Opua Coastal Preservation Incorporated v Far North District Council

[2020] NZHC 1499

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2015-488-000019

[2020] NZHC 1499

IN THE MATTER

of an application for review under Part 1 of the Judicature Amendment Act 1972

BETWEEN

OPUA COASTAL PRESERVATION INCORPORATED

Applicant

AND

FAR NORTH DISTRICT COUNCIL

First Respondent

MINISTER OF CONSERVATION
Second Respondent

DOUGLAS CRAIG SCHMUCK

Third Respondent

Hearing:

On the papers

Appearances:

R Mark for the Applicant

G Day for the First Respondent
B Arapere for the Second Respondent
J A Browne and C H Prendergast for the Third Respondent

Judgment:

30 June 2020

JUDGMENT OF WOOLFORD J

[As to Costs]

This judgment was delivered by me on Tuesday, 30 June 2020 at 3:00 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

OPUA COASTAL PRESERVATION INCORPORATED v FAR NORTH DISTRICT COUNCIL & ORS [2020] NZHC 1499 [30 June 2020]

[1]                  This is an application for costs by the first and third defendants, the Far North District Council (the Council) and Mr Schmuck respectively. It came to me as duty Judge on Thursday, 7 May 2020, because the Judge who heard the case, Fogarty J, has now retired.

Procedural background

[2]                  The plaintiff, Opua Coastal Preservation Inc (the Society), sought judicial review of the Council’s exercise of powers, acting as the delegate of the Minister of Conservation, under the Reserves Act 1977. The Society challenged two decisions:

(a)A 2014 decision to grant permission to Mr Schmuck to carry out private commercial boatyard activities on a local purpose (esplanade) reserve (the permission decision); and

(b)A 2015 decision to consent to easements over the reserve in favour of Mr Schmuck for the purpose of carrying out those activities (the consent decision).

[3]                  On 14 February 2017, Fogarty J gave judgment quashing the permission decision as being in error of law but upholding the consent decision.1 His Honour reserved costs. The Society successfully appealed to the Court of Appeal in relation to the consent decision aspect of Fogarty J’s judgment.2 Mr Schmuck then appealed to the Supreme Court, which allowed the appeal and reinstated the consent decision.3 The Supreme Court directed the High Court to now determine costs, in light of the outcome of Mr Schmuck’s appeal to the Supreme Court.4

1      Opua Coastal Preservation Inc v Far North District Council [2017] NZHC 154 [HC Judgment].

2      Opua Coastal Preservation Inc v Far North District Council [2018] NZCA 262, [2018] 2 NZLR 538 [CA Judgment].

3      Schmuck v Opua Coastal Preservation Inc [2019] NZSC 118 [SC Judgment].

4      Schmuck v Opua Coastal Preservation Inc [2019] NZSC 155 [SC Costs Judgment].

Legal principles (costs)

[4]                  Costs are at the discretion of the Court.5 This discretion should be exercised in accordance with the guidance provided in the High Court Rules 2016.6

[5]                  The general principle is that costs follow the event, that is, the successful party in a proceeding is entitled to costs from the unsuccessful party.7 Ultimately, the overriding consideration when exercising the Court’s discretion to award costs is that any award ought to do justice between the parties.8

Should costs lie where they fall or be reduced (r 14.7)?

[6]                  Rule 14.7 provides that, in specified circumstances, the Court may refuse to make an order for costs or reduce the costs otherwise payable, including where:

(d)although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or

(e)the proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding …

[7]The Council seeks scale costs on a 2B basis of $29,990 and disbursements of

$110,  for  a  total of $30,100.    Mr Schmuck seeks scale costs on a 2B basis of

$30,216.50 and disbursements of $580.20, for a total of $30,796.70.

[8]The Society, on the other hand, submits that costs should lie where they fall.

Partial success of the Society and the defendants

[9]                  First, the Society submits that it was partially successful in the proceeding, that is, in relation to the permission decision. It says that, as the parties had equal success in the proceeding, costs should lie where they fall. In reply, the Council says that the defendants were the overall successful parties. For the Society to have been the overall successful party, Fogarty J would have had to quash both of the Council’s decisions.

5      High Court Rules 2016, r 14.1(1).

6      Rules 14.2–14.7.

7      Rule 14.2(1)(a).

8      Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5].

His Honour did not do so, therefore, Mr Schmuck was able to use the reserve.       Mr Schmuck similarly explains that once the grant of easements was consented to, the permission decision effectively became redundant.

[10]              Accordingly, in my view, the defendants are the overall successful parties. They were partially successful, “yet success on more limited terms is still success”.9 This conclusion is supported by the Supreme Court’s observation that “Mr Schmuck was successful in the High Court”.10 So, the Council and Mr Schmuck would ordinarily be entitled to costs in this Court.

[11]              Next, I turn to whether the permission decision issue, on which the defendants failed, significantly increased the Society’s costs. On that point, Mr Schmuck says that the overwhelming focus of the hearing was on the lawfulness of the consent decision. That appears to be reflected in Fogarty J’s judgment — notably, his Honour’s analysis for the consent decision issue was significantly longer than that for the permission decision issue.11 Mr Schmuck also says there were minimal documents associated with the permission decision compared to the vast documentation for the consent decision, and very little of the hearing time was spent on the permission decision. Accordingly, I am not satisfied the permission decision issue significantly increased the Society’s costs. I therefore decline to refuse or reduce costs on this basis.

Public interest in the proceeding

[12]              Secondly, the Society submits that the proceeding involved a matter of public interest, namely whether commercial activities should be allowed on an esplanade reserve. It says that it had no financial benefit to gain from the proceedings, and the proceedings were issued to ensure that statutory powers under the Reserves Act were exercised lawfully.

[13]              The Supreme Court accepted that there was some public interest aspect to the Society’s position, but it held that any such public interest was limited and did not

9      Weaver v Auckland Council [2017] NZCA 330 at [26].

10     SC Costs Judgment, above n 4, at [3].

11     HC Judgment, above n 1, at [30]–[42] for the permission decision and [43]–[89] for the consent decision.

justify the making of an order that costs should where they fall.12 The Supreme Court’s assessment equally applies to the proceeding in this Court. I note the following comments of Fogarty J in relation to the consent decision:13

[55]      Embedded in [the Society’s] pleadings is a different value ascribed to esplanade reserves than that reflected by the judgments of the Environment Court, the local authority, the Minister of Conservation, the High Court and as I will endeavour to show, by Parliament, as expressed in the Reserves Act. The values underpinning the pleadings … presume that esplanade reserves should as far as possible be utterly natural, and with no commercial activity taking place on them.

[56]      This is a cultured view of nature. If that site was utterly natural, it would be difficult to walk through it, let alone sit on the grass and admire the view. It is reached by an artificially-formed track. It forms a groomed embankment. It has a small park-like character. It is an environment that has been modified by man.

…

[59]  The overall context is New Zealand is a degree of pragmatic use of   the coastline not only for the enjoyment of the coastline itself, but as the means of access to the sea. This needs to be married to a frequent acquaintance with a degree of pragmatism by both users of reserves and democratic representatives of users who hold office in Council, such as the FNDC.

…

[61] The operations of [Mr Schmuck’s] boatyard are clearly compatible  with families or couples picnicking on the Reserve and swimming off the little beach at Walls Bay. … It does not in any practical sense impede use of the Reserve. It has been objected to as a point of principle. The principle articulated several times during the hearing by counsel is that there should be no commercial activity on a reserve. That this is somehow some sacrosanct principle. It is not a principle one finds in the Reserves Act. It is a political viewpoint which is not reflected in the statute.

[14]              His Honour considered that the Society’s opposition to the consent decision was based more on a “political viewpoint” than it was on any practical impediment to the public’s access of the reserve that the easements consented to might cause. Thus, while there was some public interest in the Society’s position, it was limited. Accordingly, I reject the Society’s submission that costs should lie where they fall.

[15]              However, I note that the Supreme Court made a “small allowance for the public interest aspect of the appeal and reflecting the different roles of Mr Schmuck and the

12     SC Costs Judgment, above n 4, at [8].

13     HC Judgment, above n 1.

Council” in the appeal.14 Recently, Gordon J, in determining costs for a related matter, considered the Supreme Court’s “small allowance” for public interest.15 Her Honour noted the following:

[28]      … [The Supreme Court] did not specify the amount of that small allowance. In terms of the quantum of the allowance, in my view, the other authorities set out above are not a particularly helpful guide because they can be distinguished on a quite fundamental point. In those cases, the unsuccessful party was usually a public interest group in proceedings against a public agency. …

[29]      A reduction in costs is justified in such circumstances because … public interest groups should not be precluded from pursuing proceedings to hold such agencies accountable and to ensure they are operating within the scope of their statutory or other authority. The risk of an award of costs for proceedings which are reasonable but unsuccessful can act as a deterrent to such efforts, though this has to be balanced with the use of public resources to defend proceedings unnecessarily.

[30]      These policy reasons fall away where the successful party in a proceeding is a private landowner [namely, Mr Schmuck]. A public interest group was not looking to hold a public agency accountable for the discharge of its statutory powers. Moreover, any reduction in costs is effectively a loss to the successful party and offends a basic principle of the costs regime, that the successful party should receive costs.

[31]      In my view, a “small allowance” must be small and I will reduce costs payable by OCP by five per cent. I consider this adequately takes into account the public interest in this case.

[16]              I also note that the Society acknowledges, in its costs memorandum, that    Mr Schmuck’s “position is somewhat different [to the Council] in that he was not the party making either of the decisions under review”. For the above reasons, including those set out by Gordon J, I consider it appropriate to give the Society a “small allowance” and reduce costs payable to Mr Schmuck by 7.5 per cent. I see some distinction between this case where the issue was a right of occupation or use of a local purpose (esplanade) reserve and the case before Gordon J, which concerned the ability to discharge (under discharge consents).

[17]              The position, however, is more than a little different in relation to costs payable to the Council. This is a case in which the Society was “pursuing proceedings to hold [public] agencies accountable and to ensure they are operating within the scope of

14     SC Costs Judgment, above n 4, at [9].

15     Schmuck v Northland Regional Council [2020] NZHC 1270 [Gordon J’s Costs Judgment].

their statutory or other authority”.16 This is clear from the Society’s contention, which was repeated by Fogarty J, that the decisions “should be reviewed to ensure that the statutory powers under the Reserves Act are exercised lawfully”.17 Accordingly, the Society is entitled to a greater reduction in the costs payable to the Council, a public agency exercising a statutory authority, than in relation to Mr Schmuck, a private landowner. In the circumstances, I consider that a 15 per cent reduction in the costs payable by the Society to the Council is appropriate.

Should the Court order more than one set of costs (r 14.15)?

[18]Rule 14.15 of the High Court Rules provides that:

The court must not allow more than 1 set of costs, unless it appears to the court that there is good reason to do so, if—

(a)several defendants defended a proceeding separately; and

(b)it appears to the court that all or some of them could have joined in their defence.

[19]              This rule requires the Court to exercise some caution before awarding costs, without more, in favour of multiple parties, particularly when there is some overlap or community interest in the litigation position of those parties.18 The policy behind the rule is to minimise costs by shortening hearings where a joint defence can reasonably be expected.19 To that end, the Court should look in a realistic way at whether, and to what extent, the parties have a common or overlapping interest.

[20]The following factors are relevant in assessing whether the rule applies:20

[8] The extent to which the  defendants’  interests  were  materially  identical, as well as the extent to which one defendant did or could have relied upon the evidence or submissions of the others, are factors tending to suggest that the defendant could have joined in their defence. Conversely, factors suggesting that the defendants could not reasonably join in their defence include if the plaintiffs ran separate cases against the defendants, or sought separate relief, the defendants’ reputation are at stake, (for example, there is an allegation of fraud), a conflict of interest was likely in terms of the way the

16 At [28].

17     HC Judgment, above n 1, at [2].

18     Grey District Council v Bain [2014] NZHC 939 at [5], citing Norfolk Trustee Co Ltd v Tattersfield Securities Ltd HC Auckland CIV-2004-404-3668, 30 March 2005 at [51].

19     Independent Māori Statutory Board v Auckland Council [2017] NZHC 678 at [8]–[9].

20     Jordan v O’Sullivan (No 2) HC Wellington CIV-2004-485-2611, 1 May 2009.

plaintiffs ran their case and/or the defendants’ relationship is such that they are justified in remaining at arms length from each other.

[21]Applying those factors to the present case:

(a)The Council’s and Mr Schmuck’s interests were materially identical. That is to have the permission and consent decisions upheld so that Mr Schmuck could use the reserve for commercial activity.

(b)Mr Schmuck could have relied upon the evidence or submissions of the Council. Indeed, in his reply costs memorandum, Mr Schmuck says that he “essentially adopted the submissions of the first respondent (Far North District Council) in relation to the permission decision issue. It is also notable that Mr Schmuck says that “[m]ost of the [hearing] time was spent going through the factual background, the statutory scheme, [and] a site view” — none of which was particular to either defendant.

(c)Furthermore, the Society did not make a separate case against the Council and Mr Schmuck. Its pleadings, which are set out at [47]–[51] of the High Court judgment, were largely framed in general terms, and the Council and Mr Schmuck responded to the same pleadings. There were, of course, some points which were expressly directed to the Council. But the important point is that the Society did not make a separate case against either of the defendants. Nor was separate relief sought in relation to the different defendants.

[22]              Accordingly, I consider that some parts of the defence could have been joined. I nevertheless recognise that other parts could not have been joined, given the unique positions of the parties: the Council, for example, is a public agency exercising a statutory authority, unlike Mr Schmuck; furthermore, Mr Schmuck was joined as a defendant later in the proceeding, therefore, some of the earlier steps prior to the hearing could not have been joined by the first and third defendants.

[23]              How then should costs be awarded between the first and third defendants? One approach is to order one set of costs in favour of both defendants, the award being split

between them in a proportion that the Court determines fair.21 The other approach is to make separate costs awards for the individual defendants with some reduction to those costs to reflect the overlap between their positions. I prefer the latter approach.

Adopting that approach, Winkelmann J (as she was then) noted:22

[10]      Rule 14.15 does not require parties to share one award; the Court has an overall discretion in relation to costs and, where appropriate, a discount may be given in order to reflect the extent to which a party could or should have relied on the submissions of another defendant. This was the approach of Venning J in Re Blue Chip New Zealand Ltd (in liq) … where the Judge discounted the second defendant’s costs to reflect that:²³

… the developer parties were entitled to be separately represented on this application, including at the hearing. However, the practical reality of the position is that in large part there was a common thread running through the submissions both in the structure of the oppositions and the submissions in opposition. Undoubtedly it was appropriate for the developers to have separate advice but they were able practically to rely upon the notices of opposition and certain submissions made by counsel for [another opposing party].

[11]      Consequently, Venning J reduced the time allowed for structuring the initial opposition by half.

[12]In this case there were some factual differences affecting each trustee.

… Although the factual matrix was not identical for each, the legal issues raised by each of the third party’s applications to strike out were in substance identical. Just as in Blue Chip, it was clearly appropriate for the trustees to each have separate representation and so they should be entitled to that cost of representation at the hearing. But there was an opportunity for some sharing of the effort in the undertaking of legal research and the preparation of legal submissions. For these reasons I am satisfied that a reduction in costs is appropriate to reflect the opportunity for economy in preparation that the commonality of the matters at issue provided. In my assessment there should be a reduction of 30%. …

(emphasis added)

[24] For the reasons set out at [21] above, and having regard to the approach adopted by Winkelmann J in the above excerpt, I consider that a 30 per cent reduction in costs for both the Council and Mr Schmuck is appropriate.

Costs order

[25]In summary, I make the following orders for costs:

21     See Independent Māori Statutory Board v Auckland Council, above n 19, at [14].

22     Financial Markets Authority v Hotchin [2013] NZHC 2082.

23     Re Blue Chip Ne Zealand Ltd (in liq) HC Auckland CIV-2009-404-1511, 3 May 2011 at [18].

(a)The plaintiff, Opua Coastal Preservation Ltd, is to pay to the first defendant, Far North District Council, 2B scale costs of $17,844.0524 plus disbursements of $110; and

(b)The plaintiff is to pay to the third defendant, Mr Schmuck, 2B scale costs of $19,565.1825 plus disbursements of $580.20.

Woolford J

Solicitors:           Richard Mark, Kerikeri, for the Applicant

Law North Layers, Kerikeri (G Day), for the First Respondent

Crown Law, Wellington (B Arapere and L Kean), for the Second Respondent Henderson Reeves Lawyers, Whangarei (C Prendergast and J Browne), for the Third Respondent

24     Being $29,990 (2B scale costs claimed by the Council) x 0.85 (15 per cent reduction for public interest) x 0.7 (30 per cent reduction for commonality of matters at issue).

25     Being $30,216.50 (2B scale costs claimed by Mr Schmuck) x 0.925 (7.5 per cent reduction for public interest) x 0.7 (30 per cent reduction for commonality of matters at issue).