Gordon v Waitaki District Council
[2015] NZHC 1472
•29 June 2015
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2015-412-41 [2015] NZHC 1472
BETWEEN ROBERT WILLIAM GORDON AND
LYNETTE MABEL GORDON Applicants
AND
WAITAKI DISTRICT COUNCIL First Respondent
RODGER JOHN SMAILL AND DONNA ELIZABETH SMAILL
Hearing: 29 June 2015
(On the papers)
Appearances:
P Page for Applicants
F Barton and A Cunninghame for First Respondent
C P Thomsen for Second RespondentsJudgment:
29 June 2015
JUDGMENT OF MANDER J
[1] This is an application for costs arising out of a discontinued application for judicial review of the decision of the Waitaki District Council (the Council) to grant a variation on a non-notified basis of a resource consent. The relevant part of the resource consent in dispute related to permitted helicopter activity on Mr and Mrs Smaill’s (the Smaills) property which neighboured Mr and Mrs Gordon’s (the Gordons) property at Omarama.
[2] The proceeding was settled prior to the first case management conference as a result of the Smaills surrendering the part of the resource consent under challenge.
The only remaining issue between the parties is that of costs.
GORDON v WAITAKI DISTRICT COUNCIL & ANOR [2015] NZHC 1472 [29 June 2015]
Applicable principles
[3] While rule 15.23 of the High Court Rules provides that a plaintiff who discontinues a proceeding against a defendant must pay costs, that presumption is reversed if in the circumstances it is just and equitable to do so.1 Not uncommonly, there will be situations where the discontinuing party has succeeded. Rule 14.2(a) provides as a general principle that the party who fails should pay costs to the party who succeeds. That is subject to the overarching consideration that all matters as they relate to costs are at the discretion of the Court.2
The Gordons’ application
[4] The Gordons seek costs on a 2B basis in the sum of $7,827.33. They also seek disbursements of $11,705.80, the bulk of which comprises the expenses of experts who provided affidavit evidence filed with the Gordons’ statement of claim. The claim for the expenses incurred by the Gordons in engaging expert witnesses at an early stage is central to the parties’ cost dispute.
The Council’s position
[5] The Council acknowledges the Gordons are entitled to an award of costs, however, it submits the costs sought are excessive. It considers a reasonable award of costs on a 2B basis would amount to $6,510, payable by the Council, together with reimbursement of the $540 filing fee.
The Smaills’ position
[6] Similarly, the Smaills accept the Gordons should be awarded costs for commencing the proceedings and for its filing fee. From their perspective, they are concerned, however, as to the accuracy of the Gordons’ submission regarding the reasons why they chose to surrender the variation to the consent, the apportionment
of costs and the disbursements sought.
1 Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973.
2 High Court Rules, r 14.1
Analysis
[7] Ryde v The Earthquake Commission provides helpful guidance of the factors to be taken into account regarding a party’s entitlement to costs where a proceeding is discontinued.3 As observed by the Smaills, the questions posed in that case go largely to whether costs should be awarded rather than the assessment of any award, however, the matters set out provide assistance.
Was it reasonable to bring the proceedings?
[8] The Council acknowledges that it was reasonable for the Gordons to bring the proceeding to challenge the variation. That is a responsible concession which does not appear to be disputed by the Smaills.
Was it reasonable for the respondents to defend the proceedings?
[9] It is not seriously contended that either respondent has acted unreasonably in their approach to the Gordons’ application. A statement of defence was filed, however, the matter was resolved at an early stage, after the Smaills surrendered the variation to the consent the subject of dispute.
Why were the proceedings discontinued?
[10] In stark terms, the proceedings were discontinued because the Smaills were prepared to surrender the variation they had obtained in respect of the original resource consent. The Gordons achieved the result they were seeking in commencing the litigation. Neither the Smaills nor the Council, however, concede that the surrendering of the resource consent is necessarily to be interpreted as an acknowledgment of the merits of the Gordons’ challenge.
[11] The Smaills submit they surrendered the variation to the consent for pragmatic reasons. The position they took was motivated to avoid costs in the absence of any immediate need for the additional helicopter movements which the
variation sanctioned. In giving notice of their surrender of part of the consent, the
3 Ryde v The Earthquake Commission [2014] NZHC 2763.
Smaills expressly stated they did not accept or concede the merits of the Gordons’
position.
Were the merits of the case so obvious that they should influence the costs outcome?
[12] Both respondents have referred to Kroma Colour Prints Ltd v Tridonicatco NZ Ltd, where the Court of Appeal noted the need for caution when reversing the presumption in r 15.23 that a plaintiff who discontinues a proceeding against a defendant must pay costs, and speculating on the respective strengths and weaknesses of the parties’ cases.4 It is the reasonableness of the stance taken by the parties which is required to be considered.
[13] In the present case, the Gordons filed evidence at the commencement of the proceeding in support of their application. They submit the Court is in a strong position to rule on the merits of the case, and had the matter gone to trial they would have been successful.
[14] The Council submits that, in the absence of evidence in opposition, the Court is not able to make any finding as to the merits. The proceeding had not progressed to a point where the Gordons’ expert evidence was tested or challenged. The Smaills endorse that submission. The Gordons refer to Carmel College Auckland Ltd v North Shore City Council, where the Court considered itself appropriately positioned
to rule on the merits of the case.5 The respondents submit that was a case which had
been set down for trial and, while it was not clear whether evidence had been exchanged, the Smaills submit that would seem likely. They submit the present situation more closely resembles F v Minister of Immigration, where the Court concluded that it had insufficient evidence to determine whether the applicant should be entitled to costs.6
[15] The Gordons place some weight on a decision of Chisholm J in Godfrey v
Westland District Council, as a case similar to the present.7 There, the plaintiff had
4 Kroma Colour Prints Ltd v Tridonicata NZ Ltd, above n 1.
5 Carmel College Auckland Ltd v North Shore City Council HC Auckland CIV-2007-404-5894,
20 January 2009.
6 F v Minister of Immigration [2013] NZHC 2117.
7 Godfrey v Westland District Council HC Greymouth CIV-2009-418-180, 20 April 2010.
filed affidavits in support of his statement of claim seeking judicial review. A decision of the Westland District Council not to notify the applicant of a decision to grant consent to a home kill operation on a neighbouring property was challenged. Before trial the consent was surrendered. While the proceeding was not formally discontinued, costs were granted to the plaintiffs on the basis they had ultimately been successful in obtaining what they were seeking.
Have the Gordons displaced the presumption of r 15.23?
[16] It is not contested that the presumption has been displaced. The question is not whether there should be an order of costs in favour of the Gordons, but rather the quantum of such award and the inclusion of disbursements claimed.
Does the outcome represent vindication of the Gordons commencement of the proceedings?
[17] Plainly, the surrender of the resource consent obtained in response to the
proceeding has vindicated the Gordons’ application to review the Council’s decision.
Affidavit evidence and experts’ costs
[18] As already identified, in large part the cost dispute centres on whether the Council and the Smaills should bear the costs of the expenses incurred by the Gordons in engaging experts prior to the commencement of their proceeding.
[19] The Council considers that, while affidavit evidence from the applicants may be appropriate to assist the Court to understand the background to such litigation, the instruction of experts and the filing of expert opinion was an unnecessary step. There was no legal requirement on the Gordons to file expert affidavits at the outset of a judicial review proceeding and, while it may be a developed practice to file an affidavit in support of the application, it does not extend to filing expert evidence. The choice of doing so was the Gordons and the respondent should not bear the cost of the Gordons having made that strategic choice. In that regard, the Council submits the Gordons’ reliance on Godfrey v Westland District Council is misplaced. In the respondents’ submission, it is apparent from the expenses claimed in that case the affidavits filed were not sourced from experts.
[20] The Smaills, while acknowledging the affidavits of Mr Gordon and a Mr Chiles, a noise expert, may have assisted the Court in terms of the parties understanding of the proceedings and to prepare a defence, the affidavit of Ms Taylor, briefed to provide a “planning opinion” exceeded what was necessary at that stage of the proceedings.
[21] Having regard to the causes of action pleaded, the Gordons submit it was reasonable to make available to the parties the expert evidence upon which they relied to substantiate the grounds pleaded. In particular, those causes of action which turned on questions of fact. In the absence of providing this evidence, it was submitted the respondents were likely to challenge whether their claims could be substantiated. By making the evidence available at an early stage, it assisted in the speedy resolution of the matter, which was in the interest of all parties and the Court.
Notice of proceedings
[22] The Smaills submit they had not been put on formal notice that proceedings were being prepared and it would therefore be unjust for them to face a costs award for disbursements relating to the affidavit evidence.
[23] The Gordons argue the Smaills were aware of their intention to commence judicial review proceedings, and make reference to an email to the Council proposing the dispute be settled by the Smaills surrendering the consent variation. The Council in its reply to them indicated the Smaills were aware of the contents of the Gordons’ proposal but had decided not to surrender that part of the resource consent.
[24] The Smaills submit they had not formally been put on notice by the Gordons regarding the commencement of proceedings, and while there had been a history of complaints and correspondence exchanged between them, no specific correspondence was received regarding the proceedings. The Smaills in their submission, however, do infer that the Council advised them that proceedings were “being contemplated” and that the Council had been invited to persuade them to surrender the consent. The Smaills account is that the Council contacted them in
respect of an invitation made by the Gordons to the Council to persuade the Smaills to surrender the entire consent.
[25] There are obvious difficulties with the hearsay nature of this particular aspect of the issue. However, I note the email from the Gordons’ counsel to the Council attached to their reply memorandum refers to the commencement of judicial review proceedings in respect of the original helicopter resource consent in addition to the subsequent variation, but proposing that, should the Smaills surrender the variation, they “will not attack the original consent”.
[26] It is apparent from counsels’ submissions in relation to this point and the email previously referred to that the Smaills did not receive any firsthand advice of the commencement of the proceedings, nor were they directly communicated with in relation to a possible resolution. It was not until the application was served and the Smaills took legal advice that they considered their position and, before the parties were required to take any further procedural steps, surrendered the variation to the consent.
Preparation for the first case management conference
[27] Both respondents object to the Gordons’ claim for preparation costs for the case management conference. Ordinarily, preparation for such a conference requires counsel to discuss, prepare and address the matters set out in Schedule 5 of the High Court Rules.
[28] It is apparent that by the time any memorandum was filed by counsel, the Smaills had surrendered the resource consent variation the subject of the proceeding. All that remained was some clarification of the basis upon which the proceeding would be finalised, there being some disagreement as to whether the proceeding should be discontinued or dealt with by way of a consent order. Sensibly, common ground was reached which reserved the parties’ positions in respect of costs. The memoranda that was filed related to the disposal of the proceeding and, while generated in response to the pending conference, its purpose was largely to inform the Court that the proceeding had been substantively resolved.
Decision
[29] The dispute between the parties in relation to the award of costs largely centres on the recovery of expenditure relating to the affidavit evidence filed at the time the proceedings commenced. There is a tension between the benefit to be obtained from the Gordons disclosing from the outset the nature and potential merit of their case and voluntarily incurring costs which may not be considered necessary at that stage of the proceeding, or at least which the opposing party ought not have to bear.
[30] I acknowledge that it does not necessarily follow that the provision by the Gordons of their expert affidavits and the decision by the Smaills to surrender part of the resource consent is indicative of the respective strengths of the parties’ cases. I have already noted the submission made by the Smaills that their decision to surrender the resource consent was to avoid litigation and an assessment of their own personal circumstances as to whether they wished to be occupied by the litigation.
[31] I accept the Court is not well placed to make any definitive assessment of the merits of the parties’ respective cases and ought not surmise as to what may have been the ultimate outcome should the parties have been unable to reach agreement.
[32] That said, the Gordons ensured their case was well prepared and were able to demonstrate to the respondents the evidence available to them to substantiate their application. This afforded the respondents the opportunity in an informed way to assess their position. That benefited both themselves and the respondents who were able to draw on that information, make an expeditious decision regarding their approach to the litigation, and avoid costs that may otherwise have been incurred by obtaining their own expert advice.
[33] The competing consideration is whether the preparation and inclusion of the evidence at such an early stage was a precipitate and premature step. As the Smaills have submitted, advice of the impending litigation was only provided to them through the Council, and it was not any view of the merits of the Gordon case which influenced them, but rather an assessment of their present needs. They simply did not wish to be involved in litigation. Having made that observation, they were at
least provided with the opportunity from the outset to assess the determination of the Gordons to challenge the consent variation by the extent of the preparatory work already undertaken.
[34] In my view, the Gordons are entitled to recover the expenses associated with the preparation of the affidavit of Mr Chiles and other expenses normally associated with the preparation of a proceeding of this type. The key expense, however, is the disbursement claimed in respect of Mitchell Partnerships. Ms Louise Taylor, a partner of that firm, was briefed as an expert in her capacity as a planning consultant to provide her opinion regarding the resource management process undertaken by the Council and her view as to the adequacy of the Council’s decision. No doubt, Ms Taylor’s analysis and opinion was of considerable assistance to the Gordons in the approach they were to take to this dispute.
[35] I, however, express some reservations regarding whether her opinion can be distinguished from that which might be provided by a specialist resource management lawyer and, in that respect, if the matter went to trial, whether it does not amount to an expression of a legal opinion. Arguably, Ms Taylor’s affidavit amounts to a submission, albeit one informed by Ms Taylor’s obvious experience and qualifications in this area.
[36] In my view, the costs of the engagement of the planning consultant is not a cost which the respondents ought to bear. While perhaps a prudent step taken by the Gordons before commencing litigation, I do not consider it was a necessary part of the preparation of the proceeding itself. If the matter had proceeded to trial, such expenses could have more appropriately been examined in that context. No doubt it was of some strategic advantage to the Gordons to ensure the respondents were informed of the expert advice upon which they were relying, and which might influence the Council and the Smaills. It was not, however, necessary, at least not at the stage of commencing the proceeding, to place Ms Taylor’s expert advice into an affidavit. The Gordons could have waived privilege and provided the expert advice informally by way of correspondence. Accordingly, there will need to be modification of costs claimed in respect of preparation of affidavits.
Apportionment of costs
[37] The Smaills made submissions that liability for costs should be borne wholly by the Council on the basis the responsibility for determining whether or not the resource consent application process was properly followed rests with the Council. The Smaills submitted they relied on the Council to follow the correct resource consent process. The resource variation application was made in person by Mr Smaill, and he was not professionally advised at that time. The Council accepted the application, processed it, and relied on advice from its own noise consultant.
[38] The Council does not appear to take issue with the Smaills submission regarding the apportionment of costs. The Council has submitted that a reasonable award of costs, suggested to be in the sum of some $6,500 be payable by the Council. I have interpreted the Council’s submission as being a concession on its part that it alone should bear the award of costs.
Conclusion
[39] I make the following determination in respect of the application for costs. The Gordons are entitled to an award on a 2B basis for:
(a) commencement of proceedings by plaintiffs – 2.5 days (item 1); (b) for plaintiffs’ preparation of affidavit – 1 day (item 30).
[40] This amounts to 3.5 days at $1,990 per day, amounting to a costs award of
$6,965. In addition, I also allow the following disbursements:
(a) expenses from Chiles Ltd – noise experts - $1,150;
(b) expenses from Merv Aitcheson – process server - $322; (c) Court filing fee - $540; and
(d)Gallaway Cook Allan miscellaneous disbursements, courier fees, photocopying, etc - $514.19.
[41] This amounts to a total award of disbursements of $2,526.19
[42] Accordingly, there will be an order for an award of costs and disbursements in the sum of $9,491.19 against the Council. No order is made in respect of the Smaills.
Solicitors:
Gallaway Cook Allan, Dunedin
Webb Farry, Dunedin
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