Whanganui District Council knew there was a risk power cuts could contribute to sewage overflow into the Mowhanau Stream but delayed upgrades to warning systems, citing financial prudence.
The council was found guilty last month of discharging human effluent into the stream, after a three-day trial in the Whanganui District Court.
On January 11, 2017, staff from Horizons Regional Council, which took the prosecution, noticed effluent from the Tangi St pumping station flowing into the Mowhanau Stream.
A blown fuse on a Powerco pole had cut power to the station and in turn the warning system that would have alerted WDC staff to the problem.
Judge Brian Dwyer's decision released to the Chronicle shows Horizons Regional Council warned WDC in 2015 there was no redundancy in its system and only alternative in an outage was non-permitted discharge into the stream.
Judge Dwyer said the "linchpin" of the council's defence was that the discharge occurred due to factors it could not "reasonably" guard against.
But he said it was known "that if the pumps carrying effluent from the pumping station stopped working due to power failure, the alarm system intended to give warning that the pumping station was not working also stopped working".
There had been two power cuts in the area in the previous six months and Horizons had warned of the risk in a 2015 report.
And WDC had planned a $604,000 upgrade to the district's 34 pumping stations and alarm systems, including installing generators.
"... such likelihood had been foreseen by both the council and Horizons," Judge Dwyer said.
"The system at the pumping station was in fact designed to do precisely what it did in this case. The council cannot establish that the discharge could not have been reasonably foreseen."
WDC said it was spreading the pumping station upgrades over four years, starting with larger ones in 2015, arguing it had to provide services in a way that was affordable to ratepayers.
Tangi St at Mowhanau was scheduled to be one of the last to be upgraded.
"The council's position might be summarised as being that it did everything a reasonably prudent local authority might do in this position," Judge Dwyer said.
But he said the risk posed by stations not upgraded remained "real as ever".
It was not reasonable to delay the installation of a new system "having regard to the recognised vulnerability of the pump and alarm systems to power failures and the inevitability of illegal discharge of effluent occurring if there were such failures".
"And that is what occurred in this case."
After the outage and overflow council upgraded the system in March that year.
WDC also argued in court that it had intended to apply for a retrospective discharge consent for the overflow but Judge Dwyer said "council has not taken that step and it had 18 months to do so".
"The council has acknowledged that the discharge has had adverse cultural effects and ... has testified that the discharge presented a real public health risk."
In finding WDC guilty Judge Dwyer said ratepayers had already borne the legal costs incurred by both councils so wanted both to discuss "some other way in which any financial penalty can be beneficially spent for the district and region" before WDC's sentencing in November.
"I am far from convinced that imposing a fine which comes out of the pocket of one local authority and into the pocket of another local authority is beneficial to anyone," Judge Dwyer said.
Last month WDC chief executive Kym Fell blasted Horizons' decision to prosecute saying the situation had already been remedied had "achieved absolutely nothing" but cost ratepayers money.
But Horizons' regulation manager Nic Peet said the stream is a popular swimming place for young children and "the issues were significant enough that they needed to be brought in front of the court".