Mahora Residents Society Inc v Hastings District Council
[2024] NZHC 2157
•2 August 2024
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV-2024-441-17
[2024] NZHC 2157
BETWEEN THE MAHORA RESIDENTS SOCIETY INC
ApplicantsAND
HASTINGS DISTRICT COUNCIL
First Respondent
NZ HOUSING GROUP HASTINGS LIMITED
Second Respondent
On the Papers Counsel:
M B Lawson for the Applicant
M Casey KC for the First Respondent M J Slyfield for the Second Respondent
Judgment:
2 August 2024
JUDGMENT OF GWYN J
Introduction
[1] The Mahora Residents Society Inc (Society), the applicant, seeks judicial review of decisions by the Hastings District Council not to notify, and to grant, resource consents to NZ Housing Group Hastings Ltd (NZ Housing Group). Those consents relate to a 10-unit residential development in Mahora, Hastings.
[2] The Society’s substantive claim was summarised by McQueen J in her decision declining interim relief as follows:1
1 The Mahora Residents Society Inc v Hastings District Council [2024] NZHC 893 [Interim relief judgment] at [18]–[19].
THE MAHORA RESIDENTS SOCIETY INC v HASTINGS DISTRICT COUNCIL [2024] NZHC 2157
[2 August 2024]
[18] The Society’s statement of claim pleads nine causes of action against the Council. They are based on illegality/improper purpose, mistake of law, irrelevant considerations, unreasonableness, and legitimate expectation. The Society seeks orders quashing both the Council’s notification decision and the consent decision. There are complaints from the Council and the NZ Housing Group about the way the claim is pleaded, but I do not need to resolve them at this time.
[19] The heart of the Society’s claim is that the Council has not correctly applied the appropriate tests under the Resource Management Act 1991 (the Act) in determining whether NZ Housing Group’s application for resource consents should be subject to public notification and should be granted. Mr Lawson says this is important in that an application can be made to permit an activity that contravenes the District Plan but the correct approach to such an application must be taken to respect the integrity of the Plan.
(footnotes and citations omitted)
[3] As La Hood J elaborated in his subsequent judgment on the Council’s application for leave to participate in the substantive hearing:2
The Society pleads (among other things) that the Council acted unlawfully by applying a “permitted baseline” to its notification assessment and decision, and to its resource consent assessment and decision, when no permitted baseline arises. A permitted baseline involves a comparison of the effects of an activity for which consent is being sought with the effects of an activity that could be undertaken as of right as a permitted activity under the District Plan. The Society says that because the District Plan has no permitted activity with the same effects as the development, no “permitted baseline” arises. As a result, the Society says that the Council disregarded the adverse effects on the environment of the proposed land-use and subdivision activities, contrary to the relevant provisions of the Resource Management Act 1991 (RMA) and the objectives of the District Plan.
[4]As La Hood J also recorded:3
The Council and NZ Housing Group contend that the Council has taken a completely orthodox approach to the requirements of the RMA, and in particular to the application for the “permitted baseline” approach. They say that it is not whether the intended activity is permitted (as it is not, if consent is required, as is the case here) but how its effects compare with those activities that are permitted.
2 The Mahora Residents Society Inc v Hastings District Council [2024] NZHC 1651 [Leave to participate judgment] at [3].
3 At [4].
Application for security for costs
[5] The second respondent, NZ Housing Group, has made an application for security for costs on the basis that the applicant is of limited means and has no funds of significance to provide an undertaking as to damages.
[6] In her case management conference minute of 7 May 2024, Cull J made timetable directions by consent in respect of the security for costs application and recorded that, also by consent, the application could be decided on the papers.
[7] The Court has now received submissions from the NZ Housing Group in support of the application and from the Society opposing the application and the application came before me as Duty Judge.
Relevant law
[8] Under subcl (2) of r 5.45 of the High Court Rules 2016, a Judge may grant an order giving security for costs if he or she “thinks it is just in all circumstances”.4
[9] Subclause (1)(b) (2) applies if the Judge is satisfied “that there is reason to believe that a plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful in the plaintiff’s proceeding.”5 The other aspects of subcl (1), in para (a), do not apply in this case.
Submissions
NZ Housing Group
[10] The NZ Housing Group says that the threshold under r 5.45(1)(b) is satisfied. It says that, in the course of the Society’s unsuccessful application for interim orders,6 it became clear that the Society is of limited means, has no funds of significance to make available through an undertaking as to damages, and would struggle to meet any substantial award of damages against it. It says it is enough if the Court is satisfied
4 High Court Rules 2016, r 5.45(2).
5 Rule 5.45(1)(b).
6 Interim relief judgment, above n 1.
that there is credible evidence from which it may be reasonably inferred that the Society will be unable to pay any such order.7
[11] NZ Housing Group’s application indicates that it has asked the Society whether it is able and willing to provide security for costs in the amount sought, but as at the date of the application had received no response. The Society’s notice of opposition does not dispute that the threshold is satisfied and the Society has not provided any further evidence about its membership or its ability to meet an award of costs, notwithstanding McQueen J’s findings.
[12] The NZ Housing Group therefore says that there are credible reasons to infer that the Society would be unable to pay a costs award and the threshold in r 5.45(1)(b) is satisfied.
[13] The NZ Housing Group also says that the Society’s claim lacks merit. It says it properly pursued its application for consents, engaging with the Council for over a year before the notification and substantive consent decisions were made.8 It has in good faith carried out work and incurred costs on the basis that it is authorised to proceed, having relied on the Council decision.9
[14] Nor has the NZ Housing Group delayed in bringing its application and has continued to incur the costs of taking steps in accordance with the timetable set by Cull J on 7 May 2024 in order to ensure that the claim is ready for hearing promptly.
Society
[15] In response, the Society acknowledges that it is of limited means and is dependent on small, regular contributions from members for its funding. If security were to be awarded, then time would be needed for members’ contributions to meet that order. It says that it is not that it is unable to pay costs in the event that its
7 Scharda Holdings Ltd v Gasoline Alley Services Ltd HC Auckland CIV-2008-004-539, 13 November 2009 at [6].
8 See Interim relief judgment, above n 1, at [63].
9 At [64].
proceedings are unsuccessful, but rather that it would need time in order to raise the money.
[16] The Society relies on Reekie v Attorney-General, in urging a cautious approach. In that case the Supreme Court said:10
[2] Security for costs can be required in the High Court and District Court when it appears that an order for costs against the plaintiff might not be able to be enforced (either because of the plaintiff's foreign residence or impecuniosity).11 The jurisdiction to require security poses something of a conundrum for the courts. The poorer the plaintiff, the more exposed the defendant is as to costs and the greater the apparent justification for security. But, as well, the poorer the plaintiff, the less likely it is that security will be able to be provided and thus the greater the risk of a worthy claim being stifled.
[3] Applications for security for first instance proceedings call for careful consideration and judges are slow to make an order for security which will stifle a claim.12 A somewhat different approach has, however, been taken in respect of appeals. It was explained, rather bluntly, in Cowell v Taylor, where Bowen LJ observed:13
The general rule is that poverty is no bar to a litigant, that from time immemorial, has been the rule at common law, and also, I believe, in equity. There is an exception in the case of appeals, but there the appellant has had the benefit of a decision by one of Her Majesty's Courts, and so an insolvent party is not excluded from the Courts but only prevented, if he cannot find security, from dragging his opponent from one Court to another.
…
[17] The Society also relies on the public interest considerations it says are served by its litigation. It cites Ratepayers and Residents Action Assoc Inc v Auckland City Council, where Richardson J said:14
Any Court exercising a discretion in the interests of justice in the particular case must have regard to any public interest considerations which the litigation serves. … In acting in a responsible way as watchdogs of the public interest community organisations perform a valuable public service. Having in the public interest opened the Court door to the airing of public law questions, the public interest in having those questions proceed to hearing and determination
10 Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737 at [2]–[4].
11 High Court Rules, r 5.45; and District Court Rules 2009, r 4.20.
12 This jurisdiction was reviewed in A S McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 (CA).
13 Cowell v Taylor (1885) 31 Ch D 34 at 38.
14 Ratepayers and Residents Action Assoc Inc v Auckland City Council [1986] 1 NZLR 746 (CA) at 750.
must be a factor for consideration in deciding whether to order security, and if so, at what figure it should be fixed.
[18]The Society points to a particular passage of that judgment from McMullin J:15
… considerations of public interest — both in the narrow sense of interest to the large body of ratepayers in the Council's district and the wider sense of ensuring that local authorities observe the law — should be taken into account in deciding whether to order security to be given and, if so, in what amount. There is no general principle that in cases such as this a discount must be allowed from the amount otherwise appropriate to take account of the public interest litigation factor. It is merely a discretionary factor. If the matter were elevated to one of principle then the discretion, the exercise of which the legislature has been careful to leave entirely open, would be fettered. The question must always be what is just. I think it would be just to take account of this factor in the present case.
[19]As the Society submits, the requirement as to what is “just”, emphasised in
Ratepayers and Residents Action Assoc Inc, is replicated in r 5.45(2).
Should an order be made?
[20] The Court has a discretion whether to make an order for security under r 5.45(2).
Threshold test in r 5.45(1)
[21] I accept the submission for NZ Housing Group that the Society is a nominal plaintiff, in the sense that it was formed for the purpose of bringing this litigation.16
[22] Justice McQueen’s judgment recorded that as at the time she heard the Society’s application for interim orders, no detail had been provided about the membership of the Society, noting that Mr Ramirez’s supporting affidavit deposes that the Society represents the Mahora community “but provides no detail to support that. There is no identification of any individual members or suggestion that any individual is affected by the grant of the resource consents.”17
15 At 754.
16 Interim relief judgment, above n 1, at [29]
17 At [30].
[23] Further, McQueen J noted “… the fact is that I have very limited information about the Society, its members or indeed the community of Mahora.”18
[24] The Court also found that the Society is of limited means, as acknowledged before the Judge by counsel for the Society, and that it would struggle to meet any substantial award of damages against it: “[Mr Lawson] describes its funding as essentially based on a ‘give a little’ model.”19
[25]Justice McQueen also recorded:20
The practical reality is that the Society would bear no exposure to such losses if it was unsuccessful in its substantive application. It has no funds of significance to make available through an undertaking. Thus, its willingness to offer an undertaking provides no protection for NZ Housing Group.
[26] The Society has not provided any further evidence about its membership or its ability to meet an award of costs, notwithstanding McQueen J’s findings.
[27] I infer that the Society is at least in part a vehicle to avoid its members facing any costs liability. That is a factor tending in favour of security for costs.21 It is also clear that the Society is of limited and uncertain means.
Is an order just in all the circumstances?
[28] The Society contends that an order for security will stifle its claim, but a mere assertion of deprivation is not enough and the Society has provided no evidence as to the limits of its ability to raise the funds necessary to meet an order for security.
[29] Nor is there any evidential foundation before the Court for the Society’s assertion that its claim is in the public interest. As already noted, details of its membership have not been provided and nor has any evidence regarding any mandate to represent the interests of anyone other than its members.
18 At [31].
19 At [61].
20 At [66].
21 Jericho and Ruebe Residents Society Inc v Waikato District Council [2024] NZHC 504 [Jericho] at [12], citing Highgate on Broadway Ltd v Devine [2012] NZHC 2288, [2013] NZAR 1017 at
[20] and [22].
[30] The case is readily distinguishable from Ratepayers and Residents Action Assoc Inc, where there was evidence before the Court that the claimant was a significantly larger group and the nature of the group’s interests was not private/personal. A matter that arises out of a private interest does not become a matter of public interest simply because the public benefits generally from its determination.22 Security has been ordered in appropriate judicial review cases.23
[31] As in the Jericho and Ruebe Residents Society Inc case, the Society appears to be a vehicle for concerned adjacent landowners to oppose and/or challenge the consent. While there is some public interest in it doing so, the Society is not in the nature of a “public watchdog”. The Society members have a private interest.24
[32] As to the merits of the judicial review, the NZ Housing Council says the Society’s litigation is over-complicated,25 the pleadings run to 32 pages, incorporating long passages of evidence and/or legal submissions and extensive repetition. Responding to those pleadings imposes a substantially higher than normal burden on the NZ Housing Group.
[33] In response, the Society emphasises that the substantive hearing will have a narrow compass: the judicial review is focused on whether the Council, in considering the second respondent’s application, made its decision within the confines of the Resource Management Act 1991. It is not a rehearing of the resource consent decision and the applicant does ask the Court to substitute an alternative decision, based on additional evidence. The applicant does not intend to call further expert evidence.
[34] Consideration of this application involves balancing the competing interests of the Society’s right to access the court and the NZ Housing Group’s right to be protected
22 Belgiorno-Nettis v Auckland Unitary Plan Independent Hearings Panel [2018] NZHC 926 [Belgiorno-Nettis] at [16].
23 See for example Jericho, above n 21, at [20]; Sax v Campbell [2020] NZHC 1297; KM v TL [2013] NZHC 3000, [2014] NZFLR 162; and Friends of Houghton Valley Inc v Wellington City Council [2015] NZHC 1515. See also Ibrahim v Associate Minister of Immigration (CA746/2011) [2012] NZCA 229 at [19] where Arnold J said “… the ability of the High Court to order security for costs in respect of judicial review applications is well established.”
24 Belgiorno-Nettis, above n 22, at [17]; and Waipapa Bay Protection Society Inc v Ariki Tahi Sugarloaf Wharf Ltd [2024] NZHC 192 at [11].
25 Highgate on Broadway Ltd v Devine, above n 21, at [22(e)].
from a barren costs award. I have concluded that the balance is in favour of making an order for security for costs for the reasons discussed above.
What order should be made?
[35] The NZ Housing Group seeks security for costs in the amount of $25,000, on a 2B basis, and taking into account the interim orders application that has already been heard and determined.
[36]As Associate Judge Skelton said in Jindal v Kamal:26
Determining the amount of security justified in the particular case requires the exercise of discretion rather than a strict mathematical approach.27 It does not necessarily need to be fixed by reference to likely costs award is but rather what the courts thinks fit in all the circumstances.28 The circumstances to be taken into account include the following:29
(a)amount or nature of the relief claimed;
(b)nature of the proceeding, including the complexity and novelty of the issues;
(c)estimated duration of trial; and
(d)probable costs payable if the plaintiffs are unsuccessful and/or the defendants’ estimated actual costs.
[37] It is not appropriate for the Court to engage in any detail with the merits of the judicial review claim at this stage. I merely note that, on a very preliminary view, the claim has sufficient merit that my assessment of quantum does not turn on that consideration.
[38] It may be, as the Society submits, that the substantive hearing will have a relatively narrow compass. Against that, I balance the NZ Housing Group’s submission that the Society’s pleadings are over-complicated and repetitive, and responding to them is therefore more time-consuming and costly.
26 Jindal v Kamal [2023] NZHC 2820 at [10].
27 Sharp v Pillay [2017] NZHC 647.
28 McLachlan v MEL Network Ltd, above n 12.
29 This summary was adopted by the Court of Appeal in McNaughton v Miller [2022] NZCA 273 at [17].
[39] Other relevant factors include that the NZ Housing Group is one of two active respondents so it might not receive a full costs award if the Society is unsuccessful; the Court has so far had to consider the interim relief application, the application by the first respondent for leave to participate and this application for security for costs. The first and third of those applications have directly concerned the NZ Housing Group. As far as I am aware there are no outstanding interlocutory applications.
[40] Neither the Society nor the NZ Housing Group have provided an estimate of trial time.
Result
[41]Accordingly, I make following orders:
(a)pursuant to r 5.45 of the High Court Rules, the plaintiff is to provide security for the second respondent’s costs in the total sum of $20,000 to the Registrar of the High Court at Wellington as follows:
(i)$10,000 to be paid within 20 working days of the date of this judgment; and
(ii)$10,000 to be paid two months prior to the commencement of the trial.
(b)pursuant to r 5.45(3)(b), if either of these amounts remain unpaid after they have fallen due for payment, the plaintiff’s case will be stayed until such time as they are paid.
Costs on this application
[42] There is no reason why costs should not follow the event on a 2B basis in favour of the NZ Housing Group, together with disbursements as fixed by the Registrar. I order accordingly.
Case management conference
[43] In his memorandum of 1 July 2024 counsel for the NZ Housing Group, Mr Lawson, asks that the matter be given a firm fixture as soon as possible. A timetable leading up to trial has been set by consent.30 However, at this stage the Court does not have an estimate from the parties of likely trial time. On that basis, I direct that a further (and I anticipate, final) case management conference be convened to advise the Court on readiness of the matter for trial, likely trial time and any other outstanding matters for consideration pursuant to sch 5 of the High Court Rules.
Gwyn J
Solicitors:
Lawson Robinson, Napier Hastings District Council, Hastings
Sainsbury Logan & Williams, Napier
30 The Mahora Residents Society Inc v Hastings District Council HC Napier CIV-2024-441-17, 7 May 2024 (Minute of Cull J, 1st Case Management Conference).
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