Mike Doesburg, Partner, and Emma Burns, Solicitor, in the Environment,
Planning and Local Government Team at Wynn Williams navigate the possible cost risks
in the Environment Court.
Environment Court processes are often criticised for being time-consuming and costly. Participants must bear their own legal and expert costs and, depending on the case, may be liable to contribute to the other party’s costs.
In McCallum Bros Limited v Auckland Council [2025] NZEnvC 204, the Environment Court has confirmed a hefty cost award that will set the unsuccessful litigant back $450,000.
In what the learned judges described as a “conservative approach to costs”, McCallum Bros Limited (MBL) was ordered to pay $450,000 to Manuhiri Kaitiaki Charitable Trust (MKCT / Ngati Manuhiri), comprising $350,000 towards legal fees and $100,000 towards expert witness expenses.
The decision contains ‘best practice’ lessons for litigants who will inevitably be tasked with navigating the Environment Court’s often elusive method of awarding costs.
MBL had been declined resource consent to undertake offshore sandmining in the Mangawhai-Pakari embayment. It appealed that decision to the Environment Court and was unsuccessful again, due to insufficient evidence that adverse environmental effects would be avoided, and the finding that significant ‘mana whenua’ (cultural) effects could not be mitigated.
MKCT had thoroughly participated in the appeal and sought and was awarded costs by the Environment Court. That first costs decision was appealed by MBL to the High Court, which found that the Environment Court’s costs award had not been based on invoices of the actual costs incurred.
The High Court cited the Environment Court Practice Note 2023, which requires legal costs and disbursements to be supported by invoices or other proof of costs.
All of the above led MKCT to re-enter the Environment Court and supply its invoices to support a claim of $522,865.55 towards its legal costs of $644,515.18 and full costs for its expert witnesses of $157,340.33.
How costs are determined in the Environment Court
The Environment Court has broad discretion under section 285 of the Resource Management Act 1991 to order any party to pay the actual and reasonable costs and expenses incurred by another. While the Environment Court does not have a costs scale (like other courts), cost awards tend to fall within four bands: No costs; standard costs (generally 25-33% of the costs actually and reasonably incurred); higher than standard costs when certain aggravating factors are present; or indemnity costs, which are awarded rarely and in exceptional circumstances.
The Environment Court Practice Note 2023 provides guidelines for determining costs. The Practice Note lists six potential aggravating factors for costs — commonly known as the Bielby factors following the case of DFC NZ Ltd v Bielby [1991] 1 NZLR 587 (HC), which the courts tend to consider when determining the appropriateness of a costs award and the quantum:
• where arguments are advanced without substance;
• where the process of the Court is abused;
• where the case is poorly pleaded or presented;
• where a party has failed to explore the possibility of settlement where a compromise could have been reasonably expected;
• where a party takes a technical or unmeritorious point and fails; and
• whether any party has been required to prove facts which, in the Court’s opinion, should have been admitted by other parties.
Why the costs award so high in this case
A multitude of aggravating factors lifted the costs above a standard award in this case. The Court found there were serious issues with how MBL managed and advanced its case: MBL’s appeals for inshore, mid-shore and offshore mining consents were reduced to just the offshore area late in the process.
MBL also delayed its withdrawal of the inshore area absent clear evidence contrary to its position. This was on the basis that s 124 of the RMA protected MBL’s consent until all appeals were addressed. Given the clear ongoing adverse effects on Pakiri Beach and the nationally endangered Tara Iti, the Court found that MBL delaying withdrawal to extend its reliance on s 124 was an abuse of process.
MBL made significant errors in its initial evidence on sand generation, which were conceded only two weeks prior to heading and had required MKCT to produce evidence in rebuttal. As well as failure to provide the necessary evidence to support the application, the Environment Court found that the case was poorly pleaded, and the responses to tikanga issues were misunderstood and poorly presented.
Finally, MBL had lengthened the process by pursuing an unmeritorious application to strike out Ngati Manuhiri as a trade competitor. The Court admonished the application as “entirely misconceived”.
In light of MKCT’s invoices, the Court concluded its original decision gave insufficient weight to how the Bielby factors contributed to the actual costs incurred. Most notably, the Court found it had given insufficient weight to the generality of the hearing and the timing of MBL’s withdrawal of the mid-shore consent.
The Environment Court noted that while comparisons to other Court’s costs scales can be useful, care should be taken in applying ‘comparable’ scales.
The Court found that $350,000 towards legal costs reasonably reflected the time and complexity of the issues involved. Despite having MKCT’s invoices, the Court still found it difficult to precisely ascertain the time spent on each issue, which prevented the Court from confidently granting the further uplifts sought by MKCT.
The Court ultimately could not justify full indemnity costs but considered around 55 per cent of the legal costs incurred by MKCT was justified.
Conclusion
The significant costs awarded in this case serves as an important reminder of the risk Environment Court participants can face. While there are greater hurdles to claiming costs against local authorities, the lessons from McCallum Bros remain applicable.
It is important to conduct cases efficiently and pursue a case theory with intention. Sometimes this may require early appointment of experienced counsel in a complicated matter to ensure that only the most meritorious issues end up before the Court.
Comprehensive invoices also play a critical role in the Court’s being able to affirm the reasonableness of costs.
Parties should seek precision in their invoices when higher than standard costs are sought, and in particular, should aim to specify the time spent on each legal issue. This is particularly so if indemnity costs are sought.