Harvey v Tasman District Council
[2019] NZHC 2025
•16 August 2019
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE
CIV-2019-442-27
[2019] NZHC 2025
BETWEEN MICHAEL HENRY HARVEY
Appellant
AND
TASMAN DISTRICT COUNCIL
Respondent
Hearing: 13 August 2019 Counsel:
S A Keall for Appellant
A G Stallard for Respondent
Judgment:
16 August 2019
JUDGMENT OF CHURCHMAN J
Introduction
[1] This is an appeal against a decision of Judge Davidson in the Nelson District Court dated 20 February 2019 finding that the Tasman District Council (the Council), the respondent on this appeal, had proved its claim against Mr Harvey, now the appellant, for the unpaid balance of $10,143.10 for 12 water service connections for a subdivision in Mapua.1
[2] The hearing at first instance was in the District Court rather than the Disputes Tribunal as, under s 11(7) of the Disputes Tribunal Act 1998, the Tribunal has no jurisdiction to entertain a claim in respect of money due under any enactment.
1 Tasman District Council v Harvey [2019] NZDC 2561.
HARVEY v TASMAN DISTRICT COUNCIL [2019] NZHC 2025 [16 August 2019]
[3] Mr Harvey appeals the decision on the grounds that it contained material errors of fact and law in finding that he, rather than a company called Split Atom Marketing Limited (Split Atom), was liable.
Background
[4] On 7 October 2011, a resource consent for the subdivision of a block of land at Mapua was issued by the Council. The consent holder was described as Mike (M.H.) Harvey.
[5] Mr Harvey was the sole director and shareholder of Split Atom. Although Mr Harvey initiated the subdivision development at Mapua and obtained the resource consent in his own name, he arranged for the title to the development block to be taken in the name of Split Atom rather than in his own name.
[6] Each of the lots in the subdivision needed to have a connection to the Council’s water reticulation system. Twelve such applications were lodged on or about 1 November 2011 (“the application”). Each application was on a Council-generated request form for a new 20 mm metered water supply connection to a domestic property. Mr Harvey’s surveyor had entered “M H Harvey” next to “Name of Owner”. He also wrote “M H Harvey” under the title “Liability for connection cost and/or fee (to be completed by person liable).” Mr Harvey signed this section of the application, without altering either the name of the owner of the property or the sentence which said that he agreed to personally pay the connection cost when invoiced by Council. Three days prior to the signing of this form by Mr Harvey, title to the property that was the subject of the development had been issued to Split Atom.
[7] The Council incurred costs from a third party to install the water connection and claimed these costs from Mr Harvey pursuant to s 252 of the Local Government Act 2002 (the Act) which provides as follows:
252 Recovery of debts
Money payable by a person to the local authority for works, material, or things provided or done by the local authority, and money payable by a person to the local authority as a development contribution, is recoverable by the local authority as a debt.
[8] Mr Harvey was invoiced personally for the development contribution levy and also for the costs relating to the water connection. He paid the development levy and that part of the water connection costs that related to the work undertaken by the Council.
[9] He took no issue with the fact that the accounts from the Council in respect of the development levy and the portion of the water connection costs that related to the Council’s direct charges had been made out to him personally. However, he did take issue with his liability for that portion of the water connection costs rendered to him by the Council that represented the “outwork” that had been undertaken by the Council’s contractor.
[10] On 28 June 2012, the Council issued an invoice in the sum of $29,019.10 for water connection fees. The Council issued what were described as credit notes on 31 August 2012 and 25 May 2015 in the sum of $17,424 and $1,452 respectively. The Judge justifiably found that the language on these documents was confusing.
[11] The Judge made a finding of fact2 that although “an unsavvy rate payer” might have found the credit notes confusing, Mr Harvey was well aware that the original 28 June 2012 invoice was incorrect as to quantum. Given that there was evidence that Mr Harvey was an experienced developer, that is a finding of fact that was open to the District Court.
[12] The Judge concluded that by 31 August 2012, Mr Harvey knew that the figure owed to the Council was $11,595.10 in relation to the water connection.3
[13] The Judge found as a fact that the unpaid water connection fees were demanded on several occasions over the following years: 28 June 2012, 26 September 2013, 27 May 2015, 18 January 2016, 25 February 2016, 28 June 2016, 15 July 2016 and that these proceedings were eventually issued in January 2017.4
2 At [26].
3 At [27].
4 At [30].
Issue
[14] Before addressing what is in issue in this case, it is important to clarify what is not in issue. Despite the focus of much of the argument in the District Court, this case has nothing to do with the lawfulness of the Council imposing a development contribution.
[15] This appeal is also not about the lawfulness of the Council’s charge, including outwork costs, in relation to the water connections.
[16] The Council, in its Annual Plan is authorised to fix charges for connecting a property to its water system. The Annual Plan for the year 2011/2012 fixed the connection charge for urban areas at “$1,452 plus outwork, plus admin”. There had been no challenge to the provisions of that Annual Plan.
[17] The real issue in this case is whether the Council can only sue Split Atom as the entity that was the registered proprietor of the relevant land at the time the water connection consents were issued or whether, on the facts of this case, Mr Harvey has a personal liability.
[18] If Mr Harvey is not liable, then the Council will be unable to recover the outstanding portion of the connection costs as Split Atom has been removed from the companies register.
Mr Harvey’s position
[19] Mr Harvey contends that he signed the application in his capacity as director of Split Atom. Counsel for Mr Harvey, Mr Keall, submits that the application did not provide for execution by a company unless the person signing it altered the document by adding words along the lines of “as director of the company” or “as agent for the company”. The application required the insertion of the name of a natural person as the person liable to pay the Council’s costs for the connection, the relevant section using first-person language. Mr Harvey, as the company’s sole shareholder and director, was the only natural individual associated with it and so the surveyor who filled out the application wrote down Mr Harvey’s name, there being no other natural
person’s name for him to write. The application having been filled out by his surveyor, Mr Harvey then signed it in the form presented to him.
[20] This argument overlooks the fact that if Mr Harvey had wished to let the Council know that he was accepting the liability to pay the connection costs as agent for Split Atom, he could have written that on the form. Indeed, the surveyor, under the heading “Name and address of applicant” had written the applicant’s name as “M H Harvey, c/o Aubrey Survey and Land Limited, 66 Oxford Street, Richmond”. Mr Aubrey had then signed the document adding beneath this section “as agent for M H Harvey”.
[21] Mr Keall also submits that at around this time, the Council was corresponding with Split Atom in its capacity as developer and owner of the property and refers to the following matters:
(a)A Notice of Rating Valuation for 1 September 2011 from Quotable Value was addressed to and sent to Split Atom as the owner of the property, containing a unique reference number: 19380/305.
(b)The application used the same valuation reference number as the Notice of Rating Valuation: 19380/305.
(c)After the completion of the application, the Council wrote a letter dated 7 November 2011 to Split Atom with respect to a building consent for a stormwater tank at the site.
(d)The address on the application is the same address used on the Notice of Rating Valuation and the Council’s letter of 7 November.
(e)Split Atom paid a development contribution of $278,407.40.
[22] Mr Keall also submits that the only reasonable interpretation of the application in this context was that where Mr Harvey’s name was written, it was in his capacity as a director of Split Atom. Accordingly, it is submitted that the company is liable for the charges sought.
[23] The Judge’s analysis of this issue is said to have been wrong because he focussed principally on the fact that the application stated Mr Harvey’s name as the person liable. He noted that Mr Harvey was the applicant for the resource consent for the development, and the resource consent mentioned the applicant being required to apply separately for a water supply connection. He concluded that the reference to Mr Harvey as applicant in the resource consent was evidence that he was the person liable in respect of the application.
[24] As to the notice of rating valuation from QV, this is a document that was not prepared by the Council. It is also undated. It is likely to have been generated as a result of the registration of the transfer of the property to Split Atom on 28 October 2011.
[25] The fact that the Council corresponded with Split Atom on 7 November 2011 with respect to a building consent for a storm water tank at the site does not assist either. There is no doubt that the Council was entitled to correspond with the registered proprietor in relation to matters such as a building consent.
[26] The real issue is what legal consequences flow from Mr Harvey having signed the application which contained an express undertaking to be liable to pay for the water connection costs.
[27] Mr Keall complains that there is no evidence that the Judge’s attention was directed to s 134 of the Resource Management Act 1991 (the RMA), which provides that, where a local authority issues a resource consent, it “attaches to the land”. The resource consent expressly defined consent holder as follows:
This consent is granted to the abovementioned Consent Holder but Section 134 of the Act states that such land use consents “attach to the land” and accordingly may be enjoyed by any subsequent owners and occupiers of the land. Therefore, any reference to “Consent Holder” in the conditions shall mean the current owners and occupiers of the subject land. Any new owners or occupiers should therefore familiarise themselves with the conditions of this consent, as there may be conditions that are required to be complied with on an ongoing basis.
[28] Mr Keall submits that the correct link between the resource consent and the water supply connection was that legal responsibility sat with the owner of the land.
The resource consent was issued on 7 October 2011 in advance of Split Atom becoming the registered proprietor, which occurred shortly afterwards on 28 October 2011, at which time Split Atom was deemed to become the consent holder under the terms of the resource consent. So, in making the link between the identity of the holder of the resource consent and the application, given that the consent holder was to be regarded as Split Atom as the registered proprietor, the correct conclusion was that Split Atom should have been regarded as the person chargeable for purposes of the application.
[29] Mr Keall argues that liability for the water installation charges arose under statue rather than contract. In the absence of the power provided under s 252 of the Act, councils would not be able to claim reimbursement of expenditure. Only the local authority has the power to provide water supply services in its territory. Where water supply equipment is installed by a third party, the third party charges the council. The council’s ability to claim reimbursement of this “outwork” cost from the property owner is provided for by the combination of:
(a)it being included in the annual plan following consultation; and
(b)the existence of s 252 which gives the council the ability to recover debts.
[30] Mr Keall submits that the relationship between the property owner and the local authority is not regulated by a common law contract. The statutory function of the local authority is to provide the service. It does so exclusively within its territory. The property owner requiring the service has no choice but to request it from the local authority. The request for the service, and provision of it, are not a commercial bargain.
[31] Mr Keall complains that the Judge wrongly took a common law contract approach, which meant it was sufficient for Mr Harvey to ostensibly be the party. This is said to be significant because analysing who is the person liable for the purposes of s 252 is solely a matter of statutory interpretation. He submits that it does not involve the traditional contractual analysis, which imports considerations of what objectively
appears to be the case. Rather, the sole issue is who is the person for the purpose of these words in s 252; “money payable by a person”.
[32] Mr Keall submits that the person chargeable is the owner of the property because it is this person who enjoys the benefit for the services being provided. The context is that the infrastructural water supply services are being supplied to the property, not a person. The local authority is concerned with property, not people.
Council’s position
[33] Council’s position on appeal remains unchanged from that advanced in the District Court. It notes that consent for the subdivision was granted to Mr Harvey in accordance with his application and notified to him on 7 October 2011, the application for water connections following less than a month later. While Split Atom was a limited liability company at the time the consent was issued, having been incorporated on 22 October 2010, this consent was granted to Mr Harvey in his personal capacity.
[34] The provisions of that consent provided that there was a moratorium on the provision of new water connections to the Council’s water supply in Mapua, but the Council was nonetheless prepared to offer water connection to the subdivision subject to the consent holder paying the council development contribution for the water and current water connection fee within three months of the issue of the consent. This payment was, in fact, made, except for the external contractor outsourcing costs which are the subject of Council’s invoices here in dispute.
[35] The applications for water service were dated 1 and 2 November 2011. While submissions for Mr Harvey refer to the rating valuations as at 1 September 2011, there is no indication as to when this rating calculation was sent or received by either the Council or Quotable Value, and a more correct reference would, in fact, be the Certificate of Title which confirmed the transfer on 28 October 2011 of the property from a Mr Terrence Perry and a Mr Dennis Perry to Split Atom.
[36] Mr Stallard for the Council notes that Mr Harvey is an experienced developer and continues to operate as a real estate agent. He submits that it is simply not credible to advance an argument that Mr Harvey was unaware that he was signing other than
personally and with an assumption of liability in his own name. Mr Harvey did not follow any of the signing protocols for a company,5 and expressly asserted in the application that he was the owner of the property, notwithstanding that Split Atom was, in fact, the registered owner of the property in accordance with the title search. He could have put Split Atom on the application, but did not. In terms of the liability for the connection cost and/or fee, which is to be completed by the person that is liable, he again puts the name M H Harvey, when he could have put the name Split Atom, but did not. It is submitted that it is artificial to suggest that the name of the company could not have been used on the application. It was natural for the Council to rely upon documentation filed by an experienced subdivider.
[37] In terms of the resource consent running with the land under s 134 of the RMA, Council was aware of this as it was expressly referred to in cl 9 of the consent, but all s 134 does is set out that the consent holder is the current owner and occupier of the land. It does not deal with payment. The correct link is not as the owner of the land, but rather in terms of the consent and the application filed by Mr Harvey.
Discussion
[38] Mr Stallard also referred the Court to the case of Palmerston North Industrial and Residential Developments Ltd v Palmerston North City Council.6 Although this was a case relating to a development contribution rather than a water connection charge, it has some similarities to the present case. Mr Brian Green controlled a number of companies that made up the Brian Green Group. The judgment records that in or about November 2014, an application for land use consent for a subdivision was lodged by a company called Brian Green Property Ltd in respect of a property owned by Brian Green Properties (Palmerston North) Ltd. The Court found that no such company as Brian Green Property Ltd actually existed as at the date of the application.
[39] In December 2014, Brian Green Properties (Palmerston North) Ltd applied for a building consent which was granted on 31 January 2015.
5 Companies Act 1993, s 180.
6 Palmerston North Industrial and Residential Developments Ltd v Palmerston North City Council
[2018] NZHC 2985.
[40] On 27 February 2015, Brian Green Properties (Palmerston North) Ltd transferred the property to Palmerston North Industrial and Residential Developments Ltd. The Council sought to recover the outstanding development contribution levy from that company. It raised a number of defences including that the Council was not able to recover contribution levies as a debt, and the Council had issued its statutory demand against the incorrect entity because it was not the company that originally applied for the land use and building consents.
[41] The Council had no difficulty dismissing these arguments pointing out that s 252 of the Act expressly provides that money payable as a development contribution is recoverable by the local authority as a debt (this section is not restricted to development contributions as it also expressly includes “Money payable by a person to the local authority for works, material, or things provided or done by the local authority …”).
[42] The Court also concluded that as Brian Green controlled all the entities involved, including controlling which entity applied for a resource consent and which entity the property was held by:7
… it would be an injustice if the Council and the Manawatu ratepayers were precluded from recovering and otherwise legitimately payable development contribution levy because of steps taken wholly within the Brian Green Group.
Analysis
[43] Nothing in s 252 of the Act or s 134 of the Resource Management Act 1991 dictates that, when there is a default in the payment of a charge rendered in relation to a water connection, that the Council is restricted from suing anyone other than the current registered proprietor of the land.
[44] In the present case, the authority to undertake the water connection including the ability to recover the costs of outwork comes from the Act.
[45] The Courts will focus on substance rather than form. Just as in the Palmerston North Industrial and Residential Development Ltd v Palmerston North City Council
7 At [18].
case, Mr Harvey controlled who made the application for the resource consent and which entity became the registered proprietor of the property in question.
[46] Notwithstanding that he must have known that he intended to register the property in the name of Split Atom, he applied for the subdivision consent in his own name and it was granted to him personally.
[47] The same situation applies in relation to the water connection consents. He could have, but did not, describe the owner of the property on the application form as being Split Atom. He was content to have M H Harvey shown as the owner.
[48] Had he wanted to, he could have made it clear on the form that he was not accepting personal liability for the payment of the fee but merely signing as agent for Split Atom. Again, he deliberately chose not to do that.
[49] In any event, even if he had done so, he would still have been able to be sued but would have had the ability to seek an indemnity from Split Atom, provided Split Atom had actually authorised him to act as its agent.
[50] The Council was entitled to take the application forms at face value and to rely on the unequivocal representation, signed by Mr Harvey, that he agreed to pay the connection costs.
[51] Although the Council’s invoicing in relation to the outwork costs was sloppy, there was evidence upon which the Judge could have based his finding that Mr Harvey was aware how much was outstanding in relation to the outwork component of the connection costs. There is no basis for disturbing that finding on appeal.
[52] In these circumstances, Mr Harvey is the party liable to pay the outstanding charges. The appeal is accordingly dismissed.
[53] I invite the parties to agree costs but failing agreement, the respondent shall file a memorandum of no greater than three pages in length within 14 days of the date of this judgment, with the appellant having 14 days to reply and the matter of costs will then be dealt with on the papers.
Churchman J
Solicitors:
The Legal House, Auckland for Appellant Stallard Law Limited, Nelson for Respondent
Counsel:
S A Keall, Barrister, Auckland for Appellant
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