In this edition

Lammermoor Range wind farm sent back to the Environment Court for reconsideration
The High Court decision of Meridian Energy Limited v Central Otago District Council highlights the statutory limits on the Environment Court in assessing proposals before it. more ...

Decision on the first direct referral case under the new law
In February this year the first direct referral application was lodged by Progressive Enterprises Limited to develop a Countdown supermarket in Warkworth's town centre. more ...

New approach for old buildings: a shake-up for Wellington's heritage regime
How to appropriately protect the heritage value of private homes is a question that has proved controversial for councils in recent years. more ...

Resource Management (Enhancement of Iwi Management Plans) Amendment Bill defeated
On 4 August 2010 the Resource Management (Enhancement of Iwi Management Plans) Amendment Bill had its first reading. The Bill was defeated 64 - 57. more ...

Urban Design Panels - a national stocktake
In May and June this year, the Ministry for the Environment undertook a nationwide stocktake of local authority urban design panels, with the objective of improving the quality of urban design in New Zealand. more ...

NZS 6806:2010 Acoustics - road-traffic noise
The New Zealand Transport Agency has released a new standard that it will apply to all new and altered roads replacing the old transit guidelines. more ...

The High Court decision of Meridian Energy Limited v Central Otago District Council¹ highlights the statutory limits on the Environment Court in assessing proposals before it. 

Meridian Energy Limited ("Meridian") was granted consent by the Central Otago District Council and Otago Regional Council to establish and operate a substantial wind farm ("Proposal") in the Lammermoor Range in Central Otago ("Site").  Eight parties appealed to the Environment Court in order to have the consents overturned.  In Maniototo Environmental Society Incorporated v Central Otago District Council² the Court decided to overturn the Councils' decisions to grant consents for the Proposal.  Meridian appealed to the High Court pursuant to section 299 of the Resource Management Act 1991 ("RMA").

In its appeal, Meridian raised six grounds by which it alleged the Environment Court had erred in law, namely:

On these grounds, Meridian sought an order either to set aside the lower Court's decision and grant the consents, or, alternatively, to have the matter referred back to a different division of the Environment Court (ie sitting in a different location) for reconsideration.  The two councils supported Meridian's appeal.

Following its review and summary of the Environment Court decision, the High Court considered the third ground of appeal first - whether the decision of the Environment Court to call for consideration of alternative sites was an error of law.  The High Court ruled that the issue of alternative locations was eligible to be considered under section 104(1)(c), as it was "relevant and reasonably necessary" to determining the application, and it would have been no error of law for the Environment Court to have done so.  However, the High Court found that the Environment Court had approached the issue of alternatives on the basis that the recent decision of Lower Waitaki River Management Society Incorporated v Canterbury Regional Council³ imposed a requirement under section 7(b) of the RMA to consider alternatives when matters of national importance are raised.

The High Court considered that this interpretation of section 7(b) was erroneous in law, predominantly because the approach to alternatives under other sections of the RMA⁴ carefully spelled out the obligation to consider alternatives and such was not the case under section 7(b).  In addition, the other sections dealing with alternatives clearly focused on tangible resources, such as wind and land, rather than the intangible landscape and visual values favoured in the Environment Court decision.  The High Court ruled that this was incompatible with the intended approach under the RMA, and hence the Environment Court decision was incorrect in law in requiring alternatives to be considered.

Secondly, the High Court turned to the Environment Court's call for an explicit cost benefit analysis as part of its examination of section 7(b).  The High Court termed such an approach "novel" but noted that this particular division of the Environment Court had pursued such an approach for some time.  However, the High Court found that this approach was not in conformity with Parliament's intention.  Section 32 is the only section that expressly requires a cost benefit evaluation, and there is no requirement for the inputs to be expressed purely in economic terms.  The High Court found that the lower Court had incorrectly attempted to quantitatively assess the costs and benefits of certain parts of the proposal and that this had counted against Meridian in this case, and that the Environment Court had therefore erred in law in this regard.

As to the first raised point of appeal, the High Court ruled that it would not have been open to the Environment Court to require Meridian to demonstrate that its proposal was "the best" in net benefit terms; however, the Environment Court had not in fact imposed this requirement on Meridian and there was therefore no error of law in this regard. 

The High Court's summary of these central issues was as follows:⁵

In the circumstances of this case the Environment Court was... authorised to call for a description of alternative sites as part of its s104 analysis.  But it erred in law when it went further and proceeded on the basis that s7(b) required consideration of alternative locations and an explicit and comprehensive cost benefit analysis.  These errors led the Environment Court to apply s7(b) in a way that was not intended by Parliament.  This resulted in the Court not analysing the merits of the application in the way intended by Parliament.

Lastly, turning to the issue that Meridian had been denied a fair hearing, the High Court ruled that Meridian had not been appropriately put on notice that the Environment Court would be referring in judgment to the Lower Waitaki River decision.  Indeed, that decision was issued after argument in the Meridian case had finished.  Meridian had not been informed that the test used in Lower Waitaki River would be utilised in this case, and had not been heard on its opinion on any issues raised in that decision.  As such, as a matter of fairness, the Environment Court should have heard further from the parties in relation to Lower Waitaki River and allowed more time for further evidence to be adduced, and had erred in law in this regard.

Having found that the Environment Court erred in law, the High Court found it unnecessary to comment on the remaining two grounds of appeal.  Rather than overturn the Environment Court decision and issue the consents, the High Court considered the most appropriate relief would be to refer the case back to the same division of the Environment Court for reconsideration, albeit with detailed and specific directions.  The High Court declined to follow Meridian's suggestion that the case should be referred to a different division as this was not normal practice and would impose a considerable burden on the other parties to the appeal.
The specific directions issued by the High Court, in addition to the general direction to reconsider in the light of the High Court judgment, included:

This case highlights the careful approach that needs to be taken by the Environment Court in assessing projects, especially large ones of national importance such as the Meridian Proposal.  The High Court was apparently unsatisfied with certain obligations imposed by the Environment Court in this case, and has emphasised requirements of the RMA in its judgment.  In effect, the High Court has reiterated the need for there to be stricter statutory interpretation, or else the Environment Court will risk overstepping its powers under the RMA.  The Meridian decision also serves as a reminder of the appropriate method for dealing with alternative sites, and also that cost benefit analyses cannot always have purely economic quantitative factors as inputs.

In February this year the first direct referral application was lodged by Progressive Enterprises Limited ("Progressive") to develop a Countdown supermarket in Warkworth's town centre.  The ability for an applicant to refer resource consent applications directly to the Environment Court (ie bypassing a Council hearing) arose from the October 2009 "simplifying and streamlining" amendments to the RMA. 

Progressive's application was heard in June and an oral decision given at that time.  This has now been recorded in Progressive Enterprises Limited v Rodney District Council [2010] NZEnvC 221.  The decision, attaches several procedural minutes of the Court to assist other parties contemplating or pursuing direct referrals. 

While there was considerable background to Progressive's direct referral application (including a related plan change/variation which was heard at the same time), the parties had reached agreement on conditions by the time of the hearing and the Court was able to grant consent without difficulty. 

The decision is, however, noteable for a number of reasons which are set out below.

Costs

The Court ordered that Progressive was to pay the Court's costs of $12,500 and the Council's costs of $22,000.¹

In doing so the Court made the following observations:

• Although costs to the Crown are not explicitly provided for in section 87 of the RMA, the Court has the power to consider its costs under section 285(3) (given it has the "obligation" of dealing with the matter at first instance).
• Court costs cover the following (ie not just sitting time):

  • Preliminary stages - from the inception of the referral including Court processing time, directions, pre-hearing conferences and pre-reading of evidence.
  • Substantive hearing.
  • Preparation and issuing of a decision - usually a similar length of time to the time spent on the substantive hearing.

The cost orders were made without prejudice to Progressive's rights to seek these from other parties, including under any section 308G application, should one be made. 

Involvement by trade competitors

The two section 274 parties who pursued the matter to hearing were each (arguably) trade competitors.  While the Court heard some argument on those issues, including at pre-hearing conferences, it did not have to resolve any of the participation questions to determine the consent application (and Progressive did not pursue an application for costs under section 285 which might have required determination of some of the issues). 

Accordingly, a number of issues remain unresolved:

• Who in fact is a "trade competitor"?  While this might appear to be a simple question, a question did arise as to whether one of the section 274 parties (a developer company which was seeking to secure a supermarket tenant in its own development) was in fact a trade competitor of Progressive - because it sold land while Progressive sold groceries, and so was not competing in the same market.
• Whether there is any threshold of effects that needs to be met before a trade competitor can participate?  If status as a trade competitor is determined, there remains significant uncertainty as to the level of direct effects on that competitor required to legitimise their involvement.  In these proceedings both the supermarket and developer competitors claimed that any direct environmental effect (not relating to trade competition) would qualify them to participate in terms of section 308B of the Act.  It remains unclear whether, as with affected persons under section 95E of the Act, there should be some requirement for effects to be "minor or more than minor". 
• Whether the "trade competition" provisions apply to direct referrals?  Parts of Part 11A, and in particular sections 308C, 308D, 308F and 308G, refer specifically to "appeals".  If direct referrals are not considered to be appeals, then those provisions may not therefore apply.

It remains to be seen whether these outstanding issues will be resolved in the next directly referred application to be considered by the Court.

These proceedings also highlighted some of the difficulties an applicant might have in seeking to exclude trade competitors from participation early in the process, despite the prohibitions in section 308B.  It is likely that the Court (or a Council) will be reluctant to "strike out" a submitter on the basis of a breach of section 308B before a substantive hearing and, even if the Court did, the prospect of appeals in respect of any such decision and consequent delay and uncertainty does not make that a particularly attractive approach for an applicant to pursue. 

It may be that further reform is necessary in this area to clarify these matters and give full effect to the Government's wish to limit the trade competition "wars". 

How to appropriately protect the heritage value of private homes is a question that has proved controversial for councils in recent years.  The issue has once again come under the spotlight following a decision earlier this month by Wellington City Council to commence an in-depth review of heritage status in the suburb of Thorndon.  The review may result in a comprehensive overhauling of the citywide approach to heritage and will likely be keenly watched by councils around the country, many of which are grappling with similar issues.

When a property is listed as a heritage building in a district plan, the listed property cannot be substantially altered, demolished, or removed without resource consent.  Such controls are controversial due to inevitably competing interests.  On the one hand is the desire of district councils and heritage groups to protect heritage values for the public benefit.  On the other hand is the need to ensure private property owners are not unfairly restricted and that they are able to adapt their homes to meet the demands of 21st century living.  Although heritage protection is unquestionably important in any modern city, some argue that the listing of private homes as heritage buildings without owner consent is an illegitimate erosion of a landowner's property rights.

Thorndon heritage review

After 18 months of consultation with residents, the Strategy and Policy Committee of the Wellington City Council decided to back away from plans for a blanket "heritage area" for Thorndon.  Instead, the Committee settled on an examination of each particular aspect of the suburb's character as the basis for a Council promoted plan change.  The investigation will likely include architectural style, the historic significance of particular houses, streetscapes, topography, and vegetation.  It is anticipated that the plan change will be ready for notification in 2011.  It will be informed by a "place-based" plan and associated design guidelines aimed to improve the heritage consenting process.

Wellington's change of tack relating to heritage controls is not unique.  The move away from a blanket heritage classification in Thorndon mirrors a similar change that occurred in the context of Auckland City Council's Plan Change 163.  In that case, blanket demolition and removal controls applying to all pre-1940 residences within the Residential 2 zone were discarded in favour of a more refined approach involving the application of specific assessment criteria to each home.

Case-law

Under section 85 of the RMA a person having an interest in land affected by a provision in a plan or proposed plan may challenge the provision where they consider that it would render their interest in land incapable of reasonable use.  There have been a number of successful challenges to heritage listings.

In Steven v Christchurch City Council [1998] NZRMA 289 the applicant attempted to have an old home removed from the list of protected homes in the district plan, claiming that the it caused unfair financial hardship in respect of upgrading the property, and that the property could only be sold at fair value if the dwelling could be demolished or removed (which the heritage controls prevented).  The Court commented that the question of whether the heritage constraints in the district plan rendered the land incapable of reasonable use and placed an unfair and unreasonable burden on the owner was a contextual and objective enquiry.  It is relevant whether a section 32 analysis has been carried out prior to listing.  In the end it was held that the property would have no reasonable use if the house could not be demolished, and the listing was deleted from the plan.  In the circumstances, the listing imposed an unfair and unreasonable burden on the applicant.

More recently the cases Ngati Maru Ki Hauraki Inc v Kruithof [2005] NZRMA 1 (HC) and Helmbright v Environment Court (No 1) [2005] NZRMA 118 (HC) stress that in making decisions on heritage rules in plans, and in considering section 85 of the RMA, a sense of proportionality is needed and courts should not lose sight of the touchstone of fairness.  For example, where a residence is not unique, is run down, and the costs of restoration are uneconomic, it may not promote sustainable management to require the dwelling to be kept in an original condition.

Where to from here?

Given that the heritage rules in district plans across the country are variable and often highly restrictive, there have been calls for national standards to be implemented to address the issue.  The ability for Councils to recognise "organic heritage" (acknowledging that it is possible for heritage-listed houses to maintain heritage value without freezing in time their architectural form) may also assist in lessening the restrictive nature of heritage controls.  Whatever happens in this area, it does seem that blanket heritage listings are becoming difficult for councils to justify under the RMA and also in terms of public opinion.

In the end, the success of district plan heritage schemes may come down to the effectiveness of ongoing communication by councils with heritage-listed homeowners, and the extent to which homeowners feel that reforms are not just about regulation, but about empowering them (including in a financial sense) to preserve their homes for their own benefit, and the benefit of the public.  Wellington City Council has suggested that these factors will help to shape the heritage status reforms in Thorndon.

On 4 August 2010 the Resource Management (Enhancement of Iwi Management Plans) Amendment Bill ("Bill") had its first reading. The Bill was defeated 64 - 57.¹

The Bill was intended to strengthen the provisions by which iwi management plans ("IMPs") would influence regional and district plans and policies, and elevate the status of IMPs in the planning hierarchy.  The objective of the Bill was to ensure participation of iwi at the outset of projects, reducing the need for interested iwi parties to make submissions later in the consenting process.  

The Bill comprised three proposed amendments to the RMA.  The Bill sought to amend sections 61(2A)(a) and 74(2A)(a) of the RMA which require regional and district councils, respectively, to "take into account" IMPs when preparing or changing a regional or district plan.  The Bill proposed a more rigorous standard requiring council's to "recognise and provide for" any relevant planning document recognised by an iwi authority.  

The Bill also sought to revise section 75 ("Contents of district plans") to specifically refer to iwi authorities representing a particular iwi or hapu in the district.  However, it was decided that section 75(2)(h) of the RMA is intended to act as a catch all provision, thereby already providing for the consideration of relevant iwi authorities.

National members did not consider there to be any need for a separate amendment bill.  Dr Cam Calder referred to the primary objectives of phase two of the RMA reforms and stated that provision had already been made for the "efficient and improved participation of Maori in resource management processes".

While the specifics of the Bill have been dismissed, it is likely that the broad policy aims of the Bill will be incorporated under the phase two reforms.    It will be interesting to see how the Government will provide for additional participation by Maori in resource management processes and whether it will elevate the status of IMPs in the planning hierarchy as this Bill envisaged.

In May and June this year, the Ministry for the Environment ("MfE") undertook a nationwide stocktake of local authority urban design panels ("Stocktake"), with the objective of improving the quality of urban design in New Zealand.  The Stocktake had the detailed goals of establishing the number of panels operating in New Zealand, the processes they use, and to collect views on their effectiveness.

The Stocktake was conducted under two separate enquiries:

• Local authorities that currently operate an urban design panel (or similar) were asked questions designed to obtain a broad range of information about the operation of their panel. 
• Local authorities not currently operating a panel were asked a range of questions relating to the urban design content in the relevant district plan and whether they had ever considered operating a panel.

A total of 72 local authorities were surveyed, with 52 responses.  Of those, 10 authorities currently operate an urban design panel of some description.  These 10 authorities mainly represent metropolitan areas and areas of rapid urban growth.

Types of urban design panels in operation
From the surveys of the 10 local authorities operating urban design panels, four categories emerged:

• Independent panel of external experts: primarily made up of paid external experts from a range of professional fields, including urban designers.

• In-house panel of external experts: where discussions take place between external experts and relevant council staff, but are not open to the public or the applicants.  The role of the panel is to provide additional expert urban design advice and to boost in-house assessment capabilities.

• Technical advisory groups: for example, the Wellington Waterfront TAG, which provides specific urban design advice on development proposals on Wellington's waterfront.

• Developer covenants: a panel giving effect to developer covenants operates in Horowhenua District only.  Developer covenants exist in other parts of the country, but the formation of a panel is unusual.

At this stage, only two local authorities have undertaken a formal process of review, due to the length of time it takes for projects to move from the design stage to actual construction.  However, the results of these reviews (in the Auckland City and Queenstown Lakes districts) have revealed that the urban design panels operating there have had a positive effect on built outcomes, either by improving the standard of design or by eliminating poorly designed proposals from further consideration.

Factors determining the existence of urban design panels
From the surveys of those local authorities that do not operate panels, the following determining factors for whether or not a local authority chooses to establish and operate a panel emerged:

• District plan content: many local authorities still operate under first generation plans, which provide limited consideration of urban design outcomes.  These authorities are often further limited due to lack of capability and expertise.

• Demographic issues: urban design is still seen by many as more relevant to larger cities and towns.  Several respondents stated that the number of applications they receive is too low to justify the formation of a panel.

• Budget constraints: some local authorities have ruled out urban design panels due to budget constraints, with most reluctant to pass on operating costs to applicants.

• Availability of suitably qualified professionals: the (until recent) lack of tertiary provision of specific urban design courses and the resultant lack of professionals with formal urban design qualifications was cited as a limitation in forming a panel by several local authorities.

MfE's recommendations
Given the large range of factors cited as barriers to forming urban design panels, the MfE concluded that the best practical option for urban design assessment is to allow each authority to choose a method that suits them best.  Despite this, the MfE made the following recommendations through which urban design assessment and the operation of urban design panels could be improved and supported:

• Provide best practice guidance for local authorities wishing to set yup an urban design panel.  This guidance is intended to create greater consistency nationwide on how urban design panels operate and are monitored, and would provide standard terms of reference for use.

• Provide support for nationwide training for those sitting on urban design panels, to create a consistent decision-making process.

• Investigate ways to assist provincial and rural councils to give urban design advice, particularly for projects in their area that are large or significant.

• Continue to provide research, guidance and training on urban design issues, objectives, policies and rules in district plans to ensure these are written to give effectiveness and weight to urban design matters where relevant.  This will give decision makers the tools to make robust decisions that can include consideration of urban design matters.

The increased focus on urban design assessment is an important consideration for those involved in building projects, particularly in metropolitan centres and areas of rapid urban growth.  In those districts where they are in place, urban design panels have the potential to provide real benefits to projects, by providing quality urban design advice at an early stage, before a final design is confirmed.

It will be interesting to see how this report is received by local authorities and whether or not the findings are implemented. 

The New Zealand Transport Agency ("NZTA") has released a new standard that it will apply to all new and altered roads, replacing the old Transit guidelines.  NZS 6806:2010 Acoustics - road-traffic noise ("Standard") seeks to provide a framework for monitoring, measuring, predicting and assessing road noise levels to determine if mitigation is required.

The Standard looks to move away from the stringent system of requiring a pre-determined noise standard, to be met in all circumstances, to a more flexible approach.  The new standard introduces a matrix assessment process to help determine the best practicable option for any roading project.  This allows other factors, such as cost and visual amenity, to be considered instead of simply enforcing compliance with the relevant noise level.

The key aspects of the standard are that it:

As this is a NZTA developed standard rather than a statutory document, it remains to be seen how much weight is given to the Standard by local authorities.  There has been a call from some industry members for the development of a National Environmental Standard, in order to ensure that this flexible approach is implemented.

One potential concern about the Standard is that it specifically states that PPFs do not include "premises and facilities which are not yet built, other than premises and facilities for which a building consent has been obtained and which has not yet lapsed".  This does not provide any protection to unoccupied residentially zoned land unless there is a building consent currently in force authorising a construction.  It seems an anomalous outcome for small residentially zoned lots, where dwellings are expected to be built in the near future, to have no protection under the Standard, particularly in cases where the land has recently been rezoned to allow for residential development and at the time of the rezoning, this Standard was not in existence and was, therefore was not considered.  However, it is important to recognise that the RMA requires an assessment of noise effects, irrespective of the Standard.

The Standard, released at the end of April 2010, will be tested for the first time when the consents for the NZTA Waterview Project (which extends State Highway 20) are processed later this year.

© Russell McVeagh 2010. All rights reserved. www.russellmcveagh.com