A significant case in relation to development contributions was recently decided by the High Court, in relation to Hamilton City Council’s (HCC) development contributions policy (DC policy) and its application.
Development contributions are a funding tool for territorial authorities to charge those undertaking developments a portion of the capital expenditure cost necessary to service growth over the long term, for big ticket items such as three waters infrastructure, roading and other amenities required for growing communities. The Local Government Act 2002 (the LGA) sets out what is required by councils in order to impose development contributions, which must be done through setting a development contributions policy, and then requiring development contributions in accordance with that policy.
An application for judicial review was brought against HCC by a group of developers who were essentially claiming that HCC’s DC policy was not compliant in a number of respects with the provisions of the LGA, which was resulting in significant overcharging of development contributions.
The decision includes significant findings on development contributions. We have summarized the key findings below:
- When considering remissions relating to the reduced demand of a particular development, the DC policy requires that the reduced demand must create material future capacity in the Council’s infrastructure network. The Court considered that this was allowed under the Act, and not every development that had reduced demand for infrastructure should receive a remission. The Court found that the LGA’s references to the avoidance of ‘over-recovery’ of development contributions was meant in an aggregate sense, rather than in relation to specific developments.
- A claim was made in relation to the unreasonableness of the Council’s ‘no refunds’ policy where there was an overcalculation of development contributions, which happened relatively often due to the contribution being required at the resource consent stage. HCC’s policy where there was an overpayment was to provide the developer with ‘site credits’, which were able to be exercised for subsequent site development or redevelopment, meaning if further development did not occur the funds were essentially lost. At the hearing, HCC recognised this issue and had already removed its ‘no refunds’ policy from its 2020/21 DC policy. In these circumstances, the Court declined to grant the relief seeking that the Council reconsider its ‘no refunds’ policy.
- Another claim related to an industrial zone subdivision, which constructed and fully funded all three waters and roading infrastructure to service the subdivision and therefore claimed that it did not create any demand on infrastructure. HCC relied on the need for local roading in the wider catchment as justification for requiring contributions. The Court held that as long as a causative link can be established between the development and infrastructure demand, development contributions are still attracted, and it is not appropriate to isolate individual components of infrastructure for which a development generates direct demand and only charge development contributions in respect of those individual components.
- The Court also found that where a development contributions policy identifies catchments for various development contribution fees, it is not essential for projects that are funded by that specific fee to be located within the catchment, as long as there is a causal link i.e. that developments within that catchment create demand for a particular project.
- A claim was also brought against a part of the policy which calculated stormwater infrastructure development contributions for residential developments based on the number of bedrooms in a dwelling. Given that stormwater infrastructure generally relates to the size of an impervious surface, this method of calculation did not make sense for multi storey developments. The Court declined to find this method of calculation ‘unreasonable’ but did provide some informal direction to HCC to reconsider this in light of the increasing prevalence of multi-storey, high density developments.
Overall, this decision will be a relief to HCC due to the sheer scale of claims made against its policies. The overarching theme of the judgment is that councils cannot be reasonably expected to calculate personalised development contribution figures for each development taking into account its precise features. While it can be a blunt tool, a calculation based on floor area is considered appropriate, although it may result in some unfairness at a granular level and remissions may not be readily provided.
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Holland Beckett promotes two partners
Leading New Zealand law firm, Holland Beckett has announced the promotion to partnership of two of its senior lawyers, Will Dymock and Natasha van der Wal, effective from April 1st 2024.
The Bay of Plenty based firm has offices in Tauranga, Rotorua, Whakatāne and Taupō, and advises local, national and international clients. With over 140 staff including over 70 lawyers, the full-service firm\'s specialist teams work collaboratively and cater to a vast range of legal matters, including property, trusts and estates, commercial, corporate, finance, employment, family, civil litigation, resource management and local government. Holland Beckett also has a specialised Māori Legal Unit.
“It is a pleasure to announce the promotion of Natasha and Will, both experts in their respective fields”, says Ken Hawkes, Partner at Holland Beckett. “These talented lawyers represent the diverse capabilities we have as a firm, and the growth and strength of our team. We look forward to expanding the partnership with their specialist expertise”.
The promotion of Will and Natasha expands the partnership to 16, which is testament to Holland Beckett’s reputation as a top tier legal employer, firmly focused on recruiting the best talent and developing the next generation of legal leaders. The firm has the most female partners of any law firm in the Bay of Plenty, growing from two to five women in the past seven years.
Will Dymock, Partner
Will advises clients on a wide range of finance, corporate, restructuring and commercial transactions. Will has extensive international and domestic experience advising financial institutions and businesses (small and large) across a broad range of areas including asset finance, general corporate lending, property finance and corporate finance. Will specialises in aviation and asset finance and leasing where he advises international clients, including financial institutions, aircraft lessors, lessees / airlines and other aviation market participants, on a wide range of aviation financing, acquisitions and sales, leasing and lease restructuring. Prior to joining Holland Beckett in 2021, he spent six years in Singapore where he worked for two leading international finance practices, most recently as a Senior Associate in the global asset finance team at Clifford Chance. Prior to Singapore, Will worked in a leading banking and finance practice in Auckland.
Natasha van der Wal, Partner
Natasha joined Holland Beckett as a Senior Solicitor in 2016. Natasha’s expertise is focused on property law, commercial law and Māori legal issues. Natasha provides strategic and trusted advice on a broad range of property and commercial matters for individuals, corporate entities and local government. She has experience with complex property issues including subdivisions and development, the acquisition and disposal of residential, rural and commercial properties; and commercial leasing and licencing matters generally. As part of the specialised Māori Legal Unit at Holland Beckett, Natasha provides advice on Māori legal issues for local government, individuals, Māori trusts, Māori incorporations and post settlement governance entities. She is experienced with Māori property matters such as partitions, large commercial developments, iwi social housing and Papakainga. She has appeared before the Māori Land Court on property related matters. Outside of work, you’ll find Natasha supporting her children on the sidelines of their various sporting interests. She also promotes scientific literacy for children in New Zealand as a trustee of the House of Science NZ Charitable Trust.
Family Trusts Q&A Evening – Whakatāne
Come along to a free Trusts Q&A evening with Holland Beckett’s Trust Law experts Luke Stewart, Dan Broadhurst and Brittany Ivil.
5:30 to 6:30, Wednesday 22 May
BNZ Partners Centre, 181 The Strand, Whakatāne This free event is an opportunity for the Whakatāne community to get general guidance and discuss specific issues: Do I still need my Trust?
How easy is it to wind up my Trust?
If I keep my Trust what do I need to do?
How can I simplify my Trust? There is no charge for this session, and it is open to the public.
Please email Tiffany.head@hobec.co.nz or contact our Whakatāne office +64 7 308 8325 to indicate your intention to attend.
Holidays Act – could change finally be on the horizon?
Earlier this week the Workplace Relations and Safety Minister Brooke Van Velden gave a speech to the Auckland Business Chamber, reiterating her priorities following the conclusion of the Government’s 100-day plan in which Fair Pay Agreements were abolished, and the availability of 90 day trial periods extended to all new employees. The Minister has confirmed that delivering changes to the Holidays Act (“Act”) is one of her top priorities, which is likely to be welcome news to both employers and employees. Compliance with the Act has been difficult and costly for employers and payroll providers. The Labour Government put together a taskforce in 2018 to address the many issues being experienced by employers when calculating leave and holiday entitlements. The taskforce made a number of recommendations, all of which were accepted (for further details on these changes see our previous article here). A draft Leave Entitlements Bill was prepared, however was not introduced prior to last year’s election. The overarching issue with the Act is that there are multiple ways to calculate an employee’s holiday pay, and the Act has struggled to keep up with working arrangements outside of a normal five day a week salaried employee. Payments such as bonuses, commission, or if an employee works variable hours mean that the calculations are not straight forward and are often done incorrectly. The changes proposed were an attempt to simplify these calculations. The Minister has now confirmed that the changes recommended by the taskforce and the draft Bill will not be “simply rubberstamped” and will be subject to scrutiny as well as consultation with key stakeholders. She went on to say “if the policy is difficult to draft, chances are businesses would have a tough time implementing it too”. This indicates a major reset of the Act, and the changes which we had expected, could be on the way. Other indicated changes to employment law include a change to the rules surrounding contractors (with the Court of Appeal due to hear the Uber case this month (see here for our previous advice regarding this), we are likely to also have further developments in this area from the Courts later in the year) and changes to personal grievances. The Minister has asked for advice on whether an income threshold for raising a personal grievance can be set and removing eligibility for any remedies when an employee is at fault. The Minister has been very clear that she would like to receive feedback from the stakeholders who will eventually have to work with the Act and it is important that businesses use this opportunity to have a say on the Act. The majority of employers have struggled to achieve strict compliance with the Act due to its many complexities. Putting forward issues which regularly impact your business will ensure these can be given consideration. Our team will be closely monitoring this and will provide specific information on how feedback can be given when this information is available. If you require assistance with your current obligations under the Act, or would like to discuss providing feedback then please feel free to get in touch with a member of our specialist employment team.