Knowles v Queenstown Lakes District Council

[2020] NZHC 1550

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2018-425-000098

[2020] NZHC 1550

BETWEEN

LEONARD JOHN KNOWLES and SUSAN RAYMONDE FELS KNOWLES

First Applicant

AND

ANGELA JOAN WAGHORN

Second Applicant

AND

DAVID BRUCE CROW

Third Applicant

AND

BRUCE CHARLES MATHESON and FRANCES MARY MATHESON

Fourth Applicant

AND

QUEENSTOWN LAKES DISTRICT COUNCIL

First Respondent

AND

CSF TRUSTEES LIMITED

Second Respondent

Hearing:

On the papers

Appearances:

P J Page, J J Y R Pierce, S R Peirce for the Applicants K L Hockly for the First Respondent

R B Enright for the Second Respondent

Judgment:

3 July 2020

JUDGMENT OF NATION J

As to costs

[1]    In a decision of 5 May 2018, the Queenstown Lakes District Council (the Council) publicly notified a decision to rezone an area of central Queenstown,

KNOWLES & ORS v QUEENSTOWN LAKES DISTRICT COUNCIL [2020] NZHC 1550 [3 July 2020]

including a site which CSF Trustees Ltd (CSF) were planning to develop as a low- density suburban residential (LDSR) zone.

[2]    In a decision of 8 October 2018, the Council granted consent to CSF to develop 1 York Street on a non-notified basis. The applicants brought judicial review proceedings to quash the Council’s non-notification and substantive decisions and the consents granted to CSF.

[3]    Through a judgment of 9 December 2019, the applicants were successful.1 The Council’s decisions were ruled invalid. CSF’s application was remitted to the Council for reconsideration.

[4]    In that judgment, I ruled the applicants were entitled to costs. In the absence of agreement, costs issues are now to be determined on the basis of memoranda filed for both the applicants and the Council. No memorandum was filed for CSF.

Relevant principles

[5]    Counsel for the applicants and the Council are agreed as to the principles to be applied, as set out by counsel for the applicants:

The principles governing the Court’s discretion are …:

(a)  The discretion has not been unfettered. It is qualified by the specific costs rules rr 14.2-14.10, and is exercisable only in situations not contemplated by those specific rules, or which are not fairly recognised by them.

(b)  The costs regime is of a regulatory character and it is important that its integrity be maintained.

(c)  There is accordingly a strong implication that the Court is to apply the regime in the absence of some reason to the contrary.

(d)  Any departure must be a considered and particularised exercise of the discretion.

(e)  Although the Court does not need to give reasons for a cost order that applies the regime, reasons (albeit brief) must be given for any departure.

1      Knowles v Queenstown Lakes District Council [2019] NZHC 3227.

[6]The general principles to be applied to a determination of costs are:2

14.2Principles applying to determination of costs

(1)   The following general principles apply to the determination of costs:

(a)the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds:

(b)an award of costs should reflect the complexity and significance of the proceeding:

(c)costs should be assessed by applying the appropriate daily recovery rate to the time considered reasonable for each step reasonably required in relation to the proceeding or interlocutory application:

(d)an appropriate daily recovery rate should normally be two- thirds of the daily rate considered reasonable in relation to the proceeding or interlocutory application:

(e)what is an appropriate daily recovery rate and what is a reasonable time should not depend on the skill or experience of the solicitor or counsel involved or on the time actually spent by the solicitor or counsel involved or on the costs actually incurred by the party claiming costs:

(f)an award of costs should not exceed the costs incurred by the party claiming costs:

(g)so far as possible the determination of costs should be predictable and expeditious.

[7]    It is agreed the applicants are entitled to costs on a category 2 basis. The issues on which there is dispute are as follows:

(a)  whether costs should be awarded on a band C basis to account for the claimed “inherent unfairness and added complexity in how the Council ran its case”;

(b)  whether there should be an allowance for the time involved in preparing written submissions and written submissions in reply as steps in the proceedings for which there is no other allowance in the schedule;

2      High Court Rules 2016.

(c)  whether costs and disbursements should be allowed for the appearance at hearing of a second counsel;

(d)  whether the costs incurred with an expert witness for the applicants should be recoverable in full as a disbursement reasonably necessary for the conduct of the proceedings; and

(e)  whether there should be a reduction otherwise recoverable on account of the extent to which the Council was successful on issues the Court and parties had to deal with in the proceedings.

Uplift to band C

[8]    The applicants say there should be an uplift because of the inherent unfairness and added complexity in how the Council ran its case. They say there was unfairness in the Council continuing to defend its decision that the dominant planning instrument was the high density residential (HDR) zone chapter in the Operative District Plan (ODP), despite knowing that the Environment Court did not have jurisdiction to hear CSF’s appeal against the decision to rezone CSF’s property as part of a LDSR zone. They correctly submit the Court found this to be a materially reviewable error.

[9]    It was on that basis the applicants were successful in the proceedings. Nevertheless, it could not be said the Council’s position in the proceedings over this issue was completely without merit. As referred to in the Court’s judgment in the decisions being challenged, the Council did refer both to the operative district plan and the Proposed District Plan (PDP). The Court held that the Council had no option but to make its decision as to notification in the context of there being an appeal as to the LDSR zoning which had not been resolved. The Court rejected a submission made for the applicants in reply that the CSF appeal should have been held to be invalid from the time it was filed. Some of the rationale for the LDSR zone in the PDP for the subject property was also, at least arguably, no longer justified because of CSF’s willingness to accept the way traffic near its property would be restricted through conditions attached to its consent. It was at least potentially arguable that this should be taken into account by the Court in considering whether the Court, in the exercise of its discretion, should quash the decisions made by the Council. The Court held the

Council were nevertheless in error in giving minimal weight to the PDP in certain respects.

[10]   Whether the Council had erred in not having regard to a relevant consideration was an issue on which the Council could responsibly require a judgment from the Court after a contested hearing. Because of that, the fact it defended the position it had taken does not provide a reasonable basis for awarding costs on a category C basis rather than a category B basis which would otherwise be appropriate.

[11]   It also cannot be said that the Council’s position in the proceedings added unnecessarily to the complexity of the proceedings in a way that required more time to be taken on behalf of the applicants as to all steps in the proceedings. The applicants sought relief not just on the ground on which they were successful. There were at least four other general ways in which the applicants claimed the Council had been in error in ways that entitled them to relief. Detailed evidence and submissions were presented for both the Council and the applicants as to those issues. On each of them, the respondents were successful. It can thus be said the Council did not unreasonably cause the proceedings to be more complicated than was necessary.

[12]   I am not persuaded more time than normal would have been required for the applicants and their counsel to pursue these proceedings, especially with regard to the one issue on which they were successful.

[13]The applicants are thus entitled to costs on a band B basis, not band C.

The preparation of submissions

[14]   On a 2B basis, the applicants seek costs of $4,780 as to step 32 for preparation for the hearing, a separate award of $3,585 under step 24 for preparation of written substantive submissions for the hearing and another $3,585 under step 24 through preparing written reply submissions.

[15]   The applicants say there is no bar to a claim for costs more than once under a clause pursuant to sch 3 where the schedule does not provide for a reasonable amount of time for a particular step.

[16]   In claiming costs in step 24 for the preparation of written submissions, the applicants are seeking to recover costs according to the schedule as if the submissions were presented on an interlocutory application. On such an application, there is no step allowing costs to be awarded for preparation for the hearing. The applicants are not seeking costs for proceedings which were resolved through an interlocutory hearing. The substantive proceedings went to a hearing based on the affidavits before the Court, the documents provided for the hearing and submissions. The applicants are seeking costs for steps 30 and 32 on that basis. Subject to a potential reduction because of the number of issues on which they were unsuccessful, there is no dispute that the applicants are entitled to costs on that basis.

[17]   I agree with the submission for the Council that the allowance for the preparation of substantive submissions for the hearing is part of the allowance for step 32 in preparation for the hearing.

[18]   The applicants are not entitled to costs on a step 24 basis for preparation of substantive submissions for the hearing.

[19]   The applicants have also sought costs for preparation of submissions in reply on the basis the schedule does not allow for such work but it was required of the applicants because the Court gave them and counsel leave to file written submissions in reply.

[20]   This was an indulgence to the applicants. At the conclusion of the hearing, the applicants’ counsel said he had already prepared written submissions but he wished to add to them. The Court could have insisted, as would normally be expected, that he do this orally. The actual reply submissions filed were unnecessarily extensive and sought to raise new challenges to Council’s decisions in ways that had not been advanced at trial and which the respondents had not been able to address with either evidence or submissions. Those submissions did not find favour with the Court in its substantive judgment.

[21]   In the circumstances, the applicants’ entitlement to costs for preparation of submissions is to be recognised through the award of costs for step 32, preparation for the hearing on a one-off basis.

Allowance for second counsel

[22]   Mr Page was senior counsel for the applicants. Two other counsel appeared with him at the hearing. One of those counsel addressed the Court briefly as to one aspect of the applicants’ submissions. Both respondents were represented by single counsel. I do not consider that either the issues in the case or the evidence which had to be addressed were of such complexity that the attendance of junior counsel was necessary, even though that assistance could well have been utilised by senior counsel in a way which was of assistance to him. It was not however a case where the rendering of such assistance should count in increased costs payable by the Council. Allowance for second counsel, both as to costs and disbursements, is thus denied.

Claim for expert witness fees as a disbursement

[23]   On a 2B basis without reduction, the costs recoverable for counsel would be some $22,227. The applicants are seeking to recover as a disbursement a total of

$23,345.48 charged by a resource management planner, Mr Vivian. Annexed to Mr Vivian’s affidavit were extensive documents recording the steps taken by the Council in making its challenged decisions, and documents relating to CSF’s appeal to the Environment Court over the rezoning of its development site. Mr Vivian’s affidavit addressed, in detail, the merits of the Council’s decisions in ways which were either not grounds for review in the context of judicial review proceedings or which related to arguments that were advanced for the applicants on which they were unsuccessful in the proceedings. On 18 April 2019, Mr Vivian swore a further affidavit in reply to affidavits filed for the Council.

[24]   The applicants succeeded on a ground which could have been established through reference to the documents recording the Council’s decision-making process in relation to the challenged notification and substantive consent decisions, the lower density rezoning of the subject land, correspondence on behalf of the applicants with the Council over CSF’s appeal to the Environment Court and what would have been

undisputed evidence as to what happened in the Environment Court with that appeal. All that information could have been put before the Court without the applicants having to use the services of Mr Vivian.

[25]   In the Court’s substantive judgment, I noted and referred to the observation made by Wylie J in Tasti Products Ltd v Auckland Council:3

[75] It is the decision itself which is the subject of the review application, and not what Council officers, with the benefit of hindsight, say they did or did not do in their affidavits. Nor is it helpful for parties to applications like this to file voluminous affidavits by planners seeking to criticise or support the Council’s decision. It stands to be considered in its terms and no amount of ex post facto criticism or justification can change it.

[26]   Mr Vivian also argued that the Council’s planners had taken a too simplistic approach by reaching the ultimate determinations on the basis it was a permitted activity under the ODP to erect a residential building on the 1 York Street site that complied with all site and zone standards. He argued that, in doing so, they failed to apply rules which were intended to protect the visual amenity of the applicants’ properties. The applicants did not succeed on that argument.

[27]   The applicants thus succeeded in the judicial review proceedings on grounds which could be established without the need for expert evidence from Mr Vivian. The work he did for the applicants may well be of value to the applicants in terms of the Council’s reconsideration of all relevant issues as required by the Court’s substantive judgment.

[28]   I am not satisfied that all Mr Vivian’s expenses were specific to sand reasonably necessary for the conduct of the proceeding. The Council indicated it would agree to costs of $5,000 for Mr Vivian to be allowed as a cost in the proceeding. I accept Mr Vivian’s costs, to that extent, are recoverable as a cost in the proceeding but the amount so recoverable must be $5,000 plus GST.

3      Tasti Products Ltd v Auckland Council [2016] NZHC 1673, [2017] NZRMA 22, citing Hanna v Whanganui District Council [2013] NZHC 1360, (2013) 17 ELRNZ 314, at [14]-[15].

Reduction in costs award on the basis the applicants were unsuccessful on a number of issues they raised in the proceedings

[29]   The Council argue that the applicants advanced what amounted to six grounds of review. They succeeded on the first ground but failed on the rest. The Council says the grounds on which the applicants failed were genuinely significant to the Council as consent authority and required extensive time and attention from the Council in their responding to such grounds.

[30]   The Council submitted that, in considering whether there should be such a reduction, I should have some regard to the applicants’ unsuccessful objection to the Council’s application for leave to file a second affidavit from a planner. Associate Judge Osborne (as he was then) said there could be no reasonable objection to the filing of the affidavit. He granted leave and directed that no costs should be payable by either party as to that matter.4

[31]   The Council argued that the otherwise appropriate costs award should be reduced by 50 per cent to reflect the extent to which the applicants were unsuccessful in the proceedings.

[32]   Associate Judge Osborne dealt with costs as he did on the matter just referred to. I need not consider any further what happened there.

[33]   High Court Rules 2016 r 14.7 permits the Court, in the exercise of its discretion, to reduce an award of costs even though the applicants have been successful. The Court may do this when it considers the applicants “failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs”5 or, if the Court considered the applicants had:

(f)   … contributed unnecessarily to the time or expense of the proceeding or step in it by—

…

(ii) taking or pursuing an unnecessary step or an argument that lacks merit;

4      Knowles v Queenstown Lakes District Council HC Invercargill CIV-2018-425-98, 7 May 2019.

5      High Court Rules 2016, r 14.7(d).

[34]   In the circumstances of this case, the Court needed to have before it a full record of how the Council made the decisions which were under challenge, information as to the parties’ involvement in the relevant rezoning of the subject site in the PDP and correspondence between the parties over CSF’s appeal against that planning decision. I thus do not consider that the applicants’ pursuit of arguments on the issues on which they were unsuccessful added significantly or unnecessarily to the costs incurred by the respondents in preparing for trial.

[35]   The pursuit of those arguments at the hearing required counsel for both the applicants and the respondents to carefully address in their submissions the issues on which the applicants were unsuccessful. Nevertheless, I do not consider the applicants’ arguments in this regard were so lacking in merit that it could be said, through advancing those arguments, the applicants had contributed unnecessarily to the time or expense of the hearing. I do not consider the pursuit of those arguments would, in the context of this case, have “significantly increased the costs of the respondents”.

[36]   The applicants are thus entitled to costs in accordance with this judgment without any reduction in the award because they were unsuccessful on a number of issues.

Conclusions

[37]   The Council asked that the order for costs in favour of the applicants be made against both the Council and CSF on the basis they are to be jointly and severally liable for those costs. The Council sought such an order on the basis CSF were fully involved in the proceedings, took an active part in opposing the application for review and contributed to the Council’s error in its decision-making process through filing an appeal to the Environment Court against the Council’s rezoning decision when it did not have standing to do so.

[38]CSF has not filed any memorandum with the Court as to the Council’s request.

[39]   The Council however had the primary role in opposing the applicants’ claim for relief. It was the Council’s decisions which were under challenge. In the circumstances, the order for costs is against only the Council.

[40]   It should be possible for the parties to finalise the actual award of costs, including disbursements, in light of this judgment. Leave is reserved for them to file memoranda if there is any further issue on which they require a determination from the Court.

[41]   The applicants and the Council are each to bear the costs they have incurred in dealing with costs issues.

Solicitors:

Gallaway Cook Allan, Lawyers, Dunedin

Queenstown Lakes District Council, Queenstown Macalister Todd Phillips, Queenstown.

This judgment was delivered by me on 3 July 2020 at 11.00 am pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: 3 July 2020