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.