The legal advice was that council controlled the whitebaiting stations, which were places of work under the Health and Safety Act.
In those circumstances liability was easily found, Mr Howard said. Even if no harm occurred, the council could be prosecuted for a failure to take all practical steps to keep whitebaiters safe.
"Organisations such as the council can face fines of up to $3 million and individuals face up to five years imprisonment and/or $600,000 fines," Mr Howard said.
"These penalties cannot be insured against and any cost would fall straight to ratepayers."