Queen Elizabeth the Second National Trust v Netherland Holdings Ltd
[2014] NZHC 1094
•22 May 2014
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2013-409-001704 [2014] NZHC 1094
BETWEEN QUEEN ELIZABETH THE SECOND
NATIONAL TRUST Plaintiff
AND
NETHERLAND HOLDINGS LIMITED First Defendant
AND
R H WOBBEN AND D H WOBBEN Second Defendants
Hearing: 8 May 2014 Appearances:
F B Collins and P Kirby for Plaintiff
C J Shannon for DefendantsJudgment:
22 May 2014
JUDGMENT OF DUNNINGHAM J
[1] This is a decision on penalty for contempt of Court. It follows from my judgment of 26 February 2014, where I found that two of the defendants, Netherland Holdings Limited (NHL) and Mr Roelof Wobben, were in contempt of Court for breaching interim injunction orders made on 29 November 2013.1
[2] The Queen Elizabeth the Second National Trust (the Trust) seeks orders for a fine of $20,000 to be paid from NHL to the Trust; indemnity costs; and a sentence of
community work for Mr Wobben. The defendants oppose the orders sought.
1 Queen Elizabeth the Second National Trust v Netherland Holdings Ltd [2014] NZHC 291.
Background
[3] The factual background to those findings is set out fully in my earlier
judgment.2
However, in summary, NHL owns farmland in the Waimakariri District
and Mr Wobben is a director and shareholder of NHL. There are three blocks of land on the NHL farm which are subject to a statutory conservation covenant created under the provisions of the Queen Elizabeth the Second National Trust Act 1977, to
protect outcrops of remnant kanuka woodland on the covenanted land.
[4] NHL, through the actions of its director Mr Wobben, cleared the protected kanuka vegetation from half of one of the protected blocks, Block A, and all of another protected block, Block B, in order to allow for a centre pivot irrigator and a
lateral irrigator to have access over those parts of the NHL land.
[5] Once the Trust became aware of what had happened, it sought and obtained written undertakings from NHL that were intended to ensure it and its directors would not further harm, or allow harm to, the protected areas.
[6] On 28 November 2013, after further visits to the property to check for compliance with the undertakings, the Trust lodged an application for an interim injunction asserting that the undertakings had been breached by the defendants on at least three occasions.
[7] The Trust sought, and the defendants did not oppose, the following interim injunction orders being made:
(a) directing that no director, shareholder, employee or agent of the first defendant will take any further steps to remove, burn, damage, spray, or take any trees, shrubs or plants of any kind, including ground covering vegetation, or do any work whatsoever that may breach, or further breach the opening space covenants registered against Computer Free Hold Identifiers 592415 and 592414 (the “Langstone covenants”);
(b) directing that no director, shareholder, employee or agent of the first defendant will permit any sowing or application of fertiliser on the Langstone covenants and that no irrigation will be operated in or placed on those areas pending agreement with the applicant;
2 At [3]-[12].
(c) granting the applicant the right to cross over the first defendant’s property for the purpose of access to the Langstone covenants to inspect the state and condition thereof and to carry out any necessary maintenance or restoration work; and
(d) leave is reserved for either party to apply for variation of these orders, or for any further or other orders, on seven days notice.
[8] Regrettably, following further inspection, the Trust considered that the defendants had breached the terms of the interim injunction orders in the following ways:
(i) the first defendant’s centre pivot irrigation system had continued to operate in Block A and its lateral irrigator had continued to operate in Block B of the covenanted areas,
(ii) fertiliser had been allowed to leach and/or flow through into Block C
by way of surface puddling caused by rainfall,
(iii) the farm track on Block B, which the Trust said was wrongfully created by the defendants, continued to be used by the defendants for their vehicular access, and
(iv) fertiliser had been spread onto Block B.
[9] After hearing the matter on 11 February 2014, I held that the defendants, Mr Wobben and NHL, were in contempt of Court by:
(a) allowing irrigators to track over Blocks A and B between 12
December 2013 and 3 February 2014, and overspray water onto Block
A on 3 February 2014; and
(b) allowing fertiliser to be spread on Block B sometime between
27 December 2013 and 11 January 2014.
[10] By agreement, the issue of penalty was deferred to a subsequent hearing, while the defendants took appropriate steps to purge their contempt. It had been agreed at the earlier hearing that those steps would include at least:
(a) the erection of rabbit proof fencing on the two boundaries of the covenanted areas; and
(b) taking reasonable steps to ensure the irrigation systems would not track through either of the blocks and that the adjacent irrigator could not spread water onto the covenanted land.
[11] The first agreed step aimed to ensure the covenanted land was visually and physically separated from the surrounding farm land so that contractors would know where the boundaries were located when undertaking work on the property, and to ensure regenerating kanuka seedlings were not damaged by rabbits or other pest species. The second step was to ensure that the irrigators could not track over, or water, the protected dry land scrub, even through inadvertence.
Steps taken since 11 February 2014
[12] Since the hearing of this matter on 11 February, the defendants have taken steps to purge their contempt. However, the Trust says this is with “mixed results”. The works which have been undertaken are as follows:
Block A
[13] Rabbit proof fencing has been erected to a good standard around the cleared area of Block A, but it does not extend around the entire boundary of the block. The Trust says this is not what was anticipated either by the Trust’s written requests, or what was recorded in my earlier judgment as to the agreed steps to purge the contempt. The Trust also says that, strictly speaking, having the fence bisect the block breaches the terms of the covenant which requires nothing to be placed or permitted on the land, without the prior written consent of the Trust Board.
[14] Mr Wobben’s explanation is that he understood the purpose of the fencing on Block A was to protect regenerating seedlings in the area of Block A that had been cleared, and to prevent an irrigator passing through the cleared portion of Block A, and that has been achieved. Furthermore, when the Trust’s representative, Mr Giller, visited the property while the fencing work was being carried out, he did not raise any concern about the location of the fencing with the contractor.
Block B
[15] The entire boundary of Block B has been re-fenced. However, the Trust is concerned that the “height of the rabbit netting varies, generally between 70 cm above ground to 80 cm above ground”. The Trust had previously advised NHL that the rabbit netting should be one metre high, as in nearby Eyrewell Reserve it was found that netting needed to be at least 90 cm in order to achieve reliable hare exclusion.
[16] However, the Trust notes, with approval, that a new farm track has been installed for NHL staff to go around Block B, rather than using the farm track which the Trust says was wrongfully formed within Block B.
Block C
[17] While not a step proposed by the Trust, Mr Wobben has, of his own volition, installed a drain between where manure was stockpiled and Block C in order to limit nutrients leaching from the residue of the manure stockpile and into Block C.
[18] In summary, the steps taken by Mr Wobben have not entirely met the expectations of the Trust. This is despite the Trust setting out its expectations to Mr Wobben and NHL in very specific terms in a letter dated 10 February 2014, including the height of the rabbit proof netting and the requirement that the new fences be on the “surveyed covenant boundary”. However, in other respects, Mr Wobben has done more than was expected, although the Trust says these steps would have been required in any event, in order to comply with the underlying obligations in the covenant.
[19] It should be added that, helpfully, the Trust has accepted that the rabbit proof fencing which runs through Block A can remain there, rather than be dismantled and rebuilt to include the balance of the block containing the mature kanuka trees.
[20] Overall, I am satisfied that, viewed in totality, the defendants have taken sufficient steps to purge their contempt and that is reflected in the penalty I have decided to impose.
Purpose of punishing civil contempt
[21] It is necessary to reflect on the purpose of the power to punish for contempt in the civil proceedings before turning to penalty, because the purpose will instruct my decision on penalty.
[22] The purpose of the Court’s jurisdiction to punish for contempt in civil proceedings is two-fold. It coerces compliance with Court orders for the benefit of a private party. It also serves the public interest by ensuring the administration of justice is maintained. As was said by Lord Diplock in Attorney-General v Times
Newspapers Ltd:3
There is an element of public policy in punishing civil contempt, since the administration of justice would be undermined if the order of any Court of law could be disregarded with impunity.
[23] The Court’s recognition of a wrongdoer’s ability to purge his contempt serves both the public and private interest. In Attorney-General v Pickering, Paterson J stated the position as follows:4
[13] This Court normally allows the person to purge his disobedience of the injunction by doing what he should have done. Usually a final opportunity is given to the person to obey the order of the Court and a common course is for the Court to direct that the writ of arrest lie in the office for a defined number of days and on further failure to be forthwith issued ...
[24] The most recent statement on the purpose of imposing a penalty for contempt of Court is given in Solicitor-General for New Zealand v Krieger, where Panckhurst J cited an earlier Supreme Court judgment5 with approval: 6
[59] The purpose of punishment for contempt was explained in Solicitor- General v Siemer:
The objective of the summary process in contempt of court proceedings is to protect the ability of the Courts to exercise their constitutional role of upholding the rule of law. Effective administration of justice under our constitution requires that the orders of the Courts are obeyed unless properly challenged or set aside. Public confidence in the administration of law, also necessary for its effective administration, recognises that there is a strong expectation that those who ignore Court orders are quickly brought to account.
Hence, the main purpose of a punishment for contempt is upholding the rule of law. Deterrence, therefore, is an important consideration. I must also consider the objective seriousness of the relevant conduct, the personal culpability of the defendant, his means, and any personal aggravating or mitigating factors.
[25] When determining penalty in this case it is important to separate out the conduct which is the subject of the contempt proceedings, from the conduct which is the subject of the substantive application. I was also advised from the bar that Mr Wobben has been charged with, and pleaded guilty to, breaches of the Resource Management Act 1991 (RMA) for unauthorised removal of protected indigenous vegetation. He is yet to be sentenced. Accordingly, any penalty for breach of the interim injunction orders must be directed solely to that conduct, and not to the earlier allegations including clearing the vegetation. The appropriate remedies and/or penalties for those actions will be determined separately in the substantive proceedings for breach of covenant, and in the RMA prosecution.
Penalty sought
[26] The Trust sought that:
(a) NHL pay a fine of $20,000 for the contempt of Court;
(b) The fine be paid in its entirety to the Trust;
(c) Mr Wobben be sentenced to 150 hours community service; and
(d) NHL/Mr Wobben pay the Trust’s legal costs of approximately
$50,000 on an indemnity basis.
[27] The Trust argued that the Court had jurisdiction to make the orders sought under its inherent jurisdiction pursuant to s 16 of the Judicature Act 1908, noting that:
(a) The Court has inherent jurisdiction to impose fines for contempt having regard to its seriousness;7
(b) Under the Court’s inherent jurisdiction, there are no legal limits to the penalty that may be imposed, whether by way of fine or imprisonment;8
(c) The Court has inherent power to award any part of the fine to the complainant;9
(d) Indemnity costs can be awarded in cases of contempt.10
[28] The defendants, on the other hand, argued that a substantial costs order was a sufficient additional penalty having regard to the following factors:
(a) They have carried out considerable work since the release of the judgment, involving time and cost. The cost of the fencing will be between $9,000 and $10,000 plus GST and they have also incurred costs in obtaining professional irrigation advice to prevent the risk of
the covenanted areas being irrigated.
7 Neuronz Ltd v Tran HC Auckland CP 63/SW01, 14 May 2002, Williams J.
8 Solicitor-General v Radio Avon Ltd [1978] 1 NZLR 225.
9 Taylor Bros Ltd v Taylors Group Ltd [1991] 1 NZLR 91 (CA) at 93.
(b) The defendants have been the subject of media coverage in relation to the contempt proceedings. Being “named and shamed in public” is a penalty in itself.
(c) The prospect of a penalty hearing has been stressful for Mr Wobben and his family.
(d) The wrongdoing was “out of character”. The affidavit evidence referred to Mr Wobben as being hardworking and community minded, and this is relevant when considering the extent of “individual deterrence” needed.
[29] The defendants also urged me not to “punish twice for the same action”, noting that where both a company and a director are convicted in the context of RMA offences, the conduct should be considered in its totality when setting a starting point for a penalty and then apportioned between the company and the director.
[30] The defendants also opposed the proposal to impose community service on Mr Wobben. While the defendants did not expressly query the Court’s jurisdiction to do so, the submission was that there was no precedent for this and it would be counter-productive to make an order which would take Mr Wobben away from the farm when some of the breaches occurred because Mr Wobben was not on site to supervise activities.
Discussion
[31] The first issue to consider is the seriousness of the contempt. The consequences of the breaches of the order appear to have been minimal. The reason for not irrigating or fertilising the land, or allowing an irrigator to track over it, was because this was likely to impede regeneration of the cleared kanuka. Kanuka, being a dryland species, prefers low rainfall and a low nutrient environment. Where land is watered and fertilised, competing plant growth could adversely affect the re- establishment of kanuka. However, because of the limited number of times the orders were breached, there is no evidence that regeneration has been set back. I
also take into account the steps which have been taken to purge the contempt and thus ensure no further breaches can occur.
[32] In terms of the personal culpability of the defendants, it is, inevitable in a finding of contempt that the person’s behaviour is considered to be deliberate and therefore blameworthy. Furthermore, in this case, that culpability is aggravated by the fact that the orders were made following a failure to comply with the Trust’s informal requests and then with the written undertakings given on behalf of NHL. However, I do not wish to overstate the level of culpability. The defendants were cavalier about compliance, and did not take their obligation to see the orders were complied with as seriously as they should have. That deserves a measure of disapproval from the Courts, but is not at the most egregious end of the spectrum of conduct comprising contempt.
[33] In terms of means, there is no evidence to suggest that Mr Wobben and NHL
are not in a position to pay a substantial fine.
[34] In terms of deterrence, I am satisfied that there is both a public and individual aspect to this. I accept that the consequences and costs the defendants have suffered to date are probably sufficient deterrence for Mr Wobben and his company. While the Trust urged me to discount the personal consequences for Mr Wobben, including being the subject of adverse media coverage, I think it is relevant to the totality of penalty and what additional punishment should be imposed to bring home to Mr Wobben the seriousness of his conduct.
[35] However, I also must have regard to the wider consideration of deterring others from breaching Court orders. I accept that the Trust wants it recognised that, where they seek the assistance of Court orders to protect covenanted land, the Court will enforce compliance with those orders.
[36] Having regard to those factors, I now consider the penalties sought by the
Trust.
Fine
[37] A fine is commonly ordered as a penalty for contempt of Court in civil proceedings. However, as the Trust pointed out in its submissions, contempt cases do not appear to follow an analogous process to sentencing in criminal cases, which locates a starting point by reference to characteristics of the offence before identifying aggravating and mitigating features relevant to the offender, to arrive at a final penalty.
[38] However, some assistance as to level of penalty can be gained by reviewing other New Zealand authorities:
(a) In Director of the Land Transport Safety Authority v McNeil,11 a fine of $25,000 was imposed for deliberate and ongoing breaches over a period of two years of an injunction prohibiting Mr McNeill from being involved in any trucking operation, following a history of non-
payment of fines and road user charges.
(b) In Television New Zealand Limited v NewsMonitor Services Limited
(No 7),12
Smellie J imposed fines of effectively $22,500 on the
defendants for persistent and widespread breaches of an injunction restraining NewsMonitor from breaching the plaintiffs copyright over
a period of nearly four years.
(c) In Norbrook Laboratories Limited v Bomac Laboratories Limited,13 a fine of $10,000 was imposed for several breaches of a Court order that disclaimers be published in relation to the defendant’s product. The
breaches were found to be unintentional and promptly rectified.
11 Director of the Land Transport Safety Authority v McNeil HC Auckland, N509-IM/99,
20 December 2000, per Chambers J.
12 Television New Zealand Limited v NewsMonitor Services Limited (1997) 12 PRNZ 168 (HC).
13 Norbrook Laboratories Limited v Bomac Laboratories Limited (No 7) HC Auckland, CIV-2002-
404-1732, 18 December 2003, per Heath J.
(d) In Ferrier Hodgson & Anor v Siemer & Ors,14 a fine of $15,000 was imposed for reactivating a website which contained a number of defamatory comments and engaging on a systematic campaign to
bring the claimant into disrepute.
(e) In Solicitor-General v Krieger,15
a fine of $5,000 was imposed for
breaches of a Court order by providing access to information confidential to EQC via hyperlinks.
[39] It is clear the level of fines imposed vary between $5,000 and $25,000, but account would need to be taken of the date the fine was imposed, the egregiousness of the conduct and, of course, information about the defendant’s ability to pay, which
may not be apparent from the face of the judgments.
[40] I note, too, that NHL can only be fined. Prison, or some lesser form of detention, if that is available, is only available to punish Mr Wobben.
[41] The next issue in setting a fine is whether I reduce it to take into account the costs Mr Wobben has incurred. I consider that Mr Wobben has purged his contempt and the fine therefore needs only be set to recognise the Court’s disapproval of his initial breach of the injunction and not of any ongoing adverse affects, because there are now none.
[42] I also take into account the totality principle. Mr Wobben and NHL are essentially jointly responsible for the same breaches and the fine will be set to reflect that.
[43] Taking all those factors into account, I consider the appropriate penalty in total is a fine of $5,000.
[44] The next issue raised by the Trust was whether all or some of the fine should be paid to the Trust.
14 Ferrier Hodgson & Anor v Siemer & Ors HC Auckland, CIV-2005-404-1808, 16 March 2006, per Potter J.
15 Solicitor-General v Krieger HC Invercargill, CIV-2013-425-273, 17 February 2014, per
Panckhurst J.
[45] In Taylor Bros Ltd v Taylors Group Ltd, the Court observed that: 16
the jurisdiction regarding a fine must and does extend to ordering that part of it be paid to a complainant who has set the Court proceedings in motion … . Perhaps there is no fundamental objection in principle to accepting even that the Court could order the whole fine to be paid to the complainant. We think, however, that this would be to go too far. The contempt jurisdiction exists in the public interest as a sanction to ensure that orders of the Court are complied with. An element of amends to the public institution should always be present in a fine.
[46] In the present case, however, the Trust is a statutory body which is funded by the Crown and by public donations. I think in such circumstances, the public interest dictates that the majority of the fine is paid to the Trust and only a nominal amount is paid as an amends to the public institution of the Court. In this case, I consider that
90 per cent of the penalty should be paid to the Trust.
Community Service
[47] The Trust also urged me to impose a “sentence” of 150 hours community service on Mr Wobben. I initially had reservations about whether a community based sentence, which is a statutorily created penalty option provided for in the
Sentencing Act 2002, was available to punish contempt in civil proceedings. These
reservations were reinforced by the decision in R v Palmer,17
which held that a
person found guilty of a criminal contempt of Court could not be put on probation because the relevant statute said that a probation order could only be made in respect of a person “convicted of an offence”. As a person found guilty of contempt was not “convicted”, the alternative sentencing options provided for under the relevant Act
were not available to punish contempt of Court.
[48] However, in New Zealand this difficulty is overcome by the definition of
“offender” provided for in the interpretation section of the Sentencing Act 2002.18 It
defines an offender to include “a person who is dealt with or is liable to be dealt with for non-payment of a sum of money, disobedience of a Court order, or contempt of court”. I could, therefore, impose a community-based sentence under the Sentencing
Act 2002 on Mr Wobben if I saw fit.
16 Taylor Bros Ltd v Taylors Group Ltd [1991] 1 NZLR 91 (CA) at 5-6.
17 R v Palmer [1992] 3 All ER 289.
18 Sentencing Act 2002, s 4.
[49] However, now that steps have been taken to purge the contempt and ensure the Court orders will be complied with, I consider that the penalty imposed of $5,000 in total is sufficient punishment in all the circumstances.
Costs
[50] The Trust has also sought indemnity costs for all steps taken in respect of the contempt application. Those costs total $50,304.43 (exclusive of GST).
[51] The Trust asserts it has a contractual right to claim indemnity costs pursuant to the covenant for Block B dated 17 December 2010. It also records that it is common practice on a successful contempt application to award indemnity costs, citing Bowie v Weyburne,19 which says “where a contempt of Court is made out, the normal course is to order the person in breach to pay costs on a solicitor/client
basis”.
[52] The defendants, quite properly, did not resist an award of indemnity costs, but raised some queries about the extent of costs actually incurred, noting that they are
approximately three times higher than if costs were awarded on a 2B basis.
[53] I am satisfied it is appropriate to award indemnity costs and that the costs incurred were reasonable. While two counsel were involved for the Trust, given this is the first time the Trust has had to issue legal proceedings to enforce compliance with its covenants, I am satisfied this is something of a test case for it and it was entitled to have both its internal and external legal adviser involved. Additional disbursements were also necessarily incurred because counsel have had to travel from Wellington to the Court nearest the defendant’s property.
Orders
[54] I make the following orders:
19 Bowie v Weyburne HC Wellington [2013] NZHC 1728 at [45].
(a) the first defendant, Netherland Holdings Limited, and the second defendant, Mr Roelof Hendrik Wobben, are jointly and severally fined
$5,000 for contempt;
(b) ninety per cent of the fine is to be paid to the plaintiff, and 10 per cent to the Crown; and
(c) the first defendant, Netherland Holdings Limited, and the second defendant, Mr Roelof Hendrik Wobben are jointly and severally liable to pay the plaintiff ’s costs and disbursements for all steps taken in relation to the contempt proceedings on an indemnity basis.
Solicitors:
Duncan Cotterill, Christchurch
Gibson Sheat, Wellington
8