Tuesday, December 11, 2012

High Court decision in Mighty River Power case

Justice Ronald Young has issued his decision in the High Court litigation brought by the New Zealand Māori Council to challenge the Government’s decision to proceed with the sale of shares in Mighty River Power (New Zealand Māori Council v Attorney-General, available on the Courts of NZ website).  Justice Young found that none of the decisions taken by the Crown to advance the sale of those shares were reviewable, that is, those decisions could not be reviewed by the courts.  Furthermore, Justice Young concluded that even if the decisions were reviewable, none of the grounds for review that were argued by the Māori Council would succeed.

The New Zealand Māori Council (joined by the Waikato River and Dams Claims Trust and the Pouakani Claims Trust) sought to challenge three key decisions made by the Crown:
(a)  the direction by the Cabinet to the Governor-General to bring into force by Order in Council the State-Owned Enterprises Amendment Act 2012. This has the effect of changing the status of Mighty River Power (‘MRP’) from an State-Owned Enterprise (SOE’) to a Mixed Ownership Model (‘MOM’) company; 
(b)  amending the constitution of MRP (and later the other SOE companies) which currently requires 100 per cent of the shares to be held by the Crown through the relevant Minister, to permit 49 per cent ownership by private persons; and 
(c)  offering for sale and selling up to 49 per cent of the shares in MRP.
The Māori Council contended that, with respect to each decision, the Crown must act in a manner that is not inconsistent with the principles of the Treaty of Waitangi.  This argument was premised on the decisions being subject to the Treaty principles provision in either s 9 of the SOE Act or s 45Q of the Public Finance Amendment Act.  According to this argument, ministerial action would be inconsistent with the Treaty if the Crown did not first implement protective mechanisms to provide for redress and protect Māori proprietary rights to water and geothermal resources before making any of the three decisions.

In the alternative, the Māori Council argued that:
  • there was inadequate consultation in relation to these decisions, which was inconsistent with the principles of the Treaty;
  • the Crown made an error of law by taking into account the idea that “no-one owns the water” when deciding whether its actions were consistent with Treaty principles;
  • the Crown’s failure to wait for the completion of both stages of the Waitangi Tribunal inquiry was unreasonable;
  • it was an error of fact or law to conclude that a sale of 49 per cent of the shares of MRP would not be inconsistent with Treaty principles;
  • the intention to proceed with the sale of shares was a breach of a legitimate expectation held by Māori that the Crown would act with utmost good faith and actively protect Māori interests; and that
  • the Crown had breached the requirements of natural justice by proceeding with the sale of shares before Māori claims to the water and geothermal resources could be properly heard.
  • The Waikato River and Dams Claims Trust also argued that the Crown’s decision to proceed with the sale of shares in MRP is a breach of s64(3) of the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010.

 However, Justice Young determined that the Crown’s argument was correct.  He found that the decision to bring into the State-Owned Enterprises Amendment Act into force, the ‘commencement decision’, was not subject to the Treaty provisions in either the SOE Act or the Public Finance Amendment Act.  The Crown argued that Parliament has enacted the State-Owned Enterprises Amendment Act, delegating the decision to bring it into force to the Executive but there is no discretion for the Executive to consider the policy decisions that underlie making MRP a MOM company.  Those policy matters have already been determined by Parliament, including the nature of the protection of Treaty principles that are required.  Justice Young notes that “Parliament’s intention in passing the SOE Amendment Act and the Public Finance Amendment Act was to ensure that those companies that are subject to the new MOM regime are not subject to the s 9 SOE Act Treaty compliance requirement but to the s 45Q Treaty compliance requirement”.  As an interesting side-note, Justice Young also points out that

“The Public Finance Amendment Act 2012 provides that MOM companies will be subject to a Treaty inconsistency rule (at s 45Q) but one which has narrower application than s 9 of the SOE Act.”

This is confirmation that the protection provided by s 9 of the SOE Act were not completely transferred to the new MOM companies, despite Government Ministers’ claims that the legislation would address Māori concerns by including a provision that reflected “the concepts of the existing section 9 of the SOEs Act”.

As regards to the decisions to amend the constitution of MRP (a precondition to the sale of the shares) and to offer up to 49 per cent of the shares for sale, Justice Young found that these decisions were not reviewable because they were the exercise of common law powers and not statutory powers.  This was a direct application of the principle from the 1996 Court of Appeal decision relating to the sale of shares in Radio New Zealand.

Justice Young also rejected the Māori Council’s argument that the sale of shares in MRP would materially affect the Crown’s ability to recognize Treaty rights and provide redress.  On this point, Justice Young comes to a different conclusion to the Waitangi Tribunal, which had determined that in relation to the shares plus concept, the Crown’s ability to recognize Māori rights would be compromised.  Justice Young thought that the shares plus concept would be unworkable and did not accept the Māori Council’s submission that if the Crown was to reject the shares plus option, it had an obligation as a reasonable Treaty partner to come up with an alternative scheme.

Predictably, the Government has welcomed the decision, while it is being reported that the Māori Council is preparing an appeal.