On Wednesday 15 February the Court of Appeal will hear the arguments of two King’s Counsel, that the government should come clean on whether its lawyers are really telling Ministers that te Tiriti demands co-governance. In our opinion it is legal nonsense.

The post material below explains the issue before the court, and the current position of the case started by the Water Users’ Group Inc in 2021, to get a court ruling on such claims by Minister Mahuta.  It was written for the Water Users’ Group members and supporters the day before Chris Hipkins was elected to lead Labour, It speculated that whatever a new leader might think of the 5 Waters dog, he would not have enough independence from his Maori Caucus to put it down.

But he might pull out some of its obviously rotten teeth. Labour’s Cabinet must have known for months that Ms Mahuta sold them a crock – by inflating the alleged problem, and hiding a de facto Maori privatisation of water services under a hugely expensive ‘solution’ that expropriates local assets and local control. The possibility of a backflip is strong enough to tip the balance against wasting resources on detailed submissions on the latest Bills needed to implement the scheme.  The prospects of full repeal add to very low chances of the Select Committee being allowed to respond usefully to submitter concerns (based on what happened to the Bill passed last year).

So here is the message from the Committee of the Water Users’ Group.

“There is a lot to get on with in 2023 –

Three Waters Bills awaiting submissions
The end of 2022 saw constant news on 5 Waters. There was even mainstream reporting on its two companion Bills, seen publicly for the first time in December. In the past there was so little coverage of 3 Waters matters that our reports were information you couldn’t get elsewhere. But recently we’ve not needed to double up with specific briefs.

The main 5 waters Bill became the Water Services Entities Act 2022 on 14 December. The two companion Bills are now before Parliament. One is on price regulation (Water Services Economic Efficiency and Consumer Protection Bill) and the other (Water Services Entities Amendment Bill) has over 200 pages of amendments of the brand new Act (don’t ask about this as legislative logic, practice or precedent). Submissions close on those two Bills on 12 February. With the Labour majority they are almost certain to pass unless the new Labour leader has both judgment and freedom from control by Labour’s Maori caucus.

RMA replacement also threatens water users
For major water users the RMA “reform” Bill may become just as worrying as the privatization of 5 Waters to mana whenua control. The Natural and Built Environments Bill doubles down on many of the current RMA’s worst features, including by cutting the term of consents to take water. The Water Users’ Group will report separately on this and the other two new Bills. What used to be called ‘soaking the rich’ (taking their property or targeting them with taxes) seems to be intended for water users generally. But we can’t justify much time in submitting on Bills likely to be repealed if the government loses the next election.

First Court of Appeal hearing on Wednesday 15 February – arguments on privilege for legal advice
We have a date for the first hearing, Wednesday 15 February in Wellington.

We’ll want the Court to accept that we should see the full Crown Law office advice to Minister Mahuta which she mentioned in her Cabinet Paper. She referred to it to justify co-governance. Our two King’s Counsel say the law on privilege for legal advice is simple – if you tell others part of the advice, you’ve waived privilege for the parts you withhold. We think that is especially important for Crown Law advice if you intend the audience for your partial release to rely on it. People in government treat Crown Law as conclusive. They tend to ‘obey’ it.

You’ll recall even the PM claiming that co-governance is needed to avoid court claims of Treaty breaches. Minister Robertson also said they’d have faced litigation. We think they had a straightforward answer to any such threats – “so what?” – the claims would have no justification in the real Treaty.

But we need to see the reasoning in the alleged Crown Law advice. If the Ministers’ claims are true, all New Zealanders should have access, because it is revolutionary – it is saying that our democracy can be trumped by inherited chiefly privilege. Otherwise unqualified people getting what could be lifetime appointments giving indirect veto control of user/voter/ratepayer assets, invulnerable to dismissal.

The government’s lawyers (Crown Law) will argue that the High Court got it right in not letting us see the full advice. The High Court ruled for us against the Crown application for suppression of references to the advice. Oddly, main stream media did not even report the enormity of that demand – effectively that no one be permitted to see or know about government lawyer views that a Minister had up on public websites for more than a year.

The High Court refused to make us cut the references out of our court papers. But it applied a historical case-law view of lawyer/client privilege to hold that Mahuta’s voluntary partial disclosure waiver did not mean we could see the rest of the advice.

Our case for full disclosure rests mainly on an argument that the Evidence Act was intended to be a code on the relevant question of privileged lawyer/client communication, and that earlier cases inconsistent with it are not relevant. Especially when in reality Ministers are not normal ‘clients’ of Crown Law. She used the Crown Law references to squelch questioning and challenge.

The vital role of Crown Law on constitutional matters
The Solicitor General and the Attorney General (who head Crown Law) are the guardians of constitutional propriety within a government. Their advice has such weight that when Ministers seek Crown Law advice they are often effectively asking for rulings. As an un-involved King’s Counsel commented to us, “Crown Law are mostly their own client”. He meant that the lawyers are often the decision-makers, not their nominal government clients.

So New Zealanders and the Courts have a much greater stake in knowing what Crown Law are now saying than in what any Minister thinks about our constitution. If Crown Law is behind the departures from democratic orthodoxy, and citizen equality before the law, that is a critical issue for the courts, and for all New Zealanders.

Knowing the Crown Law opinion could stop the case
In fact, if it became clear that the Minister did not get the advice alleged in the Cabinet Paper, and the Crown Law advice in its full context was in line with historically orthodox views of the Treaty, we would probably recommend stopping the case. The government and the Minister are now so discredited on 5 Waters (have been shown to be deceitful) that getting a court declaration showing another falsehood would not be worth the cost. We would likely highlight the true position on the Treaty and Maori privilege (that it does not prescribe for co-governance) and waste no more time and money.

But why carry on anyway?
“This is very interesting for lawyers” you may say but what is the practical use of the case now? We know a Court declaration can’t invalidate an Act. The Court case was supposed to let MPs know they were being lied to on Treaty obligations when considering the Bills. But if the main Bill is now law, and the new Bills will pass, what can the case change? And why carry on if they are all likely to be repealed?”

Those are pertinent questions.

The answers are:

As explained above, if the disclosure we’ll argue for on 15 February shows that Labour Ministers have just been making up their claims for co-governance, and it is not Crown Law’s opinion that drives it, we’d probably recommend folding our tents. That is even though the case could still provide the courts a chance to clear the air, for judges to say after careful argument, that it is political choice, not Treaty law, that may transform us from a democracy under the Rule of Law into a state in which power is shared with frequently corrupt tribal elites, on the basis of express ethnic privilege. We think the cost of the case to conclusion will be so high that it may not be worth it just to get a result that might be reported only as another biff for a discredited Minister. Whether we carry on could depend on whether we got enough more in donations to keep up the fight against people freely spending taxpayer money;

If the disclosure shows instead that Crown Law is promoting the views attributed to them by Ministers, that is a much more serious problem for New Zealand. We would see it as constitutionally important for the courts to say whether judges share what may be just a Wellington woke view, that Treaty “obligations” previously thought to be confined to the Crown, may now trump ordinary peoples’ democratic rights and property rights and equality before the law. We would recommend continuing with the case to get the court’s statement. There are risks both ways:
• if the result is court endorsement of the ‘woke’ view, then New Zealanders generally would know that they should not look to lawyers and the legal system to preserve their democracy. As one donor said to us –“ At least we’ll know the dragon, and that St George is not in the courts”. We’ll know that the outcome will be up to voters, to get a Parliament willing to put lawyers back in their place.
• If the result is restatement by the courts of the historical view of the Treaty and resuscitation of Rule of Law values, then the case will have cleared the air. Too many people are silent about their worries at the moment, and not just for fear of Ministers’ “racist” gag attacks. Decent people told that co-governance is a legal requirement of the Treaty may fear that if they criticise co-governance and other anti-democratic privileges, they could be undermining the legitimacy of the law and the proper role of the Treaty.
It could remain unclear after the Court of Appeal has decided whether we get the full opinion, just what Crown Law is advising government on co-governance. If so we’ll seek your views on the future of this case. By then it may be obvious that co-governance is merely a political trade-off. It may be exposed as just partisan zealotry for race privilege that has driven the government, not clean water infrastructure needs, not cost saving, not requirements of the Treaty. If bringing our case has helped give courage to the critics, to make the true effects of the law clear, it will have served water users well.

Bizarre factoid
The Government’s lawyers asked the court to order suppression of the Minister’s references to Crown Law’s advice. That extended to asking that we be not allowed to cite the references, despite them having been up on websites for six months (when we filed the case more than a year ago). It seemed also to be asking the court to order that no one anywhere be allowed to use the references the Minister had posted, because they should have been redacted. They told the court that the papers had been purged of those ‘mistaken’ references.

In fact such references were not all purged. They remained up through the entire period in which we were waiting for the High Court decision, and they are still up in some documents. But this bizarre diversion on the road to the main hearing of our request for a declaration of the law, has highlighted the sensitivity of potential Crown Law steering of current government policy.

Summary

Our simple application to see the whole of the advice has turned what would usually be a procedural technicality (an interlocutory application) into an important question – who is running the show, woke un-elected lawyers, or elected politicians who can be replaced by voters?

Within the last few months, Minister Robertson has mentioned the risk of court challenges to defend co-governance, as if the government had no choice. A smart new Labour Prime Minister would replace the current Minister for Local Government, with a new Minister to dump the bad law, and ready to challenge the many official fallacies about the Treaty that are now afflicting local government.

Minister Mahuta and former Minister Eugenie Sage conspired to abuse the entrenchment conventions that have for 60 years protected our electoral law from parties tempted to turn a temporary majority into more permanent advantage. Disentrenching that entrenchment should be simple. But it will leave damage to the conventions.

An incoming government could mitigate the damage by making it absolutely clear that the reversal is confined to its particular circumstances. At the same time, given the possibility of activist judges who despise the will of the people, Parliament should be explicit that a Court may not rule against the legitimacy of the repeal Bill.

Many of us have hoped that entrenchment would acquire such power by longevity and its cross-party convention support, that  a court might dare to declare invalid a subsequent Act passed without the required super-majority. It would draw on  the traditional bi-partisan support for reserving entrenchment to matters fundamental to democracy.

However all thoughtful lawyers knew that a court trying to invalidate a Parliamentary majority vote would be confronting head on the questions that often involve bloodshed – who ultimately rules, who has sovereignty, who will the Police and possibly even the Army support if the Crown refuses to accept the orders of such a court, can our democracy still deliver peaceful succession in power?  And all concerned have known that our unwritten constitution works only because of  bottom lines shared across political parties. They depend on shared views on self restraint, on no-go areas for exercise of majority power. They worked when there were enough adults in charge to steer well clear of the boundaries of essential conventions.

Labour and the Greens have now exposed themselves as constitutionally venal – like teenagers willing to steal from the cash box at an unattended roadside stall, or who boast about ram-raiding because shopkeepers are too scared to defend themselves, or who collude to shoplift, because they distract the overwhelmed staff.

In their world, trust, and civilities and institutions that depend on it, become mugs’ games.

So when National and ACT repeal the Water Entities Act they should warn off any judge itching to get into the constitutional sphere. A repeal Bill should:

1. Not attempt implied repeal, by simply ignoring the purported entrenchment (though arguably it could be entirely effective)
2.  Address directly the purported entrenchment, denying the court any opportunity to find that the repealing Parliament has not directly turned its mind to the alleged entrenchment;
3. Make it plain that the new Parliament wants to limit the damage done to the entrenchment device, by referring to the circumstances of this purported entrenchment, and
4. Give any court tempted to be adventurous a warning that Parliament will not treat it lightly.

It might be done with words to the following effect.

Notwithstanding section [206AA] (purporting to require a super-majority to repeal section [116], and having regard to the absence of bi-partisan support for that purported entrenchment, this Act:

1. Repeals that section [206AA] as from the date of passage of the Act in which it was included;
2. Declares that any proceedings in any Court in which the validity and full effectiveness of this section in accordance with its terms is impugned or otherwise questioned shall terminate without further process than the coming into force of this section;
3. Declares that any Court or party to any proceeding of a kind described in the preceding paragraph shall be liable to pay full party and party costs to any other party which has defended or sought to defend the validity and full effectiveness of the intent of this section, including a proceeding ended before the coming into force of this section; and
4. Authorises the Minister to do all things the Minister considers necessary or desirable to protect and to uphold the intention of Parliament in passing this section of this Act.

I spent time among the protesters on Thursday evening, then Saturday and several hours in the terrible rain on Sunday. I mainly wanted to see how the Police were handling it – since they plainly decided years ago to waive the law when private landowners (including Maori) sought protection against forceful Maori intruders – Shelly Bay being the latest local example. The Police conduct I saw (after the early failed attempt to arrest their way over the occupation) has been exemplary – if we accept that equality of treatment under the longstanding non-enforcement policy is a consoling value.

But I’ve been radicalised into hoping the protesters win (conspicuously by the end of mandates outside high transmission risk roles). That is by simple disgust at the bizarre RNZ and other MSM state propaganda vilifying the protesters. In my many hours there, I’ve seen nothing to support the calumny aimed at the protesters. Sure, its attracted some dingbats and potentially menacing individuals. But in my view a lower proportion than in most protests.

But even if there had been truth in the allegations that the protest was funded and inspired by sinister extreme right wing foreign influences and menacing elements, the repetition of those claims demonstrates a political generation’s childish inability to look more than one move past their predicament.

Once the Police had clearly decided they had to deal softly with the protesters the die was cast. There could be no credit for a government to have its Police tip-toeing around allegedly dangerous law-breakers. If you can’t get your Police to act, you should downplay the threat, not exaggerate it, if you are not to look unable to govern. Especially if there is a risk that you might have to compromise some time.
It was also silly for Coster to wade in saying he would be moving people and vehicles when he did not have the means. And for media to claim that the Backbencher was a victim of ghastly people without being sure that the owner would not come out as he has, endorsing their courtesy, cleanliness and conduct, and then their cause.
Once Winston effectively espoused the protest cause the thing became an unmitigated loss for National and ACT. Holding their prissy political class noses together with Labour gave Winston just what he needs. And exposed the comprehensive lack of statesmanship in Parliament parties.

There is a long way for this to run. The government might decide to up the stakes and fight to a conclusion. They might “win”. But there will be a larger segment of NZ society they will no longer be able to communicate with, at least for some time. That segment is getting a daily direct lesson that our leaders lie or are careless about making stuff up, that the political class (including political journalists) have decided to stifle debate and gag people who could supply facts. I think it quite possible that none of the party leaders in Parliament had any idea of the scale of anti-mandate sentiment. It has emerged full-blown in people I know well to be unequivocally pro vax.

Main stream media are now irrelevant to many people now being radicalised, as a source of objective news. Journalists standing on balconies with the rulers are no channel to the ruled, nor can they warn the rulers of unwelcome threads of opinion and concerns among those ruled.

If the Police do manage to end this occupation here, my guess is that will sow seeds for similar resistance to break out wherever people go home to. They could target symbolically important places and their tactics can evolve faster than the authorities can evolve theirs. Among other reasons because people who have lost their jobs have more time and less to lose than before, and because those the authorities call on to enforce the law may be unreliable. Too many may sympathise with the resistance. Like the towies.

Grounded Kiwis finally getting home as MIQ ends will be predisposed to think the worst of the government, and even the opposition for being too equivocal in urging the necessary changes in the system.

The common response of ACT, National, Labour, Greens and the Maori Party has been infantile – “I can’t see you, you’re on your own and if I talked to you other people would think I was a loser like you,  you’re horrible, you stink so I won’t talk to you, everyone I know hates you, and you’ve been mean about me, so I’m not coming out of my bedroom”. But it is not funny. It is carrying us fast into the poisonous political polarisation that now discredits and paralyses other democracies.

We have been lucky with two leader s (Key and Ardern) who the haters could not persuade us to hate. But that has been good luck, not good management. After the childish moralisers took over political journalism and political parties the end of that was probably inevitable. Our luck has run out.

I’ve been thinking about immoveable vaccine suspicion I’ve recently confronted in a couple of people I regard as intelligent and public spirited. It was in my mind while listening to Kim Hill on Saturday discuss with Danyl McLauchlan his thoughtful piece called “In a captured state” in the Spinoff.

His article included a startling table. It showed NZ to be at the extremes of the left/right political divide based on income and education. Essentially,  higher income people in NZ are more likely to be blue (right in politics) than in 21 other countries and the tertiary educated were more red. I had no idea we would rate as extreme in that kind of polarisation. Danyl had several theses, but he had a profound insight into the snobbery that serves as a class marker for being in the educated camp.

 I thought ruefully of the accusation by one of my vaccine hesitant friends, that my reaction to her explanation was arrogant (snobbish).

I’ve wrongly thought New Zealand to be relatively protected from the toxic partisanship which contaminates public life in the US, Canada, the UK and even Australia. Try as they might, opponents could not get ordinary NZers to hate John Key, or Jacinda Ardern. I was forgetting about the woeful state of NZ academia – the 450 prophets of Baal.

The other anti-vaxxer just told me why he turns to conspiracy theories. He thinks what is happening in NZ cannot be honest or well meaning mistake. That would be too stupid. So he believes it must be planned, with a purpose. He sees patterns to explain it. His conspiracy explanation makes him impervious to what I might offer as counter-evidence.

 The internet offers torrents of accumulated anecdote, folklore and superstition mixed with suspicion of politics and politicians, gained from several decades of TV depictions of cynical, venal and self-serving politicians.  So while I can protest that conspiracy is too hard to pull off, he hits me with something that will in hindsight look calculated and centrally organised.  

He has been an academic. He points to our recently pervasive  academic and education establishment dogma that all knowledge is relative and that everyone’s truth must be respected. Even when it is patently false or can be falsified. Why should his vaccine hesitation be vilified he asks?

 He was told he must treat some hocus pocus as science. He must not offend Islam. He says there are attempts to cancel, sack and silence the 7 Auckland professors who protested against a demand to call matauranga Maori science.   The 7 refused to pretend that accumulated anecdote, folk history, folklore, folk wisdom, religious metaphor or superstition must be given equal or superior authority to the science that has created our current health, safety and prosperity.

 But what really struck home was his demand for an explanation why there was simply no public discussion in New Zealand of what to him was an obvious correlation. He asked why we’d started no urgent and rigorous research to find out if there was a causal connection of life and death importance, between the cultural subordination of science to matauranga Maori, and Maori resistance to vaccination? Its a fair question. Have the various  elevations of superstition over the secular rationality previously pursued by our law come to leave a generation of Maori without the intellectual bullshit detectors that our forebears developed when science confronted religion and culture?  

What else explains the lower takeup of vaccine among Maori and the huge investment going into babying Maori into being vaxxed.  If there is not a connection between the dominance of cultural safety, a woeful susceptibility to snake oil salesmen, and a lack of real science understanding, why not? In our civilisation a false compulsory respect for superstition was ridiculed out of the mainstream of other cultures decades ago (despite quaint relics such as astrology and dabbling in exotic imports like feng shui).

 He says he takes absolutely nothing on trust from a ruling education and health elite pretending that matauranga Maori is science. Why should he respect any authority dumbly confronting Maori  resistance to vaccines/science, knowing it is a problem of huge importance to Maori and great cost to the whole population? Why are DHBs or MOH alleged to be at fault, but the mechanisms and causes seem to be an undiscussible  mystery.

The weird prevalence of vaccine resistance should be sounding the alarm for the Professional and Managerial Class discussed by Kim and Danyl.  But it will possibly be overtaken by the more simple anger of the Auckland hordes looking for reasons to suspect that the elite has been lying to them, patronises them, and cannot be trusted. Our peculiarly pantheistic PMC  may be about to get a Trump style shock. Thankfully no Trump has yet emerged here.

Today the Free Speech Union issued a media statement over my name, opposing name suppression for the Auckland couple charged with a cunning escape from level 4 lockdown, to Wanaka via Hamilton.

Stuff had reported their QC as saying she was preparing to apply for name suppression.

I was happy to comment. In my opinion name suppression and the common secrecy of our courts are a blight on justice and an affront to freedom of speech.

The courts should not have power to grant name suppression.

Here is the provision they apply (grounds in bold) from the Criminal Procedure Act 2011:

200 Court may suppress identity of defendant

The claimed reasons for name suppression are often trumped up. In this case there are five good reasons to ignore sob stories:

1. Shame – the fear that your hypocrisy or lying will be uncovered should be the primary deterrent for what is really a “social” crime . Breaching restrictions on movement that may spread disease is an offence against our shared endeavour.
2. Shame should be the first and main punishment for “social” crime. We are all the victims of this kind of cheating. Shame means we can impose the punishment directly.
3. Ending name suppression would reduce the waste of Police and court time. The community could punish naturally if Stuff was free to publish what it knew.
4. Having heard lawyers and judges justifying name suppression, I believe that insider arrogance, love of having ‘secret knowledge’ lies behind much name suppression.
5. In this case name suppression will be an own goal. The Streisand effect will operate eventually even if the defendants are tempted to think they can hide their shame behind a court order, and even if the QC gets them a discharge based on some technicality.

Our community cohesion, our collective effectiveness against contagion, depend on feeling the restrictions are fair. Name suppression creates suspicion that the rules don’t mean what they say, that the elite don’t believe they are truly important. Name suppression shows what the elite really think, that embarrassment for them is more weighty than  the cost of lockdown, and the health risks of covid spreading.

We need to see fair rules applied evenly.

Finally, freedom of speech is our freedom to know things our masters would rather keep secret. Everyone close to the couple will by now know who they are. We the public should know. Freedom of speech is our right to know, not just Stuff’s right to tell us. Free speech protects us from powerful insiders. We need to know to be confident that we are indeed equal before the law. That applies just as much before a trial as after. If they are acquitted because a charge has not been proved beyond reasonable doubt, we should still be free to make up our own minds about the morality of their conduct, even if the state rightly cannot impose a punishment.

And if they are guilty but sorry, to show they have learned a lesson, true remorse or contrition would have them reject name suppression. People charged who hide behind an application that is a byword for dodgy privilege should not expect us to respect them.

For some reason I forgot to post this when I drafted it in 2014, when National was secretly pushing for more SuperCity amalgamations.

Luckily they failed. This is now a reminder of how facile is the reasoning behind that kind of push. But with Nanaia Mahuta even less use than National’s Ministers in challenging central government arrogance,  I post this now. It is a reminder of how little changes in the objectives of Wellington’s busybodies.

“Local Government Minister Paula Bennett has been saddled with an indefensible position on local government amalgamation. She inherited the official National line that the government does not have a position for or against amalgamations, and that it is up to local ‘communities to decide’.  They are sticking grimly to that line, clearly determined to minimise any September election effect of fears of more Auckland style ‘super-city’ centralisation.

But the ‘communities will decide’ line collides with the Nick Smith 2012 law change that removed the longstanding power of communities to vote no, and replaced it with a hostile takeover charter. A Local Government Commission merger plan can now be forced through against even 100% opposition from a smaller community, if it gets a 50% vote from the region as a whole. That applies irrespective of the scale of amalgamation. Some regions in the sights of the ‘think big’ planners would effectively create a form of provincial government, remote from the communities they would claim to represent..

This matters, because many smaller councils have had careful management. As the Fairfax/Taxpayers’ Union comparative research shows, there is no obvious connection between Council size and efficiency or financial soundness. Councillors closer to their communities may lead pragmatically. Metropolitan centres with party political machines may suffer under long term domination of socialist big spenders. So big-spending councillors can seek temporary relief from their debt presssures by taking over the assets, low debt, and the rating capacity of their more prudent neighbours.

The think big planners were perhaps counting on ratepayer disinterest in local government, to apply the Auckland model nationwide. But it appears they’ve had a rude awakening. Hundreds of people have turned up in Northland, and now Hawkes Bay, to protest against loss of local self determination.

OIA disclosure reveals that the Local Government Amendment (no 3) Bill on its way through now, had urgent supplementation. It enables extension across the country of the Auckland supercity two-tier unitary authority model. It adds lots of local boards. These patsy boards get some extra powers in the Bill, meant to reassure ratepayers that they can still elect some locals to listen to local concerns. The result, paradoxically, could be that after amalgamation there might be even more paid elected representatives than before. The real difference would be that most of them are political eunuchs.

A briefing to the Minister of Local Government just released under the OIA recommended that the Minister ask the Commission:

“Would the Commission be likely to abandon consideration of reorganisation options for an area if it considered that change was not viable or justified without some form of local board amalgamations?” [OIA response 29 May 2013 Information Briefing: Aide Memoire – Discussion with chair of the Local Government Commission about two tier governance options”- hyperlink to LDC website?]

The Minister was also prompted to ask whether the Commission could delay the Northland and Hawkes Bay amalgamation proposals until after the legislation was passed.

We don’t know the answers. The Commission is not subject to the OIA and has not responded to requests to volunteer the information.

The Commission was to have released its Wellington amalgamation proposal several months ago, but postponed it till June. I think they will now defer publishing any decision on the Wellington application and the Northland and Hawkes Bay draft proposals until after the Bill is passed and probably until after the Election.

So why does the Government and Commission think local boards will reassure communities worried about being ruled by remote [urban] majorities?

Unlike councils, local boards will not be able to employ staff, determine rates, raise debt or control regulatory activities. They may (if their governing body agrees) control some activities such as libraries and swimming pools. They will have the awe inspiring authority to ‘negotiate agreements’ with their governing body..

The think big brigade’s sensitivity about the pseudo-self government offered by local boards was shown in a radio debate between Wellington Regional Council Chair Fran Wilde and the Lower Hutt Mayor Ray Wallace. Fran said the operating expenditure of Auckland local boards was about 25% of the operating expenditure of Auckland Council. The figure under local board control is actually more like 12% (2012-2013. Local Board expenditure $331 million. Auckland Council  group operating expenditure $2,671 million)

The Auckland Council Annual Report also said only 25 percent of residents felt they could participate in local board decision making. It can hardly be surprising if local boards do not attract community leaders. Few people who do, rather than talk about doing, will want to spend their time in talking shops. Local boards specifically confined to transmitting  wishes to their ‘governing body’ and to be local apologists for its decisions will attract the kinds of people who like process and political action. They are not the practical people already too scarce in local government, who are there to get things done.

When the decision-making is elevated to a remote council of full time political types, local government loses the special people prepared to offer part time oversight. They have better things to do in their own businesses and lives. Consider the prospects for a rural area like Wairoa. A sole representative on a new Hawkes Bay council will have daily meetings over a hundred kilometers away in Napier or Hastings. How would they stay in the locality to rub shoulders with those they represent and keep life tolerable?.

The OIA material to date shows no sign that the Government and Commission have subjected their second tier local board system to any rigorous fitness for purpose test. We’ve seen no sign of proper cost/benefit analysis, let alone analysis of the effects on the emergence and health of local initiative, self government and leadership. Nor have people been told that the New Zealand average number of people per local government unit is over-size in relation to the averages of the countries whose democracies we might admire.

The economic analysis obtained by one target council (given that successive Ministers and the Local Government Commission seem to have felt no need for research) told it that there could be material efficiencies to be obtained from increasing the scale of some capital hungry utility functions, like water and sewage services. So sensibly, they are plannng for the amalgamation of those utility functions. There is no reason why amalgamating utilities requires the amalgamation of local democracies. It may even enhance the quality of candidates for local government, if they know they do not have to pretend expertise in utility services. They can concentrate on self determination for their areas.

In Australia, the government has braved the screeching of the corporate litigation funding jackals, and the chorus of investment organisations who think they currently get a free lunch, to make timid changes to their continuous disclosure regime. It always promised more than it could deliver, and much more than a rational rule would try to deliver.

In New Zealand the NZX worthies have almost simultaneously moved into the exposed, expensive and probably pointless battlements from which Australian companies can now partially withdraw.

The problem was always failure to define the problem before turning a slogan into a rule. NZX has not bothered to define the problem during its 20 years of trying to ape the Australians

Disclosure should have been about making companies minimise the risk that members might trade without information held by their company, with others who did hold it. It would address the unfairness of people being dorked with what should be their own information,  which has been withheld from them but not others. In other words, the rule should have been ancillary to effective insider trading law. Arguably that could usefully extend to protect non-members trading at an unfair information disadvantage with informed members or third parties – so the duty is to the market, not just fairness to existing shareholders.

Instead Australasian continuous disclosure legislates a slogan that ignores the value of company information, or subordinates it to an untested theory that somehow companies will be valued fully only if they can all be expected to continuously spill their guts. It is as if no one knew that proprietary information is commonly among the most valuable of company assets. A sound continuous disclosure obligation should have been ruthlessly enforced against companies that permitted uninformed trading when they knew, or ought to have known that their valuable information was no longer held secure in hands not free to trade.

Nearly two decades ago, as NZX emerged from demutualization, it handed to politicians and officials the control of the Listing Rules that define its product. Since then NZX has not been free to adjust the delicate balance between issuer and investor interests needed to preserve the flow of listings. Among the damaging losses, was the capitulation to those who believed we had to ape Australian regulation. Australia had long had one of the most pretentious continuous disclosure regimes. But as is often the case in Australia, it was ameliorated by tacit consensus that the rules did not really have to mean in practice what they appeared to say.

New Zealanders, however, have been generally less cynical. We want the law to be enforced to mean what it says, even if there is often too little resource applied to that. So when our regime promised we’d have a fully informed market, we wanted it to deliver that, dismissing as unworthy the worries about logic, incentives or practical enforceability (and thus integrity).

The problem is, as it always has been, that “fully informed market”, and “continuous disclosure” are just slogans. For businesses, commonly it is not in the interests of the company or its investors to spill its guts in front of competitors, contract counterparties and others who are not listed here, and therefore able to conduct business in the normal way – that is keeping their strategies, concerns and way stations to themselves. Some of the regulatory exceptions recognize particular circumstances when markets should not be fully informed. They illustrate the illogic of an underlying rule that has not identified its target, or what kind of promise can honestly be held out to investors.

A result of our naive continuous disclosure obligations has been a dearth of companies willing to list, and grave concern about the distractions to boards of worry about their disclosure liabilities, especially in fast growing companies in uncertain new fields.

Rob Cameron warned of this problem when his Task Force reported a decade ago. I was reminded of this by eminent director Dame Alison Paterson when she asked me last year to comment on the problem at one of her retirement functions. We regard it as the biggest unaddressed mistake in our capital markets regulation.

Now the Australian Government is using the Covid crisis as an opportunity to back out of the blind alley it entered more than 30 years ago.  It has confirmed the permanent end to strict liability or non-fault liability for non-disclosure (i.e. irrespective of intention, or knowledge of the fault or even of the information). The new test will be whether the officers concerned have acted with “knowledge, recklessness or negligence”.

This puts the spotlight on last year’s NZX knee jerk reaction to disappointment with the Fletcher board, to highlight an exposure for directors who fail to disclose information that they (or any senior manager) “ought reasonably have come into possession of”.  They blithely dismissed warnings of the exposures that creates, which even the most meticulous directors may have no way to avoid. Who can be reassured by saying it creates incentives to “ensure that issuers have appropriate systems and controls in place so that material information is brought to the attention of senior management efficiently”. The NZ rules will not defend directors who have tried to create that result and failed.

Ah well, at least our late decision to become more Aussie than the Aussies will curry favour with some Aussies. The distraught litigation funders cited in the AFR article of 17 February will be able to deploy some of their newly surplus resources here. They can transfer their strict liability opportunism to naïve Kiwi targets.

Everyone will have heard about the welcome judgment of Walker J on 4 May in Christiansen v DG of Health. But it is still worth reading. Just to see an instance of judicial protection against callous exploitation of special emergency power. 

It is chilling too, being reminded of the credulity of the world’s chattering classes, deeply impressed by political exhortations to be kind. The respondent Director General has almost every day recently recited the “be kind” mantra of the PM, his de facto Minister. But clearly from the facts disclosed in the case the Ministry has treated the instruction for what it has proved to be – an empty political slogan. The Ministry seems to have been under neither constitutionally intended democratic supervision, nor confident and diligent political leadership. A competent Minister at the top would have intervened to apply the experience of a career outside politics. A half way competent and well lead Ministerial staff (including the office of the Prime Minister) would have recognised the signs of high-handed indifference in the correspondence. They would have invited a Prime Minister with  intellectual confidence to inject  common sense to what was plainly a bureaucratic lockstep. And that is before anyone even talks about “kindness”. 

We’ve elected politicians without enough prior life tests and career leadership experience  to exercise democratic control. Without authoritative experienced oversight, some official cultures will inevitably become immune to their own convenient cruelty. “Be kind” means nothing without the leadership diligence that makes it practical, everyday, and integrated among all the other demands of hard decision-making. 

Cases like this should encourage judges to intervene more in official second-guessing. I’m aware of the risks of judicial activism. But rubber stamp judging would be a worse danger.

I will blog separately on the just concluded High Court hearing of COLFO v The Minister of Police, where the court heard about Police engagement in lawmaking, and Ministerial exercise of dangerously wide powers conferred by Parliament in a state of high emergency excitement.  

But for another warming example of good judging to make the law straightforward, read Electrix Ltd v The Fletcher Construction Company Ltd (no 2) [2020] NZHC 918. This judgment by Matthew Palmer J was delivered today (6 May). 

Despite being long, it reaches an admirably simple conclusion. It applies and clarifies a rule that is precisely what I think business people would expect. 

I’d summarise it to a client as – “If you can’t agree a contract, but start work nevertheless and carry on while trying to agree, if you don’t reach agreement the courts will enforce what they decide would have been the fair price. “

The judgment applies the law of contract and the law of “quantum meruit” to a dispute between a head contractor and an electrical subcontractor.  The summary at the beginning of the judgment read:

“Large construction projects benefit from a head contractor and electrical subcontractor concluding a contract and formulating the detailed design for electrical works before undertaking them. That did not happen in the Christchurch Justice and Emergency Services Precinct project. In October 2014, the Fletcher Construction Company Ltd confirmed Electrix Ltd as its preferred electrical sub-contractor. Fletcher Construction requested and Electrix provided electrical services work. Fletcher Construction paid Electrix $21.6 million (GST excl) for the work, on the basis of successive letters of intent. But the parties never managed to agree formally on a contract and never completed the detailed design of the electrical works. The electrical works suffered from poor management, delays, disruption and constant time pressure. Now, Electrix sues Fletcher Construction for some $7 million plus interest. Fletcher Construction counterclaims, saying it paid Electrix some $7 million too much, whether there was a contract or not. The proceeding was the subject of a four-week trial in October 2019.

I find there was no contract between Electrix and Fletcher Construction. The parties did not intend to be immediately bound by essential terms at any point. They expected they would be able to reach agreement on a contract, but they never did. Yet Electrix provided the electrical works services requested by Fletcher Construction. Fletcher Construction must pay the reasonable cost of the services, the “amount deserved” or “quantum meruit”. The New Zealand law of non-contractual quantum meruit is not exclusively tethered to the doctrine of unjust enrichment. Its objectives are not confined only to dispossessing those unjustly enriched but can extend to providing redress for those who have been unjustly impoverished. The market value of the services that could have been used to undertake the works is relevant. But the reasonable cost of the services actually provided is the better starting point, reflecting the market value of the particular inputs used in the provision of those services at the relevant time and in the relevant circumstances. I rely primarily on the evidence of Electrix’s expert witness, Mrs Catherine Williams. I find Fletcher Construction must pay Electrix $7,473,207 (GST excl) plus simple interest of five per cent per annum.”

I think the judgment shows the benefits judging with deep understanding of economics and incentives, as well as the basic purpose of common law judging. That is not to “be kind” or to rearrange outcomes to conform to your virtuous assessment of what the parties ought to have agreed. That can often be close to what they deserve, and when there is no contract the parties have effectively invited the court to decide on what each deserves.

But the key and most difficult job of judges is not to decide who ought to win from the  unfortunates before them.  it is to extract and apply general principles that allow other people, in future,  to understand from the precedent, how the law will treat them in similar circumstances. 

Politik has a fair summary of the convenient fallacy cited to protect Councillors from pressure to share the pain.

“COUNCILS STILL HAVE TO PAY SALARIES
Local Government New Zealand says the Remuneration Authority should be left to set fair pay levels for local government elected members, and given the appropriate tools to do so to reflect the challenging economic circumstances imposed by the COIVD-19 emergency.
This comes as many elected members across the sector have sought to take a pay cut to reduce the burden on ratepayers, but have been prevented from doing so because this is not an option available under the Remuneration Act 1977. The Act empowers the Remuneration Authority to set zero salary increases in times of economic hardship, but it does not have the ability to allow elected members to volunteer for a pay cut. Councillors have gotten around this by making contributions to charities, but this does not reduce salary costs on councils or ratepayers.”

The untruth is not Politik’s fault. The Remuneration Authority has been a happy collaborator with local government in propagating this defence of the status quo – convenient superior orders – ” don’t blame us – the law gives us no choice”. 

Clause 12 of Schedule 7 of the Local Government Act 2002 looks conclusive at first sight.

12 Payments  –

If a determination is made, a local authority must make payment to the person concerned in accordance with the conditions of the determination.

But the Remuneration Authority Act 1977 and Schedule 7 of the Local Government Act 2002, actually give the Authority power to authorise voluntary reductions. Arguably they could prescribe for involuntary reductions, though not retrospectively. I think that the better interpretation would prevent them making involuntary reductions before 30 June 2020.  

The Remuneration Authority could amend its current detemination so that it says in effect that people can take up to the maximum in a “range”under Cl 6(3) (a) (iii) and (c) , to enable them to take less for a period or indefinitely.

That could be fair to ratepayers under cl 7(1) (c)(ii).

Read the relevant provisions below (omitting irrelevant paragraphs). The key words are in red text

Remuneration of members

6 Remuneration Authority to determine remuneration

(1) The Remuneration Authority must determine the remuneration, allowances, and expenses payable to—

(a) mayors, deputy mayors, chairpersons, deputy chairpersons, and members of local authorities:

(b) …

(3) The Remuneration Authority may do 1 or more of the following things under subclause (1) or (2):

(a) fix—

(i) scales of salaries:

(ii) …

(iii) ranges of remuneration:

(iv) different forms of remuneration:

(b) prescribe—

(i) rules for the application of those scales, ranges, or different forms of remuneration:

(ii)…

(c) differentiate—

(i) …

(ii) between persons occupying equivalent positions in the same local authorities, community boards, or local boards:

(d) make determinations that apply to individuals, or groups, occupying equivalent positions:

(4)

(5) The Remuneration Authority may issue separate determinations, at different times, for the different positions listed in subclauses (1) and (2).

(6) Clause 7A applies to determinations made under this clause.

7 Mandatory criteria for Remuneration Authority

(1) In determining remuneration under clause 6, the Remuneration Authority must have regard to the need to—

(a) minimise the potential for certain types of remuneration to distort the behaviour of the persons listed in clause 6(1) in relation to their positions as listed in clause 6(1); and

(b) achieve and maintain fair relativity with the levels of remuneration received elsewhere; and

(c) be fair both—

(i) to the persons whose remuneration is being determined; and

(ii) to ratepayers; and

(d) attract and retain competent persons.

7A Matters applying to determinations

(1) The Remuneration Authority may make a determination before or after the date on which the determination is to come into force.

(2) However, a determination must not come into force earlier than the expiry date of the determination that it supersedes.

(3) A determination must specify the date on which it expires.

(4) Despite the expiry of a determination, it continues in force to the extent that it is not superseded by another determination.

(5) The Remuneration Authority may amend a determination while it is in force.

(6) Despite subclause (5), the Remuneration Authority may amend the expiry date of a determination only if the Authority is satisfied that in all the circumstances there are particular and special reasons that justify a period of less than the term originally set.

If it appears that local authority remuneration is unfair, and higher in relativity with pay actually being “received” in the post Covid world (outside local government) for jobs of similar security, the Authority could consider it has a duty to amend the current determination. 

They must take into account the relative job security of local government employment (suddenly a much more important factor).  Let’s hope they will also consider the normal consequences in the private sector of demonstrated complacency, incumbent indifference to the ‘customer’, exposure of inadequate qualifications and inability to exercise practical leadership in a crisis. 

Someone has already updated David Clark’s Wiki profile with the following:
“COVID 19
During the Covid 19 pandemic of 2020 where the NZ Government was recommending all non essential personnel maintain a lockdown Clark, Health Minister at the time, drove 2 kilometers to go for a 6 kilometers mountain bike ride.
This was specifically against the policy his Government has been promoting while the whole country was in lock down and resulted in everyone just doing whatever they felt like” . 

I think the outcome will be the opposite. Though he will deserve all the opprobrium he gets for hypocrisy, the best outcome should be a more healthy resistance by our amateur government to Police abuses of power, and restoration of the proper focus for the lock down. 

The PM announced the lockdown details over a week ago with a proper explanation of its anti-contagion purposes. She approved a questioner’s approach to getting out for exercise, provided safe separation and hygiene protocols were observed. But later the Police took  a very different approach, and the PM then meekly fell into line. To be fair to the Police, they had an excuse. The Cabinet position appears to have been confused and contradictory.

If there was not unresolved internal dissent, the outcome is more discreditable – that they simply did not realise what they were doing. As well as the original sensible ‘safe activity is permitted’ theme, Cabinet announcements have also been consistent with the progressive left line in social regulation – that it is better to spread readily avoidable cost across all NZers, by confining them all, whether or not they could safely continue their work under protocols working in Singapore, Taiwan, Sth Korea and Sweden, because that is preferred to “singling out” and imposing deterrent penalties on those ignore the justifiable restrictions. Our recent governments, both Labour and National have been determined not to be seen requiring personal responsibility on young people, ferals and other anti-social “communities”. 

That cast iron aversion to enforcing personal responsibility is baked in to our law in numerous areas. The recent Police huffing and puffing on self isolation does not persuade anyone familiar with our justice system’s bottomless willingness to accept feeble excuses, and to avoid certain consequences for clearly defined wrongs.

Instead we cast around for convenient class enemies to make vicariously liable for the faults of the ‘disadvantaged and never-responsible’ clients for the politics of conspicuous compassion. Take, for example, our ludicrously misnamed “drinking age” of 18. No one under 18 faces a penalty for drinking. Our Police told Sir Geoffrey Palmer when he was redesigning liquor law that penalising drunkenness would be too hard. So instead our law is consumed by punishing supermarket and dairy owners, and other  ‘suppliers’. That pattern is now found throughout our law.

But the outcome from needlessly nuking hundreds of thousands of jobs might precipitate a reset. I hope David Clark’s commonsense decision to ignore foolish restrictions will hasten that day. The  contagion  needs a massive consensus adherence to effective hygiene and separation protocols. They could have been promulgated with advertising as sophisticated as our anti drink driving advertisements, with saturation coverage.  Then ruthlessly enforced by Police, alongside resuscitated social sanctions. The emergency law change powers should have been used to suspend the grotesque interference of the Privacy Act (and its idealogue Commissioner). To revive shame as the front line sanction for immoral lack of care for community safety. Shame (whakaama) is the mechanism at the cultural heart of nearly all successful systems for control of anti-social behaviour. Our lawyer/political elite decided 3 decades ago, with secret Youth justice, name suppression, Clean Slate law, and the so-called Human Rights Review Tribunal, that only they should be trusted to know about anti-social reputations, and  to allocate community disfavour. 

ACT’s  Free Press email newsletter explained on 30 March why David Clark is now right. He should acknowledge hypocrisy, but insist that the government take the incident as a wake up. The Leader of the Opposition, Simon Bridges, chairing the watch dog Parliamentary Committee that is supervising the government’s use of its dangerous powers,  should help David Clark and all of us. He could get his committee to assist the government to return to safer ground. Together the Opposition and the government should walk the Police back from their outrageous assertions of  powers that have next to nothing to do with contagion mechanisms. 

Here is the key part of David Seymour’s penetrating summary on 30 March. It is particularly pertinent on the closure day for the Listener, North and South, and undoubtedly thousands of other businesses that will be of much less interest to journalists. 

“What Is Safe Versus What Is Essential

The Government has taken the view that in order to function under the lockdown, something must be deemed essential. We view this as a mistake. If the objective is to stop the spread of COVID-19, then the test should be whether something can be done safely, not whether it is essential. Moving to a test of safety rather than necessity would be a much better way of fighting the virus while salvaging businesses.

“‘Essential’ Compromises ‘Safety’

The Government rightly says it is essential to have food available. Once food is available in an area, no other activity is permissible. But making people travel further to visit a smaller number of bigger and busier stores undermines our goal of reducing the spread of the virus. Supermarkets have remained open because they are essential but they have only undertaken safety mechanisms more recently. Under a safety approach, only food stores with safe processes would be allowed to open, but all stores with such processes would equally be able to open.

Infantilising Us

‘Essential’ is a conditional term. It can’t stand alone. It only makes sense if you complete the sentence. “Doing X is essential… if your goal is Y.” By deciding what is essential, the Government is deciding your goals. It erases freedom at the most basic level. The Government will decide what you need, and by extension what you want. Instead of the objective test ‘can this be done in a way that is safe’ we are facing a subjective test ‘does the Government think you need this.’ This level of government power is not sustainable.

Breakdown Of The Rule of Law

Subjectivity leads to absurdities and a breakdown of the rule of law. The Government has decided that eating halal meat is a goal important enough to justify opening some butcheries. Driving to the beach for a walk or a picnic is not. Which one is safer? More worryingly, the Government has decided weekly papers are not essential but dailies are. The Government now has arbitrary ability to threaten media. This is an outrage but the other media are not sticking together.

Police Overreach

One consequence of Government deciding what you should want is Police overreach. The Police Commissioner’s Rambo routine of euphemistic threats to the public – ‘you might have to visit our place’ – is a major misstep. He is trying to demand respect instead of earning it. Anecdotal reports are that frontline officers, facing a time of great uncertainty, are following suit. The Police risk alienating all New Zealanders the same way they have alienated licensed firearms owners over the past year. We need community policing, not community intimidation.”