The Appeal Court has ruled the process used to acquire protected conservation land to flood for the Ruataniwha Dam in Hawke's Bay was unlawful.

Photo: RNZ / Peter Fowler

Forest & Bird has won its appeal against a High Court decision approving the downgrading of conservation land to enable the dam to be built.

In February, the High Court approved a swap between Hawke's Bay Regional Council the Department of Conservation (DOC).

The council planned to exchange 170ha of farmland for 22ha of protected conservation land in Ruahine Forest Park which would be downgraded to stewardship status, allowing it to be flooded for the dam.

Forest & Bird said the High Court was wrong to allow the land's specially protected status be revoked for a commercial development.

It argued the protected land was home to several threatened species, such as the New Zealand falcon and long-tailed bats.

A majority of the Court of Appeal today ruled that the Director-General of Conservation was not entitled to revoke the special conservation status of a small portion of the parkland.

Justices Harrison and Winkelmann found the Director-General would have had to be convinced in his assessment that the intrinsic values of the land in question were no longer worth permanent protection as envisaged by the relevant legislation.

The Court of Appeal directed the Director-General to cancel the land swap and reconsider the application of the Hawke's Bay Regional Investment Company to exchange the land.

In a dissenting judgement, Justice Ellen France said she would have dismissed the appeal on the basis that the Director-General was not limited to consideration of the conservation values of the 22ha of land.

Forest and Bird's lawyer, Sally Gepp, said the court had set a very high test to revoke the special conservation status of the DOC land and she was doubtful the regional council will meet that test.

Ms Gepp said the implications for the Ruataniwha Dam were huge and it was hard to see how it could proceed.

"The only way that it could obtain access to that land was by this, quite frankly, dodgy land swap, and now the Court's said that's not a legal way to proceed."

Ms Gepp said the Hawke's Bay Regional Council could try to seize the protected land under the Public Works Act.

The Hawke's Bay Regional Council's Investment Company, HBRIC, said the appeal court ruling was just part of the process it is going through.

HBRIC Chairman Andy Pearse said the investment company was beginning the process of discussing the decision with DOC.

"It is what it is, there is a process to go through and both we and the Department of conservation will go through the process, that's about all that can be said at the present time."

Mr Pearse said HBRIC's focus remained on confirming the final condition for the $900 million water storage project to proceed, which was securing a cornerstone investor.