Challenge to SOE sale dismissed

Last updated 15:34 27/02/2013
Fairfax NZ

Supreme Court decision clears the way for the partial sale of state owned power companies.

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The Government sale of stakes in state owned power companies is able to proceed after the Supreme Court dismissed an appeal lodged by the Maori Council.

There were four state owned power companies the Government intended to sell up to 49 per cent of, starting with Mighty River Power in the first half of this year.

The Government was forced to delay this float after the Waitangi Tribunal said proceeding would be a breach of the Crown's treaty obligations.

The challenge was taken by the Maori Council and some iwi.

In today’s ruling, heard before a packed courtroom, Chief Justice Dame Sian Elias said the court was unanimous on all issues.

She said the sale of a stake in Mighty River Power would not be in breach of Tainui Waikato settlement.

She had earlier stated that the court was "prepared to accept that privatisation 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."

The Court was not persuaded that a material impairment arose from the proposed sale of shares.

In the ruling, Dame Sian said the court had dismissed the appeal and decided there should be no order as to costs.

"While the appellants have failed as to the ultimate result, they nonetheless 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."

Earlier today, Finance Minister Bill English said the Government had done as much as "reasonably possible" in terms of consulting with Maori.

"When it comes to how we have dealt with Maori we have been able to say the Crown dealt with them with transparency and has met all its obligations and are confident we have done all we could."

The action was brought to the Supreme Court after High Court Judge Ronald Young rejected a bid by the council and other Maori groups.

The appeal of that ruling bypassed the Court of Appeal and went to New Zealand's highest court, so as to fit within the Crown's timetable for the sales.

The Government initially hoped to raise between $5 billion and $7 billion from the sale of SOE shares, including Air New Zealand, but has since been forced to put the Air New Zealand and Solid Energy floats on ice.


Maori Council lawyer Felix Geiringer said the decision came with significant concessions from the Crown.

During the Supreme Court hearing, Crown lawyer David Goddard had told the court that the Government was negotiating with Maori over rights which represented nothing short of ownership.

Geiringer said the court had taken this into account in making its decision, which agreed that the sales would impair the Crown’s ability to address water issues, only not to a material extent.

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‘‘There has been significant ground gained in relation to resolving all of the underlying issues and that’s very pleasing,’’ Geiringer said outside the Supreme Court.

‘‘The Crown came into this saying they didn’t even need to act consistently with the principles of the Treaty of Waitangi, and what’s more that the sale was not in any way impairing their ability to do so.

‘‘What we’ve got at the end of it is the court has found that in everything they do in relation to the MOM companies they’ve got to act consistently with the principles of the Treaty, and in fact the court’s found that the sales will impair the Crown’s ability to resolve water issues.’’


The asset sales programme did not make economic or fiscal sense despite the Supreme Court giving it the go ahead on "narrow Treaty grounds", Green Party co-leader Russel Norman said.

"The people of New Zealand are deeply opposed to it. The Government should not proceed with the asset sales programme even though they did have a win today in the Supreme Court."

Norman said he was disappointed with the result.

NZ First leader Winston Peters said the asset sales were a "flimsy way" of trying to get some economic recovery.

"They'll carry on cause Mr Key is obsessed with trying to prove that he is some sort of economic manager despite all the evidence now."

- Stuff

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