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Stephen Franks
Stephen is a principal of specialist Wellington law firm Franks & Ogilvie (Commercial & Public Law) and a former Member of the New Zealand Parliament.

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NZCPR Guest Forum
Stephen Franks
12 February 2012
The New Zealand Maori Council Water Rights Claim

The Waitangi Tribunal claims just announced by the New Zealand Maori Council are unapologetically an attempt at legal mugging. Though purportedly based on the deep wounds Maoridom will feel if SOE shares are sold before the ownership of water is settled, the NZMC has made it plain that they will go away if they get some soothing free shares. The claims have little apparent legal merit. But on form to date I predict a reasonable chance they will succeed in levering shares out of an easy-touch government.

Law suits are frequently purely tactical. Even meritless claims can work well to gain time, and to give the appearance of justification for procedural coercion. But it helps when they raise at least an arguable case.

So what are the legal merits of the claims? English common law in 1840 recognised property rights in rivers and in the use of water, so why would a claim to own water be fanciful? Could we all benefit if Maori forced the pace to a position where water was properly valued and allocated in markets to people who will apply it to its highest value uses? Perhaps - but the SOE related claims seem too weak to serve that purpose.

There may be some geographical areas where water ownership claims have merit, but in relation to the SOEs they will be immaterial because:

a) Sound Treaty claims are for breached property rights;

b) The only property rights important to the electricity generators are for land, use of water in hydro generation, and geothermal steam

c) Generators have the water and steam use rights they need currently without raising issues of ownership. Most of the rights are (unfortunately) time limited, so changes in ownership of the companies which hold the licences or use rights will not permanently deprive the Crown of the possibility of revisiting the nature of those rights and who should hold them;

d) The land issues have been thoroughly explored and even if they had not, they are well provided for by the memorialisation provisions in the SOE Act. No law change is needed to protect any as yet unheard claims and section 9 is irrelevant.

e) Water has never been considered a ‘pan-Maori’ matter. If any common law or customary rights exist at all they will be for specific neighbouring iwi;

f) The main generation rivers and lakes are well covered by full and final settlements with the relevant iwi. For example Clause 18 of the 191 page deed of settlement between the Crown and Waikato Tainui, and the settlement Act express the finality of the settlement. Though there are arguments that they leave open water ownership questions despite language and settlement ceremonies that highlighted the ending of historical claims, if settlement agreements are interpreted on standard principles, and not by judges longing to be politicians, there is no scope to claim that an SOE share sale affects any Treaty right;

g) Staying with the Waikato example, the Tainui deed of settlement to govern the Waikato expressly says the settlement is final (cl 16.1.3). Clause 16.3 bans courts and tribunals from enquiring into or recommending on the issues covered by the deed and it provides for parts of the SOE Act (that preserved the status quo on SOE land until claims were resolved) to no longer apply to Waikato land. While it parks the question of ownership of water, the deed contemplates the sale of an owner of generation assets. For example clause 12.31 gives to Tainui rights of first refusal to Huntly power station land but it is expressly not triggered by a sale of shares in an owner of the station.

h) If iwi from Tainui (or Ngai Tahu or Tuwharetoa) support these fresh claims they will be reneging on such deals, but it is more likely they will be reacting to the implications of a pan Maori claim (detribalised claimants and iwi from elsewhere targeting local iwi property). Already Tainui has said effectively that they will pursue their own claims. That will be to pre-empt NZMC misappropriation of any benefits that might be shaken loose over the next year or so;

i) There will be some generation water not covered by signed deals (the Rangitaiki, perhaps Waikaremoana) but it is insignificant to the shared ownership process;

j) Settled law makes geothermal resources into Crown property, but the owners of the land on top have effectively secured part of the value by their ability to hold up access. Iwi are now constructive and well rewarded participants on that well-trodden path. Those iwi will fear that a pan-Maori NZMC claim could muscle in on their landowners’ cooperation value.

When Contact was sold a decade ago there was no claim that the legislation to enable that sale, which took Contact out of the SOE stable, raised Treaty issues. So why would Maori think that they can get traction now with claims that are so obviously vexatious? The answer is simple - because they have so much experience to show they can face down politicians who would rather buy peace in their time, than hold to the principles of colour blind law and the real Treaty!

Section 9 of the SOE Act was itself an appeasement. It was not up to the Chamberlain at Munich standards of more recent abandonments of principle, because the leaders who agreed to it thought they were offering meaningless symbolic assurance to people who just needed comfort that existing law would not be covertly excluded. David Lange told me, with other members of the Coal Corporation (now Solid Energy) Board, that Tainui who claimed section 9 entitled them to hold up the corporatisation of State Coal were reneging on their deal with him. He denounced them to us, and insisted that the section was just a reminder that the Crown would remain responsible for redress whether or not the subject assets were no longer in Crown hands. Immediately after he left us, his Head of the Department of Prime Minister and Cabinet came into the room and asked us to help him note what Lange had told us, because Lange had entertained the Tainui leaders and reached the agreement on section 9 without officials who could have recorded what was actually said.

Whatever the truth behind Lange’s fury, members of the Labour Cabinet at the time claim that Sir Geoffrey Palmer told them section 9 would not have legal importance. He said it was symbolic because it did no more than state what the law was anyway. That might have been true but for the unwise reference in section 9 to the then non-existent ‘principles’.

On the application of Tainui ‘Judges who would be kings’ seized the invitation to invent some principles. The elastic ‘partnership’ that emerged put paid to the naïve hope that section 9 would be empty symbolism. This mythical partnership bore little resemblance to any kind of partnership previously familiar to lawyers, but the word served the court’s purpose. As a term of political rhetoric it justified a flood of subsequent invention, and has proved so attractive that we now see “partnerships” springing up everywhere. Our free trade agreements with other countries are now called “partnership agreements” and the if BNZ is your banker they claim to be in partnership with you. As a lawyer I long to find a case for a client enforcing long established partnership duties on BNZ to trump boring old banking law. .

Jim Bolger later secured Lord Cooke’s appointment to the UK House of Lords to limit his scope for doing more constitutional damage in New Zealand.

More recently the seabed and foreshore experience makes the lodging of these claims a no-brainer for Maori leaders, no matter how flimsy the grounds. A foolish (though strictly narrow and cautious) Court of Appeal decision in Ngati Apa, that a Maori claim had enough in it to merit more investigation, was turned by agitation into widespread and sincere Maori political conviction that they were being deprived of a settled right.

Dr Cullen eventually pared it back in a carefully drafted statute to give certainty. Sadly, a gullible National government, looking vainly to detach the race vote from the left, last year denied Maori genuine Treaty based property rights they could use positively to enhance the value of the coast to them and the rest of us. Instead it gives them power to inflict community political misery over seabed and foreshore uses. That is more damage than Ngati Apa could ever have delivered had it worked its way through the courts.

But the seabed and foreshore debacle was the natural outcome of an earlier scam. Maori scored a stunning 2004 success with a claim for 20% of new aquaculture territory.

The aquaculture claims were a blatant breach of the 1992 settlement of fisheries claims. The Treaty of Waitangi (Fisheries Settlement) Act 1992 was generous, full and final. One of the Maori negotiators told me the Crown’s opening offer of ITQ (quota) left them gobsmacked. It was twice the 5% they thought they might reach, given the flimsy basis for their claims. But they were much more shrewd and ruthless negotiators than the Crown and eventually settled at 20%, twice the Crown’s opening 10%.

After the fisheries experience the Crown side developed a practice of not allowing Ministers into Treaty negotiation processes until negotiation was near the end. Full-timers on a negotiation can nearly always beat top people who helicopter into a process looking for glory, then dart away again having unwittingly given up balancing positions carefully developed over months. Sir Tipene O’Regan played guitar on Ministers.

These successes have created a pattern that now drives Maori leadership whatever they might privately think is fair. Once the other side to repeat deals has shown itself to be a sucker, the leaders of the beneficiary side can’t stop collecting the protection money. Mulcting a sucker ends only when the sucker revolts or runs out of capacity.

Nor is there any significant downside for Maori leaders who crank up the political heat with fanciful explanations of the law to their people. Spreading outrageous expectations among Maori may even work in the short term for the political leaders on both sides. For Maori leaders it is all they need do for race-driven votes – be seen sticking it to ‘the man’. And the resulting clamour allows pakeha political targets to justify any pay-off as a small price to avoid race tension. Whether from timidity or a mistaken view that the truth would be inflammatory, I have rarely seen pakeha politicians directly rebut in a Maori setting even the most obviously false claims about the law. Yet in my experience many of those making such claims enjoyed such a challenge. They were respectful and often friendly afterward, even if the immediate public reaction was fierce.

I don’t condone those who knowingly lie about the true legal position. But I do not blame Maori for testing pakeha resolve with these claims. Race politics (indeed race seats in Parliament) have an irresistible dynamic. Anyone leading a group (union, party, sports team, racial group) whose members can see cheques just waiting to be collected from a frightened or foolish benefactor will soon be dumped if they do not pick up the cheques. Especially if the person who is being robbed persuades himself each time, loudly and publicly, that it was not really robbery, it was because he is such a caring and decent person that it was his own idea.

Courts too invite this kind of tactical abuse. They have become so slow and so complex and unpredictable (with a Supreme Court anxious to make its mark on history) that a hold-up demand can work brilliantly. The courts can discourage vexatious injunction applications for tactical purposes with awards of damages against the claimants. For Maori claimants however, that is theoretical. They know that courts are unlikely to apply that law to them in Treaty matters so they have no reason in practice to worry about the delay costs they impose on the other side.

A tactical demand, however unfair, gives Maori the time under the spotlight needed to get a government to pay rather than fight. The sequence is familiar. Few in authority have the courage to call out Maori leaders for false claims about the true legal position. The media breathlessly report wild rhetoric without generally seeking balancing commentary from experts. Sometimes they seek it from ‘experts’ who are well meaning fellow travellers with Maori, in the sense that they think the ends justify a bit of intellectual dishonesty if it advances Maori sovereignty. Others who could inject balance appear to feel it is not worth risking their careers by being embroiled in public argument against Maori. Or they feel it beneath them to grapple with intellectual ‘inferiors’. Judges who could have cleared the air after the Ngati Apa decision muttered privately about the wild misinterpretations that became common, but none appeared to think it worth giving the beleagured government or the public the benefit of their authority.

Still, this time the claims may be a bridge too far. It is careless for the NZMC to make it plain so soon that they would rather have 30 pieces of silver than the water ownership they ostensibly claim. Media statements alone show very little likelihood of Maori pressing for the respect Article 2 of the Treaty would give to property rights. And the immediate response of the government, scotching the notion of ownership of water, suggests there is little likelihood of that kind of silver lining to this dark cloud.

The combination of cynical claims and pusillanimous politicians could even see this episode speed the current water reform processes to where they seem headed, a murky system of use rights under continual reallocation risks at the point of political guns. New Zealand will lose again to leaders (Maori and Pakeha) who mouth respect for the Treaty and its continuously invented spurious principles, but who will do anything rather than uphold the Treaty’s simple inception of classical property rights.

To sum up, it is a try-on but with enough prospect of success to be a sensible step for Maori as part of an overall strategy to exploit a government that has been weak in the area. They would have been encouraged by Mr Key's eagerness to find an "elegant solution"

It is likely to be defeated as much by iwi anxiety about pan-Maori ambitions as by any legal laughability in the claims