Green & McCahill Holdings Limited v Auckland Council (as successor to Rodney District Council) [2012] NZHC 858 (1 May 2012)

Last Updated: 22 May 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-007233 [2012] NZHC 858

IN THE MATTER OF an appeal pursuant to the Land Valuation

Proceedings Act 1946

BETWEEN GREEN & MCCAHILL HOLDINGS LIMITED

Appellant

AND AUCKLAND COUNCIL (AS SUCCESSOR TO RODNEY DISTRICT COUNCIL)

Respondent

Hearing: 14 March 2012

Appearances: A R Galbraith QC for Appellant/Applicant

R B Lange for Respondent

Judgment: 1 May 2012

(RESERVED) JUDGMENT OF ANDREWS J

_{[Applications for extension of time to appeal and to adduce further evidence]}

This judgment is delivered by me on 1 May 2012 at 4pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

Solicitors: John Collinge, 10 London Street, St Marys Bay, Auckland [e-mail] Simpson Grierson, Private Bag 92518, Auckland 1141 [e-mail]

Counsel: Alan R Galbraith QC, PO Box 4338, Auckland 1140

[e-mail]

GREEN & MCCAHILL HLDGS LTD V AUCKLAND COUNCIL HC AK CIV 2011-404-007233 [1 May 2012]

Introduction

[1] Green & McCahill Holdings Limited (Green & McCahill) has applied for an extension of time to appeal against a decision of the Land Valuation Tribunal (the Tribunal) given on 19 October 2011 (the Tribunal’s 2011 decision).1 An extension of time is required because the appeal was filed on 11 November 2011, approximately one and a half days after the appeal period expired on 9 November 2011.

[2] The Council opposes an extension of time being given, on the grounds that, in substance, Green & McCahill is seeking to appeal against an earlier decision of the Tribunal, given on 25 January 2006 (the Tribunal’s 2006 decision).2

Accordingly, the Council contends that the appeal is some five and a half years out of time, and an extension of time should not be given for it to be brought.

[3] Green & McCahill has also applied for leave to adduce further evidence. That is also opposed by the Council.

Background

[4] Green & McCahill owns a large parcel of land (approximately 8088 hectares), situated just south of the Whangaparaoa peninsula, north of Auckland City. On 7 March 2002 the then relevant local authority, Rodney District Council (now Auckland Council), gave notice of its intention to take land under the Public Works Act 1981 (the Act) for a proposed highway development, “Penlink”, designed to link the Whangaparaoa peninsula with Auckland’s northern motorway. In all, 33.3522 hectares of Green & McCahill’s land was taken.

[5] Green & McCahill applied for compensation under the Act. Its application was heard by the Tribunal in two parts. The first hearing was in December 2005 (the

_{first hearing). Tribunal recorded in its 2006 decision that:}3

1 Green & McCahill Holdings Ltd v Rodney District Council Land Valuation Tribunal LVP

_{12/04, 19 October 2011.}

2 Green & McCahill Holdings Ltd v Rodney District Council Land Valuation Tribunal LVP

12/04, 25 January 2006.

With agreement of counsel for both parties, the Tribunal elected to determine this proceeding in two parts. This first hearing is to determine the highest and best use of the subject land. It is limited to the planning and hypothetical subdivision assumptions applicable to determine compensation. If necessary, a second hearing will deal with valuation issues arising from this decision.

[6] The Tribunal then said:4

The issue for determination in this decision is the highest and best use of the land affected by Penlink. ...

[7] The Tribunal concluded:5

The highest and best use of the lands affected by Penlink is for limited residential development. Penlink has caused the loss of a maximum of 4 lots; but the addition of a further 6 in the severances.

[8] The second part of the Tribunal’s hearing was from 28 March to 4 April 2011

(the second hearing). In its 2011 decision the Tribunal recorded:6

This present hearing before the Tribunal is the second of two hearings convened to deal with the applicant’s claim. The first hearing in December

2005, was by consent of the parties, limited to dealing with the

determination for valuation purposes of the highest and best use of the claimant’s land affected by the taking. That issue having been determined by the Tribunal, the parties would then be able to focus their valuation evidence upon the Tribunal’s finding for the purposes of determining valuation issues pertinent to the assessment of compensation, injurious affection and betterment in monetary terms, either by agreement, or, as has proven to be necessary, by further argument before the Tribunal. This hearing therefore represents a continuation of the process begun before the Tribunal at the earlier hearing. This decision is to be read together with the Tribunal’s earlier decision dated 25 January 2006. The determinations made by the Tribunal, in its earlier decision, are binding insofar as they affect our approach to the hearing before us, and our decisions upon the issues remaining to be determined.

[9] The Tribunal set out the scope of the second hearing, by reference to a joint memorandum of counsel, as follows:7

In determining the compensation to be payable by the applicant (if any) the principal issues which it appears will need to be decided by the Tribunal are:

4 _{At [25].}

5. At [32]. The “severances” referred to in this paragraph are two areas of land totalling 14.17 hectares severed from the north western side of the main body of the land, as a result of the taking: see Tribunal’s 2011 decision at [4](ii).

6 Tribunal’s 2011 decision at [7].

(a) should the before and after approach be followed?

(b) is there any betterment to the applicant as a result of Penlink?

(c) what is the value (if any) for compensation purposes of the six or seven lots which might be created on the severances, taking into account questions relating to access and other factors considered relevant?

(d) what are the cost savings (if any) to the applicant in not having to develop the access road of 2.1 kilometres after Penlink?

(e) what is the appropriate valuation methodology – comparative sales or other hypothetical subdivision or DCF or all three?

(f) what is the block value (if any) of the land taken based on comparative sales including issues pertaining to the potential of the land?

The Tribunal noted that it considered that questions (a) and (e) had been substantially

dealt with the Tribunal’s previous decision.

[10] After setting out and considering valuation evidence and counsel’s

submissions, the Tribunal said:8

In the result a wide range of values for the total block has been presented. We do not think it necessary or desirable for the Tribunal to attempt the somewhat academic exercise of seeking to establish a definitive value in dollar terms because we find on the evidence overall that it is abundantly plain that the betterment to the applicant’s land occasioned by the Penlink development greatly exceeds the value of the land taken, and of any injurious affection to the remaining land. The applicants’ claim fails accordingly.

The appeal

[11] Green & McCahill’s appeal is against the whole of the 2011 decision. It is claimes in the notice of appeal that the 2011 decision incorporated the 2006 decision. In particular, Green & McCahill appeals against:

(a) the Tribunal’s failure to grant it compensation for the land taken for the Penlink development and any injurious affection to the balance of the property; and

(b) the Tribunal’s ruling that there had been betterment to the balance of the land, and that the value of betterment exceeded the value of the land taken.

[12] In his submissions in support of the application for an extension of time, Mr Galbraith noted that the principal (but not the sole) issue on appeal is the Tribunal’s failure in its 2011 decision (in particular in the passage quoted at [10], above) to recognise the distinction between the issue under s 62(1)(e) of the Act, which provides:

the Tribunal shall take into account by way of deduction from that part of the total amount of compensation that would otherwise be awarded on any claim in respect of a public work that comprises the market value of the land taken and any injurious affection to land arising out of the taking, any increase in the value of any land of the claimant that is injuriously affected, or in the value of any other land in which the claimant has an interest, caused before the specified date or likely to be caused after that date by the work or the prospect of the work:

and the issue under s 62(1)(b)(ii):

the value of land shall, except as otherwise provided, be taken to be that amount which the land if sold in the open market by a willing seller to a willing buyer on the specified date might be expected to realise, unless—

...

(ii) only part of the land of an owner is taken or acquired under this Act and that part is of a size, shape, or nature for which there is no general demand or market, in which case the compensation for such land and the injurious affection caused by such taking or acquisition may be assessed by determining the market value of the whole of the owner’s land and deducting from it the market value of the balance of the owner’s land after the taking or acquisitions:

[13] Green & McCahill contends that the Tribunal’s set off of the alleged betterment which, on the facts of this case, may never be realised (or at least will not be realised until 2024), against the loss that arises as at the date of taking the land, is not stipulated by the Act.

[14] Green & McCahill also contends that there are other errors in the 2011 decision, including the failure to apply the 2006 decision that four lots had been lost as a result of the taking, an inappropriate distinction between the value of the land

taken and other comparable land, an undue reliance on the hypothetical subdivision approach rather than comparative sales, and the Tribunal’s failure to deal with the injurious affection arising from the loss of road access and the possibility of immediate or early possibility of subdivision.

Council’s opposition to application for extension of time to appeal

[15] In its notice of opposition to the application for extension of time to appeal, the Council contends that the central argument in the proposed appeal is that the Tribunal was wrong in law and fact to regard Penlink as being in existence as at the date of the taking for the purposes of assessing betterment. The Council also contends that the Tribunal’s decision that Penlink must be regarded as being in existence was the final, and significant, determination of a substantive issue in the

2006 decision, and the Court should not exercise its discretion to extend time to appeal, to enable the 2006 decision to be re-litigated.

Extension of time to appeal – legal principles

[16] An appeal against a decision of the Tribunal is brought under s 26 of the Land Valuation Proceedings Act 1948, which provides that there is a right of appeal against the making of a final order on a claim for compensation under the Public Works Act. The prescribed time within which an appeal may be brought against such an order is 21 days after the making of the final order, or “within such further time as may be allowed by the Court”.

[17] An extension of time can be given under r 20.4 of the High Court Rules. An extension of time is an indulgence within the discretion of the court. Factors which are to be taken into account include consideration of the overall justice and:9

(a) when and under what circumstances the decision to appeal was taken;

_{(b) how long the delay was;}

9 See Juken Nissho Ltd v Attorney-General (1998) 12 PRNZ 380 (HC).

(c) whether the delay can be satisfactorily explained;

(d) whether other parties would be prejudiced by an extension of time;

and

(e) the strength of the case on appeal. Should an extension of time be granted? Explanation for delay in filing appeal

[18] In an affidavit filed in support of the application for extension of time the solicitor for Green & McCahill, Mr Collinge, explained that it was always intended that an appeal would be filed. He had received instructions to appeal if the Tribunal’s decision was adverse, before the decision was given. He further explained that he had made a mistake in calculating the appeal period, as he believed that the appeal period was prescribed in working days rather than calendar days.

Submissions

[19] As noted earlier, the Council’s opposition is not on the grounds of delay after the Tribunal’s 2011 decision was given. Had that been the only issue, an extension of time would not have been opposed. The Council’s opposition centred on the following paragraph in the 2006 decision:10

It will be apparent that, when applying s 26(1)(b)(ii), a hypothetical situation is envisaged. In translating that concept to the instant case, when considering the “before” situation the existence or prospect of the Penlink project must be ignored. In the “after” situation, the Penlink project must be regarded as being in existence.

and the Tribunal’s reference to that paragraph in its 2011 decision, as follows:11

It is further perfectly clear as a matter of principle that in embarking upon the valuation exercise presented at this hearing we cannot properly have regard to hindsight, nor to the speculative views offered by several witnesses as to whether and when the Penlink road will be constructed. That as a

10 _{Tribunal’s 2006 decision at [15].}

11 Tribunal’s 2011 decision at [11] and [12].

matter of principle is made quite clear in the tribunal’s earlier decision at

paragraph [15]: ...

The judgment goes on to cite further authorities for this principle. To the extent therefore that the applicant now seeks to rely upon a rezoning of the land in 2010, or upon uncertainty surrounding the date of construction of Penlink, such reliance is misconceived. ...

[20] For the Council, Mr Lange submitted that the Tribunal’s 2006 decision was not stated to be an interim decision, and any appeal against it should have been brought within the prescribed period. He further submitted that even if the 2006 decision is properly described as an interim decision, it was an interim decision that made a final order in respect of the fundamental issue now sought to be appealed.

[21] Mr Lange submitted that in its 2006 decision the Tribunal determined more than the question of the highest and best use of the land taken; it also made final determinations that a before and after approach in terms of s 62(1)(b)(ii) of the Act was required to assess compensation, and that “before” and “after” plans presented as part of the evidence for the Council at the first hearing were to apply. The “after” plans were on the basis of Penlink being in existence. All that remained to be determined after the 2006 decision were the valuation implications of those determinations, using whatever valuation methodologies and calculations the Tribunal considered appropriate.

[22] Mr Galbraith submitted that the Council’s opposition to the application for an extension of time was misconceived. He submitted that the only basis on which the Council could assert that a ground could not be appealed is that the ground is frivolous, and it could not be asserted that Green & McCahill’s grounds of appeal were frivolous, or that the interaction between the Tribunal’s 2006 and 2011 decisions should not properly be determined on appeal.

[23] In response to the Council’s submission that the Tribunal had made final determinations in the 2006 decision as to the before and after approach, and that the “after” plans presented in the Council’s evidence (on the basis that Penlink was in existence) were to apply, Mr Galbraith submitted that a statement by a Court only binds on an issue estoppel. There can only be issue estoppel when a matter was an

issue in the proceeding, and was contested and determined. Obiter comments cannot give rise to issue estoppel.

[24] Mr Galbraith submitted that the issue before the Tribunal at the first hearing was the highest and best use of the land taken. He submitted that that is clear from [18], [25], and [32] of the 2006 decision, in which the Tribunal stated that the first hearing was “to determine the highest and best use of the subject land. It is limited to the planning and hypothetical subdivision assumptions applicable to determine

compensation”12 and repeated that “[t]he issue for determination in this decision is

the highest and best use of the land affected by Penlink”,13 then concluded that “[t]he highest and best use of the lands affected by Penlink is for limited residential development”. 14 He further submitted that the Council agreed in its submissions for the first hearing that the hearing was limited to the highest and best use of the land, and that the Tribunal should not proceed into valuation issues.

[25] Mr Galbraith submitted that notwithstanding that the Tribunal made statements of principle as to valuation issues, they were not matters at issue, and the statements were obiter, “writ in water”. No appeal could have been brought against the Tribunal’s statements of principle when the 2006 decision was issued.

Discussion

[26] In the context of the present application it is neither necessary nor appropriate to decide whether the Tribunal made final determinations that a before and after approach was required to assess compensation, or that “before” and “after” plans presented as part of the evidence for the Council at the first hearing were to apply. For the purposes of the application for an extension of time it is sufficient for determining the merits of the proposed appeal if it is reasonably arguable that the Tribunal did not make such final determinations.

[27] I am satisfied that it is well arguable that the sole issue for determination in the first hearing was the highest and best use for the land taken, and that any

12 _{Tribunal’s 2006 decision at [18].}

13 _{At [25].}

14 At [32].

statement made by the Tribunal on other matters were obiter, and could not have

been appealed after the Tribunal’s 2006 decision was issued.

[28] Mr Galbraith’s submission is supported by the extracts from the 2006 decision already referred to, in which the Tribunal set out the issues for determination in the first hearing. It is also supported by the Tribunal’s comment in its 2011 decision that the first hearing was, by consent, limited to the determination for valuation purposes of the highest and best use of the land,15 and its later reference in its 2011 decision to the “the observations in paragraphs [13] and [15] of the [2006] decision”.16

[29] I am, further, satisfied that the Council will not be prejudiced if leave to appeal is given. As Mr Lange acknowledged, Green & McCahill is appealing on other grounds unrelated to the 2006 decision as well, and (given the very short delay in filing the appeal) leave to appeal those grounds could not have been opposed. There will, therefore, be an appeal, in any event.

[30] Accordingly, I conclude that an extension of time should be given, to enable

Green & McCahill’s appeal to be brought. Application for leave to adduce further evidence Introduction

[31] Green & McCahill has applied to adduce further evidence on the appeal, by way of an affidavit of Mr Wayne McDonald. A draft affidavit by Mr McDonald was annexed to the affidavit of Mr Collinge, to which reference has already been made.

The evidence sought to be adduced

[32] Mr McDonald states that he is a civil engineer who has specialised in transportation, in particular the development of major transport and infrastructure

_{across New Zealand, with particular emphasis on the integration of land use and}

15 _{Tribunal’s 2011 decision at [7].}

16 At [10] (emphasis added).

transport planning. Since 2000 he has had senior roles with regional land transport committees, Transit New Zealand, and the New Zealand Transport Agency. As a result he has been involved at Board, Committee, Council, and Officer levels in the planning for land use development in Rodney, improving the state highway network, tolling, the responses to funding applications for subsidies, and related issues.

[33] Mr McDonald states that he had a direct personal involvement with the Penlink project from late 2000 to the end of 2011. He says that the Penlink concept developed during the period 1995 to 1998, and he sets out the relevant history from that time. Mr McDonald’s evidence may be summarised as being that, notwithstanding the priority ascribed to it by the Rodney District Council, Penlink never achieved sufficient priority at a national level to ensure funding availability from the national funding agency. Further, at no time from 2003 onwards was the Rodney District Council in a position to commit to its required share of any funding. In this respect, Mr McDonald states that had he been asked in 2003 to estimate when Penlink might reasonably be constructed, he would have said that until the local authority had certainty of funding for its share, any answer would be entirely hypothetical.

Jurisdiction to grant leave to adduce further evidence on appeal

[34] Further evidence maybe adduced pursuant to r 20.16 of the High Court Rules, which provides that leave of the Court is required, and leave may be granted only if there are special reasons for hearing the evidence.

The approach to be adopted when considering applications for leave to adduce further evidence was set out in the Court of Appeal’s judgment in Rae v International Insurance Brokers.17 The general rule is that to be admissible, the further evidence must be fresh, credible, and cogent. Evidence is fresh if it could not, with reasonable diligence, have been produced at trial. However, the absence of freshness is not an absolute disqualification for admission. Evidence which is not

_{fresh may still be admitted where there are exceptional circumstances and}

17 Rae v International Insurance Brokers (Nelson Marlborough)Ltd [1998] 3 NZLR 190 (CA) at

192-193.

compelling grounds to justify it. Such evidence must still pass the tests of credibility and cogency. The discretion is to be exercised sparingly.18

Submissions

[35] For Green & McCahill, Mr Galbraith submitted that Mr McDonald’s evidence is reliable, cogent, and specific, and fundamental to Green & McCahill’s appeal on the grounds that the Tribunal erred in law and fact in assuming that Penlink would proceed and that any benefit would accrue from the date of the taking. He submitted that Mr McDonald’s evidence would demonstrate the Tribunal’s error in dismissing evidence led by Green & McCahill as to the uncertainty surrounding whether and when Penlink would be developed as “speculative”.

[36] Mr Galbraith also submitted that the information referred to by Mr McDonald was known to the Council, which could (and should) have provided it to the Tribunal, but failed to do so, and that some of the information referred to by Mr McDonald has only come into existence after the second hearing, but, again, is information held or known to the Council. He submitted that for the Council to “sit on” information which it has which may assist the owner, but is unknown to the owner, is completely contradictory to the principles of the compulsory taking of land, where full compensation is to be paid, and any doubt must be resolved in favour of the owner.

[37] Finally, Mr Galbraith submitted that Mr McDonald’s evidence does not relate to the final determination of the substantive issues in the Tribunal’s 2006 decision, as nothing in that decision determined issues of betterment, which was asserted for the first time by the Council in its evidence filed in 2010 in the context of the second hearing. All of these matters, he submitted, are “special reasons” such that leave

_{should be given.}

18 See NZ Co-Operative Dairy Co Ltd v Commerce Commission (1991) 3 PRNZ 262 (HC) at 270, Complaints Committee No 1 of the Auckland District Law Society v P [2007] NZHC 1438; (2007) 18 PRNZ 760 (HC) at [21], and Culverden Retirement Village Ltd v McLuckie HC Auckland CIV-2007-404-

750, 18 September 2007 at [16].

[38] For the Council, Mr Lange submitted that the only objective of Mr McDonald’s evidence is to challenge the Tribunal’s 2006 finding19 that “In the ‘after’ situation, the Penlink project must be regarded as being in existence.” Mr Lange submitted that Mr McDonald’s further evidence could serve no useful purpose, as its only objective was to challenge a decision that cannot be the subject of an appeal.

[39] Further, Mr Lange submitted that Mr McDonald’s evidence is not probative. He submitted that it is self-evident that there will be changing priorities, and that evidence is not needed on that point. Secondly, he submitted that evidence has already been given for the appellant as to the likelihood of Penlink proceeding by an engineer, Mr Philip Young. Thirdly, he submitted that, in any event, there was always going to be a long delay before Green & McCahill could undertake subdivision of the land, because of the time to run on a forestry easement.

[40] Mr Lange also submitted that there was no obligation on the Council to call evidence from Mr McDonald. He submitted that as a result of the Tribunal’s 2006 decision that it was to be assumed that Penlink was in existence, such evidence was irrelevant. Further, there was no discovery obligation, and no obligation to provide other information known to the Council. He submitted that it was nonsense to suggest that the Tribunal was misled, or not appropriately informed, at the second hearing, as it was clear that as at the second hearing in 2011, Penlink had still not been constructed.

Discussion

[41] Rule 20.16(3) gives an example of a “special reason” for hearing further evidence sought to be adduced: “that the evidence relates to matters that have arisen after the date of the decision appealed against and that are or may be relevant to the determination of the appeal”. Clearly, that is only an example, and is not determinative of when leave may be given.

[42] In the light of my finding that it is well arguable that the only substantive issue determined in the Tribunal’s 2006 decision was the issue as to the highest and

19 Tribunal’s 2006 decision at [15].

best use of the land taken, I accept that Mr McDonald’s evidence is relevant to an issue that was before the Tribunal in the second hearing, and will be relevant to the determination of the appeal. I also accept that his evidence is cogent, reliable, and specific to the issues raised in the appeal, and that the court hearing the appeal is likely to be assisted by receiving the evidence.

[43] Finally, while it is not necessary in the context of this application to make a finding on the point, I accept the force of Mr Galbraith’s submission as to the disclosure by a local authority, when land is taken compulsorily, of relevant information known to it, but not to the owner from whom land is being taken.

[44] I therefore grant leave for the affidavit of Mr McDonald to be adduced.

Result

[45] An extension of time is granted for Green & McCahill to appeal. Leave is granted for the affidavit of Mr Wayne McDonald to be adduced as evidence.

[46] On a successful application for leave to appeal, costs would normally be awarded in favour of the respondent.20 However, in this instance, Green & McCahill has succeeded in its application to adduce further evidence. I have concluded that on

_{each application, costs should lie where they fall.}

_{Andrews J}

20 See Andrew Beck and others McGechan on Procedure (looseleaf ed, Thomson Reuters) at

[HR20.4.02].