IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2023-404-697
[2024] NZHC 215	

UNDER	the Judicial Review Procedure Act 2016	
IN THE MATTER	of an application for Judicial Review	
BETWEEN	BOTEV TRUSTEE LIMITED
Applicant	
AND	AUCKLAND COUNCIL
First Respondent

BRENDON TAIT
Second Respondent

SUSAN TURNER and TERRY TURNER
Third Respondents

DEVELOPMENT PARTNERS MANAGEMENT LIMITED
Fourth Respondent	

Hearing:	On the papers	
Counsel:	S Ryan for the Applicant
SF Quinn and E Manohar for the First Respondent	
Judgment:	19 February 2024	

COSTS JUDGMENT OF BECROFT J

This judgment was delivered by me on 19 February 2024 at 4pm Registrar/Deputy Registrar
Solicitors/Counsel:
Pidgeon Judd, Auckland DLA Piper, Auckland
S Ryan, Barrister, Auckland

BOTEV TRUSTEE LTD v AUCKLAND COUNCIL & ORS [2024] NZHC 215 [19 February 2024]

The application

[1]	This is a costs application. The substantive proceedings relate to an application for judicial review of what was clearly a flawed Auckland Council issued subdivision resource consent. The recipients of that subdivision consent have now, quite properly, surrendered it. Consequently, the applicant has what it wants and has discontinued its application. The applicant now claims it has been “successful” and seeks that the Court departs from the normal position that a discontinuing applicant must pay costs.

[2]	The first respondent Auckland Council agrees that the matter should be discontinued. However, it opposes costs being ordered against it. This is the thrust of its position. The first respondent also suggests, but only faintly, that costs in favour of the Council might be justified.

[3]	The applicant and the Council (in opposition) have filed submissions as to costs. The two parties involved in applying for the subdivision consent and surrendering it (the second and fourth respondents) did not file a statement of defence and have not filed any costs submissions.

[4]	I understand that the parties seek to have the matter of costs determined on the papers.

The Review Application

[5]	There is a property at 5 Sunderlands Road, Half Moon Bay, Auckland which is divided into three cross-lease titles, each with a flat. The second respondent, Mr Tait, owns Flat 2. The third respondents, Mr and Ms Turner (together the Turners) own Flat 1. The applicant, Botev Trustee Limited, owns Flat 3. The directors of that company reside in Flat 3 and have done so since 2009.

[6]	On 24 December 2021, Mr Tait by his agent, Development Partners Management Ltd (Development Partners), the fourth respondent, applied for a subdivision  resource  consent  to  subdivide  the  three  cross-lease  properties  at     5 Sunderlands Road. The application stated that it was for the conversion of three

existing cross-leases into three fee simple titles and that no alteration of the existing development was anticipated under the application.

[7]	The application incorrectly stated it was consented to and supported by the other two cross-lease owners (being the Turners and the applicant).

[8]	The application also did not accurately reflect the location of existing access and utility services for the flats, particularly in relation to Flat 3.

[9]	As a consequence of those material inaccuracies, it was alleged that the Council wrongly characterised the subdivision consent as a controlled activity. It is alleged that the application should have been a fully discretionary activity so that the other two flat owners should have been notified. But they were not.

[10]	On the 21 March 2022, relying on the grant of subdivision consent, Mr Tait commenced proceedings in the Auckland High Court for partition of the cross-lease.

[11]	Not surprisingly, the applicant (the owner of Flat 3), and the Turners were very distressed when they found out what had happened.

[12]	On 16 February 2023, their lawyers wrote to the Council pointing out that they did not consent to the subdivision application, nor were they notified, and the application was materially inaccurate. For instance, it listed Mr Tait as the sole owner of the property and that there were no other owners. The application also completely mis-characterised access to facilities and the garage. The letter invited the Council to consider cancellation of the subdivision consent under s 132(3) of the Resource Management Act 1991, or to at least review the conditions of consent.

[13]	The Council officer who granted the subdivision consent on a non-notified basis, later wrote to the applicant advising that the Council had not been able to obtain the agreement of the consent holder to withdraw the subdivision consent. On 17 March 2023, the resource consent officer advised the applicant that the Council would not take any further action on the existing subdivision consent as it had been approved.

[14]	On 18 April 2023, these review proceedings were commenced.

[15]	On 25 May 2023, the Council filed a statement of defence. It was somewhat “bare”. Mr Tait and Development Partners did not file any defence. Expert planning evidence was filed on behalf of the applicant on 23 June 2023.

[16]	On 25 July 2023, notice of surrender of the subdivision consent was received by the Council. The first surrender notice was filed by Development Partners on behalf of Mr Tait. A subsequent surrender notice was filed by Mr Tait the next day. On 31 July 2023, the Council’s solicitor supplied a notice from the Council accepting the surrender of the subdivision consent.

[17]	As a consequence of the surrender, the subject matter of the judicial review proceedings has become redundant, and the proceedings are to be, or have been, discontinued.

Legal principles

[18]	The parties agree as to the general principles. The principles governing the court’s discretion to award costs are well settled. The discretion is not unfettered. It is qualified by the specific rules set out in rr 14.2 to 14.10 of the High Court Rules 2016 (HCR) and is exercisable only in situations that are not contemplated by those specific rules, or which are not fairly recognised by them.1

[19]	The costs regime is of a regulatory character, and it is important that its integrity is maintained. There is a strong implication that the court is to apply the regime in the absence of some reason to the contrary. Any departure, such as that requested by the applicant here, must be a considered and particularised exercise of the discretion.

[20]	The relevant rule here is r 15.23 of the HCR which provides:

15.23 Costs
Unless the defendant otherwise agrees or the court otherwise orders, a plaintiff who discontinues a proceeding against a defendant must pay costs to the defendant of and incidental to the proceeding up to and including the discontinuance.

1	Smith v Smith [2020] NZCA 556 at [66].

[21]	In Earthquake Commission v Whiting, the Court of Appeal set out the principles to be applied when considering costs following discontinuance of a proceeding by a plaintiff:2
[68]	It is accepted that there is an onus on the plaintiff to persuade the Court to exercise its discretion. In deciding whether it is just and equitable to exercise the discretion, the Court may consider the parties’ conduct in the matter and the reasonableness of the parties’ respective stances, including the reasons why the plaintiff brought and continued the proceeding and the defendant opposed it.
[69]	Courts have been persuaded to exercise the discretion when:
(a)	the defendant’s acts or omissions have caused the litigation and then rendered it unnecessary; and
(b)	an intervening governmental or third party decision has rendered the proceeding redundant.

[22]	This Court has previously been prepared to exercise its discretion to award costs in favour of a plaintiff seeking a judicial review. For instance, where the plaintiff has discontinued the proceeding after a party surrendered resource consent.3 In another case, a council changed its development contribution policy in respect of an integrated secondary school in a way that achieved the same outcome sought in judicial review proceedings.4

[23]	The costs decision in J D and R D Wallace Ltd Partnership v Waipa District Council is also relevant.5 In that case, the applicants took issue with the Council’s decision allowing their neighbour to pursue a resource consent application without notification. Similarly in that case, the consent holder surrendered the resource consent. Associate Judge Brittain was prepared to award costs in the applicant’s favour in that case.

[24]	Conversely, in Maehl v Auckland Council, Whata J decided not to award costs to the applicant for judicial review following the consent holder’s surrender of the resource consent.6 Whata J declined to hold the applicant was “successful” for the purposes of a costs award. In that case, Whata J had part-heard the application for

2	Earthquake Commission v Whiting [2015] NZCA 144, (2015) 23 PRNZ 411 (footnotes omitted).
3	Eagles View Queenstown Ltd v Queenstown Lakes District Council [2020] NZHC 2282.
4	Carmel College Auckland Ltd v North Shore City Council HC Auckland CIV-2007-404-5894, 20 January 2009.
5	Wallace Ltd Partnership v Waipa District Council [2023] NZHC 1895.
6	Maehl v Auckland Council [2017] NZHC 1902 at [43].

review, and said it was not evident to the Court at the conclusion of the hearing that the Council had erred in any material way.

Costs against Mr Tait and Development Partners (the second and fourth respondents)

[25]	This appears to be a straightforward decision. On the face of it, the application for subdivision contained material errors, not least of which was that the two other cross-lease proprietors consented. In somewhat of a contradiction, it also stated there were no other owners of the property.

[26]	Even leaving aside the other apparent material inaccuracies, the information regarding consent of the other two title holders was clearly false. There is a clear inference that the information was provided by either Mr Tait, or Development Partners, who knew it to be false or, at the very least, were negligent as to the accuracy of the information. A final conclusion on this point is not necessary. What is crystal clear however is that materially incorrect information was provided.

[27]	What is equally clear is that soon after the proceedings were issued, instead of filing a statement of defence, Mr Tait and Development Partners surrendered the subdivision consent.

[28]	That invites the inference that Mr Tait and Development Partners knew of the false information, knew that the subdivision could not continue without the consent of the applicant and the third respondent, and decided to resolve the issue by surrendering the subdivision consent.

[29]	In my view that is as clear a case of “success” as can be imagined.

[30]	I order that scale 2B costs in the sum of $17,686 plus the particularised disbursements of $12,451.12 (inclusive of GST), be paid. These costs are ordered jointly and severally against Mr Tait, and Development Partners.

Costs against the Auckland Council (the first respondent)

[31]	This is a more difficult issue. As the Council’s lawyers maintain, the Council does not own the land and did not initiate the consent application. The Council “merely” plays a regulatory role. But in my view, the significance of that role, and the importance of the responsibilities that go with it, should not be underestimated.

[32]	When the Council was alerted to the problems with the consent it had issued, it did attempt to persuade the subdivision consent holder to surrender the consent. However, it was unsuccessful in those efforts.

[33]	The Council submits that it has limited power to cancel or review a subdivision approval. The Council highlights that s 132(3) and (4) specifically enable a council to cancel a resource consent but apparently only in very limited circumstances.

[34]	The Council, relying on N-Tech Ltd v Abooth Ltd,7 maintains that the Court should not speculate on the merits of a case that has been discontinued before any evidence is heard and that it is sensible in this case not to make any costs award.

[35]	All that I accept, subject to one matter that concerns me. I would have thought a responsible council in the case of an application to subdivide would have checked the legal situation with the land—which would have revealed the three cross-lease titles—would have checked who the title owners are, and whether those title owners, who are asserted to consent by the applicant, actually do consent. That would be a prudent standard practice. If that were not the case, then non-notified applications could be made based on false information with no checking process in place to protect innocent parties. In my view, even without hearing the merits of the claim, there would appear to be some initial fault on the part of the Council in failing to conduct appropriate due diligence.

[36]	In its statement of defence, the Council provided a bare denial to the claim. It maintains this position. I do not know on what basis the Council asserts there is a defence. The memorandum it provided for this costs application would certainly have

7	N-Tech Ltd v Abooth Ltd [2012] NZHC 1167.

been a good time to set this out. In the absence of that information, I have considerable sympathy with the applicant’s submission:

[40] Stepping back, it is submitted that broader considerations as to the overall justice apply. If the applicant is not considered the successful party in the circumstances here, when the consent authority was on prior notice as to alleged material inaccuracies, then the consent authority would in effect be incentivised to make bare denial defences, knowing that it had immunity from an adverse costs award if the consent holder later surrenders, even though, here, the consent authority suggested that very course to the consent holder prior to the commencement of proceedings.

[37]	That said, I also have a little sympathy for the Council which submits it has relied on the accuracy of the information provided by an applicant as part of the consent process. But I have no submissions as to why the Council could not be considered negligent in these circumstances. As counsel for the applicant submits, in light of the surrender of the consent, the Council has not explained what its arguable case was nor suggested any relevant point of law which might stand on its own in support of the Council.

[38]	However, without further information and probably a hearing, I simply cannot determine on the balance of probabilities as to whether the Council was negligent or at fault in issuing the subdivision consent—although it seems so. As a result, even in a costs hearing, I am reluctant to make adverse findings against the Council in terms of it issuing the consent.

[39]	It is a different story when it comes to analysing the actions of the Council after the fundamental problems with the consent application were brought to its notice. It seems that the Council took very little action. There was obviously some contact with the applicant in an attempt to “persuade him” to surrender the consent. However, the Council have provided little information as to exactly what it did, how energetic it was in pursuing the surrender of the consent and to what extent it confronted the applicant about the patently inaccurate, if not dishonest, information that was provided.

[40]	Now would also have been a very good time for the Council to inform the Court as to exactly what it did to resolve the matter. I do not understand why it has not provided detailed information to the Court to illuminate the situation—if only to resist a costs application.

[41]	The Council continues to simply make bare denials and to suggest that it could not do more because it had no power to cancel the consent. I would have thought there was much more it could have done in terms of actively engaging with the applicant and confronting them with the material errors.

[42]	In my view, the Council came to the view that it should stand by its resource consent too quickly. I must say that position surprises me. The applicant’s lawyer’s letters to the Council particularised a multitude of problems. I would have thought the Council would have worked very hard, much harder than it did, to resolve the issue and to take up the applicant’s concerns.

[43]	The information before me invites the inference that the Council exhibited what I would bluntly characterise as organisational passivity and bureaucratic lassitude. In other words, that the Council prematurely washed its hands of the situation. I am prepared to draw that inference. I also draw the inference that the Council’s handling of the problem, when it was brought to its attention, was unsatisfactory and inadequate.

[44]	In my view this weighs heavily in favour of a grant of costs against the Council. It supports my view that the applicant has displaced the normal presumption that it pays the respondent’s costs. I conclude the Council should pay costs to the applicant. The only remaining question is how much?

[45]	What concerns me is whether, given that this was a  “mess” primarily of     Mr Tait’s and/or Development Partners’ making, the Council should be fully liable? After some consideration and including my reluctance to make a clear finding of Council fault in the consent being issued in the first place, I conclude that 50 per cent joint and several liability is fair in all the circumstances.

[46]	I do not uphold the Council’s submission that any costs award against it should be offset by the scale costs it has itself incurred, which it calculated to be $10,019. The circumstances I have outlined do not justify this amended approach suggested by the Council.

[47]	As to the quantum of the order, I am prepared to deduct the disputed steps and disbursements identified by the Council from the scale costs and disbursements calculated by the applicant. Accordingly, the Council is jointly and severally liable for the applicant’s costs up to $5,377.50 plus the particularised disbursements of
$5,724.44 (inclusive of GST).

[48]	There are costs orders accordingly.

Becroft J