Hampton v Canterbury Regional Council (Environment Canterbury)  NZCA 509
Background and issues
In this case Simon Moffatt appealed a decision of Gendall J in the High Court refusing to overturn a decision by the Canterbury Regional Council (“ECan“), which granted Simon’s cousin, Robert Moffatt, a right to take water to the extent that Simon’s water rights to irrigate Robert’s farmland were not exercised.
The dispute arose as Simon had obtained water rights and take allocations through various consent applications to irrigate both his and Robert’s farm. After Simon transferred part of his consent to a third party, the water could only be used on Robert’s farm (as a result of a condition volunteered by Simon). Robert and Simon could not agree on the terms of any use, so the water stayed in the ground. Because of the dispute, Robert sought to obtain his own water take consent. This was granted, but Robert’s consent could only be exercised if Simon’s consent was not being utilised for the purpose of irrigating Robert’s land.
Simon appealed to the Court of Appeal alleging that the grant of consent to Robert resulted in an interference with, and derogation from, the grant of his consent because when Robert exercised his consent, the volume of water able to be taken by Simon, or transferred by him to a third party, would be reduced by the volume of water taken by Robert. In doing so Simon relied upon Aoraki Water Trust v Meridian Energy Ltd  2 NZLR 268 (HC), where the Court held that it would be unlawful for a consent authority to grant another operator a water permit where that resource was fully allocated and it would reduce the amount of water available to satisfy existing consents.
In rejecting the appeal, the Court emphasised that having proceeded with an application to irrigate both his and Robert’s land, it was inconsistent for Simon to then argue that his consent should be varied so that it could be applied to his, and another third party’s land. Further, the Court noted that the granting of the consent to Simon did not give him a “right” to transfer that consent or permit.
Rather, the Court held that: to effect Simon’s transfer, consent was required under both sections 136(2)(b) (for the transfer of water permits) and 127(1) (variations); it was not inevitable that those permissions would be granted; and Simon could not have had a legitimate expectation that he would be able to transfer the permit as that would require ECan’s reconsideration of Robert’s consent.
The Court also rejected Simon’s suggestion that Robert’s consent necessarily resulted in a derogation from his consent because that consent could only be used to irrigate Robert’s land. The Court considered that this was sufficient to distinguish the present case from the situation in Aoraki, and determined that recourse to the non-derogation concept was not necessary. Indeed, it was only if Simon’s consent was seen as a property right, could the grant of a new consent to Robert be seen as causing Simon any detriment.
Similarly, the Court disagreed with statements of the High Court in Aoraki, which suggested that the granting of a water permit creates a right to property. It noted that such a finding was contrary to the provisions of the RMA, in particular section 122(1), which provides that resource consents are neither real nor personal property. The Court held that the decision in Aoraki was incorrect to the extent that it drew a parallel between resource consents and profits a prendre. It also held that the non-derogation principle should not have been applied, as a resource consent does not confer the property rights required to support that principle. Ultimately, the Court found in favour of Robert and dismissed Simon’s appeal.
Despite its findings in respect of the High Court’s reasoning, the Court was careful to confirm that it was not suggesting that the wrong decision was made in Aoraki. The Court commented that the relevant considerations in the RMA and relevant regional plan would be sufficient to ensure that resource consents are not granted where a catchment will become over-allocated.
This decision is a deliberate shift away from the applicability of the principles of non-derogation of grant to applications for water take permits.
While the considerations in the RMA and modern regional plans play a significant role in ensuring that catchments are not over-allocated by new water take applications, the principle of non-derogation has been a useful tool in the past to ensure consent authorities and regional water plans avoid over-allocation. The loss of that tool may cause an issue for existing permit holders and regional councils as new plans are formulated and applications lodged.
In any case, the practical effect of the decision on future water take applications remains to be seen.