Hugh Green Ltd v Auckland Council
[2018] NZHC 2916
•9 November 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-3209 [2018] NZHC 2916
UNDER the Judicature Amendment Act 1972 BETWEEN
HUGH GREEN LIMITED First Plaintiff
GREERTON HOLDINGS LIMITED Second Plaintiff
AND
AUCKLAND COUNCIL Defendant
Hearing: 7 to 11 May 2018 Counsel:
ME Casey QC and AJ Casey for plaintiffs
NMH Whittington and RJ Wilson for defendantJudgment:
9 November 2018
JUDGMENT OF FITZGERALD J
This judgment was delivered by me on 9 November 2018 at 3:45 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Kemps Weir, Auckland (S Weir) Meredith Connell, Wellington
Hugh Green Limited v Auckland Council [2018] NZHC 2916 [9 November 2018]
CONTENTS
Introduction [1]
Factual background — overview [6] HGL and the Donegal Stud land [7] Key stages and planning documents in Flat Bush’s development [9] Progress of HGL’s development [15] HGL’s appeal and settlement discussions [24] Doubts as to the acquisition of Lots 800 and 801 [36] The decision not to acquire [41]
HGL’s pleaded claims
Introduction — factual matters [44] Substantive legitimate expectation [55] Other claims for judicial review [58] Breach of contract [60]
Substantive legitimate expectation — legal principles [63]
Substantive legitimate expectation — further factual detail
Introduction — the evidence relied on [81] The content of the planning documents re the POS6 Overlay [82] PC 20 workshops [90] Appeal workshops [101] The settlement meetings and correspondence [115]
Substantive legitimate expectation — analysis
Introduction [150] Did Auckland Council give a clear and unambiguous undertaking it ... would acquire Lots 800 and 801? [151]
Was any reliance by HGL on the promise or practice in question legitimate?[165]
Was there reliance in any event? [170]
Ought relief to be granted in any event? [173]
HGL’s application for judicial review
Introduction [182] Factual background to acquisition report [184] HGL’s grounds for judicial review [211] Mandatory relevant considerations — legal principles [213] Mandatory relevant considerations – analysis
District Plan – open space provisions/the Policy [216] Representations/HGL’s legitimate expectation [240] The terms of the settlement agreement [245] Irrelevant consideration – cl 58 of Stage 7 resource consent [250] Breach of natural justice [255] Wednesbury unreasonableness [262]
Breach of contract
Introduction [265] Approach to interpretation [268] Breach of contract — analysis [270]
Result and orders [283] Costs [285]
Introduction
[1] Hugh Green Ltd (HGL) is in business as a property developer. It owns land in the Flat Bush area known as Donegal Stud which it has developed for residential housing. HGL says it carried out certain aspects of its development in reliance on representations made to it by Auckland Council that the Council would acquire parts of HGL’s land (referred to as “Lots 800 and 801”) for “public open space”. Based on this understanding, HGL says it “locked in” Lots 800 and 801 as public open space when completing its development.
[2] In November 2015, however, the Council’s Parks and Recreation Committee (which I will refer to in this judgment as the “Acquisition Committee”) resolved not to acquire the lots. HGL says the decision was, amongst other things, in breach of its substantive legitimate expectation that the lots would be acquired.
[3] HGL acknowledges that while substantive legitimate expectation is a recognised administrative law cause of action in New Zealand, it is very limited in its application. To date no claim has been successful on this basis. HGL says, however, that its claim of substantive legitimate expectation is a “paradigm case”. It accordingly seeks an order that the Council give effect to HGL’s legitimate expectation by acquiring the land in question.
[4] HGL also advances more traditional grounds for judicial review, as well as a claim for breach of contract. The latter is based on a settlement agreement entered into by HGL and the Council which HGL says contractually obliges the Council to purchase Lots 800 and 801 in any event.
[5] The Council denies it gave HGL a clear and unambiguous undertaking that it would acquire Lots 800 and 801 as public open space. It accepts that at various times prior to November 2015, HGL and certain Council officials shared a common understanding the Council would purchase the lots. However, the Council says it was always subject to the caveat and clear understanding that any formal decision-making would need to progress to the Acquisition Committee, which would need to form its own view on the proposed acquisition. The Council also disputes HGL’s more
traditional claims for judicial review, and says the settlement agreement cannot be interpreted to impose a contractual obligation on the Council to purchase Lots 800 and
801. In short, the Council says HGL, anxious to take its development to market as soon as possible, took a commercial risk by progressing its development on the basis that Lots 800 and 801 would be acquired by the Council before any formal decision to that effect had been made.
Factual background — overview
[6] In this section of my judgment, I provide an overview of HGL, the relevant land and a broad chronology of relevant events. A more detailed examination of the evidence relied on by HGL in support of its claims is set out in later sections of this judgment, when addressing each of those claims.
HGL and the Donegal Stud land
[7] HGL is a privately-owned company and part of the Hugh Green Group, a well- established farming and property development group with various land holdings and activities in the greater Auckland area. HGL’s General Manager of Property and Development, Mr Patrick Gavaghan, explained that the Hugh Green Group has subdivided and marketed over 2,000 residential sections in the greater Auckland area over the past two decades, approximately 46 per cent of which are in Flat Bush and surrounding areas.
[8] The land at issue in these proceedings forms part of what is referred to as the “Donegal Stud”. Donegal Stud is an area of approximately 91 hectares in Flat Bush, located in what was formerly Manukau City. It was historically used for cattle rearing and was “greenfields” land, that is, mostly rural land with some pockets of rural residential land.
Key stages and planning documents in Flat Bush’s development
[9] Mr Russell Baikie, a planning consultant to HGL, explained that the Flat Bush area was first identified for future development in 1997, when the Manukau City
Council1 published the Development East Tamaki Draft Concept Report and Plan. That plan was adopted by the Council in 1999 and in terms of zoning, identified Donegal Stud as “future residential”.
[10] Plans for the area’s residential development intensified in around 2006, when the Council “released” certain land for development, through variations to the then District Plan. The principal variation was known as “Variation 13”. Mr Baikie explained that it provided a framework for the sequential rezoning of the Flat Bush area, based on a structure plan for the entire Flat Bush catchment. Variation 13 addressed the first stage of this rezoning (Stage 1), applying to land zoned for residential development and with an expected take-up over a period of 10 years. Stage
1 did not include HGL’s Donegal Stud land, which at that time, was zoned “future urban development.”
[11] The Council began planning for the release of “Stage 2” Flat Bush land through what became known as “Plan Change 20” (PC 20). Approximately 40 hectares of the Donegal Stud land was located within PC 20, equating to about 11.5 per cent of the total area covered by it.
[12] A helpful illustration of the Donegal Stud land falling within PC 20, and HGL’s proposed development of it, is set out below:2
1 In this judgment I will refer to both Manukau City Council and Auckland Council, established in
2010, as “the Council”.
2 This is an HGL plan, rather than a plan taken from or shown in Council planning documents.
Illustration 7: DG Stages 1- and PC20 Extent
[13] As can be seen from the above illustration, HGL’s Donegal Stud land is bordered by Murphy’s Bush to the east. A natural stream gully runs through it, separating two pieces of land from the rest of the developable lots. These pieces of land, immediately adjacent to Murphy’s Bush on its eastern edge, are known as “the Islands”. The above illustration also shows the various stages of HGL’s proposed development, to be carried out over seven separate stages –numbered on the illustration from 1 to 7. The development of the Islands was to take place last, in Stage
7. In addition, the illustration shows the two particular pieces of land which are at issue in this proceeding, Lots 800 and 801. Lot 800 is immediately adjacent to what is shown in the illustration as Castlebane Drive, and Lot 801 is adjacent to Murphy’s Bush at its north-western corner.
[14] A pre-notification draft of proposed PC 20 was released by the Council in
December 2006. The draft version of PC 20 was intended to be ready for formal
notification in 2007, but was delayed as a result of a review commissioned in 2008 of the development undertaken under Stage 1 of the Flat Bush development (i.e. pursuant to Variation 13). Of relevance to later aspects of this judgment, particular design issues identified by the 2008 Review were that roading design should provide better linkages to the “green” aspects of the overall development (referred to as the “greenfinger network”), and, as curved roads create an illusion of high density, the roads should be straight wherever possible. The 2008 Review informed the Council’s preparation in
2009 of a “Master Plan”, which set out the intended pattern of development to be conducted under PC 20.
Progress of HGL’s development
[15] Against this backdrop, HGL sought to advance its own residential subdivision of Donegal Stud, to be ready for work to begin in the summer of 2011. It required resource consent. To that end, HGL attended pre-application meetings with Council officers as early as December 2008, and on a regular basis from September 2009.
Mr Gavaghan gave evidence that during this early engagement, HGL learned that the Council planned to acquire the Islands as public open space. He also learned of the Council’s endorsement of the 2008 Review’s recommendation for straight “park edge” roads.3
[16] Mr Gavaghan said the Council’s proposed approach meant the amount of Donegal Stud land available for private development would be reduced significantly. These issues, and how HGL would be compensated for the loss of developable land, were discussed at meetings between HGL and Council officials on several occasions in late 2009 and early 2010. I return to these and other meetings between HGL and Council officials later in this judgment, as alleged representations made at these meetings form the basis for HGL’s claim of legitimate expectation.
[17] PC 20 was publicly notified on 27 October 2010. By way of background, under the Resource Management Act 1991, members of the public may make
submissions on a notified plan change. After the submissions phase is complete, the
3 “Park edge” roads mean one side of the road aligns to a park or open space; in other words, there is not development on both sides of a park edge road.
relevant local authority holds a hearing on the proposed plan change, which is usually conducted by a panel of independent commissioners who make recommendations to the local authority. The local authority makes a decision on the recommendations, and issues what is known as the “decisions version” of the plan change. This process was followed in the case of PC 20.
[18] The notified version of PC 20 included a structure plan, which identified various aspects of the land it covered as “public open space” and “stormwater management areas” — areas the Council could acquire from landowners for those purposes. Land was identified as public open space by way of the “Public Open Space
6 Overlying Area” (POS6 Overlay).
[19] By reference to the illustration at [12] above, Lots 800 and 801 (and other aspects of HGL’s development) were shown in PC 20 as falling within the POS6
Overlay. HGL’s primary concern at the time PC 20 was notified was what it perceived to be a lack of clarity as to how landowners would be compensated for land taken up by the Council as public open space or for stormwater management. It was also concerned that PC 20 showed the Islands (which HGL intended to develop at Stage 7 of its development) as falling within the POS6 Overlay.
[20] Shortly after PC 20 had been notified, on 1 November 2010, Manukau City
Council was amalgamated into the then newly constituted Auckland Council.
[21] On 3 December 2010 and again on 17 February 2011, HGL lodged a submission in response to the notified version of PC 20. It also gave evidence and presented submissions at the PC 20 hearings in August 2011. HGL’s submissions focussed on the extent of public open space shown in PC 20 and stormwater management land proposed on the Donegal Stud land, and how this was to be compensated for.
[22] In parallel with these developments, meetings between HGL and Council officials concerning HGL’s proposed development continued. Broader meetings, referred to as “PC 20 workshops”, also took place between landowners affected by PC
20 and the Council. In addition, in November 2011, HGL applied for and was granted
resource consent for Stage 1 of its development. Mr Baikie explained that this was fairly straightforward, as Stage 1 was not affected by the issues associated with public open space and stormwater management areas.
[23] The Council’s decision on PC 20 was released in June 2012. It reduced the amount of HGL’s land identified as public open space by reclassifying the Islands for development (though with a “future reserve” overlay). HGL remained concerned, however, that PC 20 still did not make adequate provision for compensation for the land which remained public open space or stormwater management areas.
HGL’s appeal and settlement discussions
[24] In July 2012, HGL (and other affected landowners) appealed the Council’s decision on PC 20 to the Environment Court and subsequently engaged in settlement negotiations. At around the same time, HGL applied for resource consent for Stages
5 and 2 to 4 of its development. The Stage 5 consent was granted in September 2012 and that for Stages 2 to 4 was granted in October 2012.
[25] Stage 5 of HGL’s development did not include any land identified in PC 20 as public open space. Stage 2, however, included a recreation reserve (for public open space) (Lot 603) and a stormwater reserve (Lot 604). Stage 2’s resource consent contained the following condition in relation to various lots, including Lots 603 and
604:
Land to Vest
60. (a) Lost 600 shall vest as Road in Council at no cost to the Council.
(b) (i) Either; Lot 603 shall vest as Local Purpose (Recreation Reserve) in Council subject to Council confirming this requirement to the Consent Holder including agreement of the compensation payable by Council for Lot 603, both within three (3) months of the date of this consent, or (ii)
If Council do not confirm Condition (60)(b)(i) above, the Consent Holder shall remove Lot 603 from the plan of subdivision and the land involved shall be incorporated into the balance subdivision land being Lot 610.
(c)
Lot
604 shall vest in Council as Local Purpose Reserve
(stormwater drainage) at no cost to Council.
[26] On 9 November 2012, and pursuant to condition 60(b)(i) set out above, the
Council advised HGL it would acquire Lot 603 as public open space.
[27] Settlement discussions between the Council and HGL continued throughout
2013. I address those discussions in more detail later in this judgment, as comments said to have been made by Council officials during the meetings also form part of the basis for HGL’s claim of substantive legitimate expectation.
[28] On 10 May 2013, the Council confirmed to HGL that the “future reserve overlay” would be removed from the Islands.
[29] In June 2013, HGL applied for resource consent for Stage 6 of its development, including the construction of two key roads, being Castlebane Drive and Hugh’s Way. The Stage 6 consent was granted in September 2013. Stage 6 also included reserve lots (for public open space), Lots 607 and 609. Like the earlier resource consent, it also contained a condition in relation to these lots:
Land to Vest
70. (a) Lot 605 shall vest as Road in the Council at no cost to the
Council.
(b) (i) Either: Lots 607 & 609 shall vest as Local Purpose (Recreation Reserve) in the Council, subject to Council confirming this requirement to the Consent Holder including agreement of the compensation payable by Council for Lots 607 & 609, both within three (3) months of the date of this consent, or (ii)
If counsel do not confirm Condition 60(b)(i) above, the Consent Holder shall remove Lots 607 & 609 from the plan of subdivision and the land involved shall be incorporated into the balance subdivision land being Lot
612.
(c) Lots 606 & 608 shall vest in council as Local Purpose Reserve
(stormwater drainage) at no cost to Council.
[30] Mr Gavaghan explained that HGL’s original plan had been to vest the stormwater and public open space land between the Islands and Castlebane Drive and Hugh’s Way (including Lots 800 and 801) during Stage 6. He said, however, that the boundary between what was to be stormwater management area and public open space
at that stage remained unresolved.4 As a result, any vesting of Lots 800 and 801 with
Council were deferred until Stage 7.
[31] HGL implemented the Stage 6 resource consent in October 2013, in particular, by forming the straight park edge roads (Castlebane Drive and Hugh’s Way), as well as in-ground services in Stage 6. The timing of these works is important to later aspects of this judgment, as HGL’s claim alleges it relied on representations by Council officials that Lots 800 and 801 would be acquired, by developing Stage 6 in the manner it did, which effectively “locked in” Lots 800 and 801 as public open space.
[32] On 22 April 2014, and pursuant to condition 70(b)(i) of the Stage 6 resource consent, HGL was advised that the Council’s Parks Department had received approval to acquire Lots 607 and 609.
[33] Meanwhile, settlement negotiations in relation to HGL’s appeal continued. A
settlement agreement was eventually executed on 12 May 2014. A significant part of
Mr Gavaghan’s evidence was directed to the negotiations leading up to the agreement and, in particular, assurances said to have been made by Council officials about the Council’s plans to acquire Lots 800 and 801. HGL says that in reliance on those assurances, including those made at a meeting on 29 April 2014 (referred to in the claim as “the April meeting”), it entered into the settlement agreement and proceeded with Stage 7 of its development in the manner it did. Again, I detail these exchanges later in this judgment when considering HGL’s claim of legitimate expectation.
[34] In August 2014, HGL applied for resource consent for Stage 7 of its development. Consent was granted on 22 September 2014. Again, like the earlier consents, the Stage 7 consent included the following condition at cl 58:
Land to Vest
58. (a) Lot 700 and 701 shall vest as Road in the Council at no cost to (b)
the Council.
Lot 702 shall vest as Accessway at no cost to Council.
4 HGL’s consultants did not agree with the Council’s modelling for stormwater management land requirements.
(c) (i) Either: Lots 800–804 incl., shall vest as Recreation Reserve in the Council, subject to Council confirming this requirement to the Consent Holder including agreement of the compensation payable by Council for Lots 800–804 incl., both prior to Council’s release of the Sec 224c certificate of subdivision, or
(ii) If counsel do not confirm Condition 58(c)(i) above, the Consent Holder shall remove Lots 800–804 incl., from the plan of subdivision and the land involved shall be incorporated into the balance subdivision land being Lot
900.
(d) Lots 805–807 incl., shall vest in Council as Local Purpose Reserve (stormwater drainage). Compensation shall be calculated and paid in accordance with Schedule 1 of the Settlement Agreement regarding the Environment Court Appeal between Hugh Green Limited and Auckland Council dated 12
May 2014 and referenced 31545787:623952.
[35] Mr Gavaghan said HGL did not challenge this condition as it considered it to be a standard condition in the same terms as those included in the earlier resource consents for Stages 2 and 6, pursuant to which the relevant lots had been acquired as public open space.
Doubts as to the acquisition of Lots 800 and 801
[36] HGL continued to progress Stage 7 of its development. On 30 March 2015, it received an email from one of its consultants, Mr Chris Maday at Harrison Grierson, recounting his discussion with an officer within the Council’s Parks Department,
Ms Tania Utley.5 Mr Maday said that Ms Utley had told him the Council did not have
enough money to purchase the Stage 7 public open space land and was therefore looking to reduce the amount it had to purchase. Mr Maday stated:
While this may be a positive for you there are several pit falls [sic] in not all areas can be serviced so you may wish to avoid receiving them back, also you have just constructed a foot bridge at considerable cost to link reserves which has an impact on the release of land.
Finally [if] they don’t acquire the land any development will be non- complying in terms of the current District Plan, so any agreement should be contingent that Council will view the non-compliance as a minor issue.
[37] Mr Gavaghan responded the following morning:
5 Ms Utley gave evidence at the hearing.
I am annoyed … they wanted the reserve which we designed, a little late to now to change their mind. As you say let’s see if we can turn this to our advantage. Key will be to avoid any delay to Stage 7 … .
[38] In terms of his last comment, Mr Gavaghan explained he was concerned at the impact any delay in the acquisition of stormwater and public open space land would have on HGL’s Stage 7 development. He explained that HGL had expected to apply for certification under s 224(c) of the Resource Management Act (confirming compliance with the resource consent) by mid-2015. He said HGL had pre-sold many of the sections and needed to get s 224(c) certification to provide title and settle with purchasers.
[39] Mr Gavaghan reported internally on Mr Maday’s email the same day, stating that the Council “appear to be within their rights under the Resource Consent condition [in not acquiring Lots 800 and 801] however we may be able to challenge that.”
[40] Discussions between HGL and its consultants continued on the implications of the Council not acquiring Lots 800 and 801. It initially seemed the two lots could be developed, with approval from Council and subject to issues with services to be provided being resolved. HGL was concerned, however, that it had marketed adjacent properties on the basis Lots 800 and 801 would be reserve.
The decision not to acquire
[41] On 27 October 2015, Mr Gavaghan attended a meeting of the Howick Local Board (HLB) to press HGL’s case for acquisition. He said it was apparent, however, that HLB had received a report which did not support acquisition of the public open space land in Stage 7 on the basis it was not now needed for the community. As a result, HGL sought and was granted permission to speak at the formal Acquisition Committee meeting to decide on whether to acquire Lots 800 and 801.
[42] That meeting was held on 18 November 2015 and Mr Gavaghan attended with HGL’s legal counsel. Mr Gavaghan said they were allocated only 10 minutes and were therefore able to give a brief summary only of HGL’s expectation that Lots 800 and
801 would be acquired. He also noted that at no stage prior to or at the meeting did
HGL have a copy of the Council officer’s report to the Acquisition Committee on Lots
800 and 801, or the previous report to the HLB.
[43] HGL was not successful in persuading the Acquisition Committee that Lots 800 and 801 ought to be acquired. On 23 November 2015, HGL was notified that the Acquisition Committee had formally resolved not to acquire Lots 800 and 801.
HGL’s pleaded claims
Introduction — factual matters
[44] Before turning to HGL’s three pleaded causes of action, it is appropriate to note the following seven matters from the “factual background” section of the amended statement of claim.
[45] First, the engagement between HGL and Council officials upon which HGL
relies for its claim of legitimate expectation encompasses the following:
(a) some 15 meetings and workshops between HGL and the Council over the period 18 December 2008 to 10 August 2010, referred to in the amended statement of claim as the “PC 20 workshops”;
(b) workshops and meetings with the Council to settle HGL’s appeal of PC
20 between 5 November 2012 and 13 November 2013, referred to as the “appeal workshops”; and
(c) a meeting with Council officials on 29 April 2014, referred to in the claim as the “April meeting”.
[46] Second, HGL alleges the PC 20 workshops were carried out “on the common understanding that Lots 800 and 801 would be acquired by the [Council] as POS 6 land”. In its statement of defence, the Council admits there was such an understanding at that time. Neither party’s pleading addresses specifically who in HGL or the Council held that common understanding, but at the very least, it must have been those representatives of HGL and Council officials who attended the PC 20 workshops.
[47] Third, HGL further alleges that it commenced development of Stage 6 of its development consistent with the clear expectation of both the Council and HGL that there would be no development on the park side of the park edge roads.
[48] Fourth, HGL alleges its plans for the development of the Stage 7 land were premised on infrastructure and services of capacity to service the Stage 7 land development as proposed (i.e. on the basis that Lots 800 and 801 were acquired as public open space), but not to service any additional residential development within the Stage 7 land.
[49] Fifth, HGL alleges that:
Through representations made by it at the PC 20 workshops, and the appeal workshops, the defendant induced a legitimate expectation on the part of the plaintiffs that the defendant would purchase Lots 800 and 801 if the plaintiffs designed their Donegal Stud land development in accordance with the Flat Bush structure plan and as agreed between the plaintiffs and the defendant at the PC 20 workshops and the appeal workshop”.
[50] HGL alleges it reasonably relied on that legitimate expectation in developing its land, and in particular constructing the park edge roads and in-ground services in Stage 6.
[51] Sixth, HGL also alleges that:
Through representations made by it at the appeal workshops and the April meeting, the defendant induced a legitimate expectation on the part of the plaintiffs that the defendant would purchase Lots 800 and 801 if the plaintiffs entered into the settlement agreement, prepared and submitted a subdivision plan for consent, and developed the Stage 7 land in accordance with the design agreed through the workshops.
[52] HGL says it reasonably relied on that legitimate expectation in entering into the settlement agreement and withdrawing its appeal, together with the development of its Stage 7 land, including the capacity of the services developed and in carrying out amenity work as part of that development.
[53] Finally, HGL alleges that if Lots 800 and 801 are not acquired by the Council, it will be left with pieces of land that are commercially undevelopable. HGL says that it “forewent [its] ability to review those parts of PC 20 that resulted in the
undevelopable land in reliance on the representations by the [Council] at the April meeting and by entering into the settlement agreement”.
[54] I now turn to HGL’s causes of action.
Substantive legitimate expectation
[55] HGL’s claim alleges that the earlier pleaded factual background, including the
PC 20 workshops, the appeal workshops and the April meeting, gave rise to a legitimate expectation that Lots 800 and 801 would be acquired by the Council, and HGL reasonably relied on that expectation when developing the Stage 7 land, in particular Lots 800 and 801.
[56] I interpolate to note that this pleaded reliance, confined as it is to the development of Stage 7, is narrower than the reliance pleaded in the factual background section of the claim, which includes the development of Stage 6. Given the way in which the claim is pleaded and was presented at the hearing, I proceed on the basis that development of Stage 6 also forms part of HGL’s alleged reliance.
[57] In terms of the relief sought under this cause of action, HGL seeks a declaration that the Council give effect to HGL’s legitimate expectation by acquiring Lots 800 and
801 under the terms of the settlement agreement.
Other claims for judicial review
[58] HGL’s claim further alleges that the Committee’s decision not to acquire Lots 800 and 801 was made in the exercise of a statutory power and was “unlawful”. HGL says the Council:
(a) failed to take into account or give sufficient weight to its own policies as to the design of public open spaces, in particular those contained in Chapters 16.15.9.3 and 17.10.4 of the Manukau District Plan;
(b)failed to take into account the representations it made at the PC 20 workshops and the appeal workshops;
(c) failed to take into account the commitment it made at the April meeting that it would purchase Lots 800 and 801;
(d) failed to take into account the provision for compensation for POS6
Overlay land made in the settlement agreement;
(e) took into account an irrelevant consideration, being HGL’s failure to appeal or vary condition 58 of the Stage 7 resource consent, when HGL already had both a commitment from the Council to purchase and a mechanism for determining compensation;
(f) gave no or insufficient weight to the undertakings by the Council in the settlement agreement; and
(g) gave no or insufficient weight to HGL’s legitimate expectation.
[59] Through its written opening submissions, HGL also advanced grounds for judicial review based on Wednesbury unreasonableness, breach of natural justice (the latter based on not receiving a copy of the report to the Acquisition Committee recommending Lots 800 and 801 not be acquired) and pre-determination. It is plainly unsatisfactory for further substantive grounds to be advanced for the first time in written opening submissions.6 Ultimately, the Council did not object to the claims of Wednesbury unreasonableness and natural justice being pursued, as they involve issues of law only and did not require any further evidence. It did, however, rightly in my view, object to the claim of pre-determination being advanced, given that would have required additional evidence from those reporting to and members of the Acquisition
Committee itself. HGL accordingly did not seek to pursue this ground of its claim.
6 Though it is fair to say that in the event, the claim of breach of natural justice was not pressed firmly by HGL, attracting only one short paragraph in its otherwise detailed written closing submissions.
Breach of contract
[60] HGL’s third cause of action is for breach of contract. It says the settlement agreement gave rise to a binding commitment on the part of the Council to acquire Lots 800 and 801, such that the decision in November 2015 breached that obligation.
[61] The terms of the agreement said to have been breached are not specified in the amended statement of claim.
[62] I turn first to HGL’s claim of substantive legitimate expectation, which was advanced as its primary cause of action.
Substantive legitimate expectation — legal principles7
[63] A leading decision examining the concept of substantive legitimate expectation in some detail is Randerson J’s judgment in New Zealand Assoc for Migration and Investments Inc v Attorney-General.8 The principles to be drawn from Randerson J’s judgment have largely been carried through into subsequent decisions, including decisions of the Court of Appeal.
[64] Randerson J surveyed earlier authorities on the doctrine, including the Privy Council’s 1983 decision in Attorney-General of Hong Kong v Ng Yuen Shiu,9 in which the Board observed that:10
… when a public authority has promised to follow a certain procedure, it is in the interest of good administration that it should act fairly and should implement its promise, so long as implementation does not interfere with its statutory duty. … The principle [is] that a public authority is bound by its undertakings as to the procedure it will follow, provided they do not conflict with its duty.
(Emphasis added)
[65] The Privy Council in New Zealand Māori Council considered a qualification that a successful challenge to an assurance of that type would depend in part on
7 Much of this summary is drawn from my recent judgment in Henry v Minister of Justice [2018] NZHC 2831.
8 New Zealand Assoc for Migration and Investments Inc v Attorney-General [2006] NZAR 45 (HC).
9 Attorney-General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629 (PC).
10 At 638.
whether there was any “satisfactory reason” not to comply with it.11 In New Zealand Assoc for Migration and Investments Inc Randerson J observed that this qualification:12
… reflects two key policy considerations which often lie at the heart of legitimate expectation cases. On the one hand there is a public interest in holding a public authority to promises made in the interests of proper public administration and allowing people to plan with some assurance. On the other, there is also a public interest in allowing governments and other public authorities to change policy from time to time when it is perceived to be appropriate to do so. Indeed, the adoption of new policy to meet changing circumstances may be viewed as the duty of any government in furthering the public interest.
[66] Randerson J further observed that a legitimate expectation (both in a procedural and substantive sense) is to be distinguished from a “mere hope” that a course of action will be pursued or a particular outcome gained.13 He stated:14
To amount to a legitimate expectation, it must, in the circumstances (including the nature of the decision-making power and of the affected interest) be reasonable for the affected person to rely on the expectation[.]
[67] In terms of the distinction between procedural and substantive legitimate expectation, Randerson J noted an expectation may be merely procedural in nature, but that there was “also some authority” for the proposition that, “in some circumstances”, substantive benefits may be recognised.15 He stated, however, that “the Courts normally stop short of granting relief in terms of a substantive outcome”.16
[68] The Judge also referred17 to the leading English Court of Appeal decision in
Bibi, in which the Court observed that where a legitimate expectation of some benefit was found, the Court would not order the authority to honour its promise, because to
11 New Zealand Māori Council v Attorney-General [1994] 1 NZLR 513 (PC) at 525.
12 New Zealand Assoc for Migration and Investments Inc v Attorney-General [2006] NZAR 45 (HC)
at [140].
13 At [143], citing Haoucher v Minister v Minister for Immigration and Ethnic Affairs (1990)
169 CLR 648 at 682 and White v New Zealand Stock Exchange [2000] NZAR 297 (HC) at 314.
14 New Zealand Assoc for Migration and Investments Inc v Attorney-General [2006] NZAR 45 (HC)
at [143] citing R v Secretary of State for Education and Employment ex parte Begbie [2000] 1
WLR 1115 (CA).
15 New Zealand Assoc for Migration and Investments Inc v Attorney-General [2006] NZAR 45 (HC)
at [145].
16 At [145].
17 At [144]–[146].
do so would be to assume the powers of the executive.18 Rather, the appropriate response was to ask the decision-maker to take the legitimate expectation properly into account in the decision-making process.
[69] Randerson J also stated the following:19
The intensity of the Court's scrutiny of the decision may also vary. Where very specific promises are made to an individual or a small class with serious consequences for them if the promises are not kept, the Court's approach is likely to be one of particularly close examination of the decision to ensure that the legitimate expectations of individuals are not unfairly or unreasonably thwarted. The Court will be astute to ensure the decision maker has conscientiously considered the position of those affected, has sound and logical reasons for reneging on the promises made, and has otherwise acted lawfully, fairly, and reasonably in the administrative law sense. In other cases, such as where the policy choices are very much in the macro-political field and there are strong countervailing grounds to support the course adopted, the Court may give greater recognition to the wider public interest in enabling governments to adjust policy including, when change is required and how, in their judgment, it is to be achieved. Even so, the Court will not in those situations, forego its proper constitution role on judicial review of ensuring that the decision maker has acted in accordance with law, fairly and reasonably.
[70] The Judge concluded his survey of the authorities by observing that:20
In no case, however, could I envisage a Court directing that a substantive benefit (such as a licence or permit) be granted. That would be to usurp the function of the executive.
[71] The above principles remain, in my view, the touchstone of the doctrine of substantive legitimate expectation in New Zealand. They were referred to with approval by the Court of Appeal in GXL Royalties Ltd v Minister of Energy.21 While the Court’s comments on legitimate expectation in that case were obiter, they cannot be described as a ringing endorsement. The Court observed that the failure in that case to advise of a departure from the position heralded in an earlier communication to the
appellant could not “elevate a process requirement into a substantive outcome.”22
18 R (Bibi) v Newham London Borough Council [2002] 1 WLR 237 (CA).
19 New Zealand Assoc for Migration and Investments Inc v Attorney-General [2006] NZAR 45 (HC)
at [158].
20 At [159].
21 GXL Royalties Ltd v Minister of Energy [2010] NZCA 185, [2010] NZAR 518 at [21] and see
[43]–[45].
22 At [45].
[72] The Court of Appeal revisited the doctrine of legitimate expectation in Comptroller of Customs v Terminals (NZ) Ltd.23 The respondent claimed a (substantive) legitimate expectation that certain duties would not be applied to their imported goods, based on alleged (oral) assurances given to it by the appellant. It is clear from the Court’s rejection of a legitimate expectation in that case that an important aspect of its decision was the statutory context, being the Comptroller’s overriding statutory obligation to collect whatever duty was required to be imposed at law. The Court nevertheless examined the underlying principles of a claim of legitimate expectation, and largely reiterated those set out by Randerson J in New Zealand Assoc for Migration and Investments Inc v Attorney-General.24 In doing so, the Court did not distinguish between a procedural and substantive legitimate expectation. It set out a three-stage inquiry in all such cases, being:
(a) First, “to establish the nature of the commitment made by the public authority, whether by a promise or settled practice or policy.”25 This was said to be “a question of fact to be determined by reference to all the surrounding circumstances.”26
(b)Second, “to determine whether the plaintiff’s reliance on the promise or practice in question is legitimate.”27 This “involves an inquiry as to whether any such reliance was reasonable in the context in which it was given.”28
(c) Third, and said to often be the most difficult part of the inquiry, “is to decide what remedy, if any, should be provided if a legitimate
expectation was established.”29
23 Comptroller of Customs v Terminals (NZ) Ltd [2012] NZCA 598, [2014] 2 NZLR 137. The Supreme Court heard, and dismissed, an appeal against the judgment but on different grounds to the legitimate expectation issue: Terminals (NZ) Ltd v Comptroller of Customs [2013] NZSC 139, [2014] 1 NZLR 121.
24 Randerson J was by then a member of the Court of Appeal and in fact delivered the Court of
Appeal’s judgment in Comptroller of Customs v Terminals (NZ) Ltd [2012] NZCA 598, [2014] 2
NZLR 137.
25 At [125].
26 At [125].
27 At [126].
28 At [126].
29 At [127].
[73] In commenting on the relief which might have been granted had a legitimate expectation been established in the case before it, the Court of Appeal observed that while the decision-maker might be ordered to follow a process that he or she has expressly or impliedly undertaken to follow, relief in the form of a substantive outcome “is rarely, if ever, granted”.30
[74] In Back Country Helicopters Ltd v Minister of Conservation, Kós J noted the prevailing trend of authorities in New Zealand was against recognition of substantive legitimate expectation, but that the New Zealand Court of Appeal had not “shut the gate altogether”.31 His Honour noted that while it might be recognised in a “truly exceptional case”, in such cases, another more conventional ground of judicial review was likely to be available in any event.32
[75] The most recent Court of Appeal statement on legitimate expectation is its judgment in Green v Racing Integrity Unit Ltd.33 In that case, the appellants claimed they had a legitimate expectation they would be consulted prior to certain steps being taken to progress testing of urine samples of the appellants’ winning pacing filly. The case was accordingly one of an alleged procedural legitimate expectation. The Court nevertheless sounded a note of caution in relation to granting of relief of a substantive nature, even if the earlier threshold requirements for legitimate expectation had been met.34
[76] Collins J considered a claim of substantive legitimate expectation in Oosterveen v Ministry of Business, Innovation and Employment.35 The claim was rejected. Collins J observed that “if the doctrine were to gain traction in New Zealand it might found a claim for judicial review where”:36
(1) a public authority has given a clear and unambiguous undertaking;
(2) the undertaking was reasonably understood to mean what the applicant claims;
30 At [155].
31 Back Country Helicopters Ltd v Minister of Conservation [2013] NZHC 982 at [184].
32 At [184].
33 Green v Racing Integrity Unit Ltd [2014] NZCA 133, [2014] NZAR 623.
34 At [41].
35 Oosterveen v Ministry of Business, Innovation and Employment [2014] NZHC 1709, [2014] NZAR 1091.
36 At [50].
(3) the decision-maker knew of the representation and chose to act contrary to it;
(4) the applicant has suffered some detriment by relying on the representation; and
(5) the decision-maker’s conduct cannot be objectively justified as being in the public interest and a proportionate response to the circumstances of the case.
(Footnotes omitted)
[77] This five-step approach was drawn largely from recent English Supreme Court, Court of Appeal and Privy Council decisions.37
[78] Finally, Palmer J recently considered the doctrine in Chamberlain v Attorney- General.38 While he concluded that the facts in that case fell far short of a successful claim, he accepted that in theory at least, such a claim was available in New Zealand. Referencing both the three-stage test identified in Comptroller of Customs v Terminals (NZ) Ltd and the five-step approach set out by Collins J in Oosterveen, Palmer J stated:
[74] I consider New Zealand judicial reluctance about claims of substantive legitimate expectations often derives from judicial concerns that it might allow the role of the decision-maker to be usurped in two ways. The first is that it is not usually legitimate to fetter a decision-making discretion with an expectation of a particular substantive outcome. The second is that it is rarely appropriate to grant substantive relief. Both concerns can be taken into account in the application of the Terminals concept of legitimate expectations and in the way Collins J suggests.
(Footnotes omitted)
[79] I respectfully agree with his Honour’s observations.
[80] I turn to apply these legal principles to this case.
37 Including, in particular, Paponette v Attorney-General of Trinidad and Tobago [2010] UKPC 32, [2012] 1 AC 1.
38 Chamberlain v Attorney-General [2017] NZHC 1821, [2017] NZAR 1271. This decision was reversed on appeal, but the Court of Appeal was not required to consider the substantive legitimate expectation claim: see Chamberlain v Minister of Health [2018] NZCA 8, [2018] 2 NZLR 771 at
fn 2.
Substantive legitimate expectation — further factual detail
Introduction — the evidence relied on
[81] I first set out the evidence relied on by HGL as giving rise to a promise or assurance by the Council that Lots 800 and 801 would be acquired as public open space. Given the nature of HGL’s claim, it is necessary to examine the content and chronology of that evidence in some detail.
The content of the planning documents re the POS6 Overlay
[82] HGL places considerable reliance on the content of the District Plan as giving rise to a promise or assurance that all land identified in the Plan as public open space would be acquired. It refers in particular to the following aspects of the Plan:
(a) the importance of the open space or “greenfinger” network in Flat
Bush;39
(b)the importance of straight park edge roads in providing a legible urban pattern, including maximising physical and visual connections to open space;40
(c) the importance of one-sided development against park edge roads, particularly in reducing the appearance of density, improving neighbourhood amenity and improving the safety of open space;41 and
(d)The Council’s intention to acquire identified land to fulfil its open space and design criteria.42
[83] HGL says these policies and objectives were “well summarised” in s 16.15.9.3 of the Plan in the following terms:
39 In particular sections 16.15.9.3, 17.10.4.7 and 17.10.9.8.1.
40 Sections 17.10.9.5.1 and 17.10.9.5.2.
41 Sections 16.15.9.3, 17.10.4.7, 17.10.9.5.1 and 17.10.9.5.2.
42 Sections 16.15.9.3, 17.10.6.2.3, 17.10.9.8.3 and 17.10.11.9.
Public Open Space, Conservation of Natural Features, Landform
Vegetation and other Heritage Features
The Flat Bush structure plan incorporates an integrated management approach to the development of the Flat Bush area. Generally the natural drainage pattern is protected through the establishment of a Public Open Space 6
Environmental Corridor zone, which is also overlaid with stormwater management areas. These corridors form the backbone of managing; water
quality, flooding, ecological protection and enhancement, and (together with the riparian margins of the streams) the provision of a quality open space
network contributing to overall amenity. The objective for these environmental corridors is that existing bush areas will not only be protected but also extended to include the riparian areas of the existing streams. This
will protect streams from erosion in addition to providing an improved habitat for fish life and other wildlife.
In the proposed urban (lower) catchment area the environmental corridors will be required to be vested with Council at the time of subdivision or development, with appropriate compensation being paid for these areas. A total of 49 stormwater ponds are identified throughout the catchment to manage both quantity and quality of stormwater before it is released into the natural drainage system. These will be progressively constructed by the development community and in some cases the Council.
The integrated structure planning approach undertaken for the Flat Bush has resulted in a substantial part of the catchment being retained in open space. Approximately 30% of the catchment has been identified for non urban purposes through a combination of Public Open Space 6 zoning, Public Open Space 6 overlying area, Stormwater Management areas and Conservation/Stormwater Management policy areas.
In total it is proposed that approximately 25 % of the area will end up in public ownership either as Public Open Space or Stormwater Management Areas.
In order to promote the integration of open space and in particular raising the profile of the environmental corridors a number of roads are identified alongside these corridors which will allow development on one side while keeping the other side open. This approach will significantly improve the amenity of the whole Flat Bush area, help to offset some of the effects of the higher densities generally proposed and will also lead to an improvement in the safety of these areas through the informal surveillance of adjoining houses, passing local traffic and enhanced use of open space.
(Emphasis added)
[84] HGL points to similar sentiments in s 17.10.6.2.3 of the Plan, which stated
(under the heading “Land purchase”):
The Council will continue to make strategic land purchases as appropriate in the Flat Bush area, having regard to land earmarked for Public Open Space or Stormwater Management Areas as identified in the Flat Bush structure plan.
[85] HGL also refers to statements in the Plan at s 17.10.9.8.3 that:
The land that Council intends to acquire for the Public Open Space 6 – Environmental Corridors Zone is shown in the Flat Bush structure plan as Public Open Space 6 overlying areas. Council will acquire the land within the Public Open Space 6 overlying area through the subdivision process. After vesting of the identified land as Public Open Space, the ‘overlying’ status will be removed and the land will be rezoned to Public Open Space 6 – Environmental Corridor Zone.
(Emphasis added)
[86] Similar statements were made at s 17.10.11.9 namely:
Upon development or subdivision of sites containing Public Open Space 6 overlying area, such areas shall be vested in the Council for Public Open Space purposes. Property owners of all land so vested shall be compensated (where applicable) in accordance with r 15.15.2 and r 17.10.11.9(b), (c) and (d).
(Emphasis added)
[87] The Council accepts the Plan, through Variation 13 and PC 20, emphasised the development of a greenfinger network, including through land earmarked for public open space and stormwater management areas. It notes, however, that references in the Plan to the acquisition of land for such purposes were qualified by provisions confirming that any decision on acquisition would be made at the time of subdivision. In this context, the Council emphasises the following:
(a) The exact position of stormwater management areas was to be determined through detailed analysis at the time of subdivision.43
(b)Section 17.10.6.2.3 of the Plan, set out at [84] above, which emphasised that only strategic land purchases would be made “as appropriate” and “having regard to” land earmarked for public open space (i.e. not representing that all land earmarked for public open space would be acquired).
(c) Section 17.10.11.9(g) of the Plan which specifically stated that:
in the situation where all or part of the land identified within the Public Open Space 6 overlying area is not required to be vested in Council as Open Public Space, the overlying area status shall no longer apply and the land shall
43 Section 17.10.5 of the Plan.
be administered in accordance with the provisions of its underlying zone as determined in r 17.10.11.9(b), (c) and (d). (Emphasis added)
(d)Section 15.15.2.2.3 (part of ch 15: Public Open Space), which provided that:
Where proposed Public Open Space is designated on the planning maps, these areas will be obtained wherever possible either by way of reserve contribution when the land is subdivided, or by the use monetary reserve contributions.
(Emphasis added)
(e) Finally, s 17.10.11(d), which was amended after the hearing by the panel of independent commissioners44 on submissions in relation to notified PC 20, which stated that:
In the case of land within the vicinity of Murphy’s Park identified on figure 17.10.19 as “future reserve”, the zoning of this land is Flat Bush Residential 3. In the event this land is acquired for reserve and in the event the value of that land exceeds the financial contribution payable for public open space purpose, it is appropriate to assess compensation for this land with regard to Public Works Act principles and in accordance with normal valuation methodology.
(Emphasis added)
[88] The Council says these provisions made it abundantly clear there was no certainty that it would acquire all land earmarked in the Plan as POS6 Overlay.
[89] The Council also refers to s 86(2) of the Resource Management Act which (subject to exceptions not relevant in this case) provides that “nothing in any plan shall impose on any regional council or territorial authority any obligation to acquire any land”. The Council says this provision exists to ensure that aspirational statements made in a district plan are not interpreted by parties as requiring land acquisition. HGL does not dispute that s 86(2) prevents a plan itself giving rise to a binding obligation to purchase land, but says that does not necessarily mean planning
provisions cannot found or support a legitimate expectation of such acquisition.
44 See [17] above.
PC 20 workshops
[90] The second set of statements or representations HGL relies on are representations said to have been made on the Council’s behalf at the PC 20 workshops.
[91] Mr Gavaghan did not give evidence of any specific representations said to have been made during the period December 2008 to September 2009. I have already summarised at [15] and [16] above his evidence as to HGL’s key concerns arising from these early discussions, particularly in respect of the reduction in the amount of Donegal Stud land available for development and the resulting method for compensation.
[92] Mr Gavaghan said these issues were also discussed frequently at meetings between HGL and the Council over the period 17 September 2009 through to
30 March 2010. Again, Mr Gavaghan did not point to any specific or express representations made by Council officers during these meetings. I also note that the minutes of the PC 20 workshop held on 30 March 2010 state that:
HGL reiterated that the land adjacent to Murphy’s Bush is development area. Council planning for the Flat Bush areas needs to consider financial considerations — cost to public and landowner of prospective purchase. Council advised that the financials associated with a preliminary position on the use of HGL land as extended Murphy’s parkland not considered presently but needs to be.
[93] The Council says this is fundamentally inconsistent with a suggestion the Council had made positive representations to that point that it would purchase all HGL’s land identified as public open space.
[94] A further PC 20 workshop was held on 10 June 2010. This was not a meeting solely between HGL and Council officers, but a broader workshop including other Flat Bush landowners and stakeholders. No suggestion is given in the evidence of any particular representations as to acquiring Lots 800 and 801 at this meeting. The meeting minutes record that:
On the issue of the open space provisions of the draft Master Plan there was considerable support for the generous provision of open space and the idea of framing the natural bush areas of Murphy’s Bush. There was some concern
however, about feasibility of Council funding the acquisition and maintenance of all these areas.
[95] The last of the engagements defined in the claim as the PC 20 workshops was a meeting held on 10 August 2010 between Council officials, Neils Construction, Fletcher Construction and HGL. The minutes of that meeting record the following:
Bruce Harland mentioned that work had been done on assessing the feasibility of Council acquiring all of the open space identified in the draft Master Plan. Preliminary indications were that it appeared feasible to acquire all the open space marked on the draft Master Plan with the reserve contributions that would be realised from the remaining development of Flat Bush.
(Emphasis added)
[96] Mr Gavaghan said this confirmed HGL’s understanding from the previous meetings that all reserved land shown on the Master Plan as public open space would be acquired by the Council.
[97] An important point to emerge from Mr Gavaghan’s cross-examination was that while he maintained his position that Council official represented in the PC 20 workshops that all public open space land would be acquired, an important aspect of HGL’s belief in this regard was drawn from the content of PC 20 itself, that is, rather than any express statements by Council officials. In this context, the following exchange took place between Mr Gavaghan and Mr Williams (counsel for Auckland Council):
Q. … In the answer you gave to my previous question you referred to not being sure what the plan that you would have had in front of you at this meeting looked like. Can I take it from that answer that you believe that when the council presents a plan showing public open space land that is a representation that it intends to buy that land?
A. I would be fair to say, yeah, to say that.
Q. So, in all of these meetings that we are going to get to, when the council presents its plan to you of land, it’s framework over which, which encompasses Hugh Green’s land, where that shows public open space you believe that that is a representation that the council will buy that land?
A. Yes, they have an intent to buy it and we were to design with that in, in accordance with that, unless we are told otherwise, which we never were.
[98] A similar exchange took place later in Mr Gavaghan’s cross-examination:
Q. So you stick to the position that in this meeting the council made a positive representation that it would acquire Hugh Green’s public open space land?
A. If the plans show that it’s reserve that was their intention as far as I
would be concerned, [inaudible]
Q. So you are saying that your belief that the council was representing that it intended to acquire Hugh Green’s public open space land is based on the plan before you in the meeting?
A. Yes, that’s what I would be reporting back to my office to say that there’s a likely, a strong likelihood and this is their intention.
Q. So it’s not that the council has made a positive representation orally, it’s that it is based on a written plan?
A. Yes, a plan that will be notified as the formal document.
[99] In relation to the PC 20 workshop held on 10 June 2010, Mr Gavaghan accepted in cross-examination that the minutes did not record any positive representation about the acquisition of HGL land, but that aspects of the HGL land were shown as public open space on plans being debated at that time. The following exchange took place about that meeting:
Q. Right, so we’re back at the plans then. That’s the basis of your belief? A. Well what are they displaying there? What’s this — what is this
particular meeting all about if it's not talking to the plan? That’s my view, it's issues regarding the draft master plan.
Q. But my question is, your belief is based on your reading of the plans that are being presented at this meeting, is that right?
A. Correct.
[100] HGL’s evidence does not, in my view, demonstrate that during the PC 20 workshops any express written or oral representations were made by Council officers that all HGL land shown as public open space would be acquired by the Council. Rather, the theme of Mr Gavaghan’s evidence in relation to this phase of engagement was that the land was shown as POS6 Overlay in the various plans being discussed at the time, and there was no indication or statement from Council officials that the land would not be acquired for that purpose.
Appeal workshops
[101] The next engagement between HGL and the Council upon which HGL relies are those meetings defined in the claim as “appeal workshops”.
[102] As noted earlier, in the lead up to the appeal workshops, HGL had made submissions on the notification version of PC 20. Part of the submission included a legal submission on HGL’s behalf. Mr Gavaghan confirmed that somebody from HGL would have read the submission prior to it being lodged. HGL’s legal submission noted the Council did not own the land that “it proposes to zone POS 6 … and there has been no proposal put forward by the Council to acquire it.” The legal submission went on to state:
If the Council eventually decides to acquire the land or to require HGL to contribute some or all of it by way of reserve contribution (or in lieu of financial/development contributions) then it is essential that the full potential of the land is recognised. Otherwise the Council is abusing the plan change process to keep down the value of the land for its own advantage and to the significant prejudice of HGL.
(Emphasis added)
[103] The appeal workshops extended over several months. In the intervening period (over the balance of 2012 and into the early part of 2013), HGL progressed Stages 5 and 2 to 4 of its Donegal Stud development. Resource consent for those stages were granted on 27 September 2012 (Stage 5) and 18 October 2012 (Stages 2–4).
[104] Also around this time, and shortly before the appeal workshops commenced, on 6 September 2012, Mr Gavaghan received an email from Harrison Grierson reporting on discussions between Harrison Grierson and Council officers:
... there is an issue in [Auckland Council] being able to afford the acquisition of new reserves under the DC policy. I [the relevant Harrison Grierson consultant] have already spoken with Parks and as of yet they haven’t been able to confirm whether they can pay. This may impact on the Murphy’s Bush extension.
[105] That email related to Stages 2 to 4 of HGL’s development.
[106] The so-called “appeals workshops” comprise five meetings over the period
5 November 2012 to 10 November 2013. In his evidence-in-chief, Mr Gavaghan
(briefly) addressed the meetings held on 5 November 2012, and 31 March and 9 May
2013, explaining that although discussion at the meetings centred on plans for the Islands (i.e. HGL’s desire that the notation “future reserve” be removed), the land between the Islands and the western park edge road:
… was always considered by both HGL and Council as part of the
‘greenfinger’ reserve land to be acquired by Council. There was never any suggestion that there would be any development on it, or that it would not be acquired for reserve by Council.
[107] Shortly after the first of the appeal workshops, the Council advised HGL that it would be acquiring Lot 603 (which formed part of HGL’s Stage 2 development), stating:
Hi Pat
Good news, Tania Utley (Parks & Recreation Adviser) has advised that
Council will purchase the reserve Lot 603.
[108] On 10 May 2013, the Council’s solicitors confirmed to HGL that the Council had agreed to remove the “future reserve” notation from the Islands. The correspondence suggested that without prejudice discussions continued in relation to the method of calculating compensation for other public open space land.45
[109] The fourth appeal workshop relied on by HGL was held on 11 July 2013.
Mr Gavaghan simply notes that by the time of this workshop, “the matter” was not resolved.
[110] HGL applied for consent for Stage 6 which was granted on 26 September 2013. The consent provided that Lots 607 and 609 of the development would vest as reserve “subject to” confirmation from the Council to HGL of that requirement and agreement regarding compensation within three months.46
[111] It was put to Mr Gavaghan that when HGL submitted its application for resource consent for Stage 6 and then implemented the consent once granted, HGL
took a commercial risk that the land that would become Lots 800 and 801 might not
45 Both parties waived privilege in the subsequent communications.
46 Namely condition 70(b)(i); see [29] above.
be acquired. Mr Gavaghan stated that in his view, there was no commercial risk, relying on the relationship he had with Council “for many, many years”. Mr Gavaghan saw no reason to defer lodging the consent or implementing it until the planning matters had been resolved, given the position he considered had been reached on the acquisition of public open space. He also noted there was market demand for the developed land and HGL was “simply doing our business, going about our business”. He also confirmed that the formation of Castlebane Drive as a straight park edge had occurred by this point, under Stage 6 of HGL’s development.
[112] The Council’s solicitors wrote to HGL on 14 October 2013 proposing to settle the compensation issue in relation to stormwater management area land in a side agreement. The letter set out what Mr Gavaghan accepted had been outlined by
Mr Walton, a senior Council official, at the earlier July 2013 meeting. It suggested a process for determining which land would be vested with the Council, calculation of compensation payable and, relevantly, said “acquisition is dependent on a budget being included in the [long term plan] and the appropriate committee of Council granting approval to acquire the land”. The letter went on to note that “upon approval being granted by a committee of the Council, Auckland Council Property Limited would be briefed to negotiate a sale and purchase agreement for the land.” The letter sought HGL’s comments. There was no immediate response from HGL, including in relation to the reference to acquisition of public open space being dependent on budget and Committee approval.
[113] The final appeal workshop on which HGL relies was held on 10 November
2013. Mr Gavaghan explained that HGL wanted clarity at that meeting around categorisation of land for valuation purposes, including reserve land. The formal minutes of that meeting record the following:
Discussion on timing of subdivision and vesting of land as POS 6. Bruce [Harland] to check the financial commitment for 2014–15–16 and to advise HG on financial year for vesting to align with the Council’s LTP and budgets.
[114] Mr Gavaghan said it was clear to him from the meeting that the question was not whether the land would be acquired for public open space, but when.
The settlement meetings and correspondence
[115] The final engagement with Council on which HGL relies is a meeting held on
29 April 2014 to discuss the settlement of HGL’s appeal (the “April meeting”). HGL pleads that at the April meeting, the Council (through its officers) represented that upon or following the subdivision of the Stage 7 land, the Council would acquire Lots
800 and 801. The background to the April meeting is a series of communications and correspondence between the Council and HGL on the terms of the proposed settlement of HGL’s appeal.
[116] On 3 December 2013, the Council’s solicitors had sent a draft settlement letter which included a provision that:
Acquisition of the land is dependent on a budget being included in the LTP and the appropriate committee of Council granting approval to acquire the land.
[117] Mr Gavaghan gave evidence of discussion he had with Mr Walton on
16 December 2013. Mr Gavaghan said that:
[Mr Walton] assured me that the land would be acquired and the clauses reflected the process that had to be followed for this to be done. I told him that we required Council to commit to the acquisition — at least in principle
— before we could sign the agreement.
[118] Mr Walton said he agreed he would have told Mr Gavaghan that it was likely the Council would acquire the land, but disputes it would have been framed as an “assurance”. He said:
While I cannot recall the exact words used in the conversation, I would normally be very careful to qualify any statements I made by ensuring that the other party understood the framework of the decision-making requirements of the Council and the fact that therefore any indications about acquisition of the land could not be completely assured — that the committee will receive a report from officers with recommendations but it is the committee that would make a decision on land purchase.
[119] By email dated 17 December 2013, HGL’s legal representatives wrote to the Council’s legal representatives referring to the earlier discussion between Mr Walton and Mr Gavaghan. The email recorded that:
HGL requires that Council commit to acquisition of the land before the agreement is finalised, at least at in-principle level.
(Emphasis added)
[120] An amended draft settlement letter was sent by the Council’s lawyers to HGL’s lawyers on 20 December 2013. Notably, this draft had the clause referred to at [116] removed. A subsequent draft of the settlement letter circulated on 18 March 2014 was in a similar form. Mr Gavaghan linked the removal of the clause with his discussion with Mr Walton on 16 December 2013. Mr Walton disputed that however, stating that he had not instructed the clause to be removed and in fact when it later came to his attention that it had been removed, he insisted it was reinstated. He said he would never have agreed to the removal of the clause because the Council’s decision-making framework was not something over which he had control. He accepted that at that point in time, however, there was no indication the relevant Council department would not recommend the acquisition of the land to the Acquisition Committee.
[121] Mr Gavaghan accepted that a fair summary of the position reached by
20 December 2013 was that Council officers attending the various meetings had indicated an intention the Council would acquire the land. Mr Gavaghan rejected the suggestion put to him, however, that they had not committed to do so. He accepted HGL was aware that any agreement reached was subject to the approval of a Council committee, but stated that “it was confirmed to us when we asked that question that it was merely a formality.”
[122] A further draft of the settlement letter was circulated on 1 April 2014. This contained Recital D, on which HGL places some reliance. It recorded:
While this agreement is focussed on the methodology for determining the approach for compensation for the stormwater management land on HGL’s property, the parties acknowledge that any public open space land required on HGL’s property will be acquired contemporaneously.
(Emphasis added)
[123] The draft also contained an entire-agreement clause, as well as confirmation that each party had not relied on any statements or representations by the other party in entering the agreement (a no-reliance clause).
[124] On 7 April 2014, the Council’s solicitors emailed HGL’s solicitors requesting a new clause be inserted as follows:
This agreement is conditional upon the appropriate committee of Council granting approval to acquire the stormwater management land and on a budget for the acquisition being included in the Council’s long-term plan.
[125] As will be appreciated, this sought reinstatement of the clause which had been removed from the 20 December 2013 draft. Mr Gavaghan said he was concerned to see the proposed clause, as HGL had understood the issue had been resolved in December 2013 through what he says were repeated assurances by Council officials that all public open space land would be acquired.
[126] Subsequent to HGL’s solicitors querying the reinstatement of the clause, the
Council’s solicitor replied stating:
That the ultimate decision to acquire the land is not affected by the agreement is implicit in the agreement — it is concerned with the process of determining compensation, not with binding the Council to a decision to acquire land. This is made clear in the proposed Recital D.
[127] The Council’s solicitor suggested that rather than the new clause being phrased in terms of conditionality of the agreement, it should be rephrased as an acknowledge on the part of HGL. The email concluded, “the concern is that if HGL doesn’t wish to acknowledge this in the agreement, there is a misunderstanding as to the agreement’s raison d'être.” Later that same day, HGL’s solicitor replied, noting that reinsertion of a clause requiring Council approval was unacceptable to HGL. The email stated:
… this was — and remains — a fundamental issue for HGL continuing negotiations on the compensation agreement. Despite my pointing out the above exchange of emails to you [which led to the earlier clause being removed] no explanation has been given as to why Council are now trying to change its position on a point agreed four months ago.
[128] In response, the Council’s solicitors noted that a Council representative,
Mr Paul O'Brien, would contact Mr Gavaghan to arrange an urgent meeting between him and Mr Walton.
[129] A further email from the Council’s solicitors reiterated:
The Council cannot acquire SMA land without Committee approval. In that regard, the Council is interested in ensuring that there is no way that the agreement can read to circumvent this requirement. This is not the intention of the agreement in any event, and this is acknowledged in Recital D — the agreement is about the process for determining compensation not agreement that the acquisition of land will take place. Structure plans are indicative in that regard and although the land is likely to be required and therefore acquired, the agreement should not presuppose this. If this remains an issue, it would seem that HGL and the Council have fundamental differences as to what the purpose of the agreement is.
(Emphasis added)
[130] The proposed urgent meeting between Mr Gavaghan, Mr O’Brien and
Mr Walton took place on 16 April 2014. Mr Gavaghan’s handwritten notes of the meeting were produced in evidence. They record:
Statutory approval to purchase land required — legal requirement. It nothing out of the ordinary look @ RC.
Didn’t realise it had been taken out. Alan it will be bought.
99% — it’s in the S Plan.
[131] The notes conclude with the following notations:
1. Stat approval*
2. Budgeted for preferably in the LTP.
[132] Mr Walton said in cross-examination that the reference to 99 per cent is not a number or a position he would have volunteered, but accepted it is one he might have agreed with if it had been put to him.
[133] On 22 April 2014, Mr Gavaghan received confirmation from HGL’s consultants on the acquisition of lots included in Stage 6 of HGL’s development and identified in PC 20 as public open space. Harrison Grierson’s email noted that:
I [the Harrison Grierson consultant] spoke with Tina Utley, Head of Parks, this morning and she informs me Parks have received approval to acquire the reserves [Lots 607 and 609]. I have asked she provide us with an email update for our records.
(Emphasis added)
[134] Mr Gavaghan said that he remained concerned at the inclusion of the “subject to approval” clause in the settlement agreement. He emailed Mr Walton and
Mr O’Brien on 24 April 2014 stating:
Allan and Paul, following on from our meeting last Wednesday I accept what you discussed may be the standard procedure for a Resource Consent and normal Council acquisitions however our opinion is that a normal process is not suitable in this case and reintroducing the condition for committee approval at the 11th hour has not been agreed to by Hugh Green Limited.
Hugh Green Limited are naturally concerned that while negotiating this agreement the development has been completed on the basis that Council will be acquiring the land with no commitment from the Council to do so.
Our suggestion is therefore that:
1 – Your Officers get confirmation from the appropriate Council Committee now that it will acquire the land on the basis set out in the agreement, and we then sign the agreement and settle all proceedings;
Or
2 – We request the opportunity to appear before the Mayor and appropriate Council Committee and explain the situation, including the history of this agreement, and request that appropriate assurances be given to Hugh Green Limited.
(Emphasis added)
[135] Neither of these proposed steps occurred. However, a further meeting — the
April meeting — between Mr Gavaghan, Mr Brannon (for HGL), Mr Walton and
Mr Harland was held on the afternoon of 29 April 2014. Mr Gavaghan said the Council officials advised HGL that excluding the committee approval clause ignored the process that had to be followed. Mr Gavaghan said:
That is, the Council could not agree irrevocably to purchase the land until the consent was issued and a decision of land acquisition filed to be made under that consent. They said that no exceptions could be made for our land as every acquisition had to follow the proper process.
[136] Mr Gavaghan further said that at the April meeting:
Mr Walton assured us that the Council absolutely intended to purchase our land. We understood from what he said that it was a ‘done deal’ and the requirement for committee approval was a formality. We believed that Council almost always followed the recommendation made to it by officers, and Mr Walton represented to us that he would be recommending that the land be purchased. Mr Walton, as Council’s Senior Property Acquisition Adviser, was essentially the “face” of the Council when it came to land acquisition, so we took him at his word.
[137] Mr Walton also gave evidence of what occurred at the April meeting. As a preliminary point, he explained that his role in the acquisition process was generally to provide technical property input and sometimes strategic advice during the relevant business unit’s initial investigations. He noted he was often, but not always, involved in reviewing the acquisition report to the relevant decision-making committee.
[138] Mr Walton did not “entirely agree” with what Mr Gavaghan said about the
April meeting. Mr Walton said:
I am sure we discussed that the Council almost always followed officer recommendations and at that time I believed that the land would be acquired. That is because at that stage there was no indication from Parks staff that they had reservations about making a recommendation to the committee to acquire the land. The first indication I had that the acquisition might not be recommended was not until December 2014. But I do not agree that a fair interpretation of the discussion was that it was a “done deal” or that I assured them that the Council’s intention to purchase was “absolute”. I was not in a position to make any such assurances.
[139] Mr Walton’s evidence did not vary significantly in cross-examination. The following exchange took place between Mr Casey and Mr Walton:
HGL’s grounds for judicial review
[211] HGL’s pleaded grounds for its application for judicial review are set out at [58] above. As will be appreciated, other than subparagraphs (f) and (g), its challenge is based on an alleged failure by the Committee to take into account mandatory relevant considerations, or taking into account what is said to be an irrelevant consideration.
[212] I have considered this aspect of HGL’s claim by reference to its pleaded case. HGL’s closing submissions delivered somewhat more of an “omnibus” attack on the Council’s decision-making on Lots 800 and 801. It is important, however, to tie its claim back to its pleaded case, as that is the case the Council was on notice it was to meet and on the basis of which it prepared its evidence.
Mandatory relevant considerations — legal principles
[213] Both parties rely on the Court of Appeal’s leading judgment in CREEDNZ Inc v Governor-General for the proposition that a decision which fails to take into account a mandatory relevant consideration is liable to be impugned on review.72 As Cooke J stated in CREEDNZ Inc:73
[I]t is only when the statute expressly or impliedly identifies considerations required to be taken into account by the authority as a matter of legal obligation that the Court holds a decision invalid on the ground now invoked. It is not enough that a consideration is one that may properly be taken into account, nor even that it is one which many people, including the Court itself, would have taken into account if they had to make the decision.
[214] The Judge went on to state:74
Questions of degree can arise here and it would be dangerous to dogmatise. But it is safe to say that the more general and the more obviously important the consideration, the readier the Court must be to hold that Parliament must have meant it to be taken into account.
[215] It is also uncontroversial that a decision-maker must have sufficient information before it to make a reasonably informed decision on a mandatory relevant
72 CREEDNZ Inc v Governor General [1981] 1 NZLR 172 (CA).
73 At 183.
74 At 183.
consideration.75 As such, “[a] failure by officials to place before the [decision-maker] information relevant to a mandatory consideration will contaminate the decision- making.”76 It is not sufficient for the officials themselves to be in possession of the information when the decision is to be made by another individual or decision-making body.77
Mandatory relevant considerations – analysis
Dist rict P lan – open spac e provisi ons/ the Pol ic y
[216] HGL submits the Council’s own policies and plans, namely the Auckland District Plan (Manukau Section) and the Policy, were mandatory relevant considerations that were not taken into account or, in the case of the Policy, misapplied.
[217] In this context, HGL relies on s 84(1) of the Resource Management Act, which states that:
While a policy statement or a plan is operative, the regional council or territorial authority concerned, and every consent authority, shall observe and, to the extent of its authority, enforce the observance of the policy statement or plan.
[218] I accept, however, Auckland Council’s submission that s 84 of the Resource Management Act is not directly relevant in this case, given the Council’s decision was not made under that statute. Rather, the Council’s decision was made pursuant to the Local Government Act 2002 (LGA 2002) which is the appropriate statutory framework for consideration.
[219] The LGA 2002 does not contain any provisions directly addressing decisions such as that made in relation to Lots 800 and 801. Section 12, however, gives the
Council a power of general competence. It (relevantly) provides as follows:
75 SmithKline Beecham (NZ) Ltd v Minister of Health [1992] NZAR 357 (HC); see also Talley’s
Fisheries Ltd v Minister of Immigration HC Wellington CP201/93, 10 October 1995.
76 Philip A Joseph Constitutional and Administrative Law in New Zealand (4th ed, Thomson Reuters, Wellington, 2014) at 949, citing Auckland City Council v Minister of Transport [1990] 1 NZLR
264 (HC), SmithKline Beecham (NZ) Ltd v Minister of Health [1992] NZAR 357 (HC) and Air
Nelson Ltd v Minister of Transport [2008] NZCA 26, [2006] NZAR 139.
77 Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139.
12 Status and powers
(1) A local authority is a body corporate with perpetual succession. (2) For the purposes of performing its role, a local authority has—
(a) full capacity to carry on or undertake any activity or business, do any act, or enter into any transaction; and
(b) for the purposes of paragraph (a), full rights, powers, and privileges.
(3) Subsection (2) is subject to this Act, any other enactment, and the general law.
(4) A territorial authority must exercise its powers under this section wholly or principally for the benefit of its district.
(5) A regional council must exercise its powers under this section wholly or principally for the benefit of all or a significant part of its region, and not for the benefit of a single district.
…
[220] HGL also refers to s 77 of the LGA 2002, which (relevantly) provides:
77 Requirements in relation to decisions
(1) A local authority must, in the course of the decision-making process,—
(a) seek to identify all reasonably practicable options for the achievement of the objective of a decision; and
(b) assess the options in terms of their advantages and disadvantages; and
…
[221] Also relevant is s 78 of the LGA 2002, which states:
78 Community views in relation to decisions
(1) A local authority must, in the course of its decision-making process in relation to a matter, give consideration to the views and preferences of persons likely to be affected by, or to have an interest in, the matter.
(2) [Repealed]
(3) A local authority is not required by this section alone to undertake any consultation process or procedure.
(4) This section is subject to section 79.
[222] Finally, and although relied on in a different context by HGL, I also consider s 80 of the LGA 2002 to be relevant, which provides:
80 Identification of inconsistent decisions
(1) If a decision of a local authority is significantly inconsistent with, or is anticipated to have consequences that will be significantly inconsistent with, any policy adopted by the local authority or any plan required by this Act or any other enactment, the local authority must, when making the decision, clearly identify—
(a) the inconsistency; and
(b) the reasons for the inconsistency; and
(c) any intention of the local authority to amend the policy or plan to accommodate the decision.
(2) Subsection (1) does not derogate from any other provision of this Act or of any other enactment.
[223] I am satisfied that in the above statutory context, the underlying provisions of the District Plan concerning public open space in the Flat Bush area were mandatory relevant considerations in the context of the Committee’s decision-making on Lots
800 and 801. I say this for the following reasons.
[224] First, while the empowering legislation is silent as to the criteria or considerations which the Council must (or may) take into account, I am satisfied Parliament must have intended that when a decision-making body is deciding whether to acquire land identified in an underlying plan as public open space, the provisions and policies of that underlying plan on public open space will be taken into account. Those plans, provisions and policies provide, after all, the very framework in which such a decision is being made. To put it another way, it is difficult to see how a decision-maker could properly form a view on whether to acquire land identified as public open space in a district plan without giving due consideration to what that plan has to say about public open space.
[225] Second, pursuant to s 80 of the LGA 2002, any decision which is significantly inconsistent with a policy or plan must identify those matters set out in s 80(1)(a), (b) and (c). While I am not suggesting the decision not to acquire Lots 800 and 801
necessarily triggered s 80,78 for the Acquisition Committee to form a view on that issue, it would need to take into account the relevant provisions and policies within the Plan. For example, it would have to consider that issue by reference not only to the total land area involved (compared with the total land area shown as POS6 Overlay in the structure plan), but also the particular attributes of Lots 800 and 801, and the consequences under the Plan of not acquiring them for public open space.
[226] Third, s 11 of the LGA 2002 states that the role of a local authority is to give effect to the purpose of local government as set out in s 10. Section 10 in turn states that:
10 Purpose of local government
(1) The purpose of local government is—
(a) to enable democratic local decision-making and action by, and on behalf of, communities; and
(b) to meet the current and future needs of communities for good- quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.
(2) In this Act, good-quality, in relation to local infrastructure, local public services, and performance of regulatory functions, means infrastructure, services, and performance that are—
(a) efficient; and
(b) effective; and
(c) appropriate to present and anticipated future circumstances.
[227] The planning witnesses at the hearing accepted that a district plan reflects the relevant community’s views, hopes and aspirations. And in this case, the community’s views, hopes and aspirations in relation to public open space. This reinforces that, in the context of ss 10 and 11 of the LGA 2002, provisions of a district plan relevant to
the decision to be taken are a mandatory relevant consideration.
78 Noting Mr Cairns’ evidence that Lots 800 and 801 represented a very small proportion only of the total POS6 Overlay identified in the Flat Bush structure plan. Further, while Ms Utley accepted in cross-examination that the proposals being discussed at the second workshop with the HLB did amount to a significant departure from the Plan, those proposals related to a broader suite of land than Lots 800 and 801.
[228] I should be clear, however, that it is not necessary for the decision-maker to list out, chapter and verse, every matter taken into account, for example, by referencing every individual plan section or provision considered. Nevertheless, the Court must be satisfied that the decision-maker has taken into account mandatory relevant considerations, even if not stated in the formal record of the decision. That is particularly so when the decision, as in this case, is not accompanied by reasons or any other record of the basis upon which the decision was made.
[229] I am not satisfied the evidence demonstrates the Plan’s relevant provisions were taken into account by the Acquisition Committee.
[230] The Council says Mr Leota took the relevant provisions into account, including through his review of the Stage 7 resource consent (which in turn refers to some aspects of PC 20); his review of Ms Utley’s earlier draft report (which canvased the acquisition in terms of the substantive objectives of PC 20); and his review of the settlement agreement (which also referenced certain provisions of District Plan). The Council also notes that Mr Leota attached to his report figure 16.11A of the Flat Bush structure plan, showing the location of the greenfinger network.
[231] While I accept the above matters, the difficulty is that Mr Leota’s report which went to the Acquisition Committee does not discuss or reference any of the District Plan’s underlying policies or provisions concerning public open space in the Flat Bush area. It does refer to s 17.10.11.9(g), but only in the context of the Council not being obligated to purchase the lots. It is not sufficient, in my view, for Mr Leota’s consideration of the relevant aspects of the underlying Plan to be “attributed” to the separate and independent decision-making Committee.79
[232] Further, it was clear from Mr Leota’s cross-examination that he had not given detailed consideration to the Plan provisions in relation to public open space in any event. For example, he confirmed he had reference to the structure plan, which identified Lots 800 and 801 as public open space. But that does not advance matters, given it was only because Lots 800 and 801 were identified in the structure plan as
public open space that a decision was required on whether the Council ought to acquire
79 Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139 at [53]–[54].
them. Mr Leota accepted he was not aware of the Plan’s provisions concerning roads framing public open spaces being straight and park edge. Mr Leota also accepted he did not consider whether a recommendation not to acquire Lots 800 and 801 would be significantly inconsistent with the Plan. Without that analysis, or at least the provision of key information concerning the underlying Plan, it is difficult to discern how the Acquisition Committee could have formed its own view that its decision was not significantly inconsistent with the Plan’s provisions concerning public open space.
[233] Nor did HGL’s own submission provide the Acquisition Committee with information concerning the Plan’s provisions and policies on public open space. Other than a brief reference to one aspect of the Plan, it focussed, not surprisingly, on the engagement between Council officials leading to the settlement agreement and its alleged legitimate expectation that the Council would acquire the lots.
[234] The Council submits it was not necessary for Mr Leota’s report to contain references to specific provisions of PC 20, given the provisions of PC 20 which “advocate for a generous provision of open space” were all substantive benefits described and considered in Mr Leota’s report in terms of the assessment against the Policy, and are “hardly controversial provisions”.
[235] Mr Leota’s report plainly referenced and discussed the Policy and his assessment of Lots 800 and 801 against its assessment criteria. But the Acquisitioin Committee’s consideration of the Policy cannot be equated with its consideration of the relevant provisions of the underlying Plan. The Policy is a Council-wide generic document, which does not address any particular land, plan or policy for public open space acquisition. Rather, it simply provides a framework within which Council officials are to assess particular land acquisitions for public open space. It cannot therefore replicate a plan’s discussion of, and policies in relation to, public open space in a specific area.
[236] The Council further says that given the evidence demonstrates the Acquisition Committee considers more than 30 public open space acquisition proposals per year, it can be inferred that it is well versed in PC 20’s provisions on public open space. Again, while there is no doubt the Acquisition Committee deals with many public open
space acquisitions, the evidence does not establish whether this is limited to the Flat Bush area or concerns public open space acquisition on an Auckland-wide basis. Further, the mere fact the Acquisition Committee deals with more than 30 acquisition proposals each year does not confirm it took into account the Plan’s public open space policies and provisions in the context of its particular decision on Lots 800 and 801.
[237] The above discussion is reinforced by my concern that Mr Leota may have misinterpreted the Policy in any event. As noted above, he was clear in his evidence that for land to be assessed as high priority under assessment criteria 1, it would need to meet all three attributes under that criteria. As Mr Cairns confirmed, however, that is not correct. It is a reviewable error for a decision-maker to misinterpret or fail to apply guidelines which it has voluntarily adopted.80 And while any error in this regard was in the context of the acquisition report, rather than the Acquisition Committee itself misinterpreting the Policy, there is no suggestion the Acquisition Committee did anything other than rely on Mr Leota’s assessment of Lots 800 and 801 against the Policy.
[238] I am therefore satisfied the Acquisition Committee failed to take into account a mandatory relevant consideration, namely the District Plan’s policies and provisions concerning public open space in the Flat Bush area, including those in Chapters
16.15.9.3 and 17.10.4.
[239] For completeness, I note that HGL invited me to conclude that, for the purposes of s 80 of the LGA 2002, the Acquisition Committee’s decision not to acquire Lots
800 and 801 was significantly inconsistent with the District Plan. It is not appropriate for the Court to embark on such an inquiry, which is properly the domain of the Acquisition Committee. To do so would be to descend into the merits of the decision. Rather, and as discussed above, the relevance of the inquiry mandated by s 80 is that for a decision-maker to form a view on whether its decision is significantly inconsistent with an underlying plan, it must have sufficient information before it as to that underlying plan. As I have set out above, I do not consider that to have been
the case when the Acquisition Committee made its decision on Lots 800 and 801.
80 See Philip A Joseph Constitutional and Administrative Law in New Zealand (4th ed, Thomson
Reuters, Wellington, 2014) at 951–952.
R epresentations/ HG L’s legit im ate ex pectation
[240] Had the various representations made by Council officials at the PC 20 workshops, appeal workshops and/or April meeting given rise to a legitimate expectation on HGL’s part, that legitimate expectation would have been a mandatory relevant consideration in any decision affecting it.81 However, as I have concluded HGL did not have a legitimate expectation, the underlying matters relied on to support the alleged expectation were not in and of themselves mandatory relevant considerations.
[241] I observe for completeness that had a legitimate expectation been established, it would have been necessary for the Acquisition Committee to be in possession of sufficient information to properly inform itself about that legitimate expectation, and whether there was a satisfactory reason to breach it. In my view, this would have required the Acquisition Committee to be in possession of far more material on that topic than the brief reference in Mr Leota’s report to an expectation arising from the settlement agreement alone. HGL’s position was that the quite lengthy engagement with Council officials over several years, against the backdrop of the District Plan provisions on public open space, gave rise to a legitimate expectation. Sufficient information would have also been required on HGL’s alleged reliance on that expectation.
[242] The Acquisition Committee did take legal advice on related matters but it was not produced in evidence. Whether it provided the necessary background information to the Committee is unknown. HGL also put some (brief) information before the Acquisition Committee on its stated legitimate expectation but that self-evidently addressed the question from HGL’s perspective only.
[243] Accordingly, had a legitimate expectation been established, the two-line reference to HGL’s expectation in Mr Leota’s report would not have provided a fair,
accurate and adequate report on that issue.82
81 Paponette v Attorney-General of Trinidad and Tobago [2010] UKPC 32, [2012] 1 AC 1 at [46].
82 Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139 at [53].
[244] Given my earlier findings on legitimate expectation however, this aspect of
HGL’s claim must be dismissed.
The terms of the sett leme nt agr eement
[245] HGL further alleges the Acquisition Committee failed to take into account the provisions in the settlement agreement for deferred payment and (unspecified) “undertakings” given by the Council in the agreement.
[246] This point may be disposed of briefly. Had I concluded the settlement agreement gave rise to an undertaking to acquire Lots 800 and 801, or founded a legitimate expectation to that effect, then it would have been a mandatory relevant consideration for the Acquisition Committee to have consider. It would have been “obviously material” to a decision on whether to acquire Lots 800 and 801.83
[247] As addressed elsewhere in this judgment, however, I do not consider the settlement agreement gave rise to an undertaking or commitment by the Council to acquire Lots 800 and 801. In any event, the full text of the settlement agreement and HGL’s key arguments in relation to it were put before the Acquisition Committee, by HGL itself. Indeed, a focus of HGL’s written submission to the Acquisition Committee was the content of the settlement agreement, a copy of which was annexed. As noted above, what material there was in Mr Leota’s report to the Acquisition Committee on HGL’s expectations also focused on the settlement agreement. And in terms of the suggestion of deferred payment, Mr Leota’s report specifically referred to HGL’s willingness to consider deferred payment terms if funding the acquisition was a concern.
[248] Accordingly, the settlement agreement was a focus of the material before the Acquisition Committee when it made its decision on Lots 800 and 801. And although no-one from the Acquisition Committee gave evidence to explain what it did and did
not take into account, given the focus on the settlement agreement in the materials put
83 CREEDNZ Inc v Governor General [1981] 1 NZLR 172 (CA) at 183 per Cooke J.
before it, I would not have been prepared to draw an adverse inference that the
Acquisition Committee failed to take that agreement into account.84
[249] HGL’s claim on this basis is accordingly dismissed.
Irrelevant consideration – cl 58 of Stage 7 resource consent
[250] HGL also alleges the Committee took into account an irrelevant consideration
— HGL’s failure to appeal or seek to vary cl 58 of the Stage 7 resource consent, “when [HGL] already had both a commitment from the Council to purchase and a mechanism for determining compensation”.85
[251] Again, the point can be addressed briefly. Indeed, it was not addressed at all in HGL’s closing submissions.
[252] I have found HGL did not have a commitment from Auckland Council to purchase Lots 800 and 801 when the Stage 7 resource consent was granted. On this basis, the pleaded allegation falls away. I also accept Auckland Council’s submission that cl 58 was the basis upon which the opportunity to acquire Lots 800 and 801 arose, such that information in relation to it could not be considered an irrelevant consideration in any event.
[253] I also accept the Council’s submission that HGL cannot “have its cake and eat it too” on this aspect of its claim. On the one hand, HGL says the Acquisition Committee ought to have taken into account a range of matters which gave rise to a legitimate expectation that Lots 800 and 801 would be acquired. On the other hand, it says the Acquisition Committee ought not to have considered a matter which could be said to have negated any such legitimate expectation. Accordingly, if the Acquisition Committee had been required to consider the history and background to any legitimate expectation on HGL’s part, it would have been quite proper and lawful for it to be in possession of all relevant material, not only that which supported HGL’s
position.
84 Philip A Joseph Constitutional and Administrative Law in New Zealand (4th ed, Thomson Reuters, Wellington, 2014) at 948–949.
85 As alleged in HGL’s amended statement of claim.
[254] This aspect of HGL’s claim is also dismissed.
Breach of natural justice
[255] As flagged earlier in this judgment, this complaint was given scant attention in
HGL’s closing submissions.
[256] HGL’s complaint is that it was not provided with Mr Leota’s report which went to the Acquisition Committee, or with a copy of legal advice the Acquisition Committee received part way through the meeting (in a non-public session).
[257] As to the former, I do not discern HGL to suggest that in the context of every potential acquisition of land as public open space, a copy of all reports and materials put before the decision-making committee must be provided to the landowner in advance of the decision being taken. Certainly HGL had no expectation of that occurring — it had not been the case in either of the two earlier acquisitions in relation to stages 2 and 5 of its development.
[258] In relation to Stage 7, HGL was afforded the opportunity to address the Acquisition Committee and make submissions on the acquisition of Lots 800 and 801. I do not consider this alone engages the principle that an applicant must be given an adequate opportunity to know the case against it and the evidence in support to be able to make submissions and bring evidence in response.86 This was not a case “against” HGL as such. It was rather a decision on whether land identified as public open space in underlying planning documents ought to be acquired.
[259] In addition, the authority relied on by HGL for this aspect of its claim concerns a duty to consult when a procedural legitimate expectation of consultation has arisen.87
That is not HGL’s claim in this case. And while it is correct that a person ought to know the case against them if a decision will deprive that person of a legitimate expectation of a benefit, I have concluded HGL did not have a substantive legitimate
expectation in this case.
86 See, for example, Royal Australasian College of Surgeons v Phipps [1999] 3 NZLR 1 (CA) at 14.
87 Te Heu Heu v Attorney-General [1999]1 NZLR 98 (HC).
[260] It cannot, in my view, be a breach of natural justice for an authority not to produce legal advice on its decision to a party interested in or affected by the decision. Self-evidently this would drive very significant inroads in to the doctrine of legal professional privilege. Rather, the risk falls on the authority in circumstances where, for example, there is little evidence that is not subject to privilege demonstrating the authority considered all relevant and ignored all irrelevant considerations. Unless the authority waives privilege in such circumstances, it may invite an adverse inference in relation to its decision.
[261] Ultimately, however, absent any detailed argument or submission by HGL on these points, I take them no further. To the extent HGL’s claim is based on breach of natural justice, it is dismissed.
Wednesbury unreasonableness
[262] The claim of Wednesbury unreasonableness (also framed as “substantive unfairness and irrationality”), was also pressed faintly by HGL. It simply submits that the “combined result” of HGL’s frustrated legitimate expectation, together with the grounds for judicial review discussed above, lead to the “inescapable conclusion” that something went wrong in the Acquisition Committee’s decision-making process which requires the Court’s intervention. HGL submits that no reasonable body of persons could have arrived at the Acquisition Committee’s decision.
[263] Absent any substantive submissions by HGL on these matters, I am not able or willing to take forward claims advanced in such a brief and “catch all” manner. Certainly, there is nothing on the face of the Acquisition Committee’s decision which would bring it into the territory of Wednesbury unreasonableness. In its closing submissions, HGL effectively invited me to prefer Ms Utley’s views in assessing Lots 800 and 801 as high priority for acquisition, over Mr Leota’s view that they were appropriately assessed as medium priority. Particularly in light of the uncontested evidence that it is not uncommon for different views to be reached on such acquisition assessments, there is nothing to suggest the Acquisition Committee’s decision was irrational or that no reasonable decision-maker could have made.
[264] This aspect of HGL’s claim must also be dismissed.
Breach of contract
Introduction
[265] HGL’s final claim is for breach of contract. Mr Casey quite responsibly confirmed in his oral closing submissions that the order in which HGL addressed its claims reflects “where the priorities lie.”
[266] HGL says that on a fair and proper interpretation of the settlement agreement, the Council was contractually obliged to acquire Lots 800 and 801. It relies on two aspects of the settlement agreement in particular, Recital D and cl 2 of sch 1 to the agreement (the terms of which are set out below).
[267] As will be appreciated, if this claim were successful, it would eclipse any consideration and outcomes on HGL’s administrative law claims.
Approach to interpretation
[268] The proper approach to contractual interpretation is not in dispute. The Court must ascertain the natural and ordinary meaning of the text in the context of the whole document and the factual matrix.88 Further, as Tipping J stated in Vector Gas Ltd v Bay of Plenty Energy Ltd:89
[19] The ultimate objective in a contract interpretation dispute is to establish the meaning the parties intended their words to bear. In order to be admissible, extrinsic evidence must be relevant to that question. The language used by the parties, appropriately interpreted, is the only source of their intended meaning. As a matter of policy, our law has always required interpretation issues to be addressed on an objective basis. The necessary inquiry therefore concerns what a reasonable and properly informed third party would consider the parties intended the words of their contract to mean. The court embodies that person. To 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.
[269] Given HGL’s claim of legitimate expectation, I am fully aware of the background to the settlement agreement, and indeed am in possession of more
88 Pyne Gould Guinness Ltd v Montgomery Watson New Zealand Ltd [2001] NZAR 789 (CA) at 29.
89 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444.
background information and evidence of pre-contractual negotiations than would ordinarily be the case in a contract interpretation dispute.
Breach of contract — analysis
[270] The following terms of the settlement agreement are of particular relevance to
HGL’s breach of contract claim:
(a) First, Recital D, which provides as follows:
While this agreement is concerned with the process for determining the approach for compensation for the stormwater management land on HGL’s property, the parties record and acknowledge that any public open space land required on HGL’s property will be acquired by the Council contemporaneously.
(b) Second, cl 2 of sch 1, which states:
The extent of the stormwater management land and any public open space land to vest shall be determined by the parties. In that regard, the Council will take a reasonable approach to identify land to be taken and will where practicable and applicable take land up to a road or site boundary to ensure that there are no unusable land fragments.
(c) Third, cl 2.3, which states:
HGL acknowledges that all acquisitions of land by the Council legally require the elected members in the committee of Council with authority delegated by the governing body to pass a resolution granting the approval to acquire.
[271] The settlement agreement also contains an entire agreement clause.
[272] On the basis of Recital D and cl 2 of sch 1, HGL submits the agreement was explicit that if any land was to be acquired, all the land would be acquired — up to a road or site boundary.
[273] Having regard to Recital D and cl 2 of sch 1, in conjunction with cl 2.3, in my view, the settlement agreement cannot properly be interpreted in this way.
[274] First, Recital D is primarily aimed at the purpose of the agreement, namely setting out a process for determining the approach to compensation for the stormwater management land on HGL’s property. In my view, the ordinary and natural interpretation of Recital D is simply that in terms of process, and in the context of any stormwater management land which is to be acquired, any public open space land also “required” would be acquired by the Council contemporaneously. Recital D does not itself impose a positive obligation on the Council to acquire land for public open space purposes.
[275] I also accept the Council’s submission that the reference in Recital D to public open space being “required” reflects the same terminology in PC 20 rule 17.10.11.9(g)90 and the vesting conditions of the resource consents themselves.91
Those materials specifically addressed the scenario in which the relevant land is
“required” by Council.
[276] In addition, cl 2 of sch 1 does not in my view amount to a contractual commitment on the part of Council to acquire all HGL’s land identified in PC 20 as public open space. Had that been the parties’ intention, one might have expected the agreement to record that fact in simple and plain terms. Rather, cl 2 expressly records that the extent of stormwater management land and public open space land to vest in the Council remained to be determined by the parties, that the Council was required to take a “reasonable approach” to identifying land to be taken, and where practicable the Council was required to take land up to a road or site boundary (to ensure that there were no unusable land fragments). In the absence of a legitimate expectation that particular land would be taken, I do not consider it unreasonable for the Council to factor into its identification of land to be taken financial constraints on any particular acquisition.
[277] The most significant difficulty with HGL’s contract cause of action, however, is cl 2.3. On its plain and ordinary meaning, the clause reflects that no binding
90 Which records that “In the situation where all or part of the land identified within the Public Open Space 6 Overlying Area is not required to be vested in Council as public open space, the overlying area status shall no longer apply and this land shall be administered in accordance with the provisions of the underlying zone as determined in Rules 17.10.11.9(b), (c) and (d).” (Emphasis added)
91 See the resource consent conditions at [25]–[34] above.
commitment had been given to acquire the land. It reflects that such a commitment could only arise from a resolution passed by a decision-making committee with appropriately delegated authority. The very presence of this clause is inconsistent with such delegated authority already having been granted and being exercised through the entry into the settlement agreement itself.
[278] HGL says cl 2.3 is not, construed properly, a “subject to approval” clause, but is aimed at process only, to cover off the legal formality required for acquisition. Putting aside that that is not what the clause says on its face, if that were the case, one might ask: what then is the clause’s purpose?
[279] HGL further submits the Council’s approach to interpretation of the settlement agreement requires the Court to adopt an interpretation which is commercially absurd. I disagree. It is only commercially absurd if it is accepted that prior to entering into the settlement agreement, HGL had already secured a binding commitment from the Council that it would acquire Lots 800 and 801. If that were so, cl 2.3 would have been redundant.
[280] Finally, HGL submits that its interpretation of the settlement agreement:
… is consistent with the representations made to [HGL] by senior Council officers that the clause, and the approval process, was a legal formality. … The only relevant qualification was that while the Committee “almost always” followed officers’ recommendations, that could not be guaranteed. In that context, officers told [HGL] that the acquisition would be recommended. That was specifically so as to induce [HGL] to enter into the agreement. [HGL] relied on that representation in entering into the Settlement Agreement on those terms.
[281] That submission confirms that the core of HGL’s case rests on the alleged representations made to it prior to entry into the settlement agreement, rather than the terms of the settlement agreement itself. I have already set out my findings in relation to the alleged pre-contractual representations and my views on the conflicting evidence in that regard. In addition, the settlement agreement contains a “no reliance” clause. For the reasons stated earlier, there is no reason why that clause should not be
conclusive as between sophisticated parties such as HGL and the Council, both of whom were legally represented at all material times.92
[282] For the above reasons, HGL’s breach of contract claim is dismissed.
Result and orders
[283] For the reasons set out in this judgment:
(a) HGL’s claim of substantive legitimate expectation is dismissed.
(b)HGL’s application for judicial review is granted, on the basis the Committee failed to take into account mandatory relevant considerations, being the relevant policies and provisions of the District Plan concerning public open space in the Flat Bush area, including those contained in Chapters 16.15.9.3 and 17.4.10.
(c) HGL’s application for judicial review is otherwise dismissed.
(d) HGL’s claim of breach of contract is dismissed.
[284] There are accordingly orders:
(a) setting aside the Acquisition Committee’s decision of 18 November
2015 not to acquire Lots 800 and 801; and
(b)directing the Acquisition Committee to reconsider the decision in accordance with the terms of this judgment, including the requirement to take into account the relevant policies and provisions of the District Plan on public open space, including those contained in Chapters
16.15.9.3 and 17.4.10.
92 See [172] above.
Costs
[285] In light of the Court of Appeal’s observations in Weaver and Water Guard, my preliminary but non-binding view is that HGL is the successful party overall, albeit not to the full extent of its claims.93 An appropriate outcome may therefore be an award of scale costs, reduced to reflect those aspects of HGL’s claims on which it was not successful. On the information presently available to me, there is no basis for increased or indemnity costs.
[286] I would encourage the parties to agree costs. If they cannot be agreed, HGL may file and serve a costs memorandum within 10 working days of this judgment. Any memorandum by the Council in response is to be filed and served within a further five working days. No memorandum is to exceed five pages. I will thereafter
determine costs on the papers.
Fitzgerald J
93 Weaver v Auckland Council [2017] NZCA 330 and Water Guard NZ Ltd v Midgen Enterprises Ltd
[2017] NZCA 36.
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