Costs

Security for costs

Defendants may seek security for costs if they consider that the appellant will not be in a position to pay costs if an award is made. An application for costs is normally made before the substantive appeal is heard and the Court has a broad and unfettered discretion. ¹²⁰⁹  When hearing an application the Court will consider the issues in two stages: the threshold test and the exercise of the discretion. ¹²¹⁰

The threshold test requires the applicant to establish that the assets of the appellant would be insufficient to pay any order for costs in favour of the applicant which the Court may make. This is a factual matter that must be established by credible testimony. Once it is established that the assets of the appellant are insufficient to pay any order of costs the Court will then consider whether its discretion should be exercised in the circumstances of the case.

The following criteria have been established by the Court to assist it when deciding whether to exercise its discretion: ¹²¹¹

• Even when the threshold test is met the Court has a residual discretion as to whether or not it is appropriate to make an order for security for costs
• There is no presumption either way for or against an order for security
• Discretion is to be exercised in all the circumstances of the case
• Security is not to deprive a party from its right to bring or defend a claim
• A financially poor party is not to have advantages through inability to pay costs by putting unfair pressure on a solvent party
• Regard is to be had to the public interest aspect of the litigation brought by an appellant who is acting responsibly as a watchdog in the public interest
• Whether there are grounds for thinking the defendant is using the application oppressively
• The merits of the appellant's case and whether the action has reasonable prospect of success
• The likelihood of the Court ordering an unsuccessful appellant to pay costs
• Overall balance is to be maintained in the interests of justice

Award of Costs

If you are unsuccessful in your appeal, you may be liable to an award of costs against you. The Environment Court has the power to order any party to a proceeding to pay costs to any other party in the proceeding or to the Crown (in respect of the Court's expenses). ¹²¹²

Awards of costs are not a penalty for failure against the losing party ¹²¹³  or a substitute for damages to compensate for delay or other losses not directly related to the proceeding. The purpose of awarding costs is to compensate a party for unnecessary costs incurred as a result of the actions of other parties. Such actions include lodging proceedings which have little merit or pursuing a case in a manner which results in other parties incurring unnecessary expense.

Who may be liable for costs?

The Environment Court may make a costs order against any party to the proceedings. Section 274 persons are parties to an appeal and therefore costs may be awarded against them. ¹²¹⁴

What can an award of costs cover?

Costs are available in relation to expenses incurred in the Environment Court hearing process. The Environment Court cannot make an award of costs in respect of costs incurred in the Council hearing or in Court-assisted mediation. ¹²¹⁵

If you are self-represented you are generally not entitled to recover costs other than disbursements. In exceptional cases such costs can be awarded, such as those involving exceptional public interest. ¹²¹⁶

When are costs awarded?

The Environment Court Practice Note 2014 provides guidance on how the Court should exercise its discretion to award costs. However, its provisions are only a guide and do not create legitimate expectations amongst the parties. ¹²¹⁷

The Environment Court Practice Note 2014 states:

• The Court will normally award costs against the appellant where an appeal is withdrawn after being set down for hearing
• The Court will not normally award costs to any party in respect of an appeal against a Proposed Plan or Plan Change which proceeds to a hearing.
• The Court will not normally award costs against a Council, unless the decision appealed against would have imposed an unusual restriction upon the appellant’s rights and the restriction is not upheld.

Where a matter has been directly referred to the Environment Court on request of the applicant, or through a call-in by the Minister, there is a presumption that the applicant will pay the costs of the process and that costs will not be ordered against other parties. When deciding the amount of any costs order, the Court must have regard to the fact that the proceedings are at first instance. ¹²¹⁸

The Environment Court is more likely to award costs against a party and more likely to order a higher quantum of costs where:

• The proceedings are vexatious or the party acts in bad faith
• The arguments put forward lack substance
• There is abuse of the Court process in order to delay or obstruct another party
• Procedural requirements, such as pre-circulation of evidence, have not been met
• The case is poorly presented
• The party fails to explore the possibility of settlement
• The party takes a technical or unmeritorious point of defence
• Irrelevant evidence is presented
• The extent of cross-examination is inappropriate
• The scope of the issues could have been narrowed
• A party abandons proceedings without adequate notice

If there is an important issue of public interest and a significant point of law is at issue, the Court may not award significant costs against the appellant, even if its appeal has not been upheld. ¹²¹⁹  The strong element of public interest inherent in RMA litigation is a dimension for the Court to consider, as ordering costs against public interest groups might deter, in the future, bona fide cases being presented and thus detracting from the material before the Court upon which it can make better informed decisions under s 5 of the Act. However, the right to appear before the Environment Court brought with it the correlative duty to act responsibly and there is no assumption that a public interest group will not have costs awarded against it in appropriate cases. ¹²²⁰  In some cases the value of the public interest group’s contribution may be reflected in a moderation of the amount of costs for which it may be held responsible. ¹²²¹

The Environment Court takes a stronger approach in enforcement proceedings where it generally applies the principle that costs usually follow the event. ¹²²²  While applications for declarations are, in a sense, enforcement proceedings, they often arise out of genuine disputes about legal rights which are in the interests of the parties to resolve, and this may lead the Court to decline orders for costs unless the party against whom costs are sought raises irrelevant matters. ¹²²³

What quantum of costs are awarded?

Environment Court costs awards tend to fall into three categories: ¹²²⁴

• Standard costs
• Higher than normal costs
• Indemnity costs

Standard costs

These generally fall within a “comfort zone” of 25-33 per cent of the actual costs incurred. ¹²²⁵

Higher than normal costs

These fall between standard costs and indemnity costs. These may be awarded where particular aggravating factors are present.

In DFC NZ v Bielby [1991] 1 NZLR 237 the court listed the circumstances which are taken into account when making a significant award of costs (“the Bielby factors”):

• The arguments advanced by the party are without substance
• The party has abused the process of the court
• The party has not met procedural requirements
• The party has pleaded their case poorly
• The party has failed to explore options for settlement
• The party has taken a technical or unmeritorious point of defence and has failed

In Foodstuffs (Otago Southland) Properties Ltd v Dunedin City Council [1996] NZRMA 385 the Court listed further matters to be taken into account:

• The party prolonged the hearing unnecessarily by raising technical and procedural issues
• The party produced irrelevant evidence
• The extent of the party's cross examination was inappropriate
• The scope of issues placed before the court by the party was too wide

Other aggravating factors may include:

• Where a party is unsuccessful before a council at first instance and, for essentially the same reasons, is also unsuccessful on appeal ¹²²⁶
• Where the facts of a case require consideration of technical issues requiring the evidence of an expert and the party fails to call an expert witness to support their case ¹²²⁷
• Where a party delays informing other parties which parts of the evidence will not be challenged ¹²²⁸

Indemnity costs

Indemnity costs fully compensate the party receiving them for the costs they incurred. These are awarded rarely and only in exceptional circumstances. These may include: fraud, misrepresentation of material facts ¹²²⁹  or flagrant disregard for the requirements of the RMA and plans. ¹⁴⁵²

How to minimise the risk of costs being awarded against you?

In order to minimise the risk of an award of costs against you, you should consider the following:

• Before launching proceedings in the Environment Court, where possible, seek professional advice to ensure that they have sufficient legal merit, i.e. that there is an arguable case
• Narrow your appeal to the substantive issues you wish to pursue. Take out minor issues or technical challenges which do not have a strong likelihood of succeeding
• Approach the other party early on to discuss your concerns and explore the potential for early settlement, or at least for narrowing the issues in dispute
• Where appropriate, make a request to the Environment Court for mediation
• Make sure that you meet all the procedural requirements
• Seek professional advice in preparing and presenting your case
• Make sure that you have substantive evidence to back up your case and that it is concise and to the point
• If you decide not to pursue your proceedings, withdraw them without delay, well before a hearing has been set down

How do you apply for costs?

Costs will only be awarded where a party applies for them. The Environment Court, should, as a matter of course, address the issue of costs during the proceeding, whether or not the parties raise the issue. In doing so it can:

• State that it will make no order
• Order costs
• Indicate that it is willing to order costs but reserve its decision on the amount
• Reserve the issue of costs without indicating whether order will be made ¹²³¹

The parties should make a genuine attempt to agree upon the issue of costs with the other parties before resorting to the court for an order. ¹²³²

The Environment Court Practice Note states that if no timetable for dealing with costs in set in the substantive decision, the default position is that any party claiming costs should lodge a claim (supported by particulars and proof of costs incurred) within 10 working days of the decision, any party from whom costs are sought should lodge a reply within a further 10 working days, and the applicant for costs may respond to new matters raised in the reply within a further 5 working days. ¹²³³

Limiting personal liability

Personal liability for costs can be limited by forming an incorporated society. This may also add credibility to a party involved in proceedings. A charitable trust does not limit liability in the same way as an incorporated society, as trustees can be personally liable for actions they take in the trust's name.

If possible, you should establish an incorporated society before you lodge a submission with the local authority on a matter which is likely to go the Environment Court. If you lodge a submission in your own name at the council level it will often not be possible to substitute an incorporated society which is established later on at the Environment Court stage.

Last updated at 4:53PM on March 13, 2018