Pacific Farms Ltd v Palmerston North City Council HC Auckland CIV 2008-454-791

[2010] NZHC 1393

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2008-454-000791

UNDER  the Declaratory Judgments Act 1908

IN THE MATTER OF     an application under Part 4 of the High Court Rules for a declaration pursuant to the said Act

BETWEEN  PACIFIC FARMS LIMITED First Applicant

ANDPACIFIC FARMS DEVELOPMENT LIMITED

Second Applicant

ANDPALMERSTON NORTH CITY COUNCIL

First Respondent

AND  PALMERSTON NORTH INDUSTRIAL

& RESIDENTIAL DEVELOPMENTS LIMITED

Second Respondent

Hearing:         7-8 December 2009 (at Wellington) Counsel:   K Johnston and A N Isac for Applicants

P J Reardon for First Respondent
G A Paine for Second Respondent

Judgment:      5 February 2010

In accordance with r 11.5 I direct the Registrar to endorse this judgment with the delivery time of 2.30pm on the 5th day of February 2010.

RESERVED JUDGMENT OF GENDALL J

PACIFIC FARMS LIMITED And Anor V PALMERSTON NORTH CITY COUNCIL And Anor HC PMN CIV-2008-454-000791 [5 February 2010]

[1]      On  the  outskirts  of  Palmerston  North  is  a  large  rural  area  identified  as suitable, and necessary, for the residential expansion of the city.   It is largely residentially zoned and the applicant (Pacific Farms) and second respondent Palmerston North Industrial and Residential Developments Limited (the developers - PNDL) own substantial adjoining areas of land in that zone.  The land of both these parties is under active development.  The land acquired by PNDL is higher than that of Pacific Farms, which resulted in surface water flowing from the former to the latter.

[2]      PNDL     obtained     resource     consents     from     the     first     respondent, Palmerston North  City  Council  (the  Council)  for  subdivision  and  land  use  in  a number of applications. This case concerns essentially a challenge by Pacific Farms to two of those resource consents, which have led to stormwater being collected from the  developed  areas  of  PNDL  and  discharged  into  a  gully  on  the  land  of Pacific Farms.

[3]      The challenge is based upon the contention that the resource consents were granted on a non-notified basis, which should not have happened.   Secondly, the discharge of collected stormwater from the higher land to two gullies on the land of Pacific Farms required the consent of the Regional Council (Horizons) under its Land and Water Regional Plan, and Pacific Farms contends that its neighbours were required to obtain a discharge consent from that Regional Council.

[4]      Whilst the proceedings were brought under the Declaratory Judgment Act

1908 seeking certain declarations, the proceedings are dealt with as if they were applications for review under s 7 of the Judicature Amendment Act 1972.   In the course of the hearing counsel for Pacific Farms accepted the proposition advanced by the respondents’ counsel that it was appropriate to deal with the proceedings in this way.

[5]      The response to the proceedings by PNDL and the Council is, in summary, that they contend that the applications for resource consent did not require public notification;  and that in any event even if there was error, the delay in bringing the proceedings was such that discretionary relief should be refused.  Two subdivisions

have been completed, with sections sold and houses built on one of them so that prejudice could occur to third parties, as well as PNDL, if relief were granted. Naturally, the arguments for all parties range far wider but that summarises the essential stances.

Background

[6]      The two areas of land were initially owned by Pacific Farms.  It sold the land on the higher ground to PNDL.   The land was rural before being later re-zoned residential.  Two gullies known as the “Johnstone Drive” and “Eastern” Gullies ran across the land.  Upon it being divided, and part sold, PNDL’s boundary transected the two gullies.  As is to be expected, rainwater that had fallen upon the land made its way into the two gullies through the natural process of permeating the soil and some, not retained in it, percolated through the force of gravity down into the two gullies.  Once the land was divided, water which may have found its way into the gullies on the PNDL’s portion of the land inevitably percolated down each gully onto the remaining land owned by Pacific Farms.  It did so intermittently after heavy rain but the gullies themselves were not what would normally be seen to be streams or rivers but simply significant and quite deep indentations in the land.

[7]      Between March 2004 and April 2009 PNDL, obtained four resource consents generally for subdivision and land use consents for earthworks from the Council. Those were consents known as RM2111, RM2351, RM2604 and RM2636.  These have enabled PNDL to develop about 80 hectares of its land in several stages.

[8]      It  is  RM2111,  RM2351  and  RM2636  about  which  challenge  is  taken. RM2111 sought consent for the initial subdivision of the land into 46 residential lots. RM2351 was essentially the second stage of the subdivision development.   Under the  resource  consents  granted,  development  of  the  land  was  permitted  which included PNDL filling the Johnstone Drive Gully on its land (pursuant to a land use consent granted under RM2111) and discharging stormwater into or underneath such filled gully through pipes.  These discharge water at the boundary land of PNDL and Pacific Farms into the remaining portions of the gullies as they transect the land of Pacific Farms.  The pipes were constructed following the grant of RM2111.

[9]      To complete the chronological narrative, Pacific Farms through its manager, Mr Fugle, became aware of development when obvious earthworks began in September 2004, and of the development progress between December 2005 and January 2006.  Until an application was made under the Official Information Act the precise details of PNDL’s applications and consents were not known until considerably later.

[10]     Pacific Farms itself applied to the Horizon Regional Council in August 2007 for consent for proposed earthworks and the filling of Johnstone Drive Gully as part of the subdivision development it wished to undertake.  It sought consent in relation to stormwater reticulation for the existing drainage that enters the gullies.   It was faced with the pipe outlet from the filled portion of the gully of PNDL and wished to connect pipes to that, so as to create a new stormwater system.  This consent was granted on 24 October 2007.   Pacific Farms’ position was that it was required to make  such  application  to  the  Regional  Council  having  been  faced  with  the fait accompli of the completed pipe system beneath the fill on PNDL’s higher land. Its position is that jurisdiction for control of water arose with Horizon Regional Council.

[11]     Application RM2636 was made in February 2008, about four months after Pacific Farms had obtained its consent to fill Johnstone Drive Gully.  It was not until shortly before the hearing of this case that Pacific Farms became aware of the grant of RM2636.  It seems that it was intended to replace RM2351.

[12]     The consents by the City Council given to PNDL were granted on a non- notified basis. Pacific Farms seek declarations in relation to:

•    the legality of that process of the Council in relation to all the consents;

•    the legality of such consents permitting discharge of stormwater in that manner rather than connection to a “stormwater disposal network”;

•    the legality of the stormwater discharge in the absence of consent from

Horizons.

[13]     For completeness I record that RM2604 was a minor subdivision of two lots which had already been granted consent under RM2111, and being a controlled activity, did not require public notification.

Statutory provisions

[14]     At the heart of these proceedings is the applicants’ challenge to the Council’s non-notification decision in respect of RM 2111, RM 2351 and RM2636.  So I set out the notification provisions of the Resource Management Act 1991.  At the time of the first resource management grant (30 September 2004) the relevant provisions of the Resource Management Act were ss 93 and 94:

“93     When public notification of consent applications is required

(1)A consent authority must notify an application for a resource consent unless –

(a)      the application is for a controlled activity; or

(b)the consent authority is satisfied that the adverse effects of the activity on the environment will be minor.

(2)If subsection (1) applies, the consent authority must notify the application by –

(a)      publically notifying it in the prescribed form; and

(b)serving   notice   of   it   on   every   person   prescribed   by regulations.”

[15]     Section 94 dealt with situations where public notification was not required under s 93(1)(a).  It provides:

“94     When public notification of consent applications is not required

(1)If notification is not required under s 93(1), the consent authority must serve  notice of  the  application on  all  persons who, in  the opinion of the consent authority, may be adversely affected by the activity,  even if  some of  those persons have given their written approval to the activity.

(2)However, a consent authority is not required to serve notice of the application under subsection (1) if all persons who, in the opinion of the consent authority, may be adversely affected by the activity have given their written approval to the activity.”

[16]     It is apparent from s 94(1) that whilst public notification is not required if s 93(1)(a)  applies,  s  94(1)  prevails  and  limited  notification  is  necessary  if  the authority is of the relevant opinion set out in that subsection.

[17]     Sections  94A  and  94B  were  inserted  in  2003.  These  sections  provide guidance  for  the  Council’s  assessment  of  adverse  effects  on  the  environment (s 93(1)) and affected persons (s 94(1)):

“94A   Forming opinion as  to  whether adverse effects are minor or more than minor

When forming an opinion, for the purpose of s 93, as to whether the adverse effects of an activity on the environment will be minor or more than minor, a consent authority –

(a)may disregard an adverse effect on the activity on the environment if the plan permits an activity with that effect;  and

(b)for  a  restricted discretionary activity,  must  disregard an  adverse effect of the activity on the environment that does not relate to a matter specified in the plan or proposed plan as a matter for which discretion is restricted for the activity.”

“94B    Forming opinion as to who may be adversely affected

(1)Subsections (2) and (3) apply when a consent authority is forming an opinion,  for  the  purpose  of  section  94(1),  as  to  who  may  be adversely affected by the activity.

(2)The consent authority must have regard to every relevant statutory acknowledgement, within the meaning of an Act specified in Schedule 11, made in accordance with the provisions of that Act.

(3)      A person—

(a)may be treated as not being adversely affected if, in  relation to the adverse effects of the activity on the person, the plan permits an activity with that effect; or

(b)in relation to a controlled or restricted discretionary activity, must not be treated as being adversely affected if the adverse effects of the activity on the environment do not relate to a matter specified in the plan or proposed plan as a matter for which—

(i)       control is reserved for the activity; or

(ii)      discretion is restricted for the activity; or

(c)must not be treated as being adversely affected if it is unreasonable in the circumstances to seek the written approval of that person.”

[18]     The  applicants  in  this  case  submit  that  Pacific  Farms  falls  within  the

“affected persons” s 94 category.

[19]     Section 94C deals with public notification if an applicant requests or special circumstances exist.  This section is of no moment in this case.

[20]   Section 94D provides for variation of public notification and service requirements.  This section has some relevance to these proceedings. It provides:

“94D    When  public  notification  and  service  requirements  may  be varied

(1)Despite s 93(1)(a), a consent authority must notify an application for a resource consent for a controlled activity in accordance with s

93(2) if a rule in a plan or a proposed plan expressly provides that such an application must be notified.

(2)Despite s 93(1)(b), a consent authority is not required to notify an application for resource consent for a restricted discretionary activity if a rule in a plan or proposed plan expressly provides that such an application does not need to be notified.

(3)Despite s 94(1), a consent authority is not required to serve notice of an application for a resource consent for a controlled or restricted discretionary activity if a rule in a plan or proposed plan expressly provides  that  notice  of  such  applications  does  not  need  to  be served.”

The nature of these proceedings

[21]     In light of the statutory notification scheme, some explanation as to the nature of these proceedings is helpful.  Where resource consent applications are subject to notification, whether to the public or limited, s 96 of the Act provides for the following persons to be able to make submissions:

(1)where there is public notification almost any person (subject to the limitation on trade competitors in s 308A and B);

(2)where  there  is  limited  notification  any  person  who  receives  the notification.

[22]     Persons who make submissions may request a hearing of the resource consent application.  Even if the resource consent is granted s 120 of the RMA confers on any person who has made a submission:

“The right to appeal against the whole or any part of a decision of a consent authority on an application for resource consent....”

That right envisages an appeal to the Environment Court.

[23]     Where, however, a person has not made a submission then there is no right of appeal under s 120.  So where a resource consent proceeds on a non-notified basis, no right to make a submission arises (the reality of course is in any event, because there  is  no  notification,  no  persons  other  than  the  applicants  will  know  the application has been made) and because there is no right to make a submission then there is no right to appeal (see Aro Valley Community Council v Wellington City Council [1992] 1 NZRMA 221).

[24]     The  effects  of  a  decision  not  to  notify  were  referred  to  by  Elias  CJ  in Discount Brands Ltd v Westfield (New Zealand) Ltd [2005] 2 NZLR 597 (SC). The Chief Justice said at [21]:

“A decision not to notify has significant consequences.  It deprives others of the right to participate in the determination of the resource consent application.   It also precludes any person other than the applicant from appealing   or   participating   in   the   hearing   of   an   appeal   to   the Environment Court  from  the  grant  or  refusal  of  resource  consent.    The Environment Court is a specialist tribunal which on appeal conducts a full rehearing of the application and is able to substitute its judgment for that of the consent authority. Non-notification precludes the opportunity for anyone other than the applicant to seek such reassessment and from further appeal on a point of law to the High Court.”

[25]     It is clear that the only possible avenues for persons other than an applicant to challenge the consent, where a decision is made not to notify, is to seek declarations under the Declaratory Judgments Act 1908 or to commence judicial review proceedings.

The pleadings

[26]     Pacific Farms pursued only three of the originally pleaded causes of action. These are:

(1)The non-notification of the three consents (but essentially the two numbered RM2111 and RM2531) was unlawful because the Council in assessing environmental effects did not have information to assess the volume of stormwater to be produced by the development, or the effects of hard-covered development of the developer’s land on the volume   and   peak   flow   of   stormwater   post-development   or sedimentary effects.   There was no proper basis upon which the Council could be satisfied in terms of s 93 of the Resource Management Act, on the information provided to it, that the effects of the land use and subdivision would be no more than minor as it was required to do.  Nor could it be satisfied that that Pacific Farms would not be affected pursuant to s 94.

(2)At least in respect of RM2111, “classification errors” resulted in the Council ignoring adverse effects it was obliged to consider for the purposes of notification.   The Council concluded the activities proposed in respect of RM2111 and RM2531 were discretionary (restricted) activities for the purposes of the District Plan.  However, Pacific Farms contended that the Council should have classified these applications as involving discretionary (unrestricted) activity because the proposals for RM2111 and RM2531 did not meet “performance standards” stipulated in the District Plan in respect of stormwater connections.   Under Rule 7.7.1.2, subdivision applications were required to be within 30 metres of “Essential Services”, which was defined as meaning the Palmerston North City Council reticulated sewage and reticulated water supply systems, stormwater systems and electrical power and telecommunication networks.  Pacific Farms said that “stormwater systems” clearly envisioned a man made structure. The term should not be interpreted so that the location of Johnstone

Drive Gully (within the stipulated 30 metres) could be said to satisfy that performance standard.  The only stormwater system which would satisfy the performance standards was well outside the stipulated distance.  Accordingly, the applications should have been considered as discretionary (unrestricted) activities, which would have required the Council to have conducted a broader inquiry into the potential adverse effects before it could conclude that notification was not required.

(3)The  Manawatu  Catchment  Water  Quality  Regional  Plan  was  the operative regional plan at the time the consents were issued.   The discharge of stormwater from PNDL’s land onto the applicants’ land and its gully, in the absence of adequate mitigation and attenuation measures, failed to comply with the conditions of that rule in that plan and the discharge was a non-complying activity in terms of the plan. Because no resource consent had been granted by Horizon to PNDL for the discharge in terms of the plan the discharge was not permitted under the regional plan and the resource consent granted by the Council was unlawful, none having been granted by Horizon.

Defence contentions

[27]    Mr Reardon, on behalf of the Council, in careful thorough submissions contended that the proceedings failed essentially on four grounds.  As a preliminary matter he challenged the use of the Declaratory Judgments procedure and this has been resolved with the agreement of all parties.  The matter is dealt with as if it were by way of judicial review.

[28]     The substantive grounds advanced were that first, Pacific Farms had not disclosed essential evidence to the Court, namely that it had applied to Horizon Regional Council for its own resource consent in respect of the filling and development of its land and portion of the Johnstone Drive Gully.  That disclosure did not occur until late in the procedures leading up to the hearing of the application. Counsel submitted that Pacific Farms cannot now complain about effects which it

offered to manage by constructing a reticulated stormwater system in its part of the gully through the connection of pipes to the outlet pipe already constructed by the developer.  It was argued that the rule in Augier v Secretary of State for the Environment [1978] 38 P & CR 219 binds Pacific Farms which is now estopped from complaining about the resource consents granted to PNDL.

[29]     Secondly, Mr Reardon argued that the delay, together with prejudice that would be caused to third parties (namely the developer and those who have acquired sections and built homes) was such that Pacific Farms is not entitled to relief or remedy.  He relied upon a number of authorities, specifically the recent decision in Skyline Enterprises Ltd v Queenstown Lakes District Council HC INV CIV-2008-

425-000650  6 November  2009  French  J,  and  emphasised  the  indefeasibility provisions which arise upon the titles being issued consequent upon the subdivisions. He  argued  that  quashing  the  resource  consent  would  undermine  that  rule  as explained in Murray v The Whakatane District Council [1997] 3 ELRNZ 308.

[30]     The  third  argument  advanced  by  Mr  Reardon  was  that  Pacific  Farms “misled” the Horizon Regional Council because, after obtaining consent to connect the  pipe  system  emerging  from  PNDL’s  land  and  filling  in  its  lower  part  of Johnstone Drive Gully, Pacific Farms achieved its objective and only then notified its challenge to the resource consents granted by the Council to PNDL.   Counsel argued that during the delayed period in bringing these proceedings to challenge the Council’s resource consents Pacific Farms sought Regional Council resource consent (in August 2007), filled the Johnstone Drive Gully almost to the top in 2007/2008, and only thereafter commenced these proceedings in October 2008.

[31]     Mr Reardon submitted that when dealing with RM2111 the Council had reached the correct conclusion as to the classification of the activity.  He said that the subdivision part of the application (as opposed to the “land use” application relating to the filling of Johnstone Drive Gully, which was dealt with separately) satisfied all the “performance standards” for residential subdivision outlined under Rule 7.7.1.2 of the District Plan, with the exception of access.  So, he said, it fell to be considered under Rule 7.7.2.1 which classified the application as “restricted discretionary”, and Rule   7.7.2.1   contained   a   “non-notification   clause”   which   provided   that   no

applications for restricted discretionary activities were required to be notified. The resource consent was granted, with the Council imposing the ‘standard’ condition upon the consent, namely that the activity did not lead to silt and other material to waterways or adjoining properties or that there be damage to any property from stormwater runoff.  Mr Reardon submitted that there was no evidence of any damage to the Pacific Farms gully in its natural state.

[32]     In respect of RM2351, Mr Reardon recorded that part of the land was zoned rural.   The application was assessed as meeting all the performance standards for rural subdivision “with the exception of access”.   It therefore defaulted to a discretionary unrestricted activity (Rule 7.16.3).   In accordance with best practice, the application as a whole was to be treated as a “discretionary unrestricted activity”. The consent was granted with the imposition of the same “standard” condition imposed in RM2111.

[33]     Mr Reardon challenged expert opinion evidence given by Mr G C Miller, a planning consultant, on behalf of Pacific Farms.  This was partly on the basis that initially Mr Miller did not express any challenge to the classification of resource consent RM2111 as “restricted discretionary” and resource consent RM2351 as “discretionary unrestricted” until he did so in his affidavit in reply.  Mr Reardon said the Council had no opportunity to rebut or reply to this opinion.  Counsel contended that there was no engineering evidence offered by Pacific Farms other than through a surveyor, to be contrasted with the evidence of two engineers given on behalf of the Council.  This engineering evidence generally related to the increase in water runoff from the developed subdivision compared to that which occurred when the land was in its natural state.  That evidence is relied on to assert that, on a factual basis, the Council’s evidence of increase would have been approximately 28%.

[34]     Whilst   Mr   Reardon’s   submissions   dealt   at   length   with   factual   and engineering matters, he accepted that the real issue was whether the Council erred in determining that the applications of PNDL need not be notified.  He emphasised that the test was if the applicant for consent offers conditions which will remedy or mitigate  the  proposed  activity  then  the  Council  was  entitled  to  take  those  into account when assessing whether the adverse effects of the proposed activity will be

minor  (s  93),  or  de  minimis  (s  94),  relying  on  the  test  described  in  Stokes  v

Christchurch City Council [1999] NZRMA 409.

[35]     When dealing with the guidance provided in ss 94A and 94B, Mr Reardon submitted that construction of houses, roads and driveways are permitted and lawful activities under the District Plan.  It is they which have obviously led to increased flow of stormwater from hard surfaces.  He contended that because the construction of houses and driveways is permitted and it was these which led to increased stormwater  flow,  for  the  purposes  of  notification  the  consent  authority  could disregard that effect even if it was adverse when determining notification or otherwise.

[36]     Mr Reardon submitted that the Supreme Court decision in Discount Brands had no relevance to the first application under RM2111.   That was because the activity  under  RM2111  was  classified  as  “restricted  discretionary”,  and  the District Plan  contained  a  rule  which  required  such  applications  not  be  notified. Discount Brands analysed the obligations of the consent authority to notify where the District Plan was silent in that regard.  So, he said, that case was relevant only to the second application under RM2351 where the activity was classified as discretionary unrestricted.  But counsel submitted that whilst the consent authority must be “satisfied” that adverse effects will be minor, relying on the dicta of Blanchard J, he effectively contended that the information before the consent authority that the application was non-notifiable had to be adequate but not all embracing.   It simply had to be sufficiently comprehensive to enable the consent authority to consider on an informed basis.

[37]     Of course, the critical issue at least in respect of RM2111, was whether it was correctly categorised as a “restricted discretionary activity”, but counsel submitted that “in any event” the Council had complied with the requirements of s 93(1)b), and that the adverse effects on the environment would be minor and, and could be satisfied that Pacific Farms was not adversely affected under s 94(1).

[38]     In relation to the second resource consent (RM2351), relating to stage two of the subdivision extending the number of residential lots by 72, Mr Reardon accepted

that the application had to be considered as a discretionary (unrestricted) activity. But he said that the second consent (RM2351) was merely an extension of the number of lots in the same subdivision, and did not involve an application for a stormwater pipe (the pipe had been put in place following the grant of RM2111, so it was already in place when the application for RM2351 was made).  Referring again to the argument that effects from “permitted activities” could be disregarded, counsel submitted that with the mitigation measures to be adopted, any adverse effects could be  considered  to  be  minor,  with  no  party  adversely  affected  by  the  proposed activities   (Stokes   v   Christchurch   City   Council).      Counsel   submitted   that Pacific Farms had not produced evidence to show there was any more than minimal adverse effects on the Johnstone Drive Gully whilst in its natural state.

[39]     As to the argument advanced by Pacific Farms that Rule 7.7.1.2 required that:

“All essential services should be available for connection within 30 metres of the nearest point of the land being subdivided.”

and that this was not met because “stormwater disposal system” meant reticulated stormwater disposal system, Mr Reardon contended that such system was not necessarily limited to pipes or lined channels.   He said that it was not open for Pacific Farms to argue, as it did, that such a provision required that the adjective “reticulated” be applied to “stormwater disposal system”.  Counsel argued that even if Pacific Farms was correct in its contention that a stormwater system meant a reticulated stormwater system, because of reference in the District Plan to such systems in urban area meaning reticulated stormwater systems, that is simply a policy not a rule.  He said that any breach of a policy was not an error of law because in terms of the Act only rules in a District Plan have the force of a regulation. Further, counsel said that its advisors explained the reason for the Council’s practice, namely that the deep gullies in the land make a reticulated stormwater system impracticable  so  that  departure  from  any  policy  (if  that  is  what  it  was)  was reasonable in the individual circumstances.

[40]     Finally, in this context, Mr Reardon submitted that even if the activity did not comply, the result would be that it fell into a higher category of classification. Yet such  activity  could  still  have  minimal  effects  on  other  persons  and  it  was  the

existence of adverse effects that had to be, he said, demonstrated by Pacific Farms. So, it followed that there had been no adverse effects identified and the Court should decline to exercise its discretion.

Submissions on behalf of PNDL

[41]     Mr  Paine  essentially  adopted  the  arguments  advanced  on  behalf  of  the Council, emphasising that the discharge of stormwater is lawful pursuant to resource consents.  He contended that Pacific Farms’ motivation was to have some other party pay for stormwater reticulation that is required, and will be further required, on its land.   He said prejudice existed to PNDL and others because it had sold a large number of sections.   He contended that the fifth cause of action, namely that the consent of Horizon Regional Council had not been given to the discharge activities was something that had to be dealt with by the Regional Council, it not being a party to the proceeding.   He emphasised issues of delay and prejudice, the delay being extensive and not satisfactorily explained.  He said a declaration would not serve any useful purpose, relying upon the dicta in Hawke’s Bay Land Protection Society Inc v Hastings District Council HC NAP CIV-2009-441-000143 7 May 2009 Miller J.

Essential issues

[42]     Given the way the matter was argued by all counsel, I have set out as fully as I can the essential arguments of counsel for the Council and PNDL, but I consider the essential issues to be:

(1)Did the Council sufficiently inform itself of the adverse effects before deciding to neither notify or serve?   Namely, was it sufficiently informed to conclude that:

•    the adverse effects on the environment would be minor (s 93);  or

(even if notification was not required under s 93)

•   there was no requirement to serve notice on Pacific Farms because the question did not arise that it “may have been adversely affected” by the activity.

(2)At least in respect of RM21111, resolution of issue (1) will require consideration of whether the Council officers erred in their classification decision.   That is, did the Council correctly conclude that the application met the requirements relating to “Essential Services” in Rule 7 of the Operative District Plan, so that the application could be treated as a restricted discretionary activity (such classification meaning that application could be subject to a non- notification clause), or should the correct classification have been discretionary (unrestricted)?

(3)Was the discharge of stormwater under the provisions of the Horizon regional plans such that the discharge was not permitted?

(4)Was Pacific Farms prevented from challenging the lawfulness of the resource consents because of its conduct in respect of subsequent resource consents granted to it?

(5)       Should the Court exercise its discretion and grant relief?

Discussion

Can the Council’s decision not to notify be impugned?

(i)       Classification

[43]     Generally speaking, where a challenge is made to a Council’s decision to allow a resource consent application to proceed on a non-notified basis, the key question will be whether the Council had “sufficiently informed” itself of the adverse effects before deciding not to notify.  But at least in respect of RM2111, a primary consideration must be whether the Council was correct to classify the proposed activity as a “discretionary restricted activity”.  This is because if that classification

was correct, the respondents would have a defence to the challenge to the non- notification decision, due to the non-notification/service clause for “discretionary restricted activity” in Rule 7.7.2.1.  That rule provides that where a subdivision is a “discretionary restricted activity”:

(i)        No such application shall be notified.

(ii)       Consents will not be required from any affected party.

[44]     Non-notification clauses such as this are expressly allowed under the RMA (see ss 77D and 94D(3)).  The preliminary issue is whether the Johnstone Drive and Eastern Gullies are a “stormwater disposal system” for the purposes of connection to “essential services”, in terms of the performance conditions in Rule 7.7.1.2.  If not, then in addition to lack of connection to water supply, there was no available connection for stormwater.

[45]     Under  the  District  Plan,  subdivisions  were  to  be  “controlled  activities” provided they conformed with “performance conditions” set out in Rule 7.7.1.2. These performance conditions related to existing buildings, minimum lot area, shape factor, access and essential services.   “Essential services” is defined as meaning “reticulated sewage and reticulated water supply systems, stormwater systems and electrical power and telecommunication networks”.   These essential services were required to be “available for connection within 30 metres of the nearest point of land to be subdivided”.

[46]   I accept the argument of Pacific Farms that the proposed subdivision applications did not comply with the requirements for “essential services” in respect of   stormwater.   I   do   not   accept   the   respondent’s   central   contention,   that Johnstone Drive Gully in its natural state met the requirement for a “stormwater system”.  In my view, in order to satisfy the performance standards necessary for a subdivision to be automatically considered a “controlled activity”, connection within

30 metres of a man-made or created stormwater system was required.  Under the part of the District Plan which sets out the “Principle reasons for adopting the objectives, policies and methods of implementation in respect of subdivisions” point 9 states:

“The Controlled Activity category has been used where it can be reasonably concluded that adverse effects can be avoided or mitigated through standards and conditions....Generally, applications for consent will be non-notified.”

I do not accept that drainage of water onto land in the form of a “natural gully” provides the same degree of predictability in respect of adverse effects as would be the case if discharge was connected to a reticulated or man-made structure, or constructed channel.   There has to be a disposal system.   Discharge onto land, comprised in the form of a natural gully, does not in my view meet the requirement for availability of a “stormwater disposal system”.

[47]   Features in the objectives and policies of the District Plan support the proposition that connection to a reticulated stormwater system was required.  These policies refer to all allotments in urban areas being “connected to a stormwater drainage system”, and policy 2.9 speaks of the “structure of the stormwater discharge system” having a “design life”, being “constructed” from suitable materials.

[48]     As referred to in [39], Mr Reardon argued that a policy was not a rule and only  the  latter  has  the  force  of  a  regulation.    But  I  accept  the  argument  of Pacific Farms that, in interpreting the meaning of “stormwater disposal system ... available for connection ...” regard may be had to policy considerations contained in the District Plan to assist in the interpretation.

[49]     So, to this point I accept the argument that the resource consent applications failed to comply with the standard performance conditions, especially in relation to stormwater  and  the  activity  therefore  fell  to  be  considered  under  the  residual Rule 7.7.3.1 classification.  That provides:

“(1)Any  subdivision which  is  not  a  Controlled Activity or  a  Discretionary Activity  (Restricted)  or  a  Non-complying  Activity  is  a  Discretionary Activity (Unrestricted).”

[50]     So, Rule 7.7.2.1, to the effect that the application did not require notification does not apply.  This conclusion is primarily of relevance to the Council’s decision not to notify in respect of RM2111.  In respect of RM2531, the Council accepted that it, in accordance with “best practice”, was required to consider to treat the whole application as a discretionary (unrestricted) activity.

[51]     So, the issue falls to be determined on the basis of whether a decision not to notify was properly made in terms of the statutory provisions.

(ii)      Approach in Discount Brands

[52]     The relevant sections of the RMA in respect of notification and service have been set out.   The Supreme Court considered the nature of the obligation on a consent   authority   to   notify   where   public   notification   is   not   required   in Discount Brands. As the Supreme Court said, a decision not to notify was one with significant consequences, and it concluded that the imposition of the requirement for the territorial authority to be “satisfied” suggested the need for some caution at [21] and [23]). The judgment contains the following from Blanchard J at [107]:

“[107]    The  information  before  the  authority  can  be  supplied  by  the applicant, gathered by the authority itself or derived from the general experience and  specialist  knowledge of  its  officers and  decision-makers concerning the district and the plan.  But in aggregate the information must be adequate both for the decision about notification and, if the application is not to be notified, for the substantive decision which follows to be taken properly – for the decisions to be informed, and therefore of better quality.

[108]    The information which the consent authority must have, in order that it can properly be ‘satisfied’, must be adequate for it to make two determinations under s 94(2).    The  first,  under para  (a),  is  whether the adverse effect of the proposed activity on the environment is more than minor.   If the authority judges that it will be, then the authority goes no further under s 94.  The application must be notified under s 93.  If, on the other hand, the authority concludes that the adverse effect of the activity will be, at most, minor, it must make a second determination, under s 94(2)(b), about whether any person nevertheless may suffer some adverse effect going beyond the effect on the environment generally - not being de minimis or merely a remote possibility.”

Blanchard J went on to say at [114]:

[114]    So, in summary at this point, the information in the possession of the consent authority must be adequate for it: (a) to understand the nature and scope of the proposed activity as it relates to the district plan; (b) to assess the magnitude of any adverse effect on the environment; and (c) to identify the persons who may be more directly affected. The statutory requirement is that  the  information before the  consent authority be  adequate. It  is  not required to be all embracing but it must be sufficiently comprehensive to enable the consent authority to consider these matters on an informed basis.

[53]     I do not accept Mr Reardon’s argument that this no longer reflects the current position  in  light  of  subsequent  legislative  changes.    In  Mt  Victoria  Residents

Association  Inc  v  Wellington  City  Council  [2009]  NZRMA  257,  Dobson  J confirmed that the 2003 amendments to the RMA did not alter the approach to be taken. His Honour said:

“[21]    The Supreme Court’s decision in Discount Brands was decided on pre-2003 amendments to what are now ss 93 and 94 of the RMA.  At least three High Court decisions have reflected on the relevance of the differences in wording, to the application of the approach as described in Northcote Mainstreet Inc v North Shore City Council [2006] NZRMA 137;   Sawmill Workers Against Poisons Inc v Whakatane District Council (No 2) [2006] NZRMA 500;   and Petone Planning Action Group Inc v Hutt City Council (High Court, Wellington, CIV 2006-485-405,

10 October 2006, Clifford J).

[22]      In the first of these decisions, Lang J analysed the differences in the sections dealing with a territorial authority’s analysis on whether to not require notification. His Honour found that the changes impacted on the point at which the consideration of adequacy of information available to a consent authority was to be undertaken (paras [90] – [93]). The nature of that analysis had not changed, as Heath J observed in adopting Lang J’s analysis (para [41] of the second decision). In the last decision, Clifford J  confirmed the  appropriateness of  the  Discount Brands approach, and emphasised that the adequacy of information available to a consent authority will depend on all the circumstances in each particular case (para [63]).”

[54]     I accept that when a consent authority is considering “adverse effects” for the purposes of notification (and when considering the subsequent granting of the resource consent), any effects which result from a permitted activity must be disregarded (ss 94A(a) and 94B(3)(b)).   But in this case, the Council’s argument along those lines is flawed.  Essentially, Mr Reardon said that the “adverse effects” complained of resulted from increased stormwater run off which is caused by the increased hard surfaces brought about by the construction of houses, driveways and roads.  He argued that because the land is zoned “residential”, that the construction of roads and houses are a permitted activity on that land, and therefore the resulting adverse effects could be disregarded by the Council in making their decision not to notify.

[55]    However, this argument overlooks the fact that under the District Plan, subdivision is at best a controlled activity.   This is not surprising – the potential effects of a subdivision are of course much more intensive than the potential residential use of land if it were to remain in an unsubdivided state.   The same argument was rejected by Chisholm J in Kawhia Harbour Protection Society Inc v Otorohanga District Council HC HAM CIV 2006-419-1089 2 August 2007.  There,

the defendants had argued that to the extent that any subdivision of the land and the consequential use of the land might generate adverse effects, that those effects were no more than the effects of activities which were otherwise permitted to occur on the land,  and  therefore  had  to  be  disregarded  as  part  of  the  “permitted  baseline”. Rejecting that argument, Chisholm J said:

“[53]    I do not accept these matters can be answered by an application of the “permitted baseline” test.   In Smith v Auckland City Council [2001] NZRMA 503 the Court of Appeal held that the “permitted baseline” test involves a standard of “not  fanciful” as  opposed to  other  possible tests  such  as  ‘more  likely’...  Even applying that high standard there appears to be merit in Mr Lawrence’s evidence that it would be fanciful to suppose that five houses would be erected on the land in the absence of a title for each house which would, of course, require a subdivision.”

Here, to suggest that approximately 100 houses would be constructed without subdivision would not just be fanciful, but absurd.  Subdivision is at best a controlled activity under the District Plan.  As such, the direction in ss 94A and 94B that effects from “permitted activities” can be disregarded has no application to the present case.

[56]     Having  dealt  with  these  primary  considerations,  I  turn  to  consider  the principal question – that is, whether the Council had sufficiently informed itself of the relevant adverse effects, so that it could be satisfied that notification and service was not required under either ss 93 or 94.   Because the Council should have considered the question of whether the applications required notification on the basis that the applications were for discretionary activities, the Council was obliged to obtain sufficient information as to the potential adverse effects of the application and especially  stormwater  effects  before  making  its  decision  as  to  notification  and service.

What  did  the  Council  have  by  way  of  information  to  enable  it  to  make  a decision as to notification, or service on possibly affected persons, or otherwise?

[57]     The applicants challenge the non-notification decisions in respect of both RM2111 and RM2531.  However, the challenge to RM2111 is the most important because it came first in time.

(i)       RM2111

[58]     In respect of RM2111, the Council’s decision recorded:

“4.1      Public Notification Consideration

...

In  this  case  for  the  reasons  discussed  below,  it  is  considered  that Section 93(1)(b) applies as the application is for a Discretionary (Restricted) Activity and that the potential adverse effects of the activity on the environment will in my opinion be minor...

...

As the only potentially affected party with regard to these matters is the applicant, I consider no persons will be adversely affected by the proposal, therefore pursuant to section 92(2) it is not necessary to serve notice on any persons as no persons have been identified as potentially adversely affected.”

[59]     As a preliminary point, I note that the Council had approached the issue (as I have concluded) erroneously on the basis that the application for RM2111 involved a “discretionary restricted activity”.   It is possible the Council’s somewhat cursory approach may have been adopted because, although it was not expressly mentioned, the Council considered itself entitled to rely on the fact that classification as a discretionary (restricted) activity meant that neither notification or service was required.  Alternatively, the Council may have approached the matter on the basis that the activity was such that it was only required to consider those adverse effects which related “to a matter specified in the plan or proposed plan as a matter for which  discretion  is  restricted  for  the  activity”  (pursuant  to  ss  94A(b)  and

94(3)(b)(ii)).  However, the Council now contends that in any event it did comply with the requirements of ss 93(1)(b) and 94(1);  that on the basis of the information it had it could be satisfied that the adverse effects of the activity on the environment would be minor, and Pacific Farms would not be adversely affected.

[60]     The information that the Council had was contained in the “Assessment of Environmental Effects” submitted by the PNDL, dated 20 April 2004.   The only reference in that to stormwater disposal or discharge after the development was at para 3.6:

“Stormwater collected from all sites and road areas will be controlled and directed to Pacific Drive and the gully system on the balanced lots.  Details of how this will be achieved will be included in the final engineering plans that will be submitted to the Council....”

[61]     Following the receipt of the application, the issue of stormwater was given some consideration by the Council. An email dated 25 August 2004 from Patrick Manson to Paul Flynn reads (Fugle affidavit, Vol 2 360):

“Paul, can you confirm with me whether or not the existing stormwater line at the top end of Pacific Drive has been designed to take any additional stormwater?”

Handwritten on that email is the following:

“Yes. No capacity exists in present system to accommodate future development.”

[62]     A joint affidavit has been prepared by Virginia Shaw and Rebecca Blyth on behalf of the Council.  They state at para 52:

“The Council was satisfied that there was sufficient information for it to conclude that the additional stormwater flows could be managed so that there was no erosion. This information comprised:

(a)       Its knowledge of the gully system;

(b)       The application and associated plans;

(c)The applicant’s proposal to accept conditions including the subsequently imposed condition 16 to take all practical steps to avoid erosion;

(d)The opinion of Council engineers that there were practicable steps available  to  avoid  erosion that  were  sufficient to  avoid  erosion effects.”

[63]     However,  other  than  the  passing  comments  which  I  have  noted,  this description appears to overstate the extent of any “assessment”.  Notwithstanding the knowledge that the reticulated Pacific Drive system would not be utilised, prior to the non-notification decision and granting of the resource consent on 30 September

2004, the Council did not subsequently obtain:   information as to volume of stormwater to go into the gully, the impact of that increased stormwater on the gully, what investigations if any had been undertaken to assess increase in stormwater flow

or whether changes as to drainage and stormwater pattern would have effects that would be no more than minor.   It appears that no assessment was made as to downstream effects, whether on the land of Pacific Farms or others of the discharge of stormwater onto that land even though it is said to be into a gully which nevertheless was owned by Pacific Farms.  Whilst there were requests made prior to the determination as to non-notification, none of the responses made reference to stormwater other than an engineering remark that there needed to be an attenuation structure downstream of the discharge point.   But there does not appear to be consideration of where that might occur or, if it was on the boundary of the land of Pacific Farms (as became the case), where such attenuation device would need to be situated.

[64]     There is force in the evidence of Mr G Miller, an expert planner, who gave evidence for Pacific Farms that little consideration was given to potentially affected persons as to downstream effects of discharging stormwater into the gully;  that the concentration of stormwater from surfaces, roads, roofs, accelerated the runoff;  and that this should have been anticipated and considered in relation to potential downstream effects.  It may not have been especially clear how the original proposal changed from a discharge into both the reticulated stormwater system on Pacific Drive and the gully, to the proposal eventually the subject of the consent which did not utilise the reticulated stormwater system.

[65]     I note finally the affidavit of Kevin Judd, an engineer engaged during the

RM2111 subdivision, where he states:

“Council’s conditional consent was issued in October 2004.   After making due enquiry at the Council we were advised that there was no capacity in the existing Stormwater System in Pacific Drive.  The Stormwater System stopped at a Manhole some 40 metres from our boundary....As no stormwater pipe was laid to the end of Pacific Drive, as would normally be the case if capacity existed to connect into, our office decided that our only stormwater option was to discharge into the existing fully   system...Preliminary  engineering  plans   were   submitted  to   Council   in December 2004. These calculations show a discharge into the gully of 204 litres per sec (when subdivision is fully developed.” (emphasis added)

Given that the non-notification decision was made in September, the dates referred are significant.   Such calculations were precisely the sort that should have been considered by the Council prior to its notification and resource consent decisions.

[66]     When the decision to grant the consent under RM2111 was made the Council simply concluded, on the issue of notification, that the activity was considered to be for a restricted discretionary activity and as a result the potential adverse effects of the activity on the environment were minor.  Potential adverse effects which were identified relate to site stability, access non-compliances, visual impacts and water supply.   There was no mention of stormwater effects in relation to downstream landowners.

[67]     I  agree  with  Mr  Reardon  that  it  is  adverse  effects  to  the  necessary environment in its natural state (i.e. Johnstone Drive Gully before it was filled by Pacific Farms) that are relevant but it still remains a predictive reasonably informed assessment whether what is proposed by the applicants may lead to adverse effects being more than minor, and whether or not the Council has sufficient information to make such an assessment – at the time it should be made (and not from later information) – will depend on all the circumstances.

(iii)     RM2531

[68]     In this case, the material before the Council, relevant to its assessment of any adverse effects, was not only inadequate and insufficient but woefully so.   It may also have been deceptive in the sense that the Council may not have known where the accumulated and accelerated discharge into the gully was to occur and how, by reason of that location, it might have affected immediate properties lower down. Further, it may not have been appreciated that whilst the gully was agreed to be an “intermittent watercourse” in the sense that in the natural state of topography water permeated or percolated down it from time to time and it may have been within technical definitions a “river”, nevertheless, it was simply land owned by the “lower” neighbour over which an increased flow of water at increased velocity and volume over a shorter period, was to occur.

[69]   Without sufficient information the Council was unable to give proper consideration to the relevant issue or to reach that view and it did not request further information on potential effects which it could and should have done.  I accept the

argument  that  the  decision  not  to  notify  or  to  require  service  was  based  on inadequate information as was the decision to grant the consent RM2111.

[70]     I  turn  to  deal  with  some  other  issues  contained  in  counsel’s  arguments, relating to the effect of conditions in the resource consents and the relevance of absence of any “post-decision” effects.

Effect of conditions in resource consents

[71]     In  the  course  of  the  proceedings,  Mr  Reardon  on  behalf  of  the  Council pointed to the fact that RM2111 was granted with a condition imposed which stated that:

“(16)    The developer of the land subject to this consent must ensure as far as possible that the carrying out of land clearance, earthworks and other construction activity does not result in:

...

¾   Damage to property from stormwater runoff.”

The consent for RM2531 was granted with the same condition (see condition 17).

[72]     Accordingly, Mr Reardon argued that the imposition of these conditions was important, because if an applicant offers conditions which would remedy or mitigate the proposed activity, a Council is entitled to take those into account when assessing whether the adverse effects of the proposed activity will be minor, or de minimis.

[73]     The Court of Appeal recently considered this question in Auckland Regional Council v Rodney District Council [2009] NZRMA 453.   One of three questions considered was whether in making a decision as to notification a consent authority could take into account prospective conditions of consent as mitigating the effects of the activity.   The Court held that the answer was yes, in respect of conditions inherent in the application, but no, in respect of those which were not.  It confirmed the approach in Montessori Pre-school Charitable Trust v Waikato District Council [2007] NZRMA 55, namely:

“[12]    ...it would defy common sense if when making the s 93 decision the consent authority could not have regard to the practical  reality  of what adverse  effects  on  the  environment would  be.    To  determine that  self- evidently  requires  consideration  of  conditions  that  would  affect  such reality.”

And William Young P added, at [60]:

“[60]    I would confirm that view.  It has no application to conditions which are both certain and an integral part of the application so that potential objectors have the opportunity to appraise them when deciding whether to object, to appear and to give or call evidence.”

[74]     Whilst it is clear that the decision-maker is entitled to consider conditions when assessing “adverse effects” for the purpose of notification, the condition imposed here was in essence that the works “as far as possible” did not result in adverse effects, which tends to beg the question.   Any “condition” accepted by a developer must be considered with an air of reality and it cannot be the case that the imposition of a condition such as this would mean that no further inquiry into adverse effects is required.  To impose a condition such as framed in this case cannot excuse a Council from properly considering whether adverse effects may arise so as to require notification.

[75]     In any event, I am persuaded that the Council did not sufficiently inform itself as to the potential effects.  The imposition of a “condition” to mitigate effects cannot assist the Council if it did not have sufficient information in the first place to assess the extent of what those potential effects could be.

Relevance of evidence of “post-decision” effects

[76]     I have already briefly alluded to this question.

[77]     Mr Reardon made the point in the Council’s submissions that there was no evidence to show that there had been any adverse effects on Johnstone Drive Gully “in its natural state”. The argument appeared to be that damage only occurred once the  applicants  had  filled  that  part  of  the  gully,  pursuant  to  their  own  resource consent. However, given that the applicants’ challenge is to the Council’s non- notification decision, the respondents’ argument on this point demonstrates some

misunderstanding as to the issue which the Court must decide.  Mr Reardon said in his written submissions:

“One can examine at length whether there was, or was not, sufficient engineering information for the Council officers to decide whether the adverse effects from the stormwater runoff would be more than minor.  But the undisputed fact in this proceeding is that there is no evidence that there were any adverse effects on the Johnstone Gully in its natural state, let alone minor effects...With respect, the Court should decline to get involved in an analysis of the notification issue when there is no evidence to suggest that the judgment made by the planning officer was incorrect in fact.”

[78]     However, an examination of whether or not there was sufficient information is precisely the question which the Court must determine.   The Court of Appeal’s decision in Palmerston North City Council v Drury [2008] NZRMA 90 is relevant. In that case, residents had successfully challenged the Council’s decision not to notify an application for a resource consent for a orthodontist practice.  On appeal, the Court of Appeal held that Miller J had erred when he took into account evidence filed on the applicant residents’ behalf as to what had happened with respect to traffic since the orthodontist practice had opened.   The appellants submitted that such evidence was inadmissible because it was not relevant;  it did not relate to the matter in issue, namely the reasonableness of the Council’s decision not to notify based on information available to it at the time.  The Court of Appeal agreed that this submission was sound.  The Court referred to the earlier Court of Appeal decision in Roussel Uclaf Australia Pty Ltd v Pharmaceutical Management Agency Ltd [1997]

1 NZLR 650 in which Richardson P writing for the Court said:

“What is under review is the challenge to the integrity of the earlier decision- making process, on which the new material does not impinge in any significant way.”

The Court in Drury also referred to the observation of the Court of Appeal in Discount Brands that it is wrong in principle to impugn a Council’s decision by later-generated material which was not before the Council at the time the non- notification decision was made: [2004] 3 NZLR 619 at [46]. Although the Court’s decision was reversed by the Supreme Court, the Judges of that Court do not appear to have questioned the correctness of this proposition.

[79]     These considerations are equally relevant to the present case.  The Council is attempting to say that the lack of evidence of subsequent adverse effects is relevant. However, just as evidence of adverse effects is irrelevant to a challenge to a non- notification decision, so must evidence of no effects.   What is relevant is the information before the Council when it made its decision – if there was insufficient information for the Council to make the required assessment, then any subsequent evidence demonstrating whether the prediction was in fact correct remains irrelevant to the integrity of the decision itself at the time it was made.

[80]     By the same reasoning, I am of the view that Pacific Farms cannot say that the  Council  should  have  had  regard,  in  considering  adverse  effects,  to  any restrictions that the granting the consent could have on future development of their land.   This was made clear in Queenstown Lakes District Council v Hawthorn Estate Limited [2006] NZRMA 424 (CA).  There, the Court of Appeal considered the meaning of the word “environment” in the context of s 104(1)(a) of the RMA, which requires the consent authority to have regard to “(a) any actual and potential effects on the environment of allowing the activity”.  The Court said at [84]:

“In  our  view,  the  word  ‘environment’ embraces the  future  state  of  the environment as it might be modified by the utilisation of rights to carry out permitted activity under a District Plan.  It also includes the environment as it might be modified by the implementation of resource consents which had been granted at  the time  a  particular application is  considered where it appears likely that those consents will be implemented.  We think Fogarty J erred when he suggested that the effect of resource consents that might in future be made should be brought into account in considering the likely future state of the environment.”

[81]     Because further development by the applicants required resource consent which had not at that time been applied for, the Council was not required to consider whether there would be adverse effects if such consent was granted in the future. But that said, that does not affect the conclusion I have reached that the Council did not have sufficient information to conduct the assessment of adverse effects, even on the gully in its natural state as it existed at the time the non-notification decision was made.

[82]     The  decision  not  to  require  notification  of  RM2111  was  wrong.    The conclusions in respect of that application are sufficient to dispose of the lawfulness

of later notification decisions.  Once the decision not to notify RM2111 was made, consequential decisions relating to the Eastern Gully under RM2531 had to be similarly flawed and the consequential resource management consent decisions were infected by the original procedural unlawfulness because had there been an original decision to notify or require service, what should later have followed would not necessarily have been the consequential decisions.

[83]     In  any  event  the  Council  had  recorded  that  in  accordance  with  “best practice”, the RM2531 application defaulted to a higher category of classification and was treated as a discretionary (unrestricted) activity.   But the information considered by the Council in respect of RM2531 was insufficient for the purposes of the non-notification decision.   The opinion of Ms Shaw and Ms Blyth (their joint affidavits paras 90 and 98) provide little independent evidence or information as to why they could be “satisfied” as to adverse effects for the purpose of notification.

[84]     RM2636 was similarly flawed.  At the time it was granted the Council knew that 16 months earlier it had granted RM2553 and that earthworks were to re-contour and alter the nature of the receiving environment in the Johnstone Drive Gully. There was no information in the application which could properly lead a reasonable planner to conclude that “no party apart from the applicant is adversely affected by the  proposed  activities”.    The  information  then  known  to  the  Council  was  that Pacific Farms would certainly be adversely affected by the discharge of concentrated stormwater flows into the head of the Johnstone Drive and Eastern Gullies.

[85]     Those findings do not dispose of the case.  There remains the argument of the Council and PNDL that relief should be denied on the basis of estoppel and delay. And there is the separate issue relating to the absence of any resource consent by Horizon for discharge of water under the Regional Plan.  I dispose of the latter point first.

Consent of the Regional Council?

[86]    Whether or not such consent was required involves a consideration and interpretation of the Regional Plan.  What Horizon may decide, or have decided, is

unknown.  Counsel for Pacific Farms accepted that the parties cannot ask this Court to assess whether the activity is permitted under the Regional Plan.  Rather, counsel said that the issue of the Regional status of the activity has never been determined.

[87]     Mr Paine, counsel for PNDL, contended that this issue can only be dealt with by the Regional Council which is not a party to the proceeding, and if there exists breaches of the Regional Plan it is a matter of enforcement by that Authority.

[88]     There is insufficient material before this Court to express any definitive view. The relevance (if any) of the Regional Plan could only be determined by Horizon, if it is asked to do so, and/or the City Council if it is ordered to do so on any reconsideration of the resource consents or conditions, should this arise out of this decision.  I will come to that later.

Is Pacific Farms estopped from challenging the Resource Consents?

[89]     Both Mr Reardon and Mr Paine submitted that Pacific Farms, knowing of the development work and stormwater discharge of PNDL, and then seeking and obtaining its own resource consent from the Regional Council in August 2007, is estopped from now challenging the legality of the earlier resource consents granted to PNDL.   Pacific Farms was, counsel said, offering to connect to the PNDL stormwater system.

[90]    Counsel rely upon the decision of Augier v Secretary of State for the Environment (1978) 38 P & CR 219. The essence of that decision was that where an applicant for planning permission gives an undertaking, and in reliance on that undertaking a planning authority grants planning permission subject to conditions which are broad enough to embrace the undertaking, then the applicant is estopped from later denying that the implementation of the permission was conditional on the compliance with the undertaking in saying there was no power to require compliance with it.

[91]     In Frasers Papamoa Ltd v Tauranga City Council HC TAU CIV 2008-470-

465 20 September 2009 Allan J, Allan J thoroughly considered the Augier principle

(at [22] – [34] which I respectfully adopt).  I summarise that.  In order to activate

Augier principles, there must exist:

•a clear and unequivocal undertaking to the Court and/or the other parties;

•receipt  of  the  grant  of  resource  consents  in  reliance  on  that undertaking;

•the  imposition  of  a  condition  on  those  resource  consents  which broadly encompassed the undertaking;  and

•detriment  to  the  Court  or  other  parties  if  the  undertaking  is  not complied with.

[92]     I do not think that the present situation is one to which the Augier principle is relevant or applicable.   The decisions which Pacific Farms seek to impugn were made  three  years  prior  to  the  granting  of  resource  consent  to  it,  which  the respondents contend gives rise to consideration of the Augier principle.  Obviously, the question of delay in bringing these proceedings requires separate consideration. But the focus here must remain on the decision-making process of the Council in relation to RM2111 and RM2531.  I do not think that Pacific Farms can be criticised, or prevented from seeking relief, because they sought to make the best of a bad situation as existed at the time.  It was presented with a fait accompli, having to face the  realities  that  it  had  to  accept  water  then  legally  being  discharged  onto  its property.

[93]     The real issue, and it is not an easy one, is whether the Court should exercise its discretion to grant relief – and, if so, its nature, - by reason of questions of delay and prejudice.

Delay and prejudice

[94]     The proceedings were issued on 22 October 2008.   The resource consents were granted to PNDL on 30 September 2004 (RM2111);   29 August 2006 (RM2351);     28  November  2007  (RM2604);     and  4  February  2009  (but  not discovered until close to the hearing).  Clearly, there has been substantial delay of between two to four years between the first two decisions.

[95]     Counsel for both the Council and PNDL contended that even if there had been error of law in the granting of the resource consents – because of the flawed/wrongful non-notification decision – the Court should exercise its discretion and refuse relief because of this delay.

[96]    Further, Mr Reardon submitted that Pacific Farms “misled” the Horizon Regional Council because, after obtaining its consent to connect the pipe system emerging from PNDL’s land, and filling in that lower part of Johnstone Drive Gully, it having achieved its objective, it only then notified challenge to the resource consents granted by the Council to PNDL.  That is, counsel submitted that Pacific Farms did not have any intention of connecting its stormwater system to the pipe system from the adjoining land.   It contends that during the period of delay to challenge the Council’s resource consents, Pacific Farms sought Regional Council resource consent, filled the Johnstone Drive Gully almost to the top in 2007/2008, and only thereafter brought these proceedings.

[97]     The usual presumption is that where there has been a breach of the statutory requirement to notify, a consent should be quashed:   see Bayley v Manukau City Council [1999] 1 NZLR 568 (CA); Waiotahi Contractors Ltd v Murray [1999] NZRMA 305 (CA);   Discount Brands v Westfield (New Zealand) Ltd [2005] 2

NZLR 597 (SC);  Progressive Enterprises Ltd v North Shore City Council [2006] NZRMA 72;  Rea v Wellington City Council [2007] NZRMA 339.

[98]     There may be special circumstances which displace that presumption.   An example of this can be seen in Skyline Enterprises Ltd v Queenstown Lakes District Council where the “undue delay” in issuing proceedings (being 11 months after the

challenged consent was granted) resulted in relief being denied.  Likewise, Miller J declined relief in Hawkes Bay Land Protection Society v Hastings District Council HC NAP CIV-2009-441-000143 7 May 2009 Miller J because:

“[65]    ...the delay is extensive and not satisfactorily explained, the facility has been built, and it has not been shown that a declaration would serve any useful purpose.”

[99]     Counsel for both respondents rely upon those cases.  Apart from the obvious delay, it was argued that real prejudice would arise to PNDL which has developed the land (or some of it) and to those who have purchased sections and built or are building houses since the grant of the resource consents.

[100]   Mr Johnston contended that Pacific Farms was entitled to be heard as to conditions attaching to the consents – as they may relate to discharge of water – but would continue to receive water onto its property (at the now filled Johnstone Drive Gully) from the pipe of PNDL.  He said that there was no question that PNDL would get “retrospective consent” and that the only issue would be conditions of dealing with water at the boundary of the land of PNDL and Pacific Farms.  He said that it was not the case that quashing the consent, requiring notification, and re-considering the application would be futile, because added conditions would be sought to be imposed upon PNDL.

[101]   Delay alone will not usually prevent the Court exercising its discretion to refuse relief and the overall interests of justice – which include issues of prejudice and futility – have to be broadly considered.   Until set aside, the consent remains valid.   Somers J said in Hill v Wellington Transport Licensing Authority [1984]

2 NZLR 314, 324 (CA):

“But it does not follow that to establish some want of legality on the part of a tribunal or authority will ipso facto lead to the setting aside of its order or decision.  Such a result will depend on the gravity of the error in the context and circumstances of the case.   This too emphasises that a decision by a Court of competent jurisdiction is necessary to establish invalidity.”

[102]   The error (not to require notification) in this case has denied Pacific Farms its right to be heard on a crucial issue, namely the receipt of water discharged into Johnstone Drive Gully on its land.  This was a error leading to Pacific Farms being

faced with a fait accompli with which it has had to deal when seeking resource consent to develop its land.  But the difficult question is whether any point would be served by quashing the consents and requiring reconsideration of the applications. The relevant work has been done with the development fill and pipe constructed by PNDL.  The land of Pacific Farms is no longer in its “natural” state (that is, with Johnstone Drive Gully as it was) being partly filled by Pacific Farms at the time of any reconsidering of the application.

[103] I have been referred to the decision of Keane J in Rennie v Thames Coromandel DC [2008] 14 ELRNZ 191 as it relates to the exercise of the discretion of the Court.  There, error of law had been found, but because of possible prejudice to third parties, Keane J devised a method by which there could be reconsideration of the application but still protecting those interests.  Although the Judge set aside the resource consents he did not set aside the building consent that was tied to those consents, nor did he grant injunctive relief requiring removal of fill placed in accordance with a resource consent or buildings constructed in accordance with it. He said that the resource consent which related to the buildings was only invalid as it was tainted by an allied earthworks consent.  The Judge said at [158]:

“....the better course is for the Council to reconsider both applications but on a notified basis, for any appraisal of the actual effects of the earthworks to be completed co-operatively and for any remedial measures to be agreed.”

Whilst Keane J set aside the resource consents so that they could be re-considered on a notified basis, it was obvious that he proceeded on the basis that the third parties who had acted in reliance upon the consents would not eventually be prejudiced.

[104]   The declarations originally sought in this case were refined by counsel for Pacific Farms in oral submissions to seek essentially a declaration that the non- notification decisions were unlawful (leaving aside for the moment the issue of invalidity due to the Regional Plan).   Mr Johnston made it clear that the resource consent itself could not be challenged but only the conditions as they might relate to discharge of stormwater.

[105]   The Court’s discretion to refuse relief in Judicial Review proceedings is narrow because if there is substantial prejudice to an applicant a remedy usually

should follow:   Air Nelson Ltd v Minister of Transport [2000] NZCA 26. The primary basis for declining to grant relief to Pacific Farms is the substantial delay in bringing proceedings, at least two years after becoming aware of the stormwater discharge pursuant to the consent.

[106]   In the end I have come to the view that I should not make a declaration in the manner sought, which had the effect of setting aside the consents, despite there being error of law by the Council in making the non-notification decisions because of:

•    the extensive delay;

•    completion of development and drainage work pursuant to the consents;

•   development  by  Pacific  Farms  through  partial  fill  of  that  part  of  its receiving land, so that the current receiving land is different to that which existed when the applications were made.

[107]   However, Pacific Farms having been deprived of the right to be notified and heard on the resource consent applications are entitled to some form of declaration to recognise that right.  I have considered whether a declaration in a form which might result in reconsideration only of conditions attaching to the resource consent (relating to stormwater discharge) could be made, but have concluded that that would be impractical without declaring that the resource consents should formally be quashed. As I have said, counsel for Pacific Farms has accepted that there would be no question that consents would inevitably be given even if reconsidered and because of the delay and matters referred to in [105] I decline to exercise the Court’s discretion in a way which would require reconsideration of the applications.  Likewise, because Horizon is not a party to these proceedings (see Dairy Proprietary Association (Inc) v New Zealand Dairy - Produce Control Board [1926] 45 NZLR 535 I decline to exercise the Court’s discretion to declare that the stormwater discharge is not permitted and is unlawful in terms of the Regional Plan.

[108]   Nevertheless, so as to provide recognition of the infringement of the rights of

Pacific Farms, I make a declaration in the following terms:

(a)The Palmerston North City Council erred in law in its decisions not to notify  Pacific  Farms  of  the  applications  of  Palmerston  North Industrial Residential Developments for consents RM2111, RM2531, RM2636.

(b)Pacific Farms were denied their right to be heard as to conditions, if any, to attach to the resource consents as they related to the discharge of   stormwater   from   the   land   of   Palmerston   North   Industrial Residential Developments onto the land of Pacific Farms.

[109]   Costs are reserved.  If the parties are unable to agree counsel are to submit memoranda.

J W Gendall J

Solicitors:

Fitzherbert  Rowe,  Solicitors,  Private  Bag  11016,  Palmerston  North  for  Applicants    (email:

[email protected])

(Counsel acting: K Johnston, Lambton Chambers, P O Box 5058, Wellington email:  [email protected])

Cooper  Rapley,  Solicitors,  P  O  Box  1945,  Palmerston  North  for  First  Respondent     (email:

[email protected])

Wadham Goodman, Solicitors, P O Box 345, Palmerston North for Second Respondent
(Counsel   acting:     G   A   Paine,   Barrister,   P   O   Box   12-015,   Palmerston   North      email:

[email protected]z)