DAISLEY v WHANGAREI DISTRICT COUNCIL [2022] NZHC 1671

DAISLEY v WHANGAREI DISTRICT COUNCIL [2022] NZHC 1671 [14 July 2022]IN THE HIGH COURT OF NEW ZEALANDWHANGAREI REGISTRYI TE KŌTI MATUA O AOTEAROAWHANGĀREI-TERENGA-PARĀOA ROHECIV-2015-488-109[2022] NZHC 1671BETWEEN MALCOLM JAMES DAISLEYPlaintiffAND WHANGAREI DISTRICT COUNCILDefendantOn the papersCounsel: J A Farmer QC and E L Smith for plaintiffP A Robertson and S M Mautner for defendantJudgment: 14 July 2022JUDGMENT OF TOOGOOD J[Costs]This judgment was delivered by me on 14 July 2022 at 11 am, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors:Tailored Legal Solutions Ltd, Dargaville for plaintiffHeaney & Partners, Auckland for defendantIntroduction [1]The claim for costs and disbursements [5]Principles [7]Assessment of scale costs and disbursements [9]Scale costs [10]Disbursements [11]Conclusion on scale costs and disbursements [14]Assessing the issues at trial and the outcome [15]The nature of the substantive claims [16]The damages sought [18]The Council's defences [19]The findings [21]Mr Daisley's claim for increased and indemnity costs [22]The claim for increased costs [23]The claim for indemnity costs [26]The Council's response to the claims for increased and indemnity costs [27]Did the Council adopt an unreasonable approach to the proceeding? [29]Conclusions on claim for increased costs [46]The claim for indemnity costs – settlement offers [51]My mid-hearing observations on the merits of the claim [56]Conclusions on costs [62]The settlement with Mr Daisley's former lawyer [64]Introduction[1] On 10 June 2022, I issued a judgment in this proceeding in which I upheld aclaim by Mr Jimmy Daisley for damages against the Whangārei District Council.1 Theclaim related to the failure of the Council to disclose to Mr Daisley that a rural propertyin Knight Road near Whangārei, which he acquired in December 2004, enjoyed thebenefit of an existing resource consent that permitted commercial quarrying. I foundthe Council to have been negligent in the storage of its records related to the consentand its failure to locate the records at various times over a five-year period whenMr Daisley requested relevant information. I held also that the Council had beenguilty of misfeasance in public office through recklessly misinforming Mr Daisley andothers about the existence of the consent and in failing to take steps to make amendsafter the consent was found.[2] Judgment was entered for Mr Daisley as follows:2(a) damages of $4,089,622 for loss of profits;1 Daisley v Whangārei District Council [2022] NZHC 1372 [the substantive judgment].2 At [565] and [566].(b) damages of $90,000 for loss of the value of the property on which thequarry was located;(c) damages of $50,000 for the recovery of direct costs flowing from theCouncil's negligence;(d) interest on the damages in (a), (b) and (c) (which Mr Robertsonquantifies in his submissions as $1,448,500.50 as at 16 June 2022); and(e) exemplary damages of $50,000.[3] On that basis, the total sum payable by the Council under the judgment is$5,728,122.50.[4] I held that Mr Daisley was entitled to costs and, because the parties have beenunable to agree on the costs contribution to be paid, I have now received memorandafrom counsel.The claim for costs and disbursements[5] Mr Daisley claims a total of $1,386,245.07 in costs and disbursements:Scale costs on a category 2B basis with a 50 per centuplift for the period from the commencement ofproceedings to 2 March 2021 $210,342.00Indemnity costs from 2 March 2021 934,058.75Total disbursements 241,844.32Total $1,386,245.07[6] Mr Daisley's claim for costs is large by any measure. To put it in context:(a) the hearing occupied 14 days;(b) the notes of evidence run to 1,238 pages;(c) close to 7,000 pages of documentary exhibits were produced;(d) the losses for which damages were sought were quantified byMr Daisley's counsel in closing at $20,945,891; and(e) the reasons for judgment occupy 193 pages.Principles[7] There is no dispute between the parties about the relevant principles for thedetermination of a costs award under pt 14 of the High Court Rules 2016 (the Rules):(a) all matters related to costs are at the discretion of the Court;3(b) a party who fails with respect to a proceeding should pay costs to theparty who succeeds;4(c) costs should be assessed by applying the appropriate daily recovery rateto the time considered reasonable for each step reasonably required inrelation to the proceeding;5(d) an award of costs should not exceed the costs incurred by the partyclaiming costs;6 and(e) so far as possible, the determination of costs should be predictable andexpeditious.7[8] Also relevant in this case are the principles set out in r 14.6, as follows:14.6 Increased costs and indemnity costs(1) Despite rules 14.2 to 14.5, the court may make an order—(a) increasing costs otherwise payable under those rules(increased costs); or3 High Court Rules 2016, r 14.1(1).4 Rule 14.2(1)(a).5 Rule 14.2(1)(c).6 Rule 14.2(1)(f).7 Rule 14.2(1)(g).(b) that the costs payable are the actual costs, disbursements, andwitness expenses reasonably incurred by a party (indemnitycosts).(2) The court may make the order at any stage of a proceeding and inrelation to any step in it.(3) The court may order a party to pay increased costs if—(b) the party opposing costs has contributed unnecessarily to thetime or expense of the proceeding or step in it by—(ii) taking or pursuing an unnecessary step or anargument that lacks merit; or(iii) failing, without reasonable justification, to admitfacts, evidence, documents, or accept a legalargument; or(v) failing, without reasonable justification, to accept anoffer of settlement whether in the form of an offerunder rule 14.10 or some other offer to settle ordispose of the proceeding; or(d) some other reason exists which justifies the court making anorder for increased costs despite the principle that thedetermination of costs should be predictable and expeditious.(4) The court may order a party to pay indemnity costs if—(a) the party has acted vexatiously, frivolously, improperly, orunnecessarily in commencing, continuing, or defending aproceeding or a step in a proceeding; or(f) some other reason exists which justifies the court making anorder for indemnity costs despite the principle that thedetermination of costs should be predictable and expeditious.Assessment of scale costs and disbursements[9] The Council resists the claim for increased and indemnity costs but generallyaccepts the sums claimed as scale costs by Mr Daisley, apart from some specific costitems and disbursements. Seven items of the costs claim are disputed by the Council.It is pertinent to deal with them first because they are relevant to assessing thesignificance of pre-trial settlement offers and the calculation of any increased costs.Scale costs[10] I deal with each of the disputed items in turn:(a) 7 September 2017 – Filing of amended statement of claim – $6,690The Council submits that sch 3 of the Rules, which sets out the timeallocations for each step for which costs are recoverable, only allowsfor recovering costs once for "[c]ommencement of proceedings byplaintiff". In that regard, the Council refers to r 7.77(8) which provides:If an amended pleading has been filed under this rule, theparty filing the amended pleading must bear all the costs ofand occasioned by the original pleading and any applicationfor amendment, unless the Court otherwise orders.The amended statement of claim, however, was filed at the direction ofthe Court after the defendants requested further and better particulars.I allow the amount claimed.(b) 15 November 2017 – Preparation for callover – $892The Council submits that while the Rules provide for costs to be paidon an appearance at a callover, there is no provision for preparation andthat the recovery of costs for preparation must have been purposefullyexcluded. Mr Daisley does not pursue this claim in the light of theCouncil's objection.(c) 17 November 2017 – Second amended statement of claim – $669The Council objects to this claim on the basis that the Court did notorder the filing of the document and Mr Daisley does not pursue it.(d) 23 February 2018 – Third amended statement of claim – $6,690The Council objects to this claim but the document was filed at thedirection of the Court following a case management conference inwhich the parties requested a consent order. I allow that claim.(e) 16 November 2018 – Fourth amended statement of claim – $6,690The fourth amended statement of claim was filed following a consentorder requiring it made by Hinton J on 24 August 2018 and I allow theclaim accordingly.(f) July 2021 – Preparation of joint expert statements and supplementarybriefs arising from amended statement of defence – $26,887.50The Council argues that the cost of the preparation of the expertstatements and supplementary briefs is subsumed by the claim forpreparation based on the time allocation for the length of the hearing.It notes the absence of an express provision in the Rules for additionalpreparation. I accept, however, Mr Daisley's submission that the needfor supplementary evidence arose after the Council was permitted toamend its defence after the close of pleadings date. Campbell J directedthat supplementary briefs could be filed in substitution for, or inaddition to, those earlier filed. In response to the Council's adjusteddefence which shifted the focus to the commerciality of the quarry andMr Patterson's evidence, five supplementary briefs were filed on21 February 2021 and 19 supplementary briefs were filed on 12 July2021. The evidence was relevant and responded appropriately to thecase presented by the Council's witnesses. Moreover, the joint witnessstatements were prepared in accordance with the usual practice whenexpert witnesses confer. I allow that item of the claim.(g) 30 November 2021 – Preparation for reconvened closing days of thetrial (written closing submissions) – $4,780The Council correctly identifies that Mr Daisley had also claimed forpreparation for a full hearing but I accept the submission of counsel forMr Daisley that additional work was required in preparing closingsubmissions because counsel agreed on arrangements to expedite thehearing and accommodate the difficulties presented by COVID-19response restrictions. Under the unusual arrangements agreed to, someof the Council's experts were not cross-examined and the issues whichmight have been raised in cross-examination were instead addressed bysubmissions. I allow this aspect of the claim.Disbursements[11] Some of the disbursements which Mr Daisley seeks to recover are disputed bythe Council. First, there is a claim to recover what I understand to be Mr Daisley'shalf share of the costs of a mediator ($5,750) and the hiring of a mediation room($478.29) on 30 September 2020 when the parties agreed to meet in mediation in anattempt to resolve their differences. While mediation is encouraged by the Court, it isnot a step in the proceeding. Moreover, the ground on which Mr Daisley seeks torecover his share of the mediation costs involves the disclosure of information relatedto the conduct of the parties in the mediation, which is privileged information andought not to be disclosed. I disallow that claim.[12] Mr Daisley also seeks to recover fees of $3,248.75 paid to Mr Denis Lane, anaccountant known to the Court to frequently give evidence as an expert witness onfinancial matters. Mr Lane was not a witness in the proceeding and his contributionwas not identified at trial. Counsel for Mr Daisley indicate, however, that Mr Lanewas instructed in the early stages of the case to assist with matters arising from thedefendants' application to strike out the proceeding. It is not clear to me whatrelevance financial information would have had to that step in the proceeding. Thejudgment of Associate Judge Christiansen, dated 25 February 2016, does not makeany reference to financial matters and deals with the Council's limitation argumentwhich appears to have been the sole issue.8 Accordingly, I disallow that aspect of theclaim.8 Daisley v Whangārei District Council [2016] NZHC 268 [the strike-out judgment].[13] There is a claim for $13,212.25 for accommodation for Ms Smith, secondcounsel for Mr Daisley, who was required to relocate from her practice base inDargaville to Auckland in July and August 2021 for preparation and trial. The amountincludes the cost of hotel accommodation and renting office space in Auckland. TheCouncil agrees to meet Ms Smith's reasonable accommodation costs but submits thatthe additional cost of renting serviced office space is not justifiable. First, the Councilsays that Ms Smith could reasonably have booked a one-bedroom suite in an hotel,which includes a separate living room or office space, for $350 per day instead of thesum of $629 per day which is sought. Second, the Council refers to informationsuggesting that the serviced office could have been rented for $2,500 a month.Mr Daisley responds by indicating that Ms Smith's claim is for appropriateaccommodation for 24 days, allowing time for the establishment and packing up ofher office, at a rate of $150 per day. That is a total of $3,600 compared to the Council'ssubmission that $2,500 would have been sufficient. Moreover, the accommodationcosts were $400 per day as opposed to the Council's proposition of $350 per day. Inthe overall scheme of things, the amounts claimed seem to be reasonable. Havingregard to the scale of the proceeding, I consider the differences between the parties onMs Smith's disbursement claims are inconsequential. I allow the claims.Conclusion on scale costs and disbursements[14] The outcome of these considerations is that from the scale costs of $224,057.25claimed by Mr Daisley, I deduct $1,561, meaning that scale costs allowed total$222,496.25. Of the disbursements sought in the sum of $241,844.32, I disallow$9,477.04, leaving a balance of disbursements recoverable of $232,367.28. The totalsum of fees and disbursements I consider to be properly recoverable according toscale, therefore, is $454,863.53.Assessing the issues at trial and the outcome[15] Assessing the award of costs when increased or indemnity costs are sought andthe parties cannot agree requires an evaluation of the disputed issues in the proceedingand the outcome.The nature of the substantive claims[16] The nature of Mr Daisley's claims is summarised at [1] to [16] of thesubstantive judgment. In brief:(a) Mr Daisley purchased the Knight Road property principally for thepurpose of operating a commercial quarry for the supply of aggregatefor use on his farm and in conjunction with his own earthworkscontracting business, and to sell quarried minerals commercially tolocal farmers and other contractors.9 As well, Mr Daisley haddiscussions with an Auckland-based contractor, Mr Bruce Patterson,about a supply agreement by which Mr Patterson would pay a premiumprice for aggregate in return for the supply of aggregate on apreferential basis whenever Mr Patterson required it.(b) A land information memorandum (LIM) Mr Daisley obtained from theCouncil in November 2004, prior to purchasing the Knight Roadproperty, declared that the Council held no consent affecting the use ofthe property. Mr Daisley was aware, however, that the quarry on theproperty had been operated commercially over several decades.(c) On 21 February 2005, however, an enforcement officer, appointed bythe Council under the Resource Management Act 1991 (the RMA)issued an abatement notice directing Mr Daisley to cease the use of theKnight Road property for the disturbance or removal of all material inexcess of 500 bank cubic metres (BCM) in any 12-month period. Thereasons for the abatement notice included the assertion that the removalof the material from the Knight Road property was neither expresslyallowed by a resource consent nor an existing use right. There followeda long-running dispute between Mr Daisley and the Council overMr Daisley's right to operate the quarry, which continued until July2011.9 In this judgment, as in the substantive judgment, the terms "material", "metal", "minerals","aggregate" and "rock" are used interchangeably to refer to the organic material extracted from aquarry without specifying, unless relevant, the type of rock concerned.(d) When the Council issued the first and subsequent abatement notices;when Mr Daisley applied unsuccessfully for a resource consent in2006; when the Council began enforcement proceedings in theEnvironment Court in July 2009, and on every other occasion whenMr Daisley sought information about the existence of a resourceconsent, the Council denied that a resource consent existed and insistedthat Mr Daisley's quarrying was unlawful. Mr Daisley's inability toexploit the Knight Road property for commercial quarrying resulted inhis suffering financial difficulties and he was forced by his bank toplace the property on the market for sale.(e) In late September 2009, while preparing a defence to the enforcementproceedings, a lawyer engaged by Mr Daisley initiated a search of theCouncil's archived records for the Knight Road property and located aland use consent that was issued in 1988 and was still current (the1988 LUC). The 1988 LUC authorised the operation of a quarry forthe extraction of red brown rock that was not limited by time and didnot expressly limit the quantity of rock that could be extracted. It wascommon ground between the parties that the consent ran with the land,meaning that, if the Council had kept the record of the 1988 LUCreasonably available and disclosed its existence to Mr Daisley,Mr Daisley would have been entitled to rely on it when he became theowner of the property. The Council's initial response was to claim thatthe 1988 LUC was no longer valid. Mr Daisley was forced to sell theproperty at a price lower than that he would have received if quarryingwas a consented activity.(f) In May 2011, on the basis that the 1988 LUC was a valid consent thatcontinued to apply to the land, the Council granted the purchaser of theKnight Road property from Mr Daisley a variation to the consentauthorising the annual removal of 50,000 BCM of material.(g) The enforcement proceedings against Mr Daisley were not withdrawnby the Council until July 2011.[17] The statement of claim was filed on 14 August 2015, just a month short of sixyears after the 1988 LUC was found. Mr Daisley claimed that the Council's repeateddenials that a valid consent existed, and its continued obstruction of his intendedquarrying activities between February 2005 and January 2010, were unlawful and inbreach of the statutory and common law duties the Council owed to him. He claimedalso that Council officers were guilty of misfeasance in public office in that theyknowingly and deceptively denied the existence of a valid consent, or were wilfullyblind to the existence of the 1988 LUC, and misled the Hearings Commissioner aboutits existence when Mr Daisley applied for a resource consent in 2006.The damages sought[18] The damages sought by Mr Daisley in the fourth amended statement of claimdated 20 November 2018 totalled $25,928,197 before tax, or $38,698,801 as a taxablesum. In closing the plaintiff's case, however, the total damages claim was reduced to$20,945,891, made up by claims for:(a) lost earnings from the quarrying operation;(b) the loss of a valuable business operation, including goodwill androyalties;(c) a loss on the value of the Knight Road property; and(d) the costs associated with resisting the Council's infringement andenforcement actions.The Council's defences[19] Almost every aspect of Mr Daisley's claims was denied by the Council in itspleadings and at trial. Although the Council, in closing its case, admitted it wasnegligent in some respects, it disputed the nature of the duties owed to Mr Daisley. Italso asserted that Council officers dealing with Mr Daisley did not know about the1988 LUC, and did not deliberately mislead Mr Daisley and others about its existence.Its position, in essence, was:(a) the Council's repeated denials of the existence of the 1988 LUCresulted from an inadvertent misfiling of the records of the consent inthe Council's archives and that it did not act in breach of any duty ofcare to Mr Daisley;(b) the claim was time-barred under s 4 of the Limitation Act 1950 becauseit was brought more than six years from the date on which the cause ofaction accrued;(c) the operation of a commercial quarry on the Knight Road property wasnever a viable prospect and, if Mr Daisley had carried out quarryingactivities in the manner he proposed, he would have lost money onevery tonne of aggregate produced;(d) Mr Daisley did not suffer any compensable loss in any other respect;(e) the damages claim, if Mr Daisley was entitled to any award, wasgrossly exaggerated;(f) Mr Daisley alone was responsible for the predicament in which hefound himself, having made a poor business decision to purchase theKnight Road property without first establishing that commercialquarrying was a consented activity and after he had received a LIM thatinformed him that no consent existed; and(g) Mr Daisley was negligent in proceeding with the purchase in thosecircumstances and contributed to his losses to such an extent as tojustify a reduction by 80 per cent of such damages as might otherwisehave been awarded to him.[20] The Council also raised a defence of betterment, but it abandoned that defencein a more general challenge to the quantification of the measure of damagesattributable to any proved negligence. As well, it seeks an order reducing any damagespayable by the Council on account of any sum received by Mr Daisley from theinsurers of his former lawyer who had previously been named as second defendant inthe proceeding.The findings[21] I found the Council liable in negligence and awarded Mr Daisley damages.I summarised my findings in the substantive judgment in these terms:[22] The Council owed Mr Daisley common law duties of care to:(a) exercise reasonable care and skill in keeping the records ofresource consents reasonably available for inspection;(b) exercise reasonable care and skill in the provision ofinformation about such matters; and(c) conduct reasonably diligent inquiries into the existence of aresource consent whenever that was in issue.[23] The Council breached its common law duties to Mr Daisleycontinuously from November 2004 to September 2009 by:(a) failing to keep a copy of the 1988 LUC in its register of thecurrent files related to the Knight Road property so as to makeit "reasonably available at its principal office";(b) failing through its officers to conduct diligent searches for theexistence of a consent:(i) on 21 February 2005 when the first abatement noticewas issued;(ii) when Mr Daisley made the 2005 application forresource consent;(iii) when the Council opposed Mr Daisley's 2006application for a resource consent on the grounds thatthere was no existing consent and required him topublicly notify the application;(iv) at the time of the subsequent abatement notices andthe enforcement application to the EnvironmentCourt; and(v) every time the Council provided Mr Daisley with anincorrect response to a request for information aboutthe existence of a consent.[24] The Council's negligence was the real and effective cause of losssuffered by Mr Daisley, including:(a) loss of profits from his inability to establish a commercialquarrying business;(b) loss of value of the Knight Road property; and(c) loss incurred through costs directly related to theconsequences of the Council's negligence.[25] I have disallowed Mr Daisley's claims to recover losses of goodwilland the value of the quarrying business.[26] I have held that Mr Daisley was not contributorily negligent.[27] I have held that the Council was guilty of misfeasance in public officeand that it should pay exemplary damages of $50,000.[28] I have dismissed the Council's defence under s 4 of the Limitation Act1950 that the proceeding was commenced out of time, because:(a) the cause of action accrued continuously from September2006 until September 2009; or, alternatively(b) section 28(b) of the Limitation Act applies with the result thatthe limitation period did not begin to run until September2009 when Mr Daisley discovered the Council's equitablefraud in denying the existence of a valid resource consent.[29] I have awarded Mr Daisley:(a) damages of $4,089,622 for loss of profits;(b) damages of $90,000 for loss of the value of the Knight Roadproperty;(c) damages of $50,000 for recovery of direct costs incurred as aconsequence of the Council's negligence;(d) interest to the date of judgment [and thereafter, at a rate of fiveper cent per annum]; and(e) exemplary damages of $50,000.Mr Daisley's claim for increased and indemnity costs[22] Mr Daisley seeks an uplift of 50 per cent of scale costs up to 2 March 2021,and indemnity costs on all steps in the proceeding taken after that date.The claim for increased costs[23] Of the available grounds for making such awards, the submission for increasedcosts rests on the proposition that the Council adopted an unreasonable approach tothe litigation from the time the statement of claim was issued, in that it:(a) refused to acknowledge the wrongfulness of its conduct; and(b) pursued unmeritorious defences.[24] In particular, it is argued that the Council:(a) denied unreasonably that it –(i) owed common law duties of care to Mr Daisley regarding theavailability of information about the 1988 LUC and theprovision of information to Mr Daisley and others about it; and(ii) breached any such duties at the relevant times;(b) unreasonably argued that Mr Daisley's claims were barred by theLimitation Act, and pursued that defence after its attempt to strike outthe proceeding on that basis failed in 2016;(c) asserted that the quarry was or would be unprofitable so that nodamages were claimable in any event and, in doing so –(i) unjustifiably disregarded the business model Mr Daisley wouldhave adopted if he had not been prevented by the Council'snegligence from doing so, including rejecting theDaisley/Patterson arrangements for the purchase of rock fromthe quarry; and(ii) relied on expert opinion that did not have an underlying factualfoundation and was based on incorrect factual assumptionsabout a large-scale commercial quarry.[25] Put simply, the proposition for Mr Daisley is that the Council should neverhave disputed its liability to Mr Daisley in negligence and that the trial of theproceeding should have been limited to quantum of damages.The claim for indemnity costs[26] The claim for indemnity costs from 2 March 2021 is founded on thecontinuation by the Council of its purportedly unreasonable approach to the litigationas just described and, particularly, on its rejection of "numerous attempts [byMr Daisley's legal advisers] to advance settlement discussions both before and duringthe trial". If the Court does not award indemnity costs from 2 March 2021, Mr Daisleyseeks a 50 per cent uplift on scale costs from that date.The Council's response to the claims for increased and indemnity costs[27] The Council submits that an uplift or an award of indemnity costs isinappropriate because:(a) the Council did not contribute unnecessarily to the time or expense ofthe proceeding, or a step in it, by taking or pursuing an argument thatlacked merit or by failing to accept a reasonable settlement offer;(b) the Council did not act vexatiously, frivolously, improperly orunnecessarily when defending the proceeding;(c) the proceeding was issued against the Council more than six years afterthe Council wrongly issued infringement notices and broughtenforcement action against Mr Daisley and the Council did not actunreasonably in pursuing its limitation defence;(d) the Council made appropriate concessions at trial;(e) the Council was not found to have acted in bad faith;(f) the plaintiff's Calderbank offers did not satisfy the principles inr 14.11(3)(b) in that the judgment sum was less than the offers to settleat $8,000,000 (made on 2 March 2021) and $11,250,000 (made on14 August 2021);(g) Mr Daisley did not make a Calderbank offer that satisfied r 14.11(4) asthe offers made were not close in value to the judgment obtained;(h) the Council has already been "punished" with an award for exemplarydamages for what the Court considered to be the Council'sinappropriate response when the consent was found in 2009;(i) the Council has at all material times acted on the advice it received fromits lawyers and experts; and(j) the Environment Court was the appropriate forum to "punish" theCouncil with a costs award for the enforcement proceedings in theEnvironment Court rather than this proceeding which was defended onreasonable grounds and in good faith.[28] Mr Robertson submits that the aim of the costs regime under the Rules is toallow two-thirds of costs considered reasonable for the proceeding and that there aregood policy reasons for a regime which allows recovery of less than the full amountof costs incurred. Mr Robertson argued, in response to the claim for increased costsdue to the Council's conduct in defending the case, that that issue had already beenaddressed in the substantive judgment.Did the Council adopt an unreasonable approach to the proceeding?[29] The claim for increased costs is founded on the argument that the Counciladopted an unreasonable approach to the litigation and that Mr Daisley's costs wereincreased by having to address untenable defences and participate in a hearing thatwas unduly prolonged.[30] I accept that an award of costs should reflect how parties acted duringlitigation, not before it.10 I was mindful of that principle, as indicated in thesubstantive judgment at [339], where I was careful to distinguish the conduct of theCouncil relevant to exemplary damages from conduct relevant to the question of costs.In the present costs context, I address only the reasonableness of the Council's defenceto the proceeding after 15 August 2015.[31] Mr Robertson submits that the Council's response to the pleaded claims wasfocused on three main areas: limitation, an absence of malice and the amounts claimed.He submits that those issues were reasonable for the Council to raise in its defence.I do not accept, however, that those were the only bases on which the Council resistedMr Daisley's claims.[32] As I recorded at [126] of the substantive judgment, the Council's formalpleading denied that s 35 of the RMA imposed on the Council an obligation to monitorthe exercise of resource consents. The Council pleaded that the section did not giverise to common law duties of care or a cause of action for damages and that legalredress under the RMA and at common law was not available to Mr Daisley.I observed at [127] that it was only in closing the Council's case that Mr Robertsonacknowledged "for the purposes of the case" that:(a) the Council accepted on the undisputed facts that it owed a commonlaw duty in relation to s 35 of the RMA to keep records of resourceconsents reasonably available, and that the duty included a duty to makereasonable enquiries to confirm the existence of such a consent;(b) the Court was entitled to find a similar duty in relation to the LIMapplied for by Mr Daisley in 2004, acknowledging that the Council hada duty to exercise reasonable care when issuing a LIM; and(c) by reference to s 35 of the RMA and s 44A of the Local GovernmentOfficial Information and Meetings Act 1987, the Council was negligentin failing to have a copy of the 1988 LUC reasonably available and,10 Paper Reclaim Ltd v Aotearoa International Ltd [2006] 3 NZLR 188 (CA) at [160].further, that no Council officer searched the Council archives in aneffort to locate a consent regarding quarrying on the Knight Roadproperty.[33] By the time those concessions were made, the evidence had been heard, over12 days. They did not require the hearing of evidence to justify them. But, in anyevent, the concessions did not amount to an acceptance of liability. Mr Robertsonargued that a claim based on a breach of the duty under s 35 could not be advancedunless Mr Daisley also established a breach of the obligation in s 322 of the RMA fora Council officer issuing an abatement notice to have reasonable grounds for believingthat the circumstances justify the service of a notice. His argument, founded on a viewof the statutory provisions and policy considerations, is summarised at [156]–[157] ofthe substantive judgment. I rejected it.11[34] Moreover, the Council never abandoned or amended its pleadings that:(a) Mr Daisley lacked standing because the quarrying activities were notundertaken by him but rather by his company, Daisley ContractingLimited, which was not a party to the proceeding;12(b) the conditions of the 1988 LUC had not been complied with and theconsent lapsed in 1990;13(c) the Council reasonably relied on Mr Barry Drake's assertions that noformal consent had been issued for quarrying;1411 The substantive judgment, above n 1, at [158]–[185].12 It was only in closing the Council's case that Mr Robertson said the Council abandoned thatargument, even though the evidence related to it had been disclosed before the trial.13 This was a proposition for which the Council never sought to lay a factual foundation and onecompletely at odds with the Council's granting of a variation to the 1988 LUC when the purchaserof the Knight Road property applied for it in 2011.14 Mr Drake was the vendor of the Knight Road property to Mr Daisley; his family had operated thequarry for more than 30 years. The 1988 LUC was issued on the application of lessees of theproperty, not Mr Drake or his father, the previous owner.(d) Mr Daisley purchased the property in the express knowledge andunderstanding that the quarry was not consented,15 and that a resourceconsent was required, meaning he took on the risk of not obtaining aconsent for quarrying;(e) Mr Daisley knew at the time of the purchase that the LIM recordedthere was no consent for mineral extraction and that at no time did herely on the Council about an entitlement to quarry;16(f) the Council was not aware, and there was no reasonable basis on whichit could be said it ought to have been aware, that the mineral extractionat the Knight Road property was consented and an existing right;17(g) the onus was on Mr Daisley to establish the lawfulness of the quarryoperations;(h) the benefit (that is, the existence of a valid consent) for whichMr Daisley did not bargain, had not been promised and was not told bythe Council he was entitled to receive, amounted to a windfall and wasnot recoverable; and(i) it denied that the consequences of a valid consent asserted byMr Daisley (the establishment of a profitable commercial quarry)would have occurred but for the actions taken by the Council regardingMr Daisley's quarrying activity.[35] The Council maintained throughout the hearing and in its closing argumentthat Mr Daisley was at fault for having undertaken a risky business venture when facedwith a LIM that stated that no resource consent existed, and that Mr Daisley15 I described this proposition in the substantive judgment at [259] as "remarkable" on the basis thatit was not immediately obvious how Mr Daisley could have knowledge and understanding of astate of affairs that did not exist.16 As with the argument summarised at [34(d)], the assertion is nonsensical; it also addresses anargument not advanced by Mr Daisley, who never relied on the Council's repeated assertions aboutthe absence of a consent. He challenged them.17 Yet Mr Robertson properly acknowledged in closing that the Council knew of the existence of theconsent "in a corporate sense"; see the discussion at [35] below.misrepresented the position to the Council by not asserting and proving the existenceof a consent. It does not appear to have occurred to the Council that arguing thatMr Daisley was negligent for not accepting and relying upon false informationnegligently provided by the Council was not only incongruous but the product of adeeply flawed analysis. Nor does it appear to have occurred to the Council thatcriticism of Mr Daisley for not proving the existence of a consent, the record of whichit held and the existence of which it denied whenever Mr Daisley or his advisersenquired, would never be accepted by the Court. Yet it was on the basis of thoseassertions that the Council argued that:(a) none of the losses claimed by Mr Daisley were caused by any provednegligence by the Council; or(b) Mr Daisley was contributorily negligent in proceeding with thepurchase and persisting with his claim that he was entitled to operate aquarry to such an extent as to disentitle him to 80 per cent of anyrecoverable losses.[36] The extent to which it was necessary for Mr Daisley to address the issuesarising from the Council's pleading because they were either never conceded by theCouncil or, if conceded, only after all of the evidence had been heard, is demonstratedby the length of the judgment and the description of the issues that it was necessaryfor the Court to determine. Significantly, none of the arguments summarised above at[33]–[34] succeeded.[37] Nevertheless, I am not prepared to hold that it was unreasonable of the Councilnot to admit liability in negligence and to focus the parties' and the Court's attentionon the quantum of Mr Daisley's claim.[38] First, it may seem obvious to a lay observer that the Council ought to be heldliable for the consequences of its denial of the existence of a consent that had beengranted by the Council's predecessor and the records of which the Council held. Butthe liability of the Council to Mr Daisley in tort was not clearly established as a matterof law prior to the trial. As Hinton J noted in an interlocutory judgment dated27 August 2018 dismissing an application for summary judgment against the Councilon the issue of liability, there was a question about whether any action for breach of astatutory duty under the RMA existed.18 Hinton J referred to two decisions of the HighCourt in which it had been held that there was no action for damages for breach ofstatutory duty under the RMA and that an affected party was limited to its remediesunder the statute.19 Hinton J held that the allegation of a duty of care in the resourcemanagement context was novel and that question could only be answered byconsidering all of the circumstances to see whether there was a proximate relationshipand to consider the applicable policy and other considerations. The Judge also touchedon whether liability would be confined to circumstances where the prosecution by theCouncil amounted to a misfeasance or was malicious.20[39] Although Mr Daisley succeeded in his argument that he was entitled to rely ona common law duty of care founded on the statutory provisions, it could not be saidprior to the issuing of the substantive judgment that the Council acted unreasonably inarguing as a matter of law that no cause of action existed.[40] The question of the whether the Council or, more accurately, the Council'sofficers knew of the existence of the consent or should, with reasonable diligence,have been aware that a valid consent existed, was a significant issue at trial. Theallegations of malice were relevant both to the cause of action alleging misfeasance inpublic office and to Mr Daisley's response to the limitation defence. The Council wasentitled to resist Mr Daisley's allegations of malice. It was held in the substantivejudgment that the Council's officers did not act maliciously but that they were recklessin assuming that Mr Daisley had the burden of proving the existence of the consentand failed to undertake reasonably diligent enquiries into its existence.[41] The limitation issue was addressed by Associate Judge Christiansen in thestrike-out judgment.2118 Daisley v Whangārei District Council [2018] NZHC 2211 [the summary judgment decision] at[32]–[35].19 Mawhinney v Waitakere City Council [2007] NZRMA 173 (HC) and Mawhinney v AucklandCouncil [2013] NZHC 159.20 The summary judgment decision, above n 18, at [35].21 The strike-out judgment, above n 8.[42] The argument for Mr Daisley in opposition to the Council's reliance on s 4 ofthe Limitation Act was to invite the Court to conclude, by analogy with judgments ofthe Court of Appeal in latent building defect cases, that Mr Daisley's negligence causeof action against the Council did not accrue until the Council's negligence regardingthe 1988 LUC was reasonably discoverable. It was not unreasonable of the Councilto resist that proposition. As I explained in the substantive judgment, the SupremeCourt's judgment in Murray v Morel & Co Ltd closed off the possibility that, even inbuilding cases, there was a doctrine of reasonable discoverability that could be appliedas a general principle in Limitation Act cases in New Zealand.22 Even though I heldat [374]–[380] that, on the application of ordinary principles, the proceeding wasissued within the six-year limitation period, that was on a basis not argued byMr Daisley. I held, that:[378] the Council was continuously in breach of its duties regardinginformation about the consent from the time it issued the erroneous LIM inNovember 2004 until the discovery of the 1988 LUC in September 2009 [and] that Mr Daisley suffered continuing damage or loss from September2006 when the Council required him to notify his 2006 resource consentapplication until the Council withdrew the enforcement proceedings in theEnvironment Court in July 2011. [The cause of action] accrued on acontinuing basis from the time the Council opposed the 2006 resource consentapplication until the discovery of the 1988 LUC in September 2009.[43] I have given careful consideration to whether it was unreasonable of theCouncil not to acknowledge that s 28(b) of the Limitation Act provided an obviousbasis for a finding that the limitation period did not begin to run until Mr Daisley'sright of action, previously concealed by the Council itself, was discovered. I acceptedthat there was no evidence that any Council officer knew the 1988 LUC existed anddeliberately withheld that information. I do not need to repeat here my discussion ofthis point at [385]-[398] of the substantive judgment. It is sufficient to repeat what Isaid at [399]:23[399] What is particularly relevant is that it was the Council's negligence[in archiving the records of the consent] and its recklessness in assuming thatthat Mr Daisley had to prove the existence of the consent, and not makingdiligent inquiries, that caused the evidence supporting Mr Daisley's claim tobe withheld. It would be wrong to allow the Council to benefit from the expiryof the limitation period when it had been responsible for the state of affairs22 Murray v Morel & Co Ltd [2007] NZSC 27, [2007] 3 NZLR 721. See the discussion in thesubstantive judgment, above n 1, at [360]–[373].23 The substantive judgment, above n 1 (emphasis added).that led to Mr Daisley's ignorance of the true position. I find, therefore, thatthe Council was reckless as to the existence of the 1988 LUC when itundertook little more than a cursory investigation of its records.[44] But although the Council might be criticised for taking the view that its ownnegligence afforded it a defence, it was entitled to rely on observations by AssociateJudge Christiansen about the uncertainty of both the accrual of the negligence causeof action and the application of a limitation defence. At the conclusion of hisdiscussion of the issues, the Associate Judge said:[65] Reasonable assumptions have been made on behalf of the Council inadvancing a strike out claim at this stage. But, until pleading and discoveryobligations have been completed the Court is not in a sufficient position topreclude the availability of a claim. Until then there is no certainty about thattime when the cause of action accrued and when considerations of theLimitation Act principles should apply.[45] It is necessary to address the submission made by Mr Robertson as recorded at[27](j) above about punishing the Council with a costs award for the enforcementproceedings in the Environment Court. I have made it clear that I do not consider theCouncil's administrative response to the finding of the 1988 LUC in September 2009is relevant to costs issues. In any event, ordering the payment of increased costs orindemnity costs is not punitive. The costs regime is entirely compensatory. Whereincreased costs or indemnity costs are awarded, the principle that no party may recovercosts in excess of those actually incurred remains in place. Awarding costs above scalesimply reflects the fact that the way the party paying costs has acted in the litigationjustifies providing the successful party with a costs contribution that exceeds thestatutory estimate of two-thirds of the costs reasonably payable for any step in theproceeding.Conclusions on claim for increased costs[46] I am not persuaded, therefore, that the Council was unjustified in resistingMr Daisley's arguments about the existence and nature of a cause of action innegligence and in raising a limitation defence, even though the Council's argumentson both issues failed.[47] I am persuaded, however, that the Council contributed unnecessarily to thetime and expense of the proceeding by pursuing other arguments that lacked merit andfailing without reasonable justification to admit facts and accept legal arguments.24Although I have held that there was no evidence that any Council officer knew of theexistence of the 1988 LUC and deliberately misled Mr Daisley and others about itsexistence, I regard the Council's litigation approach to the archiving of the records ofthe 1988 LUC, and the failure of relevant Council officers to locate it at a time whenthe existence of the consent was in issue, to have been unrealistic. Archiving a validconsent so as to remove it from prompt accessibility was clearly in breach of theCouncil's obligation under s 35(3) of the RMA to keep such a record reasonablyavailable. The ease with which Mr Shortland located the consent in 2009 wascompelling evidence about the absence of diligent enquiry by other Council officersat relevant times. Moreover, proof that the 1988 LUC was locatable was provided bythe Council's own evidence.25[48] Three Council officers were identified as having particular engagement withMr Daisley over his quarrying plans. Mr Barnsley was a central figure but I acceptthat his whereabouts were unknown to the Council so that he was not reasonablyavailable to give evidence. Moreover, he ceased employment with the Council beforethe statement of claim was issued so the Council could not have been expected to havesought his views on Mr Daisley's allegations. I accept also that another Councilofficer who dealt directly with Mr Daisley, Mr Andrew Lucas, was no longeremployed by the Council and was working overseas. Nevertheless, it is reasonable toassume that evidence that he had undertaken diligent enquiries into the existence ofthe 1988 LUC could have been available to the Council if it existed. Moresignificantly, the Council identified that another Council employee, Ms Katie Hislop,was available and had been approached by the Council in connection with theproceeding. I infer from the absence of any evidence from Ms Hislop to the contrarythat she was unable to give evidence of any searches undertaken by Councilemployees.24 High Court Rules, r 14.6(3)(ii)–(iii).25 See the substantive judgment, above n 1, at [187]–[205].[49] I consider it unreasonable of the Council, therefore, to have failed toacknowledge before trial its negligence in regard to the storage and retrieval of recordsrelated to the 1988 LUC, at least from the time when the briefs of evidence had beenexchanged. The Council's continued assertion that Mr Daisley was at fault for notproving the existence of the 1988 LUC was, in my view, simply unfathomable.[50] Before reaching a final view on the extent to which, if any, the Council'sapproach on that issue and on the other arguments summarised above at [34] shouldresult in an award of increased costs, I consider the claim for indemnity costs.The claim for indemnity costs – settlement offers[51] Mr Daisley's claim for indemnity costs is founded on an argument that theCouncil failed unreasonably to accept the pre-trial settlement offers made on behalf ofMr Daisley.[52] The proceeding was initially set down for trial in March 2021. On 3 November2020, the Council's solicitors wrote to Mr Daisley's solicitor on a without prejudicesave as to costs basis. After traversing the Council's position on its various defences,including limitation and contributory negligence, the letter recorded:23. We accept that the council made a mistake when it instigated aprosecution (because it held records that, if referred to, could have meant theprosecution should not have been commenced).24. The council should have had a proper record of the land use consenton its file and arguably, should have checked its archived quarry files before"setting the law in motion" or in its immediate aftermath. We see there is riskof the court finding a duty of care in this particular situation.25. The council also accepts that it mistakenly charged Mr Daisley ratesfor the quarry in Drake Road.[53] The Council's solicitors, therefore, offered to settle Mr Daisley's claim on thepayment of $350,000 in full and final settlement, the offer remaining open foracceptance until 30 November 2020 at 5 pm.[54] The offer was rejected but in a counter-proposal contained in a letter dated27 November 2020, also on a without prejudice save as to costs basis, Mr Daisley'ssolicitor made a Calderbank offer for full and final settlement in the sum of$15,000,000, the offer being open for acceptance until 8 January 2021. I have notbeen provided with the Council's response to that proposal, if there was one, but on2 March 2021 a further Calderbank offer was made on behalf of Mr Daisley to settlefor the sum of $8,000,000. That offer was open for acceptance until 5 March 2021 at4 pm. It was not accepted by the Council.[55] On 9 July 2021, the Council's solicitors told Mr Daisley's solicitor that theyhad no instructions to increase a without prejudice offer made on 3 November 2020 tosettle with a payment of $350,000 in total. The Council's solicitors said:The recent agreements of experts makes [sic] it impossible for the claimed lostprofits to be recovered. The quarry was never going to be profitable.My mid-hearing observations on the merits of the claim[56] Counsel for Mr Daisley argue that it is relevant to the claim for indemnity coststhat the Council did not move to settle Mr Daisley's claim after I expressed tentativeviews, during the hearing on 13 August 2021, on the merits of Mr Daisley's assertionsabout the Council's liability. By that stage, the taking of the evidence of witnesses offact, both for Mr Daisley and the Council, had been completed and I had heard theevidence of the plaintiff's expert witnesses on geological and geotechnical issues andquantum (including Mr Robertson's cross-examination). Before the Court adjournedfor the day, I made some informal observations to counsel about the state of theplaintiff's case and the Council's anticipated defences. I referred to a number ofaspects of the Council's case on liability that I considered to be of doubtful merit. TheCouncil's failure to modify its position in light of the observations is relied upon bycounsel for Mr Daisley as evidence of what I described in the judgment as theCouncil's "obstructive and uncompromising resistance to Mr Daisley's proper claimsafter the consent was found in September 2009".26[57] I do not consider it would be appropriate to hold that the Council actedunreasonably in resisting the attempts by Mr Daisley's counsel to engage in withoutprejudice settlement negotiations over the weekend after I made those informal26 The substantive judgment, above n 1, at [340].observations. By that stage, the hearing was well-advanced. The Council was entitledto take the view that I did not clearly identify in my remarks the basis on which theCouncil might be held liable in tort, and that I did not articulate expressly the reasonsI gave in the substantive judgment for rejecting the limitation defence. Moreover, theevidence of the Council's witnesses as to quantum had not been fully explored by thatstage of the hearing and, as I held subsequently, Mr Daisley's estimate of hiscompensable losses exceeded the amount ultimately awarded.[58] It is not clear to me in any event that it would be appropriate for the Court tohold a party at fault for not accepting a proposal to settle merely because the judgehearing the case had expressed tentatively adverse views without hearing the wholecase, including counsel's closing arguments.[59] I return, therefore, to the argument concerning the Council's rejection of theoffer to settle made by Mr Daisley on 2 March 2021. It is submitted on behalf ofMr Daisley that the failure of the Council to accept that offer should be the trigger forawarding indemnity costs on the basis that the fully inclusive offer of $8,000,000provided a settlement "which is sufficiently proximate to the award of damages,exemplary damages, interest (in particular) and costs".[60] I have held at [14] that the total sum of fees and disbursements that are properlyrecoverable according to scale amount to $454,863.53. Added to the judgment sumincluding interest as set out above at [2], the total amount recoverable by Mr Daisleyincluding scale costs and disbursements is $6,182,986.03.[61] That sum is approximately 75 per cent of the $8,000,000 settlement offer. I donot consider that it is sufficiently close to the amount Mr Daisley said he would acceptin settlement to say that the Council was not reasonably justified in rejecting it.Moreover, I am not satisfied that there is any other basis on which indemnity costsshould be awarded for that part of the proceeding in respect of which they are claimed.I reject the claim for indemnity costs accordingly.Conclusions on costs[62] I return then to the question of whether or not increased costs should be paid.I am satisfied that, although the Council was entitled to defend the arguments aboutliability and quantum for the reasons already discussed, Mr Daisley's costs indefending the proceeding and the length of the hearing were increased by the untenablelegal and factual issues that I have criticised. The Council thereby contributedunnecessarily to the time and expense of the proceeding by pursuing argumentslacking merit. It is appropriate to address that consequence by uplifting the total scalecosts of $222,496.25 by 25 per cent.[63] Accordingly, I direct the Council to pay to Mr Daisley increased costs in thesum of $278,120.31 and disbursements of $232,367.28, a total sum of $510,487.59.The settlement with Mr Daisley's former lawyer[64] At [567] of the substantive judgment, I noted that Mr Daisley's claim againsthis former lawyer, formerly joined as second defendant in the proceeding, was settledby agreement prior to trial and a notice of the discontinuance of that claim was filed.I observed without reference to authority that, to the extent that any sums recoveredfrom the former lawyer included compensation for losses covered by the award ofdamages against the Council, Mr Daisley is not entitled to recover twice. At that time,I had no information about the terms of the settlement between Mr Daisley and thelawyer. I am no better informed now.[65] The Council and the former lawyer were concurrent tortfeasors; that is, theywere allegedly responsible for different torts or breaches of duty producing, in general,the same losses. As I read the pleaded cases against the defendants respectively, thelawyer was sued because of alleged negligence in the advice given to Mr Daisley abouthis ability to sue the Council and the consequential delay in issuing the proceedingand because of alleged breaches of fiduciary duty. The damages sought against thelawyer were, in general but not exclusively, the damages Mr Daisley sought to recoverfrom the Council.2727 Allison v KPMG Peat Marwick [2000] 1 NZLR 560 at [160] per Thomas J, [175] per Keith J, and[180] per Tipping J.[66] The general principle in New Zealand law is that the release of one concurrenttortfeasor (the former lawyer) does not release another (the Council). But a plaintiffwho brings proceedings against concurrent tortfeasors may not recover any more thanthe full amount of the loss identified as flowing from the proved torts.28[67] It is necessary, however, in applying these principles to identify that the lossesclaimed against concurrent tortfeasors where one has settled and been released areidentical and not different losses flowing from different torts. That means that, wherea claim against a concurrent tortfeasor has been compromised, the question whetherthe plaintiff's claim against another concurrent tortfeasor has been satisfied requiresan examination of the statement of claim, the true construction of the settlementagreement with the concurrent tortfeasor who has been released and consideration ofthe surrounding circumstances.29[68] Counsel for Mr Daisley say that the causes of action against the former lawyerwere separate and distinct from those against the Council, relating to negligence,breach of fiduciary duty and breach of retainer. They say that the separate and distinctclaims were capable of an award of damages in a separate assessment of loss arisingfrom the lawyer's alleged breaches. In particular, they refer to the significant amountof legal costs and associated claims arising as a result of Mr Daisley's loss of thequarry and business and the lawyer's failure to handle the matter appropriately. Theynote that it was not a part of Mr Daisley's claim before the Court, either in evidenceor in closing on quantum, because those matters had been resolved with the formerlawyer.[69] Moreover, counsel say that the former lawyer has not agreed to release detailsof the without prejudice settlement reached, which is said to be privileged and notcapable of disclosure without the necessary consent of all relevant parties. Althoughan approach has apparently been made to the lawyer's solicitors in an endeavour toprovide the Court with the details, no information is before me at present.28 Jameson v Central Electricity Generating Board [1999] 2 WLR 141 at 150 per Lord Hope.29 DB Breweries Ltd v Mainzeal Property and Construction Ltd HC Auckland CP418/96, 26 June2000 at [88](g).[70] In those circumstances, I am unable to give any direction about the extent towhich the payment of the sums I have held to be payable to Mr Daisley should bereduced on account of the settlement with the former lawyer or their insurers.Toogood J