Brown's chance to take the helm

Illustration / Peter Bromhead

Mayor can beat arrogant port board by appointing a chairman who will pay attention to the community’s voice.

The resignation of Ports of Auckland chairman Graeme Hawkins for health reasons gives Mayor Len Brown the chance to do what he should have done a long time ago - select a port company chairman who shares the community's desire for an end to port expansion into the harbour.

If ever the time was right to signal to the port company who it works for, it is now, in the aftermath of a court case in which the port's attempt to secretly gain resource consents to extend two piers deep out into the harbour, in defiance of the mayor's wishes, was overturned by Justice Venning.

Such an appointment would help bring the arrogant port board to heel. It would also give the mayor a belated chance to show that he's more than a door mat to the various companies and "council-controlled" organisations that run the city's business enterprises.

Before the court case, in which protest group Urban Auckland successfully challenged the secret resource consents, Mr Hawkins was openly defiant.

He told Radio New Zealand that directors did not have to do what the owner wanted.

"The law as it stands at the moment ... most of my board are now experts, because everyone's lawyered up, and we have about seven or eight opinions that say the same thing - directors' responsibilities are to the interests of the company, not the shareholder."

Writing in the Herald, lawyer Charles Levin agreed, saying the Port Companies Act 1988, which he helped draft, was designed to prevent local government port-owners giving port companies binding directions.

The Lange Government wanted to privatise the ports, but backed off after strident opposition from the local authority owners.

The compromise was that local authorities could retain ownership subject to section 5 of the act which stated port companies must have the principal objective of operating as a successful business, and section 6, which said all decisions relating to the operation of the port company shall be made by the directors.

Mr Levin argued this meant "any direction by the Auckland Council to the directors to the contrary would be illegal. So would replacing directors to achieve a non-commercial objective."

This is the sort of advice Auckland councillors have relied on to justify their impotence, and that the port company has used to thumb its nose at its owners.

But the recent decision by Justice Venning overthrowing the resource consents shows that even spending $500,000 apiece on expensive QCs didn't guarantee the legal advice the council and the port company bought would be right.

Auckland law professor Peter Watts is one who challenges the Levin-Hawkins interpretation of the 1988 Port Companies Act.

Awarded a rare academic QC in 2013, in acknowledgement of his expertise in local and international commercial law, Professor Watts says "the duty to run a successful business does not in terms impose a duty on the directors to maximise profits".

"There has never been a duty on directors to maximise profits at common law, though they are free to do so if they wish.

"This it true too, I would argue, for port companies. The directors are under a duty to run a successful company, nothing more, nothing less."

A recent Court of Appeal judgment addressing the Crown's attempt, as sole shareholder, to override a land sale by the state-owned enterprise Landcorp complicates the issue.

Professor Watts says: "The Court indicated that it did not think that under the Companies Act 1993 shareholders could overrule directors even when acting unanimously."

He believes the court got this wrong, and notes the Supreme Court has granted leave to appeal.

He says the "hands-off" provision in the SOE legislation, distancing ministers from decision-making, which the judgment referred to, was very similar to the section 5 in the Port Companies Act.

In his view, this doesn't prevent directors taking account of community views, as long as it doesn't interfere with running a successful business.

The next move is up to Mr Brown.

Meanwhile Ports of Auckland, which refuses to consult on something as major as its expansion plans, is seeking our views on the park bench it has commissioned to commemorate the 30th anniversary of the Rainbow Warrior bombing by the French government.

Unfortunately, the seat can't go at the site of the bombing on Marsden Wharf. That's being demolished - without consultation.