Court of Appeal key to opening door to rate refund

Kaipara ratepayers have a chance at securing millions of dollars in rates refunds depending on the outcome of a case before the Court of Appeal this month.

The Mangawhai Ratepayers and Residents Association will head to the court in Wellington on November 22 to defend a High Court ruling that rates collected by the Kaipara District Council on behalf of the Northland Regional Council (NRC) between the years 2011 and 2016 were invalid.

If successful, ratepayers could take further court action to secure refunds of those rates paid, amounting to $14.6 million.

Under normal circumstances, the legal cost of securing a refund would likely outweigh the value of the refund for an individual ratepayer.

However, lawyer Jeremy Browne, who will be arguing the case in the Court of Appeal, said a limited number of test cases for refunds could be tried in court and other cases settled based on the test cases.

The cost of legal action in the test cases could be spread over many ratepayers seeking refunds, thus minimising the cost to individual ratepayers.

Mangawhai Ratepayers and Residents Association chair Bruce Rogan said councils must be held accountable for their failures.

“If councils win in the Court of Appeal it will confirm them in the view that they don’t have to take any account of the Local Government Act or the Local Government Rating Act. They can just do what they like,” he said.

Northland Regional Council and Kaipara District Council lost in the High Court when it was found that the steps required by the rating act to set and assess rates were never properly carried out.

These include stating the period to which the rates apply and when they are payable.

Rates invoices must show how rates are going to be used and where a ratepayer can inspect the rating information database.

Invoices must also be clearly identified as a rates invoice.

Mr Rogan said properly identifying the rates invoice was critical for the prevention of fraud.

Someone could send out invoices on Council letterhead, which would be paid by people assuming they were paying their rates, only to find that the real rates invoice turns up in their letterbox sometime later.

Mr Rogan recognised that councils were run by human beings and would not always get everything right, but if they wanted to use the rate invoice as a document to enforce collection through the courts then the document must be compliant with the law.

Asked if councils would simply raise more rates to cover any refunds, Mr Rogan said this was unlikely as they would be bound to consult with the community and the community would be unsympathetic.

He said councils would need to come up with other ways of finding the cash such as selling something or abandoning “wild-eyed schemes.”

“You say things like, ‘Instead of having a new sports stadium, we put that off for another 10 years until we have recovered from our cock ups,’” he said.

The Mangawhai Ratepayers and Residents Association estimates it will cost about $100,000 to argue the case in the Court of Appeal and has established a givealittlepage to secure donations:  givealittle.co.nz/org/mangawhairatepayers.

In a statement concerning the case, NRC chairman Bill Shepherd said the High Court had noted that the NRC had acted in good faith, but that the council may have fallen victim to imprecise legislation.
Mr Shepherd said ratepayers could be assured council had not acted irresponsibly nor blatantly flouted the law.

He said the NRC had arranged the collection of rates by the Kaipara, Whangarei and Far North District Councils in the interests of saving ratepayers the additional cost of maintaining a separate rates collection department within the NRC.

Mr Shepherd said rates collected during the years covered by the court case had been spent in good faith on a wide range of projects.