Recently, a local authority in New Zealand found that it had moved some houses off a flood plain without first obtaining the appropriate resource consent from itself.  In retaliation for this action, the council took itself to court.  And won.  And lost.

http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10428897

 The council was ordered to pay $4800 ... to itself.  A councillor was quoted as saying "We feel vindicated by this decision".  Amusingly, the cost of the legal action outweighed the fine - the council had sought independent legal advice at $3000, and had hired prosectution and defense lawyers.

Truly amusing is the similarity to an article on BBSpot, known for completely impossible satire.

 I'll be the first to say: WTF?
 

If it wasn't for the fact that it was an outright waste of public money, I'd *almost* have to agree with doing that. Well no, not really, that was a really lame thing to do.

The individual decision makers should have been disciplined/fired as appropriate. An entity suing itself is just absurd. No matter the decision, exactly zero benefit could have come from it.

How bizarre.

I could, however, see this making some sort of sense, if and only if there was a need to prosecute a test case about something.  For all other cases, this is just government waste at its best.
 

Impossible? I work in the Mother of all Bureaucracies, and I can tell you with absolute certainty that it is quite possible that the left hand doesn't know, or care, what the right hand is doing.

 

It's not just governments, some corporations are sufficiently schizoid to do it. Sony in particular is notorious for frequently having one division of the company suing another.