New Zealand Steel Mining Ltd v Butcher
[2014] NZHC 1552
•4 July 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-1172 [2014] NZHC 1552
BETWEEN NEW ZEALAND STEEL MINING LIMITED
First Applicant
NEW ZEALAND STEEL LIMITED Second Applicant
AND
THE HONOURABLE D J BUTCHER First Respondent
THE MINISTER OF ENERGY Second Respondent
THE ATTORNEY-GENERAL Third Respondent
NGATI TE ATA Fourth Respondent
Hearing: 30 June 2014 Counsel:
JE Hodder QC and TD Smith for Applicants
FMR Cooke QC, SM Kinsler and AJ Allan for First, Second and Third Respondents
JV Ormsby and JL Day and SM Hoffman for Fourth
RespondentJudgment:
4 July 2014
JUDGMENT OF FOGARTY J
This judgment was delivered by me on 4 July 2014 at 4.30 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date: ………………………….
Solicitors: Chapman Tripp, Auckland
Wynn Williams, Christchurch
NEW ZEALAND STEEL MINING LIMITED v THE HONOURABLE D J BUTCHER [2014] NZHC 1552 [4
July 2014]
Introduction
[1] The applicants, New Zealand Steel Mining Limited (NZ Steel), apply for leave to discontinue proceedings commenced by them against the Crown back in September/October 1990 and, secondly, leave to withdraw their and the Crown’s respective undertakings given to the Court on 14 November 1990, and that the costs of the application lie where they fall.
[2] The ground on which each order is sought is that the applicants’ proceeding has been dormant for over two decades, and has lost its purpose; and that the undertakings are an imminent impediment to the applicants’ enjoyment of their entitlement to mine ironsands under a statutory licence granted in 1966, which primarily supply their steel mill in Glenbrook.
History
[3] At all material times since 1966, NZ Steel holds a statutory licence granted by the Minister of Energy under the Iron and Steel Industry Act 1959 (ISIA). It is a licence to take ironsands for one hundred years. It is, of course, related to a specific area of land. Of that land, about 20 per cent (approximately 713 acres) includes four specific areas which have always been regarded by Ngati Te Ata as wahi tapu.1 This is principally because Ng Te Ata buried their people in this area. Excavation of these areas is likely to expose koiwi.2
[4] In July 1985, the Tribunal released a report.3 The Tribunal recorded that the Waiuku State Forest, of 3,725 acres at the North Head of the Waikato River, originally formed part of the Waiuku Block of 43,700 acres. That block was confiscated in 1864 following the land wars but certain parts of it were returned to Ngati Te Ata in 1865. NZ Steel was granted the licence to mine ironsands in 1966. The land included the four blocks, the subject of this litigation:
Te Papawhero 509 acres
Waiaraponia 30 acres
1 Sacred or reserved ground.
2 Human remains.
3 Waitangi Tribunal Manukau Harbour Claim (Wai 8, 1985).
Te Kuo 123 acres
Tangi Tangina 63 acres
[5] These are collectively referred to by both NZ Steel and Ngati Te Ata as either
“the four wahi tapu” or the “four blocks”.
[6] In 1959 these areas of land were taken under the Public Works Act 1928 (PWA 28) for state forest purposes.
[7] ISIA was enacted in 1959 for the purpose of bringing about the birth of an iron and steel industry in New Zealand. The one hundred year licence granted under that Act includes the four wahi tapu, also known as and hereinafter referred to as “the four blocks”. The mine of approximately 3,700 acres is known as the Maioro mine site. NZ Steel has always been conscious that there are urupa4 in the Maioro area. Prior to 1990, it became aware that the Ngati Te Ata argued that the four blocks were wahi tapu for the reason that they had been used in the past as burial sites. Indeed, the original mining licence excluded from its ambit a recognised urupa in one of the
four blocks.
[8] For some years prior to 1990, NZ Steel was aware that Ngati Te Ata and the Government were negotiating with respect to ownership of the land at Maioro or parts of it and for participation in the royalties or other income to be derived in respect of the mining of ironsands.
[9] The matter came to a head in April 1990 when the operator of a bucket dredge saw a bonelike object thrown up. It was a human bone. On 16 May the Minister of Justice advised by press release of the commencement of discussions between the Crown and Ngati Te Ata. In its press release on 17 May, NZ Steel reserved its position on a formula for resolving the impasse between the Crown and Ngati Te Ata. NZ Steel also advised in the same release that if there were concessions granted in respect to the four blocks, then NZ Steel would have to be compensated as this could amount to a loss of about 20 per cent of its entitlement.
[10] A month later again, on 16 June, the Minister of Justice issued a media statement stating the Government had set in motion the process to return the four
blocks at Maioro to Ngati Te Ata. NZ Steel protested it had not been consulted.
4 Maori burial grounds.
[11] Then, in September 1990, the Crown advised NZ Steel of its intention to remove the four blocks from the licence, preparatory to making an application to the Maori Land Court for a final revesting of the land. In an undated letter, but probably either 24 or 25 September, the Minister of Justice advised NZ Steel of the Crown’s readiness to remove the four blocks and provided a copy of a memorandum of understanding (MOU) between the Crown and Ngati Te Ata. This MOU recorded that before 30 September, the Crown would remove the four blocks from the ironsands mining licence. Secondly, it advised that Ngati Te Ata would propose conditions under which mining can proceed on the balance of the Maioro land.
[12] Faced with that information, NZ Steel commenced proceedings in the High Court on 17 October contending that the Crown’s intentions were ultra vires the provisions of the ISIA, contending the power to remove the four blocks was possible only if the blocks were no longer required for any purposes relating to the iron and steel industry. That land was still required and so could not be removed from the licence.
[13] On 14 November, two undertakings were given in place of interim orders, and the substantive proceedings set down for hearing in the week beginning 29 April
1991 for five days. The two undertakings were as follows:
(a) The Crown undertook to the Court not to excise the four blocks from the licence area until the Court issued a final decision on the orders sought in the applicants’ statement of claim (Crown’s undertaking); and
(b)The applicants undertook to the Court not to mine the four blocks pending the final resolution of these proceedings or until further orders of the court (NZ Steel’s undertaking).
[14] Tompkins J’s minute of 4 November 1990 recorded the NZ Steel undertaking in these terms:
New Zealand Steel has also, through Mr Timmons, given an undertaking that it will not mine any of the ironsands within the four areas set out in Mr O’Brien’s undertaking pending the final resolution of these proceedings, or further order of the Court.
[15] Ngati Te Ata, as fourth respondent, at the time of the undertakings, commenced its pleadings after the undertakings. On 30 November it filed a statement of defence. This included an affirmative defence alleging that they were tangata whenua of the lands and that the lands have been wrongly confiscated, reciting the sorry history of the relationship between Ngati Te Ata and the Crown in respect of these lands. This included the contention that the land had been unlawfully taken under the PWA 28, such that that was a “purported” taking and did not, and could not, confer on the Crown any right to the ironsands. That the PWA 28 did not allow land being taken for mining. It went on to plead that it was the duty of the Crown to revoke the licence over the four parcels of land.
[16] Then, on 12 December 1990, in the same proceedings, Ngati Te Ata filed a claim against the Crown. This was similar to the statement of defence and affirmative defence already discussed. It pleaded a fiduciary obligation owed by the Crown to Ngati Te Ata, by reason of the Treaty of Waitangi. It repeated the claim that the Crown’s ownership of the land was a consequence of unlawful taking, in breach of the PWA 28 and that the taking was for improper purposes to gain ownership of the land for the development of an iron and steel industry. It pleaded that the MOU was a contract and that it was the duty of the Crown to perform that contract and sought the remedy of mandamus requiring the Minister responsible for the administration of ISIA to exercise his powers under the Act to remove the Maioro lands (not just the four blocks) from the licence.
[17] Following these pleadings, against the looming April 1991 fixture, and beyond it, the three parties entered into negotiations and Crown submit:
9.7On 18 June 1991 the Court was advised that a proposal had been made that it was hoped would resolve the matter within two weeks, but that if that did not happen further interlocutory steps would be required. This is the last step on the Court file.
9.8On 16 July 1991 counsel for New Zealand Steel and Ngati Te Ata confirmed to the Crown that the proposed settlement which had been negotiated was acceptable to their respective clients. That settlement contemplated removing the areas from the New Zealand Steel licence (but not from the ambit of ISI Act under s 3(5) with Ngati Te Ata’s participation in the grant of a new licence. It therefore contemplated mining taking place in the wahi tapu areas, but on the
basis that New Zealand Steel would pay a new royalty to Ngati Te
Ata rather than the Crown.
9.9At the same time as these events, two neighbouring iwi, Ngati Tahainga and Ngati Karewa claimed they had the customary rights of ownership to Maioro. Further steps were stalled as a consequence. Ngati Te Ata took proceedings in the Maori Land Court by way of case stated to resolve the issue, and Ngati Tahainga and Ngati Karewa cournterclaimed saying they had the entitlement.
9.10On 18 February 1993 Ngati Te Ata then advised the Crown that they wished to await a final determination from the Maori Appellate Court before they proceeded with the 1991 settlement.
9.11 On 23 November 1994 the Crown met with Ngati Te Ata following the Maori Appellate Court judgment, and was advised by Ngati Te Ata that it would not formally sign up to the terms of the 1991 resolution, and now sought to amend its terms. The new conditions included a condition that if Ngati Te Ata did not agree to the mining by New Zealand Steel within the wahi tapu, Ngati Te Ata could pursue whatever remedies were available in respect of granting the mining licence.
9.12In 1995 Dame Nganeko Minhinnick’s brother, Whiti Te Ra Kaihau supported the claim to Maioro by Waikato iwi, and this led to a further mandate issue emerging which delayed the matter through to
1996.
9.13By 1996 in light of its experience with Treaty of Waitangi settlements (including what had happened here) the Crown adopted a policy that sought to resolve all grievances of an iwi in a comprehensive settlement package.
[18] In 1998 Cabinet withdrew from the nearly completed 1991 settlement entirely. The Attorney-General says:
In part because it appeared desirable that the return of the wahi tapu area should be considered as part of a comprehensive Treaty settlement, rather than on an ad hoc basis, and because procedures in the Resource Management Act 1991 and Historic Places Act 1993 appear to provide adequate protection for archaeology and other sacred sites.
[19] This advice was a change of position on the part of the Crown. It took the view that the wahi tapu blocks could be mined, consistent with protection of koiwi and any urupa. The Crown further submitted:
9.14Further negotiations continued through to last year. They were on a “without prejudice” basis, but most recently Ngati Te Ata representatives have advised they do not wish to seek to resolve the wahi tapu issues separately from an overall Treaty settlement, and
that they have a bottom line payment requirement for settlement of
$170 million.
[20] The Crown has been willing to return the lands at Maioro, including thefour blocks, but has not offered any deal in respect of the licence revenue received by the Crown..
[21] These negotiations were suspended in January of this year. This was because at the end of 2013 Ngati Te Ata, through another entity Te Ara Rangatu O Te Iwi O Ngati Te Ata Waiohua Inc, commenced proceedings in the High Court in their own right.
[22] In the meantime, NZ Steel has been mining ironsands from other areas of the Maioro block, leaving the four wahi tapu blocks. But it has now reached the point where it would be economically efficient to start mining one of the four blocks. It proposes to start on 1 August 2014, in a little under one month.
[23] Such mining would be inconsistent with NZ Steel’s undertaking in these
proceedings. Hence, this application to be removed from the undertakings.
The application for discontinuance
[24] High Court Rules 15.19 and 15.20 are applicable. These provide:
15.19 Right to discontinue proceeding
(1) At any time before the giving of judgment or a verdict, a plaintiff may discontinue a proceeding by—
(a) filing a notice of discontinuance and serving a copy of the notice on every other party to the proceeding; or
(b) orally advising the court at the hearing that the proceeding is discontinued.
(2) A notice of discontinuance under subclause (1)(a) must be in form G
24.
(3) This rule is subject to rule 15.20.
15.20 Restrictions on right to discontinue proceeding
(1) A plaintiff may discontinue a proceeding only with the leave of the court if—
(a) the court—
(i) has granted an interim injunction; or
(ii) made an interim order under rule 30.4; or
(iii) made an interim order under section 8 of the
Judicature Amendment Act 1972; or
(b) a party to the proceeding has given an undertaking to the court.
(2) A plaintiff to whom an interim payment has been made, whether voluntarily or under an order made under rule 7.70 or 7.71, may discontinue the proceeding only with the written consent of the party by whom the payment was made or with the leave of the court.
(3) A plaintiff may discontinue a proceeding in which there is more than
1 plaintiff only with the consent of every other plaintiff or with the leave of the court. If the plaintiff files a notice of discontinuance under rule 15.19(1)(a), the consent of every other plaintiff must be in writing.
(4) If there is more than 1 defendant in a proceeding, a plaintiff may discontinue a proceeding against a particular defendant only with the consent of every other defendant or with the leave of the court. If the plaintiff files a notice of discontinuance under rule 15.19(1)(a), the consent of every other defendant must be in writing. (Emphasis added.)
[25] Rule 15.20(1)(b) particularly applies.
[26] These rules reflect a presumption that a plaintiff has the right at any time to discontinue proceedings. Rule 15.20 is to be read as a restriction of this basic principle. It is to be applied against the underlying principle that the plaintiff cannot be compelled against its will to proceed to a trial or judgment.5
[27] The undertakings of the Crown and NZ Steel in these proceedings had an effect akin to interim orders, and deliberately so. An application for interim orders under s 8 of the Judicature Amendment Act 1972 had been filed.
[28] Opposition to an application for leave to discontinue and to be relieved from undertakings has to establish some prejudice to the opposing party. It has to be a
prejudice sufficient to justify denying the plaintiff the usual right to decide whether
5 O’Brien v Social Credit Political League Inc (No 2) [1984] 1 NZLR 68 (CA) at [73].
or not to pursue litigation or not. All relevant circumstances are examined.6 The circumstances must make it unjust, taking into account the interests of all parties, to continue to enforce the undertaking.
[29] Against NZ Steel’s imminent entry into a wahi tapu block, the opposition of Ngati Te Ata also functions as an application for interim relief because it is within the power of this Court to delay the entry by fixing a later date upon which the undertaking is to be released.
[30] For these reasons, I have approached the question of the merit of Ngati Te Ata’s argument in a way similar to any application for interim relief. I examined their legal arguments, not to resolve them, but rather to decide whether they are seriously arguable. Then I go on to examine whether it is unjust to hold NZ Steel to the 1990 undertaking.
[31] The first issue between the parties is the scope of the NZ Steel undertaking. As may have already been noticed, Tompkins J’s minute refers to the undertaking being applicable to “these proceedings”. Counsel for NZ Steel argue that NZ Steel’s undertaking was given only in respect of “the” proceeding (singular), meaning only the claim by NZ Steel.
[32] The reader will have seen from the narrative that the undertaking was given against a trial to take place within a few months, in a context where NZ Steel was fully appraised of the fact that this was a three-party dispute, and that the late 1990 decision of the Crown to amend the licence to withdraw the four blocks was a direct consequence of the Crown’s perception of the merits of Ngati Te Ata’s Treaty grievances.
[33] Furthermore, the undertakings were given by the Crown and NZ Steel after Ngati Te Ata had been joined as a respondent and within the period of time for the respondents to file a statement of defence, affirmative defences and
counterclaims/cross-claim.
6 Commerce Commission v Air New Zealand Ltd HC Auckland CIV-2008-404-8352, 31
November 2011 at [17].
[34] Because of NZ Steel’s prior ongoing monitoring of the relationship between Ngati Te Ata and the Crown, none of the content of the pleadings that are summarised above in the narrative will have come as any surprise to NZ Steel in
1990/1991. So that at the time the undertakings were given, the nature and scope of the dispute, later settled by the pleadings, was appreciated.
[35] The undertakings of the Crown and NZ Steel were given in that context in an appreciation that the parties would either negotiate a three-way settlement or there would be a hearing in April 1991. The hearing would rehearse and examine the three-way dispute as part of the analysis as to the statutory justification for the Crown’s decision to exercise statutory powers under the ISIA, to vary the licence by removing about 20 per cent of the area, and that those powers were being exercised in good faith and for their proper purpose. As an underpinning of that exercise of statutory power, it would be contended by the Crown, with the support of Ngati Te Ata, that the four wahi tapu blocks should never have been the subject of a mining licence in the first place. So that withdrawing the four blocks in 1990 from the licence was correcting a wrong, not committing a wrong.
[36] I am satisfied that not only did the Court deliberately use the plural “in these proceedings”, but that it would be inconsistent with the context to confine NZ Steel’s undertaking to its application. The undertaking was given, however, with the intent that it would only operate for a short period of time prior to the main hearing, less than six months later, which would either resolve the disputes or, if it did not take place, be as a result of a settlement which would either favour Ngati Te Ata so their consent was not required or, involve Ngati Te Ata if the settlement was against their interests and needed a compensating package of relief from the Crown and/or NZ Steel. Furthermore, the dispute was principally between the Crown and Ngati Te Ata, as the pleadings in the 1990 proceedings show.
The merit of NZ Steel’s application in 2014
[37] In addition to the presumptive right of a plaintiff to discontinue proceedings, there is the extraordinary fact that nearly a quarter of a century has elapsed since the undertakings were given, in a context where they were intended to last only a few
months. NZ Steel’s position is further bolstered by the fact that the question of the mining of these four lots has become embroiled in a bigger question of an overall Treaty settlement of all Ngati Te Ata’s grievances with the Crown. Last, but not least, the negotiations between Ngati Te Ata and the Crown are currently suspended.
The merits of Ngati Te Ata claims
[38] This is a Court of law. The recommendations of the Waitangi Tribunal do not bind the Crown. The readiness of the Crown to enter into Treaty settlements is an act of executive government. The merits of Treaty settlements are not capable of being judged by the High Court. As lawyers would say, they are not “justiciable”. For example, the fact that the Crown has suspended Treaty negotiations in response to the commencement of the fresh set of proceedings against the Crown in 2013 is a policy decision of the executive government. Subject to sophisticated arguments as to legitimate expectation to the contrary, or the like, that is not a justiciable act. The decision to suspend has not been challenged in these proceedings.
[39] Accordingly, when examining the merit Ngati Te Ata’s opposition to the lifting of the undertakings, I have set aside opposition which at its heart is a complaint about policy decisions of the Crown and Treaty negotiations. I have also set aside complaints of conduct by the Crown which is justified by statutory authority. For example, the 1864 confiscation of the Maioro land of Ngati Te Ata was empowered by a statute. The fact that the Waitangi Tribunal has found that that was a wrong does not make it justiciable. That is, the High Court has no power to criticise, let alone read down or set aside a statute.
[40] That leaves two categories of grievances of Ngati Te Ata which I consider to be relevant to a judgment as to whether or not the prima facie right of NZ Steel to discontinue should not be allowed. These are, in order of analysis:
(a) The pleadings in 1990 by Ngati Te Ata against the Crown in these proceedings, for breach of fiduciary obligation. It is noted that these pleadings have been reformatted but essentially reiterated in the recent
2013 proceedings.
(b)The Ngati Te Ata argument is that, as a matter of law, the compulsory acquisition of their land under the PWA 28 could not and so did not include the ironsands. The Crown’s repost is that, by the terms of the ISIA statute, the Crown had the right to grant the mining of the ironsands to NZ Steel, whether or not the Crown owned the ironsands. I have not heard a full explanation of the Crown’s analysis, but the Crown appears to contend implicitly that because it has the statutory power to take the ironsands, and to licence others to take, it has no obligation to compensate the owners of the ironsands. It was the Crown’s argument in this Court that the right to grant licences given to NZ Steel for the mining of the ironsands was a statutory “profit a prendre”.
Breach of fiduciary obligations of the Crown
[41] The grievances of Ngati Te Ata date back to the period of New Zealand’s history when the Treaty of Waitangi was treated as of no legal significance. It is important to keep in mind that the current orthodoxy that the Treaty of Waitangi is an important foundation of the New Zealand government’s legitimacy, by a transfer of sovereignty from Maori to the Crown is recent thinking. It is also important to keep in mind that the New Zealand Parliament has not gone any further at this stage than requiring government agencies and tribunals, in a few statutes, to take into account the principles of the Treaty when exercising power.
[42] Measuring the conduct of government prior to the establishment of the
Waitangi Tribunal and prior to the enactment of the State Owned Enterprises Act
1986 making relevant Treaty considerations risks misunderstanding, in whole or in part, the bona fide of executive government decisionmaking.
[43] New Zealand jurisprudence was essentially revolutionised by the Court of Appeal decision of New Zealand Maori Council v Attorney-General.7 This was the case where the Court of Appeal held that s 9 of the State Owned Enterprises Act
1986 was a firm declaration by Parliament that nothing in that Act should permit the
7 New Zealand Maori Council v Attorney-General [1987] 1 NZLR 641 (CA).
Crown to act inconsistently with the principles of the Treaty of Waitangi and that s 9 overrode the rest of the Act.
[44] There were observations by the judges that the Treaty signified a partnership between Crown and Maori, requiring each to act towards the other reasonably and with the utmost good faith and that the relationship between Treaty partners creates responsibilities analogous to fiduciary duties. 8 Cooke P wrote:9
The effect of the Court’s decision
The prosaic language of the Court’s formal orders should not be allowed to obscure the fact that the Maori people have succeeded in this case. Some might speak of a victory, but Courts do not usually use that kind of language. At the outset I mentioned that each member of the Court was writing a separate judgment. It will be seen that approaching the case independently we have all reached two major conclusions. First that the principles of the Treaty of Waitangi override everything else in the State-Owned Enterprises Act. Second that those principles require the Pakeha and Maori Treaty partners to act towards each other reasonably and with the utmost good faith.
That duty is no light one. It is infinitely more than a formality. If a breach of the duty is demonstrated at any time, the duty of the court will be to insist that it be honoured.
[45] Richardson J said:10
That the basis for the compact [the Treaty] requires each party to act reasonably and in good faith towards the other.
[46] Somers J said:11
Each party [to the Treaty] in my view owed to the other a duty of good faith. It is the kind of duty which in civil law partners owe to each other.
[47] Casey J said:12
Implicit in that relationship is the expectation of good faith by each side in their dealings with the other, and in the way that the Crown exercises the rights of government ceded to it.
8 At 703 per Casey J, at 664 per Cooke P.
9 At 667.
10 At 673.
11 At 693.
12 At 703.
[48] These passages have been interpreted by the learned editors of New Zealand
Law Reports, in the case note to the case, in this way:13
The relationship between the Treaty partners creates responsibilities analogous to fiduciary duties.
[49] However, on my reading of the judgment, the word “fiduciary” is not used. Furthermore, the Court of Appeal in Paki v Attorney General14 essentially rejected that interpretation to the New Zealand Maori Council case.15 The Supreme Court gave leave to appeal. This point has been argued, and the decision reserved.
[50] The pleadings filed by Ngati Te Ata in defence and by way of cross-claim in
1990 plead fiduciary obligations on the part of the Crown. These fiduciary obligation contentions are reformatted and pleaded again in the 2013 proceedings.
Unlawful taking of the mine sands
[51] I apprehend that one of the reasons for Ngati Te Ata pursuing the argument that the taking of the land under the PWA 1928 was void, is because it also submitted to this Court that:
By acquiring the land this way, the Crown was able to circumvent the obligation to ensure Ngati Te Ata was paid compensation and royalties for the expropriation of its assets, as provided under ISIA.
[52] I am not sure that is so.
[53] The PWA 28 was utilised by the government in 1959 to acquire the Maioro land, which includes the four blocks, for forestry purposes, the same year as the enactment of ISIA. Mr Ormsby identified contemporaneous documentary evidence from the Government Archives that at the same time that the Crown was taking Ngati Te Ata’s land for forestry purposes, mining of the ironsands on that land was being actively considered by government. If that proposition could be proved in a court of law by way of judicial review, it might found an argument that the statutory
powers of compulsory acquisition were exercised with a lack of good faith and not
13 At 642.
14 Paki v Attorney General [2011] 1 NZLR 125 (CA).
15 At [99] and [100], per Hammond J.
for the proper purpose. But even so, on current jurisprudence, the land taken would not be held upon a constructive trust for Ngati Te Ata. Rather, the normal public law presumption that all government action has its intended legal effect until it is set aside for error of law. Whether a decision is set aside upon judicial review is an exercise of discretion by the High Court. There is no real concept of void government acts, at least not these days.
The right of the Crown to revenues from the ironsands, even if the ironsands do not belong to the Crown but belong to Ngati Te Ata
[54] There is a second argument, pleaded in the 2013 claim16 that the legal consequence of the acquisition under the PWA 28 is that the Crown owns the land but not the ironsands as these were beyond the power of acquisition in the PWA 28. Section 19 of the PWA provides:
19 Mines and minerals excluded from land taken for public works
(1) Where any land is or has been taken at any time by the Governor- General or by any local authority under the authority of any Act or Provincial Ordinance for the construction of any public works, the Governor-General or such local authority shall not thereby be deemed to have acquired or to acquire any right to any mines of coal or other minerals whatsoever under any land so taken, except only such parts thereof as are necessary for the proper and effectual construction, support, and maintenance of such works.
(2) All such mines and minerals (excepting as aforesaid) shall be deemed to be and to have been excepted out of the Proclamation or other instrument under the authority whereof the land is or has been or may be taken, except so far as a contrary intention is expressed in that Proclamation or instrument.
[55] Mr Cooke QC, for the Crown, submitted that the right to mine was the Crown’s, by statute, and thereby appeared to be asserting the Crown had no obligation to compensate the owners of the ironsand being taken. I may have mistaken the scope of his proposition. He submitted.
It was the ISI Act itself that vested the rights to mine the ironsands in this area with the Crown. So Ngati Te Ata’s claim is a complaint about a legislative act, and it is accordingly a Treaty grievance rather than a judicial review claim challenging a statutory power of decision. Judicial review
16 Paki v Attorney-General, above n 14, at [160].
cannot challenge legislative action. … The right to mine was granted under the ISI Act irrespective of the ownership of the land. (Emphasis added.)
[56] Section 3 of the ISIA provides:
3Right to prospect or mine for ironsands in ironsands area vested in Crown –
(1) Except as otherwise provided by this Act and notwithstanding the provisions of any Act or of any Crown grant, certificate of title, lease, or other instrument of title, the right to prospect and mine for ironsands in any ironsands area is hereby vested in Her Majesty, subject to the provisions of this Act, and no person, other than the Minister, or a person authorised under this Act by the Minister, shall, after the commencement of this Act, prospect or mine for ironsands in any ironsands area.
(2) The Minister, without further authority than this Act, may carry on prospecting or mining operations in respect of ironsands in any ironsands area.
(3) The Minister may by writing under his hand authorise any person to exercise any of the rights or powers conferred on him by subsection two of this section subject to such terms and conditions as he thinks fit and for that purpose the Minister may from time to time, on behalf of Her Majesty, enter into agreements with any person in order to give full effect to the provisions of this subsection.
…
(6) Except as otherwise provided by this Act no compensation shall be payable to any person in respect of any rights conferred on the Minister or any other person by this Act or in respect of the suspension, taking, or postponement of any rights by this Act. (Emphasis added.)
…
[57] The ironsands were never taken formally under ISIA, though there is a power to take. Section 7 of the ISIA provides:
7 Taking of land –
(1) Where the Minister is of the opinion that any land in an ironsands area is required for the mining of ironsands or that any land in any part of New Zealand is required for the establishment or operation of an iron and steel industry, the land may be taken under this Act.
(2) The power conferred by this section to take land shall be deemed to include a power to take any estate or interest in land or any right, easement, or profit á prendre in respect of any land, and any reference in this Act to the taking of land shall be deemed to include
a reference to the taking of any such estate, interest, right, easement, or profit á prendre as aforesaid.
(3) Subject to the provisions of this Act, where any land is to be taken under this Act it shall be taken or set apart in accordance with the provisions of the Public Works Act 1928 in all respects as if the land were required for a public work under that Act and as if this Act were a special Act within the meaning of section eighteen of the Public Works Act 1928 and all land set apart as aforesaid shall, for the purposes of this Act, be deemed to be taken under this Act.
(4) Nothing in this section shall be deemed to affect the power of the Crown to acquire, for the purposes of this Act, land or any interest in land by way of purchase or by way of gift or otherwise under the Land Act 1948 or any other Act. (Emphasis added.)
[58] Inevitably, when land or rights over land are taken by the Crown from private persons, the Crown must pay compensation. Section 8 of the ISIA provides:
8 Compensation –
(1) Every person having any estate or interest in any land taken under this Act shall be entitled to compensation therefor.
(2) Compensation under this section shall be ascertained and paid in all respects as if the land had been taken for a public work under the Public Works Act 1928:
Provided that in assessing compensation under this section, the value of any ironsands which are or may be on or in the land taken shall be excluded.
[59] The proviso to s 8 might suggest an extraordinary qualification to the basic right to compensation. But s 9 follows.
[60] Section 9(1) of the ISIA provides:
9 Royalties –
(1) [Except as otherwise provided in this Act] Every person having an estate or interest in any land taken under this Act shall be entitled in accordance with this section to receive royalties in respect of any ironsands mined from the land.
[61] The function of s 9 is not to exclude compensation but to ensure that full compensation is provided. Normally when compensation is taken under the Public Works Act, a capital sum is paid representing the market value of the land. That could easily result in underpayment where land is being taken for mineral extraction.
Therefore s 9 can be understood as ensuring that the constant obligation of the
Crown to pay compensation for the taking of private property is fully provided for.
[62] The problem is that s 9(1) assumes that where any estate or interest is taken under ISIA, it will be formally taken. That has not happened. There seems to have been an assumption by both the Crown and by Ngati Te Ata that that is the end of the possibility of the Crown owing, by statute, an obligation to compensate the owners of the ironsands, that the statutory compensation only arises if the ownership of the ironsands is formally taken under the ISIA. So Ngati Te Ata is pursuing remedies in equity, of constructive trust.
[63] Mr Ormsby argued that the title of the Maori owners of Maioro, including these four blocks, prior to the acquisition in 1959 included the ironsands. I did not hear Mr Cooke QC to reject that proposition. If is right, there is an argument, however, that in the absence of any ad hoc specific statutory powers such as ss 7, 8 and 9 of ISIA, that the generic statutory obligation to pay compensation preserved in the Imperial Laws Act 1986 may apply. 17
[64] It is unlikely that ISIA would be construed as attempting to deny the basic right of compensation to private owners when land is taken by government in the public interest.
[65] However, more pertinent to the issue of discontinuance or not, that is not an argument that can be advanced against NZ Steel. If there is any entitlement to compensation or royalties, it is the Crown that has the obligation, not NZ Steel. I do not think that NZ Steel owes common law or statutory responsibilities to Ngati Te Ata.
[66] The ironsands royalty dispute essentially does not affect the NZ Steel licence.
[67] NZ Steel has been exercising its licence since 1966. It has been acquired by
BHP Bilton Limited, who no doubt purchased NZ Steel, on estimates of the value of
17 See the Imperial Laws Act 1986 ss 3(1) and 5, and First Schedule discussed by me in JA Robertson v Auckland City Council [2014] NZHC 765, at [32].
the balance of the one hundred year term, albeit maybe factoring in this challenge in respect of the four blocks.
Lapse of time considerations
[68] Ngati Te Ata have not pursued the 1990 litigation and have effectively started a new platform for their argument by commencing proceedings in 2013 utilising a new corporate entity.
[69] The 2013 litigation has had the consequence that the Crown has unilaterally suspended Treaty negotiations in the meantime.
[70] Since 2011 at least, Ngati Te Ata plainly have had a continuing opportunity to negotiate a settlement with the Crown, as a Treaty settlement. This settlement may or may not include a tripartite deal with NZ Steel. The Hon S J Bridges, Minister of Energy and Resources, has made this clear in his affidavit. Cabinet wants to discharge its Treaty obligations and, in particular, give effect to the recommendations of the Waitangi Tribunal. The Minister says relevantly:
... The status of the wahi tapu areas is a difficult issue which after some 23 years remains unresolved by the parties without the Court’s assistance. Nevertheless, the stalemate which now exists cannot continue indefinitely. As the Waitangi Tribunal in its 1985 Y8 Manukau report acknowledged, what is effectively required is a balancing of interests.
The Crown is committed to strike that balance, and the purpose affidavits explain how the Crown proposes to ensure Ngati Te Ata’s interests are actively protected while also meeting its obligations to New Zealand Steel arising from the 1966 licence.
Since 2011, the company has also sought the Crown’s support for its export business and has entered into a series of interim letter arrangements for that purpose. The resource rental level agreed reflects contemporary market conditions and is considerably above the historic rate New Zealand Steel pays under its licence for ironsands used in the Glenbrook mill. The present arrangement expires in 2016 and the company seeks a longer term arrangement to ensure security of supply so as to justify capital investment and to further develop its part of the company’s business.
The Crown wishes to support this part of New Zealand Steel’s business, and to agree an extension of the export arrangement. Any arrangement would include conditions to review the royalty rates presently in place periodically, and at least in the event a Treaty settlement with Ngati Te Ata is achieved. New Zealand Steel has indicated that in the event mining of the wahi tapu blocks commence and it achieves security to export, it will pay the agreed
export rate for all ironsands regardless of whether they are exported or used at the Glenbrook mill.
In response to NZ Steel’s request, I secured Cabinet approval to attempt to negotiate a resolution of the wahi tapu and other contemporary issues with Ngati Te Ata and New Zealand Steel. This engagement targeted contemporary issues rather than Ngati Te Ata’s historical grievances which will be addressed through the historical Treaty settlement process.
Cabinet agreed negotiation parameters that included engaging with Ngati Te Ata and New Zealand Steel about the possible transfer of ownership of the wahi tapu areas, or indeed all of the Crown-owned lands at Maioro, to a Crown approved entity representing Ngati Te Ata, and potentially including any Crown–owned ironsands underlying those lands, as well as the entitlement to funds accruing from the mining of ironsands. As New Zealand Steel has indicated that, subject to certain conditions, it will pay the export rate for all ironsand from the wahi tapu blocks the financial return of Ngati Te Ata could be considerable. Any negotiated solution would be subject to existing third party rights, as it is clear the original proposal to remove the wahi tapu areas from the licence and return them unencumbered to Ngati Te Ata is unacceptable to New Zealand Steel. Any agreement at this time would leave a comprehensive Treaty settlement for future negotiations between Ngati Te Ata and the Minister for Treaty of Waitangi Negotiations.
I instructed my officials to commence the engagement and at the time of swearing this affidavit, I have been advised that Ngati Te Ata do not wish to engage upon the current negotiation parameters. I understand they seek to settle all of their Treaty grievances in one comprehensive settlement, and that their lead negotiator has specified that they seek $170 million dollars from the Crown in addition to negotiating market rentals for the ironsand mining, on which basis they would support New Zealand Steel’s aspirations to mine all of the Maioro, including the wahi tapu areas, and to export ironsand concentrate. As I noted earlier, they have elected to bring litigation in the High Court alleging a range of breaches of fiduciary duties.
Officials were also directed to engage Ngati Te Ata in relation to the suitability of the Koiwi Protection Plan drafted by Ngati Te Ata and New Zealand Steel. At the time of swearing this affidavit, my officials are attempting to engage Ngati Te Ata as a whole in relation to the adequacy of the current plan. The Crown is open to any suggestions Ngati Te Ata may have as to how the existing arrangements can be improved.
Ultimately, the Crown has a responsibility to govern and after 23 years must find a way through the present impasse. It is not in the public interest, nor the interests of Ngati Te Ata or New Zealand Steel, that the uncertainty over the wahi tapu areas be allowed to continue indefinitely.
Striking an appropriate balance is not an easy task. On the one hand the government has obligations to New Zealand Steel arising from the 1966 licence and to the broader public in terms of securing the benefits of economic growth and employment by supporting the industry at Glenbrook. On the other hand, the Crown’s Treaty obligations of partnership, good faith towards, and active protection of, Ngati Te Ata’s Treaty interests are non- negotiable. In relation to Maioro, that means ensuring through whatever
means necessary that sites of cultural significance to Ngati Te Ata are identified and protected.
[71] I am satisfied that these circumstances are such that Ngati Te Ata cannot raise a serious argument against NZ Steel to defeat the prima facie right of NZ Steel to discontinue the 1990 proceedings. This is particularly so when one keeps in mind that Ngati Te Ata have elected to bring a counterpart claim against the Crown, not NZ Steel, for breaches of fiduciary duties in the High Court in Auckland in 2013.
[72] At present Ngati Te Ata has to elect to continue its 1990 claims against the Crown and/or its 2013 claim, or to negotiate with the Crown in the manner it is being invited to by the Crown.
[73] My overall judgment is that a case cannot be made out to deny NZ Steel the discontinuance and relief from the undertakings. The undertakings were never intended to extend beyond the fixture. The fixture was vacated in April 1991 because of advice that the case was about to settle. It would be quite wrong to hold NZ Steel to these obligations nearly a quarter of a century on.
Sufficiency of notice
[74] I have given some consideration to extending the undertakings for a month or so to enable Ngati Te Ata to reconsider and perhaps reverse its negotiation/litigation stance vis a vis the Crown. This was because on first impression there appeared to be very short notice given by NZ Steel to Ngati Te Ata of its intention to start work on one of the four blocks.
[75] However, my first impression has been mollified by the disclosure of the correspondence between NZ Steel and the Crown since early 2013. This was explained by Mr DG Charge, the Vice President – Minerals of NZ Steel. He said that:
In at least early 2013, it became clear to NZ Steel that the undertaking would interfere with its efficient mining of the Licence Area from at least August
2014. From that time forward, NZ Steel sought to engage the Crown to
determine its position in relation to an application to remove the undertaking. NZ Steel was naturally conscious of the importance of the
Crown’s position on the removal of the Four Blocks to whether an
application could and should be brought.
At that time, I understood that the Crown was engaged in a critical phase of its negotiations with Ngati Te Ata. On several occasions, senior Crown representatives advised NZ Steel that any application by NZ Steel to withdraw its undertaking in this proceeding would harm the prospects of a successful conclusion to the negotiations, and accordingly requested that NZ Steel not file any application during the course of 2013. We understood that there was a prospect that those settlement negotiations would resolve the issue of access to the Four Blocks. Accordingly, NZ Steel was content to agree to this request.
As time passed, NZ Steel became increasingly concerned that no decision had been made by the Crown as to whether it still sought to remove the Four Blocks as part of a negotiated settlement with Ngati Te Ata. Accordingly, on
20 December 2013, NZ Steel formally wrote to the Crown asking it to confirm its position. Copies of this letter and the following correspondence with the Crown are exhibited to the affidavit of Mr Minhinnick.
On 7 February 2014, Minister Bridges responded to NZ Steel indicating that the issue was the subject of discussion with his Cabinet colleagues, including in the context of the 2013 proceedings commenced by an incorporated society associated with Ngati Te Ata.
On 14 March 2014, NZ Steel wrote again to Minister Bridges requesting confirmation of the Crown’s position. A further holding response was received on 7 April 2014. I communicated to Government officials that NZ Steel intended to file an application with the High Court to withdraw the
1990 undertakings as the company was under increasing time pressure if it was to avoid significant capital expenditure by mining the Four Blocks.
On 29 April 2014, NZ Steel wrote again to indicate that the Government’s position was of great concern to it and requesting an update at the Minister’s earliest convenience.
Before a formal reply to the 29 April letter was received, on or about 12 or
13 May, Government officials phoned me and confirmed that in the event NZ Steel was to seek to withdraw the undertaking, the Crown would not oppose the application subject to conditions being put in place to protect Ngati Te Ata’s spiritual and cultural interests and further negotiations with Ngati Te Ata taking place.
NZ Steel filed this application on 15 May 2014. It received a formal response from the Crown confirming its interim position on 21 May 2014.
[76] It is not clear to the Court whether or not Ngati Te Ata were caught by surprise at the evidence also filed by NZ Steel as to the costs that would be incurred were the mining operations relocated away from their present site, which is near to one of these four blocks, to a more remote site. The ironsands are removed by a large on site conveyor system. If NZ Steel cannot start mining the closest wahi tapu
block to that conveyor system in August, it will be forced to build a new conveyor system in the northern area of the licence. NZ Steel filed opinion evidence from its operations accountant that the economic benefit of mining the resource in the wahi tapu areas of Wairaponia and Te Kuo areas before the northern area is approximately
$11.6m in net present value terms.
[77] Ngati Te Ata have not argued that they have been caught by surprise that NZ Steel has reached the stage of wanting to take ironsands from the nearest of the four wahi tapu blocks.
[78] Another important context is that NZ Steel and Ngati Te Ata have long been in discussions as to how to respond to the finding of koiwi in areas outside the four blocks. It is NZ Steel’s policy to respond with considerable care if human remains are uncovered during the excavation and there is protocol in place in that regard.
[79] Rather, the essential barrier to a three-way settlement in respect of these four blocks is which of two propositions will dominate:
(a) That these are wahi tapu and on no account will revenue be earned from them by the excavation of ironsands. If that proposition predominates, the Crown would have to pay NZ Steel compensation.
(b)Ironsands can be moved from these wahi tapu areas provided that there are protocols in place which ensure that any human remains discovered during excavation are respectfully handled consistent with the tikanga of Ngati Te Ata. If that predominates, the way is cleared for an overall settlement of the dispute.
[80] It is, however, not for this Court to presume to judge the competing merits of these two propositions. But this Court can note, as a factor going to release of the undertaking, that within Ngati Te Ata there are different points of view. Both propositions have been contended for within Ngati Te Ata. The history of this litigation shows that in 1991, decisionmakers for Ngati Te Ata were able to
accommodate both the extraction of ironsands from these four wahi tapu and respect for urupa and respectful handling of koiwi outside urupa found during excavation.
Conclusion
[81] The Court’s assessment is that there is sufficient common ground between
NZ Steel, the Crown and Ngati Te Ata for a resolution to be negotiated before
1 August.
[82] After nearly 25 years of impasse, there is no basis for imposing on NZ Steel a refusal to grant leave to it to discontinue its 1990 proceedings nor to hold it to its undertaking.
[83] For these reasons, leave to discontinue is granted, and NZ Steel is released from its undertaking.
[84] So far as NZ Steel and Ngati Te Ata are concerned, costs lie where they fall. As between the Crown and Ngati Te Ata, costs are reserved.