Media Statement
4 September 2008
Development contribution “top up” ruled unlawful by High Court Judge
A High Court ruling has blown the whistle on Auckland City Council overcharging development contributions on new
subdivisions.
The ruling relates to Auckland City Council using development contributions as a so-called “top-up”, after first having
charged a financial contribution on the same development. The Court ruled that practice illegal, which sets a precedent
for other developers who have also been overcharged by councils who seek top-up payments.
Daniel Newman, Property Council’s Policy Director said the Court’s ruling sent another clear message to the local
government sector that development contributions are not a ‘blank cheque’.
“Local councils need to learn that they cannot double-dip. The High Court decision is further confirmation that the
local government sector needs a prescriptive policy framework for determining whether or not they can charge development
contributions, when such a charge can apply, and how much they can levy.
“As a result of the ruling against Auckland City Council, other developers who have also been the victim of council
demands for top-up payments will be reviewing whether those demands were appropriate. We would expect the Council would
have to review its own potential liability under this circumstance,” Daniel Newman said.
The judicial review arose when in January 2004 Auckland City Council charged Domain Nominee Ltd. a financial
contribution of $222, 318 and took 510m² for reserves based on a 27-unit residential development in Parnell. In January
2007, the company decided to subdivide the property and reduce the number of units to 24. During this period, Auckland
City Council had introduced a development contributions policy and subsequently demanded a development contribution for
the second consent.
The Judge concluded that if Parliament had intended to give local councils the ability to impose development
contributions as an additional levy on top of financial contributions during the phase-out period, the law would have
expressly stated that entitlement.
“Once again the High Court has had to be called in to read the Local Government Act 2002 back to the local government
sector. Just as the Court found North Shore City Council’s 2004 development contributions policy to be in error of law,
so too is Auckland City Council’s practice of demanding top-up payments.
“It is our hope that the Council can work with the plaintiffs to agree on an appropriate refund. We would also expect
Auckland City Council to clarify its own policy to ensure that this double-dipping practice does not occur in the
future,” Daniel Newman said.
ENDS