CLARENCE JOHN FALOON v PALMERSTON NORTH AIRPORT LIMITED [2013] NZHC 2124

CLARENCE JOHN FALOON v PALMERSTON NORTH AIRPORT LIMITED [2013] NZHC 2124 [21 August 2013]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2012-485-2265[2013] NZHC 2124UNDER the Resource Management Act 1991BETWEEN CLARENCE JOHN FALOONAppellantAND PALMERSTON NORTH AIRPORTLIMITEDRespondentHearing: 28 February 2013Counsel: C J Faloon in personJ W Maassen for RespondentJudgment: 21 August 2013JUDGMENT OF WILLIAMS JIntroduction[1] This is an appeal against a decision by Judge Dwyer in the EnvironmentCourt striking out the appellant's application for a declaration under s 311 of the Resource Management Act 1991 (RMA). The respondent is Palmerston North Airport Limited (PNAL). Since the hearing, the appellant has filed two separate interlocutory applications in relation to these proceedings. I will deal with these applications at the end.[2] Although this matter was heard at the end of February, I invited the parties to file further submissions and documents after new issues came to light either at the hearing or in subsequent memoranda from the parties themselves. Delays in filing have caused a correlated delay in finalising this matter.Background facts[3] To understand this litigation, it is necessary to review some history. In 1975, a piece of rural land on the outskirts of Palmerston North comprising 5.6 hectares was owned by a company called Trade Lines Limited (TLL).1 The appellant's latefather was the director and shareholder of TLL. At that time, the TLL land was the middle block of three rectangular blocks of adjoining land that fronted on to the Milson Line. The eastern-most block was owned by a third party not involved in these proceedings. The western-most block was owned by Palmerston North City Council (PNCC) and PNAL as part of the airport.2 The land immediately upstream of these three rectangular blocks was, and still is, airport land.[4] The Kawau Stream is central to these proceedings. It flows from a source to the east of the airport land, crosses into that land and drains into the western-most block. From there it drains southwest across the TLL land and eastern-most block until it arrives at Milson Line. Before it reaches the western block, the stream travels underneath the airport runway via a diversion built, according to the affidavit of Mr Bodell, in 1958. I will return to this diversion (the runway diversion) later.[5] During the 1970s the water table was causing ongoing problems at the airport, despite the runway diversion. The PNCC decided that the best solution was to pipe the Kawau Stream and reroute it across a portion of the TLL land. There were obvious advantages to both sides in particular, shared cost as well as the prospect of solving a wider drainage issue in the immediate vicinity. TLL, anticipating the expansion of Palmerston North, wanted to utilise as much of the TLL land as possible for residential subdivision and development. A proper drainage scheme maximised the land's potential in this respect. Following some negotiation, the two parties entered into an agreement to lay the pipe along that route.[6] In 1977, TLL built the 410 metre diversion of the Kawau Stream accordingly (I call this the Faloon diversion to differentiate it from the runway diversion). Theappellant's father piped 205 odd metres of the downstream end of the diversion1 The title reference to this land was Lot 2, Deposited Plan 15662 certificate of title 804/42.2 Faloon & Piesse v District Van Registrar [1997] 3 NZLR 498 at 499.before his death in 1977, and the appellant completed the upstream section after hisfather's death. This section was not piped. The appellant used open channelling.[7] Despite solving the drainage issues in the vicinity and making the land suitable for residential subdivision, TLL never built the subdivision Mr Faloon senior had planned. TLL ran out of money – the residential housing market in Palmerston North at the time being very flat – and the company was ultimately liquidated. In 1993, the portion of the TLL land containing the Faloon diversion was acquired by PNAL under the Public Works Act 1981. The party that subsequentlyacquired the remaining TLL land from TLL's liquidator then completed thedevelopment in an up-swinging market and did well.[8] The appellant, perhaps understandably, feels aggrieved at the way things have turned out. This current litigation does not make any particular sense unless those background facts are first understood. By that I mean, this appeal is really a further litigation – this time in the public law sphere – of the grievance the appellant has carried all these years.Procedural history[9] On 30 March 2012, the appellant applied to the Environment Court seeking five declarations. Following a judicial conference on the matter, Judge Dwyer3struck out the proceedings in relation to four of those declarations on the basis that they related to issues beyond the Environment Court's jurisdiction.4 Judge Dwyer determined that the remaining declaration might at least be within the jurisdiction of the court. His Honour interpreted that declaration as follows:5Mr Faloon seeks a declaration that the respondent is undertaking the diversion of water without the benefit of a resource consent allowing that diversion when it is required to hold such a consent.[10] Judge Dwyer understandably thought that the appellant was challenging the legality of the Faloon diversion.3 Judge Dwyer was sitting alone pursuant to s 279 of the RMA.4 Faloon v Palmerston North Airport Ltd [2012] NZEnvC 105 at [7].5 At [8].[11] His Honour advised the parties that on receipt of documents relating to the remaining declaration, he would consider whether an oral hearing was required or whether any strike out application made by the respondent could be determined on the papers.The Environment Court decision[12] The respondent then applied to strike out the surviving declaration. Judge Dwyer decided to proceed on the papers.6 At that stage, His Honour had before him:(a) two affidavits from the appellant;(b) an affidavit of Mr Cusack, chief executive of PNAL, in support of application to strike out;(c) the Regional Plan for Beds of Rivers and Lakes and Associated Activities; and(d) material relating to the appellant's litigation history.[13] Judge Dwyer reviewed all of those documents and, in a written decision, struck out the remaining declaration on three grounds. First, the Judge held that the proceeding was vexatious because, in his view, it was not brought to achieve any discernible resource management outcome. Rather, it had been brought as part of theappellant's ongoing grievances about the acquisition of the TLL land in 1993.[14] The second ground was that the proceeding disclosed no reasonable or relevant case because:(a) the appellant and his father constructed the Faloon diversion about which the appellant now complained;6 Faloon v Palmerston North Airport Ltd [2012] NZEnvC 222.(b) it is doubtful whether there is any ongoing diversion because the stream is in a new permanent position; and(c) the Faloon diversion is in any event a permitted activity under the Operative Regional Plan.[15] Third, the Judge held that the combination of the first and second reasons meant that it would be an abuse of process to allow the appellant's case to be takenfurther.The grounds of appeal[16] In his notice of appeal, the appellant identified four errors of law and 11 questions of law. They did not make a great deal of sense to me but I do not regardthat as necessarily fatal to the appellant's proceeding. It is appropriate in a strike-out application to ask whether the facts as we know them disclose a reasonably arguable cause of action even if that requires the pleading to be amended.7 Where a pleading is deficient but is capable of effective repair the Court can permit amendment rather than strike out the proceeding.8[17] In the end, the appellant's appeal rested on the following basic propositions, articulated to a greater or lesser extent in oral argument before me:(a) the Environment Court should have heard from the appellant before reaching its decision to strike him out;(b) the appellant's case in that respect was arguable because this diversion is not a permitted activity under the Operative Regional Plan, but a controlled activity; and(c) the appellant had no ulterior motive beyond ensuring compliance with s 14 of the RMA.7 High Court Rule 15.1.8 Futures Ltd v Marshall [1992] 1 NZLR 316, (1991) 3 PRNZ 200 (HC).[18] For PNAL, Mr Maassen, argued that the questions advanced raised noquestion of law, and that in all respects Environment Court's decision was lawful.[19] These arguments were somewhat overtaken by events. It became clear to meduring the hearing that the appellant's case was not, as the Environment Court hadunderstandably interpreted it, a challenge to the lawfulness of the Faloon diversion. In fact, the appellant sought to challenge the legality of the runway diversion into the Faloon diversion.[20] In light of this misunderstanding, I have decided that the best way to proceedis to consider afresh whether it is appropriate to strike out the appellant's allegationon the papers.Discussion[21] In order to deal with this appeal it is necessary to address two questions:(a) Does the appellant, on the facts as pleaded, stand a chance of succeeding in his application?(b) Was the appellant denied natural justice?[22] In light of my findings on those two questions, it is unnecessary to determine whether the appellant had an ulterior motive beyond ensuring compliance with s 14 of the RMA or whether, if he did, that would be a proper basis for strike-out.Does the appellant, on the facts as pleaded, stand a chance of succeeding in his application?[23] The appellant alleges that PNAL has been and is currently diverting water through the runway diversion on to the Faloon diversion without resource consent.[24] After the hearing, I sought further information regarding the runway diversion from PNAL. The appellant was given leave to file any further submissions in response within seven days of receiving PNAL's memoranda.[25] On 15 July 2013, the respondent submitted an affidavit from Mr Bodell. Mr Bodell has been the facilities manager at PNAL for over a decade. Prior to that he was a professional engineer at PNCC. Mr Bodell deposed that the runway diversion was built in about 1958 and that the Palmerston North Airport was, at that time, owned and operated as a joint venture between the Crown and PNCC. The runway extension was a capital work jointly funded by those two parties.[26] On 12 August 2013, I issued a minute allowing the appellant an extension until 16 August 2013 to reply to this affidavit. The appellant used this time to file the second of the two interlocutory applications that I will deal with below. The appellant has put in no evidence to contradict Mr Bodell's affidavit.[27] The appellant argued in his submissions to the Environment Court dated 7 September 2012 that PNAL was in breach of s 14 of the RMA because it had failed to obtain a water right under the Water and Soil Conservation 1967 for the runway diversion.[28] That pleading is fatal to the appellant's case. The runway diversion was builtin 1958. At that time stream diversion was considered to be an incident of private ownership. I am advised by counsel for the respondent that there were some controls in the Soil Conservation and Rivers Control Act 1941 (the SCRC). Section 149(1)(i) of the SCRC empowered a catchment board to make bylaws preventing the widening and deepening of watercourses or the alteration of the course without the consent of the Board. But no evidence was produced by either party to suggest that any such bylaw was passed. There was no provision in the SCRC itself that made it illegal to divert or drain water on private land without consent. It follows that on the facts as pleaded, the runway diversion was lawfully constructed.[29] Nine years later the Water and Soil Conservation Act 1967 (the WSCA) established a new statutory regime that governed the diversion or abstraction of natural water. But the WSCA contained a savings provision. Section 21(2) provided that existing diversions predating 1967 were expressly unaffected by the legislation. That provision exempted PNAL from having to obtain a permit under the WSCA for the runway diversion.[30] That savings provision has been carried forward into the current operative regional plan covering the beds of rivers and lakes within the region. The authorising rule is BRL Rule 1 set out below:BRL Rule 1: Established Structures and Associated Activities –PermittedAny established structure in, on, under or over the bed of any river or lake; and any associated:a. damming of water; orb. diverting water within the bed; orc. reclaiming or draining the bed; ord. works for flood protection or erosion control; andthe associated activity of discharging excess water over or through the structure and diversion of water for draining and reclaimingis a Permitted Activity provided:i. continued adherence to all conditions attached to the resource consent or other permission which established the activity, and adherences to performance conditions below; and...[31] Even assuming 'established structure' means lawfully established structure,the runway diversion obviously fits the description in the rule. There is therefore no factual basis upon which the appellant could establish that PNAL is in breach of s 14 of the RMA. To succeed he would have had to establish that the runway diversion was built after 1967 and without a permit under the WSCA. That he simply cannot do.[32] With that conclusion in mind, I turn to the question of whether the appellant was denied natural justice.Was the appellant denied natural justice?[33] Generally speaking the default position must be that the court, when considering an application to strike-out a party's proceeding, must hear the partyaffected. The fact that there is no express direction to that effect in the RMA does not alone remove that basic requirement.[34] Mr Maassen pointed to particular features within the RMA that, he said, ought to be interpreted as giving the court discretion to deal with applications on the papers, even if they are as fundamental as strike-out applications.[35] By the terms of s 269, the court may regulate its proceedings in such manner as it sees fit and without procedural formality, provided this is consistent with fairness and efficiency.[36] Mr Maassen also referred to s 276(1A) foreshortening the evidential load on the Environment Court by allowing it, in its discretion, to simply receive evidence presented before the original consent authority and to direct how that evidence should now be given in the Environment Court. He argued that it would not be normal for viva voce evidence to be heard in a strike-out application, or for witnesses to be available for cross-examination.[37] It was also argued that relevant issues were traversed with the appellant in a pre-hearing conference (producing a transcript of exchanges between the Judge and the appellant running to 24 pages).[38] It is fundamental to the administration of justice generally that any court'sstrike-out power must be sparingly exercised and that the party most affected is entitled to be heard in person except in the most exceptional of cases. That must be particularly so where the affected party is a lay litigant. It may be difficult to make sense of written material filed by lay litigants, but oral exchanges often allow the court an opportunity to clarify meanings and intentions. I acknowledge that in this case, the Judge did have an opportunity to engage with the appellant, prior to calling for written submissions on the one ground the Judge left in place for further argument. But if the Judge had taken a further opportunity to hear oral argument in relation to the remaining ground, the misunderstanding about which diversion was being attacked by the appellant may well have been cleared up. Thus a further hearing would have had at least that efficacy.[39] What counts decisively against the appellant in this case is the principle that a hearing must have a point. The common sense proposition is that a hearing can only be necessary if there is something the affected party could have said at such a hearing that might have made a difference to the result. In this case, as I have said, the facts run against the appellant. There is simply nothing he could have said at such a hearing that stood any chance of changing the result.[40] For these reasons, the appellant's appeal against the Environment Court decision is dismissed.Further applications[41] Following the filing of Mr Bodell's affidavit in this matter, the appellant filedtwo further applications. The first, was to set aside the Bodell affidavit and Mr Maassen's supporting memorandum. The second, was an attempt under HighCourt r 7.9 to relitigate the property rights issues that had been dealt with in earlier litigation. I turn to address those now.The first interlocutory application[42] This is an application pursuant to r 1.5 of the High Court Rules for orders to set aside two documents from the respondent. These documents were filed in response to my request for further information about the runway diversion.9 The first document is a memorandum from Mr Maassen. The second document is the affidavit from Mr Bodell that I rely upon above.[43] Rule 1.5 empowers the Court to set aside any document for failure to comply with the requirements of the High Court Rules upon an application made within a reasonable time and before the party making that application has taken any fresh step after becoming aware of the irregularity.[44] The appellant's application has been made within a reasonable time and hehas not taken any fresh step after becoming aware of the irregularity. The only issue9 See [23] above.is whether the respondent complied with the High Court Rules in filing the two documents.[45] The appellant's first complaint is that the documents do not comply withr 5.11(a) and r 5.11(b). Rule 5.11 stipulates the heading requirements for a statement of claim and counterclaim. Plainly, the documents are not either. It follows that r 5.11 has no application here.[46] The appellant's second complaint is that the respondent has, in filingMr Bodell's affidavit, adduced further evidence without leave. This, contends theappellant, is a breach of r 20.16. Rule 20.16 is contained in a subpart of the rules entitled "matters leading up to hearing". It applies where, on appeal, one partywishes to adduce further evidence. Generally, an appeal proceeds on the evidence which was presented to the original decision-maker and the parties do not have an opportunity to strengthen their case with new evidence on appeal. Here, documents were filed after the hearing, in response to a specific request issued by me.[47] Even if r 20.16 does apply, the court may grant leave to adduce further evidence if there are special reasons for hearing the evidence.10 In my view, the change of focus from the Faloon diversion to the runway diversion justifies the filing and consideration of Mr Bodell's further evidence.[48] The appellant's third complaint relates to a survey plan that was attached toMr Bodell's affidavit. Mr Bodell describes the survey plan as being signed by the appellant's father. The appellant points out that this is incorrect. In fact the surveyplan was signed by a surveyor named Kevin Judd in 1993. This minor factual inaccuracy does not have any bearing on the proceeding.[49] The appellant also appears to complain that the survey plan is from his own affidavit and Mr Bodell should not be allowed to use it. The appellant has not produced any authority to show that this is a breach of the High Court Rules.10 High Court Rule 20.16.[50] The appellant's final ground for setting aside the documents appears to bethat they allegedly contradict paragraphs A to P of his submissions to the Environment Court on 7 September 2012. The only paragraphs that relate to these proceedings are J and L. I set these out below for clarity:J. The respondent Palmerston North Airport Limited has not, either (1) since the 25th January 1990 obtained a "Water Right" granted underthe provisions of the Water and Soil Conservation Act 1967, or (2)obtained a "water permit" granted under section 14 of the ResourceManagement Act 1991, to authorise it to divert water from land used for "Airport purposes" into the 1977-year diversion of the Kawau Stream constructed as a defence against water by the late ThomasJohn Faloon and by the applicant as a "Special drainage or river authority" under section 2 of the Soil Conservation and RiversControl Amendment Act 1946 and under section 7(c) of the Manawatu-Oroua River District Act 1923, being a "Special Act" forthe purposes of section 363 and Schedule 9 of RMA 1991.L. The respondent Palmerston North Airport Limited has neither (1) applied for "Resource consent" to the Manawatu-WanganuiRegional Council as "Consent authority", or (2) otherwise obtained consent from the applicant as "Owner" to divert water into the 1977- year Diversion of the Kawau Stream constructed by Thomas John Faloon and Clarence John Faloon as joint "Special powers" in "Relationship property" held in trust by Trade Lines Limited, and theapplicant, the late Helen Patricia Faloon and other trustees, under section 23 of the Trustee Act 1956.11[51] The only facts pleaded in those paragraphs that relate to these proceedings are that:(a) PNAL has not obtained a water right under the WSCA or a water permit under s 14 of the RMA to divert water from the runway diversion into the Faloon diversion; and(b) PNAL has not applied to the Manawatu-Wanganui Regional Council for resource consent to divert water from the runway diversion into the Faloon diversion.11 I note that paragraph J. does refer to some applicable provisions that predate 1967, namely s 2 of the Soil Conservation and Rivers Control Amendment Act 1946 and s 7(c) of the Manawatu- Oroua River District Act 1923. Section 2 of the Soil Conservation and Rivers ControlAmendment Act 1946 provides a definition of a "special drainage or river authority." Section7(c) of the Manawatu-Oroua River District Act 1923 empowers the Manawatu-Oroua River Board to divert any drain, stream or river. I am satisfied that neither of these provisions restricts the right of private owners to divert water on their own land.[52] Because this is a strike-out application, I must accept those facts over Mr Bodell's affidavit or Mr Maassen's memorandum. But no conflict arises. Neither documents allege that PNAL did in fact apply for a water right, a water permit or resource consent.[53] For these reasons, the appellant's first interlocutory application is dismissed.The second interlocutory application[54] The appellant applies for an interlocutory order under r 7.9 of the High Court Rules which:(a) directs PNAL to secure the determination of a proceeding under s 296 of the Property Law Act 2007;(b) directs PNAL to supply the appellant with a document that he believes would enable him to register a legal interest in land;(c) directs how this proceeding is to be conducted;(d) directs whether it is appropriate to join a number of different parties to the proposed proceeding;(e) directs the proper court in which this proceeding should take place; and(f) directs the correct method of proceeding under the High Court Rules.[55] Plainly, none of these matters have any relation to the appeal against theEnvironment Court's decision. Further, r 7.9 simply provides that a Judge may cancel a case management or issues conference in certain circumstances. It has no application to this appeal.[56] For these reasons, the appellant's second interlocutory application is dismissed.Result[57] The appeal is dismissed.[58] Both interlocutory applications are dismissed.___________________________Williams J