Lambton Quay Properties Nominee Limited v Wellington City Council [2014] NZHC 878 (2 May 2014)

Last Updated: 2 May 2014

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-007919 [2014] NZHC 878

BETWEEN LAMBTON QUAY PROPERTIES NOMINEE LIMITED

Appellant

AND WELLINGTON CITY COUNCIL Respondent

NEW ZEALAND HISTORIC PLACES TRUST (POUHERE TAONGA)

Section 274 Party

Hearing: 31 March 2014 and 1 April 2014

Counsel: C Anastasiou for Appellant

S F Quinn for Respondent

R M Devine and K M Krumdiek for Section 274 Party

Judgment: 2 May 2014

_{JUDGMENT OF COLLINS J}

Introduction

[1] Lambton Quay Properties Nominee Ltd (the building owner) wishes to demolish its building on the corner of Lambton Quay and Grey Street in central Wellington. The building is known as the “Harcourts Building”.

[2] The Harcourts Building has been assessed by the Wellington City Council

(the Council) as being an earthquake-prone building under the Building Act.¹ It is also listed as a category 1 heritage building under the Historic Places Act.²

¹ _{Building Act 2004, s 122.}

² _{Historic Places Act 1993, s 22(3)(a)(i).}

LAMBTON QUAY PROPERTIES NOMINEE LIMITED v WELLINGTON CITY COUNCIL [2014] NZHC

878 [2 May 2014]

[3] After the Council assessed the Harcourts Building as being earthquake-prone it issued the building owner with a notice in July 2012 under s 124 of the Building Act requiring the building owner to either strengthen the building or demolish it by

27 July 2027.

[4] After conducting investigations and consultations the building owner concluded that it was not economically viable to strengthen the Harcourts Building. On 4 September 2012 it applied to the Council for resource consent under the Resource Management Act for permission to demolish the building.³ However, even though the Council had required the building owner to either strengthen or demolish the building, the consent authority declined the building owner’s application to

demolish the building. The consent authority’s decision was primarily based upon its interpretation and application of the heritage provisions of the Council’s District Plan created under the Resource Management Act.⁴

[5] The building owner appealed the consent authority’s decision to the Environment Court. The Environment Court dismissed the building owner’s appeal.⁵ The building owner has now lodged 15 grounds of appeal in this Court. I will explain each of the building owner’s grounds of appeal in paragraphs [68] to [110] of this judgment. For convenience I set out the 15 grounds of appeal in Appendix 1 to this judgment.

[6] Determining the fate of the Harcourts Building has brought into focus a number of competing considerations, the most significant of which are:

(1) the safety of the public;

(2) the risk of damage to buildings which are in close proximity to the

Harcourts Building;

_{(3) the public interest in preserving heritage buildings; and}

³ Resource Management Act 1991, s 88. I refer in this judgment to the body that heard the

_{resource consent application as the “consent authority”.}

⁴ _{Sections 31, 72 to 77D.}

⁵ Lambton Quay Properties Nominee Ltd v Wellington City Council [2013] NZRMA 39 (EC).

(4) the private, financial and property interests of owners of heritage buildings.

[7] While I am aware of the significance of these issues, my task is confined to determining if the Environment Court made an error of law.⁶

[8] I have decided that the Environment Court made two errors of law when it dismissed the building owner’s appeal. The errors occurred when the Environment Court:

(1) stated the wrong test when it said the onus on the building owner was to establish that alternatives to demolishing the building had been “exhaustively and convincingly excluded”; and

(2) concluded that the relevant provisions of the Resource Management Act and the Building Act could not be reconciled, and in doing so, failed to give adequate consideration to the risk to public safety and surrounding buildings if the Harcourts Building remains as it is.

[9] To assist in understanding why I have reached these conclusions, I shall divide my judgment into the following parts:

Part 1

Background.

Relevant legislative provisions.

Part 2

Evidence in the Environment Court.

_{Reasons given by the Environment Court for its decision.}

⁶ Resource Management Act 1991, s 299.

Part 3

Principles which govern the way I must decide this appeal. Reasons for allowing the appeal.

Reasons for dismissing the majority of the building owner’s grounds of appeal. Conclusion.

Part 1

Background

[10] The Harcourts Building is an eight-storey building that was constructed in

1928 for the Australian Temperance & General Mutual Life Assurance Society. The building became known as the Harcourts Building when the real estate firm, Harcourt & Co Ltd, acquired the naming rights to the building in 1984. The building is constructed with a steel frame encased in concrete with a plastered brick facade. The facade has a number of features including columns, corbels and parapets that are constructed from masonry that is not reinforced.

[11] The Harcourts Building was given a “C” classification under s 35 of the now repealed Historic Places Act 1980 on 1 October 1982. In August 1989 the building was re-classified as a “B” category building by the New Zealand Historic Places Trust (the Trust). This classification was upheld in an appeal to the High Court on 7

September 1992.⁷ The building became classified as a category 1 building upon the

passing of the Historic Places Act 1993. The building was listed on the heritage schedule of the Proposed Wellington City District Plan in 1994.

[12] In 1999 the building was sold to Customhouse Quay Properties Ltd. The following year it was transferred to Lambton Quay Development Ltd and then in

_{2002 to the current building owner. The principal shareholder and sole director of}

⁷ T & G Mutual Life Society Ltd v New Zealand Historic Places Trust HC Wellington CP1083/90,

7 September 1992.

the building owner is Mr Dunajtschik who first became involved with the building in

1999 as a minority shareholder of the company that acquired the building that year.

[13] At the time Mr Dunajtschik and his company became involved in the ownership and development of the building, there were three adjoining buildings on Lambton Quay and Panama Street. An overall development was planned for all sites. This resulted in the demolition of the three adjoining buildings and the construction in 2002 of the 25-storey HSBC Tower on the corner of Panama Street and Lambton Quay.

[14] Part of the HSBC Tower encroaches on the title to the land occupied by the Harcourts Building. The encroachment involves part of the HSBC Tower “dove tailing” into the light shaft of the Harcourts Building. At the time consent was given to this development the building owner agreed to retain and refurbish the Harcourts Building. The refurbishment work on the Harcourts Building was carried out in

2000 at a cost of $4.5 million.

[15] On 4 September 2010 Christchurch suffered the first of a series of earthquakes which included a devastating earthquake in that city on 22 February

2011. Those events had a significant impact on the assessment of earthquake risks in earthquake-prone areas such as Wellington.

[16] On 27 July 2012 the Council served the building owner with a “Earthquake- Prone Building Notice” under s 124(1)(c) of the Building Act (Building Act Notice). The Building Act Notice classified the building as earthquake-prone⁸ and required the building owner by 27 July 2027 to either:

(a) strengthen the building to a sufficient degree so that it is not earthquake-prone; or

(b) demolish all or part of the building, so that the remainder of the building (if any) is not earthquake-prone.

⁸ Section 122(1) of the Building Act 2004 explains that earthquake-prone buildings are those likely to collapse causing injury or death, or damage to any other property, during or following a moderate earthquake. A moderate earthquake is defined in reg 7 of the Building (Specified Systems, Change to Use, and Earthquake-Prone Buildings) Regulations 2005. Under that regulation a moderate earthquake is one that would cause shaking to a building that is one-third of the strength of a new building at that site.

[17] An earthquake-prone building is one that fails to meet 34 per cent of the New

Building Standard (NBS).⁹

[18] The Council initially assessed the building at four per cent of the NBS. The building owner engaged civil engineers to evaluate the Council’s initial assessment of the extent to which the building complied with the NBS. Following consultations with the building owner’s engineers the Council revised its assessment of the building to 17 per cent of NBS.

[19] On 4 September 2012 the building owner applied to the Council for resource consent to demolish the Harcourts Building. It will not apply for consent to build a replacement building until it knows if it can demolish the building.¹⁰

[20] The building owner’s application was opposed by the Trust, and six other individuals and entities,¹¹ but supported by the Council’s planning manager and senior consents planner. The support of the Council’s senior planners was subject to conditions, including the granting of resource consent for a replacement building for the site.

[21] On 25 February 2013 Hearing Commissioners,¹² who were delegated by the Council to make the Council’s decision, concluded that a compelling case had not been made to justify demolition of the building.¹³

[22] Accordingly the application for resource consent to demolish the building was declined.

[23] The building owner then appealed the consent authority’s decision to the

_{Environment Court.}¹⁴ _{When hearing an appeal, the Environment Court has the same}

⁹ “New Building Standard” is the current earthquake design level for a new building as specified in Standards New Zealand NZS 1170.5:2004 Structural Design Actions Part 5: Earthquake Actions – New Zealand (22 December 2004).

¹⁰ In a preliminary decision the Environment Court said it was not necessary for the building owner to apply for resource consent to build a replacement building in order to enable the consent

authority to assess the building owner’s application to demolish the Harcourts Building. See

_{Lambton Quay Properties Nominee Ltd v Wellington City Council [2013] NZEnvC 147.}

¹¹ _{The Trust is the only one of the original opponents that has participated in this appeal.}

¹² _{Appointed pursuant to s 34A of the Resource Management Act 1991.}

¹³ Report of Hearing Commissioners CIV-2013-485-7919, 25 February 2013 at [268].

“power, duty, and discretion” as the consent authority,¹⁵ although the Environment

Court must also have regard to the decision which is the subject of the appeal.¹⁶

Relevant legislative provisions

[24] The relevant provisions of the Resource Management Act are contained in ss 5, 6, 7, 77A, 87A(3), 104 and 104C. The heritage provisions of the Council’s District Plan created under the Resource Management Act are also relevant.

Section 5 of the Resource Management Act: purpose

[25] Section 5 provides:

(1) The purpose of this Act is to promote the sustainable management of natural and physical resources.

(2) In this Act, sustainable management means managing the use, development, and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural wellbeing and for their health and safety ...

Section 6 of the Resource Management Act: matters of national importance

[26] Section 6 provides for recognition of matters of national importance. It provides:

In achieving the purpose of this Act, all persons exercising functions and powers under it, in relation to managing the use, development, and protection of natural and physical resources, shall recognise and provide for the following matters of national importance:

...

(f) the protection of historic heritage from inappropriate subdivision, use, and development:

_...

¹⁴ _{Resource Management Act 1991, s 120.}

¹⁵ _{Section 290(1).}

¹⁶ Section 290A.

Section 7 of the Resource Management Act: other matters

[27] Section 7 sets out other matters that those exercising functions and powers under the Resource Management Act are to have particular regard to. They include:

...

(aa) the ethic of stewardship:

(b) the efficient use and development of natural and physical resources:

...

(c) the maintenance and enhancement of amenity values:

...

(f) maintenance and enhancement of the quality of the environment: (g) any finite characteristics of natural and physical resources:

...

Section 77A of the Resource Management Act: categorisation of activities

[28] Section 77A enables the Council to categorise the activities to which its District Plan relates. The activities that can be provided for in a District Plan are set out in s 77A(2) of the Resource Management Act. Those activities were explained in the following way by Randerson J in Auckland City Council v The John Woolley Trust:¹⁷

a) Permitted activities (which do not require any resource consent);

b) Controlled activities (which require a resource consent but must be granted unless there is insufficient information to determine whether the activity is a controlled activity);

c) Restricted discretionary activities (which are subject to the particular restrictions under s 104C);

d) Unrestricted discretionary activities (where the full range of considerations under s 104 undoubtedly apply);

e) Non-complying activities (which are subject to all the provisions of s 104 and the further particular restrictions in s 104D); and

¹⁷ Auckland City Council v John Woolley Trust [2008] NZHC 28; [2008] NZRMA 260 (HC) at [30].

f) Prohibited activities.

Section 87A of the Resource Management Act: restricted discretionary activities

[29] Section 87A was passed in 2009 and replaced s 77B, which had been enacted in 1993. Section 77B introduced the concept of restricted discretionary activities and required a consent authority to specify in its District Plan matters to which it had restricted its discretion when declining a resource consent application.

[30] In Woolley, Randerson J had to consider the relationship between Part 2 of the Resource Management Act which sets out the purposes and principles of the Resource Management Act,¹⁸ and the restricted discretionary activity provisions of the Resource Management Act. Randerson J said that the provisions of Part 2 could not be:¹⁹

... used effectively to override the specific provisions of s 77B(3) ... To permit Part 2 matters to be taken into account as additional grounds to decline consent for a restricted discretionary activity would be inimical to the very nature of such an activity and the strictly confined powers available to the consent authority.

Randerson J held, however, that the provisions of Part 2 of the Resource Management Act could be taken into account in deciding to grant a restricted discretionary activity.²⁰

[31] The legislation now refers to a consent authority’s power to grant consent in

_{addition to declining consent. Section 87A(3) provides:}²¹

¹⁸ _{See [25]-[27] of this judgment.}

¹⁹ _{Auckland City Council v John Woolley Trust, above n 17, at [44].}

²⁰ _{At [45].}

²¹ _{Section 87A(3) was based on a recommendation in a report from an “Experts Panel to Local}

Government and Environment Select Committee on Drafting Accuracy Issues” at [101]-[102]. The authors of the report said:

In relation to restricted discretionary activities, we understand that, in Woolley, Randerson J held the matters in Part 2 were relevant in deciding to grant consent to a restricted discretionary activity but they were not relevant when deciding to refuse consent. This was because section 77B(3)(c) of the RMA referred only to declining a consent. In other words, the Judge’s decision on this issue was not based on the

wording of s 104C.

It is proposed that, in new section 87A(3) (to replace section 77B), both declining and granting of consent are covered. This seems to us to completely negate the Woolley judgment.

The Expert Panel’s recommendation was adopted by Parliament’s Local Government and

Environment Committee, which explained in the commentary to the Resource Management

(3) If an activity is described in this Act, regulations (including any national environmental standard), a plan, or a proposed plan as a restricted discretionary activity, a resource consent is required for the activity and—

(a) the consent authority’s power to decline a consent, or to grant a consent and to impose conditions on the consent, is restricted to the matters over which discretion is restricted (whether in its plan or proposed plan, a national environmental standard, or otherwise); and

(b) if granted, the activity must comply with the requirements, conditions, and permissions, if any, specified in the Act, regulations, plan, or proposed plan.

Section 104 of the Resource Management Act: consideration of applications

[32] Section 104 applies to all resource consent applications. It provides that:

(1) When considering an application for a resource consent ... the consent authority must, subject to Part 2, have regard to—

(a) any actual and potential effects on the environment of allowing the activity; and

(b) any relevant provisions of—

...

(vi) a plan or proposed plan; and

(c) any other matter the consent authority considers relevant and reasonably necessary to determine the application.

Section 104C of the Resource Management Act: determination of applications for restricted discretionary activities

[33] Section 104C provides that:

(1) When considering an application for a resource consent for a restricted discretionary activity, a consent authority must consider only those matters over which—

...

(b) it has restricted the exercise of its discretion in its plan or proposed plan.

_...

(Simplifying and Streamlining) Amendment Bill 2009 that the intent of s 87A(3) of the Act was

to reverse the effect of the High Court’s judgment in Woolley.

The District Plan

[34] Rule 21A.2.1 of the Council’s District Plan stipulates that demolition of any

listed heritage building is a restricted discretionary activity.

[35] The heritage objective and policies of the District Plan are expressed in the following way:²²

OBJECTIVE

20.2.1 To recognise the City’s historic heritage and protect it from

inappropriate subdivision use and development.

POLICIES

20.2.1.2 To discourage demolition, partial demolition and relocation of listed buildings and objects while:

acknowledging that the demolition or relocation of some parts of buildings and objects may be appropriate to provide for modifications that will result in no more than an insignificant loss of heritage values; and

giving consideration to total demolition or relocation only where the Council is convinced that there is no reasonable alternative to total demolition or relocation.

[36] The District Plan sets out 22 non-exhaustive “assessment criteria” that the “Council will have regard to” when considering an application for resource consent to demolish a heritage building. For present purposes it is necessary to set out only four of those assessment criteria:

21A2.1.8 The extent to which the work is necessary to ensure structural stability, accessibility, and means of escape from fire and the extent of the impact of the work on the heritage values of the building. The Council will seek to ensure that in any case every reasonable alternative solution has been considered to minimise the effect on heritage values.

...

21A.2.1.15 The extent to which the building object has been damaged by fire or other human generated disaster or any natural disaster.

_...

22. The objectives, policies and assessment criteria are incorporated into the District Plan pursuant to s 75(2) of the Resource Management Act 1991.

21A2.1.21 Whether adaptive reuse of a listed building or object will enable the owners, occupiers or users of it to make reasonable and economic use of it.

21A2.1.22 The public interest in enhancing the heritage qualities of the City and in promoting a high quality, safe urban environment.

The Building Act 2004

[37] Two aspects of the Building Act were referred to during the course of submissions.

[38] First, the effect of s 115 of the Building Act is that if the use of the building were to change to, for example, a hotel or an apartment complex, then the building would need to comply “as nearly as is reasonably practicable” with 100 per cent of the NBS.

[39] Second, the consequences of the building owner failing to comply with the

Building Act Notice could include:

(1) Prosecution of the building owner for failing to comply with the

Building Act Notice.²³

(2) The Council seeking an order from the District Court authorising it to carry out the work specified in the Building Notice, including, in this case, demolition of the building. Any order of the District Court might include a requirement that the building owner meet the costs incurred by the Council in carrying out the work specified in the

_{Building Act Notice.}²⁴

²³ _{Building Act 2004, ss 124(3) and 128A.}

²⁴ Section 126(3).

_{Part 2}

Evidence in the Environment Court

[40] The Environment Court had the benefit of extensive evidence from 21 witnesses, including expert witnesses who gave evidence on behalf of the building owner, the Council and the Trust. As the appeal before me is confined to questions of law, I shall only briefly explain the key elements of the evidence before the Environment Court.

Building owner

[41] Mr Dunajtschik gave evidence in the Environment Court. He explained that if the building were demolished the building owner intended to either:

(1) construct an extension of the HSBC Tower on the site occupied by the building and integrate the new structure into the HSBC Tower; or

(2) construct a separate stand alone building on the building site similar in design and standard to the HSBC Tower.

[42] In his evidence Mr Dunajtschik explained that:

(1) Prior to the Christchurch earthquakes the building was valued by Quotable Value at $19.5 million. In its most recent report Quotable Value assessed the building as having a $10 million value.

(2) Six floors of office tenants moved out of the building within a year of the Christchurch earthquakes.

(3) At the present time there are approximately 16 people working in the building compared to approximately 400 when the building was fully tenanted.

(4) Two years of consultation with experts has led him to conclude that strengthening the building or retaining the facade as part of a re- development are not commercially viable options.

(5) Alternative use options that have been considered include creating the building into a hotel, apartments or university student hostel. None of those options proved to be commercially viable.

(6) He has tried to reach an accommodation with the Trust but has not succeeded. His efforts included offering what was referred to as a “set off” proposal to contribute to restoration of St Gerard’s Monastery in Oriental Bay and buildings on Cuba Street.

(7) No one has been prepared to purchase the building for what he considers to be a fair price.

(8) The building is not insured and is probably uninsurable.

(9) Rental from tenants in the property is now significantly less than the

Council’s rates of $260,433 per annum.

(10) “If the property was someone’s only major investment they would be bankrupt by now”.²⁵

(11) The building owner would prefer to let the building stand as it is rather than sell it for what it considers to be an unfair price or undertake uneconomic strengthening and restoration work.

[43] Mr Corleison, a qualified valuer, gave evidence for the building owner. Mr Corleison is the sole shareholder of Robert Fisher Associates Ltd, which engages in the development, leasing and management of commercial properties. Mr Corleison is a business associate of Mr Dunajtschik. Mr Corleison has worked in the building

_{since 1981 and with the building owner in managing the building and the HSBC}

²⁵ Statement of evidence of M Dunajtschik, 15 July 2013 at [32].

Tower project. Mr Corleison was able to explain recent developments in relation to the building from the building owner’s perspective. Mr Corleison’s evidence included:

(1) An explanation that since the Christchurch earthquakes there has been:²⁶

a flight of tenants from the Harcourts Building. The Housing New Zealand’s lease expired in 2010 and [it] was unwilling to take up a new lease in the building. A number of other tenants followed suit. All attempts to fill the vacant space left by the departing tenants have been unsuccessful

... As a result ... only 1 office floor, a small portion of the

second floor and the penthouse are occupied.

(2) Attempts have been made to sell the building. These efforts have included assessments of the feasibility of turning the building into a hotel and a university student hostel. These assessments concluded the proposed re-developments were commercially unviable.

Engineering evidence

[44] Four civil engineers gave evidence in the Environment Court. They were Mr Clark and Mr Ian Smith, who gave evidence for the building owner and Mr Ashley Smith and Mr Cattanach, who gave evidence for the Trust.

[45] Mr Clark, a structural engineer, was engaged as an independent consultant – on the recommendation of the Trust to provide a written report on the “overall earthquake resilience capacity” of the Harcourts Building. Mr Clark provided the Environment Court with a very comprehensive report in which he assessed the building as having a “moderate risk” of sustaining significant damage in an earthquake. He also concluded there was a high probability of “pounding” between the Harcourts Building and the HSBC Tower in a severe earthquake.

[46] Mr Ian Smith is a consultant engineer with extensive experience in upgrading earthquake-prone buildings. In his first statement of evidence, Mr Ian Smith

_{provided the Environment Court with a thorough analysis of the way the Harcourts}

²⁶ Statement of evidence of G Corleison, 15 July 2013 at [57]-[58].

Building was constructed and its likely performance in a moderate earthquake. Mr Ian Smith explained that the unreinforced masonry elements of the building “are brittle in nature and will fail suddenly.”²⁷ As a consequence, the building will likely suffer severe damage in a moderate earthquake unless a substantial and robust new structure is added.²⁸

[47] Mr Ian Smith explained the way the Harcourts Building is likely to perform in a moderate earthquake based upon the results of a computer analysis using Extended Three Dimensional Analysis of Building Systems (ETDABS). Based on the detailed ETDABS analysis Mr Ian Smith believes “there is a likelihood of failure

of the existing building in a moderate earthquake”.²⁹ He explained the mode of

failure will likely start with hidden masonry infill walls giving way after which the riveted steel joints in the structure will start to yield. In his assessment continued earthquake shaking, even at a moderate level, will cause a significant twist in the building at the first floor at which “point there is a real possibility that the building columns under the facade will not recover”.³⁰

[48] Mr Ian Smith advised that:³¹

Even if overall collapse does not occur in a moderate earthquake the calculations show that the facade elements [will] fail and are likely to fall off the building permanently causing injury to life and other property.

[49] Mr Ashley Smith, a structural engineer, advised it was not possible to reach a conclusive decision about whether the building is earthquake-prone, but he did agree that improvement was needed. Mr Ashley Smith said the masonry elements of the facade needed to be separated and/or restrained and the potential for the building to pound into the HSBC Tower needed to be reduced or eliminated.

[50] Mr Ashley Smith did not have the benefit of a site inspection when he

reached these conclusions. However, he did undertake a “brief walk-through”

_{inspection on 8 August 2013. After that inspection Mr Ashley Smith concluded that}

²⁷ _{Statement of evidence of I Smith, 15 July 2013 at [64].}

²⁸ _{At [34].}

²⁹ _{At [64].}

³⁰ _{At [65].}

³¹ At [66].

the recent cracks caused by the Cook Strait sequence of earthquakes did not render the building uninhabitable.

[51] Mr Cattanach, a structural engineer, also gave evidence for the Trust. Mr Cattanach participated in the same “walk-through” inspection of the building as Mr Ashley Smith. In his evidence Mr Cattanach explained that he thought the building was a “good candidate for strengthening from a structural perspective”.³²

[52] The four engineers prepared a joint statement in which they agreed that:

(1) because of its relatively low strength the building must be strengthened;

(2) the risk of pounding between the building and the HSBC Tower should be addressed in any strengthening programme; and

(3) further investigations needed to be carried out to ascertain the extent of the damage caused by cracks in the building associated with the Cook Strait sequence of earthquakes.³³

[53] The four engineers also recorded that they disagreed on:

(1) the extent of the strength of the building prior to the Cook Strait sequence of earthquakes;

(2) the likely extent of cracking beyond that which could be seen following the Cook Strait sequence of earthquakes; and

_{(3) “what level of strength should be targeted for the building”.}³⁴

³² _{Statement of evidence of A Cattanach, 29 July 2013 at [9].}

33. In mid-2013 Wellington was affected by a series of earthquakes in Cook Strait, the most powerful of which occurred on 21 July 2013.

³⁴ Statement of evidence of Engineering Experts, 9 August 2013 at [10].

Quantity surveyors’ evidence

[54] Mr Cooke, a principal of the quantity surveying firm Mallard Cooke, gave evidence for the building owner. He was appointed on the advice of the Trust to prepare an independent report. Mr Cooke concluded that it would cost approximately:

(1) $10,850,000 plus GST to strengthen the building to 100 per cent of the NBS.

(2) $10,250,000 plus GST to strengthen the building to 67 per cent of the

NBS.

(3) $5,750,000 to $6.5 million plus GST to retain the facade and certain other architectural features of the building and demolish around them.

Valuation evidence

[55] Mr Washington, a director of Colliers International (Wellington Valuations) Ltd, assessed the commercial viability of implementing the strengthening work identified by Mr Clark and costed by Mr Cooke. Mr Washington concluded that the commercial market value of the building “as is” was nil and that the current market value of the building if strengthened to 100 per cent of the NBS would be

approximately $14 million. Mr Washington concluded that:³⁵

The strengthening and reinstatement works [for the building] are not commercially viable and the highest and best use of the property is as a re- development site cleared of the existing building.

[56] Mr McColl, a registered valuer, and Mr Butchers, a director of Valuation & Advisory Services, of Bayleys Valuations Ltd (the authors of the Bayleys report), prepared a commercial viability valuation of the building in October 2012 at the request of the Trust. The authors of the Bayleys report were asked to consider three

_scenarios:

³⁵ Statement of evidence of A P Washington, 15 July 2013 at [35.1].

(1) strengthening the existing building;

(2) strengthening the existing building to 100 per cent NBS and adding a four floor storey addition above the existing structure; and

(3) an approximately 80 metre high multi-storey structure built to 100 per cent of the NBS that would retain the Lambton Quay and Grey Street facades of the building and the existing lobby and stairs to the second floor.

[57] The authors of the Bayleys report concluded none of these scenarios were commercially viable.

[58] Neither the Council nor the Trust produced evidence from a registered valuer. The Trust did, however, produce evidence from Mr Dowell and Mr McDermott, both of whom gave evidence about the commercial viability of strengthening the building:

(1) Mr McDermott, a consultant in development planning, concluded “that the public economic benefits of strengthening the Harcourts Building outweigh the commercial benefits of demolishing it”.³⁶

(2) Mr Dowell, Vice-President of Historic Places Aotearoa who has a diploma in valuation and property management, concluded that “reasonable commercial use could be made of the Harcourts Building if it were to be retained and strengthened”.³⁷ He also thought “that retaining substantial elements of the Harcourts Building and integrating these with a new building is likely to be commercially viable”.³⁸

Economic evidence

[59] Mr Copeland, a consulting economist, provided expert economic evidence for the building owner. Mr Copeland disagreed with the analysis undertaken by

³⁶ _{Statement of evidence of P McDermott at [7(G)].}

³⁷ _{Statement of evidence of P Dowell, 29 July 2013 at [65].}

³⁸ At [65].

Mr McDermott. Mr Copeland concluded that the economic benefits of demolishing the building outweighed the benefits of retaining and strengthening the building.

Planning/urban design evidence

[60] Mr Leary, a member of the New Zealand Institute of Planners and the New Zealand Institute of Surveyors, gave evidence for the building owner. Mr Leary is a director of Spencer Homes Ltd. Mr Leary concluded that if the building owner’s application was declined then there was potential for significant long-term adverse effects and safety risks for the community.

[61] Mr Blunt is a registered architect and urban designer. He gave evidence for the Trust. Mr Blunt concluded that the evidence did not support demolition of the building. Mr Blunt succinctly summarised his approach by stating “never replace something unless you can replace it with something better”.³⁹

Heritage evidence

[62] The Environment Court heard evidence from five witnesses with expertise in architectural heritage:

(1) Mr Salmond is an architect with considerable experience in the field of conservation architecture. He gave evidence for the building owner. Mr Salmond acknowledged the heritage significance of the building. In his evidence Mr Salmond recognised that the question of cost and who pays for the retention and strengthening of the building is a material consideration. Mr Salmond appreciated that the costs of making the building compliant with New Zealand building standards would not be commercially viable.

(2) Mr Kelly is a historian and heritage consultant, who gave evidence for the Council. He concluded the building is:⁴⁰

a significant heritage building, well worthy of permanent protection ... It is a notable example of inter-war architecture, with two richly decorated prominent facades which give it a strong presence on its corner site. It is a key building in Wellington’s architectural heritage, being arguably the city’s best example of a Chicago-style design.

(3) Ms Neill is the “general manager-central region” of the Trust. In her evidence Ms Neill explained that the Trust “wants a safe heritage- orientated solution to the building”.⁴¹ Ms Neill explained the Trust’s concerns over the possibility of demolition of the building and the irreversible loss of a valuable historic heritage.

(4) Ms Dangerfield is an architect and a heritage advisor to the Trust.

She advised that the building has “outstanding or special heritage significance”, which “makes it worthy of retention in some way”.⁴²

(5) Mr McClean is a senior heritage policy advisor for the Trust.

Mr McClean explained that in his expert opinion the building should not be demolished and that it should be strengthened or, at least, the facade should be retained as part of any development.

[63] Mr Salmond, Ms Dangerfield and Mr Kelly prepared a joint experts’ statement. They agreed the building is a heritage building worthy of being preserved. They all agreed that if the building is to be demolished there would be a total loss of heritage values, but that a full structural upgrade of the building would result in the substantial retention of the building’s heritage qualities. They also recognised that alternative strategies which combine the street walls of the building with a new building would ensure retention of some of the building’s heritage values.

Evidence of alternative uses

[64] Mr Dunajtschik, Mr Corleison, Mr Clark and Mr Leary, amongst others, gave evidence about the various options that have been considered for the building. Those options were summarised in the following way by Mr Leary:⁴³

(1) Keeping the building as is.

(2) Strengthening the building to 100 per cent of NBS.

(3) Strengthening the building in conjunction with the adjacent HSBC Tower.

(4) Strengthening the building to 67 per cent of NBS.

(5) Strengthening the building to 100 per cent of NBS and adding four floors.

(6) Retaining the facade, demolishing the interior of the building and constructing a new building behind the facade to a height of 80 metres.

(7) Replicating the facade and lightweight materials when constructing a new building.

(8) Retaining the corner section of the building and constructing a new building on the site.

(9) Converting the existing building into a hotel.

(10) Converting the existing building into apartments.

(11) Converting the existing building into student accommodation.

Reasons given by the Environment Court for its decision

[65] I shall explain in further detail aspects of the Environment Court’s decision when I explain my reasons for allowing the appeal, and my reasons for disallowing the majority of the building owner’s grounds of appeal. For present purposes I shall summarise the Environment Court’s decision by quoting paragraph [140] of its judgment in which it distilled its reasons for dismissing the building owner’s appeal

to seven points:⁴⁴

[1] The building has high heritage values, because of its architectural character and design. Its exterior is original and in a very good state. It contributes strongly to streetscape.

[2] It does have significant seismicity issues and, if it is to be retained, it must be brought up to an acceptable percentage of NBS. We do not accept that the possibility of this building pounding the HSBC Tower, of itself, adds to a justification to demolish.

[3] The District Plan provisions relevant to heritage are very strongly expressed, discouraging demolition and having total demolition to be considered only when the decision-maker is convinced that there is no reasonable alternative.

[4] Sections 6 and 7 of the [Resource Management Act] are also strongly expressed – requiring the decision-maker to consider what might be an appropriate use or development that would overcome the nationally important protection of historic heritage, which is otherwise to be recognised and provided for, and requiring particular regard to be had to the s 7 matters we have discussed.

[5] We recognise that in its present state the building cannot support itself financially, let alone make an acceptable return on funds invested for its owner. But nor is that a reason, without more, to justify demolition. The District Plan, and s 6, require the alternatives to be exhaustively and convincingly excluded before demolition can be justified.

[6] While possible reuse as an office/retail building, and other adaptive reuses, have been considered, we cannot be satisfied that they have been explored other than with a handicap imposed by a rigidly set bottom-line figure being demanded for the land and building as they are.

[7] The Historic Places Trust, admittedly as a second best, has indicated that a sensitive retention of the building’s facades may be acceptable, but that position has not been adequately explored.

Part 3

Principles which govern the way I must decide this appeal

[66] In Bryson v Three Foot Six Ltd, the Supreme Court discussed what amounted to a question of law for appeal purposes.⁴⁵ The Supreme Court has revisited this topic on other occasions such as in R v Gwaze⁴⁶ and Vodafone New Zealand Ltd v Telecom New Zealand Ltd.⁴⁷ From these authorities, and for present purposes I note that an error of law may arise if the Environment Court has:

(1) misdirected itself when making a decision pursuant to the requirements of the Resource Management Act or any other relevant legislation;⁴⁸

(2) failed to take into account a matter required by the Resource

Management Act or any other relevant legislation; or

(3) reached a factual finding that was “so insupportable – so clearly untenable – as to amount to an error of law”.⁴⁹

[67] The building owner faces a high hurdle in relation to any ground of appeal based on the contention that the Environment Court did not give appropriate weight to the evidence put before it. My task is not to question the weight which the Environment Court placed on the evidence, but to determine whether or not any one of the 15 grounds of appeal advanced by the building owner constitutes a material

_{error of law.}

⁴⁵ _{Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [24]- [27].}

⁴⁶ _{R v Gwaze [2010] NZSC 52, [2010] 3 NZLR 734 at [50].}

47. Vodafone New Zealand Ltd v Telecom New Zealand Ltd [2011] NZSC 138, [2012] 3 NZLR 153 at [51].

⁴⁸ _{Bryson v Three Foot Six Ltd, above n 45, at [24].}

⁴⁹ At [26].

Reasons for allowing the appeal

First successful ground of appeal

[68] The sixth and 10th grounds of appeal allege:

(1) The Environment Court acted unreasonably in its interpretation of the expressions, “is convinced there is no reasonable alternative to total demolition”, and “every reasonable alternative solution has been considered” in the Council’s District Plan.⁵⁰

(2) The Environment Court erred by applying the wrong legal testing in considering the building owner’s appeal and setting the bar to granting consent at such a high level that the practical consequence was to make the granting of consent impossible.

[69] These two grounds of appeal can be conveniently dealt with together.

[70] In the conclusion of its judgment, the Environment Court said “the District Plan, and s 6 [of the Resource Management Act] require the alternatives to be exhaustively and convincingly excluded before demolition can be justified”.⁵¹

[71] In my assessment the Environment Court erred when it said the alternatives to demolition were to be “exhaustively and convincingly excluded”. This test does not reflect s 6 of the Resource Management Act or the District Plan.

Section 6 of the Resource Management Act

[72] Section 6 of the Resource Management Act requires those who exercise powers under the Resource Management Act to recognise and provide for, amongst other matters, “the protection of historic heritage from inappropriate subdivision and

_{development”. The parties and the Environment Court have proceeded on the basis}

⁵⁰ _{Clauses 20.2.1.2 and 21A.2.1.1.8.}

⁵¹ Lambton Quay Properties Nominee Ltd v Wellington City Council, above n 5, at [140.5].

that demolition of the Harcourts Building is a “use” or “development” within the

meaning of s 6 of the Resource Management Act.⁵² I agree with this approach.

[73] In this case s 6 of the Resource Management Act requires the consent authority to ensure heritage buildings are only demolished in appropriate circumstances. “Appropriate” in this context means the consent authority approves a demolition of a heritage building only when it is “proper” to do so.⁵³ In my assessment this requires the consent authority to ensure its consideration of an application to demolish a heritage building is founded upon an assessment of

whether or not demolition is a balanced response that ensures all competing considerations are weighed, and the outcome is a fair, appropriate and reasonable outcome.

[74] Section 6 of the Resource Management Act does not mean a consent authority is required to “exhaustively and convincingly exclude” alternatives to demolition before granting resource consent to demolish a heritage building. The statutory requirement for a consent authority to recognise and provide for the protection of historic heritage is a less onerous obligation than the Environment Court’s “exhaustively and convincingly” test for excluding alternatives to demolition of a heritage building. In my assessment the Environment Court overstated the effect of s 6 of the Resource Management Act.

The District Plan

[75] The Environment Court also misinterpreted the meaning of cl 20.2.1.2 of the heritage provisions in the District Plan. That clause required the consent authority to give “consideration to total demolition [of the Harcourts Building] only if it was convinced that there [was] no reasonable alternative to total demolition ...”.

[76] The Environment Court had recognised at other places in its judgment that

_{the District Plan allowed consideration of “... total demolition ... only where the}

⁵² _{Universal College of Learning v Wanganui District Council [2010] NZEnvC 291 at [142].}

⁵³ Definition of “appropriate” in The New Oxford English Dictionary, Lesley Brown (ed),

Clarendon Press, Oxford 1993.

decision-maker is convinced there is no reasonable alternative”.⁵⁴ However, when the Environment Court stated in bullet point five of paragraph [140] what it understood to be the requirements of the District Plan, it employed words that did not accurately reflect the requirements of the District Plan. By omitting any reference to “reasonable alternatives” to demolition in bullet point 5 of paragraph [140] in its judgment, the Environment Court imposed a test that is materially higher than the threshold set by cl 20.2.1.2 of the District Plan.

[77] I have carefully considered whether or not the Environment Court’s erroneous statement of the test in bullet point five of paragraph [140] of its judgment was merely an unintended oversight. In considering this issue I have been driven to conclude that the Environment Court must have deliberately used the words that are in bullet point five of paragraph [140] of its judgment. However the Environment Court provided no explanation for departing from its earlier correct statements of the

meaning of cl 20.2.1.2 of the District Plan.⁵⁵

[78] Thus I have been faced with a situation in which the Environment Court has stated two tests that it might have applied when considering the building owner’s case. Those two tests are not reconcilable because the test set out in bullet point five of paragraph [140] of the Environment Court’s decision makes no reference to reasonable alternatives to demolition which is a clear requirement of s 6 of the Resource Management Act and cl 20.2.1.2 of the District Plan.

[79] In this situation I must allow the appeal for two reasons:

(1) I cannot decide which of the two tests was actually applied by the

Environment Court. Because I am left in genuine doubt about which test the Environment Court actually applied I must allow the appeal.

54. Lambton Quay Properties Nominee Ltd v Wellington City Council, above n 5, at [140.3]. See also [108] and [139].
55. There is also no explanation for the Environment Court departing from the analysis undertaken by the Hearing Commissioners in the Report of Hearing Commissioners, above n 13, at [275]:

...Whilst we agree with the submission of the [building owner] that it is not required to exhaustively consider all alternatives or conduct a full cost-benefit analysis of alternative locations and methods, we do not consider that all reasonable alternatives have been adequately considered.

(2) If the Environment Court applied the test recorded in bullet point five of paragraph [140] of its judgment then it applied the wrong legal test when considering the building owner’s appeal. By applying the wrong legal test it acted unfairly by requiring the building owner to discharge too high a burden.

Second successful ground of appeal

[80] The eighth ground of appeal alleges that the Environment Court erred by determining that “the tension” between the Building Act and the Resource Management Act was not resolvable.

[81] The Environment Court did not attempt to reconcile the two legislative regimes. Instead, the Environment Court concluded that s 124 of the Building Act could not be reconciled with the provisions of the Resource Management Act that govern the consent authority’s consideration of the building owner’s application to demolish the building. The Environment Court resigned itself to what it described

as:⁵⁶

... another demonstration that [the Resource Management Act] provides mechanisms to manage development from the point of view of effects on the environment, and the other statute may independently govern other aspects of the use of resources. Having a permit under one statute will not necessarily be matched by one under another.

[82] The Environment Court referred to the “tension” and “inherent irony” in the requirements of s 124 of the Building Act and the consent provisions of the Resource Management Act.⁵⁷ There is obvious “inherent irony” between the earthquake-prone building provisions of the Building Act and the decisions made to date in this case. On one hand the Council has issued the Building Act Notice requiring the building owner to strengthen or demolish the Harcourts Building. Failure to comply with the Building Act Notice may result in the building owner being prosecuted and/or the Council applying for authority to demolish the building. On the other hand, the

consent authority, acting under delegated authority from the same Council, has

decided to decline the building owner’s application for resource consent to demolish

the building because of the way in which the heritage provisions of the District Plan have been interpreted and applied.

[83] The Trust submitted that the approach taken by the Environment Court on this point was consistent with that followed by Tipping and Chisholm JJ in Christchurch International Airport Ltd v Christchurch City Council.⁵⁸ In that case the Christchurch City Council wanted to use the powers conferred on it by the Resource Management Act to impose conditions over and above those powers set by the now repealed Building Act 1991 on those who wished to build homes near the Christchurch Airport so as to restrict the effects of noise from the airport on their homes. The Full Court held that the power conferred on the consent authority by the

Resource Management Act that enabled it to impose conditions when granting resource consents could not negate the express provisions of the Building Act 1991, which limited building performance criteria to those contained in the Building Code. Tipping J said:⁵⁹

The only sensible and effective way to harmonise the potentially conflicting provisions of ... the Building Act [1991] and, ... the Resource Management Act, is to focus on the different purposes of each statute. Reduced to the simplest level relevant to the present case, the Building Act allows a council to control building work in the interests of ensuring the safety and integrity of the structure, whereas the Resource Management Act allows the council to impose controls from the point of view of the activity to be carried out within the structure and the effect of that activity on the environment and of the environment on that activity.

[84] The Trust submitted that in this case I should take a similar approach and conclude the earthquake-prone building provisions of the Building Act and the consent provisions of the Resource Management Act reflect different legislative purposes. The Trust argued the Environment Court was correct by saying the provisions of the Building Act could not legitimately influence the basis upon which the consent authority considered the building owner’s application to demolish the Harcourts Building.

[85] In my view this approach was incorrect. The provisions of the Building Act and the consent provisions of the Resource Management Act are not completely irreconcilable.

[86] When Parliament enacted ss 124 to 130 of the Building Act relating to earthquake-prone buildings it conferred powers on the Council to:

(1) identify earthquake-prone buildings; and

(2) force owners of such buildings to remedy the potential hazards created by those buildings.

This reflects one of the purposes of the Building Act, namely the setting of standards for buildings to ensure “people who use buildings can do so safely and without endangering their health”.⁶⁰

[87] One of the purposes of the Resource Management Act is the management of physical resources in a way that enables people and communities to provide for their safety.⁶¹ The assessment criteria and the relevant portions of the District Plan refer to the need for the Council to consider, amongst other matters, “structural stability” of a heritage building,⁶² and the “public interest in ... providing a high quality, safe urban environment” (emphasis added).⁶³ The District Plan also requires the Council to “give consideration to total demolition ... only where the Council is convinced there is no reasonable alternative to total demolition”.⁶⁴ These provisions make it clear that public safety is a factor that a consent authority needs to consider when

_{assessing an application to demolish a heritage building.}⁶⁵

⁶⁰ _{Building Act 2004, s 3(a).}

⁶¹ _{Resource Management Act 1991, s 5(2).}

⁶² _{District Plan, cl 21A.2.1.8.}

⁶³ _{Clause 21A.2.1.22.}

⁶⁴ _{Clause 20.2.1.2.}

⁶⁵ The consent authority did consider public safety in its report. See Report of Hearing

Commissioners, above n 13, at [256]:

...Witnesses, including the Applicant’s engineer [Mr Clark], noted the need for a detailed seismic assessment of the building. Without a detailed seismic assessment to confirm the current seismic status of the building we have not been persuaded that the Harcourts building, in its present state, presents an unacceptable risk to either the HSBC tower building or to public safety.

[88] There is some degree of commonality between the overriding purposes of the Building Act and the relevant purposes in the Resource Management Act. There is also commonality between the public safety objectives of the Building Act and the relevant parts of the District Plan. Public safety must always prevail.⁶⁶ For this reason, when assessing the reasonable alternatives to demolition the Environment Court needed to consider the risks to public safety of nothing being done⁶⁷ to the building because of the building owner’s inability to comply with the Building Act Notice.

[89] The Environment Court erred by not reconciling the relevant provisions of the Resource Management Act with the Building Act. However, to found a successful appeal, the error of law must be material. The materiality of the Environment Court’s error must be assessed by examining the consequences of that error.

[90] The consequence of the Environment Court’s error was that it put the effects of the relevant provisions of the Building Act to one side and only focused upon the options of the building being demolished or strengthened. When it only focused upon these two options, the Environment Court did not consider that the building owner had said it could not feasibly comply with the Building Act Notice requirement to strengthen the building. Therefore the Environment Court failed to take into account the realistic possibility of the building being left as it is until such time as the Council takes steps to enforce the Building Act Notice or until the Council applies for consent to demolish the building.

[91] In my assessment, the consequences of the building owner doing nothing because of its inability to comply with the Building Act Notice was an important consideration because it requires a careful analysis of the risks to public safety and surrounding buildings. Mr Ian Smith’s evidence clearly explained that even if the

_{building survives a moderate earthquake it is likely to be a source of “injury to life}

⁶⁶ At [64(a)] of her statement of evidence, Ms Neill for the Trust agreed when she said that the

_{Trust “is mindful that public safety is paramount”.}

⁶⁷ At [51] of its judgment the Environment Court restated the evidence of the civil engineers who were unanimous in their view that the Harcourts Building must be strengthened. In referring to this evidence the Environment Court said “doing nothing is not a viable option”, but then did not expand on that finding.

and other property”.⁶⁸ I appreciate the Environment Court did refer to “the risk to life and limb and other property in the event of a major earthquake” (emphasis added) if the building were not strengthened.⁶⁹ The Environment Court also said that retaining the building without strengthening it would “not promote a safe urban environment”.⁷⁰ However, the Environment Court failed to take into account Mr Ian Smith’s evidence about the likely performance of the Harcourts Building in a moderate earthquake or the consequences of the building owner not being able to comply with the Building Act Notice.

[92] Had the Environment Court taken into account the realistic possibility of the building being left as it is until July 2027, then the Environment Court would have at the very least considered the risks to the safety of the public and surrounding buildings which Mr Ian Smith carefully explained in his evidence. By not fully considering this issue the Environment Court failed to take into account a relevant and important matter. This was a material error of law.

Reasons for dismissing remaining grounds of appeal

[93] In its first, second, third, seventh and ninth grounds of appeal the building owner alleges that the Environment Court erred in law:

(1) by misinterpreting ss 87A(3), 104 and 104C of the Resource

Management Act and the relationship between those sections and Part

2 of the Resource Management Act;

(2) in determining that consideration of the principles of Part 2 of the Resource Management Act is restricted to matters over which the consent authority has reserved its discretion;

(3) in determining that the combination of s 104C of the Resource

_{Management Act and r 21A.2.1 of the Council’s District Plan meant}

⁶⁸ _{Statement of evidence of I Smith, 15 July 2013 at [34].}

⁶⁹ _{Lambton Quay Properties Nominee Ltd v Wellington City Council, above n 5, at [100].}

⁷⁰ At [112].

that the only matters that could be legitimately considered were matters relating to historic heritage;

(4) by elevating the heritage provisions of the District Plan to a position of pre-eminence in respect of which the remaining provisions of the District Plan were subordinate; and

(5) in failing to have regard to the provisions of s 5 of the Resource Management Act and in failing to have regard to all of the relevant provisions of ss 6 and 7 of the Resource Management Act.

[94] The first, second, third, seventh and ninth grounds of appeal advanced by the building owner have some degree of overlap and can conveniently be dealt with under the heading “The role of Part 2 of the Resource Management Act”.

The role of Part 2 of the Resource Management Act

[95] The debate about what role (if any) Part 2 of the Resource Management Act plays in relation to applications for resource consent in relation to restricted discretionary activities stems from the way in which ss 87A, 104 and 104C of the Resource Management Act are drafted.

[96] In Woolley, Randerson J held that the wording of the now repealed s 77B(3) of the Resource Management Act only allowed the provisions of Part 2 of the Resource Management Act to be taken into account in deciding to decline an application for a resource consent for a restricted discretionary activity.⁷¹ It is this part of Randerson J’s judgment that Parliament focused upon when it enacted s 87A

_{so that the legislation now refers to decisions “to decline consent, or grant consent”.}

⁷¹ The effect of Woolley was considered by French J in Ayrburn Farm Estates Ltd v Queenstown

Lakes District Council [2012] NZHC 735, [2013] NZRMA 126 at [98]. French J said:

What Woolley prohibits is the use of a Part 2 matter as an additional ground to decline consent, [that is,] additional to the matters for discretion. To put it another way, Part 2 cannot extend the range of grounds for declining a consent beyond those specified in the Plan. It cannot bring additional matters into play, except when it comes to granting a consent.

Ayrburn was decided after the enactment of ss 87A and 104C of the Resource Management Act. French J’s judgment was, however, concerned with the law as it stood prior to the enactment of those sections. French J did not need to consider the meaning of the new provisions.

[97] The building owner submits s 104 requires Part 2 of the Resource Management Act to be taken into account when a consent authority considers any application for resource consent. In my assessment ss 87A and 104C of the Resource Management Act mean that when a consent authority considers an application for a restricted discretionary activity it “must consider only those matters over which ... it has restricted the exercise of its discretion in its Plan ...” (emphasis added). The language of s 104C of the Resource Management Act plainly limits the matters the consent authority must take into account when considering and determining an application for resource consent for a restricted discretionary activity.

[98] The words in ss 87A and 104C suggest that Parliament has precluded the consent authority from relying on the provisions of Part 2 of the Resource Management Act as additional grounds when considering an application for resource consent for a restricted discretionary activity.

[99] As Randerson J explained in Woolley, Part 2 of the Resource Management Act does not apply when it “... is clearly excluded or limited in application by other specific provisions of the [Resource Management Act]”.⁷²

[100] Therefore I am driven to conclude that when Parliament passed s 87A of the Resource Management Act it overturned the part of Woolley that limited the effect of s 77B(3) to decisions to decline applications for resource consent in relation to restricted discretionary activity. By repealing s 77B(3) and enacting s 87A of the Resource Management Act, Parliament intended that s 104C would apply to decisions to grant and decline resource consents for restricted discretionary activities. As a consequence, the factors in Part 2 of the Resource Management Act cannot be taken into account as additional grounds to grant or decline an application to undertake a restricted discretionary activity.

[101] However, Part 2 of the Resource Management Act can be used to inform those parts of the District Plan that are consistent with or compliment Part 2 of the Resource Management Act. One effect of ss 87A and 104C is that a consent

_{authority cannot rely on the provisions of Part 2 of the Resource Management Act to}

⁷² Auckland City Council v John Woolley Trust, above n 17, at [47].

override the matters the consent authority has specified in its District Plan in relation to restricted discretionary activities.

[102] In view of my explanation of the law concerning the interrelationship between ss 87A(3), 104, 104C and Part 2 of the Resource Management Act, I conclude:

(1) The Environment Court did not misinterpret ss 87A(3), 104 and 104C of the Resource Management Act and the relationship between those sections and Part 2 of the Resource Management Act.

(2) The Environment Court did not misinterpret the role of Part 2 in the context of this case.

(3) The Environment Court did not confine its decision to matters relating to historic heritage.

(4) The Environment Court referred to the principles set out in Part 2 of the Resource Management Act throughout its judgment. Although it did not specifically refer to s 5 of the Resource Management Act it did refer to the relevant provisions of that section. The Environment Court referred to “sustainable management”;⁷³ the “overall judgment”

approach;⁷⁴ “social and cultural” values;⁷⁵ “economic” effects and

benefits;⁷⁶ “amenity”; ⁷⁷ and “efficient” use.⁷⁸

[103] For these reasons the first, second, third, seventh and ninth grounds of appeal must be dismissed.

⁷³ _{Lambton Quay Properties Nominee Ltd v Wellington City Council, above n 5, at [18].}

⁷⁴ _{At [26].}

⁷⁵ _{At [39] and [94].}

⁷⁶ _{At [51], [91], [93]-[94] and [110].}

⁷⁷ _{At [101], [117] and [139].}

⁷⁸ At [117], [123] and [139].

Remaining grounds of appeal

[104] The fourth ground of appeal alleges the Environment Court erred when it determined that the assessment criteria in the District Plan were not matters over which discretion is reserved. This ground of appeal fails because the building owner has not demonstrated the Environment Court made a material error of law in relation to this issue.

[105] The fifth ground of appeal alleges the Environment Court erred in determining that criterion 21A.2.1.8 was the “nub of the argument” particularly in relation to viable alternatives. This ground of appeal fails because I am satisfied this was not intended to convey that it was the only consideration that the Environment Court took into account. Indeed, the Environment Court proceeded to give consideration to the remaining assessment criteria relevant to its determination.

[106] I have not found it necessary to provide a detailed response to the 11^th ground of appeal, which alleges the Environment Court erred by failing to take into account that in its present state the Harcourts Building is incapable of reasonable use and imposes an unfair burden on the building owner. To some extent, the answer to the

11^th ground of appeal is subsumed within the answer that I have provided in relation

to the eighth ground of appeal.

[107] The 12^th ground of appeal alleges that there was not any evidence to support the Environment Court’s finding that the building owner had imposed a rigidly set bottom line figure being demanded for the sale of the building. This ground of appeal involves an evaluation of evidence and cannot be sustained. The building owner acknowledged that this was not its strongest ground of appeal.

[108] The 13^th ground of appeal alleges the Environment Court erred by failing to take into account both the detailed analysis of the behaviour of the Harcourts Building during a seismic event and the prediction of the model used in the detailed analysis that there was a likelihood of failure of the Harcourts Building in a moderate earthquake. The answer to this ground of appeal is effectively subsumed within the answer I have provided to the eighth ground of appeal, which I have explained in paragraphs [80] to [92] of this judgment.

[109] The 14^th ground of appeal alleges the Environment Court erred by failing to take into account the burden imposed on the building owner by requiring the building owner to promote the public good by retaining heritage without contribution from the beneficiaries of that public good and without any benefit to the building owner from promoting that public good. The 14^th ground of appeal involves issues of legislative policy which are beyond my jurisdiction.

[110] The 15^th ground of appeal alleges the Environment Court’s decision was so unreasonable that no reasonable decision-maker could have reached the same decision considering the evidence before it and properly directing itself as to the law. The 15^th ground of appeal cannot be answered in favour of the building owner. The building owner’s 15^th ground of appeal is better described as a complaint against the way in which the Environment Court evaluated the evidence before it. That does not constitute an appealable question of law.

Conclusion

[111] The appeal is allowed.

[112] Consistent with the normal course taken in cases such as this I remit the decision back to the Environment Court for rehearing.⁷⁹ When rehearing the building owner’s application the Environment Court must:

(1) give consideration to demolition of the building only if it is convinced that there is no reasonable alternative to total demolition.

(2) give consideration to the risk to public safety and surrounding buildings if the Harcourts Building remains as it is.

[113] The building owner is entitled to costs on a scale 2B basis. Those costs are to be split evenly between the Council and the Trust.

⁷⁹ Royal Forest and Bird Protection Society Inc v W A Habgood Ltd (1987) 12 NZTPA 76 (HC).

_{D B Collins J}

Solicitors:

Con Anastasiou, Wellington for Appellant

DLA Phillips Fox, Wellington for Respondent

Minter Ellison Rudd Watts, Auckland for Section 274 Party

_{Appendix 1}

The 15 grounds of appeal

(1) The Environment Court erred in law by misinterpreting ss 87A(3), 104 and

104C of the Act and the relationship between those sections and Part 2 of the

Act.

(2) The Environment Court erred in determining that consideration of the principles of Part 2 of the Act is restricted to matters over which the consent authority has reserved its discretion.

(3) The Environment Court erred in law in determining that the combination of s

104C of the Act and r 21A.2.1 of the Council’s District Plan meant that the only matters that could be legitimately considered were matters relating to historic heritage.

(4) The Environment Court erred in law when it determined that the assessment criterion in the District Plan were not matters over which discretion is reserved.

(5) The Environment Court erred in law when determining that criterion

21A.2.1.8 was the “nub of the argument” particularly in relation to viable

alternatives.

(6) The Environment Court erred in law in its interpretation of the expressions, “is convinced that there is no reasonable alternative to total demolition”, and “every reasonable alternative solution has been considered”, in the Council’s District Plan (cls 20.2.12 and 21A2.1.8).

(7) The Environment Court erred in law by elevating the heritage provisions of the District Plan to a position of pre-imminence in respect of which the remaining provisions of the District Plan were subordinate.

(8) The Environment Court erred in law by determining that “the tension”

between the Building Act and the Act was “irresolvable”.

(9) The Environment Court erred in law in failing to have regard to the provisions of s 5 of the Act and in failing to have regard to all of the relevant provisions of ss 6 and 7 of the Act.

(10) The Environment Court erred in law by applying the wrong legal test in considering the building owner’s appeal and setting the bar to granting consent at such a high level that the practical consequence was to make the granting of consent impossible.

(11) The Environment Court erred in law by failing to take into account that in its present state the Harcourts Building is incapable of reasonable use and imposes an unfair burden on the building owner.

(12) There was no evidence to support the Environment Court’s finding that the building owner had imposed a rigidly set bottom line figure being demanded for the sale of the building.

(13) The Environment Court erred in law by failing to take into account the detailed analysis of the behaviour of the Harcourts Building during a seismic event and the prediction of the model used in the detailed analysis that there was a likelihood of failure of the Harcourts Building in a moderate earthquake.

(14) The Environment Court erred in law by failing to take into account the burden imposed on the building owner by requiring the building owner to promote the public good of retaining historic heritage without contribution from the beneficiaries of that public good and without any benefit to the building owner from promoting that public good.

(15) The Environment Court’s decision was so unreasonable that no reasonable decision-maker could have reached the same decision considering the evidence before it and properly directing itself as to the law.