JACKSON V PHILLIPS HC NAP CIV 2008-441-663 [2009] NZHC 170 (19 February 2009)

IN THE HIGH COURT OF NEW ZEALAND
NAPIER REGISTRY
                                                                             CIV
2008-441-663


                   IN THE MATTER OF               an appeal under s 299 of the Resource
                         
                        Management Act 1991

                   BETWEEN                        ROSS NORMAN JACKSON
             
                                    Appellant

                   AND                            STEPHEN CHARLES PHILLIPS AND
  
                                               JULIE TARRESSA PHILLIPS
                                                  Respondents


Hearing:           8 February 2009

Appearances: S L Fraser for Appellant
             S J Webster for Respondents

Judgment: 
        19 February 2009


                                  JUDGMENT OF KEANE J


              This judgment was delivered by Justice
Keane on 19 February 2009 at 4.30pm
                            pursuant to Rule 11.5 of the High Court Rules.

                
                      Registrar/ Deputy Registrar

                                                 Date:




Solicitors:

Langley
Twigg, Napier for Appellant
Sainsbury Logan & Williams, Napier for Respondents


JACKSON V PHILLIPS HC NAP CIV 2008-441-663 19 February
2009

[1]    Lying between the properties owned by Mr Jackson and his co-owner and Mr
and Mrs Phillips in Napier, stands a bank
30 metres high. On 21 July 2006 it partly
failed. Surface material from Mr and Mrs Phillips' property fell into the Jackson
property,
reducing a timber pole retaining wall, three metres high, set in place when
the bank was cleared and cut back in 2005. After the
wall was reinstated more debris
fell, three further times, causing further damage, the last in late July 2008 just as
there was to
be a hearing in the Environment Court.


[2]    Mr Jackson sought an enforcement order requiring Mr and Mrs Phillips to
retain within
their boundary at the upper extremity of the bank all surface materials.
In a decision dated 7 August 2008 the Environment Court
declined that application.
The bank had not failed, the Court held, as a result of any failure in its upper
extremity attributable
to Mr and Mrs Phillips. It had failed towards its lower
extremity, on the property of Mr Jackson, as a result of having been cleared
and cut
back by him and his co-owner in 2005.


[3]    In a second decision, given on 19 September 2008, the Court awarded Mr and
Mrs Phillips $27,871.69 indemnity costs. Mr Jackson's case, the Court had found in
its primary decision, had little if any merit.
That the bank failed because he and his
co-owner had cleared and cut it back in 2005, the Court held, should have been
apparent to
him. He should have accepted Mr and Mrs Phillips' settlement offer
made shortly before the hearing. That offer, the Court considered,
was generous. Mr
and Mrs Phillips ought not to be left out of pocket.


[4]    Mr Jackson did not appeal the Court's primary decision.
He has appealed the
award of costs it made as wrong in law. The Court, he contends, erred in principle,
failed to take account of
relevant matters, took into account irrelevant matters and
went beyond the evidence. This was not an exceptional case justifying
an indemnity
award. He ought not to be penalised for pursuing a remedy open to him on
professional advice. Mr and Mrs Phillips were
partly responsible for the case going
to hearing. They were less than co-operative and frank. Their settlement offer just
beforehand
entitled them at most to any costs incurred afterwards.

Salient evidence


[5]    Before the bank first failed in July 2006, the
Environment Court held, and it
was uncontested, the bank had stood for some 100 years without any apparent
difficulty. So the position
was when Mr Jackson and his co-owner purchased in
February 1997 and Mr and Mrs Phillips purchased in 1999. Neither identified any
fault before July 2006.


[6]    An exchange of letters between solicitors in September ­ November 2006
proved unfruitful. Mr Jackson looked to Mr and Mrs Phillips to retain the bank
within
its upper extremity, relying on an explanation as to cause given him by the
engineer, Mr Robinson, who had designed the retaining
wall at the base when the
bank was cleared and cut back in 2005. Mr and Mrs Phillips, having by then been
advised, certainly verbally,
by Opus International Consultants that the failure
resulted from that 2005 work, looked instead to Mr Jackson to shore up the bank
at
and above the base. They were not then willing to agree to the engineers meeting.
There was a stalemate.


[7]    Between 24 ­
27 November 2006 there was a fall of rock. When Mr
Jackson's solicitors contacted Mr and Mrs Phillips' solicitors in December they
were
overseas, not due to return until February 2007. The Napier City Council took the
position that it was a civil matter in which
it had no part to play. When on 3 July
2007 a branch fell from Mr and Mrs Phillips' property Mr Jackson looked to the
Environment
Court for immediate relief, an interim enforcement order requiring Mr
and Mrs Phillips to retain the upper extremity. On 6 July 2007
a Judge directed
mediation.


[8]    On 13 July 2007 at mediation Mr and Mrs Phillips undertook to remove an
offending tree. On 18
October 2007 the engineers met on site. Before then, on 3
October, and after in November, Mr and Mrs Phillips looked to settle. In
March 2008
they asked the Court to direct a second mediation. They had two quotations for the
remedial work they understood to be
necessary, one for $55,000 and the other for
$100,000. In June 2008 Mr Jackson said he would pay 25 percent of the lesser. The

second mediation on 8 July 2008 was without result. In late July there were two
further falls. So things were on 31 July 2008 when
the matter went to hearing.


Principal decision


[9]    In its decision, dated 7 August 2008, the Court held that, in seeking an
order
against Mr and Mrs Phillips under s 314 of the Resource Management Act, requiring
work and expenditure, Mr Jackson was seeking
relief in the nature of a mandatory
injunction. It was for him to prove to the civil standard that Mr and Mrs Phillips had
caused
the adverse effect he complained of. The Court held that he had not made out
his case.


[10]   The Court preferred the evidence
of William Gray, Opus International
Consultants, Mr and Mrs Phillips' engineer, to that of Mr Robinson, Mr Jackson's
engineer. It
considered Mr Gray's explanation for the various failures inescapable:

       The horizontal distance between the toe of the bank
and Mr and Mrs
       Phillips' residence is some 40M and the bank is some 30M high between
       those points. The bank failure
is at the lower portion ... close to the
       boundary between the two properties. It defies common sense to suggest that
    
  Mr and Mrs Phillips have moved rubbish some 30 or so metres down a steep
       bank to throw it on to or over the boundary.


      In face of the evidence that the excavation work at the toe of the bank was
       accompanied by vegetation clearance, using
a 10 or 15 tonne digger at its
       maximum reach to scrape the vegetation away ­ which coincides very
       largely with the
area in which the bank has failed, the hypothesis that Mr and
       Mrs Phillips have caused this failure is not credible. ...

       To the contrary, it is asking too much to believe that it is simply coincidence
       that the bank, which had been substantially
stable for many years, began to
       significantly fail in the winter immediately following the excavation at its
       base.
A conclusion that the excavation undertaking during and after the
       construction of the building in 2005 caused the bank failure
is all but
       inescapable.

[11]   Mr and Mrs Phillips, the Court concluded, had not contravened the Resource
Management Act
1991 or any related regulation or rule. They had not caused the
bank to fail. Responsibility for that clearly lay with Mr Jackson and his co-owner.

Costs award


[12]    In awarding Mr and Mrs Phillips
indemnity costs the Court relied on what it
described as its `very wide discretion' under s 285 of the Resource Management Act
1991.
That discretion, it said, had to be exercised in a principled way. There was no
presumption that costs should follow the event. Nor
were costs a penalty. They were
a `a reasonable and just contribution to actually and reasonably incurred costs'. In
deciding whether
to award costs at all, or at a higher than usual level, the Court
turned to four of the factors identified in DFC NZ Ltd v Bielby
 [1991] 1 NZLR 587,
Thomas J.


[13]    In deciding to award indemnity costs the Court acknowledged that this was
`not common' in the Environment Court
but said that was `not unknown' either. The
Court considered that the costs Mr and Mrs Phillips had been called on to meet and
were
now seeking to recover, were not unreasonable. They should not be left out of
pocket. The Court stopped short of finding that there
had been any abuse of process
on Mr Jackson's part. But, it held, he could be `justly criticised' for not accepting a
settlement
proposal before the hearing which they considered was generous.


[14]    In making its award the Court said this:

        A consideration
of our substantive decision will make it clear that we
        thought the applicant's case had little or no merit. Particularly
when the
        views of the engineer engaged by Mr and Mrs Phillips were presented, we
        would have thought that weakness
would be obvious and the desirability of
        reaching a workable compromise would have been highly apparent.

And -

       
... enforcement proceedings ... are not proceedings that Mr and Mrs Phillips
        voluntarily elected to participate in. They
had no choice but to defend their
        position, and we found that they were entirely right to do so.

And -

        It is our
unanimous view that, given the state of the evidence as reviewed in
        the substantive decision, and the refusal of the applicant
to accept what was
        a generous offer made by Mr and Mrs Phillips before the hearing, this is a
        situation where they
should not be out of pocket at all.

Appeal in point of law


[15]   The right of appeal given by s 299(1) is in point of law only:

       A party to a proceeding before the Environment Court under this Act or any
       other enactment may appeal on a point of
law to the High Court against any
       decision, report, or recommendation of the Environment Court made in the
       proceeding.

[16]   The award of costs is discretionary and, as the Supreme Court said in Shirley
v Wairarapa District Health Board  [2006] 3 NZLR 523, at 531, para [15], the
traditional view has always been that:

       an appellate court should not interfere unless satisfied that
the judge who
       made the order acted on a wrong principle, or failed to take into account
       some relevant matter, or took
account of some irrelevant matter or was
       plainly wrong.

[17]   The Court qualified that, in para [16] when it said `although
the costs
jurisdiction is discretionary, it is not unprincipled, or else it would be unacceptably
arbitrary'. But in Reid & Ors v
R  [2007] NZSC 90, at para [23], it qualified that
qualification:

       ... an appellate court cannot hope to capture the ephemeral but significant
       impressions which inform the assessments and discretions of the trial judge.
       That is why, of course, a challenge to
the exercise of discretion must
       demonstrate what could be termed, generally, an error of principle.

It remains the case that,
as Wild J said in Heli Harvest Ltd v Marlborough District
Council (WN CIV 2004-485-1669, 24 February 2005), para [2] `appeals against
cost
order remain difficult'. Such orders are `quintessentially ... discretionary'.


Costs discretion


[18]   The Environment Court's
ability to award costs is wide. Section 285(1)(a)
enables it to `order any party to pay ... to any other party, such costs and expenses
(including witness's expenses) incurred by the other party as the ... Court thinks
reasonable.' Its breadth, counsel and I agree,
is well captured by Judge Smith in

Auckland Regional Council v Cash for Scrap Ltd & Ors, Decision No A5/2007, 19
January 2007,
para [16]:

       Section 285 of the RMA gives the Court a wide discretion to award costs
       and expenses as it considers reasonable.
This discretion is exercised on a
       principled basis and is not exercised to penalise a party but to compensate
       another
party where it is considered just to do so. Costs do not follow an
       outcome as a rule and there is no scale of costs. Costs
are also seen as being
       more likely where a party has been put to unnecessary costs and expenses.
       The broad discretion
the Court is given also means that in appropriate (and
       exceptional) cases a party may be ordered to pay full indemnity costs
...

[19]   As to the part that the District Court scale of costs might play, Judge Smith
said this at para [29], as counsel agree
accurately, as do I:

       The District Court Scale of costs does not apply in the Environment Court
       per se but it may be
used to test findings as to the reasonableness of legal
       costs. As such, the scale is a useful, objective guide, but it is
limited in that it
       does only relate to legal costs and is also related to the practices of the
       District Court that
may sometimes differ in detail from those at the
       Environment Court.

[20]   On this appeal the Court is said to have misconstrued
its discretion to award
indemnity costs in particular, to have failed to articulate how exceptional that is and
why this case was
deserving. I do not agree. The Court was explicit that costs can
never be a penalty and are normally to be no more than a contribution
to actual costs
necessarily and reasonably incurred. It was equally explicit that an award of
indemnity costs is not usual but, as
it rightly said, not unknown either. Implicitly, if
not explicitly, it recognised that such an award is exceptional. It thought this
a case
calling for such an award. The issue is whether the case is in that category.


Indemnity principles


[21]   In awarding
indemnity costs the Court relied on four of the seven factors
identified in DFC NZ Ltd v Bielby  [1991] 1 NZLR 587 and it was, I consider, fully
entitled to order the exercise its discretion in that way. Thomas J may have identified
the seven factors
as going only to a departure from scale by increased award, not to
an indemnity award or an award against solicitors personally.
But why that was he
did not say and the principles he identified are those normally thought to justify a
full award; the distinction
is one rather of degree: Hedley v Kiwi Co-operative

Dairies Ltd, Norgate & Ors  (2002) 16 PRNZ 694, para [11]; Colgate Palmolive Co v
Cussons Pty Ltd [1993] FCA 536;  (1993) 118 ALR 248, Sheppard J.


[22]   One of the factors the Court identified was abuse of process but as it rightly
said this case did not lie in
that category. If Mr Jackson's explanation for the bank's
failure had been right s 314 would have given him a remedy. It enables
the
Environment Court to make enforcement orders in the nature of injunctive relief to
prohibit, bring to a halt, and remedy, if
need be also by money orders in the nature of
damages, any `actual or likely adverse effect on the environment'. The Court's
discretion
appears extremely wide. Rather, the Court was clear, the factor that it took
into account amongst those it identified was the failure,
as Thomas J said at 595:

       to explore the possibility of settlement when a compromise could reasonably
       have been expected
to ensue, or where a party has unreasonably or
       obdurately resisted a settlement of a claim or dispute.

[23]   The real question
on this appeal is whether the Court was able to rely on the
factors it identified and whether, conversely, it was right to ignore
any that might
appear countervailing.


Conclusion


[24]   In awarding indemnity costs the Court was entitled, I consider, to rely
on its
conclusion that Mr Gray's explanation as to cause was inescapable. Mr Jackson may
say that the Court was only entitled to
conclude that he had not made out his case.
But to decide whether or not that was so the Court had to decide the question of
cause
in the round. It had to exclude the explanation advanced by Mr and Mrs
Phillips and any other. It was entitled to conclude that far
from making out his case,
Mr and Mrs Phillips had made out theirs.


[25]   The Court was also entitled to conclude, I consider,
that though he was
advised professionally by Mr Robinson, Mr Jackson was not exempt from deciding
for himself whether to advance
his case and whether to settle it. He knew the bank
had been stable until the 2005 clearing and cut. He knew what the extent of that
work was. It was self evident and coincided, as the Court found, with the area of

failure. In this I do not ignore Mr Robinson's
professional opinion. But he was not
completely independent. The 2005 work had been done independently of any advice
from him but
he had designed the retaining wall that proved ineffectual. He had also
advised Mr Jackson's insurer, as the Court noted, that the
2006 failure was natural.
He had not then attributed fault to Mr and Mrs Phillips.


[26]   Mr Jackson's strongest point, I consider,
is that Mr and Mrs Phillips, no
doubt on advice, in looking to Mr Jackson to remedy the failure at the outset,
declined to allow
their engineers to meet to settle what the cause of the failure was
and did not at the earliest point authorise Mr Gray, their engineer,
to give his report
to Mr Robinson. The Court did not refer to this but I do not regard it as disqualifying
Mr and Mrs Phillips from
the indemnity award the Court made.


[27]   On 18 October 2007, a good nine months before the hearing, Mr Gray and
Mr Robinson met
for an hour to discuss the failure. Mr Gray showed Mr Robinson
his report completed in August 2007, that tabled at the second mediation
and given
in evidence. Mr Robinson considers Mr Gray held back some part of it. That does
not accord with Mr Gray's evidence and
it is hard to see what might have been
withheld. They certainly reviewed cause sufficiently to disagree. It can scarcely be
said
that there was a want of timely disclosure.


[28]   Finally, the Court was entitled, I consider, to make a full award even though
Mr and Mrs Phillips did not make their offer in settlement until shortly before the
hearing. This was not a Calderbank offer made
under the civil rules. When and how
the offer was made was no more than one discretionary factor amongst others. The
Court was entitled
to take into account that Mr and Mrs Phillips did not elect to
participate in the proceeding. They had no choice but to. It was also
entitled to
conclude that they were right not to back down. Also that Mr Jackson's claim was
misconceived, that he ought to have understood this and that he and not Mr and
Mrs
Phillips ought to bear the entire cost.


[29]   In the result I dismiss the appeal and confirm the order for costs made. Mr
and Mrs Phillips are entitled to costs on this appeal, as I should have thought at scale

2B and disbursements as fixed by the Registrar.
If costs cannot be agreed
memoranda are to be filed within 14 working days of the date of this decision.



                    
                                      _____________
                                                           P.J. Keane J