Environmental / Resource Management

This Is Not the Bias You are Looking For - Council Role in the Resource Consent Process

Enterprise Miramar Peninsula Incorporated v Wellington City Council

In the recent High Court case Enterprise Miramar Peninsula Incorporated v Wellington City Council [2018] NZHC 614 the Court made a number of interesting findings on the role of councils in the resource consent application process. The Court: 

  • clarified that the legal test against bias for councils is that, provided the ultimate decision is not made by closed minds then predisposition to a particular result will not invalidate the decision.
  • criticised the practice of councils combining notification and substantive decision-making while noting it does not automatically make a decision invalid.
  • confirmed the purpose of section 34 of the Resource Management Act 1991 (RMA) is to assist councils obtaining additional resources.

The Proceedings

The Court dismissed the challenge by Enterprise Miramar Peninsula Incorporated (EMPI) against consent to a $500 million development of Shelly Bay, Wellington. EMPI sought judicial review on two grounds. First, the decision of the Wellington City Council (WCC) not to engage independent commissioners was incorrect and consequently biased. Second, the decision to grant the resource consent was legally incorrect. The resource consent was granted under the Housing Accords and Special Housing Areas Act 2013 (HASHAA).

Council bias in resource consent applications

EMPI challenged the WCC’s decision to act as the decision-maker in relation to the resource consent. EMPI proposed the WCC was biased as it owned land that would be affected by the proposed development and had publicly promoted the development.  The Court considered the correct legal test against bias when regarding resource consents.

The Court noted there is established case law recognising the dual function of councils. Consequently, it is inappropriate to apply a standard of complete impartiality to councils regarding bias in relation to their exercise of regulatory functions.

The Court affirmed the approach of Baragwanth J in Friends of Turitea Reserve Society Inc v Palmerston North City Council [2008] 2 NZLR 661, finding a predisposition to a result will not invalidate a decision as long as the minds of council decision-makers are not closed to argument. The Court recognised it is inherent in the structure of HASHAA that there will be a degree of cooperation between an applicant and the local authority.

Regarding the Council’s financial interest, the Court held that although the Council may receive some pecuniary benefit as a result of the exercise of a statutory power of decision, it does not vitiate the decision as long as it gave genuine consideration to the application. However, the Court distinguished this from a pecuniary advantage of individual members or officers.

Councils criticised for practice of combining non-notification and substantive decisions

The case dealt with non-compliance with HASHAA procedural rules regarding a decision whether to notify a resource consent application, and on the notification of the decision on a resource consent. EMPI asserted as the statutory time limits were not met in either case, each failure amounted to an error of law.

The Court criticised the practice of councils to incorporate a decision to notify into the final substantive decision. The court affirmed the position of Elias J in Sydney St Substation Ltd v Wellington City Council and Equinox Capital Ltd [2017] NZHC 2489, who criticised the practice in relation to applications made under the RMA, as the reasoning in relation to the notification of a decision is dependent on the reasoning in relation to the substantive decision.

While the Court found failure to comply with both the notification and substantive decision statutory time frames is regrettable, it does not automatically make the decision invalid. Instead, the court took an approach consistent to Venning J in North Holdings Ltd v Rodney District Council HC Auckland CIV-2002-404-002402 11 September 2003, finding the validity of the decision is dependent upon the effect of the procedural breach.  It proposed three factors to consider:

  1.  the nature of the provisions;
  2. the degree of the non-compliance; and
  3. the effect of non-compliance.

In this instance, the Court attributed significant weight to the fact EMPI was not a permitted party to be notified and was not adversely affected.

Section 34A is all about resourcing

The Court examined section 76(2)(d) of HAASHA, which specifically incorporates s 34A of the RMA and authorises a Council to delegate powers and functions to employees and other persons. The court clarified that the purpose of s 34A of the RMA is to assist councils obtaining additional resources rather than being designed to act as a recusal mechanism.

The Court affirmed the decision of MacKenzie J in Wakatu Inc v Tasman District Council [2008] NZRMA 187 (HC), that the decision of a council to accept its own application is administrative in nature, rather than quasi-judicial. Building upon this basis the court found:

  1. the statutory scheme anticipates the dual role of councils;
  2. there is no indication s 34A should be invoked where a Council may be perceived as having a potential conflict of interest;
  3. Its primary purpose is to address resource constraints; and
  4. the Council is under no obigation to appoint independent commissioners instead of delegating its powers to employees.

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