SOPER & ORS v MARLBOROUGH DISTRICT COUNCIL HC BLE CIV 2012-406-01

SOPER & ORS v MARLBOROUGH DISTRICT COUNCIL HC BLE CIV 2012-406-01 [3 July 2012]IN THE HIGH COURT OF NEW ZEALANDBLENHEIM REGISTRYCIV 2012-406-01[2012] NZHC 1552BETWEEN A W SOPER, A Z SOPER ANDWINSTANLEY KERRIDGE TRUSTEESLIMITEDAppellantsAND MARLBOROUGH DISTRICT COUNCILFirst RespondentAND T W COSGROVE AND J COSGROVESecond RespondentsHearing: 7 June 2012Counsel: D J Clark for the AppellantsM J Radich for the First ResponentM J Hunt for the Second RespondentJudgment: 3 July 2012JUDGMENT OF MALLON J[1] Mr and Mrs Soper appeal against an Environment Court decision awarding costs to Mr and Mrs Cosgrove of $9,500. The order was made following substantive proceedings in that Court brought by the Marlborough District Council to determine competing claims by the Sopers and the Cosgroves as to the right to occupy a boatshed. The Court determined that the Cosgroves had that right.[2] The Sopers contend that the costs order was in error, principally on the basis that the Court wrongly treated the Sopers as having forced the Council to bring the proceeding when their position was unmeritorious. A further, more minor, issue is that some of those legal fees did not relate to the Environment Court proceeding. That second issue is accepted by the Cosgroves.BackgroundThe Sopers' purchase[3] The Sopers are the owners of a property in Waikawa Bay. It has a frontage to the waters of the Bay. On the foreshore in front of the property there is a boatshed. Before purchasing the property, the vendors had indicated to the Sopers that they had started to put together a coastal permit application (for occupation) but had not pursued it. The vendors provided some information about that. This included a handwritten note from the Council to the vendors dated 5 February 2008 which said that the owners would need to obtain a coastal permit and "we have no record of one on this site (not unusual for that era)".[4] As part of their pre-purchase enquiries, the Sopers also obtained a LIM (Land Information Memorandum). In relation to the boatshed, the LIM said:Structure on Foreshore/Coastal Marine AreaThe aerial photo appears to show a structure on the foreshore/coastal marine area. Council holds no records regarding this structure and no resource consent was located. Anyone intending to take an interest in this property should make their own independent assessment.[5] After purchasing the property the Sopers lodged an application for a coastal permit to occupy the boatshed. Initially the Council advised that the application was to be publicly notified. The Sopers were then told by the Council (through theofficer dealing with the application) that it had been "brought to my attention that the boatshed for which consent is sought already has a coastal permit".The Cosgroves' permit[6] The persons claiming the existing permit were the Cosgroves. They own the neighbouring property. The background to the coastal permit in their favour was asfollows. The Cosgroves' property also has a frontage to the waters of the Bay, but itis virtually a cliff face and there is no beach. In the 1970s, the then owner of that property, Mr Millar (the father of Mrs Cosgrove), obtained an authority from theWaikawa Bay2598300 5993600Lot 1 D.P. 1122134 623 134623then Marlborough Harbour Board to build the boatshed. Thereafter Mr Millar occupied the boatshed pursuant to licences issued by the Harbour Board, and then the Council when the Harbour Board ceased to exist. The Cosgroves acquired theproperty from Mr Millar, and in 1993 Mr Millar's interest in the licence wastransferred to the Cosgroves. By this time the licence was now a coastal permit issued under the Resource Management Act 1991 ("the RMA"). The Councilinformed the Cosgroves that the permit term expired on 30 June 1996.[7] The Cosgroves failed to renew the permit before the expiry date. In 1997 the Council informed the Cosgroves that the licence was deemed to continue in accordance with s 418(6) of the RMA (dealing with the continuation of activities under coastal permits).[8] In April 2000 Mr and Mrs Cosgrove applied for a further coastal permit. That application form required the applicant to complete details in respect of the location to which the application related. The Cosgroves completed this part of the form as follows:2. LOCATIONThe location to which the application relates is:_____________________________________(Attach a sketch of the locality and activity points. Describe the location in a manner which will allow it to be readily identified e.g. house number & street address, the name of any relevant stream, river or other water body to which the application may relate, proximity to any well known landmark, etc).Grid Reference (NZMS260 1:50,000 series) Map No. _______________________________Easting ___________ Northing _____________Legal Description _____________________________________________________________Property Number _____________________________________________________________(e.g. Valuation Number, Property Number from rates invoice, Lot and DP Number)[9] No sketch or plan of the locality was attached. Map No. P27 was a large map of the general area. The easting and northing co-ordinates were wrong (and, as later plotted for the Environment Court proceeding, corresponded to a position out in thesea and some distance away from both the Cosgroves' and the Sopers' properties).The legal description and property number corresponded to the Cosgroves' property rather than the Sopers'. The application form correctly described the type of consentbeing sought, namely a coastal permit. It described the activity to which theP27application related as "To renew foreshore licence number 2792 as a CoastalPermit".[10] The Council assessed the resource consent application but did not appear to realise that it contained errors. On 25 May 2000 the Council granted the resource consent. It was for a term of 15 years. The Resource Consent No. U000401 wasdescribed as a "Renewal of Foreshore Licence 2792 for a boatshed in Waikawa Bay". The use of that 2792 reference number was wrong, because in 1997 theCosgroves held the interest under Coastal Permit U930879.The enquiries and correspondence leading to the Environment Court application[11] When the Sopers were informed that there was already a coastal permit for the boatshed, they were provided with a copy of the permit (ref U000401). That permit described the location of the permit as "Waikawa Bay, Picton". As there are alarge number of boatsheds in that Bay, the Sopers examined the file number U000401. In the top of the file was a map of the area with an undated note which said:"folder indicates that the boatshed should be on Lot 1 DP 1122. Co-ordinates on procam and folder indicate it should be at X. No site plan to show exactly where boatshed is."[12] The X on the map on which this note was made, was marked on theCosgroves' property (being Lot 1 DP 1122).[13] Against this background, the Sopers' position was that the Cosgoves' consentfor the boatshed, if intended to apply to the boatshed on their property, was not valid because of errors in the resource consent application. That issue needed to bedetermined if the Sopers' application for a resource consent was to proceed. Correspondence then ensued as to how that issue was to be determined.[14] On 17 December 2010 the Sopers' lawyers said to the Council that it had aconflict of interest in relation to the boatshed. That was because the Council had toldthe Sopers (via the LIM) and the previous owner of the Sopers' land that there wasno valid consent for the boatshed. It said that the appropriate way forward would befor the Council to apply, at its cost, to the Environment Court or the High Court for a declaratory ruling.[15] On 13 January 2011 the Council's lawyers wrote to the Sopers' lawyers and the Cosgroves' lawyers. The Council set out what it saw as the two competinginterpretations as follows:On one interpretation of the Application made in 2000 the location of the area for which consent was sought was not the actual location of the boatshed. If this view is correct, the Cosgroves have no operative consent to occupy the foreshore reserve where their boatshed is located, based on theGray Cuisine decision and the authorities referred to in that decision.The alternative view is that the consent was granted for a renewal of an existing structure and for a renewal of the foreshore licence and that Council held records which showed the location, including the original foreshore licence which showed the boatshed as being in front of the Soper property. On this view, Council had actual knowledge that the specifics of the location applied for were different than the actual location and the consent granted is informed by that actual knowledge.[16] It noted that ownership of the boatshed was a separate matter from the rights of occupation of the foreshore reserve. Its view was that the Cosgroves owned the boatshed and therefore, if the Sopers obtained resource consent to the occupation, they would need to negotiate with the Cosgroves.[17] The Council concluded:Council accepts there are two different views on the scope of the resource consent granted to Mr. & Mrs. Cosgrove in 2000. The resolution of thisissue will affect Council's obligations in its capacity as consent authority inrelation to the Application. For this reason, Council considers the appropriate way forward is to ask the Environment Court to make a determination in relation to this issue. Council is willing, at its cost, to make the Application, provide the relevant information it has and to identify both the Sopers and the Cosgroves as being affected parties with rights to be heard in relation to the substantive issue.[18] By letter dated 17 January 2011 the Sopers' lawyers advised that they agreedthat it was appropriate that the Environment Court look at the status of theCosgroves' consent. By letter dated 18 January 2011 the Cosgroves' lawyersdisagreed. They said that the April 2000 application could have only related to the existing structure which was indisputably owned by the Cosgroves. They said thatan Environment Court hearing was a waste of Council funds and would put the Cosgroves to the unjustified expense of having to be represented at the EnvironmentCourt hearing. They said that the Sopers' resource consent should run its course (if the Sopers would not withdraw it). By letter dated 20 January 2011 the Sopers'lawyers reiterated their view that the Environment Court application was the proper course.[19] By letter dated 21 January 2011 the Council advised that it was proceeding tomake the application. It said that it continued to believe this was the "appropriate way forward" in view of the Sopers' concern that the Council had a conflict ofinterest. It said that the application would be made at the Council's cost, and theSopers and the Cosgroves could take whatever role they wished to in the process.The Environment Court proceeding[20] The Council proceeded to apply for a declaration from the Environment Court as to whether the resource consent granted on 25 May 2000 conferred on the Cosgroves a right to occupy the boatshed. The Environment Court hearing took about two hours. It was dealt with on the basis of the documents filed. The Council, the Sopers and the Cosgroves were each represented by counsel, although the Council adopted a neutral position.[21] The Environment Court issued a decision six days after the hearing. The decision noted the errors that had been made in the resource consent application. Itsaid that although the "record keeping might have been less than perfect, there is aclear chain of references from the first grant of the Foreshore Licence in 1973 to the latest grant of resource consent U000401 in 2000 through plan MD 14920 andForeshore Licence 2792". It said that there "can be no realistic doubt that all ofthose documents are referring to the same boatshed, which is the only such structure that there has been on the foreshore in front of either of these properties".[22] It concluded as follows:We have the clear view that it is quite disingenuous for the Sopers to attempt to assert that the application that lead to U000401 referred to anything butthe boatshed that had been in existence since 1973. There has only ever been one boatshed on the foreshore in front of the two properties. The reference to the Existing Licence Number 2792 in the documents attached to the application leads directly to the identification of that one and only boatshed. Licence 2792 refers in turn to Plan MD 14920 which, with only a little deciphering, demonstrates clearly enough that the boatshed is not in front of the Cosgrove property (noted, correctly, as part of Lots 1 and 1A DP 1123) but rather is in front of the property immediately to the south, which is of course the Soper property. Further it is just not credible that if the previous owners of the Soper property believed that they had some right of ownership or occupation of the boatshed, they would have done nothing about that in the 27 years it stood on the foreshore in front of their property.Certainly the records are not as crisply accurate as one might wish, and the failure or inability of the Council to trace through its records is regrettable, but we do not think that anyone investigating the records now known to exist, with an open and objective mind, could possibly believe that the boatshed referred to in U000401 could be any other but the one built under the original authority of Foreshore Licence No 838, and which Mr and Mrs Cosgrove now have right to occupy by virtue of Coastal Permit U000401.[23] The Environment Court then referred to the submissions concerning the areas in the resource consent application. It concluded:Our conclusion however is that the concept does not arise in the circumstances of this dispute. Factually, anyone making an intelligent and open-minded inquiry would have quickly realised that the application for permit U000401 related to the one and only boatshed that has ever been on the foreshore in front of either of these two properties, and that it was indeed the very same boatshed which was the subject of Licence 2792 and its predecessor documents. There was no material misdescription, and there is no issue about jurisdiction. In that respect, we agree with Mr Hardy-Jones'submissions that Licence 2792 and plan MD 14920 correctly and sufficiently identify the boatshed and its locality, and with his comment that cases such as Southern Scallop (see para [20]) were dealing with marine farm applications over areas that were no more than squares of ocean surface delineated on a chart. In that situation, a precise plot is the more necessary than in the case of existing structures that are there for all to see.[24] The Cosgroves applied for costs against the Sopers. Counsel for the Cosgroves advised the Environment Court that their total legal costs were $14,285.01, and an award was sought of up to two-thirds of that (ie. up to $9,500). No costs were sought against the Council.[25] The Environment Court's costs decision was given on 22 November 2011.The decision referred to a list of factors that may be relevant to a costs decisionwhich are set out in DFC NZ Limited v Bielby.1 It agreed with a submission on behalf of the Cosgroves that the Sopers had advanced an unmeritorious position and had failed to compromise when that could reasonably have been expected. It said:... This was a situation where the Council records, once fully uncovered, plainly laid out the factual history of the boatshed, who had built it and who had the rights to occupy it and the land on which it stands. The opposing position taken by Mr and Mrs Soper had no substantive merit at all. Theywere advised of the existence of the Cosgroves' resource consent inNovember 2010 and Council's records were available to the parties. Theargument that the terms of the incorrect LIM somehow overrode thepreceding 37 years' events was never going to gain traction. It was theintransigent position adopted by Mr and Mrs Soper that forced the Council to bring the application so that it could be resolved by an independent arbiter.[26] It dismissed a submission that the Cosgroves should have been seeking costs against the Council. It concluded:It is our clear view that this is a situation where Mr and Mrs Soper should make a contribution to the costs to which Mr and Mrs Cosgrove were put to protect their property by participating in the proceeding. In the overall scale of cost levels we are accustomed to see in such applications the quantum of their costs overall does not appear to be out of the run of things. While it is difficult to empirically rationalise a final figure, the suggestion of two-thirds of the incurred costs seems appropriate, given that a figure of around one- third is generally regarded as unexceptional in cases where there are noBielby-type factors present.[27] The Cosgroves sought an award of costs against the Sopers. In a decision given on 22 November 2011 an order was made in the sum of $9,500. It is against this order that the appeal is brought.The power to award costs[28] The Environment Court has the power to order "any party to proceedingsbefore it to pay to any other party the costs and expenses ... incurred by the otherparty that the Court considers reasonable."2 The Environment Court has a Practice Note which covers, amongst other things, the question of costs. The Practice Note states that costs incurred in the hearing before a Council, or in Court assisted mediations, are not awarded by the Environment Court and should not be claimed.1 DFC NZ Limited v Bielby [1991] 1 NZLR 587 (HC).2 Section 285 of the Resource Management Act 1991 ("the RMA").In relation to costs on an appeal before the Environment Court, the Practice Note states:(a) Costs are not normally awarded to any party in respect of an appeal against a Proposed Plan, or a Plan Change;(b) If the decision appealed against would have imposed an unusualrestriction upon the appellant's rights, and the restriction is notupheld, costs may be awarded against the respondent;(c) On other appeals, the Court will not normally award costs against the public body whose decision is the subject of the appeal.[29] It can be seen that these principles are neither comprehensive nor inflexible. Decisions on claims for costs are made in the exercise of a judicial discretion having regard to the circumstances of the individual case.3[30] A party to a proceeding before the Environment Court may appeal on a question of law to the High Court against any decision.4 The parties are agreed that this Court can overturn the costs decision only if the Environment Court applied the wrong legal test, came to a conclusion without evidence or on which the evidence it could not reasonably have come, took into account matters that it should not have taken into account or failed to take into account matters which it should have taken into account.5Intransigence of the Sopers?[31] The Environment Court ordered costs against the Sopers because it took theview that it was the "intransigent position" adopted by the Sopers that "forced" the Council to bring the application. In the Environment Court's view that position was3 Heli Harvest Ltd v Marlborough District Council HC Wellington CIV-2004-485-1669, 24February 2005 at [2].4 Section 299 of the RMA.5 Countdown Properties (Northlands) Ltd v Dunedin City Council [1994] NZRMA 145 (HC) at153.unmeritorious because the Sopers had been advised of the resource consent inNovember 2010 and the Council's records were available to the parties.[32] Counsel for the Cosgroves submits that this adverse view of the Sopers was open to the Environment Court on the material before it. However I accept the submission for the Sopers that in reaching that view, the Environment Court failed to take into account relevant factors.[33] First, it failed to take into account that, once the Sopers were informed that there was already a consent for the boatshed, the Sopers did make enquiries of the Council records. Those enquiries showed that there were errors in the resource consent application which had not been noticed when the consent was given. They also showed a Council notation on a map on the top of the Council's file, which put the location of the boatshed in front of the Cosgroves' property.[34] Secondly, it failed to take into account that the Council records cannot have been that clear, since five Council officers had made errors as follows:(a) Error No 1: The LIM issued by the Council (Ms Evans, Corporate Information Officer) which erroneously stated that the Council had"no records" regarding the boatshed and "no Resource Consent was located".(b) Error No 2: The note from a Council officer (signed "Guy B") to thevendors stating that the Council did not have a record of a coastal permit for this site.(c) Error No 3: The advice from the Council (from Mr Johnson, ResourceManagement Officer) that the Sopers' application for a resource consent was to be publicly notified. (The Sopers submit that this implied that the council officer had processed the application and was satisfied that there was no conflicting application.)(d) Error No 4: The map at the top of file number U000401 which saidthat the boatshed should be on the Cosgroves' property.(e) Error No 5: The Council's assessment of the April 2010 resourceconsent application (prepared by Ms Hewett, Resource Management Officer) which did not refer to the errors in the resource consent application.[35] Thirdly, it was wrong to say that the Sopers "forced" the Council to make theapplication. It is true that the Sopers considered that this was the appropriate way forward because the Council had a conflict of interest. However, as the correspondence set out above shows, the Council agreed with the Sopers that this was the appropriate way forward, despite the contrary view of the Cosgroves.[36] Fourthly, the Environment Court placed all the "blame" for the application onthe Sopers. It did not take into account that it was the errors made by the Cosgroves in the resource consent application (through their consultants) and the Council errorsidentified above that led to the Sopers' view that the Cosgroves' resource consentmight not be valid. Those errors might have led to a costs award against the Council. Although no such costs were sought, the possibility of such an award had it been sought, shows that it was wrong to award costs against the Sopers as though it was the only party responsible for the Cosgroves' costs.[37] Fifthly, the Environment Court's view was that the Sopers' position wascompletely without merit. But in taking the view, the Environment Court said that"the argument that the terms of the incorrect LIM somehow overrode the preceding37 years' events was never going to gain traction". That is not, however, an accurate summary of the Sopers' position. The Sopers had purchased a property on the basisof enquiries which indicated they might be able to pursue a resource consent application to occupy the boatshed. They then learned that there was said to be an existing permit for the boatshed, but the application for that consent was flawed as tothe location of the boatshed. The Council considered that the Sopers' position had possible merit, as discussed in the correspondence before the declaratory judgmentwas made. In the Council's submissions to the Environment Court it said that thetwo arguments were "finely balanced". The Sopers accept that the EnvironmentCourt had a different view, but submit that the Council's view supports its positionthat it was acting genuinely and not unreasonably. I agree.[38] In light of the failure to take into account these relevant considerations, I consider the Environment Court made an award of costs that was plainly wrong. I accept that a costs order against the Sopers was available in the exercise of theCourt's discretion. Although the Council made the application, it was to resolve adispute between two competing parties. The parties could have chosen not to take part. They did not. It was a case not specifically covered by the Environment Court Practice Note. In effect, the Sopers were the losing party. However, in light of the relevant considerations I have set out, I consider that no more than an award of around one third of actual reasonable costs was properly available to the Environment Court.The Cosgroves' actual reasonable costs[39] That leads to the other issue on the appeal: namely the error as to the actual reasonable costs incurred by the Cosgroves in the Environment Court proceeding. The bills submitted on behalf of the Cosgroves were as follows:(a) A fee note dated 31 May 2011 from Brandons for $1029.25 (incl GST);(b) A fee note dated 26 September 2011 from Hardy-Jones Clark for $9,986.36 (incl GST);(c) A fee note dated 3 October 2011 from Hardy-Jones Clark for $3,269.40 (incl GST).[40] I proceed on the basis that these fees are reasonable. That was the view of the Environment Court, which is better placed than this Court to know what fees are typical in proceedings before it. The issue relates to whether all of the fees were incurred in relation to the Environment Court proceeding, or whether some of themrelate to matters that preceded it (ie. opposing the Sopers' resource consent application).[41] The Cosgroves concede that a portion of the fees related to earlier matters.The narration in the Brandons' fee note records that work was done in relation to opposing the Sopers' application. It also records that Brandons conferred with theCosgroves on 27 April 2011 when "a decision [was] made to brief Blenheim counsel". Consistent with that timing, the first Hardy-Jones Clark fee note is for the period commencing May 2011. As Hardy-Jones Clark only acted in respect of the Environment Court hearing, all of their fees relate to it.[42] The Brandons' fee note should be excluded from the total costs incurred bythe Cosgroves in relation to the Environment Court proceeding, except in so far as it covers the meeting on 27 April 2011. I allow, say, $100 for that. Adding this to the other two fee notes, gives total costs of $13,355.76. One third of that in round terms is $4,450.Result[43] The appeal is allowed. The Environment Court decision on costs is quashed. In its place I order the Sopers to pay the sum of $4,450 to the Cosgroves. The costs of this appeal should lie where they fall.Mallon JSolicitors:Wisheart Macnab & Partners, Blenheim for the AppellantsRadich Law, Blenheim for the First RespondentHardy-Jones Clark, Blenheim for the Second Respondent