McElroy v Auckland International Airport Ltd HC Auckland CIV 2006-404-005980
[2008] NZHC 991
•27 June 2008
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV.2006 404 005980
BETWEEN MICHAEL SHANE MCELROY JOHN WARWICK LAMBIE AND HUGH DRUMMOND LAMBIE AS TRUSTEES OF THE CRAIGIE TRUST Plaintiffs
ANDAUCKLAND INTERNATIONAL AIRPORT LIMITED
Defendant
Hearing: 10-14, 17-19 March 2008
Counsel: Colin R Carruthers QC, Brian Dickey and Kate Bannister for
Plaintiffs
Alan R Galbraith QC, Sarah Katz and Anna Harris for Defendant
Judgment: 27 June 2008 at 2:00pm
JUDGMENT OF WILLIAMS J
This judgment was delivered by
The Hon. Justice Williams on
27 June 2008 at 2:00pm
pursuant to R 540(5) of the High Court Rules
……………………………………………..
Registrar/Deputy Registrar
A.All the plaintiffs’ claims against the defendant fail though Auckland International Airport Ltd is subject to the obligations in s 40 of the Public Works Act 1981 but the land formerly owned by the plaintiffs and held for the public work of an “aerodrome” is and will continue to be required for that public work or that, it no longer being required for that public work, it remains held for the public work of an “airport”.
CRAIGIE TRUST AND ORS V AUCKLAND INTERNATIONAL AIRPORT LIMITED HC AK CIV.2006 404
005980 27 June 2008
B. Had it been necessary so to do, the Court would have concluded that it would not have been impracticable but it would have been unreasonable or unfair to require Auckland International Airport Limited to offer the land back to the plaintiffs and that there had been a significant change in the character of the land for the purposes of or connected with the public work for which the land is held.
C. Costs are to be dealt with as in para [231] of this judgment.
TABLE OF CONTENTS
Paragraph
Introduction [1] Section 40 [7]
The Taking of the Craigie Trust Land [8] (1) Background [8] (2) Establishment deeds [13] (3) Acquisition of Craigie Trust land [25]
Questions for Resolution [29] Does s 40 of the 1981 Act apply to the airport company or, as it would
have it, does it hold its land pursuant to the Finance (No.3) Act 1944, the Land Act 1948 and the Reserves Act 1977?
(1) Statutory Definitions [30] (2) Joint Venture Airports [37] (3) Submissions and Authorities [42] (4) Discussion and Decision [94]
Section 40 of the 1981 Act applying to the airport company, does it still hold the Craigie Trust land for “any public work” and is the land
“no longer required for that or any other public work” and what is the appropriate definition of the status of the land,“aerodrome” or something else? [115]
(1) Aviation Experts [115] (2) Other Evidence [145] (3) Submissions [178] (4) Discussion and Decision [189]
Had the Craigie Trust land been shown to be no longer required for the public work of an “aerodrome” or “airport”, would it have been shown that it would be impracticable, unreasonable or unfair to
require it to be offered back to the plaintiffs? [207]
Had the Craigie Trust land been shown to be no longer required for a public work would it have been held that there had been a significant change in the character of the land such that AIAL would not have been required to offer it back to the plaintiffs? [225]
Conclusion [231]
Introduction
[1] The plaintiffs are the current Trustees of the Craigie Trust following resettlement on 18 July 1968 of the H D Lambie Trust.
[2] The defendant is the publicly listed company which, as its name implies, owns and operates Auckland International Airport.
[3] The airport company (or “AIAL”) is the owner of 36.4260ha (all CT 78D/195
North Auckland Land Registry) taken from the Craigie Trust under the Public Works
Act 1928 (“the 1928 Act”). 1
[4] In this proceeding the Craigie Trust asserts that when the Public Works Act
1981 (“the 1981 Act”) came into force on 1 February 1982, and since, the Crown was under an obligation under s 40 of the 1981 Act to offer the land back to the Trust at its value on 1 February 1982 or within a reasonable time, 18-24 months, thereafter, and the airport company has succeeded to the Crown’s s 40 obligations. The Trust accordingly seeks a declaration requiring the airport company to offer the land back to the plaintiffs at the price applicable at 1 February 1982 or up to
24 months thereafter as the land is no longer required for the public work purpose of an “aerodrome” for which it was taken and held.
[5] The airport company raises a number of defences. It asserts the Trust land is still being used as an “aerodrome” or is still required for the “public work” or
“essential work” for which it was acquired or for another “public work”, namely an
1 Throughout this judgment, it is convenient to refer to the land so taken from the Craigie Trust as the “Craigie Trust land” or the “Trust land” despite the Trust not having owned it for over 30 years. It is to be hoped the plaintiffs take no offence from that shorthand description.
“airport”. It asserts the Trust has no rights against it under the 1928 Act or the 1981
Act, s 3(3D) of the Airport Authorities Act 1966 (the “Authorities Act”), or s 7(4A) of the Auckland Airport Act 1987 (the “Airport Act”). It further asserts that, even if it is subject to an obligation under s 40, it would be impracticable, unreasonable or unfair to require it to offer to sell the land to the Craigie Trust or the land has undergone a significant change of character, all for reasons which will be discussed in the course of this judgment.
[6] The Craigie Trust land and its present development is shown on the aerial photograph attached as Annexe “A” and its location within the airport company’s land, including the second runway now under construction, appears on the further aerial photograph Annexe “B”.
Section 40
[7] To set the scene, it is appropriate to recount the terms of s 40. In its present form it relevantly reads:
40 Disposal to former owner of land not required for public work
(1) Where any land held under this or any other Act or in any other manner for any public work—
(b) Is not required for any other public work; and 2
(c) Is not required for any exchange under section 105 of this
Act—
the chief executive of the department within the meaning of section
2 of the Survey Act 1986 or local authority, as the case may be, shall endeavour to sell the land in accordance with subsection (2) of this section, if that subsection is applicable to that land.
(2)Except as provided in subsection (4) of this section, the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority, unless—
2 As observed in Bennett v Waitakere City Council (HC AK Civ.2005-404-7348 14 May 2007) (under appeal) to avoid repetitiousness, references to the criteria in s 40(1)(a)(b), unless expressed otherwise, are to be deemed to include the less frequent exchange for which s 40(1)(c) provides and since the Cadastral Survey Act 2002 repealed the Survey Act 1986 the references in s 40 are presumably now intended to refer to the Chief Executive or the Surveyor-General though the statutory amendments do not appear as yet to say as much.
(a)He or it considers that it would be impracticable, unreasonable, or unfair to do so; or
(b)There has been a significant change in the character of the land for the purposes of, or in connection with, the public work for which it was acquired or is held—
shall offer to sell the land by private contract to the person from whom it was acquired or to the successor of that person—
(c)At the current market value of the land as determined by a valuation carried out by a registered valuer; or
(d)If the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority considers it reasonable to do so, at any lesser price.
(2A) If the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority and the offeree are unable to agree on a price following an offer made under subsection (2) of this section, the parties may agree that the price be determined by the Land Valuation Tribunal.
(3)Subsection (2) of this section shall not apply to land acquired after the 31st day of January 1982 and before the date of commencement of the Public Works Amendment Act (No 2) 1987 for a public work that was not an essential work. Where the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority believes on reasonable grounds that, because of the size, shape, or situation of the land he or it could not expect to sell the land to any person who did not own land adjacent to the land to be sold, the land may be sold to an owner of adjacent land at a price negotiated between the parties. 3
3 Section 40(1)(b) originally also spoke of the land being acquired for any “essential work” as defined in s 2. However, from 31 March 1987 the Public Works Amendment Act (No.2) 1987 omitted the definition of “essential work” and the words “essential work” from s 40(1)(b) and substituted the phrase “other public work”. It was not suggested these amendments were material to this claim and “essential work” is accordingly not separately discussed.
The taking of the Craigie Trust land
(1) Brief background
[8] Since the late 1920s aircraft have landed and taken off from the Mangere land on which Auckland International Airport stands. In 1928 Charles Kingsford Smith and Charles Ulm landed there, then the home of the Auckland Aero Club. Jean Batten landed there after her famous solo flight from England in October 1936. But it was not, for many years, the only, or indeed the principal, airport in the Auckland region. That was Whenuapai then used jointly by RNZAF and civilian aircraft.
[9] After World War II a number of studies were undertaken to settle on the site for a major civil airport in the Auckland region servicing both internal and international flights. That followed receipt in 1948 of a report by Sir Frederick Tymms on the future of civil aviation in this country.
[10] In November 1955, Cabinet approved the Mangere site for a future international airport and by 1959 the Crown owned most of the land required.
[11] The Crown and the Mayors of the many local bodies in Auckland jointly instructed an experienced airport planner, Leigh Fisher & Associates, to advise on the requirements for a new Auckland international airport. In a comprehensive report dated 11 May 1959, Mr Fisher presciently covered developments in aviation in recent years and likely developments in international traffic, aircraft types and domestic and international air traffic over the years to come. Of present interest, the report was sufficiently far sighted to recommend provision be made for two runways additional to the present east-west runway, one of which was to run parallel with the existing runway and would, if built where recommended, have crossed the Craigie Trust land.
[12] Mr Fisher agreed with the Mangere choice and urged its expeditious development. His recommendations for buildings included hangars, cargo buildings, fuel storage, rental car accommodation, parking areas, an “inn or hotel” plus a
“filling station and car service garage”, though he said that “in an industry as subject to technological obsolescence as aviation, no buildings should be designed for a useful life in excess of 30 years”.
(2) Establishment deeds
[13] The plethora of local bodies in the Auckland region at the time hampered progress but on 24 September 1960 the Crown and Auckland City Council as lead local body entered into an agreement for sharing the cost of development and airport operations. The deed said:
… he intention of the parties hereto is that the Airport shall at all times be capable of serving all present and future air traffic whether internal or international permitted by the Government to operate in and out of New Zealand and that any extension and/or strengthening of the runway, the construction of additional runways and the construction of buildings and other works necessary for the efficient and economical operation of the airport as an international airport that may be necessary to achieve such intention … shall be constructed from time to time
[14] The provisions of s 31 of the Finance (No. 3) Act 1944 (the “1944 Act”) were applied by the deed to the “purchase or acquisition of the land required for the development of the International Airport and the carrying out of the present and future works”. That section provided that “notwithstanding anything to the contrary in any Act or rule of law” and in relation to land “whether a public work within the meaning of the [1928] Act or not”, where the Ministers of Finance and Works decided any work was of both national and local importance – as Auckland International was declared to be by notice in the “New Zealand Gazette” (24
November 1960, p 1846) – then the Minister of Works and any local authority could enter into agreements for the “acquisition, execution, control and management of the work or scheme as may to them seem most suited to the circumstances”. Subsection (2) provided for possible provisions in such agreements and subsection (3) provided:
Notwithstanding anything to the contrary in the principal Act, any land required for any work or scheme in respect of which an agreement has been made under this section may be taken or acquired as for a public work under the [1928] Act either by the Minister or by any local authority which is a party to the agreement.
[15] The deed defined “airways facilities” as safety systems and all other “buildings, accommodation and other services and facilities as the Minister in Charge of Civil Aviation thinks necessary for the purpose of providing for the safety and efficient operation of aircraft engaged in civil aviation”.
[16] Any land acquired for future works was to be vested in the Crown and if “used for the International Airport or ancillary aviation purposes shall be under the control and management of the Council”. Land “no longer required for airways or other ancillary aviation facilities”, including buildings, passed to Council for “use in connection with the general purposes of the International Airport”.
[17] The Council was to apply for a “Public Aerodrome Licence” for the airport.
[18] The parties had full rights at their own expense to construct, alter and remove any buildings and the deed debarred any building or construction which might “affect the future development of the International Airport … within the boundaries” without the parties’ consent, though Council had power to grant leases or licences to occupy any land within the airport boundaries and “also develop additional amenities or facilities”.
[19] Council had a similar power to let concessions for a list of facilities and “for such other amenities of any kind whatsoever as do not interfere with the efficient administration” of the airport.
[20] That deed was supplanted during airport construction by a further deed dated
25 November 1963 (though deemed operative from 24 September 1960). Its recitals repeated that the airport should “at all times be capable of serving all present and future air traffic whether internal or international” and provided for the construction of “additional runways and buildings and other works necessary for the efficient and economical operation of the airport as an international airport”. The deed also provided :
Should at any time the whole or any part of the Airport as from time to time extended cease to be required for the Airport, then so much as is not required therefor shall be disposed of as the parties to this deed may agree …
[21] The deed obliged the Minister to arrange to buy or acquire the land shown in an attached plan. It included the Craigie Trust land. Once the parties agreed on the nature of future construction, the Minister was to have those works completed.
[22] A subsequent deed bound all the other Auckland local bodies in existence at the time to the terms of those establishment deeds.
[23] Following the passing of the Auckland Regional Authority Act 1963, the ARA assumed liability for the functions previously assumed by the councils and in a deed dated 14 April 1966 the Crown and the ARA agreed:
… that the Principal Deed shall be varied so as to provide that all land now or hereafter acquired for the Airport or for ancillary aviation purposes shall pursuant to section 19 of the Reserves and Domains Act 1953 be vested in the Authority to be held in Trust for aerodrome purposes
as defined in the principal deed.
[24] Auckland International Airport officially opened on 29 January 1966 with the interim terminal building housing necessary facilities but intended ultimately for cargo.
(3) Acquisition of Craigie Trust land
[25] The Crown acquired the Craigie Trust land over a period.
[26] In 1971 it gave notice it intended to acquire 23 acres of the Craigie Trust land to the south of what is now Tom Pearce Drive. After objection by Mr J W Lambie, son of the settlor who was farming the land at the time, and negotiations over the Crown’s requirements, it was agreed in about April 1971 that only seven acres would then be acquired, compulsorily if agreement as to access and compensation could not be reached, with the balance being acquired later.
[27] Though counsel’s submissions as to the formal process by which the Crown implemented its intention showed the process to be somewhat unclear, perhaps even contradictory , the following are relevant:
a) By “Gazette” notice of 29 March 1974 published on 4 April 1974 (p 613) the Crown gave notice under the 1928 Act of its intention to take 33.6260ha of the Trust’s land for an “aerodrome” and use it to realign George Bolt Drive and erect a cargo shed.
b) By “Gazette” notice dated 23 January 1975 published on 30 January
1975 (p 141) “agreement to that effect having been entered into”,
90 acres 1.7 perches was taken under the 1928 Act for an “aerodrome” from 30 January 1975. That included the whole of the Craigie Trust land. The Trust consented in an agreement dated 3
October 1974 to the taking of the land with compensation deferred pending resolution of zoning issues and lease-back arrangements.
c) By “Gazette” notice dated 11 November 1977 published on
1 December 1977 (p 3145) the 90 acres 1.7 perches (and other land)
was declared Crown land subject to the Land Act 1948 from 1
December 1977.
d) By “Gazette” notice dated 2 October 1978 published on 12 October
1978 (p 2768) the land, now again described in decimal terms but as
36.4260ha was “under the Land Act 1948, set aside as reserves for local purpose (‘aerodrome’)” and pursuant to the Reserves Act 1977 vested in the ARA in trust for that purpose and under the deeds of 25
November 1963 and 14 April 1966.
e) Declaring land acquired under the 1928 Act to be Crown land subject to the Land Act 1948 and then setting it aside as a reserve for local purposes under, first, the Reserves and Domains Act 1953 and, later, after repeal of that statute, under the Reserves Act 1977 was said by Mr Carruthers QC, senior counsel for the Trust, to have been standard for the acquisition of land at the time. Counsel submitted it may have been a device designed to avoid triggering the offer back provisions under the 1928 Act which directed that land no longer required for the
public work purpose for which it had been acquired to be offered back, not to former owners or their descendants, but to neighbours.
[28] The trail leading to the Craigie Trust land now being owned by the airport company continues:
a) By “Gazette” notice dated 30 October 1980 published on
13 November 1980 (p 3326) the “reserve” comprising the airport land was declared under the Reserves Act 1977 to be classified as a “reserve for local purposes (site for aerodrome)”
b)For some unexplained reason, an essentially identical “Gazette” notice, this time dated 10 June 1982 and published on 22 July 1982, (p 2431) again classified the airport land as a “reserve for local purpose (site for an aerodrome)” under the Reserves Act 1977. The
1981 Act was in force when this notice was published.
c) Then, following public discussion in June 1985 as to possible corporatization of airports the Airport Act 1987 was passed on 16
December 1987. Auckland International Airport Limited was incorporated as a public company on 20 January 1988 and the Craigie Trust and its other land was vested in it by the Auckland Airport (Vesting) Order 1988 (SR1988/71) from 29 March 1988. The land was vested “together with all planning rights, designations, water rights and clean air licences, relating to it or to the operations and activities of the airport”.
Questions for resolution
[29] Rendered down to their essence, the questions for resolution in this case are: (a) Does s 40 of the 1981 Act apply to the airport company or, as it
would have it, does it hold its land pursuant to the 1944 Act, the
Land Act 1948 and the Reserves Act 1977?
(b) If the answer to (a) is that s 40 of the 1981 Act applies to the airport company, does it still hold the Craigie Trust land for “any public work” and is the land “no longer required for that public work” (nor for any other public work nor for exchange) or is it required for another public work? Resolution of that question involves deciding whether the Craigie Trust land was and is held for a “public work” either of an “aerodrome” or an “airport” which necessarily involves deciding what is comprised in either at
1 February 1982 when the 1981 Act came into force (or within a reasonable time thereafter), or at 29 March 1988 when the Vesting Order was made or as at the present time?
(c) If the Craigie Trust is not held for a “public work” would it be impracticable, unreasonable or unfair to require the airport company to offer it back to the plaintiffs?
(d) If the Craigie Trust land is not held for a “public work”, has there been a “significant change in the character of the land for the purposes of or in connection with the public work for which it was held” and thus the airport company is not obliged to offer it back to the plaintiffs?
Does s 40 of the 1981 Act apply to the airport company or, as it would have it, does it hold its land pursuant to the Finance (No.3) Act 1944, the Land Act 1948 and the Reserves Act 1977?
(1) Statutory Definitions
[30] Unsurprisingly, the 1928 Act did not define “aerodrome” or “airport”.
[31] The Civil Aviation Act 1964 – in force when the Craigie Trust land was taken – defined “aerodrome” as:
“Aerodrome” means any defined area of land or water intended or designed to be used either wholly or partly for the landing, departure, movement, and servicing of aircraft; and includes any buildings, installations, and equipment on or adjacent to any such area used in connection with the aerodrome or its administration:
[32] Interestingly, the Authorities Act – passed only two years later - contains no definition of “aerodrome” but defines “airport” as:
“Airport” means any defined area of land or water intended or designed to be used either wholly or partly for the landing, departure, movement, or servicing of aircraft; and includes any other area declared by the Minister to be part of the airport; and also includes any buildings, installations, and equipment on or adjacent to any such area used in connection with the airport or its administration.
[33] The 1981 Act contains no definition of “airport” but repeats the definition of
“aerodrome” from the Civil Aviation Act 1964 and adds:
And also includes any defined air space required for the safe operation of aircraft using the aerodrome; and also includes a military airfield.
[34] The Civil Aviation Act 1990 contains no definition of “airport” and repeats the 1964 definition of “aerodrome”, though dividing it at the semi-colon into sub- paragraphs.
[35] Section 3 of the Authorities Act empowers airport authorities to establish and carry on airports. That was amended by the Airport Authorities Amendment Act
1986 to define an “airport company” and, of relevance to this claim, with effect from
18 December 1986 enacted s 3D of the Authorities Act which, in the form current from 1991, reads:
3D.An airport operated or managed by an airport authority which is not a local authority shall – …
(b)For the purposes of the Public Works Act 1981, be deemed to be a Government work.
[36] For completeness, it needs to be noted that the Airport Act simply defines “airport” as the “Auckland International Airport at Mangere … being an area of approximately 1100ha which includes a runway, an international terminal and a domestic terminal and other buildings, installations and facilities” but, of present relevance, s 7(4A), in force since 10 August 1992 (Civil Aviation Amendment Act
1992 s 1(2)) reads:
(4A) Where land has been transferred to the company under this Act, sections 40 and 41 of the Public Works 1981 shall, after that transfer, apply
to the land as if the company were the Crown and the land had not been transferred under this Act.
(2) Joint Venture Airports
[37] For many years prior to corporatization Government policy was that New Zealand airports be owned and operated as joint ventures between Government and local bodies. Auckland International was one. A Civil Aviation administration manual on “Principles and Procedures” for such airports published on 1 August
1961 described what was envisaged:
3.World-wide acceptance of the inevitability of subsidised initial development costs for air transport acknowledges that potential air traffic and ancillary airport revenues should increasingly contribute towards recouping past costs and meeting those of future development, the main aim being the development of a satisfactory aviation service capable, in time, of meeting the justifying present capital expenditure. The “user who pays” and the community are entitled to the assurance that effective promotion and commercial development, associated with efficient maintenance and operation, will show some prospects of airports eventually becoming self- supporting if not self-liquidating. Both the aeronautical user and the airport management should have a common interest in the development of non-flight airport revenue sources. In this endeavour, rents and charges to non-aeronautical users should seek the maximum returns from consumer business and commercial and industrial tenants.
…
6.It must be recognised that airport “operations” (the movement of air traffic) have a corollary in airport “commerce”, demanding prompt appraisal and decision on local business opportunities and promotion. This broad division of the airport into two major components materially assisted the development of airport policy within the concept now accepted in New Zealand.
[38] The same document broadly placed responsibility for the operation of joint venture airports on the Crown and the management of the airport and ancillary facilities on the local body.
[39] Since New Zealand is a party, that policy was required to mesh with the 1944
Convention on International Civil Aviation which was said by Mr Garfinkle, an international aviation consultant, to define “aerodrome” in Annex 14 as:
A defined area on land or water (including any buildings, installations and equipment, intended to be used either wholly or in part for the arrival, departure and surface movement of aircraft.
[40] It was the implementation of those policies in Auckland which led to the establishment deeds.
[41] The policy largely remained in place until the corporatization and divestment of assets wholly or partly in public ownership which occurred in New Zealand in the mid to late 1980s.
(3) Submissions and Authorities
[42] For the plaintiffs, Mr Carruthers QC said the basic thrust of the claim was that the Crown and the ARA were bound by the 1981 Act to have offered the Craig Trust land back to the plaintiffs on 1 February 1982 or within a reasonable time, 18-
24 months thereafter, as it was no longer held for an “aerodrome”, the public work for which it was taken. And the airport company inherited that obligation when the land was vested in it pursuant to the Vesting Order with the obligation being to offer the land back as at its date or shortly thereafter.
[43] Summarising the history, Mr Carruthers accepted Auckland International was developed as a joint venture under the establishment deeds which made clear airport land was under the “management and control of the Council for such time as it is used for … airport and ancillary aviation purposes”. He detailed the Crown’s acquisition of the Craig Trust land earlier set out noting it was consistently taken for an “aerodrome” or similar.
[44] As earlier noted, he submitted the setting aside of the land as a reserve under the Land Act and vesting it under the current Reserves Act was standard at the time. He submitted that the plaintiffs’ rights endured through the airport privatization and corporatization process.
[45] Whichever route was adopted, he suggested that applying the 1981 Act to compulsory acquisition of land now held for commercial purposes by a commercial
entity such as the airport company is entirely consistent with the policy of the 1981
Act described in Deane v Attorney-General [1997] 2 NZLR 180, 191:
It is convenient to set out here what I apprehend to be the appropriate approach to s 40, and buy-back offers in particular. The power of the Crown to compulsorily acquire land derives from the ancient notion of eminent domain. It is today a draconian – but necessary power – in a complex, and collective society. But to the extent that the Crown's powers are a direct interference with individual property rights, our Courts – in company with Courts elsewhere in the British Commonwealth – have insisted that, always bearing in mind the purpose of any given powers (Chilton v Telford Development Corporation [1987] 1 WLR 872, at p 878 per Purchas LJ), powers of this kind are strictly construed; must be exercised in good faith (Manukau City v Attorney-General ex relatione Burns [1973] 1 NZLR 25 (CA), at p 32); and even-handedly. That last consideration has (with respect) never been better expressed than by Lord Upjohn (as he later became) in delivering a judgment of the Court of Appeal in Simpsons Motor Sales (London) Ltd v Hendon Corporation [1963] Ch 57, at pp 82 – 83:
"The underlying assumption of Parliament is that in conferring compulsory powers upon statutory authorities for public purposes, the acquiring authority will act reasonably in the public interest, that is, not only in the interests of their own ratepayers or shareholders, as the case may be, but with due regard to the interests of the person being dispossessed." (Emphasis added)
(As Mr Carruthers said, the decision in Deane was reversed by the Court of Appeal - Horton v Attorney-General CA 43/97, 3 December 1997 - and that reversal was upheld by the Privy Council - Attorney-General v Horton [1999] 2 NZLR 257 - but neither judgment commented adversely on the passage cited.)
[46] Mr Carruthers submitted the land remained held for a “public work” because the defendant operated an “aerodrome”. But the Craigie Trust land was not “required” to be used for that public work. However desirable the airport company may regard its retention, its commercial use, both present and forecast, was unnecessary for operation of an “airport”, still less an “aerodrome”, particularly when the Airport Act expressly terminated the establishment deeds and thus made the airport company’s land holding wholly subject to statute. It was impermissible, he submitted, to hold the land on a “just in case” basis for future development, noting Mr Garfinkle’s evidence later detailed that such an approach could easily mean no compulsorily acquired land would ever need to be offered back. Not only was such an approach contrary to the anti-land banking principles for which s 40 of the 1981 Act was, at least in part, enacted, it was also contrary to the observations of
the Privy Council in Horton (at 261-262) where their Lordships said of the nature of the offer back right:
This right has sometimes been described as a right of pre-emption, although Their Lordships think it bears a closer resemblance to an option: the purchaser's right is not dependent upon the vendor choosing to sell but arises as soon as the land is no longer required. Hammond J described it as an inchoate right which an owner of land taken by the Crown preserved throughout the latter's ownership and which came to fruition when the land was no longer required. It has been said in a number of cases to be the expression of a strong legislative policy to preserve the rights of an owner subject only to the continuing needs of the state.
Nevertheless, as a right in private law analogous to an option, it has some curious features. It is subject to defeasance by the exercise of the discretionary power conferred by s 40(2)(a). Furthermore, the existence of the right may well remain unknown to the owner for some considerable time. Since a decision that land is no longer required will usually be internal to the government department or state-owned enterprise, the owner may learn only much later, by use of the Official Information Act 1982 or accidental discovery, that his right to buy had accrued. By the time he claims to exercise it, policy may have changed and the land be once more required for public use. Subject to the question of reconsideration, the Crown would have to use its compulsory powers afresh and purchase at the later valuation. This may of course be a necessary consequence of the legislative policy of protecting the original owners.
…
The Court of Appeal … said that once conditions (a) and (b) and possibly (c) of s 40(1) were satisfied, the Chief Executive of the Lands Department came under a mandatory obligation to sell. There was ``no further role for the department or agency responsible for the public work for which the land was held'' and ``no room for reconsideration of the earlier conclusion that the land was not required for a public work.'' The right to an offer vests, subject only to being defeated by the exercise of the discretion conferred by s
40(2)(a) or by the state of facts described in s 40(2)(b). There is no provision for the right being divested simply by a change of mind on the part of the government department or state-owned enterprise.
Their Lordships respectfully consider that the reasoning of the Court of Appeal is correct. If s 40 confers an enforceable right to buy, then Their Lordships consider that when the conditions upon which it comes into existence have been satisfied, it must vest subject only to those grounds of defeasibility expressly stated in the statute
[47] Mr Carruthers submitted it was incorrect for the airport company to focus more on whether the land was subject to the 1928 Act prior to transfer than whether it was subject to the 1981 Act. He submitted the wording of s 40 makes 1 February
1982 and thereafter the critical period, not what occurred before that date. He
pointed to the breadth of the terms of s 40 and the lack of reference in it to land held under the 1928 or other Acts.
[48] Mr Carruthers also argued that s 40 of the 1981 Act is not primarily concerned with the disposal of land: its prime focus is whether land held for a public work continues to be required for such. If land has been held by a public body, or a series of public bodies, for a continuous public work purpose, then s 40 applies.
[49] Even were that wrong, Mr Carruthers submitted there was a consistency of public work purposes demonstrated by the “Gazette” notices in their repetition of “aerodrome” with only minor variation. He submitted the words “in any other manner for any public work” in s 40 also focused attention not so much on the way in which the body holding the land acquired it, but whether the various public entities which had held the land did so for a public work purpose relying on Port Gisborne Ltd v Smiler [1999] 2 NZLR 695, 706. There the Court of Appeal, in construing s 40 in relation to land which had passed from original Maori owners to the Crown and then to Port Gisborne and its antecedents, held:
[39] … We agree that in appropriate circumstances there is justification for disregarding intervening public owners so as to give effect to the intent of the legislation and return the land to its original private owners. As Laurenson J said, that depends on the factual and legal nexus surrounding the acquisition of the land and the manner of its holding by the intermediate public owner. In Auckland Regional Council v Attorney-General [HC AK CP.583/88 24 September 1990] Gault J commented at p 10:
“A construction excluding [as offerees] former owners that held the land for a public work would seem consistent with the intention of the section of providing a prior right to a private person to reacquire land taken or acquired from him for public use.”
[40] Where land has continued to be held by successive public bodies for a public work throughout, the true intent and spirit of s 40 is that the land should be returned to the original owner. The intent of the section cannot, however, extend to bypassing an intervening public owner where that owner neither acquired nor held the land for a public work. In the situation that the land was held throughout for a public work, there is merely a preservation of rights that the original owner would have enjoyed under s 40 had there not been a change of public owner. Where, however, the land was acquired and held by the first public owner for something other than a public work, there are no rights to preserve and it is not possible, given the wording of subs (2), to find that those rights accrue when ownership changes.
[41] What has been described as the inchoate right given by subs (2), arises and can only arise at the time when the land first becomes subject to the possible application of s 40, crystallising if and when the land is no longer required. A change of ownership while a public work purpose for holding the land continues does not affect the inchoate right, and there is no justification for reading the section as bringing it to an end. The land remains required for a public work, and s 40 does not come into play. Subsection (2) does not stipulate the offeree as being the person from whom the present holder of the land acquired it.
[50] Section 40 applies if the land is not needed for a public work or is no longer so needed (Kerr-Taylor v Attorney-General [2004] 3 NZLR 104, 114). Mr Carruthers submitted the airport company was unable to demonstrate it had a need or “required” the Craigie Trust land (apart from the Trust’s concessions later outlined) for a public work. The question was whether the particular piece of land had been shown to have been acquired or held for a specific public work (Hood v Attorney-General CA 16/04 2 March 2005, para [27]). The airport company could not show that the commercial uses to which the Craigie Trust land has been, and is forecast to be, put were “required” to be on the Craigie Trust land.
[51] One of the purposes of the enactment of s 40 was to prevent public bodies continuing to hold land acquired for public works purposes with no specific public work purpose in view and with the land simply held as a “land bank” (Bennett pp 19-
20, para [43]). Even brief intervals of land not being required for public work purposes between it being required for such purposes trigger the offer back obligation (Horton at 257, 262 (PC)).
[52] Mr Carruthers submitted the Airport Company’s approach was erroneous in suggesting its land was not subject to s 40 because it had been taken for a public work, an “aerodrome”, under the 1928 Act then declared Crown land held as a reserve under the 1944 Act and the establishment deeds. The land had never been disposed of under s 35 of the 1928 Act nor disposed of under cl 21 of the initial establishment deed. In any event, the point became moot when the trust and deeds were dissolved by the Airport Act with the land thereafter to be dealt with under s
7(4A).
[53] Mr Carruthers argued s 31 of the 1944 Act permitted the acquisition of both public and general works under the 1928 Act. He noted s 28 of that Act provided
that Part IV (which included s 31) was deemed to be part of the 1928 Act. Mr Carruthers also noted s 31 dealt with acquisitions not disposals and accordingly, he submitted, s 35 of the 1928 Act continued to apply in that latter regard. The “Gazette” notices of 1974, 1975 and 1977 taking the land were all expressed to be pursuant to the 1928 Act. Accordingly, he submitted, the Craigie Trust land was acquired for a “public work” even though the notices do not use that term and, throughout, the Crown and the ARA regarded the Craigie Trust land as held for a public work.
[54] Mr Carruthers also argued there was no statutory or other basis for AIAL’s contention that once the Craigie Trust land had been set aside as “reserves for local purpose (aerodrome)” and vested in the ARA, it could no longer be land held for a “Government work” or “local work” under the 1928 Act or a “public work” under the 1981 Act. There was no reason, he submitted, why the land could not be held on trust as a reserve under the establishment deeds and also held under the 1928 and
1981 Acts. Such would conform with s 3D of the Authorities Act.
[55] There was no basis, Mr Carruthers submitted, for the defendant’s contention that Crown land cannot be held for a public work without some formal step altering its legal status. Section 13 of the 1928 Act and s 52 of the 1981 Act do no more than create powers to set land aside as Crown land or for Government works. The decisive provision, Mr Carruthers submitted, is s 167 of the Land Act 1948 which reads:
167 Land may be set apart as reserves
(1)The Minister of Conservation may from time to time, with the prior consent in writing of the Minister of Lands, by notice in the Gazette, set apart as a reserve any Crown land for any purpose which in his or her opinion is desirable in the public interest. Every such notice shall take effect from the date thereof or from such later date as is specified in the notice.
…
(2)Upon the notice aforesaid being published in the Gazette, the land described therein shall be and be deemed to be dedicated to the purpose for which it was reserved, and may at any time thereafter be granted for that purpose in fee-simple, subject to the condition that it shall be held in Trust for that purpose unless and until that purpose is lawfully changed.
[56] The procedure in s 167 applied in this case, he suggested. The Minister had set apart Crown land as a reserve for a public interest purpose, an “aerodrome”, and upon the “Gazette” notice being published the land was deemed set aside for that reserves purpose and was then vested in the ARA on trust for the same purpose. But s 167(4) makes clear the land was subject to the 1981 Act. It reads:
(4)Where any Crown land is set apart as a reserve under this section for any public purpose which is a Government work within the meaning of the Public Works Act 1981, the land so set apart shall be deemed to be subject to that Act, save that section 35 of that Act, other than the second and third provisos to that section, shall have no application thereto.
(the 1981 Act substituted the reference to it for reference to the 1928 Act)
[57] “Government work” is defined in the 1981 Act as:
Government work means a work or an intended work that is to be constructed, undertaken, established, managed, operated, or maintained by or under the control of the Crown or any Minister of the Crown for any public purpose; …
[58] The Craigie Trust argued the Crown retained control over the land in terms of the establishment deeds. The airport land was acquired for a “Government work”, an “aerodrome”, and has continued to be held for such. Accordingly s 167(4) applies and the land, including the Craigie Trust land, is subject to the 1981 Act. That, too, conforms with s 3D of the Authorities Act and s 7(4A) of the Airport Act.
[59] Mr Carruthers submitted the statutory régime by which the airport company was established and the land vested was a code. Section 7(4) of the Airport Act vested the land notwithstanding the 1981 Act with the reach of the latter being clarified by the enactment of s 7(4A). That clearly made the land vested in AIAL under the Vesting Order subject to s 40 “as if” it were the Crown and with the final phrase - “and the land had not been transferred under this Act” – intended to avoid the transfer or vesting triggering s 40 rights (Dilworth Trust Board v Counties Manukau Health Ltd [2002] 1 NZLR 433, 448, paras [31] and [32], Horton CA43/97 p 8). In Horton, in relation to similar words found in s 24(4) of the State-Owned Enterprises Act 1986, the Court of Appeal observed:
If the grant or other transaction is not a “transfer” of land to the SOE then s 24(4) has no application and s 40 continues to apply to the Crown. If the grant or transaction is a “transfer”, then in terms of s 24(4), thereafter s 40 applies to the grant as if the SOE were the Crown and the land had not been transferred pursuant to the State-Owned Enterprises Act.
And in the unreported portion of Deane, Hammond J observed (at 42) that “Parliament did not intend that the Public Works Act rights of former owners should be diminished in the course of privatisation”.
[60] Mr Carruthers submitted that if the defendant’s construction of s 7(4A) were adopted – that the position prior to vesting of the land in AIAL was the trigger point
– the unintended result would be that s 40 applied from 1 February 1982 and AIAL would then be responsible for offering back the land as at a date, 1 February 1982 or up to 18-24 months later, when it had not then been incorporated – indeed corporatization was not then being considered – and the land had not been vested in it. That, Mr Carruthers said, was an absurd result which could never have been in Parliament’s contemplation.
[61] The Craigie Trust’s interpretation accorded with the plain words of s 7(4A) and with s 3D of the Authorities Act deeming an “airport” to be a Government work for the purposes of the 1981 Act. AIAL was deemed to be an “airport company” under s 4(6) of the Airport Act and therefore an “airport authority” under s 2 of the Authorities Act 1966.
[62] By contrast with s 7(4A), some similar statutory provisions enacted at much the same time and for much the same purpose expressly applied their provisions only to land subject to s 40 of the 1981 Act (e.g. Health Sector (Transfers) Act 1991, s 3).
[63] Auckland City Council v Man O’ War Station [1996] 3 NZLR 460 on which the defendant relied was distinguishable on its facts since in that case the land had ceased to be held for the Government work for which it was acquired and was not used for a different Government work. Accordingly s 167(4) was inapplicable.
[64] To conclude, Mr Carruthers relied on the following passage from Port
Gisborne:
[35]Section 40, which comes under Part III of the Act and is headed “Dealing With Land Held for Public Works”, is in the context of legislation which is directed to public works, and in particular to the acquisition of land for public works (s 16). It is not, and has no reason to be, concerned with land which has been acquired for other purposes. … The Act clearly has no application to land which has been acquired, and is currently being used, for purposes other than public work. … The background to the offer-back concept is that land is being acquired from a private person for a public work purpose, possibly under the threat or contemplation of compulsion. The rationale must be that it is only fair, if that purpose disappears, the land should so far as practicable revert to the previous or equivalent private ownership.
[36]In the light of that background, it would appear contrary to the statutory intention to apply s 40 to land which has been acquired for other than public work purposes. What justification could there be for requiring an offer back to be made where land has been acquired for a commercial purpose on an arm’s length transaction, but years later used for a short term for some form of public work but is then no longer required for that work? At the time of acquisition, the vendor has no existing right which needs preservation. … The framework, and the history, of the legislation all point to s 40(2) being directed to land which has been acquired for a public work, and to give an option to the person from whom it was so acquired. The fact that the present owner of the land was not the particular body which originally acquired the land for that purpose is irrelevant where a public work use has continued, with the need for any offer back not arising.
[65] For the airport company, Mr Galbraith QC, its senior counsel, submitted the defendant was not statutorily bound to offer the Craigie Trust land back to the plaintiffs. The airport company was not bound by the 1981 Act upon proper analysis being undertaken of the various statutes and deeds affecting the airport.
[66] Summarizing AIAL’s stance, he said the present airport was a joint venture under the establishment deeds with their statutory basis in s 31 of the 1944 Act. The land having been transferred to the ARA to be held on trust under the Reserves and Domains Act 1953 for the joint venture meant it was that Act and its successor, the Reserves Act 1977, which, together with the establishment deeds, governed the status of the airport land. It was thus not subject to the 1981 Act.
[67] He submitted that whether s 40 applied to the defendant was a construction exercise to be determined against the factual and legal matrix with views on that topic offered by various persons at various times of little assistance. That must be
correct. The 1981 Act applies or it does not. Views expressed outside this case on that topic by consultants, lawyers and others are of little, if any, assistance.
[68] The statutory foundation for joint venture airports was s 31 of the 1944 Act, probably passed to enable hydro-electric and other major public works to proceed. Within the statutory guidelines, s 31 gave wide powers to the Crown and local authorities to agree on development of works of local and national importance, even if they did not qualify as a “public work” under the 1928 Act. That, Mr Galbraith submitted, was demonstrated by s 31(3) enabling land to be acquired “as for a public work”.
[69] Similar powers of entering into agreements most suited to the circumstances appeared in s 12(3) of the Civil Aviation Act 1964 with permissible categories of such agreements particularised and subs (6) providing that agreements for the “development or reconstruction of an aerodrome” under s 31 of the 1944 Act might include such provisions.
[70] Mr Galbraith noted the provisions concerning land in the principal deed included the Ministerial obligation to acquire the land scheduled, including the Craigie Trust land, and provided that s 31 of the 1944 Act should apply to such.
[71] Mr Galbraith submitted that the land was initially acquired for a “Government work” or a “public work” and essentially continues to be held for such purposes.
[72] The 1975 “Gazette” notice declared all the airport land to be “taken for an aerodrome” under s 32 of the 1928 Act which meant it was held “as for a public work” under s 31 of the 1944 Act. All the airport land was then declared to be Crown land under s 35 of the 1928 Act pursuant to the 1977 “Gazette” notice.
[73] The next step in Mr Galbraith’s submissions was that, from as early as the supplementary deed of 14 April 1966, all the airport land was vested in the ARA and held “in trust for aerodrome purposes” for the purposes of the principal deed under s
19 of the Reserves and Domains Act 1953. Section 19 empowered the Minister by
“Gazette” notice to vest land in local authorities on trust “for the particular purpose for which the public reserve is reserved or set apart”. Then s 5(2)(b) of the Reserves Act 1977 specifically provides that the Act is to be read subject to the “provisions of any … deed or other instrument creating the Trusts upon which the reserve is held”.
[74] Then, by the 1980 and 1982 “Gazette” notices the airport land was re- classified under the Reserves Act 1977 as a “reserve for local purpose site for aerodrome” subject to the Act.
[75] The result, Mr Galbraith submitted, was that from at least the 1978 “Gazette” notice until corporatization in 1988, all the airport land was held as a local purpose reserve “aerodrome” or “site for aerodrome” and held in trust by the ARA for that purpose subject to the establishment deeds with those deeds having primacy over the provisions of the Reserves Act 1977 by dint of s 5(2)(b) of that Act, and s 40 which obliged bodies administering reserves to do so “to ensure the use … development, maintenance, protection and preservation … of the reserve for the purpose for which it is classified”. Accordingly, the 1981 Act did not apply to any part of the airport land including the Craigie Trust land.
[76] A variant leading to the conclusion that all the airport land was outside the provisions of both the 1928 and 1981 Acts was that, under the Land Act 1948, it was that Act which thereafter governed the Crown’s obligations. The land was held in trust for the joint venture for the purposes set out in the establishment deeds and subject to the requirements of the Land Act 1948 and, since 1977, of the Reserves Act.
[77] He supported that submission by reference to observations to that effect in a Land Information New Zealand discussion paper “Review of the Public Works Act: Issues and Options” (November 2000, p 41, para 5.4.2) and another LINZ publication, “Statutory Right of Repurchase” (1 July 2002, s 12, p 17), which said “Crown land held under the Land Act 1948 is not land ‘held for public work’ [and] the statutory offer requirements of s 40 of the PW Act do not apply”. He also submitted because all the airport land was disposed of by the Crown as required by the 1928 Act by vesting it in itself under the Land Act 1948, well before enactment
of the 1981 Act, the Crown owed no obligation to offer the land back to previous owners once the 1981 Act came into force as enactment of s 40 of that statute did not create new rights for those whose former land was no longer held under the 1928 Act despite the contrary observations in Bennett (p 33, para [88]).
[78] Mr Galbraith submitted the plaintiffs were in error in suggesting the mechanism just described was a stratagem utilised at the time to avoid offering the land to neighbouring owners under s 35 of the 1928 Act and because that Act contained no equivalent to s 50 of the 1981 Act allowing transfers between public bodies without triggering the offer back requirement. The 1928 Act included a provision comparable with s 50: s 35 of the Finance (No.2) Act 1945 made such transfers subject to s 31 of the 1944 Act.
[79] In light of that, Mr Galbraith submitted it must be concluded that the method chosen to vest the airport land in the ARA was a deliberate one, not one to circumvent the 1928 Act.
[80] Mr Galbraith submitted that airport company’s approach was recognised by the Authorities Act. He noted s 2 largely repeats the earlier definitions of “aerodrome” in its definition of “airport” but adds “any other area declared by the Minister to be part of the airport”. He also relied on s 5 which effectively repeats s 31(1)(2) of the 1944 Act and subs (3) which from 1988 read:
(3) Where in the opinion of the Minister of Finance and the Minister any work or scheme of development or reconstruction to be executed or carried out at or in connection with any airport in accordance with an agreement entered into under this section is of both national and local importance, that agreement shall be deemed to be an agreement entered into under section
224 of the Public Works Act 1981, and the provisions of that section, as far as they are applicable and with the necessary modifications, shall apply accordingly.
(The reference to s 224 of the 1981 Act was originally a reference to s 31 of the 1944
Act).
[81] In response to the Craigie Trust’s reliance on s 3D of the Authorities Act to argue the 1981 Act applies, Mr Galbraith noted the section only came into force on
18 December 1986, some years after the claimed offer back obligation became operative.
[82] Mr Galbraith submitted s 3D did not affect the airport company or its land because it was not held under the 1981 Act and the section was not intended to create rights retrospectively. Even were that submission not accepted, he submitted it did not follow the Craigie Trust land was held as an “aerodrome” as defined in the 1981
Act. It would either have been held for the purposes of an international airport under the joint venture and the establishing deeds, though as a “public work”, or s 3D would only apply to that part of the airport land which fell within the narrow definition of “aerodrome” for which the plaintiffs contend.
[83] Further, he submitted, that if the Craigie Trust’s interpretation of s 3D were accepted, the consequence would be that any airport corporatized after that provision was enacted in 1986 would have to offer back all land, however acquired, that was not being used for the plaintiffs’ narrow interpretation of an “aerodrome” or “airport”, a nonsensical result. Section 3D could only apply to land which comes within the narrow definitions of “aerodrome” in the 1981 Act and “airport” in the Authorities Act, not the whole of the airport company’s land, and s 7(4A) of the Airport Act simply preserved, from 1992, any Crown obligation which the airport company may have inherited.
[84] Mr Galbraith also relied on the whole of the Airport Act. He especially relied on its definition of “airport”, one markedly different from other definitions of the term, or “aerodrome”. After empowering the vesting of each “asset” as defined in the State-Owned Enterprises Act 1986 and liability in the company, s 7 (4) reads:
(4)Any provisions of this Act vesting any assets or liabilities in the company shall have effect notwithstanding any enactment, rule of law or agreement and, in particular, but without limitation, the provisions of this Act vesting any land in the company shall have effect notwithstanding any provision contained in the Land Act
1948, the Reserves Act 1977, or the Public Works Act 1981 or in any other Act relating to land.
c) That, had it been necessary so to do, the Court would have concluded that it would not have been impracticable but would have been unreasonable or unfair to require Auckland International Airport Limited to offer all or part of the land back to the Craigie Trust and that there had been a significant change in the character of the land for the purposes of or connected with the public work for which the land was acquired and is held and accordingly the defendant was not obliged to offer it back to the plaintiffs.
d)As to costs, each of the parties having been successful to a significant degree, the Court’s inclination is that costs should lie where they fall. If, however, either party wishes to seek costs then memoranda may be filed (maximum 10 pages) with that from the defendant being filed and served within 28 days of delivery of this judgment and that from the plaintiffs within 35 days of delivery and with counsel certifying, if they consider it appropriate so to do, that all issues of costs may be determined without further hearing.
…………………………..
WILLIAMS J.
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