Hugh Green Limited v Auckland Council
[2019] NZHC 660
•2 April 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-3209
[2019] NZHC 660
UNDER the Judicature Amendment Act 1972 BETWEEN
HUGH GREEN LIMITED
First Plaintiff
GREERTON HOLDINGS LIMITED
Second PlaintiffAND
AUCKLAND COUNCIL
Defendant
Hearing: On the papers Counsel:
ME Casey QC and AJ Casey for plaintiffs NMH Whittington and RJ Wilson for defendant
Judgment:
2 April 2019
JUDGMENT OF FITZGERALD J
[As to costs]
This judgment was delivered by me on 2 April 2019 at 4 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Kemps Weir, Auckland (S Weir)
Meredith Connell, Wellington
Hugh Green Limited v Auckland Council [2019] NZHC 660 [2 April 2019]
Introduction
[1] Hugh Green Ltd (HGL) sought judicial review of Auckland Council’s (the Council’s) decision not to acquire certain land from HGL. HGL’s primary claim was breach of substantive legitimate expectation, by which it sought an order directing the Council to purchase the land in question. I dismissed that cause of action.1 HGL also pleaded more traditional grounds for judicial review, as well as an action in breach of contract. I dismissed most of the grounds of HGL’s judicial review cause of action, but did find that the Council had failed to take into account mandatory relevant considerations (being certain provisions of the underlying District Plan). I dismissed the breach of contract claim.
[2] In terms of relief, I quashed the Council’s decision not to acquire HGL’s land and directed it to reconsider its decision.
[3] I encouraged the parties to agree costs. They have not been able to do so. This judgment accordingly determines the competing positions on costs.
Background
[4] The factual background to HGL’s claims is set out in some detail in the substantive judgment.2 It is not repeated here. Relevant to the costs arguments, however, there is no doubt HGL’s primary claim was its claim of substantive legitimate expectation. It was based on alleged representations or promises made by Council officers to HGL that the Council would acquire the land in question. As noted, I dismissed that cause of action.
[5] The remaining judicial review causes of action can be broadly categorised as a failure to take into account (or give sufficient weight to) various relevant considerations, taking into account an irrelevant consideration, Wednesbury unreasonableness and breach of natural justice. As also noted above, HGL was successful on its argument that the Council failed to take into account certain
1 Hugh Green Ltd v Auckland Council [2018] NZHC 2916 [Judgment].
2 At [6]–[43].
mandatory relevant considerations and its decision was quashed as a result. The remainder of its claims failed.
[6] The proceeding occupied five sitting days. Viva voce evidence was given by witnesses for both parties, and there was substantial cross-examination. The evidence and cross-examination related mainly to the lengthy engagement between the Council and HGL over some seven years, on which HGL relied in support of its claim of substantive legitimate expectation.
[7] A large number of documents were also produced at the hearing by way of a common bundle. There had evidently been significant time and energy expended on discovery, which is of course not ordered as a matter of course in judicial review proceedings. It seems that a reasonably large number of documents had also been produced by the Council to HGL prior to proceedings being commenced, in response to information requests made by HGL under the Local Government Official Information and Meetings Act 1987.
HGL’s submissions on costs
[8] HGL says it was the successful party overall. It says that while it did not succeed on all its claims, it was nevertheless successful in having the Council’s decision quashed and a direction made that the decision be reconsidered.
[9] HGL, quite properly in my view, also accepts that any costs award in its favour ought to be reduced to reflect the time that would have been spent by the Council in meeting the claims on which HGL was unsuccessful. HGL says a reduction of 25 per cent is appropriate. It says that much of the documentary and witness evidence would still have been required for the claims on which it was successful. HGL also says it acted in good faith throughout its dealings with the Council and “having done nothing wrong”, was then put to the cost of bringing the proceedings to rectify the Council’s erroneous decision-making.
[10] In terms of the appropriate daily rate for calculating scale costs, HGL’s costs claim is based on category 2B, save for the steps of listing documents on discovery, inspection of documents, preparation of evidence and preparation for the hearing. It
says these steps should be awarded on a band C basis. It says there was a large volume of material spanning nearly 10 years, with more than 1,500 documents discovered by HGL. HGL says the Council discovered more than 2,000 documents and is critical of the approach taken by the Council to listing those documents and what it says was a failure to remove duplicates or plainly irrelevant material. HGL also says its main witnesses’ evidence traversed the factual background to the Council’s decision in appropriate detail and produced the majority of documents relied on by both parties in the hearing. In terms of preparation for the hearing, it submits that judicial review of decisions by local authorities is an area of some legal complexity, as well as substantive legitimate expectation being a novel area of law. HGL says there was a large amount of factual material to address in the preparation for trial.
[11] Anticipating a submission to be made on behalf of the Council, it says given its lack of success on many of its claims, the Council may argue that preparation time should only be allocated on a band B basis. HGL says, however, that lack of success is already reflected in the proposed 25 percent reduction to costs and that that reduction should not be “deducted” from the preparation time as well.
[12] HGL accordingly seeks scale costs and disbursements totalling $120,939.31, less a 25 percent reduction, resulting in a costs award of $90,696.98.3
The Council’s submissions on costs
[13] The Council accepts HGL was the successful party overall. It submits costs should nevertheless lie where they fall or alternatively, any costs award in HGL’s favour should be reduced by 80 percent.
[14] In support of the above submission, the Council says HGL’s primary cause of action was substantive legitimate expectation, which required the Council to undertake substantially more work, and thus incur substantially more costs, than would have been the case if only the successful cause of action had been pursued.
3 Disbursements total $37,973.31. HGL then applies its proposed 25 percent reduction to disbursements as well as scale costs.
[15] In particular, the Council says the substantive legitimate expectation claim drove the discovery of documents back to 1 January 2009. It also says this cause of action required the Council to produce detailed evidence relating to the chronology of events over an approximately 10-year period. It submits the substantive legitimate expectation cause of action gave rise to over 80 percent of the Council’s own costs and took up at least three of the five days of trial.
[16] The Council further says that approximately half a day or more of the five-day trial was occupied by the breach of contract cause of action, and its costs in relation to that claim were also entirely wasted. On the judicial review cause of action, the Council points to the fact HGL succeeded in establishing only one of seven alleged deficiencies in the Council’s decision-making process. It also notes that the documentary evidence relevant to this claim was provided by the Council to HGL pursuant to HGL’s official information requests prior to commencing the proceedings. The Council submits that had HGL’s case been confined to judicial review alone, no discovery would have been necessary, and the evidence could have been significantly narrowed. It says that overall, the successful aspects of HGL’s claim could have been determined in a fairly simple and straightforward judicial review proceeding which could have been completed in no more than one day of hearing.
[17] If an award of costs is to be made in HGL’s favour, the Council disagrees that any steps should be calculated by reference to band C. Its key submission is that any greater than usual time on the steps for which HGL seeks band C time allocations was “self-imposed” by HGL’s unsuccessful claims, and thus those costs should not be passed on to the Council. The Council also disputes that costs should be awarded for second counsel.
[18] Finally, the Council does not accept it should bear any disbursement cost for the preparation of evidence by one of the witnesses called on behalf of HGL, a Mr Baikie, HGL’s external planning consultant. The Council says most of Mr Baikie’s written brief of evidence was directed to the detailed factual narrative leading to the Council’s decision, which was relevant to HGL’s failed claim of substantive legitimate expectation.
Approach to costs
[19] The Court of Appeal’s recent decisions in Water Guard NZ Ltd v Midgen Enterprises Ltd and Weaver v Auckland Council are instructive to the assessment of costs in a case such as this.4
[20] Those decisions make it clear that success on limited terms is nevertheless success overall for the purposes of r 14.2(1)(a).5 Further, once the successful party overall has been identified, there needs to be exceptional reasons before that party will be ordered to pay costs to the overall loser.6 If the overall successful party has failed on arguments or causes of action which substantially increased the costs of the losing party, and/or engaged in unreasonable or obdurate behaviour, those matters can be recognised under r 14.7(d), by refusing to award costs, or reducing the costs award from what it would otherwise have been.7 In the context of r 14.7(d), however, the Court in Water Guard cautioned that “the final result must ordinarily be given primary weight when exercising the r 14.1 discretion”.8
[21] In Water Guard itself, the appellant had succeeded overall, but only on a relatively small number of its original claims. It was awarded damages of $67,527.97, compared to its original claim of $511,100. The High Court assessed that a quarter of the trial time had been spent on the issues on which the appellant was successful, with the remaining three-quarters occupied by the issues on which it was unsuccessful. Both the High Court and the Court of Appeal also concluded that there had been unreasonable or obdurate behaviour by the appellant in refusing to engage on Calderbank offers made to it in the lead up to trial.
[22] Given the appellant was the successful party overall, however, the Court of Appeal disagreed with the High Court’s conclusion that it ought to pay some costs to the respondent. Reflecting, however, the significant amount of time devoted to claims on which the appellant had been unsuccessful, coupled with the appellant’s
4 Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36 [Water Guard]; Weaver v Auckland Council [2017] NZCA 330 [Weaver].
5 Water Guard at [13]; Weaver at [26].
6 Weaver at [20].
7 Water Guard at [13]; Weaver at [21].
8 Water Guard at [13].
unreasonable behaviour, the Court of Appeal concluded that costs lying where they fell, on what it described as “fruitless and uneconomic litigation,” was an appropriate outcome.9
[23] In Weaver, a leaky building claim, the appellants had succeeded on only about half of the extent of their claim. While a costs award was appropriately made in favour of the appellants, the Court of Appeal accepted it should be reduced to reflect the time and resources necessary for the respondent to meet ultimately unsuccessful arguments which significantly increased its costs. It assessed meeting the unsuccessful arguments had roughly doubled the respondent’s effort and time, and therefore a reduction of the appellants’ costs award by half was appropriate.10
Analysis
[24] The Council is right to accept HGL was the successful party overall. While it did not secure the substantive relief of an order that the Council acquire the HGL land in question, it was nevertheless successful in having the Council’s decision-making overturned and the Council being directed to reconsider its decision. In my view, this was material and meaningful success. The overall outcome in this case does not therefore resemble “fruitless and uneconomic” litigation as in Water Guard. Accordingly, and giving primary weight to the final result overall, there is no doubt the starting point is an award of costs in HGL’s favour. There is, for example, no disqualifying, unreasonable or obdurate conduct as in Water Guard which would justify costs lying where they fall.
[25] As both parties accept, however, a reduction should be made to the costs award to reflect that HGL failed on significant aspects of its claim, which undoubtedly had the effect of significantly increasing the Council’s costs. I do not accept HGL’s submission that much if not most of the same discovery and factual evidence would have been required for the successful aspects of its claim. If this were an “orthodox” judicial review proceedings, formal discovery would have been unlikely to have been
9 Water Guard, above n 4, at [18].
10 Weaver, above n 4, at [26]. The reduction therefore reflected, for the purposes of r 14.7(d), the additional and unnecessary costs incurred by the respondent, rather than the appellant only succeeding to roughly half the extent of its original claim.
ordered. Evidence would also normally have been given by way of affidavit; cross- examination is rare in judicial review proceedings.11
[26] There is also no doubt in my view that a reasonably significant proportion of the hearing time, and no doubt corresponding preparation time, was directed to the substantive legitimate expectation cause of action. That cause of action in particular drove the need to examine in detail the many pleaded representations said to have been made by the Council over several years. And, while an alleged failure to take into account that substantive legitimate expectation was an aspect of the Council’s judicial review cause of action, HGL’s claim in that regard was unsuccessful, given I did not find there was such a legitimate expectation.
[27] It will be evident from the above discussion that I do not consider a 25 percent reduction to the costs award to be sufficient. In Weaver, the High Court and the Court of Appeal, taking a relatively broad-brush approach, estimated that the respondent’s costs had been doubled as a result of meeting the appellants’ unsuccessful arguments. A reduction in entitlement to costs by half was therefore appropriate. In this case, I consider the Council’s effort and time in meeting HGL’s unsuccessful arguments would have been more than double what would otherwise have been the case. How much more so is difficult to assess, given it is correct that at least a broad overview of the factual background would have been required, to put the Council’s decision- making in context. This would not have required, however, the very detailed evidence and argument on the engagement between the parties over a seven-year period, on an almost meeting-by-meeting and letter-by-letter basis.
[28] While I also accept that HGL acted in good faith throughout its dealings with the Council, and no doubt felt a degree of (not unjustified) frustration at the eventual decision made by the Council, conduct and behaviour prior to proceedings being commenced is not relevant for costs purposes.12
11 Whichman v District Court at Manakau [2018] NZHC 3407 at [16].
12 See Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160]; Paper Reclaim Ltd v Aotearoa International Ltd [2007] 3 NZLR 169 (SC) at [40]–[41].
[29] I do not, however, consider a reduction as significant as 80 percent is warranted. I do not accept the Council’s submission that the claim on the successful elements of HGL’s claims could have concluded in one day or less. In my view, a hearing of two or possibly slightly more days would still have been required.
[30] Viewing the matter “in the round”,13 I consider a reduction of 60 percent to the costs award to be made in HGL’s favour is appropriate.
[31] This reduction should not, in my view, apply to disbursements, which should be awarded in full, other than that of the witness fees charged by Mr Baikie (discussed further below). Filing and hearing fees would still have been incurred by HGL, as well as copying and binding of common bundles and the like. In my view, it is not appropriate to “slice and dice” matters such as hearing fees and copying and binding costs, unless there is a very clear basis upon which to do so and it is plainly unreasonable in all of the circumstances to award the successful party overall its out of pocket disbursements.
[32] I do, however, consider it appropriate for the 60 percent reduction to apply to Mr Baikie’s fees. A not insignificant proportion of his evidence, and presumably therefore his fees for preparing that evidence, addressed the detailed factual narrative directed to the substantive legitimate expectation cause of action. Other aspects of his evidence were nevertheless of assistance to the Court in setting the general framework for the Council’s decision-making process, and explaining the various planning and other documents and how they work in practice. I therefore do not agree with the Council’s submission that no disbursement costs should be awarded in relation to Mr Baikie’s fees. I should also emphasise that applying the 60 percent reduction to Mr Baikie’s fees is not in any way to suggest his fees are unreasonable themselves; it simply reflects the content of the evidence which he was no doubt requested to give in support of HGL’s claims.
[33] On whether certain steps should be categorised as band B or C for time allocation purposes, I do not consider there is a principled basis upon which certain
13 Water Guard, above n 4, at [18]; Weaver, above n 4, at [18].
steps in the proceedings should be categorised as band C. To the extent that discovery, preparation of evidence and preparation for the hearing were more than what might have been expected, this was largely driven by the claims on which HGL was unsuccessful. Not categorising those steps as band C would not be a case of “double reduction” as HGL suggests. The 60 percent reduction reflects the additional time and cost incurred by the Council in meeting HGL’s unsuccessful claims. And given the additional time incurred by HGL was largely driven by its unsuccessful claims, there is no reason to increase those time bands from what they would have ordinarily been.
[34] Finally, I consider it appropriate to certify for second counsel in this case. While the case, other than perhaps the substantive legitimate expectation claim, was not particularly complex or novel, in my view, the matters in issue did warrant second counsel (for both parties).
[35]There is accordingly a costs award in favour of HGL in the total sum of
$43,153.69, inclusive of disbursements. The makeup of that amount is set out in the schedule attached to this judgment.
Fitzgerald J
SCHEDULE OF COSTS
Item Description Allocated
days
Scale Cost Adjusted
award
1 Commencement of proceeding 3 6,690 2,676 10 Preparation for first case
management conference
0.4 892 356.80 11 Memorandum for first case
management conference
0.4 892 356.80 11 Memorandum to vary
timetable
0.4 892 356.80 20 List of documents on
discovery
2.5 5,575 2,230 21 Inspection of documents 1.5 3,345 1,338 30 Preparation of evidence 2.5 5,575 2,230 31 List of issues, authorities,
and common bundle
2.5 5,575 2,230 33 Preparation for hearing 3 6,690 2,676 34 Appearance at hearing 5 11,150 4,460 35 Second counsel 2.5 5,575 2,230 Disbursements:
Cost
Adjusted award
Filing fee on statement of claim 540 540 Filing fee on application to amend claim 200 200 Scheduling fee 640 640 Hearing fees 5,760 5,760 Copying and binding (common bundle and authorities) 4,233.27 4,233.27 Expert witness costs (Mr Baikie) 26,600.04 10,640.02 Total: 43,153.69
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