IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2008-485-1657

BETWEEN	NGAHINA TRUST AND ORS Plaintiffs

AND	KAPITI COAST DISTRICT COUNCIL Defendant

Hearing:	10 - 13 May 2010

Counsel:	C R Carruthers QC with W L Aldred and P M Cassin for Plaintiffs
D J S Laing with M J McDermott for Defendant

Judgment:	31 May 2010 at 2pm

I direct the Registrar to endorse this judgment with a delivery time of 2pm on the
31st day of May 2010.

RESERVED JUDGMENT OF MACKENZIE J

Table of Contents

Introduction                                                                                                                [1] Facts                                                                                                                           [4] (a)      Ngahina Trust landholdings                                                                           [4] (b)      Sales to the Council                                                                                        [6] (c)      Planning status of the land                                                                           [25] (d)      Council’s dealings with Kapiti Coast Enterprise Trust                                [35] (e)      Subsequent planning developments                                                              [54] (f)       Physical development of the land                                                                 [61] The issues                                                                                                                 [62] Issue 1:  Does s 40(1) apply to the 1981 land and the 1987 land?                          [64]

NGAHINA TRUST AND ORS V KAPITI COAST DISTRICT COUNCIL HC WN CIV-2008-485-1657  31
May 2010

(a)	Is the land held for a public work	[64]	
(b)	Is the land no longer required for a "public work"	[75]	
Issue 2:  Do any of the exceptions in s 40(2) apply?                                               [98] Issue 3:  Discretionary relief                                                                                  [100] Result                                                                                                                     [108]

Introduction

[1]       In this action, the plaintiffs seek a declaration requiring the defendant to offer to them, under s 40 of the Public Works Act 1981 (the PWA), two areas of land in the  Paraparaumu  Town  Centre  which  were  acquired  by  the  Council  from  the plaintiffs in 1981 and 1987.

[2]       The plaintiffs contend that both areas of land were held for public works under s 40(1) of the PWA;   that they are no longer required for that or any other public work;  and that the Council is accordingly required to endeavour to sell the land under s 40(2) to the plaintiffs as the persons from whom it was acquired.

[3]       The defendant contends that the land acquired in 1987 was not held for a public work.  It further contends that in neither case is the defendant required to offer the land to the plaintiffs.

Facts

(a)       Ngahina Trust landholdings

[4]       Ngahina Trust is the description given to a Trust formed by an order of the

Maori Land Court (Aotea District) made under s 438(1) of the Maori Affairs Act

1953 on 30 October 1981.  The second to sixth plaintiffs are the present trustees of the Ngahina Trust, and the seventh to ninth plaintiff are advisory trustees.   It is convenient  to  use  the  terms  “Ngahina  Trust”  and  “the  Trust”  to  describe  the plaintiffs collectively.

[5]       Ngahina Trust was formed to represent the owners of a number of blocks of Maori land in the Paraparaumu area.  In the early 1980s, there were proceedings in the Maori Land Court to consolidate a number of land holdings and to vest those in trustees.   An order was made by the Maori Land Court amalgamating the various titles involved in the consolidation and the formation of the Trust was confirmed by an order of the Court made on 30 October 1981.  Among the lands involved were all of the lands which are in issue in these proceedings.  The law firm of Hogg Gillespie Carter and Oakley acted for the trustees at the time of the consolidation.  Mr Hercus of that firm was principally involved.  He was one of the first trustees, along with Mr Brunton, a chartered accountant.   Ms Taylor has been involved with this land throughout the relevant period.  Her evidence is that at the time the Trust was formed some of the prior individual owners were experiencing difficulties in meeting rate payments,  servicing mortgage indebtedness,  controlling weeds,  and  were having problems with tenants.  Mr Hercus’ advice was that the formation of the Trust was a sensible reorganisation of ownership interests so that the land could be more conveniently managed and dealt with.

(b)      Sales to the Council

[6]       The financial difficulties of the previous owners were such that one of the first major issues to be addressed was that the Trust had to consider a sale of part of its lands.  Kapiti Borough Council, the predecessor of the defendant, had expressed an interest in purchasing some of the lands in 1975.   In 1981, the Council was interested in obtaining part of the Trust’s lands for an extension to Rimu Road.  That part of the land was, as I later describe, subject to a designation under the District Scheme for roading purposes and for a civic centre.   A sale of that land to the Council was therefore initiated.   An agreement was entered into for the sale of
3.755 hectares to the Council in November 1981.   The recitals to that agreement noted the provision in the District Scheme for the Rimu Road extension and for the designation as a civic centre.  There was also a small strip of land adjacent to the area required for road extension, needed by the Borough as an isolation strip from the new road.   It appears from the documentation that that isolation strip was not covered by the designation, but that it was included in the sale because it would

isolate lands still owned by the Trust from access to Rimu Road, so that no question of betterment to that adjoining land would arise.  The agreement recorded that the Council would take the land pursuant to s 32 of the (then) Public Works Act 1928 for the purposes of extensions to Rimu Road, enabling a civic centre and an isolation strip.  The total compensation was fixed by the agreement at $108,900.  From that purchase price all Trust debts were able to be paid and approximately $60,000 was left over.  The November 1981 agreement was entered into before the formation of the Trust and appointment of trustees had been formalised by the Maori Land Court. That agreement was accordingly entered into by the previous owners.  The transfer of title did not take place until about a year later when the necessary orders were formalised.  It is not in dispute that the Ngahina Trust is the proper successor of the owners who entered into the 1981 agreement.  A compensation certificate under the Public Works Act was lodged, and the land was subsequently transferred to the Council.  The Rimu Road extension was formed and dedicated as a road.

[7]       Subsequently, an  area of 1656m2  of the land transferred under the 1981 agreement was sold by the Council to Radio Horowhenua.  In the subdivision carried out for that sale, the opportunity was taken to identify an adjacent area, (through which the Wharemauku Stream flowed), to subdivide that area and to vest it as a local purpose (utility) reserve.   A claim in respect of the Radio Horowhenua land was initially made in this proceeding, but that claim was not pursued at trial.  The balance of the land from the 1981 purchase retained by the Council (excluding the road, isolation strip, local purpose reserve and Radio Horowhenua land) was 3.3181 hectares, now comprised in CTWN31D/413.  The land in that certificate of title is the  subject  of  the  claim  in  these  proceedings.    It  has  been  referred  to,  for convenience by the parties, as “the 1981 land”.  I adopt that nomenclature.

[8]       Not long after the transfer of the 1981 land, Mr Hercus raised the possibility of  the  Council  acquiring  further  land  from  the  Trust.    Among  the  land  which Ngahina Trust owned was 17.1951 ha adjoining the 1981 land, being part Ngarara West F.   Part of that land was the subject of the designations to which I have referred,  and  part  of  it  was  zoned  for  commercial  purposes.    In  a  letter  dated
3 November 1982 to the Council, Mr Hercus noted that some of the land was zoned

for commercial retail purposes and the Trust was receiving inquiries about the availability of this land for such purposes.  His letter said:

… the Trustees are now in a position to deal with the portion of the Ngarara West E and F Block which was formerly known as Ngarara West B 3C balance.  Within this area are three portions in which the Kapiti Borough is interested, namely the area zoned for Park, to the North-east, the area zoned for Civic Centre in the middle, and part of a proposed Recreation Reserve. The  balance  of  the  former  Ngarara  West  B  3C  Block  is  zoned  for Commercial Services, and it seems that the Trustees could develop this area by continuing the formation of Ihakara Street until it reaches the boundary of Ngarara West B 3B and by forming the proposed short cross street to the Civic Centre Reserve as shown on the District Scheme.

As the land zoned for Civic Centre and for Park and for Recreation Reserve cannot be put on the market for sale to purchasers other than the Kapiti Borough Council, we suggest that the Trustees enter into an agreement with the Council along parallel lines to the agreement which was implemented in regard to the portion of land already agreed to be acquired by the Council in conjunction with the land in Lots 1, 3 and 4 on Plan 52906.

[9]       The Council provided an interim response to that letter in these terms:

It will be appreciated that the contents of your letter have some far reaching effects  on  Council,  and  particularly  its  finances,  so  that  some  of  the principles set out therein will have to be discussed with Council before I can give you any firm decisions.

[10]     The letter of 3 November 1982 was the subject of a report from the Town Clerk to the Council.  The Town Clerk commented on the Council’s designations of part of the Trust’s lands in these terms:

In regard to the balance of the letter it is fair to say that the approach was bound to come sooner or later as will similar approaches from other areas of land designated for Public Purposes in the Borough.

Under the District Scheme, Council has designated privately owned land for community purposes, whether it be for Civic Centre or Reserve purposes, and sometime in the near future, unless Council wishes to uplift the designations, arrangements for acquisition must be made.

[11]     The  Council  appointed  a  subcommittee  in  December 1982.    It  advised Mr Hercus of this.  However, it seems that there was no substantive response to the Trust’s inquiry.

[12]     On 11 March 1985, Mr Hercus wrote to the Council advising that the Trust had noted:

…  that  there  appears  to  be  some  demand  at  present  for  land  in  the commercial service zone.

Part of the Ngarara West F block owned by the trustees is zoned for that purpose and the trustees wish to explore the possibility and economics of preparing the land for sale and disposing [of] it.

[13]     The letter went on to inquire about a segregation strip (or “spite strip”) owned by the Council at the end of Ihakara Street.  That was relevant to any development of the Trust’s commercially zoned land.  An extension of Ihakara Street was needed to provide access to the proposed subdivision of the Trust’s commercially zoned land. That could not be achieved until that segregation strip was dedicated as road.  The letter suggested a possible exchange of the segregation strip for some land owned by the Trust which was affected by Council work on flood prevention for the Wharemauku Stream which flowed through the land.   Comments by the Deputy Borough engineer on this proposal, conveyed to a meeting of the Planning and Development Committee of the Council on 7 May 1985, included the following:

…  This may be an indirect way of trying to sell the Council more land for Civic Centre by the owners of Ngarara West F, which Council may not wish to purchase at this time.

In the long term it would be very desirable to acquire this area for Civic
Centre if a satisfactory exchange can be obtained.

[14]     There is no record of any Council response to the letter of 11 March 1985. The Trust proceeded with its plans to seek approval for a subdivision of its commercially   zoned   land.       Mr Hercus   wrote   to   the   Council   again   on
3 September 1985 about the commercially zoned land, and the designated land.  The Trust renewed its request to be able to obtain title to the segregation strip.  The Trust suggested  a  proposal  whereby it  would  acquire  that  land  from  the  Council  for essentially a nominal consideration and that the Council would acquire from the trustees all of the designated land owned by the Trust, for $75,900.  The possibility that the purchase price might be paid over a  ten  year period was raised.   The proposal was summarised by the Council for the purposes of a Planning and Development Committee meeting in these terms.

Consideration was given to a letter from Hogg Gillespie Carter and Oakley in which they gave prices for the various portions of land with Part Ngarara West F Block (formerly Part Ngarara West B3C Block).   They noted that portions 1, 2 and 4 are all zoned for various purposes which would involve

acquisition  of  title  by  the  Kapiti  Borough  Council  and  they  had  asked Council  to  consider  a  figure  of  $75,900  as  an  acceptable  basis  for acquisition.

[15]     The Trust’s proposals were referred to a subcommittee.  There is no evidence of any response following the deliberations of the subcommittee.  A response was requested by Mr Hercus by letter dated 16 December 1985 but there is no record of a reply.

[16]   The possibility of purchase by the Council of the designated land was resurrected  by the  Council  in  January 1987.    Neither  the  oral  evidence  nor  the documentary record discloses any clear “trigger” for the Council’s interest in the face of its earlier lack of response to the Trust’s overtures.  Mr Manderson, the Town Clerk, wrote to Mr Hercus on 16 January 1987 referring to the September 1985 offer. He advised that the Council was now considering acquisition of further land adjacent to the Council building, and informed the trustees of the Council’s renewed interest. He  proposed  a  meeting  between  the  parties  in  February 1987.    Mr Manderson reported to the Planning and Development Committee on 21 January 1987.  He said: “it was unclear as to why the negotiations broke down in September 1985”.   The description of negotiations having broken down is not supported by the records. There is no oral or documentary evidence of any negotiations at that time.  Rather the documentary record suggests that the Council did not respond substantively to the September 1985 offer.  Mr Manderson in his report to the Committee noted the Trust’s offer price of $75,900 in September 1985 and estimated the price to be offered now should be $84,000.  He said:

The  land  being  offered  is  ideally  placed  for  future  Civic  Centre  and
Commercial expansion.

…

To finance the purchase of this land it is recommended that funds be taken from the Land Purchase Reserve Account.  This is a new Reserve account set up recently to receive the proceeds of the sale of the land adjacent to the Council Building and the site in Raumati Road.

[17]     Mr Manderson’s  evidence  in  chief  as  to  the  purposes  of  the  Council  in agreeing to purchase was as follows:

33.       I was not aware at the time of any indication that the Borough Council’s purchase of the 1987 land was intended to be taking place under the Public Works Act.  It was, at all times, considered to be a commercial, arms-length, contractual transaction with the Trust.

34.       Further, at no time during the acquisition process was I aware of any pressure being brought to bear by the Borough Council on the Trustees to sell the land.

[18]     In cross-examination on this issue, he said:

Q.         So in terms of the way in which the Trust was negotiating with council, do you agree that it was reasonable for the Trust to assume that the land was being acquired for the public works purposes identified by the designation?

A.         It could’ve been considered that way, yes, but at the time when I was there in negotiation, there was no mention at all of the – of any requirement.

Q.         No, but let’s look at what the facts were.  The trust’s solicitors are putting to the council that the designations exist and they’re the obstacle and the council’s the only player in the market, do you understand that?

A.	I can understand that.

Q.         And I’ve already put it to you and you’ve agreed that on the other hand the council is saying the designations are there for those purposes and we either lift them or we acquire, agree?

A.	Yes.

Q.         Right.  What I’m putting to you is that from the trust’s point of view, do you agree that it was reasonable for the trust to assume that the council’s acquisition would be for the public works purposes that the designations embody?

A.         Ah, yes I do, but I also go back to the fact that considering the length of time between that initial thing and then when the trust approached council for purchase, there was no further mention of that – or the planning on requirements, and the requirement that council buy its land.

[19]     A subcommittee of the Planning and Development Committee was formed to progress the proposal.   That step was reported by Mr Manderson to Mr Hercus. There was a meeting between the Trust and the Council on 2 March 1987.   The Borough then sought a valuation for the land.  A letter from Mr Hercus following the meeting  suggests  that  the  valuation  was  to  be  referred  to  the  trustees  for consideration together with the Council’s offer.  There is however no evidence that

the valuation was made available to the trustees.   A valuation was obtained from Steele Robertson, public valuers, dated 6 April 1987.  The approach to valuation was described in the report in these terms:

In order to determine the valuation of this land we have disregarded the designations over this land and our assessment is based on the underlying zones.   Furthermore, no account has been taken that the Council is the adjoining owner as the purpose of this assessment is determining the current market value of the land if placed on the open market for sale.

[20]     The fair market value of the property was assessed $95,000.  Mr Manderson reported to the Subcommittee and suggested an offer of $90,000.  An offer was made in  a  letter  from  Mr Manderson  to  Mr Hercus  dated  13 May 1987.    One  of  the conditions of that offer, which differed from the earlier offer by the Trust, was that the segregation strip at the end of Ihakara Street be subject to separate negotiations. Mr Hercus wrote to Ms Taylor on 20 May 1987 advising receipt of the offer.   He recommended its acceptance, noting that “it will also provide a certain amount of funds to enable us to go ahead with the Ihakara Street proposed subdivision”.

[21]     As something of an aside, I observe that Ms Taylor’s evidence is that the condition that the spite strip was to be dealt with separately disappointed the trustees. That strip was essential for access to the Trust’s subdivision.  Ms Taylor’s evidence that one of the principal reasons the Trust never proceeded with that subdivision was the Council’s advice that the sale of the spite strip was to be the subject of separate negotiation.  That assertion is disputed by the Council.  The Trust’s subdivision for the  commercially  zoned  portion  of  the  land  was  approved,  in  September 1986, subject to certain conditions.  The Council did in August 1988 agree to remove the spite strip by having it dedicated as a road, subject to acceptance by the Trust of certain conditions, which did not include any payment for the spite strip by the Trust beyond the costs associated with uplifting it and forming the road.  The reasons why the subdivision did not proceed are not apparent from the evidence before me.  It is not necessary for me to examine this aspect in more detail.   Nothing which is of relevance to the resolution of this case turns on that issue.

[22]     In June 1987 a scheme plan was prepared for the purpose of subdividing the relevant part of the Trust’s land (part Ngarara West F) into two lots, one intended to

be retained by the Trust and one to be transferred to the Council.   The lot to be retained by the Trust was the commercially zoned land which was the subject of the proposed Ihakara Street subdivision.   The lot to be transferred to the Council comprised the land which was designated for reserve, road, and civic centre under the district scheme.  It also included an area of approximately 7,400m2, part of which was designated as reserve in the District Scheme and part of which was zoned commercial.   That area of land was intended to be transferred to the Council in satisfaction of the reserves contribution payable in respect of the Ihakara Street
subdivision.

[23]     After   obtaining   instructions   from   the   trustees,   Mr Hercus   responded accepting the offer.   The area involved was noted as 12.8 hectares.   The Council submitted a sale and purchase agreement showing the purchase price at $90,000. Mr Hercus wrote to the Council raising the point about the 7,400m2  which was to satisfy the reserve contribution for the Ihakara Street subdivision.  He also raised the question of whether the Council’s valuation had included that 7,400 m2  area.   He said:

Obviously if the 7400m2 shown as reserve land including the added strip on the plan SP460 is to satisfy the reserve contribution for the land in that Plan, we cannot expect the Kapiti Borough Council also to pay its cash value.  If the Council’s offer of $90,000 was in fact based on a valuation of the areas of land marked 1, 2 and 4 on the Plan attached to the offer and not just based on the valuation of the areas of land marked 1 and 2 on that plan, then we think it would be right and proper for the Council to revise its offer to a figure based on the value of Lots 1 and 2 only.

[24]     The  purchase  price  was  amended  to  $84,800  to  reflect  that  point.    The agreement was finally signed and returned to the Council on 13 November 1987. The   deposit   was   paid   on   17 November.       Settlement   was   effected   on
17 February 1989 and the transfer to the Council registered on 17 March 1989.  The land transferred to the Council was 12.7495ha being the land now comprised in CFR WN 33B/16.   That includes the 7400m2  reserves contribution.   That area is an irregularly shaped extension in the south-western corner of the land.  I refer to the land in that certificate of title, less the 7400m2, as “the 1987 land”.  I refer to the area
of 7400m2 as “the reserves contribution land”.

(c)       Planning status of the land

[25]     It is necessary to describe the planning status of the 1981 land and the 1987 land throughout the period relevant to this proceeding.  The evidence on this aspect is from Mr Baily, a planning consultant called by the plaintiff, and Messrs Pearson, Guerin and Kinnear, called (or having their evidence read) for the Council.  Mr Baily and Mr Kinnear are both independent consults.

[26]     Mr Pearson and Mr Guerin have both worked in planning capacities for the Council.   Mr Pearson joined the Council as a planning officer in January 1978. Before that he had been employed by the Council’s town planning consultants.  He left the Council in 1996.  Mr Guerin has worked in a variety of planning roles for the Council from 1989 to 2007.  From February 2005 he was sustainable development manager for the Council.

[27]     The starting point is the Council’s Proposed District Scheme 1976.  That was publicly notified on 30 May 1977.   In that scheme, a large area was designated as “reserve for civic centre”.   Adjacent was a significant area designated as “park”. There were also designated proposed roads.  The 1981 land was entirely within the area designated reserve for civic centre, and a proposed road.  The 1987 land was entirely included within the areas designated reserve for civic centre and park, with associated roads.  Thus, the entire area of the 1981 land and the 1987 land was the subject of designations.  The designated land was subject to restrictions under (inter alia) s 120 of the Town and Country Planning Act 1977 which prohibited any work on the land without the consent of the Council.  The then owners of the 1981 land and the 1987 land, and other adjacent lands, predecessors in title of the trustees, objected to the designations.   They appealed to the Planning Tribunal against the disallowance of that objection.  That appeal was dismissed.

[28]     The designations were included in the scheme when it became operative on

1 March 1981.  There was no relevant change to the designations during the currency of that scheme.  Both transfers, of the 1981 land and the 1987 land, took place while that scheme was operative.

[29]     In 1989 the Council publicly notified the Kapiti District Scheme Proposed Review No 1.  Under that proposed review, the 1981 land remained designated for civic centre and proposed road.   There were changes to the designations of the
1987 land from the 1981 District Scheme.   The area of the proposed recreation reserve was reduced.  The part removed from that designation became designated as “proposed reserve for civic purposes” and associated proposed road.   The area designated for civic centre purposes was reduced, so that it extended into the 1987 land only in a smaller area towards the south eastern corner.  The area in the 1987 land  to  which  the  previous  civic  centre  designation  no  longer  applied,  was designated part as proposed transport centre and part drainage reserve.  The balance of the 1987 land (about ⅓ to ½ of it, on my estimation) was no longer designated and reverted to its underlying office zoning.  Mr Pearson’s evidence in chief as to these changes was as follows:

44.       I  cannot  recall  the  precise  reasoning  behind  reducing  the  Civic Centre designation, but I believe that it is probably on the basis there was already sufficient land provided for future Council purposes and there was an increasing interest in availability of land for office and other commercial purposes.

45.       The designated drainage reserve, in the proposed Review No 1, was extended through the 1987 land following the course of the Wharemauku Stream, and Ngahina Street was proposed to be extended to the proposed through road.

46.       There was a minor amendment to the proposed recreation reserve, to the north of the 1987 land, by naming it specifically as “Botanical Gardens”, and a proposed transport centre was designated, adjacent to the proposed road and drainage reserve.  This transport centre had originally, in the 1981 Operative District Scheme, been located on the intersection of State Highway 1 and Kaptiti Road.

47.       There was also another designation change to the 1987 land.   An area  which  was  formerly  proposed  recreation  reserve,  became another  reserve  for  civic  purposes,  located  to  the  east  of  the proposed Ngahina Road extension.  This site has been occupied by a Women’s Centre since the early 1990s.  The underlying zoning of the new proposed civic purposes reserve was not recorded in the proposed Review No 1.

[30]     In 1994 the Council obtained a report from Works Consultancy Services (WCS) on the development of the Paraparaumu Town Centre.  The purpose of the report was to present “an implementation strategy to assist the Council and community   in   the   future   development   of   the   Paraparaumu   Town   Centre”.

Mr Guerin’s evidence is that this study by WCS, completed in October 1994, was a major influence in the formation of the Paraparaumu Town Centre.  That provided Council with a set of recommended actions to develop the Town Centre over time. That report suggested a vision for the future of the Town Centre which sought to achieve a form and character of development which enabled the establishment of a mix of activities including civic and community functions which was a prosperous centre of business within the region.   Mr Guerin’s evidence is that the preferred outline and concept plan included, for the Council owned land, a civic core around the Council/library buildings (both of which are on land adjacent to the 1987 land and to the drainage reserve beside the 1981 land);   an adjoining commercial core towards the southern boundary;  and a community core and a central parks zone to the north and west of Council’s land.  The report discussed a number of alternative courses of action the Council could pursue in order to achieve the preferred development  of  the  town  centre.    In  July 1994  the  Council  passed  a  resolution endorsing as its preferred option a concept which included a variety of mixed uses some of which included elements of retail, specific provision for civic community and entertainment facilities, and the development of a commercial core.   The Paraparaumu town centre covered an area which included the whole of the 1981 and
1987 land.

[31]     On 15 December 1994 the Council approved a new transitional District Plan. That became operative on 25 January 1995.  The relevant designations in that plan remained unchanged from those in the 1989 proposed District Scheme.

[32]     A draft District Plan was released for comment in January 1995.  That plan adopted a quite different approach.   That different approach is at least in part a reflection of the differences in planning law under the Resource Management Act
1991 as compared with the Town and Country Planning Act 1977.   It included a Town Centre zone.   The objective of that zone was to develop the Paraparaumu Town Centre consistent  with the framework pattern of development and design principles recommended by the WCS 1994 study.   The policies to implement that objective included permitting a broad range of community civic commercial entertainment and recreation activities within the Town Centre’s zone.  The plan was subsequently   notified    as    the    Council’s    first    proposed    District    Plan    in

September 1995.   It became operative on 30 July 1999.   The detailed zonings and designations  under  the  previous  schemes  were  replaced  by  the  “Town  Centre” zoning.  That extending over a substantial area of land, including the whole of the
1981 land and the 1987 land.   There are no longer any designations affecting the

1981 land or the 1987 land, apart from a designation for plantation reserve along the route of its previous drainage reserve.

[33]     Following objections,  independent  Commissioners  were  appointed  by the Council in 1997 to hear submissions on the Paraparaumu Town Centre zone.  In their report, the Commissioners noted some confusion over the Council’s vision for the Town Centre and commented as follows:

In addressing this issue we acknowledge that the District Plan is only one means by which the community might seek to influence the future planning of the town centre.   Just as important, and in some respects perhaps even more important, will be other actions taken by the Council through its strategic plan, its annual and long term financial plans process, and, most importantly, through its ownership of key land holdings in the zone.

To the extent we have been able in the context of the District Plan, we have responded to the issues raised by the submitters.  For example, through the addition of provisions addressing the resource management issues for the Central Area, including the Paraparaumu Town Centre – refer new Parts B.4, B.5 and B.6.
It is for these reasons that we made the first of the above recommendations. We consider that a statement along these lines by the Council is essential in
promulgating  public  awareness  and  understanding  of  the  town  centre
concept.  This statement should be regarded as part of and/or the foundation for on-going public consultation.

[34]     Mr Guerin  in  his  evidence  noted  a  number  of  significant  constraints  on development of the 1981 land and the 1987 land, including flood hazard, the location of the Wharemauku Stream, the peaty soils which impose additional construction costs and the limited road frontage for the 1987 land.

(d)      Council’s dealings with Kapiti Coast Enterprise Trust

[35]     In November 1993 the Council entered into a trust deed which established the

Kapiti Coast Enterprise Trust (KCET) for charitable purposes for the promotion,

benefit and  advancement of the  community.   It  also entered into  a relationship agreement with KCET setting out the obligations and responsibilities of the parties in achieving those purposes.  In October 1994, the general manager reported to the Council on the proposed Paraparaumu Town Centre concept.  He noted discussions with KCET, which had subsequently submitted a proposal to become the lead development agency.  The conclusion in his report was:

The development of the Paraparaumu Town Centre is best handled at arms length from Council itself.  The proposal from the Trust to act as the lead development agency is a positive move.  Further critical examination of the issues is best undertaken by a small working group.

[36]     The principal recommendation of that report was:

That the Council gives serious consideration to using the Kapiti Coast Enterprise Trust as lead development agency for the Paraparaumu Town Centre.

[37]     Representatives of the KCET made a presentation to a meeting of the Council on the KCET proposal to be the lead development agency for the project.   The Council resolved at that meeting to give serious consideration to using the KCET as the lead development agency and formed a small working group to examine the issues involved and work with the KCET.   In a subsequent report to Council in February 1995 the general manager concluded:

If  Council  is  to  realise  the  vision  contained  in  the  Paraparaumu  Town Centre, I would recommend it utilise the expertise of the Enterprise Trust to see that this is achieved with the minimum capital involvement or financial risk to Council.

[38]     At its meeting on 23 February 1995 the Council resolved:

That Council agree to the appointment of the Kapiti Coast Enterprise Trust to manage the development of the Council owned land within the Paraparaumu Town Centre subject to determining its commercial feasibility, and that further negotiations be undertaken to achieve the economic development of Council owned land in the interests of the community at the least cost and financial risk to ratepayers.

[39]   There followed several months of negotiations over the terms of that appointment.   It was envisaged that the KCET would become the owner of the Council land in the Town Centre area (which included, but was not confined to, the

1981 land and the 1987 land) and would on sell the land to a developer nominated by KCET to carry out the plan which was to be formulated by KCET.   There were lengthy and substantial negotiations between the Council and KCET between June and October 1995.  A significant issue in those negotiations was the option price for the Council land.   Several valuations were obtained before the option price was agreed.

[40]     The  agreement  between  the  Council  and  the  KCET  was  signed  on

13 October 1995.  The Council granted KCET a licence to investigate the feasibility of developing the Town Centre land (which included the 1981 and 1987 lands).  The licence was for the purpose of investigating the feasibility of developing the land for a comprehensive development.  The term comprehensive development was defined as:

“Comprehensive Development” and “Development” means a development for community, civic, commercial, entertainment and recreation uses which includes:

(i)         regard to the Council’s objective of establishment of a “town centre” consisting of civic and community facilities (civic hall, library, arts centre, administrative offices);

(ii)	development of the town centre or monetary contribution in lieu; (iii)	meeting the requirements of the Council for a roading plan;
(iv)       provision of public open spaces or monetary contribution in lieu;

(v)        high   standards   of   architectural   design   for   all   buildings   and structures;

(vi)     payment, subject to prior agreement, for or development of all infrastructure works required for the development (according to the cost- sharing policies applied by the Council);

[41]     Under the agreement, KCET was also granted an option to purchase the Town Centre land for a comprehensive development within a two years period, extendable by one further year.  The purchase price was set at $2.013m, adjustable if the option was not exercised in the first year.  There were detailed conditions on the exercise of the option.  These included:

(a)       Submission by KCET to the Council of proposal for comprehensive development of the land, to the stage of concept plans, preliminary drawings  and  outline  specifications,  with  possible  provision  for staging the comprehensive development;

(b)	Approval of the proposal by the Council as land owner;

(c)       KCET having a binding agreement with a suitable party capable of carrying out the development for the assignment of KCET’s rights on the exercise of the option;

(d)	Agreement on the timing of payment for the land under the option.

[42]     The agreement further provided that the exercise of the option would give rise to a binding sale and purpose agreement for the land.  That agreement would be subject to conditions subsequent as to:

(a)	KCET obtaining all necessary resource and building consents;  and

(b)       Compliance by the Council with all statutory procedures precedent to the sale of the land.

[43]     KCET had engaged consultants to produce a development concept for the Town Centre.   The development concept and feasibility report were submitted by KCET   in   January 1996.      That   included   four   precincts:      civic/government, commercial,  civic  park,  and  retail.    Under  that  concept  plan,  the  whole  of  the
1981 land was included  within the precinct for retail development.   Part of the

1987 land was within the proposed civic/government precinct.  Part of it was noted as subject to existing community functions.  The balance was within the commercial and retail precincts.

[44]     Mr  Pearson,  then  Manager  Planning,  gave  consideration  to  the  planning issues arising from the proposed development of the land.  He prepared a file note on
26 January 1996, the purpose of which was stated to be:  “To give a clear indication of the current zoning of the property and my personal view on the likely future use of

land.”  He noted an anomaly in the previous district plans as regards the underlying zoning of the area designated for civic centre under the prior plans.  He expressed the opinion that the underlying zoning of those areas was office.  In giving his reasons for that view he noted:

When the District Plan was first produced for the newly formed Kapiti Borough, a committee comprising Councillors, Government representatives and consultants met on a regular basis to prepare the District Plan.

When considering commercial development it was decided that Coastlands would become the main centre and that the land the subject of this report would be developed to contain all the civic amenities including new Council offices, library etc.

…

Thus it can be seen from the above, that since at least 1976, the subject site was intended to be used for civic and or office purposes.

[45]     His opinion at the time of his 1996 note, as to the future use of the land, was expressed in these terms:

While I am of the opinion that this type of activity is still appropriate, I now believe that the site could be used for limited retail purposes provided that the following conditions are addressed:

a)         Only stand alone, bulk retailing i.e. trading warehouses are permitted b)         Site and carparking areas to be extensively landscaped
c)         Strict controls on advertising signs

d)         Retailing to be confined to area between proposed Boulevard Road and Wharemauku Stream

[46]     The regulatory services manager of the Council, in submitting the KCET

report to the Council in February 1996, made the following recommendations:

1.         That the report be received.

2.         That Council adopt the development/concept proposed by the Kapiti Coast Enterprise Trust for the 17.8 hectares of Council owned land subject to the necessary resource management consents being obtained by any developers.

3.         That   Council   confirm   its   earlier   resolution   to   appoint   a Commissioner  or  Commissioners to  hear  any application  for  the development  of  land  currently  owned  by  Council  in  the  Town Centre.

4.         That  Council  direct  staff  to  prepare  a  variation  to  the  proposed District Plan to recognise the changed circumstances affecting the Town Centre.

5.         That Council resolve to uplift the designation as Civic Centre of the land as shown in the operative Kapiti Coast Transitional District Plan.

[47]     That report and the feasibility report, were considered at a special meeting of the Council on 22 February 1996.  The following resolution was passed:

That Council adopt the development/concept proposed by the Kapiti Coast Enterprise  Trust  for  the  area  of  Council  owned  land  specified  in  the agreement subject to the necessary resource management consents being obtained by any developers.

[48]     There was considerable opposition to the Council’s adoption of the KCET development proposal.  The operator of the nearby Coastlands shopping centre was a significant opponent, through Ngahina Developments Ltd.  It is appropriate to record that Ngahina Trust had, in 1984, entered into arrangements with the owner of the Coastlands shopping centre land for the development of some other land owned by Ngahina Trust, zoned for commercial purposes and not subject to any designation, adjacent to the Coastlands site.  Ngahina Trust became a 50 per cent shareholder in Ngahina Developments  Limited.    A  company associated  with  the  owner  of  the Coastlands  land  owned  the  other  50 per cent.     The  Ngahina  Trust  land  was transferred to Ngahina Developments Limited.

[49]     That opposition prompted the appointment by the Council, in March 1996, of consultants McDermott Miller Limited to undertake an assessment of the economic and social repercussions of proceeding with the Paraparaumu Town Centre development.   The McDermott Miller report was received in April 1996.   It was initially kept confidential to the Council’s executive until a decision of the Ombudsman in March 1997 required its public release.  The report was critical of the KCET development proposal.   In expressing conclusions as to whether the Town Centre development as envisaged in the KCET proposal would contribute to the achievement of the Council’s goals, McDermott Miller reported:

Will  the  Town  Centre  development  as  envisaged  (in  the  Kapiti  Coast
Enterprise  Trust  report)  contribute  to  the  achievement  of  these  goals’

meaning the concept is sound in principle and on balance will result in positive social and economic effects?

The Kapiti Coast Enterprise Trust development proposal would contribute in part to achievement of the environmental outcomes sought for the Paraparaumu Town Centre.    It provides for civic and eventual commercial/office use, but predicates the Centre’ future on development of a major retailing role. In our opinion, this is unsound in principle because:

it would switch the emphasis of the Centre from a civic to a commercial role;

it would have the effect of skewing Kapiti Coast’s economic base even more towards retail services;

it would impact negatively on existing retailing in Kapiti Coast (see question
3 below);

it would remove a prime site from potential use by more beneficial employment generators (commercial/office or hotel/conference use);

it would create a development which is in competition with rather than complementary  to  the  adjoining  shopping  and  commercial  area  between Rimu Road and State Highway one;

the financial investment interest it is likely to attract would not be large enough  by itself  to  generate  a  prosperous  centre  of  business  within  the region, yet would be large enough to dilute the market and depress prices for existing undeveloped retail land.

On balance, we believe the Kapiti Coast Enterprise Trust development proposal “is unlikely to have a positive social and economic effect”.

[50]     The documentary record indicates that following receipt of the McDermott Miller report, work on the planning changes which would be necessary to implement the KCET proposal was halted by May 1996.  On 6 May 1996 the Council wrote to KCET.  The Council’s position as stated in that letter was that the KCET report did not satisfy the condition in the agreement between KCET and the Council for a fully detailed comprehensive development proposal.  The letter set out in some detail the respects in which the Council considered that the necessary conditions for the exercise of the option by KCET had not arisen.  Among the matters raised was the condition of the agreement requiring compliance by the Council with all the statutory procedures precedent to the sale of the land.  The Council’s comment was:

These will include the passing of a resolution under s 230 of the Local Government  Act  notifying  Council’s  intention  to  see  the  land  plus procedures  under  the  Reserves  Act  for  the  revocation  and  revesting  in

Council of certain reserves.  Our lawyers will also need to satisfy themselves there are no requirements to be made under the Public Works Act.

[51]     The Council sought legal advice to confirm whether or not the conditions of the agreement were satisfied.  That advice confirmed the Council’s position that they were not.

[52]     In a response dated 24 May 1996 to the Council having “gone cold” on the proposal, the KCET (and its proposed development company) expressed the following:

We believe your councillors and our trustees have a firm understanding that the feasibility study provided an “in principle” agreement so that individual projects could be designed which would in turn have to meet KCDC detail planning requirements and the principles of the option agreement relating to the Town Centre concept including their quality and economic feasibility, before we could purchase each site.

Because of the requirement of the Council to avoid any development risk and yet retain control over the whole development, a somewhat unusual agreement  has  been  crafted  to  reflect  a  close  partnership  relationship between KCDC and KCET, which relies upon a great deal of trust between the parties to make it work.   We doubt that any “arms length” developer would be interested in such an arrangement with the amount of control vested in the Council.

[53]     The  Council  subsequently obtained  further  planning  advice  from  another planning consultant in relation to the proposed development of the Paraparaumu Town Centre.  There were further exchanges between the Council and KCET.  These did not lead to any consensus between the Council and KCET which could have put the KCET proposal back “on track”.  The agreement between KCET and the Council expired in October 1997.

(e)       Subsequent planning developments

[54]     Following the expiry of the KCET agreement, there were a number of further initiatives by the Council in planning for the Town Centre.  New consultants, Boffa Miskell, were engaged to prepare a design brief for the civic core and new library on Council land.   A report from Council officials to the Infrastructure Services Committee of the Council in October 1999 proposed a Council “vision” for the

Paraparaumu  Town  Centre  and  that  vision  was  endorsed  by the  Committee  on

20 October.  That vision was expressed in these terms:

Council’s vision for the Paraparaumu Town Centre

The Paraparaumu Town Centre is the vibrant administrative, social and cultural  focus  for  the  district  which  integrates  community  and  civic amenities in a central core, protects and enhances the natural and physical environment, and attracts people for social, cultural and leisure activities.

[55]    Design assumptions adopted in association with that vision included the following:

New library to be located within five minutes walk of civic buildings and community

Concept  Plan  to  incorporate  facilities  provided  for  in  the  Long  Term
Financial Strategy;  library, an arts centre, aquatic centre, Council offices

Concept Plan to include other facilities such as children’s play area, a managed wetlands, and a recreation centre

Excess land disposed for commercial purposes to offset costs

[56]     The  Committee’s  endorsement  was  subsequently  endorsed  by  the  full Council   at   a   meeting   on   11 November 1999.      The   Council   authorised   the appointment of an urban designer to undertake a consultation strategy “as a prelude to advancing the Paraparaumu Town Centre plans for comprehensive consultation with the community”.   A group of consultants were appointed, including Boffa Miskell Limited for planning and urban design review issues.  They recommended several options which were investigated and consulted upon.  The report noted that all four concept options had some common elements.  These included:

Retail development has been confined to the land on the south-east side of
Rimu Road (i.e. the Coastlands area).

The civic centre has generally been located adjacent to and west of the community centre on Kapiti Coast District Council owned land.

Office park development has been located on the west side of Rimu Road generally between the retail development at Coastlands   and the proposed civic centre.

…

The Wharemauku Stream has been realigned and is made a feature element within the entire town centre development.

A lake on the Wharemauku Stream is proposed as a civic and town centre feature.

[57]     It is not easy to discern, from the documents produced at trial, the precise uses proposed for the 1981 land and the 1987 land in these design concepts.   In August 2000 the Council passed the following resolution:

1.         That Council favours option four as presented in the Kapiti Town Centre Development – Concept Design Options Report June 2000 to be refined taking into account Council and stakeholder input.

2.         That Council notes the refinement of option four is to include the preparation  of  an  outline  strategy  for  development  of  the  town centre.      This  is   to   be  prepared   in   consultation   with   major landowners.

3.         That Council notes the amended concept plan will be presented to Council and landowners prior to seeking public response/input into the proposal

[58]     The records suggest that the subject was controversial.  The Council does not appear to have actively progressed the concept in the report.  As Mr Jefferies, who has conducted a substantial review of the documentation said in evidence:   “No further progress appears to have been made in relation to the planning for a Town Centre in accordance with the Boffa Miskell concept.”

[59]     The Council subsequently prepared a long term Council Community Plan for the period 2004 to 2014.   The Plan has subsequently been updated to cover the period 2006 to 2026.  Mr Guerin describes the Council’s current proposal for works on the Town Centre land in these terms:

The Council has also included substantial funds in its 2009-2029 LTCCP to build civic facilities on its PTC land [ABD 7/2774].   This includes $10 million for the develop of its town centres over a 10 year period including the PTC, $10.5 million to build an aquatic centre, $6 million in year 14 for a performing arts centre and $20 million in year 19 for a civic administration building.    It  has  built  civic  buildings  on  its  PTC  land  including  the community centre and the library ($5.6 million) completed in 2003.

[60]     One project which has apparently reached a significant stage of planning and preliminary development is a proposal to build an aquatic centre on the land.  A trust set up by the Council has raised approximately $2m as a contribution to the cost of construction.  Designs have been developed and released for consultation.  The next

stage would be for the Council to make a decision about going into detailed designs and then going to tender.  The 2006 update of the Long Term Council Community Plan noted that the project will not proceed unless 25 per cent external funding is achieved.  Mr Jeffries also indicated that a recreation centre may be an intended part of the overall development.  The precise details, including the proposed location, are not available from the evidence.  In the 1994 Concept Plan for the Town Centre part of the 1987 land is also proposed for public open space.  The bulk of the 1981 land is proposed for mixed use/office/commercial.

(f)       Physical development of the land

[61]     Physically, the 1981 and 1987 land remains largely undeveloped.  The 1981 land is entirely undeveloped.   There has, as appears from the aerial photographs, been drainage work carried out in improving the Wharemauku Stream.  That work has affected the drainage reserve which was subdivided from the 1981 land in conjunction with the sale to Radio Horowhenua.  It has also affected the 1987 land, where the stream flows across that land.  Three buildings have been erected on the north eastern corner of the 1987 land.   A community building has been built, the timing of which is not clear from the evidence.  Mr Jeffries’ evidence is that this was financed through community fundraising.  The extent of any financial contribution by the Council is not clear.  The Council owns the building, which is leased to a trust which operates the community centre.   A second building operated as a women’s centre.  The Council leases the land to the government agency which is responsible for the women’s centre.   The third building is used by a local bridge club.   The Council owns the land, but the tenure of the bridge club and ownership of the building are not fully apparent from the evidence.

The issues

[62]	Mr Laing in closing submissions summarised the issues for decision as being: (a)	Does s 40(1) of the PWA apply to the subject land?

(b)	Do any of the exceptions of the offer back obligation in s 40(2) apply to the subject land and how should they be dealt with?

(c)	If   not,   should   the   Court   exercise   its   discretion   not   to   grant discretionary relief?

[63]   That admirably succinct statement of the issues provides a convenient framework for my discussion of the legal principles to be applied, their application to the facts as I have stated and found them, and the submissions of counsel.   Two points need to be made.   First, the questions must be addressed separately for the
1981 land and the 1987 land.   Second, the first issue involves two quite distinct parts, which I find it convenient to express as two questions:

(a)       Is the subject land held for a public work?  and

(b)	Is the land no longer required for that public work or for any other public work?

Issue 1:  Does s 40(1) apply to the 1981 land and the 1987 land?

(a)       Is the land held for a public work

[64]     Section 40(1) provides as follows:

Where any land held under this or any other Act or in any other manner for any public work—

(a)        Is no longer required for that public work; and

(b)        Is not required for any other public work; and

(c)        Is not required for any exchange under section 105 of this Act—

the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority, as the case may be, shall endeavour to sell the land in accordance with subsection (2) of this section, if that subsection is applicable to that land.

[65]     The first requirement for the application of the section is that the land in question is “held under this or any other Act or in any other manner for any public work”.  The term public work is relevantly defined in s 2 to mean:

(a)        Every Government work or local work that the Crown or any local authority is authorised to construct, undertake, establish, manage, operate, or maintain, and every use of land for any Government work or local work which the Crown or any local authority is authorised to construct, undertake, establish, manage, operate, or maintain by or under this or any other Act; and include anything required directly or indirectly for any such Government work or local work or use:

[66]     The term local work is defined to mean:

Local work means a work constructed or intended to be constructed by or under the control of a local authority, or for the time being under the control of a local authority.

[67]     The question whether land is held for a public work must in this case be determined by a consideration of the purpose for which the land was acquired.  That requires a separate examination of the circumstances of acquisition of the 1981 land and 1987 land.

[68]     The Council does not now dispute that the 1981 land was acquired for public work purposes.   It says that those purposes were the extension of Rimu Road, an isolation strip on the eastern side of that road extension, and for a future civic centre. I consider that the evidence clearly establishes that the 1981 land was acquired for public work purposes.  That this is so is clearly evidenced by the mechanism for the transfer of title to the Council as I have described in [6].  Compensation was paid under the PWA and a compensation certificate registered.   The procedure was appropriate only for land being acquired for a public work.

[69]     The 1987 land, as I have defined it at [24], does not include all of the land acquired in 1987.  It excludes the reserves contribution land.  The plaintiffs accept that that land is not subject to s40.  As this Court held in Dunbar v Hurunui District Council land acquired as a reserves contribution on subdivision is not subject to s 40.   The plaintiffs submit that the 1987 land, as defined, is held for a public work

under s 40. The Council disputes the proposition that the 1987 land was acquired as a public work.

[70]     The purchase of the 1987 land by the Council took the form of a sale and purchase agreement.  The acquisition was accordingly a voluntary one, not effected under the statutory powers of compulsory acquisition under the PWA.  I have noted, at  [16]  and  [17],  Mr Manderson’s  evidence  to  that  effect.    The  fact  that  the acquisition was not compulsory is not, however, conclusive.   I have also noted at [18],  the  cross-examination  in  which  Mr Manderson  acknowledged  the  Trust’s possible perspective on the issue.  There was from the Trust’s perspective only one possible purchaser, if it wished to sell the land.  The evidence which I have described makes that clear.  It is also clear that the Council recognised that it would have to purchase the land at some stage if it maintained the designation.  Those points had both been recognised in 1982, when the Trust’s first offer was made, in the documents described at [8] and [10].  Nothing occurred later to alter that position, at least from the perspective of the Trust.

[71]     Section 40 is not limited in its application to land compulsorily acquired for public   works   purposes.       That   was   recognised   in   Bowler   Investments   v Attorney-General,  where Tipping J held that the absence of compulsion may be
relevant under s 40(2),  as to whether it is unreasonable to offer the land back.  Its

relevance under subs (2) necessarily indicates that an absence of compulsion does not take the land outside s 40(1).  That was explicitly stated in these terms:

The case falls, in my view, into that category foreshadowed by paragraph 2.2 of the annex where an owner sells to the Crown because the prospect of a public work has denied him a market. He is, in a sense, compelled to sell to the Crown.

While I do not overlook the fact there was no formal designation, it seems to me that in substance, if the market is anticipating the designation and the property is thus unsaleable, no material distinction should be drawn on the basis that a formal designation has not yet been imposed.

Mr Parker emphasised that at this time the Crown did not have to buy, but even if such were strictly the case, the simple fact is that the Crown did buy and the obvious reason why it bought was that it must have been satisfied

that Bowler Investments could not sell elsewhere because of the plans for the northern motorway.

[72]     Mr Carruthers for the plaintiffs submits that the negotiation of the 1987 sale was not an arm’s length commercial transaction in that at that time the whole of the
1987 land was subject to designations by the Council of reserve, civic centre, proposed road, and proposed recreation reserve.  I consider, in the light of the facts as I have found and described them, Mr Carruthers’ submission is correct.  The land was subject to designations imposed by the Council under the planning legislation. An appeal against the imposition of those designations had been unsuccessful.  The plaintiffs could not have developed the land, or sold it to another purchaser for development.  Mr Hercus’ letter of 3 November 1982 to the Council, when the sale was initially proposed, demonstrates that that point was clearly important in the plaintiffs’ decision to offer the land to the Council.  Nothing in that regard changed in the time between then and the sale in 1987.  Further, as Mr Carruthers submits, the purchase price paid by the Council was clearly calculated on the same basis as would have applied had the land been compulsorily acquired.  The Council was the only realistic purchaser at a price calculated on that basis.

[73]     Mr Laing submits that the Council’s purpose contemplated the land being used for mixed purposes which included both civic purposes and commercial purposes.    He  submits  that  the  purchase  was  authorised  by s 572  of  the  Local Government Act 1974, which allowed acquisition for commercial purposes.   I examine this submission in more detail in considering whether the land is no longer required for a public work.  Dealing with the issue of acquisition, it is sufficient to note two points.   First, that the purposes of the Council cannot by themselves be decisive  of  the  question  whether  s 40  applies.    The  position  from  the  Trust’s perspective is also relevant, as I have described.  Second, that the Council could not properly be taken to have had a purpose of acquisition other than that for which the land was designated.  The land was subject to the designations and the Council was, like any other purchaser, bound by the designations.  Any use of the land for another purpose would have required action by the Council to remove the designations. Accordingly, I find that the 1987 land was acquired for a public work.

[74]     The land having been acquired for a public work, it is held for a public work in terms of s 40.   Nothing which has occurred subsequently can alter that status. Section 40 has been in force for the entire period in which the Council has owned the
1987 land.  If it were no longer required for a public work the offer-back obligation must have been triggered.  There is no other basis upon which the land could cease to have been held for a public work.  Accordingly, I find that the 1987 is held for a public work.

(b)      Is the land no longer required for a “public work”

[75]     The way in which this question is to be determined was described by the

Court of Appeal in Attorney-General v Hull as follows:

The first, and usually determinative criterion in s 40 is satisfied when in terms of subs (1)(a) the land is no longer required for the purpose for which it was taken. Whether that is so is a question of fact involving an assessment of intention in the light of objective circumstances. Proof that the land is no longer required for the relevant public work may be achieved by demonstrating an affirmative decision to that effect. The point can also be established by examining the conduct of the body holding the land and, if appropriate, drawing an inference that the body has concluded that it no longer requires the land for that work. Alternatively, the evidence may establish that that was not the case and, for instance, that the landholding agency remained in a state of genuine indecision. But if any reasonable person would undoubtedly have concluded that in all the circumstances the land was no longer required for the relevant public work, the agency may well have difficulty asserting that it had not so concluded, and therefore had not come under any obligation to proceed in terms of the section.

[76]     The Court went on to emphasise the critical role of the facts in determining that question.

[77]     As  Mr Carruthers  submits,  land  may  become  no  longer  required  for  the public work for which it is held either by an affirmative decision to that effect or by conduct on the part of the land owner from which the inference can reasonably be drawn that it no longer requires the land for the public work for which it is held. Once land becomes no longer required, there is no opportunity for a change of mind

by the land holding agency.  That is clear from the decision of the Privy Council in

Attorney-General v Horton where their Lordships said:

The right to an offer vests, subject only to being defeated by the exercise of the discretion conferred by s 40(2)(a) or by the state of facts described in s
40(2)(b). There is no provision for the right being divested simply by a change of mind on the part of the government department or state-owned
enterprise.

Their Lordships respectfully consider that the reasoning of the Court of Appeal is correct. If s 40 confers an enforceable right to buy, then Their Lordships consider that when the conditions upon which it comes into existence have been satisfied, it must vest subject only to those grounds of defeasibility expressly stated in the statute.

[78]     There are three parts to the limb of s 40(1) that the land is no longer required for public work purposes.  These are expressed in paras (a), (b) and (c).  Paragraph (c) does not require consideration here.  The relevant question here is whether the Council has at any stage made a decision, either expressly or by reasonable inference from its actions, that the land is no longer required for the public work for which it was acquired or for any other public work.   The public work for which it was acquired must be the work for which it was designated at the time it was acquired. The term “any other public work” is of broader application.  That would include any local work which might be carried out by the Council which would fall within the definition of public work.   In the circumstances of this case, I consider that it is appropriate to consider together the question whether the land is no longer required for the original work or any other work.  Once again, the situation of the 1981 land and 1987 land must be separately considered.  However, the evidence shows that no clear distinction has been made between those two areas of land by the Council when considering its possible use.

[79]     The plaintiffs assert three alternative dates or “trigger points” on which it is alleged that the lands were no longer required for the public works purposes for which they were acquired:

(a)       In 1994 when the Council commenced negotiations with KCET;

(b)       In 1995 when the Council entered into the agreement granting KCET an option over the land which required KCET, upon exercise of the option to on sell the lands to a developer;  and

(c)       In February 1996 when the Council approved KCET’s development proposals.

[80]     The essence of the plaintiffs’ case is that the terms of the KCET agreement were such that any development on the land would not be under the control of the Council so that it could not fall within the definition of local work and hence the definition of public work.  The Council must be taken to have thereby decided that the land was no longer required for a public work, at one or other of those trigger points.

[81]    The Council’s case is that there has been no specific or irrevocable or irreversible decision by the Council to dispose of the land, or any unequivocal acts on its part from which it can be inferred that the Council has concluded that the subject land was no longer required for public works.  It contends that the 1981 land remains held for the public works for which it was acquired namely the development of a civic centre.  The 1987 land, to the extent that it may have been acquired for public works, remains held for those purposes or other public works including facilities which have already been developed or which are planned.   The Council accordingly  submits  that  neither  para  (a)  nor  (b)  of  s 40(1)  apply  and  that  no obligation to offer back the subject land to the plaintiffs arises.

[82]     I acknowledge that there is some force in Mr Carruthers submission as I have summarised  it  at  [80].    If  the  arrangements  with  KCET  had  proceeded,  then  I consider that the land could no longer be regarded as required for a public work. The KCET arrangement involved the transfer of land to a development company. Any work on the land would be carried out by the development company.   That could not be work carried out “by or under the control of” the Council.   Council control is an essential element of the definition of ‘local work’, for any work not actually carried out by the Council.   It is the plaintiffs’ contention that the KCET proposal had reached a point, at the latest by the time of the Council’s approval of

KCET’s development proposals in February 1996, that the Council must be taken to have decided that the land was no longer required for a public work.

[83]     By that stage, however, the agreement was still conditional on a number of conditions which were not in fact satisified.   Furthermore, the Council’s contract with KCET was clearly entered into on the mistaken understanding that the use of the land was not limited to public works purposes.  Had the Council considered that s 40 potentially applied to the land, it seems most unlikely that it would have entered into the KCET contract.   The performance of that contract would inevitably have resulted in a breach of the Council’s obligations under s 40.  I do not consider that the fact that the agreement was subject to compliance by the Council with all the statutory procedures precedent to the sale of the land alters that conclusion.  If the statutory procedures were understood to include s 40, then the Council had no ability to transfer the land to KCET unless Ngahina Trust did not accept a s 40 offer back.  I do  not  consider  the  Council  would  have  entered  into  the  agreement  that  it  did without making more explicit provision for that.   Further, legal advice which the Council took as to whether the conditions of the agreement were satisfied did not mention the possible relevance of s 40.

[84]     The relevant question is whether the Council’s actions are such as to give rise to an inference that the land is no longer required for public works purposes.  I am not prepared to draw such an inference from the terms of an arrangement entered into by the Council under a mistaken view that s 40 was not applicable.  While it is clear that the way in which the KCET arrangement was structured that the development of the land in accordance with it would not have met the definition of public works, it is also clear that civic and community facilities and public open spaces were to form an important part of the comprehensive development which the KCET arrangement required.  The Council did intend to maintain significant control, as the KCET response in May 1996, recorded at [52], shows.  That control would not have met the definition of local work.  But it is relevant to whether the Council has decided the land is no longer required.  I do not draw an inference that the Council had decided, by its commitment to that arrangement, that none of the land was required for public works purposes.

[85]     The question then is whether there is any other action on the part of the Council from which an inference can be drawn that the whole or any part of the land is no longer required for any public work.

[86]     Mr Laing  submits  that  there  has  never  been  a  specific  or  irrevocable  or irreversible  decision  by  the  Council  to  dispose  of  the  subject  land,  or  any unequivocal acts on its part from which it can be inferred that the Council has concluded that the subject land was no longer required for public works.  I accept that submission, so far as it relates to the whole of the 1981 land, and the whole of the 1987 land.  I do not accept that submission so far as it relates to part of the land. My reasons for those conclusions follow.

[87]     I have already referred to the Council’s purpose in acquiring the land.  I have held that the only purpose which the Council could properly have had is a purpose consistent with the designation.  However, the evidence suggests the Council has in fact proceeded  on a basis that the land  was  available for other purposes.   The Council’s submission is that the 1987 land was acquired for the dual purposes of civic  and  commercial  expansion.    I have described  the  evidence  on  which  that submission is based.  From that evidence, I conclude that the Council did have in mind that the land would be used for these two purposes.  The Council was, as I have held, mistaken in its belief that this was possible.  But that mistaken belief does not alter the fact that the Council’s purposes did involve both civic and commercial elements.   Those dual purposes have not changed over the years, although such planning as has been done to implement them has seen differences in the way those dual  purposes  might  be  implemented.    The  continued  existence  of  those  dual purposes precludes the drawing of an inference that the Council has decided that none of the land is required for civic purposes which might be achieved in a manner consistent with the definition of public work.  Not all civic purposes will necessarily involve a public work.   There is however a sufficiently high probability that civic purposes may be achieved by means of a public work to preclude the drawing of an inference that the Council has decided that none of the land is required for a public work.

[88]     Conversely, the presence of the Council’s dual purposes precludes a finding that the whole of the land is required for public works.   That is confirmed by the changes in planning status of the land I have described.  From those changes, I find that the Council has reached a position where it has determined that not all of the land is to be used for public purposes.  Those changes, and the Council’s consistent stance, advanced by counsel, that the Council has regarded the land as to be used for mixed purposes must, in my view, be conduct from which the inference should be drawn  that  it  no  longer  requires  the  whole  of  the  land  for  public  works.    The Council’s dual purposes are of such long standing, and so consistently applied over the period, as to preclude any inference that the Council has kept open the possibility that all of the land is required for public works.  That decision having been made, as I have noted in [77], it cannot be revisited.

[89]     The Council has not, however, clearly identified what part of the land is required.    Nor  has  it  determined  precisely for  which  works  it  is  required.    As Mr Laing submits, the extent required for civic purposes, as opposed to commercial purposes, has never been definitely identified.  The nearest that could be said to be an identification of part of the land appears in the designations in the 1989 Proposed District Scheme, carried forward into the 1995 Transitional Plan.  That identified the whole of the 1981 land, and part of the 1987 land, as being required for a civic centre, other parts of the 1987 land being proposed for drainage reserve and recreational reserve.   There were also some parts shown as a proposed transport centre and a proposed reserve for civic purposes, with the balance being zoned office.

[90]     I do not consider that the proposition that once there has been a decision that land is not required for a public work there can be no going back, leads to the conclusion that the Council is to be taken to have decided that the area zoned office on the 1989 Proposed District Scheme is no longer required for a public work.  That decision was a planning one.  Mr Pearson’s evidence is that the original designation, and subsequent designations, were fixed by a committee comprising a number of councillors, the chief executive, borough engineer and the Council’s planning consultants.  It was that group that decided what the Council’s requirements would be and Mr Pearson could not recall any formal discussion by the full Council or any

resolutions of the full Council.   I do not readily attribute to a committee of that nature, set up for the purpose of preparing a District Scheme, an intention to bind the Council as to the exact extent of land which would be required for a public work. Accordingly I hold that the Council has not identified any specific area of land as either required or not required for a public work so as to trigger the operation of s 40 with respect to any particular area of land.

[91]     Assistance on the way in which s 40 is to be applied to land which is used for a mix of public work purposes and commercial purposes is to be obtained from the decision of the Court of Appeal in McElroy v Auckland International Airport.   That was concerned with land which had been acquired for the public works purposes of an aerodrome for the development of Auckland International Airport.  It was argued that some of the relevant land was used for activities which could be viewed as purely commercial rather than strictly necessary for the functioning of the airport.  It was submitted that the purely commercial arm of the airport’s activities could never fulfil the necessary requirements for retention under s 40.  The Court held:

The evidence does not demonstrate that there are, on a realistically discrete basis, segments of land within that whole which are no longer held for that airport purpose. We accept that some segments may be being used for other purposes  in  the  meantime  and  some  areas  have  not  been  developed. However, that is the very nature of a modern international airport precinct. To hold that those segments ought to be cleaved off from the whole and offered back, would be quite unworkable.

The contention that the appellants’ land could be carved out so that one was left with a patchwork of land held by the respondent interspersed with, and splintered by, land belonging to private owners, is unrealistic. If the appellants’ former land could be treated in this fractured way just because parts of it are not currently in use, the same standard would have to apply to the land of other former owners. Such an outcome would wholly frustrate the flexibility that is necessary for planning, coordination, development and responding to changing demands for a modern international airport.

[92]    It is clear from that decision that the fact that there may be associated commercial activities will not deprive the land on which a public work is situated of its status as land required for the public work.   However, I consider that the circumstances in this case are quite different.  The Paraparaumu Town Centre which is proposed contemplates a mix of quite separate uses.  Some of those uses would be

uses directly by the Council.  Such uses might fall in the definition of public works. For example, a civic centre operated by the Council might meet that requirement. The fact that the civic centre may have some incidental commercial facilities, a café or the like, would not deprive such a facility of its status as a public work, if it otherwise had that status.   However, if the Town Centre included, for example, separate retail commercial or office developments, not operated by the Council, the land occupied by those uses would not be land required for a public work.   The Council clearly has a responsibility and an interest, as the planning authority, to oversee  developments  in  the  Paraparaumu  Town  Centre to  ensure that  they are consistent with Council planning objectives.  Ownership of land in the centre may provide an additional mechanism for control over development to ensure that those objectives are met.   That additional mechanism is a limited one where the land is subject to s 40.   The Council’s interest in the proper development of the Town Centre does not of itself mean that the control which the Council may exercise as land owner brings any development on the site within the definition of public work.

[93]     I do not consider that the commercial purposes and the civic purposes are so intertwined in this case as to lead to the conclusion that the Council may retain all of the land, because some of it may be required for civic purposes which might be achieved by a development which constitutes a public work.

[94]     The question which arises is as to the means of reconciling two potentially conflicting objectives:   preserving to the Council appropriate flexibility to use the land which it holds in a manner which respects the Council’s right to use that land for public works purposes;  and upholding the right of the plaintiff to have offered to it land which is surplus to these public work purposes.

[95]     The way in which s 40 applies to land which is partly required and partly surplus was addressed by Randerson J in The Sisters of Mercy (Roman Catholic Diocese of Auckland Trust Board v Attorney-General and Ors.   He said:

Counsel submitted that the expression "land" in s 40 could include part of the land (a concession rightly made) but submitted that the public body in question could not be obliged to subdivide land when only part of one title became surplus. This was coupled with a submission that the mere fact that part of the land was not being used at some time did not mean it was surplus.

It is important to focus on the statutory language when considering these submissions. First, s 40(1) refers to the land being "no longer required". That is not the same as not being used. Land (or part of it) may not be used from time to time but that does not mean it is not "required". For example, land may be required for future expansion or for needs not yet specifically identified. Or a use may be expected to resume at some point after a period of non-use. Section 40 is only triggered where a decision is made that the land is no longer required or the facts (including the conduct of the public body) plainly demonstrate that such a state of affairs has arisen: Attorney- General v Hull (CA) at paragraph [40].

If part of the land in a single title is no longer required in terms of s 40(1), then the statutory obligation to offer back that portion of the land arises even if that may require a subdivision. But where the relevant statutory officer considers that a subdivision would, for any reason, be "impracticable, unreasonable and unfair" under s 40(2)(a), then there is no obligation to sell. Any decision made under s 40(2)(a) is for the statutory officer and would be subject to challenge only upon the established grounds for judicial review.

I conclude that the concerns raised by WHL are properly addressed when or if the relevant statutory officer considers the matters under s 40(2) and that there is no general proposition that s 40(1) is not triggered where only a portion of land in one title is no longer required for a public work.

[96]     Two points arise from that.  First, that land which may not be used for some time may still be required for public works purposes.  Second, that where the point has been reached where only part of the land is required, the offer back obligation will arise even where that will require a subdivision, subject to the possible operation of s 40(2)(a).  I consider that the evidence establishes that the Council has decided that not all the land is required for public works purposes.  That finding precludes the application of that first point.  There must be at least part of the land which is no longer required, as distinct from not yet required.  The scheme of s 40 is that land should be offered back as soon as it is no longer required.  The second point, that subdivision may be required, indicates that the Council should identify the land no longer required, for possible subdivision.

[97]     I find, on issue 1(b), that not all of the 1981 land and the 1987 land is required for a public work.

Issue 2:  Do any of the exceptions in s 40(2) apply?

[98]     Because of my conclusion on issue 1, the next question is whether s 40(2) is applicable to the land.   That requires a consideration of whether it would be impractical, unreasonable or unfair to offer the land back, or whether there has been a significant change in the character of the land.

[99]     I do not consider that it is possible to deal in detail with this issue at this stage.  The precise extent and location of the land which is no longer required has not yet been determined.  The s 40(2) exceptions cannot be properly addressed until those matters are determined.   For these reasons, I turn to the third issue, that of relief.

Issue 3:  Discretionary relief

[100]   I do not consider that it is consistent with the objectives of s 40 that the Council should be able to continue to hold all of the land indefinitely when some of it is, as I have found, no longer required for a public work.

[101]   The Privy Council in McLennan and Ors v Attorney-General referred to the obligation of the land owner under s 40 to be “to make a timeous offer at the then current  market  value”.        That  was  referred  to  by  the  Court  of  Appeal  in Attorney-General v Edmonds where the Court said:

That legislative context is clear. The underlying policy is to increase the protection to the rights of property owners when land is taken (Hood v Attorney-General CA16/04 2 March 2005 at [18]). With that policy in mind, we agree with the Crown that the effect of s 40 is to impose a duty on the Crown to offer back timeously when land is no longer required.

Where the statutory duty to offer back is not exercised timeously, a declaration may be issued that the Chief Executive ought to have done what s 40 required. That is the appropriate means of protecting the former owner’s interests and ensuring the Crown acts in a responsible manner. No issue of unfairness to the former owners arises. The former owners retain the right to purchase at the price at which the land should have been offered back. Even if there has been a failure to offer the land back timeously and the Crown has

therefore  retained  the  use  of  the  land,  equally  the  former  owners  have retained the use of the purchase price.

[102]   Applying that principle, that an offer of surplus land under s 40 should be made timeously, to the facts here, I consider that the Council is under an obligation to determine the extent and location of the land no longer required.  I consider that the appropriate remedy here is a declaration to that effect.

[103]   Relief in that form will require a decision by the Council.  That will require proper consideration of a number of issues.  The decision will be potentially subject to judicial review.  The extent of consideration by Council which is required is not known.  It is not possible to put a strict time frame on the process.  The declaration which I propose will also leave open a number of matters which must be determined after the decision has been made by the Council.  These will include a consideration whether, in respect of such surplus land, any of the exceptions in s 40(2) apply.  I have already indicated that I consider it premature to address that issue now.

[104]   A  further  issue  which  may  require  further  consideration  is  the  date  of valuation for any land which is to be offered back.  Again, I consider it premature to address that issue now.

[105]   It is also perhaps desirable to add that any land which the Council now decides is still required for a public work will remain subject to s 40.  It may be used only for a public work which meets the requirements of s 40.  In considering what land is still required, the Council will need to keep in mind that restriction.

[106]   As I have noted at [87], not every civic purpose will fall within the definition of ‘public work’.  For example, it is not clear whether the proposed aquatic centre would fall within that definition.  There is insufficient evidence on that proposal.  I express no view on that question.

[107]   A further issue which I have not addressed is the status of the Community Building, Women’s Centre and Bridge Club on the 1987 land.  There is insufficient evidence before me on which to determine whether all or any of those is a public work.  If they are, then that land is clearly required for a public work.  If they are not,

then s 40 may apply.  Consideration may need to be given, in that event, to whether any of the exceptions in s 40(2) might apply.

Result

[108]   There will be a declaration that the Council is required to determine what part of the 1981 land and the 1987 land is not required for public works purposes.  Leave is reserved to both parties to apply for any elaboration of the terms of this declaration which may be required.

[109]   Costs are reserved.  The parties may submit memoranda if they are unable to agree.

“A D MacKenzie J”

Solicitors:            P M Cassin, Solicitor, Auckland for Plaintiffs
Simpson Grierson, Wellington, for Defendant