New Zealand: Judgment summary - Quake Outcasts & Fowler Developments Ltd v Canterbury Earthquake Recovery Authority

[2015] NZSC 27

This is an appeal from the decisions of the High Court and the Court of Appeal.

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

In the High Court

Fowler Developments and the Quake Outcasts sought declarations from the High Court that the red zoning of land was unlawful, and that the decision to offer to purchase either vacant land or uninsured residential properties for 50% of the 2007 rating value of the land was improperly made.

Justice Panckhurst decided that any red zoning decision should have been made using the mechanisms set out in the Canterbury Earthquake Recovery Act 2011 (CER Act) rather than using the Government's prerogative powers, and that the red zoning of the land was therefore done improperly. However, he 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 Quake Outcasts]."

By the same reasoning, he found that the September 2012 decision to make 50 percent offers was also "made outside of, and without regard for, the statutory regime and was not made according to law." These offers were therefore set aside.

The Minister for Canterbury Earthquake Recovery and the Chief Executive of the Canterbury Earthquake Recovery Authority appealed the High Court's decision, arguing that both decisions were lawful and effective.

In the Court of Appeal

The Court of Appeal, in deciding whether the decision to create the red zone should have been made under the CER Act, considered various sections of the CER Act. They decided that the information about the red zone could have been released by the Chief Executive of CERA under section 30 of the CER Act, but that there was nothing that indicated an intention to restrict Ministers from also communicating with the public. They said:

"We have no doubt that the dissemination of information and advice by Ministers is an action authorised by the residual freedom, as long as legal rights are not affected by it. That would be so even if a narrow interpretation of the scope of the residual freedom is adopted. As noted earlier, we do not consider that the red zone decision did affect legal rights. So we are satisfied that, in the circumstances of this case, the red zone decision and the dissemination of information and advice in accordance with that decision did not require specific statutory authorisation and was lawfully made under the residual freedom."

However, the Court of Appeal decided that the decision, in September 2012, to offer to purchase either vacant land or uninsured residential properties for 50% of the 2007 rating value of the land was made under section 53 of the CER Act. The Court of Appeal also decided that the decision to make the 50% offer did not consider the recovery purposes set out in section 3 of the CER Act, as required to do so by section 10.

"The problem with the September 2012 decision, therefore, as we see it, is that the Cabinet decision left the Chief Executive in a position where he was required to make a decision to make offers under s 53 in circumstances where there is nothing to indicate that he addressed the purposes of the CER Act set out in s 3, particularly the recovery objective in s 3(a), as he is required to do by s 10(1). We agree therefore with the High Court Judge's conclusion that the process leading to the September 2012 decision to make the 50 per cent offer did not involve the deliberative process required under s 10 of the CER Act and the decision was therefore made outside of, and without regard for, the statutory regime and hence not made according to law."

The Court of Appeal therefore set aside the orders of the High Court, and made a declaration that:

"the September 2012 decision by the Chief Executive to offer to purchase the properties of owners of vacant land and owners of uninsured improved properties in the red zone was not lawfully made."

In the Supreme Court

The Supreme Court considered both whether the creation of the red zone was lawful, and whether the September 2012 offers were lawfully made.

In a split (3:2) decision, the majority of the Supreme Court decided that the CER Act "covers the field" of action that may be taken in response to the Christchurch earthquakes. The Crown therefore should not have used its prerogative powers to make decisions, but rather should have used the mechanisms in the CER Act. They noted that:

"That the Act's role is exclusive is also shown by the safeguards in relation to the use of the powers in the Act, which are particularly important because many of the powers in the Act are highly coercive. It cannot have been intended that the safeguards in the Act could be circumvented by acting outside of the Act."

The Supreme Court went on to say that:

"The whole scheme of the Canterbury Earthquake Recovery Act, its purposes and its legislative history support the view that decisions of the magnitude of those made in June 2011 on recovery measures should have been made under the Act and in particular through the Recovery Plan processes. They were not. That the June 2011 decisions were made outside of the Act undermined the safeguards, community participation and reviews mandated by the Act."

However, like the High Court and the Court of Appeal, they decided that as it is now too late to require the red zoning decisions to be re-made under the CER Act, saying that "a declaration as to the unlawfulness of the June 2011 decisions would not serve any useful purpose and none is made."

The Supreme Court then considered the lawfulness of the decision to make the September 2012 offer, being the offer to purchase the vacant land and uninsured properties at 50 percent of the land value. This offer is challenged on the basis that:

  • it is irrational to take into account the insurance status of the properties;
  • the purposes of the CER Act, and in particular that of recovery, were not properly taken into account; and
  • even if the insurance status was relevant in June 2011, given the current situation in the red zones, it is no longer relevant.

In relation to the insurance status, the Supreme Court decided that:

"we do not consider that the insurance status of properties in the red zone should have been treated as determinative when deciding that there should be a differential and, if so, the nature and extent of that differential. We accept, however, that the insurance status of properties was not an irrelevant factor."

The Supreme Court also noted that the "main purpose of the Canterbury Earthquake Recovery Act is to provide for the recovery of greater Christchurch communities." They said that:

"The red zone decisions were made on a community wide basis and this suggests a whole of community approach, rather than separating out particular individuals or groups for differential treatment in a manner that does not support recovery."

In addition, there is "no doubt that the living conditions in the red zone have severely deteriorated over the last three years". The Supreme Court stated that:

"on the issue of delay, we consider this was a relevant factor that should have been taken into account. The situation in the red zones had deteriorated. Many of the June 2011 offers had been accepted and the properties vacated. The fact that the September 2012 decisions were being taken against a totally different backdrop to that pertaining in June 2011 should have been considered."

The Supreme Court therefore made the same decision as the Court of Appeal, and made a declaration that the decisions relating to the uninsured and uninsurable in September 2012 were not lawfully made, and that the Minister and the chief executive should be directed to reconsider the decisions in light of this judgment.

What happens now?

The Government will remake the decision regarding any offer to be made to the owners of vacant land or uninsured residential properties in the red zone. This new decision will need to address the circumstances as they now are, and therefore may take into account the delay in making the offer, and the hardship caused by the depopulation of the red zone during that time, particularly in relation to the running down of local infrastructure and amenities.

Any new offer will need to be made under section 53 of the CER Act, and therefore will also have to take into account the purposes of the CER Act.

Hopefully the decision for an offer to the owners of vacant land or uninsured residential properties in the flat land red zone will be accompanied by, or soon after followed by, an offer to vacant land or uninsured residential properties in the Port Hills red zone, who are still yet to receive an offer.

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”

Mondaq Advice Centre (MACs)
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.