Aztek v Attorney-General
[2020] NZCA 249
•24 June 2020 at 10 am
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| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA482/2018 [2020] NZCA 249 |
| BETWEEN | AZTEK LIMITED |
| AND | THE ATTORNEY-GENERAL |
| Hearing: | 24 October 2019 |
Court: | French, Miller and Cooper JJ |
Counsel: | M E Casey QC and A J Casey for Appellants |
Judgment: | 24 June 2020 at 10 am |
JUDGMENT OF THE COURT
AThe appeal is allowed.
BThe Chief Executive’s decision of 21 February 2011 to exempt the land from the requirement to offer back under s 40 of the Public Works Act 1981 is set aside and is to be reconsidered in accordance with this judgment.
CThe appellants are entitled to costs calculated for a standard appeal on a band A basis together with usual disbursements. We certify for second counsel.
____________________________________________________________________
REASONS OF THE COURT
(Given by Cooper J)
Table of Contents
Para No
Introduction [1]
Background [6]
The High Court judgment [19]
Appellants’ argument [27]
Respondent’s argument [35]
Analysis [45]
Statutory purpose [46]
The text [54]
Discretion [86]
Relief [110]
Result [114]
Introduction
This case concerns the proper interpretation and application of s 40 of the Public Works Act 1981 (the Act) in circumstances where:
(a)at the time of a determination that land was no longer required for a public work, the company from which the land had been acquired had ceased to exist because it was no longer on the register of companies; and
(b)the company was able to be restored to the register.
Because of its central importance to the judgment, we set out s 40 of the Act at the outset. It provides as follows:
40 Disposal to former owner of land not required for public work
(1) Where any land held under this or any other Act or in any other manner for any public work—
(a) is no longer required for that public work; and
(b) is not required for any other public work; and
(c) is not required for any exchange under section 105—
the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority, as the case may be, shall endeavour to sell the land in accordance with subsection (2), if that subsection is applicable to that land.
(2) Except as provided in subsection (4), the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority, unless—
(a) he or it considers that it would be impracticable, unreasonable, or unfair to do so; or
(b) there has been a significant change in the character of the land for the purposes of, or in connection with, the public work for which it was acquired or is held—
shall offer to sell the land by private contract to the person from whom it was acquired or to the successor of that person—
(c) at the current market value of the land as determined by a valuation carried out by a registered valuer; or
(d) if the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority considers it reasonable to do so, at any lesser price.
(2A) If the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority and the offeree are unable to agree on a price following an offer made under subsection (2), the parties may agree that the price be determined by the Land Valuation Tribunal.
(3) Subsection (2) shall not apply to land acquired after 31 January 1982 and before the date of commencement of the Public Works Amendment Act (No 2) 1987 for a public work that was not an essential work.
(4) Where the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority believes on reasonable grounds that, because of the size, shape, or situation of the land he or it could not expect to sell the land to any person who did not own land adjacent to the land to be sold, the land may be sold to an owner of adjacent land at a price negotiated between the parties.
(5) For the purposes of this section, the term successor, in relation to any person, means the person who would have been entitled to the land under the will or intestacy of that person had he owned the land at the date of his death; and, in any case where part of a person’s land was acquired or taken, includes the successor in title of that person.
The Crown acquired land described as Lot 13 DP202643 and Lot 5 DP334605 (the land) from Aztek Ltd (Aztek) for the purposes of intended roading works under an agreement dated 29 August 2005.[1] Aztek ceased to exist on 31 March 2009 when it was removed from the register of companies as a result of a failure to file annual returns.[2] Subsequently, on 3 November 2010 the New Zealand Transport Agency (NZTA) determined that the land was no longer required by it.
[1]The two properties were contained and described in, respectively, Computer Freehold Registers NA131B/788 and 141687.
[2]Companies Act 1993, s 214.
On 21 February 2011 a delegate of the Chief Executive of Land Information New Zealand (LINZ), Mr Terry Knowles, accepted a recommendation in a report prepared by Mr David Manson, a senior property consultant employed by The Property Group, that the land “be exempted from offer back to the Former Owners or their successors pursuant to Section 40(2)(a) of [the Act]”.[3] The basis of the recommendation was encapsulated in the following passage in the report, alongside a reference to s 40(2)(a) of the Act:
The former owner was Aztek Limited. The company is struck off as shown by the attached company search. The company search also verifies that no change of name or amalgamation of company has been recorded. It is therefore impractical to offer the land back as there is no one to offer the land to.
We consider that there is sufficient justification to recommend exemption from offer back on the grounds of impractical in terms of Section 40(2)(b) of the PWA.
[3]Mr Knowles was employed by LINZ as Manager Clearances in the Crown Property Group. He had delegated authority to exercise the Chief Executive’s powers under s 40 of the Act.
Aztek was restored to the companies register on 21 August 2015. The appellants challenged the Chief Executive’s decision that it was impractical to offer the land back in a proceeding commenced in the High Court in November 2016. They sought declarations that the respondent should offer to sell the land to Aztek and that the offer should be at the market value of the land as at the date of the determination that it was not required for the roading work. They were unsuccessful in the High Court, and now appeal.[4]
Background
[4]Aztek Ltd v Attorney-General [2018] NZHC 1839 [High Court judgment].
The properties which are the subject of this proceeding are located in Waterview, Auckland, between Great North Road and Oakley Creek. They are part of a larger area acquired by Ms Prujean (one of the appellants) and her partner Mr Cull in the 1990s. They obtained resource consent for the land to be subdivided and developed for residential purposes.
A staged development was envisaged. After the first stage had been completed, the development got into financial difficulties and the remaining land was the subject of a mortgagee sale in 2001. Ms Prujean and Mr Cull were then able to buy back much of the land and proceed with its development. Aztek was formed as the corporate entity by which the land would be owned and developed. After the on-sale of part of the land to help fund the project, three of the remaining properties were developed. In addition, some works were undertaken towards the development of the five remaining lots and an access road.
NZTA (at the time known as Transit New Zealand) was in the early stages of planning for what has since become the State Highway 20 Extension which links to the North-Western Motorway through the Waterview Tunnel (the Avondale Extension).[5] However, there was uncertainty as to the route that the Avondale Extension would follow. Given that uncertainty, the appellants contacted NZTA asking it to consider possible acquisition of the land in November 2003.
[5]Nothing turns on the change of name from Transit New Zealand to the New Zealand Transport Agency, and we refer to both as NZTA. In the High Court the Judge referred to the Avondale Extension as the “Waterview Project”. Nothing turns on this difference in terminology either, and we adopt the former term for consistency and because it was used in the agreement of 29 August 2005 by which the land was acquired by the Crown.
After some negotiation, an agreement was signed on 29 August 2005 (the Agreement). It took the form of an offer by Aztek to sell the land to the Crown for use in connection with the Avondale Extension. The Crown became bound to purchase the land when the Agreement was signed by an authorised agent for the Crown acting under delegated authority from the Chief Executive of LINZ pursuant to s 41 of the State Sector Act 1988.
Ms Prujean and Mr Cull moved to Australia in 2008. The land had been Aztek’s main asset. As the company no longer had any interest in the land, they ceased filing annual returns. Aztek was removed from the companies register on 31 March 2009.
After that point, Mr Cull observed the property from time to time on occasional visits back to New Zealand. He thought it appeared to be in use in relation to the Avondale Extension, referring to piezometers that had been installed on it and there being nothing to indicate that the land was no longer required. However, he monitored progress by looking at news websites, especially that of the New Zealand Herald. In 2015 he read that tunnelling had been completed and made inquiries as a result of which solicitors acting for Aztek and Ms Prujean wrote to The Property Group, which had acted on behalf of NZTA at the time the land was acquired. The letter, dated 8 July 2015, was in the following terms:
Dear James
Aztek Limited and Tresta Prujean - Probable Offerback Waterview Subdivision
We write to advise you we are acting on behalf of Tresta Prujean, whose company entered into a compulsory land taking agreement with the Crown on 29 August 2005 in respect of Lot 13 DP202643 and Lot 5 DP334605.
For your assistance we enclose a copy of the relevant Crown Sale Agreement and a copy of recent searches of the relevant titles for Lots 13 and 5.
It is our understanding that The Property Group acted on behalf of Transit New Zealand, now NZTA, in respect of the taking and your company may be acting on any disposals.
We do understand that the Crown may have surplus land involved with the tunnel work completed. The purpose of this request is [to] ascertain whether or not there is any surplus land and, if so, our client is keen to understand that her former rights and those of her company have been or will be protected.
If more information is required, please do not hesitate to let us know. Equally, if this enquiry is better dealt with by LINZ and/or NZTA direct could you please refer on.
We look forward to hearing from you at your earliest opportunity.
Yours sincerely
John Greenwood
Partner
Mr Manson replied on 13 July 2015. The letter included the following:
On 21 February 2011 Land Information New Zealand approved the exemption from offerback under Section 40(2)(a) of the Public Works Act 1981 (“PWA”) as impracticable due to the former owner Aztek Limited being a struck off company.
Section 40 requires the land “to be offered back to the person from whom it was acquired or to the successor of that person”. However successor is defined in S40(5) of the PWA “For the purposes of this section, the term successor, in relation to any person, means the person who would have been entitled to the land under the will or intestacy of that person had he owned the land at the date of his death; and, in any case where part of a person’s land was acquired or taken, includes the successor in title of that person”.
It is impractical to offer the land back as Aztek Limited no longer exists and there is no successor as defined by S40(5) PWA.
As a result of further inquiries, Mr Manson wrote again to Mr Greenwood. In an email dated 4 August 2015 he confirmed that once the tunnel works had passed the land it would be offered to a tangata whenua group under the first refusal provisions of the Ngā Mana Whenua o Tāmaki Makaurau Collective Redress Act 2014 (the Collective Redress Act). If not “taken up” they would go to the open market.
Mr Manson gave evidence that in concluding it was impractical to offer to sell the land to Aztek he had been guided by LINZ documents setting out the process to be followed in disposing of land held for a public work. These included the Standard for Disposal of Land Held for a Public Work (LINZS15000) and the Guideline for Disposal of Land Held for a Public Work (LINZG15700) both of which became effective on 13 November 2009. Mr Manson said he had also considered a standard that had previously applied, dated 1 July 2002, as a cross-reference. This was the Accredited Supplier Standard 4. That standard noted that where land was acquired for a public work from a company that was subsequently wound up or dissolved, it would be impracticable to offer the land back. Those operating under the standard were enjoined to take care to ensure the company had not simply changed its name.
LINZS15000 purports to set out procedures to be followed and a minimum level of information to be provided for the purpose of enabling LINZ to assess whether land disposal complied with the law and all those with an interest in the land have been considered. Paragraphs 9.1 and 9.2 are in the following terms:
9 .1 General
If there are no exemptions to the requirement to offer back, the vendor agency must make reasonable efforts to identify and locate the former owner or their successor, and make the offer back to that person.
9.2The former owner was a company or other legal entity
If the former owner was a company or other legal entity and it no longer exists, the vendor agency must provide evidence of steps taken to identify any succeeding entity entitled to receive an offer back.
Guideline LINZG15700 relevantly addresses circumstances in which the former owner of the land is “now a defunct company”. The guideline states:
If the land was acquired from a company that has since been wound up or dissolved, the vendor agency should ensure that the company has not merely changed its name or amalgamated with another company.
Muir J recorded that in evidence, Mr Manson had conceded that the prospect that Aztek might be reinstated to the register was not something that he had considered. He accepted he would have been aware of the possibility of a struck off company being restored but also acknowledged he may not have been aware of provisions in the Companies Act 1993 which deemed a reinstated company to have continued in existence as if it had not been removed from the register.[6]
[6]Companies Act, s 330(2).
As noted earlier, Mr Manson’s recommendation was accepted by Mr Knowles on 21 February 2011. Mr Knowles gave evidence that among the documents he considered in doing so was a Companies Office record identifying Aztek as having been struck off, and that its sole director and shareholder had been Ms Prujean. He did not consider Ms Prujean was a person interested in the possibility of the land being offered back, he did not consider contacting her and he did not regard her as a person prejudicially affected. In his view, there was no person in the affected category. As with Mr Manson, he accepted that he had a general awareness of the ability of companies to be restored to the register and he also accepted that had Aztek been restored as at 21 February 2011, he would have considered it appropriate for the company to receive an offer back.[7]
The High Court judgment
[7]High Court judgment, above n 4, at [34].
Muir J found that it was highly likely that if the land had been owned by Ms Prujean in her personal capacity, the Crown would have been obliged to offer it back to her in 2011.[8] But he rejected what he described as the “overarching submission” made on behalf of the appellants, that the obligation to “endeavour” to sell the land contained in s 40(1) should be distinguished from the obligation to sell in s 40(2) and should include an endeavour by the chief executive to “put himself in the position to sell [the property] back to the former owner or his or her successors even if such entity does not at that time lawfully exist”.[9]
[8]At [39].
[9]At [73].
The High Court held that the obligation to offer back arises at a single fixed point in time and it is only at that point that the assessment of whether it would be impracticable, unreasonable or unfair to make an offer back must be made.[10] Further, s 40(2) was a pre-requisite to the “endeavour to sell” obligation in s 40(1).[11] Consequently, if at the fixed point in time the person from whom the land was acquired does not exist, an offer back is impracticable in terms of s 40(2)(a) and no endeavours (under s 40(1)) are required.[12]
[10]At [61].
[11]At [79]–[80] and [82].
[12]At [80], [82] and [89].
Although there is precedent for recognising third party interests, in the case of a third party who is associated with the original owner their interests are recognised only to the extent they derive from the definition of “successor” in s 40(5). The Judge held that Ms Prujean’s interest in the land as a third party (as Aztek’s former sole director and shareholder) was too indirect and giving weight to it would be contrary to the principles of incorporation and limited liability.[13]
[13]At [86].
The Judge considered that acceding to Aztek’s argument would place too onerous an obligation on the chief executive to identify and notify many different classes of potential claimants who might qualify for a s 40 offer by taking a legal step: for example, those with Family Protection Act 1955 claims or paternity claims as well as creditors of liquidated companies. This would involve the chief executive stepping outside the terms of his or her mandate.[14]
[14]At [87]–[88].
In the present case, at the time the Chief Executive was required to commence his endeavours under s 40(1) there was no-one with a vested right to receive an offer. In the circumstances disposal of the land was governed by s 42, and not by the offer back provisions.[15] It was “impossible … for the land to be sold to the person from whom it was acquired or their successor. Perforce it is also impracticable to do so.”[16]
[15]Section 42 of the Act provides for disposal of land not required for a public work where an offer to sell back has been made and not accepted, or where s 40(2) and (4) do not apply. Under s 42 surplus land may be sold to the owners of adjacent land or to the public.
[16]At [89].
The Judge also addressed discretionary considerations which he saw as disentitling the appellants to relief even if their argument as to the requirements of the Act were accepted. These included the fact that the reason Aztek did not exist at the time the offer back fell to be considered was solely due to its failure to file annual returns. He considered the claim was designed to deliver a windfall gain that would not have occurred but for such default.[17]
[17]At [96]–[97].
Further, since the decision not to offer back, tangata whenua rights (and corresponding Crown obligations) had accrued, and that would weigh against the exercise of discretion in favour of Aztek.[18] The Judge had earlier explained that the rights arose under various agreements entered into by the Crown and tangata whenua in Auckland from 12 February 2010, and were ultimately reflected in the provisions of the Collective Redress Act.[19] He did not go into any detail about these rights and obligations but referred to the Limited Partnership (known as Whenua Haumi Roroa o Tāmaki Makaurau) recognised by the Collective Redress Act as having the right of first refusal to purchase the land under sub-pt 1 of pt 4 of the Collective Redress Act.[20]
[18]At [98].
[19]At [35]–[36].
[20]At [37]. The Judge referred only to “Subpart 1”, but it is clear he was referring to sub-pt 1 of pt 4 of the Collective Redress Act, which deals with commercial redress.
In addition, Aztek was a property developer and its interest in the land was purely commercial. It had no personal or familial connection with the land and this would also weigh against any exercise of discretion in its favour.[21]
Appellants’ argument
[21]At [100].
The principal submission made by Mr Casey QC for the appellants on appeal was based on the chief executive’s obligation under s 40(1) to endeavour to sell the land in accordance with subs (2). Those endeavours must be reasonable. Where the land had been acquired from a company that had subsequently been struck off the register of companies, the chief executive was obliged to consider whether there were persons who might wish to have it reinstated.
In developing this argument, Mr Casey submitted that while the circumstances referred to in paras (a) and (b) of s 40(2) could affect the right of the former owner to receive an offer to sell the land back, they are not “prerequisites”. He contended that the right to receive an offer back arises when the circumstances set out in paras (a), (b) and (c) of s 40(1) have been established; but the right is inchoate, and subject to later defeasance if either s 40(2)(a) or (b) applies.
Consistently with this approach, Mr Casey pointed to the words “[e]xcept as provided in subsection (4)” at the outset of s 40(2). This was another example of the right to an offer back crystallising subject to a subsequent decision that justified selling to some other person(s) for the practical reasons set out in subs (4). He argued the drafting again showed there could be an inchoate right to an offer back, able to be displaced where the circumstances set out in subs (4) apply.
Mr Casey submitted that there was therefore room for a period after the requirements of s 40(1)(a) to (c) had been satisfied during which the chief executive could make reasonable inquiries for the purposes of endeavouring to make an offer back. It was accordingly wrong to proceed, as the High Court had done, on the assumption that there was a single point in time at which the obligation to make an offer back arose, and that the duty to make an offer back could be assessed only at that single point in time.
Mr Casey argued that the words “[e]xcept as provided in subsection (4)” at the beginning of s 40(2) inform what is meant by the words “if that subsection is applicable to that land” at the end of subs (1). Consequently, the chief executive must endeavour to sell the land in accordance with subs (2) unless because of the considerations set out in subs (4) the land may be sold under that subsection. In other words, it is only where subs (4) applies that the chief executive does not have to act under subs (2). It is only once the obligation to act under subs (2) has arisen that considerations of impracticality, unreasonableness or unfairness become relevant.
In this case the obligation to make reasonable endeavours to sell the land in accordance with s 40(2) arose in November 2010 once NZTA decided that the land was no longer required for the purposes of the Avondale Extension. The steps then taken should have included the making of reasonable inquiries to establish whether Aztek’s former shareholder might wish to have the company restored to the register.[22] If reasonable inquiries had been made in this case the Chief Executive would have ascertained that Ms Prujean was listed as Aztek’s sole director and shareholder at the time the land was acquired and at the time the company was struck off. She should have been given an opportunity to restore Aztek to the register. Aztek had a registered office at an Auckland accounting firm and, although she was living in Australia during the relevant time period, she could have been located after reasonable inquiry.
[22]Companies Act, ss 328 and 329.
Mr Casey submitted an expectation to make such an inquiry was not unreasonable given the remedial purpose of s 40 and the common practice of holding land in a company. In the present case the reasonableness of making the inquiry was underlined by the knowledge of the Crown’s agent, The Property Group, that Aztek had been carrying out the development of its property in the vicinity when the land was acquired by the Crown.
Under s 330(2) of the Companies Act, a company that is restored to the register is deemed to have continued in existence as if it had not been removed from it. One of the stated grounds of appeal was that the High Court was wrong to limit its consideration to the status of Aztek as a non-existent company and assume that restoration to the register could not operate to put Aztek in a position where it could receive an offer back under s 40. Although the appellants claimed that upon registration to the register Aztek was deemed to have been in existence at the time the s 40 rights crystallised, Mr Casey made it clear in his argument in this Court that the appellants’ claim was simply that once restored to the register it would be in a position to receive an offer back. The main focus of the argument was the contention that the Chief Executive should have alerted Ms Prujean to the fact the land was no longer required, thereby giving her the opportunity to procure Aztek’s restoration.
Respondent’s argument
Although in his written submissions Mr Burns had submitted that Ms Prujean lacked standing to sue, he accepted that was not an issue expressly determined against her in the High Court and he did not pursue the point in oral argument. However, he emphasised that the High Court had correctly found Ms Prujean was neither the “person” from whom the land had been acquired nor a “successor of that person” in terms of s 40(2) of the Act.
His primary submission was that the High Court was correct to find that the delegate of the Chief Executive, in making the decision of 21 February 2011, had acted lawfully in terms of s 40 of the Act to “endeavour to sell the land in accordance with subsection (2)”. He argued that was when it was determined that the land was no longer required for the public work or any other public work, and was not required for any exchange. And it was at that point that the duty arose to endeavour to sell the land in accordance with subs (2).
It was in performance of that duty that (a) the Chief Executive correctly determined that Aztek no longer existed and had no successor; (b) it was therefore impracticable to offer the land back pursuant to s 40(2); and (c) s 40 had therefore ceased to apply to the land, and other rights and duties crystallised.[23]
[23]Those were the rights and duties arising under the agreements entered into by the Crown with tangata whenua in Auckland, from 12 February 2010. See High Court judgment, above n 4, at [36] and [98].
Mr Burns further claimed that there could be no duty to offer to sell the land unless there were a person to whom such an offer should be made in existence at the time the duty arose. At the relevant time Aztek did not exist. It followed that any question of whether an offer back would be impracticable, unreasonable, or unfair did not arise. He submitted that this Court’s decision in Nicholls v Victoria University of Wellington could be applied by analogy: in that case it had been held that the university was not obliged to create new leasehold titles to offer back leasehold interests acquired under the Act which had subsequently merged when the freehold was also acquired by the university.[24]
[24]Nicholls v Victoria University of Wellington [2002] 1 NZLR 659 (CA).
In his comprehensive written argument, Mr Burns referred to various authorities addressing the ambit and purpose of s 40. They included Glucina v Auckland City Council in which Baragwanath J observed:[25]
The statutory language establishes what is in my view a clear code as to what is to occur. The language of the provision is specific; it provides explicitly to whom the offer is to be made, namely the former owner and if the former owner is a deceased individual “successors” as defined in [s] 40(5). …
[25]Glucina v Auckland City Council HC Auckland M931/95, 28 February 1996 at 24.
Mr Burns also placed particular emphasis on the judgments of this Court in Attorney-General v Morrison and the Privy Council in Attorney-General v Horton, which he claimed were decisions directly contrary to the appellants’ principal argument.[26] He submitted that these and other authorities establish that the statutory duty to make an offer back only exists if and when it crystallises at the single, fixed, point in time which has to be determined in each case pursuant to s 40(1)(a)–(c). He submitted that the content of the duty is “the content provided by s 40(2)”. The position was put as follows in Attorney-General v Morrison:
[16] Under s 40 of the Public Works Act land taken for a public work must be offered back to the original owner or his or her successor if it is no longer required for that public work, not required for any other public work, and not required for exchange under s 105 of the Act – see s 40(1)(a) – (c). There are certain exceptions to the offer-back requirement set out in s 40(2)(a) and (b) and s 40(4). …
[26]Attorney-General v Morrison [2002] 3 NZLR 373 (CA); and Attorney-General v Horton [1999] 2 NZLR 257 (PC).
Mr Burns also referred to what this Court said subsequently in that judgment:
[31] In this case the land was not required for another public work … or for the purposes set out in s 40(1)(c). The provisions of s 40(2) were therefore triggered, including of course the limits on the obligation to make the offer back in s 40(2)(a) and (b) and s 40(4) but there is no suggestion they were applicable in this case.
Mr Burns submitted that the duty and corollary right crystallised at the point in time determined by s 40(1)(a)–(c). It was at that time that, in accordance with Morrison the “land taken for a public work must be offered back to the original owner or his or her successor”.[27] Thus, Mr Burns maintained that if at the time the duty crystallised the person from whom the land was acquired does not exist, and there is no “successor” as defined in s 40(5), then the chief executive cannot offer to sell the land by private contract to that person pursuant to s 40(2). It is not possible, and it is therefore impracticable.
[27]Attorney‑General v Morrison, above n 26, at [16].
Mr Burns also placed some reliance on the effect of ss 15 and 330(2) of the Companies Act. Section 15 provides that a company is a legal entity in its own right separate from its shareholders and “continues in existence until it is removed from the New Zealand register”. Section 330(2) provides that a company that is restored to the register is deemed to have continued in existence as if it had not been removed from the register. Mr Burns referred to this Court’s judgment in Clark v Libra Developments Ltd in which it was said:[28]
[201] There are other provisions in the Companies Act which are of assistance in the interpretation of s 330(2). A “company” can only exist in accordance with s 2 if it is registered under Part 2 of the Act (or reregistered under the Companies Reregistration Act 1993). Section 10 in Part 2 sets out the essential requirements of a company, including that it must have one or more shares, shareholders and directors. The fact that a company is no longer a company when removed from the register is confirmed by s 15, providing for a company to be a legal entity in its own right separate from its shareholders and it “continues in existence until it is removed from the New Zealand register”. …
[28]Clark v Libra Developments Ltd [2007] 2 NZLR 709 (CA).
Mr Burns reiterated the simple point that when the Chief Executive’s duty to endeavour to sell the land arose, Aztek had ceased to exist.
Analysis
For reasons we will address, we are satisfied that the appeal should be allowed. We arrive at that conclusion by an analysis of the text of the relevant statutory provisions. But that analysis proceeds against the background of our understanding of the remedial purpose of s 40 of the Act.
Statutory purpose
The purpose of the offer back provisions was addressed by Lord Hoffmann, writing for the Privy Council in Attorney-General v Horton.[29] He described the right of the previous owner to repurchase the land as “the expression of a strong legislative policy to preserve the rights of an owner subject only to the continuing needs of the state”.[30] He later referred to the “legislative policy of protecting the original owners”.[31]
[29]Attorney-General v Horton, above n 26.
[30]At 261.
[31]At 261.
This was consistent with observations made by this Court in Port Gisborne Ltd v Smiler.[32] In that case, the Court said:[33]
… The background to the offer-back concept is that land is being acquired from a private person for a public work purpose, possibly under the threat or contemplation of compulsion. The rationale must be that it is only fair, if that purpose disappears, the land should so far as practicable revert to the previous or equivalent private ownership.
[32]Port Gisborne Ltd v Smiler [1999] 2 NZLR 695 (CA).
[33]At [35].
This Court’s judgment in Waitakere City Council v Bennett reviewed the history of Public Works Act provisions providing for offers back to landowners from whom land had been acquired since the Public Works Act 1928.[34] Under that Act, there was no mandatory obligation to offer back land no longer required. However, if the Crown or a local authority did decide to sell the land, an obligation then arose to offer it first “to the person then entitled to the land from which such land was originally taken”.[35]
[34]Waitakere City Council v Bennett [2008] NZCA 428, [2009] NZRMA 76.
[35]Public Works Act 1928, s 35(b).
That obligation was removed by s 4(1) of the Public Works Amendment Act 1954. As amended, the Act enabled land to be sold either by private contract to the owner of any adjacent land, or by public auction or tender. That was the form in which the legislation remained until the 1928 Act was repealed and substituted by the 1981 Act.
In Waitakere City Council v Bennett, this Court said:[36]
[27] There can be no doubt that the 1981 Act was intended to be remedial (as reflected by s 5(j) [of the] Acts Interpretation Act 1924). The Bill as introduced proposed in clause 39 (which became s 40) that the Governor-General “may” consent to land no longer required for a public work being sold, and “may” sell it to “the person from whom the land was acquired or to the descendant or successor in title of that person”.
[28] A key change recommended by the Select Committee was, for the first time, to require government or local authorities to endeavour to sell land acquired or taken for a public work to the person from whom it was acquired (or their successor) when the land was no longer required for a public work.
[29] Clearly, Parliament intended to limit the power of the Crown to appropriate land and to restore greater rights to individual property owners. …
[36]Waitakere City Council v Bennett, above n 34.
Having referred to extracts from Hansard during proceedings in Parliament on the Bill, the Court concluded that s 40, as enacted, continued to apply to land acquired or taken from a private person for public work purposes under compulsion, or at least against a background of compulsion. The Court also referred with approval to the rationale which had been described in Port Gisborne Ltd v Smiler, namely that it was only fair if the public work purpose for which the land had been acquired no longer applied, that that land should “so far as practicable, revert to the previous or equivalent private ownership”.[37]
[37]At [33].
These cases were discussed and applied more recently by this Court in Williams v Auckland Council in the course of confirming that the s 40 process must be followed in the case of land no longer required even where its acquisition had been by agreement and not subject to any formal process of compulsory acquisition under the Act.[38] The Supreme Court refused leave to appeal.[39]
[38]Williams v Auckland Council [2015] NZCA 479, (2015) 7 NZ ConvC 96-013.
[39]Williams v Auckland Council [2016] NZSC 20.
There are other authorities to the same effect.[40] We conclude that the statutory provisions are designed to ensure that, so far as practicable, the land is offered back to the persons from whom it was taken or their successors on the basis that that is the right thing to do where it has been initially acquired from a private landowner for public interest purposes which have ceased to exist. The statute should be construed and applied in a way which best reflects that objective.
The text
[40]See for example Mark v Attorney-General [2011] NZCA 176, [2011] 2 NZLR 538 at [63]; Attorney-General v Edmonds CA97/05, 28 June 2006 at [60]; and Bennett v Waitakere City Council HC Auckland CIV-2005-404-7348, 14 May 2006 at [82].
We consider the case turns on two related issues. The first is whether Mr Burns is correct that, since Aztek did not exist at the time the duty to make an offer arose under s 40(1), the Chief Executive could have no obligation to take any further steps under the section. On this approach, the considerations set out in s 40(2)(a) would not be relevant; they would simply not arise.
The second issue assumes the first is resolved against the respondent. It is whether it was legitimate, in the circumstances of this case, for the Chief Executive to decide it was impracticable to make an offer back, without making inquiry for the purposes of ascertaining whether Ms Prujean might wish to procure Aztek’s restoration to the register.
Both issues are conveniently dealt with together.
The Judge’s conclusion, supported by Mr Burns, was that the focus must be on the single point in time when it was decided the land was not required for any of the purposes set out in s 40(1). At that time Aztek did not exist, and there was no successor. Mr Burns submits it necessarily follows that there was no one to whom the Chief Executive could make an offer to sell the land as contemplated by s 40(1).
We are not persuaded that is the correct approach. We accept that the language of s 40 appears to contemplate a point being reached at which it can be said that the negative conclusions set out in paras (1)(a) to (c) have been reached. Conceivably, the individual paragraphs could be satisfied successively over a period of time, but then the point must have been reached where it can be concluded that they have been satisfied. It is at that point that the chief executive’s obligation arises. The obligation is to endeavour to sell the land in accordance with subs (2).
The only qualification of that obligation arises when the subsection is not applicable to the land. As to the non-applicability of the subsection, we agree with Mr Burns that the words “if that subsection is applicable to that land” in subs (1) appear to contemplate the situation where subs (3) applies. The words with which subs (3) commences, “[s]ubsection (2) shall not apply to land acquired” between the dates described, are the only explicit reference to subs (2) not applying to land apart from what is said in subs (1). Mr Casey’s submission that subs (2) applies to all land held for a public work except where subs (4) applies appears to set subs (3) on one side. We consider the preferable view, based on the statutory language, is that the legislature put land acquired within the dates provided by subs (3) and which was not an essential work into a special category. It is to such land that subs (2) does not apply, as subs (3) explicitly states.
Subsection (4) applies, where the chief executive can reasonably conclude that the land could only be sold to the owner of adjacent land, because of its size, shape or situation. In those circumstances the chief executive may sell the land to the adjacent owner at a negotiated price. That too might be characterised as an exception to the subs (2) duty, although the drafting approach is not the same as in the case of subs (3). With the latter, subs (2) is said not to apply; if subs (4) applies, the exception is contemplated by the opening words of subs (2). In the result, subs (1) excludes altogether land that is in the limited class defined in subs (3) from the ambit of the subs (2) duty.
In the case of all other land subs (2) applies. If paras (a) or (b) apply, an offer back need not be made. But that is a decision made under subs (2) itself. The point is that once the provisions in s 40(1) are satisfied, s 40(2) comes into play. It is clear that the subsection envisages a process that might take some time to be completed. To give a simple example which must almost invariably apply, there will need to be time to ascertain the value of the land and to negotiate on the terms of the offer. Time may also be necessary to ascertain who the successors of the original owner are. It may be noted that the definition of the term successor in s 40(5) includes those who might have been entitled to the land under a will or intestacy on the death of the owner. These issues will often need to be addressed after the s 40(1) decisions have been made. While it might be possible for the work to have been done prior to that point, the statute plainly does not require it. Nor does it require the assessment of impracticability, unreasonableness or unfairness under s 40(2)(a), or significant change in character in terms of s 40(2)(b) to be made contemporaneously with the s 40(1) decisions. And it should also be noted that s 40(2A) contemplates reference to the Land Valuation Tribunal to determine the value of the land in the case of disagreement.
In this case, it appears that the Chief Executive’s delegate did make the relevant decisions under s 40(1) and (2) contemporaneously, and that may be the administrative procedure generally adopted. But that is not a requirement of the statute.
This leads to the conclusion that decisions under s 40(2) as to whether an offer will be made, and on its terms, may be made some time after the s 40(1) determinations have been made. In this case, Mr Knowles made a decision that it was impracticable to make an offer to sell because Aztek had ceased to exist. In accordance with the foregoing reasoning that is a decision that could only have been made under s 40(2), and the words in which the decision was couched reflect that. Thus the recommendation that Mr Knowles approved was that the land “be exempted from offer back to the Former Owners or their successors pursuant to Section 40(2)(a) of [the Act]”.
The Judge recognised that it would often be the case that satisfaction of the requirements of s 40(1)(a) to (c) and the decision that an offer back was not required under s 40(2) would not be contemporaneous. But he considered that was the case here:[41]
As at 21 February 2011, when the Chief Executive’s delegate Mr Knowles made his decision to exempt the lands from offer back, there was a coincidence of NZTA decision that the land was no longer required, Chief Executive decision under s 40(1)(b) and (c) (which must be assumed to have been made contemporaneously with the exemption on 21 February 2001) and decision that it was impracticable to offer back because of the then status of the original vendor (non-existent or “defunct”).
[41]High Court judgment, above n 4, at [81].
We see difficulties with that reasoning. First, as Mr Casey pointed out, the decision by NZTA that the land was not required was made in November 2010. Mr Manson’s report to Mr Knowles simply proceeded on the basis that no offer back was required because s 40(2)(a) applied to authorise that approach. So Mr Knowles effectively simply recognised that existing state of affairs and decided the offer back was impracticable. Second, the Judge’s approach did not allow for the possibility that endeavours to sell might have required inquiry of the kind Aztek asserts, followed by an offer back to Aztek subsequent to its restoration to the register.
It appears that the Judge considered the words “if that subsection [subs (2)] is applicable to that land” contemplated that the subsection would not apply where it was impracticable, unreasonable or unfair to offer to sell the land. As just noted, we do not agree; it is subs (3) that delineates land to which subs (2) does not apply. Rather, a conclusion that offer back is impracticable, unreasonable or unfair is made under subs (2), which calls for a factual inquiry. If, for example, it is decided that it is impracticable to make an offer to sell, that will not be because the subsection is not applicable to the land. Rather, the subsection does apply to the land; and it is under its provisions that the decision is made not to make the offer. It is only when the chief executive is applying subs (2) that the s 40(2)(a) (or (b)) considerations arise.
Subsection (4) is consistent with this analysis. It has the effect that an offer need not be made under subs (2). Where it applies, in other words, there is an exception to subs (2). The exception, however, is created within subs (2): it is clear that the subsection is applicable to the land, but because of its opening words and consistently with subs (4), the land may be sold to the owner of adjacent land rather than the original owner or the owner’s successor.
It follows that we do not agree with the Judge’s conclusion that s 40(2) operates as a “prerequisite” to the “endeavour to sell” obligation in s 40(1).[42] In this case, we consider that subs (2) did apply to the land. The Chief Executive’s obligation was to endeavour to sell the land in accordance with subs (2). Once subs (2) was in play, the “impracticable” criterion would, if satisfied, mean that the offer to sell need not be made. That would require a reasonable consideration of that issue, rather than the simple assumption, apparently made in this case, that the defunct status of Aztek meant that no offer could be made.
[42]At [82].
We do not accept the submission made by Mr Burns that such an approach is contrary to relevant authorities. We do not consider that Attorney-General v Morrison and Attorney-General v Horton deal directly with the point at issue in this case. Nor do we consider that they support his argument to the extent he claimed. They simply explain the sequential processes to be followed when s 40 of the Act applies. Similar ground was covered by this Court’s decision in Attorney‑General v Hull,[43] which was referred to and relied on in Morrison.[44] Once a determination is made under s 40(1)(a) of the Act that land is no longer required for the public work for which it was acquired, there must then be a determination as to whether either s 40(1)(b) or (c) applies. Such determination requires, as was said in Attorney-General v Hull that the chief executive “take reasonable steps to ascertain whether the land is or is not required” under those paragraphs.[45] If, after reasonable inquiry, no such requirement is established, “the Chief Executive must act in respect of the land in accordance with s 40(2)”.[46] What is required at that point is succinctly stated in that judgment, namely:
[44] The Chief Executive must give bona fide and fair consideration to whether the statutory course of offer back would be impracticable, unreasonable, or unfair under subs (2) or whether in terms of subs (4) the land is instead to be sold to an adjacent owner. Unless one of those exceptions applies, the Chief Executive must offer the land back to the original owner.
[43]Attorney-General v Hull [2000] 3 NZLR 63 (CA).
[44]Attorney-General v Morrison, above n 26, at [17]–[21].
[45]Attorney-General v Hull, above n 43, at [43].
[46]At [43].
But, as further explained in Hull, “[i]ndividual cases may present particular difficulties”.[47] Again, it is clear the statute contemplates that endeavouring to sell the land in accordance with subs (2) might be a process that takes time and effort. That was specifically acknowledged by this Court’s judgment in Morrison when, after discussing the relevant statutory provisions leading to the duty to offer the land back to the original owner, this Court observed:[48]
[22] The timing of that offer back will depend on the facts in each case but a reasonable time in the circumstances to ready the land for sale and to locate the original owner or successors in title of the land is allowed – see McLennan.
[47]At [45].
[48]Attorney‑General v Morrison, above n 26.
This was a reference was to the decision of the High Court in McLennan v Attorney‑General.[49] In that case the High Court had to decide the date at which current market value is to be determined where the chief executive is required to make an offer back to a former owner or their successors under s 40(2). Smellie J made a declaration that:[50]
… the date on which the current market value is to be determined is the date on which the land is validly offered back or at the date the valid offer back should have been made, if it is established that there has been a failure to act timeously and with due expedition in all the circumstances of the particular case, in determining to make an endeavour to sell the land in terms of s 40(1) and in determining to offer to sell the land in terms of s 40(2).
[49]McLennan v Attorney‑General [1999] 2 NZLR 469 (HC).
[50]At 481.
In making that declaration, the Judge was clearly influenced by the decision of this Court in Horton v Attorney-General, including the statement that while there are no express time limits in s 40, the chief executive was required to follow the statutory process and “by necessary implication to do so with due expedition”.[51] Clearly, the approach in McLennan, endorsed in Hull, recognises that time may be necessary to make the statutory decisions required under each of s 40(1) and (2). We think this runs counter to the view taken by the Judge in this case that the obligation to endeavour to sell the land in s 40(1) cannot be distinguished from the obligation to sell in s 40(2).
[51]Horton v Attorney-General CA43/97, 3 December 1997 at 17.
The argument made by Mr Burns seems rather to suggest that as soon as the duty to make the offer back arises by virtue of satisfaction of paras (a) to (c) of s 40(1), an offer to sell must be made. However, satisfaction of those requirements marks the beginning of the period within which an endeavour to sell the land must be made. In our view, that period must involve the taking of reasonable steps to ascertain whether an offer back may be made.
It is obvious that the requirement to act with due expedition cannot absolve the chief executive from making appropriate inquiries so as to ascertain whether the land might be sold in accordance with subs (2). Just as there is a necessary implication of acting with due expedition, so in our view there must be a necessary implication that the endeavour to sell the land must be characterised by reasonable and appropriate inquiries to ascertain whether such sale is possible. In this case, such inquiry would have led inexorably to Ms Prujean, who could readily have been found. We consider contacting her would have been appropriate as part of the reasonable endeavours to sell the land in accordance with subs (2). As noted above, neither the Guideline (LINZS15000) or the Standard (LINZG15700) contemplated the possibility that a struck off company might be reinstated to the register, and Mr Manson did not consider that issue.
The analysis of the statutory provisions which underpins this outcome is more consistent with the remedial purpose of s 40 than the analysis for which the respondent contends.
We are also not persuaded that anything turns on the Companies Act provisions on which Mr Burns relies. It was possible for Aztek to be restored to the register and possible for it to receive an offer to sell once it had been restored. The reasonable performance of the Chief Executive’s duties could have resulted in Ms Prujean being able to take the steps necessary to restore it to the register. The period for which Aztek was not on the register, and so not in existence, did not affect its ability to be restored. The evidence in this case satisfies us that had she been contacted Ms Prujean would have taken the necessary steps without delay.
We doubt that the implications of this approach would be as onerous on the chief executive as the Judge considered they might be. He thought that if the appellants’ arguments were accepted the chief executive might be obliged to make wide-ranging and difficult inquiries. He gave a number of examples. One was the possibility that if, in the course of establishing the identity of successors, the Chief Executive received information that someone had the potential to make a Family Protection Act claim, there might be an obligation to give notice to that person suggesting that they should be seeking legal advice. Another example to which the Judge pointed was persons who might qualify as a successor if they sought a declaration of paternity: he thought the chief executive might have obligations to persons in that category. Yet another class of person identified was creditors of liquidated companies.[52]
[52]High Court judgment, above n 4, at [87].
We do not accept that reasoning. Any such claims would be derivative in the sense that they would depend on obligations imposed by law on persons who were either the original owner from whom the land was acquired or a successor. Such obligations to third parties could not affect the chief executive’s responsibilities under the Act which relate to the original owners and their successors. Aztek is in the former category: the respondent seeks to rely on its temporary demise. Its restoration to the register brings it back to life. So it resumes its position as an original owner. Ms Prujean is simply the agent by whom its restoration was able to be procured. She is not herself a successor, and she has no rights in her personal capacity to receive an offer back.
Someone making a successful paternity claim could secure rights only as a successor. But the chief executive would have no duty towards an unknown person or class of persons. Their potential interest would obviously fall outside the category of those whose interests could be expected to be ascertained by the chief executive in making reasonable endeavours to sell the land under s 40(2).
As to the creditors of liquidated companies, the assumption behind this example is that a liquidated company would be either the original owner or a successor. The rights of creditors would have been ascertained by the liquidator. We consider any duty of the chief executive would be satisfied by advising the liquidator who had acted on the liquidation of the intended sale of the land. Individual creditors would not have any interest qualifying for an offer back under s 40.
None of these issues persuade us that an interpretation of s 40 different to that we have explained above is necessary.
For these reasons we consider the Chief Executive should have made inquiry for the purposes of ascertaining who Aztek’s shareholders were and advising them of the possibility of an offer back if the company were restored to the register. It was reasonable for the Chief Executive to make that inquiry. That would have led to Ms Prujean procuring the restoration of Aztek, as subsequently occurred. It is not suggested that there would have been any difficulty in securing that outcome. It would then have been both reasonable and practicable to offer the land back to Aztek.
We add for completeness that we do not accept Mr Burns’ proposition that this Court’s judgment in Nicholls v Victoria University of Wellington can be applied by analogy leading to a conclusion that it was impracticable to make an offer back to Aztek.[53] That case concerned leasehold interests which had been taken under the Act but were subsequently extinguished by merger into the fee simple estate when the university later also acquired the fee simple. It was argued that when the land was surplus to requirements, the university should have created new leases, equivalent in their terms to the leasehold interests taken, and offered those new leases back to the former lessees. The Court rejected that argument, holding that when the leasehold and fee simple estates merged, the leasehold interests ceased to exist. From that point, it was only the fee simple estate that the university held. [54] The Court held that s 40 contemplated the continued existence of the estate or interest taken.[55]
[53]Nicholls v Victoria University of Wellington, above n 24.
[54]At [24].
[55]At [25]
The circumstances of that case are clearly very different from this, and for that reason we do not consider that it advances Mr Burns’ argument. But it is also interesting to note that even if, contrary to the Court’s conclusion, s 40 had applied, the judgment did not reject the appellants’ argument on the basis of impracticability. The Court said:
[28] Even if what would be required of the university, had s 40 applied, could not be regarded as “impracticable”, in our view it could certainly have been considered by the university to be “unreasonable” or “unfair”, both to itself and the tax-paying public.
Given the facts of the case, the judgment may be said to demonstrate that the bar for impracticability is set reasonably high. The present case is one in which any issue of practicability is a good deal easier to overcome. Far from advancing the respondent’s case, we regard Nicholls as more favourable for the appellants, for that reason.
Discretion
The next issue that needs to be addressed is discretion, and in particular the considerations which led the Judge to express the view that he would have refused relief in the exercise of his discretion even if he had reached a different view as to the meaning of the relevant statutory provisions.[56]
[56]High Court judgment, above n 4, at [95].
Before addressing those matters, we record the general principle that once it is shown that a statutory power has been wrongly exercised, a court should generally grant relief to affected persons unless there are good reasons to refuse it.[57] And as this Court observed in Just One Life Ltd v Queenstown Lakes District Council, a successful attack on a reviewable decision does not normally result in a discretionary withholding of relief where there would be practical value in granting a remedy.[58]
[57]Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139 at [60].
[58]Just One Life Ltd v Queenstown Lakes District Council [2004] 3 NZLR 226 (CA) at [39].
The first matter to which the Judge referred was the reason that Aztek did not exist at the time the Chief Executive came to consider the offer back provisions: this was because of its own default in failing to comply with the ongoing obligation to file annual returns under s 214 of the Companies Act. He thought this must have been a deliberate decision to allow the company to be stuck off and in that respect he referred to Ms Prujean’s acknowledgment in evidence that she would probably not have taken any action to prevent the company being struck off because there was no purpose in keeping it going. The Judge considered there had been a deliberate decision to allow the company to be struck off, a decision made against Ms Prujean’s assumed knowledge of the long‑standing statutory provisions for offering property back.[59] The Judge reasoned from this that the proceeding was designed to deliver a windfall (in the sense of a declaration of entitlement to the land “at a purchase price likely to be significantly less than assumed current value”), against a background “where such advantage would never have arisen apart from the plaintiffs’ default”.[60]
[59]High Court judgment, above n 4, at [96]. The reasons for this assumption were not articulated in the judgment, and we are not sure of the basis for it.
[60]At [97].
As noted above, the Judge also mentioned that in the period intervening between the Chief Executive’s decision of 21 February 2011 and the issuing of proceedings in November 2016, a number of rights of tangata whenua and Crown obligations had arisen in respect of the land under various agreements and the Collective Redress Act. The Judge observed that neither party had made submissions in respect of how the Crown could give effect to the declarations sought by the plaintiffs in light of the third party rights which had been created in the intervening period. He concluded however that such rights must at least “weigh against exercise of the discretion sought”.[61]
[61]At [99].
The third matter to which the Judge referred was based on the statement by the Supreme Court in Williams v Auckland Council that “the purpose of the Public Works Act is to restore to someone whose land has been compulsorily taken land with which that person has a personal or familial connection”.[62]
[62]Williams v Auckland Council, above n 39, at [9].
The Judge noted that Aztek was a property developer that had been intending to build houses on the remaining lots and sell them. It could not be said that its interests were anything other than commercial.[63]
[63]At [100], referring to this Court’s decision in Hood v Attorney-General CA16/04, 2 March 2005 at [100].
We do not consider that, individually or collectively, the reasons given by the Judge justify the refusal of relief. As to the fact that Aztek was allowed to be removed from the register, the land had been Aztek’s only asset and there is no suggestion in the evidence that Ms Prujean would have had reason to suspect that the land would become surplus to NZTA’s requirements. The Judge’s reliance on this consideration does not sit happily with observations made by the Privy Council in Attorney-General v Horton, recognising that there would be cases where an owner would be simply unaware of a decision made that land was no longer required for a public work. Lord Hoffmann observed:[64]
… the existence of the right [to receive an offer back] may well remain unknown to the owner for some considerable time. Since a decision that land is no longer required will usually be internal to the government department or state-owned enterprise, the owner may learn only much later, by use of the Official Information Act 1982 or accidental discovery, that his right to buy land had accrued. By the time he claims to exercise it, policy may have changed and the land be once more required for public use.
[64]Attorney-General v Horton, above n 26, at 261.
In the present case, it is clear that it was only as a result of inquiry in mid‑2015 that Mr Cull became aware of the possibility that the land was surplus to NZTA’s requirements. Given the conclusion we have reached about the duty of the Chief Executive to make reasonable inquiries, it would not be appropriate to hold that Ms Prujean’s allowing the registration of Aztek to lapse should lead to the denial of a remedy after the company has been restored to the register. There may be cases where that would be an appropriate response, but we do not see anything in the facts here to justify that approach. The fact that a decision was made not to file annual returns must be seen in the context that Ms Prujean was unaware that the land was no longer required for some four years after that decision had been made by the Chief Executive.
This has implications for the second reason given by the Judge, which at least in part appeared to be based upon the idea that Ms Prujean and Aztek were responsible for a delay between February 2011 and the issuing of proceedings in November 2016. Yet, for a substantial part of that period, Ms Prujean was in ignorance of the fact that the land was no longer required. If the Chief Executive had made appropriate inquiry, the position could have been brought to Ms Prujean’s attention and Aztek would have been restored to the register much more quickly than in fact occurred. We do not think it is appropriate to effectively hold her (and Aztek) responsible for that delay.
The Judge concluded it was during this period that third party rights had accrued to the Limited Partnership under the Collective Redress Act.[65] However, it is clear that such rights could accrue only if it were accepted that the land did not have to be dealt with under the provisions of the Act and the Judge’s reliance on this consideration cannot survive our conclusion that an offer back should have been made to Aztek.
[65]The Limited Partnership is a body defined in s 8 of the Collective Redress Act as the Whenua Haumi Roroa o Tāmaki Makauru Limited Partnership. It is recognised by the Collective Redress Act as the body to which notices of the potential disposal of RFR land must be given, under s 122 of that Act. Under s 121(1) an owner of RFR land may not dispose of it to persons other than the Limited Partnership except in accordance with subss (2) and (3) of that section.
That is so because of ss 131 and 134 of the Collective Redress Act under which the Crown is an RFR landowner. Under s 131, an RFR landowner may dispose of any RFR land “in accordance with an obligation under any enactment or rule of law”. Under s 134, the RFR landowner is specifically empowered to dispose of RFR land in accordance with, amongst other provisions, ss 40(2) or (4) or 41 of the Act. So the requirements of the offer back provisions in the Act are recognised and provided for. Acting in compliance with them does not breach any requirement of the Collective Redress Act.
We accept that steps were taken to implement the Chief Executive’s decision that an offer back need not be made. This led to the registration of a certificate against the relevant computer freehold registers on 15 April 2015, under s 148 of the Collective Redress Act. But the evidence does not disclose that any notice had been issued to the Limited Partnership under s 122 of that Act and Mr Burns did not suggest that was the case. We expect that had there been any interest vested in the Limited Partnership under the Act, it would have been a party to the proceeding in the High Court and, in any event, evidence of any actual prejudice that might be suffered if relief were granted to Aztek would have been produced. That did not occur.
The third discretionary reason the Judge referred to was the lack of any personal or familial connection of Aztek with the land. We accept that there are statements in the cases which have referred to this issue, and that both in this Court’s judgment and that of the Supreme Court in Williams v Auckland Council there were observations about the absence of such a connection. However, we do not consider that either this Court or the Supreme Court were elevating this issue to the level of a criterion which might justify an offer back not being made, or intending to put bodies corporate in an inferior position in terms of eligibility to receive an offer back. We note further that the issue has tended to arise in the context of the assessment of what is reasonable, not in cases where the only contest is about what is practicable, which is the issue in this case.
The statement on which the Judge relied was made in the Supreme Court’s judgment declining leave to appeal.[66] One of the issues that the applicants for leave to appeal sought to pursue related to reasoning in this Court’s judgment to the effect that the applicants did not have any personal or familial interest in the land, but only an economic interest.[67] The Supreme Court, having made that point, said that this Court had:[68]
… noted that the claims had been conducted and financed by a litigation funder, under an arrangement which would yield only a small proportion of the proceeds of a successful claim to the named applicants. The applicants say they should not be penalised for having used a litigation funder, because this was the only way they could pursue the litigation which has been very expensive to conduct.
We do not read the Court of Appeal’s judgment as being critical of the use of a litigation funder, but rather as emphasising that the purpose of the Public Works Act is to restore to someone whose land has been compulsorily taken land with which that person has a personal or familial connection. That is in keeping with the fact that the offer back right applies only to the original owner and the original owner’s successor, as that term is restrictively defined in s 40(5). In the present case the land was taken in the 1950s and the present named applicants did not have any real personal interest in the land.
[66]High Court judgment, above n 4, at [100], citing Williams v Auckland Council, above n 39, at [9].
[67]Williams v Auckland Council, above n 38, at [118]–[125].
[68]Williams v Auckland Council, above n 39, at [8]–[9] (emphasis added) as in the subsequent decision of the Supreme Court declining a recall application: Williams v Auckland Council [2016] NZSC 130 at [10].
We interpolate at this point, that if this reasoning is applied to Aztek it would of course be properly characterised as the “original owner”, and not as a party that did not have any interest in the land. As the very owner from which the land was taken it had any necessary personal connection.
Those observations of the Supreme Court prompted an application to recall the judgment. In its judgment dismissing the application for recall, the Supreme Court noted that the applicants were critical, amongst other things, of the passage quoted above from the judgment declining leave. In disposing of that aspect of the recall application, the Supreme Court said:[69]
[11] The applicants contest the correctness of the statement about the need for familial connection, but accept that this is not a matter that can be litigated in a recall application. But they say that the italicised words above are factually incorrect. They suggest that the statement must be based on the Court of Appeal’s assessment, which, they say, scarcely adverted to the oral evidence given in the High Court. They say that the applicants had a personal and familial interest in connection with the land. The statement was made in the context of the conclusion made at [10] of the judgment that the evaluation in the lower Courts was essentially factual in nature and did not give rise to a point of general or public importance. It was not a finding that the lack of familial interest is a disqualifying fact as a matter of law. Nor do we see the statement as being factually incorrect when applied to the present applicants.
[69]Williams v Auckland Council, above n 68, at [11].
We see this passage as recognising that the lack of a “familial interest” is not something that should prevent an offer back being made to a party (or successor) from whom land has been taken under the Act. There is equally nothing in the Act which would support a proposition that bodies corporate per se lack any necessary connection. We also think it is clear from our earlier discussion of the statutory purpose that the legislation is not intended to distinguish between natural persons and bodies corporate.
The other case to which the Judge referred in this part of the judgment was this Court’s decision in Hood v Attorney-General.[70] In that case, the appellant’s father had owned land in central Queenstown which was compulsorily acquired for use as a high school. When the Act came into force on 1 February 1982 the land was being used as a playcentre which the appellants asserted was not in accordance with the purpose for which the land had originally been taken. They further claimed that it was not an “essential work”, as that term was then defined. They argued it would not have been impracticable, unreasonable or unfair for the land to have been offered back to them, and that the offer back provisions in s 40 of the Act were therefore triggered.
[70]Hood v Attorney-General, above n 63.
This Court held, reversing the High Court on this issue, that the playcentre activity was not included within the concept of a public school.[71] It was also held that it was not within the definition of “essential work”, a term that no longer appears in s 40(1) of the Act.[72]
[71]At [45].
[72]At [60]–[62].
However, the Court decided that it would be unfair or unreasonable for there to be an offer back, having regard to historic dealings between the Crown and the local council pursuant to which part of the school had been moved to reserve land in the context of assurances that the Council would be able to use the land vacated by the school for a reserve in the future.[73]
[73]At [97]–[98].
The Court specifically acknowledged that the interests of the former owners must be considered, and that there must be “good reason for these interests to be disregarded”.[74] However, it considered that there were good reasons in the circumstances of that case. The Court observed:
[98] In this case, we consider that this threshold is passed. This is because of the arrangements made in relation to the site when the primary department moved to its own site on reserve land. Importantly, these arrangements pre‑dated the 1981 Act and the offer back provisions. In other words, there was no obligation at that time to offer the land back to its former owner. The Council has operated on the basis that the arrangement would be honoured and has received numerous assurances to that effect from the Crown, many predating the 1981 Act.
[99] We also note that the land has been used continuously for public purposes by, first the Queenstown District High School, then the Wakatipu High School and finally the Queenstown Playcentre. Use as a playcentre would have qualified as a public work, both under the 1928 Act and the 1981 Act. Use as a reserve, when the arrangements are honoured, will also clearly be for a public purpose. As Wild J pointed out, reserve land is needed in central Queenstown and there are no suitable alternative sites. In addition, the Hood land can be seen loosely as being used for a primary school and within the purpose for which it was taken, in that the arrangement to release it to reserve once no longer needed for educational purposes enabled the new primary school site to be acquired.
[100] The Hood brothers’ rights must be taken into account and accorded appropriate weight but there is no evidence that they have anything other than a commercial interest in repurchase. This is not in our view enough to outweigh the factors favouring the Crown and, more particularly, the Council and the public with regard to the site.
[74]At [97].
As can be seen, the reference to the appellants having only a commercial interest in repurchase was made as part of the Court’s consideration of whether an offer back would be reasonable. The judgment does not treat a purely commercial interest in repurchase as disqualifying. It is simply part of the reasoning that, on the facts of that case, the appellants’ interest was insufficient to overcome strong reasons justifying retention of the land in public ownership.
In the present case, there are no such countervailing considerations on which it might be said that it would be unreasonable or unfair to make an offer back. In any event, the Chief Executive’s decision was not based upon those criteria; rather, the decision was that it would be impracticable to make an offer back. For the reasons we have given, we do not agree that was so.
In the result, we are satisfied that there are no valid reasons to decline relief on the basis of the discretionary considerations which the Judge addressed. No other issues were raised.
Relief
In the High Court the appellants sought a declaration that the property be offered for sale to Aztek at its market value at the time of the registration of the encumbrance to protect the public work, being 30 April 2012. This was based on allegations in the statement of claim that until an encumbrance was registered on the title to the land on 30 April 2012, reserving a continuing interest required by the Crown, the land was still required for the Avondale Extension. That argument has not been pursued in this Court.
In the notice of appeal, the relief sought was, instead, a declaration that the respondent should offer to sell the land to Aztek “at the market value as at 3 November 2010, being the date of the defendant’s determination that it was not required”. An alternative form of relief was sought in the notice, being simply that the decision of 21 February 2011 to exempt the land from the requirement to offer it back under s 40 be set aside and reconsidered. In his submissions to this Court, Mr Casey argued for relief in accordance with the notice of appeal.
We are not persuaded that it would be appropriate to make the first declaration, effectively requiring an offer to sell the land to Aztek to be made at the market value as at 3 November 2010. It is inherent in the reasoning that we have set out above that reasonable time would be necessary to enable the Chief Executive to find out who the shareholder of Aztek was and inquire as to whether she wished to have Aztek reinstated to the register. There is no evidence touching on what length of time might be appropriate to allow for this, and the reinstatement of Aztek. The current market value would be the date at which it could be inferred the company would have been reinstated, and in a position to receive an offer if the Chief Executive had made reasonable inquiries with due expedition.[75] These are matters that might have been the subject of specific evidence in, and findings by, the High Court.
[75]Horton v Attorney-General, above n 51; and McLennan v Attorney-General, above n 49.
There was very little focus on the relief sought at the hearing of the appeal and in the circumstances we consider the appropriate course to follow is to grant the alternative form of relief set out in the notice of appeal. We note that Mr Burns did not suggest that, were we minded to grant relief, the alternative form of remedy should not be available, notwithstanding it was not specifically mentioned in the statement of claim. There can be no suggestion of prejudice, given that this possible form of relief was specifically mentioned in the notice of appeal.
Result
The appeal is allowed.
The Chief Executive’s decision of 21 February 2011 to exempt the land from the requirement to offer back under s 40 of the Public Works Act is set aside and is to be reconsidered in accordance with this judgment.
The appellants are entitled to costs calculated for a standard appeal on a band A basis together with usual disbursements. We certify for second counsel.
Solicitors:
Greenwood Roche, Wellington for Appellants
Crown Law Office, Wellington for Respondent
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