Urlich v Attorney-General

[2022] NZHC 3393

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2022-488-000021

[2022] NZHC 3393

UNDER

the Judicial Review Procedure Act 2016 and Part 30 of the High Court Rules 2016

IN THE MATTER OF

An application for review

BETWEEN

ROBERT MATTHEW URLICH
Applicant

AND

ATTORNEY-GENERAL

First Respondent

ZHARN HOWARD URLICH

Second Respondent

Hearing:

5 December 2022

Counsel:

PM Hoskins for Applicant

NC Anderson and RM Fistonich for First Respondent (via VMR) MJ Sharp for Second Respondent (via VMR)

Judgment:

14 December 2022

JUDGMENT OF DOWNS J

This judgment was delivered by me on Wednesday, 14 December 2022 at 2 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel: Corban Revell, Auckland. Crown Law, Wellington. Te Whenua Law, Rotorua. PM Hoskins, Whangarei. MJ Sharp, Tauranga.

URLICH v ATTORNEY-GENERAL [2022] NZHC 3393 [14 December 2022]

The issue

[1]    This judicial review case has a peculiar history as the Court of Appeal has already determined the decision-maker erred. So, this brief judgment focuses on relief.

Agreed facts

[2]What follows is the suite of facts helpfully agreed between the parties.1

Acquisition of the land

[3]    On 6 June 1952, two brothers, Richard and Simon Urlich, purchased Parakerake No. 576N Block.

[4]    On 18 March 1953, the brothers agreed to sell part of the block, comprised in Record of Title NA1027/220 (the property), to Her Majesty the Queen, for a Māori school. The Ministry of Education  (MOE)  acquired  the  property  under  the  Public Works Act 1928 for a nominal sum of one shilling.

[5]    On 6 May 1953, Compensation Certificate K45258 was registered against the title to the property.

[6]    On 15 September 1955, proclamation 14699 was published in the New Zealand Gazette, taking the property for  a  Māori  school  under  the  Public  Works  Act.  The property’s existing title, 850139, is derived from that proclamation.

Relationship of the parties to the donors

[7]    The applicant, Robert Urlich, is the nephew of Richard and son of Simon. The second respondent, Zharn Urlich, is the grandson of Richard.

[8]Richard and Simon were of Ngāti Kahu descent, as are their descendants.

1      With minor stylistic changes.

Decision to offer the land to Zharn

[9]    The property was used for Rangiāwhia Māori School and later Te Kura Kaupapa Māori o Rangiāwhia. The school closed in December 2016.

[10]   On 27 May 2018, MOE determined the property was no longer required for educational purposes. On 11 September 2018, it made a corresponding declaration under s 71B of the Education Act 1989.

[11]   The property was not required for any other public work or land exchange. Consequently, the disposal process under the Public Works Act 1981 (PWA), which is managed by Land Information New Zealand (LINZ), was utilised.

[12]   On 27 February 2019, a delegate acting on behalf of the Chief Executive of LINZ (the decision-maker) determined Zharn was the only living successor to either of the donors pursuant to s 40 of the PWA because:

(a)Richard and Simon were both deceased when the property was declared surplus.

(b)Zharn, as the beneficiary of Richard’s residual estate, would have been entitled to the property had Richard owned it at his death, and so was a successor under s 40.

(c)There was no living successor to Simon for the purpose of s 40, because the property would have passed to his wife, Olivia Urlich, under his will, as the immediate beneficiary of his residual estate. Olivia is deceased.

[13]   The decision-maker did not consider s 134 of the Te Ture Whenua Māori Act 1993 (TTWMA) was available to dispose of land subject to s 40 of the PWA outside the circumstances listed in s 41 of that Act. The decision-maker decided the property should be offered to Zharn alone under s 40(2)(d) of the PWA (decision).

[14]   Robert objected to the decision and continues to do so. Robert says the Crown should offer the property back to the descendants of his father, Simon, and his uncle, Richard, in accordance with Ngāti Kahu tikanga.

The offer and associated steps

[15]   On 27 February 2019, the decision-maker executed a document entitled “Offer of Sale”, by which the property was offered to Zharn for $125,000 plus GST, if any (offer). The offer was communicated  to  Zharn  on  27  February  2019.  Zharn accepted the offer on 29 April 2019 (agreement).

[16]   The $125,000 purchase price reflects (a) the fact the property was effectively gifted to the Crown and (b) the value of improvements made thereafter. A registered valuation in November 2018 valued the land and buildings at $800,000.

[17]   The agreement originally provided for Zharn to pay a deposit of $12,500 plus GST, if any. On or about 1 May 2019, the parties agreed to amend the agreement by allowing Zharn to pay a reduced deposit of $5,000,  including  GST,  if  any  (reduced deposit). On or about 3 May 2019, Zharn paid the reduced deposit.

[18]   Zharn entered the agreement, and paid the reduced deposit, without consulting Robert.

[19]   Settlement was originally scheduled for 4 June 2019. This was amended to  18 July 2019 because the Crown’s notice to terminate the licence to occupy the property was not issued correctly and needed to be re-issued.

[20]   On 12 July 2019, Robert lodged caveat number 11492712.1 against the title to the property.

[21]   The Crown applied to the Registrar that the caveat lapse, and Robert applied to the High Court opposing this.

[22]   The High Court held it was not reasonably arguable Robert was a “successor” given the terms of s 40(5) of the PWA and prior case law.2 The caveat should therefore lapse. However, the Court made interim orders sustaining the caveat pending appeal by Robert.

[23]   Robert appealed to the Court of Appeal, which sat as a Full Court (of five Judges). Zharn appeared in that Court as an interested party.

[24]   The Court of Appeal dismissed Robert’s appeal but held s 134 of the TTWMA is available outside the circumstances in s 41 of the PWA:3

[75] We are satisfied s 134 is applicable here, in the sense that it was an available option requiring consideration by the Crown. We reject the suggestion that such an approach renders s 41 redundant and robs it of meaningful effect. …

...

[78] For these reasons we find s 134 remains available as an alternative statutory pathway to s 40 disposal procedures, in any case falling within       s 134(1)(c). …

...

[80] Formally, we do not set aside the decision made by the Crown to offer back to Zhan [sic]. However, in light of our decision it is clear (and accepted by the Crown) that the decision maker erred in disregarding s 134. As noted earlier, Robert has a legitimate expectation that the Crown will now correct the error it made and reconsider its position. The Crown has in effect undertaken to do so. In doing so, it will need to consider, first, whether this is a case where - under s 40(2)(a) - it is unreasonable or unfair to offer back to the s 40(5) successor only and, secondly, whether application should be made to the Māori Land Court under s 134(1)(c) of the TTWMA.

[25]   The Court of Appeal did not set aside the decision or agreement as there was no pleading enabling the Court to do so. The only issue before the Court was whether Robert had an interest that could be sustained by a caveat.

[26]   The decision-maker is now functus officio. Robert seeks orders of this Court setting aside the decision and agreement, and directing reconsideration as envisaged by the Court of Appeal.

2      Urlich v Attorney-General [2019] NZHC 2783 [High Court decision].

3      Urlich v Attorney-General [2022] NZCA 38 [Court of Appeal decision]. Zharn’s name is spelt incorrectly in the Court of Appeal decision, hence the variation in this judgment.

[27]Settlement has not occurred.

[28]   Zharn has not paid the Crown any monies relating to the sale apart from the reduced deposit. Zharn has not drawn any funds to finance his purchase of the property, nor paid any interest.

The claim and responses

[29]   On 10 July 2022, Robert filed this claim for judicial review. By it, he says the decision-maker erred in law in failing to consider (a) s 134 of the TTWMA and

(b)   whether offering the property to Zharn was unreasonable or unfair under s 40(2)(a) of the PWA. Robert seeks an order setting aside both the decision and agreement, and declarations.

[30]   The Crown acknowledges the decision-maker erred. It consents to the setting aside of the decision and agreement, and will repay the reduced deposit, with interest. The Crown contests only the scope of declaratory relief.

[31]   Zharn also acknowledges error on the part of the decision-maker but contests relief. He emphasises he is an innocent third party.

Analysis

[32]   As is well known, relief is discretionary in judicial review. Four factors are typically considered important:

(a)Gravity of the error.

(b)Prejudice to the applicant.

(c)Prejudice to others.

(d)Utility.

[33]I consider each.

Gravity of the error

[34]   Unsurprisingly, the more significant the error, the more likely the Court will grant relief.4

[35]   On behalf of Robert, Mr Hoskins contends the decision-maker’s (twin) errors were “grave and fundamental” because they involved a misapprehension of applicable principle and included a failure to consider Ngāti Kahu tikanga.

[36]   On behalf of the Crown, Mr Anderson observes the decision-maker did not lack capacity to make the decision, which would constitute fundamental error; rather, the decision-maker misapprehended principle in relation to a “reasonably significant [legal] issue”.

[37]   Fundamental error typically arises when a decision-maker lacks jurisdiction, capacity, or power to make the (impugned) decision.5 None of these occurred, so fundamental error is not present.

[38]   The errors were significant,  as  is  apparent  from  the  decision  of  the  Court of Appeal.  That  they  were  “grave”,  however,  is  overstatement.  The   Court of Appeal did not use this language. Nor would I. The decision-maker misapprehended principle, not more.

Prejudice to Robert

[39]   Relief may be declined when the applicant would not suffer significant prejudice. Substantial prejudice, however, typically entails relief.6

[40]   Mr Hoskins says Robert and other descendants of Simon Urlich will suffer “significant prejudice” if the agreement is not set aside, for their rights to the property

4      Philip A Joseph Joseph on Constitutional and Administrative Law (5th ed, Thomson Reuters, Wellington, 2021) at [27.4.2(9)]; Gunn v Quota Appeal Authority [1993] NZAR 102 (HC); and Barker v Queenstown Lakes District Council [2006] NZAR 716 (HC).

5      Tranz Rail Ltd v Wellington District Court [2002] 3 NZLR 780 (CA) at [45]-[46]; New Zealand Employers Federation Inc v National Union of Public Employees [2002] 2 NZLR 54 (CA) at [50].

6      Air Nelson Ltd v Minister of Transport [2008] NZCA 26, [2008] NZAR 139 at [60]-[61], as clarified in Secretary for Justice v Simes [2012] NZCA 459, [2012] NZAR 1044 at [117] and Rees v Firth [2011] NZCA 668, [2012] 1 NZLR 408 at [48].

will be “forever extinguished”. Mr Hoskins emphasises Robert regards himself as a guardian of the property (for others).

[41]   Mr Anderson says Robert’s prejudice is better conceived as a loss of opportunity: “if the decision-maker had a proper understanding of the law [they] may have decided to dispose of the Property under s 134 of the TTWMA … which may have resulted [in] the Māori Land Court vesting the Property in a wider group of descendants”.

[42]   Mr Anderson’s analysis more accurately captures the prejudice to Robert, for, even if the agreement were set aside, the decision-maker is not obliged to dispose of the property under s 134 of the TTWMA. Rather, the decision-maker must consider that as one possible outcome. However, the loss of opportunity is important to Robert for the reason he identifies.

Prejudice to Zharn

[43]In Ririnui v Landcorp Farming Ltd the Supreme Court held:7

… the fundamental issue where an application for judicial review seeks to have a contract set aside in a case where the contracting public body has capacity to make the contract is the existence and extent of prejudice to third parties. It is that consideration that should be the focus of the analysis, rather than the nature of the relief sought per se.

[44]Zharn has sworn an affidavit. He says:

(a)His grandfather, Richard, told him if the property were returned, he wanted him to receive a half-share, and would provide for this in his will.

(b)Once the property became available, he entered discussions with Simon’s children, other than Robert, with the intention that he would subdivide the property and transfer half to them.

7      Ririnui v Landcorp Farming Ltd [2016] NZSC 62, [2016] 1 NZLR 1056 at [130].

(c)He entered an agreement, reflecting the intention expressed in (b), with Simon’s children other than Robert. However, Robert then lodged the caveat that reached the Court of Appeal.

(d)He has invited  Robert  to  negotiate  since  the  decision  of  the  Court of Appeal. Robert has not done so.

[45]Michael Urlich, Simon’s grandson, has also sworn an affidavit.8 Michael says:

(a)He speaks for the children of Simon other than Robert.

(b)He and they are content with the agreement identified by Zharn.

[46]   On behalf of Zharn, Mr Sharp says he will be significantly prejudiced if the agreement is set aside as his grandfather intended he have half the property. Mr Sharp emphasises if the property is disposed  of  under  s  134  of  the  TTWMA,  the  Māori Land Court may vest it in the children of Richard and Simon or in Te Whanau Moana  hapu,  who  are  negotiating  a   treaty   settlement.   Furthermore,   the  Māori Land Court must vest the land as Māori freehold land, thereby according more restrictive rights than those associated with general land. Mr Sharp emphasises Zharn is an innocent third party.

[47]   Mr Anderson acknowledges Zharn is an innocent third party. However, he says the prejudice to Zharn is not great given (a) the Crown will repay the reduced deposit with interest, (b) Zharn has not expended any other money on the purchase, and

(c)  reconsideration of the decision is no more than that; the decision-maker may again decide to sell the property to Zharn. I prefer Mr Anderson’s analysis for the reasons he gives. Furthermore, the case is distinguishable from Ririnui because, unlike the third party in Ririnui, Zharn has not expended considerable funds purchasing equipment or hiring staff in order to develop the land for a particular purpose.

[48]The position of Michael and the other children requires no separate analysis.

8      Robert objects to the admissibility of this evidence, including on the basis it is hearsay. For reasons that will become apparent, it is not necessary to rule on this objection.

Utility

[49]   Mr Sharp says there is no point in granting relief because the agreement between Zharn and the other children captures what tikanga requires on the particular facts. He notes the Court of Appeal appeared to favour the agreement proposed by Zharn, describing it as “responsible”.9

[50]   There is force to this argument. It has caused me to pause. However, to accede to it would deprive Robert of the opportunity for reconsideration of the decision in accordance with law.

Other considerations

[51]   This leaves one consideration I have not foreshadowed. Zharn notes the agreement was entered into on 29 April 2019, yet Robert did not lodge the caveat until 12 July 2019. Mr Sharp says this delay counts against relief.

Summary

[52]   I am not persuaded the delay is sufficient to alter the calculus, which, overall, favours relief. The decision-maker’s errors were significant, but neither fundamental nor grave. Robert was deprived of the opportunity of a decision in accordance with law, and though an innocent third party, Zharn would not suffer significant prejudice if the agreement were set aside. Zharn’s proposal would not deprive relief of utility, though, as I have said, it caused me to pause.

Forms of relief

[53]   The Crown does not oppose a declaration the Chief Executive of LINZ reconsider the decision in accordance with the judgment of the Court of Appeal and, more particularly, whether (a) this is a case under s 40(2)(a) of the PWA where it is unreasonable or unfair to offer back to the s 40(5) successor only and (b) application should be made to the Māori Land Court under s 134(1)(c) of the TTWMA. The Crown opposes declaratory relief beyond this.

9 Court of Appeal decision, above n 3, at [81].

[54]   Mr Hoskins seeks relief beyond this. He says declaratory relief should encompass the following mandatory considerations:

The Tikanga Considerations; the Treaty Considerations; the interests of descendants of former owner, Simon, including their personal, familial, and cultural ties to the Property; and the Significant Māori Values associated with the Property.

[55]   Mr Hoskins says these considerations arise from the expert evidence (of Professor Margaret Mutu) offered to the Court of Appeal, and from the facts, including the relationship between Māori and the land.

[56]   I decline to go further. The Court of Appeal did not hold the decision-maker erred in relation to these considerations; rather, the Court treated these considerations as informing its analysis of the errors it identified.10 The distinction is important. Moreover, this aspect of the proposed declaration is unduly prescriptive. It appears to be framed or weighted to achieve Robert’s desired outcome.

[57]   This leaves one issue. Robert seeks an order quashing the agreement, not merely an order quashing the decision. The Supreme Court’s decision in Ririnui makes it clear such relief is available, even though the public body had capacity to make the contract. I am satisfied an order is appropriate because the decision and agreement are intrinsically linked, as the agreement gives effect to the decision.

Result

[58]   Robert’s claim for judicial review is upheld: the decision is set aside, as is the agreement.

[59]   The Chief Executive of LINZ must reconsider the decision in accordance with the judgment of the Court of Appeal, and in particular, whether:

(a)This is a case under s 40(2)(a) of the PWA where it is unreasonable or unfair to offer back to the s 40(5) successor only.

10     Court of Appeal decision, above n 3, at [75]-[78] and [80].

(b)Application should be made to the Māori Land Court under s 134(1)(c)

of the TTWMA.

Costs

[60]   The Crown responsibly accepted it was liable for Robert and Zharn’s costs until 7 June 2022, when it signalled its consent to the declarations now made. I hold the Crown liable for all costs,11 including the hearing, because its consent did not obviate the need for Robert to bring this claim and Zharn is an innocent third party.

……………………………..

Downs J

11     On a 2B scale basis.