Queenstown Central Ltd v Queenstown Lakes District Council
[2013] NZHC 817
•19 April 2013
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV-2012-425-000514 [2013] NZHC 817
BETWEEN QUEENSTOWN CENTRAL LIMITED Appellant
ANDQUEENSTOWN LAKES DISTRICT COUNCIL
Respondent
ANDCROSS ROADS PROPERTIES LIMITED Applicant
ANDFOODSTUFFS (SOUTH ISLAND) LIMITED
Applicant in CIV-2012-000405
CIV-2012-425-000515
AND BETWEEN QUEENSTOWN LAKES DISTRICT COUNCIL
Appellant/Respondent
ANDCROSS ROADS PROPERTIES LIMITED Applicant
ANDFOODSTUFFS (SOUTH ISLAND) LIMITED
Applicant in CIV-2012-425-000405
ANDSHOTOVER PARK LIMITED Objector
Hearing: 12-14 February 2013 (Heard at Queenstown)
Appearances: G Todd for the Appellant
J Gardner-Hopkins and E Matheson for First Respondent
T Ray and J MacDonald for Queenstown Lakes District Council
Judgment: 19 April 2013
RESERVED JUDGMENT OF FOGARTY J
QUEENSTOWN CENTRAL LIMITED V QUEENSTOWN LAKES DISTRICT COUNCIL HC INV CIV-2012-425-000514 [19 April 2013]
Table of Contents
Introduction ............................................................................................................[1] Errors applying s 104D(1)(a) of the Resource Management Act 1991 ..................[2] Alleged errors of law interpreting PC19(DV)........................................................[8]
Whether there was an error of law when interpreting objective 10 of
PC19(DV) ............................................................................................................ [11] Summary of Environment Court reasoning on objective 10 in Foodstuffs ..........[15] Summary of Environment Court reasoning in Cross Roads.................................[17] Analysis of the Environment Court’s interpretation of objective 10 ....................[20]
Taking into account the Foodstuffs consent in Cross Roads, s 104D
analysis.................................................................................................................[42] Materiality of error ...............................................................................................[43] Result....................................................................................................................[44]
Introduction
[1] These are two appeals. One is by Queenstown Central Limited (QCL), which owns property on the Frankton Flats. The other is by the Queenstown Lakes District Council (QLDC). Both are against one decision of the Environment Court granting consent to Cross Roads Properties Limited’s proposal for a Mitre 10 Mega on the Frankton Flats, which is the
subject of plan change 19. I call that the Cross Roads decision.1 That
decision was released shortly after the Foodstuffs decision.2
[2] This judgment needs to be read after reading this Court’s decision allowing the appeal against the Foodstuffs judgment.3 While some overlap is unavoidable, so far as possible the goal in this decision is to address all the issues in the Mitre 10 Mega appeal without duplicating the reasoning from the Foodstuffs decision.
Errors applying s 104D(1)(a) of the Resource Management Act 1991
[3] Applying s 104D(1)(a), the Environment Court in Cross Roads, by a majority, was satisfied that there is only a minor adverse effect, by reason of the reduction in supply of industrial zoned land should this proposal go ahead. It found that:
[59] ... adopting the analysis in Foodstuffs, as a matter of law the supply of possible industrially zoned land under proposed PC19(DV) is not part of the (future) environment for the purposes of section 104D.
[4] As in Foodstuffs, in the alternative, putting aside Queenstown Lakes
District Council v Hawthorn Estate Ltd, 4 the Court went on to consider whether the removal of 1.8 hectares of industrial land would only be minor or
1 Cross Roads Properties Ltd v Queenstown Lakes District Council [2012] NZEnvC 177 at [59] (Cross Roads).
2 Foodstuffs (SI) Ltd v Queenstown Lakes District Council [2012] NZEnvB5.
3 Queenstown Central Ltd v Queenstown Lakes District Council [2013] NZHC 815.
4 Queenstown Lakes District Council v Hawthorn Estate Ltd [2006] NZRMA 424 (CA).
not. This analysis was done with close attention to the distinctions between the E1 and E2 provisions of PC19. The majority of the Court was: 5
[61] ...satisfied that, even when added to the Foodstuffs effect on industrial land supply, overall the adverse “effect” of [Cross Roads Properties Limited’s] proposal on the industrial land supply in the PC19(DV) “environment” is only minor.
[5] Part of the reasoning included taking into account the flow-on implications of the Canterbury earthquakes and the ongoing global financial crisis, and supporting an expert opinion that the growth path of the Queenstown Lakes District is likely to be more subdued than the projections of the QLDC. The Environment Court concluded:6
[65] ...Taking all those matters into account, we are satisfied that to lose 5% (cumulatively up to 5.6%) of the only land that is proposed by PC19(DV) to be protected for “true” industrial uses would be an effect on the PC19(DV) environment that is only minor.
[6] This s 104D(1)(a) reasoning is much shorter than that in Foodstuffs. But it is obviously following the two alternatives, with Hawthorn and without, and in the latter using the numeric test.
[7] It is clear that the same errors of law in the application of s 104D(1)(a)
in Foodstuffs are manifest in this judgment.
Alleged errors of law interpreting PC19(DV)
[8] The errors by the Environment Court applying s 104D are sufficient to dispose of the appeal. I deal briefly with the other alleged errors of law. The Queenstown Lakes District Council appeal and the Queenstown Central Limited appeal both argued that the Environment Court erred in its interpretation of objective 10 PC19(DV). As I have already indicated, I deal with this briefly because this document has now been rendered obsolete by the decision of Judge Borthwick’s division of the Environment Court on 12
February. In Foodstuffs, it is not clear there whether or not the Environment
5 Cross Roads at [61].
6 At [65].
Court was deliberately using its analysis of objective 10 to cover both s 104 analysis and s 104D(1)(b) – but postponing that judgment to very end.7 It is not clear again in Cross Roads. I deal with the issues as to whether there is any error of interpretation of PC19 briefly, in case these appeals go to the Court of Appeal, and there this section of alleged errors of law become relevant.
[9] After its s 104D(1)(a) analysis, the Environment Court then proceeded on a s 104 analysis, examining the proposal against the relevant objectives and policies of the operative district plan and PC19(DV).
[10] In these two appeals, I heard argument that the Environment Court incorrectly interpreted the objectives and policies of PC19(DV). The argument was that the Environment Court underweighted the industrial activity goals of PC19(DV). This argument went both to errors of law in s 104 analysis, and s 104D.
Whether there was an error of law when interpreting objective 10 of
PC19(DV)
[11] The reader will recall that both the Pak’nSave and Mitre 10 Mega proposals were located in Activity Areas E1 and E2. These areas were the subject of objectives 9 and 10. Objective 10 seeks:
To create additional zoning for light industry and related business activity within the Frankton Flats Special Zone (B) (Activity Areas E1 and E2)
(emphasis added)
[12] As we shall see, the key, or core interpretation issue as to the scope of objective 10 is the function of the qualifier “related” in the phrase “and related business activity”. The obvious argument is that objective 10 is to create additional zoning for light industry (as the principal objective) and
“related business activity” that is related to light industry. Such a
7 See [119] of Foodstuffs, set out below.
construction is going to be inimical to the provision of a supermarket, but less so in the case of a Mitre 10 Mega, depending on the view taken as to the character of the Mitre 10 Mega store.
[13] The key sub policies under objective 10, which were contentious between the parties, were identified by the Environment Court as 10.1, 10.5,
10.6 and 10.11. They are:
Policies
10.1To enable predominantly industrial and trade service activities within Activity Area E1;
...
10.5To exclude activities (such as residential activities, non showroom retail and visitor accommodation) that conflict with the activities of the intended uses in the Zone.
10.6To ensure that the use of industrial and business areas is maximised by ensuring adequate minimum lot sizes and building design to allow for future adaptive reuse.
...
10.11 To ensure land is used for its intended purpose, any office space and/or retail in Activity Area E1 must be minimal and ancillary to the principal use of the site.
[14] Because the Cross Roads analysis followed after Foodstuffs, I
summarise first the Environment Court’s PC19(DV) analysis in Foodstuffs.
Summary of Environment Court reasoning on objective 10 in Foodstuffs
[15] The Environment Court in Foodstuffs considered it did not have to consider s 104D(1)(b), that is whether the proposal is contrary to the
objectives and policies of the proposed change. But it then said: 8
8 Foodstuffs (SI) Ltd v Queenstown Lakes District Council [2012] NZEnvC 135 at [119] (Foodstuffs).
[119] ... However, out of an abundance of caution... we will consider each of the objectives and policies to which the proposal by Foodstuffs is said to be contrary, after we have discussed them below under section 104(1)(b) of the Act.
[16] The Environment Court did not make a clear finding that the application will not be contrary to the objectives and policies of the proposed plan (ie, apply s 104D(1)(b). It did respond to arguments that the proposals were in conflict, by saying that it “is fundamental that the plan change be read as a whole”.9 It did reach these conclusions:
[233] Looking at PC19(DV) as a whole, we find it also includes references to:
“includ[ing] business ... areas ...;
“... a wide range of urban activities [to] be accommodated within the Zone”;
“... provid[ing] a suitable range of local ... business activities”
Show-room retail as a limited discretionary activity and retail as a discretionary activity.
Taking these provisions together with the multiple references to business activities in the policies for objectives 9 and 10, we consider those objectives cannot be read as excluding business from the E2 subzone, and that business includes some retail (for example retail which is inappropriate in the C1 subzone).
...
[237] Even if we are wrong about how proposed objective 10 and its policies are to be read, the effect of the proposal on them is at the lower end of minor, as we found in part 3 of this decision. So while there would be a social loss because of the reduction in industrial land supply, that loss is small.
[238] Finally, we judge that the impact of not using for industrial activity the small section of the site which is in the Activity Area E1 is de minimis in terms of policies 10.1 and 10.11.
9 At [232].
Summary of Environment Court reasoning in Cross Roads
[17] As in Foodstuffs the Environment Court declined to read PC19(DV) too closely, but took the approach that the plan change should be read as a whole.10 It found that the overarching objective 2 contains a policy that the zone should contain a suitable range of local service and business activities,11 and it found that there was a conflict between Policy 10.11 and Policy 10.1, and that it was difficult to reconcile policy 10.11 with policy 10.5.12 It found:
[153] In summary, objective 10 is unclear in the PC19(DV), and its policies not nearly as consistent or coherent as they should be. Given that rather unsatisfactory state of affairs, we conclude that while the proposal is contrary to policy 10.11... that policy is not consistent with policies 10.1 and 10.5... Overall we hold that, bearing in mind that "contrary to" is a strong phrase, the CRPL is not repugnant to objective 10 or its policies, read as a whole. Indeed, because the CRPL proposal is for predominantly trade show-room retail and has elements of trade services also, we find that on balance, the proposal is, as a business activity, likely to implement the other policies for the objective, more than it may "fail" policy 10.11. Finally, we can give the rules little weight in this state of policy confusion.
[18] After consideration of other matters, including Part 2, the
Environment Court went on to grant the consent.
[19] Commissioner Fletcher dissented not only on whether or not the proposal could get through the gateway, but saying:
[201] ...In my view not only is the loss of future industrial land an effect in terms of section 104(1)(a) 13 that is more than minor, but there is more to the issue. The proposal not only does not give effect to, but is contrary to objective 10, and specifically policies 10.1 and
10.11 of PC19(DV). I would refuse consent under PC19(DV).
That appears to be an application of both limbs of s 104D.
10 Cross Roads at {148].
11 Ibid.
12 At [150].
13 Clearly a typographical error in context; he was referring to s 104D(1)(a).
Analysis of the Environment Court’s interpretation of objective 10
[20] It is important to pause here and note the difference between the standards in this respect, under s 104D and under s 104. Under s 104D(1)(b), the consent authority must be satisfied that the proposed activity will not be contrary to the objectives and policies of the relevant proposed plan.14 It also has to be satisfied it will not be contrary to the objectives and policies of the operative plan, particularly objective 6,15 and policies 6.1 and 6.2. The discretion reserved under s 104 enables consents to be granted, even if they will be contrary to aspects of a proposed plan, be they objectives, policies, or rules, or zones, or other rules of implementation.
[21] It was an error of law to do the s 104 analysis before doing the s 104D(1)(b) analysis. When applying regulatory law it is important to ask the right question at the right time. Section 104D is commonly known as a gateway decision. That is how it was described by the Court of Appeal in
Dye v Auckland Regional Council:16
[5] As Mr Dye’s application was for consent to a non-complying activity, it had to pass through one or other of the gateways referred to in paras (a) and (b) of s 105(2A) of the Resource Management Act
1991 (the Act). If neither gateway was satisfied the application would fail. If the application passed through either gateway Mr Dye
then had to satisfy the consent authority that the application should be granted, bearing in mind the matters referred to in s 104(1) and in
terms of the overall discretion inherent in s 105(1)(c) of the Act.
[22] There are a number of objectives in PC19(DV). The argument focussed on objective 10. It also focussed on logic of the Environment Court, which argued that all the objectives should be read as a whole before drawing a conclusion as to whether proposals were contrary to the objectives.
[23] This part of the Environment Court’s reasoning was defended more by
Mr Todd, counsel for Cross Roads Properties, than by Mr Soper for
Foodstuffs. It was not a ground of appeal under the Foodstuffs judgment.
14 Section 104D(1)(b)(ii).
15 Section 104D(1)(b)(i) and (iii).
16 Dye v Auckland Regional Council [2002] 1 NZLR 337 (CA).
[24] Under the ordinary rules of interpreting legal instruments, one is entitled to take into account the factual context before reading any plan change, or for statutory instruments, the “mischief” being remedied.
[25] When interpreting objective 10, it is important to keep in mind the indisputable context that there is a shortage of industrial land in Queenstown. The Environment Court accepted that. The only issue being, how big was the shortage? In both Foodstuffs and Cross Roads, the Environment Court also accepted that whatever the shortage was there was not enough undeveloped land in Queenstown suitable for industrial use which could meet that demand. It was also common ground that, on any view of it, PC19 was endeavouring to put into the Frankton Flats (B) area a combination of residential, retail, commercial, and industrial uses. It was never going to be possible to simply say that because the zone envisaged some retail uses, therefore one could be satisfied, if this was a retail use, it would not be contrary to the objectives. Plainly, the zone had to accommodate all forms of uses, including industrial uses. The fact that the E2 zone allowed some retail did not mean that the objectives of PC19(DV), to provide for industrial activity, were not being pursued in that zone.
[26] The second basic context, which is a given, for resource management planners and for an expert Court such as the Environment Court, is to understand that there are always neighbourhood adverse effects that have to be brought into account when fitting industrial activities into an urban environment. Typically, to avoid nuisance, industrial activities are kept separate from residential activities, whereas retail activities are kept proximate to residential neighbourhoods, by foot or by car. It is also well- known that big box retail is a phenomenon which now has to be accommodated, and which poses serious challenges. Part of the context is that the QLDC had provided for a big box retail zone in the Remarkables Park area nearby.
[27] These armchair considerations are to some degree reflected in the opening paragraphs of PC19(DV), which include these passages:
12.19 Frankton Flats Special Zone (B)
12.19.1 Resources and Values
...This Zone is a large greenfields development site consisting of approximately 69 hectares located within close proximity to Queenstown’s existing developed urban area...
12.19.2 Resource Management Issues
...
ii Sustainable Development
The primary goal of the Frankton Flats Special Zone (B) is to enhance the sustainable development of Queenstown. It is one of the few areas left with the capacity to contribute significantly toward the need for affordable housing at densities not hitherto achieved in the District...
iii High Quality Urban Environment
In keeping with the primary goal of sustainability, development must create a liveable community characterised by high quality urban design to include:17
(a) compact residential neighbourhoods containing a mix of housing types and sizes, adequate open space, affordable housing and ready access to public transportation
(a) commercial districts with shops for residents and visitors
(b) business and industrial areas to provide employment for locals
(c) educational facilities
(d) a range of visitor accommodation facilities that add to the life of the community but do not intrude into residential neighbourhoods.
Explanation
The creation of a mixed use zone requires appropriate design of buildings and the space between buildings to create cohesion within the development. The overall urban design within zone is very important and should be given priority when developing within this zone.
(Emphasis added)
17 There are two bullet points labelled (a) in the original document.
[28] Pausing here, both the s 104D(1)(b) test, and s 104 require an examination of whether the insertion of Pak’nSave and Mitre 10 Mega big box retail developments will compromise the goals of achieving compact residential neighbourhoods, commercial districts, and business and industrial areas, educational facilities, and a range of visitor accommodation.
[29] For s 104D(1)(b), the question is not whether some retail activities can be provided for in plan change 19, but whether the scale of the retail activity proposed in E1 and E2 can be provided consistent with the industrial objectives.
[30] The question in s 104 analysis is whether or not the application has sufficient merit to go ahead, even if it is incompatible with either objectives, policies and/or rules. The question in s 104D(1)(b) is whether there can be a gateway satisfaction that the proposal will not compromise any objectives and policies.
[31] Objective 2, Policy 2.1 of PC19(DV) provides:
2.1To ensure that development is undertaken in accordance with a Structure Plan and Outline Development Plans in Activity Areas C1, C2, and E2, so that a wide range of urban activities can be accommodated within the Zone while ensuring that incompatible uses are located so they can function without causing reverse sensitivity issues;
(Emphasis added)
[32] Objective 8 provides:
To provide an area dedicated to industrial and yard based activities to meet and maintain the economic viability of these activities within the District – Activity Area D
Policies
...
8.5To exclude retailing of goods unless manufactured on site or directly connected to the industrial use of the site
...
[33] The argument before the Court focussed on objective 10. Objective
10 provides:
To create additional zoning for light industry and related business activity within the Frankton Flats Special Zone (B) (Activity Areas E1 and E2)
Policies
10.1To enable predominantly industrial and trade service activities within Activity Area E1;
10.2 To enable high quality activities which benefit from visual exposure and passing trade, and which can contribute to a high quality streetscape, to locate along the Eastern Arterial Road within Activity Area E2. These include activities such as retailing inappropriate for location within Activity Areas C1 and C2. These tend to be single purpose destinations offering goods and services associated with vehicles, construction and home building. Showrooms and premier light industrial premises are also anticipated.
...
10.5To exclude activities (such as residential activities, non showroom retail and visitor accommodation) that conflict with the activities of the intended uses in the Zone.
...
10.11 To ensure land is used for its intended purpose, any office space and/or retail in Activity Area E1 must be minimal and ancillary to the principal use of the site.
[34] The conflicts with objective 10 between the Pak’nSave proposal and the Mitre 10 Mega proposal differ. This is because the Mitre 10 Mega proposal was located in the industrial zone E1, whereas the Foodstuffs proposal was largely in E2, which was for light industrial activities with some provision for retail. Obviously, the Mitre 10 Mega proposal more squarely confronted the objectives and policies of PC19(DV).
[35] Having heard detailed argument from many counsel, I was left with the clear conclusion that, having regard to the gateway function of s 104D, which calls for decision before the s 104 analysis, no consent authority informed by the purpose of s 104D and applying subsection (1)(b) as intended
could have been satisfied that allowing two big box retail operations to locate in the E1 and E2 zones would not be contrary to at least policies 10.1, 10.2,
10.5 and 10.11.
[36] I have already observed that it was an error of law for the Environment Court to have postponed the s 104D(1)(b) analysis until after doing the s 104 analysis. The postponement overlooks that the question under the s 104 analysis is not actually compliance with the objectives and policies, or the rules. Some non-compliance can be allowed, particularly if overall the project serves the purposes of Part 2 of the Resource Management Act.
[37] In [71] of the Foodstuffs decision, already set out in [54] of the High Court decision on Foodstuffs, the Environment Court summarised its understanding of s 104D(1)(b) as:
(3) the second gateway (section 104D(l )(b)) is concerned principally with the adverse effects of a proposal on the future desired environment (even if, in the case of a proposed plan (change) that may be unlikely).
That is not the test, as I have observed in Foodstuffs.18 It is not an overall judgment of some degree of the adverse effects of the proposal. The test is tougher. The activity must not be contrary to any of the objectives or policies.
[38] The qualifier “related” business activity in objective 10 was emphasised before the Environment Court by Mr Gardner-Hopkins.19 The Environment Court, having noted that submission, reasoned that when PC19(DV) is read as a whole, a different picture emerges, and went to objective 9 (which addresses adverse effects of activities, and emphasises the
phrasing “to enhance the industrial and business areas”).
18 Queenstown Central Ltd v Queenstown Lakes District Council [2013] NZHC 815 at
[30].
19 Foodstuffs at [229].
[39] I remind myself that the Court of Appeal in Dye warn against the High Court getting engaged in interpretation issues. That is undoubtedly apposite when the Environment Court is engaged in applying s 104. But the test in s 104D is being satisfied that an activity will not be contrary to the objectives and policies of a proposed plan. In my view, it was not the intention of Parliament that this gateway section should be used for finessing out qualifiers of one objective by looking at another objective, to reach some overall conclusion that viewed “as a whole” the objectives allowed retail activity of this size in the E1 and E2 zones. The Environment Court was obviously sensitive to the qualifier “related to”, because in Foodstuffs it
returns to it again.20
[232] The arguments for the council and QCL were that “business” is either excluded from the E2 subzone or must be of a kind that is “related to” or subservient to industrial activity. Two policies (or parts of a policy) which might support that interpretation are policy
10.2 with its reference to a restricted class of retail in the last sentence of the policy, and the exclusion of "non show-room retail"
in policy 10.5. However, we consider that such an interpretation is to read PC19(DV) too closely. It is fundamental that the plan change
be read as a whole, and in the context of the rest of the plan: J Rattray and Sons Limited v Christchurch City Council (1984) NZPTA 59 at 61 (CA); Powell v Dunedin City Council [2004] 3
NZLR 721 (CA) and [2005] NZRMA 174 at [30], [35].
[233] Looking at PC19(DV) as a whole, we find it also includes references to:
• "includ[ing] business .... areas ... ";
• '' ... a wide range of urban activities [to] be accommodated within the Zone";
• " ... provid[ing] a suitable range of local ... business activities"
• show-room retail as a limited discretionary activity and retail as a discretionary activity.
Taking these provisions together with the multiple references to business activities in the policies for objectives 9 and 10, we consider those objectives cannot be read as excluding business from the E2 subzone, and that business includes some retail (for example retail which is inappropriate in the Cl subzone).
20 At [232] and [233].
[40] With respect to the Environment Court, I think that that is not permissible interpretation. It is abundantly clear that E1 and E2 were intended to be predominantly industrial areas for light industry, with business activity related thereto.
[41] This Court agrees with Commissioner Fletcher’s reasoning and conclusion. The decision of the majority in the Cross Roads decision was materially affected by errors of law, when interpreting policy 10 of PC19(DV), both in s 104D and s 104 analysis.
Taking into account the Foodstuffs consent in Cross Roads, s 104D analysis
[42] There was only one additional s 104D issue raised in this appeal. That was against the application by the Environment Court of Hawthorn, to take into account that it had granted a consent to the Pak’nSave proposal, which was likely to be implemented. There is no doubt that had that consent not been overturned by this Court’s Foodstuffs decision, it would likely have been implemented. In the context of the Cross Roads decision it was not particularly material to the reasoning of the Environment Court. For I think that the Environment Court would have come to the same conclusion, granting the Cross Roads proposal, whether or not it had granted the Pak’nSave proposal.
Materiality of error
[43] The reasoning under this topic in the Foodstuffs decision applies equally to the Cross Roads decision. In respect of the finding of error in the s 104 analysis, similar considerations apply. Section 104 analysis of a non- complying activity has to be based on a correct reading of the proposed change.
Result
[44] The appeals are allowed, for the reason that the decision has material errors of law, as summarised at the beginning of the Foodstuffs judgment, and as set out in the reasoning of that judgment, and in this judgment.
[45] The appeals are remitted back to the Environment Court. In case there be any doubt, the application now requires re-evaluation against the current terms of PC19, as they have been amended by the February 2013 decision.
[46] Costs are reserved. If the parties cannot agree costs, I require counsel to circulate draft submissions on costs, not extending beyond five pages each. After that process, file the submissions. I will deal with these submissions on the papers unless there is a request for an oral hearing. Leave to apply in that regard is reserved.
Solicitors:
Russell McVeagh, Auckland – [email protected] and james.gardner- [email protected]
Anderson Lloyd, Queenstown – [email protected]
Macalister Todd Phillips, Wanaka – [email protected]
Brookfields, Auckland – [email protected]
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