Main Farm Limited (in rec) v Otago Regional Council [2012] NZHC 302 (29 February 2012)

Last Updated: 12 March 2012

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2010-412-000385 [2012] NZHC 302

BETWEEN MAIN FARM LIMITED (IN RECEIVERSHIP)

Plaintiff

AND OTAGO REGIONAL COUNCIL First Defendant

AND EWAN ROBERT CARR Second Defendant

Counsel: J Toebes for Plaintiff

A J Logan for First Defendant

J J Moss for Second Defendant

Judgment: 29 February 2012

JUDGMENT OF HON JUSTICE FRENCH

_{as to Costs}

Introduction

[1] In my decision of 21 November 2011,[1] I found in favour of the plaintiff against the second defendant. The finding meant it was not necessary for me to consider the liability (if any) of the first defendant to the plaintiff.

[2] Unfortunately, the parties cannot agree on the costs position of the first defendant, whether it is entitled to any costs, and if so who as between the plaintiff and the second defendant should bear them.

MAIN FARM LIMITED (IN RECEIVERSHIP) V OTAGO REGIONAL COUNCIL HC DUN CIV-2010-412-

000385 [29 February 2012]

Factual background

[3] Main Farm filed proceedings against the Otago Regional Council, claiming that the regional council had wrongfully issued Mr Carr with a water permit which belonged to Main Farm. An order was sought that the regional council alter its records to record Main Farm as the permit holder.

[4] At the first case management conference, an Associate Judge suggested that Mr Carr should be joined to the proceeding. According to the Judge’s minute, Main Farm’s counsel initially rejected that suggestion on the basis this was not a case of competing claims but rather a matter of error, with the Court simply being asked to direct correction of the error. However, after further discussion it was agreed that Mr Carr was a person materially interested in the suit for the purposes of r 4.3(1), and accordingly an order was made joining him as a second defendant.

[5] The matter then progressed to a hearing before me.

[6] At the hearing, Mr Carr actively defended the claim, asserting that he, and not Main Farm, was the rightful owner of the permit. He adduced affidavit evidence. His counsel cross-examined Main Farm’s witness and made submissions.

[7] For its part, the Otago Regional Council denied it had incorrectly issued the permit to Mr Carr. It submitted that on the information available to it, the permit had been properly granted and that the regional council was entitled to rely on the information received. It contended that entitlement to the permit was a matter to be decided between Main Farm and Mr Carr and, likening itself to a stakeholder, undertook to abide the decision of the Court on that issue.

[8] The regional council did not adduce any evidence, but provided its records. Its counsel, Mr Logan, cross-examined Mr Carr and made submissions.

[9] In my subsequent decision of 21 November 2011, I held that Main Farm was the rightful owner and ordered Mr Carr to effect the necessary transfer. That finding

rendered it unnecessary for me to consider Main Farm’s claims against the regional

council, but I stated:

[62] ... Suffice it to say that on the evidence I do not consider the council to have been at fault in the matter. The delays appear to have been due to dilatoriness on the part of others, including Messrs Beattie and Carr themselves. There was also never any unequivocal communication to the regional council about Main Farm being the true owner. As Mr Logan put it, the high point of Main Farm’s case against the council was a letter written to it by Main Farm’s solicitors in July 2000. There was no follow-up from Main Farm, and another eight years of history. No active steps were taken until after the replacement permit was issued, and in the meantime no-one, including Mr Carr, had corrected the council’s misunderstanding that Mr Carr personally was an applicant and the intended consent holder.

[10] As regards costs, I noted that Mr Carr had chosen to take an adversarial role, and ordered him to pay costs to Main Farm.

[11] The costs position of the regional council was not quite so straightforward, and accordingly I reserved the right of the parties to make further submissions.

[12] Those submissions have now been filed.

[13] The regional council seeks costs of $24,313.27 calculated on a 2B basis.

[14] Main Farm and Mr Carr contend that if costs are to be awarded to the regional council, then it is the other who should pay them. Main Farm says Mr Carr was unsuccessful and should therefore pay the costs of all parties, while Mr Carr says Main Farm should never have issued proceedings against the regional council in the first place. Mr Carr also questions whether any costs should be payable at all to the regional council, submitting that the regional council could have chosen not to participate in the hearing.

Discussion

[15] Although the focus at the hearing was the dispute between Main Farm and Mr Carr, the claim against the regional council was nevertheless still alive. The regional council was entitled to defend that claim and cannot, in my view, be

criticised for doing so. Further, its counsel Mr Logan played a very constructive role at the hearing, and provided valuable assistance to the other parties and the Court.

[16] In those circumstances, it is entirely reasonable for the regional council to recover a contribution to its costs on a 2B basis.

[17] If the joinder of the regional council had been reasonable and necessary, then that would be a highly relevant and potentially decisive factor in favour of Main Farm.[2] However, in my view the proceeding against the regional council was unnecessary. As Mr Logan submits, Main Farm could not hope to succeed against the regional council if, as between Main Farm and Mr Carr, Mr Carr had been entitled to the benefit of the permit. Conversely, if, as Main Farm successfully established, it was entitled to the permit then the proceedings against the regional council were unnecessary. Keeping the claim against the council on foot was

especially unnecessary as the regional council had in its pleadings agreed to abide the decision of the Court and alter its records in accordance with the Court’s determination of entitlement to the permit. It was because there was still a live claim against it that the regional council had to take a fuller role in the proceedings than a mere stakeholder abiding the decision of the Court.

[18] On the other hand, the proceedings only progressed to a hearing because Mr Carr wrongly contended that he was entitled to the permit. A formal proof hearing would still have been required, but the cost of such a hearing would have been insignificant when compared to the costs actually incurred. Mr Logan notes that a substantial part of the costs incurred relate to the disclosure and compilation of evidence for trial, and preparation for and conduct of the hearing.

[19] A further point, as mentioned in [62] of my judgment quoted above, is that both Mr Carr and Main Farm had been guilty of delay. In his submissions on costs, Mr Toebes suggests there was some fault on the part of the regional council.

_{However, I remain of the view as expressed in my substantive decision.}

[20] In my assessment, having regard to all the circumstances, the most just solution is for the regional council’s costs to be apportioned between Main Farm and Mr Carr on a 50/50 basis.

[21] In coming to this conclusion I have not overlooked Mr Moss’s submission that Mr Carr may not be in a financial position to pay a second costs order, or at the very least not for a very considerable period of time until his other litigation is completed. In my view, however, that is not a relevant consideration in making a costs award.

Outcome

[22] I order that Main Farm and Mr Carr are each to pay half of the Otago

Regional Council’s costs calculated on a 2B basis.

Solicitors:

JT Law, Wellington

Ross Dowling Marquet Griffin, Dunedin

GCA Lawyers, Christchurch

(Counsel: J Moss, Christchurch)

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[1] Main Farm Limited (in receivership) v Otago Regional Council HC Dunedin CIV-2010-412-

_{000385, 21 November 2011.}

[2] Lane Group Ltd v D I & L Paterson Ltd [2000] 1 NZLR 129 (CA).