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

JurisdictionNew Zealand
CourtSupreme Court
JudgeArnold J,Elias CJ,O'Regan J
Judgment Date03 May 2016
Neutral Citation[2016] NZSC 48
Docket NumberSC 15/2016
Date03 May 2016

[2016] NZSC 48

IN THE SUPREME COURT OF NEWZEALAND

court:

Arnold J, Elias CJ, O'Regan J

SC 15/2016

Between
Mangawhai Ratepayers' and Residents' Association
Applicant
and
Kaipara District Council
Respondent
counsel:

J A Browne for Applicant

D J Goddard QC and E H Wiessing for Respondent

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.

The issues were: whether a certificate under s118 LGA 2002 affected only 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 validation of rates under s5 of the 2013 Act, 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; and whether the litigation had been public interest litigation and costs should not have been awarded against the Association.

Held: The loans made to the council were protected transactions to which s117 and s118 LGA 2002 applied. The application of those provisions in the present case meant that the council's obligations to its creditors in respect of the borrowings for the project were valid and binding on the council.

The question as to whether a local authority could set rates to service the performance of obligations under a protected transaction was a question of general or public importance. But, in the face of the clear wording of s118, the Association's argument could not succeed. There was no scope for a narrower interpretation. This case was not an appropriate one to address the proposed question. Nor was there any risk of a miscarriage if leave was not given on this point.

The Association wished to argue that its narrow interpretation of the 2013 Act was more consistent with the Bill of Rights. Legislation validating illegally struck rates was not uncommon and therefore the interpretation of the 2013 Act could be a matter of general importance. However, the 2013 Act was unique and the arguments relating to its interpretation were specific to the present facts.

There was no risk of miscarriage in the event that leave was not granted on this point. It was not arguable that the 2013 Act could be interpreted other than as a validation of all irregularities, not just those recited in the preamble. There was no room for a narrower Bill of Rights-compliant interpretation.

The CA did not consider that there was any proper basis to depart from the normal rule that costs followed the result. It said that, although the Association was motivated by considerations of principle, its members had a private interest in the outcome it. The Association wished to argue that the fact that, as ratepayers, members of the Association would benefit from a favourable outcome should not have led to a conclusion that a concessionary approach to costs should be applied because the litigation was public interest litigation. This was a facts-specific inquiry and not a matter that could be classed as of public significance. There also was no risk of a miscarriage of justice if leave was not granted on this point.

Application for leave to appeal dismissed.

JUDGMENT OF THE COURT
  • A The application for leave to appeal is dismissed.

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

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...

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