Tacon v Hastings District Council
[2013] NZHC 1078
•14 May 2013
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
CIV 2012-441-000610 [2013] NZHC 1078
IN THE MATTER OF a proceeding pursuant to the Declaratory
Judgments Act 1908
BETWEEN JANIS TACON Plaintiff
ANDHASTINGS DISTRICT COUNCIL Defendant
Hearing: 6 May 2013
Counsel: G W Calver for the Plaintiff
M Casey QC for the Defendant
Judgment: 14 May 2013
[RESERVED] JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie on 14 May 2013 at 11.30 am
Pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date:
Counsel:
G W Calver: [email protected]
M Casey QC: [email protected]
TACON V HASTINGS DISTRICT COUNCIL HC NAP CIV 2012-441-000610 [14 May 2013]
Introduction
[1] The plaintiff, Mrs Tacon, seeks a declaratory judgment pursuant to s 3 of the
Declaratory Judgments Act 1908.
[2] Mrs Tacon is seeking declarations that a targeted rate imposed by the respondent, the Hastings District Council (“the Council”), was not lawfully levied in terms of ss 14, 16, 17, 18 and Schedules 2 and 3 of the Local Government (Rating) Act 2002. She is asserting that the Council’s actions in levying the targeted rate were not within the statutory purpose, and that the Council did not comply with the relevant statutory requirements.
[3] The relief Mrs Tacon seeks does not happily fit within s 3 of the Declaratory Judgments Act. Except in limited respects, it does not raise any questions as to the validity or interpretation of any statutory provision, or other instrument. Rather, her claim essentially challenges the lawfulness of various steps taken by the Council. I return to this issue later in this judgment.
Background Facts
[4] Mrs Tacon owns a property at 35 Airini Road, Waimarama.
[5] Waimarama is a small beach settlement, approximately 30 kilometres southeast of Hastings. There are some 280 residences at Waimarama. About three quarters of those residences are holiday homes. The remainder are permanently occupied. Mrs Tacon is a permanent resident.
[6] Mrs Tacon’s property adjoins an area of some 5.99 hectares, known as the Waimarama Domain. The domain is open space. It is abutted to the north, west and south by 18 properties.1
[7] The domain was for many years owned by the Society of St Mary Trust (“the
Trust”). In 1973, the Trust leased the domain to the then Hawkes Bay County
1 One “property” comprises two unit titles.
Council for 21 years. That lease was renewed for a further 21 years in 1994. The annual rent was then $450 per annum.
[8] The Hawkes Bay County Council has since merged with other local authorities, to become the Hastings District Council. It owns other open space land adjacent to the domain. The Council land however is not all in one block. There are two adjoining blocks to the south of the domain, a smaller block to the northeast of the domain which houses a surf lifesaving club and a carpark, and a further block which does not abut the domain, but lies a short distance to the north.
[9] The rent payable under the lease of the domain fell due for review in 1994. It was agreed that it would become $11,800 per annum, effective from 30 September
1995. The rent fell due for renewal again in September 2001. The Council and the Trust were initially unable to reach agreement. There were protracted negotiations, and in the event, the Council agreed to a new rental formula. The rental was to be fixed by reference to a percentage of the capital value of the domain. The resulting rental was $59,200 (plus GST) per annum.
[10] In the course of these negotiations, the Trust indicated that it had resolved to sell the domain. Its preference was to sell the domain to the Council for reserve purposes. If this could not be achieved, then the domain was to be put up for sale subject to the lease.
[11] Council officers prepared a report for the Council’s Finance and Monetary Committee. Inter alia, that report suggested that the Council should investigate the purchase of the domain. Alternatives noted were the purchase or lease of part only of the domain, or exiting the lease altogether.
[12] The Committee resolved to consult with the Waimarama community, before finalising its preferred approach to the matter.
[13] Consultation with the community started in January 2009. An open day was held, and a public meeting was convened. Eighty people attended the open day and
150 attended the public meeting. The Council also invited submissions on the future of the domain.
[14] On 27 January 2009, the Waimarama Domain Protection Society (“the Society”), applied for incorporation. The Society had been set up by local residents. Mrs Tacon was one of its founding members. As its name suggests, its aim was to retain the domain as public open space, available for Waimarama residents and visitors alike.
[15] On 30 January 2009, the submission period on the future of the domain closed. The Council had received 111 submissions. Eighty three supported the purchase of the domain in its totality. In addition, the Society had organised a petition. The petition was presented to the Council. It was signed by 2,057 people, and it supported the Council acquiring the domain. The Council resolved to receive the petition.
[16] At some stage in early 2009, the possibility that the purchase of the domain might be partially funded by adjoining landowners was raised in a discussion between the Mayor, and a Mr Brendan Parker, who was a member of and spokesperson for the Society.
[17] On 10 March 2009, the Council obtained a valuation from a firm of registered valuers, Logan Stone Limited. The valuation considered the impact on the value of adjoining properties if residential development were to occur on the domain. It assessed the indicative land value of the adjoining properties as being approximately $5,750,000. It noted that the owners of the adjoining properties enjoyed benefits because:
(a) the Council maintained the domain;
(b) the domain gave them vehicular access to the rear of their properties; (c) the domain afforded them low-level views; and
(d) the domain gave them direct access to the beachfront.
Logan Stone considered that there would be an overall 25 percent loss in land value if these benefits were no longer available to the adjoining properties. The report went on to conclude that the properties had a total market value of approximately
$10,000,000 and that a fair and reasonable estimate of the overall loss of market value to adjoining landowners if the domain were to be developed for residential purposes, would be about 15 percent, equating to $1,500,000.
[18] Between 2009 and 2011, the Council and the Trust discussed the prospective sale/purchase of the land. Negotiations were delayed in part by an injunction against the sale issued by the Māori Land Court. This matter was only resolved in late 2010.
[19] On 10 February 2011, the Trust wrote to the Council offering to sell the domain to the Council for $1,170,000 (plus GST). The Council resolved to accept the offer, on a conditional basis. It had to be sure that it was in a position to fund the purchase, and it considered that the purchase price might be able to be funded as follows:
(a) Council funding — $500,000;
(b) Hawkes Bay Regional Council — $300,000; and
(c) adjoining landowners — $370,000.
[20] On 16 April 2011, the Mayor, a councillor, a community board member, the Council’s legal advisor, and its Chief Financial Officer, attended a meeting with the Society. Fourteen members of the Society attended. The purpose of the meeting was to advise that a purchase price that had been negotiated with the Trust, and to advise the proposed funding split which the Council considered might be appropriate. The proposed figure of $370,000 from adjoining landowners was put forward. The Council explained that it could levy a targeted rate on the adjoining properties, to recover either $23,000 per property as a lump sum payment, or $3,148 per year over
10 years. This latter figure allowed for interest, calculated at seven percent on the lump sum payment. Both amounts were inclusive of GST. The potential loss of value associated with any residential development of the domain was also discussed.
Mrs Tacon and one other landowner spoke against the proposed targeted rate. A vote was then held to ascertain how the members of the Society present wished to proceed. Council representatives left the meeting when the vote was taken. Twelve landowners voted in favour of a targeted rate. Mrs Tacon did not vote in favour, but she agreed to abide by the majority decision.
[21] On 27 May 2011, Council officers prepared a document under s 101(3) of the Local Government Act 2002. The document analysed the public/private benefits, and how the costs of purchase of the domain could be allocated. The Council also sought and obtained legal advice on targeted rating in the circumstances which had arisen.
[22] On 7 June 2011, the Council and the Trust entered into an agreement for the sale and purchase of the domain. The purchase price was $1,170,000 (plus GST if any). The agreement was conditional upon the Council arranging funding contributions from the Hawkes Bay Regional Council and adjoining landowners, totalling not less than $670,000 on terms satisfactory to it, on or before 31 August
2011.
[23] In the interim, Mrs Tacon had had the opportunity to reflect on her position. She decided that she was not prepared to contribute to the purchase of the domain. She saw her solicitors. She also wrote to the Mayor on 15 June 2011. The Deputy Mayor responded on the Mayor’s behalf, because the Mayor was unavailable, on
20 June 2011.
[24] On 21 June 2011, the Council prepared a letter to the adjoining landowners. The letter advised them that the Council had entered into the conditional agreement to purchase the domain. It detailed the purchase price, and set out the funding allocation which the Council proposed. The letter went on to advise that the Council was seeking advice from adjoining landowners as to whether they wished to pay a lump sum contribution of $23,000, or pay increased rates, effective from 1 July 2012 for a period of 10 years.
[25] On 25 June 2011, Council officers met with the adjoining landowners. The letter of 21 June 2011 was distributed. Fourteen of the 18 landowners elected to pay the lump sum of $23,000, and two elected to pay by way of increased rates over the
10-year period. Mrs Tacon elected not to contribute at all. One other landowner did not respond. That landowner has since sold his property, and the full lump sum payment of $23,000 was paid at the time of sale.
[26] Mrs Tacon is the only adjoining landowner who has refused to contribute to the purchase of the domain.
[27] A Council meeting was held on 25 August 2011. The internal report prepared under s 101(3) of the Local Government Act was presented. The Council resolved to adopt the report and to make the sale and purchase agreement unconditional, noting that the purchase would be funded as follows:
(a) Hastings District Council — $510,000;
(b) Hawkes Bay Regional Council — $300,000; and
(c) Adjoining landowners — $360,000
[28] The agreement for sale and purchase was settled on 27 September 2011, and the Council issued a press release confirming this. On 5 October 2011, it also wrote direct to adjoining landowners in this regard. On 27 October 2011, the Council passed a resolution declaring the domain a recreation reserve.
[29] The Council’s draft long-term plan, making provision for the targeted rate, was publically notified on 31 March 2012. Mrs Tacon lodged a submission opposing the proposed targeted rate. That submission was presented at a meeting of the Council held on 1 June 2012.
[30] The Council resolved to reject the submission and to adopt its 2012–2022 long-term plan on 20 June 2012. On 29 June 2012, the Council wrote to Mrs Tacon’s solicitors advising that it was retaining the funding arrangements detailed in the long-term plan, and on 6 July 2012, the Council issued its first rate
demand for the financial year. Mrs Tacon’s rate demand for the year totalled
$5,185.48. That sum included $3,148, being the targeted rate relating to the purchase of the domain. Mrs Tacon has refused to pay and she has initiated these proceedings.
The Proceedings
[31] Mrs Tacon, in her statement of claim, seeks declaratory judgments as follows:
(a) …has the targeted rate been lawfully levied in terms of s 14, s 16, s 17 and s 18, and Schedules 2 and 3, of the Local Government (Rating) Act 2002?
(b) In particular:
(i) Does the reason stated by the respondent Council as being the rationale for the targeted rate — that is for the purposes of “potentially avoiding [the Domain] being acquired by a developer and being developed, thus preserving the open nature of the property outlook” and protecting the landowners from an (alleged) drop in property values — come within the term “one or more activities or groups of activities” in s 16 of the Local Government (Rating) Act
2002?
(ii)
Were the “activities or groups of activities” identified adequately in the Council’s funding impact statement in any event and did the respondent Council comply adequately with s 16 of the Local Government (Rating) Act 2002?
(iii)
In calculating the plaintiff’s liability for the targeted rate did the respondent Council comply adequately with s 18 of the Local Government (Rating) Act 2002?
[32]
As
noted,
the proceedings have been brought under the Declaratory
Judgments Act. I was advised by counsel that this was deliberate, and intentional. A declaration could have been sought, either alone or with other forms of relief, by way of an application for review under the Judicature Amendment Act 1972 or at common law under the Court’s inherent jurisdiction.2
[33] I record that there was no application requesting me to treat the proceedings as an application to review under the Judicature Amendment Act 1972. Such a step
2 P A Joseph, Constitutional and Administrative Law in New Zealand (3rd ed, Thomson Brookers,
2007) at [26.3.3].
would have been open to Mrs Tacon.3 Unfortunately, the Court does not have power to make such a direction of its own motion.
[34] Under the Declaratory Judgments Act, where any person has done any act, the validity, legality or effect of which depends on the construction or validity of any statute or subordinate legislation, a declaration may be sought to determine “any question as to the construction or validity” of the statute or subordinate legislation.4
Proceedings are commenced by originating summons, and any declaratory order made is binding on the person making the application, on all persons served, and on all other persons who would have been bound by the declaration if the proceedings had been an action.5
[35] It is trite law that the Court will not issue a declaration under the Act where the facts are in dispute.6 Nor will it issue a declaration under the Act where the question posed for determination involves a mixture of law and fact.7
[36] Mr Calver, appearing for Mrs Tacon, accepted that there are a number of factual disputes raised by her in the affidavits filed in support of the application, and also in an affidavit which she has obtained from a valuer, a Mr Rawcliffe. Mr Calver acknowledged that it was inappropriate to ask me to make any findings in relation to the factual disputes raised. Mr Calver also advised me that Mrs Tacon was not attacking the reasonableness of the Council’s actions. He asserted that she is primarily concerned with issues of statutory interpretation. Nevertheless, he had some difficulty in detailing exactly what questions of interpretation arise on the pleadings. In discussion, he acknowledged that the issues before the Court, given the limited relief available under s 3 of the Declaratory Judgments Act, boil down to the following:
(a) What do the words “identified in its funding impact statement”, used in s 16 of the Local Government (Rating) Act 2002 mean?
3 Judicature Amendment Act 1972, s 7.
4 Declaratory Judgments Act 1908, s 3.
5 Section 4.
6 Re a Lease; Barber v Hanfling [1948] NZLR 855 (SC); Collins v Lower Hutt City Corporation
[1961] NZLR 250 (SC); Sloan v R [1990] 1 NZLR 474 (HC).
7 NZ Insurance Co Ltd v Prudential Assurance Co Ltd [1976] 1 NZLR 84 (CA).
(b) What do the words “[d]espite subsection (1)” used in s 18(2) of the
Act mean?
[37] It follows that I do not address a number of the arguments made by Mr Calver which called into question the exercise of the relevant statutory powers by the Council. I give some examples:
(a) Mrs Tacon asserted that the benefit to adjoining landowners was
“wildly overstated” by the Council.
(b)Mrs Tacon claimed that “little if any cognisance was placed on the contingent nature of the risk, or the remoteness of the possibility, that any development [on the domain] would ever occur”.
(c) Mrs Tacon asserted that the level of targeted rate imposed was not
“appropriate”.
These rather tendentious arguments do not call into question the construction or validity of any statute or subordinate legislation. Rather, they go to the reasonableness of the Council’s decision to levy the targeted rate. They are inappropriate where a declaration is sought under the Declaratory Judgments Act.
[38] For the sake of completeness, I also note as follows:
(a) In the course of his written submissions, Mr Calver sought to raise an argument based on s 117, and Part 4A of the Local Government (Rating) Act. That matter had not been raised in the pleadings. It was not pursued on Mrs Tacon’s behalf.
(b) Further, submissions about the timing of various steps taken by the
Council were not pursued.
The Issues — Analysis
[39] It was common ground that s 101 in the Local Government Act and ss 16, 17, and 18, and Schedules 2 and 3 in the Local Government (Rating) Act provide the relevant statutory framework within which the Council levied the targeted rate in issue in this case.
Section 101
[40] The starting point is s 101 of the Local Government Act. It deals with financial management by a local authority. Inter alia, it provides as follows:
101 Financial management
(1) A local authority must manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community.
…
(3) The funding needs of the local authority must be met from those sources that the local authority determines to be appropriate, following consideration of,—
(a) in relation to each activity to be funded,—
(i) the community outcomes to which the activity primarily contributes; and
(ii) the distribution of benefits between the community as a whole, any identifiable part of the community, and individuals; and
(iii) the period in or over which those benefits are expected to occur; and
(iv) the extent to which the actions or inaction of particular individuals or a group contribute to the need to undertake the activity; and
(v) the costs and benefits, including consequences for transparency and accountability, of funding the activity distinctly from other activities; and
(b) the overall impact of any allocation of liability for revenue needs on the community.
[41] Section 101(3) is a “critical filter” by which funding sources in respect of each activity must be considered and determined.8 It is concerned with how the funding needs of local authorities are to be met. The section puts in place a process by which local authorities identify and then use funding sources.9 It affords local authorities the opportunity to exercise considerable flexibility in apportioning liability between various sources.10
[42] Local authorities must determine the appropriate sources to meet their funding needs after consideration of the matters identified in both s 101(3)(a) and (b). The consideration and determination required is in relation to each activity.11
The word “activity” is defined in s 5 of the Local Government Act. It means each good or service provided by a local authority and includes “the provision of facilities and amenities”. When it is considering each activity to be funded, the local authority is required to consider each of the five factors identified in s 101(3)(a). The factors are cumulative. The consideration of each of them is mandatory.
[43] One of the identified factors is the distribution of benefits between the community as a whole, any identifiable part of the community, and individuals. The legislation has recognised that each may share in the benefits from an activity provided by a local authority. The local authority is required, inter alia, to consider the distribution of benefits, in determining how its funding needs are to be met.
[44] Here, the acquisition of the domain was an activity as defined in the Local Government Act. That is clear from s 5 and it was not disputed by Mr Calver. The Council was required to, inter alia, consider where the benefits resulting from the purchase might lie. To assist in this regard, it obtained a valuation report from Logan Stone Limited. As I have noted above, that report considered that there was a direct benefit to adjoining landowners and it quantified that benefit in financial terms. This information, which the Council was entitled to accept on its face, was incorporated
into an internal report addressing the s 101(3) considerations. The report identified
8 Neil Construction Ltd v North Shore City Council [2008] NZRMA 275 (HC) at [214].
9 Paekakariki Informed Community Incorporated v Kapiti Coast District Council HC Wellington
CIV 2003-485-2760, 29 September 2004 at [51]–[52].
10 C Mitchell and D Knight, Local Government Law in Practice (LexisNexis, Wellington 2011) at
[LGA 101].
11 Neil Construction Ltd v North Shore City Council, above n 8, [211].
that there were benefits to adjoining landowners, to the Hastings District community, to other residents of Hawkes Bay, and to visitors to the region. The specific benefits to the adjoining landowners were identified as being access to the domain, sea views, and the avoidance of a decrease in land values of up to 25 percent, and in market values of up to 15 percent. The Council adopted the report.
[45] While Mr Calver, on Mrs Tacon’s behalf, was critical of the s 101(3) analysis, and submitted that the resulting targeted rate imposed was “not appropriate”, that submission turned on a criticism of the Logan Stone valuation, in reliance on another valuation report prepared by a Mr Rawcliffe for Mrs Tacon and on some lay views expressed by Mrs Tacon. Such factual disputes cannot be raised in the context of an application under s 3 of the Declaratory Judgments Act.
[46] Mrs Tacon did not otherwise suggest that the Council failed to comply with s 101.
[47] Once the Council had:
(a) considered the various factors detailed in s 101(3)(a), and
(b)concluded that the benefits arising from the purchase of the domain would be shared by the adjoining landowners, and
(c) stood back and considered the overall allocation of liability for revenue needs on the community as required by s 101(3)(b),
it was entitled to determine how its funding needs arising from the purchase of the domain would be met. In the event, it determined to allocate the funding needs between itself, the Regional Council, and the 18 individual landowners.12 This apportioned the benefit of acquiring the domain between adjoining landowners, the wider regional community, and the district community. It is noteworthy that the council did not seek to recover the full benefit assessed to each adjoining landowners
by Logan Stone Limited. Rather, it determined to recover part of its funding needs
12 As noted in fn 1 above, one of the “properties” comprised two unit titles. The Council treated
both as one rating unit.
for the purchase of the domain from the adjoining landowners to recoup in part the benefit derived by those landowners. It was entitled to reach that conclusion on the materials before it, and at law.
Section 16
[48] At this point, s 16 of the Local Government (Rating) Act came into play. It provides as follows:
16 Targeted rate
(1) A local authority may set a targeted rate for 1 or more activities or groups of activities if those activities or groups of activities are identified in its funding impact statement as the activities or groups of activities for which the targeted rate is to be set.
(2) [Repealed]
(3) A targeted rate may be set in relation to—
(a) all rateable land within the local authority’s district; or
(b) 1 or more categories of rateable land under section 17. (4) A targeted rate may be set—
(a) on a uniform basis for all rateable land in respect of which the rate is set; or
(b) differentially for different categories of rateable land under section 17.
[49] The following are clear from s 16:
(a) A local authority has a discretion whether or not to set a targeted rate; (b) A targeted rate may be set in respect of one or more activities or
groups of activities;
(c) A local authority may only exercise its discretion to set a targeted rate for one or more activities or groups of activities, if those activities or groups of activities are identified in its funding impact statement;
(d)The activities or groups of activities identified in the funding impact statement must be the activities or groups of activities for which the targeted rate is to be set;
(e) A targeted rate may be set either in relation to all rateable land within the local authority’s district, or in respect of one or more categories of rateable land under s 17.
[50] Clearly, if a targeted rate is to be set, there must be an activity or group of activities. As I have already noted, it was common ground that the acquisition of the domain was an activity. Mrs Tacon however complained however that this activity was not identified by the Council in its funding impact statement as the activity for which the targeted rate was to be set.
[51] Mr Calver sought a declaration as to what the words “identified in its funding impact statement” require. He did not, however, suggest that there was any confusion or lack of clarity as to the meaning of these words, or explain why they need to be construed. Rather, he argued that the document in which the activity was identified was not a funding impact statement. That is a rather different issue.
[52] The words “identified in its funding impact statement” are perfectly clear. They bear their ordinary commonsense meaning. The section requires simply that the activity or groups of activities intended to be the subject of a targeted rate must be identified or set out by a local authority in its funding impact statement.
[53] A “funding impact statement” is defined in s 5 of the Local Government (Rating) Act. Relevantly, the definition refers to cl 15 of Schedule 10 of the Local Government Act. Clause 15 requires that a long-term plan “include” a funding impact statement in relation to each year covered by the plan. No separate document is required. The funding impact statement must be in the prescribed form detailed in the Local Government (Financial Reporting) Regulations 2011 — reg 5 and form 2. The form is tabular, requiring that sources of operating funding and its application, sources of capital funding and its application, any surplus or deficit, and the funding
balance, be set out for each year, starting with the year before year 1, and concluding with year 10.
[54] The legislation and the accompanying regulations envisage that the provision of the information detailed in form 2 will suffice to impart the information required by reg 15(2)(a)–(c). The form goes on to require that the information specified in cl 15(3)–(5) should also be included where relevant.
[55] Clause 15(3) details what a funding impact statement must include if the sources of funding being resorted to by a local authority include a general rate. Clause 15(4) and (5) provide as follows:
15 Funding impact statement
…
(4) If the sources of funding include a targeted rate, the funding impact statement must—
(a) specify the activities or groups of activities for which the targeted rate is to be set; and
(b) include particulars of the category, or categories, of rateable land, within the meaning of section 17 of the Local Government (Rating) Act 2002, to be used; and
(c) for each category, state—
(i) how liability for the targeted rate is to be calculated;
and
(ii) the local authority's definition of a separately used or inhabited part of a rating unit, if the rate is to be calculated on that basis; and
(d) if the targeted rate is set differentially, state the total revenue sought from each category of rateable land or the relationship between the rates set on rateable land in each category; and
(e) state whether lump sum contributions will be invited in respect of the targeted rate.
(5) If the sources of funding include a general rate or a targeted rate, the funding impact statement must, for the first year covered by the long-term plan, include examples of the impact of the rating proposals in subclauses (3) and (4) on the rates assessed on different categories of rateable land with a range of property values.
s
[57] I am acutely aware that a declaration that the words “identified in its funding impact statement” mean that the activity, or groups of activities, intended to be the subject of a targeted rate must be identified, or set out, by the local authority in its funding impact statement, and that the words a “funding impact statement” bear the meaning attributed to them in s 5 of the Local Government (Rating) Act, does not advance matters from Mrs Tacon’s perspective. There is no utility in declaring that the statute means exactly what it says and I decline to do so. I do however trespass briefly into the realms of judicial review, in an endeavour to bring some finality to this matter.
[56]
…
Clau
e 15(6) states as follows:
(6)
If the same source of funding is to be used in more than 1 of the years covered by the long-term plan, in order to comply with subclauses (2)(a), (3), and (4) with respect to that source, it is sufficient—
(a) to comply with those subclauses in relation to 1 of those years; and (b) for the funding impact statement to specify the other years in respect of which that source is to be used.
[58] The Council’s long-term plan for the years 2002–2022 is in two volumes.
[59] There is a one-page document headed “funding impact statement” at page 45 of volume 1. The statement is very much an overview. Targeted rates are noted, but not in any great detail. Insofar as it goes, this statement seems to comply with form
2 in the regulations. It does not, however, set out the information required by cl 15(4), (5) and (6). The plan then goes on to summarise the Council’s rating requirements. There are further references to targeted rates, but not specifically to the rate for the acquisition of the domain. I note, however, that the contents page, page 1 in volume 1, records that volume 2 contains more detailed financial and funding information.
[60] Volume 2 contains detail on Council policies and on its finances. It makes general reference to targeted rates in a number of places, for example:
(a) At page 14, under the heading “costs and benefits of distinct funding”, it is noted that where direct benefits are identified and targeted for a specific service, a separate funding mechanism is generally used and considered appropriate for transparency.
(b)On page 16, it is noted that targeted rates will be used to fund capital works within a defined area of benefit.
(c) On page 17, under the heading “fees and charges”, it is noted that where possible, the Council will seek to recover contributions from any direct beneficiaries from capital works. It is recorded that that can be achieved through direct user charges, development contributions, or targeted rates on those persons or properties directly benefiting.
(d)On page 19, under the heading “parks and reserves”, it is noted that funding sources for parks and reserves can come from a general rate, or a uniform targeted rate.
(e) On page 60, there is a table which sets out financial impacts on sample properties in various rating areas. Waimarama is included in that list, although there is a footnote that the figures exclude the Waimarama Domain targeted rate.
(f) There is a further document headed “funding impact statement” for long-term plan, commencing at page 65. The statement is under various headings, namely “roads and footpaths”, “stormwater disposal”, “wastewater disposal”, “water supply charges”, and “safe, health and liveable communities”. There is a reference to the domain, but not to the targeted rate for its acquisition.
(g) There is a forecast statement for comprehensive income for the
10 years to 30 June 2022. Targeted rates are identified at page 84. There is a reference to the Waimarama seawall, but not to the domain.
Nor is there any reference to the domain in other details given of targeted rates at pages 92 and 93.
[61] Volume 2 does make two specific references to the domain:
(a) On page 20, under the heading “rating policy”, there is the following
statement:
A new rate is proposed to fund the purchase of the Waimarama Domain. Property owners will have two payment options to consider, which include a one-year targeted rate (lump sum), or a fixed targeted rate payable over 10 years.
(b) Part B, commencing at page 111, is headed “rates for 2012/2013”.
There is discussion of targeted rates, and the domain is covered on page 114. It reads as follows:
Waimarama Domain (Acquisition of Land).
A targeted rate set on the properties adjoining Waimarama [domain] calculated based on the direct private benefit to the adjoining landowners. The targeted rate is made up of components as follows:
(a) One-off lump sum payments of $23,000 (inclusive of
GST per property).
(b) Interest costs over a 10-year period charged at seven percent and reviewed annually.
Total targeted rate per annum over 10 years is $3,148.00 (inclusive of GST and interest).
[62] It was not really in dispute between the parties that the information contained in volume 2 includes much of the detail required by cl 15 of the 10th Schedule.
[63] The information required by cl 15(1) and (2) seems to be provided in the funding impact statements at page 45 in volume 1, and at page 65 in volume 2. The information required by cl 15(3), in relation to general rates, is contained at page 111 of volume 2. The information in relation to uniform annual general charges required by cl 15(3)(b) is also on page 111. The information on targeted rates, and specifically on the targeted rate for the acquisition of the domain, is given under Part B from pages 111 through to 117. In relation to the domain, the activity — the
acquisition of land — is specified, albeit in a heading. The categories of rateable land subjected to the targeted rate are identified — it is the properties adjoining the Waimarama Domain. The basis of calculation is said to be “the direct private benefit
to the adjoining landowners”.
o
through until 2022 for those who elect to pay by way of instalments. [65] There are also deficiencies in the information provided:
[64]
this f
In
r the
(a)
my view, the format of the Council’s long-term plan is unfortunate. I say following reasons:
While certain statements are identified in the plan as “funding impact
statements”, those statements do not incorporate all of the information required by cl 15. Nor do they refer to where the further information required can be found. (b)
The position is further complicated, because the required information is spread throughout volume 2. The most detailed information is at
pages 111 and 114 under a heading “Part B”. There is no Part A.
Part B is not expressly identified to be part of the Council’s funding
impact statement. (c)
Much of the required detail is given in part of the plan headed “Part B
— Rates for 2012/13”. However, the targeted rate could extend (a) The Council has not set out in detail how liability for the targeted rate was calculated. Simply asserting that it was based on the direct private benefit to adjoining landowners is not, of itself, helpful to adjoining landowners, seeking to determine exactly how the targeted rate levied against them has been determined. In my view, the Council should have gone further to comply fully with cl 15 (4)(c)(i).
(b) Clause 15(4)(c)(ii) has not been complied with. As noted in foot notes
1 and 12 above, one of the properties is in two unit titles. As I
understand it, both are rated separately, yet they have paid only one lump sum payment.
(c) Clause 15(5) has not been complied with. The funding impact statement does contain an example of the impact of the rating proposals in the rates assessed on different categories of rateable land with a range of property values. That information is at page 60 in volume 2. However, it is there noted that the targeted rate in respect of the Waimarama seawall, and in respect of the domain acquisition, are excluded.
[66] These deficiencies notwithstanding, even had I been dealing with the matter on an application for review, I would not have granted relief to Mrs Tacon, for the following reasons:
(a) The Council assiduously consulted with its community, and in particular with the adjoining landowners.
(b)The proposed targeted rate and the basis on which it was calculated was clearly explained to all adjoining landowners.
(c) With the exception of Mrs Tacon, all were happy with the targeted rate, and all have paid either by way of a lump sum contribution, or are paying over the 10-year period.
(d)The purpose of a long-term plan is to provide an opportunity for community participation in Council decision making. That purpose was clearly met in the present case. Mrs Tacon was not prejudiced. She lodged a detailed written submission on the targeted rate. That submission was presented to the Council.
(e) The information that was included in the plan sufficed to put Mrs Tacon on notice, and there can be no suggestion that she was not properly informed in relation to the issue.
(f) Were the targeted rate to be set aside, the Council could address the situation afresh and repeat the exercise properly.
Section 17
[67] Pursuant to s 16(4), a targeted rate may be set either on a uniform basis for all rateable land or differentially for different categories of rateable land under s 17.
[68] It is clear from s 17 that categories of rateable land are categories that are identified in the local authority’s funding impact statement as categories for setting a targeted rate, and are defined in terms of one or more of the matters listed in Schedule 2 to the Act. The requirement is conjunctive.
[69] Schedule 2 lists various matters that may be used to define categories of rateable land. One of the matters listed is “where the land is situated”.
[70] In the present case, the Council, at page 114 in volume 2 of its long-term plan, identified that the properties the subject of the targeted rate were those adjoining the domain. Geographical location can form a basis for definition, in terms of Schedule 2.
Section 18
[71] Section 18 provides for how liability for a targeted rate may be calculated. It provides as follows:
18 Calculating liability for targeted rate
(1) The calculation of liability for a targeted rate set under section 16 must utilise only a factor or factors that—
(a) are identified in the local authority’s funding impact statement as factors that must be used to calculate the liability for the targeted rate; and
(b) are listed in Schedule 3.
(2) Despite subsection (1), the liability for a targeted rate may be calculated as a fixed amount per rating unit.
(3) To avoid doubt, if targeted rates are set differentially, the rates concerned do not have to be calculated using the same factors for each category of land.
[72] Mr Calvert sought a declaration as to the meaning of the words “[d]espite subsection 1” contained in s 18(2). He submitted that while the end result of the calculation process may be the setting of a fixed amount per rating unit, in arriving at this result, a Council must still have regard to the two factors identified in s 18(1).
[73] Mr Casey QC for the Council submitted that the opening words in subs (2) must be taken to mean what they say, and that a Council can either calculate liability for a targeted rate under s 18(1), or calculate liability for a targeted rate as a fixed amount, under s 18(2).
[74] I agree with Mr Casey’s submissions.
[75] The words “[d]espite subsection (1)” do not, on the face of it, require a Council to first have regard to the matters detailed in subs (1), before calculating liability for a targeted rate as a fixed amount per rating unit. Had the legislature required that the matters detailed in subs (1) first be taken into account, it would have used words such as “[a]fter considering the factors in subsection (1), the liability for a targeted rate may be calculated as a fixed amount per rating unit”. It did not do so. Rather, the opening words of subs (2) indicate that the two calculations required are alternatives.
[76] There is a further factor compelling this conclusion. A number of the Schedule 3 matters, which are appropriate for consideration in calculating a differential rate under s 18(1), would be superfluous to any calculation of a fixed rate under s 18(2). The factors identify bases for comparing different rateable properties, which in turn can provide a principled basis for charging some property owners more than others. The factors are irrelevant when calculating a fixed rate which requires that all property owners pay the same amount. The Schedule 3 factors could only assist in determining the proportion the property owners collectively should pay, as against other funding sources. That issue, however, is dealt with by s 101(3).
[77] This interpretation is consistent with the approach taken in a previous case, and by the commentators. In Paekakariki Informed Community Incorporated v Kapiti Coast District Council, Ronald Young J noted “the targeted rate for a particular authority may be set either in relation to all land or categories of land on a uniform basis for all rateable land or differentially”.13 Professor K A Palmer, in his
seminal text, Local Authorities Law in New Zealand,14 appears to accept that there
are two distinct methods of calculating liability for a targeted rate — on a fixed basis, or differentially.
[78] Accordingly, I declare that the words “[d]espite subsection (1)”, used in s 18(2) of the Local Government (Rating) Act, do not require a local authority to take into account the matters detailed in s 18(1), when calculating liability for a targeted rate as a fixed amount per rating unit.
Result
[79] For the reasons I have set out, Mrs Tacon is entitled to declarations as detailed in [78] above.
[80] While I am not persuaded that the Council has fully complied with its obligations under s 16 of the Local Government (Rating) Act, Mrs Tacon is not entitled to a declaration under the Declaratory Judgments Act in that regard. Further, had I been dealing with the matter by way of application for review, I would have declined her relief, notwithstanding what are, in my view, deficiencies in the way in which the Council handled the matter.
[81] It is my preliminary view that costs should lie where they fall. If either party disagrees with that view, then I direct as follows:
(a) The Council is to file and serve any submissions it wishes to file in relation to costs within 10 working days of the date of this judgment.
13 Above, n 9 at [6].
14 Palmer Local Authorities Law in New Zealand (looseleaf ed, Thomson Brookers)
(b)Mrs Tacon is to file and serve any submissions in reply, within a further period of 10 working days.
I will then deal with the issue of costs on the papers, unless I require the assistance of counsel.
Wylie J
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