Queenstown Community Strategic Assets Group Trustee Limited v Queenstown Lakes District Council HC Christchurch CIV 2010-425-000396

[2011] NZHC 231

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2010-425-000396

BETWEEN  QUEENSTOWN COMMUNITY STRATEGIC ASSETS GROUP TRUSTEE LIMITED

Plaintiff

ANDQUEENSTOWN LAKES DISTRICT COUNCIL

First Defendant

ANDQUEENSTOWN AIRPORT COPORATION LIMITED Second Defendant

ANDAUCKLAND INTERNATIONAL AIRPORT LIMITED

Third Defendant

Hearing:         17 March 2011

(Heard at Wellington)

Counsel:         F B Barton and A M Cunninghame for Queenstown Community

Strategic Assets Groups (Plaintiff) No appearance for First Defendant

T Weston QC and D Webb for Queenstown Airport (Second
Defendant)
S J Katz and S P Pope for Auckland International Airport Limited

(Third Defendant) Judgment:   21 March 2011

JUDGMENT OF FOGARTY J

[1]      By  consent  there  is  a  substitution  of  the  plaintiff  to  the  Queenstown

Community Strategic Assets Incorporated Society.

[2]      The second and third defendants apply for security for costs.

QUEENSTOWN COMMUNITY STRATEGIC ASSETS GROUP TRUSTEE LIMITED V QUEENSTOWN LAKES DISTRICT COUNCIL HC CHCH CIV 2010-425-000396 21 March 2011

[3]      These proceedings run in parallel with proceedings commenced by Air New

Zealand CIV 2010-425-000395.

[4]      The  statement  of  claim  in  these  proceedings  pursues  an  application  for judicial review on one of the grounds also being pursued by Air New Zealand.

[5]      The plaintiff is an incorporated society whose members include prominent and substantial Queenstown area businesses and business interests.  One of the initial members is John Martin.   He is the shareholder and sole director of the original plaintiff.    Other  initial  members  if  the  Society  are  Skyline  Enterprises  Limited (which runs a substantial restaurant above the Lake accessed by a gondola), Monaghan Holdings Limited, Jacks Point Land Limited and Hogans Gully Farming Limited, all of whom own substantial areas of land.  Jacks Point is the backer of a large residential and resource development at the foot of the Remarkables.

[6]      The application for security for costs relies on r 5.45 of the High Court Rules. The Judge must be satisfied that there is reason to believe the plaintiff will be unable to pay the costs if the plaintiff is unsuccessful in the plaintiff’s proceeding.

[7]      The application is opposed on the grounds that there is no evidence the plaintiff would be unable to pay the costs.  The rules contain a mechanism for a levy on the members to meet the Society’s liabilities.  I have no doubt as to the integrity of the original members of the Society.  As the name of the Society indicates, these members consider themselves pursuing broader community interests and by forming a society are inviting other members of the community to join.

[8]      Mr Webb arguing for the second defendant pointed out that there is no ability on a judgment creditor of the Society to force the Society to impose a levy.   His argument essentially was that an order for costs would be unenforceable.  This is a different test from that contained as the threshold test in r 5.45(1)(b).

[9]      I am not satisfied that there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if the plaintiff is unsuccessful.  The second defendant and the third defendant are seeking respectively $45,000 and $50,000 as

security for costs.  I have no doubt that the original members of the Society have the wherewithal to meet those payments.

[10]     Although I am not satisfied that the threshold in r 5.45(2) has been met, that does not end the matter.   I do not think that r 5.45(1)(b) had in contemplation a plaintiff able to pay costs, but unable to be pursued for costs, for want of assets. High Court Rules function for the normal run of litigation.

[11]     It is unusual, indeed no prior precedents were cited to me, where a public interest Society formed to pursue litigation has the backing of such substantial members.   All the cases cited before me, tracking back to the leading Court of Appeal cases of Ratepayers and Residents Action Association v Auckland City Council [1986] 1 NZLR 746, are of societies where there is real doubt as to their ability to pay costs.

[12]     Rule 1.6 provides that where there is no applicable rule the Court must make an order best calculated to promote r 1.2.     That rule includes promoting a just determination of the dispute.

[13]     I fall back on some basic principles. They are:

1.The duty of every Judge is to decide a case without fear or favour to any of the litigants.

2.The importance of access of all litigants to the High Court so that justice can be done.

3.The basic policy of the High Court Rules is that a successful litigant should recover costs calculated as being two-thirds of a rate adjusted periodically, being a base rate of fees per counsel and solicitors measured against the complexity of the litigation.

4.Contemporary judicial review policy reflects a relaxation of the locus standi principles, which used to be a barrier to pursuing applications for judicial review.  There is no doubt that Air New Zealand can argue

that it is a party affected by the acquisition.  (This is contested, but I am working on the presumption that Air New Zealand would not be spending some of its resources on this litigation if it did not consider the  pursuit  of  the  litigation  to  be  in  its  long  term  commercial interests.)

[14]     In  past  times  the  initial  members  of  the  plaintiff  could  have  considered inviting the Attorney-General to bring a relator action in the public interest.   The Attorney-General may have declined to do this, noting the presence of a well resourced litigant like Air New Zealand pursuing the same argument.

[15]     I also recognise that this plaintiff can resource itself readily by imposing a levy now on its members to fund the litigation.   I infer that in fact it is doing so. There is no suggestion that its solicitors and counsel arrayed before me are acting pro bono.  Applying rr 1.6 and 1.2, I think the plaintiff should provide security for costs.

[16]     Recognising the inevitable, Mr Barton shifted ground and argued that if there was to be an order for security for costs, it should be discounted because the plaintiff is acting in the public interest.  There would be room for discounting were I dealing with an impecunious organisation, bringing an argument that was seriously arguable before the Court in the public interest.   See the Court of Appeal in the Auckland Ratepayers case.  Such a policy can be illustrated by the recent decision of Clifford J in  the  Save  Happy  Valley  v  Minister  of  Conservation  &  Ors  HC  Wellington CIV 2006-485-001634 18 September 2006 case, where he refused to make any order of security for costs.  But where a public interest litigant is funded adequately, I see no reason why it should be favoured as a litigant by being given a discount against the standard obligations to pay costs.

[17]     No challenge was made to the calculation of costs on a 2B basis of $50,000 (second defendant), and $45,000 (third defendant) respectively.

[18]     Mr Barton’s last remaining point is that given the nature of his organisation it

was not in the position to immediately write a cheque to satisfy an order for security

for costs.  It was in a position to do so in the sum of approximately $50,000 but not as to approximately $100,000.

[19]     Accordingly, there is an order of security for costs in favour of QAC in the sum of $50,000 and AIL in the sum of $45,000.  The security is to be paid as to half to each litigant within five working days of this judgment and as to the balance one calendar month after that date.  Costs are reserved on this application.

Solicitors:

Anderson Lloyd, Dunedin, for Plaintiff

Lane Neave, Christchurch, for Second Defendant

Russell McVeagh, Auckland, for Third Defendant