New Zealand Steel Limited v Attorney-General

[2013] NZHC 3524

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2013-485-002886 [2013] NZHC 3524

BETWEEN  NEW ZEALAND STEEL LIMITED First Plaintiff

WAIKATO NORTH HEAD MINING LIMITED

Second Plaintiff

ANDTHE ATTORNEY-GENERAL First Defendant

WAIKATO REGIONAL COUNCIL Second Defendant

Hearing:                   7-8 October 2013

Counsel:                  J E Hodder QC with T D Smith and A Neris for Plaintiffs

C R Gwyn, Deputy-Solicitor with S Kinsler for First Defendant

No appearance for Second Defendant (abides outcome) Judgment:     20 December 2013

JUDGMENT OF THE HON JUSTICE KÓS

[1]      Ironsands on the north head of the Waikato River are mined by the plaintiffs under licence from the Crown.   More than 9 million tonnes are mined annually. More than 2 million tonnes of concentrate are removed from site.  And from that concentrate, two-thirds of a million tonnes of steel is produced.

[2]      Above the ironsands a Crown forest grows.  The deed of licence between the

Crown and the first plaintiff requires the Crown to fell and remove the trees.  The

Crown’s obligation is “subject always to … any statutory enactment”.

NEW ZEALAND STEEL LIMITED v THE ATTORNEY-GENERAL [2013] NZHC 3524 [20 December 2013]

[3]      It is common ground that the plaintiffs’ mining activity requires no resource

consents whatever.  That is the combined effect of the Iron and Steel Industry Act

19591 and the transitional provisions of the Crown Minerals Act 1991.2

[4]      But what about the Crown’s obligations to fell and remove its trees?  Must the Crown still obtain resource consents for land surface disturbance associated with that activity?3  That is the issue in this case.

[5]      There is a rather Gilbertian quality to that question.   Tree-felling involves only modest land surface disturbance.  Roads and tracks mostly; surface impressions from felled trees being dragged behind skidders.  Mining operations (which require no consent) involve open cast excavation of the land on which the trees grew, to a depth of up to 65 metres.   For the most part, land surface disturbance from tree felling is obliterated in the course of mining operations.

Fig: 1 Ironsands mining operation at the Waikato River north head.

1      Herein, the 1959 Act.

2      Herein the CM Act.

3      It is common ground that tree felling itself is a permitted activity under the district and regional plans. It does not require consents.

Structure of this judgment

[6] In tracing the historical background, and the statutory and contractual framework in which the issue is set, I will follow so far as possible a chronological structure. I will then sketch the stances of the parties on the issue identified at [4], and then set about resolving that issue, by breaking it into two parts. That begins at [50].

[7] The impatient reader may go direct to the declarations made, which serve as my conclusions. They are to be found at [67].

Background 1:  1848–1959

[8]      The black  sand  beaches  on  the western  coastline of New  Zealand  are  a product of prehistoric volcanic activity in the Taranaki region.  Cook observed these sands on his first voyage to New Zealand in 1769.   Their obvious iron-bearing properties attracted mining and smelting attempts as early as in 1848.  But problems with the fineness and constituent properties of the ore meant effective smelting took another century to perfect.

[9]      In the meantime, and apart from the ironsand  resources, the government became interested in the lands at the north head of the Waikato River.  Much of this land was the subject of a Crown purchase from Ngāti Te Ata in 1864.  Some of it was confiscated pursuant to the New Zealand Settlements Act 1863.  By 1932 the sand dunes were threatening to engulf farms further inland.   That year the Public Works Department began sand dune reclamation.  It planted marram grass and lupin, and then pine trees.  Some additional land, including wahi tapu parcels which had not been purchased or taken from Ngāti Te Ata, were taken under the Public Works Act 1928 for sand dune reclamation in 1939, and for other state forest purposes in

1959.  In 1952 control of the forest passed to the New Zealand Forest Service.  In

1961, 1962 and 1966 most of the land now comprising the Waiuku Forest was set apart as a permanent state forest under s 18 of the Forests Act 1949.

[10]     The 1959 Act has been through three quite distinct iterations.

[11]     The Iron and Steel Industries Act 1914 was passed with the express purpose of encouraging the manufacturing in New Zealand of iron and steel from iron ore or ironsand produced in New Zealand.   The Act provided bounties payable by the Crown to manufacturers at the rate of 12 shillings a tonne for iron and 24 shillings a tonne for steel. The essential function of that Act was exhortatory.

[12]     The  Iron  and  Steel  Industry Act  1937  was  somewhat  different.    Private enterprise not having progressed, it was focused instead upon the establishment of a Crown enterprise for the making of iron and steel.  Section 5(1) of that Act provided that notwithstanding anything to the contrary in the Mining Act 1926 or in any other Act, Commissioners (acting on behalf of the Crown) may “without further authority than this Act, carry on mining operations for iron ore on any land in New Zealand”. But, subject to regulations made under that Act, the provisions of the Mining Act

1926 were to apply to those mining operations as if the Commissioners held a mining privilege under that Act.   It authorised the taking of land under the Public Works Act 1928 for the purposes of the Commissioners’ mining operations.

[13]     In 1949 there was a breakthrough in smelting technology in New Zealand. By the use of a new system of electric smelting, it became possible to transform ironsands continuously into iron and steel.  But it was still some years before that process was economically worthwhile.  From 1956 renewed interest developed in the possibility of establishing an economic industry.  Both technological improvements and growth of the size of the New Zealand market encouraged that development. The government then decided that there should be a full scale investigation of the feasibility of a domestic iron and steel industry.  It was for that purpose that the third and final iteration of this legislation was passed, the 1959 Act.  In introducing the

Act the Minister of Mines told Parliament:4

I sincerely hope that it will be the birth of an iron and steel industry in New Zealand ... it vests in Her Majesty the Queen the right to do all the mining and prospecting in the initial stages of the industry.  It also gives the Minister of Industries and Commerce, on behalf of Her Majesty, the right to invest in the  initial  company  that  has  been  formed  to  test  and  investigate  the properties of our ironsands.

Statutory framework 1:  the 1959 Act

[14]     The 1959 Act is very different from the 1914 and 1937 Acts.   The most fundamental point of difference, perhaps, is that the Mining Act 1926 found no place in the regime established under the 1959 Act.   That contrasts to the 1937 Act. Section 4 of the 1959 Act provides that nothing in the Mining Act (1926 or 1971) “shall apply to ironsands in any ironsands area or to the prospecting or mining for ironsands in any ironsands area”.  Apart from two smallish areas in the South Island, “ironsands area” was defined in the schedule to the 1959 Act as the West Coast of the North Island from the south head of the Kaiapara Harbour to the northern bank of the Whangaehu River (just north of Wanganui), and in a strip from the high water mark  to  three  miles  inland.    Given  the  non-application  of  the  Mining Act,  the regulatory framework otherwise imposed by that Act could instead be imposed only through conditions in licence granted by the Crown.

[15]     Section 3 of the 1959 Act is the basis of the plaintiffs’ right to mine without resource consents under the Resource Management Act 1991.5   It does a number of things.  First, it vests the exclusive right to prospect and mine for ironsands in any ironsands area in the Crown.   Secondly, it authorises mining of ironsands in such areas by the Minister “without further authority than this Act”.  It is common ground that meant mining operations required no other consent.   For instance, under the

Town and Country Planning Acts 1953 and 1977.   Thirdly, it provided that the Minister might authorise the exercise of his or her rights and powers by another person.

[16]     So far as relevant s 3 provides:

3         Right to prospect or mine for ironsands in ironsands area vested in   Crown   –   (1)   Except   as   otherwise   provided   by   this   Act   and notwithstanding the provisions of any Act or of any Crown grant, certificate of title, lease, or other instrument of title, the right to prospect and mine for ironsands in any ironsands area is hereby vested in Her Majesty, subject to the provisions of this Act, and no person, other than the Minister, or a person authorised under this Act by the Minister, shall, after the commencement of this Act, prospect or mine for ironsands in any ironsands area.

(2)       The Minister, without further authority than this Act, may carry on prospecting or mining operations in respect of ironsands in any ironsands area.

(3)       The Minister may by writing under his hand authorise any person to exercise any of the rights or powers conferred on him by subsection two of this section subject to such terms and conditions as he thinks fit and for that purpose the Minister may from time to time, on behalf of Her Majesty, enter into agreements with any person in order to give full effect to the provisions of this subsection.

[17] Section 10 of the Act provides a parallel power to the Crown to provide access to land taken for the purpose of ironsand mining. The Crown is empowered to grant leases, sub-leases, licences and easements with respect to prospecting, mining and extraction of ironsands. Section 4 of the Act ousts application of the Mining Act 1971. In that respect the 1959 Act is in distinct contrast to the 1937 Act.6

[18]     Section 4 provides:

Nothing in the Mining Act 1971 shall apply to ironsands in any ironsands area or to the prospecting or mining for ironsands in any ironsands area, whether or not the land has been taken or required under or for the purposes of this Act.

[19]     Section 7 provides a power to take land (in accordance with the Public Works Act) if land is required for the mining of ironsands (or the establishment or operation of an iron and steel industry).  There was an important amendment made to the Act, inserting s 7A, in 1965.  I will return to that issue also.7

[20]     Sections  12  and  13  of  the Act  empower  the  Crown  to  participate  in  a company to investigate the prospecting processing of ironsands in New Zealand. That expressly includes a company carrying on the manufacturing of iron and steel.8

Background 2:  1959 – 1965: establishment of New Zealand Steel Ltd

[21]     In  1960  the  Government  formed  the  New  Zealand  Steel  Investigating

Company Ltd.  It undertook a study of the technical and economic feasibility of a steel industry using ironsands deposits as raw materials.   In December 1962 the

6 See [12] above.

7 At [25].

8      1959 Act, s 30 (inserted in 1965).

company reported to the government.  It recommended establishment of an iron and steel industry in New Zealand as soon as possible.

[22]     A further report was obtained from the government-appointed “provisional board” of the New Zealand Steel Company (to be incorporated).   It reported in December 1964.  It recommended the formation of an operating company with the government taking at least 25 per cent of the equity capital.  It was expected that the company would be able to achieve a net level of foreign exchange savings of £20 million per year by domestic production of iron and steel.  The report recommended that the initial source of the iron be the Waikato River north head deposit.

[23]     The  first  plaintiff,  New  Zealand  Steel  Ltd,  was  incorporated  by  the government in July 1965.

Statutory framework 2:  the 1959 Act amended in 1965

[24]     In 1965 the 1959 Act was amended.  Two particular amendments should be noted.

[25]     First, s 7A was inserted.  It provides that the Crown may set apart state forests land (for the purposes of the Forest Act 1949) in an ironsands area, for the purposes of the 1959 Act.  Prior to the amendment, a state forest area subject to the 1959 Act would cease to be a state forest.  Section 7A permitted such areas to continue as state forests  while  remaining  available  for  ironsands  prospecting  and  mining.     It established in effect a dual ministerial control regime.  Section 7A(5) provided:

(5)       The Minister of Energy shall not make any grant, sale, or disposal under subsection (1) of section 10 of this Act in respect of any land set apart under this section without –

(a)       The concurrence of the Minister of Forests and subject to such terms and conditions as the Minister of Forests may require; and

(b)       Making it a condition of any such grant, sale, or disposal that no trees on any such land shall be cut, felled, removed, or disposed of otherwise than in accordance with subsection (2) of this section.

Section 7A(5)(b) is reflected in the licence ultimately granted to the plaintiff.

[26]     Section  14  of  the 1959 Act  was  also  inserted  in  1965.    It  provided  for notification of changes to be made by the Franklin County Council to an “iron and steel zone”, and a “ironsands zone” in the operative district scheme.  Notice of the changes proposed was required to be published not later than 1 November 1965.  It is, or was, essentially a transitional process provision.  It was suggested to me that s

14 had continuing significance today. That is not a submission I accept.

Background 3: the 1966 licence

[27]     On 3 June 1966 the New Zealand Government and New Zealand Steel Ltd entered into a heads of agreement, and a licence.   The former provided that the government would have the right to take up to 25 per cent of shares issued in that company.   There was to be a government loan of £3 million (and a government guarantee of company borrowing up to £8 million).  There was an assurance by the government that it would not introduce legislation altering the schedule to the 1959

Act, excluding any part of the existing “ironsands area”, unless satisfied that the resources in those areas were not required for development of the industry by the company.  Any considerable new deposits of iron ore discovered before 1 January

1986 were to be added to the schedule.  It provided, fundamentally, for the company to have a 100 year right to process all New Zealand ironsands in any ironsands area provided in the 1959 Act.  It provided assurances of supply of coal and electricity at concessionary prices.  It granted sole rights to the manufacture in New Zealand of a number of iron and steel products, such as galvanised sheeting, pipes tubes and rods, tin plate, and rails.  And it provided for entry into a formal licence in respect of the Waikato north head deposit, the subject of the present proceeding.

[28]     The deed of licence grants the company “exclusive licence, liberty, power and authority to mine and extract all ironsands as defined in s 2 of the [1959] Act at the Waikato north head”.  It also grants a full liberty, licence, power and authority (but subject to the provisions of the 1959 Act and the licence), to dig, excavate, mine or quarry under or upon  that  land for the purposes of quarrying and  removing ironsands.   The licence grants, also, a right of occupation of the land for those purposes, for a term of 100 years. A per tonne royalty (six pence) was payable.

[29]     The company is required to give the Minister of Forests two years notice of mining operations necessitating the clearance of land for mining purposes.  Stump removal  remains  the  company’s  responsibility.    The  licence  required  that  the company “systematically worked the ironsands by advancing across such areas and in such directions as should be pre-determined by agreement with the Minister of Forests so that the forestation or reforestation or worked over areas may be properly planned”.    The  company  was  bound,  also,  to  pay the  costs  of  dune  protection environmental work.

[30]     The licence provided that the company “shall not cut, fell, remove or dispose of any trees on the said land”. That of course reflects s 7A(5)(b) of the 1959 Act.

[31]     The licence then provides the following covenants:

AND the Minister doth hereby convenant with the Company that the Company duly paying the royalties hereinbefore reserved and observing and performing  the  several  covenants  and  stipulations  herein  on  its  part contained or implied, shall peaceably hold and enjoy the rights, powers, liberties and authorities hereby granted during the said term without any interruption by the Minister or any person rightfully claiming through, under, or in trust for him.

AND the Minister of Forests subject always to all obligations restrictions and duties expressed or implied in relation to the said land by in or under these presents or by in or under any statutory enactment  of the General Assembly of New Zealand hereby covenants with the Company as follows:

That the Minister of Forests shall permit the Company to carry out its mining and associated operations without let or hindrance and will not derogate from nor depreciate the rights powers liberties advantages and benefits granted to or conferred upon the Company by these presents.

That the Minister of Forests shall permit the Company its servants agents invitees and licensees full and free liberty of ingress egress and regress for the   purposes   of   the   Company   including   the   provision   construction reticulation maintenance and repair of roads power-supply and water-supply whether new or existing...

[32]     It is common ground that the Minister of Forests may not refuse to remove trees from the licence area once notified by the licensee.9    The effect is that, thus notified, the Crown must complete the one aspect of ironsands mining operation still

reserved to it alone: the removal of trees.  It follows that the licence includes a right to have the Crown remove trees where necessary for mining operations.

Statutory framework 3:   the 1959 Act repealed, in 1991, and the Crown now bound by the RMA

[33]     On 1 October 1991, the 1959 Act was repealed by s 361 of the RM Act. Two things may be noted.

[34]     First, the Crown was now bound by the provisions of the RM Act.10

[35]     Secondly, the CM Act – a companion piece of legislation to the RM Act – preserved  “existing  privileges”,  including  any  “authorisation  given,  agreement entered into, and grant of rights under the [1959 Act]”, as continuing to have effect as if the CM Act and RM Act had not been enacted, and thus from becoming subject to any new RM Act requirements.  To be clear about this point, s 2(1) of the CM Act refers  explicitly to  rights  under  the  1959 Act  as  “existing  privileges”  protected transitionally

[36]     Section 107(1)(a) of the CM Act, as enacted, provided:

(1)       ... every existing privilege shall continue to have effect after the date of commencement of this Act as if this Act and the [RM Act] had not been enacted and as if the Act which applied to the privilege before that date continued in force, and, without limiting the generality of the foregoing –

(a)       As if the holder of the privilege continued to have the same statutory rights as the holder would have had if this Act and the Resource Management Act 1991 had not been enacted ...

[37]     That provision was repealed and replaced in the Crown Minerals Amendment Act 2013.  Section 106 now provides that the savings and transitional provisions in sch 1 have effect for the purposes of the CM Act.  Clause 12(1) of sch 1 provides:

(1)      ... each existing privilege continues to have effect after the commencement of the Amendment Act as if:

(a)      the Act  that  applied  to  the  privilege  before  the commencement of the principal Act continues in force; and

(b)       the  holder  of  the  privilege  continues  to  have  the  same statutory rights as the holder would have had if the principal Act and the Resource Management Act 1991 had not been enacted (except that if any consent in respect of the privilege would, but for this subclause, be required and need to be sought under the Resource Management Act 1991, then the Resource Management Act 1991 does apply)...

[38]     “Existing privilege” continues to be defined as including “any authorisation given, agreement entered into, or grant of rights under the [1959 Act]”.11     I will return, under Issue Two, to how this might apply in this case.

Background 4:  1991 - 2013

[39]     It is unclear whether resource consents were sought prior to enactment of the RM Act in 1991.  More recently, since 2003, the Crown has applied for and obtained resource consents under the RM Act for land surface disturbance associated with its removal of trees, including for the plaintiffs’ mining purposes.   It does not appear that it did so between 1991 and 2002.  Felling of trees is a permitted activity under both  the district  and  regional  plans.   The only discretionary activities  requiring resource  consent  are  certain  roading  and  track  activities,  and  soil  disturbance

activities exceeding 1,000 m3, or 2 ha.   The evidence is that in every instance

consents have been granted by the second defendant Council, save on one occasion where the application was unrelated to mining operations.12

Summary of submissions

Plaintiffs

[40]     The first plaintiff, New Zealand Steel Ltd, was the original licensee under the

1966 deed of licence.  It commenced mining operation in the licence area in 1968. In  2008  the  rights  and  benefits  under  the  licence  were  assigned  to  the  second

plaintiff, Waikato North Head Mining Ltd.  It is a related company of New Zealand

11     CM Act, s 2(1).

12     It concerned proposed deforestation in a wahi tapu area. That area is not mined by the plaintiffs.

Steel Ltd.  There is for present purposes no practical point distinguishing between

them.  I will simply refer to the rights here as those of “the plaintiffs”.

[41]     The plaintiffs’ position is that the 1959 Act authorises “mining operations” by the Minister “without further authority than [the 1959] Act” in any ironsands area. The Minister can in turn authorise “any person” to exercise those rights and powers (including carrying on such mining operations without further authority).   The removal  of  vegetation  (and  associated  soil  disturbance)  is  part  of  “mining operations”.  So, the plaintiffs say, the 1959 Act confers on the licensee the right to cause those land use activities to be undertaken.

[42]     The  plaintiffs  say  that  the  licence  imposes  conditions  on  preparatory vegetation  removal  and  soil  disturbance  (by  way  of  notification),  but  that  the plaintiffs have a specifically enforceable right to compel the Crown to undertake that work.  The plaintiffs then say that their rights to mine, and rights to compel removal of vegetation, continue as “an existing privilege”, undisturbed by the enactment of the RM Act, by virtue of s 2 and sch 1 cl 12 of the CM Act.  Thus, instead of seeking resource consents for any of these land use activities under s 88 of the RM Act, the plaintiffs  can  simply rely on  an  existing  privilege.    So  too  can  its  “contracted operatives” – here the Crown.

[43]     The plaintiffs say that in policy terms this is unremarkable.  The RM Act is concerned with activities which use relevant land rather than particular owners or actor.    The  nature  of  ironsands  makes  it  pointless  to  regulate  preliminary  and transient activities which will be overtaken by the path of mining (which is clearly permissible without consents).   The objectives of the 1959 Act are satisfied, in promoting ironsands mining while utilising state forest assets to the extent consistent with such mining.

The Crown

[44]     The Crown’s position, Ms Gwyn emphasised, is a relatively neutral one.  It is not before the Court as proxy for the relevant consent authority, the second defendant Council.    The  Crown  considers  that  the  better  construction  of  the  licence  and

legislation is that the Crown’s remaining function – clearance of vegetation and incidental land surface disturbance – requires resource consents.  But fundamentally the Crown seeks certainty.   It has cooperated with the plaintiffs in bringing the proceedings.  It has agreed a number of points en route to trial.  There is agreement also that no costs should be ordered whatever the outcome.

[45]     The Crown accepts it is required to clear trees on notice from New Zealand Steel Ltd, in accordance with the licence agreement.  And it accepts that the licence is an “existing privilege” for the purpose of the transitional provisions of the CM Act, which subsist as if the 1959 Act was still in force.   But it says, first, that its obligations do not extend to the clearance of trees in a manner which would be unlawful under other enactments.

[46]     Secondly, the Crown says that the grant under the licence to New Zealand Steel Ltd was qualified.  Responsibility for tree felling was reserved to the Minister of Forests.  The covenants in respect of forest clearance were expressed to be subject to other enactments.  No power was granted to New Zealand Steel Ltd to clear trees ahead of mining.   The Crown says that New Zealand Steel Ltd therefore has no “statutory right” under the 1959 Act to fell trees preserved, and no existing privilege therefor. While the licence includes the right to have the Minister clear the trees, that right remains subject to relevant legal requirements.

[47]     Finally, the Crown says that it has itself no “existing privilege” preserved by the transitional provisions of the CM Act that would shield it from the operation of the RM Act.  It says that none of the administrative powers preserved in relation to New  Zealand  Steel  Ltd’s  existing  privilege  empower  the  Crown  to  clear  trees without resource consents under the RM Act.

The Council

[48]     The second defendant Council abided the outcome.  It filed no submissions. It is perhaps regrettable that the Council, with its enforcement responsibilities under the RM Act, and unique perspective on the environmental issues relevant to soil and dune conservation in the area of the north head of the Waikato River did not see fit to take any step beyond notifying the Court of its abidance.  The Council said in that

notice that “the matter is a point of law particular to the unique obligation pertaining to this site”.  That may be so.  But it does not mean the Council should not form a view about it, and inform the Court accordingly.

[49] If anything can be inferred at all from the Council’s quietude, it is I suppose that no burning issue of environmental practice or protection is at stake here. Perhaps for the reasons noted at [5].

Issues

[50]     The broad issue posed at [4] falls to be answered through the examination of two more particular issues:

(a)       What was the nature of the plaintiffs’ rights under the licence, prior to

1991?

(b)Do the transitional provisions of the Crown Minerals Act 1991 mean that resource consents are not required for land surface disturbance associated with the removal of trees?

Issue 1: What was the nature of the plaintiffs’ rights under the licence, prior to

1 October 1991?

[51]     It is clear that the licence authorises all the “liberty, power and authority” necessary for the plaintiffs to mine ironsands in the land beneath the forest at the Waikato River north head.   With one important exception:   the felling of the tree cover.  Subject to that point, it is not contested by the Crown that the grant in the licence is an exercise of authority by the Crown under s 3(3) of the 1959 Act.  Nor is it contested that what the plaintiffs then do, pursuant to that licence and grant, requires no resource consent under the RM Act.  That is the effect of s 3(2).  The only consents needed, it is said, are for the land surface disturbance associated with the Crown’s reserved right to control and conduct tree felling.

[52]     Secondly,  the  right  of  the  plaintiffs  to  mine  is  essentially contractual  in nature, but underpinned by statute.  Their right to do so without resource consents is different:  fundamentally statutory in nature, but underpinned by contract.

[53]     Thirdly, it is clear that the licence requires the Crown to clear the land of trees (stumps apart) upon due notification by the plaintiffs.  That is acknowledged in the  Crown’s  pleading.    I  accept  the  Crown’s  submission  that  the  grant  to  the plaintiffs did not include a power, on their part, to clear trees ahead of mining.  But it is I consider a distinction without a difference.  The Crown’s broad bundle of rights under the 1959 Act is subdivided.  Some are not granted to the plaintiffs at all.  For

instance, mining ironsands in 101 years’ time.13     The bulk of the Crown’s rights

under the 1959 Act may however be exercised by the plaintiffs, in accordance with s

3(3) and the licence itself.  Where trees grow, the plaintiffs may, via a contractual notification process, require the Crown to remove them.  I have no doubt, therefore, that the rights under the licence include the right to require removal of the trees for (and as part of) authorised mining operations.   Although the expression “mining operations” is not defined in the 1959 Act, I accept that the removal of trees to facilitate open cast mining must constitute “mining operations”.14   To put that point another way, if the Crown itself were conducting the whole of the ironsands mining exercise, it could not be said that its removal of trees preparatory to mining somehow

fell outside the scope of s 3(2).  But the limitation in grant to the plaintiffs means the Crown must still perform that part of the “mining operations”.   The plaintiffs are entitled to compel it to do so. And prior to 1991 the Crown could not have advanced the point it now takes:   that the qualification in the covenant compels it to seek

resource consents. The Crown had no consents to seek before 1991.15

[54]     Fourthly, then what difference does that qualification make?  What additional effect does the words “subject always to all obligations restrictions and duties ... in or under any statutory enactment” in the licence have?   In my view the answer is none at all.   As a matter of contract they add nothing substantive to the Crown’s

obligations.   Any contractual obligation is necessarily subject to compliance with

13     The licence is for 100 years only.

14     Blackwater Mines Ltd v Foster [1935] NZLR 282 (SC) at 283 and 294.

15     Town and Country Planning Act 1977, ss 62(2) and 116; Soil Conservation and Rivers Control

Act 1941, s 170.

mandatory statutory obligations, whether pre-contractual or supervening.16    In this respect, then, it is useful to reflect silently on what the Crown’s argument would have been if those words had been omitted.   A change that would have made no difference as a matter of contract.

[55]     I therefore accept the plaintiffs’ submission that the rights and obligations of the parties in relation to the requirement to fell trees form a critical part of the grant of rights and powers to carry on mining operations under the 1959 Act.  Albeit that the Crown still conducts that small part of the mining operations, at the plaintiffs’ will.

Issue 2: Do the transitional provisions of the Crown Minerals Act 1991 mean that resource consents are not required for land surface disturbance associated with the removal of trees?

[56]     The Crown accepts that the licence is an “existing privilege” for the purposes of the transitional provisions of the CM Act.   Thus the Crown accepts that by cl 12(1)(b) of sch 1, the plaintiffs enjoy the same “statutory rights” as would have obtained prior to the enactment of the CM and RM Acts in 1991.

[57] The transitional provisions of the CM Act have been considered before in cases concerning the Coal Mines Act 1979 and the Mining Act 1971. In Powelliphanta Augustus Inc v Solid Energy New Zealand Ltd,17 Panckhurst J considered whether enforcement powers under the RM Act were available against the holder of a coal mining licence granted under the Coal Mines Act 1979 alleged to have acted in breach of both licence conditions and the RM Act.  He concluded that

the RM Act enforcement powers were excluded by s 107 of the CM Act.

[58]     Panckhurst J began with the statement of principle in Stewart v Grey County Council18 that the Mining Act 1971 was special legislation that excluded the application of parallel planning legislation. The Coal Mines Act 1979 was held also

to be special legislation providing for coal mining, for which no further consents

16     See e.g. the discussion of supervening illegality in Carter Contract L:w in Australia (6 ed, LexisNexis Butterworths, Sydney, 2013) at [33-22] and [33-23].

17     Powelliphanta Augustus Inc v Solid Energy New Zealand Ltd (2007) 13 ELRNZ 200 (HC).

18     Stewart v Grey County Council [1978] 2 NZLR 577 (CA).

were required for matters addressed in the licence.   Panckhurst J endorsed the conclusions reached by the Planning Tribunal in 1995 in Opoutere Ratepayers and Residents Association (Inc) v Heritage Mining, concerning the interpretation of s

107:19

... the purpose of subs (3), reads in conjunction with subs (1), (in particular paragraphs (a) and (b)), is to ensure that existing privilege holders’ statutory rights under the previous Mining Act legislation are preserved.  Where for past purposes such privilege holders’ licences stipulated that consents were to be obtained under legislation such as the Water and Soil Conservation Act

1967 or the Clean Air Act 1972, those consents are now to be sought and obtained under the Resource Management Act (e.g. when the term of a water

right, formerly granted under the 1967 Act, is due to expire).

...

Clearly, as recognised in Stewart, the holder of such a privilege did not need to obtain land use consent under the Town and Country Planning legislation; and, in turn, such a holder does not need to obtain such consent under the Resource Management Act.

[59]     Panckhurst  J  noted  that  the  Planning  Tribunal’s  decision  in  Opoutere Ratepayers had been specifically referred to by the then Minister of Energy at the second reading of the Crown Minerals Amendment Bill 1993.20    The Bill had been introduced to “provide greater clarity and give better effect to the original intention of Parliament that all the rights of existing privilege holders continue under the Crown Minerals Act”.21  The Minister went on to observe that:22

The decision of the Planning Tribunal was to confirm the Government’s view of the legislation.   Therefore I am able to assure member that the provisions in the Bill accord entirely with the view of the Planning Tribunal as to what the law meant.

[60]     A similar  conclusion  was  reached  by  Chisholm  J  in  Solid  Energy  New Zealand Ltd v Buller District Council.23    A declaration was made that holders of licences granted under the Coal Mines Act 1979, and preserved by s 107 of the CM Act, were not  required  to obtain consents under the Building Act 1991 for the

construction work.  The building works were authorised by the licences.  Chisholm J

19     Opoutere Ratepayers and Residents Association (Inc) v Heritage Mining Planning Tribunal

Auckland A33/95, 20 April 1995.

20     Powelliphanta Augustus Inc v Solid Energy New Zealand Ltd (2007) 13 ELRNZ 200 (HC) at

[45].

21     550 NZPD 8824 (12 September 1994).

22     550 NZPD 8825 (12 September 1994).

23     Solid Energy New Zealand Ltd v Buller District Council [1998] NZRMA 385 (HC).

concluded that the Coal Mines Act 1979 controlled the activity of coal mining, including the erection of buildings in relation to the activity.   There was no requirement that a licensee obtain a building permit from a territorial authority prior to the enactment of the CM Act and Building Act 1991.  The effect of s 107 was to preserve the plaintiff ’s licences as if the Coal Mines Act had remained in force.  As

Chisholm J put it:24

It follows that notwithstanding the enactment of the Crown Minerals Act the holders of coal mining licences were in precisely the same position as they had been in before the Act came into force.

[61]     The following are the conclusions I have reached in examining this issue.

[62] First, it is evident that the 1959 Act is special, displacing legislation in the same way the Mining Act 1971 and the Coal Mines Act 1979 are. That is apparent in part from its inclusion alongside those Acts in the definition of existing privileges in s 2(1)(e) of the CM Act. In doing so Parliament must have had the present licence in mind. There are only two licences to which s 2(1)(e) could apply: the Waikato River north head and the Taharoa licences. More significantly, the 1937 iteration of the 1959 Act expressly embraced the Mining Act 1971. But the 1959 Act provided, in s 4, that nothing in that Act was to apply to ironsands mining operations. I accept the submission for the plaintiffs that the effect of ss 3 and 4 of the 1959 Act was to create a separate statutory regime authorising such mining operations.

[63]     Secondly, what I draw from the Powelliphanta Augustus and Solid Energy decisions is that the expression “statutory rights” in the transitional provisions was intended by Parliament to reflect the whole bundle of legal rights that the preserved legislation confers on the privilege holder.   Those are the “statutory rights” the holder “would have had if the [CM and RM Acts] had not been enacted”, as cl

12(1)(b) puts it.   I do not consider that analysis is altered by the change to the transitional provisions in 2013.  Although I do allow that that intent is made even

plainer by the former s 107(1).

24 At [13].

[64]     Thirdly, I agree therefore with counsel for the plaintiffs that the transitional provisions require the following question to be answered:  prior to the enactment of the CM Act and RM Act, was consent required for the effective exercise of any of those rights and obligations?  If the answer to this question is “no”, the transitional provisions preserve that position (cl 12(1)(b)).   If the answer is “yes”, then the exception contained within cl 12(1)(b) applies and consent is required to be sought under the RM Act.

[65]     Fourthly, one of the “statutory rights” in this case was the right under s 3(2) of   the   1959   Act   to   conduct   ironsands   mining   operations   without   further authorisation.  It is common ground that means resource consents were not required to conduct mining operations.  Part of mining operations, as I have found already, is the prior removal of existing tree cover.  Although the plaintiffs as licensees could not undertake that work, they could make the Crown do so.  Prior to the enactment of  the  RM Act,  neither  required  further  authorisation  in  the  nature  of  resource consents to conduct the mining operations, collectively or individually.   And the Crown did not require such consents to conduct its part of the mining operations, tree removal.

[66]     Posing then the question in [64], I reach a negative answer.  The result is that the transitional provisions preserve the pre-1991 position.  The splitting off of tree removal makes no difference.   The licensee was entitled to compel the Crown to complete tree removal as part of the mining operations to which s 3 of the 1959 Act relates.  The “statutory rights”, continuing as if the RM Act had not been enacted, include that activity.

Result

[67]     The following declarations will therefore be made:

(a)      the  grant  of  rights  under  the  Iron  and  Steel  Industry  Act  1959 contained in the 1966 Deed of Licence from the Crown (as Licensor) to New Zealand Steel Ltd and its successors and assigns (as Licensee) included the right of the Licensee to require the felling and removal of

trees and necessary  incidental works, including soil disturbance and vegetation clearance, on  notice, by the Licensor to permit mining operations to proceed;

(b)the Deed of Licence, incorporating the rights in (a), is an “existing privilege” within the   meaning of clause 12 of Schedule 1 to the Crown Minerals Act 1991; and

(c)      neither the Licensor nor the Licensee need any consent under the Resource Management Act 1991 to undertake such removal of trees or any necessary incidental works.

[68]     Leave is reserved to apply to vary these declarations if necessary. [69]          It is agreed there be no order for costs.

[70]     I express my appreciation to counsel for their very helpful submissions, in particular those delivered orally.

Stephen Kós J

Solicitors:

Chapman Tripp, Wellington, for Plaintiffs
Crown Law, Wellington for First Defendant