RICKY AND NICOLA BRONLUND v THAMES COROMANDEL DISTRICT COUNCIL [1999] NZCA 163 (26 August 1999)

IN THE court of appeal of new zealand

ca190/98

	between	ricky and nicola bronlund
		Appellants

	and	thames coromandel district council
		Respondent

Hearing:	19 and 20 July 1999
Coram:	Henry J Thomas J Tipping J
Appearances:	R A Houston QC and E Hudson for Appellants D J Heaney and S A Bambury for Respondent
Judgment:	26 August 1999

judgments of the court

HENRY J

[1] I have had the opportunity of reading in draft the judgment of Tipping J. I am in general agreement with his reasons and conclusions, but as the Court is not unanimous in its views on two aspects of the appeal I wish to give brief consideration to those.

General damages

[2] I would not interfere with Tompkins J's assessment of $20,000.I would approach this issue on the basis that that sum was his award for the stress hardship and uncertainties which the appellants undoubtedly suffered.I would not regard the award of interest as in some way equating a higher sum.On my reading of the judgment, the Judge did not approach this part of his task on that basis, but rather in the exercise of his wide discretion thought it appropriate to allow interest on that part of the claim.To do so is in accordance with principle, and is common practice in the United Kingdom (Wright v British Railways Board [1983] 1 AC 352;Rules of the Supreme Court 1965, Order 6 rule 2 (16).The rationale is that the successful plaintiff has been kept out of monies properly due.In the present case, the justification for interest is strong because substantially the whole of distress suffered was for events which covered the period well before trial - there were no substantial ongoing effects outside the interest period allowed.

[3] As to quantum, Tompkins J had the benefit of seeing and hearing the appellants, and with his own considerable experience the opportunity of assessing the impact events had on them.The Judge's treatment of the claim is set out in the judgment of Tipping J and need not be repeated.It is detailed, and as Mr Houston responsibly accepted in the course of argument, it refers to all factors of significance, without in any way downplaying their importance.A careful reading of the evidence of each appellant confirms that the Judge's assessment of the factual matters was fair and accurate.In my view nothing is to be gained from elaborating on the Judge's summary by extracting particular aspects of the evidence.There is no doubt that the appellants were caused considerable distress and anxiety, and also experienced physical hardship in that they endured difficult and unpleasant living conditions over an appreciable period of time.The claim was presented, understandably and in my view appropriately in the circumstances, as a joint one, which is why the award was joint without any attempt at a separate assessment.

[4] General damages for resulting harm of this kind is invariably a difficult exercise, and one which is not capable of precision.It is also very much in the province of the tribunal entrusted with the exercise, be it Judge or jury. The function of an appellate Court, now well established, is not in issue, and has been restated by Tipping J.Applying that test, I am unable to conclude that this award should be interfered with by this Court.It must also be remembered that what had to be assessed was the injury or harm resulting from the respondent's negligence, namely the issue of the permit.The subsequent conduct of the respondent is of limited relevance, and should not be used in some way to punish the respondent under this head of damage.

[5] Our attention was drawn to a number of cases where awards of general damages for this kind of injury have been made.Each must of course be considered in the light of its own particular circumstances, but a consideration of those demonstrates that the present award cannot be said to be out of line.

Costs

[6] Although Rule 360 gives the Court a discretion, it must be exercised according to principle.I am unable to see where the Judge erred.As Tipping J has pointed out, the relevant amount of the judgment was substantially less - to the extent of about $13,000 - than the payment into Court, which was to cover the claim (including interest) down to the date of payment.Interest accruing pursuant to the judgment after that date would therefore have to be deducted from the final judgment figure before ascertaining whether for these purposes the amount recovered did or did not exceed the payment in.

[7] It appears that in the High Court the appellants accepted that costs of trial would be against them.That is in accordance with well established principle.The authority relied upon by Mr Hudson of Willcox v Kettell [1937] 1 All ER 222 to support his submission to this Court that trial costs on the issue of liability should be against the respondent, or at least not visited on the appellants, does not represent current English practice.Nor does it accord with my experience as to New Zealand practice.The general approach in England now is that stated by Sellars LJ in Hultquist v Universal Pattern & Precision Engineering Co Ltd [1960] 2 All ER 266,272:

The plaintiff has asked for the costs of the issue of liability on which he had succeeded, and in this court it was submitted that he was entitled to these costs.In my experience also, it is very rarely that a plaintiff in such an action as this and in similar circumstances is awarded the costs of the issue of liability.It is a matter in the discretion of the trial judge, and, whichever way he might exercise it, this court would not intervene except in special circumstances within the decision of Evans v. Bartlam.

The action of tort consists of wrong-doing and damage resulting therefrom (J.R. Munday, Ltd. v. London County Council), and the plaintiff must prove both to obtain a judgment.On the face of it there can be no complaint and no ground for an order for costs of the issue of liability because the plaintiff has been called on to prove a case to establish his right to damages and has failed to get more than the amount in court.A payment into court is an offer to dispose of the action and, if accepted, prevents all further costs. A plaintiff who continues an action after a payment in takes a risk and cannot normally complain if he has to pay all the costs which his acceptance of the offer would have avoided.

Hultquist is cited in support of the following passage in The Supreme Court Practice 1997 Vol 1 p.399 on the exercise of the discretion as to costs when there has been a payment in:

The modern practice does not require the Court to distinguish between the issues of liability and damages or to make any special order on the issue of liability on which the plaintiff succeeds.The modern practice is to look at the position of the parties at the end of the day to see whether the amount paid in is more or less than the total of the plaintiff's claim or claims. Thus, where in an action for unliquidated damages the amount awarded to the plaintiff is less than the amount paid into Court in satisfaction by the defendant, the modern practice is to order that the plaintiff should have his costs up to the time of payment in and that the defendant should have his costs thereafter, without making any special order with regard to the costs on the issue of liability after the date of payment in.

The same approach was confirmed by this Court in Beadle v M & L A Moore Ltd [1998] 3 NZLR 271,273.

[8] This issue is not to be confused with a situation where there may be an apportionment of costs of trial where each party can properly claim to be partially successful, as for example in respect of separate causes of action or a claim and counterclaim situation.The rationale behind the practice on a payment in situation must not be forgotten.In the end result, the appellants having elected to continue the trial process through to conclusion have recovered less than they could have received from the respondent without proceeding to a hearing.The respondent was put to the expense of a hearing when it was prepared to pay a sum greater than its actual liability.

[9] I am not persuaded that there is any basis for holding that Tompkins J erred in that he failed to recognise his discretion included not making an award to the respondent.This use of the word "entitled" in context was no more than a recognition of the general principle which was re-stated in a similar way by this Court in Beadle v M & L A Moore Ltd.The Judge would have been fully aware of the provisions of Rule 360, of the principles applicable to it, and also conscious of the absence of any submissions to support a departure form those principles.

[10] I would allow the appeal, but only to the limited extent indicated by Tipping J.I would dismiss the cross-appeal.

THOMAS J

Introduction

[11] The fact that this appeal is being dismissed does not mean that the Council did not act in a high-handed and bureaucratic manner towards Mr and Mrs Bronlund.The Council was wholly responsible for the situation and suffering which they have endured.At a time when all was well in their lives and their prospects looked bright, the Bronlunds were suddenly plummeted into a prolonged ordeal which must have been nothing short of a nightmare to them.

The Council grants planning consent

[12] Mr and Mrs Bronlund are a young, hard-working couple.They have three children, aged between four and nine at the time.The Bronlunds were renting a house in the Coromandel, but they wanted their own home.They aspired to own a house with a view and plenty of space for a garden and for the children to play.In 1991 they bought approximately six acres in a rural setting and set about building their "dream home".

[13] The vendor's agent did not say anything about "designated house sites" on the property.Mr Bronlund had the property valued for finance purposes and the valuer's report made no mention of the specified site requirement.On the contrary, the report claimed that several pleasant house sites were available towards the northern part of the lot where very pleasant views were available. When dealing with the zoning the valuer confirmed that the land was in a coastal zone permitting one dwelling-house per lot, again without reference to a building site restriction.Mr Bronlund's solicitor obtained a search of the title.There was nothing on the title to indicate any limitation as to building sites.So Mr and Mrs Bronlund proceeded with the transaction.

[14] In due course, Mr and Mrs Bronlund applied for a building permit.After they had lodged the application they were advised by the Council that, in addition to the application for the building permit, an application for a non-notified controlled use application would be required.Mr and Mrs Bronlund duly complied with this advice.They made the appropriate application and lodged a site plan showing the site on the land where the house would be located.In due course they were advised by the Council that both the planning consent and building permit were granted.The only condition on the consent was that the work be carried out in accordance with the plans approved in the application which, of course, included the site plan which they had submitted.

[15] Thus, the Bronlunds had obtained permission to build their new house. They had taken all precautions and done everything required of them.They had no reason to think anything was amiss.Their own home, which was to be a large two-storied, imposing house was only a matter of time away.

[16] Construction of the house commenced in October 1992.It was on the site approved by the Council.While progress was slow, primarily because the builder was engaged in another substantial construction, the work proceeded steadily and the house took shape.Throughout the process of construction the Council's building inspectors inspected the works at appropriate intervals. Nothing was said by them about the building site.Like the Bronlunds, they no doubt thought everything was in order.

[17] The house had reached the stage at which the foundation and framework had been completed.It was ready to be closed in and the roof installed.The plumbing had been partly completed and the drainage and septic tank had been connected.Mr and Mrs Bronlund's plans had moved beyond mere aspirations.The house had reached the stage where they could physically anticipate the house in its finished state - as any young, proud house owners are wont to do.

But the Council says stop!

[18] Then, on 25 February 1993, the Bronlunds were served with a stop work notice.Unbeknown to them, the subdivision of the land of which their lot was part had been subject to a condition requiring houses to be located on sites which were specified on a plan lodged by the landowner who had subdivided the land.The Bronlund's house was not built upon the specified site for the block.Indeed, it was some 150 metres from the site shown on the resource consent plan relating to the subdivision.But, of course, until this development the Bronlunds did not know that and there was no reason why they should have known that.They had relied upon the Council.

[19] The idea of requiring specified building sites as a condition of the subdivision had been developed by a Mr Cross, the Policy Planner for the Council, in conjunction with the landowner.Mr Cross did not like the prospect of a row of houses being built along the spur or prominent ridge of the land overlooking the adjacent bay.In his view the building of houses along the ridge was contrary to the review of the district scheme.He reported his concerns to the Council and the original subdivision hearing was adjourned. Following the adjournment the landowner, after consulting with Mr Cross, presented a revised plan containing specified house sites set back from the top of the spur or ridge.It was this subdivisional plan which was approved.

[20] Mr Cross was absent overseas when Mr and Mrs Bronlund's application for planning consent was received.Nevertheless, it was fully considered and processed by two planning officers of the Council.They followed the correct procedure.But they did not know of the condition requiring any house to be built on a specified site because the Council had negligently failed to ensure that the necessary planning information was entered on to the property and information index card.The information was, of course, in Mr Cross's head. As he said, the fact that the proposed site for the house was 150 metres from the specified house site would have been obvious to him because of his personal knowledge of the original consent to the subdivision.

[21] On 23 November 1992 Mr Cross inspected the land in the company of a neighbour who objected to the location of the Bronlund's house.Mr Cross saw the concrete slab foundation for the house and realised that it was not being built on the specified site.He rang Mr and Mrs Bronlund's solicitor and asked him to advise his clients to stop work while the Council attempted to resolve the matter.The solicitor declined to give his clients that advice and work on the house proceeded.Surprisingly, no further action was then taken until the following year, 25 February 1993, when the stop work notice was served on the Bronlunds.The notice required all work on the dwelling to cease immediately. Naturally, it came as a dreadful shock to Mr and Mrs Bronlund.

[22] Mr Cross was then advised by the Council's solicitors that a stop work notice was not the correct procedure.So, on 8 March 1993, he served an abatement notice on the Bronlunds requiring them to cease further work and to remove the partly built house or seek a variation to the consent which they had obtained which would permit them to locate a house on a site other than the specified house site.

[23] Acting on legal advice, which was based on the expediency of the situation, Mr and Mrs Bronlund duly made the application to vary the consent which they had originally obtained.Work on the house stopped but pending the hearing of the application no steps were taken to remove it from the site.The Bronlund's application for a variation was referred to an independent Commissioner.But the application was opposed by the Council.Subject to certain conditions the Commissioner recommended, however, that the consent be granted and this recommendation was accepted by the Council.A neighbour appealed to the Planning Tribunal.The variation was upheld subject to conditions agreed to by the parties.

[24] In all, it was not until 12 months after the stop work notice had been served on Mr and Mrs Bronlund that they were able to continue with the construction of their house.

The Bronlunds suffer the consequences

[25] As the Judge at first instance noted, when the stop work notice, and later the abatement notice, were served on them, Mr and Mrs Bronlund were placed in a dilemma.They could not afford to pay the rent on the house in which they were living as well as the mortgage repayments on the house they were building. They decided to close the house in and, in effect, to "camp" in it.As the septic tank, effluent disposal, and the like were all connected, they were able to put in a toilet and shower.Initially, however, they had no bathing facilities, shower or bath.It was necessary to put everyone in the car and travel into town to Mr Bronlund's parents for such necessities.At first, as well, there were no kitchen facilities and Mrs Bronlund cooked on a small gas stove off a boat.She later obtained a larger stove fuelled from a gas bottle. A washing machine was installed.It was not piped or plugged in to the electricity.As there were no power points, the Bronlund's worked off the builders' pole for their electrical supply.The use of more than one appliance often caused the fuse to blow.There was only one internal door and that was on the toilet.The absence of internal doors meant little privacy.

[26] The house, in reality a roughly closed in shell, was "very, very draughty and unpleasant".The floors were concrete and as the weather got colder so did the house.The temporary construction leaked and no carpet could be laid.The Bronlunds eventually made do with carpet off-cuts.The house had no curtains. The Bronlunds and family had two rooms downstairs which they lived in.They were not lined and eventually wiring was put in, but it was still exposed. Their daughters occupied a room upstairs with no insulation or ceiling. Because of the absence of curtains they had difficulty in getting to sleep. There were no lights upstairs and if the children needed to go to the toilet they had to go downstairs to where the only toilet was situated.

[27] As the weather conditions deteriorated so did the quality of the Bronlund's living.There was little grass outside and the ground became a bog. They could not go outside without wearing gumboots.And the mud was carried inside.

[28] The Bronlund's health suffered.The girls had more colds and influenza than in the past.Mrs Bronlund contracted bad dermatitis, an ailment which she had never previously suffered from.Her back and arms became raw and her face puffed up.The condition was painful.Mr Bronlund developed high blood pressure.Living with the stress and uncertainty of the situation both the Bronlunds suffered emotionally.The conditions also placed a strain upon their relationship.They had to defer their plans to have a fourth child.

[29] To sum up:all this disruption, additional cost, and the trauma and strain which went with it, resulted from the Council's action in granting Mr and Mrs Bronlund planning consent and a building permit to build a house on the site which they had chosen and disclosed to the Council.Mr and Mrs Bronlund were throughout entirely innocent.It was the Council alone which was at fault, but it was the Bronlunds who suffered the severe consequences.

The Council's unacceptable response

[30] It is of interest to compare the Council's response with the likely response of an ordinary person in a similar situation to the Council.Such a comparison is not out of place.The "reasonable man [or woman]" represents the law's anthropomorphic conception of justice.See The Rt Hon The Lord Hoffman, "Anthropomorphic Justice:The Reasonable Man and his Friends" (1995) 29 The Law Teacher 127.It is a concept which is called in aid in many and varied circumstances.(See, for example, Lord Lloyd's invocation of the hypothetical "man on the Clapham omnibus" in R v Secretary of State for the Home Department, ex p. Fire Brigades Union [1995] 2 AC 515, at 568 and 571).The likely reaction of an ordinary person in circumstances such as the present provides a helpful criterion by which to assess the Council's conduct.

[31] I do not doubt that an ordinary person who had been negligently responsible for an innocent neighbour building on a restricted site would be appalled at what he or she had done.They are likely to have gone "cap in hand", as it were, to the Bronlunds, apologised for their mistake and sought to make amends.If they had the material resources they would almost certainly have accepted financial responsibility for the consequences of their default. Even if they felt under a duty to rectify the matter, their attitude, one would think, would be one of sympathy and contrition manifesting itself in a strong desire to help Mr and Mrs Bronlund in every way possible.Accepting responsibility for the disaster, they would co-operate to the full in working out a solution which, as far as possible, spared the Bronlunds the inevitable consequences of their neglect.

[32] But the Council is not an ordinary person and that was not its response. Why should this be so?The answer can only be that the Council possessed power which the ordinary person does not have.It was vested with all the authority of a territorial authority under the Resource Management Act 1991.Naturally, the Council saw the exercise of this authority in terms of a duty to enforce conditions which have been imposed pursuant to planning consents granted under that Act.Mr Cross took the view that "conditions of planning consent must be complied with"."A person", he proclaimed, "who does not comply with a condition of a planning consent is in breach of that consent."There is no evidence that Mr Cross's mind was ever much moved by the fact that Mr and Mrs Bronlund complied with the Council's direction to apply for planning consent and did not breach any condition of that consent when it had been granted.

[33] It was not until the matter came before the independent Commissioner that it appears any sort of sensible balance was introduced between Mr Cross's planning ideal of a house-free ridge and the de facto position of the Bronlunds.It may well be that, notwithstanding that a significant number of other houses in the same subdivision have been built on sites other than the specified sites, the condition had to be enforced.But the manner in which the Council went about enforcing the condition was, by any standards, high-handed and peremptory.It is an illustration of what the ordinary man and the woman in the street see as the indifferent face of bureaucracy.

The Bronlunds succeed but are worse off

[34] Regrettably, Mr and Mrs Bronlund, the innocent parties, are now worse off than when they started the action.Even if, because of the Council's payment into Court, they were not liable for the Council's costs, they would probably be worse off.The damages would not compensate them for their monetary losses or the physical and emotional hardship and mental strain which they have endured.In cases such as this the Courts can only be concerned that the fundamental principle of restitutioin integrum, is more illusory than real.Damages do not place the plaintiffs, as far as money possibly can, in the same position as they would have been in but for the defendant's wrongdoing.All too frequently, plaintiffs whose loss can be measured in relatively modest sums are not restored to the position they would have been in had they not sustained the wrong.The Courts' demand for strict proof of loss and the fact that the Courts' assessments tend to be conservative can combine to favour the unsuccessful defendant.

[35] Could it have been different?I will look briefly at general damages and exemplary damages before re-examining the question of costs.

General damages

[36] I would wish to be more generous than the trial Judge in awarding general damages.

[37] Because the acutely stressful events which would attract an award of general damages can be said to have ceased when the Bronlunds were able to continue with the building of their home, the Judge's approach of awarding a sum for general damages and then allowing interest on that sum is not appropriate.The Bronlunds, on the one hand, have been held out of the principal sum for the period that it has remained unpaid.They have borne the cost of the money.The Council, on the other hand, has had the use and benefit of that sum and been saved the money cost for the same period of time.

[38] It is to be emphasised that no part of the allowable or market interest applied to the general damages of $20,000 awarded by the trial Judge in this case includes an element for mental stress and suffering.The interest rate represents compensation for the cost of money (including risk), and as it is or derives from a market rate, includes an allowance for inflation.Thus, the award of interest on the principal sum does not increase the general damages received by the Bronlunds for the stress and inconvenience which they suffered. It is in this respect that I consider that the reasoning adopted by Tipping J is in error.The award of interest does no more than attempt to keep the principal sum abreast of the cost of money and the predicted erosion of inflation.In other words, interest simply does not bear on the general damages awarded for mental stress and inconvenience which comes to an end, or substantially to an end, at a particular point in time.Hence, contrary to the terms of Tipping J's judgment, the interest which accumulated on the general damages should be disregarded.

[39] This being the case, I consider that the $20,000 awarded was too low having regard to the full extent of the Bronlund's mental and emotional stress and the extreme level of inconvenience which they suffered.Thirty thousand dollars would not have been amiss.Such an increase is not inconsequential as it represents a fifty per cent increase over the Judge's award.And it would have recognised both the common and separate impact of the Council's default on Mr and Mrs Bronlund.

Exemplary damages

[40] I accept that exemplary damages cannot be awarded in this case.The Council can only be held liable for exemplary damages in respect of conduct which is actionable.While it acted in a high-handed and reprehensible manner, the liability which the Judge found against the Council did not attach to that conduct.The Council was found liable for its earlier negligence.It may well be that a differently worded pleading in negligence or a different cause of action, such as misfeasance in public office, may have covered the Council's unacceptable behaviour.I was initially minded to suggest that the case be sent back to the High Court to be heard on these issues, but I have finally decided against that course.The Bronlunds have had their day in Court and, in any event, it is most unlikely that they would recover sufficient monies to outweigh the cost, inconvenience and stress which would be involved in a further proceeding.

The costs of the Council

[41] I would, however, also allow Mr and Mrs Bronlund's appeal against the trial Judge's order directing them to pay to the Council costs in the sum of $36,508.68, including disbursements.I consider that in this instance the costs should be borne by the Council.

[42] I accept, as Tipping J states, that a plaintiff who fails to obtain more than the amount paid into Court has to be regarded, prima facie at least, as the unsuccessful party, and I am fully alert to the positive effects such payments into Court have in facilitating settlements.But r 360 of the High Court Rules, relating to the consequences of non-acceptance of a sum paid into Court, expressly confers on the Court a discretion as to whether to allow the defendant his or her costs of the proceeding subsequent to the payment in.In stipulating in George Chimirri Interiors Ltd v Hawkins [1988] NZHC 487; (1988) 1 PRNZ 218, at 219, that prima facie costs should be assessed on the full amount in favour of the defendant, Tipping J added;"...unless there are circumstances in the case which ought properly to persuade the Court to exercise its discretion to reduce the amount flowing from that approach".I consider that the trial Judge omitted to address, or to properly address, the question whether he should do so in the circumstances of this case.

[43] A number of considerations are relevant to this conclusion.

[44] First, the Judge did not discuss the question whether he might decline to award costs to the Council.He simply recited that the Council had paid into Court $135,000 in satisfaction of the plaintiff's claims inclusive of interest, whereas special and general damages plus interest came to $125,740.51.He then stated:

This payment in was not accepted.It follows that the plaintiffs are entitled to party and party costs up to the date of payment in, and the defendant is entitled to party and party costs thereafter.(Emphasis added).

[45] It would appear, therefore, that the Judge proceeded on the basis that a cost award against the Bronlunds would automatically follow from the non-acceptance of the payment in.This approach may have been due to the fact that counsel for Mr and Mrs Bronlund did not draw his attention to the discretion which he had not to award costs.Counsel contested the quantum of costs only.But the discretion is a discretion vested in the Court and it should have been deliberately addressed.Having regard to the circumstances of this case it is difficult to see how the question could have been avoided unless it had been assumed that the order would automatically follow the fact that the payment in exceeded the judgment sum.

[46] Secondly, the payment in was made with a denial of liability.The notice of payment into Court was dated 13 March 1997.The proceeding had already been on foot for some two and-a-half years and the trial followed a year later. Although the Council were clearly at fault and liable in negligence, liability was denied in the statement of defence and the denial of liability was persisted in at the hearing.Yet, it is difficult to see how a denial of liability could be justified in the circumstances.Hence,a payment into Court with an admission of liability would have been the appropriate course, particularly for a responsible Council.It must have considered, but rejected, that course largely if not solely for tactical reasons.Even if, by this time, the conduct of the proceeding was in the hands of its indemnifier, the Council cannot excuse itself.It has a choice of insurers.(A case in which enlarged costs were allowed because liability had been put in issue when there was no justification for doing so is H & W Wallace v Lehrke (1993) 7 PRNZ 110, at 111.)

[47] A payment in with an admission of liability by the Council would have created a different situation.In the first place, with an acknowledgement that the Council accepted responsibility for its default, the Bronlunds may well have decided to accept the payment in rather than face the considerable work and expense of establishing liability.Secondly, the Bronlunds are now in effect being called upon to pay costs which have largely been incurred in establishing liability.The Bronlunds were never given the clear choice which could have been expected in the circumstances and are now being required to pay for costs incurred by the Council which need not have been incurred.

[48] Thirdly, having put liability in issue, the Council then exhaustively contested every issue.The transcript reveals that even insubstantial issues were challenged and fought, such as the Bronlund's liability for the payment of the planning consent fee of $6,884.23 in respect of the application which they were required to undertake to remedy the Council's own mistake, a payment which was only conceded by the Council at the hearing of the appeal.Notwithstanding its responsibility for the Bronlund's plight the Council were not prepared to yield a point.Again, the Bronlunds are in effect required to pay, at least in part, for the Council's unyielding approach.

[49] Fourthly, the amount of the payment in does not exceed the judgment sum by a significant margin.The Council paid $135,000 into Court.The revised judgment following the majority's judgment is for the sum of $133,076.01.The difference is $1,924.The call is too close, and it is difficult to hold that the Bronlunds should be liable for the Council's costs in the circumstances of this case simply because they misjudged the amount they would be likely to receive by that narrow sum.

[50] Finally, I would be prepared to take the Judges' conservative approach to general damages into account in determining this question.The assessment of general damages is not an exact science and, even if it is held that the award of $20,000 cannot be said to be outside the range open to the Judge, it has to be accepted that it is not on the high side.Having made a moderate award for general damages the Judge was entitled, particularly having regard to the closeness of the sum paid in to the judgment sum, to decline to treat his award of general damages as being anything more than an assessment in the nature of a round figure.

[51] For these reasons I would be prepared to depart from the prima facie rule and allow Mr and Mrs Bronlund's appeal against the costs ordered to be paid to the Council.

A different outcome

[52] If Mr and Mrs Bronlund were to succeed on the basis either that general damages should be increased or that the costs order against them should be reversed, their appeal would be allowed.And they would be entitled to costs at first instance and in this Court.To some extent, at least, the injustice of the present outcome would be ameliorated.

TIPPING J

Introduction

[53] At trial the appellants, Mr and Mrs Bronlund, established that the respondent, the Thames Coromandel District Council, had been negligent when it issued a building permitto them in 1991.The site of their house required special approval which had not been obtained.The consequence was that when the house was in the course of construction a stopwork notice was issued by the Council, after it realised its earlier mistake.This occurred in February 1993.There followed an abatement notice requiring the demolition of what had already been built.The Bronlunds stopped work but took no steps to comply with the abatement notice.They applied for the necessary special permission and, in spite of opposition from the Council, obtained that permission following a recommendation from the Commissioner appointed to hear their application.There was an appeal to the Environment Court by a neighbour but that was compromised and in due course, some 12 months after the stopwork notice had been issued, the Bronlunds were able to continue building in March 1994.

[54] In the meantime they had endured considerable stress, anxiety, inconvenience and additional costs. Tompkins J found that the Council had been negligent in erroneously issuing the building permit when the proposed site did not comply with an earlier subdivisional approval.This approval had stipulated building sites on each lot.The Counsel's negligence was in not maintaining adequate records.There was nothing to show those considering the building permit application that the Bronlunds' land could be built upon only on the pre-determined site.Hence the permit was wrongly issued for a site some 150m away.The Judge acquitted the Bronlunds of any contributory negligence.They had no knowledge that they could only build on the pre-determined site and no reason to doubt the validity of the building permit or their entitlement to build on the site which they had chosen.

[55] The Judge awarded the Bronlunds general and special damages plus interest totalling $127,521.01.The Council had, however, made a payment into Court of $135,000.00.Having failed to beat the payment in, the Bronlunds were ordered to pay the Council's costs incurred after payment in, amounting to $36,508.68. They received an award of costs in their favour for steps taken prior to the payment in of $1,555.00.Hence after paying their own costs as well as those awarded to the Council, the Bronlunds had little left of the judgment sum.

[56] In their appeal they seek to show that the damages awarded were deficient in several respects.That is the broad background.I will consider the facts of the case in such further detail as may be necessary when examining each aspect of the appeal.

General damages

[57] Mr and Mrs Bronlund as joint plaintiffs claimed general damages of $100,000.00.The Judge awarded them $20,000.00 plus interest at 11% from the date they were given permission to continue building on their preferred site (11 March 1994) to the date of formal entry of judgment, which in terms of the judgment as ultimately sealed, was 11 June 1998.Inclusive of interest the general damages figure came to about $29,350.00.There was no suggestion that in making his assessment the Judge had overlooked any relevant aspect of the general damages claim.The appellants contend that the figure fixed by the Judge was "breathtakingly" low and should be increased so as to award $20,000.00 plus interest to each plaintiff - an effective doubling of the Judge's award.Mr Houston argued that as the Judge had not apportioned his total between the two plaintiffs, he may have overlooked the need to compensate both of them.As to that, the claim made by the plaintiffs was a joint one, and most of the evidence in support of the claim for general damages came from Mrs Bronlund.The Judge would undoubtedly have realised that with two plaintiffs he had to consider the effect on each of them.

[58] It is convenient to set out the Judge's discussion of the general damages issue in his own words.The Judge had the parties before him and was thus well placed to assess the impact of the Council's negligence and its consequences upon them.This is how he saw the matter:

The plaintiffs claim for general damages for stress, hardship and uncertainties are in two broad areas.The first relates to the living conditions following the issue of the stopwork notice, the second to the planning litigation they were required to prosecute.

Evidence of their living conditions was given by Mrs Bronlund.At the time the stopwork and abatement notices were served in February 1993, the house was at the stage where the framing had been erected, some plumbing and drainage had been installed, but little further had been done.They were in a dilemma. They had drawn down the majority of the $120,000.00 loan they had arranged and were therefore liable for the principal and interest payments.They were living in rented accommodation.They could not afford to pay both the rent of $125.00 a week and the mortgage payments of $496.00 per fortnight.They decided their only course was to live in the house.Fortunately the drainage work had been completed.To make the house occupiable plywood was placed on the outside and they put in a toilet and shower, a kitchen sink, a gas stove and a washing machine, although these were not properly installed.There were no power points.They had to take power from the builder's pole.They put in windows and a roof.They was only a door on the toilet and one between the garage and the house.It was draughty and unpleasant.There was little privacy.The kitchen facilities were primitive.The floors were concrete. The house with the temporary cladding leaked.There was no insulation or ceiling.Initially there were no bathing facilities - they travelled to Mr Bronlund's parent's house to wash.There were no lights upstairs.Mrs Bronlund considered that their health suffered.The girls then aged five and three had more colds and flu than previously.She was pregnant with their third child when they moved in.She referred to the emotional impact.The conditions placed a strain on the relationship between the two of them.There was also a social impact.Due to the state of the house they did not consider they could invite friends in.

They also referred to the worry and uncertainty surrounding the planning application to the Council and the appeal to the Planning Tribunal, compounded by the large legal and other bills that they incurred.

I have no doubt that these conditions caused the plaintiffs considerable mental and physical hardship.Had the Council, at the time the building permit was lodged, told them the correct situation, much, but not all, of this would have been avoided.I will discuss later in this judgment what the likely consequences would have been.

Not all of this mental and physical hardship would have been eliminated.The plaintiffs did not have the financial resources to complete the house within a normal time.It was also going to be a lengthy process stretching over a year or more.They would in any event have been living in an incomplete house, but not to anything like the extent that they were forced to.Even when planning consent was finally given, their ability to proceed with the house was severely affected by the costs totalling some $66,000.00 that they had incurred.

Also, as I shall shortly elaborate, the plaintiffs are likely to have applied for resource consent in any event.There would have been a degree of stress in that process.

I accept the submission made on behalf of the Council that general damages cannot be awarded for the stress of litigation:Rowlands v Collow [1992] 1 NZLR 178.However, that relates to the stress of this litigation. It does not exclude my taking into account the stress relating to the planning litigation, to the extent that it was caused by the negligence of the Council.

Having regard to all of these factors, an appropriate award for general damages is $20,000.00.

[59] It is not the function of this Court to substitute its own assessment of general damages for that of the trial Judge.A different award will be made on appeal only if this Court is satisfied that the trial Judge's award was so low (or so high) as to amount to a wholly erroneous figure, see Stieller v Porirua City Council [1986] 1 NZLR 84 (CA).

[60] A colloquial yet helpful approach is that adopted by Lord Denning MR in McCarthy v Coldair [1951] 2 TLR 1226; 95 SJ 711: "Counsel expressed the test graphically and rightly when he said that this Court would interfere if, when seeing the figure, it said to itself - Good gracious me - as high [or low] as that."

[61] A feature of the present award was the Judge's inclusion of interest.He was fully entitled to take that approach, albeit some Judges may have fixed a global figure without interest.In this case the qualifying stress, anxiety and inconvenience effectively ceased in March 1994 when the way was clear for the Bronlunds to continue building on their preferred site.

[62] As the circumstances justifying the award had ceased several years before judgment there was logic and force in the Judge fixing a sum payable as at March 1994 and then compensating the Bronlunds for not having had that sum in hand by an award of interest.The point has relevance in two ways.First, the award should be viewed through 1994 eyes; and second, the fact that interest has accrued at 11% cannot be ignored in determining the overall result from the Bronlund's point of view.They will actually receive nearly $30,000.Fixing general damages in circumstances such as these is not an exact science.Minds can reasonably differ over what is an appropriate sum.General consistency is desirable, albeit not easy to achieve when the facts of individual cases can vary so much and similar events can have markedly different impacts on different people.The award in the present case could in my view have been somewhat higher without being open to criticism.But I am not persuaded it was at a level which requires intervention by this Court.It does not strike me as being a wholly erroneous figure.This aspect of the appeal must therefore fail.

Exemplary damages

[63] The Judge declined to award any damages under this head.In the view I take I need not consider any issue of vicarious liability or any question of the availability of exemplary damages for non intentional torts such as negligence.The Judge dealt with the subject in this way:

Mr Hudson submitted that there were three aspects of the Council's conduct which called for condemnation.They were the failure of Mr Cross to take steps in November 1993, on becoming aware of the Council's error, to bring that error to the plaintiffs' attention.The second was the failure of the Council to bring to the plaintiffs' notice the problem prior to the service of the stopwork notice.The third was what he described as the casual and offhand manner in which the stopwork notice was served on the plaintiffs.They were asked to call at the Council's office when the stopwork notice was handed over to them without any prior notice.

I do not consider that any one of these actions or all three taken together come anywhere near the sort of conduct that would justify the award of exemplary damages.Whilst it may be said that the Council's conduct was insensitive and even thoughtless, it does not amount to conduct of the kind that merits punishment by the award of exemplary damages.That claim fails.

[64] In this Court Mr Houston, who was unable to represent the Bronlunds at trial through illness, argued that the consequences of the Council's negligence were such that exemplary damages should have been awarded.He attempted to support that submission by reference to the following passage from my judgment in McLaren Transport Ltd v Somerville [1996] 3 NZLR 424, 429:

Another point which derives from Richardson J's judgment in Taylor v Beere (supra) is the proposition that when exemplary damages are awarded the exemplary or punitive element in the overall award represents the difference between what the plaintiff ought to receive as compensation and what the defendant ought to pay for the harm caused and the manner in which it was caused.

[65] The very next sentence is relevant and should be borne in mind.The passage cited by Mr Hudson cannot be divorced from it:

When the plaintiff receives more than what is necessary to compensate him for the wrong suffered and all its effects upon him (ordinary and aggravated damages) it is because the defendant's conduct is deemed to require additional censure.

[66] It is the conduct of the defendant establishing the cause of action that is the key dimension in deciding whether to award exemplary damages, not the consequences of that conduct or subsequent conduct unrelated to the establishment of the cause of action.If the position were otherwise conduct which is not actionable in itself, or has not been found to be actionable, would be used to justify exemplary damages where none were justified by the conduct constituting the cause of action.The Judge was right to reject the claim for exemplary damages.There was nothing in the Council's conduct constituting the cause of action, which approached the level of negligence at which exemplary damages may have been available.The essential fault on the Council's part was in not keeping its planning records in a sufficient state to alert it to the problem with the Bronlund's proposed building site.This ground of appeal cannot succeed.

Special damages

(a) Inflation

[67] The Bronlunds challenge the Judge's decision not to allow an item described as increased building costs due to inflation.The basis of the claim as presented at trial was this.The value of the building work if competed by September 1993 would have been $383,000.The value of the work completed as at the issue of the stopwork notice in February/March 1993 was $81,600.Hence the value of uncompleted work at that time was $301,400.Inflation for the period March 1993 to March 1997 (the latest date to which figures were available) was 25.93%.Applying that percentage to the value of the outstanding work resulted in a sum of $77,600 which was the amount of this claim.The Judge expressed his conclusion on this point as follows:

There are difficulties with this approach.It assumes that in September 1993, or shortly thereafter, the plaintiffs would have spent the amount required to complete the building.In fact they did not do so.This was in part because of the substantial costs they had incurred in relation to the resource management consent plus the costs of the temporary works, but it is also because, apart from these costs, they did not have the financial resources to complete the building within a normal time.There may be a case for allowing for inflation between 1991 when I have found that planning consent would have been available had it been sought and 1994 when the planning consent was available but no figures have been supplied upon which I could make an assessment.

I am satisfied that there will have been some increased cost as the result of the problems that flowed from the Council's negligence, but I do not have sufficient evidence upon which I can make an appropriate allowance.This item is disallowed.

[68] The essential difficulty is that the Bronlunds did not, and were never going to be able to, complete the house by September 1993 which is the date upon which Mr Henderson, their witness, had based his calculations.Faced with this problem Mr Hudson, who argued this part of the appeal, changed the basis of the claim to one which sought an inflation adjustment on the money which the Bronlunds spent in the 1993 year on temporary work and resource management costs.The amount was $51,853.40.It was argued that this money was diverted from the building project and that had it been available for that project further progress could have been made, thus saving inflationary increases in the cost of the work which was not able to be done with this money.This suggested approach led to alternative claims (depending on the period adopted) of $4,251.00 and $13,445.00 representing inflation of 8.2% from March 1993 to March 1994, and of 25.93% as from March 1993 to March 1997 respectively.I do not consider the appellants are now entitled to approach the matter on this new basis.

[69] There is no sufficient evidence to demonstrate when the diverted money was actually paid for the diverted purposes.In any event the Bronlunds were awarded interest from March 1994 on the money which they had to pay for resource management costs and temporary work.They have thus received a substantial measure of compensation for not having been able to apply that money to building purposes.To add a further increment on account of inflation would not, in the circumstances, be appropriate.

Experts' fees

[70] In counsel's summary of the issues raised by the Bronlunds, this point was raised as a matter of special damages.Iwill treat it as such for present purposes but hitherto it seems to have been treated as an issue of costs, in the form of witnesses' expenses.Indeed it was so treated in the body of the submissions.The distinction has no ultimate moment, save that the adjustment I would make under this head shouldnot carry interest from a date earlier than the date of judgment.This is because the point was presented essentially as an issue of costs.The Bronlunds claimed experts' fees totalling $7325.52 incurred prior to the payment in.The Judge rejected the claim on the basis that there was no sufficient evidence when these fees were incurred.His attention was not drawn to the fact that certain invoices did carry the necessary information to enable it to be said with confidence that these fees were incurred prior to payment in.When the point was raised Mr Heaney fairly accepted its force.In terms of the general approach to qualifying experts' fees adopted by the Judge, Iconsider the Bronlunds should have been allowed $4,000 on this head and provision should be made to that effect in the formal order.

Payment in

[71] Three issues were raised on this topic.It was argued first that the payment in was invalid because it was made without leave after setting down: see Rule 348(2).It is not clear when the proceeding was set down for trial. This point was not raised in the High Court and there are no factual findings upon it below.If the payment in was made without leave when leave was required, Ido not consider it should be treated as invalid at this late stage.Leave should either be granted nunc pro tunc or the Court's discretion as to costs should be exercised as if the payment had been made with leave. Furthermore, the effect of Rule 5 is that if leave was required the Council's failure to obtain it amounted only to an irregularity and did not nullify the payment in.There would in the circumstances be no reason to set aside or otherwise invalidate a step which was obviously treated as valid throughout, until this appeal.There can be no suggestion of any procedural injustice.

[72] The second issue concerned the wording of the notice of payment in.It is sufficient to say that as the claims were alternative and there was in essence only one claim, albeit on different legal bases, there was no need for the Council to specify to which cause of action the payment in related.There was in myview no breach of Rule 347(4)(a), no uncertainty and certainly no injustice.

[73] The third contention was that the Judge failed to exercise the discretion vested in him and automatically ordered costs against the Bronlunds after they failed to beat the payment in.The Judge's costs decision was obviously based on the way the matter had been put to him.In their submissions the Bronlunds appeared to accept they would have to pay costs post payment in.The issues addressed were essentially matters of quantum.That is how the Judge approached the issue and if he appeared to assume that this is what should happen he was only adopting the Bronlunds' stance.There was in any case no basis for departing from the general practice that if the plaintiff fails to beat a payment in the defendant should have costs thereafter.While Rule 360 gives the Court a discretion to make an order to that effect, it behoves a plaintiff who wishes the Court to adopt a different stance to identify something sufficient to justify a departure from the normal practice.Not only was nothing identified, the Bronlunds seemed to be accepting the general position applied.

[74] Counsel raised a number of matters in this Court in an attempt to suggest that the High Court should have exercised its discretion in a different way. Ihave considered them all but amunable to accept that proposition.Specifically Ido not consider the fact that liability was found in favour of the plaintiffs should mean that the ordinary consequence of failing to beat a payment in should not apply.By paying in, albeit with a denial of liability, the defendant is saying to the plaintiff - I deny liability for your claim, but in case I am wrong I hereby offer $X in full satisfaction.A plaintiff who succeeds on liability, but fails to obtain more than the amount thereby offered, has to be regarded, prima facie at least, as the unsuccessful party:see Beadle v Moore [1988] 3 NZLR 271, 273 (CA).

[75] Having considered all the points raised on this aspect of the case I am satisfied the Judge was entitled to order the Bronlunds to pay the costs of the proceeding post the payment in, including of course the costs of trial.

The $6884.23 issue

[76] I accept that for the purposes of the payment in, the Bronlunds should be deemed to have been successful in relation to this sum, in addition to the judgment sum.The point does not, however, avail them because the addition of this sum to the judgment sum does not take the Bronlunds over $135,000.The more is this so as the interest awarded should for payment in purposes be calculated up to the date of payment in, although of course correctly calculated up to the date of judgment for judgment purposes.

Costs generally

[77] Counsel raised various matters in relation to the quantum of the costs which were fixed in the Bronlunds' favour for matters up to the payment in. These matters concerned preparation for trial, and specifically matters of discovery, production, inspection and interrogatories.I amnot persuaded that there are any grounds to interfere with the Judge's approach in this area, and woulddecline to make any adjustments.

Conclusion - Formal Orders

[78] The only aspect upon which the appeal shouldsucceed, is the allowance of $4,000 for experts' fees incurred prior to payment in.The appeal is accordingly allowed to the extent of increasing the judgment sum from $129,076.01 to $133,076.01.The cross appeal filed on a precautionary basis in relation to interest running for payment in purposes only to the date of payment in, has no effect on the judgment sum and is dismissed.As they have substantially failed in their appeal, the Bronlunds must pay the Council's costs, which in the circumstances are fixedat $4,000plus disbursements and the reasonable travel and accommodation expenses of one counsel to be determined if necessary by the Registrar.

Solicitors

Purnell Jenkison & Roscoe, Thames, for Appellants

Heaney & Co, Auckland, for Respondent