Following the New Zealand Maori Council's claim to the Waitangi Tribunal and then proceedings in the High Court, the Supreme Court has now decided that the Crown's proposed partial sale of Mighty River Power (MRP) can go ahead[1]. The Maori Council claimed that Maori have proprietary rights to fresh water and that the sale would impair, to a material extent, the Crown's ability to remedy any Treaty of Waitangi breach in respect of Maori interests in the Waikato River. The Supreme Court disagreed.

This case was an appeal from the High Court's decision that the Crown's proposed decisions to sell shares in MRP (and other SOEs) were not subject to compliance with the principles of the Treaty and, even if they were, the sale would not prejudice the Crown's ability to address ownership issues in the future[2].

The Supreme Court dismissed the appeal. The Court's key findings were:

  1. Both the decision to transfer MRP (and other SOEs) from the SOE regime to a "mixed-ownership" regime; and any subsequent sale of shares in a mixed ownership company are subject to an obligation to act consistently with the principles of the Treaty. Therefore, the High Court was wrong in finding that these decisions were not reviewable on this basis.
  2. The water permits held by MRP are properly regarded as "interests in the Waikato River" for the purposes of the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010. Again, in this regard the Supreme Court disagreed with the High Court. However, while they were "interests", the Crown was not proposing to "dispose" of them so there was no obligation to "engage with Waikato-Tainui in accordance with the principles described in the Kingitanga Accord" as required by section 64 of that Act.
  3. Crown ownership and control of the power-generating companies will undoubtedly be diminished by privatisation[3]. Moreover, privatisation might "preclude or limit the possibility of some options for redress which would otherwise be possible"[4].
  4. However, the partial privatisation of MRP "will not impair to a material extent the Crown's ability to remedy any Treaty breach in respect of Maori interest in the [Waikato] river"[5].

The Court's conclusion that the Crown's ability to remedy Treaty breaches would not be impaired to a material extent was reached after taking into account a range of factors. The Court struggled to see how stopping the partial sale of MRP would deliver in terms of recognising Maori rights to water. This was a different situation arising in earlier litigation in 1987 concerning the transfer of land to SOEs where the transfer of land would have potentially removed the Crown's ability to redress claims in relation to the land. In particular, the Court appeared to conclude that the issues relating to proprietary rights in freshwater are best addressed through regulatory reform and specific settlement[6].

The Court discussed the various provisions under the Resource Management Act 1991 (RMA)[7] that provide "substantial recognition of Maori interests"[8]. The Court highlighted the RMA's 35 year limitation on the term for water permits, and the Court said[9]:

Water rights, unlike the ownership of land, are limited to 35 year terms. Although in reality such rights are likely to be renewed while used for electricity generation, the terms of renewal remain under review. Indeed, under the current permits for [MRP] the terms must be reviewed to conform with any Treaty settlement.

The Court also took into account the Fresh Start for Fresh Water process and the related engagement with Maori on the broader water management issues. At paragraph [145] the Court summarised the Crown's position on these broader issues as follows:

[145] Mr English summarised the Crown position as being that it acknowledges that Maori have "rights and interests in water and geothermal resources". Identifying those interests is being addressed through the "ongoing Waitangi Tribunal Inquiry" and a number of "parallel mechanisms"[10]. The Crown position is that any recognition must "involve mechanisms that relate to the on-going use of those resources, and may include decision-making roles in relation to care, protection, use, access and allocation, and/or charges or rentals for use. Currently the Ministry for the Environment has responsibility for progressing policy development around these issues"[11]. The Court should accept that it is not an empty exercise.

 

Therefore, the Court appeared to put considerable weight on what it saw as the "current social and legislative environment" in relation to Treaty rights, including the specific settlements relating to rivers (eg the Waikato River). While the outcome of the forthcoming Waitangi Tribunal's inquiry into proprietary rights was uncertain "the trend since the [initial SOE case in 1987] should provide reassurance that Maori claims are not being ignored". The Court commented that "sustainable settlements need time to work out", but went on to say that[12]:

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].

 

It is worth noting that, while rejecting the appellants' claim, the High Court also noted "it is a great sadness that many of these claims have not been heard and resolved" and urged "those who have the authority to urgently address these claims"[13].

So while the Supreme Court effectively cleared the way for the partial sale of MRP and other SOEs, it did so based on Crown 'undertakings' that Maori proprietary claims to freshwater would be addressed (albeit with no guarantee of a particular outcome for Maori); and that the partial sale would not prejudice that process[14]. Potentially, the RMA has a central role to play in providing mechanisms to give effect to any proprietary-type interests. In that regard, the High Court observed that "a far more direct, effective and obvious control [of water resources] is through the amendment of the [RMA] which directly governs the water consent process"[15]. The Supreme Court appears to agree. These issues and the implications for the RMA will be a key aspect of the Waitangi Tribunal's future inquiry into the existence and recognition of any proprietary rights - due to commence later this year.