WAITAKERE CITY COUNCIL V ESTATE HOMES LIMITED HC AK CIV 2007-404-3992

WAITAKERE CITY COUNCIL V ESTATE HOMES LIMITED HC AK CIV 2007-404-3992 5 June 2008IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-3992BETWEEN WAITAKERE CITY COUNCIL Appellant AND ESTATE HOMES LIMITED Respondent Hearing: 27 February 2008 Appearances: M E Casey QC and MJE Casey for the Appellant N D Wright for the Respondent Judgment: 5 June 2008RESERVED JUDGMENT OF PRIESTLEY JThis judgment was delivered by me on 5 June 2008 at 10.30am pursuant to Rule 540(4) of the High Court Rules. Registrar/Deputy Registrar Date: Counsel/Solicitors: M E Casey QC, Kensington swan, Private Bag 92101, Auckland N Wright, Brookfields, P O Box 240, AucklandTABLE OF CONTENTSParagraphIntroduction 1 Background 4 The Environment Court's Decision 15 Discussion 32 Appellant's Submissions 35(i) Wrong Legal Test 36(ii) Disregard of the road's designation 43(iii) Consideration and interpretation of the District Plan 44(iv) Findings unsupported by the evidence 51(v) No consideration of Council's role as a roading authority 55 Submissions of Estate Homes 57 Decision 69 The Sixth Point of Law 88 Result 99 Costs 100Introduction[1] The parties' dispute over the past six years has required six hearings at four levels of the judicial hierarchy. I am the eleventh judge to be engaged. [2] The genesis of the dispute was comprehensively described by McGrath J delivering the Supreme Court's judgment in Waitakere City Council v Estate Homes Ltd [2007] 2 NZLR 149:[1] This appeal raises issues concerning requirements for new public facilities that are sometimes imposed by planning consent authorities when granting consent to the subdivision of land. At times local authorities treat the consent process as an opportunity to secure the construction by developers of additional infrastructure that will serve future community needs, even though it may go beyond what is required to serve the immediate needs of the development concerned. The present case involves the Waitakere City Council's requirement that a developer design, form and construct, as part of its subdivision, an arterial road over its land along the path of a long-standing designation. The Council accepted that it should compensate the developer to the extent that the requirement involved additional road width and more land for road reserve than would otherwise have been required in the subdivision. Differences, however, arose between the Council and the developer concerning the basis on which such compensation should be assessed and paid. These differences have given rise to this litigation. [2] In September 1999, Estate Homes Ltd purchased a 3.1 ha block of land in Waitakere City for the purposes of subdivision and medium-density residential development. The land had a frontage to its south onto Ranui Station Road, which runs east to west. Since 1989 the land had been subject to the designation of an arterial road, the course of which ran through the land from Ranui Station Road in the south to the point where the road entered adjoining private land to the north. The road eventually linked up further north with Marinich Drive. The purpose of the designation was to provide for the extension of Marinich Drive so that eventually it would become a district arterial road running from Ranui Station Road in the south through to Swanson Road in the north. [3] It was clear at all times to Estate Homes that in planning its subdivision of the property it would have to take account of the designation. [4] The Council has never had plans to give effect to the designation by itself building an arterial road. It anticipated that the land alongside the designated road, up to where it joined Marinich Drive, would eventually be subdivided by developers. At all times the Council has envisaged that, as the adjacent land was subdivided, developers would be required to complete the sections of the arterial road that fronted onto their subdivided land, until the arterial road was complete.[3] The Supreme Court (infra [9] and [13]) referred an issue back to the Environment Court. That Court's decision, to which I shall shortly refer, was delivered by Judge C J Thompson on 15 June 2007. The appellant challenges it by this appeal.Background[4] When Estate Homes applied for subdivision and Resource Management Act consents in 2000 it requested compensation for the construction of a designated arterial road. Estate Homes' request was for compensation over and above what was required to construct a local road. The relevant condition (2(o), note vi) imposed by the Council indicated a willingness to pay compensation for the cost of the construction of the arterial road which were additional to the costs of constructing a collector road rather than a local road. The compensation was expressed as being for the extra two metres width of the carriageway. [5] It is unnecessary to outline the subsequent litigation history before the Supreme Court's involvement in great detail. Estate Homes appealed to the Environment Court. The argument there focused on issues of compensation and vesting, and in particular whether Estate Homes could seek compensation for the entire cost of the arterial road's construction. The Environment Court's judgment was that the Council's requirement that Estate Homes form and construct a road without compensation for its total cost, or indeed for the value of the land designated as a road, was unlawful. [6] The Council appealed to this Court. In July 2004 Venning J, the appeal's focus having shifted to the vires of conditions imposed under s 108(2) of the Resource Management Act 1991, held that the Council's condition was valid but the Council was nonetheless required to pay compensation for the additional land required for an arterial road. [7] The next stop was the Court of Appeal, which divided in its judgment. The majority were of the view that the land designated for the arterial road, as a matter of statutory interpretation, had been taken. The minority was of the view there was nostatutory right of compensation because there had been no taking, but that the real issue was whether a subdivision of the type Estate Homes was undertaking required a collector road or a local road. The minority would have referred that question back to the Environment Court. [8] The Supreme Court granted leave to appeal. The Court was critical that the Environment Court had allowed the appeal to it to proceed on a materially different basis from Estate Homes' original application. The Court addressed the issue of the imposition of conditions on subdivisional consents and the power to impose conditions under s 108(2). The Court did not consider the land designated for the arterial road had been taken. Seeing the real issue between the parties as essentially that identified by the minority in the Court of Appeal the Court said:[70] In order to decide that it was appropriate to decide outstanding issues in this Court, we would need to be satisfied that they would not turn on questions of specialist judgement concerning facts which the legislature contemplated would be determined on appeal from a local authority by an expert tribunal. That is not the case here. Specifically, we are not satisfied that the question of whether a collector road or a local road was the appropriate basis for assessing the extra costs associated with an arterial road turns solely on Council documents concerning the thresholds set for individual types of road. In our view the ultimate questions may well turn on planning judgment. Accordingly, we propose to refer the question of what compensation would make the Council's requirement to construct an arterial road reasonable at common law to the Environment Court for determination.[9] The matter was thus remitted back to the Environment Court for determination pursuant to s 26 of the Supreme Court Act 2003. [10] The Supreme Court gave the Environment Court some guidance as to how it should approach the matter:[73] On the argument we have heard, that will turn on whether, in the absence of a designation, it would have been appropriate for the road shown as lot 71 of the subdivision plan to be built to the standard of a collector road or a local road. Other ways in which Estate Homes could have organised the subdivision, so as not to include a road on lot 71, will not be relevant. We have concluded that this specific decision is a matter of planning judgment which is appropriately taken by the specialist appellate Court whose members, of course, have already heard evidence that was directed to the central issue.[11] The Supreme Court then turned to how the Environment Court should ideally have determined the appeal. However, as matters had developed, the Court took the view that the situation was "exceptional" ([76]). The Court summarised the parties' respective dilemmas arising from the fact that the road had in fact been built. The Court considered the Council was no longer able to abandon its requirement for an arterial road. The Council was not able to raise its right to determine road expenditure as a factor to preclude the Environment Court from exercising its jurisdiction to amend the original condition imposed if the Court decided such condition was unreasonable [77]. If so, there would be an increase in the amount the Council had committed itself to pay towards the cost of the road. [12] Importantly the Court then said:[77] Within the limits of what was sought in the original application, the Environment Court will, in these circumstances, have jurisdiction to amend the condition accordingly if it finds that compensation on the basis of note (vi) to condition 2(o) is unreasonable. The Court should indicate what adjustments would have to be made to the condition to make it reasonable, covering the basis of compensation for additional costs of construction and for any additional land required for an arterial road.[13] The Supreme Court set aside the judgment of the Court of Appeal and ordered the appeal to be referred back to the Environment Court "to be determined in accordance with this judgment". [14] The issue on this appeal will thus be whether the Environment Court did what it was told to do in a correct manner.The Environment Court's Decision[15] The issue dividing the parties on their second visit to the Environment Court in May 2007 remained what it had been at the outset, - should the compensation figure volunteered to Estate Homes by the Council be based on the extra costs involved in constructing an arterial road rather than either a collector road or a local road. Counsel in the Environment Court apparently agreed that the Court should address two questions which were:(a) Whether the compensation payable by the Council in order to render the requirement to vest and construct Marinich Drive "reasonable" ought to be based upon the "base requirement" of constructing and vesting a local road or a collector road (or something in between). (b) Whether the ruling of the Supreme Court in that respect enables any additional claim to be made for any consequential or flow on costs associated with having constructed an arterial road as opposed to a local or collector road (that is, as opposed strictly to the costs of the road construction per se).[16] How (b) came to be formulated by counsel as a question is not readily apparent. It lies outside the specific questions referred back to the Environment Court by the Supreme Court for a planning decision on a clearly stated issue. I discuss this aspect later (infra [88]). [17] The Environment Court thus described its task:[11] So, while we must accept the requirement for the arterial road as a given, we must also assume that there would have been a road on that alignment. We must decide what standard of road would and could reasonably have been required on that alignment, for that subdivision, if the arterial road requirement had never existed.[18] The Court then briefly described the parties' respective stances. The Council contended that the notional road on the Marinich Drive alignment would have been a collector road. It pointed to the evidence of a planning witness, Mr Philip Brown, to the effect that there were sensible planning reasons to make the road a collector road, including connectivity within the district's roading network. Once it was accepted the road was to be one through and beyond the subdivision, (Marinich Drive is certainly that, although there remains a short unconnected portion of the designated arterial road on the north side of the subdivision), a local road would be unsound. [19] The counsel also relied on policy 4.4 of its District Plan which in generalised language spells out what roads ideally should be designed to achieve. [20] The Court, with reference to Mr P Brown's evidence, said this (the emphasis being Environment Court's);[14] We accept Mr Brown's view that the Estate Homes land is not an island, and that connectivity is important in considering the whole roading network. But those views, and the plan provisions referred to, do not reallyhelp us answer the question. In principle, a well-connected network need not necessarily all be of collector or higher standard[21] Estate Homes described the collector road requirement as being unfair, disproportionate and unreasonable. [22] The Court went on to describe the relevant geography, noting that the subdivision more or less straddled Marinich Drive and that the housing blocks on either side had direct and convenient access through their own formed roads to the local road of Ranui Station Road to the south and to the collector road of Metcalfe Road to the east. The Court noted the definition of a collector road in the District Plan (being roads designed to distribute traffic from local roads to arterial roads) with traffic flows typically in the range of 2,000 to 10,000 vehicles per day. Local roads by contrast gave access to abutting land with limited through traffic with traffic volumes of generally less than 1500 vehicles per day. A "local street" was a road in a dominant residential environment of approximately 150 homes. [23] Without an arterial function, said the Environment Court, Marinich Drive would have limited through traffic. There was no "convincing evidence" about whether traffic flows would be less than 2,000 per day. Although the number of dwellings in the "macro catchment", when fully developed, would be more than 150, not all its residents would have to travel "the length of Marinich Drive to link into the wider roadwork network in the area". Marinich Drive would not be a local main road as that term is used in the definition of a collector road. [24] The Court then turned to policy 10.8 of the District Plan which recognised the need to maintain amenity values contributing to the well-being of residents. The Court was of the view a local road in the subdivision was more likely to achieve this than a collector road which "would channel traffic through what is a residential environment". [25] The Court then returned to the geography of Ranui Station Road, Swanson Road, Metcalfe Road, and Marinich Drive. It referred to schools, community facilities, the railway station along Ranui Station Road, and the markings ofpedestrian refuge near the school, all reflecting in the Court's view its local road status. The Court then said:[23] Given the status and function of Ranui Station Road as a local road, there is even less reason for Marinich Drive to be considered a collector road. Marinich Drive, when completed, would provide a link through and beyond the subdivision, but functioning as a local road.[26] The Court next looked at the guidelines for local living roads. It referred to the evidence of Mr Geoff Brown, Estate Homes' traffic engineer, that as an arterial road, Marinich Drive would have a catchment of more than 150 household units. The Court then stated:[24] The only reason it will have a catchment of more than 150 units is because it is designated as, and will eventually operate as, an arterial road. That does not really help answer the question of what a reasonable comparitor should have been.[27] The Court then referred to the agreed view of both experts, Mr Cuthers and Mr G Brown that the subdivision, comprising 68 units, would probably generate traffic movements of around 600 vehicles per day. Both those witnesses disagreed on the number of generated vehicles which would use Marinich Drive. Mr G Brown estimated it at 10% as opposed to Mr Cuthers' 50%. The Court split the difference and considered if 200 vehicles per day used Marinich Drive, spread over the period from 7 am to 7 pm, that would equate to one vehicle movement every 3.6 minutes. That, in the Court's view would be readily accommodated by a local standard road. [28] The Court then concluded (again the Court's emphasis):Assessment[27] Applying, as best we can, our collective experience and judgment to the question of which standard, local or collector, would have been fair to both the appellant and the community, and proportionate, ie reasonable at common law as the appropriate comparitor, we have no real doubt that the answer must be local. In our view that standard best reflects a fair and proportionate contribution by the developer to the overall cost of achieving what the council wanted – a connector road of arterial standard.[29] The Court thus decided a reasonable requirement of the Council would have been the base requirement or comparitor of the construction and vesting of a local road.[30] On issue [b] the Court seemed to have difficulties with exactly what the Supreme Court had directed.[28] (b) We cannot attempt to answer issue (b) without knowing what costs Estate Homes would wish to include within the rubric of consequential or flow on costs. The judgment of the Supreme Court simply mentions . . . the extra costs associated with an arterial road. Whether any particular cost item is . . . associated with. .. the arterial road sufficiently closely to be a claimable extra cost is a matter of fact, probably best decided by an appropriately experienced arbitrator. We do note however that the council agrees that as well as construction costs, it should pay compensation for the additional 3 m strip of land required to take the road from collector to arterial standard. (Mr Philip Brown – rebuttal, para 2.5). We would assume that as the Court's view is that the comparitor should have been a local road, the council's position would adjust accordingly.[31] Hopefully, despite the Court's difficulty, to which I shall return (infra [88]) this is not an issue which should sensibly divide the parties. I assume that both have clear and agreed positions on the extra costs involved in constructing the arterial road as opposed to either a collector or local road, as they should on the areas of relevant land stripsDiscussion[32] An appeal to this Court from the Environment Court, in terms of s 299, must be on a point of law. [33] The Supreme Court's reference to the Environment Court was to ensure that a specific issue was subjected to planning judgment by a specialist appellate court. That issue is whether, in the absence of a designation for Marinich Drive, it would have been appropriate for the road to be built to collector road or local road standards. It was for the Environment Court to decide whether the Council's basis for compensation (collector road standard) was unsound and the condition unreasonable. [34] In short, the issue of the reasonableness of the condition imposed by the Council requiring collector road standard was for the Environment Court to decide as a matter of planning judgment. It is not for this Court to reassess the question ofreasonableness unless the Council can show on this appeal the Environment Court erred in law. The fact the Council may not like the Environment Court's decision is irrelevant. As the Supreme Court observed at [70] (supra [8]) the Council's road type thresholds are not solely determinative. Irrelevant too would be my own assessment of reasonableness if no discernible legal error (which would includeWednesbury unreasonableness) is present.Appellant's submissions[35] Mr Casey QC formulated five questions of law. These were: a) The Court applied the wrong legal test. b) The Court disregarded the relevant road designation. c) The Court discounted the relevant District Plan provisions and misinterpreted or misapplied others. d) The Court made findings unsupportable by evidence presented at the first hearing before it. e) The Court gave no consideration to the Council's role as a roading authority. Mr Casey additionally articulated a sixth question of law to which I shall return at the end of this judgment. This was that the Environment Court had misinterpreted the Supreme Court's reference to it to indicate adjustments for "additional costs of construction" and for any additional land required for an arterial road, and was wrong to leave this issue of "flow on" costs for later determination.(i) Wrong Legal Test[36] Mr Casey asserts that the Court applied the wrong legal test when deciding that a local road rather than a collector road was the appropriate road standard. Itsdecision wrongly applied a "causal nexus" test by referring to the subdivision alone and the traffic generated by it. The Court further misdirected itself in the area of "proportionality" because it limited its consideration again to the likely use of the road by traffic generated by the subdivision. [37] Furthermore submitted counsel, the Court misapplied the common law requirements for substantive reasonableness. It incorrectly decided whether the Council's decision to impose a collector road was reasonable depended on whether such a road was necessary. [38] Finally there was an error because the Court held the test in respect of works and services conditions under s 108(2)(c) was the same as for financial contribution conditions imposed under s 108(2)(a). By referring to ss 108(2)(a) and (10) cases such as Far East Investments Limited v Auckland City Council (Environment Court decision (A048/01) and Retro Developments Limited v Auckland City Council(Environment Court decision (A038/04), and adopting the four step causal nexus test propounded in those decisions, which all related to financial contributions, the Court had erred. An inquiry into whether the collector road condition was fair and reasonable was permissible. But this was not a "test" of the imposition of conditions. In counsel's startling submission an appropriate condition did not have to be fair or reasonable. It only had to be minimally fair or reasonable. [39] The Environment Court's approach was fundamentally wrong because the test it had adopted contained no recognition of the provisions of the District Plan, other instruments, or the purposes and principles of the Act. The Plan and the Act would have to inform the Court's decision, particularly since the Supreme Court had referred the matter back for the exercise of a planning judgment. [40] The Court had clearly demonstrated its "causal nexus" approach by its references that although traffic generated by the subdivision would have the "opportunity" to use Marinich Drive for convenient access, that in itself did not require a collector road standard. It had further observed that without its arterial function, Marinich Drive would have limited through traffic and could function as alocal road. In counsel's submission the connectivity function of Marinich Drive should not be disregarded. It was relevant. [41] The Court was incorrect when it stated that the only reason why the catchment exceeded 150 units was because it was designed as and would eventually operate as an arterial road. In counsel's submission Marinich Drive connected a number of areas and would do so regardless of its arterial function. [42] The Court had wrongly rejected the relevant provisions of the District Plan because it had looked at the situation only through the narrow lens of proportionality. As a result it had failed to consider progressive subdivision of land as a principle of urban development. It had failed to consider the Council's responsibility to provide roading and infrastructure.(ii) Disregard of the road's designation[43] Shortly put, Mr Casey submitted that Marinich Drive would have had to be a collector road in any event. Although the Environment Court was directed by the Supreme Court to disregard Marinich Drive's arterial road designation that did not justify the Court disregarding the issue of whether it should have been a collector road. The function of Marinich Drive and its broader connectivity role ought to have been considered, not merely its function to serve the subdivision.(iii) Consideration and interpretation of the District Plan[44] Mr Casey submitted that the Court had erred by holding policy 4.4 as irrelevant. It had misinterpreted policy 10.8 as a reason for discounting the collector road function of Marinich Drive. It had further misinterpreted the Plan's provision and guidelines relating to the household unit catchments. Finally, the Court had minimised the Council's planning and roading functions by referring to these as a "wish" rather than proper exercise of the Council's functions.[45] A misinterpretation of a District Plan can amount to an error of law Dye v Auckland Regional Council [2002] 1 NZLR 337 (CA) at [13] – [15]. The relevant Plan provisions had been produced and explained in the first hearing before the Court by the Council's planning witness, Mr Phillip Brown. [46] Policy 4.4 was one of connectivity. The requirement for connectivity and the housing unit catchments standards for collector and local roads, although not necessarily determinative, were relevant. The Supreme Court itself had recognised this at [70] of its judgment as being an issue on which a planning judgment might well turn. The connectivity requirement was a central theme of the Council's planning evidence. By rejecting this at [14] with the statement "in principle a well connected roading network need not necessarily all be of collector or higher standards" the Court had failed to address connectivity and road standard issue satisfactorily. The Court's reference to Ranui Station Road and Metcalfe Road and access to those streets from the subdivison avoided the point. [47] As to policy 10.8, requiring the maintenance of amenity values contributing to the well being of residents and the Court's decision that a local road was more likely to do this (supra [24]) there was no evidence to support this finding, particularly since the subdivision in question was intended as a medium density subdivision close to transport facilities. In counsel's submission the only evidence on the policy 10.8 issue, was from Mr Phillip Brown and was to the contrary. He had stated:To combat congestion and amenity problems created by traffic flows, the Council assesses subdivision applications to ensure that they are designed to contribute towards the creation of a well-connected road network.The same witness went on to state that the District Plan required new subdivision layouts to include road connections where possible to mitigate the environmental affects of subdivision, pointing out that without adequate connections traffic was funnelled into a small number of larger roads which exacerbated congestion. [48] I comment that although this may have been the only evidence on 10.8 policy, it was not focussed on the issue the court had to decide.[49] In counsel's submission the Environment Court was wrong to "substitute" its own view in the face of the relevant evidence before it. [50] Furthermore it was wrong to find the requirement of a collector road standard was dependent on the designated status of Marinich Drive as an arterial route. The household unit catchment standard relied on the number of households served by a road within an adjacent radius. The designation status of a road was not relevant to the number of households in the subdivision. This was a function of a residential zoning. The use of Marinich Drive was instead informed by the number of households in the catchment rather than the traffic which might use it from the subdivison itself.(iv) Findings unsupported by the evidence[51] This point of law is woven through previous points. The Court apparently took a view of the Marinich Drive and the subdivision. This cannot be criticised. Mr Casey submits, however, that the clear direction of the Supreme Court to the Environment Court required it to determine the issue on the evidence given at the previous hearing. Thus, treating Ranui Station Road as a bench mark when assessing the appropriate designation for Marinich Drive, rejecting undisputed expert evidence that Marinich Drive should otherwise have been designated a collector road, and finding the only reason why Marinich Drive was so designated was because of its 150 household unit catchment, were all impermissible findings given the evidence before it. [52] The Environment Court had no evidence before it about Ranui Station Road, other than it was a local road in the Council's roading hierarchy. There was no opportunity given to the Council's witnesses to compare and explain the differences between Ranui Station Road and Marinich Drive, nor to make the point that there is no inconsistency between Ranui Station Road's designation and Marinich Drive being a collector road. The expert called by Estate Homes, Mr Geoff Brown, never asserted that Marinich Drive should be built to local road standards.[53] Counsel further submitted the Court had not exercised appropriate caution nor had it given the opportunity to the parties for further comment or evidence in respect of certain conclusions it had drawn from taking a view. [54] Counsel further submitted the Court had misinterpreted the traffic generation figures by arriving at a 10% figure for subdivision traffic using Marinich Drive. Given that the Court was faced with conflicting evidence in this area I do not regard this point, either alone or in combination, constitutes a point of law for appeal purposes.(v) No consideration of Council's role as a roading authority[55] Counsel submitted that, although directed by the Supreme Court to make a decision in a planning context, the Supreme Court itself having observed (at [29]) that a local authority's decision would always be relevant because of its general knowledge of the local context, the Court took insufficient notice of the Council witnesses called. [56] The Supreme Court's comment was at an early part of its judgment when it was considering, in a policy context, the Environment Court's jurisdiction. There is nothing in the supreme Court's direction to the Environment Court to suggest the Council's roading function should fixate the Court.Submissions of Estate Homes[57] Mr Wright's submissions understandably focused on the job the Supreme Court had directed the Environment Court to do. In his submission Estate Homes' stance in the Environment Court sought a simple result. The result should be fair, particularly in the sense that Estate Homes should not, unlike other developers in the district, be forced to pay a large share of the costs of an arterial road which was unrelated to the subdivision. Secondly the result should be proportionate to the impact of the subdivision.[58] Counsel's perception of the Council's position was the issue of reasonableness should be determined by the Council's wider roading and transport plans rather than by what was necessary for the subdivision. [59] In essence the Court had looked at the evidence and had made a "call" as to what it considered a reasonable result. Reasonableness is a factual matter, not a legal matter. [60] Dealing with the Council's appeal points Mr Wright submitted there were no cases dealing with reasonableness under s 108(2)(c) but there were under s 108(2)(a). There was no principled basis on which the Court should apply a different standard to the two subsections. [61] The s 5 sustainable management purpose of the Act dictates a balancing exercise which requires decision makers to assess disparate interests and arrive at a balanced and proportionate outcome. Policy 10.27 of the District Plan in general terms articulates this policy in a transportation strategy context. The policy specifically states that it should be "contributing when required to an upgrading of the transport system proportionate to the pressures on that system created by the developer". [62] Inherent in the policies of the plan is a requirement to treat developers fairly. It was thus not an error for the Court to adopt the Far East Investments Ltd v Auckland City Council test. [63] It was for the Court to assess proportionality. Its assessment was not susceptible to appeal. On issues of connectivity and the effect on roading and infrastructure of progressive subdivision, although the Council had power to impose whatever roading network it saw fit, the real issue was whether in doing so it was acting fairly. Fairness, like reasonableness, was a factual matter, not a question of law. Care should be exercised to ensure that factual questions, which properly lay inside the specialist expertise of the Environment Court, were not surreptitiously converted into questions of law.[64] Addressing the Council's submission that the Court had erred by disregarding what the designation should be, Mr Wright submitted this was not so. The issue the Court had to determine was related not to connectivity issues but instead to principles of fairness, reasonableness and proportionality. [65] Nor did the Court ignore District Plan provisions relating to connectivity. It had referred to policy 10.8. There is no District Plan policy authorising the Council to impose conditions for new roading works out of proportion to the impacts of a subdivision. [66] On other issues, Mr Wright noted the Environment Court made it clear, having "no real doubt", that its judgment was not finely balanced. Nor had the Court ignored the Council's evidence. Rather that evidence was focused on the Council's transportation network plans rather than what was a fair and reasonable contribution for Estate Homes to pay. [67] It was vital, submitted counsel, that the appeal should not be used as a means to circumvent the basis on which the Supreme Court sent an issue back to the Environment Court. [68] Without conceding the point Mr Wright seemed to accept that [21] – [23] of the Court's decision, culminating in the Court commenting on the layout and facilities available in Ranui Station Road, was unusual and an approach possibly not open to the Court.Decision[69] There can be no criticism of the Environment Court not correctly identifying the issues sent back to it by the Supreme Court. Its "assessment" (supra [28]) was that it had no "real doubt" that a local road was fair to both the appellant and the community, proportionate or reasonable at common law, and was a standard which "best reflects a fair proportionate contribution by the developer to the overall costs of achieving what the Council wanted – a connector road of arterial standard".[70] I see no force, with respect, in Mr Casey's argument that the Court misdirected itself by applying the wrong legal test. The references to Far East andRetro (supra [36]) do not really lead anywhere. Nor do I consider the Environment Court has adopted a "causal nexus" test which has been determinative of a wrong decision. Nor do I see any substantial legal error arising from the fact that, when assessing reasonableness, the Court mentioned authorities on the reasonableness of financial contributions imposed under s 108(2)(a) in the context of making a fairness and reasonableness assessment under s 108(2)(c). [71] The Supreme Court's direction to the Environment Court did not require an assessment against some discrete standards peculiar only to the Resource Management Act. Rather the direction was to assess the compensation issue by determining whether a collector road or a local road was the appropriate basis for assessing the extra construction costs, against the benchmark of what "would make the Council's requirement to construct an arterial road reasonable at common law". (supra [8]). This was to be a matter "of planning judgment" appropriately left to the Environment Court as a specialist appellate court (supra [10]). [72] The Environment Court at [13] of its judgment correctly recorded the Council's position that the notional road on the Marinich Drive alignment would have been a collector road. It referred to the evidence of Mr Phillip Brown in that regard and to the Council's submission that there were sensible planning reasons for a collector road, including the District Plan's requirement for connectivity within the district's roading network. Once it was accepted that the road went through and beyond the subdivision a local road designation was inapplicable and unsound. [73] The Court referred specifically (at [14]) to Mr Brown's evidence to the effect that the Council's wish, encapsulated in both the District Plan and particularly in policy 4.4, was to have a well connected road network. In that regard the Court said:We accept Mr Brown's view that the Estate Homes' land is not an island, and that connectivity is important in considering the whole roading network. But those views and the Plan provisions referred to, do not really help us answer the question. In principle, a well connected network need not necessarily all be of collector road or higher standard.[74] The Supreme Court recognised at ([29] and [75]) of its judgment that the Council was a roading authority and that it was not normally open to the Environment Court to amend a condition, thus increasing a Council's financial contribution to the road. However, for reasons not necessary to repeat here, but evident in [75] – [77] of its judgment, the Supreme Court regarded this dispute as "exceptional". It also pointed out at [70] of its judgment: Specifically we are not satisfied that the question of whether a collector road or local road was the appropriate basis for assessing the extra costs associated with an arterial road turn solely on Council documents concerning the threshold set for individual types of road. In our view the ultimate questions may well turn on planning judgments.[75] These comments, and indeed the entire context in which the Environment Court reassessed the situation, are important. Although the policies behind and functions of collector roads are matters properly within the Council's domain as a roading authority, and also (as the Environment Court was aware) discernible from the District Plan, it does not necessarily follow that a collector road must be imposed as a condition to every subdivision where collector road criteria are met. [76] Mr Casey may be right when he submitted that Marinich Drive would have been a collector road in any event. But that is not what the Supreme Court had in mind when it remitted the issue back to the Environment Court. The Environment Court was not directed to rubber stamp the Council's wishes and policies across the board. Rather it was directed to exercise a planning judgment, in the circumstances of what had become (because of the odd way issues shifted in various courts), on the issue of whether it was reasonable to require Estate Homes to build Marinich Drive within subdivision to collector road standard. [77] Mr Casey described the principal failing of the Court's decision as having taken a "microview of the roading issue" by focusing on the immediate needs of the subdivision and its demand rather than looking at the wider picture which would include the cumulative affects of development. Mr Casey saw huge risks in this approach. He submitted the Environment Court's decision meant councils would be limited, so far as roading was concerned, to imposing conditions only on what was directly necessary to provide access to and inside each development without regardto integrated management concepts. Thus councils would no longer be able to use the subdivision consent process to develop and implement an integrated roading network. They would be forced to accept piecemeal roading standards driven only by perceptions of fairness and proportionality applicable to individual subdivision. [78] In my judgment this submission accords to the Environment Court decision a status which it cannot possibly have in what the highest court in the land described as an "exceptional" case. The planning importance of integrated roading networks, local considerations, and roading authority functions are clearly recognised and in no way minimised by the Supreme Court. [79] As the Supreme Court shrewdly observed at [1] local authorities, often regard consent applications as an opportunity to force developers to construct or contribute to infrastructure in excess of what a particular development or subdivision might require. There must be reasonable limits placed on that opportunity. Without such limits, local authorities would be able to subvert the policies and principles of the Resource Management Act to shift, in an unfair and disproportionate way, fiscal burdens from their ratepayers to developers. [80] I do not consider that the Court, when considering the subdivision and Marinich Drive, has ignored the evidence it had before it. It is referred to amenities contained in the District Plan (at [18]). It has reached a planning judgment that the opportunity for traffic in the subdivision to join Marinich Drive to access parts of the city to the north or the south did not in itself require a road of collector standard. It has considered traffic volumes, household numbers, and catchments. I agree with counsel that the Court, by considering (in [23]) various aspects of Ranui Station Road and its amenities as a result of taking a view, which were not the subject of evidence, may have strayed outside the Supreme Court's direction.. But I am of the clear view that excursion has not led the Court into error. [81] It might well be there were many tenable and indeed compelling arguments in favour of designating Marinich Drive as a collector road rather than a local road. Certainly that is the outcome the Council wanted. But in the context of the referenceby the Supreme Court to exercise a planning judgment, I do not see any determinative error which can properly be categorised as an error of law. [82] What Mr Casey has endeavoured to do is to mount a whole battery of legal principles, which, in the normal course of events, might be applicable to a planning decision as to whether a condition requirement should be imposed on a developer to create a collector road, and assert that those principles demonstrate error on the part of the Environment Court. With respect, that approach obscures the nature of the planning judgment the Court was directed to undertake in an exceptional case. [83] In short, and for the reasons I have outlined, I do not consider the Court applied the wrong test in embarking on the assessment the Supreme Court required of it. The test of reasonableness at common law is what the Supreme Court specified. I consider the Court has been alert to and has assessed the collector road designation rather than disregarded it. I see no evidence, leading to error, to suggest that the Court has ignored the relevant provisions of the District Plan. Nor has it ignored the Council's roading authority status. [84] It is possible that the Court, in its discussion on Ranui Station Road, may have considered factors which it ought not to have considered. But I do not consider in so doing it has reached a decision it otherwise would not have. Nor has it failed to follow the Supreme Court's direction. [85] I reject counsel's submission that the Court's findings were unsupported by evidence at the first hearing. What was required was to assess that evidence and make a planning decision which was reasonable in the exceptional circumstances of the case. The fact that the evidence may well have pointed to the desirability of collector road status for Marinich Drive does not lead automatically to a decision that, for this particular subdivision, local road status is inappropriate. [86] The Supreme Court expected from the Environment Court a planning decision to bring finality to a dispute which has progressed through four courts in a changing fashion. The Supreme Court's assessment of what the real issue was and the way in which it wanted that issue resolved are final. The Environment Court hasmade a decision. The many legal points raised by the Council do not, in my judgment, amount to a determinative error, either alone or in combination. [87] Thus on the first five points of law raised by the appellant, the appeal must fail.The sixth point of law[88] The Council's final appeal point was the Environment Court was wrong to have left open for later determination an unspecified claim for consequential or "flow on costs". [89] In counsel's submission the Supreme Court had expressly confined the issue to be decided by the Environment Court to what was sought in the original application which is simply the difference in construction costs arising from the width of the road land involved. Mr Casey asserts that at no stage during the original application or the appeal process did Estate Homes, seek flow on costs. [90] That may well be the case. I have no evidence on it. If it is the case I do not understand why the Environment Court stated that counsel had agreed the second primary issue was as set out in [15](supra), requiring the Environment Court to consider whether the Supreme Court's ruling enabled an additional claim to be made. [91] I rather suspect the Supreme Court itself was uncertain exactly what the position was on this. Although making it very clear that the matter remitted to the Environment Court was whether compensation would flow from whether it was appropriate for a collector road or a local road to be built as a matter of specialist appellate court planning judgment, the Court then went on to say at [77]:Within the limits of what was sought in the original application, the Environment Court will, in these circumstances, have jurisdiction to amend the condition accordingly if it finds that compensation on the basis of note (vi) to condition 2(o) is unreasonable. The Court should indicate what adjustments would have to be made to the condition to make it reasonable, covering the basis of compensation for additional costs of construction and for any additional land required for an arterial road.[92] I doubt whether there is any difficulty in resolving the construction cost difference between a local road and a collector road. Exactly what is involved with "additional land" is unclear, particularly since the area and position of lot 71 as a designated arterial road would probably have been obvious from the outset. [93] The Supreme Court has made no mention of the concept of "flow on" costs, so exactly why counsel chose to present that to the Environment Court as a "primary question" I know not, and I have no intention of inquiring. [94] The Environment Court understandably was also perplexed. It said at [28]:[28][b] We cannot attempt to answer issue [b] without knowing what costs Estate Homes would wish to include within the rubric of consequential or flow on costs. The judgment of the Supreme Court simply mentions the extra costs associated with an arterial road. Whether any particular cost item is associated with the arterial road sufficiently closely to be a claimable extra cost is a matter of fact, probably best decided by an appropriately expereienced arbitrator. We do note however that the Council agrees that as well as construction costs, it should pay compensation for the additional 3m strip of land required to take the road from collector to arterial standard. (Mr Philip Brown –rebuttal para 2.5). We would assume that as the Court's view is that the comparitor should have been a local road, the Council's position would adjust accordingly.[95] The Environment Court thus refused to answer the second primary question, noting, however, that counsel had agreed on the quantum of construction costs involved and that it should pay compensation for the additional three metre strip. [96] In that situation I do not consider the Environment Court can be faulted for reserving leave. If these issues are remarkably still at large, it is for the Environment Court to determine them. The sixth appeal point must thus fail. [97] However, I would have thought that if the parties were ad idem on what compensation was to be paid if a collector road was to be constructed, it should not be difficult for them to resolve the additional compensation which will have to be paid as a result of the Environment Court's local road decision, and if land area is a factor, the additional land which might be involved.[98] I would hope, however, after this marathon litigation, the parties will have lost their appetite for further disputes and will not lock horns on "flow on " costs whatever they may be.Result[99] The appeal for the reasons stated in the previous section of this judgment is dismissed.Costs[100] The respondent is entitled to costs. These are reserved. If counsel cannot agree memoranda should be submitted. Priestley J