United Seadown Inc. and Another v Timaru District Council
 NZEnvC 429
BEFORE THE ENVIRONMENT COURT
Environment Judge J R Jackson
In the Matter of the Resource Management Act 1991
In the Matter of appeals under section 120 of the Act
Application for indemnity costs. The District Council granted a consent to establish and operate a quarry. The appellant lodged an appeal against the consent, which was adjourned until a resource consent or certificate of compliance was obtained by the quarry owner from a Regional Council, and then applied out of time for costs with regard to the application for adjournment, seeking an indemnity award from the other two parties, for the incurring of unnecessary costs as a consequence of the other parties' actions — whether the Court should use its discretion under s285 Resource Management Act 1991 to award indemnity costs.
A: Under section 285 of the Resource Management Act 1991, the Environment Court orders Rooney Holdings Limited to pay $2,500 to United Seadown Incorporated.
B: Under section 286 of the Act this court names the District Court at Timaru as the court this order may be filed in for enforcement purposes (if necessary).
At issue was when the Court should determine a costs application; and whether the Court should use its discretion under s285 RMA to award costs beyond the normal range.
Held: Under s269 RMA (Court procedure) the Environment Court could regulate its own proceedings in such a manner as it thought fit. It was therefore at the Court's discretion as to when it found it appropriate to deal with a costs application in a proceeding.
The Environment Court did not as a matter of general practice, allow costs to a successful party unless there were special circumstances by which it would be fairer to depart from that rule. Costs were not awarded as penalty but in the interests of just compensation. The relevant circumstances to be considered were set out in . Case law also established that the usual practice was not to order the primary decision maker (local authority) to pay costs unless it had neglected a duty or engaged in frivolous or vexatious conduct. There was a high threshold test and a need for some aspect of the action of the council to be blameworthy. Section 91 RMA conferred on the Council a duty to consider an application, not defer it — the power was discretionary and simply because the court had come to a different outcome, did not in and of itself justify an award being made against the Council. There was no evidence of the Council breaching a duty, nor could its conduct be described as vexatious or frivolous. There was no basis for an award of costs against the Council.
Indemnity costs were only awarded in rare cases and generally needed breach of confidence or flagrant misconduct. There was no evidence that Rooney had intentionally misled the parties and the court so an award of indemnity costs was not appropriate. Rooney should not however have been allowed to take the risk that it was wrong about groundwater levels and that the Court should simply deal with the land use application. This approach was wrong under the Affco principle ( ) and meant United was put to unnecessary cost to take legal advice and seek the opinion of an expert to bring the procedural issue to the Court's attention.
Application for costs against Rooney granted (though not indemnity costs). Application against the Council declined.
United Seadown Incorporated (“USI”) lodged an appeal 1 against a decision of the Timaru District Council (“the TDC”) granting consent to Rooney Holdings Limited (“RHL”) to establish and operate an aggregate quarry bounded by Seadown, Waipopo and Blackler Road, near Timaru. RHL has lodged its own appeal with regard to some of the conditions imposed by the TDC 2.
USI applied to the court, under section 91 of the Resource Management Act 1991 (“the Act” or “the RMA”), for an order that both appeals be adjourned until RHL had applied for consents from the Canterbury Regional Council, which it alleged were required for the proposed quarry under the Proposed Natural Resources Regional Plan (“PNRRP”).
The court considered the application on the papers and on 14 September 2010 issued its decision 3 adjourning the appeals until a resource consent or certificate of compliance was obtained from the Canterbury Regional Council under Rule WQL40 of the PNRRP. Any application for costs was to be lodged within 15 working days of the date of the decision and any reply within a further 15 working days.
On 7 October 2010 the Registrar received an application for costs by USI against RHL and the TDC. The TDC and RHL have each lodged a response, both received on 29 October 2010.
USI has applied for costs against RHL and the TDC with regard to the application for adjournment. It seeks an indemnity award of $14, 792; a division of 80% to RHL and 20% to the TDC is proposed as appropriate in the circumstances. The breakdown of costs is as follows:
(a) Legal fees
(b) Groundwater scientist
It is submitted by USI that an award of indemnity costs is justified and appropriate because:
• The application was inaccurate or misleading and an abuse of process;
• The arguments adopted by RHL were without merit;
• RHL failed to present evidence on the critical issue of groundwater and nor did it make proper concessions; and
• RHL adopted a piecemeal approach.
As a consequence, unnecessary costs were incurred by USI.
Referring to 4 USI says there are two key factors when determining whether an indemnity or near indemnity award should be made in the context of a misleading application:,
(1) Was the application misleading and if so, was this deliberate or intentional?
(2) Was any party forced to take action as a consequence?
With regard to the first question, USI argues that there is no evidence to support the assertion by RHL in the application for resource consent that average groundwater was five metres below the ground level. RHL's position is contradicted by Mr Steffen's evidence and no basis for the assertion had ever been provided. It is submitted that RHL was aware the application was misleading and lodged it nonetheless. RHL sought planning and legal advice regarding the preparation of the application which leads to a strong implication that it knew of the records and chose to lodge an application which ignored them.
If the court does not accept that the application was deliberately misleading then USI suggest an award of near indemnity costs, amounting to 90% of the amount incurred, would be appropriate.
As for the second question, groundwater quality is a critical concern for USI. It has had to spend a considerable amount of its resource on a procedural issue to ensure that groundwater issues are properly considered. The inaccuracy in alleged groundwater levels was brought to the attention of RHL and the TDC early in the proceedings. However, despite this the Council did not exercise its power under section 91 and RHL proceeded with the application.
The substance of RHL's argument was that it would comply with Rule WQL40 by not intercepting groundwater. In order to ensure it did not intercept groundwater RHL proposed to excavate an area of 200-300m 2 to determine current groundwater level. It is submitted that this approach will not ensure compliance with Rule WQL40 because it relates to groundwater levels at a point in time. This is not the test in the Rule, which is the highest groundwater level which can reasonably be expected to occur at the site based on relevant groundwater data. Further, the method of determining groundwater levels, since it requires excavating into groundwater, itself requires resource consent.
USI's application to adjourn the proceedings was supported by the evidence of Mr Steffens, a groundwater scientist. RHL did not call any expert evidence on groundwater. It is submitted that the making of an unsupported assertion in an application and then not presenting evidence to support that assertion supports an indemnity award.
USI submits that RHL has taken a piecemeal approach rather than the proper course which would have been for RHL to prepare a comprehensive application for the full suite of necessary planning permission including land use consents from both the TDC and land use consents, diversion and discharge consents from the Regional Council. USI refers to 5 where the piecemeal approach taken by a party was seen as a relevant factor in a costs application.
As a preliminary point, it is...
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