Auckland Council has contacted police over claims a Manurewa homeowner whose house was sold by mortgagee sale today has been paying rates to an unregistered Maori authority.

Charlotte Hareta Marsh lost her home in a court-ordered sale after failing to pay rates since August 2006. She has refused to recognise the authority of Auckland Council and claims to have paid her rates instead to the "rightful land owner" - Arikinui o Tuhoe.

Charlotte Marsh at her home in Manurewa. Photo / Dean Purcell, NZ Herald
Charlotte Marsh at her home in Manurewa. Photo / Dean Purcell, NZ Herald

It is the first forced sale Auckland Council has taken under the Local Government (Ratings) Act, though it has five other properties in its sights with significant rates arrears.

The council's chief financial officer Sue Tindal told the Herald Ms Marsh now owed more than $12,000 in unpaid rates and penalties and nearly $3000 in court costs.

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The money and any further charges would be deducted from today's $597,000 sale price and the balance returned to Ms Marsh.

She said the mortgagee process was not taken lightly.

"It's always a last resort. That is after all avenues to attempt to extract the rates from the ratepayer have been exhausted."

Asked if the council was being mean spirited forcing Ms Marsh from her home of 20 years over a debt of $12,000, she said: "We have to be fair to all ratepayers. We have several hundred thousand ratepayers who do pay their rates. This particular case is not about an affordability issue, it is about a ratepayer refusing to acknowledge Auckland Council as a statutory authority."

She added that council officers had contacted police over claims Ms Marsh had been paying her rates to an unregistered Maori authority. It was now for police to determine whether this constituted criminal activity, Ms Tindal said.

A Counties Manukau police spokeswoman said police were aware of the issue and in discussions with Auckland Council.

But police were yet to receive a formal complaint and were not actively investigating the case.

It was likely to be a civil matter and had been referred to the Counties Manukau Maori liaison officer.

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Ms Tindal stressed there had been numerous attempts to get Ms Marsh to settle her rates bill. But written correspondence had been returned to council unopened and Ms Marsh had been unwilling to communicate with council staff.

"Unfortunately during that dialogue Ms Marsh choose to accept advice from her advisor."

The settlement date for Ms Marsh's 1950s three-bedroom Rogers Rd home was August 28, when the new owner could legally take possession of the property.

However Ms Marsh has vowed to remain where she is, standing up during today's auction and yelling that her property was not for sale, before being escorted to the back of the auction room by Barfoot & Thompson staff.

"I'm not going anywhere," she later told the Herald. "They're going to have to pull me out kicking, screaming, yelling. I will get my nieces and nephews around."

Ms Tindal said the matter was now out of the council's hands and it had no further role to play should Ms Marsh refuse to vacate the property.

"It will become a matter for the purchaser of the property to take up and how they deal with that will be their decision."

The mortgagee sale was not so much a wake call for other property owners, she said. "It's about fairness to all other ratepayers that pay their rates."

Ms Tindal was aware of a handful of other forced sales by councils under the Ratings Act, including in Gisborne in 2011, Napier in 2008 and two properties in Dunedin prior to 2012. The former Manukau City Council had applied to sell two properties in 2009-2010.

In dramatic scenes this morning at Barfoot & Thompson's Shortland St auctions rooms, Ms Marsh stood up as her 1950s Rogers Rd three-bedroom house went under the hammer, yelling: "The property is mine. I grew that tree. It's mine. There is a caveat on the property. It is not for sale."

Ms Marsh was escorted to the back of the auction room by Barfoot staff and two police officers were called and remained in the auction room as the sale proceeded.

After heated bidding from at least five prospective buyers, an Asian man eventually bought the house for $597,000. The property sits on an 827sq m section and has a CV of $400,000.

Auckland Council commenced the sale process under the Local Government (Ratings) Act by going to the High Court after Ms Marsh had failed to pay any rates since August 6, 2010.

She currently owes more than $11,700. It is one of eight properties Auckland Council is seeking unpaid rates for through the High Court, totalling more than $300,000, but the first of the properties to have been sold outright by mortgagee sale.

The council plans to use proceeds from the sale to pay the outstanding rates bill, plus legal costs and court fees. Any balance would be returned to Ms Marsh.

The auction was halted this morning as council staff, legal counsel and a representative of the council's iwi liaison unit tried to broker a last-minute deal to save Ms Marsh's home of 20 years. But she refused and now faces being forcibly removed if necessary.

Arikinui o Tuhoe, who was also at the auction, told the Herald the sale process was unlawful. The land had been passed down through whakapapa and she now planned to take the matter to an iwi body and was considering a legal challenge.

"They tried to do a deal with Charlotte and the deal they said was if she paid her rates they'd forestay proceedings.

"It's now $15,000, this is what they think."

Arikinui o Tuhoe said she had registered a caveat over the property with the High Court which should have prevented the sale going ahead.

"I put a trespass notice over all the land.

"It's not about money. It's about the land and the people."

Ms Marsh said the forced sale of her home was "rubbish".

"What they have done is set themselves up for a massive fall.

"It went for $600,000 for a debt of $11,000 - that's obscene."

Ms Marsh said she refused to accept the last-minute deal because "it sounded under-handed - 'please pay your bill and we'll go away'".

She felt she was being used as a "test case".

Council general manager accounting services Sharmaine Naidoo said last week the council had sent four rates notices and around eight reminder letters to Ms Marsh each year, however they had all been returned.

"A notice of intention to sell the property under the Local Government (Rating) Act 2002 was sent to the owner in August last year. After providing the owner with another opportunity to pay the rates, the High Court sent the owner a further letter on 21 May, 2015 advising of the council's intention to proceed with the sale."

Property records show Ms Marsh has owned the house since January 1995, when it was purchased for $137,000. She is also the listed co-owner of a 7.3ha property in Te Kuiti worth $209,000.