Who us? No, we just own property and aren't trade competitors

In the first consideration of the 2009 RMA amendments on trade competition, General Distributors (Progressive Enterprises) sought a declaration from the Environment Court that Foodstuffs Properties (Wellington) was in breach of the RMA by making a submission opposing its non-complying resource consent application to establish a new Countdown supermarket in Tawa. Progressive and its predecessors have had a Woolworths supermarket in the Tawa town centre since the 1970s, so when the site was sold in 2009 to Foodstuffs and with Progressive’s lease expiring, it was necessary for Progressive to find an alternative site in order to maintain a presence in Tawa.

It identified a site at the southern end of Tawa, on land prepared for development but outside the existing commercial town centre. Despite the clear intention of the 2009 Amendment Act to end trade competitors using the RMA to oppose such applications, Foodstuffs filed a submission in opposition. It challenged departure from a centres-based approach, and asserted that Council’s policy as demonstrated through a recent Plan Change supported locating any supermarket within the Tawa town centre. Granting consent to the Countdown supermarket, it was argued, would be contrary to the purpose and principles of the RMA and “make a mockery” of the approach adopted in the Plan Change.

Part 11A of the RMA (“Act not to be used to oppose trade competitors”) introduced limits on participation for trade competitors and “surrogates” by limiting a trade competitor to making a submission where it is directly affected by an effect that (a) adversely affects the environment, and (b) does not relate to trade competition or the effects of trade competition. To avoid that limitation, Foodstuffs first argued that the Court did not have jurisdiction to make a declaration at this stage of the application process (the first instance council hearing for the resource consent hearing was to be heard shortly after the jurisdictional hearing). Foodstuffs argued that s 308G of the RMA, which deals with declarations that a person has breached Part 11A, was a code that prevents a declaration that the trade competition provisions had been breached until after an appeal against a first-instance Council decision had been decided by the Environment Court, thereby opening the way for an aggrieved party to seek indemnity costs in the Environment Court and damages in the High Court.

In rejecting that submission, the Court found that s 308G exists for a particular purpose – visiting on a party who has pursued a trade competition purpose through the appeal process potentially substantial penalties for doing so. In contrast, the Court’s general jurisdiction to make a declaration on whether an act contravenes or is likely to contravene the Act remained available to Progressive. In reaching that conclusion, the Court forcefully noted:

“As is well enough understood, the motivation for (the amendments on trade competition) was the frustration of seeing developments (not at least supermarket development) 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 second Foodstuffs argument was that as it owns supermarket sites, and leases them to franchisees who conduct the retail trading, it did not engage in retail trading and was not a trade competitor. In rejecting that submission, the Court found that the groups of individuals forming Foodstuffs would be a person for the purpose of s 308B, and that exactly what structure or form a would-be competitor chooses to adopt is irrelevant. Unsurprisingly, the Court concluded that there can be no doubt that Progressive and Foodstuffs are competitors in the supermarket trade.

Having found it had jurisdiction, and that the two companies were competitors, it remained only for the Court to consider whether or not the Foodstuffs submission fell within the terms of s 308B. Unfortunately for Foodstuffs, and as the Court observed, its submission had more to do with issues of district plan integrity than specific effects on the environment, and what is contrary to the provisions of the plan will not always result in an adverse effect on the environment. Interestingly, however, the Court did agree with Foodstuffs that harming the viability and vitality of a centre addresses an adverse effect, as found by the Supreme Court in its Discount Brands decision. Nevertheless, the fallacy in Foodstuff’s position quickly became apparent as the Court found that the reason the new Countdown could have such an effect is that it will compete with Foodstuff’s own new supermarket (to be opened on the former Woolworths site) thereby drawing customers away from Foodstuff’s supermarket and the centre within which it is located. This, the Court noted, no matter now one dresses it up, relates to, in a sense of a connection with, an effect of trade competition.

The Court therefore made a declaration that Foodstuffs was in breach of the RMA, but declined to make a consequential enforcement order requiring it to withdraw its submission as Foodstuffs and the Council would ‘understand perfectly well the consequences and import of the declaration’.