A High Court judge found it "incomprehensible" that the former democratically-elected Kaipara District Council would decide to increase the cost of a controversial wastewater project by tens of millions of dollars without consulting its ratepayers who were to pay for it.

In a judgment released this week, Justice Paul Heath ruled the council breached the Local Government Act by entering into the sewerage scheme and took particular aim at former Mayor Neil Tiller, his councillors and chief executive Jack McKerchar.

He said the Auditor General Lyn Provost's assessment that the council's decision to basically double the size of a controversial wastewater project from $35.6 million to an estimated $57.7 million "wasn't appropriate" was a "gross understatement".

"It must have been blindingly obvious to the mayor and his councillors that while ratepayers might (given that the project did not enjoy universal approval) have been prepared to pay increased rates to meet a cost of $35.6 million, it could not be said confidently that they would agree to pay $57.7 million for a similar facility."


Justice Heath said the Local Government Act required the council to "make itself aware of" and "have regard to the views of all of its communities" in terms of processes to be followed when making major decisions.

Specific protections, he said, were also given to creditors who may be adversely affected through non-payment of debt by a territorial authority.

"It is common ground that the nature of the decision to build the sewage treatment plant required the council to follow the "special consultative procedure", to which section 83 of the Local Government refers."

He said an example of a lack of transparency was the exclusion of members of the public from a meeting at which the council decided to execute relevant contractual documents for the project.

"It is sufficient to say that the failures to comply with relevant statutory procedures were both manifold and serious," the judge said.

On the repayment of debt incurred from the scheme, Justice Heath said the council was not duty-bound to levy rates but should consider all available options, such as means of restructuring debt arrangements. No such assessment was undertaken by the council, he said.

Meanwhile, the council welcomed the court's decision which it said confirmed that historic rates have been effectively validated.

Chairman of commissioners John Robertson was pleased there was now "absolute clarity" around the issue of historic rates in that they were enforceable and must now be paid.


"As we have consistently said, significant errors were made by previous councils in approving the development of the scheme.

"However it was always the view of the commissioners that the debt was enforceable and that council had a legal obligation to repay the debt. The court has agreed with this view and I hope it is now crystal clear to everyone so that as a district, Kaipara can move forward."