23.02.16 to 05.07.2016

The High Court has agreed to the release of the pleadings in respect of the KDC's legal action against the Auditor-General for negligence in respect of the audit of the KDC.

Some of the arguments presented to the court, a consideration of some legal principles, the statement of claim and the statement of defence, a summary of those documents and a commentary on them, can be see at KDC v A-G.

SO, WHAT HAPPENED TO JACK?   03.07.2016  
Honest John has kept very quiet about the proceedings taken against Jack McKerchar the former CEO who many hold responsible for the Kaipara debacle.

We were told by the commissioners in December 2014 that legal action was being taken against him but, pursuant to the policy of opacity pursued by Honest John, we have received no further information, some nineteen months later. He creates a smoke-screen by claiming “privileged information” under the Official Information Act.

Surprisingly the Northern Advocate has just featured an article by Mike Dinsdale bringing us up to date with what is happening in this case.

The case was originally filed with the Employment Relations Authority (ERA) and it appears that it relates solely to the severance pay that the ex CEO received on resigning pursuant to a deed of settlement between him and the KDC.

The Advocate article is taken from the determination of the ERA by Authority Member Anna Fitzgibbon on 21 June 2016, which can be seen here.

The KDC is claiming the refund of the severance pay because the KDC has since discovered that the CEO breached his statutory obligations and failed to comply with the LGRA. If the KDC had been aware of these matters then the CEO could have been dismissed without severance pay.

Jack McKerchar is defending the claim on the basis that the deed of settlement was stated to be “In full and final settlement” which prevents the KDC from having the agreement set aside and pursuing its claims.

The KDC sought to have the ERA decide the preliminary issue of whether the wording of the deed of settlement prevents any claim being pursued.

The authority decided that the matter involves important questions of law and has been the subject of intense media scrutiny and ordered the removal of the case to the Employment Court.

At this stage there is no indication when the case will be heard.

The important point is that the KDC can at best only recover the money it paid to McKerchar. That leaves us all wondering about the losses that the KDC suffered because of McKerchar’s incompetence.

What is amazing about all this is that despite all the allegations of breaches of statutory duties and failure to comply with the LGRA, which are clear matters of incompetence and would support a claim in negligence, Honest John did not file proceedings for negligence in the High Court to recover the losses caused by the ex CEO.

It was a no brainer. The claim is clear cut and there is oodles of evidence to support it, including the report from the Auditor-General who painted a very sorry picture of Jack McKerchar’s abilities.

There was almost certainly professional indemnity insurance to meet the damages bill.

So why oh why did Honest John pass up the opportunity to go to the High Court?

And an even bigger question: Were Honest John and his mates negligent for failing to file proceedings and act in the best interests of ratepayers?

Your Questions Answered

Why did you fail to file proceedings in the High Court against Jack McKerchar?

For those who missed the previous consultation period for this issue, the matter has been reopened because of the unlawful consultation first time around.

My criticism of Honest John’s consultation process on this matter can be seen in the post THIS IS GOVERNANCE AT ITS WORST on 10.06.2016 (scroll down).

I criticised the fact that he publicly invited ratepayers to have their say and emphasised the importance of their input, but the links to the information on the KDC website were down for part of the consultation period.

The KDC has taken that on board and has now extended the consultation period on this issue until 1 August 2015.

Details of the proposed changes and Bylaw can be seen on the KDC website at YOUR DISTRICT – HAVE YOUR SAY - Consultation, Wastewater Drainage Policy and Bylaw. Or go directly here.

This is a dreadful report and proposal that is based on urban myths and unsubstantiated claims, using the fiction of a degradated Harbour as scare tactics to justify what is nothing more than another ticket-clipping exercise from a desperate council.

The whole scenario of supporting the EcoCare lemon at all costs and dismissing alternative sewerage systems (see Christian Simon's letter in this week’s Focus - Wastewater Policy Flawed), and ignoring bovine pollution, will keep Kaipara poor for decades.

Honest John has done immeasurable damage to our communities and should spend his time packing his bags and leave all outstanding issues for a democratically elected council to resolve in full consultation with ratepayers.

There is a certain amount of ambiguity in the proposals for Alamar Crescent. The plan itself states

Structured parking spaces

The article in the Focus states:

Other changes would be sleepers for the trailer and car parks,

Sue Hodge advised me:

(We) will lay some dividers and mark out the width of a car park to help structure the parking. (Alamar Crescent)

Similar to Alamar we will lay some dividers and mark out the width of a car park and would expect a second row of cars to also park there.(Sellars Reserve)

Yesterday, in a response to submissions from Dave McGillivray, Sue Hodge now advises:

It is proposed that the car parks have clearly marked wheel stops only rather than timber guides or dividers.

There is no plan at this stage to remove the boat ramp at Sellars Reserve. A future option might be to re-locate it away from the intersection.

Doug Bone has also obtained details of the advisory group which helped draft the poposals. Sue Hodge advises:

The advisory group was made of local residents who are also ratepayers. The advisory group included:

• Isabel Hollis – Fishing Club

• Rosemary Browne – Mangawhai Community Trust (resident of Alamar Crescent)

• Trevor Downey – Harbour Restoration Society

Don't forget that the deadline for submissions on the Fire Service Rules specifically relating to dedicated water tanks for fire-fighting close on Thursday 30 June.

For details scroll down to FIRE SERVICE REGULATIONS 21.06.2016

If you are opposed to the tanks and don't have time for detailed submissions simply send an email to council@kaipara.govt.nz stating that the Fire Service Rules should be completely omitted from the District Plan until a democratic council is elected.

The Mangawhai Focus was delivered today. It has an article on the Alamar Crescent proposals (see post below) and comment from Honest John. He advises that he wants feedback on the proposed changes and then goes on to state that the deadline is 1 July, which is this Friday.

That is consultation commissioner style.

So what are the proposals? They are on the KDC website but you will have a heck of a job finding them unless you follow the instructions in the post below.

One has to ask why the inordinate haste to spend money on improvements that, with respect to those who have come up with them, are going to create more problems than they solve and which will come as a surprise to most people who use the facilities.

Some of the ideas are simply daft.

The trailer parking on Sellars Reserve is not an issue except for a couple of weeks a year, and even then common-sense usually ensures that maximum parking is achieved. Laying railway sleepers as parking guides for each trailer (each presumable set in concrete) will be massively expensive and is going to inhibit sensible parking.

The same railway sleepers are to be used to designate parking spaces along Alamar Crescent. Again, completely unnecessary and ridiculously expensive. It is going to create huge problems for wide vehicles and create dangerous obstacles for people and children leaving vehicles.

The KDC also intends to push out (towards the road) the timber barriers that prevent parking on the grass reserve to make more room for a walkway, with the result that most parked vehicles will stick out and obstruct the roadway.

The proposed walkway is no doubt being promoted for safety reasons but the truth is that a walkway across the reserve down to the jetty is completely unwarranted and will destroy the openness of the Reserve.

I urge all ratepayers let Honest John know that the proposals should be put on hold until proper consultation is carried out and the proposals vetted for desirability and feasibility.

It is ironic that just a couple of years ago Honest John tried to secretly sell Sellars Reserve to recoup monies for his coffers. We need to ensure that any of our money that is spent is used wisely and according to community wishes and not wasted on utterly impractical ideas.

Here are submissions from the MRRA.  Feel free to cut and paste but ensure that send your submissions to.council@kaipara.govt.nz by 1 July

You may also want to suggest that the consultation be extended because of the failure to advertise the matter appropriately.


We wish to make some points which we believe the KDC should consider before making a final decision on the Alamar Crescent Concept Plan.

Ratepayers need to know the source of the money and why it has to be spent with such haste.

Sellars Reserve
There is no need to do anything with the parking in Sellars Reserve. There are only issues for a few days a year and generally those who use it for parking car with trailers use their common sense and have two rows of car with trailer parking. Defining parking spaces with timber guides is an unnecessary expense and will create problems, which would likely include legal actions against council for damage to tyres and wheels.

Boat ramp by Sellars Reserve
We understand that it is the intention that the boat ramp by Sellars Reserve is to be removed eventually. We are vehemently opposed to this. Congestion at the other boat ramps would be hugely exacerbated at peak times if this access to the estuary was barred. All that is needed is clearer signage about not parking on the beach, and enforcement of that as necessary..

We understand that the walkway bordering Alamar Crescent is to provide a safe walkway for pedestrians. We comment as follows:

The proposed walkway will do nothing to solve the real problems for pedestrians, cyclists, vehicles and especially vehicles towing trailers. The real problems are:

1. The corner where North Avenue meets Alamar Crescent.

2. The intersection where Wharfdale Crescent, Roberts St and North Avenue meet.

• There is no safe passage for pedestrians around the North Ave - Alamar Cr corner, and the proposed walkway will not ameliorate this danger at all.

• One of the greatest risks is caused by people, especially inexperienced people towing boats around the corner and forgetting that their trailer will cut the corner. A child was killed there for exactly this reason some years ago, and the proposals being suggested here will, if anything increase the risk of recurrence of this tragedy.

• If North Avenue was terminated at Wharfdale Crescent and a new access was installed at the other (Camping Ground) end no other safety improvements of any kind would be needed, because there would be no through traffic..

• However, in the absence of the changes suggested above, it is hard to imagine a safer walkway than what is currently available. It is possible to walk comfortably from the camping ground to North Avenue without going into any area where there are moving vehicles. All that is possibly needed is some signage telling people of this.

• There is insufficient space for a formed walkway. We note that on the Gold Coast that such walkways along the beachfront are several metres wide. In Alamar Crescent the gap between the trees and the timber parking barriers is too narrow for a walkway.

• The overhang from parked vehicles also reduces the available space.

• We observe that most people walk in groups side by side. There is insufficient room for such walkways in our location, so pedestrians will continue to use the roadway or the grass reserve.

• Moving the timber barriers back towards the road would be costly as they are all set in concrete.

• Moving the barriers back towards the road would reduce the length of the parking space so that many vehicles would project into the roadway. At present vehicles, trucks, motorhomes etc already impinge on the roadway and it is difficult for cars with boat trailers to exit the properties opposite because of the limited space for turning. Any reduction in the parking space length would mean that the roadway would be narrowed and leave insufficient room for cars with trailers leaving residential properties. Moreover, if vehicles entering and leaving are required to manoeuvre between physical constraints as suggested, there will be a significantly increased risk of collisions, between vehicles and pedestrians, and vehicles with passing vehicles.

• Putting in the walkway would require relocation of the picnic tables. These are all set in concrete and would be irreparably damaged. A completely unwarranted expense

• The pathway along the Alamar Reserve to the jetty is a waste of money, with no benefits attached. . It will ruin a lovely open grass area where people can walk freely and picnic, and play games. If they want to walk to the jetty they can walk on the grass or on the beach. Such a pathway would also create difficulties for the mowing contractor.

• If a formed footpath is deemed necessary (and there is no demand for it that we know of) it should be located along the seaward side of Alamar Crescent down to the Fishing Club.

Parking along Alamar Crescent
We understand that the parking strip is not going to be sealed or parking lines painted. However, it is proposed that timber guides are to be installed. We are opposed to this for the following reasons:

• Correct parking is not an issue for all but a couple of weeks in the year, when there is extreme pressure on available parking.

• The expense is unwarranted

• Timber barriers will create more problems that they solve. They will be too narrow for some vehicles.

• They will create serious safety hazards for both vehicles and pedestrians, especially children who will trip over them when entering and leaving vehicles.

• They will prevent parallel parking for essential service vehicles. Large Council and other contractors’ trucks use the area in off-peak times for maintenance.

• The Council mowing contractor needs to parallel park to use his ramps to unload his mowers.

Speed Bumps
We suggest that speed bumps are installed along Alamar Crescent to stop not just speeding hoons but also cars and cars with trailers that sometimes drive too fast given that there are families and children leaving the beach and walking between parked cars. The speed bumps need to extend to the seaward side of the parking area to deter people from swerving into the parking area to avoid them.


ALAMAR RESERVE   27.06.2016
Very few readers will know that submissions on the KDC proposals for Alamar Crescent and Reserve close on 1 July (this Friday).

The proposals were published via media release on 14 June and the only indication to ratepayers was via an article in the Lifestyler of 21 June.

It appears that the proposals are the result of contributions from the Mangawhai Boating Club, the Community Trust, and a local resident. There is no information on what the Community Trust is or the name of the local resident.

There has been virtually no communication with anyone else although Venessa Anich, the KDC General Manager Community, is quoted as saying that neighbours who are affected have been advised.

According to the Lifestyler, plans are available on the KDC website.

But when you put the two words “commissioners” and “consultation” come together you end up with smokescreens and appalling transparency.

Try and find the Alamar proposals on the KDC website. They are not under Have Your Say, and the search engine offers no relevant results.

You actually need to go to Your District - News - Media Releases - Mangawhai’s Alamar Crescent is in line for a spruce-up. Scroll down to the proposals.

All residents of Mangawhai need to have their say on this issue, as do those who use the facilities. Such a limited time for consultation with so little publicity is not acceptable.

A few weeks ago Winston Peters pointed the finger at Kaipara ratepayers and accused us of not being angry enough.

The National government walked all over the rule of law in Kaipara, allowed predators to run up massive debts and then dumped the debts on the unwitting ratepayers.  At the same time it allowed the guilty parties to slope off into the darkness.  It changed the law retroactively just before our case was due to be heard in court and forced us to pay rates that were clearly unlawful, along with vicious, vindictive penalties on them. 

The National Party also deprived us of our democracy for four years and replaced a democratic council with an autocracy run from Wellington.

And what did ratepayers do at the by-election in 2015 in response to these outrages?  As Peters pointed out, the majority in Mangawhai voted for the National Party.

They have been rewarded for their loyalty with what Associate Minister Louise Upston euphemistically calls a "return to democracy", when, buried beneath the smoke and mirrors, the truth is that the Crown Manager and the Crown Observer will effectively rule the new council from Wellington.

Scarcely a murmur has been heard about the new deprivation of democracy.

This is not the only instance.  The National government is doing all it can to introduce unelected Maori representatives into local government.

Take a look at Karl du Fresne‘s article about Maori representatives being appointed to councils and by-passing the democratic election process.  He sounds a stern warning:

Democracy is a package deal. It doesn’t come with optional extras that you discard if they don’t happen to suit you. And the danger is that once you start subverting democratic principles, even with the best of intentions, anything becomes possible.

If there’s no longer a rigid rule that the people who make decisions on our behalf must be elected by us and accountable to us, reformers will soon find other ways to “improve” the system – all in the interests of fairness, of course.

This is how democracy gets undermined – by inches and by degrees. Ultimately someone might decide that voting is a clumsy and inconvenient process and that democracy would be much more efficient if we got rid of it altogether. It’s happened in plenty of other places.

It is still not too late to stop apartheid- type racial privileges becoming part of New Zealand’s political landscape. Dr Muriel Newman’s article Standing up for Democracy  tells us what each individual New Zealander can do to to add their weight in supporting the democratic process in this country rather than racial-based privileges.

If you need a warning from the past, then here it is, using very similar words to Carl du Fresne:

We all watched in amazement as John Key’s government moved with lightning speed in 2013 to head the MRRA off at the pass just weeks before its High Court judicial review of the KDC's unlawful rates was scheduled to be heard.

The government passed a validation bill in super-fast time to change the law so that the KDC could collect its unlawful rates.

On the other side of the coin we also saw the situation where the government-appointed commissioners dragged the chain on filing negligence proceedings against the Auditor-General so that the limitation period would seriously reduce any damages recoverable from the government’s favourite daughter.

If Duffy J in the High Court makes a decision in the near future that favours ratepayers then watch John Key go into grease-lightning mode to change the law retroactively to ensure that unlawful rates across the country are declared to be legal.

But the Prime Minister is not so keen to move when ratepayers or workers are being financially prejudiced, even though vast sums of money are at stake.

The botch-up with the calculation of holiday pay under the Holidays Act 2003 has resulted in approximately 750,000 workers being underpaid to the tune of between $300 million and $2.3 billion, going back 6 years.

The problem is that workers can only recover under-paid wages for the previous 6 years, so, as the delay in resolving the issue continues, the amount each employee can claim is being reduced on a daily basis. This amounts to about a million dollars a day.

The Council of Trade Unions has presented a Bill to the government that effectively stops the limitation clock running. It has pressed for the Bill to be passed under urgency.

Katie Bradford of One News reports that the government is not moved.  In an interview John Key rejects legislation as a solution (watch the video):

"One of the issues there is that that would be a very long process,

we’d have to go through the Parliamentary process

and I think that we are looking to try and find a solution to that issue that does not require a change of the law."

So the clock keeps ticking and workers lose up to a million dollars a day as John Key twiddles his thumbs. And, on the other hand, employers are saving a million dollars each day that there is a delay.

Thanks to Rob Warren for the reference.

The closing date for submissions on the Fire Service Regulations is 30 June. 

I hear loud criticism from tradesmen and home-builders about the crassness and the cost of the regulations but very few of them realise that the whole issue is now open to submissions from ratepayers and affected persons.

Part of being in a democracy (yeah, right!) is ensuring that one’s voice is heard when the occasional opportunity arises. Local authorities tend to ignore submissions from ratepayers, but if enough of them put pressure on the council then any protest becomes more difficult to ignore.

Originally the KDC adopted the Fire Service Regulations in their entirety as part of the District Plan without even considering what that meant in practical terms. Following widespread criticism they proposed changes over a year ago and have now decided to seek further submissions from ratepayers.

I therefore encourage all ratepayers to lodge a submission against the Tank-Farm proposals that Honest John wants to leave behind as his legacy when he passes the baton on to Crown agents in a few months.

It is no good criticising the situation in future if the opportunity to make a difference is ignored.

The links to the new proposals on the KDC website are:

Proposed Plan change No 2

Section 32 Evaluation Report

Summary of Plan change

Online submission

True to form, the online submission link is down. However submissions can be made to: planchanges@kaipara.govt.nz

Further details:

Drop in Session

Council is also holding a drop-in session at the Council’s Mangawhai Office, at Unit 6 The Hub, 6 Molesworth Drive, Mangawhai, between 3.00pm and 6.00pm on Wednesday 22 June 2016. Please feel free to come a long and discuss any concerns or ideas you have on this subject with Council staff.

If you have any questions regarding this, contact Robert Schlotjes, Paula Hansen or Venessa Anich on 0800 727 059.

Please tell all your friends, neighbours and relatives of the importance of this issue and get them to file submissions otherwise we will end up with:

WINSTON HITS TOWN     14.06.2016
Here are some comments relating to Winston Peter’s whirlwind visit to Mangawhai.

Our local MP hit Mangawhai last night. At a meeting organised by the local business association he again renewed his promise to fix the illegal Kaipara debt if he has the balance of power in the next election.

The New Zealand First leader made it clear, as he did before the by-election last year, that he would only keep his promise if Mangawhai ratepayers voted for him in the election. He pointed out that the majority in Mangawhai, taken from polling booth tallies, voted for Mike Sabin and the National Party. That was in spite of the National Party validating all the illegal rates and dumping massive illegal debt onto the ratepayers of the District.

Peters warned: “Don’t go voting National and then expect me to fix your problems for you.”

In respect of the illegal debt he pointed out that the debt would not have arisen if it had not been for the negligence of the government’s auditor, the Office of the Auditor General. The government therefore had to take responsibility and make up the losses arising from the auditor’s negligence.

He also took a swipe at Associate Minister of Local Government Louise Upston. He questioned her competence and asked why Kaipara ratepayers were so accepting of her recent announcement re the shape of the new council. Although elections were to be held the appointment of a Crown Manger and a Crown Observer meant that the elected council had no power and council would be driven, as it is now, by directives from Wellington.

He accused locals of not being angry enough and passively tolerating the abuse of democracy.

Mayoral aspirant Greg Gent made some interesting and unexpected observations in question time. He asked why local authorities were not held accountable in law whilst company directors are. It seemed anomalous to him that once a council is voted in then it effectively has three years to do whatever it likes without any accountability. The only way that it can be called to account is at a subsequent election.

And so say all of us.

For many years now the MRRA and other ratepayers have been trying to make the KDC (and those who form part of it) responsible the path of destruction that it has created. All attempts to establish accountability have so far come to a dead-end, stymied by a government that is determined that no one in council is to be held responsible for their incompetence and worse.

The problem stems from a fundamental principle of administrative law that is the root of all the problems. That principle states that an unlawful action taken by a local authority is lawful until a court of competent jurisdiction rules that action to be unlawful. (In law the action is voidable so it remains valid until it is declared to be invalid.)

So effectively a local authority can do anything it likes (except for criminal acts) and that action is deemed lawful until someone with bucketfuls of money and a constitution of an ox gets a ruling from the court.

And, as we have seen so far, when it comes to local authorities the courts appear to go gaga.

What this all means is that, effectively, local authorities are outside the reach of the law. They can thumb their noses at their binding statutory obligations and remain confident that there will be no come-back. For instance the word “must” is used 890 times in the Local Government Act and nearly all of those create an obligation on a local authority. But the reality is that a local authority can ignore all of those "musts" and the ratepayers can do absolutely nothing about it.

As we have found out.

John Key has said time and time again that the government is not going to give any hand-outs to Kaipara.

Winston Peters was at pains to point out that “hand-outs” is the wrong word. That is what they did with South Canterbury Finance which they bailed out without having any legal obligation to do so at a massive cost to taxpayers.

In the case of Kaipara it was the complete failure of the government appointed auditor, the Auditor-General, to audit the KDC in a professional way that caused the Kaipara debacle. If the Auditor-General had done her job properly then the blowout would not have happened.

Mayoral hopeful Greg Gent suggested in question time that audits are “after the event” checks and would not have made any difference. That is not true. The audit carried out on local authorities includes not just checking statements of historical accounts but checking plans and rating resolutions before they are adopted or passed. Anyone with a simple knowledge of local authority law would have noted that the KDC was acting unlawfully in virtually every decision that it made.

Not only that, the Auditor-General was alerted as early as 2009 by myself and several others via detailed legal submissions that the EcoCare rates that the KDC proposed to pass were in blatant breach of the Local Government (Rating) Act. The Auditor-General would have nothing to do with it and (quoting the fundamental principle of administrative law referred to above) advised that it was for the courts to decide whether the actions were unlawful.

It should be noted that the Auditor-General is an officer of parliament, appointed by Parliament and disciplined and fired by Parliament. Parliament is responsible for her actions. And that means her actions both as auditor for local government and in her role as watch-dog for local government. Her task is to keep local authorities within the law. In that she failed miserably and parliament must accept responsibility for that.

But the Auditor-General was not the only one. The Minister of Local Government was also alerted to the details of the unlawful activities of the KDC and refused to take any action against the council, save putting it “on watch”. Subsequent advice from ratepayers about unlawful action failed to elicit any response.

Likewise, ratepayers wrote to John Key himself alerting him to the situation but, again, without any success.

It is absolutely clear that, with eyes wide open, the government allowed the Kaipara rort to proceed uninterrupted. Not only that, the failure of the government and its agents to act and to curb the flouting of the law, gave encouragement to the rorters to continue the pillage of Kaipara in full knowledge that they had the tacit approval of the authorities.

Greg Gent’s question raised the issue of why councillors are not made responsible for their actions like company directors are.

The responsibilities of company directors were set down recently in the Nathan case by Justice Paul Heath and we were disappointed in the High Court judicial review that the MRRA brought that Heath J failed to extend some of those obligations to elected councillors.

The Local Government Act does make elected councillors responsible for losses suffered by their council but I understand that the provisions (sections 44-46) have never been used. The provisions cover the situation where the local authority has incurred a loss through the actions of its councillors.

The main point is that any recovery action has to be triggered by our old friend the Auditor-General. In respect of the KDC’s losses the Auditor-General was requested by counsel for the MRRA to trigger the provisions but she refused to do so on the grounds that a case could not be made for liability.

There is very little doubt that the chief executive at the time, Jack McKerchar, was negligent. In addition he probably had professional indemnity insurance to cover any liability. But for reasons unknown the government-appointed commissioners refused to sue him for damages and issued minor proceedings in the Employment Court which appear to relate only to his golden handshake.

It was the same with the KDC’s consultant Beca and its lawyers who should have shouldered a large part of the burden of the debt. The commissioners advised that no action would be taken against them.

As we know, proceedings were issued against the Auditor-General but far too late. Proceedings should have been filed in 2012 when the commissioners took power and the limitation period would have stopped running. The miserly $5 million settlement was all too predictable and simply window dressing to cover a done-deal behind the scenes between the two parties, no doubt on the initiative of the government and the Department of Internal Affairs.

In short the failure to hold other parties accountable for the KDC losses, by employing the provisions of the LGA and the law of negligence, all stem from the failure or refusal of the government-appointed commissioners to take the appropriate actions.

So not only did John Key’s government stand by and allow the losses to be incurred, it also thwarted any actions taken to recover those losses from those who were responsible.

No, we do not want any hand-outs. We just want the government to front up and pay for the losses that it was responsible for.

ANOTHER MONEY-GRAB    13.06.2016
Many of us have been denied our statutory right to be consulted and make submissions on the wastewater proposals that Honest John is pushing through. See post below (THIS IS GOVERNANCE AT ITS WORST).

I have to admit that I have not perused the proposals in detail because I came unstuck when I read the following about the issues that the proposal was tackling.

4 The Issues - Onsite wastewater treatment systems

4.1 Sensitive receiving environments

The Kaipara District Plan recognises the importance of natural and physical resources, the life-supporting processes they contribute to the people, the mauri or life force that binds these environments together, and the value placed by the district’s residents on these sensitive receiving environments. These environments are largely along or around waterways within the district.

There is well documented evidence and acceptance that privately owned onsite wastewater systems at Mangawhai have contributed to the degradation of the water quality in the Mangawhai Harbour with associated public health, safety and environmental issues. Onsite wastewater systems are still a concern for the ongoing health of sensitive receiving environments. Despite a new wastewater system in Mangawhai there are ongoing concerns regarding onsite wastewater system failures around the area and the potential continuation of the degradation of water quality in the Mangawhai Harbour with associated public health, safety and environmental issues. There are still some septic tank connections within the Mangawhai Wastewater Drainage District.

One would like to think that the courts interpret the law based on the black letter of the law. In other words, what does the law say and how is it applied to the situation before the court? The political overtones should be irrelevant.

Scientific analysis is the same. It should be empirical in nature. That is, based on testing and experience, and not based on some pie in the sky theory.

We have already seen how the EcoCare lemon was promoted on the basis that the Mangawhai Harbour was dreadfully polluted and the lemon was to be its salvation.

Honest John has now admitted that in fact no testing of the Harbour had been carried out when those pronouncements were made or subsequently. Only now is the KDC actually planning to test the water for pollution.

It is therefore somewhat surprising that the wastewater proposal makes the statements that it does.

We can disregard the “mauri” altogether. Spiritual beliefs have no place in in scientific investigation.

But it is the ex-cathedra statements that draw the attention. Let us look at them:

There is well documented evidence and acceptance that privately owned onsite wastewater systems at Mangawhai have contributed to the degradation of the water quality in the Mangawhai Harbour with associated public health, safety and environmental issues.

According to the proposal, there is not only evidence of degradation resulting from private systems, but there is well documented evidence. And, more than that, the evidence has been accepted. Accepted by whom is not clear.

All of which appears to fly in the face of the facts. From what I understand there is absolutely no scientific evidence that the Harbour is polluted. There is no evidence that any pollution is caused by private wastewater systems.

The proposal then goes on to consider the “ongoing concerns” about private systems polluting the harbour, but without identifying the source of those concerns.

If Honest John wants to get into speculation then why is he ignoring the effect of bovine discharges on the Harbour? That is a massive issue nationwide for our waterways.

This part of the proposal is nothing but a shocking con job and its glib, baseless conclusions destroy the credibility of the whole proposal.

This looks like another shonky proposal to milk more money out of ratepayers. Just like the fire service regulations. The aim is tie the ratepayer up with bureaucratic regulations ostensibly based on health and safety considerations when they are nothing more than money-grabs.

I have sent an Official Information request to the KDC requesting:

• The name of the author of the proposal.

• Copies of the “well documented evidence”.

• Who has accepted that evidence?

• Who has “expressed ongoing concerns” about private wastewater systems and on what basis?

Somewhat surprisingly Honest John and his crew decided to introduce a whole new policy and bylaws relating to waste water. This is what the KDC website says:

We want to know what you think about projects and issues that affect our district.

We rely on you to get involved and have your say on the future of your community.

We welcome your input, ideas and suggestions.

Your input and the information you provide will help us with our decisions.

The website includes links to the proposal, the formal statement of proposal, and the public notice.

The only problem was that when I visited the site the links were down and led nowhere. I tried for a few days but without any success. My intention was to do a full report on this website to encourage ratepayers to lodge submissions prior to the closing date.

On 25 May I emailed the KDC advising that the links weren’t working and asked them to advise me when they were working. I received a response on 26 May:

Thank you for your email regarding issues with the Council website.

I have forwarded this issue to the IT Department to investigate.

If you require any further assistance please email council@kaipara.govt.nz or phone 0800 727 059 Monday to Friday 8 am to 4.30 pm.

Regards Fay Fergus

After receiving the letter I tried the website for a few days but the links were still down.

I received no further advice from the KDC advising that the links were fixed. I presumed, wrongly, that it would extend me the courtesy, as I had requested, of advising when the links were functioning.

I have checked today and the links are working. The only problem is that the website states:


The submission period has now closed.

The submission period was from 1 May to 1 June and it is unknown how long the links were down during that period.

Now it is unclear whether the broken links was deliberate or whether it was just an IT glitch. One would like to think that it was not deliberate, but, given the track record of Honest John and his mates for governance and transparency, it would not be out of synch with previous performances.

But, whatever the cause of the problem, ratepayers were denied their rights of consultation as required specifically by the Local Government Act and more generally by the obligation of the KDC to act in a transparent way and in accordance with the principles of good governance.

The Local Government Act and the Local Government (Rating) Act introduced new provisions that demanded accountability from local authorities and gave ratepayers the right to extensive consultation before any decisions were made by the council.

The whole accountability process has become a charade with most councils, and the KDC under the commissioners has made an art form of ducking and diving to avoid any accountability. There is a lot of talk and flag-waving about the democratic process of consultation, but the reality is that it is denied by little tricks such as we have here. And any consultation that does take place is simply ignored.

A responsible council would acknowledge the failed consultation in this instance and would re-advertise the proposal with a new consultation period.

But don’t hold your breath. Honest John is not known for his compliance with the law and it will be like water of a duck’s back. Only a few months to go and he will be rid of the whole pathetic saga.

As an aside, one wonders why Honest John is pushing through a proposal of this type just months before he quits.

He has already appointed a chief executive for 4 years who simply does not fit the bill. Now he is introducing new fundamental policies and bylaws. Surely these should have all been left to the new council.

Which leads us into even more major decision-making in respect of the fire service regulations. See the post below.

Those who made submissions on the Fire Service regulations some time ago have today received an email updating the situation:

You are receiving this because you have been a submitter to Plan Change 2 – Fire Safety. This is to keep you informed of what has happened since you made your submission.

Please read the attached information carefully or click HERE to go to Council’s website to read this update.

This is to inform you of what Council have been working on since you made your submission.

Council have investigated the Fire Safety Rules further and are considering a new approach and would like your thoughts on the scope of this new approach.

This means that Plan Change 2 will need to be withdrawn.

We would like your feedback on the potential new approach prior to a new Plan Change being notified.

Please provide these by return email to planchanges@kaipara.govt.nz or by post to Private Bag 1001, Dargaville 0340 by Thursday 30 June 2016.

There is link on the website, which is working today, that sets out the proposal.

Again, one has to wonder why, having delayed the matter for over a year, Honest John is now asking submitters to provide their further submissions “by return email” and the consultation period is limited to only 20 days.

This is an important issue that should not be decided by government imposed commissioners whose terms of reference and political instructions come directly from Wellington.  The issue is fundamental to the development of Kaipara and any decision must be made by the people independently of any pressure from the government or the fire service.

One gets the distinct impression that there is pressure on Honest John to force through all of these proposals before he quits because the powers behind the throne know that it is unlikely they will be adopted by the new council.

Only one candidate has put his name forward as Mayor – Greg Gent - but it would be helpful for each Mayoral candidate to publicly announce how they stand on the important proposals that Honest John is rushing through, and whether they should be left for the incoming council to consider.

Kaipara’s worst kept secret is now out.

Greg Gent, local farmer who led the review team into the Tiller/Geange debacle and persuaded the councillors to request the appointment of commissioners and cancel democracy, has advised that he will be standing for Mayor in the October election.

Details are available in the Kaipara Lifestyler.

Gent has yet to announce who will be on his ticket but it is likely that he and Associate Minister of Local Government Louise Upston and the Department of Infernal Affairs have that one organised.

Stage one was the announcement of castrated democracy with the supposedly democratic council being subject to the orders of new Crown Manager and the new Crown Observer.

Stage two was the announcement of Greg Gent’s candidacy for Mayor.

The third stage will be the announcement of his running mates. Expect some dyed-in–the wool National Party folk to emerge from the woodwork.

No doubt the plan is to ensure that all the secrets of the past remain hidden and that those responsible for the community being dumped with an unlawful debt remain out of the reach of the law.  He has declared himself to be a supporter of the commissioners, so expect his policies to be the same if he is elected.

It will be interesting to see, if he is elected, whether he continues the Kaipara (and NRC) tradition of setting rates unlawfully.

Except for his role on the review team he has no experience in local government. He says:

From that base I will need to build my knowledge. I would also strongly encourage all new councillors to undergo appropriate and ongoing training so they can fill their roles effectively.

We may well end up with a mayor with no real experiences in local government. We can take it as read that that the elected councillors will know nothing. And we all know that Honest John has appointed a new chief executive who has absolutely no experience or knowledge of local government.

That sounds like a pretty experienced team to try and put back together one of the most dysfunctional councils that New Zealand has ever experienced.

What has happened to the Fourth Estate in New Zealand?

The “Fourth Estate”, as it is understood today, was coined by Edmund Burke in a parliamentary debate in 1787 when newspapers commenced reporting the debates in the House in the UK. Today it means the press and the media.

The understanding is that the Fourth Estate, by reporting on the actions and decisions of the first three estates, and subjecting them to public scrutiny, keeps those other estates honest and accountable.

History has shown that democracies only flourish where the Fourth Estate is strong and fearlessly exposes the excesses of the other estates.

Sadly, as in many modern democracies, the voice of the free press has been silenced because of its financial involvement in big business which runs most modern democracies. The Press, like many appointed watchdogs, has been captured by those who it is supposed to expose.

We have seen over the past six years how the KDC was allowed to run amok and totally outside the law whilst the watchdogs and the government did nothing. The newspapers throughout the period simply printed the propaganda straight from the media releases of the outlaws and never stopped to inquire if the complaints of ratepayers were justified.

Ratepayers were dumped with unlawful rates and unlawful debts, with Parliament imposing retroactive legislation to legalise the rorts of the past, without any murmur from the Fourth Estate. No one in the media quibbled when democracy was denied to Kaipara for four years.

It still goes on. John Key was allowed to get away with his dictatorial comments about appointing commissioners in Auckland City, and the media has been singularly quiet about his intentions to emasculate democracy in Kaipara. This time by appointing a Crown Manager and a Crown Observer to whom the supposedly “free” council will be accountable.

Except for Q & A and The Nation on the weekend there is no media pressure on politicians. We are fed a diet of pap and comatose inducing TV and Mike Hosking serenades us nightly with his view of John Keysian Utopia. Our newspapers seem frightened to enter into any serious criticism of the government

Jane Bowron looks at the issue in a Stuff article Whatever happened to interviewing politicians? She comments:

Seven Sharp and Story have pretty much given up any pretence of actually interviewing politicians and holding them to account. These 'current affairs' shows have become increasingly irrelevant as National Party fan Mike Hosking is allowed an unbridled free political party shot with his end of programme nightly rants.

She adds:

The nightly 6pm news bulletins on both channels give only soundbites to set pieces of politicians bailed up in the corridors of power, or wearing hard hats and hairnets visiting building sites or dwindling industries before the plug is pulled on them, all done in front of a chorus of nodding sycophants huddling in the background shot, the best noddy award going to the Minister for 1080 Maggie Barry.

Interestingly, the NZ Herald has included a piece from Catriona McLennan, a barrister and former political reporter headed Government riding roughshod over democracy. The article refers to the government vetoing the parental leave private member’s bill before Parliament. The government has the right of veto the bill if it has “a more than minor Impact on the Government’s fiscal aggregates if it became law.”

In the past the veto has only be used to veto parts of a bill. However the National Party intends to veto the whole Bill despite the fact that it has majority support in the House. It will do so without establishing that the Bill will cause more than a minor impact. It will simply refer to the right to veto and crunch parliamentary democracy.

The author states:

This appears unprecedented. It is also anti-democratic. A majority supports the Bill. The provisions have been thoroughly debated – they have been to select committee twice.

But John Key will go ahead simply because no one confronts him with his undemocratic actions. It’s not so much that the Teflon boys have applied a thick coating to his hide, it is simply that the Fourth Estate is no longer willing to front up and ask the appropriate questions. Like the tale of the Emperor’s new clothes, they suck in the fantasy about Teflon John and allow him unlimited latitude.

A sad state of affairs. That was the understatement of Brian Rudman in the NZ Herald describing John Key’s latest dictatorial aberrations in respect of his peremptory orders to Auckland City.

He comments

In recent days, it's as though Auckland has transmogrified into Isis-controlled Fallujah, and Wellington-based President John Key and his deputy, Bill English, are about to invade the Queen City to rescue it from its evil council.

This all stems from John Key’s threat that if the Auckland Council did not bow to his demands then he would appoint commissioners to take over the council. The demands in question relate to the freeing up of land as required by the government’ which at that time had not been formulated.

"Mark my words," he told reporters after being asked about the possibilities for dealing with an uncooperative council.

The Prime Minister, no doubt sucked in by his own “Teflon John” moniker, appears to forget that local government in New Zealand is run independently of central government. Councillors are elected by democratic vote of ratepayers and it is the responsibility of local authorities to act in accordance with the law and in the best interests of ratepayers. Central government has a minimal part to play in local government.

John Key has absolutely no legal power to intervene in the affairs of local government and to do so, or to threaten to do so, was a fundamental breach of our democratic system of government.

In issuing the threats John Key was no doubt seeking to exercise the extensive powers that the National government granted itself in amending the Local Government Act (LGA) in 2012. That Act previously only allowed the Minister of Local Government to intervene where a local authority was out of control but the powers were limited and procedurally complex. The 2012 amendment gave much broader powers for the Minister of Local Government to intervene and to do so quickly.

However, the new powers are statutory powers that must be exercised by the Minister of Local Government, and they must be exercised strictly in accordance with the procedures laid down in the LGA. They do not grant any personal powers to the Prime Minister and they certainly do not allow the Prime Minister to issue ad hoc orders to a local authority and threaten the appointment of commissioners if the authority does not obey his instructions.

Brian Rudman suggests that the dictatorial attitude of John Key is “a sad state of affairs”. It is far worse than that. Given John Key’s approach in Auckland, his effective denial of democracy in Kaipara, and the ongoing denial of democracy in Environment Canterbury, we are seeing a government that is moving more and more towards an autocracy and imposing its political will by Prime Ministerial edict.

Dave McGillivray, a staunch opponent of the oppression of Honest John and his mates, has alerted me to an article in the Northern Advocate about rates on Maori Land and the initiative of Far North District Council Mayor John Carter to resolve the historic problem of non-payment of rates.

According to the article, the FNDC has changed its approach to rating Maori land, has remitted historic rates debts, and, with the cooperation of the Ngakahu Whanau Ahu Whenua Trust, has brought neglected land into production with current rates being paid.

It appears that the previously rates had been charged unfairly with the uniform annual general charge (UAGC) being levied against each multiple owner rather than one charge being levied against the land. Those rates have now been remitted.

There is a bit of spin in that, and a large degree of generosity towards the FNDC. Let’s look at the legal situation:

1. If it did charge multiple UAGCs against a single property then the FNDC was clearly in breach of the law. Section 15 of the LGA states quite clearly that a UAGC is a “fixed amount per rating unit”.

2. The rates charged were therefore unlawful and the rates assessment notices and the rates invoices were unlawful because they included rates that were unlawful. Accordingly the ratepayers had no liability for the rates.

3. Any penalties added to unpaid rates were unlawful because the rates assessments and invoices were defective.

4. The obligation on the council was to issue corrected rates assessments and rates invoices. In such circumstances any penalties charged would be wiped because they were added to unlawful rates.

It seems to me that the FNDC did not “change” its approach to rating but corrected a system that was unlawful.

However, whatever the reason and irrespective of the spin, one has to commend the actions of the FNDC.

Compare Honest John’s approach in respect of the KDC.

Ratepayers in Kaipara went on rate strike to force the KDC to stop acting unlawfully in both setting rates and making unlawful decisions in respect of EcoCare. The KDC refused to take action for several years and responded eventually by promoting the Validation Act.

Retrospective legislation is an attack on the rule of law but is justifiable in some extreme circumstances. What was utterly unforgivable about Honest John’s Validation Bill was that it changed the law for a case that was already due to be heard by the High Court a month or so later.

Not only that, Honest John sneaked into the Validation Act levies that had been raised unlawfully by Jack McKerchar (the infamous “unit of demand” levy) which were completely outside the law.

Not content with that, in a decision born out of spite and retribution, Honest John refused to remit the penalties that had been added to the unpaid rates of rate-strikers.

Ratepayers were willing to pay their rates but not the penalties, and presented their cheques to the KDC. They were rejected.

By accepting this compromise Honest John could have resolved much of the bitterness that has ensued and the current cases in the High Court. Instead he sought his full pound of flesh to feed to the baying banks and created a resentment against his regime that can never be cured.

The folly of Honest John’s greed was exposed in the High Court appeal in the rates recovery action by the KDC against Bruce and Heather Rogan. The Rogans always maintained that they would pay the rates when lawful rates assessments and rates invoices were delivered to them. Counsel for the Rogans presented compelling evidence to the court that all the documents delivered to the Rogan were non-compliant with the requirements of the LGRA.

Duffy J posed a question to counsel for the KDC:

If Mr and Mrs Rogan had offered to pay the outstanding rates when legally valid rates assessments and rates invoices were delivered to them, as required by the LGRA, why did the council not simply deliver legally correct forms?

The answer from KDC’s counsel stunned the court.

Because the KDC would then have to forego all the penalties that had been charged.

Duffy J addressed counsel for the KDC and pointed out that if the forms were non-compliant then any penalties added were unlawful. She also questioned rhetorically whether the loss of the penalties could be seen as a punishment for the KDC for failing to comply with the legislation. She also asked whether the loss of penalties might encourage the KDC to be more careful in drafting rating documents in the future.

We don’t know what the outcome of the case will be but Honest John will be sweating. He may be wishing that he had foregone the penalties and made an effort to build bridges rather than trying to oppress ratepayers. Like the FNDC has done with Maori land.

Sometimes the carrot works better than the stick.

Honest John and ratepayers

All stick and no carrot

Louise Upston has finally announced what we all expected, that democracy will not return to Kaipara. She is going to appoint a Crown Manager and a Crown Observer who will effectively run the council

Of course, she doesn’t actual say that they will run the Council. If you read the article in the Northern Advocate you will note how democracy and its importance is a fundamental part of the message that the Associate Minister is promoting. But, while her words wave the flag of democracy and its so-called return to Kaipara, the reality is that democracy is being quashed for another three years.

The election is being stitched up with the government promoting a National Party ticket to take over the Council led by Greg Gent, staunch National Party supporter, unconditional advocate on behalf of the commissioners, and the person who contrived the demise of democracy in 2012.

That is bad in itself. But she is appointing a Crown Manager:

"I will appoint a Crown Manager to take responsibility for certain outstanding legal actions, on behalf of the newly-elected council. Newly-elected council members will then be able to focus on providing effective governance and on the district's future, rather than being distracted by past issues."

In other words the new council will have absolutely no say in what happened in the past in respect of EcoCare and all the other unlawful actions perpetrated by both the previous council and the commissioners.

John Key is wetting himself at the thought that a democratic council might challenge the validity of the unlawful EcoCare debt, and press for compensation from those responsible for the debacle, including his own government who knowingly allowed the trough-feeders to plunder Kaipara.

A Crown Manager acting in the interests solely of the government will ensure that ratepayers have no voice at all, and John Key’s worst nightmare – that democracy rears its ugly head in Kaipara – is forestalled.

Louise Upston suggests amid all the smoke and mirrors that the Crown Manager is appointed to "assist the new elected members, so that they will not distracted by past issues”.

The truth is that a Crown Manager has virtually absolute power. Section 258D of the Local Government Act states:

6) A local authority must—

(a) co-operate with a Crown Manager so that he or she may fulfil his or her terms of reference; and

(b) comply with the directions of a Crown Manager;

Please Mrs Upston, where does democracy come into that equation?

It is the same with the Crown Observer. This is the incredible spin that Louise Upston puts on her decision to deprive Kaipara of its democracy:

"It is important that newly-elected council members have the right support to be successful in their demanding and complex role. With this in mind, I will also appoint a Crown Observer to help ensure newly-elected council members are well supported. The Crown Observer will not be involved in decision-making and will only offer advice or guidance."

That is simply not correct.  The office of Crown Observer is a statutory office that has vested in it certain statutory powers.  One of those is that the local authoirty must cooperate with the Crown Observer. In other words, any advice given must be followed. 

Instead of three dictators under the guise of commissioners the government is now appointing two dictators who will run the show and leave the elected members as a vestige of the democracy that we used to have.  They will be useful for opening rest homes and citizenship ceremonies.

What the Associate Minister is really saying is:

The government has stitched up Kaipara nicely and we are not going to take any chances that a democratically elected council will undo all of the good work we have done to protect the banks and the trough-feeders, and, heaven forbid, a new council might put the interests of rate-payers first. We are therefore appointing two dictator who will have absolute power to run the council according to the dictates of the government. The elected members will have to do as they are told and if they don’t they will be replaced by commissioners as quickly as you can say ‘third term arrogance”

This totalitarianism clothed as democracy was predicted by Aldous Huxley, British writer and philosopher, writing in the 1930s and 1940s:

Under the relentless thrust of accelerating over-population and over-organization, and by means of ever more effective methods of mind-manipulation, the democracies will change their nature; the quaint old forms--elections, parliaments, Supreme Courts and all the rest--will remain. The underlying substance will be a new kind of non-violent totalitarianism. All the traditional names, all the hallowed slogans will remain exactly what they were in the good old days. Democracy and freedom will be the theme of every broadcast and editorial--but democracy and freedom in a strictly Pickwickian sense. Meanwhile the ruling oligarchy and its highly trained elite of soldiers, policemen, thought-manufacturers and mind-manipulators will quietly run the show as they see fit.

Do the people of Kaipara want to stop this onslaught on democracy? And if so, how do they tackle the government proposals for Kaipara?

The other major parties showed no inclination to help us during the Validation Bill disgrace. Only Winston Peters and New Zealand First supported our clamour for fairness, the rule of law and a return to democracy.

How about Winston for Mayor of Kaipara?

MUST READS    28.05.2016
If you want to understand the psyche of trough feeders who runs central and local government then I commend to you Worzel’s World - the Power of Human Stupidity - in the latest Mangawhai Focus. Worzel paints a sombre picture of those who run our government:

We are governed by people who are demonstrable failures, liars and cheats to boot. Somehow right and wrong have become confused with legal and illegal. No longer do the contrived laws passed by our inept politicians align with what is right or what is just.

The emperors, and there are far too many of them, have no clothes and no money to buy any. The kingdom is bankrupt, in thrall to foreign powers, yet our many emperors still pay themselves lavishly at the peasants expense all the while reassuring everybody that all is well. Anyone, even the very stupid, need only take an objective look around to know that all is a long way from well. The majority of us simply shrug it all off and refuse to acknowledge the awful truth.

He also has strong words from for those who are sucked in by those who govern:

Despite such obvious incompetence they are still sufficiently shameless to tell us what a good job they are doing running the country. And incredibly there are still those that believe them. The one thing they have got right is they have not underestimated the power of human stupidity.

In the same edition of the Focus, have a read of a letter to the editor from Anthony Roberts of Mangawhai headed Greed and CamouflageHe makes the telling comment:

Regrettably there are times as in Mangawhai that the 700-pound gorilla* called the government have had the upper hand.
The law may be, but that does not make it right.

* a person or organization so powerful that it can act without regard to the rights of others or the law.

The commissioners are not going through a formal consultation process with this year’s annual plan because the annual plan is not, in their words, significantly different to the LTP of last year. However, the commissioners are seeking “feed-back” on the “small, but good changes” that are proposed.

As Christian Simon points out in his letter to the Editor in the Mangawhai Focus, there is a significant change to the LTP. In the annual plan the commissioners have decided to pour another $664,000 of ratepayers’ money into the EcoCare Ponzi Scheme without any formal consultation. This was not mentioned in the LTP.

But, as we all know, anything to do with EcoCare does not need consultation. That, of course, is precisely what the previous council did when it originally commissioned the lemon, unlawfully. And even though the High Court declared the decision to be unlawful, parliament and the courts gave the KDC a free pass.

The problem is that we are stuck with that lemon, whether it works or not. Not only are we compelled by the government to pay the rip-off price for an unlawful lemon which is not fit for purpose, we have been forced for the past four years by the government’s agents to squander more money on patching up the lemon.  With Louise Upston's announcement (scroll down), it appears that the coercion will continue when the government appoints a “minder” in October to ensure that the lemon keeps sucking in ratepayers’ money in years to come.

The problem is that having forced us to pay for the lemon, the government and its agents cannot be seen to admit that the lemon is a lemon. It is a bit like the Emperor’s New Clothes; it is the ultimate confidence trick. It is all fluff, fantasy and spin.

Just how many millions have been spent in the last four years feeding the lemon that was supposed to service 4.500 properties but only does 1,750 and has reached its capacity?

What happened to all the work of Harrison Grierson over the last year or so developing options for the future, all of which have been committed to the junk bin without any further comment?

When is Honest John, and whoever may succeed him, going to call an end to the farce, have EcoCare properly and independently assessed on a fit for purpose basis, and then make sensible decisions about options for the future? Just as Christian Simon has been telling us for years.

These are the sort of questions that Honest John should be answering in his Your Questions Answered column in the Focus.

Is Honest John telling porkies in his latest Your Questions Answered column in the Focus?

Judge for yourself. This is what he says about the latest pay out from the Mangawhai Endowment Fund (now called the Mangawhai Endowment Lands Account (MELA)):

The Mangawhai Endowment Lands Account is a council reserve with a capital base of over $5 million from which income is derived.

Point one: The monies in the fund were held by the KDC and spent on other matters during the out of control EcoCare days. The Auditor-General in her report could not track down where the monies went.

Point two: The monies do not exist. They are simply a book entry, which effectively says that the KDC owes Mangawhai ratepayers that money.

Point three: No income is derived from the fund, as suggested by Honest John because the fund does not exist. The commissioners simply calculate what the annual return would be if the fund did exist and then allocate funds from that amount. The so called “income” comes from the rates paid by all ratepayers across the district

Point four: If the fund was separately invested then income would be available from a third party e.g. a bank. Under the present system ratepayers are effectively paying the interest themselves out of their rate payments.

Point five:  If the capital is paid out to beneficiaries, there is no money in the fund to pay out.  The commissioners simply take the amount from the rates paid by ratepayers across the district.

Point six:  The fund was invested through the KDC.  The fund was used by the KDC for another prupose.  (In common parlance, it was stolen.)  Ratepayers are now compelled to pay out of their rates the nominal interest that would have accrued if the monies had been invested.  If the capital is paid out then that so-called capital has to be paid out of rates.

Point six:  If Honest John invested his retirement fund with a trustee, would he be happy if the fund was stolen; if he was billed an annual fee so that nominal interest could be paid to him; and when he asked for repayment of the capital he was told that he would first have to deposit that amount of money with the trustee?

The cat is finally out of the bag.

Kaiparaconcerns has warned for some time now that John Key would not allow democracy to return to Kaipara.

For four years he has suspended democracy and appointed commissioners to ensure that his policies relating to local government were imposed on the people of the district.

That meant insuring that the ratepayers of the district were forced to pay the massive unlawful EcoCare debt. In addition the unlawful rates set over 5 years were validated by parliament retroactively, with the government insisting that the draconian penalties charged should remain to teach revolting ratepayers a lesson.

It also meant that all those responsible for the legal and financial debacle - KDC’s chief executive at the time and his staff, the elected councillors, the KDC’s legal advisers and consultant, Audit New Zealand as auditor, the OAG as principal auditor and watchdog of local government, and the Minister of Local Government and the National government itself – were to be allowed to escape without any accountability.

On paper the commissioners have done well. Parliament has white-washed all the illegalities and the District Court, the High Court and the Court of Appeal have both surprisingly interpreted the law on a political basis whilst ignoring the black letter of the law.

However the “occupation years” have left a deep feeling of resentment in the community, festering sores that will simply not go away.

Allowing democracy to return to Kaipara was never on the cards for the government. A liberal council would open the books and reveal the true state of the KDC’s finances, reveal the shenanigans of the past, and open the vault where all the skeletons are buried away. Many of the dealings of upstanding citizens might be exposed to the laser light of public opinion.

And then there is the outstanding High Court judicial review which could take the lid off Pandora’s Box when it comes to the legality of past rates.

Time is running out with nominations due soon for councillors and Mayor, and John Key had to show his hand.

The cards are now being play, slowly, and (to mix metaphors) all the pieces of the jigsaw are now falling into place.

Greg Gent ticket
The Mangawhai Focus spilt the beans first. It confirmed the district’s worst kept secret that Greg Gent, who single-handedly persuaded the previous council to resign and request the Minister to appoint commissioners in 2012, is to lead a National Party ticket to take over the council.

Greg Gent is a strong supporter of the commissioners and the policies of the commissioners and will ensure that the policies of the current regime continue whilst the skeletons remained locked in the vault.

Unsurprisingly, the Associate Minister of Local Government, Louise Upston, who has been passed the poisoned chalice of the Kaipara by Minister Peseta Sam Lotu-Iiga, made her move this week. The report of her comments can be seen in the Kaipara Lifestyler of 23 May.

Associate Minister of Local Government, Louise Upston

Clearly the Minister, and no doubt the infamous Department of Internal Affairs (the DIA not the CIA), have been working behind the scenes to ensure that a council acceptable to the government is elected in October. The Lifestyler article reports:

Ms Upston has held a series of meetings in the Kaipara to encourage voter participation in October.

The Associate Minister made a similar announcement about meetings last year when she suspended democracy for a further year. She met only those people who allied themselves to the National Party’s coat tails.

"A line in the sand"
Apparently John Key’s government is going to draw “a line in the sand” over the past and ensure that those elected in 20016 are not responsible for what went on in the past. In other words he is going to legally block off the past so that it is no longer legally actionable.

This is what the Associate Minister said:

“My concern was that we would get to the local body election and some of the legal processes would be carried on. I want to provide some comfort for those thinking of standing for council that they won’t inherit that baggage and risk. I am looking at options to draw a line in the sand and say actually if you are elected onto council that won’t be part of your responsibility.”

Such a move goes to the very heart of what local government is all about and the fundamental democratic process. It suggests that the legal rights of ratepayers restated in the New Zealand Bill of Rights Act are going to be overridden in some undemocratic way.

Under section 12 of the LGA a local authority is “a body corporate with perpetual succession”. If John Key is going to draw “a line in the sand” in respect of the past then it will have to be more than in the sand. He will effectively have to amend the legislation or introduce a Bill to legally terminate the old KDC and to legally create a new KDC to commence in 2016.

Such a device would have so many complications that it would be unworkable.

New chief executive
The appointment of an inexperienced new chief executive – train man Graham Sibery – is clearly part of the grand design. Just a week ago this website predicted that he was appointed despite having no experience or expertise in local government so that the Minister would have an excuse to appoint a “minder” to help him out.

These are the words that the Louise Upston uses to justify the appointment of a “minder”, or a “support person” as she euphemistically calls it:

“I am looking at options to provide a support person for the elected council for a period of time and also, recognising that there is a new chief executive coming on board in July, that person would also provide support to him in his job leading the organisation and his management team.

The Minister now has wide powers under the LGA to appoint “minders” to ensure that local authorities toe the line set down by central government.

The most likely appointment is that of Crown Observer who can be appointed where there is a significant problem relating to the local authority.

Significant problems abound: ongoing legal challenges, unqualified chief executive, perhaps an uncooperative new councillor.

Whilst the title is “observer”, the role is far wider. The Crown Observer has terms of reference laid down by the Minister, which like the current commissioners is all to do with politics and nothing to do with the welfare of the local community.

The Observer’s role is to “assist the local authority resolve the problem” which it was appointed to resolve, with "assist" being far stronger than offering advice. Section 258B(6) LGA states:

(6) A local authority must –

(a) co-operate with a Crown Observer so that he or she may fulfil his or her terms of reference;

Not quite the powers of commissioners, but not far off. If the local authority does not do as it is told by the Observer then in the wink of an eye commissioners will be back in Dargaville.

The smoke and mirrors brigade will be out in force with the “we are here to help you” spin, with selected comments from supporters extolling the virtues of the new proposals.

Don’t believe a word of it. Under the guise of “democracy” there will be no democracy at all. It is all calculated to ensure that you pay the debts incurred by your council whether legal or not, that you pay your rates whether legal or not. And so that you have no say in anything that is done by you council.

Ratepayers in Kaipara need to ask themselves whether they are going to allow the tyranny that has been imposed on them and will be re-imposed on them in October to continue.

John Key will allow this to proceed because he is Teflon John and nothing sticks. He knows that he can attack the foundations of democracy and get away with it because people in general simply do not care. He also knows that the media does not see the problem for what it is and does not care about what is going on in a backwater of the country.

If we are going to fight this attack on democracy then we need to tell the world what National is planning to do in Kaipara. Expose them to the world and shame them.

So, over to you ratepayers. You know what’s coming. Are you going to lie down and let John Key and his lackeys deprive you of your fundamental rights, or are you going to do something about it?

The ball is in your court.


Rates set and assessed including GST
One of the big issues before the High Court in the recent judicial review hearing was whether a local authority has the power to set and assess its rates “including GST”.

The LGRA makes it clear that the formal legal processes of setting and assessing can only relate to “rates” that are defined in the Act. GST is not a rate.  It is a tax that is added only when an invoice is issued later down the rating chain.

The MRRA argues that because an extraneous non-“rate” matter is introduced into the legal process then the setting and assessing of rates including GST is non-compliant with the Act.

The issue is of importance when penalties are added to rates. Under the LGRA penalties are added to the “rates assessed” and can be no more than 10 per cent of the rates assessed.

The KDC and NRC, along with just about every council in NZ, include the GST at the setting and assessing stages, rather than the later invoice stage. The result is the penalties are added to the rates and the GST.  So, if the rate is $1,000 the penalty will be $115 and not $100.  And, of course, this figure becomes significant when penalties are added to penalties on a compounding basis.

This is a windfall for councils that was not anticipated by the legislation. Not only that, as Duffy J noted in the High Court, by charging a 10 percent penalty on rates and on GST, the KDC and NRC were charging more than the 10 per cent on rates permitted under the Act.

It is interesting that the funding impact statement for the draft 2016/2017 annual plan therefore proposes rates that are expressed to be “including GST”.

The Council is running the risk that another year’s rates will be non-compliant with the LGRA. The funding impact statement is the source document on which the legal process of setting rates is founded. Thus, when rates are set by formal resolution they must be set under section 23 LGRA:

“in accordance with the relevant provisions of the local authority’s long-term plan and funding impact statement for that financial year”.

That means that once the annual plan, including the funding impact statement, is adopted by the KDC, the format of the rates is set in concrete. If the funding impact statement has rates “including GST” then so must the rates resolution.

And if the High Court decides that including GST at that stage is unlawful, all the rates for 2016/2017 will be unlawful.

There is only a month to go before the annual plan must be adopted and the rates set, and it is unlikely that the High Court decision will be available by then.

It is a real gamble for the commissioners. They can amend the format of the proposed rates before the annual plan is adopted next month and propose and set the rates without any GST and be guaranteed that the rates will be lawful. Or they can continue down the “including GST” track and run the risk of all the rates for 2016/2017 being unlawful, if that is what the High Court decides.

Pollution of the Mangawhai Harbour
Note this comment from the draft annual plan consultation document under Wastewater at page 15:

During last year, a community advisory panel worked with Council staff and experts to assess the future development of the Mangawhai Community Wastewater Scheme (MCWWS). We were all reminded that the scheme’s intent remains true – to protect the Mangawhai Harbour and groundwater from pollution from human waste(Emphasis added)

It is ironic that the pollution of the Harbour was supposedly the driving force behind EcoCare and yet it is not until the last few months that the Harbour has been properly tested for pollution.  "Save our Harbour" was the catch-cry of the predators who used it as a smoke-screen to pillage Kaipara via the EcoCare Ponzi scheme.

Many commentators have pointed out for years that even if there was pollution of the Harbour then it is more likely that it originated from bovine (cows) waste rather than human waste. The finger has been pointed at several farms bordering on the estuary.

It is noteworthy that those who farm those properties are ardent supporters of the commissioners and that the commissioners have now excluded possible bovine pollution from their agenda.

Number of connections to EcoCare
This is an issue where the facts are thin on the ground and from time to time the commissioners float all sorts of figures.  So it is worth looking at what the draft annual plan says.

Take a look at the table on page 8 of the funding impact statements. It shows that there are 1,686 residential connections to EcoCare with 41 Other. This Other presumably relates to separate units (SUIPs) which are charged an extra fee but do not have a separate connection to the system.

There are 117 pan charges for non-residential properties. There can be several pan charges per property so the number of connections is less than 117. Say. 60 actual connections.

That makes a total of about 1,750 actual existing connections to EcoCare.

Note that the disposal field is at the end of its capacity and the plant itself can only cope with more connections by downgrading the quality of the discharge. (Scroll down to ECOCARE PLANS 21.05.2016)

According to the Beca report in 2006 the extended scheme was supposed to cope with 4,500 connections.

Have some sympathy for those who own vacant sections which are deemed to be "capable of connection", because the sewer reticulation runs close to their properties. There are 521 of them. They now pay 75 per cent of the full connected charge amounting to $833.33 per annum even though they are not connected to, and do not use the service.

The irony of this is that they are paying because they are “connectable”, but the problem is that scheme does not have the capacity to cope with that number of extra connections. They couldn’t connect if they wanted to. In the days of “user pays” they are being forced to pay for a service that is not available.

In the latest Mangawhai Focus the Editor effectively banned Bruce Rogan from the columns of his newspaper (scroll down to LACK OF FOCUS 21.05.2016). The basis for this banning edict appears to be that Bruce Rogan refutes and discredits “every column or comment from the commissioners”. It amounts to a barrage of rhetoric that the Editor believes his readers should be protected from.

I won’t go into any depth about dictatorships and how important control of the press is. But it is deplorable that a local newspaper in Mangawhai in 2016 should become an unquestioning lackey to the undemocratic regime that has forcible compelled ratepayers of the District to bear the responsibility of a debt that is not theirs.

Has it ever occurred to the Editor of the Focus that Bruce Rogan “refutes and discredits” so much because there is so much to refute and discredit.

Enough said, but just to put the record straight about the actual content of Bruce Rogan’s letter that triggered the knee-jerk reaction from the Focus. The letter pointed out that the last legally consulted amount for the EcoCare project was $17 million dollars.

For those interested, here are the bare facts without any barrage or rhetoric:

• The original Statement of Proposal for the Simon Engineering scheme was dated 23 July 2003. This proposal was fully consulted on in compliance with the LGA

The only reference to cost is on page 23:

Council pre-tender estimates are for capital costs of less than $17 million and annual costs in the order of $800,000 per annum with adjustments for inflation and population growth.

• The second statement of proposal dated February 2006 related to the proposal advanced by Earthtech (which changed its name in 2008 to Water Infrastructure Group).

The costs were set out as follows (page 13):

Capital Costs of Project

The capital costs of the project are $35.6 M (excluding GST) but including capitalised interest and Council fees. This includes provision for:

Reticulation of the current urban areas,

Connection of established households,

Establishment of the sewer transfer network between Mangawhai Heads, Mangawhai Village and the Treatment Plant site in Mangawhai Park,

Establishment of Treatment Plant in Mangawhai Park, and

Disposal and or reuse of treated wastewater and biosolids.

In addition to the capital costs of the project the cost of financing the loan must also be addressed as this is a significant component of the overall cost.

The only problem with this second statement of proposal was that it was completely unlawful. Under s 97 LGA a local authority is obliged to consult with ratepayers through a statement of proposal before making any decision to commence a significant activity.

In late 2005, long before the SOP was released, the KDC had secretly resolved to commit to the EcoCare project and had signed the Project Deed and all the loan agreements to finance the project. It was already a done deal.

That is why the High Court declared that the entry into the Project Deed and the loan agreements was unlawful.

The only lawful consultation with ratepayers was therefore the 2003 statement of proposal for $17 million.

Is the appointment of Graham Sibery further evidence that Honest John has lost the plot?

Through the haze of smoke and behind the mirrors of Honest John’s spin machine the intelligence is that Honest John and his two side-kicks have had enough and want out. October cannot come soon enough.

They came in nearly four years ago with all the cockiness of autocrats backed by the big guns of government. They thought that they could move in, dump the illegal debt on ratepayers, trample all opposition, extract the last pound of flesh for the banks, and ensure that John Key's vision of local government, with ratepayers compelled to provide endless sustenance for the trough-feeders, was set in concrete.

With mission accomplished they could then swan off to another junket.

Perhaps they could award themselves another McGredyWinder award for excellence, this time in the art of subjugation of democracy and the rule of law. Perhaps the Auditor-General could be a judge, as she was for their last self-award.

The reality is that they have been abject failures. Despite the efforts of the establishment to crush ratepayers’ rights there is a glimmer of hope that the courts will finally come to the rescue of the rule of law and acknowledge the illegalities perpetrated during the commissioners’ regime for what they are.

The recipe for custard is there. It just needs stirring.

In short, the dream junket has turned into a nightmare for all three commissioners and has forever blotted their CVs. Nothing like an abject failure on your record card.

So, why appoint Graham Sibery with no experience in local government to head a cot-case council that desperately needs a person with a depth of local government expertise and experience?

And why appoint him for the maximum term of 4 years so that the new council is effectively hog-tied by a chief executive who does not have the qualifications and experience for the job? To get rid of him would, yet again, cost ratepayers a fortune with another platinum hand-shake.

Take a look at what Honest John wrote in his letter to ratepayers sent out with the final 20015/2016 rates invoice in April. He advises that the term of the commissioners ends in October and then adds somewhat bizarrely:

We want to end our term with the organisation being led by a Chief Executive who is “fit for purpose”.

What a strange expression to use for a Chief Executive. The comment also suggests that the current acting chief executive is not "fit for purpose". And, given Graham Sibery’s acknowledged lack of expertise and experience in local government, how could he ever be seen to be “fit for purpose”?

Central government is watching. Time is running out. Just over four months before democracy returns. Or will it?

LACK OF FOCUS    21.05.2016
In the latest edition of the Mangawhai Focus the Editor takes issue with comments by Bruce Rogan in Letters to the Editor about double standards that Bruce Rogan alleges have been applied by the newspaper.

Rather than respond to the allegations, the Editor makes a sweeping personal attack on Mr Rogan for what he calls abusive language and for "not entering into any reasonable form of debate". He then goes on to state:

We believe our readers are tired of this constant barrage and we would rather not burden them any further with this rhetoric.

I am not sure who the “we” refers to. Presumably it refers to the editorial staff. And I am not quite sure whether the Editor has done a survey of readers to see if Mr Rogan is a persona non-grata amongst readers and should be banned from the pages of the Focus.

Forgive me but, as I understand it, the Press is supposedly the protector of our liberties and rights and should aim to present the truth and all the various versions of the truth, without fear or favour.

Yes, Bruce Rogan can be a little over the top. He speaks his mind and he speaks it loudly in plain and simple English. He is not afraid to take on City Hall, the government and the courts if he believes that they are wrong and if they are treating the people of his District unfairly and illegally.

I have fought alongside Bruce for many years now and whilst we have different approaches, we are both motivated by the disgraceful way in which the people of the District have been treated by their Council, the commissioners, our previous MP Mike Sabin, the government, Parliament, and now by the courts of law.

Bruce’s rhetoric does not arise out of self-interest or any personal goals but because he wants to do all he can to remove the burden of a massive illegal debt (acknowledged by the High Court to be illegal) that has been forcibly dumped on the next few generations of innocent Kaipara ratepayers.

The battle against the illegalities perpetrated by the KDC goes back over 8 years now, and in that time the Mangawhai Focus generally sided with the Council when it was in power and has clearly thrown in its lot with the commissioners, becoming nothing more than a propaganda rag to promote their policies and spin.

Rather that present both sides of the argument, to research the facts and “enter into a reasonable form of debate” the Focus has treated the emanations from Dargaville as gospel, and has used its editorials to preach a narrow, one-sided, politicised sermon that completely ignores the issues that are bubbling beneath the surface.

It would be nice if the Editor of the Focus climbed off his high-horse and actually took the trouble to understand the issues that many people in the district are fighting for. If Bruce Rogan wins the battle to relieve ratepayers of the illegal debt, or even to relieve ratepayers of the punitive and vindictive penalties that were imposed by the government, then he will have done the people of Kaipara proud.

Incompetence and corruption swept under carpet.” That is local MP Winston Peters' view of the Auditor-General’s involvement in the Kaipara debacle. He adds:

The commissioners did not even move to take action against the managers of the project Beca Carter Hollings and Ferner Ltd, yet they were reappointed by the government for another term.

It was Beca who pressed the KDC to increase the original scheme (costed at about $35 million in February 2006) to cater for what it said were 4,500 connections. The cost almost doubled but the capacity of the plant is only half of what was promised.

He concludes:

The National government has wiped its hands of the problem and there’s been no attempt to try and renegotiate the loans or lessen the load. This $5m settlement will hardly dent the debt.

See Mangawhi Focus here

ECOCARE PLANS   21.05.2016
The EcoCare scheme sucks in more money than sewage. In the four years of his dictatorship Honest John has struggled to come to terms with Kaipara’s favourite Ponzi scheme.

He and his crew performed their commission to ensure that the whole of the unlawful cost of the scheme was dumped on ratepayers and that all the guilty trough-feeders who caused the financial debacle were left untouched. Mission accomplished.

But sadly, he has been left with a lemon of a sewerage scheme that he is going to bequeath to the democratic council.

Not only was the scheme illegal, as declared by the High Court, but it was a total rip-off. That is the one thing that the Auditor-General got right.  The disposal field was a dog and there are many unanswered questions that hang over the plant itself and the reticulation, especially in relation to the quality of the materials used.

Honest John put together a bunch of his groupies who knew diddly squat about wastewater, gave them an important-sounding name - Mangawhai Community Waste Water Scheme Advisory Panel - and set them the task of employing their ignorance and inexperience to advise the commissioners on what to do with the EcoCare lemon.

The advisory panel came up with all sorts of options including dumping the waste water from the plant on the golf course. Honest John no doubt favoured the option of dumping the wastewater in the estuary outside Bruce Rogan’s property.  (Really, that was an option.)

If you take a look at Honest John’s column You Questions Answered in the latest Mangawhai Focus you will see that all the advisory panel's options have been skittled and it is back to the current Brown’s Road farm as the disposal option. Apparently, according to Honest John, there is another 15 years’ life left in the farm.

As for the plant, it is really struggling. Beca told us that it would cater for 4,500 connections. There are currently less than 2,000 connections and it is close to capacity.  But Honest John’s advisory panel have come up with a "cunning plan" worthy of Baldrick. Because the farm is not used as a dairy farm the KDC is going to apply for a consent from the NRC to discharge a lower quality outflow from the plant.  That, according to Honest John, will mean that the plant will have enough capacity for another 9 years

It will be interesting to see what the outcome will be. There will of course be the costs involved in extending the diposal fields.  Further down the track, it will then become impossible to sell the farm as a dairy farm because it will be heavily polluted and not meet Fonterra standards.

One also wonders how the Brown’s Road farm neighbours - dairy farmers - feel about the more concentrated discharge. Watery discharge has a tendency to flow and ignores legal boundaries to the same extent that the KDC ignores legal compliance. Will the KDC construct a massive wall to encircle the farm to prevent seepage on to neighbours’ properties? And if so, will Mexico pay for the wall?

Before reading the next two articles scroll down to NEW CHIEF EXECUTIVE APPOINTED 14.06.2015 to understand the background.

John Dickie has looked at Graham Sibery's work experience as listed in his LinkedIn page and reports:

Since coming "down under" from the UK in June 2008 his jobs, all related to rail, have had tenures of 1yr 9months; 2yrs 8months; 7months; and most recently 2yrs 11 months of which the last year has been on leave. One would have to wonder why such short tenures and why on "leave" for the last year. Given that he will be coming into a totally new environment, Local Government, and the mess that still persists throughout NZ and especially Kaipara District local government, how long will it take to develop the competence necessary to effectively lead KDC, and what additional resources will be required to assist him in reaching that competence. Or is there perhaps some secret agenda that there will be rail projects transiting from Auckland to further north through Kaipara.

Clause 33 of the Seventh Schedule to the LGA requires a local authority in appointing a chief executive “to have regard to the need to appoint a person who will discharge the specific responsibilities placed on the appointee”.

Surprisingly the requirements of a performance review which takes place 6 months before the chief executive's contract expires is far more detailed. The review must assess:

the mix of skills and attributes possessed by the chief executive, and the degree to which they are consistent with the skills and attributes that the local authority considers necessary for the future

Logic suggests that those matters should be considered before the chief executive is appointed, not four and a half years into the contract.

The role of a chief executive of a local authority is highly specialised and needs a person with the appropriate knowledge, skills and experience.

Kaipara demands even more. Despite what Honest John would have us believe, it is in a financial and legal crisis. It will need someone of exceptional knowledge, experience and abilities to fix the legal issues, the financial problems and the festering sores that are the legacy of Honest John.

It is beyond credibility that Honest John and his mates could make such an appointment and then to make it for the maximum period allowed of 5 years.

The irony is that Honest John has gone public on the need for people of the right abilities to come forward to stand as councillors, and then appoints a chief executive as captain of the good ship SS Kaipara who does not have his Master’s Certificate and, to boot, has never been on a boat in his life.

Something very murky is going on.

Remember last year when Honest John and his mates turned Magical Mangawhai into a tank farm. The Council adopted the ridiculous Fire Services Regulations holus bolus without even taking note of what they said.

Kaipara, “Where it's easy to live”, as Honest John would have us believe, is one of the few councils that have adopted the optional regulations.

The regulations are draconian and require each property to have a separate, dedicated concrete water tank to be used solely for firefighting. The Regulations also require a concrete hardstand and turning area on each property for fire trucks, and no vegetation close to a house.

After wide-spread complaints Honest John called for submissions last year so that he could decide on the future of the regulations.

So what happened to the submissions?

Precisely nothing.

The submissions established overwhelmingly that the Regulations should go, so Honest John and his team simply decided to bury the matter.

The official advice received a few weeks ago is:

The Council received many submissions which raised valid points and is presently reviewing its position on this Plan Change and considering whether this Plan Change should be withdrawn.

The Council has been in discussion with NZFS.(New Zealand Fire Service)

All submitters will be advised of the Council approach when a decision has been finalised.

Honest John has five months to go. His tank farm vision for Mangawhai can be seen on the causeway between the Village and the Heads. Those tanks will be an everlasting monument to a regime that took instructions from the bureaucrats in Wellington and did not give a toss about the people of Kaipara.

"Magical Mangawhai"

According to Honest John's vision

THE IRONY OF IT   14.05.2016
I have spent a lot of time in the last few day reflecting of the High Court hearings earlier in the week.

One of the things that struck me is the irony of the involvement of major law firm Simpson Grierson in the KDC debacle.

It was Jonathan Salter, a senior partner as Simpson Grierson and specialist in local authority law who (on my recommendation) was appointed by the KDC to review the EcoCare rates that we alleged for years were unlawful.  His report confirmed the illegality of the EcoCare rates and other rates and he advised that a court would "likely" find the rates unlawful.

Simpson Grierson's recommended a validation bill to fix the problem and we all know what happened.

The Bill was drafted by the Parliamentary Counsel Office, and there may have been some input from Simpson Grierson.  So we are not quite sure who should take responsibility for one of the most awful pieces of drafting to ever be enacted.  In the Court of Appeal the judges mocked the format of the Act, with its long laborious preamble, but they did not understand that the format was laid down in Parliamentary rules.

What the courts did not appreciate, or refused to recognise, is that the Act is riddled with errors and miss-statements. It validates unlawful levies (the unit of demand levy that Jack McKerchar concocted).  But, more importantly, it has massive holes in the definition of the "specified rates", the very rates that it was purporting to validate.

How ironic that an Act of Parliament that was supposed to validate rates that had been incompetently drafted, should itself be incompetently drafted.

There is further involvement of Simpson Grierson.  The Guide to the Local Government (Rating) Act 2013  lists its legal reviewers as Jonathan Salter and Lizzy Wiessing of Simpson Grierson.  This is the advice offered by the Guide:

Rates are a tax and the Rating Act is a taxation statute. A generally accepted constitutional principle of taxation is that all decisions, actions and procedures must be strictly in accordance with the legislation governing the tax. That means that: • only those rates authorised under the Rating Act can be set and assessed – anything else is unlawful and likely to be set aside if challenged (the legal term for this is ultra vires) • rates must be set strictly in accordance with the procedural steps and information requirements set out in the Rating Act (rate-setting that does not follow the prescribed process also runs a judicial risk – the person who said short-cuts make for long delays had the rating process in mind) • there is little judicial tolerance for departures from the legislative requirements – even minor typographical errors (for example, an “and” rather than an “or”) could be sufficient to invalidate a rate.

These are not academic points – ratepayers can and will scrutinise your decisions and actions. Local authorities set their rates in open council and follow a process of consulting on their spending and rating proposals through the long-term and annual plan (more on this later). The information is therefore readily available to the public.

With these strong words resounding in my memory I watched the High Court proceedings with amazement as Duncan Lang (senior partner of Simpson Grierson) and the same Lizzy Wiessing argued that the strict obligations imposed on the KDC under the Rating Act were not obligations at all and that to comply with the law would place too great a burden on the KDC.

There are 271 "musts"  (absolute obligations) in the LGRA most of which apply to the local authority.  According to Simpson Grierson "must" means "may" and is optional, but only when it applies to the local authority.  Section 60 states that a person (ratepayer presumably) must not refuse to pay rates.  Simpson Grierson argued that the must in section 60 means must, and, if the ratepayer does not comply, the ratepayer is not allowed to defend an action for the recovery of the rates.

A law for one and a law for the other.

And like many others in the court, as I watched the verbal ping-pong game between lawyers, I did a quick calculation of how many thousand dollars an hour the game was costing the ratepayers of Kaipara.  All because Honest John would not acknowledge that the rates he had set were unlawful. 

All he had to do was to read the advice of the KDC's own lawyers in the Guide to the Rating Act.  It wouldn't have cost ratepayers a penny.  But "Hey, who cares?".  It's not his money.

Honest John and his crew have appointed a new Chief Executive.

That in itself is questionable. With only five months to go before the government imposed regime is (supposedly) replaced by a democratically elected government (no this is not Zimbabwe), the commissioners have gazumped the new council by appointing their choice for chief executive for the next five years.

Why would they do that when Jill McPherson could well have continued to serve as acting chief executive until the new council was bedded in and the new council could then choose a new chief executive that suited that council’s requirements?

It stinks to high Heaven.

But the smell is worse. Read on.

The appointee is Graham Sibery. See the Northern Advocate, the KDC press release and Graham Sibery’s LinkedIn page.

One of the major problems is that Kaipara has an ongoing problem with compliance with local government legislation. Jack McKerchar simply ignored compliance and ruled Kaipara like a tyrant. Steve Ruru had a few ideas but allowed himself to be bulldozed by the Tiller/Geange council and then completely rolled over when faced with the government-imposed regime of Honest John.

The irony is that although the Validation Act supposedly validated many of the breaches of the law in the past, Steve Ruru and Jill McPherson continued along the same non-compliance road in subsequent years. All the rates since 2012 are riddled with non-compliance with the law.

What Kaipara needs is a strong chief executive who has a profound knowledge of local government, good governance, legal compliance and all the other things that are absolutely essential to a well-run council.

Graham Sibery clearly has some good academic qualifications but his work experience is in trains and transport in Australia. He knows diddly squat about local authorities and how the law works in New Zealand.

This is the spin that Honest John puts on it:

“Graham will bring extensive public infrastructure leadership and project management skills to the Kaipara community.” Mr Robertson said.

“He has run large organisations, and has leadership experience in both the public and private sectors. He understands community engagement and will enjoy the environment that Kaipara provides.”

We cannot prejudge Graham Sibery, but the appointment appears to be utterly inappropriate because, quite simply, he does not have the appropriate skills for this job. It is like appointing an untrained layman to be a senior surgeon at Whangarei Hospital.

The question is why was he appointed? His job is to implement the decisions of the council and ensure that they are implemented in compliance with the law. He has to control and advise his staff. But he has no knowledge or experience in local government and there is no one else to advise him or help him out.

And that is where my nose starts twitching. Being a babe in the woods, the new chief executive will need a permanent adviser. Perhaps a lawyer from Simpson Grierson permanently seconded to the KDC. Or, and now we are getting into conspiracy theories, the Minister of Local Government will assist the Council by appointing a minder to advise the new chief executive.

John Key is not going to allow democracy to return to Kaipara without the Council being effectively controlled from Wellington. There is still time to do an Environment Canterbury arrangement with a mix of elected councillors and government appointed commissioners. There are also secret moves afoot for a National party ticket to contest the election so that the work of the commissioners and the National government in suppressing the ratepayers can continue. But there still needs be a minder for the Department of Internal Affairs to ensure that the council follows the National Party line - and the appointment of Graham Sibery might just be part of that grand plan.

Over three days in the High Court in Whangarei we finally found a Judge who was courteous, intelligent, friendly and enquiring, but more than that she made it absolutely clear that her role was to apply the black letter of the law.

Ailsa Duffy J heard the judicial review application by the MRRA against the KDC and the NRC and the appeal of the rate recovery claim of the KDC/NRC against Bruce and Heather Rogan.

Justice Duffy may not have known a lot about rating law when the cases started but she quickly grasped the issues and the law. She also evinced an approach that was clearly open-minded with no pre-conceived ideas or personal agendas.

To hear her probing questions and her logical summations was an absolute delight. She did not simply sit and listen like many judges, she enquired and probed.

An example:

The power to delegate
The Local Government (Rating) Act allows the NRC to delegate the collection of rates to the KDC under s 53 LGRA. Nothing more.

The KDC/NRC lawyer argued the NRC had additional powers to delegate to the KDC, namely the assessment of rates, the recovery of rates, including issuing legal proceedings, the adding of penalties and the remission of rates, which all stemmed  from a contractual arrangement between the parties.

Duffy J pointed out unless the NRC had the statutory power to delegate those matters it had no power to enter into a contract to delegate them. So unless there was a provision in the Act that allowed the delegation of these matters, the contract would be unlawful, and the delegation unlawful.

The council’s lawyers argued that the NRC was not delegating its powers; it was appointing the KDC to act on its behalf.

Duffy J was insistent, pointing out that whether you called it delegate, appoint authorise or whatever, it was still a delegation.

Duffy J then pressed the council’s lawyer to state exactly what provision in the LGRA empowered the NRC to delegate all those matters.

The only thing that he could point to was section 53 which allows delegation of the right to issue joint rates assessment notices and invoices and collect rates that are due. The lawyer argued incessantly and unconvincingly that the word “collection” encompassed all the other matters that had been been purportedly delegated in the contract.

If Duffy J finds that the delegation of the functions to the KDC was unlawful then it may mean that the NRC’s rates were invalid because they were not assessed in conformity with the LGRA.

Other matters of interest:

There were lengthy arguments about when GST should be added to rates. The GST Act is quite clear that GST is added when the rates invoice is issued.

However, both councils, and virtually all councils in New Zealand, add GST when the rates are "set".  This is further up the rating chain which consists of the sequence of setting, assessing and invoicing. Setting the rates is by the formal rates resolution that makes the proposed rates lawful. The MRRA argued that the LGRA did not permit including GST as part of the formal process of setting rates. Consequently the rates were unlawful. The GST could only be included at the invoice stage.

The real issue is that under the LGRA penalties on rates must be added to the “rates assessed”. At that stage of the rating process the rates should not include GST. By bringing the inclusion of GST forward, the rates assessments are expressed by the KDC to include GST. That means that if penalties are added they are added not just to the rates but to the 15 per cent GST as well. This is compounded with further penalties if the rates remain unpaid.

This is a nice little money earner for local authorities.

Duffy J was quick to point out that by charging 10 per cent penalty on the rates PLUS the GST, the councils were breaching the statutory requirement that penalties do not exceed 10 per cent of the rates.

May means must and must means may
This provided a little light relief in the court and illustrates lawyers struggling to argue the unarguable.

The LGRA states that local authorities may add penalties to rates but to do so the must “authorise” the adding of penalties in a penalty resolution on the same day as the rates resolution. In other words they have to exercise the option and at that time.

In some instances the NRC stated in its resolution that penalties “will be added”. That was fine. However on some occasions the resolution stated that penalties “may be added”. The MRRA argued that this did not authorise the adding of penalties as required by the provision. It simply granted a further option that could not be exercised because of the time limitation in the provision.

The lawyer for the NRC then argued that may in the resolution meant must or will.

Conversely, when the KDC failed to comply with the “must clearly identify” obligations in the rates assessment notices and the rates invoices, the same lawyer argued that must means may and that they were not obligations.

Section 60
This was the biggie. This was the torpedo that the KDC fired to destroy the Rogan case. Effectively section 60 of the LGRA states that you cannot refuse to pay your rates on the grounds of invalidity of the rates unless you have applied to the High Court.

Section 60 is a provision that is interpreted by local authorities to support the proposition that ratepayers cannot defend an action for recovery of rates if they have not filed proceedings in the High Court. The KDC argued that the Rogans had not complied so they had no defence to the action to recover rates.

The problem is that section 60 does not say that. The previous legislation did say that, but it was replaced by the LGRA and section 60 in 2002. Carefully read, section 60 does not include any prohibition on a ratepayer defending an action for recovery. The right to defend oneself is a fundamental human right guaranteed by the NZ Bill of Rights Act, and can only be limited in legislation by specific wording.

We will find out whether the torpedo failed to fire when the judge makes her decision.

Money comes before legal compliance
This was a really interesting eye-opener. The KDC was asked why the dispute with the Rogan’s and other striking ratepayers - about the validity of the rates assessment notices and rates invoices - could not have been resolved under the provisions of the LGRA designed for that purpose. The KDC could have simply issued amended and correct rates assessment notice and rates invoices.

The response from counsel for the KDC was that if that procedure was followed the penalties already added would be lost.  In other words the KDC was going to hang on to the money it had gouged from ratepayers despite it having been unlawfully charged.

The Judge made the comment that the council could still recover the rates, and surely the loss of the penalties was justified if they were added unlawfully. She added that in a way the loss of the accrued penalties could be seen as a punishment for the council for not complying with the law and an incentive to comply with the law in future.

Duffy J reserved her decision.  In respect of the judicial review she intends to decide on what declarations, if any, she will make regarding illegality.  She would then invite submissions from the parties on the relief (orders) sought. 

She aknowledged that a judgment against the councils would have far-reaching effects, not just for the two councils involved but for all local authorities in New Zealand.  She anticipated that the government would have to be involved because of the effect on local government.  She even mentioned that a validation act might be needed to tie up all the loose legal ends.

In the KDC v Rogan case, Duffy J has to decide the effect of section 60 and the Validation Act to see if they prevent any defence being advanced.  If the defence can proceed then she intimated that it might be appropriate to refer the case back to the District Court to consider the very detailed defences.  Judge de Ridder in the District Court did not consider the defences advanced by the Rogans because he decided that section 60 barred any defence.

It could be several months before the decision is available.

KDC v AG  06.05.2016e
The battle to obtain copies of the proceedings in this case continues.

The day after the article appeared critising Honest John for ignoring the Official Information request (see below SECRET PROCEEDINGS 02.05.2016), an emailed response was received from the KDC.  (Honest John is an avid reader of this website.)

The email advised that the KDC was waiting for the High Court's decision, which it was entitled to do under the Ombudsmen Act.

However, the AG's lawyers have now advised that the AG will abide by the Court's decision on whether to disclose the proceedings.  However it provides some considerations to assist the Court, including:

The allegations and responses in the pleadings remain untested, and the confidential matters canvassed at a mediation are not always reflected in the pleadings themselves. The pleadings are therefore of limited utility for the MRRA to understand the basis and rationale for settlement.

In addition, the court may consider that there is a material risk of inaccurate or unfair reporting of the contents of the pleadings (which are of course only unproven allegations) given the MRRA’s stated intention of making the papers available to its members and therefore (in effect) to the public.

We now await the decision of the High Court.  ,

The Northern Advocate report can be seen here.

It is my sad duty to report that the Supreme Court, the highest and final appeal court in New Zealand, has declined to hear the MRRA's appeal in relation to the Court of Appeal decision. 

That means that the legal challenge to the lawfulness of the EcoCare debt and the dumping of it on ratepayers has come to an end.

The Champagne corks will be popping in every council office in New Zealand because it now means that when a council borrows money it no longer has to comply with the Local Government Act or the Local Government (Rating) Act.  Even monies raised for an unlawful purpose become the responsibility of ratepayers.

It is also a sad reflection on the attitudes of our courts that the High Court, the Court of Appeal and the Supreme Court adopted with some gusto the meaning of two enactments - the Mangawhai Validation Act and the protected transaction provisions in the LGA - that endorsed the approach of local government, but which could not be justified on the plain meaning of the words or on the basis of the legislative history. 

In spite of the Supreme Court stating that there has been no miscarriage of justice, a great injustice has been perpetrated on the people of Kaipara. That also applies to the people of New Zealand, but they remain in ignorance of the true significance of the decisions that have been made.

It is also a very sad day for the rule of law in New Zealand.

At momentsi like this you need ...............the Privy Council.

The decision of the Supreme Court can be seen here.

HIGH COURT CASE  3.05.2016
Remember that the High Court judicial review case is to be heard next week in Whangarei on Monday and Tuesday, the 9 and 10 May.

The appeal from the District Court in the KDC v Rogan case will be heard in the High Court on Wednesday, 11 May.

Justicee Ailsa Duffy will be presiding in both cases.

The Court commences at 10 am each day.

The legal issues in the case are different to those rejected by the Supreme Court and centre around the unlawfulness of the rates assessment notices, rates invoices, rates resolutions and penalty resolutions of the KDC and the NRC. 

In the latest edition of the Mangawhai Focus (not available on line) Honest John rejects Bruce Rogan's claim that the proceedings against the Auditor-General were not filed in the High Court.  He is right, but there was initial confusion because the staff in the High Court could not find the proceedings.

It has now been confirmed that proceedings were filed BUT the High Court is refusing to release copies of the pleadings unless those applying for the release can justify the release on the grounds set out in the High Court Rules.

This refusal is at the behest of the lawyers for the A-G.

The MRRA has filed an application setting out the reasons why the proceedings should be made public.  These include the publifc interest and the fact that the commissioners used ratepayers' monies to fund the proceedings.  Also, that the ratepayers have been dumped with an illegal debt by Parliament and they should be allowed to know what steps have been taken on their behalf to recover some of the debt from those who are responsible.  The A-G is an Officer of Parliament.

An application has also been made to Honest John, as chair of the commissioners, to release the information under the Oficial Information Act. 

That application was made on 13 April but to date there has been no response, not even an acknowledgement.

It creates an interesting situation and those with a conspiracy-theory bent are revelling in another possible manifestation of trough-feeders collaboration.

It has been widely circulated that Honest John and the AG are acquaintances or friends.  That is not surprising given that they both have worked in the local government field for some time.  They are both under attack from ratepayers, and no doubt they have common ground in resisting those attacks.

It is, however, remarkable that last year when commissioner Peter Winder's firm gave a prize for excellence to Peter Winder and his commissioner mates, the AG was one of the appointed judges.  Some of us might have said that it was totally inappropriate to appoint her as a judge given the financial mayhem that she caused in Kaipara, and given that she was, at that time, being sued by the KDC. 

Some wits might also say that it was completely iillogical that someone who showed total incompetence in auditing Kaipara should be placed in a positon to judge matters of competence in other fields.

Whatever the thoughts that might be going around, it is clear that the A-G is desperate to keep any mention of that dreaded word "negligence" out of the news and the public eye.  It is widely acknowledged that the OAG and Audit NZ were negligent in their Kaipara dealings but the press has largely let the A-G and her Office off the hook.  In the past few years she has managed to claw-back some of her reputation.  The last thing that she wants is for the press to re-hash the public flogging that she received when she released her Kaipara report which highlighted the incompetence of her Office.

John Key has clearly decided to stick by her, otherwise she would have been gone by lunch-time.  The best way to ensure that the matter is buried is to cast a shroud of silence over the whole thing, as he did so successfully with Mike Sabin.

Honest John has a problem as well.  No doubt the settlement agrement with the A-G had a confidentiality clause.  There is probably a lot in the agreemnt and in the proceedings that is not for the eyes of ratepayers.  Honest John's difficulty is that he can only refuse to divulge the information on very narrow grounds under LGOIMA (Offical Information Act).

One of the purposes of the Act is to promote the accountability of local authority members and officials.

Section 5 sets out the basic principle:

5  The question whether any official information is to be made available, where that question arises under this Act, shall be determined, except where this Act otherwise expressly requires, in accordance with the purposes of this Act and the principle that the information shall be made available unless there is good reason for withholding it.

So, is there a good reason for withholding the information?  There are some conclusive reasons set out in section 6.  There are other reasons set out in section 7.

The only possible reason is where it is necessary to maintain legal professional privilege.  But that no longer applies because the proceedings have been settled and finalised.

It will be interesting to see how Honest John wriggles out of this one.  He has 20 working days from the date of the application for information to respond.

The whole point of settling a legal dispute pre-court is that an "arms-length" negotiator is able to extract a premium amount from the defendant because it avoids a public court case and exposing the defendant's dirty laundry for all to see, with the consequential reputational loss.  That is worth big money. 

The question that ratepayers want to know the answer to is: Why is the compensation so low given that that the case was settled out of court and the A-G was allowed to scamper free with her reputation intact, and her insurance company picking up the tab for the miserly damages?

I have always maintained that the way that the KDC snaffled the Mangawhai Endowment Fund and used it for unknown purposes would have landed a lawyer in jail.

Lawyer Gerald McKay has been jailed for 4 years and 6 months for monetary offences including breach of trust. He shifted monies held on trust for clients to pay for his day-to-day business expenses. The report can be seen here.

Judge Colin Doherty stated:

“You were using your client’s money as your banker.”

So what is the difference between that and what the KDC did?   Was it not using the Endowment Fund as a banker?

The audit rules allow local authorities to do just that provided that it is properly documented and that the money can be repaid. However, the KDC had no documentation (they just pilfered it).  Even Rodney Hide as Minister of Local Govern\ment was moved to issue a "Please explain".  The KDC cannot repay the monies taken without incurring further debt and the commissioners advised last year that they have no intention of repaying it anyway.

Under the audit rules the Council can also pull the wool over the eyes of ratepayers by pretending that is not a debt because it is not borrowed from an external source.

Smoke and mirrors, sleight of hand, jiggery-pokery, creative accountancy and all that.

Prominent New Zealander found not guilty.  See the NZ Herald report.  Monday's report here.  

Only 35% of New Zealanders have complete or lots of trust in judges and the courts, according to a new report which highlights some key trends in the way the judicial system is viewed by the public.

The full report in the NZ Lawyer can be seen here.

More questions for Honest John (see two posts below):

  • According to your comments the damages to be paid by the Auditor-General include "GST (if any)".  What precisely does that mean?  With all the legal expertise that you have used our money for you should know whether GST is payable or not.  So, is it or isn't it?  And, if it is payable, then on what basis?

  • Was the limitation period a factor in arriving at a settlement figure?

NZ Herald report for Friday

Honest John has a regular column in the Mangawhai Focus called Questions you have asked where he answers questions that no one has in fact asked. It is just an effective way of getting his propaganda across to ratepayers.

In the latest edition Christian Simon, a regular thorn in the side of Honest John, asks some real questions that do need answering. They can be seen here.

Christian makes some good points. Here are some additional questions.

Interest on the debt
Ratepayers have been advised that a large portion of the debt ($24-$26 million) has been set aside to be funded by future development. Only part of that interest is being paid and the rest is being capitalised. In other words the unpaid interest is added to the capital each year and interest is charged on the interest.

Is that correct? What are the figures? If some interest is not being paid then surely the Council is not meeting its interest bill? But Honest John says that the Council is meeting all the interest that is due. Or is this a technicality – because the bank agrees to the non-payment and capitalisation, the interest in question is not “due”?

If the future development contributions are needed to extend the EcoCare plant and disposal field and provide reticulation, how can it also be used to pay of the deferred debt and capitalised interest?

The auditor issued a warning that if that part of the debt could not be covered by development contributions then rates would have to increase substantially to meet the shortfall. When will that happen?

If the KDC cannot meet all of the interest on its debts then is it a “going concern”? All local authorities must meet the going concern test. “Going concern” is defined by the Auditor-General as being able to meet its debts for the foreseeable future without government intervention. But what of the interest that is not paid on the deferred part of the debt? Was the Validation Bill government intervention?

Retiring debt
Honest John advises that the pittance received from the Auditor-General is going to be used to reduce the general debt of the KDC. That is wrong. The monies must be used to pay off the EcoCare debt.

The commissioners have created such a massive smokescreen around the illegalities of EcoCare that many may have forgotten that the EcoCare debt was a segmented debt. That is a separate debt that stood apart from the general debts of the KDC.

It appears that monies received to pay down the EcoCare debt have in fact been used by the KDC for completely different purposes.

Take the total cost of EcoCare of $62.4 million and then deduct monies received by the KDC to repay capital.

The 2011/2012 annual report states that in the first four years of EcoCare rates from 2008/2009 to 2011/2012 the KDC collected $7,335,538 in annual and capital EcoCare rates.

For the same period the KDC collected $1.278 million in development contributions

It also received a Ministry of Health subsidy of $5.896 million.

That is a total of $14.0509 million that should have been paid off the EcoCare debt

Since then there have been several million in annual and capital EcoCare rates and development contributions.

How much of this money has actually been used to pay down the EcoCare debt? (Less of course operating costs and interest.)

Mangawhai Endowment Fund
All the monies held by the fund have been spent. Is that correct? What were they spent on? To replace those monies – held on trust for the people of Mangawhai - the KDC would have to borrow that money externally. Putting aside the accounting nonsense that is allowed to mislead ratepayers, would it not be more honest to show the true indebtedness of the Council including all internal borrowings?

Auditor-General damages
Were legal proceedings filed? 
What was the original claim for damages?

It will be interesting to see if Honest John will front up and answer REAL questions.

According to Honest John the Auditor-General
argued that the KDC was responsible for the losses suffered in the EcoCare debacle because it signed compliance statements required by the LGA confirming that it had complied with the law, and that the auditor was allowed to rely on those statements.  In addition a local authority is primarily responsible for complying with the law.

It is a rubbish argument.  If that is the case then why bother having auditors?  An auditor is the cop whose job it is to ensure that the entity is obeying the rules.  Imagine the police relying on the word of a criminal that he had not broken the law.

If an auditor fails to pick up glaring and fundamental errors in the affairs of a local authority then that auditor is negligent irrespective of the fault of the local authority.

But what the argument does highlight is that the KDC itself was negligent in signing the statements and providing incorrect information to the auditor.

So who carries the can for that?

The chief executive, Jack McKerchar, and the Mayor signed the compliance statements.  They also provised the information to the auditor.  However, that was all approved by the councillors. 

So, are they responsible?

The extent of their negligence is evidenced far and wide in the report on the debacle issued by the OAG and in comments made by the courts. It is an open and shut case on the negligence of those who ran the KDC on behalf of ratepayers.

There is little doubt that if they had been brought to court, in the same way that directors of companies are held responsible, they would all be facing a massive award of damages.

However, that is an outcome that the government has worked hard to avoid.  The government decided long ago that the ratepayers were going to bear the burden of the EcoCare loss because any other solution would undermine the whole basis of local government in New Zealand.

Who would risk being a chief executive in future if there was a potential liability running into millions of dollars?  So, the commissioners, on the bidding of the puppet-masters in Wellington, allowed Jack McKerchar to escape without any claim against him for negligence.  Certainly they are pursuing in the employment court but that is a mere sop to the peasants and only deals with the golden handshake he received on departure.

Good councillors are hard to come by, especially given the mediocre pay that they receive.  If the KDC councillors, who were probably not insured, were sued for millions of dollars in damages for negligence, then it would not only destroy them, but more importantly ensure that no one would stand for election as a councillor in the future.

Suing the councillors was not therefore on the cards.  So, the Auditor-General, who has the power under the LGA to take action against councillors who cause loss to the Council, announced that there was insufficient evidence to bring an action against the KDC councillors.

Cute.  This is the same Auditor-General who argued that she should be let off the hook because it was the Council officers who were negligent.

And we all know that the commissioners announced that Beca and the Council lawyers would not be pursued for damages.   Heaven forbid that advisers should be held responsible for the actions that they advised on.  That would upset the local government gravy train.

So it all goes round in circles like some great circus, but with one consistent truth:  ratepayers alone must bear the brunt of all the financial imprudence, the negligence and the illegalities of its elected representatives and their professionsl advisers.

NZ Herald report for Thursday.

As a case progresses up through the hierarchy of the court system the legal issues become much simpler.

When the case against the KDC started in the High Court the commissioners were in complete denial, they dug in, and it cost the ratepayers vast sums of money to establish what everyone already knew, that the KDC had acted recklessly and outside the law in respect of virtually all aspects of EcoCare. It wasn’t the commissioners’ money and they thought they could overwhelm the MRRA with their firepower.

All the chaff has been blown away and we are now left with the kernel of two issues:

• Do the protected transaction provisions entitle a local authority to set a rate for an unlawful purpose?

• Does the Validation Act validate only those irregularities recited in the preamble to the Act, or does it validate the specified rates “for all purposes”?

Protected transaction provisions
The MRRA is of the view that the protected transaction provisions were only ever intended to prevent local authorities from pleading their own unlawful acts to wriggle out of loan contracts - following a spate of such cases in the UK in the 1990s. That is the clear meaning of the words in the LGA and the clear intention of Parliament as expressed in many places in the Parliamentary records.

Despite there being no evidence in the wording or the Parliamentary record of any broader meaning, the Court of Appeal was adamant that the enactment empowered local authorities to rate ratepayers to meet loan agreement commitments even though the courts had decided that those loan agreements were unlawful. Certainly, the provisions entitled the lender to take action against the local authority – that was the purpose of the provisions – but there was nothing in the legislation to suggest that the local authority could "reach out" and pursue ratepayers to meet its unlawful commitments.

The MRRA argues that if that was the intention of Parliament then it should have introduced clear legislation to that effect. The irony is that such legislation was in force until 1996, when it was repealed. Until then ratepayers could not challenge on any grounds rates raised to meet loan commitments.

Validation Act
A close examination of the wording of the Validation Act and its passage through the Parliamentary processes establish that the Act only validates those irregularities recited in the preamble and nothing more.

The MRRA argue that the fact that the rates were set for an unlawful purpose renders them invalid. As does the failure to consult with ratepayers on the rates through the annual and long term plans as required by the LGA. Neither of these defects were referred to in any way in the legislation.

The Court of Appeal did not go into any great detail and adopted the view of Heath J in the High Court that the Act validated the rates “for all purposes” – a suggestion raised by David Goddard QC for the KDC, which Heath J accepted with some alacrity.

The MRRA‘s stance is that the clear meaning and intention of the enactment should be adopted. If Parliament intended the Act to validate the rates for all purposes then why did Parliament not include a simple clause to that effect rather than going through the details of irregularities under the LGRA in 73 clauses in the preamble?

KDC response
The KDC has responded to the application for an appeal to the Supreme Court through David Goddard QC. We were expecting some legal fireworks. Some obscure aspect of the law that we had missed. But no, there is nothing. The KDC states that it is a simple matter of whether the Supreme Court accepts the decisions of the Court of Appeal without any further enquiry, or whether it wants re-examine the interpretation of the two enactments as requested by the MRRA.

The KDC concedes that the first question involving the meaning of the protected transaction provisions is certainly a matter of broad public interest. We now have to wait and see what the Supreme Court thinks.

The trial of the Prominent New Zealander has been going on for the last three days in the Whangarei High Court before Justice Venning and a jury.

Whilst a broad suppression order is in force in respect of names and relationships, that has not stopped the NZ Herald reporting full details of the allegations, the evidence presented, and the rebuttals for the defence.

For those who missed the reports they can be seen here: Monday, Tuesday and Wednesday.

Honest John, the spinmeister of the occupying forces, has excelled himself in justifying the pathetic settlement with the Auditor-General.

As predicted on this website, the dispute never came to court and was settled behind closed doors by agreement without any admission of liability and, no doubt, with a confidentiality clause.

It smacks of a pre-ordained cosy arrangement to let the OAG, the Auditor-General and Audit New Zealand off a hook that they should never have escaped from.

This was rampant negligence of a magnitude unheard of in local government and yet the Auditor-General and her bunch of incompetents walked away from this sordid affair, like all the other guilty parties, with smiles on their faces.

The slap on the wrist for the Auditor-General must have been ear-shattering.

All that was needed was for Honest John to wrap it all up with a large dose of smoke and mirrors and tell the victims in Kaipara how lucky they were to have such a wonderful settlement. Read his simpering justification in the Kaipara Lifestyler, the Mangawhai Focus and the Northern Advocate.

Lawyers are keenly aware of negligence claims and the amount of damages that are awarded. Winston Peters is no fool, and commented that there was nothing positive in the settlement with the OAG:

“In reality, the Auditor-General’s office failed to do its job and as a result the Kaipara sewerage scheme’s $30 million blowout costs landed firmly on the backs of ratepayers. This miniscule settlement will do little to alleviate their burden.”  (Source:  Kaipara Lifestyler.  See above)

Compare the OAG settlement with other settlements in recent years.

Credit Sails was a debt security that turned out to be a dog. The Commerce Commission pursued those responsible and achieved an out of court settlement (with no admission of liability) of $60 million for the 3,000 investors. The fear of a court hearing pressured the guilty parties into settling. They could not risk the damage to their reputation by having their dirty linen aired in public.

BDO Spicers, auditors of the failed Capital and Merchant Finance, settled out of court for $18.5 million.

It is ironic that in the Focus report on the settlement Honest John rejects using the courts to pursue claims because of the risks involved.  He showed no such compunction in setting all sorts of records in issuing legal proceedings against innocent ratepayers.

One cannot help believing that the real reason was to ensure that Parliament's own Officer, Lyn Provost, was not dragged through the mud.  A discreet arrangement with a modest token thrown to the baying wolves in Kaiprara was deemed sufficent to shut them up, with an overlay of spin from Honest John.  And that is a token that was paid by the insurers, not the OAG.

Note also the comments about the silence over the last two years on the basis that informing ratepayers would have breached mediation protocol and risked Council’s ability to secure a monetary settlement.  Baloney.  The commissioners are the representatives of the ratepayers and there is no legal reason why the broad sweep of the legal action could not have been revealed.  Again, we have Honest John covering up for two years and then entering into a confidential settlement. 

Only six months to go before a democratic council can open the books and the records and reveal what really went on.

HOW MUCH DID KDC CLAIM?    06.04.2016
According to Honest John legal proceedings were filed against the OAG in December 2014 in the High Court in Wellington.  It will be interesting to see what amount was claimed in damages in the statement of claim.

The NZ Herald reports on the trial of the "prominent New Zealander" which starts on Monday.

OAG DAMAGES   02.04.2016
$5.3 million sounds like an appropriate amount to repay what is owed to the Endowment Fund.

Now there’s an idea for the Commisars!


Doug Bone

The Crown Law Office has indicated that the Attorney-General is likely to seek leave to intervene in the Supreme Court appeal if leave to appeal is granted, and depending on the breadth of the appeal allowed.

The grounds of intervention are not known but it can be taken as read that the Crown will not be intervening to protect the interests of ratepayers.

So what is the role of the Attorney–General and the Crown Law Office?

The Crown Law Office website has a bold banner that proclaims:

Trusted Legal advisers to the New Zealand Government since 1875

The Office is therefore simply the legal representative of the government that is in power.

The website states that the Office has two primary purposes. The first is:

to ensure that the operations and responsibilities of the executive government are conducted lawfully,

That appears to reflect higher values such as ensuring that the government complies with the rule of law.

The second primary purpose, however, has more of a political flavour:

to ensure that the government is not prevented, through legal process, from lawfully implementing its chosen policies and discharging its governmental responsibilities.

John Key’s government has decided as a matter of policy that Kaipara ratepayers must bear the burden of the unlawful debts (for which his own government agencies were largely responsible) and the Crown Law Office will, if the appeal is allowed, ask the Court to apply an interpretation of the law that supports the government’s policy.

The Supreme Court will only allow an appeal if it involves a matter of public importance.  Clearly the government feels that that test has been met, otherwise it would not be inclined to intervene.

If the Supreme Court allows the appeal then this is going to be a massive ding-dong battle between ratepayers and the government over the extent to which the rule of law applies in New Zealand, and will define once and for all whether the courts in this country are independent of government influence.
This is one of the most important cases to come before the Supreme Court and it is a sad reflection on the state of journalism in this country that the mainstream media remains silent on this important legal confrontation.  Clearly it doesn't understand the principles that are at stake. Or perhaps no one really cares.

From the OAG website - what the OAG SHOULD do.

 About us

The Controller and Auditor-General (the Auditor-General) is an Officer of Parliament. Her mandate and responsibilities are set out in the Public Audit Act 2001.

The Auditor-General is independent of executive government and Parliament in discharging the functions of the statutory office, but is answerable to Parliament for her stewardship of the public resources entrusted to her.

Parliament seeks independent assurance that public sector organisations are operating, and accounting for their performance, in accordance with Parliament’s intentions. There is also a need for independent assurance of local government. Local authorities are accountable to the public for the activities they fund through locally raised revenue. As an Officer of Parliament, the Auditor-General provides this independent assurance to both Parliament and the public.


The reality:

Instead of snarling at the incompetent office-holders of the Kaipara District Council, the Audit Office watch-dogs were inside fawning on them. How secure are our traditions of incorruptibility, and accountability, when the watchers are asleep or lickspittles?

Stephen Franks is principal of Wellington commercial and public law firm Franks and Ogilvie.

("lickspittle":  a person who behaves obsequiously to those in power.)


KDC SETTLES WITH OAG    31.03.2016
So, finally the cosy little arrangement between the commissioners and the OAG has reached its denouement. It has been announced that the claim for damages for negligence against the OAG has been settled by agreement following mediation, with damages of $5.375 million to be paid by the OAG, but with no admission of liability from the OAG.

See: OAG websiteNorthern Advocate

Each party is to pay its own legal costs.

As predicted by this website, that amounts to a proverbial slap on the wrist given the damage that the Auditor-General and its utterly incompetent off-spring Audit New Zealand wreaked on the Kaipara community.

If the OAG and Audit NZ had done their jobs properly then the massive illegal debt would never have happened.

We do not know the ins and outs of the legal claim which has meandered on in secret for over 15 months and we will never find out. Honest John will keep his cards close to his chest and spin a cloud of smoke around the facts.

No doubt both sides were keen to have a confidentiality clause so that those who footed the bill - the ratepayers of Kaipara - will never know whether the delay of the OAG in delivering its Kaipara Inquiry report put it outside the limitation period and whether the commissioners’ delay in issuing proceedings cost the ratepayers of the district dearly by delaying the proceedings even more.

Honest John will not even reveal what amount was claimed from the OAG. Disgraced former MP for Northland Mike Sabin campaigned for the OAG to pay $30 million. That was probably to make him feel good after he and his Parliamentary mates shafted ratepayers with his vindictive and legally inept Validation Bill.

The settlement announcement states that the OAG claimed that it was the Council that had responsibility to comply with its statutory obligations, and its failure to do so was not attributable to the OAG. Part of that is correct. The KDC does have statutory responsibilities and it clearly failed to carry out those responsibilities.

However the OAG was the auditor and had a duty of care to carry out the audits in a professional manner. It failed completely to do that and was therefore responsible for damages for its failure.

Note the dumping of liability. The OAG is the auditor and the watch-dog. It stuffs up completely and says that it is not at fault because it was the KDC that made all the errors and breached its obligations under the LGA. This is on par with a negligent surgeon saying that his negligence was irrelevant because it was the patient who must bear the responsibility for being sick in the first place.

The Auditor-General gets out of this with little egg on her face. She has denied liability, although apologising for her staff, and she won’t have to pay a penny herself. It will all come from her insurers. Her legal fees will be paid by the taxpayer.

So despite this award, the guilty parties have got away without having to pay one cent of their own money.

The OAG’s negligence was excused because of the failure of the KDC to comply with its statutory obligations under the LGA and its defective certificates in its annual reports that it had so complied.

If that is the case and we can rely on the certificate then why do we need auditors?

The question then arises as to the responsibility of the Council officers who signed the defective certificates.  this is what the LGA says in one of the schedules:

34 Statement of compliance

(1) An annual report must include a statement that all statutory requirements in relation to the annual report have been complied with.

(2) The statement must be signed—

(a) by the mayor or chairperson of the local authority; and

(b) by the chief executive of the local authority.

Surely the Mayor and the chief executive who signed the certificate must therefore be responsible.

Yes, if you believe in fairies. Believe it or not it is the OAG, under the LGA, that decides whether Council officers are liable for any loss suffered by the Council, and Lyn Provost ruled last year that neither is liable.

You will also recall that Honest John and his crew announced last year that they were not going to pursue Beca, or Bell Gully for their roles in the debacle.

All very cosy.

Note that the KDC is pursuing Jack McKerchar in the Employment Court but not for damages for his gross negligence. Just to try and recover some of the golden handshake they stupidly paid him for stuffing up Kaipara.

We then come back to the Court of Appeal. In its bizarre, sweeping judgment it decided that the when a local authority enters into a loan agreement it is not obliged to comply with the the requirements of the LGA. That is, so it argues, the effect of the protected transaction provisions in the LGA. If you follow the logic through, which the Court of Appeal never did, because the KDC borrowed money for EcoCare it was not obliged to comply with any of the provisions of the LGA relating to the loan. So when it came to signing the annual report certificate it was quite within its rights to assert that it had complied with all the appropriate LGA requirements.

That shows why the Supreme Court needs to get involved and bring some clarity to this aspect of the law.

So who really is responsible and must foot the bill? Right again! You, the innocent ratepayers.

The Court of Appeal was quite clear that, in passing the Validation Bill, Parliament was dumping the sole responsibility for the Kaipara fiasco on the innocent ratepayers. That was a policy decision made by Parliament.

Parliament has also allowed Lyn Provost, Auditor-General, its own appointed officer, to get away with incompetence and negligence that effectively destroys the standing and reputation of the Office of the Auditor General and it does not give a fat rat’s. Lyn Provost will carry on the charade in her role as auditor and watch-dog, the fat cats will slope off into the shadows even fatter than before, and the world will left as it should be, with the rule of law in tatters and the ratepayers funding the rorts of the trough-feeders.

Now we have to see whether the damages, less GST (if applicable), less legal costs, will be applied to the EcoCare debt or whether it will disappear in another puff of smoke.

Wouldn't you be smiling?

Chicken feed settlement. Should be at least $20 million, or perhaps in excess of $30 million (the illegally raised debt) from AG, McKerchar, Tiller and Councillors; though of course the KDC Commissioners have decided not to pursue any action against Tiller and Councillors, nor consultants, nor their legal advisers who would have overseen the (il)legal documentation setting up this crippling debt.

Is this settlement reflective of an all too cosy relationship between the Commissioners and the Auditor General?

Why a mediated settlement? KDC Commissioners have shown no willingness to mediate a settlement with ratepayers, just take them to courts and extract every drop of blood they can with the connivance of central government and convincing the courts that what words written in the Mike Sabin sponsored Validation Act in fact are not dastardly enough and in fact say that ratepayers should be screwed even further than Parliament allowed.

Shame on the Courts, the Commissioners, the AG and Parliament.

John Dickie

Given Honest John’s insistence that the fund still exists it is worth re-reading ratepayer Doug Bone’s comments made a couple of years ago.

Coincidentally, Doug Bone sent in his own comments on the Commissioners' evasiveness about the whereabouts of the capital of the Mangawhai Endowment Fund:

At one of the recent hearings of submissions to the KDC Draft Annual Plan, I had the opportunity to question the Commissioners over the “missing” Mangawhai Endowment Fund principal of $5.7 million. The Commissioners freely agree that the money no longer exists. It was not them that used it, but a previous Council. My question was why there was no provision in the DAP to repay our money, and why it is not acknowledged as being a debt.

The Commissioners response was that the principal of $5.7 million now only exists in a notional sense, but as Council makes “interest” available for community projects, there is really no need for the principal to actually exist in a bank account. Such an arrangement seems, on the surface, to be perfectly fine – the community continues to benefit from the interest. But, where does that interest actually come from now? Not from the missing principal obviously, so it really just comes straight out of our rates!

But then, I asked, what if there was a Community project so important that the use of some of the principal was justified. After some consultation, they agreed that such a scenario was possible and that if it happened Council would have to provide the money. Now, given their financial state, how would Council manage to front-up with the cash? They would have to borrow it, of course!

Now let’s enlarge upon that scenario. What if we all decided that we weren’t happy with the way KDC was managing our Endowment Fund, and we wanted the stewardship of our money moved to another body. Since the Fund was created by an Act of Parliament in 1966, it would probably need another such Act to replace or amend the original. A Local Bill, perhaps – they’re easy to come by! Maybe Mike Sabin might like to sponsor it, and redeem himself in the eyes of Kaipara!

If this happened, then KDC would have to front-up with the $5.7 million. They would have to take out a loan. The ratepayers would be the security. The ratepayers, through their rates, would have to repay the loan, plus interest. So, to get back our money – and it is (or was) OUR money not KDC’s – it would cost us all more than the amount, whereas it should cost us nothing!

That, in my opinion, is where “creative accounting” crosses the fine line and becomes fraudulent accounting. Let’s not be fooled – we are never going to see our money again. It’s been stolen, and the perpetrators are getting off scott-free.

Note that the commissioners have since resolved to run down the fund.  Not only will the annual interest be taken from rates but they will make annual awards from the capital, which does not exist, so it will also come from rates.  They will do this until the "fund" is all used up and this skullduggery can be consigned to history.

Last year's mystery "prominent New Zealander" should be standing trial in the High Court in Whangarei next Monday.

Readers may recall this report of 8 May 2015 from Stuff:

A prominent New Zealander facing 12 charges of indecent assault will stand trial in April next year.The man appeared in the High Court on Thursday, where Justice Paul Heath confirmed the man's continued interim name suppression through to trial. A trial date of April 4, 2016, was set.The man has pleaded not guilty to all charges and was excused from attending a trial call over in June.Most details of the case are suppressed to protect the identity of the alleged victims....

This is in response to HONEST JOHN AND THE TRUTH 24.03.20(scroll down).  The comments reproduced below were posted in July last year and spell out the truth about the Mangawhai Endowment Fund rather than the fluff that the Mangawhai Focus publishes.  Honest John and is fellow trustees changed the name of the Fund to try and disguise the fact that the Fund was stolen by the KDC to use on unidentified expenses and the only remnant is the rental properties that still remain.  Hence the new name: Mangawhai Endowment Land Account (MELA).

The Bream Bay News reported in its edition of 23 July 2015 that it is inviting donations from those who want to contribute to a permanent legacy for the long term benefit of Waipu.

It’s a good job that Waipu is not part of Kaipara otherwise the endowment fund might go the same way as the Mangawhai Endowment Fund. That fund was supposedly held for the benefit of lands adjoining the Mangawhai Harbour. However, it was not invested separately and during the wild days of the McKerchar/Tiller regime disappeared down the financial gurgler along with countless other millions.

The Mangawhai Endowment Fund - now called the Mangawhai Endowment Lands Account (MELA) - is now a myth. A small amount is still held in properties but the rest is simply a book entry. Each year the commissioners go through a charade of allocating the interest to just causes. But there is no interest because the fund does not exist. Council simply pays what it calculates would be interest if the fund existed and takes the monies from rates paid across the district.

The commissioners treat the loan as an internal debt which means that it is not taken into account when calculating whether the Council is solvent or not. But if the debt, supposedly held on trust by the KDC, is to be repaid then it can only be repaid by raising an external debt, which all ratepayers will have to pay, interest and all.

In a report to the KDC from Linda Osborne of 30 June 2015 the position was stated as follows:

The MELA account is listed as a reserve in the accounts of Council. No cash fund exists

The report recommended that the present situation where the capital is protected, decided by ratepayers back in 2001, should be abandoned and replaced with the following:

Option B of spending all of the interest without protecting the capital would allow more funds to be available for community distribution. It would also allow Council to spend more effectively to reduce the capital and positively benefit Mangawhai.

Behind the weasel words, what is the purpose of this new approach? Whatever it is you can guarantee that it is not for the benefit of ratepayers. One can only presume that it is a way of running down the capital of the fund so that this embarrassing part of Kaipara’s history is finally expunged.

And remember that it is not the fund that is being run down because there is no fund to run down. Every payment that is made to ratepayers ostensibly from the “fund”, whether in the form of interest or capital, has to be paid by ratepayers throughout the whole district in rates, and then it is paid to the chosen few.

So who decides how the fund is to be spent. The Osborne report suggests that the commissioners have sole power:

Council is the legal holder of MELA and therefore has the jurisdiction to decide how it is spent, ensuring it is for the benefit of the Mangawhai community and/or environment.

You may argue, quite rightly, that the KDC are the trustees and may have the fund vested in them but they have a legal obligation to consult with beneficiaries, the ratepayers.

Now follow this carefully and see how the commissioners manipulate consultation to secure their own ends.

The report states:

Discussions have been held with the current MELA Committee who are also members of the Mangawhai community. The Committee have the delegation to allocate grants and are in agreement with Council’s alternative approach.

Let’s look at this comment closely as it sums up the dishonesty and the appalling governance of the commissioners.

The MELA committee, who are in agreement with the commissioner' approach, consists of:

Chair: John Robertson (Commissioner)

Members: Joanna Roberts, Alan Russek, Richard Booth (Commissioner)

Linda Osborne states that the current MELA committee are "members of the Mangawhai community". Not true. Two members are but commissioners Richard Booth and John Robertson have nothing to do with Mangawhai.

The report states that the committee are in agreement with the Council’s approach. That it scarcely surprising when two of the members of the committee are commissioners, and the other two were appointed by the commissioners.

But what of the views of ratepayers?

Community View
As they are the recipients of MELA, the Mangawhai community may have strong opinions on how it is spent, especially if it affects the amount that local groups can access for funding purposes. Given there would be more funds available to allocate to the community it is thought they would view this decision as favourable.

So there is no intention to actually consult with ratepayers. All decisions are to be made by three unelected commissioners who consult with a committee of two of the unelected commissioners and two unelected ratepayers selected by the commissioners.

A resolution confirming the new approach was passed unanimously by commissioners Robertson and Booth at the June council meeting – no doubt wearing their hats as commissioners and not committee members. Commissioner Winder was absent attending the Rogan hearing in Whangarei.

Legal Eagle has presented his concerns about what he considers to be theft of the Mangawhai Endowment Fund to the Auditor-General. No doubt there will be the usual resounding silence.

Associate Minister Louise Upston, who heads Honest John Robertson’s Cheerleaders, is not so silent. She recently visited Kaipara and met with the MELA committee and other groups. She commented:

“I was impressed by the great work that these groups are doing in their communities using their creativity to help make each of their towns vibrant and inclusive places.”

What she did not do is ask the people of Mangawhai about the creative accounting that has led to the theft of their endowment fund and the complete failure of her favourite three smart boys to include ratepayers in any consultation process about the future of the fund.

Honest John has put his honesty on the line in his latest Your Questions Answered column in the latest Mangawhai Focus.

Under the heading Dealing with myths he recounts some of what he calls "myths" that that are being spread about the regime of the commissioners.  He then goes on to present what he says are the facts.

Many readers may want to challenge Honest John on his "facts".  If you feel that he is wide of the mark then please let me have your comments or questions that you would like put to him.

Email: contactus@kaiparaconcerns.co.nz

Louise Upston, Associate Minister of Local Government,
will announce soon whether full democracy will return to Kaipara

LGA IGNORED AGAIN   24.03.2016
Associate Minister of Finance Louise Upton caused a bit of a stir on Tuesday. The KDC had scheduled a Council meeting for 9 am at its offices at the Hub in Mangawhai, but that was upset by a message from the Associate Minister that she would be calling by to meet the Commissioners.

It is uncertain what happened next, but it appears that the Council meeting was brought forward and was done and dusted before the advertised time for its start.

The KDC minutes are not yet on its website (and by the way, John, the link on the website in A-Z documents is broken) so no explanation has been forthcoming. A staff member suggested that a public notice had been put out advertising the change in time, but no evidence can be found of that.

The LGA in clause 19(4) of the Schedule 7 is unforgiving:

A local authority must hold meetings at the times and places that it appoints.

Part 7 section 46(1) of the Local Government Official Information and Meetings Act also requires 14 days public notice of meetings.

But the Act also states (in subsection (5)) that failure to publicly notify does not result in the meeting being invalid provided that public notice is given subsequently in accordance with subsection {6}.

So let’s see if our rulers, with several favourable court decisions in their favour under their belts, feel it necessary to comply with the LGA and other legislation.

Perhaps another opportunity to obtain another legal opinion from Simpson Grierson.

Associate Minister of Local Government, Louise Upston, is the one who “consulted” with a select group of National Party locals last year and suspended democracy for another 12 months.

John Key’s government must be in dread of the KDC having democratic winds exposing the real situation in Kaipara and the thought of an elected Council acting in the best interests of ratepayers.

Has John Key decided that democracy is to be denied again, or is he going to give us the semblance of democracy but with all the power vested in an adviser or commissioner still under his tight control?

Time is running out for the government to move, so if democracy is to be denied yet again it is likely that John Key will make his move soon.

The Chief Executive’s report presented to the KDC non-meeting this week outlined in detail the ongoing saga in respect of legal action being taken against the Auditor-General and Jack McKerchar.

Previously Honest John has run for cover and claimed legal privilege to support his silence and his opacity.

This website has maintained for years that the action against the A-G was nothing more than an exercise in duplicity. The OAG delayed its report on the Kaipara shambles sufficiently so that the limitation period would expire and the whole thing has gone into the “murky dealings” basket which will only be exposed if we can get democracy back.

The Court of Appeal stated quite clearly that Parliament decided in passing the Validation Bill that the ratepayers of Kaipara alone would be responsible for the illegal debt of the KDC. Parliament does not want its own Officer and watchdog, despite evidence of rampant incompetence, to bear any of the responsibility.

So this is what Jill McPherson has to say in her report to bring us all up to date after over 15 months of legal action:

The legal cases taken by Council against the Auditor-General and the former Chief Executive Officer continue.

Fascinating stuff.

One only hopes that the new democratic council (Yeah, right!) looks very closely at the liability of the commissioners for failing to file proceedings against the Attorney-General as soon as it became apparent all those years ago that her Office and Audit New Zealand had been negligent in auditing the KDC.

The commissioners elected to delay filing proceedings on the pretext that they were waiting, and waiting and waiting for the OAG report on its own negligence.

All the lawyers that I have spoken to are of the view that proceedings should have been filed at the earliest possible moment to stop the clock running.

The big question that faces the courts of this country is whether local authorities should be allowed to operate outside the law.

Local authorities are created by statute and their powers are granted by statute. However, when it comes to enforcing the law the courts appear to shun away from applying them, even though the same court might show no reluctance when applying those laws to individuals or to companies.

Citizens are allowed to challenge the decisions of local authorities by seeking judicial review of those decisions on the basis that the authority failed to comply with the law.

That sounds pretty straight forward, but the problem is that judicial review is discretionary. So, although a complainant may establish to the satisfaction of the court that the local authority flouted the law, the court can refuse to grant any relief if, in exercising its discretion, it finds that it would be “inappropriate”.

The problem is that in respect of local authorities there seems to be a completely different set of rules when it comes to exercising discretion. The problem is, to make it worse, that no one knows what the set of rules are.

The decision of the KDC to proceed with the EcoCare project, and then expanding the scope and cost of the scheme, both without consulting with the ratepayers, were blatant breaches of the requirements of the Local Government Act. It was so blatant that one wonders why the advisers to the KDC including Beca and the KDC lawyers did not step in and advise the Council of its indiscretion.

Despite being caught in flagrante delicto, so to speak, Honest John and his crew poured money into a legal defence, first to try and strike out the MRRA claim of unlawfulness for having no basis (lost with costs awarded against them) and then denied that they had not consulted with ratepayers.

Once that defence looked hopeless they then resorted to claiming that even if they were wrong in law the Court should not grant any relief to the MRRA because the KDC was in dire financial situation and any award against it or declaration of illegal rates would result in fiscal Armageddon for the Council, which in turn would necessarily be visited on its ratepayers.

They provided endless affidavits from financial gurus arguing that Armageddon was imminent if the law was applied.

The position taken was that although there might be a breach of the law the KDC should be excused because any punishment would make the Council unviable and create mayhem for its ratepayers.

The Court of Appeal appears to have taken a similar approach. Many of those who were at the Court of Appeal hearing were somewhat surprised at Miller J’s comments, made before any evidence was heard, that to find for the MRRA and possibly put the KDC into receivership would be the “nuclear option”. It would cause financial chaos and result in a greater burden to be borne by ratepayers. He continued along those lines in his written judgment.

In other words, the Court looked at the financial and administrative inconvenience of applying the law of the land, and that approach seemed to dominate the Court’s approach to the legal issues.

The question that the MRRA’s legal counsel put to the Court in his summing up perhaps enshrines the dichotomy facing the courts in this country. Are local authorities subject to the rule of law like everyone else? Or are they in a special category, and exempt from the application of the law because any claim against a local authority will necessarily impact on the innocent ratepayers, and is likely to cause financial and administrative chaos? If the latter was chosen then not only would the local authorities’ past actions be unassailable but they could remain confident that they could in future act outside the law with impunity.

It is worth bearing in mind that local government is a delegated branch of central government. If a court held that a local authority had committed gross abuses of the law then it could threaten the financial survival of that local authority. It might also place a big question mark over the legality of many of the decisions of other local authorities and cause a few ripples through the whole structure of local government.

Parliament decided in 2002, in introducing the LGA and the LGRA, that local authorities were to be accountable to ratepayers and that legislation introduced a lot of mandatory consultation procedures and rating processes. It now seems that that John Key’s government (the string-pullers of Honest John and his crew) is arguing that local authorities should be exempt from the law because they are a special case and a strict application of the law would result in financial and administrative inconvenience and politically unacceptable outcomes.

That approach is clearly ongoing. Remember that the watch-dog and auditor for the local government sector is the Office of the Auditor-General. The A-G is an officer of Parliament, appointed by Parliament and open to discipline by Parliament. Lyn Provost the present incumbent turned a blind eye to KDC’s persistent, flagrant breaches of the law even when evidence was put before her on a plate.

Have we reached the stage where justice is applied on the basis of who has broken the law?

It is noted that there is no such squeamishness in the courts and in local government when it comes to private companies failing. Imagine Dick Smith asking the courts not to enforce its legally incurred debts because to do so would result in financial Armageddon or the nuclear option for the owners the investors, the bankers and the customers of Dick Smith.

The guaranteed demise of Dick Smith creates a far greater financial loss to the community than a financial wake-up call and a dressing-down on legal compliance for the KDC.

It will be interesting to see how the courts approach the prosecution of Hamilton City Council by WorkSafe New Zealand over the death of a keeper at Hamilton Zoo.

The Council is being charged under the Health and Safety in Employment Act for not taking all practicable steps to ensure that the employee was not exposed to hazards.

The maximum fine is $250,000.00.

The question is, will the Hamilton City Council plead that it should be exempt from the law because effectively the innocent ratepayers will be left to pay any fine that is imposed?

The MRRA has followed up its application for an appeal to the Supreme Court by filing its legal submissions with the Court.

The KDC now has 15 working days to file its own submissions in response. The Court will then decide whether to allow the appeal, and if so, on what grounds.

The grounds for appeal were really quite simple. The High Court and the Court of Appeal held that the EcoCare project was unlawful because the KDC failed to consult with ratepayers before committing itself to the scheme. The Courts also decided that prima facie the EcoCare rates were also unlawful because they were set to fund an unlawful scheme. It is accepted law that rates cannot be set for an unlawful purpose.

However, the Courts held that both the Validation Act and the protected transaction provisions in the Local Government Act overrode that unlawfulness in the rates

The MRRA argues that the Validation Act, even on the most benevolent interpretation, only validates the rates for certain rating years.

In respect of the protected transaction provisions (which makes local authority loan agreements entered into unlawfully “valid and enforceable”), there is no evidence to suggest that the interpretation adopted by the courts is the correct one.

The clear meaning of the words in the enactment and the clear intent of Parliament was to prevent local authorities from reneging on their loan agreements because of their own unlawful activities (which many of them did in the UK – hence the provisions).

There is no doubt that the KDC cannot wriggle out of its loan agreements, but, and this is the big but, the provisions do not empower a local authority to meet its liabilities by setting unlawful rates. Parliament never intended that and there is no wording in the provisions to suggest that.

The Courts have so far argued that the power to extract the money from ratepayers is “implicit”, even though the law is quite clear that powers to set rates must be explicitly provided for in legislation.

The Supreme Court will only take the appeal if it thinks that the case is of public importance or a miscarriage of justice would occur.

It seems that the District Court debacle relating to the other cases that are stayed pending the outcome in the KDC v Rogan case has been sorted out. They will now await the appeal to the High Court to be heard in May.

That appeal is on track, as is the judicial review Rogan v KDC and NRC. Both the District Court appeal and the judicial review application will be at the same hearing but separately on consecutive days.

The Rogans' application to the High Court for a stay on the payment of costs until the High Court decision has been made, has been successful.

WORZEL’S VIEW 15.03.2016
Have a read of Worzel’s view of the KDC debacle in his Mangawhai focus article, A case of misunderstanding.

He is one of the parties being sued for rates arrears and comments:

I do not understand why anyone, apart from those getting the dosh of course, would support KDC by giving them money or any other resources. While little organisations in small towns beaver away with voluntary workers and donations and achieve excellent results, the Dargaville crew suck up money like a Dyson vacuum sucks up dust only to be thrown away. John Robertson describes this organisation as ‘high performing’. But then in my other research into the human condition I have found that those who must praise themselves have seldom done anything praiseworthy.

The KDC has finally been permitted to join the Local Government Funding Agency. The Agency is a group of local authorities that can, because of its size, negotiate better rates for borrowing money.

Until mow the KDC has been excluded because its borrowings were too high to meet the Agency’s ratio, and because it had committed many acts of default under its current loan arrangements.

Despite uncertainty about the financial viability of the KDC because of the pending court cases, the Agency has decided to take a chance with the Council.

The Media release put out by the Council extolls the advantages of joining the Agency but, as one would expect from Honest John, they are extremely vague. He states:

It is too soon to say how the lower interest rates on borrowing will translate into future planning for the Council and ratepayers, except that it will have direct monetary benefits and savings.

Reduced interest rates do have “direct monetary benefits and savings”, that is obvious. But one would have thought that those benefits could have been spelled out in more detail. For instance: A saving of x per cent per annum on the Council debt of $xxxxxxxxx million would result in and annual saving of $x. But all that gets lost in the nice sounding words and the billowing smoke.

Why join a scheme when the benefits are not yet clear?

What Honest John does not reveal is the downside of the joining the Agency. Each member council is obliged to cross-guarantee all the debts of other local authorities that are members. But it is wider than that. As we have all found out, the ratepayers of a district are obliged to pay the debts of their council whether it acts imprudently, recklessly or illegally. And as the council guarantees the other member councils, the ratepayers are responsible for those debts as well. So, by joining the Agency, all the ratepayers in Kaipara become guarantors for the debts of Auckland City. Nice thought.

No wonder the commissioners and their string-pullers wanted this one sewn up before democracy returns. A new democratic council might look more closely at the fine print and recognise that the LGFA gives the banks bigger security and bigger control over local authorities, and all at the expense of ratepayers.

ED SAID 15.03.2016
ED SAID of the Mangawhai Focus included some interesting snippets in his latest editorial. His comments normally reflect the views of the commissioners, so it is interesting that he makes the following comments

The Commissioners’ tenure is running its course though I expect there will still be some governmental over-seeing for at least the immediate future.

More than likely he knows what is going on behind the scenes. It is hard to imagine that the government will allow the commissioners' draconian dictatorship - run for the benefit of central government and the banks - to be suddenly replaced with a liberal, democratic council which places the interest of ratepayers before all others.

Honest John has already selected some disciples and is looking for others to groom who can continue his regime, but no matter what he does there is a good chance they will be spurned by the voters. Is John Key going to risk true democracy returning to Kaipara with the possibility that the new council might reverse all the unfair, inequitable and unlawful actions of the previous regime? And even more scary, is he going to permit a council to operate that might open the books and reveal where all the monies went and point the finger at those who rorted the community?

Here’s a clue from ED SAID:

Could a particular political leaning be an advantage? Might a known right-leaning Council be able to cuddle up to the Government for the odd special privilege for Kaipara? Just a thought. The ends invariably justify the means.

"The end invariable justifies the means."  Really? 

Only just over 7 months to D Day, but don’t hold your breath. That is plenty of time for the dirty-tricks brigade to ensure that we are condemned to a continuing dictatorship from Wellington.

After months of denial, the National Party, in the guise of Nick Smith, Minister of the Environment, has finally come clean on its proposals to give ownership of fresh water in New Zealand to Maori.

The announcement was made, as one would expect, discreetly at a Party conference at Lake Tekapo last Saturday. Whilst the new flag debate controls the headlines this fundamental change to how New Zealand will function in the future was quietly slipped under the radar.

The proposals can be seen in the comments of Muriel Newman, the commentaries of David Round and Mike Butler's Water and deceit, part 2.  The speech of Nick Smith announces a consultation process Next Steps for Freshwater.

For those who are interested in the remnants of the rule of law in New Zealand and how the proposed Maori rights infringe that principle then the commentary of ex Judge John Willy are thought-provoking.

Note that submissions on the fresh water proposals close on 22 April 2016.

If you feel that this is an important issue then let you circle of friends, family and acquaintances know about it.

The MRRA has applied to the Supreme Court for leave to appeal the decision of the Court of Appeal.

The Supreme Court is the highest court in the land and some years ago replaced the Privy Council based in London.

Appeals to the Supreme Court are not as of right but have to be approved by the Court on the basis that they are of general or public importance, of commercial significance, or a miscarriage of justice may have occurred or may occur.

Now that the Notice is filed the MRRA has until 14 March to file its submissions on why the appeal should be heard. The KDC then has a further two weeks to file its submissions in reply. The Court will then decide whether it will hear the appeal.

The decision to proceed with the appeal was made by the MRRA after lengthy consideration of the legal principles involved and the effect that the Court of Appeal decision would have on not only Kaipara ratepayers but all ratepayers in New Zealand.

The Court of Appeal held that the protected transaction provisions in the Local Government Act were so broad that they entitled a local authority to set rates for an unlawful purpose.

The clear intention of Parliament when introducing the provisions, which the Court overlooked, was that the provisions were to prevent local authorities taking advantage of their own ultra vires acts and reneging on their loans. They were never intended to be used by a local authority as a sword against ratepayers.

Likewise, both Heath J and the Court of Appeal decided that the Validation Act was intended by Parliament to validate the EcoCare rates “for all purposes” including defects that Parliament was unaware of.

This again ignores the clear intention of Parliament which was to validate only the irregularities set out in some great detail in the Preamble to the Act (some 73 clauses!), and nothing more. That was the scope of the Act laid down by the Parliamentary process.

If the decision of the Court of Appeal is allowed to stand then effectively any local authority that sets a rate to fund any debt - which is every local authority - can completely ignore its obligations under the Local Government Act.

The Court of Appeal also refused to consider the MRRA’s right to a judicial review because it decided that the MRRA’s interpretation of both the protected transaction provisions and the Validation Act (which were based on the actual intentions of Parliament) were not  “viable” interpretations. The MRRA was therefore denied its fundamental rights under the NZ Bill of Rights Act.

Honest John has of course taken the offensive in the latest edition of the Mangawhai Focus (not yet online).under Further litigation a burden to ratepayers. Regretfully such litigation is a burden to ratepayers and that is what happens when the local council has been hijacked by the government, the offenders are allowed to abscond and the ratepayers are forced to pay an illegal debt to ensure that the banks get their pound of flesh.

Honest John and his string-pullers are in absolute dread that the Supreme Court might look at the Kaipara debacle and have the fortitude to bring the rule of law back to Kaipara.

I am sure that all ratepayers would be delighted to hear that they are not responsible for the illegal debts incurred by the KDC.

Honest John raises the “bankruptcy” of the KDC as a red-herring to scare ratepayers. The truth is that the KDC is and had been insolvent for many years. It has committed several acts of default under its loan agreements and only survives because it has the backing of the government. It is so much in debt that the Local Government Funding Agency will not allow it to join, and interest payments on a large part of its debts are being capitalised because it cannot afford to pay them.

And that is after using all the monies in the Mangawhai Endowment Fund (and other reserve funds) for "other purposes" (which the OAG could not trace) and not repaying them.

The solution is not difficult.

If the debt is declared by the Supreme Court to be unlawful then ratepayers would be willing to pay their fair share of the debt, being the value of the EcoCare plant.

The rest of the debt would have to be divvied up, as in any receivership situation, between the Chief Executive, the councillors, the Auditor-General and Audit New Zealand, Beca, and all those who were party to the unlawful and financially imprudent actions that created the massive debt.

Of course, the government would also have to chip in. Not because ratepayers are seeking hand-outs but because it was the government’s failure through the incompetence of the OAG and Audit-New Zealand that allowed the Kaipara debacle to get off the ground. It was also the failure of those bodies, and the various Ministers of Local Government, and John Key, who were all personally warned that Kaipara was out of control, but who chose to turn a blind eye and allowed the rorts to escalate.

There is still the outstanding issue of whether ABN Amro which originally lent the money to the KDC in questionable circumstances met the good faith requirements of the protected transaction provisions. The loan was conditional upon a report from their lawyers Russell Mceagh on the legality of the loan and it was glaringly obvious that the loan was in breach of the LGA in many respects. That is why, no doubt, the loan was sold at a 40 per cent discount. That is a compelling reason for the current bankers taking a substantial haircut.

Rather than bitching about ratepayers defending themselves from his persecution, Honest John should roll in Steven Joyce to bang a few heads together and broker a deal between the parties that was completely fair and would put all the problems of the past to rest.

Aye, but there’s the rub. This is not about fairness. It’s about shafting the ratepayer. And so far there has been no need to be fair. And that is why is why it is so important to put the case before the Supreme Court. Fairness, justice and the law is on the side of the ratepayers. All we need is a court of law to acknowledge that.

MORE FROM THE FOCUS    23.02.2016
Rob Pooley, the editor of the Mangawhai Focus, was clearly nettled by my comments in FOCUS AT IT AGAIN   02.02.2016. He wrote to me personally to try and justify the lack of a factual basis for his “honest opinions” that he foists regularly on his readers. He would do much better if his “honest opinions” did not echo exactly the views of Honest John, and if he did attempt to elicit the facts before gushing into print. A bit of investigative journalism would not go amiss.

In the following edition of 8 February ED SAID became an expert on all things ecological about the Wharfdale Crescent property which the commissioners are selling without any consultation even though it is claimed to be an important wetland area. 

After tramping through the property ED SAID opined expertly:

“Trust me, it is not a ‘wetland'. In fact it’s more like a wasteland. It is a piece of “wet land” which is PC for a ‘swamp’.

Quite coincidentally the editorial coincides with an article in the same edition on the very same matter, with the same approach and attitudes from Honest John.

Honest John with his usual amiable and open approach refused permission to an ecological expert instructed by ratepayers to even enter the property. However his mates at the Focus were given free rein to go exploring the property looking for, as ED SAID says, pristine lakes, lily pads and pink-legged flamingoes.

Did ED SAID find pink-legged flamingoes?

Should we trust ED SAID’s ecological expertise, as he invited us to do?

Before making up your mind see the summary of the ecologist’s report on the property provided by the NRC.:

The size of the wetland and presence of native plants fulfils the RSQP (regional Water and Soil Plan) Appendix 13(a) criteria for an Indigenous Wetland. It is also likely that the area would fulfil at least one of the nine appendix 13(b) criteria for a Significant Indigenous Wetland.

But, no mention of any pink-legged flamingoes.