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WAITAKERE CITY COUNCIL V CAREY PATRICK BRUNEL AND ANOR HC AK CIV-2006-404-4504 [2008] NZHC 1406 (5 September 2008)

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
                                                                     CIV-2006-404-4504



                BETWEEN                          WAITAKERE CITY COUNCIL
                                                 Appellant

                AND                              CAREY PATRICK BRUNEL
                                                 First Respondent

                AND                              THE COVE LIMITED
                                                 Second Respondent


Counsel:                   M E Casey QC for Appellant
                           M J E Williams for Respondents

Costs Judgment:
           5 September 2008


                             JUDGMENT OF THE COURT


This judgment was delivered by Justice Baragwanath
on 5 September 2008 at 10 a.m
                 pursuant to Rule 540(4) of the High Court Rules

                                
  Registrar/Deputy Registrar

                                     Date........................




Solicitors:
Waitakere City Council,
Auckland
Turner Hopkins, Auckland

Counsel:
M E Casey, Auckland
M J E Williams, Auckland


WAITAKERE CITY COUNCIL V CAREY PATRICK
BRUNEL AND ANOR HC AK CIV-2006-404-4504 5
September 2008

[1]    The Waitakere City Council (the Council) served on the respondents
notice
under s 23(1)(c) of the Public Works Act 1981 of intention to take compulsorily two
undeveloped sections belonging to the
respondents. The sections adjoined a ramp
built on Council land giving trailer boats access to the sea and the Council wished to
provide an area for parking boat trailers and towing vehicles. The respondents'
objection resulted in an enquiry by the Environment
Court under s 24(3). That Court
reported to the Council that the taking should not proceed and awarded costs to the
respondents.
This Court allowed the Council's appeal and declared pursuant to
r 718A of the High Court Rules that the Council might proceed with
the compulsory
acquisition. The Council now seeks costs of the hearings before the Environment
Court and of the appeal.


[2]   
For costs in the Environment Court, Mr Casey sought an order based on the
District Court scale, adopted by the High Court in Tairua
Marine Ltd v Waikato
Regional Council  [2006] NZRMA 485, of $10,075.                He observed that the
Environment Court had accepted as reasonable the respondents' actual costs of
$29,683.95,
which were closely similar to those of the Council $30,736.10. He
invited this Court to consider exercising discretion to make an
increased costs order
to reflect considerations listed in Development Finance Corporation of New Zealand
v Bielby  [1991] 1 NZLR 587 at 594 (HC), now the subject of r 48C of the High
Court rules.


[3]    For the High Court hearing Mr Casey sought a 2B order, entailing
costs of
$13,630 and disbursements $4,566.25, a total of $18,196.25.


[4]    Mr Williams opposed the making of any orders for costs.


Submissions


Jurisdiction


[5]    As regards costs in the Environment Court, Mr Williams submitted that this
Court lacks jurisdiction
to make any such determination and that the decision should
be referred back to the Environment Court. He compared the costs power
under

s 24(13) of the Public Works Act with the broad discretion of the Environment Court
under s 285 of the Resource Management
Act 1991 and cited the decision of the
Supreme Court in Waitakere City Council v Estate Homes Ltd  [2007] 2 NZLR 149 at
[70]:

        In order to decide that it was appropriate to decide outstanding issues in this
        Court, we would need to
be satisfied that they would not turn on questions of
        specialist judgement concerning facts which the legislature contemplated
        would be determined on appeal from a local authority by an expert tribunal.

[6]     Mr Casey submitted that costs should
be determined in this Court under
r 718A which states that, having heard an appeal, the Court may either direct the
court appealed
from to determine any matter the Court directs or itself make any
further or other order, including any order as to costs.


[7]
    I accept Mr Casey's submission.           I have decided to exercise the costs
discretion both in relation to the Environment
Court hearing and in this Court. The
advantage of a unified approach in my view outweighs the Environment Court's
greater familiarity
with events before it. It was necessary in order to determine the
appeal to review the transcript of the Environment Court hearing
and I have the
advantage of that Court's views expressed both in its substantive report and in its
costs decision, albeit written
on the basis of the respondents' success in that Court.

Test case?

[8]     Despite Mr Casey's submission to the contrary, there
is force in
Mr Williams' submission that this had significant elements of a test case, in which
event in conventional adversary litigation
there may be some departure from the
principle that costs follow the event. The reason, where the dispute is between a
citizen and
a statutory authority, is that recently stated in Yadegary v Chief Executive
of the Department of Labour  [2008] NZCA 295 at  [33]:

        The rule of law requires that laws be as clear and predictable as practicable
        (see John Finnis Natural Law (1980)
at 270). But as Jeremy Bentham
        observed in his "Theory of Legislation" (Etienne Dumont edition translated
        and edited
by CM Atkinson, 1914) at 62:

                ... the legislator, who cannot pass judgment in particular cases, will
           
    give directions to the tribunal in the form of general rules, and leave

               them with a certain amount of latitude
in order that they may adjust
               their decision to the special circumstances.

There may be taken into account in exercise
of the costs judgment whether the
relevant principles are clear or require settling by adjudication.


[9]    Mr Casey submitted
that here the principles were clear.              Mr Williams
described his clients as "reluctant trail blazers". There is substance
in Mr Casey's
submission, in that the decision of this Court followed fairly well-settled general
principles. But the fact that the
Environment Court saw the matter differently
supports Mr Williams' submission that the absence of any general discussion of the
practical
operation of s 24 led to difficulty for that Court and for counsel.

Conduct of Environment Court hearing

[10]   Mr Casey submitted
that the respondents had taken a "hostile" approach to
the Council's claim to take their land, requiring the Council to prepare detailed
evidence and argument responding to matters which were not relevant, many of
which were not referred to in the Environment Court's
decision. He submitted that
at the hearing they advanced grounds of objection that had not been notified, that
course resulting in
additional costs. The Court ruled that some did not require
response; others contributed to what this Court has held to be an erroneous
decision.


[11]   Mr Casey further submitted that the respondents wished to develop their land
for financial reasons rather than
for personal occupation and that their objection was
motivated by the perceived inadequacy of the compensation under the Public Works
Act.


[12]   A further submission, that the objectors did not instruct their valuers to meet
the Councils valuers to seek agreement
on a fair price, was not pursued.


[13]   Mr Williams submitted that his clients had done no more than exercise their
rights to
recourse to the appropriate tribunal to test the justification of the proposed
taking. He referred to evidence that there had been
settlement discussions between
the parties, including the valuers' meeting and indeed reaching agreement as to price
but at a figure
unacceptable to the Council.

[14]       He defended the raising of issues to which the Council was required to
respond by reference
to the broad criteria of s 24(7) on which the Environment Court
was required to report. In particular he cited the costs judgment
of that Court,
stating:

           ... I do not consider that the grounds raised by Mr Casey [as to new issues]
           can be
made out. A fair interpretation of the objections includes these topics
           that Mr Casey alleges were `new', `unheralded'
and `spurious'. And they
           were topics that the Court was required to enquire into in any event. The
           time it
took to hear the case was not unreasonable when one considers the
           importance of the matters at stake.


Discussion



Statutory context


[15]       The Public Works Act contains two sections dealing with costs. One, of
immediate relevance as falling
within the section under which the Environment
Court exercised jurisdiction in this case, is s 24(13) which empowers that Court to
award

           ... such costs as it considers just either in favour of or against the objector,
           the Crown, or the local
authority.

The other, dealing with costs in claims for compensation before the Land Valuation
Court, is s 90. It states:

     
     90   Costs in claims for compensation

           (1) Subject to the provisions of this section, the costs of a hearing by the
           Land Valuation Tribunal
under this Part of this Act shall be in the discretion
           of the Tribunal, which may direct to and by whom and in what manner
those
           costs or any part of them shall be paid.

           (2) Where the respondent has made an offer of any amount for
           compensation and the compensation awarded is less than the amount so
           offered, the Tribunal may order the claimant
to bear his own costs and to pay
           the costs of the respondent in so far as the costs of either party are incurred
    
      after the making of the offer.

           (3)     If costs are not awarded in accordance with the provisions of
         
 subsection (2) of this section, the Tribunal shall, unless for special reasons it
           thinks it proper not to do so, order
the respondent to bear his own costs and
           to pay the reasonable costs of the claimant.

       (4) Without limiting the
generality of the provisions of subsection (3) of
       this section, it is hereby declared that the fact that the Tribunal in any
case
       considers that the amount claimed was unreasonably high having regard to
       the compensation awarded or the evidence
before the Tribunal, shall be a
       special reason that the Tribunal may take into consideration for the purposes
       of that
subsection.

       (Emphasis added.)

[16]   In Minister of Works and Development v Cromwell Farm Machinery Ltd
 [1986] 2 NZLR 29 the Court of Appeal held that "reasonable costs" in s 90 does not
mean full indemnity costs in terms of s 60, provided they are reasonable,
but rather a
more generous approach than is adopted in ordinary civil litigation. While it does
not appear that the authorities referred
to at [18] below were cited, this Court is of
course bound not only by the decision but also by the approach taken in that case.


[17]   The Act includes Part 2 "Acquisition of Land for Public Works", in which
appear, under the heading "Compulsory Acquisition
of Land" ss 23 and 24, and
Part 5 "Compensation", in which appears under the heading "Entitlement", s 60
"Basic right to compensation"
and s 90 "Costs in claims for compensation".
Section 60 states:

       60    Basic entitlement to compensation

       (1)   Where
under this Act any land--

               (a)   is acquired or taken for any public work; or

               (b) suffers any injurious
affection resulting from the acquisition or
               taking of any other land of the owner for any public work; or

      
        (c)    suffers any damage from the exercise (whether proper or
               improper and whether normal or excessive) of--

                       (i)   any power under this Act; or

                       (ii) any power which relates to a public work
and is
                       contained in any other Act--

       and no other provision is made under this or any other Act for
compensation
       for that acquisition, taking, injurious affection, or damage, the owner of that
       land shall be entitled
to full compensation from the Crown (acting through
       the Minister) or local authority, as the case may be, for such acquisition,
       taking, injurious affection, or damage.

       (Emphasis added.)

Constitutional context


[18]   The general law has always
protected the subject from loss at the hands of the
community. It was outlined in Estate Homes Ltd v Waitakere City Council  [2006]
2 NZLR 619 (CA):

       The principle of compensation for public taking

       [128] One principle is that, subject to inconsistent legislation
and
       compliance with the general law, it is the right of every person to use his
       assets as he pleases and to be compensated
if they are expropriated for public
       purposes. Public sector requirements imposing a disproportionate burden on
       individual
persons are constitutionally improper. That compensation is
       normally paid in such cases was pointed out by Lord Donovan in
       Birmingham Corporation v West Midland Baptist (Trust) Association Inc
        [1970] AC 874 at pp 908 ­ 909:

               "My Lords, in any developing community there must be power to
               take land from private
owners for public purposes; and in a society
               where private ownership of land is permitted, justice requires that

              compensation should be paid for such taking."

       [129] The presumption in favour of compensation was stated by
Sir Baliol
       Brett MR in Attorney-General v Horner  (1884) 14 QBD 245 at p 257:

               "It is a proper rule of construction not to construe an Act of
               Parliament as interfering
with or injuring persons' rights without
               compensation, unless one is obliged so to construe it."

       ...

   
   [132]    The implicit requirement of compensation is as old as the repealed
       Ch 28 of the Magna Carta:

               Compensation
for taking a private property

               No constable or other of our bailiffs shall take corn or other chattels
          
    of any man without immediate payment, unless the seller voluntarily
               consents to postponement of payment.

To similar
effect is the approach adopted by the Privy Council in Blakes Estate Ltd v
Government of Montserrat  [2005] UKPC 46.


[19]   In construing legislation the Court will apply the presumption stated by
Lord Hoffmann in R v Secretary of State for the
Home Department, ex parte Simms
[1999] UKHL 33;  [2000] 2 AC 115 at 131:

       In the absence of express language or necessary implication to the contrary,
       the courts ... presume that
even the most general words were intended to be
       subject to the basic rights of the individual. In this way the courts of the
       United Kingdom, though acknowledging the sovereignty of Parliament,
       apply principles of constitutionality little different
from those which exist in
       countries where the power of the legislature is expressly limited by a
       constitutional document.

[20]   When considering the application of s 24(13) regard is to be had both to its
text and to its purpose: Interpretation Act
1999 s 5. Its purpose is to be deduced
from its setting within:


       a)      Section 24;


       b)      Part 2;


       c)
     The overall scheme of the Act; and


       d)      Wider constitutional principle.


[21]   Viewed simply within s 24 it is
well arguable, as Mr Casey contended, that
costs should follow the event. As he put it, since the respondents received from the
Environment
Court a costs award approaching indemnity following their success in
that Court, what is sauce for the goose is sauce for the gander;
a reciprocal award in
favour of the Council should follow its success on appeal.


[22]   But a different perspective emerges when
the wider context is examined.
Part 2 concerns compulsory taking of land by the community from the subject. It is
to be read within
the scheme of the whole Act. For present purposes it has two core
provisions: one empowering compulsory taking (Part 2) and the other
providing for
compensation (Part 5). The policy of Part 5 is stated in s 60: the owner of the land
taken is entitled to full compensation
from the taking authority. Section 90, dealing
with costs of proceedings to assess compensation, gives effect to the policy of s
60.
Unless there are special reasons to the contrary, the Land Valuation Tribunal must
order the taking authority to bear both its
own costs and the reasonable costs of the
claimant.

[23]     Reasonableness of costs is a touchstone of the Act. That is seen,
for example,
in s 66(1)(a) which in authorising payment of "all reasonable costs" incurred by way
of disturbance payments includes,
where appropriate,

         (ii) The reasonable valuation and legal fees or costs incurred in respect of
         the land taken
or acquired:

         (iii) The reasonable valuation and legal fees or costs incurred in respect of
         the land acquired in
substitution ...

[24]     Regard is also to be had to the constitutional principles summarised at [18] ­
[19] above.


[25]    
Read in that light, s 24(13) is not to be read as an equivalent of r 47(a) of the
High Court Rules which states a general principle
that the loser should pay the
winner's costs. Nor indeed is it to be read as conferring an unlimited discretion on
the Court, any
more than r 46 which provides that all matters of costs are at the
discretion of the court. As is seen from such cases as Glaister
v Amalgamated
Dairies Ltd  [2004] 2 NZLR 606 (CA), broad costs discretions are to be exercised in
accordance with other material considerations; there the later and more specific
rules.


[26]     Here, as Mr Casey emphasises, Parliament has distinguished between s 90
cases where the citizen is presumptively
entitled to reasonable costs and s 24(13)
where no such presumption is stated. He submits that the circumstances of s 90 are
different
in kind from those of s 24(13): in the former case the taking is inevitable; in
the latter it is not. If a landowner wishes to resist
the taking, as may be attempted
under ss 23 ­ 24, costs should simply follow the event.


[27]     I prefer a more nuanced view.
The difference between the two cases is in my
opinion one of degree rather than of kind. Certainly Parliament has withheld from a
s 23 objector the right to a costs order on a basis equivalent to s 90, that is:

         unless for special reasons it thinks it
proper not to do so, order the
         respondent to bear his own costs and to pay the reasonable costs of the
         claimant.

[28]   But while not presumptively determinative as it is under s 90 the compulsory
element of the taking is a factor of relevance
under s 24(13). So too is the standard
of reasonableness which infuses the measure.


[29]   A landowner who unreasonably resists
a s 23 application, either because the
need for the taking is obvious or because the grounds or conduct of the opposition
are without
substantial merit, may well be ordered to pay costs. One who has acted
wholly reasonably may successfully resist a costs order, even
if unsuccessful.
Indeed there may be circumstances where there should be a contribution to that
party's costs.


[30]   Here the
Environment Court cited the statement of Judge Treadwell in BJ &
KL Wall v Rodney District Council W119/97:

       In terms of the
Public Works Act 1981 the Court may award such costs as it
       considers just, either in favour of or against the objector the
Crown of the
       local authority. Having regard to the fact that an objector is defending his
       rights of ownership, the
Courts have taken a liberal approach to this
       particular issue.

The sentiment accords with the nature of the s 24 function
within the legal system.


This case


Environment Court


[31]   The Environment Court did not consider that the overall conduct
of the
respondents before it was unreasonable. Given:


       a)        The importance placed by our constitution on the protection
of
                 citizens' rights;


       b)        The principle that if the community is to benefit by taking property
  
              there should be due compensation to the person affected; and

       c)      The lack of clear authority as to the
interpretation and application of
               s 24;


I consider that justice will be done by simply quashing the costs order
made by the
Environment Court in the respondents' favour.


High Court


[32]   Given the approach adopted in Cromwell and the difference
between the
formulas of ss 90 and 24(13) there will be a costs order in favour of the Council. But
for the reasons stated in [31]
that order will be at a reduced figure of $10,000.


Decision


[33]   There will be orders in terms of [31] - [32] of this judgment.