Environmental / Resource Management

Duty of Care in the Context of Regulatory Action?

Introduction

In the recent decision Daisley v Whangarei District Council [2018] NZHC 2211 the High Court dismissed an application for leave to bring a summary judgment application against the Whangarei District Council (Council) and Mr Peters. In the process of reaching this decision the High Court provided some interesting commentary surrounding local authority liability in relation to the duty of care owed to landowners when taking regulatory action. 

Background

In December 2004 the plaintiff purchased a property where a quarry, which was operating at the time of the purchase, was located.  Before settlement, the plaintiff obtained a LIM report from the Council with no reference to a land use consent for the quarry operation. The plaintiff continued to operate the quarry through a limited liability company controlled by him, but was issued with a series of abatement notices, infringement notices and an application for an enforcement order by the Council, between February 2005 through to April 2009.

During this time the Council made assertions that the operation of the quarry was an unconsented and unlawful use of the land. The plaintiff objected to the notices contending, inter alia, that he and his predecessor had paid rates consequent upon Council mineral rate notices and that the quarry had long been operational. The plaintiff did not respond to the notices by stating there was a land use consent and the Court suspected that the plaintiff had no reason to consider that such a consent existed.

Ultimately the plaintiff ceased the quarrying operation, as a result of the enforcement proceedings taken against him. Following the cessation of quarrying, a land use consent dated 1988 was located at the offices of the Council by an employee of Mr Peters.

Claim against the Council

The essence of the plaintiff’s claim was that the Council unlawfully issued the abatement notice and related proceedings and, consequently, the plaintiff had to close the quarry, losing profits. The quarrying operation ceased as a result of the enforcement actions brought by the Council.

The plaintiff sought summary judgment against the Council claiming liability on the grounds:

  • Breach of a statutory duty under the Resource Management Act 1991 (RMA)
  • Negligence when using abatement, infringement and enforcement notices under the RMA

The Council raised the following defences:

  • Limitation
  • The plaintiff does not have standing to bring a claim for loss, due to the quarrying at all times being conducted by a limited liability company
  • The Council caused no loss
  • Contributory negligence

Summary judgment

The plaintiff was required to obtain leave to bring a summary judgment application as it was not filed at the same time as the statement of claim served on the defendant. Leave was declined to make an application against the Council for a number of reasons, including because the Court was not satisfied the Council had no arguable defence. 

Council’s arguable defences

The High Court held that a claim for a breach of statutory duty against the Council requires the plaintiff to show that a statutory provision has been breached that is actionable by way of a claim for damages.

The Court held the breach of s 35(5)(gb) of the RMA, which requires every local authority to keep adequate records of all resource consents, did not cause any loss because the plaintiff purchased the property on the basis of no resource consent.

The plaintiff also relied on s 322(4) of the RMA, which provides that an abatement notice must not be issued unless the enforcement officer has reasonable grounds for believing that a circumstance exists which warrants its issue. While the Court accepted loss was caused by breach of s 322(4), as the abatement actions ultimately brought an end to the quarrying, it is questionable whether there is any action for breach of statutory duty, in addition to the other remedies available under the RMA.

Does a local authority have a duty of care under the RMA?

The High Court examined authorities which held that there is no action for damages or breach of statutory duty under the RMA, before finding it to be a slight over-reach to say there can never be an action for breach of statutory duty under the RMA. The Court proceeded to discuss the difference between breach of a statutory duty and a claim for negligence.

An action for negligence requires that the plaintiff establish there is a duty of care owed by the Council when it is prosecuting a landowner. The Court examined case law which established:  

  • Local authorities making decisions on resource management issues do not owe landowners a duty of care
  • Local authorities issuing building consents do owe a duty of care
  • The Court could find no authority where a Court has considered whether a local authority, taking regulatory action by way of prosecution or otherwise, owes a duty of care to a landowner.  Therefore, the alleged duty of care would be a novel one.

The Court accepted the alleged duty of care would be a little closer to the building consent scenario as the local authority is acting more in a quasi-judicial capacity. However, whether there is a duty of care or not, can only be established by considering all of the circumstances to see whether there is a proximate relationship and what are the applicable policy and other considerations. It may be that the Council is only liable for wrongful prosecution where the prosecution amounts to misfeasance or is malicious.

The Court found whatever the answer, a summary judgment was clearly not appropriate based on negligence under the RMA. The Court also recognised that the limitation defence could not be ruled out.

The Court dismissed the summary judgment application against Mr Peters, as the claim was dependent upon a good claim against the Council. The defendants were held to be entitled to costs against the plaintiff.

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