The Indigenous Affairs Minister was all smiles and sunshine on Wednesday after announcing she had signed a 40-year lease with Tangentyere Council over the Alice Springs town camps, in exchange for $138 million worth of housing and infrastructure upgrades.

“This agreement is a significant win for the Australian and Northern Territory Governments, Alice Springs town camp housing associations, Tangentyere Council and town camp residents,” said Minister Macklin. “It means we can start working together to transform the appalling living conditions endured by many people living in the Alice Springs town camps.”

But within 24 hours of this announcement, the town camp takeover had well and truly derailed. Yesterday in court, lawyers for town camp resident and prominent anti-intervention campaigner Barb Shaw obtained a temporary “stay of execution”. Shaw is seeking an injunction against the minister compulsorily acquiring the town camps, or signing any agreement with Tangentyere because the tenants of the town camps have never been properly notified that their rights are about to be extinguished.

The Federal Court will reconvene on Tuesday to continue hearing the case.

Macklin can’t sign her lease deal today, as planned, but her immediate worry is how to explain what emerged in court late yesterday.

In writing to Macklin to indicate an intent to sign up for a 40-year lease, Tangentyere’s lawyers, Gilbert & Tobin, dumped a bucket on the minister. The document is dynamite.

“The housing associations have agreed to enter into the sub leases for the simple reason that you have threatened them with compulsory acquisition if they do not,” Gilbert & Tobin wrote.

“The loss of tenure to these lands is something that is abhorrent to the housing associations and they could not run the risk that it might occur.”

On the public claims by Macklin that the time for negotiation had ended, Tangentyere’s lawyers noted: “It is simply incorrect to assert that time has run out. The timetable is completely within your power to set, as indeed you have done throughout these negotiations.”

If the letter raises serious questions about the legality of the entire process, politically speaking it’s even worse. The “people under duress” are the nation’s poorest, most marginalised citizens who were told that unless they did what the government wanted they would lose their land forever.

This whole exercise could have been avoided. Macklin did not have to pick a fight with the Alice Springs town campers. She could have resolved the situation amicably – Tangentyere and the housing associations which represent the town campers want housing upgrades but they just wanted to be a key part of the process.

Macklin should understand that if you threaten and bully Aboriginal people, they’re going to fight back and they’re going to bring friends.

Shaw’s legal team includes prominent Queens Counsel Ron Merkel, the Human Rights Law Resource Centre, leading international law firm Allens Arthur Robinson, George Newhouse, a prominent Sydney-based human rights lawyer and UTS-based lawyers Professor Larissa Behrendt and Alison Vivian.

Quite a line-up, Minister.