Gifford v Marlborough District Council
[2024] NZHC 3896
•19 December 2024
IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WAIHARAKEKE ROHE
CIV-2024-406-000014
[2024] NZHC 3896
UNDER the Resource Management 1991 (RMA) IN THE MATTER OF
a decision of the Environment Court
BETWEEN
MICHAEL HOWARD GIFFORD
First Appellant
CRB TRANSPORT LIMITED
Second AppellantAND
MARLBOROUGH DISTRICT COUNCIL
Respondent
Hearing: 27 November 2024 Appearances (via AVL):
D J Clark for Appellants
A C Besier for Respondent
Judgment:
19 December 2024
JUDGMENT OF GRAU J
[Environment Court appeal]
[1] The appellants, Michael Gifford and CRB Transport Ltd (CRB), appeal the Environment Court’s order that they pay $130,000 to the Marlborough District Council (the Council), that sum being the Council’s (reduced) cost of complying with enforcement orders that had been made by consent in 2020 under s 314 of the Resource Management Act 1991 (the RMA).1
[2] The orders were made for an investigation of an area of Mr Gifford’s property where Mr Gifford had buried organic waste. The Council considered Mr Gifford’s
1 Marlborough District Council v Gifford [2024] NZEnvC 148 [Decision on appeal].
GIFFORD v MARLBOROUGH DISTRICT COUNCIL [2024] NZHC 3896 [19 December 2024]
actions were generating, or were likely to have generated, adverse effects on his and adjoining property, as well as on downstream waterways. Mr Gifford had not complied with the enforcement orders and so the Council undertook the work on his behalf. The work cost much more than was expected; almost double the quote Mr Gifford had earlier obtained but did not proceed with. Mr Gifford’s view is that the Council spent far too much money on an unnecessarily wide investigation that was ultimately inconclusive, and he should not have to shoulder the cost of it.
[3]Mr Gifford says that the Environment Court Judge made three errors of law:
(a)The Judge adopted a Wednesbury approach to assess the costs payable to the Council for the steps it took to comply with the enforcement orders.2
(b)The Judge was wrong to take a restrictive approach, being only a “broad review” of the costs the Council incurred.
(c)The Judge incorrectly stated that the appellants had opportunities to seek to refine, amend, or cancel the orders and they have not done so, when the appellants had in fact applied to cancel the enforcement order around five months before the Environment Court made its decision on costs.
[4] The Council says the Environment Court’s decision should be upheld, the Environment Court was not wrong to apply a Wednesbury standard, and that only a broad review was within its jurisdiction. Nor did the Court err in declining to undertake a merits assessment towards costs recovery when, provided the work meets the requirements of the orders, the costs are recoverable under s 315(2)(c) of the RMA. The Council says the third alleged error of law is not relevant to the appeal. The application to cancel the orders was made well after the work required by the Orders was undertaken and paid for. Instead, the appellants are attempting to relitigate the facts that led to the issue of the enforcement orders.
2 Referring to Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 (CA) [Wednesbury].
Background
[5] The first appellant, Mr Gifford, owns an 80-ha rural property adjoining State Highway 1 to the south of Blenheim (the Property). The Property is used for farming and quarrying. The second appellant is Mr Gifford’s company, CRB. Mr Gifford holds a resource consent in relation to the quarry, as well as a resource consent which enables him to deposit clean fill where there has been gravel extraction on the Property.
[6] On 15 October 2018, the Council applied to the Environment Court under s 314 of the RMA for enforcement orders against Mr Gifford, CRB, and another company called Greenfuel Logistics Ltd.3 In essence, the Council contended that the appellants had placed, stored and buried materials, or otherwise used the Property in a manner which contravened the RMA, the Wairau Awatere Resource Management Plan, and the Proposed Marlborough Environment Plan. The Council’s argument was that organic material applied to the Property in an area described as “Area A” had been applied too deep and thick, resulting in contamination of the ground water and the adjoining Pukapuka Stream, which was in turn contaminating a neighbour’s domestic bore (the Thynne Well).
[7] The activity to which the enforcement order relates to is the spreading of grape marc (a winery waste contaminate) and grape marc leachate, onto land. Council officers had visited the site and observed large volumes of grape marc and grape marc leachate on the Property. Officers also made observations about discoloured and highly odorous water in the Pukapuka Stream, which flows through a flat section of the Property, and further downstream discharges into the Wairau lagoons.
[8] The Council considered that the activities did not comply with permitted activity standards and contravened the RMA, and were likely to be causing changes to the chemical and physical nature of the surrounding soil and any water in the soil. The visible orange seepage on the bank of the Pukapuka Stream was likely the result of soil and ground water contamination.
3 Greenfuel Logistics Ltd was subsequently removed as a party.
[9] The Thynne Well had been adversely affected since February 2016 and the neighbours had not been able to use the water for drinking and cooking water since the middle of 2016. The Council believed a full investigation of the extent of buried material was required.
[10] Following mediation between the parties, the enforcement orders were granted by consent on 16 January 2020. 4 The appellants agreed to Orders B3, B12, and B13 (together, the Orders), which required an investigation into the extent of waste burial and potential contamination from that buried waste in relation to Area A, as follows:
Buried Organic Waste
3.(B3) Engage a suitably qualified and experienced person approved by the Council’s Compliance Manager in relation to the investigation and management of the area where there has been buried organic waste on the Property within “Area A” on Map 1 attached to these orders (the waste management expert) to:
a.(B3a) Within 3 months of the service of the Order of the Court, prepare an investigation plan and submit to the Council’s Compliance Manager for comment and approval (investigation plan). The investigation plan is to set out the investigation of the area of land on the Property marked as Area A, which contains buried organic waste. The investigation plan is to describe:
i)the soil testing programme;
ii)the surface and ground water testing programme;
b.(B3b) Undertake a detailed investigation in accordance with the approved investigation plan.
c.(B3c) Prepare a report setting out the results of the investigation (buried waste investigation report) describing the extent of buried waste material in Area A, reporting and analysing the results of the testing, and recommending measures for the removal of all buried waste material and/or the remediation of Area A.
d.(B3d) Submit the buried waste investigation report to the Council’s Compliance Manager for comment within 6 months of the service of the Order of the Court.
e.(B3e) Address any comments made by the Council's Compliance Manager and revise the buried waste investigation report if necessary and submit the finalised report to the Council's Compliance Manager within 15
4 Marlborough District Council v Gifford [2020] NZEnvC 003.
working days of the Council's comments being provided to the waste management expert.
f.(B3f) Within 2 months of the Council providing their comments, produce a draft remediation plan describing the proposed remediation of Area A and submit the draft remediation plan to the Council's Compliance Manager for approval and comment.
g.(B3g) Respond to Council's comments where required and issue a finalised remediation plan to Council's Compliance Manager (Remediation Plan A) within 20 working days of the Council providing its written advice on the draft remediation plan.
…
12.(B12) If there is no proximate and available community or Council water scheme that is able to be connected to supply potable water to the Thynne property, then within 5 months of the service of the Order of the Court to engage a suitably qualified and experienced person in water supply and water contamination (water expert) (approved in writing by Council’s Compliance Manager). The water expert is to prepare and submit a draft report (water supply report), within 8 months of the service of the Order of the Court, to the Council's Compliance Manager for approval, advising on:
a)Whether the Thynne well (marked on Map A) located in Seventeen Valley Stream adjacent to a property at 3853 SH1 Redwood Pass, legal description Lot 5 DP 365088, serving the Thynne property, located at 3893 SH1 Riverlands and contained in legal description Part DP 751 (the Thynne property) can be remediated to provide a source of potable water, taking into account the groundwater supply into the well and to set out measures to be undertaken to achieve this;
b)If necessary, recommend an alternative supply of potable water for the Thynne property.
13.(B13) Within 9 months of the service of the Order of the Court, to implement and pay for the measures recommended by the water expert in the Council approved water supply report.
[11] The initial completion date for Order B3 (B3a–e) was within six months of service of the Orders. For Orders B12 and B13, the initial completion date was within eight months of the service of the Orders. Various extensions and variations of the Orders were granted. However, the appellants ultimately failed to comply because they did not engage a suitably qualified expert to investigate the contamination in Area A.
[12]Mr Gifford had attempted to engage an expert, and he obtained a quote of
$79,000 for the ordered work. As the Court noted at Mr Gifford’s eventual sentencing, including for breaching the Orders, Mr Gifford had said he became overwhelmed by the costs. The Court did not accept that claim as an excuse and said he ought to have alerted the Council and/or applied to the Court so that it could consider whether the order to which he agreed should have been amended.5
[13] On 14 October 2021, the Environment Court granted an application under s 315 of the RMA, allowing the Council to comply with the Orders on behalf of the appellants.6 The Council then engaged an expert from the firm Tonkin + Taylor Ltd (TT) to undertake the investigation and complete the work. On 8 November 2021, the Court issued a decision which combined the investigation required for Orders B3, B12, and B13 into one investigation report.7 This was set out in a new Order 14, as follows:
14.In relation to Orders B3, B12 and B13, the investigation of Area A and the Thynne Well are to be undertaken by 29 April 2022. The results of the investigations for Order B3, B12 and B13 are to be reported to the Court by 9 May 2022.
[14] TT completed its investigation and provided its report in May 2022 (the Report). It found soil and ground water contamination in Area A but it did not establish any clear link between the adverse effects caused by the material buried in Area A and the ground water quality in the Thynne Well or surface water. The Report recommended further investigation.
[15] On 20 July 2022, the Environment Court suspended the Orders as they related to Area A.
[16] Following the Report, the Council reported to the Environment Court that Order B3 was completed, and it was undertaking further investigation before it reported back to the Court on the completion of Orders B12 and B13. The Council now accepts that no further work is required in respect of Orders B12 and B13.
5 R v Gifford [2022] NZDC 22061 at [84].
6 Marlborough District Council v Gifford [2021] NZEnvC 161.
7 Marlborough District Council v Gifford [2021] NZEnvC 173.
[17] On 10 November 2022, Mr Gifford and CRB were sentenced in the Blenheim District Court on a number of charges under the RMA, including charges of breaching the Orders.8 Mr Gifford unsuccessfully appealed his sentence. In a decision dated 9 November 2023, Palmer J dismissed a suggestion that the Environment Court had not had jurisdiction to make an “investigation” enforcement order under s 314 of the RMA, a submission that had also been made in the District Court. That ground of appeal failed on the basis that an investigation may be a logical step in remedying a breach by identifying the best way to remedy it, thus an investigation is able to be ordered by the Environment Court.9
[18] It is the cost of this investigation report by TT that is the basis of the current appeal. The Council spent $174,536 (including GST) on the TT report. Before it engaged TT, the Council had also sought estimates from two other consultancies. The initial TT estimate was around $50,000–$70,000. Pattle Delamore Partners Ltd (PDP) estimated $97,590, and 4Sight estimated $55,465. The final cost of the work is said to have escalated due to COVID-19 restrictions, increase in drilling costs, and difficulty in mobilising staff across the country. It is Mr Gifford’s position that the Council wanted a “Rolls Royce” investigation, which is what they got after the Court granted the Council’s application under s 315 of the RMA allowing them to comply with the Orders on behalf of Mr Gifford.
[19] Before the Council applied to the Environment Court to recover the costs of complying with the Orders, the Council obtained an independent review of the TT costs from a director at PDP, given that the final cost of the Report was considerably higher than the estimate. The reviewer considered that the work could have been done for approximately $20,000 less than TT had invoiced. She concluded that a cost of
$130,000 (GST exclusive) would be a fair cost for the work TT carried out. The Council accepted the review and duly applied to the Environment Court to recover
$130,000 of the costs of complying with the Orders on behalf of the appellants under s 315(2)(c) of the RMA.
8 R v Gifford, above n 5.
9 Gifford v Marlborough District Council [2023] NZHC 3141 at [33].
[20] The Council subsequently undertook further testing of the Pukapuka Stream and Thynne Well. The results were provided to the appellants on 22 January 2024. The appellants then requested the cancellation of the Orders. This request is yet to be dealt with by the Environment Court.
[21] The Environment Court then granted the Council’s application to recover the costs of the TT Report.
Relevant provisions of the RMA
[22] I begin with the purpose of the RMA being the promotion and sustainable management of natural and physical resources. Sustainable management is defined in the “Purpose” section as:10
… managing the use, development and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural wellbeing, and for their health and safety, while—
(a)sustaining the potential of natural and physical resources (excluding minerals) to meet the reasonably foreseeable needs of future generations;
(b)safeguarding the life-supporting capacity of air, water, soil, and ecosystems; and
(c)avoiding, remedying, or mitigating any adverse effects of activities on the environment.
[23] I agree with the respondent that the provisions in the RMA dealing with enforcement orders are designed to implement this purpose.
[24] Section 314 of the RMA sets out that the Environment Court may make an enforcement order under s 319 to require a person to do one or more of the things contained in s 314(1). The Orders in this case were made under ss 314(1)(b)(i) and (ii), (1)(c), and (1)(da). Also relevant in these proceedings are ss 314(1)(d) and (2). These relevant provisions state:
10 Resource Management Act 1991 (RMA), s 5.
314 Scope of enforcement order
(1)An enforcement order is an order made under section 319 by the Environment Court that may do any 1 or more of the following:
…
(b)require a person to do something that, in the opinion of the court, is necessary in order to—
(i)ensure compliance by or on behalf of that person with this Act, any regulations, a rule in a plan, a rule in a proposed plan, a requirement for a designation or for a heritage order, or a resource consent; or
(ii)avoid, remedy, or mitigate any actual or likely adverse effect on the environment caused by or on behalf of that person:
(c)require a person to remedy or mitigate any adverse effect on the environment caused by or on behalf of that person:
(d)require a person to pay money to or reimburse any other person for any actual and reasonable costs and expenses which that other person has incurred or is likely to incur in avoiding, remedying, or mitigating any adverse effect on the environment, where the person against whom the order is sought fails to comply with—
(i)an order under any other paragraph of this subsection; or
(ii)an abatement notice; or
(iii)a rule in a plan or a proposed plan or a resource consent; or
(iv) any of that person’s other obligations under this Act:
(da) require a person to do something that, in the opinion of the court, is necessary in order to avoid, remedy, or mitigate any actual or likely adverse effect on the environment relating to any land of which the person is the owner or occupier:
…
(2)For the purposes of subsection (1)(d), actual and reasonable costs include the costs of investigation, supervision, and monitoring of the adverse effect on the environment, and the costs of any actions required to avoid, remedy, or mitigate the adverse effect.
[25] Section 315 requires a person against whom an enforcement order has been made to comply with it and (unless the order directs otherwise) pay all the costs and expenses of compliance. If they fail to comply, any person may, with the Environment
Court’s consent, comply with the order on behalf of the defaulter and recover the costs and expenses of compliance as a debt due. Any costs and expenses that remain unpaid may be registered as a charge on the land in respect of which an enforcement order has been made.
Environment Court decision
[26] The first issue for the Environment Court to determine was whether it had jurisdiction to determine a dispute about the costs payable to the Council for the steps it took to comply with the Orders.11 The Court concluded that it retained such a “supervisory” role over enforcement orders and matters of compliance for so long as such orders are on foot.12 The Court acknowledged the Council’s submission that the Court’s ability to review costs incurred in complying with enforcement orders would discourage the use of s 315(2) where appropriate. However, the Court said that its role could only extend to determining if the costs incurred:13
(a)relate to and arise from the orders being complied with; and
(b)are reasonable – in that sense we rely on the Wednesbury approach to reasonableness.
The Court said its role did not extend into a “forensic analysis”, and anything beyond a broad review is not within the Court’s expertise and the scope of supervision under s 315.14
[27] The appellants’ submission before the Environment Court was that the Council acted outside of the scope of the Orders when it undertook the work. The purpose of an enforcement order is to “avoid, remedy or mitigate” an adverse effect on the environment, not to ascertain whether there is one in the first place.15 It was argued that the Report did not require any remediation to occur, so it was not reasonable to impose a substantial cost on the appellants.16
11 Decision on appeal, above n 1, at [36].
12 At [36].
13 At [38]; citing Wednesbury, above n 2.
14 At [39].
15 At [44].
16 At [45].
[28] The Environment Court found that the Orders were properly made and could not be challenged through the costs recovery process. This was particularly the case here when the appellants had the opportunity over many years to refine, amend, or cancel the Orders, and when Palmer J had found in a prior criminal appeal from the Environment Court that the Orders were properly made.17
[29] The Court accepted the Council’s submission that there was no basis to assert the Council had pre-determined the scope of the Orders or the investigation, nor that it had rejected people Mr Gifford attempted to engage as experts. And, despite any concerns about costs or the scope of the investigation, Mr Gifford did not return to Court to raise these concerns or seek an amendment to the Orders. Mr Gifford had simply not engaged an expert, and the Orders did not specify how the investigation should be done, just what it was intended to achieve.18
[30] The Court found that it was not the Council’s job to determine how the investigation was to proceed or what it was to look into. The following needed to occur or be included in a final report under the terms of the Orders:19
(a)a suitable qualified expert was to be appointed;
(b)the report was to devise a plan for investigation and undertake an investigation into contamination;
(c)the expert was to provide a report to the Council on the extent of contamination; and
(d)advice from the expert on remediation (if necessary), any recommendations, and “sign off”.
[31] In answering the question of whether the costs sought were reasonable, the Court then applied what it called a Wednesbury approach to determining what is reasonable, saying, “[t]he principle is that a decision may be challenged as
17 At [47]–[50]; citing Gifford v Marlborough District Council, above n 9.
18 At [54]–[55].
19 At [56].
unreasonable if it is so unreasonable that no reasonable authority would ever come to it”.20
[32] The Environment Court found that the Council acted reasonably in engaging TT and then querying the costs, concluding as follows:
[58]We record, in relation to the costs incurred:
(a)the Council sought estimates from three qualified experts before authorising the work.
(b)it was guided by the expert it chose, T+T as to the form and extent of investigation.
(c)it did not accept the scope of the work without ensuring it addressed what was needed under Orders B3, B12 and B13.
(d)T+T requested three variations to the original scope of the works culminating in a final and required project budget from T+T for the investigation works and reporting of $151,805.14 (GST excluded).
(e)having received T+T’s invoice and being concerned at its amount, the Council engaged PDP to review the work undertaken and the costs. That review determined that
$130,000 was a fairer cost of the work than the $151,720 charged.
(f)taking PDP’s advice into account, the Council only seeks
$130,000 from the respondents.
[59]In those circumstances, we have no doubt that the Council acted reasonably in engaging T+T to undertake the work and then in querying the costs and reducing the amount it would seek from the respondents.
[60]Further, we are satisfied that the work undertaken by T+T was a necessary part of complying with the Orders.
[33]The Court also noted that the appellants had suggested an amount of
$75,263.75 was reasonable, being the average of the figures proposed by various companies during the tender process. However, as the Court said, this suggestion paid no regard to the work actually undertaken by TT and the review by PDP.21
20 At [57].
21 At [61].
[34] The Court also rejected the appellants’ argument there was an alternative pathway to compliance that would not have involved the Report being prepared. The Court held that the appellants were “with the benefit of hindsight” questioning the appropriateness of the Orders and the way the Council sought to comply with them.22 But, as the Court pointed out: 23
Not only did the respondents consent to the orders, but they also failed to comply with them. It is not then appropriate to then assert that the Council needed to step back and determine if a more focussed approach would rule out contamination. The Council relied on its expert to determine the correct approach – as it was required to do by the Orders.
[35] The Court also saw no merit in debating the conclusions of the Report.24 Any issue as to whether further steps needed to be taken for Orders B12 and B13 was a separate matter for the Court and did not mean that payment of costs incurred thus far should be deferred.25
[36] The Court also rejected the appellants’ argument that the Council should have mapped out what the potential costs were likely to be and then returned to get the Court’s informed consent to that process. Absent any dispute, the Court said there is no need for the Council to return to the Court before it makes a demand for reimbursement.26 The Court considered that Mr Gifford had some awareness that costs would be significant from his dealings with an expert from PDP, Mr Callander, whom he ultimately did not engage. The Court also adopted the following passage of Palmer J’s sentencing appeal decision in respect of Mr Gifford’s failure to comply with the Orders:27
[34]The other points, which also all fail, can be dealt with more briefly:
(a)The quote of $80,000 to Mr Gifford by a water scientist for an investigation, more than what he anticipated, does not make a difference to whether Mr Gifford should have complied with the order. If the size and cost overwhelmed Mr Gifford, he could have alerted the Council and/or applied to the Court to amend the terms, as the Judge held.
22 At [62]–[64].
23 At [65].
24 At [70].
25 At [71].
26 At [78].
27 At [60]; citing Gifford v Marlborough District Council, above n 9 (footnotes omitted).
(b)The enforcement order was not silent as to what was required. It specifically required Mr Gifford and CRB to engage a qualified approved person to investigate a likely potential contamination to inform any remediation work.
…
(e)The Judge was entitled to find it was a breach of the rule of law for which Mr Gifford was highly culpable. Mr Gifford chose to do nothing when he was unwilling to pay for something he agreed to pay for. In so doing, he disrespected his legal obligations and the rule of law.
[37] The Environment Court also rejected the argument that because further steps might be necessary it was premature to seek recovery of the TT costs, finding that the argument “pays no regard” to the need for the Orders to be complied with in the timeframe set by the Court. Nor did the Court accept that s 294 of the RMA could be invoked to enable the Court to review the consent given under s 315. This was another attempt to impugn the Orders, which was not appropriate in the costs hearing.28
[38] The appellants were therefore ordered to pay the sum of $130,000 within 21 days of the Environment Court decision.29
Approach on appeal
[39] Section 299 of the RMA allows a party to a proceeding before the Environment Court to appeal to the High Court on a question of law on any decision. The onus of establishing that the Environment Court erred in law rests on the appellants.30 It is not the role of the Court in an appeal on a question of law to undertake “a broad reappraisal of the [decision-maker’s] factual findings or the exercise of its evaluative judgments
…”.31 The Environment Court may have made an error of law if it:32
(a)applied the wrong legal test;
28 Decision on appeal, above n 1, at [81]–[84].
29 At [86].
30 Poutama Kaitiaki Charitable Trust v Taranaki Regional Council [2020] NZHC 3159 [Poutama] at [30].
31 Chorus Ltd v Commerce Commission [2014] NZCA 440 at [112].
32 Bryson v Three Foot Six Ltd [2005] NZSC 34, (2005) 2 NZELR 135 at [24] and [26]; see also Poutama, above n 30, at [31]; and New Zealand Transport Agency v Architectural Centre Inc [2015] NZHC 1991, (2015) 19 ELRNZ 163 at [22]–[23].
(b)reached a factual finding that was “so insupportable – so clearly untenable – as to amount to an error of law”;33
(c)came to a conclusion that it could not have reasonably reached on the evidence before it;
(d)took into account irrelevant matters; or
(e)failed to take into account matters that it should have considered.
[40] Relief will only be granted if the errors in law materially affected the outcome of the Environment Court’s decision.34
Discussion
Should the Court have applied a Wednesbury test to the issue of costs?
[41] I agree with the appellants that the Environment Court erred in law by applying a Wednesbury test. As both parties agree, the Wednesbury standard applies in judicial review proceedings where this Court is reviewing decisions by the Executive. That is, however, an entirely different context where the High Court is concerned with the reasonableness of a decision by a statutory decision maker. The Environment Court was not, however, concerned with the reasonableness of the Council’s decision to seek its costs of complying with the Orders. The Council was entitled to recoup its costs as a debt due. The Court was only concerned with the level of costs the Council had incurred. Nor is the Council seeking to recover costs of complying with the Orders an exercise of a statutory power, and thus amenable to judicial review. Even if it was, the Environment Court does not have jurisdiction to judicially review a Council’s exercise of its statutory powers. Only the High Court has such jurisdiction.
[42] I do not agree with the respondent that it is nevertheless appropriate to import this test from the judicial review context when the legislation itself does not provide any test. There may be no test simply because s 315 states only that the costs are
33 Poutama, above n 30, at [31(b)].
34 Titirangi Protection Group Inc v Watercare Services Ltd [2018] NZHC 1026, [2020] NZRMA 200 at [27].
recoverable as a debt due and can be registered as a statutory land charge, neither of which is a process within the jurisdiction of the Environment Court. That might tend to suggest there is no role for the Environment Court at all. The only other Environment Court authority I have seen on this issue pointed out that no further application is required to the Court to recover such costs.35 The Environment Court also said in that case that s 315 did not confer a discretion on the Council to consider whether the costs are “actual and reasonable”, in contrast to s 314(1)(d).36 Despite saying that, however, the Environment Court in that case did proceed to grant an order in favour of the Council to recover costs and expenses as a debt due.37
[43] I understand the Court in Armishaw to have been saying that, when a person has been granted a s 315 order to comply with an enforcement order on behalf of another, they do not necessarily need to return to the Environment Court to seek a further order to recoup their costs of compliance. In my view, however, in the event of a dispute about the level of costs incurred, it would seem odd if the Environment Court which had made the s 315 order—that order effectively indemnifying the person to whom it is granted—was not then able to exercise any supervisory jurisdiction, ensuring the person who is complying with the order on behalf of another has acted appropriately in doing so, which would include only incurring costs that are necessary.
[44] The question thus remains, how should the Environment Court have considered the issue of recovery of costs in this case? Although I agree with the Council that the “actual and reasonable” standard set out in s 314(1)(d) is not directly applicable when the Orders in this case were not made under that provision, I consider a materially similar standard would be appropriate to the issue of costs under s 315(1)(b). The wording of s 315 suggests the full costs of complying with the orders are payable as it requires (unless the enforcement order directs otherwise) the person to “pay all of the costs and expenses of complying with the order”. It therefore follows that the party who complies with the order on behalf of the non-compliant party may
35 Otago Regional Council v Armishaw [2023] NZEnvC 177 at [29].
36 At [31]. Section 314(1)(d) enables an order requiring a person to reimburse any other for actual and reasonable costs and expenses that were incurred (or likely to incur) in avoiding, remedying, or mitigating any adverse effect on the environment, where the person against whom the order is sought has failed to comply with an order under s 314.
37 At [35].
recover all of the costs and expenses of compliance, given it is only asking for what the non-compliant party would have had to pay if had they complied in the first place.
[45] But it must also be the case that a non-compliant party should not be responsible for the costs and expenses of any work unconnected to what is required to comply with the terms of an enforcement order. For example, costs and expenses of actions that go above and beyond what is necessary for compliance or which are disproportionate should not be sought to be recovered. Circumstances will vary widely. The scale of work required as against the amount sought is a useful starting point. But nor would it be appropriate to require a party acting on behalf of a non- compliant party to choose the least complex or “cheapest” option when it might not be the appropriate one. It must be the case that the complying party has an ability to exercise its judgment as to the most suitable option for the work.
[46] Where a non-compliant party has had the opportunity to comply with the enforcement order itself, but did not do so, it cannot later complain about the cost of another’s compliance unless it can establish unnecessary or disproportionate costs. In such circumstances, it would seem appropriate for the non-compliant party to bear the onus, on the balance of probabilities, of demonstrating that costs and expenses have been unnecessarily incurred or manifestly unreasonable. A similar approach has been taken in the context of disbursements under the High Court Rules 2016.38
[47] I also note that failure to comply with an enforcement order is an offence under s 338 of the RMA and, in the context of sentencing under the RMA, a “polluter pays” approach is taken. That approach aligns with requiring a person who did not comply with an enforcement order to show why they should not have to pay the costs and expenses incurred by someone else who acted on their behalf to comply with the order.39
[48] The error of law I have identified does not, however, assist Mr Gifford because I consider that the Environment Court nevertheless reached the correct result. The
38 See Buller Electricity Ltd v Electricity Authority [2024] NZHC 2081 at [12].
39 See Thurston v Manawatu-Wanganui Regional Council HC Palmerston North CRI-2009-454-24, 27 August 2010 at [44].
$130,000 the Council sought to recover was its actual costs of complying with the Orders, reduced after an independent review of those costs. That the actual costs were higher than the quoted costs—both to Mr Gifford and to the Council—has been explained. The real complaint is that a lot of money was spent to find out that there was no major issue. But that could not have been known until the investigation was completed, and this appeal is not the place to undertake an examination of the merits of the investigation. The short point is that Mr Gifford is the author of his misfortune. He had the opportunity to commission his own report at half the cost and he did not take up that opportunity. And it is not now possible to determine whether the cost quoted to Mr Gifford would also have been the final cost of the work if he had duly commissioned a report himself.
[49] Nor does it follow from the fact that the Report was inconclusive that the Council spent too much money. The Council did not determine the scope of the investigation. The Orders, to which Mr Gifford had agreed, set out that it was for the expert to prepare an investigation plan. Thus, the Council’s engagement of TT meant it was for TT’s experts to determine the scope of the investigation, and there is no evidence the Council had pre-determined it scope. The investigation was duly carried out, then the Council sought an independent review, which did not include findings of superfluous or inappropriate work. One of Mr Gifford’s chief complaints was about ground monitoring wells, but that had also been proposed in the quote Mr Gifford obtained but did not action. Additional testing that took place after the conclusion of the TT work is simply not relevant.
[50] Accordingly, there is nothing to suggest the costs were unnecessary or unreasonable. Rather it might be said that Mr Gifford is fortunate the investigation was ultimately inconclusive. I note the Council’s comment that if the appellants had undertaken the investigatory work when they were required to in 2020, the results may have been very different because delay potentially diminishes the extent of pollution over time. Although there was a significant cost involved in reaching an inconclusive finding, had it been otherwise, Mr Gifford would likely have been facing more significant costs to remediate the pollution he caused.
The “broad review” to the assessment of costs
[51] The argument for Mr Gifford on this ground is that the Court erred in saying it was not appropriate to conduct a “forensic analysis” of the costs claimed.
[52] I agree with the respondent that Mr Gifford cannot attempt to relitigate whether the Orders and/or their scope were necessary or were within the Environment Court’s jurisdiction to make, and this is, in reality, what he seeks to do under this ground of appeal. That the Orders were both necessary and within scope has already been confirmed by Palmer J in Mr Gifford’s appeal against his sentence (which was imposed for breaches of the RMA, including for Mr Gifford’s offences of non- compliance with the Orders). His Honour held that an “investigation” enforcement order was within the Environment Court’s powers under s 314.40 It appears to me that seeking a full merits-based assessment of the Orders in a costs hearing in this case would amount to a collateral challenge to Palmer J’s decision. Submissions that seek to argue this point must accordingly be put to one side.
Cancellation of the enforcement Orders
[53] Similarly, I would accept the Council’s submission that the fact the appellants had applied to cancel the enforcement Orders, after the Report costs had already been incurred by the Council, cannot be taken into account. As set out above, under s 315, a party in respect of whom an enforcement order is made is liable to pay all costs and expenses associated with compliance, and the compliance costs had already accrued by the time the Council provided the results of additional testing and the appellants applied to the Environment Court to cancel the Orders.
Conclusion
[54] Ultimately in the circumstances of this case, while I accept that there was a significant error of law, I find the Environment Court did not reach an incorrect outcome. The Environment Court clearly concluded that the scope of the Report was appropriate and addressed what was required under the Orders. This satisfies the requirement that the cost of the TT report was connected to compliance. The
40 Gifford v Marlborough District Council, above n 9, at [33].
Environment Court also clearly concluded that the Council had acted fairly in reducing the amount sought from the appellants, having taken independent advice on that point. Therefore, the costs claimed by the Council cannot be said to be manifestly disproportionate in the circumstances. Having set aside the bulk of the appellants’ submissions, there is nothing else to suggest the costs sought by the Council were unconnected to compliance or manifestly disproportionate.
Result
[55] For the reasons above, I agree there has been an error of law, but I dismiss the appeal on the basis that the Environment Court did not reach an incorrect conclusion.
[56] As the successful party, the Council is entitled to its costs on the appeal. I see no reason to depart from 2B scale costs. Counsel should endeavour to agree on costs but, in the event they cannot, short memoranda of no more than five pages (including tables) are to be filed. I will then consider the issue of costs on the papers. Given that the holiday period is approaching, the parties may file such memoranda if necessary, by 30 January 2025.
Grau J
Solicitors:
Wisheart Macnab & Partners, Blenheim for Appellants Tasman Law Limited, Richmond for Respondent
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