Monticello Holdings Ltd v Selwyn District Council
[2015] NZHC 1674
•17 July 2015
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IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2013-409-001521 [2015] NZHC 1674
BETWEEN MONTICELLO HOLDINGS LIMITED
Plaintiff
AND
SELWYN DISTRICT COUNCIL Defendant
Hearing: 11-14 and 21 May 2015 Appearances:
P J Dale and G A Hair for Plaintiff
FMR Cooke QC and P G Rogers for DefendantJudgment:
17 July 2015
JUDGMENT OF GENDALL J
Table of contents
Introduction [1] The dispute in a nutshell [1] Summary of findings [4] Factual background [8] General [8] What information could the SDC have availed itself of? [21] Monticello’s claim and the SDC’s defence [28] Duty of care [34] General principles [34] Proximity and relationship explained [45] Public policy [52] Duty of care in relation to local authorities [62] What must be established in this case [82] Did the SDC owe Monticello a duty of care? [83] Introduction [83] Proximity – resource consent [86] Proximity – Land Information Memoranda (LIMs) [93] Proximity – Project Information Memoranda (PIMs) [97] Broader policy considerations – Project Information Memoranda
(PIMs)
[106] Remaining elements of the case [109] Outcome [111] Costs [112]
MONTICELLO HOLDINGS LIMITED v SELWYN DISTRICT COUNCIL [2015] NZHC 1674 [17 July 2015]
Introduction
The dispute in a nutshell
[1] This is a case about negligence. The plaintiff, Monticello Holdings Ltd (Monticello), brings this claim against the defendant, Selwyn District Council (SDC), alleging that the SDC was negligent in failing to disclose to Monticello the existence of a former town dump on land which it had purchased for the purpose of developing into a residential subdivision. As a result of this alleged negligence, Monticello has been put to, or will incur, cost it would not otherwise have incurred had the existence of the dump been disclosed.
[2] Monticello maintains that the SDC owed it a duty of care to keep and maintain accurate and reliable records about the existence of contaminated sites within its sphere of control, to disclose that information to Monticello, and under all the circumstances it should have refused to grant it a resource consent to develop the land. It claims as damages the cost of remediating the site.
[3] The questions for resolution are whether:
(a) the SDC owed Monticello a duty of care;
(b) if so, whether the SDC breached that duty of care;
(c) if breach is established, whether there is a causal connection between
that breach and Monticello’s claimed loss; and
(d)if causation is made out, whether the damage is nonetheless too remote.
Summary of findings
[4] It is useful at the outset to provide a summary of my findings and the overall conclusions I reach in this judgment, which I now do. The duty of care alleged by Monticello is effectively three-pronged. I have interpreted Monticello’s allegations here to consist of a claim to a duty of care on the part of SDC in (a) maintaining
adequate records and recording contamination on Project Information Memoranda (PIMs); (b) maintaining adequate records and recording contamination on Land Information Memoranda (LIMs); and (c) not issuing resource consents in relation to land SDC knows, or ought to know, is contaminated. However, its underlying complaint, on its case, seems to be with the issue of the resource consent.1
[5] I have reached the following conclusions:
(a) in issuing the resource consent, the SDC owed no duty of care to furnish Monticello with any information. Indeed, the SDC was entitled to rely on the information placed before it and no more. In relation to this head, I find that there was insufficient proximity between the parties. Further, even if there was sufficient proximity between them, there is a clear line and established line of authority which holds that local authorities owe no duty of care in relation to the issuing of resource consents in situations such as this.
(b)the SDC cannot be liable in relation to issuing a LIM, or even failing to record relevant information on the LIM, in this case because no LIM was sought or received. There was therefore insufficient proximity between the parties.
(c) the SDC owed Monticello no duty of care in issuing the PIM. The only person entitled to obtain the PIM in question which was sought here was the neighbour Mrs Cooper, and it was solely referable to the sewer works (not a broader subdivision). The SDC’s responsibility in issuing a PIM does not extend to third parties. There was therefore insufficient proximity between the SDC and Monticello.
[6] Because of these conclusions I have reached, I have not been required to address the questions noted above at [3](b)–[3](d). Monticello has not made out its
claim and it therefore fails in its entirety.
1 Confirmed at para [94] plaintiff ’s closing submissions and as noted at [30] below.
[7] Later in this judgment I also deal with the question of costs. It seems to me that this is a case where costs should follow the event. And my initial inclination is that costs should be on a 2B basis, with certification for second counsel. However, I have not determined the matter, and if the parties cannot agree, memoranda are to be filed in accordance with paragraph [112] below.
Factual background
General
[8] On 8 July 2005, Monticello, a company incorporated in New Zealand, entered into a contract to purchase a 10 hectare parcel of land at Manse Road, Leeston for $1,125,000 (the Broomhall Land).2 The contract was subject to, inter alia, Monticello undertaking due diligence, including, without limitation, obtaining a Land Information Memorandum (LIM). On 11 July 2005 a LIM was requested from the SDC. The LIM was issued by the SDC on 19 July 2005. The contract for the
purchase of the land then became unconditional and subsequently the purchase was settled in January 2006.
[9] On 5 April 2007, Monticello (by its agent) entered into a conditional contract with Ms Ruth Cooper to purchase part of a neighbouring block of land containing about one hectare adjacent to the Broomhall Land (the Cooper Land)3 at a price of
$75,000. Monticello neither obtained, nor requested, a LIM for the Cooper Land. The history of ownership of the Cooper Land is of some relevance here and can be summarised in chronological order:4
(a) 1924: Public Trustee
(b) 1926: Leeston Town Board
(c) 1961: County of Ellesmere
2 Being more particularly described as Lot 2, DP 69912, Block XIV Leeston SD.
3 Being more particularly described as Lot 1, DP 6760, CT 353166.
4 For clarity, I observe that the Leeston Town Council was amalgamated into the Ellesmere County Council in 1959. Further, the Ellesmere County Council was amalgamated into the Selwyn District Council in 1989.
(d) 1965: Mr Wielsiman
(e) 1977: Mr Byrman
(f) 1984: Mr and Mrs Cooper
(g) 1996: Mrs Cooper
[10] On 12 April 2007, Monticello (by its agent, Davis Ogilvie & Partners Limited (Davis Ogilvie) who are a firm of surveyors and engineers) submitted an application to the SDC for a resource consent for the subdivision of the Cooper Land (App. No.
075131). The Cooper Land was to be subdivided into two lots. New Lot 1 was to be
1,392 square metres and was to stand alone and be retained by Mrs Cooper with her home which was on this area. New Lot 2 containing 9,964 square metres was to be amalgamated with Monticello’s Broomhall Land. On 2 May 2007 the resource consent was granted, with the result that the Broomhall Land and new Lot 2 of what once was the Cooper Land were able to be amalgamated. Hereafter I will refer to this amalgamated land (containing as it did about 10.99 hectares in total) as “the Land”.
[11] On 18 July 2007, Monticello (by its agent, Davis Ogilvie) applied for a resource consent (App. No. RC075296) for subdivision of the Land into 103 residential allotments. Monticello then wrote to Ms Cooper stating that additional condition 15 of the 5 April 2007 agreement for sale and purchase of the Cooper land was satisfied.5 The resource consent RC075296 for the Land was duly granted on 3
October 2007. One of the conditions of the consent was:
43.That the Consent Holder shall identify and report all hazardous waste sites within the subdivision prior to any engineering works commencing. Where a hazardous site is found at any stage of the subdivision development works then the Consent Holder shall undertake all necessary work to rehabilitate the site. This may include treatment and off site disposal. All works shall be undertaken at the Consent Holder’s expense.
5 This condition 15 provided: “This agreement is subject to and conditional upon the Purchaser arranging at his cost approval of the consent to the subdivision on terms satisfactory to the Vendor and the Purchaser within two (2) months of the date of this Agreement”.
[12] On 21 August 2008, Davis Ogilvie lodged an application with the SDC for a PIM for work to be carried out on the Cooper Land, namely the installation and connection of a sewer pipe from Ms Cooper’s dwelling on new Lot 1 retained by her to the “network utility sewer main installed in Manse Road”, together with the disconnection and decommissioning of Ms Cooper’s existing septic tank. The SDC issued the PIM on 5 September 2008. The PIM made no reference to contamination or hazardous material on any part of the Cooper Land. In particular, in the section headed “Special Land Features”, the PIM disclosed only two discrete matters:
Ground bearing capacity on this site should meet the requirements of the NZ Building Code Section b1 without a subsoil investigation being carried out.
This site is located in an area known to have a high ground water table.
[13] Nearly three years then passed with little happening, in part due to the intervening global financial crisis. Then, on 13 July 2011, because of this lapse in time, Monticello (by its agent, Davis Ogilvie) lodged a further renewed Resource Consent application (App. No. 115180) seeking again to divide the Cooper Land into the two allotments referred to above at [10]. The earlier grant of consent under App. No. 075131 for this activity had lapsed through the effluxion of time without being given effect to. In the new application, App. 115180, new Lot 1 was now to contain
1,426 square metres (as compared to 1,392 square metres) and new Lot 2 was to contain 9,941 square metres (as compared to 9,964 square metres). This resource consent was duly granted by SDC on 16 August 2011. Monticello’s purchase of the Cooper Land subsequently settled on 10 November 2011.
[14] In November 2011, new titles for the subdivision of the Cooper Land into the two Lots described at [13] above were issued. New Lot 1 which included her home was retained by Ms Cooper. New Lot 2 was finally transferred to Monticello and merged/amalgamated with the Broomhall Land. As I have said above, in this judgment I will refer to this amalgamated land as “the Land”.
[15] On 1 January 2012, the “National Environmental Standard for Assessing and
Managing Contaminants in Soil to Protect Human Health” came into force.6 The
6 Resource Management (National Environmental Standard for Assessing and Managing
Contaminants in Soil to Protect Human Health) Regulations 2011.
practical result of this was that, from this date, SDC would require an assessment to be undertaken, against the Hazardous Activities Industries List (HAIL) before any building consents were granted. Despite being able legally to pass this obligation on to purchaser home-owners Monticello, no doubt mindful of saleability issues over the sites in its subdivision, decided to undertake this exercise itself. It duly made inquiries. These consisted of contacting Environment Canterbury (ECan) and Mrs Cooper. ECan responded to this enquiry on 1 October 2012 as follows:
Thank you for submitting your property enquiry. I have searched our Listed Land Use Register (LLUR) which holds information about sites that have been used, or are currently used for activities which have the potential to have caused contamination.
There are currently no LLUR sites located on the land parcel(s) you enquired about.
[16] Subdivision work was then proceeding. On or before 17 October 2012, during the completion of site works for the subdivision of the Land, Monticello discovered the presence of buried rubbish in a pit on the Land. Specifically this was under that part of the new Lot 2 on what was once the Cooper Land, which by now had been amalgamated with the Broomhall Land. It is accepted that this rubbish was part of a former disused town dump on the site established from about 1933 and used until about 1955 and used by the Leeston Town Council and then the Ellesmere Council, both of which were predecessors of the SDC.
[17] Following its discovery, Monticello, presumably upon advice from its consultants Davis Ogilvie, decided to excavate this buried rubbish. Thus by
21 November 2012, Monticello had excavated approximately 1,400 cubic metres of potentially contaminated soil and rubbish, from an area on the Land measuring approximately 51 metres in length by 17 metres in width and 3 metres in depth. The excavation site on that portion of the land, which was previously part of the Cooper land, spanned three lots (Lots 12, 13 and 14) of the new 103 Lot subdivision. The excavation remained open until an assessment was completed. During this period, the excavated material was moved and placed on another area of Monticello’s Land. It has remained there in a large mound ever since.
[18] On 17 October 2013, Monticello applied to the SDC for a combined subdivision and land use consent (App. No. 135583). The SDC granted consent
135583A, which was a subdivision consent to create 19 allotments (of the total 103) in two stages (stage 4A and stage 4B), and included remediation of the contaminated land. The SDC also granted consent 135583B, which was a land use consent to undertake earthworks to remediate the contaminated site, as part of consent
135583A. It related to the removal of the stockpile of contaminated soil and hazardous material, and the remediation of the underlying ground. In the report applying for the consent, prepared by Davis Ogilvie, it was stated:
No 224 certificate shall be issued for stage 4b until such a time that the contaminated stockpile is removed from the site, and/or subsequently tested to provide evidence that no contamination remains on the proposed lots.
[19] When consent 135583B was granted on 20 March 2014, it contained two conditions relating to the waste material:7
3.Soil and material that contains concentrations of metals or other contaminants in excess of soil contaminants standards or guidelines for residential land use shall be disposed of offsite at an appropriate permitted facility in accordance with the Golder Associates Site Management Plan submitted with the application.
4.A Site Validation Report to Council approval demonstrating that Stage 4B is suitable for residential development shall be produced in accordance with the Ministry for the Environment Contaminated Land Guidelines.
[20] The stockpile is currently located on Lots 78, 79, 80 and 81 of the Land. And, from material which is before the Court, it appears the cost of remediating the land, involving treatment and removal of the contaminated material offsite, is estimated to be in excess of $800,000.
What information could the SDC have availed itself of?
[21] Following discovery of the existence of this former dump site, the parties began to make enquiries. Those enquiries shed some light on the information the SDC and its predecessors had available to it. It seems that historical records of both
the Leeston Town Council and the Ellesmere Council, which had been passed into
7 These same conditions are contained in resource consent 135583A, as conditions 13 and 14.
the SDC’s archive records, made some fleeting references to this “Manse Road
Dump” but these did not find their way into SDCs direct records. On 23 November
2012, an agent of Monticello wrote to the SDC after the dump had been discovered. The email relevantly stated:
I am amazed that Council have no record of what was its predecessors, the Ellesmere Town Board and Ellesmere County Council, land holding and dumping site. I have sent information relating to ownership of this land area, Cooper’s land prior to acquisition by Monticello, to Rachel Carruthers some weeks ago when we investigated NES issues. Ecan have no record and Mrs Cooper no knowledge when contamination issues were discussed with her.
Surely Council’s property portfolio would have record of that Council land use! Your comments on this matter would be helpful as to subsequent land use, house location, that Council of the day were able to permit on the land.
[22] Mr Geoff Birss an employee of the Council replied the same day:
There was work done here at SDC listing all the old historical gravel and dump sites but this one must have been missed.
[23] Mr Birss then forwarded the email on internally for the purposes of further inquiries to be made. Historical enquiries were undertaken, with an email from SDC of 10 December 2012 observing that Leeston Town Board records, and records from the Ellesmere Guardian (obtained from Papers Past), up until 1945 had relevant information in the years 1925, 1928, 1933 (the site became a town dump around this time), 1944, 1953, 1955 (the site ceased being used as a dump around this time),
1956, 1958 and 1959.
[24] The SDC also has provided a HAIL list it had prepared in 2013, subsequent to the discovery of the former dump site on the Land, which runs to some 51 pages, containing over 1,100 entries. This list for the entire SDC district, contains details of properties and hazardous, or potentially hazardous, issues with those properties, including former rubbish dumps. At the top left hand side of the table list, there is a comment recording: “Existing HAIL list in Oct 2013 that Lauren has already mapped”. On that list noted as entry 1077, is an item which relates to “896 103
Manse Rd” (which I understood to be broadly what was Lot 2 on the Cooper Land), with the comment “possible township rubbish dump”. In the comments section, it is stated:
May be affected by historical dump activities undertaken in the past by the Leeston Town Board. Could be affected by contaminated material, and as yet the extent to which the property may be affected has not been determined.
[25] As to what the SDC ought to have known, Monticello refers to various statutes and council rules which, it says, reinforce the obligation incumbent on the SDC to keep and maintain accurate records. In particular, reference is made to the:
(a) Public Records Act 2005 (s 17 in particular, as to which refer [27]
below)
(b) Resource Management Act 1991:
35 Duty to gather information, monitor, and keep records
(1) Every local authority shall gather such information, and undertake or commission such research, as is necessary to carry out effectively its functions under this Act or regulations under this Act.
…
(3) Every local authority shall keep reasonably available at its principal office, information which is relevant to the administration of policy statements and plans, the monitoring of resource consents, and current issues relating to the environment of the area, to enable the public—
(a) to be better informed of their duties and of the functions, powers, and duties of the local authority; and
(b) to participate effectively under this Act.
…
(5) The information to be kept by a local authority under subsection (3) shall include—
…
(j) records of natural hazards to the extent that the local authority considers appropriate for the effective discharge of its functions
…
104 Consideration of applications
(1) When considering an application for a resource consent and any submissions received, the consent authority must, subject to Part 2, have regard to–
(a) any actual and potential effects on the environment
of allowing the activity …
(c) Hazardous Substances and New Organisms Act 1996
(d) Local Government Official Information and Meetings Act 1987:
5 Principle of availability
The question whether any official information is to be made available, where that question arises under this Act, shall be determined, except where this Act otherwise expressly requires, in accordance with the purposes of this Act and the principle that the information shall be made available unless there is good reason for withholding it.
(e) Health Act 1956, s 23
(f) Building Act 2004:
35 Content of project information memorandum
…
(1) A project information memorandum must include—
(a) information likely to be relevant to the proposed building work that identifies—
(i) the heritage status of the building (if any);
and
(ii) each special feature of the land concerned (if any); and
(b) information likely to be relevant to the proposed building work that, in terms of any other Act, has been notified to the territorial authority by a statutory authority; and
…
(2) In this section,—
...
special feature of the land concerned includes, without limitation, potential natural hazards, or the likely presence of hazardous contaminants, that—
(a) is likely to be relevant to the design and construction or alteration of the building or proposed building; and
(b) is known to the territorial authority; and
(c) is not apparent from the district plan under the
Resource Management Act 1991.
(g) SDC’s own policy documents and policy objectives
[26] It needs to be observed that the proposed Selwyn District Plan, notified on 2
December 2000 contains some information regarding contaminated land. Under Rule 7 are notes relating to a “Contaminated Site Register”. In particular, it is noted:8
The Council has a register of sites which may have contaminated land, because of past activities on the site. These sites should be tested prior to the activities listed in Rule 7.1 taking place. If a site is on the Council register, it will be noted on any LIM (Land Information Memorandum) issued for the site.
PLEASE NOTE – The register is not a comprehensive list. There are likely to be additional contaminated sites in the District which are not on the register, particularly if the activity in the past did not require [sic] to obtain any permit or license.
[27] This contaminated site register referred to was clearly a “work in progress”. It contained only 35 sites and was acknowledged by the SDC to be inadequate. The SDC also itself prays in aid here legislative provisions it says are relevant to the dispute:
(a) Public Records Act 2005:9
17 Requirement to create and maintain records
(1) Every public office and local authority must create and maintain full and accurate records of its affairs, in accordance with normal, prudent business practice, including the records of any matter that is contracted out to an independent contractor.
…
(3) Every local authority must maintain in an accessible form, so as to be able to be used for subsequent reference, all
8 The general tenor of these comments is also repeated under Rule 1.1 – Land and Soil, particularly as it relates to contaminated soil.
9 Counsel also makes reference to ss 45–47 of the Public Records Act 2005.
protected records that are in its control, until their disposal is authorised by or under this Act.
…
25 Discharge of public records
(1) The Chief Archivist may authorise in writing the discharge of a public record only if—
(a) the Chief Archivist considers that the public record is suitable to be discharged; and
(b) the public record is an open access record that is not in current use; and
…
(e) the administrative head of the controlling public office agrees to the public record being discharged; and
(b) Local Government Official Information and Meetings Act 1987:
44A Land information memoranda
(1) A person may apply to a territorial authority for the issue, within 10 working days, of a land information memorandum in relation to matters affecting any land in the district of the authority.
(2) The matters which shall be included in that memorandum are—
(a) information identifying each (if any) special feature or characteristic of the land concerned, including but not limited to potential erosion, avulsion, falling debris, subsidence, slippage, alluvion, or inundation, or likely presence of hazardous contaminants, being a feature or characteristic that—
(i) is known to the territorial authority; but
(ii) is not apparent from the district scheme under the Town and Country Planning Act
1977 or a district plan under the Resource
Management Act 1991
…
(f) information relating to the use to which that land
may be put and conditions attached to that use …
(3) In addition to the information provided for under subsection (2), a territorial authority may provide in the memorandum such other information concerning the land as the authority considers, at its discretion, to be relevant.
…
(6) Notwithstanding anything to the contrary in this Act, there shall be no grounds for the territorial authority to withhold
information specified in terms of subsection (2) or to refuse to provide a land information memorandum where this has been requested.
(c) Resource Management Act 1991:
30 Functions of regional councils under this Act
(1) Every regional council shall have the following functions for the purpose of giving effect to this Act in its region:
…
(c) the control of the use of land for the purpose of—
…
(v) the prevention or mitigation of any adverse effects of the storage, use, disposal, or transportation of hazardous substances:
(ca) the investigation of land for the purposes of identifying and monitoring contaminated land:
…
31 Functions of territorial authorities under this Act
(1) Every territorial authority shall have the following functions for the purpose of giving effect to this Act in its district:
(a) the establishment, implementation, and review of objectives, policies, and methods to achieve integrated management of the effects of the use, development, or protection of land and associated natural and physical resources of the district:
(b) the control of any actual or potential effects of the use, development, or protection of land, including for the purpose of—
…
(iia) the prevention or mitigation of any adverse effects of the development, subdivision, or use of contaminated land:
(d)Resource Management (National Environmental Standard for Assessing and Managing Contaminants in Soil to Protect Human Health) Regulations 2011.
Monticello’s claim and the SDC’s defence
[28] Reduced to its core, Monticello’s claim is that the SDC owed to it a duty of
care to maintain accurate and reliable records, and particularly for matters which
should have been given priority, such as categories of records relating to town dumps and the like. In its pleadings, Monticello claims that the duty of care extends also to:
(a) recording contamination of land such that it is not fit for its designated or intended use;
(b)disclosing adverse features of the land, in particular, details of contamination in PIMs, LIMs and designations under the district plan;
(c) refusing resource consents for the development of land when it knew, or with reasonable diligence ought to have known, that the land was contaminated, unfit for human habitation, and likely to be subject to a compliance order issued pursuant to s 104 of the Hazardous Substances and New Organisms Act 1996; and
(d)in making its consideration when deciding to grant or decline a resource consent application, to take account of adverse features which it knew, or ought to have known, rendered the subject land unsafe for residential development.
[29] Monticello further advances its argument on the strength of provisions of the Resource Management Act 1991, and other arguments, but the duty of care point set out above at [28] is the mainstay of its claim. In submissions, Monticello does not precisely identify what it says to be the duty of care. In this respect its claim, as I see it, is essentially fluid. In opening submissions, its position is clarified somewhat:
72.Otherwise aside from the issue of loss the main issue that emerges therefore is whether it was reasonable for the current Council to have known about the dump site prior to its discovery and whether it was under any obligation to check its records or make any independent investigation when considering an application for a resource consent.
[30] Monticello refined its case in closing submissions, where it set out the alleged duty of care in the following manner:
90.The pleaded duty is set out in paragraphs 29 and 30 of the statement of claim and which in summary required that [the SDC] … maintain adequate records, record contamination or adverse features and
disclose that information in PIMs, LIMs and its designations, and so not grant a resource consent when it knew or ought to have known the land was contaminated.
…
94.The underlying complaint of the plaintiff is that SDC should never have issued a resource consent for this land, and so the Cooper transaction would not have proceeded.
[31] In response, the SDC denies it owed a duty of care to Monticello. It claims that it was not reasonable to expect that current Council staff would be aware of the dump site given its historic nature and historical practices for dealing with such sites, that it had no obligation to check long-archived or other records or make independent investigations when considering an application for resource consent, that any duty it had was discharged by the imposition of condition 43 of resource consent 075296 (requiring Monticello to identify and report hazardous waste sites, and remediate them at its own cost), and it was not reasonably foreseeable that Monticello would rely on the SDC in this way. In opening submissions, the SDC introduces its case on this basis:
1A local authority such as the Selwyn District Council (the “SDC”) does not, and cannot be expected to give assurances to property developers such as Monticello that land acquired for development will not turn out to be contaminated, or otherwise not be suitable for the type of development the developer wishes to engage in. Any such private law duty of care would adversely affect the effective performance of the statutory functions local authorities need to perform under the RMA and other legislation. It would also introduce an impossible burden upon local authorities.
[32] These opening submissions also provide a summary of the bases upon which the claim is resisted. That summary can be further refined to the following propositions:
(a) Monticello took the risk that the land it acquired might be contaminated, and thus unfit for residential development. SDC’s District Plan advised that there was a list of contaminated sites, but that it was incomplete. Further, Monticello did not obtain a LIM to ascertain whether the site was on this list. No expert advice was sought, or investigative work undertaken, before the purchase was
settled. Finally, one condition of the resource consent made it clear that any contamination would need to be remediated by Monticello, at its cost.
(b)There is a recognised duty to take care when issuing a LIM. The information to be included in issuing a LIM is that which is known to the Council. Here, no LIM was obtained, and SDC says the information referred to was not known to the SDC. Further, there is no duty of care in relation to the issuing of resource consents.
(c) The fact that SDC’s predecessors had knowledge of the town dump does not impute that knowledge to SDC. Thus, even though the information was in SDC’s archives, it was not reasonable for SDC to discover that historical information. To do so is described as “an impossible burden”.
(d)The regime put in place under the RMA made it clear that SDC had not identified all contaminated sites, and that the ultimate responsibility for this rested with purchasers and owners.
(e) The PIM issued to Ms Cooper (and not to Monticello) does not assist the claim.
(f) The duty of care suggested by Monticello is inconsistent with the relevant applicable statutory schemes.
(g)Monticello’s loss is not loss arising from any conduct of SDC but, rather, from the actions of Monticello itself. SDC describes Monticello as the “master of its own misfortune”.
[33] And, it is clear too that, should Monticello succeed in establishing liability, the parties are in substantial dispute over quantum, including the measure of loss and whether Monticello has caused or exacerbated its own loss (i.e. was it contributorily negligent?).
Duty of care
General principles
[34] Monticello’s claim against the SDC is brought in negligence. An essential precondition to an action in negligence, requires the plaintiff to establish that the defendant owed a duty of care to it. The nature of that duty of care is, in essence, an imposed requirement that one party not behave in a certain way in relation to a specific person or group of persons.
[35] The law of negligence is therefore relational. No person owes to the world at large an obligation to take care.10 This requirement of relationship is a commonality which runs through all of the great negligence cases. In Heaven v Pender, an English Court of Appeal decision of some 130 years antiquity, Sir Baliol Brett MR stated:11
… whenever one person is by circumstances placed in such a position with regard to another that every one of ordinary sense who did think would at once recognise that if he did not use ordinary care and skill in his own conduct with regard to those circumstances he would cause danger of injury to the person or property of the other, a duty arises to use ordinary care and skill to avoid such danger.
[36] Perhaps the best known articulation of this relational quality of negligence is found in the following famous passage of Lord Atkin’s judgment in Donoghue v Stevenson:12
The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer's question, Who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question. This appears to me to be the doctrine of Heaven v Pender …
10 The most well known conception of this principle is found in the judgment of the Privy Council in Grant v Australian Knitting Mills Ltd [1936] AC 85 (PC) at 103. This point is also aptly demonstrated on the facts of Sutradhar v Natural Environment Research Council [2006] UKHL
33, [2006] 4 All ER 490 (no duty of care owed to the population of Bangladesh).
11 Heaven v Pender (1883) 11 QBD 503 (CA) at 509.
12 Donoghue v Stevenson [1932] AC 562 (HL) at 580. See too Palsgraf v Long Island Railroad
Company 248 NY 339 (1927) at 344 per Cardozo CJ.
[37] Perhaps the most troublesome aspect of the law of negligence is to delimit the metes and bounds of the duty of care. In other words, determining the circumstances in which one person is in a relationship to another such that he or she owes a duty of care to that other person. This is, at least partly, because of the inherently mercurial nature of negligence. Its outer limits are determined on the unique facts of cases as they arise and are always amenable to extension or constriction as the mores of society fluctuate. This fluidity also results in part from the fact that determining the existence or absence of a duty of care requires judges to wade into the mire of public policy.
[38] One might well ask how, then, do courts confronted with these issues resolve them. The answer to that is by applying a framework (and it is no more than a framework), to determine whether, in all the circumstances of a case, it is “fair, just and reasonable” that a duty of care be recognised.13 The framework is two-staged:
(a) first, an internal inquiry is undertaken. This focuses on the relationship and proximity between the parties themselves; and
(b)second, an external inquiry is undertaken. This requires an examination of the overarching policy considerations, on the one hand favouring, and on the other hand leaning against the recognition of a duty of care.
[39] The two-stage inquiry has a clear lineage.14 In modern jurisprudence it can be traced to the House of Lords Decision in Anns v Merton London Borough Council.15 Despite objections, in several overseas jurisdictions, to the duty formula developed in Anns, New Zealand courts have continued to apply the broad two-stage
test, and certainly never resiled from it.16 The acceptance of the Anns test was swift
13 See Couch v Attorney-General (on appeal from Hobson v Attorney-General) [2008] NZSC 45, [2008] 3 NZLR 725 at [52], citing Brown v Heathcote County Council [1986] 1 NZLR 76 (CA) at 79; South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282 (CA) at 294–295 per Cooke P, 305–306 per Richardson J. See too Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA) at [58].
14 The three fundamental cases upon which the formula is based are Donoghue v Stevenson [1932] AC 562 (HL); Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (HL); Home Office v Dorset Yacht Co Ltd [1970] AC 1004 (HL).
15 Anns v Merton London Borough Council [1978] AC 728 (HL).
16 As to overseas objections, refer Stephen Todd “Negligence: The Duty of Care” in Stephen Todd
in New Zealand, being adopted in the Court of Appeal in Scott Group Ltd v
McFarlane and Others only months after the House of Lords released its decision.17
[40] Since those early days, Anns has been cited many times in New Zealand Courts. However, the adaption of Anns to New Zealand circumstances began with the decision of the New Zealand Court of Appeal decision in South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations.18
Commenting on the two-stage test, Cooke P there stated:19
A broad two-stage approach or any other approach is only a framework, a more or less methodical way of tackling a problem. How it is formulated should not matter in the end. Ultimately the exercise can only be a balancing one and the important object is that all relevant factors be weighed. There is no escape from the truth that, whatever formula be used, the outcome in a grey area case has to be determined by judicial judgment. Formulae can help to organise thinking but they cannot provide answers.
[41] The next landmark decision was that of the Court of Appeal in Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd.20 In that case the Court of Appeal framed the approach in this way:21
The ultimate question when deciding whether a duty of care should be recognised in New Zealand is whether, in the light of all the circumstances of the case, it is just and reasonable that such a duty be imposed. The focus is on two broad fields of inquiry but these provide only a framework rather than a straitjacket. The first area of inquiry is as to the degree of proximity or relationship between the parties. The second is whether there are other wider policy considerations that tend to negative or restrict or strengthen the existence of a duty in the particular class of case. At this second stage, the Court's inquiry is concerned with the effect of the recognition of a duty on other legal duties and, more generally, on society.
[42] In a series of appellate decisions since then, the broad Anns approach has been affirmed, albeit modified to New Zealand conditions and refined.22 Thus, it
(ed) The Law of Torts in New Zealand (6th ed, Thomson Reuters, Wellington, 2013) at 151–152.
17 Scott Group Ltd v McFarlane and Others [1978] 1 NZLR 553 (CA). The House of Lords released its decision on 12 May 1977. Scott Group Ltd was heard on 16 and 17 February 1977, with judgment being delivered on 18 November 1977.
18 South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd
[1992] 2 NZLR 282 (CA).
19 At 294.
20 Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA). In the intervening years, many cases avowed the approach taken in South Pacific Manufacturing Co Ltd: see Attorney-General v Carter [2003] 2 NZLR 160 (CA) at [22].
21 Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA) at [58].
22 Couch v Attorney-General (on appeal from Hobson v Attorney-General) [2008] NZSC 45,
must be established that it is fair, just and reasonable that a duty be imposed. Ultimately, the method of determining that overarching question should not matter. However, a two-stage test is the preferred methodology in New Zealand.
[43] As I have said, it must first be asked whether the relationship and proximity between the parties supports the imposition of a duty. Second, the question as to whether a duty should be imposed having regard to extraneous policy concerns must be addressed. I note at this point that it has been said that the proximity inquiry “include questions of policy in the broad sense of that word” and that “residual policy factors outside the relationship of the parties’ which were to be taken into
account at the second stage of the duty inquiry”.23
[44] The requirement that the imposition of a duty of care be “fair, just and reasonable” is a broad inquiry, requiring courts to have regard to all relevant circumstances.24 Further, where courts are confronted with a novel category of duty, “in deciding whether or not there is a duty of care in a new situation the Courts should decide gradually, step by step and by analogy with previous cases”.25 In the Australian High Court, in Graham Barclay Oysters Pty Ltd v Ryan, Kirby J stated that a duty of care will be owed if “a reasonable person in the defendant’s position could have avoided damage by exercising reasonable care and was in such a relationship to the plaintiff that he or she ought to have acted to do so”.26
Proximity and relationship explained
[45] It is one thing to state that the first limb of the two-stage test is to ascertain the nature of the relationship between the parties, and the proximity of that relationship. Such statements are of little assistance in the abstract, however. I turn
briefly to consider what this means.
[2008] 3 NZLR 725; Body Corporate No 207624 v North Shore City Council [Spencer on
Byron] [2012] NZSC 83, [2013] NZLR 297; North Shore City Council v Body Corporate
188529 [2010] NZSC 158, [2011] 2 NZLR 289.
23 Cooper v Hobart [2001] SCC 79, [2001] 3 SCR 537 at [30].
24 See Takaro Properties Ltd v Rowling [1987] 2 NZLR 700 (PC) at 709; South Pacific
Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR
282 (CA) at 293; Governors of the Peabody Donation Fund v Sir Lindsay Parkison & Co Ltd
[1985] AC 210 (CA) at 241 per Lord Keith.
25 South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd
[1992] 2 NZLR 282 (CA) at 295.
26 Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54, (2002) 211 CLR 540 at [240].
[46] It needs to be made apparent that this inquiry is not focused solely on the degree of geographical or temporal separation between the parties but, rather, “everything bearing upon the relationship between the parties”.27 It is also more than a simple assessment of forseeability. As Glazebrook J stated in Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd:28
[59] The inquiry into proximity is concerned with the nature of the relationship between the parties and is more than a simple question of foreseeability. It involves consideration of the degree of analogy with cases in which duties are already established. This is because Courts should only move gradually into new areas of liability and also because the examination of factors that have influenced earlier decisions ensures that any development of the law occurs in a principled and cohesive manner – Connell v Odlum, at p 265
[47] In the higher echelons of New Zealand’s judicial system it has been held that, in novel duty cases, the role of forseeability is far from determinative. In the Supreme Court in North Shore City Council v Attorney-General, Blanchard J remarked:29
Foreseeability is in such novel cases at best a screening mechanism, to exclude claims which must obviously fail because no reasonable person in the shoes of the defendant would have foreseen the loss. The law would then regard the loss as such an unlikely result of the plaintiff’s act or omission that it would not be fair to impose liability even if that act or omission were actually a cause, or even the sole cause, of the loss
[48] Of course, it must be established as a matter of course that the loss was a reasonably foreseeable consequence of the defendant’s actions. But it is not determinative. As Tipping J has stated:30
For a duty of care to be reasonable as between the parties, the loss or damage involved must have been reasonably foreseeable. If it was not, it would not be reasonable to impose a duty. But the fact that the loss is foreseeable does not of itself make it reasonable to impose a duty.
[49] Under this first head, courts are really concerned with whether there is “a relationship of such a nature that the defendant may be said to be under an obligation
27 North Shore City Council v Attorney-General [2012] NZSC 49, [2012] 3 NZLR 341 at [156].
See too Donoghue v Stevenson [1932] AC 562 (HL) at 582.
28 Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA).
29 North Shore City Council v Attorney-General [2012] NZSC 49, [2012] 3 NZLR 341 at [157], after referring to the judgment of McLachlin CJ in Sullivan v Moody [2001] HCA 59, (2001) 207
CLR 562 at [41].
30 North Shore City Council v Attorney-General [2012] NZSC 49, [2012] 3 NZLR 341 at [220].
to be mindful of a plaintiff’s legitimate interests in conducting his or her affairs”, or “a means of identifying whether the defendant was someone most appropriately placed to take care in the avoidance of damage to the plaintiff”.31 This concept of proximity has been described as “notoriously elusive”.32 It has been said that the
inquiry reflects:33
… a balancing of the claimant’s moral claim to compensation for avoidable harm and the defendant’s moral claim to be protected from an undue burden of legal responsibility.
[50] Proximity is not, however, without its dissidents. In Alcock v Chief
Constable of South Yorkshire, Lord Oliver famously quipped:34
And, in the end, it has to be accepted that the concept of "proximity" is an artificial one which depends more upon the court's perception of what is the reasonable area for the imposition of liability than upon any logical process of analogical deduction.
[51] If a party succeeds in establishing a sufficiently proximate relationship, there appears to be some dispute as to whether this gives rise to a prima facie duty of care.35 I incline to the view, which has seemed to prevail, that the finding of proximity is a necessary, but not sufficient, condition for the finding of a duty. Once a finding of proximity is found there seems to be an established duty of care which can only then be extinguished or diminished by broader policy concerns.
Public policy
[52] The next question, once proximity is established, is how to account for the inherently ethereal policy concerns in this area. The first question that immediately arises is what are these policy concerns. That can, broadly, albeit unhelpfully, be described as all those factors which negate, minimise or support liability. In any
event, it has been described as the “third phase” of the judicial process, involving
31 At [153].
32 Customs and Excise Commissioners v Barclays Bank plc [2007] 1 AC 181 (HL) at [15]
33 South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd
[1992] 2 NZLR 282 (CA) at 306.
34 Alcock v Chief Constable of South Yorkshire [1992] 1 AC 310 (CA) at 411.
35 Couch v Attorney-General (on appeal from Hobson v Attorney-General) [2008] NZSC 45, [2008] 3 NZLR 725 at [79]; Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297 at [53]–[54]; North Shore City Council v Attorney-General [2012] NZSC 49, [2012] 3 NZLR 341 at [152]
“interests outside and beyond the interests of the immediate parties to the litigation”.36 This is of course an unsatisfactory description.37
[53] However, the entire sphere of public policy is plagued with dissatisfaction. This led Burrough J in Richardson v Mellish to describe public policy as “a very unruly horse, and when once you get astride it you never know where it will carry you. It may lead you from the sound law. It is never argued at all but when other points fail”.38 Equally unhelpfully, in Davies v Davies, it was stated that “[p]ublic policy does not admit of definition and is not easily explained”, though it was acknowledged that it is “a variable quantity; that it must vary and does vary with the habits, capacities, and opportunities of the public”.39
[54] That is not to say that there have not been attempts to synthesise and distil the essence of public policy. By way of example, MacCormick has stated:40
‘Policy’ has become a hideously inexact word in legal discourse, but if we wish to use it with any exactitude at all, we had better use it as denoting those courses of action adopted by the courts as securing or tending to secure states of affairs conceived as desirable. A ‘policy argument’ for a given decision is an argument which shows that to decide the case in this was will tend to secure a desirable state of affairs.
[55] In this country, in McCarthy v Wellington City, His Honour McCarthy J has endeavoured to elucidate the core concept by stating:41
… many factors bring their influence. … Though it is impossible to condense these influences into a definition, or even to list them in order of weight, it must be accepted, I think, that powerful amongst them is the social outlook and development of the country at the time when the Court acts. The decision is made, in form, by adopting the familiar legal device of the reasonable man — what such a man would anticipate; the fiction being that he would anticipate and guard against only those matters which the Court considers reasonable and sufficiently proximate, that being treated as a matter of degree
[56] Over 150 years ago, a similar attempt was made by Parke B in Egerton v
Brownlow.42 His Honour stated that public policy is:43
36 Leon Green “Tort Law Public Law in Disguise” (1959) 38 Texas Law Review 1 at 2.
37 Egerton v Brownlow (1853) 4 HL Cas 1, 10 ER 359 (QB) at 123,408.
38 Richardson v Mellish (1824) 2 Bing 229, 130 ER 294 (Comm Pleas) at 252, 303.
39 Davies v Davies (1887) 36 Ch D 359 (CA) at 364.
40 Neil MacCormack Legal Reasoning and Legal Theory (Clarendon Press, Oxford, 1978) at 263.
41 McCarthy v Wellington City [1966] NZLR 481 (CA) at 519.
… capable of being understood in different senses; it may, and does, in its ordinary sense, mean “political expedience,” or that which is best for the common good of the community; and in that sense there may be every variety of opinion, according to education, habits, talents, and dispositions of each person, who is to decide whether an act is against public policy or not.
[57] To this he added (which no longer represents the position on the utilisation of public policy):44
To allow this to be a ground of judicial decision, would lead to the greatest uncertainty and confusion. It is the province of the statesman, and not the lawyer, to discuss, and of the legislature to determine, what is the best for the public good, and to provide for it by proper enactments. It is the province of the judge to expound the law only; the written from the statutes: the unwritten or common law from the decisions of our predecessors and of our existing courts, from text-writers of acknowledged authority, and upon the principles to be clearly deduced from them by sound reason and just inference; not to speculate upon what is the best, in his opinion, for the advantage of the community.
[58] Some time ago now, Symmons also embarked on an endeavour to categorise policy considerations.45 The policy considerations identified are:46
(a) the “administrative factor” – “where will it all end?”. This is effectively a flood gates argument, concerned with ensuring that the consequence of finding a duty of care to exist is the promotion of litigious conduct on the part of society;
(b)the “public interest” or “looking over the shoulder” factor. This is concerned with the extent to which persons who are found to owe a duty of care will become cautious in undertaking their functions, with the net result that the broader public would suffer.
(c) the “social occasion” factor. The author suggests that there is a need
to distinguish those acts allegedly negligently performed in a social or
42 Egerton v Brownlow (1853) 4 HL Cas 1, 10 ER 359 (QB).
43 At 123,408 – 123,409. See too Wilkinson v Osborne (1915) 21 CLR 89 at 97 per Isaacs J;
Rodriguez v Speyer Brothers [1919] AC 59 (HL) at 79.
44 At 123,409.
45 CR Symmons “The Duty of Care in Negligence: Recently Expressed Policy Elements – Part I” (1971) 34 Modern Law Review 394; CR Symmons “The Duty of Care in Negligence: Recently Expressed Policy Elements – Part II” (1971) 34 Modern Law Review 528.
46 At 402 (Part I).
informal setting, as compared to professional settings. A common example is alleged negligence in sport.
(d)the legislative policy factor. This concerns the impact of legislative intervention in a particular area on the scope of liability in negligence. For example, it has been said that legislation “does not by itself give rise to a civil action, but it forms the foundation on which the common law can build a cause of action”.47
[59] Public policy is therefore not what individual judges or courts consider to be a desirable state of affairs. Rather, it is incremental and to be adjudged in accordance with prevailing government policy, the ethos of legislation and guided by precedent. It should be noted that prior precedent is by no means definitive, and nor is it rigid, but an incremental approach ensures that any departures are not brash. As Windeyer J stated in Mount Isa Mines Ltd v Pusey:48
… it is not for an individual judge to determine the policy of the law according to his own view of what social interests dictate. The field is one in which the common law is still in course of development. Courts must therefore act in company and not alone. Analogies in other courts, and persuasive precedents as well as authoritative pronouncements, must be regarded.
[60] Lord Diplock has comparably remarked:49
The justification of the courts' role in giving the effect of law to the judges' conception of the public interest in the field of negligence is based upon the cumulative experience of the judiciary of the actual consequences of lack of care in particular instances. And the judicial development of the law of negligence rightly proceeds by seeking first to identify the relevant characteristics that are common to the kinds of conduct and relationship between the parties which are involved in the case for decision and the kinds of conduct and relationships which have been held in previous decisions of the courts to give rise to a duty of care.
47 Scott v Green & Sons [1969] 1 All ER 849 (CA) at 850.
48 Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383
49 Home Office v Sorset Yacht Co [1970] AC 1004 (HL) at 1058. See too Egerton v Brownlow
(1853) 4 HL Cas 1, 10 ER 359 (QB) at 151,419:
… it may be that Judges are no better able to discern what is for the public good than other experienced and enlightened members of the community; but that is no reason for their refusing to entertain the question, and declining to decide upon it.
[61] Public policy is, at best, uncertain. It is, nonetheless, a vital element in delineating those areas of the law in which an action in negligence will run and those areas in which it will not. As I have mentioned above, however, it is only necessary to address the issue of policy if there is sufficient proximity between the parties. Even then, the role of public policy will typically be to extinguish or narrow an inchoate duty recognised by a sufficiently proximate relationship, not to found a duty where there is a lack of proximity.
Duty of care in relation to local authorities
[62] Local authorities are attractive defendants. It is often said that they have “deep pockets”. Also, they do not, generally speaking, cease to exist in the way that intended defendant companies can. There is a long line of New Zealand (and overseas) authority addressing the scope of local authorities’ liability in negligence. As I have already noted, the extent of their liability is not set in stone.
[63] It has long been held in New Zealand that local authorities have a duty of care, and are thus:50
… liable to original and subsequent home owners for loss caused by the failure of building inspectors to carry out their inspection functions with reasonable skill and care.
[64] This principle received confirmation in the Court of Appeal’s watershed
decision Invercargill City Council v Hamlin, as affirmed by the Privy Council.51
Though the liability is founded in an older line of authority, the Court of Appeal’s judgment in Hamlin provides compelling justification for the imposition of the duty to take care in relation to negligent inspections. 52 In my view it is useful to explore the heart of the Court of Appeal’s reasoning to inform the present discussion. The facts are largely irrelevant, other than to confirm it was a claim stemming from
negligent inspection.
50 North Shore City Council v Body Corporate 188529 [2010] NZSC 158, [2011] 2 NZLR 289 at
[17].
51 Invercargill City Council v Hamlin [1996] 1 NZLR 513 (CA & PC).
52 Bowen v Paramount Builders (Hamilton) Ltd [1977] 1 NZLR 394 (CA); Mount Albert Borough
Council v Johnson [1979] 2 NZLR 234 (CA); Brown v Heathcote County Council [1986] 1
NZLR 76 (CA); Stieller v Porirua City Council [1986] 1 NZLR 84 (CA); Askin v Knox [1989] 1
NZLR 248 (CA).
[65] Cooke P delivered the first judgment of the Court. His Honour relevantly stated:53
… whatever may be the position in the United Kingdom, home-owners in New Zealand do traditionally rely on local authorities to exercise reasonable care not to allow unstable houses to be built in breach of the bylaws. Casey J illuminates this aspect in his judgment in this case. The linked concepts of reliance and control have underlain New Zealand case law in this field from Bowen onwards.
[66] The judgment of Richardson J is, however, the guiding judgment in Hamlin. His Honour commenced the judgment as follows:54
Legislation must be seen in its social setting and the common law of New Zealand should reflect the kind of society we are and meet the needs of our society.
It is I think important to consider the social and governmental context in which during the 1970s and 1980s the Courts of New Zealand consistently upheld duties of care on the part of local authorities towards house owners in relation to building inspections. There were six distinctive and long-standing features of the New Zealand housing scene at that time.
1.The first was the high proportion of occupier-owned housing. Home ownership by people in all walks of life was the goal and to a large extent the reality. Reference to the New Zealand Official Year Books confirms that over 70 per cent of permanent housing was occupier owned and that over 80 per cent of permanent housing was in detached houses on their own sections.
2.The second was that much of the housing construction, including low cost housing, was undertaken by small-scale cottage builders for individual purchasers. Reporting in 1971 the "Commission of Inquiry into Housing in New Zealand" ([1971] 4 AJHR H-51) chaired by RB Cooke QC noted at p 192 that the New Zealand house was not a factory produced article but was custom built to suit the site and the owner. Apart from comparatively few major operators most firms in the building industry were small with some 85 per cent of home builders employing fewer than six workers (p 186). Over the last 40 years the ratio of state/private housing starts has seldom reached 10 per cent.
3.The third was the nature and extent of governmental support for private home building and home ownership. From last century the state accepted substantial responsibility for financing low cost housing. For many decades the State Advances Corporation was the vehicle through which low interest loans were made available for low cost new housing purchases and state house tenants were financed into the purchases of houses they had been renting.
53 Invercargill City Council v Hamlin [1996] 1 NZLR 513 (CA & PC) at 519.
Amongst the innovative schemes designed to facilitate home ownership were suspensory loans, homestart and sweat equity programmes, state guarantees of mortgages and the capitalisation of the family benefit, the last of which helped nearly 100,000 families into their own homes in the 1960s (p 56) - at a time when the total population of New Zealand was only about 2.5m.
4.The fourth was the surge in house building construction in the buoyant economy of the 1950s and 1960s. In 25 years through to the mid-1970s the housing stock more than doubled.
5.The fifth was the wider central and local governmental support for private home building. The first standard model building bylaw was published in 1935 and by the 1970s almost all territorial local authorities had adopted and were working under the New Zealand Standard Model Building Bylaw NZSS1900 published by the Standards Association of New Zealand in 1964. "The Review of Planning and Building Controls" published by the Office of the Review of Building Controls in 1983 noted in para 10.10 (p 25) that building inspectors filled a significant advisory and educative role spending 10 per cent to 60 per cent (depending on location) of their time in that way. The Review also noted (para 7.1) (p 16) that while health and safety seemed to be the prime considerations it was clear that "health" had included comfort or convenience and "safety" had moved into the area of good standards of workmanship or durability or sound construction. Again, the Commission of Inquiry Report noted (pp 193-194) that the Building Research Association, which was funded by the levies paid on construction work normally due when the building permit was issued, intended to provide a central source of information, advice, testing and research on housing design, cost, user, and planning requirements. The high social interest in standards and amenities was also reflected in the terms of reference of the Commission and the discussion in its report.
6.The sixth was that it has never been a common practice for new house buyers, including those contracting with builders for construction of houses, to commission engineering or architectural examinations or surveys of the building or proposed building. In the low-cost housing field the ordinarily inexperienced owner was contracting with a cottage builder on fairly standard plans amended to suit the owner's wishes and pocket. That contracting was within the framework of encouragement and often financial support from the state and of the protection provided by local body controls and adherence to the standard bylaws. It accorded with the spirit of the times for local authorities to provide a degree of expert oversight rather than expect every small owner to take full responsibility and engage an expert adviser.
[67] It was these special New Zealand conditions which justified departure from the English approach. This is reflected in the following passage:55
Ultimately we have to follow the course which in our judgment best meets the needs of this society. Those distinctive social circumstances must be taken to have influenced the New Zealand Courts to require of local authorities a duty of care to home-owners in issuing building permits and inspecting houses under construction for compliance with the bylaws.
[68] Time does not stand still, however. The Hamlin duty was expanded by the Supreme Court in North Shore City Council v Body Corporate 188529.56 The Court there held:57
[48] There is no principled basis for making the Hamlin duty dependent on whether the dwelling in question is stand-alone or part of a block of dwellings, or on how many dwelling units there are in the block. Any such limitation would, in any event, be inconsistent with the rationale for the duty. That rationale is based on the control which councils have over building projects and on the general reliance which people acquiring premises to be used as a home place on the council to have exercised its independent powers of control and inspection with reasonable skill and care and, in particular, to have exercised with reasonable skill and care its powers of inspection of features that will be covered up.
[49] The duty affirmed in Hamlin is designed to protect the interests citizens have in their homes. As a matter of principle and logic that duty should extend to all homes, whatever form the home takes. Distinctions based on the ownership structure, size, configuration, value or other facets of premises intended to be used as a home are apt to produce arbitrary consequences. Furthermore, the Hamlin duty must be capable of reasonably clear and consistent administration.
[69] Shortly after North Shore City Council v Body Corporate 188529 was decided, the Supreme Court was once again confronted with the scope of the Hamlin duty. Thus, the decision in Body Corporate No 207624 v North Shore City Council marked the true ‘unshackling’ of the Hamlin duty of care.58 In that case the Court held that there was no principled basis for confining Hamlin to residential buildings; commercial building owners could also bring an action against the Council. These cases, however, are concerned with liability arising from a relationship created by the Building Act 2004 (and its predecessor, the Building Act 1991). If liability is to
be established in the case before me, it will not be on the same basis.
56 North Shore City Council v Body Corporate 188529 [2010] NZSC 158, [2011] 2 NZLR 289.
57 (citations omitted).
58 Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297, overruling a line of Court of Appeal authority: Te Mata Properties Ltd v Hastings District Council [2008] NZCA 446, [2009] 1 NZLR 460; Queenstown Lakes District Council v Charterhall Trustees [2009] NZCA 374, [2009] 3 NZLR 786. See also the High Court decision in Three Meade Street Ltd v Rotorua District Council [2005] 1 NZLR 504 (HC).
[70] But it is clear there has been little reticence to develop and rarefy the duty incumbent on local authorities where principle and policy so requires. This can also be seen in the Supreme Court’s judgment in Marlborough District Council v Altimarloch Joint Venture Ltd, which concerned the liability of local authorities when issuing LIMs.59 Tipping J’s judgment dealt comprehensively with the duty of care question. As to proximity, His Honour stated that a “person requesting a LIM from a territorial authority is clearly in a position of proximity to the authority” and the “relationship between the parties is closely analogous to a contractual one”.60
[71] Having resolved the first stage of the inquiry, Tipping J then considered policy considerations. It was first noted that Parliament recognised that parties would rely on the accuracy of at least certain aspects of the LIM.61 In particular, it was stated:62
The subsection is apt to encourage general reliance on the accuracy of information required to be supplied in LIMs. That is a significant indicator, within the section itself, that as a matter of policy those relying on LIMs should not be denied the duty of care that proximity considerations suggest should exist.
[72] Further, and relevantly, though addressing proximity and policy as one, Tipping J said:
[88] Reasonable and foreseeable reliance on a written statement made in a business context is a conventional indicator of both proximity between the maker and the recipient and, subject to any countervailing considerations, that as a matter of policy a duty of care should be imposed on the maker. In the case of the supply of a service for a fee under the provisions of a statute, questions of policy are likely to be of greater import than the proximity that must thereby necessarily exist.
[73] Further, Tipping J held that the placement of s 44A within Part 6 of the Local Government Official Information and Meetings Act 1987 clearly established that it was outside of the protection of s 41. All of this led to the conclusion that proximity
and policy factors favoured the imposition of a duty of care.63
59 Marlborough District Council v Altimarloch Joint Venture Ltd [2012] NZSC 11, [2012] 2 NZLR
726.
60 At [85] and [86].
61 At [87].
62 At [87].
63 At [98].
[74] In the context of Altimarloch-type liability, a similar question to the present dispute arose in Westland District Council v York.64 This was an appeal against a decision refusing to strike out a proceeding. The Court of Appeal summarised the case in its opening paragraph:
[1] In September 2005 the respondents settled the purchase of a motel at Franz Josef, having first obtained from the appellant Council a Land Information Memorandum (LIM). The LIM is said to have been negligently prepared, in that it omitted information known to the Council about the location of the Alpine Fault, the damage that the town might suffer from a large earthquake, and a Government suggestion that local authorities should create fault avoidance zones along fault lines. The respondents say that not before November 2010, when the Council first mooted such a zone, did they discover these omissions. A zone was formally notified in 2012. It would affect the motel.
[75] Of course, it must be borne in mind that York was a case involving a strike out application, not a substantive decision. However, the following observations of the Court are relevant:65
[24] But the question here is not whether local authorities owe a duty to a purchaser to whom they supply a LIM; that was established in Altimarloch. Only in one detail, the extent to which a local authority must search out information that might affect the property, is there anything novel about the claim, and we have assumed for present purposes that the duty extends so far. The question is whether limitation bars the action.
[76] There is authority potentially running against the grain of this, however, For example, in Henry (as trustees of the THP Trust) v Auckland Council, Ellis J stated:66
In short, the information required to be disclosed by s 44A(2)(a) must identify the relevant special feature or characteristic of the land and must, within the parameters of what is actually known by the Council, be accurate and not misleading. Provided the disclosure meets the basic standards just mentioned, the Council need not include all the information about the subject property that is in the Council’s possession and it has a wide discretion as to how the information is disclosed.
…
[Section] … 44A(2)(a) is centrally concerned with putting the recipient of a
LIM on notice of particular facts that are within the Council’s knowledge
64 Westland District Council v York [2014] NZCA 59.
65 (emphasis added).
66 Henry (as trustees of the THP Trust) v Auckland Council [2014] NZHC 435 at [90] (emphasis added), after referring to Resource Planning and Management Ltd v Marlborough District Council HC Blenheim CIV-2001-485-814, 10 October 2003; Weir v Kapiti Coast District Council [2013] NZHC 3522, (2013) 15 NZCPR 28.
(the existence of any special characteristic of the land concerned) and which might affect the physical state, and potentially the value, of the land. The purpose is not to warrant that the land is good or safe, but simply to provide information on the basis of which the recipient can decide for him or herself whether to make further inquiries, obtain expert advice, negotiate on price or simply walk away. To the extent the Council has detailed information about a special feature on its file, it is not required to record all of it on the LIM. But reference to its existence and availability should also, no doubt, be made.
[77] As a final point in relation to LIMs, Tipping J, in North Shore City Council v
Body Corporate 188529, relevantly commented:67
[84] In a case in which the issue arises, the Court will have to examine how to treat a failure by a prospective purchaser to request a LIM before becoming committed to the purchase. That failure may amount to contributory negligence or, depending on the circumstances, it may be the only real and effective cause of the purchaser’s ultimate loss.
[78] There is a countervailing line of authority in relation to resource consents. The position can be summarised succinctly – local authorities, in issuing resource consents, do not owe generally duties of care to individual landowners. Bella Vista Resort Ltd v Western Bay of Plenty District Council involved a matter where the Court of Appeal considered the scope of a local authority’s liability in negligence
when issuing a resource consent.68 In that case, a Ms Hofmann had obtained a
resource consent from the respondent Council on a non-notified basis. A variation to the consent was subsequently granted to allow the construction of a facility.
[79] Neighbours, who were assumed to be consenting to the proposal, took judicial review proceedings. This ultimately resulted in the resource consent, and the variation, being set aside. Ms Hofmann and her husband did not appeal the judicial review decision. Nor did they seek to obtain further resource consents from the Council. Instead, they commenced proceedings alleging Council negligence. Overall, the Court held that the Council did not owe a duty of care in the consenting
process. Robertson J, delivering the first judgment, stated:69
67 North Shore City Council v Body Corporate 188529 [2010] NZSC 158, [2011] 2 NZLR 289.
These sentiments were again echoed by Tipping J in Marlborough District Council v
Altimarloch Joint Venture Ltd [2012] NZSC 11, [2012] 2 NZLR 726 at [90].
68 Bella Vista Resort Ltd v Western Bay of Plenty District Council [2007] NZCA 33, [2007] 3
NZLR 429. See too Baker v New Plymouth District Council [1996] DCR 709 (DC); Smaill v
Buller District Council [1998] 1 NZLR 190 (HC) at 206.
69 At [25].
[25] I am satisfied that the proper conceptualisation of the statutory duty in the present case is that a consent authority must act within its power to issue consents in conformity with the purpose of the Act, namely, the promotion of the sustainable management of natural and physical resources (s 5(1)). In assessing sustainable management, a consent authority is directed to consider the need of communities to provide for their social, economic and cultural well-being as well as environmental protection (s 5(2)). This direction does not mean that consent authorities are necessarily to be liable for an individual’s economic loss. The Privy Council, in McGuire v Hastings District Council [2002] 2 NZLR 577 at para [21], held that the true interpretation of s 5 does not allow the definition of sustainable management to be broken up into its component parts. The underlying purpose of the consent process is to provide a system whereby proposed activities can be assessed in terms of their impact on the environment and their sustainability. It does not require an assessment of the economic well-being of individual applicants, or subsequent purchasers.
[80] His Honour went on to comment:70
[56] Even in the restricted form now advanced before us, the duty of care advocated by the appellants would have a distinctly chilling effect on RMA applications before any council. An authority must be able to rely on the information which is provided to it. As the case has been argued (and I accept that there has not been a full inquiry into the position of the planning consultants who acted for the Hofmanns in their initial applications) the planning consultants had a duty to act professionally and in conformity with the law. The form of consent which was obtained from the neighbours was inadequate and inappropriate. To impose a duty of care, which would necessitate every authority going behind the information placed before it, would create an intolerable burden.
[81] In the resource management context, it has been held however that local authorities are liable in negligence for granting a consent in accordance with a procedure the Council knows to be in error.71 It has also been held that a local authority is liable in negligence for granting an indulgence to a building/planning consent applicant by dispensing with a requirement under a proposed district scheme.72 Errors in interpretation by local authorities do not, however, give rise to
liability in negligence.73
70 (emphasis added).
71 Port Underwood Forests Ltd v Marlborough District Council [1982] 1 NZLR 343 (HC).
72 Craig v East Coast Bays City Council [1986] 1 NZLR 99 (CA), though the validity of this case was doubted in Bella Vista Resort Ltd v Western Bay of Plenty District Council [2007] NZCA
33, [2007] 3 NZLR 429.
73 Morrison v Upper Hutt City Council [1998] 2 NZLR 331 (CA).
What must be established in this case
[82] In order to succeed in this negligence proceeding, Monticello must establish four essential elements. First, that, in law, the SDC owed to Monticello a duty of care. Secondly, that the SDC breached that duty of care. Thirdly, that there is a causal connection between the breach of the duty of care and the loss suffered by Monticello. Finally, that the particular type of damage suffered by Monticello was not so unforeseeable as to be too remote.
Did the SDC owe Monticello a duty of care?
Introduction
[83] In this case initially it was somewhat difficult to precisely pin down the nature of the duty of care Monticello claims it was owed by the SDC. It seems to me that the core of Monticello’s case is that encapsulated in its closing, which I have replicated above and now repeat:
90.The … duty [of care] … in summary required that [the SDC] … maintain adequate records, record contamination or adverse features and disclose that information in PIMs, LIMs and its designations, and so not grant a resource consent when it knew or ought to have known the land was contaminated.
[84] At the outset, I need to note here that the line of authority discussed above, as it relates to LIMs and resource consents, appears to largely encompass matters arising in the present case. The only aspect of this case involving a potentially novel duty of care, is that relating to the PIM. Thus, I will approach my decision in this case in accordance with those authorities, though of necessity I need to adopt a fresh approach for the aspect involving the PIM.
[85] On the issue of proximity, I need to state now that, in my view, proximity on the facts of this case is difficult to satisfy. Monticello did not apply for a LIM (which would have satisfied the proximity requirement). Nor did it ‘personally’ obtain a PIM (that was obtained by Davis Ogilvie for sewer diversion purposes in relation to what was then Mrs Cooper’s land). The relationship between Monticello and the SDC is almost solely predicated on Monticello seeking and obtaining a resource consent for the development of the Land into the subdivision.
Proximity – resource consent
[86] For my part, I consider there to be a lack of proximity (sufficient to found a duty of care) between the SDC and Monticello when the SDC is issuing a resource consent. I have reached this view cognisant of the recognition that “where a person pays a fee to a public body for a service, the parties will normally be in a proximate relationship”.74 However, in the resource management context it has been held that there is insufficient proximity to found a duty of care in situations very similar to the current one. I repeat the comments of Robertson J in Bella Vista Resort Ltd v Western Bay of Plenty District Council:75
[56] Even in the restricted form now advanced before us, the duty of care advocated by the appellants would have a distinctly chilling effect on RMA applications before any council. An authority must be able to rely on the information which is provided to it. As the case has been argued (and I accept that there has not been a full inquiry into the position of the planning consultants who acted for the Hofmanns in their initial applications) the planning consultants had a duty to act professionally and in conformity with the law. The form of consent which was obtained from the neighbours was inadequate and inappropriate. To impose a duty of care, which would necessitate every authority going behind the information placed before it, would create an intolerable burden.
[87] The SDC owed no duty of care, in issuing the resource consent, to consider the economic interests of Monticello, nor the viability of the project (to the extent that project information was before the SDC). When considering resource consents, local authorities are obliged to give effect to the purpose of the Resource Management Act. Their role is quasi-judicial and, in this respect, their allegiance lies with no one. Their obligation is simply to comply with the statutory requirements. As was said in Bella Vista Resort Ltd v Western Bay of Plenty District
Council:76
The reason that resource consent was required was to determine the impact of the business activity on the environment, not to assess the economic wellbeing of the proposed activity.
74 Body Corporate No 207624 v North Shore City Council [2012] NZSC 83, [2013] 2 NZLR 297 at [28], citing Marlborough District Council v Altimarloch Joint Venture Ltd [2012] NZSC 11, [2012] 2 NZLR 726 at [86].
75 Bella Vista Resort Ltd v Western Bay of Plenty District Council [2007] NZCA 33, [2007] 3
NZLR 429. See too The Favorite Ltd v Vavasour [2005] NZRMA 461 (HC).
76 Bella Vista Resort Ltd v Western Bay of Plenty District Council [2007] NZCA 33, [2007] 3
NZLR 429 at [52] and [55].
…
… there is a public interest in regulatory bodies being free to perform their roles when making quasi-judicial decisions. The duty, even as now circumscribed, would open Councils to a constant challenge in this regulatory area.
[88] On this proximity aspect, I consider there to be a substantial disconnect between the role of the SDC in considering and granting resource consents, and the duty of care now said to be owed. Further, and perhaps more importantly, it cannot be suggested, with any degree of conviction, that a party applying for a resource consent can expect the issuing authority to apprise it of deleterious aspects of the land upon which a development is planned to proceed. To recognise such a duty would not only be impossible in these circumstances, given what I see as the similarity of this case to Bella Vista, but would also impose an intolerable burden upon local authorities in their quasi-judicial consent-issuing role.
[89] I therefore find untenable the suggestion that the SDC owed a duty of care not to grant a resource consent when it knew or ought to have known the land was contaminated. For completeness, I note that this would be my finding under this head, irrespective of any conclusion I may have reached in relation to the LIM and PIM issues.
[90] And in any event, a possible argument exists that, even if a duty of care as alleged was found to exist on the part of the SDC, it was discharged by the imposition of condition 43 of the resource consent (noted at para [11] above) which placed the onus on Monticello to:
Identify and report any hazardous waste sites within the subdivision
and:
Undertake all necessary work to rehabilitate the site…at the consent holder’s
expense.
[91] And finally, as an aside, one might well suggest at one level, that to issue a resource consent for contaminated land, with a specific condition attached that the consent holder be responsible for, and bear the cost of, remediation of any
contamination, could be a more sustainable use of a resource, than simply letting it fall into disuse.
[92] I therefore find that the SDC owed Monticello no duty of care in issuing the resource consent.
Proximity – Land Information Memoranda (LIMs)
[93] The SDC does not owe a duty of care, to the world at large, to maintain complete records to ensure that any potential LIMs ever issued are correct in the sense they contain all the Council’s detailed information about features of a site in question. Nor do I consider that a local authority owes a duty to the world at large to simply keep comprehensive records (such as under the Public Records Act, the Local Government Official Information and Meetings Act, and the like). That duty, if it exists, must be founded on a sufficiently proximate relationship. And as the authorities suggest, in interactions with local authorities, such proximity will ordinarily be established by a fee-paying relationship (though this is not exclusively the case). In this case, Monticello neither paid for a LIM nor sought one at all.
[94] Thus, I find that there is not sufficient proximity here to found a relationship based upon a LIM. The fact that the information would not have been supplied, even if requested, does not, in my view, alter the position. Monticello’s suggested duty is effectively inviting this Court to hold that any general failure by a local authority (if made out) is actionable by everyone within that local authority’s jurisdiction. This, in my judgment, is, unsupportable. As I have stated, negligence is relational. With respect to that aspect of this case, relating to the issue of a LIM, there was no relationship whatsoever.
[95] I therefore reject the notion that, absent a specific paid request to obtain a LIM, there is a general duty of care (seemingly owed to everyone within a relevant district or region) to record contamination in all LIMs and designations. Thus, the SDC owed Monticello no duty of care in relation to any LIM.
[96] I observe that, although a LIM was not sought here, had Monticello obtained a LIM, for the reasons set out below in relation to PIMs, I would likely have found
that there was a duty of care founded on a sufficiently proximate relationship, with policy factors tending in favour of the imposition of a duty of care.
Proximity – Project Information Memoranda (PIMs)
[97] More vexed is the question of whether a local authority owes a duty of care when issuing a PIM. It is first necessary to note that a party pays for a PIM (in this case the fee for the PIM alone was $200). As I have said, this is often a compelling indication that there exists sufficient proximity between the parties. I see this situation as similar to a request for a LIM, in relation to which, the Supreme Court in Altimarloch stated that a “person requesting a LIM from a territorial authority is clearly in a position of proximity to the authority” and the “relationship between the
parties is closely analogous to a contractual one”.77
[98] Further, the well known fact that persons, commercial and otherwise, place reliance on the information held by local authorities, further supports the existence of a sufficiently proximate relationship. However, beyond that, a local authority when issuing a PIM is exercising functions under the Building Act, the purposes of which are stated as follows:
3 Purposes
This Act has the following purposes:
(a) to provide for the regulation of building work, the establishment of a licensing regime for building practitioners, and the setting of performance standards for buildings to ensure that–
(i) people who use buildings can do so safely and without endangering their health; and
(ii) buildings have attributes that contribute appropriately to the health, physical independence, and well-being of the people who use them; and
(iii) people who use a building can escape from the building if it is on fire; and
(iv) buildings are designed, constructed, and able to be used in ways that promote sustainable development:
(b) to promote the accountability of owners, designers, builders, and building consent authorities who have responsibilities
77 Marlborough District Council v Altimarloch Joint Venture Ltd [2012] NZSC 11, [2012] 2 NZLR
726 at [85] and [86].
for ensuring that building work complies with the building code.
[99] By s 32 of the Building Act, an owner is able to apply for a PIM for building work, where the owner is considering carrying out such work and a building consent is required. I have set out at [25](f) above, s 35 of the Building Act, which lists the information required to be recorded in a PIM. It must include “each special feature of the land concerned”, which is subsequently defined as including:
… without limitation, potential natural hazards, or the likely presence of hazardous contaminants, that—
(a) is likely to be relevant to the design and construction or alteration of the building or proposed building; and
(b) is known to the territorial authority; and
(c) is not apparent from the district plan under the Resource
Management Act 1991.
[100] I am satisfied therefore that there existed sufficient proximity between Mrs Cooper and the SDC for there to be a duty of care to ensure that the PIM issued was accurate. This raises two further and immediately pressing questions:
(a) does the duty require the SDC to disclose information in its records (said by the SDC to be archives), but not in its formal consenting systems? and
(b) does the duty extend to Monticello?
[101] In relation to the first question, I incline to the view that the duty does require the SDC to disclose information in its records, even historic records. The justification for this is as follows:
(a) members of the public rely on local authorities for information; (b) a fee is paid for the provision of the information;
(c) this is information within the sole control of the SDC (save for newspaper articles making reference to the dump);
(d)the former dump site used to be owned and managed by the SDC’s predecessors in time – this is not a piece of land for which the SDC has no records or for which contamination could only be discovered if a site investigation was undertaken. Quite simply, the SDC ought to have known about this site;
(e) the disclosure need not be extensive – it needs to draw the attention of the parties to the hazard, rather than to provide substantial details of it;
(f) the SDC knew that there were contaminated sites within its district;
(g)it concerns health and safety in relation to building, or future building, which is what the Building Act is concerned with. Three immediately obvious health and safety concerns might include the existence of heavy metals, leeching and a risk of subsidence;
(h)this conclusion is supported by authorities to which I have referred above in relation to LIMs, which I see to apply equally to PIMs:
(i)Westland District Council v York:78 “Only in one detail, the extent to which a local authority must search out information that might affect the property, is there anything novel about the claim, and we have assumed for present purposes that the duty extends so far.”
(ii)Henry (as trustees of the THP Trust) v Auckland Council:79 “[Section] … 44A(2)(a) is centrally concerned with putting the recipient of a LIM on notice of particular facts that are within the Council’s knowledge”.
(i)that members of the public would rely on the information contained in a PIM they have requested is reasonably foreseeable – after all, the
78 Westland District Council v York [2014] NZCA 59 at [24].
79 Henry (as trustees of the THP Trust) v Auckland Council [2014] NZHC 435.
PIM must disclose special features of the land. That is one of the express purposes for which they exist.
[102] Extensive submissions were advanced before me on the impact of the Public Records Act, the Resource Management Act, the Local Government Official Information and Meetings Act, the Health Act, and the Resource Management (National Environmental Standard for Assessing and Managing Contaminants in Soil to Protect Human Health) Regulations 2011. While these all plainly have some bearing upon the case, and I have been cognisant of them, the PIM argument arises in relation to a regime constituted by the Building Act. On that basis alone, I have found that there is a sufficiently proximate relationship between the SDC and Mrs Cooper to warrant the recognition of a prima facie duty of care.
[103] Indeed, the other statutes referred above, it seems to me, will not generally be capable of founding a sufficiently proximate relationship. They are broad duties, owed to a very wide group of people, to simply keep records. As I have mentioned above, not every failure to keep a record prescribed by legislation is actionable per se. In any event, this is not a case where I need to explore this issue in any detail.
[104] Though I have reached the conclusion that there would be a sufficiently proximate relationship between the SDC and Mrs Cooper, I have also concluded that there is insufficient proximity between the SDC and Monticello in relation to the issuing of the PIM here to justify the recognition of a broader duty of care. There are two primary reasons for this:
(a) PIMs are requested by the owners of land. No broader audience has standing to request a PIM. Thus, unlike LIMs, there is a clear legislative policy that a local authority’s responsibility is to the owner of the property, not to anyone else; and
(b)the frame of reference for a PIM is the individual building project for which a building consent is needed. In this case, that work was to do with underground sewer services. The PIM was not requested for building work or subdivision purposes.
[105] It would thus be counter to a clear legislative policy to hold that there is a sufficiently proximate relationship between a local authority and a third party relying on a PIM. In reaching this conclusion, it is irrelevant, in my view, whether the SDC might have known that the PIM was in practical terms requested by some party other than Mrs Cooper. The PIM application was made by her, or on her behalf, as the owner of the property concerned.
Broader policy considerations – Project Information Memoranda (PIMs)
[106] Because I have concluded there is insufficient proximity between the SDC and Monticello with regard to the issuing of the PIM here, I need not move on to consider whether policy considerations tend against the imposition of a duty. However, I make two general observations which, to my mind, would nevertheless support the general imposition of a duty of care:
(a) first, in my judgment, no floodgates argument applies here. The category of land in which this situation will arise is comparatively limited. It would be confined to those situations where the local authority has records of a contaminated site, but has no ready access to those records. There is no requirement, as I see it, to go out and investigate sites. Further, though there may be a substantial number of contaminated sites within a district, the proportion of those sites will be low as compared to uncontaminated sites.
(b)second, this is an issue which ultimately concerns the health and safety of a potentially large group of many people. I have mentioned this above. Where contamination is a concern, and the Council has records of it, then it would appear to me to support the imposition of a duty of care.
Remaining elements of the case
[107] Before I turn to this particular aspect of the present case, several additional matters should be mentioned for completeness. As best I can tell further allegations Monticello has endeavoured to advance here are that at some earlier stage, the SDC
should have first, searched its archives to record any contamination of the Land as an adverse feature and secondly, embarked on its HAIL project of identifying all contaminated sites in its region. The failure to do so is suggested as further negligence. On this approach, however, I am satisfied that the SDC did not act negligently in any way in dealing with Monticello itself – for example, when dealing with any LIM or PIM which may have been (but was not) sought by Monticello or in dealing with the resource consent application itself. In my view, these earlier acts of alleged negligence do not involve a proximate relationship between Monticello and the SDC in the circumstances prevailing here. If at all, they would only involve a duty of care to the world at large – specifically a duty of care towards existing or potential property owners in the Selwyn District. That does not involve a proximate relationship here. Moreover, the alleged negligence in these actions or inactions on the part of the SDC would have occurred at some earlier point in time and not at the stage when a LIM or PIM were sought or when the resource consent was applied for. And, in any event, the appropriate mechanism for SDC to provide advice of the historic landfill directly to Monticello would have been in a LIM and clearly one was not sought.
[108] For these reasons, these additional alleged duties of care as formulated by Monticello also cannot exist to justify a claim in negligence in this case. Finally, there seems also in one sense to be pleaded by Monticello here what might be seen as an alternative claim for breach of statutory duty on the part of SDC but, as I see it, this adds nothing to its claim in negligence and I do not propose to consider it further.
[109] Returning to address the remaining elements required in this case, because of the conclusion I have reached above on the duty of care issue, I do not need to consider whether the SDC breached any such duty, whether any breach caused the damage as claimed, or whether the damage is too remote.
[110] However, I do observe that had I got to these stages I would have had a range of further concerns. The first concern would be regarding Monticello not undertaking due diligence (no LIM was obtained and no site investigation undertaken); the second relates to the fact that, once discovered by Monticello, the
SDC was not informed of the dump site in contravention of cl. 43 of the resource consent; and the third concerns the fact that the contaminated portion of the site was substantially excavated (with the increasingly adverse consequences this attracted) without consultation with the SDC, or its permission.
Outcome
[111] For all the reasons I have outlined above, it will be apparent that Monticello’s claim fails and I dismiss it. The SDC owed no duty of care to Monticello in issuing the resource consent to it or the PIM which was issued to Mrs Cooper. Because no LIM was sought or obtained, this cannot found or support the existence of a duty.
Costs
[112] The SDC has succeeded in defending this claim. It is entitled to costs in the usual way. Without deciding the matter, my initial view is that costs should follow the event on a 2B basis with certification for second counsel. However, if the parties cannot agree on costs they are to file memoranda (not exceeding five pages) in accordance with the following timetable:
(a) Monticello within 20 working days; and
(b) The SDC within 20 working days thereafter.
In the absence of either party, indicating they wish to be heard on the question of costs, I will then determine costs on the papers.
...................................................
Gendall J
Solicitors:
Malley & Co, Christchurch
Adderley Head, Christchurch
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