State Housing Action Inc v Minister of Housing
[2016] NZHC 2924
•5 December 2016
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IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
CIV 2016-470-139 [2016] NZHC 2924
BETWEEN STATE HOUSING ACTION
INCORPORATED Plaintiff
AND
MINISTER OF HOUSING AND MINISTER OF FINANCE Defendants
Hearing: 9 November 2016
(Heard at Wellington)
Counsel:
M J Sharp for Plaintiff
D J Goddard QC and J K Gorman for DefendantsJudgment:
5 December 2016
JUDGMENT OF SIMON FRANCE J
[1] These judicial review proceedings involve a challenge to the decision of the responsible Ministers to enter into a contract to sell 1124 Housing New Zealand Corporation (Housing New Zealand) properties located in Tauranga to a private provider. The plaintiff alleges the decision was made following a process that did not comply with the relevant statutory provisions, and was an unreasonable exercise of statutory power.
The legislative context
[2] In February 2016 the Housing Corporation Act 1974 was amended to insert a new Part which provided for the sale of Housing New Zealand properties to other
social housing providers.
STATE HOUSING ACTION INC v MINISTER OF HOUSING AND MINISTER OF FINANCE [2016] NZHC
2924 [5 December 2016]
[3] The lead up to this legislative change is set out in the evidence of the defendants:1
(a) In 2010 an independent Housing Shareholders Advisory Group made a set of recommendations to the Government which called for the community housing sector to play a greater role in assisting people requiring housing support.
(b)Cabinet agreed to a new direction, and over the next four years implemented a series of steps to give effect to this new direction. These included making capital grants to non-government providers, making income related rent subsidies available to Community Housing Providers, and shifting responsibility for assessing tenants’ eligibility, and placement, from Housing New Zealand to the Ministry of Social Development (MSD).
(c) Cabinet also adopted in December 2014 a set of objectives called the Social Housing Reform Programme Objectives. These were then enacted into legislation in the February 2016 amendment.
[4] The Housing Corporation (Social Housing Reform) Amendment Act 2016 inserted a new Part 5A into the parent statute. Its purpose (s 50A) is to enable social housing transactions to be entered into and implemented. Power is conferred on the Ministers of Finance and of Housing, acting jointly, to enter into social housing transactions on behalf of Housing New Zealand (s 50E(1)(a)). In doing so the Ministers are not constrained by the objectives, functions and powers of Housing New Zealand.
[5] A social housing transaction is defined as consisting of one or more relevant contracts entered into under s 50D and s 50E of the Act. These are the key
provisions:
1 First affidavit of Ms Karen Mitchell, the government official responsible for managing the transfer of assets pursuant to the Social Housing Reform Programme.
50D Meaning and relevance of social housing reform objectives
(1) The social housing reform objectives are any 1 or more of the following:
(a) people who need housing support can access it and receive social services that meet their needs:
(b) social housing is of the right size and configuration, and in the right areas, for households that need it:
(c) social housing tenants are helped to independence, as appropriate:
(d) there is more diverse ownership or provision of social housing:
(e) there is more innovation and more responsiveness to social housing tenants and communities:
(f) the supply of affordable housing is increased, especially in
Auckland.
(2) The social housing reform objectives are relevant to decisions by the Minister to enter into transfer contracts (see section 50E) but may also be relevant to other decisions by the Minister under or in relation to this Part.
50EMinister may enter into transfer contracts as Corporation or subsidiary
(1) The Minister may enter into a contract, for and on behalf of the Corporation or subsidiary, that provides for either or both of the following (a transfer contract), if the Minister considers that the entry into the contract is for the purpose of any 1 or more of the social housing reform objectives:
(a) the transfer of ownership of assets of the Corporation or subsidiary:
(b) the grant of an interest in assets of the Corporation or subsidiary.
(2) A transfer contract may be on any terms and conditions (including as to consideration) that the Minister may agree with the transferee.
[6] It can be seen that s 50E empowers the Ministers to enter into a contract that sells Housing New Zealand assets if they consider that entry into that contract is for the purposes of one or more of the social housing reform objectives.
[7] The decision under s 50E to enter into a transfer contract in relation to
Housing New Zealand’s Tauranga properties is the challenged decision.
The Tauranga situation
[8] In June 2015, following regional consultation, properties in two areas, Invercargill and Tauranga, were identified as suitable for offering to community housing providers. Insufficient interest was garnered in Invercargill, so only Tauranga proceeded. In August 2016, Accessible Properties was announced as the preferred bidder. Accessible Properties is wholly owned by IHC Incorporated New Zealand.
[9] Two contracts have been negotiated with Accessible Properties. The first contract is the transfer contract for the sale and purchase of the 1124 properties. The purchase price will be less than apparent market value because of the limitations on the purchaser. First, the use to which the property may be put is restricted. Prior to transfer an encumbrance has been placed on the properties which require that they be used only for social housing. Second, the rent is fixed by negotiation with MSD, and the purchaser/provider cannot increase it. (The rent is met in part by the tenant to a level set by MSD, and the balance is paid by MSD. This tenant’s contribution is generally no more than 25 per cent of income.) All outgoings are Accessible Properties’ responsibility.
[10] The Crown retains an investment in the properties, called the Crown Retained Investment (CRI), which is the difference between the book value and the purchase price. This is secured by way of second mortgage. If at some point the property is released from social housing requirements, it may be sold but the Crown receives back the CRI which is itself index linked to movements in the local property market.
[11] The second contract is called the Capacity Contract and is between MSD and Accessible Properties. MSD is responsible for managing the social housing programme in terms of service provision. It sets the rent for a property after negotiation with the provider (be it Housing New Zealand or Accessible Properties or some other registered provider). It also allocates tenants, and fixes their contribution to that rent. It also has responsibility in relation to the overall suitability of the housing stock available.
[12] The delivery of more suitable housing is an important part of the Social Housing Reform Programme. There are two aspects: reconfiguration of existing stock and provision of extra properties. Reconfiguration concerns reshaping the profile of the properties both in terms of where they are located and the number of bedrooms each property offers. The Capacity Contract addresses both aspects, with rules around reconfiguration, and a commitment by Accessible Properties to provide an agreed number of new properties within a stated timeframe. (The plaintiff submits that number will not be enough to address housing problems in Tauranga.) Significant financial incentives attach to the successful provision of these extra properties. The contract also addresses functional aspects such as repair and maintenance.
[13] The two contracts are inter-dependant. The parties agree the validity of the decision under challenge falls to be assessed against the two contracts as a package.
[14] On 30 September 2016 the Ministers of Finance and Housing agreed to proceed with the sale of the Tauranga properties to Accessible Properties. The signing of the contracts themselves has been deferred to allow these proceedings to be heard.
The evidence
[15] The plaintiff is a recently incorporated society which brings together a network of groups and individuals who are concerned about the Government’s plans in relation to Housing New Zealand properties. On a very general level the plaintiff’s position is that divestment to private sector providers is wrong, and the focus should be on better enabling Housing New Zealand to do its job. The plaintiff considers selling social housing to the private sector will result in less social housing overall, housing being concentrated in lower socioeconomic areas, displacement of current tenants, and poorer service provision to vulnerable people.
[16] Evidence for the plaintiff was filed by its convenor, Mr John Minto; the convenor of the Tauranga branch, Ms Vanessa Kururangi; and two others whose evidence was tendered as expert evidence. In my view a considerable portion of the plaintiff’s evidence is not properly admissible, or is of reduced probative value.
Much of it is opinion evidence from persons not qualified as experts to give such evidence for the purposes of High Court proceedings, being either informed lay persons, or insufficiently qualified experts.2
[17] One of the experts clearly is qualified to give evidence and he provides an analysis of the housing situation in Tauranga, and then expresses an opinion as to why the Government’s approach is not the correct one. The thrust of the evidence is to identify alternative policy considerations that it appears from the record the Ministers did not consider, and which it is contended needed to be considered.
[18] Key factual information that is relied upon by the plaintiff is that the Tauranga housing market resembles Auckland in terms of sustained high population growth and growing problems with affordability and homelessness. It is noted there is already an acute shortage of social housing stock. The waiting list for such housing, as a percentage of the overall available stock, is two and a half times the waiting list in Auckland or nationally. The thesis then advanced is that the arrangements with Accessible Properties under the Capacity Contract will not address these deficits. It is merely a transfer of ownership. Finally, the expert challenges the cost/benefit analysis of the sale at the agreed prices.
[19] The three witnesses for the defendant are the two relevant Ministers, and Ms Mitchell.3 The Ministers separately detail their involvement with the Social Housing Reform Programme from its inception. Each also identifies the various briefings and reports received throughout the whole process from the inception of the new programme, including the more recent phase of the Tauranga transaction.
[20] The Minister of Finance, the Hon. Bill English, has held specific responsibilities in relation to Housing New Zealand since November 2014. Since then he has been fully involved in the development and implementation of the transfer of properties pursuant to the Social Housing Reform Programme. The
Minister details various Government decisions he has been closely involved in the
2 The concern about admissibility was raised by the Court. Mr Goddard QC for the defendant indicated his agreement with the concerns, but advised that because the proceedings were being brought on with urgency, the decision was taken not to raise objections that might delay matters.
3 Above n 1.
18 months preceding the challenged decision. The Minister then details 22 separate issues or topics concerning which he had held meetings with officials and received briefing papers. The purpose of this part of the Minister’s affidavit is to set out the existing familiarity with the issues that the Minister brought to his consideration of the final report. (The report will be described below.)
[21] The Minister of Housing, the Hon. Paula Bennett, advises that she has been involved in the Social Housing Reform Programme since its inception, including the development of the objectives. The Minister has been concerned throughout to keep an emphasis on the people who the Programme is intended to assist. Her consideration of the various issues has been influenced by this focus. Consistent with that, the Minister was responsible for the inclusion of a Principles part in the Capacity Contract.
[22] The Minister identifies the same background meetings and briefings as the
Minister of Finance as informing her consideration of the final Report.
The Treasury Report
[23] The final Treasury Report (titled Entry into the Tauranga Transaction Transfer Contract) was provided to the Ministers on 26 September 2016. The action sought was that each Minster:
(a) confirm agreement that the transfer of the properties was for one or more of the Social Housing Reform objectives set out in s 50D of the Act; and
(b)agree to exercise their power under s 50E of the Act to transfer the properties.
[24] The Report sets out the legislative framework together with commentary on that. It notes that some of the criteria inherently require measurement against the status quo. For example, objective (d) refers to delivering “more” diverse ownership. Whilst noting that some criteria arguably do not require the same type of evaluation, the paper nevertheless assesses each of them against the status quo.
[25] The next section addresses the place of the Tauranga transaction within the wider social housing programme. The key components of the programme are identified and it is noted that the Tauranga transaction is the first in an anticipated number of such transactions. The Report continues:
18.A key objective of the [Social Housing Reform Programme] that is enabled through the proposed transfer transaction in Tauranga and the wider transfer transaction programme is that there is a more diverse ownership or provision of social housing. The transfer of social housing provided by [Housing New Zealand] to alternate providers will help you to meet this objective, through diversifying ownership of social housing.
19.The diversity created or strengthened through transfer transactions is broader than diversity of ownership. When there are more developers, financiers and specialist services providers involved in the sector, capability and capacity are increased. This capability and capacity will support the objective of more innovation and more responsiveness to social housing tenants and communities, and help ensure people who need housing support can access it and receive social services that meet their needs.
[26] The next sections of the Report detail the tender process, and then proffer an analysis of the preferred bidder, Accessible Properties. There is then an assessment of the purchase price and the financial considerations arising, followed by a description of the structure of the two contracts, with most focus on the Capacity Contract.
[27] The final section contains an assessment of the Transaction against each of the six statutory objectives set out in s 50D. In this section officials advise, based on a detailed analysis under each objective, that the Ministers could conclude that the Transaction is for the purposes of statutory objectives (a), (b), (d) and (e). Concerning objective (c), helping tenants to independence, it was considered the transaction was consistent with it, but did not materially better that objective so should not be relied on in isolation. It was considered objective (f) (that supply of affordable housing is increased, especially in Auckland) was not relevant to the transaction.
[28] Each of the Ministers, in their evidence, addresses why they agreed with the officials under each head. These include, under some of the criteria, further reasons or different emphases that were relevant to the particular Minister’s decision. The
Minister of Finance also disagreed that objective (f) was irrelevant and considered, for reasons he explains, that the transaction was also for the purposes of this objective.
The plaintiff ’s challenges
[29] The two causes of action involve some overlap. The first cause of action is illegality, it being claimed that the decision of 30 September 2016 was unlawful because the Ministers did not have copies of the actual contracts at the time of taking the decision or, at least, were insufficiently aware of key details. The plaintiff identifies three areas where it is said the information the Ministers actually had about the content of the contracts was deficient. This is where the overlap with the second cause of action, unreasonableness, arises. It is contended that not being aware of these three matters is a reason why the decisions are also unreasonable.
[30] The three areas of alleged deficiency are:
(a) the fact the Ministers were not advised that Accessible Properties will not be the actual purchaser/landowner;
(b) the explanation given of the “put option” is said to be insufficient.
The put option covers the circumstances in which MSD can release properties from the social housing encumbrance, thereby allowing Accessible Properties to sell them on the open market;
(c) the reconfiguration obligations on the purchaser are said to be different in the contract from that previously advised to the Ministers.
[31] As noted the second cause of action is unreasonableness. This is generally advanced by way of identifying contrary policy arguments to those identified in the Treasury Paper, and then advancing the proposition that the Ministers’ decision must be unreasonable if regard was not had to these contrary arguments.
Decision
The need to have the actual contracts
[32] I take as a statement of the applicable law a passage from Cooke P in
New Zealand Fishing Industry Assn v MAF:4
… the relevant considerations which the Minister was bound to take into account included such facts obviously material to the mandatory statutory considerations as were or ought to have been known to himself or the Ministry. That is to say, the duty to consider statutory criteria extends to facts so plainly relevant to those criteria that Parliament would have intended them to be taken into account and a reasonable Minister would not fail to do so. See CREEDNZ Inc v Governor-General [1981] 1 NZLR 172, 183; Ashby v Minister of Immigration [1981] 1 NZLR 222, 225–226.
[33] It is common ground the Minister did not have complete copies of the contracts at the time they agreed to the transfer. During the oral hearing the claim that Ministers needed to have the actual contracts was apparently modified to a lesser claim that they needed at least to be aware of the key terms or provisions. If that is the case, it is now an uncontentious proposition, although it should be qualified. The key provisions in the present context are those provisions relevant to the statutory objectives. The Ministers’ power to sell the properties is dependent on them jointly concluding that the transaction is for the purposes of one or more of the statutory objectives, and that is what determines what are the key provisions. Price, for example, is obviously important but is not necessarily relevant to the question of whether the contract advances one of the statutory objectives.
[34] There can be no obligation on the Ministers to have or read the actual contracts. It misunderstands their role, and that of government officials, to advance such a proposition. Much of the content of the contracts will be both standard, and irrelevant to the Minister’s functions. The Capacity Contract for example extends to
439 pages and has much detail that a Minister need not address or be aware of.
4 New Zealand Fishing Industry Assn v MAF [1988] 1 NZLR 544 (CA) at 552.
[35] Mr Goddard QC relied here on the well-known authorities that confirm the ability of Ministers to rely on advice from officials.5 For example, in Bushell: “the collective knowledge, technical as well as factual, of the civil servants in the department and their collective expertise are to be treated as the Minister’s own knowledge, his own expertise”.6
[36] In the present case I consider it is not tenable to suggest the Ministers needed the actual contracts. They needed to be aware of the key features which connect the contracts to the statutory objectives.
Information errors or deficits
[37] I turn then to the three matters which are said to be material and on which it is said the Ministers were not informed or were misinformed. It is convenient within this section to address a fourth area of identified concern namely the amount of information the Ministers had about the existing situation in Tauranga.
[38] The first topic is the identity of the purchaser. The successful bidder was Accessible Properties Ltd, an entity wholly owned by IHC Incorporated New Zealand. It is a registered charity and one of the country’s largest non-governmental providers of social housing. It is registered as a community housing provider. There is no challenge to its suitability for that housing provider status.
[39] The briefing papers did not advise the Minsters that Accessible Properties will not in fact be the name on the title. Rather, a new entity will be formed solely for the transaction. It will be 100 per cent owned by Accessible Properties. It seems the rationale for this structure is to ring fence assets and assist with financing. The
asset owner will be a party to the Capacity Contract as will Accessible Properties,
5 Bushell v Secretary of State for the Environment [1980] 2 All ER 608 (HL) contains important statements that have often been relied upon. See, for example, CREEDNZ Inc v Governor-General [1981] 1 NZLR 172 – Cooke P at 183 and Richardson J at 200; New Zealand Fishing Industries Assn v MAF, above n 4, at 567 and Air Nelson Ltd v Minister of Transport [2008] NZAR 139 at [42]–[48]. Another authority often also cited in this case is Attorney-General of Canada v Inuit Tapirisal of Canada (1980) 115 DLR (3d) 1.
6 Bushell at 613.
and each will be jointly and severally responsible for all obligations under that contract.
[40] Mr Sharp contends that an analysis of the Capacity Contract shows that the structure is even more complex, with a second layer of entities owning the registered owner. He submits there are risks if the companies fail, and there are insufficient controls on transfer of shares.
[41] I accept the respondent’s position that this was not information the Ministers were required to know. Accessible Properties is an established registered provider and there is no reason to conclude the structural issues are of significance, or carry a risk that the bargain is other than with Accessible Properties. It remains a signatory to the Capacity Contract. Further, the point concerning transfer of shares is incorrect. MSD must approve any transfer of shares and the contractual definitions make it clear that extends to subsidiaries.
[42] The second concern is the information available to Ministers about the “put option”. The put option is the provision that allows MSD to release properties from the obligations under the capacity contract, and the encumbrance. The plaintiff submits that the last advice to the Minister about the put option (a report dated
20 May) described a position substantially different from the contractual position that existed at the time of the challenged decision. It is said the contract allows more properties to be released than had previously been advised to the Ministers.
[43] Prior to the 20 May paper, there had been, on 17 March 2016, a specific briefing on the put option issue. The 20 May paper identifies for the Ministers what the original draft contract contained as regards “put options”, and sets out the concerns that had been raised with the provision as then drafted. A new structure is foreshadowed which will address the concerns of private housing providers.
[44] Mr Sharp accepted this was not his strongest challenge, and that is so. The put option was a topic on which the Ministers had been regularly briefed. They were fully aware that the contract would provide capacity for the Government to withdraw
properties from the arrangement, and that compensation arrangements between the parties were necessary, and were being finalised.
[45] It is important to recall here that the focus of the Ministers’ decision under the Act is on whether the transaction is for the purposes of the Programme objectives as set out in the Act. The Ministers may, for other reasons, have an interest in the finer detail, but that level of detail is not relevant to the Ministers’ ability to make the challenged decision.
[46] The third challenge also concerns the accuracy of the information provided to the Ministers about the obligations on Accessible Properties under the Capacity Contract to reconfigure the existing stock. As noted, reconfiguration refers to altering the profile of the properties so as to relocate the property to a different part of town, or alter the mix of the options as regards the number of bedrooms the properties have. Obviously, for example, if there is great demand from single tenants, a plethora of three bedroom houses is undesirable.
[47] I accept that reconfiguration is a topic of importance in that it is one of the planks of the Programme, and one of the statutory objectives (s 50D(1)(b)). The challenge here is similar to that made in relation to the put option issue, namely that the detail of the reconfiguration provision in the contract had changed from that set out in the last briefing paper that addressed the issue.
[48] The plaintiff contends that the contract reserves less control to MSD than had previously been indicated in the briefing papers. The contract now gives the provider a right at its discretion to provide a replacement property for an original property as long as it is in the same area and of the same size. Previously all reconfigurations had to be negotiated. The provision is therefore said to lessen the capacity of MSD to implement its reconfiguration plans through negotiation.
[49] The relevant briefing paper had made it plain that a change would be made to the original intended requirement that all reconfiguration would need MSD approval. The paper noted that it was intended that some reconfiguration would be able to be done by Accessible Properties as of right.
[50] The paper set out one example that might be approved as an “as of right” reconfiguration. As it happens, one of the conditions identified in the example was not carried over into the draft contract. This alteration in the detail of the reconfiguration package is said to represent a material change concerning which Ministers needed to be aware. I do not agree. There was no need for the Ministers to be appraised of the fine detail of the “as of right” reconfiguration option. They were aware an “as of right” provision would be included, and were aware in general terms the type of situation officials had in mind. The Ministers would have understood the implications for the statutory objectives of allowing as of right reconfiguration. Nothing more was needed in legal terms. Ministers do not need to micro manage the implementation of such schemes but properly rely on officials to give effect to the policies.
[51] The fourth topic is the amount and quality of information the Ministers had about the current situation in Tauranga. A review of the briefing papers indicates that Tauranga had been, from an early stage, identified as an area where “the supply portfolio is misaligned”.7 However, a detailed breakdown of this misalignment does not appear to have been provided at that time. That said, there was considerable other information provided over the period. The public document calling for
Expressions of Interest from interested bidders stated that MSD wanted more one and two bedroom, and fewer three bedroom, properties than currently exist. Further, the final Report on which the Ministers based their decision contains information both about the reconfiguration requirements under the Capacity Contract, and also Accessible Properties’ plans once it owns the properties. It is noted in the Report that Accessible Properties intends to take an active approach to reconfiguration, and a chart is supplied which identifies both the configuration of the existing supply, and Accessible Properties’ planned reconfiguration. No error has been identified in the outline given there of the breakdown of the existing holdings.
[52] I am satisfied the Ministers had the necessary information about the
contracts’ structure as regards reconfiguration.
7 Briefing paper 12 August 2015.
Unreasonableness of the decision to enter into the transaction
[53] The second challenge is that the decision of the Ministers was an unreasonable exercise of their statutory power. The focus with such a challenge is on whether the decision was within the range of decisions the Ministers acting reasonably could make. The extent to which the Court inquires into the underlying reasonableness of a decision turns on a number of variables which include the subject matter of the decision and the nature of the person or body entrusted with the power. The greater the policy content underlying a decision, the more likely a court will consider it is not best placed to inquire into the matter.
[54] Richardson J explained the general principles this way:8
Finally, it is important to remember, as Lord Wilberforce reminds us, that there is no universal rule as to the principles on which the exercise of a discretion may be reviewed: each statute or type of statute must be individually looked at. The willingness of the Courts to interfere with the exercise of discretionary decisions must be affected by the nature and subject-matter of the decision in question and by consideration of the constitutional role of the body entrusted by statute with the exercise of the power. Thus the larger the policy content and the more the decision-making is within the customary sphere of elected representatives the less well-equipped the Courts are to weigh the considerations involved and the less inclined they must be to intervene.
And on the concept of challenge for reasonableness, observed:9
Equally clearly, in my opinion, the Minister’s final recommendation was reasonable. As to this head it is elementary law that the question is not whether the Court thinks that this view was right or wrong, but whether it was one which a reasonable Minister could take. The statute required him to have regard to all the overlapping matters listed as (a) to (e), but their weight inter se was for him to decide, within the limits of reason. Subject only to that necessary qualification, it is as has been said again and again that policy is for the Minister, not the Courts.
[55] These passages highlight not only the limited role of the Court in certain situations, but also that with any consideration of a decision taken pursuant to legislative power, the legislative scheme is crucial. It will identify the purposes of
the power and what controls exist on its exercise. The legislative scheme will also
8 CREEDNZ, above n 5, at 197–198.
9 New Zealand Fishing Industries, above n 4, at 554.
point to any mandatory considerations to which the decision maker must have regard.
[56] Of the present scheme it can be observed:
(a) the reason the legislation was enacted was to authorise Ministers to act on behalf of Housing New Zealand, and to enter into contracts that transfer Housing New Zealand properties to other social housing providers;
(b)the power to enter into such contracts is conferred on two Ministers of the Crown required to act jointly;10
(c) the circumstances in which the power may be exercised are addressed by the legislation itself which identifies six objectives that can underlie any sale;
(d)the objectives are broadly worded and a particular transaction need only be for the advancement of any one of them;
(e) before exercising the power the requirement is only that the decision-maker “consider” that the contract is being made to advance that purpose.
[57] As a general observation, the nature of persons to whom the power is conferred, and the fact that the legislation prescribes the relevant criteria in broad terms, points to a reduced scope for the type of challenge the plaintiff here makes.
[58] Turning to the present facts, the evidence establishes the decision was taken by the nominated Ministers who each separately turned their mind to the correct issues. The Ministers were both familiar with the Social Housing Policy Reforms, having been involved from an early stage. It has already been concluded that they
did not act on incorrect information, and that they had available to them the relevant
10 It should be noted that the Ministers may delegate this function, s 500 of the Housing
Corporations Act 1974. This diminishes the weight to be attached to this factor.
material. The rather difficult task therefore confronting the plaintiff is to establish that the properly informed Ministers could not reasonably have formed the view that the Tauranga transaction was for the purposes of any one of the six broad statutory objectives.
[59] A common theme advanced by the plaintiff is that there is no evidence that the Ministers considered whether alternative strategies to the sale of the properties to a private provider might be better. However, the Act does not require the Ministers to do this. The legislation conferring the power itself reflects a policy decision and in exercising individual decision making powers under that legislation, the decision maker is not obligated by that legislation to revisit the policy debate each time. The plaintiff’s submission pays too little regard to the statutory scheme and reflects an overbroad approach to what is a mandatory consideration. There is nothing in the legislation to mandate consideration of alternative policy choices.
[60] A second theme advanced by the plaintiff in support of its claim of unreasonableness is that it is not logical for the Ministers to have concluded the transaction will solve or even improve the shortage of social housing in Tauranga. It is noted that there is already a long waiting list, and other than to the extent the capacity contract requires the provision of extra properties, nothing will change except the owner of the properties.
[61] Again, however, this is to debate the wisdom of the policy rather than the lawfulness of the decision. The Act does not require the Ministers to believe the transaction will immediately solve or improve Tauranga’s social housing situation. Rather, the Ministers must assess whether the transaction is for the purposes of the statutory objectives. Given the breadth of those objectives, a Minister could reasonably reach the view that it is, even though recognising that in the short term
the transaction does not practically change much in Tauranga.11
[62] The plaintiff’s submission on this and several other matters focuses on the transaction as an end in itself and what it will mean (as they see it) for Tauranga.
11 That is not to infer that the Ministers accept the plaintiff ’s point about the immediate utility of the transaction. It is clear from their evidence that do consider there are more immediate benefits.
The legislation, though, through its broadly worded criteria allows for the transaction to be viewed in the context of a wider national policy. It is therefore not an unreasonable exercise of the power for the Ministers to take that focus.
[63] In addition to these general observations about why the case cannot succeed, the reality is that there is no basis to suggest the Ministers could not reasonably determine some of the objectives were advanced. The Capacity Contract requires Accessible Properties, over a nominated timeframe, to provide additional properties. It was plainly open for a Minister acting reasonably to conclude this requirement of the transaction advances statutory objectives (a) – people who need housing can access it; and (f) – the supply of housing is increased. It does not undermine this analysis for the plaintiff to advance the proposition that much more additional housing is required than is being provided for. The reality is that a lesser quantity of housing still comes within the statutory proposes.
[64] Second, the transaction transfers ownership of properties from the largest owner, Housing New Zealand, to Accessible Properties. Again, it is plainly possible for a reasonable Minister to consider the transaction thereby advances objective (d) – diversification of ownership. The contract transfers some stock for the dominant owner to another, albeit existing, owner who becomes a new significant provider in that area.
[65] These two features alone are enough to require the plaintiff’s case to be dismissed since either consideration is enough to authorise the Ministers to take what must in legal terms be a reasonable decision to enter into the contract.
Conclusion
[66] The application is declined. There is no basis to say the Ministers’ decision under s 50E of the Housing Corporation Act 1974 was an unreasonable exercise of statutory power. It is a decision with which the plaintiff disagrees because it reflects a policy choice the plaintiff rejects. However, as has often been said, policy is for the Minister, not the Courts. In my view these proceedings fail because they run contrary to that principle, and because they have insufficient regard to the clear
statutory scheme which contemplates the Ministers making the very decision they have.
[67] Costs memoranda may be filed if agreement cannot be reached.
Simon France J
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