J T JAMIESON & CO LTD v INLAND ROAD LTD [2014] NZHC 1170

J T JAMIESON & CO LTD v INLAND ROAD LTD [2014] NZHC 1170 [29 May 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2012-404-005057[2014] NZHC 1170UNDER Subpart 3 of Part 6 of the Property LawAct 2007IN THE MATTER OF an application for reasonable access tolandlocked landBETWEEN J T JAMIESON & CO LIMITEDPlaintiffAND INLAND ROAD LIMITEDDefendantHearing: On the Papers[Final Submissions Received on 28 February 2014]Counsel: R O Parmenter for the PlaintiffR C Mark for the DefendantJudgment: 29 May 2014JUDGMENT OF DUFFY J[Re Costs]This judgment was delivered by Justice Duffyon 29 May 2014 at 4.00 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Counsel: R O Parmenter, AucklandR C Mark, KerikeriCopy To: Graham and Co, Auckland[1] The issue for determination is whether the plaintiff is entitled to 2B costs or not. For the reasons set out below, I conclude that the general principle that costs are at the discretion of the Court still applies to applications under s 327 of the Property Law Act 2007. I see no reason in this case why costs should not be awarded to the plaintiff.[2] Further, in this case, the defendant's valuer has unnecessarily made thehearing more difficult. Insofar as there might be reasons for treating an application under s 327 as different from other applications to this Court in some cases, this is not such a case.Background[3] On 11 December 2013, in J T Jamieson & Co Ltd v Inland Road Ltd [2013] NZHC 3313, I held in favour of the plaintiff, J T Jamieson & Co Limited, by granting the plaintiff access to landlocked land under s 327 of the Property Law Act 2007 ("the Act").[4] In that decision, I gave the parties leave to file memoranda as to costs, if they were unable to reach an agreement on costs.[5] The plaintiff now seeks 2B costs. The defendant, Inland Road Limited,opposes the plaintiff's application for costs. It submits that an application for accessto landlocked land involves seeking the Court's indulgence and that this factor may influence the exercise of the Court's discretion. The defendant submits that costsshould lie where they fall.Relevant law[6] The starting point for applications for costs is r 14.1(1) of the High Court Rules. This rule provides:14.1 Costs at discretion of court(1) All matters are at the discretion of the court if they relate to costs—(a) of a proceeding; or(b) incidental to a proceeding; or(c) of a step in a proceeding.Seeking the Court's indulgence[7] In the New Zealand Procedure Manual: High Court (Matthew Casey, Christopher Corry, John Faire, Sally Fitzgerald, Philip McCabe and Graham TaylorNew Zealand Procedure Manual: High Court (2nd ed, LexisNexis, Wellington, 2013)) at [14.7.5(b)], it is recognised that a successful plaintiff may be refused costs where the object of the suit has been to seek an indulgence from the court. Examples given include an application for validation under the Illegal Contracts Act 1970, and an application by a tenant for relief against forfeiture after breaching its lease.[8] Another type of application where it has been argued to involve the Court'sindulgence is an application under s 317 of the Act to allow a modification or extinguishment of an easement or covenant. For example, in Macrae v Walshe[2013] NZCA 664, the appellant was ordered to pay 2B costs and compensation to the respondent. The appellant was the successful party in the application to modify the easement.[9] In the Australian text Law of Costs (GE Dal Pont Law of Costs (5th ed, Lawbook Co, Sydney, 2013), Dal Pont at [14.34] stated:As a general rule, a party who seeks a dispensation, indulgence or favour of the court is ordered to pay the other party's costs of the application, whether or not it succeeds. [C]onsistent with the judicial exercise of the costsdiscretion, [the general rule] should not be viewed as propounding aninvariable or inflexible rule, nor any overarching 'indulgence principle'.[10] However, the examples given do not include applications for access to landlocked land.Case law[11] The defendant refers to the case Wentworth v Sayes (1994) 2 NZ ConvC 191,859 (CA) where the Court of Appeal dismissed an appeal against a High Court decision that granted access to landlocked land.[12] Casey J, at 191,864, quoted from Robertson J's judgment in the High Courton the issue of costs:On an application of this sort the starting point must be that the responsibility for the litigation and the costs which are incurred should lie with the plaintiffs who are seeking the Court's indulgence to overcome a legal problem. As I made clear in the course of the hearing, and at times in this judgment, I am of the view that the litigation became more divisive and prolonged than it needed to have been if problem solving had been the flavour of the interchange rather than inflexible claim and counterclaim. In all the circumstances I direct that the plaintiffs make a contribution of $42,000 on account of the costs and disbursements incurred by the first and second defendants.[13] In response to this quoted passage, Casey J thought the High Court Judge"overstated the position" that the starting point is that costs should lie with theplaintiff who is seeking a remedy to landlocked land. But His Honour did not interfere with the costs order. At 191,864 - 191.864, Casey J said: the appellants [the defendants in the High Court] relied on the apparentlegal and factual situation in good faith and were unexpectedly faced years later with the prospect of significant detriment to their properties. This can be taken into account as a substantial factor in the award of costs, justifying a departure from the normal rule that they follow the event.[14] The defendant also refers to Lowe v Brankin (2005) 6 NZCPR 607 (CA), a partially successful appeal against the quantum of compensation and costs awarded in an application for access to landlocked land. Hammond J there referred to the High Court Judge's comments on costs:[57] The High Court Judge held:This type of case warrants a different approach from the normal approach under the rules that the successful party is entitled to costs. The Plaintiff is seeking a significant discretion to be exercised in his favour, and for his advantage. It affects well established property rights. It is to the detriment of the [residents], albeit that detriment will be minimal over any significant period of time.[58] Following that conceptual approach, the Judge awarded costs to the appellants on a 2B basis but, "because of the criticisms I have made of theirvaluer, and also because of their failure to even concede the obvious (i.e. theland was landlocked), that should be reduced by 15%."[15] In response to the High Court Judge's departure from the normal approach to costs, the Court of Appeal said:[61] In our view it was contrary to authority and unwise to lay down a fixed rule as to costs — of a specialised variety — for this particular context.[62] As to authority, in Wentworth v Sayes (above) at page 60 this Court rejected the proposition that that starting point must be that costs should be allocated to plaintiffs who were seeking a court's indulgence to overcome a legal problem of the character in issue in this case. This is because every title to land-locked land in New Zealand is impressed with the statutory qualification in s 129B of the Property Law Act 1952 that the court may adjust the position. This is a social objective, and in the prior authorities in this Court the ability of the High Court to compromise the title is expressly recognised. And as we have already noted, it is better to treat the costs arising prior to legal proceedings as transaction costs recoverable as part ofthe "compensation".[63] That aside, as this case amply demonstrates, when it comes to litigation, the facts of a land-locked land case are infinitely variable. An assessment of all the circumstances, and the conduct of the parties can be a matter of some real complexity. This subject area is not amenable to arbitrary rules. It follows in our view that the general proposition of our law— that costs are in the discretion of the Court — should obtain, at least in relation to litigation costs. (emphasis added)[16] The third case the defendant refers to is Lyons v Breslin [2012] NZHC 3106. This case is not directly on point as it dealt with an application for costs where land was held not to be landlocked. However, an obiter comment at [12] by Priestley J is relevant:Essentially the first defendants [applicants under s 327] were seeking anindulgence. Were the first defendants to have been totally successful, it isunlikely the plaintiffs would have been ordered to pay significant costs unless their litigation stance had been unhelpful.2 It thus follows that, in the exercise of my discretion, I should weigh the fact that the plaintiffs were doing no more than resisting an attempt to strip them of part of their property which they did not want to lose.[17] However, the cases cited in the footnote in the quote above are all High Court authority, including Sayes v Wentworth HC Auckland M1817/90, 12 November 1993, which was discussed by the Court of Appeal in Lowe v Brankin.[18] The plaintiff submits that costs should follow the event and has citedAsmussen v Hajnal (2009) 10 NZCPR 551 (HC) and Wagg v Squally Cove Forestry Ltd [2012] NZHC 2763, (2013) 13 NZCPR 798. In both cases, the Judge took theordinary approach that an unsuccessful party should pay costs to the successful party in an application for access to landlocked land.[19] In Asmussen, Wild J held that:[78] The plaintiff has been successful with his present application for relief. He is entitled to his costs. I order that the first defendants are to pay those costs to the plaintiff on a 2B basis. Those costs include, of course, reasonable disbursements.[20] In Wagg, Mallon J commented that:[277] The plaintiffs have succeeded. My preliminary view is that the costs should follow the event and that costs should be ordered on a 2C basis. The C allocation would recognise that, although the plaintiffs were all represented by the same counsel, more than the normal amount of time for each step is likely to have been necessary because of the number of plaintiffs.[21] Asmussen was successfully appealed in part in respect of the quantum of compensation, and Mallon J's finding in Wagg that the land was landlocked was reversed on appeal. However, these Court of Appeal decisions do not detract from the comments above on the issue of costs.[22] I have found two additional cases which were not referred to me by counsel where costs followed the event. In B A Trustees Ltd v Druskovich [2007] NZCA 131, [2007] 3 NZLR 279, the Court of Appeal considered an appeal against a decision under the now repealed Property Law Act 1952, s 129B. The respondentshad successfully applied for an order that they be granted "reasonable access" tolandlocked land in the High Court. The Judge ordered the respondents to pay the appellants compensation. Costs were ordered against the appellants. On appeal, in relation to costs, Arnold J at [75] said that:The respondents were substantially successful in the High Court and were entitled to an award of costs.[23] The same approach was followed in Cleveland v Roberts [1993] 2 NZLR 17 (CA).Analysis[24] I am persuaded by the comments of the Court of Appeal in Lowe v Brankinthat the Court's general discretionary approach to costs is still applicable in thecontext of applications under s 327 of the Act. The defendant cited cases that awarded costs to an unsuccessful party. But, in my view, these cases turned upon the specific circumstances and conduct of the parties, as opposed to any fixed rule that costs should not follow the event.[25] In Wentworth v Sayes, there is evidence that the plaintiff, while ultimately successful in obtaining relief for landlocked land, had been difficult and had prolonged the proceedings. This was one contributing factor that led to a finding that costs should be awarded against the plaintiff, despite being the successful party.[26] The cases identified above where costs followed the event are indicative that there is no fixed rule in such circumstances. I must turn my mind to all the circumstances in determining what is fair and just when ordering costs.[27] In the earlier judgment, I commented on the conduct of the defendant's valuer, Mr Rowsell. At [102], I commented that Mr Rowsell's behaviour, in failing to address how much land was needed for "other adjustments" in creating theeasement access, undermined the purpose of the conference of experts, and created difficulties for the Court in assessing compensation for the access easement. As a result, Mr Rowsell contributed to the length and difficulty of the hearing, thus causing the plaintiff to incur more costs. Furthermore, Mr Rowsell changed his position after the conference of experts as before then, he had given no indication of the position that he adopted at the hearing.[28] By quoting from a passage in Lyons v Breslin, I infer from the defendant'ssubmissions that one factor that supports the defendant's position is that the plaintiff's application has detrimentally affected the defendant's package of propertyrights. However, I note that this consideration has already been recognised in the award of compensation. At [121], I increased the quantum of compensation forinjurious affection from $42,000 to $50,000 to take into account the defendant'sdiminished bundle of ownership rights.[29] After considering the case law and the conduct of the parties, I have come to the view that costs should not lie where they fall. The defendant, through its expert, Mr Rowsell has unnecessarily contributed to the time and expense of the proceeding and this should be recognised in the costs order.[30] Accordingly, the plaintiff is entitled to 2B costs. The plaintiff is also entitled to the disbursements that it seeks. I note for completeness that the plaintiff hasabandoned its disbursements' claim for the helicopter hireage.Duffy J