Case Law

Judicial Review – Importance of recognising and applying the right legal tests

Judicial Review

Author: Bronwyn Carruthers (Partner) and Sarah Glenn (Solicitor), Russell McVeagh
Number: NZHC 2518
Court: High Court
Party: Macpherson and Matheson v Napier City Council and Anor [2013]

Background

Whatever It Takes Trust Inc (“Trust“) sought consent for a multi-unit development (“Development“) opposite Macpherson and Matheson’s (“M“) property in reliance on a controlled activity status under the relevant plan.  Two issues arose – firstly, the Development was not fully compliant with the relevant standard in relation to garaging, and secondly, the application was silent on the consent required under the National Environmental Standards for Assessing and Managing Contaminants in Soil to Protect Human Health Regulations 2011 (“NES Regs“) despite the site, formerly a scrap yard, being listed on the Hazardous Activities and Industries List.

Napier City Council (“Council“) informed the Trust of the issue with the garaging non-compliance, but did not raise any issues with the lack of an application under the NES Regs.

A new site layout plan was lodged with the Council that showed compliant garaging.  However, by that time, the Council had notified Plan Change 5 (“PC5“), which changed the activity status of the Development from controlled to discretionary.  PC5 was notified after the application was lodged, but before the garaging non-compliance was remedied.  

M sought judicial review. M’s grounds of review included that the decision involved errors of law, was unreasonable, and that the Council failed to take into account mandatory considerations.  In briefly considering the relevant judicial review principles, of interest the Court noted that “satisfying the requirement to take into account relevant matters…rests on the Council first recognising the right legal tests to be applied”.  The Court stated that the primary issue to be resolved was whether or not the application should have been treated as a controlled activity. 

Section 88A  

While the garaging was made compliant, this was not done until after PC5 had been notified.  The Court discussed s 88A, which “saves” the activity status of applications from the effects of plan changes that are notified after lodgement.  Section 88A reads:

88A Description of type of activity to remain the same

 (1)    Subsection (1A) applies if—

(a)             an application for a resource consent has been made under section 88 or 145; and

(b)             the type of activity (being controlled, restricted, discretionary, or non-complying) for which the application was made, or that the application was treated as being made under section 87B, is altered after the application was first lodged as a result of—

(i)              a proposed plan being notified; or

(ii)              a decision being made under clause 10(1) of the First Schedule; or

(iii)             otherwise.

(1A)           The application continues to be processed, considered, and decided as an application for the type of activity that it was for, or was treated as being for, at the time the application was first lodged.

(2)             Notwithstanding subsection (1), any plan or proposed plan which exists when the application is considered must be had regard to in accordance with section 104(1)(b).

(3)             Repealed.

The difficulty faced here was that by the time a fully compliant application for a controlled activity was received by the Council, PC5, which changed the Development to a discretionary activity, was in effect.  The Court considered that if, when first lodged, the Development had been fully compliant, then there was no doubt that s 88A would have preserved the controlled activity status.  However as this was not the case, the Court went on to discuss the interpretation of s 88A, and in particular, the meaning of the phrase “was treated as being for the time it was first lodged“.

M argued that the phrase has no application here and was intended to only cover s 87B which sets out when certain activities are “to be treated as” discretionary or prohibited rather than referring to the way an activity was treated by the Council.  The Trust argued that the Council was at all times treating the application as if it were for a controlled activity (despite the fact that it was not).  The Court acknowledged that provisions are to be read in context and within the overall purpose of the Act and agreed with M that the purpose of the phrasing was intended to cover s 87B activities, rather than situations where a Council treated an activity in a way that is inconsistent with its classification.  The Court also referred to the s 104(5) power to grant consent for a different activity than what was applied for if that is the correct classification – signalling a clear intention from Parliament that it is “the substance of an application [that is] the determinative factor, rather than the form of activity expressed in the application”.  The Court went on to state that the contrary interpretation, that the operation of the saving provision in s 88A was dependent on the attributed form that a consent authority gave to classifying an application, would “make a nonsense of the Act”.  The Court therefore held that the controlled activity status could not be saved by s 88A simply because it was presented as a controlled activity despite being non-compliant and the Council chose (despite its knowledge of that non-compliance) to treat it as such.  The Development was a restricted discretionary activity at the time it was lodged, and at the time PC5 was notified.

NES Regs

As the Development did not meet the controlled activity requirements of reg 8 of the NES Regs, by default a consent was required under reg 11 as a discretionary activity.  This consenting requirement was never considered by the Council or the Trust, potentially due to the NES Regs having only just come into force.  The Council instead sought to address the NES Regs via conditions of consent requiring that certain assessments be undertaken. 

The Court held that the Council had failed to recognise the need for a consent under the NES Regs and the conditions did not replicate the very specific requirements of reg 8: “by failing to process the Trust’s proposal in accordance with the NES Regulations, the Council inadvertently overlooked its statutory obligation to fully observe the NES Regulations”

Bundling

The Court then went on to discuss the issue of consent bundling and whether the discretionary consent under reg 11 would only apply to the part of the proposal relevant to the NES or would result in the entire Development being considered as a discretionary activity. 

The Court recognised that the Act is silent on bundling but allows for a Council to defer decision making until all relevant consents are lodged where consents are inter-connected and that as a result, bundling will turn on the extent to which the consents overlap.  In discussing case law the Court observed that in some cases a holistic approach has been preferred and the proposal considered in terms of the most strictly controlled activity, while in others the Courts have taken a hybrid or component based approach.  In considering the Development the Court found that “consideration of each would affect the other, so each was mutually co-dependent on the other…there could be no construction of the multi-unit residential development without some disturbance to the soil”.  The Court concluded that an overall assessment of the proposal should have been undertaken as a discretionary activity as that was the most restrictive status. 

Relief

M sought that the resource consent be set aside and the decision freshly determined.  They contended that there had not been delay and that the same decision would not necessarily be made when correctly assessed as a discretionary activity.  The Council and Trust opposed this relief and argued that the same outcome would be reached as the Development would be assessed as a controlled activity because the site had been remediated in accordance with the NES.  The Trust also argued that to grant the judicial review would cause loss, undue delay and additional expense as a result of it relying on the grant of consent to declare its purchase contract unconditional and complete settlement.

The Court recognised that even where the action subject to review is found to be unlawful, it has a residual discretion around whether to grant relief.  Considering first the issue of delay, the Court held that while delay can lead to a denial of relief, in this case delay is not a reason to refuse relief as M brought the judicial review proceedings in a reasonable time.  The Court then considered the gravity of the error, absence of an injustice, the practical value of the relief and the inevitability of outcome together as those grounds for refusing relief overlapped.  It held that the errors made by the Council were serious, more than technical defects and that the “same outcome is by no means inevitable“.  Even with the remediation, the Development would not be able to be considered as a controlled activity due to PC5 and would at best be a restricted discretionary activity.  Further, the Court considered that the Council’s non-compliance with the NES Regs by-passed the entire scheme, undermined the integrity of the NES regime as a whole and displayed a serious disregard for the resource management requirements it is obliged to adhere to.  The Court did recognise that the Trust would suffer the consequences of the Council’s error but also that the Trust must take responsibility for its incomplete application. 

Finally, in considering the case to be analogous with Turners & Growers Horticulture Ltd v Far North District Council [2012] NZRMA 435 and Akaroa Marine Protection Society Inc v Minister of Conservation [2012] NZAR 655, the Court held that as the same outcome cannot be assumed, the decision to grant resource consent should be set aside.