Daisley v Whangarei District Council
[2016] NZHC 268
•25 February 2016
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV2015-488-000109 [2016] NZHC 268
BETWEEN MALCOLM JAMES DAISLEY
Plaintiff/Respondent
AND
WHANGAREI DISTRICT COUNCIL First Defendant/Applicant
WAYNE WESLEY PETERS Second Defendant/Applicant
Hearing: 22 February 2016 Appearances:
S Perese for the Plaintiff/Respondent
F Divich and H Waldren for the First Defendant/ApplicantJudgment:
25 February 2016
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
This judgment was delivered by me on
25.02.16 at 4:30pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
M J DAISLEY v WHANGAREI DISTRICT COUNCIL and W W PETERS [2016] NZHC 268 [25 February
2016]
[1] The first defendant (the Council) applies to strike out the plaintiff’s claim which was filed on 14 August 2015. It says section 4 of the Limitation Act 1950 applies because the proceeding was not filed within six years of those events giving rise to the plaintiff’s claims.
Background
[2] The plaintiff is a contractor. The Council is a local authority and has functions, powers and duties under the Resource Management Act 1991 (RMA). The second defendant is a solicitor and principal of a law firm.
[3] In December 2004 the plaintiff purchased a 48 hectare block of land with a commercial quarry.
[4] The quarry was the subject of a 1988 open-ended land use consent for the quarrying of red brown rock which is deemed by the RMA to be a land use which runs with the land.
[5] When the plaintiff purchased the property and until 21 September 2009 he knew it had been operated as a commercial quarry and was rated as such by the Council, but he did not know about the existence of the land consent attaching to the land.
[6] After purchasing the land the plaintiff continued to operate the property as a quarry but had not sold any rock before the Council ordered him to stop quarrying. The Council issued an RMA abatement notice dated 21 February 2005 to stop the quarrying of all brown stone and other material in excess of 500.0m3.
[7] The plaintiff says the Council represented in the abatement notice that the plaintiff’s quarrying was not expressly allowed by a resource consent or existing use. Relying on that representation he said he complied with the terms of the notice.
[8] The Council issued further abatement notices in November 2006, June 2008, and November 2008 all of which the plaintiff says were intended and did prevent the operation of the quarry.
[9] Then in August 2009 the Council served an RMA application it had made to the Environment Court for an enforcement order to prevent the plaintiff from undertaking all mineral extractions on the land for a period of up to 16 months.
[10] The plaintiff says on 13 August 2009 he instructed the second defendant to act for him; and that on 21 September 2009 an employee of the second defendant located from the first defendants records a copy of the land use consent held by the first defendant.
[11] On 15 October 2009 the first defendant withdrew its abatement and infringement notices, but continued to pursue the plaintiff for quarrying a type of rock which it did not consider to be covered by the land use consent.
[12] The plaintiff has sued the Council alleging a breach of statutory duty, common law negligence, and misfeasance in public office.
[13] It is pleaded the Council had the function of controlling any actual or potential effects of the use, development or protection of land within its district and therefore owed a duty to exercise skill and care concerning the issue of abatement notices. The plaintiff says the Council’s notices of abatement and infringements, and its application to the Environment Court for enforcement orders were based on the Council’s belief that the quarrying was not expressly allowed by a resource consent. The plaintiff says contrary to that belief its quarrying was in fact authorised by the land use consent, the original copy of which consent was at all times with the Council.
[14] The plaintiff says he relied on the Council’s representation that there was no
consent and has suffered loss as a result.
[15] Behind the plaintiff ’s claim of negligence is the assertion that the Council owed a common law duty of care in the exercise of its statutory functions and was required to have reasonable grounds for believing there was proper cause for issue of an abatement notice including that records ought to have been checked and that there was sufficient evidence to support such claims. The plaintiff pleads the first
defendant failed to check its records and that failure was negligent as was the issue of RMA notices which had the effect of stopping the quarry operation from February
2005. The plaintiff says the circumstances of the Council’s negligence were not discovered until the land use in question was located on 21 September 2009.
[16] Regarding claims of breach of statutory duty – misfeasance in public office, it was alleged that the Council knew the land use consents that had previously been issued were deemed to be resource consents under the RMA; that the Council was aware the plaintiff asserted the right to quarry the land based on the grounds of the quarry being an existing use as opposed to the existence of the land use consent. The Council held rating records and knew the land was being operated as a commercial quarry. It was not until 21 September 2009 that the plaintiff said his lawyer discovered the Council’s misfeasance in this regard.
Issues
[17] For present purposes and as described on behalf of the Council they are: (a) When did the plaintiff’s cause of action accrue?
(b)Is the accrual more than six years prior to the commencement of the proceeding on 14 August 2015?
(c) Has the Council concealed the existence of the consent by fraud and thus postponed the commencement of time beginning to run?
[18] It is the Council’s position that the plaintiff’s causes of action set out in his statement of claim are time barred pursuant to s 4 of the Limitation Act 1950 and therefore cannot succeed; that causes of action accrued from the time the abatement notices issued, the first of those being in 2005.
[19] The Council says losses were created by those abatement notices and therefore the information obtained by the plaintiff’s solicitor on 21 September 2009 was always available for access for the plaintiff since 21 February 2005.
[20] The Council says it has not concealed anything; that the land consent in question was always reasonably discoverable when the Council’s notices issued.
[21] The Council’s case is that plainly no question of fraud arises in the
circumstances.
Considerations
[22] Ms Divich for the Council submits case law supports the position taken on behalf of the Council, and refers to this case being similar to that in Thom v Davys Burton1.
[23] In that case the plaintiff sued his solicitors in respect of a prenuptial agreement signed in March 1990 that was void pursuant to the Matrimonial Property Act 1976 because the signature of the wife to be was not properly witnessed. In that outcome the sharing provisions of the Matrimonial Property Act applied and his (now) former wife, upon application to the Court, obtained a greater share than the prenuptial agreement had provided for.
[24] Twelve years after the agreement in question was signed, Mr Thom sued his solicitors in negligence. The solicitors raised a limitation defence under s 4 of the Limitation Act 1950. That defence succeeded in the Court of Appeal and was upheld in the Supreme Court. The Supreme Court held that a cause of action in negligence arises when the plaintiff first obtained the unenforceable agreement, even though the extent of the resultant damage would not become clear until later.
[25] For present purposes the Court’s focus is upon when the cause of action arises. In Invercargill City Council v Hamlin2 the Court of Appeal held that:
In an action in tort based on a wrongful act which is actionable per say without proof of actual damage, the cause of action will accrue at the time the act was committed. Where the claim is based on negligence, however, damage is an essential part of the cause of action, and until the damage has occurred the cause of action is not complete.
1 [2009] INZLR 437 (SC).
[26] In that case principles of reasonable discoverability applied and no damage was deemed to have occurred until that time when advice was obtained regarding the state of a house requiring repairs. Ms Divich’s submission is that issues of reasonable discovery do not apply because the claim pleads damage having occurred when the notices issued.
[27] Ms Divich refers also to the decision of the Supreme Court in Murray v
Morel & Co Limited3
[28] In that case the Supreme Court held there was no general principle that a cause of action did not accrue for limitation purposes until the elements were reasonably discoverable by the plaintiff and there were no grounds for applying the reasonable discoverability principle to that case.
[29] In that case Tipping J stated:
The numerous references in the Limitation Act to accrual of a cause of action can only be construed as references to the point of time at which everything has happened entitling the plaintiff to the judgment of the Court on the cause of action asserted. Save when the Limitation Act itself makes knowledge or reasonable discoverability relevant, the plaintiff’s state of knowledge has no bearing on limitation issues. Accrual is an occurrence-based, not knowledge based, concept. The Limitation Act as a whole is structured around that fundamental starting point. The periods of time selected for various purposes must have been chosen on that understanding…
[30] It is the Council’s case that any breach of duty owed occurred at the time abatement notices issued. Also it is clear that the plaintiff is suing for “loss of profit” as a result of the abatement notices. It follows, counsel submits, that the time to sue shall run from that date the alleged breaches occurred i.e. when the abatement notices issued – all of which were issued more than six years before the proceeding was filed on 14 August 2015.
[31] Ms Divich submits:
(a) That like the situation in Thom in this case the plaintiff suffered an immediate loss from the date of the issue of the abatement notices
because from those dates he was restricted from quarrying; indeed the plaintiff specifically claims for loss of revenue between the dates of the issue of the notices and the discovery of the land use on 21
September 2008.
(b)That in terms of diminution of value this too occurred immediately upon the abatement notices being issued because then the value of the property diminished to reflect the change in the ability to quarry the land commercially.
(c) For a cause of action to accrue it was not necessary for the plaintiff to know that the abatement notices should not have been issued due to the existence of an open-ended resource consent because the losses flowing from the abatement notices were suffered immediately upon them being issued.
[32] It is the Council’s case that there are no allegations of fraud pleaded and therefore no opportunity to plead s 28(b) of the Limitation Act 1950 which, in the case of an action concealed by fraud, permits the period of limitation to run from the time the fraud has been discovered or when with reasonable diligence it could have been discovered.
[33] Ms Divich submits fraudulent concealment does not extend to situations where the Council ought to have known but did not know the relevant facts that constituted the cause of action; that there is no deliberate concealment where the Council failed to disclose a negligent breach of duty that it was not aware it was committing.
[34] The plaintiff’s case is that on 21 September 2009 an employee of the second defendant located the land use consent held by the Council. The Council’s position is that a search of its records at an earlier stage would have revealed that land use consent.
[35] The plaintiff’s position is that s 4 of the Limitation Act 1950 applies; but that disclosure or discovery of the land use consent is an integral part of its causes of action against the Council in that it gives rise to proximity and an element of a duty of care owed. In the alternative s 28 of the Limitation Act 1950 provides that a cause of action is postponed where there is concealment by fraud.
[36] Mr Perese submits the Council’s abatement notices were intentional misrepresentations or the Council was wilfully blind to any right to issue them i.e. knowing misrepresentations that there was no land use consent to operate a quarry. Mr Perese submits the representation obtained for the Council the position that the Council was no longer bound to recognise the open-ended land use consent granted to the plaintiff under the Town and Country Planning Act 1977, but it instead required the plaintiff to apply for a fresh consent under the Resource Management Act 1991. He said in reliance on its misrepresentation the Council then proceeded to prosecute the plaintiff in the Environment Court; impose fines on the plaintiff and then referred those fines, unpaid, to a debt collection company for recovery.
[37] Mr Perese submits the Council’s negligence, and/or public misfeasance caused loss during the period of abatement and forced the plaintiff to incur expenses in making resource applications to operate the quarry. Mr Perese submits it is arguable that discoverability maybe a necessary ingredient of the cause of action upon the basis that a cause would not exist unless and until the plaintiff knows or ought to know that there is a causal link between the Council’s conduct and the harm the plaintiff suffered; that until the default was known there was no cause of action capable of being pursued.
[38] The plaintiff acknowledges a claim in fraud has not been specifically pleaded. Mr Perese submits that the focus should be upon the facts from which the Court could draw an inference of fraud. He submits that on what is pleaded, the Court is entitled to draw an inference of a falsity, which was knowingly made, without belief in the truth, or was reckless or was careless whether it was true or false. He submits an inference of moral turbidity may be drawn from the fact that the Council proceeded to prosecute the plaintiff knowing or being wilfully blind that there was no proper basis for the prosecution.
Conclusions
[39] If this Court is to strike out the claim it must believe the cause of action is clearly untenable; that it cannot succeed.
[40] The Court is bound to act cautiously and only in clear cases.
[41] The plaintiff purchased the quarry property as a going concern. The land was located within the Council’s area of control. The Council has function, powers and duties under the RMA. When the plaintiff purchased the land it was unaware it was subject to a Town and Country Planning Act and an open-ended land use consent for the quarrying of red brown rock. When he purchased the land the plaintiff believed the quarrying was being carried out pursuant to existing use rights.
[42] The land use consent under the Town and Country Planning Act 1977 was deemed a land use consent under the Resource Management Act 1991, and it ran with the land that the plaintiff purchased. Following the purchase the plaintiff began operating the quarry but was stopped by the Council. An abatement notice issued. Limitations on quarrying were imposed.
[43] The Council’s position then was that the plaintiff’s quarrying was not expressly allowed by a resource consent or an existing use. Further abatement notices issued subsequently.
[44] It seems clear the Council’s understanding and representation of the matter was wrong. It is pleaded that the details of the relevant consent permitting the quarrying activity were in the Council’s control and possession throughout.
[45] Then, in August 2009 the plaintiff was served with an application under the RMA for an enforcement order to prevent any mineral extract on the land at all for up to 16 months.
[46] It was not until then that soon after the correct position was discovered by an employee of the plaintiff’s solicitor, from the Council’s own records. Almost immediately and upon that discovery the Council withdrew its abatement and
infringement notices. It is clear that the circumstances of the Council’s negligence
was not discovered until the land use consent was located on or about 21 September
2009.
[47] The plaintiff pleads losses during the period of abatement between February
2005 and September 2009 and forced the plaintiff to incur losses and expenses in making resource applications to operate the quarry. The Supreme Court decision in Murray v Morel4 does Mr Perese submits, endorse the principle that for limitation purposes an action did not accrue until the elements were reasonably discoverable.
[48] In this case this Court considers that there might be due cause for variation of general principles in the case of the plaintiff who was given all reason to believe the Council’s prosecution of his activities was well founded on the Council’s statutory responsibility to act as it did; that there was no reason otherwise for the plaintiff to suspect the Council’s actions were ill-founded. Then and until there is established that link between the Council’s conduct and the harm suffered by the plaintiff it is arguable that discoverability may be a necessary ingredient of the cause of action.
[49] It is the plaintiff ’s obligation upon his claim to establish the defendant owed him a duty of care. This assumes the plaintiff is aware of those facts which give rise to the proximity of a duty.
[50] Elements of duty of care are variable. In cases based on negligence damage must be proved. As Mr Perese submits until the damage has occurred the cause of action is not complete and that position needs to be appreciated against the background that in building contract cases a local authority’s duty was a recognised category of duty of care.
[51] The Court agrees this case is different and as it appears is unlike any for which ready comparisons can be made. Elements of proximity are important in considering aspects of duty of care.
[52] This Court considers there is an element of novelty with the present circumstances. This case may not be outside the realm of those for which reasonable discoverability in relation to elements of causation, and not just in relation to damages or loss, are important. Beyond issues of the availability of discovery there cannot always be discounted an absence of the link between the actions of the defendant and the damage the plaintiff has suffered. It may be that until that link is established there is uncertainty about whether a cause of action can be said to have accrued. There is authority for claims that an element of contract may arise in the
relationship between the local authority and a member of the public.5
[53] In this case it is arguable that the Council knew of the existence of the land use consent yet despite this issued a number of abatement notices and indeed it applied to the Environment Court for enforcement orders to enforce those abatement notices. The consequences of a failure to comply with an enforcement notice are an offence and is punishable accordingly. It follows that in the present case the pleadings support a submission that even if the Council is correct that the damage or loss in 2005 marks the commencement of the accrual period, the plaintiff may be able to rely on s 28 of the Limitation Act 1950 to postpone the running of the accrual period.
Summary
[54] The Council submits that its misrepresentation of issues surrounding the land use consent was discoverable earlier than when it was discovered on 21 September
2009.
[55] Before the Court however is the Council’s strike out application. For reasons related to the particular circumstances of the case the Court is reluctant to consider the plaintiff’s cause of action is untenable and cannot succeed. The Council on a number of times and over a number of years asserted there was no land use consent. Those were positive claims by a local authority that had sole control and possession of relevant records. Mr Perese submits and the Court accepts that a member of the public should be entitled to rely on the local authority acting honestly.
[56] The Council acted without consultation with the plaintiff. The plaintiff did not ask the Council whether there was a land use consent, but was told and he was entitled to believe there was no resource consent.
[57] As Mr Perese says that absent any rights to sue in contract the plaintiff must therefore rely on some other right of action against the Council; that there is no established common law duty of care owed by the Council to members of the public in relation to the Council’s volunteered statements and nor is there any established statutory duty concerning the Resource Management Act 1991 and the issue of enforcement of abatement notices.
[58] It is arguable the duty of care arose when the plaintiff became aware of the Council’s misrepresentation and only then was in a position to argue duty, breach, causation and loss.
[59] Also an argument of fraud may be able to be raised by reason of the concealment by Council of the right of action available to the plaintiff. It has not been pleaded yet, but that opportunity is still available. No statement of defence has been filed, because the strike out application was filed instead.
[60] Mr Perese submits dishonesty can be inferred in the circumstances; that arguably the Council’s prosecution actions intentionally misled the plaintiff; that the frequency of abatement notices within a short period after the property had been purchased, requires investigation and explanation. Therefore the case may not just be about negligence and they may assume the character of an intentional tort. In the
Commissioner of Inland Revenue v Chesterfields6 the Court of Appeal held that the
elements of the tort of misfeasance in public office assumed two forms i.e. targeted malice and non-targeted malice. The Court noted that under both forms the act complained of must be done by a public officer and in the exercise of that officer’s public functions. A further and fundamental element of the tort of both forms is that there must be actual damage or loss suffered by the plaintiff caused by the public officer’s conduct.
[61] Arguably that is what happened in the present case.
[62] The Court held that targeted malice requires a specific intention to injure a person when it involves bad faith by that officer exercising a public power for an improper or ulterior motive. Non targeted malice occurs when the public officer acts knowing he/she has no power to do the act complained of.
[63] In the present circumstances the plaintiff may experience difficulties in meeting the standard of proof required. However the Court has before it only the facts pleaded which for present purposes the Court must assume are provable. There has been no discovery or any repleading – both of which would in the normal course be required in a case of this kind. Of course allegations of fraud cannot be left to be inferred from the facts as appears clear from the commentary in McGechan on Procedure at paragraph 5.26.08. Such allegations must be pleaded with care and particularity.
[64] It is a long reach but perhaps an element of concealment of fraud might in time reveal itself as a probability. It may be a matter for consideration upon any pleading filed later, which may occur once obligations of discovery are met.
Summary
[65] Reasonable assumptions have been made on behalf of the Council in advancing a strike out claim at this stage. But, until pleading and discovery obligations have been completed the Court is not in a sufficient position to preclude the availability of a claim. Until then there is no certainty about that time when the cause of action accrued and when considerations of the Limitation Act principles should apply.
Judgment
[66] The strike out application is dismissed.
[67] The Council shall pay the plaintiff’s costs on a 2B basis.
Associate Judge Christiansen
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