Council staff will be all too aware of the importance of consultation and the risks of judicial review. In this article we look at two Council decisions which were found to be invalid due to insufficient or incorrect consultation and we discuss what they mean for future Council decision-making.

In the first case, the Court decided that the Council should have consulted on a carpark redevelopment, even though there was no specific statutory requirement to do so. In the second case, the Court decided that the Council's consultation on changes to its gambling policy was flawed.

Case One: Failure to consult

For most Council decisions, there is no specific statutory requirement for consultation. Instead, it is up to a Council to decide how it will consider the views and preferences of those people who are likely to be affected by, or who have an interest in, the decision, depending on how significant the Council decision is: ss78 and 79 LGA 02.

This was the starting point for the first case, Pascoe Properties Ltd v Nelson City Council (Pascoe), which concerned a Council decision to redevelop a Council-owned carpark.

The Council had purchased the carpark land using targeted rate funding from inner city ratepayers and it had been used as a public carpark for over 30 years. The Council wanted to change the carpark's layout, remove 26 carpark spaces, and build a small reserve. The Council had generally described the redevelopment in a September 2009 strategy document and allocated funding in its annual plan, but Council staff and consultants subsequently revised the redevelopment in June 2010. The Council sought tenders in February 2011.

The plaintiffs owned or leased buildings next to the carpark. They complained that they had first become aware of the revised plans in August 2010; that a public meeting on the revised development in September 2010 was not advertised; and that the Council did not make any changes as a result of submissions made at that meeting.

The Court decided that the Council did have a duty to consult when changing the purpose of the carpark or carrying out works that were inconsistent with its use as a carpark. The circumstances of the decision created a duty to consult. The Court also suggested that, because of the original targeted rate funding, inner city ratepayers had a legitimate expectation to be consulted before the Council decided to use the carpark for any other purpose.

Here, the Council had failed to comply with its duty to consult on the revised plans. The Court ordered the Council not to accept any tenders and to instead consult on the proposed redevelopment.

Case Two: Failure to correctly follow special consultative procedure

The second case, Nelson Gambling Taskforce Inc v Nelson City Council (NGT), concerned Council consultation on changes to its gambling policy on pokie machines. Here there was a statutory duty to consult - the Gambling Act requires Councils to use the special consultative procedure in the LGA 02. The details of the special consultative procedure and the required statement of proposal (SoP) will depend on what the Council proposes to do:

  • if a Council is adopting a gambling policy, then the SoP will be a draft of the proposed policy: s87(2)(a) LGA 02; or
  • if a Council is amending or replacing a gambling policy, the SoP must include the proposed changes; reasons for the changes; and reasonably practicable alternatives: s87(2)(b) LGA 02.

In NGT, the Council proposed to amend its policy by making one change - reducing the cap on pokie machines from 301 to 269. The Council's SoP described this one change; but the Council also attached a draft policy (with the one change noted) without further explaining what submitters should, or should not, submit on.

Submitters then proposed additional changes to other parts of the policy. The Council did not restart the special consultative procedure or issue a new SoP in response to these submissions. Instead, Council officers listed the additional changes in a public Council bulletin where the original SoP had been notified, and separately contacted people that the Council knew were interested in the policy. The Council then amended the gambling policy to reduce the cap on pokie machines (but not by as much as originally proposed) and to include the additional changes.

The Court decided that the Council's approach did not comply with s87(2)(b) LGA 02:

  • The Council's SoP had suggested a stricter policy approach (by reducing the cap on pokie machines) when the additional changes "loosened" the policy on pokie machine location.
  • Members of the public would not have known, from the SoP or the draft policy released for consultation, that additional changes were proposed (indeed they were not initially proposed by the Council).
  • The subsequent advertisement of the additional changes did not fix the Council's initial non-compliance with s87(2)(b).

The Court held that all Council changes to the policy were invalid, except for the reduction in the cap on pokie machines as this was within the scope of matters being consulted on in the Council's SoP.

What do the decisions mean for Councils?

  1. Councils will be required to consult in some circumstances

In Pascoe, the Court took very seriously the need for Councils to consider the views and preferences of people likely to be affected by a Council decision: s78 LGA 02.

The Court looked at all the circumstances behind the Council decision and decided that the Council should have consulted before making the decision, even though the decision was not significant. In other words, the duty to consult arose from the circumstances.

Pascoe does not give clear guidance on when a Court will "find" similar circumstances in the future. Two troubling aspects of the decision are that:

  • the Court did not consider the effect of s79 of the LGA 02, which gives the Council a discretion as to how it will consult, depending (in part) on the significance of the decision; and
  • the Court did not draw on the developing case law around Part 6 of the LGA 02, including the Court of Appeal decision Whakatane District Council v Bay of Plenty Regional Council which held that a Council was not required to consult where a Council had reasonably considered relevant community views and preferences at all appropriate stages (under the former s78(2) LGA 02).
  1. Decisions outside the scope of the SoP are likely to be invalid

The scope of a Council's SoP will dictate the limits of Council decision-making at the conclusion of a special consultative procedure. When a Council is amending a policy using the special consultative procedure:

  • The Council must be sure that the SoP complies with s87(2)(b) and clearly explains what issues are "at large" and can be the subject of submissions.
  • The Council can still attach a draft policy to a SoP (eg to provide context), but cannot rely on the policy to implicitly set the scope of the SoP.
  • The Council cannot make changes that are outside the scope of the relevant SoP.

If a Council then receives submissions on matters outside the scope of proposed changes, the Council can either carry out a further special consultative procedure or refuse to consider the submissions (to the extent that they relate to matters beyond scope). It can be risky to rely on other notification processes as a "patch-up" halfway through the consultation process.