Schmuck v Northland Regional Council
[2020] NZHC 1270
•9 June 2020
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV-2019-488-000075
[2020] NZHC 1270
UNDER the Resource Management Act 1991 IN THE MATTER
of an appeal under ss 299, 300 of the Act
BETWEEN
DOUGLAS CRAIG SCHMUCK
Appellant
AND
NORTHLAND REGIONAL COUNCIL
Respondent
OPUA COASTAL PRESERVATION INC
s 274 Interested Party
Hearing: On the papers Appearances:
A Galbraith QC and M Prendergast for the Appellant G Mathias for the Respondent
R Mark for the Opua Coastal Preservation Inc
Judgment:
9 June 2020
Reissued:
30 June 2020
JUDGMENT OF GORDON J
[As to costs]
This judgment was delivered by me on 9 June 2020 at 4.00 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors: Henderson Reeves, Whangarei
Thomson Wilson, Whangarei
Counsel:A Galbraith QC, Auckland R Mark, Kerikeri
SCHMUCK v NORTHLAND REGIONAL COUNCIL [2020] NZHC 1270 [9 June 2020]
[1]This is an application for costs by the appellant Douglas Schmuck.
[2] On 20 March 2020, I gave judgment in his favour on an appeal on questions of law against a decision of the Environment Court.1
[3] The Northland Regional Council (NRC) was represented at the hearing, having given notice of its intention to appear on the appeal.2 Opua Coastal Preservation Inc (OCP), which was represented in the Environment Court proceedings as a party under s 274 of the Resource Management Act 1991, also gave notice of intention to appear on the appeal and was represented by counsel.
Background
[4] Mr Schmuck had applied to the NRC for renewal of the discharge consents under which his boatyard at Walls Bay, Opua, operated. The boatyard operates partly on land owned by Mr Schmuck and partly on an adjacent Esplanade Reserve (Reserve). The NRC declined the application. Mr Schmuck appealed to the Environment Court.
[5] The Environment Court refused renewal of the discharge consents as they applied to the Reserve, effectively confining the operation of the boatyard under the discharge consents to the boatyard land.
[6] In the notice of appeal, a number of errors of law were alleged. Those pursued at the hearing were:
(a)Error of law arising from a breach of natural justice, argued in two parts:
(i)The Environment Court erred in law when, after the hearing and without hearing from the parties on the issue, it declined jurisdiction to consider the application for renewal, relative to
1 Schmuck v Northland Regional Council [2020] NZHC 590.
2 Resource Management Act 1991, s 301.
activities located on the Reserve, due to what was obviously a typographical error;
(ii)The Environment Court was wrong in law to conclude that it did not have jurisdiction to consider the renewal applications as they related to the Reserve.
(b)Error of law arising from a breach of natural justice when the Environment Court, after viewing the subject site following the hearing (which was understood would happen), developed its own discharge system without reference to the parties for comment and for expert witness review as to its feasibility.
[7] On the first aspect of the first ground, the NRC said that even if there was an error of law (and I record that counsel for the NRC did not seek to argue otherwise), it was not material. It was submitted that if Mr Schmuck failed on the other alleged errors of law, such that the decision given on the merits should stand, the appeal should be dismissed. OCP acknowledged there was a breach of natural justice but said that Mr Schmuck still received discharge consents for the land he owned. I rejected these submissions and found that the error was a substantive issue; it could not be described as a process issue.
[8] On the second aspect of the first ground, the NRC acknowledged there was an error by the NRC in the way in which it recorded the legal description of the Reserve in the discharge consents, and the references in the documentation were intended to be to the Reserve.
[9] On the second ground, the NRC acknowledged that the failure to seek feedback and comment from the parties on the proposed discharge system arguably affected the whole decision but did not concede the appeal.
[10] I found in favour of Mr Schmuck on the three errors of law. These were fundamental errors on which the appeal rested. I allowed the appeal and set aside the decision of the Environment Court.
Costs claimed
[11] Ms Prendergast, for Mr Schmuck, seeks costs on a 2B basis. In a joint memorandum of counsel for the three parties filed for a case management conference, it was agreed that the appeal should be categorised as 2B. There was no order made by the Court at the time but I accept that 2B is the appropriate category for costs.
[12] Mr Schmuck seeks scale costs of $21,032.00 and disbursements of $2,676.25, a total claim of $23,708.25.
Submissions
[13]Mr Schmuck seeks costs against both the NRC and OCP.
[14] For the NRC, Mr Mathias submits an award of costs against it would be inappropriate. He says that the grounds of appeal advanced at the hearing differed “markedly” from those in the notice of appeal; the second ground in relation to the site visit was only raised a few days prior to the hearing; and the grounds argued were directed at errors on the part of the Environment Court rather than the NRC. Mr Mathias submits the NRC was put to unnecessary cost because matters raised in the notice of appeal were not pursued at hearing. He says the NRC accepted the two grounds advanced at the hearing. The NRC should not be liable for costs arising from errors on the part of the Environment Court and costs should lie where they fall. It would be inappropriate to make an award of costs against the NRC where it was a public body discharging its statutory duties under the Resource Management Act.
[15] Mr Mark, for OCP, submits the organisation has a legitimate public interest in activities on the Reserve, especially as it is occupied in part by Mr Schmuck’s boatyard for commercial purposes. He says there is authority for a reduction in costs to reflect this public interest.3 He further submits that Mr Schmuck was unsuccessful on certain allegations in the notice of appeal and that the scope of the directions in my judgment
3 Citing Northland Environmental Protection Society Inc v Chief Executive of the Ministry of Primary Industries [2017] NZHC 2435.
were limited. He says the final outcome may not differ significantly from the one set aside. Finally, Mr Mark submits that the point on which Mr Schmuck succeeded was not one in which OCP made submissions in the Environment Court. He says costs should lie where they fall.
Costs – general principles
[16] Costs are at the discretion of the Court.4 The High Court Rules 2016 (the Rules) provide guidance as to how the discretion might be exercised.5
[17] The general principle is that the party who fails with respect to a proceeding should pay costs to the successful party.6 Ultimately, the overriding consideration when exercising the discretion to award costs is that any award ought to do justice between the parties.7
Should costs be refused or lie where they fall?
[18] Under r 14.7 the Court may refuse or reduce costs in various specified circumstances.
[19] Among circumstances that may be relevant to the award of costs in this case, r 14.7 provides:
14.7 Refusal of, or reduction in, costs
Despite rules 14.2 to 14.5, the court may refuse to make an order for costs or may reduce the costs otherwise payable under those rules if—
…
(d)although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or
(e)the proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding; or
4 High Court Rules 2016, r 14.1(1).
5 Rules 14.2–14.7.
6 Rule 14.2(1)(a).
7 Packing In Ltd (in liq) v Chilcott (2003) 16 PRNZ 869 (CA) at [5].
(f)the party claiming 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 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, or 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
(g)some other reason exists which justifies the court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.
Public interest
[20] I will address r 14.7(e) first, in relation to OCP’s submission that, due to its role acting in the public interest in this appeal, costs should lie where they fall or should be reduced.
[21] Mr Mark submits that the Supreme Court has previously found “some public interest aspect” to OCP’s opposition to an appeal dealing with Mr Schmuck’s efforts to obtain easements over the Reserve.8 This is correct. However, the Supreme Court went on to say that any public interest was limited and did not justify making an order that costs should lie where they fall. I see no reason to depart from this conclusion in this proceeding. The two situations appear the same or very similar. Mr Mark did not attempt to suggest otherwise.
[22] In addition to his submission that the public interest justifies refusing to award costs, Mr Mark says costs have been reduced to reflect public interest. He cites
8 Schmuck v Opua Coastal Preservation Inc [2019] NZSC 155 at [7]-[8].
Northland Environmental Protection Society Inc v Chief Executive of the Ministry of Primary Industries.9 That case concerned the judicial review of the approval scheme operated by the defendant which permitted exports of swamp kauri. Toogood J accepted there was “genuine public interest in the proper scrutiny by the Court of the exercise of statutory functions by public officials.”10 Proceedings brought on a reasonable basis might be unsuccessful and the Judge was concerned an award of costs should not act as a deterrent. However, he also acknowledged that public agencies should not unnecessarily be required to use resources to defend cases which have no merit or are conducted unreasonably. A balancing exercise was necessary. Toogood J concluded the plaintiff was liable for 25 per cent scale costs and reduced the sum under r 14.7(e).
[23] This was a generous reduction for an unsuccessful party. In Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust, Churchman J was prepared to reduce costs awarded against the unsuccessful plaintiff by a much more modest 10 per cent to reflect public interest.11 The Judge identified “a line of authority that in ‘public interest’ case[s], costs can be reduced”.12 He referred to Taylor v District Court at North Shore (No 2), in which it was held that the public interest exception to the normal rule that costs follow the event is available where a case concerns:13
. . . a matter of genuine public interest, [has] merit and [is] of general importance beyond the interests of the particular unsuccessful litigant. To obtain the benefit of the exception in rule 14.7([e]), the unsuccessful litigant must also have acted reasonably in the conduct of the proceeding.
[24] There can be no pecuniary profit for a successful plaintiff and the proceedings cannot be used as part of a “campaign” against a public body.14 Churchman J adopted
9 Above n 3.
10 At [7].
11 Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2017] NZHC 2665.
12 At [13].
13 Taylor v District Court at North Shore (No 2) HC Auckland CIV-2009-404-2350, 13 October 2010 at [9], affirmed by the Court of Appeal in New Zealand Climate Science Education Trust v National Institute of Water and Atmospheric Research Ltd [2013] NZCA 555 at [11].
14 New Zealand Climate Science Education Trust v National Institute of Water and Atmospheric Research Ltd, above n 13, at [14].
the approach of Wylie J in Coro Mainstreet (Inc) v Thames-Coromandel District Council that the proceedings cannot be brought for personal gain.15
[25] As in Coro Mainstreet, and as noted above, Churchman J concluded a reduced award of costs to the successful parties of 10 per cent was justified.16 The award in Coro Mainstreet was upheld by the Court of Appeal as an appropriate discount to reflect the public interest,17 as was Churchman J’s decision to give the same discount in Brook Valley.18
[26] However, it is important to note Churchman J did not apply the reduction to costs awarded to the first respondent (a community trust) but did for the second respondent (the Minister for the Environment) and third respondent (Nelson City Council).19 This was to reflect the public interest activities of the community trust – and Mr Schmuck cannot claim any similar public interest in these proceedings – but also draws a distinction between costs awarded against a private organisation and public agencies.20 Indeed, Churchman J’s express grounds for granting the reduction was that the plaintiff was “an incorporated society … pursuing the judicial review in order to ensure that public powers were exercised in a responsible and accountable manner”.21
[27] I return to OCP’s submissions on reduced costs. First, I am satisfied this was a matter of public interest. As Mr Mark notes, this was the Supreme Court’s conclusion in the closely related proceedings. Rather than rights of occupation or use, the matter before me concerned the ability to discharge (under discharge consents). For this reason, the circumstances are very similar to those in the other proceedings in that Mr Schmuck’s ability to undertake specific activities on public land are in issue.
15 Coro Mainstreet (Inc) v Thames-Coromandel District Council [2013] NZHC 1527 at [7].
16 The discount only applied to the substantive proceeding; on other steps taken by the plaintiff to seek a stay of the substantive decision pending appeal, the Judge refused a public interest discount.
17 Coro Mainstreet (Inc) v Thames-Coromandel District Council [2013] NZCA 665 at [12].
18 Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust [2018] NZCA 573 at [97].
19 Brook Valley Community Group Inc v Brook Waimarama Sanctuary Trust, above n 11, at [26]- [28].
20 At [24].
21 At [22].
I am also satisfied that OCP acted reasonably in its conduct in the proceeding in this Court.
[28] On this basis, the Supreme Court’s further conclusion in the related appeal that a “small allowance for the public interest aspect of the appeal” applies to this case. It did not specify the amount of that small allowance. In terms of the quantum of the allowance, in my view, the other authorities set out above are not a particularly helpful guide because they can be distinguished on a quite fundamental point. In those cases, the unsuccessful party was usually a public interest group in proceedings against a public agency.22 Churchman J recognised this distinction in Brook Valley, though the circumstances were different from those in this case.
[29] A reduction in costs is justified in such circumstances because, as Toogood J pointed out in Northland Environmental Protection Society, public interest groups should not be precluded from pursuing proceedings to hold such agencies accountable and to ensure they are operating within the scope of their statutory or other authority. The risk of an award of costs for proceedings which are reasonable but unsuccessful can act as a deterrent to such efforts, though this has to be balanced with the use of public resources to defend proceedings unnecessarily.
[30] These policy reasons fall away where the successful party in a proceeding is a private landowner. A public interest group was not looking to hold a public agency accountable for the discharge of its statutory powers. Moreover, any reduction in costs is effectively a loss to the successful party and offends a basic principle of the costs regime, that the successful party should receive costs.
[31] In my view, a “small allowance” must be small and I will reduce costs payable by OCP by five per cent. I consider this adequately takes into account the public interest in this case.
22 See also Action for Environment Inc v Wellington City Council [2012] NZHC 2615 and Gibbs v New Plymouth District Council (No 2) HC New Plymouth CIV-2004-443-115, 5 October 2006. I note that in the latter, Heath J was not prepared to reduce costs or award no costs on public interest grounds in an unsuccessful application for judicial review by an individual. He did, however, award reduced costs to another party, an organisation which supported the Council in the proceedings, because it played a more limited role at trial. These are not the circumstances here.
Other grounds for reducing or refusing costs
[32] As to r 14.7(d), Mr Schmuck has succeeded overall but did not pursue several points at the hearing of the appeal. He did not fail on them and the decision not to pursue them led to a considerably shorter hearing. I therefore consider (d) does not apply.
[33] I do not see that Mr Schmuck conducted the appeal to bring him within the scope of r 14.7(f).
[34] This leaves r 14.7(g), which is a catch-all provision. That paragraph provides that the Court may refuse to make an order for costs or may reduce costs if some other reason exists which justifies the Court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious.
[35] Two cases are of assistance here. In Beach Road Preservation Society v Whangarei District Council, Chambers J said:23
[21] On a costs application we are not concerned with how the original decision under attack came to be made. What we are concerned with is the litigation itself. … Both respondents must share responsibility for those costs because, and only because, each decided to defend the proceeding, wrongly, as it turned out. That is why they must pay costs to the society. It is irrelevant how the land came to be zoned as it was or how the resource consent decision came to be made. Parties pay costs because they have elected to bring or defend proceedings and have adopted a stance in those proceedings which a Court has found to be unjustified.
[36] More recently in Manukau Golf Club Inc v Shoye Venture Ltd, the Supreme Court said:24
[13] … In virtually every case where an appeal succeeds, the appellate court has formed the view that the Judge below went wrong in some way or other. For the purposes of costs in the appellate court, it does not matter why the Judge went wrong. The losing party on the appeal almost always has to pay costs to the winning party – and in that sense “pays for” the error (as found) of the judge below. That is the consequence of a respondent fighting to maintain its win and supporting the findings of the judge below. If the respondent accepts the judge below was wrong, then it should settle with the appellant or not seek to defend the appeal. In those circumstances, it would avoid liability for costs. Shoye did not adopt that stance in the Court of Appeal.
23 Beach Road Preservation Society v Whangarei District Council (2001) 16 PRNZ 13 (HC) at [21].
24 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305.
We have seen its submissions. It sought to uphold what the Judge had found in its favour.
[14] All that mattered so far as costs in the Court of Appeal were concerned was how the appeal was conducted. Since Shoye chose to seek to uphold the judgment in its favour but was unsuccessful, it became liable to costs in accordance with the fundamental principle of costs that “the party who fails with respect to an appeal should pay costs to the party who succeeds”. There was in this case no suggestion of any disentitling conduct on the part of the Club, justifying a refusal to award costs on the basis of r 53F.
(emphasis in original)
[37] My concern here is not to determine where fault lies in the decision of the Environment Court. Whether the Environment Court or the Council made the decision in issue is an irrelevant consideration. My concern is with the conduct of the parties in the appeal in this Court.
[38] Mr Schmuck challenged the Environment Court’s decision and the NRC and OCP both acknowledged the errors but submitted they were not determinative. They defended the Court’s ultimate decision. They are therefore liable for costs. If they had accepted that the errors vitiated the entire decision, then they could have adopted the approach identified by the Supreme Court in Manukau Golf Club and not opposed the appeal. They wrongly defended the Environment Court’s decision and must pay Mr Schmuck’s costs because he was the successful party.
How should costs be allocated between the NRC and OCP?
[39] The liability for costs of more than one party is set out in r 14.14. The default position is that liability is joint and several unless the Court directs otherwise. I see no reason to alter the liability of the unsuccessful parties.
[40] In consequence of my decision on the public interest question above, therefore, the NRC will be liable for 50 per cent of costs awarded. OCP will be liable for 45 per cent of costs awarded.
Quantum of costs and disbursements
[41] Mr Mathias submits the claim for second counsel and for preparation of an interlocutory application are not justified. I agree. The claim for second counsel is
disallowed. The appeal, as it was pursued at the hearing by senior counsel, Mr Galbraith QC, did not require the presence of second counsel. While Ms Prendergast represented Mr Schmuck in the Environment Court, her knowledge of the evidence was not required for the appeal in this Court having regard to the way it was ultimately conducted at the hearing.
[42] As to the preparation of the interlocutory application for a stay of the Environment Court decision, this was consented to. Costs were not claimed at the time, nor was an application made to reserve costs. There are no special reasons to the contrary, pursuant to r 14.8, that costs should not have been fixed (if they were to be sought) when the interlocutory application was determined. This claim is also disallowed.
[43] Three further points arise from the schedule of costs. First, the case management conference scheduled for 12 September 2019 was vacated by Brewer J and did not occur. Orders were made on the basis of a joint memorandum. There can be no claim for an appearance accordingly. Second, a joint memorandum dated 19 September 2019 is claimed for. There is no record of such a memorandum in the Court file. It is disallowed in consequence. Finally, Mr Schmuck claims appearances for a one-day hearing. The matter was originally set down for 1.5 hearing days but was completed within one day because of the reduced number of grounds argued. The hearing continued until the afternoon adjournment. Hearing time is measured in quarter days. Mr Schmuck is therefore entitled to costs for appearance at the hearing of 0.75 days.
[44]The quantum of costs allowed is $16,132.50.
[45] The disbursements claimed fall within the provisions of r 14.12. I allow the claim for $2,676.25.
[46]The total amount for costs and disbursements allowed is $18,808.75
Order for costs
[47] Adjusting the amount of costs for the public interest entitlement for OCP, I make orders that costs in favour of Mr Schmuck are to be paid:
(a)By NRC in the sum of $9,404.37; and
(b)By OCP in the sum of $8,463.94.
Gordon J
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