Section 108(2)(b) allows a consent condition to require a bond to be entered into with the council. Section 108A specifies that a bond may be required to ensure the performance of any one or more conditions of a resource consent and it may continue to be in force after the expiry of the consent to secure the ongoing performance of conditions relating to long-term effects. Bonds can be registered against the Title (Computer Register) of the land to which the activity relates to act as a covenant running with the land and binding subsequent owners (s109).
If a consent holder is for some reason unable to ensure compliance with a bond requirement, such as the liquidation of a consent holder company, then a financial bond is available for the council to use to undertake those specific works. A further example is that a bond may be required for landfill activities where the effects of the landfill may still occur after it is filled and rehabilitated (for example, because of leachate problems).
For subdivisions, s222 allows bonds to be entered into as part of grant of a completion certificate and deposit of the survey plan (s224) and in doing so a council may exercise all powers conferred under s108A. This effectively allows bonds to be applied following grant of subdivision consent.
It is critical that legal advice is obtained to assist in drafting a bond condition. An example bond condition:
At least two months prior to the installation of any part of the marine farm, the consent holder shall enter into an enforceable agreement and bond with the AB Council for a sum of $1,000.00 per hectare granted to ensure compliance with conditions (X) and (Y). The bond is required under Section 108(2)(b) of the Resource Management Act 1991. To meet the bond requirement, either:
- The bond shall be guaranteed by a guarantor acceptable to the AB Council who shall be bound to pay for the carrying out of any works required to meet requirements of Conditions (X) and (Y) in the event of any default by the consent holder, or
- The consent holder shall provide the AB Council with such security as is acceptable to the AB Council for the performance of any works required to meet the requirements of Conditions (X) and (Y) in the event of any default by the consent holder.
The value of the bond should be based on the estimate cost of the works subject to the bond.
Bonds should not be used as a penalty for non-compliance. The purpose of a bond is to ensure that an event such as restoration occurs, not to solve compliance issues.