High Court dismisses councils' Three Waters challenge

Tuesday, 21 February 2023

The mayors of Waimakiriri, Timaru and Whangārei have lost a High Court challenge over the government’s Three Waters reform.

Three councils, which took the government to court over its Three Waters reforms, have had their claim dismissed by the High Court.

Mayors Nigel Bowen (Timaru), Dan Gordon (Waimakariri) and Sheryl Mai (Whangārei) took a case to the High Court in June 2022, seeking declarations over the rights and interests property ownership entails under the proposed Three Waters entities.

The mayors claimed the government’s proposals would take council-owned property “without conceding that it is a taking”, and “without fair compensation being paid to communities for their property’’, and sought declaratory relief under the Declaratory Judgements Act of 1908.

In her judgement, Justice Jillian Mallon acknowledged it was 'undoubtedly the case' the Three Waters reforms will 'alter the role that local government has historically held', something that would have 'major significance for our communities.'

* Crown argues councils opposing Three Waters reforms should not win in court

Local Government Minister Nanaia Mahuta says the Government will create four new public water entities, with local councils taking non-financial shareholdings. (First published on April 29, 2022)

* Timaru mayor says they are 'cautiously optimistic' after taking Three Waters reforms to High Court

* Councils tell court Three Waters reforms could lead to other asset grabs

* Councils ask court if they can get 'full and fair' compensation in water reforms

But she said whether this was desirable was a matter for Parliament, which had processes 'to ensure that the important issues at stake are carefully considered.'

'It is not the court’s role to interfere in that.'

The court found it could not grant any of the declaratory judgements, which were “framed too generally to be useful”, and were “outside the court’s proper role” as they would infringe on the principle “that the court does not interfere with the legislative process,” or parliamentary sovereignty.

But the plaintiffs welcomed the judgement, which they said “validates” their concerns and reasons for taking the legal action.

Kieran McAnulty took over as Local Government minister from Nanaia Mahuta in January 2023.

In a statement on behalf of the three Councils, Timaru District Mayor Nigel Bowen said the decision “confirms the Government’s Three Waters plan is expropriating councils Three Water assets and that the decision to pay compensation rests with Parliament.”

He said the judge’s comment that the reforms “involve a form of expropriation for which compensation could be given”, highlights the lack of acknowledgement that “confiscation was taking place”, and that “a deliberate decision was made to not compensate communities.”

Bowen said the judgement “underlines the government has been intentionally misleading New Zealanders about the true ramifications of this law….” and added “more strength to calls from across the country for a significant rethinking of the plan.”

It’s not clear if the councils will appeal the judgement, but Bowen said the group will be “consulting with our advisers and seeing what the next steps we can take.”

During the two days of hearings in Wellington last year, Mike Colson, KC, appeared for the Crown, arguing none of the declarations could be granted as they were overly general “abstract propositions” and related to a parliamentary policy decision, which was not something the court should interfere in.

Further, Colson told the court it was not just the assets that would be transferred but also the debt that goes with them.

Today's judgement noted that at the time of the hearing the government intended to pass legislation “significantly reforming” the way water services were provided, but more recently the new prime minister had backed away from the reforms.

In January 2023, Mahuta was replaced by Kieran McAnulty as Minister of Local Government following Hipkin’s first cabinet reshuffle.

New Minister of Local Government Kieran McAnulty declined to comment on the ruling on Tuesday.

“DIA’s [Department of Internal Affairs] legal advisors will need some time to fully consider this decision and give advice, and my focus continues to be on the response to Cyclone Gabrielle.”

As it stands, the Three Waters reforms will transfer drinking water, wastewater and stormwater infrastructure from the country’s 67 councils to four regional publicly-owned entities in mid-2024.

Timaru, Whangārei and Waimakariri councils combined hold $1.76b worth of three waters infrastructure services for some 200,000 people.

In 2021, Timaru District Council voted to leave Local Government NZ in protest at it’s position on the reforms, though it would rejoin the group just over a year later.