Justice Paul Heath has told the Mangawhai Ratepayers’ & Residents’ Association the Kaipara District Council is entitled – through the Validation Act which Parliament passed last December – to collect rates now to pay for Mangawhai’s EcoCare sewerage system, even though the council’s original borrowing decisions were in breach of the Local Government Act.
Members of the association have withheld about $700,000 of rates payments on the grounds of illegality.
The judge agreed with the association, in a final decision issued on Friday on the association’s application for judicial review, that his original ruling on this aspect of its proceeding was implicit, not explicit, so he set out his reasons in a decision on an application he heard on 18 July, but didn’t change his decision.
Meanwhile the association has filed an appeal to the Court of Appeal. The association has called a meeting for Sunday 10 August to discuss its options.
Justice Heath said in Friday’s decision he was satisfied that, had the Validation Act not been passed, the association would have succeeded in obtaining the relief it originally sought in relation to the council rating decisions over the wastewater system. The judge found those decisions were covered by “protected transaction” status under the Local Government Act.
He said he didn’t make a declaration on that because the Validation Act operated retrospectively to declare rating decisions & other policies & plans lawful.
Key points Justice Heath made on Friday about his original decision were: “I found that the EcoCare & modification 1 agreements were entered into in breach of the relevant provisions of the Local Government Act. I rejected the contention that the historical rating decisions were unlawful. I held that those decisions had been retrospectively validated by the Validation Act.
“I also rejected the association’s submission that the loan contracts were unenforceable. I found that they were ‘protected transactions’, for the purposes of the Local Government Act. That meant that they were enforceable at the suit of the creditor.”
In his decision on the 18 July hearing, Justice Heath said the association felt he hadn’t dealt with the primary point it raised, whether the council was entitled to levy rates in the future to meet obligations falling due under a loan agreement that was entered into in breach of the Local Government Act but regarded as valid & enforceable because of its status as a protected transaction.
In Friday’s decision, Justice Heath elaborated on his earlier answers, saying: “Its [the council’s] ability to raise money through rates to meet that lawful commitment is not affected by any failure to comply with procedural prerequisites.”
The judge then refused the association’s application for an interim injunction to stop the council collecting withheld rates pending hearing of the appeal it filed just before this resumed High Court hearing. He didn’t accept the submission by association counsel Matthew Palmer QC that Parliament validated the rates for some purposes, but not for others.
Justice Heath indicated in his original decision that he’d award indemnity costs in favour of the association, and said in Friday’s decision he was satisfied that, if the Validation Act hadn’t been passed, the association would have succeeded in its claim relating to invalidity of council rating decisions arising out of the EcoCare agreements & modification 1.
The association has spent about $222,000 on the case. In his latest ruling, Justice Heather ordered the council to pay indemnity costs for most of the time leading up to the first hearing, and standard court costs for the period to his May decision.
The chairman of the commissioners appointed to run the council in 2012, John Robertson, said the court had confirmed the council’s clear mandate to collect rates, including those withheld: “The association has had its day in court. We invite the association executive to accept the very clear rulings by Justice Heath and to withdraw its appeal lodged in the Court of Appeal.
“No one is a winner from this litigation. It is time to accept the judgment and for the district to be able to move on.”
Link: High Court decision, Mangawhai Ratepayers’ & Residents’ Association Inc v Kaipara District Council