SOROKA v WAIKATO DISTRICT COUNCIL [2019] NZHC 2940

SOROKA v WAIKATO DISTRICT COUNCIL [2019] NZHC 2940 [11 November 2019]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYI TE KŌTI MATUA O AOTEAROAKIRIKIRIROA ROHECIV-2018-419-0179[2019] NZHC 2940BETWEEN GLENN MICHAEL SOROKA and LOUISECLAIRE MEREDITH as trustees of thePAKAU TRUSTPlaintiffsAND WAIKATO DISTRICT COUNCILDefendantCIV-2018-419-0187BETWEEN GLENN MICHAEL SOROKA andLOUISE CLAIRE MEREDITH as trusteesof the PAKAU TRUSTPlaintiffsAND WAIKATO DISTRICT COUNCILDefendantHearing: 1 October 2019Appearances: B D Gray QC and J Dawson for the PlaintiffsP Moodley for the DefendantJudgment: 11 November 2019JUDGMENT OF ASSOCIATE JUDGE SMITHThis judgment was delivered by me on 11 November 2019 at 3:00pm,pursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors / Counsel:Turner Hopkins, AucklandB D Gray QC, AucklandJ Dawson, AucklandBrookfields Lawyers, Auckland[1] This is an application by the defendant (Waikato) under r 4.56 of the HighCourt Rules 2016 to add Auckland Council (Auckland) as a second defendant.Auckland consents to being joined, but the application is opposed by the plaintiffs (theTrust), who say that Waikato is the proper defendant, and that they should not becompelled to join an additional defendant they do not wish to sue.Background[2] These two proceedings, which are being case managed together, concern aparcel of land owned by the Trust at Klondyke Road, near Port Waikato (the Klondykeproperty). The Klondyke property was until 1 November 2010 within the territorialdistrict then known as Franklin District. From that date, the Franklin District Councilwas disestablished. Parts of the former Franklin District were absorbed into Waikato'sterritory, and some northern areas became part of Auckland's territory. The remainderof the former Franklin District became part of the territory administered by the HaurakiDistrict Council (Hauraki). The Klondyke property is now in Waikato's territory.Transferrable Rural Lot Rights[3] The Operative Franklin District Plan that was in force on 1 November 2010(the Operative Plan) provided for the creation of "conservation lots" on propertieswithin the Franklin District, as a restricted discretionary activity. The relevantprovisions of the Operative Plan were designed to enable legal and physical protectionof significant features on a property, such as indigenous vegetation and/or wetlands.Conservation lots could be created on the property in exchange for the protection ofthe significant feature. Under the Operative Plan, there was no ability to transferconsented conservation lots (or any other title or lot) to another property within theFranklin District.[4] The concept of Transferable Rural Lot Rights (TRLRs) was introduced byFranklin District Council in September 2003, in its Rural Plan Change 14 (PlanChange 14). A "decisions version" of Plan change 14 was released in July 2006, andthat is the version that was later substantially approved by the Environment Court.Plan Change 14 introduced the concept of a landowner amalgamating a qualifyingvacant rural lot situated within a designated "management area" within the FranklinDistrict with an adjoining rural lot, to create a larger rural lot (the donor lot). Thatprocess would generate or give rise to one or more TRLRs, which could be"transferred" for use on another rural lot in a different management area (the receivinglot), which would be more suitable for subdivision.[5] In addition to the use of vacant lots to create TRLRs, Plan Change 14 providedfor the creation of "environment lot entitlements", which could be "created", orrecognised, on the donor land (in accordance with a stated formula) in exchange forthe owner of the donor land providing a covenant for the protection, maintenance andenhancement of significant ecological features on the donor land. The covenant wouldbe registered on the title to the donor land.[6] Environmental lot rights so created also generated TRLRs under PlanChange 14, available to be "transferred" to effect the subdivision of a suitable ruralsite within another management area.[7] The subdivision provisions in Plan Change 14 were subject to a number ofchallenges by way of appeal, and the appeals had not been determined by the timeFranklin District Council was disestablished on 1 November 2010. The pendingappeals against Plan Change 14, which were jointly managed after 1 November 2010by Auckland and Waikato, were the subject of a hearing in the Environment Court inFebruary 2013. Plan Change 14 was substantially approved, with some amendments,and became operative in both Auckland and Waikato in May 2013. Some parts of PlanChange 14 did not become operative however, and those included certain of theprovisions relating to TRLRs.The Trust's application to Auckland and Waikato[8] In April 2012 the Trust made an application ("the application") to Aucklandand Waikato in the following terms:The proposal is to conserve approximately 204ha of native bush on [theKlondyke property] and to use the conservation lot subdivision rules of theDistrict Plan to create 29 lot entitlements It is proposed to transfer 13 ofthe 29 entitlements to the Chamberlain Road property using the TransferableRural Lot Right subdivision rule of proposed Plan Change 14 Further lotswill be transferred to other properties in separate applications which are tofollow soon.[9] The reference to "the Chamberlain Road property" was a reference to a25 hectare property in Chamberlain Road, Bombay, formerly situated within theHunua Rural Management Area of the Franklin District but after 1 November 2010within Auckland's territory. I will refer to this property as "the Chamberlain property".[10] Resource consent was required for the necessary earthworks at theChamberlain property, and application clearly had to be made to Auckland for thatconsent. Resource consent was also necessary to determine whether the Chamberlainproperty was suitable for the proposed subdivision. The recognition of theconservation lots/environmental lot entitlements at the Klondyke property, and howmany of them would be recognised, were (on the face of it) solely for Waikato todetermine.[11] The application, lodged by the Trust's surveyors, first dealt with mattersconsidered to fall within Waikato's jurisdiction. Under a heading "Native BushConservation Subdivision – Waikato District Council Jurisdiction", the surveyorsaddressed the "conservation lot" provisions of Waikato's Operative Plan (Franklinsection). They then considered the relevant provisions of Plan Change 14. In aseparate section headed "Transferable Rural Lot Right Subdivision – AucklandCouncil Jurisdiction", the application addressed relevant provisions of Auckland'sOperative Plan and Auckland's (identical) Plan Change 14.[12] The application acknowledged that while the transfer of Rural Lot Rights wasa discretionary activity under Plan Change 14, there was no provision for the transferof lots under Auckland's Operative Plan. Applying the principle that, where aproposed change to an operative district plan has been notified, an activity is to beassessed under the more onerous of the respective requirements of the Operative Planand the plan change, the Trust's application fell to be assessed as a non-complyingactivity under the Operative Plan.[13] On the application of Plan Change 14 to the "Native Bush ConservationSubdivision" application, the Trust's surveyors said:A total of 64 additional allotments are provided for under this rule inaccordance with Table 2. We are proposing to use only 13 of theseEnvironmental Lot entitlements for his application and further lots will betransferred to other properties in separate applications which are to followsoon. The new Conservation Lots are shown as Lots 1 to 8 and 10 to 14Subdivision Consent Plans.[14] In a "General Matters" section near the end of the application, under theheading "Joint Decision", the Trust's surveyors noted that the donor property waslocated within Waikato's jurisdiction and said: "so we have provided [Waikato] with acopy of the application and plans to enable a joint decision to be made."[15] In a section of the application headed "Conclusion", the surveyors referred to"the transfer of the 13 development rights approved through the protection of theabovementioned ecologically significant feature."Waikato's response to the application[16] Waikato replied to the application by letter dated 24 May 2012. It advised thatit had recently encountered circumstances which had given it cause to question thelegal basis for cross-boundary transfers of conservation lots or environmental lotentitlements, such as those sought in the application. Waikato noted that it could notmake an assessment of the receiver lots, as they were outside its jurisdictionalboundary. It advised that it was in the process of confirming its legal position, whichwould involve consultation with Auckland. For that reason, it would not proceedfurther with the application until the legal basis for allowing cross-boundary transfershad been confirmed.[17] The delay in processing the application was fairly short. On 1 June 2012Waikato sent a further letter to the Trust's surveyors. It had discussed the status ofsimilar applications with Auckland and with Auckland's solicitors. As a consequenceof those discussions, and in light of the application having been accepted forprocessing by Auckland, Waikato stated that it would:continue to work within [Auckland's] timeframes for processing theapplication, to the extent that it can confirm to [Auckland] whether the donorlots are compliant with the relevant plan provisions of the Waikato DistrictPlan. Whether any donor lot can then be taken account of for the purpose ofenabling subdivision within Auckland City will be determined by [Auckland].The Report[18] Waikato issued a "confirmation" report on 3 July 2012 (the Report),confirming that 13 (transferrable) conservation/environmental lots could be created onthe basis that 175 ha of the Klondyke property would be protected by an appropriatecovenant.[19] The proposal was described in the Report as a proposal "to undertake asubdivision creating thirteen (13) conservation/environmental lots at this site and thentransfer those Lots to [the Chamberlain property] being the receiver site." The Reportnoted that the Klondyke property was in Waikato's District, while the proposedreceiver site was in the Auckland District. It went on to say that, "given this", theReport would be in terms of the donor site only.[20] The Report assessed the application under the conservation lot entitlements ofthe Waikato Operative Plan, Franklin section. As all of the requirements of theWaikato's Operative Plan were not met, the application (insofar as it affected theKlondyke property) was assessed as a non-complying activity.[21] The Report said that under Plan Change 14, the maximum number ofenvironmental lot entitlements for the Klondyke property would have been 20. Butagain, not all of the requirements of Plan Change 14 were met. The result under PlanChange 14 was that the application would have to be dealt with as a discretionaryactivity with respect to the donor property.[22] Waikato concluded that the area of feature to be protected at the Klondykeproperty (assessed in the Report at 175 ha) was sufficient to create the 13 conservationlot/environmental lot entitlements that the Trust wanted for its immediate purpose ofsubdividing the Chamberlain property. Waikato then advised that certain conditionsshould be imposed as part of any consent that might be granted.The Decision[23] There had been considerable consultation between representatives of Aucklandand Waikato as to how such "cross-border" TRLR applications were to beadministered. The two councils eventually determined to deal with cross-borderTRLR applications jointly, with joint hearings (if necessary) and a joint decision.[24] No hearing was considered necessary on the application, and a joint decisionwas made by Auckland and Waikato on 31 July 2012 (the Decision). Consent wasgiven to a "Transferrable Rural Lot subdivision" for 13 lots to be created at theChamberlain property, subject to provision of a covenant protecting 204 ha of mature,remnant native bush on the Klondyke property.[25] Separate application numbers used by the two Councils were shown at the topof the Decision, which described the application as an application:• to covenant approximately 204 hectares of mature remnant native bush at theKlondyke property (Waikato District);• to undertake a Transferrable Rural Lot subdivision for 13 lots to be created atthe Chamberlain property; and• for land resource consent for approximately 5,000 m3 of earthworks over anarea of 8,000 m2 at the Chamberlain property.[26] The Decision addressed the application under each of the "Franklin sections"of the two Councils' Operative Plans, and the application was granted subject to anumber of conditions. The proposal was also considered to be substantially consistentwith the provisions for TRLRs between identified management areas set out in PlanChange 14.Two additional TRLRs recognised for the Klondyke property[27] Waikato subsequently recognised two additional conservation lots and/orenvironmental lot entitlements for the Klondyke property, and it appears that the Trustwas able to find suitable receiving properties for those lots/entitlements.The Trust provides the protective covenant[28] On 22 February 2013 the Trust provided the required covenant (with the QueenElizabeth II National Trust) for the protection, maintenance and enhancement of thenative bush on the Klondyke property. It was then able to proceed with the first stageof the 13-lot subdivision of the Chamberlain property.Variation 13[29] Auckland and Waikato both considered the TRLR scheme to be unsatisfactorywhen it involved "cross-border" transfers.[30] In July 2012, the two Councils publicly notified identical variations to PlanChange 14, in respect of TRLRs. In each territory the variation was designated"Variation 13". The purpose of Variation 13 was to prohibit the transfer ofenvironmental lot entitlements across territorial boundaries.[31] A hearing conducted jointly by Auckland and Waikato took place between30 June and 4 July 2014, and a decision on Variation 13 was issued by the HearingCommissioners on 11 February 2015. The decision generally upheld Variation 13,bringing to an end the "cross-border" use of TRLRs between parts of the formerFranklin District now administered separately by Auckland and Waikato. However,the decision did include provision for the Trust to transfer the 14 remainingenvironmental lot entitlements it held at the date of the public notification ofVariation 13. That brought to 29 the number of TRLRs available for the Trust's use,being the number of lot entitlements assessed by the Trust's surveyors in theapplication.The Court proceedingsThe Declaration Proceeding[32] In proceeding CIV-2018-419-187 (the Declaration Proceeding), the Trust saysthat only 29 TRLRs were created by Waikato, and it asks for a declaration that it isentitled to a further 35 TRLRs. It contends that Waikato was obliged to either grantor refuse the application insofar as it asked for the creation of 64 TRLRs in respect ofthe Klondyke property, and in so doing confirm or reject the Trust's entitlement to the64 TRLRs it asked for. It says that Waikato has not done that, and that the applicationin respect of the outstanding 35 TRLRs has not been refused.[33] The Trust contends that the Report failed to distinguish between conservationlots, environmental lot entitlements, and TRLRs, and it erroneously treated theapplication as if it were an application for the creation of conservation lots (under theOperative District Plan (Franklin Section)), rather than correctly treating it as anapplication for the creation of TRLRs (under Plan Change 14). The Trust says that theReport also erroneously treated the application as if it were for the creation of13 conservation/environmental lots, rather than the creation of 64 TRLRs and thetransfer of 13 of them.[34] The Trust further contends that Auckland and Waikato mischaracterised theapplication in the same respect in the Decision.[35] The Trust then pleads that:The decision did not grant consent to the use of any of the remaining 51TRLRs because no application for consent had then been made identifying thereceiving properties for them.[36] The Trust says that the absence of receiving properties for the 51 TRLRs notaddressed in the Decision did not affect its entitlement to the creation of the 64 TRLRs– it contends that the Decision "secured" that entitlement, and the entitlementcrystallised when the Trust provided the protective covenant in February 2013.[37] The Trust asks for the following relief:(a) A declaration that by 22 February 2012 it was entitled to 64 TRLRs inrespect of [the Klondyke property];(b) A declaration that [the Trust] remains entitled to a further 35 [TRLRs];(c) An order requiring [Waikato] to consent to the transfer from [theKlondyke property] of 35 [TRLRs] to new receiving properties whichwill themselves need to obtain Resource Consent.The Damages Proceeding[38] In proceeding CIV-2018-419-179 (the Damages Proceeding), the Trust allegesthat Waikato wilfully refused to confirm the Trust's entitlement to the 64 TRLRs, andthat it did so either with knowledge of the unlawfulness of its refusal or with recklessindifference to the lawfulness of the refusal. It says that Waikato knew that its refusalto confirm the Trust's entitlement was likely to injure it. It seeks damages in the sumof $10,000,000, based on the value of the 35 additional TRLRs says it should havehad if Waikato had issued them at the relevant time and they had been transferred foruse in a management area within Auckland's territory.[39] The Trust pleads substantially the same factual background as that pleaded inthe Declaration Proceeding. It contends that it applied for, and was entitled to, thecreation of 64 TRLRs in respect of the Klondyke property, but Waikato erroneouslytreated its application as if it were for the creation of only13 conservation/environmental lot rights. It accepts that Waikato did not grant consentto the use of 51 of the 64 TRLRs sought by it because no receiving properties had beenidentified by them, but says that the application and the Decision nevertheless"secured" the Trust's entitlement to the issue of 64 TRLRs, and that that entitlementcrystallised when the Trust provided the deed of covenant in February 2013.[40] The Trust goes on to plead that Waikato unlawfully exercised its powers in thefollowing respects:(a) It refused to confirm the Trust's full entitlement to TRLRs when itgranted the application;(b) It promulgated Variation 13;(c) It did so without prior consultation with the public or interested partiesincluding the Trust;(d) Its refusals to process cross-border boundary title transfers wereexercises of power which were unlawful and therefore improper;(e) It required the Trust to have its entitlement to TRLRs assessed underthe District Plan, from time to time, on each occasion successiveresource consent applications were made to utilise its entitlement;(f) It extinguished the Trust's entitlement to TRLRs;(g) When considering subsequent applications by the Trust to transferTRLRs from the land, it applied the conservation lot criteria;(h) It improperly determined to publicly notify the Trust's applications forresource consent to utilise the TRLRs;(i) Subsequent to the public notification of Variation 13, it treatedapplications made by the Trust for transfer of TRLRs into Aucklandas a prohibited activity; and(j) It used the public notification of Variation 13 as a specialcircumstance to justify requiring full public notification of furtherapplications for transfer of TRLRs.Waikato's statements of defence[41] In its statement of defence in the Declaration Proceeding, Waikato says thatRule 22 of Plan Change 14 set out specific performance standards in respect of thecreation of environmental lots, including as to the maximum number of environmentallots on any rural lot, and that it provided for the grant or refusal of applications forconsent in respect of environmental lot subdivisions under the rule. However it deniesthat Rule 22 caused any rights to accrue to the Trust, and it denies that the Reportreferred to TRLRs.[42] In an affirmative defence, Waikato refers to the Trust's "proposal" as stated inthe application,1 and to that part of the "conclusion" in the application that is referredto at [15] of this judgment. It says that the application was granted (subject to theconditions stated in the Decision), and the approval permitted the use of the 13 lotrights that had been sought. Auckland separately granted the Trust consent to twoadditional lot transfers into its territory in respect of the Klondyke property, andconsent was later granted for the transfer of the remaining 14 lot rights permitted tobe transferred under Variation 13. Accordingly, consents were given for everythingthe Trust had applied for in the application.[43] In response to the Trust's claims in the Damages Proceeding, Waikato repeatsits responses made to identical individual allegations made by the Trust in theDeclaration Proceeding. On the alleged unlawful exercise of its powers, Waikatodenies the allegations that it promulgated Variation 13 without consultation with1 Reproduced at [8] of this judgment.interested parties, and that it refused to process cross-border title transfers. It deniesthat it extinguished any entitlement of the Trust to TRLRs, and says that resourceconsent applications by the Trust were necessary. It says that, when considering theTrust's applications relating to the Klondyke property, it applied a dual assessmentunder the Waikato Operative District Plan (Franklin Section), and under PlanChange 14.[44] Waikato denies that it undertook any of the actions described at sub-paragraphs(h), (i) and (j) of [40] of this judgment, and says that those actions were undertaken byAuckland.[45] Waikato pleads that, of the 29 lots sought to be transferred to Auckland inrespect of the Klondyke property, only 13 were the subject of the application.Applications for transfers of the other 16 conservation/environmental lots were madeto Auckland.Waikato's application to join Auckland[46] Waikato says that relevant decisions relating to the TRLRs were made jointlyby Waikato and Auckland, and both Councils are jointly interested in the subject matterof the proceeding. It says that Auckland's presence is necessary in order to determineall questions involved in the proceeding.Evidence for Waikato in support[47] In an affidavit sworn in support of the application to join Auckland as a party,Ms Jane Macartney, a senior policy planner for Waikato, said that Auckland played ajoint role with Waikato in processing the application, and a joint decision was givengranting the subdivision application. Ms Macartney said that the joint approachpre-dated the application, and it commenced with the successor councils to theFranklin District Council working closely together in respect of Plan Change 14 andapplications for consented lots that had been filed since the Franklin District Councilwas disestablished in November 2010. In respect of the application, Ms Macartneynoted that there was a high level of consultation between Waikato and Auckland,including over the procedure the two Councils would adopt to deal with theapplication. The cooperation relating generally to cross-border applications of thiskind had been the result of considerable consultation between Auckland and Waikato,which included Waikato's consent managers meeting with their Aucklandcounterparts, email exchanges between the two Councils, and telephone discussions.[48] Ms Macartney provided with her affidavit a copy of her own report written inJune 2014 for the hearing before the Hearing Commissioners on Variation 13. In herreport, she noted that the boundaries for the new Auckland Council were settled by theLocal Government Commission in a determination issued in March 2010 (the LGCDetermination). The LGC Determination addressed a number of transitional matters,and it provided that the transitional provisions in cl 67 of sch 3 to the LocalGovernment Act 2002 (LGA 2002) applied to the LGC Determination.[49] Clause 67 of pt 4 of sch 3 to the LGA 2002 materially provided:67 Provisions that apply to each reorganisation schemeThe following provisions apply to each reorganisation scheme unlessamended or declared not to apply to a reorganisation scheme:(a) the local authority that assumes, under the scheme,jurisdiction over an area formerly comprising or forming partof a separate district or region, or that takes over theresponsibilities of a local authority, has, and may exercise, andis responsible for,—(i) all the powers, duties, acts of authority, andresponsibilities that were previously exercised by theformer local authority, or that would have beenexercised by it if it had remained in existence or incontrol of that area:(ii) all the liabilities, obligations, engagements, andcontracts that were previously the responsibility ofthe former local authority, or that would have been itsresponsibility if it had remained in existence or incontrol of that area:(iii) all the actions, suits, and proceedings pending by oragainst the former local authority, or that would havebeen its responsibility if it had remained in existenceor in control of that area.[50] The LGC Determination further provided that any matter under the ResourceManagement Act 1991 (the RMA) before or initiated by Auckland Regional Councilor Franklin District Council in respect of any areas now included in the WaikatoDistrict, was to become the responsibility of Waikato, and that any plan, policy, ruleor strategy prepared by Franklin District Council would continue in force in respect ofthose areas of the former Franklin District included in Waikato's District, until the planexpired or was revoked by Waikato.[51] Ms Macartney also drew attention in her report to s 81 of the RMA, which isconcerned with transitional provisions which are to apply in the case of adjustmentsto territorial boundaries. Section 81(1) and (3) of the RMA provide:81 Boundary adjustments(1) Where the boundaries of any region or district are altered, and anyarea comes within the jurisdiction of a different local authority,—(a) the plan or proposed plan that applied to the area before thealteration of the boundaries shall continue to apply to that areaand shall, in so far as it applies to the area, be deemed to bepart of the plan or proposed plan of the different localauthority:(b) any activity that may, before the alteration of the boundaries,have been undertaken under section 19 may continue to beundertaken as if the alteration of the boundaries had not takenplace.(3) A territorial authority shall, as soon as practicable but within 2 years,make such changes to its district plans as it considers necessary tocover any area that comes within its jurisdiction, and, after thechanges are made, this section shall cease to apply.[52] The effect of s 81 was that the part of the former Franklin District that cameunder Waikato's jurisdiction (now referred to as the "Franklin Section") became a"bolt-on" to the Waikato District Plan, with the Franklin Section and the WaikatoOperative District Plan forming a single document.[53] Ms Macartney also referred to s 11 of the LGA 2002, dealing generally withthe role of a local authority. Section 11 states that the role of a local authority is, interalia, to:(a) give effect, in relation to its district or region, to the purpose of localgovernment stated in section 10; and(b) perform the duties, and exercise the rights, conferred on it by or under[the LGA 2002] and any other enactment.[54] Finally on the legislative background, Ms Macartney noted s 31 of the RMA,which dealt with the functions of territorial authorities under the RMA. Briefly, s 31provides that every territorial authority has certain specified functions, together with"(f) any other functions specified in [the RMA]".[55] Ms Macartney concluded from her review of this legislation that plan changes(or variations) could legitimately apply to the "Franklin Section", subject tocompliance with sch 1 to the RMA.2 She noted that Variation 13 only changed onematerial aspect of the TRLRs regime that applied to that part of the former FranklinDistrict now within Waikato's jurisdiction: cross-boundary transfers were prohibited.[56] Ms Macartney noted that cross-border transfers were never anticipated duringthe development of Plan Change 14, as Plan Change 14 was always intended to applywithin a single district (the former Franklin District).[57] In a supplementary affidavit sworn on 23 September 2019, Ms Macartneyproduced a copy of Variation 13, which reproduced (in the "Rule 50 – Definitions"section) a proposed new definition of a TRLR. The text shows that, prior to thepromulgation of Variation 13, the definition was:TRANSFERABLE RURAL LOT RIGHT means a right to transfer an existingRURAL LOT from a (donor) property in any Rural or Coastal zone to aspecified receiver area. It means a RURAL LOT is rescinded from a propertyand created as a new title or titles in a receiver area.The Trust's opposition[58] In its opposition, the Trust says that the two proceedings arise out of a resourceconsent application which required distinct decisions by the two territorial authorities,each functioning within its own separate jurisdiction under the RMA. Waikato'srelevant decision-making jurisdiction comprised decisions pertaining only to the"donor property" (the Klondyke property), which was located within its jurisdiction,and on which the entitlement to TRLRs arose. Auckland's decision-making2 Schedule 1 deals with the preparation, change, and review of policy statements and plans.jurisdiction comprised only decisions relating to the use of the TRLRs on a "receiverproperty" where that property was located within its jurisdiction.[59] The Trust says that it is not pursuing Auckland in either proceeding in respectof its decisions or decision-making powers; it is only pursuing Waikato in respect ofdecisions made within Waikato's jurisdiction in respect of the resource consentapplication, and the remedies it seeks will require the Court to consider only Waikato'sdecision-making. The Court will not be required to consider decisions made byAuckland, and Auckland will not be affected by any order sought by the Trust.[60] The Trust says that the fact that the Decision was made jointly does not affectthe separate responsibilities of the two Councils: each had distinct decision-makingpowers.[61] In respect of the "exercises of power" pleaded in the Damages Proceeding, theTrust says that its claims are concerned solely with exercises of power by Waikato,and the particular exercises of power particularised at sub-paragraphs (h), (i) and (j)[as reproduced in [40] of this judgment, were exercises of power solely by Waikatowithin its district and jurisdiction.[62] The Trust says that Auckland's presence as a party is not necessary for theadjudication of all issues in the proceedings, and that justice does not require thejoinder of Auckland.[63] In the foregoing circumstances, the Trust would be significantly prejudiced interms of costs, time and issues to be adjudicated on, if Auckland were joined as adefendant.Applications to join defendants — legal principles[64] Rule 4.56 of the High Court Rules 2016 materially provides:4.56 Striking out and adding parties(1) A Judge may, at any stage of a proceeding, order that—(b) the name of a person be added as a plaintiff or defendantbecause—(i) the person ought to have been joined; or(ii) the person's presence before the court may benecessary to adjudicate on and settle all questionsinvolved in the proceeding.(2) An order does not require an application and may be made on termsthe court considers just.[65] Waikato relies on both limbs of r 4.56(1)(b). First, it says that Auckland is aperson who should be added as a defendant because it "ought to have been joined".3In the alternative, it says that Auckland's presence before the Court is necessary toadjudicate on and settle all questions involved in the proceeding.4The first limb — r 4.56(1)(b)(i)[66] The Courts have adopted different approaches to the interpretation ofr 4.56(1)(b)(i). In Paccar Inc v Four Ways Trucking Inc, Barker J considered that thelimb was intended to apply to:5 those cases in which the person sought to be joined 'should' have beenjoined because it is impossible to do justice between the existing partieswithout the joinder (eg where the party sought to be joined is jointly interestedwith either the plaintiff or the defendant in the subject matter of the dispute).[67] In two more recent cases, a more liberal interpretation has been adopted, underwhich the "ought to have been joined" formula has been read as permitting, subject tothe overall justice of the situation, the joinder of any party the plaintiff could haveelected to sue in the first place.6[68] However in Newhaven Waldorf Management Limited v Allen Kós J, deliveringthe judgment of the Court of Appeal, said that the use of the expression "person ought3 High Court Rules 2016, r 4.56(1)(b)(i).4 Rule 4.56(1)(b)(ii).5 Paccar Inc v Four Ways Trucking Inc [1995] 2 NZLR 492 (HC) at 495.6 Robin v IAG New Zealand Ltd [2018] NZHC 204; and Fonterra Co-Operative Group Ltd vWaikato Coldstorage Ltd, HC Hamilton CIV-2010-419-855, 22 December 2010.to have been joined" addresses persons whose presence is necessary for the Court toadjudicate the exact issues arising on the pleadings.7The second limb — r 4.56(1)(b)(ii)[69] The Court's general approach was described by the Court of Appeal inNewhaven as liberal, with a fairly low threshold for the making of an order.8 What isimportant is the nature of the impact of the proceeding on the additional defendant'srights. Those rights might not necessarily be confined to legal rights, although thecase for joinder will be stronger if they are.[70] In its decision in Newhaven, the Court of Appeal referred to the decision of thePrivy Council in Pegang Mining Co Ltd v Choong Sam, where Lord Diplock referredto the great variety of circumstances in which application may be made to join anadditional party to an existing action.9 His Lordship went on to express the view ofthe Board that:10 one of the principal objectives of the rule [permitting joinder of additionalparties] is to enable the Court to prevent injustice being done to a personwhose rights will be affected by its judgment by proceeding to adjudicate uponthe matter in dispute in the action without his being given an opportunity ofbeing heard. To achieve this object calls for a flexibility of approach It has been sometimes said that a party may be added if his legal interestswill be affected by the judgment in the action but not if his commercialinterests only would be affected. While their Lordships agree that the merefact that a person is likely to be better off financially if a case is decided oneway rather than another is not a sufficient ground to entitle him to be added asa party, they do not find the dichotomy between "legal" and "commercial"interests helpful. A better way of expressing the test is: will [the intendedparty's] rights against or liabilities to any party to the action in respect of thesubject matter of the action be directly affected by any order which may bemade in the action?[71] Both counsel referred to Mitchell v Attorney-General, a judicial review casewhere the Court noted that there may be broader scope for joinder as the potential7 Newhaven Waldorf Management Ltd v Allen [2015] NZCA 204, [2015] NZAR 1173 at [42].8 At [44] and [46].9 Pegang Mining Co Ltd v Choong Sam (1969) 2 MLJ 52 (PC) as cited in Newhaven WaldorfManagement Ltd v Allen, above n 8.10 At 55-56.impact of the rights and liabilities on proposed parties could be wider than in anordinary civil proceeding.11 Her Honour said:[18] the effect of the judicial gloss on r 4.56, and its English equivalent,is to clarify the "necessity" requirement: the rights and liabilities of the partyseeking joinder must be rights against, or liabilities to, a party to the action.Where the joinder application is made by a defendant[72] The position of a defendant seeking joinder is summarised in McGechan onProcedure, where the authors say:12The current approach where defendants seek joinder is to treat any oppositionby the plaintiff as a factor to be considered, but not a bar to joinder. InMainzeal Corp Ltd v Contractors Bonding Ltd (1989) 2 PRNZ 47 (HC),Barker J held that the plaintiff's wishes and its possible liability for additionalcosts are factors to be considered in the exercise of the Court's discretion.Barker J did not follow previous dicta suggesting that an order uponapplication by a defendant to join an additional defendant would not generallybe made where the plaintiff opposes or that the plaintiff's wishes ceased tobe relevant once the grounds for joinder had been established The middleground adopted by Barker J now applies.Directions if joinder order appropriate[73] Once it is determined that a party ought to have been joined, or that party'spresence is necessary, the usual practice of the Court is to prefer the procedure whichis most likely to be more convenient and lead to the most efficient and expeditiousdisposition of the proceeding.13Counsel's submissionsWaikato[74] In respect of the Declaration Proceeding, Mr Moodley noted that theapplication was made to Auckland and Waikato together, and there was a high level ofconsultation between the two Councils on the application. The consultation includedthe procedure by which the applications were processed by the two Councils, and11 Mitchell v Attorney-General [2016] NZHC 1737, [2016] NZAR 962.12 McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR4.56.12].13 Orion New Zealand Ltd v Earl P Smith Ltd [2013] NZHC 1411 at [29](b).Auckland as the receiving authority had to approve the identity and quantity of the lotsto be transferred. The Decision was issued jointly.[75] Mr Moodley noted that Waikato agreed to process the application only becausethe application was accepted for processing by Auckland. Both Councils wereinvolved in the decision-making process, and if the Decision involved amischaracterisation of the application, as the Trust contends and Waikato denies, the"mischaracterisation" would have been that of both Councils. In those circumstances,it was inappropriate to issue the Declaration Proceeding against Waikato alone.[76] In respect of the Damages Proceeding, Mr Moodley referred to two key aspectsof the proceedings, being the application and the Decision (addressed in theDeclaration Proceeding), and the process and actions taken in relation to Variation 13(addressed in the Damages Proceeding). Waikato's position is that the Trust's attemptto separate the roles of the two Councils is artificial and inappropriate on both of thoseaspects, and fails to take into account the actual circumstances in which the challengedactions occurred.[77] Mr Moodley addressed each of the alleged wrongful "exercises of power". Hesubmitted that both Councils promulgated Variation 13, on which a joint hearing wasconvened, and at least three of the alleged misuses of power pleaded in the DamagesProceeding (those reproduced at (h), (i) and (j) of [40] of this judgment) involved stepstaken by Auckland, not Waikato. In respect of others, he submitted that there was infact no wrongful exercise of powers by Waikato. These were said to be unilateralexercises of power by Auckland, making it appropriate for Auckland to be joined as adefendant (rather than leaving it to Waikato to make a third party claim againstAuckland).[78] Mr Moodley emphasised that Auckland has consented to being joined in theproceedings. Implicit in that is that Auckland accepts that it had a role in the mattersgiving rise to the Trust's present claims.[79] On the law, Mr Moodley submitted that the jurisdiction to join a defendantunder r 4.56 is a liberal one, and this is a clear case for the exercise of the jurisdiction.The Trust[80] Mr Gray emphasised that the relief sought in both proceedings is soughtagainst Waikato only. It is not sought against Auckland.[81] That is clearly the case with the Declaration Proceeding, where the schemechanges effected following the approval of Variation 13 mean that the Trust cannotnow transfer environmental lot entitlements for use in Auckland's jurisdiction – theremaining TRLRs have to be used within Waikato's territory. For that reason theDeclaration Proceeding, which essentially seeks to determine the effect of theapplication and the Decision, was commenced separately from the DamagesProceeding (which is concerned substantially with losses said to have been sufferedby the Trust as a result of the promulgation and subsequent approval of Variation 13).[82] Addressing the Declaration Proceeding, Mr Gray submitted that Waikato'sfailure to either grant or refuse the application for the creation of the remaining35 TRLRs involved a wrongful exercise of power by Waikato, not Auckland.[83] Because the property is located within Waikato's district, only Waikato couldissue the TRLRs, and the fact that Auckland may have participated in evaluating theapplication cannot change that: only Waikato could determine the application insofaras it was concerned with the issue of the TRLRs, and only Waikato owed a duty to theTrust in that respect. For that reason, the relief is sought only from Waikato, andAuckland has no relevant interest in the Declaration Proceeding. Nor is Auckland'spresence necessary to determine the issues in the Declaration Proceeding.[84] The fact that the application was filed with both Auckland and Waikato was amatter of form, not substance. And the fact that the Decision was signed by bothCouncils merely reflects the fact that each was exercising a separate function relatingto the land within its district. That had to be so, because the jurisdiction of eachterritorial authority did not extend beyond the boundary of its own district, and thereis no mechanism under the RMA for "joint" resource consents to be granted by two ormore Councils.14[85] Where multiple resource consents are required from different territorial orregional authorities, the RMA does permit the applications to be heard together.15 Butthat does not affect the separate responsibilities undertaken by each Council, which inthis case were dictated by the facts that the donor property was within Waikato'sdistrict and the receiving property was within Auckland's district. The "joint" natureof the application and its processing and hearing was no more than an administrativeconvenience.[86] On the issues in the Damages Proceeding, Mr Gray submitted that, in breachof duties owed by it to the Trust, Waikato agreed (with Auckland) not to process further"cross-border" TRLR applications, and to promulgate Variation 13. Waikato andAuckland may have done certain things in parallel, but it is Waikato that owed therelevant duties to the Trust in respect of acts or omissions within Waikato's district,and Waikato did exercise the powers described at [40] of this judgment within itsdistrict.[87] For those reasons, this is not a case where Auckland and Waikato are jointlyinterested in the subject matter of the dispute, or where the rights or liabilities ofAuckland might be "directly affected" by any order that might be made in theproceedings. The expression "joint interest" in the context of r 4.56 is concerned withlegal liability - something involving the existence of a duty, possible breach, andpossible relief. No rights or liabilities of Auckland will be directly affected as aconsequence of these proceedings, and Waikato has not been able to identify any dutythat might be owed by Auckland to the Trust, or any remedy which might be availableto the Trust against Auckland.14 Referring to s 2 of the Local Government Act 2002, and s 31 of the Resource Management Act1991.15 Resource Management Act 1991, s 102.Discussion and conclusions[88] I do not consider this is a case where the first limb of r 4.56(1)(b) applies. Theissue under the first limb is whether joinder of the person sought to be added as adefendant is necessary for the Court to adjudicate the exact issues arising on thepleadings. I do not think it is in this case.[89] The relief sought in the Declaration Proceeding is concerned only with (i) thenumber of TRLRs the Trust says it was entitled to in respect of the Klondyke property,and (ii) the Trust's claimed entitlement to have Waikato consent to the use of a totalof 35 TRLRs on another receiving property. Following the adoption of Variation 13,any other receiving property would have to be situated in Waikato's territory, andAuckland would appear to have no interest in it. The Trust could not have suedAuckland for relief on those issues, as Auckland could not have owed the Trust anyrelevant duty.[90] Looking at the declarations sought in the Declaration Proceeding individually,the first of them invites the Court to declare how many TRLRs a particular owner ofa piece of land in Waikato's district held (in respect of that land) as at 22 February2013. That will presumably involve the Court enquiring into how many environmentallot entitlements the land owner would have been entitled to at that date, on the basisof him or her providing a suitable protective covenant for the protection, maintenanceor enhancement of significant ecological features on the land. None of that appears toraise any issue for adjudication that would require Auckland's participation in thelitigation.[91] The same is true of the second declaration that is sought (a declaration that theTrust remains entitled to a further 35 TRLRs) – any declaration made to that effectwould merely reflect a finding that the Trust was entitled to the first declaration sought(if that proved to be the position), plus the fact that it has used 29 of the 64 TRLRs itclaims to be entitled to.[92] The third direction sought (requiring Waikato to consent to a transfer of the 35TRLRs to new receiving properties) could not affect Auckland at all – since theadoption of Variation 13, "cross-border" use of TRLRs has been prohibited, and anytransfer could only be to a property within a management area in Waikato's district. Idid not understand Mr Gray to contend otherwise at the hearing, and as I understandit, the prohibition on "cross-border" use of TRLRs is now operative in both districts.[93] The statement of claim in the Declaration Proceeding does contend thatWaikato "erroneously" treated the application in a particular way in the Report, but inmy view that is an issue between the Trust and Waikato – Auckland's presence beforethe Court is not necessary for the Court to adjudicate on it. The statement of claimalso alleges that the application and the Decision had the effect of "securing" theTrust's entitlement to the 64 TRLRs, and that that entitlement "crystallised" when theprotective covenant was provided. Whether or not that is so, the Decision appears tomake it clear that the creation or recognition of further conservation lots orenvironmental lots at the Klondyke property, beyond the 13 required for thesubdivision of the Chamberlain property, would be a matter for Waikato. The Decisionstated in the attached Advice Notes:7. In respect of the property at Klondyke Road, Port Waikato, theapplicant has indicated that they may seek to generate additionalConservation Lot entitlements and transfer these off the site as part offuture applications. In this respect it is noted that any additionalsubdivision entitlements would need to be assessed as part of anyfuture application, on its merits, and based on the Waikato DistrictPlan rules that prevail at the time of that application being made. Noguarantee is given as to the potential number of lots (if any) whichmay be utilised in association with making such an application orapplications.[94] So whatever might have been the effect of the Decision and the subsequentprovision of the Deed of Covenant, it is hard to see how Auckland's joint participationin the Decision could make its presence before the Court necessary to decide an issue(the effect of the Decision on the Klondyke property) that appears to affect only theTrust and Waikato.[95] Similar considerations apply to the Damages Proceeding, where the Trustmakes additional allegations of unlawful exercises of power by Waikato: the powersin question are not said to have been powers of Auckland that it exercised unlawfully:they are said to have been powers of Waikato that Waikato exercised unlawfully. TheTrust could not have sued Auckland for the wrongs it has alleged, and Auckland'spresence as a party is not necessary for the Court to adjudicate on the exact issues inthe Damages Proceeding.[96] I do not think there is any question of Auckland being "jointly interested" inthe proceedings because a joint decision was given. It was, but I accept Mr Gray'ssubmission that the two Councils were still required to address separately the issuesaffecting the "donor" land and the issues affecting the "receiving" land. Each Councilwas required to act independently (in accordance with the objectives of the RMA) inrespect of the land within its district. And of course the Decision did not purport toaddress the issue of the 35 TRLRs the Trust says should have been issued to it.[97] Nor do I consider the fact that the two Councils collaborated in the processingof "cross-border" TRLR applications affects the position. I accept Mr Gray'ssubmission that this was no more than a matter of administrative convenience once across-border receiving property had been identified; it did not affect the responsibilityof each territorial authority to make relevant decision affecting the land within itsdistrict.[98] On the promulgation of Variation 13, which resulted in the prohibition of the"cross-border" use of TRLRs which is at the heart of the Damages Proceeding, I donot think it assists Waikato that Auckland may have adopted the same Variation 13.Each Council was responsible for the promulgation of variations to its own planchanges, and Waikato remained responsible for its own variations regardless ofwhether Auckland introduced the same variation within its territory.[99] The statutory provisions referred to in Ms Macartney's report for the hearingon Variation 13 are consistent with Waikato being the only territorial authority withany entitlement to make decisions about conservation and environmental lot rights inrespect of the Klondyke property, and Waikato has not sufficiently shown thatAuckland had any responsibility for the determination of that issue. It was a matter tobe determined by Waikato. Consistent with that view, it was Waikato that providedthe Report, not Auckland.[100] Considering the second limb of r 4.56(1)(b), where the additional party'spresence before the Court must be necessary for the Court to adjudicate on and settleall questions involved, I am unconvinced that there is any relevant "necessity" in thiscase. As Clark J noted in Mitchell v Attorney-General, the concept of "necessity" isgenerally concerned with the legal rights and liabilities of the parties,16 and I acceptMr Gray's submission that the statements of claim as presently framed do not assertany liability of Auckland, or appear to affect any legal right or liability of Auckland.Nor is it clear how any findings or determinations in the proceedings could affectAuckland's "pocket", or otherwise impact on its rights.[101] Nor do wider considerations of justice favour Auckland being joined. I acceptthat the Court's approach to joinder of parties under r 4.56 has generally been liberal,but the Trust's wishes must also be considered. If Auckland's rights will not beimpacted by any findings or decisions in the proceeding, as appears to be the case, itis difficult to see why the Trust should be asked to bear the additional costs and delaythat would be likely to attend any order joining Auckland. If Auckland holds relevantdocuments, an appropriate application for non-party discovery can be made, and ifnecessary Auckland's officers who were involved with the matter can be called to giveevidence at trial. There is nothing before me to suggest that Auckland would notsensibly co-operate on those matters, and there is nothing else that would suggestAuckland's presence as a party might be necessary to ensure all relevant evidence isbefore the Court.[102] For all of the foregoing reasons, I am not satisfied that Waikato has made outa basis for joinder of Auckland under either limb of r 4.56(1)(b). There is no sufficientbasis to conclude that Auckland ought to have been joined, and nor is there any basisfor the Court to find that Auckland's presence before the Court is necessary toadjudicate on and settle all of the questions in the two proceedings.Result[103] For the foregoing reasons, the application is dismissed. The Trust is entitledto costs, which are awarded on a 2B basis, together with disbursements as fixed by theregistrar.16 Mitchell v Attorney-General, above n 11, at [18].Associate Judge Smith