The Sisters of Mercy (Roman Catholic Diocese of Auckland Trust Board) v Attorney-General HC Auckland Cp.219/99
[2001] NZHC 457
•6 June 2001
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY CP.219/99
BETWEEN THE SISTERS OF MERCY (ROMAN CATHOLIC DIOCESE OF AUCKLAND TRUST BOARD)
Plaintiff
AND THE ATTORNEY-GENERAL
First Defendant
AND THE AUCKLAND HOSPITAL BOARD
Second Defendant
AND THE AUCKLAND AREA HEALTH BOARD
Third Defendant
AND WAITEMATA HEALTH LTD
Fourth Defendant
AND THE RESIDUAL HEALTH MANAGEMENT UNIT
Fifth Defendant
Hearing: 7, 8 and 9 November 2000
Counsel: D L Schnauer and L H Campbell for Fourth Defendant
I C Carter for First, Second, Third and Fifth Defendants
D E Wackrow and M T Lloyd for Plaintiff
Judgment: 6 June 2001
RESERVED JUDGMENT OF RANDERSON J
Introduction
[1] This is another chapter in a series of cases arising from s 40 of the Public Works Act 1981. Under that provision, where land previously acquired under the Public Works Act is no longer required, then in certain circumstances, it must be offered back to the original owners or their defined successors.
[2] This case involves a portion of land originally acquired from the Sisters of Mercy in the 1950s for the purposes of the North Shore Hospital. Complications have arisen from the transfer of hospital assets and liabilities from one entity to another as a result of changes in the health sector since 1993. The land was held for many years by the Auckland Hospital Board and its successor, the Auckland Area Health Board. Under the health reforms introduced in 1993, the land was transferred to Waitemata Health Limited (WHL). This company was known as a Crown Health Enterprise or CHE. Any assets or liabilities of the former Area Health Board not transferred to a CHE, were to remain with the statutory entity known as the Residual Health Management Unit. Following the most recent health reforms, the assets and liabilities of WHL have been vested in the Waitemata District Health Board and WHL has been dissolved with effect from 1 January this year.
[3] WHL took over responsibility for the provision of health services (including the North Shore Hospital) with effect from 1 July 1993. Just prior to that, its predecessor, the Auckland Area Health Board, wrote to the Sisters of Mercy on 13 May 1993 advising that a portion of the land which had been used for a number of years as a garden nursery was surplus to the Area Health Board’s requirements. This portion of the land was offered back to the plaintiff under s 40 of the Public Works Act. When an offer back is made under s 40, the former land owner has 40 working days to accept the offer: s 42(1)(a). But before the 40 day period had expired, the Area Health Board withdrew the offer. It is not clear exactly when the offer was withdrawn, but for present purposes it is agreed it could not have been before 24 May 1993.
[4] The plaintiff filed this proceeding six years later on 24 May 1999, alleging that all or any of the defendants had breached their obligations under s 40 to offer the land back to the plaintiff and seeking various declarations as to the defendants’ responsibilities.
The applications
[5] There are two applications for consideration:
[a] An application by the fourth defendant WHL to strike out the statement of claim on the following grounds:
[i] That the Sisters of Mercy unlawfully assigned their rights under s 40 to a third party and are precluded from bringing a claim.
[ii] That the claim is barred by the Limitation Act 1950.
[iii] That s 40 does not apply to unsubdivided land.
[iv] That the claim is precluded by virtue of clause 3 of the First Schedule to the Health Reforms (Transitional Provisions) Act 1993 (or subsequent amendments thereto) which modifies in certain respects the rights and obligations applicable under ss 40 to 42 of the Public Works Act.
[b] An application by the first, second and third defendants, (the Attorney-General, the Auckland Hospital Board and the Auckland Area Health Board) to be struck out as parties.
Background facts
In setting out the background facts, I am conscious that at this interlocutory stage, care should be taken not to encroach upon factual issues better addressed at trial. However, in addition to the facts stated in the statement of claim there are a number of facts not in dispute or which are matters of public record. I propose to take those into account. Where applicable I will indicate areas where the facts are in dispute, are not known, or require determination at trial.
[7] Between 1951 and 1956 approximately 40 acres of land on the shore of Lake Pupuke was acquired by the Auckland Hospital Board from the religious order known as the Sisters of Mercy. The title to the land shows it was taken by proclamation “for a hospital” and was vested in the Auckland Hospital Board. The Sisters of Mercy are legally incorporated and their Trust Board is the successor to the original owners. It is not in dispute that the land was acquired under the Public Works Act 1928 by compulsory acquisition, or at least against the background of acquisition by that means. Nor is it in dispute that the land is “held” under the Public Works Act 1981 for the purposes of s 40(1).
[8] Thereafter, the North Shore Hospital was established on the land and while small portions of the land have since been sold, WHL or its successor still holds some 36 acres (14.7 ha) including a portion of land adjoining Carmel College on the Shakespeare Rd frontage of the hospital property. For a number of years, that portion of the land (the nursery land) was occupied and used as a garden nursery. However, it has never been subdivided into a separate title and remains part of the title comprising the hospital land. More recently, since WHL became responsible for the hospital, the nursery land has been used for carparking associated with the hospital. The nursery land occupies an area of approximately 7840 m2 less an access strip of 715 m2 recently sold to the Sisters of Mercy.
[9] Between 1956 and 1992, the land was owned by the Auckland Hospital Board which was defined as a “local authority” having power to make decisions under s 40. However, from 1992 the Auckland Area Health Board took over responsibility for the land under the Area Health Boards Act 1983. Area Health Boards were not defined as local authorities for the purposes of the Public Works Act, but s 70(2) of the 1983 Act obliged an Area Health Board to comply with the Public Works Act when disposing of land vested in it. That meant that any surplus land held by the Area Health Board would have been subject to s 40 with the statutory powers being exercised by the appropriate statutory officer of the Crown under s 40(1).
[10] Crown Health Enterprises such as WHL were a new form of legal entity established in 1993 by s 37 of the Health and Disability Services Act of that year and the contemporaneous Health Reforms (Transitional Provisions) Act which are considered in more detail later. WHL assumed responsibility for the subject land on 1 July 1993 (the relevant Order in Council is SR.1993/94).
[11] From a date in early 1992, there is evidence that the Auckland Area Health Board was considering the possible disposal of the nursery land. A valuer and surveyor were instructed around that time. On 13 May 1993 the Acting General Manager of the Auckland Area Health Board wrote to the Sisters of Mercy in the following terms:
“LAND AT 110 SHAKESPEARE ROAD (PETTITS GARDEN CENTRE, TAKAPUNA)
The Auckland Area Health Board (as successors to the Auckland Hospital Board) is required pursuant to Section 40(2) of the Public Works Act 1981 to offer land back to the dispossessed owners in such cases where lands were acquired compulsorily and have since become surplus to the Public Work for which they were acquired.
In April 1949, the Crown commenced to acquire land from various owners to establish a hospital at North Shore, which included inter alia Pt Allotment 89 and sections 18 & 19, owned at that time by the Sisters of Mercy. The portion of land which is currently under consideration by the Directors of North/West Crown Health Enterprise for declaring surplus, is shown bordered yellow on the attached plan.
In compliance with the said Section 40(2), the Board offers the land back to the Sisters of Mercy at the current market value, as determined by the duly appointed registered valuer, of $1,254,000 inclusive of GST, in anticipation of the Board’s decision to so declare the land surplus to hospital requirements.
To that end I enclose two copies of a Sale & Purchase Agreement. Should you wish to purchase, Section 40(2) permits:
1 The offer to remain open for 40 working days from the receipt of this letter (definition of working days as defined in Section 2 of the Public Works Act 1981.
2 Failure to exercise this option within the prescribed time is taken as your decision not to pursue the right of purchase.
Therefore, if you wish to accept the offer, please have executed both copies of the agreement and return one copy with the required deposit monies. If you are in any doubt regarding this matter, you should contact your solicitor, as execution of the agreement constitutes a legal and binding contract.
Currently, the land is subject to a lease to Pettits Nursery, expiring on 10 September 1993, the annual rental for which amounts to $43,000 pa plus GST.
The Board will draft and execute a Memorandum of Transfer upon issue of a new title by the District Land Registrar following the various approvals to the plan of subdivision. Stamping and registration will be the purchasers responsibility.
Although you have forty (40) working days to decide whether you wish to purchase the property at the market valuation given, it would assist the Board in meeting its contractual arrangements with the Crown if an indication of acceptance, or non acceptance, could be made earlier.
If you do not wish to purchase the land, please so advise by signing the duplicate copy of this letter and returning same to this office at your earliest opportunity.
Please feel free to contact Mr Derek Divers, or Tony Downer, for any further information.
Yours faithfully
R. K. Stent
Acting General Manager
for Auckland Area Health Board”
[12] In the third paragraph of the letter, there are two references to “the Board”. Mr Schnauer for WHL submitted that the first reference to the Board was to the Auckland Area Health Board while the second was to the Board of WHL. It was further submitted that the offer contained in the letter was conditional upon the board of WHL declaring the land surplus to requirements. I note that the second paragraph of the letter refers to the portion of land being “currently under consideration by the Directors of North/West Crown Health Enterprise for declaring surplus . . .”. Although WHL was not incorporated until 2 June 1993 (after the date of the letter), counsel advised there was an establishment board for the new Crown Health Enterprise. The precise position in that respect is not clear, bearing in mind that WHL did not take over legal responsibility until 1 July.
[13] Around the same time, there is evidence that the Area Health Board was advertising the nursery land for urgent sale and that the Area Health Board was in negotiation with a third party for the sale of the land. As well, on 19 May 1993 the Area Health Board’s surveyor obtained the approval of the North Shore City Council to a subdivision so that the nursery land could be disposed of as a separate title. One of the conditions required a 20 m esplanade reserve to be set aside adjacent to Lake Pupuke.
[14] In a memorandum dated 21 May 1993, the Chief Executive of the North/West Crown Health Enterprise (who may also have had a role in the Area Health Board) made certain recommendations regarding the nursery land. He described the offer made to the Sisters of Mercy as expiring on 30 July 1993 and stated that it was anticipated they would either waive their rights or accept the “statutory offer” by 21 June. It appears from this memorandum that the agreement sent to the Sisters of Mercy with the letter of 13 May (which agreement has not been located) must have included a condition because one of the recommendations contained in the memorandum was that the offer made to the plaintiff under s 40 should have the following condition removed:
“That this offer is subject to the North West Crown Health Enterprise Establishment Board’s approval by the 29 May 1993.”
[15] The Chief Executive also recommended in the same memorandum that the Commissioner (presumably the Commissioner appointed in respect of the Auckland Area Health Board) should execute on behalf of the Board “a conditional agreement for the sale of surplus land” to a named third party.
[16] It is evident from other material in the memorandum that it was intended that the sale to the third party (at a figure of $1.5 million plus GST) would proceed only if the Sisters of Mercy were to waive their rights under the offer back procedure. The memorandum also records that “the North/West CHE accepts the land is surplus to their needs and can be disposed of”. I was advised by Mr Schnauer that this statement is disputed.
[17] On 24 May 1993 the Acting General Manager of the Area Health Board sent an internal memorandum to Board officers advising:
“I cannot approve this sale for the following reasons:
1. Settlement must be certain by 30/6/93 for AAHB.
2. CHE unlikely to agree to private hospital.
3. CHE must be aware that any subdivision or long-term lease involves loss of frontage.
Therefore with only 5 weeks to 30 June, we should withdraw the property for sale and advise the Sisters of Mercy accordingly.
I apologise for any inconvenience this has put you and your team to, but it was necessary for the AAHB to attempt to balance its books.
I congratulate you and your team for receiving such an excellent offer.”
[18] A few days after the memorandum of 24 May, the “Board-Manager-Estate” wrote to a real estate agent on 27 May 1993 advising in relation to the nursery land and another property that “the respective Crown Health Enterprises have re-assessed their need for these properties, and consider that they now will require the lands to meet their future strategic goals”. Similar advice was given in another letter dated 8 June 1993 to another real estate agent.
[19] Another matter of possibly crucial importance is that there is no evidence at this stage that the relevant statutory officer under s 40 of the Public Works Act was consulted or involved in any way in relation to the offer made on 13 May. It is possible in those circumstances that the letter of 23 May was invalid and was no more than an expression of the Area Health Board’s view as to whether it required the land. Something more may be required if the plaintiff were to establish that the land was no longer required for any of the three purposes identified in ss 40(1)(a), (b), and (c) of the Public Works Act (which I later discuss in detail). How the Area Health Board felt entitled to make the offer back is not explained.
[20] The precise factual circumstances surrounding the offer, the reasons for the withdrawal, and the respective positions of the Area Health Board and the fledgling Crown Health Enterprise, are not clear and could only be established at trial. However, it is not in dispute that the offer made in the letter of 13 May 1993 was withdrawn before the expiry of the 40 day statutory period for acceptance. The precise date when that occurred is in doubt. The only conclusion which can be drawn with any certainty for present purposes is that it was not before 24 May 1993, the date of the internal memorandum from the Acting General Manager advising that the offer would have to be withdrawn.
[21] Sister Frances Mary Stewart representing the Sisters of Mercy, has sworn an affidavit in which she says she had discussions in mid-1993 with officials from the Auckland Area Health Board. The formal offer in the letter of 13 May was received but she subsequently received a facsimile from the Area Health Board telling her to disregard what had been discussed. Although she could not remember what was said with any precision, the gist was that ‘everything was all off’. She says the facsimile suggested that the Area Health Board’s communications on the subject be destroyed and she says she did that. There is evidence that the Trust Board of the Sisters of Mercy had no reason to believe that the offer was withdrawn for anything other than proper reasons and did not learn otherwise until 1998.
Events after 1 July 1993
[22] After WHL assumed responsibility for the land, it seems nothing further was done towards its disposal until late 1997. On 18 November 1997 the secretary of WHL wrote to the Chief Executive of the Crown Company Monitoring Advisory Unit recommending that the approval of the shareholding ministers in WHL be sought for disposal of three areas of land including the nursery land. The letter advised that the land in question was “surplus to current requirements and likely to remain surplus for the long-term”. The letter also noted that WHL’s property committee had agreed to make application to “clear these portions of the site for possible sale by putting them through the Crown property clearance processes”. The committee’s recommendation to the full board had yet to be confirmed. On 18 December 1997 the shareholding ministers advised that they consented to the disposal of the surplus land on certain conditions, including that the land be cleared for disposal on the open market “after processing through the offer back provisions of ss 40/41 of the Public Works Act 1981 . . .”.
[23] The secretary of the board of WHL has deposed that the steps taken in 1997 and 1998 by WHL were preliminary only and that WHL had not taken any final decision to declare the land surplus. WHL simply wished to be in a position to dispose of the land promptly if a decision were taken to do so.
[24] In the meantime, the Sisters of Mercy entered into an agreement dated 30 April 1998 with a company named Treasury Group Ltd (TGL) dealing with its “unsatisfied rights” to have surplus portions of the hospital land transferred to them under the Public Works Act. The terms of this agreement will be examined in more detail later. Shortly after that, the Sisters of Mercy advised WHL it had appointed TGL as “their attorney to act on their behalf in respect of the Unsatisfied Rights pertaining to the North Shore Hospital site . . .”. Thereafter, there were negotiations involving TGL and WHL which resulted in WHL selling another portion of the site (an area on the corner of Taharoto Rd and Shakespeare Rd) to the Sisters of Mercy or their nominee. In turn, the Sisters of Mercy nominated a third party to proceed with the acquisition. It is unnecessary for present purposes to consider that matter in any detail. Its only relevance is that the transaction appears to have been one contemplated by the agreement between the Sisters of Mercy and TGL of 30 April 1998.
[25] WHL (and presumably its successor) remain adamant that the nursery land is still needed for its purposes and that it has not in fact been surplus to its requirements at any time since it assumed responsibility for the land on 1 July 1993.
The issues likely to arise at trial
[26] The statement of claim focuses on the offer made by the Area Health Board on 13 May 1993 and its subsequent withdrawal. Although citing a date of 8 June 1993 for the withdrawal of that offer, Mr Wackrow accepts that it may have been any time between 24 May 1993 and 8 June 1993. It is alleged that the land was in fact surplus prior to the offer back on 13 May 1993. Indeed, it is alleged that the land has been surplus at least since the Public Works Act 1981 came into force on 1 February 1982 and that there has been a breach of duty in not commencing the statutory offer back process from 1 February 1983, which the plaintiff alleges is a reasonable time for that process to have been started after the 1981 Act into force.
[27] Mr Wackrow also advises that he intends to amend the pleadings to allege as an alternative that, even if the land had not become surplus prior to 1 July 1993, it has become surplus in 1997 as a result of subsequent events.
[28] During the course of the hearing, it emerged that there are likely to be at least the following issues arising at trial (some on the present pleadings and others which will arise from signalled amendments):
[a] Whether the land has in fact become surplus such as to give rise to the obligations under s 40 and if so, when that state of affairs arose.
[b] Whether the Area Health Board had authority to make the offer back of 13 May 1993 in view of the fact that it was no longer a “local authority” and the statutory process was to be managed by the appropriate Crown officer under s 40 as it then stood.
[c] Whether the offer was conditional on WHL agreeing that the land was surplus.
[d] If the offer was subject to a condition of that kind, whether it was a lawful condition. In that respect, it is clearly arguable that the condition went well beyond a mere conveyancing condition and could have had the effect of completely negating the offer. I note the recent decision of the Court of Appeal in Attorney-General v McLennan and Others (CA.41/00, 7 December 2000) in which it was confirmed that reasonable conveyancing, terms and conditions could form pact of an offer under s 40. But the disputed condition in this case may not fall into that category.
[e] Whether the withdrawal of the offer by the Auckland Area Health Board was lawful or whether the Board was in breach of duty by failing to keep the offer open for the statutory period of 40 working days after it was made.
[f] Whether there may be damages claims against the Crown or any of the other bodies involved.
[g] The effect of clause 3 of the First Schedule of the (then) Health Reforms (Transitional Provisions) Act 1993 in respect of the claim under s 40 in the light of the recent decision of the Privy Council in Dilworth Trust Board v Counties Manukau Health Ltd and Attorney-General (PC.13/00, 7 March 2001) and the Health Sector (Transfers) Amendment Act 2000 which came into force on 1 January this year.
[29] Against that background, I now turn to consider the grounds identified in paragraph 5 in support of the strike out application.
(i) Was there an unlawful assignment of the plaintiff’s rights to TGL?
[30] The resolution of this question depends upon whether the arrangements between the Sisters of Mercy and TGL are such as to preclude the plaintiff from bringing this proceeding. It is clear from the statute that the offer back is to be made “to the person from whom it was acquired or to the successor of that person . . .”: S 40(2). The term “successor” is defined by s 40(5) as meaning “. . . the person who would have been entitled to the land under the will or intestacy of that person had he owned the land at the date of his death; and, in any case where part of a person’s land was acquired or taken, includes the successor in title of that person”.
[31] It is not in dispute that TGL is not a successor within the statutory definition. So on the facts of the present case, any offer back must be made to the Sisters of Mercy. It is also common ground that any claim must be brought by them. For that reason it must be shown by WHL that the Sisters of Mercy are somehow precluded by the arrangements with TGL from bringing the claim or that the Sisters of Mercy (although described as such in the entituling) are, in reality, TGL.
[32] It is not alleged that the agreement entered into between the Sisters of Mercy and TGL is a sham. It follows that its terms must be given effect according to their tenor. In summary, the relevant terms may be described as follows. Under clause 1, the Sisters of Mercy agree to bring their claims against the Crown for any unsatisfied rights arising under ss 40 to 42 of the Public Works Act in relation to all of the hospital land acquired from them. TGL is appointed as their attorney in respect of the unsatisfied rights with power to execute such documents as may be necessary, including the issue of any Court proceedings; TGL agrees to pay all costs and to indemnify the Sisters of Mercy; the Sisters of Mercy agrees to provide all necessary documentation in support; if the Sisters of Mercy acquire the whole or any part of surplus land under the Public Works Act, then they will immediately transfer the land so acquired to TGL or its nominee; in return the Sisters of Mercy are to receive the strip of land adjacent to Cannel College already mentioned, as well as 10% of the purchase price under any agreement.
[33] Clauses 6 and 7 are of some significance. They provide:
“6. IT is hereby acknowledged and agreed that the Trust Board have the ultimate control of the Unsatisfied Rights and that so far as the Unsatisfied Rights are concerned Treasury will not act contrary to the instructions given by the Trust Board in respect of the Unsatisfied Rights.
7. IT is hereby acknowledged and agreed that the Trust Board will not pursue the Unsatisfied Rights except as is provided for in this Deed.”
[34] Mr Schnauer referred me to the decision of Baragwanath J in Glucina v Auckland City Council (High Court, Auckland, M.931/95, 27 February 1996) in which the Court considered whether the rights of a former owner under s 40(2) are assignable and if not, whether a former owner is entitled to enter into a binding obligation to make available to a third party the benefit of the statutory right. Before considering this decision further, it is important to note an important distinction from the present case. The plaintiff, Mr Glucina, was not the former owner or his successor as defined in the Public Works Act. Mr Glucina relied upon a deed between himself and the former owners purporting to assign their interests under the Public Works Act to Mr Glucina.
[35] Baragwanath J decided (at 24) that the statutory rights were not capable of formal assignment, pointing to the explicit statutory language in finding that the definition of “successor” was inconsistent with the inclusion of an assignee. I agree. However, His Honour was unable to find any justification in public policy or otherwise to forbid a former owner from contracting with a third party in relation to the rights. The former owner, having acquired the land, was entitled to do with it as he pleased.
[36] After the conclusion of the hearing, Mr Schnauer drew my attention to the Court of Appeal decision in J Sew Hoy and Others v PHC Sew Hoy and Another [2001] 1 NZLR 391. There the Court decided that the prospective right to an offer back under s 40 at some indeterminate future date was not an asset of a partnership for the purposes of the Partnership Act 1908 but was an inchoate right in the nature of a contingency. Blanchard J expressed the view (obiter) that such a right was not capable of assignment. To the limited extent that this decision is relevant to the present case, it supports the conclusion reached in Glucina that the rights under s 40 are not capable of assignment and that any offer back must be made to the person from whom the land was taken or the defined statutory successor of that person.
[37] Mr Schnauer submitted that the effect of the agreement between the plaintiff and TGL was to assign the rights. He submitted that, in substance, TGL was taking over the unsatisfied rights and was seeking to enforce them. He submitted that subsequent correspondence showed that TGL had made a payment of $500,000 plus GST to the Sisters of Mercy in relation to the transfer of their rights and that they would not be entitled to receive any further sum unless the value of the nursery land (if transferred to the Sisters of Mercy) exceeded $5 million. This was on the basis that it was subsequently agreed with the Sisters of Mercy that the $500,000 paid to them would be received on account of the total sum due to it under the agreement (amounting to 10% of any purchase agreements). Mr Schnauer also relied on the Power of Attorney and the fact that TGL was funding the entire proceeding.
[38] I cannot accept Mr Schnauer’s submissions. On a fair reading of the agreement, the Sisters of Mercy agreed to bring proceedings to enforce the claim and if successful, to immediately transfer the property, once received, to TGL. The fact that funds for that purpose were to be provided by TGL is not relevant to the issue of whether the s 40 right was assigned. Clause 6 of the agreement makes it clear that the Sisters of Mercy retain ultimate control of the unsatisfied rights. The fact that, by clause 7, the plaintiff agreed not to pursue those rights except in accordance with the deed, does not affect that conclusion. There is no suggestion in the documents or elsewhere that the offer back would be made to anyone other than the Sisters of Mercy and there is no express or implied assignment of rights as there was in Glucina.
[39] Nor is there any evidence to suggest that the plaintiff in this proceeding is in reality TGL. It may be that the proceedings are substantially and ultimately for the benefit of TGL, but I see nothing unlawful in the Sisters of Mercy entering into such an agreement if they see fit to do so. It is true that the statutory rights are for the benefit of the former owner or successors as defined, but the way in which the former owner chooses to benefit is entirely up to them. Here, the Sisters of Mercy have chosen to benefit by a commercial arrangement which will ensure that they receive a payment from the ultimate transfer of the land. I see nothing unlawful in that.
[40] Mr Schnauer advised during the hearing that it was not contended that TGL’s involvement in the proceedings was champertous. However, in a memorandum since filed, he contends that the arrangements are champertous citing Trendtex Trading Corporation v Credit Suisse [1982] AC 679 (HL). As I understand it, Mr Schnauer’s argument is based on the submission that any rights the Sisters of Mercy may now have are confined to damages. The resolution of WHL’s claim in this respect depends on a range of issues, including the nature of the agreement, the rights conferred under it, and whether TGL has a genuine commercial interest in the litigation. These are matters which are plainly unsuitable for determination in a pre-trial application and I decline to do so.
[41] In view of these conclusions, the first ground for the strike out application fails.
(ii) Is the plaintiff’s claim statute barred?
[42] Mr Schnauer’s second ground to support the application to strike out was founded on the assumption that the plaintiff’s claim must be based on the tort of breach of statutory duty. It followed that in terms of s 4(1)(a) of the Limitation Act 1950, any such claim could not be brought after the expiration of six years from the date on which the cause of action accrued. Alternatively, Mr Schnauer submitted that the claim was a “sum recoverable by Virtue of any enactment” and was subject to a six year limitation period under s 4(1)(d). The resolution of this question depends in part upon the nature of the relief sought, including the distinction between declaratory relief and a claim for damages.
[43] Based on the decision of the Privy Council in Attorney-General v Horton [1999] 2 NZLR 257, Mr Schnauer submitted the cause of action accrued as soon as the land was no longer required in terms of s 40(1). At 261-262, the Privy Council endorsed the view of the Court of Appeal that once conditions (a), (b) and possibly (c) of s 40(1) were satisfied, the relevant statutory officer of the Crown was under a mandatory obligation to sell. Thereafter, there was no further room for reconsideration of the earlier conclusion that the land was not required for a public work. The right to an offer back vests, subject only to being defeated by the exercise of the discretion conferred by s 40(2)(a) or by the stated facts described in s 40(2)(b). Their Lordships concluded that if s 40 confers an enforceable right to buy, then:
“When the conditions upon which it comes into existence have been satisfied, it must vest subject only to those grounds of defeasibility expressly stated in the statute.” (at 262)
[44] The last step in Mr Schnauer’s argument was that, to the extent the plaintiff’s claim was based on the land becoming surplus (at the latest) by the letter of 13 May 1993, the plaintiff ought to have filed its proceeding no later than 13 May 1999. As the proceedings were not filed until 24 May 1999, he submitted the claim was out of time.
[45] Mr Schnauer’s submission that the claim was one based on the tort of breach of statutory duty was based on the decision of Smellie J in Rowan v Attorney-General [1997] 2 NZLR 559. In that case, land initially acquired under the Public Works Act became surplus but was not offered back to the original owners. Instead, it was offered back to the successors in title of the original owners even though one of the former owners was still alive. It was held that the Crown’s obligation was to offer the land back in the first instance to the former owner and that the Crown was in breach of s 40 in the circumstances. It was also held that the breach of the statutory duty in s 40 to offer the land back gave rise to a private cause of action. As well, there was a cause of action based in negligence.
[46] It is important to note that Rowan was a claim for damages, it being recognised that there was no longer any prospect that the land itself could be restored to the former owner. In the present case, as the pleadings currently stand, the plaintiff’s claim is purely for declaratory relief based upon the Court’s general jurisdiction, the Declaratory Judgments Act 1908, and the powers available to the Court on judicial review under the Judicature Amendment Act 1972. As it is presently constituted, the relief sought is as follows:
“(a) A declaration in the general jurisdiction of the Court and or relief pursuant to the Judicature Amendment Act and or a Declaration or Order pursuant to the Declaratory Judgments Act that:
i. The Defendants have breached their Statutory obligation under Section 40 of the Public Works Act 1981 to offer back to the Sisters of Mercy the Garden Centre Land.
ii. The Defendants and or the bodies or Officials they represent or by whom they are represented ought to have offered the Garden Centre Land back to the Sisters of Mercy no later than the 1st February 1983.
iii. The Defendants are to now offer the Garden Centre Land back to the Sisters of Mercy at a price fixed as at the 1st February 1983 by a registered valuer if the parties so agree or at a price determined by the Land Valuation Tribunal as at the 1st February 1983.”
[47] The correct analysis of s 40 is a matter of some complexity because it both imposes obligations and confers discretions. As clarified in Horton, once the factual circumstances described in subs (1)(a), (b) and (c) have been established, the relevant statutory officer is under a mandatory obligation to sell the land in accordance with subs (2). However, when subs (2) is considered, the obligation is subject to three specified exceptions. The statutory officer is not obliged to offer the land back if:
[a] The officer considers that it would be impracticable, unreasonable, or unfair to do so: subs (2)(a); or
[b] There has been a significant change in the character of the land for the purposes of, or in connection with, the public work for which it was acquired or is held: subs (2)(b); or
[c] The statutory officer believes on reasonable grounds that, because of the size, state or situation of the land he or it could not expect to sell the land to any person who does not own the land adjacent to the land to be sold, in which case the land may be sold to an owner of adjacent land at a price negotiated between the parties: subs (4).
[48] Thus, while an obligation may arise under subs (1) where the relevant factual circumstances are made out, the statutory officer may nevertheless decline to offer the land back to the original owners or their successors (as defined) if any of the three circumstances described are applicable. It is clear from the statute that ss 40(2)(a) and (4) confer a discretion upon the statutory officer while the provisions of s 40(2)(b) contemplate the existence of factual circumstances rather than a discretion. The latter nevertheless entails some degree of judgment by the statutory officer, especially in relation to the issue of “significant change in the character of the land”.
[49] Although there was an offer back (of some description) made in the letter of 13 May, Mr Wackrow acknowledged in argument that there is no evidence that any consideration had been given to the matters under ss 40(2) or (4). It is simply pleaded in the statement of claim that the relevant land “has not been required for Public Work”. Mr Wackrow accepted that the form of the declaratory relief would need to be amended to seek a declaration as to whether and at what date the land was no longer required for any of the purposes described in ss 40(1)(a), (b) and (c). The next step would be for the relevant statutory officer to consider the position under subs (2) and (4). The plaintiff would be unable to establish any loss unless it could be demonstrated that the statutory officer would not seek to place reliance on any of the matters in ss 40(2) or (4). The position about that is unclear.
[50] In summary to this point, the principal declaratory relief is limited to whether the factual circumstances described in ss 40(1)(a), (b) and (c) are such as to give rise to an obligation to sell the land and, if so, at what date. Future amendments to the pleadings may change that.
Limitation period where declaratory relief is sought
[51] There is an essential difference between the grant of declaratory relief and other relief such as an injunction or damages. A declaratory order or judgment is simply the Court’s declaration or statement resolving a dispute over the law applicable to a situation in which the applicant has a sufficient interest. A declaration neither commands nor restrains action: Aronson, Judicial Review of Administrative Action (1996), 861. The Court’s power to grant bare declarations without accompanying remedies has existed at least since 1850: see the discussion in Aronson at 862 et seq. No separate cause of action is required either under the Declaratory Judgments Act 1908 or the Judicature Amendment Act 1972.
[52] In relation to the former, s 2 of the Declaratory Judgments Act provides that no proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought and the Court may make binding declarations of right, whether or not any consequential relief is or could be claimed. In the case of the latter, the jurisdiction to grant relief depends upon the exercise or refusal to exercise a statutory power. It also embraces the proposed or purported exercise of such a power: see s 4 Judicature Amendment Act and the definitions of statutory power and statutory power of decision in s 3.
[53] I am doubtful whether jurisdiction exists in the present case to grant a declaration under s 3 of the Declaratory Judgments Act. So far as the Act relates to statutes, s 3 confers jurisdiction to grant a declaration where a person has done or desires to do any act the validity, legality or effect of which depends on the construction or validity of any statute. It also applies where the applicant claims to have acquired any right under any statute or to be in any other manner interested in the construction or validity thereof. In such a case, a person may apply to the Court for a declaratory order as to the construction or validity of the statute. In the present case, the matters at issue do not turn to any real degree upon the construction of s 40. Rather, they depend upon whether factual circumstances have arisen such as to give rise to all obligation to offer the land back under s 40, the validity of the offer made on 13 May and its subsequent withdrawal. Prima facie, the case does not appear to be one for which jurisdiction exists to grant declaratory relief under the Declaratory Judgments Act.
[54] However, it is unnecessary for me to reach any final view on that issue because I have reached the clear conclusion that jurisdiction does exist under the Judicature Amendment Act 1972 to grant declaratory relief of the nature sought.
[55] In Hull v Attorney-General (1998) 12 PRNZ 523, I had occasion to consider the jurisdiction of the Court to grant relief under the Judicature Amendment Act in relation to the exercise of powers under s 40. Drawing attention to the composite nature of the statutory obligations and discretions imposed and conferred by s 40, I concluded at 525 that “the Court is entitled to inquire into the existence of the facts which are necessary preliminaries to or inherent in the exercise of the combination of statutory duties and powers: Secretary of State for Education and Science v Tameside MBC [1977] AC 1014, 1047 (HL)”. My findings in that respect were not overturned on appeal and, indeed, in Attorney-General v Hull [2000] 3 NZLR 63, the Court of Appeal endorsed the availability of remedies under the Judicature Amendment Act in its decision at paragraph 52, citing Royal Australasian College of Surgeons v Phipps [1999] 3 NZLR 1, 11.
[56] I conclude that jurisdiction does exist under the Judicature Amendment Act 1972 to grant declaratory relief of the kind sought. That jurisdiction exists, irrespective of the existence of a remedy in damages for breach of statutory duty. The ability to grant declaratory relief is of particular importance when relief is sought against the Crown against whom an injunction may not be granted: s 17 Crown Proceedings Act 1950.
[57] The Limitation Act 1950 does not provide any time limit for bringing proceedings under the Judicature Amendment Act 1972. It follows that to the extent that the proceedings rely on the Judicature Amendment Act, they are not out of time. As indicated, I make no firm finding as to whether jurisdiction exists to grant relief under the Declaratory Judgments Act 1908 or in the inherent jurisdiction of the Court. If such jurisdiction does exist, it is not proscribed by any provision of the Limitation Act 1950.
Claims for damages - Application of s 4(1)(a) Limitation Act
[58] To the extent that the statement of claim may later be amended to include a claim for damages for breach of statutory duty, s 4(1)(a) would apply so as to exclude any claim which depended on the cause of action arising before 24 May 1993. That raises the question when any such cause of action arose, including issues about when loss occurred or could reasonably have been discovered. Given the uncertain state of the pleadings and the possibility of factual determinations being required, it is inappropriate to rule on this aspect of the matter at this stage.
Application of s 4(1)(d) Limitation Act 1950
[59] Mr Schnauer submitted in the alternative that any claim was barred unless brought within six years of the cause of action arising by virtue of s 4(1)(d) of the Limitation Act (“actions to recover any sum recoverable by virtue of any enactment . . .”). Counsel drew my attention to the repeal in 1962 of the former s 23 of the Limitation Act which imposed a twelve month time limit on the bringing of claims against any person (including the Crown) for any act done under any Act of Parliament or public duty or authority or for neglect or default in the execution of any such Act, duty or authority. This provision was simply repealed without replacement. Extrinsic material researched by counsel shows that Parliament was concerned that the Crown should not have more favourable time limits than others but does not reveal what time limits were then intended for claims for damages arising from breach of statute.
[60] Counsel referred me to Central Electricity Board v Halifax Corporation [1963] AC 785 (HL) where a provision in the Limitation Act 1939 (UK) equivalent to our s 4(1)(d) was considered. The appellants sought to recover a sum of cash they contended was to vest in their predecessors by virtue of a statute requiring certain electricity assets to be transferred and to “vest . . . without further assurance”. The main question was whether the six year time limit under the equivalent of our s 4(1)(d) applied or the twelve year time limit under an action for recovery on a -”speciality” - a matter not mentioned in our Limitation Act. The House of Lords had no difficulty in deciding that the claim fell squarely within the s 4(1)(d) equivalent. I note the legislation in issue provided directly for the vesting of the assets (in this case cash), the value of which was readily ascertainable.
[61] My own research has revealed another recent decision in the United Kingdom which is of further assistance as to what constitutes a claim under s 4(l)(d). In R v Secretary of State for Transport (ex parte Factortame Ltd and Others) (1999) TCC 546, Judge Toulmin QC, sitting in the Queen’s Bench Division considered the differences between a claim in tort for damages for breach of statutory duty and a claim for recovery of money under a statute in relation to provisions of the Limitation Act 1980 (UK) equivalent to our ss 4(1)(a) and (d). His Honour defined a tort as:
“A breach of non-contractual duty which gives a private law right to the party injured to recover compensatory damages at common law from the party causing the injury.” [Paragraph [171]]”
[62] The learned Judge went on to state:
“The definition which I formulated differentiates between a section 2 right, where damages are compensatory at common law, and a section 9 right, where quantum of damages is fixed by statute.” [Paragraph [176]]
[63] Sections 2 and 9 of the UK statute are equivalent to our ss 4(1)(a) and (d).
[64] Judge Toulmin construed “any sums recoverable by virtue of an enactment” under s 9 as referring to:
“. . . cases where those sums which are recoverable by the claimant are specified in or directly ascertainable from the enactment. This is to be contrasted with damages recoverable under section 2 which are compensatory damages assessed under common law principles and which cannot therefore be directly ascertained from the statute.” [Paragraph [185]]
[65] In the light of the English authorities, I find that a claim for damages for breach of s 40 of the Public Works Act could not be regarded as a claim for a “sum recoverable by virtue of any enactment”. The distinction noted by Lord Reid in the Central Electricity Board case at 799 between an action on a statute and an action given by a statute is helpful. Section 40 does not confer a cause of action for damages or the recovery of a sum of money either expressly or by implication. Nor does it specify sums recoverable or define how such sums are to be ascertained. While it imposes certain statutory duties, any recovery of damages must depend on the common law and whether a cause of action exists for breach of any such statute at the suit of a private individual: see the speech of Lord Browne-Wilkinson in X (Minors) v Bedfordshire County Council [1995] 2 AC 633, 670 (HL).
(iii) Does s 40 apply to unsubdivided land?
[66] Mr Schnauer submitted that where WHL’s holding is in one title, it could not be obliged to subdivide off a portion of the land if that portion were found to be surplus. WHL’s concern stems in part from the likelihood that the subdivision of the nursery site from the balance land would trigger the esplanade reserve provisions of the Resource Management Act 1991 and lead to WHL being required to set aside areas of valuable land adjoining Lake Pupuke.
[67] Counsel submitted that the expression “land” in s 40 could include part of the land (a concession rightly made) but submitted that the public body in question could not be obliged to subdivide land when only part of one title became surplus. This was coupled with a submission that the mere fact that part of the land was not being used at some time did not mean it was surplus.
[68] It is important to focus on the statutory language when considering these submissions. First, s 40(1) refers to the land being “no longer required”. That is not the same as not being used. Land (or part of it) may not be used from time to time but that does not mean it is not “required”. For example, land may be required for future expansion or for needs not yet specifically identified. Or a use may be expected to resume at some point after a period of non-rise. Section 40 is only triggered where a decision is made that the land is no longer required or the facts (including the conduct of the public body) plainly demonstrate that such a state of affairs has arisen: Attorney-General v Hull (CA) at paragraph [40].
[69] If part of the land in a single title is no longer required in terms of s 40(1), then the statutory obligation to offer back that portion of the land arises even if that may require a subdivision. But where the relevant statutory officer considers that a subdivision Would, for any reason, be “impracticable, unreasonable and unfair” under s 40(2)(a), then there is no obligation to sell. Any decision made under s 40(2)(a) is for the statutory officer and would be subject to challenge only upon the established grounds for judicial review.
[70] I conclude that the concerns raised by WHL are properly addressed when or if the relevant statutory officer considers the matters under s 40(2) and that there is no general proposition that s 40(1) is not triggered where only a portion of land in one title is no longer required for a public work.
(iv) Is the claim precluded by the Health Reforms (Transitional Provisions) Act 1993 as originally enacted or as amended?
[71] The delivery of this judgment was delayed by agreement until after the outcome was known of the appeal by the Dilworth Trust Board to the Privy Council. The advice of the Privy Council was delivered on 7 March 2001. In the meantime, further reforms of the health sector were effected by the New Zealand Public Health and Disability Act 2000 and the Health Section (Transfers) Amendment Act 2000 generally with effect from 1 January 2001. I therefore sought and received further submissions from counsel as to the effect of the Privy Council decision and the latest amending legislation.
[72] As earlier indicated, WHL and similar CHE’s were established by the Health and Disabilities Services Act 1993. Broadly speaking, the legislation provided for the abolition of area health boards, the establishment of the CHE’s, and the transfer of certain assets and liabilities from the former to the latter. The transfer of assets and liabilities was achieved by the preparation of proposals which were then approved by Order in Council made under s 5 of the Health Reforms (Transitional Provisions) Act.
[73] The proposal for the transfer of assets and liabilities to WHL is a bulky document upon which I did not receive detailed submissions. I note, however, that in terms of clause 3 of the Second Schedule, certain liabilities of area health boards were not transferred to WHL, including certain contingent liabilities. Those provisions may be relevant to the ultimate disposition of this proceeding depending upon the ultimate form of the pleadings.
[74] The proposal for transfer of assets and liabilities to WHL was approved by Order in Council dated 28 June 1993 which stipulated that the proposals were to take effect on 1 July 1993.
[75] By s 9 of the Health Reforms (Transitional Provisions) Act, the provisions of the First Schedule to the Act were to apply to the transfer of assets or liabilities. The relevant parts of clause 3 of the First Schedule as they stood before the amendments effected by the legislation just enacted were:
“3 Modification of provisions of Public Works Act 1981
(1) This clause applies to the transfer to the transferee under this Act or by another transferee of land or an interest in land that at the date on which this Schedule comes into force is subject to sections 40 to 42 of the Public Works Act 1981.
(2) Nothing in sections 40 to 42 of the Public Works Act 1981 shall apply to the transfer of land or an interest in land to a transferee (being a transfer to which this clause applies) so long as the land or interest in land continues to be used for the purposes of the transferee, but, if all or any part of the land or interest in land is no longer required for such purposes, sections 40 and 41 of that Act shall apply to the land or interest no longer required as if the transferee were the Crown and the transfer of that land to that transferee were not a transfer to which this clause applies.”
[76] It is not in dispute that this clause applied to the transfer of the subject land from the Auckland Area Health Board to WHL with effect from 1 July 1993. WHL was a transferee within the meaning of clause 3(1) and on the day that the schedule came into force (11 May 1993). the land transferred was subject to ss 40 to 42 of the Public Works Act 1981 in the sense that it constituted “land held under this or any other Act or in any other manner for any public work . . .”. In other words, whether or not the obligation to offer back the land to the original owner or the successor of that person had arisen, the land was held in such a way that that obligation could arise in the event of the statutory triggers being activated.
[77] The debate in the Dilworth Trust Board case, both in the Court of Appeal ([1999] 3 NZLR 537) and in the Privy Council, focused principally upon two questions:
[a] Whether the word “purposes” in the phrase “for the purposes of the transferee” in clause 3(2) refers to the purposes of the transferee of the land or is to be restricted to the purposes for which the land was originally taken, or to a public work within the meaning of the Public Works Act.
[b] Whether the “option” in favour of Dilworth contained in s 40(2) continued to apply to the land, notwithstanding the terms of clause 3(2).
[78] As to the first question, the Privy Council (in advice delivered by Lord Cooke) agreed with the conclusion of the Court of Appeal that the phrase “for the purposes of the transferee” in clause 3(2) is not to be given a restricted meaning. It is to be construed as meaning the statutory purposes of the transferee (CHE) in question: paragraphs [17] and [18] (CA) and paragraphs [22], [29] and [30] (PC).
[79] The following passage at paragraph 32 is also helpful in relation to the meaning of clause 3(2):
“The first limb of the clause has a function corresponding to that of section 24(4) of the State-Owned Enterprises Act 1986. It ensures that a mere transfer to a CHE does not activate buy-back rights. The rest of the clause at least ensures that, after a transfer, buy-back rights do not come into being for the first time unless and until all or any part of the land is no longer required for the CHE’s own statutory purposes.”
[80] Both the Court of Appeal and the Privy Council found the second question to be “more difficult”. It raises the issue whether at the time of the transfer to the CHE, a buy-back option had already arisen even though one or more of the parties may not have appreciated as much. At paragraph 35, the Privy Council agreed there was force in the view expressed by the Court of Appeal that the latter part of clause 3(2) is prospective in that ss 40 and 41 will only apply if and when the land (or part of it) is no longer required for the CHE’s purposes.
[81] The Privy Council also observed that the Court of Appeal had considered it arguable, on the basis of Attorney-General v Horton that the CHE took the land subject to Dilworth’s statutory right, in the nature of an option, to re-purchase. Counsel for Dilworth had put the matter on the basis that this argument was not dependent on Dilworth establishing that the CHE had any actual or constructive notice of such a right: paragraph [34] (PC).
[82] Referring to the argument for the CHE, the Privy Council noted in paragraph [35] that it was accepted Dilworth might have a remedy against the CHE either as a notice-based cause of action or a claim in personam based on the amended proposal for transfer of pre-existing obligations to the CHE. Counsel for the CHE had also suggested that Dilworth might have some right to damages against the Crown. Counsel had submitted that, on this approach, any “inherited’ buy-back rights which Dilworth might have against the CHE would not depend on clause 3(2).
[83] The Privy Council considered there was force in that argument and “had difficulty in seeing that clause 3(2) could be the source of what they have called an inherited right”. But, like the Court of Appeal, the Privy Council was unwilling to rule definitively on the matter at the pre-trial stage. Accordingly, the decision of the Court of Appeal was affirmed.
[84] It should be noted that in Dilworth, it was accepted that at some stage before the land was transferred to the CHE, it was no longer required for hospital purposes and that it should have been offered back for sale to Dilworth. There is no agreement about that issue in the present case and it remains to be determined whether, and if so at what date, the land may have become surplus.
[85] What is important for present purposes is that there has been no definitive determination either by the Court of Appeal or the Privy Council as to the second question posed; ie, what is the case if there are so called “inherited rights” which have arisen prior to the date of the transfer? The position remains arguable in that respect and may well depend on the facts ultimately established at trial as well as the correct interpretation of the proposal for transfer of assets and liabilities between the Auckland Area Health Board and WHL. Effectively, it is arguable that rights arose prior to 1 July 1993 which are neither dependent on nor affected by clause 3(2).
[86] It is possible that WHL or its successor might be obliged to honour an obligation already incurred by the Auckland Area Health Board to offer the land back. Second, some form of notice-based cause of action might arise against WHL. In that respect, there is evidence upon which a Court could conclude that WHL or its establishment board or officers were aware prior to 1 July 1993 that the Auckland Area Health Board had offered the land back to the Sisters of Mercy. Third, there might be some form of claim for damages for breach of statutory duty or otherwise against WHL and/or the Residual Health Management Unit (RHMU).
[87] The RHMU was established as a Crown entity under ss 16 to 19 of the Health Reforms (Transitional Provisions) Act to hold any assets and liabilities not transferred to WHL: ss 22(2) and (3). The Minister of Health, by Gazette notice, (1993, Vol. 3, p 2023) dated 29 June 1993, authorised the RHMU:
“(xi) To manage all liabilities of the Area Health Boards (other than Vested Area Health Board Debt) vested in the RHMU on the Effective Date, including, without limitation, liabilities under contracts and in respect of Claims; . . .”
[88] A “claim” is defined by the Gazette notice as meaning “a claim, suit, proceeding, or other liability arising in relation to an act or omission of an Area Health Board prior to the effective date”.
[89] I am reluctant to reach any firm conclusion on these issues until the pleadings are amended, the relevant facts are determined, and I have had the benefit of full argument on the complex provisions of the proposal for transfers of liabilities, including contingent liabilities and claims. Plainly, those are issues which cannot and should not be determined on a strike out application.
The effect of the amending legislation in 2000
[90] The main provisions of the New Zealand Public Health and Disability Act 2000 and the Health Sector (Transfers) Amendment Act 2000 came into force on 1 January 2001. Under the first of these pieces of legislation, the Health and Disability Services Act 1993 is repealed and fresh reforms to the public health and disability sector are effected. The second piece of legislation renames the Health Reforms (Transitional Provisions) Act 1993 which is now to be called the Health Sector (Transfers) Act 1993 and makes certain other changes. By s 12, the First Schedule of the 1993 Act is amended by repealing clause 3 and substituting the following clause so far as it is relevant for present purposes:
“ 3. Modification of provisions of Public Works Act 1981
(1) In this clause, public work land means any land or interest in land owned by a transferee that-
(a) on 10 May 1993 was subject to sections 40 to 42 of the Public Works Act 1981; and
(b) has on 1 or more occasions been transferred by or under this Act.
(2) Sections 40 to 42 of the Public Works Act 1981 do not apply to any public work land so long as the land -
(a) is held by a transferee (regardless of whether or not those purposes are the purposes for which the land was acquired under the Public Works Act 1981 or under any corresponding former Act) -
(i) for the purposes of the transferee; or
(ii) to enable the transferee to prepare for the disposal of the land; or
(iii) to enable the transferee to determine whether to transfer or hold the land for any purpose referred to in this subclause; or
(b) is transferred under this Act to enable another transferee to hold the land for any of the purposes specified in paragraph (a); or
(c) is held under a lease or licence granted by a transferee to any person other than a transferee for health-related purposes or, with the consent of the Minister, for any other purpose.
. . .”
[91] The Privy Council did not express any firm view on the amending legislation because it decided the matter should be dealt with on the basis of the legislation as it stood at the time of the Privy Council hearing in November 2000. However, Lord Cooke noted at paragraph [19] that it might be that “the words just quoted [ie, “regardless of whether or not those purposes are the purposes for which the land was acquired under the Public Works Act 1981 or under any corresponding former Act”] are intended to confirm for the future the intention which, as will be seen, the Court of Appeal and their Lordships discern in the phrase “for the purposes of the transferee” in the now replaced clause 3(2)”.
[92] Mr Wackrow submitted there was doubt as to whether the land was “public work land” for the purposes of the new clause 3 but my tentative view is that the land does fall within that definition. While the new clause 3(2) makes explicit the findings of the Court of Appeal and the Privy Council in the Dilworth Trust Board case as to the “purposes” issue and is now directed more towards the status of the land rather than its transfer, the issue of inherited claims may still be unclear. In particular, the possibility that the Auckland Area Health Board was under an obligation prior to 1 July 1993 to transfer the land to the Sisters of Mercy is not specifically addressed. There may also be in personam claims arising prior to the date of transfer to WHL. I remain reluctant to reach a firm conclusion on this issue without the benefit of further evidence and argument in the light of any amended pleadings.
[93] Mr Wackrow has signalled in his most recent submissions that the causes of action will be reformulated to include the following claims:
[a] That the land was transferred subject to the plaintiff’s statutory right to have the land offered back (in the nature of an option). Coupled with this cause of action is a claim that both WHL and the newly formed Waitemata District Health Board were aware of the plaintiff’s claims that it was entitled to an offer back both in 1993 and 1997.
[b] Some other form of notice-based cause of action against WHL and the Waitemata District Health Board.
[c] Possible in personam claims against WHL and the Waitemata District Health Board or damages against the Crown (in respect of both Land Information New Zealand and the Residual Health Management Unit) for “failure to act appropriately” in both 1993 and 1997.
Summary
[94] I conclude:
[a] The plaintiff’s rights under s 40 have not been unlawfully assigned to TGL.
[b] The plaintiff’s claim is not statute barred (at least to the extent that purely declaratory relief is sought). Aspects of any damages claimed based on the tort of breach of statutory duty may be statute barred but it is too early to reach any conclusion on that issue.
[c] Section 40 may apply to unsubdivided land.
[d] It may be that clause 3 of the First Schedule of the (now) Health Sector (Transfers) Act 1993 either in its present form or as originally enacted does not exclude inherited claims which have arisen prior to the effective date of transfer of the land to WHL on 1 July 1993.
[e] The application by WHL to strike out the statement of claim should be dismissed at this juncture although without prejudice to the right of WHL’s successor or any other defendant to renew, the application following the filing of an amended statement of claim. I prefer this course rather than to further adjourn the application as suggested by counsel for the defendants, particularly in view of likely changes to the parties to this litigation.
The application by the first, second and third defendants to be struck out as parties
[95] It is clear that neither the second nor third defendants (the Auckland Hospital Board and the Auckland Area Health Board) remain in existence. Any liability there may be for any of the causes of action already pleaded or to be pleaded, could only involve the Attorney-General on behalf of a Crown agency such as Land Information New Zealand; WHL or its successor; or the Residual Health Management Unit as fifth defendant.
[96] WHL has ceased to exist by virtue of s 95(1) of the New Zealand Public Health and Disability Act and its assets and liabilities vest in the Waitemata District Health Board by virtue of s 95(3) and Schedule 7 of the Act. These changes take effect from 1 January 2001.
[97] In view of these developments, the appropriate course is for the second, third, and fourth defendants to be struck out. The plaintiff may apply to substitute the Waitemata District Health Board for Waitemata Health Limited if it wishes. That would leave three defendants: the Attorney-General, the Waitemata District Health Board, and the Residual Health Management Unit.
[98] I order as follows:
[a] That the second, third, and fourth defendants be struck out as parties.
[b] That the plaintiff file and serve any amended statement of claim, together with any application to join the Waitemata District Health Board as a defendant within one month of the date of this judgment.
[c] That the application by the fourth defendant to strike out the statement of claim be dismissed without prejudice to the right of any new or substituted defendant to apply again.
[d] The Registrar is requested to allocate a further conference before me in approximately two months time.
Costs
[99] If counsel are unable to resolve costs issues, memoranda may be filed by the plaintiff within one month of this judgment and by the defendants within two weeks after service of the plaintiff’s memorandum.
0
0
0