Court upholds sensible approach to local authority works on private property

Tuesday 24 July, 2018

Local authorities have a power to construct works on private property under s 181 of the Local Government Act 2002 with the consent of the owner or after following the process in Schedule 12.  The High Court recently ruled that local authorities must only give notice and follow the process under s 181 and Schedule 12 once; the process need not re-start if the property changes hands. 

This was good news for Watercare Services Ltd which sought a declaration from the High Court to this effect.  Watercare is Auckland’s CCO which manages water and wastewater.  It proposes to construct the Central Interceptor, a major piece of wastewater infrastructure which will cost over $1 billion and which will pass under more than a thousand private properties in Auckland. 

Section 181 requires local authorities to either obtain the consent of the owner or comply with Schedule 12, which requires that the owner and occupier are notified and an objection process is followed.  Schedule 12 contains a proviso that if there is a change of occupier there is no need to give notice to the new occupier.  Watercare went to the High Court for a declaration as to whether the same is true in respect of owners (in respect of which the Schedule is silent).  The Court held that it is: no additional consent or Schedule 12 process is required if ownership of the property changes hands part way through or after that process. 

The Court noted that the alternative interpretation would have been absurd and unworkable as it would have required fresh consents or a fresh Schedule 12 process if the property was sold.  This could lead to delays (especially for large, long-term projects like the Central Interceptor), uncertainty and additional cost. 

This decision means that purchasers do not have a right to be notified under the LGA about proposed s 181 works if notice has already been given to the previous owner.  However, there are two key protections for purchasers.  The first is that the standard agreement for sale and purchase or real estate includes a warranty that at the date of the agreement, and at settlement, no notice or consent has been received or given in relation to the property which has not been disclosed to the purchaser.  The second is that a notice or consent under s 181 must be included on a LIM report under s 44A(2)(d) of the Local Government Official Information and Meetings Act 1987.  Local authorities should ensure that their LIM processes will pick up any s 181 consents or notices. 

If you require advice on s 181 please contact Campbell Stewart in the Property Team or Megan Crocket in the Local Government Team.  If you require advice in relation to LIMs please contact Megan Crocket or Shaye Thomas in the Local Government Team.