Northland Regional Council v Kaipara District Council

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeFrench J
Judgment Date27 March 2018
Neutral Citation[2018] NZCA 63
Docket NumberCA526/2017
Date27 March 2018

[2018] NZCA 63



Kós P, French and Clifford JJ


Northland Regional Council
Kaipara District Council
Cross-appeal Respondent
Richard Bruce Rogan and Heather Elizabeth Rogan
First Respondents
Mangawhai Ratepayers' & Residents' Association Incorporated
Second Respondent

D J Goddard QC and E H Wiessing for Appellant and Cross-appeal Respondent

J A Browne for First and Second Respondents

Judicial Review, Local Government — appeals against an interim decision of the High Court (“HC”) which dismissed challenges to the rates set by the cross-appeal respondent but upheld some rates and a final decision quashing the unlawful rates and associated penalties — whether delegation of rates assessment breached s24 Local Government (Rating) Act 2002 (“LGRA”) (due date or dates for payment) — penalty on unpaid penalties

The assessment of rates was a purely mechanical/mathematical process done by a computer involving no element of discretion or evaluative judgment. In those circumstances it was not the sort of process that engaged public law restrictions on delegation of powers. The rule against delegation only applied to functions requiring the exercise of discretion or evaluative judgment. It had been open to the Regional Council to enter into an arrangement with the District Council under which the latter would recover unpaid rates on its behalf. The Regional Council had breached s24 LGRA by passing resolutions purporting to set rates without stating the date on which the rate must be paid. Both Councils had failed to comply with the time requirements under s58 LGRA (imposition of penalty).

Under the Goods and Services Tax Act 1985 (“GST Act”) the legal liability for payment of GST fell on the supplier of the goods and services, not the recipient of those services. The cost of the GST liability therefore fell on the local authority.

Section 57 LGRA (penalties on unpaid rates) provided that a local authority may by resolution authorise penalties to be added to rates that were not paid by the due date. If a penalty formed part of the rate, it followed that a resolution authorising the imposition of penalties on unpaid rates must encompass all penalties previously imposed.

It was not the law that every rates irregularity automatically resulted in a remedy being granted to the ratepayer and the rates being set aside. The errors were technical and had not caused any prejudice to R or any ratepayer.

The appeal against the interim and final decisions of the HC in relation to the Regional Council was in part. The cross-appeal was allowed in part.

  • A The first and second respondents' application for an extension of time to file a memorandum in accordance with r 33 of the Court of Appeal (Civil) Rules 2005 is granted.

  • B The appeal against the interim and final decisions of the High Court in relation to the Northland Regional Council is allowed to the extent described at [90] of this judgment.

  • C The cross-appeal is allowed to the extent described at [91] of this judgment.

  • D Orders under s 5 of the Judicature Amendment Act 1972 are made in the terms set out at [92] of this judgment.

  • E The first and second respondents must pay the appellant and cross-appeal respondent one set of costs for a standard appeal on a band A basis with usual disbursements.

  • F Costs in the High Court are to be determined by that Court in light of this judgment.


(Given by French J)


Mr and Mrs Rogan are members of the Mangawhai Ratepayers' & Residents' Assoc Inc. They and the Association issued judicial review proceedings in the High Court challenging the legality of certain rates charged by the Kaipara District Council and the Northland Regional Council.


The case was heard by Duffy J. In an interim decision, the Judge dismissed the challenges to the rates set by the Kaipara District Council but upheld some of those relating to the Regional Council rates. 1 She found the Regional Council had not complied with certain requirements in the Local Government (Rating) Act 2002 (the Rating Act) and granted a declaration that the regional rates in question had not been lawfully set or assessed. The issue of further relief was reserved.


In a subsequent decision (the final decision), Duffy J made orders quashing the unlawful Regional Council rates and associated penalties. 2 She declined to validate them under s 5 of the Judicature Amendment Act 1972 and also declined to make an

order under s 120 of the Rating Act directing the Regional Council to set replacement rates.

The Regional Council now appeals both the interim and the final decisions.


The Rogans and the Association cross-appeal the finding that the Kaipara District Council rates were not unlawful. In addition, although successful against the Regional Council, they seek to support Duffy J's judgment relating to the Regional Council on grounds other than those relied on by the Judge. These additional or other grounds are arguments they advanced in the High Court but which the Judge rejected. The notice setting out the additional grounds was filed late. However, the Regional Council and the Kaipara District Council raised no objection to the late filing, and we accordingly grant an extension of time. 3


The Rogans and the Association ask us to invalidate the impugned resolutions and quash all rates and penalties imposed in reliance on them.


This judicial review proceeding represents another chapter in a long running legal battle.


It began with a major cost blow-out for a new sewage scheme which the Kaipara District Council was proposing to establish in Mangawhai. Consultation with the community about the scheme had taken place on the basis the construction cost would be $17 million. The actual cost was in the vicinity of $63 million. There was a public outcry and as a protest, the Rogans and other members of the Association withheld payment of rates to the Kaipara District Council. They believed the Kaipara District Council was illegally entering into contracts relating to the scheme, illegally taking out loans to pay for the contracts and illegally levying rates to repay the loans.


Then followed an Auditor General's report that was critical of the Kaipara District Council and the appointment of commissioners to replace some councillors. 4

The Association also issued judicial review proceedings against the Kaipara District Council. Before those proceedings were determined, Parliament had passed the Kaipara District Council (Validation of Rates and Other Matters) Act 2013 retrospectively validating the rates. The Judge who heard the judicial review proceedings — Heath J — found the Kaipara District Council had acted illegally but in light of the validating legislation only issued a declaration of illegality regarding the entry into the contracts. He declined to issue a declaration of invalidity regarding the rates themselves. 5

Dissatisfied, the Rogans considered it unjust they should be required to pay rates a portion of which was to gather revenue to pay debts that were illegal. They filed an appeal against Heath J's decision in this Court and continued to withhold payment of the rates pending the outcome of the appeal (which was dismissed) and a subsequent leave application to the Supreme Court. 6


The Supreme Court however declined to grant leave. By that time, the Kaipara District Council had already issued proceedings in the District Court against the Rogans and other ratepayers seeking recovery of the unpaid rates and penalties. The Kaipara District Council was the named plaintiff although it was also suing in respect of rates said to be owing to the Regional Council.


The Rogans intended to defend the case on the grounds the Kaipara District Council's rates assessment and rates invoices did not comply with ss 45 and 46 of the Rating Act and that until compliant documents were issued rates were not payable. As regards the Regional Council rates, the argument was that the Kaipara District Council could not sue in its own name for Regional Council rates.


Shortly before trial, the Regional Council was joined as a second plaintiff. That prompted the Rogans and the Association to examine the Regional Council's rating process for the first time. They identified alleged deficiencies and the judicial review proceedings which are the subject of this appeal were then launched.


We turn now to address each of the claimed irregularities at issue in both the appeal and the cross-appeal, the relevant High Court rulings, the arguments on appeal and our assessment.

Non-compliance by Regional Council with s 24 Rating Act — due date

The Regional Council is a local authority under the Local Government Act 2002 for the Northland region. 7 There are three constituent territorial authorities in the Northland region, one of which is the Kaipara District Council. The other two are the Far North District Council and the Whangarei District Council.


The Regional Council sets its own rates, due dates for payment of its rates and a penalties regime for unpaid rates. Some of the rates it sets are region wide rates and others are specific to parts of the region, for example the Kaipara region. The rates assessed by the Regional Council on rating units in each constituent district are payable in addition to those assessed by the three District Councils for their respective districts.


Under rating services agreements entered into by the Regional Council and the three District Councils, the Regional Council appoints the District Councils to prepare the rates assessments and invoices for all Regional Council rates, the rates themselves having first been set for each rating year by Regional Council resolutions. In accordance with the...

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