KEY POINTS:
An Auckland City Council levy on a Parnell apartment project has been quashed by the High Court, leaving the council open to potentially $13 million in refund claims by developers.
Developer Domain Nominee sought a judicial review of the council's seeking "top up" payments during a transition from one growth levy policy to another in 2005-06.
Lawyer Sue Simons said the council misapplied section 200 of the Local Government Act, which enabled councils to charge development contributions.
The council required $280,000 in development contributions towards the costs of parks and reserves in January 2007 as a condition of resource consent.
However, the developer had paid $222,000 as a "financial contribution" in 2004 for the same project and the same purpose but under the Resource Management Act.
The council argued it was being fair to all developers and was entitled to seek the difference between the financial contribution already paid and the development contribution.
In a reserved decision, Justice Helen Winkelmann said the section of the act was ambiguously expressed but she favoured the company's interpretation.
Had Parliament intended to provide for local councils to have the ability to impose the development contribution as an additional levy on top of the financial contribution already imposed during a phase out period or thereafter, Parliament would have expressly stated that.
The judge ruled that the council had no authority to charge a development contribution for reserves and parks for Domain Nominees' Birdwood Cres subdivision.
She quashed the development contribution for reserves and parks.
Sue Simons said that as a result her client would pay no more.
The only way to challenge the council for its "double dipping" had been through the judicial review.
All developers who paid the top up would also be entitled to a full refund of development contributions.
Property Council policy director Daniel Newman said he expected the city council would review its potential liability as a result of the ruling and work with developers on an appropriate refund.
Auckland group manager for city planning, Penny Pirrit said the numbers of developers affected was not yet known. "We are looking through the judgment to consider what action the council needs to take."
A court appeal was one option.
She said the judgment showed there was some ambiguity in the law and had clarified this.
During the case, a witness for the council said financial contributions had raised significant sums of money for open space - about $13 million a year - and the council decided it would need to pay careful attention to how the transition from that policy was managed.
Mr Newman said that the High Court had "again been called in to read the Local Government Act back to local government".
In March last year, he said, the court found North Shore City Council's development contributions policy to be in error of law.
North Shore City Council said yesterday that the court did not quash its development contributions policy in its decision on the Neil Construction case and it continues with the levy.
However, as directed by the court, it was working with a developers' group to better reflect the Local Government Act.
The amount to be refunded was not yet agreed.
