Max Pakinga-Barber

Summary

A decision by a local authority to appoint a chair for a major council-controlled organisation was unlawful for failure to consider the relevance of knowledge of tikanga Māori.

Background

Watercare is the council-controlled organisation (“CCO”) responsible for providing water and wastewater services to Auckland. Auckland Council is the sole shareholder of Watercare, and is entitled to appoint its directors, that power being delegated to a Committee.

Section 57 of the Local Government Act 2002(“LGA”) sets out requirements for the appointment of CCO directors. Section 57(1) requires local authorities to adopt policies that set out procedures for identifying knowledge and skills in CCO directors generally. Section 57(2), meanwhile, requires that when appointing a director for a particular CCO, that the local authority is satisfied that the appointee has the necessary skills, knowledge, and experience to lead the organisation.  

Section 57(3), introduced by a 2019 amendment to the LGA, states “[w]hen identifying the skills, knowledge, and experience required of [CCO directors], the local authority must consider whether knowledge of tikanga Māori may be relevant to the governance of that [CCO]”.

On 12 March 2024, Council staff reported to the Committee that Watercare needed a new chair. The staff identified that te ao Māori knowledge was a skills gap on the current board. This advice reflected wording from the Council’s overall CCO board member appointment policy, which described “knowledge of te ao Māori and established Māori networks” as a core competency for CCO directors.

Following this, the Committee nominated a selection panel, which considered a shortlist of four candidates including Person A and Mr Hunt. The panel recommended that Person A be appointed as chair, and recommended against Mr Hunt’s appointment. The judgment redacted the name of the recommended appointment, so this brief refers to them as Person A.

At the 25 June Committee meeting scheduled to consider the chair appointment, a councillor moved for Person A’s appointment, in accordance with the panel recommendation. However, another councillor moved an amendment that Mr Hunt replace Person A as the candidate (“Appointment Decision”). A majority of the Committee present and voting voted in favour, and the Council went on to announce his appointment as Watercare chair.

The plaintiff, an independent Māori board established under statute, filed judicial review proceedings against the Council

The case

The plaintiff alleged that the Appointment Decision was unlawful on three grounds. They sought a declaration to this effect, as well as orders setting aside the decision, removing Mr Hunt from his role as chair, and making the decision afresh.

First ground – Breach of standing orders

Standing Orders adopted by the Council under the LGA barred “direct negative” motions – those that, if carried, would have the same effect as defeating a motion. The Plaintiff argued that the Appointment Decision breached this rule, as it negated the purpose of the original motion (namely, to appoint Person A as chair).

The Court disagreed. In this case, the purpose of the motion was to appoint a Watercare chair, not to appoint Person A as chair specifically. The Appointment Decision achieved this objective, notwithstanding that it had substituted one candidate for another.

Accordingly, there was no breach of the Standing Orders and the first ground failed.

Ground2 – Failure to consider knowledge of tikanga Māori

The plaintiff argued that the Council had unlawfully failed to consider the relevance of tikanga Māori knowledge in the Appointment Decision.

The Council disputed this. They argued that while there was no direct consideration of tikanga Māori knowledge, s 57(3) had been met as “knowledge of Te Ao Māori” had been identified as a core director competency in the Council appointment policy and in the specific Watercare appointment criteria.

The Court rejected the Council’s arguments for two broad reasons.

First, the wording of s 57(3) clearly required consideration for each individual director appointment. Even if the overall appointment policy showed an expectation that the relevance of tikanga Māori knowledge be considered, this could not establish that such consideration had actually occurred.

Second, the Council had not in fact considered tikanga Māori knowledge at any stage. While they had considered the broader criterion of knowledge of te ao Māori (broadly translated at “the Māori world view), s 57(3) specifically referred to tikanga Māori (a narrower concept relating to rules, practices, and the right way of doing things within te ao Māori).

Knowledge of the former did not imply knowledge of the latter. Section 57(3) required the Council to give attention to knowledge of tikanga Māori specifically. As they had not done so, the Court upheld the second ground.

Ground3 – Significant decision in relation to body of water

The plaintiff argued that the Appointment Decision was a “significant decision…in relation to a body of water”. The Council had failed to consider the cultural and spiritual relationship of Māori to relevant bodies of water, in breach of s 77(1)(c) of the LGA.

While the Court did not reach a final decision on this point, it held that the Appointment Decision was probably not a decision to which ss 77(1)(c) applied. While s 77(1)(c) was likely to apply to many of Watercare’s strategic and operational decisions, the Appointment Decision related to governance, not to any specific body or bodies of water.  

Result

The Court held that failure to consider the relevance of tikanga Māori knowledge rendered the Appointment Decision unlawful. The decision was set aside.

This means that the Council must make the decision again. However, in doing so, they are free to reappoint Mr Hunt, provided they comply with s 57(3) in doing so. Mr Hunt was re-appointed 3 months after his original appointment and one month after the High Court made this judgment.

This raises legitimate questions about the merit of the proceedings.

Litigants in dispute with public bodies should view this case as an illustrative example that a win in court does not mean a good return on investment.

For further information on this case or similar issues, please contact Director, Brigitte Morten.

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Summary

A husband and wife were unsuccessful in claiming against a local authority for a mistaken assurance that their pool complied with the Fencing of Swimming Pools Act 1987 (“FOSPA”).

Background

In 2008, Ms Buchanan and Mr Marshall (“Plaintiffs”) purchased a property in Nelson. A selling feature of the property was its centrally located open-plan swimming pool area.

The Tasman District Council had certified in 2006 that the pool complied with the FOSPA. This was confirmed in subsequent pool inspections in 2009 and 2012.

However, the Council’s advice was incorrect– the pool had never been FOSPA-compliant. The Council made this clear to the Plaintiffs in a pool inspection in 2019, and required the Plaintiffs to undertake expensive remediation, including installing a barrier that undermined the open-plan layout of the pool area and thereby reduced the market value of the property.

It was undisputed that the Plaintiffs were outside of the statutory deadline to make a claim in respect of the 2006certification. Well-established case law recognised that the Council owed a duty of care to the Plaintiffs in respect of that certification.

To get around the claims deadline, the Plaintiffs claimed against the Council in respect of the 2009 and 2012 inspections. They argued the claim on the basis that the inspections had given them a false sense of security that the pool complied with the FOSPA, thereby depriving them of an opportunity to sue in respect of the 2006 certification within the statutory limitation period.

The Council admitted negligence but disputed the existence of a duty of care.

The case

The Plaintiffs claimed against the Council in negligence, negligent misstatement, and breach of statutory duty. They claimed damages reflecting lost market value of their property, remediation cost, and general distress.

The deciding issue in the case was whether the Council owed the Plaintiffs a duty of care in respect of the 2009 and 2012 inspections.

The High Court

The High Court found that the Council owed the Plaintiffs a novel duty of care in negligence.

They found that a duty existed because the Council, as the sole body responsible for conducting FOSPA inspections, was the appropriate party to bear responsibility for failure to undertake them properly. Their statutory function meant it was inevitable that they would provide assurances to homeowners about FOSPA compliance, and that homeowners would take their assurances as read.  The court drew an analogy with well recognised duty of care councils owe to those to whom they issue building and code of compliance certificates under the Building Act.

The court found that a duty in negligent misstatement existed, largely on the same basis.

However, the breach of statutory duty claim was rejected as there was no suggestion Parliament intended that a breach of the FOSPA would be enforceable as a civil action for damages.

The court went on to find that while the 2009 inspection was barred by the 10 year limitation period under the Building Act, the 2012 inspection was within time. Accordingly, the court awarded the Plaintiffs the majority of their claimed damages for lost amenity value, remediation costs, and general distress.

Court of Appeal

The Court of Appeal held that no duty of care existed, overturning the High Court. The result was that the Plaintiff’s claim against the Council for damages failed in its entirety.

The court held that it was wrong for the High Court to analyse the matter as a novel duty of care. They should have applied the orthodox test for negligent misstatement. The requirements for a duty of care in negligent misstatement were as follows:

a)     Advice is given for a purposethat is made known to the adviser (expressly or implicitly);

b)     The advisor knows that advice will be communicated to advisee (individually or as a class);

c)      The advisor knows that the advice is likely to be acted on without independent inquiry; and

d)     The advisee acts on the advice to its detriment

Requirements (a) and (d) were not met in this case.

Requirement (a) was not met because there was no connection between the purpose for which the advice was given and the loss suffered.  The court drew on prior case law that established that the existence and extent of a duty of care owed in respect of a statutory function will be coloured by the purpose of the empowering statute.  

The purpose of the Council’s inspection function under the FOSPA was to minimise the risk of harm to children. However, the claimed duty related to economic interests of property owners (who were the subjects rather than the beneficiaries of FOSPA regulation) in preserving their ability to sue the Council in respect of prior acts of negligence. Recognising such a duty would have clashed with the scheme of the FOSPA.

Requirement (d) was also unmet, in that the Plaintiffs had in no way relied on Council statements in the 2009 and 2012 inspections. They were not planning to sue the Council at any point prior to 2019. Reliance on the statements may have promoted a false sense of security, but it did not lead the Plaintiffs to take any step they would not otherwise have taken.

Accordingly, no duty of care in negligent misstatement existed. Following from this, the court refused to recognise a novel duty of care in negligence, holding that to do so would cut across the already well-established law.

Result

The Plaintiffs failed in their claim for damages against the Council on the basis that no duty of care existed.

The decision has the hint of unfairness, given that the Council was admittedly negligent in their original and subsequent inspections. However, as the Court of Appeal noted, the unfairness arose as an inevitable side effect of statutory limitation periods. It was not appropriate for principles underpinning the law of torts to be distorted, however harsh the consequences may have been for the Plaintiffs.

Update: On 20 August 2024, the Supreme Court granted the Plaintiffs leave to appeal. The sole question on appeal will be whether the Court of Appeal was correct to hold that there was no duty of care owed by the Council to the Plaintiffs when carrying out FOSPA inspections. The hearing was in March 2025 but the parties settled before a judgment was delivered.

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For information on this case or similar issues please contact Brigitte Morten, Director

Summary

A resource consent for an intensive social housing development was quashed by the court for failing to notify an affected person.  

Background

The Resource Management Act 1991 (“Act”) categorises activities that determine whether a resource consent is required, and the level of scrutiny that consent applications must be given.  Local authorities are empowered to create  plans and rules which control land use in its district using these statutory categories.

Where a land user applies for resource consent, local authorities must notify ‘affected persons’ of the consent application. An affected person is someone who stands to be affected by the activity in a way that is minor or more than minor. Failure to notify affected persons can render a resulting consent invalid.

The Auckland Unitary Plan is the prevailing district plan in Auckland. The plan sets out zoning rules for various areas of Auckland, as well as creating ‘overlays’. Overlays are areas within a district that change or add to zoning rules that apply to that area.

In May 2022, Kainga Ora applied to Auckland Council for a resource consent for an intensive social housing project in the Manukau CBD (“Development”). The zoning rules set out in the plan classified intensive housing as a permitted activity, but the medium aircraft noise area overlay (“Overlay”) that applied to the Development classified intensive residential development as a discretionary activity requiring a resource consent.

The Overlay existed to protect Auckland Airport from ‘reverse sensitivity’ effects. Reverse sensitivity here meant the risk of increased airport noise complaints from residents, which could potentially disrupt airport operations.

The Council considered that Auckland International Airport Limited (“AIAL”) was not an affected person. They concluded that any reverse sensitivity effects from the Development were likely to be less than minor, on the basis that the development complied with acoustic standards within the Overlay. Accordingly, they decided not to notify AIAL of the consent application (“Notification Decision”) and granted the consent soon after.  

When AIAL discovered that the consent had been granted, they challenged the Notification Decision and the consent via judicial review.

The case

The Court held that the Notification Decision was unlawful for three inter-related reasons.

Misinterpretation of the Overlay

The Council made the Notification Decision on the basis that if an application complied with acoustic standards in the Overlay, its reverse sensitivity effects would be less than minor and it would not require notification. The Council reasoned that as the underlying zoning rules were permissive of intensive housing, an acoustic assessment was all that was needed. Additionally, they emphasised the lack of explicit density controls in the Overlay.  

The Court rejected the Council’s interpretation. The clear intent of the Overlay was that it superseded the underlying zoning rules. The policy behind the Overlay was to protect airports from reverse sensitivity effects, regardless of the zone in which those effects occurred. The terms of the Overlay specifically contemplated that new residential activities be avoided unless their effects could be mitigated through acoustic design standards and controls on density. High density developments increased the pool of potential noise complainants, a factor highly relevant to reverse sensitivity effects.

By relying on compliance with acoustic standards as the sole criterion, the Council had effectively treated the Development as a permitted activity under the plan, despite the Overlay explicitly saying a resource consent was required.

Failure to undertake adequate analysis of reverse sensitivity effects

The Court held that the Council had also erred in failing to undertake an assessment of all relevant effects on AIAL before making the Notification Decision. This requirement to assess effects was implied from the legislation.

The Council argued that their assessment of acoustic effects, in reliance on an engineer’s report, was sufficient to satisfy the requirement. The Court disagreed, holding that a broad assessment of all relevant noise effects or how those might have led to reverse sensitivity effects was required. This would have required a consideration of the cumulative noise effect on residents, including that aircraft noise would recur multiple times per hour, and that people in the outdoors would have to pause conversations or shout regularly.

‍Reliance on inadequate information

Finally, the Court held that the Council had erred in making the Notification Decision on the basis of inadequate information.

Examples of inadequate information on which the Council based their decision included a reliance on unrepresentative flight data collected during Covid-19 restrictions, as well as information about forecasted flight frequency. Adequate information on these points was necessary to accurately determine the level of disruption caused by aircraft noise and thereby the risk of noise complaints.

‍Result

The errors identified by the Court rendered the Notification Decision unlawful. Because the Council had not complied with the notification requirements of the Act, the resource consent issued for the Development was invalid. Should Kainga Ora wish to progress the development, it will need to re-apply for the consent on a notified basis. As a notified party, AIAL will have rights under the Act in respect of any consent issued, including the right to appeal the consent to the Environment Court.

The case is a prime example of the stringent approach to notification that has traditionally been applied by the courts. The decision suggests that where there is any room for doubt, consenting authorities should notify. The result of failure to do so here has been a delay of two years and counting for a major social housing project.

For future information on this case or similar issues please contact Brigitte Morten, Director