Auckland Council abandons forced sale of Ōtara house over $317k rates debt after learning owner is dead

Auckland Council has abandoned the forced sale of an Ōtara house which has notched up a huge bill of $317,000 in unpaid rates and penalties after discovering the owner is dead.

The deceased owner's relatives contacted the council after coverage by the Herald.

The ramshackle three-bedroom Guthrey Place property was due to be auctioned this week by Barfoot & Thompson in just the second-ever forced rating sale taken by the council.

But in an 11th hour reprieve, the compulsory court-ordered auction was abandoned after relatives of the property's owner - Joseph William Leef - contacted council officials to inform them that Leef was dead.

"Following the Herald story in late July, a number of family members came forward - from as far afield as Australia - to help us fill in the blanks on the property's ownership history and speak to us about managing it from here," Auckland Council group chief financial officer Ross Tucker said.

"We are really pleased that the planned rating sale has now been stopped, this month's auction cancelled and we're working with family members on next steps.

"We have still got some work to do, including liaising with the family on clarifying current ownership arrangements and how we might manage the rates debt against the property."

The 92sq m weatherboard home sits on a 693sq m section and has a CV of $950,000.

The rates bill on the property, which is surrounded by state homes, has grown to $317,846.55 and is now the city's longest outstanding debt.

No rates payments have been made on the home since March 2005 - more than 19 years.

The council said a compulsory sale was a "last resort". Officials went to great lengths trying to locate the owner or their family in order to come to a repayment arrangement that could avoid a forced rating sale, prior to seeking a High Court order.

Auckland Council spend eight years trying to recover the huge rates debt

Debt recovery action commenced in June 2016 and court action began later that year seeking what was then $46,000 in unpaid rates.

However, repeated attempts to serve notice on the property owner were unsuccessful, including multiple visits to the house.

Over the years, the property became increasingly overgrown.

High Court charging orders were lodged against the title in 2019. The council applied to the High Court for a forced rating sale in May last year and the sale had been due to occur at Barfoot & Thompson's CBD office on Wednesday.

However, Leef's relatives are now negotiating a repayment arrangement and the sale has been cancelled as a result.

"Clearly this is a private matter for the family of Mr Leef, who passed away some years ago, so we're taking care with sharing any further details, however, we're committed to working with them on a satisfactory resolution," Tucker said.

In almost all cases, the council was able to avoid taking "strong action" to recover unpaid rates and could instead work with property owners who were having difficulty paying.

The cost of living crisis had made it harder for many Auckland households to manage their rates bills, Tucker said.

Anyone concerned about paying their rates should contact the council to discuss available assistance.

"Rating sales are rare and an absolute last resort. However, they are part of the council managing its obligations to be fair to all ratepayers and to continue delivering services for Aucklanders.

"Being able to stop this sale and work towards a resolution for those involved is certainly a great outcome."

Other high-profile cases involving unpaid rates

The case would have been only the second time the council had sold a privately-owned home over unpaid rates, with just one other successful compulsory rating sales since the supercity came into being in 2010.

Charlotte Hareta Marsh lost her home of 20 years in a 2015 court-ordered sale after failing to pay rates for nine years.

Despite repeated warnings, she refused to recognise the authority of Auckland Council and claimed to have paid her rates instead to the "rightful land owner" - Arikinui o Tuhoe.

At the time of the sale, Marsh owed more than $12,000 in rates and penalties and nearly $3000 in court costs.

Asked at the time if the council was being mean-spirited forcing Marsh from her home over a $12,000 debt, the council said it had to be fair to all ratepayers.

The late activist Penny Bright's 11-year refusal to pay rates nearly cost her her Kingsland home in the months before her death.

Bright, a colourful protester who spent much of her life holding Auckland Council to account, had disputed and refused to pay her rates, citing "the lack of transparency in council spending on private sector consultants and contractors".

The council went to court to have Bright's home forcibly sold to recoup tens of thousands of dollars in unpaid rates and penalties, and it was listed for sale in April 2017.

But in May that year, a deal was struck after Bright applied for a rates postponement, which was accepted by the council and the forced sale proceedings halted.

In December 2021 the Herald reported the council was going after Freemans Bay cafe owner Dilip Rupa's business and home due to his refusal to pay $350,000 in rates - the city's then largest overdue bill.

It was applying to the High Court for a forced rating sale. Rupa would then have six months to pay the debt, or his family-owned business premises and jointly-owned Grey Lynn home could be sold at auction to recoup the arrears.

Last month, the council said the Rupa matters were still before the courts.

-This story originally appeared in the New Zealand Herald.