Nelson Gambling Taskforce Incorporated v Nelson City Council HC Nelson CIV 2010-442-368

[2010] NZHC 2283

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2010-442-000368

UNDER  the Judicature Amendment Act 1972

IN THE MATTER OF     an application for review of a decision of the Nelson City Council under s 102 of the Gambling Act 2003 and s 83 of the Local Government Act 2002

BETWEEN  NELSON GAMBLING TASKFORCE INCORPORATED

Plaintiff

ANDNELSON CITY COUNCIL First Defendant

ANDTRILLIAN TRUST Second Defendant

Hearing:         2 December 2010

Appearances: CCM Owen for First Defendant/Applicant

LSB Acland for Plaintiff/Respondent

No appearance for Second Defendant (excused) Judgment:    16 December 2010

JUDGMENT OF ASSOCIATE JUDGE OSBORNE

as to Security for Costs

[1]      The Nelson Gambling Taskforce  Incorporated  has issued proceedings for judicial review of decisions of the Nelson City Council.

[2]      The Council now applies for an order that the Society give security for the Council’s costs in this proceeding in the event the Society is unsuccessful.   The Council seeks security in the sum of $28,670 (assuming discovery and inspection are

ordered).

NELSON GAMBLING TASKFORCE INCORPORATED V NELSON CITY COUNCIL AND ANOR HC NEL CIV-2010-442-000368  16 December 2010

[3]      The Council’s application expressly relied upon r 5.45 High Court Rules.  It might equally have relied on s 17 Incorporated Societies Act 1908.  The discretion in relation to the latter provision – “seemingly superfluous” in the view of the authors of McGechan on Procedure (looseleaf ed, Brookers) at [HR5.45.16] – is parallel. Counsel, in support of their submissions, understandably referred me to authorities decided both under the Rules and under the Act.

[4]     The application for security is opposed by the Society.   The Society acknowledges that it would not be in a position to pay costs if unsuccessful and therefore accepts that the threshold expressly contained in r 5.45(1)(b) exists.  The Society asserts that there are three factors relevant to the discretion, namely that:

i)        the claim has merit and the prospects of success are good;

ii)security may have the effect of preventing the Society from pursuing the claim; and

iii)the claim is brought in the public interest and is of public importance.

[5]      In the event the Court makes an order for security, the Council seeks a further order that the proceeding be stayed until such security has been given.  The Society, in  its  notice  of  opposition,  while  opposing  the  stay  also,  did  not  identify  any particular  ground  for  such  opposition.    In  oral  submissions,  however,  it  was submitted  that  as  an  Associate  Judge  I  lack,  in  relation  to  judicial  review applications, the jurisdiction to stay the proceeding until security is given.

Background

[6]      The judicial review proceeding attacks, and seeks to have set aside under s 4(2) Judicature Amendment Act 1972, two decisions referred to in the statement of claim as the “gambling policy decision” and the “territorial authority consent”.

[7]      The gambling policy decision is a reference to a Council resolution on 3 June

2010 whereby the Council resolved to approve a (2010) gambling venue policy

pursuant to s 101 Gambling Act 2003.  The resolution included amendments to the previous (2007) gambling policy as follows:

THAT Council approve the following amendments to Council’s Gambling

Policy 2007:

Wording on community facilities be amended to “The venue not being immediately adjacent to any playground, kindergarten, early childhood centre, school or place of worship…”

Wording regarding the location of venues with regard to ATMs be deleted

That a cap of 285 be set on the number of Class 4 Gaming Machines

AND THAT the policy on Board Venues (TABs) be separated from that on

Class 4 Gaming Machines.

[8]      The territorial authority consent is a reference to consent granted on 30 June

2010 by the Council as territorial authority under s 83 Local Government Act 2002 to the second defendant (Trillian Trust).  The consent allowed the Trust to operate up to nine class 4 gaming machines (colloquially “pokies”) at a property in St Vincent Street in the Victory area of Nelson.  The property is adjacent to the Victory Square Kindergarten.

[9]      The Society alleges that these decisions were invalid: the gambling policy decision because of error of law, breach of natural justice and consideration of irrelevant considerations; and the consent decision because of error of law (being breach of the 2010 gambling policy).

[10]     The Council denies each alleged ground of invalidity.

[11]     The Council says that before it is required to enter upon the expense of obtaining affidavit evidence and of completing discovery and inspection, it should receive the protection of security for costs.

Security for costs – the approach

[12]     The express provisions of r 5.45(2) High Court Rules (and impliedly also under s 17 Incorporated Societies Act) empower a Judge to order the giving of security for costs when it is just in all the circumstances to do so.

[13]     In A S McLachlan Ltd v MEL Network Ltd (2002) 16 PRNZ 747 the Court of Appeal emphasised the discretionary nature of the jurisdiction and observed that it is not to be fettered by constructing “principles” from the facts of previous cases. There is no checklist of so-called principles.

Application of s 17 of the Act and r 5.45 in this case

Threshold – inability to meet costs

[14]     In  the  circumstances  of  this  case,  a  concession  by  Mr  Acland  that  the threshold test - that there is no reason to believe that the Society will be unable to pay the Council’s costs if the Society is unsuccessful in this proceeding - is made out both in terms of r 5.45(1)(b) and s 17(1) of the Act is plainly correct.  The evidence of the Society’s chairperson establishes that the Society was incorporated on 15

September 2010, two days before this proceeding was issued.  Its primary purpose, as contained in its rules, is to have this Court adjudge the 2010 gambling policy decision and the territorial authority consent unlawful.  The Nelson Mail newspaper, shortly before this proceeding was issued, quoted Craig Morice, a lawyer working with the group (and also the Society’s solicitor in this proceeding) as having stated that the Society would  be incorporated before this proceeding was filed, which would provide greater defence around Court costs if the (judicial review) application fails.  Mr Morice commented that the Council had said that it would sue the group for costs if they lost.

[15]     After the commencement of this proceeding, the Council’s solicitors wrote to the Society noting the public comments in relation to costs and seeking confirmation that the Society would be able to pay costs if unsuccessful.  Mr Morice responded by stating that the Society’s assets are membership fees and donations and that it was unlikely the Society would be able to pay costs if its claim was unsuccessful.

[16]     The threshold is established.

Inability to pursue a claim if the Court orders security

[17]     This  was  a  ground  of  opposition  stated  by  the  Society  in  its  notice  of opposition.  Mr Acland stated it again as the first of three reasons pursuant to which the Court should decline to order security for costs.   In the remainder of his submissions, however, there was no significant focus on this factor.   At most, Mr Acland returned to it with a brief submission that there are issues of fairness and access to justice.

[18]     Ms  Owen,  for  the  Council,  noted  that  while  this  ground  of  opposition involved the contention that an order security for costs may have the effect of preventing the Society from pursuing the claim (her emphasis) there was no supporting evidence filed by the Society to substantiate that claim.  There was indeed none.

[19]     The importance of the Courts’ protection of access to justice for a genuine plaintiff  is  recognised  in the leading authorities,  including A  S  McLachlan  (see particularly [16]).   In some circumstances, despite the existence of other factors suggesting that security should be ordered, it might be unjust to order security where it would bring to an end a plaintiff’s ability to proceed.

[20]     The  Courts  have,  as  noted  in  McGechan  on  Procedure  (looseleaf  ed, Brookers) at [HR5.45.16], taken the view that it is relevant to consider the ability of interested members and creditors of companies and societies to assist in providing security.  This recognises that the security for costs jurisdiction aims to place parties on a more equal footing in terms of ability to recover costs.  New Zealand Courts have adopted this approach through applying a passage from the judgment of Moffitt J in Pacific Acceptance Corp Ltd v Forsyth (No 2) [1967] 2 NSWR 402 at 407. See for instance National Bank of New Zealand Ltd v Donald Export Trading Ltd [1980]

1 NZLR 97 at 100-101 per Richardson J for the Court of Appeal.

[21]     The ability of one party to come up with the necessary funds for either security or the litigation generally is a matter, usually, within the peculiar knowledge of that party.   The Society in this case has provided no evidence in relation to its inability to raise funds.

[22]     Mr  Acland  referred  me  to  the  judgments  of  the  Court  of  Appeal  in

Ratepayers and Residents Action Association Inc v Auckland City Council [1986] 1

NZLR 746, with particular reference to the discussion as to the public interest as a factor in applications for security.   It is also relevant on the issue of funding.   In Ratepayers, the Court of Appeal varied the quantum of security orders made in the High Court by Sinclair J.   In making his orders, Sinclair J had envisaged that the Ratepayers Association would ask its members for contribution or otherwise order its affairs so as to provide a financial base adequate for the purpose of security (per Richardson J at 749).  McMullin J, for his part, considered it reasonable (at 752) that members of the Association should be called upon to contribute from their own pockets towards the cost of the proceedings, finding apposite the observations both of Moffitt J in Pacific Acceptance Corp and of the Court of Appeal in National Bank of New Zealand Ltd v Donald Export Trading Ltd.  Somers J, at 754, expressed his general agreement with what had been written by Richardson and McMullin JJ.  The ability of the Society to obtain funds in the manner discussed was therefore a factor in the exercise of discretion in that case.

[23]     Counsel did not refer me specifically to any other cases where the funding possibility had been discussed.  Unsurprisingly, such cases exist.  Equally, they are usually cases in which a range of factors exist and each will turn on its own facts. The decision of Associate Judge Gendall in Friends of Turitea Reserves Society Inc v Palmerston North City Council HC Palmerston North CIV-2006-454-000879, 23

February 2007, provides an example.   The Society Applicant had provided a statement to the Court as to its inability to meet an order for security for costs (from its own funds) and it would have had to obtain necessary funds from its members. The applicant did not assert that the proceedings would not be able to continue if an order for security for costs were made but did assert that an order would place an undue burden on its members.   His Honour, at [60], referred to the discussion of McMullin J in particular in Ratepayers.  His Honour referred, at [61], to the fact that there was a short timeframe to trial, with the matter set down for its substantive hearing a little over two months later.  His Honour then went on, at [61]-[62], to take into account the public interest in the Turitea Reserve and in issues of statutory interpretation in relation to the Reserves Act 1977 before concluding, at [63], that the

interests of justice were best met in that case by refusing an order for security for costs.

[24]     The decision is, with respect, a good example of the Court’s consideration of various factors present in the particular circumstances of a particular case.

[25]     In this case, focusing for the moment on access to justice, I find:

i)The Society has given no evidence as to how it is funding the existing costs and disbursements of this litigation nor as to how it might fund any order for security.

ii)The Court has the unsworn statement of the Society through its solicitor that it would not be able to meet an award of costs – given that in the present context this is a statement against interest, I give it weight in the sense that it confirms that the Society is at present unable to pay something from its own funds towards the Council’s costs.

iii)The Court has received no evidence from the Society as to any difficulty the Society might have in raising funds for security from its members.  It is clear from the statements to the Nelson Mail (above [14]) that the vehicle of an incorporated society was deliberately chosen, partly to shield the group from costs orders.   On the other hand, one might anticipate that, if the group involved were sufficiently motivated to form the Society and to commence the litigation, there might be the ability to raise funds from members, particularly if the sum ordered by way of the Society did not approach the level of a full award based on scale 2B.

iv)There is no element of late application by the Council for security for costs in this case – in that regard, the proceeding differs from the Friends of Turitea Reserves case and indeed

from Official Bay Heritage Protection Society Inc v Auckland

City   Council   HC   Auckland   CIV-2006-404-005947,   26

February 2007, in which the Court at [23] to [24] noted the eleventh-hour nature of the application and its impact on the ability of the Society and its members to provide funds at short notice.   The Court limited the amount of security to a lower figure than would otherwise have been ordered.

[26]     This litigation is at an early point.  There may be interlocutory attendances. The case has not been set down for hearing.   It is conceivable that an order for security for costs might be difficult for the Society to meet.  On the other hand, the Society has provided no evidence as to inability.  In these circumstances, a denial of access to justice is a possible but not demonstrated outcome of any security order. Members of the Society may themselves have the means, by contributing further funds, to ensure that security is provided.

[27]     These matters are a factor in the judgment I must reach as to what is just in the circumstances.

The merit of the claim and its prospects of success

[28]     The merits of a plaintiff’s case are a proper matter for consideration in the context of security for costs: see Ambrose v Pickard [2009] NZCA 502. An order which prevents a plaintiff from pursuing its claim will generally be made only after careful consideration and in a case in which the claim has little chance of success: McLachlan per Gault P at [15].

[29]     There is, as the authors of McGechan on Procedure (looseleaf ed, Brookers) comment at [HR5.45.03(2)], in relation to Meates v Taylor (1992) 5 PRNZ 524 (CA) a very real limit as to how far an inquiry into the merits can be made, particularly at an early stage of the proceeding.

[30]     In  the  present  case,  the  plaintiff  has  filed  evidence  in  support  of  its application for judicial review.  Neither the Council nor the Trillian Trust has so far filed evidence.

[31]     The Council, in support of its application for security for costs, referred to “the merits of the plaintiff’s claim against the First Defendant” and left the enunciation of those grounds to affidavits filed.

[32]     Central to the Society’s  claim is an allegation that the Council failed to follow the special consultative procedure.  That procedure is one prescribed in s 83

Local Government Act 2002.  Section 102 of the Gambling Act requires the Council to follow the special consultative procedure when the Council reviews its policy on class 4 venues every three years.  The Society says that the policy on class 4 venues adopted by the Council must specify whether or not class 4 venues may be established in the Nelson district and, if so, where they may be located and the maximum number of gaming machines that may be operated.  The requirements of the special consultative procedure involve notification of the draft of the proposed policy and an opportunity for public submissions on the proposal.

[33]     The Society asserts that the 2007 gambling policy had not permitted a class 4 venue within 100 metres of any playground, kindergarten, early childhood centre, school or place of worship.  The 2007 gambling policy had also capped the number of gaming machines in operation in Nelson at 301.  The Society alleges that the 2010 draft policy differed from the 2007 policy in one respect only, namely by reducing the total number of gaming machines allowed in the Nelson district from 301 to 269.

[34]     The draft proposal was duly published in March 2010.   Submissions were made and a hearing conducted in May 2010.   Submissions were made against the lowering of the cap.  The hearing panel, in May, formed a recommendation to the Council.  It recommended adoption of changes to the 2007 gambling policy (other than a single change as to cap proposed in the 2010 draft policy), whereby the condition that new class 4 gaming venues could not be located within 100 metres of an  ATM,  or  of  particular  community  facilities,  was  removed.     Its  further

recommendation was that the total number of class 4 gaming machines be reduced to

285 (rather than to 269).

[35]     The  Council  then,  on  21  May  2010,  wrote  to  submitters  and  some organisations advising that the hearing panel would recommend that the Council adopt a number of changes to the Gambling Policy including those I have identified. The letter stated that:

The Hearing Panel has asked staff to write to everyone who has expressed an interest in the policy review process, to ensure you are all aware of the changes proposed.  Council is expected to consider the recommendations of the Panel at its meeting on 3 June.  If you do have any questions about the Panel’s recommendations or the process please don’t hesitate to contact me.

[36]     Notwithstanding  the  reference  to  the  Council’s  meeting  on  3  June,  the Council in its publications shortly afterwards indicated that the hearing panel would be reporting the changes proposed to the Council at the Council’s 17 June meeting for approval.

[37]     The Council in fact met on 3 June 2010 and passed a resolution approving the changes to the 2007 gambling policy as recommended by the hearing panel.

[38]     The Society asserts that these events constituted a failure in relation to the special consultative procedure under s 102 of the Gambling Act.  First, the Society says that the additional changes were such as to change the draft policy and to create proposed changes that required public notification.  Secondly, the Society says that there was a breach of natural justice through a lack of provision to the public of sufficient information as to the proposed changes.  The Society says that the letter of

21 May 2010 did not constitute public notice and in any event it neither invited submissions   from   recipients   nor   allowed   sufficient   time   for   any   uninvited submissions to be made.  Thirdly, the Society says that the Council took into account irrelevant considerations in that it considered additional changes to the policy which were  outside  the  original  statement  of  proposal.    Fourthly,  and  moving  to  the decision on 30 June 2010 to grant consent to Trillian Trust, the Society says that decision  constituted  an  error  of  law  in  that  the  Trillian  Trust  venue  had  been

prohibited  under  the  gambling policy 2010  as  a class  4  venue as  it  is  a place immediately adjacent to a playground.

[39]     Ms Owen submitted on behalf of the Council that the merits of the Society’s claim are weak.  In her submissions she referred to the evidence for the Society in opposition to the application for security.  She noted that some represented groups which had been consulted by the Council “throughout the special consultative procedure” and which had made submissions following the release of the hearing panel recommendations.   She pointed to evidence filed indicating that the Council had indeed received further submissions and had considered those.

[40]     Mr  Acland’s  submissions  developed  the  proposition  in  the  notice  of opposition to the effect that the Society’s claim has merit.

[41]     Mr Acland identified the importance of the special consultative procedure which the Council was required to adopt under the statutory regime of the Gambling Act.  He referred me to the decision of the Court of Appeal in Easton v Wellington City Council [2009] NZCA 513, especially at [14], and to the decision of the Environment Court in The  City  is  Ours  Inc  v  Wellington  City  Council  [2010] NZEnvC 115, especially at [49].   Taken together, those cases may be considered authority for the proposition that a Council, in developing its statement of proposal, must  reach  a  view  about  what  it  wants  to  do  before  embarking on  the  special consultative procedure and that a Council cannot finally opt for an overall scheme which is so different from the statement of proposal that the consultation process was subverted in some way.  Mr Acland submitted that the departure (from one change to the 2007 policy, being a tightening of controls, to three changes, at least some of which arguably loosen controls) amounted to a “subversion”, as that concept was used in The City is Ours case.

[42]     Mr Acland’s submissions then turned to the extent and content of subsequent notification  of  the recommendation  of  the hearing panel  and  submitted  that  the plaintiff  had  a  case  that  the  requirements  of  natural  justice  and  the  principles contained in s 82 Local Government Act and s 27 New Zealand Bill of Rights Act

1990 had been breached.

[43]     I remind myself that this case is in its earliest stages.  The Council has not filed evidence in the substantive proceeding.   What it has filed, in relation to its consultation processes, is an affidavit of  Nicola Adeline McDonald, who is the Manager of the Council for Policy and Planning.  Ms McDonald deposes that she strongly believes that the Council had followed the process prescribed by the Gambling   Act   and   the   Local   Government   Act,   in   both   spirit   and   form. Ms McDonald speaks in some detail as to the process which she oversaw.   She emphasised that the Council had embarked on what she refers to as “pre- consultation” with the community, despite the absence of any requirement for such “pre-consultation”.  She refers to the steps in the process.  When she comes to the changes which the hearing panel recommended, she says this:

The NCC was required to, and did, give notice of the proposed policy, in a manner that it considered appropriate, to societies holding class 4 venue licenses  [sic]  in  the  district  and  to  organisations  representing  Maori. However the Council went much wider than that in notifying persons or bodies whom it considered might wish to express a view on any review of the policy.  I go into this in more detail in the affidavit on the substantive proceeding, which is still in the course of preparation and is due to be filed on 16 December 2010.

[44]     I heard the Council’s application for security for costs on 2 December 2010 and  therefore  do  not  have  before  me  any  of  the  additional  detail  which  Ms McDonald indicated was to come in her substantive affidavit.

[45]     Ms McDonald is entitled to her view of the process she oversaw.  It is her view.    Her  evidence  does  not  in  any  detailed  way  address  what  the  Society complains were inadequacies of process once the hearing panel decided to contemplate, and then to recommend, changes to the policy.  Her evidence does not indicate if she considered the modifications to be so insignificant and, if so, why, as to not constitute a (The City is Ours) subversion.  Equally, she did not address the fact that neither the 21 May 2010 letter nor the Council’s separate publications identified the existence of an opportunity to make new or further submissions.   It may be that the Council will at trial argue that there was an implicit call for further submissions.  But the contrary view is also arguable.

[46]     It is my responsibility to make some assessment of the merits and prospects of  success  of  the  claim  if  I can  appropriately do so,  bearing in  mind  that  this proceeding is at an early stage.

[47]     On my assessment the plaintiff’s case is not without merit or prospect of success, on at least one of its causes of action.   The decision of the Environment Court in The City is Ours case points to the sort of matters which will require careful consideration at trial.  Were the modifications made to the statement of proposal of such significance as to constitute a subversion of the consultation process?  I cannot say at this point of the litigation whether the Society has little or no prospect of success on that question.

Public interest

[48]     The  relevance  of  public  interest  was  encapsulated  by  Richardson  J  in

Ratepayers at 750:

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.

[49]     As McMullin J observed in the same case, at 754, there may be two levels to public interest in this context, both the narrow sense of interest to the large body of ratepayers in a council’s district and in the wider sense of insuring that local authorities observe the law.

[50]     The importance of the public law context was explained by Richardson J in

Ratepayers, again at 750, where his Honour noted a number of themes:

•      There is an emphasis on the rule of law.

•The  development  of  public  law  in  common  law  jurisdictions  and statutory availability of judicial review point to the need to provide adequate procedures for testing the purported exercise of statutory powers.

•The freer approach to standing in public law cases reflects a view that the law must somehow find a place for the disinterested citizen in order to prevent illegalities in government which otherwise no one would be competent to challenge.

[51]     These considerations lead to a recognition that public interest community organisations perform a valuable public service as watchdogs of the public interest.

[52]     In this case, as Mr Acland submitted, the litigation indisputably holds the Council  to  account  for  its  exercise  of  statutory  obligations  and  powers.    This litigation qualifies to be considered in that broader sense of public interest.  This is reinforced by the comparative novelty of the review regime under the 2002 version of the Local Government Act.   Part 6 of that Act is headed “Planning, Decision- making and Accountability”.  The sections which follow have detailed provision as to the decision-making process, public notification, consultation and accountability.

[53]     Then, turning to the Gambling Act, one finds that one of the purposes of that

Act (s 3(h)) is to:

… facilitate community involvement in decisions about the provision of gambling.

[54]     By the nature of the combined statutory regime (Gambling Act and Local Government Act) there is a vital public interest in the broader sense of ensuring that local authorities observe the statutory regime.

[55]     The submissions of Ms Owen, for the Council, did not focus on this broader public interest.  Rather, her submissions focused on what McMullin J described as the narrow sense of interest to the large body of ratepayers in the district.

[56]     Ms Owen pointed to the evidence filed by the Society which identifies that the gambling venue in the Victory area is at the heart of the dispute.  As a result of the Council’s decision making, consent was obtained for a “pokie” venue close to the Victory Square Kindergarten.  Ms Owen noted a degree of emphasis in the evidence upon the Victory community – she submitted that a statement by one deponent

(Darci Goldsworthy) that the proceeding is “of great public concern for the entire Nelson district as evidenced by affidavits filed in support of the claim” was unfounded and unsubstantiated, in the sense that a recurring focus of the evidence is on the impact on the Victory community.

[57]     Mr Acland, for the Society, submitted that the affidavit evidence reflected a Nelson interest which was broader than Ms Owen suggested.  This was reflected in the following evidence:

•Dr Philip Townshend, the Director of Research and Clinical Issues for the Problem Gambling Foundation of New Zealand since 2005, gave evidence on behalf of that foundation and also on behalf of the Te Kahui Hauora O Ngati Koata Trust, which is a provider of Mäori and health social services in Whakatu.  He spoke of his involvement in the consultation process, concluding that he found the process entirely misleading.   He spoke of the harm caused by pokie gambling; he referred specifically to issues arising from the venue in Victory but spoke also to potential, broader consequences.

•Wendy May Logan, the Chief Executive Officer of the Nelson District Free Kindergarten Association for the past 20 years, gave evidence on behalf of that Association.  The Victory Square Kindergarten is one of nine kindergartens within the Nelson City Council boundaries.   She spoke both of concerns about access to gambling near any of the Nelson kindergartens and also in relation to the decision specifically on the Victory Square gambling venue.

•Dr Jillian Sherwood, a Medical Officer of Health for Marlborough and Nelson, employed by the Nelson Marlborough District Health Board, referred to historical involvement of the Nelson Marlborough District Health Board public health service in assessing the impact of gambling on community health in the Nelson district.  She spoke to her concern that the Board was not adequately involved in the policy review process, particularly in regard to the changes ultimately made;

and she spoke of studies conducted into gambling both amongst adults and adolescents.

•Ken Meredith is the Secretary of the Nelson Residents’ Association Inc, founded in 1996 for a range of objects including to have the Nelson City Council appropriately serve the needs of the residents. He deposes that when  his Association made submissions in April

2010, the Association did not know the Council was leaving open the possibilities of amending the whole policy.

[58]     On  any  view  of  the  evidence  of  those  four  deponents,  who  each  have significant professional or executive roles independent of the Society, there is an evident public interest which extends across the Nelson district, if not beyond.  There is  some  focus  of  the  Society  upon  the  decisions  impacting  on  the  Victory community, but it happens to be the Victory venue which provides to date the single example of an outcome unacceptable to some.   The evidence establishes that the process which underlies that outcome is of broader public interest in the district as a whole.

[59]     I then return to focus on this Society in relation to this litigation.   In some cases an established society plays an ongoing watchdog role.   In Ratepayers, for instance, the Association had been formed at some previous time to promote, protect and advance the interests of the residents and ratepayers of Auckland City.  It had

869 members by the time of the litigation.  It came to take an interest in a proposal promoted by the Council for the construction of Aotea Centre.   (The Nelson Residents’ Association is a similar body to the Auckland Ratepayers and Residents Action Association.)

[60]     In  other  cases,  such  as  the  present,  the  litigation  is  not  brought  by  an established Society formed previously in the broad interests of the district’s inhabitants.  A body might be formed with a broad role including a concern as to the effects of gambling or the Gambling Act upon this or other districts.  This Society is not such a body.  Its central purpose was to ensure that the Council’s 2010 gambling policy is  recognised  as  unlawful  under  the  Gambling  Act  and  under  the  Local

Government Act and that accordingly any consents that may have been granted under the 2010 policy are declared unlawful.

[61]     I have not been provided with details of the membership of the Society. Mr Goldsworthy deposes  that  it  is  “made up  of  residents  and  ratepayers  of  the Nelson District” and that it was formed to provide a unified voice for members and other  residents  dissatisfied  with  the  2010  process.    I  do  not  know  how  many members the Society has.

[62]     What I am left with in terms of known and verifiable detail is:

i)The plaintiff society did not exist before the 2010 gambling policy review.

ii)       The Society has members of an unspecified number.

iii)The Society’s reason for existence relates to the 2010 process and the decisions that came out of that process – it has no expressed broader focus.

iv)The Society was formed specifically for the purposes of conducting this litigation.

v)The Society was formed with a view to protecting its members from the consequences of costs orders in the litigation.

[63]     In  Official  Bay  Heritage  Protection  Society  (above  at  [25]iv)),  Rodney Hansen J dealt with an application for security.  In that case the plaintiff society had a membership drawn from residents in the immediate vicinity of a proposed development and was apparently formed in response to a proposed development. The Society’s objectives related to the protection and enhancement of the amenities and quality of the local environment.  When the Council granted a resource consent, the Society brought judicial review proceedings.   His Honour, at [19] and [20], identified the bona fides and arguable merit of the proceeding and identified a public interest element both in terms of preservation of heritage buildings and localities in

Auckland and in terms of ensuring the Council met its statutory obligations.   His

Honour then continued, at [21]:

On the other hand, there are also private interests served by the litigation. The Society’s membership comprises property owners or residents who have a pecuniary or other personal interest in the outcome of the litigation. They see the proposed development as detrimental to their neighbourhood and their  ultimate  goal,  I  infer,  is  to  achieve  something  which  is  more sympathetic to the built environment in the area. This weighs in favour of requiring members to contribute more than a nominal amount to the costs of [the second defendant] if their challenge is successful.

[64]     The  Society  in  the  case  before  me  has  not  provided  detail  as  to  the breakdown of its membership.  It has chosen not to give the detailed evidence which would  indicate  what  proportion  of  “the  residents  and  ratepayers  of  the  Nelson district” (who Mr Goldsworthy deposes make up the Society’s membership) is from the Victory community.  Those Victory residents who undoubtedly comprise some, if not a majority, of the Society have a similar residential interest in the outcome of litigation as had the residents in the Official Bay Heritage Protection Society case.  A successful outcome in each proceeding would bring personal benefit at a residential level – a more sympathetic built environment in the Official Bay Heritage Protection Society case; more appropriate business activities in the neighbourhood, (as seen through the eyes of the plaintiffs and its witnesses) in this case.

The interests of the ratepayers of Nelson

[65]     Implicit in the position of the Society is the proposition that the members of the Society, in pursuing this litigation, should not be personally exposed to the possibility of contributing to the litigation costs of the Council if the Society is unsuccessful.

[66]     That approach has regard to the interests of the members of the Society.  It is in a sense half the equation.   The other half of the equation is the interest of the Council in recovering proper costs and of its ratepayers in not fully bearing those costs in a case where the Council is ultimately successful.

Length of trial

[67]     This proceeding is unlikely to involve a lengthy trial.

[68]     For the Council, Ms Owen prepared costs calculations based on a one-day hearing.  The amount sought by way of security is predicated on a trial of that length. In the course of submissions, counsel recognised that the trial may well exceed one day, but it would remain a relatively short trial in any event.

[69]     The complexity of the proceeding and the ultimate length of trial are matters the Court should take into account in its exercise of discretion.   The Courts have tended in relation to cases of complexity, which will require lengthy trial, to view that as a factor demanding some measure of protection of the defendant’s interests through security.  Litigation involving confined issues and requiring a relatively brief trial does not tend to be so expensive.

[70]     That said, an ultimately successful defendant still incurs costs.   The costs may be lower than in other cases but where security is ordered the lower level of costs is reflected usually in a lower level of security.

Overall balancing

[71]     None of the factors I have identified can be determinative on its own.

[72]     Ultimately there are two factors which weigh most strongly in favour of an award of security for costs.

[73]     First, although there are undoubtedly public interest issues which point to the need for access to justice, it would not be unreasonable in the circumstances of this case to  expect the members of the Society to assist it with funding to provide security.   There is, in the proceeding, some measure of personal benefit to the residents of the neighbourhood, at least some of whom make up the membership of the Society.  Their contributions need not be equal.

[74]     Secondly, the concerned members of the Society were reacting to a particular situation which had developed and could equally have pursued this litigation in their own  names.     Other  organisations  which  have  broader  community  objects  or objectives in relation to gambling – what might traditionally called watchdog organisations – have not brought this litigation, although several were actively involved in the 2010 review process.   The members of this Society have chosen to bring the litigation through a new incorporated body in order to seek to avoid the consequences of costs liability.   That, as  I say, is not determinative but it is a significant factor.

[75]     Having regard to the confined nature of this proceeding, elements such as the public interest and access to justice issues can be accommodated through some departure from the level of security which might normally be awarded in the absence of such factors.

Amount of security

[76]     The fixing of the amount of security is a matter of discretion.  The amount the Court awards by way of security is not intended to be a pre-estimate of the actual amount of party and party costs that might become payable should the case go to trial and the plaintiff be unsuccessful.  The Court fixes the amount which it thinks fit in all the circumstances:  National Bank v Donald Export Trading Limited at 103; McLachlan at 27.

[77]     Ms Owen with her written submissions provided a calculation based on scale

2B of $28,670 to the end of trial.  Mr Acland had no issue with the calculation save that the sum of $2,538 of the calculation related to this interlocutory proceeding, which will be dealt with as a separate costs issue.  Taking that into account, I view

$26,000 as a likely award of costs to the Council if successful at trial.

[78]     I have regard to the significant public interest element in this proceeding. That weighs in favour of a substantial reduction in what might otherwise be an appropriate amount of security.  I balance against that consideration the fact that the estimated calculation of costs is being assessed at an early point of the proceeding

and is based on a one day trial, which may prove to be insufficient – in that sense the Council is carrying a risk that the trial may well require a second day, with the flow on implications in terms of preparation and trial time.  As the Court in relation to such a consequence would not expect to revisit the amount of costs before trial, the Society stands to benefit from the fact that security is being set down now rather than later.

[79]     In these circumstances I consider it just that the Society provides security in the sum of $10,000, being a little under 40% of the estimated (one day trial) costs.

Staging of security

[80]     It is within the Court’s discretion to order payment of security in stages.

[81]     It is appropriate in the circumstances of this case, in which the Society may have to look to members or other arrangements to assist with security, to order two tranches on specified dates.  Having regard to the fact that affidavit evidence will be required, it is appropriate that the two tranches be equal ($5,000) payments.

Stay

[82]     The Council seeks an order that the proceeding be stayed until any ordered security is provided.   This is a common incident of a security judgment:   see for instance National Bank v Donald Export Trading at 103.   Although the Society’s notice of opposition had not raised any jurisdictional point in relation to the application for a stay, counsel for the Society took such a point at the hearing before me.  The submission was that an Associate Judge does not have jurisdiction to order a stay in relation to judicial review proceedings.  The taking of this point in this way was procedurally inappropriate.   It was particularly regrettable in that had proper notice of the point been given to the other parties and to the Court the point would have become moot as the Court would have arranged for a Judge to hear the interlocutory applications.

[83]     As the point raised goes to jurisdiction, the reality is that I must deal with it. Ms  Owen  helpfully agreed  to  deal  with  the last-minute point  by considering it

immediately after the hearing and filing a written submission.  I have now received that submission.

[84]     Counsel  for  the  Society  referred  to  orders  made  by  Dobson  J  in  Ngati

Muriwai Hapu Inc v The Whakatohea Mäori Trust Board Inc HC Wellington CIV-

2007-463-000030, 15 February 2008, as authority for the proposition that an Associate Judge of this Court has no jurisdiction to stay a proceeding brought under the Judicature Amendment Act for judicial review.  His Honour held that a stay is a form of relief because a substantive determination is not possible until the stay is removed (at [14]).  By reason of s 26J(4)(c) Judicature Act 1908, an Associate Judge does not have jurisdictional power to grant any relief on an application for review under s 4(1) Judicature Amendment Act.   Similarly, an Associate Judge does not have power, by reason of s 26J(4)(c) of the Act to grant any relief in proceedings for a writ or order in the nature of certiorari.

[85]     The Ngati Muriwai decision has since been applied in Gilbert v Te Ohu Kai Moana Trustee Ltd HC Wellington CIV-2006-485-000642, 22 February 2008 at [46]-[47].

[86]     Given that the relief sought in this proceeding (setting aside of two decisions) is in the nature of certiorari, it is the Society’s position that as an Associate Judge, I am not empowered to order a stay of the proceeding.

[87]     Ms Owen, in her supplementary written submission, submitted that I ought not to follow the approach taken by Dobson J in Ngati Muriwai.  She noted that the orders were made on an ex parte application without hearing from counsel.   Her submission was that the concept of “relief”, as used in s 26J(4)(b) Judicature Act was intended to exclude from the Associate Judge’s jurisdiction (her emphasis):

•interlocutory  or  substantive  orders  that  are  determinative  of  the proceedings (eg an order striking out a proceeding; or

•orders that otherwise grant a remedy to the plaintiff (eg an order for an interim or permanent injunction.

[88]     Ms Owen submitted that an order of stay cannot constitute relief because the substantive proceedings remain live and can still be determined.  In that sense, the stay is distinguishable from an order striking out a proceeding, which by its nature brings the proceeding to an end.  Ms Owen submitted that an order of stay is not one which  disposes  of  the  proceeding,  but  is  an  order  which  might  result  in  the proceeding not continuing.   She noted that the plaintiff can avoid the non- continuation of the proceeding by complying with the security for costs order.  She submitted that a stay of proceedings does not stand separate in and of itself, but rather is integral to the security for costs award and vice versa.  Both, she said, are truly procedural.

[89]     I recognise that the jurisdictional issue is not free of difficulty.  It produces the odd result that I may make the combined security/stay orders in an ordinary proceeding  but  not  in  a  judicial  review  proceeding.    However,  accepting  the reasoning of Dobson J in Ngati Muriwai, I apply that decision.

[90]     The difficulty in this area is that the concept of “relief” in the Judicature Act requires the Courts to give recognition to the fact that certain interlocutory orders will by their nature provide a form of relief.  In some cases, such as an order of strike out, the correct categorisation will be clear.  In others, such as an order of stay, it is more difficult.  Ultimately, I am drawn to the importance of substance over form, as I infer Dobson J was.   The reality is that once stayed, the proceeding is going nowhere unless a further step is taken (payment of the security).  In substance, the defendant for the time being does not have to face the litigation.  In my judgment, that is a form of relief.

[91]     I will therefore decline to order a stay.

[92]     My decision not to order a stay myself is based purely on the jurisdictional ground raised for the plaintiff at the hearing.   No further grounds were raised in opposition to the granting of the stay.  In my judgment, this (but for the jurisdictional point) would have been an appropriate case for the ordering of a stay in conjunction with the security order in the ordinary way.   It is the stay which gives a security order teeth.

[93]     This leaves the Council without the benefit of a stay through this judgment, but with the right to have its application for a stay considered by a Judge who will have jurisdiction.  Alternatively, the Council might elect to have the stay application adjourned for the time being upon the basis that the Council, if the Society fails to provide the security, might apply for a further order for enforcement of an interlocutory order under r 7.48 High Court Rules.  This is the course that Associate Judge Gendall contemplated in Gilbert (at [47]) with reference to the then r 258.  I am  uncertain  whether  reliance  on  r  7.48  would  in  itself  provide  a  satisfactory solution to the Council, but the preferred procedure is a matter for the Council and its advisors.

[94]     I am concerned for the parties, and in particular the Council, that additional costs have been incurred through the late raising of the jurisdictional issue.   As I have said above (at [82]), a single hearing would have sufficed for both applications had the Society given proper notice of the jurisdictional issue.   The Society must understand that leaving aside the costs of the hearing before me, which I will deal with shortly in the agreed way, there is every likelihood that the Society might need to bear costs of any further hearing in relation to a stay in a sum greater than would be the case by applying the 2B scale.  Increased costs are indicated under r 14.6(3) because the Society failed to comply with the rules and in particular the requirements of r 7.24 relating to the content of a notice of opposition.  It may be that the incurring of additional costs may be avoided through agreement reached by the parties which may lead to a consent memorandum to be dealt with by a Judge.  That, again, is a matter for the parties and their advisors.

Orders

[95]     I order:

i)        The plaintiff shall provide security for costs in the sum of

$10,000, which sum shall be paid to the Registrar of the Court pending the resolution of this proceeding in two tranches, namely:

i.    one tranch of $5000 to be paid to the Registrar within ten working days of this order; and

ii.  a second tranch of $5000 to be paid to the Registrar within five working days of the setting down date.

ii)The first defendant’s application for an order of stay, and this proceeding generally, are adjourned to the list at Nelson at 10 a.m., 25 January 2011.

iii)The plaintiff is to pay to the first defendant in any event the costs of this interlocutory proceeding to the point of this order on a 2B basis together with disbursements to be fixed by the

Registrar.

Associate Judge Osborne