Salis v Dunedin City Council

[2017] NZHC 2897

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2017-412-000023 [2017] NZHC 2897

BETWEEN

SERGIO SALIS AND

CHRISTOPHER ROBERTSON Appellants

AND

THE DUNEDIN CITY COUNCIL First Respondent

FILLEUL APARTMENTS JV LIMITED Second Respondent

Hearing:	(Determined on the papers)
Appearances:	L A Andersen for Appellants R J Brooking for First Respondent S M Chadwick for Second Respondent
Judgment:	23 November 2017

JUDGMENT OF GENDALL J AS TO COSTS

[1]      In a judgment I gave in this proceeding on 20 September 2017 I dismissed the appellants’ appeal against a decision which had been made in the Environment Court.  That decision upheld the granting by the Dunedin City Council of a resource consent to the second respondent to construct and use a non-complying apartment building on a property adjacent to the appellant’s property in central Dunedin.

[2]      In giving that judgment, at para [52] I reserved costs and indicated that if the parties were unable to agree upon that issue they could file memoranda.  This has now occurred.  Counsel have also indicated a decision on costs is to be made on the

basis of the papers filed.  I now give that decision.

SALIS v DUNEDIN CITY COUNCIL [2017] NZHC 2897 [23 November 2017]

[3]      At the outset, I note that Mr Andersen for the appellants confirms that the appellants accept that, as they were unsuccessful in this appeal, they are liable for costs to both the first and second respondents but that these should be calculated on the standard category 2B scale basis.  Mr Andersen went on to state that costs have been settled with the first respondent on this 2B basis.

[4]      The second respondent, however, is claiming a greater level of costs here either on an actual indemnity or an increased scale costs basis.   Whether this is appropriate is the principal issue to be addressed in this judgment.

[5]      To   put   matters   into   perspective,   the   second   respondent’s   costs   and disbursements, if calculated on a category 2B scale basis, are set out in Schedule A of its Costs Application filed 30 October 2017 at a figure of $10,786.93.  That Costs Application goes on to indicate that an award of indemnity costs here to cover the second respondent’s actual costs in this matter (as outlined in invoices attached as Schedule B) would total $27,430 plus disbursements of $418.93.

[6]      Lastly, in that Costs Application, counsel contends that if this Court is not minded to award the second respondent indemnity costs, then an award of increased category 2B scale costs, with a 50 per cent uplift, should be made.   This would amount to uplifted costs and disbursements claimed by the second respondent at

$16,180.40.

Increased costs and indemnity costs

[7]      Rule 14.6 of the High Court Rules describes the instances in which an award of increased costs or indemnity costs may be made.  It provides:

14.6     Increased costs and indemnity costs

(1)      Despite rules 14.2 to 14.5, the court may make an order—

(a)      increasing   costs   otherwise   payable   under   those   rules

(increased costs); or

(b)       that the costs payable are the actual costs, disbursements, and witness expenses reasonably incurred by a party (indemnity costs).

(2)       The court may make the order at any stage of a proceeding and in relation to any step in it.

(3)      The court may order a party to pay increased costs if—

(a)       the nature of the proceeding or the step in it is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or

(b)       the party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in it by—

(i)        failing to comply with these rules or with a direction of the court; or

(ii)      taking  or  pursuing  an  unnecessary  step  or  an argument that lacks merit; or

(iii)      failing,  without  reasonable  justification,  to  admit facts, evidence, documents, or accept a legal argument; or

(iv)      failing, without reasonable justification, to comply with an order for discovery, a notice for further particulars, a notice for interrogatories, or other similar requirement under these rules; or

(v)       failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule  14.10  or  some  other  offer  to settle  or dispose of the proceeding; or

(c)       the proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring it or participate in it in the interests of those affected; or

(d)       some other reason exists which justifies the court making an order for increased costs despite the principle that the determination  of  costs  should  be  predictable  and expeditious.

(4)      The court may order a party to pay indemnity costs if—

(a)       the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

(b)       the party has ignored or disobeyed an order or direction of the court or breached an undertaking given to the court or another party; or

(c)       costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the

party claiming costs has acted reasonably in the proceeding;

or

(d)       the person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to it; or

(e)       the party claiming costs is entitled to indemnity costs under a contract or deed; or

(f)       some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination  of  costs  should  be  predictable  and expeditious.

[8]      The party (here the second respondent) claiming increased or indemnity costs carries the onus of persuading this Court that their award is justified.1

[9]      As to indemnity costs, the situations provided for in r 14.6(4)(c), (d), and (e), which are not related to behaviour, do not apply here.  Apart from these, it is clear from r 14.6(4)(a) and (b) particularly that indemnity costs are considered to be exceptional and generally awarded only where a party has behaved either badly or very unreasonably, for example, by way of a breach of confidence or flagrant misconduct.2

[10]     As to increased costs, overall these may ordered where there is a failure by the paying party to act reasonably.3

[11]     Here, the second respondent contends that this appeal entirely lacked merit and  therefore  indemnity costs  or,  in  the alternative,  at  least  increased  costs  are warranted.  Lengthy submissions are advanced in support of this contention.

[12]     Complaints are also advanced by the second respondent on the basis that it contends there were discussions with informal offers made to the appellants to settle

matters throughout the process, without success.

1      Strachan v Denbigh Property Limited (HC) Palmerston North, CIV-2010-454-232, 3 June 2011 at [27].

2      Bradbury v Westpac Banking Corporation [2009] NZCA 234; Prebble v Huata [2005] NZSC 18.

3      Bradbury v Westpac Banking Corporation, above n 2.

[13]     In  addition,  broad  claims  are made by the second  respondent  which  are effectively allegations of misconduct on the part of the appellants.   These include suggestions that for no good reason the appellants simply set out to obfuscate and cause project delays here and particularly, that in all the circumstances it must be presumed  that  this  appeal  was  brought  with  an  ulterior  and  improper  personal motive, simply to obstruct the proposed development.   All this culminated in the suggestion that the appeal was brought improperly and was frivolous

[14]     I  do  not  intend  to  address  all  the  second  respondent’s  claims  in  detail. Significant factual disputes between the parties over what may have happened between them are outlined in their respective submissions.   Suffice to say that the submissions in response from counsel for the appellants, in my view, to an extent adequately address and respond to the claims made by the second respondent.

[15]     Although the appellants were unsuccessful in this appeal, I do not accept that in all the circumstances here, it could be said that the appeal was frivolous or entirely hopeless from the outset.  And, as to suggestions the appeal was brought with an improper motive, there is nothing definitive before me to substantiate this claim.

[16]     The appellants contend too that they acted properly in bringing this appeal and in accordance with their legal rights to see that justice in this case was properly met.

[17]     Overall, and at a general level, I agree.

[18]     I conclude therefore, but only by a reasonably fine margin, that the second respondent has been unable to satisfy the onus upon it of persuading me that an award of increased or indemnity costs is justified here.

[19]     The second respondent, as a successful party, is entitled to an award of costs on the usual category 2B scale basis.  As I note above, these costs, together with disbursements, set out at Schedule A of the second respondent’s Application for Costs total $10,786.93.  The quantum of these costs is generally uncontested by the appellants.   The appellants do suggest they should be entitled to an allowance or

reduction for their costs in having to respond to what is claimed to be “an unmeritorious application” by the second  respondent for indemnity or increased costs.  I reject this suggestion entirely.  The Costs Application was properly made in all the circumstances here and, as I have noted above, it is only by a fine margin that the costs I am about to award to the second respondent are to be limited to a category

2B scale amount.

[20]     An order is now made, therefore, that the appellants are to pay:

(a)      To the first respondent, their costs on this appeal calculated on a category 2B basis together with disbursements as fixed by the Registrar; and

(b)      To the second respondent, their costs calculated on a category 2B

basis  together  with  disbursements  totalling  in  all  the  sum  of

$10,786.93.

...................................................

Gendall J

Solicitors:

Leonard Andersen, Barrister, Dunedin

Anderson Lloyd, Dunedin

Webb Farry, Dunedin