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Ace Developments Ltd v Attorney-General [2017] NZCA 409; [2017] 3 NZLR 728 (18 September 2017)

Last Updated: 2 February 2018

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IN THE COURT OF APPEAL OF NEW ZEALAND
BETWEEN
 Appellant
AND
 Respondent
Hearing:
15 June 2017 (further material received 3 July 2017)
Court:
French, Miller and Brown JJ
Counsel:
F M R Cooke QC and G D Jones for Appellant P H Higbee and N C Anderson for Respondent
Judgment:


JUDGMENT OF THE COURT

  1. The application for leave to appeal is granted.
  2. The appeal is dismissed.
  1. The appellant must pay the respondent costs for a standard appeal on a band A basis together with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)






Table of Contents

Introduction [1]
Background [5]
The High Court decision at issue [15]
Two jurisdiction issues [22]
Is the proposed further evidence material to the appeal? [30]
Does the Canterbury Earthquake Recovery Act preclude [31]
compensation for relocation costs?
Are relocation costs “actual loss”? [39]
Are relocation costs “economic or consequential loss”? [41]
“Except as provided by this Act” [50]
Are Ace’s relocation costs recoverable under pt 5 of the [64]
Public Works Act?
Section 66 of the Public Works Act [67]
Section 68 of the Public Works Act [79]
Conclusion [82]
Outcome [87]

Introduction

[1] Ace Developments Ltd owned land compulsorily acquired by the Crown under the Canterbury Earthquake Recovery Act 2011. The Associate Minister for Canterbury Earthquake Recovery determined that Ace should receive compensation for the taking based on the market value of the land. Ace disputes this and says compensation should be based on the costs of relocating its business.
[2] Ace filed an appeal in the High Court against the Associate Minister’s determination. That appeal has yet to be heard.
[3] This judgment is about an interlocutory application Ace made in the High Court seeking leave to adduce new evidence at the pending appeal. The application was declined by Gendall J, in part for reasons which if correct mean that Ace’s substantive appeal in that Court is doomed to fail.[1]
[4] That has prompted Ace to file an appeal in this Court against Gendall J’s interlocutory decision.

Background

[5] Ace owned land and improvements situated at 115–117 Moorhouse Avenue, Christchurch. It developed the land for use as a car yard and as at 22 July 2014 was leasing the property to a car dealer. On 22 July 2014, the property was compulsorily acquired by the Crown under s 55 of the Canterbury Earthquake Recovery Act for the purposes of a proposed sports stadium.[2]
[6] Section 62 of the Canterbury Earthquake Recovery Act provides that a person who suffers loss resulting from the compulsory acquisition of land is entitled to compensation from the Crown. The Act further provides that compensation is to be determined by the Minister for Canterbury Earthquake Recovery.[3]
[7] Having regard to the technical issues likely to arise in compensation claims, the Minister established a panel comprised of three experts to provide him with advice and recommendations on claims (the Panel).[4] The Minister also appointed the Associate Minister for Canterbury Earthquake Recovery his delegate for the purpose of determining the claims.
[8] On 24 April 2015, Ace duly lodged a claim for compensation.[5] A substantial part of its claim, which exceeded $8 million, related to the cost of acquiring and developing a replacement property. Ace stated it wanted to continue its business and provided evidence it could relocate its business further down Moorhouse Avenue within the general vicinity of other existing car dealerships. In order to achieve a comparable scale of operations, it said it needed to acquire two new sites, demolish the existing buildings on those sites, construct new buildings and create a car yard.[6] It also claimed the new property would have a lesser investment value than the taken property. Once fully developed, the substitute property would have a value of $2.58 million which was some $820,000 less than the value of the taken land which it assessed at $3.4 million.
[9] The relocation costs amounting to $7.369 million were detailed as follows:
[10] As well as providing evidence and written submissions in support of its claim, Ace met with the Associate Minister and the Panel.
[11] In its report to the Associate Minister, the Panel recommended payment of compensation calculated by reference to the market value of the land taken, which it assessed to be $3.3 million. It advised there was no proper legal basis to the claim for relocation costs and this should not be allowed. Its main reasons for reaching that conclusion appear to be as follows:[7]
[12] The Associate Minister accepted the Panel’s recommendation and determined compensation was payable to Ace for the compulsory acquisition of its property in the sum of $3.3 million together with interest, professional fees and the cost of relocating an advertising sign.
[13] Dissatisfied with that outcome, Ace then filed an appeal in the High Court under s 69(1)(a) of the Canterbury Earthquake Recovery Act. The appeal will be by way of rehearing.
[14] Ace intends to argue on appeal that in accordance with the general principles underpinning the Public Works Act, it was entitled to full compensation and that full compensation was required to be assessed on a relocation basis and in light of the recovery purposes of the Canterbury Earthquake Recovery Act. It will be contended that the circumstances of earthquake recovery in Christchurch necessitate businesses engaging in extensive rebuilding and redevelopment notwithstanding the economic cost of doing so and that businesses are forced to either do that or leave Christchurch altogether.

The High Court decision at issue

[15] Ace wants to call new evidence to support the reasonableness of the sums it says would need to be spent to create the replication property. The evidence will be from other local business people developing motor vehicle dealerships and also expert evidence comparing the economics of Ace’s proposal with the economics of other similar projects.
[16] The application to call the new evidence formally described the evidence in the following terms:

(a) Evidence as to the sums being invested and likely return on such investment by other business people acquiring land in the vicinity of Moorhouse Avenue, Christchurch for development as motor vehicle dealerships.

(b) Expert evidence comparing the economics of the appellant’s proposal to relocate its business to another site in Moorhouse Avenue against the economics of the investments of the other business people making or proposing similar projects.

[17] The application was brought under r 20.16 of the High Court Rules. It provides that a party to an appeal may adduce further evidence only with leave of the Court and only if there are special reasons for hearing the evidence.
[18] In declining the application, Gendall J found there were no special reasons. The Judge considered the reasonableness of Ace’s relocation proposal had been put in issue before the Panel and that Ace deliberately chose not to call the evidence it now wants to adduce. In the Judge’s view, it would be wrong to allow Ace to recast its case. Litigants are under an obligation to put their best case at first instance and must live with their chosen litigation strategy.[8]
[19] Justice Gendall went on to hold that, in any event, the proposed new evidence was not material to the appeal because as a matter of statutory interpretation replication costs are not a head of compensation available under the Canterbury Earthquake Recovery Act. Whether the relocation proposal was reasonable or not was therefore irrelevant.[9]
[20] It was this second reason that was the primary focus of the appeal before us.
[21] Before turning to the issues on appeal, we first address two preliminary jurisdiction points which we raised with counsel prior to the hearing.

Two jurisdiction issues

[22] Ace purported to file its appeal in this Court on 28 October 2016 under s 70 of the Canterbury Earthquake Recovery Act. However, that Act had been repealed on 19 April 2016 and replaced by the Greater Christchurch Regeneration Act 2016. An issue therefore arises as to which Act applies to the case which in turn impacts on appeal rights to this Court.
[23] The transitional provisions of the Greater Christchurch Regeneration Act provide that compensation claims made under the Canterbury Earthquake Recovery Act, but not completed, are to be continued under the latter Act as if the Greater Christchurch Regeneration Act had not been passed.[10]
[24] We agree with counsel that a claim should not be treated as completed for this purpose until all appeal rights relating to that claim have been exhausted. We therefore hold that this appeal is governed by the Canterbury Earthquake Recovery Act.
[25] Section 70 of the Canterbury Earthquake Recovery Act states that an appeal may only be made to the Court of Appeal as of right on a substantive question of law. Leave is required for an appeal on any other question. Ace did not file an application for leave.
[26] Counsel for Ace, Mr Cooke QC, candidly admitted he had failed to notice that the word used by the legislature was “substantive”. He had misread it as “substantial”. However in his submission, the two words were interchangeable and therefore the appeal was as of right because Ace’s appeal raised questions of law that were significant or important and therefore of substance.
[27] We do not accept that submission. We consider that Parliament has deliberately chosen to use the word “substantive” and that “substantive” should be given its usual meaning as: not procedural, “[t]he part of the law that creates, defines, and regulates the rights, duties, and powers of parties.”[11] An appeal raising the issue of whether special reasons exist for the purposes of granting leave to adduce further evidence is in the nature of a procedural question rather than a substantive one and accordingly leave is required.
[28] In case this was the conclusion we reached, Mr Cooke made an oral application for leave. The Crown opposed leave being granted.
[29] Notwithstanding the Crown’s opposition, we consider it is in the interests of justice to grant leave. Although the proposed appeal has arisen in an interlocutory context, it raises an important question of law that may be dispositive of Ace’s claim. Mr Cooke also told us it is likely to have a bearing on claims still in the pipeline. The delay has not caused the Crown any prejudice.[12]

Is the proposed further evidence material to the appeal in the High Court?

[30] The answer to that question depends on the interaction between the Canterbury Earthquake Recovery Act and the Public Works Act. It is essentially an issue of statutory interpretation.

Does the Canterbury Earthquake Recovery Act preclude compensation for relocation costs?

[31] Compensation under the Canterbury Earthquake Recovery Act is dealt with in s 40, s 41 and under subpt 5 of pt 2. By virtue of the combined effect of ss 40, 41, 60 and 62, compensation is only payable to a person who suffers loss resulting from:
[32] Ace is a person that has suffered loss arising from land being compulsorily acquired under the Canterbury Earthquake Recovery Act.
[33] When land is compulsorily acquired under the Public Works Act, compensation has been awarded under s 66 of that Act or its common law equivalent for the costs of relocating a business.[13] Such compensation is usually described as a disturbance payment. In making its claim for relocation costs, Ace relies on s 66 and other provisions in the Public Works Act that it contends apply equally to land compulsorily acquired under the Canterbury Earthquake Recovery Act.
[34] In the High Court, Gendall J rejected that submission. He did so principally on the grounds that the Canterbury Earthquake Recovery Act has its own compensation regime and a statutory definition of compensation which excludes “economic or consequential loss”. In the Judge’s view, relocation costs are “economic or consequential loss”.[14]
[35] The correctness of that ruling turns primarily on the interaction between two sections in the Canterbury Earthquake Recovery Act, namely ss 61 and 64. Both are contained in subpt 5 of pt 2.
[36] Section 61 states:

61 Meaning of compensation

In this subpart, compensation—

(a) means compensation for actual loss; but

(b) except as provided by this Act, does not include compensation for—

(i) a loss by an insurer arising from a liability to indemnify:

(ii) any part of a loss that is insured:

(iii) any part of a loss that ought reasonably to have been insured:

(iv) a consequence of regulatory change arising from the operation of this Act causing loss:

(v) cancellation of an existing resource consent that has already been exercised:

(vi) cancellation of an existing use right:

(vii) economic or consequential loss:

(viii) loss of personal property exceeding $20,000 in value:

(ix) business interruption:

(x) any other loss that the Minister reasonably considers is unwarranted and unjustified.

[37] As can be seen, s 61 defines “compensation”. It does so first by stating that “compensation” means compensation for “actual loss” and then by specifying types of loss that are excluded from the definition. Among the list of excluded items is “economic or consequential loss”, the exclusion relied upon by Gendall J. None of the other excluded types of loss is relevant to this case. Significantly, the list of excluded items commences with the words “except as provided by this Act”.
[38] It follows from all of the above that relocation costs must be outside the statutory definition of compensable loss if either:

Are relocation costs “actual loss”?

[39] Contrary to a submission by the Crown, we do not accept that “actual loss” and “economic or consequential loss” are “opposites”, that is we do not accept the list comprises types of losses that are not actual losses. Such an interpretation overlooks the “but” between the definition of compensation requiring actual loss and the list of exclusions. The “but” makes it clear the list is of items, or may include items, that are considered actual loss and which would otherwise be compensable. The Crown’s submission would also render the list largely pointless. There would be no need for the list if all the listed items were already outside the definition as “nonactual.”
[40] Our research suggests that in legal contexts, including the context of compulsory acquisition, the phrase “actual loss” does not have a generally accepted meaning. In those circumstances, we consider that the words as they appear in the Canterbury Earthquake Recovery Act should have their ordinary and natural meaning; being real and significant loss[15] that has been suffered or will be suffered;[16] as opposed to loss that is non-existent or theoretical.[17] Ace has not yet incurred the relocation costs, but it will if it undertakes the proposed relocation, a relocation it would not have undertaken but for the compulsory acquisition of its old site. The relocation costs are clearly more than negligible. We therefore proceed on the basis that a claim for compensation for relocation costs is in principle a claim for compensation for actual loss and to that extent within the first requirement of the definition of compensation.

Are relocation costs “economic or consequential loss”?

[41] The next question is whether relocation costs are “economic or consequential loss” within the meaning of s 61(b)(vii). Unfortunately, the term is not defined in the Act.
[42] The focus of counsel’s argument was on the meaning to be afforded “consequential loss”, rather than “economic loss”, reflecting the difficulties of interpreting the phrase “economic loss” as well as an assumption that the “or” was not necessarily disjunctive. Parliament’s use of the term “economic loss” is problematic. In one sense, all claims for monetary compensation can loosely be termed claims for economic loss. However it is doubtful that this was the intended meaning as it would mean all claims were excluded. In a tort context, the term “economic loss” has a more limited meaning, denoting “financial loss” or harm to one’s economic interests as distinct from physical damage to property or personal injury. Economic loss is traditionally regarded as one of three categories: (a) consequential economic loss, being financial loss arising from physical harm; (b) pure economic loss, being financial loss which does not arise from physical harm; and (c) relational financial loss.[18]
[43] Assuming “economic loss” as used in s 61 imports all those meanings, Ace’s claim would fall within the second meaning. It is unnecessary for us to reach any concluded view on this because for the reasons that follow we are satisfied that the claim undoubtedly comes within the category of “consequential loss”, whatever “economic loss” means and regardless of whether the exclusion should be interpreted as “consequential economic loss” or two separate categories of loss (economic and consequential) that are not co-extensive.
[44] Mr Cooke contended that as a matter of general principle the meaning of the term “consequential loss” depends on context[19] and in the context of the Canterbury Earthquake Recovery Act it imports concepts of directness and remoteness. In his submission, Parliament’s intention in using the phrase was to exclude loss that does not directly arise from the compulsory acquisition of the land and that is being claimed by someone other than those with an interest in the taken land. Relocation costs suffered by the owner of the taken land was, he argued, very much a direct loss — it arises directly from the compulsory acquisition — and was therefore not consequential.
[45] In support of that submission, Mr Cooke referred us to a Regulatory Impact Statement dated 28 March 2011.[20] The statement was prepared by the State Services Commission for the purposes of advising the Government on proposed legislation which later became the Canterbury Earthquake Recovery Act. It discusses compensation options for the taking of land and recommends, among other things, landowners being compensated in “the same manner as under the Public Works Act — at market rates.”[21] In a later passage, the Regulatory Impact Statement recommends against creating new compensation entitlements for other losses that people may suffer and goes on to state:[22]

The new legislation would need to specify that some matters will not be compensated. For example, there should be no compensation for government actions that result in:

[46] Mr Cooke emphasised that the example given of consequential loss — the cordon example — is very different in nature from relocation costs suffered by the dispossessed owner of land.
[47] We accept that the list of exclusions in s 61(b) does appear to have had its genesis in the Regulatory Impact Statement. The similarities between the two lists are too marked for the conclusion to be otherwise. We also agree that the phrase “consequential loss” must have been intended to import concepts of causation, directness and remoteness. However, where we part company with Mr Cooke is the application of those concepts to relocation costs and the weight he attaches to the cordon example.
[48] In our view, correctly analysed, relocation costs are in the nature of a consequence, they are not direct or immediate upon the compulsory taking of the land. They are downstream flow on effects and indirect because they do not relate directly to the property actually acquired by the Crown. They arise directly because of choices by the owner. In terms of the definition of “consequential loss” contained in McGregor on Damages, they are also consequential in the sense they are loss related to the circumstances of the particular claimant, not loss every claimant in a like situation will suffer (that is the loss of their land).[23]
[49] We therefore conclude that relocation costs are “economic or consequential loss” within the meaning of s 61(b) and therefore excluded from the definition of compensation unless there is another provision in the Act providing to the contrary.

“Except as provided by this Act”

[50] Mr Cooke says there is another such provision and that is s 64(3). Section 64(3) states the Minister must determine compensation in the case of the compulsory acquisition of land in accordance with the provisions of pt 5 of the Public Works Act. The provisions of the Public Works Act on which Ace relies to support its claim for relocation costs are found in pt 5.
[51] The full text of s 64 of the Canterbury Earthquake Recovery Act is:[24]

64 Minister determines compensation

(1) The Minister must determine—

(a) whether compensation is payable; and

(b) the amount of compensation to be paid.

(2) Compensation is determined,—

(a) in the case of compulsory acquisition of land, as at the date of the compulsory acquisition; and

(b) in any other case, as at the date of the notice of demolition or the date of the loss or damage as the case may be.

(3) For compensation for the compulsory acquisition of land, the Minister must determine compensation having regard to its current market value as determined by a valuation carried out by a registered valuer; and so far as practicable, the Minister must determine compensation in accordance with the relevant provisions of Part 5 of the Public Works Act 1981.

(4) Before making a final determination under subsection (1), the Minister must give a claimant a reasonable opportunity to appear before the Minister or the Minister’s delegate to make representations as to the nature of the claim and the amount of compensation payable.

(5) A claimant may make representations under subsection (4) personally or through a representative (including a lawyer, accountant, or other expert).

[52] The words italicised were added to the Bill during the Committee of the Whole House stage by way of Supplementary Order Paper. They appear to be the result of unrecorded discussions between the Minister and the Select Committee considering the Bill and a perception that the compensation provisions needed greater clarity.[25]
[53] Justice Gendall held that the reference in s 64(3) to “the relevant provisions of Part 5 of the Public Works Act 1981” was a reference to the machinery provisions of pt 5 of the Public Works Act dealing with the assessment of market value of the land taken. That followed from the subject matter of the preceding subclause of s 64(3). It was all about market value. In the Judge’s view, much clearer words would have been used if Parliament had intended to incorporate all of the provisions of pt 5 and thereby modify the statutory definition of compensation.[26]
[54] On appeal, the Crown endorsed that reasoning. Ms Higbee submitted it would have been an easy matter for Parliament simply to have said compensation in the case of the compulsory acquisition of land is to be solely determined in accordance with the Public Works Act, if that was what was intended. It did not. If Ace’s interpretation of s 64(3) were correct, it was a very oblique way of achieving that result.
[55] When asked the reason for the phrase in s 61 “except as provided by this Act”, Ms Higbee said the phrase did have work to do and drew our attention to s 40(2) and s 40(3). Those provisions contain compensation for specified types of loss, “whether or not the loss is insured in whole or in part.” It will be recalled that one of the types of loss excluded in s 61 is “any part of a loss that is insured.” In Ms Higbee’s submission, s 40(2) and s 40(3) demonstrated that when Parliament wanted to depart from the statutory definition of compensation, it did so in clear and unequivocal language.
[56] Ms Higbee further argued that Gendall J’s limited interpretation of s 64(3) reconciled the reference to the Public Works Act with the existence of a special statutory definition of compensation, without doing violence to that definition. Ms Higbee emphasised that the compensation scheme under the Canterbury Earthquake Recovery Act was intended to be restrictive, not generous. It only allowed compensation for the compulsory acquisition of land and (in some contexts) demolition of buildings. Why, she asked, would Parliament go to the trouble of creating a special definition, including making a list of exclusions, if in relation to the main category (compulsory acquisition of land) it would be overridden by the Public Works Act?
[57] Ms Higbee acknowledged the recovery purposes of the Canterbury Earthquake Recovery Act but contended they could not be used to trump a statutory definition.
[58] As will be apparent, there is much force in Ms Higbee’s submissions. On the other hand, as Mr Cooke pointed out, equally it would have been an easy matter for Parliament to have said compensation for the compulsory acquisition of land is limited to the market value of the land taken, if that was what was intended. The legislature did not however do that. Instead it said “so far as practicable, the Minister must determine compensation in accordance with the relevant provisions of Part 5 of the Public Works Act”.
[59] Further, there are provisions in pt 5 of the Public Works Act that by their very nature could not apply to compulsory acquisition of land taken under the Canterbury Earthquake Recovery Act. Accordingly, the limiting word “relevant” would still have meaning under Ace’s interpretation.
[60] The Canterbury Earthquake Recovery Act was passed under urgency. There is no Select Committee report, only transcripts of its hearings.[27] The legislation had its first reading on 12 April 2011 and its second and third readings on 14 April 2011. What background legislative material exists is of limited assistance. There is no unequivocal statement of the reason for the late addition of the reference to the Public Works Act. However, the materials do include express recognition[28] of the “full compensation” principle that underlies pt 5 of the Public Works Act.[29] Further and importantly, nowhere is there any suggestion owners of land compulsorily acquired as a result of the earthquake should not have full compensation.
[61] Against that background, and in light of the ordinary and natural meaning of the words used, we consider that the requirement imposed on the Minister under s 64(3) was to determine Ace’s compensation in accordance with the provisions of pt 5 of the Public Works Act regarding compulsory acquisition of land, including compensation for disturbance payments. The compulsory acquisition of land has always been viewed as a serious interference in individual rights demanding special attention.[30]
[62] We conclude that all the compensation provisions relating to the compulsory acquisition of land contained in pt 5 of the Public Works Act, including s 66, do potentially apply to Ace’s claim.
[63] However, there is still another question and that concerns the scope of those provisions. Justice Gendall held that even if Ace were correct in its interpretation about the reference to the Public Works Act, it would make no difference because Ace’s claim was outside the scope of the Public Works Act as well.

Are Ace’s relocation costs recoverable under pt 5 of the Public Works Act?

[64] As previously indicated, there is a dispute as to exactly what was Ace’s business. However, resolution of that issue, which is a factual one, is beyond the scope of this appeal. It is for the High Court to determine at the substantive appeal. For the purposes of this appeal, we proceed on the assumption that Ace was, as it contends, in the business of owning and leasing specialist car yards.
[65] As also previously indicated, it is well established that the principle underlying the compensation provisions of the Public Works Act is full compensation. The purpose of the provisions is to ensure the person to be compensated is given a full money equivalent of their loss. The word “full” has the added purpose of emphasising that a claimant is entitled to receive the complete equivalent of that which has been taken away from them.[31] The claimant has the right to be put, so far as money can do it, in the same position as if their land had not been taken.[32]
[66] Ace contends its relocation costs are recoverable under either s 66 or s 68 of the Public Works Act and that in interpreting those provisions the Court must have regard to the underlying objective of achieving equivalence.

Section 66 of the Public Works Act — disturbance payments

[67] Section 66 of the Public Works Act states:

66 Disturbance payments

(1) Subject to subsection (2), the owner of any land taken or acquired under this Act for a public work shall be entitled to recover compensation for any disturbance to his land and in particular to recover, where appropriate,—

(a) all reasonable costs incurred by him in moving from the land taken or acquired to other land acquired by him in substitution for the land taken or acquired, including—

(i) [Repealed]

(ii) the reasonable valuation and legal fees or costs incurred in respect of the land taken or acquired:

(iii) the reasonable valuation and legal fees or costs incurred in respect of the land acquired in substitution, but not exceeding the reasonable valuation and legal fees or costs which would be incurred in respect of land with a market value equal to the land taken or acquired:

(iv) the actual and reasonable costs incurred by him in transporting his goods and chattels and those of his family from the land taken or acquired to the land acquired in substitution, but not exceeding the reasonable costs of such transport by road over a distance of 80 kilometres, or such greater distance as is necessary to reach the nearest land that reasonably could have been acquired in substitution:

(b) an allowance for any improvements not readily removable from the land taken or acquired which are of particular use to a disabled owner or any disabled member of an owner’s family and which are not reflected in the market value of the land.

(2) No person shall be entitled to compensation under this section unless—

(a) he was not a willing party to the taking or acquisition; or

(b) he was a willing party to the taking or acquisition principally because the land had been notified.

[68] Before the enactment of s 66, disturbance payments were a well-established feature of compensation packages particularly in cases where businesses were required to move as a result of land being taken.[33] Section 66 represents the first time such payments have had a statutory basis. However, it is clear from the legislative history of the 1981 Public Works Act that the section was intended to state existing law and to provide some clarity by giving examples of available disturbance payments.[34]
[69] We accept that the list of recoverable costs is not exhaustive. However, we agree with Gendall J that the interpretation of the words “all reasonable costs” must be coloured by the list.[35] The costs are incidental costs, additional to the payment of market value for the land taken, not a substitute for it. If Parliament had intended the capital cost of acquiring the substitute land to be recoverable as a disturbance payment, it would surely have said so. It would be an extraordinary omission to have left out what would likely be the biggest cost of all.
[70] We are fortified in that conclusion by reference to the fact there is no case in this country or in any comparable jurisdiction where a disturbance payment has ever been awarded for the cost of buying a substitute property. And as noted s 66 was designed to confirm existing law.
[71] Mr Cooke acknowledged the lack of authority but submitted landowners should be in no different position from tenants leasing compulsorily acquired land who have been held entitled to compensation under s 66 for capital items.[36] However in our view this argument overlooks the concept of market value which is the primary compensation that landowners (unlike tenants) are paid for the loss of their land. The concept of market value deems land to be fungible, any special attributes for a given use being already built into the market value. The underlying premise is that having received the market value of the land, the landowner can use that money to buy equivalent land somewhere else if they wish.
[72] We derive further support for our conclusion by consideration of the fact that allowing recovery of the cost of acquiring the substitute land as a disturbance payment would render other provisions of pt 5 meaningless. In particular, ss 65, 73 and 74.
[73] Section 65 states that where the compulsorily acquired land was devoted to a purpose for which no general demand exists (such as a church or sporting facility) then “compensation may be assessed on the basis of the reasonable cost of equivalent reinstatement in some other place”. It has been held that the reasonable cost of equivalent reinstatement includes the cost of acquiring the substituted premises.[37]
[74] Mr Cooke argued the existence of s 65 simply demonstrated Parliament being thorough and that in the desire to provide full compensation it was inevitable there would be overlaps between the various sections. We are not persuaded by that argument. We accept there may be overlaps, but in our view it would make a nonsense of this specific provision with its “land for which no general demand exists” prerequisite if the cost of acquiring a substitute property were generally available as a disturbance payment anyway.
[75] As for ss 73 and 74, they provide that where the market value of the owner’s interest in the taken land is insufficient to enable the owner to acquire another property of an equivalent standard, then the owner may be entitled to financial assistance in the form of a loan. Section 73 relates to residential properties and s 74 to commercial properties. Again, in our view, it would make a nonsense of these specific provisions if compensation, rather than a loan, were available as a disturbance payment.
[76] Mr Cooke suggested the sections would have work to do where there was a need for bridging finance while compensation was being assessed. However we consider that argument a stretch. Neither section says anything about bridging finance.
[77] While we consider that the cost of acquiring the substitute land (and the loss of land value) is not recoverable under s 66, we consider that the costs of demolishing the existing buildings on the substitute site and developing it, as well as the leasing fees, are in a different category. They fit more easily into the concept of a disturbance payment being an additional but incidental cost and are consistent with the case law.
[78] However, their recoverability in any given case will depend on whether the costs are reasonable and not too remote. There is no evidence about the existing buildings on the substitute site and Mr Cooke did not know what they were. He conceded that if for example it was a 10 storeyed hotel, then it would not be reasonable to demolish it. He also accepted there would need to be an adjustment in the event of betterment. To the extent any relocation costs have already been taken into account in the assessment of the market value of the land taken, there would also have to be an adjustment.

Section 68 of the Public Works Act — business loss

[79] Mr Cooke submitted that if the relocation costs were not recoverable as disturbance payments under s 66, they were recoverable under s 68. In light of our conclusions about s 66, the only way this would make a difference to the outcome is if we considered that s 68 permits recovery for the cost of buying the substitute site.
[80] Section 68 states:

68 Compensation for business loss

(1) The owner of any land taken or acquired under this Act for a public work who has a business located on that land shall be entitled to compensation for—

(a) business loss resulting from the relocation of the business made necessary by the taking or acquisition which loss, unless the owner and the Minister or local authority otherwise agree, shall not be determined until the business has moved and (if the circumstances so require) until sufficient time has elapsed since the relocation of the business to enable the extent of the loss to be quantified; or

(b) loss of the goodwill of any such business, if—

(i) the land is valued on the basis of its existing use; and

(ii) the owner gives such assurances and undertakings not to dispose of the goodwill and not to engage in any similar trade or business as may be required by the Minister of local authority.

(2) No person shall be entitled to compensation under this section unless—

(a) he was not a willing party to the taking or acquisition; or

(b) he was a willing party to the taking or acquisition principally because the land had been notified.

[81] The term business loss is not defined in the Public Works Act. However, we agree with the Crown that in its natural and ordinary meaning it relates to loss of profits. Mr Cooke’s argument would also render s 74 meaningless for the reasons already discussed.

Conclusion

[82] We conclude that the cost of acquiring a substitute property is not compensable under the Canterbury Earthquake Recovery Act. It is outside the statutory definition of compensation because although it may be actual loss, it is economic or consequential loss and not recoverable under pt 5 of the Public Works Act. So too compensation for the difference between the value of the taken property and the value of substitute property.
[83] Other incidental relocation costs which have not already been taken into account when calculating the market value of the land taken may be recoverable, depending on whether they are reasonable and to the extent they do not contain an element of betterment. The cost of demolishing and replacing existing buildings on substitute land together with leasing fees may fall within that category.
[84] This interpretation is consistent with the purpose of the Canterbury Earthquake Recovery Act to ensure that Christchurch communities recover from the earthquake.
[85] It follows that in so far as the proposed new evidence relates to the reasonableness of the cost of acquiring the substitute land, it is not relevant and therefore inadmissible.
[86] It is unclear to us whether the proposed evidence Ace wants to adduce is relevant to the reasonableness of those relocation costs that we have held recoverable. However, even if it is relevant (which is debatable) we would disallow it on the grounds of lack of special reasons. It is too late for Ace to be shoring up its case on an issue that was — unlike the cost of acquiring a substitute property — well understood at the time the Associate Minister made her decision. A court should always be slow to admit further evidence that is not updating evidence and that could have been put before the decision maker and her advisers. We agree with Gendall J that Ace’s claims about the difficulties it experienced in obtaining the evidence earlier lack specificity and do not warrant granting leave.

Outcome

[87] The application for leave to appeal is granted.
[88] The appeal is dismissed.
[89] As regards costs, there is no reason why these should not follow the event. We therefore order the appellant to pay the respondent costs for a standard appeal on a band A basis together with usual disbursements.





Solicitors:
Tavendale and Partners, Christchurch for Appellant
Crown Law Office, Wellington for Respondent

[1] Ace Developments Ltd v Attorney-General [2016] NZHC 2467 [High Court Decision].

[2] The Crown compulsorily acquired the land on 22 July 2014 by proclamation: “Land Taken for Metro Sports Facility — Christchurch City” (31 July 2014) 82 New Zealand Gazette 2268. The land vested in the Crown on 14 August 2014.

[3] Canterbury Earthquake Recovery Act 2011, s 64.

[4] The Canterbury Earthquake Compensation Panel which was comprised of two lawyers and a valuer.

[5] The Crown received and settled a compensation claim from the tenant.

[6] Ace accepts it cannot recover both the value of the land taken and the purchase price of the substitute land. This does not appear to have been how Gendall J understood the position in the High Court: see High Court Decision, above n 1, at [12].

[7] Mr Cooke QC submitted there was only one reason and that was the unreasonableness of Ace’s proposed project. However, we do not accept that interpretation of the Panel’s decision. Nothing turns on this.

[8] High Court Decision, above n 1, at [25]–[32].

[9] At [58].

[10] Greater Christchurch Regeneration Act 2016, s 5 and sch 1 cl 9.

[11] BA Garner Black’s Law Dictionary (10th ed, Thomson Reuters, St Paul (Minn), 2014) at 1658.

[12] Canterbury Earthquake Recovery Act, s 70(1)(b).

[13] Lower Hutt City Corp v Dyke [1954] NZLR 166 (LVC); approved of in Berger Paints NZ Ltd v Wellington City Corp [1973] 2 NZLR 739 (SC). For a case under the Public Works Act 1981 see Minister of Works and Development v David Reid Electronics Ltd HC Dunedin M91/89, 18 December 1989.

[14] High Court Decision, above n 1, at [34]–[37].

[15] BA Garner, above n 11, at 1087, definition of “actual loss”.

[16] Tony Deverson and Graeme Kennedy (eds) The New Zealand Oxford Dictionary (Oxford University Press, Melbourne, 2005) [NZ Oxford Dictionary] at 11, definition of “actual”, sense 2; JA Simpson and ESC Weiner (eds) The Oxford English Dictionary (2nd ed, Clarendon Press, Oxford, 1989) [The OED] at 132, definition of “actual”, sense 4; and Philip Babcock Gove (ed) Webster’s Third New International Dictionary (G&C Merriam Co, Springfield (Mass), 1976) [Webster’s Dictionary] at 22, definition of “actual (adj)”, sense 4.

[17] NZ Oxford Dictionary, ibid, at 11, definition of “actual”, sense 1; The OED, ibid, at 132, definition of “actual”, sense 3; and Webster’s Dictionary, ibid, at 22, definition of “actual (adj)”, sense 2b.

[18] Stephen Todd “Negligence: the Duty of Care” in Stephen Todd (ed) The Law of Torts in New Zealand (7th ed, Thompson Reuters, Wellington, 2016) at [5.9.01]–[5.9.04].

[19] Relying on Oceania Furniture Ltd v Debonaire Products Ltd HC Wellington CIV-2008-485-1701, 27 August 2009 at [116]–[121].

[20] State Services Commission “Regulatory Impact Statement: Canterbury Earthquake Response and Recovery Bill” (28 March 2011) [Regulatory Impact Statement]. At the time, the Bill was entitled the Canterbury Earthquake Response and Recovery Bill.

[21] At [67].

[22] At [82].

[23] Harvey McGregor McGregor on Damages (19th ed, Sweet & Maxwell, London, 2014) at [3008].

[24] Emphasis added.

[25] (12 April 2011) 671 NZPD 18159; and Canterbury Earthquake Recovery Bill 2011 (286-1) (Special report providing corrected transcripts from the hearing of evidence on the Canterbury Earthquake Recovery Bill) [Special Report] at 120.

[26] High Court Decision, above n 1, at [40].

[27] Canterbury Earthquake Recovery Bill 2011 (286-1) (Hearing of evidence); and Special Report, above n 25.

[28] Regulatory Impact Statement, above n 20, at [67]. We also considered a document counsel provided to us that was prepared by the Government and circulated to Members of Parliament during the Committee of the Whole House stage: see (12 April 2011) 671 NZPD 18151 and 18158. This document responded to concerns raised before the Select Committee, and was an early indication of the changes that would be in Supplementary Order Paper 2011 (237) Canterbury Earthquake Recovery Bill (286-1). A comment at 8 of the document reflects the “full compensation” principle.

[29] See Public Works Act, s 60(1).

[30] William Blackstone Commentaries on the Laws of England (15th ed, T Cadell and W Davies, London, 1809; reprint Professional Books, Abingdon (Oxfordshire), 1982) vol 1 at 139.

[31] Drower v Minister of Works and Development [1984] 1 NZLR 26 (CA) at 29; David Reid Electronics Ltd above n 13, at 3; and see Russell v The Minister of Lands [1898] NZGazLawRp 6; (1898) 17 NZLR 241 (SC) at 251.

[32] David Reid Electronics Ltd, above n 13, at 2; and Russell, above n 31, at 253.

[33] Wellington City Corp v Berger Paints NZ Ltd [1975] 1 NZLR 184 (CA) at 203–204; Horne v Sunderland Corp [1941] 2 KB 26 (CA); Harvey v Crawley Developments Corp [1957] 1 QB 485 (CA); and see the cases above at n 13.

[34] New Zealand Public Works Act Review Committee Report of the Public Works Act Review Committee (Ministry of Works and Development, Wellington, 1977) at 5. This report is recognised in the parliamentary debate as being the basis of the legislation: (12 December 1980) 436 NZPD 5921. See also Peter Salmon The Compulsory Acquisition of Land in New Zealand (Butterworths, Wellington, 1982) at [14.2]–[14.3].

[35] High Court Decision, above n 1, at [54].

[36] David Reid Electronics Ltd, above n 13.

[37] A & B Taxis Ltd v Secretary of State for Air [1922] 2 KB 328 at 344 (CA); see Peter Salmon, above n 34, at [14.12]; and see New Zealand Public Works Act Review Committee, above n 34, at 5 and 17. In Halstead v Manchester City Council [1997] EWCA Civ 2555; [1998] 1 All ER 33 (CA) the compulsory acquisition of two churches was compensated by an agreement to construct a single replacement church.

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