The New Zealand Maori Council v The Attorney-General

JurisdictionNew Zealand
CourtSupreme Court
JudgeElias CJ,McGrath,William Young,Chambers,Glazebrook JJ
Judgment Date27 February 2013
Neutral Citation[2013] NZSC 6
Docket NumberSC 98/2012
Date27 February 2013

[2013] NZSC 6

IN THE SUPREME COURT OF NEW ZEALAND

Court:

Elias CJ, McGrath, William Young, Chambers and Glazebrook JJ

SC 98/2012

BETWEEN
The New Zealand Maori Council
First Appellant
and
The Waikato River and Dams Claim Trust
Second Appellant

and

The Attorney-General
First Respondent

and

The Minister of Finance
Second Respondent

and

The Minister for State-Owned Enterprises
Third Respondent
Counsel:

C R Carruthers QC, P D Green and F Geiringer for Appellants

D J Goddard QC, J R Gough and S Kinsler for Respondents

P T Harman for V Winitana, G Morrell and F Timutimu (Interveners)

Direct appeal from High Court on questions of law arising from a judicial review application of Crown's proposed restructuring of State owned enterprise, Mighty River Power Ltd — Crown proposed that under State-Owned Enterprises Amendment Act 2012, Mighty River would be reconstituted as a “mixed ownership model company” under Part 5A Public Finance Act 1989 (“PFA”) — appellants said this was unlawful by reason of s9 State Owned Enterprises Act (Treaty of Waitangi) and s45Q PFA (Treaty of Waitangi), both of which prevented the Crown from acting inconsistently with the Treaty of Waitangi — use rights of relevant waters were subject to long-standing claims of Treaty breach — Waitangi Tribunal found customary rights of Maori included authority over these resources and the right to economic benefit from their use — Mighty River held resource consents over use of water from Waikato River — whether proposed sale of 49 per cent of shares (on which the claim of material prejudice was based), was reviewable for consistency with principles of the Treaty — whether the partial privatisation of Mighty River would impair, to a material extent, Crown's ability to remedy any Treaty breach in respect of Maori interests in the river — whether sale was in breach of s64 Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010 (creating or disposing of interests).

The issues were: whether the proposed sale of the shares (on which the claim of material prejudice was based), was reviewable for consistency with the principles of the Treaty; whether the partial privatisation of Mighty River would impair, to a material extent, the Crown's ability to remedy any Treaty breach in respect of Maori interests in the river; and whether the proposed sale of shares was in breach of s64 Settlement Act 2010 which precluded interests in the river being disposed of.

Held: The statutory scheme of the 2012 legislation had common features with that examined in New Zealand Maori Council v Attorney-General (“Commercial Radio Assets case”) in that under that case the proposed sale was also to proceed only when separate legislation removing the prohibition on sale of the shares was brought into effect, but there was a crucial difference. Unlike in the Commercial Radio Assets case, the legislation clearing the way for sale here provided for the Crown to remain under a continuing obligation to comply with Treaty principles when acting under the statutory provisions governing the mixed ownership companies regime. The continuing statutory restraint upon the Crown when acting in respect of a mixed ownership company had to be ascertained in light of the continuation of the Treaty protection provision in s45Q PFA.

The Court of Appeal recognised in New Zealand Maori Council v Attorney-General (“SOE case”) that s9 SOEA stated a fundamental principle guiding the interpretation of legislation which addressed issues involving the relationship of Maori with the Crown and formed the basis of the approach of New Zealand courts to any subsequent legislation requiring that the Crown act consistently with Treaty principles. In re-enacting the identical provision to act consistently with Treaty principles in the mixed ownership companies legislation the Parliamentary purpose was clear, s45Q had to receive the same interpretation s9 had received in the SOE case and the Commercial Radio Assets cases.

Giving meaningful effect to s45Q required a realistic approach to the legislative scheme that governed the sale of shares in mixed ownership companies. Part 5A effectively permitted the Crown to do something with the shares which was currently prohibited. As an action permitted to that extent by Part 5A, a sale of shares had to be conducted in accordance with s45Q. Section 45Q did render reviewable the proposed sale of shares in Mighty River by the Crown, for compliance with the principles of the Treaty. The real issue then was whether or not the sale of shares would be Treaty-compliant.

In New Zealand Maori Council v Attorney-General (“Broadcasting Assets case”) the Privy Council identified the test to be applied for deciding whether a proposed transfer of assets to a State enterprise would breach s9 SOEA as: depending on whether the transfer of the assets could now or in the foreseeable future impair, to a material extent, the Crown's ability to take the reasonable action which it was under an obligation to undertake in order to comply with the principles of the Treaty. In deciding whether proposed Crown action would result in “material impairment”, a court had to assess the difference between the ability of the Crown to act in a particular way if the proposed action did not occur, and its likely post-action capacity. Impairment of an ability to provide a particular form of redress which was not in reasonable or substantial prospect, objectively evaluated, would not be relevantly material. To decide what was reasonable required a contextual evaluation which might require consideration of the social and economic climate. Where the capacity to provide a particular form of redress would be materially impaired, the courts had to also consider whether the Crown would nonetheless have the capacity to provide other forms of redress which were equally effective.

On this basis:

  • (a) before the Court could intervene it had to be satisfied the proposed privatisation was inconsistent with Treaty principles;

  • (b) there would be inconsistency if the proposed privatisation would “impair, to a material extent, the Crown's ability to take reasonable action which it was under an obligation to undertake in order to comply with the principles of the Treaty”; and

  • (c) the Court had to address this issue directly and form its own judgment.

The Crown acknowledged that Maori had interests and rights in relation to particular waters. It had not been prepared, so far, to negotiate for recognition of Maori property in waters or for their participation in the economic benefits obtained from the use of waters (as distinct from the bed or banks of a body of water). Recognition of Maori interests in water was clearly still a work in progress. The change in ownership of Mighty River had to be assessed in the context of the Crown's overall and ongoing response to Treaty claims.

The memorial regime under s27A SOEA (District Land Registrar to register necessary memorial) and the continuing operation in relation to mixed ownership companies of the resumption procedures provided for under s27B SOEA (resumption of land on recommendation of Waitangi Tribunal) was significant protection for land interests. The practical effect of the continued operation of the resumption procedures was the outstanding claims for resumption in relation to the dams (and any other memorialised property) of the mixed ownership companies would be unaffected by privatisation.

Crown ownership and control of the power-generating companies would undoubtedly be diminished by privatisation. Privatisation might preclude or limit the possibility of some options for redress which would otherwise be possible: for instance, the “shares plus” proposal, or royalty regimes which were particular to the State enterprise power-generating companies, or reparation out of the water assets of the State enterprise.

In assessing the materiality of this, certain considerations had to be kept in mind:

  • (a) irrespective of whether privatisation occurred, the current power-generating infrastructure and its significance for the wider NZ economy were facts on the ground which would not be ignored;

  • (b) given the vast public expenditure associated with the construction of the power-generating infrastructure, the courts should be slow to insist on protective measures which would prevent the Crown from obtaining full value (for the benefit of the NZ as a whole), when the shares in the mixed ownership companies came to be sold;

  • (c) regulation of water use and control was under review by the Crown, and settlements had indicated the willingness to consider extension of Maori authority in connection with specific waters — there might be some ownership interest insufficiently addressed by regulatory reform, but the significance of the interest had to be assessed against the opportunities under consideration for real authority in relation to waters of significance. That was the context in which the materiality of the sale of a minority interest in a company using the waters had to be considered;

  • (d) the significance of shares as a means of redress should not be overstated as they could only be a proxy for the underlying claims; and

  • (e) water rights, unlike the ownership of land, were limited to 35 year terms (the maximum term possible under the Resource Management Act 1991 (“RMA”)), and indeed under the current permits for Mighty River, the terms had to be reviewed to conform with any Treaty settlement.

If the Crown was required to settle claims with shares, there was no reason to think the Crown would lack the capacity to do so by buying them back. It followed that following privatisation, the Crown would retain an appropriate level of capacity to offer Maori shares and, associated with this, a commensurate measure of influence.

It was difficult to see that “shares plus” would produce reparation that would be more...

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