180 Aotea MB 242 IN THE MAORI LAND COURT OF NEW ZEALAND AOTEA DISTRICT UNDER IN THE MATTER OF A20060008047 A20050010539 Sections 133, 135 and 151 Te Ture Whenua Maori Act 1993 Rakautaua 1B2A2 MARK AND RAYMOND CONNORS Applicants Hearing: 15 November 2005 161 Aotea MB 191-193 14 March 2006 167 Aotea MB 179-188 11 April 2006 169 Aotea MB 121-135 12 June 2006 171 Aotea MB 61 22 August 2006 176 Aotea MB 1 17 October 2006 177 Aotea MB 285 23 January 2007 Appearances: Mr M Restieaux for the applicants Mr J W Tizard for the consenting owners Ms H Hipango for the dissenting owners Judgment: 24 January 2007 RESERVED JUDGMENT OF JUDGE L R HARVEY Introduction [1] Mark and Raymond Connors filed an application to purchase Rakautaua 1B2A2 for $555,000 on 22 December 2004. Alternatively, they sought a fifteenyear lease of the land. At a recent hui a majority of beneficial owners, including the Connors, who are the largest individual shareholders, agreed to the sale proposal by a significant majority. M AND R CONNORS MLC A20060008047 [24 January 2007]
180 Aotea M B 243 [2] However, a minority of owners oppose the sale. Following further discussion between the parties, the present application was amended to now include a proposal to exchange land so that the dissenting owners would retain an area equivalent to the value of their shareholding. The land offered in exchange is derived from the parent Rakautaua block and adjoins a whanau urupa. The exchange land is also greater in value in a monetary sense. [3] The issues for the Court are threefold: firstly, has the applicant satisfied the Court that the sale should proceed? Secondly, is there sufficient evidence to support the submission that an exchange of land should proceed? Thirdly, should the land that would be sold to the Connors have its status changed from Maori freehold to General land? Background [4] Rakautaua IB2A2, which is 22.3941 hectares in area, was created by partition order on 29 July 1918, 71 Whanganui MB 135. As at 31 August 2006 there were 13 owners in the land holding 0.5777 shares. Mark and Gerald Connors hold 0.422 shares as joint tenants or 73% of the total shareholding in the block. [5] Given the complexity of the proceedings and the fact that the land would be permanently alienated I considered it necessary that the dissenting owners receive independent advice. To that end on 11 April 2006 I appointed Harete Hipango, solicitor of Whanganui, to represent the dissenting owners, 169 Aotea MB 135. [6] The application has come before the Court for hearing on several occasions in 2005 and 2006 as indicated in the intituling to this judgment. The last hearing was held yesterday. Submissions for the applicants [7] Mr Restieaux submitted: (a) the dissenting owners numbered five holding 0.0405 shares. The area of land equating to the shareholding of the dissenting owners was 1.5699 hectares;
180 Aotea MB 244 (b) the applicants had revised their application to include an exchange order and an amended subdivisional plan. The land to be exchanged is General land owned by Mark and Christopher Connors in equal shares being described as a subdivision ofrakautaua IB2B Lot 1 DP5651 and Lot 2 DP8713; (c) the value of the shares of the dissenting owners based on a sale price of $555,000 is $38,908.60. However Russell Goudie, a valuer engaged by the applicants, has valued the land to be exchanged at $48,000 inclusive of GST. In arriving at his valuation he has taken into account the fact that it is intended that Maori land is being exchanged for Maori land; (d) on a shareholding basis 7.01 % of the Maori owners oppose the sale while 19.91 % are in support. As mentioned, the applicants hold 73.08% of the shares and of course they are in favour of the sale. But if the applicants' shares are removed from the calculations then the figures are 26% in opposition and 73 % in support. Therefore this outcome complies with the requirements of section 150C(l)( a)(i) and (ii) of the Act; (e) the dissenting owners have been offered an exchange of land which is part of the same ancestral land block, is equal in area but is greater in monetary value. In addition, the applicants have agreed to meet all of the costs associated with these applications; (f) the applicants have gone out of their way to secure an accommodation of the dissenting owners' interests while at the same time fulfilling the wishes of the consenting owners; (g) a land exchange can be effected by order of the Court per sections 310-312 of the Act. The present proposals fully comply with the exchange provisions of the Act; (h) the dissenting owners have had more than adequate opportunity to discuss and consider the proposal and have also received independent legal advice; and
180 Aotea MB 245 (i) notice of the proposal to change the status of the land from Maori freehold to General had been issued but no notices per section 147 A of the Act in opposition have been filed. [8] Mr Restieaux also made submissions on a proposed lease of the exchanged land and the holding over under the old lease of the land. He also indicated that draft orders had been prepared should the applications be granted. However he noted that in the circumstances such matters were likely to be premature and his clients were content to simply await the outcome of these proceedings before continuing further with their proposals. Submissions of consenting owners [9] Mr Tizard made a number of submissions, several of which were almost identical to that of Mr Restieaux. He made particular submissions on the issue of status change including: (a) sections 136(a), (b), (c) and (e) of the Act have been satisfied. The remaining issue for the Court to consider is section 136( d) - that the land can be utilized more effectively as General land; (b) the applicants wish to farm the land as owners and deal with it as they see fit including to enable one of them to obtain capital from the farming partnership and the other to bring in his son. Whilst the land remains Maori freehold land all transactions of significance will continue to require meetings of owners and confirmation by the Court. These procedures are likely to become more difficult over time as their interests fragment. They create financing difficulties which a change in status will avoid; ( c) it is fair to enable the consenting owners to sell their interests particularly where they are not in a position to maintain any ongoing interest in their ancestral land and do not place the same importance on that as do other owners;
180 Aotea MB 246 (d) in view of the current spread of ownership it is highly unlikely the owners will have any option other than to lease the land to the applicants. Any other use of the land for other purposes will be difficult to achieve as those owners who wish to sell and realise their asset will require rent so long as they are unable to sell; (e) there is no offer from the peas to acquire any of the interests to be sold and there is no realistic prospect of the PCAs ever being in a position to acquire the land having regard to its value and the large share already owned by the applicants; and (f) all these matters are consistent with the decisions of the Full Bench of the High Court in Brown v Maori Appellate Court [2001] 1 NZLR 87 where that Court accepted that the Act is not predicated on a continuing relationship between the owners and the land and that sale and a change of status may well result in the most effective use of the land. [10] Mr Tizard further submitted that the consenting owners wished to receive payment as soon as practicable and so long as the orders are conditional upon the grant of a resource consent for the subdivision there appeared to be no reason why they should have to wait until new title for the exchanged land would be available. To that end the draft order is intended to facilitate prompt payment to them once the appeal period has lapsed and the implementation of the subdivision is only a matter of mechanics and time. Submissions of dissenting owners [11 ] Ms Hipango submitted that: (a) the dissenting owners do not consent to the resolution to sell but will not actively oppose that aspect of the proceedings; (b) similarly, the dissenting owners do not consent to the exchange order but will not actively oppose the applicants' case; and
180 Aotea MB 247 ( c) as to change of status, the dissenting owners instructed counsel to make no submission on the issue of status change. [12] Ms Hipango stressed that the dissenting owners would accept the exchange land as they wished to retain their whakapapa connections to the land and parent block. For them, she contended, it was not a question of money. [13] In this context, counsel noted the dissenting owners wished to have it recorded that they were disappointed at the actions of their whanaunga in agreeing to the alienation. That said, as mentioned, they acknowledged that the land offered for exchange is derived from the parent block and is near a whanau urupa. [14] Ms Hipango further contended that the key issue is the change of status but that was a matter for the Court and the dissenting owners were content to abide the Court's decision. The Law [15] Section 150C(1) of the Act states: "The owners in common of a block of Maori freehold land must not alienate Maori freehold land owned by them - (a) by sale or gift, unless the sale or gift has the consent of - (i) at least three-quarters of the owners, if no owner has a defined share in the land; or (ii) the persons who together own at least 75% of the beneficial (b) (c) freehold interest in the land,' and by long-term lease, unless the Court, in its discretion, approves and the long-term lease has the consent of- (i) at least half of the owners, if no owner has a defined share in the land; or (iii) the persons who together own at least 50% of the beneficial freehold interest in the land,' and in any other way except- (i) by agreement of all the owners; or (ii) pursuant to a resolution carried at a meeting of assembled owners held under and in accordance with Part 9. " [16] Sections 310-312 of the Act state: "310 Court may make exchange orders (1) For the purpose of giving effect to the exchange of any land to which this Part of this Act applies, or of any interest in any such land, for any other
180 Aotea MB 248 land (whether land to which this Part of this Act applies or not), or for any other interest in land, the Court may make exchange orders in accordance with sections 311 to 314 of this Act. (2) Nothing in this section or in sections 311 to 314 of this Act shall prevent the alienation of any Maori freehold land by way of exchange in any manner in which such an alienation could be effected otherwise than under this section and those sections. (3) None of the provisions contained in any other Part of this Act with respect to the alienation of Maori freehold land, except section 148, shall apply to an exchange under this Part of this Act 311 Land and interests that may be exchanged (1) Any Maori freehold land, or any interest in any such land, may be exchanged by means of an exchange order for any other Maori freehold land or General land, or for any other interest in any such land (2) Any General land owned by Maori, or any interest in any such land, may be exchanged under this Part of this Act for any other General land, or for any other interest in General land, whether or not owned by Maori. (3) Any Maori freehold land, or any interest in any such land, may be exchanged under this Part of this Act for any Crown land that is subject to Part 2 of the Maori Affairs Restructuring Act 1989, or for any interest in any such land 312 Conditions precedent to making of exchange orders (1) The Court shall not make an exchange order unless it is satisfied in respect of the following matters: (a) That the exchange is not detrimental to the interests of the Maori owners affected by the exchange: (b) That, if the interests to be exchanged are unequal in value, a sufficient sum of money by way of equality of exchange has been actually paid or sufficient security for its payment has been given: (c) That the Maori owners of the land affected by the exchange have had sufficient notice of the application for an exchange order and sufficient opportunity to discuss and consider it, and that there isa sufficient degree of support for th~ application among the owners, having regard to the nature and importance of the matter. Notwithstanding anything in subsection (1)(b) of this section, in any case to which that provision applies the Court may waive the requirement to pay a sum of money by way of equality of exchange if it is satisfied that the exchange is in the nature of a family arrangement and that, apart from the inequality of the exchange, no party to it is adversely affected" [17] Regarding change of status, section 136 states:
180 Aotea M B 249 "136 Power to change status of Maori land owned hy not more than 10 persons (1) The Maori Land Court may make a status order under section 135 where it is satisfied that - (a) the land is beneficially owned by not more than 10 persons as tenants in common; and (b) neither the land nor any interest is subject to any trust (other than a trust imposed by section 250(4); and (c) the title to the land is registered under the Land Transfer Act 1952 or is capable of being so registered; and (d) the land can be managed or utilised more effectively as General land; and (e) the owners have had adequate opportunity to consider the proposed change of status and a sufficient proportion of the owners agree to it. " [18] The Maori Appellate Court has dealt with status change applications for well over a decade. The leading authorities are in re Part Orokawa - Loma Cleave (1995) 4 Taitokerau Appellate MB 95; in re Maketu A2A - White (1999) 1 Waiariki Appellate MB 116; re Papamoa 2Al -Hoko (2003) 20 APWM 167 and in re: Orokawa 3B - Regeling(2004) 6 Whangarei Appellate MB 157 (6 APWH 157). [19] The most recent decision of that Court is in re: Wainui 2F4D - CraIg (2006) 7 Whangarei Appellate MB 1 (7 APWH 1). The essential legal principles set out in the authorities relevant to status change are: (a) those with rights or interests in the land go beyond the beneficial owners themselves to whanau, hapu and descendants of owners; (b) land is a taonga tuku ilio and should be retained within the kin group if possible; (c) owners should as far as possible be empowered to develop, manage and utilise and control their own lands; (d) status change for the sole purpose of securing a higher sale price is not a reason to grant such an order;
180 Aotea MB 250 ( e) section 136 is to be read conjunctively. If the Court is dissatisfied that any of the criteria set out in that section have not been satisfied it need proceed no further; (f) notice must be given to the preferred class of alienees to give that group the opportunity to make submissions; (g) a change of status is possible but only in limited range of situations and each application must be considered as to its merits and particular circumstances taking into account the principles of retention and development; and (h) an applicant's personal circumstances must always be taken into account when considering any application for a status change. [20] The superior courts, as noted by counsel, have also provided guidance on the issue of status change and alienation generally. In addition to Brown v Maori Appellate Court there is of course the important judgment of the Court of Appeal Valuer-General v Proprietors Mangatu Incorporation [1997] 3 NZLR 641. At page 649 of the decision, Richardson P makes it plain that the Act provides for alienation but in limited circumstances: "The 1993 Act imposes very significant constraints on the sale of Maori freehold land, particularly sale to a purchaser who would seek to change its status from Maori freehold land to general land Parliament could not have expressed the policy more clearly. Drawing on the Treaty of Waitangi and the special significance of land to Maori people the 1993 Act reflects as the primary objective to be applied throughout the legislation and by the Maori Land Court to the retention of Maori land by Maori and the use, development and control of Maori land by Maori. The machinery provisions allowingfor alienation of land are directed and restricted to that end. There is no question of majority decisions of owners necessarily carrying the day. Any agreement of the owners is subject to the contingencies that the Maori Land Court may in exercise of its powers and responsibilities refuse to confirm the alienation or to change the status of the land. " [21] A further refinement of these key principles can be discerned from the High and Court of Appeal judgments Edwards v Maori Land Court and Bruce v Edwards [2003] 1 NZLR 515. In the latter decision the Court of Appeal held that the members of the PCAs had a statutory right of first refusal if Maori freehold land was to be alienated. The Court observed that since an order for change of status would
180 Aotea MB 251 bypass the right to first refusal and the restrictions on alienation, the peas should be given opportunity to make fully informed submissions before a status change application was dealt with. Discussion [22] The present facts are not unusual. A small block of Maori freehold land has three sets of owners. The European owners whom acquired their interests over time and are without doubt the majority owners by significant margin. Then there are the Maori owners in two sets, those supporting alienation and those in opposition. [23] There can be no doubt that the applicants have attempted to accommodate the interests of all parties, particularly the dissenting owners. These proceedings were first filed in December 2004 and during the course of over two years, the applicants have provided the Maori owners with a variety of options in an effort to find an agreeable outcome. To that end they are to be commended for their efforts. [24] The dissenting owners do not consent to the proposals but have decided not to actively oppose the application. They too are to be commended for their practical approach, given the issues involved and the undoubted tensions that have arisen within the Maori ownership group. Resolution to sell confirmed [25] Plainly the confirmation of the resolution to sell ought to be made. An overwhelming majority both in terms of shareholding and individual owners support the sale. I also record that there is no opposition to the sale. Accordingly, the resolution to sell the land to the applicants is confirmed. Exchange of land [26] As I mentioned at yesterday's hearing, a particular feature of the present application is the exchange of land. Ordinarily, dissenting owners would simply have their interests sold along with the majority, regardless of their opposition. For example see in re Ngarara West B3B - Property Ventures Limited (2006) 180 Aotea
180 Aotea M B 252 MB 15. The present case is quite different in that the dissenting owners are to be provided with an area of land in equal size, of greater monetary value adjoining a whanau urupa. Equally importantly, the land offered for exchange is derived from the parent Rakautaua severance. [27] As to the exchange, the dissenting owners, as mentioned have agreed to receive the exchange land even though they do not consent to the overall scheme that is proposed. It is obviously an essential element of the agreement. Having carefully considered the evidence before the Court and the conditions as set out in sections 310-312 of the Act, I am satisfied that the exchange complies with those provisions. Change of status [28] Regarding the change of status application of the land to be sold from Maori freehold to General land, the Maori Appellate Court in their judgment Wainui 2F4D make it plain that a change is not undertaken lightly, given the importance of the rights of the preferred class of alienees. At 7 Whangarei Appellate MB 7 that Court held: "The most significant effect of status change in this case would be to remove the perpetual statutory right of first refusal reserved to pea members. The principles as set out in the preamble and sections 2 and 17 make it clear that this right is of the greatest importance. In a sense the social contract implicit in the Act's principles is an acceptance that sales by Maori landowners can continue but only on condition the right oire-acquisition by whanau, hapu and descendants is also acknowledged. In this way the property rights of land-owners and collective interests of the kin group are reconciled. Put another way, the introduction by the legislature, of a first right of refusal, strikes a balance between land-owner control or tino rangatiratanga on the one hand and hapu interest in a collective taonga toku iho on the other... in our view the removal of that protection should only be allowed where the application is in some material way outside the ordinary run of cases. That must be so, because to adopt any other approach would be to undermine the very careful balance between owners and the wider kin group to which we have referred. " [29] That Court then considered a number of arguments similar to the present including the issue of price and the lack of offers from the preferred class. For completeness I reproduce the reasoning of the Appellate Court on those arguments in full, 7 Whangarei Appellate 8-10:
180 Aotea MB 253 "[24J The argument that a change of status produces better prices, while often true, is no reason to change status. That would be the case on every proposal to alienate Maon' land If price were a valid argumen~ the effect would be to remove the interest of the wider kin group so carefully protected in the Act in the ordinary mn of cases. In any event, as we have said, there was no hard evidence on the question in the Court below. [25J Similarly the fact that the appellant is the sole owner of the block cannot be a reason to change status since a key principle in the Act requires a balancing between the interests of the wider kin group and the landowner. In fact sole ownership would tend to strengthen the claim of the hapu to a right of repurchase in our view. Nor can the mct that the appellant is a whiingai and not by blood a member of the original landowning hapu take the appellant's case any further. Firs~ as a matter of tikanga, she is by adoption a member of the hapu even if not by blood Second, her standing as a whiingai makes it all the more important to protect PCA nghts. [26J Counsel argued in addition that the hapu had made no offer to purchase the land and, given its value, were unlikely to do so in the near future. While we can see the appellant's concern at being beholden to a group who cannot afford to buy her ou~ the Act establishes a perpetual right of first refusal. In this sense, the whiinau and hapu referred to in the preamble and s2 are entities whose existence is indefinite in time. The financial means of the current generation of PCA cannot be detenninative. " [30] The principal concern of counsel for the consenting owners appeared to be the ability of the Connors to manage their farming operation. Counsel emphasized that the restrictions of the processes of the Court if the land remained Maori freehold land were in effect an unnecessary imposition on the owners. He highlighted the obiter statements of the High Court in Brown v Maori Appellate Court in support of his submission. [31] As the Maori Appellate Court has underscored, the introduction by the legislature of a first right of refusal strikes an important balance between land owner control and hapii interests in a collective taonga tuku iho. Thus the removal of such a protection should only be permissible where in some material way an application falls outside the ordinary run of cases. To do otherwise would be to undermine the very careful balance between owners and the preferred class. [32] There is nothing in the evidence before the Court to persuade me this application falls outside of the usual run of cases in any material way. While the exchange is clearly a distinctive feature, it is not determinative. Similarly, I am not
180 Aotea MB 254 persuaded that the change of status of the larger severance that will be sold to the Connors meets the criteria of section 136( d) of the Act, taking into account the principles set out in the authorities. There is no evidence before me that a change of status was essential to the proposals proceeding and that without such a change the entire scheme would fail. While it is certainly desirable from the applicants' perspective that a change of status be effected, on balance, I do not agree that the potential inconvenience to the Connors of the land remaining subject to the regime of the Act outweighs the policy contained in the Act's fundamental purposes. [33] In summary I am therefore not satisfied that the land can be managed or utilized more effectively as General land. The application for change of status is accordingly dismissed. Decision [34] The resolution of owners for sale of the land to the applicants is confirmed. The exchange of land between the applicants and the dissenting owners is approved and the status of the exchange land shall be Maori freehold land. The application for change of status of the land from Maori freehold to General land is dismissed. [35] There will be no order as to costs. Pronounced at S. SZ; Jmf1Pm in /j1; Hlr"N{jAIVWf this )1-tz-l day of \JIHvWPRLj on t V ~r;;g-bay 2007