Young v Attorney-General

[2021] NZHC 1359

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2017-409-000110

[2021] NZHC 1359

BETWEEN

STEVEN RICHARD YOUNG

Plaintiff

AND

ATTORNEY-GENERAL

Defendant

Hearing:	On the papers
Appearances:	A R B Barker QC and J Moss for Applicant K G Stephen and H T N Fong for Defendant
Judgment:	10 June 2021

JUDGMENT OF DUNNINGHAM J

RE:  Costs Decision

This judgment was delivered by me on 10 June 2021 at 10.30 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Introduction

[1]    The  defendant,  the  Crown,   applies   for   costs   against   the   plaintiff,   Mr Steven Young, following its successful defence of Mr Young’s claim in nuisance.1 In my judgment I indicated that costs should follow the event and that 2B costs were appropriate, but allowed the parties to file memoranda if they were unable to agree on costs.2

1      Young v Attorney-General [2020] NZHC 463.

2 At [130].

YOUNG v ATTORNEY-GENERAL [2021] NZHC 1359 [10 June 2021]

[2]    The parties have been unable to agree on costs. The Crown seeks costs, largely on a 2B basis, with some adjustments. Mr Young submits that costs should lie where they fall.

Background

[3]    Mr Young brought a claim in nuisance against the Crown alleging there was an ongoing rockfall hazard constituting an actionable nuisance on Crown-owned land adjacent to his property. He sought a declaration that the Crown implement extensive protective works or provide damages for his loss.

[4]    I found there was an actionable nuisance and the Crown had a measured duty to do what was reasonable in all the circumstances. However, I refused to grant a declaration that the Crown implement protective works because the proposed works were neither practicable nor cost effective, and so were unreasonable in the circumstances. I found the Crown had discharged its duty by making the hybrid red zone offer (the offer) to purchase Mr Young’s land in 2015.

Where should costs lie?

Mr Young’s position

[5]    Mr Barker QC, for Mr Young, submits costs should lie where they fall because the economic effect of the judgment is analogous to a successful claim for damages of

$1,299,3833 (the value of the offer) as the land in its current state has no value.4 If the

judgment was framed in those terms, Mr Young would be entitled to costs, subject to reductions to account for the low quantum awarded compared to that sought and any Calderbank arguments.5

[6]    Second, Mr Barker submits it is inappropriate to award the Crown costs because the Crown was successful on an issue it did not argue. The Crown submitted the measured duty was to provide access for Mr Young to enter his property and used

3      That is the land value of $1,050,000 plus the value of the Wong and Jamieson houses ($1,040,000) less the EQC payment to the Wongs ($67,734) less the EQC land payment ($792,883).

4      Young v Attorney-General, above n 1, at [104].

5      Weaver v Auckland Council [2017] NZCA 330, (2017) 24 PRNZ 379 at [26].

the offer as a background circumstance rather than the primary basis for their defence. The Crown’s decision to “renew” the offer at trial was made orally in opening submissions and was subject to ministerial approval.

The Crown’s position

[7]    The Crown seeks costs from Mr Young because it was the successful party. The Crown rejects Mr Barker’s characterisation of the judgment, and submits the offer is not analogous to a damages award. Mr Young had the burden to prove the Crown breached its measured duty and he failed. It is irrelevant whether the Crown pleaded that the offer was a way of meeting the measured duty.

[8]The Crown seeks $329,092.80 in costs comprising $69,448 in scale costs and

$259,644.80 in disbursements largely calculated on a 2B basis with adjustments for certain memoranda, certification for second counsel, allocation time for appearances, and preparation of briefs.

Analysis

[9]    It is clear that the losing party in the proceeding should pay the costs of the successful party.6 It is important that as far as possible the determination of costs is predictable and expeditious.7

[10]   In my view the Crown is entitled to costs in this case as it was the successful party. Mr Young’s claim was premised on him being entitled to something more than the offer and that claim failed. While there was an actionable nuisance, I held the Crown had discharged its measured duty to Mr Young by providing the offer in exchange for the land. I do not accept the offer was equivalent to an award in damages. The offer was not contingent on the litigation or an award in recognition of his claims. As the Crown says, Mr Young rejected that offer, litigated, lost and has since appealed. Characterising the judgment as analogous to a successful damages award ignores that the offer was made prior to the litigation, was contingent on the transfer of land, which

6      High Court Rules 2016, r 14.2(1)(a).

7      Rule 14.2(1)(g).

is very different from an award of damages, and was rejected on the basis Mr Young believed he was entitled to more under his claim in nuisance.

[11]The Crown was successful in defending the case. It is entitled to costs.

Increased costs

The Crown’s position

[12]   The Crown seeks costs awarded on a 2B basis but adjusting downwards for certain memoranda, and adjusting upwards to reflect certification for second counsel, allocated time for appearances, and increased costs for preparation of briefs.

[13]   The Crown requests costs for preparation based on a five day trial8 because while the efficiencies gained through “hot tubbing” reduced the length of the trial, detailed and time consuming preparation was still required. Based on a five day trial band C allows five days for preparing witness briefs.9 The Crown seeks five additional days for preparation of briefs as the nature of the proceedings and the complexity of the expert briefs meant the time required substantially exceeded five days.10 The Crown prepared seven briefs including five expert briefs, two of which involved complex geotechnical engineering and planning evidence. The Crown submits in a similarly complex case, the Court awarded the successful party two thirds of the actual time spent on the briefs of evidence.11 Here the Crown is requesting ten days in total, which is less than two thirds of the time spent, which exceeded 15 days.

Mr Young’s position

[14]   If costs are to be awarded, Mr Barker accepts the Crown’s calculation of scale costs and its claim for:

(a)certification for second counsel; and

8      High Court Rules, sch 3, item 33B.

9      Schedule 3, item 33.

10     Rule 14.6(3)(a).

11     Strathboss Kiwifruit Ltd v Attorney-General [2019] NZHC 62 at [29]-[30].

(b)the increase to five days’ preparation.

However, he does not accept the claim for 10 days for preparation of briefs.

[15]   Mr Barker submits the Crown filed two short factual briefs on issues which were either unsuccessful or abandoned by the Crown. The expert briefs were prepared by experienced experts which counsel ought to have directed to the questions they were to answer. The experts should not have had significant involvement in drafting apart from to review. Mr Barker submits given the amounts charged it can be assumed the experts, rather than counsel, have drafted their evidence. This was unnecessary and there is no reason to depart from scale costs in this instance. Based on the four day trial, the Crown should not be entitled to claim an additional six days.

Analysis

[16]   I accept it is appropriate for the Crown to seek costs for preparation of their briefs based on the scheduled five-day trial rather than four days, noting the trial did in fact go into a fifth day. I accept the Crown anticipated the level of work required was that for a five-day hearing and the efficiencies of the “hot-tubbing” procedure should not limit the Crown’s ability to claim for the expected five days.12

[17]   The Court may increase costs from the five days allocated to the ten days requested if the “nature of the proceeding or the step in it is such that the time required…would substantially exceed the time allocated under band C.”13 As noted by Mallon J in Strathboss Kiwifruit Ltd v Attorney-General there is significant work to be done by counsel when preparing briefs in complex cases14

identifying the areas on which expertise is necessary in light of the factual and legal issues of the case, identifying relevant witnesses with the necessary expertise, instructing the experts, identifying the relevant documents for their instruction, reviewing drafts to ensure they address the relevant matters and in a manner appropriate for the Court’s understanding and so on.

12 In Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd [2015] NZHC 470, (2015) 23 PRNZ 200 at [28] Katz J took into account that the parties had prepared for a four week trial although the trial only took six days, when determining costs.

13 High Court Rules, r 14.6(3)(a).

14 Strathboss Kiwifruit Ltd v Attorney-General, above n 11, at [29].

[18]   Here the complexity of the geotechnical evidence necessarily presented by the Crown, including the alternative remediation proposal developed by the Crown, meant the time required to create these briefs of evidence was likely to substantially exceed the time allotted under band C. I consider the requested uplift is appropriate.

Reduction in scale costs

Mr Young’s position

[19]   If costs are not to lie where they fall, Mr Barker submits a reduction in scale costs of 50 per cent is appropriate to recognise the issues canvassed above at [5]-[6] and that the Crown failed on the important defence of statutory immunity. This was a key aspect of the Crown’s position during litigation. Although Mr Young was not required to call evidence on that issue, his lawyers had to review the Crown evidence from Mr Ombler and Mr Bradley and had to prepare to cross-examine those witnesses and to address the defence in closing.15 It was a difficult legal issue requiring the review of complex legal decisions. It imposed additional cost on Mr Young.

[20]   Further Mr Barker submits the Crown failed on other aspects of its claim, including Dr Kupec’s proposed alternative remediation plan and assessment of the steps required  to  finalise  the  subdivision  before  the  earthquake  and  costings.  Mr Barker also highlights the Crown’s abandonment of its counterclaim in trespass. Mr Young would be entitled to costs for his statement of defence to this counterclaim of $4,780. The combined effects of these issues where the Crown did not succeed was an increase in Mr Young’s costs which makes a scale award inappropriate.16 A deduction of 50 per cent against scale costs is requested.

The Crown’s position

[21]   The Crown rejects that any reduction is required for the statutory authority defence. The Crown refers to Easton Agriculture Ltd v Manawatu-Wanganui Regional Council where the Court found the Council owed a duty of care which was breached, but, causation was not made out and the plaintiffs unsuccessfully sought a reduction

15     Although in the end only one of them was cross-examined.

16     High Court Rules, r 14.7(d).

in costs because they had succeeded on the issue of duty and breach.17 Kós J stated “the plaintiffs have failed altogether. It makes no difference that they succeeded on some essential steps in their negligence claim, when they failed on the final step.”18

[22]   The Crown also refutes the submission that some of the evidence was not accepted but, even if it was not, if it is reasonable to engage an expert for the proceedings the fee is recoverable, even though it may not have assisted.19 Mr Bradley and Mr Ombler provided evidence on the Crown’s reasonable dealings with Mr Young on the offer and access. There is no reason to deduct costs for their briefs.

Analysis

[23]   As noted by the Supreme Court “the loser and only the loser pays” unless there are exceptional circumstances.20 Rule 14.7 High Court Rules 2016 allows the Court to reduce the costs award that otherwise would be payable if:

(d) although the party claiming costs has succeeded overall, that party has failed in relation to a cause of action or issue which significantly increased the costs of the party opposing costs; or

…

(g) 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.

[24]   I accept that Mr Young had to devote resources to address the defence of statutory immunity as it would have been a complete defence to the plaintiff’s claim if it had been successful. However, it was not unreasonable for the Crown to raise this defence, as a step in opposing liability in nuisance. Furthermore, although the parties did not refer to it, the legal arguments on this issue were prepared for the hearing of the preliminary question on what defences were available to the Crown. Mr Young was held to be entitled to 2B costs on that occasion, so to some extent at least, he has

17     Easton Agriculture Ltd v Manawatu-Wanganui Regional Council HC Palmerston North CIV-2008-454-31, 22 December 2011.

18     At [29(b)].

19     New Zealand Steel Ltd v Minister of Commerce and Consumer Affairs [2018] NZHC 3133 at [9].

20     Shirley v Wairarapa District Health Board [2006] NZSC 63, [2006] 3 NZLR 523 at [19] cited in

Taylor v Roper [2019] NZHC 16, (2019) 24 PRNZ 373 at [10].

been compensated for researching and preparing arguments on that issue.21 Although the Crown failed on that point, it was ultimately successful in resisting Mr Young’s claim and there is insufficient reason to reduce costs to the Crown.

[25]   The counterclaim in trespass was a simple factual issue which occupied little time at trial and which needed to be covered in evidence in any event as part of the factual narrative. It did not materially alter the scope of the evidence Mr Young had to prepare, and its abandonment did not lead to significant wasted costs for him. Again, it does not warrant a reduction in the costs award.

Disbursements

The Crown’s position

[26]   The Crown seeks $259,644.80 in disbursements, for accommodation, travel, court fees, photocopying and expert fees. That figure includes a claim for expert fees of $253,507.25 from the total of $354,774.59 incurred.22 These expert fees relate to the five expert witnesses called and a junior staff member at Aurecon.

[27]   The Crown acknowledges that for the Court to approve expert fees as disbursements, the fees must be specific to the conduct of the proceeding; reasonably necessary for the conduct of the proceeding and reasonable in amount.23 The Crown submits its expert evidence was related to the issues in dispute and was specific to the proceedings, it was necessary to engage all of its experts, and its evidence was referred to in the judgment.24 However, if it was reasonable to engage an expert for the conduct of the proceedings the fee is recoverable regardless of whether it assisted the Court, and here the evidence was clearly reasonable and required to respond to the evidence provided by the plaintiffs.25 Finally, the submission that the expert fees were reasonable is supported by affidavit evidence from an independent expert,

21     Young v Attorney-General [2019] NZHC 993, [2019] 3 NZLR 808 at [72].

22     This was adjusted in the Crown’s reply memorandum from $259,202.25 to $253,507.25 (by

$5,695) in recognition of various points raised by Mr Young.

23     High Court Rules, r 14.12(2)(b)-(d).

24     Including evidence from  Dr  Jan  Kupec,  Brent  Toms,  Mark  Allan,  Mark  Shalders  and  Mike Southby.

25     New Zealand Steel Ltd v Minister of Commerce and Consumer Affairs, above n 21, at [9].

Ms Rori Green. Where Ms Green has found an unreasonable cost, the Crown has adjusted the costs claimed in accordance with Ms Green’s view.

[28]   The Crown also  seeks  $90,343.75  in  expert  fees  for  the  assistance  of  Ms Gibbons, as Associate at Aurecon, in preparing the expert evidence. Expert fees are claimable for work done by more junior members of an expert witness team.26 Using her expertise was significantly more cost effective as her charge out rate was less than Dr Kupec, Mr Allan, and Mr Toms.

Mr Young’s position

[29]   Mr Barker submits there should be no disbursements as these follow costs,27 and if the judgment had been phrased as an award of damages for Mr Young in the amount of the offer, he would have been entitled to claim his expert fees. If that argument is rejected he considers the disbursements claim is excessive and should be reduced.

Fees excessive

[30]   Mr Barker submits any award of disbursements for experts’ fees should be reduced by 50 per cent because the fees for the three Aurecon expert witnesses were excessive  and unjustified.  Mr Barker  submits based on  a 35 hour billable week   Dr Kupec spent 4.5 weeks, Mr Toms four weeks, Mr Allan 3.6 weeks and Ms Gibbons nine weeks on their evidence. This seems unreasonable. Dr Kupec’s evidence was extensive but it covered undisputed issues and some of it was not accepted. Mr Allan’s evidence was an 18 page summary of the planning rules and their application to the remediation options - he charged $51,187.50. Mr Toms’ evidence was an assessment of the rockfall from the Crown’s land which accepted Mr Benge’s evidence as to the location of the cliff. Given it was only nine pages with three annexures, charging

$44,537.50 is excessive.

[31]   Mr Barker notes the comparative expert fees from Mr Young’s experts on geotechnical, surveying and planning evidence was $71,709, less than a third of the

26     Kelly v Lasque Construction Ltd [2015] NZHC 3368.

27     High Court Rules, r 14.12(2).

costs claimed for Aurecon. A difference of almost 300 per cent between comparable professionals who undertook largely the same work is excessive. Mr Young submits to support charging at such levels the Crown is required to justify the basis for their claim and they have failed to do this.

[32]   In reply the Crown submits it is inappropriate to compare the fees incurred by Mr Young’s experts and those incurred by the Crown experts. For example, Mr Duke and Mr Bell offered scant evidence in surveying matters and gave no planning evidence. It is better to compare the fees of Mr Duke and Mr Bell and their juniors ($71,709) with those of Dr Kupec ($56,350) plus some of Ms Gibbons’ fees.

Fees do not relate to what would be necessary for preparation of evidence

[33]   Mr Barker submits the disbursements requested for Aurecon encompass more than what would be necessary for the preparation of evidence and attendance at trial and these additional attendances are unrecoverable.28 Mr Barker criticises the Crown’s evidence as there is no information about why the various categories of attendance were necessary for the preparation of evidence by the witnesses. Some of the invoices totalling $169,150 pre-date the provision of Mr Young’s evidence to the defence. This suggests much of the earlier work related to background advice that was not related to the provision of evidence for the hearing.

[34]   The Crown rejects that it was unclear why the categories were necessary. The Crown also rejects the submission that it was not entitled to prepare evidence before receiving the plaintiff’s evidence. In this case it was able to consider in advance the remediation required, pre and post-earthquake, the volume and location of rockfall, as well as the value of the property. The Crown did not have to wait for the plaintiff’s evidence before preparing its defence.

Reasonableness of fees not adequately supported

[35]   Mr Barker also challenges the independent evidence provided by Ms Green about the reasonableness of costs. He submits she is not an expert on surveying and

28     Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494 at [62].

planning matters. As  a  geotechnical  engineer  she  is  qualified  to  comment  on  Dr Kupec’s evidence only.

[36]   Mr Barker submits Ms Green also addresses the wrong question because she notes the steps taken by Aurecon were necessary for the conduct of the case rather than necessary for the experts to prepare and  give evidence.  Mr  Barker  submits Ms Green was useful in providing a range of appropriate charge out rates, and some support for the steps Aurecon took, but provides little support for the primary question of whether the steps were necessary for the provision of evidence or whether the time spent was reasonable. The Court has criticised bald assertions as to the reasonableness of fees29 and there is little to support Ms Green’s assertions.

Costs of Ms Gibbons fees

[37]   While Mr Barker accepts that assistance of more junior personnel in assisting experts is appropriate, he submits Ms Gibbons was not particularly junior her charge out rate is similar to Dr Kupec.30 Further, Mr Barker submits Ms Gibbons appears to have provided extensive assistance to Aurecon experts in fields outside her expertise and the only time she spent preparing evidence was 140 hours drafting for Dr Kupec. Her other attendances appear to relate to other issues more generally.

Other issues

[38]   Mr Barker also challenges some of the time charged by the Aurecon experts. He submits Mr Allan’s descriptions of his attendances are inadequate to determine the reasonableness of the charges. Further,  he  takes  issue  with  various  charges  for Dr Kupec providing evidence at various three stages of the trial, Ms Gibbons’ attendance at the trial, and an entry for “monthly reporting” warranting a reduction of

$9,903. Mr Barker submits this illustrates a carelessness in recording of time in terms of the amounts subject to any award against Mr Young.

[39]   The Crown accept a minor adjustment to the expert’s fees claimed of $5695 is appropriate as some of Dr Kupec’s charges relating to the trial could be reduced, and

29     Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, above n 12, at [51].

30     Ms Gibbons charged $295 per hour, Dr Kupec charged $350 an hour.

that Ms Gibbons was not required at the trial, and her monthly reporting should also be removed.

[40]   Finally, Mr Barker submits parts of Dr Kupec’s evidence were unnecessary for the determination of the case or not accepted by the Court. Leave for Mr Toms to produce more material was refused and this cost should not be recoverable. Mr Barker submits all these issues warrant a discount of 50 per cent.

Analysis

[41]   To approve expert witnesses’ fees the Court must be satisfied the witnesses expense was specific to the conduct of the proceeding, reasonably necessary for the conduct of the proceeding, and reasonable in amount.31 Actual fees can be sought if they meet these criteria.32 To satisfy the Court the fees are reasonable a description of the attendances and analysis is required.33

[42]   Here, perhaps reflecting that the costs relating to expert witness fees were high, the plaintiff has taken the unusual step of filing an affidavit from Ms Green, a geological engineer, to provide expert evidence on:

(a)whether the categories of  attendances  undertaken  by  Dr  Kupec,  Mr Allan, Mr Toms, Ms Gibbons and Mr Southby were reasonably necessary for the conduct of this proceeding;

(b)whether the amount of time claimed for the relevant categories of attendances were reasonable; and

(c)whether the hourly rate charged by each author is reasonable.

I note, too, that Ms Green was careful not to express opinions on issues which were beyond her expertise, for example, on the utility of the evidence as to value of the property in its pre and post-earthquake state.

31     High Court Rules, r 14.12(2)(b)-(d).

32     Air New Zealand Ltd v Commerce Commission, above n 28 at [64].

33     Sullivan v Wellsford Properties Ltd [2018] NZHC 129 at [52]-[53]; Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd, above n 12, at [44(1)].

[43]   In order to assess the reasonableness of each category of attendances undertaken by the experts at Aurecon, she considered:

(a)whether the attendances related to the issues raised in this case; and

(b)whether the extent of work done was proportionate to what was required.

In that regard, she set out her understanding of the key relevant issues in the case which needed to be addressed by Aurecon’s experts.

[44]   While I consider such evidence is not usually required, as the relevance of the steps taken to the issues in the case can usually be assessed by the Judge, the evidence was nevertheless helpful. In particular, I found her comments on the extent of the work done in relation to the preparations of preliminary reports, and her conclusion that the total fees charged for these was “a relatively high proportion of the overall cost for the engineering works” and a lesser amount was reasonable, was of utility. Her evidence on usual charge-out rates for this work confirming that the rates charged were “within the range of typical rates charged by peer firms”, albeit at the upper end of the scale, was also useful. Accordingly, I reject the challenges to her evidence.

[45]   In my view, the Crown has responsibly reduced the amount it is seeking for its expert witness fees by reference to her comments, and the requirement that the fees be “reasonably necessary for the conduct of the proceeding and reasonable in amount” has been met. Accordingly, I am satisfied that the reduced amount the Crown is seeking in respect of expert witness fees should be awarded.

[46]   I reject the suggestion that because some attendances related to work undertaken before receiving the plaintiff’s evidence, meant they were not specific to the conduct of the proceeding or reasonably necessary for it. As soon as the claim was received, the Crown would have needed to take advice from experts in order to consider what position to adopt in the proceeding.

[47]   I also do not accept the assertions that some of the evidence was irrelevant, or was rejected by the Court. For example, the Crown’s alternative remediation option, which did not require works which were prohibited by the Christchurch City Plan, was a useful way of testing whether there was a viable and cost-effective remediation option which would address the rock fall risk. Although this option proved not to be cost-effective, it was useful to have this option before the Court in order to determine what the extent of the Crown’s measured duty to respond to the nuisance should be.

Analysis

[48]   The Crown has provided an affidavit from Ms Gibbons explaining her involvement in the proceedings. Ms Gibbons’ charge out rate is $55 lower than the other experts and Ms Green considered it reasonable. I reject Mr Barker’s submission that Ms Gibbons was unqualified to provide assistance to other Aurecon experts. She was an associate at Aurecon with 17 years’ experience in the industry and she was qualified to provide assistance to her colleagues. Some of Ms Gibbons’ other attendances include helping collate data, summarising the relevant background geotechnical and geological information and assisting with geohazard information. All of this information  was utilised in the  provision of expert  evidence. I  reject  Mr Barker’s criticism of Ms Gibbons’ fees.

[49]   In my view, the other issues raised by Mr Barker regarding Aurecon experts’ time charged do not warrant further reductions.

[50]   For all these reasons, I consider it is appropriate to award disbursements as claimed by the Crown. These meet the requirements of High Court Rules 14.12(1)(b) and (c) and have been appropriately discounted to satisfy the requirement that they be “reasonable in amount”.34

Result

[51]Costs are awarded to the defendant in the sum of $329,092.80. This comprises

$69,448 in scale costs and $259,644.80 in disbursements as set out in the costs

34     High Court Rules 2016, r 14.12 (d).

schedule annexed to the defendant’s costs memorandum dated 12 April 2021, with the adjustments incorporated from the defendant’s reply memorandum on 12 May 2021.

Solicitors:
Crown Law, Wellington

Copy To:

Mr Andrew Barker QC, Barrister, Auckland Mr J Moss, Barrister, Christchurch