Watercare Services Limited
[2018] NZHC 294
•1 December 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-292
[2018] NZHC 294
UNDER the Declaratory Judgments Act 1908 AND
UNDER
the Judicature Act 1908
AND
IN THE MATTER
of s 191(3) and Schedule 12 of the Local Government Act 2002
IN THE MATTER
of an application by WATERCARE SERVICES LIMITED
Applicant
Hearing: 9 October 2017 Appearances:
R J Somerville QC, B S Carruthers and A M Cameron for the Applicant
J Caldwell as amicus curiae with K Dawson
Judgment:
1 December 2017
Reasons:
1 March 2018
JUDGMENT OF WOODHOUSE J
(Reasons)
This judgment was delivered by me on 1 March 2018 at 3:30 p.m. pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
RE WATERCARE SERVICES LTD [2018] NZHC 294 [1 March 2018]
Introduction
[1] Watercare Services Ltd (Watercare) sought declarations as to the interpretation of s 181 and sch 12 of the Local Government Act 2002 (the Act). Section 181 and sch 12 make provision for construction of works on or under private land for sewage and stormwater drainage, amongst other works. In a judgment without reasons the declarations were made.1 I now provide reasons.
Summary: the background, the issue, the alternative interpretations and the decision
[2] Watercare, is a council-controlled organisation of Auckland Council. It is responsible for the construction, ownership and management of all publicly owned water supply, wastewater and sewage systems in Auckland. As such, Watercare has the power of a local authority under s 181 of the Act to construct works.2 This power is subject to compliance with other provisions in s 181 and sch 12 which are directed to the rights of owners and occupiers of affected land and buildings.
[3] Watercare is proposing to undertake major underground sewage and stormwater drainage works in Auckland, known as the Central Interceptor. These works will collect, store and convey wastewater from the central area of the Auckland Isthmus to the Mangere Wastewater Treatment Plant. Watercare cannot proceed with the work under s 181 unless it either has the prior written consent of the owners of the land through which the drains will pass, or it has complied with the requirements of sch 12.
[4] Schedule 12 requires, in addition to public notice of the proposed works, individual notices to the owners of land who have not consented, where the owner is known, and to the occupier of land or a building through or under which the works will pass. Schedule 12 makes provision for objections by owners and occupiers, a procedure for determination of objections, and a right of appeal to the District Court.
1 Re Watercare Services Ltd [2017] NZHC 2981. The declarations are recorded below at [9].
2 Local Government (Auckland Council) Act 2009, s 64.
[5] Schedule 12 contains a proviso that, if there is a change of occupier after notice of the intention to construct the works has been given, it is not necessary to give notice to any subsequent occupier before the work is done. I will refer to this as “the proviso”. There is no similar provision relating to a change of ownership. The presence of the proviso for occupiers, but no similar proviso for owners, is what gave rise to uncertainty of meaning in respect of which Watercare sought the declarations.
[6]Two questions of interpretation arose:
(a)If there is a change of owner after an owner has given consent to the works, is Watercare required either to obtain the written consent of the new owner or give notice under sch 12 to the new owner before it is completed?
(b)If there is a change of owner after notice has been given in accordance with sch 12, and the works proceed, is it necessary to give notice under sch 12 to the new owner?
[7] This is the first occasion the High Court has been required to consider this issue in respect of sch 12, or its statutory predecessor in sch 16 of the Local Government Act 1974.3
[8] The focus is on the meaning of the word “owner”. In broad terms, there are two possible meanings of “owner” as used in s 181 and sch 12:
(a)One is the owner at the time consent is given, or at the time notice under sch 12 is given. I will refer to this as “the first alternative”.
(b)The other is the owner when consent is given, or when the notice is given and, if there is a change of owner after consent or notice is given, the subsequent owner or subsequent owners. I will refer to this as “the second alternative”.
3 Section 181 has been substantially considered in two other High Court decisions: Hutt City Council v Lower Hutt District Court [2013] NZHC 706, [2013] NZAR 592 and Bailey v Christchurch City Council [2013] NZHC 1933, [2013] 3 NZLR 679.
[9] I concluded that the first alternative is the correct meaning. The formal declarations were:4
(a)On a proper construction of section 181(3) of the Local Government Act 2002 (the Act), if there is a change of owner after written consent has been given, it is not necessary either to obtain the written consent from the subsequent owner or give the subsequent owner notice under Schedule 12(1)(b) of the Act of the intention to construct the works before the work is done.
(b)On a proper construction of Schedule 12 of the Act, if there is a change of owner after notice has been given under clause 1(b) of the Schedule, it is not necessary to give notice to any subsequent owner before the work is done.
Contradictor
[10] Because the application could not reasonably be filed with named respondents, Watercare sought directions as to service. A direction was made for service on the Attorney-General. Crown Law advised that the Attorney-General did not wish to be involved in the proceeding. Watercare then applied for an order for appointment of amicus curiae. An order was made appointing Ms Caldwell as amicus curiae. I have been materially assisted by submissions from Ms Caldwell, as well as submissions from Dr Somerville QC for Watercare.
The proposed works
[11] An outline of the proposed works is conveniently taken, in substantial measure, from the statement of claim. The facts have been confirmed by affidavits and are not in issue.
[12] The Central Interceptor is intended to reduce the volume of wet weather overflows into the environment by 80 per cent and provide the network capacity required for future growth on the Auckland Isthmus.
4 Re Watercare Services Ltd, above n 1, at [1].
[13] The main works involve the construction of a 13km main tunnel with three shorter link sewer tunnels. There is also to be a series of smaller collector sewers.
[14] The main tunnels will lie between 22m and 110m below the ground surface. While construction will occur largely below ground, 19 sites are required at the surface along the tunnel alignment. The surface sites are required to construct the tunnels and provide permanent facilities associated with connections to the network and for ongoing operations and maintenance.
[15] The cost of the works is approximately $1.16 billion. The work has a construction timeframe of approximately five years following a proposed 18 month notice period before the work begins.
[16] The proposed works are all within the territorial jurisdiction of Auckland Council. The Central Interceptor will have important positive effects for Auckland by:
(a)providing additional sewer network capacity for growth and development on the isthmus;
(b)providing asset security by duplicating the lower section of the ageing Western Interceptor which passes beneath the bed of the Manukau Harbour;
(c)significantly reducing the volume of wastewater overflows into the Meola Creek catchment; and
(d)providing the opportunity to further reduce existing wastewater overflows from the combined sewer system into urban streams and the Waitemata Harbour.
[17] Watercare sought all necessary authorisations under the Resource Management Act 1991 to construct and operate the Central Interceptor, and now has them. The 19 surface sites are now designated, and resource consents have been granted for the works along the full alignment.
[18] The Resource Management Act approvals do not provide Watercare with the right to construct the works underground through private property. It is for this reason that Watercare wishes to invoke the provisions of s 181 and sch 12.
[19] The tunnels pass under 1,085 private properties. At the date of hearing of this proceeding written consents had been obtained from the owners of 512 properties.
Declaratory judgment: jurisdiction and discretion
[20] It is necessary to determine whether the Court has jurisdiction under s 3 of the Declaratory Judgments Act 1908 and, if so, whether it is appropriate for the Court to exercise its discretion to make the declarations sought. There were comprehensive and persuasive submissions from Dr Somerville on these two points. Ms Caldwell agreed with the submissions.
[21] I was satisfied that the Court does have jurisdiction. Section 3 of the Declaratory Judgments Act makes express provision for declarations where, amongst other things, any person proposes to take action and the steps required to be taken turn on construction of a statute. That applies in this case. There is no requirement that there be an existing dispute before the Court can assume jurisdiction.5
[22] Section 10 of the Declaratory Judgments Act addresses the Court’s discretion in the following terms:
10 Jurisdiction discretionary
The jurisdiction hereby conferred upon the High Court to give or make a declaratory judgment or order shall be discretionary, and the said Court may, on any grounds which it deems sufficient, refuse to give or make any such judgment or order.
[23] The limits on the discretion not to make an order were discussed by the Court of Appeal in Electoral Commission v Tate as follows:6
[30] ... There may be a number of sound reasons why a declaratory judgment or order should be refused. Examples of grounds on which such
5 Mandic v Cornwall Park Trust Board [2011] NZSC 135, [2012] 2 NZLR 194 at [5] and [8]-[9], per Elias CJ.
6 Electoral Commission v Tate [1999] 3 NZLR 174 (CA).
judgments or orders have been declined are cases where the question is one of mixed law and fact, or where the question is an abstract or hypothetical question, or where the order would have no utility. …
[31] The Courts cannot, however, refuse to give or make a declaratory judgment or order on a ground which is inconsistent with the Courts' essential function. Broadly speaking, that function is to interpret and apply the law to the facts of a particular case. With respect to statutes, the Courts have the function of authoritatively construing legislation, that is, determining the legislation's legal meaning so far as is necessary to decide a case before it. …
[24] Reasons for declining to make declaratory orders, of the type referred to at [30] of Electoral Commission v Tate, or otherwise, do not arise in this case. For that reason, and given my conclusion already recorded that Watercare’s interpretation is correct, I was satisfied that this is a case where the declarations sought should be made.
The statutory provisions
[25] The meaning of an enactment is to be ascertained from its text and in the light of its purpose.7
The text
[26] The starting point is the text. The text of direct relevance is s 181 and sch 12. Section 181 is in sub-pt 3 of pt 8 of the Act. The heading to pt 8 is: “Regulatory, enforcement, and coercive powers of local authorities”. The heading to sub-pt 3 is: “Powers in relation to private land”.
[27]Section 181 provides:
181 Construction of works on private land
(1)A local authority may construct works on or under private land or under a building on private land that it considers necessary for—
(a)the supply by territorial authorities of water by means of reticulated systems:
(b)the supply of water through water races:
(c)trade wastes disposal:
(d)land drainage and rivers clearance.
7 Interpretation Act 1999, s 5(1).
(2)A territorial authority may construct works on or under private land or under a building on private land that it considers necessary for sewage and stormwater drainage.
(3)A local authority or a territorial authority, as the case may be, must not exercise the power in subsection (1) or subsection (2) unless it has—
(a)the prior written consent of the owner of the land to the construction of the work; or
(b)complied with the requirements of Schedule 12.
(4)A local authority may enter the land to inspect, alter, renew, repair, or clean any work constructed under this section or under the corresponding provision of a former Act.
(5)The power in subsection (4) must not be exercised without first giving reasonable notice of the intention to enter the land to the owner and occupier (if any).
(6)This section applies subject to the Public Works Act 1981 as to compensation for injurious affection to land.
[28]Schedule 12 provides:
Schedule 12
Conditions of constructing or undertaking works on private land
without the owner's consent
1For the purposes of section 181(3)(b), the requirements are as follows:
(a)a description of the works, accompanied by a plan (in the case of any works to be constructed), showing how they affect any land or building, must be deposited for public inspection at a place within the district in which the works are to be undertaken:
(b)the territorial authority must give notice in writing of the intention to construct the works (referring to a plan and description of the works and where the plan and description can be viewed)—
(i)to the occupier of the land or building unless there is no occupier or, after all reasonable steps have been taken, the occupier cannot be found; and
(ii)to the owner if known:
(c)however, if there is a change of occupier, it is not necessary to give notice to any subsequent occupier before the work is done:
(d)if, within 1 month after the notice is given, the occupier or owner serves on the territorial authority a written objection to the proposed works, the territorial authority must—
(i)appoint a day for hearing the objection; and
(ii)give to the objector reasonable notice of the day, time, and place of hearing so as to enable the objector to attend the hearing:
(e)the territorial authority must hold a meeting on the day appointed, and may, after hearing any person making any objection, if present, determine—
(i)to abandon the works proposed; or
(ii)to proceed with the works proposed, with or without any alterations that the territorial authority thinks fit.
2A person who is aggrieved by a determination of the territorial authority under clause 1(e) to proceed with the works proposed (with or without alterations) may appeal to the District Court against the determination within 14 days after the date of the determination.
3Pending the decision of the Court on the appeal, the territorial authority must not proceed with the works.
4On the hearing of the appeal, the Court, whose decision is final, may confirm or amend or set aside the determination of the territorial authority.
(emphasis added)
[29]The proviso is cl 1(c) of sch 12 – the words given emphasis.
The purpose
[30] Relevant provisions of the Act bearing on its purpose, and including the specific purpose of s 181, are noted in the following paragraphs. These provisions refer to purposes of local government and the role, powers, and duties of local authorities. Watercare is not a local authority, but the provisions directed to purposes are relevant because, as earlier noted, Watercare has the power of a local authority under s 181 to construct works on private land (and other powers of a local authority under other specified provisions).8
8 Local Government (Auckland Council) Act 2009, s 64.
[31] Broad statements of the purpose of the Act and the purpose of local government, are in ss 3 and 10 of the Act, which relevantly provide as follows:
3 Purpose
The purpose of this Act is to provide for democratic and effective local government that recognises the diversity of New Zealand communities; and, to that end, this Act—
…
(c)promotes the accountability of local authorities to their communities; and
(d)provides for local authorities to play a broad role in meeting the current and future needs of their communities for good-quality local infrastructure, local public services, and performance of regulatory functions.
…
10 Purpose of local government
(1)The purpose of local government is—
(a)to enable democratic local decision-making and action by, and on behalf of, communities; and
(b)to meet the current and future needs of communities for good- quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.
(2)In this Act, good-quality, in relation to local infrastructure, local public services, and performance of regulatory functions, means infrastructure, services, and performance that are—
(a)efficient; and
(b)effective; and
(c)appropriate to present and anticipated future circumstances.
[32] Section 11 provides that it is the role of every local authority to give effect to the purpose of local government stated in s 10 and to perform the duties, and exercise the rights, conferred on it by or under the Act and any other enactment.
[33] Section 11A requires every local authority to have particular regard to the contribution that five “core services” make to its communities, one of which is
“network infrastructure”. Network infrastructure is defined in s 197(2) as including the provision of water, wastewater, and stormwater collection and management.
[34] Section 14 requires every local authority to act in accordance with principles specified in the section. These relevantly include obligations to conduct business in an open, transparent, and democratically accountable manner, and to give effect to identified priorities and desired outcomes in an efficient and effective manner.
[35] Sections 57 and 58 of the Local Government (Auckland Council) Act 2009 impose further specific duties on Watercare. Of particular relevance is a requirement that Watercare “manage its operations efficiently with a view to keeping the overall costs of water supply and waste-water services to its customers (collectively) at the minimum levels consistent with the effective conduct of its undertakings and the maintenance of the long-term integrity of its assets”.9
Interpretation: the first alternative meaning of “owner”
The meaning from the text
[36] The text giving rise to uncertainty is the proviso, but the uncertainty is not contained in the words of the proviso. It is uncertainty arising from the absence of a similar proviso relating to a change of owner. Whether the absence of words in sch 12 can be used to determine the meaning of the word “owner” is addressed when considering the second alternative.
[37] “Owner” is not defined in the Act. The starting point is to consider the meaning of owner in the context of s 181.
[38] Section 181(3)(a) is important. It contains the provision for consent of the owner. In my opinion this provision means that, if the consent of the owner is given, no further steps are required in respect of the land of that owner even though the owner may change before the work is completed. In other words, “owner” means only the owner at the time consent is given.
9 Section 57(1)(a).
[39] This conclusion is based on what seems to be the plain meaning of the word read in the context of s 181 as a whole. The consent must be obtained before the work commences. That is made clear by the reference in s 181(3)(a) to “the prior written consent” of the owner. And it is obvious that the person from whom the consent is obtained must be the owner when the consent is given.
[40] If Parliament had intended that the authority to proceed with the works, derived from a consent under subsection (3)(a), would lapse if there was a change of owner, it is to be assumed that there would have been a provision to that effect. There is no such provision. A consent given by the person who is the owner before the work commences provides the local authority –Watercare in this case – with the power under s 181(1), or s 181(2), to proceed with construction of the works under the land and under any building on the land of the owner who gave the consent. No further consent is required if there is a change of owner. This creates a temporal limit: “owner” means only the owner at the time the consent is given.
[41] This conclusion bears on the meaning of “owner” in sch 12. There does not appear to be any principled basis for interpreting the meaning of owner, in relation to an owner who does not consent, differently from the meaning of owner in relation to an owner who does consent. This means that, if the sch 12 procedure has commenced, pursuant to s 181(3)(b), notice is required to be given only to the person who is owner at the time the notice is given (and only if the owner is known10). This temporal limit on the meaning of “owner”, in this case being the person who is owner when the notice is given, in all relevant respects is the same as the temporal limit on the meaning of “owner” in respect of a consent.
[42] There are further considerations arising from analysis of the text which support these conclusions. They are appropriately noted when providing reasons for rejecting the second alternative.
[43] Watercare submitted that the definition of “owner” in earlier local body legislation, going back to the Municipal Corporations Act 1867, provides some support for a conclusion that there is a temporal limit on the meaning of “owner”. Ms
10 See sch 12, cl 1(b)(ii).
Caldwell submitted that these submissions were not persuasive. I agree. It is unnecessary to review the historical legislation in relation to the first alternative, although some of it has relevance when considering the second alternative.
The meaning in the light of the purpose of the Act
[44] The conclusion that “owner” has the first alternative meaning is consistent with the purposes of the Act, both in respect of its broad purposes and when considering purposes in the context of s 181 powers and duties. There are two broad purposes of relevance, reflected in different ways in the provisions of the Act, and ss 57 and 58 of the Local Government (Auckland Council) Act 2009. Stated in general terms these are: on the one hand, the public interest in getting public works commenced and completed efficiently, effectively and, in the case of Watercare, at overall costs at the minimum levels consistent with the effective conduct of its undertakings; and, on the other hand, the need to provide reasonable protection of the interests of private property owners and occupiers.11
[45] Ms Caldwell, in outlining an argument in support of the second alternative, gave emphasis to the interests and rights of private land owners. The first alternative interpretation does not exclude the objective of providing reasonable protection of private property interests in a balanced way. In my judgment that is what the Act requires. For reasons I come to, when considering the second alternative, the second alternative would materially alter the nature of the balance indicated by the Act.
Interpretation: the second alternative meaning of “owner”
The meaning from the text
[46] Dr Somerville submitted that the second alternative would require cl 1 of sch 12 to be read as if it contained a further proviso to the following effect:
However, if there is a change of owner, it is necessary to give notice to any subsequent owner before the work is done.
11 See Hutt City Council v Lower Hutt District Courtl, above n 3, at [43]-[45]; Bailey v Christchurch City Council, above n 3, at [61].
[47] Dr Somerville submitted that there was no justification for what would amount to a major modification of the text. He cited the following caution from the authors of Burrows and Carter Statute Law in New Zealand:12
It is true that courts normally cannot fill gaps in legislation. They cannot write in what the Legislature has not thought fit to include. However, sometimes a question may arise to which the legislation does not provide an express answer, but to which the court is able to construct an answer by considering the purpose of the Act as a whole, and the various indications of intention in its provisions. … However, this approach is not uncontroversial, and must obviously be employed with great care. In the Northland Milk case itself Cooke P noted that the courts must not usurp Parliament’s policy-making function. “Gaps” do not exist if the legislation cannot be interpreted sensibly as it stands. Nor can “gaps be filled” if the proposed implied term is contrary to the legislative scheme: it is important to appreciate the basic structure and principles of the Act.
(Emphasis in bold added in submission, footnotes omitted.)
[48] Ms Caldwell accepted that there is need for caution before adopting an interpretation that fills a perceived gap in a statute by adding words. She submitted, however, that the second alternative “does not necessarily” require additional words to be read into sch 12, as suggested by Dr Somerville, but rather that the first alternative would require the addition of the word “owner” in the proviso.
[49] I agree with Dr Somerville. The second alternative does, in substance, require words to be read into sch 12. That is not necessary because sch 12 can be interpreted sensibly as it stands. Counsel’s submissions focused in substantial measure on the absence of a proviso relating to a change of owner. But the proviso, directed only to occupiers, cannot be read in isolation to determine the meaning of the word “owner”. The meaning of the word “owner” in sch 12 needs to be assessed in its fuller context, and in particular its meaning in the context of s 181. The conclusion already reached in that regard, when considering the first alternative, can be applied entirely consistently when reading the relevant words in sch 12. In particular, cl 1(b) of sch 12 requires the notice to be given to the owner, if known, before the work commences. The notice to be given is notice “of the intention to construct the works”. This is a temporal limitation. As with the similar point made in relation to s 181(3)(a), if
12 Ross Carter Burrows and Carter Statute Law in New Zealand (5th ed, LexisNexis, Wellington, 2015) at 231.
Parliament had intended that a change of owner, after notice had been given, required new notice to be given to the new owner, words to that effect would have been inserted.
[50] The conclusion that there is a temporal limit on the meaning of the word “owner”, from the words requiring notice to be given of “the intention to construct the works”, might also apply to the meaning of “occupier” in cl 1(b) of sch 12. On that basis a question could arise as to why the proviso was necessary for occupiers.
[51] I do not consider that this seeming inconsistency provides grounds for adding words that are not there in relation to a new owner. The real uncertainty, if there is any, is not as to the meaning of “owner”, but as to why Parliament considered it necessary to add the proviso in respect of a change of occupier.
[52] From 1867 to 1974 there was local body legislation in seven successive enactments with provisions broadly similar to s 181 and sch 12, but without the proviso.13
[53] The proviso first appeared as sch 16 in the Local Government Act 1974, added by the Local Government Amendment Act 1979. The 1979 Amendment Act was one of the major additions to the 1974 Act, as part of a staged amalgamation to replace the Municipal Corporations Act 1954 and two other Acts.14
[54] Schedule 16 of the 1974 Act is, in material respects, the same as sch 12 of the Act. Counsel’s researches did not discover any explanation for the introduction of this proviso in the Bill which led to the 1979 Amendment Act. But there are possible explanations which indicate that the focus was on the position of occupiers with no
13 Municipal Corporations Act 1867, ss 2 and 320; Municipal Corporations Act 1876, ss 4 and 219; Municipal Corporations Act 1886, ss 6 and 275; Municipal Corporations Act 1900, ss 3, 269 and sch 10; Municipal Corporations Act 1920, ss 2 and 291 and sch 8; Municipal Corporations Act 1933, ss 2 and 223 and sch 9; and Municipal Corporations Act 1954, ss 2 and 218 and sch 10.
14 Owing to the “magnitude of the task”, the Local Government Act 1974 was enacted, and then amended in three stages, to incorporate the provisions of the Municipal Corporations Act 1954, the Counties Act 1956, and the Local Authorities (Petroleum Tax) Act 1970: see the explanatory note to the Local Government Amendment (No 2) Bill 1977 (55-1). The second stage, resulting in the 1979 Amendment Act, amalgamated, with amendments, the provisions of the Municipal Corporations Act 1954 and the Counties Act 1956 relating to (amongst other things) drainage and water supplies.
intention to imply, by omission of a similar proviso for owners, that notice would have to be given to new owners.
[55] One possible explanation for the proviso is that those who drafted the 1979 amendment looked afresh at the ramifications of what at that time was sch 10 of the Municipal Corporations Act 1954. As already noted, sch 10 of the 1954 Act is broadly similar to sch 16 of the Local Government Act 1974, except that there was no proviso in sch 10 about subsequent occupiers.15 It is possible that the drafters of the 1979 amendment saw a possibility of an ambiguity as to the rights of successive occupiers under sch 10 of the 1954 Act which did not arise in relation to successive owners. That ambiguity would arise because occupiers were referred to only in sch 10, whereas the meaning of “owner” is to be construed by reference to s 181 as well as by reference to sch 12. In other words, the drafters saw a need to introduce the proviso because the temporal limit on the meaning of owner, founded primarily on construction of s 181, did not apply to occupiers. At the same time, it might reasonably be assumed that introduction of the proviso relating to occupiers was not seen as creating uncertainty in respect of owners for the same reasons I have concluded there is none. Or this aspect may not have been seen. That is possible because the uncertainty may not leap out at the reader, and the amalgamation of the law which produced the 1974 Act was a major task in the course of which minor errors may have arisen.16
[56] Another possible explanation for a proviso relating to new occupiers, but none relating to new owners, comes from the difference between ownership and occupancy in the present context. There are mechanisms outside the Act for informing new owners. For example, the Auckland District Law Society standard form agreement for sale and purchase of real estate includes warranties to the following effect:17
(a)The vendor has not “received any notice or demand and has no knowledge of any requisition or outstanding requirement … from any local government authority or other statutory body … or given any
15 There was also no provision for an appeal in sch 10 of the Municipal Corporations Act 1954, a provision, as with the proviso, first introduced in sch 16 of the Municipal Corporations Act 1974.
16 See above n 14.
17 Real Estate Institute of New Zealand and Auckland District Law Social Inc. Agreement for Sale and Purchase of Real Estate (9th ed (6), 2012) at cls 7.1 and 7.2(8).
consent or waiver which directly or indirectly affects the property and which has not been disclosed in writing to the purchaser”.
(b)Any notice received between the date of the agreement and settlement has been delivered to the purchaser or the purchaser’s lawyer, and no consent or waiver has been given in that period.
[57] If the owner is given notice under sch 12, then puts the land on the market for sale, the owner is bound to give notice of receipt of the sch 12 notice to prospective purchasers. Prospective purchasers can then decide whether to proceed with negotiations for an agreement or withdraw. If the owner, as vendor, fails to notify prospective purchasers of the sch 12 notice, in breach of the warranty, the purchaser can exercise any available rights under the agreement. The position is in substance the same if an owner gave consent under s 181(3)(a) and then offered the land for sale.
[58] Ms Caldwell agreed that it is likely that a notice issued by Watercare would be captured by the warranties in the standard Auckland District Law Society agreement for sale and purchase, and that this would provide “a degree of protection” for prospective purchasers, including where a property is on-sold more than once from the time notice is given by Watercare. Ms Caldwell nevertheless noted some limits to the extent of the protection available to purchasers.
[59] I accept that the limits are present, including the possibility that there will be no warranties, but it is unnecessary to explore these limits. This is because the matter now under consideration – possible reasons for the introduction of the proviso – is in this case peripheral to the central aspects of interpretation. In any event, if any uncertainty remains as to whether the second alternative should be rejected, it is removed on consideration of the second alternative in the light of purpose, to which I now turn.
The second alternative in the light of purpose
[60] I consider that the second alternative would be contrary to the broad purposes of the Act, and to the more specific objectives under s 181 and sch 12. I agree with a
submission for Watercare that the second alternative would “lead to uncertainty, cost, inefficiency and to a number of potentially absurd outcomes”.
[61] Uncertainty, additional cost, and inefficiency would result if notice under sch 12 is required to be given to successive owners. The possibility of a change of ownership after notice has been given pursuant to s 181(3)(b) is a real possibility. The change of ownership might occur after the right of appeal provided for in sch 12 has come to an end, the territorial authority is entitled to proceed with the works, and the works have begun. If the second alternative applies, the territorial authority will have to start again and possibly suspend work. The resulting delay in construction of the works could be significant and costly and result in inefficiencies. These outcomes, contrary to clear purposes of the Act, would be compounded, and in some cases produce what could reasonably be described as absurd, if there is more than one change of ownership, with each change requiring the territorial authority to start the sch 12 process again. A new sch 12 process, or successive processes, could be required to be given months or years after construction of the works had begun.
[62] There would also be uncertainty of interpretation as to when notice to a new owner was no longer required. Would it be required: if there is a change of owner while an objection is still under consideration by the territorial authority; or while there are still rights of appeal; or before the works have started; or before the works go into the land of the new owner; or at any time up to the completion of the works, no matter how many pieces of land might be involved? And if notice to a new owner was required, there is nothing in the Act indicating how the territorial authority would be required to be informed of such change. For example, would it be an obligation on the territorial authority or an obligation on the new owner?
[63] It is presumed that Parliament does not intend to legislate in a manner that is absurd;18 and that it “does not intend to bring about results that are unreasonable or unfair or arbitrary”.19 In Frucor Beverages Ltd v Rio Beverages Ltd, the Court of Appeal approved the following definition of “absurdity”:20
18 Frucor Beverages Ltd v Rio Beverages Ltd [2001] 2 NZLR 604 (CA) at [28].
19 Burrows and Carter Statute Law in New Zealand, above n 12, at 344-345.
20 Frucor Beverages Ltd v Rio Beverages Ltd, above n 18, at [28], citing Francis Bennion Statutory Interpretation (3rd ed, Butterworths, London, 1997) at p 751.
[V]irtually any result which is unworkable or impracticable, inconvenient, anomalous or illogical, futile or pointless, artificial, or productive of a disproportionate counter-mischief.
[64] The opposite, and positive, presumption is that Parliament intends to legislate in a way which produces a practicable, workable and sensible result.21 Where there are two possible interpretations, “the court will adopt that which is just, reasonable and sensible rather than that which is none of those things”.22
[65] All of those statements of principle indicate that the second alternative is not the correct interpretation
[66] The extent of the potential uncertainty, added cost, and inefficiency, in the case of Watercare’s Central Interceptor, will be apparent from the outline of the project at the beginning of this judgment. Years could elapse between an owner being notified and the works passing under the property of that owner, which property at that point may have been sold more than once. It is also unclear how Watercare could be expected, over that time, to be aware that title to any one of the 1,085 properties affected by the works has been transferred.
[67] Ms Caldwell, quite properly, cautioned against using the facts relating to this particular project for the purpose of interpretation of s 181 and sch 12. I agree that the interpretation of sch 12 must be principled and workable in respect of any qualifying project. But I do not agree that the facts in relation to Watercare’s Central Interceptor project should simply be set aside. They provide a real illustration of real difficulties that would arise if the second alternative is adopted as the correct interpretation. I also do not accept that there could be absurd outcomes, or at least unreasonable outcomes, only in cases of big projects. In addition, difficulties of interpretation will remain irrespective of the size of the project. Determining when there is a cut-off point for notification to a new owner is unaffected by the size of the project. If the second alternative were adopted, the court would have to record, in the declaration, when the cut-off point arises. This would again get into the exercise of adding words when it is unnecessary to do so.
21 R v Salmond [1992] 3 NZLR 8 (CA) at 13.
22 Homer v Bradfield Rural District Council [1949] 2 KB 1 (KB) at 7.
[68] Ms Caldwell referred to the fact that Watercare has power under the Public Works Act to acquire interests in land, through agreement or compulsorily. She submitted that, to avoid the difficulties that would arise if the second alternative applies in Watercare’s case, because of the size of the project, Watercare could, for example, make “a co-ordinated effort to secure subsurface easements from all property owners who do not consent on a willing buyer-willing seller basis”.
[69] Ms Caldwell referred to an observation of this Court in Hutt City Council v Lower Hutt District Court that “[t]he reference to the Public Works Act … in s 181(6) of the Act clearly demonstrates that Parliament intended the two Acts to be part of integrated legislative scheme”.23 In reliance on that observation, Ms Caldwell submitted that Watercare’s powers under the Public Works Act could be used “if the process required by section 181(2) and Schedule 12 does not provide adequate certainty for [Watercare’s] project”.
[70] I do not agree that Parliament intended powers under the Public Works Act should be invoked, rather than powers under the Act, in the case of big projects where the problems I have earlier described would be likely to arise. That approach would amount to a conclusion that s 181 and sch 12 are not designed for big projects. That cannot be correct. And I do not understand the observation of Collins J in Hutt City to be indicating anything to the contrary. In that case the Judge was referring to circumstances where s 181 had no application at all.
[71] Arguments in support of the second alternative contain within them an implicit proposition that the rights of private property owners will not adequately be met if a change of ownership does not require the sch 12 procedure to begin again. That proposition, if not supported by the text and the purposes of the Act, amounts to a value judgment, or opinion, which cannot be a foundation for interpretation of legislation. The proposition is not supported by the Act. The objectives of the Act which are designed to accommodate the public interest are set out in detail and plainly require considerable weight. They would be subjugated to private property interests, rather than balanced with them, in ways which are not supported by an assessment of
23 Hutt City Council v Lower Hutt District Court, above n 3, at [36].
purposes or the relevant text of the Act. And this would arise almost entirely from the absence of a proviso for owners similar to the proviso for occupiers, not from any words used in the Act directed to the interests of owners.
[72] The final consideration is that the second alternative, which would give rise to new rights of objection, and therefore repetition, and possibly several times, of the sch 12 process, would be contrary to the conventional limits on objection processes.
[73] The sch 12 objection process, if applied using the first alternative, is a conventional means of providing a degree of protection for private property interests when such interests need to be balanced against public interests. A plainly important purpose of s 181 is to provide appropriate protection for private property interests, but sch 12 in considerable measure is a procedural provision. It is not some form of declaration of the rights of private property owners. It sets out obligations in relation to notice, rights to object, time limits, a right to a hearing, and a right to appeal.
[74] Such procedures, which apply in relation to numerous public activities, are designed to come to an end, and not be able to be revived in relation to the particular subject matter of the procedure. The particular subject matter of the procedure under sch 12 is a piece of land, not the identity of the owner.
[75] Applying these considerations, the rights of any owner of a piece of land will come to an end, at the latest, when appeal rights have been exhausted. A new owner might be able to step into an objection process which has not been finally determined, but once it has been finally determined, on a conventional approach, that is an end to it.
[76]For these reasons the declarations were made.
Woodhouse J
Solicitors / Counsel:
Dr R J Somerville QC, Barrister, Dunedin
Ms B S Carruthers and Mr A M Cameron (applicant’s instructing solicitor), Russell McVeagh, Auckland
Ms J Caldwell and Ms K Dawson, Buddle Findlay, Auckland
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