Spackman v Queenstown Lakes District Council

[2007] NZCA 463

IN THE COURT OF APPEAL OF NEW ZEALAND

CA527/07
[2007] NZCA 463

BETWEENMICHAEL SPACKMAN

Appellant

ANDQUEENSTOWN LAKES DISTRICT COUNCIL

First Respondent

ANDRAYLENE JELLEY AND WILLIAM JELLEY

Second Respondent

Hearing:15 October 2007

Court:William Young  P, Robertson and Ellen France JJ

Counsel:C R Carruthers QC and C P Thomsen for Appellant

R S Cunliffe for First Respondent
F B Barton for Second Respondent

Judgment:24 October 2007 at 4 pm

JUDGMENT OF THE COURT

A        The application for a stay is dismissed.

BThe appellant is to pay each of the respondents costs of $1,000 and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by William Young P)

Introduction

[1]        In issue in this appeal is the approval by the Queenstown Lakes District Council of a subdivision proposed by Mr William and Mrs Raylene Jelley which would create four allotments on their property on Mt Barker Road, Wanaka.  The subdivision consent was challenged by the appellant, Mr Michael Spackman, who is an adjoining property owner.  His primary concerns in the High Court were as to lot 2 of the subdivision (which adjoins his property) and particularly the location of the building platform on that allotment.

[2]        In his substantive judgment of 4 April 2007 (HC DUN CIV 2006-412-000843), Fogarty J concluded that there had been procedural errors on the part of the Queenstown Lakes District Council in relation to the grant of subdivision consent.  The effect of his judgment was to permit the subdivision to proceed in relation to lots 3 and 4, but not in relation to lot 2.  He directed that the Council reconsider the application in relation to lot 2.

[3]        Mr Spackman has appealed to this Court, primarily against that part of the judgment which permits the subdivision of lots 3 and 4 to continue. He has, however, also sought to prevent Mr and Mrs Jelley and the Council proceeding with the reconsideration of the application as to lot 2. 

[4]        The primary issue for us is whether the orders made by the Judge should be stayed pending the hearing of the substantive appeal in this Court.

A stay is refused in the High Court

[5]        On 20 June 2007, Mr Spackman obtained a stay from Fogarty J of his substantive judgment.  This was against an undertaking as to damages given by Mr Spackman.  This stay, however, was on a limited basis and was to be reviewed on Wednesday 5 September 2007.  The review duly took place and in a judgment delivered on 14 September 2007, the Judge concluded that the stay should be set aside.

[6]        Mr Spackman has appealed against the Judge’s refusal to grant a stay.  This appeal was, of course, superfluous given this Court’s primary jurisdiction under r 12 of the Court of Appeal (Civil) Rules 2005 to grant a stay – a jurisdiction which has also been invoked by Mr Spackman.

The reasons given by the Judge for refusing a stay

[7]        The reasons given by Fogarty J to justify the refusal of a stay can be summarised briefly.  We note that the reasons overlap to some extent:

(a)Irrespective of the legal merits of the substantive appeal, Mr Spackman was going to have to live with a subdivision of the adjoining property.  The dynamics of the resource consent process would not allow him to dictate the form that the subdivision would take. 

(b)The Judge was extremely critical of the actions taken by Mr Spackman’s Wellington counsel (not Mr Carruthers QC).  He had, in the Judge’s view mind, engaged in gaming behaviour associated with an attempt to drag out resolution of the appeal.  This was in a context where Mr and Mrs Jelley had spent in excess of $250,000 on the subdivision and where, if there were further delays, they would be under considerable pressure to settle on terms favourable to Mr Spackman. 

(c)The Judge identified what he saw as major changes in the focus of the case.  At the substantive hearing, the focus was on lot 2 (and primarily on the building platform) and not lots 3 and 4.  When a stay was sought in June, it was on the basis of an argument which he considered was abandoned in September.  This was not only material to the Judge’s assessment of the merits of the appeal, but also to his conclusion that Mr Spackman and his advisers had engaged in gaming behaviour which he saw as an abuse of process.

(d)There had been major delays in the prosecution of the appeal.

The arguments for Mr Spackman in support of a stay

[8]        Mr Carruthers challenged the Judge’s conclusion that Mr Spackman and his advisers had engaged in gaming behaviour (an issue which we will discuss in detail later in this judgment).  He emphasised Mr Spackman’s undertaking as to damages.  He contended that if subdivision of lots 3 and 4 proceeds, this will adversely affect (or undermine) the appellant’s position as to proposed lot 2.  This is because it will irretrievably change the position on the ground to a point where the “new” lot 2 will almost inevitably be in broadly its originally proposed position, as will the building platform on it.  He said that once titles to lots 3 and 4 are created the situation may have gone past the point of no return and that will certainly be so if the new lots are sold to third parties.

[9]        There is one other point made by Mr Carruthers which we should note. After the substantive proceedings were commenced there were cross-undertakings between Mr Spackman and Mr and Mrs Jelley.  Mr and Mrs Jelley undertook not to proceed with the subdivision pending the resolution of the proceedings and Mr Spackman provided his first undertaking as to damages.  Mr Carruthers made something of the terms of the undertaking given by Mr and Mrs Jelley but we are satisfied that it was referable to the resolution of the proceedings in the High Court and could not fairly be considered as applying pending all possible appeals.

Discussion

The position as to lot 2

[10]      Not content with seeking a stay as to lots 3 and 4, Mr Spackman has also sought to prevent Mr and Mrs Jelley and the Council proceeding with a reconsideration of the application as to lot 2. 

[11]      When challenged on this aspect of the case, Mr Carruthers noted that the judgment had required the Council to reconsider the application in relation to lot 2, an aspect of the order in respect of which he maintained that a stay might be available.  But Mr Carruthers was unable to point to any conceivable entitlement on the part of Mr Spackman to prevent Mr and Mrs Jelley starting again in relation to lot 2. 

[12]      In those circumstances we can see no basis for a stay in relation to the reconsideration of the position as to lot 2.

Has Mr Spackman changed his position?

[13]     In a letter of 17 November 2006 from Mr Spackman’s South Island solicitors to the solicitors for Mr and Mrs Jelley, the following paragraph appeared:

Our client’s preference is not to inhibit your client dealing with Lots 3 and 4 of the subdivision, but instead to secure the status quo in respect of Lot 2, this being achieved by the building platform approved by the Council for Lot 2 being surrendered to allow the balance of the subdivision to proceed and titles to issue without delay.  Our client will provide an undertaking as to damages in respect of Lot 2 in that event.  Your client has the opportunity to apply again for an approved building platform on Lot 2 or seek a discretionary activity consent for a dwelling.  In fact, such an arrangement would be a complete solution to the High Court proceedings if it could be agreed that our client would be notified of a fresh application for a building platform on Lot 2.

[14]     This proposal presupposed the creation of lot 2 with the only reserved issue being the location on it of the building platform.  This proposal was not accepted by Mr and Mrs Jelley (unfortunately for them, as circumstances have turned out).  But it is of some contextual significance.

[15]     In his substantive judgment Fogarty J dealt with the position as to lots 3 and 4 by noting that as a “fall back position” Mr and Mrs Jelley had submitted that the consent should be quashed only as it relates to lot 2.  The Judge then went on:

[53]     … Counsel are of the opinion this would enable Lots 3 and 4 to obtain subdivision consent and that the second respondents could obtain from the first respondent the appropriate approvals under ss 223 and 224(c) [of the RMA 1991] and thus carry out the subdivisions of Lots 3 and 4.

…

[55]     The issue as to materiality of error reduces then to whether there has been a significant loss of an opportunity to argue for a different position and size of the building platform on Lot 2 as a s 94 consideration.

It appears that the “fall back position” was advanced for the first time in oral argument. There is no indication in the judgment that counsel for Mr Spackman resisted it and we would have thought that if there had been opposition, it would have been recorded by the Judge. The letter of 17 November 2006 (which had been written by counsel who appeared for Mr Spackman in the High Court) provides a context in which it is understandable that there may have been no such opposition. 

[16]     That said, we accept (and Mr Barton for Mr and Mrs Jelley did not challenge this) that once the substantive judgment was released Mr Spackman did resist the ancillary orders which were necessary to uphold the consent in as much as it related to lots 3 and 4.  Mr Barton likewise did not seek to maintain that there had been any subsequent change in position on the part of Mr Spackman.

[17]     In short, Mr Spackman was initially content to live with the creation of lots 3 and 4 and it is likely enough that in the High Court his counsel did not resist the “fall back position” advanced by Mr and Mrs Jelley which involved the severing of the consent as to lot 2.  But since the substantive judgment was issued, Mr Spackman has reconsidered his position as to lots 3 and 4 and has been consistent in his opposition to their creation. 

Has Mr Spackman been gaming the system?

[18]      Mr and Mrs Jelley are very exposed to delaying tactics.  Mr Jelley is 73 and Mrs Jelly is 61.  Their only source of income is superannuation.  They have, so far spent, as the Judge noted, $250,000 on the subdivision.  They have also incurred a further $50,000 in costs.  Their savings are now largely expended.  They wish to market lots 3 and 4 over the summer.  If they cannot do so, they maintain that they will be placed under financial pressure.

[19]      Mr Carruthers responded by noting that their son, a property developer, has been managing the subdivision of their property.  That is plainly so.  But there is no evidence to suggest Mr and Mrs Jelley and their son are joint venturers. Further, although the Mt Barker Road property is undoubtedly very valuable (and unencumbered) Mr and Mrs Jelley are vulnerable to pressure associated with any further delays in relation to the subdivision.  All this provides a context in which the Judge was understandably alert to the possibility that Mr Spackman might be gaming the system.

[20]      As noted, Mr Carruthers was critical of the Fogarty J’s conclusion that Mr Spackman (via his Wellington counsel) had acted in a gaming way. So it is appropriate, to identify the primary considerations which lead the Judge to reach the conclusion he did.

[21]      The Judge was primarily motivated to make his finding by events surrounding the appeal filed by Mr Spackman against what he claimed were “decisions” of 20 March 2007.  Mr Spackman had been seeking further discovery, an order setting aside claims to privilege and access to the site.  At the hearing on 20 March, the Judge did not make decisions adverse to Mr Spackman in relation to these applications, save in the sense that he did not deal with them finally.  Instead, he reserved leave to the parties to revert to the Court.  It appears that the issues raised by these applications were resolved (at least substantially) on an informal basis between the parties before the substantive hearing.

[22]      The substantive proceedings were heard on 28 March 2007 and the judgment was delivered on 4 April 2007.  Yet, on 19 April 2007 Mr Spackman appealed against interlocutory decisions said to have been made by the High Court on 20 March.  There are four odd features about this:

(a)The decisions imputed to the Judge in this notice of appeal were not made.  On the face of it, there was nothing to appeal against.

(b)If the decisions had been made on 20 March as alleged, the possibility of an appeal against them was overtaken by the hearing of the case on 28 March 2007 and delivery of judgment on 4 April 2007.  Any challenge to process might therefore be expected to be taken up in an appeal against the substantive decision.

(c)On 18 May 2007 Wellington counsel then acting for Mr Spackman (not Mr Carruthers) wrote to this Court suggesting that the interlocutory appeal be heard prior to Mr Spackman’s appeal in relation to the substantive judgment.  This was a very surprising proposition.

(d)In the same document, the following assertion appeared:

In the appellant’s view the additional evidence would have resulted in the second respondents’ resource consent being disallowed in its entirety.

The Judge construed this – we think perfectly reasonably – not just as counsel repeating what Mr Spackman may personally have thought but rather as a submission of counsel – and a thoroughly misleading one at that given the informal resolution of the applications.

[23]      The Judge was also critical of Mr Spackman’s Wellington counsel for not copying the material which he sent to this Court to the solicitors acting for Mr and Mrs Jelley.  We agree with the Judge that this was unfortunate. As well, the Judge was dissatisfied with the failure of Mr Spackman’s Wellington counsel and solicitors to refer in communications with this Court to the informal arrangements which were entered into on 20 March 2007 (despite the solicitors at least being aware of them).

[24]      Other features of the case relied on by the Judge were:

(a)The failure by the appellant to prepare a case on appeal, a state of affairs which still continues.

(b)The shifts in the focus of the arguments advanced by Mr Spackman (at least as perceived by the Judge).

[25]      The application before us is not an appeal against the decision of the Judge and we must approach the issue afresh. 

[26]      As noted, the Judge relied on what he saw as changes in focus in the way in which Mr Spackman’s case was presented.  As is apparent from what we have already said, Mr Spackman’s case has evolved but there is a real sense in which that evolution has occurred as the situation has developed.  We do not see anything sinister in this.

[27]      We have already noted that Mr and Mrs Jelley’s circumstances provide a context in which gaming behaviour involving the stringing out of the appeal might have advantages for Mr Spackman.  The reality is that there have been significant delays associated with the appeal because even now, more than six months after the substantive judgment was given, the case on appeal has not been prepared.  The consequence of this delay is that if a stay is allowed, Mr and Mrs Jelley will probably be delayed a further year in terms of their ability to market lots 3 and 4.  In that context, the quite extraordinary conduct over the 20 March “decisions” casts a serious shadow over the bona fides of the conduct of the appeal.  As well, in seeking to prevent, without any good cause, the Council reconsidering the application as to lot 2,  Mr Spackman, already in something of a hole, made the mistake of continuing to dig.

[28]      For all that, we are reluctant to decide the case on the basis that there was gaming behaviour.  The events in relation to the appeal against the “decisions” of 20 March have not made any actual difference to the course which events have taken. The conduct of Mr Spackman’s advisers associated with that appeal are susceptible to an explanation involving errors of judgment and perhaps a desire to preserve all possible arguments.  A similar comment could be made about the appeal against the refusal of a stay.  This appeal was unnecessary but perfectly explicable as being a belt and braces response to the situation in which Mr Spackman found himself.  In those circumstance we are not prepared to find that the conduct of Mr Spackman, through his legal advisors, was deliberately abusive.

Should a stay nonetheless be refused?

[29]      It is true that refusing a stay may affect the utility of Mr Spackman’s appeal.  Indeed, in all probability, if a stay is refused that appeal will indeed be rendered nugatory.  But given the impact on Mr and Mrs Jelley of granting a stay (which we will discuss shortly), we must assess realistically the significance of the loss of that appeal right. 

[30]      There is the reality that there will be a subdivision on the adjoining land.  The resource consent process will not allow Mr Spackman to dictate the nature of the subdivision.  It may well be that the creation of lots 3 and 4 will create facts on the ground which will affect the ultimate configuration of lot 2 and the building platform on it.  As to this the Judge noted in his judgment of 14 September 2007:

[7]       Mr Barton … has agreed responsibly that a consequence of judgment No. 1 is that the Council as consent authority is likely to approve a building platform on proposed Lot 2 very similar to the building platform as originally approved.  This is because that building platform is located as far back as possible in the Rural Lifestyle Zone on the boundary with the Rural General Zone on the front of a terrace, the land below the terrace falling steeply away.  The present building platform is 30 x 15 metres.  The issues facing the consent authority on the new application will be to what extent it is reasonable to reduce the length of the building platform to take its western boundary further away from the boundary to the second respondents’ property, the extent to which landscaping conditions can be imposed to provide for privacy, and maybe design constraints on the residence to be built on the platform.

[8]       Of course, if the applicant achieves his goal of obtaining by way of judicial review an order quashing the entirety of the subdivision consent, then it is in a stronger position, theoretically, to argue for a redesign of the whole subdivision.

It is important to remember that, as matters stand, Mr and Mrs Jelley have yet to obtain a valid consent to the creation of lot 2. As well, there is the reality that in November last year, Mr Spackman was perfectly prepared to agree to the creation of lots 3 and 4.  The carefully written solicitors’ letter of 17 November 2006 suggests that the consequences for Mr Spackman of the creation of lots 3 and 4 may not be as dire as he now asserts.

[31]      While preservation of the utility of Mr Spackman’s right of appeal is of significance, it is equally – and perhaps more – significant that Mr and Mrs Jelley not be deprived of the fruits of their judgment.  Mr Spackman’s undertaking as to damages is all very well but if delays associated with his appeal are such that Mr and Mrs Jelley are required to compromise with him on his terms to allow a subdivision to proceed, they will have been deprived of the fruits of the judgment. 

[32]      We assess the prejudice to Mr and Mrs Jelley of allowing a stay as equivalent to the prejudice to Mr Spackman if a stay is denied.

[33]      In this context, we see delay (and associated prejudice to Mr and Mrs Jelley) as the decisive consideration.

[34]      In a context where time is money, it was incumbent upon Mr Spackman to proceed promptly if he wished to hold up the subdivision while he appealed against the judgment.  It is perfectly clear that he has failed to do so.  Even now, the case on appeal has not been lodged.  We reject any suggestion that Mr Spackman had an entitlement to defer the lodging of a case on appeal until just before the expiry of the period of six months from the date of the filing of his appeal contemplated by the Court of Appeal (Civil Rules) 2005.

[35]      If Mr Spackman’s appeal had been prosecuted promptly and urgency sought it is at least likely that it would have been resolved in time to allow Mr and Mrs Jelley, if successful, to market lots 3 and 4 over the summer.  To grant a stay now would have the practical effect of preventing that and thus creating a situation where they may be forced to compromise with Mr Spackman on his terms if they are to free up any money.

[36]      Accordingly we are not prepared to grant a stay.

Disposition

[37]      We dismiss the application for leave for a stay.  We order Mr Spackman to pay costs of $1,000 together with usual disbursements to each of the respondents.

Solicitors:
Mike Garnham, Wellington, for Appellant
Macalister Todd Phillips, Queenstown, for First Respondent
Anderson Lloyd, Dunedin, for Second Respondent