Kane v Attorney-General

[2014] NZHC 251

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-4843 [2014] NZHC 251

UNDER  the Judicature Amendment Act 1972

AND UNDER                   Part 30 of the High Court Rules

BETWEEN  MICHAEL ANTHONY KANE, PATRICIA MARY BARRETT, IRENE DOROTHY LODER, JENNINE TERESA KANE, KAY THOMSON, JANET ELIZABETH OTTO, RODERICK ANDREW RUTHERFORD AND LOUIS EVAN ERSKINE FAIRHALL

Applicants

ANDATTORNEY-GENERAL Respondent

Hearing:                   17 February 2014

Counsel:                  R J Fowler for Applicants

C R Linkhorn and R M Hogg for Respondent

Judgment:                21 February 2014

JUDGMENT OF GODDARD J

This judgment was delivered by me on 21 February 2014 at 4.30 pm, pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Gillespie Young Watson, Lower Hutt for Applicants

Crown Law, Wellington for Respondent

KANE v ATTORNEY-GENERAL [2014] NZHC 251 [21 February 2014]

Introduction and overview

[1]      The applicants seek alternative declarations in relation to land in Blenheim compulsorily  acquired  by  the  Crown  in  1947  for  New  Zealand  Defence  Force (NZDF) purposes (referred to as the 1947 land).   The applicants claim that immediately prior to its compulsory acquisition, the 1947 land was owned by the beneficiaries of the Estate of George Fairhall.  Those beneficiaries have all died and the applicants’ case is that, together with the Marlborough District Council, they are the successors to the beneficiaries.  As such, they say that if the 1947 land ceases to be required for a public work, it must be offered back to them under s 40 of the Public Works Act 1981 (the Act).

[2]      Since its acquisition, the 1947 land has been continuously used as a NZDF

airbase and continues to be used for that and for regional airport purposes.

[3]      In 2012 the Crown entered into Deeds of Settlement with Kurahaupō iwi, providing for the transfer of the 1947 land to Ngāti Kuia, Ngāti Apa ki te Rā Tō and Rangitane o Wairau (the three Kurahaupō iwi) as part of settlement of a Treaty of Waitangi claim, to be recognised in legislation.

[4]      The applicants are concerned that if, prior to transfer of the 1947 land to iwi, they had  existing offer-back  rights  in  relation  to  that  land, those rights  will  be permanently extinguished from the point at which the land is transferred, because iwi will not be subject to Public Works Act obligations.

Grounds of review

[5]      The applicants contend that the Crown is in breach of its duty in a number of respects because they say the Crown knew, as at 4 December 2010, that they had offer-back rights in respect of the 1947 land and therefore ought not to have included the land in the Deeds of Settlement without first addressing their offer-back rights.

[6]      As a related ground of review, the applicants claim they had a legitimate expectation that, before the Crown included the 1947 land in any settlement with iwi, the Crown would first address their offer-back rights.

[7]      As a further related ground, the applicants claim that, before making any decision to include the 1947 land in any settlement with iwi, the Crown should have taken into account their offer-back rights as a relevant consideration.

[8]      Further, the applicants claim that the Crown is or was under an obligation in negotiating with Kurahaupō iwi not to knowingly put at risk their offer-back rights.

Remedy

[9]      Of the two alternative declarations originally sought, the applicants settled on the following as the remedy they require from the Court:

A declaration that before the Crown included the 1947 land in the deeds of settlement, it should have first sought the consent of the applicants or procured  an  acknowledgement  from  them  surrendering  their  offer-back rights.

Section 40 of the Public Works Act 1981

[10]     Section 40 provides for the disposal of land not required for a public work to the former owner of the land or their successor.  For the purposes of s 40(5), the term “successor” means the person who would have been entitled to the land under the will or intestacy of that person had he or she owned the land at the date of his or her death and, in any case, where part of the land was taken, includes the successor in title.

Post settlement history of the Woodbourne land

[11]     The first members of the Fairhall family settled in Nelson in February 1842 and in 1885 one of their sons, Edward Fairhall (Junior) moved to Woodbourne in Marlborough.  The Woodbourne farm subsequently became part of a family farming partnership, registered in the name of George Fairhall, one of the three surviving sons of Edward Fairhall (Junior).  Due to George Fairhall’s interest in aviation, part of the Woodbourne farm came to be used as a private airfield in the 1920s.

[12]     In 1939, a major part of Woodbourne was taken by the Crown for NZDF

purposes under the Public Works Act 1928.

[13]     On 18 July 1941 George Fairhall died intestate and without issue.

[14]     On 29 September 1941, letters of administration were obtained from the Supreme Court in Nelson by George Fairhall’s four surviving siblings, as his next of kin.

[15]     In 1946, during the period of administration, the administrators of the estate sold the Fairhall homestead and some of the remaining Woodbourne land to private interests.  It seems clear the administrators were seeking to liquidate the assets in the estate  for  distribution  in  that  form,  as  is  evident  from  a  1948  deed  of  final distribution of the estate, in partially executed form and to which I shall refer shortly.

[16]     In 1947, and before the administration of the estate was finalised, the Crown compulsorily acquired a further 111 acres of Woodbourne land for NZDF purposes. This is the land at issue in these proceedings.  The acquisition was on 29 September

1947, and was effected by Proclamation 678 (Marlborough Registry).

[17]     At some point in 1948 the estate was finalised, as appears from the partially executed  and  incomplete  copy  of  the  above-mentioned  deed  of  distribution, exhibited to the affidavit of Jennine Teresa Kane.

[18]     It is accepted that, under intestacy law at the time of George Fairhall’s death, George Fairhall’s beneficiaries under his estate were his four surviving siblings (who became the administrators of his estate) and the children of his predeceased siblings.1

All of those beneficiaries are now deceased.

[19]     The  applicants  in  this  proceeding  are  the  grandchildren  of  two  of  the deceased siblings of George Fairhall and the great grandchildren of one of those siblings.

Issues

[20]     The applicants must successfully argue three questions before the substantive

grounds of review can be considered.  First, are the applicants “successors” for the

1      Administration Act 1908 and Statute of Distributions 1685, s 7.

purposes of s 40 of the Act?  Second, is their claim justiciable?  Third, and closely related  to  the  second  question,  does  the  Court  in  its  supervisory  role,  have jurisdiction to review parliamentary policy and process in this case?

Are the applicants “successors” for the purposes of s 40 of the Act?

[21]     The Crown’s position is that, while the applicants may be successors  of beneficiaries of George Fairhall’s estate under the law of estates and succession, they are not “successors” for the purposes of s 40 of the Act.

[22]     The Crown’s submission in this regard is that, at the time of its compulsory acquisition in 1947, the estate of George Fairhall was the owner of the land and the now deceased beneficiaries of his estate would have been his “successors” for the purposes of s 40 of the Act, as those persons would have been entitled to inherit the land under the intestacy.  Had the land become surplus to the Crown’s requirements during their lifetime, they would have been  entitled to a s 40 offer-back.   The Crown’s case is, however, that the applicants are generationally removed from such entitlement and are not eligible for offer-back, as they are the successors of beneficiaries for whom entitlement did not crystallise during their lifetime.

[23]     The first limb of s 40(5) of the Act is the one applicable to the applicants’ situation.  Its interpretation is clear.  It provides only for offer-back to the immediate beneficiaries under the will or intestacy of the original owner.  On that basis, only those beneficiaries who were the immediate successors under the intestacy of George Fairhall’s estate qualified as his “successors” for the purposes of s 40(5).   The applicants do not qualify.   This interpretation accords with the following obiter observations  of  the  Court  of  Appeal  in  Port  Gisborne  Ltd  v  Smiler,  which  I

respectfully adopt:2

Pursuant to sub (2) land is to be offered back “to the person from whom it was acquired or to the successor of that person”.  “Successor” is defined in subs (5) which, as set out earlier, provides:

(5)     For the purposes of this section, the term “successor” in relation to any person, means the person who would have been entitled to the land under the will or intestacy of that person had he owned

2      Port Gisborne Ltd v Smiler [1999] 2 NZLR 695 (CA), at [44]–[45].

the land at the date of his death; and, in any case where part of a person’s land was acquired or taken, includes the successor in title of that person.

The division in subs (5) is immediately apparent.  Where part of a person’s land was taken, and that part is available for offer back, the offer is to be made to the “successor in title” of the original owner.  In other circumstances however,  the  offer is to be  made  to  “the person who would have  been entitled to the land under the will or intestacy of that person had he owned the land at the date of his death”.   Parliament has made a deliberate distinction.  Offer-back provisions allowing for sale to owners of land from which  the  subject  land  was  severed  have  existed  since  1876.     Such provisions give effect to a legislative policy of re-amalgamating blocks of land where only part was acquired by the Crown.  Owners of adjacent land have been alternative offerees.  In both cases it was the person then holding title to the land who became entitled.   In 1981 new offer-back provisions were introduced.  Where an entire section of land is acquired the provision is narrower and provides only for offer back to the immediate beneficiaries, under the will or on intestacy, of the original owner.

[24]     In March 2011, a part of the 1947 land (2.66 hectares), known as the golf club land, having been determined as no longer required for a public work was offered back to the applicants as “the immediate surviving descendants to the beneficiaries of the estate of GHM Fairhall, as required pursuant to Section 40(2) of the Public Works Act 1981”.  The applicants did not take up the offer to buy back the

2.66 ha but point to this offer-back as evidence of the Crown’s recognition of their

offer-back rights generally under s 40.

[25]     However, my view of the eligibility of the applicants for offer-back rights to the 1947 land is as set out in paragraph [21] above.   It follows that I accept the Crown’s argument in relation to the absence of eligibility of the applicants for an offer-back to that land under s 40 of the Act, should it ever become surplus to the Crown’s requirements.   In itself, that is sufficient to dispose of this application. However, it is appropriate to also consider the issues of justiciability and jurisdiction that have been raised.

Justiciability

[26]     Even if the applicants were eligible for offer-back under s 40(5) of the Act, a question  immediately arises  in  relation  to  the justiciability of their claim.   The wording of the declaration, as sought, while directed to an alleged failure to take into

account a legitimate expectation in relation to a statutory right, in reality seeks to bind the Crown in respect of an unknown future contingency.

[27]     The  Deeds  of  Settlement  with  Kurahaupō  iwi  provide  inter  alia  for  the purchase  and  lease  back  to  New  Zealand  Defence  Force  of  those  parts  of Woodbourne Airbase that are still required for defence purposes.  This includes the

1947 land.   I will refer to these Deeds of Settlement and the Te Tau Ihu Claims

Settlement Bill in more detail under the related heading of jurisdiction.

[28]     The applicants have argued that, if they are eligible for offer-back rights under s 40, then in the event the 1947 land becomes surplus to Crown requirements, their “inchoate” or nascent pre-emptive rights will be extinguished if the land is transferred into iwi ownership, as that transfer will not be subject to Public Works Act obligations.

[29]     The Government’s obligation, where s 40 rights have been triggered and the distinction between that situation and the situation of land still required for public works, has been explained to the applicants on a number of occasions, through correspondence with the Office of the Minister for Treaty of Waitangi Negotiations and with Directors of the Office of Treaty Settlements.   Throughout this correspondence, it has been made clear that the vesting or transfer of any property to Kurahaupō iwi as part of the settlement is subject to confirmation that no prior offer-back or other third party rights or obligations are found to exist in respect of that property.

[30]     For  instance,  on  29  June  2009,  the  Minister  for  Treaty  of  Waitangi

Negotiations wrote to Mr Tim Fairhall advising that:

In clause 7(j) of Attachment Four of the Agreement, the vesting or transfer of any property as part of the settlement is subject to confirmation that no prior offer back or other third party rights or obligations exist in relation to the property.

I have asked my officials to keep you informed of any progress as appropriate.

[31]     On 28 May 2010 the Minister wrote again to Mr Tim Fairhall advising:

The  Crown  and  Kurahaupō  are  working  towards  signing  a  Deed  of

Settlement in mid-2010

The  Minister   of   Defence   is   currently  preparing  a  White   Paper   on Government policy arising from the Defence Review 2009 that is expected to be released in September 2010.

The New Zealand Defence Force needs to have a clear basis for decisions on what land is surplus and what land is needed for their operational purposes at Woodbourne.   The forthcoming White Paper is expected to provide this clarity.   The final offer to Kurahaupō over Woodbourne, including any specific land to be offered, will be guided by the findings in the White Paper.

Any land at Woodbourne declared surplus must pass normal statutory clearances,  including  the  offer-back  provisions  of  the  Public Works Act

1981,  before  it  can  be  purchased  by  Kurahaupō  as  part  of  their Treaty settlement.

[32]     In  November  2010,  the  (then)  Deputy  Director  of  the  Office  of  Treaty

Settlements Office, wrote to Mr Tim Fairhall advising:

The Crown and all three Kurahaupō iwi ... will have signed the Deeds by early December 2010.   We envisage that legislation giving effect to the Deeds will be passed by the end of next year.

The Kurahaupō settlements include the opportunity for the three iwi to purchase land at the New Zealand defence Force (NZDF) Woodbourne Airbase. The NZDF has already declared some Airbase land surplus and this is currently subject to section 40 (s 40) of the Public Works Act 1991.  This land will only be available for purchase by the iwi if the land is not required to be sold in accordance with s 40. A diagram of the surplus land is included under  “Woodbourne Airbase  Land”  in  the Attachments  Schedule  of  the initialled Deeds which can be found on the Office of Treaty Settlements website under the “Documents” tab.

The Deeds also provide that by 31 December 2010, the NZDF must advise the three iwi of:

(a)     the remaining Airbase land that is required for NZDF operational purposes or required for any other public work.  This land will be available   to   the   iwi   for   purchase   and   leaseback   for   the continuation of the public work; and

(b)     the  remaining  Airbase  land  that  is  not  required  for  NZDF operational  purposes and is  not required for any other public work.  This land will be declared surplus and subject to s 40 of the Public Works Act 1981 and only be available for purchase by the  iwi  if  the  land  is  not  required  to  be  sold  in  accordance with s 40.

[33]     On 12 July 2011, the Director of the Office of Treaty Settlements wrote again to Mr Tim Fairhall advising that:

... Section 40 of the Public Works Act 1981 is only triggered if the land offered is declared surplus by the landholding agency in which case it will go through clearances under section 40.

For  those  portions  of  the  Woodbourne  Airbase  that  the  New  Zealand Defence Force declared surplus the clearance process has now been completed in accordance with the Public Works Act 1981.  Where required, descendants of former owners were identified and offer-backs made to them.

[34]     On 6 September 2011, the Director wrote further advising that:

All of the land NZDF declared surplus to its requirements has been through the government’s disposal clearance process which included assessment of whether there were obligations under section 40 of the Act to offer the land back to former owners or their successor(s).  Where land has been cleared by this assessment it will be available for purchase by iwi.

[35]     On 31 May 2012, the Deputy Director of the Office of Treaty Settlements, inter alia wrote advising:

It is our view that an entitlement to an offer-back over Crown-owned land under section  40  does  not  exist  until  such  time  as the  land  is  declared surplus.

[36]     The above excerpts clearly explain the situation in relation to the NZDF land; the distinction between land still required for public works and land no longer so required; the application of s 40 of the Act to the latter; and the process being followed.

[37]     The question of the justiciability of the applicants’ claim can be dealt with shortly.   The situation is clear.  While the applicants contend the Crown had a duty to address their claim of “inchoate” offer-back rights before entering into the Deeds of Settlement with Kurahaupō iwi, such rights, had they existed, have not yet arisen in relation to the subject land and thus no commensurate legitimate expectation in the s 40 context can arise.  The land is not surplus to Public Works Act requirements, as it is still required as a NZDF base and for regional airport purposes.  Any contractual rights or legitimate expectation under s 40 could constitute no more than a possible future contingency.  Thus, there is no enforceable duty that the Crown has breached; nor any decision that the Crown should have taken prior to the signing of the Deeds of Settlement that could be categorised as amenable to judicial review.

Jurisdiction

[38]     Closely related to justiciability is the question of the Court’s jurisdiction in

relation to parliamentary policy and processes.

[39]     In May 2009, the applicants became aware that the Crown, through the Office of Treaty Settlements, was considering the inclusion of the 1947 land, comprising part of the Air Force’s base at Woodbourne, as part of the Crown’s Treaty settlements with the Kurahaupō iwi.

[40]     In October and December 2010, the Crown signed Deeds of Settlement with Kurahaupō and other iwi.  Inter alia, the Deeds provided for the future treatment of three types of land at Woodbourne Airbase, described as follows:

(a)      “current   surplus   land”   which   NZDF   had   declared   surplus   to requirements on 1 March 2010 and which was at the time still going through the statutory clearance process under the Act;

(b)“non-operational land” which was any land that NZDF would notify the iwi by 31 December 2010  was no longer required  for NZDF operational purposes or required for any other public work, and which would also need to go through the statutory clearance process under the Act; and

(c)      “leaseback land” which was the remainder of the Woodbourne land that is required for NZDF operational purposes or required for any other public work.

[41]     In December 2010, NZDF informed Kurahaupō iwi of the areas that were no longer required for operational purposes or for any other public work, and those areas that were still required for operational purposes and which would be available for sale and leaseback.  The remainder of the 1947 land was assessed as still required for defence purposes.  Transfer of the properties would be conditional on settlement legislation being enacted to give legal effect to the matters covered in the Deeds of Settlement.

[42]      Kurahaupō iwi have indicated their intention to purchase the operational areas (if settlement legislation in its current form is enacted) and lease them back to the NZDF.

[43]     On 27 May 2013, the Te Tau  Ihu Claims Settlement Bill (the Bill)  was introduced into the House.  The Bill is an omnibus bill comprising four component bills, three of which are claims settlement bills that seek to give effect to the Deeds of Settlement entered into by the Crown providing for settlement of all historical claims in the top of the South Island and some claims in the North Island.

[44]     The first reading of the Bill occurred on 5 June 2013 and the Maori Affairs

Select Committee reported back on the Bill on 19 November 2013.

[45]     If the Bill passes into legislation, the Crown will be authorised to transfer the properties to iwi as part of commercial redress.  In this regard, Part 3, Subpart 1 of the Bill expressly provides for the transfer of the Woodbourne land.   By way of example, s 146 (1) provides as follows:

146     The Crown may transfer properties

(1)      To give effect to part 6 of a deed of settlement, and any of parts 3 to

6 of the property redress schedule of a deed of settlement, the Crown (acting  by  and  through  the  chief  executive  of  the  land  holding agency) is authorised to—

(a)     transfer  the  fee  simple  estate  in  a  commercial  property, deferred selection property, or any Woodbourne land to the trustees of a settlement trust; and

(b)     sign a transfer instrument or other document, or do anything else, to effect the transfer.

[46]     Section 148 of the Bill provides for its application to other enactments, again with express reference to the Woodbourne land that:

148     Application of other enactments

...

(4)       In exercising the powers conferred by section 146, the Crown is not required to comply with any other enactment that would otherwise regulate or apply to the transfer of a commercial property, a deferred selection property, or any Woodbourne land.

[47]     As is clear from the above sections of the Bill, title to the land will be perfected by the enactment of the proposed legislation.   Transfer of title to the Woodbourne land is expressly recognised in the draft sections.

[48]     The lengthy correspondence conducted on behalf of the applicants with the office of the responsible Minister, excerpts of which are set out above, also make it abundantly clear that neither the inclusion of the Woodbourne land, or its history, or the possible application of s 40 of the Act, have been overlooked in any respect during the course of negotiations and in the parliamentary process.  The wording of the draft legislation explicitly reflects this.

[49]     The applicants, through counsel, have accepted “as trite law” that the Court will not interfere in parliamentary proceedings, citing New Zealand Maori Council v Attorney-General,3    and   accept   this   principle   extends   to   steps   or   decisions preliminary to legislation in a Treaty of Waitangi settlement context that are closely related    to    the   parliamentary   legislative   process,    citing    Potaka-Dewes    v Attorney-General.4    Likewise, the applicants have accepted, for the same reasons, that the advice given by officials to a Minister of the Crown is not amenable to review, citing Milroy v Attorney-General.5

[50]     The applicants profess not to seek to challenge the sovereignty of Parliament, or the parliamentary process, or the steps leading to the draft legislation, or the advice given by officials.  However, they are in reality seeking to challenge all of those matters.   Their challenge is characterised as directed to “the failure of the Crown to take certain steps before committing itself to those steps”.  In the wording of the declaration they are seeking those steps were that, before the Crown included the 1947 land in the deeds of settlement, it should have first sought the consent of the applicants or procured an acknowledgement from them surrendering their offer-back rights.   Thus, the challenge is to an alleged requirement for the Crown to have addressed their claim to “inchoate” rights under s 40 of the Act, prior to committing

itself by entering into the Deeds of Settlement.

3      New Zealand Maori Council v Attorney-General [2007] NZCA 269, [2008] 1 NZLR 318.

4      Potaka-Dewes v Attorney-General [2009] NZAR 248 (HC).

5      Milroy v Attorney-General [2005] NZAR 562 (CA).

[51]     Even if the applicants did qualify under s 40(5) of the Act as successors for the purpose of offer-back, any rights they might have to an offer-back could be no more than a possible future contingency, as I have already found.  As such they are not enforceable or actionable until such time as they might crystallise.

[52]     The suggestion in the declaration, that the Crown should be required to seek the consent of third parties to a settlement process in which those third parties are not involved, is also misconceived.

[53]     There  has  been  no  determination  of  the  applicants’  rights  or  interests protected or recognised by law, which have been affected, in terms of s 27 of the New Zealand Bill of Rights Act 1990 and requiring the observance of natural justice in the applicants’ case. As I have already found on two bases, the applicants have no rights or interests under s 40 which could be affected.

[54]     Insofar as the applicants had a right to be heard on the issue of their situation in relation to s 40 and to the preservation of any inchoate rights they might possess, the applicants have been fairly heard. The extent of the correspondence referred to is testament to the engagement that officials entered into with the applicants, in order to explain the situation and the process to them.   There is no proper ground for the Court to interfere in the parliamentary process that is under way, nor any ground on which to review the Treaty settlement process.

Result

[55]     The application is dismissed.

Costs

[56]     The Crown has asked for costs if it is successful.  These are awarded on a 2B

basis.

Goddard J