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Local Government: Legal Update Edition 1 - April 2018

Edition One: The Year That Was Wynn Williams: Specialist advisers to Regional Councils across New Zealand Access to specialists in any area.


Notes from the Editor Welcome to the first edition of the Wynn Williams Local Government Legal Update. The purpose of this publication is to provide an ongoing review of the legislation and cases that affect local government authorities. I hope that you enjoy the commentary and if you have any questions, comments or something for the next edition, please don't hesitate to contact me.

What's in this Edition Introduction

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Resource Management Act Cases

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Part 2 of the RMA - the role of Part 2 in deciding resource consent applications Part 2 of the RMA and the higher order directions - what about their role in plan making? Extent of RMA functions

Other Cases of Note

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The One Plan Declarations Sufficiency of information in notification decisions Fees and charges

Lucy de Latour - Partner T: 03 379 7622 M: +64 22 097 2504 E: lucy.delatour@wynnwilliams.co.nz

To consult, or not to consult?

Lucy de Latour is a Partner at Wynn Williams. She works as part of the Local Government Strategy & Advisory Team and the Resource Management & Environmental Law Team.

Rating powers of local authorities

Lucy specialises in resource management, environmental and local government law and she has a broad range of experience within her field of expertise. She has detailed knowledge of district and regional plan formation and plan change processes, resource consent applications, resource management related law reform and local government and public works legislation. Her expertise stems from years of practice in the local government space and also as in-house counsel for one of New Zealand's largest Regional Councils, Environment Canterbury.

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Local Government Act 2002 and Rating Legislation:

www.wynnwilliams.co.nz

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Local Authority Liability

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The Interplay of Alcohol Policies and District Plans Confirmed

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Introduction Wynn Williams' local government specialists span offices and teams and work seamlessly together to provide a collaborative and effective approach to legal issues. This inaugural publication of the Wynn Williams Local Government Legal Update examines a range of case law from 2017 affecting local authorities. It touches on some of the key developments under the Resource Management Act 1991 (RMA), particularly in relation to the application of Part 2 of the RMA, a matter which continues to receive considerable attention from the courts. It outlines some other significant cases from 2017, including regarding the extent of council jurisdiction in relation to the interplay between the RMA and the Fisheries Act 1996. The update also outlines the Court of Appeal's decision in Wellington City Council v Minotaur Custodians Ltd regarding the extent of consultation obligations under the Local Government Act 2002 (LGA) and a recent High Court decision concerning the extent of council rating powers. In relation to local authority liability, the decision of the Supreme Court in Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2017] NZSC 190 is examined by some of our litigation specialists. Finally, we consider a recent case concerning liquor licensing and the interplay between district plans and the setting of Local Alcohol Policies under the Sale and Supply of Alcohol Act.

Wynn Williams is a full service, national law firm with a team of 95+ lawyers and support staff across offices in Christchurch and Auckland, New Zealand. We provide advice to private individuals, rural clients, businesses and organisations of all sizes - as well as local authorities, and overseas investors. The firm has a global outlook and services clients from all over the world. Our firm mantra is Listen, Lead and Grow. We are committed to listening to our clients, leading in our legal work to help clients achieve their goals, and growing our client relationships. We are recognised and recommended by the Asia Pacific Legal 500 and Chambers & Partners directories.

Local Government Legal Update | Edition One - April 2018


Local Goverment Advisory Team

Jared Ormsby - National Managing Partner Local Government Strategy T: +64 3 379 7622 M: +64 27 479 7376 E: jared.ormsby@wynnwilliams.co.nz

Philip Maw - Partner Resource Management

Lucy de Latour - Partner Local Government & Resource Management

T: +64 3 379 7622 M: +64 21 155 2172

T: +64 3 379 7622 M: +64 22 097 2504

E: philip.maw@wynnwilliams.co.nz

E: lucy.delatour@wynnwilliams.co.nz

Joshua Shaw - Partner Compliance & Enforcement

Jeremy Johnson - Partner Dispute Resolution

T: +64 3 379 7622 M: +64 21 038 5617

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T: +64 3 379 7622 or 09 300 2600 M: +64 27 418 1654

E: joshua.shaw@wynnwilliams.co.nz

E: jeremy.johnson@wynnwilliams.co.nz

Jonathan Gillard - Partner Property

Charlene Sell - Partner Commercial

T: +64 3 379 7622 M: +64 27 418 1654

T: +64 3 379 7622 M: +64 27 684 5653

E: jonathan.gillard@wynnwilliams.co.nz

E: charlene.sell@wynnwilliams.co.nz

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Resource Management Act Cases 2017 saw yet another amendment to the RMA come into effect in the form of the Resource Management Amendment Act 2017. While this update is focused on recent case law developments, the changes introduced by the Amendment Act have no doubt been the focus of considerable attention from councils. Given the volume of case law generated by the RMA this update focuses on some of the more significant developments.

Local Government Legal Update | Edition One - April 2018


Part 2 of the RMA - the role of Part 2 in deciding resource consent applications No case summary would be complete in the local government space without a comment on the application of Part 2 of the RMA. As many of you will know, the application of Part 2 when determining a resource consent application has been the subject of much contention. The High Court in R J Davidson Family Trust v Marlborough District Council [2017] NZHC 52 confirmed that the rationale in Environmental Defence Society Inc v New Zealand King Salmon Company Limited [2014] NZSC 38 also applies to a consent authority's consideration of resource consent applications under section 104 of the RMA. This means that unless there is incompleteness, ambiguity, or illegality in the relevant planning document, there is no need to resort to Part 2 of the RMA in determining a resource consent application. The current confusion in relation to the application of Part 2 at the resource consent stage can be seen by the varying approaches taken by the Environment Court in Infinity Investment Group Holdings Ltd v Canterbury Regional Council [2017] NZEnvC 36, Pierau v Auckland Council [2017] NZEnvC 90, Save Wanaka Lakefront Reserve Inc v Queenstown Lakes District Council [2017] NZEnvC 88 and Blueskin Energy Limited v Dunedin City Council [2017] NZEnvC 150. In Infinity, the Environment Court held that Part 2 should only need to be considered when dealing with an application under section 104 of the RMA where there is incompleteness, ambiguity or illegality in a relevant planning document which cannot be remedied by having regard to higher order instruments, essentially following the approach in R J Davidson.

In Pierau, the Court did not reach a conclusion as to the correct approach to Part 2, as the outcome in that case would have been the same applying either an overall broad judgment assessment under Part 2, or a precautionary approach confined to the relevant parts of Policy 11 in the New Zealand Coastal Policy Statement (NZCPS), and so did not make a definitive finding. In Wanaka, the appellant appealed against the grant of consent which had been assessed under both an operative and proposed district plan. There, the Court considered that because the case involved a proposed plan in the early stages of consideration, it was necessary to resort to Part 2, thus distinguishing the approach in R J Davidson on the basis that in R J Davidson, there was only an operative plan in existence (the Marlborough Sounds Resource Management Plan). Finally, in Blueskin the Court deviated from the prescriptive approach in R J Davidson, holding that Part 2 considerations may assist when determining the weight to be given to matters in section 104(1)(b). Any direct recourse to Part 2 is not required where policy direction is contained in higher order instruments, absent the three exclusions or caveats in R J Davidson, however Part 2 may assist in informing the exercise of the Court's discretion as to whether consent should be granted. As will be evident from the above, the ongoing role of Part 2 in considering resource consent applications remains somewhat unclear and is likely to be a matter of debate on certain resource consent applications. An appeal against the High Court's decision in R J Davidson was heard by the Court of Appeal late in 2017 and we await the decision.

Extent of RMA Functions The High Court's decision in Attorney-General v Trustees of Motiti Rohe Moana Trust [2017] NZHC 1429 has recently considered the interplay between the RMA and the Fisheries Act 1996. In this case before the High Court, the Trustees of Motiti Rohe Moana Trust were seeking declarations that Bay of Plenty Regional Council planning controls over fishing, to maintain indigenous biodiversity and provide for relationships of MÄ ori with their taonga, were lawful.

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The Attorney-General appealed the Environment Court decision that declared that they were available in some circumstances on the basis that section 30(2) of the RMA prevents a regional council from controlling fishing covered under the Fisheries Act 1996. The Court determined that although the relationship between the RMA and the Fisheries Act 1996 does seem to preclude action, the Fisheries Act 1996 is largely concerned with sustainability as it relates to the future utilisation of


Part 2 of the RMA and the higher order directions - what about their role in plan making? The role of Part 2 in plan making is somewhat clearer given King Salmon was decided in the context of a plan which was required to give effect to the NZCPS. However, the recent decision of the High Court in Royal Forest & Bird Protection Society Incorporated v Bay of Plenty Regional Council [2017] NZHC 3080, provides further clarity on the role of higher order policy and how it is to be implemented in making decisions on planning documents. In this case, Forest & Bird were challenging an interim decision of the Environment Court that declined to amend the wording of the Bay of Plenty Regional Council's proposed Regional Coastal Environmental Plan. Forest & Bird contended that the Environment Court erred in its interpretation of the Supreme Court decision in King Salmon in terms of the hierarchy of planning documents and the NZCPS. The Environment Court took a "contextual" approach where policies conflicted, believing that "avoid" and "appropriate" could take on different meanings depending on the context of the plan and the individual situation. The High Court rejected this approach, and confirmed that the stricter approach of King Salmon still applies. This requires policies being weighed against each other, and those that are more directive carry greater weight. As a result, policies that seek to "avoid" adverse effects are more prescriptive, and take precedence over those

fish as a resource, whereas the RMA has a wider protection element that is not solely tied to utilisation of resources. As a result, the Court determined that the Council could impose controls in limited circumstances, but they must be careful not to duplicate the functions provided under the Fisheries Act 1996, and will need to be satisfied that any control for maintaining indigenous biodiversity is necessary and clearly demonstrated.

regulating "inappropriate" development. The planning hierarchy was also questioned, with the High Court clarifying that although referring to Part 2 may not be necessary, decision-makers should still check against other higher-order planning documents (such as national policy statements) to avoid the message of the policies being diluted, particularly where there is doubt over which policy framework could apply. This applies even if the regional policy statement is settled. Overall, the High Court rejected the Environment Court's "proportionate" approach, believing it to be consistent with the overall broad judgment approach rejected by the Supreme Court. This decision confirms that the strict interpretation of "avoid" to mean "not allow" continues to apply. It also confirms the importance of checking back to higher-order documents for decision-makers to ensure all relevant policies are being given effect to, which will be of importance for councils undergoing plan reviews. And, in yet another take on Part 2, the High Court in Turners & Growers Horticulture v Far North District Council [2017] NZHC 764 took a broad approach to the application of Part 2 in plan making, finding that Part 2 remains relevant to plan making decisions under the RMA due to the obligation to prepare a plan change in accordance with the matters in section 74(1)(a)-(f) of the RMA, which includes a reference to Part 2. This appears to be at odds with aspects of the decision in Royal Forest & Bird Protection Society Incorporated and no doubt this is not the last word on Part 2.

demonstrating the complex and case-specific nature of this issue. However, it does appear that although this judgment does not open the door to unrestricted action by a regional council, they may be able to impose more controls than appear on first glance. However, leave was granted to appeal the High Court's decision to the Court of Appeal on 21 March 2018, specifically regarding the extent of council functions under section 30(2) of the RMA in respect of fisheries resources and maintaining indigenous biodiversity.

The Court declined to make a final declaration,

Local Government Legal Update | Edition One - April 2018


Other cases of note:

The One Plan Declarations: Wellington Fish and Game Council v Manawatu-Wanganui Regional Council [2017] NZEnvc 37 This decision of the Environment Court concerned an application for various declarations made by Wellington Fish and Game Council and the Environmental Defence Society Inc that the Manawatu-Wanganui Regional Council has been failing to correctly implement the Manawatu-Wanganui Regional Plan. The declarations ultimately made by the Environment Court provide a timely reminder about the obligations on and the legal requirements for consent authorities when considering applications for resource consents, particularly for restricted discretionary activities. It also reinforces the importance of managing within freshwater limits, despite the sometimes difficult nature of this task. In short, the decision confirmed that: ¥¥

It is not open to a council to make resolutions that purported to confirm the resource consent process that will apply to activities regulated under planning documents.

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Councils should be cautious about filling the gap by resorting to requesting further information under section 92 of the RMA for fundamental elements of a consent application, such as those matters that should be addressed in an Assessment of Environmental Effects.

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Care needs to be taken when using advice notes. Advice notes or consent conditions purporting to fetter enforcement are unlawful under the RMA.

A detailed summary of the decision can be found here: https://www.wynnwilliams.co.nz/getattachment/ fb7fa3c5-53a9-4255-8d82-5194d43499a1/.aspx.

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Sufficiency of information in notification decisions: Gabler v Queenstown Lakes District Council [2017] NZHC 2086 The High Court considered a judicial review of a decision by Queenstown Lakes District Council not to notify a resource consent application for a commercial activity within a rural zone. One of the particular challenges to the Council's decision was that it had insufficient information to determine the potential noise effects of the activity. The High Court examined case law surrounding the "adequacy" of information required to make a decision on notification, including Discount Brands (Westfield (NZ) Ltd v North Shore City Council [2005] NZSC 17 and the most recent Supreme Court case of Auckland Council v Wendco (NZ) Ltd [2017] NZSC. The Court confirmed that a notification decision requires the decision-maker to be sufficiently and relevantly informed. While a consent authority does not have to be separately "satisfied" of the "adequacy" of information (referring to earlier RMA notification provisions that required that the consent authority to be "satisfied" that it had received "adequate information" before making a notification decision), a consent authority still must decide the level of effects based on a sufficiently and relevantly informed understanding of those effects. In other words, there must be a "secure foundation" upon which important decisions are to be made. A non-notification decision requires the decision-maker to be sufficiently and relevantly informed and to bring that information properly to account in a reasoned way. The judicial review application in the case was not ultimately successful. The High Court found that the Council did have adequate information on potential noise effects to make a relevant and informed decision. However, it serves as a reminder of the level of information required to make a notification decision.

Fees and charges: Porirua City Council v Darryl Berwyn Ellis [2017] NZHC 784 The case concerned additional charges under section 36 of the RMA. Although section 36 of the RMA was amended in 2017, the changes are mainly superficial and do not affect the decision in this case. The decision serves as a reminder for local authorities that these charges must reflect the actual and reasonable costs incurred in relation to a particular activity. The High Court upheld the Environment Court's decision to reduce a processing fee from $78,357.36 (including an initial fixed charge of $4140) to $49,687.72. The Environment Court considered that some of the costs were unreasonable, particularly the Council officer's time (and the fact that the Council officer undertook a number of administrative activities that ought to have been delegated to administrative staff), the traffic engineer's costs and the independent commissioner's costs. The High Court acknowledged that the sole purpose of an additional charge is to recover the reasonable costs incurred by the local authority in respect of the activity to which the charge relates, and that costs must be reasonable and reflect a commensurate fee for the size and extent of the benefit obtained by an applicant. This decision reiterates the need for councils to clearly communicate with applicants especially where costs are escalating and no estimate has been provided. Regularly assessing whether all costs invoiced are related to the application at hand, and appropriately charging based on the level of difficulty associated with an application, is also good practice.

Local Government Legal Update | Edition One - April 2018


Local Government Act 2002 and Rating Legislation To consult, or not to consult? The most significant case in 2017 concerning the various obligations on local authorities under the Local Government Act 2002 (LGA) was the Court of Appeal's decision in Wellington City Council v Minotaur Custodians Ltd [2017] NZCA 302. The decision concerned the extent of consultation obligations under the LGA. Arguably the case goes further than many previous cases to place considerable weight on the wide discretion afforded to councils in how to discharge obligations in relation to consultation. By way of background, Minotaur Custodians Ltd owned a number of apartments in an apartment building in the "suburban centre" zone. Following a review of its 2007 Parking Policy in 2009, the Council identified a number of parking demand issues in both residential and suburban zoned areas. In response, the Council proposed a number of changes to its parking policy. For Minotaur, this meant that although existing residents were protected, any new residents were ineligible for residents' parking permits and could only purchase coupon parking scheme exemption permits (at a significantly higher cost). Consultation documents were sent to over 3,500 residents and nearly 500 other affected parties. Public notices were published in The Dominion Post and The Wellingtonian in addition to being accessible on the Council's website, libraries, and service centres. However, the Council did not specifically consult nonresident owners. Minotaur did not receive a copy of the consultation documents by post and was not one of the targets for active consultation.

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Following lengthy and unsuccessful negotiations between Minotaur and the Council, Minotaur commenced proceedings in the High Court in March 2015, where it successfully argued that the Council should have directly consulted non-resident landlords. The High Court found that the Council failed to act in accordance with its duty to give consideration to those persons likely to be affected and failed to encourage those who may be affected by a decision to present their views. Justice Mallon considered that the crucial flaw in the Council's case was that it offered no logical explanation or rationale as to why it targeted residents and businesses in the affected areas, but not landlords, and therefore inferred that the failure to send consultation documents to landlords was an oversight. However, the Court of Appeal overturned the High Court's decision and held that, despite the lack of explanation in evidence from the Council as to the different treatment of Minotaur, an inference could still be drawn from the record that there was a rational basis for the different treatment between affected classes within the community. The Court of Appeal emphasised that local authorities are afforded a broad discretion as to whether to consult and if so, how to consult, and specifically that Part 6 of the LGA carefully and repeatedly rejects the idea that there is to be found in its provisions any duty to consult with affected or interested parties. Consultation decisions must be rational and consistent with the objectives of the LGA and the particular controlling provisions. The Court of Appeal's approach is certainly more lenient in regards to the broad discretion of council decisionmaking.


Rating powers of local authorities Last year, the High Court reaffirmed the wide ranging powers and broad discretion afforded to local bodies to set rates under the Rating Act in Meridian Energy Company v Wellington City Council [2017] NZHC 48. Wynn Williams published a summary of the case at the time it was released, which you can read in full on our website here: http:// bit.ly/2HGp39f Essentially, Meridian judicially reviewed the Council's decision to create a division to reflect two uses of land on the rural properties that Meridian had its wind farm facilities on, namely the underlying land and non-wind farm related improvements, and the value of the wind farm improvements. The Court commented on the use of the word "part" in section 27(5) of the Rating Act, noting that the natural and ordinary meaning of the word "part" or "parts" does not require the land on which the farm facilities were constructed to be physically separated from the land used for rural purposes when the Council set the differential rates. Requiring the Council to isolate separately identifiable and physically discrete parts of the land under which the wind farm facilities were constructed before setting a differential rate in relation to those facilities, would offend one of the basic purposes of the Rating Act. The Court found the Council had acted lawfully in creating the divisions to the rateable units and emphasised that the intention of the Rating Act is to provide local bodies with flexibility and broad powers to set differential rates.

Local Government Legal Update | Edition One - April 2018


Local Authority Liability The most significant case from 2017 in relation to local authority liability was the Supreme Court decision in Southland Indoor Leisure Centre Charitable Trust v Invercargill City Council [2017] NZSC 190. In this decision, the Supreme Court confirmed that the duty of care owed by councils to building owners includes all forms of building owners, from residential homeowners, owners/occupiers, commercial building owners, and now, developers. Wynn Williams published a summary of the case at the time it was released, which you can read in full on our website here: http://bit.ly/2qREMYA Essentially, the Council issued a code of compliance certificate for the sports and leisure stadium in Invercargill without inspection by the Council's chief building inspector, solely in reliance on the Trust's engineer's inspection. Several years later, the stadium's roof collapsed under the weight of heavy snowfall. The Trust brought proceedings against the Council in negligence and negligent misstatement for issuing a code compliance certificate. The Supreme Court confirmed that a council's duty of care stemmed from its regulatory obligations, and its power and control under the Building Act, and that a building owner commissioning and relying on its own experts cannot displace that duty. The Council owed a duty of care to the Trust in (or despite) the circumstances, and breached that duty of care by negligently issuing a code compliance certificate. While a building owner's specialist consultants may be negligent, this did not by itself absolve the Council of liability. Following this decision, council insurers may well demand tighter processes for issuing code compliance certificates, including increased numbers of inspections.

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The Interplay of Alcohol Policies and District Plans Confirmed The High Court's decision in Hospitality New Zealand Canterbury Branch v Christchurch City Council [2017] NZHC 1360 concerned a challenge by HNZ to a decision made in relation to the provisional Local Alcohol Policy by the Council on 29 September 2016. The decision confirms that a district plan is a relevant consideration when making decisions on a Provisional Local Alcohol Policy under the Sale and Supply of Alcohol Act 2012. The Christchurch City Council's decision, among other things, set a 3 a.m. closing time for on-licence premises on South Victoria Street and a transitional 3 a.m. closing time for those on North Victoria Street, which would be cut back to 1 a.m. after three years (the Decision). HNZ argued that the Decision was unreasonable and did not take into account relevant considerations. In particular, HNZ argued that the Sale and Supply of Alcohol Act 2012 requires any District Council to take into account the objectives and policies of the relevant District Plan. HNZ said that this should have included any proposed District Plan, in this case the Christchurch Replacement District Plan (CRDP). The relevant decisions on the CRDP (made by an independent hearing panel) specifically addressed the extent and importance of entertainment facilities in the city including protection of the existing investment and the relationship of licensed premises / their customers with nearby residents. HNZ said that the Council failed to take this into account when making the Decision. Alternatively, HNZ said that it was unreasonable not to take into account as it was clearly relevant. The Council's argument was multi-layered. First, it contended it was under no obligation to have regard to any District Plan when making the decision because

it had developed a Provisional Local Alcohol Policy. Second, if it was wrong on the first point it argued that it only had to take into account the operative District Plan which did not include the then proposed CRDP or decisions made in relation to it. Lastly, it argued that relevant aspects of the CRDP were taken into account. After a lengthy analysis of the statutory scheme and the development of local alcohol policies under the Sale and Supply of Alcohol Act 2012, the Court found that the Council did have to take into account the District Plan when making the decision on the local alcohol policy. The Court found the "District Plan" as referred to in the Sale and Supply of Alcohol Act included the proposed Plan, being the CRDP and decisions made on it. It was then found that the Council had not had regard to the CRDP. On 23 November 2017 the Council decided not to notify the provisional Local Alcohol Policy and instead start a new policy development process. As justification, the Council cited the development of the city since 2012 (when the provisional LAP was first developed), the completion of the review of the Christchurch District Plan, and the development of the city's hospitality industry since 2012. Most recently, it appears that the Council has voted not to pursue a new Local Alcohol Policy at this time, but may revisit the issue in the future. This means that the default provisions under the Sale and Supply of Alcohol Act 2012 will apply. This decision provides an important reminder to Councils of the statutory interplays between its various functions.

Local Government Legal Update | Edition One - April 2018


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In-house Training for your Team Wynn Williams regularly provides training for local authorities on a range of topics: ¥¥ ¥¥ ¥¥ ¥¥ ¥¥ ¥¥ ¥¥ ¥¥ ¥¥

Freshwater management Local Government and Official Information Act 1987 requests Expert witness preparation and cross-examination Environmental prosecutions Consent processing Plan implementation (including the weight to be given to proposed and operative plans) Biosecurity Act 1993 matters Training for Independent Hearing Panel members General local government related legislative updates and case law updates

We are well placed to assist your Council by providing training for your staff. If you would like to discuss some in-house training, please contact Lucy de Latour. T: +64 3 379 7622 E: lucy.delatour@wynnwilliams.co.nz

I hope that you enjoyed this first edition. The next edition of this newsletter will be issued in August / September and will follow the same theme; we will review decisions, case law and topics that we are seeing as we work with our clients. If there is anything in particular you would like to see or think that your teams would benefit from, please do not hesitate to contact us. We offer a comprehensive in-house training facility and would be happy to talk further about coming to your Council to help your teams upskill. Until the next time...

Lucy de Latour - Partner T: 03 379 7622 M: +64 22 097 2504 E: lucy.delatour@wynnwilliams.co.nz

Local Government Legal Update | Edition One - April 2018


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Wynn Williams Local Government Roundup  

Edition 1 of this Local Government legal publication including case updates, legislative changes and commentary

Wynn Williams Local Government Roundup  

Edition 1 of this Local Government legal publication including case updates, legislative changes and commentary

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