A celebrated Waiheke Island vineyard at the centre of a protracted noise dispute with neighbours has been ordered to pay them $412,000 in legal costs for its role in the "torturous" debacle.

Auckland Council is also in the gun and has been ordered to cough up $82,000 towards the neighbours' $825,000 legal bill due to its own failures.

A judge ruled the council had initially failed to monitor Cable Bay Vineyards or take prompt enforcement action in response to serious rule breaches, which amounted to a "neglect of duty".

The judge accused Cable Bay of displaying "provocative conduct" throughout the proceedings, advancing "unmeritorious" arguments and trying to "push the boat out at almost every turn" during costly litigation spanning five years.

The one bright spot for the council is Cable Bay's attempt to extract hundreds of thousands of dollars towards its own $600,000 legal bill has been rejected.

The vineyard's bid to force neighbours to contribute to its legal costs also failed.

But the matter is far from over. Both Cable Bay and Auckland Council have appealed the ruling, meaning yet further legal costs.

Cable Bay Vineyards has been ordered to pay its Waiheke Island neighbours $412,000 in legal costs. Photo / Dean Purcell

The prolonged dispute is linked to Cable Bay's bid to obtain retrospective consent for its Oneroa restaurant operation, which has notched up more than 100 noise complaints since 2014 - many linked to revellers imbibing on the vineyard's lawn.

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The vineyard is owned by wealthy European businessman Loukas Petrou, who also owns a construction firm and two luxury homes worth about $15 million.

Petrou's wine operation was slapped with enforcement orders in 2018 to control the racket, and finally granted consent in 2020 subject to strict conditions.

But Petrou's company appealed the decision unsuccessfully to both the High Court and Court of Appeal, arguing the conditions were too onerous.

Meanwhile, the parties filed applications for costs as their legal bills mounted up.

In a scathing costs decision obtained by the Herald, Environment Court Judge Laurie Newhook noted the case involved "notable sums" of money.

A delay in issuing the decision was regrettable but not surprising given the circumstances of the case, the judge said.

"Not only are the sums claimed by two parties quite extreme on their face, but the
submissions on costs and their attachments exceeded 500 pages!

"Worse, they were based upon liberal interpretations by all parties about 'success' of varying kinds each claimed for themselves, to the point that some aspects of the submissions took on the appearance of re-litigation of the bitter substantive disputes."

Cable Bay Vineyards owner Loukas Petrou, with Caroline Petrou, at the Metro Top 50 Restaurants function in Auckland in April 2013. Photo / Norrie Montgomery

The decision says the neighbours were compelled to engage senior legal counsel and expert consultants during the proceedings at significant personal cost.

They'd argued Cable Bay's behaviour amounted to an abuse of the court process, and that the council neglected its duties. The neighbours sought compensation for the full cost of their hefty legal expenses.

Cable Bay, meanwhile, argued the neighbours had conducted the case poorly, subjected the vineyard to a "barrage" of information, and that the council had unreasonably defended the case. The vineyard sought compensation for half its $600,000 legal bill.

The council argued the amounts sought by the parties were excessive and costs should lie where they fell.

Judge Newhook said Cable Bay's claim of being forced to respond to an information barrage was "pejorative and considerably overstated".

The vineyard's planning witnesses were "unhelpful" and the judge criticised a "lack of specific examples to support most of the allegations raised by Cable Bay".

The judge also took aim at the council, saying its "belated" enforcement action and "failure to act" contributed to an escalation in problems, adding time and cost.

The council's "neglect of duty" resulted in enforcement orders being needed "for some quite egregious matters when it finally took action".

"Earlier action by the council could have taken quite a lot of the heat out of the process, with significantly less cost to parties.

"For these reasons, I conclude the council failed in its duties and costs should therefore be awarded."

A lawyer representing Cable Bay said the vineyard "rejects any characterisation of its actions as suggested by the Environment Court".

The comments and costs decision were both under appeal, and it was "premature to make any statements and or comments until the decision of the High Court".

Waiheke resident and Auckland Council candidate Mike Lee said the council's woeful compliance performance was an open secret on the island.

But rather than admitting and rectifying those deficiencies, the council was spending even more ratepayers' money "to fend off the legal consequences of its failings".

"I feel really sorry for the Cable Bay neighbours, they've been battling what must seem a tyranny of official indifference for years."

A council spokeswoman said the council did not take legal proceedings lightly.

"Our in-house legal team and external legal providers work together to ensure the most prudent use of ratepayer funds."

The council had appealed the costs decision and would not comment further while the matter was before the court.

One of the neighbours, who wished to remain anonymous, said the affected homeowners were relieved and felt vindicated by the court rulings imposing strict noise limits on Cable Bay.

He declined to comment on the costs award or subsequent appeals while the matter was still before the court.