TREASURY PROPERTIES LIMITED v SAYERS [2013] NZHC 1587

TREASURY PROPERTIES LIMITED v SAYERS [2013] NZHC 1587 [28 June 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2008-404-8034[2013] NZHC 1587BETWEEN TREASURY PROPERTIES LIMITEDFirst PlaintiffAND PETER SAYERS, BARRIE SAYERS andALISON RUTH WISESecond PlaintiffsAND THE ATTORNEY-GENERAL OF NEWZEALANDDefendantHearing: On the PapersAppearances: AR Barker for PlaintiffsHS Hancock and JS Andrew from DefendantJudgment: 28 June 2013JUDGMENT (NO. 2) OF TOOGOOD JThis judgment was delivered by me on 28 June 2013 at 4:00 pmPursuant to Rule 11.5 High Court RulesRegistrar/Deputy RegistrarIntroduction[1] On 15 July 2011 I issued a judgment in this matter1 ("the principal judgment"), concerning land which was compulsorily acquired by the Crown for use in conjunction with the expansion of the Auckland Motorway network. The issuesrelated to an alleged agreement for the "re-acquisition" of the land by the Crownarising from correspondence between the parties in May 2006, and questions of repudiation, affirmation and cancellation of the purported agreement which arose from subsequent conduct and correspondence by and between the parties.[2] This judgment concerns a matter previously not raised in the proceeding which the parties have subsequently asked the Court to consider pursuant to leave reserved.Background facts[3] In the early 1960s, the Crown compulsorily acquired land (comprising two adjacent parcels) near Albany. By 1999, the Crown decided that it no longer required the land for the purpose for which it was acquired. The Crown was therefore required to offer back the land to the second plaintiff (the Sayers) under s 40 of thePublic Works Act 1981 ("the Act").[4] The offer back was made by the Crown in January 2003. In March 2003 the Sayers entered an agreement with the first plaintiff, Treasury Properties, appointing Treasury Properties as the lawyers for the Sayers in the negotiations with the Crown for the reacquisition of the land. In April 2003, the Crown and the Sayers entered an agreement for the purchase of the land, subject to a formula for determining the price("the 2003 offer-back agreement").[5] However, before the issue of the price under the offer-back agreement could be determined, the Crown informed the Sayers that, despite the decision to offer the land back in 1999, it was considered that the land was again required for public work. This led to discussions and correspondence between the parties in May 2006.1 Treasury Properties Ltd v Attorney-General HC Auckland CIV-2008-404-8034, 15 July 2011.[6] In the principal judgment, I held that the May 2006 correspondence gave riseto a binding contract ("the May 2006 agreement"). I made a declaration that theparties were bound by an agreement which provided that the 2003 offer-back agreement between the Sayers and the Crown was cancelled, the result being that title to the land remains vested in the Crown. I declared also that the contract provided that the claims by the plaintiffs to acquire title to the land through the offer- back agreement and on-sale agreement entered into in March 2003 were to be abandoned, and that the plaintiffs would receive compensation in a sum to be determined by the application of an agreed formula.This application[7] The parties have reached a settlement on the quantum payable under the May 2006 agreement, and that agreement has been performed. However, the parties have since been unable to reach agreement about the effect of the May 2006agreement on the second plaintiff's rights under s 40 of the Act. The parties are unclear, particularly, on whether the second plaintiffs have ongoing rights in respect of the land under s 40.[8] In a Minute dated 10 February 2012, I accepted a request for this matter to be determined under the leave reserved in the substantive judgment, with the issue to be determined on the papers. Both parties have filed submissions.Issue[9] The issue arising for determination is whether the cancellation of the 2003 offer-back agreement has also discharged the Crown's obligation to the secondplaintiffs under s 40 of the Act.Public Works Act 1981[10] Section 40 is the relevant section. In essence, it provides that where the Crown has acquired land for public work, when the Crown no longer requires theland for that work it must offer it back to the person (or his or her successor) from whom the Crown acquired the land. Section 40, as far as is relevant, reads:40 Disposal to former owner of land not required for public work(1) Where any land held under this or any other Act or in any other manner for any public work—(a) Is no longer required for that public work; and(b) Is not required for any other public work; and(c) Is not required for any exchange under section 105 of this Act—the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority, as the case may be, shall endeavour to sell the land in accordance with subsection (2) of this section, if that subsection is applicable to that land.(2) Except as provided in subsection (4) of this section, the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority, unless—(a) He or it considers that it would be impracticable, unreasonable, or unfair to do so; or(b) There has been a significant change in the character of the land for the purposes of, or in connection with, the public work for which it was acquired or is held—shall offer to sell the land by private contract to the person from whom it was acquired or to the successor of that person—(c) At the current market value of the land as determined by a valuation carried out by a registered valuer; or(d) If the chief executive of the department within the meaning of section 2 of the Survey Act 1986 or local authority considers it reasonable to do so, at any lesser price.Second plaintiffs' submissions[11] The Sayers say that the May 2006 agreement did no more than settle any claims they had arising from the initial change in use in 1999 which resulted in the offer-back agreement, but did not settle their rights over the property under s 40 more generally.[12] The Sayers summarise their argument as follows:(a) The situation prior to the May 2006 agreement was that the property was to be transferred from the Crown to the Sayers, from the Sayers to Treasury Properties, and from Treasury Properties to the Crown. The last step would have been by way of compulsory acquisition which would have given rise to s 40 rights for Treasury Properties at least.(b) Under the May 2006 agreement, the Crown was effectively re- acquiring the land by way of compulsory acquisition. Consistent with that principle, the parties sought to protect the s 40 rights which would attach to the property by mimicking a compulsory acquisition.(c) The Court held that the May 2006 agreement did not involve a compulsory acquisition so did not give rise to s 40 rights. However, it did not cancel or waive existing rights. The May 2006 agreementmerely settled the Crown's liability regarding its earlier obligation tooffer the property back.(d) The position is that the Crown still holds the property for a public work. It acquired the land from the Sayers, so if it decides it no longer wants the land for public work it is required under s 40 to offer the land back.Defendant's submissions[13] For the Crown, it is argued that the May 2006 agreement involved a surrender of s 40 rights and full resolution of the Crown's obligation to offer back the landunder s 40. In essence, the defendant argues that the May 2006 agreement cancelled the 2003 offer-back agreement and compensated the second plaintiffs for allowing the land to remain in the Crown's hands. By cancelling the 2003 offer-back agreement, the second plaintiffs allowed their rights in respect of the land under s 40 to come to an end.[14] The defendant submits that under s 40(2) the key question is whether landwas "acquired" from the second plaintiffs. Following the cancellation of the 2003 offer-back agreement, the land was not acquired from the second plaintiffs a second time.[15] The defendant also argues that the effect of the principal judgment is that the compensation provided by the Crown under the May 2006 agreement was compensation for the second plaintiffs never exercising their right to own the land. That is, the parties were agreeing that the second plaintiffs would relinquish their rights to an offer-back and their rights under the 2003 offer-back agreement. This would mean the Crown had fulfilled its s 40 obligations to offer back the land, the offer not being accepted by the second plaintiffs. The Crown relies on Attorney- General v McLennan,2 where it was held that any unaccepted offer back dischargedthe Crown's obligations under s 40.[16] The defendant further says that the Court held that the land was not to be acquired by the second plaintiffs, so the first plaintiff would acquire no interest in the land. If the land was not acquired by either plaintiff, the Crown cannot acquire the land back from them.[17] It is also argued that the compensation paid to the plaintiffs was compensation for them giving up their rights under the 2003 offer-back agreement and s 40.Analysis[18] The starting point must be s 40. On ordinary principles of statutory interpretation, in order for the Sayers to be entitled to an offer-back from the Crown, the following must be established:(a) The Crown must have acquired the land from the second plaintiffs, or the second plaintiffs must be a successor of the person from whom the land was acquired;2 Attorney-General v McLennan CA41/00, 7 December 2000.(b) The land must have been acquired for public works; and(c) The land must no longer be required for public works.[19] If those criteria are met, then the Crown is obliged to offer back the land.[20] In the present case, despite the May 2006 agreement, it can be said that:(a) The second plaintiffs are successors to the person from whom the Crown acquired the land; and(b) The land is required for public works. Although the public works are different, the land is still so required.[21] At [163](1) of the principal judgment, I noted that a result of the cancellation of the 2003 offer-back agreement was that the land remained vested in the Crown. The Crown is still in possession of the land, for the purpose of public works. While this means the Crown is under no obligation to offer the land back now, on a strict interpretation of the legislation the Sayers satisfy the criteria for s 40 and so appear to retain the statutory right to an offer under that section.[22] In Hall v Attorney General,3 Duffy J considered the circumstances in which statutory rights within the Public Works Act could be waived or removed. The Judge held that, since Parliament has seen fit to provide for statutory rights of offer-back and a statutory process for exemptions of those rights, any attempt to deviate from that process by contracting for a waiver of those rights must be done in the clearest possible terms and must not rely on contractual principles for reading such terms into a written contract.[23] The ability to waive or contract out of a statutory right is essentially a matter of statutory interpretation. Regard must be had both to the purpose and text of the relevant statutory provisions. Matters which are purely procedural may more readily be waived or limited but the courts will be less ready to accept that substantive rights3 Hall v Attorney-General [2012] NZHC 3615.may be waived or that parties may agree that significant statutory duties need not be performed.4[24] While there has not strictly been a waiver in the present case, I consider that similar principles are applicable here. Because the Sayers retained the statutory right to have the property offered back to them, clear wording would be required if the May 2006 agreement was intended to cancel such a right.[25] There is no such express mention of an intention to remove s 40 rights in the May 2006 agreement.[26] The Crown argues that the effect of the May 2006 agreement is that there isan unaccepted offer by the plaintiffs which discharges the Crown's obligations to offer back the land. It says that the compensation paid was compensation for the Sayers never exercising their right to own the land; that is, the Sayers were relinquishing their right to an offer back.[27] The Crown relies on Attorney-General v McLennan5 to support their unaccepted-offer argument. However, McLennan is factually different from the present case. In that case, a number of offers were made by the Crown betweenOctober 1994 and July 1996. The Crown's initial offer was found to lapse inFebruary 1995 without having been accepted and on 3 July 1996 the Crown made a second offer which was withdrawn on 30 July 1996 without being accepted. It was held that the Crown had discharged its obligations.[28] In this case, however, the offer was accepted by the Sayers, at least initially. That is, when the Crown decided that it no longer needed the land for public works, it was offered back to the Sayers and they accepted that offer. It was only once the Crown subsequently decided that it did, in fact, need the land for public works that the original agreement was cancelled. McLennan does not assist the Crown in this case.4 I-Health Ltd v iSoft NZ Ltd [2011] NZCA 575, [2012] 1 NZLR 379 at [39].5 Above n 2.Conclusion[29] The scheme of the May 2006 agreement, as described at [71] of the principal judgment, was to give effect to the notional or fictitious purchase of the land by the plaintiffs under s 40 and a subsequent re-acquisition by the Crown. The formula for the payment of compensation recognised that, had those fictional transactions occurred in reality, the plaintiffs would have benefitted from any net increase in the value of the land between the date of purchase and the date of re-acquisition by the Crown.[30] This arrangement did not compensate the plaintiffs for agreeing to relinquish their statutory rights under s 40 of the Act.Declaration[31] I declare that the May 2006 agreement, as explained in the principal judgment, did not abrogate the rights available to the plaintiffs under s 40 of the Public Works Act 1981.[32] The plaintiffs are entitled to costs. Any application for costs shall be made by way of memorandum filed and served no later than 26 July 2013. Any memorandum in reply to the plaintiffs' costs memorandum shall be filed and servedby the defendants no later than 23 August 2013. Unless otherwise directed, costs shall then be dealt with on the papers.................................................... Toogood J