Port Gisborne Limited v Smiler CA182/98 [1999] NZCA 343; [1999] 2 NZLR 695 (26 April 1999)

Last Updated: 26 August 2018

IN THE COURT OF APPEAL OF NEW ZEALAND CA182/98


BETWEEN PORT GISBORNE LIMITED

Appellant

AND W K SMILER AND OTHERS

Respondents


Hearing: 8 March 1999

Coram: Richardson P Gault J Henry J

Appearances: T Arnold QC and M R Dean for Appellant
J V Williams and G C Warren for Respondents

Judgment: 26 April 1999

JUDGMENT OF THE COURT

Introduction

[1] This case concerns the operation of s40 of the Public Works Act 1981 and in particular whether it requires the appellant, Port Gisborne Limited, to offer the respondents a first right of purchase of a block of land which Port Gisborne proposes to sell. The land in question is known as Tauwhareparae and consists of some 11, 263 hectares near Tolaga Bay. In a judgment delivered on 12 June 1998 Laurenson J held that the land fell within s40 and that, subject to the discretion conferred by s40(2) of the Act, Port Gisborne was bound to offer the land back to its original owners or their successors.

[2] Section 40 as presently enacted provides:

40. (1) 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.

(2) Except as provided in subsection (4) of this section, the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority, unless-

(a) He or it considers that it would be impracticable, unreasonable, or unfair to do so; or

(b) There has been a significant change in the character of the land for the purposes of, or in connection with, the public work for which it was acquired or is held--

shall offer to sell the land by private contract to the person from whom it was acquired or to the successor of that person--

(c) At the current market value of the land as determined by a valuation carried out by a registered valuer; or

(d) If the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority considers it reasonable to do so, at any lesser price.

(2A) If the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority and the offeree are unable to agree on a price following an offer made under subsection (2) of this section, the parties may agree that the price be determined by the Land Valuation Tribunal.

(3) Subsection (2) of this section shall not apply to land acquired after the 31st day of January 1982 and before the date of commencement of the Public Works Amendment Act (No. 2) 1987 for a public work that was not an essential work.

(4) Where the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority believes on reasonable grounds that, because of the size, shape, or situation of the land he or it could not expect to sell the land to any person who did not own land adjacent to the land to be sold, the land may be sold to an owner of adjacent land at a price negotiated between the parties.

(5) For the purposes of this section, the term "successor", in relation to any person, means the person who would have been entitled to the land under the will or intestacy of that person had he owned the land at the
date of his death; and, in any case where part of a person's land was acquired or taken, includes the successor in title of that person.

Factual background

[3] The land at issue in this case was originally owned by Maori. It is ancestral land of the hapu of Tauwhareparae and has been referred to throughout the case as the Tauwhareparae Block. Negotiations between the Maori owners and the Crown for acquisition of the land began in 1874. Section 34 of the Immigration and Public Works Act 1870 empowered the Government to acquire land in the North Island and that Act and amendments in subsequent years allocated funds for this purpose. As will be further discussed later in this judgment, s34 does not specify the purpose for which the land is purchased; in addition to requiring consultation with the Superintendent of the relevant Province the section simply provides that the acquisition may be made if it appears "that a profit may be made in the sale of such land" and it is "otherwise expedient". Although the Immigration and Public Works Act 1870 was repealed by the Public Works Act of 1876, s2 of the latter Act provided that the 1870 Act and its subsequent amendments were to remain in full force with respect to such things as had been done or commenced under their authority. The Crown initially leased approximately 40,000 acres of the Tauwhareparae land, the lease being signed by a number of hapu members in early 1875, and agreement to sell the land to the Crown was not arrived at until 1879; nevertheless s34 of the Immigration and Public Works Act 1870 continued to provide statutory authority for the purchase.

[4] As noted the Maori owners agreed to sell to the Crown in 1879, the Crown having given notice on 17 January 1878 under the Government Native Land Purchases Act 1877 ss 2 and 3 so as to make it unlawful for private buyers to purchase any interest in the block. Following the agreement to purchase the Crown applied to the Native Land Court pursuant to s6 of the Native Land Amendment Act 1877, which amended the Native Land Act 1873, to have that court "ascertain and determine what interest" the Crown had acquired in the Tauwhareparae land and to have the land vested in the Crown by order of the court. Section 6 provided that the Native Land Court would have "all such powers and authorities in respect of any such application as it would have in any matter in its ordinary jurisdiction". On 3 June 1881 an order
was granted pursuant to s6 vesting 44, 150 acres of the Tauwhareparae land in the Crown.

[5] On 24 August 1881, a proclamation in the Gazette declared the Tauwhareparae Block to be "waste lands of the Crown" (this term being used to describe lands of the Crown held for no defined purpose) and as such to be "sold and dealt with according to the provisions of the laws regulating the sale and disposal of waste lands of the Crown in force in the Land District of Auckland." (The New Zealand Gazette No 69, August 25 1881, pp1108-1109). The proclamation refers to the land as having been "purchased out of the sums authorised under The Immigration and Public Works Act, 1870, and Acts amending the same" thereby strengthening the conclusion that the purchase of Tauwhareparae was made pursuant to s34 of the 1870 Act. The proclamation was made pursuant to s17 of the Waste Lands Administration Act 1876 and s28 of the Land Act 1877 Amendment Act 1879. The former section provided for lands purchased out of sums authorised by the Immigration and Public Works Act 1870 and its amendments to be declared waste lands of the Crown when the Governor was satisfied that they were "free from Native claims and all difficulties in connection therewith". And although that section was repealed by the Repeals Act of 1878, it was revived by s28 of the Land Act 1877 Amendment Act 1879. As noted above, following the declaration the Tauwhareparae Block fell to be dealt with "according to the provisions of the laws regulating the sale and disposal of waste lands of the Crown in force in the Land District of Auckland". The Land Act of 1877, which on the abolition of the provinces replaced the earlier regime under the Auckland Waste Lands Act 1874 and amendments thereto, established the Land District of Auckland and provided for the classification and disposal of the land subject to it. It is the provisions of this Act that determined the status of the Block in 1881.

[6] The Tauwhareparae Block was not in the event disposed of under that Act and in 1884 the land was endowed on the Gisborne Harbour Board by the Gisborne Harbour Act of 1884. By s13 it was "set apart as an endowment" for the purposes of the Act and those purposes were the funding and borrowing for that purpose of the costs of constructing harbour works. The revenue from the lease of endowment lands provided an income stream to support the funding arrangements.
[7] Such of the land as was still in the hands of the Gisborne Harbour Board in 1993 was transferred to Port Gisborne Limited pursuant to the Port Companies Act 1988. The Crown does not want to resume ownership of the land, and in January 1998 Port Gisborne offered it for sale by public tender, thereby giving rise to these proceedings.

The High Court decision

[8] In their statement of claim dated 19 March 1998 the respondents averred that pursuant to s40 of the Public Works Act 1981 Port Gisborne had a duty to offer the land back to the successors of the original owners. Port Gisborne, it was claimed, acted in breach of that duty by offering the land for public sale without first offering it to those successors. By way of relief the respondents sought declarations that Port Gisborne had failed to comply with its statutory duty; that it was obliged, pursuant to s40, to offer the land to the respondents as successors of the original owners; and that it was reasonable for it to offer the land at less than market value in accordance with the discretion to do so under s40(2)(d) of the Public Works Act 1981.

[9] Laurenson J began his judgment by setting out the three questions that he said called for determination: first, whether the land fell within the definition contained in s40(1); second, whether there were any other enactments preventing the operation of s40; and third, whether s40(2) applied to the land. Turning first to s40(1) Laurenson J observed that the Port Companies Act 1988 provided for the transfer of endowment land to the new port companies and removed any restrictions on that land's sale. Section 26 of the Act exempted the transfer itself from the operation of ss 40 and 41 Public Works Act, but provided that after the transfer the sections were to apply to that land as though it had not been transferred. After analysing the Gisborne Harbour Act 1884 and the Gisborne Harbour Act 1905, Laurenson J found that the Tauwhareparae Block was held by the Harbour Board for a public work. The land was no longer required for any other public work and nor was it required for an exchange. Unless some other enactment excluded the operation of s40, Port Gisborne was required to sell the land in accordance with s40(2) if that section applied to the land.
[10] The Judge then considered whether ss 143A and 143C of the Harbours Act 1950 excluded the operation of s40 by providing a parallel power of sale. Port Gisborne submitted that there was a power of sale under s143C(3)(c) and so the Gisborne Harbour Board would not have had to sell the land subject to s40 Public Works Act. This, Port Gisborne said, meant that Parliament cannot have intended s40 to apply to endowment land such as the Tauwhareparae Block. Laurenson J observed that prior to the transfer of the land to Port Gisborne, there was an express prohibition on sale in s12(1) of the Gisborne Harbour Act 1905 in relation to the Tauwhareparae endowment. Accordingly the land fell within the class of endowment lands that may not be sold pursuant to s143(3)( c); s40 was not excluded.

[11] Laurenson J then turned to s40(2). He held it would be inappropriate for him to direct the Chief Executive Officer of Port Gisborne on how he should exercise the discretion entrusted to him by s40(2)(a) and (b). But there remained two further s40(2) issues for consideration: from whom was the land acquired; and did the applicants fall within the definition of "the person from whom it was acquired or the successor of that person". The Judge observed that the Gisborne Harbour Board acquired the land from the Crown in 1884. On a literal interpretation of s40(2) Port Gisborne would be obliged to offer the land back to the Crown. The applicants submitted, relying on the decision of Gault J in Auckland Regional Council v Attorney-General (No 2) (High Court, Auckland, CP 583/88, 24 September 1990) that the intervening public owner should be ignored and the land offered back to the applicants. Laurenson J said that whether this could be done would depend upon a consideration of the factual and legal nexus between the acquisition by the Crown from the original Maori owners and the subsequent endowment of the land to the Gisborne Harbour Board. Putting it another way, he asked whether the period of Crown tenure between 1881 and 1884 could be ignored for the purposes of the Public Works Act 1981. This, he said, would depend on an analysis of the circumstances surrounding the acquisition of the land and the legal nature of the Crown's tenure between 1881 and 1884.

[12] Laurenson J said that the land had been acquired and held as part of the general policy of the Crown at that time to acquire land for settlement and development purposes. The applicants and Port Gisborne each presented an
historian's report prepared in reliance on records such as Hansard, title documents, newspaper articles, letters, legislative materials and other official documents. After considering the historical evidence Laurenson J concluded that it could not be said that the Crown acquired the land with the specific intention of using it as a public work. It was, however, contemplated, certainly at a local level, that the Tauwhareparae Block would be suitable as an endowment for the Harbour Board and a firm decision on this matter was eventually taken in 1884. These facts, the Judge said, were sufficient for him to conclude that the land was held for a public work by the Crown during the period after vesting in the Crown and up to its endowment to the Board. Having reached this conclusion he held that Port Gisborne is obliged by s40(2) (subject to the consideration by its Chief Executive Officer of the matters referred to in s40(2)(a) and (b)) to offer to sell the land by private contract to the persons from whom it was acquired or the successors of those persons.

[13] As to the question of who are the successors of the original owners, Laurenson J held that the procedure under s41 of the Act governing the disposal of former Maori land was appropriate to address this issue.

The rival arguments on appeal

[14] It is common ground that the land is no longer required for any public work, nor is it required for exchange under s105 of the Act. For present purposes there is no suggestion that either paras (a) or (b) of subs (2) of s40 are applicable. The opposing arguments proceeded on that basis.

[15] On appeal Mr Arnold QC for Port Gisborne submitted first that the purpose of s40, as expounded in the Parliamentary debates prior to its enactment, was to provide for the offering back of land that had been compulsorily acquired. Second, Mr Arnold argued that Parliament did not intend s40 to apply to endowment lands such as Tauwhareparae. This argument was largely based on the provisions of the Harbours Act 1950. Third, he submitted that the Crown did not acquire the land for a public work; it cannot therefore be said that the respondents are the successors of persons from whom the land was acquired for a public work as required by subs (2). Mr Arnold submitted that Laurenson J erred in finding that the Crown held the land from the date of its acquisition for a public work. If s40 is found to apply to
endowment lands, the appellant's argument is that the party from whom the land was acquired for a public work is the Crown. The Crown's ownership of the land cannot be ignored for the purposes of s40(2) because the Crown itself did not hold or acquire the land for a public work. Finally, Mr Arnold submitted that the use of the word "successors" places some temporal limit on the operation of s40. Even if the section applies to the land, the time when it could be offered back to the successors of the original owners has passed.

[16] In reply Mr Williams for the respondents submitted first that the court should have regard to the plain meaning of s40(1). The triggering elements in the section are set out in plain words and there is no element of compulsion in the acquisition required. Once s40 is triggered, Mr Williams said, an offer back under s40(2) must be made to the last private owner of the land or his or her successor. The definition of "successor" in s40(5), Mr Williams submitted, is open ended and does not restrict the offer back provisions to the first generation.

Nature of the Crown’s ownership

[17] The starting point is the acquisition of the land by the Crown. As noted above in the factual outline, the land was acquired pursuant to s34 Immigration and Public Works Act 1870. Section 34 provided:

34. The Governor may from time to time in the name and on behalf of Her Majesty purchase or in anywise acquire any land in the North Island of New Zealand or any interests therein which the owners thereof may be willing to sell convey or surrender after he shall have been requested so to do by the Superintendent of the Province in which the land is and after he shall have agreed with such Superintendent upon terms for charging against the Province the amount to be expended in the purchase and if it shall appear to him that a profit may be made in the sale of such land and otherwise expedient that he should acquire such land and in entering into any contracts for the purchase for money of any lands under the powers contained in this section of this Act the Governor shall be guided in fixing the price which he shall be willing to pay therefor by an estimate based on the laws in force in the Province in which such land is regulating the price at which Waste Lands of the Crown may be sold.
[18] Unlike the more specific powers of acquisition contained in Part II of the Public Works Act 1876, s34 was a broad provision enabling the Government to negotiate the purchase of land for general purposes. The land has been described as forming part of the "land bank" of the Crown, available to be sold to settlers.

[19] As noted above, following the vesting of the land in the Crown and the Waste Lands proclamation of 24 August 1881 the land fell to be dealt with under the Land Act 1877. Section 5 of that Act provided:

The demesne lands of the Crown in New Zealand shall be deemed and taken to be all lands vested in Her Majesty wherein the title of the aboriginal inhabitants of New Zealand has been extinguished.

Crown land shall be deemed to be all demesne lands of the Crown which have not been dedicated to any public purpose, or which have not been granted to any person in fee-simple, and shall include all lands heretofore designated waste lands, Crown lands, and confiscated lands respectively.

[20] As this section makes plain, not all land held by the Crown was held for a public purpose. Land designated waste land, as indeed the Tauwhareparae land had been, was publicly owned but was not held for any public work or dedicated to any particular public purpose. In terms of the long title the purpose of the 1877 Act was to regulate the sale or other disposal of the lands of the Crown and the statute contained detailed provisions for their classification and disposal.

[21] Consistent with this conclusion is the limited reach of the offer back provisions in force at that time. The 1878 legislation did not apply to all land acquired under the Immigration and Public Works Act 1870, but only to land that was held or acquired for "Government works". The offer back provision, s9 Public Works Act 1876 Amendment Act 1878 provided:

If it is found that any land held, taken, purchased, or acquired under the said Act, or "The Immigration and Public Works Act, 1870" and Acts amending the same, or otherwise howsoever, for Government works, is not required for such works, the Governor may cause the same to be sold, in the manner and subject to the provisions of subsection two of section twenty-nine of the said Act.
"Government works" was in turn defined as "a work under the control of the General Government". And the meaning of "work" can be seen from the definition of "Public works" and "works" in s3 of the Public Works Act 1876:

"Public works" and "works" include surveys, railways, tramways, roads, bridges, drains, harbours, docks, canals, water-works and mining works, electric telegraphs, lighthouses, buildings, and every undertaking of what kind soever, which the General Government or a County Council or a Road Board is authorized to undertake under this or any other Act or Ordinance of the General Assembly or of any Provincial Legislature for the time being in force.



[22] In order to fall within the definition there must be some positive activity in relation to the land. Although the definition is broadened by the use of the word "undertaking", that word is nevertheless coloured by the list that precedes it. It is to be noted too, that definition is significantly narrower than the definition of "public work" and "work" under the 1981 Act. In particular, the 1876 definition did not include the use of land extension.

[23] The Tauwhareparae land, acquired as it was under s34 Immigration and Public Works Act 1870 for general purposes, was not land to which the offer back provisions of the day applied. This is not in itself determinative. Nevertheless it demonstrates the statutory distinction between land acquired and held for public or government works and land that was simply owned by the Crown for the general purposes of settlement.

[24] We conclude that during the 1881 to 1884 period the Tauwhareparae land was not held for a public work. The land was held in the general land bank of the Crown and was not dedicated to a particular public purpose. It formed a part of the land holdings of the Crown available for sale pursuant to the waste lands regime prevailing in the Land District of Auckland.

[25] We are conscious that we are differing from Laurenson J in our assessment of the historical position. The affidavit evidence records the historical background leading up to the endowment. There is nothing in that evidence which could support a finding that at the time of acquisition the Crown had in contemplation use of the
land for what is even now defined as a public work, still less for “Government works” as they were defined over the relevant period. The purchase was made pursuant to s34 of the 1870 Act, and the land was accordingly proclaimed to be “waste land of the Crown” and held by the Crown on that basis. With respect to Laurenson J, we do not see significance in the fact that a local member of Parliament introduced a Bill postulating endowment which was defeated. It is significant that when the Gisborne Harbour Board was established, this land was not endowed but remained with the Crown, and until 1884 was to be dealt with according to the Land Act of 1877. The Judge relied primarily on three factors in reaching his conclusion. First, the land was not allocated for any other purpose during the Crown’s tenure. This at best is equivocal, but importantly as already noted, the land was held under a specific statutory regime which did not designate it as being held for public work purposes. Second, the land “remained in contemplation as an endowment”. It is difficult to find evidential support for this conclusion. There is no contemporary record indicating this was the Crown view, and it is arguably inconsistent with the failure to endow on the establishment of the Harbour Board. Third, the fact of endowment in 1884. With respect, we do not see that as being of assistance.

[26] This conclusion gives rise to what we believe is an insurmountable difficulty for the respondents whose entitlement is dependent upon the contention that the Crown’s acquisition of the land is the acquisition to which s40(2) applies in the present case.

Port Companies Act 1988

[27] Before turning to the primary legal issues we refer briefly to s26 of the Port Companies act 1988 which provides:

Modification of provisions of Public Works Act 1981 – Nothing in sections 40 to 42 of the Public Works Act 1981 shall apply to the transfer of land to a port company pursuant to this Act, but sections 40 and 41 of that Act shall, after the transfer, apply to that land as if the port company were a Harbour Board and the land had not been transferred pursuant to this Act.
[28] It is similar in terms to provisions governing the acquisition of land by State Owned Enterprises. The purpose of the provision would appear to be twofold. First, to avoid any argument that the statutory transfer triggered, and therefore was subject to, s40. Second, to make it clear that the transfer did not of itself deprive a person having the right given by s40 in respect of land owned by a Harbour Board of that right, and thus avoid the possibility of an argument that the offeree in this case would be the Gisborne Harbour Board.

Construction of s40 – first approach

[29] In ascertaining the true intent and meaning of s40, which is to be gained from a reading of the whole section, it is helpful to look first at its historical background.

[30] The land was initially purchased by the Crown under s34 of the Immigration and Public Works Act 1870. That section empowered the Government to purchase land from a willing vendor to be dealt with as what were termed waste lands. There was at that time no offer back provision similar to the present s40. The 1870 Act was repealed by the Public Works Act 1876, which provided by s29 that land taken under that Act for public works but no longer required for public work could be sold by offering it first to the person then entitled to the land from which the subject land had originally been severed, and if not accepted then to the owner of adjacent lands. Under s9 of the 1878 amendment, any land “held, taken, purchased or acquired’, whether under certain specified Acts or otherwise howsoever, for Government works and not required for such works, could be sold in accordance with s29 of the 1876 Act. The reason for extending coverage to land “held, taken, purchased or acquired” would appear to ensure that all land which came into ownership of the Crown for Government works purposes was covered. The term “held” would cover, for example, land which was transferred or vested by operation of statute. There is no apparent reason in the context of the statute, for reading the word in a way which is inconsistent with the other qualifying words – namely the purpose of carrying on Government works must lie behind obtaining ownership of the land. The broad principle was that land obtained for those purposes, but which had ceased to be relevant to those purposes, should be offered back so as to reconstitute the original private holding in so far as that could be achieved.
[31] The 1876 Act was replaced by the Public Works Act 1928. Section 35, the offer back provision, was in similar terms to its predecessor as amended in 1878. Section 35 was amended in 1935, by requiring the land to be sold either privately to the owner of any adjacent lands, or by public auction or tender. The consistent intention which comes through is that the offer back concept is referable to land which has been brought into public ownership for public work purposes.

[32] For the first time, the 1981 Act required the offer back to be made to “the person from whom (the land) was acquired”. It also reduced the words qualifying the land in question to the single concept of “held”.

[33] Subsection (3) of s40 as originally enacted in 1981 and in force until amended to its present form in 1987 is important. It read:

Subsection (2) of this section shall only apply in respect of land that was acquired or taken-

(a) Before the commencement of this Part of this Act; or

(b) For an essential work after the commencement of this Part of this Act.

It can be noted that this is the apparent reason why subs (1) refers to the obligation to sell under subs (2) as applying “if that subsection is applicable to that land”. Accordingly land which was acquired or taken after the commencement of Part III of the Act for a public work which was not an essential work was excluded from the operation of subs (2). The obvious purpose of the change from the earlier legislation was to restrict the nature of the public work which would give rise to the offer back provisions. There is however no discernible reason for extending the offer back concept to cover land which had not been obtained from private ownership for a public work -–the intent was to restrict it to land acquired for a limited kind of public work. The use of the phrase “acquired or taken” in defining the application of subs
(2) and repeated in subs (5), is itself a strong indication that the section as a whole was addressing, and only addressing, land obtained for public work purposes. Land “taken” prior to 1981 is clearly a reference to land compulsorily taken for a public work under earlier legislation, in respect of which the offer back concept, already established, was being retained. In the overall context and background, the absence
of an express qualification to the old para (a) did not require a different construction. Neither is the distinction drawn in the present subs (2)(b), (introduced in 1982) concerning change in character of land for the purposes of the public work for which it “was acquired or is held” inconsistent with this approach. That provision covers an original public work purpose, and a subsequent or changed public work purpose.

[34] Although the drafting technique adopted has removed without replacing the express provision as to the applicability of subs (2), the purpose of the 1987 No. 2 amendment was to remove the earlier restriction to land obtained for essential work, but making that removal to apply only to “acquisitions” after the amendment came into force. If the argument is accepted that s40(2) now applies to all land owned by the Crown or local authority as at the relevant date dictated by subs (1)(a) (b) or (c), regardless of the purpose of the original acquisition, then an anomaly arises. Land acquired within the period nominated by subs (3) for public work which was not an essential work is excluded, but land acquired within that very same period for a purpose which is not a public work, but which at any time after acquisition happens to be used for a public work, is caught by subs (2). That cannot represent the legislative intention.

[35] Section 40, which comes under Part III of the Act and is headed “Dealing with land held for public works”, is in the context of legislation which is directed to public works, and in particular to the acquisition of land for public works (s16). It is not, and has no reason to be, concerned with land which has been acquired for other purposes. The Crown has the right to acquire land for other purposes, as a local authority (which is defined in wide terms), may well have. The Act clearly has no application to land which has been acquired, and is currently being used, for purposes other than public work. It is difficult to see why, or in which ways it should or could apply to land which has been acquired outside any contemplation of the Act, but then subsequently and quite independently of the provisions of the Act, is used for a public purpose. The background to the offer back concept is that land is being acquired from a private person for a public work purpose, possibly under the threat or contemplation of compulsion. The rationale must be that it is only fair, if that purpose disappears, the land should so far as practicable revert to the previous or equivalent private ownership.
[36] In the light of that background, it would appear contrary to the statutory intention to apply s40 to land which has been acquired for other than public work purposes. What justification could there be for requiring an offer back to be made where land has been acquired for a commercial purpose on an arm’s length transaction, but years later used for a short term for some form of public work but is then no longer required for that work? At the time of acquisition, the vendor has no existing right which needs preservation. Such a right could only come into existence when the land is used for a public work, and when that comes about completely unrelated to the circumstances of the acquisition. The framework, and the history, of the legislation all point to s40(2) being directed to land which has been acquired for a public work, and to give an option to the person from whom it was so acquired. The fact that the present owner of the land was not the particular body which originally acquired the land for that purpose is irrelevant where a public work use has continued, with the need for any offer back not arising.

[37] There is therefore a strong argument that the offeree is the person from whom the land was originally acquired for a public work. That is the person who is given the right at the outset, and whose right is to be preserved. If there is no public work purpose behind the transfer of ownership, there is no cause for s40 to bite in respect of that ownership. That would give effect to what appears to be the true intent of the legislation, and to be a justifiable construction of the section as a whole when read in the context of the Act. It is also consistent with observations made in other cases, and referred to with apparent approval by the Privy Council in Attorney-General v Horton and Campbell (Appeal No. 51 of 1998, judgment 8 March 1999). Lord Hoffmann there said at p5:

This right has sometimes been described as a right of pre-emption, although their Lordships think it bears a closer resemblance to an option: the purchaser's right is not dependent upon the vendor choosing to sell but arises as soon as the land is no longer required. Hammond J described it as an inchoate right which an owner of land taken by the Crown preserved throughout the latter's ownership and which came to fruition when the land was no longer required. It has been said in a number of cases to be the expression of a strong legislative policy to preserve the rights of an owner subject only to the continuing needs of the State.
[38] The enquiry therefore is: from whom was the land acquired for a public work purpose? Usually, but not necessarily, the answer will identify a private person. In the present case, for the reasons already given, the Crown did not acquire, nor at any time did it hold, the land in question for a public work. The first occasion upon which the land came within that description was on its endowment in favour of the Gisborne Harbour Board. It follows that the respondents would have no entitlement under s40(2), and the person so entitled is the Crown.

Construction of s40 – second approach

[39] If the contrary view is taken that s40 applies to land currently held for a public work even when its ownership was obtained by the holder without any contemplation of a public work purpose, the respondents still cannot succeed. Subsection (2) requires the land to be offered back to the person from whom it was acquired or to that person’s successor. On a literal interpretation this would require Port Gisborne to offer to sell the land to the Crown. Mr Williams’ only answer to this was to rely on Auckland Regional Council v Attorney-General (No.2). We agree that in appropriate circumstances there is justification for disregarding intervening public owners so as to give effect to the intent of the legislation and return the land to its original private owners. As Laurenson J said, that depends on the factual and legal nexus surrounding the acquisition of the land and the manner of its holding by the intermediate public owner. In Auckland Regional Council v Attorney-General (No 2) Gault J commented at 10:

A construction excluding (as offerees) former owners that held the land for a public work would seem consistent with the intention of the section of providing a prior right to a private person to reacquire land taken or acquired from him for public use.

[40] Where land has continued to be held by successive public bodies for a public work throughout, the true intent and spirit of s40 is that the land should be returned to the original owner. The intent of the section cannot, however, extend to bypassing an intervening public owner where that owner neither acquired nor held the land for a public work. In the situation that the land was held throughout for a public work, there is merely a preservation of rights that the original owner would have enjoyed under s40 had there not been a change of public owner. Where, however, the land
was acquired and held by the first public owner for something other than a public work, there are no rights to preserve and it is not possible, given the wording of subsection (2), to find that those rights accrue when ownership changes.

[41] What has been described as the inchoate right given by subs (2), arises and can only arise at the time when the land first becomes subject to the possible application of s40, crystallising if and when the land is no longer required. A change of ownership while a public work purpose for holding the land continues does not affect the inchoate right, and there is no justification for reading the section as bringing it to an end. The land remains required for a public work, and s40 does not come into play. Subsection (2) does not stipulate the offeree as being the person from whom the present holder of the land acquired it. On this basis, the enquiry is twofold. First, who was the owner of the land at the time it was first held for a public work? For the reasons earlier given the answer must be the Gisborne Harbour Board. The second question is: from whom did the Board acquire the land? Again, the answer can only be the Crown.

Harbours Act 1950

[42] It can also be said that the provisions of the Harbours Act 1950 raise doubts as to whether the offer back provisions in s40 were intended to apply to endowment lands granted to Harbour Boards by the Crown. Section 143C of the Harbours Act, inserted by s26(1) of the Harbours Amendment Act 1977, provides a power of sale in respect of endowment land. This power is subject to s143A. Section 143A specifies that Harbour Boards are not authorised "to deal with land taken or acquired under the Public Works Act 1981 otherwise than in accordance with the provisions of the Act". Endowment land is not land "taken or acquired" under public works legislation and the restriction in s143A would not therefore seem to apply. The endowment in the present case (Tauwhareparae) was subject to an express prohibition on sale, contained in s12(1) Gisborne Harbour Act 1905 and before that in s13 Gisborne Harbour Act 1884, and could not therefore be sold pursuant to s143C (see s143C(3)(c)) but the provisions of s143A nevertheless indicate that Parliament did not intend s40 to apply to endowment land.

The meaning of "successor"

[43] Given our finding that the offer back provisions do not apply to the Tauwhareparae land, it is not strictly necessary to determine the nature of the "successors" to whom s40 extends. Nevertheless this issue has been argued before us and we express our views.

[44] Pursuant to subs (2) land is to be offered back "to the person from whom it was acquired or to the successor of that person". "Successor" is defined in subs (5) which, as set out earlier, provides:

(5) For the purposes of this section, the term "successor", in relation to any person, means the person who would have been entitled to the land under the will or intestacy of that person had he owned the land at the date of his death; and, in any case where part of a person's land was acquired or taken, includes the successor in title of that person.

[45] The division in subs (5) is immediately apparent. Where part of a person's land was taken, and that part is available for offer back, the offer is to be made to the "successor in title" of the original owner. In other circumstances however, the offer is to be made to "the person who would have been entitled to the land under the will or intestacy of that person had he owned the land at the date of his death". Parliament has made a deliberate distinction. Offer back provisions allowing for sale to owners of land from which the subject land was severed have existed since 1876. Such provisions give effect to a legislative policy of re-amalgamating blocks of land where only part was acquired by the Crown. Owners of adjacent land have been alternative offerees. In both cases it was the person then holding title to the land who became entitled. In 1981 new offer back provisions were introduced. Where an entire section of land is acquired the provision is narrower and provides only for offer back to the immediate beneficiaries, under the will or on intestacy, of the original owner. In making these observations, we are not to be taken as expressing any views in relation to the particular facts of this case.

Disposal

[46] For the reasons given above we conclude that the appellant, Port Gisborne Limited, is not obliged to offer the Tauwhareparae land to the respondents pursuant to s40 Public Works Act 1981. The appeal is allowed, the orders made in the High Court are quashed and the application for judicial review is dismissed. If costs are an issue, counsel may submit memoranda.

Solicitors

Nolans, Gisborne, for appellant
Walters Williams & Co, Auckland, for respondents