Friends of Houghton Valley Incorporated v Wellington City Council
| Jurisdiction | New Zealand |
| Judge | Collins J |
| Judgment Date | 02 July 2015 |
| Neutral Citation | [2015] NZHC 1515 |
| Docket Number | CIV-2015-485-000270 |
| Court | High Court |
| Date | 02 July 2015 |
IN THE MATTER of an application for review
IN THE MATTER of subdivision and land use consents by the First Defendant under the Resource Management Act 1991 No SP295568 dated 25 November 2014
UNDER the Judicature Amendment Act 1972
and
[2015] NZHC 1515
D B Collins J
CIV-2015-485-000270
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
Application by second defendant for security for costs — plaintiff was an incorporated society formed to apply for judicial review of the first defendant Council's decision to grant the second defendant (the applicant) resource consents for the subdivision of land — applicant sought $24,000 security calculated on a scale 2B basis — argued that the plaintiff had been formed to circumvent the possibility of orders for costs being made against its members, that it would not be able to pay costs if it lost, there were no merits to its application and that it would not suffer prejudice if security for costs were ordered — consideration of s17(1) Incorporated Societies Act 1908 (Security for costs where society is plaintiff) — whether security of $24,000 should be ordered.
G D S Taylor for Plaintiff/Respondent
E L Manohar for First Defendant
H B Rennie QC and P D Tancock for for Second Defendant/Applicant
JUDGMENT OF Collins J
I am ordering Friends of Houghton Valley Incorporated (Friends of Houghton Valley) to pay the Registrar of the High Court $10,000 as security for costs. This order is made under r 5.45 of the High Court Rules.
I am also ordering the security for costs be paid to the Registrar by 28 August 2015.
No other orders are made at this juncture.
Kaikoura View Ltd (Kaikoura) owns a vacant site on the slopes above Houghton Valley in Wellington (the site). The site is approximately 0.52 ha and is zoned “outer residential” in the operative Wellington City District Plan.
On 13 November 2013, Kaikoura applied to the Wellington City Council (the Council) for resource consent to subdivide and build 13 properties on the site (proposed development). The Council issued resource consent on 25 November 2014.
The Council's resource consent decision is a comprehensive 28-page document, which reflects considerable thought and attention by the decision-makers.
During the time it took for the resource consent to be granted, a number of residents in Houghton Valley expressed their displeasure at the prospect of Kaikoura undertaking the proposed development. Those residents held public meetings, wrote to the Council and made submissions to the Council.
On 23 January 2015, Friends of Houghton Valley was incorporated under the Incorporated Societies Act 1908.
On 10 April 2015, Friends of Houghton Valley commenced its application for judicial review. The proceeding is to be heard on 21 October 2015. Four grounds of judicial review have been pleaded.
First, it is alleged the Council failed to have regard to the fact that the land immediately above the site is a scenic reserve. It is said the Council failed to consider the effects of Kaikoura's proposed development on the environment. 1
Second, it is alleged the Council failed to address the submissions made to it by persons who are now members of Friends of Houghton Valley. 2
Third, it is alleged the Council failed to provide adequate reasons for its decision. 3
Fourth, it is alleged the Council failed to obtain and consider the hydraulic effects of increased storm water flow from the proposed development upon contaminated ground water which currently comes from a former landfill in Houghton Valley. 4
All grounds for judicial review are firmly denied by Kaikoura and the Council. They say:
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(1) the site was already zoned for residential use and the Council made no error when it issued the resource consent;
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(2) the Council considered all relevant matters raised by those who expressed concerns about the proposed development;
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(3) the Council's decision granting resource consent is a detailed written decision which fully explains the Council's reasons for granting the resource consent; and
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(4) the site is not part of the former landfill and ground water from the former landfill is not affected by the proposed development.
Kaikoura has sought $24,278 security for costs. In its written application, Kaikoura also sought an order that if it is not paid within four weeks, the proceeding is to be struck out or stayed. However, at the hearing, Mr Rennie QC, senior counsel for Kaikoura, abandoned this part of its application.
The sum of $24,278 is calculated on a scale 2B basis and is based on the understanding the hearing of the application for judicial review will take one day.
Kaikoura's grounds for security for costs can be distilled to the following four points:
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(1) Friends of Houghton Valley has been established as a vehicle for the proceeding in order to circumvent the possibility of orders for costs being made against its members if they were to personally initiate the claim for judicial review and lose.
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(2) Friends of Houghton Valley will not be able to pay security for costs if the application for judicial review fails.
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(3) There are no merits to the application for judicial review.
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(4) No prejudice will be suffered by Friends of Houghton Valley if an order for security for costs is made. Conversely, Kaikoura will suffer prejudice and loss if security for costs is not ordered.
Orders for security for costs are governed by r 5.45 of the High Court Rules. The relevant parts of that rule confer a discretion on a Judge if he or she thinks it is just in all the circumstances to order security for costs. An order for security for costs cannot be made unless there is reason to believe the plaintiff will be unable to pay the costs of the defendant if the plaintiff's proceeding fails.
In addition, s 17(1) of the Incorporated Societies Act 1908 is engaged in this case. That section provides:
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17 Security for costs where society is plaintiff
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(1) Where a society is the plaintiff in any action or other legal proceeding, and there appears by any credible testimony to be reason to believe that if the defendant is successful in his defence the assets of the society will be insufficient to pay his costs, any Court or Judge having jurisdiction in the matter may require sufficient security to be given for those costs, and may stay all proceedings until that security is given.
At the time Parliament passed the Incorporated Societies Act 1908, the High Court Rules only provided for security for costs where the plaintiff was resident out of New Zealand. 5 It is difficult to see any significant differences in principle between s 17(1) of the Incorporated Societies Act 1908 and r 5.45. 6 I think it appropriate to regard s 17(1) as simply conferring concurrent jurisdiction to order security for costs in this case. 7
The challenge facing Judges required to consider applications for security for costs were succinctly stated by William Young J who said, when delivering the judgment of the Supreme Court in Reekie v Attorney-General: 8
… The jurisdiction to require security poses something of a conundrum for the courts. The poorer the plaintiff, the more exposed the defendant is as to costs and the greater the apparent justification for security. But, as well, the poorer the plaintiff, the less likely it is that security will be able to be provided and thus the greater the risk of a worthy claim being stifled.
William Young J went on to explain that applications for security for costs at first instance require careful consideration and that Judges are “slow to make an order for security which will stifle a claim”. These comments reflect the following observations of Bowen LJ in Cowell v Taylor: 9
The general rule is that poverty is no bar to a litigant, that from time immemorial, has been the rule at common law, and also, I believe, in equity. There is an exception in the case of appeals, but there the appellant has had
the benefit of a decision by one of Her Majesty's Courts, and so an insolvent party is not excluded from the Courts but only prevented, if he cannot find security, from dragging his opponent from one Court to another.
In A S McLachlan Ltd v MEL Network, the Court of Appeal explained the discretion to order security for costs should not be “… fettered by constructing ‘principles’ from the facts of previous cases”. 10
In the present case, I have been guided by the following considerations:
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(1) Security for costs should not be ordered at first instance if the effect of such an order would risk stifling a worthy claim. 11
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(2) Assessing the worthiness of a plaintiff's claim at an interlocutory stage is a difficult task and does not involve the detailed analysis associated with determining the outcome of substantive proceedings. 12
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(3) The diligence with which the application for security for costs has been made may also be a relevant consideration. 13
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(4) Cases in which the plaintiff is merely a nominal defendant that is representing the interests...
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