The Teaching Council is facing financial chaos after a judicial review quashed its decision to more than double teachers' practising certificate fees.
The High Court in Wellington has ruled the council acted unlawfully when it changed the fee for certificate renewal from $220 every three years to $157 every year from February.
It said the council failed to consult teachers about the changes and was unlawfully charging teachers for costs beyond registration and certification.
The court's decision said the council had warned that cancelling the new fee, which applies to more than 100,000 teachers a year, would result in it becoming insolvent and cause chaos.
It said the council had argued that: "Insolvency would have a catastrophic impact on all of [the respondent's] functions including those most important to the safety of children and young people in classrooms to ensure teacher applicants for certification were fit to teach and have been properly vetted and that they are competent and have no conduct issues."
The decision said the Post Primary Teachers' Association, which brought the case, had acknowledged that quashing the new fee immediately would "cause considerable disruption to the process of issuing practising certificates" and it suggested delaying the effect of the decision for six months.
However, Justice Churchman said he could not do that.
He also said the council's warning of financial insolvency assumed the government would require repayment of $11 million used to transition to an annual fee.
"It seems improbable that the government would act in such a manner. It is far more likely that the government would continue to support the Teaching Council as it has done since 2015. To the extent that legislative amendments are required, it also seems likely that the government would attend to them promptly," he wrote.
The Post Primary Teachers' Association brought the case last year.
It challenged the decision to increase the fee, the shift to annual renewal, and the council's decision to set up a leadership centre.
The court's decision said the move to annual certificate renewal was likely to create more work for teachers than triennial certification and the council had incorrectly said it could not legally accept instalment payment of fees for a triennial certificate.
"I have reached the conclusion that the change to the period of certification was a significant one that produced detriment for a large number of teachers. The teachers had no opportunity for meaningful or indeed any input into the decision.
"There is also no indication that the funding provided by the minister would have been any different had the proposal put to him been for retention of three-yearly certification with payment by annual instalment. Fairness required that the respondent consult on this decision," Justice Churchman said.
He said the council had failed to consider the merits and disadvantages of annual certification and was overwhelmingly concerned with the cashflow consequences of the move from triennial to annual payment.
The judge said the Teaching Council's fee included components it was not legally authorised to charge for - ensuring teachers' professional voice was heard, and providing independent policy advice.
However, he did not uphold the PPTA's claim that the council had failed to consult on its decision to set up a leadership centre. He said there had been some consultation already and more was expected.
Teaching Council board chair Nicola Ngarewa said teachers weren't necessarily wanting to pay more, but she believed the consultation process had given the options rather than focusing on cost alone.
"The government had been subsidising a significant amount of the fees until relatively recently, until the new collective came through, so that's what ultimately brought about the change, as well as our interpretation of the legislation was that we needed to be financially sustainable by a period of time," she told Morning Report.