NZ Cash Flow Control Limited v Attorney-General

[2021] NZHC 1150

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-000530

[2021] NZHC 1150

BETWEEN

NZ CASH FLOW CONTROL LIMITED

First Appellant

AND

OFFSHORE HOLDINGS LIMITED

Second Appellant

AND

ATTORNEY-GENERAL

Respondent

Hearing:	10 May 2021
Appearances:	G J Ryan and N J McKessar for Applicants K F Gaskell for Respondent
Judgment:	21 May 2021

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 21 May 2021 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

NZ CASH FLOW CONTROL LTD v ATTORNEY-GENERAL [2021] NZHC 1150 [21 May 2021]

The application

[1]    The appellants appeal from a compensation decision in respect of properties compulsorily acquired from them by the Crown in 2014 under the Canterbury Earthquake Recovery Act 2011 (the CER Act). This judgment concerns an application by the appellants for leave to adduce further evidence on the hearing of the appeal under r 20.16 High Court Rules 2016.

[2]    The further evidence is contained in an affidavit of Malcolm Lyall and concerns the availability and amount of a heritage grant the second appellant contends would have been available to it had its property not been compulsorily acquired. The application is opposed by the respondent.

Background

[3]    At the time of the February 2011 Christchurch earthquake, the first appellant was the owner of 10-12 Bedford Row, Christchurch and the second appellant was the owner of 128 Manchester Street, Christchurch. Mr Denis Harwood is the director of both appellants.

[4]    The Crown compulsorily acquired the appellants’ properties under the CER Act on 23 January 2014. On 22 January 2016, the appellants lodged claims for compensation under s 62 of the CER Act.

[5]    Under the CER Act compensation claims were determined by the Minister for Canterbury Earthquake Recovery (the Minister).1 The compensation claims process was managed by the Canterbury Earthquake Recovery Authority until it was disestablished in April 2016. Responsibility was then transferred to Land Information New Zealand (LINZ).

[6]    The CERA Compensation Claims Determination Process document (August 2014) sets out the process for determining compensation claims and that document was provided to the appellants on 10 February 2016. Because of the technical nature of issues that arise in determining compensation claims, the Canterbury Earthquake

1      Canterbury Earthquake Recovery Act 2011, s 64.

Compensation    Panel    (the    Panel),    was    established    to    provide    advice   and recommendations to the Minister.2

[7]    Between January 2016 and November 2018 there were delays while the appellants prepared their claims. During this period, LINZ was advised the appellants were represented by a consultant, Paul Rutledge, and by legal counsel, Glen Ryan.

[8]    The claims were to be presented at meetings of the Panel on 7 December 2018 and then on 29 May 2019, but in both instances they were deferred due to Mr Harwood having health issues. Ultimately, the appellants’ claims were presented at a meeting of the Panel on 28 November 2019.

[9]    The Minister’s delegate attended the meeting. The appellants were represented at the meeting by counsel, Mr Ryan and Hugh Matthews, and by Mr Harwood. They had other representatives present also including Mr Rutledge (advisor), Simon Newberry (valuer), Nicholas Todd (quantity surveyor), Mark Blyth (construction), Grant Moore (quantity surveyor), Warren Brixton (consultant) and Richard Farrow (architect). Deborah Moore attended the meeting as a representative of LINZ as well as Crown advisors, Kelly Paterson (solicitor), Annie Cao (solicitor), Mark Dunbar (valuer) and Keely Pomeroy (quantity surveyor).

[10]   There was a good deal of evidence put before the Panel. Before the meeting the appellants provided written submissions and 15 briefs of evidence. At the meeting the appellants provided additional material including from their valuer, Mr Newberry.

[11]   The meeting was transcribed and the appellants were provided with a copy of the transcript. The appellants were also provided with a copy of the Panel’s draft recommendation report to the Minister. On 3 July 2020, Mr Ryan provided the appellants’ comments on the Panel’s draft recommendation report.

[12]   Deborah Moore deposes, and it is not disputed by the appellants, the evidence before the Panel and Minister relevant to the possibility of the second appellant receiving a heritage grant included:

2      Ace Developments Ltd v Attorney-General [2017] NZCA 409, [2017] 3 NZLR 728.

(a)Mr Harwood’s original brief of evidence (dated 26 April 2019) where he stated he was working with an architect, Richard Farrow, to submit an application for a heritage grant “in the up to $1 million grant category”.

(b)In Mr Harwood’s reply brief of evidence (dated 8 November 2019) he stated that if the second appellant had retained the building it would have qualified for a heritage grant which would total $1,000,000.

(c)Shortly  before  the  Panel’s  meeting,  evidence  was  tendered  by  Mr Farrow (dated 7 November 2019) stating that he considered the second appellant would have been eligible for a heritage grant up to

$1,000,000.

(d)Mr Brixton provided a brief of evidence (dated 21 November 2019) stating that in his opinion a heritage grant in the order of $500,000 might have been made to the second appellant by the Christchurch Earthquake Heritage Building Trust (CEHBT) of which he had been the secretary.

The Panel’s recommendation report

[13]   The Panel’s recommendation report was dated 20 August 2020. The report, all of the information provided to the Panel in respect to the appellants’ compensation claims, and the meeting transcript were provided to the Minister. 3 The Minister issued her determinations on the compensation payable to the appellants on 9 October 2020. Her determinations were in accord with the Panel’s recommendations.

[14]   The Panel took a residual value approach to the valuation of the second appellant’s property. It described this method at para [24] of its report as follows:

… the residual method considers the value of the repaired building as complete, and then deducts all the costs that a hypothetical purchaser would incur in undertaking such an exercise.

3      In the Minister’s decision of 9 October 2020 she sets out all of the information that was before her in reaching her decision.

[15]   The Panel dealt with the issue of the heritage grant at paras [51] to [66] of the recommendation report. At paras [57]-[62], it referred to the evidence of Mr Brixton concerning an application made by the second appellant to the CEHBT and his view that had the property not been acquired by the Crown a heritage grant in the order of

$500,000 might have been made to the second appellant. Given its importance to this application, I set out the Panel’s consideration of Mr Brixton’s evidence below:

57.There was a third brief which is dated 21 November 2019 from Warren Brixton. This was delivered less than a week before the meeting commenced. The Crown would have had little opportunity to investigate its contents. Mr Brixton said that he was, at least at the relevant time, the committee secretary for the CEHBT. As noted earlier, it was said to be evidence in reply, but in reality it was new evidence delivered at the 11th hour.

58.Mr Brixton said at paragraph 10 of his evidence, that “based on the quoted price to restore, strengthen and repair the building at 128 Manchester Street and having regard to the detailed nature of the documents submitted in support of the funding application, it is my opinion that the funding application would likely have been favourably considered by the [CEHBT] and indeed by Brendan Smyth and his assessment team”.

59.He then attached as Appendix 1 a copy of standard conditions for any grant made, which included at paragraph 5 that funding given in excess of $150,000 will be subject to a compulsory requirement for a full Conservation Covenant under the Reserves Act 1977. Appendix 2 sets out the purpose of the Trust, and notes that funding will be available not only for historic buildings listed in the District Plan or entered on the New Zealand Heritage List, but also for “buildings and groups of buildings that make a significant contribution to the historic identity and visual character of communities”. And at clause 4.1, it notes that “expert advice on individual applications will be sought as required”.

60.At paragraph 11 of his brief, Mr Brixton notes that he has attached as Appendix 4 a list of buildings that obtained grants and the approximate amount. He goes on to say that “based on the information therein it is my opinion that had the [CEHBT] been able to move ahead and consider the funding application lodged, that a grant in the order of

$500,000 might have been made”.

61.Yet looking at Appendix 4, there were only three grants of about that amount (excluding a $1 million grant which is said to be a donation from  Fletcher  Building).    In  the  main,  the  grants  were  less  than

$100,000, and apart from four above $300,000, the rest were between

$20,000 and $250,000.

62.So on the face of that document we do not think it supports a grant in the order of $500,000. But there is a more fundamental concern. The Trust envisages expert advice on individual applications, and we do not think that Mr Brixton has evidenced any necessary qualifications to be

able to give us an opinion as to the quantum of any grant had a redevelopment of the building proceeded.

[16]   Notwithstanding its view that Mr Brixton was not qualified to express an opinion as to the quantum of any grant, the Panel concluded that in assessing the value of the second appellant’s property for compensation purposes an allowance should be made for a heritage grant in an amount of $100,000. It said at para [65] of its report:

A residual value enables us to consider what might have happened if that hypothetical purchaser had chosen to repair, and so our analysis is to consider whether or not a heritage grant would have been available to that person or entity. We consider that the evidence does not show to any reasonable standard of proof that a grant would be available, let alone the quantum claimed. But having regards to the principles of the Public Works Act, and despite the late evidence and its probity, we are prepared to take a liberal approach and recommend that a grant of $100,000 be taken into account.

[17]   The result of the Panel’s consideration was that on a residual value basis the second appellant’s property had a market value as at the date it was compulsorily acquired by the Crown of $1,422,000 and that was its value for compensation purposes. The Panel’s detailed residual value analysis is set out at para [66] of the recommendation report and includes an allowance for a heritage grant of $100,000.

The notice of appeal

[18]   The appellants contend the Minister made an insufficient allowance for a potential heritage grant for the repair of 128 Manchester Street. Their notice of appeal sets out various grounds of appeal challenging both the Minister’s decision and the Panel’s consideration of the evidence and conclusions in relation to the heritage grant issue. Specifically, the following grounds are relevant:

4.3.10The Minister and/or the Panel wrongly and/or unreasonably concluded that the only possible source of a heritage related grant was the CEHBT (Report, paragraph 56).

4.3.11The Minister and/or the Panel wrongly and/or unreasonably rejected the evidence of Mr Richard Farrow and Mr Warren Brixton about the likely quantum of a heritage related grant or grants (Report, paragraphs 56, 62).

4.3.12The Minister and/or the Panel wrongly and/or unreasonably took the view that expert evidence should have been presented as to the likely quantum of a heritage related grant or grants (Report, paragraph 62).

4.3.13The Minister and/or the Panel wrongly and/or unreasonably concluded that the evidence presented did not show to a reasonable standard of proof that a heritage related grant would be available, and as to the quantum of such grant (Report paragraph 65).

The further evidence

[19]   As noted earlier, the appellants seek to adduce as evidence on their appeal an affidavit of Mr Lyall which was not before the Panel or the Minister. Mr Lyall was a trustee of the CEHBT. He discusses Mr Brixton’s evidence and largely, although not entirely, agrees with it and concludes:

I refer to paragraph 11 of Mr Brixton’s brief. He expressed there the view that a grant in the order of $500,000 might have been made by the CEHBT. It is also my recollection that as at early 2014 the CEHBT still had funds available. However there was a good detail [sic] of competition for funding and, as I have already stated, the funds available to the CEHBT were limited from the outset. Bringing my best judgement to bear upon this aspect of the matter at this point in time it is my view that any grant made would more likely have been in the order of $250,000.

The law

[20]Rule 20.16 High Court Rules 2016 provides:

20.16   Further evidence

(1)Without leave, a party to an appeal may adduce further evidence on a question of fact if the evidence is necessary to determine an interlocutory application that relates to the appeal.

(2)In all other cases, a party to an appeal may adduce further evidence only with the leave of the court.

(3)The court may grant leave only if there are special reasons for hearing the evidence. An example of a special reason is that the evidence relates to matters that have arisen after the date of the decision appealed against and that are or may be relevant to the determination of the appeal.

(4)Further evidence under this rule must be given by affidavit, unless the court otherwise directs.

[21]   In B v A, Wylie J summarised the relevant principles that apply to an application governing receipt of further evidence on an appeal under r 20.16.4 These principles are accepted by counsel. I adopt them and set them out below:5

[25]      The relevant principles governing the receipt of further evidence are straightforward:

(a)the Court can receive further evidence if it thinks that the interests of justice require it to do so;

(b)it is wrong to allow an appellant to bolster his or her case with additional evidence that was available at the lower Court hearing, but not adduced because of the particular view of the case being taken at the time;

(c)admitting further evidence on appeal is exceptional rather than routine. A change of heart about how a case should have been run will not suffice. The prospect of further evidence triggering a substantial re-litigation before the appellate Court of the substantive case will count against admitting the further evidence;

(d)generally, the further evidence must be fresh, credible and cogent;

(e)evidence will not be regarded as fresh if it could, with reasonable diligence, have been produced at the trial;

(f)the absence of freshness is not an absolute disqualification. When the further evidence is not fresh, it will not generally be admitted unless the circumstances are exceptional and the grounds compelling. In addition, the further evidence needs to pass the tests of credibility and cogency;

(g)the interests of justice require the parties to put their best case forward at trial, in order to avoid wasting the Court’s limited time and resources. A high value is placed on finality when the parties have been afforded the opportunity and failed to take it; and

(h)the standard to be met is “rightly high”.

Discussion

[22]   While the Court has a discretion under r 20.16 to grant leave to adduce further evidence, the discretion will be used sparingly. Appeals will generally be heard on the evidence that was before the initial decision-maker and parties cannot expect to obtain leave to adduce new evidence that does little but improve on their case or recasts their evidence reflecting a change in litigation strategy.6

4      B v A [2020] NZHC 580.

5      Footnote omitted.

6      Ace Developments Ltd v Attorney-General [2016] NZHC 2467 at [18]-[20].

[23]   The appellants contend Mr Lyall’s evidence should be admitted to remove uncertainty as to the quantum of a heritage grant and address the Panel’s concern as to Mr Brixton’s ability to give his evidence. They submit the evidence of Mr Lyall is not tendered to bolster their case. I do not agree. The evidence is primarily to provide support for the evidence of Mr Brixton. Specifically, it is the appellants’ counter to the Panel’s findings, at para [62], that Mr Brixton was not qualified to give evidence as to the quantum of any grant and, at para [65], that “the evidence does not show to any reasonable standard of proof that a grant would be available, let alone the quantum claimed”. While Mr Lyall holds a different view to Mr Brixton as to the likely quantum of a heritage grant the thrust of his evidence is one of agreement with     Mr Brixton.

[24]   Next, the appellants submit Mr Lyall’s evidence was not presented earlier only because it was not available. I do not accept the evidence of Mr Lyall was not available earlier. The evidence is not fresh. The appellants rely on an affidavit of Mr Harwood in which he says that his  health  difficulties  compromised  his  ability  to  obtain  Mr Lyall’s evidence. In my view, no link is established between Mr Harwood’s ill- health and the appellants’ failure to obtain evidence from Mr Lyall. It is necessary to consider Mr Harwood’s evidence more closely.

[25]   Mr Harwood says he understood that Dame Anna Crichton, who was the Chair of the CEHBT, would provide evidence for the Panel meeting and that the heritage grant aspect of the evidence was primarily dealt with by him because he knew Dame Anna. Due to ill-health he was out of the country between May 2019 and October 2019. Upon his return, he says, it was too late to obtain Dame Anna’s evidence as she was on holiday in France at the time. He also says, following the filing of this appeal further efforts have been made to obtain an affidavit from Dame Anna but she is now not prepared to assist and he only very recently followed up with other contacts who had been involved with the CEHBT including Mr Lyall. That evidence falls well short of establishing that Mr Lyall’s evidence was not available or is fresh.

[26]   While I accept Mr Harwood was overseas for some months during 2019 he knew of the Panel meeting and of the need to prepare the appellants’ evidence. The compensation claim process had been ongoing since January 2016 and two previous

meetings of the Panel had been vacated. There were other qualified people engaged by the appellants who could have liaised with Dame Anna and obtained her evidence in Mr Harwood’s absence. These include the appellants’ consultant Mr Rutledge and the appellants’ present lawyers. Although Mr Harwood says the heritage evidence was to be dealt with primarily by him he also refers to the fact that both Mr Rutledge and Mr Farrow, and later a Mr Mackay, had dealings with Dame Anna about her giving evidence.

[27]   Furthermore, when it became known Dame Anna’s evidence would not be available, the appellants had sufficient time to obtain evidence from Mr Brixton.    Mr Brixton’s evidence is dated 21 November 2019 and was therefore prepared after Mr Harwood returned from overseas. There is a lacuna in Mr Harwood’s evidence as to what happened between learning Dame Anna was in France and the Panel meeting. He does not say what steps were taken prior to the Panel meeting once it became clear that Dame Anna’s evidence was not available. He takes up his narrative again from after the filing of this appeal.

[28]   I accept Harwood does say he believes if he had been in good health in the months leading up to November 2019 the appellants would have obtained the evidence of Mr Lyall before the Panel meeting but there is nothing in the evidence to suggest that Mr Lyall’s evidence could not have been obtained at the same time as Mr Brixton’s evidence. Relevantly, in this context, there is nothing in the evidence to suggest the appellants were unhappy with the evidence of Mr Brixton and were making efforts to obtain evidence from other sources, including Mr Lyall. There was no request made for an adjournment of the Panel’s meeting, nor any request to submit further evidence. It is also particularly noteworthy that despite being given the Panel’s draft report critical of the evidence of Mr Brixton, there was no request to adduce further evidence even at that stage.

[29]   The appellants then argue the evidence of Mr Lyall is credible and cogent. I have no reason to doubt Mr Lyall’s credibility. I do not, however, regard his evidence as cogent, nor do I consider it is substantially helpful to the resolution of the appeal.

[30]   Mr Lyall is giving counterfactual evidence and it cannot be expected that he can be certain whether the second appellant would have received a heritage grant and, if so, in what amount. However, even allowing for that, Mr Lyall’s evidence is noticeably deficient in a number of respects relevant to those central issues.

[31]   In his affidavit, Mr Lyall has referred only to documents produced or provided to him by the appellants. He makes no reference to any records of the CEHBT. He says the second appellants’ application was discussed only “to some extent” by the trustees. The application was not considered “in detail” because the Crown’s interest in the property became known and the application was declined. There was apparently no expert advice sought in relation to the application which, as the Panel noted, the CEHBT envisaged would be obtained on individual applications.

[32]   Mr Lyall also says the funds available were limited but it is his “recollection” that as at early 2014 there were still funds available. He plainly has not made enquiries about that. He also does not comment on whether funds would have still been available when the second appellant’s application would otherwise have been processed. This is important because Mr Lyall notes there were many applications received by the CEHBT and Mr Ryan concedes that the architect and engineering plans and the repair costings that Mr Lyall was asked to consider did not accompany the second appellant’s application to the CEHBT and were not in existence at that time. It can be expected there would have been a lengthy delay between the making of the second appellant’s application for a grant and any decision in relation to it.

[33]   The appellants then submit that, even if Mr Lyall’s evidence is not considered to be fresh, there are two exceptional and compelling reasons why it should be admitted.

[34]   First, it is argued the Panel took a highly unusual approach to the heritage grant in that it found the evidence did not establish that a grant would have been available but then made an allowance for a grant of $100,000 in its residual value analysis. I agree with Ms Gaskill that it appears the Panel intended to apply the principle that in assessing the value of land for compensation purposes a liberal assessment should be

taken from the claimant’s point of view.7 However, in so far as the appellants contend the Panel was wrong in its approach, it was to their advantage. I do not see how it can justify them adducing further evidence.

[35]   Second, it is submitted, in the absence of Mr Lyall’s evidence, counsel for the appellants will be unable to reliably and accurately discharge their duty to the Court in making submissions as to what allowance should be made for a heritage grant.   Mr Ryan argues counsel should not be put in the position of having to rely on Mr Brixton’s evidence, when he/she knows of contrary evidence from an apparently more reliable source. This is a most novel submission and I do not accept it.

[36]   The appellants do not retreat from their reliance upon Mr Brixton’s evidence. Mr Ryan describes the evidence as “appropriate” and “sufficient”. In those circumstances, there is no ethical dilemma faced by counsel in relying on Mr Brixton’s evidence and, plainly, it is Mr Ryan’s intention to do so. If, contrary to their actual position, the appellants were to accept Mr Brixton is not qualified to express an opinion as to the likely amount of a heritage grant they could simply make a concession to the effect. It does not require further evidence to be admitted.

[37]   The appellants then argue the admission of Mr Lyall’s evidence will not require reply evidence from the respondent. Ms Gaskell has confirmed the respondent will not wish to adduce further evidence. I accept this is a matter that weighs in favour of admitting Mr Lyall’s affidavit but it is not a significant one given the strength of the countervailing factors.

[38]   Finally, the appellants argue the Court must stand back and assess all the circumstances of the particular case for the purpose of seeing if there is anything about the case that justifies a departure from the standard approach.8 I agree with that submission, but no further factors were advanced by the appellants which might justify me granting leave to adduce Mr Lyall’s evidence.

7      Te Marua Ltd v Wellington Regional Water Board [1983] NZLR 694 (CA); Poverty Bay Catchment Board v Forge [1956] NZLR 811 (Land Valuation Court) and Pryor v Minister of Land Information [2015] NZHC 3117 at [15].

8      Comalco New Zealand Ltd v Television New Zealand Ltd (1996) 10 PRNZ 573 (HC).

[39]   The appellants’ application will be dismissed because the evidence of Mr Lyall is not fresh and the appellants seek to introduce it simply to bolster their case. Furthermore, the evidence will not be substantially helpful to this Court on the hearing of the appeal and no other factors are advanced which I consider justify it being considered.

Result

[40]The appellants’ application is dismissed.

[41]   I know of no reason why the respondent would not be entitled to costs on a 2B basis plus reasonable disbursements as fixed by the Registrar. However, as counsel did not address me on the matter I reserve costs and memoranda may be filed within 14 days if counsel are unable to agree. Memoranda shall not exceed five pages.

[42]   In a joint memorandum of 19 May 2021 counsel sought an adjustment of the timetable. There shall be directions made by consent in accordance with para 5 of that memorandum.

O G Paulsen Associate Judge

Solicitors:

White Fox & Jones, Christchurch Crown Law, Wellington