The review found Kawarau Jet should have been notified as an affected party before the Queenstown Lakes District Council (QLDC) granted Thunder Jet resource consent to operate commercially on the Kawarau River.
In her reserved judgement dated Monday, Justice Christine French said there had been a "serious breach" of the "public and participatory" Resource Management Act (RMA) and of Kawarau Jet's rights.
She acknowledged the significant cost and inconvenience to Frontier Adventure Tours Ltd - which trades as Queenstown Water Taxis Ltd and owns Thunder Jet - but noted it had bought its boat after it knew Kawarau Jet would start a legal challenge and "elected to take the risk".
Frontier spokesman Duncan Storrier said Water Taxis would continue to operate but Thunder Jet ceased operations on the river immediately the notification arrived.
"The consent that has been quashed goes back to council for council to do again. Thunder Jet now have two consents with council - the original application, to be reprocessed correctly, and the new consent to operate three additional boats."
Justice French reported there was evidence of Frontier "specifically advising the council that written approval from Kawarau Jet was not necessary".
Mr Storrier said: "We were asked for an opinion and gave an opinion. There are many examples of other operators not being notified when consents are issued."
Justice French wrote she was satisfied Kawarau Jet's concerns about safety on the waterways were genuine and went beyond commercial considerations. She noted there were "hazards" on the Kawarau River, with a number of boating fatalities over the years and three in 2008.
Justice French wrote that Maritime New Zealand's report, stating multiple operations on the river could occur safely, was not definitive compared with the "expert material" heard in the judicial review. Maritime NZ was not the consent authority and did not operate under the Resource Management Act, she wrote.
Kawarau Jet director Andrew Brinsley said he was pleased with the outcome but it had been a "very frustrating exercise" to have to go through months of preparation for the High Court review, when the QLDC and Frontier both now acknowledged the council's process was flawed.
"The council's decision was clearly unlawful and Kawarau Jet's rights were seriously breached in not being given the opportunity to participate in a notified process.
"The real issues, the judge said, should now be heard . . . The judge can clearly see there are safety issues down there and that was one of the reasons she made a ruling so promptly."
Mr Storrier said one of the biggest challenges in the case was "understanding where the threshold is for an affected party, bearing in mind the Resource Management Act should not consider trade competition".
