Kaipara District Council commissioners are looking at possible action against parties involved in the controversial Mangawhai EcoCare wastewater treatment scheme that has left Kaipara ratepayers among the most indebted in the country, the High Court has heard.

A judicial review into the controversial sewerage scheme - lodged by the Mangawhai Residents and Ratepayers' Association - started in the High Court at Whangarei yesterday before Justice Paul Heath.

Association lawyer Matthew Palmer said this was an important case not only for Kaipara ratepayers, Mangawhai residents and the council, but also important for the constitution. It also affected the Bill of Rights Act and the rule of law.

The group wanted, in effect, the judge to rule that the KDC's interpretation of the law relating to debt is wrong.

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It also wanted him to rule the KDC, in supporting the Kaipara Validation Act - a law passed by Parliament validating irregularities in the setting and assessing of Kaipara District rates from the 2006-07 financial year to 2011-12 - was acting against the Local Government Act and its responsibilities to ratepayers. "What we are dealing with is an extreme saga of incompetence in public decision-making," Mr Palmer said.

Ratepayers were initially told the final scheme would cost no more than $10.8 million in 2003, then $37 million in 2009 while at the same time the council had taken out a loan for $57.978 million for the scheme and Mr Palmer said this was not done with public consultation as required by law. The spending was also not included in the council's long-term plan, as required. He said the group wanted the court to rule that the council doesn't have and didn't have the power to set rates to cover the loans taken out for the scheme that had been ruled illegal.

Mr Palmer said the commissioners appointed by the Government to take over the running of Kaipara were considering taking action against some of the parties criticised over the scheme in the Auditor General's report into the affair.

The Auditor General was highly critical of the whole process and Mr Palmer said the council's submissions to the court said action was possible against the council chief executive at the time, councillors, the Auditor General's Office, the contractors and consulting company involved and the financier.