Hauraki Maori Trust Board v Attorney-General HC Hamilton CIV 2007-419-000245

[2008] NZHC 2518

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV 2007-419-000245

UNDER  the Judicature Amendment Act 1972 and

Parts IV and VII of the High Court Rules

IN THE MATTER OF     the State Owned Enterprises Act 1986

BETWEEN  HAURAKI MAORI TRUST BOARD AND OTHERS

First Plaintiffs

ANDSIR GRAHAM STANLEY LATIMER AND ANOTHER

Second Plaintiffs

ANDTHE ATTORNEY-GENERAL First Defendant

ANDTHE HONOURABLE MINISTER OF FINANCE AND THE HONOURABLE MINISTER FOR STATE OWNED ENTERPRISES

Second Defendants

ANDLANDCORP FARMING LIMITED Third Defendants

Hearing:         On the Papers

Counsel:         L G Powell for Plaintiffs

S Barker for Defendants

Judgment:      21 August 2008

JUDGMENT OF COOPER J ON COSTS

This judgment was delivered by Justice Cooper on

21 August 2008 at 10.00 a.m., pursuant to r 540(4) of the High Court Rules

Registrar/Deputy Registrar

Date:

HAURAKI MAORI TRUST BOARD AND OTHERS AND ANOR V THE ATTORNEY-GENERAL AND ORS HC HAM CIV 2007-419-000245  21 August 2008

Solicitors:

Powell Webber & Associates, PO Box 37 661, Parnell, Auckland

Buddle Findlay, PO Box 2694, Wellington

An application for costs

[1]      The plaintiffs commenced an application for review under the Judicature Amendment Act 1972.   In circumstances that will be recounted, a notice of discontinuance was later filed.  In that notice, it was recorded that there was no issue as to costs between the plaintiffs and the first and second defendants.  However the notice also stated that the third defendant sought costs against the plaintiffs and that the plaintiffs reserved their position on costs against the third defendant.

[2]      The plaintiffs and the third defendant have now exchanged submissions on costs.  The third defendant seeks indemnity costs, or failing that, costs calculated in accordance with Category 2 Band B.  The plaintiffs say that no order for costs should be made against them, they raise issues as to the third defendant’s calculation of Category 2 Band B costs and they say further that they should be entitled to costs in respect  of  the  costs  application.    In  order  to  assess  the  relative  merits  of  the respective positions of the parties it is necessary to say something about the claim and the basis on which it was discontinued.

The proceeding

[3]      The first-named plaintiff is a Mäori Trust Board established pursuant to the Hauraki  Mäori  Trust  Board  Act  1988  and  represents  Hauraki  iwi  in  respect  of Hauraki land claims before the Waitangi Tribunal.

[4]      In  the  statement  of  claim  it  was  pleaded  that  on  6 April  2006  the  first plaintiffs  were  appointed  as  the  representatives  of  Hauraki  iwi  in  respect  of settlement of Hauraki land claims including the negotiation of a comprehensive settlement of all Hauraki claims with the Crown and to consult, negotiate or deal with the Crown or third parties in respect of any ancillary matter relating to such negotiations.

[5]      Those lands include land known as Whenuakite Station.  Hauraki iwi allege a specific grievance for the loss of that land which they say was wrongly taken from them and they also maintain that it should be returned to them as general relief compensation for historical grievances

[6]      The New Zealand Mäori Council is a body corporate established pursuant to s 37 of the Mäori Community Development Act 1962.   The statement of claim pleaded  that  in  1987  the  second  plaintiffs  reached  agreement  with  the  Crown pursuant to which there would be a protection mechanism for the transfer of Crown lands to State Enterprises which was subsequently incorporated into legislation as the Treaty of Waitangi (State Enterprises) Act 1988.

[7]      The plaintiffs were concerned about the possibility that Whenuakite Station was to be sold by the third defendant pursuant to a tender process that closed on 13

February 2007.  They were concerned about the sale of the land because it would defeat part of their Waitangi Tribunal claim.  They thought also that the sale would breach s 9 of the State Owned Enterprises Act 1986 (“SOE Act”), which provides:

Nothing  in  the  Act  shall  permit  the  Crown  to  act  in  a  manner  that  is inconsistent with the principles of the Treaty of Waitangi.

[8]      So they commenced the proceeding.  In the statement of claim they sought  a declaration that any agreement to sell land known as Whenuakite Station by the third defendant would breach s 9 of the SOE Act 1986 and would accordingly be invalid, as well as orders:

a)       Directing or declaring that the second defendants in their capacity as shareholding Ministers of the third defendant should direct the third defendant not to proceed with a tender process or any sale arising out of that process by reason of the breach or threatened breach of s 9 of the SOE Act;  and

b)Directing or declaring that the second defendants as the shareholding Ministers of the third defendant should give such directions as to the future conduct of the third defendant as might be needed to prevent

future breaches of s 9 of the Act in relation to the plaintiffs and those they represent.

[9]      The statement of claim was accompanied by an application for interim relief and an affidavit in support of that application sworn by Terrence McEnteer.  In his affidavit Mr McEnteer referred to the immense importance of Whenuakite Station to the Hauraki iwi arising from its historical significance, its location and its future potential  as  part  of  a  Hauraki  settlement.    He  also  referred  to  findings  by  the Waitangi Tribunal in its Hauraki Report that Crown purchases prior to 1865, which included the Whenuakite Block, had contributed to the economic marginalisation of Hauraki Mäori because few reserves had been made.   Mr McEnteer detailed the circumstances in which he had become aware of the intended sale of the land and of steps which he had taken in an attempt to discuss it with the third defendant and the Crown.

[10]     Mr McEnteer  attached a letter  from  the  Minister  in  charge of Treaty of Waitangi Negotiations dated 14 February 2007 in which the Minister declined to meet to discuss the proposed sale.  Having noted that Whenuakite was subject to a resumption application currently before the Waitangi Tribunal, the Minister continued:

The Crown’s policy is that Landcorp properties are generally not available for use in settlements.  This reflects the fact that the Crown prioritises the use of other assets in settlements. The Crown is confident that it has retained adequate assets, including licensed Crown forest land and land-bank properties, with which to reach a fair settlement with Hauraki in the future.

[11]     There was also an affidavit in support of the application for interim orders sworn by Sir Graham Latimer.  Sir Graham was formerly the chairman of the New Zealand Mäori Council and his affidavit referred to the negotiations with the Crown between July and October 1987 as to the appropriate protection mechanisms to be adopted with regard to the proposed transfer of Crown assets to State Owned Enterprises.   He referred to s 27B of the State Owned Enterprises Act  with  its provision for resumption of land that had been transferred to a State enterprise where the Waitangi Tribunal has recommended the return of the land to Mäori ownership and was critical of the letter attached to Mr McEnteer’s affidavit from the Minister in

Charge of Treaty of Waitangi Negotiations, expressing his view that it amounted to a clear breach of the settlement that had been reached in 1987.

Subsequent events

[12]     As matters transpired there was never any affidavit in response to those on which the plaintiffs relied in their application for interim relief.   There was a telephone  conference  on  28  February  following  which  counsel  for  the  third defendant filed a memorandum in which they indicated that while Landcorp would not undertake to the Court not to proceed with the tender process, it had deferred a decision on accepting a tender for the Whenuakite Station until Friday 2 March. When the matter came before Priestley J he directed that there should be a further telephone conference on Thursday 1 March, but he set the interim application down for hearing on Friday 2 March.

[13]     On 1 March counsel for the third defendant filed a memorandum which read as follows:

1.This memorandum is filed on behalf of Landcorp Farming Ltd, the third defendant in this proceeding for the purpose of this morning’s telephone conference at 9.30 am.

2.Without prejudice to its legal rights and position in this litigation, after discussion with the Crown (and not as a result of any section 13 or 14 SOE Act direction), Landcorp has agreed to defer any decision to sell Whenuakite Station until 28 March 2007.

3.Subject to a reservation of leave to apply to vary, on two (2) Court days’ notice to the parties, Landcorp is prepared to give an undertaking to the Court that it will not dispose of the Whenuakite Station prior to 28 March 2007 and on this basis, on instruction from the Third Defendant, I so undertake.

4.The reason for the deferral is to enable Landcorp to explore a commercially acceptable solution which will satisfy Landcorp’s commercial objectives and the Crown’s objectives.

[14]     The matter came before Priestley J again on 1 March 2007.  In a minute that he issued on that day he noted the undertaking contained in paragraph 3 of the memorandum of the third defendant, which he attached to his minute.   He also recorded advice which had been given to him by Ms Kerr, who had appeared for the

Attorney-General, that the Minister of State Owned Enterprises (one of the second defendants) had announced that there was to be a high level policy review and that the proposed sale of the Whenuakite Station had been put on hold.   The Judge directed that there would be a further telephone conference on Wednesday 21 March

2007 and vacated the fixture scheduled for the interim relief application.

[15]     On 21 March the matter came before Rodney Hansen J.   By memorandum dated 20 March signed by counsel for the first and second defendants and by counsel for the third defendant the Court had been advised as follows:

1.On 1 March 2007 Your Honour made directions following a teleconference of counsel.  Among other things you noted the third defendant’s undertakings as recorded in a memorandum of counsel for the third defendant dated 1 March 2007.

2.The  Crown  and  Landcorp  Farming  Limited  (Landcorp)  have conferred on the issue of Whenuakite Station.

3.         The third defendant has decided to defer the sale of Whenuakite

Station for a period of 12 months.

4.Consequently, the third defendant offers an undertaking on the same terms as set out in its memorandum dated 1 March 2007 save that the date is amended to 20 March 2008.

5.Counsel for the defendants submit that as a consequence of this undertaking on behalf of Landcorp no interim orders are required.

6.Counsel seek leave to apply on a week’s notice if any issues remain unresolved as at 1 March 2008.

[16]     After the conference on 21 March Hansen J issued a minute in which he recorded:

[1]       The application for interim relief has been addressed by Landcorp’s decision to defer the sale of Whenuakite Station for a period of twelve months.   It has given an undertaking on the same terms as set out in its memorandum of 1 March 2007 (attached to the minute of Priestley J of the same date) to defer any decision to sell Whenuakite Station until 20 March

2008.

[2]       On that basis, all parties ask for both the substantive application and the application for interim relief to be adjourned to a judicial conference to be convened in early March 2008, the date to be fixed by the Registrar closer to the time.   If a permanent resolution is achieved in the meantime, the parties will immediately advise the Court and the proceeding will be withdrawn.

[3]       (not relevant)

[4]       Mr Powell sought an order for costs in relation to the application for interim relief.   That is resisted by all defendants on the ground that the undertaking now given involves no concession in relation to either the right to interim relief or relief on the substantive application.  I am not prepared to make an order for costs at this stage.   If Mr Powell wishes to pursue the matter, he should file a formal application which will need to be argued in the usual way.

[17]     Subsequently, on 17 September 2007 an agreement was entered into between the Crown and the third defendant.   The effect of the agreement is to protect Whenuakite Station from sale.  It provides that it will not be sold without the written consent of the Crown or in accordance with the agreement and not for at least four years from the date of the agreement.

[18]     It was in these circumstances that the proceeding was discontinued by the plaintiffs.   The notice of discontinuance, although dated 16 April 2008 was not in fact filed until 26 May.  When the matter was mentioned before Asher J on 28 April the notice had not made it to the file that was before him.  However, in a minute that he issued on that day he rejected a suggestion that there should be a formal hearing on costs unless that was requested in a formal memorandum by counsel.  That step was not taken and instead counsel for the parties have exchanged submissions so that the matter may be dealt with on the papers.

The claims for costs

[19]     It is against that background that the claims for costs that are now made must be assessed.  I have set it out at some length because in my view it clearly points to the appropriate resolution of those claims.

[20]     The third defendant had protested all along that there was no proper cause of action pleaded against it.  In their first memorandum of 28 February 2008 counsel for the third defendant asserted that as a State Owned Enterprise Landcorp was not to be treated as the Crown for the purposes of s 9 of the State Owned Enterprises Act

1986.   Further, counsel submitted that neither s 13 nor s 14 of the State Owned

Enterprises Act would empower a shareholding Minister to interfere in a single operational decision by the Board of Landcorp as a State Owned Enterprise.

[21]     For these arguments counsel relied on the decision of Robertson J in Te Heu Heu v Attorney-General  [1999] 1 NZLR 98. In its costs application it argued accordingly that there was never any proper foundation for the claim against it. Further, it submitted that since counsel for the present plaintiffs had also acted for the plaintiffs in Te Heu Heu v Attorney-General they must have known that the claim was bound to fail.  It is on this basis that counsel have sought an award of costs on a indemnity basis and has even gone so far as to invite the Court to consider making an award of costs against the plaintiffs’ solicitors personally.

[22]     It is to be noted that such arguments have not been advanced on behalf of the first and second defendant.  In any event, the difficulty that they confront is that it is not the Court’s practice to inquire into the merits of claims which have never been brought to substantive hearing.

[23]     The application for costs falls to be considered under r 476C.   That rule provides:

Costs

Unless the defendant otherwise agrees or the Court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

[24]     In their commentary on that rule the authors of McGechan on Procedure refer to Oggi Advertising Ltd v McKenzie (1998) 12 PRNZ 535 and North Shore City Council v Local Government Commission (1995) 9 PRNZ 182 as establishing that the following principles should be applied.  First, the Court should enquire whether the plaintiff acted reasonably in commencing the proceeding and the defendant in defending it.  Second, the Court will not speculate on the merits of a case it never heard and only in an exceptional case, where the merits are clear, will that influence the Court’s costs decision upon a discontinuance.  Reference is also made to Olive Francis Retirement Home Ltd v Director-General of Health (HC AK CIV 2005-404-

1367, 13 July 2005, Simon France J) as an application of the first of those principles,

so that where a defendant acted reasonably in taking a step negating the point of the proceeding and the plaintiff then discontinued costs are likely to be left to lie where they fall.

[25]     I do not think it would be right to decide the present issue by a close inquiry into the merits of the plaintiffs’ claim.  I observe that the decision in Te Heu Heu v Attorney-General is a decision of the High Court and entitled to respect for that reason, but it is not beyond the realms of possibility that jurisprudence in this area might develop further.   One only needs to consider the law before and after the decisions in New Zealand Mäori Council v Attorney-General [1987] 1 NZLR 641 and Attorney-General v Ngati Apa [2003] 3 NZLR 643 for that point to be demonstrated. The background to the matter which I have set out and which has not been contested by any affidavits filed by the defendants, or by the third defendant for present purposes, is that Whenuakite Station is land highly valued for its historical connections with the Hauraki iwi and also considered important for their future well- being. Given the manner in which the proceeding was settled I think the Court can infer that those considerations must have been accepted, at least by the first and second defendants. I would not be prepared to hold in the circumstances that the plaintiffs had acted unreasonably in commencing the proceeding.

[26]     That does not mean, of course, that the third defendant acted inappropriately in defending it.  It may well have been right in its contentions based on Te Heu Heu v Attorney-General.   But in my opinion this is not one of those cases where the position could properly be said to be so clear that the claim was without merit that there should be an award of costs in favour of the third defendant, and it is not right now for there to be speculation on the merits of the case given the absence of any substantive hearing.

[27]     Having regard to the circumstances that I have recounted it is also plain that as a consequence of the settlement agreement between the Crown and Landcorp the plaintiffs acted responsibly in discontinuing the claim.  The purpose of the litigation had been achieved.  In my view this is a clear case where costs should lie where they fall with respect to the discontinuance.

[28]     I have given consideration in the circumstances to whether I should accede to the submission made by the plaintiffs that they should have costs on the application for costs.   I suspect that in part that application may have been prompted by the highly critical stance adopted by counsel for the third defendant in their submissions on the costs issue.   Indeed, a degree of intemperate language has strayed into the submissions of both parties on these issues.  Having considered the position I think the appropriate outcome is simply to leave costs where they fall in respect of all outstanding issues.

[29]     For the foregoing reasons I make no orders as to costs.