BELLA VISTA RESORT LIMITED & BELLA VISTA PROPERTIES LIMITED V WESTERN BAY OF PLENTY DISTRICT COUNCIL CA CA233/05

BELLA VISTA RESORT LIMITED & BELLA VISTA PROPERTIES LIMITED V WESTERN BAY OF PLENTY DISTRICT COUNCIL CA CA233/05 1 March 2007IN THE COURT OF APPEAL OF NEW ZEALAND CA233/05 [2007] NZCA 33BETWEEN BELLA VISTA RESORT LIMITED & BELLA VISTA PROPERTIES LIMITED Appellants AND WESTERN BAY OF PLENTY DISTRICT COUNCIL Respondent Hearing: 24 October 2006 Court: William Young P, Chambers and Robertson JJ Counsel: M G Dixon for Appellants P J Crombie for Respondent Judgment: 1 March 2007 at 11 amJUDGMENT OF THE COURT A The appeal is dismissed. B The respondent is entitled to costs of $6,000 together with usual disbursements.____________________________________________________________________REASONS Robertson J [1] William Young P [65] Chambers J [76]ROBERTSON J Table of Contents Para No Introduction [1]Facts [6]The High Court case [12]Was the Judge correct in holding that the Council did not owe a duty of care to the Hofmanns? [17](i) Did the Judge err in striking out the statement of claim when it asserted a novel duty? [17](ii) Did the Judge err in his conceptualising of the statutory scheme? [21]High Court approach [21]Statutory framework [25]Relevant authorities [29]Overseas jurisdictions [46]Conclusion [49](iii) Did the Judge err in his assessment of proximity and policy considerations [50]Does the fact that the Hofmanns on-sold to two companies which they controlled make any difference? [63]Result [64]Introduction[1] This is an appeal against a decision by Simon France J striking out a claim of negligence. [2] Evelyn Marie Hofmann obtained consent from the respondent (the Council) in a non-notified application under s 94 of the Resource Management Act 1991 (RMA) to construct a lodge and restaurant. Subsequently, pursuant to s 127 of the RMA, a variation was granted by the Council to allow for the construction and operation of a separate conference facility. The two appellant companies, both associated with Mrs Hofmann and her husband, took over the development and operation of the lodge, restaurant and conference facility. [3] Neighbours who had been assumed to be consenting to the proposal took judicial review proceedings (Troughton & Ors v Western Bay of Plenty District Council HC TAU CIV 2003-470-238 18 February 2004) which resulted in thedecisions granting and varying the resource consents being set aside. The question of consent was remitted to the Council to be reconsidered. [4] The appellants neither appealed against the judicial review decision of Keane J nor sought to obtain further resource consents from the Council for their lodge, restaurant and conference facility. Instead they commenced proceedings against the Council seeking damages, alleging negligence in dealing with the consent process. Third parties were joined, but did not participate in the High Court hearing and were not before us. [5] The issues raised on appeal are: (a) was the Judge correct in holding that the Council did not owe a duty of care to the Hofmanns? (b) does the fact that the Hofmanns on-sold to two companies which they controlled make any difference?Facts[6] On 29 August 2001, the Council granted the Hofmanns' application for an upmarket homestay and function facility on a non-notified basis under s 94 of the RMA. The approval allowed 50 large scale events per year (with a maximum of 150 people) and an average of 15 guests per night for accommodation. [7] The Hofmanns commenced business on 5 September 2001. [8] In October 2001 Mrs Hofmann spoke with an officer of the Council about the construction of a further building which would be a stand-alone function facility. She was advised that they would not need to obtain new consents from the neighbours and that approval could be obtained by way of variation of an existing condition. She wrote an appropriate letter. The Council approved the variation and the Hofmanns built the function centre.[9] On 28 August 2002, Bella Vista Properties Ltd (BVP) purchased the property and business from Mr and Mrs Hofmann. The Hofmanns are the shareholders of that company. Bella Vista Resort Ltd (BVR), of which the Hofmanns also are the sole shareholders, leased the business from BVP in April 2003. [10] The High Court revoked both the consent and the variation in judicial review proceedings brought by the neighbours who had signed the written consents on the basis that their consents were given in relation to an "exclusive homestay and restaurant" and not a fully fledged conference centre. The applicant neighbours argued that the scale of the application could not be reconciled with their consents and that by approving the application on a non-notified basis the Council had effectively denied them standing to challenge the application. Keane J upheld this argument observing that, if what was being consented to by the neighbours was not clear, the Council had a duty to satisfy itself what was consented to. [11] The Council, as a result of the High Court decision, required the appellants to cease all activity by 7 April 2004. This occurred.The High Court case[12] The appellants brought a claim in negligence against the Council on the basis that the Council owed a duty of care to "all persons, natural and corporate, who relied on either the consent or the variation or both". The relevant particulars in the statement of claim were:17. Pursuant to its said duty the first defendant was required to ensure that the applications for consent and variation were dealt with in accordance with the Act and validly issued under the Act. 18. The first defendant is in breach of its duty to the first and second plaintiffs, who have relied upon the consent, in the following particulars: (a) Failing to properly consider the application for consent in comparison to, and in conjunction with, the affected persons' written consents. (b) Failing to properly apply the provisions of Section 94 of the Act in determining that the application could proceed as non- notified.(c) Issuing a consent for activities beyond what was consented to by the affected persons and applied for by Evelyn Hofmann. (d) Issuing a clearly invalid consent. 19. The first defendant is in breach of its duty to the first and second plaintiffs in approving the variation on a non-notified basis in the following particulars: (a) Failing to properly apply the provisions of Section 127 of the Act. (b) Wrongly determining that the variation involved only a change or cancellation of a condition to the original consent. (c) Granting the variation on a non-notified basis in reliance upon the affected persons' original consents. (d) Issuing an invalid variation to the original consent.[13] Before us, Mr Dixon accepted that the duty of care alleged was too widely framed, but argued the strike-out should be considered on the basis that the duty was to the person who obtained the consent or became entitled to its effect and benefit. [14] It is important to focus on the precise nature of the claim. [15] As pleaded, the claim addresses only the decision making of the Council in relation to its statutory functions associated with the issuing of the consent and variation. This is a quasi-judicial role and not one which is an obvious candidate for the imposition of a duty of care. [16] I recognise that the material before the Court suggests that Mrs Hofmann claims that she was advised by a Council Officer that the function facility could be the subject of a variation of the existing consent (see [8] above). This alleged advice is not the subject of a separate claim for negligent misrepresentation. Given the close connection between the advice and the granting of the variation, it is far from clear that such a claim could be asserted independently of the claim based on the Council's alleged negligence in issuing the variation. If policy considerations negative the existence of a duty of care as to the issuing of the variation, the same policy considerations might be thought to negative a duty of care as to closely related advice. Such a claim would also face difficulties for Mrs Hofmann, given the subsequent introduction of the two appellant companies into the development and operation of the lodge, restaurant and conference facility.Was the Judge correct in holding that the Council did not owe a duty of care to the Hofmanns?(i) Did the Judge err in striking out the statement of claim when it asserted a novel duty?[17] The Judge treated the cause of action as a novel duty. He predicated his approach to the case on the two step test set out in South Pacific Manufacturing Co Ltd v New Zealand Security Consultants and Investigations Ltd [1992] 2 NZLR 282 (CA) and applied in Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA). [18] Mr Dixon submitted that, as this case involved a novel duty of care, the Judge was wrong to strike-out the cause of action. He argued that in a new claim situation the Court should be cautious about strike out. A Court would be justified in doing so only if the Court could be confident that no further investigation or argument of any kind could provide any appreciable assistance to reaching the correct outcome:Hobson & Couch v Attorney-General CA74/05 CA238/05 17 May 2006. [19] It is perhaps questionable as to whether this case involves a novel duty of care. Not dissimilar issues were litigated nearly 25 years ago in Port Underwood Forests Limited v Marlborough County Council [1982] 1 NZLR 343 (HC); a variation on the theme a little later in Craig v East Coast Bays City Council [1986] 1 NZLR 99 (CA); and quite recently in Three Meade Street Limited v Rotorua District Council [2005] 1 NZLR 504 (HC). [20] Whatever the classification however, I am not persuaded there was any error in the High Court Judge treating this case as being open to a strike-out application. The scope and extent of the duty alleged were fully before the Court and did not require further elaboration or definition. Nothing has been pointed to which suggests that on the case as pleaded the Court would have been assisted by other evidence or more submission. It is fundamentally a question of policy as to whether in circumstances such as this a duty of care should exist.(ii) Did the Judge err in his conceptualising of the statutory scheme? High Court approach[21] The Judge considered the pleaded duty against the statutory scheme and assessed whether the scheme excluded it. He held that the RMA's primary purpose is the sustainable management of natural and physical resources. Public officials are charged with the task of balancing protection of the environment with social, cultural and economic wellbeing. He reviewed what must be considered in exercising the discretion to give resource consent (especially under s 104) and determined that the width of the private cause of action pleaded was inconsistent with the scheme of the RMA. He noted that the duty was pleaded as including those who placed "reliance on" the consent which would be wide enough to include guests, suppliers and employees. Simon France J held at [33]:The focus of the Act in the area of resource consent is on the assessment of the impact of the activity on the environment. It is quite some distance from a consideration of the economic interests of persons who have a connection to the activity.[22] Mr Dixon contended that the Judge erred in failing to recognise that economic factors were an important aspect of the RMA. He noted s 5 and the definition of sustainable management that included a focus on the economic wellbeing of communities. He argued that this recognition in the Act gives rise to a duty of care, namely that the consent authority must not do anything which unjustifiably imperils the economic interests of an applicant (or subsequent purchaser) in making a decision to grant a resource consent. [23] Mr Crombie responded that the "economic wellbeing" aspect of s 5 relates to enabling the community at large to provide for themselves economically and does not cover narrower considerations of individual financial viability. The economic effects of proposals are considered only to the extent that they affect the community at large and not the economic effects on the expectations of individuals: Imrie Family Trust v Whangarei District Council [1994] NZRMA 453 (PT).[24] Quite predictably the emphasis before Simon France J was on the extraordinarily broad view of the duty which was then being advanced but which before us had been curtailed, so the underlying rationale needs to be assessed.Statutory framework[25] I am satisfied that the proper conceptualisation of the statutory duty in the present case is that a consent authority must act within its power to issue consents in conformity with the purpose of the Act, namely the promotion of the sustainable management of natural and physical resources: s 5(1). In assessing sustainable management, a consent authority is directed to consider the need of communities to provide for their social, economic and cultural wellbeing as well as environmental protection: s 5(2). This direction does not mean that consent authorities are necessarily to be liable for an individual's economic loss. The Privy Council inMcGuire v Hastings District Council [2002] 1 NZLR 477 at [21] held that the true interpretation of s 5 does not allow the definition of sustainable management to be broken up into its component parts. The underlying purpose of the consent process is to provide a system whereby proposed activities can be assessed in terms of their impact on the environment and their sustainability. It does not require an assessment of the economic wellbeing of individual applicants, or subsequent purchasers. [26] The jurisdiction to issue consents on a non-notified basis is provided in s 94. At the time of the granting of resource consent, the section provided:94 Applications not requiring notification(1) An application for— (c) Any other resource consent that relates to a controlled activity need not be notified in accordance with section 93, if— (i) The activity to which the application relates is a controlled activity; and (ii) Written approval has been obtained from every person who, in the opinion of the consent authority, may be adversely affected by the granting of the resource consent unless, in the authority's opinion, it is unreasonable in the circumstances to require the obtaining of every such approval.[27] This section provides a means by which resource consent can be considered without requiring a notification process to occur. This has the advantage of reducing the delay in obtaining resource consent and saving the applicant money. Dealing with a resource consent on a non-notified basis is for the benefit of the applicant. [28] The decision to give initial resource consent can be different to the decision to extend or renew consent for previously approved activities. Section 104(2A) allows a consent authority to consider the value of the investment of the individual consent holder when deciding to renew. The wording of s 104 limits the consideration of an individual's financial situation to the decision to renew and is not relevant to the decision to initially grant consent.Relevant authorities[29] In Port Underwood Jeffries J found that the Council owed a duty to a plaintiff which had sought planning permission to establish a commercial forest, to provide a valid authorised permission under the statute. The Judge found that nothing said or done by the plaintiff was misleading but, in accordance with a procedure which the Council knew was in error, it granted the company consent. The claim was also for negligent mis-statement (which does not arise in the present case) and having referred to the decision in Anns v Merton London Borough Council[1978] 1 AC 728 (HL), the Judge said at 348:The Town and Country Planning Act 1953 imposed upon local authorities the obligation to prepare publish and administer district schemes. Henceforth use of the land within the territory was subject to control by the local authority. The duties, powers and discretions possessed by local authorities under the legislation were extensive and greatly curtailed a landowner's freedom to use his land as he chose. The granting or refusal of permission to use land in a particular way could have marked consequences on an owner and others. Extensive appeal provisions were made. It is clear reliance upon the permission of the local authority was fundamental.[30] The Judge concluded at 348:The duty owed was to give valid, authorised permissions under the statute to persons entitled to make applications for consents or permissions.It is important to note that the local authority in Port Underwood had not denied a duty but argued that it had not been breached in the circumstances. The Judge did not agree on the facts with that contention. [31] There were some similar issues in Craig. The plaintiff owned land adjoining a site where the Council permitted a deviation from the requirement of a proposed District Scheme that two residential units would be permitted only if they were separated by six metres. With that gap one of the units would have been built over a sewer line. The space was reduced to 3.8 metres without a written application to dispense with the six metre requirement. Mr Craig was denied the opportunity to object to the indulgence. [32] Cooke P said at 101:In my opinion the law of New Zealand is that a local authority dealing with an application for planning consent owes a duty, at least to neighbouring owners whose amenities should reasonably be foreseen to be closely and directly adversely affected by the proposal, to take reasonable care that it acts within its powers. Further than that it is not necessary to go for present purposes. The case is analogous on the question of checking the extent of legal powers to Takaro Properties Ltd v Rowling [1986] 1 NZLR 22 and on the question of proximity to Meates v Attorney-General [1983] NZLR 308 and Brown v Heathcote County Council [1986] 1 NZLR 76.[33] Tompkins J, with whom Richardson J concurred, said at 107:In considering the application for a building permit, in advising the building firm that lodged it to seek a dispensation, and in making on behalf of the owner a report to the planning committee in support of a dispensation without requiring a specific departure or seeking the consent of the appellant as an adjoining occupier, the respondent was, in my view, acting in the operational area. These were administrative acts that did not involve the making of any policy decision. I do not find there to be any considerations of policy or otherwise which ought to limit the scope of the duty. Indeed these considerations would tend to indicate to the contrary. There seems to be every good reason of policy for finding the existence of such a duty of care, remembering always that the duty proposed is to exercise reasonable care, not an absolute duty to ensure compliance. It is my conclusion that, for the reasons I have already discussed, it is just and reasonable to conclude that in the circumstances the respondent owed to the appellant a duty of care to ensure that in processing the application for abuilding permit it ensured that its operative district scheme was complied with, and that if there were to be a departure from that scheme, the proper statutory procedures were observed by requiring a notified application for specified departure.[34] Unlike the present case, in Craig there was a complete failure by the Council to follow the statutory procedures for issuing a dispensation on a non-notified basis. The Council did not seek written consent from affected persons as required by s 76 of the Town and Country Planning Act 1953 nor even consider that such a step was necessary. [35] The reasoning and approach of this Court in Morrison v Upper Hutt City Council [1998] 2 NZLR 331 is instructive. No reference is made to Port Underwoodor even Craig on which Richardson P had sat. Ms Morrison wanted to build two units on a site she owned. The provisions of the District Scheme precluded more than 12.5% of the sites in a given neighbourhood being used for two townhouses. The Council had treated "neighbourhood" as meaning "street". Using that approach the Council provided oral advice to Ms Morrison and her surveyor that her application would satisfy the requirement. This was found to be incorrect and the application was subsequently refused. The Planning Tribunal allowed a specified departure but Ms Morrison sued for the additional costs which had been incurred in the delay that this had occasioned. [36] In the District Court there was a finding that there was a duty of care and no good reason in public policy to limit or dissolve the duty. In the High Court, and in this Court, there was agreement that there was the necessary degree of proximity or relationship between the parties, but at both appellate levels it was held that, as a matter of policy, there should not be a duty of care. [37] Richardson P, writing for the Court, noted that, whether or not it was just or reasonable to recognise a duty of care was an intensely practical question which requires consideration of all the material facts in combination. [38] Richardson P found that the statutory scheme raised three policy considerations tending to negate a private law duty of care. First, the Council, as the statutory body administering the District Scheme, was constantly exercisingjudgment and there was a heavy overlay of policy considerations which required evaluation and determination. Secondly, there was an appellate structure in place which provided a statutory remedy for the review of initial decisions and various ameliorating remedies were available in that. [39] Finally, Richardson P said at 338:The third and final policy consideration tending to negate the existence of any common law duty of care is the floodgates problem. Recognition of a duty of care would allow claims to be advanced whenever a claimant asserted an incorrect interpretation, negligently made, causing loss. And the recognition of a duty of care of this kind could not reasonably be confined to planning responsibilities of local authorities. It would be difficult to justify not extending the duty category to decisions on the construction of other legislation or private law documents likely to affect other persons. In short, the proposed duty category would potentially be hugely expansive, carrying significant and unacceptably indeterminate consequences for the public interest.[40] In Three Meade, without reference to any of those decisions, Venning J dismissed a claim by an owner-builder who alleged that the Council assumed a duty of care to ensure that its inspections and resulting rulings were performed to a reasonable standard. [41] Venning J held that Invercargill City Council v Hamlin [1996] 1 NZLR 513 (PC) was not determinative and drew a distinction between a private residence as inHamlin and a commercial property. Three Meade involved a motel complex. [42] Applying the principles in South Pacific Manufacturing, Venning J held inThree Meade that the ultimate question was whether, in light of all the circumstances of a particular case, it was just and reasonable that a duty of care should be imposed. This involved an inquiry into the degree of proximity or relationship between the Council and the plaintiff and whether there were policy considerations which tended to negatise or restrict, or strengthen, the existence of duty. He found that the proximity factor was satisfied but held that there were issues of policy which drove him to conclude that on the facts of the particular case the Council did not owe a duty of care to the first plaintiff.[43] Similarly, Venning J held that, having regard to the statutory scheme, and applying the same reasoning as this Court had in Attorney-General v Carter [2003] 2 NZLR 160 (CA), there could not be a reframing of its claim as a breach of statutory duty. He said at [64] and [65]:Similarly, in the present case, it is not part of the statutory scheme that by issuing a code compliance certificate the council was guaranteeing the motel was free from defects which might otherwise cause economic loss to an owner. Section 76 of the Building Act provides that a council has the power to enter a premises to inspect building works during construction. Again the purposes of the inspection are set out at s 76(1). Those purposes are specific. They include to take all reasonable steps to ensure:• That work is being done in accordance with the consent;• That any compliance schedule issued is complied with;• That buildings remain safe, sanitary and have a means of escape from fire; and• That buildings that are likely to be declared dangerous or unsanitary come to the attention of the local authority.[44] Without deciding whether Morrison necessarily overrules Craig, at the very least it confirms that local authorities cannot owe a duty of care for granting permission to applicants. Craig, on its facts, can be distinguished from the present case as the appellant was a neighbour, not the initial applicant. [45] An applicant cannot attempt to shift liability for losses suffered on to the consent authority for doing that which the applicant sought. The duties owed by consent authorities to neighbours and those owed to applicants are necessarily asymmetric.Overseas jurisdictions[46] In Australia, the two stage Anns approach was rejected by the High Court of Australia in Sutherland Shire Council v Hayman (1985) 157 CLR 424. The High Court of Australia also rejected the three stage Caparo Industries Plc v Dickman [1990] 2 AC 605 approach: Sullivan v Moody (2001) 207 CLR 562. TheNew South Wales Court of Appeal considered Craig directly in Newcastle City Council v Shortland Management Services & Ors [2003] NSWCA 156 at [62] but did not apply it noting that New Zealand law substantially differs from Australian law: at [66]. [47] The United Kingdom has taken a similar approach to Australia in not finding consent authorities liable in negligence resulting in pure economic loss in relation to planning and environmental regulation. In Lam v Brennan [1997] PIQR P488 the Court of Appeal (Civil) declined a claim in negligence for property loss and personal injury caused by fumes from the claimant's neighbour's business. The Court of Appeal struck out the claim, holding that both planning and environmental provisions were plainly "for the benefit of the public at large living within the area of the local authority": P504. The Court held that no duty ought to be owed to individuals because of failures by a council to manage environmental or planning legislation. [48] The general approach taken in the United Kingdom is that local authorities making decisions on planning permission (and environmental regulation) will not owe landowners a duty of care. The rationale is that the statutory regimes pursuant to which the local authorities act, are not intended to protect individual landowners against economic harm and the statutes provide alternate remedies for those dissatisfied with the decisions of authorities: Strable v Dartford Borough Council[1960] 12 P & CR 172 at 174; Harris v Evans [1998] 1 WLR 1285 (CA Civ).Conclusion[49] The authorities seem to suggest that a third party in the position of the neighbour is entitled to rely on a local authority properly exercising its statutory powers, but that if there is a failure in that process which flows from the action or inaction of the complaining party, a duty will not exist. Port Underwood might be read as more expansive, but the existence of the duty was admitted and the breach was a deliberate act of the Council known not to be within the Scheme.(iii) Did the Judge err in his assessment of proximity and policy considerations?[50] In considering the issue of proximity, the Judge applied Carter. He held that there was a lack of proximity because the purpose of the resource consent is the effective management and protection of resources and the environment and not the protection of subsequent owners' economic interests. [51] Mr Dixon sought to distinguish the current case from Carter. He accepted that economic interests are not a consideration in a determination as to whether or not a vessel is seaworthy (which was the issue in Carter) but that, in the present case, economic interests are a relevant factor in the consideration of sustainable management, especially given that economic interests were the sole reason for applying for resource consent. [52] I do not agree. The reason that resource consent was required was to determine the impact of the business activity on the environment, not to assess the economic wellbeing of the proposed activity. [53] Mr Crombie submitted that the Judge was correct to find that there was no proximity between the appellant and the Council warranting the finding of a duty of care. He noted The Favorite Ltd v Vavasour [2005] NZRMA 461 (HC) where the Court refused to find a duty of care in respect of an improperly processed transfer of a water permit under s 136 of the RMA, holding that, in light of the statutory scheme (and policy reasons), there could be no duty to make further inquiries. [54] Mr Crombie further contended that the decisions of consent authorities under the RMA were policy decisions involving interpretations of information submitted by applicants. The decision of whether to grant resource consent is a quasi-judicial decision (as opposed to an operational function) that is not susceptible to the finding of a duty of care. I agree. [55] As Mr Crombie asserted, there is a public interest in regulatory bodies being free to perform their roles when making quasi-judicial decisions. The duty, even asnow circumscribed, would open Councils to a constant challenge in this regulatory area. [56] Even in the restricted form now advanced before us, the duty of care advocated by the appellants would have a distinctly chilling effect on RMA applications before any Council. An authority must be able to rely on the information which is provided to it. As the case has been argued (and I accept that there has not been a full inquiry into the position of the planning consultants who acted for the Hofmanns in their initial applications) the planning consultants had a duty to act professionally and in conformity with the law. The form of consent which was obtained from the neighbours was inadequate and inappropriate. To impose a duty of care, which would necessitate every authority going behind the information placed before it, would create an intolerable burden. [57] The operation of the RMA depends, to a large extent, on non-notified applications under s 94. An inevitable consequence of the approach advocated by the appellants would be that every authority would have to investigate and double- check all information provided. It could never safely exercise the power to grant a non-notified application. Such a situation would result in unacceptable delays in the administration of the consent process. [58] In the factual circumstances of this case, it is clear that when the initial application was made there was dialogue between the applicants and council officers. In the course of this, a degree of modification and fine-tuning occurred which meant that there was some refinement of the proposal. This provided the springboard for the variation which allowed the business operation to develop away beyond what the consenting neighbours had envisaged. [59] The imposition of the duty contended for would make such informal dialogue and/or assistance and/or rejigging between council officers and applicants practically impossible. It is inevitable that staff of consenting authorities would be fearful of leaving themselves open to attack. Forcing them to operate in a defensive mode would not be in the public interest.[60] In this case there are alternative remedies which are available to both the original applicants and the appellants. The applicants had a right of appeal against the finding of Keane J on judicial review. They may also have some cause of action against the professionals who they employed to assist them in their RMA applications. The appellants had, and continue to have, the opportunity to reapply for resource consent on a notified basis. The absence of a duty on the Council does not mean that people in the position of the appellants are denied any form of redress. [61] Had there been no other remedy available to the appellants, it would not have altered my decision. The Hofmanns made an economic decision, that is applying for resource consent on a non-notified basis hoping that the consent would be obtained more cheaply and quickly. This economic decision was not a good one. The fact that their decision turned out to have had adverse effects on the appellants' business does not mean that someone else (or some other entity) should be liable for the economic loss or the failure to make the hoped for financial gain. [62] Strong policy considerations negate the finding of a private law duty of care. I am satisfied that Simon France J was correct in finding that a duty of care should not be imposed.Does the fact that the Hofmanns on-sold to two companies which they controlled make any difference?[63] Having found that there was no breach of any duty which would have been owed by the Council to the Hofmanns as the original applicants the issue of responsibility to subsequent purchasers is moot.Result[64] None of the grounds upon which it is alleged the Judge in the High Court erred have been sustained and in my view the appeal should accordingly be dismissed with costs to the respondent of $6,000 together with usual disbursements.WILLIAM YOUNG P[65] I have, with some difficulty, come to the view that the appeal should be dismissed. [66] Given the decisions of the High Court in Port Underwood Forest Ltd v Marlborough County Council [1982] 1 NZLR 343 and in this Court in Craig v East Coast Bays City Council [1986] 1 NZLR 99, I do not see the duty of care alleged in this case as novel. [67] I do not regard Port Underwood as distinguishable. No doubt the negligence alleged (and held to have been proved) was far more marked than what is in issue here. But the existence of the duty of care should not become mixed up with the order of magnitude of the alleged breach. So for the proceedings to be struck out, this Court must over-rule the Port Underwood decision. Given that Port Underwoodis not a judgment of this Court and in any event largely proceeded on the basis of concessions, it is a candidate for over-ruling. But standing in the way of such an over-ruling is the Craig judgment. [68] I do not see how we could distinguish Craig on the basis that the duty which was found to exist was owed to neighbours rather than to the applicant for the resource consent. (a) I cannot see how there could be asymmetrical duties of care, ie duties of care owed to other interested parties but not to the applicant. Given that it is the applicant who deals direct with the local authority and is perhaps most likely to be adversely affected if something goes wrong, proximity between a local authority and applicant might be thought to be far stronger than as between the local authority and other affected parties. (b) Policy considerations which weigh against the imposition of a duty are equally strong in relation to both applicants and other interested parties. The fundamental problem is the risk that the imposition of aduty of care will distract local authorities from a dispassionate performance of their duties and this is equally applicable to both classes of potential claimants. I am unconvinced of the relevance of the conduct of the Hofmanns in this case or the responsibility which applicants generally have for getting their applications right. At this point of the inquiry, it is important to focus on whether there is a duty, not whether the Hofmanns were also negligent. [69] So, in my view, this appeal depends on whether Craig still represents the law. [70] In the twenty years which have elapsed since Craig was decided the tide has very much gone out on negligence claims. Craig therefore seems anomalous in light of more recent authorities in New Zealand (particularly Morrison v Upper Hutt City Council [1998] 2 NZLR 331) and elsewhere. Indeed were it not for the Craigdecision I would have had no difficulty in concluding that this appeal ought to be dismissed. I am, however, reluctant to over-rule (or treat as over-ruled) – especially on a strike out application - a fully considered judgment of this Court. Craig was not cited in Morrison, a consideration which has troubled me. On the other hand, inInvercargill City Council v Hamlin [1996] 1 NZLR 513 (PC) Craig was referred to (at 516-517) without disapproval, and perhaps more importantly, as one of a number of cases which the Privy Council, in the end, would appear to have regarded as being authoritative in New Zealand although perhaps anomalous in light of the jurisprudence in other jurisdictions. [71] Further, the arguments about Craig have highlighted for me the dangers of dealing with issues of policy on the basis of assumptions. When I first considered the arguments in the case I was very much influenced by the risk that local authorities subject to such a duty of care might be inappropriately cautious about notifying resource consent applications. But presumably local authorities (and their insurers) have, since the 1980s, been aware of the Port Underwood and Craig decisions and have been aware of the potential for civil liability to be imposed in these circumstances. And there was no empirical evidence put before us to suggest that any such awareness has had a distorting effect on the way in which local authorities exercise their responsibilities under the Resource Management Act. As well, despite"flood-gates" arguments being available when Craig was decided, litigation of the present kind would not appear to have become common. [72] Obviously the more closely the pleading focuses on the precise statutory functions of the Council as a consent authority, the more it engages policy considerations which point away from the imposition of a duty. The statement of claim unhelpfully focuses on the Council's quasi-judicial responsibilities rather than on the broader context in which the relevant decisions were made. In Morrison the District Court judgment against the Council in favour of Ms Morrison in relation to a negligent advice claim - which seems to have been closely associated with her ultimately unsuccessful claims - was not challenged on appeal. There is other authority which supports the view that negligent planning advice given by a local authority can sound in damages, see for instance my own judgment inCourt v Dunedin City Council CP51/97 HC Dun 4 December 1998. Given Craigand the willingness of the Courts to award damages against local authorities for negligent planning advice, I was, until persuaded otherwise by the judgments of Robertson and Chambers JJ, inclined to the view that it was not appropriate on a strike out application to rule out the possibility of a claim in the present circumstances. [73] On this point I note that, if the Council owed a duty of care to Mr and Mrs Hofmann, I can see no logical reason why such a duty would not also be owed to their successors in title who might reasonably be expected to act on it. I agree that this might give rise to difficulties associated with contributory negligence issues but those could be appropriately dealt with at trial. In any event it may be that any such difficulties could be addressed by joining the Hofmanns as plaintiffs with them seeking to recover as damages losses they have suffered as shareholders in the appellant companies. [74] I have, however, concluded that the case must be addressed as pleaded. This is particularly as the appellants have not sought to reformulate their claims to base them on negligent advice. Indeed, on the basis of what we know of the facts, such a claim would itself face difficulties. So the case must be addressed as founded on theproposition that the Council owed a duty of care associated with the way in which it exercised its quasi-judicial functions. [75] As is apparent, I have reservations about the "flood-gates" policy argument and the associated potential for distorted decision making by local authorities (at least in the immediate context of notification decisions). Further, I am of the view that Craig cannot be distinguished. But I have, in the end, come to the conclusion that Morrison must be regarded as the controlling authority: this for the reasons given by Chambers J. It follows that I am of the view that Morrison should be taken as having over-ruled Craig and that, accordingly, the Council did not owe a duty of care to the Hofmanns.CHAMBERS J[76] I agree with Robertson J that the appeal must be dismissed. My reasoning is essentially as expressed by Robertson J in his opinion and by Simon France J in the decision under appeal. I have decided to add a few thoughts of my own as to why I have been unable to accept Mr Dixon's submission that Craig is the controlling authority and that it dictates that the Western Bay of Plenty District Council owed the alleged duty of care to Bella Vista Resort Limited and Bella Vista Properties Limited. [77] In my view, Morrison is the controlling authority, not Craig. Morrisoninvolved a set of facts which are in essence identical to the assumed set of facts in the present case. In that case, Ms Morrison applied for consent to erect a townhouse on her parents' property in Upper Hutt. The Upper Hutt City Council declined Ms Morrison's application, based on its interpretation of "neighbourhood" in a particular clause in the district scheme. The council also considered there were "no unusual features regarding the land or the application which would warrant the granting of a specified departure": [1998] 2 NZLR 331 at 334. Ms Morrison did not appeal to the Planning Tribunal against the decision of the council refusing her application. Instead, she made a second application for planning consent, as by this time the district scheme had been amended. Her application was again refused. She appealed to the Planning Tribunal, which allowed the appeal and grantedMs Morrison a specified departure. Ms Morrison then erected the townhouse. Because of the lapse of time, the building costs and finance costs were more than they would have been had the first application been granted. She then sued the council in negligence, claiming that the council breached a duty of care owed to her in the way it dealt with her first application. [78] The present case is on all fours in terms of essential (assumed) facts. In the present case, the Hofmanns complain that the council granted consent, only to be told later by the High Court it should not have (at least on a non-notified basis). While that is the converse of Morrison, where the council did not grant consent, only to be told later by the Planning Tribunal it should have, the distinction is irrelevant. Each case involves an error by a council in considering an application for planning consent. In each case, a court subsequently found the council had misinterpreted a legal document, in Morrison the district scheme, in the present case s 94 of the Resource Management Act 1991. As a consequence of the interpretation error, the applicant for planning consent suffered economic loss. [79] The issue in Morrison for this court was whether the council did owe "a duty of care to Ms Morrison in arriving at its interpretation of "neighbourhood" when determining her application": at 337. This court held that "viewed on its own there was a necessary degree of proximity or relationship between the council as the alleged wrongdoer and Ms Morrison as the person suffering the damage": at 337. The court then went on to consider the "policy implications" of recognising a duty of care. Those policy factors are weighed at 337-338 in the judgment. [80] Among the factors this court identified were these. First, the administration of a district scheme and the construction of relevant provisions in it involve an exercise of judgment which is "properly concerned with such considerations as the fair, efficient and effective disposition of applications and the promotion of the longer-term objectives of the scheme". Questions of construction tend to raise policy considerations which are difficult enough to assess in determining whether the construction was erroneous in law. But, as the court went on to say:It would be even more difficult to the point of being scarcely justiciable if the Court were also asked to rule whether the misconstruction was negligent.In short, such questions of interpretation affecting the result of the decision on the application (rather than the processing of the application) are hardly susceptible to an application of a negligent standard.[81] Secondly, to allow negligence to intrude into what is essentially a public law area would effectively "allow an award of what in essence would be administrative law damages although such damages are not available in administrative law proceedings". [82] Thirdly, a policy feature of the Town and Country Planning Act 1977 was that "timely appeal to the Planning Tribunal is the statutory remedy for the review of a council's decision by a special-purpose appellate tribunal". An appeal to that tribunal was described by this court as "a convenient and practical remedy". This court said:It is in the public interest that challenges to the integrity of the district scheme and decision making under it be taken by appeal to the tribunal and end there or by limited appeal from the tribunal to the Courts. To superimpose a private law duty of care in relation to the construction of scheme provisions would cut across that statutory regime.[83] Fourthly, the court referred to the floodgates problem. In its view, recognition of a duty of care would allow claims to be advanced whenever a claimant had asserted an incorrect interpretation was negligently made, thereby causing loss. The proposed duty category would be, the court thought, at least potentially, "hugely expansive, carrying significant and unacceptably indeterminate consequences for the public interest". [84] The court concluded there were "overwhelming policy reasons for denying such a duty in this case". In my view, those policy considerations apply equally to the present case and are decisive. The Resource Management Act and the Environment Court are the current equivalents of the Town and Country Planning Act and the Planning Tribunal, and nothing turns for present purposes on that modernisation. [85] Mr Dixon referred to the fact Craig was not referred to in Morrison. There are three possible reasons for that omission. The first is that the bench in Morrisonsimply overlooked it. I think that unlikely, given that Richardson P prepared the reasons for judgment in Morrison and was also a member of the bench in Craig. [86] The second possibility is that the Morrison court thought Craig wrongly decided, but considered it unnecessary to overrule it formally. To overrule by implication is a not unknown judicial technique. Since Craig, there had been, as the President observes in his opinion, a sea-change in the way in which courts in New Zealand, Australia, and the United Kingdom have approached negligence claims. The consideration of policy factors in Craig is skimpy compared with the policy analyses undertaken in the 1990s and in the first part of this century by appellate courts when weighing novel negligence claims. Certainly the analysis inCraig does not begin to grapple with the policy factors this court considered inMorrison and found "overwhelming" against the proposed duty of care. Further, the court appears to have given no consideration as to whether the more appropriate remedy for Mr Craig was not that which the Hofmanns' neighbours sought in the present case. [87] The third possibility is that the Morrison court considered Craigdistinguishable. I think it clearly was. This court was at pains in Craig to restrict the duty of care "to neighbouring owners whose amenities should reasonably be foreseen to be closely and directly adversely affected by the proposal": [1986] 1 NZLR 99 at 101 (per Cooke P). See too at 106 (per Tompkins J). Even if Craigwas correctly decided, a matter on which I do not find it necessary to pronounce, it clearly should not be extended to embrace others as its beneficiaries. Ms Morrison was not an adjoining owner; she was an applicant for planning consent. To my mind, that is the most likely basis on which the Morrison court distinguished Craigand considered it unnecessary to explain why. [88] The President says that he does not see how we could distinguish Craig on the basis that the plaintiff in Craig was a neighbour whereas here (and in Morrison)the plaintiff was the applicant for planning consent: see [68] above. He then goes on to observe that "proximity between a local authority and applicant might be thought to be far stronger than as between the local authority and other affected parties". The reason for excluding the duty of care is not proximity. As I have shown, this court inMorrison accepted there was the "necessary degree of proximity or relationship" between the council and Ms Morrison. The reason for negating the duty arises at the second stage of inquiry, where, as this court said in Rolls-Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 at [58], courts have to consider "other wider policy considerations that tend to negative or restrict or strengthen the existence of a duty in the particular class of case". At that second stage, the court is concerned with "the effect of the recognition of a duty on other legal duties and, more generally, on society". [89] The President notes that Craig was referred to "without disapproval" by the Privy Council in Invercargill City Council v Hamlin [1996] 1 NZLR 513 at 516-517. I do wonder, with respect, whether Lord Lloyd of Berwick, who wrote the Privy Council's advice, had actually read Craig, as he refers to it as one of a group of cases decided in 1986 which, he says, "applied the principles stated in Bowen v Paramount Builders and Mount Albert Borough Council v Johnson to building defects other than faulty foundations". While that comment is true of the other cases in the group, Craig itself, of course, had nothing to do with building defects or with negligent work by council building inspectors. Craig and Morrison, like the present case, are not in the Hamlin category, which presumably explains why Hamlin and its sister cases were not referred to by the Morrison court. [90] The policy factors in Morrison are, to my mind, unanswerable. Indeed, there is a further factor here, which was not present in Morrison. That is that the Hofmanns asked the council to deal with their application and the variation on a non-notified basis and explained the reasons why, in their view, the council was justified in so proceeding. The council in good faith accepted their entreaties. It seems completely unjust that the Hofmanns should now seek to sue the council for having adopted the very submissions they urged on it. In my respectful view, this consideration is not to focus on "whether the Hofmanns were also negligent", as the President suggests: at [68]. Rather, the Hofmanns' acts are relevant in assessing the overall justice of a proposition that a decision maker can be potentially liable in negligence to an applicant whose submission it adopts.[91] In line with the controlling authority of Morrison, I consider the alleged duty of care to be untenable. In my view, Simon France J was right to strike out the statement of claim.Solicitors: P Devoy, Tauranga, for Appellants Cooney Lees and Morgan, Tauranga, for Respondents