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Note: The reports contained within this agenda are for consideration and should not be construed as Council policyunless and until adopted. Should Members require further information relating to any reports, please contactthe relevant manager, Chairperson or Deputy Chairperson.
I hereby give notice that an ordinary meeting of the Strategy and Finance Committee will be heldon:
Date:Time:Meeting Room:Venue:
Thursday, 7 February 201310.00amReception Lounge Level 2Auckland Town Hall301-305 Queen StreetAuckland
Strategy and Finance Committee
OPEN AGENDA
MEMBERSHIP
Chairperson Cr Penny WebsterDeputy Chairperson Cr Des Morrison
Councillors Cr Anae Arthur Anae Cr Richard Northey, ONZMCr Cameron Brewer Cr Calum PenroseMayor Len Brown, JP Cr Dick QuaxCr Dr Cathy Casey Cr Noelene Raffills, JPCr Sandra Coney, QSO Cr Sharon Stewart, QSMCr Alf Filipaina Member David TaipariCr Hon Chris Fletcher, QSO Member John TamihereCr Michael Goudie Cr Sir John Walker, KNZM, CBECr Ann Hartley, JP Cr Wayne WalkerDeputy Mayor Penny Hulse Cr George Wood, CNZMCr Mike Lee
(Quorum 12 members)
Tam WhiteDemocracy Advisor
1 February 2013
Contact Telephone: (09) 307 7253Email: [email protected]: www.aucklandcouncil.govt.nz
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TERMS OF REFERENCE
The Strategy and Finance Committee will have responsibility for:
x Planning and Financial Management, exercising the Councils responsibilities andmaking recommendations to the Governing Body where required under Part 6 (exceptsubpart 2) of the Local Government Act 2002;
x Discussing Independent Maori Statutory Board agreements with the Independent MaoriStatutory Board and making recommendations to the Governing Body;
x Discussing local board agreements with the local boards and making recommendationsto the Governing Body on the adoption of the agreements as part of the annual plan;
x Delegation of powers to subcommittee(s);x Dealing with Councils Governing Body responsibilities for rates collection;x Ensuring local board input to the Long Term Plan and financial policies;x Approving the write off of outstanding accounts (excluding rates) and wholly or partly
remit fees and charges up to $500,000; andx Acquisition and disposal of property assets.
For the avoidance of doubt, these delegations confirm the existing delegation (contained inthe Chief Executives Delegation Register) to staff relating to the above terms of referenceunder the enactments mentioned below but limits those delegations by requiring them to beexercised as directed by the committee.
Relevant legislation includes but is not limited to:
Local Government Act 2002;
Local Government (Rating) Act 2002; andLocal Government (Auckland Council) Act 2009.
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ITEM TABLE OF CONTENTS PAGE
1 Apologies 5
2 Declaration of Interest 5
3 Confirmation of Minutes 5
4 Petitions 5
5 Public Input 5
6 Local Board Input 5
7 Extraordinary Business 5
8 Notices of Motion 6
9 Auckland Regional Amenities draft Funding Plan 2013-14 proposed
submission 7
10 Ken Maunder Park Community Trust - Request to Renew and Extend
Loan Guarantee 75
11 Selection of members to the local board funding policy review political
working party 81
12 Council Response to Law Commission Issues Paper - Joint and Several
Liability 85
13 Monthly budget update 99
14 Consideration of Extraordinary Items
PUBLIC EXCLUDED
15 Procedural Motion to Exclude the Public 111
C1 Open space land acquisition budget 111
C2 Recommendation from the Regional Development and Operations
Committee - Acquisition of Land for Local Purpose Reserve, Umupuia 111
C3 Recommendation from the Regional Development and Operations
Committee - Acquisition of Land for Local Purpose Reserve, Otahuhu 112
C4 90 Pavilion Drive, Mangere 112
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1 Apologies
At the close of the agenda no apologies had been received.2 Declaration of Interest
Members are reminded of the need to be vigilant to stand aside from decision makingwhen a conflict arises between their role as a member and any private or other externalinterest they might have.
3 Confirmation of Minutes
That the minutes of the Strategy and Finance Committee held on Wednesday, 19December 2012, be confirmed as a true and correct record.
4 Petitions
At the close of the agenda no requests for petitions had been received.
5 Public Input
Standing Order 3.21 provides for Public Input. Applications to speak must be made to theCommittee Secretary, in writing, no later than two (2) working days prior to the meetingand must include the subject matter. The meeting Chairperson has the discretion todecline any application that does not meet the requirements of Standing Orders. Amaximum of thirty (30) minutes is allocated to the period for public input with five (5)minutes speaking time for each speaker.
At the close of the agenda no requests for public input had been received.
6 Local Board Input
Standing Order 3.22 provides for Local Board Input. The Chairperson (or nominee of thatChairperson) is entitled to speak for up to five (5) minutes during this time. TheChairperson of the Local Board (or nominee of that Chairperson) shall wherever practical,give two (2) days notice of their wish to speak. The meeting Chairperson has thediscretion to decline any application that does not meet the requirements of StandingOrders.
This right is in addition to the right under Standing Order 3.9.14 to speak to matters on theagenda.
At the close of the agenda no requests for local board input had been received.
7 Extraordinary Business
Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (asamended) states:
An item that is not on the agenda for a meeting may be dealt with at that meeting if-
(a) The local authority by resolution so decides; and
(b) The presiding member explains at the meeting, at a time when it is open to thepublic,-
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(i) The reason why the item is not on the agenda; and
(ii) The reason why the discussion of the item cannot be delayed until asubsequent meeting.
Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as
amended) states:
Where an item is not on the agenda for a meeting,-
(a) That item may be discussed at that meeting if-
(i) That item is a minor matter relating to the general business of the localauthority; and
(ii) the presiding member explains at the beginning of the meeting, at a timewhen it is open to the public, that the item will be discussed at the meeting;but
(b) no resolution, decision or recommendation may be made in respect of that itemexcept to refer that item to a subsequent meeting of the local authority for furtherdiscussion.
8 Notices of Motion
At the close of the agenda no requests for notices of motion had been received.
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Auckland Regional Amenities draft Funding Plan 2013-14 proposedsubmission
File No.: CP2013/00425
Purpose1. To approve a submission on behalf of Auckland Council to the Auckland Regional Amenities
Funding Board (Funding Board) draft Funding Plan 2013-14, as per the Auckland RegionalAmenities Funding Act 2008 (the Act).
Executive Summary2. The Funding Board is required to prepare an annual draft funding-plan for the Auckland
Regional Amenities (Amenities). The draft funding-plan details the provisional allocations offunding as determined by the Funding Board. The draft funding-plan must be circulatedpublicly, calling for submissions. Auckland Council is permitted to provide a submission tothe draft funding-plan.
3. Councils role is confined to the provision of the funds, not in the decision making of how thefunds are allocated. Council do not have the ability to direct the Funding Board on thefunding allocations, as the Funding Board has been established to act independently ofCouncil.
4. The intent of the Act is to enable the Amenities to achieve financial sustainability, as they aredeemed an essential part of the fabric of Auckland. It is envisaged that Amenities will movefrom financial dependence on this funding mechanism, to eventual financial independencewhere they are able to rely on their own fund raising activities
5. The Funding Board have proposed to reduce the funding request by the Auckland Regional
Helicopter trust by 25% to $900,000 (application amount $1,230,000). The Funding Boardhave looked at all entities across the Helicopter Trust family e.g. Auckland Regional RescueHelicopter Trust and Rescue Helicopter (Auckland) Trust, and has concluded that thecombined trading results of the two entities was a surplus of $2.257 million as at 30 June2012. This demonstrates that the ARRHT are becoming more financially independent.
6. The Funding Board have advised that levels of service would not be affected by theproposed reduction of funding.
7. The key points of the proposed submission are that:
x Acknowledging the Amenities for operating prudently in a financially constrainedenvironment, by submitting considered funding applications,
x Acknowledging the Funding Board for taking into consideration the two new fundingprinciples, by proposing a 2.5% increase in funding for the Amenities,
x Requesting that the Funding board confirm that the Auckland Regional RescueHelicopter Trusts (ARRHT) ability to deliver current levels of service will not beadversely affected by the proposed reduction in funding. When doing so, the FundingBoard should have regard to other trusts related to ARRHT.
x Requesting Councils pohutukawa logo be included on the Amenities websites
x Requiring clarification that educational courses provided by Watersafe are not aduplication of those provided by the Coastguard, and
x
Requiring clarification of funding mechanisms in respect of the proposal to annualisethe Auckland Arts Festival.
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Recommendation/sThat the Strategy and Finance Committee:
a) Agrees that the report be received
b) Approves the draft submission to the Auckland Regional Amenities Funding Board
draft Funding Plan 2013-14
Discussion8. The Funding Board is an independent body, which is responsible for allocation of the annual
funding provided by the Auckland Council for the Auckland Regional Amenities. TheAmenities comprises of ten independently governed organisations:
x Auckland Observatory and Planetarium Trust Board
x
Auckland Philharmoniax Auckland Regional Rescue Helicopter Trust
x Auckland Theatre Company Ltd
x Coast Guard Northern Region Incorporated
x New Zealand Maritime Museum Trust Board
x New Zealand Opera Limited
x Surf Life Saving Northern Region Incorporated
x The Auckland Festival Trust
x Watersafe Auckland Incorporated
9. The Funding Board was established under the Auckland Regional Amenities Funding Act2008. The Act was established to secure funding through Auckland Council for theAmenities that provide arts, educational and rescue services throughout the Aucklandregion. The intent of the Act is to enable the Amenities to achieve financial sustainability, asthey are deemed an essential part of the fabric of Auckland and are necessary to make theregion a vibrant and attractive place to live. It is envisaged that Amenities will move fromfinancial dependence on this funding mechanism, to eventual financial independence wherethey are able to rely on their own fund raising activities. In theory this will free up rate payerfunding for other Amenities.
10. The role of the Funding Board is to assess the annual funding applications from theAmenities, against funding principles identified within the Act. The funding principles detail arange of requirements for the Funding Board to have regard to when determining theprovisional grants for the Amenities. At the 1st November 2012, Strategy and Financecommittee meeting council adopted two additional funding principles, which required theFunding Board to have regard of the councils proposed rates increase for the forthcomingyear and requiring the Amenities to align their activities to the Auckland Plan, by adoptingrelevant performance measures.
11. The funding principles primarily require the Funding Board to;
x Grant funding to the Amenities for expenses incurred in providing the services;
x For the Funding Board to ensure funding is only available for activities within the Auckland
region; and,
x For the funding not to be applied towards capital expenses.
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x Funding Board must determine that the Amenities have made all reasonable endeavoursto maximise their funding from other available funding sources.
12. Once the Funding Board have conducted the analysis, they are required under the Act toprepare the draft-funding plan and circulate for public consultation, calling for publicsubmissions. The Council is also permitted to make a submission on the draft-funding plan.
13. Officers have reviewed the draft Funding-Plan 2013-14 with general feedback being thatplan is well considered. Officers have noted that there could be an improvement on theperformance measures detailed by the Amenities and their alignment to the Auckland Plan.Council officers are committed to continue working with the Funding Board and Amenities inthe development of robust performance measures. However, some concerns have beenraised, please refer to the attachment for full submission details:
x Commitment from Council officers to assist in the development of meaningfulperformance measures which demonstrate an alignment to the Auckland Plan
x Requesting Council acknowledgement as a major financial contributor to the Amenities,through the incorporation of the Councils logo on the Amenities websites/promotionalmaterial
x Requesting that the Funding board confirm that the ARRHT ability to deliver currentlevels of service will not be adversely affected by the proposed reduction in funding.When doing so, the Funding Board should have regard to other trusts related toARRHT.
x Clarifications that the courses provided by Watersafe are not a duplication of thoseprovided by the Coastguard
x Requesting an increase in the focus of water safety education in particular for thePacifica community
x Clarification or further investigation required on the funding mechanisms in respect ofthe proposal to annualise the Auckland Arts Festival
14. Once submissions have been received (8th February 2013) a hearing will be held on 14 thFebruary 2013. The Funding Board will consider the submissions received and will thenfinalise the funding plan.
15. Council will then consider the Funding Boards recommendations on the total levy, at theMarch 2013 Strategy and Finance committee. Under the Act, Councils role is confined toapproving or rejecting the total levy amount, having regard to the funding principles. Underthe Act, Council do not have the ability to direct the Funding Board on the fundingallocations, as the Funding Board has been established to act independently of Council.Councils role is in the provision of the funds, not in the decision making of how the funds areallocated between the Amenities.
16. At the March 2013 meeting, should Council decide to reject the proposed total levy from theFunding Board, the dispute must be referred to an independent arbitrator. Council can onlyreject the proposed total levy after having regard to the funding principles. The legislationdoes not allow for renegotiation. If Council do not accept the proposed levy, the matter mustbe referred to arbitration in the first instance. On a previous occasion, the matter wasreferred to arbitration. On this previous occasion costs of approximately $70,000 wereincurred, in addition to the Funding Board costs, as the arbitrator found in favour of theFunding Board.
17. This year the proposed funding allocations have experienced attention from the FundingBoard decision to reduce the funding allocation to the ARRHT. The Act as previouslydescribed requires the Funding Board to operate independently of council and they are
mandated to provide robust assessment of each Amenities funding application.18. The Funding Board have proposed to reduce the funding request of the ARRHT by 25% to
$900,000 (application amount $1,230,000). The Funding Board have looked at all entitiesacross the Helicopter Trust family e.g. Auckland Regional Rescue Helicopter Trust and
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Rescue Helicopter (Auckland) Trust, and has concluded that the combined trading results ofthe two entities was a surplus of $2.257 million as at 30 June 2012. This demonstrates thatthe ARRHT are becoming more financially independent, which the Funding Board advises isdue to their very successful fund raising activities.
19. The Funding Board have advised that levels of service would not be affected by thisproposed reduction of funding.
Consideration
Local Board Views
20. Decision-making and oversight in respect of regional activities is the responsibility of theGoverning Body. This report relates to the funding relationship between the Council, theFunding Board and Amenities.
21. Local Board views have not been formally canvassed, however views have been soughtfrom Great Barrier, Waiheke, Rodney and Franklin local boards, given these areas relianceon the regional rescue helicopter service.
22. Waiheke local board have formally responded, stating that:That the Waiheke Local Board would view with concern, any proposal by the AucklandRegional Amenities Funding Board to reduce the annual funding to the Auckland RegionalRescue Helicopter Trust.
Waiheke Island, and the other Gulf Islands, account for 45% of the trips of the HelicopterTrust. Waiheke Island, in particular, is dependent on their valuable services, as there arelimited emergency health services available on the island. The age profile of the Waihekeresidents is older than the rest of the Auckland region and is therefore more likely to be ingreater need of these emergency services. The Waiheke Local Board also notes that theWaiheke Health Trust would view any reduction of the Helicopter service with concern.
The proposed funding cut could mean rescue helicopters being available for fewer hoursand with reduced capability, which would directly affect Waiheke Island, as a major user ofthe service. The Waiheke Local Board also notes that a reduction in funding could alsojeopardize the purchase a replacement helicopter in 2015.
Maori Impact Statement
23. The Amenities have the ability to make positive contributions to Maori Wellbeing, and todeliver on Auckland Plan outcomes relating to effective communication and engagementwith Maori and contribute to effective Maori capacity. Legislation requires that themembership of the Funding Board must have at least one member who represents theinterests of Maori in the Auckland region.
General24. This report does not trigger the significance policy.
Implementation Issues25. There are no implementation issues associated with this report.
Attachments
No. Title Page
A Auckland Council proposed submission to draft funding plan 13
B Auckland Regional Amenities Funding Board draft Funding Plan 2013-2014
15
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Signatories
Authors Colette Farrer - Advisor
Authorisers Alastair Cameron - Acting CCO Governance and External Partnership Manager
Andrew McKenzie - Chief Finance Officer
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AttachmentA
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31st January 2013
Public SubmissionsAdvisory OfficerAuckland Regional Amenities Funding BoardPO Box 6969Wellesley StreetAuckland 1141
To the Chairperson, Auckland Regional Amenities Funding Board
Re: Auckland Regional Amenities Funding Board Draft Funding Plan 2013-14 Submission
Auckland Council are providing a submission to the Auckland Regional Amenities Funding Boarddraft Funding Plan 2013-14.
1. The specific matter within the draft 2013-14 Funding Plan that our submission relates to is:
Auckland Council acknowledges that the Funding Board and Amenities have gone to considerableeffort to be mindful of the Auckland Councils proposed rates increase; we commend the proposed2.5% increase.
Auckland Regional Rescue Helicopter Trust
Requesting that the Funding board confirm that the Auckland Regional Rescue Helicopter Trusts(ARRHT) ability to deliver current levels of service will not be adversely affected by the proposedreduction in funding. When doing so, the Funding Board should have regard to other trusts relatedto ARRHT.
Performance Measures:
Council wish to advise the Funding Board that they need to encourage the Amenities to developmeaningful performance measures, which demonstrate an alignment to the Auckland Plan.
Council acknowledges, this is a new funding principle and the development of meaningfulmeasures requires time. Council is expressing a commitment to work closely with the FundingBoard and Amenities forthcoming year in the development of performance measures.
Auckland Council Branding:
Council provides a significant financial contribution to the Amenities, Council would like theAmenities to include the councils logo on their websites to enable public awareness.
Auckland Festival Trust:
x Council would like clarification from the Auckland Festival Trust (page 16) on the level offunding required to enable the increase in the frequency of the arts festival
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x Council would like to understand what the Trust has done to secure funding from externalparties
x Has the Festival Trust considered the increase in frequency of the festival in relation to theATEED major events strategy?
x When will the Festival Trust formally approach Council regarding this proposal?
Watersafe and Coastguard:
x Council would like clarification that the courses provided by Watersafe are not a duplicationof those provided by the Coastguard
x Council are requesting an increase in the focus of water safety education, in particular forthe Pacifica community
2. We seek the following amendment to the draft 2013-2014 Funding Plan:
Council does not seek an amendment to the draft 2013-2014 Funding Plan, only clarifications tothe above-mentioned points.
3. Our submission is that (state the nature of the submission, giving reasons for theamendment requested):
Councils submission is detailed above under the specific matters section.
4. Please indicate the cost or savings impact of your proposal, if possible:
Not applicable
Yours Faithfully
Cr P Webster
Chair of the Strategy and Finance CommitteeAuckland Council
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Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee Page 75
Ken Maunder Park Community Trust - Request to Renew and ExtendLoan Guarantee
File No.: CP2012/24323
Purpose1. This report seeks approval from the Strategy and Finance Committee to a request from the
Ken Maunder Park Community Trust for Auckland Council to renew a loan guarantee withthe ASB Bank for an amount of $200,000 for an 8-year period.
Executive Summary2. A request has been received from the Ken Maunder Park Community Trust (the Trust) for
Auckland Council to renew a $200,000 loan guarantee arrangement with the ASB Bank Ltd.The original guarantee facility was initially approved by Waitakere City Council andsubsequently entered into by Auckland Council in late 2010. The loan and guaranteearrangement expired on 31 October 2012, although it continues in place until formallyreleased by the bank.
3. The ASB Bank lent the Trust $200,000 in 2010 to enable the new facility being built by theTrust on council owned land to be completed after a series of cost increases resulted in theTrust having insufficient funds to cover the total cost of the development.
4. As at 1 November 2012, the amount outstanding on the ASB Bank loan remained at$200,000. The Trust is negotiating the renewal of the loan arrangement for a further 8-yearperiod and has requested that Auckland Council re-new its loan guarantee facility. As theTrust leases its site from Auckland Council, it is prevented from offering the ASB Bank firstmortgage security over the land and buildings for the loan. The Chair, Mr Ross Hick, acts as
a guarantor for the interest due on the loan only, not the principal.
5. In early 2012 Auckland Council (Legal Services and Treasury) and ASB Bank negotiatedand agreed the terms and conditions of the loan guarantee documentation and applicableinterest rates that is acceptable to both parties. This form of documentation will be used inthis instance if the request is approved by council.
6. A further change to the previous loan guarantee arrangements is the requirement for theborrower (the Trust in this instance) to enter into a Guarantee Side Deed which is aagreement between the council and the Trust, setting out the terms and conditions underwhich Auckland Council will provide the loan guarantee to the ASB Bank on behalf of theTrust. This will include a condition, that should the Trust fail to meet its obligations under the
loan facility, this will be deemed to be a default under the lease agreement.
Recommendation/sThat the Strategy and Finance Committee:
i) Approves the request from the Ken Maunder Park Community Trust for a loanguarantee facility in respect of a $200,000 loan from the ASB Bank.
ii) Requires that the loan guarantee be limited to a maximum period of 8 yearsand that the documentation be in the form agreed between Auckland Counciland ASB Bank in respect of loan guarantees to community organisations, alsorequiring the Ken Maunder Park Community Trust to fully repay the loan within
the 8 year period.
iii) Requires a Guarantee Side Deed be entered into between Auckland Counciland the Ken Maunder Park Community Trust recording the terms and
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conditions under which Council will guarantee the loan facility, including arequirement to make annual reductions in the principal outstanding, and across-default clause with the lease agreement.
iv) Delegates approval for the final term and conditions of the loan guarantee andGuarantee Side Deed to the Manger, Regional and Local Planning and/orManger Finance.
Discussion7. The Waitakere City Council (WCC) worked with the Trust to develop an indoor facility on
Ken Maunder Park, New Lynn. This facility is also available for community use. During2010, while the indoor facility was still under construction, significant cost variations hadresulted in a funding shortfall of approximately $200,000.
8. The WCC had already financially contributed to the facility in three ways: a grant of$250,000 was provided from the Leisure Facility Partnership Fund; new public toilets andchanging rooms to the value of $330,000 were incorporated into the facility to help sharecosts; and an additional sum of $75,000 was contributed to cover the increased cost of awastewater pump station.
9. Project variations/cost increases created the additional funding shortfall of approximately$200,000. The Trust obtained a $200,000 loan from the ASB to over this shortfall. Thebank requested that the borrowing be secured by a council guarantee because the facility islocated on council owned land and the Trust could not provide mortgage security to theASB. The request for a council guarantee is common practice amongst financial institutionsfor occupiers on council property.
10. The request was considered and approved by the WCC, and subsequently the AucklandTransition Authority. The loan guarantee was documented by the newly formed AucklandCouncil.
11. The Trusts business plan and associated documents provided to the WCC in 2010demonstrated the ability of the Trust to repay the loan over the 10-year term from operatingsurpluses. It was the Trusts intention to repay the loan as early as possible through themarketing opportunities of the Facility.
12. To date, no principal repayments have been made. This means that in order to fully repaythe loan in the remaining 8 years of the ASB loan, annual payments of principal mustincrease from $20,000 to $25,000, plus interest.
13. In addition to the ASB loan, as at 30 September 2012 the Trust also owed a further$134,000 to other unsecured lenders. This represents a reduction of $26,000 since 30September 2011.
14. The business plan and latest financial information has been reviewed by council staff whoare of the opinion that the Trust is growing its business and has been able to trade profitably,and projections indicate that this situation will continue. Noted in paragraph 13 above, theTrust has also been able to make principal repayments on unsecured loans from privateindividuals.
Consequences of not renewing
15. Should the request to renew loan guarantee not be approved the ASB may chose to call in
the loan, meaning that as the Trust has insufficient funds to repay the loan, AucklandCouncil will be required to do so under the terms of the existing loan guarantee agreement.
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16. If Auckland Council is required to make payment under the loan guarantee, it will besubrogated into the role of lender and would need to determine how to manage theoutstanding loan. A number of options exist, ranging from converting the debt into acommunity loan; taking recovery action against the Trust or seeking alternative security fromthe trustees.
Options
17. Options regarding renewal of the guarantee are limited. In an ideal situation the facility andtrust would exist without any debt. Unfortunately this is not the case, and a loan guaranteefacility is the most cost effective manner for council to continue supporting the Trust in theshort to medium term. Options in respect of this loan are limited to:
xProviding a grant sufficient to cover the loan amount to ASB
xConverting the ASB loan into a council community loan
xRenewing the loan guarantee and monitoring it for on-going compliance.
18. Providing a grant is unviable as there are no budgets available to cover this option. Acommunity loan would result in council directly assuming the risk of the loan, with associatedresponsibilities of monitoring and enforcing the loan, and the need to fund the repayment ofthe ASB loan in the first instance.
19. A loan guarantee arrangement leaves the monitoring and enforcement obligations with theASB, with council only needing to be involved if there is default under the loan agreement.This arrangement also provides that if the trust defaults under the loan agreement with thebank, then there is an automatic default under the lease, triggering a number of otherremedies for council to consider.
20. Of the options available to council for dealing with this request, a loan guarantee facility isthe most cost effective manner for council to continue supporting the Trust in the short to
medium term. This is the recommended course of action.
21. The ASB Bank has a large presence in the area of loans to community and/or not for profitorganisations. Auckland Council has acted as guarantor in circumstances whereorganisations have made their own funding arrangements; are located on council ownedland; and require a loan guarantor.
Consideration
Local Board Views
22. Details of the request from the Trust were reported to the Whau Local Board on 11
December 2012. The Whau Local Board resolved to support the request, Attachment A.The authority to approve a request for a loan guarantee resides with the Strategy andFinance Committee, although the resolutions of the Whau Local Board have incorrectlyreferred the matter to the Regional Development and Operations Committee.
Maori Impact Statement
23. There are no known matters relating to this request that require the input of Maorirepresentatives.
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Whau Local BoardOPEN MINUTES
Minutes of a meeting of the Whau Local Board held in the Whau Local Board Office, 31 TotaraAvenue, New Lynn on Tuesday, 11 December 2012 at 6.37 pm.
PRESENT:Chairman Derek Battersby QSM, JPDeputy Chairman Duncan MacDonald JPMembers Kathryn Davie
Catherine FarmerLily Ho
Sandy Taylor JPJack Weir
APOLOGIES:Cr Noelene Rafills
IN ATTENDANCE:Haylee Magele, Youth Advisory Panel RepresentativeJock Jamieson, West Lynn GardenMargaret Jamieson, West Lynn Garden
20 Ken Maunder Park Community Trust - Request to Renew and Extend Loan Guarantee
Resolution number WH/2012/178MOVED by Member DQ Battersby, seconded Member D MacDonald:
That the Whau Local Board:
a) Recommends to the Regional Development and Operations Committee that:
i) the request from the Ken Maunder Park Community Trust for a loan guaranteefacility in respect of a $200,000 loan from the ASB Bank be approved.
ii) the loan guarantee be limited to a maximum period of 8 years and that thedocumentation be in the form agreed between Auckland Council and ASB Bankin respect of loan guarantees to community organisations, also requiring theTrust to fully repay the loan within the 8 year period.
iii) if a loan guarantee is approved, that a Guarantee Side Deed be entered intobetween Auckland Council and the Ken Maunder Park Community Trustrecording the terms and conditions under which Council will guarantee theloan facility, including a requirement to make annual reductions in the principaloutstanding and a cross-default clause with the lease agreement.
CARRIED
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Selection of members to the local board funding policy review political working party Page 81
Selection of members to the local board funding policy review politicalworking party
File No.: CP2013/00341
Purpose1. This report recommends the Strategy and Finance Committee appoint members to the local
board funding policy review political working party.
Executive Summary2. The Strategy and Finance Committee approved the creation of a working party to provide
guidance and direction with respect to the development of the local board funding policy atits meeting on 1 November 2012. The committee agreed that the working party will include:x the mayor as chair of the working partyx seven councillorsx seven local board membersx one representative from the Independent Maori Statutory Board.
3. The chairs of local boards agreed a formal process for selecting members to politicalworking parties at their 19 November meeting. The chairs decided that each working partyshould include eight representatives from local boards in order to achieve a suitablegeographic spread of their members. This will require the currently agreed membership ofthe local board funding policy review political working party to be increased by one localboard member.
4. The local boards have undertaken a process to select representatives for the local boardfunding policy review political working party. Nominations were not finalised for inclusion in
this report, however local board services will distribute names to committee members priorto the meeting.
5. It is proposed that the first meeting of the working party be scheduled for 15 March 14.30 -17.00.
Recommendation/sThat the Strategy and Finance Committee agrees that for the political working party for thereview of the local board funding policy:
a) the local board representation is increased to eight members
b) the following representatives are appointed:
i) seven councillors as representatives of the Governing Body in addition to themayor as chair of the working party.
ii) one representative for the Independent Maori Statutory Board.
c) the first meeting of the political working party will be held on 15 March 14.30 - 17.00.
Discussion6. Local boards requested that a political working party be established to ensure there is
effective communication between the boards, governing body and officers over the course ofthe review of the local board funding policy. The purpose of the working party will be toprovide direction and guidance on the policy review work programme.
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17. The Independent Mori Statutory Board will have oversight of the local board funding policyreview process through their membership of the Strategy and Finance Committee, and itsrepresentative on the political working party.
Significance
18. Agreeing members for a political working party is not a significant decision.
Implementation Issues19. There are no implementation issues associated with the recommendations in this report.
AttachmentsThere are no attachments for this report.
Signatories
Authors Beth Sullivan - Principal Advisor Policy
Authorisers Andrew McKenzie - Chief Finance Officer
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Council Response to Law Commission Issues Paper - Joint and Several Liability Page 85
Council Response to Law Commission Issues Paper - Joint and SeveralLiability
File No.: CP2013/00673
Purpose1. To obtain the committees authority to provide a response to the Law Commissions issues
paper on joint and several liability and to allow for the finalisation of the councils response tobe delegated to the Chair of the committee.
Executive Summary2. The Law Commission has issued an issues paper on the legal rule, called joint and several
liability, that applies in negligence cases. The Law Commission is interested in the councilsresponse to the issues it has posed in its paper. This rule as it currently operates has adirect impact on the councils budget, including a $470 million provision for claims over thecourse of the LTP. If the rule was to be changed as a result of the Commissions inquiry,then this potentially has a significant impact by reducing the amount of such provision. Thedeadline for providing a response to the Law Commission has been extended for the counciluntil 15 February 2013.
Recommendation/sThe Strategy and Finance Committee agrees that:
a) The council endorses a recommendation that proportional liability is the most costeffective rule for the council in cases of negligence.
b) The council provides an Auckland focused submission on the Law Commissionsissues paper on joint and several liability.
c) The council supports the SOLGM submission on the Law Commission's issuespaper.
d) The finalisation of the councils submission on the Law Commissions issues paperbe delegated to the Chair of the Strategy and Finance Committee.
Discussion3. The Law Commission has produced an Issues Paper entitled Review of Joint and Several
Liability. Joint and several liability is the legal rule that currently applies when two or moredefendants in court proceedings are held liable for the same loss. Under this rule, eachdefendant is liable for the whole loss regardless of how many others are also at fault. Thatis, all defendants are sued for the whole amount of the loss and effectively the lastdefendant standing or the defendants with the deepest pockets pay.
4. Joint and several liability has evolved under hundreds of years of common law. Theunderlying principle is that the plaintiff, the person who has suffered the loss, should not beout of pocket. The plaintiff does not need to locate all those who are at fault.
5. In cases of negligence, the other defendants are often untraceable or insolvent and the
council then bears a disproportionate share of the cost of the loss. The current systemencourages some sectors to structure their affairs to operate in ways that limit theirexposure, such as by setting up a special purpose company. This results in occasions that
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the council pays for all of the wrongdoing even where the councils part is only a smallreason why the loss was suffered.
6. This means that the council must arrange for suitable insurance cover for the entirety ofsuch losses and create sizeable provisions in its budget to cover the cases where insuranceis not available.
7. The Law Commission is now asking whether joint and several responsibility remains themost appropriate way of dealing with liability in negligence cases. This is set against thebackdrop of the leaky buildings crisis, the global financial crisis and the cost and availabilityof indemnity insurance.
8. This presents an opportunity to consider whether it remains fair that the council shouldcontinue to bear the disproportionate share of the costs in negligence cases. If the positionwere to change, then who, if anyone, would pick up the costs in the event the other partiesare insolvent or unable to be found?
9. The area that this has the biggest impact for the council is its potential liability for leakyhomes. The council has allowed about $470 million over the life of the current LTP and thisarea is no longer available to be covered by insurance.
10. An example of one of the options suggested is that a plaintiff who owns a defective home,would not recover the full amount of the damage to their house and may not be able toafford the full costs to repair the damage. There is a balancing exercise here in relation tothe costs to the ratepayer against the costs to an individual or business that has sufferedloss for which they are generally blameless.
11. The current system actively encourages parties responsible for negligent construction toarrange their affairs so as to avoid liability. The council is not in a position to do this and areoften becomes the deep pocket left resolving the claim.
12. The current system also encourages plaintiffs to only bring proceedings against the councillate in the limitation period and there may be insufficient time for the council to locate othersolvent defendants. The council can then be responsible for the whole of the amount as it isthe only defendant.
13. To highlight the amount of money involved, the previous total of five years of settlements forweathertight claims across the legacy councils and Auckland Council above and beyond thelegacy insurance recovery was $247 million.
14. The Law Commission paper summarises the current position and looks at options forchange. The options are summarised from paragraph 16 below. The full paper is availableto view on the Law Commissions website at www.lawcommission.govt.nz The LawCommission has asked questions about the matters in their report and seeks views,experiences and preferences from respondents. The Law Commission seeks responses tofocus on the areas of concern to the council.
15. A copy of the draft SOLGM submission is attached as attachment A. This is a thoroughresponse and may be endorsed by the council. It is understood that the LGNZ response willbe very similar in substance. An officer draft response focusing on the impact to the councilis attachment B to this report.
16. A delegation is sought to enable finalisation of the response which is due by 15 February2013, taking into account the views of the committee.
Law Commission Options
17. The Law Commission has identified the follow options to the status quo.
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Alternatives to joint and several liability: Proportionate Liability
18. Each defendant would be liable for a proportion of the overall loss, based on their level offault. This alternative is fairer to defendants. However, if one or more defendants cannot befound or are insolvent, then the plaintiff would be out of pocket. The plaintiff would need tojoin all the defendants to the case if they wish to collect the full amount of the loss.
19. The council estimates that had it, and the predecessor councils, been responsible for a
proportionate share of liability and it would have resulted in a significantly reduced paymentwith a possible savings as high as $140 million as compared to the actual amount paid of$247 million.
20. This rule has been adopted in other jurisdictions, including most Australian states. Otherjurisdictions have adopted the rule for a particular industry or class of defendants, such asbuilding and securities. Some jurisdictions have allowed the proportionate rule to includecapping of liability or other forms of limited liability.
21. On the face of the figures alone, proportionate liability will have a positive impact on thecosts paid by the council.
22. The Law Commission considers that if there is to be a shift to proportionate liability it should
be applied to all sectors universally. Such a shift would better harmonise the NZ system withAustralian jurisdictions and would be consistent with NZs obligations under CloserEconomic Relations.
Alternatives to joint and several liability: Hybrids
23. Other jurisdictions have used various hybrids of the current NZ system and proportionateliability.
24. Hybrid one those predominantly at fault remain jointly and severally liable and minorplayers only pay a proportionate share. The council is often a minor player in negligenceclaims and estimates that in relation to the leaky homes cases, its liability is at a range at arange of 15-20% level of the total cost of the loss.
25. Hybrid two where the plaintiff is also at fault, in other words is contributory negligent to theloss. If the plaintiff is not at fault, then the defendants remain jointly and severally liable.This supports the underlying principle of the current rule that a plaintiff should not have tobear costs. Where the plaintiff is also at fault, then proportionate liability would apply to alldefendants.
26. Hybrid three where the plaintiff is also at fault, the contributory negligence would be sharedproportionately across all parties, not just the defendants.
27. Hybrid four is a variant of hybrid three, but reallocates the share of an absent or insolventdefendant so that the plaintiff receives all of the defendants contribution. The council wouldstill be worse off then a pure proportional system, but not liable for 100%.
Alternatives to joint and several liability: Capping
28. This is where the maximum liability can be applied for certain types of defendants or types ofcases. This has been used overseas primarily in relation to professional liability foraccountants, lawyers, architects etc. This option supports the theory that there is a need forsuitably qualified persons to remain in such professions and prevent wholesale collapse of aparticular sector.
Alternatives to joint and several liability: Contracting Out
29. It is usual in commercial arrangements for limitation or exclusion to be agreed for liability innegligence. However, for the most part, the council does not have the option of entering intoa commercial arrangement as it is performing a statutory duty. The council has to perform
these duties as a matter of law and is required to do so with reasonable care.30. The council cannot contract out of its statutory duties.
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Alternatives to joint and several liability: Warranty system
31. NZ has a long established statutory warranty system for negligence causing personal injury,ACC. This means that court cases alleging negligence causing physical harm are notallowed in NZ. One option that could meet the costs for building defects is through a similarscheme. Such a scheme is unlikely to be successful without very strong governmentalsupport. Overseas experience has shown that industry only supported schemes are not
satisfactory.
Analysis of options
32. There is no perfect legal rule that will be fair to all persons in a dispute at all times.
33. Changes to the rule may lead to reduce levels of liability of new claims in the future, but it isunlikely that these would have retrospective effect on current legal proceedings. The numberand size of building related cases are expected to reduce over time, however, the councilwill always be a locatable and solvent defendant in negligence proceedings.
34. On balance, it is recommended that a form of proportional liability be considered for furtheranalysis by the Law Commission.
35. Moving to a purely proportionate system or a capped system means that the councils shareis related to its share of fault, but does not help a plaintiff where there is an absent orinsolvent defendant.
36. These alternatives are not necessarily fairer to everyone, but will be more cost effective tothe ratepayer.
Consideration37. Building Control and Risk and Assurance have had input into this report.
38. There may be a community impact depending on whether the government agrees tointroduce a bill that changes the rule on joint and several liability.
Local Board Views
39. The costs of meeting the councils obligations in negligence matters is a governing bodyresponsibility. In the event that there is a bill before Parliament on this matter, local boardviews will be sought at this stage.
Maori Impact Statement
40. This report does not appear to have significant benefits or adverse affects on Maori.
Implementation Issues41. The Law Commission deadline for the councils response is 15 February 2013.
42. The Law Commission anticipates providing a final report in April/May 2013.
Attachments
No. Title Page
A Draft Response by SOLGM 89
B Draft Response by Auckland Council 95
Signatories
Authors Helen White - Manager Public Law
Authorisers Wendy Brandon - General CounselAndrew McKenzie - Chief Finance Officer
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Council Response to Law Commission Issues Paper - Joint and Several Liability Page 90
In cases such as the leaky homes issue, local authorities negligence is fruit of poisoned treein
that it is the choice of the builder to use substandard materials or construct in a substandard way
that is the root cause. It is that negligence, that makes possible the consequence of any negligent
action of a local authority i.e. in the absence of negligent construction, the consequences of
negligent inspection will generally be limited.
The paper correctly notes that legal principles around restitution are designed broadly to place the
plaintiff in as near a position as possible to that which they would have been in had the damage
not occurred. We agree that this is fundamental tenet of consumer protection. Equally consumer
protection should be about more than righting wrongs, it must also focus on ensuring that
wrongs are kept to the absolute minimum. In other words, the law should be designed in such a
way as to incentivise due care.
In effect, joint and several liability deep pockets operating together create the situation where local
authorities have to pay, when local authorities pay in restitution of a claim they do so using public
money. In effect then joint and several liability in cases such as leaky homes means the entireratepaying public are directly acting as backstop for the action of others.
In addition to the financial cost of the reimbursement there is an opportunity cost. Local
authorities and their communities cannot undertake other projects or services including the
provision of infrastructure that promotes and sustains economic growth. If rates are increased to
meet settlements than the ratepayer misses out on whatever they would have done with the funds.
While preserving the ratepayers position and therefore their economic welfare, society as a whole
suffers a loss of economic welfare as a result.
Facing these realities, the paper is correct when it says that the economically rational thing fordeep pocketed defendants to do is to take all steps they can to minimise the risk to themselves (or
what page 63 of the paper cites as the gatekeeper effect). The leaky homes example serves as
a textbook illustration of this. The 2012 Report of the Housing Inquiry1 noted the following:
x inspection processes have become more rigorous, with the average number of house
inspections rising from seven in 2000/1 to eleven in 2006/7
x the Registered Master Builders Federation have suggested that there is a need fro more
drawing details (from an average 10 pages in 2002 to 30 pages in 2007), more office and
on-site staff to facilitate the consenting process, and additional inspections, and a higher risk
margin to allow for building consent time delays have increased total construction costs by
approximately 10 percent.
Prudent local authorities historically insured themselves against losses of this nature (again an
economically rational and efficient result). But the leaky homes issue has resulted in increased
risk profile for local authorities, which has impacted on the cost of insurance. As Riskpools
submission has noted has reached the point where insurance for some types of claim are no
longer available. Where insurance costs increase the choices facing local authorities are stark
increasing rates, reducing expenditure in other areas (with the effect on the nations economic
welfare as a whole) or accepting greater levels of risk.
1New Zealand Productivity Commission (2012), Housing Affordability, pp 160-161
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Council Response to Law Commission Issues Paper - Joint and Several Liability Page 91
SOLGM therefore concurs with the papers comment (at page 62) that
There is areasonable consensus in New Zealand that the combination of joint and several
liability and a deep pocket is one situation that may lead to inefficiency.
It seems that the Law Commission has previously considered, and not been convinced by these
arguments. In particular, we note the extract from the Law Commissions 1998 report (quoted on
page 61 of the paper) which asks
Can it really be suggested that a result of proportionate liability would be a second-guessing
of auditors by creditors or shareholders of a company?
Based on 14 years experience since that time, our answer to this is an unequivocal yes. The
collapse of Enron, Worldcom and Arthur Anderson resulted in action against auditors in oversees
jurisdictions (it was one of the causes of the collapse of Arthur Anderson) and has been
threatened in New Zealand (though we are not aware of any case that has come before the courts
as yet).
We also find the arguments the paper advances around cross-Tasman harmonisation persuasive.
Australia is New Zealands largest trading partner, although CER was historically about trade in
goods, there is increasing trade in professional and trade services (including the building trades).
We submit that there is value in companies that operate in both jurisdictions operating under as
consistent a legal framework as possible. Multiple frameworks create a risk of plaintiffs
jurisdiction shopping i.e. looking for the jurisdiction where the law is most plaint-friendly. The
Riskpool submission notes that at least one multinational provider has ceased operation in New
Zealand as a result of the risks joint and several liability creates. The inefficiencies of operatingunder two different frameworks (having to retain counsel to interpret different statutes and sets of
case law and the like) give additional weight (if any were needed) to the economic arguments of
Chapter Eight of the paper.
In preparing our submission, SOLGM has tried to approach the issue from a base of principle.
While some may argue otherwise, we find it difficult to accept an argument that proportionate
liability should be selective. While we accept that some industries or sectors may pose particular
risks or be particularly prone to these claims, we should be incentivising all industries or sectors to
exercise a duty of care. The Law Commission should apply principle to its analysis and
recommend a consistent application of whichever regime it recommends, that is to sayproportionate liability should apply everywhere or nowhere.
The second part of the paragraph on page 62 (quoted earlier) noted that economic inefficiencies
arising from joint and several liability are not inevitable and can be controlled in other
ways. While SOLGM supports Riskpool in seeking to move to proportionate liability, we also
note that such a change will be seen as a loss of plaintiffs rights2. We therefore turn to some of
the other alternatives to proportionate liability.
2
In the event that a local authority is held liable for a leaky home claim, the settlement will be either be paidfrom rates income (including rates levied on the owner of the leaky building) or from insurance (or both). Ifpaid for by insurance, a local authority will probably pay higher premiums which will be recouped by rates.
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AttachmentA
Item12
Strategy and Finance Committee
07 February 2013
Council Response to Law Commission Issues Paper - Joint and Several Liability Page 92
Recommendation
1. That New Zealand move to proportionate liability as the basis for restitution of claims
made in tort and contract.
Liability, Corporate Law and Insolvency Law
It is difficult to consider these issues in isolation from corporate law. The paper notes that the use
of single development companies by developers and builders is becoming common place these
have a limited life and/or purpose and disappear soon after the development is complete. Another
aspect of the leaky homes issue is that once the issue became known a number of smaller
companies were wound up and new ones formed, under the same beneficial ownership.
In short, it is all too easy for those involved in businesses such as these to use the protection of
corporate law to walk away and start afresh this effectively is why local authorities have paid 45
percent of the total cost of claims settled to date.
While the corporate form was intended to separate personal and professional obligations, we
cannot conceive that the corporate veil was ever intended to provide disincentives to taking due
care. We understand that there are limited circumstances where the corporate veil can be pierced
(generally around fraud or suspected fraud), there is a prima faciecase for piercing the corporate
veil in cases of negligence.
Recommendation
2. That future development of the proposals should consider the interface of the law of
restitution with corporate law, and the law of insolvency. This recommendation
would apply under either of joint and several or proportionate liability.
Compulsory Warranties
The paper discusses compulsory warranty schemes and correctly notes that there is such a
scheme in place with the Building Act. There is merit in these schemes though we note overseas
experience with these schemes generally suggests that in the long term government intervention
by underwriting is necessary.
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AttachmentA
Item1
2
Strategy and Finance Committee
07 February 2013
Council Response to Law Commission Issues Paper - Joint and Several Liability Page 93
Recommendation
3. That the Commission gives further consideration to the circumstances in which
compulsory warranty schemes should apply. This recommendation would apply
under either of joint and several liability and proportionate liability.
Collectivisation of Risk
Another approach to the issues raised in the paper is to encourage or require some degree of
industry collectivisation of risk. The principles underpinning this approach are simple and are in
practice in some areas already. For example, historically members of the Law Society paid a
compulsory levy to a so-called fidelity fund each year, with the fund used to reimburse clients in
cases of misappropriation. The local government sector has a form of collectivisation of risk in
place through Riskpool though membership of Riskpool is voluntary.
SOLGM suggests that the Commission identify the existing schemes that exist for collectivisation
of risk across the economy and assess how they operate. The Commission might then consider
whether there are industries or sectors that are high risk that do not have such schemes in place,
and whether encouragement or mandation should be required. The schemes tend to be more
common in industries or professional groupings where reputation and trust are fundamental to the
ability to conduct business, or where the use of public money is involved.
These schemes offer only a partial solution. Collectivisation of industry risk is generally designedto provide a backstop for small-moderate claims affecting a single plaintiff, or small groups.
Collectivisation of industry risk begins to break down when faced with challenges of the size of the
leaky homes problem. For example, Riskpools submission notes that the scheme has now
declined to provide cover for future leaky homes claims due to an inability to secure insurance
cover for these claims.
Recommendation
4. That the Commission develop proposals for schemes that collectivise industry risk,possibly starting with high risk industries that do not have existing schemes. This
would apply under either joint and several or proportionate liability and could operate
in conjunction with compulsory warranty schemes.
Plaintiff Management of Risk/Personal Responsibility
Chapter Eight of the paper discussed the economic rationale for each of joint and several and
proportional liability. Using this framework it is evident that the most economically efficient
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AttachmentB
Item12
Strategy and Finance Committee
07 February 2013
Council Response to Law Commission Issues Paper - Joint and Several Liability Page 95
Auckland Council Draft Submission
Law Commission Issues Paper: Review of Joint and SeveralLiability
Introduction1. This submission is from Auckland Council, Private Bag 92300, Auckland 1142.
2. Auckland Council would welcome the opportunity to discuss the submission with theCommission. It can be contacted through Helen White, Manager Public Law, Legal Services, ph09 367 3111, [email protected].
3. In preparing its submission, the council has had the benefit of viewing a draft submission of the
Society of Local Government Managers (SOLGM) and liaised with Local Government NewZealand (LGNZ). The council is broadly in agreement with the detail contained within the draftprepared by SOLGM and understands that the submission prepared by LGNZ is also supportiveof a change to proportional liability. It does not intend to repeat the detail that is contained inthe SOLGM submission.
The current position
4. The current system works well to ensure that the person who has suffered loss is not out ofpocket when there is a solvent defendant who can be located. When the case alleges that thecouncil has played a part in the loss, then it will on occasion be liable to meet the full amount ofthe loss regardless of the number of other parties involved.
5. This means that provision must be made in the councils budget to meet such losses orinsurance cover must be arranged where available. The leaky homes cases are now not able tobe covered by insurance and the provision made by the council is significant. The provisionover the life of the LTP is $470 million.
6. The leaky homes claims have exposed the council to a high level of financial liability. A numberof the other defendants in these cases, including the builders and other trades persons, areusually more at fault then the council, but often they are unable to be found or are insolvent.This is an area where insurance is not always available and there is incentive for atradesperson or builder to protect against potential liability by setting up a special purposecompany that can be liquidated at will. The owners of these companies are then able to moveon to new ventures with the protection of a different corporate entity.
7. The councils role in these cases is a relatively minor part in the fault compared to thebuilder/tradespersons. However, the council is a convenient and permanently available, solventdefendant.
Proportionate Liability8. Joint and several liability has evolved to protect the plaintiff. However, the council, and
consequently, the ratepayers, bears a cost that is disproportionate to the part it has played inthe loss. It would be more cost effective for the council if its liability was limited to represent itscontribution to the loss.
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AttachmentB
Item12
Strategy and Finance Committee
07 February 2013
Council Response to Law Commission Issues Paper - Joint and Several Liability Page 97
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Item13
Strategy and Finance Committee
07 February 2013
Monthly budget update Page 100
11. The Devonport-Takapuna Local Board has sufficient underspends within their 2012/2013budget to fund this increase, but have requested that the increase be funded regionally onthe basis that an automatic inflation adjustment should have been applied to thesebudgets, which would have increased the local boards funding by this amount.
12. Officers consider that the increases in these grants are discretionary in nature and that it isappropriate for these increases to be funded from discretionary local funds rather than
being funded regionally as part of the application of councils cost of inflation.
Centralisation of graffiti removal budgets
13. In March 2012 the Regional Development and Operations Committee endorsed theAuckland Graffiti Vandalism Prevention Plan and a new regional graffiti removal contractwas established from 1 July 2012 to provide an end-to-end solution to graffiti acrossAuckland in a cohesive manner.
14. The new regional graffiti contract was not finalised in time for adjustments to be included inthe long-term plan. As a result, budget adjustments are now required to align budgets withdecision-making responsibilities and the new contract.
15. These adjustments require moving approximately $295,000 per annum from local activities
and $75,000 per annum from other regional activities to the regional budget for graffitieradication. While this will reduce the overall budget allocated to each local board, thechanges will not impact service levels for local boards.
Manukau Rail Link Double Track Connection
16. Auckland Transport is requesting approval to reprioritise $2.6 million in the current year2012/2013 and $1 million in 2013/2014 for construction of a double track connectionbetween the northbound Manukau Rail Link and the main line at Wiri junction.
17. Construction of the existing northbound Manukau Rail Link (double track) was completed in2012 with a single track connection to the double track main line.
18. Passenger rail services currently operate at 2030 minute intervals. This work would allowthe line to deliver 10 minute service frequencies in support of the Auckland Plan objectiveof doubling public transport trips to 140 m