Meridian Energy Ltd v Southland District Council

• Jurisdiction: New Zealand
• Judge: WHATA J
• Judgment Date: 12 December 2014
• Neutral Citation: [2014] NZHC 3178
• Docket Number: CIV 2014-425-000041
• Court: High Court
• Date: 12 December 2014

BETWEEN

Meridian Energy Limited

Plaintiff

and

Southland District Council

Defendant

[2014] NZHC 3178

judges:

Whata J

CIV 2014-425-000041

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

Application for a ruling on whether a resource consent was required to construct a new ventilation shaft and associated works for the Manapouri Power Station (MPS) — Parliament enacted a special Act, the Manapouri — Te Anau Development Act 1963 (MTADA), to validate and implement an agreement to construct and supply electricity via the MPS — the plaintiff was empowered under s4 MTADA (Authorising corporation to construct and use works) to undertake certain activities in relation to the MPS — s8 MTADA (Effect of Act) provided that the provisions of the MTADA and of the agreement were to have effect notwithstanding anything to the contrary in any other enactment — s9(3) Resource Management Act 1991 (RMA) stated that land could not be used in a manner contravening a district rule unless it was allowed by a resource consent, s10 RMA (Certain existing uses in relation to land protected) or was an activity allowed by s10A (Certain existing activities allowed — surface of water) — whether s9(3) RMA applied to the land use activities of the MPS.

counsel:

D Goddard QC and L Theron for Plaintiff

B J Slowley for Defendant

JUDGMENT OF WHATA J

1 Meridian Energy Limited (Meridian) owns and operates the Manapouri Power Station and associated works (MPS). The MPS is the largest generator of hydrogenation in New Zealand and supplies energy to the Tiwai Point aluminium smelter.

2 Meridian is empowered under the Manapouri — Te Anau Development Act 1963 (MTADA) to undertake certain activities in relation to the MPS in the following comprehensive terms:

4. Authorising corporation to construct and use works

• (1) The corporation shall have, and shall be deemed since the making of the agreement to have had, full power and authority—

  • (a) to erect, construct, provide, use, and operate all works, appliances, and conveniences which may be necessary or requisite for or in relation to—

    • (i) the utilisation of water power from the said water resources for the generation of electrical power; and

    • (ii) the generation, transmission, use, supply, and sale of electrical power required from time to time to be supplied pursuant to the agreement; and

    • (iii) the transmission, use, supply, and sale of any other electrical power generated from the said water resources:

      …

3 Section 8 of the same Act provides:

8 Effect of Act

The provisions of this Act and of the agreement shall have effect notwithstanding anything to the contrary in any other enactment.

4 Section 9(3) of the Resource Management Act 1991 (RMA) states:

9 Restrictions on use of land

…

• (3) No person may use land in a manner that contravenes a district rule unless the use—

  • (a) is expressly allowed by a resource consent; or

  • (b) is allowed by section 10; or

  • (c) is an activity allowed by section 10A.

  …

5 Meridian and Southland District Council (SDC) seek clarification as to whether s 9 of the RMA supersedes s 4 of the MTADA for the purpose of land use activities. The following questions are therefore before the Court:

• (a) Does Meridian need a land use consent to carry out an upgrade of a ventilation shaft at the MPS?

• (b) Does the MTADA override the requirements for land use consents that would otherwise apply in relation to the MPS under the RMA?

6 As should be obvious, the central issue is whether s 9(3) applies to the land use activities of the MPS.

Background 1

7 Meridian undertakes a number of activities at the MPS on an ongoing basis to ensure the effective operation of the power station. In 1996 consents were obtained for the use of water for generation purposes. Meridian also obtained a permit to discharge contaminants into Deep Cover for two years on 13 December 2000, a coastal permit to discharge waters to Doubtful Sound, a water permit to dam and divert the waters of Lake Manapouri and the Waiau and Maroroa Rivers and a water permit to take and use water from Lake Manapouri for power generation to enable the MPS to change the way it utilized the water available to it.

8 However, prior to 2010 Meridian has not sought land use consent for projects at the MPS as it has assumed that the land uses are authorised by the MTADA. For example, in 1996 the Ministry for the Environment advised that no land use consents were required for a second tail race tunnel constructed between 1997 and 2002, because of the MTADA, and the tunnel was constructed on this basis without land use consents. There are a number of other structures for which Meridian does not hold land use consents because it has relied on the MTADA.

9 In 2010 Meridian proposed construction of a new reticulated water system to comply with fire safety requirements. SDC expressed the view that a resource consent was required for this work. Because of the practical importance of this work Meridian applied for resource consent to ensure that the work could begin without delay, but noted in its application that the MTADA authorises the maintenance and replacement of vital infrastructure such as water reticulation.

10 In 2011 Meridian decided to upgrade the ventilation shaft at the MPS building. In July 2012 Meridian contacted SDC about the upgrade and again SDC took the position that a land use consent was required.

11 The parties have resolved to seek a declaratory judgment to clarify whether the upgrade required consent.

The 1963 agreement

12 The MPS was constructed in the 1960s (though not fully operational until mid—1973) for the purposes of supplying electricity to Consolidated Zinc Pty Ltd, subsequently known as Comalco. In 1963 the Crown entered into an agreement with Comalco in relation to the construction of the MPS and the supply of electricity from MPS to Comalco (“the 1963 agreement”). The 1963 agreement is set out in the schedule of the MTADA.

13 In essence, the agreement contemplates that the Crown will construct and operate a hydro—electric works at Manapouri and that this scheme will supply energy to Comalco for the purposes of an aluminium smelter. There are detailed provisions as to the supply of electricity, including in the event that, for whatever reason, electricity cannot be supplied to Comalco. 2

14 The 1963 agreement also contemplated a duration of some 100 years, though it was terminated and replaced by another agreement between Meridian and Comalco with effect from 2013.

15 The MPS and the 1963 agreement were transferred to ECNZ after the establishment of ECNZ as a State owned enterprise in the late 1980s. These assets were then transferred to Meridian by agreement and deed in 1998 when ECNZ was split into three SOE generation companies.

• (a) The Crown shall not be liable to the Company for any failure to supply electrical power to the company hereunder if such failure is the result of: —

  • (i) war or act of public enemies;

  • (ii) act of God;

  • (iii) strike or lock—out or stoppage or restraint of labour;

  • (iv) riot or civil commotion;

  • (v) the Crown's failure through no fault or neglect of its own to obtain adequate supplies of plant, equipment or materials necessary for the generation, transmission or supply of electrical power; or

  • (vi) any other cause (except fire) beyond the control of the Crown.

  • The Crown shall use its best endeavours to recommence and continue the supply of electrical power to the company as soon as possible after any such failure.

16 The nature and extent of the Crown's undertaking is recorded at cl 27 of the 1963 Agreement (set out in the Schedule to the MTADA):

The Crown will take all such action as may be necessary to validate this agreement, the Crown's operations and the Company's rights hereunder (including but not without limiting the generality of the foregoing any authorisation which may from time to time be necessary or expedient under the provisions of any Act) and this agreement shall take effect from the date on which it is declared by Act of the General Assembly of New Zealand in Parliament assembled to be valid and binding in all respects and to have full force and effect according to its tenor.

The legislation

MTADA

17 The preamble refers to the 1963 Agreement and states:

And where as it is necessary to validate the agreement first hereinbefore mentioned and to authorise and empower the Minister to carry out and perform the terms of and otherwise implement that agreement.

18 Section 3 validates the 1963 Agreement in the following terms:

Auckland3 Validating agreement

• (1) The agreement is hereby declared to be valid and binding in all respects and to have full force and effect according to its tenor.

• (2) The Minister on behalf of Her Majesty the Queen shall be deemed to have been duly empowered to enter into and execute the agreement and to confer on the Company the rights specified therein.

…

19 Section 4 is recorded at [2] and s 4A contemplates that the Minister will promulgate binding operating guidelines for the levels of Lakes Manapouri and Te Anau based on recommendations by the Guardians of Lakes Manapouri and Te Anau, and Meridian “aimed to protect the existing patterns, ecological stability, and recreational values of their vulnerable shorelines and to optimise the energy output of the Manapouri power station.”

20 Section 5 requires that Meridian must consult:

5 Preservation of natural scenery and fishery

Before exercising any power conferred on him by section 4 within the Fiordland National Park, the corporation shall consult—

• (a) the Minister of Conservation on the measures to be taken with a view to preserving natural scenery that may be affected by the exercise of the power:

• (b) the Minister of Conservation on measures to be taken to minimise any adverse effects on the trout fishery in Lakes...