New Zealand: Judgment summary - CERA v Fowler Developments Ltd and Quake Outcasts

Last Updated: 22 February 2015
Article by Helen Smith, Ayleath Foote, Stephanie Grieve and Jonathan Forsey

Most Read Contributor in New Zealand, November 2017

[2013] NZHC 2173, [2014] 2 NZLR 54, (2013) 7 NZ ConvC 96-005

This case concerns two applications for judicial review heard together by consent. The first applicant, Fowler Developments Limited, is a property development company that owned eleven sections at Brooklands, all of which were red-zoned after the earthquakes. The second applicant, Quake Outcasts, is a group of 46 individual or joint owners of properties in the red zone. They all own either vacant land or uninsured properties.

The genesis of the proceedings was the making of offers by the chief executive of the Canterbury Earthquake Recovery Authority (CERA) to purchase either vacant land, or uninsured residential properties, for 50% of the 2007 rating value of the land.

During the hearing the declarations sought were reformulated. The relief sought was:

  1. " A declaration that "neither the declaration of the red zone, nor the subsequent offers made by the Crown in those zones affect the existing rights at law of residential occupation of property owners in those zones.
  2. The decision(s) of the respondents to offer to purchase the properties of the Quake Outcasts are set aside, and the matter is remitted to the Ministers and chief executive who made the decisions to make new decisions to offer to purchase the properties in accordance with law, requiring them under s 4(5)(b) of the Judicature Amendment Act 1972 to make such decisions in accordance with the following directions. The decisions should:
    1. be in accordance with the purposes of the CER Act, particularly the need to ensure that affected communities recover from the impacts of the earthquakes; and
    2. have regard to:
      1. recognition that a market for the properties as residential properties no longer exists;
      2. the previous use of the 2007 RV as a basis for acquisition;
      3. the cost of acquiring an equivalent replacement property;
      4. the individual circumstances of the property owners; and
      5. the reasons for the Court's judgment."

Justice Panckhurst considered that there were three main issues to consider:

  1. Does the creation of the red zone and the making of buy-out offers to property owners within the zone affect the property rights of the applicants?
  2. Should the decision(s) which resulted in the chief executive making 50% offers to property owners in the red zone be set aside?
  3. If so, what form of relief is appropriate, if any?

Are the property rights of owners within the red zone adversely affected?

Justice Panckhurst acknowledged the decision of Asher J in O'Loughlin v Tower Insurance Limited [2013] NZHC 670, which noted that the red zone did not stop people from continuing to live in the red zone, and did not prohibit the building or repairing of homes in the red zone, and said that he did "not disagree with these observations as far as they go", but noted that they were made in a very different context.

He said that:

"The decisions must, I think, be viewed as a package. There were four elements: the zones, the purchase offers, the announcement and the clearance strategy – although this last element was revealed post-announcement, and only gradually. In combination the package was essentially destructive of the residential zoning designations of the red zone land. In reality the decisions meant that over time the red zone would cease to be residential, and would become open space. In the meantime, the residential zones under the district plan subsisted, but in reality were no longer operative."

Justice Panckhurst then decided that:

"The use and enjoyment of one's home is a fundamental human right. In my view the creation of the red zone comprised an interference with that right. Whether that interference was arbitrary and unlawful depends on whether the red zone decision had to be made pursuant to the Act, a question to which I now turn."

Prerogative powers

It has long been established that prerogative powers can be displaced by the enactment of statutory powers in favour of the Crown. In Attorney-General v De Keyser's Royal Hotel Limited [1920] AC 508, Lord Dunedin said:

"... it is equally certain that if the whole ground of something which could be done by the prerogative is covered by the statute, it is the statute that rules. On this point I think the observation of the learned Master of the Rolls is unanswerable. He says: "What use would there be in imposing limitations, if the Crown could at its pleasure disregard them and fall back on prerogative?"

The decision to implement the red zone and to make offers to purchase the properties in the red zone was made by Cabinet, on the advice of an ad hoc group of Ministers including the Prime Minister and the Minister for Canterbury Earthquake Recovery.

However, prior to the decision being made, the Canterbury Earthquake Recovery Act 2011 (the CER Act) was already in effect. The CER Act included (at section 11) the requirement for the development of a Recovery Strategy, which was to be "an overarching, long-term strategy for the reconstruction, rebuilding, and recovery of greater Christchurch" which should address, among other things, "areas where rebuilding or other redevelopment may or may not occur, and the possible sequencing of rebuilding or other redevelopment". Section 27 of the CER Act allowed the Minister to suspend, amend or revoke a range of controls, including resource management and local government controls. Section 53 allows the Chief Executive to purchase property in the name of the Crown, and section 54 allows the Minister to compulsorily acquire property. Section 10 requires that the Minister and the Chief Executive exercise their powers in accordance with the purpose of the CER Act.

Justice Panckhurst decided that the De Keyser test is met in this case. He said:

"I doubt that there could be a clearer case of express statutory powers conferred on the Crown in a well defined field than this. It follows in my view that the Minister was obliged to invoke section 27 in order to define and create the red zone."

The red zone decision therefore should have been made pursuant to the CER Act, and not as a decision of Cabinet.

Should the red zone decisions be set aside?

Neither of the applicants any longer sought to have the red zone decisions set aside. Justice Panckhurst noted that the vast majority of the offers have been accepted, and that many people have now moved on. He said that "regardless of the decision-making process and my conclusion that the decision was not made according to law, the fact remains that the present situation is essentially a fait accompli".

He did, however, make:

"A declaration that the decision to create the red zone announced on 23 June 2011 did not lawfully affect the property rights of the property owner applicants in the proceeding CIV-2013-409-000843 (the 'Outcasts')."

This declaration is limited to the members of Quake Outcasts.

Should the uninsured and vacant land offers be set aside?

Justice Panckhurst said that:

"The finding, and reasoning, relating to the creation of a red zone is of equal application to the September 2012 decision to make 50 percent offers to the applicants. Following the Committee meeting the Minister made a public announcement and then the chief executive invoked s 53 to make purchase offers, but there was no deliberative process as required under s 10 and the Act generally. Both simply proceeded to implement a decision made in Committee. In my view, it inevitably follows that the essential decision was made outside of, and without regard for, the statutory regime and was not made according to law."

The main arguments raised in relation to the 50% offer were that they were de facto compulsory acquisition offers, the "moral dilemma" argument (that to provide compensation for the uninsured would encourage people not to insure), and the lack of even-handedness with those who received 100% offers.

Justice Panckhurst said that the compulsory acquisition argument was "not particularly helpful". Previous cases had determined that "compulsory taking occurs only when a land owner is compelled to transfer rights under protest and with no choice" (Waitakere City Council v The Estate Homes Limited [2007] 2 NZLR 149 (SC)).

The moral dilemma argument was accepted by Panckhurst J as seeming like "a legitimate factor to take into account", but "it was a blunt instrument because no distinction was drawn between those who made a deliberate election to be uninsured and those who were uninsured through no fault of their own, including because insurance cover was unobtainable".

Justice Panckhurst did consider that the lack of even-handedness argument had "considerable merit":

"Clearly, the main impetus for the June 2011 decision to make 100 percent offers to insured property owners was the need to provide certainty and create the confidence necessary to enable people to move on with their lives, given that "many people have their life savings tied up in their homes", to borrow the Prime Minister's phrase.


Yet it is apparent that payments of 50 percent of the land rating value will not enable many property owners to make a fresh start... I am satisfied that the plight of this relatively small group has not been adequately considered in light of the purposes of the Act."

He therefore decided to make a direction to reconsider the 50% offers made to the applicants, and to make a fresh determination in accordance with the CER Act. The formal orders made were:

"A declaration that the decision to offer to purchase the properties of the applicants on the terms announced by the Minister on 13 September 2012 was not made according to law and is set aside, as are the offers subsequently made to the applicants by the chief executive.

A direction that the Minister and the chief executive reconsider and reach a new decision to purchase the applicants' properties, such decision to be made in accordance with law

  1. as required by the purposes and principles of the Canterbury Earthquake Recovery Act 2011, and
  2. with regard paid to the reasons contained in this judgment."

What now?

The Government is currently considering whether to appeal this decision. An alternative that they have raised is that they could simply withdraw the offers for uninsured or vacant land, leaving the home-owners to deal with their land as they choose.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Stephanie Grieve
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions