When will the Environment Court award higher costs?

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When will the Environment Court award higher costs?

When will the Environment Court award higher costs?

Thursday 23 April, 2020

The Environment Court recently released two decisions in which it considered when it was appropriate to award higher costs and indemnity costs. Costs in the Environment Court generally fall into three broad categories:

Standard costs: usually within a "comfort zone" of 25-33% of actual costs incurred.
Higher than normal costs: where particular aggravating or adverse factors might be present, such as those identified in Bielby.^{^[1]}
Indemnity costs: awarded rarely and only in exceptional circumstances.

In Vortac v Western Bay of Plenty DC,^{^[2]}the Court considered that indemnity costs were justified. The plaintiff had made allegations that the Council was behaving illegally by allowing storm water from excess rainfall to travel through a natural gully on land owned by the plaintiff (of which low-lying areas were flooded in high-water). The plaintiff sought interim enforcement orders requiring the Council to limit water run-off to the area specified in an easement and a declaration that the Council was acting illegally.

The interim application failed, and the Court concluded that the Council was entitled to indemnity costs for the following reasons:

The grounds of the application were not set out;
The assertions in the affidavits were not proven;
A number of critical assertions (such as illegality) have not been made out in any way and continue to be repeated;
The proceedings were misconceived as an interim enforcement order;
The Council's costs were in the circumstances modest; and
That there are no grounds made out on which the ratepayer should be obliged to meet even part of the cost of these proceedings.

However, in Stone v Hastings District Council,^{^[3]} the Court declined to award higher costs to the Council despite the Council’s argument that the plaintiffs had failed repeatedly on the same grounds and their arguments were without substance.

The plaintiffs had applied for a non-notified resource consent to subdivide their rural land into 2 blocks. Consent was refused because the proposal didn’t meet the minimum site area for subdivision in the rural zone and was contrary to the objectives and policies of the Rural Resource Strategy, the Rural Zone and the Subdivision sections of the Proposed District Plan and the relevant Assessment Criteria of the Proposed District Plan. The plaintiffs were unsuccessful in their appeal to Council and in the Environment Court.

The Court held that it was relevant that the plaintiffs were unsuccessful twice before coming to Court but acknowledged that the plaintiffs’ evidence about the effects of the proposal had been accepted. The Court held that it was appropriate to make a costs award in the circumstances, particularly because the issues raised on appeal were largely a repeat of those raised before the Commissioner and on objection. However, although the arguments were a 'repeat', they were not without substance, so the Court awarded costs of 34%, only just outside the standard costs category.

Conclusion

The grounds on which the Environment Court will award higher or indemnity costs are well-known and uncontroversial, however, the Court is more likely to consider that aggravating or exceptional circumstances are present if a plaintiff makes allegations of illegality rather than merely pursuing a somewhat forlorn hope.

For questions relating to this article, please contact one of our experts below.

[1] DFC NZ Ltd v Bielby (1991) 1 NZLR 587.

[2] Vortac NZ Limited v Western Bay of Plenty District Council [2019] NZEnvC 180.

[3] Stone v Hastings District Council [2019] NZEnvC 175.