March 2013 Māori Law Review

Partial privatisation no material impairment to remedying Treaty breaches – New Zealand Māori Council v Attorney-General [2013] NZSC 6

The Supreme Court has dismissed the Māori Council's appeal from the High Court's refusal to grant judicial review over the proposed partial privatisation of Mighty River Power.

Download New Zealand Māori Council v Attorney-General [2013] NZSC 6 here (353 KB PDF).

Overview and result

Proposed asset sale no material impairment to ability to remedy any Treaty breach
Date27 February 2013
CaseNew Zealand Māori Council v Attorney-General (353 KB PDF)
Citation[2013] NZSC 6
CourtSupreme Court
Judge(s)Elias CJ, McGrath, William Young, Chambers and Glazebrook JJ
Earlier/later decisionsNew Zealand Māori Council v Attorney-General [2012] NZSC 115; New Zealand Maori Council v Attorney-General [2012] NZHC 3338
Legislation citedState-Owned Enterprises Amendment Act 2012; Public Finance Act 1989, s 45Q, Part 5A; State-Owned Enterprises Act 1986, s 9; Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010, s 64;
Cases citedThe Stage 1 Report on the National Freshwater and Geothermal Resources Claim (Wai 2358, 2012); New Zealand Maori Council v Attorney-General [1987] 1 NZLR 641; New Zealand Maori Council v Attorney-General [1994] 1 NZLR 513 (PC); New Zealand Maori Council v Attorney-General [1996] 3 NZLR 140 (CA); Te Runanganui o Te Ika Whenua Inc Society v Attorney-General [1994] 2 NZLR 20 (CA).
Overview and resultAppeal dismissed from High Court refusal of judicial review sought of decisions preliminary to partial privatisation of State-Owned Enterprise power generating company with interests affecting Waikato River.  "Partial privatisation of Mighty River Power will not impair to a material extent the Crown's ability to remedy any Treaty breach in respect of Māori interests in the river[.]" (At [8].) Proposed sale of shares in power generating company is reviewable for consistency with the principles of the Treaty of Waitangi (disagreeing with High Court on this point).

Background

Mighty River Power Ltd, currently fully owned by the Crown, has water permits issued pursuant to the Resource Management Act 1991 to operate hydro generating power facilities along the Waikato River.

In 2012, Parliament enacted amendment legislation to enable the Crown to sell up to 49 per cent of its shares in this company.

The State-Owned Enterprises Amendment Act 2012, when it comes into effect, will remove Mighty River Power from being a State enterprise in the State-Owned Enterprises Act 1986.  Mighty River Power will become a mixed ownership model company pursuant to the Public Finance Act 1989.

The Public Finance (Mixed Ownership Model) Amendment Act 2012 inserted a new Part 5A into this 1989 Act.  Part 5A includes section 45Q which reads:

(1) Nothing in this Part shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi (Te Tiriti o Waitangi); (2) For the avoidance of doubt, subsection (1) does not apply to persons other than the Crown.

Section 45Q(1) is identical to section 9 of the State-Owned Enterprises Act 1986.

The overriding issue in this case Supreme Court case was whether the sale of up to 49 per cent of the shares in Mighty River Power will be consistent with the principles of the Treaty of Waitangi?  The New Zealand Maori Council argued no; the Crown argued yes.

This case followed a successful urgent hearing in the Waitangi Tribunal.

The New Zealand Maori Council applied to the High Court for judicial review of the Government’s action to proceed with the partial share sales.  In December 2012, the High Court held that the Crown’s decision to proceed with the sales were not reviewable.

A week later the Supreme Court granted the Maori Council and the Waikato River and Dams Claim Trust leave to appeal this judgment directly to the Supreme Court.

The appeal was heard on 31 January – 1 February 2013.

The Supreme Court issued its unanimous single judgment on 27 February 2013.

Discussion

Summary

The Supreme Court’s single judgment (consisting of 151 paragraphs) provides an overall win for the Crown (at [8]): “the partial privatisation of Mighty River Power will not impair to a material extent the Crown’s ability to remedy any Treaty breach in respect of Maori interests in the river.”

But there is also a substantive win for Maori: “the proposed sale of shares (on which the claim of material prejudice is based) is reviewable for consistency with the Treaty principles” (at [7]).

Issues

The Supreme Court’s judgment addresses the 5 issues raised by the Maori appellants.

Issue 1: Is the proposed sale of shares in Mighty River Power reviewable for consistency with the principles of the Treaty of Waitangi?

This issue goes to the heart of the relationship between several statutes including the State-Owned Enterprises Act 1986, the State-Owned Enterprises Amendment Act 2012, and Public Finance (Mixed Ownership Model) Amendment Act 2012.  The Maori appellants argued that the Crown is required to act consistently with the Treaty principles when selling the shares because this would be an exercise of the Crown’s powers under the new Part 5A of the Public Finance Act, therefore making relevant section 45Q.  The Crown, relying on the New Zealand Maori Council v Attorney-General (Commercial Radio Assets case) [1996] 3 NZLR 140 (CA), rejected this assertion and argued instead (at [48]) that the “power of the Crown to sell shares was an incident of their ownership and shareholder powers under the common law and the Companies Act 1993.”

The Court agreed with the Maori appellants on this issue.  The Court held that there was a “crucial difference” between the Commercial Radio Assets case and this case because “In the present case, the continuing statutory restraint upon the Crown when acting in respect of a mixed ownership company must be ascertained in light of the continuation of the Treaty protection provision in s 45Q” (at [51]).

According to the Court, the Crown is presently under a statutory restraint because of section 9 of the State-Owned Enterprises Act and the Crown will continue to be under a statutory restraint because of section 45Q of the Public Finance Act.  This transition is, according to the Court, “seamless” (at [51].

The Court stressed that s 9 jurisprudence has established that section is “of great authority and importance to the law concerning the relationship between the Crown and Maori” (at [52]) and “Section 45Q brings with it the heritage of s 9 and this Court, reflecting what is the purpose of Parliament, must invest it with equivalent significance” (at [59].

Issue 2: Is Cabinet’s decision to bring into effect the State-Owned Enterprises Amendment Act reviewable?

Because of the Court’s finding on issue 1, the Court quickly dismissed this issue.

Issue 3: Was the Crown in breach of s 64 of the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010?

Section 64, in summary, records an acknowledgment that the Crown and Waikato-Tainui have different concepts and views regarding relationships with the Waikato River, and that the Crown, a Crown entity, state enterprise, or mixed ownership model company must engage with Waikato-Tainui in accordance with the Kiingitanga Accord principles if action is proposed to create or dispose of a property right or interest in the Waikato River.

The Maori appellants argued that the Crown must engage with Waikato-Tainui before pursuing any share sales.

The Court disagreed (at [82]):

“We are unable to accept that the partial privatization of Mighty River Power constitutes disposal of property or interests held by the Crown in the river.  The rights and the associated land in the river bed held by Mighty River Power (which are undoubtedly ‘property’) are not being disposed of and will continue to be held by it.”

Issue 4: The adequacy of the consultation following the Freshwater Report

The Maori appellants argued that the Crown’s consultation with Maori following the recommendations of the Waitangi Tribunal in 2012 was “too rushed” (at [83]).

The Court disagreed: “The fact that the Crown ultimately rejected the Waitangi Tribunal suggestion as inappropriate is not a basis from which it can be inferred that the consultation was empty or pre-determined” (at [87]).

Issue 5: Is the proposed sale of shares in Mighty River consistent with the principles of the Treaty of Waitangi?

According to the Court, this is the substantive issue of the case.  In reference to the New Zealand Maori Council v Attorney-General [1994] 1 NZLR 513 (PC) [Broadcasting Assets case], the Court stated:

“In deciding whether proposed Crown action will result in ‘material impairment’, a court must assess the difference between the ability of the Crown to act in a particular way if the proposed action does not occur and its likely post-action capacity.  So impairment of an ability to provide a particular form of redress which is not in reasonable or substantial prospect, objectively evaluted, will not be relevantly material.  To decide what is reasonable requires a contextual evaluation which may require consideration of the social and economic climate” (at [89]).

The Court then provided this 3 point test to determine this issue (at [90]:

“(a) Before intervening, the Court must be brought to the conclusion that the proposed privatisation is inconsistent with Treaty principles;

(b) There will be inconsistency, if the proposed privatisation would ‘impair, to a material extent, the Crown’s ability to take the reasonable action which it is under an obligation to undertake in order to comply with the principles of the Treaty’; and

(c) The Court must address this issue directly and form its own judgment, along the lines discussed in [89]”.

The Court then proceeded to discuss a range of factors, including the evolution of the statutory regimes for controlling the use of water, and concluded (at [97]) that the current Resource Management Act “substantially improved the recognition of Maori in relation to the management of waters” (at [97]).

The Court discussed the initiatives that the Crown has implemented in recent years to engage with Maori about water management and water use (e.g. see [103]) and recorded statements made by the Crown, the Deputy Prime Minister and the Attorney-General that recognise Maori do “have interests and rights in relation to particular waters” (at [103]) and the partial sale of shares “will not have a ‘chilling effect’ on the willingness of the Crown to provide appropriate rights recognition and redress” (at [105]).  The Court then cited Treaty of Waitangi settlement legislation specific to water as proof that the Crown, in recent years, has become willing to negotiate new management and use regimes for water that better recognise Maori interests.

The Court then concluded this discussion (at [115]) by emphasising the differences between this case and the New Zealand Maori Council v Attorney-General [1987] 1 NZLR 641 (CA) case as essentially:

“The Crown will retain substantial capacity to provide redress in the form of shares, if that is seen as appropriate.  The Crown will retain at least 51 per cent of the shares and therefore majority control over the company.  And, to the extent that the generating assets include land, they remain subject to the resumption regime.  As well … in the current legal and social environment, Maori can be confident that their claims will be addressed, something which was not as clear in 1987 as it is now.”

The Court also stressed the difference between ownership of land and water rights limited to 35 year terms under the Resource Management Act.  The 35 year term of water permits gives opportunities for review on their renewal.  The Court thus accepted the Crown’s argument that the protection of Maori in waters comes close to the memorialisaton protection put in place for land (at [141]).

Conclusion

The Court dismissed the appeal:

“[149] As is apparent, we are prepared to accept that privatization may limit the scope to provide some forms of redress which are currently at least theoretically possible.  But in assessing whether this amounts to ‘material impairment’, regard must be had to (a) the assurances given by the Crown, (b) the extent to which such options are substantially in prospect, (c) the capacity of the Crown to provide equivalent and meaningful redress, and (d) the proven willingness and ability of the Crown to provide such redress.”

Costs

The Court did not award costs against the unsuccessful Maori appellants because they had succeeded on an “important point of principle, namely that the Crown was bound to comply with the principles of the Treaty before deciding to sell the shares” (at [151]).

Comment

This is a gracious decision.  And it is a thoughtful one too.  And clever.  The Court has:

  • Breathed new life into the New Zealand Maori Council v Attorney-General [1987] 1 NZLR 641 (CA) case – a case to be now known as the SOE case rather than the Lands case.  The Court gave weight to the SOE case jurisprudence that vests the section 9 Treaty principles section as a paramount provision that contains a broad constitutional principle.  The SOE case is “of great authority and importance to the law concerning the relationship between the Crown and Maori” (at [52]).
  • Recognised that water permits are interests in water in accordance with section 122 of the Resource Management Act, and assets within the meaning of the State-Owned Enterprises Act.
  • Observed that the United Nations Declaration on the Rights of Indigenous Peoples probably does not add anything significant to the statutory incorporation of the Treaty principles in section 9 and section 45Q (at [ 92]).
  • Acknowledged the different approaches to the issue of commercial redress for use of rivers by the Waitangi Tribunal and the courts [see para 100].  But reflected: “Such interests are however unascertained, including as to their nature and extent.  How they may be given effect in modern conditions consistently with Treaty responsibilities and other government obligations is also far from clear” (at [101]).
  • Acknowledged that the Maori appellants did not rely on a common law Aboriginal title claim.  The Court stated: “So we propose to proceed on the basis that the proposed privatisation will not have any effect on such claims” (at [131]).
  • Emphasised that while the Crown can go ahead with the share sales, “This is not to say that the water claims should be parked.  The Waitangi Tribunal has emphasised the need for urgency in addressing proprietary claims.  It appears from the policy initiatives and from the assurances given in the litigation that the message that there is need for action on these claims has been accepted [by the Crown]” (at [148]).

The decision deserves a very close read and careful reflection.  There are weak areas and over the next few days, weeks and months many will explore these.  For example, while the Court has readily stated that “the Resource Management Act currently provides substantial recognition of Maori interests” (at [143]), the Court did not engage with the relevant case law.  This case law shows a very clear trend that Maori are rarely successful in relying on these provisions to protect the wairua and mauri of water.

Even though the courts often do acknowledge the importance of the Maori provisions in the Resource Management Act, this Act gives equal weight to many other values and interests and it these other values that often trump Maori interests.

In the end this was a case prepared for and heard under urgency.  There are issues that have been skimmed over, like this one.

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Author: Jacinta Ruru

Professor Jacinta Ruru

Ngāti Raukawa ki Waikato, Ngāti Ranginui ki Tauranga, Ngāti Maniapoto and Pakeha

Jacinta is a professor in law at Otago University where she has been a faculty member since 1999. In 2016, she also became Co-Director of Nga Pae o te Maramatanga New Zealand’s Maori Centre of Research Excellence.

Her research interests focuses on exploring Indigenous peoples’ legal rights to own, manage and govern land and water. Jacinta’s PhD thesis (University of Victoria, Canada, 2012) is titled “Settling Indigenous Place: Reconciling Legal Fictions in Governing Canada and Aotearoa New Zealand’s National Parks.”

Jacinta has led, or co-led, several national and international research projects including on the Common Law Doctrine of Discovery, Indigenous rights to freshwater and multidisciplinary understandings of landscapes.

She coleads several research groups including a new University of Otago Poutama Ara Rau Research Theme, and has organised a variety of national and international conferences including the “In Good Faith” Treaty of Waitangi symposium (2007), the international Indigenous Legal Water Forum (2009) and the Australia New Zealand Law and History Society conference (2013).

Significant research awards include the University of Otago prestigious Rowheath Trust and Carl Smith Medal for outstanding scholarly achievement across all disciplines (2010) and the Fulbright Nga Pae o te Maramatanga Senior Maori Scholar Award (2012).

Jacinta is a consultant editor to the Māori Law Review.