IN THE MAORI LAND COURT OF NEW ZEALAND TAITOKERAU DISTRICT 5 TAITOKERAU MB 234 A A A

Transcription

1 IN THE MAORI LAND COURT OF NEW ZEALAND TAITOKERAU DISTRICT UNDER IN THE MATTER OF 5 TAITOKERAU MB 234 A A A Sections 135, 151, 158 and 338, Te Ture Whenua Maori Act 1993 Kirikiri Pawhaoa B2A1 MAX MANNING & HUMPHREY O'LEARY Applicants Hearing: 30 September 2009 Appearances: W W Peters for Applicants Judgment: 14 May 2010 RESERVED JUDGMENT OF JUDGE D J AMBLER Introduction [1] Kirikiri Pawhaoa B2A1 (CT 155/86, North Auckland Registry) is Maori freehold land ( the land ). It was owned by the late Williena Manning and is now vested in the trustees of her estate, being her widower, Max Manning, and Humphrey O Leary. [2] The trustees have applied to the Court for confirmation of an alienation of the land and ancillary orders in terms of a family arrangement amongst the beneficiaries of the estate who have agreed that the land should be sold. The High Court has approved the family arrangement and made orders under ss 64 and 64A of the Trustee Act 1956 see Manning v Manning (2009) 27 FRN 2586 MANNING MLC A May 2010

2 [3] The issue for me is whether, notwithstanding the decision of the High Court, the sale should be confirmed in terms of Te Ture Whenua Maori Act 1993 ( the Act ). Background [4] The background set out below is taken in part from the High Court judgment and otherwise from evidence before me. [5] Mr and Mrs Manning were married for about 38 years. When they commenced their relationship Mrs Manning already had two daughters, Daphne (then aged 8) and Vesta (then aged 5). Mr Manning effectively became the girls father and later grandfather to their children. [6] Mrs Manning inherited Maori freehold land at the northern head of Whangaruru Harbour. That land was taken by the Crown for park land in the early 1970 s. Apparently, Mrs Manning eventually received a plot of land at Bland Bay and a sum of money by way of compensation for the land taken. [7] In 1998 Kirikiri Pawhaoa B2A1 came up for sale. It is immediately adjacent to the land taken by the Crown in the 1970s. Mr and Mrs Manning decided to purchase the land, in Mrs Manning s name only. The land was purchased for $112, using money that Mr and Mrs Manning had accumulated over the years. The purchase was confirmed by the Maori Land Court. Mr and Mrs Manning subsequently built a garage, flat and their main house on the land. [8] Mr Manning explained that they purchased the land in his wife s name only as he understood that, as a non-maori, his name could not go on the title. It is not clear what legal advice Mr and Mrs Manning took in this regard at the time. The position of course is that the land could most certainly have been purchased by them in their joint names. [9] The decision to purchase the land in Mrs Manning s name has significant legal consequences. First, in terms of s 6 of the Property (Relationships) Act 1976, 5 Taitokerau MB 235

3 that Act does not apply to the land. Second, in terms of Part 4 of the 1993 Act, Mr Manning could only ever be entitled to a life interest in the land under Mrs Manning s estate. Third, there are significant restrictions under the Act in terms of how testamentary trustees can deal with Maori freehold land. [10] From time to time Mr and Mrs Manning discussed applying to the Court to change the status of the land to General land. They sought advice from their solicitor. They understood that it was not a straightforward matter and ultimately did not seek a change of status. [11] Mrs Manning died in August She left a will dated 20 July 2001 where she left Mr Manning a life interest in the land. The will then provided that on Mr Manning s death: (a) (b) Vesta would have a life interest in a half share in the property and on her death the half share was to pass to her children in equal shares with a gift over to any of Vesta s grandchildren alive at Mrs Manning s death. The other half share was to pass in equal shares to the children of Daphne (who predeceased Mrs Manning). Again, there was a gift over provision. [12] Mr Manning no longer has the energy or financial resources to undertake the maintenance required to keep the land and improvements in good condition. He has moved to a smaller property in Whangarei but still spends two to three days a week at the land looking after it. Apparently, none of the other beneficiaries have the ability or wish to maintain or use the land. [13] The trustees have had extensive discussions with the beneficiaries and have agreed that the best solution is for the land to be sold and the funds distributed. The trustees entered into a conditional agreement for sale and purchase of the land on 28 April The sale price is $1,500, The purchaser is not of the preferred classes of alienees. The agreement is conditional upon inter alia the High Court making orders necessary to give effect to the family arrangement and this Court granting orders confirming the sale and changing the status of the land from Maori freehold land to General land. 5 Taitokerau MB 236

4 [14] Three of the grandchildren beneficiaries are minors and Mr Eckard was appointed as guardian ad litem to report to the High Court on whether the proposed sale of the land is in their best interests. Mr Eckard agrees that the sale of the land is in their best interests. The proposal is that the proceeds of sale be divided by way of cash payment of 37 per cent to Mr Manning and the remaining 63 per cent to be held on the same trusts under Mrs Manning s will with 33 per cent to Vesta and her children and 30 per cent to Daphne s children. [15] The trustees brought an application in the High Court under ss 64 and 64A of the Trustee Act 1956 seeking a declaration that the family arrangement be approved on behalf of the grandchildren beneficiaries who are minors, a declaration that the beneficiaries acting by unanimous consent are entitled to bring the trust over the land to an end and to sell the land at fair market value, and a declaration that the trustees are entitled to enter into any transaction arising from the family arrangement on behalf of the beneficiaries. The application was supported by the beneficiaries. On 25 February 2009 the High Court granted the declarations sought but expressly left the issue of confirmation of the sale of the land for this Court to determine. [16] The trustees have now applied to this Court for several orders, being: (a) Confirmation of the sale under s 151. (b) An exemption from a special valuation under s 158. (c) A change of status of the land to General land under s 135. (d) A recommendation that part of the land be set aside as a Maori reservation under s 338. [17] The applications in this Court were opposed by Robert Carpenter on behalf of the Ngatiwai Ki Whangaruru Whenua Topu Trust and a local kuia, Raukura Robinson. In short, they claimed that the land contained a significant pa site and objected in principle to the sale of Maori freehold land. Nonetheless, none of the preferred classes were in a position to purchase the land. The evidence as to the pa site being on the land was disputed by Trevor Richards, who said it was on adjacent land. Due to my conclusions below on other issues I need not resolve the issue of the location and significance of the pa. 5 Taitokerau MB 237

5 [18] The Court otherwise heard from Mr Manning and a registered valuer called on his behalf, Robert Malone, who confirmed that the sale price of $1,500, was higher than what he considered to be the fair market value of the land. Confirmation of Sale [19] I have no doubt that the proposed sale makes financial sense for the beneficiaries. However, I must consider whether to grant confirmation of the sale in accordance with the provisions of the Act. Te Ture Whenua Maori Act 1993 [20] Section 152(1) provides: (1) The Court must grant confirmation of an alienation of Maori freehold land if it is satisfied- (a) that,- (i.) in the case of an instrument of alienation, the instrument has been executed and attested in the manner required by the rules of court; or (ii.) in the case of a resolution of assembled owners, the resolution was passed in accordance with this Act or regulations made under this Act; and (b) that the alienation is not in breach of any trust to which the land is subject; and (c) that the value of all buildings, all fixtures attached to the land, all things growing on the land, all minerals in the land, and all other assets or funds relating to the land, has been properly taken into account in assessing the consideration payable; and (d) that, having regard to the relationship (if any) of the parties and to any other special circumstances of the case, the consideration (if any) is adequate; and (e) that the purchase money (if any) has been paid to, or secured to the satisfaction of, the Maori Trustee or Court appointed agent or trustees in accordance with section 159; and (f) that, if section 147A applies to the alienation, the alienating owners have discharged the obligation in that section. 5 Taitokerau MB 238

6 [21] The Court cannot confirm an alienation that contravenes an express provision of the Act. Furthermore, as provided for in s 152(1)(b), the Court cannot confirm an alienation that breaches any trust to which the land is subject. [22] Here, the land is vested in the trustees in terms of the testamentary trust under the will. The Act also imposes significant restrictions on wills that in some respects amount to statutory terms of trust. These arise from s 108: (1) Except as provided by subsections (2) and (3) of this section, no owner of any beneficial interest in any Maori freehold land has the capacity to dispose of that interest by will. (2) An owner of a beneficial interest in Maori freehold land may leave that interest by will to any person who belongs to any one or more of the following classes: (a) Children and remoter issue of the testator: (b) Any other persons who would be entitled under section 109(1) of this Act to succeed to the interest if the testator died intestate: (c) Any other persons who are related by blood to the testator and are members of the hapu associated with the land: (d) Other owners of the land who are members of the hapu associated with the land: (e) Whangai of the testator: (f) Trustees of persons referred to in any of paragraphs (a) to (e) of this section. (2A) A person in whom an occupation order has been vested may leave the occupation order by will to any 1 or more persons who come within subsection (2). (2B) A person is entitled to succeed to an occupation order by will (a) if the person owns a beneficial interest in the land to which the occupation order applies; and (b) if the Court is satisfied, in the circumstances, that the extent of the person's beneficial interest in the land justifies that person succeeding to the occupation order. (2C) An occupation order that passes by will is cancelled automatically on the date of expiry or termination of the occupation order 5 Taitokerau MB 239

7 (3) Subsection (2)(e) of this section shall have effect notwithstanding anything in section 19 of the Adoption Act (4) Any owner of a beneficial interest in Maori freehold land may by will leave that interest to the owner's spouse, civil union partner, or de facto partner for life or for any shorter period. (5) Any provision in a will purporting to leave a beneficial interest in Maori freehold land to any person otherwise than in accordance with subsection (2) or subsection (4) of this section shall be void and of no effect; and that interest shall, unless disposed of in accordance with either of those subsections by some other provision of the will, pass to the persons entitled on intestacy. (6) Where any beneficial interest in Maori freehold land is left by will to any trustee, the trustee shall not have power under the will or under any Act to sell the interest; and any provision in the will purporting to confer such power shall be void and of no effect. (emphasis added) [23] It will be seen that an owner of Maori freehold land is restricted in his or her ability to dispose of his or her land by will. Under s 108(1) an owner has no capacity to dispose of land except as per ss 108(2) and (3) and, I would add, s 108(4). Under s 108(2) an owner can leave an interest by will to any of the persons listed therein. Under s 108(4) an owner can leave an interest to his or her spouse, civil union partner or de-facto partner for life or for any shorter period. This is the provision that allowed Mrs Manning to leave the life interest to Mr Manning. [24] The corollary of these provisions is that a land owner cannot stipulate in his or her will that Maori freehold land be sold. It must be vested in the persons entitled. This is reinforced by s 108(6): Where any beneficial interest in Maori freehold land is left by will to any trustee, the trustee shall not have power under the will or under any Act to sell the interest; and any provision in the will purporting to confer such power shall be void and of no effect. [25] There is otherwise no express provision in the Act permitting a testamentary trustee to sell Maori freehold land. Part 7 of the Act governs the alienation of Maori 5 Taitokerau MB 240

8 freehold land. Maori freehold land can only be alienated if it is expressly permitted by the Act as per s 146: No person has the capacity to alienate any interest in Maori freehold land otherwise than in accordance with this Act. [26] Section 147 sets out who may alienate Maori freehold land: (1) Subject to this Act, (a) The sole owner of a block of Maori freehold land has the capacity to alienate the whole or any part of the land; and (b) The joint tenants of a block of Maori freehold land acting together have the capacity to alienate the whole or any part of the land; and (c) the owners in common of a block of Maori freehold land have the capacity to alienate the whole or any part of the land in accordance with section 150C; and (d) the trustees of a trust constituted under Part 12 have the capacity to alienate the whole or any part of Maori freehold land vested in them, in accordance with section 150A; and (e) a Maori incorporation has the capacity to alienate the whole or any part of Maori freehold land vested in it, in accordance with section 150B. [27] I note that s 147 does not include testamentary trustees. That is to be expected given that they are prohibited from selling land in s 108(6). [28] This prohibition against testamentary trustees selling Maori freehold land reflects the kaupapa of the Act as per the Preamble and ss 2 and 17. Maori freehold land is regarded as a taonga tuku iho. Part 4 of the Act, which is concerned with administration of estates, is based on the premise that, whether an estate is testate or intestate, interests in Maori freehold land must be vested in the persons entitled under the Act. Part 4 even goes so far as to abrogate the common law rule of bona vacantia to ensure that land is inherited. see s 114. Once inherited, the owners may of course have the power to sell the land. 5 Taitokerau MB 241

9 High Court Judgment [29] Mr Peters argues that, notwithstanding these statutory prohibitions, the trustees can sell the land. He relies on the judgment of the High Court. I have had the benefit of Mr Peters submissions in this Court and also the submissions of Mr Barker who argued the application in the High Court. [30] Justice Andrews dealt with the question of whether the proposed sale contravened the Act at paragraphs 41 to 55. At paragraphs 43 to 47 she outlined Mr Barker s arguments: [43] Mr Barker referred me to s 108(6) of Te Ture Whenua Maori Act. This section is headed Disposition by Will. Sub-section (2) specifies the persons to whom an owner of a beneficial interest in Maori freehold land may leave that interest by will essentially, whanau or trustees for whanau. Sub-section (4) provides that the interest may be left to a spouse for life or a shorter period. [44] Sub-section (6) provides: Where any beneficial interest in Maori freehold land is left by will to any trustee, the trustee shall not have power under the will or under any Act to sell the interest; and any provision in the will purporting to confer such power shall be void and of no effect. [45] Notwithstanding s 108(6), Mr Barker submitted that Te Ture Whenua Maori Act specifically recognises the rights of beneficial interests of Maori freehold land to implement a Saunders v Vautier type proposal, such as that before the court. [46] Mr Barker submitted that s 108(6) does not have the effect of preventing beneficiaries, having consented to the sale, from directing the trustees to sell the property. He referred to s 149 which provides: Alienation of equitable interests In the case of any Maori freehold land that is vested in a trustee, every person who is absolutely entitled to any beneficial interest in the land has the same capacity to alienate that interest as that person would have if the legal interest were vested in that person. 5 Taitokerau MB 242

10 [47] Mr Barker submitted that where, as here, all beneficiaries consent to the proposal then, subject to the two matters discussed below, s 149 allows the beneficiaries to deal with the property as if they were the legal, rather than beneficial, owners. Those issues are: a) Whether in fact the High Court has jurisdiction to give consent on behalf of the minor beneficiaries; and b) Whether s 149 still applies where some of the interests are contingent. [31] At paragraphs 48 to 51 Justice Andrews concludes that the High Court has inherent jurisdiction to consent to the proposal on behalf of the minor beneficiaries. She then continues in relation to the contingent interests: [52] In relation to this question, Mr Barker referred to his earlier submissions as to the application of the rule in Saunders v Vautier, referring again to the judgment in re Blake. [53] He submitted that it is clear that s 149, in referring to persons who are absolutely entitled would not permit contingent beneficiaries from implementing a proposal on their own. However, equally, beneficiaries holding a vested interest ( absolutely entitled ) could not implement a proposal without the consent of the contingent beneficiaries. [54] I accept Mr Bakers s submission that when all beneficiaries, vested or contingent, agree to implement a proposal, s 149 is not infringed. [55] Accordingly, I conclude that the implementation of the proposal would not be contrary to the provision of Te Ture Whenua Maori Act. For completeness, I repeat that the trustees acknowledge that the first refusal requirement must be complied with, and that the sale instrument must be confirmed by the Maori Land Court. Discussion [32] Notwithstanding that the High Court has made declarations that permit the trustees to proceed with the sale, I cannot avoid the conclusion that the proposed sale would breach the Act. [33] I do not believe that the High Court intended to permit the trustees to breach the Act. Sections 64 and 64A of the Trustee Act 1956 do not permit variations to trusts that breach a statute. In any event, the Trustee Act 1956 must be read subject to Part 4 of the Act as per s 101: 5 Taitokerau MB 243

11 All other enactments and rules of law relating to (a) Applications for and grant of administration of estates of deceased persons; and (b) The administration of such estates; and (c) The bringing and settling of claims against such estates; and (d) Succession to property owned by deceased persons at their death, shall, in relation to estates to which this Part of this Act applies, be read subject to this Part. [34] As I have pointed out, ss 108(1), (2), (4) and (6), 146 and 147 make it clear that an owner of Maori freehold land can only leave those interests by will to persons within the classes identified and otherwise that there is no ability to sell the land while it forms part of a testamentary estate. The prohibition against sale applies equally to the will maker, the trustees and the beneficiaries. [35] I reject Mr Barker s argument, as articulated in the High Court and as repeated by Mr Peters, that s 149 of the Act enables beneficiaries to consent to a sale and thereby direct the trustees to override s 108(6). [36] Section 149 does not override the provisions referred to above. Were it intended to override such provisions, then the Act would have needed to be far more explicit. [37] In my view, s 149 does not apply to testamentary trustees. It provides: In the case of any Maori freehold land that is vested in a trustee, every person who is absolutely entitled to any beneficial interest in the land has the same capacity to alienate that interest as that person would have if the legal interest were vested in that person. [38] Section 149 is contained within Part 7 of the Act. As noted earlier, s 147 sets out the persons who can alienate Maori freehold land. The only trustees who can alienate Maori freehold land are trustees of trusts constituted under Part 12 of the Act see ss 147(1)(d) and 150A. Part 7 makes no reference to testamentary trusts - they are governed by s 108(6) in Part 4. Accordingly, in my view, when s 149 refers to land being vested in a trustee, it is referring to a trust under Part Taitokerau MB 244

12 [39] Section 149 must be understood in its statutory context. Its purpose is simply to clarify that, where land is vested in trustees under Part 12, the beneficial owners may still alienate their beneficial interests in accordance with the Act. Part 12 trusts are a unique feature of the Act and give rise to beneficial interests that are akin to shares in land. Hence, the Act elsewhere addresses the distinction between beneficial and legal ownership see ss 122, 127 and 215(5). [40] But even if I am wrong and s 149 can in theory apply to testamentary trusts, ss 108(1) and (6), 146 and 147 make it clear that testamentary trustees cannot sell Maori freehold land while it is part of an estate. The trustees must vest the land in those persons entitled who may or may not then be able to sell the land, depending on the nature of the interest they hold. [41] The proposed sale is in breach of ss 108(1) and (6), 146 and 147 and is consequently in breach of the statutory terms of the trust. It therefore offends s 152(1)(b). Life Interests [42] One further matter requires comment. In my view caution is required in how life interests in Maori freehold land are regarded. They are not synonymous with life interests in General land. A testamentary life interest in Maori freehold land is a creature of statute that arises either by s 108(4) in relation to a will or by s 109(2) in relation to an intestacy. Life interests can otherwise be created by vesting order under s 164 or by transfer confirmed by the Court under s 151, subject of course to the restrictions on alienation as per ss 147A and 148. Regardless of the type of life interest, the Act imposes certain restrictions as per s 150D: A person with a life interest or a determinable life interest in Maori freehold land (a) (b) is not capable of alienating the Maori freehold land in which the life interest is held without the consent of all persons entitled in remainder; and holds that interest as a kaitiaki in accordance with tikanga Maori. 5 Taitokerau MB 245

13 [43] It is questionable whether life interests can be converted to an interest in the proceeds of sale of Maori freehold land, though I need not reach a final view on that issue because of my conclusions above. Conclusion [44] The end result is that the proposed sale cannot proceed as it is currently structured. That may seem a harsh outcome, but that is what the Act intends. Had the land been vested in Mr and Mrs Manning jointly in the first place then the situation would have been quite different. [45] For the foregoing reasons I cannot confirm the sale. Consequently, I need not consider the applications under s 135 for change of status (which presents its own issues) and under s 338 to set aside part of the land as a Maori Reservation. All applications are dismissed. Pronounced in open Court in Whangarei at 5.29 pm On Friday this 14th day of May D J Ambler JUDGE 5 Taitokerau MB 246