Porirua City Council v Ellis
[2017] NZHC 784
•26 April 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2016-485-769 [2017] NZHC 784
UNDER THE Resource Management Act 1991 IN THE MATTER
of an appeal under section 299 of the Act
BETWEEN
PORIRUA CITY COUNCIL Appellant
AND
DARRYL BERWYN ELLIS Respondent
Hearing: 20 February 2017 Appearances:
J G A Winchester and H P Harwood for Appellant
S F Quinn for RespondentJudgment:
26 April 2017
JUDGMENT OF CULL J
[1] This is a Resource Management Act costs appeal brought by the Porirua City
Council (the Council) against the respondent Café Owner, (Mr Ellis) over
$27,891.89. The issue before the Environment Court was whether the Council’s charges of $78,357 for a resource consent application were reasonable in the circumstances. The Environment Court reduced the charges payable to the Council by $27,891.89 and the Council now appeals that decision.1
[2] The appeal is brought under s 299 of the Resource Management Act 1991 (the RMA) on questions of law only and concerns the statutory basis for the Council to fix administrative charges under s 36 of the RMA and the exercise of the
Environment Court’s discretion.
1 Ellis v Porirua City Council [2016] NZEnvC 168.
PORIRUA CITY COUNCIL v ELLIS [2017] NZHC 784 [26 April 2017]
Factual background
[3] Mr Ellis is the sole Director of Groundup Café Ltd and owns Groundup Café (the Café) located on a rural zoned site within Pauatahanui Village. Only primary production activities are permitted in the rural zone and any commercial activity requires resource consent as a discretionary activity. The Café was originally established under resource consent RC2495 granted in March 2001 with the following restrictions: limited opening hours, a capacity limited to a maximum of 35 patrons, alfresco seating limited to the front of the building and 10 parking spaces provided at the rear.
[4] The Council identified that Mr Ellis required a new resource consent when it processed his application for building consent to extend the Café. On 29 June 2011, the Council granted the building consent with a notice under s 37 of the Building Act
2004, which required a resource consent before building work commenced. However, Mr Ellis undertook building works to expand the café without obtaining the required resource consents.
[5] Over the course of two years, the Council encouraged Mr Ellis to apply for a resource consent, during which time he continued to trade. Mr Ellis eventually applied for a retrospective resource consent on 1 August 2013 and paid the required Council fixed charge of $4,140 (GST included). This retrospective resource consent included an extension to the building, an increase in the capacity of the Café to a maximum of 65 patrons as well as an enlargement of the carpark to 22 parking spaces.
[6] After publicly notifying the consent application, the Council received 285 submissions on the application, with 61 in full or partial opposition. Mr Ellis contacted the Council in mid-February 2014 to discuss the costs of processing the resource consent. He had noticed the high number of submissions and was concerned about costs. A meeting was held and a number of options were discussed to minimise the costs involved.
[7] On 11 April 2014, the Council appointed an independent Commissioner to hear and decide the consent application (the Consent Commissioner).
[8] Before the hearing to determine the consent application, a number of requests for further information were made. These requests related to out-of-scale or inaccurate plans, an assessment of the effects on the on-site wastewater system, discrepancies between the maximum number of patrons and seats sought by Mr Ellis as well as seeking an independent traffic assessment by a traffic engineer, at the request of the Consent Commissioner.
[9] On 30 June 2014 Mr Ellis received the first invoice for $6,279 (GST included) as a processing fee for additional charges, being the difference between the charges to date ($10,419) and the fixed charge of $4,140 he had already paid.
[10] The hearing was held between 17 and 19 November 2014. It was attended by Mr Ellis’ legal counsel, architect, traffic engineer and planner, 19 submitters and their representatives and/or witnesses (totalling 26 people), as well as nine Council staff and/or consultants. On 8 January 2015 the resource consent application was granted. There were no appeals to the Environment Court on the basis of this decision.
[11] On 25 February 2015, Mr Ellis received a second invoice for $74,217.36 (GST included), not including the $4,140 he had already paid. This brought the total cost of the two invoices for processing the application to $78,357.36 (GST included). The breakdown of the costs included the work of the Consent Commissioner, the independent traffic engineer, printing and advertising costs, the time of the planning officer and the Manager of Land Use and Subdivision Engineering, Council’s Leisure Assets and Services as well as administrators’ time. Mr Ellis had not requested an estimate of charges and no estimate had been provided by the Council before issuing the February 2015 invoice.
[12] Mr Ellis objected to these costs as unreasonable, unjustified and disproportionate under s 357B of the RMA, and he sought a reduction of at least 50 per cent to the total amount of charges levied. The Council appointed a second independent Commissioner to consider the costs objection (the Costs Commissioner). The Costs Commissioner accepted the recommendation of the Resource Consents Planner, who had processed the application, to reduce the charges
by a small sum of $777.75 (GST excluded). This reduction was to account for the time of a Council officer ($241.50) and the Consent Commissioner ($536.25) on the basis that it concerned property legal issues, which were not the domain of the RMA. All the other charges were upheld.
[13] Mr Ellis then appealed the decision of the Costs Commissioner to the
Environment Court.
The Environment Court’s decision
[14] After setting out the background and parties positions regarding the dispute, the Environment Court outlined the statutory basis for cost recovery under s 36 of the RMA. The Environment Court’s decision follows the established legal steps for fixing an additional charge under s 36(4) of the RMA, as confirmed by the High Court in Hill Country Corp Ltd v Hastings District Council.2
[15] The Environment Court observed that while the actual costs incurred in relation to the resource consent application process were not disputed, the reasonableness of the costs was. A breakdown of the time and costs spent by Council staff, consultants and the Consent Commissioner on processing Mr Ellis’ application was canvassed by the Court and the Council’s administrative charges were broken down into three broad categories, which follow.
The Council’s officers’ time
[16] The Environment Court determined that some of the costs charged by the Council were unreasonable, including an informal parking survey by the Council’s consent planner, the combined time spent on submissions and writing the s 42A report, excessive site visits, time spent on dealing with the property law aspects, as well as other administrative activities related to processing. The Court assessed the reasonable charge for the Council’s own resource consent process as $23,723.95
(GST included).
2 Hill Country Corp Ltd v Hastings District Council [2010] NZRMA 539 (HC).
The traffic engineer’s costs
[17] The Environment Court also considered that it was unreasonable for costs to be charged for an initial parking survey and related work undertaken by the Council, in light of the Council engaging an external consultant traffic engineer later in the process. Further, while the Court viewed the work of the consultant engineer as making a contribution to the consent process, charging the full cost of the engineer’s work was unreasonable because a number of matters were considered that went beyond the consent process at hand. The Court found that a reasonable charge for the engineer was $10,158.31 (GST included). This represented a one third reduction in the costs originally charged.
The Consent Commissioner’s costs
[18] The Environment Court observed that although an assessment was required into the resources needed to deal with the consent, it concluded that the overall cost of the Consent Commissioner was “on the high side”, particularly the large number of hours recorded for deliberation and decision-writing, in light of the nature and scale of the consent application. The Court determined that a reasonable charge for the Consent Commissioner was $21,326.16 (GST included), being 70 per cent of the original charge.
[19] The Environment Court held that the actual and reasonable costs to be charged by the Council were $55,208.42 (GST included) and the fixed charge paid by Mr Ellis ($4,140) was a long way short of satisfying these actual and reasonable costs.
[20] The Court then made a further reduction of $5,520 (GST included), being approximately 10 per cent, to be fair and appropriate. The Court justified this final reduction in costs because the Council allowed the costs to escalate to a level that was clearly not commensurate with the scale and effects of the proposal and failed to notify Mr Ellis of an estimate of the increasing magnitude of the costs.
[21] The Environment Court fixed the final costs, as actual and reasonable, at
$49,687.723 (GST included).4 This was a reduction of $27,891.89.
Nature of the appeal
[22] The appeal is brought pursuant to s 299 of the RMA, which permits a party to proceedings before the Environment Court to appeal to the High Court on a question of law.
[23] The Council relies on Hill Country Corp Ltd v Hastings District Council as the leading authority on administrative costs under the RMA.5 In the Hill Country decision, the High Court summarised the principles relevant to a High Court appeal from the Environment Court, with reference to the Supreme Court’s decision in Bryson v Three Foot Six Ltd.6 The High Court stated that it would only interfere in
an Environment Court decision if the Court:7
(a) applied the wrong legal test;
(b)came to a conclusion without evidence, or one which, on the evidence, it could not reasonably hold; and
(c) took into account matters extraneous to the decision or failed to take relevant matters into account, with the Environment Court given some latitude in reaching findings of fact within its area of expertise.
[24] These principles were later confirmed in the High Court decision of Ayrburn
Farm Estates Ltd v Queenstown Lakes District Council.8 In that case, it was stated that in respect of appeals under s 299 of the RMA, the question of the weight to be
3 The Environment Court incorrectly calculated this final cost. The actual and reasonable costs were determined as being $55,208.42 (GST included), with a further reduction of $5,520 (GST included), which should equate to $49,688.42.
4 Deducting the money the respondent had already paid, the balance of costs to be paid to the
Council was determined by the Environment Court as $45,547.72. In light of note 3 above, the Environment Court made a further mistake in the balance to be paid by the respondent: this should be $45,548.42.
5 Hill Country, above n 2.
6 Bryson v Three Foot Six Ltd [2005] 3 NZLR 721 (SC).
7 Hill Country, above n 2, at [9] – [10].
8 Ayrburn Farm Estates Ltd v Queenstown Lakes District Council [2012] NZHC 735.
given to relevant considerations is for the Environment Court alone, and is not for reconsideration by the High Court, as a point of law.9 It was further stated that not only must there have been an error of law, but that error must have been a “material” error, in the sense that it “materially affected the result of the Environment Court’s decision.”10
Issues on appeal
[25] The Council submits the Environment Court made three errors of law in its assessment of costs, by:
(a) failing to properly consider and apply the statutory power for local authorities to recover their actual and reasonable costs for processing resources consents in s 36 of the RMA (misapplication of s 36 RMA);
(b) relying on irrelevant considerations in order to make discounts to the
Council’s actual and reasonable costs (irrelevant considerations); and
(c) making positive factual findings which were not available on the evidence (unsupported evidential findings).
[26] The parties’ submissions are considered under each of the three alleged errors
of law.
First error - misapplication of s 36 RMA
[27] The first issue is whether the Environment Court applied the wrong legal test, in terms of s 36 of the RMA and exceeded its jurisdiction, in two respects:
(a) by incorrectly setting aside the Council’s Administrative Charges Policy, when the Court replaced the Council’s hourly rate with its own for the administrative work undertaken by the Council’s processing
planner; and
9 At [35].
10 At [36].
(b)incorrectly applying a test of overall fairness in the application of s 35(5) of the RMA and remitting part of the Council’s costs.
[28] As this is a challenge to the Council’s power to levy administrative charges,
the statutory basis for cost recovery by the Council needs to be considered.
The statutory basis for cost recovery – s 36 of the RMA
[29] The power of the Council to levy administrative charges is contained in s 36 of the RMA. The relevant parts of s 36 provide:
36 Administrative charges
(1) A local authority may from time to time, subject to subsection (2), fix charges of all or any of the following kinds:
…
(b) charges payable by applicants for resource consents, for the carrying out by the local authority of any 1 or more of its functions in relation to the receiving, processing, and granting of resource consents (including certificates of compliance and existing use certificates):
…
Charges fixed under this subsection shall be either specific amounts or determined by reference to scales of charges or other formulae fixed by the local authority.
(2) Charges may be fixed under subsection (1) only—
(a) in the manner set out in section 150 of the Local Government
Act 2002; and
(b) after using the special consultative procedure set out in section
83 of the Local Government Act 2002; and
(c) in accordance with subsection (4).
(3) Where a charge fixed in accordance with subsection (1) is, in any particular case, inadequate to enable a local authority to recover its actual and reasonable costs in respect of the matter concerned, the local authority may require the person who is liable to pay the charge, to also pay an additional charge to the local authority.
(3A) A local authority must, upon request by any person liable to pay a charge under this section, provide an estimate of any additional charge likely to be imposed under subsection (3).
(4) When fixing charges referred to in this section, a local authority shall have regard to the following criteria:
(a) the sole purpose of a charge is to recover the reasonable costs incurred by the local authority in respect of the activity to which the charge relates:
(b) a particular person or persons should only be required to pay a charge—
(i) to the extent that the benefit of the local authority’s actions to which the charge relates is obtained by those persons as distinct from the community of the local authority as a whole; or
(ii) where the need for the local authority’s actions to which the charge relates is occasioned by the actions of those persons; or
…
(5) A local authority may, in any particular case and in its absolute discretion, remit the whole or any part of any charge of a kind referred to in this section which would otherwise be payable.
…
[30] In this case, the Council levied a fixed charge under s 36(1) for processing Mr Ellis’ resource consent application of $4,140 (GST inclusive). Because the Council’s costs exceeded the fixed charge, the further invoices were rendered to Mr Ellis as “additional charges” under s 36(3) of the RMA.
Administrative Charges Policy
[31] Under s 36(2) of the RMA, the Council finalised its Administrative Charges Policy (Policy), following a consultation process prescribed under s 83 of the Local Government Act 2002. The Council sets an annual schedule of Resource Consent Fees for each financial year in conjunction with its Annual Plan and the schedules of fees set out the Council’s fixed and hourly charges for the processing of resource consents.
[32] The fixed charge and the additional hourly rate applicable in 2013 was the fixed charge of $4,140 and the hourly rate for additional costs was $138 an hour. In the Schedule, annexed to the Council’s Policy, the fixed and additional fees are described as follows:
The dollar amounts shown in the 'Fixed' fee column represent a reasonable average of the cost of processing each particular type of application. They act as a deposit.
If the time spent processing the application is greater than the time covered by the fixed fee then Council will recover the additional processing cost at the hourly rate shown as the 'Additional (per hour)' column via an invoice to the applicant.
The invoice may also include a monitoring fee if applicable, and the cost of any specialist advice or other costs set out in the schedules below.
[33] Included in the “schedules below” is the category “Notified Resource
Consent and Service of Notice”, which applied in Mr Ellis’ case.
[34] The fees applicable from 1 July 2014 includes an increased hourly rate for additional charges at $145 per hour. The respective schedules state that resource consent fees were set following public consultation and by resolution of the Council under the RMA at the respective Council meetings held on 26 June 2013 and 26 June
2014.
[35] The way in which the legislation works is that s 36(3) enables local authorities to recover additional charges where their actual and reasonable costs are not covered by the fixed charge. Section 36(4) sets the criteria to which local authorities must have regard, in fixing the additional charges. Importantly, s 36(4)(a) reinforces that the sole purpose of an additional charge is “to recover the reasonable costs incurred by the local authority in respect of the activity to which the charge relates”. In this case, Mr Ellis specifically must have received a benefit from the Council’s processes for which he is being charged, which satisfies one of the s 36(4)(b) criteria. The other important provision is s 36(5) of the RMA, which confers an “absolute discretion” on the local authority to remit the whole or any part of any charge, which would otherwise be payable. The charge here relates to a kind referred to in s 36 and includes the fixed charge as well as the additional charges.
Council’s position
(i) The Administrative Charges Policy
[36] The first aspect of the Council’s submission, in asserting that the Environment Court applied the wrong legal test under s 36 of the RMA, is that the Court incorrectly set aside the Council’s Administrative Charges Policy. The Council argues that the legislative consultation process under the Local Government Act involves an opportunity for members of the public to make submissions and be heard. The schedule is set by elected members, after a full consultation process and
takes into account the Council’s actual and reasonable costs of processing resource
consents.11
[37] The Council adopts a single hourly rate for all of its staff involved in a resource consent application, regardless of experience or qualification. The Environment Court, it submits, is not entitled to replace a Schedule of Costs in its consideration of reasonableness under s 36(4)(a). The Environment Court lacks jurisdiction to look behind or review Council policies and any challenges to the Policy and Annual Schedule can only be made by way of judicial review in the High Court.
[38] The Council accepts that it is proper for the Environment Court to reduce Council’s costs on the basis of the principles in s 36(4), such as a charge that did not arise from the consent application, but, it submits the Environment Court is not entitled to reset charges and policies which are subject to a different statutory process.
[39] The Council further submits that the administrative tasks, namely the Council’s officers’ time processing the resource consents were not unnecessary and that the time taken was not unreasonable. Because the identity and experience of the person performing the work is irrelevant under the Council’s Policy, the single hourly rate applies and there is no basis, it submits, for finding that those charges were not actual and reasonable.
[40] The Council asserted that it did not blindly apply its Policy, as it did not charge for all of the time spent on the application. Further, the Council did exercise its discretion to make a remission: it acknowledged that seeking legal advice on co- existing property rights issues and an upcoming court case was related more to the Council itself, in light of the litigation before the High Court, and part of its charge was remitted to reflect this.
[41] The Council further submits that the Environment Court erred in adopting its own lower rate for administrative staff, when Mr Smith, the Consents Officer, gave
11 Local Government Act 2002, s 83(1)(g) and (h).
uncontradicted evidence that he was able to perform the administrative tasks in less time than another staff member, because he was familiar with the process and application.
(ii) Incorrectly applied a test of overall fairness
[42] In the second part of its argument, the Council submits that it was an error of law for the Environment Court to introduce an overall test of fairness in applying s 36(5). The Council contends that the Court’s evaluation of the “factors involved” in the Court’s decision did not take into account the mandatory considerations in
s 36(4). The Court stated:12
[131] After evaluating the factors involved I conclude that there is a need for a further reduction of $5,520 (GST included), approximately 10%, to be fair and appropriate.
[43] The Council contends that s 36(5), although broadly worded, does not permit the Environment Court to impose an additional and highly subjective test of “fairness”. Section 36 empowers local authorities, it says, to recover their actual and reasonable costs and sets mandatory considerations for determining what those are. This does not involve an extra test of “fairness”.
[44] Further, the Council submits that additional charges, if they satisfy the criteria in s 36(4) and are actual and reasonable, should not be interfered with by the courts, by imposing a remission under s 36(5), because those decisions should be left to local elected representatives.
[45] The Council relies on the Environment Court’s decision and the High Court’s decision in Hill Country Corp Ltd v Hastings District Council for the proposition that s 36 of the RMA imposes a “user pays” regime and that the costs of processing resource consents should not be borne by rate payers.13 The High Court in Hill Country commented that Councils, which adopt 100 per cent user pays cost recovery regimes (whether for fixed or additional charges) are not to be criticised on that account alone, because s 36 is premised on enabling local authorities to recover the
whole of the costs incurred by them, in respect of a s 36(1) activity, but no more than they expend.14
Mr Ellis’ position
[46] Mr Ellis places emphasis on the requirement for additional charges to be the recovery of reasonable costs incurred by the local authority. He highlights that the High Court in Hill Country confirmed the established steps for fixing an additional charge under s 36(4) of the RMA and submits that the Environment Court, not only set it out, but correctly and carefully applied the test, step by step, in identifying whether the Council’s costs were reasonable and meet the s 36(4)(a) threshold.
[47] Mr Ellis challenges the Council’s approach to the determination of what is “reasonable” under s 36(4)(a), in that restricting “reasonable” to the s 36(4)(b) criteria only is contrary to the Hill Country analysis. Similarly, the Council’s submission that the discretion to remit charges must relate to the mandatory considerations in s 36(4) is legally incorrect. The remission under s 36(5) can only be considered if the criteria in s 36(4)(b), were met.
[48] Mr Ellis submits that what is relevant is the legal test set by s 36 and the case law, which reconfirms that the discretion with the Environment Court is exercisable on appeal, as the Environment Court correctly undertook in this case. The Environment Court, in this case, did not replace the Council’s hourly rate but made a reduction to the additional charges, based on unreasonableness for particular tasks, as it was entitled to do under s 36(4)(a) of the RMA.
Discussion
[49] The High Court in Hill Country confirmed the approach for fixing an additional charge under s 36(4) of the RMA.15 These have been referred to as the steps in the s 36 process for a s 36(1) activity. Those steps are:
(a) What are its actual costs incurred in relation to the activity (including costs charged to it by external consultants)?
(b)Are those costs reasonable in relation to the activity, that is, do they meet the s 36(4)(a) threshold?
(c) Are those costs satisfied by the fixed charge?
(d)If not, what “additional charge” should be levied to recover the balance of the actual and reasonable costs?
(e) Can that person who initiated the activity be required to pay that charge because they satisfy one of the criteria in s 36(4)(b)?
(f) Is it a case where, in the exercise of the local authority’s absolute discretion under s 36(5), either the whole or part of the fixed charge or the additional charge should be remitted?
[50] These steps were set out in the Environment Court’s decision under its heading of “Approach” and the Environment Court proceeded to undertake the analysis under each of the steps.16
[51] It is relevant to observe that the Hasting District Council’s charges in Hill Country related to the processing of a private plan change in respect of land at Ocean Beach in the Hastings District. The High Court considered the objection to the Hastings District Council seeking to recover 100 per cent of its costs and held that the Council acted within the terms of s 36 of the RMA and the general law in fixing the charges in question. The Council was entitled to recover the full actual costs of processing the private plan change, in terms of its policy, provided it did not lose sight of the requirement to apply the criteria in s 36(4) and the discretion in s 36(5) of the RMA.
[52] I turn then to consider the Environment Court’s decision under each of the categories of the Council’s charges.
[53] The first category is the most contentious and that is the Council’s Officers’ time in processing the resource consent. The Court considered the total of 222.25 hours recorded for the Council officers, with the majority spent by Mr Smith, an experienced Council Resource Consent Planner in non-notified and limited-notified applications. Mr Smith himself acknowledged the total cost was much larger than other applications, which may be considered “similar on the surface”, but the Council’s Policy with its flat hourly rate of $138 and $145 respectively applied, regardless of the task involved. In response to Mr Ellis’ contention that there was significant administrative work undertaken by Mr Smith, which could more appropriately have been undertaken by administrative staff and not a qualified planner, Mr Smith maintained it would have been inefficient to delegate to administrative staff, who would not have had the same understanding of the application that he did.
[54] The Environment Court rejected the application of a fixed rate for all staff processing resource applications under the Policy and Schedule, without reviewing their reasonableness. The Court said:17
Notwithstanding the Council’s fixed rate for all staff processing resource consent applications, the charge out rate should have been lowered to reflect the limited skill required. Applying a blanket charge out rate, without considering whether it was reasonable to do so, is not the correct approach to s 36 of the RMA. In addition, the Council did not consider its own RMA Administrative Charges Policy. Time spent on expert planning matters cannot possibly be assessed as the equivalent of administrative matters such as copying and organising the basic logistics of a Council hearing.
[55] Although the hourly rates are set and apply to all of the Council’s officers regardless of their expertise or level of experience, the Environment Court was considering the effect of such a charge in its assessment of whether the costs incurred by the local authority applying a blanket hourly rate is reasonable.
[56] The Court focused on the need, under the RMA, for “an assessment of reasonableness in charges on a case by case basis” and observed that the Council’s
own published Schedule indicates the need for some review.18 Specifically, the
Court recorded that when asked, Mr Smith indicated that review had not occurred.
[57] The Court then held that irrespective of the Council’s Administrative Charges Policy, it was unreasonable for Mr Smith to carry out administrative work which was charged at the rate of a professional officer, compared to work that could have been undertaken by an administrative officer who would be paid at a lower rate. The Court found the combined time spent by Mr Smith on submissions and writing the s 42A report, being 91.5 hours in total, was too high.
[58] The Court quantified the administrative tasks and replaced the hourly rate of
$138 (6 hours) and $145 (5 hours) with $75 an hour, based on an annual salary of
$60,000 and a reasonable 2.5 multiplier, as one would expect on a “commercial basis.”19 In addition, the Court found that the five days of time charged was unreasonable for the analysis and summarising of submissions, dealing with the property law aspects, writing the s 42A report and coordinating the tasks associated with resource consent processing.
[59] The effect of the calculation at $75 an hour instead of the hourly rate in the respective Schedules reduced the overall charge by $728.
[60] For completeness, although not as contentious, the Court found 12 site visits by Mr Smith involving 8.75 hours unreasonable and reduced the costs by $655, for two site visits. Similarly, the parking survey undertaken by Mr Smith, given the subsequent engagement of a traffic engineer by the appellant and the Council, was unreasonable. The full costs of the Council’s consultant traffic engineer was a third higher than the applicant’s own traffic expert and his charge was reduced to
$10,158.31.
[61] The Consent Commissioner’s costs of $30,000 for a two and a half day
hearing and two and a half weeks preparation and writing a decision was held to be
18 Ellis, above n 1, at [73].
too high and unreasonable. Those costs were reduced to 70 per cent of the total charged, amounting to $21,326.16.
[62] In its assessment of the fifth step to be followed in its s 36 RMA assessment, the Court took an overall evaluation of the charges and applied a further 10 per cent reduction, “to be fair and appropriate”.20
[63] The Court made this discount for the following reasons:
(a) the Council allowed the costs to escalate to a level that was not commensurate with the scale and effects of the proposal;
(b)the issue of traffic and parking ultimately was resolved by adding 12 car parks only;
(c) the Council was aware of the concerns of Mr Ellis on costs at an early stage in the resource consent process; and
(d)it would have been fair for the Council to have alerted and kept Mr Ellis up to date at major steps in the resource consent process as to the actual costs as well as providing an estimate of future costs. This would have allowed Mr Ellis to consider what actions he might take to keep the costs at a level proportionate to the expansion of his business.
[64] In reviewing the Environment Court’s approach to this objection by Mr Ellis under s 357B of the RMA, I consider that the Court approached the matter appropriately and in accordance with the established principles of a s 36 RMA assessment of fixed and additional charges.
[65] The Council is correct in submitting that the hourly rates have been set within a legislative framework and can be utilised lawfully. It is also correct that the
Council can apply the Schedule’s hourly rates to its time spent on resource consent applications in calculating its additional charges.
[66] However, the Council must ensure that the costs are reasonable and reflect a commensurate fee for the size and extent of the benefit obtained by the applicant. In this case, the ultimate cost was six times more than the $10,419 initially charged and the net result was an expansion of an existing rural café structure and an additional
12 car spaces in the carpark.
[67] The Council submits that it has a policy of 100 per cent recovery of its charges and Hill Country was relied on to support that proposition. As stated above, Hill Country involved a private plan charge at Ocean Beach and 100 per cent recovery of Council’s costs was approved by the High Court in those circumstances. Similarly here, the Porirua Council publishes as part of its Policy, that it will recover
100 per cent of its charges in a private plan change.21
[68] But this case does not involve a private plan change and the Council’s
charges must be reasonable in the context of each case.
[69] The Environment Court undertook the assessment of the Council’s charges in
this case and exercised the discretion under s 36(5) to remit $27,891.89 of the total
$78,357.36 charged because the charges were unreasonable, given the facts of this case. The Council did not undertake the s 36(5) assessment, (although deducted legal costs after Mr Ellis’s challenge and did not charge for unspecified and unrecorded time). The Environment Court has not “substituted” the hourly rate for the Schedule rate as such, but quantified a comparative and contestable hourly rate for some of the hours claimed, in reaching a carefully reasoned deduction.
[70] I do not consider the Environment Court’s approach to the assessment of cost
was an error of law. The approach to the assessment of reasonableness was required by the RMA. The Environment Court, as a specialist body, upon which the
21 Porirua City Council “Policy on Administrative Charges under the RMA: Part 2 and Resource
Consent Fees” (2013 and 2014), Note 7.
jurisdiction is bestowed to undertake such an assessment, was open to reach the conclusions it did.
[71] For completeness, I reject the Council’s submission that to determine what is “reasonable” under s 34(4)(a), requires a consideration of the s 36(4)(b) criteria only. Such a restrictive approach to this section is misplaced. A person can only be required to pay an additional charge, if one of the criteria in s 36(4)(b) is satisfied. A remission can only be considered under s 36(5) if the criteria in s 36(4)(b) is met. If the charge was not occasioned by the applicant’s resource consent application, it would fail to meet the requirements of s 36(4)(b) and there would be no need to remit a charge under s 36(5).
[72] I turn then to consider the Court’s approach to fairness. The factors upon which the Environment Court reached a decision that a further discount should be made was undertaken, after the Environment Court evaluated all of the factors involved. I find that this was not an additional test imposed by the Environment Court, but part of the Court exercising its broad discretion under s 36(5) of the RMA, in deciding whether any remission was appropriate and reasonable and if so, how
much.22 I do not find any reason to interfere with the Court’s decision. This ground
of appeal fails.
Second error - irrelevant considerations
Council’s position
[73] The Council submits that the second error of law made by the Environment
Court was that it took into account various irrelevant considerations not contemplated under s 36 of the RMA, including:
22 It was open to the Court to consider what was fair in light of the broad s 36(5) discretion to determine reasonableness. Black’s Law Dictionary defines “reasonable” as “Fair, proper, or moderate under the circumstances” in Bryan A Garner and others Black’s Law Dictionary (10th ed, Thomson Reuters, St Paul, MN, 2014); The Oxford English Dictionary defines “reasonableness” as “The fact or quality, in a person, of being amenable to reason, or of acting or thinking in a sensible or fair manner” in Oxford English Dictionary (2017, online ed).
(a) that the Council did not voluntarily provide Mr Ellis with an estimate of its total costs, when it was not required to do so under s 36(3A) unless Mr Ellis made a request for such an estimate;
(b)the scale and effects of the proposal, which is irrelevant to the statutory requirements of assessing actual and reasonable costs under s 36 and do not necessarily reflect the process involved in obtaining a consent;
(c) impacts on Mr Ellis’ business, particularly the size and viability of the business;
(d)the final outcome of the consent process and consent conditions, including the length and preparation of the written decision;
(e) an alternative hypothetical approach for processing the application, which was neither practicable nor lawful under s 36;
(f) using and relying on Mr Ellis’ traffic engineer’s costs as a benchmark for reasonableness, when it was erroneous for the Environment Court to determine on appeal that the value provided by both engineers was equivalent; and
(g) whether the charges were “fair”, when the test outlined in s 36 of the
RMA is whether costs are actual and reasonable.
Mr Ellis’ position
[74] Mr Ellis submits that there are no fixed criteria that apply to an assessment under s 36 of the RMA, which makes it difficult for the Council to assert that irrelevant matters were taken into account in respect of the overall inquiry as to reasonableness. All matters considered by the Environment Court are alleged as being relevant to the key issue of whether the fees charged were “reasonable” (as per s 36(4)(a) of the RMA) and whether in its absolute discretion there was justification for some of the charges to be remitted (as per s 36(5) of the RMA).
Discussion
[75] As this ground overlaps with the first, the above discussion and the result also apply to this ground. The Environment Court took into account relevant considerations in its assessment of the reasonableness of the Council’s costs. The Court’s s 36 RMA assessment of reasonableness and fairness in reaching its conclusion was both appropriate and relevant, as was the exercise of the discretion under s 36(5) to remit part of the Council’s charge, in the absence of the Council having done so. There was no error of law and this ground also fails.
Third error - unsupported evidential findings
Council’s position
[76] The Council finally submits that the Environment Court’s third error of law was making positive findings unsupported by the evidence. The Council identifies various findings in this vein, including:
(a) that it was unreasonable to charge for time spent by the Council’s
consents officer, Mr Smith, completing a traffic survey;
(b)that it was “likely” that property law issues at the site (which were the subject of separate proceedings) contributed to the Council costs to an extent greater than the Costs Commissioner identified in his decision;
(c) that it was unreasonable to charge for time the Council’s traffic engineer spent considering submissions on Mr Ellis’ consent application; and
(d)that there was no transparent measure of whether the Council exercised its discretion to remit part of its charges under s 36(5).
[77] In support of this submission, the Council relies on the High Court decision in Auckland City Council v Wotherspoon, where the principles for errors of law based on a lack of evidence are set out.23
Discussion
[78] I accept Mr Ellis’ submission that under this ground, the Council is seeking to revisit the facts of the case. Mr Ellis states that in order to challenge a factual finding of the Environment Court on appeal, the Council must show that finding to be “clearly unsupportable” and that no reasonable decision maker could have
reached such a conclusion on the evidence.24
[79] The factual conclusions of the Environment Court were open to it on the evidence before it and the conclusions were reasoned and supported by the facts and the experience of the specialist Environment Court. I do not find that the Environment Court’s conclusions were “clearly unsupportable” or so unreasonable, they should be disturbed.
Result
[80] The appeal is dismissed. I find there were no errors of law made by the
Environment Court.
[81] Costs are to be awarded on a 2B basis.
Cull J
Solicitors:
J Winchester and Hamish Harwood, Simpson Grierson
S Quinn and K Krumdieck, DLA Piper
23 Auckland City Council v Wotherspoon [1990] 1 NZLR 76 (HC) at 82, 85 and 88.
24 Ayrburn Farm Estates, above n 8, at [33]-[36].
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