Local Government Wins at the Privy Council

The long running "apportionments" dispute has been settled.

The Privy Council today allowed an appeal from Local Government New Zealand and three of its member councils against the way the Valuer-General had directed that certain properties be treated for valuation purposes.

The Privy Council has ruled that occupation not the existence of separate title is the prime determinant of a separate property for rating purposes - in other words that each flat or shop in a block is a separate property.

Most of the 74 city and district councils had been levying uniform annual charges on each flat or shop when some ratepayers had been claiming that only one such charge could be levied over the entire block. In ruling that each flat or shop is a separate property the Privy Council has effectively held that each flat or shop can be charged.

The decision provides a final resolution to an issuing that had been running since late 1997.

"We are very pleased that the Privy Council has put the whole matter to bed" Local Government New Zealand Chief Executive Peter Winder said today. "Had the Court of Appeal decision stood local authorities may have been liable for refund of $36 million, possibly more".

Mr Winder noted that the case had few implications for future rating as the new Rating Act had rewritten the law to say that from 1 July next year a block of flats would be regarded as one property, but also that each flat or shop could be charged if a local authority wished to do so.

"This is a significant decision for two reasons. It means that local authorities need not refund any of the rates that were under challenge. And just as importantly it gives a clear directive that the primary consideration in rating and valuation law is the promotion of a fair and equitable rating system rather than what is convenient."

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