Bunnings Limited v Hastings District Council
This costs decision followed an unsuccessful appeal by Bunnings Ltd (“Bunnings“) against the refusal by the Hastings District Council (“Council“) of an application for land use consent to construct and operate a Bunnings Warehouse centre on a 4 hectare block. The proposal for a large scale retail / trade supply operation constituted a non-complying activity in the Plains Zone of the Hastings District Plan (“Plan“).
The Environment Court’s findings on appeal were largely in accordance with those made by the Council. Consent was declined on the basis that the proposal did not pass through either of the section 104D gateway tests in that the Court was not satisfied the adverse effects on the environment would be minor and found that the proposal was contrary to the objectives and policies of the Plan. The proposal was not considered to achieve the wider sustainable management purpose of the Resource Management Act 1991 (“RMA“).
In particular, the Court placed a great deal of weight on the importance of protection of the rural resource in the Plan, and held that the narrow approach of Bunnings, focussing simply on the soil structure of the site rather than the wider resource, was “fundamentally flawed”.
Costs were reserved, with the applications being placed on hold to enable costs to be resolved through discussions between the parties. Having been unable to do so, the parties referred the matter back to the Court for resolution. Costs were sought by the Council of $130,000, being approximately 65% of its total costs incurred, and by CDL Land NZ Ltd (“CDL“), a neighbouring property owner and section 274 party, of a significant award of costs without specifying a particular amount. Bunnings opposed, contending that an appropriate award would be approximately 20% of total costs for each.
The first of four issues Bunnings raised in opposition to the Council’s claim was the inclusion of legal fees for attending without prejudice discussions and mediation. Both the Council and CDL conceded in reply that these should not be included and made appropriate adjustments to their claims. Bunnings also considered the award of costs for council officer’s time inappropriate in this case, a matter Judge Dwyer declined to take further given the time constituted only 4% of the total costs and was therefore a comparatively small factor in the overall considerations. Judge Dwyer did note however that the Court may award such costs where reasonable, but that “it is not usual to do so and there is a clear reticence on the Court’s part about awarding such costs”.
Thirdly, Bunning’s took issue with what it saw as excessive and unnecessary legal and planning costs incurred by the Council. In particular, the Council’s legal fees were said to have been doubled due to the choice to instruct Queen’s Counsel. Judge Dwyer held that the reasonableness of fees paid is not for the Court to determine. Rather, the Court’s focus should be on the proportion of those costs that is reasonable to expect another party to contribute. He did not consider the Council could be criticised for choosing “gold plated” legal representation given the significance of the case for the Council, but it would in turn not be necessarily be reasonable for Bunnings to be penalised for this choice.
Lastly, Bunnings contended there was an absence of Bielby factors justifying an award outside the Court’s comfort zone (25-33%).
The Judge referred to the Court’s general discretion to award costs under section 285 of the RMA and the divergence from most other jurisdictions in that costs do not automatically follow the outcome of proceedings in the Environment Court. Justice Dwyer did comment, however, that he agreed with Bunning’s concession that in this instance costs ought to be awarded to the successful parties who have sought them.
The Judge concurred with the Council’s argument that in this particular case higher than normal costs ought be awarded, for the following reasons:
- The Council’s decision was upheld in all respects, with the Judge going as far as to say that it was “not seriously challenged”.
- The case advanced by Bunnings was without substance or unmeritorious in that it understated the versatile nature and capacity of the soils as well as the site’s capacity to be viably managed, and took a far too narrow approach to the objectives and policies of the Plan.
- The appeal was pushing the boundaries insofar as it was not considered to be anything other than a “direct challenge to very clear objectives and policies of the District Plan relating to protection of the rural land resource”. There had been pressure on the Council for some time to allow commercial and industrial activities to locate on the Heretaunga Plains, and if the application was granted it would set a difficult precedent for the Council’s processing of such applications in future.
- Bunnings failed to address the effect the proposal may have on CDL’s land despite this being an issue specifically identified in the Council’s decision.
Bunnings was ordered to pay $98,000 to the Council and $25,000 to CDL, which amounted to 50% of the total costs incurred by each party.
This decision is a reminder that the Court will not uphold challenges to the deliberate focus of the objectives and policies of a District Plan, and that attempts by applicants to do so may well contribute to a higher than usual costs award being imposed. A clear preference in the Plan to focus on protecting a particular resource, in this case the life-supporting capacity of the Plains, “reflects a choice which the framers of the District Plan [are] entitled to make” and any departure from that focus is not to be considered insignificant, particularly where it could have significant policy implications and impact on the integrity of the Plan.
 The issue of whether fees are excessive has been raised in several of Judge Dwyer’s latest decisions. In another recent case, Judge Dwyer commented on a “very large fee” of $90,000 for a two day hearing, but again isolated the key issue as being “not whether the Council considered the costs to be reasonable, but rather, what costs is it reasonable to require [the other party] to pay” (Sybeem Holdings Ltd v Auckland Council  NZEnvC 9, at para 40).