ROYAL FOREST AND BIRD PROTECTION SOCIETY OF NEW ZEALAND INCORPORATED v NORTHLAND REGIONAL COUNCIL [2019] NZHC 449

ROYAL FOREST AND BIRD PROTECTION SOCIETY OF NEW ZEALAND INCORPORATED vNORTHLAND REGIONAL COUNCIL [2019] NZHC 449 [15 March 2019]IN THE HIGH COURT OF NEW ZEALANDWHANGAREI REGISTRYI TE KŌTI MATUA O AOTEAROAWHANGĀREI-TERENGA-PARĀOA ROHECIV-2018-488-109[2019] NZHC 449UNDER Judicial Review Procedure Act 2016IN THE MATTER of an application to review decisions not tonotify and to grant a resource consent fordrainage and disturbance of a regionallysignificant wetlandBETWEEN ROYAL FOREST AND BIRDPROTECTION SOCIETY OF NEWZEALAND INCORPORATEDApplicantAND NORTHLAND REGIONAL COUNCILFirst RespondentAND RESIN AND WAX LIMITEDSecond RespondentOn the papersCounsel: S Gepp and P Anderson for ApplicantP Maw and S Campbell for First RespondentD Neutze and A Green for Second RespondentJudgment: 15 March 2019COSTS JUDGMENT OF TOOGOOD JThis judgment was delivered by me on 15 March 2019 at 11.00 amPursuant to Rule 11.5 High Court RulesRegistrar/Deputy RegistrarIntroduction[1] Resin and Wax Ltd (Resin & Wax) applied to the Northland Regional Council(the Council) for resource consents to mine kauri resin in the Kaimaumau-Motutangiwetland. According to a wide-ranging wetland ranking analysis undertaken by theCouncil in 2011, this is the second-most environmentally important wetland inNorthland. The Council decided not to notify the application publicly and granted theconsents in March 2018.[2] On 4 October 2018, the Royal Forest and Bird Protection Society of NewZealand Inc (Forest & Bird or the Society) applied for judicial review, challenging thelegality of two decisions made by the Council; namely:(a) the decision not to notify Resin & Wax's application for the resourceconsents; and(b) the subsequent decision to grant the consents.[3] On 12 November 2018, the Minister of Conservation filed a similar applicationfor review of the Council's decisions.[4] On 21 November 2018, the Council filed a notice of appearance reservingrights in the proceeding,1 stating that it intended to abide by the decision of the Court.It conceded that it had applied the incorrect statutory test in respect of the notificationdecision.2 No statement of defence was filed by either respondent.[5] On 3 December 2018, counsel for Resin & Wax informed Forest & Bird that ithad surrendered the resource consents.[6] On 10 December 2018, for reasons that I will come to, Forest & Birddiscontinued the judicial review proceeding. It now seeks a costs contribution of1 High Court Rules 2016, r 5.51.2 The error conceded was not pleaded by Forest & Bird as a ground for its judicial reviewapplication.$9,000 from the Council and a GST-inclusive sum of $10,049.98 for disbursements.The Council says the parties should meet their own costs.Legal principles[7] Costs are at the discretion of the Court.3 Generally, costs go to the successfulparty.4 However, a plaintiff who discontinues a proceeding against a defendant mustpay costs to the defendant unless the Court orders otherwise.5 That presumption maybe displaced if there are circumstances which make it just and equitable to do so.6 Thefollowing points emerge from the combined effect of the relevant authorities:7(a) The reasonableness of the parties' stances will be taken into account;whether it was reasonable for the plaintiff to bring and continue theproceeding and whether it was reasonable for the defendant to opposeit. It is not sufficient for the plaintiff to show merely that it hadreasonable grounds to believe it would be the successful party.(b) Conduct prior to the commencement of the proceedings may berelevant.(c) The Court will not consider the merits of the respective cases unlessthey are so obvious that they should influence the costs outcome.(d) The reason for discontinuing the proceeding may be relevant. Forexample, there may have been a change of circumstance renderingcontinuation of the proceeding unnecessary.3 High Court Rules, r 14.1.4 Rule 14.2(1)(a).5 Rule 15.23.6 Kroma Colour Prints Ltd v Tridonicatco NZ Ltd [2008] NZCA 150, (2008) 18 PRNZ 973 at [12].7 See Kroma Colour Prints Ltd v Tridonicatco NZ Ltd at [12]; see also FM Custodians Ltd v Pati[2012] NZHC 1902 at [10]-[12] and Opus International Consultants Ltd v Colac Bay Vision Ltd[2015] NZHC 1782, [2015] NZCCLR 19 at [7]-[8].Relevant background[8] Forest & Bird became aware of the Council's consent decisions in April 2018.It wrote to the Council and requested information about Resin & Wax's resourceconsent application.[9] On 14 May 2018, having read this information, Forest & Bird wrote to theCouncil and Resin & Wax requesting Resin & Wax to surrender the resource consentsand asking the Council to admit alleged errors in its decision. The Society said that,if the company and the Council did not comply with its requests, it would commencejudicial review proceedings.[10] Resin & Wax declined to surrender its consents, but it did offer to discuss withForest & Bird protective ecological measures it could take in pursuing its project.[11] Forest & Bird was not satisfied. On 25 May 2018, it wrote to the Council andResin & Wax to say that it intended to proceed with the application for judicial review.The Council responded on the same day, disputing that its decisions about the resourceconsents were unlawful.[12] At this point, the Department of Conservation (DOC) entered the fray. DOCfacilitated discussions between technical experts representing each party in anunsuccessful attempt to reach a compromise. On 25 September 2018, Forest & Birdadvised the Council and Resin & Wax that it intended to apply for judicial review. Theapplication was filed on 4 October 2018 and it was served on the respondents, alongwith two expert affidavits, on 18 October 2018. The date for filing statements ofdefence was calculated as 23 November 2018.[13] On 4 December 2018, after the Council had formally notified the Court andResin & Wax that it admitted its error and would abide the Court's decision, and Resin& Wax relinquished the consents, Forest & Bird wrote to the respondents:(a) advising them that it was considering whether to proceed to summaryjudgment in respect of the pleaded causes of action or simplydiscontinue the proceeding; and(b) seeking confirmation that the respondents would pay its costs anddisbursements if it were to discontinue the proceeding.[14] This proposal did not appeal to the Council. On 5 December 2018, it respondedto Forest & Bird, saying that if the Society sought to keep the proceeding alive, theCouncil would apply for strike-out or make submissions on the propriety of relief. Insuch circumstances, it would seek indemnity costs. The Council also offered tocontribute $1,500 to Forest & Bird's costs if it were to discontinue the proceeding.[15] Forest & Bird responded on 7 December 2018. It maintained that pursuing theproceeding would provide a useful declaration of the legal situation but said that, facedwith the threat of indemnity costs, it had elected to discontinue. The $1,500 offer wasrejected.[16] On 12 December 2018, the Council increased the offer to $4,000. This offerwas also rejected, in a letter dated 17 December 2018.The parties' positions as to costsForest & Bird[17] The costs of $9,000 sought by Forest & Bird reflect the 90 hours its in-housecounsel spent preparing the judicial review application, charged at a nominal rate of$100 an hour.[18] Forest & Bird says it was reasonable for it to bring the proceeding as it was theonly option for the Society to overturn the resource consents. Had the proceeding notbeen brought, the Council would not have admitted to applying the incorrect statutorytest and Resin & Wax would not have surrendered the resource consents. Thesedevelopments, as well as the Council's decision to abide by the Court's decision,further confirm that it was reasonable to discontinue the proceeding. Forest & Birdconcludes that, by issuing the proceeding, it achieved its primary objective of quashingthe consents.[19] In these circumstances, Forest & Bird says it is entitled to costs. Further, itsubmits the award should not be reduced because the Council elected to abide by thedecision of the Court. The Council's capitulation would have been relevant toreducing the award of costs only if the proceeding had progressed to a hearing; it didnot affect any of the costs already expended.The Council[20] The Council's position is that costs should lie where they fall. That is becauseForest & Bird chose to discontinue the proceeding. Moreover, the Society cannot saythat it succeeded: the Council elected to abide by the Court's decision because of anerror that was not relied upon in the Society's pleading. In any case, the Council says,the proceeding had become moot after Resin & Wax surrendered the resourceconsents; the company's decision was out of the Council's hands. Further, even ifForest & Bird had proceeded with its application, it would not have succeeded becausethe challenges to the Council's decision-making were merit-based.[21] In the alternative, the Council seeks a reduction in the costs to be awarded toForest & Bird, on the grounds that:(a) the time claimed by Forest & Bird is excessive;(b) the Council abided by the decision of the Court, which routinely resultsin reduced costs; and(c) Forest & Bird contributed unnecessarily to time and costs.The parties' positions as to disbursements[22] The Council also takes exception to the disbursements claimed by Forest &Bird. In particular, it says that part of Forest & Bird's expert evidence (an affidavitdeposed by Fleur Maseyk) was not reasonably necessary for the conduct of theproceeding. The Council says:(a) The affidavit focussed heavily on the merits of the Council's decisionrather than the process by which it was breached and was overlydetailed.(b) The expert evidence was not before the Council when it was making itsdecision and so is not relevant.(c) All the factual matters covered in the affidavit could have been dealtwith in legal submissions.[23] Forest & Bird defends the relevance of Ms Maseyk's affidavit and says it wasreasonably necessary for the conduct of the proceeding. Specifically, it says theaffidavit:(a) demonstrated that part of the site was a coastal environment such thatDOC's New Zealand Coastal Policy Statement applied;(b) showed that the Council's decision was not premised on an adequatefactual basis;(c) explained why the conditions of the consents were insufficient to ensurethe site was remediated and threatened species were not affected; and(d) distinguished between "outcome and process conditions" and"management plan requirements", which was relevant to the pleadederror of law concerning unenforceable conditions.Is Forest & Bird entitled to costs?[24] I have concluded that Forest & Bird has displaced the r 15.23 presumptionagainst an award of costs. Several factors justify that view:(a) It was reasonable for Forest & Bird to issue the proceeding. Thematters raised were of legitimate public importance. Further, theSociety notified the respondents of its intention to make an applicationfor judicial review several times before it did so.(b) There may be something to the Council's point that Forest & Bird'sapplication was flawed to the extent that the challenges to the Council'sdecision-making addressed the merits of the decision rather than theprocess. But I am not in a position to make an evaluation of how muchof the Society's case fell outside the legitimate grounds of challengingthe Council's decision to the extent that it was based on irrelevantconsiderations; or failed to take account of relevant factors; or wasunreasonable in a Wednesbury sense.8(c) The proceeding was discontinued because it became moot as a result ofdecisions made by the respondents after the proceeding was served onthem. The decisions were principled and entirely proper, but theymeant that the Society had achieved the outcome it sought.(d) I cannot say that the outcome of the proceeding would have beenobvious, such that it should bear on the matter of costs in either party'sfavour.[25] A similar situation arose in Godfrey v Westland District Council.9 In that case,the Pierces applied to the Westland District Council for resource consent to carry outa "home kill" operation on their property. The Council granted the application on anon-notified basis. The Pierces' neighbours, the Godfreys, then became aware of this.They wrote letters to the Council and the Pierces setting out their opposition to thegranting of resource consent and raising the spectre of a judicial review application.These letters fell on deaf ears. The Godfreys then initiated judicial reviewproceedings. By the time the matter came to Court, the Pierces had agreed to surrendertheir consent.8 Associated Provincial Picture Houses v Wednesbury [1948] 1 KB 223.9 Godfrey v Westland District Council HC Greymouth CIV-2009-418-180, 20 April 2010.[26] Chisholm J held that the Godfreys had displaced the r 15.23 presumption forthree reasons:[18] First, the plaintiffs have succeeded in achieving the underlyingpurpose of the proceeding. They sought to have the consent set aside and thesurrender effectively achieves that outcome Given that they are effectivelythe successful party, the plaintiffs should receive the benefit of the generalprinciple in r 14.2(a) that the party who fails should pay costs to the party whosucceeds.[19] Secondly, while it is well established that the Court should notspeculate about the merits in this type of situation, this is a case where themerits are self-evident. In all the circumstances the decision to proceed on anon-notified basis was indefensible and presumably this reflects thedefendants' capitulation.[20] Thirdly, it is apparent from the correspondence before the Court thatthe plaintiffs gave the defendants every opportunity to find a solution beforethe proceeding was issued. Given the attitude of both defendants they wereleft with no option other than to issue the proceeding.[27] Forest & Bird also refers me to Gordon v Waitaki District Council.10 That caseinvolved similar circumstances. The Waitaki District Council granted a non-notifiedvariation to a resource consent held by the Smaills. It involved the use of a helicopteron the Smaills' property. The Gordons took exception. They applied for judicialreview. The proceeding was discontinued prior to the first case managementconference after the Smaills surrendered the part of the resource consent subject tochallenge.[28] The dispute as to costs in that case centred on quantum, as opposed to liability.In fact, the Council acknowledged that the Gordons were entitled to costs. Mander Jnevertheless made the following comments:[10] In stark terms, the proceedings were discontinued because the Smaillswere prepared to surrender the variation they had obtained in respect of theoriginal resource consent. The Gordons achieved the result they were seekingin commencing the litigation. Neither the Smaills nor the Council, however,concede that the surrendering of the resource consent is necessarily to beinterpreted as an acknowledgment of the merits of the Gordons' challenge.[16] It is not contested that the presumption has been displaced. Thequestion is not whether there should be an order of costs in favour of the10 Gordon v Waitaki District Council [2015] NZHC 1472.Gordons, but rather the quantum of such award and the inclusion ofdisbursements claimed.[17] Plainly, the surrender of the resource consent obtained in response tothe proceeding has vindicated the Gordons' application to review theCouncil's decision.[29] Similar considerations move me in this case:(a) Resin & Wax surrendered the resource consents in response to theCouncil's acknowledgement that it had made an error and its electionto abide by the Court's decision.(b) Forest & Bird's position was effectively vindicated; the consents weresurrendered. While the Council's decision was not based on thegrounds pleaded by the Society, the Council reconsidered its earlierrejection of the Society's informal challenges and acknowledged itserror only after the judicial review proceeding was issued.(c) The error identified by the Council was the application of the incorrectstatutory test for notification. That is a fundamental error that is likelyto have been identified in the course of the proceeding or during thehearing, making the Council's resistance of Forest & Bird's challengeultimately untenable.(d) The Council's concession does not lead to the inevitable conclusion thatthe Society would have failed on its pleaded grounds. It was reasonablefor Forest & Bird to issue the proceeding and the substantive aspects ofits claim should by no means be seen as doomed from the outset as theCouncil suggests.[30] In these circumstances, I consider it just and equitable to displace the r 15.23presumption and award costs to Forest & Bird.Should the award of costs be reduced?[31] Forest & Bird is represented by in-house counsel. The Supreme Court held inMcGuire v Secretary for Justice that parties represented by in-house counsel areentitled to costs.11 However, in such situations, the Court should bear in mind thatscale costs should not exceed actual costs.12 Often, an organisation's use of in-housecounsel will result in increased cost-efficiency to the extent that scale costs do exceedactual costs.[32] This is such a situation. Forest & Bird calculates it would be entitled to scalecosts of $13,157 (being 5.9 days on a 2B basis). The Council says it would be $10,927(being 4.9 days on a 2B basis). The discrepancy does not matter, because Forest &Bird calculates its actual costs are below both scale figures.[33] The Council accepts the nominal rate of $100 per hour. However, it takes issuewith a recovery based on the claimed 90 hours. It says this is excessive and objectivelyunreasonable. Instead, the Council says Forest & Bird's costs award should becalculated using the amount of hours that otherwise would have applied to an awardof scale costs. In this case, that is 39 hours, being 4.9 days at eight hours per day.Applying the nominal rate of $100 per hour, that would result in a costs award of$3,920.[34] The Council does not substantiate this approach by reference to caselaw.Forest & Bird informs me that it is not aware of any guidance as to how in-housecounsel should calculate costs in circumstances where actual costs do not exceed scalecosts. It does not appear that the Supreme Court addressed the matter in McGuire.[35] However, the effect of McGuire was essentially to reverse the Court ofAppeal's decision in Joint Action Funding Ltd v Eichelbaum.13 The Court of Appealheld in that case that the High Court Rules should be construed as if the r 14.2(1)(f)restriction applied to limit costs to those "actually incurred" and concluded that thismeant that an award of costs may not exceed the amount for which the successful party11 McGuire v Secretary for Justice [2018] NZSC 116 at [88].12 Rule 14.2(1)(f).13 Joint Action Funding Ltd v Eichelbaum [2017] NZCA 249, [2018] 2 NZLR 70.had actually been invoiced for legal services by a lawyer retained by the successfulparty.14 As the Supreme Court noted in McGuire, this would make the award of coststo parties represented by in-house lawyers "logically unstainable".15[36] Awards of costs to parties represented by in-house lawyers were permissibleprior to the Supreme Court's decision in Joint Action Funding.16 The prior cases shedlight on the quandary faced by the parties as to the mode of calculating in-housecounsel costs.[37] In Bright v Auckland Council, Venning J said:17[2] Counsel for the Council has filed a memorandum to confirm that costson a 2B basis amount to $12,822.50 but that the Council's lawyers charge-outrate applied to the estimated time spent preparing for the appeal of 40 hoursresults in sum of $7,080.00. That is the sum the Council seeks by way of costsaward.[4] The fact the Council was represented by in-house counsel does notprevent it from recovering its costs[5] While [Henderson Borough Council] was decided before the newcosts regime, cases decided under the Part 14 of the High Court Rules applythe same principle.[6] The sum of costs sought by the Council of $7,080.00 is approved. TheRegistrar may seal the costs order in that sum.(Citations omitted)[38] I am content to adopt the same approach, allocating costs on the basis of Forest& Bird's lawyers' charge-out rate. In its submissions, the Council doubts that Forest& Bird's counsel spent 90 hours to prepare its application. It says this figure shouldbe subject to scrutiny. While I accept that the Court must reach its own view that thecosts were "reasonably incurred",18 I refer to the following observations ofChristiansen AJ in Norrie v Sutich:1914 At [41] and [43].15 At [85].16 Henderson Borough Council v Auckland Regional Authority [1984] 1 NZLR 16 (CA) at 23.17 Bright v Auckland Council [2016] NZHC 2117.18 Edel Metals Group Ltd v Geier Ltd [2018] NZCA 494 at [62].19 Norrie v Sutich [2015] NZHC 2913.[12] A difficulty arises, however, when a party is not represented byindependent counsel but rather represents itself, or appoints in-house counselfor this task... While in many cases in-house counsel will not be suitablerepresentatives, in other cases, their services will be entirely adequate. Theseservices also come at a cost and so the Courts have repeatedly accepted thatan award of costs may be made to cover the expenses associated with in housecounsel. Nor are companies required to provide detailed evidence of salariesand time cards in order to qualify. Just as Courts are willing to accept theassurances of counsel that scale costs do not exceed the costs actually billed,they are willing to accept that the cost of in-house counsel exceeds scale costswithout evidence to support this conclusion.(Citations omitted)[39] I accept as apparently reasonable Forest & Bird's estimation of 90 hours workand a rate of $100 an hour. GST is not a relevant consideration.[40] I next address whether that figure should be reduced for any reason. TheCouncil says it should be liable for only 20 per cent of the costs award because it choseto abide by the Court's decision.[41] It cannot be said that a party abiding the decision of the Court can never beliable for any costs; ultimately, the task of the Court is to make an assessment of overalljustice as between the particular parties.20 Where a defendant abides the Court'sdecision and does not adopt an unreasonable position, they will not necessarily berequired to bear the full costs of court proceedings.21 On the other hand, an error orother conduct by a defendant, requiring a plaintiff to issue proceedings to vindicatethe plaintiff's rights will suffice to expose an abiding defendant to some liability forcosts.22 The extent of contribution required will depend on the extent of the originalerror and the reasonableness of the defendant's conduct thereafter.[42] The issue with the Council's submission in this regard is that the bulk of Forest& Bird's costs were expended in preparing the application for judicial review. Thisapplication was filed before the Council chose to abide. The suggestion that theCouncil's decision should result in an overall reduction in costs is thereforeunsustainable. As for the costs incurred after the Council's decision to abide, I gather20 Kawarau Jet Services Holdings Ltd v Queenstown Lakes District Council HC Invercargill CIV-2008-425-518, 19 May 2009 at [18].21 Wang v District Court [2015] NZHC 1611, [2015] NZAR 1678 at [26].22 Hong v Deliu [2016] NZCA 75, [2016] NZAR 667 at [26].that these were minor. Wax & Resin surrendered its consents soon after this point, andafter that all that occurred was some brief correspondence in which Forest & Birdfloated and then withdrew the suggestion of pursuing a summary judgment applicationand the parties quibbled over costs.[43] These interactions between the parties (and their associated costs – though few)were directly brought about by the Council's decision to abide, which itself waspremised on an error it had committed.[44] The costs incurred by Forest & Bird after the Society was notified that Resin& Wax had surrendered its consents shall be reduced by 50 per cent.What about the disbursements?[45] A claimed disbursement must be specific to and reasonably necessary for theproceeding and reasonable in amount.23 Further, a disbursement may be disallowedor reduced if it is disproportionate in the circumstances.24 Expert witness fees are adisbursement.25 Such fees may be recoverable even if the Court finds it unnecessaryto deal with the issue on which the evidence was called.26 What matters is whetherthey were necessarily incurred and reasonable.[46] The Council takes issue with Ms Maseyk's affidavit because it says it dealsprincipally with the merits of its decision to grant the resource consents. It points torecent obiter dictum calling into question the utility of expert evidence in judicialreview proceedings.27[47] I have read Ms Maseyk's affidavit and I accept that much of it covers variousfactual matters that did not necessarily require expert insight. However, the affidavitis principally directed to the proposition that the Council made its resource consentdecisions based on inadequate information. In order to substantiate this view, Ms23 Rule 14.12(2).24 Rule 14.12(3).25 Progressive Enterprises Ltd v North Shore City Council (2005) 17 PRNZ 919 (HC) at [22]-[26].26 Beach Road Preservation Society Inc v Whangarei District Council (2001) 16 PRNZ 13 (HC) at[18].27 Speargrass Holdings Ltd v Queenstown Lakes District Council [2018] NZHC 2760 at [36]; seealso Walsh v Pharmaceutical Management Agency [2010] NZAR 101 (HC) at [29].Maseyk sets out the information which was available to the Council and which itshould have taken into account. It goes without saying that failure to take into accounta relevant consideration is an established ground of judicial review. As pointed out byMs Maseyk, the Resource Management Act 1991 requires all persons exercisingfunctions under that Act to recognise and provide for the protection of areas ofsignificant indigenous vegetation and habitats of indigenous fauna.28 Given therelative complexity of the ecological considerations that were at play, expert opinionon the matter would have aided the Court in assessing whether the Council had takenthese matters into account sufficiently, had the application progressed to a hearing.[48] I find that the costs associated with Ms Maseyk's affidavit were necessarilyincurred and reasonable.Decision[49] The Council shall pay a contribution to Forest & Bird's costs for a total of 90hours worked. Up to the date the Society was notified that Resin & Wax hadsurrendered its consents, the costs are to be calculated at a rate of $100 per hour. Anycosts incurred after that date, for the balance making up a total of 90 hours, are to becalculated at $50 an hour.[50] I approve recovery of all disbursements sought by Forest & Bird..Toogood J28 Section 6(c).