New Zealand Catholic Education Office Limited v Attorney-General [2012] NZHC 793 (27 April 2012)

Last Updated: 4 May 2012

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-1747 [2012] NZHC 793

UNDER the Declaratory Judgments Act 1908 and the Private Schools Conditional Integration Act 1975

BETWEEN NEW ZEALAND CATHOLIC EDUCATION OFFICE LIMITED Plaintiff

AND THE ATTORNEY-GENERAL Defendant

Hearing: 2-3 April 2012

Counsel: J O Upton QC and F M Shanahan for plaintiff

U R Jagose and N E Gray for defendant

P D McKenzie QC, Amicus Curiae

Judgment: 27 April 2012

_{RESERVED JUDGMENT OF DOBSON J}

The issue and its context

[1] The plaintiff in this case (NZCEO) seeks declaratory relief as to the correct interpretation of a provision in the Private Schools Conditional Integration Act 1975 (the Act). The issue is whether the Act allows so-called integrated schools to lawfully recover, as part of attendance dues, the cost of charging, recovering and accounting for those attendance dues.

[2] NZCEO acts for 24 owners of Catholic schools (the Proprietors), who between them operate 238 integrated schools throughout New Zealand. In these

_{proceedings, NZCEO also represents 68 other Proprietors who between them operate}

NEW ZEALAND CATHOLIC EDUCATION OFFICE LIMITED v THE ATTORNEY-GENERAL HC WN CIV-

2011-485-1747 [27 April 2012]

approximately 90 integrated schools. There are four further small integrated schools which have maintained their distance from the initiative pursued in the name of NZCEO, but whom its counsel, Mr Upton QC, described as expressing their general support for the action taken by it. NZCEO therefore effectively represents approximately 330 integrated schools which are educating about 86,500 students comprising some 14 per cent of the total number of students in New Zealand schools.

[3] The process for schools that were previously entirely independent of the State to be conditionally integrated into the State education system was provided for in the Act. It provides for private schools to individually settle with the Crown on terms for an integration agreement, which allows the Proprietors to retain ownership of its assets, but to conform to the standards for State schools, subject to the Crown assuming an obligation to maintain the property of the school to the extent it is used for the provision of educational services of the types provided at State schools.

[4] A private school committing to the integration process has to commit to bringing its buildings up to the standards required for State schools, and to commit capital to enhancing the standard of its buildings to comply with the standards required of State schools as promulgated from time to time. This obligation includes the servicing of debts for capital works that existed at the time an integration agreement is concluded, or are incurred thereafter.

[5] The principle that education should continue to be free to New Zealand resident school children was treated as important in designing the system for integration of private schools. However, Parliament recognised in the drafting of the Act that the on-going burden for the Proprietors to provide the capital funding for school buildings would, for most such schools, be inappropriately large to be left as a matter of voluntary contributions. Accordingly, after the first reading of the Bill, a clause was added that would authorise integrated schools to charge for attendance, amounts that covered the capital costs of provision of school buildings. The amount of such dues was to be limited to the cost of providing buildings to a standard comparable with those of State schools, and parents could not be compelled to pay amounts for other aspects of the provision of services by the Proprietors.

Compulsory charges levied for children to attend integrated schools are not to be used to levy any amounts that would give integrated schools an advantage over State schools.

[6] The terms of the provision authorising such attendance dues was enacted as follows:

36 Attendance dues

(1) If the integration agreement in respect of the school so provides, the Proprietors of an integrated school may enter into an agreement with the parents or other persons accepting responsibility for the education of a child providing that, as a condition of the enrolment and attendance of that child at that school, the parents or other person shall pay attendance dues.

(2) The said dues shall be established in respect of such school or group of schools, and at such rates, and subject to such conditions, as may be approved from time to time by the Minister, by notice in the Gazette.

(3) Revenue received by the Proprietors from attendance dues shall be used solely for the purpose of paying in respect of the school or group of schools in respect of which it is received for such improvements to the school buildings and associated facilities as may be required by any integration agreement or integration agreements pursuant to section 40(2)(c) of this Act, or for such capital works as may be required by the Minister pursuant to section

40(2)(d) of this Act, or for meeting debts, mortgages, liens, or other charges associated with the land and the buildings that constitute the premises of the school or schools.

(4) No revenue received by the Proprietors from attendance dues shall be used to provide or improve the school buildings and associated facilities to a standard higher than that approved from time to time by the Secretary as appropriate for a comparable State school.

(5) Should any Proprietor use any revenue from attendance dues for any purpose other than one permitted by this section, the Minister may, notwithstanding anything in the integration agreement, by notice in the Gazette, withdraw the right to charge attendance dues, and the controlling authority shall thereafter, while the withdrawal continues, be required to permit the attendance of children without the payment of attendance dues. The Minister may at any time, by notice in the Gazette, cancel any such withdrawal.

(6) Should any parent or other person who has accepted the responsibility for the education of a child, and has pursuant to subsection (1) of this section entered into an agreement to pay attendance dues, fail to make such payment, any payment not so

made shall be recoverable from that parent or person in any Court of competent jurisdiction as a debt due to the Proprietors.

(7) Any such failure to make payment shall constitute grounds for the Principal of the school to suspend the child from attendance at that school and to remove his name from the school register:

Provided that no child shall be so suspended and have his name removed from the school register until arrangements have been made to the satisfaction of the appropriate District Senior Inspector of Schools for the child to be enrolled at some other school.

(8) Each Proprietor who is permitted to charge attendance dues shall keep accounts in a manner approved by the Secretary showing total receipts of dues and the true disposition of the revenue. These accounts shall be balanced at a date each year approved by the Secretary, and shall be audited by a chartered accountant. The Proprietor shall send a true copy of the accounts together with the auditor's report on them to the Secretary by a date to be approved by the Secretary.

[7] The power to charge attendance dues that will be compulsory for the parents or caregivers of children at integrated schools provides the financial basis for Proprietors to discharge statutory responsibilities imposed on them under s 40 of the Act. Section 40(1) empowers the Proprietors of such a school to discharge responsibilities specified in an integration agreement to which they are a party. Then s 40(2) provides as follows:

40 Powers and responsibilities of Proprietors

...

(2) Subject to the provisions of subsection (1) of this section, the

Proprietors of an integrated school—

(a) Own, hold upon trust, or lease the land and buildings that are specified in the integration agreement as constituting the school premises; and

(b) Shall accept and meet the liability for all mortgages, liens, and other charges upon the said land and buildings; and

(c) Shall plan, pay for, and execute, over such period as may be specified in the integration agreement, such improvements to the school buildings and associated facilities, as may be required in accordance with the integration agreement to bring the said buildings and associated facilities up to the minimum standard laid down from time to time by the Secretary for State schools; and

(d) Shall plan, execute, and pay for such capital works as may be approved or required, from time to time, by the Minister, with a view to replacing, improving, or enlarging the school, its buildings, and its associated facilities in order to maintain the school, its buildings, and its associated facilities at the minimum standard laid down from time to time by the Secretary for comparable State schools; and

...

[8] Subsequent paragraphs of s 40(2) oblige the Proprietors inter alia to insure all buildings and other assets, and permit the provision of accommodation for pupils living away from home.

[9] The Act also addresses other means for Proprietors to raise money. Section 37 authorises Proprietors to request the parents of pupils to make financial contributions to the Proprietors in relation to the property comprising school premises or land and buildings associated with the school. This provision contemplates requests for voluntary contributions in relation to capital works that would achieve a standard higher than that approved for comparable State schools, which represents the limit on the extent of attendance dues defined by s 36(4).

[10] In s 38, the Act recognises a discrete entitlement for those operating an integrated school (typically a board of trustees) to take part in fund-raising activities “... in a like manner and for like purposes for the benefit of the pupils of the school as are permitted in the case of State schools”.

[11] The provisions of the Act do not explicitly allow integrated schools to use a component of attendance dues to cover the costs incurred in the process of collection. Those costs (the disputed costs) cover the range of services required to administer the recovery and application of attendance dues. The range of disputed costs was illustrated by documents annexed to an affidavit from the financial controller of NZCEO, which breaks down “collection costs” into 14 separate cost items such as credit card and EFTPOS charges, collection agency charges, a licensing and maintenance fee for accounting software, salaries, occupancy costs, depreciation, publicity and staff training.

[12] Mr Patrick Lynch, who is the chief executive of NZCEO, completed an affidavit reviewing the history of this issue from the plaintiff ’s perspective. Mr Lynch has been in this role since 1994 and has personal awareness of the circumstances surrounding the introduction of the Act and the way it has worked since then. He deposed that the system has worked well for 25 years, under which approval was given by successive Ministers of Education for levels of attendance dues that included a component for the disputed costs.

[13] Mr Lynch deposed that the value of school capital assets for the Catholic schools (therefore excluding the remainder whose interests are associated with the present claim) is in the vicinity of $1 billion. Mr Lynch foresees serious on-going difficulties for Proprietors in meeting the financial obligations they have undertaken in good faith with financial institutions, and to comply with other requirements of the Act, if a solution is not achieved that enables the recovery of the disputed costs as a component of the attendance dues.

[14] The Court had appointed Mr McKenzie QC as an amicus, to represent the interests of parents of pupils at integrated schools. In assessing the position of such parents, Mr McKenzie had made contact with a number of parents of children at integrated schools and two such persons completed affidavits reflecting their views on the matter.

[15] The first deponent was the chairperson of the board of trustees of a small Christian school in Wellington. She also has experience as a parent of children attending other integrated schools. She deposed to her experience as both a payer of attendance dues, and observations gained from her position on the board of trustees such as on the rates of payments of non-compulsory donations. This deponent supports the inclusion of a charge to recover the reasonable costs of administration in the attendance dues. She observed that in the situation of a small school, “there is not much room for the school itself to carry any loss of income”.

[16] Materially similar views were deposed to in a second affidavit from a deponent who is on the school boards of two Catholic colleges in Wellington. That deponent’s experience was that about five per cent of parents at those colleges have

difficulty paying the attendance dues, and that a greater percentage than that do not pay voluntary donations and charges. He observed that if there is a shortfall in payment of attendance dues, those parents who contribute to the fund-raising have to work harder and that the burden falls heaviest on those parents who do make voluntary payments.

[17] Mr McKenzie acknowledged that these examples of the attitudes of parents with children at integrated school reflect the views of NZCEO, and that different views may be expressed by other parents. In particular, he acknowledged that there will be parents who are not prepared to pay more than the attendance dues, and who, for financial or other reasons, are interested in keeping such dues at the lowest amount possible.

[18] Mr Jeremy Wood, who is the Group Manager, Education, Curriculum and Performance at the Ministry of Education, completed an affidavit that reflected a review of the relevant records maintained by the then Department of Education, and latterly the Ministry of Education, on its monitoring of the recovery of attendance dues. That review suggests that in the initial years after the Act came into force, the Department took the view that integrated schools could not use the attendance dues charged to the parents of pupils for the disputed costs. His affidavit cited specific examples of that approach from 1978 and 1983.

[19] However, it appears that there was a change to a more liberal approach that would permit the amounts charged for attendance dues to include an allowance for the cost of administering their recovery from about the end of the 1980s, and that from about the end of 1992, the Department had accepted that integrated schools could charge administration fees for the work involved in recovering and administering attendance fees. Mr Wood noted that information made available electronically on its website still states that attendance dues may include an

_{administration element, covering the cost of collecting the dues.}[1]

[20] Despite that, from the end of 2009 the Ministry revisited the scope of what is lawfully permitted by s 36 and came to the view that the statute did not authorise the inclusion of the disputed costs in amounts charged as attendance dues.

[21] The Ministry has maintained a constructive dialogue with NZCEO, but in the end the Ministry has been unable to accept a more liberal interpretation of s 36 of the Act that would permit the inclusion of the disputed costs. Accordingly, the parties have co-operated in pursuit of the present proceedings in which NZCEO seeks declaratory orders confirming the lawful entitlement of integrated schools to include in attendance fees charged to the parents or caregivers of their pupils a component to reflect recovery of the reasonable costs of administering the recovery of those attendance dues. The Ministry seeks declarations to the opposite effect.

Competing arguments

[22] Mr Upton advanced two alternative arguments for the scope of attendance dues permitted by s 36 of the Act to include the disputed costs. The first was that a distinction is to be drawn between the attendance dues received as the gross amounts, and the “revenue” derived from that source, namely the net revenue after deduction of the administration costs incurred. On this analysis, the distinction between the two concepts carries with it an implicit recognition that the amount of attendance dues are grossed up to include a component reflecting the cost of their recovery, and that the revenue available to be applied for the specific purposes outlined in s 36(3) will constitute the net sum after deduction of those costs.

[23] Mr Upton’s alternative argument was that the third category of cost for which attendance dues could be applied included the concept of “... other charges associated with the land and the buildings...” which includes charges incurred in recovering the attendance dues.

[24] The Ministry submitted that neither interpretation could be sustained, as the disputed costs fall outside the explicitly defined categories of item to which attendance dues can lawfully be applied. The Ministry acknowledges that the

consequence of this approach is that the disputed costs have to be funded by integrated schools from some other, voluntary, sources.

Purpose of the provision

[25] The most appropriate guidance on the approach to interpreting the section in question is that provided by Tipping J for the Supreme Court in Commerce Commission v Fonterra Co-operative Group Ltd:[2]

It is necessary to bear in mind that s 5 of the Interpretation Act 1999 makes text and purpose the key drivers of statutory interpretation. The meaning of an enactment must be ascertained from its text and in the light of its purpose. Even if the meaning of the text may appear plain in isolation of purpose, that meaning should always be cross-checked against purpose in order to observe the dual requirements of s 5. In determining purpose the Court must obviously have regard to both the immediate and the general legislative context. Of relevance too may be the social, commercial or other objective of the enactment.

That judgment also acknowledged that where the meaning is not clear on the face of the legislation, the Court will regard context and purpose as essential guides to meaning.[3]

[26] Here, the parties cast the background to s 36 and the intended purpose of it in somewhat different lights.

[27] Mr Upton characterised s 36(3) as intended to authorise the recovery of the capital cost of providing school buildings by the Proprietors from the parents or caregivers of the children attending such schools, to an extent that would place such schools on the same footing as State schools. The requirement that the Proprietors are not permitted to recover the capital cost of providing buildings to a standard higher than that the Ministry recognises as appropriate for comparable State schools is explicit in s 36(4). Arguably, the purpose of achieving equivalence is reflected in that subsection as the “ceiling”, with the “floor” being the entitlement to recover the full costs of meeting the three objectives listed in s 36(3), without needing to

_{subsidise any of those types of costs by funding raised by other means.}

[28] Mr McKenzie initially argued for a similar purpose by suggesting that s 36 was intended to achieve parity between State and integrated schools in providing for the capital cost of buildings. On this analysis, where State schools are free of any such capital charge because buildings are provided by the Ministry, to achieve parity, the Proprietors of integrated schools would need to rely on the attendance dues to fund the whole of the capital costs for buildings, without needing to subsidise those costs by funding the collection of attendance dues from other sources.

[29] Mr McKenzie acknowledged that there were no explicit references in the parliamentary materials to the aim of achieving this form of “parity”, but still supported the approach that the section would not achieve the inferred purpose of providing a funding mechanism for the capital costs that providers had to assume, unless all the costs of doing so were able to be recovered. Arguably, that is preferable to arbitrarily excluding one component of the costs of raising the capital required to comply with the Act. Similarly, there is no source material reflecting a consideration by Parliament or the drafters of any rationale for treating this component differently.

[30] From the Ministry’s perspective, Ms Jagose disputed that the purpose of s 36 was to achieve some form of parity or equivalence between State and integrated schools. She characterised the origins of the Act as reflecting a negotiated deal, with the extent of in-roads into the principle of free education being the subject of specifically defined limits. Because those defined limits fell short of authorising a charge for the disputed costs, she argued that Parliament intended those costs to be met by funding from other sources. Ms Jagose submitted that had some form of parity or equivalence been a purpose underlying s 36, then the explanatory materials or Parliamentary debates could reasonably be expected to acknowledge the point, but they do not. Parliament is to be taken as intending what it has said in the section, and the scope of compulsory charges (“attendance dues”) does not include the disputed costs.

[31] The Ministry treats the exclusion of the disputed costs as a pragmatic reflection of a negotiated deal in which the government of the day was not prepared to go further than authorising the compulsory recovery of the three defined

categories of costs in s 36(3). Consequently, Proprietors would have to subsidise the costs of meeting their statutory obligations, to whatever extent they incurred administration expenses in recovering the attendance dues. However, there is also no extrinsic evidence of any explicit negotiation that reached such a point, falling just short of what would conceptually be a substantially more coherent scheme authorising the recovery of not only the three categories of expense specified in the section, but also the incidental costs in administering the recovery and payment of such capital costs.

[32] Although there are no extraneous references which explicitly support the purpose attributed to s 36 on behalf of the plaintiff and by the amicus, there are tolerably clear indications from the terms and structure of the group of sections in which s 36 appears. Those sections support the implication of a purpose that integrated schools would be given the power to recover all elements of the three categories of costs defined in s 36(3), without requiring the anomalous exclusion of the costs incurred in recovering the attendance dues.

[33] The scope of on-going obligations of the Proprietors in respect of capital costs as spelt out in s 40(2)(b), (c) and (d) is clearly defined. Those in paragraphs (c) and (d)[4] represent two of the three categories explicitly recognised in s 36(3).[5]

Paragraph (b) (plus s 40(2)(g)) is caught within the third category in s 36(3) that is somewhat more open-ended. Costs of insurance were not specified in s 36(3) but are clearly “charges associated with the land and buildings”. In terms of a purpose implicit from the structure and content of these sections, I am satisfied that they reflect the purpose of authorising Proprietors to charge for the full range of costs of servicing the Proprietors’ capital obligations of school properties to the standard comparable with that required of State schools.

“Revenue” equals gross attendance dues, net of cost of collection

[34] Mr Upton’s first argument proceeded on the assumption that “revenue” and

_{“attendance dues” as used at the outset of s 36(3) must relate to different concepts,}

because otherwise one or other of the expressions would be superfluous where they appear. Mr Upton conceded that in normal usage the concept of revenue usually means gross receipts. However, he argued that, depending on context, it can mean net revenue after deduction of, or allowance for, relevant amounts. Here, the fact that the “revenue” is the sum received by the Proprietors from attendance dues was relied on as conveying the point that not all attendance dues would be available as revenue.

[35] Ms Jagose argued that ordinary usage of the concept of revenue reflects gross receipts or the “top line” in accounting terms from which costs are subtracted to determine net income. She cited a definition from accounting standards that defines revenue as “... the gross inflow of economic benefits during the period arising in the

course of the ordinary activities of an entity...”.[6] She also cited dictionary

definitions which are to the same effect.

[36] Further, she cited other statutory contexts where, if “revenue” referred to other than gross receipts, then the distinction was addressed explicitly, such as where net revenue, or costs of collection, were specifically recognised. These were:

(a) section 6(2) of the Reserves and Other Lands Disposal Act 1979, which provides that “revenue” is “the net revenue (after payment of all administrative charges) received by the Board ... shall be applied for purposes ...”;

(b) section 193 of the Maritime Transport Act 1994, which permits “the agent to retain a specified proportion of the marine safety charges as a collection fee”; and

(c) section 19 of the Wheat Industry Research Levies Act 1989, which

allows for “a collection fee of such amount (being not less than

_{2.5 per cent, and not more than 5 per cent, of any levy so collected)”.}

[37] Her submission was that had Parliament intended to permit deduction of the disputed costs from “gross” attendance fees, it would have explicitly outlined that entitlement, consistently with these other legislative examples.

[38] I am not satisfied that the structure devised in s 36 to permit Proprietors to charge dues for specific categories of expense enables the implication that “revenue” should be treated as net revenue after deduction of the costs of administering and recovering the attendance dues. That would involve a forced interpretation that I do not consider warranted.

[39] The difference between the concepts of revenue and attendance dues is explicable on the basis that Proprietors could receive revenue from sources other than attendance dues. Mr Upton was inclined to dismiss examples such as the prospect of rent paid to the Proprietors of a school hall for its use outside school hours on the basis that payments of that type would be received by a school’s board of trustees. That may be the case as a matter of administrative convenience, but conceptually the right to receive payment for the use of assets owned by the Proprietors is an incident of ownership. Accordingly, the use of the two phrases “revenue” and “attendance dues” is explained by the legislative aim of imposing constraints in s 36 only on the use of monies received from the charging of attendance dues, rather than inadvertently imposing a constraint on any revenues that might be received by Proprietors from other sources.

[40] Given the prospect of that consideration in the drafting exercise, the ordinary

meaning of “revenue” as gross receipts cannot be displaced.

Collection costs come within charges associated with land and buildings

[41] Mr Upton’s alternative argument depended on the third category of charge recognised at the end of s 36(3), namely “...other charges associated with the land and the buildings...”, being broad enough to include the reasonable administrative costs of recovering the attendance dues.

[42] Mr Upton’s argument was that in its context, and having regard to the purpose of the section, the scope of such “other charges” is to be interpreted as including the administration costs of recovering attendance dues. He treated the concept of “... associated with ...” as requiring a relatively looser connection than “charges upon the...land and buildings...” where that is used in s 40(2)(b), and also being more open-ended than the reference in the singular to “... other charge associated with the land...” in s 37(1) of the Act.

[43] In defining the permissible scope of attendance dues that can be charged compulsorily as an exception to the principle of free education, Mr Upton suggested that the link between recovery of the capital costs for servicing land and buildings, and the cost of achieving those recoveries, is sufficiently close for the latter to be a “charge associated with” the former.

[44] The nature of “charges” when they need only to be associated with the land and buildings is to be distinguished from a charge upon the land in the parlance of securities registered against the title to land. Mr Upton drew on one aspect of the definition of “charge” in the Shorter Oxford Dictionary, namely:

Incidental expenses. A price required or demanded for service rendered or goods supplied.

He argued that that use of the concept of “charge” was apt to extend to the disputed costs. On this point, a more natural expression may have been “... other costs incurred in association with the land and buildings” but Mr Upton’s approach does provide a measure of support for his argument.

[45] The Ministry’s contrary argument did not depend on interpreting “other charges” ejusdem generis with the specific items preceding it. That would confine “other charges” to meaning costs arising from encumbrances on the land and buildings. However, a caution against adopting a liberal or unjustifiably wide interpretation was said to arise from the stipulation at the outset of s 36(3) that attendance dues were to be used “solely” for the purposes then defined. Ms Jagose treated the use of “solely” as signalling caution by Parliament that what follows is to be strictly construed.

[46] The Ministry’s position was that it is artificial to treat the disputed costs as being “associated with the land and buildings” when those expenses are incurred in procuring recovery of payments from parents and caregivers. It also submitted that the notion of “charges” is inapt to describe the extent to which office expenses would be incurred in processing demands for payment, pursuing such payments, and processing the funds then received. In the accounting sense, many of the elements that comprise the disputed costs are more naturally described as costs rather than “charges” where that is likely to be used to describe an amount paid to a third party rather than a cost incurred internally.

[47] I am not satisfied that these various concerns for the Ministry are cumulatively sufficient to require a narrower interpretation than one which I consider to be consistent with the legislative purpose. In the context of s 36 and the group of sections in which it sits, I prefer the view that the concept of “other charges” extends to costs incurred by Proprietors that are linked with the provision of capital costs for the land and buildings. The extent of recoverable costs is those that would not be incurred but for the statutory responsibilities in respect of land and buildings that are provided for in s 40(2) of the Act. Administration charges of various types are incurred to procure the payment of the attendance dues, which are needed to service capital obligations that the Proprietors must discharge. In that sense, there is a sufficiently close link between the incurring of the disputed costs, and the land and buildings to which the Proprietors’ obligations relate.

[48] The Ministry conceded that the lawful amount of attendance dues could include a component that represents the Proprietors’ projected bad debts as a result of parents or caregivers failing to pay the attendance dues. The rationale for this acknowledgement is that if Proprietors can reliably project from previous experience that less than 100 per cent of the parents or caregivers charged with attendance dues will pay them, then their projections of the amounts required to service their capital obligations will be deficient by the extent of those contributions not received from the defaulters.

[49] Presumably, the Ministry sees the element of “grossing up” to take account of that deficiency as doing no more than ensuring that the amount available to the

Proprietors to service their capital obligation is sufficient. However, once that concession is made, the approach underlying it lends support to an interpretation of “other charges” as inclusive of the disputed costs. If accurately defined, the disputed costs will not be incurred on anything beyond the recovery of monies used to service those same capital obligations. The logic of the Ministry’s concession can also apply to the characterisation of the disputed costs.

[50] Once the scope of attendance dues is treated as providing the funding for Proprietors to discharge their financial obligations in respect of land and buildings, then a narrower interpretation excluding the disputed costs could only arise either if Parliament is attributed with the intention to impose those disputed costs on the voluntary fund-raising activities of Proprietors, or if, by oversight, Parliament did not appreciate that the disputed costs could become a meaningful burden for the Proprietors. I have rejected the first notion in discerning the purpose of the provision. I am not prepared to read down the terms of s 36(3) because of the prospect that Parliament overlooked the impact on Proprietors of having to fund the disputed costs from other, voluntary sources.

Result

[51] Both parties sought general guidance from the Court by way of declaratory orders, as to how the disputed costs might lawfully be determined as included in or excluded from the attendance dues.

[52] Having accepted the plaintiff’s alternative argument for inclusion of the disputed costs in the “other charges” component of attendance dues, it is not appropriate to further define the types of administration costs that might properly be included. The justification for including the disputed costs is that they are incurred solely in recovering and accounting for attendance dues. It is understandable that the Ministry would want a definition of the disputed costs, if they are lawfully recoverable, that is as self-policing as possible.

[53] The Act does contemplate a measure of supervision by the Ministry of the justification for inclusion of all elements of attendance dues. The Minister has a

responsibility to approve the rates for attendance dues under s 36(2), and that approval process could hardly occur without a critical consideration at some level of the components of such rates. At a more detailed level, the Secretary for Education has responsibilities under s 36(8) of the Act to receive annual accounts in a form stipulated by the Secretary. It may be that patterns of conduct have meant that, over time, the processes for recovery of, and accounting for, attendance dues have indeed become relatively self-policing. However, given the structure of s 36, the various forms of expense incurred in recovering the attendance dues should revert to being reviewable by the Ministry, as it did before reconsidering the legal basis for their inclusion. It is for the Ministry to agree with the schools on the accounting analyses that ought to be applied in differentiating, and accurately accounting for, components of items such as salaries and staff training, to the extent that they reflect the component of such costs that are incurred in the recovery of attendance dues.

[54] Accordingly, I make the following declaration: the phrase “charges associated with the land and buildings that constitute the premises of the school or schools” in s 36(3) of the Act includes the costs incurred in collecting and administering attendance dues.

[55] No other declaratory orders are appropriate.

[56] I am inclined to grant costs to the plaintiff, but reserve the entitlement to the parties to file memoranda in light of the outcome, given the inconclusive circumstances in which I heard briefly about costs during the hearing.

Dobson J

Solicitors:

Shanahan Law, Wellington for plaintiff

Crown Law, Wellington for defendant

Amicus:

P D McKenzie QC, Wellington

---

[1] Exhibit JDW 19, specified as having been updated 19 August 2010.

[2] Commerce Commission v Fonterra Co-operative Group Ltd [2007] 3 NZLR 767 at [22] (footnotes omitted).

[3] At [24].

[4] _{Cited at [7] above.}

[5] Cited at [6] above.

[6] NZIAS 18 at [7].