SIXTEEN REASONS WHY YOU SHOULD NOT PAY YOUR RATES 17.02.14
1. Ratepayers in Kaipara do not have any democratic rights. The Commissioners are a dictatorship imposed by the Government.
2. No rates without representation.
3. The Commissioners are legally obliged to act in the best interests of ratepayers. They have never done this. Instead they are driven by an agenda imposed by the Department of Internal Affairs and the banks which is based on ratepayers being responsible for all the debts of the Council, whether legal or not.
4. Commissioners have persistently refused to consult with ratepayers even though they are legally obliged to do so.
5. The Commissioners continue to operate outside the law. Examples:
• Proceeding with the Validation Act without consultation, as required by the LGA and their terms of reference.
• Defending the MRRA judicial proceedings without the appropriate statutory decision-making and consultation.
• Proposing to remit rates in breach of the rates remission policy.
• Making illegal demands on mortgagees (banks) to pay rates arrears for rate strikers when the rates were not "due and payable".
6. Until the decision of the judicial review becomes available the EcoCare rates cannot be treated as valid and therefore there is no legal obligation to pay them. The Validation Act was so badly drafted that it only validated certain minor irregularities but failed to fix substantive defects in the rates.
7. The KDC has not issued proceedings against anyone for non-payment of rates and cannot do so. Until the High Court rules on the illegality and the effect of the Validation Act then the rates are not "due and payable" and cannot be recovered in court. There is no fear of being sued.
8. Council has abused its legal powers to pursue mortgagees for rates arrears, but that was only for arrears for prior years. It can do nothing about arrears for the current year until November this year. All they can do is add the 10 per cent penalty.
9. Most of the rates paid are to fund illegal debts, bad decisions (Hakaru, McKerchar compensation, and the Proposed District Plan) and to pay for actions taken against ratepayers such as the Validation Act and the defence of the judicial review. That is what is bleeding Kaipara dry. The comments about deferring roading contracts are just a red-herring. (The Commissioners actually boasted to the High Court that they had made a profit of nearly $1 million last year.)
10. The Commissioners are on a gravy train paid for by ratepayers. Why four commissioners when Rodney had one? Why is Colin Dale working fulltime for the FNDC as its Chief Executive yet still sucking on the teat of Kaipara ratepayers?
11. The Commissioners still cannot tell us the true cost of EcoCare and where all the payments received from ratepayers went. The Council maintains that the cost of EcoCare was "some" $62.4 million. Of that a debt of about $58 million is still outstanding. That mean that only $4.4 million has been paid in cash. That begs several important questions.
• Why was the $6.6 million government grant for the Sanitary Subsidy not used to pay off the debt. Where did it go?
• Why were the tens of millions of capital payments paid by ratepayers from 2008 onwards not applied to reduce the debt? They were specially designated to pay for the capital of EcoCare. It appears that not one cent was used for the purpose intended. Where did the monies go?
• Likewise with development contributions. All the tens of millions levied for the sole purpose of paying off capital was applied to other purposes by the Council. We are not just talking about the bad old Council. The Commissioners have failed to apply any development contributions to reduce the EcoCare debt.
* What happened to all the money in the Mangawhai Endowment Fund and the Reserves Fund? Exactly where was it spent?
12. The Commissioners' funding proposals for the future to meet the debt are utterly dishonest. The whole viability of the KDC is based on the receipt of massive development contributions in the future and the application of those contributions to the reduction of the principal of the debt. They are a pie in the sky fantasy that are never going to materialise, and what is received will not be used to pay off debt. We are being conned by the Commissioners just as we were conned by the previous Councillors..
13. The KDC is insolvent. It cannot meet its debts out of its income. The warnings were loud and clear in the last two audit reports. The only way that it can ever meet its $100 million of liabilities is to raise rates massively across the whole district and to introduce capital payments to repay the massive loans. The KDC and the banks are simply trying to dump the KDC's own insolvency onto the ratepayers. Do not allow them to do that to you.
14. The promise to limit annual rate rises between 2012 and 2022 to around 3% per annum is utterly disgraceful. If company directors made such baseless promises then they would end up in gaol. It is simply a con to suck in ratepayers and to break the rate strike so that the debts can be refinanced in July this year. Once that is done and Kaipara absorbed into the great unitary authority then the screws will go on - real tight.
15. The Commissioners can only continue their dictatorial regime if we provide them with the money to pursue their policies of oppression and dissimulation. Without money they cannot operate and will be forced to front up to the realities of their insolvency, just like any insolvent business entity.. Until they stare insolvency straight in the eye we are never going to get any honesty from them and the banks about the true financial situation, and they are not going to pursue those who were truly responsible for the financial problems that the Council faces.
16. Do not be a victim. Do not pay them any more money. .
RATE STRIKE FLYER 17.02.14
The MRRA has published a flyer to be delivered to all properties in the district encouraging ratepayers not to pay any further rates to the Commissioners until the High Court has decided once and for all whether the EcoCare debt and the EcoCare rates are valid.
The flyer can be seen here.
THE RATE STRIKE AND YOUR MORTGAGE 15.01.14
The Commissioners are proclaiming loudly that now the Validation Bill has passed all the rates are legal and should be paid. That is not true. The Validation Bill, now an Act, is a side-show that has no relevance to the validity of the rates. That is a matter that is before the High Court and a matter that will be decided once and for all in the next few weeks. In the meantime ratepayers should not be paying any further rates.
I recently wrote the following article
Another blow is the acceptance by the Commissioners that they cannot issue proceedings against anyone for non-payment of the rates. While the question of the legality of the rates is before the High Court the Council will not issue proceedings against any defaulting ratepayer. This is what a bank wrote to a customer
The Council advises us that in light of the recent High Court decison, they are reviewing their position. The Council has told us they will not take any further action at this time under any demand notice they have issued to mortgagees until the matter has been resolved in Court. We understand the issue of whether the rates are vald is expected to return to Court in February 2014.
I have now been contacted by a ratepayer who is being hounded by the BNZ with threats to pay the outstanding rates. Banks have little understanding of such issues and simply do not want to get involved. Most banks will back off when they realise that the debt is disputed and is before the High Court. However, the BNZ and the ANZ have lot at stake in that most of the monies owed by the KDC is to those banks. They are keen therefore to do all they can to break the rate strike.
So here is some advice for those being hassled by their bank.
THE LEGAL SITUATION
This applies only if you have a mortgage
CURRENT RATING YEAR ARREARS (2013/14)
The bank cannot pay rates on your behalf. If it does so it is acting illegally.
PREVIOUS RATING YEARS ARREARS
Voluntary payment by the bank
The bank can only make a voluntary payment if it has been notified by the KDC of the mortgagor's failure to pay rates and the provisions of section 62(1) Local Government (Rating) Act 2002. It should not do that unless it has your consent.
Compulsory payment by the bank
The bank can only be compelled to pay the rates if three months has elapsed from the service of the notice above and not earlier than 1 November in the financial year following the year in which the rates were first assessed. So, for the 2012/13 rating year which ended on 30 June 2013, the earliest date is 1 November 2013.
Before any demand can be made any rates must be legally payable. That is usually established by the council showing that a rates assessment and invoice have been issued. However, in this case the validity of the rates is subject to judicial review by the High Court which means that the rates are not legally payable until the High Court has made its decision. In fact one bank advised a customer as follows:
The Council advises us that in light of the recent High Court decision, they are reviewing their position. The Council has told us they will not take any further action at this time under any demand notice they have issued to mortgagees until the matter has been resolved in Court. We understand the issue of whether the rates are valid is expected to return to Court in February 2014.
The recent High Court decision referred to was the decision in August 2013 to dismiss the Commissioners' attempt to strike out the MRRA claim. Justice Heath found in favour of the MRRA and stated that the arguments of the MRRA raise "difficult questions of public importance". The full hearing of the claim is being held on 3 February.
It is noteworthy that the KDC has not pursued any ratepayer in court because it knows that the court will reject any such claim until the legality of the rates has finally been established.
Compliance with the lawThe bank must comply with the strict letter of the law and with its loan contract with its customer. If it breaches either then it could be held to be personally responsible for payments made to the KDC.
WHAT YOU SHOULD DO
• Send a copy of the above to your bank and ask it to confirm that the requirements of section 62 have been complied with.
• Advise the bank that the validity of the rates is being challenged in the High Court and that they are not legally payable until the High Court has ruled on the matter.
• Instruct the bank not to pay any monies to KDC.
• Ask the bank to confirm that it will not pay monies to the KDC until the legality of the rates has been decided.
• To show your good faith, offer to pay the rates money into a separate account with the bank pending resolution of the legality issue.
• If the bank refuses to cooperate then lodge a complaint with the Banking Ombudsman.
Any feed back from those being targeted by their banks or the KDC would be appreciated.
"MONICA" responds to the letter from KDC signed by Paul Cresswell threatening to add another ten percent penalty to rate strikers' bills
Dear Paul Cresswell,
Thank you for your very humorous satirical letter dated 31st May 2013, it brightened up what was an otherwise dull day.
We have a council which isn't a council but is rather a despotic commissary appointed without mandate who are fraudulently issuing rates invoices for rates which are not rates at all and citing as its authority law (Local Govt Rating Act 2002) which it has not, nor currently complies with.
This is followed by threats to add extra penalties to illegal invoices that have penalties already added, effectively adding penalties to penalties, and your justification is that 'this is Councils normal practice'.
I am well aware of what has been 'normal practice' for the Kaipara District Council. Over the previous dozen or so years, foolishness, impudence, imprudence, corruption, dishonesty and hypocrisy has characterised 'Normal practice'. This is, in part, the reason why so many are withholding any payments and will continue until such time as these issues are resolved and we have local Government that can be trusted.
Sadly satire is a dying art these days and there are many not paying the non council's non rates who took your letter seriously.
They see not the humorists subtleties but rather interpret your epistle as a further example of the hubristic hypocrisy which has characterised the behaviour the Commissioners. It will no doubt strengthen their resolve to continue the strike. They may, as I do even agree with Mahatma Ghandi when he said 'It is as important not to comply with evil as it is to comply with good'.
But I am a little different from the rest, I get the joke. Thanks Paul you're a real funny guy.
SEVEN REASONS NOT TO PAY YOUR RATES 08.10.12
Ratepayers will have received their rate demands by now and will be reeling at the massive increases. The rates bomb which was to hit Mangawhai has now been spread over the whole of Kaipara.
For those ratepayers who live outside Mangawhai it needs to be explained that the rate increases are not because of some gold plated Mangawhai sewerage system that everyone is now having to pay for. The sewerage plant that was delivered does not come within cooey of what was promised.
The reality is that the Kaipara Council misled ratepayers as to the capacity of the plant, the cost of the plant, and how such an expensive capital item would impact on rates. More than that, the Council acted in breach of the law in not issuing a statement of proposal and consulting with the people before making a decision to go ahead with the project and the massive new loans.
Having done it all illegally, the Council then kept all the information secret from ratepayers.
The whole thing was a rort from start to finish.
Ratepayers are now faced with a quandary: pay the rates or continue the rate strike.
There are those who want to give the commissioners a fair chance to see if they will resolve the outstanding problems.
To me it is a no-brainer. There are seven good reasons why I will not be paying any more rates until the commissioners acknowledge the illegalities of the past and start acting within the law.
1. No valid Long Term Plan
All rates charged by the Council for the current rating year are invalid because the Council does not have a valid Long Term Plan. The plan that was "adopted " by the outgoing Councillors, virtually at the point of the Minister's gun, is invalid because it was adopted outside the time-frame stipulated in the Local Government Act. The legal situation is absolutely clear and the LTP is as illegal as the phone-tapping of Kim Dotcom.
[There are also several other reasons why the LTP is invalid: Failure to adopt the prior annual report within the statutory time frame to allow ratepayers the opportunity to assess Council's financial situation. Failure to meet the decision-making and consultation requirements of the LGA in the plan itself. Failure to reconsult on the plan when fundamental amendments were made that were not contemplated in the draft plan and resulted in some ratepayers paying more rates than indicated in the draft plan.]
Because the underlying plan is invalid it means that the Council is operating outside the LGA, and outside the law, and cannot carry out any of the powers granted to it under the legislation or the LTP. Local government in Kaipara is in a legal limbo.
2. A council cannot charge rates to pay for illegal debts
The rates would be invalid anyway because a local authority cannot set and charge rates to for the purposes of paying illegal and ultra vires debts. The Minister and the government will insist that ratepayers are responsible for the debts of a local authority even if they are illegal. That is not correct. A receiver appointed by a bank has certain powers set out in the LGA to collect rates to meet commitments under illegal debts, BUT the provision does not extend to cover the situation where there is no receiver appointed. There is clearly a gaping hole in the legislation.
In such circumstance a council has no special powers in relation to illegal debts and must comply with the provisions of the Act. That means promoting the four well-beings. Section 10 of the LGA states that one of the purposes of local government is:
to promote the social, economic, environmental, and cultural well-being of communities, in the present and for the future
Destroying communities, and imposing immoral and unaffordable rates which are beyond the capacity of many ratepayers to pay, simply for the purposes of repaying illegal debt that was recklessly and illegally incurred, without any consideration of the four well-beings, is something that is totally alien to the LGA and to local government in New Zealand.
More than that, a local authority and the commissioners are in a special position under the common law . They owe a duty of care to ratepayers and they must also act as fiduciaries. This means that they are like trustees and must put the best interests of ratepayers first and ahead of their own interests. Having a council in a fiduciary position dump illegal debt on beneficiary ratepayers is not something that the High Court is going to tolerate.
3. Rates assessment is invalid
Under section 45 of the Local Government (Rating) Act a rates assessment (which is what you have just received in the mail) must include all the information set out in that section. Quite amazingly, after four years of defective rates assessment and with a new legal adviser on board, the KDC has managed, yet again, to make a dog's breakfast of the rates assessments.
The problem that Council faces is that if the rates assessment is defective a ratepayer has no legal obligation to pay the rates. Under section 44 a ratepayer is only obliged to pay rates when the local authority delivers a rates assessment that contains all the obligatory information.
So, even if the rates were valid, the rates assessment can still be non-compliant and ratepayers receiving a non-compliant assessment have no legal obligation to pay the rates.
[I am preparing an article on the defects in the rates assessments.]
4. Setting-off debt for illegal rates
The Council owes me thousands of dollars in rates that it has illegally charged me over the past four years, and which it has now acknowledged to be illegal. In law I have the right to set-off what they owe me against what I owe them.
5. How much is the debt?
The glossy Project Information Booklet of November 2007 set out all the liabilities of ratepayers under the EcoCare scheme. This was the "contract" between the Council and ratepayers. Ratepayers met their obligations under this contract by paying the annual rates and the capital levies set out in the document. We completed our side of the bargain.
Council has now come back to ratepayers saying that it got all the figures wrong, it is reneging on the agreement, and charging more annual rates and capital charges to cover the debt.
That's already two bites at the cherry. How many more is it going to take?
The debt that Kaipara has is so massive that it is going to literally take generations to repay it. And that is the debt that we know about. The truth is that Council still does not have any idea what the real debt is, and if it does it is hiding it so that in subsequent years it can reveal more debt and take more and more bites at the cherry.
They will bleed us dry for decades.
The commissioners are not going to investigate the past or tell us what the real debt is. They will just keep billing us year after year, tell us that it is our responsibility, keep the banks happy, whilst all those genuinely responsible for this gigantic rort are sniggering on the sidelines.
Ratepayers would be crazy to be part of this scenario. We didn't light the fire. We are not responsible. The only way we are going to get any independent appraisal of the situation and an assessment of legal liability is to stop being victims and stand up for our rights.
And the only way that we can effectively do that is by refusing to pay our rates and show that we are not going to be bullied into paying the debt.
6. Capped rates
How is that Nick Smith, when he was Minister, said that a 6% increase was unacceptable for rates, and we are being charged many, many times more than that?
How is that Auckland City is capping its rates increases to 10 per cent?
Would the government endorse 50 percent and 100 percent increases in Auckland and risk voter backlash?
Does John Key's government give a fat rat's about Kaipara? It has already deprived us of the rule of law and now, quite symbolically, it is partially closing down our District Court. It is condemning an area that is already struggling financially to a future of economic depression and stagnation.
7. Personal liability of councillors
Putting aside the question of illegality, why should ratepayers pay for the financial excesses of a council? The LGA places huge obligations on councils to undertake any commercial transactions in accordance with sound business practice, to take a sustainable development approach, to ensure prudent stewardship etc.
Quite simply that means fundamentally that any council, like any business, or any household, is obliged to live within its budget. And the budget available to it can be readily calculated from the rates intake.
It should therefore be impossible for a council to land itself in any financial strife IF it complies with its obligations under the LGA. That is what prudent stewardship is all about.
If a council exceeds its budget and incurs massive debt, as Kaipara has done, then it is clear that the councillors must have breached their obligations under the LGA.
Why should ratepayers have to foot the bill when they are innocent parties? Surely it is the councillors, who have been entrusted with ratepayers' monies and have breached both their trust and their statutory obligations, who should be personally responsible for any overspending.
In my view the only way that Council and the Minister and the government are ever going to acknowledge the illegality of the past, and of the present, and of the future, is if ratepayers make a mark in the sand and say, with a united voice: "No more illegalities".
The only way that we can effectively make them listen is to deprive them of their life-blood - money. We need to stop paying rates
And to back that up it is looking more and more likely that we will have to issue legal proceedings to bring back the rule of law to Kaipara.
The aim is not to bring the Council down but to make it face up to its legal responsibilities. If the commissioners moved quickly, acknowledged the illegalities and agreed to an investigation of the past, then they could have an interim LTP and interim rate in place in a very short time, with the full cooperation of ratepayers.
Civil disobedience , which is what a rate strike is, does not come easily to most people. We live in a civilised society and it is part of our psyche that we need to pay our dues to the government, whether central or local.
The problem is that in this instance we have been badly let down by both central and local government. They have got themselves into an incredible complicated legal and financial mess because of their incompetence and non-compliance with the law. The way out, as they see it, is to ignore the law and bully us into paying for their mistakes.
That is something that we have to resist. We are legally in the right, and we are morally in the right. If we are united and staunch then we have a good chance that justice and fairness will return to Kaipara.
RATE STRIKE PAYMENT OF INTERIM INVOICE BY 10 SEPTEMBER 2012 BASED ON RATES PAYABLE IN PREVIOUS YEAR
Importance of the rate strike
The legal framework of local government is set out in the Local Government Act (LGA). Unfortunately the government has failed to protect the interest of ratepayers by providing adequate mechanisms to protect ratepayers interests, or effective watchdogs to hold local authorities in check. Total chaos has resulted with local authorities wielding excessive power and ratepayers having virtually no protection.
The only remedy aggrieved ratepayers have is to apply to the court, but such a step is beyond the financial capacity of most ratepayers.
That is why a rate strike is so important. In a situation like the present, where the Council has been out of control and acting illegally, a rate strike is the only effective measure to register one's concern and make sure the Council listens. It cannot survive without the financial life blood of rates.
This is especially important now that he Commissioners are taking over. The Commissioners will be very competent and very ruthless. Those who were at the Council meeting on Wednesday were staggered at the ruthless pragmatism of the grey suits who pressured the Council into adopting an invalid LTP.
The Commissioners will talk a lot about good will and winning trust but the reality is that if we are to be listened to then we must wield some power, and the only power we have is to not pay rates.
This is not just a reckless "thumb your nose" reaction. A rates strike underlies our clear statement to the Commissioners that our very reasonable requirements and expectations must be met, otherwise they will not receive any cooperation from us.
I know that there is an enormous amount of good will in the community to put this mess behind us and get our Council back on its feet again. However, that is not going to happen unless the commissioners listen to and address our concerns. The rates strike is our only way of reinforcing that message.
Illegality of rates
1. A Council cannot set or assess rates unless there is no underlying LTP. When this resolution was passed (27 June 2012) there was no underlying LTP covering the 2012/13 rating year.
2. The LTP "adopted" by Council on 29 August 2012 is not a valid LTP in terms of the LGA. Neither the planning process nor the contents of the plan comply with the requirements of the LGA. In addition the Council had no power under the Act to adopt the LTP after 30 June 2012 (section 93).
There is therefore no valid LTP in force, which means that the Council has no power to set, assess or invoice rates.
3. The rates in the interim invoice are based on the rates "payable" in the previous rating year (section 50 LGRA). Council has acknowledged that many of the rates for that year (2011/12) were invalid. Most of the invalid rates apply to Mangawhai but some relate to the whole district.
The extent of the rating irregularities is unclear until there is a fully comprehensive and independent review of all recent rates. Until then ratepayers have no idea if their rates for the prior year were valid or invalid
Invalid rates are not considered to be "rates" within the definition of that word in the Local Government Rating Act because they are not set in accordance with the requirements of the Act (section 5). The interim invoice cannot therefore be based on invalid rates from the previous year because invalid rates are not "payable".
Because of this uncertainty relating to rating irregularities the interim invoice has no legal basis and is completely unreasonable.
This is more or less acknowledged by Council in the resolution when it states that any penalty may be remitted "on a case by case basis, with regard to the acknowledged irregularities in previous rating.”
4. The report of the Minister's review team has made it clear that the ratepayers of the district have been the victims of an incompetent Council that has strayed outside the law. The extent of the incompetence and irregularities is only just coming to light.
It is clear that Council has breached the trust of ratepayers, and it s also clear that it is teetering on the brink of insolvency. Ratepayers have both the legal right and the moral right to withhold all further payments to the Council until they are assured that the Council will survive financially and that measures will be put in place, and attitudes changed, so that the confidence and trust of ratepayers is restored.
5. Council owes ratepayers in excess of $17 million dollars in illegally charged rates. So far, Council has not considered repaying those monies and the reality is that it is financially incapable of doing so. Making any further payments to an insolvent Council which already owes you money does not make sense.
6. If the rates are valid then Council has the right to charge penalties on unpaid rates. That means that there would be a 10 % penalty on the interim rates if they are not paid by 10 September. However Council has already indicated, as mentioned above, that it would consider remitting penalties.
7. Council also has the power under the rates resolution passed on 29 August 2012 to charge a further penalty of 10 % on any rates for 2011/12 that remain unpaid.
8. However, what ratepayers need to bear in mind is that Council has no power to charge any penalties where the rates themselves are invalid, and because there is no underlying LTP. The Council is effectively in legal limbo.
9. The Commissioners are not going to enforce rates and penalties that they know to be both illegal and unreasonable and that can be challenged in court. Apparently they acknowledge the hurt and the breach of trust of the past and it is hoped that they realise that any unreasonable approach to the rating issue would be counter-productive.
When the issue of past rating regularities is sorted out it is hoped that all penalties arising because of the rate strike will be remitted.
Legal action etc
10. Councils have no right to take any legal action to recover rates for a considerable time after the due date (four months). This is not an issue with the rates strike which we anticipate will be short-lived. The whole underlying principle of the rate strike is that no one will be sued for non-payment of the rates. We will use the provisions of the LGRA to the best advantage of ratepayers but ensure that the only risk is the penalty risk which is discussed above.
11. Ratepayers who have mortgages may have a problem as technically the Council could approach the ratepayer's bank to seek payment of the rates. It is thought that the Commissioners will not do this. Where there are such huge question marks over the validity of the rates it would be counter-productive to pursue illegal rates, which could be challenged in court, and lose the good will of ratepayers. They would be better to commit their energies to establishing a fair and equitable rating system.
If you have any queries then please send them to: email@example.com
"Paying any monies to these wallies is like storing your wine in a colander."
TEN PER CENT PENALTY ILLEGAL
Note that these comments on the illegality of the previous year penalty are in addition to the legal arguments put forward in the reply to Ruru's letter set out below.
Legal Eagle has looked at sections 57 and 58 of the LGRA and considers that the charging of an additional penalty on previous year's rates is illegal.
Previous year penalties - that is penalties on rates that remain unpaid at the end of a previous rating year - can only be charged in the subsequent rating year (section 58)
The provision setting out that penalty must be included in the rates resolution for the subsequent rating year (section 57).
So, if Council wishes to charge previous year penalties for the 2011/12 year then such provisions must be included in the rates resolution for the 2012/13 year.
There is no rates resolution for the 2012/13 year. Council cannot pass a rates resolution until it has adopted an LTP and that is still some way off.
As an interim measure Council has passed a resolution to the effect that ratepayers will be invoiced on the basis of last year's rates pursuant to section 50 LGRA.
The interim resolution contains no provisions relating to penalties on previous year's rates.
As there is no resolution relating to previous year's penalties Council has no power to charge a previous year penalty.
It is interesting that the interim resolution for 2012/13 sets a penalty for the non-payment of that one special instalment. The wording is as follows:
(b) a penalty of 10% will be added to rates not paid by the due date of that invoice. And that, the remittance of this penalty of 10% will be considered on a case by case basis, with regard to the acknowledged irregularities in previous rating.
Note the part that I have highlighted. The interim rate is based on the "rates payable" in the previous year. Council clearly acknowledges that there are "irregularities" in those rates, and for that reason will consider remitting any penalty on the new instalment based on the irregular rates. Yet Council is at the same time trying to charge a double penalty on those irregular rates with no remittance policy at all.
REPLY TO RURU'S LETTER
For those who want to reply to Steve Ruru's letter then the following is suggested"
I refer to your letter of 27 June 2012 and advise as follows.
1. Council's solicitor, Jonathan Salter, one of the foremost authorities on rating law in
In my opinion if such proceedings were brought it is highly likely that all the rates identified would be invalidated. In a real sense, the rates cannot be regarded as enforceable by the Council. Therefore the situation is serious and remedial action is required, assuming that the Council is not disposed to simply refund the rates received.
2. Council has acknowledged that the rates are invalid and the Mayor has publicly and personally apologised to every ratepayer.
3. At the Council meeting of 27 June 2012 the Chief Executive acknowledged that further illegalities in other rates had been discovered. He acknowledged that Council now owes ratepayers over $17 million dollars in illegal rates that have been collected. It is uncertain which rates this applies to as details of the further illegalities have not been disclosed to ratepayers. All rates must therefore be treated as possibly invalid
4. Because of the costs and delay of High Court actions most legal issues are resolved by mediation or by obtaining a barrister's opinion. That is why the Auditor-General recommended an independent review to resolve the legality of the rates rather than going to court.
5. Section 120(2) of the Local Government Rating Act (LGRA) makes it clear that issues of illegality of rates do not have to be decided by the courts. They can be decided by a barrister or solicitor or even Council itself, and Council has the power to act on that decision.
6. If invalid rates are included in a rates assessment then the assessment is itself invalid. If Council fails to deliver a valid assessment to a ratepayer then the ratepayer has no obligation to pay the rates set out in the assessment (section 44(2) LGRA). On this basis the rates assessments for 2011/12 were invalid and ratepayers are not obliged to pay the rates.
7. It is clear that all the evidence points to the fact that the rates for 2011/12 were invalid and therefore not within the definition of rates under section 5 of the LGRA. Council therefore has no power to levy penalties on "rates" that were not set in accordance with the LGRA.
8. I will be more than happy to pay the rates and penalties assessed when Council obtains a decision from the court that the rates are valid.
There has been some feedback about difficulties cancelling direct debits in favour of the Council for the payment of rates.
Click here to get all the information and sample letters.
The Rates strike is moving along nicely and gathering huge momentum. However, there is a lot of confusing advice floating around about the legal implications of not paying you rates. There has also been some feed-back from the banks about their response to a Rates Strike
Legal Eagle has modified some of the earlier advice and offers this very simple snap-shot based on not paying the last instalment due on 20 June 2012:
• Do not pay the current instalment due on 20 June 2012. We can then have an immediate effect. Council will be starved of money before it has even adopted its LTP.
• The rates strike needs to be short and sharp and have an effect in June. That is the crucial time for putting pressure on Council and government. We must stop the LTP before the end of June and stop the new rates before they take effect on 1 July.
If we can make an impact by the end of June or early July and get Council and government to respond then none of the considerations below are relevant.
• Not paying you rates is the same as not paying any other debt. If the debt is disputed the you are not obliged to pay it.
• You do not have to write to Council and advise that you are a Rate Striker. It makes no difference legally at this stage. Simply stop paying. If you have a Direct Debit in favour of the Council then cancel it immediately. See the procedure set out below.
• If you do not pay the instalment by 20 June 2012 Council will charge a 10 per cent penalty.
• Council will then send you a letter advising that you are in default and will make a demand for the rates together with all sorts of justifications.
• Advise KaiparaConcerns when you receive that letter and send a letter in response disputing the debt. A standard letter will be provided to guide you.
• Council can do nothing further until 20 October 2012, when it has the right to issue legal proceedings. We therefore have four months in which to make our point.
HELP FOR YOU
• The worst case is that you will have to pay an additional 10 per cent on your rates. The best case is that Council will be replaced and your rates will be adjusted to an acceptable level.
• The aim is to ensure that no legal proceedings are issued against any ratepayer.
• If any ratepayer is singled out by Council then we will help you and offer free legal assistance. You are not on your own.
• If you have any concerns at all then you can contact KaiparaConcerns and we will help and advise.
• You must let us know if you receive any correspondence relating to the Rate Strike so that we can advise you what to do.
IF YOU HAVE A MORTGAGE
• If you have a mortgage registered against your property then you are in a special position.
• If you do not pay the instalment on 20 June 2012 Council will send you a letter advising that you are in default and will make a demand for the rates.
• If you do not pay then Council has the power to approach your mortgagee (your bank) and request payment. Your bank will then contact you to find out what the problem is. You will be asked by the bank to pay the rates as it is a term of your mortgage.
• Banks are not obliged to pay the rates at this stage. It is optional. However the feed back that we are getting is that Banks will not get involved and will simply put pressure on you to pay, and if you don't they will pay the rates and add the amount to your mortgage.
• You must avoid any dispute with your bank.
• You need to delay the process as much as you can. When you get your letter of default from the Council you could advise that you will pay the following month. You could apply for a remission for financial hardship. There are all sorts of delaying tactics that we will advise you on.
IF YOU LEASE PREMISES
• It will be a term of your lease that you pay the rates. Sometimes the rates are paid to the landlord, sometimes directly to Council.
• If you pay to the directly to the Council then simply do not pay the instalment. Tell you landlord what you have done, and explain your reasons.
• If you pay the rates to your landlord then do not pay on 20 June, but advise your landlord the reasons why and assure him that you will pay the rates and the 10 per cent penalty after a short delay.
• Your lease cannot be terminated for non-payment of one single rates instalment. It takes an long time to go through the legal process of terminating a lease. If it turns out that your landlord is unsympathetic then delay for as long as you can and then pay the rates.
If there is any matter that worries you or anything that I have missed then let me know at: firstname.lastname@example.org
Later on we will introduce a system to record details of RateStrikers so that we can see how successful we have been and calculate the total sum withheld from Council.
THE LEGAL STUFF
For those who want chapter and verse of the legal situation take a look at the Local Government (Rating) Act 2002:
Delay of four months before legal action:
Section 63 Legal proceedings to recover rates
(1) A local authority may commence proceedings in a court of competent jurisdiction to recover as a debt rates unpaid for 4 months after the due date for payment.
(2) In any proceedings under subsection (1), the local authority may recover any other unpaid rates in respect of the same rating unit if the rates became due not earlier than 1 month before the proceedings were commenced.
(3) A court constituted under the District Courts Act 1947 has jurisdiction to hear and determine proceedings under this Act for the recovery of rates, whatever the amount of the debt involved.
Situation if you have a mortgage:
Section 62 Recovery of rates if owner in default
(1) If an owner defaults in paying the rates, the local authority may—
(a) notify persons with an interest in the rating unit for which the rates are payable (including an interest as first mortgagee) of—
(i) the fact of the default; and
(ii) the provisions of this section; and
(b) accept payment of the rates from the persons referred to in paragraph (a); or
(c) recover, as a debt from the first mortgagee of a rating unit, the rates payable in respect of the rating unit that remain unpaid on a date that is—
(i) not less than 3 months after notice has been given to that person under paragraph (a); and
(ii) not earlier than 1 November in the financial year following the year in which the rates were first assessed.
(2) A person (other than a mortgagee) who pays the unpaid rates under subsection (1) may—
(a) recover that amount from the owner as a debt; or
(b) retain that amount from any money that that person pays to the owner in respect of a debt other than that relating to unpaid rates.
(3) If a mortgagee pays the unpaid rates under subsection (1), the amount paid must be treated as part of the money secured by the mortgage until it is repaid to the mortgagee, and the provisions of the mortgage apply to that amount.
(4) This section does not affect any agreement between persons about their liability as between themselves to pay the rates for a rating unit.
"accept payment of the rates from": Note that the local authority may "accept" payment from the mortgagee (bank). There is no compulsion to pay. However, most banks simply ask the ratepayer to pay the rates.
"recover, as a debt from": The local authority cannot take any action in court against a mortgagee (bank) until three months after notice has been served on the mortgagee (bank) AND not earlier than 1 November in the financial (rating) year following the year in which the rates were assessed.
The reality is that if the Rates Strike is short and sharp and effective we will have made our point by the end of June or early July and none of these legal considerations will be relevant.
Some ratepayers have experienced some problems cancelling their direct debits for the payments of rates.
The Banking Ombudsman has advised that you can cancel your direct debt in favour of the Council at any time.
Here are comments from the website of the Banking Ombudsman:
Can I cancel a direct debit with my bank?
Yes, you can cancel a direct debit authority at any time through your bank – and your right to do so is usually set out on the direct debit authority form. Generally your bank will require you to also give notice that you wish to cancel to the initiator While the bank must act on your instruction to cancel a direct debit authority, contacting the initiator may prevent direct debits about to be processed or partly processed from being sent to your account. If the initiator is not aware of your instruction to cancel the authority, they may send through further transactions.It is important to note that the direct debit system is solely a method of collecting payments, and the banks are not responsible for the underlying contract between you and the initiator. There is a distinction between cancelling the underlying contract and cancelling the payment mechanism (in this case, the direct debit). For example, if you cancel a direct debit authority for your power bill, and your power company is still supplying power, they will still expect payment (by some means) for the agreed supply of power.
We suggest that you follow the following procedure:
• Write to the Council advising that you are cancelling your direct debit immediately. (Letter to Council).
• Write to your Bank advising that you have advised the Council that the Direct Debit has been cancelled and that you are instructing the Bank to make no further payments to the Council pursuant to that Direct Debit. Ask the Bank to confirm this. ( Letter to Bank) Include a copy of the letter to the Council
• Keep copies of all letters.
Letter to Council
Re: Direct Debit for payment of rates
Address of Rated Property: .....................................................................................
We advise that we are cancelling our Direct Debit for the payment of rates on the above property from 1 June 2012. A copy of this letter has been sent to our bank with instructions not to make any further payments to you pursuant to this authority.
Please note that you are no longer authorised to deduct any monies from our account and if you continue to do so then we will lodge a complaint with the police for taking monies unlawfully.
Letter to your Bank
Re: Direct Debit for payment of rates
Address of Rated Property: .....................................................................................
Account No: .....................................................................................
The Bank holds a Direct Debit authority in favour of the Kaipara District Council ( "the Council") for the payment of rates on the above property.
We advise that we have terminated that Direct Debit authority as at 1 June 2012 and instructed the Council not to deduct any more monies from our account. A copy of that letter is enclosed.
We therefore instruct you to cancel that Direct debit authority and not to make any further payments pursuant to that authority to the Council. We ask you to advise us if you receive any requests for payment.
Could you please confirm in writing that you have received and accept these instructions.
Many thanks for your help.
(NB: Include a copy of the letter to Council)
And further from the Banking Ombudsman:
What happens if my bank doesn’t cancel a direct debit authority when I ask it to?
If you suffer a direct financial loss as a result of your bank’s failure to cancel a direct
debit authority, you may be entitled to compensation. This could include refunding
you overdraft fees or penalty interest resulting from from the unauthorised direct
debit(s). Your bank may also be obliged to credit the funds that have been debited
without authority, unless you have benefitted in some way from the payments. For
example, if your power company has provided you with power, and you have not paid
for it by any other way, you have received a benefit from the direct debit payment,
even though it was not authorised.