A top Waiheke Island vineyard must pay its neighbours $412,000 in legal costs - thought to be the largest ever costs award before the Environment Court - after a judge turfed out the company’s appeal.

In a damning judgment taking aim at the parties for drawing out the protracted case, Justice Wylie also dismissed an appeal by Auckland Council, meaning it must pay $82,000 towards the residents’ $825,000 legal bill for its own role in the shambolic and costly affair.

The Environment Court made the costs orders earlier this year following “torturous” judicial proceeding spanning five years relating to Cable Bay Vineyards’ retrospective consent application for its Oneroa restaurant and bar.

A bid by Cable Bay to force the council to pay hundreds of thousands of dollars towards its own legal costs was rejected.

The case related to “illegal” activities at the vineyard, with rowdy wine lovers imbibing on the restaurant’s lawn triggering more than 100 noise complaints since 2014.

A judge found the council initially failed to monitor Cable Bay or take prompt enforcement action in response to serious rule breaches - labelling this a neglect of duty - prolonging the case and adding to expenses.

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

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

Petrou’s company appealed against the decision unsuccessfully to both the High Court and the Court of Appeal.

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

• Waiheke Island vineyard ordered to pay $412k costs in 'torturous' noise case

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

In a scathing costs decision in May, Environment Court Judge Laurie Newhook said the sums claimed by the parties were “quite extreme”, with submissions and their attachments exceeding 500 pages.

Judge Newhook was critical of both the council and Cable Bay, ruling the neighbours were entitled to 60 per cent of their claimed costs.

The council and vineyard company both appealed against the decision to the High Court.

The council argued the Environment Court failed to provide sufficient reasons for its costs awards, erred when it found the council had neglected its duties, and had awarded costs which were neither fair nor reasonable.

Cable Bay argued the Environment Court’s conclusions were “unsupportable”, that it applied the wrong legal test and awarded “manifestly unreasonable” costs.

In a just-released High Court decision, Justice Wylie said the submissions were “lengthy, replete with factual disagreements and with tendentious arguments about who was or was not the successful party”.

He ruled that while the Environment Court’s reasoning for its costs decision was “succinct”, the court had not failed to give adequate reasons.

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

Justice Wylie noted it was unusual for costs to be awarded against a consenting body. While he ruled the Environment Court was wrong to find the council had neglected its duty, he found the council failed in its duties when drafting rules to regulate Cable Bay.

“It was the council’s duty to assist the court by drafting consent conditions to an acceptable standard and the court concluded that the council failed to do so. This contributed to the fact that the proceedings were drawn out and to the costs incurred by all parties.”

Cable Bay’s lawyer Alan Webb argued that in effect the case was only a seven-day hearing. However, Justice Wylie found this comment was “divorced from the reality of the proceedings”, given those seven days were preceded by two years of intensive work.

Webb also argued the Environment Court failed to consider the success of each party.

But Justice Wylie rejected this argument, saying “the neighbours were the successful parties”.

“Many of the activities being undertaken by Cable Bay were required to cease. The [restaurant] verandah ultimately received consent but only subject to some 71 conditions, all intended to mitigate and render minor the adverse effects of the activities that Cable Bay had been carrying out illegally for some years.”

And although the costs awards were “high”, the judge rejected arguments they were not fair or reasonable.

“The council and Cable Bay have not identified any material error of law in the Environment Court’s costs decision. Accordingly, the appeals are dismissed.”

Auckland Council’s legal services manager regulatory and enforcement, Christian Brown, said the council appealed against the costs decision because it believed the Environment Court made several errors of law that were important to correct.

“It is pleasing the High Court agreed there had been an error, but disappointing it did not consider it material enough to refer back to the Environment Court to reconsider the quantum of costs.

“This has indeed been a long - albeit court-determined – process. The council will now take the time to consider the judgment, including any appeal options.”

A spokesman for the residents declined to comment. The Herald has approached Cable Bay.