Hampton v Canterbury Regional Council (Environment Canterbury)

[2013] NZHC 2433

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2012-409-002824 [2013] NZHC 2433

BETWEEN

SIMON JOHN MOFFATT HAMPTON

Applicant

AND

CANTERBURY REGIONAL COUNCIL (ENVIRONMENT CANTERBURY)

Hearing:

2 September 2013

Appearances:

I Hunt for Applicant

P J Shamy and M C Dysart for Respondent

Judgment:

17 September 2013

JUDGMENT OF D GENDALL J

Table of Contents

Para No

Introduction	[1]
Chronology	[6]
The issues	[38]
Relevant statutory provisions	[41]
Aoraki Water Trust case	[44]
Grounds relied upon by Simon	[54]
Errors of law	[55]
Legitimate Expectation	[66]
Derogation of grant	[77]
Failure  to  take  into  account  relevant  considerations  and  taking  into account irrelevant considerations	[85]
Premeditation/bias	[90]

HAMPTON v CANTERBURY REGIONAL COUNCIL [2013] NZHC 2433 [17 September 2013]

Remedy	[96]
Conclusion	[100]
Costs	[103]

Introduction

[1] Before the Court is an application for judicial review  brought  by  the applicant, Simon John Moffatt Hampton (Simon) in respect of a 30 August 2011 decision made by the Canterbury Regional Council (the respondent) granting an application by Simon’s cousin and neighbour, Robert William Hampton (Robert) and his wife, Emma Hampton (Emma) for a water right resource consent.

[2] The key issue here is whether the decision to grant this water permit resource consent (under reference CRC110662) to Robert and Emma was an unlawful breach of Simon’s rights with respect to a prior 24 May 2005 water right resource consent granted to him under CRC042233.

[3]   Simon’s principal complaint appears to be that his exclusive right to take and use water in CRC042233.3 has been derogated from by Robert and Emma’s consent CRC110662. (Hereafter, for simplicity and as their interests are synonymous, I will refer to both Robert and Emma together as “Robert”.)

[4]      Simon’s present application for judicial review is opposed by the respondent.

[5] This case has a reasonably long and complex factual  background.  To understand this, a relatively detailed chronology setting out the history of a number of water right applications and consents relating to the participants here is helpful.

Chronology

6 April 2004 – Application CRC042233 by Simon to take and use water

[6] On 6 April 2004 Simon initially applied for a water permit to irrigate 95.3 hectares of land at 1269 Backtrack Road, Rakaia, being his farm.   This was later

amended when the Assessment of Environmental Effects was filed to include in the body of the application not only Simon’s land but also Robert his neighbour’s land, which comprised about 78 hectares. That Assessment of Environmental Effects stated specifically that:

In addition the applicant (Simon) has come to an agreement with one of his neighbours, Robert Hampton, to provide irrigation water to his adjacent property (88 hectares) (sic?). Hence the total area to be irrigated is 173 hectares.  Both properties are currently dry land arable farms.

[7] As the application was now made to irrigate both properties, thus it almost doubled the quantity of water-take which was sought. This application was not notified, as effectively it was regarded that no-one would be adversely affected by the grant. Of importance appears to be that the water sought was to be used to irrigate both Simon’s property and Robert’s neighbouring property. On the basis of that, namely to irrigate 173 hectares of crops and pasture, an annual volume of 777,600 cubic metres was allocated and the consent finalised on 24 May 2005.

26 April 2004 – Application CRC042232 by Simon to drill a bore

[8] On 26 April 2004 Simon applied to install a bore for  the  purpose  of abstracting water to irrigate pasture and crops, on his 95.3 hectare property.  On 5 May 2004 that permit was granted. As part of the grant, Simon was required to report upon the completion of the bore, which was not done. The permit expired on 5 May 2007.

1 August 2007 – Application CRC42233.1 change of condition by Simon

[9] The above water permit CRC042233 required that the maximum rate of water take was to be measured within 12 months of the commencement of consent. This was due, as I understand it, on 23 December 2005.

[10] Simon then made an application to change this condition to  vary  that reporting provision. It was put on hold because the earlier bore permit referred to had expired. Accordingly, Simon made a further application for a new bore permit on 11 September 2007 (CRC080885). However, as with the first bore permit, no completion report was provided to the respondent and it expired on 27 September

2012. A further land use permit for a new bore however, was then granted on 5 September 2012. This does not expire until 6 September 2015.

[11]  Simon’s application CRC042233.1 for a change of condition was granted on 13 November 2007. Annexed to the consent was a plan showing the land to be irrigated which included Robert’s land.

12 May 2008 – Application CRC042233.2 by Simon to transfer allocation

[12] On 12 May 2008 Simon sought to transfer part of CRC042233.1 to a third party, Stewart & Burke Limited, at another site in the Chertsey ground water zone. Of the 777,600 cubic metres that had been allocated under consent CRC042233.1, Simon applied to transfer 350,000 cubic metres to Stewart & Burke Limited initially for the full duration of the consent (I understand to 23 December 2039).

[13] The balance of the water was stated as being retained by Simon. Initially, however, the map of the land provided by Simon on which he proposed the use of the remaining water for irrigation showed that it was proposed to be removed from Robert’s land.

Enforcement orders

[14] This application CRC042233.2 by Simon led to proceedings in the Environment Court and in the High Court. These proceedings were brought by Robert.

[15] On 28 July 2008 Robert applied to the Environment Court for interim and final enforcement orders to prevent the partial transfer by Simon of water permit CRC042233.1 under his application CRC042233.2 noted above. An interim order was made. However, application to vary that interim order was heard in December 2008.

[16] The Environment Court varied the order on the basis that Robert’s argument related only to the portion of the consent that could apply to his land being some 350,000  cubic  metres  of  the  total  777,600  metres  involved.    The  order  was

effectively amended to allow Simon to deal with the portion of water that applied to his land.

Continued processing of application CRC042233.2

[17] The application for this consent was amended on 18 December 2008 to propose that only a temporary transfer of the 350,000 cubic metres of water would take place for a period of six months. This amended application for transfer related only to the water allocated to Simon’s land. This consent was issued on 26 January 2009.

[18] As part of the conditions that were placed on this consent, the volume of the balance of the water that could be applied to Simon’s land was limited to 77,600 cubic metres and the volume of water to be applied to Robert’s land was limited to 350,000 cubic metres. This temporary transfer expired on 1 June 2009 and the volume that had been transferred reverted back to being used on the original location on Simon’s land.

Enforcement order issue ended

[19] On 1 November 2010 Robert withdrew his application for an enforcement order, apparently on the basis of a solution proffered by Judge Jackson in the proceedings in the Environment Court as noted at [21] below. This was to the effect that Robert could himself apply for a consent on the basis of the same 350,000 cubic metres permit already allocated to Simon. This water allocation was to be used on Robert’s land on condition that Robert’s permit would not be exercised when Simon was exercising his consent on Robert’s land.

5 November 2010 – Resource consent application CRC110662 by Robert

[20] This is the consent for which a complaint is brought in the present proceedings on the basis that Simon maintains it derogates from the exclusive use water right that he says was granted in CRC042233.3. Consent CRC110662 was granted on 29 August 2011.

[21] That application for CRC110662 was expressly advanced on the basis of those comments of Judge Jackson in the Environment Court decision of 22 January 2010, noted at [19] above. It seems also that these comments were considered by the respondent in granting consent CRC110662. Simon submits here that reliance on such obiter comments and/or their misinterpretation has caused the erroneous

approach adopted by the respondent. Judge Jackson’s comments were:1

I have also considered whether a non-owner (like Simon in this case) could frustrate a land owner’s wish to irrigate by obtaining a ‘use’ water permit for the land (here Robert’s land) not owned by the applicant. That would mean that the land owner could at first sight not obtain the relevant water permit for their land. However in those circumstances the consent authority could grant a further consent but by condition make it exercisable only when the first water permit is not being exercised in respect of the land.

[22] Condition 3 on Robert’s consent CRC110662 finally granted by the respondent specifically provided:

the sum of:

(a)The maximum annual volume of water taken under this resource consent CRC110662 (Robert’s consent) or any variation and used for irrigation of the land within the area shown as shaded on plan CRC110662 (Robert’s land only); and

(b)the maximum annual volume of water taken under resource consent CRC042233.3 (Simon’s consent) or any variation thereof and used for irrigation of land within the area shown as shaded on  plan CRC110662 (Robert’s land only)

shall not exceed 350,600 metres between 1 July and the following 30 June.

[23]The parallel condition 2 on Simon’s consent CRC042233.3 stated:

Water may be taken at a rate not exceeding 100 litres per second, with a volume not exceeding 86,400 cubic metres in any period of 10 consecutive days, and 350,600 cubic metres between 1st July and the following 30th June.

1       Hampton v Hampton [2010] NZ EnvC 9 at [17].

[24] As both the plan on CRC110662 and the plan on CRC042233.3 refer to the land owned by Robert and no other, therefore only Robert’s land may be irrigated by these two consents.

[25] There is no restriction however on Simon’s ability to take up to 350,600 cubic metres under his consent. A maximum of 350,600 cubic metres in any year, is able to be drawn and used only on Robert’s land. In reality at present, this is likely to be drawn under Robert’s consent CRC110662 as Simon currently has no well to draw water from and his consent authorises irrigation of Robert’s land only being land he does not own and cannot access.

[26]And significantly, condition 5 on Robert’s consent CRC110662 stated:

This resource consent CRC110662 or any variation thereof shall not be used for irrigation of the land within the area shown as shaded on plan CRC110662 (Robert’s land) at any time when resource consent CRC042233.3 or any variation thereof is being used for the irrigation of the land within the area shown as shaded on plan CRC110662 (also currently Robert’s land). (Emphasis added.)

[27]   No parallel condition appears on Simon’s consent.  Again Robert’s permit is in this respect subservient to Simon’s permit, thus an “A” permit (Simon) and “B” permit (Robert) scenario.

[28] Robert notes that effectively this consent (the “B” permit) is a “back-stop” or subservient consent and can only be exercised if the primary consent held by Simon (called the “A” permit) CRC042233.3, is not being used.

24 November 2010 – Application for resource consent CRC042233.3 by Simon

[29] This is the consent that Simon complains has been adversely affected by the respondent’s decision to grant the consent CRC110662 referred to above. This consent CRC0442233.3 proposed that 427,000 cubic metres of water would be allocated to a third party, Somerton Fields Limited, at another site altogether in the Chertsey ground water zone. It was proposed that the remaining allocation of water (about 350,660 cubic metres) following the transfer could be used on either Simon’s land or Robert’s land.

[30] The application was initially not accepted pursuant to s 88(3) of the Act as it did not provide in the respondent’s view an assessment of the effect of changing the exercise of the water permit at its current site as required under s 136(4)(b) of the Act. This was primarily due to the fact that Robert had prior to this application lodged his own application CRC110662 noted at [20] above.

[31] This led to an amended application by Simon who specified that the remaining water allocation of 350,660 cubic metres following the transfer to Somerton Fields Limited could only be used on Robert’s land and none was to be used on Simon’s land. This was a condition of the consent for the transfer of the 427,000 cubic metres that was finally issued, and was agreed to, albeit reluctantly by Simon, as he has acknowledged at page 11 of his affidavit filed herein.

[32] The position then at this point was that Simon had agreed on the basis of his desire to transfer part of the water right, no doubt for a significant valuable consideration to Somerton Fields Limited (Somerton) to retain the balance of the water for use on his neighbour, Robert’s, land. That remaining water that was available to Simon was to be used only to irrigate Robert’s property. Importantly, this particular consent was not appealed or challenged. And, the effect of Robert’s later consent, CRC110662 noted at [20] above, is that Robert can only irrigate, if Simon is not doing so. It is truly a “backstop” or subservient consent.

[33] Pausing here, the overall history so far would suggest that Simon himself does not irrigate his own land but rather first, he has traded part of the water permit he obtained originally in May 2005 as a valuable commodity to third parties either temporarily or in this case permanently; and secondly, he retains the balance of this water permit to draw 350,660 cubic metres, but this water is required to be used only on Robert’s land.

16 March 2011 – Resource consent application CRC042233.4 lodged by Simon

[34]  This is the most recent application for a resource consent that has been made by Simon. The effect of this application would be to change the location of where the remaining allocated water could be used from on the one hand, Robert’s property,

to on the other hand, both Simon’s property and another neighbour’s property owned by a Mr A Stevens.

[35] As I understand it, Simon has effectively placed this application on hold in the meantime. The respondent however suggests that this application should proceed and, if and when considered, would effectively test the adverse effects and the requirement for relief, that Simon in this proceeding is endeavouring to maintain.

Notification

[36] The respondent in dealing with an application for a resource  consent  is required to make a decision as to whether or not the application should be publically notified or be notified in a limited way to those who could be specifically affected.

[37] In terms of processing Robert’s consent CRC110662 noted at [20] above, Simon was not notified as he was not regarded as being adversely affected. In processing Simon’s most recent resource consent application CRC042233.4 (noted at [34] above), Robert has been notified as the respondent formed the view that he would be adversely affected by that application.

The issues

[38] In summary, the principal issue in this proceeding is whether the decision to grant CRC110662 was an unlawful breach of Simon’s rights in respect of the prior resource consent CRC042233.3 granted to him.

[39]     Simon’s challenge to this decision is brought essentially on the basis that:

(a)in granting the application, the respondent made errors of law;

(b)the decision to grant CRC110662 was a derogation of the consent to take and use water granted to Simon under CRC042233.3 and was thereby unlawful;

(c)the grant of CRC110662 breached Simon’s legitimate expectation that CRC042233.3 would not be deliberately eroded or interfered with

during its term by the grant of a further permit unless authorised by specific statutory power or which might preclude him from exercising his rights in respect of that consent including, by way of transfer pursuant to s 136 of the Resource Management Act 1991 (“the Act), or a change of condition;

(d)in making its decision and granting CRC110662, the respondent failed to take into account relevant considerations and took into account irrelevant considerations;

(e)the respondent’s decision was motivated by a view that the application which led to the granting of CRC042233 had been inaccurate and incomplete or misleading – which was both erroneous and indicated bias: that if CRC110662 was granted, it would enable Simon to take and use water in a manner inconsistent with his original application constituting grounds for review under s 128 of the Act (but no such review was undertaken); and that as a matter of management or fairness CRC110662 should be granted without requiring compliance with the usual statutory and regulatory requirements for such applications which inappropriately favoured the interests of Robert over the interests of Simon;

(f)at its simplest, Simon’s case is that CRC110662 affects and substantially interferes with the exclusive rights held by him pursuant to CRC042233.3 because, if CRC110662 is exercised in whole or in part, the volume of water available to him under CRC042233.3 he says is necessarily reduced;

(g)the interference is emphasised by the interpretation of the Act adopted by the respondent, namely that having been granted CRC110662 (without notification of such application to Simon), Robert can claim (and has claimed) to be adversely affected by Simon’s application to transfer CRC042233.3 and to change the conditions of that consent, and thus requires to be notified of such application.  That amounts to

an unlawful fetter on/derogation of the rights granted to Simon, and available to him pursuant to the Act;

(h)Simon    also    asserts     that    the     decision     on    CRC110662     was predetermined, and actuated by bias on the part of the respondent;

[40] Accordingly, in Simon’s prayer for relief here, he seeks a declaration determining the respondent’s decision to grant CRC110662 as unlawful. No application is made however to quash the resource consent or to direct the respondent to reconsider its decision. Instead, and perhaps unusually, there is simply an application for damages. More on that aspect later, although before me, the issue of damages was agreed not to be the focus of the present hearing.

Relevant statutory provisions

[41] The Resource Management Act 1991 (the Act) provides the statutory context within which the issues in this proceeding fall to be determined. Relevant statutory provisions include ss 5, 88, 108 and 136 of the Act. Section 108 gives a consent authority a broad discretion as to any conditions that may be imposed, but such conditions are limited by common law principles. They must be conditions imposed for resource management related reasons.

[42] Section 136 of the Act deals with the transfer of water permits. Section 136(4)(b) provides that an application to transfer water from site to site (s 136(2)(b)) shall be considered as if it were an application for a resource consent. It does not deem an application for a site to site transfer to be a resource consent application, an interpretation supported by the exclusion. Section 136(4)(b) (in relation to ss 87 – 87I) is not a resource consent, nor is it an application for a resource consent.

[43]     Section 136(4)(b) also states that:

The consent authority shall have regard to the effects of the proposed transfer, including the effect of ceasing or changing the exercise of the permit under its current conditions, and the effects of allowing the transfer.

The effects or effect referred to are the resource management related effects of such a

transfer, not other effects – such as economic effects.

Aoraki Water Trust case

[44] The legal framework in context against which Simon’s challenge to the respondent’s decision here is to be considered is largely, although not entirely, based on the decision of Aoraki Water Trust v Meridian Energy Limited.2

[45] The facts of this case were that Meridian Energy Limited used water from three high country lakes (Lakes Tekapo, Pukaki and Ohau) to generate electricity at power stations in the upper and mid-Waitaki basin in South Canterbury. Meridian and its predecessors had dammed, diverted and used water from those lakes pursuant to a serious of statutory consents since 1929. The Canterbury Regional Council (CRC) issued the current consents in 1991 for 25 years. All the relevant water was fully allocated for the purpose of satisfying the consents, in that the  consents entitled Meridian to draw off more water than was actually available. A number of other parties, including Aoraki, applied to the CRC for statutory water permits. Aoraki and two local authorities, the Timaru District Council and MacKenzie District Council (collectively “Aoraki”) applied for declarations that Meridian’s consents did not operate as a legal constraint or inhibition upon the CRC’s statutory discretion to grant consents to others or upon the power of the Waitaki Catchment Water Allocation Board to provide for allocation of water in a regional plan.

[46] This Court held that where a resource was already fully allocated to a permit holder, a consent authority could not lawfully grant another party a permit to use the same resource, unless specifically empowered to do so by statute. Any subsequent grant would negate the Resource Management Act regime for allocation of resources by over-allocation of the resource, without the ability to enforce preference or priority between competing permit holders.

[47]   The Court also held that water permits conveyed rights to the allocated water. A granted right of exclusivity could not be interfered with. A subsequent grant of a water permit to another party over the same resource derogated from the original

2       Aoraki Water Trust v Meridian Energy Limited [2005] 2 NZLR 268 (HC).

holder’s right. Nothing in the Act authorised the CRC to grant any other party a water permit in this situation nor authorised the Waitaki Water Allocation Board to promulgate a regional plan overriding the allocation of water under an existing permit.

[48] The Court also held that an original permit holder enjoyed a legitimate expectation that a public authority would not deliberately erode a grant during its terms by granting another permit to some other party.

[49] Notwithstanding this, the Court found that a consent is neither  real  nor personal property and does not confer upon the holder any rights of ownership in the resource which remain with the Crown. A permit on its own does not of itself guarantee the water’s availability.3

[50] The Court considered that four features of the Act were of importance in this case including the sustainable management concept, the obligation on a consent authority to have regard to the efficient use of resources, the authority’s obligation to control the taking, use, damming and diversion of water and the requirement that, except in certain circumstances, water can only be taken, used, dammed or diverted

if that activity is expressly allowed by a rule in a regional plan or a resource consent.4 The Act effectively prescribed a statutory resource licensing system and the argument for Aoraki would mean a consent authority could lawfully grant an unlimited number of permits for the same water even though that resource had already been fully allocated. The Court considered that would be “the antithesis of the management regime” in the Act and of the consent authority’s obligation to

control the taking, use, damming and diversion of the water.

[51]     A summary of the Court’s position is set out at [46] as follows:

[46] In summary, in a case where a resource is already fully allocated in a physical sense to a permit holder, a consent authority cannot lawfully grant another party a permit to use the same resource unless specifically empowered by the Resource Management Act for the reasons that: a) The subsequent grant would negate or frustrate both the purpose and effect of the provisions designed to ensure the effective allocation of resources, because

3 At [26].

4 At [28].

the authority would over-allocate the resource and be powerless to manage, control and enforce an order of preference or priority between competing permit holders; b) Our Court of Appeal has identified the principle of first come, first served as Parliament’s guide to an authority’s regulation of competing applications for scarce resources, by holding that a grant of a consent to one party necessarily excludes the other. Other Courts have applied the related principle that statutory authorities are unable to exercise a statutory power in a manner which might interfere with a validly granted right of exclusivity; c) A subsequent grant to another party would have the effect of derogating from the authority’s original grant because it would interfere with, erode, or destroy the holder’s right to use the property which is the subject to the consent; d) Analogously, an original permit  holder enjoys a legitimate expectation that a public authority will not deliberately erode a grant during its term by granting a permit to another party.

[52] The Court then considered whether any of the provisions of the Act expressly empowered the CRC to grant water permits to others where the resource was already fully allocated to an existing holder. Provisions which may have enabled the CRC to derogate from its grant in Meridian’s favour were identified, although it was noted that where Parliament had conferred power on a consent authority to interfere with an existing grant, it must have acted for express and very limited purposes. The Court was of the opinion that none of the provisions in the Act authorised the CRC to grant Aoraki or any other party a permit for Lake Tekapo if the grant would have the effect of reducing the amount of water available to satisfy the terms of Meridian’s consents. Basically, the CRC would be acting unlawfully if it granted Aoraki’s application in circumstances where the resource was already fully allocated to Meridian’s permits and a new permit would have the effect of diminishing or derogating from the existing consents.   Therefore, Aoraki’s first application for a

declaration was dismissed.5

[53] The Court then went on to consider the second declaration. This involved consideration of whether provisions of the Waitaki Act authorised approval for Aoraki and others to take, divert and use the waters of Lake Tekapo, notwithstanding that it might reduce the amount of water available to satisfy Meridian’s consents. This application for a declaration was also refused.

5 At [55].

Grounds relied on by Simon in this application

[54] I turn now to consider each of the specific grounds relied upon by Simon in his judicial review application – errors of law, legitimate expectation, derogation from grant, failure to take into account relevant considerations, taking into account irrelevant considerations and mistakes of fact, and predetermination/bias.

Errors of law

[55] The alleged errors of law are specified at [31] of the statement of claim. They are that the respondent failed to take into account the effect of CRC110662 on CRC042233.3 and the application under CRC042233.4; erroneously applied the principles for determining the priority of competing applications for resource consents for an unallocated resource (Fleetwing Farms Limited v Marlborough District Council and Central Plains Water Trust v Ngai Tahu Properties Limited) as if the application for transfer by Simon was an application for a resource consent and the application had priority; and erroneously assessed the application on the basis that at the time it was made, Simon did not have permission to irrigate nor did he intend to irrigate the area of land owned by Robert.

[56] The principle relied upon here is that a consent authority may not exercise a statutory power to grant a permit in such a way as to interfere with a previously granted permit, even to the extent that this must mean that the previously granted permit creates an exclusive right.

[57]     In relation to this ground, Simon relied on cases cited in Aoraki, particularly

Dowty Boulton Paul Ltd v Wolverhampton Corporation.6

[58] In Dowty Boulton Paul Ltd a company sought an interlocutory injunction relating to an area of land being used as an airfield, but the corporation (local authority) intended to develop it as a housing estate. The company was interested in that area, because of a conveyance dated 30 November 1936 from the corporation to the company of an area of land adjoining the airfield. The conveyance gave the company rights to use the airfield which would be nullified if the site of the airfield was  developed  as  a  housing  estate.    In  that  case  the  Court  concluded  that  the

6       Dowty Boulton Paul Ltd v Wolverhampton Corporation [1971] 2 All ER 277 (Ch).

company had made out a prima facie case that it was entitled to that right and the corporation was not entitled to override the right either under the terms of the 1936 conveyance or in exercise of its statutory powers.

[59] Thus, the principle from the case appears to be that a statutory authority cannot override rights they have already granted to another party.

[60]    In the present case, Simon alleges three errors of law have occurred.  First, it is said that the respondent failed to take account of the effect of CRC110662 on CRC042233.3 and the application under CRC042233.4. I reject this claim however. From the evidence before the Court it is clear to me that the CRC turned their mind to the effect of CRC110662 on CRC042233.3 and CRC042233.4.

[61]  Secondly, I do not think it can be said this is a case of competing applications for resource consents for the same resource. CRC110662 can only be exercised when CRC042233.3 is not being used. Also, s 136 of the Act provides in s 136(2)(b)(ii) that a holder of a water permit (granted other than for damming or diverting water) may transfer the whole or any parts of the holder’s interest in the permit. This may be transferred to another person on another site, or to another site, if both sites are in the same catchment (either upstream or downstream), or aquifer, or geothermal field, and the transfer is approved by the consent authority that granted the permit on an application under s 136(4).

[62] Subsection (4) provides that an application under subs (2)(b)(ii) shall be considered as if (i) the application for a transfer were an application for a resource consent and (ii) the consent holder was an applicant for a resource consent.

[63] Thirdly, Simon’s statement of claim here  states  that  the  respondent erroneously assessed the application “on the basis that at the time of the application Simon Hampton did not have permission to irrigate nor did he intend to irrigate, the area of land owned by Robert and Emma Hampton”. Although, I am unsure what counsel is trying to say here, Simon was clearly able to irrigate Robert’s land under consent CRC042233.3. However, whether he ever intended to irrigate Robert’s land is not clear.

[64] Lastly, I do not consider that CRC110662 interfered with CRC042233.3. CRC110662 could only operate if CRC042233.3 was not being used, that is, it operated as a back-up consent.

[65]     I find that there is no merit in this ground argued by Simon.

Legitimate expectation

[66] The breaches of alleged legitimate expectation are found at [35] – [39] of Simon’s statement of claim. They are that Simon had a legitimate expectation that the respondent would not during the term of CRC042233.3 take any step which would interfere with, erode or destroy the value of the consent or which precluded him from exercising his lawful rights in respect of the consent. These were to include in particular the right to transfer the consent pursuant to s 136 of the Act, or to apply to change the conditions of the consent. Simon alleges these legitimate expectations were breached by the decision. Simon claims also that he had a legitimate expectation that any decision which might affect CRC042233.3 would be reached only after giving to him all relevant material and an opportunity to make submissions to the respondent in respect of that material prior to any decision being made. He says that, in breach of that legitimate expectation, the respondent failed to disclose to Simon, prior to its decision being made, documents and materials it had received from and on behalf of Robert, and views that it had reached and expressed regarding the application. He says the respondent ought to have provided these to Simon in order for him to be able to address them; and that by reason of such breaches, the decision to grant CRC110662 was flawed.

[67] On all of this, Simon refers to the decision in Aoraki7 which he maintains is relevant here:

...granting a water permit for a particular volume of water over a specified period of time commits the consent authority to that grant in the sense that it is not entitled to deliberately erode the grant unless it is acting pursuant to specific statutory powers. The relevant factors applying in this public law context are similar to those underlying the principle against non-derogation of grant.  In situations where the consent authority’s commitment represents a full allocation of the resource to the grantee (subject, of course, to the

7 At [41].

events of nature), the latter must reasonably expect to proceed with planning and investment on the basis that the consent authority will honour its commitment. Indeed, refusal to recognise that expectation would seriously undermine public confidence in the integrity of water permits.

[68]     And similarly, Aoraki states:8

...analogously, an original permit holder enjoys a legitimate expectation that a public authority will not deliberately erode a grant during its term by granting a permit to another party.

[69] At this point, I need to note my view that the grant of CRC110662 of itself did not erode Simon’s grant and I am satisfied that CRC110662 is not a competing application to the same resource as CRC042233.3. It is true that CRC110662 may have the effect of making it more difficult for Simon to change or alter conditions on CRC042233.3, but that is a separate matter for the future, as at present, this proposition is entirely untested.

[70] Simon’s affidavit claims that prior to CRC042233.3 being granted, the respondent had concerns in relation to the water resource in relation to Robert’s and Simon’s land. He contends that because he wanted to temporarily transfer water rights to Somerton so that Somerton could use them for the upcoming irrigation season, he agreed, but only reluctantly, to the condition that the remaining water was to be used on Robert’s property only. He also claims that Somerton indicated they would not proceed if there was any delay. But, what is abundantly clear here is that Simon did agree specifically to this condition for use of the remaining water on Robert’s land, presumably so that he could complete his sale transaction with Somerton.

[71] Turning now to deal with each of Simon’s arguments on this aspect, first I am satisfied that the respondent has not destroyed or eroded Simon’s consent CRC042233.3. On this, Simon’s first argument relates to his ability to transfer his water consent under s 136 of the Act which he claims has been compromised. In my view, this is not the case. Such an application must be made to the CRC under s136(2)(b)(ii) of the Act and indeed Simon has brought a transfer application under CRC042233.4 as noted at [34] above. No decision as yet has been made on that

8       At [46](d).

application. Simon in fact has decided to put the application on hold.  Although that is a matter for him, in my view, Simon’s present complaint over transfer issues is entirely premature. That transfer application needs to be properly pursued and considered first, before any assumptions can be made that it would be rejected with possible detrimental consequences arising from any such rejection.

[72] In relation to his second argument noted above, Simon clearly as I see it, does have exclusive use of CRC042233.3 in accordance with the conditions imposed on that consent. Similarly, any change in conditions (as with his application to transfer under s 136) is required to be considered by the CRC. Again, such an application in fact is presently before the CRC under CRC042233.4 but is on hold at Simon’s request. It must be remembered also that it was Simon himself who agreed recently to the conditions imposed by the CRC on consent CRC042233.3 including, as I have noted above, the requirement that the remaining water was to be used only on Robert’s land. I repeat that in my judgment this argument advanced by Simon is premature. There is nothing before the Court to say that necessarily this application CRC042233.4 placed on hold by Simon must fail. If good reason exists for the existing allocated water in question to be drawn off or used on Simon’s land or on another property in the Chertsey water region, then this application as I see it could be favourably considered. In that event, Robert’s back-stop grant under CRC110662 would still remain, to be operative again only if the full 350,660 cubic metres was not being used elsewhere.

[73]   For all these reasons, I reject Simon’s first and second arguments in relation to legitimate expectation. They are entirely premature.

[74] The third and fourth arguments both relate to Simon’s claim that he should have been notified of Robert’s application CRC110662 and given the opportunity to be heard by the respondent. On this aspect, the CRC sought specific direction on notification matters from the experienced Local Authority Commissioner, Mr Milne. In turning his mind to whether there should be notification of the application to Simon, he rejected this proposition. He also considered whether either the fact that Simon had an application in process at the time, or any other matter amounted to “special  circumstances”.     He  thought  it  would  be  inappropriate  to  take  that

application into account when considering CRC110662. He agreed that there was no basis for public notification of the application. He concluded that Simon would not be affected to an extent that was more than de minimis and therefore notification of Simon was not required.

[75] Therefore, the respondent did not notify Simon  of  the  application CRC110662 as he was not considered to be an “affected party” in terms of ss 95B and 95E of the Act. (Commissioner Milne did note however, in relation to Simon’s new application under CRC042233.4 that Robert was an “affected party” and should be notified.)

[76]  With the benefit of hindsight, a possible argument might exist here that out of an abundance of caution it could have been appropriate for the respondent to notify Simon of the CRC110662 application and seek his response. In fact the evidence before the Court shows that Simon was indeed well aware of this application and its implications at the time and communicated with the CRC personally and through his lawyers with his views. But in any event, the CRC’s own officers and the independent Commissioner Milne found that Simon was not an adversely affected party and was not required to be notified. CRC042233.3 was not going to be adversely affected by the granting of CRC110662 which comprised purely a back-up grant. The Commissioner’s report specifically noted too that he had put CRC042233.4 out of his mind when considering CRC110662, as that was something later in time and to be considered at a later date. And in my view, even if Simon had been given an opportunity to be heard on CRC110662 the respondent would be likely to have reached the same conclusion in light of its concerns about the water resources for Robert’s land. I do not think the granting of CRC110662 was flawed for notification reasons.

Derogation from the grant

[77]     This appears to be the main argument advanced by Simon here.

[78] The arguments in relation to derogation from the grant are found at [32] – [34] of Simon’s statement of claim. They are that the respondent derogated from the consent CRC042233.3 to take and use water granted to Simon by purporting to “re-

allocate” to Robert a volume of water already “allocated” to Simon. The grant in CRC110662 is said to be an unlawful constraint on and derogation from the grant of consent and what are said to be the exclusive rights of Simon in CRC042233.3. The derogation of the grant to Simon is claimed to arise because, the effect of CRC110662, if it is exercised in whole or part, is alleged to affect the volume of water available pursuant to CRC042233.3 which is necessarily reduced. In addition Robert can claim (and has claimed) to be adversely affected by any application to transfer CRC042233.3 or to change the conditions of that consent. This, it  is claimed, unlawfully restricts Simon’s right to transfer CRC042233.3 in whole or in part, pursuant to s 136 of the Act or to change the conditions of the consent.

[79]   The argument under this head of derogation from the grant, is not dissimilar to the arguments noted above and the arguments mounted in Aoraki. Similarly the Court was dealing there with an alleged derogation of an exclusive right to use water, and again issues of legitimate expectation.

[80] The Court in that case refused to grant the declarations sought by Aoraki, finding that it would have effectively reduced the amount of water available that had been granted to Meridian, to generate power. The situation in this present case however, is quite different from that prevailing in Aoraki. In that case, Aoraki was seeking to remove water from the system that would reduce the amount available for Meridian to generate power. I am satisfied that the water permits in issue here do not have the same effect.

[81] Simon’s permit CRC042233.3 as I see it, is untrammelled by any restrictions, apart from the upper level of water he is allowed to draw for the purposes of irrigation, and a requirement that the water must be used on Robert’s land. That latter condition was one that Simon agreed to primarily so that he could sell part of the water right he had to Somerton.

[82] By the time Simon made the application for consent that he refers to in these proceedings as being trammelled by Robert’s consent, it is clear he had already not only sold part of the right, but also restricted his use of the remaining water to Robert’s land.

[83] I am satisfied here that there is no substance in any of Simon’s causes of action under this head, as the respondent in granting CRC110662 was acting lawfully based on the information that it had then, and the state of the various consents at that time.

[84]    Intrinsically the water is not owned by anyone let alone the consent holder, it is managed by the respondent through the Act, and the relevant water plan. Upper limits are put on what can be taken by each permit holder. The respondent’s role throughout is to ensure that the amount of water granted in a consent is reasonable and meets the reasonable irrigation needs of the recipient property or properties specified in the application. In this case there is no limit placed on Simon’s consent, nor is it in effect varied by Robert’s consent which is a pure back-stop and subservient right. The two for example cannot operate simultaneously, and Simon’s right to draw water for use clearly takes priority. There has been no derogation from Simon’s grant here.

Failure to take into account relevant considerations and taking into account irrelevant considerations

[85] The arguments in relation to failing to take into  account  relevant considerations and taking into account irrelevant considerations/mistakes of fact are set out at [40] – [42] of Simon’s statement of claim. The relevant factors that the respondent is alleged to have failed to take into account are that CRC110662 affects Simon’s right to change, use, transfer, surrender or replace CRC042233.3 and that the exercise of CRC110662 will reduce the volume of water able to be taken and used by Simon pursuant to CRC042233.3; it will reduce the volume of water able to be transferred by him to another person or site under s 136; it will create a constraint on Simon’s ability to transfer the consent under s 136; and it effectively grants priority to CRC110662 over CRC042233.3. The respondent it is claimed took into account irrelevant factors here including first, that the respondent mistakenly considered that if the application was not granted (CRC110662), Robert would lose an existing right under CRC042233.3 to take and use water to irrigate his land when Robert had no such right; secondly, that as a matter of management or fairness to Robert the application should be granted; and thirdly, that the respondent mistakenly considered  the  grant  of  CRC110662  could  not  adversely  affect  Simon  because

CRC042233.3 could only be used to irrigate Robert’s land, ignoring Simon’s right, as the holder of CRC042233.3 to transfer it to another person or site under s 136 of the Act and ignoring the reduction in volume of water available under CRC042233.3 if CRC110662 was exercised. For these reasons, Simon argued that the decision was flawed.

[86] With regard to relevant considerations, as I have noted above, it is my clear view that Robert’s consent CRC110662 does not reduce the volume of water able to be taken and used by Simon pursuant to CRC042233.3. CRC110662 can only operate to the extent that CRC042233.3 is not operating. And, concerning transfer arguments under s 136 of the Act, these are entirely premature. No decision has been made in relation to CRC042233.4 and that application is on hold at Simon’s request. None of this as I see it grants priority to CRC110662 over CRC042233.3 for all the reasons outlined above. I am satisfied that the respondent here did not fail to take into account relevant considerations.

[87] With regard to irrelevant considerations, it is possible that in granting CRC110662 the respondent may well have had in mind that, despite the original 2005 water consent granted to Simon succeeding in part because the allocated water was initially to be used as to a little under one half on Robert’s land, and in the intervening period, no water had in fact been drawn and made available for use by Robert. In my view, that consideration, if taken into account, could not be seen as mistaken or irrelevant however. Fair management of the water resource as I see it enabled the respondent to consider and grant Robert’s application which was always a back-up consent for water already allocated to Simon for use on Robert’s land alone. And I am satisfied too that the respondent, with the benefit of the clear opinion from the experienced independent Commissioner Milne, was entitled to conclude that Simon was not an affected party for notification purposes with respect to CRC110662.

[88] It is beyond doubt that Simon here does not as of right have the ability to transfer his water permit to another party or site – an application must be made under s 136 of the Act and by s 136(4), the respondent is to consider the overall effects of the proposed transfer and the effect of changing any of its current conditions.

[89] For all these reasons also, I do not consider that the respondent took into account irrelevant considerations here.

Predetermination/bias

[90] Simon outlines the argument for this ground at [43] – [44] of the statement of claim. He contends that the respondent’s decision was motivated by its unjustified and erroneous assessment that the application by Simon which had led to the granting of CRC04233.3 had been inaccurate, incomplete or misleading; if any application for a resource consent was made by Robert and granted (as CRC110662 was) and Simon then attempted to take and use water in a manner inconsistent with his original application, this would constitute grounds for review under s128 of the Act (but this was never undertaken); that as a matter of management or fairness, the application should be exempt from the usual requirements for such applications (which assessment improperly favoured the interests of Robert over the interests of Simon) and it was granted without formal notification to Simon, and under all these circumstances that the respondent’s decision was so affected by bias, either actual or apparent, that it was unlawful. Simon argues that therefore the decision was unreasonable, predetermined and flawed.

[91] On these aspects, Simon appears to rely on the analysis in Judicial Review: A New Zealand Perspective9 at [13.54] and [13.61] and Howe v Keown.10

[92] The analysis at [13.54] of Taylor sets out the general principles for bias including actual and apparent bias. “Bias” is noted as a predisposition to decide a cause or an issue in a certain way which does not leave one’s mind properly open to persuasion. It involves an inability to be impartial. Taylor notes that, for a local authority exercising a discretionary power expressed in broad terms to which multiple considerations apply and with respect to which the range of permissible opinion is extraordinarily wide, for example, including issues of policy, taste and philosophy, it will be pre-judgment or a closed mind not open to persuasion that will constitute bias.

9       G Taylor - Judicial Review: A New Zealand Perspective (2nd Ed, Lexis Nexis, Wellington, 2010) at [13.54] and [13.61].

10      Howe v Keown [2011] NZAR 674 (HC).

[93] Howe v Keown appears to be a recent case looking at predetermination and bias, but before me, counsel for Simon did not specifically indicate why he might be relying on it here.  In my view it adds little in this case.

[94] As I see the position, the best that can be said  for  the  bias  arguments advanced by Simon here is that the respondent did mention at one point that the original application for CRC042233 may have been misleading, but it does not appear that this materially influenced the decision on CRC110662 in any way. I am not sure how, if CRC110662 was granted (which it was), it would affect Simon’s ability to take and use water in a manner inconsistent with his original application. The consent conditions were not being reviewed under CRC042233.3 so I am unsure what grounds would constitute a review under s 128. Again Simon endeavours to argue that the interests of Robert were favoured over his and that he should have been notified of the CRC110662 application. As I have already outlined above, Commissioner Milne came to the conclusion that Simon was not an adversely affected party and was therefore not required to be notified of CRC110662, and the respondent followed this advice.

[95] In my view, there is nothing before the Court which might properly support Simon’s argument for predetermination or bias on the part of the respondent here. I am satisfied the respondent in considering CRC110662 was quite impartial, it did not have a closed mind and any suggestions otherwise are misplaced. This ground advanced by Simon must also fail.

Remedy

[96] One final matter needs mention here. This relates to the remedy sought by Simon in his present judicial review application which I have noted earlier. In the prayer for relief in Simon’s statement of claim, although he seeks a declaration determining the respondent’s decision on CRC110662 as unlawful, there is no application to quash the consent or to direct the respondent to reconsider its decision. Instead, there is an application for damages which is an unusual form of relief in a judicial review (other than for example where there has been a breach of a right

contained  in  the  New Zealand  Bill  of  Rights Act  1990  such  as  in  the  Baigent

decision).11

[97] It is suggested by the respondent that by allowing Robert’s consent CRC1109662 to stand, but seeking to declare the decision unlawful, Simon’s only purpose here must be seen as an attempt to create a platform to obtain damages against the respondent, which is inappropriate in terms of judicial review. This must also mean that any declaration as to unlawfulness which this Court might make would not effectively remedy any harm that was found to be done in the way that a direction from this Court that the respondent was required to reconsider its decision would do.  In my view there is some substance in this suggestion.

[98] The nature of the remedy in damages sought by Simon in his statement of claim as I see it is inappropriate here. A declaration that the decision made was unlawful without more would not in reality remedy what Simon sees as the problem. All this in my judgment must call into question the purpose of these present proceedings which does not readily suggest that actual relief is sought by Simon to properly remedy the alleged harm.

[99] The real test of what Simon maintains is the defect with the respondent’s decision in CRC110662 must lie with the respondent’s decision when it considers his latest application to vary conditions and transfer the remaining water right under CRC042233.4. But he has chosen for his own reasons to leave that application on hold.

Conclusion

[100] As I have noted above, the only argument advanced by Simon on his present application that may have some slight merit is in relation to the non-notification to him of Robert’s application CRC110662. However, as I have discussed, Commissioner Milne found (and the respondent accepted) that Simon would not be an adversely affected party as CRC110662 did not affect anything in CRC042233.3. In my view this was a proper conclusion and one they were entitled to reach.  I am

11      Simpson v Attorney-General (alt cit Baigent’s Case) [1994] 3 NZLR 667 (CA).

satisfied too that the granting of CRC110662 did not materially adversely affect Simon or CRC042233.3.

[101] Simon’s application CRC042233.4 to vary and transfer his remaining water permit, as noted, is currently on hold. If, and when this application is resumed, only then in my view might CRC110662 have any possible effect on Simon’s rights. Until such time as that application CRC042233.4 is processed Simon cannot be adversely affected.

[102] For all the reasons outlined above, I conclude that Simon’s present judicial review application must fail.  It is dismissed.

Costs

[103] Costs are reserved. In the event that counsel and the parties are unable to agree between themselves on the question of costs then they may file memoranda on the issue (sequentially) which are to be referred to me and, in the absence of either party indicating they wish to be heard on the issue, I will decide costs based upon all the material then before the Court.

...................................................

D Gendall J

Solicitors:

Young Hunter, Christchurch

Raymond Donnelly & Co, Christchurch