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Marlborough District Council v Valuer-General HC Wellington CIV 2006-485-933 [2007] NZHC 2149; [2008] 1 NZLR 690; [2008] NZRMA 165; (2007) 8 NZCPR 892 (3 September 2007)

Last Updated: 18 January 2018

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IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY




CIV 2006 485 933

UNDER the Declaratory Judgments Act 1908 and the Judicature Amendment Act 1972


BETWEEN THE MARLBOROUGH DISTRICT COUNCIL

Plaintiff

AND VALUER GENERAL First Defendant

AND MINISTRY OF CONSERVATION Second Defendant

AND SEALORD MARINE FARMS LIMITED Third Defendant

AND WHAKITENGA MUSSELS LIMITED Fourth Defendant

AND NEW ZEALAND MARINE FARMING ASSOCIATION INCORPORATED Fifth Defendant

AND THE NEW ZEALAND SEAFOOD INDUSTRY COUNCIL

Sixth Defendant

AND TE OHU KAIMOANA TRUSTEES LIMITED

Seventh Defendant

AND THE NEW ZEALAND AQUACULTURE COUNCIL INCORPORATED

Eighth Defendant


Hearing: 30 and 31 July 2007

Counsel: PJS Lang and G D Palmer for Plaintiff

B H Arthur and J R Burns for First and Second Defendants

B Scott and M McRandle for Third, Sixth and Seventh Defendants


THE MARLBOROUGH DISTRICT COUNCIL V VALUER GENERAL And Ors HC WN CIV 2006 485 933 [3 September 2007]

No appearance for Fourth Defendant

M J Hunt and J M Harris for Fifth and Eighth Defendants

Judgment: 3 September 2007 at 1.00 p.m.


RESERVED JUDGMENT OF RONALD YOUNG J




Introduction


[1] The plaintiff says that mussel farms authorised by virtue of coastal permits under the Resource Management Act 1991 (RMA) are rateable by local authorities as a matter of law and asks this Court for a declaration accordingly. The Minister of Conservation and the Marine Farming industry, the defendants, all say mussel farms are not rateable under the Local Government (Rating) Act 2002 (LGRA).

[2] The parties agreed, however, that the question of whether mussel farms are rateable under the LGRA gives rise to three key issues for decision by me:

(1) They are themselves “land” (owned by the farmer) as they are an interest in land and are rateable in their own right.

Or:

(2) (a) they are themselves “land” (owned by the Crown) because they are part and parcel of the seabed land; and

(b) are rateable because that land (of which the farm is part and parcel) is used primarily or exclusively for private or commercial purposes under a lease, licence or other agreement?

Or:

(3) if the farms are not themselves “land”, is the seabed land beneath them (which is owned by the Crown) rateable separately from the rest of the seabed because it is used primarily or exclusively for private or commercial purposes under a lease, licence or other agreement?

[3] Thus the plaintiff says it has an interest in land through the operation of the coastal permit. This interest in land is covered, it submits, by the definition of land in the LGRA. That Act provides that all land is rateable unless excluded by the Act.

In the alternative, the plaintiff says the operation of the mussel farms mean the farms themselves are land because they are part and parcel of the seabed. They are rateable then, the plaintiff says, because land owned by the Crown is rateable if it is used for private or commercial purposes under a lease, licence or other agreement. The plaintiff says that a coastal permit comes within the definition of licence or other agreement.

[4] Finally, the plaintiff says, if the above arguments are rejected then the water column beneath the mussel farm componentry is land and if so if it is used for private or commercial purposes under a lease, licence or other agreement it is rateable.

[5] I have grouped the submissions of all defendants who participated in this hearing into one in this judgment. I mean by this no disrespect to the individual quality of the submissions filed on behalf of each group of defendants. However, in the circumstances of this judgment there seems no purpose to individually identify what was generally a common approach by the defendants, if not always a common emphasis.

Background facts


[6] The plaintiff’s District has over 600 marine farm sites within its boundaries. The original proceedings alleged that all marine farms were rateable. However, given the different facts relating to different types of marine farms these proceedings are now solely concerned with mussel farms.

[7] The plaintiff selected three existing mussel farms as examples of a range of farms with differing legal histories, established under different legislative regimes, as defendants. Marine Farm A is at Kenepuru Sounds within the Marlborough District Council boundary. It is owned by the third defendant. A lease was first granted in

1979 and registered under the Marine Farming Act 1971. Various assignments and variations have occurred since. By virtue of s 10 of the Aquaculture Reform (Repeals and Transitional Provisions) Act 2004 this marine farm lease was deemed to be a coastal permit under the RMA with an expiry date of December 2024.

[8] Marine Farm B at Admiralty Bay is owned by the third defendant and is also within the Marlborough District Council boundary. Marine farming began by virtue of the grant of a licence in 1981 under the Marine Farming Act 1971. The licence was subsequently registered under that Act. After various assignments the third defendants became the owners. The third defendant also had a marine farming permit for the area, granted under the Fisheries Act 1983. Again, pursuant to s 10 of the Aquaculture Reform Act this licence and permit were deemed a coastal permit under the RMA, expiring in 2024.

[9] As to Marine Farm C this is owned by the fourth defendant who was granted a coastal permit to establish a marine farm under the RMA and a marine farming permit under the Fisheries Act 1983 in Whakitenga Bay in 2001 and 2002 respectively. These permits were by s 10 of the Aquaculture Reform Act deemed to be coastal permits under the RMA.

[10] A mussel farm typically consists of a series of long lines at the surface of the sea (the backbone) anchored, through warp lines, to the sea floor. From the backbone hang ropes to which developing mussels cling (culture lines). These ropes, which hang down below the backbone, do not touch the seabed. They move with the tide and the action of the sea with the attached mussels gathering nutrients.

[11] Mussels mature over two years and are then harvested by stripping from the ropes. The ropes are then replaced with fresh ropes which have been seeded with immature mussel sprat and the process begins again.

[12] Three types of anchors are commonly used in mussel farming. One involves screwing a thin rod into the seabed to which the lines and buoys are attached. The second is effectively a sea anchor known as a danforth anchor. The most common type is a simple concrete anchor on the seabed to which the warp lines are attached. Concrete anchors are generally 1.5m high, 1.8m wide and 1.5m long.

[13] Typically, the mussel farm componentry occupies only a relatively modest percentage of the total permit area at any one time. Lines can be and are commonly shifted within the permit area and are able to be moved within a day. At times when

the lines are used for mussel sprat catching the structure may be completely removed for extended periods.

[14] The area within the coastal permit is often shared with other users of the sea, including fishermen. The marine farming industry has signs on boat ramps and has published pamphlets encouraging fishing around marine farms and explaining how boats can safely tie up to a mussel farm to facilitate fishing. Those with smaller boats can fish between the backbone lines which are typically approximately 20m apart.

The issues


[15] Issue (1). Are mussel farms rateable as they are themselves “land” (owned by the farmers), being an interest in land, and are rateable in their own right.

[16] The plaintiff’s submission is that by virtue of the LGRA all land is rateable (s 7(1)) unless the LGRA says it is not (s 7(2)). Land is defined in the same way in both the LGRA and the Rating Valuation Act 1998:


Local Government (Rating) Act 2002

5 Interpretation

land means all land, tenements, and hereditaments, whether corporeal or incorporeal, in New Zealand, and all chattel or other interests in the land, and all trees growing or standing on the land.



Rating Valuation Act 1998

2 Interpretation

land means all land, tenements, and hereditaments, whether corporeal or incorporeal, in New Zealand, and all chattel or other interests in the land, and all trees growing or standing on the land:

[17] The plaintiff says mussel farms are land because coastal permit mussel farmers have an exclusive right of occupation of the land and thus an interest in the land. This interest arises from the actual exercise of a coastal permit.

[18] The plaintiff says this is a straightforward application of the principles in Auckland City Council v Ports of Auckland Ltd [2000] NZCA 190; [2000] 3 NZLR 614, which provides such exclusive rights of occupation are an interest in land.

[19] The plaintiff submits that the scheme of the RMA supports this interpretation. Section 12(2)(a) of the RMA provides that no one shall occupy any of the coastal marine area unless (as relevant here) by a resource consent.

[20] This provision the plaintiff says needs to be read in conjunction with s 122(5)

of the RMA, which provides as follows:

122 Consents not real or personal property

. . .

(5) Except to the extent—

(a) That the coastal permit expressly provides otherwise; and

(b) That is reasonably necessary to achieve the purpose of the coastal permit,—

no coastal permit shall be regarded as—

(c) An authority for the holder to occupy a coastal marine area which is land of the Crown or land vested in a regional council to the exclusion of all or any class of persons; or

(d) Conferring on the holder the same rights in relation to the use and occupation of the area against those persons as if he or she were a tenant or licensee of the land.

[21] As to this the Court of Appeal in Hume v Auckland Regional Council [2002]

3 NZLR 363 said:

[22] There are thus two ways in which any form of coastal permit may give rights of exclusion of others from use and occupancy. The first is when the permit expressly provides for such rights of exclusion; they will then take effect according to their tenor. The second is when exclusion of others or a degree of exclusion is reasonably necessary to achieve the purpose of the permit. This is akin to saying that rights of exclusion may be implied to an appropriate extent when the purpose of the permit makes such implication reasonably necessary. The ability to make an implication of this kind is logically necessary to allow the coastal permit system to operate effectively. Parliament cannot have intended such operation to depend solely on express

conditions of a permit. If there were no such conditions and no power of implication, some permits might then be unable to operate according to their purpose.

[23] The capacity for implication which para (b) recognises removes to a large extent the difficulties which Mr Brabant suggested would arise with general public access to other types of structure within the coastal marine area, such as marine farms, moorings or restaurants built out over coastal waters. If the matter is not expressly governed by a condition of the permit, the inter–relation between public and private use of authorised structures within the coastal marine area can fairly and reasonably be governed by a sensible process of implication under s 122(5)(b). In the ordinary case of moorings, for example, reasonable necessity must imply exclusivity of use by the permit holder.

[22] Thus the plaintiff submits the area occupied by the mussel farm componentry (the lines, ropes, buoys and anchors) is exclusively occupied by that componentry as a necessary implication from the grant of the permit. They say no one or no thing can literally occupy the same space occupied by the concrete anchor or the backbone line or the rope with the mussels. These items, the plaintiff says, are exclusively occupying that space. The plaintiff submits that even though the public does have rights with respect to the area subject to the coastal permit that does not mean the plaintiff cannot have exclusive occupation rights. The plaintiff says such cases as Waahi Paraone Ltd v Far North District Council [2005] 1 NZLR 525; Lextrum Marina Ltd (in rec.) v Rodney District Council HC AK M2287/91 27 August 1997

Smellie J; Glenwood Lumber Co Ltd v Phillips [1904] AC 405; and Auckland City

Council v Ports of Auckland Ltd [2000] NZCA 190; [2000] 3 NZLR 614 all support this proposition.

[23] In Waahi Paraone Ltd a building was constructed over water allowing public access to the area under the building. Rodney Hansen J concluded that the land was occupied by the building irrespective of whether the public visited the area under the building.

[24] In Auckland City Council v Ports of Auckland Ltd the occupation rights of the Port to a pontoon was in part through a coastal permit created by virtue of s 384A of the RMA. The Court said:

[81] In relation to the floating facilities at Westhaven the reality is that there is an exclusive occupation of the airspace in which the jetty’s floating pontoons move with the tide. It understates the position, as did the respondent in support of its cross-appeal on this point, to say its right is no

more than to a priority of use. There can be no shared occupation of that airspace. The position can be likened to the area of movement of overhead telephone wires in Telecom Auckland (see para [78] above). The airspace through which the pontoons move is equally to be regarded as owned by the respondent during the team of currency of its s 384A permit.

[25] Having established, the plaintiff submits, this exclusive occupation right then, when exercised by the construction of the mussel farm, this amounts to “land” for the purpose of the rating legislation.

[26] The plaintiff says the Court of Appeal’s findings in Telecom Auckland Ltd v Auckland City Council [1999] 1 NZLR 426 support this conclusion. In Telecom the court considered whether telecommunication lines above and below ground were land and therefore able to be rated. The plaintiff says the Court concluded that because the owner of the lines had the exclusive right to occupy that part of the soil that the lines occupy

that space is properly . . . also to be regarded as owned for the time being by the operator. [78].

[27] The Court concluded that, given this exclusive right of occupation was more of an interest in land than an easement, which itself was classified in law as an incorporeal hereditament (and thus “land”), so such an exclusive right must also be “land”.

[28] Finally, the plaintiff points to the definition of land in the LGRA and the RMA as including incorporeal hereditament [16]. The plaintiff therefore submits that this exclusive right of the exercise of the coastal permit is land.

[29] The plaintiff’s case is that the RMA does not provide that no property rights can be created incidental to consents under the Act: Armstrong v Public Trust HC TIM CIV 2006-476-000227 20 April 2007 Fogarty J. The plaintiff submits in this regard that neither s 122(1) nor the effect of the Foreshore and Seabed Act 2004 prevented the exercise of a coastal permit being an interest in land for ratings purposes.

[30] Section 122(1) provides that a resource consent is neither real nor personal property. The plaintiff’s case is that this provision is intended to refer solely (in this case) to the coastal permit (the resource consent) and does not govern what happens after the permit has been granted. In particular, the plaintiff says subsection (1) does not govern the actual mussel farm componentry. Thus the plaintiff submits s 122(1) does not say that the mussel farm componentry can be neither real nor personal property.

[31] The plaintiff also submits that a marine farmer’s interest in land is preserved despite the enactment of the Foreshore and Seabed Act and is not inconsistent with that Act. In particular, the plaintiff submits that despite s 14(1) of the Foreshore and Seabed Act providing that no part of the seabed may be alienated or otherwise disposed of, because the marine permit existed as at the date of the introduction of the Foreshore and Seabed Act, it cannot be contrary to that Act.

[32] The plaintiff submits that the placement of structures in the coastal marine area by itself does not derogate from the rights secured by the Foreshore and Seabed Act. Thus the plaintiff says there is no alienation in terms of s 14 by the creation of an interest in land arising from the coastal permit. Finally, the plaintiff says the Foreshore and Seabed Act can have no effect on specific marine farms identified in this case because existing interests of land in each of the marine farms A, B and C are preserved by s 17(2) of the Act.

Discussion


[33] Broadly, if the plaintiff satisfies me that the mussel farms are an interest in land and therefore land, and neither the RMA nor the Foreshore and Seabed Act prevent such an interest from becoming real property, then the mussel farms would be rateable in some form. This would be so because, by virtue of s 7 of the LGRA, all land is rateable and land includes an interest in land.

[34] The plaintiff accepts the marine permit itself is not land nor an interest in land without the exercise of the permit. The plaintiff says the permit becomes an interest in land when the rights given under the permit are exercised and the mussel

farm constructed on site. They say the physical presence of the componentry occupies a space on both the seabed (the anchor) and in part in the water column above the seabed through area ropes and lines and in the air space above the seabed (buoys), which cannot be occupied by anything else and is therefore an exclusive occupation.

[35] Such exclusive occupation may give rise in common law to an interest in land. However, in this case I am satisfied that in fact the so-called exclusive occupation does not give rise to an interest in land. I am satisfied that the effect of both the RMA and the Foreshore and Seabed Act prohibits coastal permits granted under the RMA from becoming an interest in land, and therefore land, and thus rateable. These conclusions satisfy me that neither the coastal permit nor the exercise of a coastal permit can be an interest in land such that it is “land” under the LGRA and rateable.

[36] I turn, firstly, to the approach of the RMA to seabed land. In Hume v Auckland Regional Council [2002] NZCA 167; [2002] 3 NZLR 363 (CA) at [7]- [8] the Court made it clear that coastal permits are an entirely different species of statutory consent than those relating to land. The statutory framework of the RMA is to prohibit any activity in the coastal marine area unless a special permit is given (s 12). If such a permit is given, then it gives occupation rights to the permit holder and may exclude, but only to the extent necessary either through particular conditions in the permit or by necessary implication of the grant ([22]-[23]).

[37] The Court also contrasted s 12(1) and s 12(2) and rights of occupation of the

Crown or Regional Council land and other land. At p 368 it said:

[12] Subsection (1) applies to the coastal marine area generally. Subsection (2) concerns only Crown land or regional council land in the coastal marine area. The definition of occupy introduces the concepts of a lease or licence. Hence in our view subs (2) is concerned with questions of tenure. If the land is other than Crown land or regional council land, a lease or licence will ordinarily be required by the person who gets a permit under subs (1), in addition to that permit. The subs (1) permit holder acquires permission to do the work involved in creating the structure or otherwise, but an occupation right is also necessary, whether by lease or licence, or by permit if the land is Crown or regional council land. In effect Parliament has entrusted to regional councils the power to grant a permit to occupy Crown land.

[38] This approach to coastal permits and the RMA point, in my view, away from an intention by Parliament to create or allow an interest in land through obtaining a resource consent. A coastal permit granted with respect to Crown land does not give occupation rights through a lease or licence by the permit. The occupation rights are limited to those necessary to fairly allow the operation of the permit, but no more. This differentiation when the land involved is Crown land points away from the creation of interests in land such as leases. Indeed, permits are expressly neither leases nor licenses.

[39] The plaintiff’s case is that a straight-forward application of Telecom and Ports of Auckland establishes that the exercise of the coastal permit is an interest in land and rateable. In Telecom the question in issue was the obligation of Telecom to pay rates for telephone lines installed above and below ground. The lines were owned by Telecom. The Court found that the underground lines exclusively occupied the portion of the soil where they lay and so that space was also properly regarded as owned by Telecom. The Court concluded that the Telecommunications Act 2001 did not derogate from the proposition that while Telecom remained the owner of the lines it had an interest in the land in which they lay. The Court concluded that given an easement was an incorporeal hereditament, and therefore within the definition of land under the Rating Powers Act 1988, the greater interest held by Telecom, exclusive possession of that part of the soil in which the lines lay, must also be land. This conclusion was based on an analysis of a line of New Zealand authority which confirmed the rateability of other utility lines such as gas and electricity. The Court at p 439 said:

The foregoing survey of the case law and the New Zealand rating statutes leads us to the conclusion that, unless there is a clear indication in the Telecommunications Act that telephone lines and booths are to be treated differently from gas and electricity lines, this Court should apply to them its decisions in the Auckland Gas and Hutt Valley cases. We are satisfied that in concluding that the particular utility companies had for rating purposes an interest in land, those cases were consistent with the prior decisions of the House of Lords and the Privy Council. Furthermore, Parliament must be taken, in the 1967 consolidation, to have endorsed the position taken by the Court.

. . . but where a relevant statute contains a broad definition of an interest in land and our Courts have previously found one to exist in markedly similar factual circumstances, it seems to us that Parliament is to be taken to have intended the same result. Putting the matter another way, in such

circumstances it is to be expected that if Parliament intends not to grant an interest in land it will say so with some precision.

[40] The essential point of Telecom is that once exclusive occupation of the area occupied by the lines was established then such an interest is “land” being a greater interest than an easement, itself “land” (an incorporeal hereditament) unless there was a contrary statutory intention. In Telecom the Court concluded that there was no contrary statutory intention in the Telecommunications Act and confirmed the rateability of the area of the overhead and underground lines.

[41] In this case the marine farm componentry is of a similar nature to telecommunication and other utility lines. I accept there are differences which I will later consider relating to exclusivity. For this purpose, however, I proceed on the basis that the space occupied by the anchor, the back bone lines and the mussel lines all exclusively occupy their own space. The similarity of mussel culture lines, which are suspended from the back bone and move with the tide and the sea, to the overhead power lines is self-evident. It is therefore necessary to turn to the RMA, which approved the construction of the componentry by coastal permit, to see if it restricts any legal interest arising from that componentry.

[42] Section 122(1) of the RMA looms large here. It provides that resource consents are neither real nor personal property. Fogarty J recently considered in Armstrong v Public Trust the extent of s 122(1). He said:

[18] It is not possible to interpret that subsection as saying that Parliament has set its face against the creation of property rights as incidental to holding consents under the RMA, for that proposition is confounded immediately by the remaining subsections of s 122.

[19] What then is the reason for subs (1)? There was a measure of agreement between counsel that it functions by eliminating recognition by the Courts of any property rights be they real or personal property in respect of RMA consents, except and only to the extent that Parliament has provided for them expressly or by necessary implication. I think that proposition is sound. It is confirmed by consideration of later provisions in Part 6 of the Act, within which s 122 falls, under the heading “Transfer of consents”.

[43] This approach – that s 122(1) prevents the Courts from recognising any property rights, real or personal, in respect of RMA consents except, and only to the

extent that Parliament has provided for them, either expressly or by necessary implication – is consistent with a number of other earlier decisions. The Environment Court in Stokes v Christchurch City Council [1999] NZEnvC 238; [1999] NZRMA 409 at

416 said that resource consents are “primarily a bundle of economic rights, notwithstanding that they are not real or personal property under s 122 of the RMA”. In Dart River Safaris Ltd v Kemp [2000] NZHC 448; [2000] NZRMA 440 (HC) Pankhurst J made a similar point at [27], commenting that a resource consent confers on its holder “legal rights” which “are not founded in land law”. Fogarty J’s approach is also consistent with Randerson J’s conclusion in Hauraki Maori Trust Board v Waikato Regional Council HC AK CIV-2003-485-000999 4 March 2004 at [36] where he said

The grant of a right of occupancy under a coastal permit is not

(consistently with the general law) equivalent to ownership.

[44] And more recently, Chisholm and Harrison JJ noted in Aoraki Water Trust v Meridian Energy Ltd [2004] NZHC 820; [2005] 2 NZLR 268 (Full HC) that a water permit (one type of resource consent) was in the nature of “a licence plus a right to use the subject resource”. “In that sense”, they went on to say, “it has similarities with a profit à prendre”. However, they recognised that water permits “are not themselves either real or personal property”, even though they may be “of considerable economic value” ([35], [38]).

[45] Given the plain words of s 122(1) the starting point, therefore, in any such case must be that coastal permits confer no property rights. The plaintiff submits that Parliament, by providing for coastal permits which gave rise to exclusive occupation and thus an interest in land have by necessary implication created property rights not intended to be governed by subsection (1). And, the plaintiff says, subsection (1) is only concerned with the consent itself, here the marine permit, rather than the exercise of the permit. The plaintiff stresses it is the exercise of the permit which creates the interest in land.

[46] Parliament might be said to have provided for property rights in subs (5) of s 122 as follows:

(5) Except to the extent—

(a) That the coastal permit expressly provides otherwise; and

(b) That is reasonably necessary to achieve the purpose of the coastal permit,—

no coastal permit shall be regarded as—

(c) An authority for the holder to occupy a coastal marine area which is land of the Crown or land vested in a regional council to the exclusion of all or any class of persons; or

(d) Conferring on the holder the same rights in relation to the use and occupation of the area against those persons as if he or she were a tenant or licensee of the land.

[47] In Hume v Auckland Regional Council [2002] NZCA 167; [2002] 3 NZLR 363 (CA) the Court said the “and” at the end of subs (5)(a) was disjunctive. Thus, a coastal permit may expressly provide (subs (5)(a)) or where it is reasonably necessary to achieve the purpose of a coastal permit (subs (5)(b)) it may be authority for the holder to occupy a coastal marine area to the exclusion of others (subs (5)(c)) or it may confer on the holder as against others as if they were a tenant or licensee (subs (5)(d)).

[48] In this case, there is no claim that the coastal permits expressly confer property rights on their holders. The question is therefore whether it is reasonably necessary to achieve the purpose of the coastal permit so that the permit should be regarded as authority for the holder to occupy the area the subject of the permit to the exclusion of all or any class of persons.

[49] In Hume Tipping J, delivering the Court of Appeal judgment, recognised that the presumption is that a coastal permit would not provide authority for its holder to occupy the permit area to the exclusion of all. At 371 he said:

[25] Section 122(5) can therefore be viewed as stating the principle that, unless expressly or implicitly provided otherwise in the permit, the public is not excluded from that part of the coastal marine area in or upon which a permitted structure is to be found; nor is public use of the structure excluded, unless and to the extent expressly stated or unless such exclusion arises by necessary and reasonable implication. We do not consider that Mr Brabant’s submission that the position is the reverse can stand against s 122(5). Parliament seems to us to have gone out of its way to state that the default position (that is, the position in the absence of express provision or necessary implication) is that public use and access is permitted. The default position is demonstrably not that the public are excluded in the absence of express or implied permission.

[50] However, in Auckland City Council v Ports of Auckland Ltd [2000] 3 NZLR

614 (CA) and Waahi Paraone Ltd v Far North District Council [2005] 1 NZLR 525 the Court of Appeal and the High Court respectively found that a floating pontoon connected to a jetty and a building built over water on the Mangonui Harbour were areas occupied to the exclusion of all and reasonably necessary to achieve the purpose of the coastal permit.

[51] In this case, however, I do not consider that it is reasonably necessary to achieve the purpose of the coastal permit to give exclusive occupation of the marine area. The facts in this case are quite different than Ports of Auckland or Waahi Paraone. In both of those cases the attachment to land was fixed and permanent. In Ports of Auckland the floating pontoon was part of a jetty which was fixed to the seabed by a large number of piles driven into the seabed. Exclusive occupation of that area was inevitable. The floating pontoon permanently attached to the jetty moved up and down with the tide and, as the Court said, “there could be no shared occupation of that airspace”.

[52] Similarly in Waahi Paraone a building was constructed over the water. No other building could occupy that area and although the area underneath the building could be used by others there could be no form of occupation. In this case, all of the mussel farming componentry can and is able to be shifted within the permit area. There is no permanent attachment to the seabed land itself. Instead mussel farm componentry is fixed to a given area only by virtue of the weight of its concrete anchors. It is possible for other coastal permits to be granted through the area for activities other than mussel farming. And it is possible for the coastal permit area to be extensively used by amateur and commercial fishermen. The only area that is exclusively occupied is the area of water displaced by the rope.

[53] Section 122(5)(c) is concerned with authority to occupy a “coastal marine area”. The area being talked about is no doubt the area which is the subject of the coastal permit. In those circumstances, it seems unlikely that Parliament intended to refer only to the componentry and the fact that it exclusively occupies the space in which it sits. If that were the case then every coastal permit would be authority to occupy a coastal marine area to the exclusion of others because inevitably every

coastal permit will involve some componentry either in the sea or on the seabed. It seems, therefore, unlikely that Parliament intended to create with respect to the grant of coastal permits a virtually inevitable exception under s 122(5).

[54] The final point relevant to issue (1) is whether or not in any event the plaintiff has an exclusive right to the land occupied by the componentry of the mussel farm. The defendant submits that while the componentry may exclusively occupy its own space this is not “exclusive occupation” where, as here, there was a pre-existing right of public access to the same space. Where the public have a pre-existing right of access then the defendants say there can be no exclusive right of occupation given those pre-existing rights. Where, however, the right of public access is conferred in the document giving exclusive occupation then the assumption is of exclusive occupation. In essence, unless the occupier has exclusive occupation then they cannot “give” access rights to others, including the public.

[55] The plaintiff submits that the area it has exclusive occupation of is the area bound by the “spatial outer limits of the marine farm structure including the water column within those limits down to the seabed”. The plaintiff says that while others may use the area within the marine permit (for example to navigate through or to fish from) these are not occupation rights but access or use rights. The plaintiff says that this situation is akin to the facts in the Lextrum Marina case. Lextrum involved the construction of a marina. The public had navigation rights within the marina through the area where the licence had been granted. The Court concluded the marina owner, however, had exclusive occupation rights.

[56] The defendants submitted that in Whangarei Harbour Board v Nelson [1930] NZGazLawRp 98; [1930] NZLR 554 the Court distinguished between existing rights of access and rights of access created by the instrument purporting to give exclusive occupation. The defendants say the Court concluded the former could not give exclusive occupation because there were existing access rights and the latter could only give rights of access if the agreement conferred exclusive occupation rights.

[57] In this case s122(5) of the RMA makes it clear that rights of public access to the area of the coastal permit, although limited, are pre-existing. The coastal permit

itself does not give the public the right of access to the permit area. The public already has such a right. The permit restricts public access insofar as the coastal permit expressly provides for it or to the extent that it is reasonably necessary to achieve the purpose of the permit. And so, except to the extent required, a permit confers no exclusive rights of occupancy on the permit holder.

[58] The facts of this case are distinguishable from Lextrum. In Lextrum there were over 900 piles driven into the seabed such that access to that area either on the surface of the water or on the water was effectively eliminated. Here, the position is quite different. Beyond the backbone lines and the mussel lines, which at any time displace a modest area of sea in relation to the total permit area, there is essentially nothing to stop public access and use. And, as long as the use is not incompatible with the mussel farm, then it can be carried on in the permit area. Another mussel farm permit might not be able to be granted because that would be incompatible with the existing use (Aoraki Water Trust). However, it is possible that other forms of marine farming could be given permits in the same area for activities not incompatible with mussel farming. Any such permit would also involve occupation rights.

[59] In those circumstances, it cannot be said that either by virtue of the coastal permit or by virtue of its operation the plaintiff has exclusive occupation of any of the coastal permit area.

[60] I am satisfied, therefore, that s 122(1) applies to both the grant and the operation of a coastal permit and that neither its grant nor its operation gives rise to any real property. In this aspect of the claim, therefore, the plaintiff cannot establish a marine farmer with an operating mussel farm by virtue of a coastal permit has an interest in land sufficient to make it rateable under the LGRA.

[61] These conclusions are, in my view, supported by the Foreshore and Seabed Act. The thrust, as relevant here, of the Foreshore and Seabed Act is to provide that the Crown owns the seabed including the water and air above (s 4(a)(d) and s 13(1)) and that no part of the seabed may be alienated or otherwise disposed of (s 14(1)). If the plaintiff is correct and the resource consent and its operation creates an interest in

land and therefore is real property, this would in my view be an alienation or other disposal prohibited by s 14 of the Foreshore and Seabed Act.

[62] The plaintiff’s submission is that a coastal permit, assuming it leads to an interest in land by the exercise of the permit, does not (in breach of s 14) constitute an alienation or other disposal of that land. The plaintiff says that a coastal permit is not inconsistent with the objects of the Foreshore and Seabed Act as outlined in s 3. Nor, the plaintiff submits, does the placement of structures when exercising the permit derogate from the rights of the public as identified in the Foreshore and Seabed Act. In addition, the plaintiff says s 17(2) preserves the interests of the three marine farms in this case and therefore s 14 of the Foreshore and Seabed Act has no application here.

[63] I reject these submissions. In my view the Foreshore and Seabed Act makes it clear that only the Crown can have ownership of the seabed (including the air and water space above). Sections 13 and 14 provide as follows:

13 Public foreshore and seabed vested in the Crown

(1) On and from the commencement of this section, the full legal and beneficial ownership of the public foreshore and seabed is vested in the Crown, so that the public foreshore and seabed is held by the Crown as its absolute property.

(2) Subsection (1) replaces all previous statutory vestings in, and acquisitions of title by, the Crown in respect of any area of the foreshore and seabed.

(3) Subsection (1) does not affect customary rights that are able to be recognised and protected under Part 3 or Part 4.

(4) The Crown does not owe any fiduciary obligation, or any obligation of a similar nature, to any person in respect of the public foreshore and seabed.

(5) The Land Act 1948 does not apply to the public foreshore and seabed.

14 Public foreshore and seabed not to be alienated

(1) Despite any enactment to the contrary, no part of the public foreshore and seabed may be alienated or otherwise disposed of.

(2) However, subsection (1) does not prevent the alienation of any part of the public foreshore and seabed—

(a) by a special Act of Parliament enacted after the commencement of this section; or

(b) under section 355, in accordance with sections

355AA or 355AB, of the Resource Management Act

1991.

[64] For the coastal permit holder the Foreshore and Seabed Act therefore prohibits ownership of any of the seabed or water space the subject of the permit. The plaintiff’s case, to establish an interest in land, is based on exclusive occupation of the areas of the componentry of the mussel farm. This claim of an interest in land through exclusive occupation, in my view, is a clear disposition of the Crown’s interest in the seabed. If there is a right to exclusive occupation of these areas which creates in turn an interest in land, it follows that the Crown’s interest in the seabed is compromised by no longer being (for the time of the permit) full legal and beneficial ownership of the seabed (s4(a)). This in turn is prohibited by s 14(1) as a disposition of the seabed.

[65] This conclusion supports the proposition in s 122(1) that granting and the exercise of a coastal permit creates no interest in real or personal property. The Foreshore and Seabed Act is a clear expression of legislative intention that no property rights to the seabed are created by the granting and exercise of a coastal permit.

[66] Finally, the plaintiff says in any event the Foreshore and Seabed Act has no application to the three marine farms the subject of these proceedings because of s

17(2) of the Act. I reject that submission.

[67] Section 17(2) of the Foreshore and Seabed Act provides as follows:

17 Rights of lessees, licensees, etc, preserved

(2) A specified interest and any resource consent that, immediately before the commencement of this section, was in effect continues, to the extent to which it is lawful, to have effect according to its tenor.

[68] As to the marine farms B and C, prior to the introduction of s 10 of the Aquaculture Reform Act (1 January 2005) neither of these farms could claim an interest in land. At best farm B had a licence (not an interest in land) and farm C a permit.

[69] Farm A was originally a leasehold interest which is an interest in land. I accept the defendants’ submissions, however, that s 10 of the 2004 amendment meant that as at the date of introduction of the amendment all three marine farm interests were transferred to coastal permits. In any event, s 17(2) says the specified interests continue “according to [their] tenor” and only to the extent to which they are lawful. This does not say the interest continues to be, for example, a lease with regard to marine farm A but only that the terms of the lease continue. The possessor of the special interest, therefore, loses no express entitlements but does lose the legal status of the interest. In marine farm A’s case this would be the loss of the legal interest of a lease. I am satisfied, therefore, that the Foreshore and Seabed Act supports the proposition that those who hold and exercise coastal permits have no interest in land.

[70] In summary, therefore I find:

(a) Section 122(1) of the RMA prevents either a coastal permit or the mussel farm componentry installed by authority of the permit becoming real or personal property. It is not, therefore, land within the definition contained in the LGRA.

(b) The Foreshore and Seabed Act also prohibits the Crown from granting any interest in the land of the seabed arising from a coastal permit for a mussel farm. Therefore, neither the permit nor the componentry can be considered land within the definition of the LGRA.

(c) Neither the permit nor its operation gives the mussel farmer exclusive occupation of the seabed such as to found a claim for an interest in land.

[71] The answer to Issue (1) is therefore no.


Issue 2(a) – Are mussel farms rateable because they are themselves land (owned by the Crown) because they are part and parcel of the seabed land


[72] By virtue of clause 2 Part 1 of Schedule 1 of the LGRA land vested in the Crown forming part of the bed of the territorial sea where used primarily or exclusively for private or commercial purposes under a lease, licence or other agreement is rateable land. This, the plaintiff says, applies to the facts of this case.

[73] I turn first to issue 2(a); whether the land is part and parcel of the seabed land. The plaintiff’s case is that the seabed is “land” in terms of the LGRA and the mussel farms are part of that land and are therefore also land. The plaintiff says (relying upon Elitestone Limited v Morris [1997] UKHL 15; [1997] 2 All ER 513, adopted in Ports of Auckland) that the ropes, lines, and anchors have, as chattels, become part and parcel of the land given their degree of annexation and the object of their annexation. The plaintiff says given the marine farm is anchored to the seabed for some time (the period of the permit) and the purpose of doing so is to ensure the marine farm stays fixed for the period of its use it is a chattel that has become part and parcel of the land.

[74] The plaintiff says the fact that the lines are in the sea, or that the anchor has a small footprint in relation to the whole of the permit area, or that the structures are moveable, are all irrelevant to an assessment of whether the chattel has become part and parcel of the land.

[75] The defendants’ case is that the componentry is not part and parcel of the seabed. They submit that, if the plaintiff is correct, then this would mean the Crown as “owner” of the seabed land is responsible for the rates. This, the defendants say, could not have been intended by Parliament.

[76] I will first consider the part and parcel argument. In Ports of Auckland the Court of Appeal adopted the approach of the House of Lords in Elitestone as to whether a chattel had become part and parcel of the land. In Elitestone the Lords

said the question whether a chattel had become part and parcel of the land depended upon the degree of annexation and the object of the annexation with respect to the chattel. In Elitestone the Court contrasted the position of a house constructed on land in such a way that it could not be removed “save by destruction”. Such a house the Court said could not be described as a chattel and must have been intended to form part of the realty. In these circumstances, there was a strong presumption that the purpose of placing the house on the site was that it was intended to become part of the land. It was no longer a chattel in those circumstances. The Court said, however, that where the house was removable (in whole or in sections) then it might remain a chattel even though connected to the mains, water and electricity supply.

[77] The Court in Ports of Auckland concluded that the degree of attachment of a pontoon to the piles which were driven into the seabed was such that it made the pontoon (the chattel) part of the jetty. The pontoon was permanently attached to the jetty. Given the pontoon was part of a jetty with a number of piles driven into the seabed this was, the Court said, a high degree of annexation. In that case the object of the annexation, the Court said, was to “give effect to and allow the full enjoyment of rights and occupation of water space at Westhaven”. The Court concluded at p

633:

[81] In relation to the floating facilities at Westhaven the reality is that there is an exclusive occupation of the airspace in which the jetty’s floating pontoons move with the tide. It understates the position, as did the respondent in support of its cross-appeal on this point, to say its right is no more than to a priority of use. There can be no shared occupation of that airspace. The position can be likened to the area of movement of overhead telephone wires in Telecom Auckland (see para [78] above). The airspace through which the pontoons move is equally to be regarded as owned by the respondent during the term of currency of its s 384A permit. And such rights are for the same reasons as in Telecom Auckland to be regarded as an incorporeal hereditament and an interest caught by the definition of “land” in the Act.

[82] In summary the floating facilities, in our view, are part of the land in which their locating piles are embedded. If that is wrong they are interests in that land in the nature of incorporeal hereditaments. But while on either approach they are rateable property they are situated outside Auckland city. Only if they were brought within its boundaries would the appellant be empowered to levy rates on them.

[78] The facts in this case relating to the degree of annexation can be contrasted with those in Ports of Auckland. Here, commonly, the ultimate attachment to the

seabed is the weight of a concrete anchor. It is not attached to the seabed at all. It stays on the seabed by its own weight. In Ports of Auckland the jetty, to which the pontoon was permanently attached, was annexed by piles driven into the seabed. In this case the whole structure of the mussel farm can easily be shifted with the permit area, typically in less than a day. Clearly, the jetty in Ports of Auckland could not be shifted in this way. At times, where the componentry is for mussel sprat catching, all of the componentry may be removed from the permit area for an extended period (up to six months). Finally, the permit is for a finite term. In my view, this evidence all points towards a very limited degree of annexation.

[79] In this case the purpose of the annexation is to enable the mussel farm to function. The farm needs to be fixed, although not necessarily in the same position, throughout its two yearly cycle. The marine farm does not need to be fixed to any particular seabed site for it to function. It can be removed and used on any site. Indeed, as I have said, that is typically what happens from time to time. It is not therefore intended, nor is it necessary, that the componentry be part of the seabed land itself. The concrete blocks simply anchor the structure in place where the owner of the coastal permit believes the lines are best situated. The marine farm componentry is anchored to the seabed to facilitate marine farming not to facilitate the use of the land itself.

[80] I am therefore satisfied that the mussel farms are not part and parcel of the Crown’s seabed land. I also accept the defendants’ submission that Parliament could not have intended that the Crown became a ratepayer of seabed land because a local authority pursuant to the RMA had granted to a private individual a mussel farm permit on which it has installed farming componentry. This is especially so given the Crown may not be able to pass on any such rates obligation to the permit holder. This conclusion means that I have decided that mussel farms are not rateable because they are not themselves land. However, in case I am wrong on issue 2(a) I go on to consider issue 2(b).

Issue 2(b)

Are the mussel farms rateable land under the LGRA because they are rateable because that land (of which the farm is part and parcel) is used primarily or exclusively for private or commercial purposes under the lease, licence or other agreement?

[81] Issue 2(b) raises the question of whether by exercising the rights provided by a coastal permit (as part and parcel of the seabed) a coastal permit is being used primarily or exclusively for commercial purposes under a lease, licence or other agreement (Schedule 1, Part 1 clause 2 LGRA). The plaintiff says it is clear the land, including water space, is used for private and commercial purposes and therefore the only question is whether this is pursuant to a lease, licence or other agreement. The meaning of this phrase is also relevant to, and in my view will effectively resolve, issue 3.

[82] The plaintiff submits that a coastal permit is a form of licence in the broadest sense of that word. They submit in this case that the use of the word licence in this context is intended to be no more than an indication of permission to do, or an exception from, something. The plaintiff says the consent here necessarily excludes others from mussel farming and in that sense the permit can be considered a form of licensing. The plaintiff submits that the previous exercise of the same authority as currently under the coastal permit was exercised as a licence under the RMA.

[83] The plaintiff further says that the changes from the Rating Powers Act 1988 to the LGRA intended no change to the categories of non rateable land. In the 1988 statute Crown land did not qualify as non rateable if it was occupied under a lease or licence or other authority “granted by the Crown . . . for a term of not less than 12 months”. In the LGRA “or other authority” was changed to “or other agreement”. The plaintiff says that in the 1988 Act a coastal permit was an “authority granted by the Crown” (through its agent the Local Authority). They submit the LGRA should not be seen as broadening the category of non rateable land by including coastal permit land as non rateable. Thus “or other authority” in the 1988 statute should be seen as the equivalent of “or other agreement” in the 2002 statute.

[84] In my view the words of clause 2 are plain and clear. The terms “lease or licence” are used in their formal sense, referring to a particular agreement between two parties which creates the relevant legal interests of a lease or licence in law.

There is no suggestion that any form of lease exists here. The plaintiff instead claims that a licence exists. This interpretation of “lease or licence” in the context of clause 2 runs against its plain words, which connote a formal arrangement; as signaled by the catchall phrase at the end of clause 2: “or other agreement”. Those words make it clear that “lease or licence” are intended to be in the nature of “agreements”; an argument of interpretation that is supported by the ejusdem generis rule.

[85] Nor, in my view, is the plaintiff’s view assisted by its reliance upon Aoraki

Water Trust.

[86] In Aoraki the Court commented that in relation to the allocation of water rights the Act “effectively describes a licensing system”. Other environment Court decisions dealt with that proposition: GUS Properties Ltd v Marlborough District Council (PT, Wellington, W 75-94, 5 August 1994); Viaduct Harbour Holdings v Auckland Regional Council (EC, Wellington, A4/99, 22 January 1999). The Court in Aoraki did not say that the grant of a water right there, or as here a coastal permit, is a licence. Nor could they say that. Section 10 of the Aquaculture Reform Act makes it clear that a grant of a permit for a mussel farm in a particular area is not a licence:

10 Leases and licences deemed to be coastal permits

(1) On and from the date specified in subsection (2), each lease and licence is deemed to be a coastal permit granted under the Resource Management Act 1991.

(2) For the purposes of subsection (1), the date is- (a) the commencement of this Act; but

(b) if section 16 applies, the date on which the application referred to in that section is determined.

(3) A deemed coastal permit is subject to the same conditions as applied to the lease or licence immediately before the date specified in subsection (2).

(4) The consent authority may, within 12 months after the commencement of this Act,-

(a) commence a review of a deemed coastal permit, including the conditions of the permit; and

(b) if it considers it necessary to do so, vary, add, or delete conditions for the purpose of making the conditions consistent with the Resource Management Act 1991.

(5) In exercising the power in subsection (4), the consent authority-

(a) may do so on its own initiative or after a request from the holder of the permit; but

(b) must not amend the species or area covered by the permit.

(6) To avoid doubt, a review under subsection (4) is a review of consent conditions for the purposes of section 120 of the Resource Management Act 1991.

(7) Sections 23 and 24 apply to a decision made by a consent authority under subsection (4), and that provision applies accordingly with all necessary modifications.

(8) A deemed coastal permit is to be treated as if it had been granted for a term of 20 years beginning on the commencement of this Act.

(9) A, deemed coastal permit is to be treated as if it-

(a) authorises the holder to undertake aquaculture activities in the area specified in the lease or licence concerned to the extent consistent with the lease or licence as in force immediately before the date specified in subsection (2); and

(b) includes all the coastal permits that would otherwise have been required under sections 12 and 14 of the Resource Management Act 1991 to undertake those activities; and

(c) includes all the coastal permits that would otherwise have been required under section 15 of the Resource Management Act 1991 to undertake those activities to the extent that they were being undertaken at the commencement of this Act.

(10) Subsection (11) applies if, immediately before the date specified in subsection (2),-

(a) a variation has been made under section 13(1) or (3) of the principal Act to a lease or licence which authorises the farming of species of fish, aquatic life, or seaweed not authorised before the variation; and

(b) the holder of the lease or licence has not begun to farm the species of fish, aquatic life, or seaweed that the variation applies to.

(11) The holder of the lease or licence must not begin farming the species of fish, aquatic life, or seaweed referred to in subsection (10)(b) if doing so would have, or is likely to have, effects that are more adverse in character, intensity, or scale than the effects of farming the species of fish, aquatic life, or seaweed that the lease or licence applied to immediately before the variation.

(12) However, subsection (11) does not apply if the holder of the lease or licence is authorised to farm the species of fish, aquatic life, or seaweed concerned by-

(a) a permission that is deemed to be a coastal permit by section 384 of the Resource Management Act 1991; or

(b) a coastal permit granted under the Resource

Management Act 1991; or

(c) a variation granted before 1 October 1991.

[87] Both s 121 and s 122(5) of the RMA confirm this interpretation. Section

122(1) provides that a resource consent is not personal property. A licence is a form of personal property. Subsection 5(d) uses the phrase “as if he or she were a tenant or licensee of land”. This use of the phrase “as if” clearly illustrates Parliament’s intention that a coastal permit holder is neither a tenant nor a licensee.

[88] Nor can a coastal permit be seen as an “agreement”. Such a permit is granted as a result of a judicial process applying the facts to the law and reaching a conclusion, often in the face of competition between a number of parties.

[89] I acknowledge the defendants’ submission on issue 2(b) that there could be debate about exactly what part of the seabed is being used primarily or exclusively for private or commercial benefit. The defendants’ submission is that the difficulty in defining with precision such an area of seabed for rating purposes illustrates that Parliament could not have intended to rate such an ill-defined area. Here, the plaintiff’s case is that the seabed used for commercial purposes is the seabed itself, where covered by the anchors, and the water column above the seabed (also part of the seabed) which is contained by the area bounded by the limits of the movements

of the ropes and lines of the mussel farm. This they say is similar to the position of the overhead telephone lines described in Telecom.

[90] It would be difficult but not impossible to identify the area covered by the mussel farm operation similar to telephone lines. And, as the defendants accept, if the seabed is rateable it will be for the Valuer-General in terms of the Rating Valuation Act to work out appropriate rating units.

Summary Issue (2)


(1) Mussel farms are not part and parcel of the seabed land.

(2) The exercise of a coastal permit is being used primarily for private and commercial purposes but it is not doing so “under a lease or licence or other agreement”.

[91] The answer to issue (2) is therefore no.


Issue (3)

If the farms are not themselves “land”, is the seabed land beneath them (which is owned by the Crown) rateable separately from the rest of the seabed because it is used primarily or exclusively for private or commercial purposes under a lease, licence or other agreement?

[92] This issue can be dealt with shortly. I have found that the seabed here has not been used by the mussel farm under a lease, licence or other agreement. I have also found that it has not been exclusively used. Therefore, the plaintiff’s claim cannot possibly succeed based on this proposition. The answer to Issue (3) is therefore no.

Costs


[93] Counsel for those defendants who seek costs should file and serve memoranda within 14 days. The plaintiff should respond within a further 14 days.






.................................

Ronald Young J









Solicitors:

Simpson Grierson, Auckland, for Plaintiff

Crown Law Office for First and Second Defendants

Chapman Tripp, Wellington, for Third, Sixth and Seventh Defendants

Gascoigne Wicks, Blenheim, for Fifth and Eighth Defendants

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