Sustainable Otakiri Incorporated v Whakat�ne District Council

[2023] NZCA 32

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA49/2021
 [2023] NZCA 32

BETWEEN	SUSTAINABLE OTAKIRI INCORPORATED Applicant
AND	WHAKATĀNE DISTRICT COUNCIL First Respondent CRESWELL NZ LIMITED Second Respondent

Court:	Cooper P and Goddard J
Counsel:	D M Salmon KC, D A C Bullock and E J Mills for Applicant A M B Green for First Respondent S A Barker and A P Duncan for Second Respondent
Judgment: (On the papers)	24 February 2023 at 3.00 pm

JUDGMENT OF THE COURT

AThe application for a stay of enforcement of the costs awards made in this Court and in the Environment Court is granted.  The enforcement of those costs awards is stayed until the date on which Sustainable Otakiri Inc’s application for leave to appeal to the Supreme Court is determined.

BThere is no order as to costs.

____________________________________________________________________

REASONS OF THE COURT

(Given by Goddard J)

Introduction

1. On 2 December 2022 this Court dismissed four related appeals on questions of law under the Resource Management Act 1991, which arose out of a proposal by Creswell NZ Ltd (Creswell) to expand an existing spring water extraction and bottling operation near Ōtākiri in the Bay of Plenty.[1]  The applicant, Sustainable Otakiri Inc (Sustainable Otakiri), was the appellant in one of those appeals.  The respondents to Sustainable Otakiri’s appeal were the Whakatāne District Council (the Council) and Creswell.  An order was made requiring Sustainable Otakiri, the unsuccessful appellant, to pay costs on the appeal to the Council and to Creswell.  

   [1]Te Rūnanga o Ngāti Awa v Bay of Plenty Regional Council [2022] NZCA 598 [Court of Appeal judgment].

2. Orders for costs against Sustainable Otakiri in favour of Creswell were also made in the Environment Court and in the High Court.  Sustainable Otakiri has paid the High Court costs, but not the costs awarded in this Court or in the Environment Court.

3. Sustainable Otakiri seeks an order staying the enforcement of the costs orders made in this Court and in the Environment Court (the costs awards).[2]  It says that if enforcement of the costs awards are not stayed, Creswell will proceed with a liquidation application based on a statutory demand it has served for payment of the costs awards.  Sustainable Otakiri is not able to pay those costs, which total approximately $61,000.  It says that if it is liquidated, it will be deprived of its ability to proceed with its proposed appeal to the Supreme Court.

   [2]Court of Appeal judgment, above n 1, at [196]–[197]; and Te Rūnanga o Ngāti Awa v Bay of Plenty Regional Council [2019] NZEnvC 116 at [31] [Environment Court costs judgment].

4. The application for a stay is finely balanced.  But we have concluded that it is in the interests of justice for a stay to be granted by this Court for a short period while the Supreme Court considers Sustainable Otakiri’s application for leave to appeal.  If leave is declined, the stay will terminate and the costs orders will be enforceable.  There will be no material prejudice to Creswell from this brief delay.  If leave is granted, the Supreme Court can determine whether a further stay should be granted, and (if so) on what terms. 

5. Our reasons are set out briefly below.

The stay application

1. The stay application is made in reliance on r 30 of the Supreme Court Rules 2004.  Sustainable Otakiri submits that if a stay is not granted it is likely to be liquidated, as it is not able to pay the costs awards.  Its counsel are acting pro bono.  If it is liquidated, the proposed appeal to the Supreme Court will be rendered nugatory.  There is no realistic prospect that a liquidator would seek to proceed with the proposed appeal in circumstances where the cost of doing so would be significant, the financial benefit to Sustainable Otakiri if the appeal were to succeed would be confined to reversal of the costs awards, and the reversal of the costs awards would prejudice the creditor seeking liquidation.  It says that there are good prospects that the Supreme Court will grant leave, given the issues of public and general significance involved in the appeal including the interpretation of the relevant plan and the relevance of the water’s end use.

2. The application is opposed by both respondents on the grounds that:

   (a)Sustainable Otakiri’s appeal will not in fact be rendered nugatory unless a stay is granted.  A liquidator might decide to pursue the appeal in order to reverse the costs orders.  Even if that did not occur, the Supreme Court could substitute parties into the appeal, such as members of Sustainable Otakiri who were entitled to bring an appeal to the Environment Court on the consent decisions in issue.

   (b)Te Rūnanga o Ngāti Awa (Ngāti Awa), another appellant in the related appeals before this Court, also is seeking leave to appeal to the Supreme Court from this Court’s decision.  It seeks similar outcomes to Sustainable Otakiri.  Thus, even if enforcement of the costs awards made against Sustainable Otakiri renders it unable to proceed with its proposed appeal, the Supreme Court may be able to consider the issues it wishes to raise.

   (c)If a stay is granted, the respondents will suffer prejudice as they have been put to the cost of defending appeals before three courts but have only recouped costs awarded in the High Court.  Given Sustainable Otakiri’s evidence that it will struggle to raise further funds, the respondents should not have to face a further possible appeal without recovering the costs to which they are entitled.

   (d)Given the proposed appeal by Ngāti Awa, third parties would not be materially affected were a stay not to be granted. 

   (e)Sustainable Otakiri’s appeal is not of sufficient public importance, given it represents the interests of its members, whose focus is on the amenity value of their properties.

3. Rule 30(2) of the Supreme Court Rules provides:

   (2)Pending the determination of the application or the appeal, the court appealed from or the Supreme Court may, on application,—

   (a)order a stay of the proceeding in which the decision was given or a stay of the execution of the decision; or

   (b)grant any interim relief.

4. The principles that apply to stay applications under r 30 of the Supreme Court Rules are similar to the well-established principles that apply when a stay is sought under r 12 of the Court of Appeal (Civil) Rules 2005.  The Court considering such an application must balance the successful litigant’s rights to the fruits of a judgment and the need to preserve the parties’ original positions in case the appeal is successful.  Relevant factors include:[3]

   (a)whether the appeal may be rendered nugatory by the lack of a stay;

   (b)the bona fides of the applicant as to the prosecution of the appeal;

   (c)whether the successful party will be injuriously affected by the stay;

   (d)the effect on third parties;

   (e)the novelty and importance of the questions involved;

   (f)the public interest in the proceeding; and

   (g)the overall balance of convenience.

   [3]Kiwi Internet Marketing Ltd v Trent [2017] NZCA 174 at [7].

5. The likelihood of the Supreme Court granting leave to appeal may also be a relevant factor.[4] 

Analysis

[4]At [8].

1. We proceed on the basis that any stay that might be granted by this Court should not extend beyond the date on which the Supreme Court determines Sustainable Otakiri’s application for leave to appeal.  If leave is declined, the stay should terminate.  Conversely, if leave is granted the Supreme Court can consider whether to grant a further stay, and if so, on what terms.  That Court will be better placed to do so at that time, having regard to the factors that led it to grant leave.  Any stay granted by this Court is likely to be operative for a few months at most. 

2. We accept that it is likely that if a stay is not granted, Sustainable Otakiri’s proposed appeal is unlikely to proceed even if leave is granted.  A liquidator would be unlikely to proceed with the appeal in circumstances where that would be unlikely to produce a financial benefit for the entity in liquidation that would be commensurate with the costs of pursuing the appeal. 

3. Sustainable Otakiri’s proposed appeal relates to the resource consents granted by the Council.  The appeal by Ngāti Awa relates to the resource consents granted by the Bay of Plenty Regional Council, a respondent in the related appeals before this Court.  There is some overlap in the issues.  But there are issues raised by Sustainable Otakiri’s appeal that would not be addressed if it is not represented in any further appeal.  We do not accept the respondents’ submission that even if Sustainable Otakiri’s appeal is not pursued, the issues it wishes to raise could be considered by the Supreme Court in the context of the proposed appeal by Ngāti Awa. 

4. It is possible that the Supreme Court could, if it grants leave, make orders substituting members of Sustainable Otakiri as appellants.  But it would not be appropriate for us to speculate about whether the Supreme Court would make such an order.  Rather, it makes sense for the position to be preserved to enable that Court to decide whether to make any orders of that kind. 

5. We therefore accept Sustainable Otakiri’s submission that if a stay is not granted, there is a real prospect that its proposed appeal would be rendered nugatory. 

6. The fact that an appeal will be rendered nugatory is not determinative.[5]  But in the present case, a stay of the costs awards for a few months until the leave application is determined will not cause any material prejudice to the respondents.  If leave is declined, then Creswell will be able to proceed to liquidate Sustainable Otakiri and recover any funds that may be available for unsecured creditors, if it still wishes to do so.  The prejudice to the respondents will be confined to a short delay in obtaining any payment towards the costs awards that may be achievable through that course of action.  The respondents will be in the same position if leave is granted, unless the Supreme Court decides to grant a further stay.  In either scenario, the prejudice attributable to a short stay granted by this Court will not be material. 

   [5]Cousins v Heslop [2007] NZCA 377, (2007) 18 PRNZ 677 at [10].

7. The prejudice identified by the respondents in their opposition to a stay — failure to recover the costs awards in the courts below — is not prejudice attributable to a stay pending the Supreme Court’s leave decision.  The focus is on the incremental prejudice attributable to a stay: as explained above, that is confined to a short delay in taking enforcement action.  Given the financial position of Sustainable Otakiri, it may be questioned whether the respondents could expect any net financial benefit from seeking liquidation of that entity.  The prospect that liquidation will result in the costs awards being paid seems slender, even absent a stay. 

8. We considered the possibility of granting a stay on terms requiring security to be provided for the costs awards.  The difficulty is that this would not merely preserve the respondents’ position: it would improve their position, in circumstances where Sustainable Otakiri cannot itself pay the costs awards now.  That goes beyond what could reasonably be required as a condition of granting a brief stay of enforcement of the costs awards. 

9. In summary, the interests of justice favour the grant of a stay of enforcement of the costs awards made in this Court and in the Environment Court pending the Supreme Court’s leave decision. 

10. Sustainable Otakiri did not seek costs on its application for a stay.  We agree that it is appropriate for the costs of this application to lie where they fall, having regard to the nature of the application and the very limited relief obtained. 

Result

1. The application for a stay of enforcement of the costs awards made in this Court and in the Environment Court is granted.  The enforcement of those costs awards is stayed until the date on which Sustainable Otakiri Inc’s application for leave to appeal to the Supreme Court is determined.

2. There is no order as to costs.

Solicitors:
LeeSalmonLong, Auckland for Applicant

Brookfields Lawyers, Auckland for First Respondent

Buddle Findlay, Wellington for Second Respondent