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Hollow Victory in $600,000 Cost Award

News Release 18 December 2002

Hollow Victory in $600,000 Cost Award for Southern Capital

Listed investment company Southern Capital has been awarded costs of nearly $600,000 in an Environment Court decision relating to the company’s Pegasus Bay development north of Christchurch.

Environment Court Judge Treadwell yesterday ordered the Canterbury Regional Council to pay Southern Capital $597,802 following a series of protracted Resource Management Act hearings dating back to 1998. Southern Capital had applied to the Court for costs of $731,064,52. The Court also awarded $50,000 to Waimakariri District Council, which itself had made application for an amount of $97,367.63. These amounts are exclusive of GST.

These sums set a new high-water mark for costs awarded by the Environment Court. Southern Capital Investment Director Michael O’Connor said he understood the previous highest amount awarded by the Environment Court was just $50,000.

Mr O’Connor described the victory as a hollow one.

“While this decision vindicates Southern Capital’s claims about unfair treatment at the hands of the Canterbury Regional Council, the whole process of having to go to the Environment Court in the first place delayed the Pegasus Bay Town development by about two years. The award of costs still is only a little over half of what we actually spent defending the case. Moreover, we have obtained no recovery of the substantial holding costs incurred through this delay.”

While the Court has found its decision based on the cost of each witness, the Court nevertheless has reserved leave to Southern Capital to apply further, should Southern Capital consider that the Court has inadvertently failed to address any particular witness. Mr O’Connor said that Southern Capital is considering the import of this allowance and will be reviewing the decision in detail to ensure that all of its witnesses’ costs have been covered.

Mr O’Connor said two important consequences flow from this decision in terms of how regional councils will deal with resource management matters. Firstly, councillors themselves need to examine their own governance procedures to ensure that their staff are acting within delegated authority and keep councillors appropriately informed as to the implications of their actions.

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Secondly, this decision underscores the importance of decisions made at the local authority level, where resource management applications are dealt with first.

Mr O’Connor said Judge Treadwell had drawn attention to the fact that the Canterbury Regional Council had, in taking the case to the Environment Court, sought a third opinion on the project, despite having already received two high quality opinions under the transitional district plan and the proposed district plan.

“Judge Treadwell was explicit in saying that the parties had the unusual luxury of two carefully considered and reasoned decisions to date by persons with undoubted expertise in the field of resource management,” Mr O’Connor said.

“The Judge admitted these factors were all relevant when taking into account the awarding of costs.”

Southern Capital only received consent to begin building its Pegasus Bay project in January 2002 after spending four years tied up in the Resource Management consent process.

“The delays and compliance costs associated with obtaining consents were a significant deterrent to development.”

Pegasus Bay is a proposed township covering 338 hectares northeast of Woodend, 15 minutes north of Christchurch. The project is being developed over the next 20 years and will eventually house a population of 5,000 with 1800 dwellings. Southern Capital is now assisting Waimakariri District Council with finding solutions for the supply of potable water and disposal of sewage for the eastern part of the district, before commencing the development of Pegasus Bay Town.

The new township is conservatively estimated to be worth in excess of $130 million once complete.


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