This update outlines several recent creative approaches to disputing liability for rates, which have been raised across New Zealand over the past 12 months. The disputes concern the validity of rates invoices, the payment of overdue rates, the legal authority of councils to levy rates at all, and the forum in which legal challenges are brought. 

As many councils are having to tackle these disputes and issues on a frequent basis, this update outlines several of the more common issues raised and the current legal position on the same, with useful discussion having been provided by the courts. While there will always be a need to consider the legal arguments raised in any case, and potentially take advice, councils should be reassured that several of these ‘creative’ arguments have been recently dismissed. 

Emerging issues for councils - creative arguments for disputing rates liability

This update outlines several recent creative approaches to disputing liability for rates, which have been raised across New Zealand over the past 12 months. The disputes concern the validity of rates invoices, the payment of overdue rates, the legal authority of councils to levy rates at all, and the forum in which legal challenges are brought.

As many councils are having to tackle these disputes and issues on a frequent basis, this update outlines several of the more common issues raised and the current legal position on the same, with useful discussion having been provided by the courts. While there will always be a need to consider the legal arguments raised in any case, and potentially take advice, councils should be reassured that several of these ‘creative’ arguments have been recently dismissed.

Sovereign citizens movement

Some of the more creative disputes are originating from a group generally known as “sovereign citizens”. This movement believes that they are bound by New Zealand laws only if they have consented to them. Sovereign citizens are responsible for filing, or threatening to file, legal proceedings which can run to many hundreds of pages, and which broadly deny that they are liable for rates, or subject to the legislation that empowers councils to set and collect rates.

The most common arguments that have been raised before the courts, or with councils directly, are: 

The issue of allodial title

Most of New Zealand's law has been inherited from the English legal system. Prior to the Battle of Hastings in 1066, land was owned absolutely by those who owned the soils. This was known as allodial ownership, meaning that there was no higher authority or lord over that land.  

In New Zealand we use the tenure system of land ownership. In Rural Banking and Finance Corporation of NZ Ltd v Official Assignee of Vanenckevor Justice Fisher confirmed that the “doctrine of tenure governs the ownership and use of land in New Zealand, there can be no room for allodial interests that is to say estates held in absolute ownership without acknowledgment to a superior (ibid). In the case of New Zealand fee simple interests, that superior is always the Crown.”

Despite this statement being constantly re-affirmed and repeated, allodial title arguments continue to be raised in an effort to challenge the imposition of what are considered ‘unlawful’ rates. 

Rebuttal of laws - dual persona 

The assertion of dual persona (often raised alongside absence of consent or contract) amounts to a challenge to the jurisdiction of the Courts or enacted legislation. Individuals claim that they have two personas, with one being a legal or corporate personality, and the other being the flesh and blood of a person. 

We have seen several recent examples of correspondence or proceedings where individuals attempt to disassociate themselves from their corporate / legal personality and use that as the basis for arguing that the Courts, and councils, have no authority over them.

In Niwa v Commissioner of Inland Revenue the High Court determined that it would be an abuse of process to allow this theory, and avoid, defeat or delay the obligations placed on the defendant that were duly recognised by law.

Rebuttal of laws - absence of consent or contract 

A further avenue of challenge contends that there is a need for a contract before any statute applies to a “person” or “people”. This form of challenge has also been dismissed, with the Court in Tasman District Council v Richardson [2023] NZDC 18560 at [26] succinctly stating that:

The law applies to everybody in New Zealand whether it be the Act or the Crimes Act 1961. No contract is required and it simply just does not make sense to draw a distinction between “persons” and “people”.

A recent example of a challenge to overdue rates - based on the absence of statutory authority / unlawfulness of laws

The recent decision in Tasman District Council v Richardson considered several of the above themes, in a case concerning a refusal to pay overdue rates totalling $1,767.  

The ratepayers argued that not only is the Local Government (Rating) Act 2002 unlawful, but that all New Zealand laws are unlawful. In doing so, the ratepayers argued that the Court has no jurisdiction to determine the matter, based on an Act of English Parliament from 1649 that prohibits any person acting as proxy to the King of England, Ireland or the Dominions. 

In response, the Court swiftly (and unsurprisingly) dealt with the matter, confirming “the law was clear and that the Acts of Parliament in New Zealand are binding on all persons within the territory of New Zealand”. The Court in Richardson noted the High Court decision in Warren v Police which had previously considered similar arguments, and confirmed the following relevant principles:

1. New Zealand Parliament is empowered to make legislation…;
2. The Acts of Parliament are binding on all persons within the territory of New Zealand…;
3. The Courts of New Zealand must uphold the legislation enacted by the New Zealand Parliament; and
4. The Courts of New Zealand are subservient to the Parliament of New Zealand. 

On the basis of these principles, allegations that the Governor General cannot act as proxy for the Crown, and therefore any statute gaining royal asset via the Governor General is unlawful, will be promptly dismissed. 

Looking ahead

Local authorities across New Zealand are facing a number of similar challenges to rates in various forums, each of which involves time and resources. While bringing rates recovery proceedings is often the last resort, councils should feel reassured from the Court’s recent approach to dealing with similar pseudo-legal arguments.  

Summary judgment was granted in Richardson, due to the lack of any arguable defence, and the messaging in the decision makes it clear that the courts do not wish to spend unnecessary time and cost determining points of law that are well-established, and unambiguous. 

Get in touch

We are available to assist with responding to rates related disputes, allegations, and other threats, including those made by sovereign citizens, and to assist with rates collection disputes more generally.

Special thanks to Grace Mohi for her assistance in preparing this update.