records, breakdowns and descriptions of how staff time was spent (Chatham Rock is not seeking the names of staff, but it asks that different individuals be distinguished so that it can identify how much time an individual spent on one or various projects);
(e) documents showing a detailed breakdown of costs that have been credited to Chatham Rock pursuant to the credit notes issued, sufficient to inform Chatham Rock of exactly what charges have been reversed.
[75] Mr Johnson does not accept Chatham Rock’s complaints about the extent of the information the EPA has provided. He stated that ample information was provided to Chatham Rock during the consent process, and that Chatham Rock could have easily identified particular aspects that were disputed at the time. He said that the EPA responded in a timely manner to Chatham Rock’s requests for further information, particularly having regard to the large volume of information sought. He contended that Chatham Rock had been in a position to articulate with a reasonable degree of precision what it is that it disputes.
[76] Mr Johnson said that detailed information was provided for Chatham Rock on a monthly basis, with each monthly invoice. In addition, the EPA provided cost estimates, and monthly invoices contained a detailed table of the costs which fell within the scope of the total cost to be recovered for the month. Details of costs would include:
(a) task codes indicating the tasks undertaken by staff, the time spent in relation to those tasks, and the costs to be recovered;
(b) tables indicating the time period for which those costs were incurred;
(c) description of expenses incurred by the EPA (including the name of the relevant service provider) and the amount charged;
(d)descriptions of the EPA’s staff and DMC expenses, including the period for which those costs were incurred. Details would often include which DMC member incurred the cost, and the reason for the cost;
(e) details of costs incurred but not recovered from Chatham Rock.
[77] Mr Johnson stated that the redactions were accepted by Chatham Rock. In a letter dated 13 May 2015 to Chatham Rock, the EPA advised that it had redacted some information for the following reasons:
(a) the identity of persons had been withheld in some cases in order to protect the privacy of natural persons;
(b) the bank account details of natural persons had been redacted; (c) descriptions of any legal advice had been withheld.
[78] The EPA advised in the letter that, in reaching its decision to withhold the above information under s 9 of the Official Information Act 1982, it had concluded that public interest considerations in favour of releasing the information did not outweigh the reasons for withholding it. The remainder of the redacted information was said to have been redacted on the basis that the information was “out of scope” of Chatham Rock’s request. That was said to be because the information was not attributable to the application.
[79] Chatham Rock responded by letter from its solicitors dated 17 May 2015, advising that Chatham Rock took “no issue” with the redactions.
[80] Mr Beck rejects Chatham Rock’s argument that it needs further discovery from the EPA in order to properly defend its position. He submits that Chatham Rock has had sufficient information to raise any disputes. To accede to a request for access to yet more documents in this case would create a precedent that would effectively bring a halt to marine consent applications.
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