IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-7748

IN THE MATTER OF	an appeal under s 299 of the Resource
Management Act 1991

BETWEEN	DEVONPORT HERITAGE INCORPORATED
First Appellant

AND	MASONIC FRIENDLY SOCIETY INCORPORATED
Second Appellant

AND	NEW ZEALAND HISTORIC PLACES TRUST (POUHERE TAONGA)
Third Appellant

AND	NORTH SHORE CITY COUNCIL First Respondent

AND	REDBACK DEVELOP LIMITED Second  Respondent

CIV-2009-404-8147

IN THE MATTER OF	an appeal under s 299 of the Resource
Management Act 1991

BETWEEN	DEVONPORT HERITAGE INCORPORATED
First Appellant

AND	MASONIC FRIENDLY SOCIETY INCORPORATED
Second Appellant

DEVONPORT HERITAGE INCORPORATED AND ORS V NORTH SHORE CITY COUNCIL AND ANOR HC AK CIV-2009-404-7748  9 July 2010

AND	NEW ZEALAND HISTORIC PLACES TRUST (POUHERE TAONGA)
Third Appellant

AND	NORTH SHORE CITY COUNCIL First  Respondent

AND	REDBACK DEVELOP LIMITED Second  Respondent

CIV-2009-404-8206

	IN THE MATTER OF	Part 1 of the Judicature Amendment Act
1972	
	
AND		
	
IN THE MATTER OF	
the Resource Management Act 1991	
	
BETWEEN	
DEVONPORT HERITAGE INCORPORATED
First Plaintiff	
	
AND	
MASONIC FRIENDLY SOCIETY INCORPORATED
Second Plaintiff	
	
AND	
NEW ZEALAND HISTORIC PLACES TRUST (POUHERE TAONGA)
Third Plaintiff	
	
AND	
THE ENVIRONMENT COURT First Defendant	
	
AND	
NORTH SHORE CITY COUNCIL Second Defendant	
	
AND	
REDBACK DEVELOP LIMITED Third Defendant	

Hearing:	
On the papers		

Judgment:	
9 July 2010		

2

JUDGMENT OF RODNEY HANSEN J

This judgment was delivered by me on 9 July 2010 at 4.30 p.m., pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:	Alan Jones Law Partnership, PO Box 32249 Devonport North Shore City 0744
Stafford Klaassen, PO Box 29185 Greenwoods Corner Auckland 1347
Simpson Grierson Private Bag 92518 Wellesley Street Auckland 1141
Crown Law, PO Box 2858, Wellington 6140 (P Gunn)
Copy to:	P Cavanagh QC PO Box 4338 Shortland Street Auckland 1140
M Casey QC, PO Box 317, Shortland Street, Auckland 1140

Introduction

[1]     In these proceedings the appellants/plaintiffs challenged decisions of the Environment Court.  On 14 December 2009, the Environment Court began hearing an appeal against resource consents granted by North Shore City Council (the Council) to Redback Develop Limited (Redback) to redevelop a site in Devonport occupied by the Masonic Tavern.   In the course of that appeal, three proceedings were filed.

[2]       In order these were:

a)        CIV-2009-404-7748.   An appeal against a prehearing direction by Principal Environment Court Judge Thompson excluding evidence on the topic of archaeology.

b)	CIV-2009-404-8147.	An   appeal   against   a   decision   of   Judge

Thompson declining an application for a stay pending appeal.

c)        CIV-2009-404-8206.   An application to review a decision of Judge Thompson declining to recuse himself.  Orders were sought that Judge Thompson should not hear the appeal and that the hearing should be stayed until the two appeals had been determined.  Interim relief was sought which I declined in a judgment delivered on 15 December
2009.

[3]       Subsequently, the appellants/plaintiffs withdrew the appeals and discontinued the review application.   They proposed that costs should lie where they fall.   The Council does not seek costs but Redback seeks costs in relation to the three proceedings on a category 2 band B basis and indemnity or increased costs on the application for interim relief.

[4]       In  claiming  that  costs  on  the  proceeding  should  lie  where  they  fall, Mr Cavanagh QC, for the appellants/plaintiffs, submits that the Environment Court had effectively admitted the evidence excluded by its initial disputed ruling. Accordingly, the proceedings no longer served any useful purpose.  That analysis of events is hotly disputed by Mr Casey QC for Redback.

[5]       The decision of the Environment Court to exclude evidence on the topic of archaeology affected the evidence of three witnesses whom the appellants/plaintiffs proposed to call – Mr Martin Jones, Dr Caroline Phillips and Ms Beverley Parslow. Mr Jones is what is known as a standing building expert.  The other two witnesses are archaeologists.

[6]       On 15 December 2009, after the hearing commenced, Mr Cavanagh applied for the evidence of Mr Jones to be admitted.  That was allowed on the basis that it did not deal with the topic of archaeology and was not excluded by the ruling.

[7]       When the hearing resumed on 15 February 2010, after being adjourned part- heard, Mr Cavanagh submitted for consideration an amended brief of Dr Phillips. Any evidence which contravened the Court’s ruling had been edited out and the brief was admitted.  No attempt was made to introduce the evidence of Ms Parslow.

[8]       In the result, the evidence of Mr Jones and Dr Phillips was admitted in conformity with the ruling of the Environment Court.  Mr Cavanagh’s submission that  the  Environment  Court  had  “now  found  to  be  of  value”  evidence  it  had previously excluded is, accordingly, unsustainable, as is his claim that the relief sought in this Court had effectively been granted by the Environment Court “by it admitting the disputed evidence”.   Evidence as to archaeology was excluded in accordance with the initial ruling.   As Mr Casey submits, if the steps ultimately taken to comply with the Environment Court’s order had been taken at an early stage, proceedings in this Court could have been avoided altogether.

[9]       Redback is therefore clearly entitled to costs on each of the three sets of proceedings.  Redback claims an allowance of one day for each of the proceedings under item 10 of Schedule 3 and .8 days pursuant to item 4.10 for the filing of memoranda for an initial conference and the memorandum addressing costs and other issues following the withdrawal of the proceedings.

[10]     Item 2 of the Schedule applies to the application for review but it does not apply to the appeals.    They are covered by items 14 – 16 of the Schedule which make no provision for the initial steps involved in a proceeding.  I accept that some allowance should be made. To allow for no preparation time would be anomalous.
But, in my view, no more than half a day for each of the appeals is appropriate.  I propose to allow a total of 1.5 days for the initial steps plus .8 days for preparation of memoranda, a total of 2.3 days.  At the daily rate of $1,600 the appellants/plaintiffs are entitled to costs of $3,680.

Cost on application for interim relief

[11]     Redback seeks indemnity costs or, at the very least, increased costs (on a category 3 basis with a two-thirds uplift) on the unsuccessful application for an interim order.  The grounds on which such an award is sought are:

a)	There was a breach by the plaintiffs’ counsel of the duty to make full disclosure;

b)	The steps taken by counsel to initiate recusal were improper;

c)	The importance and urgency of the application; and d)	The importance of the proceeding to others.

[12]     The application was made on a without notice basis, although the application was served on the parties and a full set of the relevant documents provided to the Environment Court at the time the application for the Judge to recuse himself was heard.  The defendants appeared on a “Pickwick” basis.  For practical purposes, the application proceeded on a notified basis.

[13]     Mr Casey submits that the plaintiffs’ counsel, nevertheless, remained under the duty of utmost good faith arising in without notice applications to make full disclosure of all relevant facts, including those against their clients’ interests.   He submits there was a breach of this duty.   He says the documents filed with the application were entirely self-serving; they did not provide “even the most basic information” about the circumstances leading up to the making of the orders and the evidence was selective, to say the least.   It is submitted that this was not only improper conduct on the part of counsel but added to the burden on counsel for Redback.  Among other things, counsel was required to prepare an additional bundle of relevant background material.

[14]     I do not accept that there was a breach of counsels’ duty.   The documents (including submissions) filed with the application contained a fair, if abridged, account of the background.  I was provided with the transcript of the hearing of the application for recusal and of the earlier decision to refuse a stay pending the hearing of the appeal.

[15]     I acknowledge that counsel for Redback provided material assistance at the hearing by way of the further bundle of background material, some of which was not in the documents filed or tendered on behalf of the plaintiffs.   That may indicate shortcomings in the preparation and presentation of the plaintiffs’ case but it does not, to me, bespeak a breach of counsels’ duty.

[16]     Mr Cavanagh first invited Judge Thompson to recuse himself in a personal letter to the Judge which was not copied to counsel for the defendants.  The Judge directed the letter to be returned and the application was then made in open Court on the first day of the scheduled hearing.

[17]     Mr Cavanagh explains that in writing direct to the Judge and not copying the letter to the parties, he was following the procedure endorsed in Howell v Millais.
At the recusal hearing, Mr Cavanagh also disclosed that he had sought the advice of two Auckland silks who had endorsed the strategy he proposed to adopt.  Mr Casey points out that the circumstances in Howell v Millais were quite different.   The recusal  request  was  made  by  personal  communication  to  the  Judge  because disclosure in the usual way would have revealed correspondence of a personal nature between the Judge and the law firm in which the plaintiff was a partner.  Disclosure of the correspondence would have caused embarrassment to the Judge.

[18]     While I accept that Mr Cavanagh acted with the best intentions in writing direct to the Judge, I am in no doubt that it was not the proper approach.   The circumstances in Howell v Millais were exceptional and far removed from the circumstances of this case.  Here there was no reason why the application could not have been made in the normal way at the outset.

[19]     That said, it is not at all clear to me why the way in which the application was initially advanced in the Environment Court should increase the costs awarded in this Court.  It did not affect the course of the proceeding or increase the costs of those opposing interim relief.

Importance and urgency

[20]     Mr  Casey  submits  that  Mr  Cavanagh’s  disclosure  at  the  hearing  in  the

Environment Court that he had conferred with two other Auckland silks (senior to

him) who had indicated their support for his actions, placed Redback in a situation where it was necessary to engage senior counsel in order to ensure a level playing field.   While the matter in issue was not especially complex, the circumstances justified the engagement of counsel of special skill and experience.

[21]     Mr Casey also points to the need to deal with the proceedings urgently.  The recusal application was heard on Monday 14 December and, having received copies of the proceedings later that day, Mr Casey and his junior were required to work into the evening in order to prepare for the hearing in the High Court the following morning.

[22]     Mr Casey submits that it fell to him to defend the Environment Court Judge against the very serious allegation that he was biased, an allegation going to the integrity of the Judge himself and also to the public’s faith in the judicial system. The allegation  received  prominence  in  the  media.    As  a  senior  member  of  the Environment Court bar, Mr Casey saw himself as under a duty to defend the Judge from what he saw to be the unwarranted attack on his integrity.  That, he submits, was “some other reason” to award increased costs pursuant to r 14.6(3)(d).

Evaluation

[23]     I am satisfied that the circumstances do not warrant an order for indemnity costs.  While I was able to conclude without difficulty that there was nothing in the interlocutory decisions of Judge Thompson to support a finding of bias, I would not characterise the application as vexatious, frivolous, improper or unnecessary in the sense of involving flagrant misconduct.

[24]     In considering whether an order for increased costs is justified, I follow the approach mandated in Holdfast NZ Ltd v Selleys Pty Ltd of first categorising the proceeding under r 14.3, working out a reasonable time for each step under r 14.5 (including any extra time justified for a particular step) and then stepping back and
looking at the resultant award. 

[25]     I have  no  difficulty  with  costs  being  determined  on  a  category 3  basis. Although the proceedings were not at all complex, I accept that the interests and the issues involved and the involvement by the appellants/plaintiffs of senior counsel, warranted the engagement of senior counsel for Redback.   I also accept that the involvement of additional counsel was justified given the urgency, importance and potential implications of the application.

[26]     For the purpose of determining the time allowance for the steps taken, I consider band B is generally appropriate.  However, the time for preparation allowed under item 4.14 (equivalent to the time occupied by the hearing) is inadequate.  The application was supported by five affidavits.  It required reviewing the Environment Court proceedings from the time of the initial evidential ruling.  I propose to allow
1.5 days which recognises the need for senior counsel and his instructing solicitor to be involved in preparation.

[27]     On that basis, scale costs are as follows:

Preparation	1.5		
Hearing	  .5		
	2.0 @ $2,370	$4,740	
Allowance for second counsel (for appearance only)	$1,185

Total	$5,925

[28]     I do not think any further uplift is justified.  None of the factors advanced on behalf of Redback support a finding that the appellants/plaintiffs contributed unnecessarily to the time or expense of the application.  Classifying the proceeding as category 3 for costs purposes is sufficient recognition of the importance of the proceeding.

Disbursements

[29]     Redback seeks to recover $843.75 charged by a planning consultant who reviewed the affidavits filed in support of the application.  Although no affidavit in opposition  was  filed,  I  consider  it  was  reasonable  to  incur  that  expense.    The

plaintiffs  had  filed  no  less  than  five  affidavits  by  experts  in  support  of  the application.  Redback was entitled to retain the services of an expert to review them.

Result

[30]	The appellants/plaintiffs must pay Redback:

a)	Costs of $3,680 on the three proceedings;

b)	Costs	of	$5,925	and	disbursements	of	$904.95	(including photocopying of $61.20) on the application for interim relief.