New Zealand Journal of Environmental Law
Last Updated: 30 January 2023
Local Authority Liability for Developments in Areas Subject to Hazards
New Zealand is particularly vulnerable to natural hazards arising from its geological formation, extensive coastline and high rainfall, as well as man-made hazards such as contaminated land. While these are essentially nationwide problems, central government has chosen to devolve most of its responsibility for the management of hazards to local authorities, as well as the accompanying potential for liability. This article seeks to explore the potential for local authority liability when allowing development in areas subject to hazards, and specifically considers development in areas subject to liquefaction in Christchurch, as well as the risks for greenfields development on contaminated land in Auckland.
New Zealand is particularly vulnerable to natural hazards arising from its geological formation, extensive coastline and high rainfall. In addition, like many countries which have a history of commercial agriculture, horticulture, and general industrial development, New Zealand also has a significant level of contaminated land.
While these are essentially nationwide problems, central government has chosen to devolve most of its responsibility for the management of hazards to local authorities. Of course, such responsibilities are inevitably accompanied by the potential for liability, with this potential being heightened when a local authority’s role in managing and avoiding hazards impacts upon private
*Julia Harker LLB(Hons)/BA is a barrister specialising in resource management and local government law. She is currently studying towards an LLM at the University of Auckland.
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property. It is this interface between private property values, the effective management of hazards, and the potential for local authority liability that this article seeks to explore.
First, local authorities’ statutory duties and responsibilities in relation to the identification and management of hazards will be examined. Next, the evolution of local government liability in the context of building negligence and the more recent phenomenon of “leaky buildings” is considered.
To give context to this discussion, case studies will be drawn upon, including development in areas subject to liquefaction in Christchurch and risks for greenfields development in Auckland.
Lastly, the article will look at issues with the current approach to hazard management and identify reforms which could be made so that local govern ment may more effectively plan for hazards.
2. STATUTORY RESPONSIBILITIES
Central government has delegated most hazard management responsibilities to local authorities through a number of statutes. These include: the Resource Management Act 1991 (RMA), Building Act 2004 (Building Act), Hazardous Substances and New Organisms Act 1996 (HSNO), Local Government Official information and Meetings Act 1987 (LGOIMA), and the Civil Defence Emergency Management Act 2002 (CDEMA).
2.1 Resource Management Act 1991
As the primary environmental management statute in New Zealand, the RMA sets out local authority functions and responsibilities with respect to hazards.
It is important to set out the definitions for hazards covered by the RMA as these materially differ from those used in other Acts concerned with hazard management.
The RMA distinguishes between “natural hazards” and manmade hazards such as contamination. Section 2(1) broadly defines “natural hazards” as:
... any atmospheric or earth or water related occurrence (including earthquake, tsunami, erosion, volcanic and geothermal activity, landslip, subsidence, sedimentation, wind, drought, fire, or flooding) the action of which adversely affects or may adversely affect human life, property, or other aspects of the environment
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“Contaminant” is defined as including:
... any substance (including gases, odorous compounds, liquids, solids, and microorganisms) or energy (excluding noise) or heat, that either by itself or in combination with the same, similar, or other substances, energy, or heat—
(a) when discharged into water, changes or is likely to change the physical, chemical, or biological condition of water; or
(b) when discharged onto or into land or into air, changes or is likely to change the physical, chemical, or biological condition of the land or air onto or into which it is discharged
“Contaminated land” is defined as:
... land that has a hazardous substance in or on it that—
(a) has significant adverse effects on the environment; or
(b) is reasonably likely to have significant adverse effects on the environment
Hazardous substances are also partially regulated under the RMA and are defined under s 2 of HSNO (see below).
Under the RMA, both regional councils and territorial authorities are responsible for the management of hazards. These responsibilities overlap and may be allocated by a regional council under its Regional Policy Statement (RPS) depending on whether a regional or local response is required.
One justification for the overlap of functions between regional councils and territorial authorities is the requirement in s 30 for regional councils to achieve integrated management of resources in the region. In North Shore City Council (Re an application)1 the Court found that in order to achieve this goal, a regional council must be able to impose some measure of restraint on management decisions made by territorial authorities.
Regional councils are responsible for the control of the use of land for the purpose of the avoidance or mitigation of natural hazards and the prevention or mitigation of any adverse effects of the storage, use, disposal, or transportation of hazardous substances (s 30(1)(c)(iv) and (v)). These responsibilities also extend to the region’s coastal marine area (s 30(d)(v)). In addition, regional councils are responsible for the investigation of land for the purposes of identifying and monitoring contaminated land (s 30(1)(ca)) and the control of discharges of contaminants into or onto land, air, or water (s 30(1)(d)(iv)).
1 North Shore City Council (Re an application)  NZRMA 74.
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Territorial authorities under the RMA are given the control of any actual or potential effects of the use, development, or protection of land. Similar to regional councils, this control may be exercised for the purpose of the avoidance or mitigation of natural hazards and the prevention or mitigation of any adverse effects of the storage, use, disposal, or transportation of hazardous substances (s 31(1)(b)(i) and (ii)). Territorial authorities are also specifically tasked with controlling land for the prevention or mitigation of any adverse effects of the development, subdivision, or use of contaminated land (s 31(1)(b)(iia)).
The term “control” is significant in terms of the functions of both regional councils and territorial authorities. It is important to clarify that local authorities are only required to avoid or mitigate natural hazards through the control of land, not to control the occurrence of natural hazards themselves.2
Furthermore, the exercise of control requires the implementation of specific rules which in fact do control the use of land.3 In McKinlay v Timaru District Council 4 the Environment Court found that it was not sufficient, in the context of existing use rights, for the regional council to state which local authority should be responsible for developing objectives, policies and rules relating to the control of land and coastal marine areas, as this amounted to a mere assertion of the right to control, not the “exercise” of the right to control.
The main method by which regional councils seek to manage hazards is through their RPS and regional plans. Under s 62 an RPS must state the local authority responsible in the whole or any part of the region for specifying the objectives, policies, and methods for the control of the use of land to avoid or mitigate natural hazards or any group of hazards and the prevention or mitigation of any adverse effects of the storage, use, disposal, or transportation of hazardous substances (s 62(1)(i)(i) and (ii)). If the regional council does not specify which local authority is responsible for this task, then the regional council will retain primary responsibility for this function (s 62(2)).
A regional council may prepare regional plans to assist it in carrying out its functions (s 63(1)) and must specifically consider the desirability of preparing a regional plan where there is a threat from natural hazards or hazardous substances (s 65(3)(c)). However, the preparation of such plans is not mandatory, aside from the Regional Coastal Plan which may address coastal hazards within the coastal marine area.
As with regional councils, the main method by which territorial authorities implement their hazard functions is through district plans and the rules they contain (see ss 72–76).
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In addition, territorial authorities may exercise significant control over land use in situations where hazards arise through the resource consent processes. Specifically in terms of subdivision, a territorial authority may refuse to grant a subdivision consent where (s 106(1)):
(a) the land in respect of which a consent is sought, or any structure on the land, is or is likely to be subject to material damage by erosion, falling debris, subsidence, slippage, or inundation from any source; or
(b) any subsequent use that is likely to be made of the land is likely to accelerate, worsen, or result in material damage to the land, other land, or structure by erosion, falling debris, subsidence, slippage, or inundation from any source ...
In this context, “material damage to land” has been interpreted to mean material damage to the physical substance of the land and not minor slippage, slumpage or subsidence.5 As addressed in Foreworld Developments Ltd v Napier City Council,6 the onus is on the applicant to propose measures to satisfy s 106 and it is then for the council to determine if the measures are sufficient to meet the requirements. This is a matter of degree, and as such, total protection is not required.7
In addition, both regional councils and territorial authorities must keep records of natural hazards to the extent that they consider appropriate for the discharge of their functions (s 35(5)( j)).
2.2 Building Act 2004
Aside from the hazard management responsibilities contained in the RMA, territorial authorities are also required to regulate the construction of buildings on land subject to natural hazards in carrying out their function as “building consent authorities” under the Building Act.8 This role, along with its district planning functions, places a significant burden on territorial authorities to manage and negotiate the interface between natural hazards and property rights.
While both the Building Act and RMA manage natural hazards, there are important differences between the statutory focus and methods through which hazards are addressed. Under the RMA, the use and subdivision of land should be such that natural hazards are either avoided or mitigated, whereas the
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Building Act gives territorial and unitary authorities responsibility for granting building consent on land subject to specific natural hazards, with certain exceptions. The RMA manages land use, such as the location of a building and its effects, and the Building Act focuses on the construction, safety and integrity of buildings, including footings and foundations.9
The Building Act contains a suite of provisions (ss 71–74) which set out the limitations and restrictions on building consents when an applicant proposes to construct a building on land subject to natural hazards.
Under the Building Act, “natural hazard” is defined as any of the following (s 71(3)):
(a) erosion (including coastal erosion, bank erosion, and sheet erosion):
(b) falling debris (including soil, rock, snow, and ice):
(d) inundation (including flooding, overland flow, storm surge, tidal effects, and ponding):
It is important to note that this definition of “natural hazard” is not as expan sive as that under the RMA. Importantly, neither earthquake hazards, such as liquefaction and construction within the presence of a fault line, nor volcanic and geothermal hazards are included in this definition. Furthermore, “non natural” hazards such as contaminated land are not covered.
Section 71(1) provides that a building consent authority must refuse to grant a building consent for the construction or major alteration of a building if:
(a) the land on which the building work is to be carried out is subject or is likely to be subject to 1 or more natural hazards; or
(b) the building work is likely to accelerate, worsen, or result in a natural hazard on that land or any other property.
However, this prohibition does not apply if the building consent authority is satisfied that adequate provision has been or will be made to (s 71(2)):
(a) protect the land, building work, or other property ... from the natural hazard or hazards; or
9 W Saunders and P Glassey “Guidelines for assessing planning policy and consent require ments for landslide prone land” (2007) GNS Science Miscellaneous Series 7, at 38.
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(b) restore any damage to that land or other property as a result of the building work.
In addition, under s 72 a building consent authority must grant a building consent if it considers that:
(a) the building work to which an application for a building consent relates will not accelerate, worsen, or result in a natural hazard on the land on which the building work is to be carried out or any other property; and
(b) the land is subject or is likely to be subject to 1 or more natural hazards; and
(c) it is reasonable to grant a waiver or modification of the building code in respect of the natural hazard concerned.
If building consent is granted under s 72, the territorial authority must notify the consent to the Registrar of Land who will record on the relevant certificate of title that a building consent was granted under s 72 and give particulars of the natural hazard concerned (ss 73 and 74).
The leading case regarding the application of these provisions is Logan v Auckland City Council.10 While this decision was made under the former Building Act 1991, it has been applied in post2004 decisions.11
In summary, the building consent authority must refuse building consent under s 71(1) if either of conditions (a) or (b) are present, unless satisfied that provision for adequate protection has been made under s 71(2)(a) or (b). If the building consent authority determines that consent should be refused under s 71, then it must consider s 72 conditions (a), (b) and (c).12 If these conditions are satisfied, the building consent authority must grant building consent, subject to notification on the certificate of title that the consent has been issued under s 72 and identifying the relevant natural hazard.13
When preparing and registering a notice against the certificate of title, the territorial authority must only identify the appropriate hazard that is relevant. To list all the relevant natural hazards would amount to a failure of its statutory duty under the Building Act, which might affect the value of the land without
10 Logan v Auckland City Council CA243/99, 9 March 2000;  NZCA 43; (2000) 4 NZ ConvC 193,184. 11 Re Building consent for a house on land subject to coastal hazards Determination
Department of Building and Housing 2007/110, 17 September 2007; Building consent for a storage shed on land subject to inundation at 58 Brookvale Lane, Taupaki Determination Department of Building and Housing 2008/82, 5 September 2008.
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proper consideration of the relevant types of hazard that may affect the building or land.14
Once registered, the territorial authority will only have immunity from actions relating to the particular natural hazard identified.15
In addition to refusing or imposing conditions on building consents for construction on land subject to hazards, territorial authorities also have specific powers under the Building Act with respect to dangerous or earthquakeprone buildings.
Under s 121, a building will be dangerous if in the ordinary course of events or in the event of fire the building is likely to cause injury or death to any persons or damage to other property.
A building will be “earthquake prone” under s 122(1) if the building:
(a) will have its ultimate capacity exceeded in a moderate earthquake (as defined in the regulations); and
(b) would be likely to collapse causing—(i) injury or death to persons in the building or to persons on any other property; or
(ii) damage to any other property.
However, this does not apply to a building used wholly or mainly for residential purposes unless it is two or more storeys high and contains three or more household units.16
If the territorial authority is satisfied that the building is dangerous or earthquake prone it may under s 124: put up hoarding or a fence to prevent people from entering the building; put a notice on the building warning people not to approach; and give written notice requiring work to be carried out on the building. The territorial authority may apply to the District Court for an order authorising it to carry out the necessary work if work required to be carried out is not completed.17
Territorial authorities are also obliged to keep certain information that is relevant to the administration of the Building Act under s 216. This includes
17 Ibid, s 126(1).
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building consents, project information memoranda and code compliance certificates (CCC).
Section 392 of the Building Act provides that no civil proceedings may be brought against a building consent authority for any action or omission in good faith in reliance on certain documents, including: a compliance document, determination by the chief executive, a current product certificate, or a CCC.
In addition, if building consent is granted under s 72 and notification has been given of this on the certificate of title, the building consent authority will not be liable:18
... in any civil proceedings brought by any person who has an interest in the building referred to in subsection (2) on the grounds that the building consent authority ... issued a building consent for the building in the knowledge that the building for which the consent was issued, or the land on which the building was situated, was, or was likely to be, subject to damage arising, directly or indirectly, from a natural hazard.
However, it is notable that this provision does not exclude liability where consent is granted under s 71 and no notation is made on the certificate of title.
2.3 Hazardous Substances and New Organisms Act 1996
In addition to the protections from hazards afforded under the RMA and Building Act, HSNO plays an important role in regulating the storage, use and transport of hazardous substances and new organisms.
HSNO defines “hazardous substances” as:19
... any substance—
(a) with 1 or more of the following intrinsic properties:(i) explosiveness:
(iii) a capacity to oxidise:
(v) toxicity (including chronic toxicity):
(vi) ecotoxicity, with or without bioaccumulation; or
18 Ibid, s 392(2) and (3).
19 Hazardous Substances and New Organisms Act 1996, s 2 (HSNO).
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(b) which on contact with air or water (other than air or water where the temperature or pressure has been artificially increased or decreased) generates a substance with any 1 or more of the properties specified in paragraph (a) [of this definition]
Prior to the enactment of HSNO and the transfer of hazardous substances under the Act, territorial authorities played a pivotal role in the management of hazardous substances under the Dangerous Goods Act 1974 (DGA). Territorial authorities were “licensing authorities” under the DGA20 and as such were responsible for licensing premises for the storage of dangerous goods21 and the appointment of inspectors to ensure compliance.22
Since the provisions of HSNO came into force on 2 July 2001, territorial authorities have played a more limited role in the management of hazardous substances, with the Environmental Risk Management Authority (ERMA) taking over their responsibilities in relation to licensing the use and storage of hazardous substances.
However, under s 97, local authorities do retain some enforcement responsibilities. Both regional councils and territorial authorities may take enforcement action under HSNO if a breach is discovered while their officers are on particular premises for a resource management purpose, or where ERMA has delegated enforcement powers to the council.23 Territorial authorities are also responsible for the enforcement of HSNO in certain premises within their district, such as residential properties (excluding places of work, motor vehicles, ships, rail vehicles and aircraft)24 and may prosecute parties in non compliance with the Act.
HSNO provides minimum standards for the control of hazardous sub stances and requires those exercising powers under the RMA to comply with the provisions of the Act.25 However, s 142(3) provides that local authorities may impose more stringent requirements on the use, storage, disposal, or transportation of hazardous substances, where this is necessary for the purposes of the RMA. Local authorities often provide for stricter controls through district and regional plans. In particular, territorial authorities will often control the location of hazardous facilities through zoning provisions and by requiring that sites be separated from residential areas, schools, or other sensitive receiving environments. Such facilities will normally require a landuse consent and may be subject to extensive conditions, such as limits on the quantity of hazardous
24 Ibid, s 97(1)(h).
25 Ibid, s 142(2).
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substances able to be stored on the premises and reporting/monitoring requirements.26
2.4 Local Government Official Information and Meetings Act 1987
Territorial authorities have additional responsibilities in relation to the provision of land information memoranda (LIM) for properties under LGOIMA. Any person may apply to a territorial authority for a LIM under s 44A and it must contain certain property information. This relevantly includes:
(a) Information identifying each (if any) special feature or characteristic of the land concerned, including but not limited to potential erosion, avulsion, falling debris, subsidence, slippage, alluvion, or inundation, or likely presence of hazardous contaminants, being a feature or characteristic that—(i) is known to the territorial authority; but
(ii) is not apparent from the district scheme under the Town and Country Planning Act 1977 or a district plan under the Resource Management Act 1991:
(f ) information relating to the use to which that land may be put and conditions attached to that use:
In addition, the territorial authority may include any other information which it considers, in its discretion, to be relevant.
The High Court in Resource Planning & Management Ltd v Marlborough District Council 27 considered the extent of information required to be provided with regard to special features and characteristics of land. The Court found that the disclosure of information:28
... is a limited one in the sense that the authority is not required to provide all of the information on its files. The width in terms of s 44A(2)(a) comes from the fact that the information must not be apparent from the district scheme. This means some level of inquiry is to be undertaken. However, where the requirement is not simply one of disclosing all information on the files, there has to be some cut off point.
28 Ibid, at .
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This responsibility to provide property information is accompanied by the potential for civil liability if this is not carried out accurately or information is not included.
2.5 Civil Defence Emergency Management Act 2002
The CDEMA aims to improve and promote sustainable management of hazards and provide for planning and preparation for emergencies.29
Section 4 of the CDEMA defines hazards as:
something that may cause, or contribute substantially to the cause of, an emergency
Under s 12 of the CDEMA local authorities are required to establish a joint Civil Defence Emergency Management Group (CDEM Group) for their region. CDEM Groups are required to identify and understand hazards and risks, as well as to prepare CDEM Group plans and manage hazards and risks.30 Currently, there are 16 CDEM Groups nationwide.31
Section 110 of the CDEMA provides that no cause of action may be brought against a CDEM Group for any damages or loss due directly or indirectly to a state of emergency, unless there is bad faith or gross negligence.
It is evident from the above analysis that local authorities in New Zealand bear a significant legislative burden for the management of hazards. For example, in relation to a single residential development, a territorial authority may be required to assess the potential effects of hazards when promulgating zoning restrictions and rules under the district plan, issuing subdivision and landuse consents for development, granting building consent for proposed construction, and providing information to prospective purchasers on special land characteristics.
Despite this high level of responsibility, local authorities often do not have the funding or expertise to adequately identify all relevant hazards in their region or district. This results in a real risk that development may occur in inappropriate or even unsafe locations and exposes local authorities to a greater risk of liability when errors do occur.
29 Civil Defence Emergency Management Act 2002, s 3 (CDEMA). 30 Ibid, s 17.
31 Ministry of Civil Defence and Emergency Management “CDEM Groups” <www. civildefence.govt.nz>.
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3. LOCAL GOVERNMENT NEGLIGENCE
Historically, local government in the United Kingdom and New Zealand was statutorily responsible for regulating the provision of safe and sanitary housing. However, in more modern times, local government’s functions and duties have significantly expanded with the consequence that it is more frequently exposed to actions in negligence by members of the public. Two classes of negligence action which are readily brought against local authorities include actions for negligent inspection of houses and negligent advice by council officers.
3.1 Negligent Inspection
The potential for local authorities to be held liable for negligent inspection finds its origins in the English decision of Dutton v Bognor Regis UDC.32 In that case, a council inspector approved the construction of foundations for a house located above an old landfill site, with a subsequent purchaser later discovering serious defects with the internal structure of the house. The Court found that the council was entrusted with such extensive control over the building construction process under the Public Health Act 1936, and specific bylaws made under that Act, that it owed an attendant duty of care. This meant that any inspections carried out on a property during the building process needed to be performed with reasonable care and in compliance with the bylaws. Notably, this duty could also extend to future purchasers of a property who did not have contractual proximity to the original builder of the property.
The duty of a council officer to take reasonable care in carrying out an inspection was subsequently confirmed by the House of Lords decision of Anns v Merton London Borough Council 33 (Anns).
The imposition of such a duty on local authorities was embraced by the New Zealand courts in the Court of Appeal decision of Mt Albert Borough Council v Johnson,34 which similarly involved the negligent inspection and approval of inadequate foundations by the council. Similarly, the Court of Appeal in Stieller v Porirua City Council 35 found the council liable for negligent inspection in not identifying noncompliances with the building code. The Court also went on to state that:36
In New Zealand, the statutory provisions covering the issue of building permits do not relate solely to matters of health or the safety of occupiers of premises.
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However, by the mid1980s, the English courts began to question whether liability for negligent inspection should be visited upon local authorities, particularly where safety was not at issue. The House of Lords decisions in Peabody Fund v Sir Lindsay Parkinson Ltd 37 and Murphy v Brentwood District Council 38 (Murphy) signalled a retrenchment from the principles expressed in Anns. In both decisions the House of Lords found that the local authority’s duty was limited to the protection of the health and safety of members of the public, and did not include purely economic loss suffered by developers or homeowners. Therefore, a local authority could not be held liable in negligence where a latent defect was discovered before any injury to a person, health, or damage to property other than the house itself had occurred.
PostMurphy, the New Zealand Court of Appeal in Invercargill City Council v Hamlin 39 (Hamlin) was faced with determining whether New Zealand local authorities should be held liable for negligent inspection resulting in purely economic loss. In Hamlin the plaintiff brought an action against the council for negligently approving inadequate foundations which required replacement. While the foundations were faulty, only minor damage had occurred to the property and the loss was therefore purely economic in nature.
In finding the council negligent, the Court of Appeal distinguished Murphy based on the unique relationship between local authorities and homeowners in New Zealand, as well as certain characteristics of the domestic building industry. Richardson J found that the duty of care towards homeowners in relation to building inspections had been consistently applied by the New Zealand courts largely due to the degree of reliance placed on such inspections by the public. This reliance had been accepted by local authority building inspectors as extending beyond public health and safety to standards of workmanship and sound construction.40
Richardson J also observed that the New Zealand housing industry and social setting could be distinguished from that of the United Kingdom on six major grounds: a high proportion of owneroccupier housing; much housing construction was undertaken by smallscale builders for private individuals; the nature and extent of government support for private home building and homeownership; the surge in house construction in the 1950s and 1960s; local government support of private ownership and regulation of good construction; and the fact that there was not an established practice of commissioning engineering, architecture, or survey reports prior to purchasing a property.41
41 Ibid, at 524–525.
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Furthermore, the Court considered that any movement away from liability for negligent inspection would have such significant implications in terms of public expectations of local authorities that any such amendment to the law should be made by Parliament.42 This decision was ultimately upheld by the Privy Council,43 largely on the basis of the significant differences between the New Zealand and UK housing industry identified by the Court of Appeal.
3.2 Leaky Building Cases
Local authorities’ wider role in ensuring proper construction of houses and specifically council liability for negligent inspection has assumed new importance given the recent “leaky building” phenomenon in the housing industry, where through a combination of poor design, building materials and construction methodology, numerous homes have developed weathertightness issues. A report commissioned by the Department of Building and Housing estimated that between 22,000 and 89,000 homes could be affected.44 Territorial authorities have become a target of litigation for leaky buildings as often the original construction companies are no longer in existence and councils are perceived by many claimants as having “deep pockets”.
The leading authority regarding council liability for “leaky building” construction is the Supreme Court decision in North Shore City Council v Body Corporate 188529 (Sunset Terraces).45 In that case, owners of units in two residential apartment blocks brought an action against the council for their losses due to water damage resulting from faulty construction which should have been identified in council inspections.
The Supreme Court affirmed the principles set out in Hamlin as follows:46
... the New Zealand authority confirmed in Hamlin is correct and should continue to be followed. Liability to homeowners for loss of value or repair costs in respect of faulty building work, negligently passed by Council inspectors, has been imposed on territorial authorities with statutory responsibilities to supervise building for more than thirty years. Such liability fits within the wider framework of responsibility in negligence described in South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd and applied in relation to duties arising out of a background of statutory responsibility by this Court in Couch v Attorney-General.
46 Ibid, at .
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The Court also placed great weight on the fact that:47
... those ordering their affairs in this field were entitled to take the view that what the Court of Appeal and Privy Council had said was a correct statement of the law. Hundreds, if not thousands, of people must in the meantime have relied upon the proposition that the 1991 [Building] Act had not affected the common law position. For this Court to defeat that reliance retrospectively by holding that the true position was otherwise would represent an inappropriate use of our ability to depart from a previous decision of the Privy Council.
The Court ultimately found that any move to distinguish Hamlin on the basis of the size, ownership structure, configuration, or value of a property would be inconsistent with the underlying rationale:48
That rationale is based on the control which councils have over building projects and on the general reliance which people acquiring premises to be used as a home place on the council to have exercised its independent powers of control and inspection with reasonable skill and care and, in particular, to have exercised with reasonable skill and care its powers of inspection of features that will be covered up.
However, this relatively expansive approach to council liability for negligent inspection has recently been limited in terms of its application to commercial properties.
In Three Meade Street Ltd v Rotorua District Council 49 the plaintiff brought an action against the council for defects in a motel building. The High Court found that the principles in Hamlin did not mean that a council would inevitably owe a duty of care to commercial or industrial property owners. While there was certainly proximity between Three Meade and the council, there were policy factors militating against the imposition of a duty of care, including that the plaintiff as the original developer had the ability to protect itself through contractual arrangements and was therefore less vulnerable than domestic homeowners.
While the courts have been ready to impose liability on local authorities for negligent inspection in the context of leaky buildings, they are to date unwilling to allocate any liability to national bodies such as the Building Industry Authority (BIA), which was responsible for approving the use of flawed products such as monolithic cladding and untreated timber.
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In Attorney General v Body Corporate 200200 50 the Court of Appeal found that the BIA was not in a sufficient relationship of proximity with building owners and the BIA’s role was of a quasilegislative or quasijudicial nature.51
North Shore City Council attempted to join the BIA as a third party to a leaky building claim in Attorney General v North Shore City Council.52 The council claimed that the BIA negligently failed to warn the council of the leaky building syndrome and the implications for the council when reviewing its building consent functions. The Court of Appeal found that the BIA did not owe the council a duty of care as its powers and controls were limited and the scope of liability was too far removed from the alleged negligent monitoring. The BIA’s review functions were also of a quasijudicial nature.
While the courts to date have barred any actions against the BIA, it is questionable whether this unfairly places the burden of leaky building liability on local authorities when it may properly be seen as a nationwide failure in the building industry and one therefore requiring a national solution.
3.3 Negligent Advice
Aside from owing a duty of care in relation to the inspection of buildings, local authorities also owe a duty of care when providing advice to members of the public. This includes both the formal provision of advice in a LIM and informal advice provided by council officers to inquiring members of the public.
This duty of care has its genesis in the leading UK authority of Hedley Byrne v Heller,53 which held that a negligent yet honest misrepresentation, orally or in writing, may give rise to an action for damages for financial loss where the person giving the advice possesses a special skill and that person ought to have known that reliance was being placed on that skill and judgement. This obligation is obviously highly relevant to local authorities given that members of the public will often seek advice from their local council,
particularly in relation to district planning and property information.
An example of where a council has been held liable for negligent advice is the High Court decision of Ivan and Barbara Court v Dunedin City Council.54 In that case, a council officer gave erroneous advice to the vendor of a property that a certificate of compliance could be issued for the construction of a residential building to provide certainty for a purchaser. However, the purchaser subsequently found that the property needed to be an independent economic farm unit and cancelled the agreement for sale and purchase. The Court found
51 Ibid, at 111–113.
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that the council officer had a duty to the vendor and it was foreseeable that this could negatively impact on any future sale.
Similarly, in Bronlund v Thames Coromandel District Council 55 the council was found to be negligent in issuing a building consent and continuing to inspect a building project which was outside of the specified building platform. The Court found that financial and/or staffing constraints experienced by the council did not negative either its duty of care to keep proper records which would enable it to identify important planning conditions, or its duty to bring such a condition to the plaintiff’s notice.
This duty was also held to apply to adjoining landowners in Craig v East Coast Bays City Council 56 (Craig), where the council granted consent for a building which blocked the plaintiff’s view despite this being both contrary to its district scheme and advice given to Craig by council officers. The Court also went on to state that a local authority will be liable where it fails to ensure compliance with its own district planning instruments in granting building consent which negatively impacts on the amenity of an adjoining property owner.
Craig is now considered by the courts as a highwater mark for negligence actions against local authorities and was arguably overruled by the Court of Appeal decision of Morrison v Upper Hutt City Council 57 (Morrison).
In Morrison the Court of Appeal found against imposing liability on a territorial authority in relation to an application for planning consent. Morrison argued that a territorial authority charged with the administration of a district plan owed a duty of care to interpret the words used in the plan which was reasonable having regard to the object of the plan and fairness to those affected by it. The Court found that while there was a necessary degree of proximity, there were overwhelming policy reasons countering such a duty of care.
This decision was affirmed in Bella Vista Resort Ltd v Western Bay of Plenty District Council 58 (Bella Vista) which found no duty of care could be imposed on the council when determining whether to grant a variation of a resource consent, on the basis of policy considerations identified in Morrison. Notably, William Young P found that Morrison had necessarily overruled the Court’s decision in Craig, although this was not finally determined by the other members of the bench.
More recently in Oteha Investments Ltd v Simon Yates Planning 59 the High Court held that there is a material distinction between interpretive consideration
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by the council of an application for resource consent which is quasijudicial and any preliminary advice it may have given which may properly be the subject of an action in negligence. This was because of the differing context and policy considerations which arose in the circumstances.60 The Court found that the council was offering expert prelodgement advice which was not part of its quasijudicial statutory consent function as in Morrison and Bella Vista.61
With regard to the provision of LIMs by territorial authorities, the recent Court of Appeal decision in Vining Realty Group Ltd v Moorhouse 62 found that Marlborough District Council could be held to have a duty of care to a person for inaccurate information in a LIM (in that case, errors relating to the transfer of a water permit). Furthermore, the Court found that protection from liability under s 41 LGOIMA did not apply to LIMs.63
Most actions in negligence brought against local authorities may be classed as either negligent inspection or negligent advice cases. The New Zealand courts, in large part due to the progressive Court of Appeal bench in the 1980s, have previously taken an expansive approach to local authority negligence, particularly in comparison to the UK. However, it appears that there is now a trend towards containing the tort’s application to local authorities by restricting it to residential properties (with respect to negligent inspection) and the exercise of nondecisionmaking functions.
Despite this judicial movement towards limiting the scope of negligence actions brought against local authorities, there is still potential for actions to be taken in the context of development of land subject to hazards.
4. HAZARD MANAGEMENT AND CASE LAW
It is evident from the preceding discussion that the potential for local authority liability in New Zealand has expanded due to its role as both a building regulator and source of property advice. This section explores the extent to which local authorities may be exposed to liability in relation to properties subject to hazards, as well as how the risk of development in areas subject to hazards is addressed by the courts when considering applications for resource consents.
60 Ibid, at –.
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4.1 General Approach — Risk Assessment
Unlike other types of adverse effects under the RMA, the likelihood of hazards such as liquefaction, land instability and coastal events affecting property may be uncertain at the time of consent. Therefore, such risks are normally the subject of forecasts and projected return periods that are revised in the face of additional information.
The leading authority in terms of risk assessment is Long Bay-Okura Great Park Society Incorporated v North Shore City Council 64 (Long Bay). In the context of determining the probability of adverse effects relating to a proposed residential development, the Judge set out the following process to be carried out by local authorities, which involves assessing:65
(1) the nature of the proposed or existing activity and its context. This usually needs to be analysed in terms of spatial extent, intensity, and duration;
(2) whether there is a causal relationship between the activity and its “effects”; and
(3) the risk of the effect, which also consists of three components —
(a) the probability of the effect;
(b) its consequences (its costs and benefits); and
(c) the relevant policy or objective which the risk impinges upon.
The High Court in Francks v Canterbury Regional Council 66 similarly recognised that:67
the established jurisprudence indicates the necessity for a probabilitybased risk assessment ... What is clear from the cases is that the Environment Court is often faced with the difficult question of risk assessment and sometimes in situations where that issue is at the outer limits of existing expert knowledge.
The Long Bay approach to risk analysis has been applied in numerous Environment Court decisions, including the recent decision in Otago Regional Council v Dunedin City Council.68
Closely aligned to the practice of risk assessment is the precautionary principle. The precautionary principle has attained significant standing in many
64 Long Bay-Okura Great Park Society Incorporated v North Shore City Council NZEnvC A078/2008, 16 July 2008.
65 Ibid, at .
66 Francks v Canterbury Regional Council  RMLA 97 (HC). 67 Ibid, at 108.
68 Otago Regional Council v Dunedin City Council  NZEnvC 120;  NZRMA 263.
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jurisdictions subsequent to the 1992 Rio Declaration on Environment and Development, which states at Principle 15 that:
... Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing costeffective measures to prevent environmental degradation.
This concept is reflected in the sustainable management principle in the RMA and, in the context of coastal hazards, a distinctly precautionary approach is identified in the New Zealand Coastal Policy Statement (NZCPS) (Policy 3). A precautionary approach has also been applied by the courts in a number of decisions.
In Foreworld Developments Limited v Napier City Council 69 (Foreworld ) the Court stressed that:70
The kind and degree of precaution to be taken depends on the level of knowledge of the risk, its likelihood of occurrence, and its consequences. We do not live in a riskfree world and the RMA does not require the avoidance of all risk.
The parameters and impacts to be considered in any risk assessment are significantly influenced by the planning period adopted. In the context of coastal hazards, in the 1994 decision of Bay of Plenty Regional Council v Whakatane District Council,71 which involved a subdivision application at Ohope Spit, a forecasting period up to 2050 was considered to be:
... as far as the “foreseeable future” may reasonably be extended, allowing for the uncertainties of scientific knowledge and balancing the interests of the applicant and succeeding landowners.72
However, this forecast period has more recently been extended out to 100 years. In Foreworld the Court found that:73
Given that the expected life of a house would almost certainly be more than 50 years, and that unless specifically limited land use consents have an indefinite life, 100 years is, we think, an appropriate period for considering coastal issues.
69 Foreworld Developments Limited v Napier City Council, above n 6. 70 Ibid, at .
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There might even be an argument for it to be longer, but the uncertainties of attempting to predict coastal movement strain even a 100 year span.
This approach has been followed in the more recent decision of Southern Environmental Association (Wellington) Inc v Wellington City Council.74
Given this general approach to risk assessment, the following sections will consider case law involving specific types of hazards.
Flooding is an issue in many parts of New Zealand due to its comparatively high rainfall and the fact that development frequently takes place in close proximity to rivers and flood plains. It is therefore unsurprising that a number of actions have been brought against local authorities where construction has been authorised in areas subject to flooding hazards.
In Brown v Heathcote County Council 75 the Browns applied to the Heathcote County Council for a building permit to build a house on a section of land adjacent to the Heathcote River. The council in turn referred the building permit application to the Christchurch Drainage Board, as was its established practice. The board approved the building permit application subject only to some conditions about sewerage and drainage. However, the board gave no information or advice concerning the susceptibility of the land to flooding.
During subsequent winter storms, the river overflowed its banks, flooding the house. The Court found that while a local authority did not normally owe a duty to volunteer advice, as it was the practice of the board to provide advice on flooding risk, it owed a duty to the Browns to consider whether the land was prone to flooding and breached that duty when it failed to warn them of this risk. The Court found that the board was the only authority in the region with detailed knowledge of river flood levels and that the:76
... evidence established that it was looked to by local authorities and property owners as the repository of knowledge about the rivers.
The Court also distinguished the responsibilities of New Zealand local authorities from the limited responsibilities of those in the UK, citing the
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broader development legislation, such as the Local Government Act 1974, under which New Zealand authorities operated at that time.77
In Resource Planning & Management Ltd v Marlborough District Council 78 the plaintiffs received subdivision consent to establish a winery/holiday park venture near Blenheim on former council land. The land was located on the side of the old Opawa River which had been blocked since 1914 and was subject to flooding hazards. Subsequent to granting the consent, the council included the property within a Flood Hazard Overlay (FHO), which made the construction of buildings on the property a noncomplying activity. The plaintiffs contended that the council had failed to adequately disclose issues of inundation and erosion and that the council had changed the planning regime through the introduction of the FHO, resulting in losses to the plaintiff.
The Court did not accept the plaintiffs’ argument that they were not adequately advised of the hazards affecting the land. The council’s Property Development Brief, LIM reports and consent notices affecting the land all disclosed flooding and inundation issues, and the plaintiffs were in fact aware of the flooding risk. The Court also found that the council was not obliged to disclose its intention to introduce a FHO in the district plan as the plaintiffs knew of the hazardous nature of the site, the FHO had minimal effect, and that, despite the noncomplying status of building activities, the FHO did not prevent building taking place on the property.
In Otago Regional Council v Dunedin City Council 79 the Environment Court was tasked with considering a noncomplying resource consent application for the construction of a house on a flood plain near the coast. While the Dunedin City Council had granted resource consent with conditions, the Otago Regional Council challenged this on the basis that there was a risk of damage to property and/or harm to occupants from this hazard.
The Environment Court found that the activity passed the s 104D gateway in that the proposed activity was not contrary to the objectives and policies of the Dunedin City District Plan and Otago Regional Policy Statement as they contained provisions recognising that landowners may knowingly accept such risks. Taking into account the fact that the applicants were well informed and ready to assume the risk of building on a flood plain below sea level, the Court found that the proposed design of the house, coupled with a deed in favour of Dunedin City Council holding that the applicants and successors would bear any risk, would sufficiently avoid or mitigate the adverse effects of the proposal.80
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4.3 Land Instability
Land instability hazards arise as a result of rock and soil composition, weath ering and saturation, as well as events such as heavy rainfall, seismic activity and construction.81
The impact of land instability on residential homes has resulted in numerous negligence actions being brought against the council, particularly where house foundations have been constructed on unstable ground.82
However, such actions are normally brought by the occupier against the council for negligent inspection during construction of the home. The High Court judgment in Smaill v Buller District Council 83 (Smaill ) moved beyond consideration of negligent inspection of houses to consider a claim that the council negligently granted subdivision consent and building permits for a resort development, as well as breached its statutory duties, in failing to adequately plan for an area of known geological instability.84
This type of action is fundamentally different to an action for negligent inspection as the plaintiff is seeking to censure the council’s decision to authorise development, rather than the failure of its officers to competently carry out a building inspection — with the former going to the heart of local government’s decisionmaking powers.
In Smaill, land at Little Wanganui was rezoned from rural to a resort zone and a subdivision scheme approved in 1973. This subdivision was extended in 1975 and building permits for the construction of houses were granted from 1978 and throughout the 1980s. Little Wanganui residents raised concerns about the cliff area near the subdivision land in 1981 and 1982. Subsequently, the council obtained a report from the Department of Scientific and Industrial Research in 1983 which noted a potential hazard from falling rocks but did not define a hazard zone. The 1987 district scheme continued to encourage development in the area, and between 1989 and 1991 the council allowed vegetation clearance to be carried out on part of the subdivision.
At the end of 1991, the council obtained a more comprehensive report which identified that the subdivision land was subject to a high risk from instability and was therefore unsuitable for residential development. On the basis of this report the council notified residents of the hazard and recommended that people not occupy their properties.
The Court found that the council’s decision to grant a landuse change was immune from potential liability for negligence but both the decision to approve
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the subdivision scheme and to grant building permits were susceptible to such an action. It went on to hold that:85
... the council was negligent from February 1984 when Mr Nathan gave a sufficient assessment of the risk, to require that decisive action be taken to properly evaluate the instability problem and adopt measures for the protection of people and property.
The Court in Smaill also considered whether a local authority’s actions in granting landuse, subdivision and building consents for development in a hazardous area could be the subject of an action in negligence or breach of statutory duty. It found that the landuse consent for the resort granted under the Town and Country Planning Act was made after a formal hearing by a committee with quasijudicial functions and therefore was immune from challenge for negligence:86
Applying the test enunciated in Trapp v Mackie I am satisfied the town and country planning committee in considering the change of land use was required to act in a manner similar to a Court of justice. It follows that when its recommendation was adopted and became the council decision consenting to the change of land use, such decision was immune from challenge for negligence.
However, the decision to approve the subdivision scheme under the Counties Amendment Act 1961 was purely administrative and did not involve a court like process as:87
It is not decisive that the council was required in the event of rejection to give written reasons, or indeed that as a matter of procedure the rules of natural justice may have applied. The characteristics of a Courtlike process did not attach. Indeed there was no requirement to have a hearing.
Therefore the council decision to approve the subdivision could be the subject of a negligence action.88 This distinction, however, would not apply under the RMA as applications for subdivisions are now subject to the same quasijudicial process as landuse consents.
The Court also went on to find that the provisions of the Local Government Act 1974 and, after 1 July 1992, s 36 of the Building Act 1991 (which are
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similar to the current Building Act provisions) required the council to consider the likelihood of the risk of damage as a result of the failure of the cliff face. The Court also considered that this breach of duty conferred:89
... the affected permit holder a right to seek damages. The statutory duty to refuse to grant permits where the likelihood of damage during the building’s lifetime existed, clearly rested with the council or territorial authority, and was well defined. The function was expressed in obligatory, rather than discretionary, terms. Plaintiffs who were granted building permits comprise, to my mind, an easily ascertained class of persons to whom the statutory duty was owed. The statute does not provide any form of remedy in favour of persons affected by a breach. Moreover, the introduction in s 641A(3), repeated in s 36(3), of a provision which protected the council or territorial authority from civil liability if the certificate of title was tagged, strongly suggests that otherwise breach of the duty would confer an actionable right.
4.4 Coastal Hazards
As an island nation with a coastline stretching 15,134 kilometres, New Zealand is particularly susceptible to coastal hazards such as storm events, as well as the more insidious longterm effects of sealevel rise. This risk, combined with an increase in both the scale and average cost of coastal development, is a potential threat for council liability.
The NZCPS plays a key role in managing the coastal environment, including potential hazards, requiring local authorities to identify and assess:90
... areas in the coastal environment that are potentially affected by coastal hazards (including tsunami), giving priority to the identification of areas at high risk of being affected. Hazard risks, over at least 100 years ...
Furthermore, Policy 25(b) of the NZCPS provides that redevelopment or change of land use should be avoided where this would increase the risk of adverse effects of coastal hazards. As the NZCPS only took effect in December 2010, it is too early to assess what impact this may have on local authority planning instruments and consenting processes in coastal areas.
As the popularity of coastal development has continued to increase, there have been numerous cases where coastal hazards have been considered in relation to resource consent and plan change applications.
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In Buckley v South Wairarapa District Council 91 the Environment Court declined resource consent to construct a dwelling house to the coastline in an area known as Shag Rock on the south Wairarapa coast. This was based on the Court’s finding that the risks from both storm surge and tsunami were moderate to high and likely to be exacerbated by sealevel rise over the next 50 to 100 years.92
However, in Waterfront Watch Incorporated v Wellington Regional Council 93 (Waterfront Watch) the Court approved the redevelopment of the overseas passenger terminal in Wellington Harbour which is subject to flooding by tsunami. The Court found that:94
the Act does not require the elimination of all risk, and it is selfevident that those who choose to live in a location such as this must assume a higher level of risk of harm from tsunami or similar events than those who choose to live in the hills of Karori.
In Hemi v Waikato District Council 95 Hemi appealed the Waikato District Council’s decision to decline his application for resource consent to construct a dwelling on coastal land at Raglan. The land was subject to coastal inundation and there was a risk that this would increase due to sealevel rise.
The Court found that there was low to moderate risk to the dwelling and minimal personal risk from sealevel rise and that the appellant would have several decades of use before removal would be required under a worstcase sealevel rise scenario. Applying the reasoning in Waterfront Watch, the Court went on to state that:96
... the risk of coastal hazard is required to be assessed, but it would be wrong to conclude that a proposal must satisfy the court that all such risk is eliminated. We adopt the reasoning in Waterfront Watch Inc v Wellington Regional Council where the Court determined that a development that might be subject to coastal hazard should be able to be designed and operated at an acceptable level of risk. We agree that there is an element of “voluntary assumption of risk” by people who choose to live near the coast in situations such as this, and the
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Court’s concern must be whether such risk is acceptable on all of the facts presented to it, rather than whether such risk is able to be avoided absolutely.
However, this principle of voluntary assumption of risk in relation to coastal hazards was not applied in Southern Environmental Association (Wellington) Inc v Wellington City Council.97 In this case the Wellington City Council was seeking a plan change to rezone coastal property from rural to residential at Owhiro Bay. The properties were subject to significant coastal hazards, including: flooding, inundation, erosion, tsunami, and sealevel rise.
The Court declined consent as, notwithstanding any erosion protection or building requirements, there would be a significant risk from coastal hazards to the properties. This finding seems to be strengthened by the fact that in rezoning the development for residential purposes the council would have been effectively endorsing the site as a suitable and safe location, contrary to its role as a local authority.
Like many industrialised nations, New Zealand has areas of contaminated land. This is largely due to early industrial activities, such as timber treatment plants and gas works, and the development and use of chemicals such as pesticides and fertilisers within the rural sector. The extent of contamination in New Zealand, however, is largely unknown, with a 1992 desktop assessment estimating that there were potentially 7,200 potentially contaminated sites.98 The potential for local authority liability emerges when proposals are made for the development of brownfields and greenfields areas for more sensitive activities, such as residential housing.
To assist local authorities with the assessment and management of contaminated sites, the Ministry for the Environment (MfE) developed a series of contaminated land management guidelines (Guidelines). These Guidelines provide guidance on: reporting on contaminated sites; hierarchy and application of environmental guideline values; risk screening systems; classification and information management protocols; and site investigation and analysis of soils.99
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Contaminated Land Management Guidelines No. 4: Classification and Information Protocols provides that regional councils should maintain a contaminated site register for their region. Sites may be identified on a register in two circumstances:100
(1) Where there is information regarding the landuse history which indicates that activities or industries have been undertaken on the site that appear on the Hazardous Activities and Industries List (HAIL), which includes industries that are known to have the potential to cause land contamination resulting from hazardous substance use, storage, or disposal;101 or
(2) Where there are hazardous substances present that have, or are reasonably likely to have, significant adverse effects on the environment. Substantive evidence of contamination, such as investigation reports, will normally be required prior to the identification of a site as contaminated land on the register.
Despite the provision of the Guidelines, MfE was concerned to ensure that the controls applied by local authorities were consistent throughout the country and that sufficient controls were in place for the redevelopment of contaminated land. In response to these concerns, MfE has produced a Proposed National Environmental Standard for Assessing and Managing Contaminants in Soil to Protect Human Health (NES). The NES aims to set a standard at which land is considered safe for human health and ensure that land affected by contaminants in soil is appropriately identified at the time of being developed and, if necessary, remediated, or the contaminants contained, to make the land safe for human use.102
The proposed NES provides for smallscale subsurface investigation of land to determine the presence, extent and nature of contamination provided that restrictions are met. The removal of underground petroleum storage systems and associated sampling is also a permitted activity provided the council is notified prior to commencement and a report of the findings is given to the council. If a report is not provided this activity would be a controlled or restricted discretionary activity.103
(Ministry for the Environment, Wellington, 2004).
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The NES also contains soil contaminant values (SCV) that define the soil contaminant concentration levels at or below which the exposure is judged to be acceptable because any adverse effects on human health for most people are likely to be acceptable for the intended land use. The levels at which soil was considered safe for certain types of development has been reduced from the original proposed NES. If a resource consent is sought for the use, development or subdivision of land where the soil does not exceed the SCV for the intended land use then it would be a controlled activity. However, where the risk to human health from soil contaminants exceeds the SCV then a restricted discretionary application would need to be made.104
The Ministry duly issued drafting instructions for the Parliamentary Counsel to prepare the regulations. The NES regulations have been finalised and have been approved by the GovernorGeneral.105
Despite the pervasiveness of contaminated land throughout New Zealand, there is a lack of case law involving actions against local authorities.
In Dancorp Developers Ltd v Auckland City Council 106 the plaintiff was considering purchasing an old timber treatment plant in Onehunga for subdivision. A shareholder of Dancorp made a general inquiry regarding subdivision consent with a council engineer who assured him that consent would be granted. There was no discussion regarding the potential contamination of the land.
Dancorp entered into an unconditional agreement for sale and purchase for the property but ultimately subdivision consent was not granted as the council found that the site was chemically contaminated. Dancorp cancelled the contract and brought an action in negligence against the council for failing to advise it of the contamination.
At the time of the inquiries there was some information on the council’s files inferring there might be contamination; however, the extent of contamination was unclear. The Court found that while Dancorp and the council had an ad hoc special relationship, the responsibility assumed was only to exercise reasonable care. As important information was missing from the file and contamination had not been a major issue in refusing subdivision consent previously, the council officer did not breach his duty of care in not advising of the risk of contamination. In addition, there was no causation as Dancorp, through its
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shareholder, knew that the site was contaminated but had been assured by an expert that this would not be a problem.
Local authorities are frequently required to determine whether development should occur in areas subject to hazards, particularly in coastal areas. The frequency with which such applications are considered will only increase as the pressure for new development in urban centres mounts; forcing development in areas of land which were previously considered marginal or which have previously been used for industrial or agricultural purposes.
However, local authorities and the Environment Court are increasingly taking a more sophisticated approach to assessing such resource consent applications by employing risk assessment methods and requiring expert evidence on the extent and potential mitigation of such hazards through, for example, engineered solutions. There also appears to be a trend towards allowing applicants to voluntarily assume the risk of developing on land affected by hazards, provided that the local authority can limit its own liability through mechanisms such as covenants (for example, the decision of Otago Regional Council v Dunedin City Council discussed above).
This emphasis on allowing applicants to voluntarily assume the risk of developing on land subject to hazards is in some respects concerning as it seems to contradict the statutory responsibilities of local authorities under the RMA to control the use of land to avoid or mitigate natural hazards. Arguably, this role is not fulfilled by allowing individuals to develop properties in hazardous areas on the basis that they will not seek compensation from the council.
A further reason for discouraging broad application of a personal assump tion of risk approach is the fact that when such property owners actually face the predicted hazards it would seem unlikely that either local or central government would ignore their plight given the potential political repercussions. The New Zealand public is accustomed to relying on government support when such events occur and therefore the longterm efficacy of such an approach is questionable.107
Despite the more sophisticated approach taken by local authorities with respect to development in hazardous areas, there is still the potential for liability to arise where councils fail to advise or provide inaccurate advice regarding the presence of hazards and potentially, as occurred in Smaill, where councils
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grant consent for development in areas which they should have been aware were unsafe.
5. CASE STUDIES
The following case studies explore the potential for local authorities to be held liable for allowing development in areas subject to hazards.
5.1 Bexley Liquefaction
Christchurch suffered significant damage and loss of life as a result of earth quakes on 4 September 2010 and 22 February 2011, as well as numerous after shocks. While such intense seismic events will invariably result in extensive property damage, areas such as the southeast suburb of Bexley appear to have suffered more than most due to extreme liquefaction. This has led many residents to question whether development should have occurred in the area at all and whether Christchurch City Council should be held liable.
Christchurch is geologically prone to liquefaction as most of the city is located on the flat terrain of the Canterbury Plains where extensive deposits of loose sand and gravels are present. Much of the city was originally swamp, estuaries and lagoons which have been drained and is subject to flooding by the Avon and Heathcote rivers.108 In some respects liquefaction poses a much greater risk than fault rupture as liquefaction can occur where earthquake shaking reaches a certain level, regardless of the source of the earthquake rupture.109
Much of Bexley was originally swampland which formed part of the Bexley Wetlands, as well as old landfill, before being subsequently reclaimed and developed for residential purposes. Originally zoned for industrial purposes, the then owner Quarrington Holdings succeeded in having the council rezone the land for residential purposes in the early 1990s (including a 20hectare block it had purchased from the council). The land was then onsold to Pacific Park Estate which developed roads and around 30 homes before selling the land to Enterprise Homes in 1996, leading to the development of a further 150 homes over a 10year period.110
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At the time of construction, the council only required minimal reinforcing of concrete foundation slabs. This contrasts with practice for new construction in other peatprofile suburbs which involves pole foundations underneath concrete slabs.111 Land information memoranda for the Pacific Park area also revealed that the land is mostly silt and sand down to 3 metres, with little or no hard fill, and some areas of land being filled without council supervision.112 Unsurprisingly, during the September and February earthquakes the shaking triggered liquefaction in Bexley, resulting in ground settlement and lateral
spreading, causing extensive damage to residential properties.113
Under the Christchurch City Council’s City Plan (City Plan) Bexley is zoned Living 1 and is located within a flood management area. However, the planning maps provide no indication that the area may be subject to liquefaction. The City Plan does provide that consent for a restricted discretionary activity is required for building and filling within a flood management area that is located in a “Living” (or residential) zone.
The City Plan does not, however, contain any specific provisions relating to liquefaction hazard. This is contrary to s 31 RMA and relevant case law that provides that control of the effects of hazards should be exercised through the implementation of specific rules.
The Christchurch City Local Civil Defence Emergency Management Arrangements report114 (Report) identifies that:115
The most susceptible areas to liquefaction are those with water saturated, loose, well soiled silt, and sand. It is also common in peaty soils. These materials under lay large parts of the eastern suburbs and area around the Heathcote River.
The Report also contains a High Groundwater Liquefaction Potential Hazard map which identifies the Bexley area as being subject to high liquefaction potential.
Environment Canterbury’s Regional Policy Statement (RPS) addresses natural hazards in the Canterbury region. Policy 3 provides that:
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Where there is no provision for natural hazard in a plan relevant to an area in which an application for a resource consent has been received, the consent authority should, when having regard to this Regional Policy Statement, take a precautionary approach to the potential for a natural hazard to be created or increased as it relates to the applicant or any other person or property. This may be achieved by giving priority to the principle of avoidance.
The RPS also goes on to acknowledge that many district plans in its region do not deal with all natural hazards. However, Environment Canterbury’s Natural Resources Regional Plan does not include any rules relating to natural hazards such as liquefaction.
Other than identifying that Bexley is located in an area subject to high liquefaction potential, neither the district nor the regional planning documents include any additional rules relating to seismic hazards. Therefore, unless a LIM were obtained or further investigation carried out at the time of purchase, a member of the public may be unaware of the significant risk of liquefaction affecting properties in the area.
In the current situation it is arguable that Christchurch City Council was or should have been aware that if they allowed development to occur in Bexley without proper controls being placed on development, particularly in relation to foundations, that significant property damage could occur due to liquefaction as a result of seismic activity.
Liquefaction potential has been assessed and defined for the Canterbury region by studies in 1991, 1992, 2000 and 2004, and regional liquefaction hazard maps have been produced on the basis of these studies.116 Therefore, similar to Smaill, the council would have been aware of the risk in allowing development to take place in areas such as Bexley. However, as the decisions to change the landuse zoning for the area and grant consent for subdivision are arguably quasijudicial functions, this may prevent an action being brought against the council for these decisions.
Despite this limitation, the council may potentially be liable for granting building consents for the construction of houses in the area, as this is an administrative decision and therefore a duty of care may be imposed. However, whether any duty of care has been breached is complicated by the fact that currently the Building Act does not include seismic hazards such as liquefaction within its definition of “natural hazards” under s 71(3). Therefore, the council
116 Earthquake Commision “Darfield Earthquake Recovery Geological Interpretative Report Kaiapoi North”, 6 April 2011 <www.canterbury.eqc.govt.nz>.
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would not have had a basis on which to refuse to grant consent under s 71(1), nor to allow consent subject to a notification on the title under s 72.
Given the lack of legislative guidance in terms of liquefaction, reference would need to be made to building practice to determine whether it was reason able for the council to have allowed construction to occur without requiring special foundations or ground stabilisation works.
Even if liability cannot ultimately be established, it is clear from this review that significant reforms are required to the Building Act, as well as the manner in which Christchurch City Council and Environment Canterbury provide for natural hazards and the control of their effects in relevant planning instruments.
As part of the national response to the September Canterbury earthquake, Parliament enacted the Canterbury Earthquake Response and Recovery Act 2010 (CERRA 2010) under urgency. The purpose of CERRA 2010 was to facilitate the response to the earthquake by providing adequate statutory power and relaxing or suspending provisions in enactments that may divert resources away from the response to the earthquake or may not be able to be complied with.117
CERRA 2010 provides for the GovernorGeneral on the recommendation of a relevant Minister to, by order in council, make any provision reasonably necessary or expedient for the purpose of the Act.118 This provision gives virtually unprecedented powers to the executive and has been the subject of extensive criticism, particularly in relation to subs 3 which provides that:
The recommendation of the relevant Minister may not be challenged, reviewed, quashed, or called into question in any court.
Any person acting under such orders in council will not be held liable for doing or omitting to do anything in good faith authorised by or made lawful by an order.119 Section 20 of CERRA 2010 also specifically provides that the Act does not confer any right to compensation.
Subsequent to the February 2011 earthquake, the Canterbury Earthquake Recovery Act 2011 (CERA 2011) was enacted, repealing and replacing CERRA 2010. Its overarching purpose is to enable Canterbury, particularly the greater Christchurch area, to recover from the earthquakes.120 It provides for the development of Recovery Strategies and Recovery Plans approved by
117 Canterbury Earthquake Response and Recovery Act 2010, s 3. 118 Ibid, s 6.
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the Minister for Canterbury Earthquake Recovery.121 CERA 2011 provides that no RMA document may be interpreted or applied in a way that is inconsistent with a Recovery Strategy and local authorities may not make a decision or recommendation — for example, when granting a resource consent — that is inconsistent with the Recovery Plan.122
Notably, s 83 CERA 2011 provides that no action may be brought against the Crown or any person to recover any damages or other amount for any loss, damage, or adverse effect due directly or indirectly to any action taken under the Act or orders under CERRA 2010, unless such action or omission constitutes bad faith or gross negligence.
A suite of orders were made under CERRA 2010 and continue to have effect under CERA 2011. These relevantly include the following:
(a) Canterbury Earthquake (Building Act) Order 2010
This order provides for certain scheduled works to be carried out without building consent and modifies provisions of the Building Act with respect to the meaning of dangerous buildings and the powers exercised by territorial authorities over such buildings. A territorial authority acting in good faith under this order will not be subject to any liability.
(b) Canterbury Earthquake (Local Government Official Information and Meetings Act) Order 2011
This order enables Canterbury local authorities to issue LIMs outside of the regular statutory period. The local authorities must include all information readily available and note on the LIM that it holds other information which it cannot currently access and that there is new postearthquake information which has not been included.
(c) Canterbury Earthquake (Resource Management Act) Order 2010
The time periods for processing resource consents and preparing plan changes were extended under this order, as well as limiting the duty to keep records under and enforce district plans under ss 35 and 84 of the RMA. Most signifi cantly, clause 14 of the order provides that:
Despite anything in the Act, a local authority is not liable for prosecution for an omission of the local authority that permits a contravention of any of sections 9, 11, 12, 13, 14, or 15 of the Act, provided that omission is reasonably necessary to promote the purpose of the Canterbury Earthquake Response and Recovery Act 2010.
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(d) Canterbury Earthquake (Resource Management Act) Order 2011
Under this order, all resource consent applications are to proceed on a non notified basis but the consent authority is required to consult with any person who will be or is likely to be adversely affected by the proposed activity but has no appeal rights. Consent may also be granted for noncomplying activities even if the activity does not meet either of the two gateway tests under s 104D of the RMA.
(e) Canterbury Earthquake (Resource Management Act Permitted Activities) Order 2011
This order deems temporary accommodation, depots and storage facilities to be permitted activities.
The exemptions from liability provided under the orders, while in some ways justified by the emergency situation, may potentially create problems if consent is given for the reconstruction of residential buildings in known areas of liquefaction. There is a danger, if this process is not properly managed, that consents may be issued in areas in which construction should not occur due to the propensity for liquefaction or without proper engineering solutions. If such deficiencies are established at a later date, residents would not have any remedy against the local authorities.
5.2 Auckland Greenfields Development
While contaminated soils may not result in such overt adverse effects on property or occupiers as seismic hazards such as liquefaction, if inappropriate development takes place on contaminated sites the resulting longterm exposure to contaminants may be equally harmful in terms of their impact on human health.
Due to the intense pressure for growth and shortage of housing in Auckland, developers are increasingly looking to provide residential development in both greenfields and brownfields areas. However, as a result of past industrial and horticultural activities, many areas of Auckland contain contaminated soil which requires identification and remediation if residential activities may safely occur on these properties.
Within the Auckland region, contaminated land has commonly resulted from past landuse activities such as horticultural activities, timber treatment plants, landfills, gas works, and petroleum storage facilities. Due to historic practices, chemicals used in such activities have leached into soils (or in the case of horticultural activities been sprayed directly onto soil) and continue to pose a persistent health threat if sufficient remediation or protective work is not carried out before more vulnerable activities are allowed to occur on sites.
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This case study will focus on residential development on greenfields horti cultural areas and the potential for local authority liability if development is authorised on unremediated land.
Significant areas of Auckland were once used for horticultural activities or “market gardens”. In 1956, there were 4,955 acres of market gardens registered within metropolitan Auckland rising to 8,488 hectares in 1979. Historic activities were largely concentrated in PukekoheBombay, OnehungaMangere, Avondale, TamakiPanmureMt Wellington, Papatoetoe and Mt Roskill.123
A 2002 study of pesticide residues in horticultural soils of the Auckland region collected soil samples from 48 cropping areas on 43 active or former horticultural properties. The most commonly detected pesticides found in such soils were DDT (dichlorodiphenyltrichloroethane), copper, dieldrin, arsenic, and lead;124 and 45 per cent of historic properties sampled had soil contaminants equal to or exceeding trigger levels used in the report, with levels of contaminants being elevated compared to background levels.125 The report went on to find that:126
These elevated levels of contaminants have the potential to impact on the suitability of such land in its current state for residential development. Territorial local authorities should consider requiring site assessments involving contaminant analysis prior to allowing a change in land use, subdivision or redevelopment on greenfields sites.
This concern regarding residential development of greenfields sites stems from the fact that humans may be exposed to contaminants in soil and settled dust through dermal contact, inhalation and ingestion. Exposure may also arise through uptake of chemicals in edible plants grown on residential properties, and earthworks required for the subdivision of land may result in pesticide and metalcontaminated soil entering waterways and the generation of contaminated dust.127
The report also recommended that national and regional strategies be
127 Ibid, at 24.
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adopted for the assessment, management and remediation of contaminated horticultural land in New Zealand.128
Subsequent to this report, Auckland City Council initiated a study to identify properties within Auckland City’s boundaries that may have been used for horticultural purposes based on aerial photographs from the 1940s, 1950s and 1960s. From this review the council determined that the properties of 4,872 residential owners may possibly be on land used for horticultural purposes.129 While this does not mean sites are necessarily contaminated, it provides an indication of the extent of land that may be affected by contaminated soils.
As a result of these studies the council declared that it would include notices on the LIMs of up to 5,000 properties indicating that the land was previously used for horticultural purposes but that the council had no knowledge of whether or not the property is contaminated. The notices are to specify that council has no knowledge of whether the property is or is not contaminated as a result of such use. The notices would also have set out that the council may have required soil testing if subdivision, new activities, or an extension of existing activities is proposed. This proposed notification resulted in public criticism regarding the potential for a reduction in property values, as well as concerns about the council’s potential liability for including such information on LIMs.130
The council sought the opinion as to the lawfulness of providing such information from the Crown Law Office via the Ministry for the Environment. The Crown Law Office found that the council could include such information in LIMs but that it was not mandatory. This was based on an analysis of s 44A LGOIMA which requires local authorities to include information in LIMs regarding contamination if the presence of hazardous contaminants is “likely”. Crown Law interpreted “likely” to mean a “real and substantial risk” (applying Port Nelson Limited v Commerce Commission)131 and found that the studies were not sufficient to establish that there was a real and substantial risk that hazardous contaminants were present on particular residential properties.132
The opinion also reported that whether the council chose to identify the risk of contamination on LIMs:133
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There is no “safe” option for a council that is deciding whether to include relevant information on a LIM. If the information was included but the research was found to be incorrect or inaccurate, home owners whose property values had fallen as a result might wish to sue. If the information was not included, purchasers of properties found to be contaminated might wish to sue. It is not possible to completely exclude liability in respect of LIMs. The exclusion of Part 6 from s 41 of the LGOIMA provides some support for an argument that a council is liable if it negligently includes information on a LIM, even when the information provided is wrong for reasons other than bad faith.
The regulation of contaminated land is the responsibility of both regional councils and territorial authorities under the RMA. Despite the creation of the Auckland Council unitary authority, reference will be made to provisions in Auckland Regional Council and Auckland City Council’s district plan as these remain operative at the present time.
At a regional level, the Air, Land and Water Plan134 (ALWP) provides for the management and remediation of contaminated land. The ALWP provides that intrusive investigation of land for the purpose of ascertaining whether there is contamination is a permitted activity, provided that the Auckland Council is advised in writing prior to the commencement of the activity and other conditions are met.135
Under the ALWP, remediation or land disturbance of sites for the purpose of landuse change is either a controlled or restricted discretionary activity. As a requirement of the controlled activity status a site investigation report (including details of contamination levels found) and remedial action plan must be provided to the Auckland Council.136 If the applicant does not wish to provide such reports to the council then the remediation will be a restricted discretionary activity.137 The ALWP also regulates the use of agrichemicals into air, or onto or into land or water.138
In addition to such planning controls, the Auckland Regional Council was responsible for keeping a register of contaminated and potentially contaminated sites. However, this task often proved difficult as there is no obligation on owners or occupiers of land to provide such information,139 and is further
139 Ibid, Issue 5.5.21A.
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complicated by changes of ownership of land with historic contamination as current owners may not want to be held responsible for activities which caused the contamination.140
The City of Auckland District Plan Isthmus Section (ADP) provides that the council will not approve a subdivision where any of the land or any structure of the land is subject to “manmade hazards such as pollutants from industrial activities, that may be hazardous to future occupiers of the land”.141
Under the ADP, any activity which remediates an identified contaminated site is a controlled activity. This is because remediation activities have the potential to cause further damage to the environment and the council needs to ensure that it is undertaken in accordance with stated guidelines.142 Furthermore, any activity that proposes to locate on a listed contaminated or potentially contaminated site has a discretionary activity status to ensure that the site is safe for the proposed new activity.143 However, the list contained in Annexure 8 of the ADP focuses on exlandfills and industrial sites and does not incorporate former horticultural sites.
The ADP also regulates “hazardous facilities” — defined as any activity involving a hazardous substance, sites where hazardous substances are stored or handled, and any installations containing hazardous substances. However, this definition does not include all activities involving hazardous substances, such as the incidental use and storage of hazardous substances in domestic quantities.144 All proposed hazardous facilities, and any expansion or alteration to an existing hazardous facility, will be subject to a Hazardous Facility Screening Process to determine its activity status within particular zones.145 The ADP identifies three broad groups of effects to be managed: effects caused by fire and/or explosion; effects on human health; and environmental effects. The level of risk for these three groups of effects is converted into an effects ratio and then used to determine whether the proposed hazardous facility will be a
permitted, controlled, or discretionary activity in a particular zone.146
At a national level the Proposed National Environmental Standard for Assessing and Managing Contaminants in Soil to Protect Human Health will give guidance to Auckland Council by ensuring that land affected by con taminants in soil is appropriately identified, and remediated or contained at the time of being developed to make the land safe for human use.
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However, Auckland City Council did express concerns in its submission on the NES that the soil guideline values used were incompatible with current Ministry for the Environment and international guidelines. For example, the “safe” level of carcinogenic polycyclic aromatic hydrocarbons exceeded former Ministry guidelines by several orders of magnitude.147 However, these concerns may have been met by the reduced soil contaminant values included in the amended NES.
Overall, Auckland’s planning instruments take a relatively proactive stance on contaminants when compared with other local authorities nationally.148 However, the Auckland Council, like its predecessors, will be under intense pressure to rezone land for residential purposes both within and outside the Metropolitan Urban Limits.
Under the Auckland Regional Growth Strategy a number of areas in the periurban fringe have been flagged for greenfields residential development, including: Albany, Greenhithe, Massey North, Helensville, Kumeu, Redhills/ Westgate, East Tamaki, Takanini, Hingaia and Pukekohe. Many of these areas have been or are currently being used for intensive horticultural activities and therefore site investigation and, if necessary, site remediation may be required before development occurs.149
The potential risk of liability for Auckland Council may arise if there is a failure to advise developers and future purchasers of a known risk of contami nation. In addition, if the council is the former owner of land (which is less likely in these areas), it may also be liable for having created the contamination risk.
While there is a lack of case law regarding actions being brought against councils for allowing development on land affected by contamination, Riskpool (the mutual fund that indemnifies local authorities against liability claims) reports that it handles two cases a year on average. A typical claim involves costs of around $20,000 to $60,000 to resolve and may also incur additional
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costs for alternative accommodation for affected landowners, health treatment expenses, as well as postdevelopment remediation costs.150
As the extent of contaminated historic horticulture sites within the Auckland region is still unknown, local authorities will need to carefully manage greenfields development to ensure that contaminated sites are appropriately remediated before more vulnerable development takes place.
6. PROBLEMS WITH CURRENT HAZARD MANAGEMENT REGIME
Along with identifying potential areas of liability for local authorities, the preceding analysis has highlighted a number of issues with the current hazard management regime which need to be rectified to avoid future inappropriate development in areas subject to hazards.
6.1 Failure to Control the Effects of Hazards
While ss 30 and 31 of the RMA provide that local authorities are required to control the use of land to avoid or mitigate the effects of natural hazards, in practice the extent to which this duty is fulfilled varies from region to region. In addition, certain types of hazard appear to be better understood and managed by local authorities than others.
The methods through which hazards are managed also differ between regions, with some authorities providing direct guidance through district or regional planning rules,151 while others rely on LIM reports to notify prospective purchasers of potential land hazards.152
This reliance on LIM reports to communicate hazard information to members of the public is flawed when considering that only those purchasing properties tend to request a LIM and even then only 10 to 20 per cent of purchasers actually obtain LIMs. This is because they are expensive, often
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contain information already possessed by the purchaser, and it may be uncertain whether the sale will go ahead.153
An example of a hazard that has not been well provided for by planning instruments is earthquake hazards. A 2001 study of planning and policy for managing earthquake hazards in New Zealand found that the methods of accounting for earthquake hazards varied between different districts and regions. In general, it found that earthquake hazards were dealt with as part of an “all hazards” framework which did not specifically address earthquake hazards and only two district plans had specific rules for earthquake hazards, although many plans had rules for other hazards such as flooding, land instability, erosion, and coastal hazards.154
There is also a concern that regional councils and territorial authorities are not pursuing a coordinated approach to hazard management, with many district plans not reflecting the approach contained in regional policy state ments. This is concerning as hazards such as flooding and earthquakes do not respect administrative boundaries and are best managed through an integrated approach.155
6.2 Overreliance on Building Act Methods
Local authorities have a tendency to rely on the assessment of proposed building construction under the Building Act to control development on hazardous land, instead of proactively managing the location of development through district and regional plans.
There is now an increasing emphasis on engineered solutions which, while valid in many situations, may not sufficiently mitigate the risks associated with natural hazards where events exceed design parameters. As a result, it may be preferable to engage in landuse planning to avoid locating development in risky areas in the first place.156
A commonly cited example of overreliance on engineered solutions was the Marmara earthquake in Turkey in 1999, where, despite measures being taken to ensure buildings were earthquakeresistant, a failure to sufficiently control the
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work of local building contractors and to consider whether building sites were appropriately located resulted in significant damage.157
Local authorities should also be hesitant to rely on the Building Act as the primary method of regulating development in hazardous areas as it does not address all hazards. Within the Building Act only certain natural hazards may be taken into account when determining whether to grant a building consent. As discussed previously, the Act does not take into account earthquake hazards such as liquefaction or manmade hazards such as contamination. This appears to be an unfortunate oversight by the legislature and should be corrected, particularly in light of the devastation caused by the Canterbury earthquakes.
6.3 Lack of National Guidance
Local authorities have the prime responsibility for managing hazards within New Zealand under the RMA, Building Act and CDEMA. However, this potentially places an unfair burden on local authorities, which may have many conflicting pressures, limited funding, and capacity restrictions.158 Currently, there is insufficient national guidance as to how to develop and implement hazard policy at the local level, leading to inconsistencies between different regions and arguably a less proactive planning response than if national instruments were in place.
This situation could be ameliorated by the preparation of a National Policy Statement for hazard management (NPS) which could require local authorities to amend their regional and district plans to provide for a coordinated response to hazard management. For example, the NPS could require territorial author ities to develop specific policies and rules for identifying and assessing relevant hazards when new development is contemplated.
National guidance could also be provided through the promulgation of additional national environmental standards (NES), similar to the NES for Assessing and Managing Contaminants in Soil to Protect Human Health. Such NES could focus on specific areas of hazard, such as seismic hazards, flooding, and coastal hazards.
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If the events of the past years have taught us anything it is that New Zealand, like most nations, is at constant risk of hazardous events. The responsibility to manage that risk — for better or worse — has been largely delegated by central government to local authorities. Such responsibility, however, also comes with a price tag in terms of potential liability when inaccurate advice is given or when development is allowed to take place in unsuitable locations.
The potential for liability, while posing an additional strain on local resources, is also symptomatic of problems with the way hazards are managed by government at both a local and national level. While it cannot be predicted when the next disaster may take place, it is certain that local authorities will face greater pressure as the need to adequately manage hazards and the desire for further urban development continue to collide.