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Attorney-General v Edmonds [2006] NZCA 146; [2006] NZCA 146 (28 June 2006)

Last Updated: 21 December 2011


IN THE COURT OF APPEAL OF NEW ZEALAND

CA97/05

BETWEEN THE ATTORNEY-GENERAL
Appellant


AND TERENCE DESMOND MEAD EDMONDS, DAVID JOHN MCINTYRE EDMONDS, HYLTON ANDREW MCINTYRE EDMONDS AND JENNIFER HATFIELD MCINTYRE WILSON
Respondents


Hearing: 21 and 22 February 2006


Court: Glazebrook, Hammond and Ellen France JJ


Counsel: M T Parker, T G Stapleton and J R Burns for Appellant
J O Upton QC and D A Laurenson for Respondents
R J B Fowler and P C Mitchell for Intervener


Judgment: 28 June 2006


JUDGMENT OF THE COURT
  1. The appeal is allowed in part. The finding that breach of s 40 of the Public Works Act 1981 gives rise to a continuing cause of action is set aside. The declaration made by the High Court is accordingly set aside and a declaration in the following form is substituted:

A declaration that the Crown is obliged to offer area A, of the former Hotel Cecil site at 2 Lambton Quay, Wellington, to the plaintiffs under s 40 of the Public Works Act 1981 as at July 1990; and area B, and that part of area C not required for the substation (being 263m2 of area C) as at July 1996.

B The cross-appeal is dismissed.

  1. Costs of $8,000 are awarded to the respondents with usual disbursements.

REASONS

(Given by Ellen France J)


Table of Contents

Para No
Introduction [1]
Factual background [6]
The site [16]
Statutory scheme [23]
The High Court judgment [26]
The issues [47]
Nature of the statutory duty [48]
Was area A surplus as at 1 February 1982? [67]
Did area A become surplus in 1989? [90]
When did areas B and C become surplus? [101]
(i) Did Council require the land as at July 1996? [102]
(ii) Unfair or unreasonable to offer back? [125]
How much land was required for the substation? [132]
Did the Crown have to offer back airspace? [144]
Remedies [160]
Costs in the High Court [166]
Result and costs on appeal [167]

Introduction

[1] In a judgment delivered on 3 May 2005, Miller J made a declaration that the Crown was obliged to offer back certain areas of land to the respondents under s 40 of the Public Works Act 1981. Miller J reserved the question of damages.
[2] The Crown appeals against Miller J’s finding that the breach of the s 40 offer back obligation creates a continuing tort. The Crown also says Miller J was wrong not to conclude parts of the land continued to be required by the Wellington City Council. Alternatively, the Crown says it would have been unreasonable or unfair in terms of s 40(2)(a) to offer back in July 1990 or subsequently. The Crown argues that s 40(2)(a) is in issue because of a 1989 agreement between the Crown and the Council to exchange land in the area to meet the Council’s transportation needs.
[3] The respondents, whom we will describe as the Edmonds family, cross-appeal. They say the land was in fact surplus to requirements in 1982 when the Public Works Act 1981 came into force. The land should have been offered back then. They also say there was an obligation to offer back airspace over part of the land.
[4] The Council was not a party to proceedings in the High Court but was given leave to intervene in the appeal and we heard from counsel for the Council. The Council essentially supports the Crown’s position that the Council continued to require parts of the land for transportation purposes.
[5] The appeal accordingly raises issues about the application of s 40 of the Public Works Act 1981.

Factual background

[6] The appeal relates to land at 2 Lambton Quay, Wellington, described in more detail below. The Crown acquired the land compulsorily from Gwyneth Edmonds in 1942 for wartime purposes. The respondents are or represent Mrs Edmonds’ successors for the purposes of s 40.
[7] After World War II, the land was held for defence purposes and then, from 1981, for “Buildings of the General Government”. That designation referred to the Government Centre, a large area of central Wellington intended for future Government accommodation and, particularly, to provide a grouping of public buildings and spaces that expressed the national role of government and the national identity. The concept changed in 1987 to the, smaller, Parliament Centre proposal.
[8] The land in issue was occupied by the Cecil Hotel until it was largely demolished in 1963. Part of the Hotel remained until it, too, was demolished by the Council in around 2000.
[9] In 1973-74, an old Municipal Electricity Department substation on adjoining land was relocated on the Hotel Cecil site.
[10] At the end of March 1988, an agreement for sale and purchase between the Crown and Government Property Services (“GPS”) was executed transferring a number of Crown properties to GPS. The Hotel Cecil site was included in the agreement. Ultimately, the site did not transfer to GPS ownership.
[11] The Edmonds’ interest in the land was revived after November 1988 when Robert Edmonds, Mrs Edmonds’ son, received a call from a solicitor acting for the Ministry of Works. Matters developed from there with the Edmonds lodging a caveat against the title in July 1995.
[12] No offer back was made to the Edmonds despite various reviews by the Department of Lands and Survey (DOSLI) which was by then responsible for public works matters. The matter had by that time become complicated by the involvement of the Council.
[13] The Council’s involvement dated back to understandings in the 1960s and 1970s between the Crown and Council that land owned by one could be transferred to the other. In addition, there was a history of co-operation between the Council and the Crown on planning matters. The Council wanted to create a transport centre and at least part of the Hotel Cecil site was, at times, of interest to the Council for these purposes.
[14] Then, in 1989, the Crown and the Council reached an agreement on a series of property exchanges that included part of the Hotel Cecil site. The Crown agreed to transfer 1480m2 to the Council comprised of 1096m2 being the part of the site referred to in the proceedings as area B (661m2) and that called area C (435m2), the balance coming from adjoining land. Accordingly, 1480m2 was vested in the Council by declaration published by Gazette Notice dated 17 June 1991. The Gazette Notice was cancelled the following year by DOSLI because it had vested 1480m2 only for roading without making any provision for the substation. Area C, comprising 435m2, was subsequently gazetted for the substation but no steps were taken to gazette area B.
[15] The Crown and the Council then had a series of discussions about how the 1989 agreement could be implemented. Negotiations between the Crown and the Council over this finally broke down in February 1995. The Council also lodged a caveat against the title to the Hotel Cecil site. It ultimately went ahead and built a bus parking and turning area on part of the land although title to the land remains with the Crown. The Edmonds issued the present proceedings in August 2000.

The site

[16] The land in issue is a triangular shaped block with street frontage to Lambton Quay (73.9m), Mulgrave Street (9.95m), and Kate Sheppard Place (formerly Sydney Street East, 61.27m). The land totals 1928m2 in area and is that comprised in Certificate of Title 34B/723.
[17] For the purposes of the proceedings, the land has been divided into three parts referred to as areas A, B, and C. The appendix shows CT 34B/723 divided by dotted lines into areas A, B, and C.
[18] In general terms, area A is the area of some 832m2 fronting on to Kate Sheppard Place. It is described by Miller J as the residue because it was not defined as roading under the 1989 agreement and nor was it set aside for electricity purposes (in a Gazette Notice of 9 April 1997).
[19] In similarly general terms, area B is the 661m2 fronting on to Lambton Quay. It was defined under the 1989 agreement and subsequently gazetted on 27 June 1991 as land vested in the Council for roading purposes minus the land later designated in 1997 for electricity purposes. Area B and part of area C are now used by the Council as part of the redeveloped Lambton Bus Interchange.
[20] Area C is 435m2 and was taken for electricity purposes in 1997. Part of area C is occupied by the substation built by the former Municipal Electricity Department.
[21] Areas B and C do differ slightly in shape from the area designated for roading under the 1989 agreement. Area C includes a small triangular area of about 24m2 being Part Lot 1 DP1085. The parties say nothing turns on this.
[22] The Court had the advantage in this case of taking a view. That assists in an understanding of the geography of the site with area A being raised above the other two areas.

Statutory scheme

[23] Section 40 of the Public Works Act 1981 sets out the obligation to offer back land taken for a public work when it is no longer required. Section 40 states:
  1. Disposal to former owner of land not required for public work

The chief executive of the department ... 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 ... or local authority, unless –

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 ... or local authority considers it reasonable to do so, at any lesser price.

(2A) If the chief executive ... 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 ... 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.
[24] A “public work” means:
[25] The current version of s 40 was enacted in 1987. The section differs from s 40 as enacted in 1981 in the following relevant ways:

The High Court judgment

[26] The claim in the High Court brought by the Edmonds family was for damages for breach of statutory duty and an application for judicial review.
[27] The Edmonds family initially claimed that on 1 February 1982 when the Public Works Act 1981 came into force, the land was not required for a public work and should have been offered back at that point. During the course of the hearing in the High Court, the claim was amended to plead 1 September 1992, November 1994 and 10 July 1996 as alternative dates on which the land became surplus. The Crown in its statement of defence to the third amended statement of claim accepted that area A became surplus when the 1989 agreement with the Council was entered into and ought to have been offered back six months later in January 1990. The Crown accepted that areas B and C were surplus to its requirements under the 1989 agreement but said that those areas were then required for other public works, mainly, roading and electrical infrastructure. Alternatively, the Crown said it was not reasonable or practicable to require the Crown to offer areas B and C back at any of the post-1989 dates pleaded because by then it had entered a binding agreement to transfer those areas to the Council.
[28] As Miller J observed, the plaintiff found the Crown’s admission area A was surplus in 1989, “most unwelcome”. The explanation for that, Miller J said, came from changes in land values. In particular:

... a spectacular increase in central Wellington land values in the mid-1980s. Values fell steeply from the peak in 1987-8 to a low around 1992-3. They have still not recovered to 1990 levels. That is undoubtedly why the plaintiffs did not plead a July 1989 date themselves. If that date was accepted as the first and only date on which an obligation to offer back area A arose, the plaintiffs presumably would be unlikely to buy the land and would be limited to nominal damages.

[29] The first issue dealt with by Miller J was whether the Crown required the land as at 1 February 1982. That was the date when the Public Works Act 1981 came into force. Miller J took the view that “required” connotes need or necessity but does not mean that the land holding authority must be able to point to a specific project or use for the land at any given time. That is particularly so when the public work for which the land is held is broadly defined. In this respect, Miller J relied on Randerson J’s observations in Sisters of Mercy v Attorney-General & Ors HC AK CP 219/99 6 June 2001 (at [68]) where Randerson J said there was a distinction between land being “no longer required” and land not being used. (at [68]).
[30] The Judge saw the question as one of ascertaining the intention of the authority holding the land (Attorney-General v Horton [1999] 2 NZLR 257 at 262). The authority need not make a conscious decision that the land is surplus (Attorney-General v Morrison [2002] 3 NZLR 373 at [17] (CA); Counties Manukau Health Limited v Dilworth Trust Board [1999] 3 NZLR 537 at [25] (CA)). Instead, intention was to be assessed in light of the “objective circumstances” and the “unequivocal public acts” of the land holding authority.
[31] Miller J took it for the purposes of s 40(1)(a) that the plaintiff had the burden of proving that the Crown had a change of intention.
[32] Finally, the Judge found that it was necessary under s 40(1)(a) for the Crown to have a “degree of commitment”.
[33] Applying these principles, Miller J concluded, first, from 1974 onwards, land associated with the substation was required for the purpose of the supply of electricity. There is no dispute about that finding although the parties disagree about how much land is “associated” with the substation.
[34] Second, Miller J concluded that the balance of the site was required for a public work, namely, “Buildings of the General Government” which was the designation used for land intended for the construction of the Government Centre. In reaching that view, the Judge considered whether in the absence of specific plans for the site in 1982, the Government Centre proposal was too diffuse or general in nature to be a public work. That issue arose because of his finding that in 1982, the Crown had no specific proposal in mind for the Hotel Cecil site. His Honour took the Shorter Oxford dictionary of “work” as including “something to be done, or something to do; occupation; business; task; function”. The Government Centre was intended to be a public work in this broad sense.
[35] Miller J’s reasons for concluding land was required for this purpose as at 1 February 1982 were as follows:
[36] His Honour did not accept that the Crown required the site for transport purposes although he accepted the Crown was prepared to make Crown land available to the Council for a bus terminal, subject to its own requirements.
[37] The second issue was whether the Crown was right in its assertion that by July 1989, it no longer required area A. Miller J’s finding was that the State Services Commission concluded in 1989 that it did not require the site. He also found that the Council required only the 1480m2 which included the substation. There was no suggestion s 40(2) applied and so the right to an offer back in relation to area A vested in 1989.

[38] Miller J considered the nature of the breach of the statutory duty imposed by s 40. In his view, the breach is continuing in nature because the right to an offer back vests unconditionally once the requirements of s 40(1) and (2) are met. The cause of action is therefore complete at any later date, so long as the Edmonds family can establish loss at that date. Hence, the Edmonds family could rely on the 1992, 1994 and 1996 dates.
[39] In terms of areas B and C, the Crown accepted it did not need any part of B and C after 1989. The third issue was whether, after 1989, the Council nonetheless required part of the site (area B and that part of area C not needed for the substation) and, if not, whether it was unreasonable, unfair or impracticable to offer this land back. Miller J concluded the Crown had not established that the Council required part of the site after 1989. That was because, first the Council had simply shown a preference for one of the two available sites for northbound buses, should they be re-routed. Second, the Council was willing to trade the Lambton Quay site for land elsewhere. By 10 July 1996 the Council did not require this land.
[40] An issue which then arose was whether it was unreasonable, impracticable, or unfair to offer back area B and the balance of area C. Miller J did not accept that the Chief Executive could invoke s 40(2)(a) for the first time in litigation brought long after the event. His Honour did nonetheless consider the issue, as it had been argued by counsel.
[41] On this basis, Miller J found it was not unreasonable, impracticable or unfair to offer back. The reasons for this conclusion were as follows:
[42] The fourth issue was how much of area C was required for the substation. Miller J accepted the undisputed evidence for the Edmonds family from Mr Stewart (a valuer) and Mr Watson (an electrical engineer) that together established only 172m2 was required for the substation along with its access and ventilation requirements.
[43] Fifth, the Judge was not willing to accept the “suggestion” in the evidence on behalf of the Edmonds family that the obligation under s 40 might extend to airspace over the substation.
[44] The sixth issue related to remedies. Miller J said a declaration that the land should be offered back is an appropriate remedy for area A and for that part of area C not part of the 172m2 required for the substation. As the parties accepted Mr Stewart’s valuation evidence, the Crown must offer area A as at 1993, at $750 per square metre, and area B and the balance of area C as at 1997, at $1,000 per square metre, unless it chooses to offer the land at a lesser price as contemplated by s 40(2)(d).
[45] The question of damages was reserved for further argument if necessary.
[46] Finally, Miller J awarded the Edmonds family costs on a 2B basis.

The issues

[47] A number of issues arise. They are as follows:

Nature of the statutory duty

[48] The Crown’s position is that the finding that the action for breach of s 40 is continuing in nature and that the Edmonds family may therefore rely on the 1992, 1994 and 1996 dates is contrary to the nature of the duty and right in s 40 as established by the authorities.
[49] The Crown accepts that the failure to offer back may amount to a breach of statutory duty but not that the failure gives rise to a continuing tort.
[50] Accordingly, the Crown says that what should have happened here is that the Court should have made a declaration that the Crown should have offered back area A at the latest by July 1990.
[51] The Crown submits that there does not appear to be any New Zealand authority establishing that an action for breach of statutory duty can comprise a continuing cause of action. The decision of the High Court of England and Wales in PPL v DGI [2005] 1 All ER 369 does establish that, depending on the particular statutory provision and the facts of the case, an action for breach of a statutory duty may constitute a continuing cause of action. However, in contrast to this case, the Crown submits that PPL related to an ongoing obligation to pass legislation.
[52] The Edmonds family did not advance their case in the High Court on the basis that s 40 gave rise to a continuing cause of action but the Edmonds family were content to accept the Judge’s suggestion to this effect made at the hearing. The Edmonds family now submit that Miller J was right in his conclusion that s 40 gives rise to a continuing cause of action of breach of statutory duty. The Edmonds family characterise what has occurred as a continuing state of affairs and, until fulfilled, the Crown continues to be in breach of its obligations.
[53] The Edmonds family note that the reference in National Coal Board v Galley [1958] 1 All ER 91 to trespass or nuisance as situations in which a cause of action may be continuing does not provide for an exclusive or a closed category. Indeed PPL recognises a cause of action of breach of statutory duty can constitute a continuing cause of action.
[54] The Edmonds family also submit that there are a number of policy considerations which support the view taken by Miller J. Those considerations are as follows:
[55] We reject the submission that there are policy considerations which support Miller Js conclusion that s 40 gives rise to a continuing cause of action. Our reason for that stems from the nature of the right under s 40 which has been discussed in a number of cases and the availability of a declaration if the right to an offer back is not observed. Limitation issues do not arise in this case.
[56] It is helpful to refer, first, to Attorney-General v Horton [1999] 2 NZLR 257 at 261, where Their Lordships noted that the right was sometimes described as a right of pre-emption. Their Lordships considered the s 40 right was closer to an option (at 261):

... 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 a 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.

Nevertheless, as a right in private law analogous to an option, it has some curious features. It is subject to defeasance by the exercise of the discretionary power confirmed by s 40(2)(a). Furthermore, the existence of the right may well remain unknown to the owner for some considerable time. Since a decision that land is no longer required will usually be internal to the government department ..., the owner may learn only much later, ... that his right to buy had accrued. By the time he claims to exercise it, policy may have changed and the land be once more required for public use.

[57] Later, Their Lordships indicated that 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 existence of facts set out in s 40(2)(b) (at 262). Further, at 262, it was said:

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.

[58] Subsequently, in McLennan v Attorney-General [2003] UKPC 25, Their Lordships outlined the statutory framework as requiring an offer back to the former owner when the land is no longer required. Their Lordships described the Crown’s obligation as “remain[ing] the same throughout: to make a timeous offer at the then current market value.” (at [46]). What is a timeous offer will depend on the circumstances.
[59] This Court in Hull, at [49], however said it did not find it helpful:

... to try to compare the position under s 40 with conventional property law concepts. It might be better simply to allow the provisions of s 40 to speak for themselves in their historical and legislative context.

[60] 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.
[61] 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.
[62] In some circumstances, however, damages may be available. An example of a situation in which damages may be appropriate is where the Chief Executive can no longer offer back the land. That was the situation in Rowan v Attorney-General [1997] 2 NZLR 559 (HC) where the land in question had been on-sold and developed and was no longer available to offer back.
[63] Apart from the Rowan situation of impossibility, the appropriate initial remedy will generally be a declaration. If the Chief Executive does not comply with the declaration, other avenues of redress may be available and that is how the issues of perceived unfairness advanced by the Edmonds family can be addressed. Accordingly, we agree with the Crown that it was wrong to characterise s 40 as giving rise to a continuing cause of action. Given the nature of the s 40 right, we do not see the analogy with tortious conduct as a helpful one.
[64] Even if the analogy with tortious conduct was apt, a distinction can be drawn between the present case and those overseas authorities in which a breach has been said to give rise to a continuing cause of action. The distinction between those tortious acts which create a continuing cause of action and those which do not emerges (as the Crown submitted) from the discussion in Homburg Houtimport BV v Agrosin Private Ltd & Ors (The Starsin) [2003] 2 All ER 785. In that case the House of Lords dealt with a claim in negligence against the owners of a vessel which carried various cargoes from the Far East to ports in Western Europe. The condition of the cargoes deteriorated as the voyage went on because they had been negligently stowed by the ship owners’ employees before the voyage began.
[65] For present purposes, the relevant point emerges in the judgment of Lord Hoffman. Lord Hoffman concluded that the negligent act was the initial stowage. There was then progressive damage. Lord Hoffman said that the cause of action in relation to negligent stowage was completed when more than insignificant damage was caused by the stowage. Hence, the trial Judge was wrong to treat the progressive damage as a new cause of action. Rather, a single cause of action accrued to owners of the cargo at the time of the negligent damage.
[66] Accordingly, His Lordship took the view that this case was different from that considered by the House of Lords in Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127. In Darley the digging of coal underground was not a wrongful act. The cause of action only arose because there was a letdown of some of the surface. Hence, in Darley there was no “unifying cause of action” in contrast to the position in The Starsin. Similarly, here, there has been a single failure, namely, to offer back in a timeous way.

Was area A surplus as at 1 February 1982?

[67] The Edmonds family (who cross-appeal on this issue) accept that Miller J applied the correct principles in deciding the land was “required” by the Crown as at 1 February 1982. The Edmonds family’s challenge is therefore to the application of those principles to the facts.
[68] Mr Upton advances three bases on which it is said Miller J was wrong. First, the Crown did not need the land but rather held it as part of a land bank against a possible future need. Second, for periods of time (particularly 1979 to September 1983) there was no specific proposal affecting this land. Finally, to the extent there was any proposal relating to this land, it only affected the site in a peripheral way. Any use of the land for a public work over the period was, similarly, minimal.
[69] The Crown says the evidence supports Miller J’s findings. The Crown emphasises the proposals for the site and its use and submits that the evidence establishes that the Supreme Court/High Court and the National Art Gallery were specific and competing proposals for which the Crown needed the land in the 1970s and 1980s.
[70] We agree that the findings made were clearly open on the evidence and see no basis for disturbing those findings.
[71] The starting point, as we see it, is that the Government Centre was a concrete proposal at least since the 1950s. (A draft prepared by the Ministry of Works and Development in July 1983 for inclusion in the Wellington District scheme review states that the first “official” Government Centre Plan was submitted to the Government by the Government Architect in 1933. That draft suggests the boundaries were defined by a Cabinet Committee in 1956.) Donald Gray, who worked for both the Ministry of Works and then DOSLI over the relevant period, said the Centre was to be:

... a development of buildings, open areas and various services on a large area of land around Parliament Buildings, and was intended to house the Head Offices of Government Departments.

[72] The land in issue in this case was held as part of the holdings for the Government Centre, the designated purpose for the land being formally changed from “Defence purposes” to “Buildings of the General Government” in 1981 ((22 January 1981) (New Zealand Gazette 89)). Brett Tiller, who was employed by the Ministry of Works at the time explained that “buildings of the General Government” was the standard term used for land the Ministry of Works and Development acquired on behalf of Government for the Government Centre.
[73] The Government Centre was not some vague notion but rather reached the point of detailed plans with clearly defined objectives. To illustrate, the Evening Post newspaper in September 1967 discussed the unveiling of the concept together with a model. The 1967 model showed an office tower and bus station on the Hotel Cecil site. There was also discussion of the model in a building magazine in June 1973 and the Ministry of Works published a booklet on the Centre in November of that year. Again, the Hotel Cecil site was to be utilised with proposed shops and an office block on the site and a bus terminal between the Railway Station and Rutherford House.
[74] Various plans were developed over the years and the concept was regularly evaluated over the relevant period. For example, a Review Committee reported in September 1976 following a re-evaluation of the “total use” of the Government Centre. That report reiterated one fairly consistent theme, i.e. that the Centre “should reflect New Zealand’s national identity.” Another consistent thread was the notion the Centre should be developed as an “integral” part of the city. That concept is reflected in the inclusion of the Centre in the Council’s operative District Scheme (1972) for “National, civic, cultural and community purposes” until 1985.
[75] There were periods when there was no specific proposal directly affecting the site. Mr Tiller’s evidence was that there were no specific proposals over the period May 1979 to some time in 1983. However, that fact cannot be given too much weight given the ongoing commitment to the Centre. The nature of the proposals involved was such as to explain longer gestation periods. Importantly, there were definite proposals which would have involved the site. In particular, there were proposals for the Supreme Court in the 1970s and for the National Art Gallery in 1983 to 1984. There was also recognition at later points (1976 and 1988) that the proposed High Court building might affect the site. The High Court site was not finally defined until 1989.
[76] The various plans were the subject of discussion. For example, Gary Grant, who was employed by the Ministry of Works and Development, refers to a discussion about the Art Gallery proposals at a meeting on 5 April 1984 of the Capital City (Policy) Committee. (That Policy Committee included representatives of both the Crown and the Council.) In terms of the Art Gallery, plans were at quite an advanced stage in the early 1980s. Mr Grant referred to the documentation showing that architects had been engaged in relation to the Art Gallery proposal. A letter from the Ministry of Works dated 4 October 1983 refers to “Government approval” to the siting of the National Art Gallery on land “bounded by Molesworth Street/Lambton Quay and adjacent to the Court of Appeal. There is also material prepared by the Ministry of Works for a Policy meeting on 5 April 1984 which refers to the “old Ngati Poneke” building having been demolished by the Ministry in preparation for the bus terminal development and the Art Gallery.
[77] The proposals therefore reached a level of detail consistent with there being a need for and commitment to the use of the site for public works. In other words, there was a sufficient degree of particularity in the proposals to support the conclusion the land was necessary for those purposes.
[78] We do not agree the use to be made of the site as part of these proposals was peripheral. Mr Upton’s submission was that a comparison of the plans for the National Art Gallery as at 10 October 1984 with the plan of the Hotel Cecil site showed the Gallery would have impacted “to a modest extent” on the site. The impact is certainly not complete but the Gallery as Mr Upton acknowledged, would have been built over part of area A. We would say it directly affected a good part of area A. But, in any event, if the use albeit minimal is necessary to ensure that a proposal can proceed, that supports the view the land was required at least until it is plain what amount is actually needed.
[79] Miller J rejected the Edmonds family’s claim the land was held as part of a land bank. The Edmonds family challenge that. In that context, Mr Upton relies particularly on Mr Tiller’s statement in cross-examination that the Crown was holding the land “for future needs which may not necessarily have been identified.” But he said he would not use the phrase, “while they decided what they wanted to do with it.” Rather, he said “I would say they were holding it as a land bank for future development needs.” The Edmonds family also emphasise a later (1985) report from the State Services Commission (“SCC”) which discussed, amongst other matters, the effect of the removal of “office accommodation” as an “essential work” and noted the resultant advantages of the Crown retaining “in perpetuity” land it held. The Commission is doing no more, though, than stating the obvious. In any event, the specificity of the Government Centre concept, and the detail of the plans developed under its umbrella support Miller J’s finding it was not correct to describe this as a land bank.
[80] Mr Upton accepts that it is not necessary for the Crown to be actually using the land. However, the Edmonds family are still critical of Miller J’s finding that the remaining part of the Hotel Cecil was used for Government purposes, “including housing parts of the National Library and a few Ministry of Works employees.”
[81] The Edmonds family refer to evidence from two of the Crown witnesses, Messrs Gray and Tiller. That evidence does suggest any use for a public work was minimal but this evidence does not encompass all of the periods of time involved. (Mr Tiller’s evidence relates to 1979 and Mr Gray’s evidence deals with a later period, 1984/85.) Miller J was entitled to rely on Lindsay McClintock’s evidence that the Government Office Accommodation Board used some of the building for accommodating public servants. Mr McClintock worked with the former Public Works Department in the early 1940s and then again after 1947. He was with the Department when it became the Ministry of Works and later the Ministry of Works and Development until January 1980. Mr McClintock also talks of use by the National Library service in the 1970s. That evidence is supported by a State Services Commission’s letter of 5 October 1972 which refers to use by the Library service. There is also reference to use for map storage in early 1981. A later, 1984, document prepared by the Ministry of Works also refers to use by that Ministry.
[82] Accordingly, the better view of the evidence is that the site was used throughout the period although at times on a limited basis. That use is consistent with the purpose for which the land was held after 1981.
[83] Miller J placed reliance on the Crown’s unwillingness, until 1989, to transfer the land to the Council and that is consistent with the view the land was required in terms of s 40. Indeed we agree with Miller J that the Crown was willing to make land available to the Council for a bus terminal but “subject to its own requirement.”
[84] The site was clearly a part of the Government Centre. There was no decision before 1982 that it should be taken out. The level of commitment does have to be assessed with a fair degree of realism given where the site is located. With its frontage to both Lambton Quay and Molesworth Street, directly opposite Parliament the site is, as Miller J aptly put it, “a natural location for significant public buildings.”
[85] For these reasons, Miller J was correct to conclude the land was required for a public work as at 1 February 1982.
[86] Miller J went on to consider whether the Crown required the land for transport purposes. Miller J’s conclusion was that from the mid 1960s, the Crown’s planning encompassed a transport and bus terminal near the Railway Station although not necessarily on the Hotel Cecil site. However, Miller J took the view that while the provision of public transport to and from the Government Centre was of interest to the Crown, it was not a government work. That finding is not challenged.
[87] Miller J also concluded that the Council required the land for a transport centre as at 1 February 1982.
[88] The Edmonds family say that the Council’s requirements at this point were irrelevant. On the authority of McNicholl v Auckland Regional Authority HC AK A952/85 and A1164/85 8 August 1986, Mr Upton submits the “essential work” under the pre-1987 amendment to the Act had to be that of the land-holding authority, i.e. the Crown not the Council.
[89] However, Miller J made clear his finding on this aspect was necessary only in that it made sense of His Honour’s later finding about the position of the Council in 1989. The finding was, in any event, plainly open on the evidence. In a sense, the concept was for a Government Centre along with a transport centre but with the Council making the running on the latter.

Did area A become surplus in 1989?

[90] The Crown in the High Court said that area A became surplus in July 1989. That was Miller J’s finding and the Crown says that finding was correct. The Edmonds family in its cross-appeal challenges this finding.
[91] In particular, the Edmonds family’s position is that if area A was not surplus in 1982, the next date on which it became surplus was September 1992. At that latter point, DOSLI became responsible for managing and ultimately disposing of the land.
[92] There is evidence to support the view that in 1986 area A was still required by the Crown. The Government Office Accommodation Board, for example, wrote in March 1986 advising the State Insurance Office there was no possibility of the latter acquiring Crown land north of Willis Street. That was because the Board “requires all its land holdings in the Government Centre”. Later, in July 1986, there is a Minute about the leases on the Hotel Cecil building. The Minute says the site was “subject to a proposed development” and so no action should be taken to renew leases without consultation.
[93] The position by 1987 changed in that the Government Centre concept was replaced by a smaller project, the Parliament Centre. However, it is clear that the Hotel Cecil site was still a part of this Centre. The strongest argument for the Edmonds family on this aspect is that there is no direct evidence about when the Parliament Centre concept was abandoned. Miller J found the idea had been abandoned by 1989 and certainly, it does not figure in the documentation after then. By then the decision had been made to place the High Court on its present site.
[94] Miller J’s decision that area A was surplus by July 1989 does not, however, turn on the abandonment of the Parliament Centre. Rather, he saw it as critical that by that point the SSC had decided the land was not required. Hence, the July 1989 agreement between the Crown and the Council to transfer a part of the site to the Council.
[95] The Edmonds family say this fact does not mean the Crown proved it no longer required area A at that time. That is because the Crown was willing to transfer some 1480m2 to the Council which was made up of areas B and C. That reflected the fact areas B and C were part of a larger strip of land designated “proposed road” on the City of Wellington Operative District Scheme (1984).
[96] The Edmonds family also point to a memorandum from the Minister of State-Owned Enterprises to the Expenditure Review Committee attached to a Treasury fax dated 14 November 1990 which states:
  1. Options for the long term future of the site include ownership by the Wellington City Council or use by the Justice Department to provide car parking facilities and allow for future development of the High Court. These options are currently under review by GPS.

[97] We agree with the Crown that it was open to Miller J to conclude that the effect of the July 1989 agreement showed the land was no longer required. That is because the Crown’s consistent approach was a willingness to release land to the Council “subject to its own requirement”. Once there were no competing requirements, the Crown took the position it did in July 1989.
[98] The review of possible options by GPS referred to in the memorandum is too vague to alter the picture.
[99] The approach of GPS was in any event consistent with the view the land was surplus by July 1989. GPS by then was writing to the Council saying it should uplift the roading designation or purchase the balance. By October 1990, the site had been taken out of the agreement for sale and purchase between the Crown and GPS.
[100] The Edmonds family have not satisfied us we should take a different view on this from that taken by Miller J. The parties’ approach was that it was appropriate to allow the Crown some 12 months after the property became surplus to make an offer back. We take no issue with that.

When did areas B and C become surplus?

[101] There are two main issues under this heading. First, was the Judge right to conclude that the Crown had not established that the Council required the land as at July 1996? Second, if that is right, was it unfair or unreasonable to offer back as at July 1996?

(i) Did Council require the land as at July 1996?

[102] The Crown first takes issue with the way in which the Judge decided this question. The Crown says the matter should be considered by deciding on the evidence available, how the Chief Executive would have decided the matter at the time. The notion that s 40(1)(b) must have been expressly invoked is contrary to the authorities (Morrison, and Hood above). The question is to be objectively determined on the basis of evidence available at the time. Here, Miller J has taken into account evidence that may not have been available to the Chief Executive at the time, for example, internal Council communications.
[103] On an objective assessment, the Crown submits, the Council has required the land or most of it for a transport terminal for buses since at least the 1960s. The fact the Council was willing to consider and explore the Crown’s proposal to take other land in lieu does not alter the position. There was a need for a clear and unequivocal action by the Council abandoning its rights.
[104] The Crown’s submissions are supported by those made on behalf of the Council. The Council accepts that Miller J asked the correct question, that is, what was the corporate intention of the Council but submits that it is wrong to say that the relevant intention was present in 1989 and in 1992 but was lost by 1996.
[105] In this context, the Council makes three principal points. First, it is submitted that Miller J did not consider the special statutory framework applying to these decisions. As a result, documents such as annual plans which result from that statutory framework have not been considered. If the Court had looked at the annual plans the purpose, that is, for a public work, would have been manifest. Further, the Council emphasises that while it lost transport funding operations and the power to recommend where operations were needed through statutory amendment, the Council was still responsible for owning the infrastructure for passenger transport. Hence, for the period from 1992 to 1996, the provision of bus shelters, terminals and road markings stayed under the control of the Council. Similarly, over the period from 1996 to 2003, the Council’s rights remained the same.
[106] Second, the Council is critical of the absence of any direct evidence from the Council. For example, Mr Kiddle, whose evidence was relied on had left the Council by 1991. Third, it is submitted that the evidence on which Miller J did rely was indirect and in some instances irrelevant. Miller J was wrong to take evidence of inaction into account. This is a reference to the fact that the Council was advised of the revocation of the Gazette notice and did not react.
[107] Finally, the Council also raises an issue as to whether the Crown was the appropriate party given that the Crown held the land as a bare trustee for the Council.
[108] The Edmonds family submit that the Judge was right that by December 1994 the Council had decided it was willing to swap for land in other areas of an equivalent value.
[109] It is submitted that none of the matters raised by the Crown or the Council alter the correctness of Miller J’s findings.
[110] The submission is that the annual plans are not new evidence but in any event should not affect the findings.
[111] While the Council never abandoned its rights under the agreement it did not necessarily mean the Council continued to require the land.
[112] The statutory framework is irrelevant. Miller J did not find as he did because the Council had a changed role in relation to roading but rather assessed the evidence and found that the land was not required.
[113] We do not consider there has been any error in the approach taken by Miller J as is suggested by the Crown. In referring to the failure of the Crown or local authority to invoke s 40(1)(b) or s 40(2)(a) all Miller J says is that it is then hard to see why the Court ought to make the decision for the Crown or local authority. Miller J does then go on to consider, on an objective basis, what the position was. It is difficult in the circumstances of this case, to see how that decision could be made without considering material originating from the Council and as the Edmonds family point out, the evidential burden is on the Crown or the local authority. In that context, it is relevant that the Council was aware of the proceedings but chose not to seek to join them. It is too late now to raise an argument that the Crown was only a bare trustee. Finally, in terms of the general approach, Miller J did take into account the absence of a formal decision by the Council that it no longer required the land. In the circumstances, nothing further was necessary.
[114] The primary arguments in favour of the conclusion the Council did require the land as at July 1996 are two-fold. First, the Council did have a longstanding requirement for some sort of transport centre. That had long been an aspect of the Council and the Crown’s approach to the Government Centre although the Crown saw its own requirements as coming first. The Council had designated at least the majority of the site in issue in these proceedings as proposed road in its District planning documents since 1972. Hence, in November 1992, the Office of Crown Lands in a memorandum observed that the Council wanted areas B and C for road and that this “will become part of the Bus Terminus Redevelopment.” Further, in 1994 the Cityworks Division of the Council which dealt with Transportation and Traffic was saying it wanted the land for “future improvements to bus waiting facilities for northbound buses in the medium term, and in the longer term for further public transport centre development.”
[115] Second, the Council was to acquire the site as part of the 1989 agreement. Indeed, that was the effect of the 1991 Gazette Notice revoked for different reasons by DOSLI in 1992. There was no formal decision by the Council to move away from that as would have been consistent with the statutory framework for the making of decisions by Council.
[116] However, it was open on the evidence for Miller J to find, as he did, that it was not “inevitable” that the bus terminal would use the Hotel Cecil site. As Miller J observed, the Council’s requirement for the site was dependent first on a decision to route northbound buses down Lambton Quay. Second, the Council’s General Manager, Mr Chrysell, in memoranda of 9 October 1984 and 1 April 1986 expressed a preference for northbound buses in Lambton Quay to be routed in to Bunny Street (on the southern side of Rutherford House) and then around the eastern side of Rutherford House. The Council would then need Crown land on the Rutherford House side of Lambton Quay, but not the Hotel Cecil site. The Council is critical of the reliance on Mr Chrysell’s memorandum as it related to an earlier period but it does demonstrate the underlying point that any requirement turned on the decisions about other matters such as the route of the buses. Hence, there is a file note dated 26 January 1995 which records a discussion in which it is noted:
  1. Council would like an area approx 50m2 around the subway exit to erect a small bus shelter/terminal for bus driver use. Not essential but would be useful for them.
  2. Council would like to know if DOSLI has any land in/around Thorndon Quay area that could be used as a bus holding area. (On their wish list but not essential.)

[117] The changing role of the Council in relation to the provision of transport services has not been critical in Miller J’s decision.
[118] It was also open to Miller J to decide, as he did, that what had led to the use of the Hotel Cecil site was not a “specific requirement” for the site but rather the existing roading designation and the pressure from GPS to uplift it.
[119] Further, while the Council intended when it entered the 1989 agreement that the land would be used for roading and a bus terminal it agreed to take the land in the 1989 agreement as part of an “unders and overs” arrangement. It had the chance to acquire the land and took it. That is what Miller J meant when he said there was no formal decision to acquire the site for this purpose.
[120] The main arguments against the notion the Council required the land are, first, the Council’s position was advanced on the basis it would accept alternative land so long as it got the land and its value. Second, Mr Twydle from DOSLI undertook a review and as a result concluded in 1994 that the Council did not require the land.
[121] On the first point, the Crown and the Council say there was no formal Council decision to accept alternative land. However, if the land was required, it is not really credible that the Council officers would have been negotiating to take other land in its place. The Council’s inaction on receipt of advice of the revocation of the Gazette notice similarly could be seen as indicative of the Council’s approach. Further, the Council’s solicitors addressed the matter on the basis that the concern was to get what was promised in terms of the agreement. The Edmonds family is right that it was an available conclusion that the Council’s focus was on “not missing out” in terms of Council’s entitlements under the 1989 agreement rather than on a requirement for a particular piece of land. The Annual Plans relied on by the Council are at a level of generality and do not alter the position on this aspect.
[122] On Mr Twydle’s conclusion the Council did not require the land, the Crown and the Council point out first, that he was a DOSLI employee not a Council employee. Second, he was not aware of the 1989 agreement. We are not convinced that alters the matter. Mr Twydle was addressing the question of whether the Council required the land.
[123] For these reasons, Miller J could properly conclude that the Council did not require the land in issue as at July 1996 allowing a period of time for the view to be reached that the land was not required. Miller J has not been shown to be wrong.
[124] The Edmonds family contended that by November/December 1994, the Crown had all the information it needed to decide the Council did not need these areas. Hence, the Edmonds family say the offer back date (allowing 12 months to make the offer back) should have been December 1995. We are not satisfied there is a basis for taking a different view than that of Miller J on this issue. In the circumstances, it was open to the Judge to place weight on the timing of Mr Twydle’s decision (10 July 1996) that the land was not required.

(ii) Unfair or unreasonable to offer back?

[125] On the second issue, that is whether offer back would be unfair or unreasonable, the Crown submits that from Hood it is clear that the Court has to undertake a broad analysis concerned essentially with the balancing of the competing rights and interests created by the Act. The matter should not be judged only from the point of view of the land-holding agency. The submission is that the Court has given priority to interests of the former owner which is not correct especially where those interests are solely commercial.
[126] The Crown summarises the relevant rights and interests as follows:
[127] On this aspect, the Edmonds family submit that Miller J did take into account all relevant considerations. It is also noted that the Council would have been obliged to offer the land back at that time if it was the landholder. Further, Miller J accepted that the Edmonds’ interest was more than financial.
[128] The parties all agree that this Court should consider whether it was unfair or unreasonable to offer back rather than refer matters back to the Chief Executive. The Court should be cautious about deciding this matter given the discussion on the approach to s 40(2) in the decision of the Supreme Court in Hood v Attorney-General [2005] NZSC 53. In declining to grant leave, the Supreme Court observed that the circumstances in which it may be “unreasonable” or “unfair” to offer land back:

... are not circumscribed by the statute. It is open to the Chief Executive of LINZ [Land Information New Zealand, formerly DOSLI] ..., to consider the matter broadly and to take into account the expectations of any other body or person affected. Although the Court of Appeal did not consider that the arrangements between the Ministers and the Council were legally enforceable, they were not irrelevant to the assessment to be made. ...

... the parties appear to have been content to have the application of s 40(2) dealt with by the Courts on application for declarations as to what the Chief Executive of LINZ should have done. Mr Wilson did indicate in his submissions that the outcome of a successful appeal might be to return the matter for the determination of the Chief Executive, rather than to have the Court determine whether it was fair and reasonable for the land to be retained. Again, the basis on which leave is declined should not be taken to indicate approval of the course the litigation has taken.

[129] These observations are not binding as they were made on a leave application but they do make the point that the proper course may well be remittal back. The decision is one for the Chief Executive and the Court has not had the benefit of a decision from the Chief Executive on it. However, in the circumstances of this case where all parties would like the Court to address the matter, and Miller J did so with a similar caveat, we do so too.
[130] For the reasons given by Miller J, we agree it was not unfair or unreasonable to offer back. First, the Council may have “inherited” the obligation to offer back in any event given the land was no longer required for a public work. Second, the Crown could have made the 1989 agreement subject to s 40. The fact it chose not to protect itself in this way is not a consequence which should be visited upon the Edmonds family. Finally, like Miller J, we are not prepared to assume that the Crown will necessarily face liability to the Council in damages.
[131] For completeness, we mention here that the Crown also challenged Miller J’s finding that the Edmonds family would have acquired the land had it been offered back at any time since 1992. That challenge was not vigorously pursued and the finding was plainly open on the evidence.

How much land was required for the substation?

[132] The Crown appeals against the Judge’s conclusion that the area required for the substation was 172m2. That area comprises the total (rounded up) of the 78m2 occupied by the substation plus the 93.59m2 which, on the Edmonds’ evidence, was required for access and ventilation purposes. The Crown says that the area required for the substation was the 435m2 surveyed. The Edmonds accept the area was required for a public work but they say Miller J was right to find the area required was 172m2.
[133] Miller J found that, by Gazette Notice of 17 April 1997, the 435m2 comprising area C was declared to be set aside for electricity purposes and to remain vested in the Crown. His Honour found that the Crown held that area as from December 1994 for the purpose of transferring it to the Council for a public work, that is, an electricity substation.
[134] The question under s 40(1)(b) was not however whether the Crown held area C for electricity purposes but whether the Crown decided that the Council required that area for the substation and, if so, whether its decision is reviewable. The Judge relied on the evidence of Raymond Boyd who was employed with DOSLI and then LINZ from January 1992 to June 1998. Mr Boyd accepted that he “basically left it to the surveyors” who came up with 435m2. Miller J stated:

[166] ... The apparent lack of critical scrutiny is perhaps unsurprising in the circumstances, since the Crown was motivated to seek the Council’s agreement to a property swap in relation to area B.

[167] There was no evidence of any functional or other reason why the Crown required as much as 435m2. I find that Mr Stewart’s and Mr Watson’s evidence together establish that only 172m2 are required for the substation together with its access and ventilation requirements. That evidence was undisputed. I observe that the old substation served the same area of central Wellington but occupied only 156m2, and the plan attached to Mr Kiddle’s letter of 21 June 1989 appeared to depict a much smaller area surrounding the substation. Further, the land surrounding the substation is presently either landscaped or used as part of the bus terminal. That is not due to underground cabling requirements, because the principal electrical cables to and from the substation are located on the Lambton Quay side.

[135] For these reasons Miller J concluded that the Council required 172m2. It followed that the Crown had shown that at all times since 1989 it held 172m2 of area C for another public work in the form of the substation. But it had failed to establish that the Council required the balance of area C for that purpose.
[136] For the reasons set out in the judgment we agree that the Crown had not shown that the whole of area C was required for that purpose.
[137] The Crown make the argument that the precise area required for the substation was determined by LINZ in accordance with the requirements of the relevant local authority bylaws. It is also submitted that Mr Boyd directed the surveyors to identify an area that would meet those requirements.
[138] What Mr Boyd said was:

The instruction to [Axis Survey] consultants would have been here as [sic] a Substation sitting on a flat piece of land with a perpendicular bank behind it, would you survey enough of that off to meet the requirements of the local authority by-laws. They needed access from the street, from Lambton Quay up into the Substation itself. It had large double doors which allowed access into the Substation itself.

[139] Mr Boyd was questioned further and asked whether he had basically left it to the surveyors to fix an appropriate amount of land to meet the requirements of the substation. He said he had. Further, he could not, as the Edmonds family point out, directly help as to how the figure of 435m2 was struck.
[140] There is no other evidence to the effect that Mr Boyd left it to the surveyors to fix an appropriate area of land to meet the requirements of any local authority bylaws. As the Edmonds family note, this is the first and sole reference to any local authority bylaw requirement. The written instructions from Mr Boyd to the surveyor indicate that the surveyor was asked to prepare a survey plan for the area having been provided with an aerial photograph with a triangular area marked on it. In Mr Boyd’s letter of 21 March 1996 to the surveyors he states:

Further to our conversation today I would like you to undertake the necessary work to raise a title for the land outlined in yellow on the attached aerial photograph [area C].

[141] As the Edmonds family submit, if there were in fact local authority bylaws that meant 435m2 were required for the substation, the Crown would have had to bring evidence of them in order to discharge the evidential burden under s 40(1)(b). It did not do that.
[142] The evidence from the Edmonds family in support of the claim that something less than the area surveyed was required came from Arthur Stewart, an experienced valuer, and from Stephen Watson who is an electrical engineer. Mr Watson gave evidence about how much land was necessary to ensure proper access to and ventilation for the substation. The evidence of both Mr Stewart and of Mr Watson was uncontested and supports Miller J’s conclusion.
[143] The evidence from Messrs Stewart and Watson is also consistent with the fact that before the substation was shifted to its present site in 1973-74, it was located on a 156m2 site. Further, a recent photograph taken after the Council’s recent work and use shows that a large triangular section in front of the substation is currently being used for bus parking and turning and the entire area behind the substation is used for planting. There has been no error in the approach to this issue.

Did the Crown have to offer back airspace?

[144] The Edmonds family (as cross-appellants) argue that the s 40 obligation extends to the airspace over the substation. The Edmonds family rely on the definition of “land” and on ss 28 and 31 of the Act.
[145] The Edmonds family also note that if part of the land is in a single title and is no longer required in terms of s 40(1) then the statutory obligation to offer back arises even if that may require a subdivision (see Sisters of Mercy, above).
[146] Mr Upton for the Edmonds family also pointed to the fact there had been some consideration of possible use of airspace at various points in time. For example, the Capital City Planning (Technical) Committee (comprising members from the Council and from Government Departments) at its meeting in February 1986 discussed airspace over the transport terminal. The Committee noted there had been an earlier proposal by Government that airspace over the terminal be developed for offices and other commercial purposes. The Committee’s minutes record: “This did not proceed but the Committee considered that it was worth pursuing again...”.
[147] The Crown, in responding to the cross-appeal, submits that if there was an obligation to offer back airspace, the legislation would have made express provision for that. Absent such a provision, it is submitted there is no jurisdiction to bring such a claim or to order such relief. Rather, it is submitted that the rights to airspace above the land attached to that land and that the Act supports this submission.
[148] The relevant sections are ss 28 and 31 which are in a sub-part of the Act described as “extending” the estates in land that may be acquired or taken.
[149] In terms of s 28, the power to take land for a public work includes the power to take and to hold the land subject to “any particular estate, interest, easement, profit à prendre, covenant, or encumbrance”. Further, in terms of s 28(b) the power to take land for a public work includes the power to acquire or take and to hold separately:
[150] “Land” is defined to include any estate or interest in land (s 2).
[151] Section 31 makes it clear that the Minister or local authority may in taking land for a public work acquire only the surface:

... together with such part of the subsoil or of the air space above the surface as is deemed necessary, or may acquire or take all or only such part of the subsoil or of the air space above the surface as is deemed necessary excluding the surface.

[152] The remainder of s 31 deals with the implications of that power. Section 31(2) to (4) provides as follows:
[153] Miller J’s approach to this aspect was, first, to note that there was a “suggestion” in the evidence on behalf of the Edmonds family that the obligation under s 40 might extend to airspace over the substation. Miller J said:

Whatever the practical possibilities for a development around and over the substation, s 40 applies to “land”. I am not prepared to accede to that suggestion in the absence of argument.

[154] This matter was the subject of an application for recall of the judgment. In that context, the Judge accepted the submission made by the Edmonds family that the issue was live. It had been raised “albeit obliquely” in the third amended statement of claim and addressed in the evidence of the valuer, Mr Stewart.
[155] However, given the importance of finality, Miller J took the view that the Court should not be too ready to afford a further hearing to a party which has “simply omitted” to address an issue of which it was well aware, particularly where that issue was controversial and the Edmonds family knew that the airspace rights were valuable. Miller J declined the recall application in a decision delivered on 14 June 2005.
[156] Miller J did note that the question was one of law and did not turn on any further factual findings since His Honour had held that all of the land was required to be offered back. However, we agree that Miller J was correct to decline to recall as the matter was raised too late.
[157] Even if the point had been raised earlier, we do not consider this to be a case where an obligation to offer airspace arises. The practicalities of requiring consideration in every case as to whether there is a need to offer airspace back even if the underlying land is still needed, puts too high a burden on the Crown. We consider that, if intended, any such burden would have been expressly provided for in the legislation. We do not discount the possibility that in some cases there might be an obligation to offer back airspace even in cases where the underlying land is needed for a public work. We consider, however, that this would be rare and may be confined to situations where there are concrete plans for the use of the airspace for a non-public work. Although the prospect of use of airspace was considered at various points in this case, in our view this does not carry much weight as it was historical in nature.
[158] Finally, in terms of the evidence relied on by the Edmonds family, we note that Mr Stewart’s evidence relates to value. Mr Watson’s evidence was that it was possible to build over the substation but not over the entire site. Neither of those aspects are determinative of the Edmonds family’s claim.
[159] Accordingly, we conclude there has been no error in the approach to airspace.

Remedies

[160] There are two aspects to remedies that arise for consideration. The first is whether the Edmonds family should have to elect between a declaration and damages. The second issue relates to the terms of the declaration.
[161] The first issue arises because Miller J said the Edmonds family did not have to elect before judgment between a declaration or damages. The Crown says Miller J was wrong in this respect. That is because the remedies, as is accepted by His Honour, are mutually inconsistent and so the Edmonds family as plaintiffs were required at law to elect (see Chatfield v Jones [1990] 3 NZLR 285 (CA); Roberts v Rodney District Council [2001] 2 NZLR 402 (HC); and Johnson v Agnew [1980] AC 367 (HL)).
[162] The Edmonds family’s position on this is that the law does not always require a plaintiff in these circumstances to make an election. Rather, the authorities recognise as a matter of fairness that a plaintiff can wait to make an informed choice. In this case, the Edmonds family say, they would not know the price that would be required by the Crown for the land until an offer was made. Nor, at trial, were they aware of what the market value of the land would be at the time it was offered to them.
[163] As we have already indicated, we consider the appropriate remedy will generally be a declaration. If there is then no offer back or there is some other problem in relation to the offer back, it may be that whatever has occurred will give rise to a separate cause of action. That approach is consistent with the nature of s 40 and with its underlying purpose. In some respects, this is not a significant issue since Miller J issued his judgment and so clarified the relevant dates. In other words, the Edmonds family do know what the position is now. In the circumstances, we do not consider it is necessary to require an election. The matter can now be resolved on the basis the relevant dates have been clarified.
[164] This leads in to the second remedies issue, namely, the terms of the declaration. The parties agreed that the sealed judgment should record that the Edmonds family were entitled to a declaration which declared as follows:

... The Crown must offer area A as at 1993, at $750 per square metre, and area B and the balance of area C as at 1997, at $1,000 per square metre, unless the Crown chooses to offer the land at a lesser price as contemplated by s 40(2)(d) of the Public Works Act 1981.

[165] The figures, $750 and $1,000 per square metre, reflect Mr Stewart’s uncontested evidence of the market value at the relevant times. In our view, to direct the Chief Executive in that way is to fetter the discretion. The use of statutory language, i.e. a requirement to offer back at then market value or lesser price is the preferred approach. The declaration should simply refer to the obligation to offer back.

Costs in the High Court

[166] The Crown appeals against Miller J’s award of costs to the Edmonds family on a category 2B basis. The Crown say they were not heard on the question of costs and dispute the conclusion that the Edmonds family had succeeded in substantial part. This part of the appeal was not vigorously pursued and we see no merit in it. Category 2B is appropriate and the Edmonds family clearly were successful in substantial part.

Result and costs on appeal

[167] For these reasons, the appeal is allowed in part. The finding that a breach of s 40 of the Public Works Act 1981 gives rise to a continuing cause of action is set aside. That affects the form of the declaration made by the High Court which is set aside. A declaration in the following form is substituted:

A declaration that the Crown is obliged to offer area A, of the former Hotel Cecil site at 2 Lambton Quay, Wellington, to the plaintiffs under s 40 of the Public Works Act 1981 as at July 1990; and area B, and that part of area C not required for the substation (being 263m2 of area C) as at July 1996.

[168] The cross-appeal is dismissed.
[169] The Edmonds family have largely succeeded in that Miller J’s finding the land should have been offered back is upheld. We thus award the respondents costs of $8,000 plus usual disbursements.

Solicitors:
Crown Law Office, Wellington, for Appellant
Bisson Moss, Napier, for Respondents
Phillips Fox, Wellington, for Intervener



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Appendix

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