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Brief Counsel

Appeal Court decision exposes councils to legal risk

19 August 2010

A recent Court of Appeal judgment knocking back a decision by the Bay of Plenty Regional Council due to failure to satisfy the consultation provisions in the Local Government Act (LGA) has the potential to expose other councils to legal risk, and to slow local body decision-making.

This Brief Counsel looks at the Court of Appeal ruling and comments on its wider implications.

The case

The appeal, taken by Whakatane District Council against Bay of Plenty Regional Council (known as Environment Bay of Plenty (EBOP)), challenged the lawfulness of EBOP’s decision to relocate its head office from Whakatane to Tauranga on the basis that EBOP had not satisfied the procedural requirements of s 78(2) of the Local Government Act 2002 (the Act). 

 Section 78(2) does not specifically require a consultation but does require that local authorities must give consideration to community views and preferences at four stages in policy development:

  • the stage at which the problems and objectives related to the matter are defined

  • the stage at which the options that may be reasonably practicable options of achieving an objective are identified

  • the stage at which reasonably practicable options are assessed and proposals developed, and

  • the stage at which proposals of the kind described in the bullet point immediately above are adopted.

EBOP had sought a report from Deloitte regarding the most feasible location and had resolved in principle on 7 December 2006 to adopt the Deloitte recommendation that it move to Tauranga.  On 15 March 2007, EBOP publicly notified the necessary amendments to its 10 year plan and invited the public to make submissions, in writing by 2 May or in person from 21 May to 24 May. 

However the Appeal Court ruled that these steps were insufficient to satisfy s 78(2) and the relocation has been put on hold.

Section 78 (2) for the chop

A Bill to amend the LGA (the Local Government Act 2002 Amendment Bill) has had its first reading and is due to be reported back to the House from select committee on 4 November 2010.  The Bill repeals s 78(2) outright. 

The change will mean that, while councils will still have to consider the views and preferences of potentially affected persons when making “significant” decisions, it will be easier to justify doing this just once per project rather than on the four separate occasions listed in the current legislation.

But until the Bill is enacted, s 78(2) will remain in force and the Appeal Court’s decision will stand.

Wider implications of the judgment

Consultation on important policy issues is a matter of natural justice and good governance and the highly prescriptive provisions of s 78(2) are designed for only the most significant decisions.

Nevertheless, the legal exposure the judgment creates for councils has the potential to tie local government decision-making in knots, or at least to significantly slow it down – especially for large projects that fall into the “significant decision” category. 

Policy areas which might be affected could include: an overhaul of public transport services, the introduction of metered water, changes to recycling policy or, in Wellington’s case, the proposed creation of a “super city”.

For further information, please contact the lawyers featured. 

Contacts