ZYXCBA Developments Ltd v Auckland Council

[2015] NZHC 2224

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-2306 [2015] NZHC 2224

UNDER	the Declaratory Judgments Act 1908
BETWEEN	ZYXCBA DEVELOPMENTS LIMITED Plaintiff
AND	AUCKLAND COUNCIL Defendant

Hearing:	On the papers
Counsel:	M E Casey QC and A Davidson for the Plaintiff D J Neutze and M C Allan for the Defendant
Judgment:	16 September 2015

COSTS JUDGMENT OF MUIR J

This judgment was delivered by me on Wednesday 16 September 2015 at 10.30 am pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

Counsel/Solicitors:

M E Casey QC, Barrister, Auckland
P Castle, Castle Brown, Auckland

D J Neutze, Brookfields, Auckland

M C Allan, Brookfields, Auckland

ZYXCBA DEVELOPMENTS LIMITED v AUCKLAND COUNCIL [2015] NZHC 2224 [16 September 2015]

[1]      In my judgment of 23 June 20151  I declined the declarations sought by the plaintiff relating to the approach which should be followed by valuers in assessing the value of reserve land which vested in the defendant following lodgement of a subdivision plan by the plaintiff.

[2]      In regards to costs, I indicated:2

The defendant is entitled to costs which, absent any special considerations of which I am unaware, I would award on a 2B basis (one counsel).   In the event costs cannot be settled by agreement, brief memoranda may be filed. These are to be exchanged in draft before filing so as to limit areas of disagreement.

[3]      I have now received memoranda from counsel indicating that they have not been able to resolve costs and detailing their areas of disagreement.

Defendant’s application for costs

[4]      The defendant seeks increased costs of up to 50 per cent for the following stated reasons:

(a)      The defendant repeatedly raised concerns as to the appropriateness of the plaintiff’s declaratory judgment proceeding in resolving the core dispute between the parties;

(b)The defendant also proposed other more efficient means of resolving the dispute, such as by referring the dispute to the Land Valuation Tribunal or arbitration;

(c)      Associate Judge Bell, in a minute following the first case management conference,   expressed   concern   about   the   plaintiff’s   piecemeal approach to the calculation of the compensation claim and gave a

“costs warning” to the plaintiff;

1      ZYXCBA Developments Ltd v Auckland Council (No3) [2015] NZHC 1412.

2 At [135].

(d)The final judgment shared Associate Judge Bell’s concerns regarding the suitability of the declaratory judgments procedure to the issues raised in this proceeding;

(e)      The plaintiff decided to pursue the declaratory judgments procedure in the face of the strong contrary indications from both the defendant and Associate Judge Bell;

(f)      A “fundamental difficulty” with the plaintiff’s approach was the lack of  any  valuation  based  on  the  pro  rata  formula  or  any  of  the approaches by which it said the value of the land is captured; and

(g)      The plaintiff pursued arguments that lacked merit.

[5]      Alternatively, if increased costs are not awarded, the defendant seeks scale costs in the sum of $29,253, together with disbursements of $21,702.  Contrary to the plaintiff’s view, the defendant considers that it should be able to claim costs for:

(a)      A second case management memorandum which it says was helpful and addressed important legal questions raised in Associate Judge Bell’s minute dated 2 February 2015;

(b)A second affidavit by Mr Harland and the memorandum of counsel dated 16 June 2015.  It says this second affidavit was filed directly in response to the Court’s invitation at [16] of the second judgment dated

25 May 2015;3

(c)      Second counsel.  The defendant says its junior counsel was present in Court for most of the hearing and the way in which the trial was conducted meant that a reasonable level of in-trial work was required, for which junior counsel took substantial responsibility.  The in-trial work encompassed preparing submissions in opposition to the plaitniff’s  application  for  leave  to  amend  its  statement  of  claim,

further research in relation to the history of r 15.15.2.2.3, and the preparation of further submissions on the pro-rata declaration; and

(d)The  actual  fees  relating  to  the  defendant’s  expert  valuer,  Mr Delbridge,4  were reasonably necessary for the conduct of the proceeding and are reasonable in amount.

Plaintiff ’s position

[6]      The plaintiff submits that the defendant should only be entitled to claim scale costs for one counsel, resulting in scale costs of $24,875 and that an allowance of

$5,382 (inclusive of GST) should be made in respect of Mr Delbridge’s costs.

[7]      The plaintiff points out that the defendant’s reasons for an increased award of costs were all matters that the Court was aware of when it gave the 2B indication. Those  matters   were  discussed   in   the  “discretion”  section   of  the   judgment immediately preceding the costs indication.  In any event, the plaintiff denies that the declaratory proceedings were inefficient, unreasonable or lacked merit.  It argues that it should not be penalised for seeking to clarify the meaning of a rule which was acknowledged to be poorly drafted and internally inconsistent.   It points out that whilst it was criticised for not having produced a valuation to support its position, it took the view that the declarations were sought to clarify what the valuers were then required to do.   The plaintiff says that the overarching objective of obtaining clarification of the valuers’ task was achieved despite the outcome.   Therefore, to that extent, the proceeding was an efficient way of determining the approach the District Plan requires compensation to be assessed.

[8] The plaintiff opposes costs for the four items claimed as set out above at [5]. In respect of Mr Delbridge’s costs the plaintiff submits that, to the extent that the expert assistance was necessary for the conduct of the proceeding, the amount claimed is not reasonable. It points out that Mr Delbridge undertook approximately

87 hours of work in relation to the proceeding which equates to nearly 11 full days of work.

Discussion

[9]      Rule 14.1 of the High Court Rules provides that costs are at the discretion of the Court.  That discretion is not, however, unfettered.  It is qualified by the rules set out in rr 14.2 to 14.17.  Any departure from the costs regime established by those rules must be a considered and particularised exercise of the discretion.5

Increased costs

[10]     The Court may make an order for increased costs under r 14.6 where there is a failure by the paying party to act reasonably.6   I do not consider increased costs to be appropriate in the circumstances.   Although the defendant raises a number of matters in its memorandum in support of its application these were all matters of which I was appraised at the time giving my judgment.   Nevertheless, I indicated that the award should be on a 2B basis absent any special considerations of which I

was unaware.

[11]     It is correct that my judgment includes, as an alternative basis for the denial of relief, observations about whether the claim was one where the discretionary relief contemplated by the Declaratory Judgments Act 1908 was appropriately given.   I record the relevant objections in my judgment.  But what cannot be gainsayed about this litigation is that, whether the way forward be by negotiation, mediation, arbitration or adjudication by the Land Valuation Tribunal, the plaintiff’s declaratory judgment proceedings have given an opportunity for the High Court to express its views in respect of the proper construction of Plan provisions acknowledged by the respondent (and by me in my judgment) to be awkward and the interpretation of which has necessitated a detailed consideration of the context and scheme of the Plan.   These were not matters of which Associate Judge Bell was aware when he gave his costs warning.  Only at the conclusion of trial was that assessment possible

and this is reflected in [135] of my judgment.

5      Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305 at [7] and [16]; Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at [22]; Mansfield Drycleaners Ltd v  Quinny’s Drycleaning (Dentice Drycleaning Upper Hutt Ltd) (2002) 16

PRNZ 662 (CA) at [27].

6      Bradbury v Westpac [2009] NZCA 234, [2009] 3 NZLR 400 at [27].

[12]     The defendant also considers that the plaintiff pursued arguments that lacked merit, citing my comment that “the case law [was] firmly against the declaration sought”, in relation to declaration 1(c). However, that declaration was not the focus of the proceeding.  The proceeding centred on declarations (a) and (b) which raised live and significant issues.

[13]     For these reasons I do not consider an award of increased costs appropriate in terms of r 14.6.

Second case management memorandum

[14]     This memorandum was prepared for the first case management conference on

3 February 2015.   It is listed as item 4 in the defendant’s schedule.   In a minute issued on 2 February 2015, Associate Judge Bell raised a number of questions and invited counsel to “provide further information at the conference” the following day. The defendant decided to file a second memorandum which responded to some of the questions raised.   I consider that the second memorandum was helpful to the Associate Judge and the defendant is entitled to claim costs for this step.

Second affidavit by Mr Harland and memorandum

[15]     In my judgment dated 25 May 2015, I granted leave to the defendant to file additional evidence relating to the context and history of the relevant plan provisions which  may assist  interpretation  of the  “pro rata” point.   Accordingly,  a second affidavit was filed by Mr Harland, one of the defendant’s senior planners.   In my minute dated 15 June 2015, I recorded that I had received and read that affidavit but that I did not consider it took the matter “materially beyond that already advanced in the evidence and by Mr Neutze in his submissions”.  I decline costs for this item on the basis that I was not materially assisted by it.

Second counsel

[16]     My judgment records an allowance for one counsel only.   I am happy to elaborate the reasons.   I do not, having regard to the decision in Nomoi Holdings

Ltd,7 regard there as being anything so atypical about this litigation as to warrant an allowance for second counsel.  It was conducted on sworn affidavits with reasonably limited cross-examination and was fundamentally a legal argument based (in large measure)  on  uncontentious  facts.     It  is  accepted  that  the  plaintiff ’s  several applications for amendments in terms of the relief sought created some additional work during trial.  That is recognised in a discrete costs award in respect of the first (failed) application.  The case is not in my view one where the analogy with “former trial practice” referred to by Chambers J in Nomoi Holdings is sufficiently strong to warrant allowance for second counsel.

Disbursements

[17]     The defendant seeks reimbursement of Mr Delbridge’s actual fees of $21,482 under r 14.12 on the basis that the expert fees were reasonably necessary for the conduct of the proceedings and are reasonable in amount. That rule provides:

14.12 Disbursements

(1)      In this rule,—

disbursement, in relation to a proceeding,—

(a)       means an expense paid or incurred for the purposes of the proceeding that would ordinarily be charged for separately from legal professional services in a solicitor’s bill of costs; and

(b)      includes—

(i)       fees of court for the proceeding:

(ii)      expenses of serving documents for the purposes of the proceeding:

(iii)     expenses  of  photocopying  documents  required  by these rules or by a direction of the court:

(iv)     expenses of conducting a conference by telephone or video link; but

(c)      does not include counsel’s fee.

relevant issue, in relation to a disbursement, means the issue in respect of which the disbursement was paid or incurred.

7      Nomoi Holdings Ltd v Elders Pastoral Holdings Ltd (2001) 15 PRNZ 155 (HC) at [21].

(2)      A disbursement must, if claimed and verified, be included in the costs awarded for a proceeding to the extent that it is—

(a)      of a class that is either—

(i)       approved  by  the  court  for  the  purposes  of  the proceeding; or

(ii)      specified in paragraph (b) of subclause (1); and

(b)      pecific to the conduct of the proceeding; and

(c)      reasonably necessary for the conduct of the proceeding; and

(d)      reasonable in amount.

(3)      Despite subclause (2), a disbursement may be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.

…

[18]     There  is  no  dispute  that  Mr  Delbridge’s  fees  are  a  disbursement.8      The defendant is prima facie entitled to recover the actual expenses, provided that the criteria in r 14.12(2) and (3) are met.9

[19]     Nor is it disputed that Mr Delbridge’s expert assistance was to at least some extent reasonably necessary for the conduct of the proceeding.  The challenge is to the amount of time spent.  The plaintiff compares the 87 hours (or 11 days) spent with the scale costs calculation for the defendant’s counsel which assumes 13.2 days for the full proceeding.

[20]     A party’s entitlement to recover the actual fees  and disbursements of its experts (provided they meet the criteria in r 14.12(2) and (3)) extends not only to time spent preparing and giving evidence, but also that spent critiquing other parties’ experts in order to assist counsel to understand the issues and opposing contentions and to assist them with cross-examination.

[21]     In the present case Mr Delbridge produced a substantial, closely reasoned and helpful affidavit and there is no dispute that the defendant should be entitled to

8      See Air New Zealand Ltd v Commerce Commission [2007] NZCA 27, [2007] 2 NZLR 494 at

[47].

9      At [48] and [64].

recover his attendances at court and assisting counsel in preparation of cross- examination of the plaintiff’s expert valuer Mr Bennett (including a critique of his reply evidence).  I accept also the defendant’s submission that, in the way the reply evidence was approached, invoking concepts of fair and special value, Mr Delbridge had a significant role in assisting counsel to meet what was an evolving case.  This was so even during the course of the hearing as a result of the late amendment which I allowed to the prayer for relief (the so called “pro rata”) argument.

[22]     Nor  is  there  any  specific  challenge  to  the  hourly  rate  charged  by  Mr Delbridge which at $260 per hour for court attendances and $219 per hour for all other attendances I consider reasonable in amount for an expert of his experience.

[23]     Mr  Delbridge’s  three  accounts  total  $23,333.50  including  GST.    Of  that

$7,607, including GST, is said to be for preparation of the affidavit and $1,495, including GST, for attendances at Court.   The total amount which the defendant claims in its schedule is $21,482 including GST.

[24]     I  am  satisfied,  given  the  nature  of  the  proceedings  and  particularly  the evolving character of the defendant’s evidence and of the relief sought, that a close relationship was necessary between counsel and its expert throughout those proceedings, which is reflected in an account somewhat higher than may be typical but which is nevertheless reasonable and proportionate.

Result

[25]     I allow:

1.        Costs in the amount of $25,671.

2.        Disbursements as claimed in items 13-17 of Schedule A annexed to

the defendant’s submission and totalling $21,702 (GST inclusive).

Muir J