WHANGAMATA MARINA SOCIETY INC V THE ATTORNEY-GENERAL OF NEW ZEALAND HC WN CIV 2006-485-000709

WHANGAMATA MARINA SOCIETY INC V THE ATTORNEY-GENERAL OF NEW ZEALAND HC WN CIV 2006-485-000709 14 November 2006IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV 2006-485-000709BETWEEN WHANGAMATA MARINA SOCIETY INC Plaintiff AND THE ATTORNEY-GENERAL OF NEW ZEALAND Defendant Judgment: 14 November 2006INTERIM COSTS JUDGMENT OF FOGARTY J First issue: The appropriate band – B or C[1] The parties have been unable to agree the appropriate banding. The plaintiff seeks a 3C classification and the defendant 2B. Rule 48 provides:48 Categorisation of proceedings(1) For the purposes of rule 47(b), proceedings must be classified as falling within 1 of the following categories: Category 1 proceedings Proceedings of a straight-forward nature able to be conducted by counsel considered junior in the High Court: Category 2 proceedings Proceedings of average complexity requiring counsel of skill and experience considered average in the High Court: Category 3 proceedings Proceedings that because of their complexity or significance require counsel to have special skill and experience in the High Court.(2) The Court may at any time determine in advance an applicable category in relation to a proceeding. If it does, the category applies to all subsequent determinations of costs in the proceeding unless there are specific reasons to the contrary.[2] Most proceedings are classified as category 2 these days. Ms Arthur argued that a proposed three day judicial review proceeding requires counsel of average skill and experience to appear and make legal submissions. Such a proceeding does not require counsel to have "special skill and experience in the High Court". [3] The Court of Appeal in Holdfast NZ Ltd v Selleys Pty Ltd (CA 200/04, 6 December 2005) said:[43] Mr Marriott further submitted that, even if increased costs were warranted, it would be inconceivable that a court should ever award a figure approaching four times over scale. There is force in this submission. The correct approach to an award of costs is this. The first step is to categorise the proceeding in terms of r 48. There is no dispute that the current proceeding was a category 2 proceeding, being a proceeding "of average complexity requiring counsel of skill and experience considered average in the High Court". Of course, that does not prevent a party selecting as its counsel a lawyer of above average skill – just as Selleys chose to do. But a party which chooses to have counsel of superior skill cannot expect the other party to pay for the additional cost which such extra skill quite reasonably commands.[4] I favour the Crown argument that as a judicial review the case was not particularly complex, giving the meaning an emphasis on the analytical character of the term "complexity". The case did require a detailed understanding of the Resource Management Act 1991 and a grasp of a significant procedural history. But, that was a level of complexity expected of counsel of skill and experience considered average in the High Court. [5] However, counsel for the plaintiff also argued that proceedings involved a serious matter relating to the appropriate and lawful exercise of ministerial decision making. This argument did not explicitly appeal to the criterion of or "significance" in the category 3 proceeding criteria. Counsel for the Crown, however, recognised the submission as one that the case was significant because of the exercise of a ministerial discretion. The Crown submitted that the exercise of a ministerial discretion is, however, the basis of judicial review.[6] With respect to the submissions of the Crown I think that is not a complete answer. As I emphasised in paragraphs [155] and[166] of the High Court judgment (passages relied on by the plaintiff) the Courts are particularly sensitive to interfering with decisions of a Minister of the Crown. The residual discretion reserved by the High Court upon judicial review is an extremely important aspect of the inherent jurisdiction of the Court. This is especially so when a challenge is to a Minister of the Crown. I would not expect a solicitor to consider that such a proceeding requires counsel of skill and experience considered average in the High Court. Because of the goal (overturning a Minister's decision) it requires counsel with special skill and experience. It requires counsel attuned to the proper reluctance of the Court to interfere with Ministerial decisions. So attuned, counsel will make decisions in the course of the preparation of the materials to be placed before the Court in order to build up a momentum in favour of the applicant's case beyond a point which might not be required where the decision maker is someone of considerably less status than a Minister of the Crown. For this reason I am satisfied that the appropriate categorisation of the case is category 3.Second issue: Time[7] The Court of Appeal in Holdfast went on:[44] The next step in the costs formulation is to work out a reasonable time for each step in the proceeding: r 48B. There are three time bands, A, B, and C. Band C is appropriate where a "comparatively large amount of time is considered reasonable" for the particular step. It is possible to get a greater time allocation for the particular step if the costs-claiming party can show that "the step in the proceeding [was] such that the time required by the party claiming costs would substantially exceed the time allocated under band C": r 48C(3)(a). Where that is shown, the appropriate judicial response is to increase the amount of time allocated for the particular step, and then to apply the appropriate daily recovery rate to the time so fixed. It has not been suggested in this case that any step in the proceeding justified an increase in costs under that head.[8] The plaintiff argued that the time allocation for discovery and inspection did not appropriately recognise the tasks undertaken in this case. The defendant provided copies of all documentation in several boxes which included 14 departmental ministerial files, many of which were comprised of multiple volumes.The plaintiff's counsel advised that consideration of that material required more than the allocated six days attendance under band C. [9] Ms Arthur agreed that there was a significant volume of paper provided to the plaintiff, but essentially she argued that this was at the plaintiff's request, and that the plaintiff had made a rod for its own back. She admitted a possible qualification in respect of step 4.7 'Inspection of documents', where she acknowledged band C might be appropriate. [10] The volume of material received and assimilated by the plaintiff was to a degree reflected in the voluminous affidavit of Mr Kelly filed in these proceedings. During the hearing I was not taken through all of this material. Indeed, I discouraged counsel from taking me through it all. As the case proceeded parts of the affidavit seemed to me to be particularly relevant, and in that context their counterpart exhibits. [11] However, the extent of discovery reasonably necessary and the time spent converting that material into affidavits cannot be judged with hindsight. Counsel prepared an argument to the Court to exercise a discretion. The range of relevant material was necessarily broad. The ultimate decision on an exercise of discretion is made after taking into account relevant material. It is to a significant degree an osmotic process and cannot be simply explained. Very often there is not one telling fact, even if in the reasoning particular facts are emphasised. [12] Because of the character of decision making, by exercise of discretion, different Judges are capable of being attracted by different matrices of relevant fact. Accordingly, prudent counsel need to err on being more than less comprehensive. This is particularly so where, as here, the burden on counsel for the plaintiff was to persuade the Court to interfere with the decision of the Minister of the Crown. [13] As the Court of Appeal has explained in paragraph [44] of Holdfast, the appropriate judicial response is to increase the amount of time allocated for the particular step. This was not the process proffered by counsel for the plaintiff in theschedules that had been lodged. Rather, counsel for the plaintiff argued for a general increase in costs relying on r 48C(1)(a) and (3):48C Increased costs and indemnity costs(1) Despite rules 47 to 48B, the Court may make an order— (a) Increasing costs otherwise payable under those rules ("increased costs"); or (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.[14] A broader approach than that indicated by the Court of Appeal in Holdfastmight be justified were the plaintiff to successfully be able to rely on ground (3)(c). The plaintiff sought to do so.[15] The plaintiff argued that this proceeding concerned issues of public confidence and the public interest in proper and lawful decision making by a Minister of the Crown. Ms Chen argued that the general importance of the case was evidenced by the number of applications made to the Court by the media to cover the proceedings and access the Court records. Accordingly, she submitted it was necessary for the plaintiff to bring and participate in the proceeding in the public interest and/or to determine issues of public importance. [16] The plaintiff is a society of persons who have an immediate and direct interest in obtaining all the resource consents necessary for the marina they want. Although the case attracted a considerable public interest, for most of the public it was as observers. I do not think that this case can be compared to New Zealand Maori Council v Attorney General (No. 3) (High Court, Wellington, CP942/88, 28 April 1995). I am not satisfied that sub-paragraph (c) applies. The fact that the case is of considerable public interest and may well raise issues of public confidence in ministerial decision making, did not make it necessary for the plaintiff to bring the application and more pertinently, that was not why the plaintiff brought the application. [17] The plaintiff is entitled to band C in respect of items 4.5, 4.6, and 4.7. Secondly, the plaintiff can also lodge an application seeking greater time than the days allocated under Schedule C. Leave is reserved for the plaintiff to do so. If the plaintiff does the defendant has three days to file submissions in reply and the plaintiff likewise three days to file a limited submission in response. [18] The plaintiff is entitled to band C in respect of the preparation of the Kelly affidavit and similarly has leave to apply in the event that the time in the preparation of that affidavit exceeded five days (being the days allocated in band C). [19] The rest of the attendances are band 2. I agree that the cost of the attendances have to be split between the scales pertaining before and after 1 June. [20] The plaintiff did run a general argument that these decision as to costs should reflect the principles under r 47 and in particular r 47(b) which provides:47 Principles applying to determination of costsThe following general principles apply to the determination of costs: (b) An award of costs should reflect the complexity and significance of the proceeding:[21] However, such an application of r 47 is not possible. It is now clear from a number of decisions of the Court of Appeal that while that principle may well guide the setting of the daily rates from time to time it cannot be used by the Judge to override the scale. In this respect the Court of Appeal said in Holdfast:[41] There are very good practical reasons why a "percentage of actual" approach should not be sanctioned. Not all judges have recently been litigation lawyers and thus familiar with the current charging of litigators. Many judges have been commercial lawyers or academics or lawyers in the public service. Even those who have been litigation lawyers quickly get out of touch with current rates after appointment to the bench. There cannot be one approach to costs if the judge happens to be a recent appointment from the bar and another approach for judges who happen not to be. The approach must be uniform and cannot be based on a judge's own assessment of the reasonableness of fees based on his or her recollection of what prevailed at the bar in his or her time. [42] It is in any event well nigh impossible even for a judge who has recently been in practice to assess the reasonableness of a party's legal fees from a cursory review of what appears on the court file. Here the judge assessed Selleys' costs as "high". But on what basis was that assessment made? There were no fee notes or time records. He did not know what hourly rates were being used. This shows the dangers of judges becoming involved in the assessment of the reasonableness of a party's actual costs. Such an assessment may be unavoidable where indemnity costs are considered appropriate, although even there judges may well find it more sensible, in the event of a dispute as to reasonableness, for costs to be taxed by the registrar.[22] This decision of the Court of Appeal reinforces the earlier decision ofGlaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606. There the Court of Appeal was examining r 46(1). This provides:46 Costs at discretion of Court(1) All matters relating to the costs of and incidental to a proceeding or a step in a proceeding are at the discretion of the Court. (2) Rules 47 to 48G apply subject to subclause (1). (3) This rule is subject to the provisions of any Act.[23] The Court of Appeal said at paragraph [24]:[24] To put this another way, there is a relatively obvious logic to the monetary allowances in the new rules and the discretion exists to enable the unexpected and the unforeseen to be fairly accommodated. It is not a case of R 46 having an exclusionary primacy over R 47 (or any other rules): the rules are complementary, and designed to produce an effective whole.Conclusion[24] It may well be that the rulings made in this decision will suffice to enable the parties to now agree on costs. However, as indicated, leave is reserved to make further submissions on costs. That leave includes raising any matter not yet determined by this judgment.Solicitors: Chen Palmer, Wellington, for Plaintiff Crown Law, Wellington, for Defendant