Local Government New Zealand Heads to Privy Council

Local Government New Zealand today announced it will be appealing the Court of Appeal decision in the “apportionments case” to the Privy Council

This case is a challenge to the way the Valuer-General and his predecessors have classified blocks of flats, shops and similar properties for rating purposes. The Valuer-General believes that a block of flats should be treated as a single “separate property” for rating purposes, whereas Local Government New Zealand believes each flat or shop should be a “separate property” in its own right.

“The issues in the case are complex, but what it really comes down to is one single question. Should valuation legislation be about rating equity or convenience for the valuer” Chief Executive, Peter Winder said.

The case was heard by the High Court in June 1999, with Local Government New Zealand being successful in most of what it sought. The Court of Appeal overturned that judgement in September 2000.

The outcome of the case is important because it may have downstream consequences for the way most councils have rated in the past. Fifty-eight of the 74 local authorities have made uniform charges on each flat or shop in a block of shops, but some ratepayers have advice that the only charge per block can be made.

Mr Winder stressed that this case was not about the legality of the charges themselves but about the way properties have been valued.

Mr Winder said “If we are successful this will automatically resolve the issue, if we are not successful then I predict that further litigation will follow to determine whether the charges were lawful.”

In the event that local authorities do have to refund rates then 58 councils could be liable to make refunds of at least $36 million to around 12,000 properties.

The other three parties that joined with Local Government New Zealand to bring the case have not decided whether or not to join appeal, but will do so in the next month.

The case will be funded by the 58 affected local authorities, all of whom have agreed to make a contribution.

Local Government New Zealand has retained Allan Galbraith QC to present the appeal. The appeal has been provisionally set down for July 3-4. Local Government New Zealand does not expect a decision until August or September.

“We have advised the affected local authorities not to refund any charges while the matter is before the Courts. Thirty-six million dollars is about two percent of the rate take. Some local authorities may be up for as much as six percent of their total rates. Local authorities have a duty to all of their ratepayers and not just those who might, and I stress the word might, have a claim.”

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