That discussion was held yesterday in the High Court in Christchurch and a video link enabled proceedings to be viewed from the same court in Whangarei.
The association sought orders that the decisions taken by the council to enter into contracts on the wastewater project were in breach of the Local Government Act 2002 and were therefore illegal.
It also sought indemnity costs from the council, saying it had spent $179,475 in legal proceedings from December 2012 to April 30, 2014.
The council opposed an interim relief to prevent it from collecting overdue rates as such an order would be inconsistent with Parliament's clear intention in enacting the Validation Act.
Council lawyer David Goddard said in the unlikely event that the Court of Appeal took a different view and found that some part of the withheld rates was not payable, any overpaid rates would be refunded.
If rates remained unpaid, penalties would continue to accrue, which would not be in the interests of ratepayers, he submitted.
Also, he said, uncollected rates would mean reduced cashflow in terms of deferred work programmes and reduced services.
Association lawyer Matthew Palmer told the court yesterday that the statutory power to rate could not be exercised and that the council must consider all available options to ascertain what approach was in the best interest of its ratepayers before levying rates.
The council, he argued, invited legal proceedings by continuing to rely on the presumption of validity to collect and enforce its rates, despite having legal advice from February 2012 that its rates were invalid.
Mr Palmer cast doubts on the council's evidence that its finances were in a sustainable position.
Unpaid past rates are about $8.5 million.
Mr Palmer said the association wanted the indulgence of the Court of Appeal and the Supreme Court on important legal and constitutional issues in terms of the council's powers to set rates to finance loans that were entered into illegally.
Justice Heath will deliver his ruling next week.