The Supreme Court has ruled that Home Affairs Minister Michael Fahy did have the power to take over the governance functions of the Corporation of Hamilton.

The ruling by Chief Justice Ian Kawaley also stated that while Sen Fahy would not be able to end legal matters launched against the Government by the municipality, he could stay them until the temporary stewardship order is over.

The initial legal dispute began as a result of amendments made to the Municipalities Act 1923 between 2010 and 2014 which gave the Government the power to collect wharfage fees and allowed Government to cancel some contracts entered into by the Corporation.

In January, Sen Fahy assumed temporary stewardship of the Corporation’s governance and, during a subsequent court hearing, lawyer Alan Dunch stated that he represented the Corporation which wished to discontinue proceedings.

However Eugene Johnston of J2 Chambers, who have represented the Corporation in proceedings previously, said they had been properly instructed by the Corporation and wished to continue with the matter.

Mr Justice Kawaley determined that two preliminary issues had to be determined: whether J2 Chambers had due authority to commence the present proceedings and whether the stewardship notice conferred authority on the minister to seek leave to discontinue the present proceedings.

In a ruling dated March 19, he wrote that he could not find that the proceedings were filed by J2 Chambers without authority, saying the evidential picture was “somewhat murky” about who gave J2 what instructions when and what authority they possessed to bind the Corporation.

“There are potentially an infinite variety of circumstances where lawyers whose authority to do so may be uncertain ought to be free to file proceedings, most obviously to preserve limitation proceedings and valuable causes of action, without undue anxiety about the risk of facing personal liability in costs for commencing proceedings without proper authority.

“Indeed, in the present case the perception appears to have been on the part of those instructing J2 that the mayor was improperly seeking to facilitate the minister’s desire to halt what the instructing parties had been advised was entirely valid and important public law proceedings against the Government.

“The mayor, in contrast, clearly perceived that his collaboration with the minister was essential to preserve the existing democratically elected governance structure. Irrespective of the merits of these opposing perceptions, there was some credence to the argument that those instructing J2 had the better claim to be carrying out the will of the Corporation.”

The Chief Justice also found that the act allowed the relevant minister to assume stewardship of the governance functions of the Corporation in circumstances where those functions have broken down.

“In the present case this breakdown has occurred because of deadlock which prevents valid resolutions being passed,” he wrote. “I further find that the governance power includes the right to instruct lawyers on behalf of the Corporation.

“However, in the present case, where the proceedings have been brought against the minister, the minister may not validly assume control of the present proceedings and bring them to an end.

“Because the purpose of the present proceedings is to challenge decisions made by the minister and the executive and legislative branches of Government and the Corporation has a fundamental right to determine for itself whether or not to pursue its litigation claims and have the judicial branch of Government decide whether or not its claim against the Government is meritorious, should it decide to pursue the present action.”

However, Mr Justice Kawaley found that the Minister was empowered to make an order staying the action until a further order so that when the deadlock is broken, the Corporation’s duly elected officers can decide for themselves whether or not to proceed with the matter.

“It appears that the deadlock may not be broken until after the next municipal elections, but those elections are only a matter of weeks away,” the Chief Justice wrote.

“Having regard to the nature of the claims, there is no apparent reason why those members of the Mayor’s Council who are in favour of pursuing the present claim should be permitted on exceptional grounds of public policy to continue to prosecute the present action while they lack the statutory authority to properly instruct the firm of attorneys which was initially retained to conduct the present proceedings.”