UNCLE JOE'S LETTER 03.05.13
To Bruce Rogan, MRRA
I wish to thank you and the MRRA executive for your public spirited action in filing papers against the legion of illegalities resulting from the abuse of power by the Kaipara District Council.
No confidence can be given to the Department of Internal Affairs, its current minister, or the commissioners, that they will be beholden to the genuine and valid interests of the ratepayers. In fact, it is plainly apparent, that cover up, "damage" minimisation, and propagandistic spin is the order of the day from this quarter.
Nowhere in their frequent pronouncements is mentioned the fact that the banks themselves are major players in this scandal of national significance. I say national significance because they (the banks) have calculatedly operated a programme of reckless lending to councils up and down the country, confident that the supine, placid and stupid body politic of New Zealand will merely pay up on illegal loans that they neither heard about, did not approve, and received debatable and minimal benefits from, pay up for decades, despite the fact that already established systems and norms of democratic consultancy were flagrantly and corruptly violated.
Should the MRRA win their case it will be a signal triumph for the principles and practices of democracy, and will provide a benchmark for future councils to make them take care to consult with the ratepayers fully, and not allow themselves to be captured by a corrupt, secretive and self-serving council executive.
The entire court case could have been avoided if they had simply scheduled new elections to council. The community is quite capable of organising its own clean up. As it is the government has sent in a cover-up brigade, sans democracy. The only option left for politically cognizant citizens is the one the MRRA has taken, placing the issues before an independent body, the judiciary.
It is unfortunate that this is tremendously expensive. If the commissioners had truly been on the side of the ratepayers, they would have taken the very action that the MRRA has done, namely sue their own council.
I am organising a further (small) donation to the legal fund and will send it to you in the next few weeks.
Uncle Joe of Kaiwaka.
JOHN DICKIE'S VIEW OF THE COMMISIONERS $500,000 FIGHTING FUND 20.04.13
I have just become aware of the Press Release of today regarding the “Council warns of massive legal costs, and may be forced to find $500,000 in unbudgeted funds to for legal costs against the Mangawhai Residents and Ratepayers Association (MRRA) claims."
As I state below, Council / Government and Commissioners in fact have challenged the community to do this for years, saying everything is legal until a Court determines otherwise.
There was a slight glimmer of hope when MRRA, Boonham and I (all of whom who had made complaints to Ombudsman &/or OAG)c sat with some Councillors in January 2011 and it was decided there would be an independent Barrister’s review of legalities etc, and that both parties would abide by the findings and discuss a way forward.
The review was held (and in fact not independent as Council reneged on promises regarding TOR etc) and slowly it came out that the complainants were in fact correct and Council wrong.
Then the “legal until a court approves otherwise” spin ramped up, and continues to this day, with the recent twist that Parliament is being asked to legalise everything.
So please do not place the “blame” for the legal challenge on the MRRA – you “invited” it and aggravated the situation by asking for retrospective validating legislation before consulting the community, and further aggravating it by presenting in the Draft LTP / AP the assumption that all would be validated and also the low risk of a challenge.
Your attempt at bluff has been challenged; let the courts decide!
Why did you wait until the last day of public submissions to release the Press Statement?
If the court case decides in favour of the MRRA / Community you Commissioners should be held personally liable for the costs of the court case because of your actions in precipitating the case.
John Dickie, Mangawhai
COMMISSIONERS PANIC 19.04.13
There are serious signs of panic coming from the Council offices. The commissioners are spinning stories about the MRRA and its intentions and trying to do all they can to create a split between east and west.
John Robertson is doing the rounds of parliament trying to get support for his disgraceful validation bill that he hopes to inflict on parliament in the near future.
He must be getting desperate as time slips away and there are substantial legal proceedings blocking his pathway.
He wants the validation to go through before the end of June so that the financial accounts can be cleared of a pile of contingent debts and therefore get the auditor's stamp, and Council can set rates before 1 July.
He may also be expecting a tap on the shoulder from the regulatory authorities who may not be too happy about the Council operating illegally because it has no LTP. And that may well be followed by another tap on the shoulder from the ANZ and BNZ.
The latest move of the commissioners is to put the frighteners on everyone by making a big fuss about setting aside $500,000 to defend the MRRA claim. They are even getting Council staff to make submissions on the plan so that they can then respond to it. The full details can be seen in the draft Council agenda here at page 63, and the press release here.
A pity that ratepayers were not advised of this decision and given the opportunity of commenting on it in their submissions on the DAP.
It is not the decision so much about the money but the decision as to whether the proceedings should be defended. The ridiculous thing is that Council has already acknowledged the invalidity of all the rates, the LTP etc by including them in the validation bill, so there is nothing to dispute.
The only real issue is whether ratepayers in law are responsible for the illegal debts of Council. That is an issue that ratepayers have a right to be answered by the court.
The old Council and now the commissioners have played games with the rule of law and natural justice for years and have ridden rough-shod over the rights of ratepayers. We are now in the situation where the High Court could finally make a ruling on the matter within just a couple of months.
Resolving the legal issues once and for all, within such a short space of time is an eminently fair solution for both Council and ratepayers
Council also needs to look seriously at parking its bulldozer and actually coming to some arrangement with ratepayers to resolve their problems, and to plan cooperatively for the future. The MRRA, other ratepayers groups, and the ratepayers at large, do not want a fight that makes the lawyers rich. They want a fair and just solution to the problems that are facing Council. And they want that now so that solutions can be agreed and Kaipara can move on.
This decision about the defence to the proceedings is regarded as a significant decision by Council and triggers in depth consultation with ratepayers under the LGA. Ratepayers should make the views known loudly and clearly and let the Council know that they want their concerns resolved, and preferably by agreement rather than through the courts.
Mangawhai Residents and Ratepayers Association (MRRA)
Ratepayers Group Files Judicial Review Proceedings in High Court
Kaipara District Council defence expected by 30th April
The MRRA has filed proceedings in the High Court for a judicial review of many decisions made between 2005 and 2013 by the Kaipara District Council when designing, building and funding the Mangawhai sewage scheme (EcoCare).
The Statement of Claim prepared by the lawyers working for MRRA challenges Council decisions to enter into the EcoCare contract and to raise bank loans which financed the scheme. The basis of the ratepayers’ challenge is that KDC made these decisions in breach of the requirements of the Local Government Act and because of that those decisions are illegal.
The Mangawhai Ratepayers and Residents Association wants a court ruling that ratepayers are not responsible for the EcoCare debt, and cannot be forced by Kaipara District Council to pay it off.
Ratepayers also want court rulings that decisions made by Kaipara District Council relating to the rates for the last six years, development contributions, and the most recent Long Term Plan are all illegal.
KDC has 25 working days in which to file its defence with the High Court.
The Mangawhai Ratepayers campaign was joined by many angry ratepayers this time last year, when Kaipara District Council issued a Draft Annual Plan proposing huge rate increases. Their action included a widely supported rate strike.
Central Government intervened, sacked the elected Council and Mayor, and appointed four Commissioners to run the Kaipara District Council. Their recent action – a Validation Bill put before Parliament to fix the problems by making them legal later - has also angered residents. Their latest action – the 2013-2014 Draft Annual Plan which assumes existing residents and a high rate of growth will fund the debt – further upsets ratepayers and residents.
Kaipara District Council debt and rate issues are now in front of Parliament, the High Court, and the court of public opinion as never before.
Bruce Rogan, Chairman of MRRA, said, “matters of major concern are now before the Court, so I won’t comment on them here. But I will say that we are determined to resolve ratepayers concerns wherever they can be resolved, fairly, and in accordance with the law. Our case will stand in any court in the land.”
Statement of Claim: http://www.kaiparaconcerns.co.nz/files/Statement_of_Claim.pdf
Enquiries: Bruce Rogan 021 0818 0162, MRRA@vodafone.co.nz
What is Judicial Review ?
The MRRA have filed proceedings in the High Court for a judicial review of some of the decisions made by the KDC.
Unlike parliament, which in principle has unlimited powers, local authorities are creatures of statute and can only exercise the powers that are granted to them in those statutes (acts of parliament).
The principal statutes setting and limiting the powers of local authorities In New Zealand are the Local Government Act (LGA), the Local Government (Rating) Act (LGRA) and the Resource Management Act (RMA).
Decisions made by local authorities can therefore be challenged on the basis that they were not made in accordance with the law, or that the local authority had no power to make them (ultra vires - outside its powers).
What decisions are being challenged?
There are two separate parts to the MRRA claim.
The first relates to those decisions that the KDC has already acknowledged to be non-complying with the law and therefore illegal. These include decisions relating to the illegal rates for the last six years, illegal development contributions, the 2012/22 LTP, and the current year's rates.
The second claim is that the decision to enter into the EcoCare contract (both the first and second contracts) and to incur the debts to finance the scheme were made in breach of the requirements of the LGA and that they are therefore illegal and ultra vires.
Following on from this an order is being sought to the effect that ratepayers cannot be rated to pay for an illegal or ultra vires debt.
What remedy is being sought?
The application generally seeks a declaration from the court that the decisions are invalid, and if monies have been paid pursuant to an illegal decision, then it seeks the repayment of the monies.
In respect of the liability for the illegal EcoCare debt a declaration is being sought that ratepayers are not responsible for the EcoCare debt.
The Council is not being sued as such and there is no claim for damages.
Who pays the legal costs ?
The costs of the MRRA are paid by members who have contributed to the litigation fund of the Association.
The cost of the KDC will be met from rates. However, this needs to be put in context.
The legal costs on the validation bill being pursued by the commissioners without any ratepayer mandate will amount to several hundred thousand dollars. That is being paid out of ratepayers' money to remedy the incompetence of the Council staff and the Councillors stretching over many years.
In the past few years the Council has wasted well over $100,000 of ratepayers monies on legal opinions to try and fight off the claims of illegality by ratepayers, all of which have now been acknowledged
[Only recently the commissioners maintained that they had a legal opinion (which they refused to produce) to the effect that the current LTP and rates were valid. Yet a few weeks later they contradicted this by including both of them in the validation bill.]
All ratepayers are aware of the $240,000 of their monies that was paid to Jack McKerchar without any legal justification.
In comparison the costs involved with the judicial review will be minimal. Even if Council decides to contest the application the facts are not in dispute and Council has already acknowledged the illegality of most of the decisions by including them in the validation bill.
Why are legal proceedings necessary?
As mentioned, Council has already acknowledged that some of the decisions being challenged are invalid.
In respect of the illegal EcoCare rates and development contributions Council obtained a legal opinion that stated this, and it has confirmed this by including them in the validation bill.
In respect of the other decisions, such as the LTP and the current year's rates, Council has included them in the validation bill which is a clear acknowledgement that they are invalid. You can only validate something that is invalid.
The difficulty that ratepayers face is that although Council acknowledges that the decisions are invalid it refuses to do anything about them.
It argues that the courts take the view that although, for example, the rates are technically invalid, ratepayers are still bound by them until a court declares them to be invalid.
It is a proposition that favours local authorities and puts a huge amount of power in their hands. Put simply, a local authority can do anything it wants whether legal or not and it is not deemed to be acting illegally until a court declares it to be.
That perhaps is why we have so many problems of this type in local government.
Underlying this huge imbalance of power is the fact that legal proceedings are very costly and take an enormous amount of stamina, commitment and mental resolve.
Fighting "City Hall " and the government is a daunting prospect. Local authorities know this and they can feel free to act recklessly, and at times with disdain for legal compliance, because that they know that the regulatory authorities in New Zealand are asleep and that it is highly unlikely that ratepayers will have the financial or mental wherewithal to launch a legal challenge.
Last year the Council resolved to consult with ratepayers in respect of options for dealing with the invalid rates and to appoint a focus group. Unfortunately the commissioners, a few months after their appointment, reneged on that agreement and made a unilateral decision to apply for a validation of the rates, even though their terms of reference specifically stated that they were to consult with ratepayers on the options.
Not only that, the validation bill totally misrepresents the background to the illegal rates and includes the validation of charges that no local authority in the country has the power to charge. It is an abuse of the validation process.
This arrogant disregard of ratepayers' views and the abuse of a parliamentary procedure left the MRRA with little alternative but to issue proceedings.
Perhaps the last straw was the point-blank refusal of the Minister of Local Government to enter into a dialogue with the Association and any other ratepayer representatives to discuss options for the future of Kaipara.
It became absolutely clear that the commissioners and the Minister were intent on bulldozing thorough the validation bill irrespective of the merits of the case for validation, and without any consideration of the views, or the legal rights, of the ratepayers of Kaipara.
The court decision on the EcoCare debt is pivotal
The first part of the claim relating to illegal rates etc is pretty straight forward. Council has already acknowledged the illegality of these decisions so there is little to argue about.
The crucial issue is whether the EcoCare decisions - the scheme and the debt - were illegal and ultra vires.
To recap the legal argument:
It was a fundamental requirement under the LGA for Council to go through the decision-making process in the LGA, and consult with ratepayers through a statement of proposal and LTP (or amendment) before making any decision of this type.
Council did not go through the decision-making process at all.
Council consulted on the first contract and debt after the contract was signed (the statement of proposal of 2006). In respect of the second contract and debt (which doubled the size of the scheme and the debt) there was no statutory consultation or disclosure, and the amendments were kept secret from ratepayers for 5 years.
If the court decides that the debt is illegal/ultra vires then it gets a bit complicated.
Even Illegal debts are still deemed to be "valid and enforceable" against a local authority under a provision in the LGA. The security for the debt is the Council's power to set and charge rates.
Now, if the local authority defaults on a debt then there is no doubt that a receiver appointed by the lender has the right to set a special rate to cover payments owing under the debt. There is a clear provision in the LGA to this effect.
However, what is not clear in law is whether a local authority itself has the power to set a special rate to enable it to make payments under an illegal or ultra vires debt.
A local authority's powers are created by statute and, unlike the situation where a receiver is appointed, there is no specific power in the LGA or LGRA for a local authority to set and charge a rate to make payments under a debt where the debt is illegal.
Both Acts contain general powers to set rates but there are underlying principles in the legislation which must be adhered to such as the four well-beings (now repealed but relevant to this case) which would seem to exclude a local authority from charging a special rate to pay for illegal debts.
Not only that, there are specific limitations on the powers of a Council under the Common Law relating to the duty of care and the fiduciary duties owed to ratepayers.
The law is unclear and the presumption that ratepayers are liable for all debts irrespective of legality does not appear to stack up on a close examination of the statutory powers of a local authority
This claim is the essence of what the Kaipara problem is all about. Who is liable for the debt?
The Council, the commissioners and the Minister have made it absolutely clear that they adhere to the assumption that ratepayers must bear the burden of the all debts even if they are illegal and ultra vires, and even though the ratepayers are a totally innocent party.
Ratepayers reject that absolutely. They maintain that they are not liable in law, and that those who are responsible for incurring an illegal debt must be responsible for repaying it.
The only way that this fundamental dispute can be resolved is by getting the court to rule on the matter.
Why not wait for the results of the OAG inquiry?
This inquiry, despite the length of time that it has taken and the costs that it has consumed, is a complete red herring.
The OAG is hopelessly compromised because it is that Office's incompetence, as both auditor and watchdog, that gave the renegades in Council the latitude to breach the law at will.
If the OAG had done its job properly then there would be no Kaipara crisis now.
The fact that there are 30 pages of illegal actions in the validation bill is a testament to the incompetence of the auditor and the watchdog, especially as they were alerted to many of them and took no action. And that is only the tip of the iceberg.
It is nothing short of disgraceful that the Auditor-General is holding an inquiry into her own Office's audit performance, in breach of basic principles of equity and natural justice.
In addition, the time taken -13 months so far - is deplorable. The commissioners have found it convenient to argue that they cannot look back or take any action in respect of liability for illegalities, irregularities and overspending until the OAG report is available.
That stance, and the delay, has created a huge chasm between commissioners and ratepayers and prevented any fair and honest, and independent, assessment of the problems confronting Council. Without that assessment, and resolving the problems of the past, it is impossible to go forward and plan a new future.
The other main problem with the OAG inquiry is that it is completely toothless.
The report following the inquiry will only make findings. It cannot make any rulings or make any orders. Thus It can make no ruling on breaches of the law.
We have seen in recent months that the findings of the OAG are swatted away regularly by the government and its Ministers. That will inevitably happen to any findings in relation to EcoCare.
If this situation is to be resolved then both parties need to have some resolution of the issue of liability for the debt. The only entity that has the legal power to make that decision, which is binding and enforceable, is the court.
Is there any other way of resolving the matter?
The MRRA did all that it could to resolve this matter with the commissioners and the Minister before filing proceedings. It was left with little alternative.
it is now over to the Minister and the commissioners as to how the matter will progress from here.
It would be completely inappropriate for the commissioners to proceed with the validation bill now that the matter is before the courts. Any interference with the court process would be seen as an abuse of the separation of powers.
Defending the claim that the rates etc are illegal would appear to be futile given that Council has already publicly acknowledged their illegality.
The question of liability for the illegal debt is perhaps a matter that both parties could agree to have resolved by the court. It is pivotal to any progress in this matter and it is vital for both parties that this issue is resolved one way or another.
Ratepayers are not unreasonable. They accept the dire situation that Council is in both financially and legally and that solutions such as a validation bill will be required at some stage. However, there has to be a resolution of the liability issue and a lot more independent scrutiny and transparency before any steps forward can be made.
It is now over to the commissioners and the Minister to decide if they want to continue the bulldozer approach or whether they are prepared to abide by the decision of the court as to the liability for the debt, allow some independent scrutiny of Council's finances, and then resolve the issues collaboratively with ratepayers.
An agreement reached now could see many of the fundamental issues resolved within a few months and Council at least pointing in the right direction.
My only concern is whether the individual commissioners have the right attitudes and abilities to compromise, and to work cooperatively with the community.
Ratepayers generally have not been impressed with the approach of the commissioners. They come across as arrogant and bullying with a scant regard for the views of ratepayers, and a total disregard for consultation and transparency.
The Minister may need to examine whether the right people are at the helm of the SS Kaipara to see it safely through the turbulent waters.