Supreme Court Upholds Council’s Appeal On Roading And Subdivisions

The recent decision of the Supreme Court in Waitakere City Council v Estate Homes Limited [2006] NZSC 112 has clarified the law relating to subdivision consent conditions that require the provision of public infrastructure. The decision overturns an earlier judgment of the Court of Appeal ([2006] 2 NZLR 619) and contains some important comments on the scope of Environment Court appeals and the lawfulness of consent conditions generally.

The background to the case involved a proposed subdivision by Estate Homes Ltd (Estate Homes) that included the construction of an arterial road along the path of a longstanding designation. Waitakere City Council's (Council's) normal policy was to require applicants for subdivision consent to undertake the construction of designated roads as part of the subdivision process. In such situations, the Council would typically pay compensation to developers to the extent that the road was not necessary for the purposes of the particular development. In light of this policy, Estate Homes' consent application sought compensation for the difference between the cost of constructing a local road (which was arguably required to serve the subdivision) and an arterial road (which was the higher capacity road demanded by the Council under the designation).

The Council ultimately granted subdivision consent to Estate Homes. The consent was issued subject to a condition requiring the road to be vested in the Council and stating that the amount of compensation would be the difference between the construction of an arterial road and a collector road. Estate Homes appealed against that condition, which resulted in a much smaller compensation payment, and the matter proceeded on appeal through the Courts.

The main issues for the Supreme Court were:

identification of the statutory basis for the Council to require the road to be constructed; and

what entitlements to compensation this gave rise to.

Statutory basis for roading requirements

The majority of the Court of Appeal had held that by imposing the condition noted above, the Council effectively 'acquired' the land under s322(2) of the Local Government Act 1974. On that basis, the majority reasoned that the Council was required to fully compensate Estate Homes for the 'taking', due to associated provisions in the Local Government Act 1974 that invoked the Public Works Act 1981.

The Supreme Court disagreed. It held that the legal presumption of compensation only applies if...

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