Marlborough District Council v Marlborough Aquaculture Limited

[2015] NZHC 2116

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2015-406-19 [2015] NZHC 2116

UNDER

Section 299 of the Resource Management

Act 1991

BETWEEN

MARLBOROUGH DISTRICT COUNCIL

Appellant

AND

MARLBOROUGH AQUACULTURE LIMITED

Respondent

Hearing:	31 August 2015
Counsel:	J W Maassen for Appellant D J Clark for Respondent
Judgment:	2 September 2015

RESERVED JUDGMENT OF MACKENZIE J

I direct that the delivery time of this judgment is

4.30 pm on the 2nd day of September 2015

Solicitors:           Cooper Rapley Lawyers, Palmerston North, for Appellant

Wisheart Macnab & Partner, Blenheim, for Respondent

MARLBOROUGH DISTRICT COUNCIL v MARLBOROUGH AQUACULTURE LT [2015] NZHC 2116 [2 September 2015]

Background

[1]      This is an appeal under s 299 of the Resource Management Act 1991 (RMA)

against a costs decision by the Environment Court.1

[2]      Marlborough Aquaculture Ltd (MAL) applied to the Marlborough District Council (the Council) for coastal permits to establish, operate, and maintain a marine farm in Beatrix Bay.  The Council appointed an independent Commissioner to deal with  the  application.    The  Commissioner  refused  consent  in  a  decision  dated

30 October 2014.2

[3]      MAL filed an appeal against the refusal on 25 November 2014.  The Council filed a memorandum dated 4 December 2014 requesting that the appeal be dealt with sequentially by the same Court division as another appeal relating to an application in Beatrix Bay.  MAL filed a memorandum dated 5 December 2014 opposing that request, and raising a question as to whether ecological effects of the proposed activity were  a live issue.   Judge Jackson issued a minute on 9 December 2014 directing  that  the  Council  to  advise  by  12 December  2014  whether  adverse ecological effects were an issue in the appeal and if so, the witnesses it proposed to call on that issue.  The Judge noted that only after the answers to those questions were known could the Court deal with what the  Judge described  as  “the quasi joinder” proposed by the Council.

[4]      The Council filed a memorandum dated 11 December 2014.  It advised that the Council intended to call evidence on ecology from two witnesses; a marine biologist and an ornithologist.   It described the areas which their evidence would cover.  The memorandum said that the issue of ecological effects was always live in the present application.  The Council accepted that it had not previously presented a separate ecological report, and that the Commissioner found limited ecological effect on the evidence before him.  The Council submitted that this did not raise an issue

estoppel against it on that issue.

1      Marlborough Aquaculture v Marlborough District Council [2015] NZEnvC 112.

2      Application by Marlborough Aquaculture Ltd – Decision of the Commissioner, 30 October

2014.

[5]      In a memorandum in response dated 17 December 2014, counsel for MAL submitted that none of the matters on which the two intended witnesses were to give evidence were referred to in the decision being appealed.   It submitted that the Council was endeavouring to advance these further matters to justify the consent refusal when they were not included in the decision being appealed.  There was no identifiable change in circumstances and nothing to suggest that the information was new or unavailable to the Council when the decision was made.

[6]      Judge Jackson issued an interim procedural decision on 18 December 2014.3

He allowed the Council to call the proposed evidence and set a timetable for filing. In his reasons, the Judge noted a submission by Mr Clark citing authority as to the circumstances in which a decision maker may call evidence contrary to its decision. He went on to say:

[13]      The situation here is quite different, although I accept that there is no change in circumstances. Rather the Council is supporting its decision and proposing to call further evidence on (if it is correct) matters which are potentially of national importance under section 6 RMA. Neither public confidence in, nor the integrity of the RMA would be impugned if I allowed that evidence to be called. To the contrary, public confidence in the process may be increased if there is more scientific evidence before the court. Any issue as to why the evidence was not given at the Council hearing is principally relevant to costs.

[7]      The  timetable  for  evidence  which  Judge  Jackson  fixed  in  that  decision departed from the usual procedure.   Normally, MAL’s evidence would have been filed first.  The timetable provided for the evidence from the Council’s two scientists to be filed first, followed by MAL’s evidence in chief, then the Council’s evidence in chief, followed by rebuttal evidence.

[8]      After the evidence of the Council’s two scientists was filed, counsel for MAL sent an email to the Court advising that it had decided not to proceed with the appeal. In a minute dated 6 March 2015, Judge Jackson recorded the withdrawal of the appeal and set a timetable for any costs application.

[9]      The Council filed a memorandum seeking a costs award of $14,000, out of actual costs of some $43,500.  Counsel for MAL filed a memorandum opposing this.

Judge Jackson issued a fully reasoned costs decision on 24 June 2015.4    He refused costs.   In his reasons, he noted the course of the proceeding, as I have described above,  and  set  out  in  some  detail  the  submissions  of  both  counsel  in  their memoranda.  In his consideration of those submissions the Judge said:

17]      The Council has put forward a number of theories about why the appeal was withdrawn. The appellant has informed the court and the parties that the reasons for its withdrawal concern financial constraints and the economic viability of engaging experts to respond to the Council's ecological evidence compared with the size of the farm it seeks to establish. I have no reason to doubt that explanation and it is not appropriate for the court or the Council to speculate.

[18]      It is clear, given the grounds for the appeal, that in lodging its appeal the appellant was not anticipating that the Council would focus on the ecological  effects  of  the  proposal.  The  appellant  submits  that  had  they known that this would be the Council's focus they would not have lodged an appeal. The ecological evidence was to be served on 13 February 2015 and, while I am not told when the appellant received it, the appeal has been withdrawn a couple of weeks after that (on 5 March), presumably once the appellant had had a chance to digest the evidence and look at its options.

[19]     The Council, in choosing to call further evidence on the ecological effects, has not changed its position but it has altered the focus of the appeal so that the appellant's skirmish became more like a full battle on a new battleground. Given the change in circumstances, the appellant was entitled to withdraw its appeal and it has done so in a timely fashion. Only the first step of the evidence exchange timetable had been fulfilled and a notice of hearing had not yet issued.

The Council’s submissions on this appeal

[10]     In written submissions to this Court, Mr Maassen for the Council submits that the costs decision contained inadequate reasons and was erroneous in law on a number of grounds.  He submits that the fact the Council did not call expert evidence on certain topics when obtaining reports in its discretion under s 42A of the RMA was irrelevant to the exercise of the discretion as to costs.  An appeal proceeds de novo and is unfettered by what has gone before, and the Council should provide evidence  to  the  Environment  Court  in  the  public  interest  in  a  focused  way. Mr Maassen also submits that the costs decision is illogical because it precluded recovery of all costs, not just those related to marine and avian ecology.  He submits that the Council incurred a range of expert and legal costs to meet the Court’s

timetable and that costs on MAL’s failed application to exclude evidence were not

addressed.

[11]     An important plank in Mr Maassen’s argument is that the Council is in a special position so far as costs are concerned.  In its capacity as a consent authority the Council is not a litigant in the ordinary sense.  When an appeal is lodged it is a statutory respondent, though not an interested party for purposes other than assisting the Court.  How the Council can best do that is informed by what the Council has learnt from  submitters  and  the appellant  at  first  instance.   The Council  and  its ratepayers are involuntarily involved in public interest litigation  pursuant to the RMA.   Mr Maassen did not go quite as far as submitting that there should be a presumption that the Council should receive costs, but submits that it is a strong factor, and that it was not displaced by the circumstances here.

[12]     Mr Maassen also submits that the Environment Court should not expect that all the evidence the Council may wish to call on appeal has already been obtained by the Council in its capacity as consent authority.  Mr Maassen further submits that the Environment Court mischaracterised the actions of the Council on appeal by suggesting that it opened up a new battleground and changed the focus of the appeal.

[13]     Finally, Mr Maassen submits that the Environment Court’s costs decision is inadequately reasoned in that it did not consider any reasons the Council had for not earlier calling evidence on marine ecology and avian ecology, as a consent authority. The Court simply relied on the fact that there were no reports under s 42A of the RMA and that the evidence had not been obtained earlier.  Mr Maassen submits:

The Environment Court can’t have it both ways and expect the Council to participate in the public interest and then not allow it to recover some costs of evidence provided on this basis.  This fact and the fact that the Council was calling evidence in the public interest of relevance are reasonable considerations in forming the grant of costs and are not outweighed by the simple fact the Council had not obtained the evidence earlier.

[14]     He further says that the Council’s evidence must have proved determinative in MAL’s decision to withdraw its appeal, presumably because it accepted on that evidence that its application did not represent sustainable management.  He submits that in this way the public interest was served.  He submits that MAL’s assertion that

the  calling  rather  than  the  cogency  of  the  new  evidence  led  to  its  decision  to withdraw is implausible.  If true, the appeal should have been withdrawn once the decision to admit the evidence was made.

[15]     Mr Maassen in his oral submissions challenged the correctness of the Judge’s findings at [18] that MAL was not anticipating that the Council would focus on the ecological effects of the proposal; and at [19], that the Council had altered the focus of the appeal.  He submits that the Council’s position was such that the ecological effects of the proposal were always important; that the focus of the appeal was not determined solely by MAL’s grounds of appeal; and that the Council’s decision to call evidence did not change that focus of the appeal.  He submits that the starting point is that the Council, having filed evidence that is relevant and helpful in defending the Commissioner’s decision, is entitled to reasonable costs.

[16]     Mr Maassen further submits that the Judge erred in law in saying, as he did at [13] of the interim procedural decision and [15] of the costs decision, that any issue as to why the Council’s evidence was not given at the Council hearing is principally relevant to costs.  He submits that the issue of costs on the appeal is to be determined having regard to steps in the appeal, not at the earlier stage.

Discussion

[17]     The right of appeal under s 299 of the RMA is confined to an appeal on a question of law.  This appeal is an appeal against the exercise of a discretion not to award costs.  The appellant must show that the Judge has erred in the exercise of his discretion, and that his error is such as to raise a question of law.

[18] The Council’s submissions place considerable weight on the proposition that the starting point is that the Council should be awarded costs because of its statutory public interest role in the process. That is summed up in the submission I have quoted at [13]. I do not accept that submission. The Council’s statutory role is a relevant consideration in appropriate cases, but Mr Maassen was unable to cite authority for the proposition that it is the starting point, or that it is entitled to such significant weight as he accords it, as a matter of law. The Judge did not err in law in not adopting that starting point.

[19]     The Judge also did not err in law in his assessment of the merits of the application, particularly at [18] and [19] of the costs decision.  His finding that MAL did not anticipate the Council’s focus on the ecological effects of the proposal was a factual one, which he was best placed to make.  It does not involve a finding that, as a matter of law, the ecological effects of the proposal were not relevant, or a proper subject of evidence by the Council.  Similarly, his assessment that the Council had altered the focus of the appeal so as to escalate the “battle” was a factual assessment which he was best placed to make.  The weight which he gave to both of these points was  a  matter  for  the  exercise  of  his  discretion.    No  error  of  law  has  been demonstrated, and no ground has been shown for this Court to interfere with the weight he has given to these factors.

[20]     The sequence in which events unfolded was relevant.   It was the Council’s application to have the appeal heard with another appeal which put the ecological effects of the application in focus. As Mr Maassen submits, the Council was entitled to do that, and to call evidence on it.  The Judge had to deal with that issue in his interim procedural decision.  He did so by directing that the Council’s evidence be presented first.  His observation at [13] of that decision, repeated at [15] of the costs decision, reflected that procedural history.  That was a relevant factor, and the Judge did not err in law in having regard to it.   Nor did he err in the exercise of his discretion in doing so.

[21]     There is no general principle in the Environment Court that costs will follow the event.5     That Court’s Practice Note 2014 records, as an issue relevant to the practice of the Court in considering costs issues, that where an appeal is withdrawn after being set down for hearing, the Court will normally award costs against the appellant.  The weight to which that general principle was entitled in this case was a matter for the Judge’s discretion.  It is clear that he had regard to it, because he noted that it did not, strictly speaking, apply in this case. The appeal was withdrawn before

the appeal had been set down for hearing, and before, in the ordinary course of

events, the Council’s evidence would have been required.

5      Stevens v Dunedin City Council PT Christchurch C5/95, 3 February 1995; Scott v Waipa District

Council EnvC Auckland A81/99, 28 July 1999.

[22]     That ordinary course of events was departed from following the Council’s initiative to have MAL’s appeal heard with another appeal.  The particular facts of this case meant that the Judge did not err in declining to apply the general rule dealing with withdrawn appeals.   The Judge did not err in law in finding that the Practice Note did not apply.

[23]     The Judge’s decision on costs is fully and carefully reasoned.  No error of law in it has been made out.  The exercise of his discretion has not been demonstrated to be in error.  The decision was well within the limits of the Judge’s broad discretion on costs.

Result

[24]     The appeal is dismissed.  I award costs to the respondent on a 2B basis, plus disbursements.

A D MacKenzie J