Minister for Canterbury Earthquake Recovery v Ace Developments Limited
[2015] NZHC 1027
•15 May 2015
IN THE HIGH COURTOF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2014-409-000863 [2015] NZHC 1027
BETWEEN THE MINISTER FOR CANTERBURY
EARTHQUAKE RECOVERY Plaintiff
AND
ACE DEVELOPMENTS LIMITED First Defendant
AND
ACE SALES LIMITED Second Defendant
Hearing: 1 April 2015 Appearances:
K M Paterson for Plaintiff/Counterclaim Defendant
G D Jones and K L Maclean for First Defendant
J Moss and L Hill for Second DefendantJudgment:
15 May 2015
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
on summary judgment applications
THE MINISTER FOR CANTERBURY EARTHQUAKE RECOVERY v ACE DEVELOPMENTS LIMITED [2015] NZHC 1027 [15 May 2015]
TABLE OF CONTENTS
Introduction ............................................................................................................[1] The claims and counterclaims ................................................................................[6] The Minister’s case [6] The defendants’ cases [8] Ace Developments’ counterclaim [10] Summary judgment principles .............................................................................[14] Plaintiff ’s application [14] Defendant’s application [16] Compulsory acquisition of land under the CER Act ............................................[18] The statutory framework as to acquisition [18] Provisions of the CER Act [21] Provisions of the Public Works Act 1981 [24] Compulsory acquisition of this land ....................................................................[26] What the Crown did [26] The involvement of the defendants with the property [31] The claim process following the Proclamation [36] This proceeding is commenced [41]
The Minister’s claim for an order for vacant possession against
Ace Developments ...............................................................................................[50] The applicable statutory framework [50] Discussion – has Ace Developments been in possession? [52] Conclusion [55] The Minister’s claim for an order for vacant possession against Ace Sales ........[59] The construction of “the owner of the land” under s 54(2) CER Act [59] Ace Sales’ contended construction of s 54(2) CER Act [61]
The construction of “an owner of the land” in the context of s 54(2)
CER Act [65] The rule that words should have effect [79] The implied exclusion rule [83] Decisions in other jurisdictions [89] Outcome – s 54(2) CER Act does not apply to Ace Sales [92]
Ace Developments’ and Ace Sales’ claims in relation to offers of
compensation......................................................................................................[100] The claims [100] Non-resolution of compensation claim – effect on the Crown’s rights [104] The statutory requirement for compensation under the CER Act [110] Differences between the compensation provisions of the CER Act
and the PW Act [115]
Conclusion – PW Act relevant for principles of compensation but not
procedure [125] Outcome – the Minister is not required to make an offer [132] Ace Developments’ counterclaim ......................................................................[133] The formulation of Ace Developments’ counterclaim [133] Test on summary judgment application [137] Declaratory relief on summary judgment [138] Submissions for Ace Developments [139] Submissions for Minister [143] Discussion [144]
Interest when compensation payment occurs after taking of possession [150] Outcome on counterclaim [151] Costs ...................................................................................................................[152] Orders .................................................................................................................[155]
Introduction
[1] Christchurch and surrounding districts suffered a series of earthquakes from
4 September 2010.
[2] In April 2011, Parliament enacted the Canterbury Earthquake Recovery Act
2011 (the CER Act). The purposes of the CER Act include the provision of appropriate measures to ensure that greater Christchurch and the councils and their communities to respond to, and recover from, the impacts of the Canterbury earthquakes.1
[3] Part 2 of the CER Act contains provisions empowering the Minister for Canterbury Earthquake Recovery (the Minister) (being the plaintiff in these proceedings) to acquire land compulsorily for a Government work.2
[4] The first defendant (Ace Developments) is the registered proprietor of a property in Moorhouse Avenue, Christchurch (the property). The property sits within an area identified in 2012 as the site for a Metro Sports Facility.
[5] This proceeding relates to the compulsory acquisition of the property in 2014.
The claims and counterclaims
The Minister’s case
[6] The Minister asserts that through steps taken under the CER Act the property became absolutely vested in fee simple in the Crown on 14 August 2014 and that the Crown is entitled to vacant possession of the property.
[7] The Minister seeks, by summary judgment, an order that the defendants give vacant possession of the property to the Crown.
1 As defined by s 3 of the Act.
2 A “Government work” having the meaning defined in Public Works Act 1981, s 2.
The defendants’ cases
[8] The defendants assert that the Crown has not lawfully followed the statutory process for compulsory acquisition of the property with the consequence that the second defendant (Ace Sales) is entitled to remain in occupation of the property.
[9] Ace Developments asserts that it is not in possession of the property but that
Ace Sales is in possession of the property pursuant to a deed of lease dated 1 June
2012 (the deed of lease).
Ace Developments’ counterclaim
[10] Ace Developments has filed a statement of defence and counterclaim. It asserts that the combined effect of provisions of the CER Act and the Public Works Act 1981 (PW Act) is:
(a) that the Minister was required to make a formal offer of compensation to Ace Developments for the property;
(b)the Minister has refused to make Ace Developments the required offer; and
(c) the market value of the property at the date of acquisition has been determined by a registered valuer engaged by the Minister as being
$3,300,000.00 plus GST (if any) (all references hereafter to
“$3,300,000” incorporating the GST component).
[11] Ace Developments seeks by summary judgment declarations under the
Declaratory Judgments Act 1908 that:
(a) the Minister is obliged to make Ace Developments a formal offer of compensation for the property;
(b) the offer should be for not less than $3,300,000.00; and
(c) the acceptance of the offer made, at the option of Ace Developments, being final settlement of compensation for the acquisition, is without prejudice to the defendants’ rights to have compensation determined under the CER Act.
[12] The Minister opposes Ace Developments’ summary judgment application. In
particular the Minister asserts that:
(a) Under the CER Act the defendants are not entitled to an offer of compensation before vacant possession is given (s 70 of the PW Act not applying).
(b)Ace Developments has not finalised a compensation claim, a fact which precludes the Minister from making a determination of compensation under s 64(3) of the CER Act.
(c) Even assuming the defendants were entitled to an offer of compensation in some circumstances, they would not be entitled to an offer of compensation in this case having not provided vacant possession.
[13] Ace Sales has not filed a counterclaim. Nonetheless it records in its notice of opposition that it will counterclaim for:
(a) a writ of mandamus compelling the Minister to give Ace Sales a notice (under s 54 of the CER Act) of intention to take the property and follow all the lawful steps required under the CER Act and the PW Act; and
(b)a writ of mandamus requiring the Minister to make an offer of compensation prior to Ace Sales’ giving vacant possession of the property.
Summary judgment principles
Plaintiff ’s application
[14] The starting point for a plaintiff’s summary judgment application is r 12.2(1) High Court Rules, which requires that the plaintiff satisfy the Court that the defendant has no defence to any cause of action in the statement of claim or to a particular cause of action.
[15] I summarise the general principles which I adopt in relation to this application:
(a) Commonsense, flexibility and a sense of justice are required.3
(b)The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.4
(c) The Court will not hesitate to decide questions of law where appropriate.5
(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.6
(e) In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or
other statements, or inherently improbable.7
3 Haines v Carter [2001] 2 NZLR 167 (CA) at [97].
4 Pemberton v Chappell [1987] 1 NZLR 1 (CA).
5 European Asian Bank AG v Punjab & Sind Bank [1983] 2 All ER 508 (CA) at 516.
6 Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR 21.
7 Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 (HC).
(f) In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation – the defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the Notice of Opposition.8
(g)In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.9
(h)The need for judicial caution in summary judgment applications has to be balanced with the appropriateness of a robust and realistic judicial attitude when that is called for by the particular facts of the case. Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required
for the protection of the integrity of the summary judgment process.10
(i)Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.11
Defendant’s application
[16] The starting point for a defendant’s summary judgment application is r 12.2(2) High Court Rules, which requires that the defendant satisfy the Court that none of the causes of action in the statement of claim can succeed.
[17] I summarise the general principles which I adopt in relation to the application:
8 Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA).
9 Jowada Holdings Ltd v Cullen Investments Ltd CA248/02, 5 June 2003 at [28].
10 Bilbie Dymock Corporation Ltd v Patel & Bajaj (1987) 1 PRNZ 84 (CA).
11 Pemberton v Chappell, above n 4.
(a) The onus is on the defendant seeking summary judgment to show that none of the plaintiff’s causes of action can succeed. The Court must be left without any real doubt or uncertainty on the matter.
(b)The Court will not hesitate to decide questions of law where appropriate.
(c) The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.
(d)In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.
(e) In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.
(f) Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.
Compulsory acquisition of land under the CER Act
The statutory framework as to acquisition
[18] The central proposition of the Minister’s case is that the property has been lawfully taken in the name of the Crown. This requires examination of the provisions of ss 54 and 55 of the CER Act in particular.
[19] Ace Developments’ defence and Ace Sales’ alternative defence are based on the provisions of Part 2 Subpart 5 of the CER Act (ss 60 – 67) which entitle a person who suffers loss from compulsory acquisition to compensation. By reason of the provisions of s 64(3), Ace Developments’ argument in turn relies on provisions of Part 5 of the PW Act.
[20] Central to the first aspect of Ace Sales’ case is the correct construction of the requirements under s 54(1) – (2) of the CER Act. Those provisions deal with the service of a notice of intention to take land.
Provisions of the CER Act
[21] Part 2 Subpart 4 of the CER Act includes the following provisions:
54 Notice of intention to take land
(1) The Minister may acquire land compulsorily by causing a notice of intention to take land in the name of the Crown to be published in the Gazette and twice publicly notified, which notice must give—
(a) a general description of the land required to be taken (including the name of and number in the road or some other readily identifiable description of the place where the land is situated); and
(b) a description of the purpose for which the land is to be used. (2) The Minister must serve on the owner of, and persons with a
registered interest in, the land a notice of the intention to take the land in the form set out in Schedule 1, unless it is impracticable to do
so.
(3) The Minister must lodge a copy of the relevant notice in the Gazette under subsection (1) with the Registrar-General of Land, who must register it without fee against the computer register affected.
(4) Any notice under this section may be withdrawn by the Minister, and, if it is withdrawn, a notice to that effect must be lodged with the Registrar-General of Land, who must register it without fee against the computer register to the land.
(5) To avoid doubt, there is no right of objection to a notice of intention to take land.
(6) A notice of intention to take land under this section ceases to have effect on the expiration of 3 years after the date of the publication of the relevant notice in the Gazette unless, on or before the expiration of that period,—
(a) a Proclamation taking the land has been published in the
Gazette; or
(b) the Minister has, by further notice in writing served on the owner of the land intended to be taken, and persons with a registered interest in the land, confirmed the intention of taking the land.
(7) If the Minister has confirmed the intention of taking the land, the notice of intention so confirmed ceases to have effect unless, on or before the expiration of 2 years after the date of that confirmation, a Proclamation taking the land has been published in the Gazette.
55 Proclamation
(1) If the Minister considers that land should be taken in the name of the Crown, the land intended to be taken may be taken in accordance with this section.
(2) If necessary, a cadastral survey dataset showing accurately the position and extent of the land to be taken must be prepared and be lodged with the chief executive of Land Information New Zealand for the purposes of the Cadastral Survey Act 2002.
(3) So long as the relevant notice in the Gazette has been registered in accordance with section 54(3), the Minister may recommend that the Governor-General issue a Proclamation taking the land.
(4) The Governor-General may, on the recommendation of the Minister, by Proclamation declare that the land described in it is taken in the name of the Crown.
(5) Every Proclamation under this section must be published in the Gazette and publicly notified within 1 month after the date of its making, and every such public notification must contain some readily identifiable description of the land taken, but a Proclamation is not invalidated by any error, defect, or delay in its gazetting or public notification.
(6) Unless otherwise provided in the Proclamation or in this Act or in any other Act, the land specified in a Proclamation under this section becomes absolutely vested in fee simple in the Crown and freed and discharged from all mortgages, charges, claims, estates, or interests of whatever kind, on the 14th day after the day on which the Proclamation is published in the Gazette.
(7) If land is compulsorily acquired under this section, the Crown succeeds to all rights, entitlements, and benefits that the owner has or may have against—
(a) the insurer of the land; or
(b) the insurer of any building or other property on the land.
56 Proclamation to be registered
(1) The Minister must lodge every Proclamation with the Registrar- General of Land, who must register it without fee against the computer register to the land.
(2) If the land is not subject to the Land Transfer Act 1952, the Registrar-General of Land must enter the Proclamation in the index book of the Deeds Register Office and upon such registration the land becomes subject to the Land Transfer Act 1952.
(3) An error in any Proclamation does not of itself prevent registration in respect of titles to land validly affected.
(4) If land is not subject to the Land Transfer Act 1952 and dealings with it are not registrable under the Deeds Registration Act 1908, the Proclamation must be lodged with the Surveyor-General to be recorded in the cadastre.
(5) To avoid doubt, the registration of a Proclamation does not result in the cancellation of the title affected.
57 Vacant possession
If the owner or occupier fails to give vacant possession of the land specified in a Proclamation under section 55 within 1 month following the publication of the Proclamation in the Gazette, the Minister may seek an order from the High Court directing the owner or occupier to give vacant possession.
[22] Section 3 of the CER Act lists its purposes, providing:
3 Purposes
The purposes of this Act are—
(a) to provide appropriate measures to ensure that greater Christchurch and the councils and their communities respond to, and recover from, the impacts of the Canterbury earthquakes:
(b) to enable community participation in the planning of the recovery of affected communities without impeding a focused, timely, and expedited recovery:
(c) to provide for the Minister and CERA to ensure that recovery:
(d) to enable a focused, timely, and expedited recovery:
(e) to enable information to be gathered about any land, structure, or infrastructure affected by the Canterbury earthquakes:
(f) to facilitate, co-ordinate, and direct the planning, rebuilding, and recovery of affected communities, including the repair and rebuilding of land, infrastructure, and other property:
(g) to restore the social, economic, cultural, and environmental well-being of greater Christchurch communities:
(h) to provide adequate statutory power for the purposes stated in paragraphs (a) to (g):
(i) to repeal and replace the Canterbury Earthquake Response and Recovery Act 2010.
[23] Section 4 of the CER Act deals with interpretation. It includes the following definitions:
4 Interpretation
(1) In this Act, unless the context otherwise requires,—
…
Canterbury earthquakes means any earthquake in Canterbury on or after 4 September 2010, and includes any aftershock
…
CERA means the Canterbury Earthquake Recovery Authority established by the State Sector (Canterbury Earthquake Recovery Authority) Order 2011
…
land includes an interest in land
Provisions of the Public Works Act 1981
[24] Part 5 of the PW Act (as referred to in s 64(3) CER Act) contains provisions as to compensation payable in respect of land taken or vested under the provisions of the PW Act and of the Local Government Act 1974.
[25] Ace Developments relies upon s 70 PW Act upon the basis that it is one of the “relevant provisions of Part 5” as referred to in s 64(3) CER Act.12 Section 70 of the PW Act provides for a process whereby those whose estate or interest has been taken are entitled on application to the Minister to be made a formal offer of
compensation.
12 Above at [19].
Compulsory acquisition of this land
What the Crown did
[26] A Recovery Plan, as provided for under Part 2 of the CER Act, and known as the Christchurch Central Recovery Plan (CCRP) was prepared in 2012. The CCRP incorporated a spatial Blueprint Plan which laid out precincts and anchor projects for the redevelopment of the central city. One of the anchor projects identified in the Blueprint Plan was the Metro Sports Facility. The site for the Facility included Ace Developments’ property.
[27] The Minister proposed to take the interest of Ace Developments as registered proprietor of the property.
[28] On 5 February 2013, the Minister served the required notice of this intention on Ace Developments.13 The Minister then complied with the other formalities in relation to the notice of intention, including public notification and registration against the title.
[29] In April and May 2014, unsuccessful negotiations occurred between Ace
Developments and CERA as to a possible sale and purchase agreement.
[30] On 22 July 2014, pursuant to s 55(4) of the CER Act, the Governor-General declared the property taken in the name of the Crown on the 14th day after publication of the Proclamation in the Gazette. The Proclamation was published in the Gazette and The Press on 31 July 2014, with the consequence that the property became absolutely vested in fee simple in the Crown and discharged from all mortgages, charges, claims, estates or interests of whatever kind, on 14 August
2014.14
The involvement of the defendants with the property
[31] In the meantime, there were happenings at the property. At the time of the earthquakes and until the Proclamation was registered on the title, Ace
13 Pursuant to s 54(2) CER Act.
14 By reason of s 55(6) CER Act.
Developments was the registered proprietor. It had leased the property to Orix New Zealand Ltd (Orix). The Crown negotiated a settlement with Orix whereby Orix vacated the property upon the vesting in the Crown.
[32] Under the terms of its lease, Orix had granted back to Ace Developments an “exclusive and unrestricted licence” to occupy two sheds at the rear of the property, a licence which Ace Developments was permitted to assign. David Alexander, the sole director of both Ace Developments and Ace Sales, has produced a deed dated 1 June
2012 whereby Ace Developments “leases” the rear sheds to Ace Sales for five years
from 1 June 2012.
[33] Mr Alexander deposes that Ace Sales is a licensed motor vehicle dealer and
trades as “Alexander’s on Moorhouse”.
[34] When the Minister filed this proceeding, the affidavit in support of summary judgment application was filed by Nicola Thomas, a land and acquisitions manager, of CERA. Ms Thomas deposed that at the time of the application, there were a number of motor vehicles parked at the property displaying information which suggested that they were for sale by “Alexander’s on Moorhouse”.
[35] Through the acquisition process, CERA took advice from a Christchurch valuer. The valuer understood (from Mr Alexander) from October 2012 that there were lease arrangements affecting the property. At that point, Mr Alexander did not make lease documents available. But the valuer noted upon discussion with him the name of “Ace Investments” as a lessee. In the same month (October 2012) Mr Alexander provided to the Crown’s agent, The Property Group Ltd, answers in a Property Information Questionnaire which referred to a lease to Ace Sales. Later valuations provided by CERA’s valuer amended the report details of the “lease” to refer to Ace Sales.
The claim process following the Proclamation
[36] The chief executive of CERA has a form for any compensation claim.15
Section 63(1) CER Act requires that any claim for compensation must be lodged by providing to CERA “a properly completed claim in [that] form”.
[37] In September 2014, Mr Alexander filled in details on the provided form and submitted it to CERA. In the part of the form provided for details and value of any claim pursuant to Part 5 PW Act, Mr Alexander wrote simply – “TO BE ADVISED”.
[38] Around the time Mr Alexander lodged a claim form, registered valuations were obtained on either side. The valuation obtained by Ace Developments was
$3,480,000 plus GST (if any). The valuation obtained by CERA was $3,300,000 plus GST (if any).16
[39] Discussions occurred between the lawyers for CERA and Ace Developments. CERA noted an increasing number of vehicles on the property. CERA called for the property to be vacated. CERA also called for another claim form, this time with completed details. Ace Developments insisted that until the Minister made a formal offer of compensation (as provided by s 70 PW Act) it was not obliged to vacate the property. Ace Developments recorded that it did not intend to do so.
[40] It is common ground that through this period there were no dealings between
Ace Sales on the one hand and CERA and the Crown on the other.
This proceeding is commenced
[41] Ms Thomas has explained the situation as it was perceived by CERA at the beginning of December 2014:
CERA does not agree that section 70 of the PWA has any application to the acquisition of the Property or that it is obliged to make any offer or payment to Ace before vacant possession is given. Because Ace and CERA have been unable to agree on compensation, it will need to be determined in due course according to the procedure set out in the CER Act. Ace is required to give vacant possession in the meantime.
15 As provided for by s 64(1) CER Act.
16 All references to the $3,300,000 in the judgment from this point are inclusive of GST if any.
[42] The Minister issued this proceeding, naming Ace Developments as the single defendant.
[43] Ace Developments filed its initial notice of opposition in December 2014 identifying six grounds of opposition:
(a) The defendant has a defence to the plaintiff’s claim.
(b) No agreement for the payment or determination of compensation for
the taking of the defendant’s land has been made.
(c) The defendant has requested the plaintiff to make it a formal offer of compensation for its estate or interest in the land taken in accordance with s 70 Public Works Act (which applies to this acquisition by virtue of s 64 of the Canterbury Earthquake Recovery Act 1981) but the plaintiff has failed or refused to do so.
(d) The plaintiff is in breach of its obligation to make an offer to the defendant of compensation for its estate or interest in the land at the time the land was taken.
(e) The defendant will counterclaim against the plaintiff (and apply for summary judgment on its counterclaim) for a declaration that it is entitled to receive an offer in accordance with s 70 Public Works Act.
(f) The defendant’s counterclaim ought to be heard together with the plaintiff’s claim.
[44] Ace Developments subsequently filed an amended notice of opposition in which it added a further ground, namely:
The defendant is not in possession or occupation of the land.
[45] Ace Developments elected to file a statement of defence and included a counterclaim. It seeks by summary judgment declarations that:-
(a) the Minister must make it an offer of not less than $3,300,000 for its interest in the land; and
(b)Ace Developments may accept such offer without prejudice to further rights of compensation.
[46] Ace Developments’ pleadings led the Minister to amend his claim. Ace Developments had previously adopted the position that (by reason of the Minister’s failure to make an offer of compensation) Ace Developments was not required to and would not give up the vacant possession of the property. By its notice of opposition, however, Ace Developments now asserted that it was not in possession or occupation of the land. The affidavit of Mr Alexander identified the licence arrangement between Ace Developments and Ace Sales in relation to the rear sheds on the property. Mr Alexander deposed that Ace Developments was not in occupation or possession of the property, although his affidavit was silent as to who occupied that part of the property which did not comprise the rear sheds.
[47] For the Minister, Christopher Egden, a land acquisitions adviser at CERA, provided a reply affidavit. Mr Egden deposed that until Ace Developments’ amended notice of opposition was filed in January 2015, Ace Developments had not suggested that it was not the party in possession of the property.
[48] By leave, the Minister amended his claim and his application for summary judgment to include Ace Sales as a second defendant. Ace Sales filed a notice of opposition identifying nine grounds, including an assertion that it was in occupation and entitled to remain in occupation of the property:
a. The second defendant has an arguable defence to the plaintiff’s
claim.
b. No agreement for the payment or determination of compensation for
the taking of the defendant’s interest in the land has been made.
c.The plaintiff has breached its obligation to make an offer to the second defendant of compensation for its interest in the land at the time the land was taken.
d.The plaintiff has breached its obligation to deal with the second defendant at all despite being on notice through its own valuers that the second defendant had an interest in the land. In particular:
i. The plaintiff has failed to serve notice of its intention to take the land in the form required;
ii. That failure has meant that all other steps purported to be taken by the plaintiff are invalid and/ or unlawful;
iii. That failure has also meant that the second defendant has been denied the opportunity to receive from the Minister of
CERA a notice of the intention to take the second defendant’s interest in the land prior to being asked to vacate the site;
iv. That failure has meant that the second defendant has not had the opportunity to make a claim or application for compensation nor to have its claim or application for compensation assessed or determined prior to being asked to vacate the site; and
v. The plaintiff has given notice to the landlord (first defendant) and other tenant of the land (Orix) and has obtained a market valuation for the loss of (respective) interests in the land but has failed to do the same for the second defendant.
e.The second defendant is in occupation of the land as a consequence of the plaintiff not following the lawful it is obliged to follow.
f. The second defendant will suffer loss as a result of the acquisition by the plaintiff if it is required to vacate the land.
g. It is just and equitable.
h. The plaintiff has filed its proceeding under the wrong process.
Summary judgment is inappropriate when seeking orders for possession of land.
i. The second defendant has only just been recently joined to this proceeding but will counter claim for:
i. A writ of mandamus compelling the plaintiff to give notice to the second defendant of its intention to take the land in question and to follow all of the lawful steps it is required to follow under the Canterbury Earthquake Recovery Act 2011 and the Public Works Act 1981; and
ii. An offer of compensation under the Canterbury Earthquake Recovery Act 2011 and Part 5 of the Public Works Act prior to giving vacant possession.
[49] Ace Sales relied on the previous affidavit evidence filed in the proceeding but elected itself not to adduce any evidence.
The Minister’s claim for an order for vacant possession against Ace
Developments
The applicable statutory framework
[50] The combined effect of s 55(6) CER Act and the steps indisputably taken by the Crown is that the property on 14 August 2014 became absolutely vested in fee
simple in the Crown and freed from all mortgages, charges, claims, estates, or interests of whatever kind.
[51] Section 57 CER Act entitled the Minister to seek an order directing Ace Developments (as owner or occupier) to give vacant possession of the property if, as owner or occupier, it failed to give such vacant possession.
Discussion – has Ace Developments been in possession?
[52] For Ace Developments, Mr Jones submitted that on the basis of the evidence it is fairly arguable that Ace Developments is not a party in possession or occupation of the land. By implication his submission was that Ace Developments had not failed to give vacant possession of the land. He accordingly submitted that the Minister’s summary judgment application against Ace Developments must be dismissed.
[53] Mr Jones expressly disavowed reliance on an argument (advanced by Ace Sales as I will come to)17 that the Minister is required to make an offer of compensation before compulsorily acquiring an interest in land under the CER Act.
[54] The Court is able to determine the outcome of the Minister’s application against Ace Developments by reference to a matter of timing. In the period leading up to this litigation, Ace Developments’ consistent position (expressly stated through Mr Jones as its barrister) was that it did not intend to vacate the property until it had received compensation for its interest in the property. That assertion may be contrasted with Ace Developments’ position at this hearing when Mr Jones accepted that the non-payment of compensation does not affect the Crown’s right to vacant possession.
Conclusion
[55] Thus, as matters stood, when the Minister filed this proceeding, he was justified in seeking an order under s 57 CER Act as against Ace Developments
because it was asserting the right to remain in occupation.
17 Below at [100]–[132].
[56] Mr Alexander’s subsequently sworn statement that “Ace Developments is not in occupation or possession of the property” renders it at least arguable that Ace Developments was not in possession at the time of Mr Alexander’s affidavit (19
January 2015) and may no longer be exercising possession. But Ace Developments’ position when the litigation was filed in early December 2014 involved a failure to give vacant possession.
[57] It makes sense that Parliament would have intended to empower the Crown to obtain an order for possession notwithstanding the fact that an occupier may have relinquished possession after a s 57 application has been filed. Otherwise an owner or occupier could refuse to give up possession until litigation is issued only to then assert, in response to a summary application, that it was no longer in possession and that an order for possession should not be made. The legislation protects the Crown from any further change of position by an occupier which may be vacillating in relation to its intentions.
[58] In the event I came to this conclusion, Mr Jones did not suggest that there were any matters of discretion which should cut across the right of the Crown, as vested owner from August 2014, to now have an order as to vacant possession. It is clearly appropriate that the Crown should have such an order against Ace Developments.
The Minister’s claim for an order for vacant possession against Ace Sales
The construction of “the owner of the land” under s 54(2) CER Act
[59] Ace Sales asserts that it had the right as an “owner of the land” under s 54(2) CER Act to receive a Notice of Intention under the CER Act and that the Minister failed to give it notice. The consequence, says Mr Moss for Ace Sales, is that the Proclamation declaring the property to be taken is unlawful and of no effect. Consequently, Ace Sales would be entitled to the possession of the property, which entitlement it is exercising.
[60] The accepted facts are these – the Crown, in February 2013, gave to Ace
Developments as owner a (s 54) Notice of Intention to take Land (Notice of
Intention), which was registered in March 2013. The validity of that is undisputed. The Crown did not give a similar Notice of Intention to Ace Sales.
Ace Sales’ contended construction of s 54(2) CER Act
[61] Mr Moss submits that the Crown was required to give a Notice of Intention to Ace Sales on the basis that Ace Sales was an “owner” of the property and therefore a person to whom notice had to be given under s 54(2) CER Act. For convenience, I again set out s 54(1) and (2) which provide:
54 Notice of intention to take land
(1) The Minister may acquire land compulsorily by causing a notice of intention to take land in the name of the Crown to be published in the Gazette and twice publicly notified, which notice must give—
(a) a general description of the land required to be taken (including the name of and number in the road or some other readily identifiable description of the place where the land is situated); and
(b) a description of the purpose for which the land is to be used. (2) The Minister must serve on the owner of, and persons with a
registered interest in, the land a notice of the intention to take the
land in the form set out in Schedule 1, unless it is impracticable to do so.
[62] Ace Sales asserts that it ought to have been served with a Notice of Intention by reason of the interest which it acquired from Ace Developments through the deed of lease. Mr Moss appropriately accepts that Ace Services does not come within the concept of “person with a registered interest in the land” as used in s 54 of the Act, as Ace Developments’ interest was not registered against the title to the property. Ace Sales therefore does not come within the second class of recipients under s 54(2) CER Act.
[63] Mr Moss submits that Ace Sales falls within the first class of recipients under s 54(2) CER Act namely as “an owner of the land” as that expression appears in the subsection. Mr Moss does not contend that a person with a licence to occupy or a right of tenancy, such as Ace Sales acquired, would in normal legal parlance be “an owner of the land”. He instead invokes the special definition which appears in s 4
CER Act, which I again set out for convenience:
4 Interpretation
(1) In this Act, unless the context otherwise requires,—
…
land includes an interest in land
[64] Mr Moss submits that, by reason of the s 4 CER Act interpretation provision, the Minister under s 54(2) of the Act has to serve a Notice of Intention on any owner of an unregistered interest in the property. On this construction of the provision, Mr Moss submits that the situation of persons whose unregistered interests are not known to the Minister is dealt with through the s 54(2) qualification, “unless it is impracticable to do so”. This qualification excuses service in relation to persons whose interests are unknown to the Minister.
The construction of “an owner of the land” in the context of s 54(2) CER Act
[65] A comparison of the provisions for a Notice of Intention in relation to compulsorily acquired land under s 54 CER Act and s 23 PW Act makes it plain that the 2011 provisions are derived from the 1981 Act.
[66] Section 23(1) PW Act provides:
23 Notice of intention to take land
(1) When land (other than land owned by the Crown) is required to be taken for any public work, the Minister in the case of a Government work, and the local authority in the case of a local work, shall—
(a) cause a survey to be made and a plan to be prepared, and lodged with the Chief Surveyor, showing the land required to be taken and the names of the owners of the land so far as they can be ascertained; and
(b) cause a notice to be published in the Gazette and twice publicly notified giving—
(i) a general description of the land required to be taken (including the name of and number in the road or some other readily identifiable description of the place where the land is situated); and
(ii) a description of the purpose for which the land is to be used; and
(iii) the reasons why the taking of the land is considered reasonably necessary; and
(iv) a period within which objections, other than objections by persons who are served with a copy of the notice under subsection (1)(c), may be made; and
(c) serve a notice on the owner of, and persons with a registered interest in, the land of the intention to take the land in the form set out in Schedule 1.
[67] The interpretation section of the PW Act also provides a definition of land:
Interpretation
In this Act, unless the context otherwise requires, –
land includes any estate or interest in land
[68] The expression “owners of the land” or “owner of the land” appears twice in s 23(1) PW Act. It first appears in s 23(1)(a). The context is a mandatory, three-step process applicable when the Crown requires land to be taken for a public work.
[69] As Step 1 (that is the s 23(1)(a) step), the Minister must initiate the surveying of the land so as specifically to identify the land required and the names of the owners of the land so far as they can be ascertained. In other words, at Step 1, a physical area of land (rather than an interest in land) is being surveyed and identified together with the names of those who own that area of land. The area of land to be taken and therefore being surveyed may overlap more than one title. At Step 1, there is no focus on other interests in the land. The Minister in identifying the owners of the area of any taken land, is identifying registered proprietors of the title or various titles which fall within the surveyed area.
[70] Counsel were unable to identify any authority, either binding or persuasive, which deals with the definition of “land” under s 23. Ms Paterson referred me to a text discussion. In Peter Salmon’s The Compulsory Acquisition of Land in New Zealand the author analysed the provisions under the then-recently enacted PW Act
1981.18 In his commentary dealing with how the Crown takes land for public works,
18 Peter Salmon The Compulsory Acquisition of Land in New Zealand (Butterworth, Wellington,
1982).
Mr Salmon states:19
Owner
[5.6] The term “owner” is not defined in this part of the Act, although it receives an extended definition in the compensation section.20 Problems may arise in determining what is meant by the word in this part of the Act. It is probably intended to have the limited meaning of registered proprietor.
[71] I consider this passage to correctly state the position.
[72] As Step 2, s 23(1)(b) requires the Minister to publicly notify details of the land to be taken and other matters. Nothing in s 23(1)(b) is likely to particularly assist in the construction of the term “the owner of the land” as it is used in s 23.
[73] Step 3 (the final step) is provided in s 23(1)(c). The Minister is required to
serve a notice “on the owner of, and persons with a registered interest in, the land”.
[74] It is improbable that Parliament in s 23 PW Act would have used the expression “the owner of the land” (s 23(1)(c)) in a different sense to the meaning the expression “the owners of the land” has in s 23(1)(a). As the clear focus of “ownership” under s 23(1)(a) is on the ownership of land in its most usual sense, and not upon the ownership of other interests in land, this points strongly to “the owners of the land” being so interpreted in s 23(1)(c).
[75] The expansive definition of “land” upon which Mr Moss relies, applies in terms of the opening words of s 2 “unless the context otherwise requires”.
[76] When the full context of s 23(1) is examined, as I have done, the context requires a definition of “land” other than that provided in s 2.
[77] This approach to s 23 PW Act does not strip the extended definition of land of its usefulness. When one considers the PW Act as a whole it is useful that Parliament included extended definitions of the concepts of “ownership” and of
“land” to be applied where the context is appropriate. For instance, the provisions
19 At 36.
20 Public Works Act 1981, s 59.
for compensation under Part 5 of the Act, and for benefits in lieu of compensation under Part 6 are clearly intended to benefit a wider class of persons than are intended to be the focus of the initial steps to be performed by the Minister when the Crown is taking the land.
[78] Two common law principles of interpretation reinforce the conclusion that the Minister is not required, under s 23(1)(c) PW Act, to serve a Notice of Intention on the owner of an unregistered interest in the land.
The rule that words should have effect
[79] Section 23(1)(c) PW Act requires that notice be served on, as one of the two recipient classes, those persons who have a registered interest in the land. Mr Moss’ construction would have it that persons with unregistered interests in the land are already encompassed within the class of “owners of the land”.
[80] If Mr Moss’ interpretation were correct, the second recipient class (persons with a registered in the land) is superfluous as persons with any interests (whether registered or unregistered) would be encompassed within the first recipient class (owners of the land).
[81] Pearce and Geddes in Statutory Interpretation in Australia say:21
All Words have Meaning and Effect
2.26 As a general principle, the courts have pointed out that they are not at liberty to consider any word or sentence as superfluous or insignificant. All words must prima facie be given some meaning and effect: Commonwealth v Baume (1905) 2 CLR 405 at 414 per Griffith CJ…22
To similar effect was the observation of Thomas J in R v Pora in relation to the
Criminal Justice Act 1985, that:23
Furthermore, to permit s 4(2) to predominate would be to rob s 2(4) of any meaning at all contrary to the basic premise of statutory interpretation that
21 Dennis Pearce and Robert Geddes in Statutory Interpretation in Australia (8th ed, LexisNexis
Chatswood, NSW, 2014).
22 Commonwealth v Baume (1905) 2 CLR 405 at 414 per Griffith CJ (other citations omitted).
23 R v Pora [2001] 2 NZLR 37 (CA) at [133].
the Courts must seek to give effect to every word of an enactment. This viewpoint must be squarely confronted in due course.
The authors of Burrows and Carter’s Statute Law in New Zealand recognise the same approach while observing there are limits to its application:24
Generally speaking the courts are unwilling to treat words in an Act as being surplusage. It is natural to assume that a drafter has used words carefully, and has meant every word to have significance. But at times a court is forced to conclude that certain words should be ignored in arriving at a sensible conclusion.
The authors make footnote reference to a number of cases recognising the caution to be exercised by the Court before treating a statutory provision as otiose or mere surplusage. The dicta include the judgment of the Privy Council in Glenharrow Holdings Ltd v Attorney-General in which Lord Rodger rejected an interpretation of s 77(2) Mining Act 1971 which would have rendered certain words “mere
surplusage”.25
[82] I summarise these authorities by acknowledging the importance of recognising that all the words used by Parliament should have effect unless that leads to a conclusion which does not make sense.
The implied exclusion rule
[83] In s 23(1) PW Act, Parliament (in addition to requiring notification of “the owner of the land”) has expressly required notification of “persons with a registered interest”. The implied exclusion rule is explained thus in Burrows and Carter’s Statute Law in New Zealand:26
The implied exclusion rule of interpretation (expressio unius est exclusio alterius) means that the items expressed in a detailed list are presumptively exhaustive; they cannot be added to by the Courts.
24 John Burrows and Ross Carter Statute Law in New Zealand (4th ed, LexisNexis, Wellington,
2009) at 314.
25 Glenharrow Holdings Ltd v Attorney-General [2004] UKPC 42, [2005] 2 NZLR 289 at [36].
26 Statute Law in New Zealand, above n 24, at 135.
[84] The authors footnote the observation of Baragwanath J in VDM Grange
Limited v Parker where His Honour said:27
Parliamentary counsel are well familiar with the principle … that express mention of one thing by implication excludes another … If the [Employment Relations Act 2000] conferred on the [employment relations] authority a general jurisdiction to deal with Court cases there would be no need for s 99
… and that section’s limitation as support jurisdiction to strike and lock out
cases would be inexplicable.
[85] It is well recognised that this approach to interpretation must be used by the Courts with caution, even extreme caution, so as to avoid simply bolstering a pre- determined interpretation.28
[86] Notwithstanding the need for a cautious approach, I am satisfied in this case that the implied exclusion rule is of principled assistance in supporting an interpretation which is also justified for other reasons. Parliament’s apparently deliberate qualification of the expression “persons with an interest in land” by the addition of the word “registered” strongly implies exclusion of unregistered interests. And the implied exclusion appears to make sense in terms of the scheme of the Act. Those with unregistered interests who wish to pursue compensation upon the taking of land will still have their rights to pursue compensation by reason of the extended definition of “owner”. But the Crown in the meantime will have been able to proceed with the taking of the land under Part 2 of the Act. There will have been direct notification to the registered proprietor and others with registered interests coupled with a public notification (thereby protecting the compensation interests of those with unregistered interests in land).
[87] The appropriateness of applying the implied exclusion rule is reinforced by another aspect of s 23 PW Act. The express reference in s 23(1)(c) to “persons with a registered interest in the land” (who must receive a Notice of Intention) may be contrasted with s 23(3) PW Act which expressly relates to “every person having any
estate or interest in the land” (my emphasis). The range of persons identified in
27 VDM Grange Limited v Parker [2006] 1 NZLR 353 (HC) at [57].
28 Statutory Interpretation in Australia, above n 21, at 178; see also Statute Law in New Zealand,
above n 24, at 135.
s 23(3) have a right to object to the taking of the land under the PW Act to the Environment Court. If Parliament had intended precisely the same persons who may object under s 23(3) to be recipients of the required notice under s 23(1)(c), Parliament would surely have used the same wording (“every person having any estate or interest in the land”) in s 23(1)(c) as was used in s 23(3).
[88] The implied exclusion rule of interpretation supports the conclusion that a person with an unregistered interest in land is not entitled by s 23 PW Act to a Notice of Intention.
Decisions in other jurisdictions
[89] The interpretation I prefer accords with findings or observations in two decisions in the planning/resource management jurisdictions. Both concerned objections under s 23(3) PW Act, the first being to the Planning Tribunal as it existed in 1989 and the second to the Environment Court in 2005.
[90] In Ngatikahu Trust Board v The Mangonui County Council the Council intended to take land for sewage works.29 The objector was the purchaser of the land under an executed Memorandum of Transfer but was not yet registered proprietor. It had caveated the title. It was contended before the Tribunal that the Council had been obliged to serve the objector with notice of its intention to take the land. The Tribunal rejected the argument. It noted that the caveat did not create an interest in
land. It held that the objector was therefore neither the owner of the land nor a person with a registered interest in the land in terms of s 23(1)(c) PW Act.
[91] In Bird v Nelson City Council the Council intended to take a small area of land owned by Mr and Mrs Bird.30 No issue was taken as to the right of Mr and Mrs Bird, as registered proprietors, to object. But the Council asked the Court to strike out for lack of standing a notice lodged by 58 other persons who held concerns about the taking of the land. Judge Jackson held that the additional persons did not hold
“any estate or interest in the land” such as to entitle them to object under s 23(3) of
29 Ngatikahu Trust Board v The Mangonui County Council Planning Tribunal A53/89, 26 June
1989.
30 Bird v Nelson City Council [2006] NZRMA 39.
the Act because a “concern” did not fall within the context of “estate or interest in the land”. The Court struck out the notices on that basis. The Court was not called upon to consider whether the 58 additional persons should have been served with a Notice of Intention under s 23(1)(c). But, given the finding that the 58 did not hold any estate or interest, it is clear that the Court would have found that the Council was not required to serve them with a Notice of Intention.
Outcome – s 54(2) CER Act does not apply to Ace Sales
[92] The core wording of s 54(2) CER Act was clearly borrowed by the draftsmen from s 23(1)(c) PW Act. Parliament must be taken to have intended that the key concept would receive the same construction.
[93] Mr Moss sought to draw support for a different construction from some of the purposes of the Act as set out in s 3 CER Act.31 None of those provisions casts any different light on the specific steps identified for the taking of land under Part 2, Subpart 4 of the Act.
[94] Accordingly, I conclude that such interests as Ace Sales may have in the property (whether characterised as a lease interest or a licence) did not require the Minister to give to Ace Sales a notice of intention in terms of s 54(2) CERA Act.
[95] In framing his submissions, Mr Moss implicitly recognised that the contention that the Minister was acting unlawfully in seeking to remove Ace Sales from possession of the property stands or falls on the proposition that the Minister had to serve a Notice of Intention upon Ace Sales. As I have found that underlying proposition to be incorrect, the argument in its entirety equally fails.
[96] Mr Moss also referred to the principles of Magna Carta and the declared unacceptability of disseisin of freehold and liberties. Such is an appropriate reminder of the respect of property ownership rights in jurisdictions such as New
Zealand. But such an argument cannot prevail where Parliament enacts clear laws
31 Above at [22].
and procedures for the compulsory acquisition of land and the executive meets the requirements of the legislation. Disseisin involves a wrongful dispossession.
[97] I have found that Ace Sales was at most the holder of an unregistered interest in the property. As such I have found that it was not entitled to a Notice of Intention under s 54(2) CER Act. There has been no failure by the Minister in relation to the Notice of Intention procedure.
[98] By reason of my finding that the Minister was not required to serve a Notice of Intention upon Ace Sales, I am not required to rule on an alternative submission made by Ms Paterson. She submitted that the Crown’s compulsory acquisition would remain valid even were the Minister to have failed to serve a Notice of Intention under s 54(2). Ms Paterson noted a difference between s 54(1) and s 54(2) CER Act. Section 54(1) identifies how the Minister acquires land compulsorily (namely by publishing in the Gazette and locally a Notice of Intention). Ms Paterson notes that the requirement under s 54(2) to serve a Notice of Intention is not directly linked to the compulsory acquisition mechanism in s 54(1). She submits a breach of s 54(2) therefore does not affect the compulsory acquisition which occurs under s 54(1). I see force in Ms Paterson’s submission but refrain from expressing a concluded view.
[99] This leaves the argument as to a breach of the offer of compensation procedure as developed by Mr Jones for Ace Developments and adopted by Mr Moss for Ace Sales. I return to that below at [110].
Ace Developments’ and Ace Sales’ claims in relation to offers of compensation
The claims
[100] The Minister accepts the entitlement of Ace Developments, as the registered proprietor of the property, to claim compensation under s 62 CER Act.
[101] Ace Sales asserts a right to be compensated for losses arising from the Crown’s compulsory acquisition of the property. Its losses are said to flow from the loss of the right it would have had under the deed of lease to occupy part of the
property for five years. Ace Sales has an arguable entitlement to compensation in terms of s 62 CER Act. Again, for the Minister, Ms Paterson did not suggest otherwise.
[102] Ace Developments and Ace Sales share an argument to the effect that the Minister was obliged to make to each of them a formal offer of compensation for their interests in the property. At that point, their cases diverge:
(a) Ace Sales asserts its entitlement to remain in occupation of the property on the basis that the Minister has not made a formal offer for compensation (an argument not adopted by Ace Developments – Mr Jones stating in his submissions that Ace Developments does not assert that it has a right to remain in possession until it receives an offer under s 64 CER Act).
(b)Ace Developments asserts (by its counterclaim and summary judgment application) an entitlement to receive an offer from the Minister of not less than $3,300,000).
[103] I therefore now examine in this order:
(a) Consequences of non-resolution of compensation.
(b) The statutory regime for compensation under the CER Act.
Non-resolution of compensation claim – effect on the Crown’s rights
[104] For this discussion, I assume (without deciding) that there is an unresolved compensation process. For the Minister, Mr Paterson invokes the provisions of ss
55(6), 57 and 66 CER Act, which I repeat for convenience:
55 Proclamation
…
(6) Unless otherwise provided in the Proclamation or in this Act or in any other Act, the land specified in a Proclamation under this section becomes absolutely vested in fee simple in the Crown and freed and
discharged from all mortgages, charges, claims, estates, or interests of whatever kind, on the 14th day after the day on which the Proclamation is published in the Gazette.
57 Vacant possession
If the owner or occupier fails to give vacant possession of the land specified in a Proclamation under section 55 within 1 month following the publication of the Proclamation in the Gazette, the Minister may seek an order from the High Court directing the owner or occupier to give vacant possession.
66 Exercise of power unaffected by claim for compensation
The exercise of the power giving rise to a claim for compensation under this subpart is unaffected by the making and determination of the claim and, in particular, must not be subject to any delay or other impediment dependent on resolution of the claim.
[105] The s 66 reference to an “exercise of the power giving rise to a claim for compensation” is to the power which the Minister holds to acquire land compulsorily under s 54 CER Act. Once the power has been exercised through a Notice of Intention under s 54 and a Proclamation under s 55 CER Act, the taken land is vested in the Minister (14 days after publication of the Proclamation). It is freed and discharged from all claims and interests of whatever kind. In short, what is left is a personal claim of the owner or occupier for compensation from the Crown under s
62 of the Act. By s 57 CER Act, the owner or occupier effectively has one month within which to give vacant possession (the Minister thereafter having the right to seek an order for vacant possession under s 57).
[106] Section 66 CER Act is in a sense the culmination of the vesting provisions. By s 66, it matters not (for the Crown’s rights in relation to the land) whether the owner or occupier has yet made a claim or the Minister has yet made a determination of the claim. The clear import of s 66 is that a delay in resolution of the claim (whether the cause of the delay was in the making or the determination of the claim) does not govern or affect the Crown’s rights in relation to the land. The heading to s 66 – “Exercise of power unaffected by claim for compensation” – clearly reflects,
in summary, what Parliament intended.32 Accordingly, irrespective of whether the
Minister was (through the s 64(3) incorporation of Part 5 of the PW Act) required to
32 The heading is relevant to the ascertainment of the meaning of an enactment – Interpretation Act
1999, s 5(3).
make an offer of compensation, any delay in relation to compensation does not affect the validity of the procedure whereby the land was taken and the Crown’s rights (including rights of possession vested).
[107] In reaching this conclusion, I am rejecting the ground of opposition in which
Ace Sales asserted that it:
… is in occupation of the land as a consequence of the plaintiff not following the lawful and statutory process it (sic) is obliged to follow, and entitled to remain in occupation until the lawful and statutory process is followed;
[108] In this case the Crown has complied with the procedures which are required under the CER Act to effect the property’s vesting in the Crown. Claimants have their rights of compensation and are entitled to receive a determination from the Minister once they have submitted properly completed claims. Compensation can then follow. The dispossession which has occurred in this case is lawful and therefore effective.
[109] Therefore in a summary judgment context, the Minister has established that it is not arguable that Ace Sales is entitled to have compensation matters dealt with (whether through an offer process or a claim process) before the Minister seeks an order for vacant possession of the property. This leaves the defendants’ assertion that they are entitled to receive an offer of compensation from the Minister – I turn to examine that issue in the context of the requirements for compensation.
The statutory requirement for compensation under the CER Act
[110] Compensation in relation to land required by compulsory acquisition is dealt with in Subpart 5 of Part 2 CER Act. That subpart provides:
60 When this subpart applies
This subpart applies if—
(a) land is compulsorily acquired under this Act; or
(b) compensation is payable under section 40 or 41.
61 Meaning of compensation
In this subpart, compensation—
(a) means compensation for actual loss; but
(b) except as provided by this Act, does not include compensation for—
(i) a loss by an insurer arising from a liability to indemnify: (ii) any part of a loss that is insured:
(iii) any part of a loss that ought reasonably to have been insured:
(iv) a consequence of regulatory change arising from the operation of this Act causing loss:
(v) cancellation of an existing resource consent that has already been exercised:
(vi) cancellation of an existing use right: (vii) economic or consequential loss:
(viii) loss of personal property exceeding $20,000 in value: (ix) business interruption:
(x) any other loss that the Minister reasonably considers is unwarranted and unjustified.
62 Entitlement to compensation
A person who suffers loss resulting from a matter referred to in section 60 is entitled to compensation from the Crown.
63 Procedure for claiming compensation
(1) A claim for compensation under this subpart must be lodged by sending or delivering to CERA a properly completed claim in a form provided by the chief executive.
(2) The claim must be lodged within 2 years after the exercise of the power in question.
64 Minister determines compensation
(1) The Minister must determine—
(a) whether compensation is payable; and
(b) the amount of compensation to be paid. (2) Compensation is determined,—
(a) in the case of the compulsory acquisition of land, as at the date of the compulsory acquisition; and
(b) in any other case, as at the date of the notice of demolition or the date of the loss or damage, as the case may be.
(3) For compensation for the compulsory acquisition of land, the Minister must determine compensation having regard to its current market value as determined by a valuation carried out by a registered valuer; and so far as practicable, the Minister must determine compensation in accordance with the relevant provisions of Part 5 of the Public Works Act 1981.
(4) Before making a final determination under subsection (1), the Minister must give a claimant a reasonable opportunity to appear before the Minister or the Minister's delegate to make representations as to the nature of the claim and the amount of compensation payable.
(5) A claimant may make representations under subsection (4) personally or through a representative (including a lawyer, accountant, or other expert).
65 Time for making determination
The Minister must ensure that claims for compensation are determined within a reasonable period.
66 Exercise of power unaffected by claim for compensation
The exercise of the power giving rise to a claim for compensation under this subpart is unaffected by the making and determination of the claim and, in particular, must not be subject to any delay or other impediment dependent on resolution of the claim.
67 No compensation except as provided by this Act
(1) Nothing in this Act, apart from this subpart or section 40 or 41, confers any right to compensation or is to be relied on in any proceedings as a basis for any claim to compensation.
(2) Nothing in section 185 of the Resource Management Act 1991 applies in relation to any matter to which this subpart applies.
[111] The defendants particularly invoke s 64(3) CER Act. As Mr Jones identified it, the dispute is as to the proper interpretation of s 64 CER Act. By that section, the Minister must determine compensation, where land is compulsorily acquired, having regard to its current market value and, so far as practicable, in accordance with the relevant provisions of Part 5 PW Act. In terms of this requirement, the defendants invoke particularly the provisions of s 70 PW Act (part of Part 5) which allows the owner of any estate or interest in land taken under the PW Act to apply to the Minister (or local authority) to be made a formal offer of compensation for the estate or interest taken.
[112] The process for compensation expressly set out in the CER Act was encapsulated by Ms Paterson in the following submission, which I adopt –
The CER Act provides its own mechanics provisions for the compensation process. It provides for a compensation claim to be lodged in the form provided for the chief executive within 2 years of the exercise of the power in question (s63). It provides for the Minister to determine compensation as at the date of the acquisition, and for the Minister to give a claimant a reasonable opportunity to appear before the Minister or his delegate to make representations as to the nature of the claim and the amount payable (s64(2), (4)). It also provides for claims to be determined within a reasonable period (s65).
[113] Ms Paterson submits that the CER Act contains a stand-alone procedure for determining compensation while the Act remains largely silent as to the principles that should be applied in calculating and determining compensation.33 Ms Paterson submits that Part 5 of the PW Act comes in to the calculation and determination of compensation, not to the procedure.
[114] Mr Jones, for Ace Developments, identified its central issue raised in relation to compensation issues as being whether s 70 PW Act is a “relevant provision” as referred to in s 64(3) CER Act. Mr Moss was content to simply adopt Mr Jones’ submissions.
Differences between the compensation provisions of the CER Act and the PW Act
[115] I have examined similarities between the PW Act and the CER Act in relation to Notices of Intention under the two Acts. It is now necessary to consider the significant differences between the PW Act and the CER Act in relation to the fixing of compensation.
[116] Both statutes entitle a person, who suffers loss through the compulsory acquisition of their land, to compensation.34
[117] The CER Act deals with claims for compensation in ss 63–67 CER Act as set out at [109] above. The Minister determines compensation.
33 Section 64(3) CER Act requires the Minister to determine compensation “having regard to [the land’s] current market value …” before requiring the Minister, so far as practicable, to determine the compensation in accordance with the relevant provisions of Part 5 of the PW Act.
34 PW Act, s 60; CER Act, s 62.
[118] By s 59(1)(a) CER Act, the claimant has a right of appeal to the High Court against the Minister’s determination of compensation under s 64 of the Act.
[119] The PW Act, while providing for compensation claims when land is taken, first provides in ss 69–70 for offers of compensation.
[120] Section 70(1) PW Act provides:
70 Offer of compensation when land taken
(1) Subject to sections 99 to 101, where any land is taken under this Act, and no agreement for the payment or determination of compensation has been made, the owner of any estate or interest in the land taken shall, notwithstanding the provisions of section 77, be entitled on application to the Minister or local authority to be made a formal offer of compensation for his estate or interest in the land taken.
(2) The provisions of subsections (2), (3), (4) and (6) of section 69 shall apply to the making of an offer under this section, and every reference in those subsections to the Minister shall be read as a reference to the Minister or the local authority, as the case may require.
[121] Thus, under s 70 PW Act, the owner of an interest in the taken land may apply for an offer to be made. The Minister (or other taking authority) must then make the requested offer within one month thereafter.35
[122] While ss 69–70 PW Act provide for offers, ss 77–87 PW Act provide for claims. By s 77 PW Act, the owner of any land who claims to be entitled to compensation under the PW Act may make a claim.36
[123] Thus the PW Act contains a two-part structure whereby compensation may be fixed and paid:
(a) by the offer process (ss 69–70); or
(b) by the claim process (ss 77–87).
35 PW Act, ss 69(4) and 70(2).
36 Owner, by virtue of s 59 PW Act, includes persons who are in occupation of the land under any lease or licence.
[124] The competing arguments for the defendants and the Minister are reducible to this: does s 64(3) operate so as to incorporate both procedural requirements and principles of assessing compensation into the CER Act (the claimants’ contention) or does it operate solely in relation to principles of compensation (the Minister’s contention)?
Conclusion – PW Act relevant for principles of compensation but not procedure
[125] When one considers the provisions of CER Act as to the steps to be taken in relation to compensation, the position contended for by Ms Paterson, for the Minister, is vindicated. Those which may be considered the key provisions – ss 62–
64 – appear intended to establish a clear regime by three steps:
(a) the owner or occupier who suffers loss by compulsory acquisition is entitled to compensation;
(b) the owner or occupier must lodge a claim for compensation; and
(c) there must be a determination (by the Minister, or through an appeal under s 69(1)(a) by the High Court) of whether compensation is payable and, if so, how much.
[126] The third step involves the assessment of compensation by either the Minister or the High Court. Section 64 is concerned with the correct assessment of the nature of the claim and the calculation of the appropriate compensation. The formula under s 64(3), whereby “the Minister must determine compensation” (in accordance with the relevant provisions of Part 5 PW Act) is related directly to the opening words in s 64(1) whereby “the Minister must determine whether compensation is payable” and, if so, how much. The statutory obligation upon the Minister in relation to the procedure for determining compensation is triggered by the preceding section, s 63, which requires claims for compensation to be lodged.
[127] If Parliament had intended to impose upon the Minister a procedure for compensation which involved offers, as has applied for many years under the PW Act, it is improbable that it would have done so other than in or alongside s 63 which
is expressly concerned with “procedure”. Parliament, without expressly referring to a regime of “offer and acceptance”, is unlikely to have intended to import such a regime through s 64, whose focus is on assessing compensation in a principled manner.37
[128] Counsel referred me to such matters of the legislative history of s 64 as they had been able to identify. Section 64 CER Act was the subject of an amendment from the Bill (where it appeared as cl 63). In particular, sub-cl (3) was amended by the addition of the underlying words:
For compensation for the compulsory acquisition of land, the Minister must determine compensation having regard to its current market value as determined by a valuation carried out by a registered valuer, and so far as practicable, the Minister must determine compensation in accordance with the relevant provisions of Part 5 of the Public Works Act 1981.
[129] It appears that there is no commentary which sheds any light on the reason for or the intended effect of the addition.
[130] The nature of the addition reinforces my earlier conclusion, namely that the incorporation of provisions from the PW Act under s 64(3) CER Act was intended in relation to provisions which would further provide for or inform the principles of compensation. What Parliament appears to have intended and achieved through the words of amendment was to clarify a requirement in the Bill which would have ended bluntly with the Minister determining compensation by regard to “current market value”. In other words, the amendment improved the formerly laconic definition of the valuation approach to be adopted.
[131] I conclude that s 64(3) CER Act does not, by its reference to the relevant provisions of Part 5 PW Act, import into the CER Act a requirement that the
Minister, on application, makes an offer of compensation.
37 Principles, contained in Part 5 of the PW Act, which would appear to be “relevant” in terms of s
64(3) CER Act may include PW Act, ss 62(1)(a), 62(1)(b), 66, 67, 68, and 75.
Outcome – the Minister is not required to make an offer
[132] The Minister is not required to make an offer of compensation to either defendant.
Ace Developments’ counterclaim
The formulation of Ace Developments’ counterclaim
[133] I summarise the material allegations of Ace Developments’ counterclaim:
(a) Ace Developments’ land was compulsorily acquired pursuant to the
CER Act.
(b) Ace Developments thereby suffered loss.
(c) On 8 August 2014, Ace Developments applied to the Minister to be made a formal offer of compensation.
(d)On 10 September 2014, Ace Developments lodged a claim for compensation in the form provided by the chief executive of CERA.
(e) The market value of the property as at the date of acquisition has been determined by a registered valuer engaged by the Minister as being
$3,300,000.
(f) The Minister has refused to make a formal offer to Ace
Developments.
[134] Ace Developments seeks three declarations under the Declaratory Judgments
Act 1908, namely that:
1The plaintiff is obliged to make the defendant a formal offer of compensation for its estate or interest in the land taken in accordance with section 70 PWA.
2 The offer should be for not less than $3,300,000 plus GST (if any).
3The acceptance of the offer may, at the option of the defendant, be in full and final settlement of compensation for the acquisition, or without prejudice to the defendant’s right to have compensation determined under the CER Act.
[135] In his submissions, for the hearing, Mr Jones sought an amendment to the second prayer for relief by adding the words “plus interest at the Judicature Act rate of 5 per cent per annum from 8 September 2014, plus GST (if any)”.
[136] In his statement of defence, the Minister pleads (together with other admissions and denials):
(a) A registered valuer has assessed the market value of the land at
$3,300,000 but the valuer was engaged by CERA (not the Minister) and the assessment does not amount to the determination of the Minister of any compensation payable to Ace Developments.
(b)The claim form submitted to CERA on 10 September 2014 was incomplete in that it did not state the requisite details of Ace Developments’ claim pursuant to the relevant provisions of Part 5 PW Act.
(c) Ace Developments was not entitled to be made an offer in that it has not provided vacant possession to the Crown.
(d)A claim for compensation must be determined by the Minister within a reasonable period, but no other timing constraints apply to the determination of compensation payable to Ace Developments.
(e) The Minister is not yet able to consider Ace Developments’ claim for
compensation because that claim is incomplete.
Test on summary judgment application
[137] To obtain the declarations sought, Ace Developments (as counterclaim plaintiff) must satisfy the Court that the Minister at trial would have no arguable defence to the request for declaratory relief at trial.
Declaratory relief on summary judgment
[138] I adopt what I said in Maryville Courts Trust Board v Earthquake
Commission:38
[12] The Court's jurisdiction to grant summary judgment includes in relation to relief by way of declaratory order under the Declaratory Judgments Act 1908. An initial legislative exclusion of such relief no longer applies. On any such application, the range of factors which come into play in deciding whether a declaration should issue are wide and will make it very difficult in principle to obtain such a declaration on summary judgment.
Submissions for Ace Developments
[139] Mr Jones’ submissions in support of the declaration by summary judgment
were succinct.
[140] In a detailed valuation report dated 14 August 2014, TelferYoung (Canterbury) Ltd assessed the market value of the property at $3,300,000. It was recorded that TelferYoung had completed an earlier market valuation on 4 December
2013 at $3,150,000.
[141] In January 2015, Buddle Findlay addressed an open offer to Ace Developments through Mr Jones. In full and final settlement of Ace Developments’ claim for compensation, CERA offered to pay Ace Developments $3,300,000 plus GST (if any) together with an additional sum of $15,000 (plus GST, if any) towards costs associated with the compulsory acquisition. The offer was stated to be inclusive of all heads of compensation, interest and costs. It was expressly based on the TelferYoung valuation. The offer was rejected the next day.
[142] Mr Jones submitted that it would not be open to the Minister to make an offer of less than $3,300,000. Mr Jones referred to the requirement upon the Minister,
under the offer provisions of s 69 PW Act.39
38 Maryville Courts Trust Board v Earthquake Commission [2013] NZHC 1575 at [12] (citations omitted) in relation to the granting of a declaratory relief by summary judgment.
39 In particular s 69(2) PW Act, whereby an offer shall be such as the Minister considers adequate to fairly compensate the owner for his estate or interest” (Mr Jones’ emphasis).
Submissions for Minister
[143] Ms Paterson first addressed matters on an assumption (which she rejected, as I have) that the Minister is required to make an offer of compensation as provided for in the PW Act. Ms Paterson noted that under s 69(2) CER Act, the Minister is the person who decides what is adequate to fairly compensate an owner. A valuer’s valuation is one piece of information upon which a Minister might reach a decision. But a Minister may take a different view from one or more of his or her advisers. Accordingly, it cannot be stated as a matter beyond argument that the Minister would have to arrive at an offer of $3,300,000 or more.
Discussion
[144] For a number of reasons, the declaration sought by Ace Developments is unsuitable for summary judgment.
[145] First, the relief sought by Ace Developments is predicated upon the basis (which I have rejected) that the Minister is obliged to make an offer under the CER Act as if the offer provisions of the PW Act applied. As the relief sought is claimed by reference to an offer, and not by any reference to the determination procedure which I find to be the applicable proceeding, the summary judgment application would have to be dismissed for that reason if no other.
[146] Secondly, the determination of compensation is a matter which Parliament has entrusted to the Minister. To the extent that Ace Developments relies upon correspondence as to offers of settlement passing between CERA and Ace Developments, it is not open to this Court to conclude in a summary judgment setting that a position which CERA was prepared to adopt for the purposes of a negotiated settlement amounts implicitly to a conclusion (or some form of informal determination) by the Minister himself as to what constitutes the appropriate compensation by reference to s 64 CER Act and to the relevant provisions of Part 5
PW Act.
[147] Thirdly, there is the concept of a declaration which deals with only one possible aspect of a determination process under s 64 (the declaration relating to the
figure below which the valuation should not be set). That concept highlights the unsatisfactory nature of a request to the Court which would affect a statutory procedure without the Court being able to rule upon the outcome of the determination as a whole. Before making a final determination under s 64(1) of the Act, s 64(4) requires the Minister to give a claimant a reasonable opportunity to appear before the Minister. It is not for this Court, particularly where the context is an application for declaratory relief, to usurp the outcome of what is effectively a hearing into issues relevant to compensation by declaring (short of such a hearing) that compensation cannot be below a certain figure.
[148] Fourthly, I must take into account the discretionary nature of the declaratory relief which would be considered by a trial Judge. Ace Developments complains that it has not received an offer from the Minister. However, from the time it lodged the claim form in September 2014, Ace Developments has been able to detail its claim in relation to the value of the land taken, even if reserving its position in relation to other heads of compensation which Ms Paterson for the Minister accepts may be available.
[149] Finally, I note a difficulty which would have confronted Ace Developments had the declaration it sought related to a determination rather than an offer. It is at least arguable that Ace Developments has not in terms of s 63(1) CER Act lodged a “properly completed claim” in the form provided by the chief executive of CERA. The space provided in the CERA form for the details of a claim is fundamental to the claim form. Ace Developments elected to complete that form with the words “TO BE ADVISED”. Above that part of the form, Ace Developments referred to a figure in a one-page valuation letter which put the market value of the property at
$3,480,000 as at 25 November 2013. But the claim form did not identify whether that or some other sum was claimed. In these circumstances it is at least arguable that a properly completed claim form was not submitted. Accordingly, it is arguable that Ace Developments is not a “claimant” in terms of s 64 CER Act (having failed to file a properly completed claim). Equally, it is arguable that the “reasonable period” in which the Minister must determine claims for compensation under s 65
CER Act has not begun to run.
Interest when compensation payment occurs after taking of possession
[150] In his submissions,40 Mr Jones requested an amendment to the relief sought by Ace Developments, to include interest on compensation payable. As the operation of the legislative provisions vesting the property in the Crown is clear, it is not directly in point to consider any issue of fairness or unfairness which may arise as to the eventual timing of a payment of compensation to Ace Developments or Ace Sales. I note, however, Ms Paterson’s advice to me that CERA pays interest on principal sums of compensation. Such an approach accords with the Privy Council’s judgment in Inglewood Pulp and Paper Co Ltd v New Brunswick Electric Power
Commission,41 in which it was held that the owner is entitled to interest upon the
principal sum of compensation from the date when possession is taken under the legislation which provides for compulsory acquisition, unless the legislation clearly shows a contrary intention, because:42
… the right to receive interest takes the place of the right to retain possession.
Outcome on counterclaim
[151] The Minister has an arguable defence to the granting of a declaration in relation to an offer of compensation for the land, whether at $3,300,000 or any other figure. Ace Developments’ summary judgment application must fail.
Costs
[152] In relation to his claim, the Minister having been successful is entitled to costs against both the first defendant and the second defendant.
[153] On Ace Developments’ counterclaim, the practice of the Court of Appeal as
outlined in NZI Bank Ltd v Philpott indicates that costs on Ace Developments’
summary judgment application should be reserved.43
40 Above [135].
41 Inglewood Pulp and Paper Co Ltd v New Brunswick Electric Power Commission, [1928] AC
492; see also A A Hyam, The Law Affecting Valuation of Land in Australia, The Federation
Press, 2014, p 321.
42 Per Lord Warrington at 499.
43 NZI Bank Ltd v Philpott [1990] 2 NZLR 403, (1990) 3 PRNZ 69.
[154] Co-operation and a practical approach between counsel should lead to a recognition of what items should be included in an immediate costs and disbursements judgment and what items ought to be effectively excluded for the time being to be dealt with upon the outcome of the counterclaim. In the event there is disagreement, the matter will be determined in accordance with the direction below. The Court will determine costs on the papers.
Orders
[155] I order:
(a) Ace Developments Ltd and Ace Sales Ltd must give vacant possession of the property at 115 – 117 Moorhouse Avenue, Christchurch to the Minister for the Canterbury Earthquake Recovery, with this order to take effect at noon, Friday, 22 May 2015.
(b) The costs of the plaintiff’s claim and summary judgment application
are reserved.
(c) In the event the parties do not resolve issues of costs and disbursements on the plaintiff’s claim and summary judgment application, counsel are to file memoranda as to costs (no longer than four pages), with the plaintiff’s memorandum to be first filed and the defendants’ memoranda to be filed within five working days thereafter.
(d) The summary judgment application of the first defendant is dismissed.
(e) The costs and disbursements of the first defendant’s summary
judgment application are reserved.
(f) I adjourn the first defendant’s counterclaim to a case management conference at 3.00 pm on 24 June 2015, by telephone (Associate Judge Osborne). Counsel are to file and serve at least five working days before the conference a memorandum as to the future conduct of
the proceeding, including all matters required for consideration under
Schedule 5 High Court Rules.
Associate Judge Osborne
Solicitors:
Buddle Findlay, Christchurch
Tavendale and Partners, ChristchurchCounsel: G D Jones, Barrister, Christchurch
Ngaire Smith, Christchurch
Counsel: J Moss, Barrister, Christchurch
3
3
1