Thursday, August 27, 2015

Mangawhai Ratepayers at Court of Appeal

Thirsty and worrying work this Court of Appeal stuff. A couple of beers in the Back Bencher at the end of a two day hearing in front of Justice Rhys Harrison, Justice Mark Cooper, and Justice Forrest Miller. Bruce Rogan (Chair of Mangawhai Ratepayers and Residents Association) and his wife Heather flank the MRRA legal team - Matthew Palmer QC on the left, and Kitt Littlejohn Barrister on the right. (The hearing was on the 25th and 26th of August 2015).

Very briefly, the causes of action for this hearing - which followed the judicial review heard by Justice Heath (posts here and here)), are as follows (simplified a bit by me):
  • that the Kaipara District Council (KDC) does not have the power to rate for unlawful purposes. That KDC acted unlawfully in deciding to enter into and expand the Ecocare Wastewater Scheme, and that it could not then enforce rates on ratepayers.
  • that the Validation Act did not retrospectively validate ALL matters  stemming from those unlawful decisions. It only validated various historic rating defects. Significant matters - including the additional $30,000,000 loan were not dealt with or validated by the Validation Act.
  • that the KDC acted inconsistently with the Bill of Rights Act by initiating Validation Legislation which had an effect of undermining MRRA judicial review proceedings - to which they had a right.
The CoA decision will take a while. A few months. Hard to usefully summarise such a packed and interactive two days - the justices stopped the QC's for Kaipara District Council (David Goddard QC) and Matthew Palmer frequently. Questions of clarification, information, tangential thoughts. Very interesting. One of the strands of the hearing was the matter of consequences. What would happen if the CoA made certain orders? Would it mean the cost of the Ecocare sewerage scheme being carried by all of Kaipara District's ratepayers? Among Matthew's closing remarks - his reply (which is apparently quite restricted in what it can/cannot address), he told the Justices, to the effect: "a consequence of adopting the arguments of my learned friend would mean that any Council in New Zealand can breech Local Government Act provisions with impunity, leave ratepayers with the bill, and mean that Long Term Plans all become window-dressing, ratepayer submissions become meaningless. That cannot have been what Parliament intended."

You could have heard a pin drop at that moment.

Certainly the twenty or so Mangawhai residents in the Wellington courtroom had to restrain themselves from shouting: "hear, hear", while those 30 or 40 residents who took a bus down to attend the hearing by videolink in the Court of Appeal hearing room in Auckland's Queen Street, probably didn't have to restrain themselves. 


Clive Boonham (aka Legal Eagle, and whose website dedicated to this whole problem is here) is on the right of this picture with a couple of local residents. Clive has been on this case for the better part of a decade, and, as a retired lawyer, he has an eye and the head for the detail that has been an essential part of the MRRA legal action. One of the aspects that took centre stage in the CoA hearing was the potential option of Kaipara District Council going into receivership because it could not service the loan requirements (because the KDC would not/could not collect rates to service the loans). Interestingly a couple of the Justices kept referring to this option as "the nuclear option" - as if it was not an option that should be contemplated. However Matthew Palmer argued that that option was built into the financial management provisions of the Local Government Act, and was clearly an option that had been contemplated by Parliament when it enacted the LGA. Among the very direct and hard-hitting submissions made by Palmer in his closing remarks:
  • MRRA residents would prefer to have an unelected receiver deciding what to do with the unlawfully incurred debt, rather than unelected commissioners;
  • The loan is with ANZ, if it was put in the position of appointing a receiver, then perhaps it might have some regard for what that would do to its reputation in the community;
  • It is understand that ANZ bought the loans from ABN-AMRO after the 2007 GFC for a discount, that might influence the amount it needs to get back;
  • There are substantial protections built into Local Government Act receivership provisions - such as Health and Safety - which protect citizens from draconian actions;
  • That there would be a supervisory role for the High Court, rather than Kaipara District Council, which is also preferred by ratepayers.....   


Make no mistake, these are heavy duty matters. Matters of local government principle that have not been clarified by New Zealand courts to date. With any luck important principles will be established through the Court of Appeal judgment. In this group pic you can see Auckland mayoral candidate Penny Bright. She can sniff out a hot issue at a 1000 metres. 


The professional legal team. In fact, the same team supported Urban Auckland in its fight with Ports of Auckland Ltd and Auckland Council over the Bledisloe Wharf extensions. Matthew has built something of a reputation working with issues that interact with the New Zealand Bill of Rights Act (BORA). (Enacted in 1990 - 25 years ago.). He argued that Kaipara District Council acted inconsistently with BORA because it initiated Validation Legislation in Parliament, which, according to Justice Heath who heard the original judicial review proceedings, effectively stymied MRRA attenmpts to get the issues dealt with by the High Court. One of the rights that is recognised in the NZ Bill of Rights Act is the right to a judicial review hearing which can hold public institutions to account. Palmer argued that in initiating and pursuing the Validation Act, to retrospectively validate unlawful prior decisions, the ratepayers were denied that right. He argued that KDC had acted inconsistently with the Bill of Rights. 


We await the decision with great expectations and interest. 

5 comments:

publicwatchdog said...

Great summary Joel!

Are Councils effectively above 'the rule of law'?

We shall see ......

Penny Bright

Michelle Jago said...

Well done on this mammoth effort. And again we wait.

Graham Mackenzie said...

Joel
A very good summary. I believe Palmers comments that this case was not about money, however it is about the principal of law, ie that citizens can rightfully expect Local Governments to act lawfully. The fact that the MRRA offered to settle for $30 million and the banks take a hair cut and the Office of the Auditor General cough up compensation of $30 million for a complete failure to audit the Kaipara Councils accounts 2003 to 2013 would resolve this serious matter.
The Commissioners have acted appallingly in continuing the application of illegal rates and failing to keep the community informed.
The Local Government Financial Authority have declined to renew the funding lines for the Kaipara District Council

Anonymous said...

Keep up the good work Mangawhai. In my Auckland local board the Long Term Plan consultation has been completely bogus - projects were named that they had no intention of implementing, and the actual projects were never named or costed in public consultation. Conflicts of interest are rife. Auditor completely unconcerned. So this bit made me smile "a consequence of adopting the arguments of my learned friend would mean that any Council in New Zealand can breech Local Government Act provisions with impunity, leave ratepayers with the bill, and mean that Long Term Plans all become window-dressing, ratepayer submissions become meaningless. That cannot have been what Parliament intended." YES! Keep fighting the good fight.

Wayne Cameron said...

If the commissioners had issued rates demands of sufficient sums, that would repay the $70M in a proper time frame, this would have had caused a couple of interesting reactions:
1. probably a mass revolt
2. a complete rewrite of the 10 yr plan
3. a complete stalling of house sales
So the real estate agents blithely entice uniformed buyers to wade into this madness, based on rates bills 'priced to keep the peace'.
Wayno

Thursday, August 27, 2015

Mangawhai Ratepayers at Court of Appeal

Thirsty and worrying work this Court of Appeal stuff. A couple of beers in the Back Bencher at the end of a two day hearing in front of Justice Rhys Harrison, Justice Mark Cooper, and Justice Forrest Miller. Bruce Rogan (Chair of Mangawhai Ratepayers and Residents Association) and his wife Heather flank the MRRA legal team - Matthew Palmer QC on the left, and Kitt Littlejohn Barrister on the right. (The hearing was on the 25th and 26th of August 2015).

Very briefly, the causes of action for this hearing - which followed the judicial review heard by Justice Heath (posts here and here)), are as follows (simplified a bit by me):
  • that the Kaipara District Council (KDC) does not have the power to rate for unlawful purposes. That KDC acted unlawfully in deciding to enter into and expand the Ecocare Wastewater Scheme, and that it could not then enforce rates on ratepayers.
  • that the Validation Act did not retrospectively validate ALL matters  stemming from those unlawful decisions. It only validated various historic rating defects. Significant matters - including the additional $30,000,000 loan were not dealt with or validated by the Validation Act.
  • that the KDC acted inconsistently with the Bill of Rights Act by initiating Validation Legislation which had an effect of undermining MRRA judicial review proceedings - to which they had a right.
The CoA decision will take a while. A few months. Hard to usefully summarise such a packed and interactive two days - the justices stopped the QC's for Kaipara District Council (David Goddard QC) and Matthew Palmer frequently. Questions of clarification, information, tangential thoughts. Very interesting. One of the strands of the hearing was the matter of consequences. What would happen if the CoA made certain orders? Would it mean the cost of the Ecocare sewerage scheme being carried by all of Kaipara District's ratepayers? Among Matthew's closing remarks - his reply (which is apparently quite restricted in what it can/cannot address), he told the Justices, to the effect: "a consequence of adopting the arguments of my learned friend would mean that any Council in New Zealand can breech Local Government Act provisions with impunity, leave ratepayers with the bill, and mean that Long Term Plans all become window-dressing, ratepayer submissions become meaningless. That cannot have been what Parliament intended."

You could have heard a pin drop at that moment.

Certainly the twenty or so Mangawhai residents in the Wellington courtroom had to restrain themselves from shouting: "hear, hear", while those 30 or 40 residents who took a bus down to attend the hearing by videolink in the Court of Appeal hearing room in Auckland's Queen Street, probably didn't have to restrain themselves. 


Clive Boonham (aka Legal Eagle, and whose website dedicated to this whole problem is here) is on the right of this picture with a couple of local residents. Clive has been on this case for the better part of a decade, and, as a retired lawyer, he has an eye and the head for the detail that has been an essential part of the MRRA legal action. One of the aspects that took centre stage in the CoA hearing was the potential option of Kaipara District Council going into receivership because it could not service the loan requirements (because the KDC would not/could not collect rates to service the loans). Interestingly a couple of the Justices kept referring to this option as "the nuclear option" - as if it was not an option that should be contemplated. However Matthew Palmer argued that that option was built into the financial management provisions of the Local Government Act, and was clearly an option that had been contemplated by Parliament when it enacted the LGA. Among the very direct and hard-hitting submissions made by Palmer in his closing remarks:
  • MRRA residents would prefer to have an unelected receiver deciding what to do with the unlawfully incurred debt, rather than unelected commissioners;
  • The loan is with ANZ, if it was put in the position of appointing a receiver, then perhaps it might have some regard for what that would do to its reputation in the community;
  • It is understand that ANZ bought the loans from ABN-AMRO after the 2007 GFC for a discount, that might influence the amount it needs to get back;
  • There are substantial protections built into Local Government Act receivership provisions - such as Health and Safety - which protect citizens from draconian actions;
  • That there would be a supervisory role for the High Court, rather than Kaipara District Council, which is also preferred by ratepayers.....   


Make no mistake, these are heavy duty matters. Matters of local government principle that have not been clarified by New Zealand courts to date. With any luck important principles will be established through the Court of Appeal judgment. In this group pic you can see Auckland mayoral candidate Penny Bright. She can sniff out a hot issue at a 1000 metres. 


The professional legal team. In fact, the same team supported Urban Auckland in its fight with Ports of Auckland Ltd and Auckland Council over the Bledisloe Wharf extensions. Matthew has built something of a reputation working with issues that interact with the New Zealand Bill of Rights Act (BORA). (Enacted in 1990 - 25 years ago.). He argued that Kaipara District Council acted inconsistently with BORA because it initiated Validation Legislation in Parliament, which, according to Justice Heath who heard the original judicial review proceedings, effectively stymied MRRA attenmpts to get the issues dealt with by the High Court. One of the rights that is recognised in the NZ Bill of Rights Act is the right to a judicial review hearing which can hold public institutions to account. Palmer argued that in initiating and pursuing the Validation Act, to retrospectively validate unlawful prior decisions, the ratepayers were denied that right. He argued that KDC had acted inconsistently with the Bill of Rights. 


We await the decision with great expectations and interest. 

5 comments:

publicwatchdog said...

Great summary Joel!

Are Councils effectively above 'the rule of law'?

We shall see ......

Penny Bright

Michelle Jago said...

Well done on this mammoth effort. And again we wait.

Graham Mackenzie said...

Joel
A very good summary. I believe Palmers comments that this case was not about money, however it is about the principal of law, ie that citizens can rightfully expect Local Governments to act lawfully. The fact that the MRRA offered to settle for $30 million and the banks take a hair cut and the Office of the Auditor General cough up compensation of $30 million for a complete failure to audit the Kaipara Councils accounts 2003 to 2013 would resolve this serious matter.
The Commissioners have acted appallingly in continuing the application of illegal rates and failing to keep the community informed.
The Local Government Financial Authority have declined to renew the funding lines for the Kaipara District Council

Anonymous said...

Keep up the good work Mangawhai. In my Auckland local board the Long Term Plan consultation has been completely bogus - projects were named that they had no intention of implementing, and the actual projects were never named or costed in public consultation. Conflicts of interest are rife. Auditor completely unconcerned. So this bit made me smile "a consequence of adopting the arguments of my learned friend would mean that any Council in New Zealand can breech Local Government Act provisions with impunity, leave ratepayers with the bill, and mean that Long Term Plans all become window-dressing, ratepayer submissions become meaningless. That cannot have been what Parliament intended." YES! Keep fighting the good fight.

Wayne Cameron said...

If the commissioners had issued rates demands of sufficient sums, that would repay the $70M in a proper time frame, this would have had caused a couple of interesting reactions:
1. probably a mass revolt
2. a complete rewrite of the 10 yr plan
3. a complete stalling of house sales
So the real estate agents blithely entice uniformed buyers to wade into this madness, based on rates bills 'priced to keep the peace'.
Wayno