Port Otago Limited v East Otago Taiapure Management Committee
[2013] NZHC 2795
•23 October 2013
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2013-412-383 [2013] NZHC 2795
UNDER The Resource Management Act 1991
IN THE MATTER of an appeal against a decision of the
Environment Court
BETWEEN PORT OTAGO LIMITED Appellant
ANDEAST OTAGO TAIAPURE MANAGEMENT COMMITTEE, SOUTHERN CLAMS LIMITED, OTAGO ROCK LOBSTER INDUSTRY ASSOCIATION INCORPORATED, PAUA INDUSTRY COUNCIL LIMITED AND PAUAMAC 5 INCORPORATED First Respondents
OTAGO REGIONAL COUNCIL Second Respondent
Hearing: 23 October 2013
Appearances: L A Andersen for appellant
P J Page for first respondents
Judgment: 23 October 2013
(ORAL) JUDGMENT OF LANG J
[on appeal as to decision on costs by the Environment Court]
PORT OTAGO LTD v EAST OTAGO TAIAPURE MANAGEMENT COMMITTEE & ORS [2013] NZHC 2795 [23 October 2013]
[1] Port Otago Limited (“Port Otago”) applied for consent to widen and deepen the Port Chalmers Channel. It proposed to do that by dredging the channel and then depositing the dredged material at a point known as “A0”, some 6.5 kilometres to the north of Taiaroa Head.
[2] The Commissioners granted Port Otago’s application, and the first respondents appealed against that decision to the Environment Court. The first respondents have separate interests in relation to the coastline ecosystem in the area of Blueskin Bay to the north of Dunedin. They have cultural, commercial and recreational concerns and interests in relation to that area.
[3] The appeals followed the usual pre-trial process in the Environment Court. This included caucusing of experts on no fewer than three occasions. Ultimately, a fixture was scheduled to commence on 26 November 2012.
[4] The focus of the hearing in the Environment Court1 related to the conditions to be imposed in respect of the consents issued to Port Otago. The first respondents had made it clear from the outset that their concern lay not so much in the concept of dredging the channel and dumping of the recovered material, but rather as to the manner in which compliance with any conditions could realistically be monitored.
[5] When the hearing in the Environment Court commenced, counsel presented their opening addresses. The Court then arranged for experts for each party to caucus in order to endeavour to reach agreement regarding key issues. When the experts reported back to the Court, several issues needed to be determined. The
Court then determined these in an oral decision delivered on 30 November 2012.2 In
doing so he largely followed the recommendations made by the experts. He then invited counsel to file draft orders reflecting the determinations made by the Court in
1 Before Judge Smith sitting with Environment Commissioners Sutherland and Leijnen.
that decision. The Judge finally approved the conditions in a Minute issued on
4 June 2013.3
[6] The Judge did not determine the issue of costs in the decision he delivered on
30 November 2013. Rather, he said:4
[48] If any application for costs is to be made, that is to be filed within the same time, 10 working days for reply and a final reply, if any, a further 5 working days. This singularly does not appear to be a case where costs are appropriate. This has been a cooperative development of conditions for the benefit of all parties, undertaken during the hearing and prior. Nevertheless, we make directions in case parties have a different view.
[7] The first respondents considered that the Environment Court should make an award of costs in their favour. Port Otago considered that costs should lie where they fell. Both parties then filed memoranda in relation to costs. In a decision issued on 6 May 2013, Judge Smith directed that Port Otago was to contribute the
sum of $9,000 towards the first respondents’ costs.5 That represented a contribution
of approximately 20 per cent of actual costs incurred.
[8] Port Otago now appeals to this Court against the Judge’s decision to make an award of costs in favour of the first respondents. It argues that the conditions that the Environment Court ultimately imposed were developed through vigorous debate and discussion between the experts called by the parties during the course of the hearing. It says that a hearing was always going to be necessary in order to ensure that all competing views were properly considered and taken into account. It says that in those circumstances the Judge ought to have directed that costs lay where they fell.
Relevant principles
[9] The Environment Court has a very wide power to make an award of costs. That power is contained in s 285 of the Resource Management Act 1991, which
provides:
3 East Otago Taiapure Management Committee v Otago Regional Council Decision No [2013] NZEnvC 126.
4 East Otago Taiapure Management Committee v Otago Regional Council, above n 2.
285 Awarding costs
(1) The Environment Court may order any party to proceedings before it to pay to any other party the costs and expenses (including witness expenses) incurred by the other party that the Court considers reasonable.
(2) Subsection (1) does not apply if the Environment Court makes an order under section 308H(2).
(3) The Environment Court may order any party to proceedings before it to pay to the Crown all or any part of the Court's costs and expenses.
(4) Subsection (3) does not apply if the Environment Court makes an order under section 308H(3).
(5) In proceedings under section 87G, 149T, 198E, or 198K, the
Environment Court must,—
(a) when deciding whether to make an order under subsection (1)
or (3),—
(i) apply a presumption that costs under subsections (1) and (3) are not to be ordered against a person who is a party under section 274(1); and
(ii) apply a presumption that costs under subsection (3) are to be ordered against the applicant; and
(b) when deciding on the amount of any order it decides to make, have regard to the fact that the proceedings are at first instance.
(6) The Environment Court may order a party who fails to proceed with a hearing at the time the Court arranges, or who fails to give adequate notice of the abandonment of the proceedings, to pay to any other party or to the Crown any of the costs and expenses incurred by the other party or the Crown.
(7) The Environment Court may order an applicant to pay the costs and expenses that a consent authority or a territorial authority incurred in assisting the court in relation to a report provided by the authority under section 87F, 165ZFE(6), 198D, or 198J and that the court considers reasonable.
(8) In deciding whether to make an order under subsection (7), the court must apply a presumption that such costs are to be ordered against the applicant.
[10] There has been some debate in the authorities as to whether, given the very wide terms of the discretion granted to the Court, the discretion is unfettered.6
Generally speaking, however, the Environment Court and this Court have both taken
6 See eg McKenzie v Taupo District Council [1996] NZRMA 237 at 238 (HC); Tairua Marine Ltd
the view that the discretion needs to be exercised on a principled basis. It is also clear from the authorities that no hard and fast principles have been established regarding the exercise of the discretion.
[11] In particular, the Environment Court has not established a general principle that costs should be awarded to the successful party. This is likely to be because, in this area of the law, absolutes are seldom realistically achievable. In many cases, all parties will be partly successful and partly unsuccessful. This represents the nature of the issues that the Environment Court is likely to encounter.
[12] The Environment Court has taken the view that it will be appropriate to award costs when it is just to do so. It has, however, developed principles relating to circumstances in which it will be prepared to make significant awards of costs.7
Generally speaking, however, the Court has determined what will be a just outcome on case specific principles. That appears, with respect, to be an entirely appropriate approach.
[13] Given the width of the discretion vested in the Environment Court, this Court has adopted a cautious approach when considering appeals from awards of costs made by the Environment Court.8 It will only interfere where the decision in question is plainly wrong, 9or where the Environment Court has erred in principle in making the decision. An error of principle may occur where the Environment Court
takes into account an irrelevant consideration, or where it fails to take into account a relevant consideration.10 Other errors of law may also entitle the Court to intervene.
This case
[14] In the present case, it is clear that the Judge did not make the award of costs on the basis that the first respondents were the successful parties in the proceeding.
7 See eg, Vestroete v Far North District Council Decision No [2013] NZEnvC234 at [20] citing principles in DFC NZ Limited v Bielby [1991] 1 NZLR 594-595 (HC) at [14].
8 See the discussion in Canterbury Regional Council v Waimakiriri District Council [2004] NZRMA 289 at [50] (HC); Newbury Holdings Ltd v Auckland Council [2013] NZHC 1172 at [70].
9 McKenzie v Taupo District Council [1996] NZRMA 237 at 238 (HC).
10 Countdown Properties (Northland) Ltd v Dunedin City Council [1994] NZRMA 145 at 153 (HC).
Rather, he considered that it was just to make an award of costs because Port Otago had failed, up until the hearing, to give adequate consideration to a set of monitoring conditions that could be enforced in a reliable and certain manner.
[15] I draw this conclusion from the following passages in the Judge’s decision:11
[21] There is some real argument between the parties as to whether or not the requirements for monitoring conditions and their enforceability should have been known to the Port Company.
[22] I have reached the conclusion that the issue of adaptive management is one which has been subject to a significant number of Court decisions, all of which have emphasised the need for enforceable criteria while allowing adaptive management solutions. Although the question of how those solutions are addressed is open, the outcomes must be clear. That was the position adopted by the Regional Council and reinforced by this Court, and in my view, it is neither novel nor unexpected.
...
[27] On the other hand, I do recognise that a key issue in this case was the failure to acknowledge that enforceable criteria needed to be inserted within the consent. That took effort by the Court. With the extremely able assistance of Commissioners Sutherland and Leijnen, wording was agreed.
[28] I do not think that any criteria under Bielby have been made out. Nevertheless, this does appear to be a case where some costs might be awarded on the basis of recognition that earlier adoption of appropriate adaptive management criteria would have resolved this matter without a hearing.
[16] The central issue in the present appeal is whether the factors identified by the
Judge rendered it just and reasonable to make an award of costs against Port Otago.
[17] The wording of the Judge’s decision does not enable this Court to readily identify the precise reasons why he considered that Port Otago had failed to recognise at an early stage the need for conditions of the type ultimately imposed by the Environment Court. With the assistance of counsel, however, I have examined the events leading up to the hearing in the Environment Court. These assist me to
understand why the Judge considered that an award of costs was appropriate.
11 East Otago Taiapure Management Committee & Ors v Otago Regional Council & Anor, above n
The events leading up to the hearing in the Environment Court
[18] Counsel for the first respondents points out that in February 2012, he filed a memorandum in the Environment Court pointing out that the first respondents did not oppose Port Otago’s dredging proposal in principle. The Commissioners had made the decision to grant the consents based on modelling work undertaken by Port Otago. Counsel for the first respondents accepted in his memorandum that if the modelling results accurately reflected what would happen in practice, the first respondents would have no cause for complaint. Counsel advised the Court that the first respondents’ concern was whether the conditions attached to the consent enabled the flow of silt to the delicate coastal on-shore coastal area to be properly monitored. If the flow of silt was to exceed acceptable levels, they were also concerned as to what management or enforcement action could be taken to ensure that damage did not occur to that area.
[19] As noted above, the experts for the first respondents, Port Otago and the Otago Regional Council met on three occasions. The first caucus was that attended by ecologists on 14 August 2012. There was disagreement at the conclusion of that caucus regarding the areas that needed to be monitored. Port Otago’s expert considered that monitoring around A0 area, together with the area at the edge of the
plume,12 would be sufficient to determine whether or not there was excessive flow of
silt towards the northern inshore coastline. The expert for the first respondents considered that in-shore monitoring of the coastal area was required in order to reliably ascertain whether silt dumped at sea was making its way to that area.
[20] The second caucus occurred on 15 and 16 August 2012, and involved experts in marine modelling. Although there were some differences of opinion regarding peripheral matters, the experts reached agreement that the modelling proposal used by Port Otago to obtain the consents was sufficient for that purpose.
[21] The third caucus was held on 22 August 2012, and involved experts in monitoring. They were tasked with considering various techniques that might be
used to monitor the flow of silt and sediment towards the inshore coastline. The first
12 In this context the plume is the trail of silt that is suspended in the water after it has been
respondents had proposed that a technique known as “fingerprinting” be implemented for this purpose. At this caucus the experts agreed that this technique was not yet sufficiently developed to be reliably implemented. Importantly, however, the monitoring experts included the following comments in their report to the Court:
10. In relation to the proposed dredging, the near field and far field monitoring require different approaches. It is understood the modelling caucus have concentrated on the near field monitoring to validate the model or otherwise. Witnesses understand that the near field monitoring proposed by the Modelling caucus addresses the issues of model validation and uncertainty and include provisions for the cessation of dumping if the plume behaviour deviates significantly from predictions. Therefore, this caucus concentred on monitoring approaches for the far field.
11. Witnesses agree that there is a need for continuous long term monitoring of turbidity [water clarity] at the disposal site, and in the near shore of Blueskin Bay. Witnesses recommend that this monitoring occurs for sufficient time to capture natural variability prior to dredging.
[22] Shortly before the hearing on 26 November 2012, the first respondents and Port Otago reached agreement regarding conditions that could be attached to the consents. These required the consent of the Otago Regional Council if they were to progress any further. On 23 November 2012, however, the Regional Council advised Port Otago that it did not regard the proposed conditions as being appropriately certain and/or enforceable. For that reason, this proposal could not proceed further.
[23] On Friday, 23 November 2012, Judge Smith convened a telephone conference with all counsel. By that stage he had read the evidence the parties had filed, and he had also received the reports prepared following the caucuses of experts. Although there is no record of exactly what occurred during the telephone conference, it appears that the Judge raised concerns regarding at least some of the conditions proposed by Port Otago.
[24] At the hearing on 26 November 2012, the principal focus shifted quickly to the manner in which turbidity levels in the water near the coastline could be monitored and measured. This led the experts to confer regarding the issue of whether or not they could set maximum turbidity levels which when reached would trigger defined management responses.
[25] The draft conditions that Port Otago had placed before the Court at the commencement of the hearing did not prescribe upper limits for turbidity levels. Nor did they prescribe management responses that would automatically be triggered by excessive turbidity levels. Rather, the draft conditions provided for Port Otago to respond “as soon as practicable” in the event of “differences assessed as significantly adverse on the environment.” Potential responses included the halting of further
dumping activities until the identified issues had been addressed.13
[26] When the experts caucused during the hearing in the Environment Court, they were able to produce the following conditions that the Court ultimately approved:
Management Action
137.Should the results of turbidity monitoring undertaken during disposal exceed 75% of the Environmental Turbidity Limit then Port Otago will:
a. Inform the Consent Authority;
b. Adapt its disposal practices to minimise the increases in turbidity. Actions may include but not be limited to:
i. modify sailing speed and direction;
ii. modify disposal methodology and rate of release;
iii. alter location of disposal within A0;
iv. consider cessation of disposal of silt-laden material;
v. assess turbidity at mooring site C (Cornish Head).
138.Should the results of turbidity monitoring undertaken during disposal exceed the Environmental Turbidity Limit then Port Otago will:
a. Inform the Consent Authority;
b. Cease disposal of silt loads;
c. Investigate modification of disposal practices to minimise the increases in turbidity. Actions may include but not be limited to those matters listed in 137 above;
13 The vagueness of, and difficulty in enforcing, these terms is likely to have been the issue that concerned the Judge at the telephone conference on 25 November 2012.
d. Report the findings of the investigations to the consent authority. The report will include a proposal for modified disposal methodology to ensure compliance with the consent.
e. Recommence disposal of silt loads only when the consent authority authorises recommencement.
[27] In accepting that such conditions were appropriate the Court said:14
[42] What we have changed is, of course, the inclusion of ETLs [Environmental Turbidity Limits] rather than relying entirely on verification of a hydro-dynamic model. In that regard we consider that the expert caucusing supports the view that the better balance is to utilise an adaptive management model together with upper limits.
[28] The fundamental difference between the approach ultimately taken by the experts and the Environment Court, and that taken by Port Otago prior to the hearing, was that Port Otago’s proposed conditions did not contain any prescribed upper limit at which prescribed management responses would automatically be triggered. The conditions agreed to by the experts at the hearing prescribed both of these matters.
[29] Although the wording used by the Court when fixing costs is rather oblique, I am satisfied that the history of the proceeding, and the manner in which it was ultimately resolved, enables the reasoning underlying the decision to be ascertained. The Environment Court took the view that Port Otago ought to have been alive earlier to the need to provide prescribed permissible upper turbidity limits, coupled with prescribed management action where these were exceeded. I draw that
conclusion from the Judge’s comments at [22].15
[30] Counsel for the first respondents had pointed out in the following passage of his submissions in relation to costs that the Environment Court had adopted a similar approach in other recent cases:
16. The appellants take the view that [Port Otago’s] position (supported it would seem by the Otago Regional Council) was wholly misconceived as to the legal requirements for an adaptive management regime right up until the commencement of the hearing. That is, neither [Port Otago] nor the Regional Council appeared to appreciate that the authorities (most recently
the Tauranga case, and much earlier, the Kuku Mara cases) required an adaptive management regime to adopt enforceable and measurable performance standards against which responses are set out as conditions of resource consent. In substance that is what the appellants have been saying all along and certainly since 15 February 2012. It is submitted that the appellants’ position has been vindicated.
[31] The Judge echoed this submission in his comments at [22].16
[32] I have therefore concluded that the Judge considered that Port Otago ought to have been alive to this issue earlier, and ought to have amended its draft conditions so as provide for the matters that the experts ultimately agreed upon and the Court approved.
[33] I accept that the Judge may have gone a step too far in saying17 that earlier recognition of these factors by Port Otago would have obviated the need for a hearing. Clearly the Environment Court would have been required to approve any proposal that the parties put before it. Nevertheless, I consider the Judge was entitled to conclude that Port Otago ought to have directed its mind at an earlier stage to the possibility of prescribing measurable upper permissible limits of turbidity, as well as the management action to be taken when these were exceeded.
[34] That being the case, I conclude that the Environment Court reached its decision on a principled basis. It was entitled to make an award of costs in favour of the first respondents because they had argued from the outset for a set of conditions of the type that the experts and the Environment Court ultimately agreed was appropriate. I therefore do not consider that the Environment Court erred in principle in reaching its decision as to costs.
Result
[35] The appeal against the award of costs is accordingly dismissed.
Lang J
Solicitors:
Andersen Lloyd, Dunedin
Gallaway Cook Allan, Dunedin
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