You are on page 1of 34

IN THE COURT OF APPEAL OF NEW ZEALAND

CA 331/2014

BETWEEN

MANGAWHAI RATEPAYERS AND


RESIDENTS ASSOCIATION INC
Appellant

AND

KAIPARA DISTRICT COUNCIL


Respondent

SUBMISSIONS OF
MANGAWHAI RATEPAYERS AND RESIDENTS ASSOCIATION
31 July 2015

Solicitor Acting:
P J Kennelly
P O Box 607
Orewa
Ph: 09 426 8301
Fax: 09 426 8302
Email: kennelly@kennellylaw.co.nz

Counsel Instructed:
Dr M S R Palmer QC
Thorndon Chambers
PO Box 1530
Wellington 6140
Ph: 04 460 0741
Fax: 04 499 6118
Email: Matthew.Palmer@chambers.co.nz

TABLE OF CONTENTS
1 Summary .................................................................................................... 1
2 The Facts and High Court Decision ........................................................ 3
3 The Rating for Unlawful Purposes Issue ................................................ 5
A The LGA and its breaches here ...............................................................................5
B The Power to Rate and the Right to Challenge Rates .............................................6
C The Protected Transactions Defence .......................................................................9
4 The Validation Act issue ......................................................................... 14
A The Text of the Validation Act ..............................................................................14
B The Purpose of the Validation Act ........................................................................15
C A Rights Consistent Interpretation of the Validation Act .....................................17
5 The Bill of Rights Issue .......................................................................... 19
A What Happened and What is Sought .....................................................................20
B The Bill of Rights and Declarations of Inconsistency ...........................................21
C The Justice of Making Declarations Here .............................................................23
D Declarations and Damages against the KDC.........................................................28

SUMMARY

1.1

Three significant issues of law arise in this appeal:


(a)

Does a local authority have power to rate, for the specific purpose of
funding unlawful expenditure, under the protected transactions
provisions of the Local Government Act 2002 (LGA)?

(b)

Does the Kaipara District Council (Validation of Rates and Other


Matters) Act 2013 (the Validation Act) retrospectively validate legal
defects in rates set by the Kaipara District Council (KDC) when they
were not the defects identified by Parliament?

(c)

Should the Court declare the Act to be inconsistent with the appellants
right to judicial review under s 27(2) of the New Zealand Bill of Rights
Act 1990 (Bill of Rights) because it retrospectively overrode judicial
review proceedings, and declare that the KDC acted unlawfully, and
award public law damages against it, in promoting the Bill?

1.2

The factual context is an egregious series of secret and unlawful decisions by


the KDC, from 2000 to 2007, in building the $65 million EcoCare
wastewater facility for the Mangawhai community of 1,200.

When the

extent of the financial mismanagement surfaced in 2011, the KDC proposed


to increase rates by 22%.

A rates revolt ensued, the Auditor-General

initiated an inquiry, and the KDC was replaced by Commissioners appointed


by the Minister of Local Government.
1.3

The Mangawhai Ratepayers and Residents Association Inc (MRRA)


actively scrutinised, criticised and opposed proposals and decisions by the
KDC, pointing out the invalidity of the resulting rates. The KDC asserted its
rates were valid until they were challenged in Court. When the MRRA did
so, the KDC promoted a local bill that identified particular defects in rates
set from 2006 to 2012 and sought, retrospectively, to validate specified rates
for those financial years. The Validation Act was enacted on 10 December
2013, one week after the Auditor-Generals damning report was released.

1.4

The MRRA was successful in obtaining declarations from the High Court
that the contracts for building the EcoCare facility were made and entered

into unlawfully and the contracts were unlawful. However the Court found
(implicitly) that the KDC had power to impose rates, that the Validation Act
validated rates for all purposes and that there was no breach of the Bill of
Rights. However, the Court awarded indemnity costs to the MRRA because
the KDC had thwarted the MRRAs right to relief.
1.5

In this appeal, the MRRA submits:


(a)

The KDC did not have power to impose rates for the purpose of
funding contracts it had entered into unlawfully.

The protected

transaction provisions of the LGA preserve the enforceability of the


loans by the lenders but do not empower the KDC to impose rates to
fund them. Declarations are sought accordingly.
(b)

The Validation Act must be interpreted consistently with its purpose


and with the right to judicial review protected by s 27(2) of the Bill of
Rights. It may not be interpreted to validate, retrospectively, legal
defects in rates which were not the defects identified by Parliament in
passing the Act and which were under judicial review at the time of its
passage. A declaration to that effect would allow the fourth cause of
action, which has not yet been argued, to proceed. And it would mean
that the first cause of action (per (a) above) should result in this Court
ordering that the rates under challenge, and penalties for their nonpayment, be quashed and refunded.

(c)

This Court should also declare the Validation Act inconsistent with the
appellants right to judicial review under s 27(2) of the Bill of Rights.
The Act could easily have excluded these proceedings from its
retrospective overriding of rates challenges.

(d)

The KDC, a creature of statute, did not have the legal power to act
inconsistently with the Bill of Rights. A declarations, and $991,000 in
public law damages, are sought.1

(e)

Costs should be awarded to the MRRA.

$1,000 per member of the MRRA at the time, which amounts to $991,000 in total
almost exactly the same as the amount of the KDCs surplus in 2012/13.

THE FACTS AND HIGH COURT DECISION

2.1

The factual context is complex.


judgment at [1]-[7] and [12]-[24].

It is summarised in the High Courts


It is set out in tabular form in the

Chronology attached to these submissions.


2.2

More detailed background to the wastewater facility is set out in the


Controller and Auditor-Generals (AGs) Report of her Inquiry into the
Mangawhai community wastewater scheme published on 3 December 2013.
Both parties agreed in the High Court that it can be taken as correct.2

2.3

The Auditor-General found there were significant defects in the KDCs


processes and decisions at almost every stage of the EcoCare wastewater
project. The KDC: failed in basic project management (AG 3.60-3.83);
failed to adequately consider funding (AG 3.3, 6.7, 8.58); had only a weak
appreciation of its accountability and legal obligations and poor or nonexistent records (AG 6.9-6.10); and failed to pay enough attention to ensure
its charges complied with the law (AG 8.72-8.73).

2.4

The MRRA and other ratepayers consistently attempted to raise problems


with the KDC. The AG concluded that the MRRAs concerns expressed in
2002 were unsurprising (AG 5.26) and the community sounded warnings
and concerns that later proved to be well founded (AG 5.27).

2.5

The High Court characterised this proceeding (at [7]) as exposing a high
degree of incompetence among KDC Councillors and executive officers.
The Court found (at [41]-[42]) that the Councils decision-making failed to
meet its lawful obligations and that those failures were both manifold and
serious. Of the key KDC decision on Modification 1 in late October 2006,
to double the size of the project to $57.7 million without consulting
ratepayers or even informing them until 2011, the Court observed (at [21]):
The Auditor-General said that this increase was not appropriate. That is a
gross understatement. I find it incomprehensible that a democratically
elected Council (in conjunction with its executive team) could decide to
2

Mangawhai Ratepayers and Residents Association Inc v Kaipara District Council


No 3 [2014] NZHC 1147 (Judgment No 3) at [3] (Vol 1 Case On Appeal tab 23
referenced as 1 COA 23). This is the substantive judgment. Unless otherwise
indicated, references in the text are to Judgment No 3. The Auditor-Generals Report
is at 3E COA 79 and is referred to as AG.

4
increase the cost of a major infrastructure project by approximately $22.1
million without consulting with its constituents, namely, the ratepayers who
were to pay for it. It must have been blindingly obvious to the Mayor and
Councillors that while ratepayers might (given that the project did not enjoy
universal approval) have been prepared to pay increased rates to meet a cost
of $35.6 million, it could not be said confidently that they would agree to
pay $57.7 million for a similar facility.

2.6

The High Court:


(a)

Declared that the KDCs decisions to enter into the EcoCare


agreements (including loan agreements)3 and adopt Modification 1
were unlawful and the agreements and adoption were unlawful.4

(b)

Found,

notwithstanding

that,

the

contracts

were

protected

transactions under the LGA and declared that creditors were entitled
to take enforcement action if the KDC were to default on payment.5
(c)

Did not address directly the argument that the KDC had no power to
impose rates for the purpose of funding unlawful expenditure, but
impliedly assumed that it did and provided supplementary reasons in a
further judgment.6

(d)

Held the Validation Act validated the rates for all purposes and so
refused the MRRAs claims for relief from the rates that it otherwise
would have been granted.7

(e)

Found the Validation Act was apparently inconsistent with the right to
judicial review protected by s 27(2) of the Bill of Rights but that it was
a justifiable limit since Parliament thought it desirable.8

(f)

Decided the KDC was entitled to promote the Validation Bill.9

(g)

Held the KDCs actions in promoting the Validation Bill, to thwart the
MRRAs right to relief, justified an award of indemnity costs in favour
of the MRRA.10

3
4
5
6
7

The High Court defines the EcoCare agreements in Judgment No 3 at [17].


Mangawhai Ratepayers and Residents Association Inc v Kaipara District Council
No 4 [2014] NHC 1742 (Judgment No 4) at [60c] and [38a and b] (1 COA 25).
Judgment No 4 at [60c] and [38c].
Judgment No 3 at [59]-[62], [69], [72]; Judgment No 3 at [60a], [14], [16], [17]-[19].
Judgment No 4 at [47].

THE RATING FOR UNLAWFUL PURPOSES ISSUE

3.1

The first issue is whether the KDC had, and has, the power to impose rates to
fund an unlawful project. This issue is live irrespective of the effect of the
Validation Act as it applies to future as well as past rating decisions. The
KDC points to the protected transactions provisions of the LGA to say that it
has the power to rate. The MRRA says that those provisions preserve the
ability of creditors to enforce the loans against the KDC; but they do not
separately empower the KDC to impose rates on ratepayers.

3.2

In its substantive judgment (No 3), the High Court described this (at [27]) as
the MRRAs primary submission. At [50] it accepted the submission that
Parliament did not intend Councils to enter into contracts to finance
unlawful projects.

However, the Court only implicitly dealt with the

argument (in [60]), after analysing the enforceability of a protected


transaction, when it assumed the Council could levy rates to pay an
enforceable debt. In the costs judgment (No 4) the Court (at [12]) misstated
the MRRAs argument,11 accepted it had dealt with the argument implicitly
(at [16]), provided some supplementary reasons for the implicit decision
(at [16]-[19]) and declined to reopen its implicit finding (at [60a]).
A

The LGA and its breaches here

3.3

Democratic decision-making is at the heart of the LGA. The purpose of the


LGA in s 3 is to provide for democratic and effective local government.
To that end the Act is intended to promote, among other things, the
accountability of local authorities to their communities (s 3(c)). Section
10(1) further states that the purpose of local government is to enable
democratic local decision-making and action by, and on behalf of,
communities. A local authority must act in accordance with the principles
set out as s 14, including the requirement to make itself aware of, and have
regard to, the views of the community (s 14(1)(b)). Where the principles
conflict, s 14(2) requires that the conflict is resolved in accordance with the

8
9
10

Judgment No 3 at [94], [104]-[105] and [111].


Judgment No 3 at [110].
Judgment No 4 at [60d] and [47].

principle that a local authority should conduct its business in an open,


transparent, and democratically accountable manner (s 14(1)(a)(i) LGA).
3.4

The relationship between a local authority and its ratepayers is governed by


statute, though it has been analogised to a fiduciary relationship by the
House of Lords12 and by Thomas J in this Court.13 Professor Kenneth
Palmer states that the members [of a local authority] owe a general duty of
good faith to the community to promote and safeguard the interests of the
people and property of the district.14

3.5

Part 6 of the LGA imposes strict planning, decision making and


accountability requirements on local authorites.

The purpose of the

requirements for the special consultative procedure (s 83) and the statement
of proposal (SOP) and Long Term Plan (LTP) (ss 93-97) provisions is to
ensure that significant decisions are made by a local authority only after
consultation and the inclusion of relevant information in the LTP (s 97(2)).
Compliance with the special consultative procedure is mandatory. There is
no power in the LGA for a local authority or other entity to waive
compliance. It is clear that Parliaments expectation is compliance in each
and every case. Failure to comply with requirements can be expected to
result in decisions being set aside, as this Court found in Whakatane District
Council v Bay of Plenty Regional Council.15 Here, the High Court found the
KDC breached these provisions.16
B

The Power to Rate and the Right to Challenge Rates

3.6

The power to rate, as with other taxes, is the subject of fundamental


constitutional principle. It has been clear in Westminster systems since the
Bill of Rights of 1688 that the power to extract money from citizens to tax

11

12
13

14
15
16

The Court stated (at [12]) it rejected the MRRAs submission that the loan contracts
were unenforceable. But the MRRA did not make such a submission. It argued that
enforceability of a loan does not also imply a power to impose rates.
Bromley London Borough Council v Greater London Council [1983] 1 AC 768.
Mackenzie District Council v Electricorp [1972] 3 NZLR 41. See the survey of the
fiduciary duty notion in relation to local government by Thomas J in Waitakere City
Council v Lovelock [1997] 2 NZLR 385 (CA).
Kenneth Palmer, Local Authorities Law in New Zealand (Brookers, Wellington,
2012) at 1.7.2.
Whakatane District Council v Bay of Plenty Regional Council [2010] NZCA 346,
[2010] 3 NZLR 826.
Judgement No 3 at [17] (definition of EcoCare agreements), [35]-[45].

requires clear Parliamentary authority.17 Section 22 of the Constitution


Act 1986 confirms that in New Zealand. The same principle is even more
true of local authorities which are purely creatures of statute. They only
have the power to charge a fee or levy if that is provided for by legislation.18
The conditions which Parliament has set down to empower the setting of
rates must be met for rates to be lawfully imposed.
3.7

There is no general power to rate. A local authoritys power to rate is


expressly provided for by the Local Government (Rating) Act 2002
(LGRA). Its purpose in s 3 highlights the importance of rating decisions
being made in a transparent and consultative manner and ratepayers being
able to identify and understand their liability for rates.

3.8

Subpart 2 of Part 1 of the LGRA, particularly ss 13, 15 and 16, empowers


the setting of rates. This links directly into the LGA planning processes
through the s 23 requirement that they be set in accordance with the relevant
provisions of the LTP and Funding Impact Statement for that year. In the
absence of a validly adopted LTP and Funding Impact Statement making
provision for the rates a local authority has no power to set a rate.
Correspondingly, ratepayers obligation to pay rates (ss 12, 44, 60) only
relates to rates, within the meaning of s 5, which are set on that basis.

3.9

Importantly, the power to rate is the exercise of a statutory discretion. As


such it can only be exercised for a lawful purpose, in accordance with the
purposes of the Act. A public body abuses its powers if it makes decisions
outside the limits of its powers, including where the power is exercised for
a purpose that is not within the contemplation of the enabling statute - a
basic principle of administrative law expressed in those terms by the
Supreme Court in Unison Networks.19

3.10 As the High Court accepted here, Parliament could not have intended to
confer a power on local authorities to tax ratepayers for unlawful or

17

18

Article 1 of the Bill of Rights 1688 (law in New Zealand per the Imperial Laws
Application Act 1988, Schedule 1) provides that levying money for or to the use of
the Crowne by pretence of prerogative without grant of Parlyament for longer time or
in other manner then the same is or shall be granted is illegal.
Legislation Advisory Committee Guidelines on the Process and Content of
Legislation (Ministry of Justice, 2014), ch 15.

improper activities and purposes. A unanimous five judge Court of Appeal


found in Wellington City Council v Woolworths NZ Ltd (No 2) that a local
authority must act within the powers conferred on it by Parliament and its
rate fixing decisions are amenable to judicial review.20 Its analysis of the
1974 Act noted the force of characterising the rating system as a taxation
system and that the constraints on local authorities very wide rating powers
were the significant process obligations providing for public participation,
openness and accountability in the decision-making.21
3.11 So there can be no power to set, assess or collect a rate to meet commitments
that were themselves taken on illegally.

The power to tax cannot be

exercised to fund illegally entered into loans. There is no explicit power to


do so and there must be a strong presumption against implying a power to do
so, given the constitutional context.
3.12 Here, the KDC set general and targeted rates to fund the costs of EcoCare for
seven rating years, 2008/09-2013/14, including the period when ratepayers
were not even informed of the EcoCare liability. The general and targeted
rates set by the KDC for these rating periods included a Mangawhai Uniform
Targeted Rate (MUTR) and a Mangawhai Uniform Annual Charge
(MUAC), which were set specifically in order for the KDC to meet its
commitments under the EcoCare funding agreements.
3.13 The rates from 2008/09 were based on the cost estimate of EcoCare of $35.6
million set out in the 2006 SOP. Rates for the subsequent rating years were
simply increased for inflation until the 2011/12 rating year. The 2012-22
LTP proposed a rates bomb to try and meet the true costs of the loans that
had just been revealed to ratepayers. Following widespread protests and a
rate strike the figures were reworked to provide a smaller but still substantial
increase, and to spread the rates burden across the District. A large part of
the debt has now been assigned to future development and is intended to be
funded by development contributions.

19
20
21

Unison Networks Ltd v Commerce Commission [2007] NZSC 74, [2008] 1 NZLR 42
at [50]-[53]).
Wellington City Council v Woolworths NZ Ltd (No 2) [1996] 2 NZLR 537 at 545.
At 544-545.

3.14 The MRRA submits that the targeted rates, imposed specifically to fund a
commitment unlawfully entered into, are consequently unlawful. So are the
general rates, to the extent that they fund the EcoCare scheme. The KDC
had, and has, no power to set rates in order to enable it to meet these
financial commitments it has entered into illegally.
C

The Protected Transactions Defence

3.15 The KDCs response to this has been: (a) the protected transactions
provisions of the LGA establish the loans as valid and enforceable in the
hands of the KDC; and (b) the KDC must be able to set rates to fund those
debts in order to balance its budget.
3.16 The MRRA acknowledges (a): the protected transactions provisions validate
the loans and render them enforceable in the hands of creditors when they
would otherwise not be enforceable. But the MRRA objects to (b). The
2006-2012 rates are invalid because they (c) are set for an unlawful purpose
and (d) they did not comply with the requirements of the LGRA. The
protected transaction provisions do not cure either of these problems or give
the KDC some additional implied power to impose rates on ratepayers. And
neither can future rates be set for an unlawful purpose.

The KDCs

argument is untenable because it is inconsistent with the text, purpose, and


legislative history of the Act, as well as constitutional principle.
1 Text and Purpose of Provisions do not create additional powers
3.17 Subpart 4 of Part 6 of the LGA contains eight sections which protect the
validity of borrowing transactions and their related securitisation from
challenge on the grounds that entry into the borrowing arrangements did not
properly comply with the Acts requirements.
3.18 Section 117 is drafted carefully so as to confer validity and enforceability
only on protected transactions (not further actions related to them, such as
assessing rates).

The words valid and enforceable do not create any

special powers that are not already in existence. The relevant instrument
remains valid and enforceable only to the extent that it was valid and
enforceable by the creditor under the original instrument and the general law.

10

3.19 Section 118, in establishing the certification process, provides a


straightforward means of activating the protection of s 117 by identifying a
protected transaction.

Its wording includes is conclusive proof for all

purpose that the local authority has so complied. But so complied refers
to complied with this Act in connection with a protected transaction
(emphasis added). It cannot be expanded beyond the transaction itself.
3.20 Neither does s 120 assist the KDC. Its purpose is to save the ability of any
person to obtain a remedy from a court. An exception to this is stated to be
(other than an act or thing necessary for the performance of a protected
transaction that has already been entered into). The performance of a loan
is the payment of regular instalments under the loan agreement, and
repayment of the full debt if the borrower defaults. Activities by which
revenue is gathered to enable repayment of the loan is not performance of
the loan; the LGA does not guarantee that all loans will be repaid or that
local authorities will never default on loans. The exception merely prevents
a court injunction against payment. It does not go further.
3.21 Read in light of their context and purpose the meaning of ss 117 and 118 is
clear and unambiguous. They provide a shield for creditors from invalidity
arguments by local authorities; an unlawful contract is valid and enforceable
where it would otherwise not be. Lenders to a Council are not prevented (as
they otherwise would be) from enforcing the repayment obligation based on
the terms of the loans and the usual contractual and debt remedies. But these
provisions do not provide a sword to local authorities to charge ratepayers
rates that would otherwise be unlawful. The KDC cannot resist demands for
payment by its creditors on the grounds of procedural invalidity of the loans.
But if the KDC doesnt have funds to satisfy its obligations, it has no
additional power to reach into ratepayers pockets to do so.
3.22 The KDCs argument requires the Court to read into the protected
transactions provisions text which would empower local authorities to set
rates for otherwise unlawful purposes.

Nowhere does the text of the

provisions provide a basis to do that. And the purpose of the provisions


militates against it.

The MRRA says the purpose of the protected

transactions provisions is to protect the enforceability of otherwise unlawful

11

transactions between a Council and a creditor.

This purpose does not

require, or enable, a local authoritys decision to be treated as lawful for all


other purposes unrelated to the protected transaction.

This purpose is

fundamentally different from empowering a Council to impose rates on


ratepayers which would otherwise be unlawful.
2 The Provisions are about enforceability not enforcement
3.23 Sections 117 and 118 protect the enforceability of the EcoCare financing
agreements in the hands of the creditors. The KDCs arguments would turn
that protection into a guarantee of the enforcement of the agreements.
Creditors would not need to take any steps to enforce loan agreements. They
would not need to assess credit risk or the viability of the project for which
lending is sought.

Ratepayers would bear the entire risk of this moral

hazard. Councils would always be able to meet their obligations through


rating revenue. Parliament cannot have intended this.
3.24 Rather, Parliament has provided for the possibility of receivership of local
authorities as part and parcel of the accountability framework for local
authorities. The LGA inserted ss 40A to 40E into the Receiverships Act
1993. Rates that are subject to a charge may vest in a receiver and the
receiver has LGRA powers to recover rates (s 40C). Where such a rate or
rates revenue is charged as security a receiver is given the explicit power by
Parliament to assess and collect a rate (s 115 LGA). No such power is given
by Parliament to a Council.

The KDCs argument would render this

framework unnecessary.
3 Provisions do not overide LGA & LGRA
3.25 The KDCs argument means that ss 117 and 118 would override the rest of
the LGA. It would require the Court to disapply Parliaments conditions for
the exercise of rating powers in the LGA and the LGRA wherever the rates
relate in some way to a protected transaction. The scheme and purpose of
the Act and the LGRA, in providing for transparent democratic decisionmaking, would be rendered irrelevant. Local authorities would be able to
ignore all the conditions on the exercise of their rating powers in the LGA

12

and the LGRA if they can simply say that they are assessing rates in order to
meet the requirements of a protected transaction.
3.26 Section 12(3) of the LGA, makinglocal authority powers subject to other
enactments, tells against that. More generally, as a matter of constitutional
principle, Parliament should not be presumed to have intended, in enacting
ss 117 and 118, local authorities to ignore their democratic decision-making
obligations that the very same enactment sought to uphold.
3.27 Legislative history supports this.

The current provisions relating to

borrowing in the LGA have their genesis in the Local Government


Amendment Act (No. 3) 1996 (LGAA 1996).22

The previous regime

involved raising loans with approval of the Local Authority Loans Board, the
need for a loan poll in certain circumstances, and the obligation on
ratepayers to meet all rates set to fund loans.
3.28 This regime was replaced with the ability of local authorities to borrow
generally from banks and financial institutions.

The guarantee of

enforceability regardless of procedural defect was seen as necessary to make


the reform work: to ensure that local authorities were not seen as high risk
borrowers (but, not that they would be no-risk borrowers). Ratepayers were
protected by the detailed financial management processes and consultative
procedures that had to be followed prior to the entry into the transaction by
the local authority (now subpart 3, part 6 of the LGA). Increased power to
borrow was checked by increased transparency and accountability, including
potential enforcement of the law by judicial review. The Parliamentary
debates are clear about this.23 This is an inauspicious legislative context to
seek to imply or infer a power to rate for unlawful purposes.

22

Section 122ZG of the LGAA 1996 included new provisions to protect the
enforceability of loans against local authorities in the event that there were defects in
the local government process by which the loan was authorised. The Local
Government Bill 2001 did not replicate the former provisions of parts 7A and 7B on
introduction but they were substituted back in during passage of the Bill.

13

4 Provisions do not insulate against judicial review


3.29 A further consequence of the KDCs argument would be to deny ratepayers
access to, and the High Court jurisdiction to hear, an application for judicial
review seeking even a declaration of unlawfulness, let alone relief from the
consequence of unlawfulness. Any local authoritys power to set, assess and
collect rates would be legally unassailable, if done to meet a protected
transaction, despite blatant transgressions of the requirements of the LGA
and LGRA. That cannot be the effect intended by Parliament.
3.30 This aspect of the KDCs argument would erect ss 117 and 118 as superprivative clauses that overrides the requirements of the LGA and the LGRA.
It would prevent the High Court from examining, in a judicial review,
whether a council has acted unlawfully in purporting to tax ratepayers. Such
a proposition would transgress the inherent supervisory jurisdiction, and
constitutional function, of the High Court to judicially review the legality of
administrative action. An argument for this based on an implied or inferred
power is weak indeed.24
3.31 Furthermore, the interpretive effect of s 27(2) of the Bill of Rights, required
by s 6 of that Act, puts the matter beyond doubt: Every person whose rights,
obligations, or interests protected or recognised by law have been affected by
a determination of any tribunal or other public authority has the right to
apply, in accordance with law, for judicial review of that determination.
Such a limit on the right to judicial review is not proportional the interests
of the Council do not outweigh the rights of ratepayers - and is therefore not
justified under s 5. The KDCs interpretation of ss 117 and 118 cannot be
reconciled with the right to judicial review under the Bill of Rights. The
MRRAs interpretation must be preferred.
3.32 The conventional willingness of the courts to uphold the right of judicial
review counts further against the KDCs preferred interpretation of the

23

24

(19 December 1995) NZPD (Hon Graeme Lee); (27 March 1996) NZPD (Hon John
Banks). Local Government Bill, Report of Local Government and Environment
Committee, 2002, pp 16-17.
A similar clause to the one here existed in the Labtests case but did not affect that
judicial review proceeding. Lab Tests Auckland Ltd v Auckland DHB [2008] NZCA
385, [2009] 1 NZLR 776 at [74], [90]-[91].

14

protected transactions provisions.

Nothing in the LGA indicates any

intention on the part of Parliament to deprive ratepayers of their long-held


right to judicially review a rating decision by a local authority that owes
them a fiduciary duty to act in their best interests. Were such a fundamental
change to ratepayers rights contemplated this would have had to be clearly
signalled and debated by Parliament. That is the requirement of the principle
of legality and s 6 of the Bill of Rights, as is submitted in relation to the
Validation Act in part 4 of the submissions.
4

THE VALIDATION ACT ISSUE

4.1

The second issue concerns the scope of the Validation Act. The MRRA
argues that the correct purposive interpretation of the Act, consistent with the
Bill of Rights, is that the Act only validates the defects identified by
Parliament in passing the Act. Those defects were the subject of the primary
relief sought in the second and third causes of action in these proceedings.
The High Court dismissed these arguments in one paragraph (at [69]).

4.2

The MRRA says that other defects in the specified rates, that were not
specified in the lengthy preamble of the Act, and were regarded by
Parliament as outside the scope of the Act, were not validated by the Act:
(a)

the invalidity of the rates for being imposed for unlawful purposes, as
argued in part 3 of the submissions above (the first cause of action);

(b)

defects in consultation procedures regarding LTPs and annual plans


that also invalidate rates and that are also not specified in the preamble
to the Validation Act, that have not yet been argued in the High Court
(the fourth cause of action).25

The Text of the Validation Act

4.3

The preamble to the Validation Act precisely specifies the illegalities of the
KDC that the Act validates. The preamble specifies 65 failures to comply
with nine provisions of the LGRA and LGA. It goes into great and specific
detail. Each recital in the preamble identifies a different set of specific
defects. These are the defects the MRRA had pointed out to the KDC and

15

which were the subject of the second and third causes of action.
4.4

After rehearsing these failures the preamble at recitals (67) to (73) then states
that it is desirable that the irregularities, late adoption and omissions
(specified in more summary form but still clearly relating to the defects
identified above) be validated, that legislation is the only means by which
they can be validated, and The objects of this Act cannot be attained other
than by legislation (recital (73)). The Act then states The Parliament of
New Zealand therefore enacts as follows (emphasis added).

4.5

The Act validates the failures to comply with the sections identified in the
preamble in ss 5 to 14. Section 5 validates the rates of the KDC that were
identified in the preamble (and are defined in s 4) despite any failure of the
Council to comply with sections 16, 17, 18, 19, 23 and 43 of the Local
Government (Rating) Act 2002 which are the sections identified as having
been breached in the preamble.

4.6

Section 14, to avoid doubt, provides that nothing in the Act affects the
right of the Council or any other person to bring any proceedings against any
person arising out of, or in connection with, any actions or omissions
associated with matters validated by this Act.

This was deliberately

widened by the Select Committee from the clause as introduced which


related only to the KDCs right to bring proceedings.
B

The Purpose of the Validation Act

4.7

The MRRA submits that the purpose of the Validation Act is to validate
rates against only the defects that were identified in the preamble.

4.8

The General Policy Statement of the Explanatory Note of the Validation Bill
as introduced begins The Kaipara District Council . . acknowledges that a
number of irregularities occurred in the way in which it purported to comply
with certain provisions of [the LGRA and LGA]. It summarises the types
of irregularities which correspond to those itemised in the preamble, and
then states The Council considers that it is desirable to address the
irregularities. (p 2, emphasis added). At the beginning of the clause by
25

See Judgment No 3 at [59]. So the scope of the Validation Act in part 4 is a live
issue whether or not this Court accepts the arguments in part 3 of the submissions.

16

clause analysis in the Explanatory Note it is said that the Preamble


describes the background to the Bill and sets out the objects of the Bill.
4.9

Section 3 states the purposes of the Act are to validate the rates, treat all
money received as having been lawfully received by the KDC, authorise the
KDC to recover unpaid rates and penalties, validate elections or applications
of the targeted rates, validate the information in the rates assessments and
other actions relating to the 2006 development contributions policy, validate
the late adoption of the 2011 annual report and the 2012 special consultative
procedure. Each of these purposes of the Act corresponds with a category of
specified defect in the preamble. The purpose of the Act is tied directly to
the defects specified in the preamble.

4.10 Another clue to purpose is that the Local Government and Environment
Select Committee of the House of Representatives amended cl 3 of the Bill
by deleting a proposed paragraph (g) which had read validate any other
actions or omissions of the Council relating to the financial years 2006/07 to
2012/13 (inclusive). The Committee stated This paragraph would validate
any actions or omissions by the council, and implies that the proposed
legislation would have a wider legal effect than intended. This runs directly
contrary to the purpose for which the KDC argues.
4.11 Another indication of the purpose of the Act lies in what Parliament
considered the scope of the Act was, for the purposes of the select committee
considering amendments. The select committee itself noted in its report:
The following historic issues relating to the scheme are outside the scope of
the bill:
the basis on which the scheme was commissioned and financed
the decision to expand the scheme or increase borrowings
the level of debt incurred or the councils debt management approach.
While outside the scope of the bill, these are important issues and are being
covered by the Controller and Auditor-Generals inquiry into the scheme.

4.12 The departmental advisers to the select committee advised that what was
effectively the second and third causes of action in the current proceedings
were related to the Bill but did not so identify the first cause of action the

17

ability to rate for unlawful purposes outlined above.26 Their report of 15


October 2013 stated: 27
It is the Departments understanding that the scope of this Bill is limited to
validation of historical rates, policies and plans and ancillary matters. It is
therefore likely that the Bill cannot deal with issues relating to other
governance decisions by the Council or their consequences. This precludes
the inclusion of any provisions dealing with the design and commissioning
of the Mangwhai Community Wastewater Scheme or the debt incurred by
the Council in relation to that scheme.

4.13 This is consistent with officials advice that rates were being validated only
for procedural irregularities, not substantive irregularities.28 Parliament was
advised that the Bill was concerned with ratepayers having been prevented
from having a clear and accurate picture of the rates proposed in
consultation documents.29 This is clearly what Members of Parliament
understood.30
4.14 Other defects, such as those argued in part 3 and those in the fourth cause of
action, were not the reason the Act was promoted or passed. Parliament
knew about the alleged defects in the first cause of action but did not identify
them among the reasons for validation.

The MRRA submits that

Parliaments purpose must have been to validate only the specified rates
against the defects that were specified in the Act.
C

A Rights Consistent Interpretation of the Validation Act

4.15 Section 6 of the Bill of Rights requires that wherever an enactment can be
given a meaning that is consistent with the rights and freedoms contained in

26
27
28

29
30

DIA Initial Briefing to Local Government and Environment Committee, 29 July


2013 (3D COA 64, p 2330).
DIA Report to the Local Government and Environment Committee, 15 October 2013
(3D COA 68, p 2470).
DIA Initial Briefing to Local Government and Environment Committee at paras 3,
14, 18, the last noting the summary of the procedural failings of the Council that the
Bill addresses is attached as Appendix Two (3D COA 64).
DIA Report to the Local Government and Environment Committee, 15 October 2013
(3D COA 68, p 2475).
(12 June 2013) 691 NZPD 11087 Nicky Wagner (Chair of the Select Committee)
(first reading: more about poor attention to detail and poor process than about
something that is illegal or unfair) (3C COA 61 at 2067) and (13 November 2013)
694 NZPD 1464 (second reading: We looked at every irregularity, we held it up to
the light and tested it, and we have only validated anything that could have been
struck correctly if they got the language right.) (3D COA 70 at 2551).

18

this Bill of Rights, that meaning shall be preferred to any other meaning.31
This argument was not acknowledged in the High Courts judgment.
4.16 Section 27(2) of the Bill of Rights protects the right of the ratepayers to
challenge the setting and assessment of rates by judicial review. It is well
established that the courts will presume that general words in legislation
were intended to be subject to the basic rights of the individual32 and that
clear words are necessary before the court will read legislation as intending
to remove rights protected by [the Bill of Rights].33
4.17 The Supreme Court has found that s 6 directs the Court to prefer a rights
consistent meaning whenever that meaning is reasonably possible or
reasonably available34 and tenable i.e. ascertainable on the text in light
of its purpose.35 This Court has recently described s 6 as reflecting a
common law principle of legality that operates in a wider context, is
constitutional in nature, existed long before enactment of the [Bill of Rights]
and does not depend on the existence of ambiguity in a statutory
provision.36 Awkwardness in language is not a barrier and the meaning
does not even need to be the Parliaments original intended meaning.37
4.18 New Zealand courts use a variety of interpretive techniques to apply s 6 in
such circumstances. This Courts recent decision in Spencer is particularly
apposite, in finding that without clear and unequivocal words requiring that
result, we can see no warrant for giving retrospective effect to pt 4A to
incorporate an expansive interpretation of a phrase taken from the
31
32
33

34
35
36
37

See generally Ross Carter Burrows and Carter Statute Law in New Zealand 5th ed
(Wellington, LexisNexis, 2015) at 368-384.
Cropp v Judicial Committee [2008] NZSC 46, [2008] 3 NZLR 774 at [27]
(Blanchard J for the Court).
Attorney-General v Spencer [2015] NZCA 143 at [75], after citing R v Pora [2001] 2
NZLR 37 (CA) where three judges agreed that clear and purposeful language is
called for to override the strength of principles and values in legislation such as the
Bill of Rights Act at [111] [112] (Gault, Keith and McGrath JJ) and three judges
found that, by s 6, the New Zealand Parliament has adopted a general principle of
legality that means that fundamental rights cannot be overriden by general or
ambiguous words (Elias CJ and Tipping J, supported by Thomas J) quoting Lord
Hoffman in R v Secretary of State, ex parte Simms [2000] 2 AC 115 at 131 (HL).
R v Hansen [2007] NZSC 7, [2007] 3 NZLR 1 at [158]-[159] (Tipping J), [290]
(Anderson J), or [252] (McGrath J).
Hansen at [25] (Elias CJ), [150] (Tipping J), [179] (McGrath J).
Spencer at [74].
R v Poumako [2000] 2 NZLR 695 (CA) at [37], Re AMM [2010] NZFLR 629 (HC) at
[31] and [34].

19

explanatory note when it can reasonably be understood as referring to the


Crowns prospective exposure unless it discontinued the Atkinson policy,38
and that the relevant provisions there can be read in a manner consistent
with the right to freedom from discrimination to recognise that Parliament
would not without plain and clear words retrospectively declare the Atkinson
policy lawful prior to 15 May 2013.39 There are numerous examples of
rights-consistent interpretations of legislation by the New Zealand Courts.40
4.19 Here, the wider interpretation contended for by the KDC would completely,
rather than partially, override the ability of the MRRA to exercise its right to
judicial review. The MRRA accepts that the purpose of the Validation Act
was to cure the specified defects in the specified rates. But the KDCs
argument would have the Court interpret Parliaments purpose as also
overriding any defect in the specified rates, including those that Parliament
did not know about and could not evaluate. Overriding the right to judicial
review to that extent, if at all, cannot be justified under s 5.
4.20 Protecting the right to judicial review requires the narrow interpretation of
the Validation Act, which accords with its purpose. A more expansive view
of a retrospective validation would cut directly across the right to judicial
review. That is particularly so here, where the right was in the course of
being exercised when Parliament passed the Act. Parliament must not be
presumed to have intended to abrogate the right to judicial review on all
grounds, when it identified only certain grounds as of concern.
5
5.1

THE BILL OF RIGHTS ISSUE


The MRRA acknowledges that the purpose of the Validation Act was to
retrospectively validate the rates specified in the Act against the defects
specified in the preamble of the Act. Alternative relief is therefore sought to
the MRRAs second and third causes of action in these proceedings.

38
39
40

Spencer at [82].
Spencer at [87].
For example, in Watson v Electoral Commission [2015] NZHC 666 the High Court
read down the meaning of election programme and election advertisement in
order to accommodate s 14 of the Bill of Rights. In Dotcom the Supreme Court read
a rights-consistent qualifier into the apparently broad powers of search and seizure
Dotcom v Attorney-General [2014] NZSC 199 (and see Zaoui v Attorney-General
(No 2) [2005] NZSC 38, [2006] 1 NZLR 289 at [90]-[91]) as did this Court in Tauber
v Commissioner of Inland Revenue [2012] 3 NZLR 549.

20

What Happened and What is Sought

5.2

The MRRA finds itself in an unenviable position. As Heath J observed, the


Associations right to [relief of the type they originally sought] was thwarted
by statutory provisions enacted at the behest of the Council on 10 December
2013, at a time when it was known that the hearing of the substantive
proceeding was to begin on 3 February 2013.41

5.3

The MRRA consistently objected to rating decisions by the KDC from 2009.
The KDC were advised by Simpson Grierson that the rates were not
enforceable and if proceedings were brought it is highly likely that all the
rates identified would be invalidated.42 The KDC consistently responded to
ratepayers that rates were legally valid until a court ruled otherwise.43

5.4

Mr Rogan, the President of the MRRA, advised the KDC on 29 August 2012
that the MRRA would have to pursue judicial review proceedings if a
cooperative approach was not possible.44 Cooperation was not forthcoming.
The MRRA sought legal advice in late September 2012. On 18 December
2012 the Commissioners decided instead that their preferred solution was to
seek retrospective validation of the defects and they rescinded the elected
KDCs previous resolution to work with the community and form a
community focus group to review the available options.45

Before the

substantive case, delayed by a strike out application by the KDC of one


cause of action, could be heard and decided Parliament enacted the Bill on
10 December 2013.
5.5

The MRRA has been deeply disturbed by these events. It considers the
enactment of the Validation Bill over the top of its extant High Court
proceedings is a breach of fundamental constitutional principle in New
Zealand.

It understands that, under the doctrine of Parliamentary

sovereignty, Parliament has the legal ability to pass any law whatever. But
the MRRA considers that overriding extant judicial review proceedings by
retrospective legislation is a violation of its right under the Bill of Rights to
41
42
43
44
45

Judgment No 4 at [47]
Not included in COA. High Court CBD Doc#133, at para 23 (List of Documents
Wholly Omitted, p 20). The High Court confirmed this in Judgment No 4 at [47].
Third Affidavit R B Rogan (2 COA 6, p 457, para 5).
Third Affidavit R B Rogan (2 COA 6, p 463, para 33).
KDC Report and Minutes (3C COA 50, 51).

21

challenge public decisions by way of judicial review, consistently with the


rule of law.
B

The Bill of Rights and Declarations of Inconsistency

5.6

Section 27 of the Bill of Rights, entitled Right to Justice, is in part 2,


governing civil and political rights. Subsection (2) states:
(2) Every person whose rights, obligations, or interests protected or
recognised by law have been affected by a determination of any tribunal or
other public authority has the right to apply, in accordance with law, for
judicial review of that determination.

5.7

This provision is substantially the same as that included in article 21(2) of


the draft Bill of Rights proposed in the 1985 White Paper which noted that:
It should serve as a check to privative clauses in Acts purporting to restrict
the power of judicial review,46 and any attempt completely to deprive the
High Court of its review powers would violate the guarantee.47

5.8

The provision reflects, recognises and affirms the courts traditional concern
to protect access to the courts and to be sceptical of privative clauses, as
noted by this Court recently in Spencer. Cooke and Ongley JJ famously
stated, [i]ndeed we have reservations as to the extent to which in New
Zealand even an Act of Parliament can take away the rights of citizens to
resort to the ordinary Courts of law for the determination of their rights. 48
In Tannadyce McGrath J noted the integral link between judicial review and
the rule of law.49 And in its 2014 Code of Constitutional standards the
House of Lords Constitution Committee identified, in its first tranche of
standards about the rule of law, laws should not prevent a court from
deciding pending litigation according to its merits on the basis of the law in
force at the time when the proceedings were commenced.50

46
47
48

49

50

A Bill of Rights for New Zealand: A White Paper (1985) at 10.172.


At 10.175.
New Zealand Drivers Association v New Zealand Road Carriers [1982] 1 NZLR
374 at 390 (CA). This reservation was repeated by Lord Steyn in the House of Lords
in 2005 in Jackson v Attorney-General [2005] UKHL 56, [2006] 1 AC 262 at [102].
Tannadyce Investments Ltd v Commissioner of Inland Revenue [2012] 2 NZLR 153
at [4]. And see Harry Woolf, Jeffrey Jowell, Andrew Le Sueur De Smiths Judicial
Review (6th ed, Thomson, Sweet & Maxwell, London 2007) at 1-014-1-017.
JS Card, R Hazell, D Oliver The Constitutional Standards of the House of Lords
Select Committee on the Constitution (London, the Constitution Unit, 2014) at 1.1.6.

22

5.9

Section 4 of the Bill of Rights means that the Validation Act cannot be
invalid.

However, that does not prevent the Court from formally declaring

the existence of the inconsistency. In Moonen, a unanimous bench of 5


judges in the Court of Appeal recognised that the purpose of s 5 necessarily
involves the Court having the power, and on occasions the duty to indicate
that a provision is inconsistent with the Bill of Rights.51 In Poumako another
unanimous bench of 5 in the Court of Appeal considered there had been a
breach of the Bill of Rights, though only one judge indicated he would have
made a formal declaration.52

The Supreme Court is similarly clear in

Hansen itself that the courts are entitled to inquire into the conformity of
legislation with the Bill of Rights and McGrath J recognised a
constitutional responsibility of the court to indicate in its judgment that it
has relied on s 4 of the Bill of Rights Act to uphold an inconsistent provision
in another statute.53

It is a small step from recognising a duty to indicate

inconsistency to formally granting a declaration in order to vindicate the


rights of a litigant in circumstances that warrant it.54
5.10 In the Taylor cases, the High Court in 2014 refused to strike out an
application for a declaration of inconsistency and then, in 2015, issued a
declaration of inconsistency in relation to breach of the right of prisoners to
vote.55 In the latter case, Heath J (at [61]), after considering Baigents Case,
proceeded on the basis of the general principle that where there has been a
breach of Bill of Rights there is a need for a Court to fashion public law
remedies to respond to the wrong inherent in any breach of a fundamental
right. Similar reasoning in Baigents case resulted in the now wellestablished jurisdiction of the courts to grant the remedy of public law
damages for breach of the Bill of Rights.56 The purpose is to vindicate

51
52
53
54

55
56

Moonen v Film and Literature Board of Review [2000] 2 NZLR 9 (CA) at [19]-[20].
Poumako [2000] 2 NZLR 695 (CA) at [86]-[106] (Thomas J),
R v Hansen [2007] NZSC 7, [2007] 3 NZLR 1 at [254] and [259] and see Anderson J
at [267].
See generally Claudia Geiringer On a Road to Nowhere: Implied Declarations of
Inconsistency and the New Zealand Bill of Rights Act (2009) 40 VUWLR 613 and
Petra Butler Bill of Rights in Mary-Rose Russell and Matthew Barber (eds) The
Supreme Court of New Zealand 2004-2013 (Wellington, Thomson Reuters, 2015) at
256-264.
Taylor v Attorney-General [2014] NZHC 1630 and Taylor v Attorney-General
[2015] NZHC 1706.
Siimpson v Attorney-General [1994] 3 NZLR 667, 676 (Cooke P) [Baigents Case].

23

rights. The courts will have regard to the nature of the right and the nature
of the breach.57
5.11 The provision of a remedy in such circumstances is consistent with New
Zealands obligations under the International Covenant on Civil and Political
Rights, New Zealands commitment to which the Bill of Rights affirms.58
The courts have stated that monetary compensation for breach of the s 27(1)
right to natural justice of the Bill of Rights will be rare as a rehearing
could be ordered, though none of the cases involved a breach of s 27(2).59
C

The Justice of Making Declarations Here

5.12 The High Court here was satisfied that had the Validation Act not been
passed that the Association would have succeeded in obtaining relief of the
type originally sought in relation to the invalidity of rating decisions made
by the Council, arising out of the EcoCare agreements and the adoption of
Modification 1.60
5.13 The first question is whether the Validation Act is inconsistent with the Bill
of Rights. Following the Supreme Courts approach in Hansen61 the first of
Tipping Js two steps in answering that question are to ascertain Parliaments
intended meaning in the Validation Act and whether that meaning is
apparently inconsistent with s 27(2).
5.14 As the High Court accepted, the MRRA submits that the Validation Act is
inconsistent with s 27(2):
(a)

The purpose of the Validation Act is to validate the specified rates and
rates assessments for the 65 specified defects as traversed above. The
effect of the validation was to prevent the MRRA pursuing its judicial
review action as pleaded.

57
58

59

Taunoa v Attorney-General [2007] NZSC 70, [2008] 1 NZLR 429 at [261]


(Blanchard J).
Under Article 2(3) New Zealand undertakes to ensure that any person whose rights
and freedoms as herein recognised are violated shall have an effective remedy,
notwithstanding that the violation has been committed by a person acting in an
official capacity. And see article 8 of the United Nations Universal Declaration of
Human Rights Everyone has the right to an effective remedy by competent national
tribunals for acts violating the fundamental rights granted him by the constitution or
by law. The Bill of Rights must be construed in light of these obligations.
Taunoa at [261], [298] (Blanchard and Tipping JJ) regarding s 27(1).

24

(b)

Parliament was aware of the extant judicial review challenge to the


specified rates, at least through the MRRAs submissions to the select
committee. However, there is no evidence the Attorney-General knew
about the proceedings when the section 7 advice was given. Parliament
prevented the High Court from exercising its discretion of ordering
relief and must be taken to have known thats what it was doing.

5.15 The next step is for the Court to ascertain whether the inconsistency is
nevertheless a justified limitation under s 5. The High Courts analysis of
this question was sadly deficient, briefly holding that it does not behove the
Court to second-guess [Parliaments] political judgment.62 That cannot be a
correct approach to whether to issue a declaration of inconsistency. Rather,
what the Court needs to consider is whether the Validation Acts objective is
sufficiently important to warrant overriding a fundamental constitutionally
important right? If so, are the means chosen to do so proportional to the
objective i.e. be rationally connected with, and impair, the right as little as
possible.63
5.16 The MRRA submits the Acts limitation on their right of judicial review is
not justified under s 5 for the following reasons:
(a)

The Acts purpose could be argued to be important to healing the


breach of trust between the Council and community. The MRRA has
consistently maintained a position that, if accompanied by sufficient
other measures to resolve the problems with the KDCs finances,
validation may be appropriate.

However, the MRRA says that

pursuing validation when a significant proportion of the Mangawhai


community is alienated from the KDC, when the Auditor-Generals
inquiry was still outstanding, and over the top of existing judicial
review proceedings could reasonably have been expected to make, and
has made, the situation worse.

60
61
62
63

Judgment No 3 at [47].
Hansen also leaves open the possibility of other sequences of steps, as in Moonen.
Judgment No 3 at [104].
Hansen at [42] (Elias CJ), [64] (Blanchard J), [104] (Tipping J), [203] (McGrath J),
[272] Anderson J.

25

(b)

The KDC puts most of its emphasis on the public importance of its
finances.

That seems to have been the top priority of the

Commissioners since assuming office, on their own evidence.64 And


the financial effect was the key argument provided by officials in
advice to the select committee against excepting the proceedings it
would effectively defeat the whole purpose of the Bill.65
(c)

But this argument fails the proportionality test. It would not have been
difficult to have ring-fenced the outcome of the proceedings to those
who were party to them the members of the MRRA.

That is what

the most recent validating legislation has done in s 9 of the Land


Transport (Speed Limits Validation and Other Matters) Act 2015. The
select committee considering the Bill here was aware of this option.66
Yet Supplementary Order Paper 406, an amendment which would have
done so, was moved but failed.67 Restricting the scope of the relief in
that way would have preserved the MRRAs ability to pursue judicial
review but confined the financial effects to a manageable size. The
KDCs evidence on its financial situation demonstrates that it could
afford relief awarded only to the MRRA members.68
(d)

The primary question for the High Court in relation to the second and
third causes of action would have been what relief should be granted.
It would have had to have weighed such factors as: the mix of
procedural and substantive failures; the egregious number, extent and
character of the failures; the fact that many of them were made in the
face of prior identification of them by Mr Boonham and the MRRA;
the effect of the range of possible relief on the members of the MRRA
and other ratepayers in the Mangawhai and wider Kaipara community;

64
65
66

67
68

Affidavit J S Robertson dated 20 December 2013. Not included in COA (Index of


Documents Wholly Omitted, p 14).
DIA Report to the Local Government and Environment Committee, 15 October 2013
(3D COA 68 pp 2476 2477).
In its submission to the select committee the MRRA cited the examples of s 5
Citizenship (Western Samoa) Act 1982 and s 70G New Zealand Public Health and
Disability Act 2000. (3D CoA 63 at para 49 and footnote, and amendment suggested
to the committee 3D CoA 65.)
3 COA 71, 72.
Affidavit of S J T Ruru 2 CoA 3.

26

the effect of the range of possible relief on the financial position of the
KDC and, through it, on the inhabitants of the Kaipara District.
(e)

Relief in judicial review, especially in relation to procedural errors, is


discretionary and lies in the Courts hands. The KDC advised the
select committee that it may well be that the MRRA would obtain no
substantive remedy. So the question is: how can denying the Court
even the possibility of responsibly exercising its discretion for ordering
relief, if it upheld the MRRAs judicial review challenge, be a justified
limitation on the right to judicial review. Winkelmann Js judgment in
Spencer rejected the Crowns argument of resource constraints as a
justification of limiting rights because the Human Rights Tribunal is
bound to take such constraints into account.69 That must be even more
the case in relation to the High Court in judicial review. This Court
further noted that it does not follow from the executives concerns
about cost implications that Parliament intended to deny redress for
unlawful discriminatory acts prior to the enactment there.70

(f)

The right to judicial review is a right to put a case - to have ones day
in court. It is an opportunity to have a Court order relief that would
have been just in the circumstances of the case if it had agreed that
there was invalidity.
opportunity.

Yet the Validation Act denied even that

Parliament failed to respect the comity that exists

between the branches of government and sought to remove the


effective access of citizens to the courts.
5.17 The Court must also examine the Act to determine, pursuant to s 6 of the Bill
of Rights Act, whether it is reasonably possible for a meaning consistent, or
less inconsistent, with s 27 to be found. If so it must be adopted with the
effect that all causes of action become arguable. The MRRA submits the
best candidate for such a meaning is: the definition of specified rates in s 5 is
limited to the description of the specified rates in the rates resolutions and
does not include the description of the same rates in the rates assessment
notices which is quite different. Neither the rates assessment notices nor the
69
70

Spencer v Attorney-General [2013] NZHC 2580 at [167].


Attorney-General v Spencer [2015] NZCA 143 at [86].

27

rates invoices, which are based on those notices, are validated and therefore
ratepayers are not liable for the specified rates (ss 44 and 46 of the LGRA).
5.18 If this interpretation is not accepted, and s 4 of the Bill of Rights mandates
that the Validation Act overrides the second and third causes of action then,
for that denial of the MRRAs right to justice, there must be a remedy.
5.19 Here, the circumstances are propitious for issuing a declaration of
inconsistency if the Court finds the Bill of Rights has been breached:
(a)

it is civil proceedings rather than criminal proceedings;71

(b)

the Attorney-General did not express a view on the issue one way or
the other, and there is no evidence he or his advisers were aware that
the Bill cut across extant judicial review proceedings;

(c)

it is a local bill, not a government bill so no high policy is implicated.

5.20 Here, Parliament knew that what it was doing was contrary to constitutional
principle. As the Court of Appeal said in Moonen:72
[The] purpose [of s 5] necessarily involves the Court having the power, and
on occasions the duty, to indicate that although a statutory provision must
be enforced according to its proper meaning, it is inconsistent with the Bill
of Rights, in that it constitutes an unreasonable limitation on the relevant
right or freedom which cannot be demonstrably justified in a free and
democratic society. Such judicial indication will be of value should the
matter come to be examined by the Human Rights Committee. It may also
be of assistance to Parliament if the subject arises in that forum. In the light
of the presence of s 5 in the Bill of Rights, New Zealand society as a whole
can rightly expect that on appropriate occasions the Courts will indicate
whether a particular legislative provision is or is not justified thereunder.

5.21 How can we otherwise expect Parliament to be reminded of the need for
respect for constitutional principle, and respect for and comity with the
courts, if the courts are not clear, in the ordinary exercise of their own
function of declaring the law, about the constitutional consequences of what
Parliament does?

Doing so here is entirely consistent with the courts

traditional concern to protect access to the courts voiced by this Court in


Spencer this year, among others. The MRRA submits that this is that rare but

71

72

Belcher v Chief Executive of the Department of Corrections [2007] NZCA 174;


Belcher v Chief Executive of the Department of Corrections [2007] NZSC 54 at [7][8]; McDonnell v Chief Executive of the Department of Corrections [2009] NZCA
352 at [123d].
Moonen at [20] (Tipping J for the Court).

28

clear case in which a declaration by the Court of inconsistency of an Act of


Parliament with the Bill of Rights is a proportionate means of vindicating a
litigants rights.
D

Declarations and Damages against the KDC

5.22 The MRRA also seeks declarations that the KDCs actions in promoting the
Bill without excepting the proceedings were inconsistent with the Bill of
Rights. If the Act is inconsistent with the Bill of Rights, the KDCs actions
in promoting the Bill must be also.
5.23 It is important to note that this remedy will not be available for many people
who ask Parliament to act. The courts have been careful to uphold article 9
of the Bill of Rights of 1688 that proceedings in Parliament ought not be
impeached or questioned in any court. The courts will not interfere with
Parliamentary proceedings or restrain the Crowns actions in bringing a Bill
before Parliament.73 Some courts have gone a significant distance, some
respected commentators say too great a distance, in this direction.74
5.24 The KDC is not a natural person or the Crown or part of the executive. Like
all local authorities the KDC is created by statute and is a creature of statute.
Its rights, privileges and powers to act derive from statute. If statute does not
empower it to act, it may not do so. An empowering clause in a statute must
be interpreted, consistent with the Bill of Rights, not to empower the making
of rules or regulations that are inconsistent with the Act.75 Still less can an
empowering clause empower actions that are inconsistent with the Bill of
Rights. A local authority, a creature of statute, has no lawful power to act
inconsistently with the Bill of Rights.
5.25 In the usual course of a local authoritys activities it may promote a local bill
to Parliament where the interests of the authority or the inhabitants of the
73

74

75

Westco Lagan Ltd v Attorney-General [2001] 1 NZLR 40 (HC), Te Runanga o


Wharekauri Rekohu Inc v Attorney-General [1993] 2 NZLR 301 at 308 (Cooke P)
(CA), New Zealand Maori Council v Attorney-General [2007] NZCA 269, [2007] 1
NZLR 318.
See critical commentary of Milroy v Attorney-General [2005] NZAR 562 (CA)
which disclaimed jurisdiction over pre-legislative policy decisions as flawed and
unmanageable, Philip Joseph Constitutional and Administrative Law in New
Zealand (4th ed, Thomson Brookers, Wellington, 2014) at 15.4.2.
Drew v Attorney-General [2002] 1 NZLR 58 (CA), Cropp v Judicial Committee
[2008] NZSC 46, [2008] 3 NZLR 774 at [25].

29

district are concerned. This is recognised in s 2 of the Finance Act 1978 for
the purpose of a local authority expending money in and about preparing and
passing a bill through Parliament as noted by the Court of Appeal in New
Plymouth District Council v Waitara Leaseholders Association Inc.76
5.26 Standing Order 253 of the House of Representatives provides that one of the
four classifications of bills is a local bill a bill promoted by a local
authority, which affects a particular locality only. Appendix C outlines the
procedures that must be met for a bill to be able to be introduced as a local
bill.77 Ordinarily, the courts would not prevent a Council from seeking to
persuade Parliament to enact, or a Minister to promote, such a Bill, given
that it is within the Councils competence to do so. (emphasis added).78
The last words are crucial.

It is not within the competence of a local

authority to act inconsistently with the Bill of Rights.


5.27 The same restriction applies to Commissioners who stand in the shoes of the
KDC and are constrained by the legal duties that constrain the KDC. It is
even more important that Commissioners, who lack democratic legitimacy,
observe the rights and freedoms of those affected by their decisions.
5.28 The MRRA does not argue that promotion of any Validation Bill would be
ultra vires the Bill of Rights. Rather, it was the KDCs promotion of a
Validation Bill that failed to preserve the right to judicial review in
overriding

proceedings

that

were

already

underway

that

was

disproportionate, unnecessary, and unjustified under the Bill of Rights. The


KDC promoted the Bills introduction over the top of existing proceedings
against them. The KDC considered that the Court may well not grant
relief in the proceedings anyway. But it consistently advised in trenchant
terms against any form of exception of the proceedings.
5.29 The MRRA seeks public law damages from the KDC for its breach of the
Bill of Rights in such exceptional circumstances. There can be no doubt that

76
77
78

New Plymouth District Council v Waitara Leaseholders Association Inc [2007]


NZCA 80 at [60].
Standing Orders of the House of Representatives, 2014, Appendix C Preliminary
procedures for private bills and local bills and local legislation bills.
New Plymouth District Council v Waitara Leaseholders Association Inc. [2007]
NZCA 80 at [64].

30

the KDCs actions were to the detriment of the MRRA. But the KDCs
offending actions, which succeeded in invoking the sovereign power of
Parliament, cannot be set aside. The KDC cannot be directed to make its
decisions again. If the MRRA achieves no substantive relief then it, and its
991 members, will be in the position envisaged by Blanchard J in the
Supreme Court in Taunoa, where unless there is a monetary award there
will be insufficient vindication and the victim will rightly be left with a
feeling of injustice.79 Public law damages are appropriate.
5.30 As to quantum, Cooke P in Baigents Case suggested the gravity of the
breach, the importance of the right involved and the deterrence of breaches
are relevant considerations.80 The Supreme Court has said the amount
should not be so small as to seem derisory but not compensatory or punitive
and should be moderate.81 Previous awards are difficult to compare as
most of them are in the realm of breaches of personal freedoms.82
5.31 How does one put a value on access to court and justice? The MRRA has
sought damages calculated at $1,000 per member of the MRRA (there are
991 members). This is deliberately set at a level that is modest per person
but, having regard to the number of people, not derisory. As a total it
seems a significant amount but that is because of the number of people
whose right to justice the KDC has breached. It is very similar in amount to
the KDCs 2012/13 surplus. There is also a public value in deterring other
local authorities from pursuing the same sort of conduct. This level of
damages would assuage the feelings of hurt, outrage and injustice which will
otherwise linger in the Mangawhai community for years to come.
DATED 31 July 2015.

Matthew S R Palmer QC
Counsel for the Mangawhai Ratepayers and Residents Association Inc
79
80
81
82

Taunoa v Attorney-General [2007] NZSC 70, [2008] 1 NZLR 429 at [255].


Baigents Case at 667 (Cooke P).
Taunoa at [264], Attorney-General v Udompun [2005] 3 NZLR 204 (CA) at [177].
Matthew Smith, New Zealand Judicial Review Handbook (Thomson Reuters,
Wellington, 2011 at 73.6.4.

31

Table of Authorities
Statutes
Bill of Rights 1688 (art 1) (UK)
Citizenship (Western Samoa) Act 1982
Constitution Act 1986
Finance Act 1978
Kaipara District Council (Validation of Rates and Other Matters) Act 2013
Land Transport (Speed Limits Validation and Other Matters) Act 2015
Local Government Act 2002
Local Government (Rating) Act 2002
New Zealand Bill of Rights Act 1990
New Zealand Public Health and Disability Act 2000.
Receiverships Act 1993
Cases
Attorney-General v Spencer [2015] NZCA 143
Attorney-General v Udompun [2005] 3 NZLR 204 (CA)
Belcher v Chief Executive of the Department of Corrections [2007] NZCA 174
Belcher v Chief Executive of the Department of Corrections [2007] NZSC 54
Bromley London Borough Council v Greater London Council [1983] 1 AC 768
Cropp v Judicial Committee [2008] NZSC 46, [2008] 3 NZLR 774
Dotcom v Attorney-General [2014] NZSC 199
Drew v Attorney-General [2002] 1 NZLR 58 (CA)
Jackson v Attorney-General [2005] UKHL 56, [2006] 1 AC 262
Lab Tests Auckland Ltd v Auckland DHB [2008] NZCA 385, [2009] 1 NZLR 776
Mackenzie District Council v Electricorp [1972] 3 NZLR 41
McDonnell v Chief Executive of the Department of Corrections [2009] NZCA 352
Milroy v Attorney-General [2005] NZAR 562 (CA)
Moonen v Film and Literature Board of Review [2000] 2 NZLR 9 (CA)
New Plymouth District Council v Waitara Leaseholders Association Inc [2007]
NZCA 80
New Zealand Drivers Association v New Zealand Road Carriers [1982] 1 NZLR
374 (CA)
New Zealand Maori Council v Attorney-General [2007] NZCA 269, [2007] 1
NZLR 318
R v Hansen [2007] NZSC 7, [2007] 3 NZLR 1
R v Pora [2001] 2 NZLR 37 (CA)
R v Poumako [2000] 2 NZLR 695 (CA)
R v Secretary of State, ex parte Simms [2000] 2 AC 115
Re AMM [2010] NZFLR 629 (HC)
Simpson v Attorney-General [1994] 3 NZLR 667 [Baigents Case]
Spencer v Attorney-General [2013] NZHC 2580
Tannadyce Investments Ltd v Commissioner of Inland Revenue [2012] 2 NZLR 153
Tauber v Commissioner of Inland Revenue [2012] 3 NZLR 549
Taunoa v Attorney-General [2007] NZSC 70, [2008] 1 NZLR 429
Taylor v Attorney-General [2014] NZHC 1630
Taylor v Attorney-General [2015] NZHC 1706
Te Runanga o Wharekauri Rekohu Inc v Attorney-General [1993] 2 NZLR 301(CA)
Unison Networks Ltd v Commerce Commission [2007] NZSC 74,[2008] 1 NZLR 42
Waitakere City Council v Lovelock [1997] 2 NZLR 385 (CA)
Watson v Electoral Commission [2015] NZHC 666
Wellington City Council v Woolworths NZ Ltd (No 2) [1996] 2 NZLR 537
Westco Lagan Ltd v Attorney-General [2001] 1 NZLR 40 (HC)
Whakatane District Council v Bay of Plenty Regional Council [2010] NZCA 346,
[2010] 3 NZLR 826
Zaoui v Attorney-General (No 2) [2005] NZSC 38, [2006] 1 NZLR 289

32
Other Materials
International Covenant on Civil and Political Rights
United Nations Universal Declaration of Human Rights
(19 December 1995) NZPD (Hon Graeme Lee)
(27 March 1996) NZPD (Hon John Banks)
(12 June 2013) 691 NZPD 11087 (Nicky Wagner)
(13 November 2013) 694 NZPD 1464 (Nicky Wagner)
A Bill of Rights for New Zealand: A White Paper (1985)

Legislation Advisory Committee Guidelines on the Process and Content of


Legislation (Ministry of Justice, 2014), ch 15
Local Government Bill, Report of Local Government and Environment Committee,
2002.
Standing Orders of the House of Representatives, 2014
Texts and Articles
Petra Butler Bill of Rights in Mary-Rose Russell and Matthew Barber (eds) The
Supreme Court of New Zealand 2004-2013 (Wellington, Thomson Reuters,
2015)
JS Card, R Hazell, D Oliver The Constitutional Standards of the House of Lords
Select Committee on the Constitution (London, the Constitution Unit, 2014)
Ross Carter Burrows and Carter Statute Law in New Zealand 5th ed (Wellington,
LexisNexis, 2015)
Claudia Geiringer On a Road to Nowhere: Implied Declarations of Inconsistency
and the New Zealand Bill of Rights Act (2009) 40 VUWLR 613
Philip Joseph Constitutional and Administrative Law in New Zealand (4th ed,
Thomson Brookers, Wellington, 2014) at 15.4.2.
Kenneth Palmer, Local Authorities Law in New Zealand (Brookers, Wellington,
2012) ch 1
Harry Woolf, Jeffrey Jowell, Andrew Le Sueur De Smiths Judicial Review (6th ed,
Thomson, Sweet & Maxwell, London 2007)
Matthew Smith, New Zealand Judicial Review Handbook (Thomson Reuters,
Wellington, 2011