Independent first principles review 

 

This is Legal Eagle's response to the KDC's revised proposals for a so-called independent review into the EcoCare rates.18.11.11

 

Report to Council 14 October 2011 by Glennis Christie
I had hopes that Glennis Christie, with her track record in compliance with the Auckland City Council, would bring with her a much needed more open and honest approach to the affairs of the KDC. This report that she has prepared dashes those hopes. Glennis has only been in the job for a short while but that is no excuse for her trotting out the same misleading information that we have become accustomed to during the McKerchar/Tiller regime

Let me explain:

Errors in the report

Statement: Concerns have been raised by a group of Mangawhai ratepayer representatives.

Truth: The concerns about the legality of rates have been raised not just by the group of three that negotiated with Council but by the ratepayers at large, the OAG, and the Minister of Local Government. In addition I have spoken to only four Councillors about the matter but they all share the serious concerns of ratepayers.

Statement: Council is aware of one area of non-compliance.

Truth: This statement sums up every thing that is wrong with the KDC and the head-in-the-sand attitude of its Councillors. This statement is a mantra adopted by the Council that Councillors can hide behind, but it has nothing to do with the truth.

Let us look at the areas of non-compliance that Councillors do know about.

1. Bell Gully finally acknowledges that the one-off rate was invalid for the first three years of EcoCare because the category of land was defined by a non Schedule 2 matter.

2. Bell Gully has acknowledged that the rates assessments for the first three years are invalid because they did not include all the information required by the Rating Act. This means that ratepayers have no legal obligation to pay the rates. Councillors are all aware of this area of non-compliance. However, they have been persuaded by Bell Gully that the non-compliance is irrelevant because of the operation of section 60. (Section 60 says that ratepayers are obliged to pay rates unless they bring an action in the High Court.)

That is not correct because EcoCare so-called rates do not comply with the provisions of the Rating Act and are therefore not "rates" under the Act, and, in any case, such an interpretation would make a mockery of the Rating Act. I put the question: If ratepayers are obliged to pay the rates regardless of any non-compliance, what is the point of having the Rating Act with its stringent provisions?

I also put this question to Councillors: If the non-compliance of rates assessments can be ignored because of the operation of section 60, why does that same argument not apply to the non-compliance of the one-off rate. Why all the hullaballoo about replacing the rate when section 60 requires ratepayers to pay the rates anyway? Why not just ignore the invalidity?

In fact, why bother with any review of the legality of the rates? If Councillors are confident that section 60 imposes an absolute obligation on ratepayers to pay rates regardless of fundamental non-compliance with legislation then there appears to be no point in having a review of the rating process over the past few years.

3. Another matter of non-compliance was Council's failure to include the one-off rate in the funding impact statements for the first three years. This rate was not mentioned. This means that Council has no power to set the rate in the rates resolution (which must be "in compliance with the funding impact statement"), and therefore to assess and charge that rate

This fatal omission has never been formally acknowledged but a clause relating to the one-off rate was slipped into the funding impact statement for 2011/12. This was a tacit acknowledgement of the non-compliance. Councillors are all aware of the omission of the one-off rate from the funding impact statements because I told them about it.

4. The terminology used in the rating documents in non-compliant with the Rating Act. Bell Gully has been pointing this out for over a year and stated quite clearly that the phraseology had to be "aligned" in the following rating year. This was ignored by Council. The OAG and the Minister have also highlighted the non-compliant use of language. This advice has also been ignored. Councillors are aware of this matter of non-compliance.

5. The OAG and the Minister have both pointed out that separate units cannot be rated unless Council uses the SUIP expression in its rating documentation, AND it is obliged to include a definition of a SUIP in the funding impact statement. Council did not do this in the first three years of EcoCare and, even though Councillors were fully aware of the problem, the matter was not remedied in the 2011/12 rating year.

I have hammered this point home to Councillors time and time again. I have presented to them all a copy of the provision in the LGA that states that a definition of a SUIP must be included in the funding impact statement. I have shown them examples of how other Councils comply with this requirement. And yet all our Councillors except one deny any knowledge of this matter of non-compliance.

6. Council set, assessed and collected rates for the 2008/09 rating year even though there was no service for any part of the rating year. This issue has been sidestepped by Councillors and Bell Gully even though it is a blatant breach of the Act and probably is a criminal offence. Which Councillor genuinely believes that Council can levy a targeted rate for a service that does not exist? Again, a matter of non-compliance that every Councillor is aware of.

7. Rates were levied for part of the 2008/09 and 2009/10 rating years in breach of the section 43 of the Rating Act. The Act is absolutely clear and yet Councillors have chosen to ignore it. Councillors are well aware of this matter of non-compliance.

8. The most recent matter of non-compliance that Council says that is unaware of is the alteration to the wastewater rate for the rest of Kaipara in the rates resolution for 2011/12. Some unidentified person in Council altered the relevant part of the resolution in the agenda so that this rate became a "one-off" rate. It should have been an annual rate. Council voted on the basis of the amendment and the minutes were confirmed.

So there is supposedly a one-off rate for the rest of Kaipara (as well as Mangawhai). The problem is that the rates resolution must be in accordance with the provisions of the LTP and the funding impact statement. As a one-off rate for the rest of Kaipara was not mentioned in either of those documents then the one-off rate is invalid.

Likewise Council has no power to charge an annual rate because it can only charge rates that have been set in a rates resolution. The rates resolution does no mention an annual rate.

I presume that Council is ignoring the illegality and collecting the illegal rate. I have written to every Councillor pointing out the error and asking what they intended to do about it. The only reply was from Councillor Larsen who acknowledged the illegality. So Councillors are aware of another matter of non-compliance, but as in the other instances, simply choose to ignore it.

9. Bell Gully has acknowledged that that the statement of proposal for the replacement of rates was defective in many respects and non-compliant with the Rating Act. However, according to the Glennis Christie report, Council is not aware of this matter of non-compliance.

10. Many of the rating documents are simply unintelligible. I have invited Councillors to read the funding impact statements for all four years to see if they can understand what they actually say. They are unintelligible drivel. Even the Minister, with his softly, softly approach, agrees. He takes issue with Council's failure to communicate the meaning of the rates with ratepayers, which is a fundamental requirement of the Rating Act. Councillors are well aware of this matter of non-compliance.

Statement : Agreement has not been reached around the provider for this service and the scope and terms of reference.

Truth: The method of selecting the reviewer was agreed by the parties as were the terms of reference. John Dickie and Helen Curreen met with Councillors Geange and Blackwell and I personally had several lengthy conversations with Councillor Geange in which the terms of reference were completely agreed. Councillor Geange assured me that she had the authority from Council to agree those terms.

The truth of the matter is, no matter what spin is put on it, that Council had an agreement with ratepayers and has reneged on that agreement

Statement: It is appropriate that only significant legal compliance issues are addressed.

Truth: Why is it appropriate? From whose point of view? Certainly not the ratepayers. Who decides on what "significant " means. The answer is clear: The very people who made the errors in the first place.

When considering compliance with the Rating Act every single instance of non-compliance is significant. In respect of the one-off rate for the rest of Kaipara the addition of the expression "one-off" may be regarded as insignificant. However, that simple alteration renders the whole rate illegal.

It is not for Council to decide which matters of non-compliance are significant. That is a proper decision for the reviewer.

Statement: Going forward.....It is accepted that we should focus on getting it right for the future.

Truth: "Going forward" the latest slogan of Council to cover up the errors of the past. "It is accepted........."   Another smokescreen. Accepted by whom? Certainly not ratepayers.

What Council is effectively saying is that it acknowledges errors in the past but it wants to ignore them and concentrate on the future.

I am sure that most people charged with some misdeed would echo that sentiment but, unlike Council, they are not in charge of running their own trial.

Ratepayers insist that Council goes back. That it faces up to its errors, acknowledges them and is held accountable for them. We are not going to stand by and watch Council whitewash its past illegal actions.

Statement: Current fiscal constraints

Truth: It is amazing that when the Chief Executive was inflicting his incompetence on the ratepayers there was no limit to the amount of money that could be spent on getting legal advice from Bell Gully to try and justify the reckless and out of control behaviour of Council. Now that Council is in the gun and, quite amazingly, running its own trial, the matter of fiscal restraint is suddenly raised.

Councillors need to be aware that in normal councils with competent chief executives and competent staff the rating documentation is prepared by qualified staff with the appropriate experience and credentials. There in no cost to council above the normal salaries. In the case of KDC the Chief Executive was obliged to get legal advice from Bell Gully at every step of the way because quite simply he did not know what he was doing. Much of the legal advice received was ignored and the Chief Executive was allowed to blunder on, unfettered by an unquestioning Council. Councillors ignored the legal advice received from me, ignored the comments of the OAG and even voted to deny themselves access to the legal advice of Bell Gully.

Let us make no bones about it, the cost of the review of EcoCare rates is directly a result of the incompetence of the Chief Executive and the incompetence of the Council and it is something that Council has to accept.

Likewise, if we ever have a truly independent review and it turns out that a substantial sum of money has to be refunded to ratepayers because of the invalidity of the rates, then that will be a direct consequence of the incompetence of the Chief Executive and Councillors' breach of the duty of care that they owe to ratepayers .

Statement: That the Chief Executive be delegated the authority to approve the terms of reference and the provider.

Truth: This is disgraceful. This is supposedly an independent review and yet the person who is effectively under investigation is given such wide-reaching powers of veto.  It is an insult to all the basic principles of justice and fair play and I am sure that every right thinking person would be offended by such a proposition.

In no other area of life would such a proposition be entertained. It is a sad reflection on the dismal level of integrity and ethics in local government in New Zealand.

I see that this particular provision has since been modified and the Mayor, the Deputy Mayor and Councillor Blackwell now have the power of veto. As Councillors these are the very people who have been responsible for the chaos of non-compliance in the KDC and yet they are put in charge of a so-called independent review.

With the greatest of respect to all three of them, there are some fundamental principles at stake here. They are in a clear conflict of interest situation and no Councillor or employee of Council should be involved in the review in any way. Justice must not only be done, it must be seen to be done. Having Councillors in charge of a review of their own actions is always going to taint any findings.

I now turn to another document.

REVISED TERMS OF REFERENCE AND SCOPE

Statement: Council is focused on improving the rates and rating processes for the future.

Truth: This is totally contrary to what was agreed with ratepayers and is not in accord with the recommendation of the OAG.

The understanding was that there would be a review of historic rates to see if they were invalid and, if so, what could be done to resolve the ensuing problems.

If the sole focus is the future then there is no need for a review of the past. Why not simply close the book on the past and employ competent people who know how to draft rates?

Statement: Reliance will be placed on prior legal opinions unless there is good reason not to.

Truth: This is completely unacceptable. It talks of legal opinions that have been obtained. The reality is that no legal opinions have been obtained. A legal opinion is an independent view of how the law would apply to a particular set of facts. Bell Gully has simply offered advice to Council on a client/lawyer basis. It is partial advice based on the particular instructions of the Chief Executive, and given solely to meet the needs and the best interests of the client.

In addition much of the advice was kept secret from ratepayers and Councillors.

it is quite ludicrous to suggest that such partial advice from the Council's own solicitors should carry any weight in a supposedly independent review.

This provision means that Council has the power to ignore any finding of the reviewer and replace it with the advice from its own solicitor.

 

RATEPAYERS NOT ALLOWED TO MAKE SUBMISSIONS
I find it completely unacceptable that ratepayers have been barred from making any legal submissions to the reviewer. How can you have a fully independent review of Council's actions when only Council is allowed to make submissions to the reviewer?

 

SUMMARY
By ensuring that the terms of reference and the scope of the enquiry are dictated by Council, and by denying ratepayers the right to make submissions, Council has surrendered all pretence that this is an independent review.

If the report of the reviewer  is critical of Council's performance in any way it will be interesting to see if the report sees the light of day.

 

-------------------------------------------------------------

According to the Chief Executive's report of 24 August 2011 the independent first principles review is under way and initial contact has been made with the Law Society about selecting an independent barrister.  Barabara Ware at Council is handling the matter and was due to update Councillors at the Council meeting held on 24 August 2011.

Interestingly, the same report contains a gem that tickled Legal Eagle.  I suspect that Barbara Ware put it in the report without Jack knowing.  However, could it be that Jack has had an epiphany and finally seen the light about legal compliance and consulting with ratepayers?

Read on ....

JACK, YOU MUST BE JOKING  26.08.11
For years Legal Eagle has been lambasting Council about the legally non-compliant EcoCare rates and the legally non-compliant development contributions, and the failure to consult with ratepayers in respect of the rates and in respect of rating separate units - or units of demand as the Chief Exxecutive has christened them.  I have issued dire warnings about the consequences of failure to comply with both the Rating Act and the Local Government Act, and warned that the courts will take a very dim view of such illegal activities. 

Of course my comments have been completely ignored by the Chief Executive and the Mayor who both claim to be "unaware" of the legal chaos they have created.  How bizarre, therefore, that in the Chief Executive's report of 24 August 2011, the Chief Executive includes this priceless snippet:  

10.1 Care Needed in Meeting Requirements of Local Government Act when Making Decisions

Part 6 of the Local Government Act 2002 sets out the process Council must follow in making decisions. An aspect which has been challenged by aggrieved parties on several occasions is the adequacy of consultation undertaken by a Council with those affected by the decision it intends to take. This is especially critical when a proposal is a significant one. The most recent example of this happened a couple of months ago when Nelson City proposed to revamp a carparking area into an inner city park. They were keen to get the work done before the Rugby World Cup ™ activities began in the city. Because the proposal changed over time, and the affected parties (mainly surrounding businesses) were not consulted about the finalized version, the High Court ruled that the process had been deficient and issued orders prohibiting the Council from accepting tenders and directing the Council to undertake consultation on the redevelopment plan in accordance with Part 6 of the Local Government Act 2002. This demonstrates the importance of observing the correct process as a failure to comply will not readily be overlooked by the Courts.

And so say all of us.

 

REVIEW BACK ON TRACK   07.08.11

The independent review of EcoCare rates is back on track after a year of toing and froing.  In the meantime another year's EcoCare rates have been set in in a non-compliant way and more development contributions have been collected which will most likely have to be refunded.

Resolution passed by Council at the Council meeting of 27 July 201110.3 EcoCare Complaint: Request for Independent Review Update

Corporate Services Manager 4505.0

Resolved Larsen/Geange

That Council proceeds with the Mangawhai Community Wastewater Scheme (previously Mangawhai EcoCare Project) independent review, amended as requested by the complainants.

 Reason for the resolution
This will keep faith with the complainants and allow for an independent person to review the Council’s processes for setting and levying rates for the Mangawhai Community Wastewater Scheme.

Now it is a matter of waiting to see what happens............

............................................................................................................................................................

Go to the following comments:

Hijacking in Kaipara

Independent review

First principles review

Issues omitted from Bell Gully review

 


Hijacking in Kaipara

A major hijacking is underway in Kaipara.

In response to several complaints from ratepayers, including myself, about the validity of EcoCare rates, the Auditor General drew attention to some "issues" in respect of the EcoCare rating documentation and recommended an "independent first principles' review" of the EcoCare rates for the 2010-11 year.

This seemed straight-forward enough.  Everyone believed that there would be an independent audit, or that an independent barrister would be appointed to write an opinion, so that the extent of the legal non-compliance would be identified, openly and publicly, and this difficult matter could be resolved once and for all.

However, what might be reasonable and straightforward elsewhere is not necessarily the situation in Kaipara.

Independent review is top secret
The Chief Executive, Jack McKerchar, is doing all he can to hijack the independent review.

For reasons only known to himself he is maintaining that the second opinion that he received from the Council's lawyers, Bell Gully, in October 2010 on the legality of the EcoCare rates, should be treated as the independent first principles review, and that no further review is required.

The difficulty with this is that, while proclaiming on the one hand the Bell Gully opinion to be an independent and first principles review, the Chief Executive is refusing to allow the opinion to see the light of day. 

He has even denied elected Councillors access to the document

It sits in the Chief Executive's TOP SECRET drawer.

In December last year the Chief Executive emailed me a Memorandum supposedly providing a summary of the advice contained in the Bell Gully opinion.   I believe that I am privileged as I understand that elected Councillors have been denied access to even this document.

Defects in EcoCare rates acknowledged
This is all very fascinating.  We have a situation where it is acknowledged that things are seriously amiss with the drafting of EcoCare rating documents:

The Council lawyers, Bell Gully, have acknowledged that some of the EcoCare rates are invalid and that the Council failed to comply with the Rating Act. 

A retired barrister and solicitor (no legal slouch, although I say it myself) has advised that are substantial problems with legal compliance. 

The Auditor General has highlighted some problems and recommended an independent first principles review of the EcoCare rates.

 At the meeting with some ratepayers early in January 2011 the Chief Executive acknowledged that the rating process for the three years of EcoCare was "flawed".

Responsibility
So, if there is a general acknowledgement that the EcoCare rates are "flawed", where does responsibility for the legal non-compliance lie?

The answer is quite clear: fairly and squarely with the Chief Executive.  It is his job to ensure that all rating documentation is prepared in compliance with the legislation.  If he fails to do that then he is in breach of the legal obligations that he owes Council.

Conflict of interest
So, here we have a situation where a Chief Executive is seriously in the gun for failing to supply appropriate advice to Council.  And yet, that very same Chief Executive, whose knowledge and expertise are now in question, and effectively is the subject of the so-called independent review, is the one who has:

chosen the reviewer,

organised the review,

set the terms of reference,

has kept the contents of the review secret from ratepayers and ELECTED COUNCILLORS, and

is now telling the world that the review was both first principles and independent. 

Councillors' response
I have rarely seen such a fundamental breach of a basic principle of law.  It screams "conflict of interest" so loudly that I suspect that every ratepayer would be alarmed if they knew what was going on.  And yet... and yet ....so far, our elected Councillors seem to have been won over by the Chief Executive's rhetoric and are about to support the hijacking of the independent review. 

At the Council meeting of 15 December 2010 Council Meeting, Councillor Larsen, seconded by Councillor Linton, introduced the following motion:

That Council be provided with all requests for legal advice and  legal advice received in respect of (the legality of the EcoCare rates) and  all financial information relation to (sic) Mangawhai Community Wastewater Scheme and .....

A brave move for two newly elected Councillors.  For some bizarre reason Councillors voted against the motion.  On the face of it, they appear to be happy to accept the Chief Executive's spin on what the opinion says, rather then looking at the opinion themselves and seeing what Bell Gully really has to say about the non-compliance issue.

Apparently the matter is coming before Council again at the March Council Meeting.  No doubt the public will be excluded from the debate.

The Chief Executive will be doing all that he can to ensure that the Bell Gully opinion is kept under tight wraps, and that the full shambles of the EcoCare rates debacle, and his role in it, remains hidden.

Whether he succeeds depends on whether Councillors wish to fulfil their obligations as elected representatives and make decisions based on having access to ALL information that is required to make those decisions, or whether they allow themselves to be blindfolded and hobbled by the Chief Executive, and effectively let him dictate to them how Council should be run.

 Decision time for our new Councillors.

  Coming up:  What is an independent review? 


 Independent review

So, what is an independent review?

The essence of an independent review is that it is carried out by someone who has no association with any of the parties involved in the review.  Thus there can be no hint of partiality, favouritism or undue influence.

The review by Bell Gully could not be judged as independent because that firm acts as the KDC''s solicitors.  It is instructed and paid by the Council on an ongoing basis, it has a special relationship with Council, and it is accordingly disqualified from being independent.  

Remember that lawyers are effectively hired guns that act on a client's instructions.  Their job is to support a client's case.

In addition, for a review to be independent, any person whose actions are the subject of the review must stand aside from the review process. 

In this instance the review was effectively examining the legality of the rating documents prepared by the Chief Executive and his staff.  Clearly, therefore, the Chief Executive should not have been involved in any way with the review.

As we have seen from my previous comments, that was not the case.  The Chief Executive instigated the review, chose the reviewer, posed the questions to be answered, and then kept the whole thing secret.

Coming up:  What is a first principles review?


 First principles review 

First principles has a fancy ring to it, but in fact it is a fairly vague term which simply means fundamental or back to basics. Perhaps comprehensive covers it.

So, is the Bell Gully review of the legality of the EcoCare rates comprehensive?

No one has been allowed to see the Bell Gully review - even elected Councillors - so we cannot make that judgment.  However, I have been provided with a document prepared by Bell Gully that purportedly summarises the advice in the main review.  The document is headed Memorandum, is dated 16 December 2010, and it states:

This memorandum provides our advice on the validity of EcoCare targeted rates set by Kaipara District Council.

Surprisingly the memorandum only raises four legal points. 

1. It acknowledges that the one-off rate is invalid for all three years that it has been levied because the differential rate is based on a matter - the date the title was created - which is not one of the legal matters set out in the Local Government (Rating) Act (the Rating Act). (Rates can only target categories of land based on the matters set out in Schedule 2 of the Rating Act.)

2. It vaguely discusses the jumbled wording of the funding impact statement and considers that the rate is not invalid on that basis. (It ignores the fact that the draftsman has confused the EcoCare rates with the wastewater rates for the rest of the rating district and as a result the funding impact statement is unintelligible and therefore invalid.)

3. It considers the meaning of Section 43 of the Rating Act.  Section 43 states quite clearly that a council may only levy a targeted rate for a factor (eg connection to a service) if that factor is in existence the day before the commencement of the rating year.  If a service is connected during the rating year then a council cannot charge a proportion of the rates.  It has to wait until the following rating year.  The Section is quite explicit but Bell Gully states lamely that it "considers" that a council can charge a proportion of the rates where a connection is made during the rating year.  With respect, this seems to be totally contrary to the clear intention of Section 43.

4.  Bell Gully does an about-face on its advice re the expression unit of demand.  In a previous opinion it was very gung-ho about using this terminology for setting rates even though, to me, it was startlingly obvious that this was clearly contrary to the provisions of the Rating Act.  It has apparently reconsidered its position and modified its stance.  It now states:

We understand that the proposed definition is intended to be used internally to assist Council officers with interpretation of "the number of separately used or inhabited parts of a rating unit" (a schedule 3 factor).  As such, we do not consider this is a valid reason to challenge the validity of the rates.

[The problem is that the expression that is being interpreted - the number of separately used or inhabited parts of a rating unit - is not used anywhere in any of the rating documents.  So how can the expression unit of demand be used to interpret an expression that has never been mentioned?  The point is, of course, that Council SHOULD HAVE used that expression in all of its rating documents but failed to do so.  This is a fatal flaw which renders the rates invalid in respect of separate units.  Bell Gully chooses to ignore this.  In addition, Bell Gully ignores or overlooks Council's failure to include a definition of a separate unit in the funding impact statements (as required by the Local Government Act) for all three years of the EcoCare rates.  Another fatal defect that makes any rates levied against separate units null and void.]

And that is the sum total of what the Chief Executive maintains is a first principles review.  It is remarkable for its brevity and the limited number of legal points that it examined, and then very superficially. 

For some reason Bell Gully did not feel it necessary to examine all the other legal defects in the EcoCare rating process.

Next: The omissions from Bell Gully's review.

 



Issues omitted from Bell Gully review
 
1. Statement of proposal

The EcoCare statement of proposal is the document that introduced to the ratepayers the whole concept of the EcoCare wastewater scheme and how it was to be funded. A statement of proposal is part of the special consultative procedure under the Local Government Act which is intended to ensure that ratepayers are fully informed of the proposed new development and how that development is to be funded.

Bell Gully did not mention the EcoCare statement of proposal at all in its review. It therefore did not examine Council's failure to advise ratepayers that a new system of rating was being introduced in the form of targeting separate units in Mangawhai.  In addition the document did not discuss how a separate unit was proposed to be defined so that ratepayers could have some input.

2. Funding impact statement
Bell Gully glossed over the deficiencies in the funding impact statement. This is the vital document in the annual or long term plan that must set out the exact terms of the proposed rates. Bell Gully did not consider:

The KDC funding impact statement confuses the wastewater rates for Mangawhai and those for the rest of the District (they are totally different).There is a confusing use of terminology and inconsistencies in describing the rates. The categories of land to be targeted, and the Schedule 3 liability factors (eg connection to a service) are not identified, as required by the Rating Act.

It also missed the fatal error of not including a definition of a SUIP in the funding impact statement.

It also failed to mention that the one-off EcoCare rate was completely omitted from the funding impact statement, and therefore automatically became invalid. (Interestingly, in the newly released Draft Annual Plan for 2011-12 this omission has been corrected. So someone must have been aware of the omission)

3. Rates Resolution
The rates resolution was not mentioned. This is bizarre given that it is the document that legally sets the rates (i.e. makes the rates legal). It is also strange given that it is absolutely riddled with major defects.

4. Rates Assessment
Except for a cursory examination of the effect of Section 43 of the Rating Act, there is no mention of the steps in the rate assessment process and whether these complied with the Rating Act.

This is a huge omission given that it is the rates assessment that actually creates the legal liability to pay rates. You can have perfectly valid rates that a local body may no be able to collect because it did not carry out the assessment process lawfully.

The Council failed to comply with all the basic steps in assessing rates.

5. EcoCare rates for 2008-09
Bell Gully also overlooked the EcoCare rates for the 2008-09 year. That was the year that Council charged a proportion of the annual rate but the full year's levy for the one-off rate. As it turned out, the EcoCare Scheme was not up and running at any time during that year. Thus there was absolutely no basis for the rates. Section 43 was irrelevant because the factors of connection or availability of connection did not apply to any properties during the year. Council rightly credited the proportion of the annual payment to the following year's rates but retained the one-off payment in its coffers. That was clearly an illegal act but Bell Gully remained amazingly silent on this issue.

6. Unit of Demand Resolution
Bell Gully, in its first opinion, was very gung-ho about the Council being able to use the expression unit of demand to describe a SUIP under the Rating Act. It endorsed the Chief Executive's fanciful Unit of Demand Resolution and even made amendments to it.

The second opinion tells a different story. In this latter opinion Bell Gully tempers its advice and suggests rather clumsily that the expression unit of demand is simply to be used "internally" as a guide to assist Council officers in determining what a SUIP is. There is no discussion as to the legality of the Unit Of Demand Resolution and whether rates. once set and assessed, can be amended or clarified retroactively by a simple resolution of Council. (They can't.)

7. Development contributions
Given the comments in the first opinion about development contributions it is remarkable that they are not even mentioned in the second opinion Memorandum.

The first opinion stated confidently in the Summary of advice that:

The Council levies development contributions for additional units of demand through a Development Contribution Policy adopted in accordance with the LGA.

That is a fairly authoritative statement but it became apparent later (in a letter from that firm to the chief Executive) that, when making the statement, Bell Gully had not exmained any of the rating or development contribution documents.  It had based its view on the assurance from the Chief Executive that all documents were legally compliant.

The Development Contributions Policy does not in fact stand scrutiny. It fails to meet the requirements of the Local Government Act and it may well be that all development contributions paid to date for the EcoCare scheme will have to be refunded.