The applications were for non-complying activities under the operative district plan and were prohibited under the proposed plan change. This required the consent authority to assess each application as a non-complying activity under sections 104D and 104 of the Resource Management Act 1991 ("RMA"). Section 104D provides gateway tests; the application must pass at least one of them before the consent authority can consider whether to grant the application. The two gateway tests are that the consent authority must be satisfied that:
- The adverse effects of the activity on the environment will be minor; or
- The activity will not be contrary to the objectives and policies of both the operative and proposed plans.
The Council declined one application and the other went directly to the Environment Court, where both consents were granted.
The Environment Court adopted the decision of Queenstown Lakes District Council v Hawthorn Estate Ltd1in relation to the definition of "environment" in section 104D. Hawthorn states that the environment includes the future environment as it might be modified by activities permitted under a district plan, or by activities for which consents have been approved and which look likely to be implemented. However, the Hawthorn approach expressly excluded the future environment as it might be modified by activities for which applications had not yet been made.
As the content of the proposed plan change implementing the industrialisation of the application site was still under appeal, the Environment Court concluded that the potential rezoning was not relevant. Therefore, the potential loss of industrial land if the applications were granted was not a relevant effect on the environment. The High Court considered that the Environment Court decision did not consider either the subject site or the receiving environment as a place where industrial activity might occur in the future.
The High Court recognised that Hawthorn needs to be understood in its context and a "real-world" approach has to be taken. The environment in Hawthorn was stable, and not subject to proposed changes, compared with the proposed sites in the Queenstown decisions. The High Court pointed out that Hawthorn did embrace the future environment as a consideration in sections 104D and 104 and signalled the difficulties of applying its approach in areas undergoing change. Guidance about future activities could be gleaned from policy frameworks and district plan rules. The High Court said that when assessing applications in such changeable areas, consent authorities need to consider the operative plan, existing resource consents, competing uses of the land, and regulatory initiatives as shown in proposed plan changes.
Although the proposed plan change was still under appeal, the High Court found that it was appropriate to take the loss of industrial land, which would be caused if the applications were granted, into consideration as an effect on the future environment. On a real world assessment, the land was inevitably going to be industrialised, based on the lack of other industrial land in the area, the operative plan provisions and the proposed plan change. This needed to be taken into account when assessing the applications under section 104D.
The Environment Court also considered whether the effect of granting consent would be minor. It held that the effects of changing a resource by less than 20% may be considered minor. The Environment Court found that the applications would have a less than minor adverse effects on the environment because the applications would only result in the loss of less than 5% of the available industrial land.
The High Court disagreed with this approach. It said that the statutory test of "minor" needs to be understood in context and applied within the policy framework. The purpose of section 104D(1)(a) is to allow applications for non-complying activities where the adverse effect on the environment is so minor "that it is not likely to matter", even though the activity may be contrary to the operative and/or proposed plans. Assessing whether an effect is minor for the purposes of section 104(1)(a) involves both a quantitative and qualitative analysis. The High Court considered that a minor effect is "a very small eye in the needle".
The High Court also found that the Environment Court decisions conflated the section 104 and section 104D assessments. The Environment Court had considered whether the activities were contrary to the objectives and policies of the plans, under section 104D(1)(b), after considering the applications under the general requirement in section 104 to analyse activities with regard to the objectives and policies. The High Court pointed out that the section 104D gateway needs to be passed before section 104 is reached.
For a non-complying activity to pass the gateway in section 104D(1)(b), a consent authority must be satisfied that the activity will not be contrary to the objectives and policies of a plan. However, section 104 provides a consent authority with the discretion to grant an application where some non-compliance with objectives and policies exists. Therefore, separate analysis is required because the standards under the two provisions are different. If a consent authority assesses the two provisions together, there is a risk that a decision under one section will influence the decision under the other.
The High Court found that there had been errors of law in the Environment Court decision and that there was a real prospect that both applications could have been dismissed under either section 104D gateway test. The High Court quashed the decisions, sending the applications back to the Environment Court for reconsideration.
The Queenstown decisions raise important issues and provide useful guidance related to the assessment of applications for non-complying activities. Leave to appeal the High Court decisions on questions of law has been granted.2 It will be interesting to see what further litigation follows and what effect this may have on the assessment of applications for non-complying activities under the RMA.
1 Queenstown-Lakes District Council v Hawthorn Estate Ltd (2006) 12 ELRNZ 299;  NZRMA 424 (CA).
2 Foodstuffs (South Island) Ltd v Queenstown Lakes District Council  NZHC 1552.
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