First Gas Limited v Gibbs

[2022] NZHC 742

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE

CIV-2021-443-000016

[2022] NZHC 742

BETWEEN

FIRST GAS LIMITED

Plaintiff

AND

RUSSELL VICTOR GIBBS, PARANI JOSEPHINE GIBBS and LEIGH JOSEPH

HORTON as trustees of the RV and PJ GIBBS FAMILY TRUST

Defendants

Hearing:	13 December 2021
Appearances:	L P Wallace and J E Atkin for the Plaintiff Defendants in Person
Judgment:	12 April 2022

JUDGMENT OF GRICE J

(Costs)

[1]                   This is an application for costs following a judgment in favour of the plaintiff delivered in December 2021.1 Earlier an interim injunction had been granted on the application of the plaintiff.2 Costs were reserved on that application and fall now to be determined as well. A variation of those interim orders enabling First Gas to commence repairs was also granted in a separate judgment.3

[2]                   The substantive claim was based in nuisance. First Gas operated the Maui Gas Pipeline which ran through the Gibbs Trust Farm.4 In 2018, an inspection by First Gas

1      First Gas Ltd v Gibbs [2021] NZHC 3309 (Substantive judgment).

2      First Gas Ltd v Gibbs [2021] NZHC 1722 (Interim injunction judgment)

3      First Gas Ltd v Gibbs [2021] NZHC 2794 (Variation judgment).

4      The defendants are trustees of a family trust.

FIRST GAS LIMITED v GIBBS [2022] NZHC 742 [12 April 2022]

indicated a “buckle” had developed in a five-metre portion of the pipeline on the Gibbs Trust Farm. As a result of that, urgent work was undertaken to bypass the pipeline. More extensive repairs were needed to the pipeline itself. These required the shutdown of the pipeline, which had considerable ramifications for the customers supplied by the pipeline, including the Huntly power plant, two methanol plants and commercial and domestic users. The pipeline supplied over 90 per cent of the natural gas used in the upper North Island.5

[3]                   Difficulties had emerged in the working relationship between First Gas and the Gibbs family, leading to a situation where First Gas felt its only option was to apply to the Court for an interim injunction prohibiting the defendants from restricting and interfering with the plaintiff’s access rights under various authorisations, registered easement certificates and the provisions of the Petroleum Act 1937.

[4]                   Following the grant of the interim injunction, the substantive proceeding was given priority and heard in New Plymouth over four days, including a site visit to the farm. I found for the plaintiff and issued declarations authorising First Gas to enter onto the land in order to inspect, maintain, repair or operate the pipeline and to deposit and store, inspection, maintenance, repair or operation store, for the purposes of machinery related to those works.6 I also issued a permanent injunction prohibiting the defendants from obstructing access.7 The declaration and orders were subject to conditions, including reasonable notice being given to the defendants of entry onto the land.8 The conditions were attached to the judgment.

[5]                   The parties have been unable to agree on costs following the substantive decision. The costs in relation to the interim injunction and variation remain outstanding.

[6]                   The plaintiff’s application for costs seeks an award based on a calculation according to schs 2 and 3 of the High Court Rules 2016. This is on a Category 2, Band

5      Substantive judgment, above n 1, at [1].

6 At [278].

7 At [278].

8      At [279] and Attachment 1 – Draft Conditions.

B basis. A certificate is sought for a second counsel for two days of the four-day hearing.

[7]                   The defendants oppose the costs application on the basis that their defence in the High Court was reasonable and that the issues involved are of national interest and public importance, affecting large areas of land across New Zealand as well as a significant number of landowners. The Trust also says that First Gas failed to apply to the Court for a declaration of rights in a timely manner. If it had done so, it would have avoided the applications for an interim injunction, variation and the attendant costs by applying for a declaration of rights when “First Gas decided to reset the collaborative relationship”.9 The Trust also says the applications for relief, including the variation to the interim injunction, should have been submitted as a single application.

[8]                   In relation to the calculation of costs itself, the Trust submits a 2C category is inappropriate. The Trust says that it is taking the substantive decision on appeal and seeks an adjournment on the costs issue until after the appeal in the Court of Appeal is determined. If the costs are awarded, it seeks a stay on enforcement of the costs decision.

[9]                   Finally, the Trust submits that costs should lie where they fall as both parties are affected and interested in the land and must have an ongoing mutual relationship.

Principles as to costs

[10]               No issue is taken with the well-known general principles which apply to the award of costs under the High Court Rules 2016. Costs are always at the discretion of the Court.10 However, the Court must exercise that discretion in a principled way. In general terms, the following are the principles in relation to the setting of costs:11

(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds:

9 Memorandum on behalf of RV & PJ Gibbs Family Trust, 31 January 2022, at [9].

10     High Court Rules 2016, r 14.1.

11     Rule 14.2.

(b)an award of costs should reflect the complexity and significance of the proceeding:

(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application:

(d)an appropriate daily recovery rate should normally be two-thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application:

(e)what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs:

(f)an award of costs should not exceed the costs incurred by the party claiming costs:

(g)so far as possible the determination of costs should be predictable and expeditious.

…

[11]               There is no reason in this case why costs should not follow the event. The claim proceeded in a timely manner. It was brought on promptly. Both parties appeared, called evidence and made submissions and there was a site visit by agreement but at the initial request of the defendants. While the issues did involve interpretation of statute and easement certificates which had not been the subject of scrutiny by the Court earlier, there was nothing particularly difficult or complex about the interpretation. The proceedings were such that they needed to be conducted by counsel of skill and experience considered average in the High Court, and a normal amount of time would be considered reasonable for the preparation and related attendances.

[12]               Therefore, in terms of rr 4.3 and 4.5 of the High Court Rules, a categorisation of Category 2 and B is appropriate. That is what is sought by the plaintiff.

[13]               There is no reason why costs should not follow the event. As to the matters raised by the Trust:

(a)The issues between the parties were aired at the hearing. There is nothing in this case which would call for costs to be adjusted due to the

various stances of the parties at the hearing or in the course of the proceedings. It is not appropriate to relitigate the issues in this Court in relation to costs. I found for the plaintiff and therefore costs should follow the event in the usual course.

(b)In terms of national interest and public interest, First Gas noted in the course of its evidence that issues with most owners of land over which the pipeline runs are able to be resolved by agreement without difficulty. The relationship between the Trust and the Gibbs’ has been difficult for some time. There are no issues in the national interest, nor issues of public interest in relation to these proceedings. While a number of the members of the public may be interested in the issues and the outcome of the proceedings, that is a different thing to proceedings in the public interest.

(c)In relation to the suggestion that applications for interim relief, including variation, should have been submitted as a single application, the interim injunction and the variations were opposed by the Trust. In the circumstances, First Gas was required to make the various applications and have them dealt with by the Court. This is no reason to discount those costs.

(d)The fact that the judgment is going on appeal does not obviate an award of costs in this Court. The principle that costs should be awarded following the determination of a proceeding applies.

(e)If the Trust seeks a stay of the enforcement of any costs award, that application should be made to the Court following a discussion with First Gas over the issue.

[14]               The Trust has applied for a stay of enforcement of the judgment pending appeal. That was brought on a without notice (Pickwick basis) and has been declined. The application for stay will move to a hearing in due course.

Conclusion

[15]               Accordingly, an award of costs in favour of First Gas is made on a 2B basis as claimed together with reasonable disbursements. Awards of costs are made in favour of First Gas for the claim in relation to the substantive hearing and also the earlier interim injunction and variation applications which were successfully prosecuted by First Gas prior to the substantive decision which dealt with the permanent injunction.12 For clarity this judgment does not deal with the issue of costs on the application for stay.

Grice J

Solicitors:

Govett Quilliam, New Plymouth Defendants in Person

12  The Judge dealing with those interim applications reserved costs and no application was made at the time. Therefore those costs form part of the present application and fall to be determined in the context of the final costs award. The original hearing Judge is not available conveniently to make the determination, in terms of r 4.9 of the High Court Rules.