Royal Forest and Bird Protection Society of New Zealand Incorporated v Northland Regional Council
[2019] NZHC 449
•15 March 2019
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV-2018-488-109
[2019] NZHC 449
UNDER Judicial Review Procedure Act 2016 IN THE MATTER
of an application to review decisions not to notify and to grant a resource consent for drainage and disturbance of a regionally significant wetland
BETWEEN
ROYAL FOREST AND BIRD PROTECTION SOCIETY OF NEW ZEALAND INCORPORATED
Applicant
AND
NORTHLAND REGIONAL COUNCIL
First Respondent
AND
RESIN AND WAX LIMITED
Second Respondent
On the papers Counsel:
S Gepp and P Anderson for Applicant
P Maw and S Campbell for First Respondent D Neutze and A Green for Second Respondent
Judgment:
15 March 2019
COSTS JUDGMENT OF TOOGOOD J
This judgment was delivered by me on 15 March 2019 at 11.00 am Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
ROYAL FOREST AND BIRD PROTECTION SOCIETY OF NEW ZEALAND INCORPORATED v NORTHLAND REGIONAL COUNCIL [2019] NZHC 449 [15 March 2019]
Introduction
[1] Resin and Wax Ltd (Resin & Wax) applied to the Northland Regional Council (the Council) for resource consents to mine kauri resin in the Kaimaumau-Motutangi wetland. According to a wide-ranging wetland ranking analysis undertaken by the Council in 2011, this is the second-most environmentally important wetland in Northland. The Council decided not to notify the application publicly and granted the consents in March 2018.
[2] On 4 October 2018, the Royal Forest and Bird Protection Society of New Zealand Inc (Forest & Bird or the Society) applied for judicial review, challenging the legality of two decisions made by the Council; namely:
(a)the decision not to notify Resin & Wax’s application for the resource consents; and
(b)the subsequent decision to grant the consents.
[3] On 12 November 2018, the Minister of Conservation filed a similar application for review of the Council’s decisions.
[4] On 21 November 2018, the Council filed a notice of appearance reserving rights in the proceeding,1 stating that it intended to abide by the decision of the Court. It conceded that it had applied the incorrect statutory test in respect of the notification decision.2 No statement of defence was filed by either respondent.
[5] On 3 December 2018, counsel for Resin & Wax informed Forest & Bird that it had surrendered the resource consents.
[6] On 10 December 2018, for reasons that I will come to, Forest & Bird discontinued the judicial review proceeding. It now seeks a costs contribution of
1 High Court Rules 2016, r 5.51.
2 The error conceded was not pleaded by Forest & Bird as a ground for its judicial review application.
$9,000 from the Council and a GST-inclusive sum of $10,049.98 for disbursements. The Council says the parties should meet their own costs.
Legal principles
[7] Costs are at the discretion of the Court.3 Generally, costs go to the successful party.4 However, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant unless the Court orders otherwise.5 That presumption may be displaced if there are circumstances which make it just and equitable to do so.6 The following points emerge from the combined effect of the relevant authorities:7
(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.
(b)Conduct prior to the commencement of the proceedings may be relevant.
(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.
3 High Court Rules, r 14.1.
4 Rule 14.2(1)(a).
5 Rule 15.23.
6 Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973 at [12].
7 See Kroma Colour Prints Ltd v Tridonicatco NZ Ltd at [12]; see also 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].
Relevant background
[8] Forest & Bird became aware of the Council’s consent decisions in April 2018. It wrote to the Council and requested information about Resin & Wax’s resource consent application.
[9] On 14 May 2018, having read this information, Forest & Bird wrote to the Council and Resin & Wax requesting Resin & Wax to surrender the resource consents and asking the Council to admit alleged errors in its decision. The Society said that, if the company and the Council did not comply with its requests, it would commence judicial review proceedings.
[10] Resin & Wax declined to surrender its consents, but it did offer to discuss with Forest & Bird protective ecological measures it could take in pursuing its project.
[11] Forest & Bird was not satisfied. On 25 May 2018, it wrote to the Council and Resin & Wax to say that it intended to proceed with the application for judicial review. The Council responded on the same day, disputing that its decisions about the resource consents were unlawful.
[12] At this point, the Department of Conservation (DOC) entered the fray. DOC facilitated discussions between technical experts representing each party in an unsuccessful attempt to reach a compromise. On 25 September 2018, Forest & Bird advised the Council and Resin & Wax that it intended to apply for judicial review. The application was filed on 4 October 2018 and it was served on the respondents, along with two expert affidavits, on 18 October 2018. The date for filing statements of defence was calculated as 23 November 2018.
[13] On 4 December 2018, after the Council had formally notified the Court and Resin & Wax that it admitted its error and would abide the Court’s decision, and Resin & Wax relinquished the consents, Forest & Bird wrote to the respondents:
(a)advising them that it was considering whether to proceed to summary judgment in respect of the pleaded causes of action or simply discontinue the proceeding; and
(b)seeking confirmation that the respondents would pay its costs and disbursements if it were to discontinue the proceeding.
[14] This proposal did not appeal to the Council. On 5 December 2018, it responded to Forest & Bird, saying that if the Society sought to keep the proceeding alive, the Council would apply for strike-out or make submissions on the propriety of relief. In such circumstances, it would seek indemnity costs. The Council also offered to contribute $1,500 to Forest & Bird’s costs if it were to discontinue the proceeding.
[15] Forest & Bird responded on 7 December 2018. It maintained that pursuing the proceeding would provide a useful declaration of the legal situation but said that, faced with the threat of indemnity costs, it had elected to discontinue. The $1,500 offer was rejected.
[16] On 12 December 2018, the Council increased the offer to $4,000. This offer was also rejected, in a letter dated 17 December 2018.
The parties’ positions as to costs
Forest & Bird
[17] The costs of $9,000 sought by Forest & Bird reflect the 90 hours its in-house counsel spent preparing the judicial review application, charged at a nominal rate of
$100 an hour.
[18] Forest & Bird says it was reasonable for it to bring the proceeding as it was the only option for the Society to overturn the resource consents. Had the proceeding not been brought, the Council would not have admitted to applying the incorrect statutory test and Resin & Wax would not have surrendered the resource consents. These developments, as well as the Council’s decision to abide by the Court’s decision, further confirm that it was reasonable to discontinue the proceeding. Forest & Bird concludes that, by issuing the proceeding, it achieved its primary objective of quashing the consents.
[19] In these circumstances, Forest & Bird says it is entitled to costs. Further, it submits the award should not be reduced because the Council elected to abide by the decision of the Court. The Council’s capitulation would have been relevant to reducing the award of costs only if the proceeding had progressed to a hearing; it did not affect any of the costs already expended.
The Council
[20] The Council’s position is that costs should lie where they fall. That is because Forest & Bird chose to discontinue the proceeding. Moreover, the Society cannot say that it succeeded: the Council elected to abide by the Court’s decision because of an error that was not relied upon in the Society’s pleading. In any case, the Council says, the proceeding had become moot after Resin & Wax surrendered the resource consents; the company’s decision was out of the Council’s hands. Further, even if Forest & Bird had proceeded with its application, it would not have succeeded because the challenges to the Council’s decision-making were merit-based.
[21] In the alternative, the Council seeks a reduction in the costs to be awarded to Forest & Bird, on the grounds that:
(a)the time claimed by Forest & Bird is excessive;
(b)the Council abided by the decision of the Court, which routinely results in reduced costs; and
(c)Forest & Bird contributed unnecessarily to time and costs.
The parties’ positions as to disbursements
[22] The Council also takes exception to the disbursements claimed by Forest & Bird. In particular, it says that part of Forest & Bird’s expert evidence (an affidavit deposed by Fleur Maseyk) was not reasonably necessary for the conduct of the proceeding. The Council says:
(a)The affidavit focussed heavily on the merits of the Council’s decision rather than the process by which it was breached and was overly detailed.
(b)The expert evidence was not before the Council when it was making its decision and so is not relevant.
(c)All the factual matters covered in the affidavit could have been dealt with in legal submissions.
[23] Forest & Bird defends the relevance of Ms Maseyk’s affidavit and says it was reasonably necessary for the conduct of the proceeding. Specifically, it says the affidavit:
(a)demonstrated that part of the site was a coastal environment such that DOC’s New Zealand Coastal Policy Statement applied;
(b)showed that the Council’s decision was not premised on an adequate factual basis;
(c)explained why the conditions of the consents were insufficient to ensure the site was remediated and threatened species were not affected; and
(d)distinguished between “outcome and process conditions” and “management plan requirements”, which was relevant to the pleaded error of law concerning unenforceable conditions.
Is Forest & Bird entitled to costs?
[24] I have concluded that Forest & Bird has displaced the r 15.23 presumption against an award of costs. Several factors justify that view:
(a)It was reasonable for Forest & Bird to issue the proceeding. The matters raised were of legitimate public importance. Further, the
Society notified the respondents of its intention to make an application for judicial review several times before it did so.
(b)There may be something to the Council’s point that Forest & Bird’s application was flawed to the extent that the challenges to the Council’s decision-making addressed the merits of the decision rather than the process. But I am not in a position to make an evaluation of how much of the Society’s case fell outside the legitimate grounds of challenging the Council’s decision to the extent that it was based on irrelevant considerations; or failed to take account of relevant factors; or was unreasonable in a Wednesbury sense.8
(c)The proceeding was discontinued because it became moot as a result of decisions made by the respondents after the proceeding was served on them. The decisions were principled and entirely proper, but they meant that the Society had achieved the outcome it sought.
(d)I cannot say that the outcome of the proceeding would have been obvious, such that it should bear on the matter of costs in either party’s favour.
[25] A similar situation arose in Godfrey v Westland District Council.9 In that case, the Pierces applied to the Westland District Council for resource consent to carry out a “home kill” operation on their property. The Council granted the application on a non-notified basis. The Pierces’ neighbours, the Godfreys, then became aware of this. They wrote letters to the Council and the Pierces setting out their opposition to the granting of resource consent and raising the spectre of a judicial review application. These letters fell on deaf ears. The Godfreys then initiated judicial review proceedings. By the time the matter came to Court, the Pierces had agreed to surrender their consent.
8 Associated Provincial Picture Houses v Wednesbury [1948] 1 KB 223.
9 Godfrey v Westland District Council HC Greymouth CIV-2009-418-180, 20 April 2010.
[26] Chisholm J held that the Godfreys had displaced the r 15.23 presumption for three reasons:
[18] First, the plaintiffs have succeeded in achieving the underlying purpose of the proceeding. They sought to have the consent set aside and the surrender effectively achieves that outcome… Given that they are effectively the successful party, the plaintiffs should receive the benefit of the general principle in r 14.2(a) that the party who fails should pay costs to the party who succeeds.
[19] Secondly, while it is well established that the Court should not speculate about the merits in this type of situation, this is a case where the merits are self-evident. In all the circumstances the decision to proceed on a non-notified basis was indefensible and presumably this reflects the defendants’ capitulation….
[20] Thirdly, it is apparent from the correspondence before the Court that the plaintiffs gave the defendants every opportunity to find a solution before the proceeding was issued. Given the attitude of both defendants they were left with no option other than to issue the proceeding.
[27] Forest & Bird also refers me to Gordon v Waitaki District Council.10 That case involved similar circumstances. The Waitaki District Council granted a non-notified variation to a resource consent held by the Smaills. It involved the use of a helicopter on the Smaills’ property. The Gordons took exception. They applied for judicial review. The proceeding was discontinued prior to the first case management conference after the Smaills surrendered the part of the resource consent subject to challenge.
[28] The dispute as to costs in that case centred on quantum, as opposed to liability. In fact, the Council acknowledged that the Gordons were entitled to costs. Mander J nevertheless made the following comments:
[10] In stark terms, the proceedings were discontinued because the Smaills were prepared to surrender the variation they had obtained in respect of the original resource consent. The Gordons achieved the result they were seeking in commencing the litigation. Neither the Smaills nor the Council, however, concede that the surrendering of the resource consent is necessarily to be interpreted as an acknowledgment of the merits of the Gordons’ challenge.
…
[16] It is not contested that the presumption has been displaced. The question is not whether there should be an order of costs in favour of the
10 Gordon v Waitaki District Council [2015] NZHC 1472.
Gordons, but rather the quantum of such award and the inclusion of disbursements claimed.
[17] Plainly, the surrender of the resource consent obtained in response to the proceeding has vindicated the Gordons’ application to review the Council’s decision.
[29]Similar considerations move me in this case:
(a)Resin & Wax surrendered the resource consents in response to the Council’s acknowledgement that it had made an error and its election to abide by the Court’s decision.
(b)Forest & Bird’s position was effectively vindicated; the consents were surrendered. While the Council’s decision was not based on the grounds pleaded by the Society, the Council reconsidered its earlier rejection of the Society’s informal challenges and acknowledged its error only after the judicial review proceeding was issued.
(c)The error identified by the Council was the application of the incorrect statutory test for notification. That is a fundamental error that is likely to have been identified in the course of the proceeding or during the hearing, making the Council’s resistance of Forest & Bird’s challenge ultimately untenable.
(d)The Council’s concession does not lead to the inevitable conclusion that the Society would have failed on its pleaded grounds. It was reasonable for Forest & Bird to issue the proceeding and the substantive aspects of its claim should by no means be seen as doomed from the outset as the Council suggests.
[30] In these circumstances, I consider it just and equitable to displace the r 15.23 presumption and award costs to Forest & Bird.
Should the award of costs be reduced?
[31] Forest & Bird is represented by in-house counsel. The Supreme Court held in McGuire v Secretary for Justice that parties represented by in-house counsel are entitled to costs.11 However, in such situations, the Court should bear in mind that scale costs should not exceed actual costs.12 Often, an organisation’s use of in-house counsel will result in increased cost-efficiency to the extent that scale costs do exceed actual costs.
[32] This is such a situation. Forest & Bird calculates it would be entitled to scale costs of $13,157 (being 5.9 days on a 2B basis). The Council says it would be $10,927 (being 4.9 days on a 2B basis). The discrepancy does not matter, because Forest & Bird calculates its actual costs are below both scale figures.
[33] The Council accepts the nominal rate of $100 per hour. However, it takes issue with a recovery based on the claimed 90 hours. It says this is excessive and objectively unreasonable. Instead, the Council says Forest & Bird’s costs award should be calculated using the amount of hours that otherwise would have applied to an award of scale costs. In this case, that is 39 hours, being 4.9 days at eight hours per day. Applying the nominal rate of $100 per hour, that would result in a costs award of
$3,920.
[34] The Council does not substantiate this approach by reference to caselaw. Forest & Bird informs me that it is not aware of any guidance as to how in-house counsel should calculate costs in circumstances where actual costs do not exceed scale costs. It does not appear that the Supreme Court addressed the matter in McGuire.
[35] However, the effect of McGuire was essentially to reverse the Court of Appeal’s decision in Joint Action Funding Ltd v Eichelbaum.13 The Court of Appeal held in that case that the High Court Rules should be construed as if the r 14.2(1)(f) restriction applied to limit costs to those “actually incurred” and concluded that this meant that an award of costs may not exceed the amount for which the successful party
11 McGuire v Secretary for Justice [2018] NZSC 116 at [88].
12 Rule 14.2(1)(f).
13 Joint Action Funding Ltd v Eichelbaum [2017] NZCA 249, [2018] 2 NZLR 70.
had actually been invoiced for legal services by a lawyer retained by the successful party.14 As the Supreme Court noted in McGuire, this would make the award of costs to parties represented by in-house lawyers “logically unstainable”.15
[36] Awards of costs to parties represented by in-house lawyers were permissible prior to the Supreme Court’s decision in Joint Action Funding.16 The prior cases shed light on the quandary faced by the parties as to the mode of calculating in-house counsel costs.
[37]In Bright v Auckland Council, Venning J said:17
[2] Counsel for the Council has filed a memorandum to confirm that costs on a 2B basis amount to $12,822.50 but that the Council’s lawyers charge-out rate applied to the estimated time spent preparing for the appeal of 40 hours results in sum of $7,080.00. That is the sum the Council seeks by way of costs award.
…
[4] The fact the Council was represented by in-house counsel does not prevent it from recovering its costs…
[5] While [Henderson Borough Council] was decided before the new costs regime, cases decided under the Part 14 of the High Court Rules apply the same principle.
[6] The sum of costs sought by the Council of $7,080.00 is approved. The Registrar may seal the costs order in that sum.
(Citations omitted)
[38] I am content to adopt the same approach, allocating costs on the basis of Forest & Bird’s lawyers’ charge-out rate. In its submissions, the Council doubts that Forest & Bird’s counsel spent 90 hours to prepare its application. It says this figure should be subject to scrutiny. While I accept that the Court must reach its own view that the costs were “reasonably incurred”,18 I refer to the following observations of Christiansen AJ in Norrie v Sutich:19
14 At [41] and [43].
15 At [85].
16 Henderson Borough Council v Auckland Regional Authority [1984] 1 NZLR 16 (CA) at 23.
17 Bright v Auckland Council [2016] NZHC 2117.
18 Edel Metals Group Ltd v Geier Ltd [2018] NZCA 494 at [62].
19 Norrie v Sutich [2015] NZHC 2913.
[12] A difficulty arises, however, when a party is not represented by independent counsel but rather represents itself, or appoints in-house counsel for this task... While in many cases in-house counsel will not be suitable representatives, in other cases, their services will be entirely adequate. These services also come at a cost and so the Courts have repeatedly accepted that an award of costs may be made to cover the expenses associated with in house counsel. Nor are companies required to provide detailed evidence of salaries and time cards in order to qualify. Just as Courts are willing to accept the assurances of counsel that scale costs do not exceed the costs actually billed, they are willing to accept that the cost of in-house counsel exceeds scale costs without evidence to support this conclusion.
(Citations omitted)
[39] I accept as apparently reasonable Forest & Bird’s estimation of 90 hours work and a rate of $100 an hour. GST is not a relevant consideration.
[40] I next address whether that figure should be reduced for any reason. The Council says it should be liable for only 20 per cent of the costs award because it chose to abide by the Court’s decision.
[41] It cannot be said that a party abiding the decision of the Court can never be liable for any costs; ultimately, the task of the Court is to make an assessment of overall justice as between the particular parties.20 Where a defendant abides the Court’s decision and does not adopt an unreasonable position, they will not necessarily be required to bear the full costs of court proceedings.21 On the other hand, an error or other conduct by a defendant, requiring a plaintiff to issue proceedings to vindicate the plaintiff’s rights will suffice to expose an abiding defendant to some liability for costs.22 The extent of contribution required will depend on the extent of the original error and the reasonableness of the defendant’s conduct thereafter.
[42] The issue with the Council’s submission in this regard is that the bulk of Forest & Bird’s costs were expended in preparing the application for judicial review. This application was filed before the Council chose to abide. The suggestion that the Council’s decision should result in an overall reduction in costs is therefore unsustainable. As for the costs incurred after the Council’s decision to abide, I gather
20 Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council HC Invercargill CIV- 2008-425-518, 19 May 2009 at [18].
21 Wang v District Court [2015] NZHC 1611, [2015] NZAR 1678 at [26].
22 Hong v Deliu [2016] NZCA 75, [2016] NZAR 667 at [26].
that these were minor. Wax & Resin surrendered its consents soon after this point, and after that all that occurred was some brief correspondence in which Forest & Bird floated and then withdrew the suggestion of pursuing a summary judgment application and the parties quibbled over costs.
[43] These interactions between the parties (and their associated costs – though few) were directly brought about by the Council’s decision to abide, which itself was premised on an error it had committed.
[44] The costs incurred by Forest & Bird after the Society was notified that Resin & Wax had surrendered its consents shall be reduced by 50 per cent.
What about the disbursements?
[45] A claimed disbursement must be specific to and reasonably necessary for the proceeding and reasonable in amount.23 Further, a disbursement may be disallowed or reduced if it is disproportionate in the circumstances.24 Expert witness fees are a disbursement.25 Such fees may be recoverable even if the Court finds it unnecessary to deal with the issue on which the evidence was called.26 What matters is whether they were necessarily incurred and reasonable.
[46] The Council takes issue with Ms Maseyk’s affidavit because it says it deals principally with the merits of its decision to grant the resource consents. It points to recent obiter dictum calling into question the utility of expert evidence in judicial review proceedings.27
[47] I have read Ms Maseyk’s affidavit and I accept that much of it covers various factual matters that did not necessarily require expert insight. However, the affidavit is principally directed to the proposition that the Council made its resource consent decisions based on inadequate information. In order to substantiate this view, Ms
23 Rule 14.12(2).
24 Rule 14.12(3).
25 Progressive Enterprises Ltd v North Shore City Council (2005) 17 PRNZ 919 (HC) at [22]-[26].
26 Beach Road Preservation Society Inc v Whangarei District Council (2001) 16 PRNZ 13 (HC) at [18].
27 Speargrass Holdings Ltd v Queenstown Lakes District Council [2018] NZHC 2760 at [36]; see also Walsh v Pharmaceutical Management Agency [2010] NZAR 101 (HC) at [29].
Maseyk sets out the information which was available to the Council and which it should have taken into account. It goes without saying that failure to take into account a relevant consideration is an established ground of judicial review. As pointed out by Ms Maseyk, the Resource Management Act 1991 requires all persons exercising functions under that Act to recognise and provide for the protection of areas of significant indigenous vegetation and habitats of indigenous fauna.28 Given the relative complexity of the ecological considerations that were at play, expert opinion on the matter would have aided the Court in assessing whether the Council had taken these matters into account sufficiently, had the application progressed to a hearing.
[48] I find that the costs associated with Ms Maseyk’s affidavit were necessarily incurred and reasonable.
Decision
[49] The Council shall pay a contribution to Forest & Bird’s costs for a total of 90 hours worked. Up to the date the Society was notified that Resin & Wax had surrendered its consents, the costs are to be calculated at a rate of $100 per hour. Any costs incurred after that date, for the balance making up a total of 90 hours, are to be calculated at $50 an hour.
[50]I approve recovery of all disbursements sought by Forest & Bird.
……………………………………….
Toogood J
28 Section 6(c).
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