FEDERATED FARMERS OF NEW ZEALAND INCORPORATED v ROYAL FOREST AND BIRD PROTECTION SOCIETY OF NEW ZEALAND INCORPORATED [2016] NZHC 2962

FEDERATED FARMERS OF NEW ZEALAND INCORPORATED v ROYAL FOREST AND BIRD PROTECTION SOCIETY OF NEW ZEALAND INCORPORATED [2016] NZHC 2962 [8 December 2016]IN THE HIGH COURT OF NEW ZEALANDNEW PLYMOUTH REGISTRYCIV-2016-443-56[2016] NZHC 2962UNDER the Resource Management Act 1991IN THE MATTER of an appeal from a decision of theEnvironment Court under s 299 of the ActBETWEEN FEDERATED FARMERS OF NEWZEALAND INCORPORATEDAppellantAND ROYAL FOREST AND BIRDPROTECTION SOCIETY OF NEWZEALAND INCORPORATEDRespondentNEW PLYMOUTH DISTRICTCOUNCILInterested PartyHearing: 5 December 2016Counsel: P R Gardner for AppellantP Anderson and S Gepp for RespondentJudgment: 8 December 2016JUDGMENT OF CLIFFORD JIntroduction[1] This is an appeal on a point of law from a costs decision of the Environment Court.[2] On 10 May 2016 the Environment Court, having earlier made declarations of unlawfulness,1 made a costs order in favour of the respondent, Royal Forest and Bird1 Royal Forest and Bird Protection Society of New Zealand Inc v New Plymouth District Council[2015] NZEnvC 219.Protection Society of New Zealand Inc (Forest and Bird) against New Plymouth District Council (the Council).2 An interested party, Federated Farmers of New Zealand Incorporated (Federated Farmers), now appeals that decision.[3] Federated Farmers says the Environment Court was wrong in law to have ordered costs against the Council on the basis, in part, that the Council had acted unreasonably.Context[4] Section 6 of the Resource Management Act 1991 (the RMA) recognises eight matters of national importance. One of those, found in s 6(c), is "the protection of areas of significant indigenous vegetation and significant habitats of indigenous fauna" (significant natural areas or SNAs). Section s 6 requires that all persons exercising functions and powers under the RMA are to recognise and provide for the protection of SNAs. Under s 31(1)(b)(iii) every territorial authority has the function of controlling the actual or potential effects of the use, development, or protection of land for the purpose, amongst other things, of the maintenance of indigenous biological diversity.[5] In 1998 the Council notified a proposed district plan. Forest and Bird sought the recognition of 361 SNAs in that plan. The Council identified 164. Of those, 90 were on public land, 38 were on private land but legally protected by covenants, and 32 were on private land, not subject to any form of legal protection. The proposed plan contained no protective rules. Rather, a "palette" of non-regulatory methods were recognised, supported by a monitoring programme.[6] Forest and Bird appealed the provisions of the proposed plan to the Environment Court. It challenged the actions of the Council in only recognising those 164 SNAs. It also challenged the failure of the Council to provide legal protection for SNAs in the plan itself. The appeal was settled. That settlement was reflected in consent orders made by the Environment Court (the Consent Orders) and a Memorandum of Understanding entered into by the parties (the MOU).2 Royal Forest and Bird Protection Society of New Zealand Inc v New Plymouth District Council[2016] NZEnvC 85.[7] Amongst other things, the Consent Orders provided for the inclusion of new criteria for the recognition of SNAs and rules to protect SNAs, in the new plan. Going forward, a resource consent would be required before works could be undertaken in identified SNAs.[8] The MOU provided for a process whereby the Council was to review existing and potential SNAs against criteria recorded in the Consent Orders. That process was to be completed within 24 months.[9] The proposed plan was amended as provided by the Consent Orders. The Council commenced the process of reviewing the existing, but previously unprotected, SNAs and of identifying further SNAs for inclusion in the plan.[10] The Council completed the process as regards the 32 existing unprotected SNAs, retaining them all in the district plan subject to the new rules. During the same period the Council identified a further 361 sites which potentially met the SNA criteria, but it did not complete the process to recognise those sites in the district plan and bring them within the ambit of the new protection rules.[11] At that point, Forest and Bird sought declarations that, having failed to complete the process envisaged in the MOU, the Council was in breach of its obligations under the RMA as regards the protection of SNAs.[12] In addition to seeking those declarations, Forest and Bird also sought enforcement orders from the Environment Court, mandating steps to be taken by the Council to include all those 361 SNAs in its district plan.[13] The Environment Court made the declaration asked for, as summarised in a report of the judgment:3(8) Declarations were made that the Council had a duty to recognise and provide for the protection of SNAs identified during the process in Appendix 21.1. The Methods of Implementation in the Plan, if implemented in their entirety, gave effect to the relevant provisions of the New Zealand Coastal Policy Statement and Regional Policy Statement for Taranaki which sought3 Royal Forest and Bird Protection Society of New Zealand Inc v New Plymouth District Council(2015) 19 ELRNZ 122 at 123.to protect indigenous biodiversity . The omission of the Council toinclude in [the revised plan] SNAs identified applying the [new] criteria contravened its duty to protect areas of significant indigenous vegetation and significant habitats of indigenous fauna under s 6(c) of the Act. The omission failed to give effect to relevant provisions of the New Zealand Coastal Policy Statement and Taranaki Regional Policy Statement(para 114).[14] The Court declined, however, to issue enforcement orders. The Council had a review process under way, and it was not open to the Court to prescribe the form of that review.[15] The Court concluded its decision by observing that it was appropriate to consider an award of costs against the Council. Submissions were sought in accordance with the Environment Court Practice Note 2014.[16] Forest and Bird duly applied for costs against the Council and Federated Farmers. Federated Farmers applied for costs against Forest and Bird.The costs decision[17] Forest and Bird sought costs against the Council of $64,000. It had incurred total costs of some $108,000 (including GST). Although some of those costsreflected Federated Farmers' participation in the application, the bulk related directlyto the application for declarations and orders with respect to the Council's actions.[18] Judge Dwyer, in deciding whether a costs award was appropriate, referred to para 6.6(c) of the Environment Court Practice Note 2014, which provides:If the decision appealed against would have imposed an unusual restrictionupon the appellant's rights, and the restriction was not upheld, costs may beawarded against the respondent council. On other appeals, the Court will not normally award costs against the public body whose decision is the subject of the appeal unless it has failed to perform its duties properly or has acted unreasonably.[19] Although Forest and Bird's proceedings were not a normal appeal, the Judge nevertheless considered that the principles identified in that paragraph were applicable. He found that the Council had failed to perform its duties properly and had acted unreasonably.[20] In reaching the first of those conclusions, the Judge noted first that the Council had a duty under the RMA to recognise and provide for the protection of SNAs in its district plan and by omitting to include the 361 identified SNAs it had contravened that duty. In doing so it had also failed to give effect to the relevant provisions of the New Zealand Coastal Policy Statement and the Regional Policy Statement (RPS), contrary to its obligations under s 75(3)(b) and (c) of the RMA.[21] The Judge considered those failures were unreasonable because:(a) They were directly contrary to the relevant statutory duties and obligations.(b) Failure to include the 361 SNAs was directly contrary to the Council'sagreement to do so in the MOU.(c) That refusal was not, given the identification by its own advisers of the extent of unprotected SNAs throughout the district and uncontested evidence of a Ms Maseyk as to the extent of those SNAs, not based on any principled reason that was apparent to the Court.[22] Then, balancing Forest and Bird's unsuccessful attempt to strike out aspectsof the Council's case prior to the hearing, which the Court considered was anunnecessary diversion from the merits, and that Forest and Bird did succeed in obtaining a declaration, but not enforcement orders, Judge Dwyer concluded that a costs award in the 25 to 33 per cent zone was reasonable, and awarded Forest and Bird $30,000.[23] The Judge dismissed Forest and Bird and Federated Farmers' claims against each other. Forest and Bird's strikeout application had caused some additional costs to Federated Farmers. Those were counterbalanced by the costs Forest and Bird incurred in responding to the case advanced by Federated Farmers in support of theCouncil's position.This appeal[24] It is unusual, to say the least, for an interested party in a proceeding to appeal against a costs order not made against it, but against another party. It might be thought even more unusual where the party against whom the order was made has not appealed, and has paid the ordered costs, as is the case with the Council here. It is also unusual for a costs appeal to be advanced on a specific point of law. As the RMA limits appeals from the Environment Court to ones on points of law,4 that was the only avenue open to Federated Farmers.[25] In its written submissions, Federated Farmers explained why it had brought this appeal:26. The reason that Federated Farmers has brought this appeal to the High Court can be summarised in the statement that it believes thatthe voluntary, "no rules", regime that is in place regarding the"unprotected" SNAs has been very successful in protecting thoseSNAs, and Federated Farmers wants to see that regime continued.27. Federated Farmers considers that the implication in the EnvironmentCourt's costs decision, that the Council did something that was wrong because it did not adhere to the terms of the MOU, means that the Council will have little alternative than to include rules in theDistrict Plan and bring the "unprotected" SNAs into the ambit ofthose rules when the review of the District Plan that is currently under way is completed.28. Federated Farmers is of the view that, in making its costs decision, the Environment Court has overlooked that the Council is a public authority, and that the Council was therefore not legally bound by the terms of the MOU.[26] The principle underlying awards of costs in the civil courts is that it is reasonable and fair that the successful party be paid costs (in reality, a contribution to actual costs) by an unsuccessful party.[27] There were aspects of the way in which Federated Farmers framed its written submissions which reflected its disagreement with the substantive outcome. As themaxim says, "costs follow the event". Thus decisions about, and contests regarding, costs proceed on the fundamental assumption that one party has succeeded. As a matter of principle, therefore, an appeal against an award of costs is not a proper way4 Resource Management Act 1991, s 299.of, in effect, challenging the substantive decision itself. If a party has a right to appeal, that is the proper process to challenge the substance of a decision.[28] Having said that, this appeal by Federated Farmers is best seen as one againstthe Environment Court's finding of "unreasonableness" by the Council.[29] Federated Farmers submitted that, given that the MOU was not legally binding, given fundamental principles of public law, the Court had been wrong – as a matter of law – to find the Council unreasonable because it had failed to do what it said it would do in the MOU. Federated Farmers was concerned to ensure that councils should not be concerned about departing from memoranda of understanding, where there were good reasons to do so. Federated Farmers advanced that argument by reference to the well known principles that a public decision maker must not fetter its powers, and therefore to the limited role of estoppel in the public law area. The suggested error of law was, therefore, that the Judge had failed to consider the significance of those principles when he made his finding of unreasonableness.Analysis[30] The Judge recorded (as summarised above) the reasons for his finding of unreasonableness succinctly. He said:[38] I also consider that the Council's failures were unreasonable,because: They were directly contrary to the duties and/or obligations which I have identified; Failure to make adequate provision in its District Plan for the recognition and protection of SNAs was directly contrary to its agreement to do so under the MOU; The refusal to recognise and protect SNAs in light of the identification by its own advisors of the extent of unprotected SNAs throughout the district and in light of the uncontested evidence of Ms Maseyk as to the extent of those SNAs was not based on any principled reason that was apparent to the Court.[31] Thus the costs decision was based firmly on the Council's failure to complywith legislative duties and obligations. That that failure was also contrary to itsagreement under the MOU, and to the advice it received, supported the classification of that failure as unreasonable. Those considerations would, obviously, have come to nothing if the Council had not failed to perform duties the RMA imposed on it.[32] Moreover, the Judge was well aware of the non-binding nature of the MOU, to the extent that it might have required the Council to do something inconsistentwith its legal obligations. In responding to Forest and Bird's strikeout application atthe start of the hearing, the Judge recorded his view that there was a "fundamental flaw with the MOU". That was the inclusion of a condition which required theCouncil to undertake to notify a plan change. The Judge's view was that the Councilcould not possibly agree to do that. It was bound by the provisions of s 32 of the RMA which set out a process, a statutory process, which had to be adopted. The Council could not bind itself to notify a plan change.[33] In my view, therefore, the Judge's finding of unreasonableness was not basedon an erroneous view as to the status of the MOU. Nor does it imply that the Council was unreasonable simply for not complying with the MOU. Rather, theCourt's finding was first that the Council's actions were unreasonable because they were "directly contrary" to lawful duties and obligations. If there had been no suchfailure to discharge lawful obligations, even if the Council had not fulfilled the terms of the MOU, there would have been, given the Judge's reasoning, no finding ofunreasonableness. The relevance here of the failure to comply with the MOU was that, if the Council had done so, it would – as matters transpired – have discharged its lawful duties.[34] In my view, Federated Farmers' concern is misconceived. If, having signed an MOU, a council correctly determines that it may perform its lawful duties and discharge its lawful obligations in a different way, and does so, then I fail to see how that council could be criticised. Similarly, in my view, there was no error of law inJudge Dwyer's costs decision.[35] The appeal is dismissed.[36] I see no reason why costs should not follow the event on a 2B basis for a half day appeal."Clifford J"