The ratepayers group that revolted over a $65 million wastewater plant, brought down a council and sparked the country's biggest rates rebellion, has lost its case at the Court of Appeal.

Mangawhai Ratepayers and Residents Association sought a declaration that Kaipara District Council could not rate for unlawful purposes and had to quash rates it charged for purposes deemed illegal.

But the Court of Appeal, in a ruling released today, found in favour of the council, and also ruled that the association must pay its rival's costs.

John Robertson, chairman of the commissioners at the Kaipara District Council, said he welcomed the court's judgment.


"We are still studying the detail of the decision, but we're pleased with the outcome," he said.

"Our focus now is on Kaipara's future and preparing for next year's elections."

The ruling said that although the council had "gone about things in quite the wrong way", there was "nothing intrinsically illegal about the council's objective".

In 2013, the High Court ruled that the ratepayers had to cough up $57 million for the Mangawhai community wastewater scheme.

The court heard that the council allowed the scheme's cost to explode from $35 million to $63.5 million without consulting ratepayers.

The association challenged this at the Court of Appeal, saying the council's actions were unlawful and it had made multiple decisions relating to the scheme that did not comply with the Local Government Act.