Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council
[2013] NZHC 2468
•20 September 2013
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2013-404-3034
[2013] NZHC 2468
UNDER the Resource Management Act 1991 BETWEEN
THURLOW CONSULTING ENGINEERS & SURVEYORS LTD
Appellant
AND
AUCKLAND COUNCIL
Respondent
| Hearing: | 17 September 2013 |
Counsel: | M E Casey QC for Appellant G C Lanning and W M Bangma for Respondent |
Judgment: | 20 September 2013 |
JUDGMENT OF HEATH J
This judgment was delivered by me on 20 September 2013 at 3.00pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Cooper Rapley, Palmerston North Simpson Grierson, Auckland Counsel:
M E Casey QC, Auckland
THURLOW CONSULTING ENGINEERS & SURVEYORS LTD v AUCKLAND COUNCIL [2013] NZHC
2468 [20 September 2013]
The appeal
[1] Thurlow Consulting Engineers & Surveyors Ltd (Thurlow) appeals against the amount of an order for costs made in its favour, in the Environment Court.1
[2] Following a successful appeal2 against a plan change to the North Shore District Plan, Thurlow applied to the Environment Court for costs. The Court ordered the Auckland Council (the Council)3 to pay costs of $30,000 to Thurlow.
[3] Thurlow seeks to increase that award. It contends that the Environment Court ought to have awarded indemnity costs of $269,566.28; this sum is a combination of costs rendered by lawyers and experts. As well as opposing Thurlow’s appeal, the Council cross-appeals, on the grounds that no order for costs ought to have been made.
Background
[4] By Plan Change 32, the Council sought to increase the development potential in two low-density residential areas, comprised within the Albany Structure Plan Area. To do that, it was necessary to reduce the minimum lot size. During the consultation period, it became clear to the Council that the roading network in the surrounding area was not adequate to fulfil the expected needs of the additional development. In its decision, the Council, considering the roading issue to be critical, introduced a rule designed to prevent development until appropriate roading was available. This was called the “trigger rule”.
[5] The intention of the trigger rule was to suspend permitted additional development until such time as a road had been built to accommodate anticipated traffic flows. To achieve that end, the Council had nominated a “preferred road” that crossed land owned by North Eastern Investments Ltd (NEIL). While NEIL’s land was outside of the Plan Change 32 area, it did not know, at the time the plan change
1 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97 (Judge Harland).
2 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 82 (Judge Harland, Commissioner Howie and Commissioner Oliver).
3 Although the Plan Change had been undertaken by the North Shore City Council, by the time of the appeal to the Environment Court the new Auckland Council had taken over its functions.
was proposed, that its interests would be affected. As Thurlow performs consultancy services for NEIL, the latter was able to use Thurlow’s challenge to the plan change as a means of advancing its own objections.
[6] The proposed road, known as the Medallion Drive Extension, was not designated under the Public Works Act 1981. Had such a designation been made, any successful challenge to it would likely be met with compensation and an award of indemnity costs.4
[7] The substantive appeal to the Environment Court was heard over three days, from 29 to 31 August 2011. By that time, NEIL had made three land use applications to progress its proposed developments. They were for developments involving intensive residential, mixed use commercial/residential and apartment towers with a construction value of about $100 million.
The substantive Environment Court decision
[8] Thurlow contended that the new rule, designed to increase the development potential in two low density residential areas in the Albany Structure Plan Area by reducing the minimum lot size, was “too uncertain and unenforceable”. The Court was asked to delete the additional subdivision rights. Because the Commissioners who heard submissions on the proposed change acknowledged existing roading limitations, they had included the “trigger rule”, to have the effect of delaying additional subdivision rights within the Fairview Avenue catchment area until the
Medallion Drive Extension had been completed.5 As an alternative to its primary
position, Thurlow sought deletion of the trigger rule itself.
[9] The Environment Court accepted submissions put to it about the lack of any integrated transport assessment available when the changes were first proposed. An assessment was only completed after submissions had been made on the proposed changes. The Court said:
4 Public Works Act 1981, s 76.
5 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 82, at para [7].
[9] We consider that the submitters’ criticisms of the Council’s preparation and processing of [Plan Change 32], and in particular the lack of an adequate assessment of transport issues prior to notification of the plan change are well founded. We agree with the submissions by [counsel for New Zealand Transport Agency and Thurlow respectively] that further information on traffic effects should have been available before [Plan Change 32] was notified. All parties may have benefitted from this information being available prior to notification. However in the circumstances the appropriate information was made available and was considered by all parties prior the Council hearing of submissions and decisions. It has been further considered in this hearing. Although this process was not ideal, we are satisfied that all parties have had a fair opportunity to consider the information and be heard on the matter.
[10] The Court considered that the status of the Medallion Drive Extension as a “preferred road” was “unclear and, at best, ... indicative” in nature.6 It also observed that all parties agreed that the proposed trigger rule was uncertain in its wording. By the end of the hearing, even the Council accepted that the rule needed to be “more precise and enforceable”.7 Notwithstanding that concession, counsel were unable to agree on the wording of a replacement rule. The Court did not consider it was appropriate for it to undertake that word-smithing task.8
[11] The Environment Court concluded by saying:
[37] The relevant objectives of the Plan, supported by the policies, are quite clear: any road upgrade required to mitigate the adverse effects of additional traffic volumes shall be completed prior to, or concurrent with, any additional development rights. In this case there is no dispute that the approximately 426 potential additional dwellings within the parts of Areas A and B in the Fairview Avenue catchment would create traffic volumes that need to be addressed through road upgrades. A trigger rule has not been able to be drafted to effectively address these adverse traffic effects and to assist the Council to carry out its functions. There are other methods available which the Council is now actively considering and we note Mr Reidy’s agreement, under cross-examination, that the Medallion Drive Extension should have been designated a long time ago.
[38] We find the trigger rule to be too uncertain and not the most appropriate method to implement the policies and achieve the objectives of the Plan.
[39] Given the consensus that additional lots in the Fairview Avenue catchment should not be released until appropriate road upgrading is in place, we consider that it is premature to provide for that additional subdivision potential until an appropriate and workable solution has been
6 Ibid, at para [31].
7 Ibid, at para [34].
8 Ibid, at para [36].
found. Accordingly we find that the minimum subdivision standards for the affected areas should remain at 1ha and 4,000m² for those parts of Areas A and B respectively (as shown shaded on the map at Appendix 17A/M to [Plan Change 32]) until the necessary road upgrading has been resolved. Given the current circumstances, we consider that such rules limiting the subdivision rights are the most appropriate methods.
[40] When the necessary road upgrading, be it the Medallion Drive Extension or some other option, has been resolved and progressed to an appropriate stage of certainty, then it will be open to the Council, or other parties, to initiate a further plan change to provide for smaller lot sizes in the Fairview Avenue catchment.
(Emphasis added; footnotes omitted)
The Environment Court decision on costs
[12] Thurlow sought costs. Following a hearing on 17 December 2012, the Environment Court gave its decision on that application, on 10 May 2013.9 While making it clear that its decision should be read in conjunction with the substantive determination of 3 May 2012, the Court provided a “brief overview of the case” to explain the context of its decision. Judge Harland said:
[2] ... Despite this being a case concerning an appeal against certain plan change provisions, the evidence comprised a significant amount of material that the significant amount of background material was provided by Thurlow who appeared to run the appeal on behalf of its client North Eastern Investments Limited (“NEIL”). NEIL owns land it wished to develop that abuts, but is not within, the land covered by [Plan Change 32], however the Council (initially with NEIL’s consent) sought to provide a roading solution to PC32 ("the Medallion Drive extension") over NEIL’s land. The Medallion Drive extension was indicated on the planning map in the District Plan as a “preferred road”, but it had never been designated and we noted in our decision that the status of the notation in the District Plan was unclear and at best could be described as indicative? By the time of the hearing discussions between the Council and NEIL had broken down to the extent that NEIL no longer was prepared to agree to the Medallion Drive extension being constructed on its land. We gained the impression that who should pay for the cost of the Medallion Drive extension was a key issue, with NEIL understandably not being prepared to completely fund a roading option that also had a significant public benefit and in circumstances where the Council could have chosen to take steps to designate the land, but had not done so. Although another roading option was possible (“the Fairview Road upgrade”), from a traffic engineering perspective this was not the preferred option. We heard a considerable amount of evidence about the merits of the two options from Thurlow, the Council and Auckland Transport.
9 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97.
[13] The Court was alive to the extent of its jurisdiction under s 285 of the Resource Management Act 1991 (the Act) to order costs. Section 285(1) confers a broad discretionary power:
285 Awarding costs
(1) The Environment Court may order any party to proceedings before it to pay to any other party the costs and expenses (including witness expenses) incurred by the other party that the Court considers reasonable.
....
[14] Reference was also made to the Environment Court Practice Note 2011 (the Practice Note). Among other things, it deals with the circumstances in which costs might be ordered, on various types of appeals. The opening words to the Practice Note state:
This is a guide to practice in the Environment Court. It will come into effect from 1 November 2011 and is intended to replace all earlier Practice Notes. It is not a set of inflexible rules, but is a guide to the practice of the Court and will be followed unless there is good reason to do otherwise.
[15] Clauses 4.5.2 and 4.5.3 of the Practice Note deal with appeals against a plan change:
4.5.2Where an appeal against a Proposed Plan, or a Plan Change under the First Schedule to [the Act] has proceeded to a hearing, costs will not normally be awarded to any party.
4.5.3If the decision appealed against would have imposed an unusual restriction upon the appellant’s rights, and the restriction is not upheld, costs may be awarded against the respondent. On other appeals, the Court will not normally award costs against the public body whose decision is the subject of the appeal.
[16] Judge Harland correctly recognised that the Practice Note provided guidance only and “should not override or act as a fetter to the statutory imperative contained in s 285”.10 She added that:11
[6] ... as a matter of general principle, costs against a Council (particularly on a plan change appeal) will, in the main, only be awarded where a Council has acted in breach of the duties or otherwise in some reprehensible manner.
10 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97 at paras [5] and [6].
11 Ibid, at para [6], citing Daly v Wellington City Council [2011] NZEnvC 244 at para [4].
[17] Judge Harland took the view that costs should be ordered. In determining that the circumstances justified an order, she said:
[13] In the main, the presentation of the case revolved around the wording of the trigger rule. Accordingly, despite Mr Lanning’s submission that the Council was largely successful in retaining [Plan Change 32], the reality is that the additional subdivision entitlement it enables is unable to be implemented until a workable road upgrading solution has been found. We agree that there was a significant amount of time taken up during the hearing with background matters relating to NEIL’s obvious and at times difficult negotiations with the Council, not all of which was relevant. We accept that some background was required, but not to the extent of that which was provided.
[14] Whilst the only planning evidence was called by the Council it did not satisfy us, as our finding records, that the trigger rule was appropriate.
[15] We agree that there were substantial process failures by the Council, which occurred during the preparation and processing of this plan change. The failure to undertake an Integrated Traffic Assessment prior to the promulgation of the plan change when obviously traffic issues would be of concern was a significant failure. This failure was rectified by the steps taken subsequently by the Council and as outlined above, full evidence was presented about the various transport solutions to the obvious problem that an increased subdivision enablement would create a transport problem.
[16] Equally clear during the hearing was that the preferred transport solution (the Medallion Drive extension) was not able to be achieved without a designation in the absence of NEIL’s consent. As NEIL did not consent to it, the need for a designation was an obvious option. The Council came to Court without any plans to designate NEIL's land. During the costs hearing it was revealed that funding will not be available before 2022. There is accordingly force to Thurlow’s submission that if the Medallion Drive extension was the preferred option, this transport solution was never going to be achieved during the life of the plan change. Why it continued to be advanced as an option that could be supported by the trigger rule is surprising in light of this.
[17] Whilst Thurlow continued to support amendments to the trigger rule during the hearing, this was its back-up position given that its primary submission was that its appeal in total ought to be allowed, with the result that the plan change could not proceed.
[18] We agree with Thurlow that as the Council's position at the hearing continued to support the trigger rule and the Medallion Drive extension as a preferred option, this imposed an unusual restriction on NEIL’s rights because the Council had taken no steps to legally secure the rights which would have enabled the Medallion Drive extension to succeed. Mr Reidy (the Council's planning witness) accepted that a designation process ought to have been put in train much earlier.
[19] Because of the above, it is appropriate for there to be a departure from the usual situation where costs are not awarded against a Council in plan
change appeals, and for an award of costs to be made in favour of Thurlow against the Council.
[18] The Judge then considered in what amount costs should be ordered. Thurlow had sought indemnity costs in the sum of $269,566.28. In deciding that costs of
$30,000 should be awarded, Judge Harland said:12
[22] Thurlow submitted that costs should be awarded on an indemnity basis, or alternatively higher than normal costs were justified in accordance with Bielby. Bielby outlines factors which are aggravating or adverse that might justify a higher than normal award of costs. These factors are:
(a)where arguments are advanced which are without substance;
(b)where the process of the Court is abused;
(c)where the case is poorly pleaded or presented, including conducting a case in such a manner as to unnecessarily lengthen the hearing;
(d)where it becomes apparent that a party has failed to explore the possibility of settlement where compromise could have been reasonably expected; or
(e)where a party takes a technical or unmeritorious point of defence.
[23] In this case, the parties all agreed that no further subdivision should be enabled until an appropriate roading solution was in place. They also agreed that the Medallion Drive extension was the preferred solution. The Council's preparation and processing of the plan change was inadequate. It failed to prepare an Integrated Transport Assessment to determine the extent of the transport issues prior to notification. It also failed to adequately identify and assess methods other than a trigger rule to achieve the objectives of the plan. The result of this was to continue to support an inappropriate method (a trigger rule) which in effect put an unusual restriction on NEIL’s land. The Council should have identified the alternatives sooner.
[24] Counter-balancing, in part, the Council's failures was the unnecessary length of the hearing due to the submissions and evidence presented for Thurlow on a wide range of matters not relevant to the appeal and the Court’s jurisdiction. These included details of the proposed development and resource consents for the NEIL land and matters relating generally to the funding of, and the Council’s responsibilities for, infrastructure, particularly roading.
[25] We are also mindful that a party is not ordered to pay costs as a penalty, but may be ordered to pay costs as compensation where that is reasonable
12 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97. The reference to Bielby is to Development Finance Corporation of New Zealand Ltd v Bielby [1991] 1 NZLR 587 (HC).
and just. The Court has formed the view that indemnity costs are not appropriate, and therefore the issue is what costs are reasonable.
[26] Thurlow’s costs seem high compared to the issues at stake and the length of the hearing. We have formed the view that in this case it is inappropriate to measure the award of costs we make against the actual costs that have been claimed. We take into account the findings we have made about the nature of the Council's failure, which we have found related to the failure to appreciate the need for a designation in circumstances where, what it proposed would have imposed an unusual restriction on the appellant’s rights. As against that, Thurlow on behalf of NEIL continued to negotiate with the Council. NEIL could have discontinued those negotiations earlier, and then matters might have proceeded in a different way. We have also found that Thurlow’s case was presented in the context of considerably more detail than was needed, and therefore the hearing was extended because of this. In all of these circumstances, our view is that a reasonable award of costs against the Council is $30,000.00.
Grounds of appeal and cross appeal
(a)Thurlow’s appeal
[19] Mr Casey QC, for Thurlow, submitted that while the Environment Court was right to hold that this was a case in which costs should be ordered in favour of Thurlow, there were errors in its approach that meant that its decision on quantum was flawed. Mr Casey submitted that, if I were to uphold that submission, the question of quantum should be remitted to the Environment Court for reconsideration.
[20] The points raised by Mr Casey are:
(a)The Environment Court failed to take adequate account of the factors identified in its decision to support an award of costs, when deciding on the amount to be awarded.
(b)The costs’ judgment does not explain, by reference to the facts and circumstances on which the decision to award costs was based, how the amount of costs was fixed.
(c)The decision fails to address, in any reasoned or principled way, how the amount ordered ($30,000) was assessed, having regard to the actual costs incurred of $269,566.28.
(d)The judgment fails to explain, or provide a principled basis for, the Court’s implicit view that it was inappropriate to measure any award of costs against those actually incurred.
(e)The Court failed to explain why the hearing was extended because of the presentation by Thurlow of evidence that the Court considered excessive; nor did the costs judgment address the consequences of that finding.
(f)The Court failed to take account of the distinction between the claimed expert witness fees and legal costs.13
(g)The Court erred in failing to take account of the fact that, had the counsel proceeded on the basis that the road had been designated, costs could have been recovered in full, under s 76 of the Public Works Act 1981.14
(b)The Council’s position
[21] On its cross-appeal, the Council contends that there was no legitimate basis on which the Environment Court could have reached the conclusion that this was a case in which costs should be ordered. Mr Lanning, for the Council, submits that the Environment Court was wrong to conclude that the trigger rule imposed an “unusual restriction” on NEIL’s rights. The phrase “an unusual restriction” is a reference to
the type of situation in which costs might be awarded on an appeal against a plan change.15 Mr Lanning also contended that there was no “blameworthy” conduct, on the part of the Council, that could justify an order for costs.
[22] Mr Lanning also contended that the Environment Court had erred in its approach to fixing quantum. The submissions advanced were also relevant to
13 In civil proceedings in this Court, the costs incurred by expert witnesses are usually treated as a disbursement and are generally recoverable in full: Air New Zealand Ltd v Commerce Commission [2007] 2 NZLR 494 (CA).
14 The principle that, where a subject is defending itself against loss of property rights at the hands of the Sovereign or for the benefit of the community, costs considerations favour the subject was, advanced in aid of this submission. See Waitakere City Council v Brunel HC Auckland CIV-2006-404-4504, 5 September 2008 (Baragwanath J).
15 Environment Court Practice Note 2011 cl 4.5.3, set out at para [15] above.
whether there should have been an order for costs, in any event. In particular, Mr Lanning submitted that:
(a)The Court had erred in taking into account decisions relating to the funding of the Medallion Drive Extension, particularly decisions made after the hearing of the Plan Change appeals and the issue of a decision on them.
(b)If the Court were entitled to take account of funding considerations generally, it nevertheless erred in taking into account the fact that funding could have been changed in the future and that a notice of requirement for the Medallion Drive Extension had been lodged by the time of the costs hearing.
(c)The Environment Court erred in failing to take into account details of invoices supporting the claim for costs. This submission is directed to the Court’s conclusion that there was no evidential basis for challenge.16 The Court should have looked, it is contended, at whether the costs and witnesses expenses were referable to the appeal in respect of which costs were sought.
(c)Is there a question of law?
[23] An appeal may only be brought to this Court, from a decision made by the Environment Court, on a question of law. Section 299(1) of the Act provides:
299 Appeal to High Court on question of law
(1) A party to a proceeding before the Environment Court under this Act or any other enactment may appeal on a question of law to the High Court against any decision, report, or recommendation of the Environment Court made in the proceeding.
...
16 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97 at para [21], set out at para [47] below.
[24] The first question is whether any of the points raised by Thurlow or the Council qualify as questions of law. The nature of such a question was considered by the Supreme Court in Bryson v Three Foot Six Ltd,17 in the context of an analogous provision in the Employment Relations Act 2000.18
[25] Delivering the judgment of the Supreme Court in Bryson, Blanchard J observed:
(a)An appeal cannot be regarded as being brought on a question of law where the fact-finding Court has merely applied law which it has correctly understood to the facts of an individual case. Provided that the Court has not overlooked any relevant matter, or taken account of some matter which is irrelevant to the proper application of the law, the conclusion is a matter for the fact-finding Court, unless clearly
unsupportable.19
(b)The ultimate conclusion of a fact-finding body can sometimes be so unsupportable, or so clearly untenable, as to amount to an error of law. That will occur when proper application of the law requires a different answer. Such cases will arise rarely; for example, cases “in which there is no evidence to support the determination”, “one in which the evidence is inconsistent with and contradictory of the determination” or “one in which the true and only reasonable conclusion contradicts
the determination”.20
(c)It does not matter whether an appellate Court would have reached a different conclusion on the evidence. The issue is whether the decision under appeal was a permissible option.21
17 Bryson v Three Foot Six Ltd [2005] 3 NZLR 721 (SC).
18 Employment Relations Act 2000, s 214.
19 Bryson v Three Foot Six Ltd [2005] 3 NZLR 721 (SC) at para [25].
20 Ibid, at para [26], citing with approval from Lord Radcliffe in Edwards v Bairstow [1956] AC 14 (HL) at 36. Lord Radcliffe’s observation were, themselves, based on those of Lord President (Normand) and Lord Cooper, in Inland Revenue v Fraser [1942] SC 493 at 397 and Inland Revenue Commissioners v Toll Property Co Ltd [1952] SC 387 at 393, respectively.
21 Ibid, at para [27], adopting what was said by Lord Donaldson MR in Piggott Brothers & Co Ltd v Jackson [1992] ICR 85 (CA) at 92.
(d)An error concerning a particular fact which is only one element in an overall factual finding cannot be said to give rise to a finding of “no evidence” where there is support for the overall finding in other portions of the evidence. It could, however, lead or contribute to an outcome that is unsupportable.22
[26] Those observations must be applied having regard to the nature of an appeal against a decision on costs. Such decisions have always been regarded as “quintessentially discretionary”.23 In such circumstances, an appellate Court may only intervene if it can be shown that the Court from which the appeal is being brought took into account irrelevant factors, failed to take account of relevant factors, made an error of principle, or was plainly wrong.24
[27] On the Council’s challenge to the threshold question, I do not discern that any error of law exists. There may or may not be merit in Mr Lanning’s submission that the finding of the Environment Court that the trigger rule “imposed an unusual restriction on NEIL’s rights” was not available.25 Although the reference to “an unusual restriction” comes directly from the Practice Note,26 that document is not a
statute. Nor must it be applied, as if it were. The Environment Court is a specialist tribunal and is best placed to determine whether a rule of the type in issue did or did not impose “an unusual restriction” on NEIL’s rights. I regard that finding as one of fact against which an appeal on a question of law does not lie.
[28] The submission that the Council’s approach was not “blameworthy” faces the same difficulty. The implicit finding of fact was based on the evidence before the Environment Court, in an area within its area of expertise.27 Like the “unusual
22 Ibid, at para [28].
23 Commerce Commission v Southern Cross Medical Care Society [2004] 1 NZLR 491 (CA) at para [12]. See also R v Reid [2008] 1 NZLR 575 (SC) at para [23] in relation to an award under
s 7 of the Costs in Criminal Cases Act 1967. Anderson J, for the Supreme Court said that “an appellate court cannot hope to capture the ephemeral but significant impressions which inform the assessments and discretions of the trial judge. That is why, of course, a challenge to the exercise of discretion must demonstrate what would be termed, generally, an error of principle”.
24 May v May (1982) 1 NZFLR 165 (CA).
25 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97 at para [18], set out at para [17] above.
26 Environment Court Practice Note 2011, cl 4.5.3, set out at para [15] above.
27 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97 at para [18], set out at para [17] above.
restriction” finding, these particular aspects of the costs decision may be said to have been “influenced by a myriad of details that are difficult to replicate on appeal”.28
[29] A number of the factors raised by both Thurlow and the Council in challenging the discretionary decision on quantum are no more than factors of which the Environment Court was entitled to take into account in reaching its decision. It is not for this Court, on appeal, to second guess the weight that may have been given to such factors when the Court reached its ultimate decision.29 That decision had to
represent an overall judgment, based on relevant considerations.30
[30] There are, however, three points which I consider are questions of law, for the purposes of s 299 of the Act. They are:
(a)Whether the Environment Court gave sufficient reasons for its decision on the amount to be ordered as costs. This point is directly related to observations made by the late Chambers J, when giving the Supreme Court’s judgment in Manukau Golf Club Inc v Shoye Venture Ltd.31
(b)Whether the Environment Court erred in its approach to assessment of the costs and witness expenses claimed. This point relates to the question whether a more critical approach should have been taken by the Environment Court to assessing whether all costs claimed were sufficiently referable to the appeal.
(c)Whether the Environment Court took into account an irrelevant consideration; namely, the funding position as disclosed to it at the time that the costs application was heard.
28 Adopting the language used by Fisher J, delivering the judgment of the Court of Appeal in Commerce Commission v Southern Cross Medical Care Society [2004] 1 NZLR 491 (CA) at para [12].
29 Bryson v Three Foot Six Ltd [2005] 3 NZLR 721 (SC) at para [25]. See also para [25](a) above.
30 Ibid, at para [28], set out at para [25](d) above.
31 Manukau Golf Club Inc v Shoye Venture Ltd [2013] 1 NZLR 305 (SC) at paras [7]–[9] and [16]. See para [37] below.
Analysis
(a)The approach to costs in the Environment Court
[31] Section 285(1) of the Act32 confers a broad discretion for the Environment Court to order that a party to an appeal be paid “the costs and expenses (including witness expenses) incurred by the other party”. The one qualification is that the quantum of costs must be “reasonable”.
[32] In Tairua Marine Ltd v Waikato Regional Council33 Asher J, in dealing with an appeal against an order for costs, said:
[54] I conclude that the amounts awarded by the Environment Court were not manifestly excessive. I do not address the issue of whether they were consistent with the Court’s usual practice and principles, as the Environment Court has not set out to create any “usual practice and principles” and correctly and quite explicitly approached the matter on a discretionary case by case basis.
[55] It could be said that the entirely discretionary approach of the Environment Court leads to uncertainty and makes the financial outcomes of litigation impossible to predict. However, that is the nature of the absolute and broad discretion set out in s 285. To attempt to set out a set of principles or rules could create precedents which in the face of later experience were regretted.
[56] I find that the approach of the Environment Court was not in error, and the awards not manifestly excessive.
[33] The approach identified by Asher J is different to the one adopted for civil proceedings in this Court. Under the current costs regime, predictability of outcome is an important goal. Dealing with the approach to costs on a standard, increased or indemnity basis, Baragwanath J, for the Court of Appeal, in Bradbury v Westpac Banking Corporation said:34
[27] The distinction among our three broad approaches – standard scale costs, increased costs and indemnity costs – may be summarised broadly:
(a)standard scale applies by default where cause is not shown to depart from it;
32 Set out at para [13] above.
33 Tairua Marine Ltd v Waikato Regional Council [2006] NZRMA 485 (HC).
34 Bradbury v Westpac Banking Corporation [2009] 3 NZLR 400 (CA) at paras [27]–[28]. See rr 14.2–14.6 of the High Court Rules.
(b)increased costs may be ordered where there is failure by the paying party to act reasonably; and
(c)indemnity costs may be ordered where that party has behaved either badly or very unreasonably.
[28] We acknowledge Sir Rupert Jackson’s report that in practice New Zealand scale costs have been permitted to fall far short of that (p 603). That is, however, a matter for the Rules Committee. Subject to that, the starting point of our rules, which gives a one-third or thereabouts deduction from a set figure, is comfortably in the modern main stream. It affords recognition of the access to justice factor that prevails in the United States and should not lightly be departed from. Clear cause must be shown to justify an increase. Our three-stage classification, with a discretion in each class as to where the order should be pitched, accords with that approach. Indemnity costs, which depart from the predictability of the Rules Committee’s regime, are exceptional and require exceptionally bad behaviour. That is why to justify an order for such costs the misconduct must be “flagrant” (Prebble v Awatere Huata (No 2) [2005] 2 NZLR 467 (SCNZ) at para [6]).
....
[34] Although Asher J indicated in Tairua Marine that there was no “usual practice” in the awarding of costs in Environment Court appeals, I have been referred to a number of decisions that suggest the existence of a de facto sliding
scale. Counsel agreed that this “scale” was used frequently by the Environment Court. They drew my attention to Bunnings Ltd v Hastings District Council,35 in which Judge Dwyer said:
[35] The test as to the appropriate level of costs contained in s285 is, what is reasonable? As a matter of general observation, costs awards in the Environment Court tend to fall into three broad categories:
Standardcosts, which generally fall within a comfort zone of 25- 33% of costs actually incurred;
Higherthan normal costs, where particular aggravating or adverse factors might be present such as those identified in Bielby;
Indemnitycosts, which are within the Court's jurisdiction to award but which are awarded only rarely, in exceptional circumstances.
[35] The Bunnings approach is not dissimilar in type to the standard, increased and indemnity costs regime applicable under the High Court Rules. Although Judge Harland referred to it in her costs’ judgment, she added that she did “not necessarily [accept] the view” expressed about “standard” costs. The Judge did, however,
35 Bunnings Ltd v Hastings District Council [2012] NZEnvC 4 at para [35].
describe the summary as “a helpful way of setting out the way the Environment Court has dealt with different types of costs awards in the past”.36
[36] In approaching appellate review of orders for costs, it is necessary to have regard to the nature of the discretion reposed in the Court from which the appeal is brought.37
[37] Generally speaking, it will be necessary for reasons to be given to explain why a particular approach has been taken, if it were to depart from “normal” practice. For example, in dealing with costs following an appeal to the Court of
Appeal in civil proceedings, the Supreme Court, in Manukau Golf Club Inc v Shoye Venture Ltd,38 held that it was necessary for reasons to be given when there is a departure from the normal approach. For the Court, Chambers J said:
[16] We wish to make clear a court does not have to give reasons for costs orders where it is simply applying the fundamental principle that costs follow the event and the costs awarded are within the normal range applicable to that court. So here, had the Court of Appeal awarded costs in the Club’s favour on a standard appeal basis, no further explanation would have been required. It is only when something out of the ordinary is being done that some explanation, which may be brief, should be given.
(footnote omitted)
(b)Were the Environment Court’s reasons adequate?
[38] A Court’s obligation to give reasons for a decision was considered by the Court of Appeal, in Lewis v Wilson & Horton Ltd.39 That case concerned an application for name suppression, in a criminal case. In the course of giving the judgment of the Court, Elias CJ identified a number of facets of the obligation to give reasons:
(a)The principle of open justice serves a wider purpose than the interests represented in a particular case. It is critical to the maintenance of
36 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97 at para [7].
37 See para [26] above.
38 Manukau Golf Club Inc v Shoye Venture Ltd [2013] 1 NZLR 305 (SC).
39 Lewis v Wilson & Horton Ltd [2000] 3 NZLR 546 (CA). This was a decision of a Full Court of the Court of Appeal, comprising Elias CJ, Richardson P, Keith, Blanchard and Tipping JJ.
public confidence in the system of justice. Without reasons, it may not be possible to understand why judicial authority has been used in a particular way.40
(b)A failure to give adequate reasons may cause difficulty for a party wishing to decide whether to appeal or seek judicial review of a decision. That is because the lawfulness (or propriety) of what has been done cannot be assessed by the appellate or reviewing Court.41
(c)In some cases, it is appropriate for reasons to be abbreviated. Indeed, in some cases, they will be self-evident from the nature of the decision.42
(d)The provision of reasons by a judicial officer provide a discipline for the Judge. That is the best protection against the possibility of a Court giving “wrong or arbitrary decisions and inconsistent delivery of justice”.43
[39] In this case, Judge Harland endeavoured to articulate the Court’s reasons, both for holding that costs were payable and the amount in which they should be ordered. What is in issue is whether those reasons were adequate, having regard to the departure from the Practice Note44 (stating no order for costs will usually be made on an appeal against a plan change), departure from the range of costs identified in Bunnings45 and the amount of costs claimed, in excess of $250,000.
[40] Once it is accepted that this was a case in which costs should be ordered (a conclusion that I am not prepared to reconsider as no question of law arises), the question becomes whether in awarding $30,000 the Court articulated adequately its reasons for reaching that conclusion; in particular for reducing the amount payable
40 Ibid, at para [79].
41 Ibid, at para [80].
42 Ibid, at para [81]. The Court of Appeal left open the question whether, as a general rule, Judges must give reasons: see para [85], following a discussion of R v Awatere [1982] 1 NZLR 644
(CA), R v MacPherson [1982] 1 NZLR 650 (CA) and R v Jefferies [1999] 3 NZLR 211 (CA).
43 Ibid, at para [82].
44 See cl 4.5.2 of the Practice Note, set out at para [15] above.
45 Bunnings Ltd v Hastings District Council [2012] NZEnvC 4 at para [35], set out at para [34] above.
below that ostensibly accepted by the Court as its norm. I refer to the range of 25% to 33% of costs actually incurred, to which Judge Dwyer referred in Bunnings.46
[41] The sense of injustice that can arise through the potential for inconsistent application of the discretion to award costs can be seen from a decision given only two days after the costs judgment in this case. It too involved NEIL. On an unsuccessful appeal by NEIL against a decision to decline land use resource consents to construct and establish part of an intensive residential and mixed use development on land with frontages to Oteha Valley Road and Fairview Avenue, an award of
$57,000 was made in favour of the Council, in the context of actual costs totalling
$228,167.85, including GST and disbursements. In contrast to the present case, that was an appeal heard over two, rather than three days.47
[42] There are two distinct considerations that should be taken into account in approaching this question:
(a)The need to preserve the integrity of the appellate system by allowing each party to understand why a particular result has been reached, so it may make an informed decision on whether to exercise appeal rights.
(b)The need for consistency in the application of the law in relation to the circumstances and amounts in which costs should be ordered.
[43] Judge Harland explained adequately why she was departing from the usual position that costs would not be ordered on an appeal against a plan change. She did not, however, explain why the costs (which, on a global basis, included those
incurred by lawyers and experts) were fixed at about 11% of the actual costs incurred, when the range to which Bunnings refers is 25% to 30%.48 Although the Judge gave some reasons that supported a reduction of the actual costs to reflect
46 Ibid.
47 See North Eastern Investments Ltd v Auckland Council [2013] NZEnvC 103 (Judge Thompson, Commissioner McConachy and Commissioner Prime, 13 May 2013).
48 See paras [34]–[35] above.
what was reasonable in the circumstances,49 what was absent was an explanation of why she considered such a high discount was required. With respect, the reasons given do not support a reduction of the amount involved.
[44] It may be that the Court did take into account some aspects of duplicated costs.50 But, that is not clear from the judgment. Nor is it clear why the Judge considered that the hearing had been unnecessarily extended to the degree to which the Court referred,51 given that there was a site visit of about one half day, the need for opening and closing submissions and the hearing of some evidence. It is unclear why discontinuing negotiations earlier might have impacted on costs incurred; intuitively the opposite might be thought to be the case.
[45] The need for reasons to promote consistency in the award of costs can also be seen by comparing the decision under appeal with that given two days later in North Eastern Investments Ltd v Auckland Council,52 albeit in the context of a case that did not involve a plan change.53 If the Environment Court were to continue to refer to
the range of costs identified in Bunnings,54 it will be necessary to explain, albeit
relatively briefly, why an award of costs is so much lower than the 25% listed in the first category.
[46] There are two other factors that are relevant in reaching that view. The first is the amount of the award in issue. When sums of that nature are sought, any explanation for an award significantly less than that considered the norm must be expressed in a manner that enables the parties to understand why it has been reduced. The second, linked to the first, is the apparent importance of the issues raised in this case. Both counsel advised me that oral hearings on costs in the Environment Court are very rare. Indeed, both Mr Casey and Mr Lanning could only recall one or two in which they had been involved.
49 Resource Management Act 1991, s 285(1), set out at para [13] above.
50 See the comments set out at para [47]–[49] below.
51 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97 at para [26], set out at para [18] above.
52 North Eastern Investments Ltd v Auckland Council [2013] NZEnvC 103.
53 See para [41] above.
54 See para [34] above.
(c)Was there an error of law in the assessment of the actual costs?
[47] In determining quantum, the Environment Court had regard to the evidential basis on which a reasonable contribution to costs should be considered. Judge Harland said:55
[20] Mr Farquhar, a director of NEIL, filed an affidavit setting out invoices, and Mr Thurlow filed an affidavit. Neither Mr Farquhar nor Mr Thurlow was requested to be made available for cross-examination. Mr Lanning submitted that the Council's reply raised concerns about the invoices provided and whether or not all of them related to this appeal rather than NEIL’s resource consent application, and he submitted that it was therefore for Thurlow to reply to these concerns, not for, impliedly, the Council to cross examine the deponents on these issues. Furthermore, Mr Lanning challenged the invoices prepared by Mr Parfitt, who assisted Thurlow with the planning aspects of its appeal, albeit that he did not give evidence.
[21] Whilst we agree that it is for Thurlow to justify the costs it seeks, we are left with the situation that there are some challenges to the costs. Where there are challenges of this nature, they are challenges to the evidential basis for a claim. That being the case, the challenge should be mounted in an evidential way. This would require the deponents to be cross-examined. The Council elected not to cross-examine these parties. For the reasons we express below, however, that does not impact significantly on the outcome of the costs application.
[48] With respect, I consider that the Judge may have fallen into error, if she intended to hold that it would be necessary to cross-examine witnesses before an assessment could be made of the appropriateness of the costs claimed.
[49] On a perusal of the invoices, some of the fees incurred related to the appeal, but others did not. In some cases, I suspect there may have been an overlap between costs incurred for the appeal and for other reasons, which may have required some apportionment. Although the evidence was not tested by cross-examination, it would be wrong for a Court to accept uncritically the amount of costs claimed. If, having done that, the Court were in doubt about whether (for example) costs had been wasted or incurred for a different purpose, it is entitled to make a broad assessment of the reasonableness of costs incurred for the appeal.
55 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 97.
[50] I am not prepared to interfere with the Environment Court’s decision on this point. The Environment Court stated explicitly that the decision not to cross- examine did not “impact significantly on the outcome of the costs application”.56 In the context of a decision that awarded costs in the sum of $30,000, when actual costs were $269,566.28, it is clear that any error in that regard could not have been material.
(d)Did the Environment Court take into account an irrelevant consideration?
[51] In my view, Mr Lanning was right to submit that the Court should not have taken into account the funding position as disclosed to it at the time of the costs hearing. The Court could not assess the reasonableness of a party’s conduct of the hearing by reference to a subsequent event. By taking account of that irrelevant
consideration the Court may have reached an unjustified view that the “transport solution was never going to be achieved during the life of the plan change”.57
[52] Nevertheless, the absence of funding arrangements at the time that the issue came before the Environment Court on the substantive appeal was relevant to the Council’s conduct and therefore could have been taken into account; for example, on whether the Council could be regarded as “blameworthy”. In that regard, the Court’s observations in its substantive decision are apposite:58
[32] The Medallion Drive Extension road works affect NEIL’s land, which is outside of the [Plan Change 32] area. These works will most likely be public works for which the Council will have responsibility as they are to service a wider area than just NEIL’s land. This seems to have been accepted by the Council although the works do not appear to be a high priority as the following background information and sequence of events shows:
(a)In opening submissions Mr Lanning confirmed that the Council was committed to the Medallion Drive Extension but there was no provision in the Council’s Long Term Plan (“LTP”) for its construction. He submitted that ideally the new road should be achieved in conjunction with any development of NEIL’s land, but if that did not occur then there were other more direct options available to the Council and Auckland Transport, such as designation.
56 Ibid, at para [21].
57 Ibid, at para [16], set out at para [17] above.
58 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2012] NZEnvC 82 at para [32].
(b)During the hearing, at the Court’s request, Mr Lanning provided a memorandum in relation to the funding issues. He reconfirmed that there was no provision in the Long Term Plan or the Regional Land Transport Programme for the construction of the Medallion Drive Extension or any related land purchase. He indicated that the current 2011-12 Annual Plan contained funds which could be used for the design and legalisation work associated with the project.
(c)Subsequently Mr Lanning filed a memorandum advising that Auckland Transport now had funding in place to enable it to proceed with a Notice of Requirement (“NoR”) and also that it intended to commence parallel discussions with the land owner regarding acquisition
...
(footnotes omitted)
[53] In those circumstances, the reference to the funding arrangements as at the time of the costs’ judgment could not have contributed, in any meaningful way, either to the decision to award costs, or to the assessment of them. For that reason, I would not interfere on this ground with the Environment Court’s decision.
Result
[54] For those reasons, the appeal is allowed and the cross-appeal is dismissed. The award of costs in favour of Thurlow is set aside. The question of costs is remitted for rehearing before the Environment Court.
[55] The Court’s starting point will be that an order for costs is justified but whether, having heard from the parties, that is fixed at a sum higher or lower than the
$30,000 previously awarded will be for the Court to determine.
[56] Thurlow, having been successful on its appeal, is entitled to costs. One set of costs are awarded in its favour, on a 2B basis together with reasonable disbursements. Both are to be fixed by the Registrar.
P R Heath J
Delivered at 3.00pm on 20 September 2013
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