Serious legal doubts on Government’s proposed takeover of TasWater

The State Government’s forced takeover of TasWater may not be legal according to high-level advice
received by the council-owned water and sewerage business.
TasWater Chairman Miles Hampton said preliminary legal advice obtained by the company
concluded the State Government could not legislate to override the application of the Federal
Corporations Act.
TasWater is a company established under the Corporations Act 2001, and the 29 Tasmanian Councils
are shareholders in the company.
Mr Hampton said that as part of its normal fiduciary obligations, the Board had sought independent
advice on whether the proposed takeover by the State Government was legal.
He said while the preliminary legal advice had been formulated prior to the Government’s legislation
being tabled in the Parliament, it provided a clear indication that any State law could be subject to
challenge under section 109 of the Australian Constitution.
Shaun McElwaine SC has advised: ‘‘No provision of the Corporations Act entitles a person to
compulsorily expropriate a share from a shareholder, nor to diminish or expunge [their] rights.” Mr
McElwaine also advised, “no provision of the Corporations Act entitles a person to transfer the
entirety of the property of TasWater to another entity, unless TasWater agrees.”
Mr McElwaine noted that section 109 of the Constitution provides that where a State law is
inconsistent with a Commonwealth law, the Commonwealth law will override the State law.
Mr Hampton said that in light of the legal advice and the clear resolve of Councils at the LGAT
meeting held on 11 May 2017 to retain ownership, the Board of TasWater had determined that the
company would take such action as was appropriate and necessary to determine the legality of the
proposed takeover.
The Chief Owners’ Representative Mayor David Downie said it was extraordinary that the
Government was proposing a course of action that may not be legal.
“If the government has not obtained legal advice it is obviously important that they do so before
they introduce legislation into Parliament.
“Rather than provoke a potential legal battle, it is time for the State Government to commence
working collaboratively with Owner Councils and TasWater for the benefit of all Tasmanians,” Mr
Downie said.
The President of the Local Government Association of Tasmania (LGAT) Mayor Doug Chipman said
he was very concerned about the implications for all Tasmanians if poorly thought out legislation
was ultimately subject to an expensive legal challenge.
“We have repeatedly called on the Treasurer to provide his modelling and details of how he plans to
speed up TasWater’s work plans, but nothing has been provided. Now it seems that the forced
takeover may not even be legal” he said.
TasWater