Kaipara spends millions chasing unpaid penalties

Kaipara District Council (KDC) has confirmed it has spent more than $1.5 million in legal costs to defend the validity of controversial rates charges.

The $1.5 million figure only includes costs up to September 2018. Costs since September 2018 have still to be calculated. Retired lawyer Clive Boonham, who has followed the case, suggests the running total will now be closer to $2.5 million.   

The bulk of the money has been spent fighting court action brought against the KDC by Mangawhai Heads ratepayers, Bruce and Heather Rogan, who are staunchly refusing to pay penalties of about $13,000, allegedly due because of late payment of their rates.      

Meanwhile, legal costs continue to mount as KDC persists in pursuing the Rogans and other ratepayers for alleged debts incurred following more than a year-long rates strike by Mangawhai residents in 2012.

The strike was prompted after the KDC allowed costs for a controversial sewerage scheme for Mangawhai to spiral out of control, which in turn forced average rate rises of more than 30 per cent, and of several hundred per cent for some Mangawhai properties.

A High Court judge subsequently deemed the decision to build the sewerage works illegal.

KDC’s financial problems, together with the strike, prompted the government to appoint independent commissioners to take over the running of Kaipara in 2013.

Parliament later validated six years of unlawful rates collection through retrospective legislation.  

Afterwards, Mr Rogan personally collected more than $1 million worth of cheques from about 130 fellow rate strikers to hand over to Council to pay for the now validated rates.

But Council returned the money and began legal proceedings against the Rogans and about 100 other ratepayers, saying that in addition to the original rate demands, ratepayers were also obliged to pay overdue penalties.  

The Rogans and others refused to pay the penalties, claiming the commissioners had reneged on an undertaking to Parliament that when the rates were validated, they would not try to collect them. Mr Rogan said Parliament took the view that the striking whistleblowers had raised valid points and should not be penalised.

KDC disagrees. The dispute has prompted a legal fight in the District Court, High Court and Appeal Court and the battle continues, with neither side backing down.

This month, Crown Manager Peter Winder, who was appointed by the Government to resolve rates-related legal issues connected to the ill-fated Mangawhai sewerage scheme, stepped down.

In his final report to Council, Mr Winder revealed that Council lawyers were working to secure Charging Orders on 70 properties, which would open the way for the forced sale of those properties to recoup outstanding alleged debts.

Among those threatened with a forced sale is the Rogans’ property in Mangawhai Heads – something the Rogans only learned about after reading Mr Winder’s report.        

Kaipara Mayor Dr Jason Smith defended Mr Winder’s pursuit of the alleged debtors, saying there was a legal obligation for people to pay rates.

“Charging Orders are a legitimate way of enabling Council to recoup rates money owed on a property,” he said.

“We do have to enforce rates payment to be fair to all ratepayers, and as a last resort we may occasionally need to go to court for a rating sale of a property.”

Meanwhile, Bruce and Heather Rogan have filed an application for leave to appeal to the Supreme Court to continue their legal battle over the rates penalties.

Mr Rogan said Council had been “extraordinarily bloody-minded” about the whole thing.

“They have probably spent more than $2 million just to collect the penalties, when they could have had more than a $1 million in rates payments. I don’t know what they have collected in the way of penalties from people who have caved in, but it would not be remotely near $2 million,” he said.

Mr Rogan said this was what happened when local government was not properly overseen by central government.

“There’s absolutely no risk to the Crown Manager Peter Winder. He can’t lose his job and he is not answerable to the electorate. He can blaze away spending ratepayers’ money without having to ask permission for the expenditure. He can just spend it and Council just adds it to residents’ rates bills.”  

Kaipara councillor Jonathan Larsen was also critical of the decision to pursue penalties charged on rates, which were invalid until fixed by retroactive legislation, and lamented the fact that the legal costs had fallen on ratepayers.  

 “Kaipara is not a wealthy district and has a lot of debt. This was a Crown-led action and, quite frankly, I think the Crown Manager should support Council in seeking reimbursement from the Crown,” he said.

Meanwhile, Mr Winder has defended the decision to pursue penalty payments, saying Council could not in good conscience accept “partial payments” from some ratepayers when their decision to withhold rates had placed a significant cost burden on ratepayers who had paid their rates on time.

Mr Winder denied that commissioners had ever given an undertaking to Parliament that they would waive all penalties. Instead, they only undertook to waive penalties arising in the year that Parliament passed the rates validation act. They still required earlier penalties to be paid in full.

“In my role as Crown Manager, I regularly consulted with Council. On each occasion the Council made it clear that they expected that all ratepayers would pay all rates and all penalties,” he said.

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