WHAKATANE DISTRICT COUNCIL V BAY OF PLENTY REGIONAL COUNCIL HC ROT CIV-2007-463-000606

WHAKATANE DISTRICT COUNCIL V BAY OF PLENTY REGIONAL COUNCIL HC ROT CIV-2007-463- 000606 10 July 2008IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY CIV-2007-463-000606UNDER the Judicature Amendment Act 1972 IN THE MATTER OF of the Local Government Act 2002 BETWEEN WHAKATANE DISTRICT COUNCIL Applicant AND THE BAY OF PLENTY REGIONAL COUNCIL Respondent Hearing: 17-21 March and 4-6 June 2008 Appearances: D J Neutze and V T Bruton for the Applicant J G Miles QC and K J Catran for the Respondent Judgment: 10 July 2008JUDGMENT OF DUFFY J [Re Costs]This judgment was delivered by Justice Duffy on 10 July 2008 at 11.00 am, pursuant to r 540(4) of the High Court Rules Registrar/Deputy Registrar Date:Counsel: J G Miles QC P O Box 4338 Auckland for the Respondent Solicitors: Brookfields P O Box 240 Auckland for the Applicant Cooney Lees Morgan P O Box 143 Tauranga for the Respondent[1] In the week before the substantive hearing in this proceeding was due to commence, the applicant filed an application for leave to file a late affidavit to produce a privileged document. The application was successfully opposed and I directed that costs memoranda be filed within 21 days of issuing my judgment. Subsequently, the applicant applied for the recall of my judgment refusing leave to file a late affidavit but the application was abandoned before it was heard. [2] The respondent seeks costs following its success in opposing the application and for its preparation to oppose the application for recall of my judgment. It seeks costs at scale 3C and for time spent of 4.25 days. The total costs sought come to $10,072.50. [3] The applicant opposes the costs application to the extent that the respondent seeks costs at scale 3C and also for the time incurred. The applicant submits that the appropriate scale is 2B and the appropriate time incurred should be 1.35 days. The total costs calculated on this basis come to $2,160. [4] At the first telephone conference for these proceedings, both parties submitted that category 2B was the appropriate costs categorisation for the proceeding. The Court file has no record of any direction being made on the appropriate scale. Nonetheless, it seems to me that the indication from both parties that costs should be assessed on a scale 2B basis would have caused both parties to assume at the time of the conference, and to act on the basis, that this was the agreed scale to be applied. I will, therefore, approach this application on the basis that the determined scale for this proceeding is 2B. [5] The next question is whether or not the circumstances of the application for which costs are sought are such that I should depart from the determined scale. [6] The High Court Rules recognise that there will be occasions when a departure from the determined scale is appropriate. The Rules anticipate that the classification of a proceeding as 1, 2 or 3 will be done at an early stage of the proceeding but that the time band for individual steps may vary. In this case the respondent seeks to have an increase in the classification and the time banding to themaximum scale of 3C. The grounds on which the respondent seeks this increase are that the applicant improperly and belatedly attempted to introduce into evidence what was an obviously privileged letter of the respondent. The attempt occurred well after the timetable provision for filing evidence and within two weeks of the trial. At the time the respondent's solicitors were heavily involved in trial preparation and their legal submissions were due in under a week. Against this background the respondent submits there was no merit in the use of the privileged document, its purpose was to embarrass and prejudice the respondent, and there was no justification for the lateness of the attempt to introduce it. Subsequently, after I had issued a judgment finding that the letter was privileged and inadmissible in evidence, the applicant filed an application seeking to have the judgment recalled. This application was later abandoned before it was argued, but not before the respondent had prepared its argument opposing the recall. [7] The applicant submits that there is nothing about these interlocutory applications that sets them apart from other steps taken in the proceeding to justify an award in excess of scale 2B. The applicant submits the issues raised in the application were not complex and significant. It rejects the suggestion that its argument on loss of privilege and its intended use of the subject document lacked merit. [8] The applicant also challenges the respondent's claim for time spent on the applications as the application to file the late evidence (which drew in the privileged document) was one of three interlocutory applications dealt with that day. [9] The applicant estimates the respondent to have spent 1.35 days on the issues. [10] I accept the applicant's submission that costs are at the discretion of the Court (r 46) but that the discretion is to be exercised in accordance with the specific costs rules in r 47 to 48G and any departure from those specific rules should only occur in circumstances not contemplated by those rules or when they are unfairly recognised by them. I see no reason to depart from scale 2. The principles governing when inadvertent disclosure will cause a privileged document to lose its protection and become available for an opponent to use are well known. The same can be said ofthose principles applicable to the recall of judgment applications. The import of the respondent's submissions can be read as an acknowledgement that there was nothing complex or significant about the nature of the applications the respondent faced. [11] Nonetheless, I consider the respondent would have been placed in the position of having to divert its attention from the trial preparation to deal with the application. Ordinarily applications of this type would be of nuisance value only; however, this is a case where the parties were working under tight time constraints and the proceedings were being dealt with by everyone as requiring urgency. In such circumstances time two weeks before the commencement of the hearing is precious and not to be wasted on unnecessary interlocutory arguments. Furthermore, due to the urgency of the situation the application had to be heard in Auckland rather than Rotorua and so the respondent's senior counsel appeared. [12] One of the key purposes of the costs rules' self-calculating character is to encourage focus on resolving what is in issue and to discourage time-wasting interlocutory applications. In this case there was more than one factor that indicated the application was unmerited. First, it was an attempt to introduce new evidence at a time when the evidence was closed. If it had been permitted the respondent would have required an opportunity to file evidence in response. The likelihood of the Court opening up the evidence to this extent so close to a hearing being conducted under urgency was slight. Secondly, the evidence included a document that was obviously privileged and its disclosure was inadvertent. Once the respondent made it clear to the applicant the disclosure was inadvertent and the privileged document was to be returned that should have been the end of matters. There was no basis for the recall of the judgment application and the applicant appears to have recognised this before the application proceeded to a hearing. [13] In these circumstances, I consider it appropriate to award costs at the highest time band. Accordingly, I consider costs at 2C are appropriate. [14] The applicant is correct that the application was one of three heard on the same day. The argument in relation to the application would have taken less than one half day. It is, therefore, appropriate that the appearance time be calculated at.25 of a day. Since I have awarded costs on a scale not anticipated by either party's costs memorandum, I leave it to the parties to calculate the appropriate quantum of costs. [15] Leave is reserved to the parties to return to Court should any issue arise between the parties as to the correct quantum. Duffy J