Haines House Haulage Northland Limited v Whangarei District Council

[2020] NZHC 1122

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2019-488-69

[2020] NZHC 1122

IN THE MATTER

of the Local Government (Auckland Transitional Provisions) Act 2010 and the Resource Management Act 1991

BETWEEN

HAINES HOUSE HAULAGE NORTHLAND LIMITED

Appellant

AND

WHANGAREI DISTRICT COUNCIL

Respondent

Hearing:

On the papers

Appearances:

AGW Webb for the Appellant G Mathias for the Respondent

J Baguley for A Waldron (s 274 party)

Judgment:

26 May 2020

JUDGMENT OF GORDON J

[As to costs]

This judgment was delivered by me on 26 May 2020 at 3 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:           WRMK Lawyers, Whangarei

Thomson Wilson, Whangarei Atlas Legal Ltd, Kerikeri

Counsel:            A Webb, Auckland

HAINES HOUSE HAULAGE NORTHLAND LTD v WHANGAREI DISTRICT COUNCIL [2020] NZHC 1122 [26 May 2020]

[1]                 This is an application for costs by Haines House Haulage Northland Ltd (HHH).

[2]                 On 17 March 2020 I gave judgment in favour of HHH on an appeal on questions of law against a decision of the Environment Court.1

[3]                 The Whangarei District Council (the Council) was represented at the hearing, having given notice of its intention to appear on the appeal.2 Aimee Waldron, who was represented in the Environment Court,3 also gave notice of her intention to appear on the appeal and was represented by counsel.

Background

[4]                 HHH had applied to the Council for a land use consent to store relocatable houses on a site north of Whangarei between Piano Hill Road and State Highway 1. The site (Lot 2) was intended to operate as an overflow yard for houses that could not be accommodated at HHH’s main yard, approximately one kilometre away on State Highway 1.

[5]                 The Council’s reporting officer had recommended a grant of consent; a commissioner was appointed to hear the application; and consent was refused. HHH then appealed to the Environment Court. The Council supported HHH in its appeal before the Environment Court. In its interim decision dated 22 March 2019 (interim decision), the Environment Court concluded that the appeal might be allowed, and consent granted, if the Court could be satisfied as to the activities authorised and if suitable conditions could achieve the rural character and amenity requirements of the District Plan and avoid derogating from urban consolidation. HHH was directed to file further draft consent wording and conditions and landscaping plans incorporating the conclusions in the interim decision. HHH did so.

[6]                 After the hearing, and while the interim decision was pending, HHH moved a relocatable house onto Lot 1, which was adjacent to Lot 2. The potential presence of

1      Haines House Haulage Northland Ltd V Whangarei District Council [2020] NZHC 525.

2      Resource Management Act 1991, s 301.

3      As a party under s 274 of the Resource Management Act.

a house on Lot 1 was an issue at the hearing. Also in issue at the hearing was whether the application site was confined to Lot 2 or included Lot 1.

[7]                 In its final decision, given on the papers on 25 July 2019 (final decision), the Environment Court dismissed the appeal and refused the resource consent.

[8]                 Essentially the Environment Court’s reason for declining consent in the final decision was because a house had been placed on Lot 1. The Court said:

[12] In these circumstances the interim decision requirements cannot be fulfilled given that the applicant has acted precipitously while the decision was pending and later notwithstanding the clear terms of the interim decision.

…

[14]  We  acknowledge and accept that the building can be placed on this  Lot 1. However, the activity requiring resource consent cannot be granted consent if that activity prevents the mitigation required. Our reasons include not only those of legal principle but the inability to provide conditions that could satisfy us that the effects of the activity itself could be sufficiently contained within the lots and that Lot 1 DP 483749 could be free of buildings and utilised as rural pastural land to effectively manage the effects of conducting the activity on the rest of the amalgamated site.

[9]                 In my judgment, I commented on HHH moving the relocatable house onto Lot 1 after the hearing and while the interim decision was pending. I said:

[87]      In my view, even though HHH adopted the position that the house was not part of the application and was thus a permitted use, and even though, when the house was put on the site, it was located in a different position from that shown in the plans before the Court, HHH was unwise to move the house onto Lot 1, given the various issues that were live before the Court.

[88]      After the interim decision, HHH then continued to work on the house so that it was permanently installed by the time of the final decision. Even though HHH clearly took the view that the house was a permitted use and also submits in this Court that the Court did not have the legal ability to impose a condition prohibiting a house on Lot 1, it was again unwise for HHH to continue to work on installing the house. On the other hand, through counsel, HHH liaised with both the Council and Ms Waldron regarding conditions and landscaping. The Council also granted a building consent.

[10]              I set aside the final decision having found that the Environment Court made a number of errors of law. One of the errors found was that Lot 1 was outside the scope of the application for resource consent and the Environment Court had no jurisdiction

to impose conditions on Lot 1 without the consent of the owner. Even if the Environment Court did have jurisdiction to impose a condition on Lot 1, any condition preventing permitted activities is so unreasonable that it would have been unlawful. I remitted the matter to the Environment Court for further consideration.

Costs claimed

[11]              Mr Webb for HHH seeks costs on a 2B basis. In a joint memorandum of counsel for the three parties filed for a case management conference, it was agreed that the appeal should be categorised as 2B. There was no order made by the Court at the time but I accept that 2B is the appropriate category for costs.

[12]HHH seeks scale costs of $15,296.00 and disbursements in the sum of

$1,981.29 making a total claim of $17,277.39.

Submissions

[13]              HHH’s application is for a costs award against Ms Waldron who is the owner of a property adjacent to the subject site. The basis of the claim is that Ms Waldron opposed the granting of consent in the Environment Court proceeding and again in this Court. She was also not prepared to accept that the Environment Court had made any errors at all in the assessment of HHH’s application and she continued to pursue her opposition throughout the appeal hearing.

[14]              Mr Webb says in his memorandum that HHH has no objection to costs also being awarded against the Council, given that it joined the proceeding opposing the relief sought, but ultimately at the hearing it neither supported nor opposed the appeal.

[15]              Ms Baguley, for  Ms  Waldron  submits  first  that  it  cannot  be  said  that  Ms Waldron’s opposition to the resource consent application is wrong or misplaced. That is because this Court remitted the matter back to the Environment Court for reconsideration, and the outcome of that reconsideration is not yet known.

[16]              Second, Ms Baguley submits that ultimately it was because of errors made by the Environment Court that the appeal was allowed. The outcome was not as a result

of any fault on the part of Ms Waldron. Ms Baguley submits it would be demonstrably unfair if Ms Waldron had to pay costs when it was the Environment Court that was found to have erred.

[17]              Thirdly, as a result of the changed circumstances which arose because of the presence of a house on Lot 1, occurring after the hearing in the Environment Court, counsel for HHH was able to make submissions in this Court regarding the definition of “site” in the District Plan, which had not been made in the Environment Court.  Ms Baguley submits that as a result there was a need for both the Council and       Ms Waldron to participate “as a matter of proper jurisprudence and natural justice”.

[18]              Ms Baguley concludes that a fair and reasonable outcome would be for no order for costs to be made and for costs to lie where they fall.

[19]              For the Council, Mr Mathias submits that it should not be liable for a contribution towards HHH’s costs, nor for a contribution towards any costs which might be ordered against Ms Waldron.

[20]              Mr Mathias submits that the Council was left in an “unenviable position” because the result foreshadowed in the Environment Court’s interim decision was not that given in the final decision. The Council, having supported the interim decision and having maintained that support notwithstanding the fact that HHH moved the house onto Lot 1, was left as the respondent to an appeal when it had supported the consent HHH was seeking. The situation which developed was not in any respect as a result of the case presented by the Council before the Environment Court. It was supportive of the case presented by HHH.

[21]              Mr Mathias submits that the reasons why the Council advanced arguments in this Court which might be seen to be in opposition to the appeal related to planning matters divorced from the decision of the Environment Court. Mr Mathias explains that the Council understood that HHH was arguing a point of interpretation regarding (new) District Plan provisions which was at odds with the Council’s interpretation of the relationship between those provisions. However, once HHH’s reply submissions

were received this was no longer an issue. In other words, it became clear that HHH was not advancing the argument which the Council had perceived was being argued.

[22]              There was a second matter addressed in written submissions and on which submissions were made at the hearing. That was in relation to the definition of the word “site”. But Mr Mathias says that was not an issue of real substance in the hearing.

[23]              Mr Mathias highlights what he submits is a further relevant issue. That is, the determination of the Environment Court which resulted in it refusing consent, thus leading to the appeal in this Court, arose solely because of the change to the environment between the time of the hearing and the time of the interim decision. That change was the presence of the house on Lot 1. To that end Mr Mathias submits it is arguable that the costs incurred by HHH on appeal are “self-inflicted” and should be borne by HHH as a result.

[24]              Finally, Mr Mathias submits that the appeal in this Court was primarily directed at the relationship between new planning provisions which were not identified by the planning witness for HHH (or, it is accepted, by any other planning witness) in the Environment Court.4 Similarly the issue was not addressed in submissions on behalf of HHH in the Environment Court. Mt Mathias submits it would be unfair to require the Council to contribute to HHH’s costs when this issue was not part of HHH’s case before the Environment Court.

Costs - general principles

[25]              Costs are at the discretion of the Court.5 The High Court Rules 2016 (Rules) provide guidance as to how the discretion might be exercised.6

[26]              The general principle is that the party who fails with respect to a proceeding should pay costs to the successful party.7 Ultimately, the overriding consideration

4      The relevant provisions became operative on the second day of the hearing in the Environment Court.

5      High Court Rules 2016, r 14.1(1).

6      Rules 14.2–14.7.

7      Rule 14.2(1)(a).

when exercising the discretion to award costs is that any award ought to do justice between the parties.8

In there any reason to refuse or reduce the costs claimed?

[27]              Under r 14.7 the Court may refuse or reduce costs in various specified circumstances and under a catch-all provision in para (g). That paragraph provides that the Court may refuse to make an order for costs or may reduce costs if some other reason exists which justifies the Court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.

[28]              Should costs be refused or reduced because they are “self-inflicted”, to use Mr Mathias’ expression? It was the presence of the house on Lot 1, located there after the hearing, that resulted in the Environment Court dismissing the appeal and refusing the resource consent – after having signalled that the appeal would be allowed and consent granted if certain criteria were met.

[29]              The second reason advanced is that HHH did not call planning evidence about, nor make submissions on, the new provisions in the District Plan in the Environment Court, those provisions having come into effect on the second day of the Environment Court hearing. It was not until the hearing of the appeal in this Court that HHH made submissions on those provisions.

[30]              Then there are the three reasons advanced by Ms Baguley: the ultimate outcome is not yet known; the appeal was allowed because of errors made by the Environment Court; and it was necessary for Ms Waldron (and the Council) to participate to advance submissions on the meaning of “site” in the District Plan.

[31]              Two cases are of assistance here. In Beach Road Preservation Society v Whangarei District Council, Chambers J said:9

[21] On a costs application we are not concerned with how the original decision under attack came to be made. What we are concerned with is the litigation itself. … Both respondents must share responsibility for those costs because, and only because, each decided to defend the proceeding, wrongly,

8      Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5].

9      Beach Road Preservation Society v Whangarei District Council (2001) 16 PRNZ 13 (HC), at [21].

as it turned out. That is why they must pay costs to the society. It is irrelevant how the land came to be zoned as it was or how the resource consent decision came to be made. Parties pay costs because they have elected to bring or defend proceedings and have adopted a stance in those proceedings which a Court has found to be unjustified.

[32]              More recently in Manukau Golf Club Inc v Shoye Venture Ltd, the Supreme Court said:10

[13]      … In virtually every case where an appeal succeeds, the appellate court has formed the view that the Judge below went wrong in some way or other. For the purposes of costs in the appellate court, it does not matter why the Judge went wrong. The losing party on the appeal almost always has to pay costs to the winning party – and in that sense “pays for” the error (as found) of the judge below. That is the consequence of a respondent fighting to maintain its win and supporting the findings of the judge below. If the respondent accepts the judge below was wrong, then it should settle with the appellant or not seek to defend the appeal. In those circumstances, it would avoid liability for costs. Shoye did not adopt that stance in the Court of Appeal. We have seen its submissions. It sought to uphold what the Judge had found in its favour.

[14]      All that mattered so far as costs in the Court of Appeal were concerned was how the appeal was conducted. Since Shoye chose to seek to uphold the judgment in its favour but was unsuccessful, it became liable to costs in accordance with the fundamental principle of costs that “the party who fails with respect to an appeal should pay costs to the party who succeeds”. There was in this case no suggestion of any disentitling conduct on the part of the Club, justifying a refusal to award costs on the basis of r 53F.

[33]              I do not consider that either reason advanced by Mr Mathias amounts to disentitling conduct. First, in relation to the house, although I made the observation that it was unwise of HHH to move the house onto the property when it did and to continue working on the house after the interim decision issued, I determined that the Environment Court made errors of law leading it to refuse consent to the application in relation to activities on Lot 2 because of the presence of the house on Lot 1. It was a separate lot and the house was a permitted use on that site. It was the Environment Court that erred in the decision under appeal.

[34]              As to the argument that HHH did not call evidence or make submissions in relation to the new provisions in the District Plan in the Environment Court, neither did the Council, and nor did Ms Waldron. Nevertheless, the relevant provisions came into force on the second day of the hearing; the Court was required to consider the

10     Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305.

particular provisions; it did not do so and the failure to do so was material. Again I do not consider that HHH’s failure to refer to the provisions in the Environment Court is conduct that should lead to a refusal to award costs or a reduction in the costs claimed in the proceedings in this Court.

[35]              As to the reasons advanced by Ms Baguley, none of them provides a reason to refuse or reduce costs. Ms Waldron chose to argue that the Environment Court had not made errors of law. Her submissions were not accepted in this Court. A costs order relates to costs of a proceeding.11 The proceeding was the appeal in this Court and Ms Waldron lost. It does not matter that the Environment Court has yet to reconsider the matter.

[36]              Manukau Golf Club makes it clear that simply because the errors were made by the Environment Court, and that Ms Waldron was not at fault, is not a reason to refuse or reduce costs.

[37]              And, finally, there was no need for Ms Waldron to advance submissions on the interpretation of “site”. She chose to advance an interpretation based on the Council’s submissions which the Court did not accept and which HHH was required to address in reply submissions.

[38]              To conclude on this issue, there is no reason why a costs order should be refused or the quantum reduced.

Role of defendant/more than one defendant

[39]              Rule 14.14 of the Rules provides that the liability of each of two or more parties ordered to pay costs is joint and several, unless the Court otherwise directs. This is a case where the Court needs to consider whether to alter the default position in r 14.14.

[40]              What principles apply when a losing defendant/respondent has not taken an active role in the proceedings and where there is more than one losing defendant/respondent?

11     High Court Rules, r 14.1.

[41]              In Hong v Deliu,12 the Court of Appeal considered a costs award made in the High Court against Mr Hong in favour of Mr Deliu. The background to the proceedings in the High Court was that Mr Deliu had made a complaint to the Law Society about Mr Hong; charges were laid; but the Lawyers and Conveyancers Disciplinary Tribunal dismissed the charges. Mr Deliu applied to this Court for judicial review of the Tribunal’s decision to dismiss the charges. The Tribunal was the first defendant; Mr Hong the second. Both defendants abided the High Court’s decision. Neither appeared. The Judge quashed the Tribunal’s decision and the charge against Mr Hong was remitted to the Tribunal for consideration.

[42]              Mr Deliu did not seek costs against the Tribunal but did seek costs against  Mr Hong. The High Court Judge ordered that Mr Hong pay costs and disbursements to Mr Deliu. In the Court of Appeal, Mr Hong argued that he should not have had to bear the whole costs burden when he had abided the outcome and any error made by him was only one of three reasons the Judge gave for quashing the Tribunal decision.

[43]              The Court of Appeal set out six points of principle before applying them to the case before it. The following paragraphs are of assistance here:

[23]      Thirdly, a defendant joined in a proceeding has, essentially, three options: (1) to defend, (2) to abide (either conditionally or unconditionally) or

(3) to admit the cause of action. These have different costs consequences. Costs incurred (and recoverable) by the plaintiff will be greater in the former case than the latter two. A defendant who abides still puts the plaintiff to the cost of a trial, albeit a less strenuous one. A defendant who admits averts that cost for the plaintiff judgment in such a case may be entered by formal proof. Where either the second or third option has been taken, the course is out of the ordinary. Even though the level of costs will be less than in the first instance, a Court will still need to consider, however briefly, whether it is just that the usual scale measure of costs should be visited on that defendant.

[24]      Fourthly, where there is more than one defendant a Court will need to consider how costs should be allocated between them. While the default position under r 14.14 of the High Court Rules is joint and several liability among defendants, that is subject to the Court’s overriding discretion. In our view, where the case is out of the ordinary in some significant way, consideration must be given to whether to alter that burden. In particular, where costs are not sought against one unsuccessful defendant, it does not follow that the other should be liable for the whole scale measure of costs. Likewise where a defendant has taken a reduced part in opposing judgment such as by abiding the outcome or admitting the cause of action.

12     Hong v Deliu [2016] NZCA 75, [2016] NZAR 667.

[25]     Fifthly, such principles have been applied in a number of High Court decisions where a reduced share of costs has been ordered against a party abiding the outcome. In Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council French J (after referring to an earlier High Court decision) observed:

In so far as these comments could be interpreted as meaning that a person who abides the decision of the Court can never be liable for any costs, I must respectfully disagree. That would be too absolute a proposition. Ultimately, the task of the Court is to make an assessment of overall justice as between the particular parties. On the facts of this case, where the Council made a very fundamental and serious error which necessitated the issuing of proceedings, I consider the council should make a contribution. However, because it responsibly did not defend the proceeding, its liability should be limited to 20% of the costs and disbursements, excluding the costs of the experts.

The other defendant, which had actively defended, was to be responsible for the other 80 per cent, and the whole of the experts costs. A broadly similar approach was taken by Gendall J in Sutton v Canterbury Regional Council. In each of those cases the council defendants were found to have erred, justifying the imposition of costs against them. In a third case, Wang v North Shore District Court (No 3), Woolford J reviewed these authorities and observed:

The inference from [these] cases … is that where the defendant abides the Court’s decision and does not adopt an unreasonable position, they will not necessarily be required to bear the full costs of court proceedings.

In that case the abiding defendant’s error was not sufficiently substantial to warrant a contribution to the plaintiff’s costs.

[26]       … A defendant abiding the outcome may indeed be liable for costs where it is just that it bear some share of the plaintiff’s costs. The threshold for liability is not so high as to require some perversion of justice first. Error causing a need to issue proceedings to vindicate the plaintiff’s rights will suffice to expose an abiding defendant to some liability for costs. The extent of contribution required will depend on the extent of the original error and the reasonableness of the defendant’s conduct thereafter.

(citations omitted)

[44]              Applying these principles to the case before it, the Court of Appeal allowed the appeal, ordering Mr Hong instead pay 50 per cent of the costs and disbursements.

Discussion

[45]              Ms Waldron actively opposed the appeal. She is therefore liable for costs. The issue is whether Ms Waldron and the Council should be jointly and severally liable.

[46]              I consider this is a case where liability for costs should not be joint and several but that it is just for the Council to bear a share of HHH’s costs for the following reasons:

(a)The Council did more than simply abide the decision of the Court. Having given notice of its intention to appear, it was represented at the hearing by counsel;

(b)The Council made written submissions opposing what it perceived was HHH’s interpretation of the new District Plan provisions. I accept that once HHH filed its reply submissions, it became apparent that the Council had misunderstood the argument that HHH was making and the Council did not pursue its argument. Nevertheless, HHH was put to the cost of addressing this issue in reply submissions;

(c)I accept that Mr Mathias properly characterised his role at the hearing as neutral, in that the Council neither opposed nor supported the appeal;13 and

(d)Mr Mathias made written and oral submissions on how the term “site” appearing in the District Plan should be interpreted. I do not agree with Mr Mathias’ submission that this was not an issue of real substance in the hearing. It was relevant to the Court’s consideration of whether Lot 1 and Lot 2 were part of the same site for the purposes of the application for resource consent. I did not accept the Council’s interpretation advanced by Mr Mathias.

[47]              All the circumstances set out above support my conclusion that the Council should be liable for some portion of the costs. However, unlike both Kawarau Holdings14 and Sutton,15 there were no errors or conduct on the part of the Council that required the issue of proceedings. To the contrary, the Council had supported

13     Haines House Haulage Northland Ltd v Whangarei District Council, above n 1, at [37].

14     Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council HC Invercargill CIV-2008-425-518, 19 May 2009.

15     Sutton v Canterbury Regional Council [2015] NZHC 1000.

HHH’s application for resource consent. Nevertheless, while the Council was neutral, it did not just abide the Court’s decision but appeared and made submissions on an important issue in the dispute. Kawarau Holdings and Sutton, are therefore distinguishable because, although the decisions of the councils in those cases contributed to the proceedings, they either did not defend the proceedings or adopt a position on the appeal. I consider a contribution of 20 per cent by the Council is appropriate in all the circumstances.

Quantum of costs

[48]              Neither Mr Mathias nor Ms Baguley suggested that the costs were not correctly calculated in accordance with the scale. I have satisfied myself that each item of costs and each disbursement is properly claimed. The quantum of costs and disbursements allowed is $17,277.39.

Orders for costs

[49]I make orders that costs in favour of HHH are to be paid:

(a)by Ms Waldron in the sum of $13,821.91 (80 per cent); and

(b)by the Council in the sum of $3,455.48 (20 per cent).

Gordon J