Dromgool v Minister of Land Information
[2022] NZSC 157
•22 December 2022
| IN THE SUPREME COURT OF NEW ZEALAND I TE KŌTI MANA NUI O AOTEAROA |
| SC 32/2021 [2022] NZSC 157 |
| BETWEEN | SHANE DROMGOOL AND DOROTHY DROMGOOL |
| AND | MINISTER FOR LAND INFORMATION |
| Hearing: | 22 March 2022 |
Court: | Winkelmann CJ, William Young, Glazebrook, O’Regan and Ellen France JJ |
Counsel: | D M Salmon KC and A W McDonald for Appellants |
Judgment: | 22 December 2022 |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe appellants must pay the respondent costs of $25,000 plus usual disbursements.
___________________________________________________________________
REASONS
| Para No | |
| William Young, Glazebrook, O’Regan and Ellen France JJ | [1] |
| Winkelmann CJ | [110] |
WILLIAM YOUNG, GLAZEBROOK, O’REGAN AND ELLEN FRANCE JJ
(Given by O’Regan J)
Table of Contents
| Para No | |
| Introduction | [1] |
| Factual background | [7] |
| Legislative provisions | [17] |
| RMA | [17] |
| PWA | [24] |
| Environment Court report | [34] |
| High Court decision | [37] |
| Court of Appeal decision | [43] |
| Issues | [50] |
| Some preliminary observations | [52] |
| Good faith and reasonableness | [52] |
| Focus of s 24 process | [55] |
| No judicial review | [56] |
| The Minister’s s 186 decision | [57] |
| Appellants’ submissions | [60] |
| Respondent’s submissions | [69] |
| Our assessment | [73] |
| Judicial review? | [87] |
| Our assessment resumed | [94] |
| Conclusion | [102] |
| Result and costs | [108] |
Introduction
Top Energy Limited is the electricity lines company in the Far North of the North Island. It initiated a project involving the construction of a new 110kV line between Kaikohe and Kaitaia, in order to upgrade its network to meet the increased demand for electricity in the north‑east of the Far North and ensure security and reliability of supply. The proposed new line would cross lands owned by the appellants.[1]
[1]The proposed line would include six electrical conductors, comprising a 110kV circuit and a 33kV circuit. As well, it would include an optical ground wire (a combination of an earth wire and fibre optic cable). The fibre optic cable provides an ancillary telecommunication facility for protection, control and safe operation of the transmission network. For ease, we simply refer in this judgment to the “110kV line” or the “proposed new line”.
The appellants did not agree to grant the necessary easements to Top Energy for the line. Top Energy made applications to the Minister for Land Information (the Minister) under s 186 of the Resource Management Act 1991 (the RMA) to initiate compulsory acquisition of easements over each of the appellants’ land under Part 2 of the Public Works Act 1981 (the PWA).[2] In August 2016, the Minister agreed and directed officials of Land Information New Zealand | Toitū Te Whenua (LINZ) to commence the PWA process. The PWA process involves negotiations with the landowner with a view to an agreed acquisition, but if these fail the Minister may take the land compulsorily.
[2]“Land” is defined in s 2 of the Public Works Act 1981 [the PWA] as including an interest in land. Section 186(8) of the Resource Management Act 1991 [the RMA] provides for the same. In the present case, the interest that Top Energy sought over each appellant’s land was a 20 to 25 metre wide transmission easement and a right to access the easement corridor for the construction, operation and maintenance of the line and its supporting infrastructure. The easement would provide for three poles on the Dromgool and Newman properties and five on the Poulton property, holding the conductors comprising the transmission line and the ground wire.
Negotiation with the appellants did not lead to agreement and ultimately the Minister executed three notices of intention in June 2017 to take easements in relation to the appellants’ land under s 23 of the PWA. The appellants exercised their right to object to the taking by filing notices of objection with the Environment Court under s 23(3). The Environment Court’s report (issued under s 24 of the PWA) was largely in favour of the Minister’s position that the taking of the easements was appropriate.[3]
[3]Dromgool v Minister for Land Information [2018] NZEnvC 108 (Judge J A Smith, Commissioners Leijnen and Buchanan) [EnvC report]. As is apparent, the Minister, not the requiring authority (in this case, Top Energy Ltd), is the respondent to an objection heard by the Environment Court under s 24 of the PWA.
The appellants appealed against the Environment Court report to the High Court.[4] Their appeal was successful in part and the report of the Environment Court was set aside.[5] However, the Court of Appeal reversed the High Court decision and confirmed the report of the Environment Court.[6]
[4]The appeal was an appeal on a question of law under s 299 of the RMA and s 24(14) of the PWA.
[5]Dromgool v Minister for Land Information [2019] NZHC 1563, [2019] NZRMA 674 (Courtney J) [HC judgment].
[6]Minister for Land Information v Dromgool [2021] NZCA 44, [2021] NZRMA 382 (Cooper, Clifford and Goddard JJ) [CA judgment].
The appellants were given leave to appeal to this Court, but the grant of leave was limited.[7] The approved question was:
Whether the Court of Appeal was correct in its interpretation of the role and obligations of the Minister for Land Information in deciding an application under s 186(1) of the Resource Management Act 1991 and, in particular, whether the Minister must be satisfied that the proposed taking is fair, sound and reasonably necessary for achieving the objectives of the network utility operator or whether it is sufficient that the Minister is satisfied the proposed taking is capable of meeting that test.
[7]Dromgool v Minister for Land Information [2021] NZSC 71 [SC leave judgment]. As mentioned above at n 4, the High Court appeal was brought under s 299 of the RMA. Section 308 of the RMA provides for appeals to the Court of Appeal from a decision of the High Court under s 299. Such appeals are treated as if they are brought under Subpart 8 of Part 6 of the Criminal Procedure Act 2011 which deals with appeals on questions of law in criminal proceedings. The Court of Appeal decision was therefore decided under that framework: see the CA judgment, above n 6, at [7], n 14. Further appeals to this Court are authorised by s 309 of the Criminal Procedure Act, meaning this Court has jurisdiction under s 71(a) of the Senior Courts Act 2016. For further discussion, see generally Ortmann v United States of America [2018] NZSC 125 at [30] which addresses similarly structured rights of appeal in the Extradition Act 1999.
This Court refused leave on other questions in respect of which the appellants sought leave.[8] At times the argument drifted into these questions, but our focus is on the approved question only.
Factual background
[8]SC leave judgment, above n 7, at [6]. One ground on which leave was refused but which featured in the argument in this Court was that the Environment Court should have found the Minister’s s 186 decision was defective because Top Energy’s route selection was based on improper and irrelevant considerations (including that an affected landowner for the “FGT/Sutcliffe Route”, discussed below at [10], had political connections) and Top Energy had withheld material information from the Minister.
Top Energy considered that the proposed new line was required to meet the increasing demand for electricity in the relevant area and ensure security and reliability of supply.[9] It instructed an engineering consultancy to investigate potential routes for the new line. As part of the overall project, Top Energy investigated a potential route linking a new substation in Wiroa near Kerikeri to a substation at Pamapuria near Kaitaia. This route affects about 96 properties, but Top Energy was able to secure agreements to grant easements in relation to most of them. The area affecting the appellants is an approximately seven kilometre stretch known as the “Mangakaretu section”.
[9]The proposed line forms part of a wider project to build a new transmission line between Kaikohe and Kaitaia. It is being built in three stages. Stages one and two are complete. Stage three would complete the connection. This appeal concerns land sought to be acquired for stage three.
Initially the consultant identified a route for the Mangakaretu section passing over land held by the Office of Treaty Settlements, which was land‑banked for the purpose of claims for redress under the Treaty of Waitangi.[10] The route also involved rural land owned by the Taylors, the Poultons (who are appellants in the present case) and a property known as “Greenacres”. This route was referred to in the Courts below as the OTS route, and we will use the same name.
[10]The Office of Treaty Settlements has now become Te Arawhiti | The Office for Māori Crown Relations.
Top Energy pursued the OTS route as its preferred route between 2012 and 2014, but it became clear that the Minister for Treaty of Waitangi Negotiations would not agree to easements being placed on the land in the face of objections by the potential Treaty claimants.[11] As there is no power to compulsorily acquire Crown land,[12] Top Energy began investigating alternative routes.[13]
[11]The land-bank is a protective mechanism designed to ensure that successive governments retain land for return to Māori through the Treaty settlement process. Once transferred to the land-bank, the relevant property is held by the Crown in anticipation of transfer to a claimant group as part of the settlement of claims relating to historical Treaty breaches. Although the Crown retains the discretion to allow land-banked property to be used for qualifying public works of national interest, approval must first be obtained from the Minister for Treaty of Waitangi Negotiations, typically following consultation with the Māori claimant group likely to seek return of the land as Treaty settlement redress. The Minister of Māori Development also has decision-making powers in respect of land-banked land sought to be used for public works.
[12]PWA, s 23(1) empowers the Minister to acquire land “other than land owned by the Crown” for a Government work. The same constraint applies in respect of land sought to be acquired using the RMA pathway: see the discussion of s 186(4) in Seaton v Minister for Land Information [2013] NZSC 42, [2013] 3 NZLR 157 at [61] per Chambers and Glazebrook JJ.
[13]As will become apparent, the relevant statutory provision refers to consideration of alternative sites, routes, or other methods of achieving the project’s objectives. For the purposes of the present appeal, the focus is on alternative routes for the proposed line. Such alternatives could include another route involving the use of the s 186 process or another route that did not require compulsory acquisition of land. For simplicity, we will refer to “alternatives” when discussing the statutory requirement and the consideration of alternative routes in the present case.
The two alternatives that are relevant to the present appeal were described by the Environment Court as follows (we adopt the same descriptors for this judgment):[14]
(a)the FGT/Sutcliffe Route, slightly to the west of the [OTS] route and travelling through the length of the FGT and Sutcliffe properties, relying on the [agreement to grant an easement] with Poulton and the agreement of Greenacres eventually obtained. This route, of course, still involved crossing the Taylor property, who had already indicated they would not consent, and also further crossing of the FGT Farms Limited, Sutcliffe and Cornelius properties;
(b)… the Objection Route, travelling through a different portion of the Poulton farm (for which there was no [agreement to grant an easement]), Newman Farms, Dromgool (the Objectors), Sutcliffe, Kearney and Cornelius properties. This utilised a section of public road between Newman Farms and the Jones property for around 1.5km. …
[14]EnvC report, above n 3, at [14] (emphasis in original).
The Environment Court also referred to another route further to the west that was considered but rejected, and it is not relevant to the issues before us.
All of these routes are marked on the map reproduced in annexure C to the Environment Court report.
Ultimately, Top Energy opted for the Objection Route. It obtained an agreement to grant an easement over the relevant part of the Sutcliffe property,[15] but the appellants did not agree to enter into agreements to grant easements. In May 2016, Top Energy made applications to the Minister under s 186(1) of the RMA to have easements taken under Part 2 of the PWA in respect of the appellants’ properties. In August 2016, the Minister agreed to commence the compulsory acquisition process. The Minister’s decision was, in each case, recorded in a decision sheet prepared by LINZ officials (the LINZ decision sheet). This set out a series of statements with accompanying explanatory text to be noted by the Minister and a number of questions, also accompanied by explanatory text, which the Minister needed to answer, before coming to the s 186 decision itself.
[15]The location of the line over the Sutcliffe property for the Objection Route was less intrusive than it would have been if the FGT/Sutcliffe Route were chosen.
In November and December 2016, the Minister issued Notices of Desire (under s 18 of the PWA) to acquire easements over the appellants’ properties.
The appellants did not agree to enter into agreements to grant easements. In June 2017, the Minister executed Notices of Intention to Take Easements in respect of the appellants’ properties under s 23 of the PWA.
In July 2017, the appellants filed their objections to the proposed acquisition of easements in the Environment Court. Amended objections were filed in May 2018. The hearing of the objections in the Environment Court took place in June 2018, with the resulting report issued on 11 July 2018.
Legislative provisions
RMA
The focus of the present appeal is the decision made by the Minister under s 186 of the RMA to commence the compulsory acquisition process (we will refer to this as the s 186 decision). Section 186 relevantly provides:[16]
[16]Although the section refers to the Minister of Lands, it is the Minister for Land Information who is now the Minister responsible for the operation of s 186. Part 2 of the PWA refers to the Minister of Lands as well, but this too is treated as a reference to the Minister for Land Information.
186Compulsory acquisition powers
(1) A network utility operator that is a requiring authority may apply to the Minister of Lands to have land required for a project or work acquired or taken under Part 2 of the Public Works Act 1981 as if the project or work were a government work within the meaning of that Act and, if the Minister of Lands agrees, that land may be taken or acquired.
(2)The effect of any Proclamation taking land for the purposes of subsection (1) shall be to vest the land in the network utility operator instead of the Crown.
…
(5)Any claim for compensation under the Public Works Act 1981 in respect of land acquired or taken in accordance with this section shall be made against the Minister of Lands.
(6)All costs and expenses incurred by the Minister of Lands in respect of the acquisition or taking of land in accordance with this section (including any compensation payable by the Minister) shall be recoverable from the network utility operator as a debt due to the Crown.
…
(8)For the purposes of this section, an interest in land, including a leasehold interest, may be acquired or taken as if references to land were references to an interest in land.
The purpose of s 186 of the RMA is to provide a mechanism for a network utility operator that is not a central government or local government entity to engage in a process that provides for the compulsory acquisition of land, if that is required for a particular project or work.[17]
[17]Top Energy is owned by a trust for electricity consumers in its area of operation, but is not a local authority.
In the present case, there is no dispute that (and the Minister was satisfied that) Top Energy is a network utility operator and it is also a requiring authority, having applied for and been granted that status under s 167 of the RMA. In many cases, the requiring authority will have given notice to the relevant territorial authority under s 168 of the RMA of its requirement for a designation for the work and the process for consideration of that notice under ss 168A–174 of the RMA will have taken place. That was not, however, required in this case because the applicable district plan allows for the construction of the proposed transmission line without a designation.[18]
[18]Subject to the qualification that Top Energy would (as it noted in its s 186 applications) be required to secure resource consents for the sections of the proposed line located in areas where electricity lines are not otherwise permitted, such as wetlands and river crossings. Top Energy was confident these could be obtained.
The mechanism chosen in s 186 for non‑governmental requiring authorities to compulsorily acquire land is to provide that any acquisition must be undertaken by the Minister on behalf of the requiring authority, but in circumstances where, if the compulsory acquisition occurs, it is the requiring authority that is the transferee of the land not the Minister. So the compulsory acquisition process is undertaken by a Minister with public accountability, not by the requiring authority that will, in some cases, be a privately owned entity.[19]
[19]The Minister is not involved in the converse process under s 185 of the RMA, however. That section provides for an owner of land subject to a designation to apply to the Environment Court for an order that the relevant requiring authority buy or lease the land under the PWA.
Section 186 does not, itself, provide statutory authority for the Minister to compulsorily acquire land. Rather, it provides for the Minister to trigger the process under the PWA that can ultimately lead to the Minister taking the land required by the network utility operator under s 23 of the PWA.
In Seaton v Minister for Land Information, McGrath and William Young JJ observed that s 186 was included in the RMA to fill a lacuna created by privatisation during the 1980s and 1990s.[20] When the PWA was enacted in 1981, utilities were public entities and had direct access to the compulsory acquisition power in the PWA. Section 186 was enacted to allow for the newly private utilities to request that the government exercise its taking powers in the PWA for their ultimate benefit.
[20]Seaton, above n 12, at [76]–[77] per McGrath and William Young JJ (although they disagreed with the conclusion reached by the majority on the merits, their characterisation of the purpose behind s 186 was not challenged by other members of the Court).
In Seaton, the Minister had invoked the compulsory acquisition process in the PWA to acquire easements over land needed to relocate towers supporting electricity lines. The land was required because the New Zealand Transport Agency (NZTA) widened the state highway which meant the towers had to be relocated in a way that affected Mrs Seaton’s land. The Minister invoked the PWA at the instigation of the NZTA on the basis Mrs Seaton’s land was required for a Government work. Mrs Seaton argued her land was in fact required by the utility company for its towers, and therefore it should have invoked s 186 of the RMA. A majority of this Court accepted Mrs Seaton’s argument was correct. Seaton did not raise the same issues as arise in the present appeal but its discussion of the s 186 power is of assistance in the analysis of the issues arising in this case.
PWA
Once the Minister agrees to an application under s 186(1) of the RMA, the process for acquisition (including compulsory acquisition) of land under Part 2 of the PWA commences. Part 2 deals with acquisitions of land for public works by a Minister or a local authority. (For simplicity, we will deal with the power as it relates to a Minister only.) The Minister has a broadly expressed power under s 4A of the PWA to acquire land for a Government work, to settle the purchase price, to administer, develop or improve the land and to transfer or dispose of it. The detail in relation to the acquisition of land is set out in Part 2.
Before we embark on the analysis of the Part 2 provisions, we reiterate that s 186(1) of the RMA says the acquisition or taking of land for a network utility operator that is a requiring authority is to be effected “as if the project or work were a government work” within the meaning of the PWA. This contemplates that the Part 2 provisions have to be read with any necessary modifications to reflect the fact that the requiring authority is a non‑governmental body and so the project or work is not (other than by the deeming provision) a Government work as defined in s 2 of the PWA.
The scheme of Part 2 of the PWA is as follows:
(a)Section 16(1) empowers the Minister to acquire land required for a Government work.
(b)Section 18 requires good faith endeavours to acquire the required land by agreement. If these endeavours fail, s 18(2) allows the Minister to take the land compulsorily.
(c)Under s 23(1), where a compulsory acquisition is required, the Minister must publicly notify by Gazette their intention to take the land, setting out a description of the land, the purpose for which the land is to be used, the reasons why the taking is considered reasonably necessary and the period for the making of objections. Notice must also be served on the landowner of the Minister’s intention to take the land (the notice in effect sets out the same points as those in the Gazette).[21]
(d)Section 23(3) provides that any person with an interest in the relevant land may object to the taking in the Environment Court.
[21]Section 23(1)(c), referring to the prescribed form set out in sch 1 of the PWA.
Section 24 deals with the objection process. It relevantly provides:
24 Objection to be heard by Environment Court
(1)On receiving a written objection under section 23, the Environment Court shall, as soon as practicable, send a copy of the objection to the Minister or local authority, as the case may require.
(2)Within 1 month after receiving a copy of the objection or within such further period as the Environment Court may allow, the Minister or local authority, as the case may require, shall send to the Environment Court and serve on the objector a reply to the objection containing the following information:
(a)the statutory or other authority under which it is proposed to take the land; and
(b)the nature of the work to be constructed or the purpose for which the land is required; and
(c)such other matters as may be appropriate having regard to the objections made and to any practice directions issued by the Environment Court.
(3)The Environment Court shall inquire into the objection and the intended taking and for that purpose shall conduct a hearing at such time and place as it may appoint.
…
(7) The Environment Court shall—
(a)ascertain the objectives of the Minister or local authority, as the case may require:
(b)enquire into the adequacy of the consideration given to alternative sites, routes, or other methods of achieving those objectives:
(c)in its discretion, send the matter back to the Minister or local authority for further consideration in the light of any directions given by the court:
(d)decide whether, in its opinion, it would be fair, sound, and reasonably necessary for achieving the objectives of the Minister or local authority, as the case may require, for the land of the objector to be taken:
(e)prepare a written report on the objection and on the court’s findings:
(f)submit its report and findings to the Minister or local authority, as the case may require.
…
(10)The report and findings of the Environment Court shall be binding on the Minister or, as the case may be, the local authority.
…
(14)Subject to sections 299 and 308 of the Resource Management Act 1991, no appeal shall lie from any report or recommendation of the Environment Court under this section.[[22]]
[22]See above at n 7 for discussion of the appeal provisions.
As mentioned above, s 186(1) effectively deems the network utility operator’s work to be a Government work for the purposes of the PWA. For that arrangement to make sense, Part 2 of the PWA must be read with necessary modifications to bring the PWA and RMA into alignment. Most relevantly, in Seaton, McGrath and William Young JJ for the minority observed:[23]
Where s 186(1) of the [RMA] has been invoked, the references to “Minister” in [s 24(7)(a) and (d) of the PWA] must be read as a reference to the network utility operator (because the proposed taking will be to give effect to its objectives, rather than those of the Minister).
[23]Seaton, above n 12, at [83]. This was, however, rejected by the High Court Judge in this case (HC judgment, above n 5, at [47]) but was accepted by the Court of Appeal (CA judgment, above n 6, at [79]–[80]).
Similarly, Chambers and Glazebrook JJ reasoned that if the s 186(1) process had been invoked in Seaton, the Environment Court’s focus in an objection hearing under s 24 of the PWA would be on the network utility operator’s need for the relevant easements, rather than the objectives of the Minister.[24]
[24]At [66] per Chambers and Glazebrook JJ.
The appellants accept that this is correct, although they argue these statements do not assist in resolving the dispute in the present case. We do not agree: in our view this is an important feature of the PWA process where a network utility operator that is a requiring authority is involved.
Of particular importance in the present case are s 24(7)(b) and (d), which require the Environment Court to enquire into the adequacy of the consideration given to alternatives to the taking and to decide whether the taking is “fair, sound, and reasonably necessary for achieving the objectives” of the Minister. They are important because the appellants say the same obligations are imposed on the Minister when considering whether to exercise the power in s 186 of the RMA.
Another matter to note in relation to s 24 is that it requires the Environment Court to inquire into an objection to the taking of land (as a result of a decision under s 23). The process is the same whether the taking is by the Minister for a Government work or by the Minister for a project or work of a requiring authority. Section 24 does not expressly refer to any antecedent s 186 decision in cases where the proposed taking is at the behest of a requiring authority.
If there is no objection or the objection fails, the Minister may initiate the process whereby the relevant land is taken by a Proclamation issued by the Governor‑General under s 26. Where the Proclamation relates to land to be acquired for a network utility operator, the effect of the Proclamation is to vest the land in the network utility operator, not the Crown.[25]
Environment Court report
[25]RMA, s 186(2).
As noted above, the appellants argued in the Environment Court that the Minister was required to be satisfied that the requirements of s 24(7) were met when making a s 186 decision. This was rejected by the Environment Court.[26] The Court described the Minister’s s 186 decision as “fully discretionary”.[27] Consideration of the s 24(7) criteria is an obligation imposed on the Environment Court (in the context of the objection hearing convened under s 24(3) of the PWA), not the Minister.[28] It noted the evidence of a LINZ official that, because LINZ dealt with the application, “no alternatives were before the Minister”.[29]
[26]EnvC report, above n 3, at [53].
[27]At [40].
[28]At [35].
[29]At [42].
The Court concluded that the requirements of s 24(7) were met. It was satisfied for the purposes of s 24(7)(b) that the alternatives had been considered on a reasonable basis, and that the choice of the Objection Route was reasonable.[30] It found that Top Energy had given consideration to the FGT/Sutcliffe Route as an alternative.[31] The Court found that it was not required to conclude that the Objection Route was superior to the FGT/Sutcliffe Route. Rather, it was required to be satisfied that the alternatives had been considered and that the chosen route was reasonable.[32] The Court noted it had power to remit the matter to the Minister for further consideration if the consideration of alternatives was inadequate.[33] It considered there was no reason to do that in this case.
[30]At [127].
[31]At [126]. The Court rejected the appellants’ allegation that the assessment of this alternative was influenced by threats to Top Energy by Mr Sutcliffe (involving Mr Sutcliffe’s claimed political connections): at [113].
[32]At [127].
[33]At [56].
The Court also concluded (“by a strong margin”) for the purposes of s 24(7)(d) that the taking of easements over the appellants’ land was fair, sound and reasonably necessary for achieving the objectives of Top Energy and the Minister.[34] It was satisfied that the takings were appropriate and that the Minister could proceed with the takings by Proclamation if necessary.[35]
High Court decision
[34]At [165].
[35]At [170].
On appeal to the High Court, the appellants alleged the Environment Court had made five errors of law. Three of these related to the issues on which this Court refused leave to appeal and are therefore irrelevant in the present context.
The first of the two relevant alleged errors was the Environment Court’s conclusion that the Minister had an unfettered discretion in determining Top Energy’s applications under s 186 of the RMA and was not required to consider any specific factors including those identified in s 24(7)(b) and (d) of the PWA.
The High Court Judge accepted the appellants’ argument that the s 186 discretion is not unfettered. She said a statutory power is subject to limits, even if conferred in unqualified terms, and Parliament must be taken to have intended that a broadly framed discretion should always be exercised to promote the policy and objects of the legislation.[36]
[36]HC judgment, above n 5, at [42].
She did not, however, consider that the Minister was required to take into account s 24(7) in itself. Rather, the requirement was that the Minister had to consider alternatives, as provided for in s 24(7)(b).[37] This was because s 24(7)(b) requires the Environment Court to enquire into the adequacy of the consideration of alternatives, which contemplates that the alternatives had already been considered by someone else. The Judge said the “someone else” was, self-evidently, the Minister.[38] The High Court Judge rejected the observations made by three of the Judges of this Court in Seaton to the effect that when undertaking the compulsory acquisition process for a requiring authority, the Minister was acting, in effect, as an agent for the requiring authority.[39] She reasoned that s 186 was not the source of the power to take land: s 16 of the PWA was. Since that power was vested in the Minister, she considered that it must be the Minister alone (not Top Energy) who has the obligation to consider any relevant factors.[40] Therefore, the Environment Court had erred in concluding that there was no obligation on the Minister to consider alternatives.[41]
[37]At [48].
[38]At [49].
[39]Seaton, above n 12, at [76] per McGrath and William Young JJ and [24] per Elias CJ. Chambers and Glazebrook JJ did not deal with this point as it was not necessary to do so on the view they took. We discuss this below at [76].
[40]HC judgment, above n 5, at [47].
[41]At [53].
The second alleged error was the Environment Court’s conclusion that any defects in the acquisition process could be cured at any point up to the date of the Environment Court hearing. That finding was significant because the evidence in the Environment Court was that no alternatives were before the Minister before she granted the s 186(1) applications.[42] The High Court Judge’s interpretation of that finding was that there was no consideration of alternatives by the Minister herself before she made the s 186 decision.[43] This was because s 186 applications were dealt with by staff at LINZ, who relied on the evaluations undertaken by Top Energy, and the briefing papers provided to the Minister contained no details of alternatives.[44] As consideration given to alternatives by Top Energy was, on the High Court Judge’s approach, not relevant, the Judge found that the Environment Court had to examine what consideration had been given to alternatives by the Minister herself.[45] As there had been none, it was not open to the Environment Court to find there had been adequate consideration of alternatives.[46] Consideration of the alternatives by the Environment Court itself could not cure the Minister’s failure to do this.[47]
[42]See above at [34].
[43]The Environment Court report did, however, find there was adequate consideration of alternatives (albeit not by the Minister personally): EnvC report, above n 3, at [109], [126], [127], [129] and [174].
[44]HC judgment, above n 5, at [59]. The briefing papers did, however, note that alternatives had been considered by Top Energy. Further, the s 186 applications prepared by Top Energy that were appended to the briefings given to the Minister by LINZ staff did indicate the background information to how the route selection was made by Top Energy (this was noted in the EnvC report, above n 3, at [42], but the Environment Court said that material cannot bind the Minister at the s 186(1) decision stage).
[45]At [63].
[46]At [63].
[47]At [65].
Before leaving the High Court decision, we note in passing that the Judge rejected a ground of appeal based on alleged defects in the Minister’s decision-making in relation to the s 186 applications on the basis that such alleged defects were properly within the ambit of judicial review of the Minister’s s 186 decision, not an appeal to the High Court from the Environment Court.[48]
Court of Appeal decision
[48]At [4], [5] and [68].
The Court of Appeal endorsed the High Court’s finding that s 186 did not confer an unfettered discretion on the Minister.[49] It considered the Minister must exercise the power in s 186 in accordance with the relevant provisions of the RMA and the PWA. This meant it must be exercised on the basis that, if the relevant land is compulsorily acquired and that is challenged by way of an objection, the issue of whether or not the land should be taken will be determined by the Environment Court.[50] The Court continued:
[72] We consider this means the Minister must be satisfied that the proposed taking is capable of meeting the statutory test in s 24(7)(d) that the Environment Court would apply if there was an objection: namely that it is fair, sound and reasonably necessary for achieving the objectives of the network utility operator that the land should be taken. That requires the Minister to have sufficient information to ascertain what the objectives are, and also that there has been appropriate consideration of alternative sites, routes or other methods of achieving those objectives. But we do not consider it is the Minister’s role to decide which of a number of alternatives should be pursued. Rather, it is for the Minister to decide whether the proposal which is the subject of the s 186 application can meet the statutory test.
[49]CA judgment, above n 6, at [70] citing this Court’s decision in Unison Networks Ltd v Commerce Commission [2007] NZSC 74, [2008] 1 NZLR 42 at [53].
[50]At [71].
Later, the Court returned to this issue and commented:
[85] We do not consider that in deciding whether or not to agree to a request under s 186(1) of the RMA the Minister is required to be satisfied that the proposal will definitely meet the requirements of s 24(7) of the PWA. It will be enough if the Minister is satisfied it is capable of doing so. The s 186(1) decision occurs prior to the matter being considered by the Environment Court. If the legislative intent was that both the Minister and the Environment Court were required to be satisfied of the same matters it would be surprising if the statutory regime specified the criteria to be applied at the subsequent stage, but not the former. We think that if that was what was intended, the legislature would have stipulated the considerations relevant to the Minister’s decision, and then said they should also govern the Environment Court’s decision. The Environment Court could then have been placed in a role analogous to its role in determining an appeal in exercise of its functions under the RMA, but that is obviously not what s 24 of the PWA contemplates.
The Court considered that the inquiry into the adequacy of the consideration of alternatives under s 24(7)(b) of the PWA “must embrace the consideration of alternatives by the network utility operator”.[51] It said this Court’s decision in Seaton supported that view.[52] The High Court’s conclusion that the Minister must personally consider alternatives was not in accordance with the statutory scheme.[53] Rather, where a network utility operator is involved, it will assume primary responsibility for considering alternatives.[54] This meant that, while it was open to the Minister to decide there had been inadequate consideration of alternatives, the Minister was not obliged to consider the alternatives.
[51]At [81].
[52]At [77]–[81].
[53]At [82].
[54]At [91].
Accordingly, the Court of Appeal found that the Environment Court’s obligation under s 24(7)(b) was to enquire into whether there had been adequate consideration of alternatives, but not whether the Minister personally had given them adequate consideration.[55] It considered that the summary given by LINZ officials to the Minister of the consideration of alternatives by Top Energy was adequate for the Minister to reach the view that the s 186 applications were capable of achieving a favourable report from the Environment Court in the present case.[56]
[55]At [91].
[56]At [106].
As mentioned earlier, the High Court rejected allegations of defects in the Minister’s decision-making because such allegations were properly within the ambit of judicial review, not an appeal to the High Court from the Environment Court. The Court of Appeal considered that it would be possible for the Environment Court to consider the processes in relation to the Minister’s s 186 decision in an appropriate case (for example, if the unfair process meant there had been inadequate consideration of alternatives). For that to be appropriate, however, it would need to be shown that what had occurred at the s 186 stage had a material impact on the decision to take land that was under consideration by the Environment Court.[57] The Court did not consider any such material impact had been demonstrated.
[57]At [110].
The Court also rejected the appellants’ arguments on issues in respect of which this Court declined leave.[58]
[58]At [111]–[112]. See above at n 8.
The Court of Appeal therefore allowed the appeal and referred the matter back to the Environment Court to finalise the terms of the easements.
Issues
The approved question on which leave was given sets out the key issue in the appeal: what are the role and obligations of the Minister in deciding an application under s 186(1) of the RMA?
That, in turn, gives rise to some more specific issues:
(a)Must the Minister be satisfied at the time of making the s 186 decision that the best of the available alternatives has been selected (having personally considered the alternatives) and that the proposed taking is fair, sound and reasonably necessary for achieving the objectives of the network utility operator?
(b)Is it the function of the Environment Court when considering an objection to a taking of land under s 24 of the PWA to consider and rule on any alleged defects in the process leading to the Minister’s s 186 decision?
(c)Is judicial review of a s 186 decision an available option?
(d)If the Minister’s s 186 decision was unlawful, did the Environment Court report process cure any defects in that decision?
Some preliminary observations
Good faith and reasonableness
In Deane v Attorney‑General, Hammond J said powers of compulsory acquisition must be strictly construed, exercised in good faith, and even-handedly.[59] He quoted the observation of Upjohn LJ in the England and Wales Court of Appeal in Simpsons Motor Sales (London) Ltd v HendonCorp as follows:[60]
The underlying assumption of Parliament is that in conferring compulsory powers upon statutory authorities for public purposes, the acquiring authority will act reasonably in the public interest, that is, not only in the interests of their own ratepayers or shareholders, as the case may be, but with due regard to the interests of the person being dispossessed.
[59]Deane v Attorney-General [1997] 2 NZLR 180 (HC) at 191.
[60]Simpsons Motor Sales (London) Ltd v HendonCorp [1963] Ch 57 (CA) at 83 per Upjohn LJ.
We agree with Hammond J and the observation in Simpsons. Relying on both Deane and the statutory text of s 16(1) of the PWA, the Court of Appeal held in Seaton that the Minister’s land acquisition power is limited by the concept of reasonableness.[61] Takings must be supported by a clear justification to reflect the significant incursion, authorised by the PWA, on private rights. Although this Court arrived at a different conclusion from that of the Court of Appeal in Seaton on the merits in that case, it adopted a similar view of the parameters of the Minister’s power. Land can be “acquired if reasonably required” or “reasonably necessary” for the specified Government work.[62]
[61]Minister for Land Information v Seaton [2012] NZCA 234, [2012] 2 NZLR 636 at [31] and [53], referring to Deane, above n 59, at 191.
[62]Seaton, above n 12, at [47]–[48] per Chambers and Glazebrook JJ. See also at [24] per Elias CJ (holding that the “clear meaning” of s 16(1) is that it is “confined strictly” to takings that are “reasonably necessary for a Government work”). McGrath and William Young JJ wrote that the concept of “required” for the purposes of s 16 must “encompass what is reasonably, and not just absolutely, necessary”: at [73]. The minority’s interpretation of “reasonably necessary” was broader than that of the majority: in the situation that applied in Seaton, the minority considered a taking by the Minister followed by a later transfer to the network utility operator was reasonably necessary.
These values are reflected in the requirement in s 24(7) that a taking of land be fair, sound and reasonably necessary for achieving the objectives of the proposed transferee of the land and, more generally, the powers of the Environment Court as independent reviewer of the process in dealing with an objection under s 24, including a power to, in effect, overrule the Minister’s decision.[63]
Focus of s 24 process
[63]PWA, s 24(10).
This appeal derives from the Environment Court’s report under s 24 of the PWA. So it is that report that is the focus of the present appeal. The principal focus of the Environment Court’s report is the proposed taking of the relevant land under s 23 of the PWA, rather than the Minister’s decision to initiate the PWA process under s 186 of the RMA. The appeal to the High Court was an appeal on a question of law, as is the appeal to this Court. The limited question on which leave to appeal to this Court was granted reflects this. At times, counsel for the appellant, Mr Salmon KC, appeared to challenge factual findings made in the Environment Court’s report. However, when this was put to him, he accepted that the factual findings were not able to be challenged before us.
No judicial review
The appellants did not challenge the Minister’s s 186 decision by way of judicial review. However, the appellants argued that the Environment Court’s consideration of an objection under s 24 of the PWA allowed for an analogous challenge to the Minister’s s 186 decision. We revert to that aspect of the case later.
The Minister’s s 186 decision
Section 186 does not give any guidance as to the matters that must be taken into account by the Minister in making a decision on an application made under that section.[64] However, we agree with both the High Court and the Court of Appeal that this does not mean that the decision is fully discretionary, as the Environment Court suggested.
[64]Other than its description of the qualifying criteria for applicants (a “network utility operator” that is a “requiring authority” in relation to the proposed project or works). For the Minister's s 186(1) discretion to be engaged, the Minister must first be satisfied that the applicant meets the relevant criteria. However, as noted previously, Top Energy’s qualification as a requiring authority is not in dispute. We therefore focus on the factors relevant to the discretion in s 186(1) (“if the Minister of Lands agrees”) to permit the commencement of the PWA process under which land may be acquired or taken.
In Unison Networks Ltd v Commerce Commission, this Court made it clear that public bodies must exercise statutory powers in accordance with the statutes which confer them.[65] The Court added:
[53] A statutory power is subject to limits even if it is conferred in unqualified terms. Parliament must have intended that a broadly framed discretion should always be exercised to promote the policy and objects of the Act. These are ascertained from reading the Act as a whole.
…
[54] Ascertaining the purpose for which a power is given is an exercise in statutory interpretation which is not always straightforward. This is partly because legislative regimes differ in the specificity with which they grant powers. In this area the courts are concerned with identifying the legal limits of the power rather than assessing the merits of its exercise in any case. They must be careful to avoid crossing the line between those concepts.
[65]Unison Networks Ltd, above n 49, at [51].
We apply that approach here. The s 186 decision must be made in accordance with and to promote the policy and objects of s 186 and the statutory scheme of which it is a part. And the Minister must act reasonably. We will address these factors in more detail later.
Appellants’ submissions
Mr Salmon argued that, in making a s 186 decision, the Minister must decide whether to exercise his or her discretion to take or acquire land for the purpose of vesting the land in the requiring authority. He said that requires active engagement with the proposal and required the Minister, at a minimum:
(a)to ascertain the objectives of the requiring authority;
(b)to consider alternative sites, routes or other methods of achieving the relevant objectives; and
(c)to be satisfied the proposed taking would be fair, sound and reasonably necessary for achieving the relevant objectives.
As can be seen, this is effectively a submission that the Minister’s decision under s 186 is a decision to compulsorily acquire land, rather than just to commence the process where that is one possible outcome. And that the Minister must, at the s 186 decision stage, undertake essentially the same exercise as the Environment Court undertakes pursuant to s 24(7) of the PWA when considering an objection to the taking of land.
Mr Salmon emphasised two aspects of the statutory scheme.
The first is that Parliament did not give a power of compulsory acquisition to requiring authorities. Rather, the power was given to the Minister. Mr Salmon argued that Parliament must have assumed that the Minister would take an active role in the process. He said that, when considered in this context, the Minister’s s 186 decision should be focused on the requirements of s 24(7). However, he acknowledged that the Minister will be making a decision based on the information available at the time of the s 186 decision, whereas the Environment Court may be better informed because of information that may have come to light during the processes leading up to the s 24 hearing in the Environment Court. Mr Salmon emphasised that it is the Minister who makes the order for the compulsory acquisition of land under s 23 of the PWA and, if an objection is made, it is the Minister who defends the order in the Environment Court in the hearing under s 24. The requiring authority is not a party to the Environment Court process.
The second aspect is that, even if the s 186 decision is regarded as, broadly speaking, a decision to merely initiate the PWA process, it has important consequences for the landowner concerned. Mr Salmon said once a s 186 decision is made, the landowner is drawn into the PWA process, which can be stressful, time-consuming and costly. While there is provision in Part 2 of the PWA for an agreed sale, the negotiations faced by the landowner are against the background of a potential compulsory acquisition, and so are not willing-buyer/willing-seller negotiations. If an objection is made to a compulsory acquisition order under s 23(3), the Environment Court process under s 24 is costly and can be beyond the means of many affected landowners.
Mr Salmon argued that, in the present case, the Environment Court would have approved the FGT/Sutcliffe Route if that route had been selected at the s 186 decision stage (because the Court considered one of the FGT/Sutcliffe Route and the Objection Route was reasonably necessary to achieve Top Energy’s objectives).[66] He argued that this demonstrated the significance of the s 186 decision in the overall process.
[66]EnvC report, above n 3, at [136].
All of this led to Mr Salmon’s submission that, in making a s 186 decision, the Minister must personally undertake a consideration of the alternatives and must satisfy him or herself that, on the information available at the time of the s 186 decision, the taking would be fair, sound and reasonably necessary. Put another way, he argued that s 24(7) applies to the Minister at the s 186 stage and in reviewing an objection, the Environment Court should treat s 24(7)(b) as if it reads, “enquire into the adequacy of the consideration given by the Minister” to alternatives.
However, in response to questions from the bench, Mr Salmon appeared to accept that it may be legitimate for the Minister to accept the information provided by the requiring authority about its consideration of alternatives if the requiring authority provided detailed and credible information and full disclosure to the Minister and the Minister relied on that assessment.[67] But he said that if it transpired that the process undertaken by the requiring authority was flawed, then the Minister’s decision would be tainted. However, he submitted that, given the information before the Minister from Top Energy was not adequate in the present case, the Minister was obliged to make her own inquiries in the present case rather than rely on Top Energy.
[67]On that view, the Minister is not personally obliged to consider alternatives and can rely on the considerations of the requiring authority. In this case, there was a finding by the Environment Court that the requiring authority’s considerations were adequate: EnvC report, above n 3, at [127]. This means that the Minister’s decision cannot be faulted by reference to s 24(7)(b). However, we will focus in these reasons on the primary submission advanced for the appellants — that the statutory scheme requires the Minister at the s 186(1) stage to personally consider alternatives.
Failure to adhere to the above obligations at the s 186 stage may invalidate any subsequent decision by the Minister to take land under the PWA, even if the Environment Court considered the s 24(7) test was met in relation to the decision to take the land under s 23 of the PWA by reference to up-to-date material(s). Mr Salmon submitted that a defect in the s 186 process that materially influences the decision to commence the PWA process (meaning that a different decision at the s 186 stage might have been reached but for the defect) should lead the Environment Court to set aside or refer back the Minister’s decision to take the land under s 23 of the PWA. Procedural slips or non-material defects having no impact on the s 186 decision will not, on the other hand, justify such a result. In this case, Mr Salmon sought to argue that the Minister’s decision suffered from a material error.
Respondent’s submissions
In his written submissions, counsel for the respondent, Mr Prebble, agreed with the Court of Appeal that the Minister must take account of the factors in s 24(7) when making the s 186 decision. He said the areas of disagreement between the parties were how certain the Minister must be that those criteria are met and what the Minister had to do in relation to the consideration of alternatives. He argued that it was not for the Minister to consider alternatives and determine which was the better of the two alternatives that remained in play at the time of the s 186 decision. Since the requiring authority has the institutional knowledge, expertise, financial information and responsibility to meet the costs of the project and will be undertaking the work required to implement the project, the legislation must contemplate that the requiring authority, rather than the Minister, will evaluate alternatives and choose the better alternative. However, he accepted that, before granting the s 186(1) application, the Minister must be satisfied the requiring authority has adequately considered alternatives.
Mr Prebble supported the Court of Appeal’s formulation of the s 186 power (that the Minister must be satisfied the proposed taking is capable of meeting the statutory test in s 24(7) of the PWA). But he said “capable” could be expressed differently. In his written submissions, he suggested that the Minister must be satisfied, on the basis of the information available to him or her at the time of the s 186 decision, that the proposed taking would be fair, sound and reasonably necessary. In oral argument, he reformulated this in various ways.
Mr Prebble pointed out that the LINZ Standard for the Acquisition of Land under the Public Works Act 1981, which sets out the information that must be provided to the Minister in a s 186 application, requires the applicant to address factors that align with those in s 24(7) of the PWA.
Mr Prebble said the s 186 decision is only the first step the Minister takes, because, under the PWA, there is a required process involving good faith negotiations with the landowner under s 18. If that process does not lead to an agreement then the Minister has to determine whether to exercise the power under s 23 of the PWA. If any information comes to light between the time of the s 186 decision and the time at which a s 23 decision has to be made indicating the requiring authority has not properly considered alternatives or that the taking is not fair, sound and reasonably necessary, then the Minister would not commence the process set out in s 23(1). That process includes publishing a Gazette notice which, among other things, must set out the reasons why the taking of the land is considered reasonably necessary.[68]
Our assessment
[68]PWA, s 23(1)(b)(iii).
Although s 186 is a provision of the RMA, the statutory scheme of which it is a part includes Part 2 of the PWA. Part 8 of the RMA, in which s 186 appears, is principally about designations for public works and heritage orders. Section 186 stands apart from the other provisions, with the exception of the provisions dealing with application for approval as a requiring authority, a status that is required to access the compulsory acquisition regime.[69]
[69]Section 167. However, in most cases the s 186 decision will relate to land subject to a designation. The process for obtaining a designation will involve consideration of alternatives by the requiring authority, and the adequacy of the consideration given may be assessed by the relevant territorial authority: s 171(1)(b). The process may also involve an appeal to the Environment Court, which is also required to have regard to whether adequate consideration has been given to alternatives: s 174(4). All of these steps will have been completed before the application under s 186 is made. So, in such cases, the Environment Court may have decided that there has been adequate consideration of alternative routes before the s 186 process has commenced.
More can be learned about the statutory scheme by an analysis of the process under the PWA that is triggered by a s 186 decision. As noted earlier, the process involves attempts at achieving an agreed outcome, and, in the event that this is not possible, the Minister is empowered to make a decision to take the relevant land under s 23. Section 24 is an important element of the statutory scheme, involving an independent review of the Minister’s decision to take the land by the Environment Court. When making a s 186 decision, the Minister will be aware that the matters of which the Environment Court will need to be satisfied if a compulsory taking eventuates and an objection to the taking is made are those set out in s 24(7), the most relevant of which in this context are the adequacy of the assessment of alternatives and the question as to whether the taking is fair, sound and reasonably necessary.
As noted earlier, and as with any Ministerial decision of this nature, the Minister must exercise the s 186 power reasonably and in accordance with the statutory scheme. The Minister must be satisfied that the party requesting that a s 186 decision be made is, in fact, a requiring authority.[70] But more importantly, the Minister must have regard to s 24 (and, in particular, s 24(7)), which is an important element of the statutory scheme. So in making a decision to set in train the process under Part 2 of the PWA, the Minister has to be satisfied that alternatives have been duly considered. But that does not mean the Minister has to consider alternatives personally or second‑guess the consideration of alternatives that have been undertaken by the requiring authority. We accept Mr Prebble’s submission that, given the requiring authority’s expertise and the detailed work it will have undertaken in relation to the project, it would make no sense for the Minister and his or her officials to be obliged to undertake a parallel process involving a reconsideration of alternatives and of the reasonableness of the proposed acquisition. That is not to say that the Minister and his or her officials should not insist on comprehensive and complete information from the requiring authority before engaging with a s 186 application.
[70]For further discussion, see above at n 64.
As is apparent, we disagree with the High Court Judge’s conclusion that the Minister must personally consider alternatives and her rejection of the observation in Seaton that the Minister is, in effect, acting as agent for the requiring authority.[71] We do not think the reference to “agent” was intended to indicate any formal agency relationship: rather, it reflected the fact that the acquisition of the land in question, although effected by the Minister, is for the benefit of the requiring authority and to achieve its objectives.
[71]See above at [40].
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