Case Brief: C P Group Ltd v Auckland Council [2021] NZCA 587

March 15, 2022

Auckland Council’s decision to impose a targeted rate on specific accommodation providers was set aside by the Court of Appeal as it breached the Local Government Act 2002 (“LGA”).


The current Auckland Council was elected in 2016 with the promise it would not increase average rates over 2.5% per year. Council also intended to invest in visitor attractions and events to encourage tourism, and required additional funding to ensure it upheld its election promises. Council did not have the power to target visitors directly through a bed tax or visitor levy. Instead, it sought to secure the funds through an “Accommodation Provider Targeted Rate” (“APTR”) on a selected group of commercial accommodation providers. Council envisioned that these additional costs would be passed onto the visitors, and achieve the same result as a visitor levy. The APTR was imposed in the 2017/2018 and 2018/2019 rating years.

The commercial accommodation providers affected by the APTR applied to the High Court for judicial review of the Council’s decision to impose the targeted rate. The group alleged Council had failed to follow mandatory relevant considerations under the LGA and that no reasonable local authority would have imposed the APTR. The High Court rejected these claims, and the group appealed this decision to the Court of Appeal.

The Case
Did Auckland Council adequately consider the effects on the targeted group and wider community?

Council’s decision to impose the APTR relied on the assumption costs would be passed through to visitors. In reality, the providers were in a highly competitive market and already charging the maximum they could bear. The Commerce Act 1986 prevented entities from entering an arrangement with each other to pass on the increased cost. Some providers had their room prices contractually fixed. Because of this, targeted providers were forced to absorb the unbudgeted cost and faced a disproportionate burden. The Court held Council failed to adequately consider the economic cost on targeted providers by incorrectly assuming they would choose to pass this cost on to their guests.

Additionally, the APTR had not been formulated on the basis of the statutory criteria and was instead being used as an impromptu bed tax. The assumption costs would flow to the visitors, regardless of its validity, was not a relevant consideration in setting a targeted rate under the Act. The Court held this assumption corrupted the analysis, which was improperly used to justify imposing the APTR. This error of law was sufficient for the Court to dispose of the appeal, though Gilbert J went on to briefly address the remaining grounds as obiter.

Did Auckland Council adequately consider the costs and benefits of funding the activity distinctly from other activities?

The group submitted Council failed to consider the extent they already contributed to visitor attraction. The Court disagreed, and held Council was not required to consider this under the cost-benefit analysis. The report provided by Council staff focused on issues of administrative capability to impose the APTR and the cost of implementing it. Council had appropriately considered these matters, and not erred in its analysis under the relevant provision.

Was Auckland Council’s decision to impose the APTR reasonable?

While the Court was not required to determine on this ground, it concluded a finding of unreasonableness would have been inevitable. The Court noted considerable overlap between the claims Council erred in law and acted unreasonably. Council had failed to adequately consider the distribution of benefits and the imposition of such a disproportionate burden on the targeted group. It was unreasonable to target a small group of accommodation providers when other businesses, including those outside the accommodation sector, benefited far more from visitor spending.


The Court allowed the appeal, and declared the decisions to impose the APTR in the 2017/2018 and 2018/2019 periods were invalid. These decisions were set aside.

For questions about this decision or judicial review, please contact Director Brigitte Morten.

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