SKP Incorporated v Auckland Council

[2019] NZHC 1665

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1876

[2019] NZHC 1665

UNDER

the Resource Management Act 1991 (the Act)

IN THE MATTER

AND

of a proposed appeal under s 299 of the Act

IN THE MATTER

of an application under s 306 of the Act

BETWEEN

SKP INCORPORATED

Appellant

AND

AUCKLAND COUNCIL

Respondent

AND

KENNEDY POINT BOATHARBOUR LIMITED

Consent Holder

Hearing:

On the papers

Appearances:

JDK Gardner-Hopkins for the Appellant M C Allan for the Respondent

MHL Morrison for the Consent Holder

Judgment:

17 July 2019

JUDGMENT OF GAULT J

(Costs)

This judgment was delivered by me on 17 July 2019 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

SKP INCORPORATED v AUCKLAND COUNCIL [2019] NZHC 1665 [17 July 2019]

[1]                 In my judgment of 24 April 2019 I granted an application by SKP Incorporated (SKP) to adduce further evidence but dismissed its application to extend time to appeal.1 I indicated that Kennedy Point Boatharbour Ltd (KPB) was entitled to costs, signalling that I was inclined to award costs on a 2B basis rather than indemnity costs as sought, but directed the filing of memoranda if costs could not be agreed.

[2]                 Although there was substantial agreement, costs were not agreed, and memoranda were filed. I now deal with costs.

Issues

[3]                 The parties are agreed that KPB should be awarded 2B costs in respect of SKP’s unsuccessful application to extend time to appeal and in respect of the appeal itself. The dispute is limited to the costs of SKP’s abandoned discovery application and costs on this costs dispute. KPB seeks increased costs of 50 per cent in respect of both these matters. KPB says that the discovery application was abandoned a week before it was scheduled to be heard and KPB was therefore successful in its opposition and is entitled to costs. It says that costs should be increased on the basis that it warned SKP early on that the application had no prospect of success and, if pursued, KPB would seek increased or indemnity costs. KPB also relies on its offer in correspondence prior to the filing of costs memoranda to accept scale costs. In relation to costs on costs, KPB also seeks a 50 per cent uplift on the basis that SKP had no proper basis for not agreeing to KPB’s costs offer and did not put up any reasonable counter-offer.

[4]                 SKP submits that the discovery application was withdrawn for pragmatic reasons, so it was not determined in SKP’s favour and it should not be inferred that it had no prospect of success. SKP submits that scale costs should be reduced by 50 per cent in the circumstances, including the public interest nature of the proceeding, SKP’s status and the issues raised. SKP also submits that costs on costs are unusual and here KPB’s memorandum was unnecessary as SKP merely needed an extension of time to confirm agreement with KPB’s proposal.

1      SKP Inc v Auckland Council [2019] NZHC 900 at [79].

Costs on abandoned discovery application

[5]                 Costs are at the discretion of the Court.2 One of the general principles applying to the determination of costs is that the party who fails with respect to a proceeding or an interlocutory application should pay costs to the party who succeeds.3 Also, costs on an opposed interlocutory application, unless there are special reasons to the contrary, must be fixed in accordance with the High Court Rules when the application is determined.4 In this context, “determined” includes where an application is brought to an end by a mechanism other than a Court decision, such as by agreement or withdrawal with leave.5

[6]                 Although r 15.23 concerning costs on the discontinuance of a proceeding does not apply to interlocutory applications,6 it may by analogy mean that an applicant who has abandoned an interlocutory application should pay costs where the Court does not know what the merits of the respective positions of the parties were and ought not to try to come to a view. Such an approach recognises the reality that, in the absence of some other explanation, a likely explanation for the applicant not proceeding is that it appreciated that it was unlikely that its application would prevail.7 However, there is a residual discretion not to fix an order for costs when an interlocutory application is determined where there are “special reasons to the contrary”.8 There may be special reasons when an interlocutory application is abandoned before hearing.

[7]                 Applying these principles, I consider that in the circumstances of this case KPB is entitled to costs for the steps taken opposing SKP’s discovery application, which was ultimately abandoned. However, I do not consider that increased costs are appropriate. Although KPB warned SKP it would seek increased or indemnity costs if the application was pursued and SKP abandoned the application at a late stage, SKP did at least abandon it a week before the hearing date and I accept it did so for

2      High Court Rules 2016, r 14.1(1).

3      Rule 14.2(1)(a).

4      Rule 14.8(1)(a).

5      Ip v Ip [2016] NZHC 528 at [11]–[14]; and Winton v Winton [2018] NZHC 486, (2018) 24 PRNZ

1 at [11], [16] and [17].

6      Rule 15.23.

7      MV Celebre Ltd v Airwork Flight Operations Ltd [2015] NZHC 1400 at [13].

8      Rule 14.8(1)(a) and Alarm New Zealand Ltd v 15 Hopetoun Ltd [2016] NZHC 2080 at [18].

pragmatic reasons. This was merely one aspect of a hard-fought dispute. Also, while KPB reasonably offered to accept scale costs, it compressed the time for SKP to respond and SKP did not unreasonably reject that offer – it merely was not able to confirm its position in the time set by KPB. My judgment directed that if costs could not be agreed, counsel were to file memoranda seeking costs within 10 working days (that is, by 13 May) and memoranda in response within a further five working days. KPB required a response to its costs offer by 6 May, which it extended for 24 hours until 7 May, and filed its memorandum seeking costs on 9 May even though SKP had indicated it expected to get instructions by 13 May, the date KPB’s memorandum seeking costs was due. Further, if the parties needed more time to agree costs rather than requiring the Court’s determination, an extension could have been sought. The Court does not encourage costs disputes – hence the reference in my judgment to memoranda if costs could not be agreed.

[8]                 On the other hand, I am not prepared to reduce scale costs for the discovery application as SKP submits except to reflect KPB’s claim in respect of its submissions which, though largely prepared, were not filed before the application was abandoned. I consider that a reduction of 25 per cent is appropriate for this step only. Otherwise, I consider scale costs are appropriate.

Costs on costs

[9]                 Costs on costs are unusual and the Court is reluctant to award them.9 In the circumstances, including where KPB’s offer was only open until 7 May, I am not prepared to extend the costs award to cover the filing of costs memoranda. As indicated, costs disputes are not encouraged.

Result

[10]              KPB is entitled to 2B costs in respect of the steps taken on the s 299 appeal, the s 306 application and the discovery application, except that the allocation for

9      Jeffreys v Morgenstern [2013] NZHC 1361 at [40]; and Barry Park Investments Ltd v Body Corporate Number 95388 [2016] NZHC 1527 at [25].

submissions on the discovery application is reduced by 25 per cent and the allocation for the costs memorandum is disallowed. KPB is entitled to disbursements as sought.

Gault J

Solicitors / Counsel:

Mr JDK Gardner-Hopkins, Barrister, Wellington

Mr T Greenwood (appellant’s instructing solicitor), Greenwood Law Ltd, Waiheke Island Mr M C Allan, Brookfields, Solicitors, Auckland

Mr MHL Morrison, Morrison Mallett, Solicitors, Auckland