GIBBS V THE NEW PLYMOUTH DISTRICT COUNCIL HC NWP CIV 2004-443-115

GIBBS V THE NEW PLYMOUTH DISTRICT COUNCIL HC NWP CIV 2004-443-115 5 October 2006IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY CIV 2004-443-115IN THE MATTER OF the Judicature Amendment Act 1972, rule 264 of the High Court Rules and the Reserves Act 1977 BETWEEN VICTOR LEWIS GIBBS Plaintiff AND THE NEW PLYMOUTH DISTRICT COUNCIL Defendant Hearing: (on the papers) Appearances: R C Laurenson for Mr Gibbs D J S Laing and J Mooar for New Plymouth District Council S J Harrop for Tongaporutu Bach Leaseholders' Association Judgment: 5 October 2006JUDGMENT (NO. 2) OF HEATH JSolicitors:James T Boyd, New Plymouth Simpson Grierson, Wellington Billings, New Plymouth Counsel: R C Laurenson, WellingtonIntroduction[1] In a judgment delivered on 15 March 2006, I dismissed Mr Gibbs' application for judicial review of the New Plymouth District Council's decision (made on 15 February 2005) to issue new leases in favour of 26 bach holders on land which was subject to the Reserves Act 1977. [2] The background to the application is set out in my judgment:[1] Tongaporutu is a small settlement in Taranaki, situated between Mt Messenger and Mokau. State Highway 3, the main road between New Plymouth and Te Kuiti, crosses the Tongaporutu River. Looking westward, from the bridge over the river, a row of 26 baches is visible along the riverbank. The baches stand on land that has been classified as a recreation reserve. The land is administered by the New Plymouth District Council (the Council). [2] Baches developed along the Tongaporutu River from about 1930. The number of baches grew over the years. In 1975, formal leases were granted in favour of the 26 bach owners for a period of 30 years. The leases were non-renewable. They were to terminate, with anticipated removal of the baches, in 2005. [3] On 15 February 2005 the Council decided to issue new leases in favour of the 26 bach owners. In doing so, the Council purported to act under s73(3) of the Reserves Act 1977 (the Act). Mr Gibbs, whose family have lived on land contiguous to the reserve land for many years, seeks judicial review of the decision to grant new leases. [4] Mr Gibbs claims that the Council's decision is vitiated because: a) It was predetermined. b) The Council acted for an unlawful purpose, namely a purpose contrary to the objects and purposes of the Act. c) In making its decision, the Council acted unreasonably (in the sense described in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 (CA)), took into account irrelevant considerations and failed to take into account relevant considerations. [5] The Council contends that its decision was made in accordance with the scheme and purpose of s73(3) of the Act. It disputes the allegations of bias and unlawful purpose.[3] The application for judicial review was heard over six sitting days in September and November 2005. Prior to the hearing, the parties agreed that costs should be fixed on a 2B basis, regardless of which party was successful. [4] The Tongaporutu Bach Leaseholders' Association (the Association) participated as an interested party, this Court having ordered that the bach holders ought to be served with the proceeding. [5] The Council seek increased costs against Mr Gibbs. The Association seek indemnity costs against Mr Gibbs. Mr Gibbs contends that he should not be ordered to pay any costs to either party in respect of his failed proceedings.Costs: General principles[6] Although the jurisdiction to award costs is discretionary in nature, it is not unprincipled: Shirley v Wairarapa District Health Board [2006] NZSC 63 at para [16]. The discretion must be exercised, generally, in accordance with rr 47-48G of the High Court Rules: see Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606 (CA) at para [19], affirmed in Shirley v Wairarapa District Health Board at para [17]. [7] Delivering the judgment of the Supreme Court in Shirley, Anderson J, at para [19], said:[19] Rule 47(a) reflects the longstanding principle that, unless there are exceptional reasons, costs should follow the result. That is, the loser, and only the loser, pays. [The first instance Judge's] order departs from that approach. The English Court of Appeal discussed the issue of good cause to depart from the ordinary course in Forster v Farquhar [[1893] 1 QB 564 at 569, cited by Edwards J in Cates v Glass at 68] where Bowen LJ said: We can get no nearer to a perfect test than the inquiry whether it would be more fair as between the parties that some exception should be made in the special instance to the rule that the costs should follow upon success.[8] In Commerce Commission v Southern Cross Medical Care Society [2004] 1 NZLR 491 (CA), Fisher J, delivering the judgment of the Court, said:[18] We agree with that the new High Court Rules take a more prescriptive approach to costs than previously: L v W [2003] NZFLR 961 at para [27]; Glaister v Amalgamated Dairies Ltd (2003) 16 PRNZ 536 at pp 541 – 543, particularly para [21]] at p 543; Mansfield Drycleaners Ltd v Quinny's Drycleaning (Dentice Drycleaning Upper Hutt) Ltd (Court of Appeal, CA 296/01, 23 September 2002) at para [27]; and Body Corporate 97010 v Auckland City Council (Court of Appeal, CA 234/00, 30 August 2001). 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 that the Court should hesitate to depart from that approach where clear reason for it is shown. The public interest role of the Commission is capable of satisfying that requirement.[9] In determining whether costs should be awarded against Mr Gibbs the question is: what makes it more fair, as between Mr Gibbs and the Council/Association (respectively), that he, having been unsuccessful in his claims, ought not to be required to pay costs to them?The relevant rules[10] On the claim for indemnity costs by the Association, the question is whether there are grounds, under r 48C(4) to justify such an order. Rule 48C(4) provides:48C Increased costs and indemnity costs(4) The Court may order a party to pay indemnity costs if— (a) The party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or (b) The party has ignored or disobeyed an order or direction of the Court or breached an undertaking given to the Court or another party to the proceeding; or (c) Costs are payable from a fund, the party claiming costs is a necessary party to the proceeding affecting the fund, and the party claiming costs has acted reasonably in the proceeding; or (d) The person in whose favour the order of costs is made was not a party to the proceeding and has acted reasonably in relation to the proceeding; or (e) The party claiming costs is entitled to indemnity costs under a contract or deed; or(f) Some other reason exists which justifies the Court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.[11] On the Council's application for increased costs, the question is whether one or more of the grounds set out in r 48C(3) have been made out. Rule 48C(3) provides:(3) The Court may order a party to pay increased costs if— (a) The nature of the proceeding or the step in the proceeding is such that the time required by the party claiming costs would substantially exceed the time allocated under band C; or (b) The party opposing costs has contributed unnecessarily to the time or expense of the proceeding or step in the proceeding by— (i) Failing to comply with these rules or a direction of the Court; or (ii) Taking or pursuing an unnecessary step or an argument that lacks merit; or (iii) Failing, without reasonable justification, to admit facts, evidence, documents, or accept a legal argument; or (iv) Failing, without reasonable justification, to comply with [an order for discovery, a notice] for further particulars, notice for interrogatories, or other similar requirement under these rules; or (v) Failing, without reasonable justification, to accept an offer of settlement whether in the form of an offer under rule 48G [ ] or some other offer to settle or dispose of the proceeding; or (c) The proceeding is of general importance to persons other than just the parties and it was reasonably necessary for the party claiming costs to bring the proceeding or participate in the proceeding in the interests of those affected; or (d) Some other reason exists which justifies the Court making an order for increased costs despite the principle that the determination of costs should be predictable and expeditious.[12] In determining whether to refuse an order for costs against Mr Gibbs or to reduce the costs otherwise payable by him, I must consider whether "some reason exists which justifies the Court refusing costs or reducing costs despite the principle that the determination of costs should be predictable and expeditious": r 48D(f).Commerce Commission v Southern Cross Medical Care Society is an example of acase in which public interest concerns negated the need for a costs order in favour of the successful party.Should Mr Gibbs pay costs?[13] Mr Gibbs submits that the following factors justify an exception being made to the general rule that costs follow the event: a) The proceeding was brought as a "genuine and legitimate public law challenge". b) The proceeding was not brought out of any motive of personal gain. c) The proceeding was meritorious, though ultimately unsuccessful. d) The personal circumstances of Mr Gibbs have been disadvantaged as a result of the decision to dismiss the application for judicial review. [14] In support of the submission that the public law aspect of the case brings the proceeding within r 48D(f), Mr Laurenson (on behalf of Mr Gibbs) referred me toNew Zealand Maori Council v Attorney-General [1994] 1 NZLR 513 (PC) at 525- 526, R v Lord Chancellor, ex parte Child Poverty Action Group [1998] 2 All ER 755, R (Smeaton) v Secretary of State for Health [2002] EWHC 886 and Helmbright v Environment Court (No. 2) [2005] NZRMA 49 (HC). [15] As a statement of principle, Mr Laurenson refers to the New Zealand Maori Council case, at 525-526, in which Lord Woolf, delivering the advice of the Privy Council, said:There remains the question of costs. Although the appeal is to be dismissed, the appellants were not bringing the proceedings out of any motive of personal gain. They were pursuing the proceedings in the interest of taonga which is an important part of the heritage of New Zealand. Because of the different views expressed by the members of the Court of Appeal on the issues raised on this appeal, an undesirable lack of clarity inevitably existed in an important area of the law which it was important that Their Lordships examine and in the circumstances Their Lordships regard it as just that there should be no order as to the costs on this appeal.[16] With respect, the authorities on which Mr Laurenson relied are not truly comparable to the present case. Mr Gibbs was the immediate neighbour of the reserve land on which the baches are situated. The central issue was narrow: whether s 73(3) of the Reserves Act 1977 precluded the Council from making a decision of the type challenged. Yet, Mr Gibbs did not restrict his challenge to that legal point. Had he done so, no more than one day would have been needed for the argument. [17] Instead, Mr Gibbs alleged apparent bias against those involved in the decision making process. He also alleged that the decision was irrational. The extent of those allegations increased significantly the amount of documentary evidence required for consideration. Had the issue been purely one of principle it could have been addressed adequately by reference to s 73(3). There was little prospect that claims of bias or irrationality would succeed. [18] In those circumstances, I cannot accept that the case run by Mr Gibbs falls within the category of public interest justifying no order for costs. Nor, indeed, am I prepared to reduce costs on that basis. [19] All things being equal, I would order Mr Gibbs to pay costs on a 2B basis, together with reasonable disbursements.The Association's costs[20] The Association took a limited part in the hearing and has incurred costs to total of $7,745.34, inclusive of GST and disbursements. Anticipated further costs will bring the total to $8,864.71. [21] Much of the preparation for the hearing was undertaken by the Council. The Association supported the Council's stance. To a large extent the leaseholders were protected by the Council's stance and only needed to be heard if issues of relief arose.[22] I consider it was reasonable for the Association to incur costs, but am not persuaded that it is appropriate to order costs over the 2B limit. [23] Further, while the Association would, ordinarily, be entitled to costs on a 2B basis, there is room for the exercise of general discretion (r 46) to allocate a specific sum given the relatively modest costs incurred and the limited involvement of the Association at trial. [24] I award costs in favour of the Association in the sum of $2750 plus reasonable disbursements. Disbursements are to be fixed by the Registrar.Should the Council receive increased costs?[25] A modest increase in costs is sought by the Council to reflect the additional work undertaken to familiarise counsel with a large amount of documentary evidence to which Mr Gibbs wished to refer. In addition, the Council assisted in collating much of that material for trial. [26] There is some merit in the Council's submission, but I decline to increase costs above the scale agreed initially. I am not satisfied that the modest additional costs justify exercise of the residual discretion conferred by r 48C(3)(d).Result[27] For the reasons given: a) Mr Gibbs shall pay costs, on a 2B basis, to the Council together with reasonable disbursements. I certify for second counsel. All costs and disbursements shall be fixed by the Registrar. b) Mr Gibbs shall pay to the Association costs in the sum of $2750 plus reasonable disbursements, the latter to be fixed by the Registrar.[28] I thank counsel for their assistance. __________________________ P R Heath J Delivered at 10.00am on 5 October 2006