IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA
TE WHANGANUI A TARA ROHE
CIV-2021-485-756

UNDER THE
Declaratory Judgments Act 1908 and Part 30 of
the High Court Rules 2016
BETWEEN
WATER USERS’ GROUP (NZ) INCORPORATED

Applicant
AND
HON NANAIA MAHUTA

First Respondent
AND
ATTORNEY-GENERAL

Second Respondent

STATEMENT OF DEFENCE TO FIRST AMENDED STATEMENT OF CLAIM
2 May 2022

CROWN LAW
TE TARI TURE O TE KARAUNA
PO Box 2858
Wellington 6140
Tel: 04 472 1719

Contacts:
Liesle Theron / Amy Bowden
[email address] / [email address]

Barrister Acting:
Mike Colson QC

1
The respondents by their solicitor says in response to the first amended statement
of claim dated 13 April 2022:
1.
In relation to paragraph 1:
(a)
They admit that the Water Users’ Group (NZ) Incorporated is
listed on the Incorporated Society Register.
(b)
They admit that proposals to reform drinking water, stormwater
and wastewater services are currently being considered by the
Government (“Three Waters Reform”).
(c)
To the extent they are required to plead to the remainder of
paragraph 1, they have insufficient knowledge and therefore
deny paragraph 1.
2.
They admit paragraph 2.
3.
They admit paragraph 3.
Background facts and circumstances
4.
They admit paragraph 4.
5.
They admit paragraph 5.
6.
They are not required to plead to paragraph 6.
7.
They admit paragraph 7.
8.
In relation to paragraph 8 they:
(a)
deny paragraph 8.1 that drinking water, wastewater and
stormwater did not exist before 1840.
(b)
admit paragraphs 8.2 - 8.4; and
(c)
Say further that:
(i)
in the Three Waters Reforms the phrase “three waters
services” has been used to refer to the council-owned
infrastructure network and processes used to treat,
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transport, and discharge drinking water, wastewater
and  stormwater (referred to below as “three waters
assets and services”);
(ii)
local authorities have specific statutory obligations  in
relation to  “water services”, which include “water
supply and wastewater services”; and rely on s 124 of
the Local Government Act 2002 as if pleaded in full for
its terms and effect.
The three waters paper
9.
They admit paragraph 9.
10.
In relation to paragraph 10, they:
(a)
admit that proposals were placed before Cabinet in three papers,
A New System for Three Waters Service Delivery (“Paper One”),
Designing the New Water Service Delivery Entities  (“Paper
Two”), and Protecting  and  Promoting  Iwi/Māori  Rights  and
Interests in the  New Three Waters Services Delivery Model
(“Paper Three”), together the “Three Papers”; and
(b)
say further that there were, and have been, further Cabinet
papers relevant to the Three Waters Reform both before and
after 14 June 2021, including CAB-21-MIN-0419,  CAB-22-MIN-
0144 and DEV-21-MIN-0268; and
(c)
that the proposals in the three papers agreed to by Cabinet are
subject to legislation being introduced to give effect to the
proposals and decisions.
11.
They admit paragraph 11 and say further that Ministers in Cabinet are
also separately briefed by their agencies and bring their own information
to Cabinet.
12.
They admit paragraph 12.
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13.
They admit paragraph 13 and say further that on 14 June 2021 that
Cabinet noted that the papers to be considered fol owed on from initial
decisions made during 2020 to reform three waters service delivery
arrangements to create large-scale water services entities, including
agreement that these entities would:
“2.2 be  publicly owned, with mechanisms to protect against
privatisation;
2.3  be statutory entities, designed and established by legislation;
and
2.4  have financial and operational autonomy and be able to
borrow in their own right, independent of local government
debt restrictions and the legislative decision-making
framework Local Government Act 2002;” (CAB-21-MIN-0227).
Al eged rights and interests
14.
They admit paragraph 14 and say further:
(a)
that the Minister advised Cabinet in Paper 3, in summary, that:
(i)
an important part of the three waters work is to ensure
recognition of the rights and  interests  of  iwi/Māori  in
the three waters
(ii)
how  the  Crown  engages  with  iwi/  Māori  on  the  three
waters reform, and how the interests of iwi/ Māori are
recognised through the reforms is not only important to
ensure effective public policy decision making, but also
from a Māori /Crown relationship perspective, and also
ensures the Crown meets its obligations under te Tiriti;
and
(b)
that Cabinet:
“3.  noted that Paper 3 focuses on how iwi/Māori rights
and interests feature in the proposed  reforms,
including by:
3.1  considering and addressing the requirements of the
Cabinet Office Circular, Te Tiriti o Waitangi / Treaty of
Waitangi Guidance [CO (19) 5];
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3.2  explaining  how  iwi/Māori  rights and interests have
been considered in the development of the overal
reform package; and
3.3 proposing specific mechanisms for addressing
iwi/Māori  rights  and  interests in the new service
delivery model, as set out in Paper 1 and Paper 2”
(CAB-21-MIN-028); and
(c)
repeats paragraph 10(b) and 10(c).
Adoption of the three waters proposals by Cabinet
15.
They admit paragraph 15 and repeat paragraphs 10(b)  and  10(c)  and
paragraph 11(a).
16.
They admit paragraph 16 and repeat paragraphs 10(b) and (c) and
paragraph 11(a).
17.
They admit paragraph 17.
18.
They admit paragraph 18 and repeat paragraphs 10(b) and (c).
19.
They  admit paragraph 19 and repeat paragraphs 10(b) and (c) and
paragraph 11(a).
20.
They are not required to plead to paragraph 20.
New water services entities
21.
They admit paragraph 21 and say further that Cabinet noted:
“in June and December 2020, Cabinet made initial decisions to
address this situation, by reforming three waters service delivery
arrangements to create large-scale water services entities, to
achieve scale-related efficiencies and other benefits, and with
sufficient balance sheet capacity to raise debt to fund these
investment requirements” (CAB-21-MIN-0226).
22.
They admit paragraph 22.
23.
They admit paragraph 23 and say further that Cabinet Minute CAB-21-
MIN-0419 is also relevant to the agreed boundaries for the proposed
entities.
24.
They admit paragraph 24.
25.
They deny paragraph 25 and:
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(a)
say that since the proceedings were filed, and fol owing a
Working Group Report, the proposals have developed;
(b)
say that Cabinet has:
“12  noted that the Working Group recommended
collective ownership of each water services entity by
local communities, through a direct shareholding
interest allocated to their territorial authorities, and
this approach would:
12.1  provide a tangible expression of ownership
that is recognisable by communities and
territorial authorities; and
12.2  strengthen protections against privatisation;
13  agreed to amend the Bill to provide that ownership of
a water services entity is through shares assigned to
each territorial authority in an entity’s service area,
with each share assigned to the relevant territorial
authority per 50,000 people in its district (rounded
up, with a one share minimum for every territorial
authority);
…
55  agreed to amend the Bill to require a minimum of 12
and a maximum of 14 representatives on a regional
representative group
…
69  noted that Schedule 3 of the Bill already contains
detailed arrangements that require the board of a
water services entity to:
69.1  engage with  consumers and communities on
its draft asset management plan, funding and
pricing plan, and infrastructure strategy; and
69.2  following this engagement, provide the draft
asset management plan, funding and pricing
plan, or infrastructure strategy to its regional
representative group, along with a summary of
the results of the engagement;” (CAB-22-MIN-
0144)
(c)
repeat paragraphs 10(b) and (c).
26.
In respect of paragraph 26 they deny the characterisation of the “the
proposal  for  iwi/Māori  control  and  influence”  as  a  “fundamental
component of the Minister’s proposals from the outset”, repeat
paragraph 25, and:
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(a)
say that Cabinet agreed:
“to provide for a statutory set of operating principles, to
guide and inform how the water services entities deliver
their objectives and functions, and these principles would
broadly relate to:
20.1  developing and sharing capability and technical
expertise  –  both internally, and  across the wider
three waters, development control, and land-use
planning sectors;
20.2  being innovative in the design and delivery of water
services and infrastructure;
20.3  being open and transparent – including in relation
to the calculation and setting of prices, determining
levels of service, and reporting on performance;
20.4  partnering and engaging early and meaningfully
with Māori, local government, and communities;
20.5  cooperating with, and supporting, other water
services entities and infrastructure providers, local
authorities, and the transport sector – including in
relation to infrastructure planning, and
development control and land-use planning
processes;
20.6  understanding, supporting, and enabling
mātauranga  Māori  and  tikanga  Māori  and
kaitiakitanga to be exercised –  both within the
entities and when engaging with iwi/ Māori;” (CAB-
21-MIN-0226):
(b)
say that Cabinet noted:
“that a consistent guiding principle throughout the three
waters  regulatory and service delivery reforms has been
ensuring the Treaty of Waitangi and Te Mana o Te Wai are
referenced appropriately within the legislative
framework” (CAB-21-MIN-0228); and
(c)
repeat paragraphs 10(b) and (c).
27.
In respect of paragraph 27 they:
(a)
repeat paragraph 25 and deny the characterisation of the
proposal as for “iwi/ Māori control and influence”, and
(b)
admit that that the proposals for protecting Māori interests are
based on the advice set out in paragraph 14; and
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(c)
repeat paragraphs 10 (b) and (c) and paragraph 14.
28.
In relation to paragraph 28 they:
(a)
admit paragraph 28.1, 28.2 and 28.5.
(b)
deny paragraph 28.3 and state further that since these
proceedings were filed, a Draft Exposure Bill has been released,
and Cabinet:
“13  noted that provisions have been incorporated into
the Bill to:
13.1  provide greater flexibility for the regional
representation group to determine its own
arrangements through a constitution;
13.2  enable the board appointment panel to be a
committee of the regional representative
group;
13.3  clarify that the board is accountable  to the
regional representation group;
13.4  require the board to give effect to the strategic
and performance expectations issued by the
regional representation group;”  (DEV-21-MIN-
0268)
“55  agreed to amend the Bil  to require a minimum of 12
and a maximum of 14 representatives on a regional
representative group;” (CAB-22-MIN-0144)
(c)
deny paragraph 28.4 and state further that Cabinet has:
“28  agreed to amend the Bill so that decisions taken by a
regional representative group must be made:
28.1  by consensus, if possible; and
28.2  if consensus cannot be reached within an
appropriate timeframe, by 75 percent majority
vote;
29  agreed  that procedural detail relating to decision-
making arrangements, including the role of co-chairs
where consensus cannot be reached, wil  be set out
in the constitution of each  water services entity;”
(CAB-22-MIN-0144)
(d)
repeat paragraphs 10(b) and (c).
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29.
In relation to paragraph 29, they:
(a)
admit paragraph 29.1 and say that Cabinet agreed:
“19.1  each member of the Regional Representative Group
will,  in most cases, have an equal share of voting
rights for decisions made by that Group; and
19.2  decisions of the Regional Representative Group will
require a super majority decision of 75 percent;”
(CAB-21-MIN-0227)
(b)
say further that, since the proceedings were filed, and following
the Working Group Report, Cabinet has:
“28.  agreed to amend the Bil  so that decisions taken by
a regional representative group must be made:
28.1  by consensus, if possible; and
28.2  if consensus cannot be reached within an
appropriate timeframe, by 75 percent
majority vote;
…
37   agreed  to  amend the Bil  so that the regional
representative group wil  have power to  approve
the strategic direction of the entity in its statement
of intent;”
(CAB-22-MIN-0144)
(c)
admit that local authorities will not have a say in the day-to-day
administration of three waters, otherwise deny paragraphs 29.2-
29.3 and say that since the proceedings were filed, and fol owing
the Working Group Report, Cabinet has:
“12. noted that the Working  Group recommended
col ective ownership of each water services entity by
local communities, through a direct shareholding
interest allocated to their territorial authorities, and
this approach would:
12.1  provide a tangible expression of ownership
that is  recognisable by communities and
territorial authorities; and
12.2  strengthen protections against privatisation;
13  agreed to amend the Bil  to provide that ownership of
a water services entity is through shares assigned to
each territorial authority in an  entity’s service area,
with each share assigned to the relevant territorial
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authority per 50,000 people in its district (rounded
up, with a one share minimum for every territorial
authority);” (CAB-22-MIN-0144) and
(d)
deny paragraph 29.4 and say that:
(i)
RRGs of which local authorities are members will issue a
statement of Statement of Strategic and Performance
Expectations, which the Water Services Entity will need
to respond to through its statement of intent and report
on Statement of Strategic and Performance
Expectations (see CAB-21-MIN-0227 paragraphs 17 and
30);
(ii)
Cabinet agreed that the water services entities wil  be
required in legislation to undertake engagement with
their consumers and communities on the:
“62.1  prioritisation methodology that informs
the asset management plan;
62.2  Asset Management Plan; and
62.3  Funding and Pricing Plan;”
(CAB-21-MIN-0227)
(e)
repeat paragraph 10 (b) and(c).
Further mechanisms enabling iwi/Māori control and influence
30.
In relation to paragraph 30:
(a)
They admit paragraphs 30.1, 30.2, 30.5 and 30.6.
(b)
In relation to paragraph 30.3, they admit that Cabinet agreed to
propose for legislation that the board of each water services
entity will be required to have “general collective competence in
understanding the principles of the Treaty of Waitangi and
mātauranga  Māori,  tikanga  Māori,  and  te  ao  Māori”  (CAB-21-
MIN-0228) and otherwise deny paragraph 30.3
(c)
In relation to paragraph 30.4, they admit that Cabinet agreed to
propose for legislation that the board of each water services
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entity wil  be required to have “members with specific expertise
in  supporting  and  enabling  the  exercise  of  and  mātauranga
Māori, tikanga Māori, kaitiakitanga, and te ao Māori with respect
to the delivery of water services” (CAB-21-MIN-0228) and
otherwise deny paragraph 30.4.
(d)
They deny paragraph 30.7, and say that no one has a right to
receive a form of return from the controlling entities under the
proposals agreed by Cabinet; and
(e)
They repeat paragraph 10 (b) and (c).
Justifications for iwi/Māori control and influence
31.
In relation to paragraph 31:
(a)
they admit that the Minister’s reasons for proposing structures
and mechanisms to recognise the rights and interests of iwi/
Māori included the reasons set out at paragraphs 31.1 and 31.2;
(b)
they refer to CAB-21-MIN-0226, CAB-21-MIN-0227, and CAB-21-
MIN-0228 and the corresponding papers;
(c)
they repeat paragraphs 10 (b) and (c); and
(d)
otherwise deny paragraph 31.
32.
In relation to paragraph 32:
(a)
they admit that Cabinet’s justifications for accepting the
Minister’s proposals included the reasons set out at paragraphs
32.1 and 32.2;
(b)
they refer to CAB-21-MIN-0226, CAB-21-MIN-0227, and CAB-21-
MIN-0228 and the corresponding papers;
(c)
they repeat paragraphs 10 (b) and (c); and
(d)
otherwise deny paragraph 32.
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33.
In relation to paragraph 33 they admit that “mechanisms to recognise
the rights and interests of iwi/Māori” was an element of the reform, but
otherwise deny paragraph 33.
34.
To the extent they are required to plead to paragraph 34, they admit
paragraph 34.
35.
To the extent they are required to plead to paragraph 35, they:
(a)
admit that the iwi/Māori rights and interests taken into account
by Cabinet included Treaty rights and interests;
(b)
refer to the wording of CAB-21-MIN-0228 and the corresponding
paper; and
(c)
otherwise deny paragraph 35.
36.
To the extent they are required to plead to paragraph 36, they admit that
the iwi/Māori rights and interests taken into account by Cabinet included
Treaty rights and interests, repeat paragraph  35  and otherwise deny
paragraph 36.
37.
To the extent they are required to plead to paragraph 37, they admit that
the iwi/Māori rights and interests taken into account by Cabinet included
Treaty rights and interests,  repeat paragraph 35  and otherwise deny
paragraph 37.
38.
They admit paragraph 38.
39.
They admit paragraph 39.
40.
To the extent they are required to plead to paragraph 40, they deny
paragraph 40.
41.
To the extent they  are required to plead to paragraph 40, they deny
paragraph 41.
42.
To the extent they are required to plead to paragraph 40, they deny
paragraph 42.
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43.
In relation to paragraph 43, they admit that  the first line of Paper 3,
paragraph 2 states: “This paper summarises iwi/Māori rights and interests
in the three waters service delivery reforms, and proposes a number of
specific mechanisms for protecting and promoting rights and interests in
the new service delivery model.”
44.
They admit paragraph 44.
45.
In relation to paragraph 45:
(a)
they admit that paragraph 10 of Paper Three states:
“This paper focuses on how iwi/Māori rights and interests
feature in the proposed reforms. It considers and
addresses the requirements of the Cabinet Office Circular,
Te Tiriti o Waitangi / Treaty of Waitangi Guidance (CO (19)
5), explains how iwi/Māori rights and interests have been
considered in the development of the overal  reform
package, and seeks agreement to specific mechanisms for
addressing rights and interests in the new service delivery
model”
(b)
And otherwise deny paragraph 10.
46.
To the extent they are required to plead to paragraph 46, they admit
paragraph 46.
47.
They do not plead to paragraph 47 as it refers to privileged legal advice
and otherwise deny paragraph 47.
48.
They do not plead to paragraph 48 as it refers to privileged legal advice
and otherwise deny paragraph 48.
Errors of law
49.
They admit as a general principle the rule of law requires that the law be
capable of applying equally to all persons unless there are legally valid
reasons to differentiate between them, but says further that a pleading as
to the application of general constitutional principles is too vague and not
explicit enough for them to plead to, and therefore they do not otherwise
plead to paragraph 49.
50.
To the extent  they are  required to plead to paragraph 50, they deny
paragraph 50.
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51.
To the extent they are required to plead to paragraph 51, they deny
paragraph 51.
52.
To the extent they are required to plead to  paragraph 52, they admit
paragraph 52.
53.
To the extent they are  required  to plead to paragraph 53, they deny
paragraph 53.
54.
To the extent they are required to plead to paragraph 54, they deny
paragraph 54.
55.
To the extent they are required to plead to paragraph 55, they deny
paragraph 55.
56.
To the extent they are required to plead to paragraph 56, they deny
paragraph 56.
57.
To the extent they are required to plead to paragraph 57, they deny
paragraph 57.
58.
To the extent they are required to plead to paragraph 58, they  deny
paragraph 58.
59.
To  the  extent they are required to plead to paragraph 59, they deny
paragraph 59.
60.
To the extent they are required to plead to paragraph 60, they deny
paragraph 60.
61.
To the  extent they are required to plead to paragraph 61, they deny
paragraph 61.
62.
To the extent they are required to plead to paragraph 62, they admit
paragraph 62.
63.
To the extent they are required to plead to paragraph 63, they deny
paragraph 63.
64.
To the extent they are required to plead to paragraph 64, they deny
paragraph 64.
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65.
To the extent they are required to plead to paragraph 65, they deny
paragraph 65.
66.
To the extent they are required to plead to paragraph 66, they deny
paragraph 66.
67.
To the extent they are required to plead to paragraph 67, they deny
paragraph 67.
68.
To the extent they are required to plead to paragraph 68, they deny
paragraph 68.
69.
To the extent they are required to plead to paragraph 69, they deny
paragraph 69.
70.
To the extent they are required to plead to paragraph 70, they deny
paragraph 70.
71.
To the extent they are required to plead to paragraph 71, they deny
paragraph 71.
72.
To the extent they are required to plead to paragraph 72, they deny
paragraph 72.
73.
To the extent they are required to plead to paragraph 73, they deny
paragraph 73.
First Affirmative Defence
74.
The declarations sought in the statement of claim should not be made as
the Court should not intervene in or seek to constrain the Crown in
relation to:
(a)
how the Crown makes policy;
(b)
how the Crown advances legislative reforms; and/or
(c)
the development and introduction of legislation.
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Second Affirmative Defence
75.
The declarations sought in the statement of claim should not be made as
they:
(a)
do not relate to a live dispute;
(b)
wil be of no practical consequence to the parties or the public;
(c)
do not seek declarations of legal rights;
(d)
relate to prospective matters not existing legal rights; and/or do
not have utility.
Costs
76.
The respondents seek costs in relation to this proceeding.

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