Green v Auckland Council
[2013] NZHC 3422
•17 December 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-003468 [2013] NZHC 3422
UNDER the Judicature Amendment Acts 1972 and
1977 or in the alternative Part 7 of the
High Court Rules
IN THE MATTER of the Resource Management Act 1991
BETWEEN JONATHAN GREEN and MEGAN BILES
Plaintiffs
ANDAUCKLAND COUNCIL First Defendant
ANDROBERT JAMES ANDREW TAYLOR and DORETTA PALMOLLINGO Second Defendants
Hearing: On the papers
Counsel: A Webb for the Plaintiffs
W S Loutit for the First Defendant
G Milner-White for the Second Defendant
Judgment: 17 December 2013
COSTS JUDGMENT OF PRIESTLEY J
This judgment was delivered by me on Tuesday 17 December 2013 at 10.30 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Counsel:
A Webb, Barrister, Auckland
W S Loutit, Simpson Grierson, Auckland
G Milner-White, Kensington Swan, Auckland
GREEN & BILES v AUCKLAND COUNCIL [2013] NZHC 3422 [17 December 2013]
Background
[1] The parties have unfortunately been unable to agree on costs.
[2] For reasons I do not understand, detailed costs memoranda filed by counsel languished on the desk of a case officer for approximately six weeks. Counsel filed full submissions in the second half of October but these were not brought to my attention until last week.
[3] The plaintiffs sought judicial review in respect of non-notification of an application to vary a consent notice under the Resource Management Act 1991. My reserved judgment, dated 11 September 2013,1 found in favour of the plaintiffs. Failure to notify was, in my judgment, both an error of law and unreasonable. On the issue of the judicial review discretion, by a small margin, I found in favour of the plaintiffs.
[4] On the issue of costs I said this:
[155] Counsel are agreed that costs should be reserved. It is my hope that costs can be agreed.
[156] Clearly the plaintiffs are entitled to costs and their reasonable disbursements.
[157] I am disinclined to order costs against the second defendants. I also assume that there is a practice in terms of which the first defendant can avoid liability for the second defendants’ full costs, but may be exposed to a contribution.
[5] I shall refer to the successful parties as “the plaintiffs”, the territorial authority (the first defendant) as “the Council”, and the parties against whom I exercised the judicial review discretion (whose predicament flowed from the Council’s failure to notify) as “the second defendants”.
[6] The plaintiffs seek indemnity costs from the Council, with increased costs in the alternative. They seek contribution from the second defendants. The Council accepts liability for 2B scale costs, but disputes liability for increased or indemnity
costs.
1 Green v Auckland Council [2013] NZHC 2364, 11 September 2013.
[7] The second defendants oppose a contribution to the plaintiffs’ costs and seek
2B scale costs from the Council on the basis that they were an innocent party in terms of the Council’s decisions that were successfully reviewed.
[8] So, so far as the costs award against the Council is concerned, the issue is whether the 2B scale should suffice or whether there should instead be a costs order reflecting indemnity costs or increased costs. So far as the second defendants are concerned, the issue is whether I should order some contribution. On that issue, Mr Loutit for the Council submits that discussions between the Council and the second defendants have taken place. The Council hopes to resolve compensation issues with the second defendants direct. On 12 December I held a short telephone conference with counsel for the Council and the second defendants. (The issue did not concern the plaintiffs so there was no need to trouble Mr Webb). I was told that the Council was offering a lump sum for compensation, but the amount of any costs component was unclear. Mr Milner-White submitted it might be helpful if I stipulated a figure for contribution to the second defendants’ costs.
Costs against the Council
[9] The plaintiffs rely on r 14.6(4)(a) and (f) of the High Court Rules to support their award of indemnity costs:
14.6 Increased costs and indemnity costs
...
(4) The court may order a party to pay indemnity costs if—
(a) the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or
...
(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.
[10] The plaintiffs have made extensive and detailed submissions on the relevant conduct on which they seek to rely to justify an award of indemnity costs against the Council. The conduct can be broadly categorised into three categories:
1. The Council’s failure to meet and discuss an out of Court solution.
2. The aggressive conduct of the Council which is said to include a
“veiled threat” about costs being awarded against the plaintiffs.
3.The lack of merit in respect of almost all of the points raised by the Council. Defending this proceeding has left the plaintiffs in the position they would have been had the solution been worked through prior to the hearing.
[11] I need not discuss these submissions at length. I have noted the Court of Appeal’s comments on awards of indemnity costs in Bradbury v Westpac Banking Corp:2
Indemnity costs, which depart from the predictability of the Rules Committee’s regime, are exceptional and require exceptionally bad behaviour. That is why to justify an order for such costs the misconduct must be “flagrant”: Prebble v Awatere Huata (No 2) [2005] 2 NZLR 467 at [6] (SC).
[12] It is patently clear that the conduct of the Council does not meet the requisite threshold. The Council were in a difficult position. While I found obvious errors in the notification process, the issue of discretion was finely balanced. The Council may have failed to meet the plaintiffs, but I accept Mr Loutit’s submissions for the Council that the plaintiffs were seeking re-design of the second defendants’ proposed structure, which was an issue unrelated to the Council. The Council had to defend its process. The swiftness with which these proceedings were brought to hearing would have made meaningful settlement discussions difficult. Finally, I reject any suggestion that there was an aggressive strategy by the Council. Mr Webb’s suggestion of the Council having made a “veiled threat” is too simple an interpretation of the Council’s correspondence.
[13] In the alternative the plaintiffs seek increased costs, relying on the following grounds under r 14.6:
14.6 Increased costs and indemnity costs
2 Bradbury v Westpac Banking Corp [2009] 3 NZLR 400 (CA) at [28].
...
(3) The court may order a party to pay increased costs if—
...
(b) the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—
...
(iii) failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or
...
(v) failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule
14.10 or some other offer to settle or dispose of the
proceeding; or
...
...
(d) some other reason exists which justifies the court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.
[14] The Court of Appeal said that awards of increased costs should be made when there is a failure by the paying party to act reasonably.3 Again, I do not consider the threshold is met on the grounds relied upon by the plaintiffs. This was an unfortunate case. There could in truth be no winner. The Council was placed in a difficult position. Although its own conduct put itself in that position, it was faced with a situation where the second defendants had already expended a great deal of
money in reliance on its decision. In the end, the plaintiffs were successful overall on the discretionary aspect. If I were to award increased costs in this case, it might create a precedent of increased costs awards being payable by local authorities whenever process errors are made. That would disturb the principle that the determination of costs should be predictable and expeditious.
[15] I have therefore reached the conclusion that 2B scale costs are to be awarded by the Council. The second defendants, as essentially innocent parties to the conduct
of the Council, will not be ordered to make a contribution.
3 Ibid at [27].
[16] In terms of quantum, the plaintiffs have submitted a table quantifying 2B costs at $28,059 plus disbursements of $15,850.77.4 Both the Council and the second defendants have challenged the assessment of 2B quantum in relation to two items. First, item 37 is stated as “ex-parte application for relief and affidavits” for which 2 days is claimed. Second, the plaintiffs seek an allowance for sealing orders.
[17] I accept the defendants’ submissions on this point. The interim injunction sought was not an originating application. It would be more appropriate to claim item 22, for an interlocutory application, for which 0.6 days is claimable. Again, the defendants are also correct that there were no orders which were sealed. Therefore, I reduce the days claimed by 1.7 days. The plaintiffs are therefore entitled to 12.4 days at the daily rate of $1990. That amounts to $24,676.
[18] The Council are therefore liable to the plaintiffs for costs and disbursements totalling $40,526.77.
Council’s liability to the second defendants
[19] I am attracted to the reasoning of Chisholm J in Barrett v Wellington City Council5 in relation to “innocent parties” who are in a similar position to the second defendants in this case. However, I am not going to make a formal costs award to the second defendants. Mr Loutit has advised that discussions are taking place between the defendants in relation to these matters and the Council is seeking to resolve the issue of compensation directly between the parties.
[20] To guide counsel for the Council and the second defendants, I note the second defendants have calculated their costs on a 2B basis at $21,592. The actual solicitor client costs appear to be in the region of $36,000. I would not regard a contribution in the region of $17,500 as being untoward but stress that I have no knowledge of the dynamics of the parties’ current negotiations. Nor am I making an order to that
effect.
4 Disbursements are made up largely of the fees of the experts, Messrs Putt and Brown.
5 Barrett v Wellington City Council HC Wellington CP31/00, 25 July 2000.
[21] If the issue of costs between the Council and the second defendants cannot be resolved they will need to be determined next year by another Judge.
Result
[22] The Council are to pay 2B scale costs and disbursements, totalling
$40,526.77, to the successful plaintiffs. The second defendants are not liable for any contribution to that amount.
[23] There is no formal contribution award to the second defendants payable by the Council. That matter stands adjourned to be resolved by another judge if the parties cannot agree.
.......................................…
Priestley J