THE INSURANCE COUNCIL OF NZ INCORPORATED v CHRISTCHURCH CITY COUNCIL AND ORS [2013] NZHC 1638

THE INSURANCE COUNCIL OF NZ INCORPORATED v CHRISTCHURCH CITY COUNCIL AND ORS [2013] NZHC 1638 [2 July 2013]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYCIV 2012-409-2444[2013] NZHC 1638BETWEEN THE INSURANCE COUNCIL OF NZINCORPORATEDApplicantAND CHRISTCHURCH CITY COUNCILRespondentUNIVERSITY OF CANTERBURYSecond RespondentBODY CORPORATE 423446 (OXFORDBODY CORPORATE)Third RespondentHearing: 27 June 2013 (By way of telephone conference)Counsel: D J Goddard QC for ApplicantDJS Laing for RespondentT C Weston QC for Second RespondentC A McVeigh QC for Third RespondentJudgment: 2 July 2013JUDGMENT OF PANCKHURST J(RE DECLARATORY RELIEF)Introduction[1] The judgment dated 4 February 2013 reserved the terms of relief to allow for consultation and the submission of a draft order. In the event there are unresolved aspects which necessitate this further brief judgment. Counsel filed submissions by way of memoranda, for which I am grateful. Brief oral submissions were made at a hearing by way of telephone conference.Terms of relief[2] There is agreement concerning those parts of the text in the City Council'sEarthquake-Prone, Dangerous and Insanitary Buildings Policy 2010 which should be set aside. The deletions appear in an annexed schedule marked 'A' and areaccordingly approved.[3] The Insurance Council and the City Council also agree upon the terms of'declaration 1', as follows:The Court grants a declaration that in issuing a notice in respect of an earthquake prone building under s 124 of the Building Act 2004 the Christchurch City Council cannot require a building owner to take steps to increase the seismic strength of the building to a greater extent than is necessary to ensure that the building will not have its ultimate capacity exceeded in a moderate earthquake as defined in clause 7 of the Building (Specified Systems Change The Use, and Earthquake-prone Buildings) Regulations 2005.Canterbury University, however, prefers wording that 'explicitly corresponds' withthe judgment.[4] Mr Weston QC supported a formulation which used the shorthand '34% ofthe NBS' since this was the language used in the judgment (see [26] and [35]). I sympathise with this approach both for the reason advanced and because the shorthand % figure is more readily understood. By contrast, the declaration as drafted assumes, or requires, a knowledge of the definition in clause 7 of the regulations.[5] That said, the two principal parties to the proceeding agree upon the present formulation and I consider their agreement should carry the day.[6] Declaration 2 is sought by the City Council in these terms:The Christchurch City Council in issuing a notice in respect of an earthquake-prone building under s 124 of the Building Act 2004 can require a building owner to carry out work on a building to reduce or remove specific vulnerabilities capable of causing injury, death or property damage that arises in or from the building.However the Insurance Council is opposed to the declaration and any variant of it.[7] Mr Goddard QC submitted that a declaration concerning specific vulnerabilities was not directly in issue at the substantive hearing, was not thesubject of detailed evidence or argument, and that the phrase 'specific vulnerabilities' is imprecise and would create uncertainty. He also pointed out thatthe Insurance Council sought declarations to clarify what the City Council could not do, rather than what it may do.[8] Mr Laing, supported by Mr McVeigh QC, argued that declaration 2 was necessary because it reflected a conclusion reached in the judgment (final bullet point at [35]) and confirmed the power of a territorial authority to issue a targeted s 124 notice in relation to earthquake-prone buildings.[9] In my view declaration 2 is appropriate. It was the subject of evidence and submissions at the hearing. It also identifies a significant counterpoint to the limitation upon the power conferred under s 124, the subject of declaration 1, in relation to earthquake-prone buildings.Costs[10] At the hearing Mr Goddard sought costs on a 3B basis, including costs for two counsel and travel costs from Auckland and Wellington. I expressed the tentative view that 3B costs were appropriate, but granted leave to the City Council to file a memorandum.[11] A category 3B costs calculation produces a total figure of $35,868 (following one adjustment agreed to after an exchange of memoranda). I note that the costs schedule includes $1,176 for advertising the proceeding pursuant to a direction of the Court. Mr Laing submitted that attendances in relation to advertising should not be allowed, given that advertising was in the public interest, both locally and nationally. While that is true, the attendances were necessary and comprise a legitimate part of the costs calculation producing the total set out above. The public interest is a separate issue, to which I now turn.[12] Mr Laing submitted that this proceeding was of significant public interest so r 14.7(e) applied and I should reduce the costs otherwise payable under the Rules because:The proceeding concerned a matter of public interest, and the party opposing costs acted reasonably in the conduct of the proceeding.Counsel referred to the uncertainty concerning the power of territorial authorities in relation to the issue of s 124 notices, a problem recognised by the Canterbury Earthquakes Royal Commission in its final report.[13] Mr Goddard, however, contended that reliance on r 14.7(e) was misconceived. He argued that the cases show the rule has been applied where an applicant for review failed, but the decision-maker was not awarded costs because the challenge was brought in the public interest, not for the applicant's personal benefit. Counsel added 'there is no case ... where a successful applicant for review has been denied costs on public interest grounds'. Here the Insurance Council successfully challenged the legality of a public bodies actions and the public interest pointed to an award of costs.[14] In my view the absence of previous cases similar to this one is not decisive. Rule 14.7(e) posits two criteria, public interest and that the party opposing costs acted reasonably in the conduct of the proceeding. Commerce Commission v Southern Cross Medical Care1 concerned the application of r 14.7(e). The Commission participated in a High Court appeal against its determination under the Commerce Act 1986; the Commission opting to assist the Court when otherwise there would have been no-one in opposition to the appeal. The appeal succeeded, and the High Court awarded costs against the Commission. The Court of Appeal set aside the award. In doing so the Court noted the more prescriptive approach to costs under the present High Court Rules and continued:In the interests of predictability and expedition, Courts will be less inclined to depart from the prescribed approach. The prescribed approach includes the presumption that costs follow the event. However, we do not think that1 Commerce Commission v Southern Cross Medical Care [2004] 1 NZLR 491 (CA).the Court should hesitate to depart from that approach where clear reason for it is shown.2The public interest role assumed by the Commission in presenting argument in opposition to the appeal was held to provide clear reason.[15] In this case the City Council sought to defend its earthquake-prone buildings policy. To that end, it unsuccessfully contended that territorial authorities may require work on earthquake-prone buildings to increase their seismic strength to 66% of the NBS. Thereby an issue of public interest relevant to all territorial authorities was clarified. The issue was also one which had occupied the Royal Commission. I consider the proceeding did concern a matter of significant public interest.[16] This proceeding was filed on 5 November 2012. With the co-operation of counsel, the second and third respondents were added at an early stage, a tight timetable was prescribed, and evidence and submissions were filed to enable the hearing to proceed on 12 December 2012. Not only was the conduct of the City Council reasonable, that of all parties was exemplary, reflecting a recognition of the need to urgently clarify a matter of public interest; an issue of significance to insurers, property owners and territorial authorities. But the City Council, unlike the Commerce Commission, was a party defending its position and must contribute tothe Insurance Council's costs. I am satisfied, however, that in all the circumstances it is appropriate to reduce costs by 50% in recognition of the public interest component.Solicitors:D J Goddard QC, WellingtonDJS Laing, WellingtonT C Weston QC, AucklandC A McVeigh QC, Christchurch2 Para [18].