Court of Appeal decision waters down principle of non-derogation from resource consents.
When a new entrant applies to access water from a waterbody that has already been fully allocated to another user, is there any scope for a council to grant it?
Since the High Court decided the Aoraki case in 2004, resource consent holders have been able to cite the principle of non-derogation to challenge any attempts by councils to grant further consents that could reduce the ability of an existing consent holder to exercise their grant to its fullest extent. This argument is generally used in the context of water permits, but has been applied to other activities, including jet boating.
Aoraki involved applications for water take affecting Meridian Energy’s consents to take water from Lake Tekapo. The High Court held that it would be unlawful for a consent authority to grant another operator a water permit where that resource was fully allocated and it would reduce the amount of water available to satisfy existing consents. The Court applied the property law principle of non-derogation from grant. That principle prevents the grantor of a right in property from taking action that derogate from the rights given to the grantee.
Late last year the Court of Appeal considered a challenge to a decision to grant a water permit made by an existing consent holder, again down in Canterbury (Hampton v Canterbury Regional Council). The fact scenario was fairly complex but, in short, the existing consent holder (Simon) relied upon Aoraki to say that a new consent shouldn’t have been granted as it derogated from his right to take and use water. The Court of Appeal distinguished the case from Aoraki as it found that there would be no actual impact. This was because there was a condition on the new consent saying that if Simon was taking water to irrigate the land, the new consent holder couldn’t.
However while the Court distinguished Aoraki, it also made a number of comments disagreeing with the findings of the High Court in that case. The Court of Appeal said the High Court’s reliance in Aoraki on the principle of non-derogation from grant was problematic and it disagreed that a water permit creates a right to property. It said that the consent authority does not need to protect the economic interests of consent holders.
What the decision signals is a shift away from relying on the principle of non-derogation in the context of resource consents. Instead of considering the effect of a new take on the property rights and economic interests of an existing take, the Court suggested that decision-makers need to take a wider view and look at relevant planning instruments, any actual and potential effects on the environment, and section 5 of the RMA.
However the practical effect of the decision remains to be seen, particularly given the Court acknowledged that the adverse impacts on existing consent holders is an entirely relevant consideration, particularly where a catchment is fully allocated. Existing consent holders are, of course, part of the existing environment. In fact, while the Court disagreed with the High Court’s reliance on the principle of non-derogation to reach its conclusions, it said it did not disagree with the outcome in that case. It said that “the grant of further rights to use a resource already fully allocated to others seems the antithesis of that purpose [ie s5]”.
Scenarios where new entrants want to access water that has already been “allocated” to others will only become more and more common as the pressure on the water resource intensifies across the country. Ultimately each scenario that arises will need to be looked at and the outcome is likely to change depending on the particular facts. Each will inevitably come down to a question of the scale of the effect of the proposed activity on the operation of the existing consent(s), and whether it is possible for conditions to be imposed that allow the two to co-exist. This is an approach that is more consistent with the sustainable management approach of the RMA, rather than involving a strict application of property law principles, but it could also be seen as giving rise to more uncertainty in what is already an increasingly testing environment for existing water users and resource managers.