New Zealand’s increasing natural disaster risk makes the question of a neighbour’s liability more relevant than ever. You need look no further than the cliffs of Muriwai to see the impact of naturally occurring hazards on private property. A recent case by the Supreme Court about the cliffs in Christchurch provides guidance on who should pay. 

The case of Young v Attorney-General arose in the wake of the 2010/2011 Canterbury earthquakes as the landowner and respondent in this case is the Crown, who had acquired a number of red zoned properties. The Crown-owned properties sit on top of severely damaged cliffs which had caused rockfall to the land below. This land is owned by Mr Young, the appellant. 

The ongoing instability of the cliffs means that Mr Young’s property below is unsafe and has been red zoned. Mr Young rejected an offer from the Crown to purchase his property, instead choosing to bring a claim in nuisance. The remedies sought were, first, a declaration that the Crown should be required to remediate the risk of further rockfall and/or cliff collapse, and second, damages reflecting the value of Mr Young’s lost property.

The factual context of this decision

Mr Young owns properties beneath cliffs that were damaged in the Canterbury Earthquake sequence, leading to rockfall on Mr Young’s land. The cliffs are unstable and at risk of collapse onto Mr Young’s property. In June 2012, Mr Young’s property was designated as a red zone property under the Canterbury Earthquake Recovery Act. The Crown red-zoned the other properties above Mr Young’s land and acquired them between 2012 and 2015.

Mr Young was made offers by the Crown to purchase the property but all were rejected. The final offer was $733,601.62 being the value of the property in 2007 minus the private insurance proceeds and sums already received from EQC (totaling close to $1.35 million). Because of the severe damage caused by the earthquakes, the Christchurch City Council notified a new District Plan. This new District Plan means that Mr Young’s land is now subject to management areas, which prohibit or categorise as non-complying development activities including building and hazard-removal works.

Mr Young submitted a plan to the Council for remediation which would involve scaling of rock faces, removal of an extensive amount of fallen rock and debris, benching the cliff face, and building an extensive wall at an estimated cost of $4 million plus GST. This plan was dependent on obtaining a private plan variation to the Christchurch District Plan. The Crown advanced its own plan, which would cost an estimated $1.6 million plus GST to implement. This plan would also require resource consents.

The fact that the rockfall risk presented a substantial and unreasonable interference with Mr Young’s right to use and enjoy his land was not in dispute. The issue was the extent of the Crown’s duty to respond to the nuisance, including whether it had an obligation to remediate the risk of rockfall on the basis of its plan or Mr Young’s more extensive plan.

Procedural history

The High Court considered that whether it was necessary or not for the Crown to implement a remediation plan turned on the scope of the duty owed. The Crown was only required to do what was reasonable in all the circumstances, and no more than what, if anything, was reasonable, to prevent or minimise the known risk of damage or injury.

The High Court concluded that the plan advanced by Mr Young was not reasonable in all the circumstances as it was not practicable nor cost effective. The key barrier was the prohibited status of the works under the District Plan, as without obtaining a successful variation, the proposed works would be unlawful. The remedial works proposal advanced by the Crown was considered unreasonable for the same reasons, as there would be no certainty that Council would grant a resource consent for otherwise non-complying activities. Even if the ability to obtain consents was not an issue, remedial works were not considered reasonable in the circumstances, given that the cost of the works and the risks involved were out of proportion to the benefits that could be gained.

Further, the High Court found there was no legal obligation for the Crown to compensate Mr Young for his loss at all. This was because of three key reasons:

1. a claim in nuisance does not necessarily translate to a duty to fully compensate the plaintiff for their loss;
2. the nuisance which caused the current damage did not emanate solely from the clifftop properties owned by the Crown (such that placing the entire burden of rectification on the Crown would be inequitable); and
3. given the broader responsibilities of the Crown following the Canterbury earthquakes, the Crown was entitled to ration its resources to do the greatest good for the greatest number.

The Court of Appeal took a slightly different approach. It considered what the liability of the previous landowners on the cliffs might have been. The extent of their liability for loss caused by the rockfall and continuing nuisance posed by the unstable cliffs was unclear, however, the Court did not think it would be correct to hold the private landowners liable for the cost of remediation. In any event, by the time that the Crown acquired the land, the past earthquakes and changes to the Christchurch District Plan had already effected the wholesale loss of value to Mr Young’s property.

Interestingly, the Court of Appeal also thought that where the liable neighbour is a public authority, the authority’s competing resource demands arising from its public purposes may be a relevant consideration in assessing the extent of the duty. It was therefore inappropriate for policy reasons to attribute pre-acquisition loss to the Crown as a rescuer and the offer made by the Crown to purchase Mr Young’s property achieved proportionality between the Crown’s limited responsibility and the loss suffered by Mr Young.

The Supreme Court has the last word

The Supreme Court reiterated that there was no challenge to the finding that the rockfall was a nuisance. The Court proceeded on the basis that there can be liability in private nuisance for harm originating in some natural condition of the land (such as instability of cliffs) as opposed to the effect of human activity. The line of case law considered by the Supreme Court showed that that there can be liability in nuisance arising from a natural hazard where the defendant knows or ought to have known of it but does not take any steps to prevent it. In this situation, liability should be fault-based, rather than strict.

The Court agreed with the High Court in many aspects, including that to impose an obligation on the Crown to remediate goes beyond what is reasonable in these circumstances, largely because of the cost and difficulties of implementation. However, the Supreme Court chose to depart from the reasoning of the Court of Appeal as it did not see the offer from the Crown to purchase the property linked to the question of whether the Crown had met its duty.

Mr Young argued that the significance of the planning restrictions affecting the implementation of a remedial plan was relevant to remedy rather than liability. The Court disagreed, finding that it was fair to conclude the practicalities and proportionality weighed against Mr Young. This was particularly since proportionality was being assessed in the context where nuisance was created by a natural disaster and remediation would require a significant engineering solution at a considerable cost, which would exceed the value of the preserved property, resulting in a disproportionate outcome. 

The Court also agreed with the finding of the High Court that the Crown acquired the land in the context of a natural disaster, and where it had a number of calls on its resources. This context underpinned the Court’s view that the offer to purchase the property was not related to the duty. The making of that offer would not be required of a private landowner, and taking all matters into account, the Court concluded that nothing further was required from the Crown than to warn of the risks and assist with access to the property. Having done both these things, the Crown had met its duty.

What are the implications of this decision? 

New Zealand has a plethora of natural disaster risks, such as earthquakes, slips and floods. While the Crown met its duty in this case, what is required depends on the circumstances and factual context of the nuisance. Moreover, the Supreme Court took no issue with the concept that a defendant can be liable to act positively to prevent risk from a natural hazard-based nuisance, even if it did not create that nuisance 

What is considered reasonable is going to be a fact specific inquiry. However, this case (including its procedural history) demonstrates a reluctance of the courts to impose too heavy of a burden upon public authorities and private landowners alike to remedy the consequences of natural disasters. In our view, it is likely to be a foothold case for future litigation given the effects of climate change and natural disasters on New Zealand.

This article was written by Megan Jury, a solicitor in our Litigation team.