Seeking a positive definition of the nature of resource consents
Completed as a requirement of LAWENVIR 401 Resource Management Law
Introduction
Resource consents granted under the Resource Management Act 1991 are defined by what they are not; they are “neither real nor personal property” under s 122(1). However, the Act also provides exceptions to this definition of the nature of resource consents, including in subs 122(2) – (6) that appear to apply property law principles of succession, securitisation of personal property, and the ability to grant licences or profits à prendre where stated in the consents. This apparent contradiction in the statute is made more uncertain by the New Zealand Courts’ treatment of property rights in resource consents during the appeals process.
This article looks critically at how property law concepts are applied by New Zealand Courts in the resource consent appeals process provided for under s 120 of the Act. The key question this article seeks to answer is whether the current negative expression, excluding principles of real or personal property, is an appropriate definition of the nature of resource consents in light of the purpose of the Act.
In answering this question this article looks firstly at the nature of property rights and questions why Parliament may have sought to limit those rights in resource consents. Secondly, this article assesses the Courts’ treatment of resource consents in a series of key appeal decisions. This is followed by an analysis of the Court of Appeal’s approach in a recent landmark case, and then a range of commentators’ views on the nature of resource consents. Finally, this article concludes with the potential for resource consents to be considered as a new form of entitlement.
The nature of property rights
Considering the nature of resource consents relative to property law requires a consideration of the nature of property. There are different conceptual models for describing what is meant by property in a legal sense. At a base level it is described as “a thing owned”,[1] and can include real or personal property,[2] as well as “any right or power exercisable in respect of any property”.[3] A complete analysis of property rights is clearly beyond the scope of this article,[4] however property has also been variously described as “a bundle of rights” or “incidents of ownership”[5] – each recognizing that limitations restrict absolute ownership of any type of property.[6]
If property can include rights or powers, or incidents of ownership, it is worth considering why the Act defines resource consents as neither real nor personal property. What is the reasoning for this distinction in s 122(1) when other sections of the Act appear to apply property-like principles such as indefeasibility in relation to consents?[7]
It may be that the purpose of s 122 is to limit property rights to those express provisions in the Act.[8] It is possible the purpose of the provision is also to limit expectations of private property owners under the takings doctrine, the common law principle that property rights cannot be undermined by statute without appropriate compensation.[9] In other words, is s 122 reinforcement to the provision in s 85 limiting compensation where the Act imposes planning overlays onto private property?[10]
An alternative question might be: apart from the obvious issue of undermining the express wording in s 122(1), what would be the harm in the Courts treating resource consents as real or personal property?
Treatment of resource consents under appeal
Hume v Auckland Regional Council
In Hume v Auckland Regional Council the appellant sought a reversal of the decision of the Environment Court, which held that a coastal permit to construct a jetty accessing the appellant’s property on Kawau Island did not authorise them to exclude the public from using the jetty.[11]
The appellants submitted that the Environment Court had erred in law by excluding certain incidences of private property rights and that those rights should “inform the use by the appellants of the jetty structure they own”.[12] They further claimed the declaration of the Court had the effect of nationalizing their private property.[13]
The High Court took as a starting point the statement of Barker J in Falkner v Gisborne District Council: [14]
It is a necessary implication of such a scheme that common law property rights pertaining to the use of land or sea are subject to it … The Act is simply not about the vindication of personal property rights, but about the sustainable management of resources.
Potter J in the High Court described this observation as putting common law property rights in their proper context – that is, subject to the Act.[15] She then clarified the fact that a coastal permit merely grants authority to occupy part of the marine coastal area for a limited purpose, it does not grant a property right.[16]
The Court disagreed with the logic of the appellants’ statutory interpretation regarding their private property rights, in the light of the purpose of the Act. Potter J lucidly interpreted the purpose of the exceptions in s 122 as “merely” referring to the “manner in which resource consents may be dealt with in certain situations”. Further, she stated that while these exceptions “reflect some of the incidences of real or personal property rights … they do not confer property rights.”[17]
The tone and outcome of the findings in Hume delivers a very clear reading of the purpose of the Act; that it is about managing public natural resources, and that the incursion of private property rights to the exclusion of public rights should not be upheld.
Aoraki Water Trust v Meridian Energy Ltd
Aoraki Water Trust v Meridian Energy Ltd was an application by Aoraki and others for a declaration that Meridian’s existing resource consent did not impose a legal restriction on the Canterbury District Council, as the consenting authority, from issuing additional consents in respect of the same resources.[18] Meridian’s consent allocated water use rights equating to more water than flowed in and out of the relevant catchment.[19] Aoraki sought a water permit, as resource consents relating to water are defined in the Act,[20] to take water from the same catchment for irrigation purposes.
Aoraki’s argument was based on the distinction between the concepts of a right and a permit. They submitted that a water permit provides no implied right to priority to water but merely “privilege and permission to take, divert and use such water as is available”, and that water permits only grant permission to do that which it would be unlawful to do otherwise.[21]
Meridian argued that the consents provide rights that are “not mere provisional grants”, and that it had a “legitimate expectation” that future consents would not erode the rights contained in their existing water permit.[22]
The Court found some attraction in the conceptual analysis of Aoraki’s submissions,[23] comparing their proposition to a bare licence. However, they took the view that this approach ignores the “statutory nature, purpose and effect of granting a water permit”.[24]
Focusing on the concept of sustainable management as the foundation of the Act, the Court described it as “a comprehensive statutory management regime” and that consenting under the Act is analogous to a statutory licensing system as described in Harper v Minister for Sea Fisheries. In that case, concerning abalone permits, the High Court of Australia compares the commercial licensing of public resources to the land law concept of profits à prendre. However, that Court also described this type of licensing as “an entitlement of a new kind created as part of a system for preserving a limited public natural resource”.[25]
In dismissing Aoraki’s argument the Court found that if taken to its logical conclusion their proposition would undermine the purpose and effect of the statutory management regime. Part of their reasoning was that where a resource was over-allocated, in allowing another consent the Act provided no ability to enforce preference or priority between consent holders.
The Court held, inter alia, that by the subsequent grant of a water right the consenting authority would effectively be taking away an existing right and the common law property principle of non-derogation from the grant ought to apply.[26] They also found there would be a legitimate expectation on the part of the consent holder that the economic right the consent created could not be eroded without a statutory mandate to do so.[27]
This finding is authority for the proposition that the common law doctrine of non-derogation from the grant can apply to resource consents. However, due to the Court’s criticism of the appellant’s submissions[28] and the subsequent opinion of the Court of Appeal in Hampton v Canterbury Regional Council[29] the author questions whether an analysis of the nature of resource consents recognizing their public property quality, as in Falkner and Hume, would have been more appropriate.
Southern Alps Air v Queenstown Lakes District Council
The principle of non-derogation from the grant was also to the fore in the later case of Southern Alps Air Ltd v Queenstown Lakes District Council.[30] In this case the issue was whether the Environment Court had wrongly decided that granting an additional consent to operate a commercial jet boat service would derogate from the rights an existing operator held under their earlier consent. The second issue was whether the Environment Court had correctly determined that imposing additional safety and communication requirements on the existing operator and the relevant harbour master, by permitting an additional operator to use the same stretch of the Wilkin River, would involve an illegal delegation of safety to a third party.
The argument against granting additional consents on the river claimed that the Environment Court was correct in their application of the Aoraki decision, finding it was possible to affect the quality as well as quantity of the grant in the original consent. However, the opposing submission argued that the Environment Court’s interpretation of the Aoraki decision took the non-derogation principle to “an entirely different level”.
The Court considered the common law principle in the context of leasehold interests to determine whether the earlier decision had applied the correct test for non-derogation from the grant. The correct test was whether there was a significant incursion on the grant to the level of frustrating the original consent. In overturning the finding of the Environment Court, the High Court found the impact of an additional operator on the river would not have a significant effect on the existing operator sufficient to frustrate the original consent. The additional safety requirements were determined to have been a condition of the original consent and not imposed by an additional consent.
In determining whether the Environment Court had properly considered the property law doctrine of non-derogation from the grant, Panckhurst J did not question whether the doctrine was appropriate in the light of the clear limitations in s 122(1). The judgment does not consider s 122 and both parties sought comfort from the decision in Aoraki, for differing reasons, yet neither appears to have raised the issue of whether a property rights approach is relevant. The assumption appears to be that resource consents amount to an allocation of property rights, and the Court’s determination seems more concerned with exactly what those rights are and whether they are being undermined.
Armstrong v Public Trust
The appellant in Armstrong v Public Trust sought a declaration that the resource consent granted to him and his late father should pass to him under the common law rules of survivorship of a joint tenant.[31] Their submission argued that the common law principle regarding co-owners, including the principle of survivorship, ought not be overridden by the Act unless the statute expressly stated it. This argument was founded on the contention that subs (2) and (3) of s 122 function to address circumstances where a resource consent could be treated as personal property, in spite of the clear language to the contrary in subs (1).
In accepting this submission, the Court’s reasoning appears to be based on the agreement of the parties that s 122(1) exists to prevent recognition of property rights in consents except to the extent Parliament had “expressly or by necessary implication” provided for them in the Act,[32] and further, that the common law rules of joint tenancy should not be extinguished “by a side wind” without express words.[33]
This interpretation of the Act is not conceptually inconsistent with other cases where the Court has found that the Act is not a complete code intended to exclude the common law. However, an earlier case deemed Part 6 of the Act to be a complete code, which implies the common law could also have been excluded in this case.[34]
Greenshell NZ Ltd (in receivership) v Kennedy Bay Mussel Co (NZ) Ltd
The case of Greenshell NZ Ltd (in receivership) v Kennedy Bay Mussel Co (NZ) Ltd considered coastal marine permits relating to mussel farming, and the subsequent leasing and licensing of the relevant areas of the coastal marine area to another company that was later placed in liquidation.[35] The relevant issue for the Court of Appeal was whether the High Court had erred in finding equitable relief potentially available in respect of transferred interests, including coastal marine permits, “even though the permits were not property rights.”[36]
The Court held that the rationale for the doctrine of equitable relief effectively protected a party against forfeiture of rights to property or possession. In reaching this finding the Court chose not to determine whether, [37] as Cooper J stated earlier in the High Court,[38] the rights conferred by the permits were “closely analogous to property rights”. Applying the finding from Hume the Court determined that the marine coastal permits involve some possessory rights and grant authority to occupy the particular marine coastal area for a limited purpose, but sufficient to engage the doctrine.
The Court further considered the potential for possessory or proprietary rights in the nature of consents by referring to the finding supporting survivorship from Armstrong and the finding supporting non-derogation from the grant in Aoraki.[39]
Subsequent treatment of Aoraki by the Court of Appeal
Hampton v Canterbury Regional Council was an appeal from a High Court decision regarding the allocation of water permits in the Canterbury Plains.[40] The appellant and his cousin owned adjacent farms and, as the result of a series of resource consent applications, the appellant was granted a water permit to irrigate his cousin’s farm. The appellant and his cousin could not agree on terms for the water use and, because water rights in the area were over-allocated, the Canterbury Regional Council, as consenting authority, granted the cousin a new right to take water to the extent that the appellant was not exercising the original water permit.
In the High Court the appellant claimed, inter alia, the Council’s decision amounted to derogation from the rights granted to him in the water permit and as a result he could not transfer the grants and this therefore breached his legitimate expectations of gaining an economic benefit from the transfer. The Court of Appeal found that because the consents granted were conditional, meaning they could only be used to irrigate the appellant’s cousin’s land, they could not be transferred under certain provisions in the Act. As there was no right to transfer the permit there could be no derogation from the grant and likewise no breach of legitimate expectation.
In distinguishing the case from Aoraki the Court addressed the findings in Aoraki, describing the Court’s reliance on non-derogation of grant and analogy to profits à prendre as “problematic”.[41] Firstly, the Court affirmed the common law position that water in its natural state cannot be owned as property. Secondly, while the effects of earlier legislation, and subsequently the Resource Management Act, on the Crown’s rights regarding water mean that the Crown has the right to control water usage, this does not mean they have a property right in the water itself. The Court then determined the findings that made analogy between water permits and profits à prendre could not be correct as there was no “property” that was “owned by the Crown” capable of being removed. Therefore, for the same reason, reliance upon the principle of non-derogation was also not correct, as it required a relationship that conferred a “right in property”.[42],[43] The Court then made this explicit by stating that as no property or interest in property changes hands upon the granting of a resource consent, the principle of non-derogation cannot apply.
Cooper J provides a thorough analysis of the nature of resource consents and the relevance of the rule in s 122(1) which declares that a resource consent is neither real nor personal property. Stating that the Act excludes certain incidents of ownership[44] that “the law might otherwise imply”, Cooper J adds that the Act does “confer certain property-like rights” in the subsections following s 122(1). Finally, Cooper J concludes “The legislature’s objective was plainly to allow a holder only those incidents of property that the Act itself confers, and then subject to the Act’s conditions.”[45]
This comment appears at first reading to draw a parallel with Fogarty J’s statement in Armstrong that the Act eliminates recognition by the Courts of any real or personal property rights except as provided “expressly or by necessary implication”. However, on closer reading the Court of Appeal appears to have taken a more fine-grained approach, talking of “property-like rights” and “incidents of property”, meaning that this finding raises the potential to interpret the nature of resource consents differently in future cases.
In many of the earlier cases, the Courts’ inclination to reason by analogy has given weight to arguments where apparent similarities exist between the ownership incidents in property rights and those in resource consents. Farrar defines reasoning by analogy as treating cases as: “like” if they have common “qualitative or quantitative attributes” regarded as “relevant, material or important for the purpose in question, and these outweigh the differences between them.”[46] However, it is arguable that the difference between the nature of property and the s 122 defined nature of resource consents outweighs their common attributes when the purpose is management of natural resources.[47]
In delivering this decision Cooper J has clearly departed from his earlier finding in the High Court in Greenshell regarding the rights conferred by consents being “so closely analogous to property rights that it would be unduly formalistic” to prevent the relief being sought.[48] The Court has obviously been made aware of the commentary surrounding the application of property law to resource consents,[49] but in deference to their fellow judges clarify that in departing from their reasoning they do not “suggest the wrong result was reached” in Aoraki.
Commentary
In the period prior to the finding in Hampton many commentators have addressed the question of how the nature of resource consents should be understood. While there is recognition of the appeal of viewing consents through the lens of property law,[50] many commentators harbour concerns.
Fraser addresses two concerns raised by the earlier question regarding the harm that might be caused by attributing property rights to consents. The first concern is that environmental preservation may be hampered by the use of property principles when a less privileged alternative such as a licensing model might better achieve management of limited natural resources. The second concern is that identifying a property right might “obscure the public qualities of natural resources.” The pressing issue with this concern is the potential for raising the status of consent holders to an unwarranted level, and that diminishment of their rights might give rise to a challenge akin to the takings doctrine.[51]
Barton is similarly concerned that property law principles might “lend legitimacy” to consent holders’ claims to the rights associated with those consents. He also considers general public rights of amenity and access to habitat would suffer in competition with “hard” property rights. He does conclude, however, that amongst the diverse range of situations where Courts will need to develop the law some property rights concepts can be distinguished as being logical and legitimate in the resource management context. [52]
Many commentators consider resource consents should be treated as a new form of “statutory property”[53] or “statutory licence”, although defining consents as “statutory property” is problematic if it raises the possibility of a consent holder being granted a new form of “property. Grinlinton considers these would be analogous to a bare licence combined with certain rights for use or taking of natural resources and not subject to the common law or generic statutory rules, but governed by the rules in the enabling statute.[54]
Conclusion
The nature of resource consents that are “neither real nor personal property” has clearly challenged the Courts in the decades since the Act came into force. The tension between the management of public natural resources and the interests of consent holders who perceive resource consents as a form of property has seen the gradual development of a line of authority applying concepts of property ownership to resource consents.
The earlier cases of Falkner and Hume seem conceptually aligned in rejecting private property incursions on public resource interests. However, since the decision in Aoraki, the Southern Alps, Armstrong and Greenshell cases each seem to march inexorably toward dismantling those earlier findings. It is only with the more recent Hampton case that the Court seems willing to consider a more abstract conception of the nature of resource consents, one that falls outside the traditional narrow understanding that property can only be either real or personal.
This concept is in line with many commentators’ call for recognition of statutory licences and the High Court of Australia’s “new kind” of entitlement as described in Harper.[55] Accordingly, this article concludes Parliament ought to review the Act to positively define the nature of resource consents or, alternatively, that the Courts accord them sui generis status as a new species of entitlement.
[1] Peter Spiller New Zealand Law Dictionary (8th ed, LexisNexis, Wellington, 2015) at 240.
[2] See GW Hinde and others Principles of Real Property Law (2nd ed, LexisNexis, Wellington, 2014) at 3, for a historical overview of the origin of real and personal property.
[3] Protection of Personal and Property Rights Act 1988, s 2.
[4] For analysis of the nature of property rights see Laura Fraser “Property Rights in Environmental Management: The Nature of Resource Consents in the Resource Management Act 1991” (2008) 12 NZJEL 145, at 149.
[5] AM Honoré “Ownership” in AG Guest (ed) Oxford Essays in Jurisprudence (Oxford University Press, London, 1961) 107 at 112.
[6] Derek Nolan Environmental and Resource Management Law (5th ed, LexisNexis, Wellington, 2015) at ch 1.9.
[7] For example the provisions in s 109 that enable registration of covenants that run with the land and bind all future owners.
[8] Armstrong v Public Trust [2007] 2 NZLR 859 (HC) at [19] per Fogarty J.
[9] This doctrine is most severe in jurisdictions where property rights are constitutionally enshrined, for example the United States of America Constitution, 5th Amendment.
[10] Ceri Warnock and Maree Baker-Galloway Focus on Resource Management Law (LexisNexis, Wellington, 2015) at 30.
[11] Hume v Auckland Regional Council [2002] NZRMA 49 (HC).
[12] At [22].
[13] At [23].
[14] Falkner v Gisborne District Council [1995] 3 NZLR 622 at 632.
[15] At [25].
[16] At [29].
[17] At [39].
[18] Aoraki Water Trust v Meridian Energy Ltd [2005] 2 NZLR 268 (HC).
[19] In this case the over-allocation was due to historical rights Meridian held under non-statutory consents from previous legislation, that were subsequently deemed to be permits under s 386(1) of the Act.
[20] Section 87(d).
[21] At [22].
[22] At [23].
[23] At [26].
[24] At [28].
[25] Harper v Minister for Sea Fisheries (1989) 168 CLR 314 (HCA), at 325.
[26] At [38].
[27] At [41].
[28] At [68].
[29] Hampton v Canterbury Regional Council [2015] NZCA 509, [2016] NZRMA 369 at [103] and [109].
[30] Southern Alps Air Ltd v Queenstown Lakes District Council [2008] NZRMA 47 (HC).
[31] Armstrong v Public Trust [2007] 2 NZLR 859 (HC).
[32] At [19].
[33] At [23].
[34] Springs Promotions Ltd v Springs Stadium Residents Association Inc [2006] 1 NZLR 864 at [61].
[35] Greenshell New Zealand Ltd (in receivership) v Kennedy Bay Mussel Co (NZ) Ltd [2015] NZCA 374, [2016] 2 NZLR 44.
[36] At 44.
[37] At [52].
[38] Greenshell New Zealand Ltd (in receivership) v Tikapa Moana Enterprises Ltd [2014] NZHC 1474, at [34].
[39] At [53].
[40] Hampton v Canterbury Regional Council, at n 29.
[41] At [99].
[42] At [103].
[43] See also David Grinlinton “The nature of property rights in resource consents” (2007) 7 BRMB 37 at 39.
[44] Citing Honoré’s incidents of ownership, which provide unqualified liberty to use property, the right of excluding others, the power to alienate property, and the right to immunity from expropriation.
AM Honoré, “Ownership” at n 5, at 112.
[45] At [105].
[46] JH Farrar “Reasoning by Analogy in the Law” (2009) 9(3) TJR 309.
[47] See also Barry Barton “The Nature of Resource Consents: Statutory Permits or Property Rights” (paper presented to Environmental Law: National Issue, NZLS Intensive, July 2009) at 66, on inappropriateness of making analogy between water use rights and the common law understanding of water rights.
[48] Greenshell New Zealand Ltd (in rec) v Tikapa Moana Enterprises Ltd, at n 38.
[49] At [106].
[50] Barton, at n 47, at 77.
[51] Fraser, at n 4, at ch 2.2.3.
[52] Barton, at n 47, at 76 and 77.
[53] Warnock and Baker-Galloway, above at n 10, at 256. See also Fraser, at n 4, at 2.1.3.
[54] Grinlinton, at n 43, at 39.
[55] Harper v Minister for Sea Fisheries, at n 25.