Local Authorities' decision-making requirements - Court of Appeal decision
Local Authorities' decision-making requirements - Court of Appeal decision
Friday 15 September, 2017
In the recent decision of Wellington City Council v Minotaur Custodians Limited  NZCA 302 (Brown, Simon France and Williams JJ), the Court of Appeal overturned the decision of the High Court and reinstated the Council’s original 2009 decision to adopt a new policy on resident parking permits.
The Court of Appeal’s decision has shown a welcome change in stance towards the interpretation of local authority decision-making powers, holding that Part 6 of the Local Government Act 2002 (‘LGA’) gives local authorities a broad discretion as to how to meet their statutory decision-making obligations (including whether to consult, and, if so, how), and, that the options available to challenge the exercise of those statutory discretions are limited.
Background – WCC’s change of policy
In this case, Wellington City Council (‘WCC’) undertook a city-wide review of its parking policy in 2009, and as a result of the review changed the eligibility criteria for Wellington residents' parking permits, including in the vicinity of an apartment complex owned by Minotaur Custodians Ltd (‘Minotaur’).
The effect of the policy change was to make any new tenants of Minotaur's apartment complex ineligible for residents’ parking permits, as from 1 January 2010.
WCC’s target audience for consultation was permit holders in areas directly affected by the changes; all residents of affected streets; and all residents, businesses, schools, universities and community organisations in both permit areas and peripheral areas.
Consultation documents were sent to residents and affected parties, placed on vehicle windscreens in coupon zones around the city, posted on WCC’s website, and made available in WCC’s libraries and service centre. Public notices were also published in Wellington’s city and local newspapers.
Minotaur was not one of the targets identified (either specifically or generically) for active consultation and was not sent a copy of the consultation documents. It did not find out about WCC’s policy change until one of its new tenants was declined an application for a resident's parking permit.
Minotaur complained to WCC that it had been severely disadvantaged by being denied an opportunity to engage in consultation with WCC and requested reinstatement of the old policy.
WCC did not reinstate the old policy but extended the time for implementation of the changes in relation to a number of properties (including Minotaur’s apartment complex) by two years, to allow residents and owners to –
- address any changes required to accommodate the new eligibility criteria; or
- seek case-by-case exceptions to the new policy requirements.
Minotaur did not present a case to Council for an exception, instead (at the end of the extended period), it requested information relating to WCC’s change in policy and the process involved, and in March 2015, commenced judicial review proceedings in the High Court.
In the High Court, Mallon J acknowledged that WCC appropriately decided under Part 6 of LGA that it should carry out consultation, and, target those who might be directly affected by the changes.
WCC offered no explanation as to why it did not send consultation documents to non-resident landlords (rather than just occupiers and resident landlords) of properties. In the absence of any logical rationale given by it for targeting residents and businesses in the affected areas but not non-resident landlords, Mallon J found she was entitled to infer that the failure to send consultation documents to non-resident landlords was an oversight. This meant that, since the Council had decided to consult widely amongst affected groups, it was irrational not to consult with non-resident landlords who were also directly affected.
Mallon J, therefore –
- found that WCC had failed in its statutory duty to give consideration to those persons likely to be affected, and, to encourage those who may be affected by a decision to present their views; and
- directed WCC to consider afresh whether it was appropriate to grant an exception from the policy criteria and, for that purpose, to consult with Minotaur (as if the policy had not been implemented).
WCC appealed the High Court decision to the Court of Appeal.
Court of Appeal
The Court of Appeal focussed on the question of whether or not, in deciding who to consult out of the spectrum of those who ‘will or may be affected by, or have an interest in,’ the policy change, WCC did so ‘rationally and in pursuit of the purposes of the LGA generally and those in pt 6 specifically.’ In the Court’s view, the answer turned on whether or not there was a reasonable rationale for the different treatment accorded to Minotaur.
Consultation duties under Part 6 of the LGA
In respect of local authorities’ decision-making powers and responsibilities under Part 6 (sections 76—79 and 82) of the LGA, the Court held -
- Part 6 ‘carefully and repeatedly rejects the idea that there is to be found in its provisions any duty to consult with affected or interested parties. Instead, local authorities are given a deliberately broad discretion as to whether to consult, and, if so, how.’
- Parliament has left the evidence-based judgement call about how to achieve compliance with sections 77 and 78 of the LGA to local authorities and ‘a court will not interfere with a discretionary judgment unless it is irrational or made on a wrong legal principle.’ Baragwanath J in Whakatane District Council v Bay of Plenty Regional Council  NZCA 346,  3 NZLR 826 at .
- In the exercise of statutory discretions:
- Local authorities must be able to demonstrate that their choices ‘promote[d] compliance’ with the applicable provisions of section 78 and the consultation and other considerations in section 82; and
- Decisions must be rational and discretions ‘exercised consistently, treating like-cases alike’.
WCC’s statutory discretions were exercised lawfully
The Court concluded that -
In the end, Parliament's clear and repeated preference for protecting the Council's right to decide how it wishes to consult must count for something. In this case, it means that if an inference can be drawn that there was a rational basis for different treatment between affected classes within the community, that inference should be drawn.
Whilst the Court agreed that the High Court was right to be concerned about the possibility of irrationally inconsistent treatment of Minotaur, and about WCC’s refusal to explain it in evidence, it held there was ‘a proper basis upon which a valid reason for different treatment can be inferred on the evidence’.
The Court’s view was that it could infer that WCC had valid reasons for the adoption of a narrower class of consultee because it concluded -
- Residents (both present and future), car park users, the two universities, local businesses and community representative organisations, were directly affected.
- Non-resident landlords, like Minotaur, were not directly affected. Their interests were ‘purely economic’; ‘more subtle and less obvious’. To have specifically decided to consult with non-resident landlords, Council would have had to know that the effect of the change in policy was a reduction in the pool of interested tenants, with a corresponding need to reduce rent, and a change in the nature of the customer prepared to rent Minotaur's property. A further relevant factor (under sections 79 and 82) was the amount of time and resource which would have been required to be spent on producing a reliable list of non-resident landlords.
- Although Council’s records gave no indication that the situation of non-resident landlords was considered when consultation categories were formulated, this was to be expected -
 .. Section 79(1)(b)(iv) of the LGA also reserves to the Council a discretion as to the nature and extent of any written record of the decision under challenge. .. The Council cannot be required to meticulously record reasons for its approach to procedural detail as if it were a court. As s 79(1)(b)(iv) implies, that would create too heavy a burden on a busy council with a finite budget.
Common law duty to consult
The Court provides a useful discussion on the relationship between the statutory duty of consultation in the LGA and the common law duty to consult. In summary, it concluded -
- Because of the wide discretion given to local authorities under Part 6 of the LGA, it will always be difficult to establish a concurrent common law duty to consult except in truly exceptional cases such as Pascoe Properties Ltd v Nelson City Council  NZRMA 232 (HC).
- Pascoe ‘is best understood as one founded in legitimate expectation arising from its unique facts’.
Pascoe’s ‘unique facts’ were that the adjoining businesses could demonstrate that the Nelson City Council had, in the past, struck a special rate levied on them alone to fund the Council's purchase of the land for customer parking. As a result, Mackenzie J held that Nelson City Council was obliged to consult with adjoining businesses before deciding to change the use of Council-owned land from a customer car park to a public recreation space.
- Because of the inherent requirement in Part 6 for local authorities to act rationally, a plaintiff will not be required to establish a separate and additional common law duty to consult to bring irrationality principles into play.
Even if WCC had not been successful in overturning the High Court decision, the Court made it clear that it would not have granted Minotaur the relief it wanted for a number of reasons - the delay in bringing the proceedings was significant - after five years the policy was ‘well and truly bedded in’; Minotaur did not avail itself of the opportunity to prepare a case for an exception to be made between 2010 and 2012; and the relief sought and obtained from the High Court was the same as the opportunity offered to Minotaur in 2010, when the rules were new and did not yet apply to Minotaur. It would, therefore, be unfair to give Minotaur a second chance when it offered no excuse for its failure to take up the first one.
Effect of decision
Subject to the outcome of a further appeal by Minotaur (if any), Councils can rely on the Court’s decision as confirmation that judgement calls made under Part 6 of the LGA are for Councils, alone, to make - so long as they are made rationally, demonstrate compliance with the purposes of the LGA generally and those in Part 6 specifically, and treat like-cases alike.
Please contact Theresa Le Bas if you want to learn more about the issues discussed in this article.
To view the entire Judgement, please click here.