Soroka v Waikato District Council
[2019] NZHC 2940
•11 November 2019
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2018-419-0179
[2019] NZHC 2940
BETWEEN GLENN MICHAEL SOROKA and LOUISE
CLAIRE MEREDITH as trustees of the PAKAU TRUST
Plaintiffs
AND
WAIKATO DISTRICT COUNCIL
Defendant
CIV-2018-419-0187 BETWEEN
GLENN MICHAEL SOROKA and
LOUISE CLAIRE MEREDITH as trustees of the PAKAU TRUST
Plaintiffs
AND
WAIKATO DISTRICT COUNCIL
Defendant
Hearing: 1 October 2019 Appearances:
B D Gray QC and J Dawson for the Plaintiffs P Moodley for the Defendant
Judgment:
11 November 2019
JUDGMENT OF ASSOCIATE JUDGE SMITH
This judgment was delivered by me on 11 November 2019 at 3:00pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors / Counsel: Turner Hopkins, Auckland B D Gray QC, Auckland
J Dawson, Auckland
Brookfields Lawyers, Auckland
SOROKA v WAIKATO DISTRICT COUNCIL [2019] NZHC 2940 [11 November 2019]
[1] This is an application by the defendant (Waikato) under r 4.56 of the High Court Rules 2016 to add Auckland Council (Auckland) as a second defendant. Auckland consents to being joined, but the application is opposed by the plaintiffs (the Trust), who say that Waikato is the proper defendant, and that they should not be compelled to join an additional defendant they do not wish to sue.
Background
[2] These two proceedings, which are being case managed together, concern a parcel of land owned by the Trust at Klondyke Road, near Port Waikato (the Klondyke property). The Klondyke property was until 1 November 2010 within the territorial district then known as Franklin District. From that date, the Franklin District Council was disestablished. Parts of the former Franklin District were absorbed into Waikato’s territory, and some northern areas became part of Auckland's territory. The remainder of the former Franklin District became part of the territory administered by the Hauraki District Council (Hauraki). The Klondyke property is now in Waikato's territory.
Transferrable Rural Lot Rights
[3] The Operative Franklin District Plan that was in force on 1 November 2010 (the Operative Plan) provided for the creation of “conservation lots” on properties within the Franklin District, as a restricted discretionary activity. The relevant provisions of the Operative Plan were designed to enable legal and physical protection of significant features on a property, such as indigenous vegetation and/or wetlands. Conservation lots could be created on the property in exchange for the protection of the significant feature. Under the Operative Plan, there was no ability to transfer consented conservation lots (or any other title or lot) to another property within the Franklin District.
[4] The concept of Transferable Rural Lot Rights (TRLRs) was introduced by Franklin District Council in September 2003, in its Rural Plan Change 14 (Plan Change 14). A “decisions version” of Plan change 14 was released in July 2006, and that is the version that was later substantially approved by the Environment Court. Plan Change 14 introduced the concept of a landowner amalgamating a qualifying vacant rural lot situated within a designated “management area” within the Franklin
District with an adjoining rural lot, to create a larger rural lot (the donor lot). That process would generate or give rise to one or more TRLRs, which could be “transferred” for use on another rural lot in a different management area (the receiving lot), which would be more suitable for subdivision.
[5] In addition to the use of vacant lots to create TRLRs, Plan Change 14 provided for the creation of “environment lot entitlements”, which could be “created”, or recognised, on the donor land (in accordance with a stated formula) in exchange for the owner of the donor land providing a covenant for the protection, maintenance and enhancement of significant ecological features on the donor land. The covenant would be registered on the title to the donor land.
[6] Environmental lot rights so created also generated TRLRs under Plan Change 14, available to be “transferred” to effect the subdivision of a suitable rural site within another management area.
[7] The subdivision provisions in Plan Change 14 were subject to a number of challenges by way of appeal, and the appeals had not been determined by the time Franklin District Council was disestablished on 1 November 2010. The pending appeals against Plan Change 14, which were jointly managed after 1 November 2010 by Auckland and Waikato, were the subject of a hearing in the Environment Court in February 2013. Plan Change 14 was substantially approved, with some amendments, and became operative in both Auckland and Waikato in May 2013. Some parts of Plan Change 14 did not become operative however, and those included certain of the provisions relating to TRLRs.
The Trust's application to Auckland and Waikato
[8] In April 2012 the Trust made an application (“the application”) to Auckland and Waikato in the following terms:
The proposal is to conserve approximately 204ha of native bush on [the Klondyke property] and to use the conservation lot subdivision rules of the District Plan to create 29 lot entitlements … It is proposed to transfer 13 of the 29 entitlements to the Chamberlain Road property using the Transferable Rural Lot Right subdivision rule of proposed Plan Change 14 … Further lots
will be transferred to other properties in separate applications which are to follow soon.
[9] The reference to “the Chamberlain Road property” was a reference to a 25 hectare property in Chamberlain Road, Bombay, formerly situated within the Hunua Rural Management Area of the Franklin District but after 1 November 2010 within Auckland’s territory. I will refer to this property as “the Chamberlain property”.
[10] Resource consent was required for the necessary earthworks at the Chamberlain property, and application clearly had to be made to Auckland for that consent. Resource consent was also necessary to determine whether the Chamberlain property was suitable for the proposed subdivision. The recognition of the conservation lots/environmental lot entitlements at the Klondyke property, and how many of them would be recognised, were (on the face of it) solely for Waikato to determine.
[11] The application, lodged by the Trust’s surveyors, first dealt with matters considered to fall within Waikato’s jurisdiction. Under a heading “Native Bush Conservation Subdivision – Waikato District Council Jurisdiction”, the surveyors addressed the “conservation lot” provisions of Waikato’s Operative Plan (Franklin section). They then considered the relevant provisions of Plan Change 14. In a separate section headed “Transferable Rural Lot Right Subdivision – Auckland Council Jurisdiction”, the application addressed relevant provisions of Auckland’s Operative Plan and Auckland’s (identical) Plan Change 14.
[12] The application acknowledged that while the transfer of Rural Lot Rights was a discretionary activity under Plan Change 14, there was no provision for the transfer of lots under Auckland’s Operative Plan. Applying the principle that, where a proposed change to an operative district plan has been notified, an activity is to be assessed under the more onerous of the respective requirements of the Operative Plan and the plan change, the Trust’s application fell to be assessed as a non-complying activity under the Operative Plan.
[13] On the application of Plan Change 14 to the “Native Bush Conservation Subdivision” application, the Trust’s surveyors said:
A total of 64 additional allotments are provided for under this rule in accordance with Table 2. We are proposing to use only 13 of these Environmental Lot entitlements for his application and further lots will be transferred to other properties in separate applications which are to follow soon. The new Conservation Lots are shown as Lots 1 to 8 and 10 to 14 Subdivision Consent Plans.
[14] In a “General Matters” section near the end of the application, under the heading “Joint Decision”, the Trust's surveyors noted that the donor property was located within Waikato's jurisdiction and said: “so we have provided [Waikato] with a copy of the application and plans to enable a joint decision to be made.”
[15] In a section of the application headed “Conclusion”, the surveyors referred to “the transfer of the 13 development rights approved through the protection of the abovementioned ecologically significant feature.”
Waikato's response to the application
[16] Waikato replied to the application by letter dated 24 May 2012. It advised that it had recently encountered circumstances which had given it cause to question the legal basis for cross-boundary transfers of conservation lots or environmental lot entitlements, such as those sought in the application. Waikato noted that it could not make an assessment of the receiver lots, as they were outside its jurisdictional boundary. It advised that it was in the process of confirming its legal position, which would involve consultation with Auckland. For that reason, it would not proceed further with the application until the legal basis for allowing cross-boundary transfers had been confirmed.
[17] The delay in processing the application was fairly short. On 1 June 2012 Waikato sent a further letter to the Trust's surveyors. It had discussed the status of similar applications with Auckland and with Auckland's solicitors. As a consequence of those discussions, and in light of the application having been accepted for processing by Auckland, Waikato stated that it would:
continue to work within [Auckland's] timeframes for processing the application, to the extent that it can confirm to [Auckland] whether the donor lots are compliant with the relevant plan provisions of the Waikato District Plan. Whether any donor lot can then be taken account of for the purpose of enabling subdivision within Auckland City will be determined by [Auckland].
The Report
[18] Waikato issued a “confirmation” report on 3 July 2012 (the Report), confirming that 13 (transferrable) conservation/environmental lots could be created on the basis that 175 ha of the Klondyke property would be protected by an appropriate covenant.
[19] The proposal was described in the Report as a proposal “to undertake a subdivision creating thirteen (13) conservation/environmental lots at this site and then transfer those Lots to [the Chamberlain property] being the receiver site.” The Report noted that the Klondyke property was in Waikato's District, while the proposed receiver site was in the Auckland District. It went on to say that, “given this”, the Report would be in terms of the donor site only.
[20] The Report assessed the application under the conservation lot entitlements of the Waikato Operative Plan, Franklin section. As all of the requirements of the Waikato's Operative Plan were not met, the application (insofar as it affected the Klondyke property) was assessed as a non-complying activity.
[21] The Report said that under Plan Change 14, the maximum number of environmental lot entitlements for the Klondyke property would have been 20. But again, not all of the requirements of Plan Change 14 were met. The result under Plan Change 14 was that the application would have to be dealt with as a discretionary activity with respect to the donor property.
[22] Waikato concluded that the area of feature to be protected at the Klondyke property (assessed in the Report at 175 ha) was sufficient to create the 13 conservation lot/environmental lot entitlements that the Trust wanted for its immediate purpose of subdividing the Chamberlain property. Waikato then advised that certain conditions should be imposed as part of any consent that might be granted.
The Decision
[23] There had been considerable consultation between representatives of Auckland and Waikato as to how such “cross-border” TRLR applications were to be
administered. The two councils eventually determined to deal with cross-border TRLR applications jointly, with joint hearings (if necessary) and a joint decision.
[24] No hearing was considered necessary on the application, and a joint decision was made by Auckland and Waikato on 31 July 2012 (the Decision). Consent was given to a “Transferrable Rural Lot subdivision” for 13 lots to be created at the Chamberlain property, subject to provision of a covenant protecting 204 ha of mature, remnant native bush on the Klondyke property.
[25] Separate application numbers used by the two Councils were shown at the top of the Decision, which described the application as an application:
·to covenant approximately 204 hectares of mature remnant native bush at the Klondyke property (Waikato District);
·to undertake a Transferrable Rural Lot subdivision for 13 lots to be created at the Chamberlain property; and
·for land resource consent for approximately 5,000 m3 of earthworks over an area of 8,000 m2 at the Chamberlain property.
[26] The Decision addressed the application under each of the “Franklin sections” of the two Councils’ Operative Plans, and the application was granted subject to a number of conditions. The proposal was also considered to be substantially consistent with the provisions for TRLRs between identified management areas set out in Plan Change 14.
Two additional TRLRs recognised for the Klondyke property
[27] Waikato subsequently recognised two additional conservation lots and/or environmental lot entitlements for the Klondyke property, and it appears that the Trust was able to find suitable receiving properties for those lots/entitlements.
The Trust provides the protective covenant
[28] On 22 February 2013 the Trust provided the required covenant (with the Queen Elizabeth II National Trust) for the protection, maintenance and enhancement of the native bush on the Klondyke property. It was then able to proceed with the first stage of the 13-lot subdivision of the Chamberlain property.
Variation 13
[29] Auckland and Waikato both considered the TRLR scheme to be unsatisfactory when it involved “cross-border” transfers.
[30] In July 2012, the two Councils publicly notified identical variations to Plan Change 14, in respect of TRLRs. In each territory the variation was designated “Variation 13”. The purpose of Variation 13 was to prohibit the transfer of environmental lot entitlements across territorial boundaries.
[31] A hearing conducted jointly by Auckland and Waikato took place between 30 June and 4 July 2014, and a decision on Variation 13 was issued by the Hearing Commissioners on 11 February 2015. The decision generally upheld Variation 13, bringing to an end the “cross-border” use of TRLRs between parts of the former Franklin District now administered separately by Auckland and Waikato. However, the decision did include provision for the Trust to transfer the 14 remaining environmental lot entitlements it held at the date of the public notification of Variation 13. That brought to 29 the number of TRLRs available for the Trust's use, being the number of lot entitlements assessed by the Trust’s surveyors in the application.
The Court proceedings
The Declaration Proceeding
[32] In proceeding CIV-2018-419-187 (the Declaration Proceeding), the Trust says that only 29 TRLRs were created by Waikato, and it asks for a declaration that it is entitled to a further 35 TRLRs. It contends that Waikato was obliged to either grant or refuse the application insofar as it asked for the creation of 64 TRLRs in respect of
the Klondyke property, and in so doing confirm or reject the Trust’s entitlement to the 64 TRLRs it asked for. It says that Waikato has not done that, and that the application in respect of the outstanding 35 TRLRs has not been refused.
[33] The Trust contends that the Report failed to distinguish between conservation lots, environmental lot entitlements, and TRLRs, and it erroneously treated the application as if it were an application for the creation of conservation lots (under the Operative District Plan (Franklin Section)), rather than correctly treating it as an application for the creation of TRLRs (under Plan Change 14). The Trust says that the Report also erroneously treated the application as if it were for the creation of 13 conservation/environmental lots, rather than the creation of 64 TRLRs and the transfer of 13 of them.
[34] The Trust further contends that Auckland and Waikato mischaracterised the application in the same respect in the Decision.
[35]The Trust then pleads that:
The decision did not grant consent to the use of any of the remaining 51 TRLRs because no application for consent had then been made identifying the receiving properties for them.
[36] The Trust says that the absence of receiving properties for the 51 TRLRs not addressed in the Decision did not affect its entitlement to the creation of the 64 TRLRs
– it contends that the Decision “secured” that entitlement, and the entitlement crystallised when the Trust provided the protective covenant in February 2013.
[37]The Trust asks for the following relief:
(a)A declaration that by 22 February 2012 it was entitled to 64 TRLRs in respect of [the Klondyke property];
(b)A declaration that [the Trust] remains entitled to a further 35 [TRLRs];
(c)An order requiring [Waikato] to consent to the transfer from [the Klondyke property] of 35 [TRLRs] to new receiving properties which will themselves need to obtain Resource Consent.
…
The Damages Proceeding
[38] In proceeding CIV-2018-419-179 (the Damages Proceeding), the Trust alleges that Waikato wilfully refused to confirm the Trust's entitlement to the 64 TRLRs, and that it did so either with knowledge of the unlawfulness of its refusal or with reckless indifference to the lawfulness of the refusal. It says that Waikato knew that its refusal to confirm the Trust's entitlement was likely to injure it. It seeks damages in the sum of $10,000,000, based on the value of the 35 additional TRLRs says it should have had if Waikato had issued them at the relevant time and they had been transferred for use in a management area within Auckland's territory.
[39] The Trust pleads substantially the same factual background as that pleaded in the Declaration Proceeding. It contends that it applied for, and was entitled to, the creation of 64 TRLRs in respect of the Klondyke property, but Waikato erroneously treated its application as if it were for the creation of only 13 conservation/environmental lot rights. It accepts that Waikato did not grant consent to the use of 51 of the 64 TRLRs sought by it because no receiving properties had been identified by them, but says that the application and the Decision nevertheless “secured” the Trust's entitlement to the issue of 64 TRLRs, and that that entitlement crystallised when the Trust provided the deed of covenant in February 2013.
[40] The Trust goes on to plead that Waikato unlawfully exercised its powers in the following respects:
(a)It refused to confirm the Trust's full entitlement to TRLRs when it granted the application;
(b)It promulgated Variation 13;
(c)It did so without prior consultation with the public or interested parties including the Trust;
(d)Its refusals to process cross-border boundary title transfers were exercises of power which were unlawful and therefore improper;
(e)It required the Trust to have its entitlement to TRLRs assessed under the District Plan, from time to time, on each occasion successive resource consent applications were made to utilise its entitlement;
(f)It extinguished the Trust's entitlement to TRLRs;
(g)When considering subsequent applications by the Trust to transfer TRLRs from the land, it applied the conservation lot criteria;
(h)It improperly determined to publicly notify the Trust's applications for resource consent to utilise the TRLRs;
(i)Subsequent to the public notification of Variation 13, it treated applications made by the Trust for transfer of TRLRs into Auckland as a prohibited activity; and
(j)It used the public notification of Variation 13 as a special circumstance to justify requiring full public notification of further applications for transfer of TRLRs.
Waikato’s statements of defence
[41] In its statement of defence in the Declaration Proceeding, Waikato says that Rule 22 of Plan Change 14 set out specific performance standards in respect of the creation of environmental lots, including as to the maximum number of environmental lots on any rural lot, and that it provided for the grant or refusal of applications for consent in respect of environmental lot subdivisions under the rule. However it denies that Rule 22 caused any rights to accrue to the Trust, and it denies that the Report referred to TRLRs.
[42] In an affirmative defence, Waikato refers to the Trust’s “proposal” as stated in the application,1 and to that part of the “conclusion” in the application that is referred to at [15] of this judgment. It says that the application was granted (subject to the conditions stated in the Decision), and the approval permitted the use of the 13 lot rights that had been sought. Auckland separately granted the Trust consent to two additional lot transfers into its territory in respect of the Klondyke property, and consent was later granted for the transfer of the remaining 14 lot rights permitted to be transferred under Variation 13. Accordingly, consents were given for everything the Trust had applied for in the application.
[43] In response to the Trust’s claims in the Damages Proceeding, Waikato repeats its responses made to identical individual allegations made by the Trust in the Declaration Proceeding. On the alleged unlawful exercise of its powers, Waikato denies the allegations that it promulgated Variation 13 without consultation with
1 Reproduced at [8] of this judgment.
interested parties, and that it refused to process cross-border title transfers. It denies that it extinguished any entitlement of the Trust to TRLRs, and says that resource consent applications by the Trust were necessary. It says that, when considering the Trust’s applications relating to the Klondyke property, it applied a dual assessment under the Waikato Operative District Plan (Franklin Section), and under Plan Change 14.
[44] Waikato denies that it undertook any of the actions described at sub-paragraphs (h), (i) and (j) of [40] of this judgment, and says that those actions were undertaken by Auckland.
[45] Waikato pleads that, of the 29 lots sought to be transferred to Auckland in respect of the Klondyke property, only 13 were the subject of the application. Applications for transfers of the other 16 conservation/environmental lots were made to Auckland.
Waikato's application to join Auckland
[46] Waikato says that relevant decisions relating to the TRLRs were made jointly by Waikato and Auckland, and both Councils are jointly interested in the subject matter of the proceeding. It says that Auckland's presence is necessary in order to determine all questions involved in the proceeding.
Evidence for Waikato in support
[47] In an affidavit sworn in support of the application to join Auckland as a party, Ms Jane Macartney, a senior policy planner for Waikato, said that Auckland played a joint role with Waikato in processing the application, and a joint decision was given granting the subdivision application. Ms Macartney said that the joint approach pre-dated the application, and it commenced with the successor councils to the Franklin District Council working closely together in respect of Plan Change 14 and applications for consented lots that had been filed since the Franklin District Council was disestablished in November 2010. In respect of the application, Ms Macartney noted that there was a high level of consultation between Waikato and Auckland, including over the procedure the two Councils would adopt to deal with the
application. The cooperation relating generally to cross-border applications of this kind had been the result of considerable consultation between Auckland and Waikato, which included Waikato's consent managers meeting with their Auckland counterparts, email exchanges between the two Councils, and telephone discussions.
[48] Ms Macartney provided with her affidavit a copy of her own report written in June 2014 for the hearing before the Hearing Commissioners on Variation 13. In her report, she noted that the boundaries for the new Auckland Council were settled by the Local Government Commission in a determination issued in March 2010 (the LGC Determination). The LGC Determination addressed a number of transitional matters, and it provided that the transitional provisions in cl 67 of sch 3 to the Local Government Act 2002 (LGA 2002) applied to the LGC Determination.
[49]Clause 67 of pt 4 of sch 3 to the LGA 2002 materially provided:
67 Provisions that apply to each reorganisation scheme
The following provisions apply to each reorganisation scheme unless amended or declared not to apply to a reorganisation scheme:
(a)the local authority that assumes, under the scheme, jurisdiction over an area formerly comprising or forming part of a separate district or region, or that takes over the responsibilities of a local authority, has, and may exercise, and is responsible for,—
(i)all the powers, duties, acts of authority, and responsibilities that were previously exercised by the former local authority, or that would have been exercised by it if it had remained in existence or in control of that area:
(ii)all the liabilities, obligations, engagements, and contracts that were previously the responsibility of the former local authority, or that would have been its responsibility if it had remained in existence or in control of that area:
(iii)all the actions, suits, and proceedings pending by or against the former local authority, or that would have been its responsibility if it had remained in existence or in control of that area.
[50] The LGC Determination further provided that any matter under the Resource Management Act 1991 (the RMA) before or initiated by Auckland Regional Council
or Franklin District Council in respect of any areas now included in the Waikato District, was to become the responsibility of Waikato, and that any plan, policy, rule or strategy prepared by Franklin District Council would continue in force in respect of those areas of the former Franklin District included in Waikato's District, until the plan expired or was revoked by Waikato.
[51] Ms Macartney also drew attention in her report to s 81 of the RMA, which is concerned with transitional provisions which are to apply in the case of adjustments to territorial boundaries. Section 81(1) and (3) of the RMA provide:
81 Boundary adjustments
(1)Where the boundaries of any region or district are altered, and any area comes within the jurisdiction of a different local authority,—
(a)the plan or proposed plan that applied to the area before the alteration of the boundaries shall continue to apply to that area and shall, in so far as it applies to the area, be deemed to be part of the plan or proposed plan of the different local authority:
(b)any activity that may, before the alteration of the boundaries, have been undertaken under section 19 may continue to be undertaken as if the alteration of the boundaries had not taken place.
…
(3) A territorial authority shall, as soon as practicable but within 2 years, make such changes to its district plans as it considers necessary to cover any area that comes within its jurisdiction, and, after the changes are made, this section shall cease to apply.
[52] The effect of s 81 was that the part of the former Franklin District that came under Waikato's jurisdiction (now referred to as the “Franklin Section”) became a “bolt-on” to the Waikato District Plan, with the Franklin Section and the Waikato Operative District Plan forming a single document.
[53] Ms Macartney also referred to s 11 of the LGA 2002, dealing generally with the role of a local authority. Section 11 states that the role of a local authority is, inter alia, to:
(a)give effect, in relation to its district or region, to the purpose of local government stated in section 10; and
(b)perform the duties, and exercise the rights, conferred on it by or under [the LGA 2002] and any other enactment.
[54] Finally on the legislative background, Ms Macartney noted s 31 of the RMA, which dealt with the functions of territorial authorities under the RMA. Briefly, s 31 provides that every territorial authority has certain specified functions, together with “(f) any other functions specified in [the RMA]”.
[55] Ms Macartney concluded from her review of this legislation that plan changes (or variations) could legitimately apply to the “Franklin Section”, subject to compliance with sch 1 to the RMA.2 She noted that Variation 13 only changed one material aspect of the TRLRs regime that applied to that part of the former Franklin District now within Waikato's jurisdiction: cross-boundary transfers were prohibited.
[56] Ms Macartney noted that cross-border transfers were never anticipated during the development of Plan Change 14, as Plan Change 14 was always intended to apply within a single district (the former Franklin District).
[57] In a supplementary affidavit sworn on 23 September 2019, Ms Macartney produced a copy of Variation 13, which reproduced (in the “Rule 50 – Definitions” section) a proposed new definition of a TRLR. The text shows that, prior to the promulgation of Variation 13, the definition was:
TRANSFERABLE RURAL LOT RIGHT means a right to transfer an existing RURAL LOT from a (donor) property in any Rural or Coastal zone to a specified receiver area. It means a RURAL LOT is rescinded from a property and created as a new title or titles in a receiver area.
The Trust's opposition
[58] In its opposition, the Trust says that the two proceedings arise out of a resource consent application which required distinct decisions by the two territorial authorities, each functioning within its own separate jurisdiction under the RMA. Waikato’s relevant decision-making jurisdiction comprised decisions pertaining only to the “donor property” (the Klondyke property), which was located within its jurisdiction, and on which the entitlement to TRLRs arose. Auckland’s decision-making
2 Schedule 1 deals with the preparation, change, and review of policy statements and plans.
jurisdiction comprised only decisions relating to the use of the TRLRs on a “receiver property” where that property was located within its jurisdiction.
[59] The Trust says that it is not pursuing Auckland in either proceeding in respect of its decisions or decision-making powers; it is only pursuing Waikato in respect of decisions made within Waikato’s jurisdiction in respect of the resource consent application, and the remedies it seeks will require the Court to consider only Waikato’s decision-making. The Court will not be required to consider decisions made by Auckland, and Auckland will not be affected by any order sought by the Trust.
[60] The Trust says that the fact that the Decision was made jointly does not affect the separate responsibilities of the two Councils: each had distinct decision-making powers.
[61] In respect of the “exercises of power” pleaded in the Damages Proceeding, the Trust says that its claims are concerned solely with exercises of power by Waikato, and the particular exercises of power particularised at sub-paragraphs (h), (i) and (j) [as reproduced in [40] of this judgment, were exercises of power solely by Waikato within its district and jurisdiction.
[62] The Trust says that Auckland’s presence as a party is not necessary for the adjudication of all issues in the proceedings, and that justice does not require the joinder of Auckland.
[63] In the foregoing circumstances, the Trust would be significantly prejudiced in terms of costs, time and issues to be adjudicated on, if Auckland were joined as a defendant.
Applications to join defendants — legal principles
[64]Rule 4.56 of the High Court Rules 2016 materially provides:
4.56 Striking out and adding parties
(1)A Judge may, at any stage of a proceeding, order that—
…
(b)the name of a person be added as a plaintiff or defendant because—
(i)the person ought to have been joined; or
(ii)the person’s presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.
(2)An order does not require an application and may be made on terms the court considers just.
…
[65] Waikato relies on both limbs of r 4.56(1)(b). First, it says that Auckland is a person who should be added as a defendant because it “ought to have been joined”.3 In the alternative, it says that Auckland's presence before the Court is necessary to adjudicate on and settle all questions involved in the proceeding.4
The first limb — r 4.56(1)(b)(i)
[66] The Courts have adopted different approaches to the interpretation of r 4.56(1)(b)(i). In Paccar Inc v Four Ways Trucking Inc, Barker J considered that the limb was intended to apply to:5
… those cases in which the person sought to be joined 'should' have been joined because it is impossible to do justice between the existing parties without the joinder (eg where the party sought to be joined is jointly interested with either the plaintiff or the defendant in the subject matter of the dispute).
[67] In two more recent cases, a more liberal interpretation has been adopted, under which the “ought to have been joined” formula has been read as permitting, subject to the overall justice of the situation, the joinder of any party the plaintiff could have elected to sue in the first place.6
[68] However in Newhaven Waldorf Management Limited v Allen Kós J, delivering the judgment of the Court of Appeal, said that the use of the expression “person ought
3 High Court Rules 2016, r 4.56(1)(b)(i).
4 Rule 4.56(1)(b)(ii).
5 Paccar Inc v Four Ways Trucking Inc [1995] 2 NZLR 492 (HC) at 495.
6 Robin v IAG New Zealand Ltd [2018] NZHC 204; and Fonterra Co-Operative Group Ltd v Waikato Coldstorage Ltd, HC Hamilton CIV-2010-419-855, 22 December 2010.
to have been joined” addresses persons whose presence is necessary for the Court to adjudicate the exact issues arising on the pleadings.7
The second limb — r 4.56(1)(b)(ii)
[69] The Court's general approach was described by the Court of Appeal in Newhaven as liberal, with a fairly low threshold for the making of an order.8 What is important is the nature of the impact of the proceeding on the additional defendant's rights. Those rights might not necessarily be confined to legal rights, although the case for joinder will be stronger if they are.
[70] In its decision in Newhaven, the Court of Appeal referred to the decision of the Privy Council in Pegang Mining Co Ltd v Choong Sam, where Lord Diplock referred to the great variety of circumstances in which application may be made to join an additional party to an existing action.9 His Lordship went on to express the view of the Board that:10
… one of the principal objectives of the rule [permitting joinder of additional parties] is to enable the Court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard. To achieve this object calls for a flexibility of approach …
It has been sometimes said … that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between "legal" and "commercial" interests helpful. A better way of expressing the test is: will [the intended party's] rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?
[71] Both counsel referred to Mitchell v Attorney-General, a judicial review case where the Court noted that there may be broader scope for joinder as the potential
7 Newhaven Waldorf Management Ltd v Allen [2015] NZCA 204, [2015] NZAR 1173 at [42].
8 At [44] and [46].
9 Pegang Mining Co Ltd v Choong Sam (1969) 2 MLJ 52 (PC) as cited in Newhaven Waldorf Management Ltd v Allen, above n 8.
10 At 55-56.
impact of the rights and liabilities on proposed parties could be wider than in an ordinary civil proceeding.11 Her Honour said:
[18] … the effect of the judicial gloss on r 4.56, and its English equivalent, is to clarify the "necessity" requirement: the rights and liabilities of the party seeking joinder must be rights against, or liabilities to, a party to the action.
…
Where the joinder application is made by a defendant
[72] The position of a defendant seeking joinder is summarised in McGechan on Procedure, where the authors say:12
The current approach where defendants seek joinder is to treat any opposition by the plaintiff as a factor to be considered, but not a bar to joinder. In Mainzeal Corp Ltd v Contractors Bonding Ltd (1989) 2 PRNZ 47 (HC), Barker J held that the plaintiff's wishes and its possible liability for additional costs are factors to be considered in the exercise of the Court's discretion. Barker J did not follow previous dicta suggesting that an order upon application by a defendant to join an additional defendant would not generally be made where the plaintiff opposes … or that the plaintiff's wishes ceased to be relevant once the grounds for joinder had been established … The middle ground adopted by Barker J now applies.
Directions if joinder order appropriate
[73] Once it is determined that a party ought to have been joined, or that party's presence is necessary, the usual practice of the Court is to prefer the procedure which is most likely to be more convenient and lead to the most efficient and expeditious disposition of the proceeding.13
Counsel's submissions
Waikato
[74] In respect of the Declaration Proceeding, Mr Moodley noted that the application was made to Auckland and Waikato together, and there was a high level of consultation between the two Councils on the application. The consultation included the procedure by which the applications were processed by the two Councils, and
11 Mitchell v Attorney-General [2016] NZHC 1737, [2016] NZAR 962.
12 McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR4.56.12].
13 Orion New Zealand Ltd v Earl P Smith Ltd [2013] NZHC 1411 at [29](b).
Auckland as the receiving authority had to approve the identity and quantity of the lots to be transferred. The Decision was issued jointly.
[75] Mr Moodley noted that Waikato agreed to process the application only because the application was accepted for processing by Auckland. Both Councils were involved in the decision-making process, and if the Decision involved a mischaracterisation of the application, as the Trust contends and Waikato denies, the “mischaracterisation” would have been that of both Councils. In those circumstances, it was inappropriate to issue the Declaration Proceeding against Waikato alone.
[76] In respect of the Damages Proceeding, Mr Moodley referred to two key aspects of the proceedings, being the application and the Decision (addressed in the Declaration Proceeding), and the process and actions taken in relation to Variation 13 (addressed in the Damages Proceeding). Waikato's position is that the Trust's attempt to separate the roles of the two Councils is artificial and inappropriate on both of those aspects, and fails to take into account the actual circumstances in which the challenged actions occurred.
[77] Mr Moodley addressed each of the alleged wrongful “exercises of power”. He submitted that both Councils promulgated Variation 13, on which a joint hearing was convened, and at least three of the alleged misuses of power pleaded in the Damages Proceeding (those reproduced at (h), (i) and (j) of [40] of this judgment) involved steps taken by Auckland, not Waikato. In respect of others, he submitted that there was in fact no wrongful exercise of powers by Waikato. These were said to be unilateral exercises of power by Auckland, making it appropriate for Auckland to be joined as a defendant (rather than leaving it to Waikato to make a third party claim against Auckland).
[78] Mr Moodley emphasised that Auckland has consented to being joined in the proceedings. Implicit in that is that Auckland accepts that it had a role in the matters giving rise to the Trust's present claims.
[79] On the law, Mr Moodley submitted that the jurisdiction to join a defendant under r 4.56 is a liberal one, and this is a clear case for the exercise of the jurisdiction.
The Trust
[80] Mr Gray emphasised that the relief sought in both proceedings is sought against Waikato only. It is not sought against Auckland.
[81] That is clearly the case with the Declaration Proceeding, where the scheme changes effected following the approval of Variation 13 mean that the Trust cannot now transfer environmental lot entitlements for use in Auckland’s jurisdiction – the remaining TRLRs have to be used within Waikato’s territory. For that reason the Declaration Proceeding, which essentially seeks to determine the effect of the application and the Decision, was commenced separately from the Damages Proceeding (which is concerned substantially with losses said to have been suffered by the Trust as a result of the promulgation and subsequent approval of Variation 13).
[82] Addressing the Declaration Proceeding, Mr Gray submitted that Waikato’s failure to either grant or refuse the application for the creation of the remaining 35 TRLRs involved a wrongful exercise of power by Waikato, not Auckland.
[83] Because the property is located within Waikato's district, only Waikato could issue the TRLRs, and the fact that Auckland may have participated in evaluating the application cannot change that: only Waikato could determine the application insofar as it was concerned with the issue of the TRLRs, and only Waikato owed a duty to the Trust in that respect. For that reason, the relief is sought only from Waikato, and Auckland has no relevant interest in the Declaration Proceeding. Nor is Auckland's presence necessary to determine the issues in the Declaration Proceeding.
[84] The fact that the application was filed with both Auckland and Waikato was a matter of form, not substance. And the fact that the Decision was signed by both Councils merely reflects the fact that each was exercising a separate function relating to the land within its district. That had to be so, because the jurisdiction of each territorial authority did not extend beyond the boundary of its own district, and there
is no mechanism under the RMA for “joint” resource consents to be granted by two or more Councils.14
[85] Where multiple resource consents are required from different territorial or regional authorities, the RMA does permit the applications to be heard together.15 But that does not affect the separate responsibilities undertaken by each Council, which in this case were dictated by the facts that the donor property was within Waikato's district and the receiving property was within Auckland's district. The “joint” nature of the application and its processing and hearing was no more than an administrative convenience.
[86] On the issues in the Damages Proceeding, Mr Gray submitted that, in breach of duties owed by it to the Trust, Waikato agreed (with Auckland) not to process further “cross-border” TRLR applications, and to promulgate Variation 13. Waikato and Auckland may have done certain things in parallel, but it is Waikato that owed the relevant duties to the Trust in respect of acts or omissions within Waikato’s district, and Waikato did exercise the powers described at [40] of this judgment within its district.
[87] For those reasons, this is not a case where Auckland and Waikato are jointly interested in the subject matter of the dispute, or where the rights or liabilities of Auckland might be “directly affected” by any order that might be made in the proceedings. The expression “joint interest” in the context of r 4.56 is concerned with legal liability - something involving the existence of a duty, possible breach, and possible relief. No rights or liabilities of Auckland will be directly affected as a consequence of these proceedings, and Waikato has not been able to identify any duty that might be owed by Auckland to the Trust, or any remedy which might be available to the Trust against Auckland.
14 Referring to s 2 of the Local Government Act 2002, and s 31 of the Resource Management Act 1991.
15 Resource Management Act 1991, s 102.
Discussion and conclusions
[88] I do not consider this is a case where the first limb of r 4.56(1)(b) applies. The issue under the first limb is whether joinder of the person sought to be added as a defendant is necessary for the Court to adjudicate the exact issues arising on the pleadings. I do not think it is in this case.
[89] The relief sought in the Declaration Proceeding is concerned only with (i) the number of TRLRs the Trust says it was entitled to in respect of the Klondyke property, and (ii) the Trust’s claimed entitlement to have Waikato consent to the use of a total of 35 TRLRs on another receiving property. Following the adoption of Variation 13, any other receiving property would have to be situated in Waikato’s territory, and Auckland would appear to have no interest in it. The Trust could not have sued Auckland for relief on those issues, as Auckland could not have owed the Trust any relevant duty.
[90] Looking at the declarations sought in the Declaration Proceeding individually, the first of them invites the Court to declare how many TRLRs a particular owner of a piece of land in Waikato’s district held (in respect of that land) as at 22 February 2013. That will presumably involve the Court enquiring into how many environmental lot entitlements the land owner would have been entitled to at that date, on the basis of him or her providing a suitable protective covenant for the protection, maintenance or enhancement of significant ecological features on the land. None of that appears to raise any issue for adjudication that would require Auckland’s participation in the litigation.
[91] The same is true of the second declaration that is sought (a declaration that the Trust remains entitled to a further 35 TRLRs) – any declaration made to that effect would merely reflect a finding that the Trust was entitled to the first declaration sought (if that proved to be the position), plus the fact that it has used 29 of the 64 TRLRs it claims to be entitled to.
[92] The third direction sought (requiring Waikato to consent to a transfer of the 35 TRLRs to new receiving properties) could not affect Auckland at all – since the adoption of Variation 13, “cross-border” use of TRLRs has been prohibited, and any
transfer could only be to a property within a management area in Waikato’s district. I did not understand Mr Gray to contend otherwise at the hearing, and as I understand it, the prohibition on “cross-border” use of TRLRs is now operative in both districts.
[93] The statement of claim in the Declaration Proceeding does contend that Waikato “erroneously” treated the application in a particular way in the Report, but in my view that is an issue between the Trust and Waikato – Auckland’s presence before the Court is not necessary for the Court to adjudicate on it. The statement of claim also alleges that the application and the Decision had the effect of “securing” the Trust’s entitlement to the 64 TRLRs, and that that entitlement “crystallised” when the protective covenant was provided. Whether or not that is so, the Decision appears to make it clear that the creation or recognition of further conservation lots or environmental lots at the Klondyke property, beyond the 13 required for the subdivision of the Chamberlain property, would be a matter for Waikato. The Decision stated in the attached Advice Notes:
7. In respect of the property at Klondyke Road, Port Waikato, the applicant has indicated that they may seek to generate additional Conservation Lot entitlements and transfer these off the site as part of future applications. In this respect it is noted that any additional subdivision entitlements would need to be assessed as part of any future application, on its merits, and based on the Waikato District Plan rules that prevail at the time of that application being made. No guarantee is given as to the potential number of lots (if any) which may be utilised in association with making such an application or applications.
[94] So whatever might have been the effect of the Decision and the subsequent provision of the Deed of Covenant, it is hard to see how Auckland’s joint participation in the Decision could make its presence before the Court necessary to decide an issue (the effect of the Decision on the Klondyke property) that appears to affect only the Trust and Waikato.
[95] Similar considerations apply to the Damages Proceeding, where the Trust makes additional allegations of unlawful exercises of power by Waikato: the powers in question are not said to have been powers of Auckland that it exercised unlawfully: they are said to have been powers of Waikato that Waikato exercised unlawfully. The Trust could not have sued Auckland for the wrongs it has alleged, and Auckland’s
presence as a party is not necessary for the Court to adjudicate on the exact issues in the Damages Proceeding.
[96] I do not think there is any question of Auckland being “jointly interested” in the proceedings because a joint decision was given. It was, but I accept Mr Gray’s submission that the two Councils were still required to address separately the issues affecting the “donor” land and the issues affecting the “receiving” land. Each Council was required to act independently (in accordance with the objectives of the RMA) in respect of the land within its district. And of course the Decision did not purport to address the issue of the 35 TRLRs the Trust says should have been issued to it.
[97] Nor do I consider the fact that the two Councils collaborated in the processing of “cross-border” TRLR applications affects the position. I accept Mr Gray’s submission that this was no more than a matter of administrative convenience once a cross-border receiving property had been identified; it did not affect the responsibility of each territorial authority to make relevant decision affecting the land within its district.
[98] On the promulgation of Variation 13, which resulted in the prohibition of the “cross-border” use of TRLRs which is at the heart of the Damages Proceeding, I do not think it assists Waikato that Auckland may have adopted the same Variation 13. Each Council was responsible for the promulgation of variations to its own plan changes, and Waikato remained responsible for its own variations regardless of whether Auckland introduced the same variation within its territory.
[99] The statutory provisions referred to in Ms Macartney's report for the hearing on Variation 13 are consistent with Waikato being the only territorial authority with any entitlement to make decisions about conservation and environmental lot rights in respect of the Klondyke property, and Waikato has not sufficiently shown that Auckland had any responsibility for the determination of that issue. It was a matter to be determined by Waikato. Consistent with that view, it was Waikato that provided the Report, not Auckland.
[100] Considering the second limb of r 4.56(1)(b), where the additional party's presence before the Court must be necessary for the Court to adjudicate on and settle all questions involved, I am unconvinced that there is any relevant “necessity” in this
case. As Clark J noted in Mitchell v Attorney-General, the concept of “necessity” is generally concerned with the legal rights and liabilities of the parties,16 and I accept Mr Gray's submission that the statements of claim as presently framed do not assert any liability of Auckland, or appear to affect any legal right or liability of Auckland. Nor is it clear how any findings or determinations in the proceedings could affect Auckland’s “pocket”, or otherwise impact on its rights.
[101] Nor do wider considerations of justice favour Auckland being joined. I accept that the Court’s approach to joinder of parties under r 4.56 has generally been liberal, but the Trust’s wishes must also be considered. If Auckland's rights will not be impacted by any findings or decisions in the proceeding, as appears to be the case, it is difficult to see why the Trust should be asked to bear the additional costs and delay that would be likely to attend any order joining Auckland. If Auckland holds relevant documents, an appropriate application for non-party discovery can be made, and if necessary Auckland's officers who were involved with the matter can be called to give evidence at trial. There is nothing before me to suggest that Auckland would not sensibly co-operate on those matters, and there is nothing else that would suggest Auckland's presence as a party might be necessary to ensure all relevant evidence is before the Court.
[102] For all of the foregoing reasons, I am not satisfied that Waikato has made out a basis for joinder of Auckland under either limb of r 4.56(1)(b). There is no sufficient basis to conclude that Auckland ought to have been joined, and nor is there any basis for the Court to find that Auckland's presence before the Court is necessary to adjudicate on and settle all of the questions in the two proceedings.
Result
[103] For the foregoing reasons, the application is dismissed. The Trust is entitled to costs, which are awarded on a 2B basis, together with disbursements as fixed by the registrar.
16 Mitchell v Attorney-General, above n 11, at [18].
Associate Judge Smith
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