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High Court dodges the governance issues when considering Three Waters reform

17 Mar 2023

| Author: Heidi Bendickson

Timaru District Council v The Minister of Local Government [2023] NZHC 244

Declaratory Judgments Act 1908 – exercise of discretion to grant declaratory judgment – principle of legality – democratic accountability as a core value of the law – compensation for deprivation of property rights as a core value – principle of non-interference in legislative process – whether declaration non-informative in any event – application for declaratory relief dismissed

Timaru District Council, Waimakariri District Council and Whangārei District Council applied for a declaratory judgment regarding local authorities’ role in owning and controlling three waters infrastructure.

Specifically, the declarations sought related to local government’s role in democratic governance, confirming infrastructure as a feature of local authorities’ long-standing democratic role, and confirmation of local authorities’ property rights in respect of water infrastructure and the right to compensation for the divesting of those assets.

The Water Services Entities Act 2022 forms part of  the government’s “Three Waters” reform. The Act is due to come into force in July 2024 to create water services entities with a view to transferring water Infrastructure from local authorities to these entities.

The councils are among several local authorities opposed to the reform. They noted, among other things, their concerns around cross-compensating other local authorities once the water infrastructure was held by the new water services entities.

Water infrastructure is currently owned and managed by local authorities (or organisations controlled by them) pursuant to the Local Government Act 2002 which provides for the assets to be held “wholly or principally for the benefit of the district”.

The Crown opposed the applications, saying the declarations related to principles, not legal rights, and the High Court could decide only legal rights.  It further submitted against the High Court exercising its discretion to grant declaratory relief, citing the proposed declarations’ lack of utility and their underlying purpose to influence the reform process.

Applicable principles –  discussion of jurisdiction to make declaratory judgments, High Court took a broad view of s 2 DJA and found the application was “conceivably” within the Attorney-General v Taylor formulation and the Crown’s arguments were better considered in terms of whether discretion should be exercised  – discussion of application of constitutional principles – whether the principle of legality as discussed in Fitzgerald and R may be applied to a declaration, High Court said it could “in theory” – whether democratic local governance, was a core principle of law, High Court said the real question was whether the declaratory relief sought accurately reflects that principle (it did not) – whether compensation for deprivation of property rights as a core value can be considered in relation to a declaration, High Court said it could, but the declarations sought were too general and an inaccurate reflection of local authorities’ “nuanced rights of ownership” of Water Infrastructure – whether relief sought infringes the principle of non-interference in the legislative process – discussion of Ngāti Whātua Orākei v Attorney-General – High Court considered declarations sought non-informative in any event as parliament already armed with the information addressed in application and it was parliament’s role to consider how the Three Waters reform would change the role of local government.

Held: application for declaratory relief dismissed. As a question of discretion, declaratory relief should not be granted. Declarations expressed in general and abstract terms that deprive them of usefulness in an attempt to avoid infringing the principle of non-interference with the legislative process.

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