Report of the
Enquiry into the
Rotorua Council handling of the
2009 Environment Court case
ENV-2009-AKL-304
11 March 2016
Report of Enquiry into the Rotorua Council handling of the
2009 Environment Court case ENV-2009-AKL-304
Introduction
This enquiry into the Rotorua Council handling of the 2009 Environment Court case ENV-2009-AKL-304, RRAL v Fischer (“the Fischer case”), was called in response to calls from Rotorua ratepayers dating back to 2010. During the intervening period the Rotorua Council and Councilors have resisted attempts to obtain full disclosure of the circumstances of the case, and the ultimate costs to ratepayers. In the absence of any official enquiry I have undertaken my own enquiry, following as far as possible the usual processes required for the conduct of an impartial, objective enquiry which is open to evidence from all parties.
There will be criticism of the fact that I have conducted the enquiry myself. However, I believe that any criticism would be better directed at the failure of the Rotorua Council to enquire into and fully disclose the causes and conduct of this case and that this enquiry and report should be judged on its merits.
Evidence received
The evidence is published as two separate documents which are available on request.
Background
facts
1. Since 1994 Mr Fischer has owned a property at 628 Te Ngae Road Rotorua on which a stand of specimen trees was growing.
2. In 1995 RRAL asked Mr Fischer to cut the trees on his property. Mr Fischer was reluctant to do so, but offered instead to sell the property to RRAL at market value. RRAL declined the offer, and from 1995 to 2000 some of the trees on Mr Fischer’s property were topped by RRAL with Mr Fischer’s consent.
3. In 2000 Mr Neville Munro, the then Chief Executive of RRAL, applied to the Environment Court for an enforcement order for more extensive cutting of the trees on Mr Fischer’s property. RRAL was not successful in that action and the case was resolved by a consent order under which RRAL paid $1000 in costs to Mr Fischer, and Mr Fischer agreed to further specified cutting of the trees.
4. RRAL violated the consent order by cutting beyond the limits imposed by the court. RRAL claimed the unlawful cutting was accidental.
5. In 2004 Mr Frazer Hawkins (on behalf of Mr Bob Wynn, then Chief Executive of RRAL) reached an agreement in principle with Mr Fischer under which Mr Fischer would exchange his property for a property of similar size, character or value outside the airport zone.
6. Sometime later, but before any discussion of details had taken place, the property exchange agreement negotiated by Mr Hawkins on behalf of Mr Wynn was ruled out by the RRAL board.
7. In 2009 Mr George White, the then Chief Executive of RRAL applied to the Environment Court for an enforcement order for the cutting of the trees on Mr Fischer’s property.
8. The application for the enforcement order was declined by the Court on 9 November 2009.
9. On 7 December 2009 when Mr Fischer was absent from his property RRAL contractors began unlawfully cutting Mr Fischer’s trees. RRAL claimed the unlawful cutting was accidental.
10. On 21 December RDC and Mr Fischer concluded a settlement agreement to allow the trees to be lawfully cut.
11 On 22 December the Daily Post newspaper published an editorial condemning Mr Fischer’s conduct in the case.
12 In 2015 Mr Fischer initiated inquiries
into the costs of the 2009 case to Rotorua Council.
Questions to be addressed in the present enquiry
1. How much did the Fischer case cost RRAL and/or RDC?
2. Who was responsible for the conduct of the case?
3. Was there a culture of disrespect for the law at RRAL?
4. Were the decisions of RRAL management soundly based?
5. Did the RDC/RRAL system of governance perform as it should have?
6. Did the Daily Post newspaper deal with the issue in a responsible way?
7. Has there been full disclosure by RLC?
Findings
1. How much did the case cost?
(i) The original invoices from the RRAL
lawyers, Chapman Tripp have not been found in Council or RRAL records,
but copies supplied by Chapman Tripp to RLC following an LGOIA request
show that the Chapman Tripp legal fees came to $386,795.
The RRAL accounts receivable records show that the legal fees were paid
by RRAL as they fell due (more or less).
(ii) in addition the settlement agreement involved $147,000 in compensation for the trees, $50,000 compensation to Mr Fischer for mounting his defence to the legal proceedings, $2500 for the services of the Rotorua Peoples Union in negotiating a settlement after direct negotiations broke down in the aftermath of the unlawful cutting incident of 7 December 2009 and $2759 to lawyers Davys Burton. These latter costs were met directly by RDC.
(iii) the total financial cost of the case to RRAL and ultimately RDC was therefore at least $589,000.
(iv) I have not attempted to account for the cost of RDC and RRAL staff time throughout the litigation process, but it must have come to a considerable sum.
2. Who was responsible?
There has been much confusion, even
among RDC councilors, over who was responsible for the conduct of the case.
There is a point of view, most actively promoted by Cr Sturt, but supported
by certain members of the RRAL board, that “Guerin and Winters” (RDC
Chief Executive Mr Peter Guerin and Mayor Mr Kevin Winters) were responsible.
I accept that Cr Sturt genuinely believes this to be the case, and there is a reasonable presumption that the Mayor and the CEO of the Council would have had an intimate knowledge of what decisions were being made in regard to the case, and would have been in a position to influence those decisions.
However Mr Winters has denied any knowledge of who was paying for the RRAL litigation and how much it cost. While that might seem surprising, the documentary evidence is not inconsistent with Mr Winter’s claim of ignorance.
From February 2009, all RRAL legal business conducted by Chapman Tripp was billed to RDC, with the exception of the Fischer case. The Fischer case was brought by RRAL, not by RDC, and the RRAL accounting records show that it was paid for by RRAL. Alone among the other airport matters under way at the time, the RDC was not directly involved in the Fischer case. Therefore, in contrast to the other cases, there is no reason to assume that either Mr Winters or Mr Guerin would have had a detailed knowledge of what was taking place in the Fischer case.
At least three members of the RRAL board
- Mr Bill Kingi
, Mr Mike McVicker
and Mr Bob Martin
together with the former RRAL Chief Executive Mr George White have put
forward the notion that the proceedings were the responsibility of Messrs
Guerin and Winters, and have even gone so far as to suggest that the Chapman
Tripp bills in the Fischer case were paid by the RDC.
However the Chapman Tripp invoices and RRAL payment records show that responsibility lay with the RRAL board and not with Mr Guerin or Mr Winters. It appears that RRAL progressed the case in a way that may have been designed to keep RDC in a state of ignorance and which was at best imprudent.
In this regard I note that
(i) the case was managed by RRAL contrary to the earlier implicit decision that airport legal cases would be managed by and billed directly to the Council.
(ii) Mr George White was the Chapman Tripp Contact Person and Chief Executive at RRAL and therefore was personally responsible for the management of the case.
(iii) RRAL assumed liability for the Chapman Tripp costs at a time when practically speaking it was insolvent, and would have known that the cost of litigation would ultimately fall to the RDC
(iv) the Chapman Tripp legal costs were a factor in RRAL requiring a financial bail-out by its sole shareholder, the RDC.
(v) the RDC and
its officers were apparently kept in a state of ignorance about the progress
and prospects of the litigation, as suggested by Cr Sturt.
It is also evident that
(i) Mr Guerin and Mr Winters made convenient and plausible scapegoats for the actions of others, most particularly the Chief Executive and the Board of RRAL
(ii) the claim by
RRAL board member Mr Bill Kingi that “RRAL was a disinterested party
in the proceedings” is absurd in the light of the evidence provided by
the Chapman Tripp invoice and payment records
(iii) Mr Guerin only stepped in to negotiate a settlement with Mr Fischer after the Court had delivered its decision declining the application for an enforcement order.
3. Was there a culture of disrespect for the law at RRAL?
In the 2000 case RRAL breached a consent order. RRAL claims that the breach was accidental, but there is reason to believe that the breach may have been deliberate.
In the 2009 case the Environment Court
once again decided against RRAL. Mr White has stated that he thought that
RRAL “should have won” the case and “would have won on appeal”.
He advised the Daily Post newspaper that "The transtasman flights are not
in jeopardy and will continue as planned on December 12". He then instructed
Mr Rhys Caunter from Trees-R-Us to cut the trees on Mr Fischer’s property
before 10am on 7 December, which coincidentally was the day and the time
on which Mr Fischer was due to return to Rotorua to to meet Mr Guerin and
negotiate a settlement to the dispute.
The reasonable inferences are that
(i) Mr White decided to take by fiat what the Court had told him he could not take lawfully.
(ii) RRAL and Mr White considered that their interests in this matter were so important that they could place themselves above the law.
4. Were the decisions of RRAL management soundly based?
Apart from the matter discussed in Section 3 above, there are three points at which RRAL made bad or highly questionable management decisions
(i) the decision to step back from the property exchange agreement negotiated by Mr Hawkins which would have seemed on the face of it to be fair and just, and which would not necessarily have imposed any nett cost upon RRAL or RDC.and might indeed have returned a profit. Mr White testified to the Court, and reiterated in his 2015 discussion with Mr Fischer, that RRAL held no records of the 2000 case, and it is also possible that there were no records of the RRAL engagement of Mr Hawkins to negotiate a resolution to the issue. However if that was the case it would an extraordinary failing on the part of RRAL, and at worst evidence of a deliberate attempt by someone to scuttle the proposed settlement.
(ii) The RRAL decision to seek an enforcement
order against Mr Fischer was coloured by political considerations, as indicated
by Mr Mike Foster’s evidence to the Environment Court.
(iii) Chapman Tripp billing over a two
month period for “Reviewing of Fischer website and correspondence being
circulated by him” and “Watching brief on Fischer website”
were costs to RRAL and ultimately to the RDC which were more closely linked
to the political sensitivities of the case than to the hard legal issues.
The monitoring of the “Fischer website”, which cost up to $500 per
hour over an undisclosed number of hours, was a poor use of public money.
RRAL may have sincerely believed that my political opinions were objectionable. However it was unwise to introduce those considerations into the court proceedings. We can safely assume that the Chapman Tripp lawyers would have appreciated the risks inherent in such a tactic, and would have apprised RRAL of the possible adverse consequences. Therefore RRAL itself must be held responsible for the misjudgment.
5. Did the RDC/RRAL system of governance perform as it should have?
The Airport Company although fully owned
by Council, was a separate entity which could operate “under the radar”
of Council and its officers. Thus there was no effective shareholder oversight
of the Company. Some Councilors, for example Cr Kenny, realised that things
were going awry at RRAL
but they lacked the numbers to prevail over their fellow Councilors who
were either unduly complacent, or in the case of Cr Martin and Cr McVicker,
were themselves deeply implicated in the actions of the airport company.
The outcome was poor quality decision making, and a virtual absence of
accountability among the decision makers which caused the district to suffer
a significant financial loss.
6. Did the Daily Post newspaper
deal with the issue in a responsible way?
The Daily Post openly supported the Rotorua international airport project. It could have taken that position without taking sides on the issue of the Fischer trees, but it would have been difficult. As it happened, the Daily Post failed to maintain objectivity and even adherence to the facts when it came to the Fischer trees.
Journalistic activism is justified when
it involves “speaking truth to power”, standing up for the rights of
those who are not well placed to defend themselves, rectifying manifest
injustice and so on. However when media is active on behalf of vested interests
or the civil authorities it threatens the interests of a free society.
At the very least media activism should not be allowed to over-ride three
key tenets of good journalism: truth, objectivity and responsibility.
The media should take all reasonable steps to ensure that they publish
the true facts, reveal all the relevant facts and gives them appropriate
weight in context and do nothing that might incite social disorder or lawless
acts. On all three counts the Daily Post failed the test of good
journalism. The claim that the settlement was about “two trees” was
plainly wrong
. The claim that the sum of compensation for the trees was $197,000 was
also wrong (the actual sum was $147,000), although the Daily Post might
not have recognised that error unless they had either followed the court
proceedings or spoken to Mr Fischer. Finally the claim that Mr Fischer
was “holding the city to ransom” in the circumstances of the time was
inflammatory and gave rise to fears that members of the public might be
incited to “take the law into their own hands”. In short, the
Daily
Post reporting was not truthful, objective or responsible.
7. Has there been full disclosure by RLC?
Some RLC staff have attempted to fully implement the provisions of the LGOIA. However there remain unanswered questions including why:
(i) the copies of
the Fischer invoices supplied by Chapman Tripp were ‘fudged’.
(The Fischer invoices were the only Chapman Tripp invoices to be fudged,
and RLC would be in a position to know why they were fudged).
(ii) the original Fischer invoices were removed from the RRAL financial record files sometime between February 2010 and June 2016 without proper cause or process
(iii) the documents relating to the 2000 Environment Court hearing were removed from the RRAL records sometime after the 2000 hearing without proper cause or process, and no it would appear that no effort was made to retrieve the missing information from Davys Burton. In other words there was either a deliberate attempt to conceal the events of 2000, or at best a lack of will at RRAL to retain or recover information relating to those events.
The present Council Administration has
been inconsistent in its approach to the Local Government Official Information
and Meetings Act.
Mr Gaston initially declined the request to release information relating
to the case on grounds that were untenable
. Some months later he finally released the invoices but with extensive
deletions
, which he initially justified on grounds which were not lawful, before
declaring that it was “necessary to withhold the information to protect
the privacy of natural persons”.
Council’s reluctance to release information has obstructed the delivery
of natural justice to Mr Guerin and Mr Winters.
Discussion
A commonly held view is that “Winters
and Guerin” were responsible for the conduct of this affair. That, in
essence, was the view put forward by Messrs Kingi, Martin and McVicker
, (RRAL board members) and Cr Sturt
and, by implication, by Mr White
. After being presented with the evidence of the Chapman Tripp invoices,
Messrs Kingi, Martin and McVicker did not respond to the invitation to
offer an explanation.
They in effect fell silent. That silence is open to differing interpretations.
One possible explanation is that they were embarrassed at having failed to take appropriate notice of a matter with serious financial and operational implications for RRAL. However, if that was the case, one would expect that at least one of the three would have frankly admitted to the lapse of vigilance.
A second possible explanation is that the three board members had themselves been “kept in the dark” by someone at RRAL. However, if that was the case, Messrs Kingi, Martin and McVicker would have no apparent motive to persist with the cover-up.
A third possible explanation is that Messrs Kingi, Martin and McVicker had been engaged in a deception which could no longer be sustained in the face of new evidence. This is an explanation which Messrs Kingi, Martin and McVicker have left open through their failure to offer any explanation of their own, and thus the RRAL Chapman Tripp payment records stand as powerful evidence that their attempts to divert the blame in the direction of the RDC were founded on falsehood.
Cr Sturt has continued to maintain that
“Winters and Guerin” were responsible.
I accept that as his honest opinion, but it is not supported by the facts.
He claims that he was kept in the dark about the matter and “kicked off
to the back benches” when he began asking awkward questions. I do not
dispute that may have been the case. Cr Sturt also alleges that Cr McVicker
was kept in the dark, but in this he was clearly relying on the word of
Cr McVicker himself.
Mr Guerin has not volunteered any evidence to the enquiry, and neither has Mr Winters although Mr Winters did reply to the Questionnaire of July 2015. However the failure of Messrs Guerin and Winters to respond is in a different category to the silence of Messrs Kingi, Martin and McVicker who had suggested that responsibility lay with others. When confronted with evidence to the contrary they failed to offer any explanation. So far as I am aware Messrs Guerin and Winters have not made allegations against others, and there is no evidence to suggest that they themselves were responsible for the management of the case. The allegations against them are only supported by inference, which is not sufficient to persuade me that they should be held responsible.
This is a case which ultimately caused the ratepayers of Rotorua to suffer an unnecessary and entirely avoidable loss of approximately $600,000, and in the absence of a thorough-going Council investigation there is no assurance that a similar debacle could not occur at some future time.
Most importantly, the reputations of
Mr Guerin and Mr Winters have been unfairly impugned in the aftermath of
the affair. In the interests of justice, the full facts still need to be
disclosed.
11 March 2016
Geoff Fischer
628 Te Ngae Road
Owhata
Rotorua 3010
Email:geoff.fischer@veri.co.nz
Phone:
022 6196296