Whangārei District Council v Daisley - [2024] NZCA 161
Date of Judgment
15 May 2024
Decision
Whangārei District Council v Daisley (PDF 528 KB)
Summary
The appeal is allowed in part. The finding that Whangārei District Council is liable for the misfeasance of its officers in public office is set aside, along with the award of exemplary damages.
The appeal is otherwise dismissed.
The Council must pay costs for a complex appeal on a band A basis, with provision for second counsel, and usual disbursements.
NEGLIGENCE -LIMITATION -FRAUDULENT CONCEALMENT
In 2004, Mr Daisley purchased a property near Whangārei that included a long-established quarry. When he began to work the quarry the Whangārei District Council asserted that he needed a resource consent to do so. The Council issued abatement and enforcement notices to Mr Daisley and his company, eventually seeking an enforcement order against him in the Environment Court. During this time Mr Daisley asserted that the quarry enjoyed existing use rights, however the Council insisted that he had not proved this. In September 2009, following further inquiries from Mr Daisley's lawyer, the Council located in its records a resource consent issued for the quarry in 1988.
The Council admits that it was negligent. The High Court also made a finding of misfeasance in public office, which the Council denies.
Mr Daisley did not commence this proceeding until August 2009, just inside six years from when the 1988 land use consent was discovered. The main issue in this case therefore is whether Mr Daisley's claim is barred by the Limitation Act 1950. The High Court found that the limitation defence failed because the cause of action accrued on a continuing basis or, in the alternative, the cause of action had been concealed by fraud within the meaning of s 28(b) of the Limitation Act 1950. The Council was therefore found liable and ordered to pay damages. It has appealed.
In regards to the High Court's finding of continuing breach, this Court finds that while there were periods in which this case could be analysed in terms of continuing breach, nothing turned on it because there was no allegation of repeated breach of duty after August 2009. Losses from earlier breaches of duty continued to accrue after that date but for the most part they were not distinct losses from those suffered outside the limitation period. That being so, the only loss that was within time for limitation period was the loss on the sale of the property. That is unless the running of time was postponed under the Limitation Act 1950.
Turning to s 28 of the Limitation Act 1950, this Court has considered the test for fraudulent concealment in New Zealand, particularly in light of recent developments in the United Kingdom. The Court considers that subjective recklessness as to the existence of facts compromising a cause of action is sufficient to meet the test for fraudulent concealment.
In this case, none of the Council officers actually knew of the 1988 land use consent. This Court respectfully considers that the Judge was wrong to the extent that he found the Council's corporate knowledge of the consent was sufficient for the purposes of s 28. However, this Court finds that Council officers were provided with credible information that Council records might well contain evidence of a land use consent or existing use rights, and their failure to search the records for this information was unreasonable in the circumstances. Therefore, the Council's failure to search its records for a land use consent or evidence of an existing use was subjectively reckless. That being so, it was unconscionable, amounting to fraudulent concealment for purposes of s 28(b) of the Limitation Act 1950. It follows that time did not run for limitation purposes until the consent was disclosed on 22 September 2009.
In regards to misfeasance, this Court finds that the Council officers were not subjectively reckless as to the limits of their authority. The appeal against the finding of liability for misfeasance in public office is allowed.
The appeal is otherwise dismissed.
The Council must pay costs for a complex appeal on a band A basis, with provision for second counsel, and usual disbursements.
NEGLIGENCE -LIMITATION -FRAUDULENT CONCEALMENT
In 2004, Mr Daisley purchased a property near Whangārei that included a long-established quarry. When he began to work the quarry the Whangārei District Council asserted that he needed a resource consent to do so. The Council issued abatement and enforcement notices to Mr Daisley and his company, eventually seeking an enforcement order against him in the Environment Court. During this time Mr Daisley asserted that the quarry enjoyed existing use rights, however the Council insisted that he had not proved this. In September 2009, following further inquiries from Mr Daisley's lawyer, the Council located in its records a resource consent issued for the quarry in 1988.
The Council admits that it was negligent. The High Court also made a finding of misfeasance in public office, which the Council denies.
Mr Daisley did not commence this proceeding until August 2009, just inside six years from when the 1988 land use consent was discovered. The main issue in this case therefore is whether Mr Daisley's claim is barred by the Limitation Act 1950. The High Court found that the limitation defence failed because the cause of action accrued on a continuing basis or, in the alternative, the cause of action had been concealed by fraud within the meaning of s 28(b) of the Limitation Act 1950. The Council was therefore found liable and ordered to pay damages. It has appealed.
In regards to the High Court's finding of continuing breach, this Court finds that while there were periods in which this case could be analysed in terms of continuing breach, nothing turned on it because there was no allegation of repeated breach of duty after August 2009. Losses from earlier breaches of duty continued to accrue after that date but for the most part they were not distinct losses from those suffered outside the limitation period. That being so, the only loss that was within time for limitation period was the loss on the sale of the property. That is unless the running of time was postponed under the Limitation Act 1950.
Turning to s 28 of the Limitation Act 1950, this Court has considered the test for fraudulent concealment in New Zealand, particularly in light of recent developments in the United Kingdom. The Court considers that subjective recklessness as to the existence of facts compromising a cause of action is sufficient to meet the test for fraudulent concealment.
In this case, none of the Council officers actually knew of the 1988 land use consent. This Court respectfully considers that the Judge was wrong to the extent that he found the Council's corporate knowledge of the consent was sufficient for the purposes of s 28. However, this Court finds that Council officers were provided with credible information that Council records might well contain evidence of a land use consent or existing use rights, and their failure to search the records for this information was unreasonable in the circumstances. Therefore, the Council's failure to search its records for a land use consent or evidence of an existing use was subjectively reckless. That being so, it was unconscionable, amounting to fraudulent concealment for purposes of s 28(b) of the Limitation Act 1950. It follows that time did not run for limitation purposes until the consent was disclosed on 22 September 2009.
In regards to misfeasance, this Court finds that the Council officers were not subjectively reckless as to the limits of their authority. The appeal against the finding of liability for misfeasance in public office is allowed.