Business Session 1: Legal Updates. LAPA Conference 2018 Duncan Laing

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Frederick Francis
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1 Business Session 1: Legal Updates LAPA Conference 2018 Duncan Laing

2 Legal Updates Subdivision arrangements Public Works Act 1981 & offer back Reserves Act 1997 & Crown Minerals Act 1990 Negligence in relation to tree removal Claiming costs

3 Subdivision arrangements Tenants in common & encumbrances Conversion of a cross lease to fee simple

4 Spark New Zealand Trading Ltd v Clearspan Property Assets Ltd Typically telecommunications companies hold a lease over the small piece of land where the tower is. Clearspan was in the business of taking over these leases. 2 titles for the land were issued to the owners as tenants in common. Clearspan has exclusive possession of a 42m2 lot, on which there was a Spark cellphone tower. Spark applied to the EnvC for a declaration that the arrangement was a subdivision under the RMA. Purchased a 5.25% stake in a property in Auckland. Rights to exclusive use for each lot were recorded in encumbrances. This gave Clearspan leverage when negotiating site rental. If it was a subdivision, it did not comply with the requirements in the RMA.

5 Spark New Zealand Trading Ltd v Clearspan Property Assets Ltd Environment Court High Court Court of Appeal Subdivision Not a subdivision Not a subdivision

6 Spark New Zealand Trading Ltd v Clearspan Property Assets Ltd If local authorities want to restrict or regulate these kind of arrangements, they might attempt to do so in district plans. 1 The words of section 218 are very clear. 4 These arrangements remain outside the scope of subdivision in the RMA. 2 The sale was not of the fee simple to part of the allotment. 3 The transfer of an undivided interest in land involves the sale of an undivided share to the whole of the allotment.

7 Re McKay Application for a declaration that the conversion of cross lease titles to fee simple titles are not a subdivision. This would mean that a resource consent would not be required. Application declined by Judge Kirkpatrick in the Environment Court. Conversion of cross leases to fee simple titles are a subdivision. The conversion necessarily involves the subdivision of land. Conversion of a cross lease to a fee simple requires the division of the underlying allotment. Cross leases create undivided shares in land for tenants in common, and then separate leasehold interests for each dwelling on the land. Section 218 of the RMA - subdivision of land involves: The division of an allotment by one of five specified methods in section 218(1)(a); or an application for a separate certificate of title for land shown as a separate allotment on a survey plan.

8 Subdivision key messages Tenants in common & encumbrances Not a subdivision Could be controlled in a district plan? Conversion of a cross lease to fee simple Subdivision A conversion is unlikely to have any material environmental implications, so a full assessment of affects on the environment under section 104 is probably not required. A paired-back assessment is likely to be sufficient.

9 Negligence in relation to tree removal Plaza Investments Ltd v Queenstown Lakes District Council

10 Plaza Investments Ltd v Queenstown Lakes District Council Negligence 1. Did the council owe a duty of care? 2. If it did, what was the standard of care? 3. Was the duty of care breached? Council became aware that the tree was at risk. Council became aware that visual assessments might show different results to internal tests. Tree fell, causing damage to the Lakeside Motel across the road.

11 Plaza Investments Ltd v Queenstown Lakes District Council High Court District Court The Council owed a duty of care. Acted reasonably by taking and following expert advice. The duty had not been breached. Duty of Care Duty to take reasonable steps to prevent and minimise known hazards on its land from causing damage to its proximate neighbours. Standard Take such steps as are reasonable for a local authority with similar hazards, powers and resources. Breach Council had breached its duty of care. Liable for the sum required to repair the motel.

12 Duty of care key messages 1. Local authorities should follow report recommendations on hazards, because the reports provide detail on what action might be needed to discharge a duty of care. 2. A local authority following its tree removal policy does not mean that it has discharged its duty of care. 3. The standard of care that applies to one council will not be the same as that that applies to another. The standard will depend upon the hazards, powers and resources available to the council.

13 Public Works Act 1981 Section 40 - offer back Aztek Ltd v The Attorney-General

14 Aztek Ltd v The Attorney-General Was the Crown exempt from offering back the land to Aztek Ltd? Land acquired from Aztek Ltd Aztek Ltd struck of the New Zealand Register Decision made that the land was no longer required for the purpose it was acquired Aztek Ltd reinstated to the New Zealand Register 1 2 Did the fact that Aztek Ltd was struck-off mean it was impractical to offer back? Is there an obligation to send notice to the company s former office and/or its former director/shareholder advising that the land is no longer required?

15 Aztek Ltd v The Attorney-General Companies Act 1993 Section 15 A company continues in existence as a legal entity in its own right until it is removed from the Register. Section 330(2) A company restored to the Register shall be deemed to have continued in existence as if it had not been removed from the Register. Public Works Act 1981 Section 40 - summary Where land held is not required for the public work, the chief executive of the department or local authority shall endeavour to sell the land to the person from whom it was acquired, or the successor of that person, unless he/she considers it would be impracticable, unreasonable or unfair to do so. Decision how section 40 works 1. First, identify the person from whom the land was acquired. 2. Endeavour to sell it to them, unless it is impractical to do so. 3. It is impractical to offer the land back to a company that has been struck-off. 4. It is too difficult to consider former shareholders or directors of a company as successors for the purposes of s 40. KEY MESSAGE Local authorities are not required to offer-back to a company that is struck-off.

16 Claiming costs Palmerston North City Council v Hardiway Enterprises Ltd

17 Palmerston North City Council v Hardiway Enterprises Ltd 2004 Brian Green Properties Ltd wanted to create a subdivision. Hardiway owned 70m 2 strip preventing completion of access road. LVT found the land was worth $36, Council applies to put Hardiway into liquidation. Liquidator s report noted that its only asset was the land. Council applies to the High Court Council moved to acquire the strip under the PWA. Hardiway and Council could not agree on what it was worth Court of Appeal confirmed land was worth $36,000 and ordered Hardiway to pay costs of $84,000. It never paid Council goes after Les Fugle for legal costs. Fugle s family trust owned Hardiway.

18 Palmerston North City Council v Hardiway Enterprises Ltd 1 The High Court had to decide whether the Council was entitled to claim its legal costs from Fugle in respect of the LVT and High Court proceedings. 2 3 Williams J found that the Council was entitled to claim High Court costs from Fugle, but not LVT costs. However, because of the significant delay, in the Council making the application to the High Court, the application was dismissed. Key message Local authorities should not delay claiming costs, especially against third parties.

19 Reserves Act 1997 Crown Minerals Act 1991 Royal Forest and Bird Protection Society of New Zealand Inc v Rangitira Developments Inc

20 Royal Forest and Bird Protection Society of New Zealand Inc v Rangitira Developments Inc In order to proceed with mine, Rangitira needed an access arrangement from the Council. Arrangement would permit entry to and use of the reserve for a mine and access road. Crown Minerals Act 1990 Section 60(2) In considering whether to agree to an access arrangement, an owner or occupier of land (other than Crown land) may have regard to such matters as he or she considers relevant. Reserves Act 1977 Section 23(2) summary Every local purpose reserve shall be administered and maintained under the appropriate provisions of this Act. Where scenic, historic, archaeological, biological, or natural features are present on the reserve, those features shall be managed and protected.

21 Royal Forest and Bird Protection Society of New Zealand Inc v Rangitira Developments Inc Decision Whether the Council was bound to make its decision on the access arrangement: (a) in accordance with section 23 of the Reserves Act; or (b) whether section 23 was only a factor to be taken into account when making a decision under section 60(2) of the Crown Minerals Act. Crown Minerals Act Section 60(2) is a permissive provision. 2. The section lacks the prescriptive language that would be expected if Parliament s intention was to use the section to override another piece of legislation applying to the land over which access was sought. 3. Section 60(2) does not free the land-owner from otherwise applicable constraints on decision making, such as s 23 of the Reserves Act. Reserves Act S 23(2) states that every local purpose reserve shall be administered in accordance with the provisions of the Act in order to manage and protect the reserve s features. 2. It is a directive provision and the Council is obliged to give effect to its terms. 3. This means the Council cannot enter into an access arrangement that is incompatible with the principal purpose of the reserve. It must give effect to s 23 of the Reserves Act.

22 Reserves Act 1977 key messages 1. Section 23(2) is not just a factor to be taken into account. 2. A local authority s decisions on access arrangements under the Crown Minerals Act must give effect to the Reserves Act. 3. This means that a reserve must be administered in a way that protects its features. The Court did not state what protection of features would actually involve. The parties had relied on hypothetical examples, so the Court refrained from making a declaration on this issue.

Duncan Laing Special Counsel Wellington DDI +64 4 924 3406

23 Duncan Laing Special Counsel Wellington DDI Mob duncan.laing@simpsongrierson.com

Offer-back under the Public Works Act - a re-appraisal?

Property, real estate & construction 05 August 2008 Offer-back under the Public Works Act - a re-appraisal? The owners of land held under the Public Works Act 1981 (PWA) may have greater security of investment