Mt Wellington Race Park Club Incorporated v Auckland Council
[2020] NZHC 1245
•5 June 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-001373
[2020] NZHC 1245
UNDER the Judicial Review Procedure Act 2016 BETWEEN
MT WELLINGTON RACE PARK CLUB INCORPORATED
Applicant
AND
AUCKLAND COUNCIL
First Respondent
AUCKLAND TRANSPORT
Second RespondentINDEPENDENT TRAFFIC CONTROL LIMITED
Third Respondent
Hearing: 18 and 19 May 2020 Appearances:
W D McKenzie for Applicant
A M Adams and M P Hardy for First and Second Respondents M D Lloyd for Third Respondent
Judgment:
5 June 2020
JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie On 5 June 2020 at 4.00 pm
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Date:…………………………
Solicitors/counsel:
Kidd Black Law/S Ryan and W D McKenzie Meredith Connell, Auckland
M D Lloyd, Auckland
MT WELLINGTON RACE PARK CLUB INC v AUCKLAND COUNCIL [2020] NZHC 1245 [5 June 2020]
Introduction [1]
Background [5]
The property – purchase, ownership and designations [5]
Development of the property – the leases [13]
KSMW’s use of the property [23]
Termination of the KSMW lease [27]
The agreement to lease with ITC/protests by the other users [35]
The proceedings and the undertaking [49]
Is the property a park for the purposes of s 138 of the Act? [55]
Section 138 [55]
The Interpretation Act 1999 [65]
The text of s 138 [66]
(i)The plain meaning of the word “park” [66]
(ii)Use – by whom? [69]
(iii)Used principally [79]
The statutory purpose [87]
Conclusion – Park [93]
Did the Council and AT, in effect, discharge the obligation to consult prior to entering into the agreement to lease with ITC? [96]
Relief [105]
Result [113]
Costs [114]
Introduction
[1] On 31 May 2019, the first respondent, Auckland Council (the Council), entered into an agreement to lease a property situated at 39A and 39B Tainui Road, Mt Wellington, Auckland, to the third respondent, Independent Traffic Control Ltd (ITC).
[2] The applicant, Mt Wellington Race Park Club Incorporated (MWRPC), asserts that the property is a park and that, pursuant to s 138 of the Local Government Act 2002 (the Act), the Council should have consulted on its proposal to lease the property. It says that the Council did not do so. It seeks a declaration that the Council has disposed of the property in contravention of s 138 and an order in the nature of certiorari quashing the agreement to lease between the Council and ITC.
[3] The Council and the second respondent, Auckland Transport (AT) (which is a council-controlled organisation constituted pursuant to part 4 of the Local Government (Auckland Council) Act 2009 and which has control of the property on behalf of the Council), say that the property is not a park in terms of s 138 of the Act. In the alternative, and if they are wrong and the Court finds that the property is a park, they say they discharged the obligation to consult prior to agreeing to lease the property. Further, they say that, in any event, relief should, in the circumstances of this case, be declined.
[4] ITC abides the decision of the Court on the principle issue – whether or not the property is a park – and on the related issue of whether or not the Council and AT consulted, but it also says that MWRPC should not be entitled to relief.
Background
The property – purchase, ownership and designations
[5] The leased property comprises 20,620 square metres. It is made up of part of 39A Tainui Road (about 2,100 square metres) and the whole of 39B Tainui Road (approximately 18,520 square metres). It is located in an industrial area near Mt Wellington. It is surrounded by industrial lots and is zoned for light industrial use under the Auckland Unitary Plan.
[6] The Crown purchased the property in 1957 for railway purposes. By the 1990’s the property was no longer required for that purpose and instead it was designated for a future road. In 1998, it was offered for auction by the Crown. It was acquired by the Council’s predecessor, the Auckland City Council (the ACC) on behalf of the Auckland Regional Roading Designation Fund for $980,000 which was considered to be its then market value. The Fund was dissolved a few years later and, in June 2009, the ACC purchased the property from the Fund for $4.8 million, using funds allocated for a proposed roading project known as the Auckland-Manukau Eastern Transport Initiative.
[7] The Council was constituted in November 2010 and the property then vested in it.1
[8] In 2011, the Council transferred management and control of the property to AT. The title to the property however remained in the name of the Council.
[9]The end result was that, by 2012, the property:
(a)was owned by the Council;
(b)was managed and controlled by AT; and
(c)was designated for a future road.
[10] The roading designation is still in place. It is now found in the Auckland Unitary Plan. The designation protects the proposed route of the roading project referred to above – the Auckland-Manukau Eastern Transport Initiative. However, that project has evolved over time and the property is now more likely to be required for another roading project known as the Merton-Morrin Link. This project is not yet funded but is nevertheless scheduled for delivery in 8 to 10 years’ time. It is not clear how much of the property will be required for the Merton-Morrin Link. Current plans suggest that only a relatively small portion of the property will be needed.
1 Local Government (Tamaki Makaurau Reorganisation) Act 2009, s 35.
[11] Within the Council, the property falls into an asset category known as “non- service” commercial land. This reflects the fact that the land is not currently used for the provision of Council infrastructure or services. It is the Council’s and AT’s expectation that a commercial return should be obtained from all non-service commercial land to help fund Auckland’s infrastructure and to ease the rating burden.
[12] Another Council controlled organisation, Panuku Development Auckland (Panuku), acts as the commercial property agent for both the Council and AT. Panuku’s mandate requires it to seek to obtain a commercial return from non-service properties. It was involved in entering into the agreement to lease the property to ITC.
Development of the property – the leases
[13] A dirt/grass go-kart (or kart) track was formed on the property in the late 1950s/early 1960s. The track was sealed later in the 1960s and it has been resurfaced on a number of occasions since. The track is now constructed of asphalt, approximately five metres in width. It covers an area of about 1.1 hectares. The track has two configurations – a relatively open track using a bypass section and a tighter track using an inner horseshoe bend section. The track is sanctioned for use in both directions. This increases its flexibility.
[14] The track was initially used by a club known as the Auckland Amateur Go- Kart Club. On 28 September 1976, the Mt Wellington Kart Club was incorporated and it took over the management and control of the track. It changed its name in January 2007 to KartSport Mt Wellington Incorporated (KSMW).
[15] The property was leased to KSMW from 1976. It seems likely that the initial lease was with the Crown and it is common ground that the ACC bought the property subject to the lease.
[16] In 1990, two buildings were moved onto part of the property. They were donated to KSMW and they served as its clubrooms.
[17] The property is fenced on three sides with a chain link fence, about two metres high, and with barbed wire running along the top. The fourth side of the property is
bounded by railway tracks. Access to the property is possible through two gates which were kept locked except during events. There is internal fencing around the kart track to separate spectators from activities taking place on the track. There is no seating so spectators tended to stand in areas behind the internal fences to watch. There is parking available on a grassed bank and on a sealed area borrowed from a neighbouring container storage company.
[18] KSMW financed and undertook all maintenance and upkeep of the property. The cost of maintenance was approximately $20,000 per annum. Most maintenance was carried out by committee and club members.
[19] In 2009, a new lease was entered into between the ACC and KSMW. The property was subject to this lease when it vested in the Council in 2010.
[20] The lease was for a two year term, with one further right of renewal for a year. It was due to finally expire on 1 January 2012, at which point KSMW agreed it would vacate the property and move to a new motor sport venue to be established by the Council in South Auckland known as the Colin Dale Park. The rent was a concessionary rent – $15,000 per annum. The permitted use specified in the lease was for a “Karting Club”. KSMW was required to maintain its own public risk insurance cover; it was required to erect and maintain fences on the boundaries of the property; there was a prohibition against sub-letting or assignment; KSMW agreed to occupy and use the land at its own risk; it released the ACC from all claims and demands and it agreed to indemnify the ACC against any claims ACC might become liable for. Given the roading designation, cl 10 of the lease read as follows:
If the lessor should at any time during the term of this lease, require possession of any part or the whole of the land for roading purposes, the lessor shall be entitled to terminate this lease as to the part or whole required by the lessor, by giving it six (6) months’ notice in writing to the lessee. Upon the expiry of such notice the lease will immediate terminate in respect of the part of whole of land to which the notice relates and the lessee shall yield up vacant possession of that part or whole of the land to the lessor …
The lease went on to provide that if the ACC permitted KSMW to remain in occupation after the expiration of the lease term, the occupation was to be a monthly tenancy terminable on one month’s written notice.
[21] KSMW was aware that the property had been purchased by the ACC for roading purposes. It was also aware that the ACC was keen to increase the rental to the commercial market rate. KSMW accepted that it had no long-term security of tenure at the property.
[22] As noted, the lease was due to expire on 1 January 2012. At KSMW’s request, the ACC permitted the lease to roll over thereafter on a monthly basis.
KSMW’s use of the property
[23] KSMW’s objects are set out in its constitution. Relevantly, they read as follows:
The objects of the club are to encourage, foster and develop the amateur sport of Karting and to protect the interests of the members, owners, drivers, parents, guardians, officials, volunteers, trade and others taking part in the sport …
KSMW’s members were and are kart racing drivers and associated family members. It currently has 110 members. The primary reason for being a member is to participate in kart racing practices and race events. Up until October 2018, KSMW members used the track on the property and the affidavit evidence suggests that the track served as a “nursery ground” for many highly successful motor sport drivers.
[24] KSMW race meetings were held on the property on average one weekend every month, on both Saturdays and Sundays, for 11 months of the year. Competitor numbers ranged from 40 to 80 in the winter months, to in excess of 250 drivers for high profile events. Generally, race meetings involved 8 – 10 classes in different age groups and horse-power ratings. There were also scheduled practice days held during the week at times determined by the Committee. Members of KSMW could use the track on a casual basis if it was not booked for any other use. To do so, a member had to pay a “key bond” and a rental fee to become a “Practice Key” holder.
[25] KSMW restricted and controlled access to the property. It permitted others to use it on occasion. On scheduled practice days, members from other KartSport NZ affiliated clubs could use the track for practice, provided they met KartSport NZ’s rules. On a one-off basis a KartSport NZ licence holder could “day hire” a key from
an executive committee member for $35 a day. From time to time, when the property was not required for karting, KSMW granted permission for non-karting groups to use the property. These arrangements were informal and they were often made orally. Over the years other users (jointly referred to as the “other users”) included:
(a)the Mt Wellington Roller Sports Club. It used the track on Wednesday nights from 6 – 7pm through summer for roller blading practice. It did not pay for this use;
(b)the University of Auckland Formula SAE Team. It occasionally used the track for trialling cars built by students. It could only access the property if a KSMW committee member was on-site and then only during work hours to minimise disruption to KSMW members. It did not pay a fee either;
(c)the Auckland Motorcycle Club (the AMCC). It became a relatively regular user of the property for a sport known as “bucket racing” (a type of miniature motorcycle racing). KSMW allowed AMCC to use the property one weekend every month for eight months of the year and it invoiced AMCC $500 per event; and
(d)other occasional users, such as cyclists from a local school.
[26] KSMW did not hire the track to members of the public on a casual basis. Nor was the property generally accessible to members of the public. However, when KSMW held scheduled practice days and race events, it was standard practice to leave the gates open for participants and so that spectators could access the property. Spectators were usually family members or other people known to participants. It was uncommon for members of the general public to attend.
Termination of the KSMW lease
[27] Brent Robb, who is the president of KSMW, became involved with KSMW in 2012. He has confirmed that KSMW always understood that it needed to move on from the property in the medium term. Mr Robb has deposed that he had various
conversations over the years with representatives of the other users about KSMW’s plans and that he informed them that KSMW’s tenancy was unlikely to be long-term. Mr Robb also had discussions with representatives of Panuku on various occasions between 2012 and 2018 about the termination of the KSMW lease, interim lease arrangements and the proposal that KSMW should relocate to the Colin Dale Park when it became available. These discussions took place on the understanding that Colin Dale Park would ultimately provide a replacement venue for the establishment of a new karting track. On various occasions KSMW told Panuku that it was able to move by the end of 2013, 2015 and 2017.
[28] Panuku obtained a rental valuation of the property in March 2018. Its market rental was assessed at $285,000. An internal memorandum was circulated within the ACC recommending that the lease to KSMW should be terminated, and that Panuku should seek to find a new commercial tenant for the property, prepared to pay its market rental.
[29] Jane Small, AT’s Group Manager, Property and Planning, sent a letter to the Council’s Chief Executive, Stephen Town, on 12 June 2018 recommending that:
(a)Panuku be instructed to serve reasonable notice on KSMW requiring it to vacate the property; and
(b)steps be taken to promote the property to the market.
Mr Town, through his Executive Assistant, endorsed this recommendation on 15 June 2018.
[30] Panuku contacted KSMW in mid-2018 and advised it that the Council wished to move ahead with its plans to obtain a commercial tenant for the property by the end of that year. This advice had been anticipated by KSMW. It had accepted that it was likely that it would have to vacate the property prior to the completion of Colin Dale Park and it had earlier approached another entity, KartSport Auckland Incorporated, which uses a kart track at another Council owned property known as the Rosebank Domain in Avondale. KSMW had been able to reach an agreement with KartSport
Auckland under which its members could use the Rosebank Domain track on an interim basis.
[31] On 20 June 2018, Panuku sent a formal notice to KSMW terminating the tenancy of the property on three months’ notice and requesting that KSMW vacate by 21 September 2018. Mr Robb promptly advised representatives of the AMCC, the University of Auckland Formula SAE Team and the Mt Wellington Roller Sports Club of this.
[32] On or around 21 September 2018, Liam Venter, of AMCC, contacted Mr Robb and asked him whether KSMW would be interested in continuing its use of the property if the AMCC could negotiate an extension with the Council. Mr Robb indicated that, subject to financial considerations, KSMW would be happy to continue its occupation, but that it was focused on the Colin Dale Park opportunity.
[33] In the end, KSMW sought an extension to the termination date. Panuku agreed and the termination date was extended to 12 October 2018. KSMW vacated the property on that date. Its members have since been using the kart track at the Rosebank Domain.
[34] Plans for the Colin Dale Park have progressed and, in November 2018, the Council committed $8.9 million so that the necessary enabling works could proceed. KSMW has been negotiating with the Council as part of a broader group to sign up what is known as a community lease for part of Colin Dale Park. It has organised funding to build a new kart track and supporting club rooms as soon as the lease is finalised.
The agreement to lease with ITC/protests by the other users
[35] Following the termination of KSMW’s tenancy in October 2018, Panuku started looking for a commercial tenant for the property. ITC emerged as a potential tenant and Panuku negotiated with it through until mid-2019.
[36] In the interim, Mr Venter had various conversations with Council employees. He was concerned that AMCC would lose a venue for its bucket racing. The Council’s
Parks Department endeavoured to assist the AMCC to find an alternative venue until Colin Dale Park became available. Various possibilities were canvassed, including that the AMCC build a track at Ardmore Aerodrome, that it locate to Colin Dale Park, or that it use the Rosebank Domain track. The AMCC was offered track time at the Rosebank Domain but that offer was not taken up. Eventually Mr Venter became frustrated with what he considered to be the Council’s inactivity, and he and others decided to stage a publicity stunt by running a mock race in Aotea Square. This stunt received media coverage.
[37] Mr Venter and others also canvassed local board members, councillors, the Mayor’s office and the Minister of Local Government. The general tenor of their various communications was that the AMCC and the other users wanted to be allowed to continue using the track on the property until the Colin Dale Park facility became available.
[38] After much discussion and many attempts to placate the other users, a meeting was arranged on 26 March 2019 by Councillor Penny Hulse. At this stage the Council still had the opportunity to change its course. The meeting was attended by representatives of the various Council groups involved. Neither Mr Venter nor any other representative of the other users was invited. AMCC’s request was discussed. It was agreed that the Council should continue with its plan to seek a commercial tenant for the property.
[39] Mr Venter was not deterred. On 16 April 2019, he gave a presentation to the Council’s Finance and Performance Committee. The Committee resolved to receive Mr Venter’s presentation and requested that Council staff should work with the AMCC on alternative options which might be available for it.
[40] Mr Venter and others also engaged with Panuku and its board members. Mr Venter attended a Panuku board meeting on 26 April 2019 and he was given an opportunity to present the AMCC’s case. In the course of doing so, he mentioned the possibility that the AMCC might be prepared to lease the property on a commercial basis. To this end, on 1 May 2019, Panuku made a copy of the rental valuation it had obtained available to Mr Venter. Panuku asked Mr Venter to let it know by Wednesday
15 May 2019 whether the AMCC was interested in pursuing a commercial lease of the property. Unfortunately, that date was given in error and, in a subsequent email, it was amended to Wednesday to 8 May 2019. In the event AMCC did not express an interest in taking a commercial lease of the property.
[41] On 7 May 2019, a councillor, Councillor Wayne Walker, who had earlier expressed a preference that leasing negotiations should be halted, sent a letter to the Council’s Chief Executive, the CEO of AT, the CEO of Panuku and various other senior Council employees, expressing concern that there were no immediate alternative locations available for the other users, noting that Rosebank Domain did not have sufficient scheduling capacity, and recording that Colin Dale Park was some time off and subject to financial considerations. He expressed concern that the other users had not been adequately consulted and he referred to s 138 of the Act. He expressed the view that the property had been used for many years as a park, that the decision to lease it to a commercial entity constituted a disposal and that there had been inadequate consultation. He offered his opinion that the “current recreational users should be prioritised ahead of any commercial use”.
[42]This was the first time that s 138 had been raised.
[43] On 8 May 2019, the President of the AMCC, Paul Stewart, wrote to the Chief Executives of the Council and Panuku expressing the view that the Council had acted unlawfully by failing to consult. On 10 May 2019, Mr Venter publicly threatened legal action against the Council in a media interview. Mr Venter initially deposed that Mr Stewart also wrote to the Council’s Chief Executive, Mr Town, on 10 May 2019, advising that the AMCC intended to lodge an application in this Court seeking a declaration as to the lawfulness of Panuku’s proposed actions in entering into a commercial lease of the property. The Council denied receiving any such letter and, in an affidavit in reply, Mr Venter acknowledged that, inadvertently, the letter had not been sent.
[44] The Council took the precaution of obtaining a legal opinion from Bram van Melle, the Manager of Property and Commercial – Legal Services, within the Council. Mr van Melle considered the issues raised by Councillor Walker, concluded that the
property was not a park under s 138 of the Act, and expressed the view that the Council was not required to consult on the proposal to lease the property to a commercial tenant. He also opined that, in any event, the Council appeared to have taken all relevant views and preferences into account, and that it had satisfied all relevant decision making requirements under the Act when it decided not to grant a further discounted lease to KSMW or to any other community organisation. This opinion was sent to relevant Council officers on 31 May 2019.
[45] The Council was under some time pressure. On 29 May 2019, ITC’s director, Glen Ruma, had advised Panuku that its offer to lease the property was unconditional. On 30 May 2019, Mr Ruma further advised Panuku that ITC was under pressure from an alternative landlord to confirm a lease with him, and that he (Mr Ruma) had postponed a trip to Europe to conclude a deal. Panuku did not wish to lose ITC as a prospective tenant. Accordingly, on 31 May 2019, and following receipt of the legal opinion, Panuku’s Chief Executive sought final instructions from AT’s Chief Executive and from the Council’s Chief Executive. Confirmation was given to proceed and, on the same day, Panuku signed an unconditional agreement to lease the property to ITC.
[46] The agreement to lease records that ITC is to lease the property for a term of seven years, commencing on 1 January 2020 and expiring on 31 December 2026. There is to be a right of renewal for one further period of seven years. The lease is to provide that the Council can, for any reason, terminate the lease on 12 months’ notice but only after the lease has been renewed. In effect, ITC has a guaranteed term of eight years. Rental for the first two years is $150,000 plus GST per annum, rising to
$290,000 plus GST per annum for the years January 2024 to December 2026. The rental during any renewal is to be market rent as at the date of renewal with a CPI adjustment annually.
[47] The lower rental in the earlier years reflects the fact that significant capital works are to be undertaken on the property by ITC at its expense. Those works will be owned by the Council without payment of any compensation to ITC on termination. Panuku estimates that these works are valued at approximately $600,000 and it
considers that they will substantially increase the reversionary value of the property to the Council (and AT).
[48] A formal lease has not as yet been signed – presumably because of these proceedings. ITC has however paid the Council an agreed deposit of $25,000 and it has had access to the property. It has spent $146,870 in preparing the property for its tenancy. It has not however undertaken any works which effect the track on the property.
The proceedings and the undertaking
[49] MWRPC was incorporated under the Incorporated Societies Act 1908 on 2 July 2019. Its President is Mr Venter. He is also a member of the AMCC, and he was a member of KSMW in the 1990s. He raced on the track on the property for several years through until the year 2000. Mr Venter has deposed that MWRPC members are primarily past users of the track, as well as supporters, but that membership is not limited to past users of the track. Both the AMCC and the Mt Wellington Roller Skating Club are members.
[50] The proceedings were filed and served on 12 July 2019. Inter alia, MWRPC asserts that:
(a)the whole of the property was used exclusively for recreational purposes – namely motor sport and other racing sports – from the mid- 1970s until October 2018. There is express reference to the use of the property by KSMW, the AMCC, the University of Auckland Formula SAE Team, the Mt Wellington Roller Sports Club and others;
(b)the Council was informed by these various entities, and by Councillor Walker, that it was required by s 138 of the Act to consult on its proposal to lease the property;
(c)the Council provided the other users with its legal opinion regarding the application of s 138;
(d)the legal opinion is incorrect;
(e)the property is a park by reason of its use principally for recreational purposes;
(f)the Council disposed of the property by entering into the (agreement to) lease to ITC for non-park purposes on 31 May 2019; and
(g)this has the effect of discontinuing the recreational use without prior consultation.
A declaration was sought that the Council has disposed of the property in contravention of s 138. Initially, orders were also sought to prevent use of the property for any purpose other than a park and to declare that s 138 applies to land owned by Council controlled organisations, if s 138 would apply if the land were owned by the Council itself.
[51]On 8 August 2019, ITC offered an undertaking in the following terms:
[ITC] hereby undertakes that it will not undertake any works on or do anything to affect the race track on the property described as part lot 2-3 deposited plan 11895, title NA64A/611 pending determination of the proceedings in the High Court at Auckland in CIV-2019-404-1373.
[52] The Council and AT filed a defence. So did ITC. ITC raised two affirmative defences – prejudice to it as an innocent third party and prejudice to innocent third party ratepayers.
[53] On the morning of the hearing, MWRPC sought leave to file an amended statement of claim. The Council, AT and ITC did not object and the document came in by consent. The amendment altered the prayer for relief. MWRPC still sought a declaration that the Council had disposed of the property in contravention of section 138 of the Act. It also sought the following:
…
B.In the event of the Court finding that … [the] Council has disposed of the Property in contravention of section 138 of the Local Government Act 2002, then:
a.An order in the nature of certiorari quashing or setting aside the lease entered into between [the] Council and [ITC]; and
b.Orders giving directions as to the proper legal principles to be applied by the … Council in the event of any reconsideration by it.
…
Further orders were also sought but during the hearing, MWRPC abandoned any claim to these further orders.
[54] Against this necessarily potted summary of the relatively convoluted background to these proceedings, I turn to consider the first question raised by the pleadings.
Is the property a park for the purposes of s 138 of the Act?
Section 138
[55]Section 138 provides as follows:
138 Restriction on disposal of parks (by sale or otherwise)
(1)A local authority proposing to sell or otherwise dispose of a park or part of a park must consult on the proposal before it sells or disposes of, or agrees to sell or dispose of, the park or part of the park.
(2)In this section,—
dispose of, in relation to a park, includes the granting of a lease for more than 6 months that has the effect of excluding or substantially interfering with the public’s access to the park
park—
(a)means land acquired or used principally for community, recreational, environmental, cultural, or spiritual purposes; but
(b)does not include land that is held as a reserve, or part of a reserve, under the Reserves Act 1977.
[56] Section 138 is contained in Part 7 of the Act, under the heading “[s]pecific obligations and restrictions on local authorities and other persons”. One of the
restrictions is “on [the] disposal of parks, reserves, and endowment properties, including provision for the protection of parks and reserves from disposal”.2 Subpart 3 of Part 7 details the disposal restrictions. Section 138 deals with parks, ss 139 and 139A with regional parks3 and ss 140 and 141 with endowment properties.
[57] The Council submitted that s 138 had its origin in a Cabinet Policy Committee paper which discussed three options for protecting council owned regional parks from disposal – namely prohibition, referendum and consultation.4 The paper recommended that where a regional council wished to sell land which formed part or all of a park, it should first be required to undertake a process of consultation.5 It went on to recommend that, as regional councils have the same powers under the Act with respect to parks as city/district councils, the requirement to consult should apply to all councils. This recommendation was accepted by Cabinet.6
[58] Whether this recommendation drove the drafting of the Act is however speculation and, in any event, it does not assist in deciding whether the property is a park as defined in the section.
[59] Counsel did advise me that there is nothing in Hansard to suggest that Parliament gave any express consideration to the definition of the word “park” when the Act was passed.
[60] It is noteworthy that, as initially enacted, s 138 did not define the words “dispose of”. That definition was added when the Act was amended in 2006.7
2 Section 123(d).
3 The definition of the words “regional park” in s 139 is substantially similar to the definition of the word “park” in s 138.
4 Cabinet Minute “Local Government Act Review: Paper 6 – Auckland Issues, Regional Parks” (8 October 2001) CAB Min (01) 31/4C.
5 At [25].
6 At [10].
7 Local Government Act 2002 Amendment Act 2006, s 13.
[61] It was common ground that the Council disposed of the property by agreeing to lease it to ITC for a term of more than six months.8 It was also common ground that the property was not acquired as a park and that karting, bucket racing, roller blading and cycling are recreational activities.
[62] Mr McKenzie, for MWRPC, submitted that the property is a park pursuant to the definition contained in s 138 because it was at all relevant times used principally for recreational purposes. He relied on what he argued is the plain and natural meaning of the word “park” as defined, submitting that the definition gives effect to the purposes of the Act and in particular ensures that local authorities act democratically and accountably.
[63] Ms Adams, for the Council and AT, submitted that the property is not a park for two main reasons:
(a)the property was not accessible to the public for any of the purposes specified in s 138. Instead it was in the exclusive possession of KSMW;
(b)the property has always been and still is held for the principal purpose of a road. Any temporary or interim use for a recreational purpose or purposes does not render it a park, because a temporary use is not a principal use under s 138.
[64] While it is not determinative, it is helpful to set out briefly how the Council has treated the property. David Stewart, who is head of Active Recreation in the Council’s Parks, Sports and Recreations Department, filed an affidavit which provided an overview of Council parks and sports facilities and the applicable policy framework. He confirmed that the property has never been part of the Council’s parks and facilities network, because it was acquired by the Council (through ACC) for a future road and has been recognised as non-service commercial land pending its use
8 An agreement to lease can be enforced by action, provided it is in writing and signed by the party charged – Property Law Act 2007, s 24. Specific performance is available. Where the Court would order specific performance of an agreement to lease, the parties to the agreement are treated as if the formal lease has been executed – Walsh v Lonsdale (1882) 21 Ch. D 9 (CA); followed in New Zealand, e.g. in He v Hard to Find But Worth the Effort Quality Second Hand Books (Wellington) Ltd (in liq) [2008] NZCA 509, [2009] 1 NZLR 626.
for that purpose. Mr Stewart stated that park staff could not have treated the property as a Council park or sports facility without a democratic decision being made by councillors that it should be so treated and that a decision to that end would have to be based on criteria that are transparent and publicly available. He referred to various high level Council documents – the Auckland Plan 2050, the Parks and Open Spaces Strategic Action Plan, and the Sport and Recreation Strategic Plan – and noted that underneath these high level documents are various additional policies and plans. He expressed the view that it would be difficult to make the case under relevant Council policies that the property should be acquired for sports purposes, or that the Council should “invest” in a temporary community lease (on a non-commercial basis) with the other users.
The Interpretation Act 1999
[65] In seeking to interpret s 138, both counsel called in aid s 5 of the Interpretation Act 1999. It provides as follows:
5 Ascertaining meaning of legislation
(1)The meaning of an enactment must be ascertained from its text and in the light of its purpose.
(2)The matters that may be considered in ascertaining the meaning of an enactment include the indications provided in the enactment.
(3)Examples of those indications are preambles, the analysis, a table of contents, headings to Parts and sections, marginal notes, diagrams, graphics, examples and explanatory material, and the organisation and format of the enactment.
[66] The Supreme Court, summarising the purposive approach to interpretation mandated by s 5, has observed as follows:9
It is necessary to bear in mind that s 5 of the Interpretation Act 1999 makes text and purpose the key drivers of statutory interpretation. The meaning of an enactment must be ascertained from its text and in the light of its purpose. Even if the meaning of the text may appear plain in isolation of purpose, that meaning should always be cross checked against purpose in order to observe the dual requirements of s 5. In determining purpose the court must obviously have regard to both the immediate and the general legislative context. Of
9 Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR 767 at [22], and see [24] (citations omitted).
relevance too may be the social, commercial or other objective of the enactment.
The text of s 138
(i)The plain meaning of the word “park”
[67] The definition of the word “park” in s 138 – land acquired or used principally for community, recreational, environmental, cultural or spiritual purposes – is, on its face, exclusive (a “park means …”) and clear. Construed literally, it is very wide ranging and it is capable of extending to most, if not all land, owned by the Council. Ms Adams suggested various possibilities and others spring to mind – for example, Council land with a Scout hall on it (a community use); a Council-owned carpark used by skateboarders (a recreational use); a treed urban green strip used by pedestrians for shade (an environmental use); Council land leased to a private operator who uses it for an arts cinema (a cultural use); a street corner vested in the Council used by a person of religious persuasion as a speaker’s corner to advance religious views (a spiritual use). Interpreted literally, land used for each of these purposes would fall to be considered as a park in terms of the s 138 definition. This suggests that the meaning of the word “park” may not be so obvious.
[68]There are other difficulties with MWRPC’s plain meaning argument.
(a)The argument assumes that use by anyone for one or more of the defined purposes suffices. This poses the question – does the word “use” envisage use by somebody or some entity other than the council who acquired it?; and
(b)the argument does not address the word “principally”. The word principally raises the question – is land “used principally” for one of the s 138 defined purposes if the principal reason for which it was acquired and then held is a non-park purpose, but it is used in the interim for one or more of the defined purposes?
[69]I consider each of these issues in turn.
(ii)Use – by whom?
[70] The word “park” means land either acquired or used principally for one of the defined purposes. The restrictions imposed by s 138 arise when a local authority is proposing to sell or otherwise dispose of a park or part of a park. It follows that the word “acquired” must mean acquired by the local authority, otherwise the local authority would not be in a position to sell or otherwise dispose of the land. Section 138 applies not only to land acquired but also to land used. Acquisition and use are disjunctive and the section does not go on to say who the land must be used by. It seems to me to be likely that the user must also be the acquirer because it is the acquirer (and owner) who will determine how a property is used. If this is right, then it is arguable that it is the use being made of the land by the local authority that acquired it which is critical. The property at issue in this case was not used by the Council for any of the defined purposes. Rather, it was used by the Council for a commercial purpose – to generate a rental return pursuant to a lease. There is nothing to suggest that the Council ever resolved to use the property or any part of it for any other purpose. Section 138 would not apply, and the Council would be under no obligation to consult. This analysis feeds into the use of the word “principally” in the definition. I deal with this below at [79] – [86].
[71] Alternatively, it can be (and was) argued that the word “used” means used by the public. Such an interpretation is consistent with the definition of the words “dispose of” contained in s 138(2). Disposal, in relation to a park, is defined to include the granting of a lease for more than six months that “has the effect of excluding or substantially interfering with the public’s access to the park”. This suggests that, to be a park for the purposes of the section, land falling within the definition of the word “park” must have been used by the public principally for one or more of the defined purposes.
[72] This approach is consistent with broader interpretation principles. The word “park” is an ordinary English word. In common parlance a park is normally an area used by the public. The Shorter Oxford Dictionary defines the word “park” as, inter alia, meaning an “enclosed area for public recreation, usu. large and ornamentally
landscaped, esp. in or adjoining a city or town”.10 This follows through into legal usage. Stroud’s Judicial Dictionary of Words and Phrases cites the definition of “park” appearing Perrin v New York Central Railroad Co, being “a piece of ground inclosed for purposes of pleasure, exercise, amusement or ornament”.11 Butterworths Australian Legal Dictionary goes further and defines a park as “land used for public health, recreation, enjoyment and other public purposes of a like nature”.12 Similarly, Canadian Legal Words and Phrases defines a park as “a piece of ground set apart to be used by the public as a place for rest, recreation, exercise, pleasure, amusement and enjoyment”.13
[73] Neither counsels’ nor my research has identified any case where the word “park” has been considered in New Zealand.14
[74] In the United Kingdom, the Local Government Act 1972 (UK) imposes an obligation on “principal councils” to consult before disposing of “open space”. Open space is defined as “any land laid out as a public garden or used for the purpose of public recreation or land which is a disused burial ground”.15 In R v Doncaster Metropolitan Borough Council, Ex parte Braim16 McCullough J found that the respondent council’s decision to grant a lease of land to a private golf club without prior consultation was in breach of the Act, because the land had previously been used for the purpose of public recreation. This case is not particularly helpful because the relevant statute expressly refers to land used for the purpose of public recreation. It is
10 Shorter Oxford English Dictionary on Historical Principles (6th ed, Oxford University Press, Oxford, 2007) at 2104. See also The New Zealand Oxford Dictionary (Oxford University Press, Oxford, 2008) at 824.
11 Perrin v New York Central Railroad Co, 36 NY 126 (NY 1867) at 124, as cited in Stroud’s Judicial Dictionary of Words and Phrases (9th ed, Sweet & Maxwell, London, 2016) at 1804.
12 LexisNexis Butterworths Australian Legal Dictionary (2nd ed, Butterworths, 2016), citing Wotton v Wingecarribee Shire Council & Anor (1989) 68 LGRA 38 at 47.
13 Canadian Legal Words and Phrases (online ed, Lexis Advance), citing Winnipeg City v St Vital Rural Municipality [1945] 1 WWR 161 at 177-179; affirmed [1946] SCR 101.
14 Section 138 has been considered in three cases – Christchurch City Council v Link Company Ltd HC Christchurch CIV-2005-409-966, 13 February 2008; Friends of Marine Land of New Zealand Inc v Napier City Council [2012] NZHC 1070; Gulf Harbour Investments v Rodney District Council HC Auckland CIV-2006-404-505, 5 February 2009. None considered the definition of the word park. The Gulf Harbour case is considered below from [80].
15 Local Government Act 1972 (UK), s 123(2A); Town and Country Planning Act 1990 (UK), s 336(1).
16 R v Doncaster Metropolitan Borough Council, Ex p Braim (1987) 85 LGR 233, (1986) 57 P & CR 1 (QBD). See also R (on the application of Galaxy Land Ltd) v Durham County Council [2015] EWHC 16.
however noteworthy that the decision proceeds on the basis that the proposed lease of land to the private golf club was not consistent with the relevant land being used for the purposes of public recreation, and so was a disposal that triggered the obligation to consult.
[75] In Australia, the Courts have considered the nature of a park in a number of decisions. I note the following:
(a)In Module2 Pty Ltd v Brisbane City Council,17 the Supreme Court of Queensland was considering an application to review a decision of the respondent council seeking to resume (or take) land. The relevant statutory provision required that a notice of intention to resume land be in writing and further that it specify the particular purpose for which the land was required. The notice issued by the respondent council recorded that it wished to resume the land “for park purposes”. A statement of reasons in the notice recorded that the land was being used for community sport activities, and that facilities for an Australian Rules football club and for various schools were established on it. The notice stated that resumption of the land by the respondent council would enable the existing range of uses to continue. The issue before the Court was whether the purpose as set out in the notice to resume was for park purposes within the meaning of the relevant legislation. The Court referred to dictionary definitions which noted that a park is an area set aside for public use. It accepted that parks will often contain within their boundaries recreational and other facilities. The Court considered the fact that the respondent council contemplated that the land would continue to have on it a ground and clubhouse used by an Australian Rules football club and facilities used by schools and other entities for sporting purposes, did not lead to the conclusion that the intended use was not properly described as being for park purposes. It noted that the land would continue to be used for an existing range of community uses, including training, competition and social activities,
17 Module2 Pty Ltd v Brisbane City Council [2006] QSC 71.
as well as for passive recreation. It also noted that part of a waterway corridor was located on the land, and that it provided a setting for walking and other more passive forms of recreational activity.
(b)In Application of Willoughby City Council (as manager of the Talus Reserve Trust),18 the Supreme Court of New South Wales was dealing with land which was reserved for public recreation and was managed by a Reserve Trust. The applicant Council was responsible for managing the affairs of the Trust. There were eight tennis courts, a clubhouse and a carpark on the land, which were leased to private interests for commercial purposes. Various members of the public contended that the use and occupation of the Reserve by commercial interests was incompatible with the reservation of the land for public recreation and was thus unlawful. The Court had to consider whether the lease to the private interests was consistent with the reserved purpose of public recreation. The Court considered a number of Australian authorities, all to much the same end. It concluded that the lease of the property to the private interests was unlawful, as not being for or ancillary to the reserve purposed.19
While these cases dealt with very different legislative provisions, they both proceeded on the basis that a lease of land to private interests who use it for sporting or recreational purposes, is not a public, sporting or recreational use.
[76] In the present case, the property did not have the character or trappings of a park. It was not listed anywhere as a council park, and there was no signage suggesting that it was a park. Rather, it was to all intents and purposes a private kart track in the exclusive possession of the lessee, KSMW. The lease was on commercial terms, except that the rental was concessionary. KSMW was only entitled to use the property for the limited purpose of its karting club. It did not have the right to sublet and there was no obligation in the lease requiring it to allow the public access to the property. As I have noted above, the property was largely enclosed by perimeter fencing. It was
18 Application of Willoughby City Council (as manager of the Talus Reserve Trust) [2016] NSWSC 1717.
19 At [47] – [57].
used for the primary benefit of members of KSMW, and there was no general or unrestricted public access. The other users were permitted occasional access on the property but only on terms imposed by KSMW. Access to the property was controlled by KSMW and it was open to it to decide whether or not to allow the other users to use the property. If KSMW had denied access to any one or more of the other users, they could have had no recourse to the Council, to AT or to the Courts under s 138.
[77] The use of the property by KSMW pursuant to its lease for the recreational sport of kart racing, and the occasional use of the property by the other users for recreational purposes, does not make the property a park used by the public for recreational purposes.
[78] It follows in my view, that the property is not a park as defined in s 138, either because it was used by the Council for a commercial purpose and not one of the defined purposes, or because it was leased exclusively to KSMW and it was not used by the public for recreational purposes or for any of the other defined purposes.
(iii)Used principally
[79] There is an additional argument derived from the text of s 138 – namely that the property was not a park because it was, at all relevant times, held principally for the purposes of a road.
[80] Ms Adams argued that the words “acquired or used principally” in the definition of the word “park” suggest that land said to constitute a park has one principal purpose, which in any given case will be either the reason it was acquired or the use to which it is subsequently put but only following a deliberate decision to use it for that purpose. She relied on an earlier decision of this Court – Gulf Harbour Investments Ltd v Rodney District Council.20
[81] Mr McKenzie argued that the submission that land has only one principal use has no factual basis and that it cannot be found in the Act. He argued that land can be acquired for one purpose but then used for another, and that Gulf Harbour does not
20 Gulf Harbour Investments v Rodney District Council HC Auckland CIV-2006-404-505, 5 February 2009. On appeal, Gulf Harbour Investments Ltd v Rodney District Council [2010] NZCA 428.
suggest that land which is acquired or held for a principal non-park purpose, but which is used as a park in the meantime, cannot fall within the definition of the word “park” in s 138. It was also argued that the use of the property for a recreational purpose in this case was not an “accident of history”, but rather was pursuant to a deliberate decision, democratically made, to lease the property to KSMW for a recreational purpose.
[82] The word “principally” contained in the definition of the word “park” in s 138 seems to relate to both acquisition and use. It suggests that land can be acquired or used for multiple purposes, and that the restriction on disposition is only engaged where the land was acquired or used principally for one of the defined purposes. I agree with Mr McKenzie that land can be acquired for one principal purpose and that it can then be used for another purpose which then becomes the principal purpose, and that in both cases the restriction on disposition could come into play. It seems to me that what is in issue, on the facts of this case, is whether an incidental or temporary use, not formally endorsed by the Council as the local authority seeking to dispose of the land, can be described as a principal use.
[83] The Gulf Harbour case concerned reclaimed harbour land (Hammerhead Point) which had been vested in the respondent under dedicated legislation passed in 1997. It was subject to a statutory license that required that ultimately it be leased to the applicant company for commercial development as a marina. In the interim the land had been used for public recreation. In the course of his decision, Keane J considered whether s 138 applied to the land, and therefore to the proposed lease to the applicant company. The relevant portions of his judgment are as follows:
[87]The next question is whether the Council's duty to grant a lease for the term prescribed, five years with a right of renewal, constitutes the disposal of a park for the purposes of s 138 of the Local Government Act 2002 and imposes a duty to consult publicly before the lease is given. There can be no issue that a lease in the form prescribed constitutes a disposal. A lease in excess of six months qualifies: s 138(2). The issue is whether it is a park as that is defined “land acquired or used principally for community, recreation, environmental, cultural or spiritual purposes”.
[88]Hammerhead Point, like the marina as a whole, has a dual character. It is a reclamation, vested in the District Council under the 1977 Act, to serve the community, recreationally, perhaps environmentally. But
the Act also contemplates, as has happened, that any reclamation or development might be undertaken by a private developer on the Council's behalf and become a source of revenue for both. Indispensable to that is the grant of tenure to the developer by licence and lease.
[89]The 1977 Act authorises licensing and leasing expressly: ss 9 and 10. A licensee or lessee enjoys a right superior to any enjoyed by the public, even though the public does enjoy a right of access under s 11 to which any lease or licence must be subject. The Point cannot then be said to have been acquired “principally” for the purposes that characterise a park. The rights of tenure that [the applicant company] has now, or is entitled to under the development licence, must at least stand equally. That the Point has been “used” as a park since 1989 is an accident of history. Section 138 does not to my mind apply.
(emphasis added)
[84] In my judgement, the approach to s 138 adopted by Keane J is applicable in the present case. The land at issue in Gulf Harbour had been acquired for the principal purpose of lease to the applicant company for a commercial marina. That purpose had not been abandoned, notwithstanding that the land had been used for recreational or environmental purposes pending its use as a commercial marina. In the present case, the property was acquired by ACC for roading purposes. The evidence records that the decision to acquire the property for roading purposes was democratically made by elected members of the ACC, first in 1998 and again in 2009. The 1998 decision was made urgently by the Mayor, the Deputy Mayor and the chairs of two relevant committees. The 2009 decision was made by the ACC’s Finance and Strategy Committee following an earlier resolution of the Transport Committee. There is no evidence suggesting that either the ACC, or the Council as its successor, has ever formally resolved to use the property for any other purpose. Rather, it was leased out pending its use for roading purposes.
[85] Allowing the use of the property by a short-term lessee for recreational purposes until it is required for roading purposes does not, in my view, detract from or change the principal purpose for which it was acquired. Any interim or temporary use of the property, which has not been undertaken pursuant to any deliberate or formal Council decision but which is instead an “accident of history” (to use Keane J’s phrase), or perhaps more accurately in this case, an administrative concession, should not be held to give rise to consultation expectations by persons who could have had
no such expectation but for the fact that the interim or temporary lessee permitted them to use the property on an occasional basis. It would be odd if the other users could, by a side wind, claim the same expectation to be consulted as they would have if the land been acquired pursuant to a democratic decision made by councillors for the purpose of a park or if it had been used again pursuant to a democratic decision by councillors for one of the defined purposes. Administrative actions of council officers by permitting recreational use of land while it awaits use for its intended purpose, should not, in my judgement, create a de facto park. Otherwise councils would be disincentivised from making flexible concessions for the benefit of their communities, where to do so is not inconsistent with each council’s long-term intentions for its land. The use of the property by KSMW, and through it, by the other users, for recreational purposes, was, in my view, only an interim use, inconsistent with the principal purpose for which the property was acquired and held and there has been no decision to allow the property to be used for any of the defined purposes.
[86] In my judgement, the property cannot be considered to be a park for the purposes of s 138 on this basis as well.
The statutory purpose
[87] A word’s plain meaning, even if clear (which I do not consider to be the case) is not the end of the inquiry. The purpose of the relevant statute has to be considered as well.
[88] The purpose of the Act is to “provide for democratic and effective local government that recognises the diversity of New Zealand communities”,21 and the purpose of local government is to enable democratic local decision-making and action by and on behalf of communities, and to promote the social, economic, environmental and cultural wellbeing of communities in the present and for the future.22 Each local authority must give effect, in relation to its district, to the purpose of local government.
[89] Part 2 of the Act grants local authorities general capacity and competence. To this end s 12 authorises councils to do anything that a body corporate can do (subject
21 Local Government Act 2002, s 3.
22 Section 10.
to any other law and any obligation to act wholly or principally for the benefit of their districts). The general tenor is to empower councils to give effect to their purpose, subject to democratic control through the elected members. Councils can rely on their power of general competence to provide such services as they see fit, subject to the principles set out in the Act and to democratic oversight. Section 14 of the Act sets out those various principles. Relevantly, the section provides as follows:
14 Principles relating to local authorities
(1)In performing its role, a local authority must act in accordance with the following principles:
(a)a local authority should—
(i)conduct its business in an open, transparent, and democratically accountable manner; and
(ii)give effect to its identified priorities and desired outcomes in an efficient and effective manner:
(b)a local authority should make itself aware of, and should have regard to, the views of all of its communities; and
(c)when making a decision, a local authority should take account of—
(i)the diversity of the community, and the community’s interests, within its district or region; and
(ii)the interests of future as well as current communities; and
(iii)the likely impact of any decision on the interests referred to in subparagraphs (i) and (ii):
…
(f)a local authority should undertake any commercial transactions in accordance with sound business practices; and
…
(g)a local authority should ensure prudent stewardship and the efficient and effective use of its resources in the interests of its district or region, including by planning effectively for the future management of its assets; and
…
[90] In my judgement, the purpose of the Act (and the principles which local government must abide by) would be frustrated if an overbroad interpretation of the word “park” used in s 138 were to be adopted. As I have noted, an overbroad interpretation would capture most, if not all, council land, whether or not it was in the exclusive occupation of a lessee. It could detract from effective local government and undermine the expectation that councils undertake commercial transactions and ensure prudent stewardship and the effective and efficient use of their resources in the interests of their districts.
[91] Mr McKenzie argued that s 138 only generates an obligation of consultation. He submitted that “… the marginal cost and inconvenience of consulting on the disposal of one additional land holding is small …” and that consultation “ … presents no particular inconvenience …”. I do not accept this argument. First, if MWRPC’s interpretation of s 138 is preferred, the obligation of consultation could extend well beyond the property at issue in this case. Secondly, the obligations of councils in regard to consultation are set out in s 82 of the Act. They are neither insignificant nor without cost. Unless clearly mandated, the obligation to consult should not, in my view, be inferred too readily. It could potentially interfere with a council’s ability to act effectively and to use its land efficiently for its intended purpose and in the interests of the ratepayers. The time and cost of consultation could prevent commercial transactions from proceeding at all and place councils at a distinct disadvantage from other entities undertaking similar commercial transactions. By way of example, in the present case, the other users’ assertion of rights under s 138 has frustrated ITC’s wish to enter into the property it has agreed to lease; it has meant that ITC has been unable to fully utilise the improvements it has already made to the property; it has resulted in a loss of rental to the Council and AT (and indirectly to Auckland ratepayers); it has led to a situation where ITC is threatening a claim for damages against the Council. Imposing a duty of consultation in respect of most if not all council properties (if a literal interpretation of the work “park” is adopted) would be likely to become extremely burdensome and costly.
[92] Accordingly, in my judgement, the definition of the word “park” in s 138 cannot be given what MWRPC suggests is its plain and literal meaning.
Conclusion – Park
[93] Accordingly, I conclude that the property is not a park, as that word is defined in s 138 of the Act. The literal interpretation advanced by MWRPC is inconsistent with the text of the section, because adopting a literal interpretation would be too wide ranging and would extend to most if not all land owned by the Council, and/or because the land was not used by the Council or by the public for any of the defined purposes. Further, the land was not acquired principally for one or more of the defined purposes, and the Council has never resolved to use it for one of the defined purposes. In addition the literal interpretation advanced by MWRPC is inconsistent with the statutory purpose set out in the Act.
[94]Accordingly, I decline MWRPC’s application for judicial review.
[95] That is enough to dispose of this case, but for completeness, I briefly consider the other two key issues raised in the course of the hearing.
Did the Council and AT, in effect, discharge the obligation to consult prior to entering into the agreement to lease with ITC?
[96] Section 138 directs local authorities to consult in relation to proposals to dispose of parks. The section does not mandate any particular process of consultation, but it was common ground that if there is an obligation to consult, such obligation had to comply with the general principles of consultation set out in s 82 of the Act.
[97]Relevantly, s 82 provides as follows:
82 Principles of consultation
(1)Consultation that a local authority undertakes in relation to any decision or other matter must be undertaken, subject to subsections
(3) to (5), in accordance with the following principles:
(a)that persons who will or may be affected by, or have an interest in, the decision or matter should be provided by the local authority with reasonable access to relevant information in a manner and format that is appropriate to the preferences and needs of those persons:
(b)that persons who will or may be affected by, or have an interest in, the decision or matter should be encouraged by the local authority to present their views to the local authority:
(c)that persons who are invited or encouraged to present their views to the local authority should be given clear information by the local authority concerning the purpose of the consultation and the scope of the decisions to be taken following the consideration of views presented:
(d)that persons who wish to have their views on the decision or matter considered by the local authority should be provided by the local authority with a reasonable opportunity to present those views to the local authority in a manner and format that is appropriate to the preferences and needs of those persons:
(e)that the views presented to the local authority should be received by the local authority with an open mind and should be given by the local authority, in making a decision, due consideration:
(f)that persons who present views to the local authority should have access to a clear record or description of relevant decisions made by the local authority and explanatory material relating to the decisions, which may include, for example, reports relating to the matter that were considered before the decisions were made.
…
(3)The principles set out in subsection (1) are, subject to subsections (4) and (5), to be observed by a local authority in such manner as the local authority considers, in its discretion, to be appropriate in any particular instance.
(4)A local authority must, in exercising its discretion under subsection (3), have regard to—
(a)the requirements of section 78; and
(b)the extent to which the current views and preferences of persons who will or may be affected by, or have an interest in, the decision or matter are known to the local authority; and
(c)the nature and significance of the decision or matter, including its likely impact from the perspective of the persons who will or may be affected by, or have an interest in, the decision or matter; and
(d)the provisions of Part 1 of the Local Government Official Information and Meetings Act 1987 (which Part, among other
things, sets out the circumstances in which there is good reason for withholding local authority information); and
(e)the costs and benefits of any consultation process or procedure.
(5)Where a local authority is authorised or required by this Act or any other enactment to undertake consultation in relation to any decision or matter and the procedure in respect of that consultation is prescribed by this Act or any other enactment, such of the provisions of the principles set out in subsection (1) as are inconsistent with specific requirements of the procedure so prescribed are not to be observed by the local authority in respect of that consultation.
[98] The leading decision concerning the obligations on local authorities to consult is Wellington City Council v Minotaur Custodians Ltd.23 The Court of Appeal summarised the effect of s 82 as follows:
[38]The effect of this provision is that, when a council does choose to consult, certain “principles” apply to the particular forms of consultation the council adopts: most relevantly, those affected should have access to relevant information in an appropriate format and be encouraged to present their views having been given clear information as to both the purpose of the consultation and the scope of any likely decision. Further, a council must ensure that interested or affected parties have a reasonable opportunity to present their views, and that those views are received by council with an open mind.
[39]In substance, these principles are really basic performance standards. Subsection (3) is the counterweight. This restates (now for the third time) that the “how” of compliance with these guidelines is a matter for the local authority. That proposition is subject to the following further considerations which the local authority must (relevantly) bear in mind:
(a)the terms of s 78 including, presumably, the fact that it is subject to the reservation to the local authority of the decision of how to implement;
(b)whether the views of those affected are already known to the local authority;
(c)the significance of the issue in question for those affected; and
(d)the costs and benefits of consultation.
The Court also noted as follows:
23 Wellington City Council v Minotaur Custodians Ltd [2017] NZCA 302, [2017] 3 NZLR 464.
[42] In summary, pt 6 of the [Act] carefully and repeatedly rejects the idea that there is to be found in its provisions any duty to consult with affected or interested parties. Instead, local authorities are given a deliberately broad discretion as to whether to consult, and, if so, how. That does not mean, however, that there are no limits on a council's discretion. Like all statutory decisions, consultation decisions must be rational and consistent with the objects of the [Act] and the particular controlling provisions. …
[68]In the end, Parliament's clear and repeated preference for protecting the Council's right to decide how it wishes to consult must count for something. …
[99] The principles articulated in Minotaur have been followed in a number of subsequent cases, all of which emphasise the discretion afforded to local authorities about how to consult, and avoid engaging in intense scrutiny of the decision-making processes involved.24
[100] In the present case it is clear that the Council and AT did not expressly set out to consult but they did engage extensively with KSMW prior to terminating KSMW’s lease and entering into the agreement to lease with ITC. Given that KSMW was the primary user of the property, it is understandable that the Council and AT considered that KSMW was the primary party affected by its decision to terminate the lease and seek a tenant prepared to pay a commercial rental. KSMW makes no complaint about the Council’s processes, and it is clear from Mr Robb’s affidavit that KSMW acknowledged from the outset that it would need to move on from the property in the medium term. The Council accommodated the views of KSMW by delaying termination of the lease.
[101] The Council and AT had no direct relationship with any of the other users. Nevertheless, before entering into the agreement to lease in May 2019, the Council, in effect, consulted with the other users in a manner broadly consistent with the principles outlined in s 82 of the Act. It engaged with the other users initially through its Parks Department. It listened to their concerns and made significant attempts to try and assist the AMCC to find an alternative venue. Thereafter, the other users engaged with numerous councillors and the Mayor’s Office. They also engaged with Panuku and
24 Evans v Clutha District Council [2020] NZCA 5, Gwynn v Napier City Council [2018] NZHC 1943, [2018] NZAR 1410; Friends of Onekawa Aquatic Centre Society Inc v Napier City Council [2020] NZHC 850; Save Chamberlain Park Inc v Auckland Council [2018] NZHC 1462.
its board. Direct representations were made to the Council’s Finance and Performance Committee and to the board of Panuku. It is clear from Ms Small’s affidavit, and from the exhibits to that affidavit, that elected members considered the AMCC’s views and took steps to investigate the matter internally. Council staff were instructed to try and accommodate the other users’ concerns.
[102] In my view, the Council and AT broadly observed the consultation principles set out in s 82. The evidence suggests that the Council and AT were aware of and understood the views and preferences of the other users. The Council and AT understood the nature and significance of their decision to lease the property on commercial terms on the other users. Relevant information was made available to the other users. They had every opportunity to present their case. There is nothing to suggest that the Council and AT listened to those views with anything other than an open mind. In particular, the meeting called by Councillor Hulse afforded the opportunity for the Council to change its mind and allow the property to be leased to AMCC for use by it and others.
[103] In the round, in my view the actions of the Council and AT met the standards expected of a local authority. The fundamental problem for MWRPC is not that the views of its members were not heard and considered – they plainly were. Instead the other users’ complaint is that the Council and AT did not agree with their views. There is force in the Council’s argument that these proceedings have been brought in an attempt to obtain what persuasion could not achieve.
[104] Accordingly, even if I had concluded that the property was a park pursuant to s 138, I would have held that the Council, in effect, did consult and that no further consultation is required.
Relief
[105] Even if I had found in favour of MWRPC and held that the property was a park and that the Council had not adequately consulted, I would nevertheless have declined to grant relief.
[106] The site is clearly suitable for ITC. The Council and AT have made several “without prejudice” offers to ITC to try and find it an alternative site. Their efforts to do so have proved unsuccessful. The evidence is that the property has unique features
–size, location and that it is in a relatively undeveloped state. It is ideal for ITC’s purposes. ITC has already spent a substantial sum (approximately $146,000) in partially developing the property. There would be significant prejudice to ITC were relief to be granted.
[107] Mr Ruma of ITC deposed that the Council did not tell ITC about the concerns and legal issues being raised by the other users. No deponent for the Council took issue with this assertion. Mr Venter expressed surprise that ITC was not aware and suggested that it must have been. With respect to Mr Venter, that is nothing more than uninformed speculation on his part. His expression of opinion in this regard is inadmissible. It is clear from the admissible evidence that ITC was not informed and that it was unaware of the attempts being made by the other users to retain access to the property and to prevent it being leased on commercial terms. I accept that ITC is an innocent third party to the present dispute.
[108] Substantial prejudice to an innocent third party is an established basis for declining relief even where legal error has occurred. The leading authority in this regard is the decision of the Supreme Court in Ririnui v Landcorp Farming Ltd.25 In that case the respondent state-owned enterprise had entered into an agreement to sell a farm to an entity known as Wheyland. The respondent had been advised that the farm was not of potential interest for future treaty settlements. That advice was wrong. Not all claims had been settled and an iwi, Ngāti Whakahemo, had applied for a judicial review of the respondent’s decision to enter into the agreement. Wheyland had expended considerable funds in capital investment and in increasing its labour force in order to operate the farm. It would have suffered substantial losses if the agreement were to be set aside as sought by the applicant. Members of the Court were unanimous that prejudice to an innocent third party of the kind noted was likely to be decisive. Arnold J observed as follows:
25 Ririnui v Landcorp Farming Ltd [2016] NZSC 62, [2016] 1 NZLR 1056.
[130] Accordingly, as we see it, the fundamental issue where an applicant for judicial review seeks to have a contract set aside in a case where the contracting public body has capacity to make the contract is the existence and extent of prejudice to third parties. It is that consideration that should be the focus of the analysis, rather than the nature of the relief sought per se.
Two of the judges, Glazebrook and O’Reagan JJ, held that Wheyland was an innocent third party and that the consequences to it of the agreement being set aside were significant. Two other members of the Court, Elias CJ and Arnold J, accepted that the impact on Wheyland would normally be decisive, but that it was not on the facts as they presented. William Young J declined to set aside the agreement for sale and purchase and to grant relief on alternative grounds founded in the State Owned Enterprises Act 1986. By a majority, the Court declined to set aside the agreement for sale and purchase and to grant relief.
[109] In the present case, MWRPC seeks to set aside the agreement to lease between the Council and ITC. Granting such relief to MWRPC would create substantial prejudice for ITC. ITC has invested a substantial sum on the site already and in expanding its business in anticipation of being able to occupy the site. Were its agreement to lease to be set aside and were the Council to be directed to further consult, ITC either would be required to find a new site (which the evidence suggests would be difficult if not impossible) or its occupation of the property would be delayed. Substantial additional costs and uncertainty would be created for ITC.
[110]In my view this level of prejudice to ITC, as an innocent third party, is decisive.
[111] In addition, even if the Council were ordered to consult afresh, there is, in my judgment, little prospect that it would reach a different conclusion, given the level of deliberation which the Council has already undertaken.
[112] I would have declined to grant relief to MWRPC even if I had accepted that the Council and AT had erred.
Result
[113] Accordingly, and for all of the above reasons, the application for review is declined.
Costs
[114] The Council, AT and ITC are entitled to their reasonable costs and disbursements.
[115] Mr McKenzie told me during the course of the hearing that one of the purposes for registering MWRPC as an incorporated society to bring the proceedings was to seek to avoid any individual liability for costs. The Council, AT and ITC may consider that there is no point in pursuing MWRPC. However, if they do not take that view, I make the following directions:
(a)any application(s) for costs and disbursements is to be filed and served by way of memorandum(a), within 10 working days of the date of this decision;
(b)any response from MWRPC is to be filed and served by way of a memorandum within a further 10 working days;
(c)memoranda are not to exceed 10 pages (including annexed schedules).
I will then deal with the issue of costs and disbursements on the papers, unless I require the assistance of counsel.
Wylie J
2
12
1