North Eastern Investments Limited v Auckland Council [2018] NZHC 1805 (20 July 2018)

Last Updated: 6 August 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2016-404-002324 CIV-2016-404-002325 [2018] NZHC 1805

UNDER	the Judicature Amendment Act 1972 and Local Government (Auckland Transitional Provisions) Act 2010
IN THE MATTER	of an application for judicial review in respect of decisions made under the Local Government (Auckland Transitional Provisions) Act 2010
BETWEEN	NORTH EASTERN INVESTMENTS LIMITED First Plaintiff HERITAGE LAND LIMITED Second Plaintiff
AND	AUCKLAND COUNCIL First Defendant /cont

Hearing:	On the papers
Counsel:	JW Maassen for the Plaintiffs H Ash and W Bangma for the First Defendant No appearance by or on behalf of the Second Defendant C Kirman and A Devine for the Third Defendant
Judgment:	20 July 2018

JUDGMENT OF WOOLFORD J

[As to costs]

This judgment was delivered by me on Friday, 20 July 2018 at 11:30 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

NORTH EASTERN INVESTMENTS LIMITED v AUCKLAND COUNCIL [2018] NZHC 1805 [20 July 2018]

AUCKLAND UNITARY PLAN INDEPENDENT HEARINGS PANEL
Second Defendant

HOUSING NEW ZEALAND CORPORATION
Third Defendant
[1] On 2 May 2018, I dismissed an application for judicial review filed by North Eastern Investments Limited (NEIL) and Heritage Land Limited (Heritage) and indicated that costs were payable to both Auckland Council (the Council) and Housing New Zealand Corporation (HNZ). An agreement on costs has not been reached and the parties have filed separate memoranda.

One allocation of costs?

[2] The plaintiffs submit, contrary to the indication in my judgment that costs were payable to both the Council and HNZ, there should be no more than one allocation of costs to the defendants. The plaintiffs refer to r 14.15 of the High Court Rules 2016, which provides:

• 14.15 Defendants defending separately

The court must not allow more than 1 set of costs, unless it appears to the court that there is good reason to do so, if—

(a) several defendants defended a proceeding separately; and
(b) it appears to the court that all or some of them could have joined in their defence.

[3] First, the plaintiffs note that in an application for judicial review only the decisionmaker is required to be a defendant. In this case, the plaintiffs submit that HNZ was given an indulgence by the Court to participate. HNZ wanted to participate as an intervenor and applied to do so. In such a case it would not normally be entitled to costs.

[4] The plaintiffs, however, argued successfully that the status of defendant was appropriate if HNZ was calling evidence and so HNZ shared an exposure to costs with the Council. But the plaintiffs would not have been entitled to costs against both defendants.

[5] The plaintiffs submit there are insufficient reasons to justify departure from the standard principle behind r 14.15. As a matter of principle, if parties wished to insert themselves into proceedings and call evidence in an application for judicial review and, therefore, are appropriately defendants that should not increase the costs exposure for a plaintiff.
[6] HNZ acknowledges that it initially joined as intervenor in the application for judicial review because it raised issues regarding the sufficiency of the Independent Hearing Panel’s (the Panel) reasoning as it related to zoning within the Auckland region. Subsequently, that ground was withdrawn by the plaintiffs, but a new ground was raised by the plaintiffs regarding the validity of the summonses of Council witnesses issued by the Panel at the request of HNZ.

[7] HNZ says the plaintiffs raised 25 separate grounds relating to the validity of the summonses. The plaintiffs also unsuccessfully sought to cross-examine HNZ’s Development Manager, Mr Brendon Liggett. HNZ subsequently sought costs against the plaintiffs in respect of that application and Whata J reserved costs to the trial judge.

[8] HNZ further submits that it wrote to the plaintiffs on a without prejudice save as to costs basis, noting that the issue of the validity of the summons was irrelevant to the application for judicial review and that the plaintiffs should withdraw their claim in relation to the validity of the summonses so that HNZ need not actively participate in the proceedings. The plaintiffs subsequently advised HNZ that it wished to continue to pursue their claim that the summonses were invalidly issued. At the hearing, however, the plaintiffs did not argue any of the 25 grounds relating to the validity of the summonses.

[9] After giving careful consideration to the competing contentions, I am of the view that a finding that the summonses had been invalidly issued would have had significant implications for HNZ. As such it was appropriate that it was involved in the proceedings. It would also have been inappropriate from a public policy perspective for the Council and HNZ to have been jointly represented. HNZ ran a separate case to the Council addressing in detail the 25 separate reasons put forward by the plaintiffs for why the summonses were invalid. The plaintiffs also made HNZ a defendant so they could claim costs against HNZ should it be unsuccessful in the proceedings. I am, therefore, of the view that there is good reason for the Court to allow more than one set of costs.

Categorisation and allocation of costs for substantive hearing

[10] Counsel are agreed that the proceedings are correctly characterised as 2B. Both the Council and HNZ have provided schedules which itemise their costs. Issue is taken by the plaintiffs with four items listed by the Council and HNZ.

[11] First, the plaintiffs submit that there should be allowance made for only one commencement process by the Council. In response, the Council says that because the plaintiffs substantially changed the basis of their application when filing an amended statement of claim, an allowance should be made for two commencement processes. While I acknowledge that substantial changes were made, sch 3 does not provide for a second commencement. A costs award should be predictable and expeditious. A court should not be placed in the situation where it has to analyse and make a reasoned assessment of exactly how much change had occurred and how that should be reflected in a costs award. I therefore decline to make an allowance for two commencement processes.

[12] Second, both the Council and HNZ have claimed 2.5 days for the preparation of an affidavit. The plaintiffs submit that this is unreasonable. While I acknowledge that item 30 of sch 3 does provide for 2.5 days for the preparation of briefs or affidavits, there was only limited affidavit evidence prepared as this was an application for judicial review and not a normal civil proceeding where all evidence comes in by way of briefs or affidavits. I am of the view that it would be appropriate in those circumstances to reduce the allowance from 2.5 days to 1.5 days.

[13] Third, the defendants have claimed for second counsel, submitting that second counsel was warranted because of the complexity of the factual and legal issues. This is disputed by the plaintiffs. Schedule 3 does not provide an allowance as a matter of course for second counsel. Second counsel have to be allowed by the court. In this case, I am of the view that an allowance for second counsel is not warranted. Although there was brief cross-examination of one witness by the plaintiffs’ counsel, this was not a witness trial as such nor was it a case where there was any special logistics requiring assistance from second counsel. The plaintiffs were represented by one counsel. I therefore decline to make an allowance for second counsel.
[14] Fourth, the defendants have claimed costs for appearance of principal counsel for three days. But the plaintiffs point out the hearing concluded at 3.00 pm on the Friday, so it only occupied 2.75 days despite having been allocated three. Counsel for the Council says, in response, it is inappropriate to reduce the hearing time in units below 0.5 of a day. And points out the defendants did not provide any authority for a
0.25 day reduction. However, in sch 3 next to item 34, the High Court Rules specifically provide the “time occupied by the hearing measured in quarter days”. Accordingly, I only allow 2.75 days for appearance of principal counsel.

Earlier interlocutory applications

[15] The plaintiffs earlier made an unsuccessful application for discovery and particulars. They were also unsuccessful in a later application to cross-examine a HNZ witness, Mr Brendon Liggett. HNZ also seeks costs in respect of both these interlocutory applications.

[16] I am of the view that costs should lie where they fall on the first application, but that HNZ is entitled to costs in respect of the second application.

[17] The application for discovery and particulars was dealt with at the same time as an application to intervene in the proceedings by HNZ. Whata J granted HNZ’s application, but determined that costs on the application to intervene should lie where they fall.¹ He said that the application was properly made, but the issues raised by the plaintiffs assisted in determination of the application. Whata J declined the plaintiffs’ request for discovery and particulars because the relevance of the materials sought had not yet been established. He, however, granted leave for the plaintiffs to renew their application for discovery and particulars following production of evidence by HNZ. At the same time, Whata J noted that HNZ had undertaken to provide relevant particulars in terms of the pleadings when it produced its affidavit evidence. The Judge further noted the indication from HNZ that it would provide the relevant documents in that regard. Comprehensive affidavit evidence was then filed by HNZ and the plaintiffs did not renew their application for discovery and particulars. In those

¹ North Eastern Investments Ltd v Auckland Council [2017] NZHC 1557.

circumstances, I am of the view that costs should lie where they fall on the first application.

[18] The second application to cross-examine Mr Liggett was dealt with on its own and the plaintiffs clearly failed. Although the application was dealt with on the papers, comprehensive submissions were filed and a nine page judgment issued by Whata J.² In a subsequent minute dated 1 February 2018, Whata J reserved costs. He stated:

While ordinarily HNZ success would mean it should have its costs on a 2B basis, I prefer to reserve costs to the trial judge who will be better placed to assess the prima facie relevance of Mr Liggett’s evidence and the extent to which this should bear on the question of costs overall.

[19] The plaintiffs were unsuccessful in the substantive proceedings. Mr Liggett’s evidence was not of major significance in the case. In those circumstances, I am of the view that costs should follow the event and an award made in favour of HNZ. The plaintiffs submit that 1.5 days for writing submissions as claimed by HNZ is not reasonable. I disagree. Substantial research was required as was analysis of how Mr Liggett’s evidence related to the issues identified in the pleadings.

Costs on costs

[20] The Council also seeks $4,683.00 in costs for its costs application. There is jurisdiction for the Court to award costs on costs.³ I am going to do so for two reasons. First, the plaintiffs raised an issue which required substantial engagement of the defendants. Second, the defendants were successful, aside from some minor adjustments. Costs on costs is appropriate in these circumstances. But I only allow one day for submissions, instead of the 1.5 days claimed.

Result

[21] Accordingly, there will be an award of costs to the Council in the sum of
$28,209.50 plus disbursements of $936.75 in terms of the table set out below. I further award the Council $3,568.00 for costs on the costs application. There will also be an

² North Eastern Investments Ltd v Auckland Council [2017] NZHC 2960.

3. Strata Title Administration Ltd v Body Corporate Administration Ltd [2014] NZCA 96 at [10]- [14].

award of costs to HNZ in the sum of $19,958.50 for the substantive hearing plus
$4,683.00 for the earlier application to cross-examine Mr Liggett plus disbursements of $955.00, also in terms of the table set out below:

Calculation of Costs of Auckland Council on Substantive Hearing

Item No. in High Court Rules 2016, Schedule 3	Description	Time Allocation (days or part days)	Rate ($) based on Category 2 - $2,230 daily recovery rate
2	Commencement of defence by defendant (in response to application for judicial review by plaintiff dated 16 September 2016)	2	$4,460.00
10	Preparation for first case management conference (27 March 2017)	0.4	$892.00
11	Filing memorandum for the case management conference (memorandum dated 21 March 2017)	0.4	$892.00
13	Appearance at first case management conference (27 March 2017 – Justice Whata)	0.3	$669.00
13	Case management conference on 6 June 2017	0.3	$669.00
30	Preparation of affidavit	1.5	$3,345.00
32	Defendant’s preparation of list of issues, authorities, and common bundle	2	$4,460.00
33	Preparation for hearing	3	$6,690.00
34	Appearance at hearing – principal counsel (7, 8, 9 February 2018)	2.75	$6,132.250
TOTAL		12.65	$28,209.50

Table of Disbursements

Description	Cost
Filing fee for lodgement of statement of defence (20 June 2017)	$110.00
Photocopying and binding of common bundle of documents for issue 4 (prepared by the Council)	$826.75
TOTAL	$936.75

Costs incurred relating to the Council’s cost application

Item No. in Schedule 3 – by analogy	Description	Time Allocation	Rate ($) daily recovery rate $2,230
Item 11 – filing interlocutory application	Preparing a memorandum to the Court claiming costs, after being unable to reach agreement with the plaintiffs	0.6	$1,338.00
Item 24 – preparation of written submissions	Preparing submissions in response to matters relating to costs raised by the plaintiffs	1	$2,230.00
TOTAL		1.6	$3,568.00

Calculation of Costs of Housing New Zealand on Substantive Hearing (7 – 9 February 2018)

Item No. in High Court Rules 2016, Schedule 3	Description	Time Allocation (days or part days)	Rate ($) based on Category 2 - $2,230 daily recovery rate
7	Notice of appearance (29 September 2016)	0.2	$446.00
12	Appearance at mentions hearing or callover (14 October 2017)	0.2	$446.00
13	Appearance at case management conference (27 March 2017)	0.3	$669.00
30	Preparation of affidavit (25 July 2017)	1.5	$3,345.00
32	Second defendant’s preparation of authorities and assistance with documents for common bundle	1	$2,230.00
33	Preparation for hearing	3	$6,690.00
34	Appearance at hearing – principal counsel (7, 8, 9 February 2018)	2.75	$6,132.50
TOTAL		8.95	$19,958.50

Plaintiffs’ Application to Cross-examine Mr BrendonLiggett (30 November 2017)

Item No. in High Court Rules 2016, Schedule 3	Description	Time Allocation (days or part days)	Rate ($) based on Category 2 - $2,230 daily recovery rate
-	Advising opposition to interlocutory application	0.6	$1,338.00
24	Preparation of written submissions	1.5	$3,345.00
TOTAL		2.1	$4,683.00

Table of Disbursements

Description	Cost
Filing fee for application to intervene (2 June 2017)	$200.00
Filing fee for notice of intention to appear (29 September 2016)	$110.00
Photocopying and binding of authorities, bundles and affidavit	$645.00
TOTAL	$955.00

Woolford J

Solicitors: Cooper Rapley Lawyers, Palmerston North, for the Plaintiffs

Simpson Grierson, Barristers & Solicitors, Auckland, for the First Defendant Ellis Gould, Lawyers, Auckland, for the Third Defendant