RYAN PROPERTY INVESTMENTS LIMITED V WELLINGTON ELECTRICITY LINES LIMITED HC WN CIV-2011-485-2011

RYAN PROPERTY INVESTMENTS LIMITED V WELLINGTON ELECTRICITY LINES LIMITED HC WN CIV-2011-485-2011 [10 February 2012]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2011-485-2011[2012] NZHC 114BETWEEN RYAN PROPERTY INVESTMENTSLIMITEDPlaintiffAND WELLINGTON ELECTRICITY LINESLIMITEDDefendantHearing: 12 December 2011Counsel: C La Hatte and G Warren for PlaintiffR Gordon and O Meech for DefendantJudgment: 10 February 2012JUDGMENT OF WILLIAMS JIn accordance with r 11.5, I direct the Registrar to endorse this judgment with the delivery time of 1.00pm on the 10 February 2012.[1] Ryan Property Investments Limited (RPI) owns 408 Cambridge Terrace, Naenae in Wellington. The property was purchased from the Housing Corporation of New Zealand in 2000 as part of a job lot of 70 properties. Sometime after purchase, RPI realised that there was an 11 kilovolt switching station known as the Naenae kiosk located there.[2] The switching station was built by the Hutt Valley Electric Power Board (HVEPB) in 1957. It was put there to service the then new suburb of Naenae which was planned and built around the same time. The kiosk now sits on its own title. RPI says either that the kiosk is a fixture on its land and therefore belongs to it or alternatively that it was built by HVEPB without lawful authority and is not protected by the special legislative regime which now provides for lines company access to such equipment even when it is on land owned by a third party. Either way RPI wants rent for the use of its land or its switching station, or both. RPI seeks declarations accordingly.[3] Wellington Electricity Lines Limited (WEL) says that the kiosk is not a fixture owned by RPI. Rather it is subject to the special statutory regime providing for access by WEL free of charge. WEL says it owes RPI no obligation to pay rent for the land, the kiosk or anything else. WEL seeks counter-declarations accordingly.[4] Section 3 of the Declaratory Judgments Act 1908 applies. The facts are generally settled and there is no risk of prejudice to third parties so that although jurisdiction is discretionary, there is no reason to withhold consideration of the application in this case.[5] Crucial background to this application is the privatisation of electricity reticulation that occurred pursuant to the Electricity Act 1992. At that time, the adjustment of rights between land owners and reticulators became not a contest between the state and property owners (as previously) but between competing private interests. It became necessary therefore, to provide a limited regime for the now private lines companies to override the rights of property owners in prescribedcircumstances in the interests of providing for crucial infrastructure for the community and economy.[6] The point of entry in this case is s 22 of the Electricity Act 1992 which provides:Any existing works, lawfully fixed to or lawfully installed over or under any land that is not owned by the person that owns the works, shall continue to be fixed or installed until the owner of the works otherwise decides, and no person other than the owner of the works shall have any interest in any such works by reason only of having an interest in the land.[7] Existing works is defined broadly to include any electrical installation built before 1 January 1993. There is no doubt that the kiosk fits this description.[8] Thus, if the kiosk was lawfully fixed to the land at 408 Cambridge Terrace, then RPI has no interest in it. Indeed, if the requirements of s 22 are met, s 23D of the 1992 Act further provides that RPI may not even charge WEL for access to it.[9] Two questions arise:(a) was the substation lawfully fixed to the land when it was placed there in 1957?; and(b) is WEL the rightful owner of the kiosk now?Lawfully fixed – history of authority to build the work[10] It is necessary to go back well beyond 1957 to trace the necessary authority to build in this case. The Electric Power Boards Act 1918 provided for the creation of electric power boards by Order in Council. Section 49 of that Act provided that boards could not purchase or construct electricity works without the consent of the Governor-General.Proclamations and validations[11] In 1922, a proclamation was issued creating the HVEPB whose jurisdiction would broadly cover the Hutt Valley area including present day Naenae (still to be built of course).[12] On 18 June 1923, the Governor-General issued an Order in Council authorising the HVEPB to build "lines, transformers and substations" for thetransmission and distribution of electrical energy in the relevant district "from time to time". There is a reference in the Order in Council to some particular proposed lines as shown on a map but an acceptance in its terms that other lines and equipment could also be built in the district within the authority of the Order in Council.[13] The authority was subject to six conditions. They were as follows:1. No electric lines shall be used for the distribution of electrical energy until the Hutt Valley Electric-power Board has obtained a license for such purpose in accordance with the provisions of section 2 of the Public Works Amendment Act, 1911.2. Any conditions inserted in such licenses shall be strictly complied with by such Board.3. Such Board shall forward for the approval of the Minister of Public Works such further plans and particulars as the Minister of Public Works may from time to time require.4. The Board shall not, without the consent in writing of the Minister of Public Works, erect any electric lines along the routes of the Government main trunk transmission-lines.5. The works hereby authorized shall be constructed so as to comply with the regulations made under section 2 of the Public Works Amendment Act, 1911, dated the 9th day of October, 1922, and published in theNew Zealand Gazette of the 12th day of the same month, or any regulations made in amendment thereof or in substitution therefor, which regulations shall be deemed to be incorporated herein.6. The Board shall substantially complete the works hereby authorized within a period of three years from the date of this license, or within such further time as the Minister may allow in the event of the work being delayed by strikes, lock-outs, breakdowns, or other unavoidable causes not due to any neglect by the Board.[14] Condition 6 limited the tenure of the authority to three years unless the Minister allowed an extension and then only if work was delayed as a result of force majeure type circumstances. No argument was made that a long term extension was granted by the Minister in this case, and there must be some doubt as to whether such extension would have been lawful in any event.[15] On the same day the Governor-General also issued a license as required by Condition 1 of the first Order in Council as above. The term of the license was 42 years.1[16] In 1925 the 1918 Act was repealed and replaced by the Electric Power Boards Act 1925. Section 129 contained that Act's transitional provisions. Paragraph (c) provided:All proclamations, Orders in Council, regulations, orders, petitions, agreements, awards, special orders, bylaws, resolutions, rolls, lists, rate books, plans, records, instruments, offices, appointments, and generally all acts of authority which originated under any of those enactments and are subsisting or in force on the coming into operation of this Act shall enure for the purposes of this Act as fully and effectually as if they had originated under the corresponding provisions of this Act, and accordingly shall, where necessary, be deemed to have so originated.[17] This had the affect of rolling over the authority contained in the 1923 Order in Council notwithstanding repeal of the Order's parent Act. Section 82 of the 1925 Act provided for general powers of the Board to build electricity works but s 76 continued the requirement of gubernatorial authority, and it continued to be open to the Governor-General to impose conditions on such authority.[18] By 1957 when the kiosk was built, the original authority had long since expired. But on 25 October 1950, a further Order in Council was promulgated authorising the HVEPB on its own terms, to construct and maintain electricity works. This order revoked and replaced the original 42 year licence extending the term of that licence to 31 March 1971. It also revoked the original three year authority issued on 18 June 1923, providing instead:1 See clause 3 of the Schedule to the Order in Council as gazetted on 21 June 1923. and further, for the purposes of s 76 of the 1925 Act, authorising thelicensee to construct and maintain the said electric works [19] From this point forward, it appears that the authority to construct and maintain works would last as long as the 21 year tenure of the licence. The works referred to in the 1950 Order in Council are broadly and technically described, no doubt including within their meaning, the kiosk in question here, just as the 1923 order covered lines, transformers and substations.[20] On 6 June 1956, a fresh Order in Council was issued revoking the 1950 Order in Council. This Order was described as: authorising the Hutt Valley Electric Power Board to lay, construct, put up,place and use the electric lines and to construct the electric works described in the First Schedule.[21] The Schedule simply referred to:Lines for the transmission and supply of electrical energy within the Hutt Valley electric power district as defined in the proclamations referred to hereunder and referring thereby to proclamations of July 1922, December 1924 and February 1955.[22] This was the provision pursuant to which the kiosk was built. It purports to be a licence but it revokes and replaces the 25 October 1950 Order in Council so must be read as both a licence and an authority in terms of Clause 2 of the licence. Its term was stated to expire on 31 March 1971.[23] In 1961, the Electric Power Boards Amendment Act was enacted. Accordingto Hansard, it was necessary because a magistrate's court decision in the 1950s(there is no more detail than that) had found that authorising Orders in Council under s 76 of the Electric Power Boards Act 1925 could not be promulgated in general terms. Rather, the detail of the works had to accompany the Order in Council.[24] All relevant Orders in Council in this case, including the 1956 Orders, were in general rather than specific terms and so would have fallen foul of that decision. Section 3(2) of the 1961 validation Act inserted a new s 76(1A) into the Electric Power Boards Act 1925. It provided:Subject to the provisions of this Act, any Order in Council under subsection (1) of this section may authorise the Board to construct a specified electric work or specified electric works or may be general in its application and authorise the Board to construct all electric works which may from time to time be required for the distribution and supply of electricity in any specified area without specifying the nature of any such works.[25] This provision prospectively authorised general Orders in Council.2 There followed a short validation provision in s 4(1) as follows:All electric works constructed by any Board before the commencement of this Act shall be deemed to have been lawfully constructed under the authority of an Order in Council under section 76 of the principal Act and any such Order in Council which would have been valid if section 3 of this Act had been in force at the date of the Order in Council is hereby validated.[26] There are two parts to s 4 of the 1961 Act. The first part deems any existing electric works constructed by a board before 1961 to have been lawfully constructed under the authority of an Order in Council under s 76. The second part declares any Order in Council under that section to be valid if (in effect) it complied with the relaxed requirements of the new s 76(1A).[27] The history of this legislation confirms that it was designed to deal with general Orders in Council, not problematic conditions limiting tenure such as that contained in Condition 6 of the HVEPB Order in Council. Nonetheless, the wording of the first part of s 4(1) is clear and is not, on its terms, conditional upon compliance with the second part. In other words it does not say that validation of the works is2 Section 3 of the 1961 Act was repealed and replaced by s 4 of the Electric Power BoardsAmendment Act 1969. Section 4 of the 1969 Act inserted a new s 76 into the 1925 Act, whichprovided that:Subject to section 77 of this Act, any Board constituted under this Act may purchase, construct, maintain, and renew electric works, and may enter into any contract with any person for the purchase, construction, maintenance, or renewal of electric work or for any other purpose authorised by this Act or by any Order in Council made under this Act, or for providing the Board with materials, or for any other thing necessary for any purpose of this Act.Section 4 of the 1961 Act was not affected. On my interpretation of s 4, I do not need to determine whether s 3 of the 1961 Act or s 4 of the 1969 Act applies.For completeness, I note that the Electric Power Boards Amendment Act 1961 was repealed by the Energy Companies Act 1992, however s 96 of the 1992 Act provided that "the repeal does not affect the validity of anything validated" by the 1961 Act.conditional upon the parent Order in Council complying with the requirements of s 76(1A).[28] Rather, the first part of the subsection addresses the existing situation and the second part appears to deal with the legality of any future works. It is the second part that is conditional upon compliance with s 76(1A). One can see why the subsection was drafted in this way. It would have been very inconvenient indeed if the legality of existing electricity works could be called into question because of a failure in the authorisation chain. On the other hand, any future works would be regularised only to the extent that they were authorised by a general Order in Council.[29] The result of this is that there can be no doubt that the kiosk was lawfully affixed to 408 Cambridge Terrace. First, the Order in Council of 6 June 1956 is broad enough on its terms to cover the construction of the kiosk meaning that the kiosk was authorised when it was built. Second, even if that is wrong, the 1961 validation legislation provided retrospective authorisation in any event.Notice and consent[30] RPI then argues that, even if there was general authorisation for the works, HVEPB had not notified the Crown, as land owner, of its intention to construct the kiosk at 408 Cambridge Terrace and so had failed to comply with the necessary procedures. The effect of this, it was argued, was that there was no proper authority in this particular case. By the terms of s 88 of the 1925 Act, HVEPB could proceed without consent of the land owner but there was nonetheless a requirement of notification because certain rights to compensation were triggered by notice.3[31] The problem arises because HVEPB appears to have mistakenly believed that 408 Cambridge Terrace was in fact owned by Lower Hutt City Council. Formal notification was therefore given to the council not the Housing Division of the Ministry of Works – the true owner.3 Section 88(2) gave land owners 10 days from the date of notification to object to the proposedworks.[32] That said, for several reasons I agree with WEL that there is no irregularity here sufficient to render the placement of the kiosk unlawful. Apart from anything else the 1961 validating legislation removes any doubt about lawful authority whatever the preceding facts. The terms of s 4(1) are clear and comprehensive in that respect. In addition, I agree with WEL, that although HVEPB did not realise the Crown owned the land, it nonetheless notified the Housing Division of its intention to construct the kiosk anyway – first on 22 December 1955 and second, when the final location of the kiosk had been resolved, on 18 February 1957.[33] In the last letter, the "concurrence" of the Housing Division was sought. In March 1957, a deposited plan was prepared showing the subdivision of Lot 1 DP15300 – the switching station site – signed off as approved for the purposes of the Housing Act 1955 by the district supervisor of housing construction. The plan was also annotated in handwriting on 4 April 1957 with "Housing Division". I amsatisfied that the Housing Division was notified in terms of s 88 of the 1925 Act, and in fact approved of the construction in 1957. I draw the latter conclusion from thefact that the division's concurrence was sought in February 1957, and approval was given for the purposes of the Housing Act 1955 by the district supervisor.[34] The Housing Act included ss 2 and 3 of the Housing Amendment Act 1956 dealing directly with the subject matter of electrical works on state housing land. Given the 55 years that have elapsed, there is in my view a sufficient paper trail to establish both notice and approval even though for the purposes of s 88 no approval was necessary and furthermore, for the purposes of the 1961 Act, notice was not necessary either.Does WEL own the kiosk?[35] There can be no presumption in this case, that by affixing the kiosk to the land at 408 Cambridge Terrace, ownership of it is annexed to the land owner. The regime under the 1925 Act specifically proceeds on the basis that works such as the kiosk could be built by a power board and affixed to the land of another yet still be owned by the power board. See for example s 84 in respect of tunnels, aqueducts, flumes, poles and wires on or under or across private land; s 87 as to temporaryoccupation; and, as I have discussed, s 88 as to notice to an occupier of intention to occupy land.[36] I note that any general occupation under ss 81 or 88 must be pursuant to an authority. I also note there is recourse to Justices of the Peace if the occupation is unreasonable and unnecessary, or there are better sites elsewhere. By the terms of s 89, the owner of land temporarily occupied can by notice require the Board to take it. In any event an injuriously affected owner is entitled to reasonable compensation under s 94 in accordance with the procedures of the Public Works Act 1981.[37] RPI argues in any event that s 176 of the Land Act 1948 applies because the land was owned at the relevant time by the Housing Division for state housing. If itapplied, this provision would have the effect of annexing the kiosk to the Crown'sownership. Subsection 10 of that section provides:All buildings erected on lands of the Crown without the authority in writing of the Commissioner shall, whether affixed to the soil or not, be deemed to be forfeited to Her Majesty.[38] WEL argues that for our purposes, the section only applies to Crown land and the definition of Crown land in s 2 of the Act means land "which is not for the timebeing set aside for any public purpose". Since this land had been set aside forhousing – a public purpose – the Land Act did not apply when it was built and does not apply now.[39] WEL is clearly right. The Land Act does not apply to this case. In addition, all of the surrounding circumstances of this case, most particularly the legislative context, make it clear that the ordinary presumption – that fixtures annexed to the land belong to it – has no application here. On the contrary, the controlling legislation has consistently protected the position of electric power boards like HVEPB.[40] Recourse for land owners in RPI's position under the old regime was bymeans of the Public Works Act legislation. I have no idea whether such recourse would be available after the repeal of the 1925 Act in 1993 since it was not a question addressed in argument before me but that is beside the point.[41] The application by RPI is dismissed accordingly, and WEL will be entitled to declarations on counterclaim as follows:(a) WEL owns the kiosk at 408 Cambridge Terrace;(b) The kiosk is an "existing work" within the meaning of s 22 of theElectricity Act 1992;(c) RPI is not entitled to charge WEL rent in relation to the kiosk.[42] WEL will be entitled to costs on a Schedule 2B basis.___________________________Williams J