Palmerston North Airport Limited v Palmerston North City Council [2026] NZHC 224 is a judicial review of a decision to process a resource consent application for a resource consent on a non-notified basis.  The High Court was required to consider the extent to which environmental decision makers can accept the assurances of resource consent applicants that a proposal will comply with certain requirements without interrogating the evidence or feasibility of those assurances.  The High Court was also called upon to consider whether a series of errors in the information that was before the decision maker were material to the decision to process the application non-notified.

The Airport Development Proposal

The Palmerston North Airport (the Airport) is unlike other airports in residential areas as it operates 24 hours a day. The Airport’s masterplan recorded that businesses are likely to be attracted to the surrounding area to take advantage of proximity to the Airport. In this case, Paul Barris and Brian Green Properties (Palmerston North) Limited (the Developers) intended to do exactly that through a joint venture to build a commercial storage facility. The proposed building would consist of 296 units, with external dimensions of 198 by 27 metres. Importantly, if built as planned the nearest edge of the building would be 150 metres from the south-eastern corner of the runway.

In late 2023, the Developers first applied to the Palmerston North City Council (the Council) for a resource consent on a non-notified basis. However, in September 2024 an Independent Commissioner appointed by the Council (the Commissioner) determined that the application should be the subject of limited notification to enable the Airport to make submissions as an affected person.

Instead of proceeding on a notified basis, the Developers submitted an amended application in October 2024, which sought to address the aspects affecting the Airport. The Commissioner allowed the application to proceed on a non-notified basis, and a subsequent resource consent was issued on 17 February 2025.

Judicial Review of Notification Decision

The Airport sought judicial review of the Commissioner’s decision that the application could proceed on a non-notified basis. The Airport submitted that the information advising the Commissioner’s decisions was materially inaccurate and therefore, it should have been quashed. The Developers acknowledged that there were some errors, but they argued that the errors would not have made any difference to the notification decision and therefore, it should stand.

The Developers engaged an expert aviation industry consultant who prepared four formal reports in support of the application. The expert ensured that the storage facility complied with both the requirements in the District Plan and the Civil Aviation Rules. The particular rules at issue in this case were the obligations to have sufficient Airport Protection Surfaces (APS) to keep the runway clear of obstacles, and a Runway End Protect Area (REPA) to protect people on the ground in the event of an accident.

The initial resource consent required notification because the construction phase was expected to penetrate the APS, creating potential adverse effects for the Airport. In the revised application, however, the developer made a series of minor amendments and assured the Commissioner that it no longer sought consent to breach the APS, either during construction or once the facility was completed. On that basis, the Commissioner accepted that the consent would not authorise any such breach.

In the revised application, the maps showed that part of the facility would fall within the REPA. In order to comply with the REPA, the Developers added a condition to the application in which no more than nine people would be allowed inside the facility at one time through a technology-based solution. The Developers proposed that every business at the facility would be issued with an access card which they must tap to enter and leave the building. Once nine people are inside the building, no-one else will be permitted to enter until someone leaves, ensuring the development always adheres to the nine-person limit under the District Plan.

The revised application addresses the APS issue by proposing dig the stormwater trench in a shape that curved away from the runway, as opposed to running parallel with it. This would provide an extra 90 centimetres of head room for aircrafts to pass over.

It was uncontested that the information provided in the revised application contained several errors. Such errors meant the proposed changes were no longer viable. The issue before the Court was whether those errors were sufficiently material to justify setting aside the Commissioner’s decision not to notify. The first error was that the planning maps failed to show that the facility and its entire carpark would be inside the REPA. The second was that the plans did not reveal that the whole building would permanently protrude above the APS. The final issue was that the Commissioner had been led to believe that a similar development would be acceptable near an airport in the United States, but this proposition was incorrect.

JV argued that the errors were immaterial and that it was up to the JV to find a lawful solution and it did not matter that it had not done so yet. In response, PNAL’s counsel submitted that it was impossible to be confident the Commissioner would have recommended the application proceed on a non-notified basis if she had been aware of the true picture. For example, it was difficult to imagine how the JV proposed to build such a major structure without construction equipment or earthworks ever protruding more than a couple of metres into the air. If such a feat is possible, counsel submitted it was at least incumbent upon the developer to give the Commissioner an idea of how the work might be undertaken without breaching the APS zone.

Outcome

The Court held that these errors were fundamental, given the scale of the facility and its proximity to the runway. These mistakes cannot be characterised as immaterial as they deprived the Commissioner of the necessary evidence to properly assess the development discount the risks it created. Therefore, the Commissioner’s notification decision and subsequent resource consent were set aside.

If you need advice on any of the issues raised in this article, please contact Joanna Beresford | Environmental Partner | 021 114 1277    

Disclaimer. The information in this article is intended to provide a summary of the topic covered and is for general information only. It is provided without charge, is not comprehensive, and does not provide legal advice or other advice. Please seek independent advice before acting on any information in this article.

The RMA as introduced was founded on the notion of public participation. The concept was that it was fundamental for local authorities to have the information needed to properly assess the effects of proposals on the environment. On this basis, the public would be expected to be accepting of development proposals in their community, safe in the knowledge that potential issues would be thoroughly canvassed and the effects of development, avoided, remedied or mitigated.

Successive legislative amendments to the RMA have progressively eroded this approach. New plan making processes have evolved the planning system to become more focused on speed and efficiency (and more recently achieving development outcomes) over public participation. These processes may be fast, but as this article explores, they may also come at a significant increased cost if planning durability is compromised.

RMA Public Participatory Regime

Public participation has been regarded as a fundamental pre-requisite for achieving sustainable development since the World Commission on Environmental Development published the Brundtland Report. The primary objective of the Brundtland Report was to address sustainable development; however, it simultaneously created a platform for public participation. The Brundtland Report said:

“The law alone cannot enforce the common interest. It principally needs community knowledge and support, which entails greater public participation in the decisions that affect the environment. This is best secured by decentralizing the management of resources upon which local communities defend, and giving these communities an effective say over the use of these resources. It will also require promoting citizens’ initiatives, empowering people’s organizations, and strengthening local democracy.”

The RMA was founded on the principle that increased public involvement in resource management processes results in more informed decision making, and ultimately better environmental outcomes^.. In Westfield (New Zealand) Ltd v North Shore City Council [2005] NZSC 17 the Supreme Court stated that the objective of these participatory mechanisms was to recognise and protect the rights and interests of those affected and enhance the quality of decision making. This was the prevailing ethos for the first two decades of the RMA’s existence, with the proposition that increased public involvement in resource management processes results in more informed decision making, and ultimately better environmental outcomes, described as a founding principle of the RMA.

Successive Shifts in Plan Making Process

Under the original process, when a council initiates a plan change, it is required to notify the public. At the council level any person can make a submission on the proposed plan change. After initial submissions, there is a further submission stage where people can support or oppose other submissions. Hearings are required, allowing submitters to present their views and evidence for consideration. Decisions on the submissions require explanations as to whether they are accepted or rejected. Submitters retain full rights of appeal to the Environment Court with a hearing de novo on the merits. In addition, in relation to resource consents the original process was that notification of the application, which triggered a submission process, was presumed to have to occur.

In 2009 a fundamental shift occurred with the enactment of the Resource Management (Simplifying and Streamlining) Amendment Act 2009, which removed the statutory presumption of notification in resource consenting.

Since that time there have been conscious efforts aimed at curbing the significant amount of the time taken for plans to become operative, in particular the time spent resolving appeals to the Environment Court. Initially bespoke processes were to address urgent issues in particular regions, but the principles were later incorporated into the RMA generally. In terms of bespoke processes:

• The Auckland Unitary Plan hearing process, introduced by the Local Government (Auckland Transitional Provisions) Act 2010, was a streamlined process where an Independent Hearings Panel (IHP) heard submissions and made recommendations that Auckland Council then decided on. The rights of appeal to the Environment Court were limited to where Auckland Council departed from the IHP’s recommendations, otherwise appeals were limited to the High Court on points of law.
• A similar process was adopted following the Canterbury Earthquake Recovery Act 2011, where instead of the Christchurch City Council (CCC) hearing submissions itself, an IHP was appointed to conduct hearings and make decisions on the proposed replacement Christchurch District Plan. Decisions made by the IHP had a limited right of appeal to the High Court, restricted to points of law only.

Subsequently, the Resource Legislation Amendment Act 2017 introduced a new Streamlined Planning Process (SPP) under which councils can request, directly from the Minister, a process to address matters such as the implementation of national direction and/or a significant community need (or urgency). Once agreed, the Council must follow the SPP as set out in the Minister’s direction. There are no general appeal rights on decisions made under a SPP (with recourse to the High Court only through judicial review or via an appeal on a point of law).

The Shift from Local to Central Planning in Urban Environments

In 2020 with the promulgation of the National Policy Statement on Urban Development (NPS UD) central government became more directive about the specific outcomes sought in plan making in urban environments, particularly in our largest centres.

The key direction is found in Policy 3, requiring city centres to realise as much development capacity as possible, and for metropolitan centres and areas within a walkable catchment of city centres, metropolitan centres and existing and rapid transit, to enable at least six storey buildings. Subsequent legislative amendments have shifted from only directing a planned streamlining process to also directing specific planning outcomes:

• This was followed by the Resource Management (Enabling Housing Supply and Other Matters) Amendment Act 2021 (Housing Supply Amendment Act), a bi-partisan amendment, which amended the NPS-UD, introduced the highly prescriptive Medium Density Residential Standards (MDRS) enabling at least three, three storey dwellings across all other areas of urban environments (unless a council could point to a qualifying matter – such as a matter of national importance or for instance special character ).
• The prescriptive outcomes sought by Housing Supply Amendment Act were coupled with the introduction of another bespoke planning process – the Intensification Streamlined Planning Process (ISPP). The ISPP moved further away from full public participation towards a focus on efficiently achieving the centrally specified outcomes with limited or no public participation. It required councils to promulgate, notify, hear and decide intensification planning instruments (IPI) (special plan changes to implement the NPS-UD and MDRS) within specified and shortened time frames, with no ability to withdraw an IPI and no rights of appeal.

Enduring Environmental Outcomes?

In Auckland and Christchurch, the MDRS and IPI plan changes were not popular nor were they enduring.

Christchurch

In 2022, CCC initially voted not to notify an IPI. Following a Ministerial investigation under s 24 of the RMA, CCC accepted that it was legally obliged to notify an IPI (and did so in the form of Plan Change 14 (PC14)) but in doing so noted that it did not work well for the City. A key concern for CCC appeared to be the shift away from the RMA’s public participatory model that allowed communities to have meaningful input into the types of urban environments they wished to live in, as expressed in a letter from the CCC Mayor’s office in March 2023:

But above all else, the concern felt by most people – which is shared by our Council – is that the public have had very little say in the development and implementation of these rules. The Act requires councils to undertake specific actions. Even once the plan change is notified, there is little scope for a community to respond or amend if it is outside of the Act’s parameters …

Auckland

Auckland notified its IPI, Plan Change 78 (PC 78) as required in August 2022, but it was not without problems. PC 78 excluded a large area of central Auckland within which the Auckland Light Rail (ALR) corridor route was anticipated. The ALR corridor was intended to be upzoned via a variation to PC 78 following confirmation of the ALR route. PC 78’s use of a special character qualifying matter was controversial, in the context of the ongoing debate about maintaining the quality of urban environments as opposed to intensifying to allow a greater quantity of dwellings. There was also strong community opposition on the grounds of inadequate infrastructure, particularly in relation to stormwater. Following the Auckland Anniversary Weekend and Cyclone Gabrielle flooding in January and February 2023, Auckland Council recognised that a variation to PC 78 was required to address new flood hazard modelling. Ultimately, the ALR did not survive a change of Government, multiple extensions were required to the PC78 timeframes, and the problems of PC 78 became insurmountable.

The Next Round – Auckland’s PC120

National campaigned on the basis that it would make the MDRS “optional” and, following a change of Government, the Resource Management (Consenting and Other System Changes) Amendment Act 2025 (Amendment Act 2025) was enacted. The Amendment Act 2025 again directs specific planning outcomes which introduces alternative intensification provisions for Auckland and Christchurch:

• In Christchurch, CCC was allowed to withdraw the remaining parts of PC14 that proposed to implement the MDRS, without a replacement plan change, on the basis that CCC could demonstrate that its planning framework enables at least 30 years of housing growth.
• In Auckland, the Council was allowed to withdraw the remaining parts of PC 78, including the MDRS on the basis that it would promulgate an alternative plan change (Plan Change 120 (PC 120)) using an SPP that would provide at least as much housing capacity and enable fifteen storeys within walkable catchments of three urban city rail link stations and ten storeys around two suburban city rail link stations.

Submissions on PC 120 closed in December 2025 but media reports on community meetings suggest the proposed level of intensification will be controversial. The most controversial aspects are likely to be those mandated by the Amendment Act 2025, and these will be matters that Auckland Council cannot address through the submission and hearing process as they are prescribed by legislation.

The 20-month timeframe for PC 120 spans the next electoral cycle. It will be interesting to see whether exclusion of these matters from the full rigours of RMA public participation results in acceptance (which would in fact achieve the aims of faster and enduring planning processes) or elevates debate on these planning matters to a political level, which in the case of the MDRS and PC 78 and PC 14 was time consuming and fallible to change in central Government direction.

Early indications are that PC120 may be similarly fallible.  The Council received around 10,000 submission on PC120 and, although the summary of submissions has yet to be released at the time of writing, the collective tenor of those submissions can perhaps be gleaned from observing that just five working days after the close of submissions the media was already reporting on a soon to be announced central Government U-turn on the controversial housing targets.

Building Consensus in a Centrally Directed System?

While the RMA has been a political football in recent years, the above records that there have been many attempts to mould planning processes under the guise of the need for efficiency since 2009. At present, the RMA stands to be repealed and replaced, but, as the history of recent years has shown, change is constant.

NZPI’s recent paper, The Role of The Planner, identified the functions of planners as including being pragmatic arbiters of conflicts, and intermediaries between communities and the planning system who apply creative thinking and a collaborative approach to align community outcomes with the requirements of the planning system.  The Paper also envisaged that where the political and legislative context for planning changes relatively frequently through political cycles, there is also an opportunity to build consensus across political boundaries, both in central and local government, that endures regardless of the political ideologies of the day.

Disputes and disagreements about the environment do not go away simply because the ability for communities to influence planning outcomes is more constrained. Arguably there will be greater need to find other avenues for avoiding entrenched division and building consensus. Recent history has told us that communities always find a way to fight back either through the legal system or the ballot box.

If you need advice on any of the issues raised in this article, please contact Joanna Beresford | Environmental Partner | 021 114 1277    

Disclaimer. The information in this article is intended to provide a summary of the topic covered and is for general information only. It is provided without charge, is not comprehensive, and does not provide legal advice or other advice. Please seek independent advice before acting on any information in this article.

The Resource Management (Consenting and Other System Changes) Amendment Bill (the Bill) is the second phase of the coalition Government’s three phase major transformation of the resource management system.

In his December 2024 press release RMA Reform Minister Chris Bishop says the Bill is a precursor to full replacement of the RMA and will make important changes in the short-term to make it quicker and simpler to consent renewable energy, boost housing supply, and reduce red tape for the primary sector and that the Bill will help drive economic growth and increased productivity by making it easier to get things done in New Zealand.

The Bill makes amendments across five themes:

1. System Improvements.
2. Housing and Growth.
3. Infrastructure and Energy.
4. Farming and Primary Sector.
5. Natural Hazards and Emergencies.

This article briefly summaries the key amendments by each of these key themes.

System Improvements

The Bill targets simplicity and compliance by amending the consenting and enforcement processes. The key changes proposed include:

Consenting Process

Information relating to consent applications must be proportionate to the nature and significance of the activity. Before requesting further information, consent authorities must consider certain matters, including whether an assessment can be made without it and whether it is proportionate to the nature and significance of the activity.

If the applicant fails to respond as required, consent authorities may determine the application as incomplete and are no longer required to consider the application.

Hearings

Hearings must no longer be held if a consent authority determines it has sufficient information to decide on the application. This is an interesting change as it is often the hearing itself that identifies if further information is required to make a fully informed decision.

Non-Compliance

The Bill allows for an applicant’s history of non-compliance to be considered when deciding on a resource consent. This includes current and previous abatement notices, enforcement orders, infringement notices or convictions under the RMA. Consent conditions may be used to mitigate risks of non-compliance however, it is not clear what these conditions will look like.

Additionally, Local Authorities or the Environmental Protection Authority may apply to the Court to revoke or suspend a consent for issues of non-compliance. These are very broad powers and may result in consent holders more vigorously defending enforcement actions because of the potential implications for their existing consents.

Penalties

The Bill decreases the maximum term of imprisonment for a natural person from 2 years to 18 months, bringing it below the threshold for a Jury trial which requires a maximum penalty of 2 years or more. The maximum fine for a natural person is increased from $300,000 to $1,000,000. For a non-natural person the maximum fine is increased from $600,000 to $10,000,000.

Contracts of insurance for certain fines or infringement fees are proposed to be prohibited.

Housing and Growth

The Bill aims to provide flexibility and support growth by amending the processes for creating housing. The Medium Density Residential Standards (MDRS) will become optional for councils if they can demonstrate 30 years of housing growth capacity. When altering or removing the MDRS or withdrawing an Intensification Planning Instrument, councils must use the Streamlined Planning Process.

To ensure compliance with national direction, the Minister for the Environment is given new powers to direct councils and plan changes in accordance with national direction. The Bill also proposes a simplified planning process to list or delist heritage buildings and structures.

Infrastructure and Energy

There is a strong focus on renewable energy. Some of the key changes include changing the consent timeframes and durations for renewable energy projects. A consenting authority has one year from the date the application is lodged to process and decide a resource consent application for a “specified energy activity”. For the duration of consent for renewable energy projects, the Bill introduces a default of 35 years from the date of commencement unless one of the exceptions for a shorter period apply. The lapse period for renewable energy consents is doubled from 5 to 10 years. The same increase also applies to designations.

Farming and Primary Sector

The Bill focuses on certainty and growth. Key amendments aim to balance marine protection with fishing rights. The Bill introduces definitions and restrictions on rules that control fishing, aiming to clarify the relationship between the RMA and the Fisheries Act 1996. It ensures new rules undergo a pre-notification process with the Director General of the Ministry for Primary Industries, assesses impacts on fishing, reduces scope for submissions to limit the regulatory burden on fishers, and do not apply to Māori customary non-commercial fishing rights.

The Bill also amends Part 9A of the RMA to make farm plan certification and audit services more efficient and affordable by permitting industry organisations to provide these services.

Natural Hazards and Emergencies

The Bill clarifies that when significant natural hazard risks are present, a consent authority may refuse a land use consent or impose conditions. The assessment of a natural hazard risk includes factors like likelihood, material damage and adverse effects on the health or safety of people. Plan changes introducing new natural hazard rules have immediate legal effect.

If you need advice on any of the issues raised in this article, please contact Joanna Beresford | Environmental Partner | 021 114 1277    

Disclaimer. The information in this article is intended to provide a summary of the topic covered and is for general information only. It is provided without charge, is not comprehensive, and does not provide legal advice or other advice. Please seek independent advice before acting on any information in this article.

You can read the full article here.

If you require assistance understanding the implications of the NPS HPL on your business or property then please contact contact Joanna Beresford, Partner, Environmental Law, joanna@beresfordlaw.co.nz  +64 21 114 1277.

 Disclaimer. The information in this article is intended to provide a summary of the topic covered and is for general information only.  It is provided without charge, is not comprehensive, and does not provide legal advice or other advice.  Please seek independent advice before acting on any information in this article.

The Supreme Court recently released its decision in Cloud Ocean Water Limited v Aotearoa Water Action Incorporated [2023] NZSC 153 (Cloud Ocean Water) and the Court of Appeal has also considered the end use of water in Sustainable Otakiri Incorporated v Whakatāne District Council and Te Rūnanga O Ngāti Awa v Bay of Plenty Regional Council (Sustainable Otakiri).   In this article, Resource Management and Environmental Partner, Joanna Beresford, explains what the two cases are about.

The Cloud Ocean Water case

Cloud Ocean Water addresses issues arising when a resource consent to take and use groundwater is transferred to a new owner who wishes to use the allocated water for a different purpose from the use permitted under that consent.

In this case the consent, was originally granted to “take and use” water for a wool scouring business but was renewed to allow a water bottling operation.

The Canterbury Regional Council granted new “use” consents for commercial water bottling relying on rule 5.6 of the Regional Plan, which treats as discretionary all activities not otherwise classified in the Plan.

The issue for the Supreme Court was whether the Regional Plan allowed the “take and use” consent in question to be decoupled and a new use-only consent granted independently this decoupling under rule 5.6, or whether a completely new take and use consent was required (as set out in rule 5.128).

If take and use elements could be decoupled under rule 5.6, water permit holders could “bank” the take components of their permits and repurpose (through a new consent application) the use component.  This would enable applicants to avoid having to justify the volume of water to be deployed in the new use. If rule 5.128 apply, any new use for which a consent was required would also need a take component.

The Supreme Court unanimously dismissed the appeal.  The RMA did not require take and use to be considered conjointly in all cases.  Nor was take and use to be considered separately where the Plan does not so prescribe.

There was nothing in the Plan that suggested the drafters envisaged take and use consents would or should be divisible.  While rule 5.6 filled a gap where the Plan did not classify an activity, rule 5.128 of the Plan did classify the use of water in relation to groundwater in a context where it required it to be considered as a component of an aggregated “take and use” activity.

Williams J wrote separately, concurring with the result but for the reason that the policies and objectives of the National Policy Statement on Freshwater Management and the Canterbury Regional Policy Statement would be undermined by decoupling “take” and “use” elements.

The Sustainable Otakiri case

Sustainable Otakiri relates to issues around the proposed expansion of a water bottling plant in the Bay of Plenty. It raises the relevance of the “end use” effects of an activity (in this case the relevance of the use of plastic bottles) when considering a resource consent under the RMA.

In 2016, Creswell NZ Ltd entered into an agreement to buy a water extraction/bottling business, Otakiri Springs Ltd, and the land where it was located.  Creswell then sought various resource consents from the Regional and District Councils relating to water take and land use for the operation and expansion of the water bottling plant.

Environmental groups Sustainable Otakiri and Ngāti Awa appealed against the decisions.  The Environment Court, followed by the High Court upheld the consents.

High Court held that the “end use” of plastic water bottles should not be taken into account; the activity was a discretionary “rural processing activity” rather than a non-complying “industrial activity”; and the proposed operation was the expansion of an existing activity rather than a new activity.

The High Court also rejected arguments that the resource consents would negatively affect te mauri o te wai and the ability of Ngāti Awa to exercise kaitiakitanga (collectively, the negative tikanga effects).

The Court of Appeal granted leave to appeal on all issues, apart from that relating to negative tikanga effects. The Court of Appeal dismissed the appeal, upholding the High Court’s decision, except for the ruling that the proposal was simply the expansion of an existing activity (although this did not affect the final outcome).

Sustainable Otakiri and Ngāti Awa applied for leave to appeal against the decision of the Court of Appeal to the Supreme Court.  Ngāti Awa further applied for leave to appeal directly from the High Court decision on the negative tikanga effects.

At this point the position remains that “end use” of plastic water bottles should not be taken into account but the point will not be settled until the appeals are determined the Supreme Court.  The cases were heard together by the Supreme Court in late November 2023, with a decision expected this year.

If you need advice on any of the issues raised in this article, please contact Joanna Beresford | Environmental Partner | 021 114 1277    

Disclaimer. The information in this article is intended to provide a summary of the topic covered and is for general information only. It is provided without charge, is not comprehensive, and does not provide legal advice or other advice. Please seek independent advice before acting on any information in this article.

1. When will it take effect? While technically most of the NBEA comes into effect the day after it receives the Royal Assent, the repeal of the RMA will occur later and for the most part will keep operating until each region’s NBEA date (which are yet to be determined).  The transition is expected to take close to a decade.

2. Environmental Protection Purpose: The previous two-limbed purpose in the first reading of the Bill gave equal weight to the use, development protection of the environment and te Oranga o te Taiao (which broadly translates to upholding the health of the environment).  The NBEA as passed makes it clear that the “use and development of the environment” subservient to protecting the health of the environment.  There is a clear theme throughout the legislation of the health and protection of the environment is the core purpose, which will be given effect to through a new tools of system outcomes and environmental limits and targets.

3. National Planning Framework: The existing national policy statements and national environmental standards are going to be grandfathered into a new National Planning Framework. This is going to create a somewhat strange transition given that the first NPF will be grounded in the policy of RMA national direction rather than the new environmental protection regime of the NBEA.  The Ministry for the Environment has been working on this in preparation of the NBEA passing and it is expected to be notified for submissions soon.  This will be followed by a year long board of inquiry process. Given the change to a more environmental protection based legislative regime, it will be important for businesses to have their say on the NPF to try and ensure that any environmental bottom lines that come out of this process are realistic and workable.

4. Polluter pays: The NBEA introduces a considerably strengthened enforcement regime with a raft of new enforcement tools and significantly increased penalties (i.e. from 600,000 to 10 million for companies).  Statutory liability insurance for fines, infringement fees and pecuniary penalties imposed for environmental offending havs been prohibited.  Even with the best environmental management systems and processes.  Accidents and unforeseen events happen.  It would be prudent for any businesses to discuss with their broker and review their risk management approach now that the option of managing some aspects of environmental financial risk through private contract has been removed.

5. What happens if there is a change of Government? National and Act made minority Select Committee Reports opposing the Bills and have indicated that the Acts will be repealed before then end of the year if they form the next Government.  Even if the Acts are not repealed in their entirety, we would expect a new centre right Government to substantially amend the Acts before they come into effect.

If you require assistance understanding the implications of the environmental law reform on your business or property then please contact contact Joanna Beresford, Partner, Environmental Law, joanna@beresfordlaw.co.nz  +64 21 114 1277.

 Disclaimer. The information in this article is intended to provide a summary of the topic covered and is for general information only.  It is provided without charge, is not comprehensive, and does not provide legal advice or other advice.  Please seek independent advice before acting on any information in this article.

Background

In 1997 the New Zealand Local Government Insurance Corporation Ltd established RiskPool, a mutual scheme, to provide an alternative to commercial insurance for councils.  The purpose of RiskPool was to enable local authorities to pool risk and to act as insureds and insurers.

Initially, RiskPool provided professional indemnity insurance to councils and covered weathertightness claims.  However, leaky building claims and the unavailability of reinsurance, meant that cover for weathertightness claims was phased out over time.

From 2009 onwards, RiskPool excluded cover for weathertightness claims.  It introduced, and relied on, an exclusion clause which stated that the insurance contract did:

“not cover liability for Claims alleging or arising directly or indirectly out of, or in respect of … the failure of any building or structure to meet … the requirements of the New Zealand Building Code … in relation to leaks, water penetration, weatherproofing, moisture, or any water exit or control system”.

(the exclusion)

In 2012, and in relation to a different building, Napier City Council notified a claim to RiskPool which alleged losses arising from weathertightness and non-weathertightness defects (the 2012 Claim).   RiskPool declined to indemnify the Council for the 2012 Claim on the basis that the weathertightness exclusion excluded that claim entirely.   The Council did not reply to RiskPool, and instead appears to have accepted RiskPool’s position in relation to the 2012 Claim.

In 2013 the Napier City Council was sued by owners of a 51-unit development known as the Waterfront Apartment complex.  The owners claimed the Council had been negligent in issuing building consents, failing to ensure adequate inspections took place, and issuing code compliance certificates.  The owners alleged a range of construction defects.  This included weathertightness defects and other defects that did not involve any weathertightness aspect such as structural or fire defects.

The Council notified RiskPool of this claim, and RiskPool declined cover on the same basis as it had in relation to the 2012 Claim.

In 2019 the Council settled with the owners and other parties involved in the construction of the Waterfront Apartments.   The Council paid $12.355 million towards a global settlement.   The other parties paid a further $1.295 million towards that settlement.

The Council then sued RiskPool seeking indemnity for the non-weathertightness part of the settlement.  The Council accepted that the weathertightness excluded cover for the cost to repair all weathertightness defects, but RiskPool declined the entire claim on the basis that the exclusion (as set out in full above) excluded the entire claim.

At first instance, the High Court agreed with RiskPool.  The High Court reached its decision partly by relying on correspondence relating to the 2012 Claim.

However, the Council appealed, successfully, to the Court of Appeal.

Interpretation of the exclusion

The Court of Appeal noted that contracts of insurance are to be interpreted in the same way as any other contract.  Interpretation is an objective search for common intention.  The Court of Appeal cited with approval a leading insurance law text (Derrington and Ashton) which explained, that as a general principle, an insuring clause should be given a liberal construction in favour of cover, while an exclusion should be construed strictly.

The Court of Appeal found that the Policy made it clear what was meant: cover does not extend to liability for claims “alleging or arising directly or indirectly out of, or in respect of” a weathertightness defect.  So, an inquiry into the nature of the Council’s liability was required.

For the exclusion to apply, there had to be a connection between a weathertightness defect and the Council’s liability.

The Court of Appeal also found that the weathertightness exclusion only applied to the extent that weathertightness defects caused (directly or indirectly) the loss for which compensation was claimed.   The Court of Appeal did not consider that Riskpool and the Council had intended to exclude liability for sums not causally related to weathertightness.  The language used did not support this conclusion.

Admissibility of extrinsic evidence

The Court of Appeal also gave useful guidance on the Supreme Court decision of Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696.  In Bathurst the Supreme Court held that the admissibility or otherwise of extrinsic evidence, to interpret a contract, is to be regarded as an evidential issue.  The approach taken in Bathurst is very open and could potentially render almost any background information relevant to contractual interpretation.  Fortunately, however, the Court of Appeal has walked back the potential open-endedness of Bathurst.

The Court of Appeal said that the objective approach to contract interpretation is grounded in policy objectives of certainty, of holding people to their bargains, and of efficiency in the conduct of proceedings.   Where parties have framed their contract in writing the intended meaning is extracted from the document.  The language of the document retains primacy, and evidence extrinsic to the document is confined to what a reasonable person would consider relevant.

In a statement that may be widely cited in the future, the Court of Appeal said:

So extrinsic evidence is admissible if it crosses a threshold of a) relevance and b) probative value relative to the risk that it will needlessly prolong the proceeding. When approaching the threshold courts must look first to the language of the contract, interpreted in accordance with ordinary usage. That language retains primacy and its ordinary meaning is a powerful, but not conclusive, indication of shared meaning. Extrinsic evidence must be adjudged reasonably capable of altering the ordinary meaning before it is admissible. As with any reasonableness standard, this calls for the exercise of judgement.

Applying these principles, the Court of Appeal disagreed with the approach taken by the trial Judge, who had reached their conclusion in part based on the evolution of the Policy, and the parties’ conduct after it took its final form in 2009.   The Judge had reasoned that this evidence might resolve ambiguities in the language of the Policy.  However, the Court of Appeal considered that there was no ambiguity in the language of the Policy, so there was no need to have regard to this material.  Similarly, the correspondence in relation to the 2012 claim was found to be irrelevant and inadmissible to interpret the Policy.

The Court of Appeal also rejected an argument by RiskPool that it had intended to exclude cover for all claims “involving” moisture ingress.  RiskPool had used the word “involving” in some extrinsic materials it prepared in relation to the weathertightness exclusion.  But the word “involving” did not appear in and was not relevant to interpreting the exclusion.

Commercial Absurdity?

The Council argued that RiskPool’s approach would lead to absurdity and gave the scenario whereby it was sued for entirely non-weathertightness defects (so the claim was covered) but the claimant then amended the claim to include a single weathertightness defect.  At that point the claim which was previously entirely covered would become entirely uncovered because it was “tainted”.

The Court of Appeal considered this to be a telling argument.  If Riskpool was right a claim would be excluded if a “trifiling” part of it was casually connected to weathertightness.  This would amount to the “tail wagging the dog” and the Court of Appeal did not see any intention in the Policy, or the context, to permit that.

Supreme Court

In the Supreme Court RiskPool’s argument focused closely on the meaning of the word “Claim”.   Riskpool argued  that each of the unit owners had a single claim and as their claims included weathertightness (given the weathertightness defects were present in the building) that was enough to exclude cover.

RiskPool also argued that the subject of the exclusion was the Claim and that the Claim could not be divided into weathertightness and non-weathertightness defects.

The Supreme Court disagreed.  It concluded when the exclusion clause was read as a whole, in context, it was clear that the common intention was only to exclude weathertightness risks.   However, the Council faced liability for separate and divisible loss for breach of weathertightness and non-weathertightness breaches of the Building Code.   The Supreme Court also concluded that the correspondence between Riskpool and the Council did not assist with interpreting the meaning of the exclusion clause, and that there was no error in the Court of Appeal’s interpretation of the exclusion clause.

Outcome

In the end result the exclusion did not apply.  So, Napier City Council may recover a portion of the $12.355 million it paid to settle the claim against it.    The figure payable to the Council by Riskpool is still to be confirmed.

If you would like to discuss any of the issues raised in this article, please contact Geoff Beresford | Civil Litigation and Insurance Partner | 0277 396 896   

Disclaimer. The information in this article is intended to provide a summary of the topic covered and is for general information only. It is provided without charge, is not comprehensive, and does not provide legal advice or other advice. Please seek independent advice before acting on any information in this article.

A full copy of the NPSIB can be found here

Background

The NPSIB has been six years in the making.  Consultation on the Proposed NPS IP took place in 2020 and on opportunity for feedback on an exposure draft of the NPSIB in 2022 garnered over 5,000 submissions.

Through the consultation processes, the move to impose a single method for identifying significant natural areas (SNAs) came under fire from landowners who feared it would mean losing control of private land, or facing restrictions on what they could do with it, particularly in relation to farming activities.

What does it do?

Key points to note about the NPSIB include:

• The objective of this NPSIB is to maintain indigenous biodiversity across Aotearoa New Zealand so that there is at least no overall loss in indigenous biodiversity after the commencement date.
• The NPSIB prioritises the mauri and intrinsic value of indigenous biodiversity and recognises people’s connections and relationships with indigenous biodiversity. It recognises tangata whenua as kaitiaki and people and communities, including landowners, as stewards of indigenous biodiversity.
• The NPSIB applies to indigenous biodiversity in the terrestrial environment throughout New Zealand. However, the NPSIB does not apply to the development, operation, maintenance or upgrade of renewable electricity generation assets and activities and electricity transmission network assets and activities. There are some exceptions creating a more permissive regime for specified infrastructure and existing plantation forestry.
• A precautionary approach to effects has been adopted and the NPSIB operates on an effects management hierarchy under which adverse effects are avoided where practicable, then minimised where practicable, then remedied where practicable. If more than minor adverse effects cannot be avoided, minimised or remedied then biodiversity offsetting, is provided where possible and if not possible biodiversity compensation is provided.  If compensation is not appropriate then the activity itself should be avoided.

Key policies include that:

• significant indigenous vegetation and significant habitats of indigenous fauna are identified as SNAs using a consistent approach set out in the NPS. However, the policy statement applies to councils rather than landowners, giving local authorities flexibility on how they manage adverse effects in SNAs.
• SNAs are protected by avoiding or managing adverse effects from new subdivision, use and development; and
• The importance of maintaining indigenous biodiversity outside SNAs is recognised and provided for.
• For the first time require the NPSIB requires all regional councils to prepare a strategy for biodiversity. Local authorities must have regard to the relevant regional biodiversity strategy when developing restoration objectives, policies, and methods for inclusion in regional policy statements and plans.
• Every territorial authority must undertake a district-wide assessment of the land in its district to identify areas of significant indigenous vegetation or significant habitat of indigenous fauna that qualify as SNAs. Territorial authorities are then required notify a plan or plan change to include as an SNA each area in its district that is identified as qualifying as an SNA.

Implementation

 The NPSIB places significant requirements on regional councils and territorial authorities for identifying and managing indigenous biodiversity.

Local authorities are required to give effect to the NPSIB as soon as practicable.  However, there are quite long lead times for some of the more substantial workstreams.  Changes to policy statements and plans must be notified within eight years, plan changes to give effect to the parts relating to identification of SNAs must be notified within five years and regional biodiversity strategies are to be completed within ten years.

An implementation plan has been issued alongside the exposure draft of the NPSIB to support councils in implementing the plan.  A copy of the Implementation Plan can be found here.

Biodiversity Credit System

The Government has also announced a parallel consultation on new ways to fund long-term conservation via a biodiversity credit system.  By purchasing credits, people and philanthropic organisations can finance and actively support ‘nature-positive’ actions on public and private land, including whenua Māori.

A discussion document for public consultation has been released asking how a biodiversity credit system could be set up and what role the Government should play in it.

New resource management system

The NPS-IB has been developed under RMA, which the Government intends to repeal and replace with the Natural and Built Environments Bill (NBA). National policy direction under the NBE will be by way of the National Planning Framework.  The NPSIB is expected to be transitioned into the proposed NPF developed under the NBA.

If you need advice on any of the issues raised in this article, please contact Joanna Beresford | Environmental Partner | 021 114 1277    

Disclaimer. The information in this article is intended to provide a summary of the topic covered and is for general information only. It is provided without charge, is not comprehensive, and does not provide legal advice or other advice. Please seek independent advice before acting on any information in this article.

The Environmental Protection Authority (EPA) also has enforcement powers under the RMA and may take enforcement action if a council does not, with or without council agreement.

What is an abatement notice?

An abatement notice is a formal notice that is served on a person by a council or the EPA under the RMA.  It requires the person served with the notice to stop or not commence any action that contravenes the RMA, or environmental and planning regulations, or the terms of a resource consent, or which is likely to have an adverse effect on the environment.

An abatement notice requires that action is taken to comply with the notice within the period of time specified in the notice.  Non-compliance with an abatement notice is an offense under Section 338(1)(c) of the RMA.

What is an enforcement order?

An enforcement order is an order made by the Environment Court to compel a person to comply with the provisions of the RMA, a rule in a plan, or the terms of a resource consent.  An enforcement order may be issued on terms that the Environment Court thinks fit.  It may have a wide scope and require a person to cease or undertake an activity, pay money, or reimburse others for their costs. Breach of an enforcement order is an offense under Section 338(1)(b) of the RMA.

What is a prosecution under the RMA and what are the potential penalties?

A prosecution is when a criminal charge is laid against a person or organisation (who is called the defendant) and is dealt with by a court.  Prosecutions under the RMA are at District Court level and heard by a judge with a specialist Environment Court warrant.   Most RMA offences are strict liability, meaning that the prosecutor (i.e. the Council or the EPA) does not need to prove that the defendant intended to commit the offence.

The potential penalties for offences under the RMA vary depending on the severity of the offence.  The RMA expressly provides for fines, enforcement orders, and imprisonment in some cases.  For individuals, the maximum penalty for offending is a $300,000 fine or a sentence of imprisonment of two years.

For companies the maximum penalty on conviction is a $600,000 fine.   However, the actual fine imposed in any given case be considerably lower than this. There are several ways in which fines are reduced.  For example, factors such as a defendant’s conduct, level of remorse, taking responsibility for remediation any environmental damage, may be taken into account as mitigating factors that reduce the level of a fine.

What should I do if the Council asks me to attend an interview?

If you have been asked to attend an interview with the Council for an RMA enforcement matter, it is important to understand the purpose of the interview. The interview may be conducted to investigate an alleged breach of the RMA or to gather information that is preliminary to enforcement action being taken.

What should I do if served with an abatement notice?

It is important to understand your obligations and options.  In many cases the best course of action will be comply with the abatement notice to the best of your ability within the required timeframe.   However, councils do make mistakes and in some cases it may be advisable to appeal an abatement notice and seek a stay, meaning that compliance will not be required until the appeal is resolved.

Because failure to comply with an abatement notice can result in prosecution and conviction for environmental offending, this is something that needs to be taken seriously.

What should I do if served with an application for an enforcement order?

It is again important to understand your obligations and your options.  The terms of the enforcement order may potentially be something that you could have input into.  It may be advisable to negotiate and agree to an enforcement order that you are in a position to comply with.  This may require you to instruct experts in environmental disciplines to support your position.

If you need advice on any of the issues raised in this article, please contact Joanna Beresford | Environmental Partner | 021 114 1277 or Geoff Beresford | Litigation and Insurance Partner | 0277 396 896   

Disclaimer. The information in this article is intended to provide a summary of the topic covered and is for general information only. It is provided without charge, is not comprehensive, and does not provide legal advice or other advice. Please seek independent advice before acting on any information in this article.