IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-005804 [2013] NZHC 1459

UNDER	the Declaratory Judgments Act 1908

IN THE MATTER	of land purchases for public works at
Massey North

BETWEEN	MERLENE JEANETTE COX MITCHELL CAVANAGH COX DARRIAN EDWARD COX LEVONNE CHERIE COX KYLIE JANE COX
NORMA IONA GRIMMER REX ALLAN BRIDGFORD RAYMOND CLAUDE MORETON
SW TRUST SERVICES (SIX) LIMITED as trustees of the Rexford Family Trust MARINKO PAVICH
ZORKA PAVICH Applicants

AND	AUCKLAND COUNCIL Respondent

Hearing:	11 June 2013

Appearances:	A Webb for the Cox Family
L A O'Gorman for the Respondent
No appearance by or for any other Applicant

Judgment:	12 June 2013

[ORAL] JUDGMENT OF WYLIE J

Counsel:
A Webb, Auckland
L A O’Gorman, QC, Auckland

COX & ORS v AUCKLAND COUNCIL [2013] NZHC 1459 [12 June 2013]

Introduction

[1]       The Court has before it an application to strike out these proceedings.  The proceedings comprise an application for declarations under the Declaratory Judgments Act 1908.

[2]       Declarations were sought to resolve a dispute between the parties as to the amount of compensation to be paid by the respondent Council to five applicants for the purchase of the applicants’ land for public works.

[3]       The  proceedings  were  commenced  by  agreement  between  the  parties. Moreover,  the  issues  which  required  resolution  were  agreed,  and  the  Council accepted that it should pay the legal costs of all parties to the proceedings.  Given this provenance, the proceedings have had an unfortunate history.  They have been bedevilled by disagreements between the parties, first, as to what was in issue, more recently, whether the proceedings had settled, and now, as to the terms of settlement and whether the settlement was a global settlement or a settlement between the Council and each of the individual applicants.

[4]       The  present  application  before  the  Court  is  an  application  filed  by  the respondent Council.   It is seeking an order striking out and dismissing the proceedings.  One of the grounds relied upon in the application is an assertion that the proceedings were settled by an exchange of correspondence between counsel which concluded on 20 February 2013.  It also says that the applicants should pay its actual and reasonable costs as from that date.

[5]       All applicants initially adopted the position that the proceedings had not been settled as at 20 February 2013.  However, when the Council filed its interlocutory application seeking a strike out, all but one of the applicants took no steps.   Two applicants, comprising various members of the Cox  family,  did file a notice of opposition.  In the notice of opposition, they did not oppose an order striking out and dismissing the proceedings.   Indeed, they accepted in the grounds detailed in the notice of opposition that they had agreed to settle the proceeding on 20 February
2013. They did, however, resist the making of a costs order against them.

Background

[6]       The  applicants  were  the  owners  of  five  properties  in  an  area  known  as Massey North, immediately to the north of the Westgate Shopping Centre, within the district of the former Waitakere City Council.  Their land was located just outside the metropolitan urban limit established by the Auckland Regional Policy Statement and it was zoned “countryside living” under the Waitakere City District Plan.

[7]       Following the Local Government (Auckland) Amendment Act 2004, changes were proposed to the Auckland Regional Policy Statement and the District Plan in a number of areas, including Massey North.  In the process, it was identified that areas of the applicants’ land would be required for stormwater management and green space areas.

[8]       In order to acquire this land, land purchase agreements were entered into between the Waitakere City Council and the applicants in September and October
2010.  In relevant respects, all agreements were materially the same.  Clause 5 in the agreements recorded that the parties were unable to agree on all aspects of the compensation payable and in particular, that they disagreed on whether the areas of land acquired for stormwater ponds, riparian margins, and open space, should be compensated.  It was recorded that there were three issues in dispute.  They were set out as follows:
…

(i)         on the basis of the zoning that applied prior to or subsequent to PC15, Compensation will initially be paid under this agreement on the basis of the prior zoning, inclusive of GST.  The Owners contend that compensation should be paid on the basis of the subsequent zoning.

(ii)	with   or   without   an   adjustment   for   curtilage.
Compensation will initially be paid under this agreement with an adjustment for curtilage but the Owners contend that no curtilage adjustment should be made.   This issue does not however need to be determined if the industry rate prevails.

(iii)	inclusive or exclusive of the goods and services tax.
This issue only arises if the industry rate is determined to apply to the calculation of compensation.         The    Council    contends    that

compensation should be paid “plus GST if any”; the Owners content that GST should be added and compensation paid on a GST inclusive basis.
…

Under cl 5(b) in the agreements, the parties agreed to apply to the High Court for declarations under the Declaratory Judgments Act 1908 to resolve these disagreements.

[9]       Land valuers advising the parties had agreed on the quantum payable against each of the potential outcomes.  The Council paid the compensation it considered was payable.  The expectation was that if the disagreements were resolved in favour of the applicants, there would be further sums payable to them, but not otherwise.

[10]     In cl 5(f) of the agreements, the Council agreed to reimburse the reasonable valuation and legal costs incurred by the applicants in respect of the declaration proceedings.

[11]     The applicants were all represented by one solicitor and by one counsel, Mr Curry.  He and Mr Casey QC, acting on behalf of the Council, prepared a draft statement of claim, and it was filed in this Court on 25 September 2011.

[12]     Shortly thereafter, Mr Curry suggested that representations had been made by officers or representatives of the Waitakere City Council at meetings attended by some or all of the applicants.   He sought to extend the declaration proceedings to encompass this issue as well. This proposal was resisted by the Council.

[13]     Matters were brought to a head by Mr Curry on behalf of the applicants.  He applied for directions as to the conduct of the declaratory judgment proceedings.

[14]     The application was heard by Katz J on 22 November 2012.  She issued a reserved judgment dated 13 December 2012.   In that judgment, she held that the representation issue was not appropriate for determination through the declaratory judgment procedure.  She also made the following observation:

Obviously, the applicants may have other causes of action available to them arising out of the representations that were allegedly made.  However such

causes of action would not be amenable to determination by way of declaratory judgment and would need to proceed by way of ordinary proceedings.

[15]     In late January 2013, Mr Curry and Mr Casey had a preliminary discussion about a possible settlement. There were ongoing discussions over a short period, and on 11 February 2013, Mr Casey sent a letter to Mr Curry.   Inter alia, the letter contained the following:

Further to our recent discussions I am instructed to propose a settlement of all outstanding matters as between the Council and the four parties you represent, on the basis of an ex gratia all-in payment of $100,000...

[16]     Mr Curry replied on 15 February 2013.  He requested that the ex gratia all-in payment should be increased to $125,000.

[17]     There were further discussions between counsel.

[18]     On 19 February 2013, Mr Casey sent an email to Mr Curry.  He recorded that he had instructions to conclude the matter on the basis of an ex gratia payment of
$125,000, being $25,000 for each of the five claimants, and payment of Mr Curry’s costs, inclusive of GST and disbursements, in a total sum of $25,000.  The email also recorded that the Council would require a formal settlement agreement and discharge from the claimants.

[19]     Mr Curry responded on 20 February 2013.   He advised that the offer was accepted.

[20]     Thereafter, Mr Casey prepared a formal settlement agreement and forwarded it to Mr Curry on 21 February 2013.

[21]     On 4 March 2013, Mr Curry sent an email to Mr Casey.  He indicated that he wished  to  talk  through  “difficulties  encountered  in  the  settlement  process”.    A meeting took place a few days later.  Mr Curry advised Mr Casey that his clients did not accept that the settlement extended to their claims based on the alleged representations, and that they wished to preserve their right to make claims in this regard.

[22]     The Council did not accept the assertion advanced by Mr Curry.  It took the position that settlement had been concluded and that the completion of the deed was a consequential matter to be performed as part of the settlement, but not as a precondition to it.

[23]    At this stage, a fixture had been allocated for the declaratory judgment proceeding. The matter was due to be heard on 19 March 2013.

[24]     On 11 March 2013, Mr Curry filed a memorandum with the Court on behalf of all applicants.  It sought that a date be fixed for a hearing to determine whether there  had  been  a  settlement  in  the  proceeding.    The  notice  recorded  that  the applicants denied that there had been a settlement.  Mr Casey filed a memorandum on behalf of the Council dated 12 March 2013.  That memorandum recorded that the matter had been settled.  In a reply memorandum dated 13 March 2013, Mr Curry asserted that there was an issue between the parties as to whether or not there had been an agreed settlement.

[25]     The matter came before Venning J on 14 March 2013.   He recorded the dispute between the parties as to settlement.  He vacated the fixture.  He went on to observe as follows:

The remaining issue is how the matter of whether the proceedings have been settled or not can most appropriately be determined.  I do not accept that can be done on the basis of an application contained in a memorandum such as that filed on behalf of the applicants.

While it is for counsel, not the Court, to determine the correct procedure, there appear to be at least two ways for that matter to be determined.  Either:

(a)        the applicants seek to take a further step in the proceeding and the respondent applies to stay on the ground of abuse of process; or

(b)        the applicants issue  a fresh  set  of  proceedings  seeking a declaration to the effect that this proceeding has now settled.

[26]     The matter was set down for callover before the Duty Judge.  On 25 March

2013, Mr Curry filed a memorandum suggesting that what was needed was “a new procedure akin to those mentioned” in Venning J’s minute.   He proposed that the

Council should apply to the Court for a declaration that the proceedings had been settled.

[27]     Priestley J, at callover on 25 March 2013, once again recorded the dispute between the parties.  He observed as follows:

… The respondent asserts a settlement has been concluded.  The applicants say there was no such settlement… As Venning J pointed out it is not for this Court to tell the parties how to resolve their new dispute.  If the substantive matter is set down for a fixture again clearly the respondent would have to re-plead. As Mr Curry observes, there would regrettably be disputed facts in which current counsel would probably be prime witnesses.

[28]     The Registrar was directed to schedule a one-day fixture so that matters could be resolved.  The Registrar was also directed to schedule a short case management conference before a Judge, and the parties were directed to file memoranda updating the Court, and in particular, focussing on what further timetable orders and directions might be necessary.

[29]     Mr Curry filed a memorandum on behalf of the applicants dated 26 April

2013.  A memorandum was filed on behalf of the Council by Mr Casey on 30 April

2013.  Mr Casey proposed that the Council should apply to strike out the existing declaratory judgment proceedings.  He suggested a timetable to that end.

[30]     The matter came before Toogood J on 1 May 2013.  Toogood J recorded the Council’s proposition, and recorded that Mr Curry acknowledged that the strike out application proposed by the Council was the most suitable vehicle to resolving the settlement issue.  A timetable order was made by consent which, inter alia, required the Council to file and serve an application to strike out on or before Tuesday,
14 May 2013.

[31]     That step was taken.  As I have noted above, the application was advanced, inter alia, on the ground that the proceeding had been settled.

[32]     A notice of opposition was filed by two of the applicants, all Cox family members, on 23 May 2013. Also, as I have noted above, the notice of opposition did not oppose the making of an  order striking out  and  dismissing the proceeding.

Rather, it opposed the making of a costs order.  In the grounds recorded in the notice of opposition,  it was  acknowledged  that  the applicants  had  agreed  to  settle the proceeding on 20 February 2013.

Issues

[33]     The parties could not agree on what was in issue before me.

[34]     Ms  O’Gorman  appearing  for  the  Council  argued  that  the  key  issue  that required determination was the factual question of whether the settlement agreement reached on 20 February 2013 included the applicants’ claims of misrepresentation by the Council.  She argued that this was a narrow issue capable of being determined on the basis of the documentary evidence filed in support of the application for strike out by both parties.  She presented careful and detailed submissions addressing that issue, both from a legal perspective, and from a factual perspective.

[35]     Mr Webb appearing for the Cox  family members took  a rather different approach.  He argued that the Council was simply seeking an order striking out the proceeding and costs.  He pointed out that the Cox family agreed that the proceeding could be struck out, and submitted that the only matter in issue between the parties on the papers filed was in relation to costs.  It was the Cox family’s primary position that, because the Council had only sought an order striking out the proceedings, this was the end of the matter and that there was no jurisdiction for the Court to go on and determine the scope of such settlement agreement as was reached.  As a matter of  caution,  Mr Webb  also  made  submissions  on  the  extent  of  the  settlement agreement, in the event that I concluded that I had jurisdiction.

Analysis

[36]     I start by referring to a well-known passage in the judgment of McGechan J

in Price Waterhouse v Fortex Group Limited:1

It has become fashionable in some quarters to regard the pleadings as being of little importance.   There was an echo of that approach in the implicit

1	Price Waterhouse v Fortex Group Limited CA179/98, 30 November 1998 at 17–18.

suggestion floated in this case that exchange of briefs of evidence before trial might be seen as curing any lack of particularity in the pleadings.  Any such view is misguided.   Pleadings which are properly drawn and particularised are, in a case of any complexity, if not in all cases, an essential road map for the Court and the parties.   They are the documents against which the briefs of evidence are or should be prepared.   They are the documents which establish parameters of the case, not the briefs of evidence.

We are not casting aspersions on the pleadings in this case which, leaving aside issues about necessary particularity, are well drawn on each side.  Nor are we advocating a pedantic approach to the topic.   Pleadings should be read as conveying what they would reasonably convey, in the context of the case, to a sensible legal mind.   Even less are we advocating prolixity of pleadings, or the raising of every conceivable cause of action irrespective of its potential for success; this type of pleading often contains the additional flaw  of  overlooking  R114  which  requires  each  cause  of  action  to  be separately pleaded.  What we are saying is that both the Court and opposite parties are entitled to be advised of the essential basis of a claim or defence, and all necessary ingredients of it, so that subsequent processes and the trial itself can be conducted against recognisable boundaries.  Neither the Court nor opposite parties should be placed in the position of having to deal with a proposition of whose substance adequate notice has not been given in the pleadings.

[37]     That judgment was given in the context of the substantive pleadings in the matter in dispute in that case.  In my view, it is in large part apposite to interlocutory applications as well.

[38]     The strike out application was not opposed by the Cox family members. There is no notice of opposition filed by any of the other applicants.   Pursuant to r 7.24 of the High Court Rules, a party who intends to  oppose an interlocutory application must file and serve on every other party a notice of opposition to the application.    If  the  respondents  consent,  or  do  not  oppose,  then  no  hearing  is required,2  and the respondent need not attend the hearing.3     If a party is neither present nor represented at the hearing of the application, a Judge may deal with the matter in the party’s absence.4

[39]     Given that the other applicants did not file a notice of opposition, and given that they were neither present in person, nor represented at the hearing before me, I have jurisdiction to determine the application in their absence in such manner as
appears to me to be just.

2	High Court Rules, r 7.37.
3	Rule 7.38.

[40]     There is no opposition by the Cox family members to the strike out/dismissal of the proceedings.   No steps have been taken by the other parties.   There is no impediment to the making of an order striking out and dismissing the proceedings.  I make an order accordingly.

[41]     It is not necessary for me to go on and consider whether the proceeding was settled, or what the terms of settlement were.  Nor is it necessary for me to determine whether or not there was a global settlement, or individual settlements between the Council and each of the applicants.   I do record that the Cox family members, in their notice of opposition, did accept that a settlement agreement was concluded on
20 February 2013.  They may well face difficulties if they later seek to resile from that proposition.  However, this does not compel the conclusion that the settlement extended to the representation issue.  That matter is not directly before the Court on the present application, and in my view, it is not appropriate to endeavour to deal with it in the present context.

Costs

[42]     I now turn to the Council’s application for costs.

[43]     Up until 23 May 2013, the Council did not know with any certainty what position was being taken by the applicants.   It thought, on the basis of statements made by their counsel, that they were arguing that no settlement had been concluded. However, no reasons had been advanced for that assertion.  It proposed that a strike out application should be used as the appropriate vehicle to bring matters to a head. The applicants, through their counsel, agreed that this was appropriate, and a timetable was put in place by consent to require the filing of such application, and to get the matter ready for hearing.   The fact that three of the five applicants were taking no steps, and that the Cox family members did not oppose the making of the strike out order, but did oppose a costs order, only became apparent on 23 May 2013.

[44]     During the period 20 February 2013 to 23 May 2013, the Council incurred considerable costs which could and should have been avoided if the applicants had made their ultimate position clear at a much earlier stage.   Mr Webb responsibly accepted that the applicants are exposed to a costs order over this period.  I observe

that the application might well have been avoided, or more appropriate proceedings could have been brought to try and resolve what the Council says is in dispute, if the applicants had made their position known at an earlier point of time.

[45]     All matters in relation to costs are, of course, in the discretion of the Court.5

A number of detailed principles  set  out  in  the High Court  Rules  apply.   Those principles however can yield to r 14.6.  It provides that the Court may make an order increasing costs payable under the rules, or order that costs payable are the actual costs incurred by a party.  Inter alia, it provides that increased costs may be ordered where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding by taking or pursuing an unnecessary step or an argument that lacks merit.  Further, increased costs can be ordered where 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.

[46]     I am satisfied that it is appropriate to invoke the provisions of r 14.6(3)(b)(ii)

and/or r 14.6(3)(d) in the present case.

[47]     In my view, costs should first be calculated on a 2B basis for the period

20 February 2013  to  23  May 2013.    Further,  those costs  should  be uplifted  by one-third to recognise that the costs incurred were unnecessarily incurred, because of the actions of the applicants.  Accordingly, I make a costs order on that basis against all five applicants in favour of the Council.

[48]     I now turn to the period 23 May 2013 to date.  In my view, the position of the parties changed once it became clear that the only applicants challenging the Council’s application were the Cox family members, and then only in relation to a costs order.  In my view, the Council should, at that point of time, appreciated that its application was not appropriate for the matters it alleged were in issue.   It should have accepted that a strike out application was not the appropriate vehicle to determine the scope of the settlement agreement.  Costs as between the parties were still a live issue, but they could have been dealt with either, with the consent of the parties on  the  papers,  or  alternatively,  at  a brief hearing held  for that  purpose.

Ultimately, the hearing before me lasted for two-thirds of a day.  Full submissions were presented by both parties in relation to an issue which was not raised on the papers filed.  The submissions filed by the parties also dealt with costs.   In broad terms, the argument in relation to costs took approximately 25 percent of the submissions and hearing time before me.

[49]     In my view, applying the same rules as I have noted above, it is appropriate to allow the Cox family members costs for the period from 23 May 2013 through to the date of this judgment.  I allow the Cox family 75 percent of the costs incurred after
23 May 2013, calculated on a 2B basis, increased by one-third, because the hearing was, in large part, unnecessary.

[50]     It is appropriate for counsel to calculate the costs payable by each party to the other pursuant to these orders.  The parties can set off the one award of costs against the other.  If there is any difficulty, I reserve leave to the parties to come back by way of memoranda.  Any memoranda in this regard should be filed within 10 working
days of the date of this judgment.

Wylie J