Ririnui v Landcorp Farming Ltd
[2016] NZSC 62
•9 June 2016
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| IN THE SUPREME COURT OF NEW ZEALAND |
| SC 47/2015 [2016] NZSC 62 |
| BETWEEN | MITA MICHAEL RIRINUI |
| AND | LANDCORP FARMING LIMITED THE ATTORNEY-GENERAL |
| AND | WHEYLAND FARMS LIMITED |
| Hearing: | 17, 18 and 19 August 2015 |
Court: | Elias CJ, William Young, Glazebrook, Arnold and O'Regan JJ |
Counsel: | M T Scholtens QC, A N Isac and J B Orpin for Appellant |
Judgment: | 9 June 2016 |
JUDGMENT OF THE COURT
A The appeal is allowed in part.
B The following declarations are made:
(i) The decision of Landcorp Farming Limited’s shareholding Ministers and the Minister for Treaty of Waitangi Negotiations not to intervene in the tender process on behalf of Ngāti Whakahemo as they did on behalf of Ngāti Mākino was a wrongful exercise of a public power because it was made under a material mistake.
(ii) The decision by Landcorp Farming Limited on 28 February 2014 to sell Whārere farm to Micro Farms Limited was a wrongful exercise of a public power because it was made under a material mistake.
CAll other forms of relief claimed by the appellant are declined.
DThe restraining order made by this Court in Order C of its judgment granting leave to appeal (Ririnui v Landcorp Farming Ltd [2015] NZSC 72) is discharged.
E Costs are reserved. The parties may file written submissions as to costs in this Court and in the Courts below if they are unable to reach agreement.
____________________________________________________________________
REASONS
| Elias CJ and Arnold J | [1] |
| Glazebrook J | [147] |
| O’Regan J | [150] |
| William Young J | [193] |
ELIAS CJ AND ARNOLD J
(Given by Arnold J)
Table of Contents
| Para No | |
| Introduction | [1] |
| Factual background | [4] |
| Facts primarily relevant to the error of law grounds | [5] |
| Facts primarily relevant to the bad faith ground | [27] |
| The sale and purchase agreement: cls 21 and 22 | [33] |
| The proceedings | [35] |
| Issues in this Court | [39] |
| Evaluation | [42] |
| The context: land sales by Landcorp | [43] |
| The Crown’s error | [53] |
| The decisions and/or powers at issue | [56] |
| The reviewability of Landcorp’s decision to sell Whārere to Micro | [64] |
| Decisions of Ministers | [77] |
| March 2014 decision | [78] |
| December 2013 decision | [83] |
| Drawing the threads together | [98] |
| The bad faith claim | [100] |
| Relief | [110] |
| Section 21 | [114] |
| An agreement has been concluded | [118] |
| Third party prejudice | [131] |
| Overall assessment | [138] |
| Result | [143] |
Introduction
This is a judicial review case. Judicial review is a supervisory jurisdiction which enables the courts to ensure that public powers are exercised lawfully. In principle, all exercises of public power are reviewable, whether the relevant power is derived from statute, the prerogative or any other source. The courts acknowledge limits, however. These limits are reflected primarily in the notions that the case must involve the exercise of a public power, that even if the court has jurisdiction, the exercise of power must be one that is appropriate for review and that relief is, in any event, discretionary. It is the scope of these limits that is at issue in the present case.
The appellant, Mita Ririnui, is the Chairman of the Ngāti Whakahemo Claims Committee and Te Runanga o Ngāti Whakahemo. He brought judicial review proceedings on behalf of Ngāti Whakahemo in an attempt to halt the sale of a farm property, Whārere, over which Ngāti Whakahemo claim mana whenua. The respondent, Landcorp Farming Ltd (Landcorp), a state-owned enterprise, was the vendor and the interested party, Wheyland Farms Ltd (Wheyland), was the purchaser (by nomination).
In this Court, the principal relief sought by Ngāti Whakahemo seek an order setting aside the agreement for sale and purchase. By way of background to the description of the factual and other context which follows, their contentions may be summarised as follows:
(a)First, the agreement was tainted by bad faith on Landcorp’s part. Were it not for Landcorp’s bad faith, Ngāti Whakahemo would have issued these proceedings before the agreement had been concluded and sought an interim injunction to prevent any sale prior to their resolution.
(b)Second, Landcorp was labouring under an error of law as to Ngāti Whakahemo’s status at all relevant times. But for that error, Landcorp would not have entered the agreement in the way that it did.
(c)Third, the shareholding Ministers refused to intervene in the sale process both because they wrongly thought they had no ability to intervene and also because they were labouring under the same error as Landcorp as to Ngāti Whakahemo’s status.
Factual background
For ease of presentation, we will divide the description of the factual background into two segments – the facts primarily relevant to the bad faith ground and those primarily relevant to the error of law grounds (although there is, of course, no rigid line between the two). In terms of the narrative, the facts relevant to the error of law grounds come first in time, and those relevant to the bad faith ground second.
Facts primarily relevant to the error of law grounds
Landcorp is a state-owned enterprise governed by the State-Owned Enterprises Act 1986 (the SOE Act). Its shareholding ministers are the Minister of Finance and the Minister for State-Owned Enterprises. It owns a large amount of farm land, much of which was, before Landcorp’s incorporation, in Crown ownership and is now subject to the memorial regime in the SOE Act.[1] In 2013 Landcorp owned a large block of land in the Bay of Plenty known as Whārere, on which there were five dairy farms.[2] Whārere, which comprises 404 ha on one title, had been acquired by the Crown between 1880 and 1912. It is subject to a memorial under s 27B of the SOE Act.
[1]Section 27B of the State-Owned Enterprises Act 1986 [SOE Act] provides for the resumption of any land or interest in land by the Crown on the recommendation of the Waitangi Tribunal that such land be returned to Maori ownership. Section 27A provides that the District Land Registrar shall make a note on the certificate of title of any land or interest in land transferred to a state enterprise that the land or interest is subject to s 27B of the Act.
[2]Although the farms had originally been run as five individual farms, since the late 1990s they had been run as two farms by sharemilkers.
In 2013, Landcorp decided to investigate the sale of Whārere as, although profitable for dairy farming, it was no longer a ready fit with Landcorp’s other operations due to its isolation and because its facilities needed some upgrading. In August 2013, before it had embarked on any sale process, Landcorp advised the Office of Treaty Settlements (OTS) that it was investigating the sale of Whārere and asked whether the property was potentially of interest to the Crown for Treaty of Waitangi settlement purposes. Landcorp took these steps in accordance with a protocol which it had agreed with OTS in April 2012 (the Protocol). This Protocol, which is described in its preamble as “not legally binding”, established a process by which Landcorp would give early warning of proposed land sales so that the Crown could consider whether the land was of interest to it for settlement purposes; where land was of interest, the Protocol set out a process by which the Crown would purchase it in order to “land bank” it.[3]
[3]The Protocol and its significance are discussed further below at [45]–[52].
To step back in the narrative for a moment, in February 2008 Ngāti Whakahemo filed a claim, Wai 1471, in the Waitangi Tribunal in respect of an area of land which includes Whārere.[4] According to Mr Ririnui, Whārere is part of the ancestral lands of Ngāti Whakahemo, part of their papakainga (home). In a letter dated 29 May 2012 responding to an enquiry from Ngāti Whakahemo about Wai 1471, OTS expressed the view that all Ngāti Whakahemo’s historical claims had been settled:
The historical claims of Ngāti Whakahemo (including Wai 1471) have been settled through the Affiliate Te Arawa Iwi and Hapū Deed of Settlement which was signed on 2 June 2008. Ngāti Whakahemo is listed as a hapū of Ngāti Pikiao in the Claimant Definition of the Affiliate Te Arawa Iwi and Hapū Deed of Settlement.
A year later, on 16 May 2013, Ngāti Whakahemo’s solicitors wrote challenging the OTS view. They provided a detailed explanation in support of their contention that Ngāti Whakahemo’s historical claims had not been settled, the essential point being that the claims derived from an ancestor not covered by the settlement deed, namely Maruahaira. OTS responded by letter on 28 May 2013 maintaining its view, which prompted Ngāti Whakahemo’s solicitors to write to the Minister for Treaty of Waitangi Negotiations, the Hon Christopher Finlayson QC, on 17 June 2013 drawing his attention to the dispute and summarising the basis for the contention that Ngāti Whakahemo’s claims had not been settled. The solicitors sought a face-to-face meeting with the Minister and OTS to discuss the position. The Minister responded by letter on 16 July 2013, reiterating the Crown’s position that Ngāti Whakahemo’s historical claims had been settled.
[4]There was some dispute about whether Wai 1471 applied to Whārere as it was not specifically mentioned in the claim. Williams J held that Whārere did fall within the claim: see Ririnui v Landcorp Farming Ltd [2014] NZHC 1128 (Williams J) [Ririnui (interim judgment)], at [65]–[78].
The Crown continued to maintain its position that Ngāti Whakahemo’s historical claims had been settled until the present proceedings were issued in March 2014. At that point, the Crown accepted that the claims had not been settled, for the reasons given by Ngāti Whakahemo’s lawyers in their May 2013 letter. The Crown’s persistent adherence to its erroneous view is a central feature of the present proceedings.
Returning to the more immediate narrative, on 12 September 2013 OTS wrote in response to Landcorp’s advice under the Protocol that it was considering selling Whārere. OTS said that the property was not of potential interest for a future Treaty settlement. It also asked that Landcorp advise Ngāti Mākino and Ngāti Whakaue of its intentions for Whārere once it had completed its investigations. OTS said that this advice should be given as a courtesy and not to provide those groups with any preferential treatment.
The significance of Ngāti Mākino is that in the course of negotiating their Treaty settlement with the Crown in 2008, Ngāti Mākino signalled an interest in purchasing, or having a right of first refusal over, Whārere. When the Minister for Treaty of Waitangi Negotiations wrote to Landcorp about this in September 2008, Landcorp advised that the property was not surplus to requirements as it was strategically important and, in any event, Landcorp considered granting rights of first refusal to be unattractive. In the Agreement in Principle which the Crown and Ngāti Mākino signed in October 2008, the Crown agreed to explore with Landcorp the possibility of offering Ngāti Mākino redress in the form of an option to purchase Whārere or some form of joint venture mechanism. In October 2010, after discussions between OTS and Landcorp, the Minister for Treaty of Waitangi Negotiations wrote to the Minister for State-Owned Enterprises seeking a right of first refusal for Ngāti Mākino over Whārere and other Landcorp properties. The Minister for State-Owned Enterprises replied that providing a right of first refusal over Whārere was not a viable commercial option for Landcorp. Ultimately, when the Deed of Settlement between the Crown and Ngāti Mākino was signed on 2 April 2011 (which was a full and final settlement of Ngāti Mākino’s historical claims),[5] rights in relation to Whārere were not included as part of the redress.
[5]Ngāti Mākino Claims Settlement Act 2012, s 11.
However, by 2013 Landcorp had changed its mind as to Whārere’s strategic importance. Once advised that the Crown had no interest in Whārere for Treaty settlement purposes, Landcorp’s board decided to sell the property on the open market. Tender documents were issued in late October 2013. Towards the middle of November 2013, Ngāti Whakahemo became aware of the sale, apparently by chance. On 18 November their solicitors wrote to Landcorp saying that Ngāti Whakahemo had an historical claim covering Whārere (Wai 1471) and registering Ngāti Whakahemo’s interest in the property. They advised that Ngāti Whakahemo had been in contact with the real estate agent handling the tender. Given the terms of the letter, Landcorp sought clarification from OTS. OTS responded by email on 19 November 2013 reiterating the view that Ngāti Whakahemo’s claims had been settled and suggested that Landcorp “treat the letter as it reads, as an expression of interest in the property”. On 25 November 2013, Landcorp replied to the solicitors’ letter repeating OTS’s advice and inviting Ngāti Whakahemo to participate in the tender process “along with other interested parties”.
Around this time, Ngāti Whakahemo engaged a consultant, Mr Willie Te Aho, to act on their behalf in dealing with the Crown over Whārere. On 25 November 2013 Mr Te Aho emailed the Minister of Finance’s office and OTS saying that Ngāti Whakahemo wanted to discuss the commercial purchase of Whārere and the settlement of Wai 1471 in conjunction with that. Ms Houkamau of the Minister’s office replied later that day that the Minister was away but she would rely on OTS in formulating her advice to the Minister. Mr Te Aho responded that same day, saying he would like to meet the shareholding Ministers “before a decision is made by the Landcorp Board”. He said that Ngāti Whakahemo wanted to buy Whārere at a commercially agreed price and explained why it was not prepared to enter the tender process. If he did not receive an undertaking, Ngāti Whakahemo would file a resumption application. Ms Houkamau responded that she would put the matter before the Minister of Finance “to seek his agreement for a clear signal to be sent to relevant Ministers regarding [the] Minister’s expectations of a timely, fair, commercial and [Treaty of Waitangi] cognisant sale of the Landcorp – Whārere Farm”. She indicated that Mr Te Aho’s proposal had merit but noted that there were time constraints. Mr Te Aho replied later the same day.
Following two further emails from Mr Te Aho, Ms Houkamau gave the Minister of Finance’s formal response by email on 2 December 2013. In that email she repeated the Crown’s erroneous view that Ngāti Whakahemo’s claims had been settled and invited Ngāti Whakahemo to participate in the tender. She indicated that if a tender was submitted by the closing date of 4 December 2013, Landcorp would agree to confirmation of funding arrangements by 11 December 2013 (which was, of course, a concession to Ngāti Whakahemo). Ms Houkamau went on to say:
Given the public tender process and in ensuring good faith to those who have already completed tenders or are working within the confines of the advertised date for tenders of 4 December, I understand that Landcorp cannot agree to delay or stop this process.
Mr Te Aho replied on 2 December 2013 saying that as there was no guarantee that Ngāti Whakahemo would secure the land, his “constructive approach” had failed. Later on 2 December, Mr Te Aho sent the email chain to numerous people outlining how he proposed that matters should proceed from this point. One of the steps to be taken was the filing of a resumption claim in the Waitangi Tribunal. This was filed on 4 December 2013 and served on Crown Law, OTS and Landcorp on 5 December 2013.
At the same time as these events were occurring, there were dealings between OTS and Ngāti Mākino about the sale of Whārere. In particular, on 29 November 2013:
(a)OTS wrote to Ngāti Mākino advising that OTS had waived its interest in the farm and that the property was now being advertised for sale. OTS advised Ngāti Mākino that if they were interested in purchasing the property they should contact Landcorp and advise of their interest; and
(b)Ngāti Mākino wrote to the Minister for Treaty of Waitangi Negotiations outlining their concern over the sale and asking to meet him, OTS officials and Landcorp about it. They asked that the tender be called off in the interim.
The tender closed on 4 December 2013. Micro Farms Ltd (Micro) was the highest tenderer, having offered a purchase price of $19.025 million. On 5 December 2013 there was a meeting between officials and the Minister for Treaty of Waitangi Negotiations about the background to the Ngāti Mākino request. Although there were further meetings between 10–13 December 2013 involving Ministers, officials and Landcorp about the tender and Ngāti Mākino’s position, it may be that a decision to halt the tender process had effectively been made earlier. Mr Pamment, who is a director of both Micro and Wheyland Farms Ltd[6] and had the carriage of Micro’s tender, gave uncontradicted affidavit evidence that on 6 December 2013 he and his wife were told by the real estate agent handling the sale that Ngāti Mākino had claimed that Whārere should have been offered to them and that the tender process would be cancelled as a consequence. He said how disappointed they were at this news.
[6]The tender was submitted by Micro Farms Ltd and Wheyland Farms Ltd was subsequently set up the complete the transaction as Micro’s nominated purchaser.
Be that as it may, on 12 December 2013, the Landcorp board met by way of conference call. The board agreed that its decision “came down to an exercise of judgement by the directors, having regard to all the issues identified, to decide whether the proposed course of action was in the interests of Landcorp”. The board then resolved:
To Note that:
(a)[Landcorp] in good faith commissioned a tender process for the sale of Wharere, having made due inquiry of OTS of any treaty claimant interest;
(b)Following confirmation that no treaty claims affected Wharere, the property was marketed for a period of six weeks, with tenders closing on 4th December 2013;
(c)During this process and subsequently, Ngati Makino sought redress for failure of the Crown to include the property in their treaty settlement;
(d)The Shareholding Ministers, at the request of the Minister for Treaty of Waitangi Negotiations, have requested Landcorp to delay acceptance of any tender to allow Ngati Makino the opportunity to purchase the property;
(e)Landcorp had contacted Ngati Makino and accepted an invitation to meet with them on Tuesday 17 December 2013 to explain Landcorp’s position and to explore with them ways in which the two parties could co-operate in any other areas to their mutual benefit.
The board went on to agree the following proposal:
(a)To cancel the current tender;
(b)To give Ngati Makino and other iwi, as agreed by Ngati Makino, first right of refusal to purchase Wharere at the market price, as determined by the current tender process;
(c)That Ngati Makino … respond by 28th February 2014 with settlement on 1st June 2014;
(d)That if the market price is not matched by 3pm on 28th February 2014, then Landcorp will be free to remarket the property by a new tender process, or by private treaty if the current market price is matched;
(e)That the Minister for Treaty of Waitangi Negotiations will issue a press statement explaining the background to the cancellation of the Tender and confirming that Landcorp had acted professionally and in good faith and in accordance with its obligations under the State Owned Enterprises Act 1986;
(f)To ensure the integrity of the current tender process, this proposal would remain open for acceptance by the Shareholding Ministers and the Minister for Treaty of Waitangi Negotiations until 9.00am Tuesday 17 December 2013.
The board received confirmation from the Ministers of their acceptance of its proposal and the board held a further meeting on 18 December 2013, at which it confirmed the first four resolutions and considered the terms of a draft press release to be issued by the Minister for Treaty of Waitangi Negotiations.[7] On 13 December 2013 Ngāti Awa had also written to the Ministers expressing concern about the tender. This resulted in a meeting on 18 December between the Minister for Treaty of Waitangi Negotiations, Ngāti Awa and Ngāti Mākino. Although not invited, Ngāti Whakahemo learnt of this meeting and also attended it. Mr Ririnui indicated that Ngāti Whakahemo was interested in participating in a joint purchase of Whārere, but only on a basis that recognised Ngāti Whakahemo’s mana whenua over the property. This meant that Ngāti Whakahemo required a leadership role in the purchase and in any post-purchase structure.
[7]The 18 December Board meeting is referred to in more detail below at [68].
On 20 December 2013, the Minister for Treaty of Waitangi Negotiations issued a press release welcoming Landcorp’s decision to provide Ngāti Mākino and their neighbouring iwi a further opportunity to purchase the farm. It read in part:
Although Landcorp had followed all the agreed protocols with the Office of Treaty Settlements, the Landcorp Board after considering the exceptional circumstances in this case and the very short period of time since Ngati Makino’s settlement, has agreed to cancel the tender process and allow Ngati Makino and their neighbouring iwi, an opportunity to make a formal commercial offer for the farms.
We recognise that throughout this process, Landcorp has acted appropriately and in good faith, and in accordance with its obligations under the State Owned Enterprises Act.
The upshot was, then, that despite Ms Houkamau’s advice to Mr Te Aho on 2 December 2013 that Landcorp could not agree to stop or delay the process, Landcorp did in fact “cancel” the tender soon after, and offered Ngāti Mākino “first refusal” in respect of Whārere at or above the market price. Landcorp identified a price range based on Micro’s tender and allowed Ngāti Mākino a two month window, expiring on 28 February 2014, to complete negotiations.
On 10 December 2013, Ngāti Whakahemo filed a memorandum in the Waitangi Tribunal seeking an urgent hearing of their application for resumption. The Tribunal held a teleconference on 20 December to address the application. Crown counsel advised the Tribunal that the tender had been cancelled to give Ngāti Mākino and neighbouring iwi an opportunity to make a formal commercial offer for Whārere. The Tribunal gave directions that Ngāti Whakahemo were to advise the Tribunal by 31 January 2014 whether they still sought urgency, the Crown was to file its response by 14 February 2014 and Ngāti Whakahemo to file any reply by 21 February 2014. Ngāti Whakahemo advised the Tribunal on 31 January 2014 that they were still seeking urgency. The Crown sought an extension of time to respond until 4 March 2014, but did not in fact file its response until 6 March 2014, when it advised that Whārere had been sold (these dates are relevant to the “bad faith” claim). The Crown advised that it opposed urgency.
In discussions with Ngāti Mākino in February 2014 concerning the purchase of Whārere, Landcorp indicated that it was prepared to consider ways in which it might assist Ngāti Mākino to fund the purchase. Landcorp also indicated that it would be willing to manage the property for Ngāti Mākino on a sharemilking or other basis. For their part, Ngāti Mākino said that they were interested in involving Ngāti Whakahemo as a partner in the project as Ngāti Whakahemo had the mana whenua interest in Whārere. Ngāti Mākino undertook to talk to Ngāti Whakahemo about participating in the purchase and about resolving their resumption application before the Waitangi Tribunal.
Discussions between Ngāti Mākino and Ngāti Whakahemo did not occur until 24 February 2014, four days before Landcorp’s offer was due to expire.[8] The discussions came to nothing, apparently because Ngāti Whakahemo could not accept that Ngāti Mākino would take the lead role in the project. Ultimately, Ngāti Mākino was not able to put together a viable offer and advised Landcorp on 27 February 2014 that it was withdrawing from the process.
[8]Ngāti Whakahemo were not aware of this deadline: see Ririnui (interim judgment), above n 4, at [45].
Ngāti Whakahemo’s solicitors wrote to Landcorp on 27 February 2014 with reference to Landcorp’s letter of 25 November 2013.[9] The solicitors said that the advice that Landcorp had received from OTS as to the settlement of Ngāti Whakahemo’s claims was incorrect and that the claim to Whārere had not been settled. The letter went on to say:
8.We note that Landcorp cancelled its tender for Wharere Farm late last year as a result of Ngati Whakahemo’s [resumption] application to the Waitangi Tribunal.
9.Notwithstanding the urgent application for resumption, and cancellation of the tender, we understand that Landcorp is prepared to entertain offers to purchase the Wharere Farm from third parties and that it has or may shortly receive such offers. The sale of the Wharere Farm by Landcorp to a third party would prejudice Ngati Whakahemo’s claim to the land under Wai 1471 and the prospects of the land being resumed pursuant to s 8A of the Treaty of Waitangi Act 1975.
10.In order to preserve Ngati Whakahemo’s claim to the Wharere Farm, we ask that Landcorp provide an undertaking that it will not enter into any agreement (whether conditional or unconditional) to sell the Wharere Farm without first giving Ngati Whakahemo 20 working days’ notice of intention to do so by way of written notice to this firm.
11.If an undertaking is not received by this firm prior to Thursday 6 March 2014 at 5.00 pm, Ngati Whakahemo will be obliged to make an urgent application to the High Court for an injunction preventing the sale of the Wharere farm pending the hearing and final determination of Wai 1471.
[9]See above at [11].
Also on 27 February 2014, Mr Te Aho emailed Ms Traci Houpapa, the deputy chair of Landcorp’s board, indicating that Ngāti Whakahemo had approved the issue of proceedings to stop the sale of Whārere and attaching a copy of their solicitors’ letter of the same day. Mr Te Aho said that the discussions with Ngāti Mākino had broken down and suggested that representatives of Ngāti Whakahemo and Landcorp meet on 4 March 2014 for “without prejudice” discussions to see if a way forward could be found. Ms Houpapa forwarded this email to Landcorp’s Chief Executive, Mr Steven Carden. Ngāti Whakahemo were not aware that the deadline for Ngāti Mākino to make an offer was to expire the following day.
Facts primarily relevant to the bad faith ground
On 28 February Mr Carden called the Minister for Treaty of Waitangi Negotiations’ press secretary to say that the Landcorp board would be meeting that afternoon to resolve that, following Ngāti Mākino’s withdrawal, Landcorp would re‑enter negotiations with the highest bidder in the “previously abandoned public tender” (Micro) and that Landcorp expected Ngāti Whakahemo to restart its Tribunal application for resumption. The Landcorp board did meet and, having noted the failure of Ngāti Mākino to put together a bid, as well as Ngāti Whakahemo’s request for an undertaking and threat to issue proceedings to delay or prevent the sale, the board resolved (among other things):
(a)to enter negotiations for the sale of Whārere with Micro, with settlement to be no later than 31 May 2014; and
(b)that Micro would be advised of Ngāti Whakahemo’s Waitangi Tribunal claim (Wai 1471) and of its threatened injunction proceedings.
The same day, Mr McKenzie, whose role as General Manager – Property and Environment involved negotiating and carrying out Landcorp’s various land sales including the tender and negotiations to sell Whārere,[10] telephoned Mr Pamment to advise that Landcorp wished to accept Micro’s tender bid. Mr McKenzie met Mr and Mrs Pamment later in the evening to discuss the purchase. Mr Pamment’s evidence was that he asked Mr McKenzie whether Wai 1471 could have any impact on the sale of the property and was told that OTS had advised that Ngāti Whakahemo did not have a credible claim and Landcorp was relying on that advice.[11] Mr Pamment deposed:
He [Mr McKenzie] also told us that Landcorp would not enter into an agreement to sell the property if it thought Ngati Whakahemo had a credible claim.
Mr Pamment went on to say that Mr McKenzie advised that Landcorp would include a provision in the sale and purchase agreement providing for a leasing arrangement if settlement was delayed.[12]
[10]Mr McKenzie was also one of Landcorp’s seven authorised signatories.
[11]Mr Pamment also said that when he had raised Ngāti Whakahemo’s claim with Mr McKenzie earlier in February, he was told that Landcorp had done its own due diligence before offering Whārere for tender and was satisfied that the claim had no substance.
The following day, Mr Carden contacted Ms Houpapa and suggested that she contact Ngāti Whakahemo and offer a meeting on 7 March 2014. He cautioned against setting an expectation that Landcorp was meeting to negotiate. In an email later that day he referred to meeting with Ngāti Whakahemo’s leadership “to listen to their concerns”. Ms Houpapa emailed Mr Te Aho that evening. Her email said:
The Landcorp board has met and decided not to extend the timeframe. The Landcorp lawyers have been asked to respond to [your solicitors’] letter accordingly.
Steven [Carden] and I are still available to meet with [Mr Ririnui] and [another Ngāti Whakahemo representative] to discuss the situation if they would like – unfortunately, prior commitments mean next Friday 7 March is the earliest we could both meet in Wellington or Rotorua (if that was more convenient) so please let us know.
Willie, you and I both know that wise minds around a table make for good outcomes; e hoa, I’m sorry that, in this case, timeframes have conspired against us.
On 3 March 2014, Landcorp’s solicitors emailed a letter dated 28 February 2014 responding to the request from Ngāti Whakahemo’s solicitors for an undertaking. They declined to give the undertaking, said that Ngāti Whakahemo was adequately protected by the resumption provisions in the SOE Act and asked that they be advised if any application for interim relief was made. Ngāti Whakahemo’s solicitors replied on 4 March 2014 summarising the background and indicating that Ngāti Whakahemo was prepared to participate in an urgent process before the Waitangi Tribunal to have the historic claims covered by Wai 1471 determined as a preliminary point. They renewed their request for an undertaking. On the same day, the solicitors sent copies of their recent correspondence with Landcorp’s solicitors about an undertaking to the shareholding Ministers and to the Minister for Treaty of Waitangi Negotiations. The solicitors again proposed that Ngāti Whakahemo’s historic claims covered by Wai 1471 be determined as a matter of urgency by the Waitangi Tribunal and requested the same undertaking from the Ministers as had been sought from Landcorp. They asked for a response by 5 pm on 6 March 2014.
Mr Te Aho responded to Ms Houpapa’s email of 1 March on 4 March. He agreed to a meeting on 7 March in Rotorua, noted that he understood that Landcorp was “now re-engaging with the highest bidders” and confirmed a discussion which he had had with Ms Houpapa at Waitangi on 4 February, to the effect that Ngāti Whakahemo was keen to do a commercial deal with Landcorp for acquisition of Whārere but had been shut out of the process. He sent a follow up email later that day which indicated that Ngāti Whakahemo was arranging talks with a bank to “firm up lending arrangements”. There was then a series of text messages between Mr Te Aho and Ms Houpapa which indicated that Ngāti Whakahemo was working on putting together a bid. Mr Te Aho telephoned Ms Houpapa on 4 March on a confidential basis and asked her what “ballpark” figure Ngāti Whakahemo would have to offer for Whārere. Ms Houpapa responded that the offer would have to be in the vicinity of $23 million (which was, of course, well above Micro’s tender price of $19.025 million). Mr Te Aho emailed Mr Ririnui and other representatives of Ngāti Whakahemo late on 4 March, confirming the 7 March meeting with Ms Houpapa and Mr Carden and saying “I am advised that if our purchase price is $23m, we will be in the ball park”. Mr Te Aho then discussed some joint venture options involving Ngāti Awa. In a further email he said that he had confirmed that the $23 million was for the land and buildings only (the stock belonged to the sharemilkers). This clarification came about because a Ngāti Awa representative had asked Mr Te Aho whether the $23 million included stock. As Mr Te Aho did not know, he telephoned Ms Houpapa again to ask her, and she responded that the figure did not include stock.
While this was going on, Landcorp was finalising the agreement for sale and purchase of Whārere with Micro. There were several discussions involving variously Mr Carden or Mr McKenzie and Mr Pamment concerning, among other things, the position of Ngāti Whakahemo. On 3 March 2014, Landcorp’s solicitors sent a draft agreement for sale and purchase as well as other documents (including the letter from Ngāti Whakahemo’s solicitors quoted at [25] above) to Micro’s solicitors. Micro signed the agreement on 4 March but raised several queries. The matters raised caused no difficulty from Landcorp’s perspective, and Landcorp representatives proceeded to sign the agreement, Mr McKenzie on 4 March and Mr Kennedy-Good[13] on the morning of 5 March 2014. Shortly after Mr Kennedy‑Good had signed the agreement, Landcorp’s solicitors advised Ngāti Whakahemo’s solicitors that no undertaking would be provided. In addition, on 6 March Mr Finlayson wrote to Ngāti Whakahemo’s solicitors on behalf of himself as Minister for Treaty of Waitangi Negotiations and Attorney-General, as well as on behalf of the shareholding Ministers.[14] He said:
Shareholding Ministers cannot make the undertaking you seek. The powers of Landcorp’s shareholding Ministers are set out in the State-Owned Enterprises Act 1986. The Act is designed so that these powers are exercised at a high-level (e.g. relating to the Statement of Corporate Intent or the State‑Owned Enterprise’s objectives) or in a light-handed way. The Courts have also confirmed that the Act is part of a light-handed regulatory regime that cannot countenance ‘heavy-handed’ ministerial or parliamentary control of the State-Owned Enterprise’s trading activity.
Intervening to provide an undertaking, particularly when Landcorp have declined to do so, is clearly inconsistent with the provisions of the Act.
Ministers did consider it appropriate to promote the concept of a delay with Landcorp in order to provide Ngati Makino and other iwi with the opportunity to purchase the property. We understand Ngati Whakahemo was involved in the discussions and was invited, but declined, to be part of any purchase.
[13]Mr Kennedy-Good was the Company Secretary of Landcorp and an authorised signatory.
[14]A draft of the Minister’s letter was provided to Landcorp for comment.
There was a further text message exchange between Mr Te Aho and Ms Houpapa on 5 March 2014, the terms of which made it clear that Ngāti Whakahemo were still working on putting an offer together. However, on the afternoon of 6 March 2014, Ms Houpapa telephoned Mr Te Aho to advise that Landcorp had concluded a sale and purchase agreement for Whārere with Micro. The meeting scheduled for 7 March between representatives of Landcorp and Ngāti Whakahemo nevertheless went ahead. According to Mr Ririnui’s note of the meeting, Ms Houpapa confirmed her advice of the previous day that Whārere had been sold. Ngāti Whakahemo expressed their “disgust” at Landcorp’s handling of the matter and said that they thought the $23 million figure was well above the value of Whārere. Mr Carden expressed his agreement with that and said that Landcorp was really surprised at the bid.
The sale and purchase agreement: cls 21 and 22
At the time the sale and purchase agreement was concluded, both Landcorp and Micro knew that Ngāti Whakahemo had an application for urgency before the Waitangi Tribunal in relation to its resumption application and had threatened litigation in the High Court, in the context of which it intended to seek an interim injunction halting the sale process. Accordingly, cls 21 and 22 were included in the agreement. These clauses provide:
21 Purchaser’s acknowledgements
21.1 The Purchaser acknowledges and agrees that:
(a)the Property is sold subject to all the interests registered on the computer freehold register for the Property, including, without limitation, the memorial registered under the State‑Owned Enterprises Act 1986 (referred to in further term 21.1(c));
(b)It has fully informed itself as to the nature and effect of:
(i)the memorial registered under section 27A State‑Owned Enterprises Act 1986; and
(ii) section 27B State-Owned Enterprises Act; and
(c)it is aware that the Property is currently subject to a historical Treaty of Waitangi claim (WAI 1471) and that Ngāti Whakahemo has filed an urgent application for resumption of the Property pursuant to section 8A of the Treaty of Waitangi Act 1975 presently before the Waitangi Tribunal (“the Claim”).
22 Intervening Event Clause
22.1If at any time up until settlement, there is a charging order, caveat, or other encumbrance registered against the title to the Property, or an injunction or court order relating to the Claim (“competing interest”) that would prevent registration of a memorandum of transfer in favour of the Purchaser, and the Vendor is unable, or believes that it will be unable, by the Settlement Date to resolve the competing interest, then the parties agree that the Vendor shall grant to the Purchaser a lease of the Property on standard farming terms and conditions to be agreed between the parties. The Lease shall commence on Settlement Date, being 30 May 2014 and, subject to further term 22.4, shall continue until the settlement date specified in accordance with further term of sale 22.2.
22.2The Settlement Date shall be deferred to that date being five (5) working days after the Vendor notifies the Purchaser, in writing, that it is willing and able to settle, or such other date as may be agreed between the parties.
22.3The Vendor will use all reasonable endeavours to pursue withdrawal or resolution of the competing interest by negotiation or litigation, and shall keep the Purchaser fully informed.
22.4If by 30 May 2015 (or such other date as may be agreed in writing between the parties) the Vendor has not been able to resolve the competing interest, then either party may by notice in writing to the other, cancel the contract evidenced by this Agreement.
22.5In no circumstances shall the Vendor be liable to the Purchaser for damages or compensation in the event that settlement is delayed pursuant to the provisions of this clause. If either the Vendor or the Purchaser in the exercise of its rights under this clause cancels this Agreement, then the Purchaser shall be entitled to a refund of its deposit and neither the Vendor nor Purchaser shall have any further right or claim against the other.
The effect of these provisions is that, if the parties were unable to settle on 30 May 2014 (the settlement date) as a result of (relevantly) an injunction or court order in relation to Ngāti Whakahemo’s historic claim, Landcorp would grant Micro a lease to enable it to farm the property. In the meantime, Landcorp would use reasonable endeavours to secure the withdrawal or resolution of Ngāti Whakahemo’s claim by negotiation or litigation. If Landcorp was not able to achieve that by 30 May 2015, either party was entitled to cancel the agreement. If that occurred, Micro would be entitled to the return of its deposit, but apart from that neither party would have any claim against the other.
The proceedings
Mr Ririnui issued the present proceedings on 7 March 2014. He sought an interim injunction preventing the sale of the property pending resolution of the proceedings. In an interim decision dated 26 May 2014, Williams J granted an interim injunction;[15] and, indeed, the transaction has not yet settled as a result of the court orders made to date.
[15]Ririnui (interim judgment), above n 4, at [164].
In his interim decision, Williams J:
(a)Declared that the decision of OTS under the Protocol to disclaim any interest in Whārere for Treaty settlement purposes was invalid and of no effect. This was because OTS’s decision was:[16]
[16]At [87]–[97].
(i)the exercise of a public power affecting Ngāti Whakahemo’s interests, which was reviewable at common law; and
(ii)materially influenced by a fundamental error concerning the status of Ngāti Whakahemo’s claim, which the Judge characterised as an error of law and as (in effect) a failure to take into account a mandatory relevant consideration.
(b)Declined Ngāti Whakahemo’s application for judicial review of Landcorp’s decision to sell Whārere on the basis of a breach of s 9 of the SOE Act or on the basis of a legitimate expectation. Williams J held that s 9 applied to the Crown, not to Landcorp,[17] and that there was no basis for the legitimate expectation argument.[18]
(c)Held that the shareholding Minister had the power to intervene to prevent the sale if to allow it to proceed would have been to permit a breach the principles of the Treaty,[19] and that the Ministers should have explored “with an open mind and in good faith” how the Crown’s obligations to Ngāti Whakahemo, as a group with an unsettled claim in relation to Whārere, might have been satisfied.[20]
(d)Ordered the Minister for Treaty of Waitangi Negotiations to:
(i)reconsider whether Whārere should be dealt with under the Protocol given that Ngāti Whakahemo had an extant claim in relation to Whārere; and
(ii)consult with Ngāti Whakahemo about the possible acquisition of Whārere.
(e)Held that the Court had power to set aside the agreement for sale and purchase, but did not do so.[21] Rather, the Judge delayed settlement for two months to enable the other steps to be taken.[22]
(f)Directed that there be a further hearing two months later.
[17]At [101]–[109].
[18]At [110]–[114].
[19]At [136].
[20]At [146].
[21]At [157]–[163].
[22]At [164].
The Crown and Landcorp immediately lodged appeals. Despite that, the Minister for Treaty of Waitangi Negotiations did reconsider whether, in terms of the Protocol, Whārere was of interest to the Crown for Treaty settlement purposes. He concluded that it was not of interest, either in whole or in part. This was because other Crown properties within Ngāti Whakahemo’s area of interest were available and he considered that Whārere was much more valuable than any likely settlement with Ngāti Whakahemo. At the final hearing before Williams J, there was no challenge to the Minister’s reconsideration. Rather, Ngāti Whakahemo sought and were granted leave to amend their pleadings to include the bad faith claim. In his final judgment, Williams J dismissed that claim.[23] He found that it was unnecessary to reach any conclusion as to the existence of bad faith because such a finding would not have assisted Ngāti Whakahemo. Their claim depended on the attitude adopted by the Ministers to their acquisition of Whārere, and the Ministers had refused to provide any assistance. Landcorp’s stance was accordingly irrelevant.[24]
[23]Ririnui v Landcorp Farming Ltd [2014] NZHC 3402 (Williams J) [Ririnui (HC final judgment)].
[24]At [85]–[87].
The hearing before the Court of Appeal addressed the various appeals and cross-appeals.[25] The Court held that:
[25]Attorney-General v Ririnui [2015] NZCA 160 (Harrison, Stevens and French JJ) [Ririnui (CA)].
(a)The advice given by OTS under the Protocol (and subsequently) to the Ministers (and later to Landcorp) that Ngāti Whakahemo’s claim was settled was wrong in law but was not justiciable.[26] It was not justiciable because:
(i)The Protocol was not legally binding and so did not create any legally enforceable rights.[27]
(ii)OTS’s erroneous advice did not affect Ngāti Whakahemo’s rights or have the potential to do so, directly or indirectly. Ngāti Whakahemo’s rights in relation to Whārere were already protected by the resumption memorial.[28]
(iii)The subject matter – Treaty settlement – involved policy and political decisions and was inappropriate for review.[29]
Even if the OTS advice was justiciable, it was incapable of having any legal effect and thus was not of any practical consequence to Ngāti Whakahemo.[30]
(b)Neither the shareholding Ministers nor the Minister for Treaty of Waitangi Negotiations had the power to intervene in March 2014 to prevent the sale of the property. By then, Landcorp had entered into a contractually binding commitment to sell Whārere. In any event, such intervention was inconsistent with the SOE Act.[31]
(c)Although Ms Houpapa’s conduct was misleading, the test for bad faith was not met. But even if it had been, Ngāti Whakahemo did not suffer any prejudice as a consequence because, as a matter of timing, the conduct did not prejudice the integrity of the contracting process. Moreover, even if there was bad faith, it did not affect Ngāti Whakahemo’s rights.[32]
Issues in this Court
[26]At [40].
[27]At [29].
[28]At [30]–[34].
[29]At [35].
[30]At [37].
[31]At [62].
[32]At [99].
This case has developed as it progressed through the Courts, for understandable reasons. The bad faith allegations did not assume prominence until the final judgment of Williams J as the relevant factual information only became apparent when all respondents’ affidavit and documentary evidence became available to Ngāti Whakahemo; Ngāti Whakahemo’s challenge under the Protocol was abandoned following the reconsideration by the Minister for Treaty of Waitangi Negotiations after the delivery of the interim judgment,[33] (although the Court of Appeal still addressed the Protocol in the context of the Crown’s cross-appeal).
[33]See above at [37].
The result is that the three causes of action in the fourth amended statement of claim remain alive, but in truncated form:
(a)The first cause of action alleges that Landcorp’s entry into the agreement for sale and purchase was tainted by bad faith.
(b)The second cause of action alleges that the shareholding Ministers’ decision on 6 March 2014 not to give the undertaking sought by Ngāti Whakahemo or to take other steps to protect Ngāti Whakahemo’s interests breached s 9 of the SOE Act and was based on the erroneous view that they had no power to intervene.[34]
(c)The third cause of action alleges that the advice of OTS to Landcorp on 19 November 2013 that Ngāti Whakahemo’s Wai 1471 claim had been settled was erroneous and that the erroneous advice materially affected all consequent decisions of Landcorp and the shareholding Ministers.
[34]See above at [31].
When Ngāti Whakahemo sought and obtained leave to appeal to this Court, the approved grounds of appeal were whether the Court of Appeal was correct to refuse the relief sought based on:[35]
(a)the claimed bad faith on the part of Landcorp;
(b)the acknowledged error by OTS in its advice to Landcorp; and
(c)the failure of the shareholding Ministers to intervene.
Evaluation
[35]Ririnui v Landcorp Farming Ltd [2015] NZSC 72.
In argument before this Court, Ms Scholtens QC for Ngāti Whakahemo placed much emphasis on the allegations in the first cause of action that Landcorp’s entry into the agreement for sale and purchase was tainted by bad faith on the part of Landcorp personnel and so should be set aside. However, we propose to deal first with issues raised in the second and third causes of action. We will discuss the issues under the following headings:
(a)The context: land sales by Landcorp;
(b)The Crown’s error;
(c)The decisions and/or powers at issue;
(d)The reviewability of Landcorp’s decision to sell Whārere to Micro;
(e)The Ministers’ decisions; and
(f)Drawing the threads together.
We will then consider the bad faith claim and the issue of relief.
The context: land sales by Landcorp
As the Treaty of Waitangi acknowledges, land is of vital importance to Maori. Parliament has recognised the deep significance to Maori of their ancestral lands in a variety of ways, such as in the preamble to Te Ture Whenua Maori Act 1993 which refers to land as “a taonga tuku iho of special significance to Maori people” and in the resumption provisions of the SOE Act and the Treaty of Waitangi Act 1975. The resumption provisions (ss 27–27D of the SOE Act and ss 8A–8H of the Treaty of Waitangi Act) were enacted in 1988 following the Court of Appeal’s well‑known decision in the Lands case by way of settlement of that litigation.[36] As a result of their enactment, the Crown was able to transfer Crown land to Landcorp and other state-owned enterprises. Not only do the resumption provisions allow land which is subject to a claim under s 6 of the Treaty of Waitangi Act to be transferred by the Crown to a state-owned enterprise, they also allow a state-owned enterprise to transfer land to any other person.[37] However, where land is transferred by the Crown to a state-owned enterprise, a memorial must be noted on the certificate of title, as follows:[38]
Subject to section 27B of the State-Owned Enterprises Act 1986 (which provides for the resumption of land on the recommendation of the Waitangi Tribunal and which does not provide for third parties, such as the owner of the land, to be heard in relation to the making of any such recommendation).
Although the resumption process ignores the interests of third party owners, it does, of course, provide for compensation to be payable in respect of land acquired by the Crown under the resumption process.[39]
[36]New Zealand Maori Council v Attorney-General [1987] 1 NZLR 641 (HC and CA) [the Lands case]. See also New Zealand Maori Council v Attorney-General [1989] 2 NZLR 142 (CA). In his judgment in the first case, Cooke P noted the “transcendent importance” of land and the Treaty of Waitangi to Maori: at 658. Other members of the Court also acknowledged the fundamental significance of land to Maori: at 674 per Richardson J, at 700 per Casey J and at 717 per Bisson J. For a fuller account of the background to, and operation of, the resumption provisions see Matthew Palmer The Treaty of Waitangi in New Zealand’s Law and Constitution (Victoria University Press, Wellington, 2008) at 190 and following.
[37]SOE Act, s 27.
[38]Section 27A.
[39]Section 27C.
The Waitangi Tribunal’s powers to recommend resumption are set out in ss 8A–8H of the Treaty of Waitangi Act. Initially the Tribunal makes an interim recommendation, which becomes final after a 90 day period if the parties have not resolved the matter.[40] Once the recommendation has become final, the Crown is obliged to resume the land and return it to Maori ownership.[41] As it has turned out, the Crown has actively opposed the making of resumption orders in hearings before the Tribunal, and the Tribunal itself has identified difficulties in making such orders.[42] The Tribunal has not yet made a resumption order, although it came close to doing so on at least one occasion.[43]
[40]Treaty of Waitangi Act 1975, s 8B.
[41]SOE Act, s 27B.
[42]See, for example, Waitangi Tribunal The Ngāti Kahu Remedies Report (Wai 45, 2013), where the Tribunal noted the difficulty of granting resumption orders in areas where there are overlapping customary rights or interests: at 99–100.
[43]Waitangi Tribunal The Turangi Township Remedies Report (Wai 84, 1998) at [5.5.3] where the Tribunal recommended the return of memorialised land. This triggered the 90 day period under s 8B of the Treaty of Waitangi Act. The parties reached agreement before the period expired.
Although the memorial process facilitated the sale by Landcorp and other state-owned enterprises of land to third parties, it did not facilitate the efficient negotiation of Treaty claims. Williams J described the problem as follows:[44]
On the one hand, claimants wanted access to [state-owned enterprise] lands for their settlements and OTS needed certainty over what lands might be available to be offered in the negotiation. On the other hand, Landcorp needed to be free in the ordinary course of business, to sell lands it no longer wished to retain. While the memorial regime facilitated on-sale (as it was designed to do), it did nothing to provide certainty to OTS. This was making OTS’ job difficult.
In an effort to resolve this difficulty, Landcorp and the shareholding Ministers (on behalf of the Crown) entered into an agreement in September 2007 (known as the Protected Land Agreement) under which Landcorp agreed not to offer any of its properties for sale for four years (the moratorium)[45] and (broadly speaking) the Crown agreed to purchase specified properties for use in Treaty settlements at agreed values. The properties specified were protected and were to remain in Landcorp’s ownership and under its care and management until required by the Crown. Half of the purchase price was to be paid up front, and the remainder was to be funded from diverted dividends. The Crown took redeemable preference shares in Landcorp to the value of the amounts actually paid from time to time, presumably to reflect the fact that the properties remained in Landcorp’s possession. The agreement was subsequently amended on several occasions.
[44]Ririnui (interim judgment), above n 4, at [24].
[45]The moratorium was later extended by approximately six months.
For present purposes, two of the recitals to the Protected Land Agreement are noteworthy. They provide:
C.Landcorp’s primary business is sustainable and commercially successful pastoral farming. Landcorp sells land from time to time to maintain an optimal portfolio of properties to align with value for farming use and livestock production requirements.
D.Landcorp has identified land intended for sale. The Crown wishes to protect from sale, that land which is sensitive to public policy issues, being as defined in Clause 1 of this Agreement (“Protected Land”).
The “public policy issues” referred to encompassed the need to protect land for Treaty claim purposes.
On 1 April 2012, following the expiry of the moratorium, Landcorp and OTS (rather than the shareholding Ministers as occurred with the Protected Land Agreement) entered into the Protocol. The Protocol is expressed to be not legally binding. Recital D provides:
Although this Protocol is not legally binding, both Parties are committed to following the policies and procedures it defines. This commitment is indicated by the signatures below. The signatures represent each Party’s intention to follow the policies and to maintain a process of consultation about issues which affect each Party’s responsibilities.
In relation to Whārere, Landcorp was expected under the Protocol to give OTS advance warning of its intention to sell. Although the various steps under the Protocol are rather more complex than described here, in essence OTS was required to indicate whether the Crown was interested in the land for Treaty settlement purposes. If OTS had indicated an interest, Landcorp would have been required to set the property aside for purchase by the Crown in accordance with the pricing mechanism in the Protocol. However, because OTS indicated that the Crown had no interest in the property, Landcorp was free to sell it (albeit that it was subject to the resumption provisions).
These various arrangements between the Crown and Landcorp recognise the significance of land to Maori and the need for the Crown to have access to substantial parcels of land to meet its Treaty obligations.[46] They are reflected in Landcorp’s Statement of Corporate Intent.[47] In particular, in its 2013–2016 Statement of Corporate Intent, Landcorp:
(a)describes its business activities over the upcoming three years as including optimising its farmland portfolio by (among other things) “selling non-strategic properties including land of higher value than farming and land sought by iwi (subject to the requirements of the new protocol agreed between Landcorp and the OTS)”;[48]
(b)notes the arrangements made under the Protected Land Agreement:[49]
Under the Protected Land Agreement (“PLA”), the shareholder has purchased redeemable preference shares in Landcorp up to the agreed market value of land that has been protected from sale. This share capital has been provided by a combination of one-off capital injection ($52.2 million) with the balance ($52.347 million) being achieved by 31st October 2010 through dividend diversions.
(c)records that where the Crown requires it to undertake activities or assume obligations “which will have a negative effect on Landcorp’s profit or net worth, or are of a non-commercial nature”, Landcorp would seek compensation to ensure that its commercial position was maintained.[50] This included “compensation for retaining properties normally intended for sale but which might be required by the Crown to fulfil Treaty of Waitangi obligations”.
[46]The Crown’s Treaty obligations are not limited to providing redress for historical wrongs, but, of course, go much further than that. Moreover, while resumption orders and formal settlements following negotiation are mechanisms by which the Crown can meet its Treaty obligations in relation to land, facilitating the commercial purchase of ancestral lands is also a means by which the Crown can meet its on-going Treaty obligations to particular iwi or hapu. See further at [50]–[51] below.
[47]See SOE Act, s 14.
[48]Emphasis added.
[49]The Protected Land Agreement required Landcorp to incorporate the arrangements reflected in the agreement in, among other things, its Statement of Corporate Intent “in a fully transparent manner”: cl 25.
[50]See SOE Act, s 7.
Section 5(2) of the SOE Act indicates the importance of a statement of corporate intent to the operations of a state-owned enterprise. It provides:[51]
[51]Emphasis added.
All decisions relating to the operation of a State enterprise shall be made by or pursuant to the authority of the board of the State enterprise in accordance with its statement of corporate intent.
Section 14 governs the content and preparation of a statement of corporate intent. Relevantly, it provides:
14 Statement of corporate intent
(1) The board of every State enterprise shall deliver to the shareholding Ministers a draft statement of corporate intent not later than 1 month before the commencement of each financial year of the State enterprise.
(2) Each statement of corporate intent shall specify for the group comprising the State enterprise and its subsidiaries (if any), in respect of that financial year and each of the immediately following 2 financial years, the following information:
(a) the objectives of the group:
(b) the nature and scope of the activities to be undertaken:
…
(e)the performance targets and other measures by which the performance of the group may be judged in relation to its objectives:
…
(i) any activities for which the board seeks compensation from the Crown (whether or not the Crown has agreed to provide such compensation):
Against this background, it would not have been surprising if Landcorp had given some consideration to the viability of Ngāti Whakahemo’s claim and perhaps it did. Indeed, Mr Pamment of Wheyland said that he was told by Landcorp’s Mr McKenzie in February 2014 that OTS had indicated that it had no interest in the farm for Treaty settlement purposes. Mr Pamment also said that Mr McKenzie:
… [T]old us that Landcorp had done its own due diligence before offering the property for sale by tender and they were satisfied that Ngāti Whakahemo’s claim had no substance.
Mr Pamment further said that Mr McKenzie later told him that Landcorp would not have proceeded with the sale of the farm if it had thought that Ngāti Whakahemo had a credible Treaty claim.
I have some reservations about the significance of Mr Pamment’s evidence. It must have been based on his recollection some months after the events of the remarks in question. The words he attributed to Mr McKenzie are not without ambiguity particularly when looked at in light of what we know about the relationship between the Crown generally (including OTS and the relevant Ministers) and Landcorp. In terms of the Treaty settlement process, Landcorp’s role was, as I have noted, to ascertain the view of the Crown and to act on that view. In this context, “due diligence” may have meant no more than engaging in the Protocol process and later with Ministers and only proceeding with the sale once clearance to do so had been given. There is no direct evidence of an independent assessment by Landcorp of the strength of the Ngāti Whakahemo claim; this in a context in which, if there had been such an assessment, I would have expected that there would be an associated document trail.
In the end, I do not think it matters whether Landcorp directly engaged with the merits of the Ngāti Whakahemo claim. If it did not – which I think is
probable – this supports my view of Landcorp’s limited involvement with the Treaty component of the sale process. If there was such an assessment, I would see it as referable to its own commercial interests and not one carried out on behalf of the Crown in respect of the Crown’s Treaty obligations.
A conclusion
What is said to give the case a public law character is the impact of the process on the Treaty obligations of the Crown towards Ngāti Whakahemo.
I consider that the statutory context points strongly against a public categorisation of a decision by a state-owned enterprise to enter into a contract, and that this is particularly so where the contract relates to the sale of memorialised land.
As well, when the facts are examined, I think it becomes plain that the relevant public obligations in relation to the Treaty were recognised on all sides as being the responsibility of the Crown as was the relevant decision-making associated with those obligations.
From all of this it follows – at least to my way of thinking – that Landcorp’s decision-making was not of a sufficiently public character to warrant judicial review.
Section 21 of the State-Owned Enterprises Act 1986
I have already referred to s 21. Its legislative history is reviewed by Elias CJ and Arnold J.[189] As they note, cl 20 of the State‑Owned Enterprises Bill 1986 (71‑1), provided:
Nothing in this Act shall affect the validity or enforceability of any act, omission, contract, deed, right or obligation carried out, entered into, obtained, or incurred by a State enterprise in breach of any of the provisions of this Act.
They also record the view of Professor Taggart that the amendment:[190]
… shows that Parliament did not intend to exclude the Court’s review powers in relation to compliance with Part I. On the contrary, the possibility of Court review was recognised and deliberately left open.
I have no difficulty with this view of s 21. It is perfectly clear on its wording that it applies only to protect contracts entered into by state-owned enterprises.
[189]Above at [114]–[117].
[190]Above at [115].
Given the legislative history, I do not accept that s 21 is intended only to operate between the parties to a contract so as to prevent pt 1 arguments being raised either by the state-owned enterprise or a contracting party. The original cl 20, if enacted, would have been of general application and would thus have encompassed (and precluded) amongst many other things, third party challenges to contracts entered into by state-owned enterprises. Section 21, as enacted, is confined to excluding challenges to contracts but there is no reason to suppose that it is restricted to challenges of the kind suggested by Elias CJ and Arnold J.[191] Indeed, there are good policy reasons for not so confining it. Allowing contracts entered into by a state-owned enterprise to be challenged on grounds which are not available in relation to contracts entered into by other traders has the potential to put state-owned enterprises at a competitive disadvantage in a way which is not consistent with the policy underlying s 4(1)(a).[192] Against that background, s 21 can be seen as a compromise, only excluding judicial review in relation to contracts.
[191]Above at [117].
[192]This was an important theme in Lab Tests, above n 185.
I also do not accept that it is correct to dismiss the application of s 21 on the basis that the present judicial review proceedings are not founded on inconsistency with pt 1 of the SOE Act or the statement of corporate intent. It is pt 1 of the SOE Act and the statement of corporate intent which establish the principles governing the operations of a particular state-owned enterprise. There is the s 4(1)(c) objective to exhibit “a sense of social responsibility”. It is s 9 which provides that nothing in the SOE Act permits the Crown to act inconsistently with the principles of the Treaty of Waitangi. Both provisions appear in pt 1. As Elias CJ and Arnold J note, the relevant statement of corporate intent refers to the arrangements between the Crown and Landcorp as to the sale of land in which Maori are interested and this statement of corporate intent features in their reasons at [98](a).
Given the overall policy of the SOE Act, I do not think it right to read down s 21 and to avoid its application on the basis of public law obligations which are said to be outside of pt 1 and the statement of corporate intent even though they cover the same ground. I doubt if it would have occurred to those responsible for the drafting of s 21 that it could be avoided so simply.
I accordingly see s 21 as an answer to the challenge to the contract with Wheyland.
Solicitors:
Koning Webster Lawyers, Papamoa for Appellant
Buddle Findlay, Wellington for First Respondent
Crown Law Office, Wellington for Second Respondent
Cooney Lees Morgan, Tauranga for Interested Party
[33]–[34].
354–356.
114
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