New Zealand Māori Council v Foulkes
[2014] NZHC 1777
•29 July 2014
REDACTED JUDGMENT: ISSUED 31 JULY 2014
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2013-485-455 [2014] NZHC 1777
UNDER The Trustee Act 1956, Judicature
Amendment Act 1972 and Part 30 of the
High Court RulesBETWEEN
NEW ZEALAND MĀORI COUNCIL
First ApplicantSIR EDWARD TAIHAKUREI DURIE Second Applicant
CLETUS MAANU PAUL Third Applicant
AND
ANGELA JUNE FOULKES First Respondent
ALAN PAREKURA TOROHINA HARONGA
Second Respondent
ALEXANDER JOHN WILSON Third Respondent
FEDERATION OF MĀORI
AUTHORITIES INC Fourth Respondent
Hearing: 5 June & 3 July 2014 Counsel:
M S R Palmer (5 June only) with F E Geiringer and M I de
Villiers (3 July only) for Applicants
K P McDonald QC with S M Bisley for First to Third
Respondents
N Burley with L McKeown (3 July only) for Fourth Respondent
D N Soper for Attorney-General
G M Illingworth QC with P J Andrew, Amici CuriaeJudgment:
29 July 2014
NEW ZEALAND MĀORI COUNCIL v ANGELA JUNE FOULKES [2014] NZHC 1777 [29 July 2014]
REVISED* JUDGMENT OF THE HON JUSTICE KÓS
Index
The dispute in a nutshell: what this case is about [5] Background facts..................................................................................................[10] Forestry Agreement [14] Crown Forest Assets Act 1989 [18] Crown Forestry Rental Trust Deed [19] Criteria for funding assistance [27] Current trustees [35] Previous decisions in this proceeding ..................................................................[36] Amici curiae .........................................................................................................[37] Issues ....................................................................................................................[39] Jurisdiction: s 66 and the role of judicial review in this case...............................[41] Section 66 [42] Inherent juridiction [55] Judicature Amendment Act 1972 [57] Interpretation of the Trust Deed: the role of the Treaty .......................................[65] Submissions [66] Analysis [70] Primary issues ......................................................................................................[77]
Issue 1: Are the Trust’s current criteria for recognition as a Claimant inconsistent with the Trust Deed, and therefore unlawful, in (a) requiring claimants to have registered, or be proposing to register, a claim before the Waitangi Tribunal; (b) requiring claimants to represent a cluster (with one limited exception); and (c) excluding any group whose mandate is not recognised by the Crown ................[78] A Registration [79]
Criterion [80] Submissions [84] Analysis [88] Conclusion [95]
B Clustering [96] Criterion [96] Submissions [99] Analysis [104] Conclusion [111]
C Mandate [112] Criterion [112] Submissions [115] Analysis [119] Conclusion [126]
Issue 2: Is it correct that the trustees cannot approve payments under cl 10 unless they have received an application from a Claimant requesting approval
for such a payment? ...........................................................................................[127] Facts [128] Submissions [134] Analysis [137] Conclusion [140]
Issue 3: Does the Deed permit trustees to adopt policies that may affect the
substance of underlying claims (for example by adopting set criteria as to the claims that will be funded) or directly instructing experts on behalf of Claimants? .........[141]
Facts [142] Submissions [146] Analysis [149] Conclusion [152]
Issue 4: Is it correct that the trustees cannot employ and remunerate staff other
than a secretary appointed in accordance with cl 7.4? ...........................................[153] Facts [154] Submissions [156] Analysis [159] Conclusion [163]
Issue 5: Is it correct that the trustees may delegate only ministerial responsibilities to staff? In particular, is it correct that except only to the extent that such instruction is entirely incidental to a ministerial duty, the instruction of a lawyer is a decision that must be taken by all trustees, voting in accordance
with the Trust Deed? [164] Facts [165] Submissions [169] Analysis [174] Conclusion [182]
Issue 6: Is it correct that the trustees may not delegate any powers of final
decision to a sub-committee? .................................................................................[183] Facts ..............................................................................................................[183] Submissions [189] Analysis [192] Conclusion [196] Secondary issues ................................................................................................[197] Issue 7: For the purposes of the Trust Deed, what is a “conflict of interest”? .......[198] Conclusion [211]
Issue 8: What information must a trustee be provided with where a potential
conflict of interest is identified?.............................................................................[212] Submissions [213] Analysis [213] Conclusion [221]
Issue 9: In what circumstances are the costs of the Māori Appointor in
appointing trustees to be met from the Trust fund?................................................[222] Conclusion [226]
Issue 10: Are the costs of NZMC and FOMA in negotiating with each other
payable from the Trust fund? [227] Conclusion [232]
Issue 11: Should the applicants’ costs in this application, along with FOMA’s,
be met from the Trust fund? ...................................................................................[233] Conclusion [236]
Issue 12: Is the chairperson’s appointment under cl 7.6 of the Trust Deed limited
by time, or subject to holding the continued confidence of at least two Crowntrustees and two Māori trustees? [237] Submissions [213] Analysis [213]
Conclusion………………………………………………………………….[250] Issue 13: As regards appointments by the Māori Appointor: (a) should the appointment of Mr Paki as alternate trustee be recalled; (b) what other directions should the Court give now regarding the appointment of alternates; (c) what directions should the Court give as to the trustee vacancy now arising following
the expiry of Mr Haronga’s term?......................................................................[251] A. Application to recall appointment of Mr Paki as alternate trustee…………[252] Conclusion…………………………………………………………………[262]
B. Other alternate trustee appointments……………………………………...[263] Conclusion…………………………………………………………………[274]
C. Directions following the expiry of Mr Haronga’s term……………………[275] Conclusion…………………………………………………………………[279] Summary………………………………………………………………………[280] Result………………………………………………………………………….[280]
[1] It is unlikely that any single trust has given rise to more disagreement and litigation in recent years than the Crown Forestry Rental Trust.1 What was supposed to be a compact for consensus, after Crown attempts to sell forest lands in the 1980s were thwarted by the Court of Appeal, has become a crucible for continued conflict.
[2] Yet, through all this conflict, the Trust has done great good work. As
Williams J said recently:2
Without the Trust’s interest-based distributions, the historical settlements process would eventually grind to a halt. For that reason, it is of the utmost legal, political and social importance that CFRT functions effectively, efficiently and lawfully in discharging its obligations under its trust deed.
The effective working of the Trust is clearly critical to the resolution of Treaty of
Waitangi grievances.
*This revised judgment redacts figures at [105] and corrects typographical errors at [9], [31] and
[280].
1 Herein “the Trust”. See for example, Latimer v Commissioner of Inland Revenue [2002] 1
NZLR 535 (HC); Latimer v Commissioner of Inland Revenue [2002] 3 NZLR 195 (CA); Latimer v Commissioner of Inland Revenue [2004] UKPC 13, [2004] 3 NZLR 157 (PC); New Zealand Māori Council v Attorney-General HC Wellington CIV-2007-485-95, 4 May 2007; New Zealand Māori Council v Attorney-General [2007] NZCA 269, [2008] 1 NZLR 318; Hall v Te Heuheu HC Rotorua CIV-2008-463-449, 28 April 2009; Taueki v Crown Forestry Rental Trust
HC Wellington CIV-2011-485-1497, 17 February 2012; Taueki v Crown Forestry Rental Trust
HC Wellington CIV-2011-485-1497, 4 September 2012; New Zealand Māori Council v Crown
Forestry Rental Trust [2013] NZHC 663; New Zealand Māori Council v Foulkes [2014] NZHC
747; New Zealand Māori Council v Foulkes [2014] NZHC 1225.
2 New Zealand Māori Council v Foulkes & Ors [2014] NZHC 747 at [8]. The judgment is illustrative of the sort of problems that have arisen between the trustees.
[3] The trustees are in dispute amongst themselves as to their powers and duties. Likewise the constituent members of the “Māori Appointor”, the New Zealand Māori Council3 and the Federation of Maori Authorities4 who together appoint the three Maori trustees.5 The alignment of argument will be apparent from the intitulments. But they are at least agreed that they should ask this Court to rule on
the meaning and effect of the Trust Deed. And they are agreed that I should do so without close regard to the ructions and recriminations that have impaired, but fortunately not crippled, the Trust’s recent work.
[4] This judgment deals with thirteen particular issues, the terms of which at least are agreed. They are set out at [39]. A summary of my conclusions will be found at [280].
The dispute in a nutshell: what this case is about
[5] The thirteen issues fall into four natural groups.
[6] The first three issues concern access to funding approvals. The applicants contend that the criteria adopted by the trustees are unlawful and inconsistent with the Trust Deed. Those criteria require applicants for Waitangi Tribunal claim assistance to have registered (or be proposing to register) a claim in the Tribunal, and represent a “cluster” of claimants. In the case of claimants for Crown negotiation assistance, they must have a mandate recognised by the Crown or (at the very least) a plan for carrying out the mandates process that is supported by the Office of Treaty Settlements. In essence the applicants say the criteria are too restrictive, and absolute. The applicants also take issue with the scope of material available to (and considered by) trustees and the process of engagement of experts to undertake historical research for claimants.
[7] The second group of issues – Issues 4 to 6 – concern decision-making, the employment of staff, and delegation either to subcommittees of the Trust or to staff
members. The applicants initially submitted that the trustees could not employ more
3 Herein “NZMC”.
4 Herein “FOMA”.
5 The Crown also appoints three trustees.
than a single staff member, although that argument was not pressed orally. But they remain concerned with identification of the boundary between non-delegable decisions that trustees must make alone, and ministerial or implementational decisions which may be undertaken by non-trustees or sub-committees of trustees.
[8] The third group of issues – Issues 7 and 8 – concern conflicts of interest. First, what amounts to a conflict of interest for the purposes of the Trust Deed? Secondly, what information must a trustee be provided where a potential (but not certain) conflict is identified? Consensus was reached at the hearing on the first, but not on the second.
[9] The fourth group of issues – Issues 9 to 13 – concern the process for, or basis of, appointment of trustees.6 These issues concern the costs of the Māori Appointer (NZMC and FOMA acting in concert to appoint three trustees, the concert having become discordant), the duration of the chairperson’s appointment under cl 7.6 of the Trust Deed, and specific questions concerning the appointment of alternate trustees and the trustee vacancy arising following the expiry of Mr Alan Haronga’s term.
Background facts
[10] Although all parties seek my decision on the issues, primarily under s 66 of the Trustee Act 1956, no agreed statement of facts was tendered. Such a statement is usual in s 66 applications. I will set out here the essential background facts. Additional facts relevant to a particular issue only will be set out as that issue is addressed.
The SOEs Case
[11] In March 1987 NZMC challenged the proposed transfer of assets, including Crown Forests land, from the Crown to Crown-owned companies (SOEs) under the State-Owned Enterprises Act 1986. The concern underlying that case was that Crown land transferred to SOEs might no longer be available for the settlement of
Māori claims of breaches of the Treaty of Waitangi. In June 1987 the Court of
6 Excluding Issue 11, concerning the applicants’ costs in this proceeding (and which I decline to
answer pre-emptively).
Appeal ruled that the transfer of Crown assets would be unlawful without establishing a system to consider whether transfers were inconsistent with the principles of the Treaty. This, the “SOEs Case”, has been described by the Supreme Court as of great authority and importance to the law concerning the relationship between the Crown and Māori.7 The 1987 decision in the SOEs Case was an interim one. The Court of Appeal left it to the Treaty partners to work out the practical consequences of its declarations. Leave to apply was reserved.
[12] In the end (although it was hardly the end), the Crown and NZMC reached an agreement. That agreement was given effect in the Treaty of Waitangi (State Enterprises) Act 1988. The Act gave the Waitangi Tribunal power to order resumption of SOE land. It required the Tribunal to hear claims in relation to such land. And it excluded SOEs from being heard in relation to those claims.
[13] Despite that agreement and legislation, in July 1988 the Crown announced its intention to dispose of Crown forest assets, without actually transferring them to SOEs. The details were left opaque in the announcement. It indicated that further investigations would be undertaken, including as to the Crown’s responsibilities under the Treaty. The announcement noted, also, that the Crown was “examining ways in which it can retain ownership of the land while maximising the sale value of forestry assets”. A Forestry Working Group established by the Crown recommended sale of cutting rights to the forest, but not the land. And, that consultation with Māori should occur. A decision to that effect was announced by the Crown in January 1989. A national hui with Māori was held. But in February 1989 NZMC challenged the proposed forest sales. In March 1989 the Court of Appeal ruled that
NZMC was entitled to apply for relief under leave reserved in the 1987 SOEs Case.8
Forestry Agreement
[14] In July 1989, NZMC and FOMA reached agreement with the Crown in what has been called the “Forestry Agreement”. That agreement allows the Crown to sell cutting rights to trees on Crown forest land. Title to land was not transferable by the
Crown until the Tribunal had recommended that it was no longer liable to
7 New Zealand Māori Council v Attorney-General [2013] NZSC 6, [2013] 3 NZLR 31 at [52].
8 New Zealand Māori Council v Attorney-General [1989] 2 NZLR 142 (CA).
resumption. Forest asset (excluding land) purchasers would pay a capital payment for the tree crop, and annual rental for use of the underlying land. Treaty claims were preserved by the Crown agreeing to transfer land, plus compensation up to the value of the cutting rights, if title is resumed by Māori.
[15] The Forestry Agreement provided that the rentals paid for use of the land were to be set aside thus:9
The annual rentals from the land are to be set aside in a fund administered by a trust (to be known as the Rental Trust). The final beneficiaries of the Rental Trust will be the successful claimants and the Crown. Both Māori and Crown interests will appoint trustees to the trust.
It went on to provide:10
The interest earned by the fund will be made available to assist Māori in the preparation, presentation, and negotiation of claims before the Waitangi Tribunal which are involved with, or could involve, forest lands covered by this agreement. The trustees will be responsible for setting appropriate criteria for, and allocating funds to, claimants in a timely fashion …
[16] Clause 15 of the Forestry Agreement provided for an annex. That annex lists the main principles informing the agreement. They are expressed as “Māori principles” and “Crown principles”. The former include “uphold[ing] the articles of the Treaty of Waitangi and the protections in current legislation”. The latter include “honour[ing] the principles of the Treaty of Waitangi by adequately securing the position of claimants relying on the Treaty”.
[17] Clause 16 of the Forestry Agreement provided that “the provisions of this agreement are to be reflected and embodied where appropriate in draft legislation and in any event in a Trust Deed and consent order, the terms of each of which are to be agreed by the parties in accordance with this agreement”.
Crown Forest Assets Act 1989
[18] The legislation anticipated in cl 16 became the Crown Forest Assets Act
1989. It implemented the Forestry Agreement. Section 34 of the Act provides:
9 Clause 11(i).
10 Clause 11(ii).
34 Forestry rental trust
(1) The responsible Ministers shall, on behalf of the Crown, establish by deed a forestry rental trust.
(2) All licence fees payable under Crown forestry licences shall, until such time as the Waitangi Tribunal makes a recommendation in relation to the land under section 8HB or section 8HE of the Treaty of Waitangi Act 1975, be collected by the Crown and shall be paid into an account held in the name of the forestry rental trust.
(3) All payments by the Crown to the forestry rental trust may be made without further appropriation than this section.
Crown Forestry Rental Trust Deed
[19] The Trust Deed was settled by the Crown on 30 April 1990. The Trust was described by the Privy Council as a “bold and imaginative attempt at resolving a very difficult problem”.11 Elsewhere in the same judgment, as an “elaborate
mechanism that serves much the same purpose as a Quistclose trust”.12 It is
essentially a purpose trust, albeit that two classes of persons are automatically “Beneficiaries” for whom the Trust fund is held, with a third class that may become so upon further decision by trustees. The purpose of the Trust in assisting Māori prosecute claims under the Treaty of Waitangi has been held to be a charitable one.13
[20] The Trust Deed provides:
2.1A trust is hereby established under this Deed, to be a forestry rental trust referred to in Section 34 of the Crown Forest Assets Act 1989, to be known as the “CROWN FORESTRY RENTAL TRUST”. The Trust is established to:
(a) receive the Rental Proceeds from Licences; and
(b) make the interest, earned from investment of those Rental Proceeds, available to assist Māori in the preparation, presentation and negotiation of claims before the Waitangi Tribunal which involve, or could involve, Licensed Land.
2.2Upon the execution of each Licence the Crown shall then hold the interest of the Crown in all Rental Proceeds, payable to the Crown under that Licence, on behalf of the Trustees. The Crown shall pay the Rental Proceeds to the Trustees, after deduction of Goods and Services Tax or any other tax payable on the Rental Proceeds by the
11 Latimer v Commissioner of Inland Revenue [2004] UKPC 13, [2004] 3 NZLR 157 at [18].
12 At [41].
13 At [42].
Crown as licensor, within 10 working days after the Crown receives them.
2.3The Trust is not an instrument of the Crown, nor of the Government of New Zealand. The Crown shall not be liable to contribute any sum towards the payment of satisfaction of any debts or liabilities of the Trust, other than any sum payable to the Trust by the Crown under Clause 2.2.
[21] Three key definitions, of “Beneficiaries”, “Claimant” and “Person” are as
follows:
“Beneficiaries” means:
(a) the Crown;
(b) the Claimants; and
(c) any other person who has registered a claim under the Treaty of
Waitangi Act 1975 to Crown Forest Land;
“Claimant” means a person who the Trustees recognise and accept as
meeting the criteria laid down by the Trustees in accordance with Clause 10;
…
“Person” includes a company or other body corporate and also includes an unincorporated body of persons; but every Trustee and every secretary of the Trust shall be a natural person;
[22] I add that “Trust Fund” is defined as “the Assets of the Trust”, that is capital held by the Trust, income from it and any proceeds of collection or realisation. This becomes important because the Deed permits majority decision making “on any matter relating to the Trust Fund”.14
[23] Clause 5 of the Deed provides that there be six trustees. Three appointed by the Crown, and three by Māori. NZMC and FOMA together are the “Māori appointor” of the three Māori trustees. That provision has already been the subject of dispute, and another judgment in this proceeding by Williams J.15 It is also the subject of the later issues I have to decide. If the number of trustees falls below six, the remaining trustees may continue to function, provided there are at least two
Crown and two Māori trustees.16
14 Clause 7.7. There must be two Māori and two Crown trustees in agreement.
15 New Zealand Māori Council v Foulkes [2014] NZHC 747.
16 This is the combined effect of cls 5.4 and 7.7.
[24] Clause 6 makes provision for conflicts of interest and the appointment of alternate trustees:
…
6.8Where any Trustee has a conflict of interest in respect of claims for payments to Claimants, that Trustee shall declare its conflict of interest as soon as it arises, by notifying the relevant Crown Appointor or Māori Appointor of that conflict of interest. A Trustee may not act on any matter in which that Trustee has a conflict of interest.
6.9If any Trustee has a conflict of interest in respect of claims for payments to Claimants, or if any Trustee is unable or unwilling to act in any matter or for a temporary period, the relevant Crown Appointor or Māori Appointor shall appoint an alternate Trustee for that Trustee. The alternate Trustee shall have all the powers and duties of a Trustee, subject to any limitations specified in the appointment and notwithstanding that there may already be six Trustees. A Trustee and an alternate for that Trustee may not act simultaneously on the same matter but may act at the same time on different matters.
[25] Four provisions relevant to the issues I have to decide are found in cl 7:
7.4The Trustees may appoint any person as a secretary with remuneration if and as the Trustees shall think fit, to assist in the work of the Trustees, and may from time to time remove the secretary and appoint a replacement.
…
7.6The Trustees may appoint a chairperson of the Trustees, but that chairperson shall not have a casting vote in respect of any decision made by the Trustees on any matter relating to the Trust Fund.
7.7Where the Trustees are not unanimous on any matter relating to the Trust Fund the decision of a majority of the Trustees comprising at least two Crown Trustees and two Māori Trustees shall be binding on all Trustees, failing which there can be no valid decision of the Trustees.
…
7.9The trustees shall not be liable for and shall be indemnified by and out of the Trust Fund in respect of any loss or liability which may be sustained or incurred by reason of the exercise of any of the powers of investment under this Deed. The Trustees shall be entitled to be indemnified by, and reimbursed out of, the Trust Fund for expenses incurred by the Trustees in exercising their functions under this Deed, in accordance with the Fees and Travelling Allowances Act
1951 as if the Trust were a Statutory Board for the purposes of that
Act. The Trustees shall be paid, out of the Trust Fund, such
remuneration by way of fees, salary, wages, or allowances, as the
Minister of Finance determines from time to time.
…
7.11 The Trustees may at their discretion exercise the following powers, authorities and discretions, namely:
…
7.11.3 Agents: - To employ and pay an agent (excluding any Trustee), whether a solicitor, accountant, bank, trustee corporation, stockbroker, or other person, to transact any business to do any act required to be transacted or done in the execution of the Trust or the administration of the Trust property, including the receipt and payment of money, and the keeping and audit of Trust accounts. The Trustees shall be entitled to be allowed and paid all charges and expenses so incurred, and shall not be responsible for the default of any such agent if employed in good faith.
7.11.4 Act on Advice: - To act on the opinion or advice of or information obtained from any financial adviser, lawyer, surveyor, broker, auctioneer, or other expert or professional but so that the Trustees shall not be responsible for any loss depreciation or damage occasioned by acting or not acting in accordance with any opinion, advice or information.
[26] Fundamental provisions concerning the status and rights of “Claimants” are
to be found in cls 9 and 10:
9.2Interest earned from investment of the Trust Fund shall be accumulated by the Trustees to be applied at the Trustees’ sole discretion:
9.2.1to pay the expenses of the Trustees and of the Trust, including the remuneration of the Trustees and all taxes and other levies on income or assets of the Trust; then
9.2.2subject to Clause 10, to assist any Claimant in the preparation, presentation and negotiation of claims before the Waitangi Tribunal which involve, or could involve, Licensed Land.
…
10.1 The Trustees shall decide:
(a) the criteria for those persons applying for distributions of income under Clause 9.2.2 to qualify as Claimants;
(b) the basis for allocating funds to Claimants; …
10.2The Trustees may from time to time vary the decisions made pursuant to Clause 10.1 and any variation shall take effect from a be17 specified by the Trustees.
10.3 Before deciding or varying the criteria under Clause 10.1(a) the
Trustees:
(a) must consult with the New Zealand Māori Council, the Federation of Māori Authorities Incorporated and the Crown; and
(b) may consult with any other persons or groups which they consider appropriate.
10.4Payments to Claimants shall be made to the individual, group or body, which the Trustees in their sole discretion consider represent the Claimants.
10.5Notwithstanding Clauses 10.1 to 10.4, the Trustees may, in their sole discretion, decline any application of funds pursuant to this Clause
10.
10.6The Trustees shall only make payments for expenditure or activities, and in amounts, which the Trustees have approved before the expenditure is incurred or the activity undertaken. In giving approval, the Trustees may specify maximum or interim amounts where the scope or cost of any activity is uncertain at the time of the approval.
10.7 Payments may only be made in accordance with the decisions of the
Trustees:
(a) to Claimants, upon delivery to the Trustee of satisfactory evidence and detail of any expenditure to be reimbursed and of any activity for which the Trustees have agreed to pay; and
(b) to others, to meet costs incurred by or for the benefit of Claimants, upon delivery to the Trustees of satisfactory evidence of those costs and the authority for incurring them.
Criteria for funding assistance
[27] Clause 10 of the Deed anticipates the trustees adopting criteria for deciding applications for funding assistance.
[28] The development and adoption of the current criteria arose directly from a
2003 Māori Affairs Select Committee Parliamentary inquiry and report into the
working of the Trust. Hitherto, the Trust, chaired by Sir Graham Latimer, had
17 Obviously, a typographical error. I assume either “time” or “date” was intended.
adopted a strategy known as kotahitanga. At the heart of that strategy was the organisation of “individual claimants into unified collectives to expedite the settlement process”. Claimants were encouraged, but not required, to form clusters based on geography or whakapapa to progress claims with the Tribunal. At that time the Trust undertook historical research itself, rather than providing external research funding to claimants. The Select Committee was critical of the kotahitanga policy. It considered it did not provide sufficient clarity or transparency for claimants. It said:
A number of submitters to the Inquiry felt that the criteria for allocating funding lacked clarity, and suggested that some funding decisions seemed to be arbitrary or inconsistent with the Trust Deed. The Trust disagreed with the suggestions, and asserted that applications for funding are assessed against thorough and robust criteria. We disagree with this assertion.
The criteria lacked clarity, and together with the “new direction” are directed more towards governance and capacity-building than research. We also consider that there is an unjustifiable level of discretion being exercised in a manner that does not put forward the purpose of the Trust.
[29] On 31 March 2004 the trustees resolved to adopt new criteria. The decisions made that day were based on four reports prepared by Trust staff. The reports noted that although it was open for the trustees to provide funding for Tribunal claims before a claim was registered, past experience suggested a “significant risk that much money will be invested for little return”. The reports recommended criteria be designed based on applicants being required to form clusters – a flexible concept – that had one or more registered claims before the Tribunal. In relation to direct negotiations, through the Office of Treaty Settlements, the primary criteria for funding should be that a group seeking funding have demonstrated it had a Crown- recognised mandate, or that the Office had indicated its confidence in the group’s ability to achieve such a mandate. Those recommendations were then adopted in trustee resolutions.
[30] The resolutions passed by trustees involve tightened criteria for eligibility. So far as relevant, they were:
(a) Eligibility for Trust funding under cl 2.1(b) of the Trust Deed:
To be eligible for consideration for Trust’s assistance an applicant must be Māori and must have registered a claim, or proposed to register a claim, with the Waitangi Tribunal which involves, or could involve, Crown Forest land.
(b) Eligibility for Trust assistance with Waitangi Tribunal process:
The represented group has one or more registered claimants before the Waitangi Tribunal [and] the applicant represents a cluster of claimants – OR – the applicant represents a claim made on behalf of a significant proportion of all potential claimants to Crown Forest land in a Waitangi Tribunal district.
(c) Eligibility for Trust assistance with direct negotiation process:
Groups demonstrate that they have a Crown recognised mandate – OR – the Office of Treaty Settlements has indicated its confidence in the applicant’s ability to achieve mandate.
(d) Priority:
Claimants will be prioritised according to their internal capability to manage the settlement process and to Crown priorities and policies which substantially impact on the settlement process.
[31] The criteria presently applied are set out in the Trust’s 2012 Policy Manual Te Kaupapahere mo Nga Ropu Kaitono me Nga Kairangahau Ratonga. The Trust’s chair, Ms Foulkes, deposes that it was prepared by Trust staff setting out criteria “in essence those agreed in 2004”. In answer to further enquiry from me after the
hearing, I was informed by Ms McDonald QC:18
Counsel are instructed that, as a matter of fact, the Manual incorporates not only the policies formally adopted by the trustees but also the various operational guidelines developed to give effect to that policy framework. Accordingly, the Manual is in the nature of a practical handbook used to assist staff in the application of approved policies on a day-to-day level, and has not been the subject of formal approval as a single document.
So the Manual is an amalgam document and has not itself received formal trustee approval or adoption by resolution.
18 Memorandum dated 24 July 2014, following issue of my Minute (No 6) of 21 July 2014 enquiring what evidence there was as to adoption or formal approval by trustees of the Policy Manual.
[32] In supplementary submissions following that concession by Ms McDonald, the applicants invited me to find that the cl 10.3 consultation procedures had not been followed, and that the 2004 resolutions were thus of no effect.19 I am not prepared to do so on a piecemeal basis, without proper pleadings, without proper evidence, and without proper submissions. It does not follow automatically that Equity will invalidate a criterion adopted and applied despite an omission (if established) to complete the consultative process required by cl 10.3. In these circumstances, and after so long a period of time in which these resolutions have
been applied, I decline to throw out a full-grown child with the bathwater, by way of afterthought. Omnia praesumuntur rite ese acta comes to mind. If the applicants see fit to pursue this afterthought, they may do so separately and subsequently.
[33] The Manual is said by Ms Foulkes to provide “a primary reference for staff”, and to provide “advice in a clear and consistent manner for Claimants and other interested parties”. In particular, it sets out provisions governing “Approved Client status”. That is said to be the Trust’s most significant policy. Ms Foulkes says that trustees will fund only those groups that meet the Approved Client policy criteria.
[34] Approved Client status may be given for either Tribunal claim processes, or for direct negotiation with the Crown. A summary of qualifications for Approved Client status is set out at page 12 of the Manual:
Claimant groups seeking Trust funding must apply through the Eligibility and Capability process to become an Approved Client of the Trust. In short:
the applicant must have a claim(s) registered with the Tribunal which involves or could involve Crown forest licensed land; and
if the application for Approved Client status relates to the Tribunal process, the applicant must represent a cluster of claimants in the Tribunal inquiry district.
Funding assistance for direct negotiations is predicated on the negotiations involving a claim relating to Crown forest licensed land and the applicant must demonstrate that it either:
possesses a Crown-recognised mandate to negotiate on behalf of the claimants; or
19 Memorandum dated 25 July 2014.
the group has a comprehensive, realistic and achievable plan for carrying out the mandating process which is supported by the Office of Treaty Settlements.
Current trustees
[35] The current trustees of the Trust are five in number. Ms Angela Foulkes (chair) and Mr John Wilson, both respondents in this proceeding, are Crown appointees. So is Mr Rakihia Tau, more recently appointed and not a party. The Māori appointees are Sir Edward Durie and Mr Maanu Paul, who are both applicants in the proceeding along with NZMC. The term of the sixth trustee, Mr Alan Haronga, expired on 30 June 2014, during these proceedings. He was a Māori appointee. I address the consequences of his departure in the context of Issue
13.
Previous decisions in this proceeding
[36] This is the fourth judgment in this proceeding. On 28 March 2013 Williams J issued an initial judgment concerning the basis on which an imminent trustee meeting was to be conducted.20 Far more importantly, on 9 April 2014 Williams J delivered a comprehensive judgment invalidating the removal of one trustee, the appointment of another, and the appointment of eight persons as alternate trustees.21
In short, Williams J found that the Māori Appointor process provided for in cls 6.2 and 6.4 of the Deed had not been correctly followed. The third judgment by Williams J, on 3 June 2014, concerned recovery of fees of the applicants’ solicitors as costs, and an (unsuccessful) application that Buddle Findlay (and one of its
partners, Mr Barker) be debarred from acting in this proceeding.22
Amici curiae
[37] Two amici curiae were appointed by Williams J at an earlier stage in this proceeding. Mr Illingworth QC had a general remit as to the making of submissions. Mr Andrew was given the particular task of consulting with claimants to gain an
understanding of the perspectives of such groups in relation to the matters at issue in
20 New Zealand Māori Council v Crown Forestry Rental Trust [2013] NZHC 663.
21 New Zealand Māori Council v Foulkes [2014] NZHC 747.
22 New Zealand Māori Council v Foulkes [2014] NZHC 1225.
these proceedings. He was asked to reflect, and report to the Court, the spectrum of perspectives of claimant groups.
[38] I am grateful to both Mr Illingworth and Mr Andrew for the assistance they have given me in this proceeding.
Issues
[39] There are thirteen agreed issues for determination in this judgment. They are:
(a) Issue 1: Are the Trust’s current criteria for recognition as a Claimant inconsistent with the Trust Deed, and therefore unlawful, in (a) requiring claimants to have registered, or be proposing to register, a claim before the Waitangi Tribunal; (b) requiring claimants to represent a cluster (with one limited exception); and (c) excluding any group whose mandate is not recognised by the Crown?
(b)Issue 2: Is it correct that the trustees cannot approve payments under cl 10 unless they have received an application from a Claimant requesting approval for such a payment?
(c) Issue 3: Does the Deed permit trustees to adopt policies that may affect the substance of underlying claims (for example by adopting set criteria as to the claims that will be funded) or directly instructing experts on behalf of Claimants?
(d)Issue 4: Is it correct that the trustees cannot employ and remunerate staff other than a secretary appointed in accordance with cl 7.4?
(e) Issue 5: Is it correct that the trustees may delegate only ministerial responsibilities to staff? In particular, is it correct that except only to the extent that such instruction is entirely incidental to a ministerial duty, the instruction of a lawyer is a decision that must be taken by all trustees, voting in accordance with the Trust Deed?
(f) Issue 6: Is it correct that the trustees may not delegate any powers of final decision to a sub-committee?
(g)Issue 7: For the purposes of the Trust Deed, what is a “conflict of interest”?
(h)Issue 8: What information must a trustee be provided with where a potential conflict of interest is identified?
(i) Issue 9: In what circumstances are the costs of the Māori Appointor in
appointing trustees to be met from the Trust fund?
(j)Issue 10: Are the costs of NZMC and FOMA in negotiating with each other payable from the Trust fund?
(k) Issue 11: Should the applicants’ costs in this application, along with
FOMA’s, be met from the Trust fund?
(l)Issue 12: Is the chairperson’s appointment under cl 7.6 of the Trust Deed limited by time, or subject to holding the continued confidence of at least two Crown trustees and two Māori trustees?
(m)Issue 13: As regards appointments by the Māori Appointor: (a) should the appointment of Mr Paki as alternate trustee be recalled; (b) what other directions should the Court give now regarding the appointment of alternates; (c) what directions should the Court give as to the trustee vacancy now arising following the expiry of Mr Haronga’s term?
[40] Before addressing those substantive issues, two preliminary issues arise. First, what role does judicial review play in this case? Relief is sought, primarily, under s 66 of the Trustee Act 1956. Secondly, to what extent does the Treaty itself impact the interpretation of the Trust Deed?
Jurisdiction: s 66 and the role of judicial review in this case
[41] The applicants advance a treble jurisdictional foundation for these proceedings. The pleadings themselves are somewhat immaterial. The list of issues for determination bears no relationship to them. But everyone agrees they are the issues that need to be answered. The three jurisdictional bases asserted are: s 66 of the Trustee Act 1956, the High Court’s inherent jurisdiction to review the administration of trusts, and the Judicature Amendment Act 1972. The latter at least is controversial.
Section 66
[42] The primary basis for the Court’s jurisdiction to give the answers sought lies in s 66. All parties accepted that s 66 enabled the Court to answer the six issues posed. I agree that that is so, with two significant caveats.
[43] I should therefore state at the outset what my approach to s 66 is. It provides:
66 Right of trustee to apply to court for directions
(1) Any trustee may apply to the court for directions concerning any property subject to a trust, or respecting the management or administration of any such property, or respecting the exercise of any power of discretion vested in the trustee.
(2) Every such application shall be served upon, and the hearing may be attended by, all persons interested in the application or such of them as the court thinks expedient.
[44] That disarmingly simple provision has become engrafted with a body of qualifying case law. The fundamental purpose of s 66 may be in danger of becoming lost. It is, after all, simply an enactment of a broad Equitable jurisdiction that has long resided in the Chancery Courts.
[45] The approach I take to s 66 is as follows.
[46] First, s 66 may be used to resolve any live question of interpretation of the Trust Deed, as well as any uncertainty as to the exercise of a power. The former power necessarily must fall within s 66, as well as the other matters provided for
expressly. It is, therefore, wider than the oft cited passage in Re Allen-Meyrick’s Will
Trusts:23
Wherever Trustees have some discretionary power of this kind, where it is properly described as a power or a pure discretion, and they are in doubt how, in the relevant circumstances, they ought to exercise their discretion, they are able to come to the Court and obtain directions what is the proper thing for them to do.
That might seem (although I do not believe it was intended) to confine the Court’s role to an advisory one on how powers may be exercised. But that is not in fact the position at all. Section 66 is a robust, parallel source of jurisdiction to resolve any substantial question of law concerning the meaning or administration of a trust. It is not, in my view, confined to points of “minor importance arising from the
management of a trust”.24
[47] Secondly, the existence of a dispute is not fatal to the exercise of the jurisdiction. Indeed the existence of a dispute, or at least a doubt, is essential. The Court’s function is not purely advisory, or to be invoked to resolve abstract hypotheses. In this case the parties are in dispute, but are at least united in seeking the Court’s ruling on questions of interpretation.
[48] Thirdly, the more profound the dispute, the more care must be taken that those with a legitimate interest in the outcome are represented. In particular, beneficiaries. That is the first caveat. That does not, however, preclude trustees in disagreement from seeking directions. But it may not represent the last word where a Court finds trustees have been acting in a manner inconsistent with their obligations under the Trust Deed. In such cases an application under the ordinary inherent Equitable jurisdiction is likely to be more appropriate, and more cost- effective. Otherwise affected persons not party to the s 66 proceedings will be entitled to raise the same issues anew, and seek different outcomes.
[49] Fourthly, the relief sought must not involve resolution of any disputed issues of facts. That is the second caveat. Like the Declaratory Judgments Act 1908, the s
23 Re Allen-Meyrick’s Will Trusts [1966] 1 All ER 740 (Ch) at 743.
24 Contrast Melville v NRMA Insurance NZ Ltd HC Wellington CP70/01, 17 April 2002 at [58]. I do not think that decision intended to confine the jurisdiction thus, although it is discouraging of substantive disputes being presented under s 66.
66 procedure is entirely unsuited to resolving such issues. A s 66 application proceeds on the basis of affidavit evidence. An agreed statement of facts will normally be presented to the Court.25
[50] This four-part formulation is a perhaps more liberal invitation to engage s 66 than was found by this Court in Neagle v Rimmington26 or in Melville v NRMA Insurance NZ Ltd.27 But the caveats above set out what I think are the relevant constraints of the jurisdiction. If respected, I do not think that the mere possibility of separate and subsequent beneficiary-led litigation should deter trustees from
engaging this useful jurisdiction.
[51] Now in this case all parties before me sought to rely on s 66. None suggested this was not a proper case for its application. None invoked Neagle or Melville as an obstacle in the way of answers being given.
[52] Less satisfactory, however, was the persistent torrent of affidavit evidence that rained down upon the Court. As but one example, during the hearing I asked for a record of trustee committee delegations to be produced. An affidavit emerged. Objection was taken to the extent of narrative in the body of the affidavit. An argument erupted as to what the Court had actually asked for. Leave to file further evidence was sought. It was not granted.
[53] No one produced the one document that should have accompanied a s 66 application: an agreed statement of facts. Or, at least, a good unilateral draft.
[54] The approach I have taken to the facts has been indicated already.28 I have identified in the first part of this judgment the bare background facts that I need to answer the issues posed. Those at least should be largely undisputed. In answering the issues, I may need to refer to some additional facts. They, likewise, should be substantially undisputed. Where the issues posed do not require the analysis of
contested factual positions, I shall answer them. Where they do, I shall not.
25 Melville v NRMA Insurance NZ Ltd HC Wellington CP 70/01, 17 April 2002 at [58(c)].
26 Neagle v Rimmington [2002] 3 NZLR 826 (HC).
27 Melville v NRMA Insurance NZ Ltd HC Wellington CP 70/01, 17 April 2002.
28 At [10].
Inherent jurisdiction
[55] The second jurisdictional ground advanced is the inherent jurisdiction of the Court. I accept Ms McDonald’s submission that the inherent jurisdiction is closely related to the statutory jurisdiction under s 66. The latter is really an offspring of the former.
[56] In this case the inherent jurisdiction might have enabled the Court to resolve some disputed questions of fact. But it could only have done so with the aid of cross-examination. No one sought to cross-examine any deponent in this case. That evidential straightjacketing means that, practically at least, the inherent jurisdiction adds nothing particularly to s 66 in the present context. That position was reflected in submissions that I received.
Judicature Amendment Act 1972
[57] That takes me to the third jurisdictional ground, the Judicature Amendment
Act 1972. What does this add to s 66?
[58] Mr Palmer’s position was that s 66 provided all the Court needed. But he did not resile from reliance on the Judicature Amendment Act 1972. That, as he put it, provides a wider framework for analysis. He accepts, though, that s 66 would enable the Court to reach exactly the same point so long as construction of the Trust Deed was “approached in its proper public law context”. In particular, Mr Palmer did not agree that the actions of the Trust were not reviewable, or that the Trustees were not exercising a statutory power of decision.
[59] Ms McDonald submitted that the Trust is not an entity capable of judicial review. The Trustees were not, she said, exercising a statutory power of decision at all. Amicus, Mr Illingworth QC, submitted that there was no proper basis for judicial review in this case under the Judicature Amendment Act 1972. He agreed with Ms McDonald’s submission that the Trustees were not exercising statutory powers. There was, he said, an insufficient public law component in the case to enable that jurisdiction to be invoked.
[60] I do not consider the Judicature Amendment Act 1972 can assist the applicants in this case.
[61] First, although s 34 of the Crown Forest Assets Act 1989 requires the Crown to settle a trust, the Trust itself is not a body corporate, and it does not exercise any “statutory power (of decision)” for the purposes of the Judicature Amendment Act
1972.29 Trusts exercising “public” powers may potentially be amenable to judicial
review, but only under the parallel common law judicial review path reflected in Part
30 of the High Court Rules.30
[62] Secondly, I accept that the actions of a private body (which a trust pre- eminently is) may be susceptible to judicial review at common law if those actions have a substantial public dimension. That is the consequence of cases such as Finnigan v New Zealand Rugby Football Union Inc.31 It is sometimes referred to as the “Datafin principle”.32 Relevant here are two considerations. The first is the nature of the power being exercised. If it has a public dimension – determining legal
rights, or having significant impact on the public generally – it is more likely to be amenable to review. The second is to ask, “Is judicial review necessary?”. In Macaskill v Ogden Wild J noted:33
I agree with the plaintiffs insofar as they assert that there cannot be higher standards or additional obligations for trustees’ conduct at public law than are imposed upon trustees in equity. The existence of equitable obligations, similar or identical to those that would be imposed by judicial review, indicates that it is neither necessary nor appropriate to extend the Court’s power of review to cover trustees’ conduct. Such matters fall to be dealt with under the Court’s supervisory jurisdiction, and r 626 cannot give the plaintiffs any “additional traction”…
The availability of alternative, adequate remedies has always caused the Courts to take a restrained approach to supervening review.
29 Macaskill v Ogden [2009] NZAR 111 (HC) at [26]–[28].
30 Joseph Constitutional & Administrative Law in New Zealand (4th ed, Thomson Reuters, Wellington, 2014) at 114. There is an excellent discussion of the statutory/common law divide within the review jurisdiction in Knight “Privately Public” (2013) 24 PLR 108.
31 Finnigan v New Zealand Rugby Football Union Inc [1985] 2 NZLR 159 (CA) at 178–179 and
Stratford Racing Club Inc v Adlam [2008] NZCA 92, [2008] NZAR 329.
32 See for example Taylor Judicial Review: A New Zealand Perspective (3rd ed, LexisNexis, Wellington, 2014) at 28, referring to R v Panel on Takeovers & Mergers, ex parte Datafin plc [1987] 1 QB 815 (CA).
33 Macaskill v Ogden [2009] NZAR 111 (HC) at [28].
[63] For the same reasons expressed by Wild J in Macaskill, it seems to me that judicial review adds nothing useful to the applicants’ primary foundation in Equity. Although the applicants did invoke Part 30 of the High Court Rules, it really adds nothing to the equitable ground. Mr Geiringer accepted as much on the second hearing day. The public dimension and context of the Trust Deed must, as we shall see shortly, be borne in mind at all times in its construction. But that is a product of private law, rather than public law, orthodoxy.
[64] Thirdly, reinforcing that conclusion is the fact that the primary issues I am asked to decide, in their context, raise questions of illegality and rationality, rather than questions of process. Equity is entirely capable of dealing with such issues without the need to resort to public law principles.34 In doing so, Equity will be fully mindful of the importance of context.
Interpretation of the Trust Deed: the role of the Treaty
[65] There was greater disagreement over the second preliminary issue. In essence it concerns whether the Trust Deed “must be interpreted consistently with the principles of the Treaty of Waitangi”.
Submissions
[66] The quotation immediately preceding comes from Mr Palmer. He submitted that the Trust is emblematic of the Treaty partnership recognised and given legal content in the SOEs Case. Williams J noted that the respective roles of appointors are “reflective of the Treaty partnership that created the Trust”.35 The Treaty was, therefore, a critical part of the Trust Deed’s context. It should be interpreted consistently with the principles of the Treaty. Mr Palmer went further: “if need be, viewed in context and according to purpose, it should be interpreted as subject to the
principles of the Treaty.”
34 The similarity in principle between the public law review of administrative agencies and the private law review of trustees can be seen from a survey of chapter 12 of Thomas & Hudson The Law of Trusts (2nd ed, Oxford University Press, Oxford, 2010).
35 New Zealand Māori Council v Foulkes [2014] NZHC 747 at [83(a)].
[67] Ms McDonald conceded that the Treaty was an important part of the context of the Trust Deed. The principles of the Treaty inform its purpose and guide the trustees in their activities. But the respondent trustees did not agree that if activities of the Trust could said to be inconsistent with the Treaty, they were therefore unlawful. No provision in the Deed required it to be interpreted consistently with the Treaty, or required the trustees to act consistently with the Treaty. That contrasted with s 9 of the State-Owned Enterprises Act 1987 and s 45Q of the Public Finance Act 1989.
[68] For the Crown, Mr Soper submitted that the Treaty and its principles provided a backdrop to the Deed, and were reflected in its content. But he took the same position as Ms McDonald as to inconsistency: an action that might be inconsistent with the principles of the Treaty would not thereby be unlawful and in breach of the Trust. Treaty principles were relevant to the conduct of the parties, but did not alter particular rights and obligations for agreement, contract or Trust instruments. The Trust is not the Crown. The Trustees do not owe Treaty duties. It was, said Mr Soper, not clear how the principles of the Treaty speak to the actions of the Trust or Trustees.
[69] Mr Illingworth QC travelled something of a middle road. Albeit one closer to Mr Soper and Ms McDonald’s path than Mr Palmer’s. Drawing on contractual interpretation cases, which he contended were relevant equally in the context of trust interpretation, Mr Illingworth emphasised the importance of context. But, as he put it, the Court should be wary of allowing background information to “swamp” the words of the Trust Deed itself. The Court should be wary, too, of allowing the Treaty to be used as a kind of trump card. The Treaty was of enormous background significance, but it could not override the provisions of the Trust Deed. It is an important aid to interpretation, but the applicant’s submissions as to the potential impact of the Treaty on the interpretation issues before the Court were in significant respects overstated.
Analysis
[70] Having considered these submissions, and the authorities cited by counsel, I
reach these conclusions.
[71] First, in essence similar principles should apply to the construction of trust deeds as to the construction of contracts. This approach has been endorsed on more than one occasion by Judges in the High Court of Australia, including Mason CJ and Deane J in Gosper v Sawyer36 and more recently by Heydon and Crennan JJ in Byrnes v Kendle.37 The latter found compelling the idea that instruments, whether statutory, contractual or trust should be construed according to broadly common rules. Particularly as to the admission of parol evidence to illuminate meaning:38
The authorities establish that in relation to trusts, as in relation to contracts, the search for “intention” is only a search for intention as revealed in the words the parties used, amplified by the facts known to both parties.
[72] In this country similar observations have been made in this Court.39 The proposition that the principles of construction of wills, trusts, contracts and statements are the same is more easily expressed than explained. Restraint in the receipt of parol evidence is even more desirable in construing trusts than it is in the case of contracts. What, for instance, is to happen in this case where the Trust Deed is the direct product of a unilateral settlement by the Crown, but the indirect product of tripartite (or more) negotiations? That is true of trusts generally. Trust deeds are often the product of wide ranging family discussion. Whose intent is relevant?40
Why should it matter? Whose background knowledge is to be taken into account?
Where an instrument does not have “parties”, but has been the product of somewhat diffuse negotiation, the principles in cases such Investors Compensation Scheme v West Bromwich Building Society41 and Vector Gas Ltd v Bay of Plenty Energy Ltd,42
themselves not without complexity in the contract field, are not easy to apply.
36 Gosper v Sawyer (1985) 160 CLR 548 (HCA) at 568-569. See also the judgment of Mason CJ and Wilson J in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 (HCA) at 121.
37 Byrnes v Kendle [2011] HCA 26, (2011) 243 CLR 253 at 286-290.
38 At 286.
39 Manukau City Council v Lawson [2001] 1 NZLR 599 (HC) at [13]; Bulley v Attorney-General
[2012] NZHC 615 at [51].
40 See, for example, Bulley v Attorney-General [2012] NZHC 615 at [52] – [58].
41 Investors Compensation Scheme v West Bromwich Building Society [1997] UKHL 28, [1999] 1
[73] Secondly, it is common ground that the Treaty is a matter of fundamental context to the Trust Deed. Its genesis was the 1987 SOEs Case declaration by the Court of Appeal that proposed transfers of forest lands were in breach of s 9 of the State-Owned Enterprises Act 1987, and inconsistent with the Treaty. The direct outcome of that conclusion, as a mechanism to mend that illegality, was the Forestry Agreement, and further to it, settlement of the Trust Deed. Accordingly, both the Treaty and the Forestry Agreement are of primary contextual significance to construction of the Trust Deed. It is in effect a form of implementation of the Crown’s obligations under the Treaty.
(b) In the case of FOMA, its representatives are to be the executive of
FOMA.
(c) In the case of NZMC, its representatives are to be the equivalent entity within NZMC that has authority to speak for NZMC (whether that be the executive or otherwise).
(d)Leave is reserved to either NZMC or FOMA to apply for clarification of these directions. Any such application is to be directed to either Williams J or myself.
(e) Subject to (d), the Māori Appointor is to meet and reach agreement
within 60 days from the date of this judgment.
[273] If agreement is not reached on these matters within 60 days, then I direct NZMC and FOMA to report to the Court as to what has occurred. Consideration will then be given to whether the Court should then exercise its inherent power to act in place of the Māori Appointor. If agreement cannot be reached by then, the Māori Appointor will effectively have shifted from dysfunction to non-function.
Conclusion
[274] I decline also to use the Court’s inherent or s 51 jurisdiction to appoint new alternate trustees at this stage. The exercise of that jurisdiction is not yet necessary. I have however given directions at [272] requiring NZMC and FOMA, as constituent members of the Māori Appointor, to conduct a hui (on an executive-executive basis) to appoint such trustees and alternate trustees as are required. I require this be done within 60 days of the date of this judgment.
C. Directions following the expiry of Mr Haronga’s term
[275] Mr Haronga’s term as trustee expired on 30 June 2014. In his absence,
Mr Comer and Mr Karipa have authority to act as alternate trustees.
[276] FOMA asks me to extend Mr Haronga’s term. NZMC opposes that and
suggests that I appoint Mr Neville Baker, another former Māori Trustee, to that role.
[277] I accede to neither request. Mr Haronga was appointed under an agreement that provided that no permanent trustee be appointed for a period in excess of six years. To extend his appointment would contravene that agreement. Nor am I prepared to appoint Mr Baker. First, it is evident that that course of action is opposed by FOMA. Secondly, and more importantly, the same considerations apply to the appointment of a substitute (whether it be Mr Baker or anyone else) as applies to the appointment of alternate trustees.
[278] The directions given at [272] above apply equally to the appointment of a new trustee in place of Mr Haronga. In the meantime, while trustees are five only in number, cl 5.4 of the Trust Deed will apply.
Conclusion
[279] I decline to extend the appointment of Mr Haronga as trustee. I make clear that in doing so I express no criticism of his work as a trustee. It is simply that the underlying basis of his appointment was that it would not exceed six years. A new trustee will need to be appointed by the Māori Appointor, pursuant to the directions I have already given.
Summary
[280] I now collect together my conclusions:
(a) Issue 1: Are the Trust’s current criteria for recognition as a Claimant inconsistent with the Trust Deed, and therefore unlawful, in (a) requiring claimants to have registered, or be proposing to register, a claim before the Waitangi Tribunal; (b) requiring claimants to
represent a cluster (with one limited exception); and (c) excluding any group whose mandate is not recognised by the Crown?
Answer: As to each sub-issue:
(a) The “registration” requirement is not inconsistent with the Trust Deed. It is not an unlawful constraint on Claimant access to funding.
(b) The “clustering” requirement – as expressed in the 2004 resolutions - is not inconsistent with the Trust Deed. It is not an unlawful constraint on Claimant access to funding. However, trustees must guard against inappropriate bundling of claims. They should be willing to receive direct application for exception. They may first require that serious effort be made to achieve a practical, workable cluster. Trust staff should work with applicant groups to find common ground and accommodate different strategies and outcomes within the cluster.
(c) The “mandate” requirement is not inconsistent with the Trust
Deed. It is not an unlawful constraint on Claimant access.
(b)Issue 2: Is it correct that the trustees cannot approve payments under cl 10 unless they have received an application from a Claimant requesting approval for such a payment?
Answer: The application process adopted by trustees is lawful. The approval of funding applications is a non-delegable discretion reserved to trustees. Trustees should be provided copies of the application for funding, business plan and funding proposal when deliberating on approval.
(c) Issue 3: Does the Deed permit trustees to adopt policies that may affect the substance of underlying claims (for example by adopting set criteria as to the claims that will be funded) or directly instructing experts on behalf of Claimants?
Answer: It is legitimate (and indeed necessary) for trustees to adopt criteria as to which claims will be funded. The process adopted by the Trust for the engagement of experts is not unlawful.
(d)Issue 4: Is it correct that the trustees cannot employ and remunerate staff other than a secretary appointed in accordance with cl 7.4?
Answer: The answer to Issue 4 is plainly “no”. Trustees may continue to employ and remunerate staff to the extent necessary for the efficient conduct of their obligations as trustees.
(e) Issue 5: Is it correct that the trustees may delegate only ministerial responsibilities to staff? In particular, is it correct that except only to the extent that such instruction is entirely incidental to a ministerial duty, the instruction of a lawyer is a decision that must be taken by all trustees, voting in accordance with the Trust Deed?
Answer: Trustees are required to exercise the discretions vested in them by the Trust Deed. That does not preclude them adopting policies with the consequence that implementation may then be delegated to trustee subcommittees, staff members or other agents. That does not, in my view, require trustee micromanagement, or for the agent to be a mere automaton. The real question is whether the authority left to the agent would have been an unpleasant surprise to the settlor of the trust. The trustees may, and in some cases must, obtain legal advice. The judgment sets out principles to guide trustees where all, or less than all, trustees seek particular advice.
(f) Issue 6: Is it correct that the trustees may not delegate any powers of final decision to a sub-committee?
Answer: The principles stated in answer to Issue 5, concerning delegation of decision-making to staff, apply also to delegations to sub-committees of trustees (such as the Finance and Risk Committee). The SIPO serves as an example of appropriate decision-making at a policy level by trustees, with implementation of that policy then a delegable task. (As noted, the Trust Deed permits very limited investment discretion in any case). The Finance and Risk Committee is not empowered to vary delegations approved by trustees. However it is unclear on the evidence whether in fact it has purported to do so.
(g) Issue 7: For the purposes of the Trust Deed, what is a “conflict of
interest”?
Answer: The meaning of “conflict of interest” is explained in [208] of this judgment. That is now common ground between the parties. As is the fact that conflicts are not limited to “claims for payments” referred to in cl 6 of the Deed. The practical implications of a conflict are explained at [209].
(h)Issue 8: What information must a trustee be provided with where a potential conflict of interest is identified?
Answer: Unless an obvious conflict exists, a trustee should receive the same information as other trustees. Where a conflict is potential only, the trustee should receive such information as is necessary to reach a view. A high threshold exists for withholding of information from trustees.
(i) Issue 9: In what circumstances are the costs of the Māori Appointor
in appointing trustees to be met from the Trust fund?
Answer: Consensus was reached as to the basis for payment of costs of NZMC and FOMA acting as Māori Appointor. The principles are set out at [224].
(j)Issue 10: Are the costs of NZMC and FOMA in negotiating with each other payable from the Trust fund?
Answer: The actual costs of NZMC and FOMA negotiating with each other (including legal costs), to the extent reasonable and necessary for the purposes of the Māori Appointor’s functions, are payable from the Trust fund.
(k) Issue 11: Should the applicants’ costs in this application, along with
FOMA’s, be met from the Trust fund?
Answer: Issue 11 is not answered at this stage of the proceedings.
(l)Issue 12: Is the chairperson’s appointment under cl 7.6 of the Trust Deed limited by time, or subject to holding the continued confidence of at least two Crown trustees and two Māori trustees?
Answer: The chairperson, if not elected for a fixed term, cannot serve in that office beyond the remaining term of his or her trustee appointment at the time of election. (But can then be re-elected, of course). The election (and removal) of a chairperson would require a unanimous vote (the chairperson having no vote in that event). It is not implicit in the Trust Deed that the chairperson’s appointment is for single year terms. Nor is it implicit that he or she hold the office only so long as retaining the trust and confidence of all trustees.
(m)Issue 13: As regards appointments by the Māori Appointor: (a) should the appointment of Mr Paki as alternate trustee be recalled; (b) what other directions should the Court give now regarding the appointment of alternates; (c) what directions should the Court give as
to the trustee vacancy now arising following the expiry of
Mr Haronga’s term?
Answer: As to each sub-issue:
(a) I decline to recall the judgment of Dobson J appointing
Mr Paki interim alternate trustee for Mr Paul.
(b) I decline also to use the Court’s inherent or s 51 jurisdiction to appoint new alternate trustees at this stage. The exercise of that jurisdiction is not yet necessary. I have however given directions at [272] requiring NZMC and FOMA, as constituent members of the Māori Appointor, to conduct a hui (on an executive-executive basis) to appoint such trustees and alternate trustees as are required. I require this be done within 60 days of the date of this judgment.
(c) I decline to extend the appointment of Mr Haronga as trustee.
I make clear that in doing so I express no criticism of his work as a trustee. It is simply that the underlying basis of his appointment was that it would not exceed six years. A new trustee will need to be appointed by the Māori Appointor,
pursuant to the directions I have already given.
Result
[281] Directions are given accordingly. For the avoidance of doubt, my directions comprise the whole of these reasons for judgment, and not merely the summary at their conclusion.
[282] Particular directions for the appointment of trustees and alternate trustees are given at [272].
[283] Leave to apply for clarification is reserved at particular points in this judgment. Leave is not reserved to apply generally, however.
[284] If costs are in issue, memoranda may be filed. They are to be both prompt and brief.
Stephen Kós J
Solicitors:
Woodward Law Offices, Lower Hutt for Applicants
Chapman Tong, Wellington for First to Third Respondents
Johnston Lawrence, Wellington for Fourth Respondent
Crown Law, Wellington for Attorney-General
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