Mao v Quotable Value Limited
[2022] NZHC 1680
•14 July 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-001689
[2022] NZHC 1680
BETWEEN LIANSEN MAO
First Plaintiff
QUIFEN LU
Second PlaintiffAND
QUOTABLE VALUE LIMITED
First Defendant
AUCKLAND COUNCIL
Second Defendant
Hearing: 27 June 2022 Appearances:
No appearance for First and Second Plaintiffs (written submissions received 4 July 2022)
No appearance for First Defendant V F Harrison for Second Defendant
Judgment:
14 July 2022
JUDGMENT OF ASSOCIATE JUDGE P J ANDREW
This judgment was delivered by Associate Judge Andrew on 14 July 2022 at 2.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar
Date …………………………….
MAO & OR v QUOTABLE VALUE LTD & OR [2022] NZHC 1680 [14 July 2022]
Introduction
[1] This is a further proceeding in which the plaintiffs, Ms Lu and Mr Mao, challenge the zoning requirements in the Auckland Unitary Plan1 and the alleged impact of those requirements on the value of their properties.
[2] In the present interlocutory application, the Auckland Council, the second defendant, applies to strike out the proceedings. It is contended that the plaintiffs’ statement of claim discloses no reasonably arguable cause of action and/or is an abuse of process. The Auckland Council says that these proceedings are essentially the same as those previously brought against it in earlier proceedings, which I struck out in my judgment of 28 May 2021.2
[3] The statement of claim is difficult to understand. It appears to allege three causes of action:
(a)That the Auckland Council (or Quotable Value Ltd acting as the Council’s agent) engaged in misleading or deceptive conduct in relation to the 2017 general revaluation of properties owned by the plaintiffs. The claim alleges that it was the Council’s revaluations that caused the plaintiffs not to object to the zoning changes in the AUP;
(b)That Auckland Council owed the plaintiffs a private duty of care in respect of zoning changes alleged to have affected the plaintiffs’ properties (and which it allegedly breached);
(c)That Auckland Council was negligent in allegedly providing poor service, which caused delay in the subdivision process of the plaintiffs’ property at Memorial Avenue, Mount Roskill, and allegedly failed to provide relevant documents relating to the discharge of the charging orders over Mr Mao’s property.
1 The AUP.
2 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd [2021] NZHC 1232.
[4] In the prayer for relief, the plaintiffs claim the sum of $11,920,000 for the “commercial losses/general damages of the fair market value for the properties that supported by RV and CV less the force [sic] sales value of the properties”. The plaintiffs also seek an additional interest payment of $120,000, $100,000 for humiliation, pain and suffering damages and $50,000 exemplary damages.
Factual background
[5] The material facts are the same as those relating to the earlier proceedings, Lu v Industrial and Commercial Bank of China (New Zealand) Ltd.3 The subject matter is the same eight properties that the plaintiffs owned at one point in time.
[6]I adopt [5] – [8] of my earlier judgment.
[7] In addition, I note that for the 2017 general revaluation of properties, Auckland Council contracted Quotable Value Ltd to undertake the revaluations. On 20 November 2017, the Council sent out the 2017 general revaluation notices to all ratepayers.
The earlier proceedings Lu v Industrial and Commercial Bank of China (New Zealand) Ltd
[8] In the earlier proceedings that I struck out, the plaintiffs alleged three causes of action:4
(a)Breach of fiduciary duty in that the Auckland Council failed to consider the plaintiffs’ commercial interests when it adopted the AUP, which changed the zoning of the plaintiffs’ properties;
(b)Commercial duress in that the plaintiffs alleged that the Council provided poor service, which caused a delay in the subdivision process of the plaintiffs’ property at 13 Memorial Avenue, Mount Roskill;
3 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd, above n 2.
4 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd, above n 2, at [3].
(c)Breach of the Consumer Guarantees Act 1993 (CGA) in that the plaintiffs alleged they were not satisfied with the service the Council provided under the Resource Management Act 1991.
[9] The earlier proceedings were struck out on the basis that they disclosed no reasonably arguable cause of action and were incapable of being rectified by any amended pleadings. I ordered the plaintiffs to pay costs to the Auckland Council in the sum of $14,177.28. Those costs remain unpaid.
Procedural history of these proceedings
[10] In a minute dated 25 May 2022, Moore J refused an application by the plaintiffs for an adjournment of the hearing (i.e. the hearing on 27 June 2022). A further application by the plaintiffs for an adjournment was rejected by Venning J in a minute dated 20 June 2022.
[11] There was no appearance by or on behalf of the plaintiffs at the hearing before me on 27 June 2022.
[12] I issued a minute directing that the plaintiffs were to file and serve written submissions (if they wished) in opposition to the strike out application and then I would determine the application on the papers (at least insofar as the plaintiffs did not make submissions before me on 27 June 2022).
[13] The Court has received submissions (said to be submissions in reply) from the plaintiffs dated 4 July 2022.5 They have been taken into account in the making of my determinations in this judgment. The Auckland Council chose not to reply to those submissions.6
5 The Court has also received an affidavit in support of those submissions from Mr Augustine Lau, sworn 4 July 2022. Mr Lau says that he is the property manager of the plaintiff. Mr Lau is well known to the Court. See my judgment of 7 October 2021 in Chen v Auckland Weihao Investment Ltd [2021] NZHC 2683 at [33]–[41]; see also Gao v Starlight Capital Ltd [2021] NZHC 1846 at [23]; Mao v Buddle Findlay [2022] NZHC 521 at [84].
6 Memorandum of counsel for the Auckland Council dated 5 July 2022.
Relevant legal principles
[14]Rule 15.1 of the High Court Rules 2016 provides:
Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it –
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
(2)If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.
(3)Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4)This rule does not affect the court's inherent jurisdiction.
[15] The general principles applicable to the exercise of the Court’s powers under r 15.1 are summarised in the Court of Appeal’s decision in Attorney-General v Prince,7 as endorsed by the Supreme Court in Couch v Attorney-General.8 These include:9
(a)Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation;
(b)The cause of action or defence must be clearly untenable;
(c)The jurisdiction is to be exercised sparingly, and only in clear cases;
(d)The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument; and
7 Attorney-General v Prince [1998] 1 NZLR 262 (CA).
8 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
9 Andrew Beck and others McGechan on Procedure (online ed, Thomson Reuters) at [HR15.1.02].
(e)If a defect in the pleading can be cured by amendment, the claim should not be struck out.
Analysis and decision
[16] I find that the proceedings should be struck out in their entirety. They do not disclose any reasonably arguable cause of action and are an abuse of process. My reasons are as follows.
Abuse of process
[17] In Savril Contractors Ltd v Bank of New Zealand,10 the Court of Appeal held that it was an abuse of process to bring new proceedings in substantially similar terms to prior/earlier proceedings that had been struck out.
[18] Although these proceedings are advanced under different causes of action, in my view they are in substance the same. The same eight properties are involved and the quantum and framing of the prayer for relief is identical.
[19] In my earlier judgment,11 I noted that the plaintiffs were alleging that “downzoning” had caused them substantial losses. I noted that in substance this was a challenge to the density requirements in the AUP. The same allegations are being made here; the plaintiffs have simply tried to re-package and re-formulate them, but they are not materially different. In any event, they could and should have been brought as part of the earlier proceedings.12
[20] In Commissioner of Inland Revenue v Chesterfields Preschools Ltd,13 the Court of Appeal held that statements of claim drafted in compliance with the relevant requirements will make clear to the Court and the defendant parties what is being alleged. They held that:
10 Savril Contractors Ltd v Bank of New Zealand [2005] 2 NZLR 475 (CA) at [100]–[105].
11 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd, above n 2, at [22].
12 Savril Contractors Ltd v Bank of New Zealand, above n Error! Bookmark not defined., at [109], where the Court of Appeal referred to Henderson v Henderson 3 Hare 100 at 114-115 and Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 at 23.
13 Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR 679 at [87].
[V]erbose, ill-drafted pleadings may defeat the purpose of a statement of claim to such an extent that it is an abuse of process.
[21] There is also an established body of case law recognising that for the purposes of r 15.1 “[p]leadings which can cause delay include those that are prolix … or are unintelligible”.14
[22] I agree with the submissions of Auckland Council that the statement of claim is prolix and unintelligible. This essentially places Auckland Council in the unfair position of having to make sense of the claim and to guess what the essential concerns of the plaintiffs might be. The plaintiffs appear to be conflating two separate processes, namely the valuation process, with Quotable Value Ltd acting as the Auckland Council’s agent, and the zoning/urban planning processes of the AUP. I find the proceedings are also an abuse of process on the grounds that they are ill-drafted and unintelligible.
No reasonably arguable cause of action
[23]I address each of the three causes of action in turn.
[24] The first cause of action alleges that the Council and Quotable Value Ltd engaged in misleading or deceptive conduct in respect of the 2017 general revaluation of property. They appear to argue that because the 2017 revaluations released by the Council reflected an increase in the value of their properties, these were misleading in that they did not reflect that the density requirements under the AUP had changed (thereby impacting the way their properties could be developed). They further claim that their reliance on these valuations deprived them of the opportunity to object to the same density requirements in the AUP.
[25] I find that this cause of action must fail. This is because the timeframe to object to the AUP (which ended when the AUP became operative in part on 15 November 2016) had already lapsed when the 2017 general revaluations were notified. There cannot be any actionable reliance.
14 Commissioner of Inland Revenue v Chesterfields Preschools Ltd, above n 13, at [89].
[26] I further find that neither Auckland Council nor Quotable Value Ltd’s conduct in relation to the 2017 general revaluation could be considered either “misleading” or “deceptive” in terms of s 9 of the Fair Trading Act 1986 (FTA).
[27] The test for misleading and/or deceptive conduct under the FTA involves an objective examination of whether a reasonable person in the plaintiffs’ situation would likely have been misled or deceived by the Auckland Council and/or Quotable Value Ltd’s conduct.15
[28] Auckland Council’s conduct in respect of the 2017 general revaluation was the discharge of its statutory duty as a territorial authority to revalue every rating unit at three-yearly intervals.16 Quotable Value Ltd was contracted as the Auckland Council’s valuation service provider and undertook the work alongside the Auckland Council.
[29] The purpose of revaluing properties is to enable the territorial authority to set rates fairly. The Auckland Council acknowledges on its website that “a zoning change under the Unitary Plan may affect a value if it changes the way a property can be developed, such as housing intensification”. However, the website is explicit that “the aim of the general property revaluation is not to provide values for property owners to use for marketing, sales or any other purposes”.
[30] If the plaintiffs believed that the Auckland Council’s revaluation of the properties was incorrect, there was a process available to lodge an objection. There is no credible basis upon which the plaintiffs can allege that a reasonable person (and particularly a person who, like the plaintiffs, is in the business of developing property) would be likely to have been misled by the 2017 revaluations or would have relied on those revaluations as an indication of the zoning/density requirements.
[31] In their second cause of action the plaintiffs appear to argue that the Auckland Council owed them a private duty of care when implementing zoning changes, resulting from the adoption of the AUP. It is alleged that these changes had an adverse
15 Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].
16 Rating Valuations Act 1998, s 9.
impact on their properties and that the Council breached a duty of care to them by failing to take their commercial interests into consideration.
[32] I find that this second cause of action discloses no credible basis upon which Auckland Council could owe the plaintiffs a private duty of care.
[33] In developing and adopting the AUP, Auckland Council followed the statutory process in Part 4 of the Local Government (Auckland Transitional Provisions) Act 2010.17 The LGATPA provided statutory remedies to review the Council’s decisions relating to the AUP.
[34] The plaintiffs had the opportunity, as did all members of the public, to participate and challenge the proposed zoning changes in the proposed AUP,18 which was publicly notified in September 2013.
[35] I also note that the plaintiffs purchased 41 and 41A Candia Road after the PAUP was notified. They cannot claim that they were unaware of the proposed zoning changes.19
[36] In my earlier judgment of Lu v Industrial and Commercial Bank of China (New Zealand) Ltd,20 I referred to the Court of Appeal decision Morrison v Upper Hutt City Council,21 a case where the Court of Appeal refused to impose a private law duty of care on the Upper Hutt City Council in relation to the Town and Country Planning Act 1997. One of the principal reasons the Court gave for not imposing such a duty was that there was a statutory remedy available to review the Council’s decisions. It was also held that the proposed duty of care would open a potential floodgate to a raft of claims where claimants would assert that local authorities are not interpreting plans correctly.
17 LGATPA.
18 PAUP
19 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd, above n 2, at [33]. I note that Mr Lau, in his affidavit of 4 July 2022, disputes this (contesting the assertion by Ms Amphlett for Auckland Council in her affidavit, dated 22 November 2021, at [14]).
20 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd, above n 2, at [28].
21 Morrison v Upper Hutt City Council [1998] 2 NZLR 331 (CA).
[37] Those policy reasons apply equally here. Furthermore, even if it were arguable for the Auckland Council to owe the plaintiffs a duty of care, there is no tenable case for a breach of such duty. The Auckland Council was acting pursuant to statutory powers and no probative evidence has been filed by the plaintiffs to suggest that zoning changes and their potential impacts were not duly considered.
[38] As a third cause of action, the plaintiffs allege that the Auckland Council owed them a duty of care in relation to the subdivision process for the property at 13 Memorial Avenue, Mount Roskill. It is alleged that there was a failure to provide them with documents within the 20-working day period and that this resulted in loss.
[39] Again, this cause of action is fundamentally flawed. The Court of Appeal in Bella Vista Resort Ltd v Western Bay of Plenty District Council,22 held that local authorities making decisions on resource management issues do not owe landowners a duty of care. The Court held that the role of the consent authority under the Resource Management Act 1991 is not to protect individual landowners against economic loss. The imposition of a duty of care in such cases would create an intolerable burden by requiring local authorities to go behind the information with which they were provided by applicants.
[40] If a local authority fails to comply with the timeframe set out in the RMA, the Resource Management (Discount on Administrative Charges) Regulations 2010 provides a statutory remedy. It requires councils to provide applicants with a discount. Here a discount was provided to Mr Mao.
[41] The plaintiffs further allege that the Auckland Council failed to provide relevant documents relating to the discharge of the charging orders over properties owned by Mr Mao.
[42] There is no tenable claim that the Auckland Council failed to provide the plaintiffs with these documents.
22 Bella Vista Resort Ltd v Western Bay of Plenty District Council [2007] NZCA 33, [2007] 3 NZLR 429.
[43] The Auckland Council obtained a costs order against Mr Mao in the Environment Court and charging orders were registered against Mr Mao’s property as security. The correspondence between the Auckland Council and Mr Mao’s solicitors show that Auckland Council was advised of the settlement date that the discharge documents were required for and that the Auckland Council sent those discharges to Mr Mao’s solicitors on that date, as requested.
Result
[44] I grant the application by the Auckland Council to strike out the proceedings. The proceedings are struck out in their entirety, including the causes of action against Quotable Value Ltd. None of the claims can succeed.
[45] As to costs, I find that the plaintiffs should pay costs on a 2A basis23 to the Auckland Council in the total sum of $5,375 (that includes the 2B costs order of $956 ordered by Venning J on 20 June 2022).
Associate Judge P J Andrew
23 See my minute of 23 February 2022, based on a joint memorandum from the parties, at [3(e)].
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