Wellington City Council v Aitchison
[2018] NZHC 21
•26 January 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE
CIV-2015-485-752 [2018] NZHC 21
BETWEEN WELLINGTON CITY COUNCIL
Appellant
AND
SYLVIA AND PETER AITCHISON Respondents
Hearing: On the papers Counsel:
K M Anderson and K H Rogers for Appellant
A F D Cameron for RespondentsJudgment:
26 January 2018
JUDGMENT OF CLARK J (COSTS)
Introduction
[1] Mr Walmsley and his mother own a residential property through their company, Walmsley Enterprises Ltd.1 The Aitchisons own the residential property directly above the Walmsley’s property. The two properties share a common boundary. To achieve privacy on their side the Walmsleys erected a 4-metre high, 22- metre long structure on the boundary comprising a solid wall with a walkway and play structure attached.
[2] The Aitchisons issued proceedings against the Walmsleys and the Wellington
City Council seeking a declaration under the Resource Management Act 1991 that the
1 For the purpose of this judgment I make no distinction between the company and Mr Walmsley and his mother. Throughout I refer to “the Walmsleys”.
WELLINGTON CITY COUNCIL v AITCHISON [2018] NZHC 21 [26 January 2018]
structure contravened that Act. The Aitchisons argued the Council was wrong to view the structure as a permitted activity under the Wellington City District Plan and therefore as not requiring resource consent. On 17 September 2015 the Environment Court declared that the structure was not a permitted activity, resource consent was therefore required and, for these reasons, the use of the land for the structure contravened s 9 of the Resource Management Act.2 The Environment Court’s decision turned on the interpretation of the definition of “ground level at the boundary” in the District Plan. That decision was appealed to the High Court. In a judgment delivered on 9 June 2017 I effectively upheld the decision of the Environment Court and dismissed the appeal.3
[3] The Aitchisons seek costs on a 3C basis or, should that not be accepted, they seek 2B costs with a 50 per cent uplift.4 The Council’s position is that costs should be refused or, in the alternative, that costs should be awarded on a reduced 2B basis. The questions, then, for my determination are whether the respondents are entitled to an award of costs and, if they are, on what basis?
Are the respondents entitled to an award of costs?
Parties’ submissions
[4] As stated immediately above the Council’s primary position is that costs should be refused. But if costs are to be awarded they should be reduced taking a 2B starting point (before reduction) of $10,035. The Council invokes r 14.7(e) of the High Court Rules 2016. Under r 14.7(e) the Court may refuse to make an order for costs, or may reduce costs otherwise payable if—
(e) the proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding.
2 Aitchison v Wellington City Council [2015] NZEnvC 163, (2015) 19 ELRNZ 319 [Declaratory decision].
3 Wellington City Council v Aitchison [2017] NZHC 1264, [2017] NZRMA 461 [Appeal decision].
4 The costs category was not determined in advance of the hearing.
[5] The Council relies on Hotchin v KA No 4 Trustee Ltd in which Winkelmann J declined to award costs against the Financial Markets Authority because, when it intervened, it was acting in the public interest.5
[6] The Council says that, as a public entity, it:
acted entirely in what it saw as the public interest. It wanted certainty as to the application of the District Rules for Wellington citizens and to ensure they are applied in a workable fashion. As a regulator of the District Plan, it wanted to ensure that its interpretation was robustly tested and the correct interpretation applied.…exercising a right of appeal is an appropriate way of doing that.
[7] The Council also submits it went to considerable effort to mitigate the expense to the Aitchisons by, for example:
(a) assisting the Aitchisons with the enforcement proceedings;
(b) offering to pay the costs of an amicus curiae to argue the appeal on the
Aitchisons’ behalf;
(c) contributing significantly to the case on appeal; and
(d) promptly, following the Court’s decision, offering to pay the
Aitchisons’ costs on a 2B basis.6
[8] The Aitchisons challenge the public interest ground on which the Council’s opposition to a costs award rests. Mr Cameron submitted the Council’s approach to the definition in the District Plan left those in the position of the Aitchisons “stranded”. Throughout, the Council had been content to develop its own view while leaving it for the Aitchisons to initiate proceedings a step which, in Mr Cameron’s submission, a
responsible regulator would have taken.
5 Hotchin v KA No 4 Trustee Ltd [2014] NZHC 978.
6 On the basis of 4.5 days being payable reflecting commencement of response to appeal (0.5 days);
preparation of written submissions (3 days) and appearance at hearing for sole counsel (1 day).
Assessment
[9] In the course of the appeal the Council declared, through counsel, its interest in ensuring the District Plan is applied consistently and coherently and that the interpretation of the Plan’s provisions should be fair and achieve their intended purpose.7 Similarly, in the context of this disputed costs application, the Council maintains it was acting entirely in the public interest in appealing the Declaratory decision. For the reasons that follow, however, I have reached the view that the Council’s assertions of public interest motivation do not justify a departure from the principle that the party who fails should pay costs to the party who succeeds.8
[10] Whether or not the public interest exception applies falls to be determined by considering the issue raised by the proceeding. The Aitchisons issued proceedings in the Environment Court seeking a declaration that the Council had erred in the way it had measured the height of the structure erected on the boundary and had erred in deciding the structure was a permitted activity. The key issue concerned the interpretation and application of the recession control line provisions of the District Plan.
[11] As the Environment Court stated, to begin the exercise of plotting the recession control line, it is necessary to find the ground level at the boundary.9 The District Plan contains a two-sentence definition of that term. In looking for a “practical, sensible and principled meaning” the Environment Court considered the purpose of the District Plan provisions in question and (as directed by s 5 of the Interpretation Act 1999) the “indications” in the District Plan.10 Ultimately the Environment Court found the Council had misdirected itself on the definitions in question and that it should have been guided by five specific matters of fact and law which the Environment Court set
out.11
7 Appeal decision, above n 3, at [20].
8 High Court Rules 2016, r 14.2(1)(a).
9 Declaratory decision, above n 2, at [12].
10 At [9] and [23].
11 At [34].
[12] The Council challenged the Environment Court’s decision and asked that it be set aside. Its appeal was unsuccessful and the Environment Court’s decision was upheld.
[13] A public interest is broadly served, of course, whenever the meaning of legislation is authoritatively declared. But in this case it was not the Council that took steps – in the public interest or otherwise – to obtain judicial interpretation of provisions in its District Plan. Suffering “significant and severe adverse effects” from the “overbearing” and “dominant” structure which the Council permitted to be erected on their boundary, the Aitchisons were driven to initiate proceedings.12 They succeeded at all stages. The Walmsleys initially filed a notice of appeal against the Declaratory decision but they discontinued their appeal. As far as the Aitchisons were concerned the discontinuance and enforcement orders meant the matter was resolved. Unfortunately for the Aitchisons the withdrawal of the appeal did not end matters. With the High Court’s consent the Council stepped in as appellant. The Aitchisons were now respondents to the Council’s appeal.13
[14] The Council relies on observations made by Ellis J in the course of her Procedural decision. Ellis J accepted the proper interpretation of the District Plan had ongoing practical and legal concern for the Council.14 In permitting the Council to continue the appeal Ellis J acknowledged the Council’s legitimate interest in the issues raised by the appeal and recognised “a wider public interest in the proper interpretation of the District Plan”.15 Her Honour described the issue before her as “technical in nature”.16 The Council had filed a notice of intention to appear in the appeal and had also filed an additional appeal on questions of law. Could the Council continue with
an appeal which the Walmsleys, the appellants, had discontinued? By operation of the
12 Aitchison v Walmsley [2016] NZEnvC 13 [Enforcement decision]. The enforcement proceedings brought by the Aitchisons sought removal of the structure. Although the Council had taken a position in the Declaratory proceedings antagonistic to the Aitchison’s position it nevertheless supported the steps the Aitchisons took towards removal of the very structure which the Council had permitted. The Council became a co-applicant for enforcement orders while expressly disassociating itself from that part of the application based on the Environment Court’s declaration that the structure was not a permitted activity under the District Plan. The Environment Court issued enforcement orders requiring removal of substantial parts of the structure.
13 Wellington City Council v Aitchison [2016] NZHC 167, (2016) 19 ELRNZ 154 [Procedural decision].
14 At [14].
15 At [27].
16 At [1].
High Court Rules and s 305 of the Resource Management Act Ellis J concluded the
Council’s appeal remained extant notwithstanding the Walmsleys’ discontinuance.
[15] Ellis J’s observations were made in the course of determining the technical, procedural issue before her. They do not bear on my assessment of whether the Council is able to invoke the public interest exception to liability for costs. In particular, her Honour’s observations are not determinative of the question whether, for the purpose of r 14.7(e), “the proceeding concern[s] a matter of public interest”.
[16] As I suggested earlier a broad public interest may be seen as having been served whenever the meaning of legislation is ascertained. But I do not equate that incidental public interest with the tangible public interest envisaged by r 14.7(e). An example of litigation brought in the public interest is the challenge to the decision to add fluoride to the public water supply.17 Such a proceeding of genuine public interest contrasts with this appeal from a declaration by the Environment Court that the Council had misdirected itself. The Council sought to defend its position. Until the point when the Council assumed the role of appellant it had taken a rather more passive approach.18
[17] I see no reason why the Aitchisons should bear the costs of the Council’s appeal particularly in view of their comprehensive success.
[18] Nor do I see in any of the other points raised by the Council a reason for departing from the principle that, as the successful party, the Aitchisons are entitled to an award of costs.
(a) Hotchin v KA No 4 Trustee Ltd, upon which the Council relies, is distinguishable. Mr Hotchin brought proceedings to clarify the extent of his interest in property against a Trust with which he was closely associated.19 The Financial Markets Authority intervened with the
consent of all parties. The Judge specifically observed it was in all
17 New Health New Zealand Inc v South Taranaki District Council [2014] NZHC 993, (2014)
21 PRNZ 766.
18 Procedural decision, above n 13, at [26].
19 Hotchin v KA No 4 Trustee Ltd, above n 5.
parties’ interests that the process be, and be seen to be, fully contested.20
Additionally, the Judge was satisfied the Financial Markets Authority was acting in the public interest. First, the Financial Markets Authority was intervening in performance of its statutory role representing the interests of aggrieved investors and secondly it was acting to vindicate rights and obligations imposed by statute thereby serving a broader public interest than that of immediate investors.21
(b)As acknowledged by the Aitchisons, the Council contributed significantly to the case on appeal. However, the Aitchisons have not sought costs in respect of any case management requirements nor for preparation of the case on appeal.
(c) The Council points to its offer to pay the costs of an amicus curiae which would have prevented additional expense being incurred in relation to the appeal. I consider, however, that the Aitchisons’ election to instruct counsel to represent their interests was entirely reasonable and was to be expected in the context of litigation which they initiated and managed throughout. They had a position to protect, a position they fought hard to attain. As Ellis J recorded in the Procedural decision if the Council were to succeed in the appeal the Walmsleys might rebuild a similar structure.22 For obvious reasons the Aitchisons did not wish to be in the position of having to continue to defend their position but they were entitled to protect it as they considered appropriate. That they chose to do so personally through counsel of their choosing was not unreasonable and does not disentitle them to costs.
(d) Nor do I regard the Council’s offer to pay costs to the Aitchisons on a
2B basis, promptly made following the appeal decision, as negating the
Aitchisons’ entitlement to costs.
20 At [23].
21 At [24].
22 Procedural decision, above n 13, at [15].
[19] Overall, the Council has advanced no convincing reason why the Aitchisons should not be awarded costs. Even if the litigation did come within r 14.7(e) I would not exercise my discretion so as to refuse to make an order for costs. Adopting the approach of a three-judge bench of the High Court in an analogous context I am satisfied the private party ought not to bear any costs burden. In 2005 Complaints Committee v W the Complaints Committee sought increased costs on the grounds its proceeding was of general importance to persons other than the parties and because a governing reason for bringing the proceeding was to clarify the law. The Court acknowledged that sometimes increased costs are ordered in public interest litigation but not “when the party against whom increased costs are sought is a private party”.23
[20] Finally, and in any event, the public interest exception is rarely applied to appeals.24
[21] The Council has not demonstrated the public interest exception applies and I
conclude the Aitchisons are entitled to an award of costs.
On what basis should costs be awarded?
Parties’ submissions
[22] The Aitchisons submit the case engaged complex legal and factual contentions. Accordingly, costs should be awarded on a 3C basis. Having regard to the complexity and significance of the proceeding an allowance is sought for second counsel. Additionally, and because they are not GST registered, the Aitchisons submit GST should be added to the costs award.
[23] The Council’s position is that 2B costs properly reflects the complexity of the proceeding. The legal issue for determination was “simply the correct interpretation of a District Plan provision, which is not a unique or uncommonly complex matter for the High Court”. An allowance for second counsel should not be made because second
counsel spoke only briefly at the hearing on a single topic.
23 2005 Complaints Committee v W (2008) 19 PRNZ 134 (HC) at [3].
24 New Health New Zealand v South Taranaki District Council, above n 17, at [16].
Assessment
[24] An award of costs should reflect the complexity and significance of the proceeding.25 I am in no doubt that the proceeding is appropriately classified as a category 3 proceeding because of its complexity as well as its importance to the parties. While, as the Council submitted, the legal issue may have involved the correct interpretation of a District Plan provision it was a complex issue which did require counsel to have special skill and experience in the High Court. Mr Cameron, counsel for the Aitchisons, presented full written argument and a 13-page summary of legal submissions. Mr Fowler QC, on behalf of the Council, filed detailed written submissions and an 18-page synopsis in reply. Both parties’ submissions included diagrammatic representations to convey their respective positions and the consequences of the Court accepting competing interpretations. In addition a diagrammatic representation which Mr Fowler presented on a whiteboard was reproduced in documentary form.
[25] Despite the length of the submissions, which needed only to address a single interpretative point, all of the material was relevant and it was helpful. The material was necessary in order to understand the asserted obscurity and ambiguity of the words being interpreted and necessary in order to determine, physically and conceptually, the point on a boundary from which a recession control line must vertically rise and the consequences of identifying one point over another.
[26] The Aitchisons claim costs only in respect of four steps in the appeal:
(a) commencement of response to the appeal;
(b) preparation of written submission;
(c) appearance at hearing of principal counsel; and
(d) appearance at hearing of second counsel.
25 High Court Rules, r 14.2(1)(b).
[27] Specifically, no claim is made for attendances relating to case management or preparation of the case on appeal Mr Cameron acknowledging the contribution of the Council to these phases.
[28] I consider a reasonable time for these steps is the time specified in Sch 3 by reference to band C. I allow for second counsel. Mr Slyfield presented much of the opening and Mr Cameron the closing. There was no overlap in presentation. Indeed Mr Slyfield and Mr Cameron emphasised different but complementary aspects of the Aitchisons’ case. I do not allow for second counsel for the one day claimed however. The time allowed for second counsel under band C is 50 per cent of the allowance for principal counsel. In this case that is half a day.
[29] The Court of Appeal has confirmed awards of scale costs are GST neutral.26
GST is not to be added to an order for scale costs and I decline to do so.
Result
[30] Costs are awarded to the respondents on a 3C basis. The allocation for second counsel is 0.5 day.
Karen Clark J
Solicitors:
DLA Piper, Wellington for the appellant;
Brookfields Lawyers, Wellington for the respondents
26 New Zealand Venue and Event Management Ltd [2016] NZCA 282, (2016) 23 PRNZ 260 at [7].
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