Hall v Attorney-General

[2012] NZHC 3615

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2006-404-003321 [2012] NZHC 3615

BETWEEN  JOHN HALLIDAY HALL Plaintiff

ANDTHE ATTORNEY-GENERAL Defendant

Hearing:         18-22 and 27-29 June 2012

Counsel:         A H J Commons for the Plaintiff

H S Hancock and A A Jacobs for the Defendant

Judgment:      21 December 2012

JUDGMENT OF DUFFY J

This judgment was delivered by Justice Duffy on 21 December 2012 at 2.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Counsel:     A H J Commons P O Box 4304 Shortland Street Auckland 1140 for the Plaintiff

Solicitors:    Crown Law P O Box 2858 Wellington 6140 (DX SP20208) for the Defendant

HALL v ATTORNEY-GENERAL HC AK CIV-2006-404-003321 [21 December 2012]

[1]      The plaintiff, John Hall, is the former owner of a block of land, comprising approximately 253 hectares, in the vicinity of Silverdale/Orewa, that was acquired by the Crown under the Public Works Act 1981 as part of the works to realign the Albany to Puhoi section of the State Highway One route north.

[2]      No more than 25 hectares of the Hall land was used for the realignment, which ran through the middle of the acquired land.  What remained of the land on either side of the new road came to be known as the Hall East and the Hall West blocks, depending on their location in relation to the new road.

[3]      In  2004,  the Crown  sold  Hall  East  to Mr Hall,  pursuant  to  s 40  of the Public Works Act 1981, which requires the Crown to offer to sell acquired land that has become surplus to its requirements to the original owner before selling it on the open market.  The Crown accepts that Hall East became surplus to requirements in

1999.

[4]      This proceeding is about how Hall West should be dealt with.   Mr Hall contends that on any proper assessment, Hall West has been surplus to the Crown’s requirements since before May 1999, and definitely since July 2002 when the Crown declared it to be surplus to requirements.   He claims that the Crown is obliged to offer to sell Hall West to him, just as it did with Hall East.  The Crown disputes this and contends that Hall West has only recently become surplus to requirements and, in any event, Hall West has been exempted from the offer-back requirements in s 40 in accordance with a statutory power of exemption given to the Chief Executive of Land Information New Zealand (LINZ) by s 40(2).

[5]      The key questions to be determined in this proceeding are:

(a)       When did Hall West become surplus to requirements?;

(b)      Is the Crown obliged to offer Hall West back to Mr Hall?; and

(c)       If so, was the decision to exempt the land from that requirement made properly?

Whilst those questions may appear relatively straightforward, the assessments of the facts and legal issues on which their answers turn are complex.

Overview of legislation

[6]      The scheme of the Public Works Act provides authority in s 16 for either the Minister or a local authority to acquire land for a Government work or a local work respectively.  Under s 17, the Minister or a local authority is authorised to acquire land for such work by agreement.   If agreement cannot be reached, then, in accordance with s 18, land that is required for “essential works” can be compulsorily acquired.  Even then, the Minister or the local authority must first attempt to acquire the land by negotiation.   If this is unsuccessful, s 18 sets out the process to be followed to achieve compulsory acquisition.

[7]      Section 40 provides for how the Crown or a local authority may dispose of land that is no longer required for public works.  First, the land is declared surplus to requirements of the original acquisition (s 40(1)(a)); secondly, the Crown or local authority decides if the land is acquired for another public work (s 40(1)(b)); if so, it is retained for that purpose.   If the subject land is required for no other public purpose, there is another consideration which may result in it remaining in public ownership (s 40(1)(c)).  But if the land is not required for any of the other purposes provided for in s 40(1), then, save for one exception, it is to be offered back to the original owner, or his or her successor in title (s 40(2)).  When this occurs, failing agreement on price, the price can be determined by the Land Valuation Tribunal (s 40(2A)).  The exception to the s 40(2) process is that the Chief Executive of LINZ may decide to exempt the land from being offered back if he or she is satisfied that one of the two stated grounds for exemption are present.   Section 2 contains definitions for the relevant actors, items and events.

Background

Dealings between Mr Hall and Transit New Zealand

[8]      In the latter part of the last century, pressure to realign the Albany to Puhoi section of State Highway One (ALPURT) was growing, and action was underway to begin this development.  It was one of the responsibilities of Transit New Zealand (Transit),    which    was    a    statutory   corporation    created    by   s    4    of    the Transit New Zealand Act 1989 with responsibility for national roads.  The principal objective of Transit was to promote policies and allocate resources to achieve a safe and efficient transport system that maximised national economic and social benefits.

[9]      Over much the same timeframe, Mr Hall, who had farmed his 253 hectares since the 1970s, was developing a scheme for his land to become a rural multiple housing community.  After some initial setbacks with the local territorial authority, the  Rodney  District  Council,  he  ultimately  obtained  planning  approval  for  his scheme.  However, by then, Transit had realised that part of Mr Hall’s land might be needed for the ALPURT.  One of the proposed routes for the ALPURT crossed the middle of Mr Hall’s land.   He was informed that Transit proposed to place a designation under the Public Works Act on part of his land, this being the first step towards acquiring land under the Public Works Act.  As the ALPURT qualified as an essential work, compulsory acquisition under s 18 of the Public Works Act was possible.

[10]     Mr Hall was initially resistant to his land being taken for the ALPURT.  The proposed route which bisected his land made the balance of the land unsuitable for the plans that he had for it.   His resistance included making objections before the Environment Court to the proposed route affecting his land. There were negotiations between Mr Hall’s solicitors and Transit.  Mr Hall’s stance was that if his land was to be acquired, Transit should acquire all of it.   The proposed route of the ALPURT would put an end to his plans to develop this land.  Transit recognised that Mr Hall would not be able to pursue his rural housing development, if the ALPURT ran through his land.  Its stance was that it would acquire all the land, but Mr Hall had to

agree to forego his “offer-back” rights under ss 40 and 42 of the Public Works Act. Mr Hall was resistant to foregoing these rights.   His solicitors wrote to Transit querying the need for this.

[11]     By 1997, Mr Hall was finding it expensive to hold on to land that he was unsure could be developed as he had planned, and Transit needed certainty regarding the route of the ALPURT.  The hearings in the Environment Court challenging the ALPURT designation recommenced on 10 February 1997.   On 12 February 1997, Transit determined that it would put a revised offer to Mr Hall and he:

was to be advised that Transit was confident that it could secure its designation and that if agreement could not be reached quickly Transit would abandon  further  negotiation  in  favour  of  P  W Act  [Public  Works  Act] compulsory acquisition.

On 13 February 1997, Mr Hall reached an agreement with Transit: it would acquire his land under s 17 of the Public Works Act and, in return, he would be compensated. The agreement included a term by which Mr Hall expressly waived all rights under ss 40 and 42 of the Public Works Act to re-acquire any part of the subject land that was later found to be surplus to Transit’s requirements.  The presence of this term is important because it is one of the things that the Crown now relies on to support its argument that Hall West should be exempt from the offer-back requirements of the Public Works Act.

[12]     The agreement with Transit was conditional on a number of events occurring; none of which occurred.   It provided for Mr Hall to receive compensation for the transfer of the land to Transit.  But as matters turned out, Transit never paid anything to Mr Hall under the agreement.  Nor was the land ever conveyed to Transit pursuant to this agreement.   Given the reliance the Crown now places on this agreement, I propose to return to consider its terms and its legal effect later in the judgment.

Dealings between Mr Hall and the Crown

[13]     On 20 February 1997, Mr Hall entered into a similar agreement with the Crown; it was to acquire his land under s 17 of the Public Works Act, in return for compensation.  Following the execution of this agreement, the land was transferred

to  the  Crown  and,  in  return,  Mr  Hall  received  a  payment  of  compensation  of

$6,100,000.  Unlike the agreement with Transit, this agreement said nothing about Mr Hall relinquishing rights of re-acquisition under ss 40 and 42 of the Public Works Act.

[14]     The later agreement also provided that the Crown’s rights and obligations under the agreement would be exercised by Transit as the entity responsible for constructing  the  ALPURT.    Thus,  Transit  continued  to  be  involved  in  matters affecting this land.

[15]     The parties have different and opposing views regarding the legal status of this agreement.  Mr Hall contends that it is the sole repository of the terms on which he parted with his land.  The Crown contends that it should be read in conjunction with the earlier agreement with Transit.   I will return to these issues later in the judgment.

Sale of Hall East

[16]     There is no dispute Hall East became surplus to the Crown’s requirements; it was sold back to Mr Hall in 2004, in accordance with the Public Works Act’s requirements.   Under the Public Works Act, the sale price for land that is offered back to an original owner is the market value of the land at the time when it first became surplus to the Crown’s requirements.  As occurred here with Hall East, this occasion can be earlier in time than the time when the Crown actually comes to sell the land, which can result in the Crown having to sell land to a former owner at a price that may be well under its current market value.  The Crown has acknowledged in its closing submissions that Hall East became surplus to requirements in 1999. Because the parties were unable to agree on price, Hall East was sold on the basis the price would  be determined by the  Land Valuation Tribunal, in accordance with s 40(2A).

[17]    On re-acquiring Hall East, Mr Hall immediately transferred this land to Eastwood Farms Limited (Eastwood) under a sale and purchase agreement that he had entered into before the re-acquisition.  Eastwood then sold the land on the open

market for a far higher price than the Crown  received from Mr Hall.   He has similarly committed himself to Eastwood regarding the Hall West land.  The Crown is well aware that if Mr Hall purchases Hall West from it at a price based on a historic value relating to when the land first became surplus, the land will be immediately transferred to Eastwood and it will be free to sell the land at today’s value.

Role of Eastwood in Hall West

[18]     There has been a serious ongoing dispute between the parties since 2002 regarding whether Hall West is surplus to the Crown’s requirements and, if it is, when it became so.   This proceeding was commenced in 2006.   Throughout the course of the proceeding, decisions relating to it have been made by Eastwood on behalf of Mr Hall, pursuant to a power of attorney that he gave to Eastwood in 2002. Under this power of attorney, Mr Hall has agreed that contemporaneously with Mr Hall acquiring any surplus land from the Crown, he will transfer the land to Eastwood.   This arrangement is similar to that which was applied by the former owner of the land acquired under the Public Works Act in The Sisters of Mercy (Roman  Catholic  Diocese  of  Auckland)  Trust  Board  v  Attorney-General  HC Auckland CP219/99, 6 June 2001.   While the proceeding is brought in Mr Hall’s name, it is Eastwood that has the real interest in the proceeding’s outcome. Throughout this judgment I have referred to Mr Hall whenever I intend to refer to the plaintiff and those associated with his interests, even though some of the acts and events actually were done by, or associated with Eastwood.

Department of Conservation’s interest in Hall West

[19]     The Hall land included areas of native flora and fauna that were of interest to the Department of Conservation (DoC).  Those areas formed part of a wider area of land that DoC considered were at risk from the construction of ALPURT.  This area was referred to as Recommended Area for Protection (RAP) 21.   On 15 August

1996, the Minister of Conservation entered into an agreement with Transit and the Auckland Conservation Board regarding steps to protect RAP 21 from the damaging effects of the ALPURT.  DoC’s interest in the part of the Hall land that came within

RAP 21 was first made apparent at this time.  Later in 2002, DoC’s concern to see the Hall RAP 21 land protected was a factor affecting the disposal of the Hall land. Eventually, in 2006, DoC secured the protection of the part of Hall West that was within RAP 21.  I will return to this later, as the four years that it took for DoC to secure this protection impacted on the potential disposal of Hall West.

The terms on which Mr Hall sold his land to the Crown

[20]     Identifying the terms on which Mr Hall sold his land to the Crown rests on the view that is taken of the legal effect of the two agreements he signed in February

1997.  Each agreement has similarities and dissimilarities with the other.

Transit agreement

[21]     The first agreement (13 February 1997) was with Transit.   This agreement comprised expressed terms in a document titled “heads of agreement”, as well as the terms of two other standard form contracts insofar as their terms were consistent with those set out in the heads of agreement.   One of these contracts was a LINZ agreement for sale and purchase which was attached as annexure 1, and the other was clauses 4, 6, 10 and 13 of the REINZ-NZLS agreement for sale and purchase

6th ed, 2 May 1995.  I will refer to these as the Transit agreement.

[22]     The Transit agreement identifies the parties to the contract as being Mr Hall and Transit.  The introduction section of the agreement records the history between those persons, including Transit, being responsible for developing a new state highway, namely ALPURT, and having taken steps to have designations under the Public Works Act placed on the land needed for this project.  There is also reference to Mr Hall having appealed to the Environment Court against Transit’s actions.

[23]     The agreement goes on to record that Mr Hall has requested his land be acquired under the Public Works Act and that Transit has offered to pay him the compensation set out in the agreement, in return for Mr Hall abandoning his appeal to the Environment Court and transferring his land to Transit.

[24]     At the time, Transit was keen to progress the development of the ALPURT. Securing Mr Hall’s land and the withdrawal of his legal challenge to the route Transit proposed to follow was essential if Transit was to progress with its plans.

[25]     The agreement identified Transit as the party acquiring Mr Hall’s land.  The

acquisition was subject to the following conditions:

(a)      Transit was to pay a deposit of $750,000 within a specified timeframe following the agreement becoming unconditional, pursuant to cl 1.1.6, or such earlier date as the parties agreed;

(b)The settlement date for the balance of the compensation payable to Mr Hall was 30 working days from the satisfaction of cl 1.1.6, or such earlier date as the parties agreed;

(c)      Compensation  payable  pursuant  to  cl  2  was  to  be  paid  within  a specified timeframe; and

(d)On  the  agreement  becoming  unconditional,  Mr  Hall  agreed  to withdraw his appeals in the Environment Court and to take no further steps to oppose the roading developments planned for the area by Transit or the Rodney District Council.

[26]     The agreement was conditional upon a number of events being waived or satisfied by 14 February 1997, these being:

(a)      Other appellants withdrawing their appeals against the same roading developments, or Transit giving notice that it had waived this requirement;

(b)      The  appeals  being  allowed  in  part  on  conditions  satisfactory  to

Transit; and

(c)      Transit   waiving   its   rights   of   appeal   against   decisions   of   the Environment    Court    relating    to    Transit    and    the    Rodney District Council’s requirements.

[27]     Under  cl  2,  Mr  Hall  was  to  be  paid  “compensation  ...  pursuant  to  the Public Works Act”, of $5.7M for the land and improvements, and two additional sums of $400,000 each to cover costs arising from the abandoned appeals.   The agreement made provision for interest for late settlement and for the parties to go to arbitration on certain issues, should a dispute on those issues arise between them.

[28]     The agreement contained a specific clause (4.1) in which Mr Hall agreed to waive his rights under the Public Works Act and, in particular, the rights under s 40 and s 42.

[29]     There were a number of other clauses relating to other persons who were connected with Mr Hall and his land.  Certain specified land was excluded from the agreement and was to remain in Mr Hall’s ownership.

The LINZ agreement

[30]     The second agreement was with the Crown (20 February 1997).  The parties were identified as Mr Hall and Her Majesty the Queen.  I shall refer to it as the LINZ agreement, as it was the Minister of Works who executed the agreement on behalf of Her Majesty the Queen.  Under this agreement, Mr Hall offered to sell his land to the Crown for the sum of $6.1M, plus goods and services tax, if any.   The offer was subject to the conditions set out in the attached schedules A and B.

[31]     Under  this  agreement,   Mr  Hall  agreed  to  the  land  being  taken   by proclamation or declaration under the Public Works Act and to accept the nominated sum in full settlement of compensation.

[32]     Schedule A contained standard clauses covering such things as acquisition of title, possession, rates, mortgagees’ statements, and insurance.  It also contained cl 6 in which Mr Hall expressly acknowledged that until the Crown accepted in writing,

the contract only constituted an offer to sell to the Crown, and its acceptance by the Crown was not to be anticipated, nor was Mr Hall to enter into any consequential commitments in reliance on the Crown accepting the offer.

[33]     Schedule B set out the specific conditions relating to the transaction.  These were as follows:

(a)       As the entity responsible for developing the ALPURT, Transit was to

exercise the Crown’s rights and obligations under this agreement;

(b)The agreement was conditional on the heads of agreement between Transit and Mr Hall becoming unconditional as to conditions 1.1.6(a), (b) and (c);

(c)       Mr  Hall  and  the  Crown  acknowledged  that  the  compensation  of

$6.1M was made up of $5.7M for the land and improvements and the balance of $400,000 being entitlements relating to the abandoned appeals;

(d)A deposit of $570,000 was to be paid within five working days of the heads of agreement of 13 February 1997 (which was annexed) becoming unconditional; and

(e)      The  conditions  went  on  to  provide  for  the  ascertainment  of  the settlement date, interest and how the rights of others who had grazing rights over the Hall land would be dealt with.   Payment of the compensation was subject to Mr Hall taking certain steps regarding subdividing the portion of land he was to retain.  Otherwise, title was to pass to the Crown.

The agreement in cl 7 inserted clauses 4.0, 6.0, 10.0 and 13.0 of the

REINZ and NZLS sale and purchase agreement 6th edition.

Comparison of the two agreements

[34]     When the two agreements are compared, it is clear that the same land was being offered for sale.  Each agreement was framed on the basis of Mr Hall offering his land for acquisition under the Public Works Act.  The amount of compensation in each agreement was substantially the same.  One of the sums of $400,000 in the first agreement was not paid, but its payment was conditional from the outset.   Each agreement incorporated the specified clauses of the REINZ and NZLS standard form agreements.

[35]     Significantly, in each agreement, the purchaser was different.   The Transit agreement   contained   express   provision   waiving   a   seller’s   rights   under   the Public Works Act, including those in ss 40 and 42, whereas the agreement with the Crown said nothing about this.  The LINZ agreement incorporated clauses 1.1.6(a), (b) and (c) of the Transit agreement but was otherwise silent about the terms of the Transit  agreement.    The Transit  agreement  expressly  included  the  terms  of  the standard form LINZ agreement for acquiring land under the Public Works Act where those terms were not inconsistent with the terms in the “Heads of Agreement”.  But the Transit agreement  made no reference to the later execution of any separate agreement with LINZ for the Hall land.

[36]     The provision for payment of a deposit in the LINZ agreement was separate from the deposit required in the Transit agreement.  No funds were advanced under the Transit agreement.  The compensation that Mr Hall actually received was paid by the Crown.

Has Mr Hall relinquished his “offer-back” rights under ss 40 and 42 of the

Public Works Act?

[37]     The  Crown  contends  that  Mr  Hall  relinquished  his  rights  under  the Public Works Act to have the land offered back to him.  The Crown also contends that Mr Hall’s willingness to agree to a term to this effect in the Transit agreement is a relevant consideration that the Chief Executive could take into account in deciding

to exempt Hall West from the offer-back process.   On the other hand, Mr Hall contends that the term in the Transit agreement to relinquish offer-back rights was not  something  that  he  was  happy  with;  that  Transit  had  insisted  on  it;  that, fortunately, the land was sold to the Crown, not to Transit, and the agreement with the Crown left his offer-back rights under the Public Works Act intact.  Since he did not relinquish these rights, he contends that his earlier willingness to do so is irrelevant to any consideration by the Chief Executive to exempt Hall West from the offer-back process.

[38]     A key issue to be resolved is whether the Crown and Transit should be viewed as separate entities, or whether they can be treated as the same entity for the purposes of the two agreements.  Another key issue to be resolved, if Transit was acting as a separate entity, is whether it had the necessary statutory authority to enter into the Transit agreement.  I propose to deal with the latter issue first.

Did Transit have authority to acquire the Hall land on its own behalf?

[39]     Transit was created by the Transit New Zealand Act 1989.  Transit no longer exists  under  the  present  law,  as  it  has  now  merged  with  the  New  Zealand Transport Authority.  The Transit New Zealand Act was substantially repealed by the Land Transport Management Amendment Act 2008, which, amongst other things, pursuant to s 47, changed the name of the Transit New Zealand Act to the Government Roading Powers Act 1989.  As at 1997, which is the relevant time for understanding  the  Transit   agreement,   the  legislation   was   called   the  Transit New Zealand Act.  For ease of reference and because the references to the relevant provisions in the legislation have remained the same, I propose to use the Act’s original title.

[40]     Under s 4 of the Transit New Zealand Act, Transit was constituted as a body corporate having authority to acquire, hold and dispose of land.  Its functions were set out in s 6.   One of its functions under s 6 was to “control the State highway system, including planning, design, supervision, construction and maintenance”, in accordance with the Transit New Zealand Act.  Under s 7A, Transit was given the powers of a natural person.

[41]     The Crown argues that Transit had the power to enter into a contract with Mr Hall for the purchase of his land.  However, for the reasons outlined below, I cannot accept this argument.

[42]     The Transit agreement purports to provide for Transit to acquire the Hall land as a public work.  The document is titled “Heads of Agreement for Public Works Act Compensation”.   The introduction refers to Transit’s statutory role, including its responsibility for the State highway system and Mr Hall’s land being required by Transit for the future construction and operation of a proposed State highway.  The introduction also refers to Mr Hall requesting that his land be acquired pursuant to the Public Works Act.   Under cl 2, the document states that “Transit” will pay compensation to Mr Hall under the Public Works Act.  Thus, I am left in no doubt that under the Transit agreement, Transit purported to acquire Mr Hall’s land for a public work under the Public Works Act.   I also consider that the way in which Transit framed this agreement precludes the agreement from being seen as no more than an ordinary commercial contract for the purchase of land.

[43]     It was suggested to me by one of the Crown’s witnesses, Peter Graham, during the trial that Transit could have acquired the Hall land under the Public Works Act.  This was based on Mr Graham’s view that Transit met the definition of a local authority in s 2 of the Public Works Act.   I have no doubt that Transit had the necessary power  to  purchase  or  otherwise  acquire  land  in  the  way that  natural persons may do, but that is different from acquiring land for a public work under the Public Works Act.  From my reading of the Public Works Act, it is not apparent to me that Transit had the authority to acquire land for public works: my reasons are set out below.

[44]     Transit is not expressly referred to in the Public Works Act as having the power to acquire land under this Act.   Whilst it met the definition of a “Crown entity” in s 2 of the Public Finance Act 1989, under the Transit New Zealand Act, Transit had its own legal personality which made it legally separate from the Crown. Accordingly, the references in the Public Works Act to the Crown and to Ministers of the Crown cannot be read to include Transit.

Could Transit be considered a local authority with powers under the Act?

[45]     The Public Works Act did expressly refer to Transit but this was only where s 116(4) and the fourth schedule to the Transit New Zealand Act had amended the Public Works Act to substitute references to the National Roads Board for references to Transit.   However, the provisions involving those substituted references did not vest Transit with power to acquire land for public works.

[46]     As a corporate body having statutory responsibility for the construction of the State highway system, Transit might appear to meet the definition of a “local authority” under s 2 of the Public Works Act as this definition included “any other person or body, however designated, having authority under any Act, to undertake the construction ... of any public work”.  Under s 2, “public work” is defined to mean “every work which the Crown or any local authority is authorised to construct, undertake, establish, operate or maintain ...”.  Under the Transit New Zealand Act, Transit had the authority to construct the State highway system.    However, the Public Works Act further defines a public work by defining “government work” and “local work”.  Under those definitions, a “government work” is a work constructed or intended to be constructed “by or under the control of the Crown” and a “local work” is a work “constructed or intended to be constructed by or under the control of a local authority.

[47]     I have difficulty viewing Transit and the State highway system as a local authority and a local work respectively.   First, because s 2 and other parts of the Public Works Act expressly refer to Transit.  If Transit were a “local authority” under the Public Works Act, there would have been no need to refer expressly to Transit in parts of the Act.  In accordance with the principle inclusio unius est exclusio alterius, these express references to Transit and the State highway system lead me to conclude that Parliament did not intend the more general references to “local authority” and “local work” to be applied to Transit and to the State highway system.   Secondly, s 44 of the Transit New Zealand Act confirms that State highways are vested in the Crown and not in Transit, which is not consistent with viewing Transit as a local authority having responsibility for the construction of local works.  Thirdly, Transit being a Crown entity for the purposes of the Public Finance Act is not consistent

with  viewing it  as  a local  authority for the purposes  of the Public Works Act. Finally, in New Zealand Fire Service Commission v Manukau City Council [2006] NZRMA 123 (CA), the Court of Appeal at [37]-[39] adopted an interpretation of “local authority”  and “local work” that excluded bodies that did not have local or regional jurisdictions and with members who were not to some extent elected (emphasis added):

[37]      As Robertson J noted, the definitions of “local authority” and “local work”  are  tautologous.  In  effect  the  Commission  said  it  is  not  a  local authority as defined because it does not have authority to undertake the construction or execution of any public work (i.e. local work) and that it does not have the power to construct any local work because it is not a local authority.

[38] A similar tautology arises in the definition of “local work”, which refers to the term “work” which is defined as being identical to “public work”. Thus, applying the definitions, a work is a local work that a local authority is authorised to construct etc., and a local work is a work which has been constructed etc., by a local authority. The challenge of interpretation in the present case is how to sensibly penetrate these ever decreasing definitional circles.

[39] There is real difficulty in applying the generic wording at the end of definition of “local authority” in this case, because of the tautologous drafting.    Because  of  that,  we  think  it  is  appropriate  to  consider  the definition of local authority by reference to the normal meaning of that term (particularly the use of the term “local” which appears to exclude bodies having national jurisdiction) and to interpret the generic words in the light of the categories of specific bodies identified earlier (i.e. apply the ejusdem generis maxim). We accept Mr Knight’s submission that the genus of those categories of bodies is bodies having only local or regional jurisdiction and with members who are, at least to some extent, elected. We do not accept Mr Frogley’s submission that the Commission can be considered to be part of this genus.

[48]     Under the Public Works Act, the power to acquire land for a government work is restricted to the Minister nominated in the Public Works Act, and the power to acquire land for local works is restricted to local authorities.  I have been unable to find any source of power in the Public Works Act that would have enabled Transit in its own right to acquire the Hall land under this Act.

Other evidence of Transit’s lack of authority to acquire land

[49]     Documents produced in evidence at this trial support the view that Transit had no power to acquire land under the Public Works Act.  I was taken to a document

titled “Transit New Zealand Process for Acquisition & Disposal of Property version

1.0 October 1998”. Although dated a year later than the acquisition of the Hall land, a witness from Transit gave evidence that the policy expressed in this document was in operation in 1997.  In the section dealing with property acquisition, the document records that “Transit primarily purchases property under the Public Works Act in the name of the Crown”.  I could find nothing in the document to suggest that Transit could purchase property under this Act on its own account and in its own name. Another Transit-generated document that seeks approval for a policy for the compulsory acquisition of land records that Transit’s property acquisitions are undertaken by the Department of Survey and Land Information.   There are other documents to similar effect.  Whilst these documents refer to a policy whereby the Crown acquires land under the Public Works Act for Transit to then use for its purposes, none of the documents recognise that the law allowed Transit to acquire land under the Public Works Act in its own right.

[50]     My analysis leads me to conclude that under the Transit New Zealand Act, Transit had all the powers that natural persons have to negotiate for and to acquire land.  But I am satisfied that Transit did not have power to acquire land under the Public Works Act.  This means that acting on its own behalf, Transit had no authority to acquire the Hall land under the Public Works Act.  It follows that Transit also had no authority to negotiate for the exclusion of statutory rights that the Public Works Act gives to persons whose land is acquired under its provisions, nor did it have authority to impose terms on Mr Hall that excluded his offer-back rights under ss 40 and 42 of the Public Works Act.  Insofar as Transit purported to acquire the land for itself under the Transit agreement and to exclude Mr Hall’s offer-back rights under the Public Works Act, Transit’s actions were ultra vires and so of no legal effect. This finding has significance for when it comes to considering the terms on which Mr Hall sold his land to the Crown under the LINZ agreement.

Was Transit acting as an agent of the Crown in acquiring the land on its own behalf?

[51]     If Transit were to be seen as contracting merely as an agent of the Crown, in law, the contracting parties of the two agreements might arguably be the same.  This would overcome any notion of Transit acting ultra vires as its conduct would have

been on behalf of the Crown, rather than for Transit’s own behalf.   This might provide a basis for the Crown to argue that the waiver of the offer-back rights in the Transit agreement could be read into the LINZ agreement.

[52]     I  begin  this  analysis  by  first  defining  the  nature  of  the  work  and  then considering the requirements that must be met for a contract to acquire land for a public work to be valid.  The LINZ agreement for the acquisition of the Hall land accords with the definition of a “Government work”.   First, a State highway is defined in s 2 of the Public Works Act to mean a State highway declared under s 60 of the Transit New Zealand Act.  Under this definition, a State highway could not be a “local work”, which, by a process of elimination, leads to it being a Government work.  Secondly, the construction of ALPURT, although by Transit, was undertaken for the Crown.  Thirdly, under s 44 of the Transit New Zealand Act, State highways are vested in the Crown.  Thus, I consider that land being acquired for a new State highway can only be considered to be a Government work.

[53]     Under s 4A of the Public Works Act, the Minister of Lands is given the power to acquire land for Government works and to settle the purchase price or compensation therefor :

4A      Powers of Minister of Lands

Without limiting the powers conferred on the Minister of Lands by any other

Act, the Minister of Lands shall have power to—

(a)       Acquire   any   land,   building,   or   structure   required   for   any Government work, to settle the purchase price or compensation therefor, and to administer, develop, improve, transfer, or dispose of any such property:

…

[54]     Under s 4B of the Public Works Act, every contract or instrument relating to Government work must be entered into in the name of the Crown and may be executed by a Minister of Lands or his authorised representatives (emphasis added):

4B      Execution of contracts for public works, etc

...

(2)       Every contract, deed, or other instrument relating to land acquired or to be acquired by the Crown under this Act, unless otherwise expressly provided in this or any other Act, shall be entered into in the name of the Crown and may, notwithstanding anything to the contrary in any other Act, be executed on the Crown's behalf by the Minister of Lands, or by any person or office holder authorised by the Minister in that behalf, either generally or in respect of any specified contract, deed, or instrument or of any specified class or classes of contracts, deeds, or instruments.

...

(4)       All such contracts may be varied and discharged in the same manner respectively.

[55]     Mr Hall’s argument is that although a government entity, there is no evidence to show that Transit at the time was acting on behalf of the Crown.   Instead, the evidence shows that Transit was acting as a separate entity purporting to acquire the land in its own right; hence, the absence in the Transit agreement of any reference to the Crown.

[56]     Unlike other types of agents that might play different roles outside of an agency relationship, Transit was a creature of statute and so it had to exercise its authority in accordance with its statutory functions and purposes.  As this involved managing and constructing the State highway system on behalf of the Crown, in a general sense, it is arguable that, even if it contracted under its own name, it might be seen as acting under the authority of the Crown, despite the contract not explicitly saying so.

[57]     However, a contract to acquire land under the Public Works Act is a specific type of contract.  The authority to enter into such contracts is to be sourced to the Public Works Act’s provisions, rather than the general authority provided to Crown agents from other sources.

[58]     Section 4B mandates that contracts to acquire land under the Public Works Act are entered into in the name of the Crown, unless provision to the contrary is expressly provided for in the Public Works Act, or in any other Act.   Neither the Public Works Act nor any other legislation expressly permitted Transit to enter into these contracts under its own name.

[59]     Section   4B   also   mandates   that   contracts   to   acquire   land   under   the Public Works Act are executed for the Crown by the Minister of Lands or any person authorised by the Minister to do so either generally or under any specified contract, deed or instrument.   The Transit agreement was not executed by the Minister of Lands; nor was I shown anything to establish that Transit had his authorisation to execute such contracts on his behalf.   I did, however, find references in Transit documents that were produced in evidence to a Cabinet Office Instruction of 1988 to the effect that property acquisitions for Transit were to be undertaken by the Department of Survey and Land Information and that this instruction was reaffirmed by the Minister of Transport in April 1990.  This, coupled with the absence of any evidence showing a change of policy, leads me to conclude that as at 1997, Transit had no delegated authority to execute contracts on the Minister’s behalf for the Crown to acquire land from Mr Hall under the Public Works Act.  Thus, the Transit agreement can be distinguished from an agreement made either by or on behalf of the Crown under the Public Works Act.

[60]     It follows that Transit could not on behalf of the Crown lawfully contract with Mr Hall to exclude statutory rights available to him under the Public Works Act. If those rights were to be relinquished by contract, I consider that the proper party to any such contract was either the Minister of Lands or someone acting with the necessary authority on his behalf.

[61]     Thus, I am satisfied that when it came to the sale of the Hall land, Transit and the Crown cannot be treated as agent and principal.  This means that when it comes to the Crown’s argument that the waiver of offer-back rights in the Transit agreement is a benefit that the Crown can enjoy, it faces significant problems.  An ultra vires condition cannot be read into the LINZ agreement.

[62]     However,  in  case  I  am  wrong  in  concluding  that  Transit’s  actions  in purporting to contract with Mr Hall were unlawful, I propose to put this issue to the side and to see if the law of contract has any way of saving the Transit agreement.

Contracts (Privity) Act 1982

[63]     The Contracts (Privity) Act 1982 allows a third party to potentially benefit from the agreement of two parties, but, as stated in s 4 of this Act, the agreement must specifically designate the third party as a beneficiary.   Here, the Transit agreement does not specifically designate the Crown as a beneficiary.  Instead, the language of the Transit agreement appears to grant the waiver of the offer-back rights for Transit’s own benefit.   Once Transit and the Crown are viewed as separate entities, taking the best view of the Transit agreement for the Crown’s case, this agreement is at least ambiguous as to whose benefit the waiver is granted; so, for this reason, the requirements of s 4 are not met.  This is another reason for not reading the waiver into the LINZ agreement.

[64]     Alternatively, if I am wrong regarding the separate legal character of Transit and the Crown, and here Transit was acting as the Crown’s authorised agent so that the Transit agreement is properly seen as a precursor to the LINZ agreement, the Crown faces other problems in having the waiver clause incorporated into the LINZ agreement.

Merger

[65]   The well-established parol evidence rule states that parol evidence is inadmissible to add to, vary or contradict the terms of a written contract.  This rule includes preliminary written contracts which are later embodied in formal deeds.  In this case, the LINZ agreement is established to be the main contract; so, on the face of it, the Transit agreement, as merely extrinsic evidence, should not be able to vary it.   For example, in Leggott v Barrett (1880) 15 ChD 306 (CA) at 309, James LJ stated that:

[I]f parties have made an executory contract which is to be carried out by a deed afterwards executed, the real completed contract between the parties is to be found in the deed, and that you have no right whatever to look at the contract, although it is recited in the deed, except for the purpose of construing the deed itself. You have no right to look at the contract either for the purpose of enlarging or diminishing or modifying the contract which is to be found in the deed itself.

[66]     James LJ went on to state at 311 that:

[W]here there is a preliminary contract in words which is afterwards reduced into writing, or where there is a preliminary contract in writing which is afterwards reduced into a deed, the rights of the parties are governed in the first case entirely by the writing, and in the second case entirely by the deed; and if there be any difference between the words and the written document in the first case, or between the written agreement and the deed in the other case, the rights of the parties are entirely governed by the superior document.

[67]     This  application  of  the  parol  evidence  rule  is  known  as  the  doctrine  of merger.  These principles have been accepted by the Privy Council in Knight Sugar Co Ltd v Alberta Railway & Irrigation Co [1938] 1 All ER 266 (PC), and by the High Court in Hammond v Commissioner of Inland Revenue [1956] NZLR 690 and Strathmore Group Ltd v Hanson HC Auckland CP188/89, 8 February 1991.

[68]     However, the parol evidence rule is only valid if the entire agreement has been reduced to a contract in writing.  For example, if a contract is partly oral, partly written, the rule does not apply to exclude the oral terms.   In Palmer v Johnson (1884) 13 QBD 351 at 357, such an exception was equally applied to sale of land contracts where there are two written contracts:

Now it is commonly said, that where there is a preliminary contract for sale which has afterwards ended in the execution of a formal deed, you must look to the deed only for the terms of the contract, but it seems to me one cannot lay down any rule which is to apply to all such cases, but must endeavour to see what was the contract according to the true intention of the parties. Suppose the parties should make a parol contract, with the intention that it should afterwards be reduced into writing; and that that which is reduced into writing shall be the only contract, then, of course, one cannot go beyond it; but if they intend, as they might, that there should be something outside such contract, they might agree that that should exist, notwithstanding it was not in the contract which was put into writing. In the same way, when one is dealing with a deed by which the property has been conveyed, one must see if it covers the whole ground of the preliminary contract. One must construe the preliminary contract by itself, and see whether it was intended to go on to any, and what, extent after the formal deed had been executed.

[69]     Even if I put to the side the finding of ultra vires, if Transit and the Crown are separate entities, the clear problem with trying to claim an exception to the parol evidence rule/merger doctrine is that here, the two separate contracts were actually entered into by two different parties.   On no proper construction of one contract could an agreement made with a separate party be considered part of the contract as

well, without first incorporating those terms.   Here, the LINZ agreement only incorporates conditions 1.1.6(a), (b) and (c) of the Transit agreement.

[70]     Even if Transit and the Crown are viewed as the same entity, which I do not consider is legally possible, the Crown faces difficulties with an argument based on merger.  As stated in Attorney-General of Belize v Belize Telecom Ltd [2009] UKPC

10, [2009] 1 WLR 1988 at [17], the most usual inference where nothing is stated is that nothing is to happen:

If the parties had intended something to happen, the instrument would have said so.  Otherwise, the express provisions of the instrument are to continue to operate undisturbed.

[71]     According to these principles, the parties, by specifically stating that only conditions 1.1.6(a), (b) and (c) are incorporated, have by implication excluded the rest  of the  agreement.    Indeed,  as  Mr  Hall  points  out,  one explanation  for the extensive duplication between the LINZ agreement and the Transit agreement might be because all of the operative provisions that were intended to be part of the contract were supposed to be found in the LINZ agreement.  Otherwise, the LINZ agreement could have simply incorporated the Transit agreement.

Collateral contract

[72]     Alternatively, another argument is that the Transit agreement was not strictly speaking part of the LINZ agreement, but a collateral contract.  Again, consideration of this argument requires putting the ultra vires finding to the side.   In Heilbut, Symons & Co v Buckleton [1913] AC 30 (HL) at 47, Lord Moulton said this about collateral contracts:

It is evident, both on principle and on authority, that there may be a contract the consideration for which is the making of some other contract. “If you will make such and such a contract I will give you one hundred pounds”, is in every sense of the word a complete legal contract. It is collateral to the main contract but each has an independent existence, and they do not differ in respect of their possessing to the full the character and status of a contract.

The Privy Council did also say, however, that:

[S]uch collateral contracts, the sole effect of which is to vary or add to the terms of the principal contract, are therefore to be viewed with suspicion by the law. They must be proved strictly. Not only the terms of such contracts but the existence of an animus contrahendi on the part of all the parties to them must be clearly shown.

Also, a feature of collateral contracts is that they should sit comfortably with and complement the main contract.  If the terms of the side contract are inconsistent with the main contract, that would logically point against it being a collateral contract.

[73]     Here, if the Crown and Transit are treated as separate entities, then it is clear that the Transit agreement was about Transit’s acquisition of the land, whereas the LINZ agreement was about the Crown acquiring the land.   They cannot both be effective, as there is only one piece of land. This indicates that the Transit agreement cannot  have been  intended  to  sit  alongside  the  LINZ  agreement  as  a  collateral contract.

[74]     Even if Transit and the Crown are treated as the same entities, there is only executory consideration to support the Transit agreement, as the consideration expressed in the agreement was not paid.   The terms of the Transit agreement are unusual in that they are framed as a written offer by which Mr Hall offers to sell his land to Transit, and Transit is under no legal obligation to accept the offer.  There is no suggestion in the Transit agreement that this process would be replaced by a separate process along the same lines whereby Mr Hall made a written offer to the Crown to sell the land, which the Crown was free to accept if it chose.  The Crown argued that the Transit agreement can be interpreted in a way that sees the attached annexure 1 (a standard form LINZ agreement) to that agreement as constituting its consideration.   I do not agree.   Annexure 1 does no more than form part of the Transit agreement.   There is nothing in the Transit Agreement to suggest that the parties to it were committed to enter into a further contract regarding the Hall land, whether based on annexure 1 or otherwise.  In the circumstances, I cannot see how the subsequent offer to the Crown, which is not alluded to in the Transit agreement, could nevertheless constitute consideration for the Transit agreement, thus allowing it to be seen as a collateral contract.

Pre-contractual negotiations

[75]     This leaves an argument that the Transit agreement can be viewed as pre- contractual negotiations which should be implied into the LINZ agreement.  Again, in order to explore this argument, it is necessary to put the finding of ultra vires to the side.

[76]     As  the drafter of the  LINZ  agreement,  Mr Peter Graham  gave evidence regarding what he intended that agreement to mean and how he saw it relating to the earlier Transit agreement.  Such evidence is not admissible to interpret a contract.  In Pyne Gould Guinness Ltd v Montgomery Watson (NZ) Ltd [2001] NZAR 789, the Court of Appeal said, at [29], that a proper approach to take to interpreting a contract was to consider the words of the contract, ascertain their natural and ordinary meaning in the context of the document as a whole and then to use the factual background to cross-check whether some or other modified meaning was intended. However, when interpreting a contract against the factual matrix, it is not for the Court to take into account what the parties intended the contract to mean or what they thought it meant. As was recognised in Pyne Gould Guinness Ltd at [17]:

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification.

[77]     While   declarations   of   subjective   intent   still   remain   inadmissible,   in New Zealand,  there  is  a  changing  trend  toward  the  parol  evidence  rule  in interpretation of contract where it now appears that pre-contractual negotiations can be considered as part of the contractual interpretation exercise.  In Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444, Tipping J in the Supreme Court recognised that:

[t]o be properly informed the court must be aware of the commercial or other context  in  which  the  contract  was  made  and  of  all  the  facts  and circumstances known to and likely to be operating on the parties’ minds.

This suggests that objective evidence of pre-contractual negotiations, like the Transit agreement, might also be admissible evidence to interpret the true meaning of the LINZ contract.

[78]     But, even if the Transit agreement were to be considered relevant evidence of pre-contractual negotiations as to the parties’ intentions, the statements in Vector are cautious, and I do not think that they go so far as to affirm that pre-contractual negotiations can be used to imply a term into the LINZ contract.  Yet if the waiver cannot be said to be part of the LINZ agreement and the other arguments do not apply, the only way for the waiver to survive into the new agreement is for that term to be implied into the agreement.

[79]     Traditionally, terms are only implied into a contract out of necessity to enable business efficacy: see for example, The Moorcock (1889) 14 PD 64. However, there is recent authority that terms may be implied under the broad umbrella of “interpreting” a contract. In Attorney-General of Belize at [18], the Privy Council merged the concept of implication with interpretation, stating that “the implication of a term is not an addition to the instrument.  It only spells out what the instrument means”.  Rather than relying on established tests to imply terms, the Privy Council noted that those tests should be regarded as a collection of different ways to express the central idea that the proposed implied term must spell out what the contract actually means.

[80]     On this test, implication of a term is merely an exercise in interpretation.  As such, if it is permissible to use pre-contractual negotiations to interpret a contract, it might by extension be said that it is also permissible to use them to imply a term into the contract.   Thus, this approach can then be used to imply all the terms in the Transit  agreement  as  part  of  what  the  parties  “actually  meant”  in  the  LINZ agreement.

[81]     However, even if this approach might now be applied to contracts in general, I consider that a contract to acquire land under the Public Works Act is a special form of contract.   The Public Works Act creates statutory rights pertaining to the acquisition of land for public works.  Parliament has included provision in s 17 for

land to be acquired by an agreement to purchase.   Furthermore, under s 18, the Minister is required to negotiate to purchase the land before moving to acquire it under the powers of compulsory acquisition.  Such contracts will of necessity deal with, or affect statutory rights created by the Public Works Act.   I consider that a Court should, therefore, be slow to consider departing from the written words of such contracts, especially when the written contract is not defective, as is the case here.

[82]     Furthermore,  I consider that since Parliament has seen fit to provide for statutory rights of offer-back and a statutory process for exemption of those rights, any attempt to deviate from that process by contracting for a waiver of those rights must  be  done  in  the  clearest  terms  possible  and  must  not  rely  on  contractual principles for reading such terms into a written contract.  Since I have not found it necessary to form a view on this topic, I have not considered whether it is legally possible for the Crown or any other properly authorised person to contract for waiver of the offer-back rights.

[83]     Put simply, the Crown could have replicated the waiver provision in the LINZ agreement, or it could have expressly incorporated the waiver into the LINZ agreement in the way that it incorporated other specified clauses.  That it did not in my view only goes to show that, for whatever reason, by the time the Crown came to execute  the  LINZ  agreement,  it  did  not  want  to  include  a  provision  expressly waiving the offer-back rights that the Public Works Act gave to Mr Hall.  As was recognised by the Privy Council in Attorney General of Belize, if the Crown had wanted to include a waiver of the offer-back rights in the contract with Mr Hall, it could have expressly provided for this.

[84]     There are a number of reasons for finding that Mr Hall did not waive his rights to have Hall West offered back to him once it became surplus to the Crown’s requirements.   So, subject to the Chief Executive’s decision to exempt Hall West from being offered back to Mr Hall, the Crown was obliged to offer to sell this land to Mr Hall once it became surplus to the Crown’s requirements to hold it as a public work.

[85]     I recognise that the view I have reached of the status of the Transit agreement and the meaning of the LINZ agreement is contrary to that promoted by the Crown. Peter   Graham   was   regional   solicitor   for   the   Department   of   Survey   and Land Information from 1990 to 1996 and then moved to Terralink New Zealand Limited.  He is now employed by the Property Group Limited as special counsel.  In his evidence, Mr Graham said that this was the first time in his experience that Transit had negotiated directly with a land owner and “agreed to acquire land ...”. He also said that it was :

... the first time that a possible conflict between powers and rights to acquire land directly by Transit and LINZ standard policy for acquiring land in the name of the Crown under the PWA [Public Works Act] became an issue.

Mr Graham seems to have perceived these circumstances as creating a policy issue between Transit and LINZ, rather than a legal issue of vires, with failure to recognise legal  requirements  mandated  by  Parliament  carrying  with  it  the  potential  for unlawful conduct on the part of Transit.  This may have been the result of his failure to appreciate that Transit was not a “local authority” and, therefore, it had no power of its own under the Public Works Act to acquire Mr Hall’s land.

[86]     Mr   Graham’s   failure   to   understand   the   legal   ramifications   of   the Public Works Act’s requirements for acquisition of land for public works affected his understanding of the LINZ agreement in which he had a hand drafting.  He said that he:

... deliberately restricted the LINZ Memorandum of Agreement ... to the acquisition of land and payment of compensation under the PWA because I did not intend to replace the Heads of Agreement between Transit and Mr Hall.  It was simply to give practical effect to Transit’s obligation to acquire the land and pay compensation under the Heads of Agreement.

[87]     Mr Graham said that he did not include Mr Hall’s waiver of his rights under the Public Works Act because he intended the LINZ agreement to enable that part of the Transit agreement relating to the acquisition of the land “to give practical effect to the Crown’s policy that the land acquired for the State highway network was acquired  by  the  Crown,  not  Transit”.    When  it  came  to  the  offer-back  rights, Mr Graham said that at the time he considered that:

... the Crown in exercising its statutory powers and duties under s 40 could not contractually waive its statutory obligations but that any waiver entered into by an owner could be taken into account as a matter of fact when offer- back requirements were considered under s 40.

[88]     Mr Graham insisted that, despite the Crown being the party who acquired the Hall land under the LINZ agreement, it was Transit that paid for the acquisition. However, he was forced to accept that the LINZ agreement records the Crown as being the party responsible for paying compensation to Mr Hall in return for acquiring his land.  The idea that it was Transit that paid the compensation was no more than a reflection of the budgetary arrangements between the Crown and Transit regarding land acquisition, rather than an accurate statement of the legal situation as between  the parties to  the  LINZ agreement.    Indeed,  since s  44  of the Transit New Zealand Act recognises that all State highways are vested in the Crown, it is hard to see how Transit could make any claim for having a recognisable legal or equitable interest in the Hall land.

[89]     Mr Graham’s evidence goes some way to explain the conduct of the Crown and Transit.  It does not, however, alter my view on the correct legal interpretation of Transit’s conduct or the terms on which Mr Hall sold his land to the Crown.

[90]     Mr Graham also said that the LINZ agreement was conditional upon the Transit agreement becoming unconditional.  However, cl 2 of the LINZ agreement goes no further than to say that it is conditional on the Transit agreement becoming unconditional as to conditions 1.1.6(a), (b) and (c).   These clauses related to the abandonment by other owners of their appeals to the Environment Court against the proposed route of the ALPURT, or Transit waiving this condition.  It can be seen as a way  of  inserting  the  effect  of  conditions  1.1.6(a),  (b)  and  (c)  into  the  LINZ agreement.  Further, cl 2’s inclusion of certain provisions of the ultra vires Transit agreement cannot serve to validate other provisions of the Transit agreement.  Since the events referred to in cl 2 have occurred and since the LINZ agreement has been performed by the parties, a finding of ultra vires in regard to the Transit agreement can have no legal effect now on the LINZ agreement’s limited reliance on those conditions in the Transit agreement being unconditional.   Thus, the Crown’s assertions through Mr Graham that the LINZ agreement was conditional on the

Transit agreement becoming unconditional cannot save the Transit agreement from being ultra vires.

[91]     The Crown also queried whether Transit “would have convinced LINZ to sign the LINZ agreement without the waiver clause”.  Yet there was no evidence that the Minister’s delegatee only signed the LINZ agreement because of the waiver clause.  If the Crown wanted to preserve the waiver clause, it could have done so by incorporating  it  in  the LINZ  agreement.    Further,  I do  not  accept  the  Crown’s argument that the Transit agreement provided for the purchase by the Crown and the withdrawal of the Environment Court appeals, whereas the LINZ agreement merely did the mechanics.  Parliament has provided a process in the Public Works Act for how land is to be acquired for a public work.   To accept the Crown’s submission would involve paying lip-service to the legislative process that Parliament has provided.   The role of the Minister in acquiring land for public works is not mechanical.   The statutory process involves discretionary statutory powers of decision, including those provided in ss 4A, 16, 17 and 18.  When exercising these powers, the Minister or his properly appointed delegatee must exercise their mind; this exercise could not be replaced with a mechanical rubber-stamping exercise that simply adopted what Transit had set in place.

[92]     On  the  basis  of  these  findings  and  my  analysis  of  the  legal  position,  I

conclude that Mr Hall has not relinquished his offer-back rights by waiver.

Waiver of the waiver clause?

[93]     Despite my findings, I propose to address Mr Hall’s argument that if the waiver clause stands (which I have found not so), then the Crown subsequently waived any right to rely on it through its later dealings with him.

[94]     In addressing this argument, the Crown contended that insofar as Transit had entered into negotiations with Mr Hall in January 2004 regarding the sale to him of Hall West, this conduct could not bind the Crown and, in any event, Transit had no power to sell the land.  I accept this is so, for the reasons I have already outlined.

[95]     However, I consider that by entering into negotiations with Mr Hall from

2002 for the sale of Hall West to him, Crown officials (being LINZ, Terralink and the Property Group) have conducted themselves in a way that was inconsistent with there being a waiver of the offer-back rights.  Further, the Crown’s preparedness to sell Hall East to Mr Hall is another example of conduct that is inconsistent with there being a legally binding waiver of those rights.  Here, the Crown attempted to counter this view by relying on the terms of the sale of Hall East, including a without prejudice clause.  However, the disposal of surplus land under the Public Works Act is by statutory process.  Compliance with this process is not something that can be commercially negotiated.  In this case, either the land was still subject to the s 40(2) process, in which case it had to be followed; or the waiver clause applied and so the s 40(2) process regarding offer-back or exemption was not applicable.  If the latter were the case, the Crown could contract with Mr Hall in the same way that it could with other persons.   However, the Crown had to decide which course of action to take.  Until it decided that the statutory process did not apply, it had to abide by that process.

[96]     There is no evidence that the Crown decided the s 40 process did not apply. Instead, the evidence shows that the Crown subjected itself to the s 40(2) process.  It signed an agreement described as being made pursuant to s 40(2) and it went to the Land  Valuation Tribunal  to  have  the  price  at  which  the  land  was  offered  back determined.  This is all consistent with the sale being done in accordance with, and subject to s 40(2).  That being so, I do not see how the Crown can now say that what occurred fell outside the statutory process.

[97]     I accept Mr Hall’s argument that throughout the period between 2002 and

2009, the Crown consistently by its actions and words demonstrated to Mr Hall that the Crown would not be relying on, or seeking to enforce the waiver in the Transit agreement.  Further, I consider that the Crown’s conduct fits with the categories of estoppel by conduct in Commonwealth of Australia v Verwayen (1990) 179 CLR 394 and recognised in Deane v Attorney-General [1997] 2 NZLR 180. The detriment that Mr Hall would suffer if the Crown’s representation were departed from is the loss of a valuable legal right to which he had a legitimate expectation. Thus, I find that insofar as there may have been a legally binding waiver in the Transit

agreement, the Crown’s latter conduct from 2002 onwards prevents it from relying

on the waiver.

When did Hall West become surplus to requirements?

Was Hall West surplus to requirements before 1 July 2002?

[98]     Mr Hall contends that Hall West became surplus to the Crown’s requirements at much the same time as Hall East, which was in May 1999.  However, the report dated 21 October 2002 draws a distinction between Hall East and Hall West in this respect.     The  report  records  that  whilst  Hall  East  was  declared  surplus  to requirements on 3 May 1999, Hall West was not, and gives reasons for this:

The land on the western side was not declared surplus at that stage because design and alignment of the link road to Orewa through this part of the land had not been finalised.  This land was declared surplus to requirements in June of this year.

[99]     As matters eventuated, none of the Hall West land was used for any aspect of the ALPURT, including link roads, before this land was declared surplus to requirements.  But this does not mean that this would have been known at the time. Having acquired all the Hall land for a public work, it would have made no sense to render it available for disposition prematurely.   Until such time as the Crown and Transit were fully aware that Hall West would not be needed for the ALPURT, it made sense to hold on to Hall West.  Mr Graham’s report reveals that there was a potential need to use Hall West for the ALPURT in the period before June 2002.

[100]   Mr Hall argued that there are documents that show the Crown was treating Hall West as surplus to requirements in 1999  in much the same way as it did Hall East.  I accept that valuation reports were obtained between 1999 and 2002 that show the Crown was considering disposing of Hall West.   And there are other documents that refer to  the possible sale of the Hall land, which could include Hall West, as well as Hall East.  The difficulty is in reaching a view as to whether the Crown’s decision not to dispose of the land then was because it was land-banking, which it cannot do, or because it was in a state of indecision as to whether Hall West was needed or not.  In the latter case, it might still have wanted to obtain valuation

reports to assist it in deciding on the land’s use, and it still might discuss selling it. Whilst Mr Hall made a strong argument for Hall West being surplus to requirements from 1999, I am not persuaded that this was so.  I can well understand that once land is required for a public work, there may come a time when the Crown is undecided as to whether or not it still requires the land.  Whilst the Crown should not delay unduly in making this decision, I do not see why it should be pressed to do so.  Once privately owned land is acquired for a public work, during the course of that work, the Crown should take a considered approach before deciding to dispose of it.  The evidence suggests to me that with Hall West, the question of when it was no longer required was not as clear-cut as with Hall East.

Declaration of Hall East and Hall West as surplus to Crown’s requirements

[101]   On 1 July 2002, a declaration of surplus property form was completed for Hall West.   Nonetheless, Mr Hall argues that Hall West was in fact surplus to the Crown’s requirements by not later than May 1999.   If he is right, this date will determine the value of any offer that is made to him to purchase Hall West.   It is common ground between the parties that the appropriate date for valuing land to be offered back under s 40 is the date on which it first became surplus to requirements.

[102]   There is some evidence to suggest that both Hall East and Hall West were viewed by Transit and the Crown as surplus to requirements by as early as 1999; though in the case of Hall West, these are no more than general references.

[103]   On the other hand, the Crown argued that on one view of the facts, Hall West has only recently become surplus to requirements.

[104]   Section 40 of the Public Works Act provides:

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 of this

Act—

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) of this

section, if that subsection is applicable to that land.

(2)       Except  as  provided  in  subsection  (4)  of  this  section,  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) of this section, the parties may agree that the price be determined by the Land Valuation Tribunal.

[105]   Section 42 authorises the Chief Executive to dispose of surplus land when the

original owner has failed to accept the Crown’s offer to sell the land under s 40(2):

42       Disposal in other cases of land not required for public work

(1)      Where—

(a)       Any offer to sell land under section 40(2) of this Act has not been accepted within 40 working days or such further period as the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority considers reasonable; or

(b)       Any  land  is  no  longer  required  for  a  public  work  and subsections (2) and (4) of section 40 of this Act do not apply,—

the  chief  executive  of  the  department  within  the  meaning  of section 2 of the Survey Act 1986] or local authority may—

(c)       Cause the land to be offered for sale to the owner of any adjacent land at a price fixed by a registered valuer; or

(d)       Cause  the  land  to  be  offered  for  sale  by public  auction, public tender, private treaty, or by public application at a specified price.

[106]   The combined effect of s 40(2A) and s 42(1) would allow a Chief Executive to breach any obstruction by an unco-operative former owner.  If the former owner did not like the price at which land was being offered back, price could be left to the Land Valuation Tribunal to determine.  If the former owner was not agreeable to this course of action, the process in s 42(1) gave the Chief Executive the means to progress the disposal.

[107]   Once the Crown decides that land is no longer required for a public work, it must comply with the offer-back requirements in s 40(2).  Once it has formed the view that land is surplus to requirements, the Crown cannot later alter its view and decide to hold on to the subject land: see Attorney-General v Horton [1999] 2 NZLR

257 (PC) at 261-262 where the Privy Council affirmed the view taken by the Court of Appeal:

The Court of Appeal ... said that once conditions (a) and (b) and possibly (c) of s 40(1) were satisfied, the Chief Executive of the Lands Department came under a mandatory obligation to sell. There was “no further role for the department or agency responsible for the public work for which the land was held'' and “no room for reconsideration of the earlier conclusion that the land was not required for a public work.''

The right to an offer vests, subject only to being defeated by the exercise of the discretion conferred by s 40(2)(a) or by the state of facts described in s

40(2)(b). There is no provision for the right being divested simply by a

change of mind on the part of the government department or state-owned enterprise.

Their Lordships respectfully consider that the reasoning of the Court of Appeal is correct. If s 40 confers an enforceable right to buy, then Their Lordships consider that when the conditions upon which it comes into existence have been satisfied, it must vest subject only to those grounds of defeasibility expressly stated in the statute.

[108]   As Hall West was declared surplus on 1 July 2002, this is the date at which the  Crown  recognised  the  land  was  surplus  to  requirements  for  the  ALPURT. Whether  or  not  the  land  was  needed  for  the ALPURT  as  at  1  July  2002  was something that was within the knowledge of the Crown.  Through its agent, Transit,

the Crown had control over the completion of this public work.  Whether land was required  for  the ALPURT  depended  on  the  intentions  of  those  responsible  for constructing this road.   Once they saw no further need for the Hall West land in terms of their plans for the ALPURT, it followed that there was no objective need for the Crown to retain it for this purpose.  I leave to the side for the moment whether Hall West was required for any other public purpose.  I consider, therefore, that the circumstances here are comparable to Horton insofar as there is no distinction to be made between the Crown’s decision that Hall West was no longer required for the ALPURT and this actually being the case.

[109]   Thus, I reject the arguments of the Crown that even after 1 July 2002, on an objective assessment of the facts, there was a need for the Crown to retain Hall West for the purpose of the ALPURT.

[110]   Mr Graham gave evidence about a further need for Hall West that arose on

12 August 2004.  He said that at that time a “further requirement” for Hall West was “notified internally within Transit via a memorandum ... advising that the area was required by the construction consortium for the ALPURT B2 project”.   Hall West was then seen to be required for a project site office, storage of fill material for use on the project, for dumping of surplus spoil and for a possible toll plaza area (the

2004 uses).   This need was recognised just over two years after Hall West was declared surplus to requirements.   There was also some minor realignment of the ALPURT, but at no time did the ALPURT route go beyond its designated corridor and so it did not intrude onto Hall West land.  Later in March 2006, Transit saw a further need to use part of Hall West to deposit surplus fill material.

[111]   I consider that the Crown’s argument that it needed Hall West in 2004 and later was no more than an attempt to bolster its case by relying on a subsequent minor adjustment to the ALPURT route as well as the 2004 uses as a means of showing that whatever it may have thought on 1 July 2002 regarding Hall West, the objective reality was different and this land was still needed to give the Crown flexibility to accommodate any changes to the proposed route and for the 2004 uses.

[112]    The evidence shows that as from 1 July 2002, the Crown, through LINZ, was working towards disposing of Hall West.  The hold-up to its disposal was the dispute that developed between LINZ and DoC regarding what was to be done about the portion of Hall West land that was within RAP 21.   This meant that as at 2004, Hall West was still held by the Crown and, therefore, when the need for the 2004 uses arose, Hall West was available for such uses.  Insofar as the Crown may have realised  the  benefit  of  Hall  West  for  the  2004  uses,  such  thoughts  were  well separated  in  time  from  the  2002  decision  that  Hall  West  was  surplus  to  the ALPURT’s requirements.   What occurred is best characterised as the Crown re- visiting the question of whether the land was surplus, as a result of recognising a new use for it.  This is something that the Crown could not do: see Horton at 261-

262.

[113]   As at 1 July 2002, there was nothing to suggest that the Crown needed Hall West to accommodate any potential adjustment in the ALPURT route.  Nor was there anything to suggest that the Crown needed Hall West for uses like the 2004 uses.  All indications were that Hall East and Hall West were surplus and available for disposal.  At the time, on 21 October 2002, Mr Graham wrote a report for the Principal Advisor Crown Property Clearances LINZ.  The report refers to the Hall land having been acquired for the ALPURT.  It says that Transit declared Hall East surplus to requirements on 3 March 1999, and on 7 May 1999 that property was approved for exemption from offer-back under s 40.  The report goes on to say that Hall West was not declared surplus at that stage because “design and alignment of the link road to Orewa through this part of the land” had not been finalised.  He then states that Hall West was declared surplus to requirements in “June 2002”.

The report then went on to cover in some detail the various negotiations that had been occurring with DoC since it had expressed interest in acquiring the RAP 21 land.

[188]   The advice contained in this report is significant because it comes just over a year after Transit/LINZ identified benefits in using Hall West for dumping of spoil and storage of fill material.   Despite recognition that the land could be used for another purpose, the report writer recommended all of Hall West be offered back to Mr Hall.

[189]   On 20 February 2006, the general manager (regulatory) of LINZ wrote to Mr Graham of the Property Group referring to discussions that had occurred between DoC and Transit/LINZ.  The letter records that valuers for each side were within a fair value range and so a further period of time should be given to DoC.  However, the  letter  also  states  that  failing  the  parties  reaching  a  conclusion,  “LINZ  will proceed with the s 40 offer to the former owner”.  So at this time, the Crown saw no reason to exempt Hall West from offer-back to Mr Hall.

[190]   Then, on 14 July 2006, a further report was prepared on the disposal of Hall West.   The report appears to be a draft, as no one has signed it.   This report ended with a recommendation that the balance of Hall West (excluding the RAP 21 land) be exempted from offer-back on the grounds of unreasonableness.  The report traverses the history as set out in the earlier reports.   It refers to the 1999 report’s recommendation for exemption of Hall East from offer-back and states that, at that stage, Hall West could not be declared surplus because the design and alignment of the link road to Orewa through Hall West had not been finalised.

[191]   The 2006 report then refers to the 2002 report which recommended offer- back  for both  Hall East and Hall West.   The 2006 report went  on to  note the involvement of DoC, which was seen as responsible for Hall West not being offered back  at  the  same  time  as  Hall  East.     The  report  describes  the  difficulties Transit/LINZ encountered in negotiating with DoC over the retention of RAP 21 as a public work.  The report notes concerns that had arisen within LINZ regarding the time it was taking to resolve whether the RAP 21 land would be held as a reserve, and then refers to the matter being agreed on 9 June 2006.

[192]   The report states that the previous recommendations in the April 1999 and October 2002 reports have been reviewed and that the recommendation now is for the remaining Hall West to be exempted from offer-back on the grounds of unreasonableness.

[193]   An earlier draft copy of the 2006 report was in evidence.  It bears the date

6 June 2006, although the body of the report refers to events occurring later in

June 2006.  When Mr Graham referred to it in his evidence, he referred to it as dated

23 June 2006, which fits better with the events described in it.  Unlike the July 2006 draft report, the June 2006 draft report contains a section which records that on

14 June 2006, Mr Hall filed these proceedings.   At the time, Mr Hall sought a declaration that the Crown is obliged to offer the whole of Hall West to him under s 40  of  the  Public Works Act  at  a  valuation  as  at  May  1999.    Concerns  were identified regarding whether DoC’s requirements for the RAP 21 land had been established  with  certainty  within  a  reasonable  time  of  the  land  being  declared surplus.

[194]   The 2006 report notes that since the report in October 2004, there had been further changes which needed to be taken into account with respect to the disposal of the balance of Hall West. Those changes were described as follows:

(a)      Because the issue of the RAP 21 land took until October 2004 to resolve, the disposal of Hall West was further delayed;

(b)In  the  intervening  period,  new  requirements  for  the  land  were identified, these being: a site office located on the property for the second stage of the ALPURT project; a requirement for use of the property for filling and re-contouring with excess material.  The use of the land for a site office was not seen to necessarily preclude offer- back, but it was said it would require the offeree’s agreement for continued occupation following settlement, and the fill works would involve major changes to the property;

(c)      The delay in resolving the issue with DoC was recognised as giving potential for an argument that the balance of Hall West should be valued at a historic date due to unreasonable delay in dealing with the property.  The report noted the advice of Crown Law, dated 24 March

2006, that there was no obligation to offer-back under s 40 because the former owner had waived his rights; and

(d)The  interest  in  the  land  of  Mr  Hall  was  described  as  “purely financial”.   Reference was made to Mr Hall having transferred his rights to acquire Hall East to Eastwood Developments Limited, by deed of nomination, dated 10 September 2004, and he had agreed to do the same for Eastwood Developments Limited in the event of an offer-back of Hall West.

[195]   The report noted that in considering whether it is unreasonable or unfair to require offer-back, the interests of the former owner must be considered and there must be good reason for them to be disregarded.  The report noted that in assessing this, matters must be considered broadly and the expectations of any other affected

parties may be taken into account.  The report noted that in Hood v Attorney-General CA16/04, 2 March 2004, the Court of Appeal held that where the former owners had only a commercial interest in the purchase, that was not enough to outweigh the matters in favour of the Crown being able to deal with the land.  The factors in Hood in favour of the Crown were noted as being an intention to honour arrangements made with the local Council prior to the enactment of s 40, which provided for reserve land in an area where there was a shortage.

[196]   Regarding Hall East, the report stated that a decision to offer-back had been made on the basis there was no good reason not to offer the land back, notwithstanding a waiver.  In the case of Hall West, the report said there were good reasons in that the Crown would be considerably disadvantaged and the former owner’s interests are purely financial.  Thus, the Crown acknowledged it was proper to offer Hall East back to Mr Hall, pursuant to s 40(2), and it sought to distinguish the circumstances of Hall West from those of Hall East.

[197]   The report then referred to the question of waiver.   It noted that initially, LINZ considered that it was not legally possible to waive s 40 rights, but  that Crown Law had  stated  that,  in  this  case,  the waiver could  exclude s  40  rights. Reference  was  made  to  an  Environment  Court  decision  where  statutory  rights relating to public works were treated as contractual rights that were capable of waiver.

[198]   The report concluded that there were strong grounds for arguing that Mr Hall had contractually waived his rights and had no right to make any claim under s 40 of the Public Works Act.  The report also stated the Crown’s view that irrespective of the legal status of the waiver, the mere fact Mr Hall had given waiver raised grounds for an exemption on the basis of unreasonableness and unfairness.

[199]   As to s 40(2)(b),  the report acknowledged there had been no significant change  to  the  land  warranting  an  exemption  on  offer-back  under  that  section. Sections 40(3) and 40(4) were said to be not applicable.  The view was that it would be unreasonable and unfair to offer the balance of Hall West back to Mr Hall.

[200]   Nothing happened in terms of actioning the recommendation in the 2006 report.   There were ongoing attempts at negotiating with Mr Hall.   Mr Graham referred to a draft report recommending exemption being prepared in 2006 but not sent to LINZ because “settlement discussions with Mr Hall were not finalised and because proceedings relating to section 40 were still extant”.   Given the report contained a recommendation to exempt the balance of Hall West from offer-back, it is hard to see why there was any need for negotiations with Mr Hall or why his proceedings seeking declaratory relief on his offer-back right had any bearing on actioning the report’s recommendation.  If the land was properly exempt from offer- back, that brought an end to any negotiations with Mr Hall and it removed the basis for these proceedings.   It opened the way for a legal challenge to the decision to exempt from offer-back but that was a separate issue.

[201]   Mr   Graham   also   gave   evidence   that   on   9   September   2008,   the Property Group forwarded an agreement for execution to Mr Hall on the basis if it was not signed, settlement negotiations would be at an end.  Mr Hall did not respond and so steps were taken to have the caveat removed.

[202]   A Transit committee action paper, dated 10 December 2008, was prepared to seek approval of a variation of agreement for the purported transfer of the RAP 21 land of Hall West to DoC.   This document referred to an agreement having been reached with Mr Hall, following long and complex negotiations.  Transit was said to be in a position to transfer the RAP 21 land to DoC as soon as the agreement with Mr Hall was executed by LINZ.   The document set out the familiar background regarding Hall West and the difficulties Transit/LINZ had encountered in negotiating with DoC for a “price” for the RAP 21 land.  This report noted that Mr Hall had lodged a caveat on the title for Hall West, which was seen to be an obstacle to completing the purported property transfer between LINZ and DoC.   Mr  Hall’s actions were described as “frustrating the transfer of the RAP 21 to DoC”, which had “deferred settlement” of the purported agreement between LINZ and DoC, who had agreed  that  the  agreement  would  be  cancelled  if  the  Court  found  in  favour  of Mr Hall. The findings I have reached do not support this view of events.

[203]   The report then referred to a number of meetings that had been held with Mr Hall to determine whether there were any grounds for settlement.   It said that Crown Law was currently finalising the terms of an agreement that involved settlement of a proceeding and a related proceeding involving Hall East (being the hearing in the Land Valuation Tribunal to determine the price of that offer-back).  At that time, it was anticipated that the parties would reach a full and final settlement of the issues between them.  However, no such agreement was reached.

The 2009 report

[204]   On 7 July 2009, the Property Group prepared a further report on the disposal of the balance of Hall West recommending that it be exempt from offer-back.  This report covered much the same background as the July 2006 report.   It  updated matters, as this report followed the hearing in the High Court to determine whether Mr Hall’s caveat should lapse.   It therefore reported on the outcome of those proceedings.  It was clear by then that Mr Hall had no claim to the RAP 21 part of Hall West.   The report repeated the same reasons as were given in the July 2006 report supporting the property being exempted from offer-back.  It added a summary which said:

The grounds for exemption are that the former owner has waived his rights to have the land offered back to him.   It is clear that the former owner’s interests are purely financial.   In addition, the Crown has identified subsequent requirements for the ongoing use of the land and would be disadvantaged if now required to offer it back.

[205]   The report did not suggest that the recommendations in the 2002 report and the Crown’s decision to offer Hall East back to Mr Hall were in error.   Instead, it proceeded on the basis that since October 2002, there had been a change of circumstance that warranted the balance of Hall West being exempted from offer- back to Mr Hall.  I consider, therefore, that my initial focus should be on identifying the Crown’s reasons for the change of circumstance.

[206]   Whilst the report refers to the delay in disposal of Hall West due to the RAP 21 issue with DoC, it does not identify the real cause of the delay, which, in short, I found to be the Crown haggling with itself over the purported price DoC was

to pay for the RAP 21 land, as well as the failure to address the issue in terms of the statutory scheme in s 40(1)(b).  I refer to the findings I have already made regarding delay and the handling of this issue.   I cannot, therefore, see how the question of delay can be relevant in the way that is suggested in the July 2009 report.

[207]   The second change of circumstance was the new requirements that had arisen in the intervening period for use of Hall West by Transit.   I cannot see how the existence of these requirements can justify exempting the land from offer-back.  To see matters that way would be to see them contrary to the principles established by Horton.  In that decision, the Privy Council makes it clear that once land is declared surplus  to  requirements  and  that  declaration  coincides  with  the  reality  of  the situation, any new purpose or use that might arise later cannot support a reconsideration of the land becoming surplus.  I cannot see, therefore, how these new circumstances  can  support  a decision  to  exempt  from  offer-back,  as  that  would simply be another way of arriving at the same objective that Horton disallows: namely, reversing the effect of the original decision to treat the land as surplus so that it can be available for the later recognised purpose.

[208]   The next change of circumstance was the concern that the delay in resolving issues with DoC could lead to an argument that the time taken was unreasonable, so the date for valuing the offer-back land would be an earlier time that correlated to a reasonable time for resolving matters under s 40(1)(b).  This is what I have found should happen.  Horton makes it clear that the time for valuing the offer-back price is when the land has become surplus to requirements.  If the Crown finds itself in the position where, because of its unreasonable delay, the date for assessing the offer- back price will be considerably earlier than the date of the price that could be obtained on the open market, that outcome is due to the Crown’s dilatory conduct.  I cannot see why it follows that the reasonable and fair outcome would be for the Crown to then have the land exempted from offer-back, so that it could sell for the higher price on the open market.  Such an outcome would provide no incentive for the Crown to deal with s 40(1) issues promptly and expeditiously.

[209]   There is then the idea that Mr Hall had already waived his offer-back rights. I have already found that the Transit agreement (which contained the waiver of the

offer-back rights) had no legal effect and that it did not bring about the transfer of the Hall land to the Crown under the Public Works Act.   Further, insofar as Transit purported to acquire land either for itself or for the Crown under the Public Works Act through the Transit agreement, it acted ultra vires.  It had no authority to acquire land by agreement under s 17 of the Public Works Act on its own behalf and it had no authority to do so as the Crown’s delegatee.

[210]   It is also notable that the day before the Transit agreement was executed, Transit had adopted the stance that if Mr Hall did not accept its terms, steps to take the land compulsorily under the Public Works Act would be commenced.   And earlier there was correspondence from Mr Hall’s solicitors indicating that he did not want to waive the offer-back rights.   This background must impact on how his willingness to grant the waiver is viewed.  The circumstances do not strike me as amounting to Mr Hall wanting to forego his offer-back rights.

[211]   Then there is the fact that in the 2002 report, the Crown recognised that the passage of time between the waiver in 1997 and 2002 meant that Mr Hall’s interest in re-acquiring any surplus land should be re-visited.  This was one of the reasons given for not following the recommendation in the 1999 report to exempt Hall East from offer-back: see [114] herein.

[212]   The Crown argues that even if the waiver is legally ineffective, Mr Hall’s agreement to it in the Transit agreement can be taken to show he had no interest in re-acquiring his land if it was later declared surplus.  Yet if the Crown was prepared to recognise in 2002 the effect of the passage of time on the waiver and all it indicated regarding Mr Hall’s interest in re-acquiring Hall East, it seems to me to apply equally, if not more so, to any assessment of how the waiver should be viewed in 2006 and 2009 in respect of Hall West.

[213]   I find, therefore, that given the circumstances of this case, Mr Hall’s waiver of his s 40 rights in the Transit agreement should not be understood to indicate a permanent disinterest in  re-acquiring his land.   Thus, from any perspective, the waiver is not something to be considered when it comes to deciding whether to exempt Hall West from offer-back to Mr Hall.

[214]   This leaves the notion that Mr Hall has only a financial interest in the offer- back.  First, this is no different from how things were regarding Hall East.  On that occasion, the Crown recognised “there was no good reason not to offer land back

...”.

[215]   Secondly, the present situation is very different from that in Hood.   In that case, the former owner had no expectation of the land being offered back as it had been acquired under the former legislation, which had no offer-back provisions. Here, putting to the side Transit’s ultra vires conduct in obtaining the waiver, once the Crown offered Hall East back to Mr Hall, this change of stance would have created new expectations of the likelihood of an offer-back for Hall West.   Such expectations would have been compounded by the Crown’s conduct in negotiating with Mr Hall over the sale of Hall West.  Until the RAP 21 land was resolved with DoC in 2006, Transit/LINZ were pursuing negotiations with Mr Hall which included other possibilities of protecting the RAP 21 land such as by covenants with the land owned by Mr Hall.  Officials associated with Transit/LINZ continued discussing the sale of the balance of Hall West with Mr Hall after the RAP 21 issue was resolved with DoC.  The first suggestion of exempting Hall West from offer-back to Mr Hall was made in 2006 after the proceedings were commenced.  Even then, the report of

14 July 2006 recommending exemption was not sent to LINZ and negotiations with Mr Hall continued.  It was only after the caveat proceedings in 2009 that the later report of 7 July 2009 was prepared and sent to LINZ.

[216]   I have the impression, therefore, that had Mr Hall been willing to abandon his litigation and to agree to the terms of sale insisted on by the Crown, the balance of Hall West would have been offered back to him.  This is not a case where the Chief Executive was faced with two or more options for disposing of the Hall land and made an objective assessment that it would be exempt from offer-back.  Here, after

2002, the Chief Executive has always been prepared to entertain the idea of offering Hall West to Mr Wall.  The sticking point has been the terms of which the land was to be sold to him.

[217]   Further, in Hood, there was a competing third party interest for the land, namely the Crown had promised the land, once surplus, to the local authority on the

ground it would be used as a reserve.   The distinguishing features of Hood were identified by the Court at [5]:

… it was that the arrangements with the Council which predated s 40 and which had been acted upon by the Crown and the Council made it unfair to offer the land back.

This background of promises and actioned reliance by a third party provided a strong weighting against offering the land back to the former owner’s successors in title. The  Court  of Appeal  and  the  Supreme  Court  (which  refused  leave  to  appeal) recognised  that  the  decision  to  exempt  from  offer-back  involved  a  balancing exercise.  And in the context of that exercise, the Court of Appeal recognised at [97] that the “interests of the former owners must be considered and there must be good reason for those interests to be disregarded” (emphasis added).   In Hood, the balancing exercise came out in favour of the land being a local authority reserve.

[218]   In this case, there is the fact that Mr Hall only has a financial interest in offer- back of the land, and he has entered into an arrangement that would see him onsell the land to Eastwood if he were to re-acquire it.   But there are no countervailing factors that might outweigh his rights and expectations under s 40(2).  There are no third parties who have detrimentally relied on the land becoming available to them as was the case in Hood.   The July 2009 report attempts to distinguish between there being no good reason not to offer back Hall East, but there being good reason for not doing so with Hall West.  This is said to be because “the Crown will be considerably disadvantaged and the former owner’s interests are purely financial”.

[219]   The Supreme Court in Hood v Attorney-General [2005] NZSC 53, [2007] NZRMA 28 at 30 noted that the former owner’s successors in title had assigned their interest in the land to another party who intended to develop it. Whilst this meant they had no attachment to the land other than a financial interest, the Supreme Court accepted that the absence of any other attachment did not disentitle them to have the land offered back. Rather, it was a factor to be weighed in the balance. This is consistent with the scheme of s 40(2), which extends the offer-back rights to successors in title. Such person may be one or more generations removed from the former owner and live some distance from the subject land. Hence, beyond having a financial interest in it, they may have no attachment to it. Had Parliament

considered that entitlement to offer-back rights should hinge on the offeree having an attachment to the land that was additional to a financial interest, it is difficult to see why the offer-back rights would have been extended to persons who may lack any attachment beyond the financial.

[220]   On the other hand, the only disadvantage for the Crown is that it would have to sell Hall West to Mr Hall at a historic value that is much lower than the price obtainable today.  Since the Crown intends to sell the land, and would prefer to sell it at today’s value, its interest in the land is a purely financial interest too.

[221]   Furthermore, the prospect of selling at a higher value to other parties has only come about because the Crown has taken so long to finalise this matter.  I have found this is through no fault of Mr Hall.  Had the Crown acted in a timely fashion and offered the land back to Mr Hall in April 2003, (which is the time by which it should have resolved the RAP 21 land issues with DoC), the price at which it sold to Mr Hall would have been closely related to the price it could have obtained from other parties.   There may have been some difference because the Crown could negotiate a price with other parties, whereas with Mr Hall, if no price was agreed, it could be set by the Land Valuation Tribunal.

[222]   Since s 40(2A) expressly provides a mechanism for determining the price when no agreement on price can be reached with an original owner, this suggests that the process Parliament  has provided was  intended to resolve disputes regarding price.  This in turn suggests that the discretion to exempt land from offer-back to the original owner was not intended to be used for circumstances where the Crown knew it would have difficulties with the original owner in fixing a price for the land. Otherwise the Crown could avoid having to accept a price set by the Land Valuation Tribunal    that    the    Crown    considered    was    disadvantageous    through    the Chief Executive deciding to exempt the land from offer-back.

[223]   I was referred to the relevant authorities on offer-back rights and exemption of those rights.  I have considered them carefully.  None of them factually resemble the present case.   The Supreme Court stated in McElroy v Auckland International Airport Ltd [2010] NZSC 62, (2010) 19 PRNZ 785 at [3] that “questions regarding

the use of land for public works are specific to the circumstances of the particular land and its history”.  Whilst the authorities the parties cited to me have provided helpful guidance, this case stands apart on its facts.

[224]   By way of affirmative defence, the Crown contends that it acquired the Hall land under the LINZ agreement in reliance on the waiver contained in the Transit agreement and, therefore, it would be unfair and unreasonable for the Crown to have to offer the surplus Hall land back to Mr Hall.  I reject this argument.

[225]   I found the Transit agreement to be ultra vires.  I cannot see how the Crown can assert its reliance on unlawful conduct as being something this Court should take into account when considering the basis for the Chief Executive’s decision to exempt the land from offer-back.  As I have already found, lawful authority to acquire land by agreement under the Public Works Act is vested in the Minister or his delegatee. Agreements with entities that lack authority to engage in the acquisition of land for public works do not warrant subsequent recognition.   I consider that it would be unfair  and  unreasonable  for  any  decision  on  exemption  to  give  recognition  to conduct that fell outside the statutory scheme that Parliament has provided.

[226]   I am satisfied, therefore, that the reasons set out in the July 2009 report recommending exemption of Hall West from offer-back to Mr Hall are not relevant considerations and are based on errors of law and fact.  They cannot be relied upon, therefore, to distinguish the disposition of Hall West from Hall East.   Since they formed the basis of the Chief Executive’s decision, it follows that the decision is materially  flawed  in  terms  of  administrative  law.     Whilst  a  declaration  is discretionary, I see no reason in this case not to grant Mr Hall the declaration he seeks and, accordingly, I do so.

[227]   I am also satisfied that the findings I have made mean that there are other relevant  considerations  that  the  decision-maker  may  want  to  take  into  account, should he decide to make a fresh decision on the question of exemption.  They are as follows:

(a)      The  purported  waiver  obtained  from  Mr  Hall  was  obtained  by ultra vires conduct;

(b)His willingness to agree to give the waiver needs to be understood against the factual matrix surrounding the Transit agreement;

(c)      The  delays   that   occurred   from   July  2002   when  Transit/LINZ acknowledge the Hall West land was surplus to requirements were not due to Mr Hall but to the failure of the Crown officials to approach the relevant statutory processes in the Public Works Act in a straightforward way that accorded with Parliament’s intent for how

land subject to that Act was to be dealt with.

Result

[228]   The land known as Hall West (minus RAP 21) became surplus to the Crown’s

requirements and so was available for disposal on 22 April 2003.

[229]   Mr Hall’s rights under s 40(2) of the Public Works Act were never waived and  remain  alive.    Subject  to  the power to  exempt  Hall West  from  offer-back, Mr Hall is entitled to have Hall West offered back to him at a price based on the land’s value as at 22 April 2003.

[230]   The decision of the Chief Executive’s delegatee to exempt the land from offer-back was affected by such material errors of fact and law and irrelevant considerations that the decision is not a true exercise of the discretionary power to exempt in s 40(2)(a) and accordingly is invalid.

[231]   Accordingly, Mr Hall is entitled to declarations:

(a)       Hall West (minus RAP 21) was surplus to the Crown’s requirements

as at 22 April 2003; and

(b)The decision to exempt this land from being offered back to Mr Hall is invalid, and therefore of no legal effect.

[232]   Leave is reserved to the parties to file memoranda on costs.

Duffy J