Guidance on council decision-making functions

The recent decision of Enterprise Miramar Peninsular Incorporated v Wellington City Council  [2018] NZHC 614 has provided some interesting guidance around council decision-making functions under the HASHAA and the RMA, particularly in relation to compliance with statutory timeframes and bias.

The decision suggests:

• Apparent mandatory statutory timeframes, at least in HASHAA context, are in fact not as mandatory as they seem (in the sense that non-compliance invalidates the ultimate decision), provided that no party is prejudiced by the non-compliance.
• Broadly speaking in the context of HASHAA and the RMA, the decision of a council to conduct its decision-making power is more administrative in nature than it is quasi-judicial.

HASHAA

The Housing Accords and Special Housing Areas Act 2013 (HASHAA) was designed to increase land and housing supply by allowing local authorities to grant resource consents under s 25 of HASHAA more easily than via the Resource Management Act 1991 (RMA).

The significant difference is that under HASHAA, the local authority is not under a duty to notify anyone of the fact that someone has made an application.  It may, at its own discretion, decide to notify owners of adjacent land or anyone it deems directly affected.  This decision to notify must be made within 10 working days of receiving an application.  Within 20 working days of receiving the application, the local authority must notify all parties whether or not the application has been accepted.

Background

Wellington City Council (WCC) was a part-owner of a parcel of unused land in the Shelly Bay area (Shelly Bay land).  WCC had advertised this area for sale as land for future development.

The Wellington Company Limited (TWC) was a large investment company, specialising in property development.  TWC arranged to purchase the Shelly Bay land from WCC and others, and then made an application under HASHAA for resource consent to develop the area into multiple housing complexes.

WCC processed this application itself through its employees, and did not notify anyone other than TWC of receipt of the application.  WCC later granted the application (with some conditions), again only notifying TWC.

Enterprise Miramar Peninsula Inc (the applicant) was an incorporation designed to protect and develop the Miramar area (including Shelly Bay).  The applicant was opposed to the resource consent issued to TWC, and sought judicial review of the decision granting the resource consent on the following two grounds:

1. Non-compliance with the HASHAA procedural rules; and
2. WCC’s decision to act as the decision-maker of the application (it was alleged that WCC was inherently biased and conflicted because of its role as landowner).

Non-compliance with the HASHAA procedural rules

The applicant argued that failure to comply with the HASHAA statutory timeframes automatically invalidated the decision to grant the resource consent.  The applicant relied in particular on the following:

1. Within 10 working days, the local authority must decide whether to notify any parties it considers affected, of a resource consent application. It did not.
2. Within 20 working days from receiving an application, the decision/outcome of the application must be notified to affected parties. That notification in this case took over 100 days.

In response to these claims by the applicant, the Court held that while the failure to comply with the mandatory timeframes was regrettable, it did not automatically invalidate a decision.  There were further factors that required consideration:

1. The nature of the provisions;
2. The degree of non-compliance; and
3. The effect of the non-compliance.

The Court placed significant weight on the fact that the applicant was not an affected party and would not have been notified at either of the above two stages.  The non-compliance therefore had minimal, if any, effect on the applicant.  In addition, other provisions of the RMA indicated that non-compliance with timeframes was not intended to be fatal to the ultimate decision.  This aspect of the appeal was dismissed.

WCC’s choice to act as decision-maker of the application

The applicant alleged that because WCC owned and advertised for sale part of the Shelly Bay land, it had a financial interest in the resource consent and therefore should have contracted independent commissioners to make this decision.  By not doing so, the applicant alleged bias and conflict of interest on the part of WCC.

The Court observed that the statutory context in which WCC exercised its powers was key.  Local authorities are tasked with dual functions; regulatory and non-regulatory.  In view of this dual function, complete impartiality cannot be expected of a local authority in the same way as other decision-making bodies, such as the Court.  Therefore, while Judges will be disqualified for merely the appearance of bias, so long as a decision-maker in a local authority maintains an open mind, its decision will not be invalid.  Similarly, although a local authority may receive a pecuniary benefit after making a decision to grant resource consent, that decision will not be automatically invalid.  Provided the decision maker gives genuine and professional consideration to the application and is not influenced by commercial gain there will be no conflict.  This is a different situation to where, for example, an individual councillor may have a personal pecuniary interest.

Discussion on independent commissioners

The judgment went into further detail on a council outsourcing its decision-making ability to independent commissioners.

Section 76(2)(d) of HASHAA specifically incorporates s 34A of the RMA, which allows councils to delegate powers and functions to employees and other persons.  The applicant argued that this section was designed as a recusal mechanism for councils where it has have a conflict of interest.

The Court did not accept this argument and said that the purpose of this section was not to act as a recusal mechanism, but to assist councils in obtaining additional resources where it did not have capacity or the relevant expertise.

Take home points

Apparent mandatory statutory timeframes, at least in HASHAA context, are in fact not as mandatory as they seem (in the sense that non-compliance invalidates the ultimate decision), provided that no party is prejudiced by the non-compliance.

Broadly speaking in the context of HASHAA and the RMA, the decision of a council to conduct its decision-making power is more administrative in nature than it is quasi-judicial.  In particular:

1. Both HASHAA and the RMA anticipate the dual role of councils;
2. Section 34A‘s primary purpose is to address resource constraints;
3. There is no indication that s 34A should be invoked where there is a perceived bias or potential conflict of interest on the part of a council; and
4. A council is under no obligation to appoint independent commissioners instead of delegating its powers to its own employees.