The Club Body Corporate v Queenstown Lakes District Council
Decision No.  NZEnvC 143
BEFORE THE ENVIRONMENT COURT
Environment Judge J R Jackson
In The Matter of the Resource Management Act 1991
And of an appeal under section 120 of the Act
Application for alleged post–mediation costs by the appellant — the appellant had concerns about the height of a unit (Unit 5) — during mediation the applicant's architect said that Unit 5's height could not be reduced — it was agreed that the appellant's architect would develop plans showing how the height reduction could be achieved — the applicant rejected these because of their design, additional costs, complexity and risk to construction — however the applicant's architect subsequently redesigned Unit 5 to comply with the District Plan — the appellant sought costs for the expenses incurred between the period after mediation and the agreement to the applicant's architect's amended plans, saying it had been forced to incur added costs by the applicant's refusal to accept that Unit 5 could be redesigned — Environment Court Practice Note 2014 stated that costs incurred in court — assisted mediation were not awarded by the Court — whether the period post the mediation leading up to the agreement fell within the court assisted mediation process — whether the appellant had incurred unnecessary expenses as a direct consequence of the applicant's assertion that the height of Unit 5 could not be reduced — whether the directive language in the Practice Note overrode any discretion that might otherwise exist.
The issues were: whether the period post the mediation leading up to the agreement fell within the court assisted mediation process; whether the appellant had incurred unnecessary expenses as a direct consequence of the applicant's assertion that the height of Unit 5 could not be reduced; and, whether the directive language in the Practice Note overrode any discretion that might otherwise exist.
Held: A body of general principles for the award of costs under s285 Resource Management Act 1991 had developed through the case law. The Environment Court Practice Note 2014 encapsulated many of these general principles although it was not intended to fetter the court's broad discretion but to assist the court. It was accepted that each application for costs would be dealt with on the basis of the particular facts. Two of the key principles were that there was no general rule that costs should follow the event (even if a party was successful) and costs were not to be awarded as a penalty, but in the interests of “compensation where that was just”.
It was clear that costs associated with attending the mediation itself could not be claimed. It was less clear whether negotiations or actions (for example revision of plans) which followed the mediation were still considered part of the mediation. It was acknowledged that where negotiations took place and led to a resolution without a hearing, costs were generally unlikely to be awarded.
The aspect of good faith was arguably the single most important feature of mediation. It was from this premise that the general principles around mediation flowed. As the Practice Note recognised, mediation (and other forms of alternative dispute resolution) offered the most value when they were constructively embraced.
It was clear that the success of mediation was dependent on the parties going in to the process with an open mind and a non–adversarial approach so as to get the most out of it and to increase the chances of coming up with a solution. For the parties to feel comfortable and open to discussion it was important that there was not the added pressure of costs hanging overhead as there was in the adversarial context of a hearing. Essentially that was the reasoning behind the Practice Note which specified that costs incurred in court-assisted mediation were not awarded by the court and could not be claimed.
The appellant's distinction that the costs it sought to recover were outside of the mediation process and could not be considered “in court–assisted mediation”, was superficial. While technically the evidence was compiled outside of the court assisted mediation it was timetabled as part of the mediation process. The Practice Note acknowledged that mediation was more than the day or so spent with an Environment Commissioner, stating that mediation was concluded on execution of a final agreement, on finalisation of detailed documentation left to be completed after the mediation or on agreement that no resolution was possible. All of these events often occurred a week or so after the court-assisted mediation. They were still considered part of the mediation process and the element of confidentiality still applied.
The confidentiality of mediation was relevant because the parties could not agree on what was actually said in mediation in relation to the building height. There was no record of what was said at the mediation and even if there was the court was not permitted to enquire into the mediation process, which was another reason why costs were not appropriate in the context of mediation. As the court was not able to determine what was actually said by the parties at the mediation, it could not assess whether the conduct of each of the parties was reasonable or whether it incurred further cost. Further both parties seemed to have incurred costs in respect of the use of their landscape architects for further plans and so these costs could be said to cancel each other out.
It was significant that the mediation process was successful and ultimately each of the parties achieved some success in the outcome. Where this occurred costs were usually not an issue since the natural process of compromise had meant some losses for both parties, so that each had had to bear some expense to get the outcome (or as close as they could get to it) they desired.
The application for costs should probably not have been made. Indeed, any written application for costs of under about $5,000.00 was usually inefficient in a general sense and was discouraged. However, in this case it would be better for the parties to get on and for the costs issue to be put to rest. It was not appropriate to make an award for costs against the appellant either.
Costs to lie where they fell.
A: Under section 285 of the Resource Management Act 1991, there is no order as to costs.
The Club Body Corporate lodged an appeal against a decision of the Queenstown Lakes District Council granting consent 1 to James Lloyd Developments Limited to construct five residential units with associated access, parking, landscaping and eaiihworks at a site on Marries Lane, Frankton Road, Queenstown 2.
The Club Body Corporate (“the appellant”) is responsible for the Oaks Club Resort located at 171–183 Frankton Road, adjoining the development proposed by James Lloyd Developments Limited (“the applicant”). The appellant had concerns about the height of Unit 5, the setback from the common boundary and conditions relating to traffic management on Marries Lane arising from construction activity.
The parties attended an Environment Court facilitated mediation on 9 March 2016 and after fmiher negotiations the parties came to an agreement. The parties agreed to amend the conditions so that Unit 5 would comply with the 7 metre height limit applicable to the site, the boundary setbacks would be adjusted and condition 8 (concerning construction traffic) would also be amended.
The court issued a consent order on 16 May 2016 and, at the appellant's request, costs were reserved and a timetable for any submissions was set. The appellant has lodged an application for costs against the applicant, dated 26 May 2016. The applicant has lodged a memorandum by way of reply, dated 9 June 2016, also making a counter application for the costs of responding to the appellant. The appellant has responded to that application in a memorandum dated 17 June 2016.
The appellant seeks an award of $1,612.05, being 33% of the costs incurred 3. The appellant only seeks costs for the expenses incun˙ed between the period aftermediation on 9 March 2016 and the agreement to the applicant's architect's amended plans on 21 April 2016 4 (“the relevant period”).
The primary costs during the relevant period concern the preparation and review of the plans developed by the appellant's architect Mr Wyatt in response to the applicant's position at mediation, legal considerations on the same topic and correspondence to and from the applicant and other parties to the appeal. The costs are comprised of:
The parties had comi facilitated mediation on 9 March 2016. The contentious issue identified and discussed during mediation related to the appellant's concerns with the height and proximity of Unit 5 to the appellant's development. The applicant's architect was of the opinion that the height reduction to Unit 5 could not be achieved.
A mediation agreement was reached where the appellant's architect would develop plans that demonstrated that the height reduction could be achieved. The plans were rejected by the applicant as being unacceptable due to the design, additional costs, complexity and risk to construction. 5
The applicant then redesigned Unit 5 which resulted in plans complying with the District Plan height provisions despite the applicant's architect initially asserting that this could not be achieved. Meanwhile the appellant had incurred considerable expense having its own architect prove a reduction could be achieved 6.
The Environment Court's Practice Note 2014 states (relevantly) that costs incmTed in...
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