9.05.2018

Minister for Canterbury Earthquake Recovery & Anor v Fowler Developments Ltd & Ors [2013] NZCA 588

Following the 22 February 2011 Canterbury earthquake, the Government decided to zone Christchurch based on the level of damage and to offer to purchase properties in the worst affected areas known as the ‘red zone’.  Areas were classified as “red zone” where rebuilding may not occur in the short-to-medium term because the land was damaged beyond practical and timely repair.

Owners of insured residential properties in the red zone could accept either 100% of the 2007 capital rating value, with all earthquake-related insurance claims being assigned to the Crown, or 100% of the 2007 land rating valuation, with the landowner retaining their ability to pursue their insurance claims (100% Offer).  By contrast, owners of vacant land and uninsured improved properties in the red zone were offered 50% of the 2007 rating value only (50% Offer).

The respondents (who own either vacant land or uninsured improved properties in the red zone) challenged the lawfulness of the red zone and the 50% Offer.  They sought the same 100% Offer that was made to owners of insured residential properties.

The respondents were initially successful in High Court, which held that:

  1. The red zone had not been lawfully established, because it had not been created using powers under the Canterbury Earthquake Recovery Act 2011 (CER Act).
  2. The decision to create the red zone did not lawfully affect the property rights of the respondents.
  3. The decision to make the 50% Offer was not made according to law, as it had not been made in light of the purposes of the CER Act.

On 3 December 2013 the Court of Appeal gave judgment on an appeal by the Minister for Canterbury Earthquake Recovery and the CERA Chief Executive.  It unanimously held that:

  1. The red zone was lawfully created.
  2. The decision to make 50% Offer was not lawfully made because it did not properly address the purposes of the CER Act.

In particular, the red zone was lawful because it was created using the residual freedom of the executive, it did not affect the legal rights of owners and the decision was not required to be made under the CER Act.  The Court described the red zone announcement as the dissemination of accurate information about areas where land damage had occurred, which did not require specific statutory authorisation.

By contrast, the 50% Offer was made by the CERA Chief Executive using his power under s53 of the CER Act.  The crucial issue was whether he had properly exercised that statutory power.  The Court of Appeal held that he had not done so because the decision was not made in accordance with the recovery purposes of the CER Act, and in particular the purpose of enabling people to recover from the earthquakes.

The Court of Appeal appears to have been persuaded by the plight of the respondents and others in the same position.  While there must be sympathy for vacant land owners who could not insure their land, the claims of owners of uninsured improved properties to that sympathy is less clear.  Those owners took a risk in not insuring their properties.  That risk having eventuated, an argument can be made that they should carry the loss.  It remains to be seen whether the Government will seek leave to appeal to the Supreme Court.

Back to Summary Table

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry_100x100 1
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

UAE COMPANIES LAW UPDATE
New Zealand businesses looking to establish a foothold in the UAE have many options
10.09.2018 Posted in Trade and Commodities
When You Can’t Have it Your Way
Antares Restaurant Group Limited (which owns and operates Burger King in New Zealand) has received a whopper of a sanction – a ban on the company supporting visa applications until July next year.
4.09.2018 Posted in Employment Law
Getting the Deal Through: Shipping 2019
The Marine team at Hesketh Henry have again contributed to Getting the Deal Through: Shipping 2019.
30.08.2018 Posted in Maritime Law
A Guide to Concurrent Delay
Hesketh Henry was pleased to host the New Zealand Institute of Quantity Surveyors on 14 August 2018, where one of our construction partners, Nick Gillies, presented on concurrent delay.  The same pre...
22.08.2018 Posted in Construction Law
Update – New Zealand’s New Biofouling Standards
New Zealand has introduced a new standard requiring all vessels to have a “clean hull” on arrival in the country after 15  May 2018.[1]  The objective is to minimise the introduction of ...
21.08.2018 Posted in Maritime Law
No Longer Stumped: The Health and Safety at Work Act 2015 Sentencing Guidelines
The High Court at Auckland has released its first and much-awaited decision under the Health and Safety at Work Act 2015 (HSWA).
21.08.2018 Posted in Health & Safety Law
Sanctions Update: Iran
In May the United States announced the re-imposition of sanctions in relation to trade with Iran
16.08.2018 Posted in Trade and Commodities
Send us an enquiry
For expert legal advice, please complete the form below or call us on (09) 375 8700.
  • This field is for validation purposes and should be left unchanged.