Financial contributions can be required as a condition on a resource consent under section 108 of the Resource Management Act 1991 (RMA). Importantly for many councils throughout the country that have financial contributions rules applying to permitted activities, the District Court has recently confirmed that financial contributions can lawfully be conditions of a permitted activity rule: Carterton District Council v McCarron and Butler (CIV-2012-035-000050, CIV-2012-035-000051, 5 November 2013, District Court Masterton).

Carterton District Council (Council) issued proceedings seeking recovery of financial contributions levied on two separate building developments. The developers had refused to pay the contributions on the basis that no resource consent was required and that sections 108 and 220 of the RMA only permitted the imposition of contributions as a condition of consent.

The Council had granted building consents for the works, but no resource consent was sought as the works were permitted activities under the District Plan. The Council sought payment of financial contributions in reliance on a District Plan rule that stated:

"Amount of contribution for infrastructure as a standard of a permitted activity or as a condition of a resource consent:

(h) for land use development for residential, administrative, commercial and industrial purposes, a general district-wide infrastructure contribution of $5,000 (plus GST) per new unit for linking with public infrastructure and services…".

The issue was whether a permitted activity rule can lawfully include a condition that a financial contribution is required, given that section 108 (which relates to conditions of consent) provides the only explicit basis for imposing a contribution and is silent about activities which do not require a resource consent . The Court considered the versions of sections 77A and 77B of the RMA in force at the time and whether the requirement to pay a financial contribution could be a "standard, term or condition" of a permitted activity rule. Because section 77A(2) limited the power to make conditions in the plan to matters in sections 108 and 220, it concluded that what can be imposed through district plan provisions – including those relating to permitted activities - implicitly, but necessarily, imported the powers and limits contained in sections 108 and 220. The Court considered that such an extension "makes perfect sense in practical terms, and there would be a lacuna in the scheme of the Act without it".

The Court considered that its interpretation was reinforced in this particular instance by:

  1. section 76 of the RMA (which allows rules to bemade for the purposes of territorial authorities carryingout their functions, including in relation to provision of infrastructure); and
  2. the extensive public statutory process involved increating rules in district plans, which provides anopportunity for challenging their content.

The Court also noted that the 2009 amendment to the RMA introducing section 87A in place of the former sections 77A and 77B confirmed that statutory intention, and indeed expanded the range of documents that might impose conditions on a permitted activity. Those documents now include a plan, proposed plan, the Act, or regulations.

Comment

This decision is noteworthy as it resolves an important issue of practice, and potential uncertainty, for many councils which have financial contribution rules for permitted activities. It helpfully clarifies the scope of requirements that can be imposed on permitted activities. It should help to avoid disputes in the future about the lawfulness of permitted activity requirements, particularly in relation to financial contributions addressed by district plans, but also in relation to other matters addressed by district and regional plans. Ultimately however, it demonstrates that the RMA should be amended to confirm the Court’s conclusion.