Global Metal Solutions Limited v Hamilton City Council
[2024] NZHC 790
•15 April 2024
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2021-419-000317
[2024] NZHC 790
UNDER the Resource Management Act 1991 IN THE MATTER OF
an appeal against the decision of the Environment Court
BETWEEN
GLOBAL METAL SOLUTIONS LIMITED
Appellant
AND
HAMILTON CITY COUNCIL
Respondent
Hearing: 27 November 2023 Appearances:
T Braun and E Anderson for the Appellant
L Muldowney and S Thomas for the Respondent
Judgment:
15 April 2024
JUDGMENT OF WALKER J
This judgment was delivered by me on 15 April 2024 at 12 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
GLOBAL METAL SOLUTIONS LIMITED v HAMILTON CITY COUNCIL [2024] NZHC 790 [15 April 2024]
[1] Global Metal Solutions Limited (GMS) appeals two Environment Court decisions. The first decision refused GMS’s application to vary an earlier interim enforcement order made by the Environment Court (Variation Decision).1 The second decision under appeal awarded costs to the respondent, Hamilton City Council (HCC) (Costs Decision).2
[2] The genesis of these appeals is an enforcement proceeding by HCC for noise breaches by GMS which resulted in the interim enforcement order (Enforcement Decision).3 The proceeding has occupied the attention of the Environment Court since late 2019 when HCC commenced the enforcement action.4 By that stage, HCC had already been dealing with GMS about compliance issues under the Operative Hamilton District Plan (District Plan) and the Resource Management Act 1991 (RMA) for at least 4 years. Since that time, there has been direct evidence from residents in the adjacent residential area that ongoing non-compliance at the GMS site has caused them to experience “considerable and appreciable” adverse effects on their amenity and wellbeing.5
[3] It was common ground in the enforcement proceeding that GMS noise emissions exceeded the requisite noise levels in breach of the District Plan. The crux of the Enforcement Decision was, at least in practical terms, whether there should be a grace period to permit GMS to relocate its business from the Hamilton site. GMS did not appeal that interim Enforcement Decision but, late in the day, applied to vary the date imposed for compliance with the District Plan.
[4] GMS filed its appeal of the Variation Decision on 20 December 2021. The notice of appeal sought, by way of relief, an extension of time for compliance to 28 January 2022. By the time of hearing the appeal, that date had obviously long passed. For the purposes of this appeal, it is not contested that GMS achieved compliance by
1 Hamilton City Council v Global Metal Solutions Limited [2021] NZEnvC 188, 29 November 2021. [Variation Decision].
2 Hamilton City Council v Global Metal Solutions Limited [2022] NZEnvC 71, 2 May 2022. [Costs Decision].
3 Hamilton City Council v Global Metal Solutions Limited [2020] NZEnvC 174, 14 October 2020. [Enforcement Decision].
4 Application for enforcement orders on behalf of HCC dated 19 December 2019.
5 Hamilton City Council v Global Metal Solutions Limited, above n 3 at [87]–[91].
1 December 2021. As such, GMS no longer seeks an order extending the time for compliance. It says instead that the purpose of the appeal is to correct reputationally damaging adverse findings which flowed into the adverse costs award made by the Environment Court.
Approach to appeal
[5] This means that there is a preliminary hurdle for GMS to meet. If the Variation Decision is moot, is it appealable?
[6] The Court does not normally embark on an appeal where there is no utility but has the discretion to do so in exceptional circumstances.6 Exceptional circumstances include serious procedural unfairness at the first hearing, or if it is in the broader public interest to do so.7
[7] If that discretion is exercised in favour of GMS, the second question in the substantive appeal is whether the Environment Court erred in declining to vary the time for compliance with the interim enforcement order. To succeed in an appeal, any error must be one of law not fact, and must have materially affected the Environment Court’s decision.8 An appellant must both identify a question of law and then demonstrate that the question of law has been wrongly determined by the Environment Court.9
[8] The parties agree that the approach to determining what constitutes a point of law for present purposes is helpfully summarised in Countdown Properties (Northlands) Limited v Dunedin City Council.10 A question of law arises where the Environment Court:
(a)applied a wrong legal test;
6 Baker v Hodder [2018] NZSC 78, [2019] 1 NZLR 94 at [32].
7 Otago Fish and Game Council v Otago Regional Council [2021] NZHC 3258 at [59].
8 Resource Management Act 1991, s 299.
9 Speargrass Holdings Limited v Van Brandenburg [2021] NZHC 3391 at [116].
10 Countdown Properties (Northlands) Limited v Dunedin City Council (1994) NZRMA 145 at [153].
(b)reached a conclusion without evidence, or one to which, it could not reasonably have come to on the evidence;
(c)considered matters which should not have been considered; or
(d)failed to consider matters which it should have considered.
[9] It is not for the appellate court to say whether the Environment Court was right or wrong in its conclusion. It follows that the weight that should be given to the evidence or to conflicting considerations does not raise a question of law. In short, sufficiency of evidence as opposed to the want of evidence is not a question of law.11 Similarly, it is not relevant that a differently constituted body might have come to another conclusion.12
Background
[10] By way of high-level background summary for the purposes of these appeals, GMS specialises in metal and e-waste recycling, and the export of recycling materials internationally. At the relevant time, it operated out of three sites in Hamilton, Auckland and New Plymouth. GMS collects, sorts and/or shreds product and prepares it for transport.
[11] GMS has operated the Hamilton site on Ellis Street (the Site) as a scrap metal business since 2015. The Site is situated within one of the industrial zones provided for in Hamilton under its District Plan. Activities on the Site included the loading, unloading, crushing, shredding, and processing of metal. It is the shredding activity which has been the primary focus of proceedings, however it appears that it is not only the shredding activity which produced noise emissions exceeding the noise rules under the District Plan.13
11 Terrace Tower (NZ) Pty Ltd v Queenstown Lakes DC [2001] NZRMA 193 (HC).
12 Stephen Blackley (ed) Resource Management (online ed, Thompson Reuters) at [A299.03] and [A299.06].
13 GMS described the shredder as a “significant contributor to the noise emitted from the site”.
[12] All the boundaries of the Site front onto other businesses operating within the industrial zone apart from the eastern boundary. A residential area lies near the eastern boundary; the closest properties to the Site being situated on Rimmington Drive. Between 2015 and 2018, Rimmington Drive residents contended that the noise from the Site severely and significantly impacted on their amenity, wellbeing, and overall quality of life.
[13] HCC undertook measurement of the noise levels from the Site in late 2016. Measurements taken from the nearest residential property to the Site showed that the level significantly exceeded the District Plan noise limits.
[14] In April 2017, GMS submitted a Noise Management Plan to HCC. That plan provided for “restricted” hours of operation among other measures for controlling the emission of noise. Despite implementation of these measures, further noise level monitoring during 2017 showed little if any reduction in the noise levels.
[15] In March 2018, HCC issued abatement notices requiring GMS to adopt the best practicable option of ensuring that the overall emission of noise from all activities does not exceed a reasonable level. The level was stipulated in the abatement notices.
[16] The abatement notices also required GMS to undertake various mitigation steps. Among other things, GMS was required to prepare another Noise Management Plan with noise control measures.
[17] The compliance date for the abatement notices was on or before 28 February 2019. GMS did not challenge the abatement notices but requested two extensions of time for both providing its Noise Management Plan and for achieving compliance. HCC granted two extensions of time for the completion of the Noise Management Plan but did not grant extensions for compliance. GMS did not provide HCC with evidence that it had implemented any noise mitigation measures.
[18] During 2019 HCC undertook further monitoring of the noise levels which confirmed that they continued to be well in excess of the District Plan limits.
[19] HCC thus applied for orders against GMS requiring it to cease carrying out specified activities at the Site emitting noise in contravention of Rule 25.8.3.7 of the District Plan and which has an adverse effect on the environment. The application requested that the timeframe for compliance with an enforcement order be “the earliest date set by the Court as being fair and reasonable in all the circumstances”.14
[20] While the Enforcement Decision is not the subject of this appeal, counsel submitted that it provides important context and so I summarise the most material findings.
[21] GMS opposed the application though there was no contest that it was substantially, and on a regular basis, in breach of Rule 25.8.3.7(a) of the District Plan (Noise Rule).15
[22] GMS, however, argued at the hearing that it had existing use rights because the Site had been used for metal recycling for approximately 30 years; there were no reasonably practicable mitigation measures that would allow GMS to operate from the Site in a way that was compliant with the Noise Rule, and it needed up to two years to relocate to an alternative site. HCC is critical of GMS for having raised the existing use argument late in the day and without an evidential foundation, a point to which I return later in this judgment.
[23] GMS argued that the Court should not make an enforcement order at that time, or, if it was minded doing so, to delay its operative effect to allow time to relocate. It contended there were unusual features of the case and relied on the impact on GMS’s business and loss of employment for many of the 35-40 employees working there.16
[24] The Environment Court recorded the respective position of the parties as follows:17
[2] The application is opposed by the respondents, who although claiming they have existing use rights, accept that relocating the business to another site
14 Application for enforcement orders on behalf of HCC dated 19 December 2019.
15 The Noise Rule prohibits activities within the Industrial Zone from exceeding a noise level of 50dB within the boundary of any site in the Residential Zone.
16 Hamilton City Council v Global Metal Solutions Limited, above n 3 at [134].
17 Hamilton City Council v Global Metal Solutions Limited, above n 3 at [2].
is the best option; however, they contend they need up to two years to do so. The Council submitted that, if the Court allows an extended period for full compliance, it must be framed as a deadline for compliance not a deadline for relocation, which then might be (sic) subject to an application for an extension. If this is the outcome, then the Council also seeks strict onsite mitigation requirements that have the effect of significantly reducing noise levels at Rimmington Drive. The Council’s position is based on its view that the respondents have had long enough to organise a relocation of the business to a more suitable site.
[25] Judge M Harland of the Environment Court (as she then was), sitting with Environment Commissioner Gysberts, concluded that GMS had contravened the Noise Rule and was likely to continue to do so. Judge Harland made an interim enforcement order requiring full compliance but with a delayed commencement date of 14 months. This was ten months less than GMS was seeking. The rationale expressed by the Court was that 14 months was a “significant indulgence to GMS”.18
[26] The Court also required additional mitigation measures to be implemented to deal with the likely continued exceedances and the impact on residents over the next year.19 It directed the parties to liaise about the practicality of mitigation measures suggested by their respective experts and report to the Court by 30 October 2020.
[27]The Court made the following salient findings for present purposes:
(a)It had not been provided with significant details about how aggressively GMS had pursued the investigation of relocation sites after the abatement notice and before the application for enforcement.20
(b)While GMS had taken steps, it had not communicated its efforts to HCC apart from an initial inquiry about Council sites.21
(c)The theme of the evidence from GMS was to place responsibility on HCC to assist GMS to relocate. This was even though GMS had known about the difficulties with its current site for many years, and at least
18 At [170].
19 At [180] and [188].
20 At [143].
21 At [142].
since the abatement notice was served had known that compliance with the rule was required.22
(d)While it was now the case that GMS was highly motivated and working hard to identify an alternative site within Hamilton to relocate its operation, the steps prior to the issue of proceedings had not been as proactive as they ought to have been.23 It was only since the application was filed that GMS had addressed this with the degree of necessary urgency.24
(e)It was GMS’s responsibility to liaise with HCC about what it proposed to resolve the noise emission problem, not the other way around.25 It had also failed to offer anything tangible by way of further mitigation to residents.26
(f)The Court disagreed with GMS’s view that there was nothing further it could do by way of mitigation. It said:27
[168] Mr Wilson’s inability to provide or offer any interim measures to help ameliorate the effects the residents experience was telling. It was most surprising that, faced with an application that could effectively shut the GMS business and the site down, nothing constructive was able to be offered to the Court apart from indicating it would have to be looked at later.
[28] On 16 December 2020, the Court issued a second interim decision recording additional temporary orders regulating shredder operation.28 Again, these orders were intended to be revisited and additional orders made.29
[29] A relatively long period of inactivity followed. In June 2021, HCC filed a memorandum seeking orders to hold GMS accountable for the remaining six months
22 At [146].
23 At [166].
24 At [178].
25 At [167].
26 At [168].
27 Hamilton City Council v Global Metal Solutions Limited above n 3.
28 Hamilton City Council v Global Metal Solutions Limited [2020] NZEnvC 210.
29 At [16]–[17].
of the interim period. On 10 June 2021 the Chief Environment Judge D A Kirkpatrick directed:30
(a)GMS is to file and serve a reporting memorandum on the last working day of each month until December 2021 addressing progress towards either relocation or other basis for closure of the site.
(b)GMS is to keep a record of the date, time, and duration of all shredder operations (shredder log). Every Monday it is to email the shredder log from the previous week to the Council’s enforcement officer.
[30] GMS did not comply with these directions for the months of June and July 2021. HCC pressed for compliance. Finally, GMS filed a memorandum of counsel dated 18 August 2021. HCC, concerned about the adequacy of the information provided in the single page memorandum, went back to the Environment Court on 27 August 2021. HCC warned that if immediate and ongoing compliance was not achieved by 1 December 2021, it would seek site-specific and practical orders pursuant to s 315(2) of the RMA to ensure immediate and ongoing compliance. It pointed out that this would include at least the immediate cessation of all shredder operations.
[31] The Chief Environment Court Judge issued a minute dated 30 August 2021 in the following terms:31
The presiding judge has reviewed both the memorandum of counsel for [GMS] and the memorandum of counsel for the Council. The Court shares the concerns expressed by counsel for the Council. If the next report by [GMS] does not set out a clear and practical way forward, the respondents cannot expect that the Court will be likely to consider any alteration to the current order.
[32] Despite this warning, GMS did not file any report for August, September, or October 2021.
[33] Counsel for HCC filed a memorandum on 29 October 2021 expressing concern about whether compliance would be achieved given the looming deadline. At
30 Minute of Chief Environment Court Judge dated 10 June 2012
31 Minute of the Environment Court dated 30 August 2021.
a judicial telephone conference on 12 November 2021, GMS then indicated through counsel that it no longer intended to relocate its whole operation but instead intended to relocate the shredder machine to its New Plymouth site. It also advised that it could not be compliant by 1 December 2021 and would seek an extension of the deadline. It made that application under s 321 of the RMA on 18 November 2021 seeking an extension to 31 March 2022 and proffering a reduction in operating hours of the shredder.32
Variation Decision
[34] The application was heard under urgency on 29 November 2021 by Judge J A Smith sitting with Commissioner Gysberts.33
[35] The Judge delivered an oral decision at the conclusion of the hearing declining any extension to the compliance date and reserving costs. A written decision followed a few days later.34 The key question identified by the Court was whether the enforcement order was still appropriate in the light of any change of circumstances or otherwise.
[36] After narrating the procedural context, Judge Smith noted that there had been one or two breaches by GMS of the directions made by the Environment Court.35 More critically, that the Court had not received any report from GMS for June or end July 2021. He referred to the memorandum filed on behalf of GMS on 18 August 2021 as material to an understanding of GMS’s position as at that date. The relevant parts of that memorandum were:36
2. GMS accepts that there are no mitigation options that will enable the site to be compliant if it continues with its current operations. That means that GMS is looking into either closing the site as an operating yard (and moving all operations to another site in or close to Hamilton) or moving the part of the operation referred to as the “shredder” to another site.
32 A prohibition on the operation of the shredder outside specified permitted operating hours had been made in the second interim decision of the Environment Court.
33 By this time Judge (now Justice) Harland had been appointed to the High Court.
34 Hamilton City Council v Global Metal Solutions Limited, above n 1.
35 At [15].
36 Memorandum of counsel for the respondents dated 18 August 2021.
3. Since 10 June 2021 (the date the orders were made in relation to the provision of updating information), GMS has:
3.1 continued to look for suitable sites in and around Hamilton and is currently considering options for suitable sites. GMS is still hopeful that an alternative site can be found, but is realistic that time is tight, and on that basis has explored alternatives.
3.2 the preferred alternative may be to move the shredder operation to an alternative site, most likely in Auckland or Taranaki. There are logistical challenges associated with this that GMS is working through. This will result in loss of jobs in the Hamilton region.
[37] The Judge described HCC’s response as a clarion call to GMS that delay would be fatal to GMS and that it would be seeking site-specific and practical orders from the Court.37 He recorded that the Court had to issue yet further directions on 30 August 2021 stating that if the next report by GMS did not set out a clear and practical way forward, GMS could not expect the Court to be likely to consider any alteration to the current order. He noted that, despite this warning, GMS did not file any report for August, September, and October.
[38] Focusing on when the arrangements were made for the change of Site the Judge accepted that GMS had been considering options from the period December 2020 to May 2021 at least.38 He commented that while the relevant dates were not as clear in the evidence of GMS witnesses as they should have been, they inferred that there was no firm arrangement for the New Plymouth site on 18 August 2021 and accordingly the prospect of compliance was remote by 30 August 2021.39 Materially, in a passage GMS seeks to challenge, the Court concluded that the failure to provide the required updating reports was deliberate and the filing of an application as late as 18 November 2021 was “brinkmanship” intended to force the Court to delay the hearing or grant the extension.40 Further, that GMS was indifferent to its obligations under the Court orders/directions, seeking instead to continue its activity in breach of the District Plan for the pursuit of profit.41
37 Hamilton City Council v Global Metal Solutions Limited, above n 1 at [18].
38 At [28].
39 At [35].
40 At [36].
41 At [38].
[39] That conduct was held to be relevant to the variation application, in the same way as would be relevant when seeking an interim injunction in the equitable jurisdiction. The Judge concluded that GMS needed to pull back from the approach it had adopted to date and cease the activity by 1 December 2021 or reduce the activity to such a level that there was clear compliance which could be measured and proven.
[40] Having found that the evidence did not satisfy the Court that there were exceptional circumstances to justify continued breach of the District Plan, nor having met the evidential threshold for a change in circumstances warranting an extension, the application was declined. The Court reserved costs recording that this “appears to be an unusual case where costs may be justified in full”.42
Costs Decision
[41] HCC sought costs for both the substantive enforcement order proceedings and variation proceedings. GMS responded by applying to recuse Judge Smith.43 That application became redundant because the Chief Environment Court Judge indicated that he intended to deal with matters from that point.44
[42] HCC initially sought a total costs award of $242,368.38 against GMS representing:45
(a)Higher than normal costs in relation to the substantive application for enforcement orders and the ongoing litigation following the issue of the interim decision – totalling $209,365.68 representing 85 per cent of HCC’s actual legal costs of $182,918.64 and 100 per cent of total disbursements/expert costs of $53,884.84.
42 At [51].
43 HCC did not have any opportunity to respond to the application for recusal (dated 2 February 2022) but recorded before this Court its rejection of any allegation of partiality on the part of the Judge in the variation proceeding.
44 Counsel for HCC records that HCC intended to oppose the application for recusal because of the absence of any legitimate grounds to recuse.
45 Cost memorandum of counsel on behalf of HCC dated 18 January 2022.
(b)Indemnity costs in relation to the substantive application to vary the enforcement order – totalling $33,002.70 representing HCC’s legal costs in full, inclusive of GST.
[43] In a second costs memorandum HCC amended the costs claim to GST exclusive figures.46
[44] GMS opposed the costs application in respect of both the Enforcement Decision and the Variation Decision. It argued that costs should lie where they fall. As a fall-back, it argued that if the Court considered that the application should have been signposted in earlier reporting memoranda, costs should be limited to the so-called ‘comfort zone’ – being 25 to 33 per cent of the actual and reasonable costs incurred by HCC.47
[45] On 2 May 2022, the Environment Court delivered the Costs Decision awarding “approximately 50 per cent of the total costs incurred” in favour of HCC. That figure was quantified by the Court as $134,900.48
[46]In relation to the issue of costs for the variation proceeding, the Court said:49
[23] We accept the Council’s submission that GMS’s application for variation should have been signposted earlier to the Council and the Court. We also note that GMS acknowledged this omission in their submissions. Their urgent application subsequently amounted to the Council having to prepare for a hearing in less time than usually required. Ultimately, this would have put the Council to unnecessary costs. Accordingly, an award of costs is justified in respect of the Variation Proceeding.
[47]In respect of quantum, the Court said in respect of the variation proceeding:
[26] We find that a higher-than-normal award of costs is appropriate in both proceedings. As noted above, GMS’s arguments were advanced without substance. Moreover, GMS’s variation application was poorly advanced and put the Council to unnecessary cost given its urgency.
[27] We do not consider that an award of indemnity costs is appropriate for the Variation Proceeding. Indemnity costs are rare, and are normally reserved for circumstances where the application was vexatious, frivolous or had no
46 Second memorandum of counsel for HCC as to costs dated 4 March 2022.
47 Hamilton City Council v Global Metal Solutions Limited, above n 2 at [10].
48 At [28].
49 Hamilton City Council v Global Metal Solutions Limited, above n 2.
chance of success. While GMS’s application was poorly pleaded and should have been signalled to the Council and the Court at an earlier date, we do not consider there was an extreme abuse of process that would warrant indemnity costs.
[48] GMS amended its notice of appeal to include the Costs Decision.50 It asks this Court to quash the costs order and re-determine it considering the findings on appeal.51 I return to the issue of the relationship between the substantive appeal and costs appeal in due course.
Grounds of appeal
[49] GMS’s amended notice of appeal raises five broad substantive grounds of appeal namely that the Environment Court:
(a)made findings which contradicted unchallenged evidence or had no proper evidential basis;
(b)drew inferences which could not reasonably be drawn from the primary facts;
(c)overlooked or failed to consider relevant matters and/or considered irrelevant matters;
(d)applied the wrong legal test;
(e)breached natural justice.
Mootness and the discretion to determine the appeal
[50] The first issue is a gateway issue. There is no contest that this appeal is moot in so far as any substantive outcome is concerned. The relief which GMS sought in the original notice of appeal is no longer available to it.52 Mr Braun, for GMS, did not
50 Amended notice of appeal by appellant dated 23 May 2022.
51 In oral submissions, Mr Braun, for GMS, suggested that if the Costs Decision was quashed it may be more appropriate to remit questions of costs to the Environment Court.
52 GMS withdrew the substantive relief in its amended notice of appeal dated 23 May 2022.
skirt this issue in his oral submissions. Rather, he submitted that the variation hearing in the Environment Court went so awry procedurally that the intervention of this Court is warranted. He argued that two aspects – reputational damage and the costs determination – are issues which the Court should exercise its discretion to deal with, even if the substantive outcome is unalterable.
[51] The Supreme Court in Baker v Hodder said that it is not possible to state a “test” governing the exercise of the discretion, or to give a comprehensive statement of the circumstances in which it might properly be exercised.53 However, it listed some relevant considerations:
(a)Courts should exercise restraint before dealing with moot appeals – that is, an appeal which will have no practical effect on the rights of the parties.54
(b)The fact that costs remain at issue will not necessarily mean that an appellate court would hear an otherwise moot appeal. However, it is a circumstance adding weight to the case for hearing a substantive appeal even where the relief originally sought is no longer available.55
(c)A decision to hear a moot appeal should be made only in exceptional circumstances found either in the circumstances of the particular case (for example serious procedural unfairness at the first hearing) or the broader public interest.56
[52] One of the proposed grounds of appeal relied on by GMS purports to raise procedural unfairness at the Environment Court hearing. It argues that at the outset of the hearing, the Court indicated it considered it unnecessary for Mr Eggers (for GMS)
53 Baker v Hodder, above n 6 at [33].
54 At [32].
55 At [37].
56 At [33].
or Mr Powell (for HCC) to be available for cross-examination without giving notice to the parties that it proposed to reject GMS’s evidence.57
[53] I am satisfied that no procedural unfairness has been shown. The Court provided both parties with an opportunity to cross-examine any of the other party witnesses at the hearing. The Judge expressly stated that “whether or not cross examination will avail very much, seems unlikely to me, but that is for the parties not for the Court”.58 GMS’s counsel elected not to cross-examine Mr Powell. Counsel for HCC elected not to cross-examine Mr Eggers. The Judge directed that both the affidavits of Mr McGregor (for HCC) and Mr Scott (for GMS) would be treated as the best evidence and invited counsel to make submissions as to the weight that should be given to each. Therefore, each party had an opportunity to address the Court on matters of weight. It is difficult to see in those circumstances how it could be said that the Court erred by not indicating at the outset that it intended to reject Mr Scott’s evidence when matters of weight had yet to be argued. Moreover, it is a mischaracterisation to say that Mr Scott’s evidence was rejected. The core criticism of the Court was that the evidence was imprecise, lacking in detail and did not go far enough. That is a different problem – one which essentially says that the evidence in chief did not meet the burden of proof.
[54] That criticism is also unwarranted when the Court was operating under urgency because of the timing of GMS’s application and was impacted by the unavailability (for legitimate reasons) of some of the witnesses.
[55] There is no broader public interest at stake in the appeal. GMS’s interest is an inherently private interest. GMS has not particularised any additional reputational damage by the findings in the Variation Decision (as opposed to the adverse findings in the Enforcement Decision which was not appealed), but I accept by the nature of the findings that there may be some such additional impact. However, the submission made by counsel for HCC that this is not an appropriate use of the Court’s resources in circumstances where GMS knowingly committed ongoing breaches of the District
57 Mr Eggers had not provided affidavit evidence but offered to make himself available (and provide evidence from his own personal experience) due to the explained unavailability of Mr Scott who had sworn an affidavit in support of GMS.
58 Transcription of hearing before the Environment Court on 29 November 2021 at page [5].
Plan and RMA, continued to breach interim orders and directions of the Environment Court and then sought the indulgence of the Court at the eleventh hour, has heft.59
[56] GMA relies on the “live” issue in the associated Costs Decision appeal to justify the Variation Decision appeal. However, the challenged costs award is primarily directed to the enforcement proceeding and its aftermath, not the variation proceeding. The proportion of costs attributable to the variation proceeding is comparatively slim given that those incurred costs were approximately $33,000. On its own, it does not justify re-opening the Variation Decision but is a relevant factor.
[57] While costs can in many instances be appealable on a stand-alone basis, GMS initially pinned its challenge to costs on its substantive challenge to the Variation Decision save for a discrete GST point. In oral submissions, in response to questions from the Bench, Mr Braun walked back from this proposition. He contended instead that it was open to this Court to find that criticisms made by the Environment Court in the Variation Decision did not warrant the award of costs made by the Chief Environment Court Judge even if the appeal was substantively unsuccessful. While I disagree with Mr Muldowney’s submission that any issues concerning the hearing into the Variation Decision can be addressed in the appeal against the Costs Decision, I also disagree that GMS’s cost appeal rises and falls on the outcome of this preliminary point. There are two flow-on consequences. First, it undermines the submission that the Court should exercise its discretion in favour of determining the substantive appeal because of the impact on costs. Secondly, it means that some of the costs appeal survives regardless.
[58] There is a further point which informs my conclusion not to exercise the Court’s discretion to determine the substantive appeal on its merits. I am not persuaded that, even if the Variation Decision was wrong, this would have had a material impact on costs. The appellant sought an indulgence from the Environment Court late in the day. This is relevant to costs. It is conceivable that GMS would face an adverse costs award regardless of whether the application had succeeded.
59 Hamilton City Council v Global Metal Solutions Limited, above n 1 at [14]–[20].
[59] Finally, unlike Baker v Hodder, I glean that there are policy issues arising from appellate review of a specialist jurisdiction where the objective of the appeal is reputation management rather than a substantive live issue.
[60] In sum, I find no reason to exercise my discretion to determine the appeal against the Variation Decision and decline to do so. I therefore dismiss that appeal.
Costs appeal
[61] Costs awards are quintessentially discretionary. An appeal cannot succeed unless the appellant shows that the judge acted on a wrong principle; failed to consider some relevant matters or took account of some irrelevant matter or was plainly wrong.60
[62] The Environment Court has a broad discretion in respect of costs but must ensure it does not act inconsistently with well-established principles. To this end, it has issued a Practice Note listing five factors commonly referred to and given weight if they are present.61
[63] Mr Braun submitted that where costs are determined by a judge other than the hearing judge, no deference should be afforded to the decision since the decision-maker did not possess the advantage of presiding over the trial.62 While that submission may have a superficial attractiveness, in this case Commissioner Gysberts was the Commissioner sitting with the presiding judge at the material stages of the proceeding.63 His consistent presence is an obstacle to that submission and I reject it.
[64] GMS argues that six fundamental errors materially affected the outcome of the Costs Decision:
60 Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [15].
61 Environment Court Practice Note 2014, at clause 6.6. See also DFC NZ Ltd v Bielby [1991] NZLR 587.
62 Relying on Jarden v Lumley General Insurance (NZ) Limited [2018] NZCA 6 at [8].
63 In the interim judgment of Environment Court (Enforcement Decision) Judge Harland records that Environment Commissioner D Bunting commenced as part of the Court but was unable to continue for the hearing on 13 July 2020.
(a)overlooking or failing to consider relevant matters in finding that GMS’s arguments in respect of the enforcement proceeding were without substance;
(b)incorrectly stating GMS’s position in respect of measures which would make operations compliant, contrary to, among other things, the findings of Judge Harland (as she then was);
(c)finding that HCC was put to added costs by GMS’s conduct of the proceeding;
(d)finding that the variation application was poorly pleaded;
(e)finding that GMS’s arguments were advanced without substance (referring to the points on appeal in respect of the substantive variation appeal);
(f)erroneously basing the quantum assessment on GST inclusive figures.
[65] It is not open to this Court to interfere with the Costs Decision relating to the variation proceeding on matters of weight. That falls squarely within the exercise of the Environment Court’s discretion. However, just as it is possible to challenge the cost award pertaining to the enforcement proceeding without having appealed that decision, it is open to GMS to challenge the costs award relating to the variation proceeding on similar grounds. In that respect, I accept the revised submission that the costs appeal does not wholly rise or fall on the whether the appeal of the Variation Decision succeeds.
[66]I deal with each in turn although there is significant overlap.
Did the Court err by overlooking or failing to consider relevant matters in finding that GMS’s arguments in respect of the enforcement proceeding were without substance?
[67]Mr Braun submits that the Environment Court overlooked or failed to consider:
(a)The appropriate concessions GMS made in acknowledging from the outset that its operations breached the Noise Rule in the nearby residential area and that, despite taking all practicable steps, it was not going to be able to make the Site compliant. 64
(b)The findings in the Enforcement Decision that it was appropriate to have 14 months to achieve compliance, which represented significant success for GMS measured against the 30 days for compliance sought by HCC.
(c)That GMS had grounds for believing it had existing use rights.
[68] Mr Braun further submits that if the existing use argument was without substance, this should only sound in costs to the extent that it unnecessarily added to HCC’s costs. He says that there was no significant increase to costs, given the timing of the evidence provided by HCC (relating to the interruption of the continuous use of the site) and the materiality of the existing use argument to GMS’s alleged lack of awareness of breach at commencement. This, he submits, went to the issue of requiring additional time to become compliant.
[69] I accept that the view that GMS advanced arguments without substance coloured the approach to costs. Merely because an argument is ultimately lost does not mean it was without substance and should not have been presented.
[70] However, I agree with the position advanced by HCC that it is apparent from the Enforcement Decision that GMS advanced arguments about existing use rights without evidential support. I note too GMS’s wholesale opposition to the enforcement order even when it was unable to dispute an “ongoing and persistent breach of the applicable District Plan rules”.65
[71] The first limb of s 10(1)(a)(i) of the RMA requires a respondent relying on existing rights to prove, on the balance of probabilities, that either:
64 Hamilton City Council v Global Metal Solutions Limited, above n 3 at [100] and [124].
65 At [18].
(a)on the date that the District Plan Noise Rule became operative it was operating in a manner compliant with the then-operative Noise Rule; or
(b)had existing use rights arising at some earlier date that preceded the old Noise Rule becoming operative.
[72] GMS produced no evidence to confirm that the noise emissions from the site between commencement of its operation and October 2017, when the District Plan became operative, were compliant with the then limit.66 What evidence there was suggested the contrary.
[73] Without evidential support, the existing use right argument was bound to fail. It failed after HCC called a witness to show that a plastic manufacturer operated on the site for a period of more than 12 months. 67 This interrupted the continuous use of the site as a scrap metal yard/metal recycling facility. More relevantly, the existing use right argument could not have succeeded given the absence of evidence to meet the requirements of s 10 (1)(a)(i) and the finding that the scale and intensity of GMS’s operation had changed over the years to such an extent that it was not similar in character, intensity, or scale to that which existed prior to the relevant rule.68
[74] Mr Muldowney submitted that GMS had not squarely raised the existing use argument in its evidence in chief, leading to HCC incurring unnecessary costs when it had to address the issue at the hearing after it emerged during proceedings. I do not find this point to be particularly strong and put it to one side. It is material only that HCC had to address the argument and not when it had to meet it in this case. That meets Mr Braun’s criticism that there should only be a cost consequence to the extent that it unnecessarily added to HCC’s costs. I am satisfied that it added to HCC’s legal costs as a matter of common sense.
[75] It is also incorrect that HCC sought a 30 day deadline for compliance such that it could be said that GMS achieved a level of success which warrants an order that costs lie where they fall. HCC’s application sought an enforcement order that “shall
66 Hamilton City Council v Global Metal Solutions Limited, above n 3 at [74].
67 At [81]–[82].
68 At [84].
be complied with at the earliest date set by the Court as being fair and reasonable in all the circumstances.”69 Mr Muldowney properly acknowledged that he proposed a 30-day deadline in opening submissions. By closing legal submissions, HCC accepted that relocation could be a 12–18-month exercise and pivoted its approach to one requiring hard deadline for compliance rather than a date for relocation to avoid extension applications.
[76]In sum, I find nothing in this head of challenge to the Costs Decision.
Did the Court incorrectly record GMS’s position on measures to make operations compliant?
[77] Mr Braun submitted that the following paragraph of the Costs Decision is “patently incorrect” and demonstrated the Judge’s mistaken view of the case GMS was pursing:70
[18] …However, [GMS] continued to argue that the activity could continue on the subject site and that further measures would be introduced to the operations of the site to produce a complying activity.
[78] He submitted that the statement contradicts GMS’s actual position, the findings of Judge Harland in the Enforcement Decision, the submissions of counsel and the experts’ agreed position. Moreover, he says it informed Judge Smith’s mistaken view that GMS had pursued an argument that was contrary to expert evidence and therefore unreasonable.
[79] The impugned paragraph must be read in its entirety and in the context of the whole decision. It followed an express acceptance of HCC’s submission that GMS’s arguments were advanced without substance, corroborated by Commissioner Gysberts who was present at the enforcement hearing. In the overall scheme, I am not persuaded that this statement was material to the costs assessment.
69 Application for enforcement orders on behalf of HCC dated 19 December 2019.
70 Hamilton City Council v Global Metal Solutions Limited, above n 2.
Did the Court err in finding that HCC was put to added costs?
[80] The Court expressed the view that the slowness of the extended proceedings would have added otherwise unnecessary cost for HCC.71 Mr Braun submits that this conclusion was driven by two fundamental errors: first that GMS was dilatory during the enforcement proceeding and second, that GMS caused the proceedings to be extended which added cost. He points to the acceptance by Judge Harland that, at least from the time that the enforcement proceeding was filed, GMS had been proactive and urgently taking steps to explore relocation options.72
[81] I apprehend the point Mr Braun makes is that delay prior to the proceeding is not a factor bearing on costs, in contrast to delay during a proceeding.
[82] I consider that it was open to the Court to factor in the overall timeframe within which the substantive matters were addressed. This appeal point is linked to the point about taking points without substance and therefore prolonging the hearing. As one of multiple factors considered, I find there is nothing in the point to warrant interfering with the Environment Court’s discretion. I accept Mr Muldowney’s submission that had GMS taken a more urgent approach to resolving the breaches, less effort would have been required on the part of HCC.
Finding that the Variation application was poorly pleaded
[83] GMS argues that the Court was wrong to find that its Variation application was “poorly pleaded”. In fact, the Court’s criticism was that it was “poorly pleaded and should have been signalled to the Council and the Court at an earlier date” and also “poorly advanced”.73 In short, it was a composite criticism, leading to the following passage in the Costs Decision:74
[23] We accept the Council’s submission that GMS’s application for variation should have been signposted earlier to the Council and the Court. We also note that GMS acknowledged this omission in their submissions. Their urgent application subsequently amounted to the Council having to
71 Hamilton City Council v Global Metal Solutions Limited, above n 2 at [20].
72 Hamilton City Council v Global Metal Solutions Limited, above n 3 at [166] and [178].
73 Hamilton City Council v Global Metal Solutions Limited, above n 2 at [26]–[27].
74 Hamilton City Council v Global Metal Solutions Limited, above n 2.
prepare for a hearing in less time than usually required. Ultimately, this would have put the Council to unnecessary costs. Accordingly, an award of costs is justified in respect of the Variation Proceeding.
[84] I find no error in the approach of the Environment Court. It was open to the Court to make those findings.
Did the Court err in finding that GMS’s arguments were advanced without substance?
[85] This was advanced as a ‘catch-all’ head of challenge. My findings above dispose of this ground also.
Was it an error to base quantum on GST inclusive figures?
[86] It is common ground that HCC is a GST registered entity. GMS argues that costs awards to GST registered entities should be made on a GST exclusive basis. HCC amended its costs claim in a second costs memorandum to the Court dated 4 March 2022. It recorded that it was seeking 85 per cent of GST exclusive costs incurred in the enforcement proceedings and disbursements (GST inclusive) and 100 per cent of its variation costs (GST exclusive) as follows:75
(a)Enforcement proceeding: legal costs of $158,001.60 and disbursements/expert costs of $47,056.69.
(b)Variation proceeding: legal costs of $28,698.00.
[87] Instead, the Chief Environment Court Judge made an award of approximately 50 per cent of the total costs incurred by HCC, calculating this by reference to the GST inclusive figure.76 By doing so, GMS argues that costs payable in fact represent nearly two thirds of HCC’s actual costs once the GST input credit is accounted for.77 The net difference from GMS’s perspective is said to be around $18,000.
75 Second memorandum of counsel for HCC as to costs dated 4 March 2022.
76 Hamilton City Council v Global Metal Solutions Limited, above n 2 at [28].
77 This submission assumes that any sum of costs recovered by HCC will not itself be subject to a liability to the IRD for an output tax, on which no evidence was presented.
[88] The judgment specifically states that HCC filed an application for costs seeking a total award of $242,368.38 and that this represented HCC’s legal costs in full, with all figures inclusive of GST.78 There is no reference to the second memorandum of counsel for HCC in which GST exclusive figures were claimed. However, the explicit recognition that the figures were GST inclusive signals that the Environment Court was alive to the GST component.
[89] Mr Muldowney for HCC referred to the Court of Appeal decision in Commissioner of Inland Revenue v National Insurance Company of New Zealand Ltd.79 The Court there articulated the general principle, since applied by the Environment Court, that where a court takes into account in its assessment of costs the amount of a party’s solicitor and client costs, the appropriate figure to use for that purpose is the amount actually payable by that party, including where applicable the GST component of that liability.80
[90] Generally, where scale costs are awarded, those costs are GST neutral. This is because scale costs are an objective representation of a reasonable contribution to costs recoverable and are set without reference to the actual costs incurred by the parties.81 However, awards of increased costs are sometimes determined by reference to actual costs incurred, including the GST component of those costs.82
[91] In this case, costs were assessed with reference to actual costs rather than scale costs. I accept HCC’s arguments on the applicability of GST. Had the award of costs represented indemnity costs, then the position may be different to avoid the potential for over-recovery assuming that costs recovered by HCC are not themselves subject to GST (about which no evidence was presented). Indemnity costs were not awarded,
78 Hamilton City Council v Global Metal Solutions Limited, above n 2 at [7].
79 Commissioner of Inland Revenue v National Insurance Company of New Zealand Ltd CA 300/97, 22 March 1999; (1999) 19 NZTC 15,135.
80 Commissioner of Inland Revenue v National Insurance Company of New Zealand Ltd, above n 79 at [57]. Applied by the Environment Court in Adcock v Marlborough District Council [2011] NZRMA 187 (substantive decision overturned on appeal and quashing the cost award on that basis only); Flatlands Development Ltd v Thames-Coromandel DC (2000) 6 ELRNZ 73 at [22].
81 The Law of Costs in New Zealand (LexisNexis, Wellington, 2022) at [2.64]; New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282 at [9].
82 New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282 at [11].
and I consider that the Court was entitled in its discretion to assess a proportion of the gross costs paid by HCC as a means of describing the quantum awarded.
[92]Accordingly, I dismiss this ground of appeal also.
Result
[93] I dismiss the appeal of the Variation Decision because it is moot, and no exceptional circumstances warrant this Court exercising a discretion to determine the appeal.
[94] I dismiss the appeal of the Costs Decision on the basis that GMS has not shown any error of principle or any other error justifying intervention in a quintessentially discretionary decision of the Environment Court.
[95] The respondent is presumptively entitled to costs on this appeal on a 2B basis. If costs cannot be agreed between the parties, memoranda of no more than four pages in length (plus schedule of steps) may be filed within 20 working days with memoranda in response within 14 working days thereafter. In that event, costs will be determined on the papers.
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Walker J
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