The Court of Appeal has confirmed that the government acted
unlawfully in the offers it made to uninsured landowners in
Christchurch. The decision upholds the High Court decision on the
same issues, albeit on different grounds (Minister for
Canterbury Earthquake Recovery v Fowler Developments Limited
 NZCA 588).
The decision will be welcomed by the relevant landowners and,
more widely, demonstrates the importance for statutory
decision-makers of closely following the statutory requirements
that apply to them.
The High Court decision under appeal
The case concerned the government's decisions to offer to
purchase uninsured residential properties and vacant land in the
residential red zone at only half of their 2007 rateable value. In
contrast, insured property owners had received offers at the 2007
full rateable value.
In the High Court, the judge held that the Minister for
Canterbury Earthquake Recovery's decision to declare the red
zone, and the subsequent decisions of Minister and the Chief
Executive of the Canterbury Earthquake Recovery Authority
(CERA) to make the 50% offers, were unlawful. See
here for more information.
The Court of Appeal decision
The Court of Appeal held that the Chief Executive of CERA acted
unlawfully in making the 50% offer. The reason was that the Chief
Executive failed to take into account the purposes of the
Christchurch Earthquake Recovery Act (the CER
Act), which applied to the decision. Instead, the Chief
Executive acted on a Cabinet decision to make the offers, which had
not considered the purposes of the CER Act.
This is different reasoning than the High Court decision. In the
High Court, the judge considered that Cabinet's red-zone
decision, which preceded the Chief Executive's offer, was
unlawful because it was made as a policy decision outside the CER
Act. The Judge considered that the Cabinet decision should have
been made under the CER Act as it was intended to have regulatory
effect. The failure to do so rendered the red zone decision and the
50% offers unlawful.
The Court of Appeal considered that the Cabinet decision was not
intended to have any regulatory or compulsory effect but was only
meant to identify which areas would be subject to government
offers. It was therefore properly made as a policy decision, and
did not need to be made under the CER Act.
For decision makers the Court of Appeal decision illustrates the
need to consider the statutory framework. This is best done at the
time the decision is made. Ideally, the statutory framework should
be set out in a report or other written record, with an explanation
of how the criteria is met.
For partners subject to government decisions, there are two
lessons. First, in advance of a decision, it is best to frame your
arguments in terms of the statutory criteria. Second, if you wish
to challenge a decision, obtain the information that the
decision-maker considered and check whether the statutory criteria
or purposes were applied.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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