Mayors react as Three Waters legal challenge fails, further legal action not ruled out

While not landing in their favour, the mayors that took the government's Three Waters plans to court say there are comments in the judgment to be positive about. Photo / NZME

Following the failure of a court challenge to Three Waters, the councils at the centre of the claim believe the ruling has left the door open to the possibility of compensation for the billions of dollars worth of assets being centralised as part of the reforms.

And one mayor has not ruled out further legal challenges.

In her decision released today, High Court Justice Jillian Mallon dismissed a claim by three district councils seeking a declaration preventing the Government from taking the assets without compensation.

“I accept that the Three Waters reforms involve a form of expropriation for which compensation could be given but, whether it is, is ultimately a matter for Parliament,” Justice Mallon found.

The main point on which she relied in dismissing the claim was that the application for declaratory relief was framed too generally to be useful.

She added that the legal bid attempted to influence the legislative process, meaning it would be inappropriate for the court to intervene.

But Whangārei mayor Vince Cocurullo, whose council took the challenge alongside Timaru and Waimakariri district councils, said parts of the judgment go some way toward vindicating the group’s concerns.

“It has highlighted that central government are effectively taking the assets, but not providing fair compensation,” he told NZME.

“Whangārei’s assets alone, we’re looking at $1.4, $1.5, maybe even $1.6 billion in terms of what they’re worth to our community. This is money our community have put into these assets over many years.”

In a joint statement issued by the three councils, they said the judgment identified the Government had actively decided against compensation.

“While the judgment declines to give the specific declarations sought by the councils, it goes on to highlight that there is no acknowledgment from the Government that this confiscation was taking place, and that a deliberate decision was made to not compensate communities for this confiscation.”

A trio of mayors say today's judgment could leave the door open for compensation. Photo / NZME

They point to comments made by Justice Mallon in her judgment.

She said: “I accept that these documents do not directly acknowledge that local councils will lose central incidents of ownership that they presently hold, nor that local councils’ ability to control the use of their assets will be materially diluted through the WSE [water service entity] governance structure, and nor that local democratic accountability for the provision of the Three Waters services in local communities is essentially lost.

“However, it does not follow that the Government, and in turn Parliament, is unaware of this. The proposals are directed to a new model for delivering Three Waters services in response to what is regarded to be a significant Three Waters infrastructure challenge … It has proposed a funding package but has deliberately decided that this is not intended to compensate local councils for the value of the infrastructure assets.”

Nigel Bowen, mayor of Timaru district, said while they were unsuccessful in seeking declarations, he welcomed the clarity provided by the court on the core issues.

“This judgment underlines that the Government has been intentionally misleading New Zealanders about the true ramifications of this law, and that is why we felt compelled to take up this case,” he said.

“We now call on the Government to amend its proposals to recognise properly councils’ ownership rights or to pay fair market compensation for those assets.”

Asked if the group had exhausted all legal avenues, Cocurullo said they hadn’t.

“I don’t believe we have. Sure, this judgment hasn’t looked like it’s in [our] favour, but there are actually some comments in it which are very favourable to local government.”

What the councils claimed in court

The challenge, brought by the Timaru, Whangārei and Waimakiriri District Councils sought a declaration from the High Court around the importance of local councils and the right of ownership of water assets.

Put simply, the challenge had three legs where the applicants sought the court to make declarations.

Those were the “important and longstanding” components and processes of local government, the view that local infrastructure is provided and paid for by local councils who are democratically accountable, and the right to private property, including compensation should the assets be stripped via legislation.

While the court found it had jurisdiction to make the declarations, doing so would amount to the court interfering in the legislative process.

The councils sought to inform Parliament of important legal principles so that Parliament could take account of them when considering that legislation. In effect, they sought to influence the legislative process, the judgment said.

“Property rights are absolutely fundamental in New Zealand. If you’ve bought and paid for something you should have reasonable control over it, and a legitimate expectation that it will not be expropriated without compensation,” Bowen said at the launch of the proceedings last year.