New Zealand Pork Industry Board v Director-General of the Minister of Agriculture and Forestry HC Wellington CIV-2011-485-719

[2011] NZHC 902

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-719

IN THE MATTER OF      an Application for Judicial Review under the Judicature Amendment Act 1972 and Part 30 of the High Court Rules

BETWEEN  THE NEW ZEALAND PORK INDUSTRY BOARD

Applicant

ANDTHE DIRECTOR-GENERAL OF THE MINISTRY OF AGRICULTURE AND FORESTRY

First Respondent

ANDTHE CHIEF TECHNICAL OFFICER AND BIOSECURITY NEW ZEALAND Second Respondent

Counsel:         F M R Cooke QC with J Kaye for Applicant

C R Gwyn with K M Muller and A Beck for Respondents

Judgment:      10 August 2011

JUDGMENT OF THE HON JUSTICE KÓS (Costs)

[1]      These proceedings seek to set aside new import health standards permitting the importation of pre-packaged raw pork products.   They were filed on 20 April

2011.   On 28 April 2011 the Board applied for interim orders (under s 8 of the Judicature  Amendment  Act  1972)  prohibiting  the  respondents  from  taking  any further action permitting the importation of raw pork products.

[2]      The only affidavit filed in support of the plaintiff’s application was from a Mr McIvor.  He is the Chief Executive of the plaintiff Board.  Mr McIvor does not hold scientific qualifications.   His affidavit was inadequate to support the interim

orders application.

THE NEW ZEALAND PORK INDUSTRY BOARD v THE DIRECTOR-GENERAL OF THE MINISTRY OF AGRICULTURE AND FORESTRY HC WN CIV-2011-485-719 10 August 2011

[3]      The deficiency in supporting evidence was made plain once the respondents filed  their  evidence  on  10  May  2011.    That  evidence  suggested  a  very  low probability of transmission of Porcine Reproduction and Respiratory Syndrome (PRRS) from imported product now permitted under the new standards.   The respondents’ evidence also contested the degree of seriousness of the disease, and suggested it was, in any event, reversible.  These matters emerged in an expert report which the first respondent had commissioned and relied upon called the Epix- Analytics (or Epix-A) Report.  It was copied to the plaintiff on 13 April 2011.

[4]      When the matter was first called before me on 16 May 2011 I indicated to counsel that it appeared to me that the plaintiff was likely to be able to sustain an arguable case for the purposes of s 8.  That view depended in part (but in part only)[1] on a then-unpleaded argument which nonetheless appeared potentially available to the plaintiff.  That concerned an expert working group process, and whether it gave rise to a legitimate expectation that the plaintiff be able to comment on the Epix-A Report before it was relied on by the first respondent.  Although developed further during  the  16  May  hearing,  the  point  really  emerged  from  paragraph  60  of

Mr McIvor’s affidavit.

[1] The arguable grounds are set out in paragraphs [20]–[25] of my judgment of 25 May 2011.

[5]      I also indicated to counsel, however, that I had “significant reservations as to whether the plaintiff ’s evidence made out a case that interim orders were really necessary to preserve the applicant’s position”.  My reasons for that doubt were the factors summarised in paragraph [3] above.

[6]      Had the plaintiff pressed the interim application on that day, its application would almost certainly have failed, and the respondents would have been entitled to costs.  I was not however prepared to make a decision in a biosecurity matter on the basis of a forensic mismatch.  My decision on 16 May 2011 was therefore to grant leave to the plaintiff to file further evidence addressing the specific scientific issues of the probability of risk of transmission of PRRS, the nature of the harm if it were introduced to New Zealand, and the reversibility of that harm.   I made interim holding orders through to 24 May, on which day the application was again to come

before me.

[7]      On 24 May 2011 the plaintiff, fortified by scientific affidavits from Professor Roger Morris and Drs Lawton and Neumann, renewed its application for interim orders.

[8]      My interim judgment of 25 May 2011 made interim orders restraining the Ministry of Agriculture  and Forestry from granting biosecurity clearances under ss 26-28 of the Biosecurity Act 1993 for pork product that might now be imported as a result of the Director-General’s decision (but which would not have qualified for clearance under the previous import health standards).   I directed urgent trial, to commence on 24 August 2011, and made pre-trial directions.

[9]      On 9 June 2011 I issued a brief supplementary interim judgment, at the parties’ request, revising the terms of my interim orders.  On 13 June 2011 I issued a minute revising (at the Crown’s request) my timetabling orders and providing for submissions to be made on costs on the interim orders stage.  I said in that minute:

I indicated to counsel that my sense (although it is no more than that) is that costs should lie where they fall on the interlocutory application.  The Court’s view is that the applicant should have filed its scientific evidence in the first place  and  was  perhaps  fortunate  that  the  Court  took  a  precautionary approach on 16 May.   The Crown cannot be criticised for its failure to succumb to what originally was presented against it.

[10]     The plaintiff now seeks costs, however, on a category 3 band C basis.  That is of course the highest cost level that can be applied under the High Court Rules in the absence of a specific uplift under Rule 14.6. The respondents oppose.

Submissions

Plaintiff

[11]     For the plaintiff Mr Cooke QC makes seven submissions.

[12]     First the plaintiff submits that given the course of correspondence between the  parties,  starting  on  12  April  2011  immediately  after  the  first  respondent’s decision was issued, the Board had no reason to believe that scientific evidence

would be required.   The views of the respective parties had been exchanged and

were “well known to the Ministry”.

[13]     I observe that might be so, but they were not known to the Court and the affidavits filed by the respondents in reply to Mr McIvor traversed scientific detail and in particular the issues of likelihood of harm, the extent of harm and reversibility of harm.   Those affidavits were entirely proper and germane to the question of whether interim orders were necessary to preserve the plaintiff’s position pending trial.  It was always going to be necessary for the Court to consider the probability and extent of risk, a scientific question, at this stage.

[14]     Secondly,   and   perhaps   more   cogently,   the   plaintiff   submits   that   the respondents’ scientific affidavits (or those addressing scientific matters) were one- sided and failed to advert adequately to the disputed scientific evidence as to risk of outbreak of the PRRS disease.

[15]     I  do  consider,  however,  that  a  similar  charge  may  be  made  against

Mr McIvor’s second affidavit, in support of interim orders.

[16]     Thirdly, the plaintiff submits:

The Board does not accept that had the matter been argued, it would have failed to have persuaded Your Honour that the views in the reports already in evidence were sufficient to show that there was a position to preserve.

[17]     I  observe  that  while  the  plaintiff  may advance  that  submission,  the  fact remains that it did not press the application on 16 May when it had the opportunity to do so.  And wisely in my view.   On my view of the evidence it would almost certainly have failed in its application.  The Court would have been highly unlikely to have granted the orders without the scientific evidence of Prof Morris, and Drs Lawton and Neumann.  An interim orders application is not really the place for a deficiency in supporting evidence to be rectified by reference to secondary materials exhibited  to  other  affidavits.    The  Court  required  direct  evidence  of  necessity. Mr McIvor’s affidavit dealt with the topic in five paragraphs, and without reference to specific scientific literature.  His lack of qualifications to make such observations independently I have already noted.  Even in its cost submissions, the plaintiff does

not sustain its argument that success on 16 May would have been a likelihood, by reference to particular evidence.  It merely asserts that prospect.  I disagree, for the reasons given already.

[18]     Fourthly, the plaintiff complains that the respondents missed the time limits for filing their affidavits.  I note, however, that while the respondents’ affidavits were due at 5.00 pm on 9 May, all but one were filed by 11 am on the following day,

10 May.  I am really not sure that much turns on this submission.  It does not rectify a perceived deficiency in the plaintiff’s own affidavit evidence.   It does mean the respondents had the opportunity to file better evidence than perhaps otherwise they would have, but that inequality was then more than neutralised by the opportunity given by the Court to the plaintiff to file further evidence.   The respondents were probably not unreasonably disappointed that they were not given time to respond to those affidavits.

[19]     Fifthly, the plaintiff submits that the substantial part of the argument  on

24 May was directed to the strength of the plaintiff’s challenge, rather than the

scientific evidence and the question of whether orders were reasonably necessary.

[20]     I accept that that was so to an extent, but the submission is a little unrealistic. As a result of the new evidence, a genuine issue was joined on the question of risk, extent  and  reversibility.    The  respondents  were  in  no  position  to  answer  that evidence,  not  simply  because  the  interim  timetabling  did  not  give  them  time. Without vive voce evidence the issue could never be resolved.   So the focus on

24 May was necessarily on the arguable case aspect.  I have already noted that in that respect a significant argument not pleaded at that stage (although it now is) emerged in the course of argument, in part as a result of probing by the Court about what Mr McIvor was getting at in paragraph 60 of his affidavit.

[21]     Sixthly, the plaintiff submits that the ordinary approach in Rule 14.2 should apply.  That being, that the party who fails in an interlocutory application should pay costs  to  the  party  that  succeeds.    The  plaintiff  submits  (relying  on  Glaister  v

Amalgamated Dairies Ltd)[2] that while that is subject to the overriding judicial discretion provided for in Rule 14.1, the discretion is:

... exercisable only in situations not contemplated by the specific rules or which are not fairly recognised by them.

[2] Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [22]–[28]. It also relies on the commentary in McGechan on Procedure paragraph HR 14.1.02.

[22]     Glaister  is  not  authority  for  that  proposition.     The  proposition  goes significantly further than the position taken by the Court of Appeal in Glaister.  That case concerned a refusal by a Judge to depart from the categorisation and banding principles set out in the Rules.   The appellant  suggested the Judge had unduly fettered the discretion provided in Rule 14.1.  In dismissing the appeal, the Court of Appeal emphasised the importance of the integrity of the scheme as set out in the Rules and it expressed the view that any departure from that regime must be done “in a particularised, and principled way”.  Of course that must be so.  But that case did not concern the issue here of whether a successful party always should receive costs at the interlocutory stage, and the exercise of the Rule 14.1 discretion in relation to that question.  What is clear is that Rule 14.1(2) provides that Rule 14.2 is subject to Rule 14.1(1).  It is not the other way round.

[23]     Finally, the plaintiff contends for category 3 band C in respect of the hearing. It would accept that no costs should be granted in its favour in relation to the aborted

16 May hearing.  It also seeks disbursements in the sum of $15,158.75 (covering the production of the three scientific affidavits) and submits:

... the amounts involved for the three experts are reasonable and there is no dispute that their views became necessary for the Court dealing with the interim relief application.   Indeed the Ministry’s argument is they should have been obtained at the outset.

[24]     I note that I do not consider this is a category 3 proceeding, at least at the stage it was at before me.  On the contrary it is a relatively routine judicial review proceeding.   On the other hand, I would accept that this stage, involving interim orders, was time-consuming beyond the norm for an interlocutory application, and

deserves band C.   I would also accept that up to two scientific affidavits were

appropriate.  But a third was surplussage and should not be claimable at the interim stage at least. That is not to say that all three will not be justifiable for trial purposes.

Respondents

[25]     For the respondents, Ms Gwyn submits that the plaintiff has substantially repleaded its case since the 24 May hearing, but that the core matters on which it relies had been known to it for several months before it issued proceedings.

[26]     I observe that that may be so, but I do not think the plaintiff can be criticised for staying its hand until the Director-General made its decision to impose the health standards.  That happened only on 10 April.  Nor does the submission really affect entitlement to costs on the interim orders application.

[27]     The respondents submit, secondly, that the issue of whether there was  a material risk if undertakings were not given, or interim orders were not granted, was clearly something before the plaintiff in making its application.  Ms Gwyn referred in particular to a letter dated 28 April 2011 which makes that clear.

[28]     I note, however, that that date was the same day the interim orders application was filed by the plaintiff, a full week after the proceedings were filed in the first place.

[29]     More cogently, the respondents submit, thirdly, that of necessity in applying for interim orders the plaintiff needed to address whether the interim orders were necessary to protect its position.   And so the question of risk, extent of risk and reversibility of risk were all essential matters which were required to be addressed. With that submission I do agree.  Ms Gwyn submits:

Faced with this, the applicant elected to filed incomplete, unfocused, non- scientific evidence from its Chief Executive in support of the application for interim relief on 28 April 2011.   This was so despite the fact that it had access to the services of Drs Lawton and Neumann, and Prof Morris.

[30]     The  respondents  submit,  fourthly,  that  the  scientific  evidence  filed  was excessive to respond to its own (relatively modest) evidence of scientific issues –

which essentially relied on the Epix-A Report.  I have indicated already (at [24]) that

I am sympathetic to that submission.

[31]     Fifthly, the respondents submit that this is a proper case for the Court to exercise its power under Rule 14.7 to reduce costs. The respondents submit that they were entitled to resist the application for relief which, as originally formulated, failed to show either reasonable necessity to protect the plaintiff’s position or an arguable case on the merits.

[32]     Sixthly, the respondents submit that the plaintiff obtained an indulgence from the Court on 16 May, so that it should expect, consistent with authority[3] for costs to be reduced.

[3] Holdgate v Holdgate HC Auckland CP303/96, 24 September 1996, at 3 per Anderson J; IKE v

New Zealand Couriers Ltd HC Auckland CIV-2011-404-648, 14 March 2011 at [33] per Wylie J.

[33]     Finally  the  respondents  submit  that  the  proper  costs  category  for  the application was 2, and the band, B. Although, the respondents submit that but for the inadequacies  (as  they  see  it)  of  the  plaintiff’s  evidence  it  may  otherwise  have deserved band C.   The respondents also submit that the scientific evidence was excessive and only one-third of the disbursements claimed should be allowed.

[34]     I have indicated already (at [24]) my views on these matters.

Decision

[35]     I have held already:

(a)       the plaintiff’s initial affidavit evidence was inadequate to support the interim orders application made;

(b)the application would almost certainly have failed had it been pressed on 16 May;

(c)       cogent  scientific  evidence  was  always  necessary  to  address  the question of necessity for the making of the orders; and

(d)      that issue was always one which the plaintiff needed to satisfy the

Court on in the context of a s 8 application.

[36]     I am not critical of the plaintiff for not having its house completely in order when making the application.  The truncated time frames caused problems for both parties.  Equally I am not critical of the respondents for pressing on before me on

24 May  2011,  bearing  in  mind  that  they  had  only  just  seen  the  new  scientific evidence for the plaintiff.

[37]     However,  I  am  bound  from  my  perspective  as  the  Judge  who  would otherwise most likely have made orders adverse to the plaintiff on 16 May 2011:

(a)      to regard the final outcome (where the plaintiff only got there on its second attempt) as more a drawn result than a win for the plaintiff; and

(b)to  conclude  that  justice  would  not  be  done  were  I  simply  to mechanically apply rule 14.2(a) and award costs now to the plaintiff, let alone in the sum of $27,873.19 claimed.

[38]     I think it more consonant with justice in the quite unusual circumstances of this case if costs on the interlocutory stage are determined following trial, and as part of costs in the case as a whole. This is a course I am entitled to take pursuant to Rule

14.8(1), as I have found special reasons exist here why costs should not be fixed at this juncture.[4]   Whether costs ultimately should be awarded in respect of the interim orders stage should be resolved when the final result in this proceeding is known.  In my view, given the way the interlocutory process played out here, who pays costs at

[4] See for example the decisions of French J in Gibbston Downs Wine Ltd v Perpetual Trust Ltd HC Christchurch CIV-2010-409-001716 (6 October 2010) and ABC Developmental Hearing Centres (NZ) Ltd v Artemis Early Learning Ltd HC Christchurch CIV-2010-409-001198

(7 October 2010).

the interlocutory stage should depend on who ultimately prevails at trial.

[39]     I repeat that had I fixed costs at this point I would have done so on a category

2 band C basis, with disbursements for two expert affidavits, not three (had the plaintiff prevailed) and an allowance for one junior counsel.[5]

[5] See at [24].

Disposition

[40]     Accordingly the application for costs on the interim orders stage is dismissed, without prejudice to the right of either party to have those costs fixed following trial.

Stephen Kós J

Solicitors:

Jonathan Kaye Law, Wellington for Applicant

Crown Law Office, Wellington for Respondents