In this edition:
Legislative amendments: RMA Reform Bill, NPS for Urban Development, Productivity Commission inquiry
A series of changes are afoot in the RMA space, with submissions due on four different documents early in the New Year:
- the Resource Legislation Amendment Bill, introducing the “Phase Two” RMA reforms as well as associated changes to the Public Works Act, Conservation Act, and EEZ Act due 14 March 2016;
- the initial report by the Productivity Commission on urban planning due 9 March 2016;
- a proposed National Policy Statement on urban development due 4 February 2016; and
- the Local Government NZ blue skies discussion document due 19 February 2016.
Resource Legislation Amendment Bill
The Minister for the Environment has finally introduced the long-anticipated Resource Legislation Amendment Bill to Parliament. The Bill proposes some significant process changes to the Act, which could have real consequences for participants.
Many of the changes announced in 2013 have been carried through into the Bill in some form, but any wholesale changes to the principles of the Act (sections 6 and 7) have been shelved for the time being. While that change no doubt helped to get the Maori Party over the line, the Bill has been criticised by the Green Party as weakening participation rights and centralising power around the Minister – but also by ACT for not going far enough.
While some may see the changes as “tinkering” and not addressing the fundamental nature of the RMA system, we think the wider package will mean a reduced emphasis on devolved decision making (ie by councils at a local level) and public participation. For better or worse, these have been seen as two of the hallmark characteristics of the regime up until now.
In particular, the new National Planning Template (NPT) mechanism could assist in improving consistency between RMA plans across the country, but also affords the Minister of the day a much greater level of control over planning at the local level (the NPT can contain either optional or mandatory provisions for plans – the intended balance and approach has not yet been made clear). New regulation making powers, including the ability to prohibit certain kinds of rules in RMA plans or prescribe activities that cannot be notified, also see a greater role for the Minister.
The changes to resource consents are aimed at reducing the barriers to residential development, and subdivision in particular. While a number of these could have real benefits for applicants, we see the potential for unintended consequences where the changes are linked to rules or activity statuses in RMA plans in a way that could not have been foreseen when those plans were developed. The restrictions on notification (including the narrow eligibility criteria) and restrictions on submissions and appeals are significant, and there is a risk that legitimate participation in consenting processes will be precluded in some cases.
Some of the key changes proposed to the RMA include:
- The addition of “the management of significant risks from natural hazards” as a new matter of national importance.
- Alterations to the process and content of National Policy Statements (NPS) and National Environmental Standards (NES), including combined processes and specific application to a district or region.
- The introduction of the NPT mechanism intended to achieve greater consistency for regional policy statements, regional plans and district plans across the country.
- A new requirement that local authorities ensure sufficient development capacity in their region or district.
- Limitation of councils’ planning provision making powers and a requirement that they compulsorily acquire land where planning provisions are too onerous on a land owner.
- Removal of the management of hazardous substances from the core functions of councils.
- Increased availability of limited notification in respect of plan and policy changes with limited rights of appeal.
- Two new planning tracks, one being a “collaborative” planning process (no longer limited to fresh water) with limited rights of appeal, and another “streamlined” planning process (likely to be similar to those operating in Auckland and Christchurch) with no right of appeal.
- A requirement for local authorities to engage with local iwi authorities via iwi participation arrangements.
Resource consents processes
- Treating a range of activities as permitted (and not needing resource consent).
- Reversing the Act’s current presumption with regard to subdivision to allow any person to subdivide land if it does not contravene a rule in a plan or an NES.
- Limitations on notification in respect of resource consents, including strict eligibility criteria on who is entitled to be limited notified of (and thus submit on) a resource consent application.
- A requirement for consent authorities to have regard to any measures proposed by the applicant for the purpose of ensuring positive effects on the environment to offset any adverse effects of the proposal.
- The ability to fix consent fees and determine “fast track applications” which will have to be processed within 10 working days.
- Increased circumstances in which a consent authority may strike out submissions.
- A requirement that resource consent conditions be directly connected to an adverse effect or applicable district or regional rule.
- Further restrictions on appeal rights.
In addition to the changes proposed to the RMA, a number of amendments are also proposed to the Reserves Act 1977, the Public Works Act 1981, the Conservation Act 1987, the Environmental Protection Authority Act 2011 and the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 to allow for alignment and/or streamlining of processes.
The Bill is currently before the Local Government and Environment Select Committee, having passed its first reading with 92 votes to 14 (National, Labour and the Maori Party supported the Bill, while ACT, United Future and the Green Party voted against it and New Zealand First abstained).
However the Bill faces an uncertain future, with Labour and the Maori Party only committing their support to the Select Committee stage. This fragile political environment means it will be important for users of the Act to clearly signal what changes are supported, and which are problematic.
Submissions are due on 14 March 2016, with the Minister aiming to have it passed into law by the end of 2016. We are continuing to look closely at the implications of the proposed changes, and would be happy to advise on how it will affect you.
Productivity Commission on urban planning
The Productivity Commission is currently undertaking an inquiry into urban planning. The inquiry will take a “blue skies” approach and look beyond the current systems to alternative ways of providing for development to address the issues plaguing urban planning in New Zealand, including the supply of land for residential and business development.
In these initial stages of the inquiry there is no preferred outcome on the part of the Commission or the Government, and the Productivity Commission has released an issues paper for comment. Preferred and proposed outcomes will be heavily shaped by feedback received via submissions, and so engagement at the initial stages will be important.
- Potential alternatives being considered to the current approach include:
- An effects-based approach measured against clear nationally-established environmental bottom lines.
- Reliance on tort law, such as private nuisance, to regulate planning and environmental protection.
- Increased private use of covenants.
- Adoption of tradable development rights.
- Use of offsets to mitigate and manage harmful effects on the environment.
- Use of levies or charges to control environmentally harmful effects.
Initial submissions and responses to the Issue Paper are due on 9 March 2016.
Following the receipt of submissions, a draft report will be released in July. There will then be an opportunity to submit on the draft report before a final report is presented to the Government on 30 November 2016.
National Policy Statement on urban development
In August, the Minister for the Environment signalled the development of an NPS on Urban Development, to address issues surrounding the rapid growth in New Zealand’s urban areas and the need to provide land for business and residential development.
A NPS will affect planning and development processes across the country, and guide how local RMA plans are made. While there is an undisputed need to improve urban planning processes and better enable residential development, it is important that these objectives do not overshadow other considerations such as the need to provide for appropriate infrastructure. We recommend that anyone interested in urban development engage with this process early so as to flag the key considerations, issues and concerns that should be addressed in the development of the NPS.
Feedback is now being sought on the following three questions:
- Is your area experiencing high levels of population growth and challenges in planning for this growth?
- How could a National Policy Statement and supporting guidance help to address these issues?
- What could a National Policy Statement and supporting guidance contain?
The consultation period ends on 4 February 2016. The NPS is expected to come into force in late 2016.
Local Government NZ “blue skies” discussion document
Local Government NZ is undertaking its own grassroots inquiry into effective resource management. Its discussion document can be read here. LGNZ believes that reform and the development of a fit-for-purpose system is necessary. They are seeking feedback on what nature, timing and degree of reform New Zealanders believe is required.
Submissions are due on 19 February 2016.
Russell McVeagh has been engaging on RMA reform with the Government for a number of clients from across various sectors since the start of this year.
The principle of non-derogation: Implications of the Hampton decision
The recent decision of Hampton v Canterbury Regional Council (Environment Canterbury)  NZCA 509 indicates a shift in the Courts approach to the nature of water permits from that set out in the High Court judgment of Aoraki Water Trust v Meridian Energy Ltd (Aoraki)  NZRMA 251.
Background and issues
In this case Simon Moffatt appealed a decision of Gendall J in the High Court refusing to overturn a decision by the Canterbury Regional Council (ECan), which granted Simon’s cousin, Robert Moffatt, a right to take water to the extent that Simon’s water rights to irrigate Robert’s farmland were not exercised.
The dispute arose as Simon had obtained water rights and take allocations through various consent applications to irrigate both his and Robert’s farm. After Simon transferred part of his consent to a third party, the water could only be used on Robert’s farm (as a result of a condition volunteered by Simon). Robert and Simon could not agree on the terms of any use, so the water stayed in the ground. Because of the dispute, Robert sought to obtain his own water take consent. This was granted, but Robert’s consent could only be exercised if Simon’s consent was not being utilised for the purpose of irrigating Robert’s land.
Simon appealed to the Court of Appeal alleging that the grant of consent to Robert resulted in an interference with, and derogation from, the grant of his consent because when Robert exercised his consent, the volume of water able to be taken by Simon, or transferred by him to a third party, would be reduced by the volume of water taken by Robert. In doing so Simon relied upon Aoraki, where the Court held that it would be unlawful for a consent authority to grant another operator a water permit where that resource was fully allocated and would reduce the amount of water available to satisfy existing consents.
In rejecting the appeal, the Court emphasised that having proceeded with an application to irrigate both his and Robert’s land, it was inconsistent for Simon to then argue that his consent should be varied so that it could be applied to his, and another third party’s, land. Further, the Court noted that the granting of the consent to Simon did not give him a “right” to transfer that consent or permit.
Rather, the Court held that: to effect Simon’s transfer, consent was required under both sections 136(2)(b) (for the transfer of water permits) and 127(1) (variations); it was not inevitable that those permissions would be granted; and Simon could not have had a legitimate expectation that he would be able to transfer the permit as that would require ECan’s reconsideration of Robert’s consent.
The Court also rejected Simon’s suggestion that Robert’s consent necessarily resulted in a derogation from his consent because that consent could only be used to irrigate Robert’s land. The Court considered that this was sufficient to distinguish the present case from the situation in Aoraki, and determined that recourse to the non-derogation concept was not necessary. Indeed, only if Simons consent was seen as a property right could the grant of a new consent to Robert be seen as causing Simon any detriment.
Similarly, the Court disagreed with statements of the High Court in Aoraki, which suggested that the granting of a water permit creates a right to property. It noted that such a finding was contrary to the provisions of the RMA, in particular section 122(1), which provides that resource consents are neither real nor personal property. The Court held that the decision in Aoraki was incorrect to the extent that it drew a parallel between resource consents and profits a prendre. It also held that the non-derogation principle should not have been applied, as a resource consent does not confer the property rights required to support that principle. Ultimately, the Court found in favour of Robert and dismissed Simon’s appeal.
Despite its findings in respect of the High Court's reasoning, the Court was careful to confirm that it was not suggesting that the wrong decision was made in Aoraki. The Court commented that the relevant considerations in the RMA and relevant regional plan would be sufficient to ensure that resource consents are not granted where a catchment will become over-allocated.
This decision is a deliberate shift away from the applicability of the principles of non-derogation of grant to applications for water take permits. While the considerations in the RMA and modern regional plans play a significant role in ensuring that catchments are not over-allocated by new water take applications, the principle of non-derogation has been a useful tool in the past to ensure consent authorities and regional water plans avoid over-allocation. The loss of that tool may cause an issue for existing permit holders and regional councils as new plans are formulated and applications lodged.
In any case, the practical effect of the decision on future water take applications remains to be seen.
Bronwyn Carruthers and David Owen
Land and Water Forum releases fourth report
On 27 November 2015, the Land and Water Forum (Forum) released its fourth report, which sets out 60 consensus recommendations for the improved management of New Zealand’s freshwater, and calls for the Government to urgently implement the 153 recommendations made in its earlier reports of September 2010 and May and November 2012.
Established in 2008, the Forum has brought together over 60 organisations, including industry groups, environmental and recreational NGOs, iwi, and scientists, with an interest in freshwater and land management. It seeks to provide a framework for a workable and balanced system that will facilitate growth and innovation within environmental limits. The collaborative process, the first of its kind for New Zealand’s environmental sphere, has proved challenging at times, with members coming and going. However, on the basis of the Forum’s earlier reports, the Government has developed a National Policy Statement for Freshwater Management (as revised in 2014) (NPSFM) and some of the Forum’s recommendations have been included in the recently announced reforms to the Resource Management Act 1991.
The focus of the fourth report is how to maximise the economic benefits of freshwater while remaining within water quality and quantity limits set in accordance with the NPSFM. Broadly, the recommendations centre on improving and standardising the information needed to set and manage limits in catchments, facilitating infrastructure development and catchment scale mitigations, achieving limits through flexible and adaptive systems, introducing a range of mechanisms to address over-allocation, creating a trade and transfer system for water consents, improving investment certainty, and reducing waste and inefficiency. Initial emphasis is to be placed on priorities within catchments, ie critical source areas (areas that account for a disproportionate share of contaminant loss or water quality problems) and areas of significant ecological value.
A key recommendation, to be implemented by 2025, is the national exclusion of all large livestock (cattle, deer and pigs) from waterways to protect the water quality of rivers and streams. Under the Forum’s proposed framework, councils will be able to implement further stock exclusions in areas of high ecological importance where national stock exclusions do not apply. The Government has signalled its intention to introduce a national regulation to this effect, likely around mid-2017.
The report also includes a number of urban-specific recommendations, such as the use of water sensitive design approaches. The use of these measures, which seek to maintain or enhance natural freshwater systems and processes, minimise hydrological changes and reduce the need for hard constructed infrastructure to manage stormwater run-off (for example, through reduced stormwater piping or increased rain gardens), has been a hot topic in the context of submissions and hearings on the Proposed Auckland Unitary Plan.
The fourth report considers how to better involve iwi in New Zealand’s water economy. The Forum finds that responsibility in this respect lies with the Crown, as Treaty partner. However, it suggests some tools and approaches to assist the Crown’s exploration of rights and interests with iwi. Some concerns have been raised by both current and former Forum members in terms of how these recommendations will be interpreted by councils and the potential “locking up” of water resources.
From here, by September 2016, the Forum is to contribute to the further population of the NPSFM National Objectives Framework and comment on the overall implementation of the NPSFM. By December 2017, the Forum will review the overall changes made to New Zealand’s water policy and its implementation, and consider the lessons learned and further work required to achieve the overall objective of improved water management in New Zealand.
State of the environment report and long term goals released
The Ministry for the Environment (MfE) has released two significant publications, “A Generation from Now – Our Long-Term Goals” and “Environment Aoteroa 2015”.
A Generation from Now – Our Long-Term Goals
MfE released the publication “A Generation from Now – Our Long-Term Goals” (Goals) on 26 November 2015. The Goals support MfE’s aim to achieve environmental stewardship, that is, to ensure that the environment supports New Zealand’s economic, social and cultural prosperity without compromising it for future generations. The domains that the Goals refer to are:
- Atmosphere and climate;
- Fresh water;
- Urban; and
- Environmental management system.
The Goals are long-term (looking as far forward as 2030), but also include intermediate targets to help achieve them. The Secretary for the Environment noted that the Goals are not binding and their purpose is to encourage discussion regarding how to achieve them. Further, the Chief Executive of MfE noted the targets may change as data improves.
The Goals can be viewed here.
Environment Aotearoa 2015
MfE released the report “Environment Aotearoa 2015” (Report) in October 2015. The Report belongs to New Zealand’s Environmental Reporting Series developed by MfE, and follows the 2014 Air domain report. The Report is a part of MfEs ongoing effort to improve environmental reporting by providing high-quality information on the environment. The Report covers largely the same domains as the Goals. These are:
- Atmosphere and climate;
- Fresh water;
- Land; and
The Report provides an overview of each domain. It discusses the effects (including ecological, economic, social and cultural effects) that the state of the environment has on New Zealanders, and includes supporting statistics. The Report intends to provide information that is understandable and accessible for all New Zealander's, not just decision makers. The Report presents information as a national indicator, a case study, or supporting information. The Report’s key findings included:
- Most New Zealanders enjoy good air quality most of the time. Burning wood and coal for home heating is the primary source of pollutants that cause the most concern.
- Between 1990 and 2011, New Zealand emitted around 0.1 percent of global emissions. New Zealand’s greenhouse gas emissions increased 42 percent between 1990 and 2013.
- Between 1990 and 2012, the estimated amount of nitrogen that leached into soil from agriculture increased 29 percent, and between 1989 and 2013, total nitrogen levels in rivers increased 12 percent.
- The most critical issue affecting our land is erosion caused by human activity, particularly in the north and east of the North Island. Erosion reduces the productivity of the land and affects water quality, because it adds sediment and nutrients to waterways.
- The most serious long-term pressures on our marine environment are likely to be caused by climate change. Coastal sea levels and long-term sea-surface temperatures around New Zealand have risen over the last century, and our oceans are more acidic than when measurements were first taken in 1998.
As with the Goals, the Environmental Reports are not aimed at establishing policy. Rather, they are to encourage and underpin discussions around ways to address the environmental issues.
The Report can be viewed here.
Independent experts called in to review Christchurch Plan process
In the face of substantial criticism from members of the community, the Independent Hearings Panel (Panel) and the Ministers for Earthquake Recovery and the Environment (Ministers), Christchurch City Council’s (Council) Chief Executive has called in independent consultants, McGredy Winder & Co, to assess the Council's performance in producing and reviewing its Christchurch Replacement District Plan (Replacement Plan).
McGredy Winder & Co’s review, conducted by a series of interviews and reviews of material during June 2015, has culminated in a scathing report of the Replacement Plan process. A copy of the report is available here.
The report addresses various aspects of the process, including the background to the development of the new plan (pre- and post-earthquake), the adequacy and timing of advice given by Council staff, overall management and control, and the capability, capacity and culture of the Council’s team. On balance, the reviewers found that the hypothesis they were asked to test was partly true: the Council has failed to put in place the necessary process to produce an effective plan for the Panel to consider.
Points of interest from the review include its findings that:
- The notified provisions lack certainty and clarity, are too embedded in the operative plans (which have been recognised as ineffective), and fail to address the unique circumstances facing Christchurch.
- The process has been, to an extent, driven by the need to meet tight timeframes, rather than meeting clear outcomes and objectives. As such, the development and review of the various chapters has not had the benefit of adequate analysis and consultation and has been undertaken in isolation, with no strong overall strategic approach.
- The process has struggled to meet multiple expectations. It has been a challenge to find the right balance between giving effect to higher-order planning and government direction, providing certainty and impetus for investment, and supporting the character of the Christchurch region.
- Engagement between staff developing the Replacement Plan and Councillors has been weak. Council officer assumptions (many of which were based on pre-earthquake strategies) have been driving the process and Councillors have had little involvement until late in the piece.
- The Council’s team is dominated by planners and urban designers, with a clear need for more senior input from other disciplines, particularly economics, urban systems, property development and investment.
The report concludes with short and longer term recommendations. Short term recommendations include more consultation and engagement with stakeholders; the employment of up to four senior experienced planning consultants and an economist to strengthen the leadership and technical capacity of the project team; and the development of an implementation plan and guidance notes for staff to ensure the effective administration of the Replacement Plan when it becomes operative.
In the longer term, the reviewers recommended refining the size of the planning team, in particular to find a better balance of skills and multi-disciplinary expertise; the introduction of a programme to improve the nature and quality of advice provided to Councillors; and a culture change to improve engagement within the Council and with stakeholders.
In response, the Chief Executive has hired two experienced consultants to oversee and guide the remainder of the process. Hearings on the Stage Three provisions of the Replacement Plan commence in the new year.
Russell McVeagh is acting for several clients based in Christchurch and nationwide on the Replacement Plan.
Annabel Linterman and Felicity Ellis
Report on New Zealand’s “loopy rules” released
In October 2014, Local Government Minister Paula Bennett established the Rules Reduction Taskforce (Taskforce) to engage with the public and capture their concerns about frustrating property rules. In August 2015, the Taskforce released its report titled The loopy rules report: New Zealanders tell their stories (Report). The Report is based on submissions received from around New Zealand on loopy rules − rules and regulations that are outdated, unduly onerous, inefficient, pointless, costly, unnecessarily bureaucratic, or, quite simply, just annoying!
The Report (available here) explains what qualifies as a “loopy rule”, where are they found, who is annoyed by them, what impact they have on affected parties, and what can be done to fix them. Submitters to the Taskforce included homeowners (22%), builders or trades people (16%), councils (15%), and business or industry (12%). All bemoaned the systemic complexity, inconsistency, expense and delay of New Zealand’s many “loopy rules”.
For our purposes, and perhaps not surprisingly, the Resource Management Act 1991 (RMA) was found to be the loopiest Act, accounting for 32% of the submissions, followed by the Building Act 2004 with 27%.
The major area of complaint in relation to the RMA is that it is too complex, particularly when taken in conjunction with its regime of district plans, regional plans, national policy statements and national environmental standards. Submitters queried requirements for specialist knowledge and experience at all levels of resource consent applications, and elected representatives similarly raised the intricacies of policy decisions they are required to make to develop district plans and other strategic documents.
Other RMA grievances identified by the Taskforce include the illusory 20 working day consent, the breadth of the affected party test, the time and cost of cultural impact assessments, and the need for a full consent process for minor or technical breaches of plan rules. Common complaints by councils, in particular, were that it takes too long to change plans prepared under the RMA and that they lack involvement in the development of national policy statements and national environmental standards, then receive little guidance as to their implementation. A recurring example in this respect is the National Environmental Standard for Air Quality.
The Report concludes with various recommendations, including:
- Improve how rules are made by developing a coordinated “pipeline” approach to new rules: at the design stage, ask whether regulations are the best way to solve the problem. If so, create them with a clear purpose and in consultation with the groups who have to administer and enforce them. In particular, the costs of enforcement and compliance should be clearly identified, and compliance should be straightforward.
- Then focus on the customer: at the implementation phase, give accessible and clear information and continuing feedback, and seek to create a customer service culture, shifting the administrative focus to explaining the rules and helping people navigate through their problems.
The Taskforce’s recommendations seem to distil down to improved communication between those creating the rules, those implementing them, and those applying them. A number of the identified problems with the RMA, in particular, appear to have been the focus of the Government's recently released reform Bill.
Annabel Linterman and Nick Stringer
NZIER report highlights threat to Marlborough economy from contraction in marine farming
A recently released report by the New Zealand Institute of Economic Research (NZIER), commissioned by the Marine Farming Association (MFA), has highlighted the real risks to the Marlborough economy if a contraction in the local aquaculture industry was to occur. The report identifies the significant economic contribution aquaculture makes to the Marlborough region. The report also identifies that modelling based on a 50% contraction in the local aquaculture industry (which may not be entirely unrealistic given the challenges associated with consent renewals for over half of currently consented marine farms in Marlborough in 2025) projected a loss of 1.3% of regional gross domestic product (GDP) per year, equivalent to $37 million.
The report identified the significant contribution aquaculture makes to the Marlborough economy, which currently equates to:
- 5.7% ($162 million) of Marlborough’s GDP from a combination of marine farming and seafood processing;
- employment (in the form of 859 jobs) for about 3.7% of the total labour force in Marlborough;
- export sales revenue of $276 million in 2014; and
- around 62% of New Zealand's total aquaculture production by tonnes.
The report recalled previous difficulties in consenting new space for marine farming in the Marlborough Sounds, following the moratoria imposed in 1996 and 2002, and the stagnation in new consenting that arose from the Aquaculture Management Area (AMA) reforms in 2004. The report identified that only 9 new sites and 31 extensions to existing farms have been granted in the four and a half years from 2011 to June 2015, following the repeal of the AMA reforms. The MFA has estimated that increased costs, resulting from changes that could be imposed as part of upcoming renewal applications for 56% of existing marine farms in 2025, could exceed $40 million.
The report found that a 50% contraction in the local aquaculture industry in Marlborough could have significant flow-on effects for the local economy. Assuming that no suitable new space and marine farm consents would become available, the model predicted a 1.3% drop in regional GDP, equating to $37.3 million falling out of the Marlborough economy. Once wider effects (including effects on the processing of products in other parts of New Zealand) were taken into account, a 50% contraction would result in a total loss of $124.8 million to national GDP per year, or 0.05%.
In a recent article on the NZIER report, Tim Panckhurst, chief executive of Seafood New Zealand (a national umbrella group for the seafood industry), is reported as telling the National Business Review that in order for the Government to achieve the goal in its Aquaculture Strategy of $1 billion of output from the aquaculture industry by 2025, “we should be able to expect both major political parties to champion aquaculture as they hone their policies ahead of the next election”.
[Disclosure note – Russell McVeagh has previously acted for New Zealand King Salmon on its application for new salmon farm sites in the Marlborough Sounds, three of which were confirmed in an appeal to the Supreme Court. Russell McVeagh has also recently acted for a small family trust in its appeal to the Environment Court against a decision by the Marlborough District Council to decline marine consent for a new 7 hectare mussel farm in Beatrix Bay].
“Please sir, may I have some more... space?” – Update on liquor licensing and defining wider RMA ter
Christchurch Medical Officer of Health v J & G Vaudrey Limited et al concerns two appeals to the High Court by the Christchurch Medical Officer of Health (Medical Officer) from the decision of the Alcohol Regulatory and Licensing Authority (ARLA) in relation to the interpretation and imposition of “single alcohol area” conditions to supermarket liquor licences under the Sale and Supply of Alcohol Act 2012 (Act).
The two respondents (J & G Vaurdrey Limited and Bond Markets Limited) were owners and operators of supermarkets that had independently sought liquor licenses from the Christchurch District Licensing Committee (Christchurch DLC). These decisions were subsequently appealed to the ARLA insofar as they related to the description of the “single alcohol area” (which is defined as one area within premises where it is permitted to display and promote the sale of alcohol).
The ALRA found that sections 112 – 114 of the Act seek to limit alcohol exposure to shoppers, by reducing exposure to displays, promotions and advertisements relating to alcohol, but only so far as is reasonably practicable. It considered that conditions may be imposed under section 112, however, these are limited to the location of the single alcohol area and its composition. The Medical Officer of Health appealed this finding to the High Court on grounds that the Christchurch DLC did in fact have jurisdiction to impose such conditions.
The issues to be resolved as part of the appeal before Gendall J included:
- the nature of a District Licensing Committee’s (DLC) role upon receipt of a licence application or licence renewal (including whether a DLC is able to impose conditions, additional to the description of “single alcohol area” in order to achieve the purpose of section 112); and
- the relevance and application of the requirements of natural justice when a DLC is considering an application – in particular, whether a DLC is precluded from reaching a conclusion that represents a compromise between the submissions made (rather than one proposal or the other), and whether an established breach of natural justice inevitably leads to a successful appeal (or whether it simply requires a merits based assessment of the competing positions).
The High Court, allowing the appeals and remitting the applications for rehearing before the ARLA (rather than the Christchurch DLC, which was the first instance decision maker), found that the role of a DLC and/or the ARLA upon receipt of an application for licensing or re-licensing is an evaluative one, requiring the decision maker to make a merits-based determination of the application. The Court also found that the fundamental enquiry for the decision maker is to determine whether a license ought to be granted (with appropriate consideration to submissions received and criteria within the Act).
In the case of an off-licence application for a supermarket or grocery store, the High Court determined that the relevant decision maker must impose a “single area” condition (ie a condition that describes one area within the premises as a permitted area for the display and promotion of alcohol) if it grants a liquor licence (consideration of which entails an evaluative judgment). It also concluded that the relevant decision making body has a discretion to impose any further conditions which are reasonable and that are “not inconsistent” with the Act. In deciding whether to impose such conditions, the High Court considered the relevant requirements / considerations to be as follows:
- the relevant body must have identified a risk which it seeks to abate, or a benefit which it seeks to secure;
- that risk or benefit must be consistent with the purpose and object of the Act, and not inconsistent with the Act in its entirety;
- the relevant body must direct itself as to all relevant circumstances, and must then weigh the risk to be abated, or benefit to be secured, against the relevant circumstances as identified;
- the condition must be a proportionate response;
- an absolute prohibition would not ordinarily be reasonable, nor a condition that secured a benefit or abated a disbenefit only marginally; equally, a condition may not be absurd, ridiculous, patently unjustifiable, extreme or excessive; and
- ultimately whether a condition is reasonable will depend on an objective assessment of whether there is a rational and proportionate connection, between the identified risk or benefit, when weighed against all relevant considerations.
Legal principles considered
Although considered in the context of liquor licensing, the High Court made a number of findings in relation to the principles of natural justice, the meaning of “reasonably practicable”, and the meaning of “have regard to”.
The question as to natural justice arose in this case as a result of the Licensing Committee’s decision, which was alleged to not be founded in evidence. After quashing the ALRA's decision, Gendall J enunciated a number of principles of natural justice, which have an application to all hearings before a relevant body. These principles include that:
- The applicant (and any objectors or opposing parties) must be afforded an opportunity to be heard.
- It is through being furnished with the ability to present a case, and produce evidence, that the primary requirements of natural justice are fulfilled.
- There is no general obligation upon a decision maker to either disclose what they are minded to decide, or produce a draft copy of the decision, prior to actually deciding.
- The three most important points are that the decision made:
- has a proper evidential foundation;
- is only made in reliance upon the evidence legitimately before the relevant body; and
- where the relevant body wishes to take into account further and fresh evidence, it reverts to the applicant to ensure he or she has an opportunity to comment.
- Where an applicant (or other party) is dissatisfied with a decision, the most appropriate avenue of recourse is through statutory appeal rights.
- There is a narrow basis upon which it may be necessary to provide an applicant with a further opportunity to be heard, namely where the course proposed to be adopted by the relevant body does not have an appropriate evidential foundation. The applicant must be able to apprise itself of all relevant matters, and the consequences of the proposed decision (Gendall J anticipated that this will not be common).
Given the focus of arguments as to interpretation of the Act, the Court was faced with considering the interpretation of the phrase “have regard to” in section 105 of the Act, which requires the decision making body to have regard to the object of the Act (being that the sale, supply, and consumption of alcohol should be undertaken safely and responsibly, with any harm caused by excessive or inappropriate consumption of alcohol being minimised), as well as section 113, which requires the decision maker to have regard to section 112(1) (being to limit (so far as is reasonably practicable) the exposure of shoppers in supermarkets and grocery stores to displays and promotions of alcohol, and advertisements for alcohol).
In light of the New Zealand King Salmon decision, the Court considered it trite to say that “having regard” to something does not put the position as high as giving effect to it, which is synonymous with the Supreme Court’s directive to “implement”. Justice Gendall cautioned that care must be taken not to elevate a requirement to “have regard to” to the standard of "giving effect to". As such, and following a discursive analysis of case law on the matter, Justice Gendall enunciated the following principles to guide the interpretation of the phrase “have regard to”:
- The phrase “have regard to” bears its ordinary meaning.
- The decision maker must actively and thoughtfully consider the relevant matters.
- To do so requires the decision maker to correctly understand the matters to which he or she is having regard.
- The weight to be given to such matters is generally within the discretion of the decision maker.
- There will be cases where the matter(s) to which the decision maker is required to have regard are so fundamental or critical that they assume an elevated mantle.
The meaning of “reasonably practicable” was also raised in this case, in relation to its use in section 113 of the Act (ie having regard to section 112 to limit “so far as is reasonably practicable” the exposure to displays and promotions of alcohol, and advertisements for alcohol). Justice Gendall did not consider the requirement to be absolute, but rather, requiring all reasonable steps to be taken or, to put it another way, to do that which would not be unreasonable in the circumstances. The judge therefore considered that the test depends on the context of the legislation creating the obligation, and that it is primarily going to be a factually orientated assessment.
The Court was of the opinion that the notion of proportionality is inherent in the concept of “reasonably practicable”, and ascertaining what is reasonably practicable entails a balancing exercise between the benefit sought to be secured on the one hand, and the sacrifices that would be occasioned by securing that benefit (such as cost, time, difficulty, inconvenience) on the other. Importantly, the Court stated that the mere physical possibility of a task does not render that reasonably practicable (this could notably be considered in contrast to the definition of “practically”, which may suggest that a task is either possible, or it is not).
Finally, in regard to the meaning of “reasonably practicable”, Gendall J considered that the interpretation of what “reasonably practicable” means is entirely flexible, depending on the context in which the phrase is used.
The Court ultimately allowed both appeals and remitted the case to be reconsidered before the ARLA in light of the High Court judgment.