Neill v Auckland Council

[2017] NZHC 2703

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-1802 [2017] NZHC 2703

IN THE MATTER

of an application for judicial review under

the Judicial Review Procedure Act 2016

BETWEEN

MICHAEL ACTON FYANS NEILL First Applicant

DAVID NOEL TUNNICLIFFE Second Applicant

CB TRUSTEES 2012 LIMITED Third Applicant

ROY MELVYN SIMPSON Fourth Applicant

AND

AUCKLAND COUNCIL First Respondent

PPI LIMITED Second Respondent

Hearing:	On the papers
Counsel:	D Sadlier for applicants RE Bartlett QC for second respondent
Judgment:	6 November 2017

JUDGMENT OF FITZGERALD J [As to costs]

This judgment was delivered by me on 6 November 2017 at 2 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Neill v Auckland Council [2017] NZHC 2703 [6 November 2017]

Introduction

[1]      The applicants commenced proceedings to judicially review a decision made by the first respondent, Auckland Council, but then discontinued those proceedings a short  time  later.      The  second  respondent  (the  subject  of  Auckland  Council’s decision) now seeks costs.1

Background

[2]      In  a  statement  of  claim  dated  1 August  2017,  the  applicants  challenged Auckland Council’s decision to cancel a resource-consent condition that had limited vehicle access to the second respondent’s property from a second frontage.   The applicants pleaded four causes of action in the statement of claim.

[3]      On 11 September 2017, the applicants filed a notice of discontinuance.  This occurred before the first case management conference.   At this point, the second respondent had completed no formal steps in the proceedings, in terms of the time allocations in schedule 3 to the High Court Rules 2016.

[4]      The  second  respondent  now  seeks  costs  and  disbursements.     It  seeks increased costs in relation to an “estimated” four hours of legal advice, for which the Court is requested to fix an appropriate cost sum.2  The second respondent also claims a $2,639.25 disbursement, being fees paid to a planning consultant for work carried out in July 2017.

[5]      The applicants say costs should lie where they fall.  They say that the legal costs and disbursement sought were incurred prior to the proceedings being commenced, and accordingly fall outside the discretion of the court to award costs. The applicants further say that costs lying where they fall is an appropriate outcome in any event, given the discontinuance is not evidence that the proceedings were unmeritorious;  rather,  neither  party  has  succeeded  on  the  merits  of  their  case.

Further, the applicants say that “in the face of a highly adversarial approach by the

1      The applicants and Auckland Council have resolved the question of costs as between those parties.

2      No invoices in relation to this time have been provided, or details as to what this time related.

second respondent”, they decided to discontinue the proceeding, taking that step as

early as possible to reduce costs incurred by all parties.

Discussion

[6]      Under  r  15.23  of  the  High  Court  Rules,  a  plaintiff  who  discontinues  a proceeding  must,  unless  the  defendant  otherwise  agrees  or  the  court  otherwise orders, pay a defendant’s costs “of and incidental to a proceeding up to and including the discontinuance”. Accordingly, a discontinuing plaintiff is presumed to pay costs, unless it would be “just and equitable” to not apply that presumption.3   The onus is on a discontinuing plaintiff to persuade the court that the presumption should be displaced, and it is not displaced lightly.4

[7]      Although counsel for the applicants says costs should lie where they fall given its claim was not unmeritorious (and neither party succeeded on the proceedings), if this approach were adopted (without more), then costs would routinely lie where they fall on a discontinuance.  That is plainly not the intention of r 15.23.   Nor is this a case where the merits (or lack thereof) are “so obvious” that they should influence costs following the discontinuance.5   And it is not appropriate for  me  to  seek  to  assess  the  merits  of  the  claim  or  the  stances  of  the  parties, especially given the very early stage at which the proceedings were discontinued.6

[8]      As noted, the applicants also say the discontinuance occurred “in the face of a highly adversarial approach by the second respondent”.   However, nothing in the papers before me indicates such an approach (at least insofar as one which ought to influence the costs outcome on a discontinuance).   Further and in any event, the applicants  had  commenced  court  proceedings,  the  very  nature  of  which  is adversarial.    Accordingly, a “highly adversarial approach” in and of itself cannot

mean it is “just and equitable” to displace the presumption as to costs inherent in

3      Kroma Colour Prints Ltd v Tridonicatco NZ Ltd (2008) 18 PRNZ 973 (CA) at [12]; see also

Yarrall v The Earthquake Commission [2016] NZCA 517 at [12].

4      Yarrall v The Earthquake Commission [2016] NZCA 517 at [12].

5      North Shore City Council v Local Government Commissioner (1995) 9 PRNZ 182 (HC) at 186.

6      Kroma Colour Prints Ltd v Tridonicatco NZ Ltd (2008) 18 PRNZ 973 (CA) at [12].

r 15.23. 7

[9]      Having offered no other reason to displace the presumption under r 15.23, I

consider it appropriate for the applicants to pay the second respondent’s costs.

[10]     The question then becomes, what costs ought the applicants pay?

[11]     Counsel for the second respondent estimates he spent four hours working on the matter before it was discontinued.   Correspondence annexed to the second respondent’s costs memorandum indicates that at least some of that time related to preparation  of  a  statement  of  defence,  which  is  logical,  given  the  statement  of defence was due to be filed by 18 September 2017 (i.e. only a matter of days after the notice of discontinuance was filed).

[12]     However, and as noted by Mr Sadlier for the applicants, the material filed by the second respondent in support of its claim for costs does not distinguish between costs incurred prior to and after the proceedings had been commenced.   From the correspondence before the Court, it appears that at least some of counsel for the second respondent’s time was incurred prior to the proceedings being commenced, as counsel was involved in meetings and discussions with the second respondent’s planning expert (whose invoice is for time incurred in July 2017).    The planning consultant’s fee was clearly incurred prior to the proceedings being commenced.

[13]     No authority has  been  cited  as  to  whether pre-commencement  costs  and disbursements can be claimed under the High Court Rules.  Presumably, any such costs and the planning consultant’s fee is claimed on the basis they were “incidental to” the proceedings.    French J  considered  this  issue in  Braeburn  Dairies  Ltd  v

McGregor & White Electrical Ltd.8    Noting the surprising lack of authority on the

7      Counsel for the second respondents also refers to the decision of Maehl v Auckland Council [2017] NZHC 1902, in which costs following a resource-consent proceeding were ordered to lie where they fall. In that case, the substantive hearing had taken place, and further evidence and submissions had subsequently been filed, but the proceedings became futile and were discontinued after the second respondents surrendered their consents. Ultimately, the Judge in Maehl was in a uniquely good position to assess the merits of the claim in light of the objectives achieved.

8      Braeburn Dairies Ltd v McGregor & White Electrical Ltd HC Dunedin CIV-2009-412-668,

16 December 2011.

point, Her Honour was of the view that a proceeding must be on foot before costs can be claimed in respect of it:

Pre-commencement costs

[11]      Braeburn made a claim in December 2007 which was submitted to McGregor. In response, McGregor instructed a loss adjustor to make initial enquiries, and also instructed solicitors.

[12]      Proceedings were not issued until August 2009.

[13]      A contribution to costs is sought for the legal fees incurred between April 2008 and May 2009 in dealing with Braeburn's claim. The claim is made on the basis that those costs were costs “incidental to a proceeding” for the  purposes  of  r  4.1. What  is  sought  is  a  third  of  actual  costs,  which amounts to $6530.

[14]      I do not accept that these are costs incidental to a proceeding within the meaning of the Rule. Surprisingly, there appears to be no authority on point, but in my view the proceeding must be extant before costs can be incidental to it. Otherwise, such costs would always be recoverable, which cannot be the intention of the Rule. Certainly, there was nothing unusual or exceptional about the legal work that had to be undertaken to investigate this claim.

[14]     I respectfully agree with Her Honour’s views.  There does not appear to be anything exceptional or unusual in the present case that would warrant the second respondent being reimbursed for its pre-commencement costs and disbursements.

[15]     Turning to costs incurred after the proceedings were commenced, although the second respondent did not formally complete any steps in the proceedings, the Court may still award reasonable costs.9    As noted, some costs were incurred in

taking steps to prepare a statement of defence.10

[16]     If a statement of defence had been filed, and that step was categorised as 2B

for costs purposes, the second respondent would have been entitled to $4,460 in costs.11     Given at least some steps had been taken to prepare a statement of defence

9      High Court Rules, rr 14.2(c) and 14.5.

10     The second respondent’s costs memorandum states that “in preparation for a possible application to strike the claim out, a letter was sent to Counsel for the applicants on 2 August”.  However, it

seems the second respondent had not been served with the proceedings at that time, as an

advance copy of the statement of claim and notice of proceeding were only provided to the second respondent the following day, in response to the 2 August letter.  It is accordingly not clear  that  post-commencement  costs  were  incurred  in  relation  to  a  possible  strike-out application.

11     A daily rate of $2,230 and an allocation of 2 days. See High Court Rules, sch 2 and 3.

(though to what extent is not clear), I consider an appropriate approach is to award costs of one-third of the scale costs for a statement of defence, namely $1,487.

[17]     Finally,  the  second  respondent  seeks  increased  costs  on  the  basis  the applicants’ claim  was  without  merit.12      However,  I have  very little  information relating to the circumstances surrounding the discontinuance and, as noted, it is not normally appropriate to inquire as to the merits of a claim prior to it being substantively considered.  Further, the presumption within r 15.23 does not itself lead to increased costs being awarded.13

[18]     Given  these  matters,  I  do  not  consider  an  award  of  increased  costs  is appropriate.

Result

[19]     The applicants are to pay the second respondent scale costs of $1,487. [20]   I decline to award the disbursement sought.

[21]     I make no costs order for the present application (none being sought).

S Fitzgerald J

Solicitors:           Ellis Gould, Auckland

Wynyard Wood, Auckland (C Walker)

12     High Court Rules, r 14.6(3)(b)(ii).

13     Flujo Holdings Pty Ltd v Merisant Company [2017] NZHC 1656 at [79]; Arnold v Fairfax New

Zealand Ltd [2016] NZHC 1078 at [19].