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$80m blowout may cost those who caused it

by Imran Ali

Commissioners at the Kaipara District Council are seeking legal advice to decide whether people or organisations responsible for the $80 million blowout of the Mangawhai wastewater treatment plant can be held accountable.


Chairman of commissioners John Robertson said the council intended releasing the outcome of its advice by the end of August.

"We have also looked at the Auditor General's report (into the scheme) and are also seeking legal advice," Mr Robertson said.

"I am determined to get the report out at the end of August."

The Auditor General had been extremely critical of the process leading to the securing of funding for the scheme by former councillors.


Mr Robertson's comments followed a High Court decision, released yesterday, in which Justice Paul Heath denied a request by the Mangawhai Ratepayers and Residents' Association to prevent the council collecting outstanding rates amounting to about $6.3 million.


Justice Heath said that despite the illegality of the contracts, money borrowed to fund them was a "protected transaction" which meant the lender was entitled to take enforcement action should the council default on payment.


He also expressed concern about the inequities that would arise between those ratepayers who had withheld payment of historic rates to date and those who had paid them.


If the rating decision were ultimately declared to have been made illegally, he said those who had already paid would be entitled to a refund.


"I do not see why those who have withheld payment to date should be put in a better position than those who have not."

Justice Heath has ordered the council to pay the association most of its legal costs but the exact figure will have to be worked out.


The council sought $179,475 in legal proceedings from December 2012 to April 30, 2014.


This week's decision is the latest in a protracted legal battle which has also seen an appeal filed in the High Court after a judgment in May ruled that the contracts for the scheme breached the Local Government Act and were therefore illegal. The Court of Appeal is yet to decide on a hearing date.

Mr Robertson said no one was a winner in the ongoing litigation and called on the association to withdraw its application to the Court of Appeal.


In response, association chairman Bruce Rogan suggested Mr Robertson could "go jump in the lake".

"The court has said that the council can do anything they like regardless of the law and ratepayers have to pay for it," he said.


"We haven't got justice for the ratepayers yet. The biggest issue for us is the council's right to set rates to recover outstanding debt."