Reaction to court of appeal judgement

Environment Waikato has used its investment fund to pay a rates refund to the Electricity Corporation of New Zealand (ECNZ).

“We were prepared for this outcome and had funds set aside for this purpose,” said Group Manager Finance/Regional Services Warren Stevens.

The $2 million had been paid to ECNZ in October 2004, following a court decision in ECNZ’s favour. EW subsequently appealed the decision to the Court of Appeal.

However, the Court of Appeal has now found in favour of ECNZ – so the $2,054,456.34 in over-charged rates will now be fully transferred to ECNZ.

Mr Stevens said the case arose from a situation beyond the council’s control.

“This is the result of a dispute between the Valuer-General and ECNZ, revolving around the value put on power company assets,” he said.

Environment Waikato collected rates from ECNZ over an 11-year period beginning in 1989, based on valuations of power stations under the company’s ownership. These valuations were recorded on a national valuation roll.

“Under law, we had to rate on the values as they were in the valuation roll,” Mr Stevens said.

ECNZ argued the power stations had been overvalued by the Valuer-General and won a court case forcing the valuations down. It then sought a rates refund from Environment Waikato.

“This meant Environment Waikato, under the rating legislation, became liable for the overpayment of rates,” Mr Stevens said.

EW earlier refunded rates relating to a five-year period, but believed it was not obliged to refund for the earlier six years, based on its interpretation of the 1988 Rating Powers Act.

“The irony is that ECNZ no longer exists – so we are effectively paying the money directly to the Crown,” he said.

“Legislation has now been changed and the judge commented there is no provision now when valuations change under the valuation act, that we would have any liability to refund at all,” Mr Stevens said.