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West Coast Sawmiller Sues The Government


West Coast Sawmiller Sues The Government Over Expropriation Of Property Rights

West Coast rimu processor Westco Lagan is suing the Government to establish its contractual and property rights under the West Coast Accord, and to either prevent or seek compensation for the passing of the Forests (West Coast Accord) Bill which, in its current form, denies the company compensation for loss of rimu sawmilling contracts.

"We are doing this to save our company and to reaffirm the principle that if the government takes away your contractual and property rights in the public interest, it has a duty to provide compensation from the public purse," said Westco Lagan Director Grant Carruthers.

The litigation follows the denial by Forestry Minister Pete Hodgson that Westco Lagan has property rights under the West Coast Accord, which the Government is in the process of abolishing under the Forests (West Coast Accord) Bill. The Bill specifically rules out compensation for any party affected by the abolition.

If the Bill is passed in its current form, the Government will then terminate Westco Lagan's 8 year rimu sawlog contract, which runs until 2007, with Timberlands West Coast. Termination would be effective from 31 March 2002.

Such a course of action would deny Westco Lagan at least $14 million in foregone profit and effectively bar it from access to ongoing supplies of rimu. The economic consequences to Westco Lagan would be severe.

"The Government's legal strategy is to use the Bill to cancel the Accord - and the property rights it gives us - and then use an extraordinary force majeure clause to cancel our contract with Timberlands West Coast.

"The Government knows it cannot simply cancel our contract with Timberlands because we would sue them for loss of property rights we enjoy under the West Coast Accord. According to decisions by the High Court and Court of Appeal, the Accord gives us rights to a continuing supply of timber in perpetuity. So it's a cynical approach to remove the rights and then cancel the contract."

Westco Lagan's statement of claim seeks to do two things: formally establish the extent of its property rights under the Accord; and seek a declaration from the court that the Forests (West Coast Accord) Bill's denial of compensation would, if enacted, breach the Bill of Rights Act (1990) and the Magna Carta (1297).

Magna Carta is an ancient English statute which is one of the foundations of the principle that property rights must not be interfered with by the crown, but if they are fair compensation must be paid.

Westco Lagan is principally seeking declarations on its rights, but may also seek to prevent the Bill, if passed through all stages with the no compensation clause, from receiving royal assent until the litigation is determined.

The moves follow months in which Westco Lagan has tried to achieve a dialogue with the Minister. Their approaches culminated in a flat no to compensation and a denial by the Minister of Westco Lagan's rights under the Accord.

"Litigation is a last resort for us. We are not a large company, but we will fight for our survival. We don't believe that the Minister should be acting as judge and jury on this matter. He has stated that we have no rights and then is making absolutely certain of this by passing legislation. These are matters that should be resolved through the judicial process not by the autocratic action of a Minister of the Crown.

"Life in New Zealand has come to a pretty pass when a government can simply tread all over you and take away your contractual and property rights. That's not the New Zealand way. We pride ourselves on the way we treat each other, with fairness and equity. But they are terms this government doesn't understand. Instead, they want to take away our rights because it is politically expedient to do so.

"With an agenda like that, I don't believe that any company can feel secure if it is contracting with a government agency, or investing in New Zealand on the basis of such contracts."


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