Ashland Investments Limited v Wairoa District Council
[2023] NZHC 3339
•23 November 2023
IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY
I TE KŌTI MATUA O AOTEAROA TŪRANGANUI-A-KIWA ROHE
CIV-2021-416-000005
[2023] NZHC 3339
IN THE MATTER of an application for review under the Judicial Review Procedure Act 2016 BETWEEN
ASHLAND INVESTMENTS LIMITED
First Applicant
FOREST LIFEFORCE RESTORATION TRUST
Second ApplicantAND
WAIROA DISTRICT COUNCIL
Respondent
Hearing: 25 and 26 September 2023 Counsel:
S J Ryan and S A V Thompson for First and Second Applicants M B Lawson for Respondent
Judgment:
23 November 2023
JUDGMENT OF RADICH J
Table of Contents
Paragraph
The procedural background and the issues [6]
The land, its use and the rating categories applied to it [17]
Ashland, the Trust and the Maungataniwha forest [17]
Forestry rights over the Maungataniwha forest [20]
Ashland’s activities on the land [22]
Context through the New Zealand Forest Owners decision [27]
The 2018 decision [30]
Background to the decision [30]
The decision-making process [35]
The 2021 decision [41]
ASHLAND INVESTMENTS LIMITED v WAIROA DISTRICT COUNCIL [2023] NZHC 3339
[23 November 2023]
The legislation [45]
The Local Government Act [47]
The Local Government (Rating) Act [60]
Judicial consideration of the legislation [70]
Consideration of the agreed issues [81]
The 2018 decision [82]
The 2021 decision [133]
Relief [153]
Outcome [162]
[1] Ashland Investments Ltd owns land known as the Maungataniwha forest in the Wairoa District. Together with the Forest Lifeforce Restoration Trust, it carries out conservation-based and ecological restoration activities there.
[2] Ashland and the Trust say that a rates-setting decision made by the Wairoa District Council in 2018, and its application to the Maungataniwha forest land, was flawed. The 2018 decision meant that owners of forestry land would pay a rate at a proportion of five times that paid by residential ratepayers (for each dollar of capital value). They say that the rating category in question was flawed in its own right and that it was, in any event, designed for exotic or plantation forestry, whereas they are focused on preserving, not harvesting, their mainly indigenous forest land.
[3] Ashland and the Trust say that, in addition, a rates-setting decision made by the Council in 2021, and its application to the Maungataniwha forest land, was flawed. While, in its 2021 decision, the Council did create rating categories that differentiated between indigenous and exotic forest land, a further distinction was drawn between protected and non-protected indigenous forest land. The 2021 decision meant that owners of non-protected indigenous forest land would pay a rate at a proportion of 1.6 times that paid by residential ratepayers.
[4] Again, Ashland and the Trust say that the rating category in question was flawed in its own right and that, in any event, the Council erred in applying it to the Maungataniwha forest land.
[5] In this decision, I have found that the grounds of review are not made out. The Council’s decision-making processes were sound and its decisions sat comfortably within the ambit of the broad powers given to it for the purpose of setting rates. The short point is that there need not be a direct correlation between the benefit a ratepayer receives from an activity and the rate set for it. But the rating categories that applied to the applicants’ land were appropriate in any event.
The procedural background and the issues
[6] The statement of claim was filed on 12 March 2021. A case management process then followed over the next 21 months during which time, primarily, the applicants obtained by consent orders for tailored discovery on two occasions. An amended statement of claim was filed on 24 December 2022 so as to include causes of action relating to the rating differential that was set in 2021.
[7] Timetable orders were set by consent in March 2023 leading to trial in September. Timetable orders did not include the filing of amended pleadings. However, on 14 July 2023, a second amended statement of claim was filed and then, on 22 August 2023, a third amended statement of claim was filed.
[8] On 21 September 2023, soon before the beginning of the hearing of the proceeding on 25 September, the applicants filed an application for leave to file a fourth amended statement of claim, providing a marked-up draft identifying the further amendments sought. I heard the application at the beginning of the hearing on 25 September.
[9] The amendments sought relate to adjustments made subsequent to rating differentials first applied for the rating period beginning 1 July 2021. The differential that applied to the Maungataniwha forest following the 2021 decision was a differential of 1.6. The amendments sought in the proposed fourth amended statement of claim would have pleaded that the differential was adjusted by the Council in subsequent years – to 2.35 for the July 2022 to June 2023 rating year and to 2.5 for the July 2023 to June 2024 rating year.
[10] Mr Ryan, for the applicants, emphasised that the additions were primarily for the purpose of providing updated and more accurate information. Mr Lawson, for the Council (which had consented to the filing of the third amended statement of claim) opposed the application on the grounds that, with just one working day’s notice, it would call into question in the proceeding the procedures adopted by the Council under s 23 of the Local Government (Rating) Act 2002 (the Rating Act) in 2022 and 2023.
[11] I declined the application. As I said at the time, the relief sought in para 7.1(f) of the third amended statement of claim1 seeks:
a declaration that the commercial rate … for the rating years from 1 July 2021 and subsequent has been set unlawfully – as it relates to indigenous forest, or alternatively, land of the applicant. [emphasis added]
[12] This prayer for relief made it sufficiently clear that the applicants were challenging the rates set on and from 2021.
[13] Moreover, the point is clear from the pleadings as a whole. There are in essence two key decisions in issue. The first is the Council’s 2018 December decision which set a targeted rate on a differential basis for forestry. The second is the Council’s 2021 decision which set a general rate on a differential basis (using a differential otherwise set for commercial users). If there are flaws with the 2018 decision, then they will affect, equally, the rates set on the same basis in the 2018/2019, 2019/2020 and 2020/2021 years.
[14] Similarly, if there are flaws with the 2021 decision, then they will affect, equally, the rates set on the same basis in the 2022/2023 and 2023/2024 years. The hearing proceeded on that basis.
[15] In any event, pleadings aside, the parties have filed a joint statement of issues. The issues set out in the document are expressed as being the issues that are to be determined at the hearing. In the joint statement, a list of issues is set out as relating to “the targeted roading rate set differentially” and a separate list of issues is set out as
1 And in the amended statement of claim and in the second amended statement of claim.
relating to “the general commercial rate set differentially”. In this decision, I determine the proceeding by addressing each of the issues in the joint statement. I refer to the “targeted roading rate set differentially” as “the 2018 decision” and to the “general commercial rate set differentially” as “the 2021 decision”.
[16] While 14 primary issues are raised in the joint statement, they boil down to an inquiry as to whether, in making the 2018 and 2021 decisions, the Council:
(a)erred in law in relation to the way in which it defined – by reference to land use – the rating categories that had been created, and then applied to the applicants;
(b)erred in fact, or through failing to have regard to factual and legal considerations, in the ways in which it applied relevant rating categories to the Maungataniwha forest land; or
(c)otherwise acted unreasonably.
The land, its use and the rating categories applied to it
Ashland, the Trust and the Maungataniwha forest
[17] The Maungataniwha forest, owned by Ashland, comprises 12,470.3 ha of land in the Wairoa District. The Trust is a charitable trust that carries out ecological restoration activities in the Maungataniwha forest and elsewhere in New Zealand.
The Maungataniwha forest comprises:
(a)6,037.00 ha of indigenous forest (the Indigenous Forest Block), purchased by Ashland on 26 May 2005;2 and
(b)6,433.30 ha of pine forest (the Pine Forest Block), purchased by Ashland on 5 December 2007 from Matariki Forests Ltd, which had
2 Certificate of Title GS4C/267.
operated the land as a productive forestry block.3 The Pine Forest Block includes an open space covenant over approximately 334 ha in favour of the Queen Elizabeth II National Trust (the QEII area) for the purpose of protecting the environment and the ecology of the land. The QEII area is exempt from rates.
[19]The Maungataniwha forest is treated by the Council as a single-rating unit.
Forestry rights over the Maungataniwha forest
[20] The Maungataniwha forest is subject to two registered interests which address harvesting rights. They are discussed in further detail a little later in this decision but may be described in the following way:
(a)The Indigenous Forest Block is subject to a sustainable forest management plan (Forest Management Plan) under s 67K of the Forests Act 19494 that provides for the harvest of the forest. The Forest Management Plan is for a term of 50 years, from 30 October 1996.
(b)The Pine Forest Block is subject to a forestry right (Forestry Right), registered under the Forest Rights Registration Act 1983 in favour of a third party, Prolife Foods Ltd. The right allows Prolife Foods Ltd to plant, maintain, protect and harvest tree species approved by Ashland. The right exists for a term of 26 years from 1 July 2018. The right was transferred from Prolife Foods Ltd to Trees for Kiwis Ltd on 8 March 2022.
[21] Under the Forest Management Plan, Ashland cannot harvest from the Indigenous Forest Block unless it creates an annual logging plan that is approved by the Chief Executive of the Ministry of Agriculture and Forestry.5 Equally, under the Forestry Right, the grantee does not have an absolute right to harvest. Ashland’s
3 Certificates of Title GS4C/268 and GS4C/970.
4 The Forest Management Plan is recorded against the title for the Indigenous Forest Block under registered instrument 213026.
5 Forests Act 1949, s 67H(1)(a).
consent must first be obtained. 6 And, in any case, a resource consent would be needed under the Natural and Built Environment Act 2023 (for consents sought from 24 August 2023).7
Ashland’s activities on the land
[22] Ashland, together with the Trust, operate the Maungataniwha forest primarily for conservation and ecological purposes. They have worked to restore the native forest and its ecology in order (in part) to secure breeding areas for a number of endangered native bird species including kiwi, whio, whiteheads, robins and tomtits.
[23] The applicants say that Ashland has not undertaken any harvesting activities on the Indigenous Forest Block and that there have been no approved annual logging plans under the Forest Management Plan since 2001.
[24] They say that harvesting activity on the Pine Forest Block was limited to begin with but had declined to the point where all production forestry operations had ceased by 31 December 2017, other than in two small areas in which production forestry operations have continued to limited extents. The first is an area of 91 ha that was accidentally overplanted with plantation pine forest by Matariki Forests Ltd when it owned the land. This area will be harvested commercially in 15 years’ time.. The second is a 462 ha area of mature radiata pine which is not considered to be commercially viable for harvest.
[25] The applicants say that the Pine Forest Block now falls within their ecological conservation endeavours and that it is being allowed to revert to native forest. As William Shaw, an ecologist who has given evidence for the applicants, has said,8 following the harvesting of exotic pine, there was abundant regeneration of secondary indigenous forest species and Ashland embarked on a major wilding control operation to prevent exotic wilding regeneration.
6 Clause 5.1.7 of the agreement.
7 Under the Forests Act, s 67V, nothing in the Act derogates from the Natural and Built Environment Act 2023 (nor the Resource Management Act 1991 before it).
8 Mr Shaw is a highly credentialled ecologist with direct personal knowledge of the history of, and land use at, Maungataniwha.
[26] It is in the context of this land use that it is said that the creation, and application, of rating categories for (in the case of the 2018 decision) production forest operators and (in the case of the 2021 decision) commercial indigenous forest operators is legally and procedurally flawed.
Context through the New Zealand Forest Owners decision
[27] The Council’s 2021 decision has been considered already by the Court of Appeal in New Zealand Forest Owners Association Inc v Wairoa District Council.9 That decision was concerned with a challenge by the New Zealand Forest Owners Association to the part of the Council’s 2021 decision which imposed a rating differential of 4 for ratepayers owning more than 100 ha of exotic forest land. The challenge in this case is to the creation of the protected and non-protected sub- categories for the indigenous forest category in 2021 – and to the alleged failure in the 2018 decision to create a distinction between indigenous and exotic forests. But the cases have much in common. Accordingly, while the focus is a little different at times, the descriptions of the relevant background, of the decision-making process, of the relevant legislation and of the legal principles in New Zealand Forest Owners Association are relevant here.
[28] As the Court of Appeal explained, local authorities fund their activities primarily through rates and charges of various kinds.10 Four are relevant here:
(a)General rates, which are fixed on property value according to a “cents in the dollar” formula set annually by the local authority;
(b)Targeted rates which are charges for groups who may benefit more directly than other ratepayers from a specific council activity;
(c)Differential rates, which are applied to a general rate and/or to a targeted rate to increase or reduce the amount which ratepayers would otherwise pay based upon, for example, the value of their land or the use to which the land is put; and
9 New Zealand Forest Owners Association Inc v Wairoa District Council [2023] NZCA 398.
10 At [14].
(d)Uniform annual general charges, which are fixed charges, applying to every property, no matter the value of the property.
[29] The 2018 decision involved a targeted rate set on a differential basis, while the 2021 decision involved a general rate set on a differential basis.
The 2018 decision
Background to the decision
[30] As is described in the Council’s funding impact statement in its 2018–2028 long-term plan, the Council set rates on a differential basis to recognise the different rateable value of land, the uses of land in the district, and the differing provision and consumption of Council services. The funding impact statement then, having set a general rate, applied a differential factor to a range of property types and uses in the township and in the rural areas. It set, in addition, certain targeted rates on a differential basis. For example, rural differential categories included:
(a)“rural villages”;
(b)“rural non-forestry” with different differential factors for different property values;
(c)“rural residential”;
(d)“rural commercial”; and
(e)“rural roading forestry” – the targeted rate in issue here.
[31]The differentials for the rural categories ranged from 0.5 to 3.7.
[32] A further set of differentials are applied through the targeted “roading rate”. The differentials varied over time.
[33] The reason for the targeted roading rate, and for the differentials within it, as explained by Mr Borg, the Council’s finance manager, is that the cost of maintaining
roading infrastructure accounts for approximately 55 per cent of the Council’s annual expenditure and the majority of that expenditure was spent on maintaining the rural roading network.
[34] There was no distinction drawn in the differential rate between indigenous forests and exotic (plantation or production) forests. There were in fact very few forests in the district that were not used for production purposes.
The decision-making process
[35] In December 2017, the Council released a “statement of proposal” document which looked to review its rating system by moving to a general rate calculated on the capital value of all rateable land, differentiated only by land use.11
[36] While the statement of proposal was not adopted, the revenue and financing policy which formed part of the 2018–2028 long-term plan process had proposed an increased rating differential of 5 for forestry.
[37] Consultation on the long-term plan proceeded, from May 2018, in accordance with the special consultative procedure under the Local Government Act.
[38] One hundred and four submissions were received in the consultation process. Following consideration of the submissions by the Council, the long-term plan was finalised. It included the targeted roading rate, with a differential of 5 for “rural roading forestry (≥100 ha)”.
[39] The Council resolved to set its rates on that basis for the financial year beginning 1 July 2018, on 25 September 2018.
[40] The applicants did not participate in the consultation process for the statement of proposal or on the long-term plan.
11 Land use was to be differentiated as between commercial, forestry, residential and rural use. In addition, a uniform annual general charge was to be applied as a percentage of the total general rate and targeted rates were to be levied for solid waste management, water supply, waste water and storm water.
The 2021 decision
[41] The process used by the Council in 2020 and 2021 to review its rating system, and the decision in June 2021 that followed, may be summarised in the following way:
(a)In November and December 2020, the Council reviewed the rating regime for the Wairoa District using the special consultative procedure. Two hundred and sixty-three submissions were received and hearings were conducted for those who wished to be heard.
(b)At an extraordinary meeting on 12 January 2021, the Council resolved to reduce 25 general rate differentials that were in place to five differentials.12 Amongst them was a differential category of “forestry” (with no further differential between indigenous and non-indigenous at this stage) to which a differential of 4 was applied.
(c)The outcome of this process was then the subject of a further special consultative procedure which began on 9 February 2021 with the adoption of a further statement of proposal for the amendment of the revenue and financing policy within the long-term plan. Submissions were received and heard and, on 23 March 2023, a decision was made on amendments to the revenue and financing policy.
(d)The amended revenue and financing policy was then incorporated into the draft long-term plan. It was, again, the subject of public consultation and hearings. A decision was made by the Council at its meeting on 30 June 2021.
[42] Ashland participated in each of the consultation processes referred to in [41]. It submitted that there needed to be a distinction between exotic forests planted and harvested for commercial purposes and indigenous forests which are protected for conservation purposes. And it submitted that, within an indigenous category, provision needed to be made for forests such as those of the applicant. They should
12 Within the rating system that was in place at that time, there were 34 different variable rates – including the differentials for the targeted rates to which the 2018 decision referred.
not, it was argued, be treated as commercial land but should be categorised as protected or rural uses.
[43] As a result of the process, including the applicants’ participation in it, the “forestry” category was refined further such that three categories were created:
(a)“Exotic forests” to which the “forestry” differential of 4 was applied;
(b)“Indigenous forests” to which the “commercial” differential of 1.6 was applied; and
(c)“Protected forests of any type” to which the “rural” differential of 0.8 was applied.
[44] The applicants’ land fell within the “indigenous forests” category because, with the exception of the area protected by way of a QEII covenant, the area of land was not regarded as being protected. That is the issue that arises from the 2021 decision. The applicants wished to be categorised as, or on the same basis as, a protected forest. Moreover, they challenge the property category descriptions themselves, referred to in
[43] above, adopted by the Council in its June 2021 decision.
The legislation
[45] The Local Government Act and the Rating Act are both relevant to the levying of rates. The Local Government Act was amended with effect from 14 May 2019 – in between the 2018 decision and the 2021 decision.13 However, the amendments have not changed the meaning of the provision significantly for the purposes of this decision.
[46] The relevant provisions of the Acts have been identified and discussed by the Court of Appeal in New Zealand Forest Owners Association. The description provided here incorporates key elements of the analysis of the legislation in that case.14
13 Local Government (Community Well-being) Amendment Act 2019, s 6(1).
14 New Zealand Forest Owners Association, above n 9, at [31]–[46].
The Local Government Act
[47] Section 3 of the Local Government Act describes the purpose of the Act as being “… to provide for democratic and effective local government that recognises the diversity of New Zealand communities.” To that end, as s 3 goes on to say, the Act promotes accountability and provides for local authorities to play a broad role in promoting the social, economic, environmental and cultural well-being of communities.
[48] Section 13 provides that ss 10 and 12(2) apply to a local authority performing a function under another enactment. In this case, that other enactment is the Rating Act.
[49]Section 10(1) provides that the purpose of local government is:
(a)to enable democratic and local decision-making and action by, and on behalf of, communities; and
(b)to promote the social, economic, environmental and cultural well- being of communities in the present and for the future.
[50]When the 2018 decision was made, s 10(1)(b) was in slightly different terms:15
to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.
[51] In New Zealand Forest Owners Association the Court of Appeal described these amendments in the following way:16
The linkage between services and wellbeing in the Local Government Act purpose provisions is now a little less direct. We do not read much into this. The 2019 amendments merely reverted to the original form of the legislation, suggesting a change of emphasis rather than function. Local authorities continue to promote community wellbeing by providing services, and service provision must be taken into account when budgeting for operating revenue.
15 Local Government Act 2002, s 10(1)(b) as at 1 July 2017.
16 New Zealand Forest Owners Association, above n 9, at [35] (footnotes omitted).
[52] The 2019 amendments repealed s 11A, which had provided that a local authority must have “particular regard” to the contribution that certain specified core services, including network infrastructure, make to their communities.17
[53] Section 12(2) gives local authorities a power of general competence,18 by providing that, for the purposes of performing its role, a local authority has:
(a)full capacity to carry on or undertake any activity or business, do any act, or enter into any transaction; and
(b)for the purposes of paragraph (a), full rights, powers, and privileges.
[54] Section 14 requires a local authority to act in accordance with certain principles when performing its role. It is a long provision, but, given its relevance, I set it out in full:19
14 Principles relating to local authorities
(1)In performing its role, a local authority must act in accordance with the following principles:
(a)a local authority should—
(i) conduct its business in an open, transparent, and democratically accountable manner; and
(ii) give effect to its identified priorities and desired outcomes in an efficient and effective manner:
(b)a local authority should make itself aware of, and should have regard to, the views of all of its communities; and
(c)when making a decision, a local authority should take account of—
(i)the diversity of the community, and the community’s interests, within its district or region; and
(ii)the interests of future as well as current communities; and
(iii)the likely impact of any decision on each aspect of well-being referred to in section 10:
(d)a local authority should provide opportunities for Māori to contribute to its decision-making processes:
(e)a local authority should actively seek to collaborate and co- operate with other local authorities and bodies to improve the
17 Local Government Act, s 11A as at 1 July 2017.
18 Auckland Council v C P Group Ltd [2023] NZSC 53 at [25]–[34].
19 See Auckland Council v C P Group, above n 18, at [28] where the Supreme Court remarked that s 14 emphasises proper process and is a thread running through relevant provisions; see also New Zealand Forest Owners Association, above n 9, at [37], where the Court of Appeal highlighted that point and added that it underpins a democratic model in which communities are to participate in important decisions.
effectiveness and efficiency with which it achieves its identified priorities and desired outcomes; and
(f)a local authority should undertake any commercial transactions in accordance with sound business practices; and
(fa) a local authority should periodically—
(i)assess the expected returns to the authority from investing in, or undertaking, a commercial activity; and
(ii)satisfy itself that the expected returns are likely to outweigh the risks inherent in the investment or activity; and
(g)a local authority should ensure prudent stewardship and the efficient and effective use of its resources in the interests of its district or region, including by planning effectively for the future management of its assets; and
(h)in taking a sustainable development approach, a local authority should take into account—
(i)the social, economic, and cultural well-being of people and communities; and
(ii)the need to maintain and enhance the quality of the environment; and
(iii)the reasonably foreseeable needs of future generations.
(2)If any of these principles, or any aspects of well-being referred to in section 10, are in conflict in any particular case, the local authority should resolve the conflict in accordance with the principle in subsection (1)(a)(i).
[55] Section 14 was amended in 2019 also, but only to the extent required to reflect the amendments to s 10. In 2018, s 14(1)(c)(iii) provided, “the likely impact of any decision on the interests referred to in subparagraphs (i) and (ii)” (emphasis added to show the change).20 Section 14(2) did not, as it now does, refer to “the aspects of well- being referred to in section 10”.21
[56] These provisions, which emphasise community participation through democratic processes, guide a local authority’s funding decision processes. Section 93 requires local authorities to have a long-term plan and, under s 95, funding impact statements are to be provided for each financial year. Under s 100, a local authority must ensure that each year’s projected operating revenues are set at a level sufficient to meet that year’s projected operating expenses; referred to in the heading for the
20 Local Government Act, s 14(1)(c)(iii) as at 1 July 2017.
21 Local Government Act, s 14(2) as at 1 July 2017.
section as the “balanced budget requirement”. Section 101 establishes financial management obligations:
101 Financial management
(1)A local authority must manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community.
(2)A local authority must make adequate and effective provision in its long-term plan and in its annual plan (where applicable) to meet the expenditure needs of the local authority identified in that long-term plan and annual plan.
(3)The funding needs of the local authority must be met from those sources that the local authority determines to be appropriate, following consideration of,—
(a)in relation to each activity to be funded,—
(i)the community outcomes to which the activity primarily contributes; and
(ii)the distribution of benefits between the community as a whole, any identifiable part of the community, and individuals; and
(iii)the period in or over which those benefits are expected to occur; and
(iv)the extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity; and
(v)the costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities; and
(b)the overall impact of any allocation of liability for revenue needs on the current and future social, economic, environmental, and cultural well-being of the community.
[57] Prior to the 2019 amendments, subs (3)(b) provided that the local authority must consider “the overall impact of any allocation of liability for revenue needs on the community”.22
[58] The Court of Appeal in New Zealand Forest Owners Association drew attention to several features of s 101, observing the general obligation to manage revenues and expenses prudently – with effective provision to meet the expenditure needs in its long-term plan and its annual plans, the need for a local authority to determine “appropriate” sources from which its funding needs are to be met, and the
22 Local Government Act, s 101(3)(b) as at 1 July 2017.
need for an overall assessment to be made about the impact of any allocation of liability for revenue needs on the community (as described in subs (3)(b)).
[59]The Court concluded:
[43] It is implicit in s 101 that Parliament envisaged local authorities would exercise substantial autonomy, deciding where community interests lie, what activities should be undertaken to promote them, how activities will be classified and how expenditure needs will be funded. The obligations are expressed in a very general way and local authorities are to decide what funding sources are appropriate having regard to all the considerations listed in s 101(3), which include the community’s social, economic, environmental and cultural wellbeing. These decisions are to be informed by community preferences revealed through process obligations designed to ensure the community is consulted beforehand and can hold decisionmakers accountable afterward, through the ballot box.
The Local Government (Rating) Act
[60] The Rating Act, which gives local authorities the power to levy rates, is, like the Local Government Act, process-driven.
[61]The purpose of the Rating Act is set out in s 3:
3 Purpose
The purpose of this Act is to—
(a)promote the purpose of local government set out in the Local Government Act 2002 by—
(i)providing local authorities with flexible powers to set, assess, and collect rates to fund local government activities:
(ii)ensuring that rates are set in accordance with decisions that are made in a transparent and consultative manner:
(iii)providing for processes and information to enable ratepayers to identify and understand their liability for rates; and
(b)facilitate the administration of rates in a manner that supports the principles set out in the Preamble to Te Ture Whenua Māori Act 1993.
[62]Section 13 gives a local authority the power to set a general rate:
(a)at a uniform rate in the dollar of rateable value for all rateable land; or
(b)at different rates in the dollar of rateable value for different categories of rateable land under section 14.
[63] Section 14 provides that for the purposes of setting a general rate differentially, categories of rateable land:
(a)are identified in the local authority’s funding impact statement as categories for setting the general rate differentially; and
(b)are defined in terms of 1 or more of the matters listed in schedule 2.
[64] Schedule 2 sets out the matters that local authorities may use to define categories of rateable land:
Schedule 2
Matters that may be used to define categories of rateable land
1 The use to which the land is put.
2 The activities that are permitted, anticipated, discretionary, or prohibited for the area in which the land is situated under the Natural and Built Environment Act 2023 and the rules to which the land is subject under an operative plan under that Act.
3 The activities that are proposed to be permitted, anticipated, discretionary, or prohibited activities under the Natural and Built Environment Act 2023 and the proposed rules for the area in which the land is situated under a proposed plan under that Act,
…
4 The area of land within each rating unit.
5 The provision or availability to the land of a service provided by, or on behalf of, the local authority.
6 Where the land is situated.
7 The annual value of the land.
8 The capital value of the land.
9 The land value of the land.
[65] The rate that is the subject of challenge in the 2021 decision is a general rate set differentially under these provisions.
[66]Section 16 gives local authorities the power to set a targeted rate:
(a)on a uniform basis for all rateable land in respect of which the rate is set out; or
(b)differentially for different categories of rateable land under section 17.
[67] Section 17 essentially mirrors s 14, in requiring the matters in sch 2 to be used to define differential rating categories.
[68] The rate that is the subject of challenge in the 2018 decision is a targeted rate set differentially under these provisions.
[69] Section 23 describes the procedure that local authorities must follow when setting rates. In particular, it requires rates to be set in accordance with the relevant provisions of the local authority’s long-term plan and funding impact statement for that financial year.23
Judicial consideration of the legislation
[70] A clear set of principles have emerged from Court of Appeal and Supreme Court decisions which have considered the rating powers of local authorities. The principles emphasise that the powers are process-driven. Following what amounts to considerable community involvement, elected representatives are left with broad political judgment-based powers to (as relevant here) adopt a differential rate which differentiates between types of property, or property activities, on a range of bases that need not necessarily be related to the use of the land. The basis for differentiation need not turn upon cost-benefit calculations.
[71] The starting point for this analysis is the decision of the Court of Appeal in Wellington City Council v Woolworths New Zealand Ltd.24 The Court of Appeal in New Zealand Forest Owners Association said that, in its view, the principal conclusion reached by the Supreme Court in C P Group about rating powers was that Woolworths remains good law under current legislation.25
[72] In Woolworths, the challenge to the application of a differential to commercial ratepayers when setting a general rate was not successful. The Court said that there was force in a submission for the Local Government Association in that case that “it is implicit in the scheme of the legislation that a rating system in its diversity remains primarily a taxation system and not a system inherently based on a principle of user pays”.26 Accordingly, there was an entitlement, when adopting a differential rate, to
23 Local Government (Rating) Act 2002, s 23(2)(b).
24 Wellington City Council v Woolworths New Zealand Ltd (No 2) [1996] 2 NZLR 537 (CA).
25 New Zealand Forest Owners Association, above n 9, at [57], referring to Auckland Council v C P Group Ltd, above n 18.
26 Wellington City Council v Woolworths, above n 24, at [544].
discriminate among types or groups of properties on the basis of a range of considerations on the part of “popularly elected representatives exercising a broad political assessment”.27
[73] The Court made the point that the statutory scheme does not require a relationship between rates and benefits (or a lack of benefits), saying that:28
The breadth and generality of the empowering provisions applying to territorial authorities and affecting the general rate and differential rating (in contrast with use charges and special purpose authorities) make it clear that rating was not intended to be a calculation of benefits and allocation of the incidence of rates by reference to outcome.
[74] The Court of Appeal in New Zealand Forest Owners Association looked to the Supreme Court’s findings in C P Group that there was a rational connection between rates and benefits there.29 It then said:30
To look for a rational connection, then, is not to require that rates paid by owners of targeted properties bear some particular relationship to benefits they enjoy from a service or the costs which their use of that service causes the local authority. It is to require that the decision be justified by reference to considerations which must or may be taken into account under rating legislation.
[75] The Court drew a distinction between the circumstances that applied in the case before it – where relevant statutory considerations were taken into account and applied
– and the circumstances in Mackenzie District Council v Electricity Corporation of New Zealand,31 which was described as “a clear and extreme case of a local authority acting without regard to relevant considerations”.32
[76] There was, as the Court of Appeal said in New Zealand Forest Owners Association, a significant difference between a case like Mackenzie where the local authority set a rate without reference to its funding needs, resulting in a massive
27 At [544] and [545].
28 At [552].
29 New Zealand Forest Owners Association, above n 9, at [72] and Auckland Council v C P Group, above n 18, at [121].
30 New Zealand Forest Owners Association, above n 9, at [73].
31 Mackenzie District Council v Electricity Corporation of New Zealand [1992] 3 NZLR 41 (CA).
32 At [68] – a comment made in the course of observing that little scope remains for the doctrine that a fiduciary duty which local authorities owe to ratepayers extends to the setting of rates.
surplus for the year, and a case like that before it in which the Council “reallocated liability among funding sources”.33
[77] In dismissing the appeal in New Zealand Forest Owners Association, the Court of Appeal made the point that a “degree of unfairness is to be expected at the margins of rating categories” and that something more than simple unfairness among ratepayers would be required to challenge successfully a differential in a general rate. Practical administrative considerations, it was said, may influence a local authority’s decision.34
[78] Accordingly, the role of the Court is constrained in these circumstances. As the Court said, in cases like this where policies are to be weighed by those elected by the community, the courts should defer to their decision except in clear and extreme cases.35 The Supreme Court in C P Group found that “in terms of the nature of the rating system, the observations made in Woolworths hold good, albeit aspects of the legislative scheme are different now.”36 The Supreme Court went on to say that:37
… to give the decision-maker some latitude reflects the statutory context, in particular, the factors involved in the rating decision and the provision for accountability for local authorities by means of the processes prescribed and the democratic mandate given to local authorities.
[79] As the Court of Appeal in New Zealand Forest Owners Association emphasised, the Supreme Court, while not finding it necessary to debate levels of scrutiny in judicial review in cases such as this, observed:38
… these are complex decisions, often not amenable to right or wrong answers, requiring the resolution of factual issues, the weighing of competing interests and competing policy considerations.
[80] It is with these principles in mind that I turn to consider the issues the parties have advanced for consideration.
33 At [83].
34 At [99].
35 At [546]. Similar observations were made in Waitakere City Council v Lovelock [1997] 2 NZLR 385 (CA), Blair v Upper Hutt City Council HC Wellington, CIV-2005-485-1961, 18 May 2007, at
[51] and Kidd v Southland District Council [2017] NZHC 48 at [8].
36 Auckland Council v C P Group Ltd, above n 18, at [63].
37 At [90].
38 New Zealand Forest Owners Association, above n 9, at [62] and Auckland Council v C P Group, above n 18, at [96].
Consideration of the agreed issues
[81] I go on to determine the proceeding through considering in turn each of the issues in the joint statement of issues, to which I have referred in [15] above. In doing so, I have maintained the wording for each issue that has been used in the statement the parties have agreed.
The 2018 decision
1. Was the respondent in the exercise of its discretion relating to the categorisation of land for rating purposes, required to differentiate between forest that is indigenous and forest that is exotic?
[82] The short answer to this question can only really be “No”. No one, including the applicants, sought any form of differentiation between indigenous forest and exotic forest at any stage in the consultation process leading up to the 2018 decision. There is nothing in the statutory scheme that would require the Council to make a distinction of that kind. And there was nothing in the documents the Council was considering that placed the issue before it.
[83] The Council makes the point that, by reference to a spreadsheet used in the case, only 30 properties are categorised for rating purposes as being indigenous forests. Of those properties, eight are non-rateable (including because they are subject to a QEII Trust covenant) and 14 are small and pay less than $1,000 in rates. Accordingly, the distinction between indigenous and exotic forestry had not been an issue for the Council.
[84] If the Council had foreseen an issue of this type and raised it of its own volition without consultation on the point, then that may well have been a flaw in its own right.
[85] The applicants’ focus, really, is on the next issue which turns upon whether the “rural roading forestry ≥100 ha” categorisation, within the targeted rate for rural roading in the 2018 decision, should have been applied to them.
[86] I will refer to this categorisation simply as the “forestry category” in the analysis that follows.
2. Was the roading rate based on a premise of forestry that would or may be harvested or was it limited to production/plantation forestry?
[87] The applicants say that the forestry category that, for our purposes, is the subject of the 2018 decision, is based primarily upon traffic modelling studies that relate to forest harvesting. Therefore, it is said, embedded within the categorisation is the assumption that the forest land to which it is subject is forests that will be harvested and that it should not, in those circumstances, have been applied to the applicants.
[88]Reference was made to:
(a)A March 2017 report entitled The Impact of Land Use on Pavement Wear prepared by Transport Engineering Research New Zealand Ltd for “the RCA Forum and New Zealand Forest Owners Association”, described as a nationally led study in which local authorities participated. The study established a process for identifying heavy commercial vehicle traffic generated by particular land uses. It made the point that different land uses have different cycle times. For example, dairy farming mostly operates on an annual cycle, some beef finishing operations operate on a two-year cycle, while radiata pine forestry typically has a 26 to 30-year cycle. Log harvest data is considered for the purpose of considering traffic impacts and, as a result, the amount of pavement wear that results.
(b)An April 2017 report by Business and Economic Research Ltd entitled Equitable Funding of Pavement Maintenance for Low Volume Roads – A Report for the Road Controlling Authorities Forum Special Interest Group on Low Volume Roads. The report writers refer to it as providing a method for councils to allocate to rating units the cost of pavement maintenance for low-volume roads necessitated by industrial activity. It is said in the report that (in a sense that is at odds with the authorities in [70]–[79] above) “The equitableness of applying the allocation method is assessed as a ‘user pays’ approach”.
(c)A July 2017 report by Opus entitled Equitable Funding of Pavement Maintenance for Low Volume Roads – Te Wairoa – a case study – Wairoa District Council. The report refers to input and output volumes for pine plantations and the resulting impact of logging traffic on a movement per 1,000 ha basis. “Pavement maintenance costs” are given for each industry, noting in particular the disproportionate contribution that two large forestry blocks make.
(d)A 2017 report from the Road Controlling Authorities Forum (NZ) Inc entitled Guidelines for Equitable Funding of Pavement Maintenance for Low Volume Roads. This report refers also to the 26–30 year harvesting cycle for radiata pine forestry and calculates pavement costs for each industry with targeted rates in mind.
[89] There is little doubt that these studies were prepared, insofar as they relate to forestry, with production forestry in mind. However, that does not resolve the issue of whether the differential forestry rate was or should be limited to production/plantation forestry. As emphasised in the decisions referred to above, it is implicit in the scheme of the legislation that a rating system and its diversity remains primarily a taxation system and not a system based upon the notion of user-pays. Therefore, while the Council may well have had regard to reports of the type described above, it does not mean that the forestry category must have been limited in the way the applicants suggest.
[90] While the subject matter of the reports was the impact of production forestry on roading, that does not lead inevitably to a conclusion that the differential forestry rate was based upon a premise that the forestry land to which it was subject could only be land that would be harvested.
[91] Moreover, as observed already, a fundamental point is that Ashland did not participate in the process by which the Council exercised its discretion to make the 2018 decision. Its only correspondence on the point around this time was on
26 October 2018, after the 2018 decision had been made.39 Ashland’s 26 October 2018 letter was not a contribution to the Council’s rating decision-making process. Rather, as recorded in its heading, it was an “application for rates remission”. The project work undertaken in the Maungataniwha forest by Ashland and the Trust was recorded in the letter40 which, as the correspondence from Council rating officers in response show, was received enthusiastically.
[92] However, the rates remission application was ultimately declined with the exception of the area set aside under the QEII Trust. The detailed analysis on which the Council’s decision of 19 March 2019, declining the application, was based is set out in the agenda for that meeting. It includes the point that Ashland is the largest indigenous forest in the Wairoa District, paying 92 per cent of the total rates and making up 80 per cent of the land for all properties classified as indigenous forests in the district. The property right in favour of (at that time) Prolife Foods Ltd, discussed further below, was seen to be a relevant consideration in the Council’s decision. Ultimately, the Council saw the applicants’ land as falling appropriately within the forestry category and I find no error in that approach.
3. Was an error of law made? Did the Council correctly apply the law and ask itself the right question, in particular:
(a)was the use adequately defined by reference to clause 1 of schedule 2 of the Rating Act?
(b)was clause 1 of schedule 2 of the Rating Act misinterpreted/misapplied by reference to potential use versus actual or current use?
[93] There are two parts to this issue. Subparagraph (a) and the first part of subparagraph (b) focus on the Council’s decision to adopt the forestry category for the purposes of the roading-related differential. It asks whether, having regard to cl 1 of sch 2 to the Local Government Act, it was adequately defined; was that clause misinterpreted when the decision was made?
39 Although Ashland had written to the Council in June 2013 asking for an explanation about rate increases at that point in time, referring to its properties as being “predominantly native forests where conservation work is carried out”.
40 Reference was made in the letter to the Trust’s ‘Operation Nest Kiwi Egg Project’, the largest of its type in the North Island producing 299 chicks over the last 10 years, to the conversion of pine to native forest, to significant predator control work, to whio protection, to kākābeak preservation and to translocations for native bird species.
[94] The second part of the issues asks, in any event, whether the forestry category was misapplied in the case of the applicants on the basis that the Council failed to draw a distinction between the potential use of the applicants’ land, on the one hand, and their actual or current use of the land, on the other. This point sits at the heart of the applicants’ case. Although their land is not protected in a legal sense, they say that, because they have no current intention to use it for anything other than conservation and ecological purposes, the rating differential through the forestry category should not apply to them. This, second, part of the question will require the instruments registered against the titles to the applicants’ properties to be considered. But, in the first instance, the focus is upon the adoption of the forest category by the Council in the first place.
[95] Having found, under the first issue, that there was no requirement for the Council to differentiate between indigenous and exotic production forestry, this (related) question focuses upon the statutory requirement to define categories of rateable land.
[96] As mentioned already, the 2018 decision set a targeted rate under s 16 of the Rating Act. Under that section, a targeted rate may be set in relation to “1 or more categories of rateable land under s 17” and “differentially for different categories of rateable land under s 17”.
[97]Under s 17, “categories of rateable land” are categories that:
(a)are identified in the local authority’s funding impact statement as categories for setting the targeted rate; and
(b)are defined in terms of 1 or more of the matters listed in Schedule 2.
[98] For the purposes of s 17(a) the forestry category was identified clearly in the Council’s funding impact statement for 2018. As discussed in [30] above, the statement sets out each of the differential categories for urban and rural land. As relevant here, it identified a “rural roading forestry” category. The funding impact statement said, of this category, “this differential category recognises the use to which the land is put and subsequent additional maintenance cost as a result of the forestry activities”. It gave a differential factor of 5.
[99] In terms of s 17(b), the forestry category is adequately defined in terms of one or more of the matters listed in sch 2. For the applicants, it is said that, in interpreting “the use to which the land is put” in sch 2, the focus must be on actual use of the land such as to exclude land that is not intended to be harvested.
[100] However, I agree with Mr Lawson when he says that this would amount to an overly refined categorisation of each of the integral parts of forestry activities by separating harvest out from all of the other activities that are associated with forest lands. Moreover, what we are concerned with here when looking at this first aspect of the third issue is whether the categorisation used by the Council was within the broad powers given to it to define categories of rateable land; powers which are not based upon direct linkages between differential categories of use and particular land blocks.
[101] The Council used the Rating Valuation Rules (the Rules) to assist it in defining the categories that underlay its differential rating system. The Rules are issued by the Valuer-General under the Rating Valuations Act 1988. They are prepared for the slightly different purpose of providing requirements that must be met by territorial authorities when carrying out rating valuations on district valuation rolls.41
[102] The Rules identify a range of categories – and categorisation codes – that may be used when valuing land for rating purposes. They include what are described as “first character category codes”, which provide high level descriptions. Included at this level is “Forestry land that may be either in production or currently available for planting, and includes protected forest areas.” Within this forestry category, “second character category codes” are provided. In the case of “forestry” they include “exotic forests, “indigenous forests”, “protected forests” and “vacant land suitable for planting”.
[103] As mentioned already, the distinction between exotic and indigenous forests was not used in 2018 because no one raised it. It was adopted in the 2021 decision.
[104] It seems clear to me that the use was adequately defined by reference to cl 1 of sch 2 to the Rating Act and that the clause was not misinterpreted. The forestry
41 Rating Valuations Act 1998, s 5.
category was a category that was open to the Council to adopt and there was nothing that required it to adopt a further level of differentiation in the nature of the “second character category codes” used in the Rating Rules.
[105] I turn then to the second aspect of issue 3: should the Council have applied the forestry category to the applicants in a different way based upon their actual use of the land?
[106] The applicants’ use of the land is described in [22]–[26] above. Mr Shaw (the ecologist who gave evidence in the proceeding) concluded that the Maungataniwha forest has “very significant ecological values”, noting that it is recognised as the largest private conservation project in New Zealand and the largest producer of kiwi for release back into the wild.
[107] The Council says that, while all of the work undertaken by the applicants is laudable, the difficulty is that, with the exception of the QEII covenanted area, there is no certainty that those conservation works will continue into the future. It is said that, while the land is being used for conservation purposes at the moment, the applicants could change their minds at any time. Alternatively, it is said, the land or a lesser interest in the land – such as the forestry rights over portions of it – could be sold to entities that do not share the same aspirations as the applicants.
[108] It is said that the existence of the Forest Management Plan, registered against the Indigenous Forest Block, and the Forestry Right that relates to the Pine Forest Block reinforce the potential for the current use for the land to be changed.42 It is said that this these concerns would need to be addressed through, for example, providing further QEII Trust covenants or conservation covenants that would provide for the actual protection of the ecological work undertaken on the land and that measures of this sort have been discussed with the applicants as a means of them obtaining reclassification and, as a result, relief from rating burdens.
[109] I pause here to consider the nature of the Forestry Right and of the Forest Management Plan.
42 See paras [20] and [21] above.
[110] The Forestry Right is referred to on the face of the document as a “transfer granting a forestry right” under the Forestry Rights Registration Act 1983. It was granted on 12 July 2018 to Prolife Foods Ltd. A “forestry right” under the 1983 Act is described, in s 2A, as a right to “establish, maintain and harvest … a crop of trees on that land”. It enables also the grant of rights to undertake related activities such as the construction and use of tracks, buildings and other works.
[111] Under the Forestry Right, Ashland granted to Prolife Foods Ltd rights (amongst others) to “exclusively establish and replant Relevant Trees on the Land and maintain, manage, cultivate, protect and render productive, harvest, carry away, sell and otherwise utilise the Relevant Trees”. “Relevant Trees” is defined in the document as meaning “primarily Manuka but also, in the Grantees’ discretion, includes other forest species native to the area approved by the Grantor in writing (such approval not to be unreasonably withheld or delayed)”.
[112] The document grants also the right to “exclusively use the land for the purpose of Beekeeping and to place hives and other Beekeeping related structures on the land, collect honey and other produce from beekeeping and carry out any other necessary or desirable activities relevant to Beekeeping”.
[113] It is sufficiently clear that the word “exclusively” in this grant means that only Prolife Foods may conduct beekeeping on the land; rather than meaning that beekeeping is the only use to which the land may be put.
[114] Included also amongst the grants is the right to do whatever may be necessary or convenient for, amongst other things, planting, harvesting and replanting relevant trees on the land.
[115] The grant of the right to plant, replant and harvest a potential range of forest species on the land does open up the potential use of the land in the future.
[116] On 8 March 2022 – after both of the decisions that are in issue in this proceeding had been made – Prolife Foods sold the Forestry Right to Trees for Kiwis Ltd. Ashland was a party to the “covenant deed” which gave effect to the transfer.
The deed contains a clause under which Prolife Foods and Trees for Kiwis record their agreement that they will not harvest any relevant trees on the land during the term of the Forestry Right.43
[117] Because this deed did not come into existence until after the decisions that were in issue in this proceeding were made, it cannot properly be taken into account in assessing the legality of the decisions. However, it is relevant to observe that the deed may be altered at any time with the approval of the parties.
[118] The Forest Management Plan, dated 30 October 1996 and registered against the title to the Indigenous Forest Block, under the Forests Act, provides for the annual harvesting of native timbers from the land in accordance with the allowable harvest figures for each native species that is specified in the document. An annual logging plan is to be submitted to the Chief Executive of the Ministry of Agriculture and Forestry and no work may be carried out under the plan unless the plan has been approved by the Chief Executive.
[119] The Forest Management Plan was registered against the title prior to the purchase of the property by Ashland. The last logging plan that was approved under the document was in 2001.
[120] However, the Forest Management Plan has a 50-year term. Accordingly, its existence sits uncomfortably with the applicants’ objectives.
[121] In circumstances in which the use of the land, through sale or otherwise, could be changed at any time, and in which the differential categorisation the Council adopted is in accordance with the Local Government Act and the Rating Act, there was in my view no error of law in any of the ways described in issue 3.
4. Did the Council have proper regard to the relevant mandatory considerations under s 101(3) of the Local Government Act, including:
(a)did the Council have adequate information/make proper inquiry as to the indigenous forest (FI) class and/or land of the applicants; and
43 And will ensure employees, contractors, agents and others will not undertake those activities either.
(b)was the ability to control harvest of indigenous forest as a discretionary activity relevant to the funding needs analysis under s 101(3) of the Local Government Act and, if so, was that considered?
[122] There is no question that the Council considered each of the matters identified in s 101(3) of the Local Government Act (which is set out in [56] above). Part 4 of the Council’s 2018–2028 long-term plan addressed its revenue and financing policy, including its funding impact statement and its balanced budget. Each of the s 101(3) factors was identified and a separate section then addressed each of them in turn. It was, on the basis discussed already, in order for it to settle upon the forestry category as a whole without creating a separate category for indigenous forests. There is no error on that score.
[123] The real question that appears to underlie this issue is whether the Council needed to make further inquiries about the applicants’ use of the land whether it should then have made a different decision.
[124] It is difficult to see how the argument in favour of an approach of that sort could succeed in circumstances in which no one had submitted on the long-term plan, or on the funding impact statement, seeking a different categorisation regime. In any event, for the reasons I have given in [105]–[120] above, I am unable to form a conclusion that the present use of the applicants’ land, in light of the ability for that use to change, is able to provide foundation for an argument that further differentiation in favour of the applicants is required. Equally, I do not see it as providing a basis for a decision that bespoke provision should be made for the applicants.
[125] That leads to the next question – in (b) above: does the fact that a resource consent would be needed to harvest the indigenous forest, as a discretionary activity under the District Plan, add a sufficient layer of protection to warrant differentiation in favour of the applicants? I do not think that could possibly be so. At a general level, to require a local authority to consider, in relation to individual property owners, whether the application of District Plan provisions and possible controls through resource consenting could warrant a bespoke rating category for the land in question would be so onerous as to be unworkable.
[126] Moreover, under s 39(c) of the Local Government Act, a local authority’s responsibility and processes for decision-making in relation to regulatory responsibilities must be separated from responsibility and processes for decision- making for non-regulatory responsibilities. Accordingly, what might or might not happen through a resource consenting process could not influence an outcome in a local authority’s rating process.
[127] The converse applies also. The fact that a rating category has been applied to a property on the basis of a property’s conservation or ecological status could not allow a local authority to take that into account when considering a subdivision consent.44
[128] Following on from that point, it is accepted that the Council could validly decline any resource consent that included the clearance of indigenous vegetation on the basis of adverse environmental effects, or, for example, because of the burden of the cost of any damage to rural roading. However, this is a point that is remote from the legality of a categorisation decision made by the Council for rating purposes.
[129] Accordingly, I find that the Council did have proper regard to the relevant mandatory considerations in s 101(3) of the Local Government Act in the ways that are identified in issue 4.
5. Was the targeted roading rate unreasonable as to the indigenous forest (FI) class and/or the land of the applicants?
[130] The findings made already are such that there is no basis for a finding of unreasonableness. I have found the categorisation adopted in the 2018 decision to have been made lawfully and to be otherwise without flaw. Whether applying the unreasonableness principles as they were expressed in Wellington City Council v Woolworths45 (requiring a finding that a decision must be, for example, “perverse”, “absurd” or “outrageous”) or the slightly more nuanced approach of the Supreme Court in C P Group (that the complexity of these decisions is such that they are not
44 Precious v Western Bay of Plenty District Council W074/94 (Planning Tribunal).
45 Wellington City Council v Woolworths, above n 24, at 552.
often amenable to right or wrong answers),46 the Council’s decision is not open to be overturned on this ground.
6. Did the Council make a mistake or error of fact as to the use of the land?
[131] It would appear to me that the Council had a good understanding of the applicants’ use of the land. Its understanding is apparent, at least, from the written analysis it prepared in response to Ashland’s application for rates remission of 26 October 2018, as described in [92] above.
[132] In any event, as I have found, the applicants’ current use of the land is not such in its own right as to warrant a unique rating categorisation or a finding of error in the categorisations the Council has adopted. Moreover, the Council’s view of material facts is not such as to amount to a mistake that is so central to the decision in question that, if corrected, it would require a different decision.47
The 2021 decision
7. Was an error of law made? Did the Council correctly apply the law and ask itself the right question, in particular:
(a)was the use adequately defined by reference to clause 1 of schedule 2 of the Local Government Act?; and
(b)was clause 1 of schedule 2 of the Local Government Act misinterpreted/misapplied by reference to potential use versus actual or current use?
[133] This issue mirrors issue 3 above as it relates to the 2018 decision. However, whereas the 2018 decision set a targeted rate on a differential basis – such that s 17 of the Rating Act was the entry point for the statutory analysis – the 2021 decision set a general rate on a differential basis. Accordingly, s 14 is the entry point for the statutory analysis. Sections 14 and 17 are in the same terms for the purposes of this analysis.
[134] The categories of rateable land set in the 2021 decision are identified in the Council’s funding impact statement. That statement provided that differential factors would be applied to commercial land, forestry land, residential land and rural land.
46 Auckland Council v C P Group, above n 18 at [96].
47 See, for example, Taiaroa v Minister of Justice HC Wellington CP99/94, 4 October 1994 at [42– [43], affirmed on appeal on another point [1995] 1 NZLR 411 (CA).
Then, the “forestry” differential category was refined further with the exotic/indigenous forests distinction sought by the applicants adopted. However, a further refinement was added through a distinction between ‘protected’ and ‘unprotected’ indigenous forest.
[135] For the same reasons as those given in [100] above, the categorisation of rateable land – including consideration of “the use to which the land is put” in sch 2 – was without error.
[136] It was within the Council’s powers to subcategorise forestry land for the purpose of setting differentials.
[137] Equally, for the reasons given in [105]–[121] above, cl 1 of sch 2 of the Rating Act was not misinterpreted by the Council and nor did the Council misapply it by reference to potential use versus actual or current use of the land.
8. Did the Council make proper inquiries about the indigenous forest class and/or land of the applicants?
[138] The Council did have adequate information about the indigenous forest class. It had, and made good use of, the property categories in Appendix F of the Rules.
[139] Equally, the Council had adequate information on, and made proper inquiry as to, the land of the applicants. In addition to the understanding of the applicants’ land and its use by the applicants that is displayed in the written material that assessed the applicants’ request for rates relief (and discussed in [92] above), the Council now had the submissions made by the applicants during the consultation process on the 2021 decision, referred in to [42] above.
9. Did the Council have proper regard to the relevant mandatory considerations under s 101(3) of the Local Government Act, including the question as to whether the ability to control harvest of indigenous forest as a discretionary activity was relevant to the
funding needs analysis under s 101(3) of the Local Government Act and, if so, was that considered?
[140] The Council’s consideration of the terms of s 101(3) of the Local Government Act is apparent from the written record of the consideration given to the proposed revenue and financing policy at its meeting on 23 March 2021.48
[141] The relevance of the Council’s ability to control harvest of indigenous forest as a discretionary activity and its relevance to the funding needs analysis under s 101(3) of the Local Government Act is addressed in [125]–[129] above and that analysis applies equally here.
[142] The applicants have referred, in terms of s 101(3)(a)(ii), to there being no, or a negligible, correlation between the activity to be funded and the benefit received. It has referred, under s 101(3)(a)(iv), to Ashland having forestry rights but not exercising them. And it has referred, under s 101(3)(b), to a “disbenefit to private conservation activities” and to environmental well-being arising from the Council’s decision. However, as has been said in the context of a number of the issues addressed in this decision, the Council’s decisions are well within the broad discretions under which it operates when making rating decisions. Categorisation need not be based directly upon actual use on the part of particular landowners. It is primarily a taxation system.
[143]There is no flaw under this head.
10. Was the Council in breach of the decision-making principles in s 80 of the Local Government Act?
[144] Section 80 of the Local Government Act requires the Council to identify decisions that are “significantly inconsistent” with (broadly speaking) any policy or plan adopted by the Council.
[145] The applicants say that the Council acted in breach of s 80 because the decision to tie the “indigenous forests” category to the differential of 1.6 that is applied to the “commercial” category is inconsistent with the Council’s District Plan. Reference is
48 A detailed analysis is undertaken in a 17-page appendix to the papers for that meeting.
made, in particular, to s 6(c) of the Resource Management Act which requires the local authority to provide for the protection of areas of significant indigenous vegetation and significant habitats of indigenous fauna. Reference is made by the applicants, also, to the Council’s policy, adopted in r 23.1.2 of its District Plan, which provides for the protection of significant indigenous vegetation and significant habitats of indigenous fauna, including the protection of threatened plants and animals under sch 6 of the District Plan.
[146] However, the argument advanced under this head is to misunderstand the nature of the Council’s decision. The Council has not said that indigenous forests are a commercial use. Rather, the Council in 2021 made a decision separating exotic forests from indigenous forests (and it made a further distinction for protected forests). It needed to then adopt differentials for each of those categories. For the exotic forests category, it used the standard forestry differential of 4. For the indigenous forests category, it applied the 1.6 differential that is used also for commercial properties. In doing so, it was not saying that indigenous forests are, or are akin to, commercial uses of land. The decision it made is that a 1.6 differential, used also for commercial properties, was a differential at the right level for indigenous forests. That is not a decision that is inconsistent with s 80 of the Local Government Act.
11. Is the 2021 decision unreasonable as to the indigenous forest (F1) class and/or the land of the applicants?
[147] For the same reasons as those given in [130] above, there was no unreasonableness in terms of this question.
[148] Moreover, I agree with the point made for the Council that the forest on the applicants’ land is correctly identified as indigenous forest but it is not forest land that is protected. The Council has said that, if the Forestry Right and the Forest Management Plan were to be surrendered and a covenant protecting the forests put in place, then the applicants’ land could be reclassified to “protected forest”.
[149] I agree that there is nothing that is unreasonable in the principled approach that has been taken.
12. Did the Council make a mistake or error of fact as to the land use?
[150] On the basis of the points made in [131] and [132] above, there was no actionable mistake or error of fact in the 2021 decision.
13. Are the statements of conservation intent by the applicants, and the site-specific characteristics of the applicants’ land (including the habitat for indigenous flora and fauna, Forestry Rights, Forest Management Plan, remnant pine trees, overplant land) relevant and do they affect determination of the questions in 2 and 3 above?49
[151] The points raised in this issue have been considered in the course of addressing issues 2 and 3 above.
[152] For the reasons given, none of the questions raised are able to be answered in the applicants’ favour.
Relief
[153] The joint statement of issues raises several questions under the heading ‘Relief’. For the reasons given, there are no grounds for relief to be given. However, had a ground of review been made out, there would have been difficulty in justifying a grant of relief.
[154] This proceeding was filed in March 2021. It related at that stage to the 2018 decision.
[155] Twenty-one months of interlocutory processes then followed, including applications for tailored discovery, adjournments of case management conferences, and an application for further tailored discovery. Then, in December 2022, an amended statement of claim was filed; a 40-page document. Claims relating to the 2021 decision were now included. Three months later a memorandum was filed seeking timetabling directions through to the fixture.
[156] Then, on 14 July 2023, a second amended statement of claim was filed. A third amended statement of claim was filed on 22 August 2023 and, on 21 September 2023,
49 The “remnant pine trees” and the “overplant land” are the two areas referred to in para [24] above.
just before the trial, the applicants applied for leave to file a fourth amended statement of claim, discussed in [8]–[12] above.
[157] Judicial review is intended to be an expeditious process. It should involve straightforward pleadings that get directly to the point and a simple timetable to provide for the exchange of evidence and submissions. Interlocutory issues will certainly arise in some cases and s 14 of the Judicial Review Procedure Act 2016 can be used to simplify interlocutory procedures.
[158] The length, number of pleadings, the delays between case management conferences and, generally, the time that has been taken to get to hearing are not what would be expected in a judicial review proceeding of this nature.
[159] In the meantime, the Council has an ongoing obligation under s 100 of the Local Government Act to maintain a balanced budget and is required to report annually on how it has performed against it. Delay in judicial review proceedings must be assessed in a relative sense. In some cases, the passage of time may make little difference and cause little prejudice. In a case like this, an order (had there been grounds to make one) setting aside rating decisions dating back to 2018 would have caused considerable difficulties. In circumstances such as these, applicants need to use all endeavours to have proceedings heard by the Court as expeditiously as possible.
[160] It is in my view fair for the respondent to point out that, by way of comparison, the New Zealand Forest Owners Association case which challenged the Council’s 2021 decision also was filed after these proceedings were filed and within the same period of time has been heard by the High Court, determined, appealed by the applicant and determined by the Court of Appeal.
[161] While the point does not need to be determined here, delay would certainly have been a live issue if relief fell to be considered.
Outcome
[162] For the reasons given, the applicants’ application for judicial review is declined.
[163] The Council is entitled to costs on a 2B basis. If any item of costs cannot be resolved between the parties, then the respondent may, within 15 working days from the date of this decision, file a memorandum and the applicants may, within a further 15 working days, file a memorandum in response. Any such memoranda, including schedules, should be limited to five pages in length.
Radich J
Solicitors:
Jackson Russell, Auckland for Applicants Lawson Robinson, Napier for Respondent
0
2
0