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Hampton v Canterbury Regional Council (Environment Canterbury) [2015] NZCA 509 (2 November 2015)

Last Updated: 13 November 2015

IN THE COURT OF APPEAL OF NEW ZEALAND
BETWEEN
 Appellant
AND
 Respondent
Hearing:
Court:
Wild, Miller and Cooper JJ
Counsel:
I G Hunt for Appellant P J Shamy and M C Dysart for Respondent
Judgment:


JUDGMENT OF THE COURT

  1. The application for leave to adduce fresh evidence is granted.
  2. The appeal is dismissed.
  1. The respondent is entitled to costs calculated for a standard appeal on a band A basis, together with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Cooper J)

Table of Contents

Para No
Introduction [1]
Regional control of water [6]
Simon’s resource consents and related Court proceedings [17]
Robert’s resource consent (CRC110662) [29]
The High Court judgment [49]
Simons’ subsequent consent (CRC042233.4) [62]
The appeal
The arguments on appeal [67]
Analysis [76]
Result [114]

Introduction

[1] The appellant, Simon Hampton, commenced a proceeding in the High Court at Christchurch challenging the decision of the respondent, the Canterbury Regional Council (the Council) to grant a water permit to Robert Hampton.[1] Simon Hampton and Robert Hampton are cousins, who occupy farm properties on Back Track, Barrhill between Rakaia and Methven on the Canterbury Plains.[2] Parts of their respective farms adjoin each other.
[2] As a result of a series of resource consent applications, Simon obtained a water right allowing him to take water to irrigate Robert’s land. However, the men could not reach agreement on terms on which the water could be taken and used on Robert’s land.
[3] Because water in the area is already over-allocated, Robert could not simply get a consent to take additional water. The Council adopted an elegant solution. It granted Robert a right to take water to the extent that Simon’s right to use water to irrigate Robert’s land was not being exercised. Simon now complains that this decision interfered with his property rights, specifically his right to sell his water right. Simon claims the Council’s decision was affected by various errors of law, breached his legitimate expectations, amounted to a derogation from the right conferred by the permit granted to him, and was affected by predetermination and bias. The substance of his position is that Robert has only two options: to buy Simon’s right or, there being no new water available, to do without.
[4] All of these claims were rejected by Gendall J in the High Court, and Simon now appeals to this Court.
[5] Before setting out the relevant facts, it is appropriate to say something about the regime in place in the Canterbury region for the allocation of rights in respect of water, which reflects the scarcity of the resource.

Regional control of water

[6] For most of the period relevant to this appeal, the Council had a proposed Natural Resources Regional Plan (the PRP) which had been publicly notified in July 2004. Chapter 5 of the PRP was addressed in an affidavit filed in the High Court by Geoffrey Deavoll, a planning officer employed by the Council. His evidence was not challenged.
[7] Mr Deavoll explained that chapter 5 of the PRP addressed the rapidly emerging issue of the overallocation of groundwater resources in the region by creating groundwater allocation zones. Under the PRP, applications to take water for irrigation within various groundwater zones were classed as discretionary activities if they fell within the limits established by the PRP. Applications to take water in excess of the zone limits were classified as non-complying activities.
[8] The PRP provided a methodology for both estimating the volume of water available to recharge supplies in each zone annually, and to determine how much water could sustainably be the subject of permits granted to take water. For this purpose it was also necessary to ascertain how much water was already being taken pursuant to consents already granted. It was then a question of developing a reasonable methodology to allocate water not yet allocated to applications for water permits. This process occurred after the public notification of the PRP.
[9] Mr Deavoll explained:

Water allocation became a very big issue in Canterbury particularly after the notification of the [PRP]. Priority queues were established by the Council to determine which applications would be heard and decided first by the decision-maker relevant to other applicants. This order ... was initially based on the date that an application was “notifiable” and later on the date a “completed application” was filed.[[3]] ...

[10] Mr Deavoll said that as the methodologies were refined some water allocation zones were successively over-allocated and then under-allocated. He noted that the methodology incorporated in the PRP as sch WQN9 was developed with a view to ensuring each applicant received a reasonable amount of water for the area to be irrigated. The schedule distinguished between types of farming operation, for example cropping or grazing. That classification affected both the volume of water authorised by water permits, and the rate at which water could be taken.
[11] Matters taken into account for the volume to be authorised included the land area to be irrigated, the soil type (differentiated in accordance with the ability of the receiving soil to retain water), the effective irrigation season, rainfall and the use to which the applicant intended to put the water. Mr Deavoll observed those matters were critical to the allocation of water in accordance with need, and to ensure the applicant would have sufficient water for a “viable consent”. Other relevant considerations included application rates, so as to ensure surface ponding (which could result in leaching) would not occur, and water would not be wasted as a result of runoff.
[12] Counsel for the respondent, Mr Shamy, also referred us to policy WQN17 of the PRP, headed “Reasonable and efficient use of water”. Paragraph (1) in the policy was in the following terms:

Ensure that the instantaneous rate of abstraction, the return period and the annual volume of water permits for the taking, using or diverting water are no more than reasonable for the intended end use, and thereby avoid significant wastage of water and avoid or limit the adverse effect on water quality ...

[13] The PRP regime meant applicants for water permits were required to provide information to the Council stating the intended use of the water, and demonstrating, by reference to a plan, what part of the property was able to be irrigated. Mr Deavoll noted many applicants pooled resources and participated in joint hearings, but there were occasions when the next applicant “in the queue” would not succeed because the available water had already been allocated. The lack of available water for allocation resulted in applicants seeking to utilise the provisions of s 136 of the Resource Management Act 1991 (the Act), pursuant to which holders of water permits may transfer the whole or any part of the holder’s interest in a water permit. Under the Act, such transfer to another site may take place if expressly allowed by a regional plan, or with consent on an application made under s 136(4) of the Act.
[14] We were not referred to the detail of the regional rules on this issue; however, as will be discussed, Simon sought and obtained the Council’s consent for the partial transfer of his right to another site. Mr Deavoll explained that while a transfer from an existing holder to a new person at the same site was treated as an “automatic process subject to certain administration requirements”, transfers from one site to another were processed (as required by s 136(4) of the Act) as if they were an application for a new water permit.
[15] Mr Deavoll acknowledged that quite independently of the Council and any controls it purported to exercise, a market developed in which water was effectively traded. A person could buy or lease a water allocation which was the subject of an existing permit. Since no new water was involved in such a transaction, no issue of increased over-allocation of the groundwater resource arose.
[16] It is clear that in catchments where there is an over-allocation, the scarcity of the resource has made a water permit valuable. Simon asserted the loss he suffered as a consequence of the grant of Robert’s permit was between $325,000 and $560,000. One of his claims is that the Council should have taken into account this significant economic impact before granting Robert’s permit.

Simon’s resource consents and related Court proceedings

[17] On 6 April 2004, Simon applied for a water permit to irrigate 95.3 hectares at an address given as 1259 Back Track, Barrhill No 12 RD, Rakaia. The consent sought was “to take underground water for sprinkler irrigation of 95.3 hectares of cash crops, seeds and pastures”. An accompanying letter explained it was proposed first to install a deep well for irrigation and secondly to take water for sprinkler irrigation on the land. The application stated that Simon was the owner, and the land was occupied by the SJ and LJ Hampton Farm Partnership.
[18] The required assessment of environmental effects was provided to the Council on 25 June 2004. In its introductory section, the assessment said:

The applicant owns three parcels of land adjoining Back Track and Accommodation Roads. It is the intention of the applicant to install a 250m deep well on his Barhill property for irrigation of 95.3 hectares of barley and pasture for grazing dry stock. At present the property is a dryland farm, the applicant requires 55 litres per second to increase and sustain the economic viability of the operation.

In addition the applicant has come to an agreement with one of his neighbours Robert Hampton to provide irrigation water to his adjacent property (88 hectares). Hence the total area to be irrigated is 173 hectares. Both properties are currently dryland arable farms.[[4]]

[19] The assessment said the water would be taken from a bore on the land at a stated location at a rate not exceeding 100 litres per second.[5] Attached to the assessment as Appendix 1 was a location map showing both Simon’s and Robert’s land. The assessment addressed the adverse effects of groundwater extraction, cumulative effects on other groundwater users, the irrigation methodology including a proposed pumping schedule, the effect on surface water flows and groundwater quality as well as other matters.
[20] As the application was made prior to public notification of the PRP, the application addressed these issues in accordance with the Council’s Regional Policy Statement, and relevant provisions of the Act.[6] As with the PRP when it was publicly notified, one of the relevant considerations was the issue of need for the water. Policy 6 of the Regional Policy Statement required that permits to take water should specify maximum permitted water usage and maximum abstraction rates, and be based on actual and reasonable water needs. The policy stated, amongst other things:

In considering a permit to take water, a consent authority should, as part of the requirements of s 104 of the Act, consider the need to: ... (b) be based on actual and reasonable water needs; ...

The assessment of environmental effects asserted Simon’s application was entirely consistent with this policy.

[21] The application was still being processed when the PRP was publicly notified, and the Council was therefore required to take the PRP into account in assessing the application. As we have mentioned, the PRP also required the applicant’s need for the water to be addressed, and contained methodologies that took into account, among other things, the extent of the area proposed to be irrigated.
[22] The Council decided to deal with the application on a non-notified basis and the consent was issued on 10 January 2005. It was given the number CRC042233 in the Council’s records. The consent permitted the taking of water from the proposed bore at a rate not exceeding 100 litres per second, with a volume not exceeding 86,400 cubic metres in any period of 10 consecutive days. One of the conditions imposed limited the volume of water to be taken between 1 July and the following 30 June to 777,600 cubic metres. Mr Deavoll explained in his affidavit that the annual volume had been calculated internally by the Council based on 60 per cent of the maximum daily take multiplied by a nominal irrigation season of 150 days. He said this was a “default calculation of seasonal irrigation demand at this time”, given there were issues concerning the method of calculation specified in the PRP.
[23] Another condition of consent required the water to be used only for irrigation of crops, and pasture for grazing, in the area of land shown on a plan attached to the consent. The area included both Simon’s and Robert’s land. The consent document originally issued had contained a plan referring only to Simon’s land. That was subsequently rectified, and on 24 May 2005 the consent was reissued with the correct plan, including Robert’s land. It is plain, and Gendall J found, that the annual volume of 777,600 cubic metres was calculated on a basis that reflected the intention to irrigate the combined land area of 173 hectares.
[24] Simon subsequently applied to change a condition requiring the maximum rate of water take to be measured within 12 months of commencement of the consent. This application was granted on 13 November 2007, and issued under the number CRC042233.1. A plan attached to that consent once again showed the land to be irrigated as extending to both Simon’s and Robert’s land.
[25] This was the first of a number of applications made by Simon, processed by the Council and granted using variations of the number of the original consent. As will be seen the same approach was taken when the Council consented to the transfer of part of the consent to a third party. A new permit was evidently issued to the transferee, and a fresh permit also issued to Simon reflecting the changed position consequent on the transfer, in effect showing what remained of his right net of the portion transferred. No doubt this is administratively convenient. The Council thereby has an up-to-date record of what remains authorised, on the terms recorded under the latest CRC number.
[26] On 12 May 2008 Simon made an application to transfer part of the consent to Stewart and Burke Ltd at another site in the same groundwater zone (the Chertsey groundwater allocation zone). After referring to the existing consent, the application stated:

The Hamptons wish to transfer 350,000 cubic metres of [the annual volume of 777,600 cubic metres] to Stewart and Burke Ltd for the full duration of the consent (23 December 2039).

The Hamptons will retain the balance, at the same maximum rate of take.

[27] There was a map attached, headed “Retained Water Use Map”, showing only Simon’s land. But on 19 May 2008, before the application could be processed, Simon wrote to the Council requesting that the application be placed on hold due to legal issues.
[28] It seems the application to transfer part of the permit to Stewart and Burke Ltd prompted Robert to commence a proceeding in the Environment Court. On about 28 July 2008 Robert sought interim and final enforcement orders under the Act to prevent the transfer. The Environment Court made an interim enforcement order on 30 July 2008 that the Council not process, or grant consent to, the transfer application until further order of the Court.[7] On 8 August, there was a hearing on the extent of the Environment Court’s jurisdiction under s 314 of the Act. The factual setting for that argument was set out in the Environment Court’s decision of 12 September 2008 as follows:[8]

[11] There is a dispute between the parties as to the basis upon which the resource consent was obtained. [Simon] is adamant that at no time did he intend to apply for the consent in joint names and it was simply intended that he would obtain a consent which would allow application to [Robert’s] property if suitable arrangements could be made. [Robert] denies this and says that it was always intended that he would be a resource consent holder.

[12] The costs of the application for resource consent were met by [Simon] but [Robert] says he had always expected to receive an account for half those costs. Subsequently it appears that [Simon] has requested [Robert] to meet half the costs of developing the bore and [Simon’s] costs of operating the bore as well as his own.

[29] In that decision, the Environment Court determined it had jurisdiction to determine the identity of the holder of a resource consent and that enforcement proceedings under s 314 of the Act could be used to prevent a person who is not the holder of a resource consent transferring the whole or part of the consent under s 136. The interim orders were continued for a further period, and in the meantime Simon appealed to the High Court. Simon also made an application to the Environment Court to vary its order on the basis that the current order prevented him from dealing with any part of the consent and Robert’s arguments related only to the portion of the consent that could apply to his land. On 16 December 2008 the Environment Court granted this application on the basis there was no reason to prevent Simon from using that portion of the consent which was not contested. In the result, the amended order prevented the Council from further processing any application for variation of conditions or:[9]

... any application by [Simon] to transfer any part of the 350,000 m3 relative to 77 hectares of land owned by Robert and [Robert’s wife] Emma Hampton as currently contained in CRC 42233.1 to any other person or site ...

[30] Simon amended the application to transfer the allocation on 18 December 2008. He now proposed there be only a temporary transfer of 350,000 cubic metres for a period of six months. This amended application for transfer related only to the water “allocated” to Simon’s land and a consent (CRC042233.2) was issued on 26 January 2009. Consistently with the Council’s administrative practice this consent effectively reissued CRC042233.1, but with a new condition which provided that, for the period 1 January to 30 June 2009, water with a total volume not exceeding 77,600 cubic metres could be used to irrigate “Area A”, while a total volume not exceeding 350,000 cubic metres could be used to irrigate “Area B”. Areas A and B were shown on a plan attached to the consent as CRC042233.2A, and related respectively to Simon’s and Robert’s land.
[31] The 77,600 cubic metres able to be used on Simon’s land during the
six-month period was clearly calculated on the basis that of the 777,600 annual volume to which the consent was limited, a volume of 350,000 cubic metres was to be transferred to the third party and 350,000 was to be treated as referable to Robert’s land. This left the balance of 77,600 available for irrigating Simon’s land.
[32] In fact it appears that until this point, CRC042233.1 had not been exercised. According to Mr Deavoll, CRC042233.2 enabled Simon to “give effect to” the consent (CRC042233.1), which would have lapsed on 31 December 2009 had it not been exercised at this time, by way of a temporary transfer.
[33] There was a hearing of Robert’s substantive application in the Environment Court in October 2009. The Court’s reserved decision was issued on 22 January 2010.[10] The Court declined to make a declaration that Robert and Emma should be recorded as part consent holders of water permit CRC042233.1. The Court noted Robert’s concern about a transfer of the permit to any third party because the Chertsey groundwater allocation zone was “overallocated”, that is, the Council had issued water rights to take more water than was available in the aquifers from which it was to be drawn. The consequence was that if Robert’s land was not able to be irrigated pursuant to CRC042233.1, he would have to make a new application. Under the “Fleetwing principle” of priority for applications on a first come first served basis, any application by Robert would be at the end of the queue and unlikely to obtain a water permit, given the over-allocation.[11]
[34] The Court rejected Robert’s argument that he and Emma should be treated as holders of the permit, noting Simon had been the applicant for the water permit at all times. The Court thought it important that a consent authority should not need to go behind the name of the applicant stated on the application. The Court also relied on MacLaurin v Hexton Holdings Ltd in which, having noted that s 88 of the Act allows any person to make a resource consent application, this Court said that consent authorities are concerned with the effects of a proposed activity, not about the nature of the applicant’s legal rights or interest in the particular land to which the application relates.[12]
[35] On 24 November 2010 Simon applied to transfer permanently 427,000 cubic metres of water to Somerton Fields Ltd, at another site in the Chertsey groundwater zone. It was proposed that the remaining allocation of water following the transfer could be used on either Simon’s land or Robert’s land.
[36] Simon’s application was initially not accepted since the application had not provided an assessment of the effect of changing the exercise of the water permit at its current site, a matter required to be addressed by s 136(4)(b) of the Act. Gendall J accepted Mr Deavoll’s evidence that in returning the application, the Council had been influenced by receipt of an application for a water permit made by Robert on 5 November 2010.[13] Simon then amended his application to specify that the remaining water allocation of 350,600 cubic metres following the transfer to Somerton Fields Ltd could only be used on Robert’s land, and none was to be used on Simon’s land. The consent (CRC042233.3) was granted on 23 December 2010 but on the basis that the balance of 350,600 cubic metres should be used:

... only for irrigation of crops and pasture for grazing sheep, beef cattle, deer or non-milking dairy cows as described in the application, on the area of land shown in attached plan CRC042233.3.

The attached plan CRC042233.3 identified only Robert’s land.

[37] Gendall J noted Simon’s evidence that he had agreed to this “reluctantly”.[14] Simon said he did so to meet Somerton Fields Ltd’s need to utilise the water during the forthcoming irrigation season; it did not wish to proceed with the transfer if the water was not available at that time.
[38] Simon lodged a further application on 16 March 2011. The application sought to change the location where the remaining allocated water could be used, from Robert’s property to Simon’s property and that of another neighbour. At the time of the hearing in the High Court, the application had been placed on hold at Simon’s request. Simon made an application to adduce evidence in this Court relating to the processing and grant of the application, as CRC042233.4, and we mention it again below.[15]

Robert’s resource consent (CRC110662)

[39] As noted above, Robert made an application for a water permit in respect of his own land on 5 November 2010.
[40] The application sought consent to take up to 38,880 cubic metres of groundwater over periods of 10 consecutive days, for the purposes of irrigating Robert’s land. It was intended the water be taken from wells on Robert’s land, the application reciting that because of the disagreement between Robert and Simon, joint management of the single bore on Simon’s land was no longer feasible. The application was presented as representing a “re-allocation” of Robert’s portion of the water already “allocated” under CRC042233 to a new consent to be held by the applicants. On this basis it was said the proposal was not for a new groundwater take.
[41] In addition, the application proposed consent conditions which were essentially identical to those attached to CRC042233.2. In the circumstances, the application alleged adverse effects would be less than minor and it was sought that the application be processed on a non-notified basis.
[42] Following representations by Simon’s solicitors, the issue of whether or not the application should be publicly notified was referred to an independent commissioner, Philip Milne.[16]
[43] Mr Milne decided that there was no basis for public notification of Robert’s application, and it was also unnecessary for Simon to be served with the application in a “limited notification” process under s 95B of the Act. He decided Simon’s application did not need to be publicly notified, but it should be served on Robert and Emma.
[44] The consent (CRC110662) was granted on 29 August 2011. Gendall J noted it had been expressly advanced on the basis of comments made by Judge Jackson in the Environment Court’s substantive decision. Judge Jackson had said:[17]

[17] I have also considered whether a non-owner (like Simon in this case) could frustrate a land owner’s wish to irrigate by obtaining a ‘use’ water permit for the land (here Robert’s land) not owned by the applicant. That would mean that the land owner could at first sight not obtain their own water permit for their land. However in those circumstances the consent authority could grant a further consent but by condition make it exercisable only when the first water permit is not being exercised in respect of the land.

[45] Consistently with this, condition 3 of the consent provided:[18]

The sum of:

(a) the maximum annual volume of water taken under this resource consent CRC110662 [Robert’s consent] or any variation thereof and used for irrigation of the land within the area shown as shaded on plan CRC110662 [Robert’s land only]; and

(b) the maximum annual volume of water taken under resource consent CRC042233.3 [Simon’s consent] or any variation thereof and used for irrigation of land within the area shown as shaded on plan CRC110662 [Robert’s land only];

shall not exceed 350,600 metres between 1 July and the following 30 June.

[46] As Gendall J noted, as both the plan forming part of CRC110662 and that attached to CRC042233.3 referred only to Robert’s land and no other, only Robert’s land could be irrigated under those two consents. There was no restriction on Simon’s ability to take up to 350,600 cubic metres under his consent, but it could only be used on Robert’s land. Their inability to come to terms meant that the water stayed in the ground.
[47] There was a further significant condition, attached to CRC110662. Condition 5 stated:

This resource consent CRC110662 or any variation thereof shall not be used for irrigation of the land within the area shown as shaded on plan CRC110662 at any time when resource consent CRC042233.3 or any variation thereof is being used for the irrigation of the land within the area shown as shaded on plan CRC110662.

[48] In the result Robert’s consent could only be exercised if Simon’s consent (CRC042233.3) was not being utilised for the purpose of irrigating Robert’s land.

The High Court judgment

[49] Simon’s claim in the High Court alleged errors of law, derogation from grant, breach of legitimate expectation, failure to take relevant matters into account, taking irrelevant matters into account, predetermination and bias, and unreasonableness.
[50] Simon alleged three errors of law. They were, first, the failure by the Council to take into account the effect of CRC110662 on CRC042233.3 and the application made under CRC042233.4. Secondly, it was alleged that the Council erroneously applied the principles for determining the priority of competing applications for resource consents for an unallocated resource established by Fleetwing Farms Ltd v Marlborough District Council and Central Plains Water Trust v Ngai Tahu Properties Ltd “as if the application for transfer by Simon Hampton was an application for a resource consent and the application had priority”.[19] Thirdly, it was said that the Council erroneously assessed the application because at the time it was made Simon did not have permission to irrigate, nor did he intend to irrigate, the area of land owned by Robert and Emma.
[51] The Judge rejected these claims. He found it was clear the respondent had turned its mind to the effect of CRC110662 on CRC042233.3 and the application referred to as CRC042233.4.[20]
[52] Secondly, he found this was not a case of competing applications for resource consents for the same resource. Significantly, CRC110662 could only be exercised when CRC042233.3 was not being used.[21] The Judge said he was unsure about what was intended by the third error of law alleged, but he noted that Simon was clearly able to irrigate Robert’s land under consent CRC042233.3, although it was unclear whether he ever intended to do so.[22]
[53] Simon also sought to rely on a legitimate expectation that the Council would not take any step which might interfere with, erode or “destroy the value” in consent CRC042233.3 or which would preclude him from exercising his lawful rights in respect of the consent. Those rights were said to include, in particular, the right to transfer the consent pursuant to s 136 of the Act, or to make an application to change conditions of the consent. He also asserted breach of a legitimate expectation that he would have the exclusive use of CRC042233.3, including the right to deal with it as provided by the Act. Further, he claimed he had a legitimate expectation that any decision which might affect CRC042233.3 would be reached only after provision to him of all relevant material, and after he had been afforded an opportunity to make submissions to the respondent prior to any decision being made. It was claimed that all of these legitimate expectations had been breached.
[54] The Judge rejected each of these claims. He held that the grant of CRC110662 had not destroyed or eroded CRC042233.3. It was premature to conclude that an application to transfer the right would be unsuccessful, and Simon himself had (at that stage) placed his application to transfer on hold. That application also included an application to change the conditions of consent. Further, Simon had exclusive use of CRC042233.3, in accordance with the conditions imposed on that consent. Those included the requirement that the remaining water to which it related was only able to be used on Robert’s land.[23]
[55] On the issue of whether Simon should have received information about the application and been heard on it, the Judge noted Mr Milne had considered the notification issue and considered he was not adversely affected and so not required to be notified. Essentially this was because CRC110662 would operate only as a back-up grant to CRC0402233.3, which would not be affected. The Judge concluded the granting of CRC110662 was not flawed for notification reasons.[24]
[56] The Judge next addressed Simon’s claim based on derogation from the grant of CRC042233.3, repeating his view that the consent was not affected by restrictions apart from those limiting the total amount of water able to be drawn and requiring its use on Robert’s land. He reiterated that the latter restriction was one to which Simon had agreed so he could transfer part of the right to Somerton Fields Ltd. He distinguished the facts from those in Aoraki Water Trust v Meridian Energy Ltd, a case on which Simon relied and which we discuss below.[25] He concluded there had been no derogation from the grant of Simon’s consent.[26]
[57] The Judge also rejected the arguments about failure to take into account relevant matters and taking into account irrelevant considerations. The former category was effectively a further elaboration of the alleged adverse effects on Simon’s rights under CRC042233.3 flowing from the grant of Robert’s consent, in particular the reduction in water available to Simon, and constraints on his ability to transfer the consent under s 136 of the Act. Irrelevant considerations taken into account were said to include a wrong assumption that Robert had rights to take water under CRC042233.3 and a wrong conclusion that the grant of Robert’s consent would not adversely affect Simon, because CRC042233.3 could only be used to irrigate Robert’s land; this was said to ignore Simon’s right to transfer it to another person or site under s 136.
[58] These allegations failed on the basis of the Judge’s conclusion that Robert’s consent did not reduce the volume of water able to be taken and used by Simon under CRC042233.3. Robert’s consent CRC110662 could only “operate” to the extent that CRC042233.3 was not “operating”. Any issue based on the inhibition of the right to transfer was “entirely premature” because CRC042233.4 had been placed on hold at Simon’s request.[27]
[59] The allegations of predetermination and bias failed on the facts: issues concerning both the need to notify Robert’s application and the substantive decision to grant it had been impartially considered by the independent Commissioner.[28]
[60] Notwithstanding the fact that none of Simon’s allegations had succeeded the Judge nevertheless discussed the issue of remedy, noting in particular that although he had sought a declaration that the grant of Robert’s resource consent was unlawful, Simon did not seek orders quashing the decision or directing the respondent to reconsider it. Rather, the remedy sought apart from a declaration, was damages. The Judge considered this would have been inappropriate.[29] Robert’s resource consent would be left in place, and a declaration that it was unlawful would be ineffective to remedy the alleged problem.
[61] In the result the application for review was dismissed.

Simons’ subsequent consent (CRC042233.4)

[62] Simon sought leave to adduce evidence of a subsequent consent at the hearing of this appeal, and we granted his application. Simon applied for this consent on 16 March 2011. The application sought to vary the condition of consent CRC042233.3 which confined use of the water taken to Robert’s land. Simon sought to substitute his own land and that of a neighbour, Mr Stevens. As noted earlier, it was on hold at Simon’s request at the time of the High Court judgment.[30]
[63] The consent was granted by Commissioner Milne on 14 March 2014 and a new plan CRC0402233.4 was substituted. However, condition 11 of the consent required that water taken under the permit could only be used as a secondary supply to water supplied for irrigation by the Barrhill Chertsey Irrigation Ltd Irrigation Scheme, and only at times when insufficient water is available from the scheme to fully irrigate the subject land. It was further stipulated that in the event the consent holder sold or reduced his shareholding in the Barrhill Chertsey scheme, the consent would no longer authorise the use of the water on the consent holder’s land.
[64] As explained in the Commissioner’s lengthy decision, Barrhill Chertsey Irrigation Ltd had a resource consent to take water from the Rakaia River, and use it to irrigate 40,000 hectares of land in the Chertsey groundwater allocation zone and elsewhere. The reasoning which led the Commissioner to impose condition 11 referred to the fact that the amount of water allocated to existing users in the Chertsey groundwater allocation zone was 120 per cent of the allocation limit under the PRP, and granting Simon’s application would result in the abstraction of additional water from the zone. Essentially that was because CRC0402233.3 and CRC110662 could not both be exercised at the same time, and there was therefore an effective limit of 350,600 cubic metres referable to those consents. Providing for that volume of water to be utilised elsewhere under CRC0402233.4 would mean that an additional 350,600 cubic metres would be taken because it would be necessary to utilise CRC110662 to irrigate Robert’s land. The Commissioner observed:

[Simon’s] paper allocation will not change, as if the condition is changed the consented annual volume will remain the same. However in practice and as a matter of law, that consent cannot currently be exercised by [Simon]. The consent is currently a paper allocation which is of no use to [Simon] because since 2010, the water can only be used (and therefore can only be taken for use) on ... [Robert’s] land. That is the very reason for the current application.

(Original emphasis).

[65] He concluded that the legal and practical effect of the proposal before him would be to increase the overall take from the immediate area and from the zone as a whole. Condition 11 was therefore designed to minimise the effects of the additional water take authorised by the consent. The Commissioner was also clearly influenced to impose the condition by the fact that CRC042233.3 resulted in the transfer of 427,000 cubic metres to another site, so it could not be used to irrigate Simon’s land. Indeed it is clear from the terms of his decision that he considered declining the application on the basis that it arose as a result of Simon’s own actions in selling off part of his allocation and as a result of a condition volunteered by him and not subsequently challenged.
[66] Mr Hunt submits that the condition demonstrates the correctness of Simon’s claims that the grant of CRC110662 constituted a derogation from the grant of CRC0402233.3, and breached his legitimate expectations, including the right to be heard before the consent was granted.

The appeal

The arguments on appeal

[67] Simon’s principal contention on appeal is that the grant of Robert’s consent CRC11062 substantially interfered with his rights pursuant to CRC042233.3 because when CRC11062 is exercised by Robert, the volume of water able to be taken and used by Simon under CRC042233.3, or transferred by him in accordance with s 136(2) of the Act, would inevitably be reduced by the extent of any volume taken and used by Robert.
[68] In the circumstances Simon claims the grant of CRC110662 resulted in an interference with and derogation from the grant of CRC042233.3. Mr Hunt submitted there was sufficient evidence to establish this before Gendall J at the hearing, and any doubt was subsequently removed by the decision of Commissioner Milne on 14 March 2014 to grant consent CRC042233.4.
[69] In developing these arguments, Mr Hunt submitted that an application for consent to transfer water from site to site under s 136(2)(b) of the Act is not an application for a resource consent. Consequently, he submitted, an application to transfer the whole or part of the holder’s interest in a water permit to another person on another site, or simply to another site, is not subject to the Fleetwing principle.
[70] Mr Hunt relied on the analysis of the decision of the Full Court of the High Court in Aoraki Water Trust v Meridian Energy Ltd.[31] He referred to the Court’s rejection of the argument that where a resource is already fully allocated to a permit holder, a consent authority could lawfully grant a permit to another party to use the same resource. Mr Hunt emphasised the Court’s acceptance that the Act created what was in effect a licensing system for water permits, citing the following passage from the judgment:

[30] If taken to its logical conclusion, Mr Milne’s argument would negate both the purpose and effect of this statutory resource licensing system. A consent authority could lawfully grant an unlimited number of permits for the same water even though that resource had already been exclusively or fully allocated in the physical sense. Existing and new permit holders would then have to compete among themselves to satisfy their demands. There would be no enforceable order of preference or priority, given Mr Milne’s rejection of a first-come, first-served system. Also, a consent authority would be powerless to harmonise the first grant with later grants; upon granting a permit an authority becomes functus officio and is unable to revisit its terms unless expressly allowed by statute. In our view this chaotic situation would be the antithesis of the management regime contemplated by the Act and of the consent authority’s express obligation to control the taking, use, damming and diversion of water. Also, we agree with Mr Kós that over-allocation of a water resource would be equally foreign to Part 2 of the statutory regime.

[71] Mr Hunt also noted that the Court had relied on what it described as the underlying premise of this Court’s decision in Fleetwing Farms Ltd v Marlborough District Council, that competing applications for scarce resources should be dealt with on a first come first served basis.[32] He also pointed to the Court’s conclusion that a permit could not be granted to another party to use a resource which was fully allocated without specific statutory authority, and noted that the Council had not purported to rely on any such power in the present case.
[72] Mr Hunt relied as well on the Court’s discussion of the principles of nonderogation from grant and legitimate expectation. Here, resource consent CRC11062 granted to Robert the right to take and use the same volume of water available to Simon pursuant to CRC0442233.3. It would not be possible, without breaching the allocation limit of 350,600 cubic metres, for both consents to be exercised. If Simon’s consent were exercised by the taking and use of water, then Robert’s consent could not be and vice versa. It was fallacious for Gendall J to reason that because Simon had no present ability (without Robert’s permission) to exercise CRC042233.3 over land he did not own, he could not be adversely affected by the exercise of Robert’s consent. Mr Hunt submitted that approach overlooked the priority accorded to CRC042233.3 and the “inherent rights” to seek a modification of the consent pursuant to s 127, or its transfer pursuant to s 136.
[73] For the respondent, Mr Shamy submitted that the argument CRC110662 derogated from CRC042233.3 was based on an incorrect understanding of how the two consents operated together and of how the Council manages water. Properly understood, Robert’s consent did not affect Simon’s consent.
[74] Mr Shamy also submitted that neither the Act nor case law supported Simon’s proposition that the respondent was required to consider any future economic loss to the value of a water permit as a tradable commodity. The true source of Simon’s complaint was in fact his agreement, in applying for consent CRC042233.3, that the water not transferred to Somerton Fields Ltd should be used to irrigate Robert’s land. No issues of priority arose on the facts and there was no tenable argument based on legitimate expectation.
[75] The issues of predetermination and bias, pursued in the High Court, were not raised as a discrete ground of review in this Court. As we understand it, Mr Hunt suggested that if we found in Simon’s favour on the other grounds of appeal a decision in his favour on bias would follow. We do not understand why that would be so, but in any event note that the key decisions in relation to the relevant resource consents were made by Mr Milne as an independent commissioner. Gendall J found he acted impartially and there can be no credible suggestion of bias on his or the Council’s part. We need say no more on that issue.

Analysis

[76] The position reached after the issue of CRC042233.3 and CRC11062 was that:
[77] Had some agreement been reached between the parties, CRC042233.3 could have been utilised for the purpose of irrigating Robert’s land. That possibility was inherent from the time when CRC042233 was granted, Simon’s agents having specifically amended the original application so as to include Robert’s land. Clearly Simon and Robert had expected they would agree terms on which that could occur. As we have discussed, the relevant PRP rules required need for the water to be considered, an issue specifically addressed in both the application and its assessment by the Council. There can be little doubt that the volume of water permitted to be taken and used would have been significantly reduced had Robert’s land not been included, as the application would have related to a significantly smaller area. But having proceeded with an application relating to the irrigation of both his own and Robert’s land it is inconsistent for Simon now to argue his consent should be varied so that it can be applied to his own and the neighbouring Stevens land.
[78] Mr Hunt’s argument that the issue of CRC110662 deprived Simon of the right to transfer CRC042233.3 relies on a distinction between a resource consent and the conditions to which the exercise of the resource consent is subject. Such a distinction is impermissible, because under s 2 of the Act, the term “resource consent” is defined as including all conditions to which the consent is subject.
[79] Here, following consent to the transfer of 427,000 cubic metres to Somerton Fields Ltd, CRC042233.3 required the balance of 350,600 cubic metres available under the existing consent to be used only for the irrigation of Robert’s land. This was a condition imposed to reflect an amendment made to the application, during its processing, designed to assure the Council the remaining water would only be used on Robert’s land. As Gendall J pointed out, the condition was imposed with Simon’s agreement. Simon’s claim he agreed only reluctantly can make no difference: he agreed to it in order to cement the arrangement he had with Somerton Fields Ltd. There has been no suggestion the consent was ultra vires.
[80] The result is CRC042233.3 can only be used to take water to irrigate Robert’s land. It is conceptually wrong for Mr Hunt to assert the grant of CRC110662 had the effect of taking away rights that Simon would have had to transfer the balance of the right conferred by CRC042233.3. As it stood when CRC110662 was granted, CRC042233.3 could not be transferred to another property because of its conditions. There can be no “right” to transfer such a permit: a consent to do so would be required under both ss 136(2)(b) and 127(1) of the Act.[33]
[81] Section 136(2)(b) provides:

136 Transferability of water permits

...

(2) A holder of a water permit granted other than for damming or diverting water may transfer the whole or any part of the holder’s interest in the permit—

...

(b) to another person on another site, or to another site, if both sites are in the same catchment (either upstream or downstream), aquifer, or geothermal field, and the transfer—

(i) is expressly allowed by a regional plan; or

(ii) has been approved by the consent authority that granted the permit on an application under subsection (4).

[82] That provision must be read together with s 136(4)(b) which enacts that an application under subsection (2)(b)(ii):

(b) shall be considered in accordance with sections 39 to 42A, 88 to 115, 120, and 121 as if—

(i) the application for a transfer were an application for a resource consent; and

(ii) the consent holder were an applicant for a resource consent,—

except that, and in addition to the matters set out in section 104, the consent authority shall have regard to the effects of the proposed transfer, including the effect of ceasing and changing the exercise of the permit under its current conditions, and the effects of allowing the transfer.

[83] Section 127(1) provides that the holder of a resource consent may apply to a consent authority for a change or cancellation of a condition. Section 127(3) applies ss 88 to 121 of the Act to such applications as if they were applications for a resource consent for a discretionary activity, and references in those sections to a resource consent and to the activity were references to the change or cancellation of a condition and its effects.
[84] Consideration of an application under s 136(2)(b)(ii) of the Act for consent to transfer a water permit will therefore involve application of all the normal statutory considerations to which an application for resource consent is subject under the Act, and the same is true of applications to alter conditions to which a permit may be subject, under s 127. The question of whether or not consent should be granted will need to be assessed in terms of any actual and potential effects on the environment and the Act’s purpose of sustainable management set out in s 5 will be an important consideration. The grant of further rights to use a resource already fully allocated to others seems the antithesis of that purpose, as the High Court said in Aoraki. A proper consideration of adverse effects on the environment would include having regard to the impacts of consent on already established activities. Expressly, under s 136(4), the consent authority must have regard to the effects of ceasing or changing the exercise of the permit under its current conditions and the effects of allowing the transfer.
[85] There will also be relevant policies and rules in the planning instruments against which particular applications will need to be assessed. That was so in the present case: as has been seen the issue of need was one matter to be addressed, a consideration to which the area of land proposed for irrigation was relevant. But the PRP also required consideration of the effects of a water take on surrounding groundwater users, including any cumulative effect, and any effect on “aquifer stability” as well as other matters.
[86] Thus any right of transfer was clearly contingent on the grant of consent to do so and the application for consent would need to address the full range of issues arising for the assessment of resource consents under the Act. Consequently, Mr Hunt’s submission that the application for transfer is not an application for resource consent leads nowhere. Given the origin of CRC042233.3 in an application made in respect of both Simon’s and Robert’s land, the condition to which the consent was subject and the fact it was imposed by agreement, it cannot be assumed consent would inevitably be given to the transfer of the permit. We doubt that is so, and as noted above CRC042233.4 was granted subject to it being used only as a secondary supply. That was not because of CRC110662; rather it reflected the terms of CRC042233.3 and the circumstances in which it was granted.
[87] Further, on the facts of this case, it is unrealistic to suggest Simon could have had a legitimate expectation that he would be able to transfer the permit. Such an expectation would again run contrary to the condition he sought and procured when CRC042233.3 was granted. Furthermore, upholding Simon’s claim would involve setting aside CRC110662, and requiring the Council to reconsider its grant having regard to Simon’s asserted expectation. Yet substantive relief for breach of a legitimate expectation will only be rarely granted.[34] We can see no basis on which such relief could be justified here, particularly since the condition restricting the use of water taken under CRC042233.3 was imposed at Simon’s request. We think it is an insuperable obstacle to the claimed legitimate expectation.
[88] For reasons we will explain, we do not think it is helpful to analyse the issues this case presents by considering whether the grant of CRC110662 amounted to a derogation from the grant of CRC042233.3. However, even if that approach were adopted, Simon’s claim could not succeed. The right conferred by CRC110662 aligns with the pre-existing condition on CRC042233.3, a state of affairs Simon himself brought about. In the meantime, Simon had transferred the balance referable to his land of 427,600 cubic meters to Somerton Fields Ltd, and doubtless received value for doing so. Mr Hunt claimed a derogation would necessarily arise to the extent that CRC110662 was used to irrigate Robert’s land, because it would automatically reduce the amount of water available to Simon under CRC042233.3. But this overlooks the fact that CRC042233.3 could only be used to irrigate Robert’s land. That is sufficient to distinguish the facts of this case from those before the High Court in Aoraki Water Trust v Meridian Energy Ltd in which the doctrine of non-derogation from grant was first applied under the Act.[35] However, we do not consider resort to the non-derogation concept is necessary or appropriate in the present context.
[89] It is only if, contrary to s 122(1) of the Act, Simon’s resource consent is seen as conferring a property right that he can sustain an argument that the grant of CRC110662 has caused him any detriment. For reasons we have already given, Simon cannot claim he lost a right to transfer the permit. Accepting, as he must, that under CRC042233.3 the water taken could only be used to irrigate Robert’s land, any detriment he suffered by the grant of CRC11062 was simply an inability to charge Robert for any water taken from the bore on Simon’s land and used on Robert’s land. In fact, such a detriment was only notional, since it is clear the parties could not come to an agreement that the water be used for that purpose in any event. The subsequent grant of CRC042233.4 does not alter that fact. But even if there were more than a notional detriment, preservation of a “right” of the nature alleged is far removed from any legitimate object or consequence of the Act, for the reasons that follow.
[90] In Aoraki Water Trust v Meridian Energy Ltd, Meridian had resource consent to take water from three high country lakes which it used to generate electricity at power stations in South Canterbury. Other parties, including Aoraki Water Trust (Aoraki), wished to use the same water for irrigation purposes and applied for the necessary water permits. Meridian opposed those applications, claiming the resource was fully allocated to it and other holders of existing resource consents. It was common ground that all the available water had in fact been allocated to the existing users. Meridian asserted there was therefore no water available for lawful use by third parties, and argued any additional permits would derogate from and devalue its existing rights. Aoraki and the two local authorities applied to the High Court for declarations to the effect that Meridian’s consents did not operate as a legal constraint or inhibition on the Canterbury Regional Council’s statutory power to grant consents to others.
[91] Aoraki argued permits granted to take, divert and use water do not carry with them a priority right to waters from the same source or upstream. It submitted any rights conferred must be subject to the effect of later permits granted to others, and the holder of a permit cannot claim a right to demand or expect the amount of available water will not be diminished by the grant of subsequent permits to others. Another of Aoraki’s arguments was that a water permit is not a property right because it is not freely transferable, does not grant an exclusive right to the water specified in the permit and s 122(1) of the Act declares a resource consent is neither real or personal property. Further, there was no scope for operation of the principle of “non-derogation” of rights in the context of the Act. The concept was derived from the law of landlord and tenant and had no role to play in the very different field of resource consents.
[92] The Court rejected Aoraki’s arguments for a number of reasons. First, it thought they ignored the statutory nature, purpose and effect of granting a water permit. The Court identified four salient features of the Act which were of particular importance to the case:[36]

... (1) the sustainable management concept underpinning the Act which revolves around the management of resources as opposed to leaving their fate to chance (s 5); (2) the obligation on a consent authority to have particular regard to the efficient use of resources (s 7(b)), again highlighting the management aspect and the need for complete allocation in some cases; (3) the authority’s related obligation to control the taking, use, damming and diversion of water (s 30(1)); and (4) the requirement that, except in the situations specified (s 14(3)(b) – (e)), water can only be taken, used, dammed or diverted if that activity is expressly allowed by a rule in a regional plan or by a resource consent (s 14(1) and (3)(a)). A consent authority exercises its statutory function of regulating or managing the allocation or use of a resource through its power to grant permits (ss 104 – 104D). In summary, subject to very limited exceptions, Parliament has introduced a comprehensive statutory management regime for water allocation and use.

[93] The Court held the Act effectively prescribed a licensing system. Aoraki’s argument would negate the purpose and effect of this licensing system. An unlimited number of permits could be granted and existing and new permit holders would have to compete among themselves to satisfy their demands.
[94] The second basis on which the Court rejected Aoraki’s argument was that it was contrary to this Court’s decision in Fleetwing Farms Ltd v Marlborough District Council in which it was held that, in the case of competing applications in respect of the same resource, the first in time should have priority.[37] The High Court considered it was implicit in this that the priority of the application must also be reflected in priority in terms of the right to use the resource.
[95] The High Court held that the “underlying premise” of the Fleetwing decision was reflected in a separate line of cases which showed the courts have not allowed statutory authorities “to exercise a statutory power in a manner which might interfere with a validly granted right of exclusivity”.[38]
[96] The third basis on which Aoraki’s arguments were rejected was the Court’s conclusion that the rights conferred by a water permit were analogous to a licence coupled with a right to use the resource, similar to a profit à prendre. Although the permits were not themselves real or personal property, once granted they created rights to take and use “property”, being the surface water in the lake, for a defined term, at maximum rates and quantities and for maximum periods. It was conceded Meridian’s consents were of considerable economic value; the Court considered that value could only be derived from “the holder’s rights to use the property in accordance with its permits”. It followed that:[39]

... on the basis of the current flows, granting a permit to Aoraki to use the same water would inevitably reduce Meridian’s ability to generate electricity, thereby devaluing its grant.

[97] The Court then moved to a discussion of the principle of non-derogation from grant, stating it was applicable to all legal relationships which confer a right in property.[40] The Court observed that the purpose of the water permits was to secure the right to use all the available water in the lake at the stated rates to generate hydro-electricity, over the 35-year term of the consents. To grant rights to the same water to others would frustrate or destroy the purpose for which the permits were granted. This must be contrary to the assumptions and expectations of the parties at the time the consents were granted in 1991.
[98] Finally, the Court relied on the doctrine of legitimate expectation. For reasons we have already explained that doctrine can have no application here and we do not discuss it further.
[99] We consider the analogy the Court drew to profits à prendre and its reliance on non-derogation from grant are problematic. They apparently rest on the Court’s view that once a water permit is granted it creates a right to property. We do not agree that is the case. The right is simply the right to carry out the activity under the Act; in this case the right to take and use water. These are rights necessary to overcome the restriction in s 14(2) of the Act, which would otherwise apply:

No person may take, use, dam, or divert any of the following, unless the taking, using, damming, or diverting is allowed by subsection (3):[[41]]

(a) water other than open costal water

...

[100] Water in its natural state has not generally been regarded as something that could be owned as property. The position at common law is succinctly summarised in Halsbury’s Laws of England:[42]

63. Rights in flowing water at common law. Although certain rights as regards flowing water are incident to the ownership of riparian property, the water itself, whether flowing in a known and defined channel or percolating through the soil, is not, at common law, the subject of property or capable of being granted to anybody. Flowing water is only of public right in the sense that it is public or common to all who have a right of access to it.

[101] In New Zealand, as Professor FM Brookfield observed:[43]

... The whole position has now been greatly altered by resource management legislation, which generally either extinguishes, varies, or otherwise regulates existing water rights, whether they are common law or statutory rights, and vests in the Crown the right to use water. Further, the resource management legislation forbids the use of water otherwise than as authorised under that legislation.

[102] Section 21 of the Water and Soil Conservation Act 1967 enacted that, except as expressly provided by other statutory provisions:

... the sole right to dam any river or stream, or to divert or take natural water, or discharge natural water ... or to use natural water, is herby vested in the Crown subject to the provisions of this Act:

...

[103] The Resource Management Act repealed the Water and Soil Conservation Act, but provided in s 354(1)(b) that the repeal of s 21 would not affect any rights vested in the Crown before the Act came into force. Consequently, the Crown’s sole right in relation to the control of water is preserved, but this falls short of providing for the Crown to have a property right in water.[44] In the circumstances, the statement made in Aoraki (drawing a parallel with profits à prendre) that a water permit allows the holder to remove “property”, even though “owned by the Crown”, is incorrect.[45] For the same reason it was not correct to rely on the non-derogation principle on the basis it was common to all relationships which confer a “right in property”.[46]
[104] More generally, of course, s 122(1) must be brought to account, with its rule that a resource consent is neither real nor personal property. Quite apart from any consideration related to the special nature of the legal status of water, as a general proposition no property or interest in property changes hands when a resource consent is granted. To give an obvious example, a council does not have any interest in land which is the subject of an application for a land use consent by a third party and the holder of the consent must secure any property rights needed before utilising a consent. The same applies with a water permit. Since no property interest is purportedly given it is difficult to see how the non-derogation principle can apply.
[105] By declaring that a resource consent is neither real nor personal property the Act excludes what the law might otherwise imply, namely the unqualified liberty of using a consent as the holder wishes, the right to exclude others, the power of alienation, and the right to immunity from expropriation.[47] The Act does go on to confer certain property-like rights, notably a limited right to grant a charge over a consent[48] and to transfer it to another person in certain circumstances.[49] It provides that consents are treated as property for certain purposes.[50] The legislature’s objective was plainly to allow a holder only those incidents of property that the Act itself confers, and then subject to the Act’s conditions.
[106] As a number of commentators have observed, by granting these incidents of property the legislature recognised the advantages of private ordering. Resource consents manifestly have a value, and in a world without transaction costs they would find their way to their most valued use.[51] But the legislature did not seek to create a world in which consents could be freely traded independently of the site for which they were granted. Thus, land use consents attach to the land and are freely transferrable to any person but only in respect of the site for which they were granted.[52] Water permits are freely transferrable only to an owner or occupier of the site in respect of which the permit was granted. A transfer to anyone else is possible only within the same catchment or aquifer and only where the regional plan expressly allows it or the consent authority has approved it as if it were an application for a resource consent.[53] The market value of a water permit must reflect the constraints that the Act imposes, in particular the restrictions upon alienation.
[107] When considering an application for transfer of a water permit, the consent authority must comply with any relevant public law duties, including those of considering relevant matters and observing the principles of natural justice. It does not follow, however, that the consent authority must protect the economic interest of the holders of existing consents.[54] Rather, the relevant issues will be those we have referred to above at [84]–[85].
[108] As the Court in Aoraki recognised, where the consents already held by Meridian (and some others) meant that the available resource was fully allocated, there was sufficient authority in the statutory regime and the principles set out in Fleetwing to reject Aoraki’s proposition that there was nothing to prevent the issue of further consents. Although we have departed from the High Court’s reasoning insofar as it rested on the concept of non-derogation from a grant and an analogy of profits à prendre,[55] we do not suggest the wrong result was reached.
[109] The judgment did not go into detail about relevant planning instruments or provisions of the Act which might have been relevant to the outcome of any resource consent application. We do not say that critically: the judgment simply reflects the way the matter was brought to the Court as an application for a declaration, and the arguments that were presented. Those arguments, and the judgment, focused on the nature of a water right. But what also needs to be brought into the equation is that, unless the taking and use of water is expressly allowed by a rule in a regional plan, a newly proposed activity will need a resource consent. In the case of a resource that is already fully allocated obtaining such a consent may well be very difficult when the relevant considerations under the Act and the regional plan are brought to bear. The limited basis on which CRC042233.4 was granted reflects that reality.
[110] For the reasons given, we can see no basis to hold that the grant of CRC110662 affected Simon, still less defeated any right he had legitimately arising under the Act. His inability to charge Robert for water taken under CRC110662 and used to irrigate Robert’s land is not an issue of resource management significance or concern.
[111] As foreshadowed above, we do not think it is necessary in this case to consider the difficult issues that can arise when there are competing applications for consent to use the same resource, discussed in this Court’s decisions in Fleetwing Farms Ltd v Marlborough District Council, Central Plains Water Trust v Ngai Tahu Properties Ltd and Central Plains Water Trust v Synlait Ltd.[56] We say this for two reasons:
[112] These conclusions mean that none of Simon’s claims (including the claim of bias and predetermination) could succeed and they were properly dismissed in the High Court.
[113] They also mean it is unnecessary for us to consider the issue of damages. We do observe, however, that the problematic proposition advanced by Mr Hunt, that Simon could mount a damages claim based on the issue of CRC110662, was rendered even more problematic by the fact that it was not sought that the consent be set aside. Even assuming some relevant error affected the grant of CRC11062, it is difficult to see how a damages claim could succeed in these circumstances.

Result

[114] The application for leave to adduce fresh evidence is granted.
[115] The appeal is dismissed.
[116] The respondent is entitled to costs calculated for a standard appeal on a band A basis, together with usual disbursements.





Solicitors:
Young Hunter, Christchurch for Appellant

[1] Hampton v Canterbury Regional Council [2013] NZHC 2433, [2013] NZRMA 482 [High Court judgment].

[2] We will differentiate between them by using their first names.

[3] Mr Deavoll’s description of the developing process reflects the approach mandated by the successive decisions of this Court in Central Plains Water Trust v Ngai Tahu Properties Ltd [2008] NZCA 71, [2008] NZRMA 200 and Central Plains Water Trust v Synlait Ltd [2009] NZCA 609, [2010] 2 NZLR 363.

[4] It will be noted that the combined area of Simon’s and Robert’s properties as stated was 183.3 hectares, not 173 hectares. Other documents before us imply that Robert’s land approximately 77 hectares, which would make the 173 hectare total approximately correct. Nothing turns on the precise figures.

[5] Simon applied to install a bore for the purpose of abstracting water for irrigation on 26 April 2004. Consent was granted on 5 May 2004.

[6] The transitional Regional Plan did not contain policies on water management.

[7] Hampton v Hampton EnvC Christchurch C087/2008, 30 July 2008.

[8] Hampton v Hampton EnvC Christchurch C102/2008, 12 September 2008.

[9] Hampton v Hampton EnvC Christchurch C001/2009, 16 December 2008 at [11].

[10] Hampton v Hampton [2010] NZEnvC 9 [Environment Court substantive judgment].

[11] Environment Court substantive judgment, above 10, at [8]. The reference to the “Fleetwing principle” was to this Court’s decision in Fleetwing Farms Ltd v Marlborough District Council [1997] 3 NZLR 257 (CA) at 267.

[12] MacLaurin v Hexton Holdings Ltd [2008] NZCA 570, (2008) 10 NZCPR 1 at [47].

[13] High Court judgment, above n 1, at [30]. The application was granted in August 2011, and is discussed below at [39]–[48].

[14] At [31].

[15] At [62].

[16] The same step was taken with respect to Simon’s application CRC042233.4, discussed below at [63].

[17] Environment Court substantive judgment, above n 10 (original emphasis).

[18] High Court judgment, above n 1, at [22].

[19] High Court judgment, above n 1, at [55], Fleetwing Farms Ltd v Marlborough District Council, above n 11, Central Plains Water Trust v Ngai Tahu Properties Ltd, above n 3.

[20] At [60].

[21] At [61].

[22] At [63].

[23] At [73].

[24] At [76].

[25] Aoraki Water Trust v Meridian Energy Ltd [2004] NZHC 820; [2005] 2 NZLR 268 (HC).

[26] High Court judgment, above n 1, at [84].

[27] At [86].

[28] At [95].

[29] At [97].

[30] It had been on hold since March 2011.

[31] Aoraki Water Trust v Meridian Energy Ltd, above n 25.

[32] Aoraki Water Trust v Meridian Energy Ltd, above n 25, at [31], citing Fleetwing Farms Ltd v Marlborough District Council, above n 11, at 265.

[33] The application which was granted as CRC042233.4 was in fact made under s 127 of the Act, and granted as a variation of consent.

[34] Comptroller of Customs v Terminals (NZ) Ltd [2012] NZCA 598, [2014] 2 NZLR 137 at [155] and Green v Racing Integrity Unit Ltd [2014] NZCA 133, [2014] NZAR 623 at [40].

[35] Aoraki Water Trust v Meridian Energy Ltd, above n 25.

[36] At [28].

[37] Fleetwing Farms Ltd v Marlborough District Council, above n 11. The Fleetwing approach has been further developed in this Court’s decisions in Central Plains Water Trust v Ngai Tahu Properties Ltd, above n 3 and Central Plains Water Trust v Synlait Ltd, above n 3.

[38] Aoraki Water Trust v Meridian Energy Ltd, above n 25, at [33], citing Dowty Boulton Paul Ltd v Wolverhampton Corp [1971] 1 WLR 204 (Ch), ABC Containerline NV v New Zealand Wool Board [1980] 1 NZLR 372 (HC), and Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth of Australia [1977] HCA 71; (1977) 139 CLR 54.

[39] Aoraki Water Trust v Meridian Energy Ltd, above n 25, at [35].

[40] At [36] citing Tram Lease Ltd v Croad [2003] NZCA 77; [2003] 2 NZLR 461 (CA) at 469. The Court also referred to Mount Cook National Park Board v Mount Cook Motels Ltd [1972] NZLR 481 (CA). Both cases involved leases.

[41] Section 14(3)(a) refers to activities expressly allowed by a national environmental standard, rules in regional plans and resource consents.

[42] Halsbury’s Laws of England (5th ed, 2009) vol 100 Water and Waterways (footnotes omitted).

[43] Laws of New Zealand Water at [39].

[44] We are not concerned in this case with any obligations that the Crown might have to Maori in respect of water, nor with Maori customary rights.

[45] Aoraki Water Trust v Meridian Energy Ltd, above n 25, at [34].

[46] At [36].

[47] AM Honoré “Ownership” in AG Guest (ed) Oxford Essays in Jurisprudence (Oxford University Press, Oxford, 1961) 107 at 113.

[48] Section 122(3). The right is limited in that the chargee enjoys only those powers of alienation that the holder enjoyed.

[49] For water permits, as has been discussed, transfer is provided for under s 136.

[50] Section 122(2)(c).

[51] See notably Thomas Gibbons “Property Rights in Resource Consents: Some Thoughts from Law and Economics” (2012) 25(1) NZULR 46 and Barry Barton “The Nature of Resource Consents: Statutory Permits or Property Rights” (paper presented to New Zealand Law Society Environmental Law: National Issues Intensive Conference, July 2009) 51.

[52] Section 134.

[53] Section 136(2)(b).

[54] Under s 104(2A) a holder’s investment in a resource consent is now relevant for certain purposes which do not apply here.

[55] See above at [99].

[56] Fleetwing Farms Ltd v Marlborough District Council, above n 11, Central Plains Water Trust v Ngai Tahu Properties Ltd, above n 3 and Central Plains Water Trust v Synlait Ltd, above n 3.

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