Quake Outcasts rescued by Court decision

The recent success of a judicial review of decisions made by the Minister for Canterbury Earthquake Recovery and the Canterbury Earthquake Recovery Authority (CERA), highlights the need for decision makers to follow the specific statutory regime that they operate under, rather than rely on their general powers (Fowler Developments Ltd v Chief Executive of the Canterbury Earthquake Recovery Authority (Quake Outcasts) [2013] NZHC 2173) 

The decisions under challenge

Judicial review is a method of challenging decisions made by government. The Quake Outcasts case arose from two particular government decisions:

  • The Minister’s decision to declare land as residential red zone; and
  • The decision of the Minister and the Chief Executive of CERA to make offers to purchase uninsured residential properties and vacant land in the residential red zone for 50% of their 2007 rateable value.

The decisions were in stark contrast to the Crown’s 100% offers to insured property owners within the residential red zone.

A Cabinet Paper on the 50% offers set out the competing considerations. On the one hand, the Government was concerned that a 100% offer would compensate uninsured damage, be unfair to red zone property owners who had taken out insurance, and undermine the incentive on property owners to insure.

On the other hand, the Government saw a need to encourage property owners to move on from the red zone, and to recognise that there was some residual value in the affected properties.

Basis for challenge

The principal ground of challenge was that the offers were unlawful because they were not made in accordance with of the Canterbury Earthquake Recovery Act 2011 (Act). The applicants also argued that the 50% offers were oppressive, disproportionate and in breach of human rights, although the Court discussed these points only briefly in its decision.

The Act gives the Chief Executive of CERA and the Minister a wide range of powers, including the power to acquire land and property. The Act includes safeguards on the exercise of the powers under the Act, including a requirement that powers be exercised in accordance with the purposes of the Act, and only if the decision maker considers the exercise of the power necessary.

The Act also provided for the development of a Recovery Strategy and Recovery Plans, and included requirements for consultation on the strategy and plans.

The Minister, however, made the residential red zone decisions together with other Ministers as a policy decision outside of the Act. The Minister’s decision to make 50% offers and CERA’s decision to implement it were made on a similar basis. Counsel for the Minister and CERA submitted the Crown did not need to exercise any powers under the Act, arguing that the Crown was merely exercising its common law powers to publish information.

The Court decision

The Court considered that the Crown’s general or common law powers in respect of the matters in issue had been overtaken by the Act. Parliament had enacted a statute to deal with matters arising from the Canterbury earthquake, and the statute included limitations on the exercise of the Government’s powers. Accordingly, the decisions in respect of the red zone and the 50% offers had to be made in accordance with the Act.

More specifically, the Court held that section 27 of the Act should have been invoked by the Minister. Section 27 deals with the ability of the Minister to suspend, amend or revoke in whole or in part a Resource Management Act document relating to Greater Christchurch. This was because the red zone decision effectively meant that the residential zones under the district plan were no longer operative.

The Court also held that there was no deliberative process to ensure the 50% offers were made in accordance with the processes under the Act and the purposes of the Act, or consideration of whether the decisions were reasonably necessary.

Despite the Court’s findings, the Court did not make a general declaration that the red zone decisions were invalid, as such a declaration would be problematic for the large number of insured property owners who had already accepted the Crown’s 100% offers. Instead, the Court declared that the red zone decision did not lawfully affect the property rights of the applicants in the Quake Outcasts case.

The Court also set aside the 50% offers made by CERA and ordered the Minister and CERA to reconsider and reach new decisions on whether to purchase the applicant’s properties under the Act.

The Minister and CERA are appealing the High Court decision.

Implications of the case

For Christchurch property owners, the case is significant as it reinforces the statutory regime and could lead to a better outcome for the affected owners, unless the case is overturned on appeal.

The decision also has implications in Christchurch beyond the affected owners. The Crown has delayed the announcement of the Port Hills zoning review while the appeal is underway. If the High Court’s decision stands, the Government may need to reconsider the Port Hill’s decisions. In doing so, however, the Government may need to be careful about how long it waits to make the Port Hills decisions, to avoid a challenge based on administrative delay.

The case is also of wider relevance. It highlights the need for government bodies who are subject to a statutory regime to ensure decisions are made in accordance with the statute, even if they think they are able to make the decisions as a general matter of law. There are also some interesting comments in the High Court’s decision about the use and enjoyment of one’s home as a fundamental human right, and on compulsory acquisition powers.

To discuss this case, or for other advice on public law matters please contact a member of the Public Law team

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

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