WALMSLEY ENTERPRISES LIMITED & ORS v AITCHISON [2017] NZHC 1504

WALMSLEY ENTERPRISES LIMITED & ORS v AITCHISON [2017] NZHC 1504 [30 June 2017]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2016-485-485[2017] NZHC 1504BETWEEN WALMSLEY ENTERPRISES LIMITED& ORSAppellantAND PETER AND SYLVIA AITCHISONRespondentsHearing: 9 November 2016Appearances: T H Bennion for AppellantA F D Cameron and M J Slyfield for RespondentsJudgment: 30 June 2017JUDGMENT OF CLARK J(COSTS)Introduction[1] On 22 January 2016 the Environment Court ordered the removal of a play structure which Walmsley Enterprises Ltd had erected on or close to the commonboundary between the Walmsleys' property1 at 1 Carlton Gore Road, Wellington andthe Aitchisons' property at 2/11 Maida Vale Road.2 Costs were reserved in favour of the Aitchisons and the Wellington City Council.3[2] The Council made no costs application. The Aitchisons sought indemnity costs substantially in excess of $100,000. On 10 June 2016 the Environment Court issued a decision ordering the Walmsleys to pay the sum of $72,500.00 in reimbursement of costs incurred in the enforcement proceedings.41 The property is owned by Walmsley Enterprises Limited. For consistency with the decisions of the Environment Court I refer in this judgment to "the Walmsleys" and "the Aitchisons".2 Aitchison v Walmsley [2016] NZEnvC 13 [Enforcement Decision].3 At [80].4 Aitchison v Walmsley [2016] NZEnvC 114 [Costs Decision].[3] The Walmsleys appeal the order for costs. They say no costs should have been awarded or that indemnity costs in a lesser sum should have been awarded. The Aitchisons cross-appeal, saying that indemnity costs in a greater sum should have been awarded.Background[4] In late 2014 and early 2015 the Walmsleys erected a structure attached to the retaining wall on the boundary. The Environment Court found the structure had thefollowing adverse effects on the Aitchisons' property: the structure was dominant and overbearing to such an extent as to constitute a severe adverse effect;5 the structure enabled persons on the walkway to view directly into the internal and external living spaces of the Aitchison apartment from very closeproximity which had a significant adverse effect on the Aitchisons' privacy;6 the structure had a significant and severe adverse effect on views from theAitchisons' property;7 the structure had a significant adverse effect on sunlight amenity of theAitchisons' property;8 overall, there were significant and severe adverse effects on the residentialamenity of the Aitchisons' property resulting from the presence of the structure;95 Enforcement Decision, above n 2 at [33].6 At [34].7 At [40].8 At [46].9 At [48]. the actions of the Walmsleys in erecting the structure and the presence of the structure were offensive or objectionable to such an extent as to have an adverse effect on the environment.10[5] Those findings led the Court to making an enforcement order requiring removal of the structure even though it was assumed to comply with the requirements of the District Plan.11[6] The hearing took place over four days between 18–21 January 2016. On the fifth day, because the Court wished to give its views speedily to resolve the ongoing dispute and because it was aware there was a related appeal12 before the High Court, the Court delivered an oral decision.The decision under appeal[7] The Aitchisons sought indemnity costs which, by Judge Dwyer'scalculations, amounted to $138,965.66.13[8] The Walmsleys opposed the costs application, contending that costs should lie where they fell or, in the alternative, the award of costs should be reduced.[9] Having set out the parties' respective positions Judge Dwyer referred to s 285 of the Resource Management Act 1991 under which the Environment Court may order any party to proceedings before it to pay to any other party the costs and expenses incurred by the other party that the Court considers reasonable. The Judge recognised that the purpose of costs awards is not to punish unsuccessful parties but to reimburse successful parties for expenses which they have incurred, particularly10 At [55].11 At [57].12 The appeal was against a decision issued on 17 September 2015 in which the Environment Court made declarations concerning the interpretation of provisions in the District Plan: Aitchison v Wellington City Council [2015] NZEnvC 163, (2015) 19 ELRNZ 319. The Environment Court'sdecision was upheld by the High Court: Wellington City Council v Aitchison [2017] NZHC 1264.13 Costs Decision, above n 4, at [33]. The Judge found the material provided in support of the costs application somewhat confusing but calculated the figure by reference to an invoiceschedule provided with counsel's memorandum and on the basis the Aitchisons had paid GST onthe various account.when put to unnecessary expense and that ultimately a decision under s 285 "comesdown to a determination of what is reasonable".14[10] Judge Dwyer considered it was indisputable that the Aitchisons had been put to unnecessary expense and it followed from that conclusion that it was reasonable that costs be awarded in their favour.15[11] The Judge referred to the findings of the Environment Court (summarised at para [4] above) and in particular the Court's description of the nature of the adverseeffects as "extreme" and "grossly offensive".16 Further, the potential impact of thestructure on the Aitchisons' amenity was known at least to Mr Walmsley who "deliberately refused to consider avoidance, remedy, or mitigation of those effects".17[12] Judge Dwyer said it was clear Mr Walmsley considered the Aitchisons could do nothing about the situation and it was:18equally clear that they should not have been put to the expense of having totake enforcement proceedings in light of Mr Walmsley's acknowledgementas to the likely adverse effects of the structure. Indeed it is difficult to escape the conclusion that the structure was intended to cause maximum impact on the Aitchisons.[13] The Judge accepted that neither Mr Walmsley nor his experts had turned their minds to the consequences of the significant adverse effects upon the Aitchisonsbecause they considered the contrivance of making part of the structure "a so-calledchildren's play structure got around any difficulties with the District Plan".19 That failure, however, did not relieve the Walmsleys of responsibility for costsparticularly in light of Mr Walmsley's knowledge of the likely adverse effects of thestructure.[14] The Judge distinguished Rawlings v Pilcher20 which the Walmsleys relied on in support of a submission that the enforcement action was akin to a test case and14 At [19].15 At [20].16 At [21].17 At [21].18 At [22].19 At [25].20 Rawlings v Pilcher [2014] NZEnvC 122.consequently costs were not appropriate. The Judge set out what he regarded as the obvious distinctions between Rawlings and the enforcement proceedings and rejected the submission that the enforcement proceedings had a novel aspect orinvolved "unique circumstances" which disqualified a costs award.21 That the case was unusual and attracted a high degree of public interest did not make it a test case.22[15] The Judge then turned to the so-called Bielby factors. These factors, now firmly established, arise from the decision of Thomas J in Development Finance of New Zealand Ltd v Bielby.23 Scale costs may be departed from and a higher sum allowed in the following circumstances:(a) where an argument or arguments are advanced which are without substance;(b) where the process of the Court is abused;(c) where solicitors or counsel have failed to comply with the requirements of the Rules or an order or direction of the Court in respect of procedural matters, especially in meeting prescribed time limits;(d) where the case is poorly pleaded or presented;(e) where it becomes apparent that a party has failed to explore the possibility of settlement when a compromise could reasonably have been expected to ensue, or where a party has unreasonably or obdurately resisted a settlement of a claim or dispute;(f) where a party takes a technical or unmeritorious point or defence, and fails; and21 Costs Decision, above n 4, at [23]–[24].22 At [24].23 Development Finance Corporation of New Zealand Ltd v Bielby [1991] 1 NZLR 587 (HC) at 594-595.(g) where the proceeding could have been more appropriately conducted in a District Court rather than the High Court.[16] Insofar as the Bielby factors were concerned the Judge acknowledged that the application for an enforcement order was processed co-operatively and efficiently once Mr Bennion became involved on the Walmsleys' behalf. But there was a countervailing factor:24On the other hand it must be recognised that the evidence as to adverse effects of the structure was largely either uncontested or contested only as tothe degree of effect. The limited arguments advanced by the Walmsleys'expert witnesses in this regard were without substance or merit as were theWalmsleys' arguments against the making of an enforcement order ingeneral.[17] Taking these factors into account Judge Dwyer considered the case for an award of costs to the Aitchisons was overwhelming. The Aitchisons should not have had to bring proceedings to remedy adverse effects which were recognised by the Walmsleys.25 The significant and severe adverse effects of the structure on theAitchisons' amenity when combined with the Walmsleys' knowledge of the adverse effects led the Judge to the view that the costs award should be "very substantial".26[18] Judge Dwyer then proceeded to determine the amount of the award having regard to the following matters:(a) There is a difference between costs awards in the Environment Court and those in other courts such as the District Court and High Court. The Judge did not accept a comparison with High Court scale costs. He referred to his observations in Greymouth Petroleum Ltd v Heritage New Zealand Pouhere Taonga one of which was that costs awards in the Environment Court look more directly at the merits ofthe parties' cases.2724 Costs Decision, above n 4, at [26].25 At [27].26 At [28].27 Greymouth Petroleum Ltd v Heritage New Zealand Pouhere Taonga [2016] NZEnvC 84 at [44]–[47].(b) It was apparent that the costs sought dated back to late October 2014and preceded the Aitchisons' application for declarations. The Judge intended to consider only costs arising out of the enforcement proceedings filed on 18 November 2015.28(c) As a matter of practice, costs awards in the Environment Court tend to fall within one of three categories:29(i) comfort level costs in the order of 25–33 per cent of costs incurred;(ii) elevated awards being awards above comfort level, commonly determined by reference to Bielby factors; and(iii) indemnity awards where full or close to full costs are awarded. The Bielby factors will be relevant considerations but there will almost certainly be other significant aggravating features either giving rise to the proceedings or in management of the proceedings which lead to the award of indemnity costs. Judge Dwyer observed that such awards are rare.[19] The factors which Judge Dwyer had identified earlier30 led him to concludethat indemnity costs were "arguably" appropriate but that view was to be temperedby the level of costs which the Aitchisons actually sought.31[20] The Judge observed that payment of an account by the client was not determinative of whether it was reasonable to pass on that cost to the respondent even on an indemnity basis.3228 Costs Decision, above n 4, at [30]–[31].29 At [34].30 Namely, the factors identified in the Costs Decision: at [8] being the significant adverse effects; at [21] being the Walmsleys' knowledge of the significant adverse effects; and at [28] being thatthe Aitchisons should not have been put to unnecessary expense.31 Costs Decision, above n 4, at [34].32 At [35].[21] Turning to the legal costs the Judge regarded an allowance of three days preparation for each of the four days of the hearing to be generous. It resulted in a total of 16 days representing a daily rate of $5830.50 ($93,288.00). He did not regard that as a reasonable amount to pass onto the Walmsleys. An amount in the vicinity of 50 per cent of that figure was considered to be a reasonable, if not generous, sum in the circumstances before the Judge.33[22] Next, the Judge disallowed the costs of the attendances and advice providedby Mr Slyfield as "outside counsel". Mr Slyfield had appeared only briefly, in asecondary role, and the substantive case was advanced solely by Mr Cameron.34Even if the Aitchisons' legal advisers thought it appropriate to take outside advicethe Judge did not consider it reasonable to pass the costs of doing so onto the Walmsleys.[23] Finally the Judge allowed full recovery of witnesses' costs as their evidencewas directly instrumental in the Court reaching the conclusions it reached.35[24] In the result the Walmsleys were ordered to pay the sum of $72,500.00 in reimbursement of costs incurred.Grounds of appeal and cross-appeal[25] Mr Bennion helpfully summarised in his written submissions the errors of law which it is said the Environment Court made:(1) failing to consider in awarding costs that the respondents relied on expert advice and evidence that the adverse effects of the structure had already been considered by the District Plan and a defence under s 319(2)(b) existed;(2) failing to consider that the issue of whether the adverse effects of the structure had already been considered by the District Plan made the33 At [36].34 At [37].35 At [38].case novel or unique since that issue had not previously been considered;(3) imposing costs as a penalty; and(4) imposing full indemnity costs, that is, all reasonably incurred costs, when the costs decision indicates an intention not to award full indemnity costs.[26] Mr Cameron argued for the Aitchisons that the Environment Court adoptedan "overly simplified" approach to the award of indemnity costs. The Court failed totake into account complete time records for legal work; the complexity of the work; its urgency; the skill and specialised knowledge involved; the unusual nature of the case; the importance of the matter to the respondents; the significant public interest considerations; and the relationship between the work undertaken prior to 17 February 2015 and the obtaining of an enforcement order.Appeal principles[27] Section 299(1) of the Resource Management Act permits a party to aproceeding before the Environment Court to "appeal on a question of law to the High Court against any decision of the Environment Court made in theproceeding".[28] What constitutes a question of law for appeal purposes was discussed by the Supreme Court in Bryson v Three Foot Six Ltd36 in the context of a finding of the Employment Court and in later decisions of the Supreme Court in other contexts inR v Gwaze37 and Vodafone New Zealand Ltd v Telecom New Zealand Ltd.3836 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [24]–[27].37 R v Gwaze [2010] NZSC 52, [2010] 3 NZLR 734 at [50].38 Vodafone New Zealand Ltd v Telecom New Zealand Ltd [2011] NZSC 138, [2012] 3 NZLR 153 at [51].[29] A decision relating to costs is regarded as "quintessentially discretionary".39In St Heliers Capital Ltd v Kapiti Coast District Council40 Collins J summarised the applicable principles in the context of an appeal from a decision of the Environment Court. The Environment Court may have made an error of law if it:41(1) applied the wrong legal test;(2) reached a factual finding that was "so insupportable — so clearly untenable — as to amount to an error of law";(3) came to a conclusion that it could not reasonably have reached on the evidence before it;(4) took into account irrelevant matters; and(5) failed to take into account matters that it should have considered.[30] I adopt Collin J's formulation.First ground of appeal[31] The Walmsleys contend that Judge Dwyer did not address a key plank of their case advanced in submissions and expert planning evidence namely that the adverse effects of the structure they erected had already been considered in terms of the District Plan in accordance with s 319(2)(b) of the Resource Management Act. That section provides:319 Decision on application(1) After considering an application for an enforcement order, the Environment Court may—(a) except as provided in subsection (2), make any appropriate order under section 314; or39 Commerce Commission v Southern Cross Medical Care Society [2004] 1 NZLR 491 (CA) at [12].40 St Heliers Capital Ltd v Kapiti Coast District Council [2015] NZHC 596.41 At [26]. See also Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2013] NZHC 2468 at [26].(b) refuse the application.(2) Except as provided in subsection (3), the Environment Court must not make an enforcement order under section 314(1)(a)(ii), (b)(ii), (c), (d)(iv), or (da) against a person if—(a) that person is acting in accordance with—(i) a rule in a plan; or(ii) a resource consent; or(iii) a designation; and(b) the adverse effects in respect of which the order is sought were expressly recognised by the person who approved the plan, or granted the resource consent, or approved the designation, at the time of the approval or granting, as the case may be.(3) The Environment Court may make an enforcement order if—(a) the court considers it appropriate after having regard to the time that has elapsed and any change in circumstances since the approval or granting, as the case may be; or(b) the person was acting in accordance with a resource consent that has been changed or cancelled under section 314(e).[32] Mr Bennion identified what he characterised as the "only possible reference to this matter in the costs decision" as a sentence in para [26] referring to theWalmsleys' arguments "in general".[33] Mr Bennion submitted that apart from the comments in the judgment, there were many indications from the transcript and evidence that the s 319(2)(b) limitation formed a significant part of the enforcement proceedings, was a highly contested issue and that the evidence produced was far from being without substance or merit.Analysis[34] The issue arising from s 319(2)(b) was characterised as a jurisdictional issue in the Enforcement Decision.42 The jurisdictional issue arises because s 319(2)(b) prohibits the Environment Court from making an enforcement order if the adverse effects which it has identified were expressly recognised by the person who approved the rules in the District Plan (in this case, the Wellington City Council) pursuant to which the Walmsleys say they were acting. There was considerabledebate between the parties as to the meaning of the words "expressly recognised" insubs (2)(b).43[35] In a sense, the Walmsleys attempt to run in this appeal an argument which, in the Enforcement Decision, was determined with little difficulty. The Courtconcurred with the observation of the Walmsleys' expert planning witness, Mr Leary,that it would be an absurdity if the words "expressly recognised" meant that theCouncil had to consider the effects of its District Plan on every property when making rules or imposing standards. The pertinent point, however, is that s 319(2)(b) is not directed at properties but directed at adverse effects:44What ss 17 and 319 do is recognise that on occasions application of the standards may lead to adverse effects in particular situations which were not expressly recognised when the standards were brought down and enable those outcomes to be addressed.[36] In the Environment Court's view consideration of adverse effects in thiscontext requires there to be regard not only to the type of effects but also to their degree or severity.45 The Court accepted the evidence of the expert planning witness for the Council, Mr Ulusele, that there was no evidence in the decision of the Hearing Committee that it thought the type of effects that arose for the Aitchisons would result from the District Plan provisions:46There is no recognition that its provisions might result in a severe loss ofresidential amenity".42 Enforcement Decision, above n 2, at [57].43 At [58].44 At [58].45 At [59].46 At [60].[37] Nor did the Environment Court see anything in the evidence which implied the Council must have expressly recognised the type and degree of effects experienced in this case. The effects described above at para [4], the Environment Court held, were brought about by a combination of factors:47 difficult definitions in the District Plan; different standards being applicable to fences and other residential structures; the dual activity fence/residential structure erected on or near the boundary; the particular topography of the sites; the presence of a large retaining wall partly on and partly off the boundary.[38] The Environment Court said:48It is difficult to see how this combination of factors could have been foreseen and expressly recognised when bringing down the rules and standards we are discussing.[39] It is incorrect to contend, as the Walmsleys contend, that the effects of thestructure had been considered by the District Plan, were therefore "expressly recognised", that therefore s 319(2)(b) is engaged and Judge Dwyer erred in failing to consider the matter. The Walmsleys did not appeal the Enforcement Decision yet they have advanced in their appeal of the Costs Decision arguments similar to those which were rejected in the Environment Court. This ground of appeal does not succeed.47 At [61].48 At [61].Second ground of appeal[40] In their second ground of appeal the Walmsleys argue that the case should have been seen as having a test element to it and that therefore an award of costs against them is not appropriate. This approach would be consistent with the approach taken by the Environment Court in Rawlings v Pilcher49 which Mr Bennion relied on. Mr Bennion submitted that in its Costs Decision the Environment Court was wrong in law to distinguish Rawlings v Pilcher. This case"involved a test of how the words 'expressly recognised' applied". The EnforcementDecision noted that there had been considerable debate between the parties as to the meaning of the term. Consequently the Environment Court was wrong to reject a submission that the case was akin to a test case.[41] Mr Cameron submitted that there was no novelty beyond the facts. There was no legislative uncertainty and no clarification of the District Plan was producedby the Environment Court's decision. While the case was the first of its kind underthe District Plan that was the only similarity to Rawlings v Pilcher and the Environment Court was justified in distinguishing this case from that.Analysis[42] On my reading of the Enforcement Decision the Court was engaged in a consideration of the application of s 319(2)(b) to the facts rather than any resolution of legislative uncertainty. The application for enforcement orders was founded on the provisions of ss 17 and 319 of the Resource Management Act. No issue arose about the duty which s 17(1) imposes on persons to avoid, remedy or mitigate adverse effects from their activities. The determinative issue arose under s 17(3)(a) which required the Court to consider whether the activity was noxious, dangerous, offensive or objectionable so as to have an adverse effect on the environment. Having made the factual findings required by s 17(3) the Court turned to the question of whether, under s 319(2)(b), the adverse effects had been "expressly recognised" by the Council. While noting the considerable debate between the49 Rawlings v Pilcher, above n 20.parties as to the meaning of "expressly recognised" the Court did not seem toconsider it necessary to engage in that debate. The Court observed:50The Council clearly cannot assess impacts of effects on every single property in the City when formulating its District Plan. However, s 319(2)(b) is not directed at properties. It is directed at adverse effects. The District Plan sets standards to control various effects across the District. What ss 17 and 319 do is recognise that on occasions application of the standards may lead to adverse effects in particular situations which were not expressly recognised when the standards were brought down and enable those outcomes to be addressed.[43] Judge Dwyer distinguished the test case element in Rawlings from the proceeding before him which "revolved around avoidance, remedy or mitigation of indisputably severe adverse affects".51[44] In the Court's view, assessment of adverse effects in the context of ss 17 and 319 requires consideration of the type of effects and their degree or severity.52 The Court then proceeded to consider the evidence bearing on the factual question of whether or not the particular adverse effects had been expressly recognised.[45] As I have observed the Environment Court was not confronted by legislative ambiguity or uncertainty. While there was undoubted public attention, and a level of curiosity about the dispute between the neighbours, the Environment Court itself was engaged in an orthodox application of statutory provisions to particular facts. Therewas no error in the Judge's approach. This ground of appeal does not succeed.Third ground of appeal[46] The essence of this ground is said to be that Judge Dwyer focused on Mr Walmsley's knowledge of adverse effects and imposed punitive costs.Mr Bennion submitted that in placing weight on the underlying motives of theunsuccessful party the Court's assessment had become influenced by the idea ofpunishment.50 Enforcement Decision, above n 2, at [58].51 Costs Decision, above n 4, at [23].52 At [59].[47] I take a different view of Judge Dwyer's reference to the Walmsleys'knowledge that there would be adverse effects on the Aitchisons "who would just have to put up with it". The fact is there was a legal duty on the Walmsleys to avoidadverse effects from their activities. That is the effect of s 17. A breach of that duty may provide grounds for an enforcement order. Mr Walmsleys' affidavit evidenceessentially established that he had not avoided those effects. It was clear to Judge Dwyer that Mr Walmsley considered that the Aitchisons could do nothing about the situation:53It is equally clear that they should not have been put to the expense of havingto take enforcement proceedings in light of Mr Walmsley'sacknowledgement as to the likely adverse effects of the structure. Indeed it is difficult to escape the conclusion that the structure was intended to cause maximum impact on the Aitchisons.[48] Mr Walmsley was in breach of his statutory duty to avoid adverse effects. His belief in the legal position was irrelevant to that breach. But was it permissible for Judge Dwyer to refer to Mr Walmsleys' knowledge, or state of mind, in the context of a costs application?[49] Judge Dwyer articulated and applied the relevant principles:54(a) The purpose of costs awards is not to punish but to reimburse successful parties for expenses which they have incurred, particularly when they have been put to unnecessary expense.(b) Ultimately a decision as to whether or not to award costs under s 285 involves a determination of what is reasonable.[50] As Mr Cameron submitted the evidence of the Walmsleys' knowledgeinescapably led the Court to conclude that they had made no effort whatsoever to avoid, remedy or mitigate the effects of their structure despite a clear understanding that it would give rise to adverse effects. In assessing the reasonableness of a costs award Judge Dwyer considered all relevant factors including the nature and severity53 Costs Decision, above n 4, at [22].54 At [19].of the adverse effects of the structure on the Aitchisons' amenity as well as the Walmsleys' knowledge of those adverse effects.[51] I discern no error in the Judge's approach. This ground of appeal is not established.Indemnity costs[52] The Judge's approach to the elevated costs which he awarded is challengedby both the Walmsleys and the Aitchisons.[53] The Walmsleys argue that the Judge was incorrect when he took into account his earlier analysis of the severe adverse effects of the structure and the Walmsleys'knowledge of those effects. Additionally the calculation of the quantum is challenged.[54] The Aitchisons contend that, having determined that they were entitled to indemnity costs, the Court ought to have assessed what costs were reasonable in a manner that did not defeat the purpose and spirit of their entitlement to recover actual costs.Analysis[55] I consider first the Judge's determination of the indemnity costs applicationbefore him. While his conclusion is not without ambiguity it seems clear that theJudge's intention was to award indemnity costs.(a) It was "indisputable" the Aitchisons were put to unnecessaryexpense.55(b) It followed there would be a costs award in their favour and in light of factors he had identified (severity of adverse effects combined withthe Walmsleys' knowledge of those effects) the award should be "very55 At [20].substantial".56(c) The argument that the proceeding was akin to a test case was rejected.57(d) In light of all the factors which Judge Dwyer had identified, including the relevant Bielby factors, the last question which the Judge posed for consideration was whether indemnity costs were appropriate. And he decided: "[a]rguably they were".58[56] My view in that Judge Dwyer exercised the broad discretion available to him on a principled and correct basis. He was alive to the fact that awards of indemnity costs are rare. The question is whether the factors that led the Judge to his conclusion that indemnity costs were arguably appropriate were relevant to this assessment.[57] In addition to Bielby factors which the Judge took into account59 the Judge emphasised the aggravating feature in this case was the Walmsleys' knowledge of the significant and adverse effects of this activity. I do not agree that the Judge awarded costs "as punishment for Mr Walmsley's motives" as was submitted to me.[58] The Judge did say:60Indeed it is difficult to escape the conclusion that the structure was intended to cause maximum impact on the Aitchisons.[59] Elsewhere Judge Dwyer referred to the Walmsleys' "knowledge that there would be adverse effects on the Aitchisons who would just have to put up with it".61But it is plain from his decision that the indemnity costs award was not punitive. Rather, the award was to recognise that the Aitchisons had clearly been put to the expense of taking enforcement proceedings when they should not have been in light56 At [20] and [28].57 At [24].58 At [34].59 For example at [26].60 At [22].61 At [28].of Mr Walmsley's acknowledgment of the effects of his structure.62 The Judge'sapproach was not in error.[60] Did the Judge nevertheless err in his calculation of the sum to be awarded? Having reached the view that indemnity costs were arguably appropriate the Judge said that view must be tempered by the level of costs actually sought.63 I regard this passage as indicating that the Judge had decided to award indemnity costs and was then, quite properly, embarking on an assessment of whether it was reasonable that all of the actual costs incurred by the Aitchisons be paid by the Walmsleys. I do notaccept the Judge determined not to award indemnity costs (the Walmsleys' position).Nor do I accept that the Judge adopted an overly simplified view of the relevantsteps (the Aitchisons' position).[61] Mr Cameron cited Bradbury v Westpac Banking Corporation64 for the proposition that, having decided an indemnity award is warranted, the Court must then consider whether the actual costs were reasonably incurred. That is the approach that Harrison J took in Bradbury v Westpac Banking and he acknowledged that in assessing reasonableness the result must be just and fair for the liable party but costs must not be set in a way that defeats the purpose and spirit of a rule which provides a right to recover actual costs.65[62] There is an important difference between the contexts in Bradbury v Westpac Banking and this case. Because indemnity costs in Bradbury v Westpac Bankingwere sought under r 48C(1)(b) of the High Court Rules it was necessary for the Judge to analyse the reasonableness of the costs incurred. Under r 48C(1)(b)indemnity costs were "the actual costs, disbursements and witnesses expensesreasonably incurred" (emphasis added).[63] The High Court Rules are not relevant to awards of costs by the Environment Court. Indeed, as I have mentioned, Judge Dwyer did not accept the comparison which Mr Bennion made with High Court scale costs and the amount sought by the62 At [22].63 At [34].64 Bradbury v Westpac Banking Corporation (2008) 18 PRNZ 859 (HC).65 At [207].Aitchisons. There is a similarity in principle: they are awarded rarely and in exceptional circumstances. See for example the observation of Heath J in Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council.66[64] The approach to costs in the Environment Court is different to the approach in the High Court where the underlying principle is that a successful party is awarded costs. There is no such presumption in the Environment Court. Rather, as has been set out, close attention is paid to the merits of the case advanced by a successful party and to matters such as the Bielby factors. Judge Dwyer acknowledged that in the absence of a scale, fixing reasonable costs can be a difficult exercise but he considered it was necessary also to be satisfied that the costs awarded against a party are reasonable for that party to pay. The fact that the Aitchisons hadpaid their lawyer's account and regarded it as a reasonable fee did not mean it wasreasonable to pass that cost on to the respondent when awarding costs on an indemnity basis.67[65] While he considered the information submitted by the Aitchisons required theCourt to undertake "more of an accounting exercise that it should be called upon to do"68 Judge Dwyer undertook that exercise. Ultimately he considered it was not reasonable to pass onto the Walmsleys the full amount of the legal costs which represented a daily rate of $5830.50. The Judge considered that an amount in the vicinity of 50 per cent of the claimed amount was "a reasonable (if not generous) allowance".69 Nor would the Judge make any allowance for Mr Slyfield as outside counsel.70 However full recovery of the witnesses costs was said to be reasonable.71[66] In the assessment of reasonable costs, the Court is entitled to quantify the costs awarded by reference to a median hourly rate reasonably applicable to the work completed.72 Judge Dwyer was entitled to fix the median hourly rate and did not err in its quantum. I consider that Judge Dwyer was entitled to take the view that it was66 Thurlow Consulting Engineers & Surveyors Ltd v Auckland Council [2013] NZHC 2468 at [35].67 At [35].68 Costs Decision, above n 4, at [33].69 At [36].70 At [37].71 At [38].72 Bradbury v Westpac Banking Corp, above n 64, at [209].not reasonable to pass the costs of Mr Slyfield's attendance to the Walmsleys.Mr Slyfield had appeared only briefly, as outside counsel, in a secondary role to Mr Cameron who had advanced the substantive case. The Judge was well placed to assess the case as one that could adequately be advanced by one counsel (as it had been).[67] Nor was he in error in disallowing costs for attendances prior to the issue of the declaration proceedings on 8 May 2015. Notwithstanding Mr Cameron's detailed submissions to the contrary I do not view as erroneous the Judge's decisionto exclude those costs. Even if Judge Dwyer had uncritically accepted Mr Cameron's submission, he did not accept that costs incurred prior to the issue ofthe declaration proceedings could be properly incorporated into a costs claim pertaining to the enforcement proceedings which were filed on 18 November 2015, approximately two months after issue of the Court's decision on the declarationapplication.73[68] Neither the appeal nor cross-appeal has established error in the Judge'sapproach.Conclusion[69] The appeal is dismissed.[70] The cross-appeal against the indemnity award is dismissed.[71] In light of this result my view is that it is appropriate that the parties should bear their own costs on the costs application. If that is not accepted the parties may file focussed brief memoranda._____________________________Karen Clark JSolicitors:Bennion Law, Wellington for AppellantBrookfields Lawyers, Wellington for Respondents73 At [31].