The Beach Road Preservation Society Inc v Whangarei District Council HC Whangarei CP 27/00

[2001] NZHC 811

IN THE HIGH COURT OF NEW ZEALAND
WHANGAREI REGISTRY CP 27/00

IN THE MATTER of the Judicature Amendment Act 1972

BETWEEN THE BEACH ROAD PRESERVATION SOCIETY INC
First Applicant

AND T O ANDERSON
Second Applicant

AND P J ANDERSON
Third Applicant

AND WHANGAREI DISTRICT COUNCIL
First Respondent

AND J R WILKINSON
Second Respondent

Counsel: Roger Bowden for the Applicants
Graeme Mathias for the First Respondent
Roger Bell for the Second Respondent

Date of Judgment: 31 August 2001

JUDGMENT OF CHAMBERS J

Lawyers:
Lynch & Atkins Law Centre, PO Box 1250, Whangarei, for Applicants
Thomson Wilson, DX AP 24512, Whangarei, for First Respondent
Webb Ross Johnson, DX AP 24506, Whangarei, for Second Respondent

A dispute about costs

[1] On 1 November last year, I gave judgment for the applicants on an application for review they had brought against the Whangarei District Council and Bob Wilkinson. I set aside the resource consent issued by the council to Mr Wilkinson. I expressed the hope that the parties would be able to resolve any costs issues. Unfortunately, that did not prove possible.

[2] I have received written submissions from the parties on costs. I now see why the parties could not resolve costs issues. Each side adopted a position that was wrong in law. It is clear to me that the philosophy of the new costs regime introduced by the High Court Amendment Rules 1999 (SR 1999/334) is still not understood by many practitioners. In this judgment I hope to expose some of counsel’s misunderstandings. I do that not to be critical of counsel but so that other practitioners who read this judgment will not fall into similar error. One of the fundamental principles of the new costs regime is that, so far as possible, the determination of costs should be predictable and expeditious: see High Court Rules, r 47(g). The hope of the Rules Committee was and is that the principles should be sufficiently transparent that in most cases counsel should be able to predict likely costs and later agree appropriate costs without troubling the court or incurring additional expense for the parties.

My decision

[3] I shall set out first my decision. I shall then set out why I have rejected certain arguments advanced by counsel.

[4] I order the council and Mr Wilkinson to pay to the Beach Road Preservation Society Incorporated:

[a] Costs in the sum of $15,145 calculated as set forth in paragraph 5 of Mr Bowden’s memorandum dated 5 April 2001 (11.65 days x $1300);

[b] Disbursements in the sum of $1925.06 as set forth in paragraph 4 of Mr Bowden’s memorandum;

[c] Disbursements by way of expert witness fees calculated in accordance with the Witnesses and Interpreters Fees Regulations 1974 (SR 1974/124). I direct the registrar to resolve any dispute as to the calculation of the expert witnesses’ fees recovery.

[5] The liability of the respondents is joint and several: see r 50. If one of the respondents pays the costs in full, that respondent may recover half of the costs so paid from the other respondent.

[6] I record that there was no dispute in this case that the society should recover costs. There was also no dispute that this proceeding was a category 2 case. The primary dispute was as to the quantum of any costs order. There was also a dispute between the respondents as to which of them should have to pay.

Errors in the applicants’ approach

[7] Mr Bowden, for the applicants, set out a claim first on the basis that each step was categorised as band B and then on the basis that each step was categorised as band C. For the difference between these two bands, see r 48(b). Although Mr Bowden’s memorandum was somewhat vague as to exactly what he was claiming, presumably Mr Bowden was hoping that I would opt for a costs order on a blanket 2C basis. It made a substantial difference to the claim. On a 2B basis the claim worked out at $15,535, excluding disbursements. On a 2C basis the claim came to $28,275, excluding disbursements.

[8] I reject the claim on a blanket 2C basis for the following reasons. First, it will be a rare case where a court will order a blanket band C categorisation. The fact that such a claim was made demonstrates a lack of understanding as to the difference between a categorisation of the proceedings under r 48 and a determination of what is a reasonable time for a step in the proceedings under r 48B. Proceedings can be broadly categorised as 1, 2, or 3 under r 48. Determining what is a reasonable time under r 48B is, on the contrary, an exercise to be undertaken, not in a broad-brush way, but on a step by step basis.

[9] The second reason why I have rejected the blanket 2C approach flows from the first reason just given. Mr Bowden made no attempt to show why ‘a comparatively large amount of time [would be] considered reasonable’ for any step in this proceeding: see r 48B(2)(c). If a costs-claiming party wishes to argue that a particular step required not ‘a normal amount of time’ but rather ‘a comparatively large amount of time’, then that party must, in the absence of agreement from the party opposing costs, explain why the step did require ‘a comparatively large amount of time’. Mr Bowden provided no such explanation in this case. From my knowledge of the file, no step in respect of which costs are currently being claimed seems to me other than ‘normal’.

[10] Thirdly, Mr Bowden’s claim on a 2C basis would lead to an award of costs exceeding the costs actually incurred by the society. That clearly would be contrary to the principle set out in r 47(f). Mr Bowden recognised that. He seems to suggest that, if he could get costs on the higher basis, then he would be able to revise the hourly rate he had charged the society. He has apparently charged the society at a rate of $150 an hour, inclusive of GST. If he recast his costs at what he termed ‘the more usual rate of $200’ an hour, inclusive of GST, his fee would almost exactly equate with costs on a 2C basis. Such an argument is, with respect, a perversion of the costs process. He agreed an hourly rate with the society. The society is bound to pay him no more than the agreed rate. He cannot now increase that rate. If I were to order the respondents to pay the society on a 2C basis, the society would be fully entitled to pocket the lot. The society would not have to account to Mr Bowden with respect to the surplus. The society would end up with a windfall expressly precluded by r 47(f).

[11] Mr Bowden referred to the fact that during the course of the hearing two members of the society, Terrence Andersson and Peter Anderson, were joined as second and third applicants respectively. They were joined by consent to overcome a standing argument which Mr Bell had raised with respect to the society, which initially had been the sole applicant. Mr Bowden argued that the joinder of Messrs Andersson and Anderson ‘left them liable to costs’ and presumably, therefore, afforded them ‘the jurisdiction to pursue a claim for costs’. Of course, as parties, they may be called on to pay costs and they may claim costs. They can do the latter, however, only if they have incurred costs. In this case, they did not. The society has met Mr Bowden’s costs.

[12] Mr Bowden claimed the actual fees apparently charged by the three experts: Hester den Ouden, Peter Stanley, and Hawthorn Geddes. I have not been given their invoices. I have not been told how many hours’ work they did. I have not been told their hourly rates. The Third Schedule to the High Court Rules provides that witnesses’ fees are to be paid ‘in accordance with the Witnesses and Interpreters Fees Regulations 1974’. In the circumstances, I do not know whether or not these claims have been calculated in accordance with those regulations. I shall have to leave the registrar to resolve any dispute in terms of those regulations.

[13] There is power under reg 8(2) to increase the amounts payable under the regulations in circumstances where the court ‘considers that by reason of exceptional circumstances it is desirable to do so’. That is a power the courts frequently exercise but Mr Bowden has not asked me to exercise that discretion. Nor is there anything before me which would justify my exercising that discretion. I note that, under reg 2, the word ‘Court’ includes ‘the Registrar’ in circumstances where fees, allowances and expenses of a witness are to be fixed by the registrar. It will be open to Mr Bowden, if the parties cannot resolve the quantum of expert witness fees, to try to persuade the registrar to exercise the power conferred by reg 8(2). I mention that because, while I do not know the hourly rates these experts charged, I will be surprised if those rates do not exceed the scale rates. It is well known that the scale is out of date. Because this is a perennial problem, the Rules Committee is currently investigating whether there might not be a better system for reimbursing successful parties for expert witness expenses.

[14] I make one final observation on the topic of expert witness fees. Mr Stanley has apparently charged for his time in attending court. That cost cannot be passed on to the respondents given that they did not seek to cross-examine him on his affidavits. All that can be recovered from the respondents is his fee ‘for any analysis, preparation of maps, plans, or reports, or other work necessarily undertaken in preparation of evidence’, i.e. in Mr Stanley’s case, in the preparation of his affidavit evidence.

Errors in the respondents’ approach

[15] Mr Bell, for Mr Wilkinson, submitted that the society’s claim of 11.95 days should be cut back to 11 days. I have cut the claim back to 11.65 days. I cut out the claim in respect of preparation of the costs memorandum (0.3 days), not for the reason advanced by Mr Bell, namely that ‘costs are not awarded on costs applications’, but rather because of the errors in Mr Bowden’s approach. I am not proposing that anyone should receive costs for their work in arguing costs because all three parties adopted incorrect positions. I wish to make clear, however, that, contrary to Mr Bell’s argument, costs can be awarded on a costs argument. Costs will normally be awarded to the party whose submissions are upheld in accordance with normal principles on interlocutory applications: see r 48E.

[16] The principal ground advanced by Mr Bell for cutting back time spent was that Mr Bowden had not actually spent three days in ‘preparation and issue of proceedings’, three days being the allocated time for that step under band B. In this particular case, it is possible to see how much time Mr Bowden in fact spent on various matters because he appended (wrongly) his invoices to his submissions. Mr Bell’s reference to the time actually spent by Mr Bowden was wrong. It demonstrates a misunderstanding of the fundamental rationale of the new costs regime. The court is not interested in the actual time a particular counsel may have spent on a particular step. Some counsel are highly efficient. Others, perhaps through inexperience, take much longer to do the same work. The court is not interested in how long the particular counsel involved took, whether with respect to a particular step or with respect to the proceeding as a whole. The matter is to be looked at objectively. On an objective basis, I have no doubt that what was required to commence these proceedings was ‘a normal amount of time’ with the consequence that band B is appropriate. It would have been open to Mr Bell to argue that in this case ‘a comparatively small amount of time’ would have been required for getting these proceedings off the ground. Had such an argument been advanced, it would not have been accepted. But what Mr Bell cannot argue is that Mr Bowden took less time by reference to Mr Bowden’s time records. I have not analysed those time records because they are not relevant. Even if they do disclose that Mr Bowden took less than three days for ‘receiving instructions, researching facts and law, and preparing, filing, and serving statement of claim’, then good luck to Mr Bowden and his client. All that proves is that Mr Bowden was efficient.

[17] Mr Mathias made detailed submissions on Mr Bowden’s bills of costs, suggesting that various attendances recorded were ‘excessive or unnecessary’. That is irrelevant. Mr Bowden should never have appended his invoices. But Mr Mathias should never have referred to them. I do not know how many times the court needs to say in costs judgments that under the new costs regime we are not concerned with what time particular counsel actually spent or at what rate particular counsel actually charged: see the principle in r 47(e).

[18] Mr Bell, joined by Mr Mathias for the council, argued that the respondents should not have to pay for the society’s expert witnesses on the basis that their evidence proved irrelevant. I reject that submission. It may be true that on the basis upon which I decided this case, these experts’ evidence provided little assistance. It is often the case, with the benefit of hindsight, that parties appreciate that a particular witness was unnecessary. In this case, the society advanced its argument on a number of fronts. This expert evidence was relevant to some of the arguments advanced. The fact that I did not feel it necessary to determine all the arguments advanced should not deprive the society of costs in respect of these expert witnesses, whose testimony was obtained reasonably and in good faith.

[19] Mr Bell submitted that the council alone should have to meet any costs order. He made that submission on three bases. First, the error in granting the resource consent was the council’s error, not Mr Wilkinson’s. Secondly, the district plan I had to interpret was unclear and confusing. The responsibility for that lies with the council. Thirdly, there had been a ‘signal failure’ on the council’s part to allow Mr Wilkinson ‘to put his land to any worthwhile use for well over two decades of ownership’.

[20] Mr Mathias resisted Mr Bell’s argument. He said that, while I had found that the council had misinterpreted its district plan, ‘that was a misinterpretation which was put to it by [Mr Wilkinson] through [his] resource management consultant’. He also referred to the fact that it was Mr Wilkinson who had sought the Marina zoning for his land. The council went along with what he wanted. If the Marina zoning now caused him difficulties, that was his fault.

[21] With respect, both sets of submissions are off point. 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. The society brought a claim correctly identifying the council and Mr Wilkinson as respondents. On being served with the notice of proceeding and statement of claim, the council and Mr Wilkinson had an election: to defend the proceeding or not. Both chose to defend the proceeding. I concluded that the proceeding was well brought. The society is entitled to costs. 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.