Pacific 7 Limited v Tauranga City Council
[2025] NZHC 2235
•11 August 2025
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2024-470-000208
[2025] NZHC 2235
BETWEEN PACIFIC 7 LIMITED
Applicant
AND
TAURANGA CITY COUNCIL
First Respondent
TUMBLEHOME BAY LIMITED
Second RespondentPACIFIC SAFE HARBOURS LIMITED
Third Respondent
Hearing: On the papers Counsel:
M S King and S P Connolly for Applicant
S V McKechnie and B S Clifford for First Respondent S D Campbell for Second and Third Respondents
Judgment:
11 August 2025
Reissued:
14 August 2025
JUDGMENT OF ANDREW J
[Costs]
This judgment was delivered by me on 11 August 2025 at 1 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
PACIFIC 7 LTD v TAURANGA CITY COUNCIL [2025] NZHC 2235 [11 August 2025]
Introduction
[1] In my judgment of 11 April 2025 (the main judgment),1 I declined applications by the second and third respondents, Tumblehome Bay Ltd (TBL) and Pacific Safe Harbours Ltd (PSHL), for strike out of the proceedings and rescission of an interim relief order. I also declined Pacific 7 Ltd’s application for interim relief restraining the sale of the Tauranga Marine Precinct pending a substantive hearing. I subsequently declined Pacific 7’s application for leave to appeal (the leave judgment).2
[2]This judgment contains my decision on all costs.
[3] There is no issue of costs in relation to the first respondent, Tauranga City Council (TCC). TCC does not seek costs and no costs are sought against it. The costs issues are thus confined to the applicant and TBL and PSHL.
Submissions
[4] TBL and PSHL seek scale costs up to the date of sending a Calderbank letter, and increased costs for all steps thereafter. They say this is justified as Pacific 7’s claim was “always ill-conceived, hastily constructed, and pursued relentlessly despite it being obvious it never had merit”. This, they say, was particularly so following the release of my main judgment which “made patent the lack of merit” in their claims.
[5] Specifically, TBL and PSHL submit that costs should be ordered against the applicant in this case because Pacific 7:
(a)was the losing party and TBL and PSHL were “the victors”;
(b)discontinued the application having been unsuccessful on all but one of the applications it advanced;
1 Pacific 7 Ltd v Tauranga City Council [2025] NZHC 876 [main judgment].
2 Pacific 7 Ltd v Tauranga City Council [2025] NZHC 1233 [leave judgment].
(c)failed to accept a genuine offer of settlement on terms that were more advantageous to them than what they achieved in the proceedings. As such, increased costs should be awarded; and
(d)pursued arguments that lacked merit, even after the release of my main judgment which held that the merits of Pacific 7’s case were weak. Again, TBL and PSHL say this warrants an award of increased costs for steps taken following my judgment.
[6] TBL and PSHL also submit that, while I indicated that costs should lie where they fall because the case was in the public interest and each party had a measure of success, the public interest exception relating to matters of costs should not apply as Pacific 7’s claim was not meritorious, the applicant acted unreasonably, and Pacific 7 stood to gain financially from the decision. Further, TBL and PSHL say there was no partial success by Pacific 7 as the applicant lost on all substantive points.
[7]TBL and PSHL seek a total of $58,301 in costs and $2,393 in disbursements.
[8] Pacific 7 opposes the costs sought by TBL and PSHL. It seeks costs in its favour on a 2B basis for all steps relating to defending the applications for rescission and strike out up until the date of my main judgment and an order that costs lie where they fall for all other steps taken in the proceedings. Alternatively, they seek an order that costs lie where they fall for all stages of the proceedings.
[9] Pacific 7 submits that, as TBL and PSHL failed on their rescission and strike-out applications, whereas Pacific 7 failed on only one application, the weight of my main judgment fell in their favour. It is on this basis that Pacific 7 seeks costs for the steps taken up to my main judgment.
[10] Pacific 7’s alternative submission is that costs should lie where they fall for the entirety of the proceedings because the proceedings concerned a matter of public interest and:
(a)the proceedings satisfy the requirement that they must be of general importance beyond the interests of Pacific 7 and it is wrong to suggest that Pacific 7 was seeking to purchase the land and business for itself. The applicant notes that I acknowledged the public interest in the proceedings;
(b)the application had merit. Pacific 7 says my finding that the claims were “generally weak” was only preliminary and, without a substantive hearing, it could not be definitively concluded that the claims were without merit;
(c)Pacific 7 acted reasonably throughout the proceedings, meaning it is just and equitable that costs not be awarded on the discontinuance of the claims. They further say:
(i)Pacific 7’s conduct must be considered in the context of the compressed timeframe to hearing and the evolution, volume, and timing of the evidence provided by TCC;
(ii)Pacific 7 cannot be said to have acted unreasonably in defending the applications brought by THL and PSHL; and
(iii)it was not unreasonable for Pacific 7 to apply for leave to appeal and stay of proceedings, despite those applications being unsuccessful, as they were exercising their legal right to seek leave and the application had merit.
[11] Pacific 7 also submits that their rejection of the Calderbank offer was reasonably justified and does not justify a departure from the predictability of the costs regime. They say the offer should not be taken into account at this juncture because:
(a)the offer was made with a focus on matters the respondents failed on in the main judgment;
(b)the respondents knew the timetable directions of this Court providing for Pacific 7 to file an amended statement of claim at the time of making the offer; and
(c)the offer was unreasonable in terms of timeframe for acceptance.
Discontinuance
[12] I note that TBL and PSHL consent to the applicant’s application for leave to discontinue, subject to the issues of costs and the undertaking as to damages remaining live. TCC, the first respondent, has also consented to discontinuance and seeks no costs or damages. As the applicant made an undertaking, r 15.20(1) of the High Court Rules 2016 (the Rules) provides an applicant can only discontinue a proceeding with the leave of the Court. Given the position of the respondents, I grant leave.
[13] As the applicant has discontinued the proceedings, the presumption is that costs are to be borne by Pacific 7. Rule 15.23 of the Rules provides:
Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.
[14] The presumption may be displaced where it is just and equitable not to apply it in the circumstances.3 This naturally reflects the fundamental principle that all matters relating to costs are at the discretion of the Court.4 However, the Courts will only exercise the discretion in this context where there is good reason, lest it depart from the other fundamental principle that costs follow the event.5
[15] In determining whether it is just and equitable to depart from the presumption, the following considerations, set out in Royal Forest and Bird, are relevant:6
3 Kroma Colour Prints v Tridonicatco NZ Ltd [2008] NZCA 150 at [12].
4 Earthquake Commission v Whiting [2015] NZCA 144 at [65].
5 Powell v Hally Labels Ltd [2014] NZCA 572 at [20].
6 Royal Forest and Bird Protection Society of New Zealand Inc v Northland Regional Council [2019] NZHC 449 at [7], citing Kroma Colour Prints Ltd v Tridonicatco NZ Ltd, above n 3, at [12]; FM Custodians Ltd v Pati [2012] NZHC 1902 at [10]–[12]; and Opus International Consultants Ltd v Colac Bay Vision Ltd [2015] NZHC 1782, [2015] NZCCLR 19 at [7]–[8].
(a)The reasonableness of the parties’ stances will be taken into account; whether it was reasonable for the plaintiff to bring and continue the proceeding and whether it was reasonable for the defendant to oppose it. It is not sufficient for the plaintiff to show merely that it had reasonable grounds to believe it would be the successful party.
…
(c)The Court will not consider the merits of the respective cases unless they are so obvious that they should influence the costs outcome.
(d)The reason for discontinuing the proceeding may be relevant. For example, there may have been a change of circumstance rendering continuation of the proceeding unnecessary.
[16] While I have received very limited submissions on this point, I am of the view that it would not be just and equitable for Pacific 7 to carry all costs in these proceedings.
[17] I acknowledge that the merits of the applicant’s claims were weak. However, I do not consider it unreasonable for those claims to have been brought and, for the most part, it was not unreasonable for the applicant to have continued with the proceedings.
[18] I infer that the applicant has discontinued the substantive proceedings because the decision at issue (being the sale of the Tauranga Marine Precinct) has been made irreversible by the settlement of the sale. Had the settlement not taken place, it seems likely that the proceedings would have continued to a substantive hearing.
[19] The proceedings were rendered moot by factors largely outside the applicant’s control. It is also necessary to recognise the importance of judicial review proceedings as a mechanism for holding public bodies accountable for their decision-making. In the circumstances, I find it would not be appropriate for full costs to be awarded against the applicant on the basis of the discontinuance.
Calderbank offer
[20] The respondents submit I should award costs on a 2B basis up to their making of a Calderbank offer and increased costs after that. I consider the effect of the
Calderbank offer first as my decision on that influences the remainder of this judgment.
[21] The offer made on 10 December 2024 (the applicant says it was made after 5 pm on that day) provided that, if Pacific 7 withdrew its application for judicial review by 13 December 2024, the respondents would pay Pacific 7 $1,000, not seek costs of any kind against them, and not enforce the undertaking as to damages.
[22] While the offer was properly constructed and would have left the applicant in a marginally better position than it is now in,7 I will not take the Calderbank offer into consideration in awarding costs.
[23] First, the offer was made only four days after I had made orders that significantly altered the proceedings and ultimately required the applicant to amend its statement of claim.8 The amended statement of claim was not filed until 20 December 2024. As such, the 10 December offer related to a proceeding that was evolving.
[24] Second, the timeframe provided for acceptance of the offer was far too short (especially as the applicant was in the process of amending its pleadings). As the authors of The Law of Costs in New Zealand observe, “an offer that is made very late in the proceeding, or on terms where the offer is open for a very short time, is unlikely to be effective”.9 The offer was open for approximately one working day. I do not consider this was a reasonable timeframe for the offer to be assessed by the applicant and, as such, I consider their rejection of the offer to be reasonable.
Costs up to main judgment
[25] I find that costs for all steps taken up until my main judgment should lie where they fall. I see no reason to depart from my preliminary view on that issue.
7 High Court Rules 2016, r 14.10–14.11.
8 See Pacific 7 Ltd v Tauranga City Council HC Auckland CIV-2024-470-000208, 6 December 2024 (Telephone Case Management Conference Minute of Andrew J).
9 David Bullock and Tim Mullins The Law of Costs in New Zealand (LexisNexis, Wellington, 2022) at [3.57], approved in Hürlimann v Lilley [2023] NZHC 352 at [19].
[26] Costs are, of course, at the discretion of the Court10 and a fundamental principle of the law of costs is that they follow the event — the unsuccessful party pays costs to the successful party.11 In this case, no one succeeded. While the failure by Pacific 7 to obtain judgment extending the interim orders essentially had the effect sought through the respondents’ applications, that does not alter the fact that, contrary to Mr Campbell’s assertion that TBL and PSHL were “the victors in this litigation”, the respondents also failed.
[27] I order that costs on steps taken up to my main judgment of 11 April 2025 are to lie where they fall.
Costs on steps subsequent to my main judgment
[28] I take quite a different view on the steps taken after my main judgment was released. After I released that judgment, the applicant immediately made an application for interim stay orders, which was declined.12 On 22 April, Pacific 7 made an application for leave to appeal. An application for stay was made on 24 April and an application for urgent interim stay was made on 30 April. All of these applications were declined in my judgment of 20 May 2025.13
[29] Having failed, I am of the view that costs must follow the event, and the respondents should be awarded costs for the steps taken subsequent to the release of the main judgment and up to the present.
Public interest exception
[30] Having determined that costs are to be awarded to the respondents on steps taken after the main judgment, there remains the issue of quantum. Notably, Pacific 7 has sought to rely on the public interest exception in r 14.7(e) of the Rules to justify a reduction (they sought a refusal, but that is clearly not being granted) in the costs
10 High Court Rules, r 14.1.
11 Rule 14.2(1)(a); and Manukau Golf Club v Shoye Venture Ltd [2012] NZSC 109; [2013] 1 NZLR 305 at [8].
12 Pacific 7 Ltd v Tauranga City Council HC Auckland CIV-2024-470-000208, 15 April 2025 (Minute of Andrew J).
13 Leave judgment.
award. While I have found that the matter was in the public interest,14 I do not consider the exception applies in this case, especially not to the extent of justifying a significant reduction or refusal of costs.
Costs in public interest litigation
[31]Rule 14.7(e) of the Rules provides:
Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if—
…
(e)the proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding
[32] This Court in Taylor v District Court at North Shore (No 2) explained the provision requires that:15
… the proceeding must concern a matter of genuine public interest, have merit and be of general importance beyond the interests of the particular unsuccessful litigant. To obtain the benefit of the exception in rule 14.7[(e)], the unsuccessful litigant must also have acted reasonably in the conduct of the proceeding.
[33] Alongside these considerations, the Court takes into account the principle that an award of costs should not be such as to act as a deterrent to public interest groups bringing cases. However, the Courts are conscious that it is also a matter of public interest that:16
… the resources of the courts and responsible government agencies should not be taken up by defending cases which, although they might be genuinely motivated, have no merit or are conducted unreasonably. A balancing exercise is called for.
Analysis
[34]I address the requirements for the exception in turn.
14 See main judgment at [175]; and leave judgment at [26].
15 Taylor v District Court at North Shore (No 2) HC Auckland CIV-2009-404-2350, 13 October 2010 at [9], affirmed in New Zealand Climate Science Education Trust v National Institute of Water and Atmosphere Research Ltd [2013] NZCA 555 at [11].
16 Northland Environmental Protection Society Inc v Chief Executive of Ministry of Primary Industries [2017] NZHC 2435 at [7].
[35] I repeat the finding that I made in my main and leave judgments that these proceedings concerned a matter of public interest; they related to the sale of a publicly held facility that benefits both the users of that facility and the broader Tauranga community. I acknowledge that the proceedings also involved the sale of a commercial and non-strategic local authority asset — but there was nevertheless a significant public interest dimension.
[36] As to the issue of Pacific 7 standing to gain financially from the proceedings, I do not consider this precludes them from benefiting from the public interest exception (at least on this basis). While Pacific 7 may have stood to gain, I consider that gain would have been incidental (and the extent of any gain is, in any event, far from clear). It would be concerning if the Courts penalised applicants for gaining from proceedings as a side effect of seeking to advance the public interest. Proceedings of this kind will often involve a mix of private and public interests.
[37] While both my judgments in this matter related only to interlocutory applications (i.e. I would ordinarily focus on the merits of each particular application), the public interest exception requires an assessment of the proceedings as a whole. In my view, and as I made clear in both judgments, the merits of the overall proceeding were weak. While the authorities do not specify a threshold at which the merit of a party’s claim will qualify for the exception, it is clear the level of merit present will significantly influence the ordering of a reduction in costs.17 In this case, I do not consider there was sufficient merit in Pacific 7’s overall claim to warrant any reduction of the costs award to the second and third respondents.
[38] Having found there is insufficient merit for the public interest exception, there is no need for me to consider the reasonableness (or otherwise) of the applicant’s conduct in these proceedings.
17 See for example: Ours Not Mines v Hauraki District Council [2025] NZHC 931 at [16].
Quantum
[39] The second and third respondents are awarded costs for steps taken after my main judgment, including steps taken in successfully opposing the application for leave to appeal. The total sum awarded is $12,667, calculated as follows:
Cost item Allocation Amount 11. Memorandum for case management 0.4 $956 13. Case management conference 0.3 $717 23. NOO to amended application for stay and leave to appeal 0.6 $1,434 11. Memorandum for case management 0.4 $956 24. Submission in support of opposition to stay and leave to appeal applications 1.5 $3,585 13. Case management conference 0.3 $717 13. Case management conference 0.3 $717 24. Submissions on discontinuance and costs 1.5 $3,585 Total $12,667
[40]The applicant takes no issue with the disbursements of $2,393.00 sought.
The undertaking as to damages
[41] The respondents seek timetabling orders in relation to the potential enforcement of the undertaking as to damages. The following timetable is sought:
(a)TBL and PSHL to make any application for enforcement of the undertaking as to damages within 20 working days of the release of this costs judgment.
(b)Pacific 7 has 10 working days following any such application to oppose the application.
(c)A teleconference to be set down at the earliest available date following the opposition to timetable the undertaking proceeding through to a hearing.
Result
[42] I order that the applicant, Pacific 7, is to pay the second and third respondents’ costs in the sum of $12,667 and disbursements in the sum of $2,393.
[43] If the respondents intend to pursue the undertaking as to damages, the timetabling orders sought at [41] above are granted.
Andrew J
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