Wagg v Squally Cove Forestry Limited

[2014] NZHC 745

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV 2010-442-445 [2014] NZHC 745

BETWEEN

ASHLEY JOHN WAGG and others

Plaintiffs

AND

SQUALLY COVE FORESTRY LIMITED
and others
First Defendants

MARLBOROUGH DISTRICT COUNCIL

Second Defendant

On the papers
Counsel:	J M Fitchett for the Plaintiffs L J Taylor QC and G M Downing for the First Defendants
Judgment:	9 April 2014

JUDGMENT OF MALLON J (Costs)

Introduction

[1]      This judgment concerns the first defendants’ claim for costs in the High Court.   The issue of costs has not been straightforward.   That has meant that a number of memoranda from counsel for the plaintiffs and the first defendants have been filed on that topic.  I have now had the opportunity to consider them.  I note that the second defendant does not seek any order as to costs in its favour and made no submissions on the issue of costs between the plaintiffs and the first defendants

Background

[2]      The plaintiffs own land in Wairangi Bay in the Marlborough Sounds.  There were two possible ways to access their properties by car:

WAGG v SQUALLY COVE FORESTRY LIMITED [2014] NZHC 745 [9 April 2014]

(a)      One way was over the first defendants’ private road (the red road) and then continuing over other, mainly private, land (the blue road).1   This was the traditional way the properties had been accessed.

(b)      The other way was over the first defendants’ newly built road (the yellow road).  For some of the plaintiffs that also required use of the blue road.

[3]      The first defendants wanted the plaintiffs to use the yellow road and had offered terms on which that could occur.   The plaintiffs regarded those terms as unreasonable and wished to continue to use the red and blue roads to access their properties.  There had never been any suggestion that they could not continue to use the blue road (which passed through some of the plaintiffs’ properties).  However the first defendants (via Mr Thornley) advised the plaintiffs that they wished to close access over the red road.

[4]      The plaintiffs claimed their properties were landlocked.   They applied for relief under s 327 of the Property Law Act 2007.  In a judgment given on 19 October

2012 I granted the plaintiffs relief.2   That relief granted a right of way over the red

road.   I indicated a preliminary view that the plaintiffs should have costs on a 2C

basis.

[5]      The  first  defendants  appealed  my  judgment.    In  a  judgment  given  on

4 October 2013 the Court of Appeal allowed the appeal.3    It held that, although the land was landlocked, I did not have jurisdiction to grant relief over the red road.  The Court’s view was this was because access over the red road would not unlock the plaintiffs’ properties.  The Court’s concern was that the arrangements over the blue road were dependent on the goodwill of the landowners.  It considered that without legal rights of way over the blue road the plaintiffs did not have “reasonable access

to the blue road”.4   It declined to amend the relief I granted to make it conditional on

formalising the arrangements on the blue road.   It did so because, contrary to the

1      A portion of the blue road is built on Council land reserved for roading purposes. The rest of the blue road passes through some of the plaintiffs’ land and one other land owner.

2      Wagg v Squally Cove Forestry Ltd [2012] NZHC 2763, (2012) 13 NZCPR 798.

3      Squally Cove Forestry Partnership v Wagg [2013] NZCA 463, [2013] 3 NZLR 793.

4 At [33].

view  I reached, it considered that the terms offered over the  yellow road were reasonable.  It quashed the relief I granted and declined to order any other relief.

[6]      The Court of Appeal ordered that the plaintiffs pay the first defendants’ costs in that Court on a band B basis.  It directed that “[c]osts in the High Court should now be determined in accordance with this judgment.”5

Issues

[7]      Against that background I issued a minute on 14 November 2013 which said:6

[3]       In  the  ordinary  course  that  outcome  would  mean  that  the  first defendant would be entitled to costs, as the first defendant can probably be regarded as the successful party (the finding that the land was landlocked in and of itself probably not a success in the absence of any relief being granted to the plaintiffs).  However the complication is that a number of settlement offers were made prior to the hearing and, as the plaintiffs’ application for recall [of the Court of Appeal judgment] sets out, the terms on which the yellow  road  were  offered  were  revised  during  the  trial  in  a  number  of respects that potentially had a bearing on the reasonableness of the access offered over the yellow road. …

[4]       The memoranda filed to date deal with the parties’ views on the 2B or 2C issue but not the more substantive issues that relate to whether there should be a cost order in favour of the first defendant and, if so, for which steps in the proceeding. Therefore I ask for submissions on:

(a)       whether the parties view the [Court of Appeal’s] direction … as directing that costs be awarded to the first defendant, or rather  that  I  consider  costs  in  light  of  the  substantive outcome of the appeal;

(b)       whether, if I am to consider costs in light of the substantive outcome of the appeal, costs should be awarded in favour of the first defendant;

(c)       if costs should be awarded to the first defendant, for which steps they are to be awarded in light of the settlement offers made and the various revised terms on which access over the yellow road was offered.

5 At [57].

6      Wagg v Squally Cove Forestry Ltd HC Nelson CIV-2010-442-0445, 14 November 2013.

[8]      I address these matters in light of the submission received.  I then address the issue of whether costs should be on a 2B or 2C basis.  I then address specific issues over some of the items claimed.

Should costs follow the event?

[9]      The first defendants submit that the Court of Appeal directed that costs in the High Court are now payable by the plaintiffs to the first defendants.  They submit that this follows from the reversal of the High Court decision by the Court of Appeal. They say that this was not a case where the plaintiffs had some success (for example because they established, contrary to the first defendants’ position, that the land was landlocked).   They say that the plaintiffs failed because no relief was granted to them.

[10]     I accept the submission that the first defendants were the successful party.  A finding that the land was landlocked was not a success when no relief was ordered for that.  However it does not follow that the first defendants are entitled to costs for each step in the proceeding.  I am to consider what costs are properly ordered in the first defendants’ favour, as the successful party, in accordance with the High Court Rules.

Is any reduction appropriate in light of proposals for access?

[11]     The High Court Rules include a discretion to reduce (or refuse) costs on a number of grounds.7   They include where a party has “contributed unnecessarily to the time and expense of the proceeding or step in it” by various things.8     Those things include “pursuing an argument that lacks merit” and “failing, without reasonable  justification,  to  accept  an  offer  of  settlement”.9      Costs  may  also  be reduced (or refused) if “some other reason exists which justifies the court refusing costs or reducing costs despite the principle that the determination of costs should be

predictable and expeditious.”10

7      High Court Rules, r 14.7.

8      Rule 14.7(f)

9      Rule 14.7(f)(ii) and (v).

10     Rule 14.7(g).

[12]     There were a number of attempts to settle the proceeding.  Both parties made offers.   Settlement discussions took place and/or proposals were made prior to commencing proceedings, during the course of the proceedings and during the trial. The first defendants submit that the proceedings did not settle because the fundamental difference  between the parties  remained: the plaintiffs only wanted access over the red road and the first defendants only wanted to grant access over the yellow road.  The first defendants submit that their position was upheld because the Court of Appeal found that the offer for access over the yellow road was reasonable.

[13]     The  plaintiffs  respond  that  the  offer  for  access  over  the  yellow  road materially altered during the course of the High Court hearing.  It was this altered offer which was assessed by the Court of Appeal to be reasonable.  Prior to the High Court hearing the offer in respect of the yellow road included the following conditions:

(a)       a complete prohibition of commercial use of the dominant lands with no provision for arbitration;

(b)      a  right  of  way  maintenance  company  in  which  Mr  Thornley effectively would have complete control;

(c)       a prohibition of the use by any of the dominant owners of the legal road in front of Mr Thornley’s own property; and

(d)      a price of $28,000 (plus GST and costs) per dominant allotment for the granting of a right of way over the yellow road.

[14]     It was only in the course of the High Court hearing that these conditions altered.    The  plaintiffs  say  that  these  only  altered  because  the  first  defendants accepted they were unreasonable conditions.   The further say that, contrary to insisting only on access over the red road, they made pre-trial offers in which they specifically enquired whether the conditions on which access over the yellow road would be granted  would  be amended.   They say that,  up  until  the High  Court

hearing, the first defendants’ approach had been one of “here are the terms, take it or leave it”.

[15]     Once the  conditions  in  respect  of the  yellow  road  had  been  amended,  I remained of the view that the commercial use restriction was unreasonable for these plaintiffs against a lengthy history of mutually cooperative use of the red and blue roads.   By the end of the trial this restriction was confined to forestry and other commercial activities.   It was also subject to paying a royalty and obtaining Mr Thornley’s written consent, such consent not to be unreasonably withheld and any dispute to be resolved by arbitration.  The Court of Appeal considered that with these amendments the condition was not unreasonable.   It did not express a view on whether the earlier terms were unreasonable because it did not have to.

[16]     However the Court of Appeal did express a view on whether, if the offer had been in its amended form from the outset, the plaintiffs would have accepted it.  It did so in a judgment delivered on 4 December 2013.11   That judgment related to the plaintiffs’ application to recall its earlier judgment.  That application was made in relation to the order that costs should be determined in accordance with the Court of Appeal’s judgment (refer above).  The plaintiffs contended that this direction failed

to take into account that the first defendants’ offer of access over the yellow road changed during the course of the High Court hearing (ie the very issue I am now considering).   The Court of Appeal held that its failure to consider that the offer changed was an appeal point rather than grounds for a recall.  However it went on to

say as follows:12

We would add that even if we were minded to grant the recall application and consider the matter afresh, the outcome would still be the same.  The evidence and the approach taken by the applicants towards the appeal satisfy us that even if Squally Cove’s offer had been in its amended form from the outset, the applicants would still not have accepted it.

[17]     As the plaintiffs submit, this is obiter.  It is based on the Court of Appeal’s assessment of the evidence and approach in respect of the appeal.   I nevertheless consider  it  appropriate  to  follow  the  indication  that  the  Court  of  Appeal  has

provided.  To that indication I would add that the plaintiffs (or some of them) and the

11     Wagg v Squally Cove Forestry Partnership [2013] NZCA 612.

12     At [8]

first defendants were to some degree entrenched in their respective views and that made things difficult for the other.  This was not a situation where the unsuccessful party was clearly reasonable and the successful party was clearly unreasonable.  It is therefore not a situation where it is appropriate to make any reduction in the costs payable to the first defendants.

Category 2B or 2C

[18]     The first defendants claim that the appropriate category is 2C.   The first defendants submit that category 2C is appropriate because the number of plaintiffs involved made steps in the proceeding more time consuming for counsel for the first defendants.   It says that the Court of Appeal recognised this in awarding band B rather than band A costs in that Court.

[19]     The plaintiffs submit that 2B is appropriate.   They say that, although 2C might have been appropriate for an award in their favour (given the number of parties from whom counsel needed to obtain instructions), it does not follow that it is appropriate to apply that band for a costs order in favour of the first defendants.

[20]     I accept the plaintiffs’ submission on this point.   The plaintiffs could have instructed separate counsel.  They saved costs by appointing the same counsel.   This meant that, when the plaintiffs succeeded against the first defendants in the High Court, it was appropriate to make one award of costs in the plaintiffs’ favour (rather than awards for each).  But there is no doubt that there was additional work for their counsel because he was obtaining instructions from a number of plaintiffs.  It was for that reason I gave a preliminary indication that 2C costs would be appropriate for an order in their favour.   From the first defendants’ perspective, however, they were saved time because they needed to deal only with one counsel.   Although they needed to respond to evidence from each of the plaintiffs, this was comparable to there being one plaintiff who called evidence from a number of witnesses.  Overall I consider that “a normal amount of time” for the first defendants is reasonable for the

steps in the proceeding.13

13     High Court Rules, r 14.5(2)(b).

Items

[21]     It is agreed that the schedule in force prior to 14 June 2012 applies. There are three matters in dispute:

(a)      The first matter concerns whether the first defendants should have allowances  for  opposing  the  plaintiffs’ application  to  join  further plaintiffs and opposing the plaintiffs’ application for leave to issue a subpoena in respect of Mr Stokes.  The plaintiffs were the successful party in respect of each of those applications.  I therefore disallow the

4.50 days claimed for these steps.

(b)      The second matter concerns items 7.3 and 7.4.  I accept the plaintiffs’ submission that these items are available “if trial does not eventuate” as is stated in the heading.  I therefore disallow the eight days claimed for these items.

(c)      The third matter concerns the allowance based on the number of days of the hearing.  I accept the plaintiffs’ submission that the appropriate number of days is four (rather than five).  The fifth day involved the site visit.  Counsel for the first defendants did not attend that visit.

Result

[22]     The first defendants are entitled to costs on a 2B basis.  The costs claimed are to be calculated on a 2B basis and are to be adjusted in light of my decision on the matters in [21] above.

Mallon J