Whangaparoao Community Centre Project Inc v Whangaparaoa Community Trust [2016] NZHC 2364 (5 October 2016)

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IN THE MATTER	of an application for Judicial Review pursuant to section 4 of the Judicature Amendment Act 1972 and Part 30 of the High Court Rules
BETWEEN	WHANGAPARAOA COMMUNITY CENTRE PROJECT INC First Plaintiff DESMOND HAMILTON ADAMS Second Plaintiff NORMA JOAN BUCKLAND Third Plaintiff GLENYS TERESE FERGUSON Fourth Plaintiff
AND	WHANGAPARAOA COMMUNITY TRUST First Defendant WHANGAPARAOA RESIDENTS AND RATEPAYERS ASSOCIATION _{Second Defendant}

Hearing:	On the papers
Counsel:	R G Espie for Plaintiffs J McBride for Defendants
_Judgment:	_{5 October 2016}

WHANGAPARAOA COMMUNITY CENTRE PROJECT INC v WHANGAPARAOA COMMUNITY TRUST [2016] NZHC 2362 [5 October 2016]

[1] The plaintiffs’ application for judicial review failed. The judgment ended with a consideration of the defendant’s claim for costs on an indemnity basis.¹That failed as well. I excluded indemnity costs, but left it to the successful defendants to formulate a costs claim in the usual way.

[2] The defendant responded by seeking costs on a Category 2 basis, to the extent calculated, following the steps set out in the High Court Rules. The claim was for a total of 16.05 days or $35,791.50 (at $2,230 per day). The defendants then sought increased costs based on a number of the causes of action being hopeless and which should never have been argued. Including, and in particular, allegations of deceit and dishonesty.

[3] The submissions invited the Court to increase the scale costs by 50 per cent from scale for their costs preparing for and attending the trial, that is for items 30,

32, 33 and 34 of the attached schedule. A 50 per cent uplift applied to those items accordingly increases the claim for costs to $45,826.50.

[4] Then on top of that the successful defendants sought a $10,000 increase warranted by the unnecessary allegations of fraud, reliance on hopeless causes of action and the unreasonable refusal to accept the defendants’ walk away offer.

[5] In their reply the plaintiffs rejected the allegations that they acted unreasonably and unnecessarily prolonged the trial preparation. They submitted that they had quite reasonably relied upon the authority of the New Zealand Court of Appeal in the case of Stratford Racing Club Inc v Adlam.²My judgment distinguished this case.

[6] In support of their argument that the Court should reject any uplift, the unsuccessful plaintiffs also argued that the defendants sought to and succeeded in disrupting orderly trial preparation. They gave two examples.

(a) First, the plaintiffs were put to the expense and inconvenience of an application for security for costs, only to have the defendants

discontinue without prior notice and not complying with timetable orders directed by the Court in respect of that application. The plaintiffs submitted that the defendants had no intention of pursuing the claim but brought it solely to cause damage to the plaintiffs.

(b) Second, the plaintiffs contend that the defendants deliberately served their evidence late and in breach of the Court timetable putting the plaintiffs at a serious disadvantage.

[7] The plaintiffs relied on the fact that the proceedings were a matter of public interest, to a degree recognised in the judgment, and that they were acting solely for the public good and not at all for any private and material gain. In respect of the abandoned application by the defendants for security of costs (the plaintiffs gave an assurance that they would meet an order of costs), the plaintiffs’ claim entitlement to an award of $10,258 being 4.6 hours preparing, serving and filing the notice of opposition and affidavit in support and preparing submissions that were all unnecessary. The plaintiffs also submitted the defendants’ non-compliance with the timetable order was of real significance and should be dealt with severely by the Court. It was also submitted it was only until the evidence of the defendants was received that it was apparent that the defendants were asserting compliance with the Deed of Gift which included the obligation to increase the trusteeship of the first defendant from four to six trustees. But on analysis they were proposing the appointment of only one additional trustee, name not disclosed, so only part not full compliance with their obligation to appoint additional trustees. They submitted that had the existing trustees adopted an open community friendly approach then it is likely the community’s concerns could have been allayed by provision of information in the process of consultation. Regrettably, they submitted, this did not occur leaving the plaintiffs with no other option but to seek the assistance of the Court. Rather than considering an uplift the submission of the plaintiffs is that the application for an uplift needs to be smartly dismissed and the Court should adopt a critical approach through the unsatisfactory evidence of the defendants’ conduct.

[8] For all these reasons the plaintiffs submitted that considering the overall context of the case, costs should like where they fall.

[9] In reply the defendants submitted that there is no basis for the allegation that the security for costs application was brought solely to cause damage to the plaintiffs. The application was brought for the usual reasons and promptly discontinued once the plaintiffs confirmed they understood their exposure to costs and would personally ensure they were paid if their claim failed.

[10] The defendants also dispute the merit of a claim for $10,258 for opposing security for costs and argue that the scale costs are $1,338 being item 23 of Schedule

[11] The defendants agree their evidence was late but say that was because the plaintiffs served affidavits replete with inadmissible opinions and that on 16 March

2006 Moore J confirmed that the plaintiffs’ affidavits had to be completely recast.

[12] The defendants reject the proposition that they relied on the Deed of Gift belatedly. They say that reliance on that deed was first noted in Mr Walker’s affidavit dated 3 December 2015 at para 14(e) and further explained in their solicitor’s letter to Mr Espie dated 12 February 2016.

[13] Finally the defendants’ submission reply turned to the proposition that this was public interest litigation and the plaintiff should not have to pay costs. The submissions of the defendants responsibly acknowledge that this is a relevant consideration. Rather they say that costs will still be awarded in a sum the Court considers reasonable. The defendants’ counsel cite White J in Taylor v District

The scope of the “public interest” exception, now contained in rule 14.7(e), has been considered in a number of cases: New Zealand Mäori Council v Attorney-General, Commerce Commission v Southern Cross Medical Care Society, Gibbs vNew Plymouth District Council, and Titahi Bay Residents Association Inc v Porirua City Council. As these cases show, the proceeding must concern a matter of genuine public interest, have merit and be of general importance beyond the interests of the particular unsuccessful litigant. To obtain the benefit of the exception in rule 14.7(c), the unsuccessful litigant must also have acted reasonably in the conduct of the proceeding.

³Taylor v District Court at North Shore HC Auckland CIV-2009-404- 2350, 13 October 2010 at

[14] This dictum says the proceedings must concern a matter of general public interest and have merit and have general importance beyond the interests of a particular unsuccessful litigant.

[15] The defendants also relied on similar dicta by Simon France J in the case of Titahi Bay Residents Association Inc v Porirua City Council.⁴Then it is submitted by the successful defendants that the plaintiffs did not act reasonably, they made a number of unfounded allegations of fraud and misconduct and there is no attempt to refine the pleaded issues at trial. It is further submitted that the plaintiffs attempted to re-litigate issues that had previously been the subject of other court proceedings. The submissions concluded that the plaintiffs were not entitled to invoke High Court Rule 14.7(e) to seek a reduction in costs.

[79] I do not think that these criteria are satisfied. This is because it is unusual, possibly a unique event, for a community hall to be transferred away from a ratepayers and residents committee to a dedicated charitable trust, in order to prevent the land and building being acquired by the local territorial council. It warranted a special general meeting in the first place. Such was the unusual character of it, that it was not inappropriate to test the legality of the structure in the High Court.

[17] Paragraph [7] of the judgment recorded that the second defendant, the Whangaparoa Ratepayers and Residence Association (WRRA) have entered into an agreement with the Trust to a Deed of Gift between the two transferring the hall to the Trust. That under the Trust there were going to be six trustees every year, the four founding trustees plus an additional member of the Board put forward each year by the WRRRA and a further additional Board member from the Whangaparoa community. This did not happen. As the judgment records there was a history of problems of obtaining membership of the WRRA. On 23 June 2013, 23

Whangaparoa residents applied for membership which was rejected. The judgment found that the application for membership, accompanied by a threat to wind up the WRRA was clearly a legitimate reason for refusing the application. In [59] of the

judgment I referred to the original intent that there would be two additional trustees appointed every year and only mixed evidence to the extent that this is being done. I recorded that in the course of the hearing assurances in this regard were received and that is noted in [60]. In [62] I reiterated that the settlement agreement and the gift remain in force and bind the trustees. I noted that, in future, the full implementation of this aspect of the settlement agreement is encouraged by the Court.

[18] Increased costs are only obtained if a party has acted vexatiously, frivolously, improperly or unnecessarily in continuing or defending a proceeding or a step in the proceeding.⁵

[19] In my main judgment I did not think these criteria had been satisfied. For the same reason I do not think there is any justification in an uplift. On the other hand the unsuccessful plaintiffs went into this litigation with an assurance they would pay the costs awarded against them, if they failed.

[20] In my view the appropriate order is costs on a 2B basis. I reject both the successful defendants’ application for an uplift, and the plaintiffs’ application that costs lie where they fall.

High Court of New Zealand Decisions

Whangaparoao Community Centre Project Inc v Whangaparaoa Community Trust [2016] NZHC 2364 (5 October 2016)