New Zealand Journal of Environmental Law
Last Updated: 25 January 2023
Compensation Issues and the Meaning of Section 85 of the RMA
Section 85 of the Resource Management Act 1991 (RMA) prohibits compensation claims arising from the effect of planning restrictions, but provides that persons having an interest in land can apply to the Environment Court to change a plan provision where it would render the land incapable of reasonable use. Judicial pronouncements to date have asserted that relief is only available where the proposed plan change does not endanger planning controls. The article contends that this approach is unwarranted, when considered in light of the RMA’s presumption that all reasonable forms of land use are permissible. Indeed the current judicial approach has the effect of enabling councils to promulgate restrictive zoning controls with impunity, as the landowner has no other remedy. In contrast, the author argues that on a correct interpretation, s 85 should be seen as a linchpin of the RMA defining and limiting the ability of local authorities to control and direct land use by means of prescriptive land controls such as zoning.
The extent to which planning controls can be imposed on land without payment of compensation has always been a vexed topic, causing controversy.1
Section 85(1) of the Resource Management Act 1991 (“the RMA” or “the Act”) deals decisively with this issue. It prohibits compensation claims arising
* BA, LLM (Hons). Barrister, Auckland. Email <firstname.lastname@example.org> The assistance of the following people is gratefully acknowledged: Associate Professor Ken Palmer, Faculty of Law, University of Auckland; Tony Thomas, Planner, Wellington; Phillip Milne, Solicitor, Wellington. However the views expressed in this article and all errors and omissions are the authors.
1 In EnviroNet 1 (21/8), the Minister for the Environment describes compensation as politically the most contentious issue he has faced.
from the effect of restrictions contained in a plan.2 The draconian effect of this carte blanche prohibition is balanced by permitting “any person having an interest in land” to apply to the Court3 to modify or change any provision or proposed provision of a plan where (inter alia) the offending provision (“the offending provision”) “would render [the] ... land incapable of reasonable use.”
To date, s 85 has not been subjected to much analysis, although its effect makes it significant in terms of the RMA.4 This paucity of detailed analysis may be due to its imprecise and somewhat confused drafting, causing difficulties in comprehending the meaning of the section. Consequently, to date, there is no clear understanding of when an application for a plan change will succeed.
My purpose is to explore the meaning and scope of s 85. This article holds that, properly understood, s 85(2) to (6) enables individuals5 to challenge offending provisions in a plan where they are either unduly prescriptive amenity controls, or the controls fail to focus on legitimate environmental effects. In either case, the offending provision may render the land incapable of “reasonable use” under s 85, and may be successfully challenged.
To date, the Court has emphasised s 85 challenges may not succeed where the proposed changes will affect the integrity of controls under the plan. This article argues such an approach is unwarranted. Its adoption by the Court enables councils to promulgate restrictive zoning controls with impunity, as the landowner has no other remedy. In this article, controls from the current Auckland City operative plan (“the Auckland Plan”)6 illustrate the outcome of a hypothetical s 85 challenge, based on grounds argued in this article to be relevant.
In order to understand the operation of s 85, we must first understand the extent to which it removes the common law entitlement to compensation flowing from injurious affection or a taking of land. For this reason, those common law principles are discussed first.
II. COMMON LAW BASIS FOR COMPENSATION
The Crown has always been able to regulate land use without giving compensation.7 The point of tension arises (in the planning arena) when regulation is used for purposes other than public health, and moves into in the amorphous arena of general amenity. By “general amenity,” I mean restrictions imposed on land use, which are presumed to benefit the public interest at large, whatever that may be perceived to be in the circumstances.
In the American jurisdictions, such controls are more readily recognised as a “taking”8 of property rights. However Commonwealth jurisdictions appear to have dealt with similar issues as instances of injurious affection which — if severe in their effect — amount to a taking.9
In the planning context, the relevance of Magna Carta 1215 is discussed elsewhere.10 For our purposes, it is sufficient to state the Crown can not take a subject’s property without offering compensation, but that this principle is subject to a number of exceptions — which are not well defined. Certainly the Public Works Act 1981 is a well-known illustration of the principle the Crown can not take a subject’s property without paying proper compensation.
At the forefront of this issue is the very nature of what is meant by “property rights”, as the concept of property remains illusory. Different jurisdictions (even different courts) may use the term in apparently conflicting ways. In New Zealand,
property rights are not safeguarded by a written constitution,11 as is the case in America,12 or Australia.13 However, even in these jurisdictions, what is, or is not a compensable property right, remains problematic.14
In legal terms, property rights are no more or less than a collection of individual rights and responsibilities, which can only be understood in light of other competing rights and responsibilities to the same commodity or res. The responsibilities inevitably limit or define the enjoyment or use of the res.15 Different people may have differing property rights in the same commodity, and on different levels of abstraction. I own my property, but the extent of my ownership is limited and defined by society’s collective right to that res. The right to enjoy property and the nature of that enjoyment is unquestionably a subset of property. Indeed, regulating enjoyment of property, while leaving ownership intact, may amount to a covert device to avoid paying compensation for a “taking”.16
London & North Western Railway Co v Evans17 illustrates the principle that an acquiring authority must pay compensation for a taking. This decision follows an accepted line of English authorities,18 holding that the owner is entitled to compensation in the absence of any statutory provision to the contrary where land is acquired.19
Clearly, planning authorities can impose land controls without payment of compensation as part of their responsibility to regulate public health. This justification is of comparatively recent origin, owing its legitimacy to the explosion of urban development during the Industrial Revolution. In New Zealand, the House of Lords decision of Belfast Corporation v O D Cars Ltd20 has been accepted as authority for this proposition.21 An analysis of this judgment is therefore required.
In Belfast Corporation the Law Lords recognised public health concerns as the origin of the power to regulate property usage without paying compensation. Lord Radcliffe referred to; “the great movement for the regulation of life in cities and towns in the interests of public health and amenity”.22 He opined it was not enough to refer to the enactments on public health issues as “police powers” as they “went far beyond that”. Indeed, this dictum is frequently referred to as indicating the breadth of legitimate controls justified in the interest of public health. How broad a power however, remains unclear from Belfast Corporation.
The Law Lords were dealing with a very discrete issue.23 They had to determine whether controls authorised under a Northern Ireland planning statute constituted a taking of property, contrary to Northern Ireland constitutional legislation.24 A close examination of the judgments handed down does not provide justification for extending planning controls without compensation to measures other than public health.25 Although the Law Lords recognised controls may be imposed in the interest of protecting public amenities, they did not articulate how extensive such controls could be, or what was encompassed by that nebulous expression “public amenity”. Indeed Lord Radcliffe labelled such claims as “debatable”.
In reaching their determination, the House found that the zoning imposed under the planning statute did not amount to a taking. This however was a finding within the terms of the constitutional legislation at the heart of the case. Central to this finding was their Lordships’ interpretation of the meaning of the expression
20  AC 490.
21 By our Court of Appeal in Luoni v Minister of Works and Development  1 NZLR 62. 22  AC 490, 523.
“property” used in the statute. The Law Lords understood the term to refer to the res itself, not the use of the res.26
For our purposes, Lord Radcliffe’s discussion of the extension of planning controls to areas other than public health is most telling. He stated as follows. “When town planning legislation came in eo nomine in 1909, the emphasis had no doubt shifted from considerations of public health to the wider and more debatable ground of public amenity ...”27
His Lordship recognised this “debatable ground of public amenity” may give rise to a claim to compensation.28 His Lordship continued as follows:29
It may possibly have been for this reason, I do not know, that the  Act included a comprehensive, although not exhaustive, “injurious affection” section, the effect of which was to give property owners whose rights were interfered with in the cause of town planning a right to compensation for any damage that they suffered, subject to counterclaims for betterment and certain exclusions
...30 [emphasis added].
His Lordship therefore appeared to accept public amenity controls should be compensable. It is unclear the extent to which Viscount Simmonds, the other Law Lord who gave judgment, supports this. His Lordship referred to the dictum of Holmes J in Pennsylvania Coal Co v Mahon31 that the general rule “at least is, that, while property may be regulated to a certain extent, if regulation goes too far it will be recognised as a ‘taking’”.
The Law Lords in Belfast Corporation did not therefore hold public amenity controls could be imposed without payment of compensation.32 The Law Lords did not move the law forward in this respect.
27  AC 490, 524.
28 Ibid, 524–525.
29 Ibid, 524.
30 He then continued as follows: “What is important, I think, is to recognise that although interference with rights of development and user had come to be a recognised element of the regulation and planning of towns in the interest of public health and amenity, the consequent control, impairment or diminution of those rights was not treated as a ‘taking’ of property nor, when compensation was provided, was it provided on the basis that property or property rights had been ‘taken,’ but on the basis that property, itself retained, had been injuriously affected.”
31  USSC 193; (1922) 260 US 393, 417.
32 Indeed, given the emphasis on the meaning of property under the relevant statute, their comments in this regard must be treated as strictly obiter.
Although decided some 40 years ago, it is uncertain whether Belfast Corporation represents the law in New Zealand. This is apparent for the following reasons.
III. THE COMPENSATION/AMENITY DILEMMA IN NEW ZEALAND
In Auckland Acclimatisation Society v Sutton Holdings Ltd33 Barker J held it would require very clear words to justify freezing land in private ownership without owners being entitled to claim compensation.34 He opined as follows:35 “It is trite law that the rights of land owners are not to be interfered with in the public good without compensation unless the legislation forces that conclusion to be drawn.”
However, on appeal, Cooke J (as he then was) held the scope of this principle in planning law was very limited and refused to apply it.36
Four years later, in Luoni v Minister of Works and Development,37 Cooke P (as he then had become), addressed the issue of compensation for land use controls in the following, rather truncated manner:38
The appellants cannot in our opinion take the case out of the category of the imposition in the interests of public amenity and safety of restrictions on the use of lands in a certain area, for which compensation is not available under provisions such as [the Public Works legislation]: see Belfast Corporation v O D Cars Ltd  AC 490 per Lord Radcliffe at pp 523–524 [emphasis added].
This is a correct interpretation of Belfast Corporation, in so far as both the Public Works legislation and the Northern Ireland constitutional legislation only allowed compensation for land actually taken. However, Lord Cooke’s refusal to import compensation principles in Auckland Acclimatisation Society, and his summary treatment of this complex issue in Luoni, suggests he would not easily concede a right to compensation for planning controls imposed for the “public
33 (1984) 10 NZTPA 225 (HC).
34 He adopted the reasoning of the Planning Tribunal in Re National Water Conservation (Motu River) Order  NZPT 5; (1984) 10 NZTPA 7. At p 229 of the report he acknowledged and accepted the dictum of the Tribunal that “[t]here is no enactment in New Zealand which enables a private landowner to be deprived of his rights of ownership for the public benefit without an attendant right of compensation”.
35 (1984) 10 NZTPA 225, 230.
good”. However, there may be many such controls for which compensation will be highly appropriate.39
In this respect, the British academic Grant, confirms as follows:40
Where the effect of planning control is to destroy value completely, it has never been in doubt that in principle that loss should be compensated. The physical taking of property by government by way of compulsory purchase has always in Britain been subject to a liability to pay compensation, and that obligation is enshrined in the American and other Federal Constitutions, couched in terms of a prohibition against the “taking” of property without “just” compensation. But where control depresses but does not destroy value, the obligation to compensate is less clear-cut.
People are affected by zoning in their capacity as owners or occupiers of property. Restrictive zoning, depressing value in one area, is invariably countered by permissive zoning in others — increasing the relative land value. Indeed, the State recognises the value of windfall benefits that may occur by taxing profits made as a result of land sales following zone changes.41 The imposition of this tariff adds strength to the argument that diminution in land values caused by restrictive zoning should result in favourable tax consequences.
The issue is a real Pandora’s box. If diminished land value is compensable, who should pay? Should it be the council, who imposed the zoning (but who may have no personal gain to be made from the land), or some third party - and if so, whom, in what circumstances, and when?42 The issue of compensation and betterment are linked, as Cassin notes:43
Any proposal to develop a generalised concept of “planning worsenment” to replace the traditional compensation principles is looked upon as very dangerous
... The monetary loss involved in a liberalisation (or restatement in non-traditional
terms) of compensation entitlement that went wrong could be substantial ... I reject the concept of “Betterment” in planning legislation. The introduction of betterment in planning legislation could give rise to the argument that reciprocity in terms of relaxed compensation entitlement was the quid pro quo.
Planning authorities need a clear understanding of the sort of controls that would attract a right of compensation in the absence of s 85(1). First, this gives them an appreciation of the extent to which their controls affect valuable common law property rights. Secondly, and flowing from this, the extent of the detriment may be relevant under a claim by a landowner that his or her land is “incapable of reasonable use” under s 85(2) or (3).
The real impediment to development of compensation principles must be the difficulty in finding an appropriate threshold for compensation to be awarded - followed closely by determining the appropriate party to pay it. If “public health” no longer adequately describes the appropriate threshold, what else will suffice? Concepts of “public amenity” or “public good” are too vague, potentially open to abuse, and consequently of little use.
IV. THE THRUST OF SECTION 85 OF THE RMA
In Application by Steven44 Judge Jackson accepted the significance of s 85(1) in resource management terms:
[Section 85(1)] provides the starting point of Parliament’s answer to the Act’s interference with common law property rights by creating a statutory fiction with respect to those rights. It does that by providing that no interest in land is deemed to be taken by any rule in a plan — thus recognising that in the absence of the deeming provision an interest in land may be taken by a rule (or other provision in a plan). The immediate practical consequence of section 85(1) is that the compensation provisions of the Public Works Act 1981 do not apply, and thus property owners have no right to money in lieu of their interests in the property if those interests are in effect taken away or otherwise adversely affected.
The balance of s 85 deals with an individual’s right to challenge an offending provision. Section 85(2) enables the Environment Court to change an offending provision under two differing procedures.
Section 85(2)(a) enables “references” to be made to the Court concerning any plan change proposed by a council (a “council plan change”). Any person
having an interest in land affected by the proposed change may refer a council determination on a plan change to the Court.45
Section 85(2)(b) applies to plan changes proposed by individuals (a “private plan change”). It enables appeals46 to the Court from a council determination on a private plan change. In either case, the First Schedule of the Act sets out the applicable steps to be undertaken by the council in processing the application for a plan change.
Inept drafting causes confusion in understanding exactly what the legislature intended should occur under these procedures and under s 85(3).
Relevant parts of s 85 read as follows.
(2) Notwithstanding subsection (1), any person having an interest in land to which any provision or proposed provision of a plan or proposed plan applies, and who considers that the provision or proposed provision would render that interest in land incapable of reasonable use, may challenge that provision or proposed provision on those grounds —
(a) In a submission made under Part I of the First Schedule in respect of a proposed plan or change to a plan; or
(b) In an application to change a plan made under clause 21 of the First Schedule.
(3) Where, having regard to Part III (including the effect of section 9(1)) and the effect of subsection (1), the Environment Court determines that a provision or proposed provision of a plan or a proposed plan renders any land incapable of reasonable use, and places an unfair and unreasonable burden on any person having an interest in the land, the Environment Court, on application by any such person to change a plan made under clause 21 of the First Schedule, may —
(a) In the case of a plan or proposed plan (other than a regional coastal plan), direct the local authority to modify, delete, or replace the provision;
(4) Any direction given or report made under subsection (3) shall have effect under this Act as if it were made or given under clause 15 of the First Schedule ...
(6) In subsections (2) and (3), the term “reasonable use”, in relation to any land, includes the use or potential use of the land for any activity whose actual or
potential effects on any aspect of the environment or on any person other than the applicant would not be significant.
(7) Nothing in subsection (3) limits the powers of the Environment Court under clause 15 of the First Schedule on a reference under clause 14.
Section 85(2) provides the threshold test47 to be overcome by an individual appealing the appropriate council determination, or seeking a review of it (as the case may be). In either case any person having an interest in land has status to apply to the Court where he or she considers that an offending provision would render that interest “incapable of reasonable use”. In other words, in order to pass the applicable threshold, the applicant must first make a determination the land is — or will be — rendered incapable of reasonable use.48
Section 85(3) then follows. The focus of this subsection are grounds a Court must consider in determining whether to grant relief. It requires the Court to make a determination altering an offending provision where (inter alia) it finds “[the offending provision] renders any land incapable of reasonable use”. Such a determination can only be made under s 85(3) where any person who has sought a plan change “under clause 21 of the First Schedule” applies to the Court.
With respect, it is nonsensical to suggest that the threshold for making an application under s 85(2) (that the applicant make a determination that the land is not capable of reasonable use) is not relevant to the grounds under which relief is obtained. This being the case, how do we understand s 85(3) — that is — that the Court “determines that [the offending provision] renders any land incapable of reasonable use”? Does s 85(3) provide a further and additional ground for granting relief, and if so, how does it apply?
1. Direct Application to Court for Relief
In Application by Steven49 Judge Jackson held the wording of s 85(3) did not relate to relief sought under s 85(2). He held s 85(3) enabled an application for a plan change to be made directly to Court. His Honour recognised that, under such an application, the procedures set out in the First Schedule to the Act could not apply.
Respectfully, there are difficulties with this reasoning. Self evidently, although clumsily phrased, s 85(3) applies to “any application ... made under clause 21 of the First Schedule” (emphasis added). It seems unavoidably the case that any plan change dealt with under s 85(3) must have been commenced under clause 21 of the First Schedule. In other words, under s 85(2)(b) — that is a private plan change.
This, however, conflicts with Judge Jackson’s determination.50 In reaching a contrary determination, his Honour appears to have given cognisance to legislative amendments to s 85 made in 1993.51 If his Honour was suggesting this in some way supports his reasoning, the exact opposite is the case. Indeed, this is a telling point. The 1993 amendments replaced references to sections in the Act dealing with plan changes processed under the First Schedule,52 with a reference to “clause 21 of the First Schedule”.53 Such legislative changes were made to both s 85(2) and (3). Consequently, it is unarguably the case that the legislature intended s 85(3) would apply to plan changes processed by councils under the First Schedule, and did not give a direct right of audience to the Court.
An examination of Hansard indeed confirms the 1993 amendments were simply consequential changes flowing from revision of the content and numbering of clauses in the First Schedule.54 The changes were not considered to have significance in terms of purpose of s 85(3) of the Act — certainly not providing an applicant with a new and unique procedure for obtaining a plan change.55
The issue is of fundamental importance. As his Honour recognised in the subsequent hearing,56 an application made directly to the Court would not have run the risk of possible public notification, possible public submissions, a s 32 analysis, provision of an environmental assessment report, or have been subjected
50 Ibid, 9–10.
51 Ibid, 14–16.
56  NZEnvC 91;  NZRMA 289, 297–298 (EC).
to a council determination. These would be issues under any application for a plan change processed under the First Schedule.
Further, although the language in s 85(3) is difficult, it seems unlikely that the legislature would have so obtusely given an applicant power to seek a plan change without the opportunity for public participation and council involvement.57 Both these are central themes to the Act and are given emphasis to applications for both resource consents and plan changes under the RMA.58 In addition, there is nothing in his Honour’s analysis that suggests an application directly to the Court under s 85(3) (if valid) should only be limited to correcting “mere slips” in the plan.
In summary, the wording of s 85(3), although somewhat obtuse and awkward, it is best seen as an attempt to extend the grounds a Court must turn its mind to when a private plan change is considered.
We therefore return to consider language differences between section 85(2) and 85(3), and how these may be resolved. Is the threshold for granting relief that the applicant “considers that the ... [offending provision] render[s] that interest in the land incapable of reasonable use ...” (s 85(2)), or that the Court makes this determination on the basis of its own assessment of merits of the offending provision (as stated in s 85(3))? Case law to date suggests this issue is relevant not only to a private plan change, but also a council plan change.59
2. Who Makes the Evaluation of “Reasonable Use”
We have recognised s 85(2) does not state what issue the Court must turn its mind to in determining whether a plan change is appropriate. This is acknowledged in Mullins v Auckland City Council.60 Here the Tribunal saw the grounds in s 85(3) as indicating the basis on which a Court would order a plan change — even though it accepted s 85(3) did not itself apply to a council plan change. In making this assessment, the Tribunal did not make any distinction between the ground for making application; an applicant “considers” — s 85(2), as opposed to “the Environment Court determines” — s 85(3).
The two perceptions may, of course, be different. A Court may determine land is incapable of reasonable use because the land can not be put to any
reasonable use. This is a high threshold for any applicant to overcome.61 A much lesser burden is an applicant concluding the land is incapable of reasonable use because he or she can not put the land to a particular use considered desirable and reasonable by the applicant. This later construction follows naturally from the wording of s 85(2) which states “ ... any person [may apply] who considers that the provision or proposed provision [in the plan] would render that interest in the land incapable of reasonable use ” (emphasis added).
In Hastings v Manukau Harbour Protection Society Incorporated,62 the Court dealt with a reference from a proposed council plan change. In giving judgment, Judge Sheppard stated as follows:63
On a reference ... the test to be inferred from section 85 is not whether the proposed zoning is unreasonable to the owner (a question of the owner’s private rights), but whether it serves the statutory purpose of promoting sustainable management of natural and physical resources (a question of public interest). The implication is that a provision that renders an interest in land incapable of reasonable use may not serve that purpose. But the focus is on the public interest, not private property rights.
In this assessment, any use will not be a reasonable use if it does not serve “the public interest”. It is then a short step to say that the sustainment of controls in a published plan is in the public interest. With respect, the focus of s 85 is not the public interest. “Private property rights”, to use his Honour’s term, are properly the focus of any reference made under s 85(2). Indeed the juxtaposition of that provision following on from s 85(1) suggests these rights should be safeguarded, as no compensation can be awarded for the detrimental effect of controls.64
Any ambiguity between the two approaches must surely be resolved in favour of the applicant. It is otiose to grant the right to seek relief on the basis of an applicant’s perception of reasonable use is not achievable, unless that ground is relevant to the Court’s determination of what constitutes reasonable use.
Indeed, this approach is consistent with the promoted purpose of the legislation when the Resource Management Bill was passing through its third reading in Parliament in 1991. The (then) Minister of the Environment makes this clear.65
[P]eople can use their land for whatever purpose they like. The law should restrain the intentions of the private land owners only for clear reasons and through the use of tightly targeted controls with minimum effects ... The Bill provides us with a framework to establish objectives by a physical bottom line that must not be compromised. Provided that those objectives are met, what people get up to is their affair.66
The Court may legitimately call on this speech as an aid to statutory interpretation, as it clarifies the intent of the legislation. However, difficulties in comprehending the extent of the Court’s power do not end here. The meaning of the phrase “incapable of reasonable use” requires analysis.
3. Meaning Attributed to “Incapable”
Something is “incapable” of being done if it is not possible to achieve it.67 Unless an activity is a prohibited activity, it must always be possible to apply for a resource consent to undertake it, as a non-complying, or discretionary use.
In Mullins v Auckland City Council,68 the Council was proposing a plan change, which would require the applicants to obtain resource consents in order to complete partly developed cross lease and unit title developments. The applicants could achieve their aim by seeking the resource consents after the plan change had occurred. Consequently, the Court had to consider whether the threshold for making an application under s 85(2)(a) had been reached, as it could not be said the land was incapable of the desired use.
The Tribunal concluded the applicants should not be put through the expense of applying for consents when the proposed use was reasonable.69 The Tribunal consequently found the land was incapable of reasonable use.70
 1 NZLR 641.
Likewise, in Steven v Christchurch City Council,71 the issue before the Court was the removal from a plan of a notation showing the applicant’s home as a protected building. The applicant sought this so the property could be sold on terms that would allow demolition and redevelopment. The Court granted the plan change. It was satisfied it would be uneconomic for the applicant (or any future owner) to make the house habitable. The Court found the structure would continue to deteriorate and, in time, become unlivable and require demolition. For this reason, the land was found to be incapable of reasonable use.
Both these determinations show the Court does not literally require the land be “incapable” of reasonable use before replacing the offending provision with one favouring the land use proposed by the land owner.
4. Meaning of “Reasonable Use”
The expression “incapable” must also be understood in light of the definition of “reasonable use,” given in s 85(6). “Reasonable use” includes “... the use or potential use of the land for any activity whose actual or potential effects on any aspect of the environment or on any person other than the applicant would not be significant” (emphasis added).
The attention of the Court in determining what is a “reasonable use” is consequently not directed to, or measured against, the schema of controls in the plan, but is focused on any use promoted by the applicant. This is the pivotal point in understanding the intent of s 85(2) and (3). The use or potential use promoted by the applicant is assessed against its effect (presumably adverse) on either “the environment” (as defined under the Act) or a third party. In both cases, the proposed use may be reasonable so long as any of the effects are not “significant effects”.
An “effect” looks at the outcome of the activity, not the nature of the activity. It is trite to say the RMA is effect-based legislation.72 It is indifferent to, if not actually “anti planning” through its emphasis on “effects”.73 Consequently, properly expressed, any planning control should not be stated in terms of permissible activities, but rather in terms of permissible effects of activities being undertaken. Section 76 of the Act reflects this bias:
71  NZEnvC 91;  NZRMA 289 (EC).
(3) In making a rule, the territorial authority shall have regard to the actual and potential effect on the environment of activities including, in particular, any adverse effect; and rules may accordingly specify permitted activities, controlled activities, discretionary activities, non-complying activities, and prohibited activities [emphasis added].
In other words, although the rules may specify permitted activities, controlled and discretionary activities, they must be expressed in terms of the effects of those activities. This is a fundamental point, which may not be reflected in the actuality of controls in current plans. Indeed, such a criticism may levelled at various controls in the Auckland Plan, as will become evident later in this paper.
Next the term “significant”. The effect of the activity on the environment or on any third party must be “significant” before it can count against granting consent. Although “significant” is used extensively throughout in the RMA, its meaning is not defined by the statute or, to my knowledge, by relevant case law. The Shorter Oxford English Dictionary74 defines the term as “important, notable”. Consequently the effect of the proposed use on the environment or third parties must be of importance, or notable before it can be relevant.
What of the need to show an effect on “the environment”? Although under the legislation, the term has a broad meaning, encompassing “amenity values”,75 the use of the expression here is surely directed at the physical environment in situ. In line with the recent Court of Appeal judgment of Dye v Auckland Regional Authority76 the Court must surely assess the effect of the actual activity on the physical environment, and not the precedent effect of granting consent.77 The inclusion of the term “environment” in s 85(3) can not therefore provide a suitable vehicle for the Court to deny relief in order to protect the credibility of controls in the plan. Indeed, the section is intended to provide a means of challenging those controls.
Consequently, in addressing this issue in its appellate/review role, the Court should focus on the environmental issues teased out when the council processed
76  NZCA 330;  1 NZLR 337.
77 Dye concerned the grounds that could be legitimately considered in granting a non-complying resource consent. The Court of Appeal disagreed with the High Court that the legitimacy of controls in the plan was a valid issue for consideration. As the consent being sought was a non- complying consent, the Court should accept the controls were being departed from and were not germane to whether the consent was granted. See discussion at 343, 347–351 of the judgment (ibid).
the plan change under the First Schedule.78 This will include examination of Fourth Schedule issues.79
What then, of third parties? What sort of effect on third parties may legitimately be taken into account in determining the meaning of “reasonable use”? Presumably the Court should not include in its assessment private property law rights that may be enjoyed by third parties? We are dealing after all, with legislation on management of resources. Unfortunately there is no known case law to date to suggest what effects on third parties could be taken into account.
Finally, the Court should also give consideration to the “reasonableness” of the use proposed by the applicant. Although again there is no case law on this point, the proposed use should self evidently be “reasonable”. The proposed use must consequently not be fanciful, or out of character with the surrounding environment by virtue of its location and inherent attributes. For such an interpretation to be accepted, it must qualify under s 85(6), which states a reasonable use “includes the use or potential use of the land for any activity whose actual or potential effects ...” (emphasis added).
Therefore, to summarise the meaning of “reasonable use”, a use promoted by the applicant may be a “reasonable use” so long as it is a reasonable use of the land itself (situation/inherent characteristics) and it does not have an significant (presumably adverse) effect on either the physical “environment” (a defined term in the RMA) or any third party in terms of management of resources. Further, any identified effects (presumably adverse) must qualify as important, or notable. An examination of compliance with the controls set out in the plan therefore plays no part of determining whether the proposed use is a “reasonable use”.
Given the absence of a right to compensation for injurious affection (due to the operation of s 85(1)), as well as the emphasis in the Act on advancing individual endeavour (where the environmental bottom line is not endangered), known adverse effects should indeed be important, or notable before they are found to be “significant” within the terms of s 85(6).
V. SECTION 85(3) AND JUDICIALACTIVISM
As already intimated, the Court has, to date, found against plan changes where they endanger existing controls in a plan. This has largely been done under the auspices of applying grounds the Court must turn its mind to under s 85(3). As previously stated, the Court has treated these grounds as relevant to a council plan change as well as a private plan change, while at the same time recognising s 85(3) can not actually apply to a council plan change.80
I have already argued s 85(3) can only apply to a private plan change, and have indicated the subsection sets out a more rigorous test to be overcome by the applicant. This is because, in addition to considering whether the offending provision renders the land incapable of “reasonable use,” the Court is required under s 85(3) to consider whether the provision “places an unfair and unreasonable burden on any person having an interest in the land.” Undeniably, the Court can, under this part of s 85(3), examine the reasonableness of the offending provision in the plan. Not only must the effect of that provision be both “unfair” and “unreasonable” on the applicant, but the Court must make its determination “having regard to Part III” [of the Act] (including the effect of section 9(1)”.81
First, dealing with the reference to Part III of the Act, especially s 9(1). The opening words of s 85(3) require the Court to consider, and have regard to, the landowner’s expectation that he or she will be able to use the land for any use not expressly prohibited by the RMA. These words signal to the Court that this expectation should be borne in mind when dealing with the more restrictive issues set out for consideration in s 85(3), which cut down and restrict the Court’s discretion to grant a private plan change.
The liberality of these opening words was expressly recognised in Steven v Christchurch City Council.82 In reaching this determination, the Court recognised that:83
83 Ibid, 298–299.
land resources have, unlike air and water, a well defined system of property rights to which members of the community can contribute their own subjective values. The market in that system of land use rights is, leaving aside externalities controlled under the authority of and for the purposes of s 5(2)(a)-(c), and the principles in ss 6 and 7 apparently trusted by Parliament to be a self regulating (and efficient) method of sustainable management of natural and physical resources.
Although the need to establish whether an offending provision constitutes an “unfair and unreasonable burden” enables the Court to examine controls in a plan, this exercise must self evidently be undertaken and measured against the circumstances of the applicant. Conversely however, the Court to date has used this provision to uphold controls, by holding the proposed use must not endanger the credibility of the plan. In this respect, in Steven v Christchurch City Council the Court opined as follows:84
The question of whether there is an “unfair and unreasonable burden” on the applicant has to be decided in the context of the (proposed) plan and the existence of other recipes for change. The situation is different from a normal plan change where ‘there is no presumption that the related policy, plan or rule [in the plan sought to be changed] is appropriate or correct.’
The Court continued as follows:85
As for consideration of the (discretionary) rules if the requested plan change is inconsistent with those or the problems designed to be overcome by the applicant’s plan change are adverted to in the discretionary rules, then the latter may be a factor weighing against the plan change.
With respect, violence is done to the language of the section to hold that it enables the Court to turn its mind to “[decide the issue] in the context of the (proposed) plan”. Or indeed, for the Court to presume that the existing provisions in the plans are appropriate or correct. A similar criticism has been levelled at Judge Sheppard’s comments in Hastings. Section 85(2) and (3) are legislated to protect private property rights. Consequently, any presumption the controls are “appropriate or correct” can not be a valid consideration.
In s 85(3) the burden may be “unfair” if existing controls in the plan affect say, a pensioner’s expectation of future land development, in circumstances where a heritage listing has been placed on his or her title since purchase.86 In other words, the personal circumstances of the applicant are put before the Court to
84 Ibid, 298.
85 Ibid, 299.
86 This example is given in Steven v Christchurch City Council  NZEnvC 91;  NZRMA 289, 303 (EC).
see whether they are sufficiently meritorious, and of sufficient weight, so the offending provision is found to operate unfairly. What may or may not constitute sufficient grounds of unfairness will inevitably depend on the personal circumstances of the applicant. Under such a test, such circumstances will invariably be unique, and differ from other applicants, offering little of precedent value.
An “unreasonable” burden is more likely to be an objective assessment, taking into account a judicial perception of what somebody in the shoes of the applicant should reasonably have to bear. Although it may be reasonable that an applicant’s land is made subject to controls under a plan, the issue then becomes whether those controls constitute, in the eyes of the Court, a reasonable burden. It is not enough for the Court to simply hold the controls are reasonable, as the integrity of the plan will be impeached if they are altered.
An example of how this may work is suggested by the facts of Capital Coast.87 Here the council wished to zone subdivisible land as open space, where adjacent land was zoned for residential development. In such circumstances, the landowner is providing amenities for his or her neighbours’ enjoyment. Consequently such zoning constituted an unreasonable burden.88
In Steven v Christchurch City Council89 the Court found the application of this two-tiered test difficult.90 It opined as follows:91
Those words are to be given their normal objective interpretations. Even so, it is difficult to distinguish between the meanings of “unfair” and “unreasonable” in this context. Perhaps the “unfair” relates to the qualitative aspects of the burden to be borne by the applicant, and “unreasonable” to the quantitative. As for ‘burden’, that suggests a certain imposition on the property owner is acceptable: the question to be decided by the Court is one of fact and degree given the statutory context referred to earlier in this decision.
It may be that the test of unfair and unreasonable burden, if properly construed, may not prove hard to overcome. If there is a legitimate expectation (granted by ss 85(2) or 85(3)) to use your land for any use that amounts to a “reasonable use”, provisions in the plan that impede such a use could be found both an “unfair” and an “unreasonable” burden on the applicant.
89  NZEnvC 91;  NZRMA 289 (EC).
90 Ibid, 294–295.
91 Ibid, 300.
VI. EXAMPLE OF APPLICATION OF SECTION 85
How then should the Court apply the test for challenging an offending provision in a plan? The following illustration provides an example of the argued meaning and application of s 85.
In the Auckland Plan, Residential 2 zoning requires compliance with the following prescriptive requirements, set out as objectives and policies:
220.127.116.11 OBJECTIVEAND POLICIES Objective
To conserve the landscape qualities of those residential areas which display a special blend of built and natural features, generally involving period housing, coupled with the presence of trees.
These are articulated in terms of prescriptive regulation, rather than the permissible effects of activities. The controls determine that residential development will be permitted in this area in sympathy with “period housing coupled with the presence of trees”. The controls are intended to encourage “renovation and new building construction in a manner that ‘maintains the historic form and pattern of buildings, open space, large trees and distinctive streetscapes in the zone’”. How then may these controls be open to attack?
In my example, a hypothetical landowner wishes to construct a modern high rise apartment, or say a private hospital, within the zone. His section is substantial and contains fine examples of mature trees, which will need to be removed under any intensive development. Although adverse effects (increased traffic, lighting) will be present if the development proceeds, none are significant enough to qualify as important, or notable under s 85(2) or (3). Indeed, in the example at hand, the inherent characteristics of the land may make it suitable for such development. The section is sizable, near arterial transport routes and the views
achieved from any high rise building makes the location highly appropriate for high rise development. The landowner purchased the land before it was zoned Residential 2 under the previous zoning, which was more permissive.
We are dealing here with a private plan change. The grounds under s 85(3) therefore apply. The applicant claims the zoning is unfair as he purchased the land before the Residential 2 zoning was imposed, and always intended to undertake an intensive development on the land. He claims the zoning is unreasonable as the trees and open aspect of the section benefit the surrounding neighbours in a way normally provided by a public park or protected green belt. Further, the zoning has been successful in so far as other sections remain spacious with large trees.
Under the s 85 test articulated in this paper, the continued credibility of the Residential 2 zoning is not an issue the Court is entitled to turn its mind to. Consequently the proposal may go ahead even if the development is out of kilter with period housing, does not result in “a quality of spaciousness”, and may require the destruction of large trees.
The validity of planning controls and the issue of compensation are inter-linked subjects under s 85. We need to understand the extent of the available power to seek a plan change against the common law expectation that compensation may be available for controls that stray outside the public health arena.
A plan change can be sought under ss 85(2) and 85(3) in extensive circumstances where planning controls render the land incapable of “reasonable use,” as that term is defined in s 85(6) of the RMA. Under the statutory test, the emphasis is on the proposed use of the land, and not the continued integrity of existing controls.
In setting out the terms under which relief may be given, s 85 is something of a code.92 Indeed, it may not be going too far to say that s 85 is somewhat ethnocentric in its perception. It permits an applicant to seek a plan change for any purpose which he or she considers is a reasonable use of land so long as the environment and third parties are not affected and, in the case of a private plan change, the existing controls place an unfair and unreasonable burden on any person having an interest in the land.
92 This was argued in Steven v Christchurch City Council  NZEnvC 91;  NZRMA 289 (EC). Judge Jackson however did not accept this to be so. His Honour argued s 85 had to be understood against the relevant key provisions of the Act and the council plan. See pp 295, 296 of his judgment. While the section must be understood in light of the purposes and principles of the RMA, it does not follow the section can not be read as a discrete code. As the body of this paper makes clear, the content of the plan is not relevant.
Consequently, existing judicial pronouncements, which assert relief is only available where the proposed plan change does not endanger planning controls are, with respect, misconceived. Further, such a requirement can not be sustained against the clear thrust of the RMA, which is “effects” based legislation. To the extent controls in existing plans do not embrace this philosophy, they remain liable to attack under s 85.
A judicial emphasis on maintaining the credibility of existing controls also unfairly prejudices landowners who have no other option but to seek a plan change given the absolute bar in s 85(1) on compensation being sought due for injurious affection of land values. Indeed, the present judicial approach to s 85 may encourage local authorities to impose restrictive planning controls with impunity, knowing landowners have no effective remedy.
In summary, despite its difficulties, the intention of s 85 is clear. The well- known dictum of McCarthy J in Ashburton County v Clifford93 is still apposite
— although dealing with a planning statute of earlier times. In giving judgment, his Honour stated as follows:94
The Town and Country Planning Act 1953 is the latest flowering of such legislation in the Dominion. In construing its terms, the Courts, in accordance with established principles, will not adopt a meaning which takes away existing rights of property owners further than the plain language of the statute, or the attainment of its object according to its true intent, meaning and spirit, requires.
93  NZCA 1;  NZLR 927 (CA).
94 Ibid, 943.