QLDC undertakings regarding legal proceedings

The Queenstown Lakes District Council has lodged an undertaking in the High Court regarding legal action in connection with issuing shares in Queenstown Airport.

Two weeks ago legal proceedings were issued against the Council, the Queenstown Airport Corporation and Auckland International Airport by Air New Zealand and the Queenstown Community Strategic Asset Group Trustee Limited. The Council is defending the proceedings. 

“At Monday’s meeting of Council, which was held to specifically discuss the legal action brought against the community by these two parties, the Council approved an undertaking,” QLDC chief executive Debra Lawson said.

The legal undertaking was lodged with the High Court yesterday (Tuesday).

“What it means is that the Council accepts that there will be no final decisions taken in relation to the second tranche (issuing of up to 10% further shares in Queenstown Airport) or to enter into a binding shareholders agreement with Auckland Airport, while these proceedings are before the Court,” she said.

The Council was also signalling its intention to consult with the community on any proposal to proceed with the second tranche.

The formal undertaking lodged with the Court was as follows:

1 That the Queenstown Lakes District Council undertakes that it will refrain from:

i Making any decision that it will approve Queenstown Airport Corporation Limited (QAC) exercising any option to require Auckland International Airport Limited (AIAL) to increase its shareholding in QAC, or from making any decision that it will approve any other arrangement whereby QAC takes any step which has the effect of increasing AIAL’s shareholding in QAC; and

ii Making any decision to enter into a binding shareholders’ agreement with AIAL in relation to QAC.

(The “Decisions”)

For the avoidance of doubt QLDC shall not be restrained from:

a Commencing and undertaking any process under the Local Government Act 2002 for the purpose of making any such Decisions but excluding the final Decisions; or

b Entering into discussions with AIAL or QAC in respect of the issue of shares or the conduct of this litigation; or

c Making any decision as to the process or processes to be followed under the Local Government Act 2002.

Ms Lawson said it continued to be a disappointment to the Council that legal proceedings - with the associated cost to the community - had been brought at all.

“We had entered into an agreement with the Office of the Auditor General (OAG) which had committed to undertake an in-depth, independent investigation of these matters, an investigation that would have carried minimal cost to ratepayers,” she said.

Within hours of confirmation by the OAG to all parties that it would undertake an investigation, Council was given notice of legal proceedings.

“The OAG had no choice but to put its investigation on hold and the Council must now defend these matters in Court,” Ms Lawson said.

Meanwhile accusations that the Council was gagging its elected members or that the community was prevented from having a say, made at Monday’s Council meeting, were unfortunate.

“There are two parties that are bringing proceedings against this community, anyone critical of Council regarding its response to legal matters, which are clearly outside its control, has misdirected that criticism,” she said.

The matter was now subject to Court proceedings which meant that the Council was constrained in what further comments it could make.