High Court rules govt decision to sell shares in four energy SOEs in partial-privatisation programme not reviewable

The High Court has ruled the government's decisions to partially sell four state-owned energy companies are not reviewable in court, throwing out a bid from the Maori Council and several Iwi to block the partial sale of Mighty River Power, Genesis, Meridian and Solid Energy.

The decision paves the way for the up-to-49% sell-down of Mighty River in the second quarter next year, although the Maori Council said following the ruling that it was already working on an appeal.

Prime Minister John Key has indicated the government may seek for an appeal hearing to go straight to the Supreme Court, skipping the Court of Appeal.

The ruling did not take a stance on the question of who owned water, with Justice Ronald Young saying:

"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."

Read the ruling summary from Justice Young below.

Read the full ruling here.

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 Radio 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.

[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.

Read the reaction from the government below:

Finance Minister Bill English and State Owned Enterprises Minister Tony Ryall today welcomed the High Court decision in favour of the Crown following last month’s High Court action regarding the sale of shares in Mighty River Power.

“The High Court decision confirms the Government can proceed to sell up to 49 per cent of shares in four state owned energy companies, in accordance with the legislation passed by Parliament earlier this year,” Mr English says. 

“The Government is firmly of the view that the partial sale of shares does not in any way affect the Crown’s ability to recognise rights and interests in water, or to provide redress for genuine Treaty claims.”

Mr Ryall says the Government’s share offer programme remains on track.

“The Government remains committed to an initial public offering of Mighty River Power Shares in the first half of 2013,” he says. “If the High Court decision is appealed, we hope this can be heard as soon as possible.

“The Government’s partial sale of shares in state owned enterprises is good for taxpayers, because we expect to generate between $5 billion and $7 billion in proceeds, which we will use to control debt.

“It is also good for New Zealand’s capital markets and it will improve the performance of the companies in the share offer programme.

“The Government will invest these proceeds in new public assets like modern schools and hospitals – and that’s money we don’t have to borrow from overseas lenders.”

Read the Maori Council's response below:

The New Zealand Maori Council is considering the decision issued by Justice Young today.

The matter has been determined on a narrow legal issue. The moral issue has still be to addressed in public debate.

The Court has taken a particular view of the statutory framework to say that the government decision was not one that the Courts could review. The Council’s concern is that government has not been willing to address the issue of indigenous water rights, as the Court itself noted, and has relied upon statutory technicalities; but in this instance we think that the view taken about the statutory framework does not fit with previous court decisions and we are now working on an appeal.

Read the reaction from the Labour Party below:

The Government’s asset sales shambles is set to keep rolling with an appeal against today’s judgement likely, says Labour’s SOE’s spokesperson Clayton Cosgrove.

“Today’s court decision is just the first in a number of steps for this appeal to go through. It is likely there will be an appeal and New Zealanders will again have to fork up the costs of court hearings.

“The state asset sales policy has been a train wreck from the beginning and has haunted the Government all year. They have tried to push this through for close to 12 months and they are still back where they started.

“The sales have been held up so long that the public now deserve their say. The petition to hold a referendum to stop the sales has gathered over 300,000 signatures. Their voice must be heard and the Government must agree to hold a referendum before any attempts are made to sell Mighty River Power.

“Selling our state assets is a huge mistake and many opinion polls have shown that 80 per cent of New Zealanders are dead-set against it. It’s time for the Government to listen to the people, and either hold a referendum or stop the sales.”