McCallum Bros Limited v Auckland Council
[2025] NZHC 820
•8 April 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-003058
[2025] NZHC 820
UNDER the Resource Management Act 1991 IN THE MATTER
of an appeal under s 299 of the RMA
BETWEEN
MCCALLUM BROS LIMITED
Appellant
AND
AUCKLAND COUNCIL
First Respondent
MANUHIRI KAITAKI CHARITABLE TRUST
Second Respondent
Hearing: 2 April 2025 Appearances:
M Eastwick-Field and A Wouters for Appellant T Urlich and J Pou for Respondents
Judgment:
8 April 2025
JUDGMENT OF VENNING J
This judgment was delivered by me on 8 April 2025 at 3.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Russell McVeagh, Auckland
Rice Spier, Auckland T Urlich, Hamilton
Copy to: The Interested Parties
MCCALLUM BROS LIMITED v AUCKLAND COUNCIL [2025] NZHC 820 [8 April 2025]
[1] In a decision delivered on 30 October 2024 the Environment Court ordered McCallum Bros Limited (MBL) to pay costs to Manuhiri Kaitaki Charitable Trust (MKCT) of $450,000.1 The Court also ordered MBL to pay Damon Clapshaw $50,000 in costs.
[2]MBL appeals against the costs order of $450,000 in favour of MKCT.
Background
[3] The background to the substantive appeals that were before the Environment Court is set out at [1]–[9] of the Court’s decision:
[1] There were six appeals filed in relation to three applications for consent to remove sand from the seabed within the Mangawhai – Pākiri embayment. The applications related to different bathymetric depths or distances from shore. McCallum Bros Ltd appealed against refusals to both the inshore1 and offshore applications. Four appeals were filed in relation to the grant of the midshore application.
[2] The situation is somewhat complicated in that the McCallum Bros previously held consent to extract from the inshore area and were exercising rights under s 124 of the Act (continuation of consent provisions) while the appeal was to be determined in relation to the refusal of the consent.
[3] The inshore consent was surrendered after a negotiated agreement between the parties on the basis of a temporary offshore consent being granted.4 The temporary consent was granted for the offshore area to avoid potential adverse effects recognised by all parties in relation to the inshore area. Costs were reserved.
Changes prior to hearing
[4] The midshore application, which was granted at first instance, was withdrawn shortly prior to hearing and this was dealt with in a decision issued on 22 June 2023.5 Costs were reserved.
[5] The appeal on the application for offshore consent went to a full hearing over some 33 days. In the final decision the appeal was refused, and the decision of the Commissioners confirmed.6 Directions as to costs were made.
[6] At the end of the substantive hearing there was an application by McCallum Bros to strike out Manuhiri Kaitiaki Charitable Trust (MKCT / Ngāti Manhuiri) as a trade competitor. The application for strike out was subsequently heard, and refused in a decision issued on 11 April 2024.7
1 McCallum Bros Ltd v Auckland Council [2024] NZEnvC 266. A joint decision of J A Smith and Judge A H C Warren.
[7] Costs were reserved in respect of the offshore appeal, the strike out application, the withdrawal of the midshore application, and inshore surrender/temporary offshore consent.
[8] McCallum Bros has now appealed to the High Court in respect of all matters, but the parties agreed that the question of cost should be resolved so these issues can be the subject of appeal and determination in the High Court. We do so accordingly.
[9] Costs in respect of the strikeout matter are sought particularly by MKCT in regard to a hearing that occupied in excess of eight weeks including, interlocutory and preliminary directions and hearings, and interlocutory and substantive hearings on various matters including management of the surrender of the inshore consent and the temporary offshore consent. The matter has proved to be particularly complex.
The costs decision
[4] The Court noted that while nine parties had made applications for costs MBL had resolved the issue of costs in relation to seven of them. The Court was only left with the applications by MKCT and Mr McCallum. The Court noted MKCT sought indemnity costs and expenses in relation to proceedings that were unsuccessful or otherwise abandoned by MBL. It did not seek costs and expenses associated with a mediation, MKCT’s and a related entity’s application to strike out the inshore appeal and the temporary consent.
[5] The Court noted MKCT claimed $638,396 in legal costs. It also then sought its expert’s costs, $132,671.12 for Mr Carlyon, (planner) and Dr Maseyk (effects management), and $24,66921 for Ms Lucas (landscape). The total costs sought including expert witnesses costs came to $795,736.33.
[6] The Court reviewed the procedural background to the lengthy hearing before it, including MBL’s strike out application which had come late in the piece. It then discussed what it perceived as the core error by the MBL’s experts and addressed mana whenua issues. The Court recorded that it did not accept MBL’s evidence that there were acceptable effects on mana whenua values and that MKCT had been required to lead considerable evidence, at some cost, to address cultural landscape, landscape evidence generally, ecology and cultural evidence.
[7] The Court then addressed the general principles applicable to an award of costs, acknowledging that this case was more complicated than usual. It noted that MBL argued that the costs should be within the Court’s “comfort range” which is said to be within 25 to 33 per cent of the costs actually and reasonably incurred. The Court then noted that, while none of the parties appeared to seek costs related to the limited settlement achieved before the Court, the costs of the technical evidence related to inshore and midshore consents were clearly relevant given that the evidence responded to the way MBL had presented its case. In the Court’s view MBL’s approach was in error and explained much of the differences between the experts on the issue of sand budgeting and the dynamics of the harbour and embayment in particular.
[8] For reasons which it then set out and which are not directly relevant to this appeal, the Court then considered the merits of the position MBL had taken in relation to the inshore and midshore consent, the offshore consent, and the application to strike out before concluding on this point that it had “proved to be very difficult for the parties to set out clearly their costs in respect of these various aspects of the hearing”.2 The Court discounted the assertion that the claimants were required to keep separate time recordings for each event, noted there had been no disclosure of the costs incurred by MBL itself by way of comparison, and concluded that, overall the costs sought by MKCT were a reasonable reflection of the time and complexity of the issues and the change in MBL’s position as the proceeding progressed. Finally, the Court considered the total claim bore similarities to other large complex cases that had been heard before the Environment Court.
[9]The Court then turned to the exercise of the discretion before concluding:
[56] We are unable to see anything unreasonable about the costs claimed by MKCT. The experts were properly retained and were of assistance to the Court. The costs in respect of experts seem to be reasonable and we accept that these are appropriate in the circumstances. We accept the legal costs for MKCT is likely to far exceed other parties because of the complex situation around the cultural interests and landscape interests. However, the most concerning was the application to strike them out of the proceedings.
[57] We note that there is criticism by McCallum Bros that MKCT has not produced all of the invoices that were paid in respect of the matter. McCallum Bros suggested MKCT’s claim is not only the highest costs award sought in
2 McCallum Bros Ltd v Auckland Council, above n 1, at [52].
these proceedings but would be unprecedented if awarded by the Environment Court.
[58] The basis of this assertion is unclear, but we do acknowledge the lack of any copies of invoices. However, even assuming such invoices were supplied, they would not necessarily answer the Court’s concerns in this instance given the difficulty showing the various issues on which the money has been expended. We note that McCallum Bros, notwithstanding its criticisms of other parties as to costs, does not provide details of their costs spent on the matter, which we would have thought would be a similar size or greater than that of MKCT.
[59] As to precedent this court has faced similar claims and made substantive awards. Other divisions have also made large costs orders. This case stands out for the changes made after the matter was set down for hearing and the strike out application at the conclusion of the evidence.
[10] Ultimately the Court then fixed the costs in the following passages of its decision:
[62] In relation to MKCT, we note that the total costs for the experts were around $150,000. We consider that in the circumstances those witnesses were substantively helpful and therefore an award of $100,000 is granted. We note particularly that Mr Carlyon’s evidence needed to be altered to accommodate a change in circumstances and the consents now sought.
[63] In relation to the legal costs sought of $638,396, we would have been minded to award half the costs in relation to the matters other than the strike out application. Given that this is not separated out, we have concluded that the figure of $350,000 for legal fees is appropriate.
[64] In relation to MKCT this would result in an award of $350,000 for legal costs and $100,000 for expert costs, totalling $450,000.
[11]The Court then noted in its final comments:
[66] When we look at the sums, … $450,000, we believe these show a proper relationship of the costs and time incurred by the parties in relation to the hearing. We appreciate that for certain parties the payment of only a proportion of cost will be seen as disappointing given that the balance has to borne by the client or individual.
[67] Nevertheless, this in our view meets a fair balance between the parties having regard to the broad discretion this Court has to award costs.
[68] We suggest that a close reading of the substantive decision of the Court demonstrates the ways in which these various burdens fell upon the parties to argue various aspects of the matter. In that regard, it is clear to us that MKCT as the mana whenua and kaitiaki had the responsibility to carry this matter on a cultural basis before this Court.
Approach to the appeal
[12] Costs awards involve an exercise of a discretion. Further, s 299 of the Resource Management Act 1991 (RMA) provides for an appeal to this Court but only on a question of law.
[13] As such, MBL accepts that this Court will only interfere with decision of the Environment Court if it establishes an error in law. However, it submits there was such an error of law in the present circumstances.
The Appeal
[14] MBL says the Environment Court erred in law by awarding costs that were unreasonable. Specifically, it submits the Court erred in law by:
(a)reaching conclusions on the reasonableness of the costs award to MKCT without a sufficient evidential foundation as to the actual costs incurred;
(b)taking into account an irrelevant matter, namely that MBL had not provided its own invoices when assessing the reasonableness of MKCT’s costs claim;
(c)failing to take into account relevant matters including:
(i)principles developed through the Environment Court Practice Note 2023 (PN) and case law; and
(ii)the costs settlements reached with other parties; and
(d)misapplying the developed legal test for awarding costs under s 285 RMA.
Discussion
[15] The general approach to costs in the Environment Court was recently discussed by Cooke J in the decision of Environmental Protection Authority v BW Offshore Singapore Pte Ltd.3 In that case Cooke J summarised the position as follows:4
[16] The award of costs in the Environment Court is controlled by s 285 of the RMA. This section gives the Court a wide discretion. But at the same time the discretion should not be exercised inconsistently with well-established principles relating to costs.
[17] One well-established principle is that costs will not be awarded against a statutory decision-maker in the absence of special circumstances. This principle is recognised in the Environment Court’s 2014 Practice Note. The Practice Note can only be taken to provide general guidance and should not be understood to create the relevant principle or identify its scope. Decisions of the Environment Court have also considered the principle. But the decisions of the Court of Appeal and High Court perhaps provide the most assistance on the nature and scope of the general principle. The underlying reason for it as explained in those authorities is important, including for the purpose of identifying when it might be departed from……..
[18] The second matter of general principle relates to the circumstances when the Courts award higher than usual amounts by way of costs. There is a practice in the Environment Court of applying the factors outlined by the High Court in Development Finance Corporation New Zealand Ltd v Bielby when considering whether to uplift costs. The factors referred to in that decision are sound ones, yet they emerge from a first instance High Court decision from 1990 which involved the costs schedule to the High Court Rules in effect at that time. A more up to date and complete set of principles relating to the potential uplift, or reduction in costs awards can be found in the present High Court and District Court Rules. As Asher J said in Tairua Marine Ltd reference by the Environment Court to the current Rules would involve a “rational and principled exercise of its discretion” in relation to costs.
[19] Both these matters might be said to reflect a more general point. The Environment Court exercises a specialised jurisdiction. It can be expected to develop approaches appropriate to that jurisdiction. But care should be taken that it reflect the current state of the general law. There are particular factors relating to its jurisdiction that will be relevant to the determination of costs, including the desirability of participation in resource management decisions not being deterred by the possibility of costs awards. For that reason there is no presumption that costs will be awarded to a successful party as there is with other civil litigation. Such circumstances, and the broad discretion in relation to costs in s 285 are important. But at the same time the Court is part of a wider civil justice system, and it should take into account more general principles that have been developed by the Courts when they are relevant.
3 Environmental Protection Authority v B W Offshore Singapore Pte Ltd [2021] NZHC 2577.
4 (Footnotes omitted).
[16] The parties are agreed that if a decision to award costs is made, the practice of the Environment Court is to assess the quantum within three bands:
(a)standard: 25–33 per cent of the actual and reasonable costs, described in some cases as the “comfort zone”;
(b)an uplift where there are aggravating or adverse factors such as identified in DFC NZ Limited v Bielby;5 and
(c)indemnity costs.
[17] In the present case, while maintaining that the costs award should have been no more than the standard 25 per cent of actual and reasonable costs claimed, Ms Eastwick-Field accepted that on this appeal MBL was not challenging the discretion exercised by the Environment Court in awarding an uplift in costs. The appeal is based on the Court’s failure to have a sufficient evidential foundation to support the quantum awarded.
[18] Relevant to this case is the Practice Note issued by the Environment Court in 2023 (the PN) and particularly cl 10.7 with deals with the issue of costs. Clause 10.7(n) of the PN provides:
If no direction in relation to costs is made in the substantive decision, and whether or not costs are expressly reserved, the default position which applies is that:
…
(iv) the particulars of the claim should include invoices or other proof of costs incurred.
[19] MKCT accepts it did not provide invoices in support of its claim for costs, but it relies on the affidavit of Mr Hohneck in which he deposed as follows:
3.EXTERNAL EXPENSES INCURRED BY NGĀTI MANUHIRI
3.1Our accounts staff have tabulated costs for the following technical witnesses provided evidence on behalf of Ngāti Manuhiri in relation to the inshore, midshore and offshore appeals:
5 DFC NZ Limited v Bielby [1991] 1 NZLR 587.
Mr Carlyon / Dr Maseyk Planning / Effects Management
$132,671.12
Ms Lucas
$ 24,669.21
3.2Their attendances included reviewing and considering other relevant evidence, participating in witness conferencing, preparing evidence, updating and reconsidering updated evidence once McCallum’s dropped two of its three appeals, reviewing and considering conditions, attending relevant hearing weeks and presenting evidence.
[20]And then as to legal costs he deposed:
4.LEGAL COSTS INCURRED BY NGĀTI MANUHIRI
4.1Our accounts staff have assimilated costs paid for our two lawyers for the following:
a.our midshore appeal
b.our interested party notice on the inshore appeal;
c.McCallum’s inshore, midshore and offshore appeals;
d.our application to strike out McCallum’s inshore appeal; and
e.McCallum’s application to strike out our entire case.
4.2On the advice of our lawyers, we removed costs relating to the mediations, our strike out application (which we withdraw), and the temporary consent (which was granted by consent).
4.3Those costs were calculated at $638,396.
[21] MBL submits that the PN and case law supports its submission that invoices should form the basis of the claim for compensation. Invoices are important because a costs award, as in this case, is usually based on a proportion of the actual costs incurred. Invoices normally provide details such as narrations and general time spent. MBL says that the failure in this case for the Court to require invoices so that both the Court and MBL could interrogate or consider those invoices was unreasonable. MBL submits that the Court erred by finding it was reasonable for MBL to be required to pay a costs award of $450,000 without the provision of sufficient evidence supporting
the application, particularly bearing in mind that Ngāti Manuhiri sought indemnity costs of $795,736.
[22] MKCT’s response is that invoices are not required at law. The PN refers to the fact the claim “should” include invoices or other proof, not that invoices “must” be provided. The provision of invoices is not an absolute requirement. Further the PN is not law. It is simply guidance. In any event, MKCT provided evidence of costs in Mr Hockneck’s affidavit. It was open to the Court to accept that evidence as an alternative “proof of costs incurred”. Ms Urlich submitted the Environment Court plainly considered the costs submissions which addressed the PN and accepted Mr Hockneck’s account in his affidavit.
[23] While I accept the PN provides guidance only and is not mandatory, as Cooke J said, the discretion both to award costs in the first instance and to fix the quantum of those costs must be exercised with regard to well established principles and, it follows, in a principled way. In North Eastern Investments Limited v Auckland Transport,
Gordon J noted:6
[33] The Court correctly stated that while the section does not impose any constraint upon the discretion to award costs, any discretion must of course be exercised in a principled way. The Court continued:
[11] … As is encapsulated in the Court’s Practice Note 2014, there is no presumption, as there is in general civil litigation, that a successful party should be awarded costs. What the Court is required to do is to award costs, if at all, on a basis that appears fair and reasonable in the circumstances of the particular case and at a level that represents a reasonable contribution to the costs of the receiving party.
[34] The Court correctly stated that the Practice Note is a guide rather than a prescription.
[24] Several Environment Court decisions confirm the general practice of that Court is to require invoices. In Auckland Council v Chen Hong Co Limited the Court noted:7
… the Council costs application documents do not include the invoices pertaining to legal and witness costs which form the bulk of the claim. I consider that the Court and parties subject to costs awards are entitled to see
6 North Eastern Investments Ltd v Auckland Transport [2017] NZHC 2355.
7 Auckland Council v Chen Hong Co Limited [2017] NZEnvC 144 at [22].
these documents which provide the basis of the costs award. Such invoices should be provided as a matter of course.
The Court issued an interim decision pending provision of the invoices. There are other cases which make the same point.8
[25] The Court has also acknowledged that in the absence of the detail provided by invoices it can be difficult for the Court and a party to determine the reasonableness or otherwise of the claim for legal expenses particularly when more than the usual “comfort zone costs” are to be awarded.9
[26] I do not accept that it is any answer in this case for MKCT to rely on Mr Hohneck’s evidence. The detail provided in his evidence about legal expenses particularly, is at a very high level of generality. Given the quantum claimed in this case, more was required if affidavit evidence as opposed to invoices was to be acceptable as “other proof of costs incurred”.
[27] The difficulty in the way the Court approached the matter without invoices in this case is reflected in the way it ultimately dealt with the costs of MBL’s strike out claim as part of the award. The Court clearly considered the strike out lacked merit and that indemnity costs should be applied to it. At [51] of its decision the Court said:
The entire costs surrounding the strike out application should be borne by [MBL] as an ill-conceived interlocutory step in the proceedings.
Then, in fixing the costs at $350,000 in total it said that:10
…we would have been minded to award half the costs in relation to the matters other than the strike out application. Given that is not separated out, we have concluded that the figure of $350,000 for legal fees is appropriate.
[28] However, without an invoice for the legal costs for the strike out, the Court was forced to take a stab in the dark at what those costs might have been. As the actual legal costs claimed by MKCT including those associated with MBL’s strike out came to $638,000 approximately, it follows the Court must have considered the strike out
8 Canterbury Museum Trust Board v Christchurch City Council ENC Christchurch C064/06, 23 May 2006.
9 Marlborough Aquaculture Ltd v Marlborough District Council [2015] NZEnvC 112.
10 McCallum Bros Ltd v Auckland Council, above n 1, at [63].
costs were $62,000 ($638,000 less $62,000 = $576,000 being the balance legal fees for the remaining work then divided by two as half those costs were awarded =
$288,000 + $62,000 indemnity costs on the strike out = the $350,000 awarded). However, in the absence of an invoice or confirmation of that sum, the exercise is speculative.
[29] In Jacks Point Residential No. 2 Ltd v Queenstown Lakes District Council,11 in addition to noting that “An application for costs made under s 285 RMA is expected to have attached to it the relevant invoices so that the Court has some evidence of those costs”, the Judge went on to note the difficulty in separating out the costs of, in that case, the separate parties in the absence of an invoice. Similarly, in the absence of invoices or a more detailed summary of the costs allocated to the various steps in the proceeding, it is difficult to support the award as reasonable, even allowing for an uplift.
[30] While I accept the Court may have made other cost awards for substantial sums,12 I consider the quantum of the award is also a relevant consideration when determining the reasonableness or otherwise of the approach taken by the Court in deciding the issue in the absence of appropriate detail.
[31]In that regard, I do not consider the fact MBL has chosen not to appeal the
$50,000 award in favour of Mr Clapshaw to be relevant. There are a number of reasons why a party such as MBL might determine not to appeal such an award.
Irrelevant matters
[32] MBL also submits the Court was wrong to rely on the fact that MBL had not provided invoices to support the reasonableness of the award. In response, Ms Urlich submitted that the Court had not done that. She argued that, taken in context, the Court was simply responding to MBL’s assertion that MKCT ought to have produced evidence of how much time was spent on the inshore, midshore and offshore appeals:
11 Jacks Point Residential No. 2 Ltd v Queenstown Lakes District Council [2018] NZEnvC 231 at [28].
12 Remediation (NZ) Ltd v Taranaki Regional Council [2025] NZEnvC 087.
[53] Given the many variations to the hearing order and procedure we discount the assertion that all claimants were required to keep separate time recordings for each event. There has been no disclosure of the total costs of McCallum Bros by way of comparison and we therefore conclude that the costs of the claimants are a reasonable reflection of the time and complexity of the issues and changes made by McCallum Bros as the proceeding progressed. No party referred to the scale costs and such a course would involve assigning a category and multiplier for days in court and probably involve second counsel.
[33] However, the Court does seem to have been influenced by and used the fact that MBL did not produce its own invoices to the Court in concluding that it was appropriate to accept MKCT’s claim for costs without invoices. At [58] the Court went on to say:
[58] The basis of this assertion is unclear, but we do acknowledge the lack of any copies of invoices. However, even assuming such invoices were supplied, they would not necessarily answer the Court’s concerns in this instance given the difficulty showing the various issues on which the money has been expended. We note that McCallum Bros, notwithstanding its criticisms of other parties as to costs, does not provide details of their costs spent on the matter, which we would have thought would be a similar size or greater than that of MKCT.
[34] I consider MBL makes a fair point in response that, as the applicant its position and the case it had to run was quite different to that of the objectors including MKCT, so that the costs it incurred were not necessarily relevant to whether the costs claimed by MKCT were reasonable. Nor does it follow, as a matter of logic, that MBL’s decision not to provide invoices in relation to its costs somehow supported the Court dealing with the matter in the absence of invoices and without more detail than the very broad statements of Mr Hohneck.
Was the legal test misapplied?
[35] I consider that MBLs alternative ground, that the Court misapplied the legal test by failing to require invoices, is effectively the other side of the same coin. It is unnecessary to address it given the above findings.
Result
[36] For the above reasons the appeal is allowed. The matter is referred back to the Environment Court for it to determine the issue of costs again once MKCT has been
given the opportunity to provide invoices to support the legal costs and disbursements (including witness expenses) sought.
Costs
[37] The parties are agreed that costs on a 2B basis should follow the outcome of the appeal. MKCT is to pay MBL cost calculated on a 2B basis together with disbursements as fixed by the Registrar.
Venning J
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