Choong Huat Lai and Luan Joo Tan (ENV-201O-AKL-OOO160) v Auckland Council (formerly Waitakere City Council) The Trust Community Foundanon Incorporated s274 party

• Jurisdiction: New Zealand
• Court: Environment Court
• Judge: M Harland
• Judgment Date: 20 July 2011
• Neutral Citation: [2011] NZEnvC 207
• Date: 20 July 2011

[2011] NZEnvC 207

BEFORE THE ENVIRONMENT COURT

Court:

Judge M Harland

Commissioner P Catchpole

Commissioner M Oliver

IN THE MATTER of the Public Works Act 1981 and objections under section 23(3) and section 24 of the Act

Between

Choong Huat Lai And Luan Joo Tan (ENV-201O-AKL-OOO160)

Objectors

and

Auckland Council (formerly Waitakere City Council)

Respondent

and

The Trust Community Foundanon Incorporated s274 party

Attendances:

M Casey QC & A Davidson for the Respondent

N D Wright for the Objectors

REPORT OF THE ENVIRONMENT COURT

TO The Auckland Council

COPIES TO Choong Huat Lai, Luan Joo The Trust Community Foundation Incorporated

TABLE OF CONTENTS

Introduction	3
Legal Framework	5
The Public Works Act	5
Section 18 argument	9
Fairness	9
Factual Background	11
The site in context	11
Context for the proposed work	11
Design charette (or workshop)	12
Proposed Plan Change 17	12
The New Lynn Transit Oriented Development Project.	13
The New Lynn Urban Regeneration Framework	13
New Lynn Urban Plan 2010	15
The Involvement of Infratil	15
Chronology of Events	16
The Council's objectives	25
The arguments	25
Overall conclusion in relation to objectives	26
Adequacy of consideration of alternatives	27
The tests to be applied	27
The arguments	29
Conclusion in relation to alternatives	31
Bad faith	34
Was the taking fair, sound and reasonably necessary for achieving the Council's objectives?	38
Is the taking fair?	38
Good faith negotiations	39
Disclosure	41
Resource consents for the proposed work	42
The 2006 consent and subsequent development	42
Conclusion in relation to fairness	43
Is the taking sound?	43
Involvement of Inftatil	44
Is the proposed taking in this case within the Council's powers?.	46
Section 40 expectations	49
Overall conclusion in relation to soundness	49
TTCF's position	49
Is the taking reasonably necessary?	52
Court's discretion	52
Conclusion	53

Introduction

1 The Auckland Council (“the Council”) as successor to Waitakere City Council, has given notice to the objectors that it wishes to acquire their commercial property at 30 Totara Avenue, New Lynn, for a public work. The objectors have objected to the acquisition. This case concerns whether the Council has followed the correct procedures under the Public Works Act 1981 (“the PWA”) for the acquisition of the objectors' land.

2 The Council contends that the public work for which the objector's land is required is an important stage in the regeneration of the New Lynn Township in West Auckland. The land is right next to the New Lynn transport interchange, which includes both bus and rail stations, and it is proposed that the objector's land will be used to construct a new building, housing three storeys of public car parking with a ground level retail development. A small section of the land is intended to be used to form part of an extended bus bay.

3 The objectors' family trust owns the commercial properties at 30 and 30A Totara Avenue New Lynn which comprise two blocks of ten retail shops. From one of the shops, the objectors operate their own business, (the Hong Kong Restaurant) and others (albeit not all of them) are tenanted to other small businesses. Between 2006 and 2008 the objectors extensively redeveloped this property into a new single storey retail building, with the existing commercial building being refurbished. In 2009 the property was subdivided into two lots, one for the new building and another for the refurbished old building, now known as 30 and 30A Totara Avenue. 1

4 Whilst more will be said of this shortly, the Court must conduct an inquiry into the objection and the intended taking 2 and in so doing is required to:

• (a) ascertain the objectives of the Council;

• (b) examine the adequacy the Council's consideration of alternatives; and

• (c) decide and report on whether the taking is fair, sound and reasonably necessary to achieve the Council's objectives.

5 Although the objectors' opposition to the taking was couched in their second Notice of Objection as being in relation to the matters outlined in paragraph 4 (c) above, it was clear from the way the case was argued that they in fact challenge the stated objectives of the Council and they also contended that the Council's consideration of alternatives was inadequate.

6 Underlying the various strands of the objectors' argument was a theme that the decision to acquire the objectors' land was motivated by commercial rather than public purposes, because the Council has entered into a public/private arrangement with Infratil Properties Ltd (“Infratil”) to operate the building in which the new carpark is proposed, an arrangement from which the Council stands to profit. The inference we are asked to draw is that the Council's objectives, whilst stated to be for roading, parking and urban renewal, have a significant commercial motivation which they submit is contrary to the purpose of the taking of private land for a public work. In addition the objectors challenge that the land is being taken for urban renewal, given that the objectors' recent development of the site was recognised by the Council as being for exactly this purpose.

7 The objectors also submitted that Council officers (but particularly Mr Drake), acted in an arbitrary and capricious manner and/or bad faith when they recommended to the Council the option which resulted in the objectors' land being required and other alternatives being discounted. The Court is asked to draw the inference that the ability to profit from the Infratil joint venture improperly influenced the decision to select the option favouring the acquisition of the objectors' land over other alternatives.

8 Mr Lai and Ms Tan are supported in these proceedings by the Trusts Community Foundation Incorporated (“TTCF”). TTCF is the licensed operator of a number of gaming machines situated at 30 Totara Avenue 3. It supplies eighteen (18) gaming machines to the premises which generate in the order of $500,000 per annum (from a turnover of around $1.3m per annum). 4 The funds received are distributed by TTCF generally for charitable purposes within the local community.

9 TTCF was concerned that if the compulsory acquisition of 30 Totara Avenue proceeds, and the business currently operated at the premises was required to relocate, a new operating licence would be required with the current maximum of nine (9) gaming machines permitted. 5 This would result in a reduction in TTCF's turnover and the funds available for distribution to charities.

10 We heard evidence in this case for the objectors from Dr Francis Lai a qualified chartered surveyor (both in property valuation and quantity surveying) 6, property development consultant and real estate agent, who acted for but is not related to the objectors and from Mr Lai, who was aided by an interpreter. With the consent of the parties we received an affidavit from Mr Hodder and written submissions from counsel for TTCF without the need for their appearance. For the Council evidence was given by Mr Lipka in relation to the planning and policy context behind the Council's decision to acquire the land, and from Mr Rodgers-Smith in relation to the detailed aspects of the proposed acquisition. This case has attracted interest at a political level with affidavits from two former councillors being provided to the Court. At the outset of the hearing the objectors elected to abandon this line of endeavour and the Court did not read the affidavits submitted.

Legal Framework

The Public Works Act

11 Because they interfere with private property rights, the statutory powers of compulsory acquisition of land by statutory bodies have been very carefully examined by the Courts when disputes about them have arisen. This view was carefully encapsulated by Hammond J in Deane v Attorney General7 where it was held:

The power of the Crown to compulsorily acquire land arrives from the ancient notion of eminent domain. It is today a draconian — but necessary power — in a complex, and collective society. But to the extent that the Crowns powers are a direct interference with individual property rights, our Courts — in company with Courts elsewhere in the British Commonwealth — have insisted, always bearing in mind the purpose of any given powers ( Chilton v Telford Development Corporation [1987] 1 WLR 872, at 878 per Purchas LJ), powers of this kind are strictly construed; must be exercised in good faith ( Manukau City v Attorney General

[1973] 1NZLR25 [Green] (CA), 32); and even handedly. That last consideration has (with respect) never been better expressed than by Lord Upjohn (as he later became) in delivering a judgment of the Court of Appeal in Simpson Motor Sales (London) Limited v Hendon Corporation [1963] Ch 57. 82–83:

… The underlying assumption of Parliament is that in conferring compulsory acquisition powers upon statutory authority for public purposes, the acquiring authority will act reasonably in the public interest, that is, not only in the interest of their ratepayers or shareholders, as the case may be, but with due regard to the interests of the persons being dispossessed.

12 The powers with which we are concerned find their genesis in the Local Government Act 2002 (“the LGA02”) and the PWA.

13 Section 189 of the LGA02 provides that a Council

… may purchase or take, in the manner provided in the Public Works Act 1981, any land or interest in land that may be necessary or convenient for the purposes of, or in connection with, any public work that the local authority was empowered to undertake, construct or provide immediately before 1 July 2003.

14 A “ public work” as defined in s 2 of...