Mangaroa 26N2 Trust v Huata
[2022] NZHC 113
•8 February 2022
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA
AHURIRI ROHE
CIV-2019-441-000018
[2022] NZHC 113
BETWEEN MANGAROA 26N2 TRUST
Plaintiff
AND
WI HUATA DONNA HUATA
Defendants
AND
P C RAIKES LIMITED
Interested Party
Hearing: 4–6 October 2021 Appearances:
L Foley and K Tulloch-Otimi for the Plaintiff D O’Connor for the Defendants
Judgment:
8 February 2022
JUDGMENT OF GRICE J
MANGAROA 26N2 TRUST v WI HUATA [2021] NZHC 113 [8 February 2022]
Contents
Introduction [1]
Agreed facts and issues [8]
Procedural history [10]
Mangaroa 26N2 Trust [13]
The background occupation by the Huatas [22]
Events leading to 1999 Heads of Agreement [38]
Events following the 1999 Heads of Agreement [54]
Te Ture Whenua Māori Act 1993 [108]
Interpretation [129]
Effect of s 228 of Te Ture Whenua Māori Act [142]
Analysis [153]
Specific performance [173]
Conclusion [174]
Improvements [176]
Other claims by the Huatas [186]
Conclusion [190]
Costs [194]
Introduction
[1] Mrs Miriama Te Whare bought a rural property in Hawkes Bay on 12 January 1909.1 The land is general land owned by Māori and is an estate in fee simple.2
[2] The Mangaroa 26N2 Trust (the Trust) was constituted on 27 June 1974 under s 438 of the Māori Affairs Act 1953 to administer the land for Mrs Te Whare’s descendants. The current trustees are Charles (Chula) Wall, Doug Wall, Joe Gotty and Carol Mitchell.
[3] Mr and Mrs Huata, the defendants, oppose the Trust’s claim to recover possession of the land. Since 1987 the Huata whānau, as trustees and beneficiaries of the Te Huawhenua Trust (the Huatas), have occupied the trust land at Maraekakaho Road, Hastings. The parties had been in dispute since that time over various matters.
[4] This dispute relates to whether the arrangements between the Mangaroa Trust and the Huatas included an option to purchase the land. The defendants say this option was given to them by Mangaroa trustees under a Heads of Agreement dated 1999. In the same Heads of Agreement, the Trust agreed it would lease the block of land to the Huatas for 20 years. That lease expired on 30 September 2019.
[5] The Mangaroa trustees say that the Heads of Agreement does not include an enforceable option to purchase. In any event they say that the Huatas have not paid their rent on time and have always been unsatisfactory tenants, therefore, they should not be entitled to exercise that option if the Court determines that the option is valid.
[6] P C Raikes Ltd, which uses part of the land under licence from the Huatas, has participated in the hearing. Mr Raikes gave evidence for his company which claims to be a subtenant of the Huatas. The Mangaroa trustees say they did not agree to a
1 The present certificate of title for the relevant block of land is described as identifier HBV4/1351
(Hawkes Bay), lot 2 deposited plan 1996 with an area of 17.699 hectares.
2 Kirkham (on behalf of the trustees of Mangaroa 26N2 Trust) v Huata (2016) 54 Tākitimu MB 104 (54 TKT 104) at [6] and [7] [“Māori Land Court Decision”].
licence or a sublease and did not know about that arrangement until after these proceedings had been commenced.
[7] The Huatas also say if they are not entitled to exercise the option to purchase, then they are entitled to substantial compensation for improvements they have made, including buildings erected by them over the years. They say they were given approval to improve the land in 1987 and relied on this from that time onwards. The approval was said to have been given by Mr John Hoani Wall (known as Nick Wall), then a Mangaroa trustee, and it was agreed on a handshake.
Agreed facts and issues
[8]The parties filed an agreed statement of facts as follows:
Agreed statement of facts
1.The defendants are trustees of Te Huawhenua Trust. They lease the property at 1460 Maraekakaho Road from Mangaroa 26N2 Trust.
2.Mangaroa 26N2 Trust is an Ahu Whenua Trust constituted under the
Maori Affairs Act 1953.
3.The land at 1460 Maraekakaho Road is general land owned by Māori. It is not Māori land.
4.The parties entered into the lease agreement in 1999. This was an agreement to lease. The parties did not enter into a formal lease.
5.The agreement to lease expired on 30 September 2019.
6.The Agreement to lease contains the following words:
“Should there be a change in Te Ture Whenua Maori Land Act enabling land to be easily sold. Purchase price to be set at valuation at the time, but minimum price $350,000”.
7.When the parties entered into the lease in 1999, section 228 of the Te Ture Whenua Maori Land Act applied.
8.On 11 April 2001, section 228 of the Te Ture Whenua Maori Land Act was amended.
9.On 1 July 2002, section 228 of the Te Ture Whenua Maori Land Act was repealed.
10.The defendants sought to purchase the land several times over the years as recorded in the meeting minutes by the Trustees.
11.The defendants have placed structures on the land and developed the land.
12.The Trustees have refused to sell the land to the defendants.
13.The Trustees have refused to pay compensation for structures placed on the land.
[9]Counsel have also agreed on an agreed statement of issues as follows:
Agreed statement of issues
1.The agreed issues are:
(a)Whether the "option to purchase" clause is valid and binding; and
(b)if so, whether the plaintiffs breached the “option to purchase”
clause; and
(c)if so, whether the Court should grant an order for specific performance under the "option to purchase" clause. If so, what is the date to be used for valuing the land and whether value includes improvements made by the defendants?
(d)If specific performance is not granted, whether the plaintiff should pay the defendants for improvements made to the land and the value of those improvements.
Procedural history
[10] This matter commenced as an originating application to recover possession of land and for cancellation of the lease dated 18 April 2019. The arrears of rental were then repaid. The lease expired by effluxion of time therefore a direction was made that an amended originating application be filed. That seeks a declaration that the lease expired on 30 September 2019 and that the tenant was holding over without consent. It seeks relief by way of an order for possession of the land.
[11] At the date of that application the annual rent of the land was $22,170 plus GST per annum and the rateable value of the land was $1,000,030.
[12] The Huatas oppose the making of the orders sought and claim that the lease gave them an option to purchase, which had been breached by the Mangaroa trustees refusing to sell the land. They seek specific performance. They also seek compensation for improvements and say the plaintiff is estopped from denying
compensation and that it would be unjustly enriched if it took possession of the land without paying compensation for improvements. The defendants rely on the 1999 Heads of Agreement as the basis of their option to purchase.3
Mangaroa 26N2 Trust
[13] The Mangaroa 26N2 Trust is an Ahu Whenua Trust constituted under the Māori Affairs Act.4 The beneficiaries are the descendants of Miriama Te Whare. The register of shareholders and beneficiaries is kept by Strettons, chartered accountants, based in Taupō. They have undertaken this task for over 30 years. There are now approximately 180 owners/shareholders who are descendants, largely the great grandchildren of Mrs Te Whare. Mrs Carol Mitchell who gave evidence as the Chair of the Trust is one of the great grandchildren. There are many more beneficiaries, including the generations succeeding the great grandchildren.
[14] The land involved is classified as general land owned by Māori. It has been under the relevant Māori land legislation since its purchase. The trustees and others from time to time thought the land was Māori land.
[15] Until 2002 in order to alienate the land, s 228 of the Te Ture Whenua Māori Act 1993 required the trust to obtain a 75 per cent majority at an owners/beneficiaries meeting. It also required an order from the Māori Land Court in order to alienate the land.
[16] The trust deed, under which the trust was incorporated, was amended in 1996 to allow alienation in certain circumstances. This amendment occurred at a time when the trustees considered it might be desirable to sell the land for various reasons which I go into below.5
[17]In about 1997, the trustees were considering selling the land and buying some
other land for the use of the beneficiaries closer to Taupō where the trustees largely
3 Particulars supplied in Mangaroa 26N2 Trust v Huata HC Ahuriri | Napier CIV-2019-441-18, 12 October 2020.
4 The Te Ture Whenua Māori Land Act 1993 deemed the existing trust to be an Ahu Whenua Trust and it has continued under that classification under the 1993 Act.
5 See below at [48]–[49].
reside. However, the wish expressed by a number of beneficiaries now is to use the land, including for housing for the whānau. The trustees seek to give effect to those wishes.
[18] On 14 December 1998 the minutes of a general meeting of the trust beneficiaries record the land had been put up for sale by tender. Of the eight tender documents sent out by the real estate agent, only one was returned. It was an offer to buy from the defendants at a sum of $350,000 with a $35,000 deposit and the balance payable within 28 days of approval by the Māori Land Court. The resolution to sell was carried at the meeting on voices and on a show of hands. There were 17 for and eight against, with several abstaining. The minute records there were 37 owners present. The exact number of owners/shareholders or beneficiaries were not noted in the minute.
[19] A 75 per cent majority of owners to approve a sale was needed, together with an order of the Māori Land Court. This was not achieved. Therefore, Mr Huata was told that the sale could not proceed.
[20] Since that time, when the possibility of sale has been raised, the beneficiaries have consistently voted not to proceed with a sale.
[21] The following narration of events between the parties is based on the letters, minutes and documents that the parties could locate and is not complete.
The background
[22] The Huatas first took possession of the land in late 1986, early 1987. At that stage John Hoani Wall was the chairperson of the Mangaroa Trust. Wi Huata, at that stage, said that he was encouraged by Mr Wall, who was a man of great mana, to go onto the land to improve it. Mr Huata recalled this discussion took place in about spring 1986 at Mr Wall’s home at Waitahanui.
[23] The documentation also shows that there was a further meeting in November 1986 between Nick Wall, Wi Huata and Wi Huata’s father, Mr Rana Huata, in the presence of Pat Brown the accountant for Mangaroa, at the offices of Mr Brown’s
accountancy firm, Strettons. At that stage a formal lease was discussed. That lease was never finalised. Mr Wi Huata took possession of the land regardless. The plaintiff says this was without the knowledge of the trustees. That seems to be borne out by correspondence from the time.
[24] Minutes of a meeting of the trustees on 10 February 1987 record a meeting was called at short notice to discuss the “problem” relating to the proposal to lease the Mangaroa land to Mr Huata. It notes that a lease had been prepared in November and forwarded to the Huatas but nothing was heard from them. Subsequently an offer to lease had been made by a third party, a Mr William Jones. The trustees resolved that given the delay by the Huatas the offer to lease to them was withdrawn and there was to be a meeting with the new proposed tenant on the land on 12 February 1987.
[25] It seems that when Mr Nick Hall and Mr M (Tiger) Wall, another trustee, visited the land on 12 February 1987 to check that the Huatas had not taken possession. They discovered “a workforce on the land, 200 odd bales of hay and some pigs”. A letter reporting on this and calling a meeting of trustees for 23 February 1987 records “Huata advised that he would not vacate the land”. The letter records the view of the chairman (Mr Nick Wall) was that a deal should not be concluded with Mr Huata “particularly for the relatively long-term involvement as he has been unreliable to date and a most difficult person to deal with”.
[26] Following that letter the trust’s lawyers wrote to Mr Huata returning rent that had been tendered and advising Mr Huata that he had gone into possession of the land “without any authority whatsoever”. The letter records no authority was given for him to take possession before the transaction, was completed.
[27] The trustees at that stage were not aware of the fact that Mr Huata had applied for a building consent on 15 June. In September 1989 a stop work notice was issued by the Hastings District Council in relation to a shed, which it said did not have a building permit. A kōhanga reo was subsequently established in a double garage built on the land.
[28] It appears rental was paid, despite the fact a lease was never executed. The kōhanga reo’s lawyers wrote to the Mangaroa trustees on 19 September 1991, saying that the kōhanga reo had made rental payments in 1991 for the land on which it operated and had also planted crops on the land.
[29] At that stage Mr Huata was a bankrupt.6 The kōhanga reo offered to enter into a lease of the land upon similar terms including the rental, as Mr Huata had rented the land on.
[30] The trustees had obtained judgment against Mr Huata for unpaid rates and rental of $4,714.54. It received payment of those monies, but further rental had accrued during a period of “holding over” and proof of debt was to be lodged by the trustees for a further sum of approximately $1,400. The trust obtained an order for possession of the land on 27 September 1991.
[31] The trustees of Mangaroa subsequently entered into a lease arrangement with Mr Rana Huata, Mr Wi Huata’s father.
[32] In January 1995 Mr Wi Huata was still on the land. He was served with an eviction notice by the Mangaroa Trust. He put forward three options to the trustees to allow him to stay on the land. The first was that he would purchase the land. The second was an extended lease of 14 years, offering to pay five years upfront. The third was extended lease of 10 months, giving adequate time for the Huatas to remove their belongings.
[33] Mr Wi Huata mentioned during the continuing correspondence and discussions with the trust that the land had a registered valuation of $260,000. He said that his mother’s “little shop” (which apparently referred to a shop on the property selling produce) grossed her $80,000 per annum and the te kōhanga reo grossed $120,000 in 1994.
6 Mr Huata was adjudicated bankrupt on 29 July 1991.
[34] In February 1995, at a meeting of the owners, the minutes note that 23 per cent of the total shares did not favour a sale. Mr Nick Wall was one of those who did not favour a sale to the Huatas.
[35] The owners agreed that the Huata lease should not be renewed. The Huatas were advised by letter of 21 February 1995 of this decision. That letter also refers to the owners believing they had legal title to the improvements on the land but in the circumstances they would allow Mr Huata to remove the improvements subject to providing confirmation of ownership. To enable the removal of the improvements an extension of lease from 31 January 1995 to 31 July 1995 was offered. The letter confirmed that the owners wished to regain control of the land.
[36] At this stage Mr Rana Huata was technically the tenant. However, it was Mr Wi Huata who was conducting the negotiations. They continued until September 1995 when the Mangaroa Trust indicated that it had ceased negotiations with Rana Huata and was going to proceed to have the Huatas legally removed from the land by way of trespass notice.
[37] Correspondence continued between the lawyers for the Huatas and the Mangaroa Trust lawyers. The latter took the view that Mr Wi Huata continued to occupy the property “without any legal rights” and would not agree to “reasonable terms” which the owner had offered.
Events leading to 1999 Heads of Agreement
[38] On 6 June 1996, the Mangaroa Trust obtained an order from the Māori Land Court to vary the terms of the trust. Until then the trustees had no power to sell the land. The order, among other things, allowed the trustees to sell and:
viii to investigate the feasibility of a sale of the land and negotiate with prospective purchasers before presenting any sale proposals to the beneficial owners. The net proceeds of any sale to be applied towards the purchase of further land.
[39] The move to obtain a variation to enable the trustees to investigate a sale had been initiated some years earlier.
[40] The Huatas (as the Te Hua Whenua Trust, a charitable trust incorporated under the Charitable Trusts Act 1957) submitted a signed agreement for sale and purchase of the land dated 15 December 1997 at a purchase price of $400,000. The agreement had a special condition making it subject to approval by a meeting of the owners of the property to satisfy the requirements of s 228(1) of the Te Ture Whenua Act 1993 (which had replaced the 1953 Act) as well as the order of the Māori Land Court varying the trust order to permit the sale of the land and confirmation of the agreement under s 228(3) of the Act.
[41] A valuation of the land (including the improvements, being the storage shed and garage) was obtained by the Māori Land Court on 31 July 1998. The total market value was $350,000.
[42] A meeting of owners was held on 7 October 1998, chaired by the deputy registrar of the Māori Land Court. At this meeting it was recorded that the provisions of the trust order gave the trustees the power to investigate the feasibility sale in the terms stated above.7 The meeting records the trustees put forward the offer from the Huatas with an indication that that was the “best deal available”.
[43] Following discussions, a resolution was put for the sale of the land to the Huatas at $400,000. The resolution failed on the basis there was insufficient support from the owners. The trustees were directed to investigate a sale to other parties and advise the Te Huawhenua Trust that the sale would not proceed until other options had been investigated and a report made back to the beneficial owners.
[44] The beneficiaries met again at a general meeting on 14 December 1998. The minutes record the land had been put out to tender but only one tender had been received and that was from the Te Huawhenua Trust for the sum of $350,000. A resolution was passed that the purchase be accepted. The minutes record “17 for” and “eight against”, with several abstaining. It was recorded there were 37 owners present. A number of the beneficiaries approached the trustees following that meeting objecting to the sale saying that only 37 out of a total of 176 owners were present,
7 See above at [38].
which was less than 50 per cent of the owners represented. They requested a further meeting of owners.
[45] On 5 August 1999 the trustees met again. The minutes record that the application for consent to sell by the Māori Land Court had been deferred pending approval from at least 75 per cent of the owners in order to comply with the Te Ture Whenua Māori Act.8
[46] The minutes record the difficulty in obtaining 75 per cent of the owners. After discussion, it was agreed the trustees should revisit the idea of leasing the land to the Huatas or another party.
[47] Further correspondence passed between Mr Brown (of Stretton and Co Ltd) for the trust and the solicitors acting for the Huatas. Mr Brown refers to the suggestion by the Huatas’ solicitors of a right to purchase and the fact that at that stage the trustees were not able to comply with s 228(1)(b).
[48] Wi and Donna Huata came to a trustees meeting on 6 September 1999. The purpose of the meeting was to consider and “if agreed, arrange for a long-term lease of the land to the Huatas”. The Huatas noted the reason for that was because it had not been possible to comply with the Te Ture Whenua Māori Act requirements to sell the land. The trustees agreed that the preferred course of action was “to provide for a long-term lease to Huata’s with strict conditions as to adherence to the agreement”. It was noted that the trust order permitted “the trustee to lease the land”.
[49] The minutes record that the preferred position of both parties was to sell the land but if that could not be achieved, it was agreed the next “best option was a long-term lease”. Mr and Mrs Huata confirmed the desire of their family to continue to have use of the land had to meet the conditions of the lease.
[50]A Heads of Agreement is set out in the minutes as follows:
Heads of Agreement were agreed as follows:
8 The minutes refer to s 238 of the Act which appears to be an error. The reference should have been to s 228 of the Act (as at 1999).
1.Commencement Date: 1 October 1999
2.Term: 20 years
3.Initial Rent: $12,750 (plus GST if Mangaroa 26N2 is
registered for GST).
4.Lessees: Wi Huata, Cordry Huata, Hine Huata, and Kathy Skipworth as trustees of Te Huawhenua Trust Board.
5.Rent Review: 3 yearly. First review 1 October 2002
6.Option to Purchase: Should there be a change in Te Ture Whenua
Land Act enabling land to be easily sold. Purchase price to be set at valuation at the time, but minimum price $350,000.
7.Use of the land: Apple orchard and Kōhanga Reo.
To ensure that lease is paid up to date and in advance of the first year, Huata’s agreed that funds currently on deposit in regard to purchase at Westermans Real Estate amounting to $35,000, be transferred to Stretton & Co Trust Account and applied as follows:
Licence to 30 September 1999 Rates –
Hastings District Council 2,357.35
3,750.00 Hawkes Bay Regional Council 453.35
2,810.70
Payment to be made immediately
$6,560.70
On preparation of lease agreement, first years rent in advance
$12,750.00
Balance of funds to be transferred to Te Huawhenua Trust Board.
MEETING OF OWNERS
Agreed that lease agreement should be finalised prior to meeting with owners.
[51] Another document was produced which was headed up “Mangaroa 26N2 Trust and The Trustees of the Te Huawhenua Trust Board” referring to the trustees of this trust by name which read as follows:
Heads of Agreement Lease of Land
Licence arrears and rates to be paid by 10 September 1999
Licence to 30 September 1999 3,750.00
Rates –
Hastings District Council 2357.35
Hawkes Bay Regional Council 453.35 2,810.70
$6,560.70
Lease Agreement
1Commencement Date: 1 October 1999
2Term: 20 years
3Initial Rent: $12,750
plus GST if Mangaroa 26N2 is registered for GST.
4Rent Review: 3 yearly. First review 1 October 2002
5Option to Purchase should there be a change in the law.
Variation price at the time, but minimum price $350,000.
Taupo
06 September 1999[52]Mrs Mitchell said this minute was attached to the trust minute.
[53] Mr Brown, who had been secretary at the 6 September 1999 meeting, wrote on 15 September 1999 to Mr Huata that advising the trustee’s lawyer had been instructed to draw up the formal lease agreement. He acknowledged the various payments that had been agreed at the meeting in respect of the rental and rates, including payment of the first year’s rental in advance. The solicitors acting for Mangaroa Trust were instructed to draw up the lease.
Events following the 1999 Heads of Agreement
[54] By 2008 there was still no concluded lease agreement. In the minutes of a meeting of the Mangaroa trustees attended by Mr Wi Huata on 14 March 2008 it was noted that the chairman had called the meeting as a matter of last resort because of a lack of response from the Huatas and lack of a formal lease agreement, as well as historical difficulties with payments of arrears.
[55] Mr Huata said that despite not having a formal lease the Huatas had taken care of the land, paid rental and had commenced renovating the two buildings on the
property. He suggested that the lease be granted in the name of his daughter. Mr Huata agreed to make payment of the rental arrears. It was recorded that after payment was received a formal lease agreement would be immediately drawn up effective from 1 May. Mr Huata said he had offered to walk off the land “if payment is not made in full by that time”.
[56] The trustees confirmed they were happy to lease the land for two years until 30 September 2009. They said the failure to pay in full and enter a formal lease would result in the trustees giving notice to vacate the land. The parties were to come together, subject to payment being made by 30 April 2008, to commence “setting terms” for a formal deed of lease.
[57]An invoice was sent to Mr Huata following that meeting for approximately
$54,000 noting there was outstanding rental, rates and payments in advance due as agreed to 20 October 2009.
[58] Mr Huata emailed Mr Brown (the Mangaroa Trust secretary) on 28 April 2008 advising that the Te Huawhenua Trust was to be restructured from a trust under the Charitable Trusts Act 1957 into a family trust. He sought that any lease agreement be in the name of the Te Huawhenua Trust Board or nominee to accommodate that. He sought a 21-year lease and noted the 1 October 2007 licence agreement was to terminate on 30 April 2008, noting seven months’ rent were overdue. He sought the lease agreement, acknowledged the improvements and also stated:
Work towards land purchase. Ideally we would like to purchase the land and all going well hopefully the share [this year].
[59] The email finished with the comment that this was “merely a discussion point” to lead toward a clear outcome for the 9 May meeting “at your office”. Ms King, on behalf of Mr Brown, responded with details that Mr Huata had asked for and said “your proposal to purchase the land will be presented to the trustees, however, we note that when your last proposal to purchase was raised and discussed in September 2007, it was rejected as owners had agreed that the land not be sold”.
[60] The minutes of the trustees meeting of 9 May record Mr Huata attended the meeting and provided cheques totalling $41,000. The chairman reminded Mr Huata of the undertaking that he would pay two years’ costs totalling $54,078.86 by 30 April but that since that time Mr Huata had asked for changes to the arrangements. The trustees agreed they would accept the balance of $41,000 but would not conclude a formal deed of lease until the balance of the payment had been received. They indicated failure to pay in a reasonable time would result in Mr Huata being required to vacate the lands. The terms of the deed of the lease were recorded as being agreed, as a 20-year lease reviewed five-yearly. The commencement date was 1 October and “at lease end improvements to revert to the lessor”.
[61] No mention is made in those minutes of the earlier heads of agreement, nor was there any provision for an option to purchase in the terms of lease discussed at the meeting of May 2008. The deed of lease was drawn up but never executed.
[62] The rental was to be paid six-monthly in advance. The draft lease also had a provision that at the end improvements would revert to the lessor.
[63] In minutes of a meeting of the trustees of 15 September 2010, comment was made that the rental was up to date but had not been paid six months in advance as agreed and that various changes had been sought by Mr Huata. Among the amendments Mr Huata had sought was to delete the clause referring to the lease improvements reverting to the lessor.
[64] On 27 April 2011, the trustees again met with Wi and Donna Huata. The lease payments had been received for a period but had not all been paid as agreed. It was recorded that as at 1 April 2011 the rental and rates outstanding totalled $19,000. This included six months’ to be paid in advance which had been agreed. There was discussion on the amendments submitted by the Huatas. It was noted the amendments had been received late and did not provide time for consideration by the trustees before the meeting. The minutes record that the Huatas had agreed to pay the outstanding payments and to formally present a proposal to purchase the land for consideration at the next meeting. The trustees agreed to consider the changes but said the arrears had to be paid before progressing the lease.
[65] The trustees met with their lawyers to consider the proposed amendments on 22 June 2011. Following that meeting Mr Kirkham of Le Pine & Co, acting for the trustees, emailed Mr Wi Huata on 28 July 2011, referring to Mr Huata’s “past inability to meet rental payments” and/or comply with the lease terms. The email said that the orchard on the land had been allowed to fall into an uncared for state. The shed had been constructed without approval of the lessor or formal consent under the lease and now formed part of the land without compensation to the lessee.
[66] Reference was also made to the Mangaroa Trust being willing to consider a personal entity other than Mr Huata as lessee, as long as it was responsible for the lease payments and was solvent. A draft lease for 12 months to Mr Huata was proposed on the basis that the trustees did not wish to enter a long-term agreement.
[67] In response, Mr Huata wrote inviting the trustees to visit the land. He conceded he had not made the lump sums promised but offered as a sign of commitment and goodwill to make weekly payments of $500 payments “without exception”. He asked that the “original lease” be “rekindled”.
[68] On 4 October 2011 Mr Huata indicated by email that he had been approached by a large transport company (Emmerson Transport Ltd in Hastings) to sublease the land and that he had made it clear he required the consent of the Mangaroa Trustees to sublet. Mr Huata said the transport company wanted to use the land for grazing their cattle for the next five years and had offered to pay $1,000 per annum for the first two years increasing to $2,000 thereafter.
[69] By October 2011 Mr Huata had indicated he did not want to enter the July lease agreement and preferred the “2008 lease agreement”. The trustees responded saying the problem was that he had been unable to “keep rent paid for six months in advance”. Therefore, the trustees did not want to enter a long-term lease.
[70] The trustees had served a notice of termination on Mr Huata in March 2012. A trespass notice was served on Mr Huata on 12 May 2012, but he had said he would not vacate. At that stage he was making payments of $500 per month toward the lease and recovery costs. There was no signed lease. At the time Mr Huata's barrister, Mr
Chris LaHatte, argued Mr Huata had given proper notice for renewal of the 21-year lease.
[71] Unbeknownst to the trustees, about the same time on 29 June 2012, Mr and Mrs Huata, as directors of Mokoia 14 Ltd, granted a licence of 27.5 acres of the Mangaroa Trust land to P C Raikes Ltd, with Mr Peter Raikes as the guarantor. The licence fee was agreed at $500 per annum from 1 July 2012 to 30 June 2015 with a provision for $7,000 plus GST to be deducted from the licensee in the first year only for the cost of the removal and burning of all the orchard trees and lifting orchard posts. The permitted use of the land for the licensee was for grazing of stock and for horticultural purposes including lucerne production.
[72] The Raikes went into occupation of the land in terms of that lease. Mr Raikes cleared the orchard and planted it.
[73] The Raikes’ interests continue to occupy the land under the licence. Mr Raikes says they grow feed for the livestock grazing on his nearby farm. Mr Raikes said in evidence that he had assumed the trustees would have known about the licence arrangement.
[74] After Mr Raikes took occupation of the land, he discovered the pump was insufficient for the needs he had and he put in a new pump.
[75] The trustees say the first they knew about it was when Mr Raikes appeared as an interested party in the High Court in these proceedings in November 2019. No mention is made of the licence to Mr Raikes (or his company) in the trust minutes, nor did the defendants produce any documentation indicating the trustees’ consent was sought or even giving notice of the licence.
[76] The trust minutes continued to note that no formal lease with the Huatas was in place. On 30 January 2013 the trustees appeared in the Māori Land Court in front of Judge Harvey for a review of the trust. During that hearing Judge Harvey acknowledged the ongoing challenges being faced by the trustees in relation to Mr and Mrs Huata’s lease. The trustees were to write to the Māori Land Court to advise the
outcome of negotiations. The Court gave leave for the trustees to go back to court if anything required further court direction. The minutes note that the next review was due in 2018.
[77] An internal memo produced from the records of the firm Strettons, who acted for the Mangaroa Trust, dated 30 April 2013 noted that Pat Brown (the secretary) had visited the land in late January/early February and an invitation by the Huatas had been extended to the trustees to meet on the land with Wi and Donna Huata. The minute noted that historically the trustees had wanted to visit the land but as the matter of the lease was being dealt with through lawyers, the trustees were unwilling to jeopardise those negotiations by meeting Mr Huata outside those discussions.
[78] A record of a land inspection carried out by Mr Brown on 1 February 2013 is set out in minutes of a meeting of the trustees held on 23 May 2013. Mr Brown had been met by Donna Huata but she said that Wi Huata was keen to meet with the trustees to explain “what he has done and what he plans to do with the land”. Mrs Huata informed Mr Brown of the “establishment of the new water bore and other improvements made to the soil through application of compost”.
[79] Subsequently, Mrs Huata visited the Stretton office on 10 May. She emailed on 14 May 2013 advising that she had taken over the management of the land from Wi Huata as Mr Huata was again bankrupt. She advised that the bulk of the trees had been pulled out of the orchard and the land was now grass in pasture, with the rest being an orchard and horticulture. Mrs Huata said they had been granted resource consents and had sunk a new well. She invited the trustees to visit to see the improvements.
[80] Minutes of a trustee meeting also notes that disclosure of further improvements to the land undertaken were without prior consultation with the trust.
[81] Further correspondence with Mrs Huata indicated that she had taken over as chairperson of the Te Huawhenua Trust Board and Mr Huata was no longer a member.
[82] No mention was made by Mrs Huata of the licence of the land by the Raikes interests.
[83] On 12 March 2014 Le Pine and Co, for the trustees, wrote to Mr LaHatte, then acting for the Huatas, stating that there were rent arrears of $9,552.01 as at 10 March 2014.
[84] A minute dated 24 March 2014 of a meeting between Carol Mitchell, a representative of Strettons (Ms King) and of Le Pine’s (Mr Kirkham) records a discussion about the Huata arrears and the next action. At that stage $8,552.01 was noted as owing with a further two-monthly lease charge to be added on 1 April 2014 of $3,695. A demand for the outstanding rental had been sent and there was a discussion about whether to serve a notice of termination of lease. The minutes record that the trustees were concerned whether this was appropriate and whether they should accept the invitation of Judge Harvey to seek the Māori Land Court’s direction in this regard. It was agreed that the secretary should write to the Court seeking guidance.
[85] Matters progressed to the stage where a mediation was to be held with the Huatas, in the Māori Land Court, on 24 July 2015. The minute recorded that the trustees were seeking a key outcome confirming that the lease expired in 2019 and to use the opportunity to “remind the court and Huatas” that their failure to keep strictly up to date was causing the trust “grief and cost”.
[86] By the time of that mediation the trustees noted in a minute of 23 July 2015 that the Huatas were pretty much up to date with payments and could “easily demonstrate compliance” with the lease obligations. The comment was made that if there was to be discussion about buying the land the trust had two hurdles to overcome: the cost of getting the register of beneficiaries up to date and the trustees being satisfied that a sale was what the beneficiaries wanted. A meeting with shareholders would need to be called. Mr Kirkham suggested that a solution could be that the Huatas pay for or contribute to the cost of getting the register up to date.
[87] Following the mediation, the trustees requested a hearing date in the Māori Land Court to seek an order confirming that the lease ended in 2019, not 2029 as Mr Huata contended.
[88] The Māori Land Court was asked to determine whether the 1999 Heads of Agreement did provide the terms of the lease and to determine the expiry date of the lease under s 18 of the Te Ture Whenua Māori Act. The Court declined the orders sought as it said it did not have jurisdiction in that regard.9 However, it made directions under s 237 of the Act and s 66 of the Trustee Act 1956 directing the trustees to abide by the 1999 Heads of Agreement (in the absence of alternative evidence). The Judge said he was of the view it constituted an agreement to lease that could only be cancelled for non-payment of rent or other breach.10 The Judge in the interim judgment, dated 31 October 2016, also directed the parties to enter into discussions over what compensation (if any) might be payable for any improvements on the land and to investigate a sale of the block to the Huatas. The trust was to present any sale proposals to the beneficial owners in line with the trust order.11
[89]The trustees at their meeting on 1 December 2016 noted:
(a)The judgment was “interesting” because it said the land was general land and the Act did not prevent Mangaroa from selling it. It appeared “strange” because in 2003 the Court had made an order describing the land as Māori freehold then and in 2007 the Court made an order describing the land as general land.
(b)The requirement for 75 per cent approval of the beneficiaries before a sale could proceed had been removed.
(c)The directions were that the trustees continue to abide by the 1999 Heads of Agreement which the Judge considered was an agreement to lease.
9 Māori Land Court decision, above n 2, at [20].
10 At [61](a).
11 At [61](c).
(d)The trustees had been asked to discuss any compensation with the tenants that might be payable for improvements and to investigate a sale of the block to the tenants and to take that to the beneficial owners in line with the trust order.
[90] Following that, a general meeting of owners was held on 1 April 2017. Mrs Carol Mitchell read out the chairman’s report in the Māori Land Court review, noting that the land was general land owned by Māori, not Māori freehold land.
[91] The minutes record the trust lawyer, Mr Kirkham, had summarised the legal position saying that 75 per cent was required for the selling of the land and that a 1998 sale did not go ahead as 75 per cent owner support was not obtained. The trustees reported to the owners that there had been attempts to negotiate a suitable lease with the existing tenants. In 1999 a meeting had been held with the tenants and an agreement in principle had been reached concerning the main terms of the lease, however, the formal lease was never completed. The trustees reported that the Court’s view was that that heads of agreement formed a binding lease.
[92] The owners were advised that as at 31 March 2017 the tenants were in arrears, that they had a history of always being in arrears and it had been a struggle to receive “any payments”. The owners were asked to consider a sale of the land and then the issue of compensation. Valuations were put before the meeting for the land only and for land and buildings. It was noted the tenants had indicated they would like compensation for their improvements and for the bore which the tenants had said cost
$30,000 and that the tenants had firmly advised that they did not want to vacate the land.
[93]A resolution was put to the meeting in the following terms:
RESOLVED
The beneficial owners support the trustees investigating the feasibility of the sale of land and negotiating with the prospective purchasers which may include Te Huawhenua Trust or other parties and to present any sale proposals to the beneficial owners with the net proceeds of sale being applied towards the purchase of further land.
[94] The resolution was put and the result was recorded as follows “the owners agreed not to sell the land and did not support the proposed resolution”. The issue of compensation was also discussed and there was a resolution that the owners did not support payment of compensation to the tenants.
[95] The conclusion was that there be no sale and no compensation paid to the tenants. The trustees were to seek an order from the court that the lease expired. The lease was due to expire on 31 March 2019.
[96] The trustees again met on 28 March 2018 and 20 July 2018 and discussed the arrears. It was proposed that a Property Law Act 2007 notice for failure to pay rental and rates totalling $11,927.41 be served on Mr Huata. One of the trustees was to visit the land prior to the notice being served to see if the Huatas were still on the property.
[97] At a meeting in November 2018, Douglas Wall, one of the trustees, confirmed that the Huatas continued to operate on the land despite their not actually being present. Attempts had been made to contact them. At that stage the arrears were
$8,431.50. A notice was to be served.
[98] The minutes of a meeting on 11 December 2018 record that the notice had not been complied with and an overdue balance remained of $4,473. The trust lawyer present at the meeting, Ms Foley, is recorded as cautioning the trustees that any rent monies received by the trust should be rejected. She was instructed to draft a letter to the tenants advising that proceedings would be issued for an order for possession and that no payments would be accepted.
[99] The January 2019, trust minutes record a Property Law Act notice had been served on 6 November and Mr Huata had paid $9,000 on 16 January 2019. Mr Huata had sought a meeting with the trustees.
[100] At a meeting on 17 January 2019, the trustees reiterated they did not wish to pursue settlement again because the shareholders had declined this suggestion. They directed that the payment of $9,000 would be returned and Ms Foley would start the court process to seek a vacation of the premises by September 2019.
[101] The Māori Land Court convened a teleconference on 4 June 2019 at the request of the Huatas.
[102] At a meeting on 6 September 2019 the trustees noted that various payments had been made and returned to the Huatas. A payment of $4,000 received that week had been accepted. It was agreed that Ms Foley would write to counsel for the Huatas advising further payment will not be rejected and seeking payment of the amounts that had been returned.
[103] The Māori Land Court teleconference had resulted in further discussions between counsel. The Huatas wished to continue to lease the property beyond the termination date of 6 September 2019. The trustees referred to the resolution of shareholders at the 2017 owners meeting and noted that they were not interested in leasing the property to the Huatas beyond September 2019 because of the 30 year “history of non-payment issues and expenses”.
[104] Negotiations continued between counsel. On 3 September 2019 the minutes record that the tenants had not vacated and that Judge Harvey’s decision stated the lease expired on 6 September 2019. The tenants had attempted to seek assistance from the Māori Land Court to prevent the trustees forcing them off the land but Ms Foley had written to the Māori Land Court stating it did not have jurisdiction because it was general land owned by Māori and the matter was already in the High Court.
[105] These proceedings were issued in the High Court at Napier on 6 September 2019 seeking to terminate the lease which had expired in September 2019.
[106] At a general meeting of shareholders on 25 July 2020 after the chairperson’s report and update, the shareholders resolved unanimously not to sell the land, nor to pay compensation for improvements.
[107] Ms Foley was asked to proceed with the High Court action seeking an order for the Huatas to vacate the lands.
Te Ture Whenua Māori Act 1993
[108] The Mangaroa Trust is an ahu whenua trust under the Te Ture Whenua Māori Act.12 The trust’s land at Maraekakaho Road, Hastings is general land owned by Māori.13 Land under the Act includes general land: Māori land means Māori customary land and Māori freehold land.14
[109] The general functions of the responsible trustees of ahu whenua trust land are set out at s 223 of the Act as follows:15
223 General functions of responsible trustees
Every person who is appointed as a responsible trustee of a trust constituted under this Part shall be responsible for—
(a)carrying out the terms of the trust:
(b)the proper administration and management of the business of the trust:
(c)the preservation of the assets of the trust:
(d)the collection and distribution of the income of the trust.
[110]The terms of the trust are set out in the trust order.16
[111] The trustees of an ahu whenua trust act by majority subject to any express provision in the trust order and a majority of the trustees have “sufficient authority to exercise any powers conferred on the trustees”.17 The restriction on the trustees’ powers of alienation requiring a 75 per cent majority and confirmation by the court, which existed under s 228 in Part 12 of the Act, was repealed, for present purposes from 11 April 2001.18
12 Te Ture Whenua Māori Act 1993, s 354 provided that existing trusts continued as ahu whenua
trusts. Part 12 of the 1993 Act therefore applied to the Mangaroa 26N2 Trust.
13 All land is to have particular status for the purposes of the Act. This includes general land owned
by Māori; s 129(1) of the Te Ture Whenua Māori Act 1993.
14 Te Ture Whenua Māori Act 1993, s 4.
15 Section 223. A responsible trustee is a trustee who is responsible for the administration of the trust under s 210.
16 Section 219(1).
17 Section 227(1).
18 Te Ture Whenua Māori Amendment Act 2001/Māori Land Amendment Act 2001 (2001 No 11).
[112] The court may, in the trust order, confer on the trustees such powers, absolute or conditional as it thinks appropriate having regard to the nature and purposes of the trust.19 Subject to express limitations or restrictions imposed by the court in the trust order the trustees have the powers and authorities as may be necessary for the effective management of the trust and achievement of its purposes.
[113] Part 14 of the Act also applies to general land owned by Māori.20 Part 14 deals with title, reconstruction and improvement of land. It gives the Māori Land Court wide and exclusive jurisdiction to make various orders, including partition orders, amalgamation orders, aggregation orders and exchange orders and to grant easements and lay out roadways over Māori land.21
[114] The purpose of that part of the Act is to facilitate the use and occupation by the owners owned by Māori by rationalising particular land holdings and providing access or additional or improved access to the land.22
[115] Under Part 12, The trustees or a beneficiary of the trust may apply to the court to review the terms, operation or other aspect of the trust but there can be no more than one review of the trust within a period of 24 consecutive months.23 The court, on review, may confirm the trust order for the trust without variation, exercise its powers to vary the trust, or terminate the trust if there is a sufficient degree of support for termination among the beneficiaries.24
[116] The Māori Land Court may exercise all the same powers and authorities as the High Court in respect of ahu whenua trusts.25 The court may also enforce the obligations of the trust in respect of any trustee. On application if may also add, reduce or replace trustees and remove trustees, as well as terminate the trust in respect of the whole or any part of the land.
19 Te Ture Whenua Māori Act 1993, s 226(1).
20 Section 285(b).
21 Section 287.
22 Section 286(1).
23 Section 231(1) and (2).
24 Section 231(3).
25 Section 237(1).
[117] Part 15 also applies to general land owned by Māori. This Part allows the making by the Māori Land Court of occupation orders allowing a beneficiary to have exclusive use and occupation of part of the land as a site for a house.26
[118] The Act also makes provision for Māori reservations under Part 17 which allows the court to make orders to set apart as a Māori reservation any general land for the purposes of a village site, marae, meeting place, recreation ground, among other things.
[119] At the time the trust was established, s 438 of the Māori Affairs Act allowed the Māori Land Court to vest any land owned by Māori and any trustees to be held and subject to “such trusts as the court may declare for the benefit of Māoris or the descendants of Māoris or for any specified class or group of Māoris or their descendants”.27 The Māori Land Court could vary any trust order.28 The trustees had the same powers of alienating the land in the trust as if the land were Māori freehold land not subject to a trust and as if they were beneficial owners.29 But such alienation required confirmation by the court in the same manner as if it were an alienation of Māori land by a Māori owning the land in severalty.30
[120] Until 2001 the Te Ture Whenua Act provided that the trustees had “no power to sell any land vested in them for the purposes of the trust unless the proposal to sell” unless they had the consent of at least three quarters of the owners or 75 per cent of owners of the beneficial freehold interest in the land and the sale was confirmed by the court under Part 8 of the Act.31
[121]While the land in question is general land owned by Māori, Part 12 of the Act
continues to provide for oversight by the Māori Land Court of the trust’s dealings, but
26 Section 328(1)(a) and (b).
27 Māori Affairs Act 1953, s 438(1) (now repealed).
28 Section 438(8).
29 Section 438(9).
30 Section 438(10). Existing trusts constituted under s 438(1) of the Māori Affairs Act 1953 continued as Ahu Whenua Trusts under the Te Ture Whenua Māori Act 1993; s 354. Under that Act the restrictions on the trustees’ power of alienation under s 228 of the 1993 Act were repealed on 1 July 2002 by s 58(g) of the Te Ture Whenua Māori Amendment Act 2002 (2002 No 16). The Māori Land Court has concurrent jurisdiction with the High Court in respect of trusts under s 237(1) of the Te Ture Whenua Māori Act 1993.
31 Te Ture Whenua Māori Act 1993, s 228.
the court no longer is required to approve the alienation of general land owned by Māori as it had been until 2001. Such consent is required for other types of land including Māori freehold land.32 Part 9 of the Act sets out the powers of assembled owners in relation to general land owned by Māori.33
[122] “Owners” mean the persons who are beneficially entitled to the land in fee simple as tenants in common, whether legal or equitable and where appropriate, their administrators.34 The “assembled owners” means the owners of the land assembled together in a meeting held in accordance with the relevant part of the Act.35
[123]Section 172 provides:
172 Matters that may be dealt with by assembled owners
The assembled owners of any land may consider, and, where appropriate, pass resolutions concerning, any 1 or more of the following matters:
…
(d)a proposal that any money presently held on behalf of the owners, or any money that may in the future be held on behalf of the owners, in respect of the land be applied for any specified purpose:
(e)a proposal that the land or any defined part of it be alienated to any named person on such terms and conditions as are specified in the proposal:
(f)a proposal that the land or any defined part of it be vested in a nominated tipuna:
(g)a proposal that—
(i)the lessee under any lease to which the land is subject be permitted to surrender the lease; or
(ii)any rent then due and payable under a lease be remitted in whole or in part or payment of it be postponed; or
(iii)the rent under a lease be reduced; or
32 Section 150A of the Te Ture Whenua Māori Act 1993 relates to alienation of Māori freehold land by sale or gift, which requires the consent of three quarters of the owners or 75 per cent of the beneficial owners of the freehold interest in the land. Confirmation for alienation of any interest in Māori freehold land is required under s 151 of the Act.
33 Section 169(1) of the Te Ture Whenua Māori Act 1993 states that this part of the Act applies with
respect to Māori freehold and to general land owned by Māori.
34 Section 170(1).
35 Section 170(2).
(iv)the terms and conditions of a lease be varied, with the consent of the lessee, in the manner set out in the proposal:
(h)any other matter of common interest to the owners or any of them, or on which the opinion of the owners is sought by the court.
(Emphasis added)
[124]The processes for the calling of a meeting of owners are set out at ss 173 and
174. If the meeting is duly summoned in the manner prescribed, no resolution passed at any such meeting may be invalidated or otherwise affected merely because any owner has not in fact received notice of the holding of that meeting.36
[125] The court may review the calling or conduct of any meeting of assembled owners on the application to consider whether it was conducted in a manner that was unfair to any owner or group of owners, and the court may set aside any resolution in that reconsideration.37
[126] The court may also, of its own motion, direct the recall of a meeting if it is satisfied that incorrect information was given at the meeting or there is new information that should be considered by the owners or any other special reason that the court considers it would be in the best interests of owners to recall the meeting.38
[127] Despite the provisions of s 172 allowing the assembled owners to consider a proposal for alienation of the land and pass resolutions, s 175(1) provides that:
(1) No resolution passed by the assembled owners under this Part shall have any force or effect unless and until it is confirmed by the court in accordance with Part 8.
[128]Part 8 only applies to alienations of Māori freehold land.39
36 Te Ture Whenua Māori Act 1993, s 174(3).
37 Section 178(1): the application may be made by any owners, the Recording Officer or the registrar.
38 Section 178(2).
39 Section 151 of the Act provides for the application to the court for confirmation of an alienation of any interest in Māori freehold land. Under Part 8 of the Act, which is entitled “Duties and powers of court in relation to alienations of Māori freehold land”, no instrument of alienation requiring confirmation under Part 8 has any force in effect until it is confirmed by the court under that part of the Act. If it is confirmed, it takes effect according to its terms.
Interpretation
[129] The Te Ture Whenua Māori Act is to be interpreted in a manner that best furthers the principles set out in the preamble.40 The intention of Parliament expressed in the statute is that the powers, duties and discretions conferred by the Act “shall be exercised, as far as possible, in a manner that facilitates and promotes the retention, use, development, and control of Māori land as taonga tuku iho by Māori owners, their whānau, their hapū, and their descendants and that protects wāhi tapu”.41
[130] In exercising the jurisdiction and powers under the Act the primary objective of the Māori Land Court is to promote and assist in the retention of Māori land and general land owned by Māori in the hands of the owners, as well as the effective use, management, and development, by or on behalf of the owners of Māori land and general land owned by Māori.42
[131] In applying those objectives, the court is required to seek to achieve the further following objectives:43
(a)to ascertain and give effect to the wishes of the owners of any land to which the proceedings relate;
(b)to provide a means whereby the owners may be kept informed of any proposals relating to any land, and a forum in which the owners might discuss any such proposal;
(c)to determine or facilitate the settlement of disputes and other matters among owners of any land;
(d)to protect minority interests in any land against an oppressive majority, and to protect majority interests in the land against an unreasonable minority:
(e)to ensure fairness in dealings with the owners of any land and multiple ownership;
(f)to promote practical solutions to problems arising in the use or management of any land.
40 Te Ture Whenua Māori Act 1993, s 2(1).
41 Section 2(2).
42 Section 17(1).
43 Section 17(2).
[132] The Mangaroa Trust had been varied to give the right to the trustees the power to investigate the feasibility of a sale of the land, among other amendments in 1996.44
[133]The objects of the new Mangaroa trust order were set out as follows:
2Objects
Except as hereinafter may be limited the objects of the Trust shall be to provide for the use management and alienation of the land to best advantage of the beneficial owners or the better habitation or use by beneficial owners and their successors to make provision for any special needs of the owners as a family group or groups, and to represent the beneficial owners on all matters relating to the land and to the use and enjoyment of the facilities associated therewith.
[134] The new trust order went on to set out the powers of the trustees which included:
3Powers
The Trustees are empowered: a General
In furtherance of the objects of the Trust and except as hereinafter may be limited to do all or any of the things which they would be entitled to do if they were the absolute owners of the land PROVIDED HOWEVER that the Trustees shall not alienate the whole or any part of the fee simple by gift or sale other than by way of exchange on the basis of land for land value for value and then effected by Court Order or in settlement of a proposed acquisition pursuant to the Public Works Act or similar statutory authority or by partition as hereinafter provided.
b Specific
Without limiting the generality of the foregoing but by way of emphasis and clarification as well to extend the powers of the Trustees it is declared that the Trustees are empowered:
…
iv To lease
To lease the whole or any part or parts of the said lands from year to year and for any term of years at such rent and upon such covenants and conditions as the Trustees shall think reasonable and to any person, corporate body and/or Her
44 Mangaroa 26N2 Trust Lot 2DP (1996) 144 Napier MB 64 (144 NA 64) [“New Trust Order in the Māori Land Court”].
Majesty the Queen and to accept surrenders of and vary the leases thereof.
…
vii To sell
To investigate the feasibility of a sale of the land and negotiate with prospective purchasers before presenting any sale proposals to the beneficial owners. The net proceeds of any sale to be applied towards the purchase of further land.
[135] The trust order goes on to place obligations on the trustees to report to the court at any time upon being required by the court to do so and to file a written report relating to the administration of the trust or the performance of its duties as the trustee.45
[136] The trustees were also required to prepare annual reports and arrange for audited proper accounts of assets and liabilities for any year in which the income of the trust exceeded $10,000.46 The trustees were required to produce reports and accounts for each year at any general meeting.47 A review of the trust was required the 10th year after constitution of the trust by the court. Various provisions also applied in relation to the replacement and removal of trustees.48
[137] The transcript of proceedings recording the exchanges at the time the variation was sought, indicate that Mr Wall appeared before the Court to seek the trust order. He noted that the tenants were Mr and Mrs Huata and that the trustees had been having difficulties and they had been chasing rent money. The transcript records that Mr Wall told the Court there had been a meeting of owners who had suggested that some of the land be sold. He said that the idea was that the trustees may be able to buy something else which was why it had been decided to seek the trust order. Mr Wall indicated the intention was to purchase alternative lands if a sale was proceeded with.
[138] The Judge said that a rider was required to the order stating that any future sale presented to the owners would be on the basis that the net proceeds would be applied towards further land.
45 New Trust Order in the Māori Land Court, above n 44, at [4].
46 At [4](b).
47 At [4](b)(ii).
48 At [4](c), [4](d) and [5].
[139] Following the obtaining of the order, the Huatas then presented to the trustees an agreement for sale and purchase dated 15 December 1997, which was rejected by owners.
[140] Nothing further occurred in relation to that offer to purchase. The requirement of 75 per cent of the owners to comply with s 228 of the Act had not been obtained. This was referred to in the minutes of a trustees meeting on 5 August 1999. At that meeting it was discussed that the trust should revisit the idea of leasing the land to the Huatas and to have further discussions with them.
[141] Subsequently at the meeting of 6 September 1999 the “heads of agreement”, which is the focus of the present proceedings, was recorded in the minutes.
Effect of s 228 of Te Ture Whenua Māori Act
[142] Mr O’Connor, on behalf of the Huatas, submits that the option to purchase in the lease was in law a collateral or independent bargain to be exercised according to its express terms and conditions.49 He said it was an irrevocable offer which is enforceable by a decree of specific performance.50
[143] The Huatas say the option to purchase was not void for uncertainty because there was nothing or nothing material that was left to negotiation. Mr O’Connor says the agreement was drafted by the Mangaroa trustees and the wording used by them was “option to purchase” showing they intended it to be a firm option to purchase.
[144] The Huatas further say the option to purchase is intelligible. It records the purchase price (to be set at the valuation at the time with a minimum price of $350,000) and it describes the property and the parties. Therefore, there was no uncertainty.
[145] Mr O’Connor submits that as the price was to be ascertained by a valuation the court could direct who does the valuation and enforce the contract.51 He submits that normally an agreement to buy and sell at valuation implies an objective test of a fair
49 Coachman Properties Ltd v Panmure Video Club Ltd [1984] 2 NZLR 200 (HC) at 207.
50 Lifestyle Group Ltd v Maxwell [2007] NZCA 290, (2007) 8 NZCPR 648 at [18].
51 Laws of New Zealand – Specific Performance (online ed, LexisNexis) at [79].
valuation and is sufficiently certain so the court could arrive at a figure on the evidence.
[146] Furthermore, Mr O’Connor submits that the option to purchase was not subject or conditional on any agreement by the beneficiaries to sell the land. The land was vested in the trustees and they had the power to sell it. He further says that the beneficiaries had already voted and agreed to sell the land to the defendants for
$350,000. The same price was used in the option to purchase when it set out the minimum price of $350,000.
[147] The submission is that at the time the beneficiaries had, a year earlier in December 1998, voted and agreed to sell the land for $350,000, however s 228 had restricted the alienation of general land owned by a Māori trust. Therefore the parties, by the use of the words, “if there was a change in the Act”, referred to a change to s 228 of the Act, which required a 75 per cent majority approval. Therefore, the subsequent repealing of s 228 and the confirmation by the Māori Land Court, meant that the trustees were free to sell the land under the option to purchase.
[148] The defendants say an option to purchase is a unilateral offer which is coupled with a contract not to revoke the offer and the acceptance of that offer cannot be subject to the acceptance by the beneficiaries as suggested by the plaintiff.
[149] In addition, the Huatas say that the Mangaroa trustees have already fulfilled their obligations under the trust deed “to investigate the feasibility of a sale of the land and negotiate with prospective purchasers before presenting any sale proposals to the beneficial owners”. Mr O’Connor says that as the beneficiaries had voted on and accepted the offer at the same amount that was offered (that figure being the $350,000 minimum price referred to in the option) in the option to purchase, the trustees had properly investigated the feasibility of a sale of the land. They had negotiated and presented the sale proposal to the beneficial owners who had accepted it.
[150] As a further argument the defendants say that “presenting any sale proposals to the beneficial owners” does not mean that they must also accept it, it just means that the offer must be presented by the trustees.
[151] Mr O’Connor also argued that s 172 of the Te Ture Whenua Māori Act is not effective to require the approval of shareholders to a sale of general land. He says while that section remains in force, it is meaningless. It provides for the mechanics of the approval of the sale of land by the assembled beneficial owners but it does not have any force or effect until it is confirmed by the Māori Land Court under Part 8 of the Act, which provides for confirmation of alienation of Māori freehold land only, therefore the approval of owners is needed later.52 Mr O’Connor said that Judge Harvey, in the 2016 case, said that the confirmation provisions under s 172 did not apply in this case because the land is general land owned by Māori, and Part 8 of the Act only relates to Māori freehold land.
[152] However, Judge Harvey was not specifically focused on the reference to the option to purchase of the Heads of Agreement. He confirmed that the trustees needed to follow the terms of the trust order.53 He then directed the trustees to “investigate a sale of the block to the [Huatas] … and present any sale proposals to the beneficial owners in line with the trust order”.54
Analysis
[153] Section 172 remains operative in its terms to enable assembled owners of general land owned by Māori to consider and pass resolutions for, among other things, a proposal that the land be alienated to any named person on such terms and conditions as are specified in the proposal.55 The machinery provides for the Court to call a meeting if an interested person so requests.56 The related provisions in Part 9, which specifically deal with Māori freehold land and general land, apply to the conduct of meetings of assembled owners.
[154] Section 175 of that Part of the Act provides that confirmation is required by the court in accordance with Part 8. That Part only applies to Māori freehold land. Therefore, in relation to Māori freehold land, the confirmation by the Court is required otherwise any resolution passed at the meeting of assembled owners is of no effect.
52 Māori Land Court Decision, above n 2, at [56].
53 At [59].
54 At [61](c).
55 Te Ture Whenua Māori Act 1993, s 172(e).
56 Section 173.
However, the confirmation provisions do not apply to general land. The assembled owners may make a resolution that will be effective in its terms where the land is general land owned by Māori without further confirmation.
[155] That interpretation is consistent with the decision of the Court of Appeal in Clarke v Karaitiana cited by Judge Harvey.57 Judge Harvey noted that in this case any resolution passed at a meeting under Part 9 would be of no effect. When commenting on that, Judge Harvey did not say that the resolution provisions did not apply in this case, merely that the confirmation provisions (confirmation by the court) did not apply in this case.58 Judge Harvey, in fact, emphasised that the trustees needed to follow the terms of the trust order. The terms of the trust order require the trustees to investigate the feasibility of a sale of land and negotiate with prospective purchasers before presenting any sale proposal to the beneficial owners. The trustees cannot sell without following that provision. The Judge specifically referred to the need for any sale proposal to be put to the owners in the directions.59
[156] The matter is made absolutely clear, when the requirements of the trust order for presenting the agreement to the beneficial owners are read in conjunction with the requirements of s 172, which says that: “the assembled owners of any land may consider, and, where appropriate, pass resolutions concerning, … (e) a proposal that the land or any defined part of it be alienated to any named person on such terms and conditions as are specified in the proposal”.
[157] The provision in the trust order would be effectively meaningless if “presentation” required a proposal to be put before the assembled owners but there was no requirement that they vote in support of accepting the agreement. Before the offer was accepted.
[158]Section 172 makes it clear that the provisions of the Te Ture Whenua Māori
Act govern the meeting of assembled owners. The usual position is that to pass a
57 Clarke v Karaitiana [2011] NZCA 154, at [30]; cited in the Māori Land Court Decision, above n 2, at [57].
58 Māori Land Court Decision, above n 2, at [58].
59 At [61](c).
resolution requires a majority unless there is a requirement for a special resolution
(usually 75 per cent) or other requirement specified in the trust deed.60
[159] The trustees have general powers but they must act subject to any limitations in the trust deed.61 While the s 228 provision requiring a 75 per cent majority has been repealed, the position remains that a majority of assembled owners must agree with the proposal in order for it to be passed for the sale of the land to be effected.62
[160] Therefore, the trustees could not sell the land under the 1999 Heads of Agreement without the express approval as to the sale in question by a majority of the owners of a meeting called under s 172(c) of the Act.
[161] The Huatas claim must fail for a second and more compelling reason. Section 228 of the Te Ture Whenua Māori Act was in force at the time the option was entered into.63 Therefore, at the time the “heads of agreement” was drawn up the trustees did not have the power to sell the land without a 75 per cent majority and confirmation of the Māori Land Court. The trustees could not agree to an option to sell the land at a future time in those circumstances.
[162] An option to purchase is a contract in which the vendor agrees to sell the land upon the valid exercise of the option. The relationship of vendor and purchaser, in Mr O’Connor’s submission, arises immediately when the valid exercise of the option is complete.64
[163] It would be antithetic to the provisions of s 228, which was then in force, that the trustees could agree to unconditionally sell the land, subject only to a vendor exercising an option and so breach avoid s 228.
60 Te Ture Whenua Māori Act 1993, s 227: the trustees are entitled to act by a majority.
61 Section 226(2).
62 Section 170 defines owners and assembled owners.
63 Its predecessor provision had been in force at the time the Mangaroa Trust was established: s 438
of the Māori Affairs Act 1953.
64 Buckeridge v Tucker (1899) 17 NZLR 513 (SC); and Cockwell v Romford Sanitary Steam Laundry Ltd [1939] 4 All ER 370 (EWCA); cited in D W McMoreland Sale of Land (3rd ed, Cathcard Trust, Tāmaki Makaurau | Auckland, 2011).
[164] The fact that the owners agreed to a specific proposal for a sale at $350,000 in 1997 before the option was granted does not provide the required agreement of owners to a later and different proposal.
[165] This interpretation is consistent with the purpose of the Act, which has the primary objective to promote, among other things, the retention of general land owned by Māori, in the hands of the owners and act in accordance with the wishes of owners.65 Therefore, it is clear that any agreement to sell the land, at the time of the heads of agreement whether conditional or an option to sell under s 228 required a 75 per cent majority and confirmation by the Court.
[166] In summary, first the trustees had no power to grant the option. It was invalid and of no effect because of the operation of s 228, which was in force in 1999. The trustees could not authorise alienation of the land. Secondly, even if the option did come into force following the repeal of s 228 in 2001, the trustees were still required under the trust order to obtain the consent of the beneficial owners to any sale. The process for calling a meeting and putting the proposal for the sale to the assembled owners is set out in the Māori Land Court Act, as I have outlined above. This never occurred.
[167]In addition, the parties did not intend to be bound to an option to purchase.
[168] All parties knew at the time of the Heads of Agreement that s 228 required the trust to obtain a 75 per cent majority of beneficial owners and confirmation by the Māori Land Court to enable it to sell the property. Mr Huata, in his evidence, said that he was aware of these provisions of the Te Ture Whenua Māori Act and was in a good position to watch for amendments as his wife had a position in Parliament and he had other contacts. However, he did not realise s 228 was repealed until Judge Harvey’s comments in 2016 when the parties appeared before the Māori Land Court.
[169] Secondly, Mr Huata, in his evidence, said that he had always been of the view he had a valid option to purchase the land, which he merely needed to exercise. This is inconsistent with his behaviour dating back to 1999. In particular:
65 Te Ture Whenua Māori Act 1993, s 17(1) and (2).
(a)He argued in the Māori Land Court that there was a 2008 lease that expired in 2029 and he expressly rejected the fact that the 1999 heads of agreement constituted even a lease.
(b)He never presented a valuation or referred to the option to purchase. His discussions with the trustees after 1999 referred, on a number of occasions, to his wish to buy the property but without reference back to the exercise of any option.
[170] The option to purchase was also not sufficiently certain to be enforceable. An option to purchase of the nature that Mr O’Connor is suggesting requires that no substantial matter to be left to the future agreement of the parties.66
[171] Accepting for argument’s sake that the consideration was the entry into the lease, the provisions about the setting of the price are vague. There are no mechanics as to who provides the valuation and what occurs if the parties fail to agree. There is no dispute resolution clause in the heads of agreement that provides the mechanics to resolve this.
[172] In addition, a further important issue was not agreed upon. That is whether the valuation includes the improvements or not. That issue remains one of contention between the parties. There has never been a resolution of that issue before or since the 1999 heads of agreement. A court would not be in a position to resolve that issue.
Specific performance
[173] If I am wrong about the enforceability of the heads of agreement by the defendants, I would have found specific performance was not available in any event. It is not available because of the failure of the defendants to comply with the provisions of the 1999 lease.67 They have been in substantial arrears over a period of time since the lease was granted in 1999, been in arrears. They have put improvements on the land without the Trust's consent and in fact done so knowing that the trustees were
66 Sale of Land, above n 64, at [3.17](a).
67 Location Properties Ltd v GH Lincoln Properties Ltd [1988] 1 NZLR 307 (HC) at 316; and Kilmer v British Columbia Orchard Lands Ltd [1913] AC 319 (PC) at 324.
unlikely to consent. In those circumstances, equity would not assist the defendants who do not come to it with clean hands.
Conclusion
[174] As is apparent I have reached the conclusion the “option to purchase” in the 1999 Heads of Agreement was not valid and binding. There is no need to consider whether the plaintiffs breached the “option to purchase” clause in those circumstances.
[175]In addition, there is no need to consider whether there should be an order for
specific performance under the “option to purchase” clause.
Improvements
[176] As is apparent from above, the trustees have never agreed to allow any improvements to be made or placed on the land. While Judge Harvey indicated that there was nothing in the lease to prevent the defendants taking their improvements, the Judge did not have the full information nor the benefit of the evidence that I now have before me. From the start of the Huatas’ occupation of the land in 1986/87 there was no agreement nor any encouragement to the Huatas to build or put improvements on the land.
[177] Mr Huata points to Mr Nick Wall’s encouragement to go on the land and make it productive. However, the most that can be said was that according to Mr Wi Huata, Mr Wall asked him to go on the land and improve it during a discussion around the spring of 1986. But no lease was entered into and, in February 1997, Mr Wall discovered that Mr Huata had gone onto the land without entering a formal lease and started building on the land. Mr Wall was angry. Mr Huata agreed that there was an unpleasant meeting when Mr Wall, accompanied by other trustees, came to the land and discovered the improvements.
[178] In addition, the improvements (at least the shed and possibly other buildings) had no compliance certificates. The relevant file of the Hastings District Council was produced by the plaintiff. It shows that on a number of occasions the defendant was
told to stop work on the shed but this was ignored. There is no evidence of any compliance certificate ever being issued for the shed.
[179] I do not accept Mr Huata’s evidence that he was authorised by Mr Wall to build on the land. It is contradicted by the documents produced.
[180] In relation to the installing of the water pump on the land in 2012, the defendants did not tell the trustees about this until it was installed. They did talk to the trustees about the possibility. It is also noteworthy that without the consent of the trustees, the Huatas (in the name of a company (who did not lease the land) had licenced the land to a company owned by Mr Raikes. It was the Raikes’ interests that needed the pump.
[181] Mr Raikes also cleared the orchard that the Huatas had planted. It was by then non-productive, and had fallen into ruin according to Mr Raikes. Mr Raikes has planted the land with lucerne and other feed to use on his own farm. Mr Raikes pays a company that is owned by the defendants, which purports to be the licensor, for the use of the land. He contributed most of the capital required to install the water pump to enable him to have efficient water supplies to grow his crops.
[182] Despite the fact Mrs Huata was in contact with the trustees to talk about the pump she did not mention the licence granted to the Raikes’ interests. Mr Raikes had assumed that the trustees would know and was surprised when he was told, in the course of these proceedings, that the trustees had no knowledge of the licence, that he paid a licence fee on the land, nor that he was working the land, until he filed an affidavit in these proceedings in November/December 2019.
[183] The Huatas did not licence the land in the name of the Te Huawhenua Trust, which is the lessor and is the entity that the Mangaroa 26N2 Trust had dealt with. A company apparently owned by the Huatas, called Mokoia Number 14 Ltd, granted the lease to the Raikes interests. The relationship between that company and the defendants was not the subject of evidence.
[184] In this case the trustees not only did not consent to the improvements or the buildings, they did not know they were being undertaken. There has been no agreement to pay compensation nor has the trust acted in any manner that would provide the Huatas to any right to receive compensation for any improvements to the land or buildings on it.
[185]In those circumstances, the Huatas do not have any right to compensation.
Other claims by the Huatas
[186] In his evidence, under cross-examination, for the first time Mr Huata made a claim based on mana whenua. He said he had never raised this before, either in his discussions with the trustees, in the Māori Land Court, because he was proud of his whakapapa and considered it inappropriate in the circumstances to raise that issue.
[187] A claim based on tikanga Māori in this context would need to be properly made and argued.68 As the claim was not mentioned earlier, the Court did not have the benefit of full argument nor was it the subject of appropriate evidence. That claim is not able to be considered in these proceedings.
[188] However, I note the passion that Mr Huata expressed for his relationship with the land. The Huatas have brought up their children on their land. Their children and their moko’s whenua are buried on the land. It has been home to them for 30 years.
[189] Nevertheless, it is apparent from the evidence – and as the claim to mana whenua has not been made out for the purposes of these proceedings – it was a home to them only because they refused to leave it in the face of the trustees’ direct requests to them to leave. The trustees have tried to do things legally throughout. Perhaps they have not been as proactive as the beneficiaries might have wished but, understandably in the circumstances, they did not relish a confrontation with the Huatas.
68 In the recent proceedings before the Supreme Court in Ellis v R [2020] NZSC 89, a hui of experts in tikanga Māori was convened on the issue of the relevance of tikanga to the issue of continuation of the appeal after death.
Conclusion
[190]As is apparent, the plaintiff succeeds.
[191]The points raised in the statement of issues are answered as follows:
(a)Whether the “option to purchase” is valid and binding.
Answer: The option to purchase is not valid and binding.
(b)If so, whether the plaintiffs breached the “option to purchase” clause.
Answer: In view of the fact the option to purchase is not valid and binding there is no need to consider this issue.
(c)If so, whether the Court should grant an order for specific performance under the “option to purchase”; and, if so, what is the date to be used for valuing the land and whether value includes improvements made by the defendants?
Answer: It is not necessary to consider whether an order for specific performance should be granted in view of my findings in relation to issue (a).
However, if the option were valid and binding I would have determined that specific performance was not available in the circumstances.
(d)If specific performance is not granted, whether the plaintiff should pay the defendants for improvements made to the land and the value of those improvements.
Answer: the plaintiff is not required to pay the defendants for improvements made to the land (including buildings and the pump).
[192]Accordingly, the plaintiffs are entitled to the remedies they seek as follows:
1.1A declaration that the Lease expired on 30 September 2019 and the tenant is holding over without consent.
1.2For possession of the land comprised and described in Certificate of Title HBV4/1351, being 17.6999 hectares more or less, Lot 2 Deposited Plan 1996.
[193]Those orders are made accordingly.
Costs
[194] In the circumstances there appears no reason why costs should not be awarded on a 2B basis in favour of the plaintiff. However, that is subject to any submissions made by the parties. Preliminary indication may assist the parties in resolving costs.
[195] If the parties are unable to agree upon costs, submissions should be filed and served by the plaintiff on or before seven days from the date of this decision. Any response should be filed and served on or before a further seven days. Any reply should be filed and served within a further three days.
Grice J
Solicitors:
Le Pine & Co, Taupō for the Plaintiff.
Lunn & Associates, Āhuriri | Napier for the Defendants
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