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Stewart, Isaac --- "Reverse sensitivity: an environmental concept to avoid the undesirable effects of nuisance remedies" [2006] CanterLawRw 1; (2006) 12 Canterbury Law Review 1


REVERSE SENSITIVITY: AN ENVIRONMENTAL CONCEPT TO AVOID THE UNDESIRABLE EFFECTS OF NUISANCE REMEDIES

Isaac Stewart[*]

I. Introduction

Reverse sensitivity arises when a new use is proposed for land in circumstances when an established use adjoining that land is producing adverse effects (an 'effects-creating use'). The development of new sensitive uses, such as residential dwellings or schools, is limited under the Resource Management Act 1991 ('RMA') in order to protect effects-creating uses from legal complaint. However, protecting effects-creating uses has come at a considerable expense. Reverse sensitivity contradicts the common law rule of nuisance that it is no defence that a plaintiff came to a nuisance. Instead, private land rights are extinguished for the greater public good and those harmed are left uncompensated. By placing uncompensated harm on others, effects-creating uses are not held responsible for all their costs, and the subsequent overproduction of their goods and services is economically inefficient. Reverse sensitivity is also inconsistent with the RMA's focus on protecting the environment from adverse effects, as it shields effects-creating uses from legal complaint. There are numerous undesirable effects resulting from reverse sensitivity and these have made it the subject of much academic criticism. Many argue that the concept should be rejected in its entirety. However, to reject reverse sensitivity is merely curing a symptom without dealing with the underlying problem. Reverse sensitivity is undesirable but it arose to avoid an equally undesirable situation. Without the concept, a new sensitive use could establish next to an effects-creating use and bring an action in nuisance. If the action were successful, the courts would grant an injunction without having regard to the economic and social impacts that may result. Injunctions have the ability to close key infrastructure and cripple regionally and nationally important industries. This can even occur when such activities have received planning permission. Therefore, it is the extreme effects that result from injunctive relief that reverse sensitivity seeks to overcome.

To solve the problem of reverse sensitivity, the RMA and the tort of private nuisance need to be reconciled. It is undesirable to have two contrasting systems aimed at balancing the competing interests of landowners. This reconciliation can be achieved if the courts are willing to award future damages in lieu of an injunction ('future damages') in nuisance cases. Awarding future damages will alleviate the fear that a successful nuisance action will close important industries if injunctive relief is granted. Further, it will compensate landowners who are harmed and it will force effects-creating uses to internalise their costs of production. Lastly, it can be shown that this dual system is consistent with the RMA's focus on protecting the natural environment from adverse effects.

II. Reverse Sensitivity

Definition

Reverse sensitivity is not a term that appears in the RMA.[1] Its definition first took shape in Auckland Regional Council v Auckland City Council where it was held that it refers to 'the effects of the existence of sensitive activities on other activities in their vicinity, particularly by leading to restraints in the carrying on of those other activities.'[2] Reverse sensitivity arises when an established use creates adverse effects that do not constitute a nuisance given the current state of neighbouring land. However if the neighbouring land is put to a proposed new use, then the effects of the activity will constitute an actionable nuisance. Future residents may complain about the effects-creating use and this may result in restrictions being placed on the activity or it may lead to the closure of the activity.[3] Therefore, reverse sensitivity can be regarded as the 'legal vulnerability of an established activity to complaint from new land uses.'[4] One aim of the RMA is to avoid, remedy and mitigate adverse effects on the environment.[5] Reverse sensitivity has developed into a legitimate consideration due to the broad definitions of the terms 'effect' and 'environment'. The definition of 'effect' includes future effects[6] and the definition of 'environment' includes the social and economic conditions that affect people and communities.[7] Therefore, the possibility of future restrictions on effects-creating uses is treated as an effect on the environment that must be avoided, and reverse sensitivity arose to avoid these possible restrictions.

The Development of Reverse Sensitivity

The issue of reverse sensitivity first arose under the Town and Country Planning Act 1977. In Aratiki Honey v Rotorua District Council,[8] the Planning Tribunal overturned the granting of a resource consent application for a proposed camping ground as it was situated next to an apiary. The site was suitable for the camping ground and it was zoned accordingly, but it was found that the new use was incompatible with the neighbouring bee-keeping operations. The bees would potentially attack and sting people in the neighbouring vicinity as well as defecate on surrounding properties. Judge Turner stated:

This is one of those rare situations where an established use is opposing the introduction of a new use in the neighbourhood because of what the established use perceives as its effect on the proposed use.[9]

The concept of reverse sensitivity also justified the refusal of a resource consent application for establishing a nudist camp next to some orchards in McQueen v Waikato District Council.[10] Surrounding orchard owners objected to the application on the grounds that spray drift from the orchards would constitute a health hazard to the nudists. Because of this health risk, the nudists may have sought to restrain the orchard owners from chemically spraying their orchards when and how they wished. The possibility of such restrictions was an adverse effect on the orchard owners and justified the quashing of the resource consent application. Reverse sensitivity then continued to be applied under the RMA. The concept is regarded as a legitimate reason for denying a resource consent for a new sensitive use. In Rowell v Tasman District Council,[11] a quarry opposed a nearby residential development as future landowners may have complained about noise and dust emanating from the quarry. The council made it clear that the resource consent would be rejected unless the new use agreed not to complain about the effects-creating use. Further, the concept of reverse sensitivity justifies imposing conditions on a resource consent that mitigate the adverse effects of surrounding activities. In Ports of Auckland v Auckland City Council[12] and Christchurch International Airport v Christchurch City Council,[13] the relevant bodies imposed conditions requiring that new residential developments be fitted with adequate soundproofing. Soundproofing mitigated the noise from the respective airport and seaport to the extent that any remaining interference was considered reasonable. This offered adequate protection to the effects-creating uses while allowing adjoining landowners to develop.

It is also appropriate for local authorities to provide for reverse sensitivity in district plans. In Auckland Regional Council v Auckland City Council,[14] the plaintiff (ARC) sought to have certain activities in an industrial area reclassified as discretionary instead of permitted. The ARC believed that these activities could be adversely affected by discharges from industrial uses within the area. Therefore, it was argued that applications for these new activities should be subject to conditions that mitigate the adverse effects of the surrounding environment. The Court found in favour of the ARC and held that providing for reverse sensitivity in district plans is a proper function of a territorial authority.[15] This was confirmed in Winstone Aggregates Ltd v Papakura District Council,[16] where the ARC and Winstone Aggregates Ltd appealed the proposed Papakura District Plan on the grounds that it did not adequately protect the extraction of mineral resources.[17] A 500m buffer around a quarry was sought in which certain sensitive uses could not be developed. This 'buffer zone' ensured that land could not be used in proximity to the quarry in a way that could lead to future restrictions on the quarry's operations. The Environment Court held that territorial authorities do have jurisdiction to create such a buffer and incorporate it into a district plan.

Therefore, the possibility of future complaint has allowed local authorities to deny resource consent applications, attach conditions to resource consents, and prohibit or restrict activities within particular zones or on particular land.[18] Further, reverse sensitivity has been used to protect numerous effects-creating uses including airports,[19] seaports,[20] quarries,[21] farming operations,[22] apiaries[23] and orchards.[24]

III. Reverse Sensitivity and Private Nuisance

The Tort of Private Nuisance

Private nuisance protects a landowner's right to the use and enjoyment of his or her land.[25] However, this right is not absolute and must be balanced against the competing interests of other landowners.[26] The standard that the law provides in balancing these competing interests is that of reasonableness. An interference becomes an actionable nuisance when it exceeds what an ordinary person in the plaintiff's position would consider reasonable.[27] Further, the standard of personal comfort that a reasonable occupier can expect varies according to the character of the neighbourhood in which the interference occurs.[28] For example, one would expect a higher level of interference in an industrial area than in a residential area. Therefore, 'what would be a nuisance in Belgrave Square would not necessarily be so in Bermondsey.'[29] In New Zealand, a workable test was offered by Hardie Boys J in Bank of New Zealand v Greenwood when he said that' [t] he test is simply whether a reasonable person, living or working in the particular area, would regard the interference as unacceptable.'[30] The tort of nuisance also requires that something offensive emanates from the defendant's property onto the plaintiff's property.[31] The law of nuisance has categorised potential emanations under three separate heads. These include encroachments onto the plaintiff's land from a neighbour, physical damage to the land itself, and personal discomfort where an emanation prevents the plaintiff's reasonable use and enjoyment of his or her land.[32] For the purposes of this paper, only continuing nuisances that result in personal discomfort are considered. This is because in the reverse sensitivity context, such nuisances are the most common form. Further, the liability for such interferences is strict and the mere existence of the nuisance will make the claim actionable.[33]

The Continued Application of Private Nuisance

Common law rules are defeated by contrary statutory provisions.[34] However, the RMA's provisions do not exclude the application of common law doctrines. In fact, s 23(1) expressly preserves the application of the common law by providing that' [c]ompliance with this Act does not remove the need to comply with all other applicable Acts, regulations, bylaws and other rules of law.'

The continued application of private nuisance was confirmed in Ports of Auckland v Auckland City Council.[35] Baragwanath J confirmed that occupants of proposed residential apartments could sue the Port of Auckland in nuisance if noise exceeded reasonable levels. He stated that 'there can be no doubt that very many of the potential plaintiffs whom the port company has in mind will have standing to sue [in nuisance].'[36] However, despite the preservation of the common law, reverse sensitivity effectively prevents the application of private nuisance.[37] Reverse sensitivity protects effects-creating uses by preventing surrounding land developing in a way that will transform a legitimate activity into an actionable nuisance. Therefore, reverse sensitivity does not provide a defence to a claim in nuisance, but instead it prevents a nuisance from ever arising.[38] This has allowed the law regarding reverse sensitivity to develop in a way that is inconsistent with many of the long established rules of private nuisance.[39]

Private Nuisance Provides that it is No Defence that the Plaintiff Came to the Nuisance

Reverse sensitivity has rendered meaningless the rule in Sturges v Bridgman,[40] namely, that it is no defence that a plaintiff came to the nuisance.[41] The defendant in this case was a confectioner who used two large pestles on his property to crush and grind the ingredients for his confectionary. One pestle had been used for 60 years, while both had been used in the same manner for the previous 26 years. The plaintiff moved to a neighbouring property and constructed a consulting-room for his medical practice. The construction meant that only a party-wall separated the consulting-room and the defendant's kitchen. The presence of the consulting-room meant that the noise and vibrations from the pestles were no longer reasonable and constituted an actionable nuisance. In his defence the confectioner argued that he had used his property in this manner for 26 years and that the plaintiff had moved to the nuisance. It was held that it was no defence that the plaintiff came to the nuisance. Jessel MR reasoned that the defendant's defence was unjust, as it would deprive adjacent landowners of their right to the quiet use and enjoyment of their land.

Further, as the nuisance only arose after the construction of the consulting room, the adjacent landowner was powerless to stop the use of the pestles before this time, or as Jessel MR stated:

I could not stop you: I could not interrupt. It is physically impossible, because it would be a trespass, legally impossible, because I had suffered no damage and could not maintain an action. How could you therefore acquire a right to deprive me of the fair and ordinary use of my property?[42]

Therefore, the rule seeks to prevent occupiers who establish their use right first, from diminishing the value of adjoining land.[43] To decide otherwise would sanction a transfer in property rights to the existing use.[44] Despite New Zealand's acceptance of Sturges,[45] reverse sensitivity has rendered it meaningless as it simply will not allow a plaintiff to move to a nuisance. This has allowed a situation to arise that Sturges expressely sought to prevent, namely, transferring property rights to an established use without compensation.[46]

The Public Worth of the Defendant's Activity and the Cost to the Defendant in Reducing the Interference to a Reasonable Level

Nuisance provides that the public worth of a defendant's activity is irrelevant when assessing whether an interference is reasonable.[47] This was confirmed in Bank of New Zealand v Greenwood where it was stated that 'to the extent that this is an appeal to set the public interest ahead of the private interests of the plaintiff, then I regret that authority requires me to close my ears to it.'[48] However, a consideration of the utility of the defendant's activity is overtly undertaken and is the basis of the 'locality' or 'neighbourhood' principle.[49] This was made clear in St Helens Smelting v Tipping where it was stated that:

If a man lives in a town, it is necessary that he should subject himself to the consequences of those operations of trade which may be carried on in his immediate locality, which are actually necessary for trade and commerce, and also for the enjoyment of property, and for the benefit of the inhabitants of the town and of the public at large.[50]

Reverse sensitivity clearly contradicts the law of private nuisance, as the public worth of the defendant's conduct is expressly considered. In Winstone Aggregates, it was held to be significant that aggregate was an important regional resource that was greatly beneficial to the community.[51] In its decision as to whether a buffer should be provided around the quarry, the Court stated that it needed to balance the interests of the quarry operators, adjacent landowners and the public at large.[52] In contrast, nuisance only balances the interests of competing landowners.

Further, the law of nuisance does not consider the cost to the defendant of avoiding the nuisance. In Bank of New Zealand v Greenwood, it was stated that:

If one creates an actionable nuisance, he must eliminate it, whatever the cost. The fact that it will be expensive does not affect his liability. Nor does the fact that his innocent neighbour could avoid its effects more cheaply.[53]

Conversely, under reverse sensitivity the cost of internalising adverse effects is considered. In Winstone Aggregates, the Court stated that territorial authorities should impose restrictions that confine the effects of an activity as much as is reasonably possible.[54] However, where adverse effects cannot be reasonably internalised, territorial authorities can impose limitations on adjoining land.[55] This judgment clearly brings in an element of cost when considering what is reasonable. If it is too costly to internalise adverse effects, adjoining landowners must forgo their proprietary rights in order to protect the effects-creating use.[56] In contrast, the law of private nuisance would require an effects-creating use to cease operations if interference could not be reduced to a reasonable level.[57]

Does the Law of Private Nuisance Endorse the Concept of Reverse Sensitivity in Any Way?

In the case of Miller v Jackson,[58] residents of a new housing estate brought an action in nuisance against an established cricket club. It was held that cricket balls entering the plaintiff's house constituted an actionable nuisance. Lord Denning commented that the planning authority should not have allowed a housing estate to be built in a way that would interfere with the established cricket club. This obiter comment shows some support for the concept of reverse sensitivity. However, Lord Denning's judgment has been largely discredited and his obiter comments were not followed in the case of Re JL Thomas & Co Ltd.[59] In this case, a noisy steel fabricator and an animal waste processor objected to an application for residential development in the area, as future residents might bring an action in nuisance. The Court rejected the argument and stated that the council were free to grant permission provided they did not positively intend to promote conflict. The Court stated that the objectors could not expect that conflicting uses would never be introduced into the vicinity.[60] Clearly, reverse sensitivity has been rejected in England.

IV. Current Solutions to the Problem of Reverse Sensitivity

No-complaints Instruments or No Consent

No-complaints instruments are a current solution to the problem of reverse sensitivity. These instruments make a new use conditional on the occupiers not complaining about the adverse effects emanating from a nearby activity. No-complaints conditions run with the land but covenants or easements are also registered on the certificate of title to ensure that successors in title have notice of the restrictions.[61] As consent is a defence to an action in nuisance,[62] the effects-creating use is protected from future complaint. Further, if a no-complaints condition is breached then the effects-creating use can get the local council to issue an abatement notice or it can make an application for an enforcement order.[63] Abatement notices are served by the council and prohibit a person from commencing or continuing an activity that contravenes a resource consent.[64] Enforcement orders have the same effect but are initiated by a plaintiff and are enforced by the Environment Court.[65]

No-complaints solutions have been used in both Christchurch International Airport v Christchurch City Council[66] and Rowell v Tasman District Council.[67] The first case involved an application proposing to build residential houses in proximity to the airport. The Christchurch International Airport (CIA) sought that the applications be denied or, in the alternative, that they be granted on the condition that the resource consent would endure as long as residents did not complain about the CIA's activities. Prior to the application hearing, the residents voluntarily entered into an agreement with the CIA. Nonetheless, the CIA sought a declaration that such an agreement was lawful.[68] The central issue of the case was whether the condition was contrary to the New Zealand Bill of Rights Act 1990 (NZBORA).

Likewise, in Rowell v Tasman District Council,[69] Wairoa Quarries opposed an application for residential development as new residents might complain about the noise and dust emanating from the quarry. Wairoa Quarries withdrew its opposition to the application once easements were granted that allowed noise and dust to pass over or settle on the applicant's land. The easements contained covenants to bind successors in title.[70] However, a landowner that was situated between the quarry and the applicant's land objected to the condition on the grounds that it suffered from Wednesbury unreasonableness[71] and was contrary to the NZBORA. However, in both of these cases it was held that no-complaints conditions do not breach s 14 of the NZBORA.[72] Section 14 provides that:

Everyone has the right to freedom of expression, including the freedom to seek, receive, and impart information and opinions of any kind in any form.

In Christchurch International Airport v Christchurch City Council,[73] Tipping J held, on appeal, that the Planning Tribunal erred in finding that no-complaints conditions are in breach of the NZBORA.[74] The Tribunal overlooked one crucial factor, namely the fact that the applicants had consented to their rights being taken away.[75] Tipping J stated that the concept of freedom not only meant that people were entitled to certain rights, but that they were also entitled to waive such rights if they so choose.[76] This approach was also taken in Rowell v Tasman District Council[77] where it was held that an applicant can lawfully consent to limiting his or her rights under the NZBORA.[78] Further, it was not seen as problematic that successors in title would have their rights restricted, as they would have full notice of this restriction when purchasing the property.[79] It was also held in Rowell that where a no-complaints instrument is consented to, it does not suffer from Wednesbury unreasonableness.[80] Ports of Auckland v Auckland City Council[81] addressed the situation where an applicant does not consent to the limitation of his or her rights through a no-complaints condition. The Court held that neither a court nor a council can force an unwilling party to surrender his or her rights to receive notice, make submissions, or appeal under the RMA.[82] This approach is consistent with the RMA's emphasis on public participation. Further, Baragwanath J considered the principle that a person should have access to justice is deep-rooted and that it should not be overcome without that person's consent.[83] Therefore, one can conclude that where consent is not forthcoming from an applicant, the applicant's rights cannot be limited or waived by a court or a council. However, this will have the likely effect that the applicant's resource application will be rejected. For example, in Rowell, the Court indicated that if easements were not granted over the applicant's land, the resource consent would not be granted. Therefore, an applicant is left with two choices: either sign a no-complaints instrument or be denied consent. Some academics believe that no-complaints instruments are a win-win solution to the problem of reverse sensitivity.[84] It has been suggested that they 'soften the blow' to landowners as they allow them to develop land, while at the same time protecting the interests of effects-creating uses.[85] Applicant landowners who own adjoining land are happy to surrender their rights under the NZBORA to obtain a resource consent that would otherwise not be forthcoming.[86] The surrendering of fundamental rights is seen as advantageous to their interests. However, it is submitted that no-complaints instruments are not an ideal solution, but instead the best of two bad situations. No-complaints instruments still result in many undesirable consequences and should not be accepted merely because they are better than the status quo.

V. The Undesirable Consequences of Reverse Sensitivity

The Failure to Compensate Landowners for the Limitation of Their Rights

Reverse sensitivity is the subject of academic criticism because it places uncompensated harm on landowners that adjoin effects-creating uses.[87] If landowners are unable to develop their land or complain about a nuisance, then the value of their property will be reduced. Further, if landowners are required to mitigate adverse effects through providing such things as soundproofing, then they are left uncompensated for this expense.[88] The absence of compensation has been countered by the contention that rights in land are not absolute and that the RMA can limit rights in consideration of the wider public good.[89] This was confirmed in Gargiulo v Christchurch City Council where it was stated that

we have no difficulty with private property rights being limited by the public benefit because that is authorised by the RMA if certain preconditions exist. But first we recognise that there are in our law no such things as absolute, divine or natural rights to property. Rather, property rights are themselves creatures of law which create costs (taxes) and can thus be measured against the interests to be protected under the RMA.[90]

Therefore, it is clear that private property rights can be extinguished for the public benefit. It is submitted that where rights are extinguished, landowners should be provided with compensation. In Ports of Auckland, Baragwanath J indicated his support for this view:

The court should be slow to acquiesce in the extinction of private rights without compensation as a result of administrative decisions which cannot be appealed and are difficult to challenge.[91]

However, reverse sensitivity currently extinguishes property rights without compensation and the courts' endorsement of the concept makes it difficult to challenge. Consequently, it is submitted that the concept is unjust and inequitable.

The Failure to Internalise Costs

Not only is the concept unjust, it is also inefficient. Efficiency is achieved when a polluter is made liable for all his or her costs of production.[92] Reverse sensitivity does not require effects-creating uses to internalise their costs of pollution, but instead forces adjoining landowners to bear them. The inefficiency that this creates is relevant because in achieving the purposes of the RMA, particular regard must be had to 'the efficient use and development of natural and physical resources.'[93] Further, an economic approach is desirable as the RMA regulates economic activities such as trade.[94]

The importance of economic efficiency was emphasised in Winstone Aggregates.[95] The Court said an economic approach was consistent with that stated in the Environment 2010 Strategy: A Statement of the Government Strategy on the Environment:

Resource management should ensure that the unpriced environmental effects (or external costs) associated with the production, distribution, and consumption of goods and services are 'internalised', that is, they are assessed and consistently charged to users and consumers who benefit from them.[96]

This principle was subsequently endorsed in Machinery Movers v Auckland Regional Council:

The economic reason why our society may not in the absence of regulation strike a balance between economic output and environmental quality is that the costs of pollution are not borne by polluters but by somebody else. As a result, these external costs will not, in general, be taken into account by those who cause pollution. Insofar as pollution costs are not borne by those who cause pollution, or by the purchasers of their products, some part of the total benefits resulting from economic activity in the community is wrongly redistributed away from the victims of pollution to other groups of society. In order to correct this market failure, the government must intervene to impose financial costs or penalties which bring the external costs back to the polluter.[97]

Lastly, New Zealand has made a commitment at international law to enforce a 'polluter pays' principle in which the costs of production are internalised. Although being a signatory to the Rio Declaration on Environment and Development[98] does not bind New Zealand, it does signal an intention to adhere to its principles. In Winstone Aggregates,[99] the Court cited and indicated its agreement with Principle 16 of the Rio Declaration which states:

National authorities should endeavour to promote the internalisation of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the costs of pollution, with due regard to the public interest and without distorting international trade and investment.[100]

Reverse sensitivity is clearly an inefficient concept as the costs of pollution are not internalised but instead borne by adjoining landowners. The inefficiencies that result are best illustrated with an example. In Winstone Aggregates, the quarry sought to place the costs of production on adjacent landowners by not compensating them for restricting their rights within the buffer zone. Therefore, the quarry's costs of production were lower and it could offer aggregate at a lower price to consumers. At a lower price, more aggregate is demanded than would be the case if the costs of production were internalised and prices were higher. This leads to over-exploitation of the aggregate resource, underpricing of the resource and ultimately inefficient development of the resource. In a world of scarce

resources, over-exploitation is not an issue that should be dismissed lightly. Further, when goods are overproduced, the adverse effects created in their production are also overproduced. Therefore, the level of pollution is exacerbated. It is submitted that providing compensation to adjoining landowners would internalise the costs of production and lead to an efficient outcome.

There is No Incentive to Reduce Adverse Effects

A purpose of the RMA is to avoid, remedy and mitigate adverse effects in the environment.[101] As shown above, the failure to internalise costs increases adverse effects. This is contrary to the purpose of the RMA but is not the only factor that has resulted in an increase in adverse effects. In addition, reverse sensitivity shields effects-creating uses from legitimate complaint and therefore they do not need to fear a potential nuisance action.[102] Free from the fear of prosecution, they have no incentive to reduce their effects to a reasonable level.

In fact, reverse sensitivity provides an incentive for effects-creating uses to create adverse effects and exaggerate their existence. For example, in Winstone Aggregates the quarry operators stated that the significant effects from their operations included 'ground vibrations from blasting, air blasts, noise from quarry operations and vehicles, dust, heavy vehicle traffic flows, visual impacts, release of sediment to water from earthquakes and potential risks from storage and use of hazardous substances particularly for blasting.'[103] By emphasising and exaggerating adverse effects, activities such as quarries potentially stand to gain the right to pollute and have adjoining landowner's rights transferred to them. Therefore, there is no incentive to implement cleaner technologies or reduce adverse effects, as it is costly, and the courts will protect the right to pollute free of charge anyway. Such an outcome is undesirable as it conflicts with the duty and purpose of the RMA to reduce adverse effects.[104]

There is No Incentive to Negotiate Settlements or Buy Surrounding Land

Consent is a defence to a claim in nuisance and planning authorities cannot have regard to the adverse effects upon a person if that person has given his or her written consent.[105] The implication of this is that landowners who are subject to an ongoing nuisance can sell their consent to an effects-creating use. This would internalise the costs of production and avoid many of the problematic effects that the concept of reverse sensitivity has created. However, with the knowledge that the courts will confer property rights to effects-creating uses without compensating affected landowners, such settlements are unlikely to occur.[106]

Another option is for the effects-creating use to purchase the surrounding land and create its own buffer. This was alluded to by Thesiger LJ in Sturges v Bridgman when he stated that a person who creates a nuisance can 'protect himself by taking a sufficient curtilage to ensure what he does from being at any time an annoyance to his neighbour.'[107] Alan Dormer also recognised this option when he gave the example of an American phosphate processor that purchased surrounding orchards that were being damaged from pollution emanating from its land.[108] However, under the concept of reverse sensitivity there is no incentive to buy your own buffer when the courts have made it clear that they will create one for you at no expense.[109]

The Legitimate Expansion of Sensitive Uses is Prevented

Reverse sensitivity does not allow the legitimate expansion of sensitive uses. This problem was highlighted in Sturges v Bridgman.[110] In that case, Jessel MR gave the example of a blacksmith who leases land on a barren moor. Due to an expanding town, the barren moor becomes in demand for residential buildings and its land value rises. If it were a defence that a plaintiff came to the nuisance, the owner of the moor would not be able to exploit the rising property prices. This exact problem has arisen under the RMA. As towns or cities expand, demand for surrounding land will increase. Instead of accommodating this demand, and catering for the expansion of a town, the concept of reverse sensitivity will effectively fence off towns with effects-creating uses. However, this is not to say that planning authorities should allow sensitive uses to freely sprawl into the countryside.[111] Instead, planning authorities should attempt to minimise rural/residential conflict but, where appropriate, land on the outskirts of a town should be developed into sensitive uses and offensive uses should be required to relocate or compensate new residents.

Unnecessary Restrictions are Placed on Adjoining Land in Certain Circumstances

Reverse sensitivity has placed restrictions on land when there was a possibility that future nuisance actions would be unsuccessful. Nuisance does not provide that all interferences are actionable, but merely those that are unreasonable given the locality in which they occur. In many cases of reverse sensitivity, the adverse effects emanating from an effects-creating use may have been reasonable. For example, in Rowell v Tasman District Council the new residential dwellings were proposed in a locality where 'there [were] many quarries.'[112] The adverse effects from quarrying are going to be more reasonable in this area than in others. In this situation, the requirement to reduce effects to a reasonable level should not be onerous on quarry operators. In fact, given that quarrying operations are normal in that particular locality, the effects from quarrying could be regarded as a reasonable interference. Likewise, on the facts of Ports of Auckland,[113] the plaintiffs would be moving to an industrial area that is dominated by a port operating on a 24 hour basis.[114] Given the nature and characteristics of the neighbourhood, noise from a port could be considered reasonable. Therefore, it can be concluded that in some circumstances reverse sensitivity is unnecessary and amounts to overkill.[115] In these cases, it is unjustifiable that restrictions are placed on adjacent landowners when there may have been no future effect on the effects-creating use.

The RMA is Reduced to a Planning Statute

It has been said that the RMA's primary concern is managing 'environmental effects' as opposed to the zoning approach that was undertaken pursuant to the Town and Country Planning Act 1977 (TCPA).[116] Reverse sensitivity developed under the TCPA and was consistent with that Act, given its focus on zoning.[117] However, its continued application is inconsistent with the aims of the RMA and it has reduced the Act to a planning statute.[118] Instead of assessing the environmental effects of activities, the courts and planning authorities are deciding where effects-creating uses should be situated and whose private interests should succumb to these industries.[119] Protecting hazardous activities from innocuous new uses fails to mitigate the adverse effects that the existing uses have on the natural environment. The concept clearly contradicts the aims of the Act as '[i]t shields offending activities from environmental protection rather than protecting the environment from offending activities.'[120]

Vulnerability to Sensitivity to Reverse Sensitivity and Increased Notification

Historically, where an effects-creating use was proposed on land that was surrounded by vacant land, there was no adverse effect on the adjoining landowners. However, reverse sensitivity has created an adverse effect for these landowners as they may be restricted in developing their land or forced to sign a no-complaints instrument, both of which will reduce the value of their property. Reverse sensitivity states that an effect on the environment is the possibility of future restrictions on an established effects-creating use. Following this reasoning, possible restrictions on the ability to develop land must also be considered an effect on the environment.[121] Pardy and Kerr refer to this as 'sensitivity to reverse sensitivity' and it may become a legitimate ground for opposing resource consent applications.[122] If sensitivity to reverse sensitivity is considered to be an effect, then it will become an obstacle for the very industries that reverse sensitivity seeks to protect.[123] Such a situation will be problematic as it would become increasingly difficult to find suitable land for effects-creating uses. Thesiger LJ recognised this problem in Sturges when he stated:

It would be on the one hand in a very high degree unreasonable and undesirable that there should be a right of action for acts which are not in the present condition of the adjoining land, and possibly never will be any annoyance or inconvenience to either its owner or its occupier.[124]

Thesiger LJ recognised that it is undesirable to prevent effects-creating uses from establishing on land that is currently appropriate for that use, and that may always be appropriate. If all owners of vacant land oppose the establishment of effects-creating uses on the grounds of sensitivity to reverse sensitivity, there will be no land which is suitable for these industries. This outcome is undesirable as it will stifle the development of beneficial industries.

Further, the ability to oppose applications on the basis of sensitivity to reverse sensitivity will require the notification of more resource consent applications.[125] Notification is required when an effect on the environment is more than minor and those that are affected have not given their written consent.[126] As reverse sensitivity adversely affects a landowner's rights and devalues his or her property, then any proposed effects-creating use should be notified.[127] This is going to lead to more costs and delays in a system that is already criticised for its inexpediency.[128]

VI. The Inflexibility of Nuisance Remedies Pressured the Courts to Recognise the Concept of Reverse Sensitivity

Introduction

Reverse sensitivity has constantly been endorsed by the courts despite the undesirable consequences that result from the concept. Further, its presence has been determinative in cases that have reached the courts and it continuously justifies imposing uncompensated harm on landowners. This is surprising given that reverse sensitivity is only one effect that has to be weighed against all effects. This was confirmed in Wellington International Airport Ltd v Wellington City Council:

[Reverse sensitivity] is no more than a description of a class of effect - the sensitivity of a person quite lawfully creating adverse effects to pressure from people who may be potentially affected by those effects. But like any other 'effect', reverse sensitivity needs to be considered in the context of all effects.[129]

Nonetheless, reverse sensitivity does appear to be determinative. Such a conclusion makes one ask why such a heavily criticised concept continues to gain widespread judicial acceptance. The reason is that reverse sensitivity arose to overcome the disastrous effects that can result from a successful nuisance action. Without reverse sensitivity, landowners could develop next to an effects-creating use and bring an action in nuisance. Nuisance remedies are extremely inflexible and a plaintiff is awarded an injunction almost as of right.[130] An injunction has the potential to close important infrastructure and cripple key industries if the parties are unable to reach a settlement out of court.[131] If activities such as the Christchurch International Airport or the Port of Auckland were forced to close, there would be significant economic and social impact on the operators, employees and the public. Therefore, the severe impact of a potential nuisance action outweighs all other effects, making the presence of reverse sensitivity determinative.

To illustrate the injustices and problems that can arise from injunctive relief, one only needs to review past authority. For example, in Pennington v Bishop Hall Coal Company,[132] the defendant polluted a brook that resulted in the downstream corrosion of the plaintiff's boilers. An injunction was granted despite the plaintiff's loss only amounting to £100 a year compared to the defendant's loss of £190,000 a year and the loss of 500 jobs. Likewise, in Attorney-General v Birmingham Corp,[133] riparian owners sought an injunction to prevent sewage entering their river. The defendant argued that if an injunction were granted, sewage would overflow into the city transforming it into a cesspit. Such squalid conditions would be the perfect breeding ground for a plague that could affect the 250,000 inhabitants of the town and the inhabitants of the surrounding areas. Nonetheless, an injunction was granted on the basis that the courts could not consider such effects. These cases display a blinding disparity between the harm caused to the plaintiff and the harm caused by awarding an injunction.

Therefore, reverse sensitivity cannot be reformulated without fixing the underlying problem that led to its existence. This can be achieved if the tort of private nuisance is reconciled with the RMA. The law should be a seamless whole that predictably and fairly governs the competing interests of landowners. Baragwanath J emphasised the need for coherency when he stated:

The time should be long past when statute law and common law were seen as occupying different planes. Decision makers, including planning authorities and the Court on judicial review, must consider what construction of the legislation and what development of the common law will avoid anomaly and provide a sensible result.[134]

It is submitted that this reconciliation can effectively be achieved if the courts award future damages in lieu of an injunction in prescribed circumstances. Future damages compensate a plaintiff for all future harm but allow effects-creating uses to continue operating.[135] This will remove the fear that a successful nuisance action will close an effects-creating use and hence reduce the significance of reverse sensitivity. However, one cannot make sweeping changes to nuisance remedies without asking whether future damages are compatible with the nuisance doctrine itself. The following section examines the reasons why the courts predominately award injunctions, and discusses whether refusing to award future damages can continue to be justified. In addition, the approach to remedies in other jurisdictions is reviewed to gain some insight into how foreign courts have overcome the inflexibility of nuisance remedies.

Nuisance Remedies in New Zealand

Where a nuisance is of a continuing nature and is likely to cause a substantial interference with a plaintiff's use and enjoyment of his or her land, the plaintiff is prima facie entitled to an injunction.[136] An injunction is not granted as of right, but is granted 'as of course', and damages are awarded to compensate for past loss.[137] However, being an equitable remedy, an injunction is a discretionary remedy.[138] This is confirmed by s16A of the Judicature Act 1908, which provides:

Where the Court has jurisdiction to entertain an application for an injunction or specific performance, it may award damages in addition to, or in substitution for, an injunction or specific performance.

The issue of awarding future damages arose in the landmark decision of Shelfer v City of London Electric Lighting Co.[139] In this case it was decided that when an actionable nuisance has been established, a plaintiff is entitled to an injunction 'as of course', unless something special exists in the case.[140] The reason for this was that despite the jurisdiction to award future damages, the Court did not believe that Parliament had intended to confer the power to legalise wrongful acts.[141] A wrongdoer is not entitled to ask a court to extinguish private property rights, assess the worth of these rights in the form of damages, and expose a landowner to a continuing nuisance.[142] However, Smith LJ did offer a situation in which the rule can be relaxed. Damages in substitution of an injunction can be given:

(1) If the injury to the plaintiff's legal rights is small;
(2) And is one which is capable of being estimated in money;
(3) And is one which can be adequately compensated by a small money payment;
(4) And the case is one in which it would be oppressive to the defendant to grant an
injunction.[143]

This working rule is very restrictive. The first three tests are concerned with the plaintiff's rights and only the fourth considers the effect of an injunction on the defendant. As the tests are cumulative, the oppressive effect on the defendant will only be considered when the first three tests are satisfied. Therefore, the discretion that a court retains will only be activated in very limited circumstances.[144] The Shelfer approach was consistently endorsed until the case of Miller v Jackson.[145] In that case, the plaintiffs had moved next to an established cricket club that had been used for seventy years. The defendants agreed that cricket balls that were hit over the boundary into the neighbour's property constituted an actionable nuisance. However, they contended that the Court should exercise its jurisdiction and grant damages in lieu of an injunction. The case of Sturges v Bridgman[146] was criticised and the Court held that when the plaintiffs moved to their house, they must have realised that cricket balls would land in their property. Further, unlike previous cases, the Court considered the benefit to the public of the game of cricket. It was held that when weighing the interests of the public at large, as well as those of the competing landowners, future damages were a more appropriate remedy. However, this approach was not followed in the subsequent case of Kennaway v Thompson where Lawton LJ applied the test that was laid down in Shelfer as it had 'been applied time and time again during the past 85 years.'[147] The judgment in Miller was seen as inconsistent with previous authority and the Court did not consider that it was binding on it. This heralded the return to the conventional approach formulated by Smith LJ.

New Zealand has adopted the English approach and the courts remain reluctant to grant future damages. Hardie Boys J confirmed this in Bank of New Zealand v Greenwood when he stated

it is clear that if an actionable nuisance of a continuing nature is established, the plaintiff is entitled to have the nuisance stopped and not to be paid off in damages, for that would result in the Court licensing his wrongdoing.[149]

Awarding an injunction was traditionally seen as protecting the rights of the plaintiff and therefore the plaintiff was entitled to waive this right.[150] However, if a nuisance is of a transitory nature, a plaintiff is not entitled to future damages if he or she fails to get an injunction. This was stated in the case of Hawkes Bay Protein Ltd v Davidson.[151] In that case, the plaintiffs owned a wool storage business in Awatoto, an industrial area of Napier. Hawkes Bay Protein Ltd occupied the neighbouring premises and its business involved processing meat, fish material, and offal and blood products. The odours impeded the use and operation of the plaintiffs' property so they sold it at a price that was $52,000 less than its capital valuation. It was accepted that the neighbouring nuisance was responsible for the devaluation. In the District Court, it was held that the full $52,000 was recoverable as well as additional damages for anxiety and distress.[152] However, on appeal, Gendell J reduced the amount to $12,000 and quashed the damages awarded for distress and anxiety. Gendell J adopted the reasoning in Hunter v Canary Wharf Ltd[153] and stated that a transitory nuisance, such as a noise or smell, will reduce the 'amenity value' of the property but it will not reduce the 'capital value'. This is because once a transitory nuisance ceases, there is no reduction in the 'capital value', as a transitory interference does not create lasting effects such as physical damage to the property.[154] The plaintiffs could have ceased the nuisance and restored the capital value of the property if they had sought an injunction. The failure to mitigate the harm justified the reduction in damages. This illustrates that the courts are unwilling to grant future damages if a nuisance is of a transitory nature.

The Development of Nuisance Remedies to Mitigate the Injustice Caused by Unqualified Injunctions

Due to the restrictive nature of the Shelfer approach, pressure mounted for remedies that were more flexible. However, instead of addressing the issue of whether future damages should be awarded, the courts have overcome the problems of an unqualified injunction in a more roundabout way.[155] Firstly, the suspended injunction was developed, which allows the courts to consider the public worth of the defendant's activity. Where the defendant is a public benefactor, the courts are willing to suspend the injunction.[156] The purpose of this is to allow the defendant time to reduce the interference to a reasonable level or to allow the defendant time to find a suitable alternative site.[157] This approach can be seen in Pride of Derby v British Celanese,[158] where Lord Denning held that the issue of whether the defendant's activity is for the public benefit is irrelevant in relation to the granting of an injunction, but it is a strong reason to suspend it.[159] Further, where an injunction is suspended, the courts award future damages for the length of the suspension.

Secondly, the courts have gained some flexibility by granting an injunction on terms.[160] This approach was used in Kennaway v Thompson,[161] where powerboats that emitted loud noise were a nuisance to the plaintiff's property. The Court held that an injunction preventing the powerboat racing was unworkable.[162] Instead, the Court granted a qualified injunction stating that boats exceeding a noise level of 75 decibels were only to operate on specific dates.[163] This approach reduced the interference to a reasonable level such that there was no actionable nuisance. However, both remedies do not overcome all the problems that are symptomatic of the Shelfer approach. A suspended injunction merely postpones the problem. If an interference is unable to be reduced to a reasonable level, or a settlement is not reached, the issue will simply resurface.[164] Further, the most damning criticism of the suspended injunction is that it is contrary to the principles that the courts claim constrain them in awarding future damages. A suspended injunction does licence a wrongful act, albeit for a limited time. In addition, during this time the court does sell the rights of the plaintiff in the form of damages and does subject a plaintiff to an ongoing nuisance. The suspended injunction is based on similar reasoning to Lord Denning's heavily criticised judgment in Miller v Jackson.[165] Both approaches do not consider the public worth of an activity in deciding whether a nuisance is actionable, but both state that the public worth is relevant when deciding what form a remedy should take. Lord Denning's judgment has been largely discredited due to his overzealous defence of the cricket club. However, it

is submitted that the reasoning of Lord Denning should be more strongly considered and that a court should weigh the public worth of the activity when deciding whether to award future damages.[166] An injunction on terms is fair and equitable in certain circumstances but is unworkable where large commercial and industrial plants need to constantly operate to maintain commercial viability.[167] Operations such as airports or seaports would be unable to adhere to an injunction on terms without significant economic costs.[168] This was acknowledged in Ports of Auckland,[169] where it was accepted that the port must operate 24 hours a day and could not reduce its noise emissions. It is submitted that the courts should consider the ability of a defendant to internalise its adverse effects when deciding whether to award future damages. This provides a fairer result when a given activity cannot adhere to an injunction on terms.

Developments in the Substantive Law of Nuisance that have Sought to Avoid the Undesirable Effects of Injunctions

The inflexibility of nuisance remedies has also prompted change regarding the substantive law of nuisance.[170] These changes are unjust and could have been avoided by the courts awarding future damages. Firstly, the law of nuisance provides that temporary discomforts, such as construction and demolition, are not actionable if they are conducted during the day and regard is had to minimising the adverse effects of the activity.[171] This is because a reasonable person would tolerate an interference for a limited time even if it would constitute a nuisance if it was continuing.[172] For example, in Andreae v Selfridge & Co Ltd[173] the plaintiff was not allowed to recover the full loss caused by the defendant's dusty and noisy demolition. It was stated that it would be unreasonable to expect temporary works to mitigate all adverse effects, as the progress of the works would become slow and expensive.

This result does import some commercial realism but this is done at the expense of leaving plaintiffs without a remedy. The reasoning of the decision is hardly persuasive. For example, a continuing nuisance is stopped by an injunction and damages are awarded for past loss for the duration in which the interference occurred. It is not apparent why interferences that occur for a limited duration due to their very nature should be treated differently. A better approach would be to award future damages to the plaintiff and thus force prospective developers to compensate those that they harm.[174] Secondly, the defence of statutory authority has sought to overcome the undesirable effect that results from the granting of injunctions. This defence provides that where an activity is authorised by statute, the operators are free from liability for any nuisance that is the inevitable result of that activity.[175] The defence was successful in Allen v Gulf Oil Refining.[176] Gulf Oil Refining were authorised by statute to construct certain works necessary for the establishment of an oil refinery. The operation of the refinery resulted in smell, noise and vibration that would have been an actionable nuisance but for the defence of statutory authority. The plaintiff argued that the statute only conferred the power to construct a refinery and did not expressly confer the power to operate it. Therefore, it was argued, Parliament never intended to extinguish private property rights. However, the House of Lords held that the operation of the refinery was authorised by necessary implication. Lord Wilberforce explained the implications of accepting the plaintiff's contention:

This argument has remarkable consequences. It follows that if the respondent, or any other person, can establish a nuisance, he or she is entitled (subject only to a precarious appeal to Lord Cairns's Act (the Chancery Amendment Act 1858)) to an injunction.[177]

The absence of express authority to operate the refinery did not defeat the defence. Otherwise, Parliament would have authorised the construction of works that under the laws of nuisance had no ability to operate.[178] However, it is surprising that Lord Wilberforce so readily dismissed the Chancery Amendment Act 1858 (which confers the power to award future damages). Awarding future damages would not have defeated Parliament's intent and therefore this option should have been considered.[179]

In contrast to Allen v Gulf Oil Refining, is the result in Shelfer.[180] In the latter case, the City of London Electric Lighting Company was authorised by statute to construct, and impliedly operate, works that were necessary in the supply of electricity. Unlike Allen v Gulf Oil Refining, the relevant statute provided that nothing exonerated the defendant from a claim in nuisance. Once the electric works had been used, vibrations damaged the plaintiff's premises. The preservation of an action in nuisance meant that the defence of statutory authority was unavailable. Kekewich J held that there was an actionable nuisance but that future damages were the appropriate form of remedy.[181] On appeal, this was overturned and an injunction was granted. This led to the absurd conclusion that the relevant statute intended works to be operated which, under the law of nuisance, had no ability to operate.

The absolute immunity conferred by the defence of statutory authority aims to prevent a plaintiff receiving an injunction and frustrating Parliament's intent.[182] While it is undeniable that Parliament can authorise nuisance-creating activities, it does not follow that those harmed should go uncompensated. In Allen v Gulf Refining,[183] Lord Denning was of the view that future damages were a more appropriate remedy when the issue came before the Court of Appeal. This was also the view of Kekewich J in Shelfer.[184] John Smillie has endorsed such an approach, stating that '[d]amages but no injunction is just as reasonable an interpretation of Parliament's intention as no remedy at all.'[185]

Future damages are clearly desirable for both situations. In Allen, the oil refinery could continue to operate while the plaintiff would have been compensated. It seems perverse that the Court's reluctance to 'downgrade' the remedy resulted in the plaintiff receiving no remedy.[186] Further, in Shelfer, the defendant's liability in nuisance could have been preserved whilst still allowing the defendant to construct and operate the works authorised by Parliament. Therefore, it is submitted that unless Parliament expressly extinguishes a landowner's rights, statutory authorisation should only be relevant to the extent that it favours the awarding of future damages. The final group of cases that have failed to adapt the law of nuisance to modern scenarios are the planning permission cases. The issue in these cases was whether planning permission is a defence to nuisance akin to the defence of statutory authority. The first case in which this issue was considered was Gillingham Borough Council v Medway (Chatham) Dock Company,[187] in which the Medway (Chatham) Dock Company had been granted planning permission to operate a commercial dock. The operation of this dock created a nuisance due to the noise of heavy goods vehicles accessing the port between the hours of 7.00pm and 7.00am. It was held that planning permission was not a defence to an action in nuisance but it did have the effect of changing the character of the neighbourhood.[188] Thus, what would have been a nuisance prior to the planning permission, was no longer a nuisance considering the neighbourhood now accommodated a commercial port. Buckley J held that, on the facts, the interference was reasonable and therefore the plaintiffs obtained no relief. Although planning permission was differentiated from the defence of statutory authority, the decision in Gillingham entertained the notion that the two have the same practical effect.[189]

The second case to come before the courts was Wheeler v J J Saunders Ltd.[190] Dr Wheeler owned a property that adjoined a pig farm. Odours emanating from the pig farm constituted an actionable nuisance but the farm operator retorted by saying that it had received planning permission and was conducting its business in accordance with that permission. The Court reviewed Gillingham and interpreted it narrowly. It was accepted that planning permission does not authorise a nuisance except to the extent that it changes the character of the neighbourhood. However, in this case, the existence of one activity did not change the character of the neighbourhood to the extent that the interference was now reasonable.[191] Therefore, the Court held that the plaintiff was entitled to injunctive relief and the pig farm had to restrict its operations.[192]

In the planning permission cases, the courts struggled to reach a fair and equitable decision due to the constraints imposed by the Shelfer test. In Gillingham the plaintiffs were left without a remedy whilst in Wheeler the defendant was forced to close a legitimate activity. Further, the judgments are problematic because they merely state that planning permission can change the character of the neighbourhood but give no guidance as to what will change it to the extent that an activity is no longer actionable.[193] The courts are also silent on whether rules in district and regional plans can alter the character of a neighbourhood.[194] Such uncertainty is unsatisfactory for future business operators, potential litigants, and planning authorities.[195] In addition, where planning permission is concerned, the courts should not hide behind the reasoning that to award future damages would be to licence a wrongful act. Clearly, 'wrongful' is a relative term, especially where planning permission is obtained. It is submitted that the difficulties these cases pose could be overcome if the courts treated planning permission as neither irrelevant nor decisive, but merely a factor that weighs in favour of awarding future damages.[196]

The American Approach

Some American cases offer flexible remedies that seek to overcome the injustice caused by an unlimited injunction. The approach to remedies followed by the American courts mirrored the conventional English approach until the landmark decision of Boomer v Atlantic Cement Company.[197] The defendant in this case operated a cement factory that emanated dirt, smoke and vibrations. Neighbouring landowners brought a successful action in nuisance and the Court of Appeal awarded future damages. The Court believed that closing a cement plant that was worth $45 million and employed 300 people was unjustifiable. A suspended injunction would only defer the problem and there was no guarantee that the nuisance could be reduced to a reasonable level without jeopardising the viability of the plant. Although the plaintiffs were harmed, this was disproportionate to the harm an injunction would inflict on the defendant and the substantial economic consequences that would result from closing down the plant.[198] Therefore, $185,000 in future damages was awarded in lieu of an injunction. This allowed the continued operation of the plant while compensating neighbouring landowners.

The flexibility of the American approach arguably went too far in the case of Spur Industries Inc v Del E Webb Developments Co.[199] The plaintiff had acquired land in a rural area in proximity to the defendant's cattle feeding operation. The operation resulted in odours and flies that interfered with residential units in the adjoining development. The Court recognised that moving to the nuisance, namely a rural area, meant that the plaintiff purchased land at a considerably lower price than if it had developed next to an already established town. Therefore, the Court granted an injunction but required the plaintiff to indemnify the defendant for the cost of moving its cattle feed operation. The Court said:

It does not seem harsh to require a developer, who has taken advantage of the lesser land values in a rural area as well as the availability of large tracts of land on which to build and develop a new town or city, to indemnify those who are forced to leave as a result. [200]

These two cases show that the American courts are willing to be flexible with nuisance remedies. The courts did not constrain themselves by rigid rules, but instead attempted to provide a fair and reasonable result to all parties. The courts were unwilling to see the forced closure of important industries but were also unwilling to leave plaintiffs without a remedy. The reason for the need for such a flexible approach was explained in Stevens v Rockport Granite Co:

The law of nuisance affords no rigid rules to be applied in all instances. It is elastic. It undertakes to require only that which is fair and reasonable under all the circumstances. In a commonwealth like this, which depends on the continued growth and enlargement of manufacturing of diverse varieties, 'extreme rights' cannot be enforced.[201]

It is submitted that the approach in Boomer v Atlantic Cement Company[202] is preferable. It adheres to the 'polluter pays' principle endorsed by the New Zealand courts and compensates harmed landowners.[203] It also allows an effects-creating use to decide whether to operate in its current site or to relocate and avoid paying future damages.

The Canadian Approach

The Canadian courts showed an initial willingness to diverge from the conventional English approach. This was evidenced in Bottom v Ontario Leaf Tobacco Co[204] where the Court refused to grant the plaintiff an injunction despite the smell of tobacco filling his house and causing an actionable nuisance. The Court was unwilling to close the tobacco factory when the prosperity of the town was reliant on its continued operation. The factory employed 200 people and its closure would result in mass localised unemployment. In reaching this decision, Riddell JA stated that '[t]he public good can never be absent from the mind of the court when dealing with a matter of discretion.'[205]

Likewise, in Black v Canadian Copper Co,[206] residents brought an action in nuisance against a nickel mine for harm caused by smoke. Middleton J subordinated the interests of the plaintiffs to the interests of the wider public. He reasoned:

If the mine should be prevented from operating the community could not exist at all... The Court ought not destroy the mining industry - nickel is of great value to the world -even if a few farms are damaged or destroyed.[207]

However, this judicial flexibility has retracted in recent years and Canadian courts are adhering to the Shelfer principles more stringently. The approach in Bottom v Ontario Leaf Tobacco Co[208] was criticised as 'condoning a continuation of a nuisance at the behest of a wrongdoer who is willing to pay for it and subjecting the plaintiff to compulsory expropriation without legislative fiat.'[209] In Walker v Pioneer Construction Co,[210] the Court held that future damages will only be granted where an injunction would result in widespread economic hardship. Nonetheless, the Canadian courts still show more willingness to award future damages than their New Zealand and English counterparts.

Conclusion

The above analysis of nuisance remedies illustrates that awarding future damages will be beneficial to the tort of private nuisance. In an attempt to accommodate the Shelfer approach, the courts have made changes to nuisance remedies and the substantive law that are undesirable. Further, the very arguments the courts claim constrain them from awarding future damages are occurring under both suspended injunctions and reverse sensitivity. Both concepts licence a 'wrongful' act and subject a landowner to an ongoing interference. Reverse sensitivity also leaves a landowner uncompensated. It seems ironic that the common law's insistence that the plaintiff receive nothing but the best has resulted in the plaintiff receiving nothing at all under the RMA regime.[211]

VII. An Economic Perspective: The Efficiency of Injunctions and Damages

Introduction

The above section proceeded on the basis that injunctions have the ability to close important industries. To illustrate how this can occur, it is useful to view the injunction from an economic perspective. Further, both the injunction and damages are analysed in an attempt to find a remedy that is economically efficient and consistent with nuisance authority. It was shown earlier that economic efficiency is relevant with respect to environmental law.[212] Therefore, if the RMA and private nuisance are to be reconciled, it is important that nuisance remedies are efficient. Further, taking an economic approach is not inconsistent with private nuisance. The Court in Bank of New Zealand v Greenwood,[213] for instance, showed a willingness to draw on economic considerations. In this case, sunlight reflected off the defendant's veranda into the plaintiff's premises. The Court held that it was not influenced by the relative cost of mitigating the nuisance when providing a remedy.[214] However, by not granting an injunction, and instead requiring the defendant to pay for the installation of venetian blinds, the Court clearly did consider the relative costs of abating the nuisance.[215] It has been stated that 'the result is a sensible application of law and economics.'[216] Therefore, an economic approach to remedies is consistent with both the RMA and private nuisance.

The Failure of Injunctions

Some academics contend that injunctions are an efficient remedy.[217] Those that support the granting of injunctions believe that, post-injunction, the plaintiff and defendant can enter into private negotiations. If the defendant values the right to pollute more than the plaintiff values the right to the use and enjoyment of his or her land, then a settlement will occur.[218] This is the view proposed by John Smillie:

If the court issues an injunction, the parties can negotiate a price sufficient to compensate the plaintiff for its loss, but if the court fixes the price of the 'licence' fee it may be too high, or (more likely) unrealistically low.[219]

Ronald Coase was the first to advance the view that parties engaged in conflicting land uses will settle their dispute through bargaining.[220] However, Coase's theorem is based on the fatal assumptions that there is perfect information between the parties and that there are no transaction costs. Transaction costs are the costs incurred during bargaining, litigating and negotiating.

One transaction cost that the above view fails to take into account is that the plaintiff may attempt to 'extort' the defendant.[221] This problem arises when the plaintiff is aware that the value to the defendant of polluting exceeds any harm inflicted upon the plaintiff. For example, on the facts of Christchurch International Airport,[222] if the plaintiff was allowed to build a residential dwelling and subsequently received an injunction, it could extort the airport. The plaintiff knows that the airport highly values its ability to operate. The plaintiff also knows that the cost of relocating the airport is extremely high. Therefore, the plaintiff is well aware that the airport would be willing to buy the injunction at a price in excess of any harm inflicted. It would not be unreasonable to predict that the plaintiff could stand to receive more than the value of its property in this extortion payment. However, the plaintiff must also be satisfied that this extortion fee will be greater than the cost of litigating. If the net benefit of litigating is greater than zero, then an action in nuisance will be brought. If the action is successful, the costs of the subsequent extortion fee will be passed onto the public through higher prices. This is inefficient because the airport is made liable for an amount that exceeds its costs of production.[223] The higher prices will result in a decrease in demand and under-consumption of the airport's services. This loss is not only inefficient, it is also unjust. There is also the possibility that an excessive payment may bankrupt a defendant and force closure of its business.

Coase's theorem also fails to acknowledge the presence of strategic behaviour and the possibility that such behaviour may result in unsuccessful negotiations. Negotiations will fail when a plaintiff misperceives the defendant's ability to pay damages and holds out for an extortion payment that the defendant is unable to pay. Further, 'holdout problems' are exacerbated when there is more than one plaintiff. For example, in Ports of Auckland[224] the proposed development was for an apartment building in which there would be multiple plaintiffs. Under strategic behaviour, each plaintiff would attempt to hold out and be the last person to sell his or her injunction to the port. This is because the last injunction holder has the ability to extract a higher payment.[225] This would result in considerable delays that would cost the port in lost contracts and missed profits. Further, negotiations always have the potential to break down and, if no transaction occurs, the port would be forced to close.[226]

In addition, Coase's theorem assumes that plaintiffs are rational economic actors that make balanced decisions. In reality, those who are stubborn, antagonistic and vindictive may prevent a settlement from occurring even when it is in their financial interest.[227] This transaction cost is unaccounted for and is another reason why negotiations may break down and force effects-creating uses to close.

Lastly, injunctive relief opens up the possibility of a 'speculative attack on industry'. This occurs when an investor purchases cheap land next to an effects-creating use and seeks an injunction, as it will increase the value of his or her property. For example, in Hawkes Bay Protein Ltd v Davidson,[228] the plaintiffs' property was sold for $52,000 less than the government valuation and this was attributable to the transitory nuisance emanating from the neighbouring plant. Relying on the rule that it is not a defence that a plaintiff came to the nuisance and the likelihood that the court will award an injunction, the subsequent purchaser may bring an action in nuisance. An action would be brought if the plaintiff perceives that the increase in the property's 'capital value' exceeds the costs of litigation. For example, if this occurred in the Hawkes Bay Protein scenario, the plaintiff would receive $52,000 minus the cost of litigation. However, a subsequent purchaser is never harmed because the existence of the nuisance was reflected in the price paid for the property. Therefore, a subsequent purchaser should not receive an injunction, nor should he or she receive damages. Such speculative attacks have the potential to cripple important industries. The realisation of this incentive is what motivated the Court in Spur Industries Inc v Del E Webb Developments Co[229] to make the plaintiff indemnify the defendant for its cost of relocating.

The Form of Damages

Future damages have always taken the form of a lump-sum payment.[230] However, this approach is problematic because it is inefficient, contrary to established nuisance authority, and it provides no incentive to reduce

adverse effects. Efficiency requires that costs are internalised as they occur. A one-off payment is inefficient because it requires a defendant to pay all future costs before they occur. This will lead to a short-term spike in prices, a decrease in demand, and a loss of business. In addition, a lump-sum payment has the potential to bankrupt a business, as it must pay for all future costs before they eventuate.

Lump-sum payments can be unjust to the defendant if it is emitting a transitory nuisance. If a defendant is required to pay for all future damage, and it subsequently ceases its operations or relocates, the plaintiff would have received payment for damages that never eventuated. A transitory nuisance only diminishes the 'amenity value' of a property and not the 'capital value' .[231] Hence, once a transitory nuisance ceases, all future damage ceases. This is the reason why Gendell J was unwilling to require the defendant to pay the full extent of the plaintiffs' harm in Hawkes Bay Protein Ltd v Davidson.[232] It can be concluded that a lump-sum payment is unjust on an effects-creating use and is contrary to established authority. A lump-sum payment also fails to provide an effects-creating use with an incentive to reduce its adverse effects post-payment. The dissenting judgment in Boomer v Atlantic Cement Co acknowledged this point:

Once [future damages] are assessed and paid, the incentive to alleviate the wrong would be eliminated, thereby continuing air pollution of an area without abatement.[233]

This is clearly contrary to the stated purpose in the RMA of reducing adverse effects.[234] In summary, paying future damages in one lump-sum is undesirable and another approach needs to be formulated. The above problems can be overcome if the courts are willing to adopt a radical new approach. It is submitted that future damages should be paid on a yearly basis for as long as the nuisance persists. This will compensate plaintiffs for any loss of 'amenity value' but damages will stop being paid when the nuisance ceases. In addition, an effects-creating use should have the right to apply to the court or a competent tribunal if it can be shown that the adverse effects have been reduced. This reduction should fairly lead to a reduction in the quantum of yearly damages. Conversely, if a nuisance intensifies, the plaintiff should have a right to apply for an increase in the yearly damages. This would provide a financial incentive to reduce adverse effects.

Future damages on a yearly basis are efficient and are consistent with Hawkes Bay Protein Ltd v Davidson.[235] Further, an award of future damages eliminates the problems that occur under injunctive relief. The parties to the dispute will not enter private negotiations, as it is the courts that will assess and award the damages. Therefore, a plaintiff will be unable to extort a defendant and the presence of strategic behaviour will be eliminated.

The Quantum of Damages

It is submitted that the quantum of yearly damages should be set as the 'reduction in market rental value.'[236] However, this should not be assessed as being the difference between the current rental value, and the value if there had been no interference. Instead, an effects-creating use should only be liable for an interference to the extent that it exceeds what is considered reasonable. This approach preserves the locality principle when assessing the quantum of damages. This principle provides that the character of the neighbourhood is relevant in assessing what is reasonable. This would mean, for example, that a factory in an industrial area would pay less in damages than an identical factory in a residential area, as the reasonableness of their interferences differs.

Incorporating the locality principle into the assessment of damages is desirable also because it maintains the relevance of the planning permission cases. It is settled law that planning permission can alter the character of the neighbourhood. In turn, this means that planning permission affects what is considered reasonable and will affect the level of damages. This will avoid the full remedy or no remedy situation that the courts were forced to choose between in the contrasting cases of Gillingham[237] and Wheeler.[238]

An issue to be addressed is how to assess the quantum of damages if a plaintiff moves to a nuisance. The courts must recognise that a plaintiff who comes to a nuisance receives his or her land at a cheaper price. For example, a subsequent buyer in Hawkes Bay Protein Ltd v Davidson[239] should not receive damages under nuisance, as that buyer suffers no harm. Presumably, if a subsequent buyer put the property back on the market, he or she will receive a similar price to what he or she paid for the property. This approach is attractive because it is not overly burdensome on existing industries. If damages were awarded, all neighbours of New Zealand's major industries would bring claims in nuisance, imposing a significant financial burden. Therefore, plaintiffs should not receive windfall profits in the form of damages when the presence of the nuisance is reflected in lower property prices.[240]

Moving to a nuisance will not always prevent a claim for damages. First, if it can be shown that a plaintiff was not aware of the presence of an effects-creating use, or that it was unaware of the extent of the interference, the courts should retain some discretion to award damages. This scenario is unlikely if a plaintiff moves next to an effects-creating use where the adverse effects are patent for all to see. Second, if an effects-creating use increases its output of adverse effects, a landowner should be able to bring an action in nuisance, as the additional harm is not compensated by reduced land values. Third, where a property is purchased that is receiving yearly damages for an interference, the purchaser should continue to receive this compensation. If the quantum of yearly damages is correct, the property should maintain its capital value and the seller will not be subject to any additional loss. If damages did not run with the land, a similar situation to Hawkes Bay Protein[241] would arise, in which a transitory nuisance was reflected in property prices. Lastly, subsequent purchasers of both the harmed land and the effects-creating use need to have notice of the yearly damages. Therefore, easements or covenants need to be registered on the title of each property, which detail the presence of the nuisance and the amount the dominant tenement must pay.

It is acknowledged that assessing future damages will be difficult. The process cannot be done to mathematical precision but can still be achieved.[242] Although assessing damages will be impressionistic, this cannot be seen as a strong enough reason for rejecting the awarding of future damages. In Hawkes Bay Protein Ltd v Davidson, Gendell J acknowledged that assessing damages is difficult but achievable and cited with approval the following statement made in Bone v Seale:

[An occupier] is entitled to compensation for the diminution in the amenity value of the property during the period for which the nuisance persisted. To some extent this involves placing a value on intangibles. But estate agents do this all the time. The law of damages is sufficiently flexible to be able to do justice in such a case.[243]

As the courts are currently able to assess damages for past harm, they may have the ability to assess future damages by applying similar reasoning.

VIII. Reconciling the Law of Nuisance with the RMA

A New Solution: Awarding Yearly Future Damages Coupled with a Reduction in the Scope of the Concept of Reverse Sensitivity

It has been emphasised that the law of nuisance and the RMA need to be reconciled. Awarding future damages on a yearly basis is consistent with the law of nuisance and the RMA. However, awarding future damages can only occur in prescribed circumstances. Firstly, when balancing the competing interests of landowners, both the courts and planning authorities need to weigh the same considerations. Under the RMA, planning authorities consider the public worth of the defendant's activity and the ability to internalise adverse effects. Therefore, these considerations should also be relevant for a court that is deciding whether to award future damages. This also alleviates the problems that were shown to arise under the suspended injunction and the injunction on terms. Secondly, it has been shown that when a plaintiff moves to a nuisance, the courts must retain discretion to award future damages. The courts should be allowed to discount damages if it can be shown that the nuisance was reflected in property prices. Lastly, it was outlined that under the law of nuisance there have been three undesirable changes to the substantive law that can be overcome by awarding future damages.

Therefore, it is submitted that the following seven factors should weigh in favour of awarding future damages in lieu of an injunction:

It must be emphasised that the presence of one or more of these factors should not be decisive. Instead, the courts should retain discretion so that they can tailor remedies to produce a fair and equitable result. Even given this flexibility, the courts should still be reluctant to let injunctions slip far from their grip, as it will be the appropriate remedy in some circumstances.

This approach will significantly reduce the importance of reverse sensitivity, as planning authorities will no longer need to fear that injunctions may close down effects-creating uses. However, the concept should retain a limited scope and not be rejected in its entirety.[244] Reverse sensitivity should be considered where an effects-creating use poses significant health or safety risks to non-landowners. This is because only a person with a sufficient interest in land can bring an action in nuisance.[245] Therefore, non-landowners are unable to be compensated for any harm inflicted upon them. For example, in Auckland Regional Council,[246] the ARC stated that public health and safety should not be compromised by allowing sensitive uses into a heavy industrial area.[247] To do otherwise would fail to consider the adverse effects on employees, visitors and customers.[248] Planning authorities should therefore attempt to minimise significant adverse health and safety effects on non-landowners.[249] However, this should not extend to interferences that amount only to personal discomfort.

Will this New Approach Cure the Undesirable Consequences that Result from Reverse Sensitivity?

This new approach is desirable because it compensates landowners who are harmed by effects-creating uses. By providing compensation, the approach requires the internalisation of all costs, which prevents goods and services being overproduced. In turn, adverse effects will not be overproduced and resources will not be overexploited. This will result in increased economic efficiency, which has been shown to be an important goal in environmental law.

It has also been shown that future damages paid on a yearly basis provide an incentive to reduce adverse effects. This is because changes in adverse effects are accompanied by a corresponding change in the quantum of damages. This provides a financial incentive to effects-creating uses to implement cleaner technologies. Further, the prospect of a future nuisance action provides an incentive to reduce adverse effects to a reasonable level, as this will avoid both the costs of litigation and paying damages. The limitation of reverse sensitivity will also expel the possibility that sensitivity to reverse sensitivity will arise as a legitimate complaint. This is preferable as it will prevent the development of industrial and commercial industries being stifled, and will also avoid the complications of increased notification. Not only will the new approach support the development of effects-creating uses, it will also allow new sensitive uses to develop. This overcomes the problem that reverse sensitivity gave rise to, that is, unnecessarily restricting development in certain circumstances. Future damages on a yearly basis provide effects-creating uses with an incentive to negotiate settlements. An out of court settlement will be preferable as the effects-creating use and the plaintiff can avoid the costs of litigation. Further, effects-creating uses have an incentive to purchase easements over land before it is demanded for sensitive uses. This is because the price paid for easements is likely to be minimal while land is vacant and not being adversely affected by neighbouring operations. In addition, an effects-creating use has an incentive to create its own buffer if it wishes to avoid paying future damages.

The approach will not stifle the legitimate expansion of growing cities. If the damages that an effects-creating use has to pay are too high, then it will be forced to move to a more appropriate area. This is not overly harsh on effects-creating uses, as they have ample time to negotiate settlements, and cannot expect that sensitive uses will never move to their area. Further, it can be presumed that some of the cost of relocating will be subsidised by the increased value of their land.

Lastly, the approach will not reduce the RMA to a planning statute in the way that reverse sensitivity does. Local authorities no longer need to consider the possibility of future nuisance actions closing down important industries. This will mean that development can occur around effects-creating uses. Once new uses move into the area and bring actions in nuisance, effects-creating uses will either have the incentive to reduce adverse effects or relocate. Clearly, this result is better from an environmental perspective, and consistent with the RMA's aim of protecting the environment. However, the advent of future damages does not mean that planning authorities should ignore the need to minimise conflict between differing land uses. It is submitted that New Zealand should follow the approach in Re J L Thomas & Co Ltd,[250] where it is stated that councils are free to grant planning permission provided they do not positively intend to promote conflict. Such an approach reduces the responsibility that planning authorities currently bear, to avoid conflicting land uses.[251]

IX. Conclusion

Reverse sensitivity arose due to the inability of planning law and nuisance to reconcile. The concept seeks to overcome a common law doctrine that is shackled by its rigidity when awarding remedies. Reverse sensitivity acknowledges that New Zealand needs to retain its industries for its own economic wellbeing. In contrast, the law of private nuisance vigorously defends private interests in property, to the extent that it will willingly close significant industrial and commercial operations. This paper has highlighted that these laws can be reconciled if the courts award future damages on a yearly basis. This approach is desirable because it is consistent with the tort of private nuisance and it creates incentives consistent with the RMA's focus of managing adverse environmental effects. However, to rely on the courts addressing the current issues on a case-by-case basis would be a slow and arduous experience. Therefore, reform of these areas should be undertaken by Parliament. Guidelines should be provided for awarding future damages, and reverse sensitivity should be limited to future health and safety effects on non-landowners. New Zealand is in desperate need of a system that effectively balances the competing interests of landowners. The time has come to deliver such a system and to gain some coherency in our conflicting laws.


[*] BCom/LLB(Hons). The author commences work for Russell McVeagh in 2007.

[1] B Pardy & J Kerr, 'Implications of reverse sensitivity' (1999) 3 Resource Management Bulletin 42, 42.

[2] [1997] NZEnvC 23; [1997] NZRMA 205, 206.

[3] B Pardy & JKerr, 'Reverse Sensitivity-The Common Law Giveth, and the RMA Taketh Away' (1999) 3 New Zealand Journal of Environmental Law 93, 94.

[4] Ibid 94.

[5] Resource Management Act 1991, ss 5(c), 17.

[6] Resource Management Act 1991, s 3.

[7] Resource Management Act 1991, s 2.

[8] (1984) 10 NZTPA 180.

[9] Ibid 183.

[10] (Unreported, Planning Tribunal, A45/94, Judge Sheppard, 20 June 1994).

[11] [1997] NZRMA 241.

[12] [1999] 1 NZLR 601.

[13] [1997] NZRMA 145.

[14] [1997] NZEnvC 23; [1997] NZRMA 205.

[15] A Davidson, 'Reverse Sensitivity - Are No-Complaints Instruments a Solution?' (2003) 7 New Zealand Journal of Environmental Law 203, 209.

[16] (Unreported, Environment Court, A96/98, Judge Whiting, 26 February 2002).

[17] Pardy&Kerr, above n 1,43.

[18] Pardy & Kerr, above n 3, 94.

[19] Christchurch International Airport Ltd v Christchurch City Council [1997] NZRMA 145.

[20] Ports of Auckland v Auckland City Council [1999] 1 NZLR 601.

[21] Rowell v Tasman District Council [1997] NZRMA 241; Winstone Aggregates Ltd v Papakura District Council (Unreported, Environment Court, A96/98, Judge Whiting, 26 February 2002).

[22] CJ McMillan Ltd v Waimakariri District Council (Unreported, Environment Court, C87/98, Judge Jackson, 11 August 1998).

[23] Aratiki Honey Ltd v Rotorua District Council (1984) 10 NZTPA 180.

[24] McQueen v Waikato District Council (Unreported, Planning Tribunal, A45/94, Judge Sheppard, 20 June 1994); JR's Orchard Limited v South Wairarapa District Council (Unreported, Environment Court, W104300, Judge Kenderline, 16 June 2002).

[25] Stephen Todd (ed), The Law of Torts in New Zealand (4th ed, 2005) 396.

[26] Sedleigh-Denfield v O'Callaghan [1990] AC 880, 903.

[27] Todd, above n 25, 401.

[28] But note that in St Helens Smelting Co v Tipping (1865) 11 HLC 642 it was established that the locality principle does not apply to interferences that cause physical harm to the plaintiff's property.

[29] Sturges v Bridgman (1878) 11 Ch D 852.

[30] Bank of New Zealand v Greenwood [1983] NZHC 150; [1984] 1 NZLR 525.

[31] Todd, above n 25, 398.

[32] Ibid 397-398.

[33] Ibid 414.

[34] Davidson, above n 15, 205.

[35] [1999] 1 NZLR 601.

[36] Ibid 608. Further, B aragwanath J's comments were confirmed in Varnier v Vector Energy Limited [2000] BCL 334 where Salmon J held that s 23(1) of the RMA clearly sought to preserve the right to bring a claim in nuisance.

[37] Pardy & Kerr, above n 3, 99.

[38] Ibid 99. See also A Dormer, 'Reverse sensitivity' (2001) 4 Resource Management Bulletin 29, 31.

[39] Pardy & Kerr, above n 1, 42.

[40] Sturges v Bridgman (1878) 11 Ch D 852.

[41] Pardy & Kerr, above n 3, 99.

[42] Sturges v Bridgman (1878) 11 Ch D 852, 859.

[43] Todd, above n 25, 424.

[44] Pardy & Kerr, above n 1, 42.

[45] In Ports of Auckland v Auckland City Council [1999] 1 NZLR 601, 608 it was stated that '[i]t is no defence that the plaintiff has come to the nuisance: Sturges v Bridgman.'

[46] Pardy & Kerr, above n 3, 99.

[47] Todd, above n 25, 407.

[48] [1983] NZHC 150; [1984] 1 NZLR 525, 535.

[49] Todd, above n 25, 406.

[50] (1865) 11 HLC 642, 651.

[51] (Unreported, Environment Court, A96/98, Judge Whiting, 26 February 2002) [104].

[52] Ibid [77].

[53] [1983] NZHC 150; [1984] 1 NZLR 525, 534.

[54] (Unreported, Environment Court, A96/98, Judge Whiting, 26 February 2002).

[55] Ibid [165].

[56] This approach has subsequently been endorsed by the High Court in Ports of Auckland v Auckland City Council [1999] 1 NZLR 601.

[57] Todd, above n 25, 420.

[58] [1977] EWCA Civ 6; [1977] QB 966.

[59] [1990] 1 All ER 413.

[60] Ibid 420.

[61] Davidson, above n 15, 211. Note, also, Davidson's discussion at 213-216 of the power to use covenants and easements under the RMA.

[62] Todd, above n 25, 423.

[63] Davidson, above n 15, 212.

[64] Resource Management Act 1991, s 322(1).

[65] It should be noted that if a landowner ignores an abatement notice or an enforcement order, he or she commits an offence under ss 338 and 339 respectively, and is liable for up to 2 years imprisonment and up to a $200,000 fine.

[66] [1997] NZRMA 145.

[67] [1997] NZRMA 241.

[68] Unders311 of the Resource Management Act 1991 declarations can be sought on points of law.

[69] [1997] NZRMA 241.

[70] Davidson, above n 15, 217.

[71] The term ' Wednesbury unreasonableness' derives from the case of Associated Provincial Picture Houses v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223 and itrefers to a decision that is so unreasonable on the facts that no reasonable authority could have come to it. Such decisions are invalid.

[72] It should be noted that resource management decisions are subject to the NZBORA as s 3(b) states that the Act applies to 'acts done ... in the performance of any public function, power, or duty conferred or imposed on that person or body by or pursuant to law.'

[73] [1997] NZRMA 145.

[74] [1995] NZRMA 1.

[75] Christchurch International Airport Ltd v Christchurch City Council [1997] NZRMA 145, 155.

[76] Ibid 156.

[77] [1997] NZRMA 241.

[78] Ibid 254.

[79] Ibid 254; Christchurch International Airport Ltd v Christchurch City Council [1997] NZRMA 145, 155. This is because either covenants or easements are registered on the title to give subsequent purchasers notice of the restraints.

[80] Further, it appears that no-complaints conditions are valid conditions and satisfy the test provided in Newbury District Council v Secretary of State for the Environment [1981] AC 561. For elaboration on this point, refer to Davidson, above n 15, 216-231.

[81] [1999] 1 NZLR 601.

[82] Ibid 612.

[83] Ibid 612.

[84] Davidson, above n 15, 233.

[85] Ibid 233.

[86] Christchurch International Airport Ltd v Christchurch City Council [1997] NZRMA 145, 155.

[87] See, eg, Pardy & Kerr, above n 3, 99.

[88] This result is in stark contrast to the result in Bank of New Zealand v Greenwood [1983] NZHC 150; [1984] 1 NZLR 525 where measures that were taken to mitigate adverse effects on the plaintiff's land were paid for by the defendant.

[89] Dormer, above n 38, 30.

[90] (Unreported, Environment Court, C137/2000, Judge Jackson, 17 August 2000) [74].

[91] [1991] 1 NZLR 601, 610.

[92] A Ogus & G Richardson, 'Economics and the Environment: A Study of Private Nuisance' (1977) 36 Cambridge Law Journal 284, 290.

[93] Resource Management Act 1991, s 7(b).

[94] Ogus & Richardson, above n 92, 284.

[95] (Unreported, Environment Court, A96/98, Judge Whiting, 26 February 2002) [91]-[98].

[96] (September 1995).

[97] [1994] 1 NZLR 492, 502.

[98] Report of the United Nations Conference on Environment and Development, Rio de Janeiro, 3-14 June 1992.

[99] (Unreported, Environment Court, A96/98, Judge Whiting, 26 February 2002).

[100] Report of the United Nations Conference on Environment and Development, above n 98, [92].

[101] Resource Management Act 1991, s 5(2)(c). Further, s 17 states that any person that carries on an activity has a duty to adhere to this purpose.

[102] Pardy & Kerr, above n 1, 45.

[103] (Unreported, Environment Court, A96/98, Judge Whiting, 26 February 2002) [72].

[104] Resource Management Act 1991, ss 5(2)(c), 17.

[105] Resource Management Act 1991, s 104(6).

[106] Dormer, above n 38, 31.

[107] (1878) 11 Ch D 852, 865.

[108] Dormer, above n 38, 31.

[109] This was made evident in the case of Winstone Aggregates Ltd v Papakura District Council (Unreported, Environment Court, A96/98, Judge Whiting, 26 February 2002).

[110] (1878) 11 ChD 852.

[111] For example, in CJ McMillan Ltd v Waimakariri District Council (Unreported, Environment Court, C87/98, Judge Jackson, 11 August 1998) the Court stated that rezoning rural land into rural/residential was an inefficient use of rural land.

[112] [1997] NZRMA 241, 248.

[113] [1999] 1NZLR601.

[114] Pardy & Kerr, above n 3, 101.

[115] Ibid 101.

[116] D Williams, Environmental & Resource Management Law in New Zealand (2nd ed, 1997) 511.

[117] Pardy & Kerr, above n 3, 102.

[118] Ibid 101.

[119] Ibid 101.

[120] Ibid 102.

[121] Ibid 105.

[122] Ibid 105.

[123] Ibid 105.

[124] (1878) 11 Ch D 852, 865.

[125] Pardy & Kerr, above n 3, 106.

[126] Resource Management Act 1991, s 104(6).

[127] Pardy & Kerr, above n 3, 106.

[128] Dormer, above n 38, 31.

[129] (Unreported, Environment Court, W102/97, Judge Kenderline, 19 November 1997) [44].

[130] Redland Bricks v Morris [1970] AC 652, 664 (Lord Upjohn).

[131] See Part VI of this paper for a discussion of why parties to a nuisance dispute will not always settle out of court.

[132] (1877)5 ChD769.

[133] (1858)4 K&J 528.

[134] Ports of Auckland v Auckland City Council [1999] 1 NZLR 601, 609.

[135] Todd, above n 25, 428.

[136] Ibid 430.

[137] Redland Bricks v Morris [1970] AC 652, 664.

[138] C Rotherham, 'The allocation of remedies in private nuisance: An evaluation of the judicial approach to awarding damages in lieu of an injunction' (1989) Canterbury Law Review 185, 186.

[139] [1895] 1 Ch 287.

[140] Ibid 311.

[141] Ibid 315.

[142] Ibid 322.

[143] Ibid 322.

[144] Rotherham, above n 138, 187-191, analyses each individual element of the Shelfer approach and concludes that it is very restrictive and leaves the courts with little discretion.

[145] [1977] EWCA Civ 6; [1977] QB 966.

[146] (1878) 11 Ch D 852.

[147] [1980] EWCA Civ 1; [1980] 3 All ER 329, 332.

[148] S Tromans, 'Nuisance - Prevention or Payment' (1982) 41 Cambridge Law Review 87, 96.

[149] [1983] NZHC 150; [1984] 1 NZLR 525, 535.

[150] Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287, 317 (Lindley LJ).

[151] [2003] 1 NZLR 536.

[152] A Besier, 'Leaving at all to the Resource Management Act 1991: The Demise of the Tort of Private Nuisance' (2004) 35 Victoria University of Wellington Law Review 563, 568.

[153] [1997] AC 655 (HL) 706 (Lord Hoffman).

[154] Hawkes Bay Protein v Davidson [2003] 1 NZLR 536, 545.

[155] Tromans, above n 148, 88.

[156] Todd, above n 25, 431.

[157] Ibid 431.

[158] [1953] Ch 149.

[159] Rotherham, above n 138, 193.

[160] Tromans, above n 148, 94.

[161] [1980] EWCA Civ 1; [1980] 3 All ER 329.

[162] Ibid 333.

[163] Tromans, above n 148, 94.

[164] Ibid 94.

[165] [1977] EWCA Civ 6; [1977] QB 966.

[166] Ports of Auckland v Auckland City Council [1999] 1 NZLR 601, 193.

[167] Ibid 95.

[168] For example, E McKendrick, 'Public Nuisance and the Environment' [1993] Tort Law Review 14, 15, states that the port in Gillingham Borough Council v Medway (Chatham) Dock Company [1993] QB 343 could only operate viably if it was open on a 24-hour basis. Therefore, an injunction on terms would be unworkable.

[169] [1999] 1 NZLR 601, 611.

[170] Tromans, above n 148, 108.

[171] Ibid 406.

[172] Andreae v Selfridge & Co Ltd [1938] Ch 1, 5-6.

[173] Ibid.

[174] Rotherham, above n 138, 194.

[175] Todd, above n 25, 425.

[176] [1980] UKHL 9; [1981] 1 All ER 353 (HL).

[177] Ibid 357.

[178] Ibid 358.

[179] J Jolowicz, 'Should Courts Answer Questions? Does Statutory Authority to Build Confer Immunity from Liability for Use' (1981) 40 Cambridge Law Journal 226, 228.

[180] [1895] 1 Ch 287.

[181] Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287, 300.

[182] Todd, above n 25, 427.

[183] [1980] QB 156 (CA).

[184] [1895] 1 Ch 287, 300.

[185] Todd, above n 25, 427.

[186] Jolowicz, above n 179, 229.

[187] [1992] 3 WLR 449.

[188] Cumming-Bruce LJ was the first to suggest that planning permission could change the character of a neighbourhood in an obiter dictum in Allen v Gulf Refining [1980] QB 156, 174.

[189] J Steele & T Jewell, 'Nuisance and Planning' (1993) 56 Modern Law Review 568, 571. See also S Ball, 'Nuisance and Planning Permission' (1995) 7 Journal of Environmental Law 278, 287.

[190] [1996] Ch 19.

[191] J Penner, 'Nuisance and the Character of the Neighbourhood' (1993) 5 Journal of Environmental Law 1, 24 stated that 'one actor or land-occupier does not a neighbourhood make'.

[192] This judgment was followed in Ports of Auckland v Auckland City Council [1999] 1 NZLR 601 where it was accepted that planning permission is not a defence to an action in nuisance.

[193] Steele & Jewell, above n 189, 574.

[194] S Tromans, 'Nuisance and Planning Control' (1995) 54 Cambridge Law Journal 494, 495.

[195] Ibid 495.

[196] Steele & Jewell, above n 189, 573.

[197] 257 NE 2d 870 (1970).

[198] Williams, above n 116, 565.

[199] 494 P 2d 700.

[200] Ibid [7].

[201] 104 NE 371, 373 (1914).

[202] 257 NE 2d 870 (1970).

[203] Winstone Aggregates Ltd v Papakura District Council (Unreported, Environment Court, A96/98, Judge Whiting, 26 February 2002) [92].

[204] [1935] OR 205. See also Black v Canadian Copper Co (1917) 12 OWN 243, (1920) 17 OWN 39; Canadian Paper Co v Brown (1922) 66 DLR 287.

[205] Bottom v Ontario Leaf Tobacco Co [1935] OR 205, 206-207.

[206] (1917) OWN 243.

[207] Ibid 252.

[208] (1935) 2 DLR 699.

[209] Walker v Pioneer Construction Co 56 DLR (3d) 677, cited in J Fleming, Law of Torts (4th ed, 1971) 371.

[210] Ibid.

[211] Tromans, above n 194, 108.

[212] Williams, aboven116,2,118-119. These pages give examples ofthe use of economic instruments that are used under the RMA. Further, it gives examples of how law and economics has influenced the area of environmental law.

[213] [1983] NZHC 150; [1984] 1 NZLR 525.

[214] Using relative costs to decide what form a remedy should take was first proposed by Calabresi & Melamed, 'Property Rules, Liability Rules, and Inalienability: One View ofthe Cathedral' (1972) 85 Harvard Law Review 1089.

[215] Williams, above n 116, 567.

[216] Ibid 567.

[217] M Polinsky, 'Resolving Nuisance Disputes: The Simple Economics of Injunctive and Damage Remedies' (1979-1980) 32 Stanford Law Review 1075; R Coase, 'The Problem of Social Cost' (1960) 3 Journal of Legal Studies 1; Todd, above n 25.

[218] Penner, above n 191, 15.

[219] Todd, above n 25, 431.

[220] Coase, above n 217.

[221] Polinsky, above n 219, 1077.

[222] [1997] NZRMA 145.

[223] Efficiency is achieved when operators are made liable for all their costs of production as they arise.

[224] [1999] 1 NZLR 601.

[225] Polinsky, above n 217, 1077.

[226] Penner, above n 191, 16.

[227] Polinsky, above n 217, 1092.

[228] [2003] 1 NZLR 536.

[229] 494 P 2d 700.

[230] Boomer v Atlantic Cement Co 257 NE 2d 870 (1970).

[231] For discussion of this point refer to J Wightman, 'Nuisance - the Environmental Tort? Hunter v Canary Wharf in the House of Lords' (1998) 61 Modern Law Review 870, 876.

[232] Hawkes Bay Protein v Davidson [2003] 1 NZLR 536.

[233] 257 NE (2d) 870 (1970), 876.

[234] Resource Management Act 1991, s 5(2)(c).

[235] [2003] 1 NZLR 536.

[236] Todd, above n 25.

[237] Gillingham Borough Council v Medway (Chatham) Dock Company [1993] QB 343.

[238] Wheeler vJJ Saunders Limited [1996] Ch 19.

[239] Hawkes Bay Protein v Davidson [2003] 1 NZLR 536.

[240] H Green, 'Common Law, Property Rights and the Environment: A Comparative Analysis of Historical Developments in the United States and England and a Model for the Future' (1997) 30 Cornell International Law Journal 541, 584. See also Ogus & Richardson, above n 92, 320.

[241] Hawkes Bay Protein v Davidson [2003] 1 NZLR 536.

[242] Ibid 545.

[243] [1975] 1 WLR 797, 803-804 (Lord Hoffman).

[244] Pardy & Kerr, above n 3. See also Besier, above n 152, 588.

[245] Todd, above n 25, 410.

[246] [1997] NZEnvC 23; [1997] NZRMA 205.

[247] Ibid 211.

[248] Ibid 214.

[249] This is consistent with the Ministry for the Environment's Proposals for Amendment to the Resource Management Act November 1998. It was suggested that the definition of 'environment' be amended to exclude the social, economic, aesthetic and cultural conditions and instead include the 'health, safety, amenity values and cultural values of people and communities.'

[250] [1990] 1 All ER 413.

[251] Besier, above n 152, 575. Besier states that under reverse sensitivity it is the responsibility of planning authorities to ensure that conflicting land uses are not developed in proximity to each other.


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