About

Watercare is working with various interested parties to deliver improved wastewater services to enable the Redhills area to be extensively developed with the introduction of close to 10,000 residential properties.

Hadleigh Yonge is leading Greenwood Roche’s team which is advising Watercare on aspects of this project, including providing strategic advice, negotiating and acquiring property rights, and advising on and negotiating infrastructure funding agreements.

The Northern Corridor Improvements Project is part of the Government’s accelerated package of transport infrastructure improvements for Auckland and includes the upgrading of the connection between State Highway 1 and State Highway 18, the extension of the Northern Busway and additional lanes on State Highway 1.

Hadleigh Yonge is leading Greenwood Roche’s team which is advising on aspects of this project, including negotiating and acquiring property rights, and advising on and dealing with issues relating to compensation.

The project involved significant negotiation with a prominent New Zealand developer, resulting in a number of transaction agreements, which included careful risk mitigation measures to remove leasetail issues.  Multiple parties were involved in the transaction with the property being sold to an overseas buyer before completion of the building by the developer. The transaction resulted in a new premises that aligned with the company’s values, and included an innovative and energy efficient design and flexible working space with light and views across Auckland city.

The property comprises two office towers (one tower has 22 levels and the other has 17 levels) located on the busy intersection of Queen Street and Victoria Street and accommodates approximately 60 tenants.

Horizon Oil, already the holder of a 10% participating interest in the producing Maari/Manaia fields, has acquired an additional 16% interest from Todd Energy as a result of Todd’s rationalisation of its Taranaki oil and gas assets.  OMV (operator) and Cue Taranaki hold the balance.
 
Brigid and Rachel advised on the requisite Overseas Investment Office sensitive land application and the application for Ministerial consent under the Crown Minerals Act, and assisted Horizon Oil’s General Counsel with certain other closing matters.  Following the obtaining of these regulatory consents, closing was successfully completed on 31 May 2018. 
 
The Maari and Manaia fields have offered stable oil production since 2009 and stable employment opportunities for over 100 people.  As at November 2017, gross field production stood at 8,840bpd of oil.  Gross projected 2P reserves were at 21 mmbls and 2C reserves of oil at 69 mmbls, as at 30 June 2017.  Since 2017 the joint venture has been undertaking field optimisation work as part of the Maari Production Improvement Program.

Greenwood Roche acted for Arise on the construction of its distinctive new build church, the Arise Centre, in Petone, Wellington. 
 
The Arise Centre has now received an NZIA Local Architecture Award, recognising the Centre as being amongst the best new architecture in Wellington.  The “new take” on church architecture enables the congregation to be brought together in a large space where it can make some noise.  Located in a relatively sparse former industrial space, the building comes into its own at night, imbued with a golden light.
 
The Greenwood Roche team for the project included partner Doran Wyatt and principal James Riddoch.

Digital Signatures

Digital signatures are a sub-category of the more general “electronic signature”. An electronic signature is any form of identification indicating acceptance in an electronic form. It may be a scanned version of a signature, the ticking of an “I Accept” option or a signature formed by a finger on a tablet or smartphone. In a New Zealand context, digital signatures are electronic signatures that generally comply with the Act. A digital signature’s compliance with the Act is authenticated by embedded software that provides assurances as to identification, reliability and of course, acceptance.

The Act provides that, subject to a few exceptions (such as affidavits, statutory declarations, powers of attorney, or wills) digital signatures are permitted under New Zealand law. The Act sanctions the general rule that any legislation requiring dealings to take place on paper will also be permitted to take place electronically, provided both parties agree and the dealings are not expressly excluded from the Act.

Section 226(1) of the Act states that a digital signature must:

• adequately identify the signatory and adequately indicate the signatory’s approval of the information to which the signature relates; and
• be as reliable as is appropriate given the purpose for which, and the circumstances in which, the signature is required.

To help provide certainty to users of digital signatures, the Act gives a rebuttable presumption of reliability if certain requirements are met. Section 228 provides that a digital signature will be presumed reliable if:

• the means of creating the digital signature are linked to the signatory and to no other person;
• the means of creating the digital signature were under the control of the signatory and no other person;
• any alteration made to that information (or the digital signature itself) after the time of signing is detectable; and
• the purpose of the signature is to provide assurance as to the integrity of the information to which it relates.

The recent Court of Appeal decision in Bishop Warden Property Holdings Limited v Autumn Tree Limited,[1] upholding an earlier High Court finding,[2] has alarmed some in the legal and business community.

Contrary to some suggestions, the case is not authority at Court of Appeal level for the novel proposition that one director alone cannot bind a company to a contract.  Nor are its particular findings expected to change too much for most ordinary business contracting, as it appears to have been decided very much on its own facts.

The case is nonetheless significant in terms of company contracting.  It reaffirms existing law and the correct interpretation of section 18 of the Companies Act 1993.  It also sends a salutary reminder to those involved in negotiating and settling contracts as to the extent of a director’s authority and as to when care should be exercised in assuming actual or apparent authority.

Key facts

The case involved an application by Autumn Tree to remove a caveat from land it owned that was subject to an unconditional sale and purchase agreement with Bishop Warden.

Autumn Tree was a company formed solely for the purpose of owning and subdividing some residential land in Meadowbank, Auckland.  This was its sole property.  The company was owned by 3 shareholders, with a Mr Zhao holding 50%, Anna 30% and Tina 20%.  Tina was sole director, seemingly as nominee for all 3 shareholders.

Removal of the caveat depended on whether or not the Agreement was valid (ie. had been validly entered into).  It was accepted that if the Agreement wasn’t valid, Bishop Warden had no interest to support its caveat and the caveat should therefore be removed.

In the space of one afternoon, late on 3 August 2017, Mr Blomfield (representing Bishop Warden) and Tina negotiated a sale and purchase of the land, valued post-subdivision at some $3.35M, for $1.1M.  Tina had explained she wanted to exit the company and did not want to proceed with the subdivision.  Mr Blomfield alleged he believed at the time, based on a company search undertaken that morning, that Tina was the sole director of Autumn Tree.

Unbeknownst to Mr Blomfield, some sort of disagreement existed between the Autumn Tree shareholders as a result of which the Companies Office records were adjusted by Autumn Tree’s accountants on instruction from Mr Zhao.  The companies register showed a transfer of Tina’s shareholding in Autumn Tree to Anna being registered just before midday on 3 August, and Anna registered as a new director around 1 pm.  Tina’s removal as a director was not recorded until 5 August, but was effective from 3 August.

The legal issue

The legal argument centred around section 18(1) of the Companies Act and its codification of the common law “indoor management rule” and the doctrine of apparent authority.  Applied to the facts, the question was whether, as one of two directors, Tina had authority to bind Autumn Tree to the Agreement.

Section 18(1) and the indoor management rule

Section 18(1) is based on the proposition that a person dealing with a company is entitled to assume that the company’s internal requirements have been complied with and its officers are acting lawfully.  Otherwise, business interactions would be greatly complicated.

To this end, section 18(1) restricts the circumstances in which a company can assert against a person dealing with it that the company, or the person held out by it as acting on its behalf, lacked authority to enter into the relevant transaction.  The company cannot cite:

1. non-compliance with the Companies Act or the Constitution;
2. that someone named as a director on the Companies Office records is not a director, has not been duly appointed, or does not have authority to exercise a power which a director of such a company customarily has;
3. that a person held out by it as a director, employee or agent has not been duly appointed or does not have authority to exercise a power which such persons customarily have in businesses of that type; or
4. that a document issued on behalf of the company by a director, employee or agent with actual or usual authority to issue the document is not valid or genuine,

Last week Minister for Housing and Urban Development Phil Twyford announced plans to establish an urban development authority in Auckland proposed for introduction by the end of this year or early next year.  The authority’s scope of powers and functions is not yet clear, however it seems likely they will include some ability to fast-track planning approval for projects.  The delivery of housing is clearly the focus for this new entity, but earlier comments from the Government indicate that urban development authorities could also deliver broader infrastructure and community projects in support of its housing focus.

While the proposed Auckland urban development authority will be the first of its kind under the new proposed legislation, it will by no means be the first or only entity empowered by special purpose legislation to fast-track development.  First touted by then Minister Gerry Brownlee as an “urban development authority”, Regenerate Christchurch is a statutory entity charged with and empowered to lead the regeneration of the Christchurch district.  While it does not have the full suite of “tools” that might be expected for an urban development authority (including land acquisition, securing funding, infrastructure development), it does have the ability to override local planning documents to expedite regeneration initiatives.

The experience of Regenerate Christchurch and CERA before it (which was given an even broader suite of powers to enable the expedited recovery of Christchurch) offers invaluable lessons to those who are charged with establishing the new urban development authority, and indeed, to those who are charged with leading it.  Tools granted by special legislation to fast track development can be very effective, both in terms of ease of delivery and in obtaining high quality outcomes.  The use of those tools can also enhance – rather than compromise – public engagement and iwi consultation on urban development projects.  This can, in turn, incentivise innovation and investment, particularly where development can be scaled.  However, as always with great power comes great responsibility.  The exercise of these powers is not without political risk.  As a result the successful use of this legislation will, as Auckland is about to find out, depend at least in part on both the political and public appetite for that risk.

The report looked at the different methods councils adopted when preparing their Consultation Documents and how effective the documents were in facilitating community participation. The report notes that effective Consultation Documents should contain clear language, be clear on which issues are subject to consultation and where to find the underlying information that the content of the document relies on.
 
The Auditor General made several observations on accessibility, length, effectiveness of grouping issues and the questions asked noting these are all important elements that will determine the success of the Consultation Documents. It also assessed the ways councils had tried to improve community participation. The report commended those who engaged with the community prior to the consultation period, focused on effective communication (e.g. using simple language), limited the number of issues consulted on and promoted the documents through advertising campaigns.  It also highlighted the need to update the community about progress on issues already consulted on.
 
In regards to the issue of resilience, the Auditor-General found that most councils acknowledged the need to consider the effects of climate change and risks from natural hazards and observed that councils are developing an understanding of their exposure to risk that will then inform investment decision-making for long-term planning processes.
 
While the Report could not be said to provide any revolutionary insight into the consultation process, it is hoped that it will help to guide councils in the development on their future plans and lead to more meaningful public participation.

Origin of Council’s current action

The Council’s current action has been triggered by a series of three decisions issued by the Environment Court between December 2017 and March this year in the case of Auckland Council v Budden.  Auckland Council sought declarations from the Environment Court confirming that the way it had been applying the AUP rules was correct.  In that regard, where restricted discretionary consent was required for works on a property located within both the SHZ and SCA Overlay, the Council had been assessing the consent application against the Overlay provisions only, as if they replaced the SHZ standards.  The Environment Court held that this approach was incorrect, declaring that:

Where a proposed activity:

1. is on a site located within both the Residential – Single House zone (“SHZ”) and the Special Character Areas Overlay – Residential (“SCAR”) of the partly operative Auckland Unitary Plan (“AUP”); and
2. is classed as a restricted discretionary activity either under Activity Table D18.4.1 or, due to its non-compliance with a SHZ or SCAR development standard, under Rule C1.9(2) –

then the relevant SHZ, SCAR and General Rules (and any relevant objectives and policies) apply, in the processing and determination of any resource consent application for the proposed activity, without the SCAR rules prevailing over or cancelling out other rules.

Status of consents granted

While Council has now changed its approach to assessing applications for restricted discretionary activities in both the SHZ and SCA Overlay so that it considers both sets of standards, it is apparent that some 430 consents were granted under its previous, now deemed to be incorrect, application of the AUP.  Importantly however, as a matter of law, the decision of the Environment Court did not overturn these consents.  It is a general principle of administrative law that all things are presumed to be correctly done.  This presumption of validity provides that a decision should be treated as valid unless set aside by a court of competent jurisdiction. 

Council’s proposed remedy

There is no authority for the Council to require consent holders to cease the exercise of their resource consents where such consents have not been overturned or found to be invalid.  While the decisions made by the Council, in accordance with its incorrect application of the AUP, are open to challenge by judicial review (for example, by aggrieved neighbours or community groups), unless and until a determination on them is made, consent holders are entitled to exercise their consent.  While it is pragmatic of the Council to reduce both its risk (as the consent authority that granted the consents in accordance with an incorrect application of the AUP) and the consent holder’s risk (as the holder of a consent granted using an incorrect approach), by requesting consent holders apply for new consents, we do not consider that there is any authority for the Council to require consent holders to do so, or to require them to stop works while their replacement consent application is determined.

If a consent holder does not apply for a replacement consent, they can continue to rely on their existing consent, recognising that there is the potential for it to be challenged on judicial review on the basis of the Environment Court’s declaration.  Even on a successful judicial review on a point of law, practically the consent holder may not be required to alter/remove its consented works as, in our experience, the Courts are less likely to meddle in granted consents where construction has been completed (depending of course on the scale of alterations/development undertaken in accordance with the consent).

The Auckland Council has indicated that consent holders should seek their own advice and we concur with that, however we accept it is somewhat inequitable to require that of consent holders who have relied on Auckland Council getting it right in the first place.  We expect to hear much more about this matter in the weeks to come.

The Decision

The long awaited decision offers clarity (for now) on the “pre-eminence” of Part 2 in assessing resource consent applications following the Supreme Court’s rejection of the overall broad judgment approach in the context of plan changes.  Applying King Salmon the High Court determined that because Part 2 had found its expression in the higher order planning documents, recourse to those provisions directly was neither required nor authorised in consent decisions unless some invalidity, incomplete coverage or uncertainty of meaning in those documents could be identified.  That finding, and the application of King Salmon to resource consent decisions, was the subject of the challenge before the Court of Appeal.

In brief the Court considered that the High Court’s position did not find support in the plain language of section 104(1), its legislative context or history, or previous judicial interpretation of the purpose and function of Part 2 in consenting decisions.  Nor did it find support in the judgment of King Salmon itself, or in consideration of the inherent differences between plan changes and resource consents as planning tools under the RMA. The Court identified that planning documents unlike consent applications are developed/amended through a legislative process and as part of a hierarchy which ensures implementation of higher order documents and Part 2.  However, they cannot always furnish a clear answer as to whether consent should be granted or declined.  In those instances the Court found that it is appropriate and indeed section 104(1) provides for, the ability for consent authorities to directly consult the purposes of the Act to reach a decision.

Further the Court of Appeal determined that if the Supreme Court intended its approach to apply “across the board”, it is inevitable that the Court would have expressly said so given the wide reaching implications.  In any event, the Supreme Court’s reasoning was expressly tied to the “plan change context under consideration”.

Those awaiting a return to pre-King Salmon days of the RMA may however be disappointed.  While the Court of Appeal acknowledged the “pre-eminence” of Part 2 in resource consent decisions and reinstated the ability to consult it directly, it considered that the circumstances in which that would be required may be limited, particularly where the relevant plan “has been competently prepared under the Act”.  In those instances where it is clear that a plan has been prepared having regard to Part 2 and contains a coherent set of policies leading toward clear environmental outcomes, reference to Part 2 is unlikely to add anything.  In instances where the NZCPS is engaged, the Court goes as far to say that resort to Part 2 for the purposes of subverting clear restrictions in the NZCPS would expose the consent authority to being overturned on appeal.  However absent assurance of the alignment between Part 2, the planning documents and the proposed consent decision, the Court considered that direct consideration of Part 2 is both appropriate and necessary. That, in the words of the Court, is the implication of the words “subject to Part 2” in section 104(1). 

Implications

So while King Salmon no longer applies to resource consent decisions (at least for now), the Court of Appeal’s judgment is hardly a slam dunk on the Supreme Court’s broader rationale. While decision makers may now consult Part 2 directly on consent applications, the Court is clear that that exercise is unlikely to add anything to the evaluative exercise where the plan is clear on the way Part 2 is to be achieved. In what we would suggest is a cautionary warning shot, the Court adds that in those instances, reference to Part 2 cannot justify an outcome that is contrary to the thrust of the policies.  However where it appears that a plan has not been prepared in a manner which appropriately reflects Part 2, or the objectives and policies are pulling in different directions, consideration of Part 2 is both appropriate and necessary.

We will be following how the Court of Appeal’s decision is interpreted in the coming months, and of course, an appeal of the Court’s decision to the Supreme Court remains a possibility. While the “pre-eminence” of Part 2 has (in our opinion, rightly) been restored for consent decisions, the Court of Appeal’s decision has not significantly eroded the renewed focus on the careful application of the plan provisions.  We would therefore expect increased involvement in plan review processes to secure/protect desired planning and environmental outcomes. 

For further information on this case, its implications or any resource management queries, please don’t hesitate to contact any one of our team.