MANGAWHAI RATEPAYERS' AND RESIDENTS' ASSOCIATION v KAIPARA DISTRICT COUNCIL [2013] NZHC 3530

MANGAWHAI RATEPAYERS' AND RESIDENTS' ASSOCIATION v KAIPARA DISTRICT COUNCIL [2013] NZHC 3530 [20 December 2013]IN THE HIGH COURT OF NEW ZEALANDWHANGAREI REGISTRYCIV 2013-488-152[2013] NZHC 3530BETWEEN MANGAWHAI RATEPAYERS' AND RESIDENTS' ASSOCIATIONApplicantAND KAIPARA DISTRICT COUNCILRespondentHearing: 19 December 2013 (by telephone)Counsel: M S R Palmer for ApplicantD J Goddard QC and L H Weissing for RespondentJudgment: 20 December 2013JUDGMENT (NO. 2) OF HEATH JThis judgment was delivered by me on 20 December 2013 at 9.30am pursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors:P J Kennelly, Orewa, AucklandSimpson Grierson, WellingtonCounsel:M S R Palmer, WellingtonK R M Littlejohn, AucklandD Goddard QC, Wellington[1] Mangawhai Ratepayers' and Residents' Association Inc (the Association) has brought judicial review proceedings to challenge certain decisions made by the Kaipara District Council (the Council). The decisions arise out of the Council's resolution, in August 2005, to construct a sewage treatment plant at Mangawhai.[2] Based on acknowledged irregularities in the Council's decision-making processes, the Association seeks remedies based on three causes of action:(a) Declarations that decisions to enter into the agreement to construct the plant and to borrow money to pay for it were unlawful, with the consequence that the Council has no power to set, assess and collect a targeted rate to repay the debt incurred.1(b) A declaration that general and targeted rates set and assessed by the Council for the period 1 July 2006 to 30 June 2013 were unlawful and invalid, together with an order quashing or setting aside such rates.(c) Declarations that the Council's 2009–2019 long-term Council Community Plan, including a policy on development contributions and financial contributions for the plant and roading at Mangawhai, failed to comply with ss 102 and 106 of the Local Government Act 2002, and were therefore unlawful. An order requiring refunds of development or financial contributions was, in consequence, sought.[3] In my earlier judgment, I recorded that attempts were being made, through the promotion of a Local Bill in Parliament, to validate actions taken by the Council, particularly those to which the second and third causes of action refer.2 The issues were also under investigation by the Office of the Auditor-General. At the time of the August 2013 hearing, no date for reporting was available.31 An application by the Council to strike out this cause of action, based on the "protected transaction" regime in the Local Government Act 2002 and abuse of process was dismissed in a judgment that I gave on 29 August 2013: Mangawhai Ratepayers and Residents Association Inc v Kaipara District Council [2013] NZHC 2220.2 See para [2](b) and (c) above.3 Mangawhai Ratepayers and Residents Association Inc v Kaipara District Council [2013] NZHC 2220 at paras [19]–[21].[4] On 3 December 2013, the Controller and Auditor-General (the Auditor- General) published her report, entitled Inquiry into the Mangawhai Community Wastewater Scheme. I am told that this is a detailed review of relevant facts of some 313 pages. It is accompanied by a separate independent review of audit services performed by Audit New Zealand, running to 105 pages.[5] On 10 December 2013, the Kaipara District Council (Validation of Rates and Other Matters) Act (the Validating Act) received the Royal Assent. Parliament validated certain actions of the Council, with knowledge of the existing proceeding and the relief sought.[6] On 17 December 2013, Mr Palmer, for the Association, sought an adjournment of the hearing of the substantive proceeding, set down over four days commencing on 3 February 2014. Mr Palmer submits that the Association wishes to consider re-pleading its claim in light of both the Auditor-General's report and the Validating Act. A telephone conference was held at 1.15pm on 19 December 2013, to debate an (informal) application for leave to amend the existing Statement of Claim, and the question whether an adjournment should be granted.[7] The current timetable4[8] Mr Palmer submits that a review of the pleadings cannot realistically be concluded until 31 January 2013. He also advises that the Association would prefer, primarily for reasons of cost, to deal with all issues at the same time. That would, necessarily, require adjournment of the application.requires the Council to file affidavits in opposition to the application today. The Association's evidence in reply is to be filed and served on or before 10 January 2014, together with written submissions in support of the application. The Council must file and serve its written submissions on or before 24 January 2014.[9] Mr Goddard QC, for the Council, opposes any adjournment. He submitted there was no reason why the first cause of action54 Mangawhai Ratepayers and Residents Association Inc v Kaipara District Council (Minute 5) HC Whangarei CIV-2013-488-152, 6 November 2013 at para [3].could not proceed in any event.5 See para [2](a) above.Also, he contended that the second and third causes of action could be abandoned without prejudice to subsequent repleading.[10] During the course of submissions Mr Goddard did, however, accept that so long as any new points raised only legal issues he would not object to them being pleaded before the hearing, with a response made in the Council's submissions..[11] Mr Goddard pointed to previous attempts by the Association to advance its claim promptly; to the Association's knowledge in August 2013 of the imminence of the Validating Bill being debated in Parliament and the provision of the Auditor- General's report; to the fact that the Council had allowed an appeal against my earlier decision to lapse because of the early hearing date for the substantive claim; and the need for a prompt hearing given that some $53 million worth of borrowings fall to be renewed in July 2014.[12] To my surprise, the Council has not yet paid the costs awarded on its unsuccessful application to strike out the first cause of action. As I indicated to Mr Goddard, I expect those to be paid in full by midday on 23 December 2013. Otherwise, the Council may be at risk of an application to debar it from defending the proceeding for non-compliance with a Court order.[13] I am sympathetic to the position in which the Association finds itself. The Validating Act has, in all probability, removed its ability to seek judicial review of decisions that are the subject of the second and third causes of action.6[14] During the course of the telephone conference, Mr Goddard agreed to put the Auditor-General's report into evidence, along with the affidavits that the Council is required to file by close of business today. Mr Palmer accepted that, if that were done, there were unlikely to be any factual issues outstanding on which other legal arguments could be based.The Act was supported by the Council, having been introduced by the Member of Parliament for Northland.6 See para [2](b) and (c) above.[15] Mr Palmer confirmed (without being exhaustive) that the types of claims that might be advanced if the second and third causes of action were abandoned, include:(a) A declaration that the effective removal of the remedy of judicial review by the Validating Act was contrary to the New Zealand Bill of Rights Act 1990, or the rule of law.(b) Declarations in the form sought, on the basis that that would have been the legal position had the Validating Act not been passed.(c) Some form of claim (as I understood it), potentially sounding in damages, arising out of Council's pursuit of enactment of the Validating Act.[16] On the basis that the Validating Act (taken together with the original Bill, the select committee report and a Supplementary Order Paper that addressed this particular claim) and the Auditor-General's report will provide a factual foundation for claims such as that, I take the view that it is possible for the Association to reconsider its position and to re-plead to seek remedies of the type indicated. The submissions to be filed by the Association could cover such issues and the Council can respond in the submissions it is presently to file and serve on 24 January 2014.[17] Mr Goddard suggested problems might be caused if a declaration of inconsistency were sought, unless the Crown was served. The need to deal with all issues as quickly as possible suggests to me that the Crown could be served immediately on formulation of the amended pleading. If joined as a party, the Attorney-General could make submissions at the substantive hearing in early February 2014.[18] I do not see the possibility of joinder as a potential impediment to the February hearing proceeding. I am sure that with co-operation from Mr Palmer and Mr Goddard, it will be possible for counsel for the Attorney-General to prepare for a hearing such as this relatively quickly; particularly as the same issues will need to be addressed on behalf of the Council in any event.[19] In those circumstances, I direct:(a) Leave to amend the Amended Statement of Claim is granted. Any amended Statement of Claim shall be filed and served on or before 10 January 2014.(b) Submissions on any additional causes of action of the type indicated shall be filed and served on 13 January 2014,7 contemporaneously with the Amended Statement of Claim. The time for the Council to serve submissions in opposition is extended to 27 January 2014.8(c) If relief of the type indicated 9 is sought, the Association shall serve copies of all papers filed in this proceeding on the Attorney-General so that he may be heard. An application for joinder shall be filed and served on or before 13 January 2014. If that were opposed, I will hear from counsel by telephone during the week of 13 January 2014;10(d) Leave is reserved to either party to seek a telephone conference during the week of 13 January 2013, if further directions are required. In particular, if Mr Palmer concludes, by 13 January 2014 that it is not practicable to proceed in the manner I have indicated, he should request a telephone conference early that week. If that were to happen, I shall rule on whether the first cause of action should, in any event, proceed. To accommodate that possibility, submissions on the first cause of action shall, in any event, be filed and served on or before 13 January 2014.otherwise an order can be made by consent by the Duty Judge in Auckland.7 Counsel advised me that if the adjournment application was unsuccessful, the dates for serving submissions could be extended by consent to 13 January 2014 and 27 January 2014 respectively.8 Filing will need to occur on 28 January 2014, as 27 January 2014 is a public holiday in both Auckland and Whangarei.9 See para [15] above.10 I will be available at Court for the whole of that week.(e) A copy of this judgment shall be served on the Attorney-General today, so that he is alerted to the possibility of a joinder application.[20] I observe that, because the proceeding has been brought by way of judicial review, it is unlikely that a claim in damages would be allowed to delay the pubic law aspects of the claim. On that point, I refer to observations made by the Court of Appeal in Orlov v New Zealand Law Society.11[21] I make no order as to costs on the dual application for leave to amend the Statement of Claim and for an adjournment of the hearing.___________________________P R Heath JDelivered at 9.30am on 20 December 201311 Orlov v New Zealand Law Society [2012] NZCA 12 at paras [21]–[22].