SYNLAIT MILK LIMITED v CANTERBURY REGIONAL COUNCIL [2022] NZHC 2219

SYNLAIT MILK LIMITED v CANTERBURY REGIONAL COUNCIL [2022] NZHC 2219 [1 September 2022]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2021-409-565[2022] NZHC 2219UNDER the Environment Canterbury (TransitionalGovernance Arrangements) Act 2016IN THE MATTER of an appeal under s 25 of the ActBETWEEN SYNLAIT MILK LIMITEDAppellantAND CANTERBURY REGIONAL COUNCILRespondentHearing: On the papersAppearances: E J Chapman and J A Robinson for AppellantP A C Maw and I F Edwards for RespondentB G Williams and K I Jacomb for Fonterra LimitedJudgment: 1 September 2022JUDGMENT OF DUNNINGHAM JThis judgment was delivered by me on 1 September 2022 at 2.30 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Introduction[1] This judgment considers the proposed settlement of an appeal by Synlait MilkLtd (Synlait) against the decision of the Canterbury Regional Council (the Council)on Plan Change 7 to the Canterbury Land and Water Regional Plan (Plan Change 7).[2] Synlait and the Council have reached agreement on how this appeal should beresolved. That agreement is supported by Fonterra Ltd, which is the only party to thisappeal.1[3] The parties seek the Court's approval of the proposed amendments to theCanterbury Land and Water Regional Plan (CLWRP) as negotiated, under the Court'spower to substitute its decision for that of the Council. In support of the request thatorders are made in accordance with the settlement negotiated, the parties have filed adetailed joint memorandum setting out:(a) the procedural background applicable to Plan Change 7;(b) the context to the issues raised in the appeal;(c) the issues raised in the appeal and the proposed settlement including, inparticular, the alleged error of law that has occurred in relation to Policy14.4.28 and Policy 14.4.41; and(d) the proposed amendments to Plan Change 7 to the CLWRP.[4] This judgment draws largely from counsels' joint memorandum, which I acceptas accurately setting out the issues arising and the relevant law. However, I alsoconvened a telephone conference with the parties on 26 August 2022 to ensure myjudgment accurately reflected the issue on appeal and the reasons for the partiesconsenting to the proposed amendment.1 Under s 301 Resource Management Act 1991 (RMA).Procedural background to Plan Change 7[5] Plan Change 7 was publicly notified on 20 July 2019.2 There arethree components to Plan Change 7; Parts A, B and C.[6] For the purposes of this appeal, the relevant part of Plan Change 7 is Part B,which primarily relates to the Orari-Temuka-Opihi-Pareora sub-region (being section14 of the CLWRP) and introduced or amended provisions to introducecatchment-specific freshwater outcomes, limits and provisions for the sub-region, andamended the region-wide provisions in the CLWRP insofar as they relate to theOrari-Temuka-Opihi-Pareora sub-region.[7] Synlait lodged a submission on Plan Change 7 addressing all Parts. However,the subject matter of Synlait's appeal stems from its submission on Part B of PlanChange 7.[8] The Council delegated the hearing of submissions in evidence on Plan Change7 to independent hearing commissioners. The recommendations of those hearingcommissioners were adopted by the Council as its decision on 17 November 2021 andsubsequently publicly notified on 20 November 2021.[9] Section 25 of the Environment Canterbury (Transitional GovernanceArrangements) Act 2016 (ECan Act) restricts appeals to the High Court on questionsof law only. On 10 December 2021, Synlait lodged an appeal in the High Court againstthe Council's decision pursuant to s 25 of the ECan Act. That appeal alleges theCouncil erred with respect to Policies 14.4.28 and 14.4.41 (the Policies) of Part B ofPlan Change 7.The appeal[10] The issues raised in the Synlait appeal relate to the policy frameworkintroduced by Plan Change 7 as it applies to industrial nitrogen losses intwo freshwater management units within the Orari-Temuka-Opihi-Pareora sub-region.2 Pursuant to cl 5 of the first schedule of the RMA.Those units are the Orari Freshwater Management Unit and the Timaru FreshwaterManagement Unit.[11] Within those units, certain areas have been identified as High NitrogenConcentration Areas, and Plan Change 7 sought to manage nitrogen losses in thoseareas by imposing stricter regulations on farming land use activities. For the OrariFreshwater Management Unit, that area is referred to as the Rangitata Orton HighNitrogen Concentration Area. For the Timaru Freshwater Management Unit, the areais referred to as the Levels Plain Nitrogen Concentration Area. Each of these areas issubject to a specific policy direction in regards to industrial nitrogen loss. For the firstarea, it is Policy 14.4.28 and for the second, it is Policy 14.4.41.[12] These Policies, and associated provisions, introduce a framework intended toreduce nutrient leaching in those High Nitrogen Concentration Areas in order to avoidexceedances of the New Zealand Drinking Water Standards and of the national bottomline values under the National Policy Statement for Freshwaster Management 2014.[13] The Policies form part of a wider framework introduced through Plan Change 7to reduce nutrient leaching in those High Nitrogen Concentration Areas from bothindustrial processes and farming land use activities. The level of reductions requiredunder the Policies vary, depending on whether the point source discharge of nitrogenstems from an industrial or trade waste process or from a farming activity.[14] The notified version of the Policies requires point source discharges of nitrogenfrom industrial or trade waste disposal activities to reduce nitrogen loads by30 per cent below current consented rates by 1 January 2035 unless the point sourcedischarge was from a farming activity that is subject to nitrogen loss reductions inTable 14(zc) of the CLWRP.The appeal and the proposed settlement[15] The parties consider Synlait's appeal gives rise to a question of law, beingwhether the Council came to a conclusion which, on the evidence, it could notreasonably have come to because the recommended changes to the Policies do notreflect the reasoning given in the Council's decision.[16] In its original submission on Plan Change 7, Synlait supported the two nitrogenreduction Policies in principle, but requested an amendment to the Policies to exemptdischarges which are associated with a farming activity from the requirement to reducenitrogen losses. The reasoning behind Synlait's submission, and the relief sought, wasthat any industry discharge applied as part of a farming activity should only be subjectto the controls relating to the farming activity and not the industrial or trade wastecontrols as well.[17] Having considered Synlait's submission and associated evidence, the Councilreporting officers, in their s 42A Reply Report, recommended that an exemption fordischarges associated with a farming activity would be appropriate and recommendedchanges to the wording of the Policies on that basis.[18] The hearing commissioners recommended accepting, in part, Synlait's relief inrespect of the Policies, and in doing so adopted the recommendations and reasons setout by the Council reporting officers in their s 42A report. However, the parties saythe changes the hearing commissioners recommended to the wording of the Policiesdoes not fully reflect the recommendations and reasons given in the s 42A ReplyReport.[19] The specific wording of the Policies recommended by the hearingcommissioners, and adopted by the Council, departed from the wording proposed ins 42A Reply Report and was as follows:Rangitata Orton High Nitrogen Concentration Area14.4.28 Assist in achieving water quality targets in the Rangitata Orton HighNitrogen Concentration Area by requiring in addition to Policy 14.419, pointsource discharges of nitrogen from industrial or trade waste disposal activitiesto reduce nitrogen losses load by 30% below current consented rates by1 January 2035, unless the point source discharge is from a farming activitythat is subject to the stepped nitrogen loss reductions required by Table 14(zc).Levels Plain High Nitrogen Concentration Area14.4.41 Assist in achieving water quality targets in the Levels Plain HighNitrogen Concentration Area by requiring, in addition to Policy 14.4.19, pointsource discharges of nitrogen from industrial or trade waste disposal activitiesto reduce nitrogen losses load by 30% below current consented rates by1 January 2035 unless the point source discharge is from a farming activitythat is subject to the stepped nitrogen loss reductions required by Table 14(zc).(footnotes omitted)[20] Synlait alleges the Council's decision in relation to drafting the Policies doesnot align with its decision to adopt the recommendations and reasons specified byCouncil officers in the s 42A Reply Report. The s 42A Reply Report recommendedthe Policies say, "unless the point source discharge is occurring as part of a farmingactivity that is subject to the stepped nitrogen loss reductions in Table 14(zc)" ratherthan the language which the Commissioners recommended, which said, "unless thepoint source discharge is from a farming activity that is subject to the stepped nitrogenloss reductions in Table 14(zc)". (emphasis added)[21] The parties' concern is that the wording adopted by the Commissioners is notas broad as those recommended by council officers, and which the Commissionerspurported to adopt, and could lead to activities being caught by both sets of controlswhich was not intended.[22] By way of example, Synlait owns a cheese factory in the Orari-Temuka-Opihi-Paereora sub-region and holds a resource consent authorising the discharge of wheyby-product on farms within 30 kilometres of the factory. This includes areas in boththe Rangitata Orton High Nitrogen Concentration Area and the Levels Plain HighNitrogen Concentration Area. The concern is that there could be a doubling up of thenitrogen reduction controls on such activities if the more confined wording of "froma farming activity" was retained. There is greater clarity if the broader wording of"occurring as part of a farming activity" is used.Discussion[23] I accept that an inconsistency between the reasoning of the hearing's panel andthe provisions adopted would be an error of law in respect of which this Court hasjurisdiction. Here, as Mr Maw, for the Council, confirmed, the intention is only oneor the other control would apply to a discharge. The change of wording proposed onappeal better achieves that goal and is consistent with the reasoning of theCommissioners, who accepted the recommendations of the Council officers.[24] Under r 20.19 of the High Court Rules and ss 300 – 307 of the RMA (whichapply with "necessary modifications" under the provisions of the ECan Act), thisCourt has the following jurisdiction. Where it considers an appeal should be allowed,it may:(a) make any decision it thinks should have been made;(b) direct the decision-maker –(i) to rehear the proceedings concerned; or(ii) to consider or determine (whether for the first time or again) anymatters the Court directs; or(iii) to enter judgment for any party to the proceedings the Courtdirects;(c) make any order the Court thinks just, including any order as to costs.[25] In the present case, the parties request that the Court approve the proposedamendments to the policies in Plan Change 7 under its power to substitute its decisionfor that of the Council, rather than remit the matter back to the Council. This approachhas been adopted in respect of other decisions and related to the CLWRP.3[26] I agree that is an appropriate course of action.3 Combined Canterbury Provinces v Canterbury Regional Council [2016] NZHC 1965 at [8] – [11];and Waitaki Irrigators Collective Ltd v Canterbury Regional Council [2018] NZHC 2064 at[29]-31].Outcome[27] I order that Policies 14.4.28 and 14.4.41 of Plan Change 7 to the CanterburyLand and Water Regional Plan both be amended by deleting the word "from" beforethe words "a farming activity" and replacing it with the words "occurring as part of".[28] The parties confirm there is no issue as to costs.Solicitors:Duncan Cotterill, ChristchurchWynn Williams, ChristchurchCopy to:Chapman Tripp, Christchurch