Letter to Hutt City Council on defective kerbside collection - UPDATED

October 8, 2020

We’ve been asked why the Hutt Efficient Waste Action Group decided not to ask the court to review the Hutt City Council decision and process to move to a rates-funded monopoly waste collection service. Because we posted on this site our letter before action to Hutt City Council warning of the likely court action, we think it fair to explain why the case has not proceeded.  

Essentially the Action Group accepted Franks Ogilvie advice that the likelihood of an effective remedy was not high enough to justify the costs and risks of going ahead. We did not make that advice public at the time, in case anyone wanted to proceed despite it.

Enough time has now passed to make that unlikely. To protect the privacy of a member of the Action Group we have redacted some material, and there are some other minor edits for brevity.

Please find the update at the bottom of this page:

8 October 2020

The letter was written for a group of Hutt people dismayed by the Hutt City Council’s plans for a new kerbside collection scheme.  Some became concerned by biased and incomplete disclosure by the Council in its required consultation with residents. Others have concerns about the loss of incentives for waste minimisation, or loss of choices about collection and bags and bins.

 

The consultation disclosure left out important options. It should have been balanced, fair and objective. Instead it was obviously intended to steer people into supporting one option apparently preferred by some Council officers and the Mayor.

 

Under those insiders’ preferred option Hutt households will lose their current Pay as You Throw choices among competing suppliers. Kerbside collection costs will be buried in rates. That reduces the natural reward to people who minimize their waste. Low waste producers will subsidise people who produce lots of waste.

 

The consultation, and the information provided to Councillors who made the decision, did not properly explain costs and risks. From what we have seen in thousands of pages of Council information obtained under the Local Government Official Information and Meetings Act, Councillors were likely to have been misled by significant omissions and wrong statements. Among the misleading claims was that Council had to make an urgent decision, because waste contractors would not offer bag collection after the middle of next year.

 

Many Hutt people will be aware that Councillor Milne has been trying to warn Councillors of the risks in the kerbside collection proposals. He investigated discrepancies in the information fed to Councillors (and the public), including that an end to bag service could not be avoided. That seems to have been intended to stampede Councillors. They were pressed to allow a seriously irregular process that pre-judged the outcome of the consultation. The Council asked contractors to bid on a closely specified new system at the same time as the Council was pretending to consider ratepayers’ views on other options, with an open mind.  

 

Among the tender terms was a prohibition on tenderers talking to Councillors, exactly at the time that Councillors might want to hear from those who know costs and unexpected risks in the proposed new system. That prohibition was imposed despite the decision on tender success being expressly reserved to Council officers, away from Councillors. So Councillors were told they could not talk to the people in the best position to know of problems in the Council officer recommendations, allegedly because it could undermine the tender integrity, even though Councillors would not see the final tender assessments and would not be involved in awarding the successful tender.

 

On 6 October it was widely reported that Cr Milne had been found by an investigating lawyer (Chen Palmer)to have breached the Council’s Code of Conduct, and that the Council would be deciding on what to do about that at a meeting on Friday 9 October. See for example the NZHerald report. The report of the investigating lawyer confirms that the main current complaint was about Cr Milne’s enquiries to waste companies, checking the truth and balance and completeness of officer information to Councillors.

 

Given how closely the Code of Conduct complaint is related to the reasons for our clients' notice of an intention to ask the Court to intervene, our notice of intended court action is now made publicly available. You can read it here.

 

Members of the action group supporting the court application, and the applicant in particular  regard Councillor Milne as having courageously withstood pressure to allow the pre-determined scheme for kerbside collection to proceed without challenge. Cr Milne’s explanation of his concerns about the information going to Councillors (and in consultation disclosure) circulated widely in the Hutt. The applicant in the intended action was among submitters in the consultation process who used Cr Milne’s warnings for their submissions.

 

In view of the news coverage of Chen Palmer’s bizarre conclusions on the complaints it is important for Hutt people to know that Cr Milne’s worry about legal deficiencies was well founded. We regard the conclusions as bizarre because the reporting lawyer expressly says he took no account of the context which in our opinion is vital.  We are confident of that from our study of the Council information obtained under LGOIMA requests. No safe conclusion about the complaints could ignore that context.

 

Our clients are happy to enable Hutt people to access our letter to the Council to help them understand that context.

 

Our clients in authorising this do not purport to express a view on the secondary or ‘tennis club’ complaint. However, this firm regards the Chen Palmer opinion on that complaint as questionable in terms of its legal analysis.

23 October 2020

Dear Group Supporters,


Last Friday we decided that we could not recommend that you ask the court to overturn the Hutt City Council’s decisions to move to a rates-funded monopoly waste collection system.

You will recall that we advised the Council two weeks ago of the intention to apply on your behalf for judicial review of the Council’s conduct. The application would have asked the court to order the Council to start again, with unbiased, honest consultation.

The kind of Court order sought from the Court would have required the Council to start again and not screw the scrum. It would have made them seek Hutt resident views on keeping the current system, instead of offering only four options that excluded the most obvious, least risk, most flexible and probably least expensive choice – keeping the current system.

It would have directed the Council not to twist the response forms and software, which forced people to “approve” one of the limited options before lodging their response.

It would have directed Council officers to tell Councillors (and ratepayers) that suppliers were in fact able and willing to maintain the current choices, and that they can evolve with updated technology.

That would have forced an admission that other advice to Councillors was deficient or wrong (it was so misleading that it is hard to believe it was careless).

The order to be sought would have directed the Council to delay the tendering for a Council waste collection contractor until after honest consultation and an objective fully informed decision by Councillors that genuinely reflected consultation. What actually happened showed contempt for consultation – tenderers were told which option Council wanted before the flawed online consultation and half a year before face-to-face hearings. We are told that at least 80% of the oral submitters were critical of the Council’s plans.

We would have asked the Court order to prohibit the gagging of Councillors and waste contractors. Councillors and tenderers were told that they could not communicate with each other. Even though the tender decisions were never going to be made by Councillors, and they never saw the tenders, Councillors and potential tenderers were wrongly told by the Hutt City Council CEO that any communication had to be through designated Council officers.

Councillors were therefore blocked from fact checking with the people in the best position to know the truth. In our opinion the legal justifications for those gags were spurious. Issuing the request for implementation tenders, and closing them before the consultation was over, suggests that the Council regarded consultation as mere ritual.

So why the recommendation against proceeding?

Four reasons for not going ahead with the court application are explained below, before describing the most disappointing reason. They are:

 - We could win in terms of court findings that the Council has acted wrongly, but with a strong possibility of getting no effective remedy;

 - We think that the most likely explanation for what happened is that some people within the Council had a pre-determined scheme to be achieved by hook or by crook. They may have seen the gaps in consultation and misleading reporting and communication with Councillors as just a cost of getting to the predetermined decisions. But we are advised that Courts have become unsympathetic to acting on cases of pre-determination on commercial decisions;

 - The necessary help and involvement that we could need from Hutt businesses, could make the court much less willing to intervene; and

- The Council would likely claim that delaying implementation of their tender decision would cost a lot of money. Courts usually require someone to guarantee payment of damages for the delay if the applicant loses. That would increase your risk if the action was unsuccessful. If it was successful the benefits would be shared across the community and amongst a wide range of contracting businesses but it is hard, slow and expensive to mount a class action where they can effectively contribute. In other words, a few would have to be found to bear all the downside risk, but the benefits would be widespread.

 

More detail on those reasons

We retained very experienced barristers for the case. As we worked on the application and the evidence, they came to the view that there is a high risk that the court could find the Council to have acted wrongly but decide that it was too late to interfere, or that there was not enough chance of a different outcome to justify a remedy.

The Council could go through the motions of consultation again the next time without the tell-tale features that showed it was fake last time. Councillors could cover their backs next time around with written “evidence” of considering the issues fully and objectively. If Councillors were so doggedly in support of the changes they were set up to “prefer” over a year ago that they could ignore all the warnings and signs they actually got before their decision, despite the biased and misleading “options” and reports, then it is highly likely they would do the same again.

The barristers also advised that the courts have recently started to discourage judicial review proceedings based primarily on evidence of pre-determination by decision-makers. Judges are recognising that most decision-makers do not start with open minds. So they are finding ways to avoid ordering fresh starts when decision-makers will in practice start again with the same prior preferences, but perhaps just disguise them better.

The barristers suggested that the obvious applicants for the orders may not be Hutt ratepayers and people with rubbish who will pay the costs of bad decision-making. Instead for a court looking at dud procedures obvious applicants could be either Councillors who were given the mushroom treatment, or the contractors who were gagged and then encouraged to put in tenders that could not be accepted because consultation was confined to avoid what they tendered.

But the barristers also advised that having contractors as parties could make it harder to win. The courts have shown a wish to cut the number of disappointed-tenderer cases. They have recently tended to decline to intervene where a commercial party is complaining about biased or unfair tender processes. Essentially judges seem to think that bias and predetermination goes with the territory for people doing business with Councils.

They think a case launched by, or with support from a wronged tenderer, could be treated very differently from a case without commercial implications or support.

One of the existing contractors is an obviously wronged party. But a case involving them would have an uphill task to get the Court to apply the law in the way that it would if it was only ratepayers asking that their Council be made to act lawfully.

It is impractical to proceed with this application if the Action Group could not seek help from some of the contractors who know exactly what was wrong, and how much it will cost the Council and ratepayers. We would need their evidence of contact (and non-contact) with the Council, and probably their financial support.

We would need someone to stand behind the applicant financially against the risks of a damages order should we lose. Defendants have incentives to exaggerate what court-ordered delay might lose them. We are told that in reality a delay in starting the new scheme could save the Council (and rubbish contract customers) money. But the court is still likely to require a guarantee that any  damages from delay will be paid. Given that public-spirited Action Group people individually have not much financial benefit from the action, the obvious party to give a financial backstop would be one or more of the existing businesses that will be destroyed next year if the Council proceeds. But the Council may object that such a guarantor has bad prospects. And as described above, that participation could result in the Court applying a higher legal threshold for intervention.

 The ‘own goal’

A further consideration persuaded us that we cannot recommend proceeding. It was the clincher. It could be described as an own goal. In reality the people concerned could not, in conscience, have done anything other than what they did. And even if they had not, the problems explained above would still have made it a potentially costly risk to proceed.

But the sad conclusion, after analysis with the barristers, is that the case could be undone by our own evidence. Despite consultation that in our opinion did not comply with the requirements of two statutes, by the time Councillors made their decision they had at least some warning of the deficiencies in what they’d been told. The hundreds of people who turned up to make personal submissions to Councillors told them very clearly what they actually wanted from the waste system. The strenuous and documented efforts of Cr Milne, and some of the existing businesses to be destroyed by the changes, warn of the real facts and the gaps in consultation.

The Council lawyers would be able to take that evidence to the Court. They’ll argue that despite the faults in process, by the date of the decisions last month, Councillors could know the facts if they wanted to. Though officer reports and recommendations omitted salient facts the decisions were made by Councillors who must be taken to have notice at least there were problems. Through submissions and a letter to Councillors from Cr Milne in June, they had access to corrective information about the problems and decided to proceed anyway. So the Court could decide that it cannot intervene because it is not clear that the decisions were made without relevant information, or on the basis of wrong or false information. A Court will not usually overturn an informed decision, even if it is plainly wrong, in logic, process and fairness. Judicial review does not let the judge substitute the court’s decision for that of the body authorised to make it. The court should intervene only to correct process that is unlawful or where it has been made without adequate information.

This will be bitter advice for many of you. We are sorry that we cannot recommend that your action proceed. It will likely cost between $50 - 100k if you win, and if you lose as much as 50% more, plus the risk of a damages claim. Though we think you would readily establish wrong conduct by the Council there might be no practical change in outcome from all that expense.

Finally, some people on the Council would likely interpret a decision by the Court not to intervene as much more than that. They would likely claim that it was judicial endorsement of the Council’s conduct. We think it is better for Hutt City residents in the longer term to not leave scope for false claims of Court blessing for what we saw in the thousands of pages of Council information were viewed, namely unfair and deficient consultation and decision processes.

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