New Zealand Maori Council v Attorney-General

[2012] NZHC 3338

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2012-485-2187 [2012] NZHC 3338

BETWEEN  THE NEW ZEALAND MĀORI COUNCIL

Applicant

ANDTHE ATTORNEY-GENERAL First Respondent

ANDTHE MINISTER OF FINANCE Second Respondent

ANDTHE MINISTER FOR STATE-OWNED ENTERPRISES

Third Respondent

CIV 2012-485-2185

AND BETWEEN            POUAKANI CLAIMS TRUST Plaintiff

ANDTHE ATTORNEY-GENERAL First Defendant

ANDMINISTER OF FINANCE AND MINISTER FOR STATE-OWNED ENTERPRISES

Second Defendants

CIV 2012-485-2351

AND BETWEEN            THE WAIKATO RIVER AND DAMS CLAIMS TRUST

Applicant

ANDTHE ATTORNEY-GENERAL First Respondent

THE NEW ZEALAND MĀORI COUNCIL V THE ATTORNEY-GENERAL HC WN CIV 2012-485-2187 [11

December 2012]

ANDTHE MINISTER OF FINANCE AND MINISTER OF STATE-OWNED ENTERPRISES

Second Respondents

Hearing:         26-28 November 2012

Counsel:         H A Cull QC, A T Sykes and K L Ertel for Plaintiff/Applicants

(2185/2351)

F Geirenger and J McHerron for Applicant (2187)1

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

Judgment:      11 December 2012

JUDGMENT OF RONALD YOUNG J

1      D Hall, P Harman, S Arcus and K Wing-Wong also represented the New Zealand Māori Council

but did not take the call as co-counsel at the hearing of this case.

Table of Contents

Paragraph No.

Introduction  [1]

Factual background – a brief overview  [6] The Waitangi Tribunal claim  [20] The Crown reaction and consultation  [38]

Review grounds  [47] Remedies sought  [52] Summary of Crown’s position  [56]

Crown says the decisions are not reviewable  [58] Introduction  [58] The commencement decision  [65] The sale and constitution amendment decision  [85] The Commercial Radio case  [106] The Lands case – is it similar to this case?  [126]

Are the decisions of the Crown contrary to Treaty principles?  [140] Proprietary claims to water  [147] Waikato-Tainui hapū and the Kiingitanga  [149] Ngāti Te Ata  [150] Pouakani  [151] Tuhaurangi-Ngāti Wahiao  [152] Ngāti Tahu-Whaoa  [153] Ngāti Hineure  [154] Ngāti Koroki-Kahukura  [155]

Will the sale of shares in Mighty River Power to private interests materially affect the Crown’s

ability to provide redress or recognition of rights?  [162]

Loss of control of Mighty River Power  [167]

The nexus issue and shares plus  [176]

Prejudice to ability to institute general measures of reform –

water resource rental – another nexus?  [221]

Loss of shares prevents redress?  [230]

Summary  [240]

Consultation – was it adequate?  [245] Scope of consultation  [253] Refusal to meet with chosen representatives  [267] Limited time and resources  [273] Predetermination  [274]

No one owns the water – error of law  [297]

Failure to wait for the Waitangi Tribunal process

to be complete – error of law/unreasonableness  [306] Legitimate expectation  [315] Material error – actions in breach of Treaty?  [326] Breach of natural justice?  [328]

Section 64 of the Waikato-Tainui Raupatu (Waikato River)

Settlement Act 2010  [331] Water rights  [337] Summary  [342] Costs  [346]

Introduction

[1]      On  the  29th   day  of  June 2012,  the  State-Owned  Enterprises Amendment Act 2012 (SOE Amendment Act) and the Public Finance (Mixed Ownership Model) Amendment Act 2012 (Public Finance Amendment Act) were passed by Parliament. The SOE Amendment Act enables the Government by Order in Council to change the status of Mighty River Power Limited (MRP), Genesis Power, Meridian Power and Solid Energy from State-Owned Enterprise (SOE) companies to Mixed Ownership Models (MOM) companies.   This change in status is to facilitate the Government’s plan to sell up to 49 per cent of each of these companies to private investors. The first such sale is to be the shares in Mighty River Power.

[2]      These proceedings by declaration and judicial review, broadly speaking, seek to challenge the lawfulness of the Government’s decision to sell 49 per cent of MRP without first implementing protective mechanisms so as to be able to provide redress and recognition of rights for outstanding Māori claims to proprietary interests in freshwater and geothermal resources.

[3]      As SOEs the companies were 100 per cent owned by the Crown (through a shareholding Minister).   The SOE Amendment Act removes the four SOEs from Schedules one and two of the State-Owned Enterprises Act 1986 (SOE Act) and places them within the MOM regime.  The commencement date of this process is by Order in Council.  To date no such Order has been made.  However, the Government have made it clear they intend to commence the legislation by Order in Council and sell the shares.   They have agreed not to proceed with such an Order until this litigation has been heard and judgment given by this Court.

[4]      The orders sought by the claimants are declarations that the Government’s proposed decisions are unlawful (and related injunctions) and the quashing of ministerial decisions or proposed decisions.

[5]     I use the general term “claimants” for the collective of the three plaintiff/applicants, Pouakani Claims Trust, The New Zealand Māori Council and the Waikato  River  and  Dams  Claims  Trust  unless  the  context  specifically  requires

otherwise.   I use the “Crown” to describe the defendants/respondents unless the

context requires otherwise.

Factual background – a brief overview

[6]      In May 2011, the Government outlined its policy to sell up to 49 per cent of the four SOE companies by using the MOM.  The model involves a mix of Crown and private ownership of the four companies with the Crown throughout retaining

51 per cent of any and all categories of shareholding.

[7]      The Crown says they began discussions with Māori regarding this policy as early as August 2011.   Ministers met with Iwi Leaders2  at an iwi leaders forum in Hopuhopu.  The Deputy Prime Minister, the Honourable Bill English, outlined the policy and undertook to discuss it further with iwi leaders after the general election if the National Party then formed part of the Government.

[8]      After the 2011 general election, the Government decided to proceed with the MOM proposal.  In his affidavit in support of the Crown’s case, Mr English outlines other consultations that took place with representations of particular Māori groups in September,  November,  December 2011  and  January 2012.    The  MOM  Bill  was introduced to Parliament on 5 March 2012.   It was later divided into the two bills passed by Parliament.

[9]      In late January 2012, the Government announced that it would undertake

formal   consultation   with   Māori   on   the   MOM   programme   beginning   1

February 2012. The Minister said: 3

23.      From the start of the consultation process with Māori, the Crown

made clear its intention and commitment to replicate sections 27A to

27D of the State-Owned Enterprises Act (SOE Act) and to honour its

Treaty obligations.

2      The Iwi Leaders Group are made up of leaders from 60 iwi groups.

3      The consultation document noted “The Government in consulting with Māori to ensure that, before it makes its final decision on legislation and specifically on options on s 9, it fully understands Māori views on how Māori rights and interests under the Treaty of Waitangi are affected by the proposals”.

24.The  consultation  was  intended  to  ensure  the  government  fully understood Māori views on how Māori rights and interests were affected by the proposals, and in particular to explore Māori interests around section 9 of the SOE Act (which states that “[n]othing in this Act shall permit the Crown to act in a manner that is inconsistent with the Treaty of Waitangi”) and sections 27A to 27D of the SOE Act, and what might effectively be expressed in the new legislation.

[10]     A number of hui were held around the country in February 2012 and over

200 written  submissions  were  received  by  Treasury  relating  to  a  consultation document released by them (relating to the MOM).  Further, the Prime Minister and Mr English met the Iwi Leaders Forum at Waitangi the day before Waitangi Day to discuss issues in the document.

[11]     The Crown confirmed during the consultation process that they proposed to replicate ss 27A to 27D of the SOE Act as part of the sale process in any new statute and in the Crown’s words “honour its treaty obligations”.  Section 45W of the Public Finance Act incorporates these sections into the MOM company obligations.4

[12]     As a result of consultation, Cabinet agreed to an equivalent of s 95 of the SOE Act being included within the MOM legislative framework.  This, in turn, became s 45Q of Part 5A of the Public Finance Act 1989.  Section 45Q(1) was in identical terms to s 9 of the SOE Act.  Subsection (2) provides:

45Q     Treaty of Waitangi (Te Tiriti o Waitangi)

...

(2)      For the avoidance of doubt, subsection (1) does not apply to persons other than the Crown.

[13]     Section 27A–D  (and,  therefore,  s 45W)  provided  that  where  land  was transferred to an SOE which was the subject of a claim by Māori, then a memorial would be placed on the title of the land.  If the Tribunal subsequently recommended the return of the land to Māori then the Crown was obliged to resume ownership of

the  land  (to  facilitate  redress  for  Māori)  and  the  Crown  was  obliged  to  pay

4      Sections 27A–27D provide for resumption orders with respect to land claimed by Māori.

5      9   Treaty of Waitangi

Nothing in this Act shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi

compensation accordingly.   This process was replicated for the four companies in s 45W of the Public Finance Amendment Act.

[14]     There  were  other  fora  for  discussion  about  reform  of  freshwater  policy between Māori and the Crown.  In 2009 the Crown began a programme to consider the reform of New Zealand’s freshwater policy.  Part of the policy work involves as the Deputy Prime Minster said, “the development of Treaty-based engagement with Māori on water management options”.6     The policy development involves direct contact between iwi leaders and the Crown through the Freshwater Iwi Leaders Group.

[15]     The intention is that once policies relating to freshwater are developed there will be wider consultation with Māori.  At the beginning of the discussion with the Iwi Leaders Group the Crown agreed that it would not dispense with or create property rights or interests in water without agreement with iwi.  Further, the Leaders Group are to be involved in further reform of the Resource Management Act relating to freshwater.

[16]     Māori are also members of the Land and Water Forum, a non-Government body including iwi.  The Forum comprises “key users and stakeholders in land and water”.7   However, the report of the forum has made clear that “fundamental issues between the Crown and iwi concerning iwi rights and interests are not on the table in this forum”.

[17]     The Government had a planned process for the proposed sale of the shares in the four SOEs.  Broadly it intended only to sell one such SOE at a time.

[18]     Mr John Crawford, the Deputy Secretary, Commercial Transactions Group at the Treasury described eight essential steps for the sale of the shares in this way:

6 Affidavit of Honourable Bill English at [33].

7      Land and Water Forum, Second Report of the Land and Water Forum: Setting Limits for Water

Quality and Quantity, and Freshwater Policy and Plan Making through Collaboration
(April 2012) at iii.

28.      The critical steps to be completed for an IPO (initial public offering)

of these companies include the following:

a.        completion of audited accounts;

b.preparation  and  approval  of  offer  document  by  company directors and Ministers;

c.brief  equity  analysts  (to  enable  the  analysts  to  prepare research reports and to distribute them to institutional investors);

d.pre-registration  period  (to  enable  potential  investors  to register  their  interest  in  the  IPO,  enabling  the  Crown  to assess the likely demand for shares when the offer opens);

e.        registration of offer document with the Registrar of Financial

Service Providers;

f.        consideration period of 5 working days (during which the FMA may review the Offer Document for compliance with securities laws) (the period may be extended by the FM to up to 10 working days);

g.        retail offer period;

h.        institutional bookbuild, pricing, allocation and listing.

[19]     The Government  understood  this process  would  take several  months.   It hoped to have completed the IPO process by mid May 2013 for MRP.

The Waitangi Tribunal claim

[20]     In February 2012 the New Zealand Māori Council filed two claims with the Waitangi Tribunal (the Tribunal).   The Tribunal reported on the first stage of its inquiry (after granting urgency on 28 March) on an urgent basis on 24 August 2012. In the words of the Tribunal the Wai 2357 claim (one of the New Zealand Māori Council claims):8

concerns  the  Crown’s  policy  to  privatise  up  to  49 per cent  of  four State-owned enterprises (SOEs) Mighty River Power, Meridian, Genesis and Solid Energy without first protecting or providing for Māori rights in the water resources used by these companies.

8      Waitangi Tribunal The Interim Report on the National Freshwater and Geothermal Resources

Claim (Wai 2358, 2012) at 1.

[21]     Water was intended to cover both freshwater and geothermal waters.   The

Tribunal summarised the claim in this way:

In essence, the claimants argue that Māori have unsatisfied or unrecognised proprietary rights in water, which have a commercial aspect, and that they are prejudiced by Crown policies that refuse to recognise those rights or to compensate for the usurpation of those rights for commercial purposes.  In making these claims, Māori do not claim sole or exclusive ownership of all flowing water today. They recognise and accept the rights of non Māori to share in the use and benefits of New Zealand’s waters.   Rather, Māori claim that there is an ongoing breach of their residual proprietary rights which were guaranteed and protected by the Treaty of Waitangi from 1840 onwards.  They seek recognition of their rights.  Where those rights cannot be fully restored, Māori seek compensation.

[22]     The Tribunal decided to divide its inquiry into two stages.

[23]     The Tribunal said it was making an early pre-publication copy of its stage one report available so the Government could decide whether to proceed immediately with the sale of shares in MRP.   The first stage of the inquiry focussed on the following issues:9

(a)       What rights and interests (if any) in water and geothermal resources were guaranteed and protected by the Treaty of Waitangi?

(b)       Does the sale of up to 49 per cent of shares in power-generating SOE companies affect the Crown’s ability to recognise these rights and remedy their breach, where such breach is proven?

(c)      Is such a removal of recognition and/or remedy in breach of the

Treaty?

(d)      If   so,    what   recommendations   should   be   made   as    to    a

Treaty-compliant approach?

[24]     The  purpose  in  part  of  dividing  the  hearings  was  that  if  the  Tribunal concluded the sale of 49 per cent of shares in MRP would have no material effect on the Crown’s ability to recognise Māori rights or provide redress then there was no reason not to proceed with the sale.   If, however, there was such a connection (a

nexus), which meant the sale of shares would likely have a material effect on the

9      Waitangi Tribunal Interim Report at 3.

Crown’s ability to provide redress or recognise rights, then the sale process would have to halt.

[25]     The second stage of the inquiry (likely in 2013) will consider whether any rights established as part of the first stage of inquiry, endure and have been given “Treaty consistent recognition in current laws and policies and whether the Fresh Start for Freshwater programme should wait for the definition of prior Māori rights so as to provide more effectively for their full recognition”.10

[26]     The sale process of MRP and discussion between Māori and the Crown was to a significant degree then driven by the conclusions of the Waitangi Tribunal report.

[27]     In summary, the Tribunal at its first stage of inquiry found that there was a nexus between the assets to be transferred (shares in power companies) and the Māori claim to interests in water used by the power companies sufficient to call a halt to the sale process until the Crown provided an agreed mechanism to preserve Māori rights and to provide redress.

[28]     The Tribunal noted that counsel representing the Crown, accepted that if the

Tribunal found such a nexus, then there should be a halt to the sale process.

[29]     The Tribunal having defined the nature of Māori rights and interests protected and guaranteed by the Treaty turned to the issues relevant to the proposed MOM share sales.11

[30]     As to the sale of the shares affecting the Crown’s ability to recognise rights

and provide remedy, the Tribunal said:12

We accept the Crown’s evidence and submission that it will be able to provide almost all forms of commercial rights recognition and/or remedy after the sale.

10     Waitangi Tribunal Interim Report at 3.

11     See at [23] of this judgment.

12     Waitangi Tribunal Interim Report at xv of Preface.

[31]     The Tribunal accepted the Crown’s “formal assurances” that the sale of the shares would not prevent the Crown from providing appropriate rights recognition afterwards, save for one reservation.

[32]     The Tribunal then said:13

The reservation noted above is that the claimants established to our satisfaction one vital matter that will be affected: the shares themselves. The claimants  conceded that  shares  on their  own  will not  give  them a  very meaningful recognition of their water rights.   Nonetheless shares in conjunction with shareholders’ agreements and revamped company constitutions could, if properly crafted, give them enhanced power in these companies that control and use their taonga and profit from them and thus a meaningful form of rights recognition.   After careful consideration of the submissions   we   received   from   Crown   and   claimant   counsel   as   to New Zealand company law, we agreed with the claimants that in practical terms, the Crown will not be able to provide such recognition after it sells shares to private investors.  As a result, the very asset being transferred by the Crown, and which is sought by Māori and partial remedy for this claim would in practical terms be put beyond the Crown’s ability to recover or provide after the sale.  Since it cannot be stated with certainty that any other commercial rights recognition will actually come to pass, and  given the opportunity exists here and now, and that opportunity is about to be removed beyond the Crown’s practical ability to provide, we consider that the sale must be delayed while an accommodation is reached with Māori.

[33]     The Tribunal then considered whether the removal of this capacity breached the Treaty.

[34]     The Tribunal concluded:14

If the Crown proceeds with its share sale without first creating an agreed mechanism to preserve its ability to recognise Māori rights and remedy their breach, the Crown will be unable to carry out its Treaty duty to actively protect Māori property rights to the fullest extent reasonably practicable.  Its ability to remedy well founded claims will also be compromised.

[35]     And finally, the Tribunal dealt with what recommendation could be made to assist in Treaty compliance.  The Tribunal recognised that for some claimants, shares in conjunction with shareholder agreements and amended company constitutions (the shares plus proposal) would go some way towards meeting the Crown’s Treaty

obligations.  But other affected Māori did not want shares.

13     Waitangi Tribunal Interim Report at xvi of Preface.

14     Waitangi Tribunal Interim Report at xvi of Preface.

[36]     The Tribunal recommended that the Crown:15

Urgently  convene  a  national  hui,  in  conjunction  with  iwi  leaders,  the New Zealand Māori Council, and the parties who asserted an interest in this claim, to determine a way forward.

[37]     Having concluded that a nexus existed the Tribunal considered that in the interests of the “Crown-Māori relationship we recommend that the sale be delayed while the Treaty partners negotiate a solution to the dilemma”.16

The Crown reaction and consultation

[38]     Mr English commented on the Tribunal’s concept of shares plus in his first affidavit in these proceedings.   He noted the idea was not closely defined.   He assumed that it meant the provision of a greater degree of control over the four companies by Māori through a combination of the ownership of shares bringing particular  rights,  revised  constitutions  of  the  company,  and  a  shareholder’s agreement.

[39]     He said the Government disagreed with the Tribunal’s conclusion that the shares plus proposal could provide a form of redress that could not be provided equally well in other ways.   However, the Government also considered that the Tribunal’s shares plus proposal was not workable under company law, would significantly devalue MRP, and would compromise MRP’s ability to operate efficiently.

[40]     After  the  receipt   of  the  Tribunal’s   report,   Mr English   said   that   the Government were concerned about postponing the first share offer given the cost of doing so.  However, Cabinet decided that it would delay the programme to consult Māori affected by the Tribunal’s shares plus proposal.  He said that:

Although we had formed a preliminary view about shares plus, we acknowledge that this was just our view and that there may be other views and other relevant information that would assist the decision making process.

15     Waitangi Tribunal Interim Report at 199.

16     Waitangi Tribunal Interim Report at xvii of Preface.

[41]     Cabinet decided the consultation would not be by an urgent national hui as recommended by the Tribunal but a targeted consultation with respect to those Māori groups who were directly affected.  It noted that the Tribunal had found that residual property rights in water were localised not generalised and so consultation should be with those groups who were directly affected by the proposed sale.  The consultation was to be about the Tribunal’s shares plus proposal and not otherwise.

[42]     In summary, the consultation process with respect to shares plus consisted of the Government writing to those groups that they believed were directly affected and other  groups  with  an  interest  (including,  for  example,  the  New Zealand  Māori Council) and inviting submissions.  Others who self identified as having an interest were also invited to respond.  There were face to face meetings (between the Crown and representatives of hapū and iwi) in Hamilton, Taupo, Te Kuiti, Whanganui, Tuai and Christchurch to discuss the shares plus concept.  In both the written material and in the oral presentation to Māori, the Crown explained what it understood of shares plus and why it did not support it.   There was to be no consultation with Māori, during this process, beyond the shares plus concept.

[43]     Mr English said:17

The consultation process confirmed our preliminary view that the redress outcomes available from shares plus are either replicable after sale by other mechanisms, or else not workable practice, and that the Crown’s capacity to recognise  rights  and  provide  redress  would  not  be  impaired  in  any meaningful way by proceeding to IPO without first reserving shares plus.

[44]     On 15 October,  Cabinet  decided to  proceed  with  the share sales  without implementing the shares plus idea of the Waitangi Tribunal.

[45]     A number  of  affidavits  by  the  claimants  challenge  the  adequacy  of  the consultation process (both before the introduction of the MOM Bill and after the Waitangi Tribunal report) including whether the Crown came to the consultation with an open mind, whether the consultation was about the right issues, whether it

was with the right participants and whether a fair opportunity was given to invitees

17 Affidavit of Honourable Bill English at [72].

to consider and comment on the policy.  The adequacy of consultation will be dealt with later in this judgment.

[46]     As a result of the decision of 15 October these proceedings were issued.

Review grounds

[47]     The New Zealand Māori Council, the Waikato River and Dams Claims Trust and the Pouakani Claims Trust say that to give effect to the amendment Acts there are three actions by the Crown which it has said it proposes to undertake which are susceptible to review.  These are the decisions18  which are the subject of challenge by claimants.

[48]     The proposed decisions are:

(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 MRP from an SOE to a 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.

[49]     The claimants say their primary ground of review is that, with respect to each step, the “Crown” (typically the relevant Minister) must act in a manner that is not inconsistent with the principles of the Treaty of Waitangi.  That is, the decisions are subject either to s 9 of the SOE Act or s 45Q of the Public Finance Amendment Act. In each case ministerial action would be inconsistent with the Treaty if the Crown

did not first implement protective mechanisms to provide for redress and protect

18     Anticipated decisions in fact, but the Crown accept the distinction is irrelevant in this case.

Māori proprietary rights to water and geothermal resources before making any of the three decisions.19

[50]     The failure by the Government to institute such protective mechanisms meant the anticipated decisions were inconsistent with the principles of the Treaty and, therefore, unlawful.

[51]     The alternative grounds of review are:

(a)      inadequate  consultation.     There  were  two  separate  consultation processes.  The first, before the amendment Acts were passed but after the Government announced its sale policy.  The second relating solely to the shares plus concept.  The claimants say both consultations were inadequate: with respect to who was consulted; about what; and the time and resources given to enable effective consultation.  Further, the claimants say the consultation was predetermined.  The Crown did not come to either consultation with an open mind.   Such a flawed consultation was inconsistent with the principles of the Treaty and resulted in unlawful decisions;

(b)the Crown took into account the idea that “no-one owns the water” in considering Māori claims of proprietary rights to freshwater and geothermal resources when deciding whether its actions were not inconsistent with the principles of the Treaty.   This was an error of law;

(c)      the failure by the Crown to allow the Waitangi Tribunal process to finish by waiting for its first and second reports to be completed before proceeding with the sale of MRP’s share was unreasonable;

(d)it was an error of law and/or fact for the Crown to conclude that a sale of 49 per cent of MRP would not be inconsistent with the principles of

the Treaty;

19     At [48](a), (b) and (c).

(e)      the intention to proceed with the sale of shares in MRP was a breach of  Māori  legitimate  expectation,  expressed  in  this  way,  “that  the Crown would act with utmost good faith and actively protect Māori cultural and proprietary rights and interests in freshwater and geothermal resources as recognised in the Treaty of Waitangi”.  The breach of this legitimate expectation by the Crown made the sale decision unlawful;

(f)      the Crown had a duty to have Māori claims relating to water and geothermal resources properly heard and determined before dealing with MRP’s assets and that the failure of the Crown to act fairly breached natural justice;

(g)the  Waikato  River  and  Dams  Claims  Trust  say  that  the  Crown’s decision to proceed with the sale of shares in MRP is a breach of s 64(3)  of  the  Waikato-Tainui  Raupatu  Claims  (Waikato  River) Settlement Act 2010.

Remedies sought

[52]     The New Zealand Māori Council seek injunctions preventing the Crown from partially privatising the SOEs until the Waitangi Tribunal has completed its investigation and report relating to freshwater and geothermal claims and the Crown has “implemented a mechanism agreed on by the parties or determined by the Court which will protect Māori cultural and proprietary rights and interest in freshwater and geothermal resources through the partial privatisation”.

[53]     Secondly, the New Zealand Māori Council seek declarations that the Crown ought not to take any further action relating to the partial privatisation until the completion and implementation of those factors mentioned above.

[54]     Further,   an   injunction   is   sought   to   prevent   the  Crown   from   partial privatisation until “they have conducted a lawful process” and finally, the declaration that the Crown ought not to take such action until it has conducted a lawful process.

[55]     The Pouakani Claims Trust in its amended  statement of claim seeks the declaration that the decision of the Crown to remove MRP from the SOE Act and proceed to offer 49 per cent of the shareholding “without establishing a system or mechanism to protect the applicant’s claims and interests are inconsistent with the principles of the Treaty of Waitangi and are unlawful”.  Orders are sought quashing or setting aside the decisions of the Crown and directing the Crown to reconsider its decisions with specific directions for reconsideration.  The Waikato River and Dams Claims Trust seeks identical relief to the Pouakani Claims Trust.

Summary of Crown’s position

[56]     At this point it is appropriate to set out the Crown’s overall position:

(a)      the  Crown  acknowledge  that  in  these  proceedings  Māori  seek  to protect the rights and interests of Māori in freshwater and geothermal resources;

(b)the Crown do not dispute these rights exist and are protected by the Treaty.  The extent of such rights may be in dispute and will in any event  vary  depending  upon  each  particular  circumstance  of  an iwi/hapū claim.   Some such claims can be described as residual property rights;

(c)      the Crown accept it would be inconsistent with Treaty principles for it to impair to a material extent its ability to recognise such rights and to provide redress for well founded claims;

(d)the transfer and sale of shares does not affect relevant rights in that it does not impair the Crown’s ability to provide redress or rights recognition;

(e)      the decisions of the Crown to commence the amending Acts, to amend the constitution of MRP and to sell the shares are not reviewable;

(f)       no  errors  of  law  were  made  in  the  process  nor  were  any  of  the

Crown’s decisions unlawful or unreasonable.

[57]     It is appropriate to consider first the Crown’s claim that the three decisions by the Crown relating to the creation of MOM companies and the sale of shares is not reviewable.

Crown says the decisions are not reviewable

Introduction

[58]     As the Crown identified, the challenges by the claimants fall into two broad categories:

(a)      the ‘commencement decision’:   those that challenge the decision to commence the SOE Amendment Act as it relates to MRP (and by analogy as it relates to the other SOEs); and

(b)the ‘sale and constitution amendment decision’:  those that challenge the decisions required after MRP becomes a MOM to give effect to the intention to sell the shares (the amendment of MRP’s constitution and the actual sale of the shares).

[59]     The Crown case is that neither the decision to commence the legislation nor amend the constitution and sell the shares are reviewable as to whether they are inconsistent with Treaty principles.

[60]     As to the commencement decision, the Crown says by passing the amending legislation Parliament has spoken.  The amending Acts provide for the four SOEs to become MOM companies.  Parliamentary intent, revealed through the debates and explanatory notes to the Bill as well as the terms of the amending Acts are to enable the Crown to sell 49 per cent of the MOM companies.   Parliament has included within the amending Acts  specific Treaty protections  including  s 45Q  and  45W illustrating  Treaty  issues  have  already  been  considered.     The  commencement

decision through the Order in Council does not, therefore, create an obligation to review the legislation for Treaty compliance.   Parliamentary intent given effect to through legislation is not reviewable by the Courts.

[61]     As to the sale process of the shares this, the Crown say, is the exercise of the shareholder’s (the Minister) common law right to sell.  It is not a process governed by the SOE Act (s 9) or the Public Finance Act (s 45Q) and, therefore, is not subject to an assessment of consistency with Treaty principles.

[62]     Further, this case is on all fours with the Court of Appeal’s conclusions in New Zealand Māori Council v Attorney-General (known as the Commercial Radio case).20

[63]     The claimants challenge to these Crown propositions are based primarily on three grounds:

(a)      section 9 of the SOE Act applies to the commencement power and, therefore, the decision to commence the provisions relating to MRP, are subject to an assessment of whether that decision is inconsistent with the principles of the Treaty of Waitangi;

(b)as  to  the  power  to  sell  the  shares  in  MRP  (and  amending  the constitution), the claimants say that this power is exercisable by the Minister pursuant to s 22 of the SOE Act and is not the exercise of the common law power of sale.  This section is incorporated into the SOE Amendment Act by virtue of s 23 of the Interpretation Act 1999.  To sell MRP’s shares, the Minister must exercise the s 22 power.  This is a discretionary decision under the SOE Act and, therefore, susceptible to review by virtue of s 9 of the SOE Act or s 45Q of the amendment

Act;

20     New Zealand Māori Council v Attorney-General [1996] 3 NZLR 140 (CA).

(c)      the claimants say that the Commercial Radio case is distinguishable and that this case is similar to the Lands case.

[64]     I agree with the Crown, that:

(a)      the commencement decision is not reviewable, it is effectively an attempt to review Parliamentary intent;

(b)the sale of shares in MRP is the exercise of the common law power of sale and is not subject to review through either s 9 of the SOE Act or s 45Q of the Public Finance Act (nor is the constitution amendment decision);

(c)      this case is on all fours with the Commercial Radio case with respect to (a) and (b) above.

The commencement decision

[65]     To expand the Crown submissions.   The Crown accepts that it is open for courts to review a legislative commencement decision.   An Order in Council is subordinate or delegated legislation.  Thus, the power to promulgate such an Order comes within the definition of “statutory power”21  and the Court can, therefore, review the lawfulness of such actions.   There can be no doubt, therefore, that the commencement decision is reviewable.22

[66]     However, the decision of the Minister as to when (via an Order in Council) the amending legislation comes into effect does not, the Crown say, require the Minister to review whether there has been compliance with the principles of the Treaty.  If this proposition is correct, the Crown say, then the failure by the Minister

to review whether there has been compliance with the principles of the Treaty is no

21     Judicature Amendment Act 1972, s 3.

22     See New Zealand Māori Council v Attorney-General [1996] 3 NZLR 140 (CA) at 164. See also R v Secretary of State for the Home Department ex parte Fire Brigades Union [1995] 2 AC 513 (HOL).

error by the Minister and his decision to bring the legislation into force would not, therefore, be reviewable for his failure to do so.

[67]     The Crown’s case is that the policy decisions making MRP a MOM company have been made by Parliament.  Such decisions are not reviewable.  An attempt to review this policy through the commencement process is, the Crown say, in effect trying to review the Parliamentary process by the back door.   The review of Parliamentary process is forbidden.  This prohibition was identified and confirmed

by the Court of Appeal in the Commercial Radio case.23

[68]     The  Crown  say  the  purpose  of  the  MOM  legislation  is  clear  from  the legislation itself, the policy announcements before the introduction of the legislation, and the Parliamentary Explanatory Note to the legislation.

[69]     These  all  illustrate  Parliament’s  intention  was  to  authorise  the  sale  of

49 per cent of MRP by changing its status from an SOE to a MOM company and that the commencement decision should reflect that intent.  Further, Parliament turned its mind to Treaty issues.  It preserved in the amending Acts ss 27A to 27D of the SOE Act relating to resumption orders with respect to land, a Treaty protection.24   It also included a requirement (s 45Q) that any of the powers exercised under Part 5A of the Public  Finance Act 1989  would  be  subject  to  Treaty  consistency  compliance,  a

provision  that  mirrored  s 9  of  the  SOE  Act  relating  to  the  Crown’s  Treaty

obligations.

[70]     I agree with the Crown in this context that it makes no sense to suggest that in providing for the Government/Minister to set the commencement date of the SOE Amendment Act by Order in Council, Parliament intended the Crown to undertake a review of the consistency of the MOM legislation with the principles of the Treaty. This  would  have  the  constitutionally unattractive  proposition  that  the  Executive would effectively be reviewing Parliamentary process and intent and the adequacy of

Parliamentary consideration of Treaty principles.

23     New Zealand Māori Council v Attorney-General [1996] 3 NZLR 140 (CA) at 165–166.

24     Section 45W.

[71]     As the Crown in their submissions said:

The  commencement  provision  which  appears  in  this  legislation  and  in similar form in many other Acts is included to enable the Executive to take account of practical matters relevant to the date on which the legislation comes into force: not to enable (or require) the Executive to revisit the merits of the policy to which the legislation gives effect.

[72]     Public announcements by Government both before the last election and after the election as to their intention in introducing the MOM legislation to Parliament make it clear that its purpose was to amend the SOE Act to enable four companies to have their status changed from SOEs to MOMs to sell shares in these companies. The Act itself expressly does this.   And finally, the Explanatory Note to the Bill expressly says that is the purpose of the Act:25

The Government plans to sell a minority of shares in (the four SOE companies).  As these are currently State enterprises it is necessary to pass legislation that enables the Crown to remove these companies from the ambit of the State-Owned Enterprises Act.

[73]     As to the new s 45Q the Explanatory Note says “consultation with Māori has been undertaken to gather views from Māori on how the Crown’s obligations under the Treaty of Waitangi should be reflected in the Bill”.26    The inclusion of s 45Q reflected that consultation.

[74]     The power being exercised here (the Order in Council) is the power to bring a statute into force at a time considered appropriate by the Executive.  For example, in this case, the timing of the commencement may be influenced by market conditions relevant to share value.27   The inclusion of s 45Q and s 45W illustrate Parliamentary consideration of Treaty principles in the amending statutes.

[75]     Considered in this context, therefore, in my view there can be no basis for suggesting that the Executive has an obligation to review the MOM amending Acts for   consistency   with   Treaty   principles   when   proposing   to   exercise   the

commencement power.

25     Mixed Ownership Model Bill (7–1) (explanatory note) at 1.

26     At 4.

27     R v Secretary of State for the Home Department ex parte Fire Brigades Union [1995] 2 AC 513 (HOL).

[76]     However, the claimants submit that the effect of s 23 of the Interpretation Act 1999 on the SOE Amendment Act means that the exercise of the commencement process is specifically subject to s 9 of the SOE Act.   This, therefore, obliges the Minister to assess consistency or lack of it with Treaty principles when deciding whether to  commence the legislation.    It  is  submitted  s 9  is,  therefore,  a fetter imposed on the exercise of the power to bring the Act into force, which was not present in the Commercial Radio case.

[77]     Section 23 of the Interpretation Act 1999 provides as follows:

23       Amending enactment part of enactment amended

An amending enactment is part of the enactment that it amends.

[78] The claimants’ submission is that the SOE Amendment Act amends the SOE Act, and thus, the Amendment Act is an integral part of the SOE Act by virtue of s 23 of the Interpretation Act. It was submitted this was consistent with Parliamentary intention and the legislative framework of SOEs. As the claimants say:

The significance of that proposition is that s 9 of the SOE Act 1986 applies to the actions carried out under the amending 2012 Act.   Section 9 of the SOE Act requires the Crown to act in a manner which is consistent with the principles of the Treaty of Waitangi.

[79]     Pursuant to s 2 of the SOE Amendment Act, Cabinet has a discretion as to when (and indeed whether) the amending Act comes into force.  The claimants’ case is that this power must be exercised in a way that is not inconsistent with the Treaty of Waitangi pursuant to the statutory obligation in s 9 of the SOE Act.

[80]     I  am  satisfied  that  s 9  of  the  SOE  Act  has  no  application  to  the commencement  decision.    In  assessing  the  arguments  of  the  claimants  and  the Crown,  it  is  necessary  to  consider  what  s 23  of  the  Interpretation  Act 1999  is intended to do.   Self evidently many amendment Acts change (for particular purposes) the provisions in the main “Act”.   Indeed changing the original Act is typical of the purpose of an amending Act.   And so in a literal sense often the amending Act and the original Act cannot both be part of a whole Act in the sense that s 23 appears to say.  Nor would such an idea give authority to the amending Act

if the Act it amended was to remain as it was.  Any such combined statute will often have glaring and irreconcilable inconsistencies arising from the amending statute.

[81]     Here,  the  purpose  of  the  SOE  Amendment  Act  is  to  remove  the  four companies from the SOE model and place them in the MOM model. The intention is that the four SOE companies will no longer be SOEs and will no longer, therefore, be  subject  to  the  provisions  of  the  SOE Act.    They  are  no  longer  to  be  SOE companies but MOM companies subject to different rules.

[82]     The SOE Amendment Act expressly removes the four companies from the schedule in the SOE Act so that these companies cannot any longer be subject to the SOE Act.  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 all illustrates 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.

[83]     To therefore interpret s 23 in the way the claimants submit would be contrary to  Parliament’s  clear  intention.    I agree  with  the  Crown’s  submissions  that  the primary  purpose  of  s 23  of  the  Interpretation  Act 1999  is  to  ensure  continuity between  the  originating  statute  and  the  amending  statute  for  such  things  as definitions.  But what it cannot be intended to do is literally incorporate all of the main Act into the amendment Act without regard for the substantive content of the amendment and Parliamentary intention.

[84]     I am, therefore, satisfied for the reasons given that the proposed decision to commence the amendment is not susceptible to review in this case.

The sale and constitution amendment decision

[85]     The claimants say that this Court should make orders preventing the sale of up  to  49 per cent  of  the  shares  in  MRP until  such  time  as  adequate  protective

measures have been put in place to ensure the sale is not inconsistent with Treaty principles.    It  is  common  ground  that  before  the  shares  can  be  sold  MRP’s constitution will need to be amended to permit such a sale.  The claimants submit that the sale of shares and the amendment of MRP’s constitution are subject to either s 9 of the SOE Act or s 45Q as incorporated by the Amendment Act.

[86]     The Crown says that the proposed amendment to the constitution and share sale issues were dealt with by the Court of Appeal in the Commercial Radio case. They say the exercise of the power of sale of shares is no more than the exercise of the common law right of sale and not the exercise of a statutory power subject to s 9 or s 45Q review.

[87]     In the Commercial Radio case, the Court said:28

Once  the  (No 2)  Act  is  in  force  the  provisions  of  the  State-Owned Enterprises Act including s 9 will have no application.  The unlawfulness in effecting the sale of the shares in Radio New Zealand is then alleged to arise on conventional administrative law grounds by failure by the Crown to meet the legitimate expectations of the appellants that the Crown will comply with its obligations under the treaty, failure to have proper regard to relevant considerations namely treaty obligations, unreasonableness and substantive unfairness.  The relevant treaty obligations alleged are “as a fiduciary to act with utmost good faith” and to ensure that the Māori language has a secure place in both radio and television broadcasting in New Zealand.   Those grounds have no greater strength in respect of the proposed sale after the (No 2) Act is in force than they do in relation to the decision to bring the Act into force.

[88]     The Court in the Commercial Radio case then identified the basis on which the shares in Radio New Zealand could be sold.  It said:29

In selling the shares after the (No 2) Act is in force the Crown will not be exercising any statutory power.  The (No 2) Act does not expressly authorise sale of the shares though its effect will be to remove the prohibition on the sale of these shares in s 11 of the State-Owned Enterprises Act.   The sale would be effected simply by exercise of the Crown’s common law right as owner to dispose of the shares.   It will be exercising that right with the overlay of the legislative steps clearing the way and the preparatory activity by the Executive with the view to the sale.  It is plain that the intention of Parliament is that the (No 2) Act should be brought into force to enable the sale  which  was  in  contemplation  at  the  time  the Act  was  passed.    Its

28     At 166.

29     At 166–167.

enactment was by way of implementation of the policy to sell to private interests the Crown owned commercial radio stations.  In any event, in the course of formulating and implementing that policy consideration was given to the Crown’s obligations under the treaty and representatives of Māori were consulted in the manner detailed earlier in this judgment.

[89]     The claimants argue that the sale of MRP’s shares is not the exercise of a common law power of sale but the exercise of the statutory power in s 22 of the SOE Act.  Thus, they say, the exercise of such a statutory power is reviewable by virtue of either s 9 or s 45Q.

[90]     Section 22 provides as follows:

22       Provisions relating to Ministers' shareholding

(1)       Shares in a State enterprise held in the name of a person described as the Minister of Finance or the responsible Minister shall be held by the  person  for  the  time  being  holding  the  office  of  Minister  of Finance or responsible Minister, as the case may be.

(2)       Notwithstanding any other enactment or rule of law, it shall not be necessary to complete or register a transfer of shares of the kind referred  to  in  subsection  (1)  of  this  section  consequent  upon  a change in the person holding the office of Minister of Finance or responsible Minister, as the case may be.

(3)       Each shareholding Minister may exercise all the rights and powers attaching to the shares in a State enterprise held by that Minister.

(4)       A shareholding Minister may at any time or times, by written notice to the secretary of a State enterprise, authorise (on such terms and conditions as are specified in the notice) such person as the Minister thinks fit to act as the Minister's representative at any or all of the meetings of shareholders of the State enterprise or of any class of such shareholders, and any person so authorised shall be entitled to exercise the same powers on behalf of the Minister as the Minister could exercise if present in person at the meeting or meetings.

[91]     Section 22 of the SOE Act is incorporated into the Public Finance Act by virtue of s 45W of that Act.

[92]     Section 22  they  submit,  replaces  the  common  law  right  of  an  owner  of property to sell that property (here shares) in the unusual circumstances pertaining to an SOE.  It is the SOE Act which makes particular Ministers shareholders in SOEs. They do not hold the shares as “owners” in the sense that ordinarily applies to that

term.  The Minister’s interests and powers in relation to these shares are defined by

the SOE Act.

[93]     Counsel for the New Zealand Māori Council urged me to adopt what he said was the persuasive dissent of Thomas J in the Commercial Radio case where the Judge said “the Minister’s status as the owner of the shares in the SOE is derived from the SOE Act...    Any powers which they purport to exercise as owners stem from that Act ...”.30

[94]     In terms of s 22(3), the Minister in selling the shares is exercising “the rights and powers” in relation to these shares.  The sale is a right the shareholding Minister is permitted to exercise by virtue of s 22(3).   The same rights and powers in s 22 authorise the Minister to vote to amend the constitution of MRP to enable the sale of the shares, the claimants argue.

[95]     The claimants say this case can be distinguished from the Commercial Radio decision.   The Radio New Zealand Act (No 2) 1995 removed Radio New Zealand from the relevant list of companies that were SOEs.   There was no equivalent of s 45W in the Radio New Zealand Amendment Act to continue the s 22(3) power.

[96]     I am satisfied:

(a)      that s 22(3) is not the source of the power of a shareholding Minister to sell shares in an SOE and in this regard the Commercial Radio case has direct application;

(b)Parliament intention was that the shares should be sold without the obligations in either s 9 or s 45Q applying.  In passing the legislation Parliament authorised the sale of shares in MRP with Treaty obligations recognised in s 45Q and s 45W.   Parliament itself had assessed and had passed laws which reflected its view of required

Treaty compliance.  It did not intend a further process by which the

30     At 173.

sale of the shares in MRP was assessed for consistency with Treaty obligations by the Courts.

[97]     To expand on these points, as to the exercise of the power of sale, the passage from the Commercial Radio case quoted at [88] makes it clear what power was being exercised at sale in that case.  As the Crown said, it would be possible to adopt this quote word for word in this case save to substitute the SOE Amendment Act as relevant.   Both amending statutes amended the SOE Act.   Both removed an SOE from the SOE Schedule.  Both removals were without express statutory authorisation for sale but by the device of removal of any prohibition against sale.

[98]     The SOE regime was in part to reform commercial enterprises run by the State by the use of formal company structures to mirror, in part, private companies. Such companies required, for example, (by virtue of the Companies Act) an individual shareholder rather than an office (e.g. Minister of Finance) shareholder. And so s 22 provided that the name of the Minister of Finance or the name of the Minister in charge of the SOE would be the owner of all the shares of the SOE.

[99]     To avoid having to re-register the shares each time such Ministers changed, s 22(2) provided that when the name of the relevant Minister changed no share transfer was required.  And finally, the section provides that it is the shareholding Minister who exercises the “rights and powers” attaching to the shares.

[100]   Contrary to the claimants’ submission, this section is simply designed to identify the individual who is to exercise the powers attaching to the shares.  The section does not identify what these powers are or in any way limit the Minister in exercising  the  powers  and  rights  as  an  “ordinary”  shareholder.    Section 22(3), therefore, says nothing about such rights and powers of the shareholder.  These rest in the relevant Minister as if an ordinary shareholder.  These powers include, as the Court of Appeal identified in the Commercial Radio case, the common law power of sale.  (In fact s 7 of the Constitution Act 1986 provides any member of the Executive Council can exercise the power of any other Minister).

[101]   The New Zealand Māori Council submitted that if s 22(3) did not exist then as the representative of the monarch, the Governor-General by Order in Council, could exercise the power of the monarch to sell the shares.

[102]   The Crown submitted without s 22(3) of the SOE Act, the relevant Minister could still sell the Government’s shareholding in an SOE if the Minister had Cabinet authority.  The Minister had a common law right to do so.  The Crown’s “right” to sell as owner is by convention exercised through a Minister of the Crown as it must do.  If, as the claimants say, s 22(3) is the statutory authority for the sale of shares in an SOE, then it was an unnecessary power given the existence of an authority to sell through the common law. This supports the Crown interpretation of s 22(3).

[103]  Finally, I have already noted Parliament’s clear intention in passing the amending Acts.  Certainly Parliament did not intend the Crown would be required to review the sale process against s 45Q incorporated by the Amendment Act or s 9 of the SOE Act when it limited the exercise of s 45Q to Part 5A actions only.   Such actions included the transfer of assets to MOM companies but not the sale of shares in MOM companies.

[104]   As the Crown noted, if that had been Parliamentary intention it could have said so.  It would then have hardly passed s 45Q in the form it did.

[105]   I am satisfied, therefore, that neither the amendments to the constitution of MRP nor the sale of shares are subject to review based on Crown obligations in s 9 or s 45Q. The sale of shares in MRP is not the exercise of a statutory power.  It is the exercise of a common law right of sale.  It is not, therefore, reviewable.

The Commercial Radio case

[106]   As  I  have  noted  it  is  the  Crown’s  position  that  with  respect  to  the

commencement order and the sale of the shares this case is on all fours with the

Commercial Radio case.31

31     New Zealand Māori Council v Attorney-General [1996] 3 NZLR 140 (CA).

[107]   This case raised the Crown duty to protect the Māori language, in the context of the Crown’s proposal to sell its commercial radio assets.  On 25 September 1995 the Radio New Zealand Act 1995 and Radio New Zealand Act (No 2) 1995 were assented to. The first Act removed public radio assets from SOE status to Crown entity status.  The No 2 Act would remove the company holding commercial radio assets, Radio New Zealand (RNZ), from the SOE Act.   Section 1(2) of that Act provided  the  Act  would  come  into  force  on  a  date  to  be  appointed  by  the Governor-General by Order in Council. An Order in Council was pending to bring it into force.   The purpose, as derived from the Explanatory Note of the Bill and Parliamentary debates was to enable the Government to sell the shares in the company. The reason it was not brought into force upon Royal Assent was that it was not the Government’s intention to remove RNZ from the SOE regime until the completion of the sale process.  The Crown entered into a contract of sale with NZ Radio Network Ltd, conditional on the litigation being determined.

[108]   Māori challenged four steps of the Crown: (1) the policy decision to sell the assets; (2) the agreement to sell; (3) the prospective making of an Order in Council to bring into force the (No 2) Act (thereby taking the commercial radio interests out of the SOE Act and beyond s 9); and (4) the prospective completion of sale.  Only steps (3) and (4) are relevant to this case.

[109]   Interim  relief  restraining  the  sale  was  sought  by Māori.    The  Crown  in response applied for strike out of the third cause of action, which related to the disposal of its commercial radio assets.32    Of relevance to this case in particular is the Crown’s strike out application.

[110]   In the High Court, both interim relief and strike out were refused.   In the

Court of Appeal interim relief was again refused but the majority allowed the cross-

appeal by the Crown. Thomas J dissented on the Crown’s strike out.

32     The first and second causes of action relating to television and public radio were not in issue on the appeal.

[111]   The main argument for interim relief was that mainstreaming was a primary means  of  protection  of  the  Māori  language.  The  Court  considered  the  current position and found that mainstreaming on commercial radio was a risky proposition, but that in any case it could be achieved by regulation without the retention of commercial radio stations. The Court was not satisfied on the facts that a preclusion of transfer was required to preserve the position of Māori, pending any substantive hearing.

[112]   The Radio New Zealand (No 2) Act 1995 provides as follows:

An Act to remove The Radio Company Limited from the State-Owned

Enterprises Act 1986 and other legislation

25 September 1995

BE IT ENACTED by the Parliament of New Zealand as follows:

1.    Short Title and commencement–

(1) This Act may be cited as the Radio New Zealand Act (No. 2) 1995.

(2)   This  Act  shall  come  into  force  on  a  date  to  be  appointed  by  the

Governor-General by Order in Council.

2.    Amendments to State-Owned Enterprises Act 1986 and other Acts–

The enactments specified in the Schedule to this Act are hereby amended in the manner indicated in that Schedule.

[113]   The Court with respect to that Act said:33

The (No 2) Act was assented to on 25 September 1995 immediately after the (No 1) Act, but its substantive provisions have not yet been brought into force.    Therefore,  the  entity  running  commercial  radio  still  remains  a state-owned enterprise and subject to ss 9 and 11 of the 1986 Act.   It is, however, quite plain from the (No 2) Act itself, from the explanatory note to the original Bill and from many references in the parliamentary debates that its purpose is to enable the government to sell the shares in the company which holds the commercial radio assets.  The reason for the (No 2) Act’s not being brought into force upon royal assent or at the same time as the (No 1) Act is that it is not the intention of the government to remove Radio New Zealand  Ltd and its ministerial shareholders from the ambit of the State-Owned  Enterprises  Act  until  the  time  for  completion  of  the  sale process.

[114]   As I have noted, the position here is virtually identical.  It is also plain from the  SOE Amendment Act,  from  the  explanatory  note  and  the  references  in  the

Parliamentary debates that the purpose of the Act was to enable the Government to

33     At 160.

sell 49 per cent of the shares in MRP by removing the companies from the schedules to the SOE Act and placing them within the MOM regime.  In this case there is no contract of sale and the second step relevant to the process in the Commercial Radio case is not relevant here.

[115]   As to the making of the Order in Council to bring the Act into force, the Court accepted, as do the parties to this litigation, that it is possible for a Court to review an Order in Council. The Court said:34

An   Order  in   Council  is   subordinate   or   delegated   legislation   (44(1) Halsbury’s  Law  of  England  (4th   ed)  paras 1499,  1500).    The  power  to promulgate an Order in Council in our view comes under the definition of “statutory power” as defined in s 3 of the Judicature Amendment Act 1972. It is therefore a power which may be capable of review by the Courts.  An Order in Council bringing an Act into force is also included along with various delegated legislative instruments in the definition of “Regulations” under the Regulations (Disallowance) Act 1989, and is therefore amenable to disallowance, revocation or amendment by resolution of the House of Representatives along with the other instruments; so it is equally subject to judicial review.  The real issue is whether the appellants have established as reasonably arguable a basis upon which the Court in its discretion could properly intervene in the present case.

[116]   The Court then undertook an analysis of the Fire Brigade Union case.35  They noted that the significance (partially) of that case for the purpose of the Commercial Radio litigation was a recognition of the sensitivity with which the Court construed applications for review of commencement powers.  The challenge to the failure to bring the legislation into force (in the Fire Brigade Union case) was seen as highlighting the care which must be taken to see that there is no unwarrantable intrusion into the function of Parliament.

[117]   The Court of Appeal then turned to s 1(2) of the (No 2) Act.  It said:36

It is necessary to construe s 1(2) of the (No 2) Act.  It was enacted against the background of a decision to sell the state commercial radio operations, to be achieved in part by removing the status of Radio New Zealand Ltd as a state-owned enterprise under the State-Owned Enterprises Act 1986.   The (No 2) Act does no more than effect that removal, with the consequence in

34     At 164.

35     R v Secretary of State for Home Department ex parte Fire Brigades Union [1995] 2 AC 513 (HOL).

36     At 165.

particular that s 9 and s 11 of the 1986 Act will no longer apply to this company.  That is the clear legislative intent.  There are no express fetters imposed on the exercise of the power to bring it into force.   Intervention therefore could only be based on some restriction which is either implicit in the Act itself or imposed in some other way which is consistent with the purposes  of  the  Act.    Three  bases  were  put  forward  by  Mr Farmer  as justifying intervention, none of which in our view is sustainable.

[118]   I am satisfied that there are exact parallels between the situation here and the Court’s observations with respect to the (No 2) Act.  As I have noted, s 3 of the SOE Amendment Act removes the four companies from the SOE regime.   This must inevitably mean that s 9 of the SOE Act no longer applies to MRP once the Order in Council  is  promulgated.    Indeed,  in  this  case  the  Public  Finance  Amendment Act 2012 contains an alternative provision to s 9 which while in similar form to s 9 has more limited application.  This is an even stronger indication that s 9 of the SOE Act is no longer intended to apply to MOM companies.

[119]   And, as the Court said in the Commercial Radio case, there are no express fetters imposed on the exercise of the power to bring the Act into force in this case. Equally, therefore, any intervention could only be based on some restriction which is implicit in the Act or imposed in some other way which is consistent with the purposes of the Act.

[120]   The Court then went on to say:37

He first submitted that promulgation would itself constitute a breach of s 9 of the State-Owned Enterprises Act 1986.  Even assuming for present purposes the intended sale is in breach of s 9, the argument is not tenable.   The removal of Radio New Zealand Ltd from the list of state-owned enterprises does not of itself contravene treaty obligations.  Parliament has decreed that such  a  change  of  status  is  to  happen  independently  of  fulfilment  or non-fulfilment of those obligations.  The (No 2) Act is not in conflict with the State-Owned Enterprises Act 1986, and its coming into force is clearly not governed by that Act.  In a practical sense the (No 2) Act does no more than amend the 1986 Act in this one respect.

[121]   As the Court said, the removal of MRP from the list of SOE companies could not in itself contravene Treaty obligations.  Parliament has agreed to the change of

status  of  these  companies.    Here,  as  I  have  noted,  rather  differently  than  the

37     At 165.

Commercial Radio case, a Treaty inconsistency clause has been introduced and in limited circumstances s 45Q applies to Crown obligations.

[122]   The Court then said:38

Second, it was submitted that there is a duty not to exercise the power whilst the Crown remains in breach of s 9.  For the same reasons this submission must fail.  There is no proper basis for reading into s 1(2) such a restriction, which indeed would be in direct conflict with the legislative intent, namely to take Radio New Zealand Ltd outside the constraints of the 1986 Act.  On analysis what is really being challenged is the enacted legislation, not its coming into effect.

Third,   Mr Farmer   submitted   that   the   administrative   law   grounds   of legitimate  expectation,  unreasonableness  and  failure  to  have  regard  to relevant considerations were also available as a basis for challenge.  Each of these is in turn based on alleged breach of treaty obligations.  In reality this again is an attack on the legislation itself, not on the execution decision to bring it into force.  Parliament has enacted the (No 2) Act, and there is no cause of graft onto its coming into force any condition which is not there, either expressed or by implication.   Section 1(2) does not impose on the Governor-General in Council a duty to refrain from exercising the power if other actions of the Crown, whether past or which may follow as a consequence of the (No 2) Act, constitute breaches of the treaty.

The fallacy in the argument for the appellants is the underlying contention that the commencement power can be reviewed because the Act itself breaches, or will be a means of permitting a breach, of treaty obligations.  In effect what is sought is a review of the legislation, and that is outside the proper functions of the Courts.

In summary we are satisfied that to intervene in this way would here be an unwarranted intrusion into completion of the legislative process.   It is the duty of the Courts to give effect to Acts of Parliament. To prevent the (No 2) Act from coming into force for the reasons proposed by the appellants would be contrary to the very intent of that Act and an unwarranted limiting of the very broad terms of s 1(2). We are therefore satisfied that the relief sought in this respect in the substantive proceeding is not available to the appellant, and accordingly on that ground too the need for interim relief disappears.  It also follows that this aspect of the third cause of action has no tenable basis in law and to that extent the application to strike out this cause of action is successful.

38     At 165–166.

[123]   The claimants say that the Commercial Radio case is distinguishable for these reasons:

(a)      The relief sought in this case and the Commercial Radio case are different.    In  the  Commercial  Radio  case the  claimants  sought  to prevent the relevant Act from being introduced.  Here the relief sought is an “unless” order, that is, the claimants seek a mechanism or system of safeguards before the Act is introduced to ensure no prejudice to Māori.  The fact that the relief sought in the two cases may have been different is not a feature which is relevant to the Court of Appeal’s analysis  relating to the commencement orders.   In  both situations orders are/were sought  to delay the introduction  of a statute until certain actions were taken by the Crown.

(b)The claimants say that in the Commercial Radio case the Crown had made arrangements for Māori interests in broadcasting.  In this case while the Crown recognised Māori interests in water short of full ownership, no proposal had been put to Māori with respect to their claims.  This difference, assuming there is one, is a factual difference but not one that is relevant to the Court of Appeal’s analysis of the lawfulness of the challenge to the commencement order process.

(c)      The claimants say that the Court found in the Commercial Radio case that the plaintiffs were attempting to dictate policy to the Crown but the claimants say no such attempt to dictate policy was occurring in this case.  The claimants only sought compliance with s 9 of the SOE Act.  For the reasons I have given, I am satisfied that s 9 of the SOE Act does not apply to the commencement order decision.  The Court of Appeal in the Commercial Radio case reached the same conclusion.

(d)The claimants submit that the SOE Amendment Act can be contrasted with the Radio New Zealand Amendment Act. The Radio New Zealand Amendment Act was not an Act amending the SOE Act and, therefore, s 23 of the Interpretation Act could not apply.

Section 23 did apply to the SOE Amendment Act.   Firstly, I have rejected the claimants’ case that s 23 can be used in the way submitted to make the SOE Amendment Act subject to s 9 of the SOE Act. Secondly,  although  in  the  Commercial  Radio  case  the  amending statute was not called an SOE Amendment Act it did amend the SOE

Act.39    There  was,  therefore,  no  basis  to  distinguish  these  two

legislative amendments as the claimants sought to do.

(e)      In the Commercial Radio case no claim was made to the assets themselves.  This can be contrasted with the current case where there is a claim made to water rights which MRP owns as well as their infrastructure.   There is, therefore, a close nexus between the outstanding freshwater resource claims and the actions of the Crown in selling the shares.  I do not see that the nexus argument is relevant here to the commencement decision.  That issue can be expressed as I have previously said in the claimants’ case that the Crown should be required to review consistency with the principles of the Treaty before that Act could commence. This requires an analysis of the meaning of the amendment Act and whether that was Parliament’s intention rather than an assessment of a nexus.

[124]   The claimants emphasised that the real issue in this case was expressed in the

Commercial Radio case by the Court in this way:40

The real issue is whether the appellants have established as reasonably arguable the basis upon which the Court in its discretion could properly intervene in the present case.

[125]   As with the Commercial Radio case, to establish a reasonably arguable basis the claimants have to show that it is either “implicit in the Act itself or imposed in some other way which is consistent with the purposes of the Act”,41 i.e. that there is a requirement that before a commencement order is made an assessment is made by

the Executive as to whether the decision is consistent with the principles of the

39 At [112]. The Act makes it clear it is amending the SOE Act.

40     At 164.

41     At 165.

Treaty of Waitangi.  For the reasons I have given I am satisfied that the claimants cannot establish such a proposition.

The Lands case – is it similar to this case?

[126]   The claimants placed significant emphasis on what they submitted were the similarities between this case and the Lands case.42

[127]   Government reorganisation of the public sector in the late 1980’s was given effect by the State Owned Enterprises Act 1986.   The Lands case concerned the proposed transfer of some four to five million hectares of Crown land to State-owned Enterprises.  The New Zealand Māori Council applied for review of this decision on the basis that a system was required to ensure transfer would not be inconsistent with the principles of the Treaty of Waitangi and would not prejudice unresolved Māori claims to land.

[128] The case essentially concerned two legal issues: (1) one of statutory interpretation  in  relation  to  s  27  and  s  9  of  the Act  and  (2)  substantively and practically, what were the principles of the Treaty of Waitangi that the Crown was obliged to act consistently with, by virtue of s 9.  The Court was unanimous in its decision, but delivered five separate judgments.

[129]   Section 27 set out an elaborate procedure for Māori land claims.  Essentially, if  a  claim  had  been  submitted  to  the Tribunal  in  respect  of  land  then  s  27(1) restrained  the  alienation  of  that  land  owned  by  a  SOE.    Section  27(2)  gave  a discretion to the Crown to order the resumption of land from an SOE to the Crown where the Tribunal had made a recommendation in relation to land (regardless of when the claim was submitted).  However, this left a gap for those where a claim had not been submitted by Māori to the Tribunal before the enactment of the Act, where the land may have been alienated by the SOE into private hands, affecting any

possible  restoration  of  the  land  following  a  successful  claim  in  the  Tribunal.

42     New Zealand Māori Council v Attorney-General [1987] 1 NZLR 641 (CA).

New Zealand Māori Council argued s 9 provided additional protection against this

risk.

[130]   The Court rejected the Crown interpretation that s 27 was a code and held that s 9 was to be given its plain meaning – it was a statement of broad principle that nothing in the Act should permit the Crown acting in a manner inconsistent with the Treaty.  Section 9 was held to override everything else in the Act.

[131]   As to the principles of the Treaty, the Court defined the relationship between Crown and Māori as one of partnership. On that basis the Crown had an obligation to act towards Māori reasonably and in the utmost good faith.  The Crown also had a duty of active protection of Māori people in the use of their lands and water as well as a duty to remedy and redress past breaches. Māori were also obliged by a duty of loyalty to the Crown and reasonable co-operation. The Court declined to hold there was an absolute duty of consultation as it was incapable of practical fulfilment and could not be regarded as implicit in the Treaty, however, it was recognised that in many cases the responsibility to make an informed decision would require some consultation.

[132] The Court declared that to transfer land to State Enterprises, without establishing any system to consider in relation to the particular assets or particular categories of assets, whether such a transfer would be inconsistent with the Treaty principles was unlawful.43 The Crown was ordered to prepare a scheme of safeguards to give reasonable assurance that assets would not be transferred in a way such as to prejudice any claims in the Tribunal.   Agreement was made and recorded in the preamble to the Treaty of Waitangi (State Enterprises) Act 1988. Sections 27A-D were subsequently inserted in the SOE Act. Essentially, where any land was transferred to an SOE a memorial was to be placed on the title. Where the Tribunal subsequently recommended its return to Māori, then the Crown was bound to resume

it and pay compensation accordingly.

43     At 166.

[133]   The claimants argued that the loss of Crown control over the assets of MRP when transferred from an SOE to a MOM is significantly greater than in the Lands case.   They say that unlike s 27 protection in the Lands case, here there is no protective measures for Māori interests in the water.

[134]   In the Lands case the complaint was that the Crown failed to provide for future claims to land.  Here, Māori had made claims to proprietary interests in water (particularly through the Waitangi Tribunal process) but no protection for actual claims had been instituted with respect to the sale of MRP shares.

[135] Further, the Crown have failed to take steps to address the Tribunal’s recommendations which recognised a nexus between the share sales and the ability to recognise rights and interests in water and the shares plus concept.   A similar equivalent mechanism to land ultimately agreed upon by Māori and the Crown relating to water should be accepted as appropriate by the Crown.

[136]   There are distinctive differences between the Lands case and this case.  The concern of Māori in the Lands case was that the transfer of land to SOEs would allow the SOEs to sell the land to private individuals without recognising Māori claims to particular land.  In this case there is no transfer of any property in water. What is being sold is not water but shares in a company that uses water for profit. That use is time limited by virtue of the water consents obtained (35 years).

[137]   Further,  as the Crown  noted in their submissions, in the  Lands case the Crown was exercising a discretion as to whether to transfer the assets of a SOE. Parliamentary intent in passing the SOE legislation did not require transfer of the land.  The exercise of that statutory discretion by the Crown was, therefore, subject to s 9 of the SOE Act.

[138]   Here, Parliament’s intention was to change SOEs to MOM companies. The commencement decision and the sale of the shares give effect to Parliament’s intention.  That is, to transfer the companies from SOEs to MOMs to facilitate the

49 per cent  sale  of  shares.    And  so  the  Crown’s  decision  to  bring  the  MOM

provisions into force and to sell the shares is not a discretionary decision (as it was in

the Lands case) and therefore is not subject to assessment against consistency with Treaty  principles.     The  Crown  here  is  simply  carrying  out  the  intention  of Parliament.   The only discretion to be exercised is as to the timing of the commencement order.

[139]   In   summary,   I  am   satisfied   that   for  the   reasons   I  have   given  the commencement decision, the amendment of the constitution of MRP decision and the sale of shares decision are not reviewable in this case.  All the claimants’ causes of  action,  save  for  the  s 64(3) Waikato-Tainui  Raupatu  Claims  (Waikato  River) Settlement Act 2010 claim must fail on this ground alone. All causes of action, save the s 64(3) claim,  arise  from  the proposition  that  the three decisions  above are reviewable in the particular circumstances.   I have found they are not.   For these reasons each of the claimants’ causes of action, save the s 64(3) claim are dismissed.

[272]   I am satisfied Māori were free to have their chosen representatives make

representations to the Crown regarding the shares plus proposal.

Limited time and resources

[273]   The New Zealand Māori Council says that the limited time and the resources provided to Māori for the September consultations (particularly) were inadequate to enable proper consultation.  However, there was no evidence at this review which identified what further relevant information could have been provided if more time and money had been made available.

Predetermination

[274]   This submission relates to the second consultation period.  The New Zealand Māori Council accepts that it was appropriate for the Crown to set out a tentative view of the shares plus proposal so that those who were consulted could focus their submissions.  However, the Council submits that the Crown crossed the line from a tentative view to closed mindedness and predetermination before the consultation was complete.

[275]   There are two basic reasons for the New Zealand Māori Council submission:

(a)      the Prime Minister’s press announcement, contemporaneous with the proposal to hold the September consultation, showed a closed mind; and

(b)the hui itself were conducted in a way that illustrated the Crown were consulting, in the words of the Council, “for show with no real prospect that the Crown would change its views”.

[276]   As to the later submission, the New Zealand Māori Council relied upon a number of affidavits filed by those who attended the hui.   They said that the consultation process consisted of an explanation of what shares plus was by the Deputy Prime Minister a brief, but only brief, period of discussion and an invitation to file submissions.  None of those present saw that as consultation.

[277]   As to the Prime Minister’s press statement, he said (in part):

The Government’s position of water rights has been consistent and clear:

in common law no-one owns water;

Māori do have rights and interests in water that are being addressed, and will continue to be addressed through the Treaty process with dealing with historical kinds and by other mechanisms, iwi by iwi;

the partial sale of MRP does not impact on the Crown’s ability to recognise Māori rights and interest in water.

[278]   The situation here is somewhat similar to the position in the Forestry case, the claimants say, when Cooke P said:73

A main complaint about the national hui in January 1989 is that the people there were confronted with a fate accompli.   A Māori translation of the French words is he kaupapa he kaupapa kua tau kee kore taea te whakatika – a proposal that has already been decided that you cannot correct.  Assuredly that would not represent the spirit of partnership which is at the heart of the principles that the Treaty of Waitangi referred to in s 9 of the State Owned Enterprises Act.

73 At [152].

[279]   The claimants submit this illustrates predetermination of the outcome, that the Government would not accept shares plus and that this predetermination meant that there was effectively no consultation.  The Crown’s approach did not “represent the spirit of partnership” at the heart of the Treaty.

[280]   Christopher White is the manager of the commercial transaction group at Treasury established to advise the Government on MOM and implement decisions by Government arising from the change of MRP and the other companies from SOEs to MOMs.

[281]   Once the Government had decided that it would consult about the share plus concept, it considered the Tribunal’s proposal to hold an urgent hui.  It rejected that approach.  It decided to consult with those iwi and hapū who had direct interest in water bodies and geothermal resources affected by the operations of MRP and the three other companies.  This was said to reflect the Tribunal’s findings as to Māori interest in water.

[282]   The Office of Treaty Settlements, Te Puni Kokiri,74 Treasury and ministerial advisers identified those they believed fell into this category of a direct interest. Mr White noted that groups who self identified as having a direct interest were also welcomed at the consultation hui.

[283]   In  addition,  written  participation  was  sought  from  others  including  the New Zealand Māori Council and the 11 claimants and 90 interested parties who had been before the Waitangi Tribunal for the freshwater and geothermal claim.

[284]   Further, those who were invited to make written submissions and/or attend the six hui, were invited to forward the invitation to make written submissions to any

others who they thought might be affected by the Government’s proposal.

74     Ministry of Māori Development.

[285]   A letter from the Honourable Bill English was then sent to all such persons. It advised the addressees:

(a)       that  the consultation  was  intended  to  be a  “targeted”  consultation about the shares plus concept and the Waitangi Tribunal Report;

(b)      how the Tribunal described the shares plus concept;

(c)      the Crown’s preliminary view that the shares plus concept was neither

necessary nor desirable and why the Crown thought so;

(d)what the consultation process would consist of including five topics on which the Crown particularly sought submissions.

[286]   Further invitational letters were sent out on 5 and 10 September and said in part:

that the Government wanted to explain its preliminary view of shares plus to answer questions and to “listen carefully to your views before any final decision is made”.75

[287]   There were also media releases by the Crown shortly before each of the hui which were extensively published in the media.

[288]   Six  huis  had  variable  numbers  of  attendees;  Waikato  15 attended;  at

Wairarakei 90 attended; at Whanganui 50 attendees; at Te Kuiti 15 attendees; at Tuai

46 attendees; and at Christchurch 30 attendees.

[289]   Fourteen written submissions were provided to the Crown officials at the hui and  23 written  submissions  were  subsequently  sent  to  the  Crown  within  the

timeframe allowed (5 October).

75     Letter from Honourable Bill English (Minister of Finance) and Honourable Christopher

Finlayson (Attorney-General) regarding consultation on shares plus proposal
(10 September 2012).

[290]   As to the concept of share plus the Crown invited the New Zealand Māori Council to provide details of the use of the share plus concept.   Mr White in his affidavit said the Council had claimed that such an arrangement was common for overseas companies using natural resources.   Mr White said that the New Zealand Māori Council referred it to electronic links with US and Australian companies with preference shares (which typically provided a heightened level of financial return) but they were not a shares plus concept.

[291]   Treasury through instructed agents could find “no examples” of a “special class of shares” being used as a “proxy for recognition of rights and interests in respect of the resources used by the companies”.76

[292]   As to the affidavits from attendees at various hui, some said they were helped to understand the concept of share plus by the presentation by Mr English.  Others said that their initial confusion was not helped by the presentation.

[293]   However,  a  dominant  theme  in  the  affidavits  was  that  the  consultation consisted of the Honourable Bill English explaining the share plus concept and why the Government’s view was against the idea.  Then followed a brief opportunity for questioning limited to the share plus concept.  Attendees were then invited to file written submissions with the Crown.

[294]   The Crown ministers and advisers who attended the hui were not prepared to discuss issues beyond the share plus proposal.  While many attendees appeared not to support the share plus idea, their expectation was that the Crown would come up with a more attractive proposal which directly protected Māori proprietary interests in water.

[295]   The   New Zealand   Māori   Council   has   not   satisfied   me   the   Crown

predetermined its consultation with Māori about the share plus concept.

76 Affidavit of Christopher White at [41].

[296]   Consultation need not be person to person.  It need not be in any particular form.77    The Government itself was limited in its capacity to consult about shares plus by the limited identification of the concept of the Tribunal.  The letter sent to potential  attendees  emphasised  the  Government  was  open  to  suggestions  from Māori.    This  was  a  chance  to  show  how  shares  plus  could  work,  or  how  an alternative could work and why such an arrangement had to be introduced before the

sale of the shares.  In my view there is no convincing evidence the Government had set its mind, irreversibly, against shares plus before the consultation.   I reject this ground of challenge.

No one owns the water – error of law

[297]  The claimants say that the Government’s refusal to recognise claims of proprietary rights to freshwater or geothermal resources on which it based in part its conclusion that the sale of the shares was not inconsistent with Treaty principles  is based on an error of law that no one owns water.  This error of law goes to all three decisions to be made by the Crown; the commencement decision, the amendment decision and the sale decision.  The claimants say ownership of water by individuals is possible.  Certainly the Tribunal recognised that Māori interest in water equated in

1840 to common law concepts of ownership.  The claimants submit that the Crown’s position  is  that  because  they  consider  no one  owns  water  then  they  cannot acknowledge Māori claims to proprietary interests in water.  The Crown by doing nothing to resolve Māori claims are creating, the claimants say, further barriers to recognition of water rights by selling shares in MRP.   The Crown’s position misunderstands  the  common  law  as  to  ownership  of  water,  is  irrelevant  to  the decision making and misunderstands Māori claims.  They submit, in any event, that such a proposition is irrelevant in deciding whether to recognise Māori claims of proprietary interest in water.

[298]   This is not the time, nor the opportunity to answer the question who, if anyone, owns water in the context of this case.    Far more extensive submissions

would  be  required  to  adequately  deal  with  that  proposition.    However,  having

77     New Zealand Māori Council v Attorney-General [1987] 1 NZLR 641 at 683.

reviewed the evidence I am satisfied that the Crown did not take into account the proposition  that  no one  owns  the  water  when  considering  Māori  claims  to proprietary rights in water and in making its decision to proceed with the commencement order and with its intention to sell the shares in MRP.

[299]   The  source  of  the  comment  “no one  owns  the  water”  is  several  Prime Ministerial  press  statements  when  the  Government  announced  its  intention  to proceed with the sale of MRP shares and subsequent to the release of the first report from the Waitangi Tribunal.

[300]   The Prime Minister’s press statement of 3 September 2012 announcing the sale of 49 per cent of MRP illustrates the point.  He said (amongst other matters):

The Government’s position on water rights has been consistent and clear:

In common law no one owns water;

Māori do have rights and interests in water that are being addressed and will continue to be addressed through the Treaty process when dealing with historic claims and by other mechanisms iwi by iwi.

[301]   The Prime Minister reiterated the Crown’s view that the sale of MRP would

not affect such rights and interests.

[302]   In his affidavit of 7 November 2012 the Deputy Prime Minister said:

I understand that the applicants in these proceedings claim that the decisions made by Ministers in relation to the MOM programme were based on a view that “no one owns water”. I can confirm that:

45.1Ministers were clear throughout the process that particular Māori iwi/hapū have rights and interests in specific water and geothermal resources in rohe.  If the applicants are seeking to suggest otherwise that is simply wrong;

45.2the  decisions  that  Ministers  have  made  in  relation to  the  MOM programme do not depend on particular views about the ownership of  water.    To  the  contrary,  my  view,  along  with  that  of  other Ministers, has consistently been that the MOM programme will not affect the continuing process of ascertaining and recognising Māori rights and interests in respect of such resources.

[303]   This  evidence  establishes  that  the  Crown  did  not  base  its  decision  with respect to the change in status of the SOE companies to MOMs, in part, on the proposition that no one owns the water.  The Crown’s decision was that whatever Māori rights and interests were in water, the sale of shares in MRP would not affect these rights.

[304]   Further, the Prime Ministerial statements were simply press statements made in the context of a continuing public debate about these issues.  They do not indicate that decisions about compliance with the Treaty principles with respect to the proposed transfer were made on that basis at all.

[305]   I, therefore reject that ground of challenge.

Failure to wait for the Waitangi Tribunal process to be complete – error of law/unreasonableness

[306]   As I have noted, stage one of the Waitangi Tribunal inquiry is now complete although a final report is yet to be prepared.   The Tribunal noted that its recommendation and conclusions would not change in its final report at stage one but that there may be some further material provided and any typographical errors corrected. The stage two inquiry has not yet begun.

[307]   The New Zealand Māori Council’s submission that it was an error of law and unreasonable for the Crown not to wait for the completion of the first and second stages of the Tribunal hearings is based on a quote from Cooke P in the Radio Frequency case, where he said:78

I am driven to hold that no reasonable Minister, if he accepted that the Crown is bound to have regard to Waitangi Tribunal recommendations on Māori broadcasting could do other than allow the Tribunal a reasonable time for carrying out its inquiry.

[308]   The New Zealand Māori Council’s submission is that the Crown is acting

unreasonably in the sense meant by Cooke P by refusing to wait for the final report on the stage one inquiry and by refusing to wait for the conclusion of the stage two

78     Attorney-General v New Zealand Māori Council [1991] 2 NZLR 129 (CA) at 139.

inquiry.      It   was   submitted   the  Crown   has   wrongly  rejected  the   stage one recommendations of the Waitangi Tribunal without waiting to receive the full text and references to support the Tribunal’s conclusions.  I reject this argument.

[309]   As to the first report, the Tribunal made it clear in its interim report, that the final report would not change its findings and recommendations but the Tribunal would edit for typographical error and provide further footnoting and references.79

This  tidying up  of the  first  report  could  not  possibly justify a delay in  Crown decision-making.

[310]   The purpose in dividing the Waitangi Tribunal hearing and report into two stages was to enable an early hearing and decision on that aspect of the claim (stage one) which would determine whether a halt to the privatisation of the SOEs process could be justified (the nexus question).  If the Tribunal found a nexus, then the sale process would halt.  If not, there could be no reason to halt the sale process.

[311]   The Tribunal found there was a nexus and, therefore, the sale process should halt until protective measures were put in place by the Crown.  Even if this situation had been  accepted by the Crown and if  agreement on protective measures was reached before the beginning of the second stage of inquiry, there would be no reason then to delay any share sale simply for the second part of the inquiry.

[312]   As I have observed in this Judgment, the Crown rejected the notion of shares plus as a functioning possibility and said, in any event, it did not provide the nexus claimed by the Tribunal.   The Crown, therefore, advised Māori that it intended to proceed with the sale.  And so the failure of the Crown to wait for the Tribunal’s second report is not by itself an error of law.

[313]   The process undertaken by the Tribunal was intended to provide guidance on how the Crown could proceed with the sale of the shares before the second part of the hearing was undertaken.   If the Crown are wrong in their approach to dispute

there is a nexus in this case, then their error is not in failing to wait for the second

79     Waitangi Tribunal Interim Report at iv of Preface.

report but in the failure to ensure proper protective mechanisms were in place to

protect Māori water rights.

[314]   I, therefore, reject this ground of appeal.

Legitimate expectation

[315]   The  New Zealand  Māori  Council  acknowledges  that  this  submission  is properly considered only if I have found that the privatisation does not raise s 9 or s 45Q inconsistency issues.  The legitimate expectation is expressed by the Council in this way:

That the Crown would act with utmost good faith and actively protect Māori culture and proprietary rights in interests in freshwater and geothermal resources as recognised in the Treaty of Waitangi.

[316]   The  Waikato  River  and  Dams  Claims  Trust  expresses  the  legitimate expectation similarly, and further submit there was a legitimate expectation that the Crown would engage with Waikato-Tainui in relation to the Crown’s decision.

[317]   The claimants submit this legitimate expectation arises from a number of sources:  the Treaty of Waitangi; s 9/s 45Q; court decisions confirming the Crown’s Treaty partner obligations; and assurances from the Crown.

[318]   The claimants say that that legitimate expectation would be defeated if the Crown sold shares in any of the MOMs before the Waitangi Tribunal’s final report and before there was a mechanism implemented to protect Māori rights and interests relating  to  water  resources.    The  New Zealand  Māori  Council  relies  upon  the dissenting judgment of Thomas J in the Commercial Radio case.80

[319]   Two possible legitimate expectations arise here – one substantive the other procedural.

80     New Zealand Māori Council v Attorney-General [1996] 3 NZLR 140 at 183 and 185.

[320]   I acknowledge the current debate about the place of a legitimate expectation to a substantive outcome in New Zealand jurisprudence.81    I express no view as to that debate because the assertion of a legitimate expectation in a substantive outcome cannot succeed in this case.  The substantive outcome of the legitimate expectation expressed at  [315]  is that  privatisation  as  proposed should  not  proceed  as  it  is inconsistent with Treaty principles.   I have already rejected this argument.   The

New Zealand  Courts  have  concluded  that  the  Treaty  can  only  be  enforced  if incorporated into domestic law and then only to the extent provided for in law.82

Pleading legitimate expectation of a substantive outcome based on future Treaty of Waitangi compliance is simply an attempt to get around the restrictions on direct enforcement in law of the Treaty.

[321]   As to the process legitimate expectation, the claimants say the legitimate expectation is that the Minister would not proceed with the commencement decision or with the sale until the Crown had properly assessed these decisions against consistency with Treaty principles.

[322]   I have already rejected such an approach given clear Parliamentary intention. A claim to legitimate expectation of such a process would cut across Parliamentary intent that the share sale process is subject to the Treaty protections in s 45Q and s 45W.

[323]   The majority in the Commercial Radio case made it clear that there cannot be a legitimate expectation of Crown conduct in conflict with the policy and intent of

Parliament.

81     New Zealand courts have not yet given effect to a legitimate expectation of a substantive outcome. See discussion in Air New Zealand Ltd v Wellington International Airport Ltd [2009] NZAR 138 (HC). This is in contrast to the position in the UK. See R v North East Devon Health Authority, ex parte Coughlan [2000] WLR 622.

82     Te Heuheu Tukino v Aotea District Māori Land Board [1941] AC 308; 1941 NZLR 590 PC. I acknowledge that in the likely event this case is heard ultimately in the Supreme Court, the New Zealand Māori Council wish to challenge the correctness of this decision. I am, however, bound by it.

[324]   Finally,  as  the  Crown  pointed  out,  looked  at  overall  given  there  was consultation by the Crown about compliance with Treaty principles, the MOM regime, and with respect to the shares plus concept and that the final legislation provided  Treaty  principles  protection,  meant  any  legitimate  expectation  about process had been met.

[325]   I reject this claim.

Material error – actions in breach of Treaty?

[326]   This ground of challenge relates to the breach of the Treaty as a matter of law. This alternative ground of challenge is based on these propositions:

(a)      the Crown has made a material error of law by holding its actions are not in breach of the Treaty of Waitangi;

(b)if  the  Court  finds  the  Crown’s  actions  are  inconsistent  with  the principles of the Treaty but there is no relevant enforceable requirements for the Crown to act consistently with those principles, then this Court should inform the Crown of its error and require the Crown to reconsider its decisions and acknowledge that its actions do amount to a breach of the principles of the Treaty of Waitangi.

[327]   I have found that the actions of the Crown are not inconsistent with the principles of the Treaty of Waitangi in that those actions are not likely to materially affect redress or rights claims by Māori or redress with respect to its claims to a proprietary interest in water.

Breach of natural justice?

[328]   The Waikato River and Dams Claims Trust submits that the Crown owes a duty to have Māori claims heard and determined before any sale of MRP shares. This is a duty on the Crown to act fairly.  This includes the important duty to ensure all relevant claims are resolved before assets are sold.  In this case that duty requires

the Crown to permit the claims to be heard before the Tribunal to determine rights and interests before sale.  In particular with respect to Waikato-Tainui and Pouakani to await determination of their property claims to the Waikato River before the sale of the shares.

[329]   This ground of claim is essentially a repeat of other grounds of challenge already rejected by me, for example, consultation and failure to wait for the second Tribunal report.  I am satisfied this ground of appeal raises no new claims.  Further, I am  satisfied  the  Crown’s  actions  will  not  affect  the  ability of  the  claimants  to participate in the Waitangi Tribunal process.

[330]   I reject this ground of challenge.

Section 64 of the Waikato-Tainui Raupatu (Waikato River) Settlement Act 2010

[331]   When Waikato-Tainui settled their claim with the Crown, there remained one difference between them relating to the Waikato River.  Section 64(1), (2) and (3) of the Act provides as follows:

64       Creating or disposing of interests

(1)      The Crown and Waikato-Tainui acknowledge that—

(a)      they  have  different  concepts  and  views  regarding relationships  with  the  Waikato  River  (which  the  Crown would seek to describe as including “ownership”):

(b)       the 2009 deed and this Act are not intended to resolve those differences:

(c)       the 2009 deed and this Act are primarily concerned with management of the Waikato River to—

(i)       achieve the overarching purpose of the settlement:

(ii)      recognise the special relationship of Waikato-Tainui with the Waikato River.

(2)      This section applies if the Crown, a Crown entity, [a state enterprise, or a mixed ownership model company] proposes doing any of the following actions in relation to a property right or interest in the Waikato River:

(a)      creating it:

(b)      disposing of it:

(c)      starting a statutory or other process to create it:

(d)      starting a statutory or other process to dispose of it.

(3)       The  Crown,  Crown  entity,  [state  enterprise,  or  mixed  ownership model company] must engage with Waikato-Tainui in accordance with the principles described in the Kiingitanga Accord before doing the action.

[332]   The Waikato River and Dams Claims Trust submission is that the actions of the Crown in the share sales of MRP have breached s 64 of that Act.

[333]   The Waikato River and Dams Claims Trust says that the Crown in proposing to sell 49 per cent of the shares in MRP and thereby relinquishing exclusive control of the company is instituting a statutory process to dispose of its proprietary rights or interests in the Waikato River.  In breach of s 64(3) there has been no engagement by the Crown with Waikato-Tanui before the decision to sell was made.  The Crown are, therefore, in breach of the statute and a declaration is sought accordingly.   The statement of claim seeks an order setting aside the decisions and an order that the Crown reconsider its decision with directions from this Court.

[334]   I reject the claimants’ argument.  By proposing to sell the shares in MRP, the Crown is not starting a statutory process to dispose of a property right or interest in the Waikato River.

[335]   An owner of a share in MRP does not own  any part of the assets of a company.  And so even if it could be said that a resource consent is a proprietary right in water, the sale of shares in the company holding the resource consent is not the sale of a property right in the water.

[336]   In any event, for the reasons previously given,83  a resource consent is not a property right in water.  The Crown’s proposed sale of the shares in MRP does not come within s 64(2), and, therefore, the section does not apply and the Crown is not, therefore, statutorily obliged to consult Waikato-Tainui.

Water rights

[337]   In supplementary submissions the Waikato River and Dams Claims Trust raised the issue of MRP’s water rights.  The Trust submitted that when the Crown and New Zealand Māori Council settled the Lands case, an issue arose as to the water permits held by SOEs.  These permits, the Trust says, were and remain assets of SOE companies.84

[338]   While there was no settlement of Māori claims to an interest in water at the time of the Lands case, it was agreed between Māori and the Government that water rights that had been held in perpetuity would in the future be restricted to a period of

35 years.

[339]   MRP’s current water rights were obtained through application to the Waikato Regional Council.   Grants were made in 2006 for 35 year water consents.   The original water consents had been held by the New Zealand Electricity Department, then the Electricity Corporation of New Zealand, in turn Waikato SOE Limited and finally, MRP.

[340]   While the Waikato River and Dams Claims Trust make no specific claim arising from these water permits (none was pleaded and counsel accepted none could be directly advanced in this judicial review) counsel stressed:

(a)       there is no settlement between the Crown and New Zealand Māori

Council or other Māori as to the ownership or commercial rights attaching to water permits;

83     At [210]–[218].

84     State-Owned Enterprises Act, s 29(1)(e).

(b)      part of the settlement in the Lands case was to improve processes by

Māori when there were disputed transfers of Crown assets;

(c)      these propositions supported the claimants’ case that the sale of MRP shares should wait proper inquiry to ascertain an effective mechanism to protect Māori claims to interests in water;

(d)      sale of shares will remove the possibility of a mechanism to protect

Māori claim to these water permits.

[341]   It is relevant that MRP’s current water rights were granted in 2006.  This may restrict any such claim by Māori to a share in those water consent assets.   Nor is there any basis currently to say that the transfer of water consents somehow breached s 9 of the SOE Act.  No further analysis is required with respect to the observations by the Waikato River and Dams Claims Trust as to this aspect of the case.

Summary

[342] I am satisfied that the three proposed decisions of the Crown; the commencement decision; the amendment to the constitution of MRP decision; and the sale of MRP shares decision; are not reviewable decisions.   Neither s 9 of the SOE Act nor s 45Q of the Public Finance Act apply to these decisions.

[343]   Parliament has decided the four SOEs (including MRP) should be removed from  the  SOE Act  to  become  MOM  companies  to  facilitate  the  sale  of  up  to

49 per cent of the shares in the four companies.  This case is on all fours with the Commercial Radio85 case from the Court of Appeal.  No review of Parliament by the Courts is permitted in law.  This is effectively what the claimants have asked this Court to do in these proceedings.   All causes of action, save the claim based on s 64(3) of the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010 must, therefore, fail on these grounds.   These grounds of review were dependent

upon one or more reviewable decision by the Crown.  I have found there are none.

85     New Zealand Māori Council v Attorney-General [1996] 3 NZLR 140 (CA).

[344]   As to the claim of a breach of s 64(3) of the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010 I am satisfied that there is no breach.  The sale of shares was not a sale that required the Crown to engage with Waikato-Tainui.

[345]   If I am wrong in my conclusions at [343] and [344], then I consider each particular ground of review must fail:

(a)      I am satisfied that the Crown when proposing to make each of the three decisions will not act inconsistently with the principles of the Treaty.  I am satisfied that there is no nexus or connection between the sale of the shares in MRP and the need to provide for Māori claims to proprietary interest in water by way of potential redress or recognition of rights.

(b)I am satisfied the consultation that took place relating to the Treaty protection with respect to the privatisation policy was adequate and that  the  Crown  had  not  predetermined  its  stance  especially  with respect to the Waitangi Tribunal’s shares plus concept.

(c)      I do not consider the three decisions or intended decisions of the Crown to commence the legislation, amend MRP’s constitution or sell MRP shares were based in part on the proposition that “at common law no one owned the water”.   No error of law was, therefore, established.

(d)I do not consider that the Crown was obliged to allow the Waitangi Tribunal process to be finished.  The essence of the first report was already complete with further referencing and typographical error correction to come.   The purpose of splitting the hearing was to determine the Waitangi Tribunal’s view as to whether the sale of the shares  could  proceed  without  inconsistency  with Treaty principles through the first report. The Crown was not, therefore, obliged to wait for the second Tribunal report.

(e)      I reject the claim that there was a breached legitimate expectation of Māori either to the substantive claim or the procedural complaints which made the sale decision unlawful.  These claims were essentially a repeat of other claims already rejected.

(f)      Finally, I am satisfied that there was no breach of natural justice in the process.

Costs

[346]   Should the Crown seek costs then they should file a memorandum within

21 days. The claimants have a further 21 days within which to respond.

Ronald Young J

Solicitors:

H A Cull QC, Commerce Commission, Wellington
F Geiringer, Wellington

D J Goddard QC, Wellington