AUCKLAND REGIONAL COUNCIL V WAIHEKE ISLAND AIRPARK RESORT LTD HC AK CIV-2010-404-002309

AUCKLAND REGIONAL COUNCIL V WAIHEKE ISLAND AIRPARK RESORT LTD HC AK CIV-2010- 404-002309 21 December 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2010-404-002309UNDER the Resource Management Act 1991 IN THE MATTER OF an appeal pursuant to s 299 of the Act BETWEEN AUCKLAND REGIONAL COUNCIL Appellant AND WAIHEKE ISLAND AIRPARK RESORT LIMITED Respondent Hearing: 15 July 2010 Appearances: M E Casey QC for the Appellant P T Cavanagh QC for the Respondent Judgment: 21 December 2010JUDGMENT OF DUFFY JThis judgment was delivered by Justice Duffy on 21 December 2010 at 12.30 pm, pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar Date:Counsel: M E Casey QC P O Box 317 Shortland Street Auckland 1140 for the Appellant P T Cavanagh QC P O Box 4338 Shortland Street Auckland 1140 for the Respondent Copies To: Burns Fraser (J A Burns) 106 Marsden Avenue Mount Eden Auckland 1024 Auckland Regional Council (L S Fraser) Private Bag 92012 Auckland 1142[1] The Auckland Regional Council (ARC) appeals against a decision of the Environment Court to award costs against the ARC, following the Court's decision in Waiheke Island Airpark Resort Ltd v Auckland City Council [2010] NZEnvC 086. Waiheke Island Airpark Resort Ltd (Waiheke) opposes the appeal. [2] The ARC contends that the Environment Court has made a number of errors of law and breached the requirements of natural justice, which have vitiated that Court's exercise of its discretionary power to award costs. [3] The appeal raises issues regarding awards of costs against public authority first instance decision-makers whose decisions are appealed to the Environment Court, the extent to which the merits of the first instance decision has any bearing on an award of costs for an appeal to the Environment Court, as well as the manner in which the Environment Court reached and expressed the decision to award costs.Background[4] In December 2006, Waiheke applied for resource consents to upgrade an exisiting commercial airstrip into an integrated visitor accommodation facility at 171 Carsons Road, Waiheke Island. Two types of resource consent were required for this development. First, a land use consent from the Auckland City Council to construct buildings on the airfield, associated earthworks and vegetation removal; and secondly, regional consents from the ARC for earthworks, stormwater discharge and wastewater discharge (the regional consents). [5] On 19 August 2008, the Auckland City Council granted the necessary land use consents to Waiheke. Three appeals to the Environment Court were filed against the grant of those consents, one of which was brought by the ARC (the land use consents appeal). [6] On 3 September 2008, the ARC issued a decision declining the necessary regional consents for the development. Waiheke filed an appeal against this decision (the regional consents appeal).[7] Initially, the ARC opposed the regional consents appeal. But later, the ARC and Waiheke were able to resolve this appeal without the need for a hearing through the ARC and Waiheke agreeing on the grant of the regional consents and a set of conditions that were to take effect if the Environment Court found against the ARC in the land use consents appeal. The settlement was without prejudice to Waiheke seeking costs against the ARC. [8] The ARC maintained an adversarial stance in the land use consents appeal. The appeal was unsuccessful; the Environment Court found in favour of Waiheke. Had the result been in favour of the ARC, there would have been no need for the regional consents. [9] Following its success in the land use consents appeal, Waiheke applied for costs for both appeals. The Environment Court made a global costs award, which covered both appeals. The amount awarded, and the reasoning behind it, do not distinguish between each appeal. The amount awarded came to $97,133.34. It was derived from a series of percentage awards taken from various costs which Waiheke had incurred in respect of its role in both appeals. The costs were comprised of: a 75 per cent allowance for the costs relating to water and soil issues; a 33 per cent allowance for the costs relating to the land use issues; and a 25 per cent allowance for legal costs. [10] The costs based on 75 per cent of the payment for water and soil issues came to the sum of $48,212.64. This is the sum which the parties treat as being costs awarded for the regional consents appeal. The ARC does not challenge the remainder of the costs award, which it sees as relating to the land use consents appeal.The Environment Court's decision[11] The Environment Court recognised that under s 285 of the Resource Management Act 1990 (the relevant legislation for this costs award), the Court was given a wide discretion to make costs awards.[12] The Environment Court acknowledged that as a matter of general practice, costs were not usually awarded to a successful party, and that this was only done when there were special circumstances which made it "fairer to depart from that rule" (at [8]). It then set out the relevant principles (as identified by the High Court in Development Finance Corporation of New Zealand Ltd v Bielby [1991] 1 NZLR 587) which allow for a departure from the general rule. They are: a) Advancing an argument that is without substance; b) Abuse of the Court's process; c) Failure to comply with an order or direction of the Court in respect of procedural matters, particularly in meeting prescribed time limits; d) Poor pleading or presentation of the case; e) Failure to explore the possibility of settlement when a compromise could reasonably have been expected; and f) Where a party takes a technical or unmeritorious part or defence, and fails. [13] The Environment Court noted the principle from Darroch v Northland Regional Council (1993) 2 NZRMA 637, that a territorial authority in the role of primary decision-maker is not usually ordered to pay costs when its decision is cancelled on appeal; the exception being when it has neglected to perform a duty. The Environment Court also noted the principle from Contact Energy Ltd v Waikato Regional Council [2002] NZRMA 12 (EC) that when a territorial authority has taken part in an appeal hearing in two capacities, as a consent authority and as a submitter, its conduct as a submitter can result in an award of costs against it. [14] The Environment Court found that the ARC had failed to take a reasonable approach to the appeals; this was revealed in the following ways:a) The ARC took a flawed approach to the first instance decision on the regional consents, and this flowed through to the approach the ARC took in the appeals, which led to Waiheke incurring unnecessary costs; b) The refusal to grant regional consents that were obviously capable of being settled, (as was demonstrated by the settlement the parties later reached), suggested the ARC was intent on placing all obstacles in Waiheke's path; c) The ARC should have settled the regional consents appeal earlier and its failure to do so, (or to explore the possibility of settlement earlier on), resulted in Waiheke's expert witnesses being required to prepare for a hearing; d) The expert evidence the ARC led at the land use consents appeal hearing was seriously deficient, and its witnesses were unrealistically resistant to answering cross-examination questions objectively; e) The scale of costs for the District Court was of little assistance, given the relatively short hearing time, but with considerable time and effort being spent on preparation; and f) The ARC should have to pay 75 per cent of the amounts Waiheke had to pay its expert witnesses, who had needlessly prepared for the hearing of the regional consents appeal. [15] At [18] of the costs judgment, the Environment Court acknowledged that a costs award of 75 per cent of the payment for issues relating to the regional consents appeal ($48,212.64) was significant.Appeal principles[16] Section 299 of the Resource Management Act provides that appeals to the High Court from the Environment Court are on questions of law only. A successfulappellant must demonstrate that a material question of law has been erroneously decided by the Environment Court: see Smith v Takapuna City Council (1988) 13 NZTPA 156 (HC). The applicable principles for when this Court will interfere with decisions of the Environment Court are summarised in Countdown Properties (Northlands) Ltd v Dunedin City Council [1994] NZRMA 145 (EC) at 153; the appellant must establish that the Environment Court: a) has applied the wrong legal test; b) came to a conclusion without evidence, or one to which on the evidence it could not reasonably have come; c) taken irrelevant matters into account; or d) failed to take into account all relevant matters. In Countdown, the Court also said that the Environment Court should be given some lattitude in reaching findings of fact within its area of expertise. [17] To these general principles for appeals from the Environment Court, there should be added the principles that are generally applied in appeals against discretionary decisions like an award of costs. The classic statement of the principles which guide an appeal against the exercise of a discretion are to be found in May v May [1982] 1 NZFLR 165 at 170. In Commerce Commission v Southern Cross Medical Care Society [2004] 1 NZLR 491 at [12], the Court of Appeal sounded a reminder on the narrow basis on which an appellate court can interfere with the discretionary exercise of the power to award of costs:... reasons must be shown for interfering with the exercise of a discretion as to costs. As this Court has repeatedly said, costs decisions are influenced by a myriad of details that are difficult to replicate on appeal. The award of costs is quintessentially discretionary. Review and appeal Courts are correspondingly reluctant to interfere: Lewis v Cotton [2001] 2 NZLR 21 (CA) at p 35. That is not to say that an appellate Court should decline to intervene if it can be shown that there was an error of principle or that the award was plainly wrong.[18] The principles to be derived from the relevant authorities, both relating to appeals from the Envirionment Court on questions of law and appeals against costs decisions, is that the grounds for intervention in either case are narrow and similar. [19] The ARC's appeal raises eleven questions of law, which may be conveniently categorised as falling into the following groups: a) The validity of the Environment Court's criticisms of the ARC's conduct in relation to the regional consents appeal and the relevance of this to the costs award; b) Whether the Environment Court paid proper regard to the ARC's role as a public funded consent authority with statutory duties; c) The relevance of the ARC's first instance decision on the regional consents to the question of an award of costs in an appeal against that decision; and d) Whether the Environment Court breached the requirements of procedural fairness when making its decision to award costs against the ARC. These categories provide a helpful means of grouping together for analysis the eleven grounds of appeal.Analysis[20] The relevant passages of the Environment Court's decision are at [13] and [14] of the judgment. It is helpful to look at them in their entirety:[13] I consider it appropriate to make an award of costs against ARC. ARC failed to take a reasonable approach to the appeals. The consent required for water and soil matters should have been forthcoming from ARC. It should not have been necessary for [Waiheke] to lodge an appeal against ARC's decision (see the discussion of [Banks v Waikato Regional Council Planning Tribunal Auckland A074/95, 9 August 1995 above, regarding proceedings which should not have been necessary). To have refused that which was so obviously capable of settlement, isdemonstrated by that having ultimately quite readily occurred, smacked of the taking of a position of placing all obstacles in the path of the applicant. [14] Although the Court cannot entertain claims for costs in relation to the occurrences of a first instance hearing, under s 290A the Court must have regard to decisions appealed from. Passages from ARC's decision indicate that ARC inappropriately mixed up land use matters with water, waste, and excavation permit issues. In giving reasons for its decision, ARC referred to landscape values, the scale and intensity of the proposal, the regional significance of the infrastructure, and the metropolitan urban limit (see paragraphs 11.1-11.16 of ARC's decision on the resource consent applications). I consider that the ARC's unreasonable approach to the appeals developed from the flawed approach it took at first instance, and caused [Waiheke] to incur unnecessary costs.The Environment Court's criticisms of the ARC's conduct regarding the regional consents appeal[21] At [13], the Environment Court found that the ARC was wrong to refuse the regional consents, and this error unnecessarily caused Waiheke to lodge an appeal. However, in [13], little is said to explain why the Environment Court had formed this view. The Environment Court reasoned that the refusal was obviously capable of being settled because that is what later occurred. This led the Environment Court to conclude that perhaps the refusal was simply to obstruct Waiheke's proposed development. Here, the Environment Court has reasoned in a circular fashion. For it, the seemingly apparent ease with which settlement was reached shortly before the appeal hearing was understood as being demonstrable of how capable of settlement the issues were from the outset and, therefore, how baseless was the ARC's refusal. [22] These conclusions might hold true if the relevant circumstances were unchanged from the beginning to end of the appeal process. But the Environment Court did not make this finding. Indeed, it said nothing about those circumstances. But without the Environment Court finding that those circumstances remained unchanged over the relevant period, its reasoning process is circular and, therefore, flawed. [23] At [14] of the judgment, the Environment Court referred to the first instance decision and found that the ARC had inappropriately mixed up land use matters (which were the reserve of the Auckland City Council) with water, waste and excavation issues (which were for the ARC to determine). The Environment Courtwent on to conclude that flaws in the first instance decision (due to the inappropriate mix up of issues) led the ARC to adopt an unreasonable approach to the appeals, which in turn caused Waiheke to incur unnecessary costs. [24] Save for the circular reasoning in [13], nowhere in [13] or [14], or elsewhere in the judgment, does the Environment Court provide a reasoned explanation for why it considered that the appeal was capable of settlement earlier on and, therefore, the ARC's approach to the appeal was unreasonable. Nor does the Environment Court explain why it saw a connection between perceived flaws in the first instance decision and the ARC having an unreasonable approach to the appeals. If the ARC had doggedly maintained an untenable position, both in relation to the first instance decision and the appeal, this should have been identified in the costs decision. Once something like this was identified, it would have provided a proper basis for awarding costs against the ARC. But this sort of analysis was not done. Here, there is nothing but circular reasoning and conclusory statements to support the costs award. [25] Moreover, because the appeal was settled before the hearing, there is no decision on the merits of the appeal. Thus this is not a case where some idea of why the Environment Court has found the ARC acted unreasonably can be found elsewhere. [26] The absence of reasons to explain the award of costs is regrettable. The benefits of providing a reasoned decision was recognised in R v Awatere [1982] 1 NZLR 644. In that case, the Court of Appeal was reluctant to lay down an inflexible requirement for reasons, which was of general application. Nonetheless, it said that Judges should always do their best to provide reasons that were "adequate to the occasion" (at 649). The trend since then has been towards a requirement for reasons to be given. In Lewis v Wilson & Horton Ltd [2000] 3 NZLR 546 at [74] to [86], there is a full discussion on the general desirability of Courts giving reasons for their decisions. Of particular relvance here is the recognised need for reasons to enable "the lawfulness of what is done [to] be assessed by a Court exercising supervisory jurisdiction": see [80] of Lewis.[27] The costs award is substantial; awards of this magnitude against a public authority are unusual, and contrary to general practice (see discussion below). The Environment Court acknowledged this in its decision. The departure from general practice and the adverse consequences that this entailed for the ARC makes the provision of reasons even more necessary. This all undermines the making of the costs award. It follows that the Environment Court's criticisms of the ARC's conduct regarding the regional consents appeal are not a valid foundation for the award of costs. [28] The Environment Court's view that it should not have been necessary for Waiheke to appeal the ARC's decision was expressed with reference to Banks v Waikato Regional Council. In Banks, the Environment Court awarded costs against an unsuccessful appellant on the ground that the appeal was entirely unsuccessful, matters were raised inappropriately, the appeal was vexatious in that it was inconsistent with an agreement "announced to the primary decision-maker", and unsubstantiated allegations that the applicant (respondent) was not acting in good faith had been made. The Environment Court in Banks found that it was appropriate to award costs to compensate the respondent for costs unnecessarily incurred as a result of proceedings which should not have been brought, or which were presented in a way which required the respondent to incur unnecessary expense. [29] In Banks, the party responsible for the unnecessary proceedings was the party who had brought them. Banks accords with the general principles on costs awards applicable to cases where an unsuccessful party who has needlessly brought a proceeding that lacks any merit is required to pay an award of costs that compensates the opposing party for the costs it has incurred. [30] Here, the criticism made against the ARC is that it has needlessly caused Waiheke to commence a meritorous appeal in order to obtain the regional consents it required. By analogy with the reasoning in Banks, the same reasons for compensating the affected party could apply when one party has needlessly been forced to take proceedings by the meritless conduct of the other party. But to take this approach is to extend the Banks principle. Without such adaptation, Banks does not apply to the present circumstances.[31] The Environment Court should have considered if the principles applied inBanks could be extended to cover the circumstances before it. Here, the affected party was the public authority responsible for the first instance decision. In general, the Environment Court is reluctant to award costs against a public authority in its role as the consent authority responsible for the first instance decision: see Darroch v Northland Regional Council at 640; and Environment Court Consolidated Practice Note 2006 4.5.3. This approach is consistent with the recognised general reluctance of courts to award costs against a public authority for unsuccessfully opposing an appeal against one of its own determinations: see discussion in Commerce Commission v Southern Cross Medical Care. It follows that before an award of costs of this nature was made, particularly through the extension of existing costs principles, the Environment Court needed to turn its mind fully to what it was doing. By treating its decision as something that fitted with existing principle, the Environment Court may have too readily reached the conclusion that an award of costs was warranted. In this way it has misapplied Banks and, therefore, it has erred in law. [32] The above findings relate to the decision-making process which the Environment Court has followed. In addition, the ARC argues that there can be no substance to any suggestion that the appeal was capable of settlement earlier than occurred. Here, the ARC relies on the differences between the resource conditions which the Environment Court confirmed in its final decision [2010] EnvC 32 and those originally attached to the appeal by Waiheke. Both the final conditions and the proposed conditions were included in the case on appeal. At the end of the appeal, the ARC was given leave to file material which for comparative purposes identified the differences between the proposed conditions and the final conditions. Waiheke was served with this material but did not respond to it. Whilst the material helpfully identifies the differences in the two sets of conditions, it is not clear to me how meaningful those differences are. Consequently, I cannot rely on them to assess this aspect of the ARC's argument against the costs award.Was proper regard paid to the ARC's role as a public funded consent authority with statutory duties?[33] As regards the regional consents appeal, the ARC was in the role of the consent authority. As discussed above, the usual approach taken in the Environment Court is not to award costs against a consent authority. In Darrochwhere this principle is discussed, the Environment Court qualified the principle, at 640, by adding the limitation "unless it [the consent authority] has neglected a duty". It is not clear from Darroch whether the neglect of duty the Environment Court referred to in that case relates to the consent authority's conduct at the appeal, or at the time of making the first instance decision. If it is the former, the approach is in line with the way other courts approach decisions on costs, insofar as the focus is on conduct during the proceeding before the court awarding costs. But if the reference has the latter meaning of a neglect of duty at the time of the first instance decision, it would mean that conduct which preceded the commencement of the appeal was being considered as part of a costs award which followed the outcome of the appeal. If this were the case, it would be an extension of general costs principles for which no supporting authority was cited. The extent to which the first instance process can form part of the consideration of an award of costs following an appeal is considered in more detail later in the judgment under the heading "relevance of ARC's first instance decision". [34] In Commerce Commission v Southern Cross Medical Care, the Court of Appeal discussed the reluctance of courts to order costs against statutory tribunals which participated at the hearings of appeals against their own decisions. The Court of Appeal referred to a judgment of Greig J in Foodstuffs (Wellington) Co-operative Society Ltd v Commerce Commission (1992) 4 TCLR 713 in which Greig J had declined to order costs against the Commission following its participation in what was a successful appeal against its own determination. In discussing this decision, the Court of Appeal in Commerce Commission v Southern Cross Medical Care said at [8]:He [Greig J] noted the public interest in receiving assistance from the commission in circumstances where the commission represented the onlyeffective opposition to the appeal. In general the Courts had been reluctant to award costs against the Commission in circumstances where there had been no other party to mount an effective opposition to an appeal against the commission's determination.[35] In New Zealand Engineering Coach Building, Aircraft, Motor and Related Trades Industrial Union of Workers v Arbitration Court [1976] 2 NZLR 283 (CA) at 284-285, the Court of Appeal took a contrary view. After being critical of the Arbitration Court taking an active stance opposing an appeal against its decision, the Court of Appeal referred to the risk of such conduct leading to liability for costs when the opposition was unsuccessful. [36] As was recognised in Commerce Commission v Southern Cross Medical Care, the basis for an award of costs is the presumption that in the absence of particular reasons to the contrary, costs will follow the event. The rationale for this presumption being that the successful party should not have to bear the cost of having its own rights vindicated in circumstances where the litigation stance taken by the opposing party is shown to have been unjustified. [37] Ordinarily, first instance courts and tribunals do not participate in appeals against their decisions; in this way they avoid liability for costs in the event the appeal is successful. But for those occasions where they do participate in such appeals, there is then the question of should they be at risk of an award of costs against them if the appeal is successful. [38] In Commerce Commission v Southern Cross Medical Care, the Commerce Commission submitted that it was in the public interest that a tribunal whose decision is under appeal should not ordinarily be responsible for costs. This is because the true characterisation of the role of that tribunal when it undertakes an active role on appeal is one of helping the appellate court, not of opposing the appeal as a party, in the normal sense. [39] The Court of Appeal agreed that there was a public interest in having the Commission take an active part to assist an appellate court when reviewing one of its determinations. This was particularly so in cases where there would otherwise be no opposition to the appeal. The Court of Appeal was concerned that this assistancemight otherwise be denied to an appellate court, through reluctance on the part of the tribunal to expose itself to costs. At [17], the Court of Appeal said:We agree that it is in the public interest to have the commission take an active part to assist an appellate Court when reviewing one of its determinations in circumstances where there would otherwise be no opposition to the appeal. It would be a matter of real concern if exposure to costs operated as a disincentive to the commission's active assistance in this situation. There would be additional expense to the public if an amicus curiae had to be appointed. The commission's current approach would seem to us to be consistent with the encouragement which the courts have given to the commission to play such a party.[40] Earlier in Goodman Fielder Ltd v Commerce Commission [1987] 2 NZLR 10 (CA) at 20, the Court of Appeal had distinguished this circumstance from that of how it had seen the role of the Arbitration Court in the New Zealand Engineering Coach Building, Aircraft, Motor and Related Trades Industrial Union of Workers v Arbitration Court:In both courts Mr McGrath has raised the question of the role of the Commission in appeals from it under the Commerce Act. He mentioned observations, said to have an inhibiting effect, in New Zealand Engineering Coach Building, Aircraft, Motor and Related Trades Industrial Union of Workers v Court [1976] 2 NZLR 283 at pp 284-285 about the well established principle that judicial bodies should strive not to enter the fray in a way which might appear to favour the interests of one the parties. Those observations do not apply in their terms or spirit to a case where considerations of public interest and the effective administration of an act arise, especially if there is no other party to put those considerations adequately before the appellate court. In such a case it is right that the Commission should help the appellate court to whatever extent the Commission in that court find consistent with the Commission's public responsibility.[41] In Commerce Commission v Southern Cross Medical Care, the Court of Appeal's assessment of the relevant principles caused it to conclude (at [21]):As a matter of general principle we think that the Commerce Commission ought not to be exposed to an adverse costs order for unsuccessfully opposing an appeal against one of its own determinations if all the commission has done is to assist the High Court by presenting necessary evidence and argument in opposition to the appeal in the public interest. Although we think that that is the right starting point, it is important not to overlook the inherently broad nature of a Court's discretion over costs. Some flexibility must therefore be preserved to meet the requirements of each individual case.[42] The principles to be drawn from Commerce Commission v Southern Cross Medical Care are that, in general, costs will not be awarded against a first instance decision-maker who participates in an appeal by assuming the role of assisting the appellate court (much like an amiucus curiae); the likelihood of this outcome will be strengthened when there is no other party to put the opposing arguments to the appellate court. Thus, it is the role the first instance decision-maker adopts in the appeal which determines if it may be liable for costs in the event its decision is overturned on appeal. [43] When it came to considering whether or not to award costs against the Commission, the focus of the Court of Appeal in Commerce Commission v Southern Cross Medical Care was on how the Commission had conducted itself before the court hearing the appeal. No consideration was given to the first instance decision or how it was reached. [44] The principles, which I have identified, provide helpful guidance on how the Environment Court should approach the question of costs awards against consent authorities following a successful appeal against the consent authority's decision. They also inform me that the focus of the Environment Court when considering costs against a consent authority should be on how the consent authority has conducted itself in the appeal before the Environment Court. Relevant factors will include: first, whether or not the consent authority has acted in a role akin to that of amicus curiae in assisting the appellate court, rather than that of an opposing party in the normal sense; and secondly, whether or not there was no one else to advance arguments opposing those of the appellant. [45] No such assessment was conducted in the present case. The omission to consider the nature of the ARC's role in the appeal means that the Environment Court has failed to take into account a relevant consideration when reaching its view on the costs awarded against the ARC. [46] Here of course, the ARC ultimately had no role in the hearing of the appeal as the appeal was settled. Nonetheless, I consider that before deciding to award costs against the ARC, the Environment Court had to pay regard to the factors I haveidentified above insofar as they can be applied to the pre-hearing stages of an appeal. Thus, the role played by the ARC up to the time the appeal was settled, its intended role in the appeal, and the reasons for the settlement of the appeal will all be relevant considerations for an award of costs. Without addressing those factors, the Environment Court could not categorise the ARC's role in the appeal and its potential impact on an award of costs.Relevance of the ARC's first instance decision[47] The ARC contends that [13] and [14] reveal how the Environment Court has allowed itself to be wrongly influenced by the ARC's first instance decision. In response, Waiheke contends that what is revealed is no more than a legitimate consideration of the role that decision played in causing the ARC initially to oppose the regional consents appeal. [48] Paragraph 13 of the judgment shows the Environment Court formed the view the ARC was wrong to refuse the regional consents, and that this error caused Waiheke to bring an appeal unneccessarily. There is a suggestion in what is said in [13] that the refusal had no proper foundation to support it, and that it was done to obstruct Waiheke's proposed development. This impression of the Environment Court's attitude towards the first instance decision is reinforced by [14] of the judgment. This paragraph shows that the Environment Court relied on s 290A of the Resource Management Act 1991 for authority to have regard to the first instance decision, and when it did so, it was critical of the ARC's reasoning. The overall impression the reader is left with is that the Environment Court considered there was no merit in the first instance decision. [49] Was it open to the Environment Court to have regard to the first instance decision in the way in which it did? In general, a Court does not usually criticise a party's conduct in the forum below and use that as a reason for awarding costs. When the same unreasonable approach is taken at first instance and on appeal that approach may lead to an award of costs, but then it is the nature of the approach, and its demonstration at the appellate level, which is considered, rather than the number of occasions on which it was taken. That an unreasonable approach has been takenin more than one forum can indicate how implaccably and resolutely a party may have maintained his or her unreasonable stance. But usually such conduct is met with costs that are awarded on each occasion at which the conduct has been displayed. It would be rare, if not unknown, for an award of costs to be granted following a successful appeal which reflects conduct on an earlier occasion that was at a lower level of the decision making process; particularly when at the lower level there was no authority to award costs. [50] The concern I have about the Environment Court's reasoning in [13]-[14] is that it goes further than to recognise that the ARC took the same unreasonable approach both at first instance and in the regional consents appeal. There is the reference to the requirements of s 290A, to the lack of merits of the first instance decision and how it was capable of settlement from the outset. There is also the inference that the ARC was driven by an intent to obstruct Waiheke's plans. These all suggest to me that the Environment Court considered the first instance decision and the process by which it was reached to be a relevant factor, which the Environment Court could and did take into account when it decided to award costs against the ARC. [51] Section 290A provides: "In determining an appeal or inquiry, the Environment Court must have regard to the decision that is the subject of the appeal or inquiry". This provision follows s 290 which gives the Environment Court the same power, duty and discretion in respect of a decison appealed against as the first instance decision-maker. [52] The ARC submits that s 290A does no more than to require the Environment Court to take account of the first instance decision under appeal as part of the de novo enquiry it makes when determining an appeal under s 290. I agree with the submission. Section 290A refers to decisons that are capable of being made by a local authority at first instance, and revisited by the Environment Court in an appeal, whereas the decision to award costs following an appeal is a first instance decision of the Environment Court. Thus, a costs award can be seen as being ancillary to the determination of an appeal. When viewed in this way, there is no reason for s 290A to be engaged in a decision to award costs.[53] The Act makes separate provision in s 285 for the Environment Court to award costs in an appeal. The separation of the power to award costs (s 285) from the power to determine appeals (s 290 and s 290A) provides further support for the notion that s 290A is irrelevant to a costs award. [54] There is nothing in the language of s 285 to suggest the discretionary power to award costs is so broad that it would extend to having regard to how the parties to an appeal have conducted themselves on an earlier occasion before another forum. Yet this is how s 285 would have to be read before it could be understood to permit the Environment Court to have regard to a party's conduct during the first instance decision. [55] Waiheke contends that the Environment Court has correctly understood and paid proper regard to the requirements of s 290A. Waiheke argues that the reference in [14] to s 290A does no more than to reiterate what the section says. Waiheke further argues that, when a local authority has refused a consent at first instance and then maintains that position when the refusal is appealed, the Environment Court must be entitled to have regard to the first instance refusal when it comes to forming a view on whether the stance taken on appeal was reasonable or not. [56] I accept that the approach taken in the first instance decision can throw light on the stance taken on appeal. But here I consider that the Environment Court has done more than simply look at what occurred earlier for the purpose of understanding the reasonableness of the ARC's approach at the appeal stage. Here, the Environment Court has allowed its view of perceived errors in the first instance decision to be a separate contributing factor justifying an award of costs against the ARC. Furthermore, the Environment Court's reference to s 290A's requirements suggests to me that the Environment Court saw itself as being obliged by s 290A to consider the first instance decision as part of its assessment of awarding costs. To this extent, I consider that the Environment Court has misunderstood s 290A's effect and, therefore, there has been an error of law.Did the Environment Court breach the requirements of procedural fairness?[57] The first time Waiheke sought to have the first instance decision and the conduct of the commissioners responsible for that decision taken into account in the Environment Court's decision on costs was when Waiheke filed its reply submissions on costs. This was irregular and improper in terms of the procedural requirements for reply submissions. A reply is solely for the purpose of responding to issues raised by the opposing party in its submissions. If by the time the reply was due Waiheke realised it needed to make further criticisms of the ARC to support its costs application, it should have sought leave to do so. In that way, the Environment Court could then have determined if Waiheke would be given a further opportunity to raise new matters so late in the process and, if so, the ARC's opportunity to address the new matters could have been included as part of the Environment Court's direction on leave. [58] The ARC promptly responded to Waiheke's action with a memorandum to the Environment Court complaining that Waiheke was raising a new argument in reply submissions, which meant that the ARC had no designated opportunity to respond to the argument. The ARC sought time from the Environment Court to prepare and file a response. Secondly, the ARC contended that it was inappropriate for Waiheke to be raising a new topic like this in its reply submissions. [59] The Environment Court made no directions in response to the ARC's request. The next event to occur was the Environment Court issuing its decision on costs. The costs decision, as I have already found, took into account the first instance decision. [60] Waiheke does not dispute that its criticism of the first instance decision was made for the first time in reply submissions on costs. Instead, Waiheke has confined its argument to assertions that there is no indication in the costs decision that the Environment Court has taken any irrelevant matter into account. However, since Waiheke contends that the first instance decision is relevant to the costs award, it is difficult to know what to make of its submission that no irrelevant matter was takeninto account. The reference to "irrelevant matter" is obtuse. It is hard to see how Waiheke can mean this phrase to apply to the first instance decision since, on Waiheke's view, that decision is a relevant consideration for awarding costs on appeal. [61] Waiheke also argues that there was no need for the ARC to be given an opportunity to be heard, because costs applications are generally decided on the papers. Whilst that is so when making a determination on the papers, it is important that the parties affected have a proper opportunity to address anything adverse that is said against them. Usually this can be done by exchange of written submissions. But by including new adverse material in reply submissions, Waiheke precluded the ARC from addressing this material as part of the usual process for dealing with costs awards on the papers. Unless the ARC was given the opportunity to provide submissions for the specific purpose of addressing the new adverse material in Waiheke's reply submission, the criticisms made by Waiheke in the reply submission would remain unaddressed. [62] Waiheke also asserts that there is nothing in the costs decision which suggests the Environment Court had regard to the manner in which the ARC Commissioners participated in the original hearing before them. It is difficult to know here if Waiheke is differentiating between the way in which the ARC Commissioners conducted themselves during the hearing and the merits of the first decision. If it is the former, this submission avoids addressing the latter point. Further to this argument, Waiheke contends that there was no need for the ARC to be given an opportunity to be heard because the Environment Court was able to reach a view on costs solely on the documentary material before it. This argument avoids the critical issue, which is whether or not the ARC should have been given an opportunity to respond to new adverse material, which was raised for the first time in Waiheke's reply submissions on costs. Waiheke has said nothing to counter the ARC's argument that the adverse material in issue was only raised for the first time in Waiheke's reply submission and, without the ARC having an opportunity to address this material, there was a breach of procedural fairness.[63] The stance the ARC took: first, by objecting to the inclusion of new adverse material in the reply submission and, secondly, requesting the opportunity to address the material, if the Environment Court was prepared to consider it, would have informed the Environment Court that the ARC did not acquiesce to Waiheke's breach of procedural fairness. Consequently, it was incumbent on the Environment Court to deal with the ARC's request. Directions should have been given which made it clear that the new adverse material in Waiheke's costs submissions was either going to be disregarded, or the ARC was to be given an opportunity to respond to this material. Alternatively, the Environment Court could have specifically referred in the costs decision to the new adverse material having been excluded from consideration. Nothing like this was done. [64] The failure to address the ARC's complaint about Waiheke's inclusion of new adverse material in reply submissions, and the failure to give the ARC an opportunity to respond to the new adverse material, means that the manner in which the Environment Court dealt with this issue has breached procedural fairness. [65] I have already found that the Environment Court wrongly paid regard to the ARC's first instance decision when reaching its determination on costs. This irregularity is aggravated by the ARC being denied an opportunity to address the irrelevant, but adverse material. Had the opportunity been made available, the ARC may have been able to persuade the Environment Court to disregard this material. I consider, therefore, that the failure to comply with the requirements of procedural fairness is a material error which invalidates the costs award.Outcome[66] It follows that as regards all four categories of topic, the Environment Court has been shown to have legally erred in deciding to award costs against the ARC. Those errors are sufficiently material to satisfy me that the tests before this Court will intervene on appeal against an award of costs have been met.[67] I must now decide what to do next. The ARC submits that I should determine the outcome, whereas Waiheke submits that I should send the question of an award of costs back to the Environment Court for it to reconsider. [68] I am satisfied that, in general, costs should not be awarded against a consent authority which opposes an appeal against its decision. I am satisfied that this is more likely when, as is the case here, there was no other party to oppose the appeal. However, I am also aware that there will be exceptions to this general principle. In the rare case where a consent authority obdurately opposes an appeal against a decision that is clearly unsustainable, a departure from the usual principle may and can be justified. A similar circumstance will arise when a consent authority settles an appeal close to the hearing in circumstances where the decision under appeal is clearly unsustainable, and it is abundantly clear that the appeal should have been settled earlier. However, a costs award made on this basis needs to be based on reasoned findings that are themselves based on supporting evidence. [69] I am not in a position to determine if the ARC's conduct in Waiheke's appeal to the Environment Court would qualify for treatment as an exception to general principle. Whilst I am satisfied that the costs as awarded by the Environment Court cannot be sustained, this is a different question from whether Waiheke is entitled to any costs award. The Environment Court has heard and determined the land use consents appeal and it has confirmed the resource consents. The background knowledge it will have through this involvement places it in a better position to assess if the ARC should be liable for costs, and, if so, the appropriate quantum of costs. Furthermore, if the Environment Court rehears Waiheke's costs application, it can receive any additional evidence which the parties may rely on as part of their arguments on costs. The rehearing and determination on costs should have regard to the principles of law I have identified.Result[70] Accordingly, the appeal is allowed and the costs award of $48,212.64 is set aside. The question of the ARC's liability for costs is referred back to the Environment Court for rehearing.[71] Leave is given to the parties to file memoranda on costs for the appeal. Duffy J