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BARLOW V PHILLIPS MLC 282 Aotea MB 75 [3 May 2012]
IN THE MĀORI LAND COURT OF NEW ZEALAND
AOTEA DISTRICT
282 Aotea MB 75
(282 AOT 75)
A20080015133
UNDER Section 238 of Te Ture Whenua Māori Act
1993
IN THE MATTER OF Rangitoto Tuhua 55B1B and other Blocks
(Manu Ariki Marae)
BETWEEN FAITH BARLOW AND BEVERLY
MURAAHI
Applicants
AND TEINA PHILLIPS
First Respondent
AND TE KOTAHITANGA SOCIETY
INCORPORATED
Second Respondent
AND WAITUHI FARMS (2008) LIMITED
Third Respondent
Hearing: 26 May 2011
(Heard at Taumarunui)
Appearances: Mr M Armstrong for the applicants
Miss M Rush and Mr P Jeffries for the first and second respondents
Judgment: 3 May 2012
RESERVED JUDGMENT OF JUDGE S TE A MILROY
Copy to: Mr M Armstrong, Aurere Law, P O Box 1693, Rotorua 3040, [email protected] Miss M Rush, Lewis’, P O Box 529, Cambridge 3450, [email protected]
282 Aotea MB 76
TABLE OF CONTENTS
Introduction [1]
Background [3]
Causes of Action [13]
Submissions of Respondents [19]
Evidence at Hearing [24]
Findings on Factual Matters [73]
Survey Evidence [81]
Transfer of Rangitoto Tuhua 55B1B and 55B1A2 [83]
Lease to the Society [84]
Licence to Occupy [88]
Waituhi Farms Lease [90]
Canteen [91]
ANZ Bank Account [92]
Applicants’ Legal Submissions [94]
Transfer of Rangitoto Tuhua 55B1B and 55B1A2 [95]
Indefeasibility [100]
Breach of Trust [106]
No Consideration [108]
Lease to the Society [111]
Estoppel [114]
No Application for Confirmation of Lease [117]
Licence to the Society [118]
Lease to Waituhi Farms (2008) Limited (The Farm Lease) [121]
Canteen [125]
ANZ Bank Account [126]
Respondents’ Submissions [127]
Transfer of 55B1B and 55B1A2 [130]
Lease to Society [135]
Waituhi Farms Lease [140]
Canteen [141]
Bank Account [142]
Submissions in Reply [145]
282 Aotea MB 77
Law [152]
Statutory Provisions [152]
Case Law [153]
Discussion [177]
Transfer of Rangitoto Tuhua 55B1B and 55B1A2 Blocks [178]
Transfer of Non-Reservation Land [192]
Alienation of the Reservation [210]
Lease to the Society [217]
Lease over Balance Lands [222]
Confirmation of Lease [226]
Licence to the Society [231]
Lease to Waituhi Farms [235]
Canteen [240]
ANZ Bank Account [245]
Conclusion [248]
282 Aotea MB 78
Introduction
[1] This application has had a rather lengthy history before the Māori Land Court
and I regret the amount of time that it has taken for this decision to issue. My
apologies to the parties and counsel on this matter.
[2] At the heart of the application is a disagreement between the Te Kotahitanga
Society Inc (“the Society”) and Beverley Muraahi and Faith Barlow, who are trustees
of the Rangitoto Tuhua 55B1B and other Blocks (“the Manu Ariki Marae” or ‘”the
reservation”) as to whether the Society or the trustees have authority over these
blocks. Thus Mrs Muraahi and Mrs Barlow, on behalf of the trustees, have brought
this application questioning the gift of land to the Society, the authority of the
Society to enter into a lease with itself in respect of the reservation, a lease with
Waituhi Farms (2008) Limited (“Waituhi Farms”) over the farm blocks associated
with the reservation, and a licence to a part of one of the blocks to the Society for
life. The application also seeks clarity as to whether the Society is entitled to operate
a canteen on the reservation, and as to the ownership of funds held in the Manu Ariki
Trust ANZ bank account.
Background
[3] The background to the reservation was set out in the Registrar’s report at 232
Aotea MB 134-136. On 2 June 1983 an application was heard to set aside 1.7912 ha
of Rangitoto Tuhua 55B1B (“55B1B”) as a Māori reservation. An extract from
6 Tokaanu Minute Book 5-7 (6 ATK 5-7) sets out the submissions made at the
hearing. Mr Alexander (“Alex”) Phillips gave the land for the marae reservation,
which was to be set aside for all the people of New Zealand. The main objectives for
the reservation were to provide an educational, cultural and spiritual environment for
young Māori people, and to try to reduce the number of Māori youth in jails and
asylums. At that time a meeting house, wharehui, wharekai, kitchen complex and
two newly built living quarters, a surgery and a statue of the Virgin Mary had already
been built on the land. The buildings were worth about $1,000,000.00 and additional
buildings were planned for the future. The funding came from contributions from
Mr Phillips’ followers. The Gazette Notice setting apart the Māori reservation was
282 Aotea MB 79
published on 26 January 1984.1 The Manu Ariki Trustees Fund ANZ Bank account
(“the bank account”) was opened in February 1984.
[4] The first trustees of the reservation were appointed by the Court on 16 April
1984.2 They were Alex Phillips, Arepa Phillips, Jack Tamaki, Paul Ropata, Joe
Tukapua, Beverly Muraahi, and Teina Phillips.
[5] On 17 June 1993 an application was heard to include the residue of 55B1B,
55B2B3B, 55B1A2 and 55B1A1 in the reservation. At 32 Aotea MB 159-160 the
Māori Land Court made the recommendation to cancel the existing reservation and
set apart a new reservation over all these blocks. However, the Gazette Notice never
issued to give effect to the recommendation.
[6] In 1999 Alex Phillips gifted certain blocks to the Society – Rangitoto Tuhua
55B1B and 55B1A2. At that time the provisions of Te Ture Whenua Māori Act 1993
(“TTWMA”) applied in relation to any alienation of Māori freehold land.
[7] On 14 December 2001 the Society granted a licence to occupy Lot 5 on
55B1A2 to Faith and Stephen Barlow. A further licence to occupy was also granted
to Teina Phillips in respect of Lot 2 on 55B1A2.
[8] On 27 September 2002 an application was heard to set apart Part Section 4
Block IX Tuhua, Rangitoto Tuhua 55B1B, 55B2B3B, 55B1A2, and 55B2B3A as a
Māori reservation.3 The Court made the recommendation (“the 2002
recommendation”) subject to two conditions:
a) That a 14 year lease be given to the Society in respect of the buildings
on the land; and
1 “Setting Apart General Land as a Maori Reservation” (26 January 1984) 8 New Zealand Gazette 199
at 214.
2 67 Tokaanu MB 96 (67 ATK 96).
3 120 Aotea MB 236-240 (120 AOT 236-240).
282 Aotea MB 80
b) A licence of 14 years to the existing home owners. (See 120 Aotea
MB 240).
[9] On 11 November 2002 a licence to occupy was granted from the Society to
the Society to occupy Lot 3 on 55B1A2. The term of the licence was expressed to be
“for life”.
[10] On 11 November 2003 a deed of lease was entered into from the Society to
the Society over the buildings and surrounding areas around the buildings on the
reservation, including access to the buildings, but not including the dwellings of the
licence-holders. The lease is also in respect of the carparks and all outdoor areas
developed by the Society including the railway, outdoor performing areas and
recreation areas. The term of the lease was for 14 years with 5 further rights of
renewal of 14 years. The lease finally expires on 31 March 2087. The annual rent is
$100 plus GST.
[11] On 2 September 2004 the Gazette Notice was finally published which set
apart the reservation pursuant to the 2002 recommendation.4
[12] On 1 August 2008 the Society entered into a deed of lease to Waituhi Farms.
The lease was for a term of two years, with one right of renewal of two years and
two further rights of renewal of three years, finally expiring on 31 July 2018. The
rental for the first two years was “Agreed capital expenditure (including fertiliser) of
$45,000 plus GST per annum” and in the 3rd and 4th years a minimum of $18,000
per annum plus “capital expenditure of a value sufficient to provide total annual
rental consideration of $45,000 (plus GST).”
Causes of Action
[13] The applicants’ first cause of action relates to the transfer of Rangitoto Tuhua
55B1B and 55B1A2 from Alex Phillips to the Society by way of gift. The allegation
4 “Setting Apart Maori Freehold Land and General Land as Maori Reservation” (2 September 2004)
111 New Zealand Gazette 2681 at 2718.
282 Aotea MB 81
is that Mr Phillips or the Society ought to have complied with the provisions of
TTWMA, as these blocks are Māori freehold land. No application was made for
confirmation of the transfer pursuant to Part 7 and 8 of TTWMA. The applicants
seek an order that this transfer was not valid and that the blocks are owned by the
estate of Alex Phillips.
[14] The second cause of action relates to the deed of lease to the Society dated
11 November 2003. The applicants say that the lease is not valid because:
a) The lease was granted over an existing reservation in breach of s 338
of TTWMA;
b) The Rangitoto Tuhua 55B1B and 55B1A2 blocks were transferred to
the Society in breach of TTWMA;
c) The Society had no authority to grant the lease over the original 1983
reservation and the 55B1B and 55B1A2 blocks;
d) The lease is substantially different to prior representations made to the
Court in September 2002, so that the Society is or should be estopped
from departing from those representations; and
e) An application for confirmation of the lease was not made and so it is
void.
[15] The third cause of action is in respect of the purported grant of a licence over
Lot 3 on the 55B1A2 block to the Society. The applicants rely on the same grounds
as set out above at (b)-(d). Furthermore the applicants argue that the Society cannot
grant a life interest to itself so that even if the licence is valid, it is terminable at will.
[16] The applicants also question the validity of the lease granted over reservation
lands to Waituhi Farms. The applicants say that the lease is in breach of s 338 of
TTWMA and that the Society has no authority over the 55B1B and 55B1A2 blocks.
Rather, the blocks belong to the estate of Alex Phillips.
282 Aotea MB 82
[17] The applicants also seek damages or an account for profit in respect of the
canteen operated by the Society. The applicants argue that the canteen was operated
without the authority of the trustees, and is therefore a trespass. To the extent that it
was operated by Ms Teina Phillips, the applicants say that this was in breach of trust.
[18] Finally, there is a dispute over who owns the bank account opened with the
ANZ at the same time as the reservation was set apart. If the account is, in fact,
owned by the Reservation Trust then the applicants seek a full account of any funds
improperly disbursed from the account.
Submissions of Respondents
[19] The respondents submit that the transfer of 55B1B and 55B1A2 was made in
accordance with s 147 of TTWMA. At the time of the transfer Alex Phillips was a
marae trustee and he, along with the other trustees consented to the transfer. The
transfers were registered with LINZ without rejection and the Māori Land Court
records were subsequently updated without any express instruction that confirmation
was required. By way of letter dated 25 September 2002 the Registrar of the Māori
Land Court confirmed that the Māori Land Court records had been updated. As an
aside, counsel informed the Court that an application pursuant to s 151 of Part 8 of
TTWMA had now been filed with the Court.
[20] At the time of the transfer in March 1999 the respondents say that all the
criteria outlined in s 152 of TTWMA were met and that the letter from the Registrar
indicated that the Court approved and acknowledged the transfer.
[21] The respondents say that the November 2003 lease from the Society as
landlord to the Society as tenant was a valid lease. When the Society entered into
the lease it had the power to do so as it was the owner of the land. The original
reservation area did not include the land and buildings outlined in the lease. When
the 2004 Gazette Notice expanding the original reservation was published, the lease
was already in place, so that the provisions of s 338 TTWMA did not apply. The
reason the Court put in place conditions in respect of the lease was because the Court
and counsel were under the misapprehension that the original reservation had been
282 Aotea MB 83
cancelled and a new reservation constituted over the blocks in June 1993. Since the
Gazette Notice to give effect to the 1993 recommendations was never published the
limitations on leasing contained in ss 338(11) and (12) did not actually apply, leaving
the Society free to enter into the lease for any term they wished.
[22] The Society also submitted that the licence to occupy is legitimate as the
Society was the registered proprietor of the land at the time it was signed. Similarly
the farm was operated by the Society from 1998, following the gifting of the farm to
the Society by Mr Phillips. The lease to Waituhi Farms was entered into legitimately
following the transfer of the land to the Society, and since then the Society has acted
as landlord. Again the respondents argue that the lease was put in place prior to the
publication of the Gazette Notice increasing the size of the reservation.
[23] Finally, the respondents submitted that the Society operates the Manu Ariki
Trustees’ Fund bank account at the ANZ. The Society operated the account as an
everyday account as Alex Phillips intended. The bank account receives automatic
payments from the licencees of the dwellings and the Society primarily controls and
operates the account.
Evidence at Hearing
[24] During the hearing the Court was presented with survey information on
behalf of the applicants by Hamish Grant Crawford, a licenced cadastral surveyor
with 12 years surveying experience. His evidence was that most of the buildings fell
within the marae reservation area as set apart in the Gazette Notice published in
January 1984. Of the three buildings which did not fall completely within the
reservation, two buildings largely overlapped the original reservation area – a
nursery building and a yellow building with green roof which the surveyor believed
was a dorm room. A building, which Mr Crawford identified as a disused storage
building, also partially overlapped the original reservation area to the extent of about
¼ of the building’s area.
[25] Other evidence was given by Faith Barlow and Beverly Muraahi for the
applicants, and by Paul Ropata, Teina Phillips and Evelyn Keenan for the
282 Aotea MB 84
respondents. Beverly Muraahi, Paul Ropata and Teina Phillips were trustees
appointed to the original reservation in 1984. Ms Keenan is an accounting assistant
and a signatory for the bank account. Her evidence was confined to matters
concerning the bank account.
[26] Mrs Muraahi is a daughter of Alex Phillips and his wife Betty Reweti Phillips
who were instrumental in setting up the marae reservation. Mrs Muraahi is also an
honorary member of the Kotahitanga Society Incorporated, which was founded in
1961 by her parents and other kaumātua.
[27] Mrs Muraahi gave some background information regarding the origins of the
Society. She referred to a political and intellectual movement which began in the
1950’s and seems to have had the aim of promoting Māori mana motuhake and
retention of Māori tikanga. She stated that Alex Phillips’ role in the movement was
as a spiritual leader and faith healer. Other kaumātua were involved in the political
aspects of the movement, and when two of the key kaumātua died, the movement
suffered a rift. Mr Phillips’ followers held a national hui in 1961, which resulted in a
resolution to adopt the corporate identity called, now, Te Kotahitanga Society
Incorporated.
[28] Alex Phillips decided to move his vision for the Society to the family farm
near Taumarunui in the early 1980’s. The Phillips allocated 1.79 hectares of the
family farm for the purpose of the marae reservation, and a major building
programme commenced in 1982, funded primarily from contributions made by Mr
Phillips’ followers.
[29] The marae was also supported, at least to some extent, by the farm
operations.
[30] In respect of the bank account Mrs Muraahi was adamant that the account
was set up for the sole use of the reservation trustees, and that any involvement by
the Society was purely as an administrator or manager of the reservation’s financial
transactions, not as owner of the funds. However, she agreed that some of the homes
282 Aotea MB 85
for which rental was received into the account were not located on the reservation
and funds also came from outside sources.
[31] Mrs Muraahi argued that the fact that she and Teina Phillips were the original
signatories was proof that the account was the trustees’ account, because although
she was a trustee, she had never held a position on the board of the Society.
However, Mrs Muraahi conceded that she had held positions on various
subcommittees within the Society. Mrs Muraahi was also clear that the account was
not her father’s personal account – all his personal accounts were managed by him
and his wife.
[32] Mrs Muraahi’s evidence in respect of the farm lease was that she first heard
of it at an AGM of the Society held in 2008. The meeting took place a few weeks
after Alex Phillips’ burial, and Mrs Muraahi says that although questions were raised
about the lease, the Society leadership ignored the concerns of the members.
[33] Mrs Muraahi indicated that originally the farm was run by her father and
mother together – it was not solely worked by Alex Phillips; Betty Phillips played a
considerable role in its operation. Later on two of Alex’s sons managed the farm, but
under instruction from Alex Phillips. Mrs Muraahi told the Court that when the
trustees became aware of the Waituhi Farms lease they sought urgent meetings with
the Society because they were concerned, amongst other things, that the lease
included the entrance to the reservation accessway. However, the Society was
resistant to the idea of a meeting and did not supply the trustees with copies of the
lease until they were directed to do so by a Judge. The trustees never gave any
approval to the negotiations or the lease with Waituhi Farms. Mrs Muraahi’s view
was that the farm should have been financially viable, if run properly by the Society,
but that poor management by the Society had resulted in the selling off of all the
stock and the lease of the farm to Waituhi Farms.
[34] Mrs Muraahi’s evidence in relation to the canteen was that she had opened a
small canteen in 1965 selling lollies, drinks and cakes on days that her father held his
healing practice. The funds from the canteen went to purchase more supplies and
keeping the healing services available.
282 Aotea MB 86
[35] Mrs Muraahi agreed during cross-examination that there was a separate
canteen from the one she operated. That canteen was operated by the Wairua Ladies
Committee (“WLC”), and Mrs Muraahi could not say where profits from the
operation of that canteen were paid.
[36] The WLC canteen is now operated by Teina Phillips. Mrs Muraahi said that
trustees do not receive financial reports on the operation of the canteen. Nor have
commercial activities been approved by the trustees. Mrs Muraahi alleged that a
private trust took the lion’s share of revenues from the canteen because it had a
monopoly for the sale of merchandise, food and assorted goods on the reservation.
However, Mrs Muraahi did not provide any documents or other evidence to support
her allegations.
[37] When the 55B1B and 55B1A2 blocks were transferred from Alex Phillips to
the Society, Mrs Muraahi stated that, although she was a member of the preferred
class of alienees, being a daughter of the owner of the land, she was never offered
the land prior to its being transferred to the Society. Mrs Muraahi’s wish was to keep
the land in the family, as they are ancestral lands and of great significance to them.
Her preference was that the underlying title to the land remain with the family,
although the reservation would overlay that ownership. During cross-examination
Mrs Muraahi conceded that Alex Phillips intended to gift the land to the Society, and
had he wished his children to benefit from it, he would have left the lands to them.
[38] Mrs Muraahi’s concern was that the reservation ought to be administered by
the trustees for the beneficiaries of the reservation, rather than being absolutely
controlled by the Society. In response to Mr Ropata’s evidence, Mrs Muraahi agreed
that the Society contributed to the operation of the farm but that was done so that
Alex Phillips could spend as much time as possible ministering to the sick people
who sought his help.
[39] During cross-examination of Mrs Muraahi, she agreed that while Alex
Phillips was alive he had the support of all supporters and members of Manu Ariki,
and that his wishes were always complied with. In other words he was the de facto
governor of the reservation. As the trustees were also members of the Society their
282 Aotea MB 87
governance was subsumed by Mr Phillips through the Society. Nevertheless Mrs
Muraahi argued that, at least when the reservation was first constituted Alex Phillips’
intentions were to establish trustees separately from the Society to perform their
proper function, and as part of that he supported three of his children into the trustee
roles.
[40] Since his death the Society had taken over the reservation and the trustees
had no say in what was happening, despite seeking to re-establish the trustees’ proper
roles and functions.
[41] Mrs Muraahi acknowledged that as her father reached the end of his life he
transferred his role and responsibilities in the Society to Shirley Anne Phillips, his
granddaughter and Teina Phillips’ daughter. However, Mrs Muraahi questioned what
power or authority there was to appoint Shirley Anne Phillips as director. Moreover
the trustees of the reservation could not clearly identify those legally responsible for
the operations of the Society and those who were the actual decision makers for the
Society. Mrs Muraahi emphasised that the Society was not originally created on the
basis of her father’s healing abilities but rather as a political as well as spiritual
movement. It changed in later years so that it became more of a business.
[42] Mrs Muraahi stated that the connection between the Society and the
reservation was Mr Phillips, nothing else. The roles and responsibilities of the
reservation trustees were different from those of the Society.
[43] Again Mrs Muraahi emphasised the concerns of her whānau as tangata
whenua and ahi kā of the land, as well as the role of the trustees as kaitiaki for the
reservation.
[44] Mrs Muraahi indicated that they made attempts to find an out of Court
resolution for the issues between themselves and the Society, but that the Society had
rejected their approaches.
[45] Mrs Faith Barlow also gave evidence. She is the daughter of Alex and Betty
Phillips and was also an honorary member of the Te Kotahitanga Society Inc.
282 Aotea MB 88
[46] Mrs Barlow’s evidence in relation to the bank account was that a meeting of
reservation trustees was held on 23 August 2008, after Alex Phillips’ death. At that
meeting Teina Phillips disclosed that there were no funds in the account and that they
should start afresh. The trustees resolved to ask Evelyn Keenan, the general
secretary and financial controller of the Society, to provide bank statements for the
previous two years, and a letter was sent to that effect. The Chair of trustees,
Maungarongo Phillips also made a request in person for these reports. The Society
did not provide the requested statements. As a result the trustees arranged for the
bank to freeze the account. Mrs Barlow was of the view that the Manu Ariki
Trustees’ Fund was the reservation trustees’ account and monies paid into it were for
the maintenance and upkeep of the reservation. In support of her view she queried
why Beverly Muraahi would have been a signatory on the account when she was
never a Society office holder.
[47] Mrs Barlow confirmed Mrs Muraahi’s evidence that the trustees were never
consulted in regard to the lease to Waituhi Farms. She also confirmed that the
Society had never provided the trustees with a copy of the lease until the matter
came before the Māori Land Court. Mrs Barlow was concerned that the rent from
the lease was being used to pay debts owed by the Society.
[48] Mrs Barlow explained the use of each of the buildings on the reservation.
These buildings included the canteen, Te Mana o Te Aroha (a multi-use complex
incorporating accommodation, ablution facilities, dining and food area, offices,
visitors’ lounge and other spaces), Pareuira (a wharenui with attached toilet
facilities), Whaatua Kaimarie (a wharekai), a surgery (where Alex Phillips practised
his healing), a shelter building, the awhina office and residence of Henry Tai (Chair
of the Society) and Te Puutatara (a sound shell). Most of these buildings are used
exclusively by the Society and Mrs Barlow’s evidence was that no rent or monies
were ever paid to the trustees of the reservation for use of the buildings. Apart from
the canteen all the other buildings are situated on the original 1984 reservation. The
surgery and the wharekai are mostly situated on the reservation but a small area of
each of them lies over the boundary of the reservation. Approximately one quarter
of the canteen building lies within the original 1984 reservation, while the rest lies in
the neighbouring block.
282 Aotea MB 89
[49] Mrs Barlow went on to say that a residence was built on Lot 3 of the 55B1A2
block for Alex Phillips’ sister, and that, after her death, it was given as a wedding gift
to her sister Donna Tito. The house is now controlled exclusively by Teina Phillips
and Shirley Anne Phillips.
[50] Mrs Barlow stated that when she was appointed a trustee in 1993 the
reservation trustees did not meet regularly, and she could not recall any minutes or
statements being presented at trustee meetings.
[51] Ms Keenan is the general secretary for Te Kotahitanga Society Inc, but is not
a reservation trustee. Her evidence was that the account was administered and
managed by the Society, with approved financial systems put in place at the direction
of Alex Phillips. She became a signatory to the ANZ Bank Manu Ariki Trustees’
Fund bank account when Alex Phillips asked her to fill the role. Ms Keenan’s
understanding was that the account was created by Mr Phillips to receive and expend
monies on Manu Ariki reservation. Under questioning from applicant counsel she
agreed that the Society’s role was to administer the account and that in the usual
situation the ultimate control of the account would rest with trustees of the
reservation. She also agreed that the Society was providing administration services
in respect of the account.
[52] Mrs Teina Phillips is the daughter-in-law of Alex Phillips, and is a trustee and
also a member of the Society. Her evidence was that monies from rental and other
sources were paid into the bank account as directed by Mr Phillips. The fund was
used to pay expenses in relation to Manu Ariki reservation including repairs,
maintenance, extension work and legal fees. She said that she had never abused her
power as a signatory in respect of that account, or any others for which she became a
signatory. When asked by applicant counsel whether she authorised payments she
replied:5
I just authorise when I’m told to, not through the admin department. I know that it
has the cheques so they just call me in and I just go and sign the cheques. I do not
5 267 Aotea MB 186 (267 AOT 186).
282 Aotea MB 90
read what I’m going to go over, this and that, just sign my name, it’s second
signature.
[53] When the Court asked who called her in to sign, she replied that Mr Phillips
did. Upon further questioning she went on to say that there would be meetings and
then Mr Phillips would call her in to sign the cheques after that.
[54] The main witness for the respondents was Paul or Paora Ropata, one of the
original trustees, a member of the Society and also a retired telecommunications
engineering technician who served in the Royal New Zealand Navy. He is also a
Justice of the Peace. He was President and later General Secretary of the Society
and also holds a number of portfolios within the organisation.
[55] Mr Ropata met Alex Phillips and his wife in 1959, and his interest in Mr
Phillips’ work and philosophy was sparked by the support Mr Phillips received from
a large number of Māori throughout New Zealand. Mr Ropata said Mr Phillips was
one of the Māori prophets and was very committed to the work of education and
community and sports activities and spiritual endeavours carried out at Manu Ariki.
Mr Ropata was also strongly supportive of the Director and management team of the
Society, as “they continue to uphold the ideals and words of our elders now long
departed from this world.”6
[56] Mr Ropata’s view of the genesis of the Te Kotahitanga Society Inc was much
more focused upon Mr Phillips’ work as a healer. Mr Ropata said that increasing
demands were placed upon Mr Phillips by people seeking cures for their illnesses.
That led to the establishment of the Kaunihera mō te Kotahitanga o te iwi Māori to
support Mr Phillips. Mr Ropata acknowledged that Mr Phillips and his wife faced
troubles during the early years when the movement was situated in the Te Kuiti-
Otorohanga-Te Awamutu area. By way of example Mr Ropata mentioned that Mr
Phillips and his followers were taken to Court and questioned about their activities.
However, the Kotahitanga Church Building Society Inc (now the Kotahitanga
Society Inc) was constituted in November 1961 with the aim of establishing a
complex at Manu Ariki. The fundraising and events organised by the Society
6 267 Aotea MB 189 (267 AOT 189).
282 Aotea MB 91
(sporting competitions, festivals, fundraising and special annual events) required
good administrative and financial systems and Mr Ropata said that Alex Phillips led
the Society in all its developments.
[57] It was clear from his evidence, that Mr Ropata saw Shirley Anne Phillips, the
Director of the Society, and the Society itself as carrying on the charitable work
begun by Mr Phillips.
[58] Mr Ropata confirmed that Teina Phillips “would do whatever Mr Phillips
asked her to do. There was no reason not to carry out Mr Phillips’ request as his
work had always been in the best interests of the people including those who visited
Manu Ariki to consult with him.”7
[59] Mr Ropata’s evidence in respect of the farm lease was that Mr Phillips
purchased the 55B1B block in 1947 and gradually increased the area to a farm that
now totals 1,400 acres. Mr Phillips’ supporters cleared the bush, blackberries and
gorse from the land, and Mr Ropata said that all construction on the farm was
financed by the Society.
[60] In Mr Ropata’s words:8
In 1980 a major building programme was under taken by the Society to support Mr
Phillips’ vision of building a marae. In 1982 the Society’s headquarters moved to
Manu Ariki. Initially Mr Phillips farm machinery was rented by the Society but the
money was going back to the Society through the efforts of Mr Phillips himself.
The Society also received money from the wool clip on occasions.
It was through the efforts of Society members that the farm was able to operate in
the early days. People contributed money, food and implements to ensure the farm
operated effectively.
[61] Mr Ropata went on to say that the society had managed and overseen the
farm since 1998. Minutes from the Society Board meetings of 2007 to 2010 confirm
that the farm was seen as part of the Society’s operations. A special dinner was held
on 19 July 1998 to record the formal gifting of the Manu Ariki farms to the Society.
7 267 Aotea MB 193 (267 AOT 193).
8 267 Aotea MB 193 (267 AOT 193).
282 Aotea MB 92
[62] Mr Ropata’s view of the role of the trustees was that:9
The marae trustees were chosen by the people to represent the Iwi o te Motu. They
were there to be kaitiaki of the turangawaewae o te Atua and the legal mechanism
for the reservation. The Kotahitanga Church Building Society Incorporated as is
now known (sic) was the administrator of the turangawaewae o te Atua. The elders
always [claimed] that the Society was a material side of the Atua and the marae
trustees were the legal protection for the marae.
[63] Mr Ropata went on to emphasise that Mr Phillips always had the “final say,”
and continued as follows:10
All organisations at [Manu] Ariki, including the sub-committees and the marae
trustees were taught and continued to be taught that the Society is the administrator
of the marae and the trustees are the kaitiaki.
[64] Mr Ropata said that the trustees had not had regular meetings or met with the
beneficiaries for approximately 20 years.
[65] Mr Ropata alluded to the changes to Mr Phillips’ legacy after his death, and
said that there were numerous special meetings called to discuss the changes. Mr
Ropata also said that when Mr Phillips transferred his mana to Shirley Anne Phillips
in 2003 in the presence of some 300 people, the transfer of leadership also caused
some discord.
[66] Mr Ropata gave different information from Mrs Muraahi as to how the
canteen began. He said Mrs Betty Phillips and the WLC made cups of tea for
patients who travelled to see Mr Phillips and that they ran a canteen when Mr
Phillips was healing in Te Kuiti. When he moved back to the farm, Mrs Phillips and
the WLC continued to operate a canteen on surgery days, and at other times when
the Farm Management Committee held fundraising days. Mr Ropata considered that
the canteen was administered by Mr Phillips, although run by the WLC. Although it
ran seven days a week in the late 1980’s until the early 2000’s, today it only opens
on occasion. The canteen was always run for the benefit of Manu Ariki, and Mr
Ropata believed that no one personally benefited from the canteen.
9 267 Aotea MB 194 (267 AOT 194).
10 267 Aotea MB 194 (267 AOT 194).
282 Aotea MB 93
[67] In respect of the bank account Mr Ropata stated that it was always operated
by the Society, and was intended to receive rental from the houses around Manu
Ariki. Mr Ropata also referred to a farm loan scheme operated by Mr Phillips which
was used for farm development at Manu Ariki and for purchasing neighbouring
blocks of land. Thus the account was a general account operated by the Society, not
by or for the trustees.
[68] Mr Ropata referred to an audit of the Society which was completed in early
2010. The audit found that the Society had a comprehensive set of policy and
procedural documents and well-written and clearly documented processes. The
Society’s financial management included the bank account.
[69] In summary Mr Ropata’s evidence was that Mr Alex Phillips and his
supporters in the Society worked together to create the complex at Manu Ariki.
While Mr Phillips was the key figure and founder of the Society, the Society played
a very significant role in the development and operation of the Manu Ariki complex.
[70] At 267 Aotea MB 196-197 Mr Ropata said:
The trustees’ role was more peripheral and primarily was to support the Society and
be the legal mechanism from which the Society could [operate]. Archives from the
Society clearly record the role of both entities. The Society has operated the bank
account in question since it was opened. The trustees have no authority to prevent
the Society from operating and controlling this account as it has always been an
account for the Society for funds…
For many years the trustees have refused to work alongside the Society for the
benefit of the people. They believe the way forward is to exert control over the
Society and its operation thus preventing it from being able to effectively operate as
intended by Mr Phillips.
It appears the source of the problems at Manu Ariki it is currently facing can be
tracked to the family members of Mr Phillips who seem intent on taking over despite
there being very clear governance structures in place. It was never Mr Phillips
intention that his children would all control Manu Ariki. Mr Phillips appointed Ms
Shirley Anne Phillips as director and as his successor and the family need to
continue to respect that.
[71] During cross-examination Mr Ropata further explained his view of the
trustees’ role as follows:11
11 267 Aotea MB 198 (267 AOT 198).
282 Aotea MB 94
The Society was to continue to administer the marae. The trustees were there to act
as the legal representatives should it be required. So if we needed to go to Court we
would ask the trustees to attend that. We would pay for all the paperwork, we would
pay for whatever had to be done, but the trustees would undertake the work for us.
[72] Mr Ropata expressed some disagreement with the survey plans prepared by
Mr Crawford. Mr Ropata advised that he had prepared the plan on which the
original 1984 reservation recommendation was made. Mr Ropata thought that the
surveyors had not surveyed to his plan but to something else. However, he produced
no other evidence to displace the survey evidence provided by Mr Crawford.
Findings on Factual Matters
[73] During the course of these proceedings the Court received a lot of evidence
regarding the historical background to the creation, operation and maintenance of the
Manu Ariki complex. While some of the issues before the Court can be decided on
an analysis of the survey, legal documentation and statutory provisions, the parties’
sense of what is fair and just is conditioned by their view of the historical
background.
[74] This Court must be very wary about making historical judgments on the basis
of the witnesses’ recollections and the documentation before the Court. Neither of
those sources would be sufficient to allow the Court to give a proper history of Te
Kaunihera o Te Kotahitanga or the Society and Mr Phillips’ changing role in the
political/religious/cultural movements which are mentioned in the witnesses’
evidence.
[75] Nevertheless some aspects of that history continue to resonate with all parties
in this matter, and also inform the Court as to the intentions of Alex Phillips as a key
player in creating the legal situation which is before the Court.
[76] Based on the evidence presented I have come to some general conclusions
about Mr Phillips’ position and role as they were for the period from the building of
the complex at Manu Ariki to his death in 2008.
282 Aotea MB 95
[77] In my view the evidence shows that by the time Alex Phillips moved the
centre of his healing practice from Mangatoatoa Marae and Te Kuiti to Manu Ariki
he had a very large following both for his healing practice, but also for the spiritual
message he wished to share. Mr Phillips carried out his healing, which attracted his
supporters, and they then provided resources to assist him to build the marae
complex at Manu Ariki. I consider that during his lifetime he was a charismatic
figure who influenced many people to join the Society and to seek to bring to
fruition the vision he promoted for how their community could work. He led and
grew the Society, while the Society supported and worked for him.
[78] It was clear from the evidence of all parties that during his lifetime Mr
Phillips controlled the marae reservation and the Society, and that it was only after
his death that divisions arose to the point where the work of the Society has been
called so strongly into question by the applicants.
[79] I consider that during Mr Phillips’ lifetime the trustees appointed by the Court
to the reservation played a passive role, following his leadership, and working as a
part of the Society to the extent that their roles were subsumed by Mr Phillips’
leadership and by the Society’s administration. In such circumstances it is little
wonder that the trustees called no separate meetings and kept no separate records.
Rather they attended meetings called by Mr Phillips and administered by the Society.
[80] There are a number of marae in New Zealand where, although the marae is
operating well enough, the delineation of roles between the trustees and the marae
committee, or an incorporated society acting for all purposes as the marae
committee, is never made until disagreements occur. Similarly, in the case of Manu
Ariki, had the trustees and the Society still been able to work as a cohesive unit these
governance issues would not have come before the Court. However, with the
passing of Mr Phillips it is clear that the Society faces considerable difficulties in
maintaining the organisation and in promoting his vision. It now seems that the
blurring of the roles of trustee and Society that took place during his lifetime is no
longer workable, and that means that the Court must apply the law in resolving these
matters in order to provide clarity to the parties so that they can make decisions on
how to move forward.
282 Aotea MB 96
Survey Evidence
[81] Despite Mr Ropata’s disagreement with the survey evidence given by Mr
Crawford, I am satisfied that Mr Crawford has correctly located the boundaries of
the 1984 original reservation and the position of the buildings therein. The
respondents produced no survey evidence of their own and Mr Crawford’s evidence
was not cross-examined. I therefore find that Mr Crawford has correctly sited the
original reservation on 55B1B, the expanded reservation as set out in the Gazette
Notice of 2 September 2004, and also the areas subject to licences and leases. It
follows that the evidence given by Mrs Barlow relating to the use and position of the
various buildings is correct. In other words all the buildings referred to as being
used exclusively by the Society, or under the Society’s control, except for the
licenced dwellings and part of the canteen building, are situated on the original
reservation as constituted in the Gazette Notice of January 1984.
[82] I also consider that the surveyor’s findings are supported by the fact that
many of the buildings forming the complex were already built at the time that Mr
Phillips applied for reservation status. Mr Ropata said that he himself prepared the
plan which accompanied the application for the reservation. I find it highly unlikely
that such a careful man would have mistakenly placed the reservation other than
around the buildings that the reservation was being sought to protect.
Transfer of Rangitoto Tuhua 55B1B and 55B1A2
[83] The memorandum of transfer for this transaction dated 1 September 1998
shows a transfer price of $795,000.00, but documents disclosed by the respondents’
counsel show that a gifting programme was put in place in respect of this transaction.
It is therefore clear from the evidence that these blocks were transferred by Alex
Phillips to the Society by way of gift. The memorandum of transfer does not carry
an endorsement from the Māori Land Court to show that the transaction has been
confirmed by the Court and the respondents agreed that no order of confirmation was
obtained from the Māori Land Court at the time of the transaction. An application
for confirmation has now been lodged with the Court.
282 Aotea MB 97
Lease to the Society
[84] It follows from the survey evidence that the lease was over an existing
reservation, being the original reservation constituted in 1984.
[85] I have used the records of the Māori Land Court to assist my understanding
of the application for the extension of the reservation and the conditions included in
the recommendation made by the Court. At the hearing of 27 September 2002 (120
Aotea MB 236-240) the applicant was Alex Phillips. The purpose of the hearing was
to consider an application to extend the existing boundaries of the Manu Ariki Māori
Reservation. Counsel advised the Court that Mr Phillips wished to include further
land in the reservation, and that all the land he wished to include was now in the
name of the Society.
[86] At 120 Aotea MB 237 counsel states that there was a rider to the extension of
the reservation and the appointment of further trustees, and he referred to two
conditions. The first condition was that the Society was to make certain
improvements on the lands and wished to enter into a 14 year lease in order to lease
and manage the buildings. He also referred to the need for licences to be put in place
in respect of the houses that were on Lots 2, 3, 4 and 5 next to the reservation.
Counsel later told the Court that the reason the term for the licences was 14 years
was because that was the maximum period. Here counsel must have been referring
to the limitation on the term of licences contained in s 338(12). Further on (at 120
Aotea MB 239) counsel went on to say that the buildings for which a lease was
sought belonged to the Society and that the lease was to allow the Society to manage
the buildings. In reply the Court said:
Court: Sorry, I thought it was a lease back to the Society and then the Society
extend the licence to the building owners, but that is not what you want?
Mr Fenter: No.
Court: So there are two separate forms of buildings?
Mr Wilson: Yes Sir. Lots 2, 3, 4, and 5.
Court: That’s for the extended licences.
Mr Wilson: They are private homes.
282 Aotea MB 98
Court: Yes, and the lease.
Mr Wilson: The lease would be for the Society and its buildings. Which are not
marked on that map.
Court: So the two conditions, if we can amend those conditions, firstly that there
be a 14 year lease back to the Society in respect to its buildings and a licence of 14
years to the existing home owners.
Mr Wilson: Yes.
[87] The orders were made on that basis, but in my view it is clear that the Court
simply wished to put in place the arrangements applied for by Mr Phillips. The
conditions were the applicant’s conditions, in order to provide a way for the Society
to lease and manage buildings Mr Phillips seems to have considered belonged to the
Society. In other words it was a protection for the Society, not a condition being
established by the nominee trustees.
Licence to Occupy
[88] The Society executed a licence to occupy dated 11 November 2002, giving
itself a licence to occupy Lot 3 on block 55B1A2 adjacent to the reservation. The
licence provides that the licencee has the right to occupy the licenced area for the life
of the licencee. The licence is terminable on 14 days written notice on breach of
certain terms of the licence including the occupation of the licenced area, by a
spouse, child, grandchild or great grandchild or their spouses for a continuous period
of three months, and also if the licencee comes into conflict with the philosophies of
the trustees of the reservation, Manu Ariki or the Kotahitanga Building Society so as
to make their occupation incompatible or intolerable. The licence contains the usual
terms regarding maintenance, payment of rates and outgoings and destruction of the
building by fire or earthquake or other removal or replacement. Lot 3 is not on the
original reservation.
[89] I find that the form and wording of the licence contemplates the granting of
the licence to a natural person rather than to an artificial entity.
282 Aotea MB 99
Waituhi Farms Lease
[90] The Society entered into a deed of lease with Waituhi Farms. The term of the
lease is for two years from 1 August 2008 with three rights of renewal. The final
expiry date is 31 July 2018. The survey evidence shows that the entrance to the
original reservation (but not the original reservation) as well as the further blocks
included in the extended reservation as constituted by the 2004 Gazette Notice are
included in the lease.
Canteen
[91] Although Mrs Muraahi began a canteen as a young woman to provide
refreshments for people attending her father’s surgery, I accept the evidence of Mr
Ropata that the canteen presently operated by the Society was started by Mrs Betty
Phillips and the WLC, and it appears to have been supported and then run by the
Society for a considerable number of years. I accept the evidence that the canteen
was one of the fundraising mechanisms that Mr Phillips and the Society used to
support the work of the Society. From the survey evidence it is clear that the canteen
is at least partially situated on the reservation.
ANZ Bank Account
[92] The evidence provided by the witnesses gives a very fuzzy picture as to who
was intended and entitled to operate the account. All that is clear is that the account
received funds from rentals for the various houses adjacent to the reservation and
was intended to support the maintenance and development of the Manu Ariki
complex. Although it is clear that the Society has operated the account for a number
of years at the direction of Mr Phillips while he was alive, the factors I consider
determinative are:
a) The name of the account – Manu Ariki Trustees Fund;
b) The purpose for which it was set up – to help maintain the marae;
282 Aotea MB 100
c) The initial signatories – trustees rather than officers of the Society;
and
d) The fact that the trustees of the marae were intended as those who
were to be legally responsible for Manu Ariki matters.
[93] These factors lead me to the conclusion that the bank account is an account
for the reservation trustees’ funds and that the Society has simply administered the
account.
Applicants’ Legal Submissions
[94] Mr Armstrong for the trustees submitted that pursuant to the provisions of
TTWMA and the Māori Reservations Regulations 1994 the trustees are entitled to
control, manage and administer the reservation. It was not uncommon that marae
operated with marae committees (sometimes incorporated societies) as the delegated
body carrying out the day to day functions on behalf of the trustees. However the
overall rights and responsibilities remain with the trustees. Although Mr Alex
Phillips exercised de facto control while he was alive, the exercise of such authority
was not legitimate in terms of the legal provisions. Any control the Society had was
through Mr Phillips and his role as a trustee. Mr Phillips had no ability unilaterally
to appoint anyone to control the reservation. Thus Shirley Anne Phillips as the
Director of the Society has no authority in respect of the reservation, except as may
be delegated to her from the trustees as a whole.
Transfer of Rangitoto Tuhua 55B1B and 55B1A2
[95] Applicant counsel referred to ss 146 and 147 of TTWMA, which provide that
no one can alienate Māori freehold land other than in accordance with the Act.
Section 147A provides that the alienor must offer a right of first refusal (for sale or
gift) to the preferred class of alienees. The respondents provided no evidence to
show that a right of refusal was offered to any of the preferred class prior to the
transaction taking place. Beverly Muraahi, as a daughter of Mr Phillips, was within
the preferred class and her evidence was that no offer was made to her or her
282 Aotea MB 101
siblings. She also indicated that the land was of special significance to her family,
and she and her siblings would have accepted the offer of first refusal, had it been
made. Counsel also referred to the Preamble, s 2 and s 17 of TTWMA which
emphasise retention of the land in the hands of the Māori owners as a primary
purpose of the Act.
[96] Section 150C(3)(a) requires a transferor to make application for confirmation
from the Court to a transfer of the land by way of gift. Such application was not
made. Since the offer of first refusal was not made pursuant to s 147A the Court
would not have granted confirmation pursuant to s 152 of TTWMA.
[97] In respect of that part of 55B1B which was set apart as a Māori reservation,
applicant counsel argued that s 338(11) of TTWMA prevents the transfer of the
reservation. As the reservation was never partitioned out of the 55B1B block, that
block could not be transferred without also transferring the reservation area. The
effect of the existence of the reservation was such that the entire 55B1B block could
not be transferred without being in breach of s 338(11).
[98] Applicant counsel submitted that respondent counsel gave evidence from the
Bar in saying that transfers were registered with LINZ without rejection. Even if the
Court accepts respondent counsel’s evidence on this point, the provisions of
TTWMA were not complied with. The Māori Land Court case manager had no
authority to update the records of the Māori Land Court to show the Society as
owner of the land. The alienation could only be confirmed by an order of the Court.
The case manager’s letter cannot substitute for an order of confirmation by the
Court.
[99] Applicant counsel then turned to s 156 of TTWMA, which provides that an
instrument of alienation which has not been confirmed by the Court has no force or
effect. Counsel submitted that, as a consequence, the transfers in this case have no
force or effect, and the legitimate owner of 55B1B and 55B1A2 is the estate of Alex
Phillips. The application for confirmation recently filed by the respondents is
doomed to fail, in applicant counsel’s view, because:
282 Aotea MB 102
a) Section 147A has still not been complied with;
b) The transfer is still in breach of s 338(11); and
c) The transfer is more than three months old (s 151(2)(a)).
Indefeasibility
[100] The applicant referred to the High Court decision in Warin v Registrar-
General of Land12
where the Court held that despite the fact that the confirmation
requirements of TTWMA had not been complied with LINZ registration gave an
indefeasible title in the absence of fraud or one of the other exceptions. The
applicant submitted that that case was distinguishable from the present situation
because in Warin:
a) There was no formal notation on the certificate of title that the land
was Māori freehold land;
b) The exceptions to indefeasibility did not apply; and
c) The transferee was a bona fide purchaser for value.
[101] In this case both titles have a notation as follows:
Status Order determining the status of the within land to be Māori freehold land.
[102] These notations were registered prior to the transfer.
[103] Counsel submitted that an exception to indefeasibility as contained in s 62 of
the Land Transfer Act 1952 applies in this situation, in that s 62 provides that a
registered proprietor takes subject to any encumbrances noted on the title. Not only
was the transfer invalid pursuant to the confirmation provisions of TTWMA, but the
12 HC Whangarei CIV 2006-488-000245, 31 October 2008.
282 Aotea MB 103
parties are deemed to have known that they were dealing with Māori land by virtue
of the notice given by registration of the status orders on the LINZ titles.
[104] Applicant counsel also referred to Edwards v Māori Land Court,13
where
Justice Young held that the registration of status orders in a title was important
because the effect of a change of status to general land removes most of the
restrictions contained in TTWMA in relations to dealings with the land.
[105] Counsel also relied on the case Town & Country Marketing Limited v
McCallum,14
where the Judge held that the status of a restrictive covenant on the title
gave an indefeasibility benefit which would prevent a purchaser defeating a
restrictive covenant notified upon the title. Counsel likened the status orders to a
restrictive covenant. Allowing the transfer of the blocks to the Society to stand
would defeat the notification of Māori land status on the 55B1A2 and 55B1B blocks.
Breach of Trust
[106] The applicant submitted that Mr Phillips had a duty to hold in trust that part
of the 55B1B block set apart as a Māori reservation pursuant to the provisions of
TTWMA and the Māori Reservations Regulations 1994. A transfer, therefore, of the
55B1B block breached the prohibition on alienation which applies to a reservation.
Applicant counsel also submitted that Mr Phillips and Mr Ropata had either actual or
constructive knowledge of the breach in their positions as trustees, and, as executive
members of the Society, their knowledge is imputed to the Society. Moreover, Mr
Ropata’s evidence made it clear that the Society was deeply involved with the marae
reservation, and could not deny knowledge of the reservation or the appointment of
trustees.
[107] The consequence of such knowledge, the applicant alleged, was that the
Society had actual or constructive knowledge that the land was trust property, and
13 [2002] BCL 142.
14 (1998) 3 NZ ConvC 192, 698.
282 Aotea MB 104
that it was transferred in breach of trust. Therefore this constitutes an exception to
indefeasibility as set out in Smith v Hugh Watt Society Inc15
and Frazer v Walker.16
No Consideration
[108] Section 183 of the Land Transfer Act 1952 provides:
183 No liability on bona fide purchaser or mortgagee
(1) Nothing in this Act [or the [[Land Transfer (Computer Registers and
Electronic Lodgement) Amendment Act 2002]] ] shall be so interpreted as
to render subject to action for recovery of damages, or for possession, or to
deprivation of the estate or interest in respect of which he is registered as
proprietor, any purchaser or mortgagee bona fide for valuable
consideration of land under the provisions of this Act [or the [[Land
Transfer (Computer Registers and Electronic Lodgement) Amendment Act
2002]] ] on the ground that his vendor or mortgagor may have been
registered as proprietor through fraud or error, or under any void or
voidable instrument, or may have derived from or through a person
registered as proprietor through fraud or error, or under any void or
voidable instrument, and this whether the fraud or error consists in wrong
description of the boundaries or of the parcels of any land, or otherwise
howsoever. [Emphasis added].
…
[109] In this case there was no consideration, as the sum of $795,000.00 recorded
on the transfer was gifted over to the Society via a gifting programme. Applicant
counsel referred to Tapsell v Murray17
where Allan J held that where land was
transferred for consideration, but the consideration was then forgiven pursuant to a
gifting programme, the transfer is in form and substance a gift. In that case the
Court held that indefeasibility did not apply to the transferee who received the land
by way of gift from a registered proprietor who had obtained registration by fraud.
[110] The combination of all the above factors led the applicant to conclude that the
trustees do not have indefeasible title.
15 [2004] 1 NZLR 537.
16 [1967] NZLR 1069.
17 HC Tauranga CIV 2005-470-889, 26 May 2008.
282 Aotea MB 105
Lease to the Society
[111] The lease from the Society to itself is dated 11 November 2003. At that time
the original reservation was still in place because the recommendation made by the
Māori Land Court in 1993 cancelling the reservation was never gazetted. The
applicants say that the effect of s 338(11) and (12) of TTWMA is that any lease of
reservation land must have the consent of the Court and may not exceed a term of 14
years, including any term or terms of renewal. Moreover, the trustees have the
authority to grant a lease over the reservation, no one else. In this case the lease was
granted by the Society to the Society, no application was made to Court for approval
of the lease, and the lease, including renewals has a term of 84 years. The applicants
conclude that the lease is in breach of s 338 and furthermore was not granted by the
legitimate authority in respect of the block. Therefore the lease is not valid.
[112] The applicants submit that, if the Court accepts that the rest of the 55B1B and
the 55B1A2 blocks fall into the estate of Mr Phillips, the lease for that part of the
land has not been granted by the legitimate proprietor either. Therefore it is not a
valid lease in total.
[113] The applicants also make the point that the lease has not been registered and
so no indefeasible title has been taken in respect of the leasehold interest. The
applicants argue that even if it were registered, the same problems relating to the
Society’s actual or constructive knowledge of the original defect in title and lack of
consideration would apply, so that the Society could not claim a valid lease.
Estoppel
[114] In respect of the ground of estoppel the applicants relied on the submissions
made on behalf of Mr Phillips before the Māori Land Court in 2002 relating to the
application for the extension of the reservation. In making the recommendation for
the extension the Court made the orders subject to the condition that such a lease be
entered into. The applicants argued that the lease was actually for 84 years. The
Society could only claim that the lease was valid because it was signed during the
282 Aotea MB 106
delay between the recommendation being made by the Court and the notice being
published in the Gazette. The applicants argued that: 18
The delay between the Court recommendation in 2002 and the publication
of the Gazette Notice in 2004 was simply a matter of administrative delay,
which the Society should not be allowed to rely on in order to receive a
considerable benefit, which flies in the face of representations made in open
Court.
[115] The applicants submitted that the Court should intervene by applying the
doctrine of promissory estoppel to prevent unconscionable conduct. In this case the
unconscionable conduct was constituted by the Court being told that the lease term
was for 14 years, when in fact the lease term was for a much longer period.
Furthermore, the Society could only get a valid lease over the balance of the land,
excluding the original reservation, if it obtained relief under the Illegal Contracts Act
1970 for severance.
[116] The applicants also submitted that the trustees suffered a detriment in that
they did not have the opportunity to negotiate the terms of the lease, including the
rent, and the trustees will not have possession of the land for an extra 70 years.
No Application for Confirmation of Lease
[117] The applicants also relied on s 150C(3)(b) of TTWMA. The Society did not
apply for a certificate of confirmation of the lease from the Registrar, and in the
applicants’ eyes any such application would be doomed to fail because of the
breaches of the provisions of s 338. Therefore, pursuant to s 160(2) of TTWMA the
lease has no force or effect.
Licence to the Society
[118] The Society granted a licence over Lot 3, located on the 55B1A2 block, to
itself. The applicants submitted that if the transfer of this block to the Society is
invalid, then the Society had no authority to grant the licence. The representations
18 Applicants’ closing submissions para 54.
282 Aotea MB 107
made at the 2002 hearing were that the licences would be for 14 years to existing
home owners. The Society was only able to grant the licence to itself “for life”
because of the delay between the Court recommendation and the gazettal. The
applicants say that this is also unconscionable.
[119] The applicants further submitted that the licence was an alienation subject to
s 150C(3)(b), which requires confirmation from the Registrar. No such confirmation
was granted and therefore the licence is of no effect.
[120] The applicants also referred to the term of the licence. Since the Society is
not an actual person, the applicants say that the term is uncertain, and that the
licence, if valid is terminable at will. The applicants relied on Prudential Assurance
Co Ltd v London Residuary Body,19
New Zealand Land Law,20
and s 210 of the
Property Law Act 2007 for this proposition.
Lease to Waituhi Farms (2008) Limited (The Farm Lease)
[121] The applicants based their arguments in relation to the farm lease on the
evidence of Mr Crawford, the surveyor. They say the whole of the lease to Waituhi
Farms must be called into question because the lease includes the extended
reservation lands. An additional issue is that the access to the farm is across the
reservation lands.
[122] When the lease was granted in 2008 the reservation had been extended by
Gazette Notice in 2004 to include four blocks, which the farm lease now sits over.
The lease was therefore granted over an existing Māori reservation and no
application was made to obtain consent from the Court under s 338(12).
[123] The applicants submitted that if the transfers of 55B1B and 55B1A2 blocks
are struck down the Society was not the proprietor of those blocks and could not
have entered into a valid lease. Even if it is the legitimate proprietor, the applicants
19 [1992] 3 All ER 504.
20 Tom Bennion and others, New Zealand Land Law (2nd) ed, Brookers, Wellington, 2005.
282 Aotea MB 108
argued that the effect of the reservation is to suspend the rights of the owner, so that
only the trustees could grant a lease over the reservation. That has not happened
here.
[124] If the Court accepts the applicants’ submissions on this matter a further
hearing would be needed to determine an accounting of profits or compensation in
relation to funds received under the lease.
Canteen
[125] The applicants’ submissions here are that the original canteen was located on
the original reservation. Although the canteen now extends into the 55B1A2 block
the Society had no authority to operate the canteen on the reservation lands. The
applicants seek a hearing in relation to profits or compensation due to the trust if the
Court finds in their favour on this issue.
ANZ Bank Account
[126] The applicants submitted that under cross-examination all three respondent
witnesses conceded that the bank account was opened for the marae reservation trust
and that the Society was simply the administrator of the funds. The account is
therefore a reservation trust account, and the trustees seek a proper accounting for
funds in that account.
Respondents’ Submissions
[127] Ms Rush for the respondents submitted that the present proceedings
concerned the whole of Manu Ariki, not just the marae reservation. Mr Ropata’s
evidence was that the beneficiaries of the reservation would include all members of
the Society as residents of New Zealand. Although the marae reservation was set
aside for the use of the people of New Zealand and in particular Māori, the primary
beneficiaries of the reservation were the members of the Society who supported Mr
Phillips in establishing Manu Ariki.
282 Aotea MB 109
[128] The respondents also submitted that Mr Phillips’ original intent when making
application to the Court to establish the marae was to ensure that the land he gifted to
the Society for the benefit of its members could not be sold. It was never Mr
Phillips’ intention, however, to hand over control of the marae reservation to the
trustees – the evidence for this being that the Society continued to administer the
whole marae complex and the farm since 1984 with the tacit consent of the trustees.
[129] The respondents alleged that the trustees were inactive and that it was the
Society that took the lead in developing and maintaining Manu Ariki, encouraged by
Mr Phillips’ vision. Counsel also asserted that the persons entitled to the use and
enjoyment of the reservation were the members of the Society, and therefore the
trustees had a duty to administer the reservation for the Society.
Transfer of 55B1B and 55B1A2
[130] The respondents accepted that in March 1999 two blocks of Māori freehold
land were transferred to the Society. Mr Phillips was the registered proprietor and
completed the alienation of the land in accordance with s 147 of TTWMA. Ms Rush
alluded to the fact that 55B1A2 had previously been owned by Mr Phillips and ten
other people. Respondent counsel said that the other registered proprietors were
aware of Mr Phillips’ intention to transfer the block to the Society and consented to
it. (In fact the certificate of title for this block shows that Mr Phillips was the sole
registered proprietor of the block at the time it was transferred to the Society. This
seems to be an error by counsel which is not relevant to the disposition of this
matter.) The transfers were registered with LINZ without rejection. Counsel
submitted that confirmation “in part” was obtained from the Māori Land Court in
terms of the letter provided by Court staff that the Māori Land Court records had
been updated. Although counsel accepted that the requirements of TTWMA cannot
be waived, nevertheless the issue was not raised at the time the transfers were
registered and the fact that it had been a number of years since registration took
place must cast some question over the intentions of those people raising the issue.
The reservation trustees were aware of the transfer because it was well known that
Mr Phillips had gifted land to the Society.
282 Aotea MB 110
[131] In reply to questions from the Court as to why the provisions relating to
confirmation were not complied with, counsel replied that Mr Phillips would not
have tried to override the statutory provisions, but that there was clearly confusion in
terms of the entity that was going to be the registered proprietor, and in terms of the
roles that the different entities undertook during his lifetime. Mr Phillips’ intentions
however, in terms of the result he wished to achieve were clear – that is that the
Society should receive the land.
[132] The respondents submitted that there was no evidence that the right of first
refusal was not offered to the preferred class of alienees in compliance with s 147A.
As Mr Phillips is deceased no definitive answer could be given to the question of
whether the first right of refusal was offered. In the circumstances the respondent
submitted that the Court could assume that the requirements of s 147A had been
complied with.
[133] The respondents went on to submit that the transfers were registered with
LINZ under the old paper dealing system, and that since they were accepted and not
rejected by LINZ the respondents were entitled to rely on the registration of the
transfers. The respondents’ application for confirmation which has now been filed
can rectify any defects in the registration process. Moreover the Māori Land Court
records themselves show the Society as the registered proprietors so that the current
situation is anomalous.
[134] The respondents consider that the Society has obtained indefeasible title in
respect of the blocks.
Lease to Society
[135] The respondents submitted that the Society as the registered proprietor of the
blocks was entitled to grant a lease to itself. As the reservation had not been gazetted
the lease could be for a period of more than 14 years. The intention of the Society at
all times was that there would be rights of renewal. Although the rights of renewal
were not mentioned at the hearing, this does not constitute unconscionable behaviour
282 Aotea MB 111
on behalf of the Society. The respondents submitted that it was always the Society’s
intention to take further rights of renewal.
[136] The original 1984 reservation did not include all of the land and buildings
outlined in the lease to the Society. The respondents pointed out that the majority of
the canteen falls outside the original reservation area. Part of the surgery and part of
the dining room also fall outside the original reservation area so that it was lawful to
include those areas in the provisions of the lease.
[137] The respondents submitted that the Court should take into account the fact
that a recommendation was made in 1993 to cancel the original reservation and set
apart a new reservation over 55B1B, 55B2B3B, 55B1A2 and 55B1A1. Had that
cancellation been gazetted then the Society would have been the landlord of the
property at the time of entering into the lease to the Society. The expanded
reservation was not gazetted until 2004, after the lease was entered into. The
respondents therefore concluded that in respect of the areas that fall outside the
original reservation the lease is valid.
[138] The respondents made similar arguments in relation to the licences to occupy.
At the time the society was the registered proprietor of the land and was therefore
entitled to enter into the licences. The original 1984 reservation did not extend to
include the dwellings that were subject to the licences. It was only when the
extended reservation was gazetted in 2004 that those areas came to be part of the
reservation.
[139] The respondents also asked the Court to take into account the fact that only
some of the buildings existed in respect of the original reservation. The foundations
for the main block Te Mana o Te Aroha were not constructed until 1985, and the
sound shell was built in 1998.
Waituhi Farms Lease
[140] The Society operated the farm lease from 1998, when the farm was gifted to
it by Mr Phillips. The lease was entered into legitimately following the transfer of
282 Aotea MB 112
the farm from Mr Phillips. Prior to the formal lease, Mr Phillips’ family members
had managed the farm, unsuccessfully. The Society has made improvements and
brought in farm advisers to improve the farming operation. The funds received by
the Society from the farm operations have gone back for the benefit of Manu Ariki.
Canteen
[141] The respondents submitted that the lease to the Society provided for the
operation of the canteen and shop, which has always been run by the WLC. A large
part of the canteen and shop fall outside the original reservation area. The income
earned from the canteen went back into Manu Ariki. The lease, the respondents say,
is valid in respect of the canteen and its operation is a lawful activity.
Bank Account
[142] The respondents submitted that the Society operated the Manu Ariki Trustees’
Fund bank account for many years. The account received rental from homes that are
the subject of the licences to occupy, and from rental received from properties
outside of Manu Ariki. Thus the account was not operated by the reservation
trustees, but was an account for the benefit of Manu Ariki as a whole.
[143] The bank statements filed with the Court illustrate that the Society primarily
controls and operates the account. The Society maintains good management
structures and financial checks are in place to operate the account.
[144] In conclusion the respondents emphasised Mr Phillips’ intention that the
marae reservation would be for the benefit of the members of the Society. Although
the roles of the trustees and the Society have become blurred at times the
respondents submitted that the marae trustees were inactive. The respondents further
submitted that, given the issues that have arisen, the marae beneficiaries must be
given an opportunity to express their views at a special general meeting directed by
the Court. The respondents consider it essential to ascertain the concerns of the
beneficiaries of the reservation.
282 Aotea MB 113
Submissions in Reply
[145] Counsel for the applicants rejected the submission that Mr Phillips’ intention
was that the beneficiaries of the reservation would be restricted to members of the
Society. Counsel referred to the Gazette Notice for the original 1984 reservation and
also to the evidence of Mr Ropata, and submitted that the actual evidence was that
the reservation was to be open to any person who wished to come for healing and for
Maori rangatahi who could benefit from the services that were offered. While the
Society played a role in providing those services that is different from saying that the
reservation was set up for the Society.
[146] In support of this submission Counsel referred to the Gazette Notice in 2004
that maintained that the extended reservation was for the benefit of all New Zealand
people.
[147] In reply to the submission that it was never Mr Phillips’ intention to hand
over control of the marae to the reservation trustees, the applicants referred to the
evidence that specific people were appointed as reservation trustees. Under the
Māori Affairs Act 1953 and in TTWMA there is provision for a body corporate to be
appointed as trustee, but no steps were taken to appoint the Society as trustee. Thus
the applicants say that the respondents’ submission on this point cannot be sustained
by the evidence.
[148] The applicants also noted that no questions were put to the applicants as to
why they had not taken action earlier regarding the failure to apply for confirmation
of the transfers of 55B1B and 55B1A2. The applicants therefore urged the Court not
to draw adverse inferences in respect of the applicants’ intentions in raising the
issues at this point in time.
[149] The applicants submitted that the Court could not assume that the provisions
of s 147A have been complied with: evidence is required.
[150] In response to the submission that the Society would have been entitled to
enter into the lease to itself had the recommendation made in 1993 to cancel the old
282 Aotea MB 114
reservation been gazetted, the applicants reminded the Court that the application in
1993 was to cancel the original reservation and grant a new one over all the blocks.
Had the Gazette Notice been published the reservation would have applied to all the
blocks. The Court’s intention in 1993 was to vest the reservation in the existing
trustees plus three new ones. Thus the Society would not have been the registered
proprietor of the land and could not have given the lease to itself.
[151] The applicants also submitted that if the solicitor acting for a transferor on a
transfer is aware or acts in such a way that amounts to fraud in the Land Transfer Act
sense then their actions and knowledge are imputed to the principal: Assets Co
Limited v Mere Roihi.21
The applicants’ final submission was that while the trustees
should control and administer the reservation, there is a part for the Society in Manu
Ariki. The trustees accepted that the Society was part of the original intention and
vision, and they do not intend to push the Society out the door. What they wish to do
is put in place formal structures to regularise and properly regulate the relationship to
ensure that the original vision is not lost.
Law
Statutory Provisions
[152] The statutory provisions referred to by Counsel that have not already been
quoted in the text are set out below:
152 Court not to grant confirmation unless satisfied of certain matters22
(1) The Court shall not grant confirmation of an alienation of Maori freehold
land unless it is satisfied —
...
[(f) That, in the case of —
(i) A sale or gift of a block of Maori freehold land; or
(ii) A lease of Maori freehold land,—
21 [1905] AC 176.
22 Section 152(1)(f) was in force from 1 July 1993until it was substituted by section 25 of Te Ture
Whenua Māori Amendment Act 2002.
282 Aotea MB 115
the alienating owners have, as required by section 147(2) of this Act, given a right of
first refusal to prospective purchasers, donees, or lessees who belong to one or more
of the preferred classes of alienee, ahead of those who do not belong to any of those
classes; and]
4 Interpretation
In this Act, unless the context otherwise requires,—
Preferred classes of alienees, in relation to any alienation (other than an alienation of
shares in a Maori incorporation), comprise the following:
(a) Children and remoter issue of the alienating owner:
(b) Whanaunga of the alienating owner who are associated in accordance with
tikanga Maori with the land:
(c) Other beneficial owners of the land who are members of the hapu associated
with the land:
(d) Trustees of persons referred to in any of paragraphs (a) to (c) of this
definition:
(e) Descendants of any former owner who is or was a member of the hapu
associated with the land:
[150C Alienation by other owners
...
(3) A person referred to in section 147(1)(a), (b), or (c) who executes an
instrument of alienation of Maori freehold land must,—
...
(b) [[for any other alienation (for example, a lease, licence, forestry
right, easement, profit, mortgage, charge, or encumbrance, or a
transfer or variation of any of those things)]], get a certificate of
confirmation issued and noted by the Registrar under section 160.
151 Application for confirmation
...
(2) The Court may decline to consider an application for confirmation if it is
made, —
(a) In the case of an instrument of alienation, later than 3 months after
the date on which the instrument was executed by the alienor or,
where the land is situated in the Chatham Islands, later than 4
months after that date; or
156 Effect of confirmation
(1) No instrument of alienation that is required to be confirmed under this Part of
this Act shall have any force or effect until it is confirmed by the Court under
this Part of this Act.
282 Aotea MB 116
160 Certain instruments require only certificate of confirmation by Registrar
...
[(2) An instrument of alienation to which this section applies has no force or
effect (unless confirmed by the Court under subsection (6)) until a certificate
of confirmation—
(a) has been issued by the Registrar under this section; and
(b) has been noted by the Registrar in the records of the Court.]
338 Maori reservations for communal purposes
...
(11) Except as provided in subsection (12) of this section, the land comprised
within a Maori reservation shall, while the reservation subsists, be
inalienable, whether to the Crown or to any other person.
(12) The trustees in whom any Maori reservation is vested may, with the consent
of the Court, grant a lease or occupation licence of the reservation or of any
part of it for any term not exceeding 14 years [(including any term or terms
of renewal)], upon and subject to such terms and conditions as the Court
thinks fit.
Land Transfer Act 1952
62 Estate of registered proprietor paramount
Notwithstanding the existence in any other person of any estate or interest, whether
derived by grant from the Crown or otherwise, which but for this Act might be held
to be paramount or to have priority, [but subject to the provisions of Part 1 of the
Land Transfer Amendment Act 1963], the registered proprietor of land or of any
estate or interest in land under the provisions of this Act shall, except in case of
fraud, hold the same subject to such encumbrances, liens, estates, or interests as may
be notified on the folium of the register constituted by the grant or certificate of title
of the land, but absolutely free from all other encumbrances, liens, estates, or
interests whatsoever, —
(a) Except the estate or interest of a proprietor claiming the same land under a
prior certificate of title or under a prior grant registered under the provisions
of this Act; and
(b) Except so far as regards the omission or misdescription of any right of way or
other easement created in or existing upon any land; and
(c) Except so far as regards any portion of land that may be erroneously included
in the grant, certificate of title, lease, or other instrument evidencing the title
of the registered proprietor by wrong description of parcels or of boundaries.
282 Aotea MB 117
Case Law
[153] Applicant counsel referred to the case of Warin v Registrar-General of
Land.23
Allan J’s introduction to the case was as follows:
[1] This case is primarily concerned with the inter-relationship between the
indefeasibility provisions of the Land Transfer Act 1952 (the LTA) and the Te Ture
Whenua Maori Act 1993 (the Act).
[154] The facts of the case are that in 1995 the Warins and Jensens bought a block
of land from the Māori Trustee at Bland Bay in Northland for the price of
$60,000.00. The transfer was duly registered pursuant to the LTA. In 2002 when the
plaintiffs sought to resell the land they found that the land was Māori land rather
than general land and the agreement for sale fell through. The plaintiffs applied to
the Māori Land Court (“MLC”) to change the status of the land to general land.
When the application was dismissed, the plaintiffs applied for a rehearing and a
determination that they were the owners of the land. The MLC dismissed the latter
application and adjourned the rehearing application. The plaintiffs appealed and the
Māori Appellate Court dismissed the appeal and determined that a status order
declaring the land to be Māori freehold land should be registered against the title in
the Land Transfer Office. That order was subsequently registered. The upshot was
that while the LTA records showed the Warins and Jensens as registered proprietors,
the Māori Land Court records showed the Māori Trustee as owner.
[155] The Warins and Jensens therefore applied to the High Court for declaratory
relief as to the effect of the indefeasibility provisions in the LTA on the provisions of
TTWMA.
[156] Allan J found that despite a degree of substance in the arguments that were
made on behalf of the earlier beneficial owners of the land and those within the
preferred classes of alienee under TTWMA, he was not persuaded that the Warins
and Jensens had not obtained an indefeasible title. The Judge said at [125]:
23 HC Whangarei CIV 2006-488-000245, 31 October 2008.
282 Aotea MB 118
… Security of title by registration lies at the very heart of this country’s system of
land ownership. The legislature must be taken to have been well aware of that, as is
noted by McGechan J at p 673 of the Housing Corporation case. Those responsible
for drafting the Act must be taken to have known of the Judge’s comments in that
case and have been aware of the need, if the intention was to override the LTA, to
say so expressly. Had Parliament intended to impinge upon indefeasibility
entitlements, then that could have been simply achieved, either by a specific section
in the Act, or by an appropriate amendment to s 63 of the LTA. Instead, Parliament
enacted s 126 of the Act which, although directing that the first defendant must not
register an instrument which has not been confirmed by the Court, stops short of
taking the next step of declaring that any such registration would itself be of no
effect. I do not accept that the availability of possible compensation claims would
constitute an appropriate remedy to dispossessed registered proprietors who have
acquired land in good faith and for value, possibly decades after the original
alienation.
[126] I do not over look Mr Bell’s comprehensive and determined arguments to
the contrary, and in particular I do not overlook the possibility that, in an appropriate
case, indefeasibility may be lost by statutory implication (Miller v Minister of
Mines). But where, without fraud, a purchaser of Maori land becomes registered as
proprietor without complying with the requirements of the Act, I am unable to
conclude that the legislature intended that no indefeasible title would accrue to the
purchaser, nor to any successor in title. In reaching that conclusion, I have taken
into account both the Preamble to the Act, and the provisions of ss 2 and 17(1).
[127] I accept Mr Bell’s submission that the LTA is not legislation of a special
character which enjoys inherent priority over other enactments. But, as was
observed by Lord Browne-Wilkinson in British American Cattle Co v Caribe Farm
Industries Ltd [1991] 1 WLR 1529 at 1533:
… it is critical to keep to a minimum the number of matters which
may defeat the title of the registered proprietor.
in order that the integrity of the system of land registration is maintained. That must
be so although the LTA may be over-ridden by implication, that implication must be
plain from the terms of the over-riding statute: see the discussion in Horvath v
Commonwealth Bank of Australia [1991] 1VR 643 at 655.
[128] In determining whether ss 62 and 63 of the LTA have been overridden by
implication, I am entitled to have regard, not only to the legislative purposes which
underpin the Act, but also to the need to preserve, so far as is possible, the integrity
of the Torrens System.
[129] I am satisfied that in enacting the Act, Parliament did not intend to override
the security of title which ss 62 and 63 of the LTA confers.
Another perspective
[130] I have reached my conclusion by applying conventional analytical
principles to the interpretation of the LTA and the Act. In doing so, I have been
mindful of the practical consequences for Maori owners of according primacy to
ss 62 and 63 of the LTA. There is no evidence in this particular case that any Maori
beneficiary feels disenfranchised by what has occurred. And the Maori Trustee had
broad authority from the majority of the beneficiaries to undertake the sale of land
of which the present section formed part. It is noteworthy also that Mr Bell’s
instructions come not from any former beneficiary but from Mr George, who
participated in proceedings before the Maori Land Court and the Maori Appellate
Court, and is a member of a preferred class of alienee although not a beneficiary.
282 Aotea MB 119
[131] But it may well be that in other cases Maori owners are deprived of land
through the operation of the LTA. For many, compensation, if available, will simply
not make good the loss; land is regarded as a taonga and not to be surrendered.
[132] Mr Bell referred in argument to the somewhat notorious decision of this
Court in Beale v Tahema Te Hau (1905) 24 NZLR 883 and asked the Court to avoid
the injustices of “colonial days”. This case is nothing like that one. But there is a
compelling case for further legislative reform, recognised in a Law Commission
Issues Paper “Review of the Land Transfer Act 1952”, which came to hand when this
judgment was in final draft. As is said at chapter 10.56 of the Paper:
To summarise, the LTA title and the record held by the Maori Land
Court perform distinct functions. To allow each record of title to
be used effectively, the two records need to be aligned and
discrepancies between the two eliminated.
[157] I note that the Māori Freehold Land Registration Project has now been
substantially completed. The intention of that project was to align the records of
both the Māori Land Court and LINZ, as well as to ensure that status declarations
were registered against Māori land titles.
[158] However, at the time the transfer from Mr Phillips to the Society took place,
the status orders determining the blocks to be Māori land blocks were registered in
1996 on the LTA titles.
[159] Applicant counsel also referred the Court to another judgment of Allan J,
Tapsell v Murray.24
In this case the defendant, Candy Murray, was the registered
proprietor of a block of land known as Maketu A70. Lucy Tapsell was one of a large
number of beneficiaries in the estate of a former registered proprietor, Pera
Wikiriwhi. Ms Tapsell claimed that title to the land had passed to the defendant in
breach of Pera Wikiriwhi’s Will.
[160] Pera Wikiriwhi died on 29 July 1968. The beneficiaries under her Will were
all her nieces and nephews. The executor of her Will was Tiki Wikiriwhi. On
18 May 1998 a transmission was registered to vest Maketu A70 in the executor of
Pera’s estate. On 6 July 1998 Maketu A70 was transferred into Tiki’s name as
beneficial owner. The circumstances indicate that Tiki thought he was entitled to do
this pursuant to a purported family arrangement whereby he received Maketu A70 in
24 HC Tauranga CIV 2005-470-889, 26 May 2008.
282 Aotea MB 120
his sole name in exchange for other beneficiaries receiving other Māori land interests
from which he was excluded. There was also some suggestion that Pera had made a
testamentary promise to Tiki prior to her death to the effect that he was to have
Maketu A70.
[161] When some of the other beneficiaries under Pera’s Will found out about this
transfer to Tiki they objected strongly, but although lawyers’ letters were exchanged
and a caveat registered nothing was finally resolved.
[162] By agreement dated 30 August 2002, Tiki agreed to sell Maketu A70 to the
defendant, Candy Murray. The purchase price was $64,000.00, to be paid in
accordance with the terms set out in a Deed of Acknowledgement of Debt executed
by Ms Candy Murray in favour of Tiki. The Deed indicates Tiki’s intention to gift
off the purchase price over some years as acknowledgment of her assistance over the
years as a close friend, neighbour and helper. It was not disputed that Ms Murray
had done a great deal for Tiki over the years. Tiki died on 16 November 2003
leaving a Will in which the whole of his estate was left to the Ms Murray. By that
time the defendant’s overall liability pursuant to the debt had been reduced to
$10,000.00.
[163] Lucy Tapsell alleged that Tiki took his beneficial title to the land in breach of
the trust created by clause 1 of Pera’s Will. Ms Murray claimed that the
indefeasibility provisions of the Land Transfer Act 1952 protected her position as
registered proprietor and that the claim was statute barred by virtue of the provisions
of the Limitation Act 1950.
[164] In reply Ms Tapsell argued that the defendant was not entitled to the benefit
of indefeasibility because Tiki became registered as proprietor in circumstances
amounting to fraud and Ms Murray was not a transferee for value of the land.
Furthermore, the defendant had notice that Tiki’s transfer to her was in breach of the
trust upon which he held the land, since her lawyer acted for both Tiki and herself
and was aware of the objections the whānau had to Tiki’s ownership of the block.
Finally the provisions of the Limitation Act 1950 did not apply because this was a
282 Aotea MB 121
case of alleged fraudulent breach of trust, or alternatively a claim for recovery of
trust property from a trustee.
[165] On the question of fraud the learned Judge relied on principles set out in [62]-
[64] of his judgment as follows:
Fraud
[62] The Land Transfer Act does not define fraud, but it is well settled that what
is meant is actual fraud or dishonesty of some sort, rather than constructive or
equitable fraud: Assets Co Ltd v Mere Roihi [1905] AC 176 at 210. On occasion, the
Privy Council has warned against importing doctrines of equity into the process of
determining whether fraud has been established in cases under the Land Transfer
Act: Haji Abdul Rahman v Mahomed Hassan [1917] AC 209 at 216, and Abigail v
Lapin [1934] AC 491 at 505.
[63] Each case must depend upon its own circumstances. It will sometimes be
difficult to know precisely where to draw the line: Stuart v Kingston (1923) 32 CLR
309 at 359, Blunt v Hallinan [1985] 1 NZLR 450 at 461 (CA). As has often been
said, a comparison of the facts of decided cases can be “little short of dangerous”:
Harris v Fitzmaurice [1956] NZLR 975 at 978: Blunt v Hallinan at 461.
[64] It is important to distinguish between consciously dishonest conduct on the
one hand and behaviour founded upon a mistaken, but honest, belief on the other.
Actual knowledge of the existence of an adverse right which will be destroyed by
the impugned transaction, will often lead to a finding of fraud: Waimiha Sawmilling
Co Ltd v Waione Timber Co Ltd [1923] NZLR 1137 at 1174. And knowledge that a
transaction is in breach of trust will generally lead to the same result: Locher v
Howlett (1894) 13 NZLR 584 at 595.
[166] The decision in the case depends very much on the fact situation. Suffice to
say that in the Tapsell case the Court found that there was a clear breach of trust that
gave rise to a finding of land transfer fraud.
[167] On the question of whether Ms Murray was a purchaser for value in terms of
TTWMA, the learned Judge relied on principles set out in para [88] of the judgment:
[88] The companion section, s 183, refers to a “… purchaser … bona fide for
valuable consideration …”. There is no reason to suppose that the terms “value” and
“valuable consideration” were intended to bear different meanings. In my view, the
expressions were intended to refer to a purchaser who had given consideration in the
ordinary legal sense. A definition of “consideration” appears in Currie v Misa
(1875) L.R.10 Ex.153 at 162:
… a valuable consideration, in the sense of the law, may consist
either in some right, interest, profit or benefit accruing to the one
party, or some forbearance, detriment, loss, or responsibility given,
suffered, or undertaken by the other.
That classic definition has been followed and applied in numerous cases including
for example Hutt Valley Proprietors Ltd v Gamages (NZ) Ltd [1952] NZLR 296.
282 Aotea MB 122
But in the context of vendor and purchaser, a rather more recent and perhaps
apposite approach is to be found in the language employed in Dunlop Pneumatic
Tyre Co Ltd v Selfridge [1915] AC 847 at 855:
An act of forbearance of one party, or the promise thereof, is the
price for which the promise of the other is bought, and the promise
thus given for value is enforceable.
A definition couched in those terms has enjoyed significant support: see for example
Attorney-General for England and Wales v R [2002] 2 NZLR 91 at 106 and Law of
Contract in New Zealand 3rd
ed (2007), (Burrows Finn and Todd) at para 4.1.3.
[168] At para [96] the learned Judge also refers to the principles regarding past
consideration:
[96] Moreover, Mr Dugdale is, I think, right to submit that Further Term 4 is
simply a reference to past consideration. Past consideration is no consideration in
law: Eastwood v Kenyon (1840) 11 Ad & El 438, Re McArdle [1951] Ch 669, and
Tranzequity Holdings Ltd v Malley (1990) 5 NZCLC 66,343. This is because, where
a promise is made after an obligation has been incurred and the promise is
independent of the previous obligation, that previous obligation cannot amount to
consideration as it is not part of the agreement. Fresh consideration is required in
order to (create) a binding contractual obligation.
[169] The result in that case was that the defendant was not a bona fide purchaser
for value for the purposes of the Land Transfer Act 1952. The case fell into the
exceptions to ordinary indefeasibility principles. However, the Court did not find it
necessary to make findings as to whether, in the absence of fraud, the Torrens
System confers indefeasibility of title upon a registered proprietor who takes as a
volunteer. Nor did the Judge make any findings to the effect that Tiki’s fraud could
be imputed to the defendant by reason of their lawyer knowing of it.
[170] This case also sets out the principles of estoppel as summarised by Smellie J
in Equiticorp Industries Group Ltd v R.25
There it was said:
Although today there is less emphasis on strict criteria, there are still three elements
which must be present to establish an estoppel:
(i) The creation or encouragement of an expectation or belief;
(ii) A reliance by the other party; and
(iii) Detriment as a result of that reliance.
25 [1998] 2 NZLR 481 at 715.
282 Aotea MB 123
[171] Burbery Mortgage Finance & Savings Ltd v Hindsbeck Holdings Ltd26
is a
judgment of the Court of Appeal which sets out the criteria for promissory estoppel.
Richards J set out the modern principles of equitable estoppel. He said:
It is well settled that where one party has by words or conduct made to the other a
clear and unequivocal promise or assurance intended to affect the relations between
them and to be acted on accordingly, then once the other party has taken him at his
word and acted on it, the one who gave the promise or assurance is bound by that
assurance unless and until he has given the promissee a reasonable opportunity of
resuming his position (16 Halsburys Laws of England (4th
) ed para 1514). Although
there are indications in some of the authorities that there must be a pre-existing
contractual relationship between the parties, I am of the view that the doctrine
applies in appropriate cases where there is a pre-existing legal relationship (Durham
Fancy Goods Ltd v Michael Jackson (Fancy Goods) Ltd [1968] 2 QV 839, 847); or
where the promise affects a legal relationship which will arise in the future (Bank
Negara Indonesia v Hoalim [1973] 2 MLJ 3 (PC)); or more broadly where, as here,
the promisor and promisee have interests in the same subject matter.
[172] Applicant counsel also referred the Court to Smith v Hugh Watt Society Inc.27
In this case the members of the Labour Party in Onehunga raised funds to purchase a
hall for the use and benefit of the Labour Party in that electorate. The hall was
purchased in 1973, on trust for the members of the Labour Party in the Onehunga
electorate. In 1985 there were concerns that the Head Office of the Labour Party
wanted to take control of the hall. To prevent this, the hall was transferred to an
incorporated society. At the time of the transfer the consent of all the beneficiaries to
the transfer was not obtained. Nor was consideration paid by the society for the hall.
[173] As time passed the society became less and less connected to the Labour
Party whether in Onehunga or elsewhere. The plaintiffs claimed that the Labour
Party in the former Onehunga electorate raised the funds to purchase the hall, and
that it was always intended that the property be held for the members of the Labour
Party in the Onehunga electorate or for the New Zealand Labour Party.
[174] In that case Randerson J held that the transfer to the society amounted to a
breach of trust as the unanimous consent of the beneficiaries had not been obtained.
Where a transferee received property with notice (actual or constructive) that it was
trust property, the transferee was liable as constructive trustee to account for the
26 [1989] 1 NZLR 356 at 361.
27 [2004] 1 NZLR 537.
282 Aotea MB 124
property. In that case the transferee was deemed knowingly to have received the
trust property and a constructive trust was imposed based on unjust enrichment. The
Judge also held that as the Society had imputed knowledge of the breach of trust in
that the members of the Labour Party Onehunga electorate were to continue to enjoy
and control the hall, it was unconscionable to permit the society to retain the
replacement property. The equity gave rise to an in personam claim against the
society by virtue of a constructive trust or by a breach of fiduciary duty or by a
combination of both. The principles are set out in the Judges’ decision at [80]-[86]
as follows:
[80] But, significantly for present purposes, it is well settled that the
indefeasibility provisions do not prevent in personam claims against the registered
proprietor. The possibility of in personam claims was recognised by the Court of
Appeal as early as 1924 in Boyd v Mayor of Wellington [1924] NZLR 1174 where
Adams J stated, at 1223, that the power of the court to enforce trusts, express or
implied, had repeatedly been exercised by the court notwithstanding the
corresponding indefeasibility provisions of the Land Transfer Act 1915. Similarly
for the performance of contracts upon which the title has been obtained or the
rectification of mistakes in carrying the contract into effect. Specifically in relation
to the enforcement of trusts, Adams J stated that the certificate of title is not affected
by its enforcement.
[81] The principle has not been doubted since and has been upheld at the highest
levels in the Privy Council in Frazer v Walker and Ors [1967] NZLR 1069, 1078
where it was held that the general principle [of indefeasibility] “... in no way denies
the right of a plaintiff to bring against a registered proprietor a claim in personam,
founded in law or in equity, for such relief as a court acting in personam may grant”.
More recently, the Privy Council has affirmed the same principle in Oh Hiam v Tam
Kong (1980) 2 BTR 9451, 9454.
[82] The principle has also been affirmed by the Australian courts: Breskvar and
Anor v Wall and Ors (1971) 126 CLR 376, 384-385 per Barwick CJ (HCA) on the
footing that the in personam claim depends upon the acts of the registered proprietor
himself. The “personal equities” described by Barwick CJ in Breskvar v Wall may
be created by the registered proprietor either before or after he or she has become
registered. The issue has since been helpfully discussed by Mahoney JA delivering
the judgment of the New South Wales Court of Appeal in Logue v Shoalhaven Shire
Council [1979] 1 NSWLR 537, 563. It was confirmed that an equity may arise even
in the absence of fraud. Mahoney JA gave by way of example a registered
proprietor who, before acquiring the land, agreed to hold it in trust or for a stated
purpose. In such a case, the agreement would be enforced against the registered
proprietor. Mahoney JA emphasised that the kind of interest which may be enforced
against a registered proprietor in this way is not limited and may include, in addition
to the examples given by Adams J in Boyd, a situation where the transferee has
occupied a fiduciary position in relation to the transferor.
[83] In Bahr and Anor v Nicolay and Ors (No.2) (1988) 164 CLR 604, the High
Court of Australia held that a purchaser who had undertaken to hold the title subject
to a third party's right to re-purchase, remained bound by the undertaking after the
registration of the transfer. If the transferee repudiated the third party's right to
purchase, equity would impose a constructive trust so that the registered proprietor
held the title on trust for the third party to the extent of the third party's interest. At
653, Brennan J observed that a claim in personam could be founded in law or in
282 Aotea MB 125
equity and the court has the power to order the registered proprietor to divest
(wholly or partly) the estate or interest vested in the registered proprietor by
registration. Orders of that kind:
… do not infringe the indefeasibility provisions of the Act. Those
provisions are designed to protect a transferee from defects in the
title of the transferor not to free him from interests from which he
has burdened his own title.
[84] In New Zealand, the authorities were reviewed in detail by Thomas J,
delivering the judgment of a five member Court of Appeal, in CN and NA Davies
Ltd v Laughton and Ors [1997] 3 NZLR 705, 711-713. The Court of Appeal
confirmed the scope and effect of in personam claim. The Land Transfer Act was
described as “a conveyancing enactment giving greater certainty of title but not an
enactment which in any way destroys the fundamental doctrines by which courts of
equity may enforce, as against registered proprietors, the "conscientious obligations
entered into by them”.”
[85] The court observed at 712:
Properly perceived, the principle sits comfortably with the concept
of indefeasibility. Designed to protect a transferee from defects in
the title of the transferor and not to release him or her from the
burden of interests which they may have undertaken, the principle
has as its basis the enforcement of personal claims arising out of
the registered proprietor's conduct. It is essentially non-proprietary
in nature. The key element is the involvement in or knowledge of
the registered proprietor in the unconscionable or illegal act or
omission in issue. It is such involvement or knowledge which
gives rise to the equity or legal right in the innocent party as
against the registered proprietor in person. Indefeasibility is no
answer to a claim based on such an equity or legal right. When
granted, it is true, a remedy may restrict the registered proprietor in
what he or she can do or require them to give up in whole or in
part their registered interest, but until that event occurs the title
remains conclusive as against third parties.
[86] The court did not see any detriment to the objective of indefeasibility which
was to “save persons dealing with registered proprietors from the trouble and
expense of going behind the register in order to investigate the history of the title
and to satisfy themselves of its validity”. That objective was “accomplished by
providing that anyone who purchases land, without fraud and for value, properly is
the proprietor and enters his or her deed of transfer or mortgage on the register,
thereby acquires an indefeasible right notwithstanding any infirmity in the title.
Admitting in personam claims against a registered proprietor whose very acts or
omissions give rise to the claim does not compromise this objective.”
[175] In respect of the principles to be applied in relation to a lease where the term
is uncertain, applicant counsel referred to Prudential Assurance Co Ltd v London
Residuary Body.28
In that case the House of Lords (per Lord Templeman) said as
follows:
28 [1992] 3 All ER 504.
282 Aotea MB 126
My Lords, I consider that the principle in Lace v Chandler [1944] 1 All ER 305,
[1944] KB 368 reaffirming 500 years of judicial acceptance of the requirement that a
term must be certain applies to all leases and tenancy agreements ...In Charles Clay
& Sons Ltd v British Railways Board [1971] 1 All ER 1007, [1971] Ch 725 there
was no ‘clearly expressed bargain’ that the term should continue until the crack of
doom if the demised land was not required for the landlord's undertaking or if the
undertaking ceased to exist. In the present case there was no ‘clearly expressed
bargain’ that the tenant shall be entitled to enjoy his 'temporary structures' in
perpetuity if Walworth Road is never widened. In any event principle and precedent
dictate that it is beyond the power of the landlord and the tenant to create a term
which is uncertain...
... A term must either be certain or uncertain. It cannot be partly certain because the
tenant can determine it at any time and partly uncertain because the landlord cannot
determine it for an uncertain period. If the landlord does not grant and the tenant
does not take a certain term the grant does not create a lease.
[176] Applicant counsel also referred to the case of Frazer v Walker,29
which is so
well known in New Zealand that I find no necessity to summarise its principles here.
Discussion
[177] Although there are some overlaps between the issues raised by the applicant I
will deal with them individually in the following order:
a) Transfer of Rangitoto Tuhua 55B1B and 55B1A2 blocks;
b) Lease to the Society;
c) Licence to the Society;
d) Waituhi Farms lease;
e) Canteen; and
f) ANZ Bank account.
29 [1967] NZLR 1069.
282 Aotea MB 127
Transfer of Rangitoto Tuhua 55B1B and 55B1A2 Blocks
[178] Rangitoto 55B1B is comprised and described in Certificate of Title SA
880/102. The historical search copy of the title shows that Mr Alex Phillips became
registered proprietor in 1947. In 1985 the land was transferred to Mr Phillips and his
wife as tenants in common in equal shares. When Betty Phillips died her share was
vested in Mr Phillips. In 1996 an order deeming the land to be Māori freehold land
was registered. Finally in 1999 the transfer to Te Kotahitanga Building Society Inc
was registered. I note that the Gazette Notice setting apart the original reservation
was not registered against that title.
[179] In respect of Rangitoto Tuhua 55B1A2 the historical search copy of
Certificate of Title 46B/35 shows that Mr Phillips became sole proprietor in 1990,
having acquired the land from himself and ten other owners. The historical search
copy also shows that Mr Phillips with those ten others originally acquired the land
on 25 July 1950. A status order deeming the land to be Māori freehold land was
registered in 1996 and the transfer to Kotahitanga Building Society Inc was
registered in 1999.
[180] There can be no argument that the transfer of the blocks from Mr Phillips to
the Society should have been the subject of an application to the Māori Land Court
for confirmation.
[181] At the date of the transfer s 147A of TTWMA was not yet in force (it was
inserted into TTWMA as from 1 July 2002). Prior to that date the Māori Land Court
had more extensive powers to grant or deny confirmation of a transfer of Māori Land
by way of sale or gift. The terms of s 147A were contained within s 152(1)(f).
Nothing turns on the differences of wording between the two provisions – both
provisions require that the owner of a block of Māori land must give a right of first
refusal to prospective purchasers or assignees who belong to one or more of the
preferred classes of alienee ahead of those who do not belong to those classes.
[182] The clear evidence for the applicants was that Mr Phillips did not offer them
a right of first refusal and the respondents could not produce any evidence which
282 Aotea MB 128
countered the applicants’ assertions. The evidence on the relationship between Mr
Phillips and his whānau and the Society does not suggest that Mr Phillips was likely
to have offered his children the right of first refusal once he had made up his mind to
gift the land to the Society.
[183] The wording of section 152(1)(f) states that the alienating owners must “have
given a right of first refusal to prospective purchasers or assignees who belong to
...the preferred class of alienee, ahead of those who do not belong...”. That wording
requires positive action to be taken by the alienating owner, Mr Phillips in this case,
to give the preferred class a right of first refusal. The offer of the gift to the Society
did not fulfil this requirement because the Society does not fit the definition of the
preferred class contained in s 4 TTWMA. While, as members of the Society or as
trustees of the reservation, the children of Mr Phillips may well have known that it
was his intention to gift the land to the Society, that knowledge does not constitute an
offer of first refusal for the purposes of the statute.
[184] There is no evidence that Mr Phillips undertook any other action to give
notice to the preferred class. On the balance of probabilities I find that the offer of
first refusal was not made to the preferred class.
[185] The Preamble, and sections 2 and 17 TTWMA emphasise the importance of
retention of Maori land in the hands of the “Maori owners, their whānau, their hapu
and their descendants.”30
I agree with the applicants, therefore, that even if the
respondents or Mr Phillips had applied for confirmation to the Māori Land Court, the
Court could not have granted confirmation until that offer of first refusal was made
to the preferred class.
[186] On the face of it the transfer of land from Mr Phillips to the Society was in
consideration of the sum of $795,000.00, but it was not disputed that that sum was
gifted off over time by Mr Phillips. I have no doubt that the transfer of land was a
gift to the Society. So there is little question that had a right of first refusal been
offered to the preferred class they would have been able to meet the terms of the
30 Section 2 TTWMA.
282 Aotea MB 129
offer. That is not to say that the preferred class would necessarily have taken up the
offer, but simply that the confirmation of the transaction by the Court was by no
means a foregone conclusion.
[187] Section 156(1) provides that no instrument of alienation has any force or
effect until it is confirmed by the Court. The plain fact is that no order of
confirmation was made by the Court. Accordingly, as per the reasoning in the Warin
case, the registration by LINZ of the unconfirmed transfer of the land from Mr
Phillips to the Society was a breach of statute. In so far as the records of the Māori
Land Court show the Society as the owners of the land, the records are incorrect and
Mr Phillips should still be shown as the owner of the land.
[188] The question remains as to whether the Society is entitled to claim
indefeasibility pursuant to the Land Transfer Act 1952 so as to remain registered
proprietor of the land.
[189] Pursuant to ss 62 and 63 of the Land Transfer Act 1952 the registered
proprietor holds the land subject only to such encumbrances or interests as are noted
on the register, except in the case of fraud: Frazer v Walker. As set out in Merbank
Corporation Ltd v Cramp31
and Boyd v Mayor of Wellington32
even a void
instrument will confer title upon registration in the absence of fraud.
[190] In this case, and following the reasoning in the Warin case, it is clear that the
transfer to the Society ought not to have been registered. Nevertheless, once
registered the act of registration confers indefeasibility of title upon the new
registered proprietor unless there is fraud or the case fits one of the other exceptions
to indefeasibility set out in the statute.
[191] The question then is whether procuring the registration of the transfer falls
within the fraud exception in the Land Transfer Act 1952 where there is no
confirmation by the MLC, and where both transferor and transferee knew that the
31 [1980] 1 NZLR 721.
32 [1924] NZLR 1174.
282 Aotea MB 130
land was Māori land, and must be taken to have known that transfers of the land
must comply with TTWMA.
Transfer of Non-Reservation Land
[192] In determining this I do not consider that the case Smith v Hugh Watt Society
Inc is comparable to the present case in respect of the land which was not part of the
original reservation. The Hugh Watt Society case was concerned with a trustee’s
breach of trust in transferring property to a party without the consent of all the
beneficiaries. Mr Phillips was not holding the land as express trustee for the
preferred class, but rather as proprietor in his own right.
[193] The regime put in place by TTWMA gives the preferred class a right to be
offered first refusal of the land where it is to be transferred by way of sale or gift, but
that in itself does not necessarily amount to a trust in favour of the preferred class.
[194] It could be argued that in the circumstances where the land concerned is
taonga tuku iho to be passed on through the generations and kept within the hapū,
that something in the nature of a trust relationship arises between the generations and
within the hapū. One must be wary about the dangers of substituting Māori tenurial
concepts for ones arising through the operation of a statute passed through a
Westminster style system and administered in a legal system that is founded in
English concepts of law.
[195] Nevertheless in both the Warin and the Edwards cases the Judges gave some
weight to the Preamble and s 2 of TTWMA when interpreting the confirmation
provisions as against the indefeasibility provisions in the Land Transfer Act 1952.
That said, in both cases the Courts found that the indefeasibility provisions
prevailed.
[196] Although Mr Phillips may have had some tribal connections to the land, I
was not provided with evidence to show that it was taonga tuku iho in the sense of
having been held by Mr Phillips and his whānau from ancestral times. Although I
282 Aotea MB 131
accept Mrs Muraahi’s evidence that the land was family land and of great
significance to them, she went on to say (at 267 Aotea MB 156) that:
It is important that the underlying title should have remained within the family to
recognise our connection to the land and the contribution from our family to setting
up this reservation. Also if the reservation is ever cancelled these lands should come
back to us as the family and should not go to the Society.
I note here that as the land remains Māori freehold land, the preferred class of
alienees retains a right of first refusal if the land is alienated in future.
[197] For the Society it could be argued that, given the undisputed evidence that the
Society assisted Mr Phillips in clearing the land, erecting improvements on the land,
and making contributions to increase the size of the farm, that some kind of trust
relationship could be imposed on Mr Phillips in respect to the Society.
[198] However, no such trust arguments, whether on behalf of the Society or the
preferred class of alienees were made before me.
[199] As the matter was argued before me, the applicants approached the issue
firstly by saying that failure to comply with TTWMA amounted to fraud and
secondly that the Society cannot rely on s 183 of the Land Transfer Act, the savings
provisions for transferees who are bona fide purchasers for value.
[200] I was referred to the Tapsell v Murray case where the executor of a Will
arranged for a block of land belonging to the estate to be transferred absolutely to
himself in contravention of the terms of the Will. That was determined to be fraud
for the purposes of the Land Transfer Act 1952, with the consequence that a third
party who received the land as a gift from the fraudulently registered proprietor did
not gain an indefeasible title. My understanding of the applicants’ argument is that
had the Society given good consideration for the transfer, this would be one good
reason why the error in failing to comply with the confirmation provisions should
not operate to divest the Society of the land. Since the Society did not give valuable
consideration, at least at the time of the transfer, the Court should see that as a
distinguishing factor from the Warin case and therefore give greater weight to the
failure to comply with the confirmation provisions than occurred in Warin. The
282 Aotea MB 132
main distinction between the Tapsell case and this one is that the executor had no
lawful basis for transferring the block to his own name.
[201] In the present case the owner, Mr Phillips, was not being dishonest or
fraudulent in transferring title to the land that was not part of the original reservation
to the Society. Quite the opposite – he was the owner of the land and he was seeking
to assist the Society to continue with his vision for the Manu Ariki reservation. He
did so by transferring his own property to the Society.
[202] The Society archives referred to by Mr Ropata include a description of a
dinner held on 19 July 1998. The description includes these words:
Our kaiārahi spoke to all who were present and gave thanks to all those families
(naming each of the families) who came to support and help and clear the bush lands
and scrub for farming… . At the completion of his speech he completed the formal
procedure by signing the proclamation of transfer and ownership from him to the
KBS Inc.
[203] “Kaiārahi” here refers to Mr Phillips. This description shows, I think, that
there were never any secretive or underhand actions in making this transfer. Nor
were objections made at the time of the transfer so as to alert Mr Phillips and the
Society to the possibility that the transfer was being undertaken wrongfully, or at
least that they should consider the matter further.
[204] Mr Ropata’s uncontroverted evidence was that the parties relied on their
lawyers to ensure that any legal requirements were complied with in order for the
land to be properly transferred. As I understand the argument of counsel, the
respondents thought that all legal requirements had been met and, until the present
case, there was no reason to suppose they had not been.
[205] LINZ registered the transfer and the MLC “updated” the records of the Māori
Land Court to show the Society as owner of the land, although that occurred a few
years after the registration. So again there was nothing to alert the parties to the fact
that the proper process was not followed.
[206] I consider that Mr Phillips and the Society did not intentionally breach the
statute, nor was there any deception or trickery in their actions. Rather I think they
282 Aotea MB 133
or their lawyers made an error as to the procedure that needed to be followed. In
these circumstances a genuine mistake leading to a breach of the statute is unlawful,
but it does not constitute fraud for the purposes of the Land Transfer Act
indefeasibility provisions. I therefore consider that the Society should remain the
registered proprietor of the land.
[207] The Māori Land Court records also show the Society to be the owner of the
lands. Even though such a notation comes about through an error by the case
manager there is in fact no discrepancy between the two title regimes.
[208] The result is that the Court is left in an awkward situation. I have considered
whether I should order correction of the Court records, but I see no utility in doing
so. In the final analysis, the LINZ title will remain in the name of the Society, and if
the Society wishes to transfer the land to another party it will have to offer the right
of first refusal to the preferred class. Mr Phillips’ family may take up that right at
that stage. Additionally, the reservation as gazetted in 2004 overlays these titles, so
that the underlying ownership is in abeyance anyway unless and until the reservation
is cancelled.
[209] To summarise my view in respect of this issue I consider that unless there
was fraud in the sense of dishonest misconduct on the part of the transferor or the
transferee, the Land Transfer Act 1952 indefeasibility provisions “trump” the
confirmation provisions of TTWMA in respect of the non-reservation land. A
mistake either on the part of the parties or their conveyancing solicitor in failing to
comply with the confirmation provisions of TTWMA does not, on the facts of this
case, amount to dishonest misconduct sufficient to raise the exception to
indefeasibility. In line with the cases which discuss the interrelationship between the
indefeasibility provisions of the Land Transfer Act 1952 and TTWMA I am of the
view that in this situation the indefeasibility provisions apply.
Alienation of the Reservation
[210] The question also arises whether Mr Phillips was able to transfer the
underlying title to the 55B1B block containing the original 1984 reservation.
282 Aotea MB 134
Section 338(11) of TTWMA provides that land within a reservation is inalienable to
any person. In this case the transfer document transfers the fee simple in all the land
in Certificate of Title 880/102 (and the other blocks as well) – it makes no mention
of the reservation. The transfer shows a clear intention that the whole of the land,
regardless of encumbrances or interests, was intended to be transferred and was in
fact being transferred.
[211] In this case the transferor, Mr Phillips, undoubtedly had knowledge of the
existence of the reservation, as he was one of the original trustees and gave the land
for the reservation. I consider that the Society had knowledge of the reservation
because some of the trustees of the reservation were also officers in the Society, and
there is mention of the reservation in some of the Society’s records that were
presented to the Court. Nor did the respondents mount any argument to say that the
Society did not have knowledge of the existence of the reservation.
[212] Moreover both Mr Phillips and the Society would have been aware that the
reservation was vested in trustees and that, so far as the reservation land was
concerned, they ought to have known that any transaction needed the consent of the
trustees, even if they were not aware that the reservation lands were inalienable. It
seems to me that Mr Phillips and the Society simply assumed that they had the
consent of the trustees because Mr Phillips was a trustee and was their leader.
Alternatively they may have thought that the reservation was not part of the transfer
of the blocks, as it had been set apart by Gazette Notice. Whatever the case the
trustees’ consents were not obtained to the transfer of the reservation, and even if
they were, the reservation was still not alienable.
[213] It may be that the parties intended to transfer the underlying title,
understanding that it would be with the overlay of the reservation, in the belief that
this did not transgress the provision against alienation. I consider that, if the gazettal
of the reservation is to mean anything, the Society took the title subject to the
overlay of the reservation, regardless of the parties’ intentions or their understanding
or misunderstanding of the legal situation. However, that the Courts will give effect
to the existence of the reservation as against the registered proprietor, or that the
parties themselves will respect the reservation, is different from saying that the
282 Aotea MB 135
reservation has not been alienated. As previously stated the terms of the transfer are
such that it is clear that the whole of the land in 55B1B was being transferred,
including the reservation land. This means that the transfer is in breach of the statute
by reason of the purported alienation of the reservation.
[214] Applicant counsel submitted that this statutory breach invalidates the entire
transfer, because the transfer of the reservation cannot be severed from the transfer
of the rest of the land. However, that argument brings us back to the indefeasibility
provisions of the LTA. Unless there is fraud or one of the other exceptions to
indefeasibility applies the registered proprietor has title that is good against the
world.
[215] In considering this question I am strongly influenced by the fact that the
Society has no intention of trying to deny the existence of either the original
reservation or the extended reservation – quite the contrary. Therefore I do not think
it can be said that there is any fraud by Mr Phillips or the Society for LTA purposes.
The trustees can register the gazette notice against the title to the land at any time
and the Society as registered proprietor will be bound by it. The Society may be the
underlying beneficial owner of the reservation lands, but the trustees are the legal
representatives for the beneficiaries of the reservation. The trustees lose nothing by
virtue of the change of underlying ownership.
[216] In all the circumstances I find that the title of the Society to the underlying
ownership of the land is not impugned by reason of the purported alienation of the
reservation.
Lease to the Society
[217] The Deed of Lease to the Society is dated 11 November 2003. It follows
from what I said in respect of the transfer to the Society that, except in relation to the
reservation, the Society was entitled to grant itself a lease. There are, therefore, two
aspects to this particular issue as follows:
a) The lease over the original reservation; and
282 Aotea MB 136
b) The estoppel argument in respect of the term of the lease for the
balance of the lands.
Lease Over Original Reservation
[218] As at 11 November 2003 the original 1984 reservation was still in place.
Respondent counsel argued that the original reservation ought to have been
cancelled, and since it was purely an administrative oversight that it was not, the
Court should determine that the lease was valid and effective in respect of the
reservation lands. This argument was rather hopeful, especially as the
recommendation to cancel the original reservation was accompanied by a
recommendation to set apart a new reservation over all the blocks. Even if the Court
could ignore the fact that the Gazette Notice was not published, effect would then
have to be given to the recommendation in respect of the new reservation. That
would not advance the respondents’ position.
[219] The legal reality is that the reservation is constituted by the publication of the
Gazette Notice, not by the making of the recommendation. The wording of s 338(1)
of TTWMA states:
The Chief Executive may, by notice in the Gazette issued on the recommendation of
the Court, set apart as Maori reservation any Maori freehold land…
[220] The use of the word “may” does not impose a mandatory action upon the
Chief Executive, although it would be highly unusual for the Chief Executive to
reject a recommendation by the Court. What it does mean is that gazettal is essential
to the constitution or the cancellation of a reservation.
[221] It follows that at the time of execution of the lease to the Society, the
reservation lands were vested in the trustees. The lease was not registered, so that
the lessee does not gain the benefit of the indefeasibility provisions under the Land
Transfer Act 1952. At the date of the lease the Society had notice that the trustees
were vested with the reservation lands and must therefore be taken to know that the
trustees had the authority to grant the lease over the reservation. This is supported
by Mr Ropata’s evidence that the trustees were put in place as the legal mechanism
282 Aotea MB 137
for operating the reservation. Furthermore pursuant to s 338(12) the lease had to be
approved by the Court and the maximum term could be no more than 14 years,
including renewals. I accept the evidence of the surveyor that most of the main
buildings fall within the boundaries of the 1984 reservation. I therefore find that the
lease breaches the provisions of s 338 in respect of the 1984 reservation land, and is
therefore not valid in respect of those lands.
Lease Over Balance Lands
[222] Since I have found the Society is and should remain the registered proprietor
of the balance of the lands the Society did have the authority to grant a lease over
them.
[223] Applicant counsel argued that an estoppel should apply against the Society to
prevent it obtaining the full term available under the lease. This argument is based
upon the fact that when application was made to the Court to extend the reservation
in 2002, counsel advised the Court that the extension should be subject to a 14 year
lease to the Society and to 14 year licences for the dwellings. The strength of the
applicants’ argument depends on the interpretation to be placed on the
representations made by counsel at the 2002 hearing.
[224] Contrary to applicant counsel’s submissions I do not consider that the
representations made by counsel at that hearing raise an estoppel. My reasons for
coming to this conclusion are as follows:
a) It was clear from the comments made at the hearing that the
conditions requested by Mr Phillips’ lawyer were intended to be for
the benefit of the Society and to comply with the statute;
b) Although in the 2002 hearing Mr Phillips did not indicate that the
reservation was to be subject to a lease for more than the 14 year
maximum provided in s 338, counsel for Mr Phillips did mention that
the Society already owned the land. No objection could have been
taken had the Society indicated that it would grant a longer lease to
282 Aotea MB 138
itself prior to the gazettal of the reservation. Section 338(6) provides
that:
No notice under this section shall affect any lease or licence…
Thus the law permits longer leases to be put in place prior to the
recommendation or gazettal of a reservation;
c) To raise an estoppel not only must those who have statutory rights
have induced others to believe that those rights would not be
enforced, but those others must also have changed their position in
reliance on the inducement.
[225] No evidence was presented to the Court that the Society had induced others
to believe that they would not enter into a longer lease, nor that anyone had changed
their position in reliance on those representations. Applicant counsel argued that the
actions of the Society in granting a longer lease were detrimental to the trustees of
the reservation as it prevented them from using the land in different ways. However,
the Society was entitled to grant itself a longer lease while the reservation remained
un-gazetted. Nor does that change the position of the trustees, since they did not
become trustees until after the gazettal. I was not given any evidence that the
nominee trustees had entered into agreements or begun negotiations with third
parties that were upset by the existence of the longer lease to the Society. Thus I find
the argument on estoppel fails.
Confirmation of Lease
[226] The third argument made by the applicants is that the lease is an alienation
subject to s 150C(3)(b) of TTWMA. Until a certificate of confirmation has been
issued in respect of the lease by the Registrar of the Court, pursuant to s 160(2) the
lease has no force or effect.
[227] The applicants were of the view that even if the respondents applied for
confirmation of the lease, such application would fail because the lease is in breach
of the provisions of TTWMA.
282 Aotea MB 139
[228] I agree with the applicants that because the lease includes the original
reservation it is in breach of the statute in respect of the reservation land. Section
160(3) provides that the Registrar shall issue a certificate of confirmation if satisfied,
inter alia, that:
… the alienation to be effected by the instrument –
(1) Does not contravene any of the provisions of this Act…
[229] That said, I do not agree that the application would necessarily be doomed to
fail. There is the possibility that the Society could apply for a severance from the
lease of the reservation land. If that were granted then the rest of the lease is
unexceptionable and a certificate of confirmation could be issued. I do not consider
that the lease can be struck down on these grounds unless and until it is shown that
the reservation cannot be severed from the lease. That will require a further hearing.
[230] As an aside I note that the difficulty in simply surrendering the existing lease
and entering into a new one is that all this land is now comprised within the
reservation following the recommendation by the Māori Land Court in 2002 and the
gazettal in 2004. The lease would therefore have to be entered into by the trustees
for the reservation.
Licence to the Society
[231] The applicants’ arguments in relation to the licence to Lot 3 rested on four
grounds:
a) The transfer of 55B1A2, on which Lot 3 is located, was invalid and
the Society had no authority to grant the licence;
b) At the Māori Land Court hearing of 2002 the licences to existing
home owners were to be for 14 years and the recommendation is
couched in these terms. The Society’s reliance on the licence is
therefore unconscionable;
282 Aotea MB 140
c) The licence has not been confirmed pursuant to s 150C(3)(b) of
TTWMA;
d) The licence is for life, and since the Society is not an actual person a
term is uncertain. The uncertainty makes the licence terminable at
will.
[232] The same reasoning as applied to the lease to the Society applies to a, b and c
above. Since the Society received an indefeasible title in respect of the 55B1A2
block, it had the authority to grant itself a licence. The Society was also entitled to
take advantage of the delay between the hearing in 2002 and the gazettal of the
extended reservation in 2004. Although the trustees received the land subject to the
licence, the conditions on the recommendation were intended to be in favour of the
Society, and no one could be said to have relied on the representations made at the
Court hearing, such that they changed their position and would suffer a detriment.
Although confirmation has not been granted and the licence is currently of no effect,
the Society may still present the licence for confirmation.
[233] Lot 3 is not part of the original reservation and so the licence is not in breach
of section 338 of TTWMA. Thus the Society may apply for a certificate of
confirmation from the Registrar.
[234] However, I agree with the applicants that, as the Society is not a natural
person the grant of the licence for life makes no sense. Moreover, the land is now
subject to a reservation and the length of any such lease or licences pursuant to s 338
is 14 years maximum. In my view the effect of granting a term for life to the Society
is the same as granting a perpetual licence. That may well be what was intended, but
such a result could not be achieved by granting a life term to the Society. My reason
for saying this is that the term “life” when used in property transactions is uncertain
to the extent that no one knows the length of a life until it has ended. Nevertheless,
it does end – termination is implicit in the word. Furthermore, as indicated at
paragraph [89] above the terms of the licence indicate the intention that the licence
be granted to a natural person rather than an artificial entity. Since the licence is to
the Society there is no certainty of termination and the term has therefore become so
282 Aotea MB 141
uncertain as to make the licence determinable at will by the trustees of the
reservation.
Lease to Waituhi Farms
[235] This lease was granted in 2008, by which time the reservation had been
extended by the Gazette Notice in 2004 to include five blocks. The lease to Waituhi
Farms sits over most of these blocks except 55B2B3A.
[236] Only the trustees can grant a lease over the reservation. Furthermore the
consent of the Court is required under s 338(12) in respect of a lease over a
reservation.
[237] Waituhi Farms chose not to join the proceedings, so that the Court was not
given any arguments from the tenant’s point of view, such as whether the tenant
could have been relying upon the title of the registered proprietor, being the Society,
as having all necessary authority to enter into the lease. As previously indicated the
reservation is not registered at LINZ and so does not appear on the title records.
[238] The Society has no authority, and could not execute a valid lease over the
reservation. I therefore consider that a further hearing is needed to determine the
extent of liability of the Society and whether there should be an account for profits or
compensation.
[239] Whilst the Court would be entitled to take the view that the Waituhi Farms
took the risk of not being involved in the proceedings, and could therefore make
orders in their absence, I am not prepared to do so. Rather at the end of this decision
I will give directions to the trustees and the Society to engage with Waituhi Farms to
try to achieve a settlement.
Canteen
[240] The original canteen was located within the 1984 reservation. It is now only
partly on the original reservation and extends into the 55B1A2 block. During the
282 Aotea MB 142
existence of the original reservation the trustees were entitled to maintain control and
authority over the operation of the canteen, as per the Māori Reservations
Regulations 1994. The trustees were also entitled to delegate the operation of the
canteen to the Society, and this appears to have been what occurred, certainly during
Mr Phillips’ lifetime.
[241] However, the applicants did not present me with any evidence showing that
the trustees had revoked the Society’s authority to administer the canteen. That said,
reservation trustees are entitled to receive proper financial reports and accounts
which show the use of the profits from the canteen. The Society has provided the
Court with financial reports which make it clear that funds have been used for the
purposes of the Society and to forward the Society’s objectives.
[242] The Court cannot ignore the fact that up until Mr Phillips’ death the trustees
have been subsumed by and within the Society. While I can understand that it may
have been very difficult for the trustees to take an independent stance during Mr
Phillips’ lifetime, that was their duty if they felt that the activities on the reservation
were no longer for the benefit of the beneficiaries of the reservation.
[243] It has only been since the death of Mr Phillips that the trustees have separated
themselves out from the Society and claimed separate authority, but in some ways
their mandate is questionable. The trustees were appointed by the Court on the
application of Mr Phillips with the backing of the Society members. The de facto
reality was that the trustees and the Society relied on Mr Phillips’ authority and
leadership. Now that he has died both sides are really starting afresh in terms of the
mandate, authority and jurisdiction that each has.
[244] I therefore consider that there is little point in requiring the Society to go
back and account for profits made in the past by the canteen. The real question is
how the canteen and its operations are to be managed in the future.
282 Aotea MB 143
ANZ Bank Account
[245] The Court received a lot of evidence from both sides as to the ownership of
the funds in this account, and who had the authority to operate the account. It is not
unusual for a marae committee to have bank accounts from which it draws the day to
day expenses of the marae reservation and pays in the koha and other income. The
committee will then account to the trustees for those monies. Similarly there may be
other accounts open for the benefit of the marae, for example building accounts,
investments accounts and so on. In the final analysis the trustees of the reservation
have the final authority in respect of accounts opened for the reservation.
[246] As previously indicated at paragraphs [92] and [93] I have come to the view
that the ANZ account was originally opened at Mr Phillips’ instigation to receive
income from the licenced dwellings which would then be disbursed for the upkeep of
the buildings and general reservation purposes. In other words the funds in the
account were held on trust for the benefit of the beneficiaries of the reservation. The
class of beneficiaries is as set out in the Gazette Notice. While that class includes
the Society members, it also includes many other people. During Mr Phillips’
lifetime, the Society had the authority to administer the funds and the account, but it
did so on behalf of the beneficiaries of the reservation. The trustees therefore have
the ultimate authority in respect of the account.
[247] However, I must again refer to the fact that the trustees have, for most of the
time that the reservation has been in existence, been subsumed within the Society
and under Mr Phillips’ authority. Had the trustees always maintained their separate
governance role, then I would have no hesitation in upholding the applicants’ request
for an accounting for the funds in the account. The trustees have simply not
undertaken their role as trustees and I do not consider that they are in a position to
demand that an account be made to them for those funds. If the funds could not be
fully accounted for, the Court would have to consider who is in fact liable to the
beneficiaries. Carrying the trustees’ argument to its proper conclusion the answer
would have to be that the trustees would be liable. I do not consider that requiring
an account from the trustees or the Society would be fair, reasonable or useful in the
circumstances.
282 Aotea MB 144
Conclusion
[248] The applicants have been successful at least in part in this application.
Although I have not found in their favour in respect of the transfer of Rangitoto
Tuhua 55B1B and 55B1A2 blocks, the lease to the Society is invalid in so far as it
relates to the original 1984 reservation, and unless that part of the lease can be
severed from the whole, the lease in its entirety would be invalid.
[249] The licence to the Society is for a term uncertain. It is therefore terminable at
will.
[250] The lease of reservation land to Waituhi Farms is, as between the Society and
the trustees, invalid because the Society had no authority to enter into the lease with
Waituhi Farms.
[251] In respect of the canteen I have determined not to impose an account for
profits upon the Society. Similarly in relation to the ANZ Bank account there will be
no account for profits. However, the canteen and the bank account are subject to the
authority of the trustees at this point in time.
[252] At the conclusion of the hearing the Society requested that the Court order a
meeting of owners to determine the issue as to who should be trustees for the
reservation. The Society referred to the inactivity by the trustees until Mr Phillips’
death and the subsequent disagreements that have arisen. I was impressed at the
hearing by the intentions of all parties to ensure that the vision which created the
Manu Ariki reservation would continue. There is no doubt that during Mr Phillips’
lifetime the proper legal relationships between the parties were blurred and that these
proceedings are part of the disentangling that needs to occur. However, it is very
important that the beneficiaries are consulted as to who they think may best carry
forward the founding vision for the reservation. It does appear that in the past it was
thought that the reservation trustees should be individuals, although it is not clear
why the parties held that view. It is certainly possible for an incorporated society to
be appointed as a trustee for a reservation. Or it may be that the beneficiaries
consider that the purposes for setting up the Society have run their course, and that
282 Aotea MB 145
for the future development of the reservation other trustees would be better placed to
take the reservation forward.
[253] I consider that this matter ought to be put to the beneficiaries for their views.
I therefore direct that the Registrar is to call a meeting of the beneficiaries of
the reservation to consider and decide on the following matters:
a) Whether there should be an election of new trustees;
b) Whether the current trustees are prepared to stand down to allow
an election;
c) If so, an election to take place, with nominations from the floor
permitted.
[254] The trustees and Society are directed to meet with a view to resolving
how to deal with the lease to Waituhi Farms. If possible counsel are to provide
a joint memorandum setting out any agreements and proposals in terms of
negotiating with Waituhi Farms.
[255] Submissions are invited from counsel as to the various matters that require
further hearing, applicants to file such submissions by 5 June 2012 and the
respondents to file submissions by 19 June 2012. Counsel may wish to liaise with
each other to produce a joint memorandum on these matters. If so they may advise
the Court and seek further directions.
Pronounced in open Court at 3.55 pm in Wellington on the 3rd day of May 2012.
S Te A Milroy JUDGE
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