Tacon v Hastings District Council Hc Nap

• Jurisdiction: New Zealand
• Judge: Wylie J
• Judgment Date: 06 May 2013
• Neutral Citation: [2013] NZHC 1078
• Docket Number: CIV 2012-441-000610
• Court: High Court
• Date: 06 May 2013

IN THE MATTER OF a proceeding pursuant to the Declaratory Judgments Act 1908

BETWEEN

Janis Tacon

Plaintiff

and

Hastings District Council

Defendant

[2013] NZHC 1078

CIV 2012-441-000610

IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY

Application for declarations that a targeted rate imposed by the Hastings District Council was not lawfully levied under Local Government (Rating) Act 2002 — plaintiff owned a property adjoining local domain leased by council — council resolved to purchase domain for $1.17 million on a conditional basis — council considered the purchase could be funded in part by contributions from adjoining landowners — either a lump sum contribution of $23,000 each, or increased rates of $3,148 per year over 10 years — plaintiff did not agree — whether targeted rate was within statutory purpose — whether council had complied with statutory requirements — whether declaration under s3 Declaratory Judgments Act 1908 (declaratory orders on originating summons) was the appropriate remedy.

Counsel:

G W Calver for the Plaintiff billcalver@xtra.co.nz

M Casey QC for the Defendant matt@casey.co.nz

[RESERVED] JUDGMENT OF Wylie J

Introduction

1 The plaintiff, Mrs Tacon, seeks a declaratory judgment pursuant to s 3 of the Declaratory Judgments Act 1908.

2 Mrs Tacon is seeking declarations that a targeted rate imposed by the respondent, the Hastings District Council (“the Council”), was not lawfully levied in terms of ss 14, 16, 17, 18 and Schedules 2 and 3 of the Local Government ( Rating) Act 2002. She is asserting that the Council's actions in levying the targeted rate were not within the statutory purpose, and that the Council did not comply with the relevant statutory requirements.

3 The relief Mrs Tacon seeks does not happily fit within s 3 of the Declaratory Judgments Act. Except in limited respects, it does not raise any questions as to the validity or interpretation of any statutory provision, or other instrument. Rather, her claim essentially challenges the lawfulness of various steps taken by the Council. I return to this issue later in this judgment.

Background Facts

4 Mrs Tacon owns a property at 35 Airini Road, Waimarama.

5 Waimarama is a small beach settlement, approximately 30 kilometres southeast of Hastings. There are some 280 residences at Waimarama. About three quarters of those residences are holiday homes. The remainder are permanently occupied. Mrs Tacon is a permanent resident.

6 Mrs Tacon's property adjoins an area of some 5.99 hectares, known as the Waimarama Domain. The domain is open space. It is abutted to the north, west and south by 18 properties. 1

7 The domain was for many years owned by the Society of St Mary Trust (“the Trust”). In 1973, the Trust leased the domain to the then Hawkes Bay County

Council for 21 years. That lease was renewed for a further 21 years in 1994. The annual rent was then $450 per annum

8 The Hawkes Bay County Council has since merged with other local authorities, to become the Hastings District Council. It owns other open space land adjacent to the domain. The Council land however is not all in one block. There are two adjoining blocks to the south of the domain, a smaller block to the northeast of the domain which houses a surf lifesaving club and a carpark, and a further block which does not abut the domain, but lies a short distance to the north.

9 The rent payable under the lease of the domain fell due for review in 1994. It was agreed that it would become $11,800 per annum, effective from 30 September 1995. The rent fell due for renewal again in September 2001. The Council and the Trust were initially unable to reach agreement. There were protracted negotiations, and in the event, the Council agreed to a new rental formula. The rental was to be fixed by reference to a percentage of the capital value of the domain. The resulting rental was $59,200 (plus GST) per annum.

10 In the course of these negotiations, the Trust indicated that it had resolved to sell the domain. Its preference was to sell the domain to the Council for reserve purposes. If this could not be achieved, then the domain was to be put up for sale subject to the lease.

11 Council officers prepared a report for the Council's Finance and Monetary Committee. Inter alia, that report suggested that the Council should investigate the purchase of the domain. Alternatives noted were the purchase or lease of part only of the domain, or exiting the lease altogether.

12 The Committee resolved to consult with the Waimarama community, before finalising its preferred approach to the matter.

13 Consultation with the community started in January 2009. An open day was held, and a public meeting was convened. Eighty people attended the open day and 150 attended the public meeting. The Council also invited submissions on the future of the domain.

14 On 27 January 2009, the Waimarama Domain Protection Society (“the Society”), applied for incorporation. The Society had been set up by local residents. Mrs Tacon was one of its founding members. As its name suggests, its aim was to retain the domain as public open space, available for Waimarama residents and visitors alike.

15 On 30 January 2009, the submission period on the future of the domain closed. The Council had received 111 submissions. Eighty three supported the purchase of the domain in its totality. In addition, the Society had organised a petition. The petition was presented to the Council. It was signed by 2,057 people, and it supported the Council acquiring the domain. The Council resolved to receive the petition.

16 At some stage in early 2009, the possibility that the purchase of the domain might be partially funded by adjoining landowners was raised in a discussion between the Mayor, and a Mr Brendan Parker, who was a member of and spokesperson for the Society.

17 On 10 March 2009, the Council obtained a valuation from a firm of registered valuers, Logan Stone Limited. The valuation considered the impact on the value of adjoining properties if residential development were to occur on the domain. It assessed the indicative land value of the adjoining properties as being approximately $5,750,000. It noted that the owners of the adjoining properties enjoyed benefits because:

Logan Stone considered that there would be an overall 25 percent loss in land value if these benefits were no longer available to the adjoining properties. The report went on to conclude that the properties had a total market value of approximately $10,000,000 and that a fair and reasonable estimate of the overall loss of market value to adjoining landowners if the domain were to be developed for residential purposes, would be about 15 percent, equating to $1,500,000.

• (a) the Council maintained the domain;

• (b) the domain gave them vehicular access to the rear of their properties;

• (c) the domain afforded them low-level views; and

• (d) the domain gave them direct access to the beachfront.

18 Between 2009 and 2011, the Council and the Trust discussed the prospective sale/purchase of the land. Negotiations were delayed in part by an injunction against the sale issued by the Maori Land Court. This matter was only resolved in late 2010.

19 On 10 February 2011, the Trust wrote to the Council offering to sell the domain to the Council for $1,170,000 (plus GST). The Council resolved to accept the offer, on a conditional basis. It had to be sure that it was in a position to fund the purchase, and it considered that the purchase price might be able to be funded as follows:

• (a) Council funding — $500,000;

• (b) Hawkes Bay Regional Council — $300,000; and

• (c) adjoining landowners — $370,000.

20 On 16 April 2011, the Mayor, a councillor, a community board member, the Council's legal advisor, and its Chief Financial Officer, attended a meeting with the Society. Fourteen members of the Society attended. The purpose of the meeting was to advise that a purchase price that had been negotiated with the Trust, and to advise the proposed funding split which the Council considered might be appropriate. The proposed figure of $370,000 from adjoining landowners was put forward. The Council explained that it could levy a targeted rate on the adjoining properties, to recover either $23,000 per property as a lump sum payment, or $3,148 per year over 10 years. This latter figure allowed for interest, calculated at seven percent on the lump sum payment. Both amounts were inclusive of GST. The potential loss of value associated with any residential development of the domain was also discussed. Mrs Tacon and one other landowner spoke against the proposed targeted rate. A vote was then held to ascertain how the members of the Society present wished to proceed. Council representatives left the meeting when the vote was taken. Twelve landowners voted in favour of a targeted rate. Mrs Tacon did not vote in favour, but she agreed to abide by the majority decision.

21 On 27 May 2011, Council officers prepared a document under s 101(3) of the Local Government Act 2002. The document analysed the public/private benefits, and how the costs of purchase of the domain could be allocated. The Council also sought and obtained legal advice on targeted rating in the circumstances which had arisen.

22 On 7 June 2011, the Council and the Trust entered into an agreement for the sale and purchase of the domain. The purchase price was $1,170,000 (plus GST if any). The agreement was conditional upon the Council arranging funding contributions from the Hawkes Bay Regional Council and adjoining landowners, totalling not less than $670,000 on terms satisfactory to it, on or before 31 August 2011.

23 In the interim, Mrs Tacon had had the opportunity to reflect on her...