Mangawhai ratepayers have won their High Court application for a judicial review of decisions linked to the $80million debt that led to the Kaipara District Council being run by commissioners and Parliament considering validating illegal council rates.
A judgment delivered by Justice Paul Heath on Thursday dismissed a council call for the Mangawhai Ratepayers and Residents Association review application to be struck out and awarded costs in favour of the association.
The judgment was well received at Mangawhai, where delighted association chairman Bruce Rogan said he had received about 200 congratulatory emails by 10am yesterday.
"This is a tremendous vindication of our petition. The judge is clearly saying the council has a case to answer," he said.
The association's 1300 members have so far spent about $100,000 on their legal action and Mr Rogan said there was more expense to come.
The judge, who heard the review application in the High Court at Whangarei on August 16, will hold a case management conference midway through September to arrange for what is expected to be a five-day review hearing at a date to be set.
The review will examine council decisions that increased the cost of the controversial Mangawhai sewerage scheme from about $35million to more than $65million.
The association claims rates the council struck to pay for the scheme were not made in accordance with the Local Government Act and seeks a refund of about $9.5million.
Justice Heath said in his judgment it was now acknowledged there were irregularities in the rate-fixing processes, "so much so that the Member of Parliament for Northland has promoted a local bill that is designed, if enacted, to validate the council's actions".
"This proceeding demonstrates how badly things can go wrong when a democratically elected council assumes significant financial obligations to an arm's-length third party without disclosing the extent of the borrowing to its ratepayers."
The judge said the nature and full extent of problems with the council appeared to have been uncovered by the investigative efforts of retired lawyer Clive Boonham, who bought a holiday home at Mangawhai in 2008.
Mr Rogan said it was possible MPs could push through the Kaipara District Council (Validation of Rates and other Matters) Bill to validate council actions.
But he predicted public outrage if the Government quashed a review that the High Court said had merit.