The High Court has recently presided over a long-running litigation battle between a landowner and the Whangarei District Council. In their transition from paper to electronic record keeping, the Council archived a land use consent which would have allowed Malcolm Daisley to lawfully operate quarrying activities on his land. The Council incorrectly overlooked this consent, and a lengthy legal dispute began between Daisley and the Council. Ultimately, the Court found the Council acted negligently and were held liable for over $4 million in damages. This judgment affirmed that local authorities have a duty of care to keep full, accurate and accessible records about resource consents.
Daisley purchased a quarry near Whangarei in 2004 and intended to extract metal to use in his earthworks contracting business and for commercial sales. The seller of the land told Daisley, correctly, that the quarry operations had not been challenged or prohibited at any time.
In November 2004, the Whangarei District Council (the Council) contacted Daisley and advised him that he did not have the correct consent to quarry. The Council issued abatement and infringement notices between 2005 and 2009 and eventually began enforcement action against Mr Daisley in the Environment Court. The Council remained steadfast in their position that no consents existed for the quarry.
In September 2009, Daisley’s lawyer reviewed the Council’s hard copy files and found a land use consent issued in 1998 that allowed quarrying activities on the property. This was the first time Daisley knew the consent existed. That consent was not limited by time or in the volume of removed materials. The land use consent was not recorded in the Council’s computer files when they transitioned from paper to electronic record keeping.
In December 2009, one day before an intended mortgagee sale of the property, Daisley sold the quarry for a reduced price. Daisley said this was a “forced sale”. Despite the discovery of the land use consent, the Council did not withdraw its final enforcement action against Daisley until 2011.
Daisley issued proceedings for negligence and breach of duty against the Council in 2015. He claimed that he suffered lost earnings, the loss in value of the business operation, the loss of value of the property, and costs associated with the Council’s infringement and enforcement actions. The Council raised a defence under s 4 of the Limitation Act 1950, alleging that the proceeding was time-barred.
The Council’s duty to keep accurate records was the cornerstone of this decision. The Court found the Council had common law duties owed to the public, which are provided for under ss 35 and 322 of the Resource Management Act 1991 (RMA). Section 35 requires a Council to exercise reasonable care and skill in maintaining records of resource consents for accessible public inspection. Section 322 requires an enforcement officer to be satisfiedthat there are reasonable grounds for issuing an abatement notice. The Court considered this to mean an enforcement officer has a duty to exercise due diligence to ensure that there is no resource consent authorising the activity before issuing an abatement notice. Toogood J held the general duty to exercise reasonable care found in s 35 informed the duties under s 322.
Having found the Council owed a common law duty of care to Daisley, the Court considered whether they had breached these duties under the requisite RMA provisions. Toogood J held that the Council breached its duties under s 35 for failing to exercise reasonable care in keeping the records of the 1998 consent available for public inspection. The Council acted negligently in failing to correctly inform Mr Daisley about the consent’s existence, which prevented Daisley from lawfully carrying out quarrying activities on his land.
The Council’s failure to maintain and making its records readily available resulted in another negligent breach of their obligations under s 322. Toogood J held that the Council’s abatement officer failed to adequately search the Council’s records for the relevant resource consent before issuing Daisley the first abatement notice. The Council officer, therefore, did not exercisedue diligence as required under s 322 and failed to uphold the Council’s duty of care to the public. His Honour held that the Council officer did not have reasonable grounds for belief in the circumstances to serve Daisley the first abatement notice, or any subsequent abatement notice.
The Court rejected the Council’s argument that Daisley’s proceedings were time-barred. Toogood J considered that the Council first breached its duty to Daisley when he applied for a resource consent in 2006 and the Council failed to discover the 1988 consent. His Honour held that the plaintiff sustained immediate damage when the Council incorrectly stated no consent existed and refused Daisley a resource consent on that basis.
The Court held that it would be artificial to regard the Council’s various denials of the existence of a consent as separate breaches of duty. Toogood J was satisfied that the Council continuously breached its common law duties to Daisley from November 2004 to discovery of the 1988 consent in 2009. This meant that Daisley’s proceedings accrued continuously until 2009 and therefore were not time-bared by s 4 of the Limitation Act 1950.
Daisley claimed exemplary damages on the grounds of misfeasance of public office by the Council and their officers. The Court found the Council officers failed to properly inquire about the Council’s records when issuing Daisley with enforcement proceedings. Toogood J was satisfied that the Council officers acted recklessly towards Daisley in assuming the 1998 consent did not exist when presented with evidence proving otherwise, however, they were not acting maliciously. The Court regarded the Council’s “stubborn and obstructive attitude” towards Daisley after the discovery of the resource consent as inexcusable and unreasonable. His Honour held this conduct amounted to misfeasance in public office and awarded Daisley $50,000 in exemplary damages.
The Council was found liable for a significant amount of damages. The Court accepted Daisley’s loss of income was caused by the inability to quarry on his land, and for this he was awarded over $4 million in damages. He was awarded an additional $90,000 for the loss of property value, and another $50,000 for the direct costs associated with the Council’s enforcement proceedings.
For further information on this case or similar issues please contact Director Brigitte Morten
Photo by Jonny Caspari on Unsplash
