Thames-Coromandel District Council v Coromandel Heritage Protection Society Inc

[2009] NZCA 204

IN THE COURT OF APPEAL OF NEW ZEALAND

CA96/2008
[2009] NZCA 204

BETWEENTHAMES-COROMANDEL DISTRICT COUNCIL

Appellant

ANDCOROMANDEL HERITAGE PROTECTION SOCIETY INCORPORATED

First Respondent

ANDKEITH CLAPSON

Second Respondent

Hearing:26 March 2009

Court:Chambers, Randerson and Potter JJ

Counsel:N D Wright for Appellant

No appearance for Respondents

Judgment:22 May 2009 at 4 pm

JUDGMENT OF THE COURT

A        The appeal is allowed.

BThe order for costs made in the High Court is quashed.  In substitution therefor, the first respondent is ordered to pay the second respondent costs of $10,943.76.

C        No order for costs in this court.

REASONS OF THE COURT

(Given by Chambers J)

Costs on a failed resource consent challenge

[1]       In May 2006, Keith Clapson, the second respondent, applied to the Thames Coromandel District Council, the appellant, for consent to develop a property in Coromandel township.  The council investigated the application.  On 31 July that year, Tamil Dyer, a senior resource consent planner with the council, acting under delegated authority, granted a consent to the application. 

[2]       In September the following year, David Foreman, chairperson of the Coromandel Heritage Protection Society Inc, the first respondent, noticed that work was being undertaken on Mr Clapson’s property.  He then inspected the council file.  The society did not consider the consent should have been granted.  The society’s lawyer wrote to Mr Clapson and the council, requesting that work cease immediately and threatening legal proceedings if work continued.  The council tried to assuage the society’s concerns, but to no avail.  On 2 November, the society applied for judicial review of the council’s decision.  It also sought interim relief under s 8 of the Judicature Amendment Act 1972. 

[3]       The application for interim relief was put before Harrison J.  He made timetabling directions for the exchange of affidavits.  Once the society’s lawyer saw the council’s affidavits, he realised the society’s proceedings were misconceived.  Shortly thereafter, the society filed a notice of discontinuance. 

[4]       On 7 December, however, the society filed a memorandum seeking costs against the council and an indemnity from the council for any costs awarded in favour of Mr Clapson.  Mr Clapson also sought costs against the society.  The council did not seek costs, but filed a memorandum in response submitting that costs should lie where they fell. 

[5]       The costs applications were determined by Stevens J: Coromandel Heritage Protection Society Inc v Thames-Coromandel District Council HC HN CIV 2007-419-1649 11 February 2008.  He ordered the council to pay costs to the society on a scale 2B basis.  That came to $8,640.  His Honour also considered Mr Clapson was entitled to costs.  He thought the council should have to meet those costs as well.  On a 2B basis, they came to $10,943.76. 

[6]       The council has appealed.  Neither the society nor Mr Clapson appeared on the appeal.  Each supported the High Court decision.

Did the judge taken into account irrelevant matters when determining the council should pay costs?

[7]       There is only one issue on the appeal: did the judge take into account irrelevant matters when determining the council should pay costs to the society and Mr Clapson?

[8]       Stevens J accepted that the normal rule on a discontinuance, set out in r 476C of the old High Court Rules, is that the plaintiff must pay costs to the defendant “of and incidental to the proceedings up to and including the discontinuance”: at [14]. But he concluded that the normal rule should not apply for two reasons:

(a)“there were deficiencies in the contents of the council file” which led to the society being misled as to how the resource consent had come to be granted: at [19]; and

(b)the society’s lawyer had sent the council a draft of the statement of claim before it was filed, which had given the council an opportunity to point out to the society that some of the “key allegations” in the statement of claim were wrong, an opportunity they “regrettably” did not take: at [23]-[24].

[9]       Mr Wright, for the council, attacked both reasons.  We are satisfied both his submissions are sound.

[10]     The state of a council’s record-keeping is irrelevant to an award of costs.  Costs are intended to reflect how parties have acted during litigation, not before it.  This court made that clear in Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 at [160], where we quashed a High Court costs order which had purported to punish Paper Reclaim for its pre-proceeding conduct. This court’s decision was subsequently upheld by the Supreme Court: [2007] 3 NZLR 169 at [40]-[41]. The remedy for deficient record-keeping is not a costs order, just as the remedy in Paper Reclaim for alleged improper behaviour towards a co-contractor was not costs.

[11]     Mr Wright strongly disputed that, in any event, the council’s record-keeping had been deficient or in breach of s 35 of the Resource Management Act 1991.  While his argument in this regard seems to have considerable merit, we do not pronounce upon it.  This is because that issue was not properly before the High Court or us. 

[12]     We turn to Mr Wright’s second argument.  The council was under no obligation to respond to the society’s draft statement of claim.  In any event, the council had very little time in which to comment.  The council received the draft proceedings under cover of a fax on 31 October 2007.  That fax advised that the society’s lawyer hoped to file the proceedings that day.  In the end, the proceedings were not filed and served until 2 November, but that was still only two days later. 

[13]     For these reasons, we accept Mr Wright’s submission that there was no basis for the displacement of the normal presumption on a discontinuance that the plaintiff pays costs to the defendant.  The considerations which led the judge to the opposite viewpoint were irrelevant to the costs decision.  It is important to the costs regime and its predictability that costs as a remedy be restricted to its proper role: partially compensating the party “winning” a proceeding or a step in a proceeding for its legal costs in respect of that proceeding or that step in the proceeding.  Costs are not to be used for “punishing” a party for its conduct outside the proceeding. 

Result

[14]     We allow the appeal.  We quash the order for costs made in the High Court.  The council did not seek costs with respect to the High Court proceeding.  Mr Clapson is clearly entitled to costs.  We see no reason why the society should not pay them.  There does not appear to be any dispute about the amount he claimed: $10,943.76.  We order the society to pay those costs to him.

[15]     The council did not seek costs on this appeal.  That was for two reasons.  First, this appeal has never been about the money.  What concerned the council was were the implications of Stevens J’s decision so far as it future record-keeping and the record-keeping of other local authorities was concerned.  Secondly, the council is keen to maintain a close relationship with the society, which it regards as having an important conservation role to play in its district. 

Solicitors:
Brookfields, Auckland, for Appellant