Young v Attorney-General
[2021] NZHC 463
•11 March 2021
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2017-409-000110
[2021] NZHC 463
BETWEEN STEVEN RICHARD YOUNG
Plaintiff
AND
ATTORNEY-GENERAL
Defendant
Hearing: 2 to 6 November 2020 Appearances:
A R B Barker QC and J Moss for Applicant K G Stephen and H T N Fong for Defendant
Judgment:
11 March 2021
Reissued:
12 March 2021
JUDGMENT OF DUNNINGHAM J
This judgment was delivered by me on 11 March 2021 at 2.30 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
YOUNG v ATTORNEY-GENERAL [2021] NZHC 463 [11 March 2021]
Contents
Introduction........................................................................................................... [1]
The property.......................................................................................................... [8]
The subdivision.................................................................................................... [17]
The Christchurch District Plan............................................................................ [23]
The natural hazards affecting the property.......................................................... [33]
Does the rockfall risk constitute a nuisance?....................................................... [37]
Does the Crown have a common law defence of statutory authorisation? [40]
Submissions for the Crown [45]
Submissions for Mr Young [54]
Discussion [58]
Does the Crown have a duty to abate the nuisance?............................................ [61]
Submissions for the Crown [61]
Submissions for Mr Young [67]
The proposed solutions to address the nuisance [70] Does the Crown have a duty to implement either of these solutions? [77]
Should alternative relief be awarded in the form of damages for the value of the
land lost?.............................................................................................................. [86]
Background to the damages claim [86]
Cost of rockfall protection works [89]Value of the property in 2010 [92]
Is the Crown obliged to pay damages to compensate Mr Young for his loss?
[105]
Can Mr Young succeed on his other damages claims?....................................... [116]
Lost improvements [116]
Lost rental for Houses 3, 4 and 5 [119]
Lost chattels [120]
General damages [122]
Damages on a diminution of value basis [124] Conclusion [129]
Introduction
[1] The property at 124 Main Road, Redcliffs, is a special place. The entrance is marked by low stone walls constructed of local volcanic rock. They lead the visitor to an enclave of five houses set in attractive gardens. The first two homes are recent additions, set along the narrower front section of the property that leads from the Main Road entranceway. The rear of the property expands out into a series of spacious garden rooms in which are set the original homestead and two further houses which once housed Mr Young, his family, and guests from overseas.
[2] At the rear of the property, and enclosing it in a sweeping curve on two sides, are the cliffs which give the suburb its name. They rise up as high as 70 m. Their face displays the geological history of the area, laid bare by sea and weather erosion and, more recently, by the force of the Canterbury earthquakes.
[3] Mr Young’s world was changed forever by the Canterbury earthquakes. On 22 February 2011, his wife was seconds away from being taken by a debris fall which destroyed the parked car she had just left. Rocks now completely cover his driveway and he can no longer access his property through it. The three houses to the rear of the property are uninhabitable, with the face of debris slopes now close to, or touching them. Random rocks sit near and alongside the houses as reminders of the constant threat the cliff face poses.
[4] Mr Young knows the property will never be the same. However, he says he wishes to return to live there, salvaging the five homes and protecting them as best as possible from future cliff collapse and rockfall risk.
[5] To do that he is suing the Crown in nuisance, as the (now) owner of part of the cliff face and of the clifftop properties from which the cliff collapse and rockfall risk emanates. He says the Crown is obliged to implement, at its cost, significant protective works to enable him to do this and he seeks declarations to that effect. Alternatively, he seeks an award of damages reflecting the value of the property he has lost. He also seeks damages for losses he says he incurred by the Crown failing to implement such works in a reasonable time. The physical works alone are estimated to cost $3,400,000
plus GST. The total amount claimed if Mr Young was successful on all counts, is approximately $7,000,000.1
[6] The Crown resists the claim. It says it has a common law defence to the claim in nuisance and so is not liable. However, even if it is liable, it is not obliged to carry out the extent of work sought by Mr Young. Its obligation is a “measured duty” to respond to the nuisance which arises naturally. It says it has offered to buy Mr Young’s property using the approaches to valuation adopted for other red-zoned properties, but Mr Young has rejected those offers. The Crown remains willing to purchase the land on that basis. If it is found to be under an obligation to mitigate the risk, it proposes a less costly remediation option which would allow Mr Young to use some of the property.
[7] Because the parties have been unable to agree on the extent of the Crown’s obligations in these complex circumstances, the matter has come before this Court.
The property
[8] Mr Young has owned the property at Redcliffs for more than 40 years. It is just over two hectares in size. On its eastern boundary is the former site of the Redcliffs School. Its southern and western boundaries are encircled by the cliffs, and the northern boundary, which is the narrowest point of the property, connects to Main Road.
[9] At the time of the Canterbury earthquakes, three of the houses on the property were owned and used by Mr Young and his family. They consisted of the following buildings:
(a)The original homestead built in 1901. Mr Young lived in this house and had extensively renovated it (House 1).
1 Although this figure omits the costs of a plan change to the Christchurch District Plan to enable resource consent to be sought for the works, so the real cost of the relief sought is significantly more.
(b)A large separate home sited close to the boundary with the former Redcliffs School which was built in 2002-2003 (House 2).
(c)A multi-purpose dwelling, including a sports pavilion and guest accommodation, which was built in 2007-2008 (House 3).
[10] In the narrower front section of the property, Mr Young had obtained subdivision consent in 2007 to create four new residential lots in addition to the balance lot of 1.8 hectares, Lot 5, on which Houses 1 - 3 stood.
[11] Although the subdivision was not complete at the time of the earthquakes, Mr Young had conditionally sold two lots on the eastern side of the driveway, one to the Jamiesons, and one to the Wongs. The Jamiesons and the Wongs had each built large family homes on those lots in anticipation of the subdivision being completed and titles issuing, and they were living in those homes at the time of the earthquakes. The parties referred to these as House 4 (the Wongs) and House 5 (the Jamiesons).
[12] Houses 1 – 3 were seriously damaged by rockfall in the Canterbury earthquake sequence. They can no longer be accessed safely. Houses 4 and 5 were damaged but capable of repair and are still habitable. Indeed, Mr Young and his family have been living in House 5 since purchasing it from the Jamiesons.
[13] Following the earthquakes, red placards under Civil Defence emergency powers were issued in relation to all five homes and, later, notices under s 124 of the Building Act 2004, were issued for Houses 1- 3. In March 2012, the Canterbury Earthquake Recovery Authority (CERA) issued a notice under s 45 of the Canterbury Earthquake Recovery Act 2011 (CER Act) in relation to part of the driveway, which was covered in fallen rock. The notice was issued because of concerns about danger to life if the driveway was used. It meant there could be no access over the driveway by foot or otherwise. Mr Young initially had an agreement to access his property through the former Redcliffs School site, but that expired in mid-2018 when the Christchurch City Council took it over. He currently accesses his property through a vacant section at 124A Main Road which is owned by the Crown, but he does not have
authorisation to do so. That circumstance resulted in the Crown filing a counterclaim against Mr Young in trespass which, sensibly, was withdrawn during the hearing.
[14] On 29 June 2012, Mr Young’s property was red-zoned by CERA. That was, in effect, a designation, recognising the land was considered to be damaged beyond practical and timely repair, and where remediation would be “uncertain, disruptive, slow, and more costly than the land was worth”.2
[15] In the following year, Mr Young received a Crown offer giving the two standard options for purchase of his red zone property. Option 1 was for the land only, and option 2 was for the land and improvements, based on its 2007 rating valuation. Further offers, which were hybrids of options 1 and 2, were made in February and November 2015. However, there were two key problems from Mr Young’s perspective. First, the 2007 rating valuation of the property did not reflect the value of the subdivision which Mr Young had largely implemented and second, there were difficulties caused by the Jamiesons and the Wongs being tied to Mr Young’s position because they did not yet own separate titles. To avoid this, he purchased Houses 4 and 5 from them in mid-2015, so that he now owns not just the land, but all improvements on it.
[16]Self-evidently, Mr Young has rejected all the Crown offers.
The subdivision
[17] At this juncture, it is necessary to provide more detail about Mr Young’s five lot subdivision, as it is a key reason why Mr Young did not accept the Crown’s red zone offer. A subdivision consent for the five lot subdivision was granted on 23 March 2007. The subdivision works were largely completed when the first earthquake hit on 4 September 2010. The only condition of subdivision consent which had not been completed was engineering work to protect the development from rockfall.
2 Quake Outcasts v Minister of Canterbury Earthquake Recovery [2017] NZCA 332, [2017] 3 NZLR 486 at [7](c).
[18] The condition in question identified a rockfall hazard on the property, and set out the following requirements to address it:
A significant rock cliff bluff adjoins the northwest side of lots 4 & 5 and effects of rock fall can be mitigated by design and construction of engineered works. The engineering issues have been detailed in a report from Bell Consulting Ltd dated 31 March 2006.
…
In terms of rock fall there is potential for release of smaller sized debris from localised sources along with potential for some larger blocks to be released. A potentially unstable section of the cliff is located above the southern part of lot 4. Under direction of a Geotechnical Engineer the visible areas of loosened blocks of rock on the cliff above the southern part of lot 4 are to be removed and the larger blocks bolted. The geotechnical engineer is to design a rock catch/deflection fence across the southern part of lot 4 to protect an identified building site on the north part of the lot.
…
If a rock deflection fence, as opposed to a rock catch fence, is constructed on lot 4 a rock catch fence/wall is to be constructed along the north western boundary of lot 3. The fence/wall is to be designed by the geotechnical engineer.
[19] The relevant parts of this condition are set out in full because there was a dispute as to the extent of the works still required to satisfy this condition, to allow the subdivision to be completed and titles to issue. Mr Young says, and I accept, that he had constructed a rock wall on the boundary of lot 3 and the mutual driveway, and it was the “rock catch fence/wall” which was described in the last part of the condition to protect Lot 3.
[20] Still required was the work to scale the cliff and remove loose rocks (although some work of this nature had been done) and to bolt the larger rocks. Also required was the construction of a rock catch fence/wall on lot 4. In relation to that, Mr Young said the surveyor and he were in discussions with the Council to defer the requirement to place rockfall protection works on lot 4 until a particular dwelling had been designed for this section. If that was done, then the design of the rockfall protection structures and the house could be co-ordinated. In other words, Mr Young was negotiating the possibility of having the subdivision signed off and titles issue without doing further work. Instead, through a consent notice procedure under s 221 of the
Resource Management Act 1991 (RMA), the rockfall protection works would be implemented by the new owner of lot 4 at the time the section was built on.
[21] If that had been done, the s 224 certificate for the subdivision could have issued in relatively short order and the subdivision completed. However, such a change would have required an application to vary the conditions of consent under s 127 RMA. There was no impediment to doing that but, no doubt, the value of lot 4 would have reflected the fact that significant rockfall protection works were still required to be constructed by the purchaser.
[22] The cost and extent of the remaining engineering works required to protect against rockfall risk was an issue in dispute in the hearing because it affected the value of the land at the time of the earthquakes, and it is a subject I will return to later.
The Christchurch District Plan
[23] As a consequence of the Canterbury earthquakes, and the devastating land damage they caused, the Christchurch City Council paid significantly greater attention to management of natural hazards in the new Christchurch District Plan (CDP) which was notified post-earthquake.
[24] In August 2014, the Council advised Mr Young that it had been reviewing land use zoning rules for cliff hazard management areas as part of its review of the existing District Plan. It was proposing to introduce a “prohibited use status for the highest risk areas of the cliff edge, called Cliff Hazard Management Area 1 … [along with] a Cliff Hazard Management Area 2, where non-complying activity status will apply”.
[25] These management areas were identified based on the likely risk they posed to life and they were subsequently incorporated in the CDP, albeit under the slightly different descriptors of Cliff Collapse Management Area 1 (CCMA 1), and Cliff Collapse Management Area 2 (CCMA2). The bulk of Mr Young’s property is now located within these two management areas.
[26] As explained by Mr Allan, the expert planning witness called by the Crown, the risk to life used to identify these areas is expressed in terms of the “annual individual fatality risk” (AIFR). This is the probability of a fatality for a person occupying the identified site in a year as a result of cliff collapse. CCMA1, which covers the majority of Mr Young’s land, is where there is a 10⁻¹ to 10⁻² AIFR, that is, an annual risk of fatality of 1 in 10 to 1 in 100. Running alongside that, is CCMA2 where there is a 10⁻² to 10⁻³ AIFR, that is, an annual fatality risk of 1 in 100 to 1 in 1000.3 Both CCMA1 and CCMA2 encompass locations where the risk to life from natural hazards is considered to be unacceptable.
[27] The CDP restricts development activities such as new building, subdivision and earthworks in the CCMA1 and CCMA2. In CCMA1, subdivision, earthworks, hazard mitigation or removal works, and construction, are all categorised as prohibited activities. The same activities are categorised as non-complying activities in CCMA2.
[28] The CDP also identifies a risk of mass movement (or landslide) on and adjacent to the property. As a consequence, much of the property is also subject to a hazard overlay identified as Mass Movement Management Area 1 (MMMA1). Relevant activities, including earthworks, hazard removal works and construction of residential dwellings, are categorised as non-complying activities in this area.
[29] As Mr Allan explains, where an activity is listed in a plan as a “prohibited activity”, it is expressly prohibited without exception. A resource consent cannot be sought, or granted, for the activity. It is the most restrictive activity status provided for under the RMA and it is rarely used, except where it is backed by strong evidence of its necessity, including justification through objectives and policies.
3 To put that in perspective, the New Zealand Ministry of Health Statistics relied on in the Christchurch City Council document Understanding life-safety risk concepts for rockfall and cliff collapse in the Port Hills (Summary Series 1/3) (Christchurch City Council, September 2012) at 2, shows the risk of a New Zealander dying in a car accident is significantly lower, at around 1 in 10,000 years or AIFR 10⁻⁴.
[30] A plan change is required to remove the prohibited activity status and allow a resource consent to be sought for the prohibited activity. I accept Mr Allan’s evidence that while a plan change provides a “possible pathway” to changing the prohibited activity status of works in CCMA1, the prospect of achieving this is very low.
[31] A non-complying activity requires a resource consent before it can be carried out. It is generally used for activities where the potential adverse effects may be significant but do not warrant prohibition. It is a signal these activities will be subject to a greater degree of scrutiny. Before such activities can be granted consent, they must pass through what is commonly referred to as the “threshold” or “gateway” test in s 104D RMA. This requires the activity to demonstrate that either:
(a)the adverse effects of the activity on the environment will be minor; or
(b)the proposed activity is not contrary to the objectives and policies of the relevant plan or plans
before the grant of consent can be considered.
[32] Mr Allan notes the objectives and policies of the CDP contain quite directive avoidance policies in regard to natural hazards, and this would make it difficult to satisfy the second limb of s 104D.
The natural hazards affecting the property
[33] There was no dissent over the type and extent of natural hazards threatening the property. Dr Jan Kupec, and Mr Elliot Duke, both experienced geotechnical engineers, agreed that the key geohazards at the property include cliff collapse, fly rock (as part of cliff collapse), rock fall and mass movement.
[34] Cliff collapse refers to the mass detachment of large portions of a rockface that results in numerous boulders falling at the same time. Due to the number falling together, there are typically collisions between the boulders which can result in erratic trajectories and create smaller rocks (called fly rocks) which can then fly off further than would otherwise be anticipated. Rock fall hazard occurs when isolated boulders
break off the cliff face, as opposed to cliff collapse where an avalanche of material comes down. Finally, a mass movement hazard refers to the movement of a large area of land, but which may not result in the loss of that land in a way that a cliff collapse will. Typically it is known as a landslide and occurs where the upper mass of land moves relative to the lower part. There are two mass movement areas identified in the Redcliffs area. The Balmoral Lane mass movement area has a projected direction of movement towards the driveway of the property. The Glendevere Terrace mass movement area is located to the southwest of the property and is projected to move towards House 1 and 2 at the back of the property.
[35] During the Canterbury earthquake sequence, the expert evidence confirms that approximately 21,400 m³ of material fell on to Mr Young’s property. Of that, approximately 6,100 m³ fell from the cliff top properties which sit beyond Mr Young’s boundary, and which now are owned by the Crown. The balance of more than 70 per cent fell from the cliff face that lies within Mr Young’s property. That is a complicating factor in this case. To the extent Mr Young’s property has already been affected by rockfall and cliff collapse, it has been primarily from the cliff face within his own boundaries. Furthermore, particularly as a result of the 22 February and 13 June 2011 earthquakes, an extensive rock debris apron has formed at the base of the cliff within the property, and this talus slope acts as a ramp over which future debris and rock falls can be conveyed further into the property, exacerbating the extent of the fatality risk within the property.
[36] However, there are also numerous ground tension cracks on the land at the top of the cliff face and these could lead to possible slope failure under either static events (for example, high intensity rainfall), or dynamic conditions (for example, earthquakes). Mr Barker QC submits I should, therefore, treat the future risk as emanating solely from Crown land, given the evidence of cracking and subsidence reported on it. He says the fact the parts of the cliff face that may fall are in Mr Young’s land is simply a consequence of the more fundamental instability of the Crown’s land.
Does the rockfall risk constitute a nuisance?
[37] Mr Young asserts that the ongoing rockfall risk from the clifftop properties now owned by the Crown is an actionable nuisance, saying it constitutes a substantial and unreasonable interference with his right to use and enjoy his land.4 He points out it is well established that interferences of this nature, even though they are wholly natural in their occurrence, can give rise to an actionable nuisance.5
[38] In Leakey v National Trust for Places of Historic Interest or Natural Beauty, the plaintiff’s houses lay at the bottom of a large mound of earth on the defendant’s land. The mound was unstable, and quantities of earth and tree stumps had fallen on the plaintiff’s land. The English Court of Appeal held that a wholly natural event, which arose through no fault on the part of the defendant, nevertheless gave rise to an action in nuisance, saying:6
If, as a result of the working of the forces of nature, there is, poised above my land, or above my house, a boulder or a rotten tree, which is liable to fall at any moment of the day or night, perhaps destroying my house, and perhaps killing or injuring me or members of my family, am I without remedy? … Must I, in such a case, if my protests to my neighbour go unheeded, sit and wait and hope the worst will not befall? …
In [this] example …, I believe that few people would regard it as anything other than a grievous blot on the law if the law recognises the existence of no duty on the part of the owner or occupier.
[39] In the present case, there was no real debate that the rockfall risk constituted a substantial and unreasonable interference with Mr Young’s right to use and enjoy his land. There was, however, debate over the extent of the Crown’s duty to respond to that nuisance given:
(a)to date, the rockfall risk had originated primarily from Mr Young’s own land; and
(b)the cost and impracticality of the remedial options proposed.
4 Read v J Lyons & Co Ltd [1945] KB 216 (CA) at 236.
5 Citing the leading decision of Leakey v National Trust for Places of Historic Interest or Natural Beauty [1980] QB 485 (CA).
6 At 523-524.
However, before advancing those arguments, the Crown submitted it had a complete defence to the claim relying on the common law defence of statutory authority. I address that submission first.
Does the Crown have a common law defence of statutory authorisation?
[40] Initially the Crown pleaded two affirmative defences. The first, that s 145 of the Greater Christchurch Regeneration Act 2016 (the GCR Act), (being the successor to the CER Act), provided it with immunity from Mr Young’s claim. The second, is that the Crown could rely on the common law defence of statutory authority. It says it acquired the land in accordance with statutory authority,7 and the continuation of the nuisance was the inevitable result of the Crown’s actions in purchasing and holding the adjacent clifftop properties pursuant to those statutory powers.
[41] Both defences were the subject of a preliminary hearing in 2019, where Mander J rejected the argument that s 145 of the GCR Act provided the Crown with complete immunity from the plaintiff’s claim.8
[42] In respect of the common law defence of statutory authorisation, Mander J held the availability of such a defence would require not just an analysis of the statute itself, but a close examination of the decision making process as it related both to the purchase of the clifftop land and the engagement with Mr Young regarding his property. It would also require an assessment of:9
… wider considerations related both to prospective regeneration plans or options, if any, to remediate the land or discernible public policy objectives and strategies to promote the recovery of the wider community which the red zone decisions appear to seek to give effect.
[43] However, Mander J also noted “the defence of statutory authorisation in a situation such as the present appears to be novel”.10 This was because the cases appeared to require a linkage between the activity authorised by Parliament and the
7 Under the Canterbury Earthquake Recovery Act 2011, s 53.
8 Young v Attorney-General [2019] NZHC 993, [2019] 3 NZLR 809 at [51].
9 At [70].
10 At [68].
creation of the nuisance, whereas here, by purchasing and holding the neighbours’ properties, the Crown had not created the nuisance.
[44] In the end, though, given the limited material before him, Mander J did not consider it was appropriate to determine whether a common law defence was available, and it was raised again in the substantive hearing before me.
Submissions for the Crown
[45] The Crown submits it was authorised to acquire and hold the clifftop properties pursuant to the statutory authority it has under s 53 of the CER Act.11 That section provides that “[t]he chief executive may, in the name of the Crown, purchase or otherwise … hold … land and personal property”. The Crown says it could not have exercised the power under s 53 in a way that could have avoided the continuation of the alleged nuisance. It could not refuse to purchase the clifftop properties as they fell within the red zone. Once it acquired those properties, there was no practical way of mitigating the rockfall risk.
[46] The Crown describes the plaintiff’s proposed remedial measures as a type of “fantastic method” or “extravagant device” which the authorities have rejected as a reasonable way of carrying out a statutory power. Not only will the proposed measures cost significantly more than the value of the land they would protect, they cannot be progressed without a change to the CDP which currently prohibits earthworks and hazard mitigation works in the vicinity of the cliff face.
[47] The Crown rejects Mander J’s observation that “the common law defence appears to be premised on the activity which the statute has expressly or impliedly authorised as having created the nuisance, rather than one that results in an assuming responsibility for it”.12 Relying on X [Minors] v Bedfordshire County Council, the Crown submits the statutory authority defence applies “where the loss suffered by the plaintiff is the inevitable consequence of the proper exercise of the statutory power or duty”.13 The linkage is between the authorised activity and the liability, and it does
11 And then, under its successor, the Greater Christchurch Regeneration Act 2016.
12 Young v Attorney-General [2019] NZHC 993, [2019] 3 NZLR 809 at [69].
13 X [Minors] v Bedfordshire County Council [1995] 3 WLR 152 at 167 (emphasis added).
not require the authorised activity to have created the nuisance. The tort of nuisance can be committed both by positive conduct, or by omission (that is, by failing to abate, and thereby continuing, the nuisance) and the Crown submits a principled application of the defence requires it to be available for both ways of committing the tort. It should therefore be available when the allegation is the Crown has failed to abate the nuisance it inherited through acquiring the properties under statutory authority.
[48] The Crown goes on to say the availability of the defence is reinforced by the fact the alleged claim of nuisance is inconsistent with the statutory scheme and policy of the CER Act. The suggestion the Crown should be liable to restore, as far as possible, the property to its pre-earthquake state ignores the statutory regime and limitations under the CER Act, and its successor. The CER Act laid down specific parameters for the provision of financial compensation. This is only payable to a person who suffers loss resulting from:
(a)land being compulsorily acquired under the CER Act;
(b)demolition of a non-dangerous building by the CERA; or
(c)damage to property caused by the demolition of a building by CERA.
The Crown says the nature of Mr Young’s claim is far removed from these three categories and it falls foul of s 67(1) of the CER Act which expressly states that nothing else in the CER Act “confers any right to compensation or is to be relied on in any proceedings as a basis for any claim to compensation”.
[49] Furthermore, the substance of Mr Young’s claim, which is that the Crown ought to remediate his property, fundamentally cuts across the scheme of the CER Act. In support of this submission the Crown referred to the decision in Marcic v Thames Water Utilities Ltd, where the plaintiff’s land had been repeatedly flooded because of overloading in a section of the sewage system.14 The plaintiff sued the utility company in nuisance, but the claim was rejected. The Court held that what distinguished the plaintiff’s claim from the usual cause of action in nuisance was that it was not a case
14 Marcic v Thames Water Utilities Ltd [2003] UKHL 66, [2004] 2 AC 42.
of deciding what was reasonable between two parties, but involved a very different exercise of dealing with the capital expenditure of an entity which was providing public utilities on a large scale. The Court considered it could not decide whether expenditure on the particular improvements sought by the plaintiff represented the best order of priorities. Furthermore:15
[i]t would subvert the scheme of [the statute] if the courts were to impose upon the [utility company], on a case by case basis, a system of priorities which is different from that which the director considers appropriate.
[50] Applying that to the present case, the Crown argues Mr Young’s claim effectively requires the Court to impose different priorities and financial burdens on the Crown for earthquake recovery purposes which are otherwise governed by the CER Act (and, then, the GCR Act). The importance of prioritising spending in light of available funding was identified in the decision Quake Outcasts v The Minister for Canterbury Earthquake Recovery, where it was said:16
… [f]unding decisions will of course take into account the general priorities in Government spending as well as the purposes of the Act. The Act must also be read as envisaging that the Recovery Strategy and Recovery Plans would be tailored to take into account available funding.
[51] The limits on Crown expenditure was also referred to in the evidence given by Mr Ombler, the former Chief Executive of CERA, where he referred to the following statement in the Earthquake Recovery Plan:
There are limitations on Crown expenditure and the Crown must ensure that any decisions on using public funds are fiscally prudent, taking into account the Crown’s recovery objectives for greater Christchurch as well as its obligations to New Zealand taxpayers. The objectives of the Crown offer cannot be pursued regardless of cost, and there are opportunity costs.
[52] The Crown says the effect of Mr Young’s claim is to seek to bypass the statutory process envisaged under the CER Act to decide where and how to build protective measures and it invites this Court to impose a set of priorities on the Crown expenditure when this Court does not have the requisite overview of how expenditure is best allocated between competing priorities.
15 At [70].
16 Quake Outcasts v The Minister for Canterbury Earthquake Recovery [2015] NZSC 27, [2016] 1 NZLR 1 at [145].
[53]For these reasons the Crown maintains it has a defence of statutory authority.
Submissions for Mr Young
[54] Mr Young, however, argues there are two important principles emerging from the cases on this defence that are relevant to this case. The first is that the defence only applies to a nuisance that is a direct or inevitable consequence of undertaking the statutorily authorised activity. As was said in Powrie v Nelson City Corp:17
In the present case, there is no contest as to whether or not what the respondent set about doing was done in pursuance of its statutory powers. It is agreed that it was. The nuisance, however, arises not from the exercise of the power, but from a consequence of it, namely, the discharge of the stormwater on the appellant’s land … There is no doubt that the doing of the work in the place it was done was authorised by statute. I do not think, however, that the discharging of water on the appellant’s land was “necessarily or inevitably involved” in either the construction or maintenance of the authorised work.
Mr Young says it is difficult to see how it is an inevitable consequence of the purchase of these properties under the CER Act that the Crown must have an immunity from the ordinary incidents of land ownership, as it is able to buy and hold the land regardless of whether the immunity exists.
[55] The second is that the availability of the defence must arise by necessary implication from the particular statute. In Kelly v Hayes, the holders of leases under Land Act 1802 were obliged to clear the land of bush and sought to be exempted from responsibility if fires lit for this purpose spread to neighbouring land.18 However, the Court of Appeal rejected that submission saying:19
[i]f the Legislature had meant to free a [lease holder] from a responsibility which exists in the case of every other holder of land, one would have expected a very clear expression of its intention.
[56] Here the Crown must show as a matter of statutory interpretation, that although Parliament gave an express indemnity in respect of actions of a certain nature,20 it nevertheless intended there should be an additional immunity in respect of actions not
17 Powrie v Nelson City Corp [1976] 2 NZLR 247 (SC) at 250-251.
18 Kelly v Hayes (1902) 22 NZLR 429 (SC) at 434.
19 At 434.
20 Under the Greater Canterbury Recovery Act, s 145.
covered by the express immunity. In light of Kelly v Hayes that cannot logically be advanced.
[57] For these reasons, Mr Young maintains the Crown cannot rely on a defence of statutory authority.
Discussion
[58] I accept that by virtue of the provisions of the CER Act, and the decision made by Cabinet,21 the Crown committed to acquire red-zoned land and, in doing so, it inherited whatever nuisance arose in respect of that land. However, that does not mean the continuation of the nuisance is the inevitable consequence of owning and holding land. Many naturally occurring circumstances which could constitute a nuisance (such as large overhanging trees, or a small section of unstable cliff face), can be remedied relatively simply. In those cases, it cannot be said acquisition of the land will inevitably require the Crown (or any other land owner), to continue the nuisance. Had a modest amount of work been required on the cliff face, for example, to remove some unstable rock to enable Mr Young to continue living on the property, there is little doubt he could have sought to have that work done by the Crown, just as he could with a private land owner.
[59] I also accept there is nothing to suggest that the Crown, by accepting the obligations of ownership, did so on any other conditions than the previous land owner. The CER Act does not, either expressly or by implication, authorise the Crown to own properties free of liability from the usual responsibilities of land ownership. Indeed, the provision of express exemptions from liability for certain acts under the CER Act make it implausible that there was an implied exemption from liability in respect of land acquired using the powers of the CER Act, and its successor.
[60] In my view, the question of whether the Crown was obliged to remedy a continuing nuisance is best considered in the next part of this decision where I discuss the extent of the duty the Crown owes in the circumstances of this case. That can take
21 See the discussion at [43]-[61] of Quake Outcasts v Minister for Canterbury Earthquake Recovery, above n 16.
into account the multiplicity of issues which arise here, including the shared responsibility for the nuisance, the cost and practicality of mitigation options, the relevance of the CER and GCR Acts and the policy considerations which lie behind the powers bestowed on the Crown under those Acts.
Does the Crown have a duty to abate the nuisance?
Submissions for the Crown
[61] If (as I have found), the Crown does not have a complete defence to the claim in nuisance under the defence of statutory authority, the Crown argues it has no more than a “measured” duty of care and it is not obliged to implement the remedial measures proposed in this case, where the cost is out of all proportion to the benefit to the plaintiff, and the community.
[62] As the Crown outlines in its submissions, the genesis of this “measured” duty to abate a nuisance on a defendant’s land is to be found in Sedleigh-Denfield v O’Callaghan,22 and was applied by the Privy Council in Goldman v Hargrave to a case where the relevant hazard had natural causes as opposed to being caused by the occupier.23 In Goldman, the occupier was found liable for the damage caused to neighbouring properties from a fire caused by lightening striking a tree on his property. In that case, it was recognised the standard of care was what was reasonable to expect of the occupier in his or her individual circumstances.24 Account, too, had been taken of the fact “this hazard [has been] thrust upon him through no seeking or fault of his own”.25 However, as the occupier could have extinguished the fire with little effort or expenditure, it was reasonable to expect him to have done this.
[63] In the subsequent case of Leakey v National Trust for Places of Historic Interest or Natural Beauty, the position was summarised as follows:26
22 Sedleigh-Denfield v O’Callaghan [1940] AC 880 (HC) at 897.
23 Goldman v Hargrave [1967] 1 AC 645 (PC).
24 At 663.
25 At 663.
26 Leakey v National Trust for Places of Historic Interest or Natural Beauty, above n 5, citing the headnote.
… an occupier of land owed a general duty of care to a neighbouring occupier in relation to a hazard occurring on his land, whether such a hazard was natural or man made; that the duty was to take such steps as were reasonable in all the circumstances to prevent or minimise the risk of injury or damage to the neighbour or his property of which the occupier knew or ought to have known; that the circumstances included his knowledge of the hazard, the extent of the risk, the practicability of preventing or minimising the foreseeable injury or damage, the time available for doing so, the probable cost of the work involved and the relative financial and other resources, taken on a broad basis, of the parties …
[64] The concept of a “measured duty of care” has continued to be applied. In Holbeck Hall Hotel Ltd v Scarborough Borough Council, the English Court of Appeal found the defendant Council was not liable for a landslip which damaged the plaintiff’s hotel saying:27
I do not think justice requires that a defendant should be held liable for damage which, albeit of the same type, was vastly more extensive than that which was foreseen or could have been foreseen without extensive further geological investigation; and this is particularly so where the defect existed just as much on the plaintiffs’ land as on their own.
The Court also noted that even if the extent of the hazard had been foreseeable, it would not necessarily have been incumbent on the Council to carry out extensive and expensive remedial work to prevent the damage.28
[65] In Lambert v Barratt Homes Ltd, the English Court of Appeal overturned a finding that the Council had breached its duty of care by “failing to construct the necessary drainage ditches and catch pit”,29 because the cost of that work was “obviously likely to be considerable”.30 The Court observed that:31
[a]s a local authority Rochdale might be expected to have access to funds far in excess of those available to the individual respondents, but it is well known that most local authorities are under a degree of financial pressure. Moreover their resources are held for public purposes and are not generally available for the benefit of private citizens.
27 Holbeck Hall Hotel Ltd v Scarborough Borough Council [2000] QB 836 (CA) at 861.
28 At 863.
29 Lambert v Barratt Homes Ltd [2010] EWCA CIV 681 at [24].
30 At [21].
31 At [22].
The Court referred the matter back to the first instance Judge to determine whether the Council was simply under a duty to co-operate with the construction of a suitable drainage system on the land, or whether it was required to do something more, albeit not meeting the whole cost of the relief works.32
[66] Finally, the Crown referred to Vernon Knight Associates v Cornwall Council, where the English Court of Appeal summarised the law as follows:33
(a)A landowner owes a measured duty in both negligence and nuisance to take reasonable steps to prevent natural occurrences on his land from causing damage to neighbouring properties.
(b)In determining the content of the measured duty, the court must consider what is fair, just and reasonable as between the two neighbouring landowners. It must have regard to all the circumstances, including the extent of the foreseeable risk, the available preventive measures, the costs of such measures and the resources of both parties.
(c)Where the defendant is a public authority with substantial resources, the court must take into account the competing demands on those resources and the public purposes for which they are held. It may not be fair, just or reasonable to require a public authority to expend those resources on infrastructure works in order to protect a few individuals against a modest risk of property damage.
Applying these principles in the present case, the Crown submits its duty to Mr Young, if one is held to exist, has been met by its red zone purchase offer.
Submissions for Mr Young
[67] Counsel for Mr Young acknowledges the line of cases referred to above, but cautions against relying on cases such as Marcic v Thames Water Utilities Ltd, which was cited by the Crown, and which related to a nuisance emanating from sewage systems.34 Mr Barker points out there was a very different statutory context which governed those schemes, and the House of Lords itself recognised that the British sewage system was an exception to the more general rules that apply between private land owners.35 In Marcic, there was a statutory complaints procedure, with an
32 At [25].
33 Vernon Knight Associates v Cornwall Council [2013] EWCA CIV 950, at [49].
34 Marcic v Thames Water Utilities Ltd, above n 14.
35 At [59].
associated enforcement regime, which told against a liability in nuisance. In any event, Marcic was a case where there was statutory authorisation for the nuisance and to find there was a separate duty to address the nuisance would be contrary to the statutory scheme.
[68] For these reasons, Mr Barker argues there is nothing to preclude consideration of the remediation options proposed. Furthermore, he says that what Mr Young is requiring the Crown to do will not remove the danger absolutely, nor does it return all his land to its former state, but it is “an alternative that is workable, practical and proportionate”.
[69] In light of these submissions, it is necessary to look at the remediation options which each party proposes.
The proposed solutions to address the nuisance
[70] Mr Young has engaged experienced engineers, from the engineering firm Davis Ogilvie, to prepare a plan to mitigate the rockfall hazard at the property and enable him to repair and use the five houses located on it. The proposal acknowledges the geotechnical hazards outlined at [33]-[34] above. In summary, it proposes the following works:
(a)scaling the rock faces to remove loose rock;
(b)removing approximately 56,800 m³ of fallen talus;
(c)benching the cliff face in the mass movement area on the northwest side of the property, involving 13,600 m³ of earthworks;
(d)building a significant bund (around five metres in height and 300 metres in length), along the two sides of the property threatened by the cliff to protect the area where the existing houses stand.
[71] Mr Shaun Coakley, formerly operations manager, and now general manager, of Protranz Earthmoving Ltd, gave expert evidence of the costs involved in these
works. He has drawn on his experience in carrying out similar works for CERA on properties both above and below the cliffs in the area, including above Mr Young’s property, and at Deans Head and Peacocks Gallop in Sumner. His estimate of costs, includes the cost of obtaining resource consents for the works, totals $4,337,763.43 plus GST. Mr Coakley acknowledges, however, that his costings do not take into account the fact a plan change would be required before resource consents could even be sought for the works. As Mr Allan said, this would involve significant additional cost, possibly running into hundreds of thousands of dollars, with no guarantee of success.
[72] The Crown’s expert, Mr Michael Southby, a chartered professional engineer and certified project manager, initially costed the works at $3.6 million plus GST as he considered some of Mr Coakley’s assumptions overly conservative. I accept the likely cost of the works is somewhere between these figures and is around $4,000,000 plus GST, but noting this does not take account of the cost of seeking a plan change.
[73] While the Crown denies it is liable to implement extensive protection works, it nevertheless had Dr Kupec, from Aurecon New Zealand Ltd, put forward an alternative proposal for remediation of the property. That proposal would enable continued residential occupation of some lots on the property, but takes into account the prohibition on undertaking works in the CCMA1 zone. It assumes that no work could be undertaken within the CCMA1 area, which covers the majority of the property, but also assumes that resource consents could be obtained for rockfall protection works within CCMA2. It would allow around 2,100 m² of the property to be occupied for residential purposes as opposed to the area of 5,800 m² under the Davis Ogilvie proposal presented by Mr Young.
[74]The key features of the Crown’s proposal are:
(a)The construction of two bunds, the first protecting existing houses 4 and 5 from the cliff fall risk to the northwest, and the other running through where Houses 1 and 2 currently exist, but allowing two sections to be created between the second bund and the eastern boundary of the property.
(b)The first bund would need to be approximately 94 m long, four metres high and 4.6 m wide at the base. The second bund would need to be approximately 73 m long, 2.5 m high with a base width of 3.5 m and have a two metre high rockfall protection drape fence on top.
(c)House 3 could not remain in its present position, as it would lie between the first bund and the cliffs on the north western side.
(d)Access would continue via 124A Main Road, but if the original access to the property was to be reinstated the first bund would need to be extended by 35 m, to protect the driveway from rockfall.
[75] Dr Kupec’s proposal would not involve removal of the talus apron, nor benching the cliff top, which he considers could in turn induce further instability in the Balmoral Lane mass movement area.
[76] Despite its more modest nature, it would still be an expensive undertaking. Mr Southby estimates Dr Kupec’s proposal would take about 10 to 12 weeks to implement and cost $1,433,480 plus GST. In cross-examination he acknowledged this did not include a sum for professional fees which were often costed at 10 per cent and, although it included a sum of approximately $28,000 for risk, it did not include a contingency fee. This could be a variable amount and he accepted he had used a 10 per cent contingency fee when pricing the Davis Ogilvie proposal. I therefore consider the actual cost would be at least $1,600,000 plus GST.
Does the Crown have a duty to implement either of these solutions?
[77] The question of whether the Crown is obligated to implement one of the proposed remediation options turns on the scope of the duty the Crown owes to Mr Young. While I have held the Crown is not protected from liability by statute, it does not automatically follow the Crown is liable to fund whatever works are required to protect the property from the nuisance and remediate the damage already caused. The duty is only “a duty to do what is reasonable in all the circumstances, and no more than what, if anything, is reasonable, to prevent or minimise the known risk of damage
or injury”.36 In deciding what is reasonable the Court needs to ask “[i]s it practicable to prevent, or to minimise, the happening of any damage?” and, “[i]f it is practicable, how simple or how difficult are the measures which could be taken, how much and how lengthy work do they involve, and what is the probable cost of such works?”37
[78] It is readily apparent that Mr Young’s proposed solution cannot meet the threshold of being what is reasonable to do in all the circumstances. Quite simply, it is neither practicable, nor cost effective.
[79] The primary barrier is the prohibited status of the works under the CDP. It cannot be reasonable to expect the Crown to embark on the costly plan change process which would be required before it could even seek consent to undertake the works, particularly when the prospects of success are remote. The cost of that exercise is not quantified by Mr Young, but I accept Mr Allan’s evidence that it could involve several hundred thousand dollars and would take 12-18 months to complete, disregarding the cost and time involved in any subsequent appeal. Without a successful plan change the works are unlawful and there is no prospect that this Court would impose such an obligation on the Crown.38
[80] Even if the works were not prohibited by the CDP, I do not consider they meet the threshold of what could reasonably be required of the Crown in all the circumstances. The proposed works will not permit full use of the property as occurred prior to the earthquakes. While it will enable the existing houses to be retained, they will be bound, on two sides, by man-made bunds which will stand between four and five metres high. There can be no doubt that the visual impact of these on the property will be significant and very different from the natural cliff face which previously surrounded the properties. The works will not restore the property to anything like its original state which the Young family took so much pleasure in.
[81] It is also clear the cost of the works would far exceed the value of the property that could be rendered usable by the works. The expert evidence called by Mr Young,
36 Leakey v National Trust for Places of Historic Interest or Natural Beauty, above n 26, at 524.
37 At 524.
38 Pride of Derby and Derbyshire Angling Assoc Ltd v British Celanese Ltd [1953] Ch 149 (CA) at 181, [1953] 2 WLR 58 at 82.
put the 2010 value of the land at $2,300,000 plus GST. However, that figure assumed all the costs of subdivision had been met. The correct value (as I discuss below) must deduct various amounts including the costs of completing the subdivision of Lots 1-4. The expert evidence called for the Crown put the 2010 value of the land at $1,025,000 plus GST (although $1,520,000 plus GST if the subdivision was completed). However, only part of this land would be rendered useable by Mr Young’s proposal. There is no doubt that such a remedial measure, where the cost far exceeds the value of the land rendered useable, is not within the scope of the duty on the Crown to do what is reasonable in all the circumstances.
[82] While the Crown has proposed an alternative remediation option, which is at least potentially consentable under the current CDP, I am satisfied that it, too, could not reasonably be required of the Crown to prevent or minimise the nuisance. First, while the proposal is technically consentable, it is a non-complying activity and there can be no certainty resource consents would be granted for the works as proposed.
[83] Even assuming the consents would been granted, the works cannot be said to be reasonable in all the circumstances having regard to their cost and the fact they will only enable a portion of the site to be used. Houses 1, 2 and 3 could not remain in their current locations, and although two new house sites will be created, they will be quite different in the level of visual amenity afforded to them because of the large rock bunds which would run alongside them to protect them from the risk of rock fall.
[84] The land which would be rendered useable by the Crown’s proposal is valued by the Crown’s expert witness at $934,783 plus GST.39 Even if the value of the Wong and Jamieson houses is added,40 the cost of remediation and of creating the new subdivision, could well exceed the value of what would be preserved. Again, I am satisfied the cost of the works, and the risks involved, are not proportionate to the benefits they could achieve.
39 Using Mr Shalders’ valuations of land value, and excluding the costs of subdivision.
40 Which Mr Shalders says is $460,000 to $500,000, although Mr Foster says they are worth in excess of $1,000,000.
[85] For these reasons I am satisfied it would be unreasonable to require the Crown to meet the cost of implementing either of the two remediation proposals.
Should alternative relief be awarded in the form of damages for the value of the land lost?
Background to the damages claim
[86] Underlying Mr Young’s claim is a sense of injustice that he is not being fully compensated for what he has lost in the earthquakes. It is clear from the history of negotiations between the parties that Mr Young would agree to sell the property to the Crown if he received a higher offer for the land. The primary impediment to this is that the Crown will not recognise the increased value created by the subdivision consent for Lots 1 and 4. That means Mr Young will be out of pocket if he accepts any of the red zone land offers and he seeks to distinguish his position from other red zone land owners through his claim in nuisance against the Crown.
[87] Initially, the Crown, through CERA, offered to purchase Mr Young’s property for its 2007 rating valuation ($2,650,000), or $1,050,000 for the land only, with Mr Young keeping his insurance claims other than the payment for land damage received from the Earthquake Commission. That was unacceptable to Mr Young.
[88] A further hybrid residential red zone offer was made to purchase the property in 2015. CERA offered Mr Young $1,050,000 for the land plus the value of Houses 4 and 5 using an independent valuation undertaken by Quotable Value. His response was to reject this hybrid offer unless the following two variations were made to it:
(a)the EQC land damage payment was retained by him; and
(b)no deduction was made for the EQC residential dwelling payment made to Mrs Wong, which she had retained.
However, CERA was not willing to accept these variations, and the proceedings were subsequently issued.
[89] Before discussing what alternative relief by way of damages should be granted, if any, it is necessary to make findings as to the value of what Mr Young has lost as a result of the earthquakes and the rockfall risk that eventuated. For the purposes of this exercise, I adopt the same approach as the parties and consider the land value only. I ignore the value of Houses 1 to 3 as Mr Young has received insurance payments settling his claims in respect of them. I also ignore Houses 4 and 5 as their value was also settled by the valuations used for the hybrid red zone offer and which Mr Young then used to fix the purchase price when he acquired those houses from Mrs Wong and from the Jamiesons in 2015.
Cost of rockfall protection works
[90] The first issue is what value should be placed on the land towards the front of the property which had consent for subdivision, but where titles had not yet issued. It was common ground there were still rockfall protection structures to be constructed to meet the conditions of the subdivision consent, although the parties differed as to the extent of those works. The cost of that work would affect the net loss to Mr Young if one approaches the issue by considering the value of the land once subdivided, less the costs of completing that exercise.
[91] Dr Kupec identified the work he considered was required to complete the subdivision and Mr Southby gave evidence that those works would have cost $381,000 plus GST. However, Mr Young’s expert, Mr David Bell, took issue with the extent of the work Dr Kupec said was still required and Mr Coakley raised queries in relation to Mr Southby’s costings. Those witnesses say:
(a)the costings should not have included $51,440 for Lot 3 protection works as the Lot 3 rock catch fence had already been built;
(b)the cost of $138,000 for 60 additional rock bolts was excessive, and it was not clear that any further rock bolting was required in addition to the bolting already done;
(c)the sum of $127,000 for preliminary and general works was excessive given it represents a third of the entire contract value; and
(d)the sum of $14,000 for scaling the rockface appears high. $1,000 had already been spent on scaling work and 14 times more such work would not need to be carried out.
[92] I accept that Lot 3 protection works were not required as a rock catch fence had been built alongside Lot 3. However, a rock deflection bund or fence was required for Lot 4. I am also satisfied that some further scaling and bolting work was required but the extent of that work is highly uncertain. As Mr Barker proposed in closing submissions, I consider a figure of $200,000 plus GST is an appropriately conservative assessment of the cost of further works required before subdivision consent could issue, and I adopt that figure.
Value of the property in 2010
[93] The next issue to determine is what the value of the property was in 2010 prior to the Canterbury earthquakes triggering the cliff collapse and compromising the future use of the property.
[94] The valuation evidence for Mr Young was given by Mr Mark Foster, a senior registered valuer employed by Telfer Young Canterbury Ltd, and the valuation evidence for the Crown was given by Mr Shalders, a registered valuer at Ford Baker Valuation Ltd.
[95] I found both valuers’ evidence helpful and there was not a significant difference between them, save when the assumptions they used for the purpose of their valuation differed.
[96] The valuers were largely in agreement over the value of Lots 1 – 4 just prior to the earthquake but assuming titles had issued. Mr Foster assessed the value as
$1,100,000 (plus GST), (or around $1,250,000 GST inclusive) while Mr Shalders assessed the value as $1,205,000 (GST inclusive). However, these values ignored the costs still to be expended to complete the subdivision. They also ignored any discount that would apply if someone was purchasing the property in September 2010 before the subdivision was completed.
[97] Mr Young’s view was that the only cost which should be deducted is the cost of the works to satisfy the subdivision consent condition specifying rockfall hazard protection works. In all other respects, had the earthquake not happened, the subdivision would have been completed and he would have had the benefit of that increase in value.41
[98] Mr Shalders, however, used the conventional assumption of the price a willing buyer and willing seller would agree on should the property be sold just prior to the September 2010 earthquake. In that scenario he assumed that a prudent purchaser would allow for disposal costs, holding costs and would require a suitable profit and risk margin, allowing for the prevailing market conditions in 2010, but also the fact that pre-sales had been made for two of the lots being created.
[99] Despite Mr Young’s view that he was not and never would be a willing seller as at September 2010, the reality is the market value of his property at that date needed to take account of the delay and the risks inherent in the subdivision not being completed. Ironically, the Canterbury earthquake sequence was just the type of risk that could eventuate to thwart a subdivision being completed. In my view, therefore, Mr Shalders’ approach to the valuation exercise was the appropriate approach. However, as I have found, the deduction he made of $381,913 for rockfall protection works was too high. While Mr Shalders does not give a figure for the value of Lots 1 to 4 alone using this method, I am satisfied Lots 1 to 4 would be worth significantly less than $1,000,000 (GST inclusive).
[100] That then leaves the value of Lot 5, the balance lot. Both valuers chose to value that based on the hypothetical subdivision approach which was to assume the value to be achieved by subdivision, but then deduct development expenses, selling expenses and holding costs. Both valuers assumed a subdivision of eight lots, albeit neither had the benefit of a draft subdivision plan, and the key difference between Mr Foster’s and Mr Shalders’ analysis was the average price they assumed for the resulting sections. Mr Foster assumed an average price of $400,000 whereas Mr Shalder assumed an average price of $325,000. These assumed prices were based
41 That is why Mr Foster was only asked to value the subdivision of Lots 1-4 as if it was completed.
on sales prices for other sections in the area.42 However, truly comparative sales were difficult to find and I consider the assumed prices were within the spectrum of prices that could reasonably have been achieved.
[101] I do not dissect that valuation evidence for Lot 5 further because, in the end, Mr Foster’s total figure was $1,200,000 (including GST) and Mr Shalders’ was
$950,000 (including GST) and I consider they represent upper and lower ends of the spectrum of what that part of the property might realistically be valued at.
[102] Mr Foster does not give an overall value for the property that includes holding costs, development expenses and a discount for profit and risk on the subdivision of Lots 1 to 4 so, in my view, his total land value of $2,300,000 exclusive of GST as at 2010 is considerably overstated. Mr Shalders does this exercise and comes up with a figure of $1,155,000 including GST. However, that figure overstates the development cost for rockfall protection measures by almost $200,000 plus GST.43 Accordingly, I find the value of Mr Young’s land as at 3 September 2010 before the earthquake struck was approximately $1,355,000 including GST.44
[103] Mr Young then claimed the value of his land pre-earthquake represented the extent of his loss as the land was now worthless because of the rockfall risk and lack of legal access and Mr Foster gave evidence to that effect.45 Mr Shalders values the property, in its current state, at somewhere between $460,000 and $500,000. However, he bases that on the value of Houses 4 and 5, and on there being access to those properties, and he does not see any additional value in the red zoned land. In practical terms therefore, he also considers the land is now worthless.
[104] It is clear the value of Lots 4 and 5, which are still usable, relies on them having practical and legal access. The Crown initially counter-claimed against Mr Young in trespass as a consequence of him using 124A Main Road, which is in Crown ownership, for access. However, during the hearing, the Crown withdrew that claim
42 In particular, a sale of a 1,882 m² property at 51A Main Road which sold in August 2010 for
$445,000.
43 He used $381,913 plus GST whereas I consider $200,000 plus GST was appropriate.
44 Being $1,025,000 plus $181,000 plus 12.5% GST to reach a GST inclusive figure.
45 Indeed he suggested it may have a negative value.
and, presumably, will continue to allow access at least on an informal basis. However, I expect there would be a cost to formalising that access, and the question of what value the land would have with such access was not the subject of evidence. As neither valuer placed a value on the land itself, I accept it is worthless in its current state. Thus, Mr Young’s loss, in 2010 values, if he receives no compensation, is the value of the land which I have assessed as $1,355,000 including GST.
Is the Crown obliged to pay damages to compensate Mr Young for his loss?
[105] While Mr Young’s preferred form of relief is a declaration that the Crown is obliged to implement the protective works proposed, in the alternative he seeks an award of damages based either on the cost of the remediation works avoided, or on the value of the land he has lost.46
[106] Given my view that the works are impracticable, there is no basis on which I would award the costs of the works, as damages. The only circumstances in which such an order would be made is where the Court expected the plaintiff to implement the works, with the defendant simply funding them. Mr Young cannot lawfully implement his own remediation proposal nor do I consider it reasonable to expect the Crown to fund its alternative remediation proposal.
[107] In the alternative, Mr Young says the value of the land he has lost, which he initially put at $2,300,000 (GST inclusive) then modified during the hearing to a figure of $2,137,500 (GST exclusive), should form the starting point for an award of damages.
[108] I accept the red zone offers Mr Young has received do not reflect the actual value of his land at the time, particularly given the increase in value created by the steps taken towards subdividing Lots 1 to 4. However, this is not a case where I consider the Crown had a legal obligation to compensate Mr Young fully for his loss. There are three key reasons for this.
46 I leave aside for the moment, the question of other damages.
[109] First, as already discussed, a claim in nuisance does not necessarily translate to a duty on a defendant to fully compensate a plaintiff for the loss, no matter how great it is. In practical terms, Mr Young has lost the use of a property valued at
$1,355,000. It is unlikely that private owners of the clifftop properties would have been obligated to meet this cost had they retained ownership of the clifftop properties. I do not consider the Crown should have to meet a higher standard than would be imposed on private land owners.
[110] Secondly, and more importantly, the nuisance which caused the current damage did not emanate solely from the clifftop properties owned by the Crown. The vast majority of the rock which fell on Mr Young’s property during the Canterbury earthquake sequence, emanated from his own land. There has always been a rockfall risk on his property which the Council recognised when it proposed conditions on Mr Young’s five lot subdivision. The rockfall which occurred in 2010-2011 created the talus apron on Mr Young’s property which exacerbates the ongoing rockfall risk to the land. It also rendered the driveway to the property unusable. While Mr Young says the ongoing nuisance now largely emanates from Crown-owned land, I cannot ignore the fact Mr Young’s property has been made unusable because of the collapse of the cliff face which was located largely within his own property. To place the entire burden of rectifying the situation on the Crown would be inequitable.
[111] Finally, in determining what is reasonable to expect of the Crown in the circumstances, I must have regard to the much broader responsibilities which the Crown have taken on following the Canterbury earthquake sequence.
[112] This is not a case where an isolated issue has arisen between two neighbouring property owners. Rather, the Crown has had to deal with almost 8,000 properties located in the areas which were red zoned after the Canterbury earthquakes. These include the properties on the clifftops above Mr Young’s house. The Crown has had to make decisions about how to use its finite resources in a way that treats all those home owners equitably.
[113] The Crown in those circumstances cannot reasonably be required to fully compensate individuals for all their losses. It is entitled to ration its resources to do
the greatest good for the greatest number. As the Supreme Court said in the Quake Outcasts decision “the earthquakes and not the Crown caused the land damage in the red zones”.47 Consequently, the Crown does not have a “duty to each and every resident to do everything possible to ensure that person’s individual recovery from the effects of the earthquakes”.48
[114] While Mr Young seeks to differentiate his position from other red-zoned property owners because of the ongoing nuisance emanating from the cliff top properties, that cannot change the fact his primary loss is a result of the Canterbury earthquake sequence, and there is no reasonable basis on which Mr Young can expect differential treatment from other red-zoned property owners. Indeed, prior to the earthquakes, it seems neither Mr Young, nor the then cliff top property owners, saw the need to implement significant protective works against the rockfall risk. It is only the earthquakes that brought that risk to the fore, and it is appropriate that the remedies offered to Mr Young are consistent with that of other red-zoned property owners. Accordingly, I consider that in making the hybrid red zone offer to Mr Young in 2015, the Crown discharged its obligations to Mr Young appropriately.
[115] The only further comment I will make is that, given the lapse in time since the offer was made, and the fact the Crown has had the benefit of retention of those funds in the interim, consideration could be given to adjusting the hybrid red zone offer by the payment of interest on the sum. However, as I have not had submissions on that issue, I make no finding on it. I reserve leave to the parties to make further submissions on that issue if it cannot be resolved between them.
Can Mr Young succeed on his other damages claims?
Lost improvements
[116] Mr Young seeks $1,448,706.37 plus GST for the cost of reinstating all undamaged external improvements that he says would be destroyed by the removal of
47 Quake Outcasts v The Minister for Canterbury Earthquake Recovery, above n 16, (footnotes omitted).
48 At [177].
rocks as part of his remediation proposal. These improvements include rock walls, driveways, kerbing and landscaping.
[117] I do not consider such losses are claimable. As the Crown says, it is not rational for Mr Young to assert that he will suffer loss through the Crown implementing the very remedial works he argues the Crown is required to undertake. Furthermore, as these losses will be caused by the removal of rocks which largely fell from land owned by Mr Young, it is unreasonable to hold the Crown solely responsible for this loss. In any event, as I have held the Crown is not required to undertake these works, this claim falls away.
[118] Alternatively, had I held Mr Young was entitled to compensatory damages over and above the hybrid red zone offer, the value of these items is already reflected in the value of the land. He would not be entitled to claim separately for these items in addition to being compensated for the value of the property as a whole.
Lost rental for Houses 3, 4 and 5
[119] Mr Young claims lost rental on Houses 3, 4 and 5 of $295,000. This is premised on the Court being prepared to make declarations that the remediation proposal outlined by Davis Ogilvie should have been implemented within a reasonable time following the earthquakes enabling him to rent those properties from 2016. However, as I have held the Crown is not required to implement those works, this claim can not succeed.
Lost chattels
[120] Mr Young claims to have lost chattels in the sum of $125,000 as a consequence of the nuisance itself and of the failure to undertake remediation works. This claim relies on Mr Young’s evidence that he has undamaged chattels which are currently trapped in Houses 1 – 3 and which he has been unable to use for the past nine years as he cannot access them because of the rockfall risk.
[121] Again, this claim assumes the Crown is obligated to undertake remedial works which would allow access to those buildings, a view I have rejected. It also ignores
the fact the chattels are trapped largely as a result of rockfall which occurred within Mr Young’s property.
General damages
[122]Mr Young also seeks general damages in the sum of $50,000.
[123] I have no doubt Mr Young has found the process of living through the earthquakes and dealing with insurers and government authorities stressful, demoralising and draining. I accept it has also put a strain on his marriage. This is consistent with the experience many Christchurch home owners have had through their properties being damaged or destroyed or their land red-zoned, and through ensuing disputes with insurers, EQC, or the Crown. However, an award of general damages will only flow from a finding that the defendant has failed in its duty to the plaintiff and the resultant emotional harm is a consequence of that failure. That has not occurred in this case and I decline to award general damages.
Damages on a diminution of value basis
[124] If the Court was prepared to approach damages on the basis of a diminution of value of the land, Mr Young seeks the following damages in addition to the loss of value of the land:
(a)the lost value of Houses 4 and 5 in the sum of $500,000;
(b)the value of lost external improvements and landscaping;
(c)lost rental in the sum of $295,000;
(d)lost chattels; and
(e)general damages.
[125] The only new claim made which is not already covered as a head of damages above, is the loss of value of Houses 4 and 5 valued at $500,000. However, the Crown has offered to pay Mr Young for these houses at the price established by valuation, and
remains willing to pay him for them in the context of the hybrid red zone offer. I decline to make a specific order to that effect, given the Crown offer to purchase those houses remains open as part of the hybrid red zone offer.
[126] I repeat that the claim for the value of external improvements and landscaping is captured in the claim for the value of the land, and cannot form a separate head of claim.
[127] I reject the claim for lost rental because it assumes a duty to have remediated the property in a timely way, which is a duty I have rejected.
[128] Similarly, I reject the claim for the value of lost chattels and general damages for the same reasons I rejected them in the context of a claim to order remediation works.
Conclusion
[129] Mr Young’s claim seeking declarations that the Crown is required to undertake the remediation works proposed, or for an order awarding damages for his loss, are both dismissed. While I accept the ongoing rockfall hazard constitutes an actionable nuisance, I am satisfied the Crown, through its hybrid red zone offer which remains open for acceptance, met its obligation to do what is reasonable in all the circumstances to address that continuing nuisance.
[130] Costs should follow the event. My initial view is that 2B costs are appropriate. If the parties cannot settle the question of costs, I direct:
(a)the Crown is to file and serve a memorandum on costs within 20 working days;
(b)Mr Young has 15 working days to file and serve a response; and
(c)the Crown is to file and serve any reply, limited to three pages, in a further five working days.
[131]Costs will be determined on the papers unless I need to hear from the parties.
Solicitors:
Crown Law, Wellington
Copy to:
Mr Andrew Barker QC, Barrister, Auckland Mr J Moss, Barrister, Christchurch