Mangawhai Ratepayers' and Residents' Association Incorporated v Kaipara District Council

• Jurisdiction: New Zealand
• Judge: Arnold J,Elias CJ,O'Regan J
• Judgment Date: 03 May 2016
• Neutral Citation: [2016] NZSC 48
• Docket Number: SC 15/2016
• Court: Supreme Court
• Date: 03 May 2016

Between

Mangawhai Ratepayers' and Residents' Association

Applicant

and

Kaipara District Council

Respondent

[2016] NZSC 48

court:

Arnold J, Elias CJ, O'Regan J

SC 15/2016

IN THE SUPREME COURT OF NEWZEALAND

Application for leave to appeal to the Supreme Court — the applicant Association had challenged the validity of rates set by the council to meet its obligations under a $50 million loan used to pay for a wastewater facility — the council had failed to comply with the requirements of the Local Government Act 2002 (LGA 2002) and the Local Government (Rating) Act 2002 — this meant the project, the borrowing to pay for it and the setting of rates to meet the loan obligations were unlawful — validation of the borrowing was not required as it fell within the protected transactions provisions (the PTPs) of the LGA 2002 — a validating Act was passed in respect of the rate rises — whether a certificate of compliance under the PTPs related only to the contractual relationship between the council and the creditor, and had no effect on the statutory relationship between the local authority and the ratepayer — whether the rates validation provisions, when interpreted in a manner which was consistent with the right of judicial review under s27(2) New Zealand Bill of Rights Act 1990, did not validate the assessment of the rates in relation to illegal borrowings or the council's failure to consult with ratepayers — whether the litigation had been public interest litigation and costs should not have been awarded against the applicant.

counsel:

J A Browne for Applicant

D J Goddard QC and E H Wiessing for Respondent

• A The application for leave to appeal is dismissed.

• B The applicant must pay costs of $2,500 to the respondent.

JUDGMENT OF THE COURT

1 The applicant Association applies for leave to appeal against a decision of the Court of Appeal, 1 dismissing its appeal against a decision of the High Court. 2

2 The High Court decision was one of a number of decisions by Heath J dealing with the Association's application for judicial review of decisions made by the respondent Council to enter into contracts relating to a project for the

evelopment and construction of a wastewater facility at Mangawhai, to borrow money to pay for the project and to levy rates to meet outstanding borrowings

3 The project was mismanaged. The cost of the project far exceeded estimates. The Council borrowed over $50 million. It then levied rates at levels reflecting what the Court of Appeal called “massive increases”, 3 this in an area of low median income and communities that are among the most deprived in the country. The Council failed to comply with the requirements of the Local Government Act 2002 (LGA 2002) and the Local Government ( Rating) Act 2002 (the LGRA). This meant the project, the borrowing to pay for it and the setting of rates to meet the loan obligations were unlawful.

4 The Minister of Local Government appointed commissioners to take over the running of the Council from the elected councillors. After the Association's judicial review application was filed, the commissioners sponsored a local Bill to remedy the illegality of previous rating. The Kaipara District Council (Validation of Rates and Other Matters) Act 2013 (the 2013 Act) was passed in December 2013. This retrospectively validated rates for the 2006–2013 financial years.

5 The Council's borrowings were not validated by the 2013 Act. Validation was not required because the loans were deemed to be lawful under the “protected transactions provisions” (the PTPs) of the LGA 2002. 4 Nor did the 2013 Act validate the transactions relating to the project or rates to be levied in the period after 2013.

6 The Association succeeded in the High Court in obtaining a declaration that the Council acted unlawfully in entering into contracts for the project. It failed, however, in its challenge to the validity of rates levied and to be levied on members of the Association and in a damages claim against the Council. Its appeal to the Court of Appeal also failed.

7 The Association seeks to pursue three issues on appeal to this Court.

8 The first concerns the PTPs. The loans made to the Council were protected transactions to which ss 117 and 118 of the LGA 2002 applied. Under s...