The KDC/NRC HIgh Court Interim decision can be viewed here

The KDC/NRC High Court final decision can be viewed here.


For those who want to read the Auditor-General's report

on the inquiry into the Mangawhai wastewater scheme


Full report




MRRA circular 2014

We believe that the council will have to climb some very steep hills to successfully sue any Kaipara ratepayer for non-payment of rates, and when the time comes we intend to be ready to provide a vigorous defence to anyone who is sued by this council. 

Winston Peters on EcoCare 2014

This is a sorry litany of negligence, corruption and coverup. 

Winston Peters on retrospective legislation 2014

Retrospective legislation that is harmful to any party should be an abomination in a democracy. In this instance, it was used as a device to brush incompetence and corruption under the carpet. New Zealand First’s view is clear; inconvenient truths should not be buried but exposed to the cleansing light of public scrutiny. Cover up – deny – and avoid scrutiny whilst the innocent suffer and the guilty walk away unscathed and fully paid.

Winston Peters to Kaipara ratepayers 2014

National and its local MPs, past and present, should be ashamed of their underhand way of allowing the guilty to escape accountability and leaving you with the cost. 

Bottom line policy of NZ First for Election 2017

Eliminate the debt burden on Kaipara District Council ratepayers caused by the Mangawhai Community Wastewater Scheme. 

Phil Twyford (Labour) on the second reading of the Kaipara Validation Bill 2013 stating the two reasons why Labour supported the Bill:

The first is that if negligence or corruption is found to have been involved in the governance of Kaipara District Council, and if the report of the Auditor-General does uncover culpability of that nature, then the wrongdoers must be held accountable. I take some assurance from the unanimous cross-party agreement at the select committee, which is included in the commentary on this bill, that we expect the Government to hold those people accountable if the Auditor-General’s reports finds wrongdoing of that nature.

The second is that the Mangawhai ratepayers group must not be punished for blowing the whistle. There were wrongdoings committed here. The financial cost to the residents is significant, and they must not be punished for blowing the whistle. That is why I am pleased to see a commitment being made by the commissioners to the select committee that there would be an amnesty for the rates penalties incurred by those people withholding their rates in protest at this situation. On the basis of those two elements, I believe, then, that there is a basis for passing this bill so that all of the ratepayers and the people of Kaipara District can move forward.

The betrayal of ratepayers in respect of these two issues and the vindictive pursuit of whistle-blowing ratepayers for the draconian penalties.is the root cause of the ongoing problems.


In 2011 the KDC announced that Jack McKerchar was resigning as chief executive “for personal and health reasons”.

That was a lie. The truth was that the KDC secretly paid $240,000 to get rid of McKerchar in a deal brokered by Mayor Tiller and Deputy Mayor Geange. That is the infamous agreement which contained the full and final settlement clause which prevented the KDC recovering substantial damages for McKerchar’s incompetence.

Persistent pressure and LGOIMA requests finally exposed the truth about the resignation.

In August this year the KDC announced that chief executive Peter Sibery had resigned. No reason was given. Graham Sibery has made no comment and Mayor Gent refuses to give any reasons .

The Lifestyler reported Mayor Gent:

Asked for further details, Mr Gent said that employment agreements remained a private matter under the Employment Relations Act 2000 and the Privacy Act 1993.

One might say that Graham Sibery’s departure is clouded in secrecy. There is a wall of silence around it.

Graham Sibery - Was there a financial settlement?

I have suggested in an earlier post that it looked likely that the KDC and Sibery have parted company under a confidential agreement. That may entail a sum of up to a million dollars, given that there was almost four years to run on his contract.

The departure was sudden so it seems that there was no time for the appropriate performance procedures and review under his employment contract.

He could have been fired on the spot, or constructively fired, in which case there will be legal claim and a hefty award in damages.

Or Sibery may have decided to quit for personal reasons.

Looking back, there has to be some concern about the motivation behind Sibery’s original appointment just over a year ago.

• He had no experience in local government when that was desperately needed. the KDC had to have a qualified and experienced skipper at the helm capable of tackling the muddy waters of Kaipara.

• Why did Peter Winder and the commissioners appoint Sibery when it was the right of the newly elected council to appoint its own chief executive?

• And why a contract for the maximum term of five years allowed under the LGA?

• Did Sibery and Winder work together during the Rugby World Cup?

In short, why appoint a square peg to fill around hole for a term of five years when it was pretty clear that it would never fit. Was that a ploy to ensure that when there was an inevitable parting of the ways there would be a virtual guarantee of a hefty golden handshake?

Of course all this is speculation, but that is what happens when those in powers slam down the portcullis on transparency. And that is what they have done. This is the response of the KDC to my LGOIMA request for information regarding the resignation of Graham Sibery:

Whilst there may well be community interest in this matter, there are good reasons under section 7(2)(a) and 17(a) of the LGOIMA for withholding this information at this time to avoid infringing upon Mr Sibery’s personal privacy. There is also good reason for withholding under section 7(2)(c), to protect information which is subject to an obligation of confidence because the release of the information would be likely to damage the public interest by detracting from Council’s ability to manage its employee relationships in confidence. I am of the view that those good reasons for withholding outweigh the public interest in the matter.

If a chief executive suddenly leaves a job in breach of his contract then the reasons for his departure should be public knowledge. Ratepayers pay the salary of the chief executive and any golden handshake that he may be given. Ratepayers also pay the wages of the Mayor and councilors. Under the basic principles of accountability and transparency it is fundamental that such matters should be publicly revealed.

Mayor Gent’s reference to the Employment Relations Act 2000 and the Privacy Act 1993 are just smoke-screens.

Graham Sibery’s personal privacy has nothing to do with it. He is a public figure and, if he quits after one year into his contract, those who pay his salary are entitled to know why. If he resigned for personal reasons then that is all that we need to know. But the way Mayor Gent has gone about this suggests that there is something far more costly to ratepayers that is being hidden.

As for the other ground quoted by the KDC in its response, section 7(2)(c) of LGOIMA only applies where there is an “obligation of confidence”. That appears to suggest that there is a settlement agreement of some sort with a confidentiality clause, probably with a financial payout of some kind.

In the McKerchar resignation, the KDC simply lied to ratepayers. In the Sibery resignation the KDC has not lied, but it has refused to tell the truth.

In the McKerchar resignation the truth finally emerged when the annual report revealed the golden handshake paid to McKerchar. The annual report is a statutory document and is required by the LGA to include details of all remuneration paid to a chief executive during the year in question.

Unfortunately for ratepayers, the year in question ends in June 2018 and the KDC has three months in which to publish that report. That means that we will not know whether the KDC has paid an inducement to Graham Sibery to resign until the end of September 2018.

The alternative is that the KDC rethinks its obligations to ratepayers and comes clean on the matter. If it has got nothing to hide then it should make a statement stating that Graham Sibery resigned for personal reasons and that there was no financial settlement. If it does that then we can put that issue to bed.

Chris Sellars (aka Worzel) has been very brave in his article Worzel’s Fraud Report in the latest Mangawhai Focus. (not yet online) He pulls no punches in stating that those responsible for the EcoCare shambles were guilty of fraud.

He is in good company. Winston Peters has repeatedly stated that the EcoCare was fraudulent.

Last year Worzel wrote an article on organised criminal gangs. He commented:

What then do organised criminal gangs do? Do they meet in secret to conspire and break the law? Do they engage in lies and intimidation in order to obtain compliance with their wrongdoing and suppress opposition? Are they a burden financially and socially to their communities? Do some of the more powerful gangs have friends in politics who can pull a few strings and ‘fix’ things for them? Does this sound like the Mongrel Mob, Headhunters, Hells Angels or Ulysses Motorcycle Club to you?

Sounds more like the Kaipara District Council to me.

This website went on to comment:

When you look at the financial damage the KDC has done to our communities, businesses and families then you can safely say that the KDC is the most destructive gang in all of our lives.

The KDC fraudulently and illegally entered into a Ponzi type arrangement that was planned to enrich those involved with full knowledge that the ratepayers of the district would be dumped with a massive illegal debt.

They lied and misrepresented the situation for years, they pilfered all the funds set aside for other purposes to feed their rort and stole the Mangawhai Endowment funds monies. They created a smoke pall to disguise the financial realities and the utter ineptness of the EcoCare scheme and they even persuaded Parliament to force the luckless ratepayers to pay their illegal tithes plus vindictive penalties.

As ex detective Mike Sabin said about the Councillors who were responsible for the Kaipara rorts: "if they had been company directors they would all be in jail now."

And that's where they should be, along with all the others who suspended their judgement and their obligations to the community and to their professions, and allowed the Kaipara rorts to proceed, condoned the excesses and incompetence and illegalities, and stood by and watched as the people of Kaipara were fleeced.

They are all now sitting back with smug smiles on their faces while the current gang continues to pursue and harass the only people who come out of this indecent shambles with clean hands - the ratepayers of the district.

The Big Lie was that EcoCare was necessary because of the pollution of the Mangawhai harbour caused by septic tank outflow, thus necessitating a modern sewerage system that would fix all the problems. There was, in fact, no evidence at the time that the harbour was polluted but it gave the rorters an ecological and emotional peg on which to hang their fraud.

That lie has finally been exposed by the results of water quality testing in the catchment area for the harbour that have just been released. See the report on the KDC website.  Not surpisingly the catchment area for the harbour is seriously polluted.



NZ Herald


Note how all reports regurgitate the spin of the media statements without any critical assessment. By repeating the statements over and over again they add to their credibility in the minds of readers.

For a critical assessment of the media comments of the NRC scroll down to COMMENTS ON NRC MEDIA RELEASE  13.09.2017

It is important that sight is not lost of the REAL ISSUES.

• The Kaipara Validation Act was enacted by Parliament in 2013 on the understanding that those responsible for the unlawful Kaipara debt would be held to account and that penalties on the withheld rates of whistle-blowers would be remitted. The government controlled KDC commissioners did neither, creating a deep bitterness within the community.  Many ratepayers refused to pay the rates unless the historic penalties were remitted.

• The ratepayers had no issue with the NRC and tried to make some arrangement to pay the NRC's part of the combined rates directly to the NRC. The NRC refused to cooperate.

• In 2014 ratepayers paid approximately $1 million in withheld rates to the KDC on behalf of the KDC and NRC but without the penalties. The KDC returned the monies and responded by issuing over 100 separate proceedings against ratepayers in the District Court to recover the KDC and NRC rates and the penalties, as well as pursuing many more ratepayers through their mortgagees.

• Some rebel ratepayers have tried to pay rates instalments as they fall due, as they are entitled to do under the Rating Act. However the NRC (and the KDC) deny ratepayers that right because of their unlawful “oldest debt first” policy. Any payment of an instalment is applied to the oldest debt and not the instalment. This is in blatant breach of the requirements of the Rating Act.

• Most ratepayers succumbed to the legal pressure and paid the rates and penalties. About seven are still defending court actions with the action against Bruce and Heather Rogan being the test-case. In that case the District Court rejected the Rogan’s defence that the rates were unlawful and ruled that the Rogan’s were liable for the rates and penalties because they failed to file judicial review proceedings in the High Court to challenge the legality of the rates. The Rogans immediately filed an appeal against the ruling and, with the MRRA, applied for judicial review of the rates. The High Court held in the judicial review that five years of NRC rates are invalid. The judgment on the District Court appeal has still to be delivered by the High Court.

• Following the judgment of High Court the MRRA approached the NRC and suggested a meeting to see if settlement could be reached by the parties. The NRC CEO Malcolm Nicolson responded on behalf of chairman Bill Shepherd as follows:

Having given the matter careful consideration and having sought legal advice, Council has decided to process with the lodgement of an appeal to the High Court decision. We therefore conclude that there is little merit in meeting at this time.

• The amount of legal costs incurred so far to recover the penalties on whistle-blowers withheld rates will soon be revealed following LGOIMA requests but it is many hundreds of thousands of dollars. In addition the NRC is also planning to spend the best part of $200,000 dollars on the latest appeal plus any costs that may be awarded against it. All of that is ratepayers’ money.

• The amount of rates and penalties owed to the NRC by the Rogans and the other six ratepayers is approximately $17,700.

The NRC has just issued a media release advising that it is lodging an appeal against the two judgments of Duffy J in the High Court relating to the validity of its rates.

The NRC media release is full of the smoke and mirrors that we have come to expect from our local councils.  The release is set out in full with comments from Legal Eagle in blue.

For further background information scroll down to:




Media Release 13 September 2017

Urgent hearing sought for appeals against Mangawhai rates rulings

The Northland Regional Council (NRC) is to file an appeal against a recent High Court decision quashing several years of its rates in the Kaipara district and is seeking to appeal the court's earlier related decision which found two issues with the council's rating practices.

These issues were how council set due dates for the payment of rates and its arrangements for rate collection within the Kaipara district. The council is also seeking an urgent hearing for the appeals.

The NRC failed to include the dates for payment of instalments in its rates resolutions. This is a fundamental part of statutory process for making the rates lawful. It also unlawfully delegated to the KDC the power to assess NRC rates, add penalties to them, and to recover overdue NRC rates.

The High Court last month made an order setting aside the regional council’s rates for the Kaipara district for the five rating years 2011/12 to 2015/16 inclusive and any penalties imposed by – or on behalf of – NRC over that same period.

However, the High Court was clear that there was to be no order requiring the council to refund the rates and penalties involved, despite finding for the plaintiffs (the Mangawhai Ratepayers and Residents Association and Richard Bruce Rogan and Heather Elizabeth Rogan) on the legal status of the rates.

The High Court did not order repayment of invalid rates simply because the remedy of restitution is not available under a judicial review application. That would require a separate application.

Soon after the release of the most recent High Court decision, regional council chairman Bill Shepherd said at the heart of the case – which had implications for local authorities nationally – was the council’s use of its Kaipara district counterpart to collect rates on its behalf.

The heart of the case was the failure of the NRC to comply with simple legal requirements that it had been warned about on many occasions.

The Rating Act allows another local authority to collect rates on its behalf, but that is all.

The judgment certainly has implications for other local authorities. Most local authorities, like the NRC, have an arrogant disdain for compliance with the law and believe that they are protected from any challenge by the indifference of the Auditor-General and the government, and the unfairness and cost of our judicial system. If any challenge does survive then they expect to be rescued by a sympathetic government passing validating legislation.

Compliance with the law appears to be outside their contemplation.

Chairman Shepherd confirmed Wednesday, 13 September that appeal documents will be filed with the Court of Appeal.

He says in its decision, the High Court had noted the NRC had acted in good faith with the judge commenting the council “may have fallen victim to legislation that was less precise than it needed to be”.

A generous comment from the Judge that is not quite in accord with the facts.. The omission of dates from the rates resolutions was a fundamental error that should never have happened. How hard is it to comply with a requirement to include four dates in a legal document? The unlawful delegation was based on a complete ignorance of the law. The agreement drawn up between the NRC and the KDC was based on legislation repealed in 2003.

How would the NRC councillors feel if they were the object of a botched operation where the surgeon committed basic procedural errors and used outdated practices? Would they be happy if the hospital pleaded that the surgeon had acted in good faith and that some of the procedures were unclear?

With that in mind, in addition to the appeal, Chairman Shepherd says the council will also approach the Department of Internal Affairs asking it for a law change clarifying the section of the Rating Act covering rates collection arrangements.

And while he is at it, how about a nice little validation act to sanitise all the NRC’s illegalities? And how about the ludicrously drafted and incomprehensible section 60 of the Rating Act which is used by local authorities to persecute ratepayers. A little clarity there would not go amiss.

Note the red herring.  Its the law's fault.  Nothing to do with fundamental incompetence.

Chairman Shepherd says that if an urgent hearing is granted, the council's appeals could potentially be heard before a three-member bench of the Court of Appeal within three to five months; much less than the nine to 12 months likely under a standard appeal.

Initial estimates were that the appeal could cost the NRC in the order of $170,000 to $190,000.

The rates are invalid because of the incompetence of the NRC and the incompetence of its legal advisers. The NRC has already paid a king’s ransom in legal advice in respect of rates and in pursuing whistle-blowing ratepayers to recover vindictive and unconscionable penalties on withheld rates. The councillors of the NRC are happy to spend more and more of ratepayers’ money pursuing their victims down a blind and endless tunnel because they know that they will never be held to account. Meanwhile their lawyers cast off any blame for past incompetent advice and salivate at the thought of further rich pickings in the Court of Appeal.

While appealing will be costly, the council feels the issues at stake are too important not to appeal. The collection of rates by the district councils in the region on behalf of the regional council provides significant cost savings which benefit the region's ratepayers.

Indeed the cost savings are important. But not if you fail to comply with simple legal requirements and pour hundreds aof thousand of dollars down the gullets of your lawyers..

Referring to the years at the centre of the High Court case, Chairman Shepherd says ratepayers can be assured “our council has not acted irresponsibly and blatantly flouted the law”.

The NRC has legal obligations that it did not comply with. The Court stated in its interim judgment:

[120] In short, the NRC has failed to exercise its statutory powers properly when determining rates resolutions and it has unlawfully sought to delegate the performance of a number of its functions in relation to rates to KDC. These are substantial and grave errors that warrant recognition by this Court making declarations of invalidity.

No amount of spin can disguise the gravity of the errors.

“We have arranged the collection of our rates by the Kaipara, Whangarei and Far North District Councils using standard sector practice in the interests of saving our ratepayers the additional cost of maintaining a separate rates collection department within our council.”

On the contrary, you have cost your ratepayers a huge amount of money because you failed to comply with your fundamental but very simple legal obligations. Good intentions mean nothing if accompanied by incompetent performanceAnd a tip.  Don't follow "standard sector practices" unless you are absolutely sure that they comply with the law.  Otherwise you could end up like ..........the NRC.

Chairman Shepherd says it’s also important to remember that all the rates collected during the years covered by the court case had been spent in good faith on a wide range of projects and work programmes that had been clearly outlined in the relevant Annual and/or Long Term Plans at the time.

“These plans are widely consulted on and outline how we fulfil our purpose for our communities; including outlining how much we will collect in rates and how and where we will spend them.”

All the more reason to be careful. You are obliged to balance your books which mean that you have an absolute obligation to ensure that the rates are set and assessed lawfully so that you can meet your statutory obligations. You failed to do that. There are no excuses.

Lastly, he says it’s important to remember the judge’s decisions do not relate to the rates for the current financial year, or the 2016/17 financial year.

That’s right. But, sadly, you rating documents for the current rating year suffer from ongoing defects and non-compliance with the Rating Act. Your rates invoice denies ratepayers with arrears their fundamental statutory right to pay that instalment by due date without incurring a penalty payment. You apply an “oldest debt first” policy whereby ratepayers with arrears are denied that right, with the payment being used to pay the oldest debt, and a penalty added for non-payment of the instalment.

Your legal advice on this matter is completely wrong and the fact that many other councils apply the same policy is completely irrelevant. The reality is that when the issue comes before the High Court, which it will, the inclusion of that policy in your rates invoices will invalidate them all. Be warned.

There have been a lot of online comments about this article.  Go to the article here and scroll down to the bottom.

The ratepayers who fought the law and won.  See today's article by Susan Edmunds in the Sunday Star Times.cataloguing the fight for justice in Kaipara. 

Watch the video interview with Bruce & Heather Rogan.  Not only does it show our beautiful estuary but it also sums up why the KDC and other councils throughout the country must comply with the law.

The MRRA was represented in the latest District Court and High Court cases by Jeremy Browne of Henderson Reeves in Whangarei.  Thomas Biss, one of the other directors of that firm, sums it all up with his comment:

"It's important that people stand up and say 'if the Government is going to rule, it's important that it acts in accordance with the laws'.

See the article in Local Matters.

The Lifestyler has just announced the appointment of an interim chief executive for the KDC. He is Peter Tynan who was previously chief executive at Southern Cross Healthcare where Mayor Greg Gent is chairman. He is currently on the board of Osteoporosis NZ.

Peter Tynan

The new appointee will remain until a permanent chief executive is appointed and will be on the same salary as Graham Sibery

Many of us were alarmed last year when Graham Sibery was appointed KDC CEO by the commissioners for five years without having had any experience in local government. The KDC is seen as the cot-case of local authorities with a track record of incompetence, non-compliance with legislation, and blatant flouting of the law. Many felt that an experienced captain at the helm was essential to offer the guidance and advice that the KDC desperately needs to get back on track and win back the trust of ratepayers.

It is therefore disappointing that the new appointee has no experience in local government.

It may well be that the adage “beggars can’t be choosers” applies. Moving to the KDC as a career move is a bit like moving to the “Warriors”. Not many takers, especially in an interim role. But there is no doubt that Peter Tynan has many other qualities. If he can break away from the political mind-set that constrains Greg Gent’s council, he could bring a fresh pair of eyes and a dose of practical common sense which could help resolve some of the deep-seated issues that divide Kaipara.

THE REASON WHY .........................

The High Court has declared that five years of NRC rates are invalid. The MRRA is overjoyed. The NRC is in crisis. Many ratepayers and outside observers do not understand what is going on.

Many think that ratepayers have an unchallengeable obligation to pay rates so that our local council can fulfil its role and meet its financial obligations. I have heard people stating that because of the recent High Court ruling the roads will now be neglected, even though the NRC is not responsible for roads. Others suggest that a small group of discontents have used minor legal technicalities to avoid payment of rates for their own personal gain. Mayor Gent muddies the waters with his obfuscatory comments. (See Anthony Roberts’ letter in the latest Mangawhai Focus.)

Many of the elected councillors have no idea why there is so much bitterness about the past rating issues because they were not around at the time. And they are unlikely to find out. Mayor Gent and his Deputy Mayor Wethey endorsed the government’s appointment of a Crown Manager to deal with those historic issues under direct instructions from Wellington and have carefully steered councillors away from any involvement.

So, it is time that the real reasons were laid bare so we can all understand what is driving the defiant ratepayers .........(More)

Very soon the Councillors of the NRC will have to decide if they are going to appeal the judgment of Duffy J that invalidated five years of NRC rates.

The problems they face are:

Judgment is very tight
The judgment of Duffy J is very tight. That means it is argued very methodically and carefully. There is not much doubt that the NRC’s rates were seriously defective. The Rating Act lays down procedures in the rating process which must be followed if rates are to be lawful. Despite what has been suggested the requirements are quite straight forward and simple to understand. Compliance is not hard. Putting four instalment dates in a resolution is not beyond the expertise of most people, never mind the expertise that a local authority should have or can call upon.

Even David Goddard QC (counsel for the NRC) struggled to counter the non-compliance of the rates. He tried hair-splitting arguments like suggesting that because the rates has been declared to be unlawful in the interim judgment it did not mean that they were invalid. His main thrust was to persuade the Court to use its remedial discretion, which is available in judicial review applications, and decline to make any award against the NRC. He relied on the Armageddon argument. That is, any negative finding would result in disastrous financial and administrative consequences for the NRC and it ratepayers. Affidavits from costly experts were provided to support the scenario.

Duffy J systematically and clinically dismissed all of the NRC’s arguments and it is unlikely that she will be overturned on appeal.

NRC’s lack of awareness of legal outcomes
The NRC should not be surprised at the outcome. The Knowhow Guide to the Rating Act published by the Society of Local Government Managers (SOLGM) is the “Bible” for setting rates in compliance with the law. It was legally reviewed by the NRC’s own solicitors and contains warnings about making simple errors in rating processes and the dire consequences that can result. (The Guide can be seen here. See page 6, the paragraph starting with “Rates are a tax…”)

The NRC should also have learned from the Kaipara Validation Act of 2013 that minor errors as well as major errors can result in rates being set aside. That Act contained 73 clauses in its Preamble setting out the defects in KDC rates and other matters from 2006 to 2012. The important message to be learned is that even one simple error could result in the rates being deemed to be unlawful. The NRC shares rates assessment notices and rates invoices with the KDC and should have been on high alert.

Poor legal advice
There has to be a question mark over the legal advice the NRC received. It is unclear whether the defective rates and penalty resolutions were vetted by the NRC’s lawyers but the fundamental errors should have been picked up. For five years they were missed.

The omission of the dates in the rates resolution was a glaring fundamental error that should never have happened. The unlawful delegation to the KDC of the assessing of NRC rates, the adding of penalties, and the recovery of NRC rates was simply inexcusable. The delegations, all set out in a formal Rating Services Agreement (presumably prepared by a lawyer), were blatantly unlawful. The law allowing such delegations was repealed in 2003.

Offers to settle declined
It is hard to comprehend why the NRC got involved in the dispute in the first case. The real issue was the punitive penalties charged on whistle-blowers’ rates that were withheld as a protest in the rate strike of 2012 (see post above). The NRC had two opportunities to resolve the matter fairly.

o It could have accepted payment of the rates tendered in 2014 and written off the penalties. The penalties on rates withheld by whistle-blowers were an unconscionable windfall and insignificant.

o It could have accepted Bruce Rogan’s offer for the NRC rates to be paid directly.

Instead the NRC threw its lot in with the KDC and unlawfully hounded the whistle-blowing ratepayers through their mortgagees and the District Court. It is important to note that the NRC argued in the District Court that the Rogans did not have the right to defend the action to recover rates arrears in that court unless they filed judicial review proceedings in the High Court. The Rogans and the MRRA therefore filed the judicial review proceedings at the instigation of the NRC. The rest is history.

Enormous cost of litigation
The only amount at stake in this whole dispute was the historic penalties on whistle-blowing ratepayers’ rates. What that amount was is unknown but it was certainly many, many times less than the NRC has spent on trying to recover the penalties.

Over the years with the threats to ratepayers, pressure on mortgagees and court actions, most ratepayers have understandably succumbed and settled with the KDC and NRC. For some years now there has been a staunch rump of about seven ratepayers who have legal actions against them stayed pending the outcome of the test case against Bruce and Heather Rogan. On the figures provided by the KDC the total amount outstanding in rates and penalties is approximately $195,000. That is for the NRC and the KDC. On a rough calculation I estimate that the amount owing to the NRC in rates and penalties is about $17,700 in total. A large part of that is made up of rates which the ratepayers tendered in 2014 and was returned. The negligible balance is the penalties, the pound of flesh that the NRC was so desperate to secure, clearly at any cost.

To recover that amount the NRC has shared legal costs with the KDC. Legal Eagle is seeking the amount of those costs under an official information request, but with lawyers’ costs (two top New Zealand law firms and a top QC and senior solicitor), expert witness’s costs and court costs, the final figure for the NRC alone will amount to several hundred thousand dollars. Costs have yet to be awarded by the Court but to cap it all the NRC may have to pay the legal costs of the ratepayers. Plus there is the contingent liability to refund rates paid, if legal action is taken by ratepayers.

The pursuit of ratepayers for those unconscionable penalties has been a disaster for the NRC. It must look back with regret to 2014 when it had the opportunity to settle on a fair and reasonable basis, and on a basis that was anticipated by parliament, and to put the whole acrimonious dispute behind it.

Continuing invalid rates
Despite the two judgments of Duffy J, and the clear warning that she has delivered to local authorities, the NRC rates for 2017/2018 are unlawful. Or, more accurately, the combined rates invoices of the KDC and NRC are non-compliant with the Rating Act, which means that the rates are not payable by ratepayers.

One of the issues relates to the payment of rates. A rates invoice is an invoice for the current instalment of rates. The ratepayer is obliged by the Rating Act to pay the instalment and if payment is made by the due date a penalty of 10 percent on the instalment is avoided.

However, where a ratepayer has arrears of rates the NRC denies the ratepayer the right to pay the instalment in accordance with the legislation. It has an “oldest debt first” policy. If a ratepayer with arrears pays the amount of the current instalment the amount is deducted from the oldest amount owed, and, as the current instalment has not been paid, an instalment penalty is then added.

This unlawful device is widely adopted by local authorities presumably to compel ratepayers to pay arrears. It is included on the advice of lawyers and Local Government New Zealand but is fundamentally unlawful.

Such a policy may be used in commercial arrangements but the setting, assessing and invoicing of rates are statutory procedures with strict requirements set out in the Rating Act. A local authority cannot override those requirements. The fact that the policy is widespread does not change the situation, it simply means that more local authorities have opened themselves up to legal challenge, with dire consequences if a challenge is successful.

One of the difficulties facing local authorities is that their legal advisers have advised for many years that the “oldest debt first” policy is compliant with the law. There is a huge reluctance for those adviser to now admit that they were wrong and perhaps face the prospect of being held responsible for many years of unlawful rates.

Who is to blame?
Who is to blame for the whole fiasco? Clearly responsibility lies with those who made the decisions to fritter away so much money on a futile legal foray that was doomed to disaster. With common sense and a fair approach the whole dispute could have been settled sensibly years ago.

There are two issues. When suing to recover a debt one has to be absolutely sure that the debt is due and payable. That means, in respect of rates, that one must be absolutely certain that the rates have been set, assessed and invoiced lawfully. If the NRC launched into court with over one hundred claims for rates arrears without having those rates thoroughly legally vetted for compliance, then it was grossly negligent.

If those rates were legally vetted then the NRC has to ask itself whether it is going to hold its legal advisers responsible for missing such elementary errors.

One of the problems with local authorities and legal advice is that no one in a local authority has any “skin in the game”. They are playing with other people’s money and stand to lose nothing personally and, as things stand at present, are going to be protected by central government from any liability for incompetence or negligence. It is also worth noting that litigation lawyers make their money out of long drawn out legal disputes, not out of quick settlements on a fair and sensible basis.

But the big issues is why the NRC got involved in the political decision to persecute whistle-blowing ratepayers of the KDC. It was those whistleblowing ratepayers who through their rate strike and legal submissions finally forced the KDC and the government to acknowledge that the KDC had acted illegally and incompetently for 6 years.

How did the NRC come to be party to the ruthless pursuit of unfair and draconian historic penalties levied on the withheld rates of KDC ratepayers??

The reality is that this was a political issue driven by the National government and the Department of internal Affairs which is responsible for the administration of local government. Local government in New Zealand skates on very thin ice both financially and in respect of legal compliance. The last thing the government needed was for a group of rebel ratepayers to challenge the fundamental legality of rates, the competence of a local authority, and raise concerns about the cracks in the façade of local government. Ruthless retrospective validation acts, and vindictive treatment of those daring to blow the whistle are the weapons of choice. No doubt it was expected that the rebels would have succumbed years ago under the sheer oppression of the government-driven action. But that did not happen.

The Kaipara commissioners, appointed and instructed by Wellington, turned down every approach for settlement, including the tender of the outstanding rates. Although the commissioners are gone, one of them Peter Winder was appointed on instructions from the Cabinet to continue as KDC Crown Manager to assume the complete responsibility for decision-making in respect of the outstanding KDC rating issues and the current litigation. In other words, all that KDC rating decisions in respect of this rating litigation have been made by the government through the commissioners and now through Peter Winder. And that is exactly where most of the responsibility for this legal and financial disaster lies.

Graham Sibery’s role as chief executive of the KDC terminated on 1 September according to Mayor Gent. Sibery will be asked to help on an ad hoc basis “if needed”. That raises and important legal question: Who is now running the good ship Kaipara?

Under the Local Government Act (LGA) a local authority must have a chief executive. It cannot function legally without one. That becomes apparent when you look at the role the chief executive plays, as set out in section 42 of the LGA.

The KDC is therefore obliged to appoint an acting chief executive until a permanent one is appointed following a selection process.

Will it be a current member of KDC staff? Will ex acting chief executive Jill McPherson come back to claim that position? Or the role may suit Peter Winder when he gets stood down, again, as Crown Manager. Or, and this is a long shot, will Jack McKerchar, with his vast experience and unsullied record, return to the seat he kept warm for so many years?

Paul Campbell of the Kaipara Lifestyler reports on Mayor Gent's statement in respect of the Sibery resignation:

A statement from Mayor Greg Gent said Mr Sibery “resigned on Friday 25 August 2017.

“The council wishes to acknowledge the contribution that Graham has made while in the CEO role and wishes him well for the future. His last day in the office is September 1, although he will be available ‘if needed’ after that date for a short period. A process will begin immediately to find a successor.” 

Asked for further details, Mr Gent said that employment agreements remained a private matter under the Employment Relations Act 2000 and the Privacy Act 1993.

Not much transparency there.  We do not know if Sibery simply quit, whether a deal was done behind the scenes, or whether there will be a prolonged employment dispute.  In the case of Jack McKerchar his departure in 2011 was flossied up for the public as a resignation for health reasons.  It turned out that there was a contactual agreement for him to quit on the basis of $240,000 being paid. 

The truth will come out sooner or later.The annual report is obliged to show all remuneration paid to staff but that will not come out until next year..

Frank Newman comments on the NRC judgment can be seen in Breakingviews here.

He comments:

One may ask, why does it matter? It matters that council's not only act within the law, but that they act fairly and with a duty of care. Not so many years ago the NRC could have been considered the best managed of the four councils in Northland. To its credit then, it was sharply focused and had a culture of professionalism that put ratepayers first. Nowadays its focus seems to be to please everyone about everything, and exercises might over right.

(The Rogans) are exceptional people and without such righteous folk all-powerful ratepayer funded organisations like local governments would have become even more totalitarian as they already are. Heavens knows how much ratepayers money the NRC has spent on the matter - much more than $300k I suspect as true to form the Council hired expensive top-ranked (“Band 1”) legal counsel to put its case. The NRC should tell us how much their mistake has cost ratepayers and whether anyone will be held accountable, and save the trouble of the question having to be asked under the Official Information Act.

It's time our councillors at the NRC had a serious think about what their organisation has become, and where it is going. That's what they are elected to do. 

Bruce Rogan's report on the meeting can be seen
here  (click ok or yes) or here.

Are ratepayers of the KDC going to have to fork out for another golden handshake that will make Jack McKerchar’s $240,000 pale into insignificance?

In 2011 the KDC paid chief executive McKerchar $240,000 to persuade him to leave and it looks as though history is repeating itself with the departure of current chief executive, Graham Sibery who “resigned” on Friday. (See post below)

 McKerchar’s departure case in 2011 was described as a “resignation”.  An infonews post reported it as follows:


 Mayor Tiller advised the Council had accepted the resignation which has been tendered for personal and health reasons. “Jack has been with Council since 1993 and has achieved many significant outcomes for Council in that time” said Mayor Tiller. “We wish him well for the future and thank him for his loyal service to Council.”

Mr McKerchar noted he was not getting any younger and his health, affected by diabetes, was not as robust as he would like. “I want to increase my fitness and get the health benefits that will bring so I can lead an active and healthy life as I get older” said Mr McKerchar. “The stresses of the position mean I cannot devote the time I need for myself and this will give me an opportunity to do some things for myself, including supporting my family.”

The reality was rather different.  The KDC had been desperate to get rid of McKerchar.  Mayor Tiller and Deputy Mayor Geange had negotiated a secret settlement agreement with McKerchar whereby he was paid $240,000 with the provision that it was in full and final settlement of all claims between the parties.

The KDC refused to release details of the secret arrangement but after pressure from ratepayers and a LGOIMA request from Legal Eagle the KDC finally relented.  (See Lifestyler report.)

In January 2013 the KDC sent three documents to legal Eagle, including the settlement agreement. They can be seen here.

In respect of Sibery’s departure no reason has been given so far by Mayor Gent.  That does not look good.  Normally in such situations the departure arrangements are agreed in advance and dressed up in suitable spin in a media statement, with the truth well-removed from public scrutiny.  The lack of any gloss on the departure suggests that trouble lies ahead.

Sibery had nearly four years to run on his contract.  He moved from Australia to take up the KDC position.  There is no suggestion that he was dismissed following the normal and requisite procedure.  These are all signs that KDC ratepayers are in for another substantial flogging.  This time we may be looking at the $1 million dollars, plus all the legal costs if the matter goes to court.

At this stage we do not know what the situation is, the reason why Sibery has resigned, and why the Mayor is refusing to make any comment.  Legal Eagle will apply for that information through a LGOINA request.  What we do know is that the KDC has been left high and dry without a chief executive and with its breadth of problems and poor reputation it is going to struggle to find anyone of sufficient capability.

We also know that the Crown Manager Peter Winder, wearing his hat as commissioner, played a large role in the appointment of Sibery.   The commissioners shocked everyone by gazumping the new council and appointing Sibery, with absolutely no local government experience, for a term of five years.

The appointment met with widespread criticism, which, of course, has now been vindicated.

Graham Sibery, the KDC chief executive has suddenly handed in his resignation.

According to a Northern Advocate report, he handed in his notice yesterday. It is understood that he is going to continue working for an undefined period until a replacement is found.

Graham Sibery

Mr Sibery was appointed by the KDC commissioners just over a year ago for a five year term. That appointment raised eyebrows in the community because many felt it was up to the newly elected council to appoint its own chief executive. In addition, a term of five years was considered far too restrictive for the incoming council.

Perhaps the biggest criticism of the appointment was the fact that Mr Sibery had absolutely no experience in local government. Whilst some may argue that a good track record in business is an important asset, there is no doubt that, given KDC’s poor track record in legal compliance, someone with broad experience in local government was an absolute necessity.

To add to the mystery of the sudden resignation, Mayor Gent is refusing to make any comment on the matter beyond the fact of resignation

For earlier posts go here