In our previous FYI The "Supermarket circus" - Trade Competition under the RMA we commented on proposed amendments to the Resource Management Act 1991 (RMA) in the then Resource Management (Simplifying and Streamlining) Amendment Bill. These amendments were intended to restrict trade competitors' rights of submission and appeal on resource consents, plan changes, and other consents.

The new provisions

The proposed amendments have since been passed into law. Part 11A now prevents trade competitors from submitting on proposals by their competitors, unless they are "directly affected" by the proposal and the effect "adversely affects the environment".

The new Part 11A allows any party to Environment Court proceedings (including the consent authority) to obtain a declaration from the Environment Court that a trade competitor has breached these requirements and to seek an award of costs. If the declaration is granted, the applicant may also apply to the High Court for damages against the trade competitor.

General Distributors Limited v Foodstuffs Properties (Wellington) Limited [2011 NZEnvC-112]

On 26 July 2011, the Environment Court issued what appears to be its first decision relating to the new provisions.

General Distributors Limited (GDL) applied to the Court for a declaration that Foodstuffs Properties (Wellington) Limited (Foodstuffs) breached sections 96 and 308B of the RMA when it submitted against GDL's resource consent application to construct and operate a supermarket at 3 Main Road, Tawa, Wellington.

The Court noted "trade competitor" and "trade competition" are not defined in the RMA. Taking guidance from the Concise Oxford Dictionary, it held trade competition occurs where "two or more organisations [are] striving to establish superiority over other(s) in the buying and selling of (in this case) goods".

The Court rejected an argument by Foodstuffs that it did not have jurisdiction to grant the declaration. Foodstuffs argued section 308G of the RMA was a code, and limited a party's ability to seek a declaration that there had been a breach of the trade competition provisions until after the Council's decision had been appealed and decided by the Environment Court.

The Court held, while section 308G of the Act gave parties the ability to seek a declaration that a party had acted as a trade competitor in an Environment Court appeal that "...should not be understood as impliedly prohibiting an application for a declaration at an earlier stage". The Court noted, if that was the case, the only way of preventing a party from breaching section 96(2) would be to judicially review the Council's decision not to strike out the submission under section 41C(7) (presumably on the grounds the submission was an abuse of process).

The Court noted that, in making the amendments to the Act, Parliament was motivated by "the frustration of seeing developments (not least supermarket developments) being bogged down in seemingly endless RMA litigation that, in the end, was motivated by nothing more than the wish to stifle the opening of a rival store in a given location". The Court found, "To confine the power to do something until that litigation is concluded, would make no sense."

The Court then considered the content of Foodstuffs' submission and whether it breached sections 96 and 308B of the RMA. The submission did not assert that Foodstuff's would be "directly affected" by the proposal in an environmental sense. The submission stated that locating the proposed Countdown supermarket outside the Tawa Town Centre would impact on the Centre's "viability and vitality". Foodstuffs argued this meant its submission was concerned with adverse effects on the Tawa Town Centre, not trade competition.

In The "Supermarket circus" - Trade Competition under the RMA, we expressed a concern that section 308B, although excluding submissions raising effects of trade competition, might not prevent a submission raising "consequential effects" (for example, the effects that trade competition might have drawing people away from an existing town centre). The Court appears to have now "shut the door" on this argument. It found, in respect of Foodstuff's submission raising concerns about the Tawa Town Centre "...no matter how you dress it up, that relates to...an effective trade competition in section 308B terms". The Court further found that Foodstuff's submission was in breach of section 308B of the RMA.

Implications

This decision establishes that declarations that a party is a trade competitor may be brought at the Council hearing stage. Parties do not need to wait until a matter has been appealed and determined by the Environment Court. Interestingly, the decision also suggests that consent authorities may have the ability under section 41C(7) of the RMA to strike out submissions by trade competitors themselves (on the grounds that if the submission is in breach of sections 96 and 308B of the RMA it is an abuse of process).

The decision confirms the Court will not allow trade competitors to make submissions that dress up trade competition arguments as "consequential effects" (for example, drawing away customers having an adverse effect on the viability and vitality of an existing town centre). Lastly, the decision suggests the Courts will be guided by Parliament's clear intention to discourage trade competition in RMA proceedings when making future decisions, and will interpret those provisions broadly (i.e. against trade competitors).