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Mills v Far North District Council [2018] NZHC 3091 (27 November 2018)

Last Updated: 3 December 2018

JUDGMENT OF FITZGERALD J

[As to costs]

This judgment was delivered by me on 27 November 2018 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar........................................ Date...............

Solicitors: Richard Mark, Kerikeri

Law North Ltd, Kerikeri

Henderson Reeves, Lawyers, Whangarei

Mills v Far North District Council [2018] NZHC 3091 [27 November 2018]

Introduction

[1] In a substantive judgment dated 15 August 2018, I determined the applicants’ application for judicial review of two decisions made by the first respondent (the Council).¹ Those decisions granted a resource consent to the second respondents (the Gans) and determined that the consent application would proceed on a non-notified basis.

[2] The applicants advanced six causes of action. I held two of the causes of action to be made out and dismissed the remaining four. Despite my conclusion that the Council had erred in part of its decision-making process, I declined to exercise my discretion to grant relief in this case.

[3] Although I upheld only two of the four causes of action advanced by the applicants, they were, in my view, the most important causes of action advanced and those which attracted the most time and attention in the submissions and hearing. And, although I declined to grant relief, the reasons for upholding the applicants’ two causes of action are in my view likely to have a somewhat broader effect. They focussed on the material the Council ought to have taken into account when assessing a resource consent application of the type in this case and the sufficiency of the information before the Council when it did so. That said, the fact I declined to grant relief, despite the errors found in the Council’s decision-making process, will have been a significant outcome from the Gans’ perspective.

[4] At the conclusion of my judgment, I encouraged the parties to agree costs. They have been unable to do so. This judgment accordingly determines the competing (and somewhat complex) costs submissions.

[5] The applicants also applied to recall my judgment, which I declined.² This judgment also deals with costs on that application.

¹ Mills v Far North District Council [2018] NZHC 2082.

² Mills v Far North District Council [2018] NZHC 2451.

Legal principles

[6] In the ordinary course, costs are awarded to the successful party against the unsuccessful party.³ Further, parties ordered to pay costs are jointly and severally liable unless ordered otherwise by the Court.⁴

[7] Limited success is still, however, success for the purposes of costs.⁵ It is therefore generally wrong in principle to award costs against a party who has enjoyed a measure of success. Rather, where circumstances make it appropriate, the costs awarded to the successful party may be reduced, or costs ordered to lie where they fall.⁶

[8] The above cost principles ought to be fairly straightforward to apply in most cases. In a proceeding of this kind, however, complications can arise. As noted, the applicants sought judicial review of the Council’s decision-making on the Gans’ application for resource consent. Both the Council and the Gans were therefore properly named as respondents to the proceedings. In some cases like this, one of the named respondents will abide the Court’s decision, and the other will take up the substantive role of defending the proceedings. Particularly if the decision-maker is the party abiding, but is ultimately found to have acted unlawfully, questions can arise as to whether it should nevertheless have a costs award made against it. In addition, parties in the Gans’ position can sometimes be viewed as “innocent” parties to the proceedings, having been properly named as a respondent, but not having taken steps in the proceedings which would otherwise warrant a costs award against them. And further complications can arise, as in this case, where the applicants have succeeded on some but not all of their claims, and where despite concluding the decision-maker fell into error, the Court declines to grant relief.

[9] Several High Court authorities, which have considered the approach to costs in similar cases, were recently addressed by Thomas J in Rochdale Precinct Society

³ Shirley v Wairarapa District Health Board [2006] NZSC 63; [2006] 3 NZLR 523 at [19].

⁴ High Court Rules, r 14.14.

⁵ Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36; and Weaver v Auckland Council

[2017] NZCA 330.

6. Water Guard NZ Ltd v Midgen Enterprises Ltd [2017] NZCA 36 at [13] and Weaver v Auckland Council [2017] NZCA 330 at [26]–[29].

Inc v Christchurch City Council.⁷ I can do no better than respectfully adopt her Honour’s summary of those earlier authorities:

[18] In Beach Road Preservation Society Inc v Whangarei District Council, Chambers J determined costs between two unsuccessful respondents: the council and a resource consent applicant, Mr Wilkinson.⁸ The respondents raised various objections with respect to costs, one of which was that Mr Wilkinson ought not to be liable because the council was responsible for the error on which the judicial review turned. Chambers J rejected that submission and ordered costs, jointly and severally between the two:

[19] Mr Bell submitted that the council alone should have to meet any costs order. He made that submission on three bases. First, the error in granting the resource consent was the council’s error, not Mr Wilkinson’s. ...

...

[21] With respect, both sets of submissions are off point. On a costs application we are not concerned with how the original decision under attack came to be made. What we are concerned with is the litigation itself. The society brought a claim correctly identifying the council and Mr Wilkinson as respondents. On being served with the notice of proceeding and statement of claim, the council and Mr Wilkinson had an election: to defend the proceeding or not. Both chose to defend the proceeding. I concluded that the proceeding was well brought. The society is entitled to costs. Both respondents must share responsibility for those costs because, and only because, each decided to defend the proceeding, wrongly, as it turned out. That is why they must pay costs to the society. It is irrelevant how the land came to be zoned as it was or how the resource consent decision came to be made. Parties pay costs because they have elected to bring or defend proceedings and have adopted a stance in those proceedings which a court has found to be unjustified.

[19] Similar circumstances arose in Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council, where the council’s liability was capped at 20 per cent.⁹ In that case, the council abided the Court’s decision, but the second defendant, a private entity, sought to resist the judicial review application. The council was responsible for the error (a decision to process a resource consent on a non- notified basis) which led to a successful review. After citing the passage from Beach Road above, French J stated:

[18] In so far as these comments could be interpreted as meaning that a person who abides the decision of the Court can never be liable for any costs, I must respectfully disagree. That would be too absolute a proposition. Ultimately, the task of the Court is to make an assessment of overall justice as between the particular parties. On the facts of this case, where the Council made a very fundamental and serious error which necessitated the issuing of proceedings, I consider the council should make a contribution. However, because it responsibly did not

⁷ Rochdale Precinct Society Inc v Christchurch City Council [2018] NZHC 1708.

⁸ Beach Road Preservation Society Inc v Whangarei District Council [2001] NZHC 811; (2001) 16 PRNZ 13 (HC).

9. Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council HC Invercargill CIV-2008-425-518, 19 May 2009.

defend the proceeding, its liability should be limited to 20% of the costs and disbursements, excluding the costs of the experts.

[20] Chisholm J took a different approach in Barrett v Wellington City Council.¹⁰ In that case, the council, which had resisted the review, was primarily responsible for the established error and the other defendants were in some senses as “innocent” as the plaintiff. The council was ordered to pay not only the costs of the plaintiff but also the other defendants because it was up to the council to comply with notification provisions:

[5] ... As I see it, responsibility for that outcome must rest squarely with the first defendant. The second/third defendants were parties to the review process because they were parties affected, not because they carried responsibility in some way or other for the Council’s decision not to notify.

...

[9] ... I am not persuaded that this is a situation where costs should rest where they fall. My reasons can be summarised. First, the fact that the second/third defendants sought to uphold the Council’s decision should not count against them. Given their expenditure on the complex running into many millions of dollars, it is not at all surprising that they attempted to support the Council’s decision. Secondly, while the first defendant now claims that if it had been aware that it might have to pay the second/third defendants’ costs it would have more actively discouraged the second/third defendants from incurring significant costs; the reality was that it was always vulnerable to an order for costs in favour of the second/third defendants. Thirdly, I do not accept that shortcomings in the developer’s assessment of effects has any direct bearing on the Council’s decision not to notify. Fourthly, the fact that the second defendant might be an experienced property manager cannot alter the fact that it was the Council’s decision which gave rise to this proceeding. Fifthly, the first defendant’s claim that the second/third defendants benefited from the Court’s judgment (by avoiding public scrutiny of the project) needs to be balanced against the allegation by the second/third defendants that if they had been aware of the problem they would simply have repositioned the eastern wing to ensure that it was a permitted activity.

[21] Preferring the approach in Kawarau, Gendall J made essentially the same decision in Sutton v Canterbury Regional Council.¹¹ In that case, the council choseto abide the decision of the Court whereas the second respondent chose to resist the judicial review application. Because the second respondent was the real protagonist, Gendall J considered it was unjust to make the council jointly and severally liable. The council was nevertheless liable for 20 per cent of the applicant’s costs (including disbursements) because it was the council’s error which led to the success of the review:

[41] Infinity, as the unsuccessful party who actively resisted the applicants’ judicial review application here and argued their position in full, must be the primary party liable for the applicants’ costs. And because the Council elected not to oppose and participate in these proceedings, it would be unjust, in my view, to make it jointly and severally liable for the full amount of the applicants’ costs.

¹⁰ Barrett v Wellington City Council HC Wellington CP 31/00, 25 July 2000.

¹¹ Sutton v Canterbury Regional Council  [2015] NZHC 1000. 

[42] The Council however clearly made mistakes in its original decision and must be seen as responsible in part for the outcome here. Therefore, to achieve overall justice between the parties in the circumstances of this case, I consider it necessary to apportion the applicants’ costs here in the same way as did French J in Kawarau Jet Services Holdings. In this case, as in the proceedings before French J, the Council made “a very fundamental and serious error which necessitated the issuing of proceedings”. Accordingly, and despite the comments of Chambers J onthe basis of shared responsibility for costs in Beach Road Preservation Society, as I see it the Council should contribute in some way to the applicants’ costs.

[43] As to quantum, I must note and weigh into the consideration here the Council’s responsible decision not to oppose the application in this proceeding, and their apparent reliance earlier on the erroneous AEE which Infinity had compiled and provided to the Council. As with Kawarau Jet Services Holdings, I consider here the Council’s liability should be limited and a contribution of 20 per cent in my view would be appropriate. But, unlike the decision in Kawarau Jet Services Holdings I do include the expert evidence fees and expenses ($5,111.41), together with the other disbursements in the Council’s proportionate liability here. Noting matters raised by French J in Kawarau Jet Services Holdings, the real protagonist in these present proceedings I find was Infinity. But clearly the expert Ms Johnston’s report and her overall contribution here assisted in correcting the earlier errors made by the Council and establishing the proper position. As such, in assessing the overall justice in this case, the Council should meet a part of this disbursement.

[22] In summary, unsuccessful parties are prima facie jointly and severally liable. That rule may be varied because the ultimate task of the Court is to make an assessment of overall justice as between the particular parties, in the particular circumstances. Relevant considerations include whether and in what manner the parties participated in the proceedings, the extent to which one party was in error,and what measure of reliance was placed on the error by the other party.

[10] As French J emphasised in Kawarau Jet Services, the ultimate aim is to make an assessment of the overall justice as between the parties to the particular case. That is the approach I adopt in determining costs in this case.

Submissions

Applicants’ submissions

[11] The applicants say they are the successful party overall. They point to the fact they were successful on two of the six causes of action advanced, noting the principle that limited success is still success. The applicants therefore say there can be no question they were the successful party as against the Council, because even though relief was ultimately declined, the Court nevertheless found the Council had erred in material respects in its decision-making process.
[12] In terms of the position as between the applicants and the Gans, the applicants say there is no basis for a costs award in the Gans’ favour against the applicants. Counsel for the applicants, Mr Williams, notes he is aware of cases in which the decision-maker has been found to have been in error but the Court has ordered costs against a judicial review applicant where relief has been refused. Mr Williams submits that in each of those cases, however, the errors made out were not found to be material, which cannot be said to be the case here. At the very most, the applicants say that as between them and the Gans, costs should lie where they fall, given the Gans both pleaded against and opposed the substantive causes of action. In short, the applicants say the result between them and the Gans could be viewed as something of a “draw”.

[13] Alternatively, the applicants say that if the Court is minded to award costs to the applicants and the Gans, the Council should be ordered to meet those costs, apportioned between those parties with reference to the scale. Mr Williams says such an approach would be consistent with Heath J’s observations in Videbeck v Auckland City Council¹² and the authorities summarised by Thomas J in Rochdale.

[14] In terms of any costs award in their favour, the applicants (responsibly) propose a discount of 40 per cent of scale costs, to reflect those aspects of the claims on which they were unsuccessful. And given they were not successful in their application to recall my judgment, the applicants propose a “deletion of an amount reflecting scale costs for preparation of submissions on the recall application”.

[15] In terms of disbursements, and in addition to Court filing, setting down and hearing fees, the applicants seek recovery of fees paid for expert evidence they adduced at the hearing.

[16] The applicants therefore seek costs and disbursements totalling $23,654.41 against both respondents jointly and severally, or alternatively as against the Council only.

¹² Videbeck v Auckland City Council [2002] 3 NZLR 842 (HC).

[17] The applicants also seek costs on this costs application (“costs on costs”),¹³ on the basis they have attempted to resolve costs with the other parties in line with the Court’s initial indications, but were met with indications from the respondents that costs would be sought against the applicants, including on an increased basis.

Council’s submissions

[18] The Council’s primary position is that costs as between all parties should lie where they fall or, alternatively, costs should be awarded against the applicants in favour of the Council.

[19] The Council says all parties achieved limited success and limited adverse findings, such that there is no single party which can be considered to be the “overall successful” party. The Council also says the Gans’ conduct in relation to their application for resource consent, in failing to provide elevations to Heritage New Zealand during consultation, albeit inadvertently, “did unfortunately create additional burden on the parties in evidence and submissions”. Ms Baguley, for the Council, submits this is a matter which the Court should take into account when determining the Gans’ costs application, by reducing any costs awarded to them.

[20] The Council also points to the costs it incurred in defending multiple causes of action, many of which were not successful. It says it was successful in its position on the exercise of the Court’s discretion to decline relief, and in declining the application for recall. The Council further submits the errors in the present case were not material and had no effect on the outcome of the resource consent application.

[21] In all the circumstances, the Council says this is a case where success and failure are evenly balanced among the parties and costs should lie where they fall. Alternatively, “high costs awards” against any party would be inappropriate and not in accordance with the clear principles set out in r 14.2.

¹³ Relying on North Eastern Investments Ltd v Auckland Council [2018] NZHC 1805 at [20].

The Gans’ submissions

[22] The Gans dispute any costs liability to either party, and oppose any submission that their costs should lie where they fall. Counsel for the Gans, Ms Prendergast, submits her clients are “innocent parties” in a real sense, as well as in the context discussed by the High Court in Videbeck and Barrett v Wellington City Council.¹⁴ The Gans submit they were joined to these proceedings as parties affected, but through no fault of their own. They point to the fact they relied on professional advice in making their application for consent and had no part in the Council’s decision-making. The Gans are, unsurprisingly, neutral as to where any costs burden lies between the applicants and the Council.

[23] Ms Prendergast says the Gans were required to defend their position “in the face of attack from the applicants”, particularly with respect to what are said to have been unsubstantiated and unfounded allegations of misleading conduct. The Gans say their adoption and support of the Council’s submissions did not add to the issues or lengthen the hearing in any significant way in any event. They also point to the fact they were successful on the question of relief, the issue of key importance to them. They therefore consider they are entitled to costs from the applicants.

[24] The Gans also say they were put to additional cost in relation to the allegations of dishonesty which I found not to be made out. On that basis, the Gans seek an award of scale costs against the applicants (being $28,704) with an uplift of 20 per cent on the steps prior to and preparation for the hearing. Alternatively, the Gans do not oppose the making of a “Sanderson order”, pursuant to which the Court orders an unsuccessful defendant (in this case, the Council) to pay the successful defendant’s costs (in this case, the Gans) directly.

[25] The Gans say if costs are to be awarded to the applicants, then a much greater reduction then the 40 per cent proposed by the applicants should be made, to reflect their failure on a number of causes of action and also on the application for relief itself.

¹⁴ Videbeck v Auckland City Council [2002] 3 NZLR 842 (HC) and Barrett v Wellington City Council

HC Wellington CP 31/00, 25 July 2000.

[26] Finally, and in terms of the disbursements sought by the applicants, the Gans oppose an award of the experts’ fees. They say the experts’ advice went beyond what was appropriate on a judicial review proceeding, and inappropriately descended into the merits of the judicial review.

Analysis

Costs as between applicants and the Council

[27] I am clear in my view that, as between the applicant and the Council, the applicants are the successful party overall. They succeeded on two of the six causes of action pleaded, and as noted above, those two causes of action were in my view the more important causes of action against the Council. I therefore consider it appropriate to make a costs award in the applicants’ favour against the Council.

[28] I also accept the applicants’ (responsible) submission that the costs award should be reduced to reflect the fact they were unsuccessful on four out of the six causes of action advanced. I do not consider the fact the applicants failed on the question of relief to be material for costs purposes, at least as concerns the Council. As the applicants note, the Council made extremely brief submissions only on this aspect of the claim.

[29] I am therefore satisfied the applicants should be awarded costs on a scale 2B basis against the Council, reduced to reflect those aspects of the claim on which the applicants were unsuccessful. The applicants have proposed a reduction of 40 per cent. In my view, however, a slightly larger reduction is warranted. I propose a 50 per cent reduction. This reflects that:

(a) First, while the applicants were successful on two of the six causes of action, a not-insignificant amount of time was still taken up dealing with the remaining four causes of action.

(b) Second, a not-insignificant portion of the evidence filed on the applicants’ behalf extended beyond what was appropriate in judicial review proceedings. For example, a large amount of the affidavit
evidence from members of the community simply expressed their personal concerns and views about the sheds in question. As I noted in my judgment, such evidence was not relevant,¹⁵ yet the Council would have nevertheless incurred some time and cost reviewing and dealing with that evidence. And as I also noted in my judgment,¹⁶ the expert briefs, while not wholly irrelevant, did extend into the merits of the decision-making process to a greater degree than was necessary for the purpose of demonstrating, for example, the utility of the resource consent application having proceeded on a notified basis.

[30] I therefore make an order of costs in favour of the applicants against the Council on a scale 2B basis, reduced by 50 per cent. The scheduled attached to this judgment sets out the costs award in this respect.

[31] As to disbursements, no issue is taken with the applicants’ claim for filing, setting down and hearing fees. The Council does not comment on the appropriateness of the experts’ fees.

[32] I nevertheless consider a modest reduction to the amount claimed by the applicants for experts’ fees is appropriate.

[33] A disbursement may be disallowed or reduced if it is disproportionate in the circumstances of the proceeding.¹⁷ The Court is also to consider whether an expert’s fee is reasonable in amount.¹⁸

[34] Given the experts’ evidence extended somewhat further than I consider appropriate for a judicial review proceeding,¹⁹ I make an order that the costs award in the applicants’ favour against the Council is to include those expert fees by way of disbursements, but reduced by 20 per cent.

¹⁵ Mills v Far North District Council [2018] NZHC 2082 at [192].

¹⁶ At [113] and [191]–[192].

¹⁷ High Court Rules, r 14.12(3).

¹⁸ Rule 14.12(2)(d).

¹⁹ See above n 16.

[35] I should add that the fact I have reduced the quantum of these particular disbursements says nothing of the reasonableness of the actual fees charged by the experts themselves. That issue obviously turns on the scope and nature of instructions given to them, something I cannot and do not need to consider. Rather, the reduction reflects an assessment of the reasonableness of the amount claimed in the context of these particular proceeding.

Costs between applicants and the Gans

[36] As between the applicants and the Gans, I do not consider the applicants to be the successful party overall. For that reason, I do not consider it appropriate for the Gans to share responsibility for the costs award I have made above in the applicants’ favour.

[37] But should a costs award be made in favour of the Gans? They chose to join in these proceedings and actively supported the Council’s position on the causes of action advanced. I nevertheless do not consider their actions in doing so would have significantly increased the applicants’ costs from those they would have incurred in any event. In addition, on the question of relief, being the key aspect of the claim from the Gan’s perspective, they were wholly successful. I also accept the Gans were put to the expense of responding to allegations made by the applicants of misleading conduct which I found not to be made out.

[38] Finally, the crux of these proceedings concerned the Council’s decision- making, which was found to be wanting in respects I do not consider to be immaterial. Primary responsibility for that must lie with the Council, and not the Gans or the applicants.

[39] For these reasons, I consider there should be an award of scale 2B costs in the Gans’ favour.

[40] The Gans’ costs award should, however, be reduced to reflect the fact they took an active (albeit supporting) role on causes of action on which they were unsuccessful. Taking what can only be a robust and broad approach, I consider a 20 per cent reduction to be appropriate.
[41] The next question is: who should bear responsibility for the costs award in favour of the Gans? In my view, it is appropriate to apportion it between the applicants and the Council; the applicants are to bear 40 per cent and the Council 60 per cent.²⁰

[42] The applicants were wholly unsuccessful on the key issue from the Gans’ perspective — relief. There was also significant focus on the Gans’ stated use of the sheds, which I found to be a red-herring, yet the Gans no doubt incurred additional costs dealing with that issue. In these circumstances, I consider it fair that the applicants bear some of the Gans’ costs.

[43] In terms of the Council, as noted, the essence of these proceedings turned on its decision-making, in which the Gans played no part. And I do not consider the issue which arose over the Totalspan shed elevations not being provided to Heritage New Zealand relevant to the question of costs. Ultimately, the decision on the Gans’ application was the Council’s and the Council’s alone, and it was in possession of all information concerning the sheds’ elevations.

[44] Finally, I do not consider there is any basis for the applicants’ share of the Gans’ costs award to be the subject of increased costs. The applicants’ submissions on the Gans’ stated use of the sheds does not fall into that category of allegation or conduct which can be categorised as unreasonable for cost purposes. Certainly the allegations were not made out, but that alone is not sufficient to warrant a departure from the normal approach.

[45] The resulting costs award in favour of the Gans is set out in the attached schedule. I note for completeness that I have omitted from the award step 32 claimed by the Gans — for preparation of the issues, authorities and common bundle. The Court did not receive any substantive materials under this step that would justify awarding it against the other parties.

20. A so-called “Sanderson order”; see Matthew Casey and others Annotated High Court Rules (4th ed, LexisNexis, Wellington, 2018) at [HCR14.1.6(a)] and [HCR14.1.8(b)].

Costs on the recall action

[46] Costs of the recall application should be determined separately from the costs on the substantive proceedings, coming as it did after determination of the substantive claim. As the application was unsuccessful, there is no dispute a costs award ought to be made in favour of the Council and the Gans.

[47] The Council seeks $892.00, being scale 2B costs for step 11 (preparation of a memorandum). The Gans seek the same amount, by reference to the same step. In their original costs memorandum, the applicants made an allowance for costs on the recall application of $2,230. That is obviously a greater amount than claimed by the respondents.

[48] The applicants are accordingly to pay each of the Council and the Gans the sum of $892.00 by way of costs on the recall application. This is also set out in the attached schedule of costs.

Costs on costs

[49] I am not prepared to award costs on the costs application, or steps taken in relation to it, to any party. As is clear from this judgment, no single party has been a clear winner on the costs applications, and the more appropriate outcome is for costs to lie where they fall.

Orders

[50] On the substantive proceeding:

(a) The Council is to pay the applicants $26,666.15 costs and disbursements.

(b) The Council is also to pay the Gans $10,800.00 costs and disbursements.

(c) The applicants are to pay the Gans $7,200.00 costs and disbursements.
[51] On the recall application, the applicants are to pay each of the Council and second respondents $892.00.










Fitzgerald J

Schedule of Costs

Substantive proceeding

Costs and disbursements to be paid to the applicants by the Council

Costs and disbursements to be paid to the Gans

Recall application

Costs payable by applicants