WI HUATA as trustee of TE HUAWHENUA TRUST of 1460 Maraekakaho Road, Bridge Pa, Hastings AND MANGAROA 26N2 TRUST an Ahu Whenua Trust under Te Ture Whenua Maori Act 1993 with its registered office at 33 Heuheu...
[2024] NZHC 2756
•26 September 2024
IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY
I TE KŌTI MATUA O AOTEAROA AHURIRI ROHE
CIV-2023-441-000074
[2024] NZHC 2756
UNDER Part 18 of the High Court Rules 2016,
section 3 of the Declaratory Judgments Act 1908 and the Court’s equitable jurisdiction
IN THE MATTER OF
Mangaroa 26N2 (Lot 2 Deposited Plan 1996) – Cancellation of Lease
BETWEEN
WI HUATA as trustee of TE HUAWHENUA TRUST of 1460 Maraekakaho Road, Bridge Pa, Hastings
Plaintiff
AND
MANGAROA 26N2 TRUST an Ahu
Whenua Trust under Te Ture Whenua Maori Act 1993 with its registered office at
33 Heuheu Street, Taupō Defendant
P C Raikes LIMITED an incorporated company with its registered office at 303 Frimley Avenue, Hastings
(Interested Party)
Hearing: 4 June 2024; further submissions 23 July 2024 Counsel:
T L Barker and Z T Mora for Plaintiff L A Foley for Defendant
Judgment:
26 September 2024
JUDGMENT OF LA HOOD J
HUATA v MANGAROA 26N2 TRUST [2024] NZHC 2756 [26 September 2024]
An application to strike out a tikanga claim
[1] The Mangaroa 26N2 Trust (the defendant) applies to strike out these proceedings, or in the alternative summary judgment or security for costs. The proceedings seek a declaration and damages for a breach of the “state of ea” (balance) between the plaintiff and defendant. The plaintiff is Mr Wi Huata in his capacity as trustee of Te Huawhenua Trust (the plaintiff). The defendant is an Ahu Whenua Trust under Te Ture Whenua Maori Act 1993.
Background and procedural history
[2] The defendant owns Lot 2 Deposited Plan 1996, formerly known as Mangaroa 26N2 (the Block). The Block is in Hastings.
[3] The plaintiff started occupying the Block in 1987. Between 1987 and 1999, this occupancy was pursuant to an oral lease agreement with the defendant. During those 12 years, disputes arose. In response, on 6 September 1999, the parties entered into a Heads of Agreement to Lease (the Heads of Agreement) providing for a 20-year lease from 1 October 1999. The Heads of Agreement included an option to purchase clause.
[4] The plaintiff has attempted to purchase the Block and enforce the Heads of Agreement during his occupancy. In 2019, the now-defendant applied to the High Court for a declaration that the lease with the now-plaintiff was at an end and the defendant sought possession of the Block. On 8 February 2022, Grice J decided:1
(a)the option to purchase was not valid and binding;
(b)there was no need to consider whether the option to purchase clause had been breached because the clause was not valid and binding;
(c)it was therefore unnecessary to consider whether an order for specific performance should be granted, but if the option had been valid and
1 Mangaroa 26N2 Trust v Huata [2022] NZHC 113 at [191].
binding, the Court would have decided that specific performance was not available in the circumstances; and
(d)the defendant was not required to pay the plaintiff for improvements made to the Block and the value of those improvements.
[5]Grice J made declarations that:2
(a)the lease expired on 30 September 2019 and the tenant is holding over without consent; and
(b)for the possession of the Block.
[6] The plaintiff continued to occupy the Block until approximately February 2024.3
Submissions
For the defendant
[7] The defendant submits that the entire proceedings should be struck out and/or that summary judgment should be entered in favour of the defendant; or if any part of the proceedings survives, security for costs should be ordered; and costs should be awarded to the defendant.
[8] The defendant acknowledges that there is no precedent for the alleged breach of the state of ea, but submits that the factual basis of the claim has already been litigated and as such the claim should be struck out.
[9] The defendant submits that because the High Court ordered that the defendant was able to take possession of the Block in February 2022, the defendant cannot be liable to the plaintiff for losses resulting from that order. The defendant submits that
2 At [192] and [193].
3 See Mangaroa 26N2 Trust v Huata HC Napier CIV-2019-441-018, 5 February 2024 (Minute of Palmer J).
as the plaintiff breached the Heads of Agreement over the course of his occupancy of the Block, he cannot succeed in enforcing an oral agreement to redress the state of ea.
[10] The defendant submits the High Court decision of EBS v CAS establishes4 that the res judicata issue can be treated as either cause of action estoppel, issue estoppel, or the rule in Henderson v Henderson5 that it is an abuse of process to commence a proceeding in reliance on issues or facts that should have been raised in a previous proceeding.6
[11] The defendant says an issue estoppel arises as there has been a final judgment between identical parties dealing with identical subject matter. In the defendant’s submission, the only difference in the present pleadings compared to those before Grice J is the pleading of the obligation being oral rather than in the Heads of Agreement. However, even if the subject matter of the two proceedings is not sufficiently similar to raise an issue estoppel, the rule in Henderson v Henderson prevents the plaintiff advancing a claim that could have been advanced in the earlier proceedings.
[12] The defendant submits that the claims fall within a limitation period under the Limitation Act 1950. The claim alleges breaches of the state of ea in 1995, 1998, 2011 and 2019.7 Only the 2019 breach could fall within a six or 12-year period. Further, the defendant says the proceeding is vexatious or frivolous because of how late it has been raised, and as such it should not be permitted to proceed.
[13] For those reasons, the defendant submits there is no reasonably arguable cause of action and the proceedings should be struck out, or for the same reasons, summary judgment should be entered as the claim cannot succeed.
4 EBS v CAS [2014] NZHC 2929 at [25].
5 Henderson v Henderson (1843) 3 Hare 100, 67 All ER 313 (Ch).
6 EBS v CAS, above n 4, at [54] citing Beattie v Premier Events Group Ltd [2014] NZCA 184, (2014) 21 PRNZ 826 at [45].
7 The dates of the attempted sale and purchase of the Block.
For the plaintiff in substantive/respondent in interlocutory
[14] The plaintiff submits that the substantive issue is one of tikanga Māori and because causes of action based on tikanga are a developing area of law, they should not be stifled summarily. The plaintiff’s claim seeks a declaration that the defendant breached the state of ea; an order that the trustees of the defendant failed to facilitate the sale of the Block to the plaintiff on agreed terms; damages;8 and costs.
[15] The plaintiff claims that the defendant breached the state of ea reached by the Agreement by declining all of his attempts to purchase the Block pursuant to the option to purchase clause. The disruption to the state of ea has not been restored by way of tikanga. The plaintiff says it is now appropriate to put the claim before the Court given it has an inherent jurisdiction to hear matters of tikanga and this claim raises significant issues of tikanga not previously tested by the courts.
[16] The plaintiff submits that neither strike out nor summary judgment are appropriate. The statement of claim cannot be characterised as disclosing no reasonably arguable cause of action or case. The amended statement of claim pleads a breach of tikanga Māori by way of the principle of ea, which is a genuine claim for determination. As the Law Commission | Te Aka Matua o Te Ture noted in its recent He Poutama report, tikanga must not be shoehorned into a Pākehā law framework.9 Accordingly, there is no complete answer to the claim such that strike out or summary judgment is appropriate.
[17] The plaintiff notes that when the parties entered into the Heads of Agreement in 1999, s 228 of Te Ture Whenua Maori Act was in force,10 although the plaintiff says it only applied to Māori freehold land. The Block is general land owned by Māori, and therefore s 228 did not apply and the applicant was able to agree to a sale, unrestricted by the provisions of Te Ture Whenua Maori Act.
[18] The plaintiff submits that cause of action estoppel, issue estoppel and the rule in Henderson v Henderson do not arise because the issue regarding tikanga and the
8 The quantum of damages sought is unspecified.
9 Law Commission | Te Aka Matua o te Ture He Poutama (NZLC SP24, 2023) at [8.39]–[8.61].
10 Repealed by Te Ture Whenua Maori Amendment Act 2002, s 58(g).
breach of ea have not been previously pleaded or determined. There is also no abuse of the Court’s processes.
Relevant law
Strike out
[19] The application for strike out relies on r 15.1 of the High Court Rules 2016. Rule 15.1 provides:
15.1 Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it—
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
(2)If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.
(3)Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4)This rule does not affect the court’s inherent jurisdiction.
[20] The leading authorities in respect of strike out principles are Attorney-General v Prince11 and Couch v Attorney-General.12 They emphasise13 the need for courts to take a cautionary approach to disposing of proceedings through strike out and uphold a high threshold. McGechan on Procedure summarises the principles from those leading cases as follows:14
11 Attorney-General v Prince [1998] 1 NZLR 262 (CA).
12 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
13 See also Smith v Fonterra Co-operative Group Ltd [2024] NZSC 5, [2024] NZRMA 202 at [83]– [85].
14 Jessica Gorman and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR15.1.02(1)].
(a)Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation;
(b)The cause of action must be clearly untenable;
(c)The jurisdiction is to be exercised sparingly, and only in clear cases;
(d)The jurisdiction is not excluded by the need to decide difficult questions of law, requiring extensive argument; and
(e)The Court should be particularly slow to strike out a claim in any developing area of the law.
Res judicata — the relevant principles
[21] The doctrine of res judicata encompasses cause of action estoppel and issue estoppel. It is not clear that it directly encompasses the rule in Henderson, namely that a party is precluded from raising in subsequent proceedings matters which were not but could, and should, have been raised in earlier proceedings.15
[22] The leading text on res judicata, Spencer Bower and Handley: Res Judicata, states that alongside cause of action estoppel and issue estoppel, there is “the extended doctrine based on abuse of process”.16 This is said to have been “cross fertilised” with Henderson in the decision of Greenhalgh v Mallard,17 with the extended doctrine attributed to Henderson.18 The rule has been described in a number of cases as falling within the broader category of res judicata rather than existing as a separate concept.19 But some decisions have doubted whether the rule falls within the doctrine of res
15 EBS v CAS, above n 4, at [25].
16 Patrick Keane Spencer Bower and Handley: Res Judicata (6th ed, LexisNexis, London, 2024) at [26.01].
17 Greenhalgh v Mallard [1947] 2 All ER 255 (CA) at 257.
18 Keane, above n 16, at [26.03]
19 See the cases discussed in Johnson v Gore Wood & Co [2000] UKHL 65, [2002] 2 AC 1 at 31, including Vervaeke (formerly Messina) v Smith [1983] 1 AC 145 (HC) where Lord Hailsham described the rule in Henderson v Henderson as “both a rule of public policy and an application of the law of res judicata”; and EBS v CAS, above n 4, at [25] where counsel submitted that res judicata comprised cause of action estoppel, issue estoppel and the rule in Henderson v Henderson.
judicata.20 I consider the issue is largely academic. As stated in Johnson v Gore Wood & Co, although distinct from cause of action and issue estoppel, the rule has much in common with them, sharing the underlying public interest in finality in litigation and that a party should not be twice vexed in the same matter.21
[23] Turning to the applicable principles of issue estoppel, I gratefully adopt the following summary from Hinton J’s judgment in Ngāti Paoa Trust Board v Auckland Council:22
[149] Res judicata is a doctrine which estops a party from disputing a final decision on the merits that has been made by a New Zealand judicial tribunal of competent jurisdiction. Issue estoppel applies to fundamental issues determined in an earlier decision that form the basis of the judgment. The issue must be precisely the same as that previously determined. It must be an issue that is an essential step in the reasoning of the judgment, without which the judgment could not stand. The issue may be one of fact or law.
[150] To be estopped, a party must have been a party to the prior proceedings or a privy of such a party. One party is a privy of another if they had such a union or nexus, community or mutuality of interest, that to estop would produce a fair and just result.
…
[152] The policy rationales for issue estoppel are (a) that litigants should not be vexed twice on the same point and (b) the public interest in finality to litigation. However the overriding consideration is whether the estoppel works justice and not injustice.
…
[174] Finally I need to consider whether it is ultimately in the interests of justice as between the parties, having regard to the purpose of issue estoppel, to grant the estoppel.
20 Barrow v Bankside Members Agency Ltd [1996] 1 All ER 981 (CA) at 260 where it was said that the rule in Henderson v Henderson was “not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel” and instead was described as “a rule of public policy based on the desirability … that litigation should not drag on for ever”; Bradford & Bingley Building Society v Seddon [1999] 4 All ER 217 (CA) at 225, where Auld LJ stated that “it is important to distinguish clearly between res judicata and abuse of process not qualifying as res judicata, a distinction delayed by the blurring of the two in [Henderson]”; and Rafiq v Secretary for the Department of Internal Affairs of New Zealand [2014] NZHC 2064 at [18], where Asher J concluded that “Henderson v Henderson is now seen as different from res judicata or issue estoppel”.
21 Johnson v Gore Wood & Co, above n 19.
22 Ngāti Paoa Trust Board v Auckland Council [2022] NZHC 893, (2022) 23 ELRNZ 775 (footnotes omitted).
[24] In relation to the principle referred to at [174] of Ngāti Paoa Trust Board, it seems that even where all the elements of issue estoppel have been established, the claim can be allowed to proceed if there are special circumstances that mean estoppel would not “work justice” between the parties. However, Spencer Bower and Handley notes that there have been very few cases where special circumstances have been established.23
[25] In relation to the rule in Henderson, I adopt the following summary of the relevant principles from Dobson J’s decision in EBS v CAS:24
[54] In the event that I am wrong to find that an issue estoppel arises, it is appropriate to review whether the rule in Henderson v Henderson would apply. A current formulation of this long-standing rule is that it is an abuse of process to commence a proceeding, although not estopped by the principles of either cause of action estoppel or issue estoppel, where the plaintiff seeks to rely on issues or facts that could and ought to have been raised in a previous proceeding. There is clearly scope for an analogy that the same constraint should apply to an added cause of action in existing proceedings.
[55] Our Court of Appeal has more than once adopted the observations of Lord Bingham from Johnson v Gore Wood & Co (a firm), which included the following:
… there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.
…
[57] The House of Lords’ approach invites a broad merits-based assessment of the consequences for both sides of either allowing the claims in the two new causes of action to run to trial, or preventing EBS having her day in Court on them. One way of evaluating the merits is to ask, in all the circumstances, whether EBS could have pursued the claim now being advanced at an earlier stage, and if so whether she should reasonably be expected to have done so. That evaluation encroaches on the tenability of the proposed cause of action, which I consider next.
23 Keane, above n 16, at [8.33].
24 EBS v CAS, above n 4 (footnotes omitted).
Admissibility of Grice J’s decision
[26] At the hearing, I raised an issue as to the admissibility of Grice J’s findings in the previous High Court proceedings given the limitations on the admissibility of findings of fact in civil judgments provided for in s 50 of the Evidence Act 2006. That section provides that evidence of “a judgment or a finding of fact in a civil proceeding” is inadmissible in another civil proceeding to “prove the existence of a fact that was in issue in the proceeding in which the judgment was given”. I received further written submissions on this issue.
[27] I am satisfied that Grice J’s judgment and findings are admissible for the purposes of this application. Section 50(2)(b) expressly states that the “section does not affect the operation of the law relating to res judicata or issue estoppel”. To the extent that there is any question about whether s 50(2)(b) applies to the rule in Henderson given the discussion above at [22], I consider it does. The purpose of s 50(2)(b) is to allow consideration of findings made in earlier proceedings to the extent they are relevant to whether the current proceedings should be allowed to progress to trial. This can encompass both the rule in Henderson and the doctrine of abuse of process.
[28] The purpose of s 50 is to prevent a court abdicating its responsibility to make factual findings by relying on factual findings made in another forum, which may have involved different parties and standards of proof.25 No such concern arises here. The purpose of admission of Grice J’s findings is not to prove those findings in these proceedings, but rather to establish whether those findings mean it would be contrary to principle to allow the matter to proceed to trial. Any other interpretation would prevent the application of the rule in Henderson and the principles of abuse of process more generally.
[29]I am fortified in this conclusion by the recent Court of Appeal decision in
Attorney-General v Siemer,26 where the Court held that s 50 did not apply to the
25 Elisabeth McDonald and Scott Optican (eds) Mahoney on Evidence: Act and Analysis (4th ed, Thomson Reuters, Wellington, 2018) at [50.01]; and Attorney-General v Siemer [2024] NZCA 435 at [26]–[31]. I observe that Attorney-General v Siemer was released after the hearing.
26 Attorney-General v Siemer, above n 25.
admissibility of court decisions when considering whether it is appropriate to make an order under s 166 of the Senior Courts Act 2016 (preventing the bringing of further civil proceedings without the High Court’s leave). The Court held that the decisions were not being admitted for the purpose of proving the existence of a fact in issue in the earlier proceeding, but rather to provide a reliable record of the relevant earlier proceedings to determine whether a s 166 order was appropriate.27
Interaction between tikanga and state law in this case
[30] These proceedings raise the difficult issue of the interaction between tikanga and state law.
[31] The Law Commission | Te Aka Matua o Te Ture’s study paper He Poutama notes “The common law cannot give effect to tikanga that is contrary to statute or to fundamental principles and policies of the law”.28
[32] This conclusion is drawn from Supreme Court authority that tikanga will not be relevant if it is contrary to statute or binding precedent,29 or fundamental principles and policies of the law.30
[33] Subject to this qualification that tikanga will not be relevant if it is contrary to fundamental principles of state law, I accept the plaintiff’s submission that novel tikanga claims should not be stifled summarily through strike out,31 and tikanga must not be shoehorned into a Pākehā law framework.32
Application of the principles to this case
Non-identical parties
[34]There was some suggestion in oral argument that estoppel or the rule in
Henderson cannot apply because the parties are not identical. That submission is
27 At [3].
28 Law Commission | Te Aka Matua o te Ture, above n 9, at [8.39](f).
29 Ellis v R (Continuance) [2022] NZSC 114, [2022] 1 NZLR 239 at [117] per Glazebrook J, and
[265] per Williams J.
30 Takamore v Clarke [2012] NZSC 116, [2013] NZLR 733 at [95] per Elias CJ.
31 Smith v Fonterra Co-operative Group Ltd, above n 13, at [83].
32 Law Commission | Te Aka Matua o te Ture, above n 9, at [8.39]–[8.61].
unsustainable. As noted at [150] of Ngāti Paoa Trust Board, the parties do not have to be identical but rather, have such a union or nexus, or community or mutuality of interest, that to estop would produce a fair and just result. It was an agreed fact in the proceedings before Grice J that “[t]he defendants are trustees of the Te Huawhenua Trust”.33 The named defendants in that case were Wi Huata and Donna Huata. In this case, the plaintiff is Wi Huata in his capacity as trustee of the Te Huawhenua Trust.
Cause of action estoppel
[35] In relation to the possible application of cause of action issue estoppel, I accept the plaintiff’s submission that a cause of action estoppel cannot apply here as it requires there to have been a final judgment between identical parties dealing with the same cause of action. As this is a novel cause of action in tikanga, clearly cause of action estoppel does not apply and I consider it no further.
Limitation Act 1950
[36] The defendant submits that as the amended statement of claim alleges breaches of the “state of ea” on various dates between 1995 and 2019, only the 2019 breach could fall within a six or even 12-year period provided in the Limitation Act 1950. The defendant submits the plaintiff could have issued proceedings any time after the alleged breaches occurred from 1995 onwards, including raising a claim in the Māori Land Court in 2014 and the High Court in 2019. However, given the defendant’s concession that the 2019 breach would not fall foul of the Limitation Act, and my understanding that claim effectively alleges a continuous breach of the state of ea from 1995 to present, application of the Limitation Act would not dispose of the proceedings. I would not therefore be prepared to strike out the proceedings on this basis.
Further background relevant to issue estoppel
[37] The first step in considering issue estoppel is to identify the fundamental issues of fact and law that were determined by Grice J and were essential to her reasoning.
33 Mangaroa 26N2 Trust v Huata, above n 1, at [8].
A helpful starting point is the agreed statement of issues set out in Grice J’s decision as follows:34
Counsel have also agreed on an agreed statement of issues as follows:
Agreed statement of issues
1.The agreed issues are:
(a)Whether the “option to purchase” clause is valid and binding; and
(b)if so, whether the plaintiffs breached the “option to purchase” clause; and
(c)if so, whether the Court should grant an order for specific performance under the “option to purchase” clause. If so, what is the date to be used for valuing the land and whether value includes improvements made by the defendants?
(d)If specific performance is not granted, whether the plaintiff should pay the defendants for improvements made to the land and the value of those improvements.
[38]Grice J’s conclusions on those issues were:
[191] The points raised in the statement of issues are answered as follows:
(a)Whether the “option to purchase” is valid and binding.
Answer: The option to purchase is not valid and binding.
(b)If so, whether the plaintiffs breached the “option to purchase” clause.
Answer: In view of the fact the option to purchase is not valid and binding there is no need to consider this issue.
(c)If so, whether the Court should grant an order for specific performance under the “option to purchase”; and, if so, what is the date to be used for valuing the land and whether value includes improvements made by the defendants?
Answer: It is not necessary to consider whether an order for specific performance should be granted in view of my findings in relation to issue (a). However, if the option were valid and binding I would have determined that specific performance was not available in the circumstances.
34 Mangaroa 26N2 Trust v Huata, above n 1, at [9].
(d)If specific performance is not granted, whether the plaintiff should pay the defendants for improvements made to the land and the value of those improvements.
Answer: the plaintiff is not required to pay the defendants for improvements made to the land (including buildings and the pump).
[39] It is only Grice J’s conclusions on issues (a) and (d) that can give rise to an issue estoppel in this case.
[40]Dealing first with issue (a), Grice J summarised her conclusions as follows:
[166] In summary, first the trustees had no power to grant the option. It was invalid and of no effect because of the operation of s 228, which was in force in 1999. The trustees could not authorise alienation of the land. Secondly, even if the option did come into force following the repeal of s 228 in 2001, the trustees were still required under the trust order to obtain the consent of the beneficial owners to any sale. The process for calling a meeting and putting the proposal for the sale to the assembled owners is set out in the Māori Land Court Act, as I have outlined above. This never occurred.
[167] In addition, the parties did not intend to be bound to an option to purchase.
[168] All parties knew at the time of the Heads of Agreement that s 228 required the trust to obtain a 75 per cent majority of beneficial owners and confirmation by the Māori Land Court to enable it to sell the property. Mr Huata, in his evidence, said that he was aware of these provisions of the Te Ture Whenua Māori Act and was in a good position to watch for amendments as his wife had a position in Parliament and he had other contacts. However, he did not realise s 228 was repealed until Judge Harvey’s comments in 2016 when the parties appeared before the Māori Land Court.
[169] Secondly, Mr Huata, in his evidence, said that he had always been of the view he had a valid option to purchase the land, which he merely needed to exercise. This is inconsistent with his behaviour dating back to 1999. In particular:
(a)He argued in the Māori Land Court that there was a 2008 lease that expired in 2029 and he expressly rejected the fact that the 1999 heads of agreement constituted even a lease.
(b)He never presented a valuation or referred to the option to purchase. His discussions with the trustees after 1999 referred, on a number of occasions, to his wish to buy the property but without reference back to the exercise of any option.
[170] The option to purchase was also not sufficiently certain to be enforceable. An option to purchase of the nature that Mr O’Connor is
suggesting requires that no substantial matter to be left to the future agreement of the parties.35
[171] Accepting for argument’s sake that the consideration was the entry into the lease, the provisions about the setting of the price are vague. There are no mechanics as to who provides the valuation and what occurs if the parties fail to agree. There is no dispute resolution clause in the heads of agreement that provides the mechanics to resolve this.
[172] In addition, a further important issue was not agreed upon. That is whether the valuation includes the improvements or not. That issue remains one of contention between the parties. There has never been a resolution of that issue before or since the 1999 heads of agreement. A court would not be in a position to resolve that issue.
[41]In respect of issue (d), Grice J’s conclusions were:
[176] As is apparent from above, the trustees have never agreed to allow any improvements to be made or placed on the land. While Judge Harvey indicated that there was nothing in the lease to prevent the defendants taking their improvements, the Judge did not have the full information nor the benefit of the evidence that I now have before me. From the start of the Huatas’ occupation of the land in 1986/87 there was no agreement nor any encouragement to the Huatas to build or put improvements on the land.
[177] Mr Huata points to Mr Nick Wall’s encouragement to go on the land and make it productive. However, the most that can be said was that according to Mr Wi Huata, Mr Wall asked him to go on the land and improve it during a discussion around the spring of 1986. But no lease was entered into and, in February 1997, Mr Wall discovered that Mr Huata had gone onto the land without entering a formal lease and started building on the land. Mr Wall was angry. Mr Huata agreed that there was an unpleasant meeting when Mr Wall, accompanied by other trustees, came to the land and discovered the improvements.
[178] In addition, the improvements (at least the shed and possibly other buildings) had no compliance certificates. The relevant file of the Hastings District Council was produced by the plaintiff. It shows that on a number of occasions the defendant was told to stop work on the shed but this was ignored. There is no evidence of any compliance certificate ever being issued for the shed.
[179] I do not accept Mr Huata’s evidence that he was authorised by Mr Wall to build on the land. It is contradicted by the documents produced.
[180] In relation to the installing of the water pump on the land in 2012, the defendants did not tell the trustees about this until it was installed. They did talk to the trustees about the possibility. It is also noteworthy that without the consent of the trustees, the Huatas (in the name of a company (who did not lease the land) had licenced the land to a company owned by Mr Raikes. It was the Raikes’ interests that needed the pump.
35 D W McMoreland Sale of Land (3rd ed, Cathcard Trust, Tāmaki Makaurau | Auckland, 2011) at [3.17](a).
[181] Mr Raikes also cleared the orchard that the Huatas had planted. It was by then non-productive, and had fallen into ruin according to Mr Raikes. Mr Raikes has planted the land with lucerne and other feed to use on his own farm. Mr Raikes pays a company that is owned by the defendants, which purports to be the licensor, for the use of the land. He contributed most of the capital required to install the water pump to enable him to have efficient water supplies to grow his crops.
[182] Despite the fact Mrs Huata was in contact with the trustees to talk about the pump she did not mention the licence granted to the Raikes’ interests. Mr Raikes had assumed that the trustees would know and was surprised when he was told, in the course of these proceedings, that the trustees had no knowledge of the licence, that he paid a licence fee on the land, nor that he was working the land, until he filed an affidavit in these proceedings in November/December 2019.
[183] The Huatas did not licence the land in the name of the Te Huawhenua Trust, which is the lessor and is the entity that the Mangaroa 26N2 Trust had dealt with. A company apparently owned by the Huatas, called Mokoia Number 14 Ltd, granted the lease to the Raikes interests. The relationship between that company and the defendants was not the subject of evidence.
[184] In this case the trustees not only did not consent to the improvements or the buildings, they did not know they were being undertaken. There has been no agreement to pay compensation nor has the trust acted in any manner that would provide the Huatas to any right to receive compensation for any improvements to the land or buildings on it.
[185] In those circumstances, the Huatas do not have any right to compensation.
[42] Although more relevant to application of the rule in Henderson, it is convenient at this point to set out some background to the current tikanga claim. Grice J’s decision records a claim of tikanga Māori was made for the first time in those proceedings while Mr Huata was under cross-examination. Grice J summarises the claim as follows:
[186] In his evidence, under cross-examination, for the first time Mr Huata made a claim based on mana whenua. He said he had never raised this before, either in his discussions with the trustees, in the Māori Land Court, because he was proud of his whakapapa and considered it inappropriate in the circumstances to raise that issue.
[187] A claim based on tikanga Māori in this context would need to be properly made and argued.36 As the claim was not mentioned earlier, the Court did not have the benefit of full argument nor was it the subject of appropriate evidence. That claim is not able to be considered in these proceedings.
36 In the recent proceedings before the Supreme Court in Ellis v R [2020] NZSC 89, a hui of experts in tikanga Māori was convened on the issue of the relevance of tikanga to the issue of continuation of the appeal after death.
[188] However, I note the passion that Mr Huata expressed for his relationship with the land. The Huatas have brought up their children on their land. Their children and their moko’s whenua are buried on the land. It has been home to them for 30 years.
[189] Nevertheless, it is apparent from the evidence – and as the claim to mana whenua has not been made out for the purposes of these proceedings – it was a home to them only because they refused to leave it in the face of the trustees’ direct requests to them to leave. The trustees have tried to do things legally throughout. Perhaps they have not been as proactive as the beneficiaries might have wished but, understandably in the circumstances, they did not relish a confrontation with the Huatas.
[43] The plaintiff filed an appeal against Grice J’s decision. As part of the appeal process, in June 2022 the plaintiff attempted to insert “a claim based on tikanga” into the issues on appeal, but following objection abandoned this ground of appeal on 29 June 2022. A year later, in July 2023, the plaintiff applied to stay the appeal to allow the claim of tikanga to proceed in the High Court, but subsequently abandoned the appeal following the dismissal of the stay application. In determining the application, French J noted counsel’s point that the claim based on tikanga appeared to have a different focus than the belated claim made at trial (a mana whenua claim), and held:37
[21] In support of the application, Mr Reid said the starting point was that these were Māori parties in dispute. He relied on the Supreme Court decision in Ellis38 and made the following principal submissions:
(a)until the High Court has determined the tikanga claim it is premature for the appeal to be heard;
(b)the failure of the appellants to raise the tikanga claim earlier was due to errors on the part of their previous lawyers;
(c)those errors were then compounded by the High Court Judge who (without the benefit of the Ellis decision) failed to adjourn the hearing and call for further evidence;
(d)although initially rejecting the suggestion that the tikanga claim now being advanced was different to the assertion of mana whenua made in the High Court, Mr Reid acknowledged the claim currently lacked specificity and needed to be properly pleaded and articulated. That was however something that required specialist assistance which he was not able to provide;
37 Huata v Mangaroa 26N2 Trust [2023] NZCA 338.
38 Ellis v R (Continuance), above n 29.
(e)the purpose of the stay application was to give the appellants an opportunity to correct what had gone wrong and so avoid a miscarriage of justice; and
(f)the respondent would not be prejudiced by a stay because the appellants are now up to date with rent payments and all rental payments during the continuation of the stay would be paid in advance. In the event the tikanga claim was successful it would constitute an alternative basis for determining the respondent’s applications and it is anticipated the appeal would then be withdrawn.
[22] I did not accept these submissions. In my view, it would be unjust for there to be any further delay in the prosecution of this appeal. For the appellants to attempt to stay their own appeal at the eleventh hour by invoking a new and vague claim that was never before the High Court is unacceptable. If, as seems surprising, there were errors made by no fewer than three sets of lawyers, that is a matter between the appellants and those lawyers. It is, in my view, untenable to suggest that the respondent would not be significantly prejudiced by what would be a very significant delay. All of this comes against a history of delays occasioned by the appellants, including an attempt in the High Court to stay that proceeding over a year after the respondent had filed its originating application for possession of the land.
[44] In 2014, the plaintiff was in rent arrears of approximately $8,000 and the defendant sought the Māori Land Court’s directions about whether it was appropriate to issue a Notice of Termination of Lease.39 Grice J’s decision refers to the subsequent mediation and court hearing that resulted in a Māori Land Court decision in 2016.40 Throughout those proceedings in the Māori Land Court, Mr Huata did not raise a claim based on a state of ea. In fact, he denied that the Heads of Agreement was binding during those proceedings.
[45] The previous High Court litigation was commenced in April 2019 and throughout those proceedings Mr Huata did not raise a claim based on a state of ea. In those proceedings, by 21 September 2020 the plaintiff had applied to stay the High Court proceedings and have the entire matter heard in the Māori Land Court. However, no state of ea claim was made.
[46] Mr Huata filed an application in the Māori Land Court in July 2019. Mr Huata wrote to the Māori Land Court claiming a right to buy the land, and that the Huatas
39 See Mangaroa 26N2 Trust v Huata, above n 1, at [84].
40 At [85]–[87].
had made improvements to the land that he considered the defendant should pay for. There was no mention of a state of ea claim.
Issue estoppel in relation to the correct interpretation of s 228 of Te Ture Whenua Maori Act 1993 and the trust order
[47] At the hearing, counsel for the plaintiff submitted that Grice J’s analysis of the application of s 228 of Te Ture Whenua Maori Act was incorrect. It was contended that Grice J was wrong to conclude that the trustees cannot authorise alienation of the land due to the operation of the section. It was also submitted that Grice J was wrong to determine that even if the option did come into force following the repeal of s 228 in 2001, the trustees were still required under the trust order to obtain the consent of the beneficial owners to any sale. Although I received additional submissions on this issue following the hearing, I have reached the conclusion that issue estoppel clearly applies to this point.
[48] Grice J’s conclusions about the operation of s 228 and the effect of the trust order were essential components of her reasoning on issue (a) set out at [37]–[40] above. The arguments now advanced that Grice J was wrong appear to be orthodox arguments of statutory and contractual interpretation. The fact that they include contentions that were not put to Grice J is irrelevant. The plaintiff had an opportunity to make, and did make, arguments about the interpretation of s 228 and the trust order in the proceedings before Grice J. These arguments were rejected, and the issues conclusively determined. The opportunity to challenge those conclusions was on appeal, but the appeal was abandoned. It would clearly be contrary to the doctrine of issue estoppel for the same issues to be relitigated in these proceedings.
Does issue estoppel apply to the claim even if the provisions of Te Ture Whenua Maori Act and trust order operated in the way determined by Grice J?
[49] The plaintiff’s overarching submission is that even if the provisions of Te Ture Whenua Maori Act and trust order operated in the way determined by Grice J, this does not alter the obligations the trust had in tikanga. The plaintiff submits the obligation was to address any disruption to the state of ea existing between the parties that was caused by the change in the trust’s ability to deliver an approved sale of the whenua. In other words, the applicant had an obligation in tikanga to do what was
right to address the changed circumstances sufficient to restore balance and preserve the mana of each party. I therefore turn to the question of whether a claim put on this basis should be allowed to proceed.
[50] The plaintiff pleads that the Heads of Agreement: created a state of ea between the parties; the plaintiff took steps to purchase the land and enforce the Heads of Agreement on a number of occasions; the trust breached the Heads of Agreement as it has not gone through with the sale; the plaintiff’s occupation of the whenua included tikanga obligations to maintain ahikā and ahikāroa and kaitiakitanga; the plaintiff has improved the condition of the whenua; and the defendant has breached the state of ea reached by the Heads of Agreement in purporting to cancel the lease and resiling from the sale and purchase agreement.
[51] The plaintiff further pleads that as a result of these breaches: it suffered harm because its connection with the whenua and the agreement reached in tikanga has not been recognised; the plaintiff has spent funds to improve and develop the Block in reliance on the agreement that it would eventually own the Block; it has been forced to vacate the whenua; and they have been forced to leave buildings, plants and a well on the whenua that cannot be removed without being destroyed; causing loss of value, loss of potential income from operating the land; and loss of opportunity to recover the state of ea between the parties.
[52] The remedies sought are: a declaration of the state of ea; damages for the breach of ea, including for loss of opportunity based on funds and time expended on the land in reliance on the Heads of Agreement that could have been invested elsewhere; loss of opportunity based on commercial return that would have been received for the resources invested in reliance on the Heads of Agreement; general damages to compensate the plaintiff for stress, anxiety and impact on mana and mauri suffered as a result of the breach of ea and removal from the land; and restitution in the amount the defendant has been unjustly enriched as a result of improvements made to the law; or compensation for the value of the assets left on the land.
[53] It can be seen from this summary that the claimed breach of the state of ea relies heavily on the state of ea being created by the Heads of Agreement. In particular,
the Heads of Agreement providing an enforceable option to purchase that the defendant has breached because it has “not gone through with the sale”.41 The amended statement of claim includes the follow pleading:
26. The Defendant has breached the state of ea reached by the HOA [Heads of Agreement] in purporting to cancel the lease and resiling from the sale and purchase agreement. As a result, the Plaintiff has been adversely affected and the consequences are devastating for them.
[54] I am satisfied that an issue estoppel arises given this heavy reliance in the pleadings on there having been an enforceable option to purchase in the Heads of Agreement (rejected by Grice J in determining issue (a)) to create the state of ea; and the fact that the main remedy sought is compensation for improvements to the land (rejected by Grice J in determining issue (d)). I am satisfied that the essence of this claim is an attempt to relitigate Grice J’s conclusive determinations that the Heads of Agreement did not provide for an enforceable option to purchase the land and there is no obligation to compensate the plaintiff for improvements to the land.
[55] As matters stand, Grice J’s judgment and the abandonment of the appeal to the Court of Appeal, mean that there is an authoritative state law conclusion that there is no basis for these claims. To allow them to now proceed through a claim of tikanga would, in my view, be a breach of a fundamental principle of the common law, namely the doctrine of issue estoppel. I do not consider that it is open to me as a High Court Judge to allow a claim to proceed in breach of that fundamental principle of state law.
[56] I also consider there are no special circumstances that mean estoppel would not “work justice” between the parties, which might require the claim to be allowed to proceed. Indeed, for the reasons set out below, I consider the overall justice of the situation clearly favours striking out the claim.
41 Amended Statement of Claim (30 January 2024) at 22.
Application of the rule in Henderson
[57] Even if I am wrong about whether the issues are sufficiently similar to give rise to an issue estoppel, I am satisfied that the rule in Henderson requires the claim to be struck out.
[58] The defendant notes that the alleged breaches of the state of ea date from 1995 to 2019 and that the plaintiff has delayed bringing this claim until December 2023, but could have used any one of the prior occasions detailed at [42]–[46] above to raise the claim. The defendant submits there is no reasonable explanation for such a delay and it should be fatal to the present proceedings. The defendant says the history of this matter shows the current claim is simply another example of Mr Huata coming up with a new basis to claim rights over the land. The defendant’s chairperson has filed an affidavit setting out some of the financial costs of the proceedings, which total approximately $158,000.
[59] I do not accept that the delivery of the Supreme Court’s decision in Ellis v R in 2022 is an explanation for why the tikanga claim was not raised earlier in these proceedings.42 As the Supreme Court noted in Ellis, the recognition of tikanga as part of the common law of New Zealand has a longstanding history. Although that recognition has been considerably developed over the last 30 years, in 2012 it was explicitly recognised by the Supreme Court in Takamore v Clarke.43
[60] The Supreme Court in Ellis said “tikanga has been and will continue to be recognised” in the development of Aotearoa/New Zealand’s common law in cases where it is relevant.44 He Poutama states:45
1.1In 2001, Te Aka Matua o te Ture | Law Commission (the Commission) published Māori Custom and Values in New Zealand Law, a study paper focused on tikanga. The Study Paper reflected on how Māori custom and values can influence the law and discussed ideas for future law reform to “give effect to Māori values in the laws of New Zealand”. As the Commission said:
42 Ellis v R (Continuance), above n 29.
43 Takamore v Clarke, above n 30, at [150]–[152] per Tipping, McGrath and Blanchard JJ.
44 Ellis v R (Continuance), above n 29, at [19].
45 Above n 9 (footnotes omitted).
If society is truly to give effect to the promise of the Treaty of Waitangi to provide a secure place for Māori values within New Zealand society, then the commitment must be total. It must involve a real endeavour to understand what tikanga Māori is, how it is practised and applied, and how integral it is to the social, economic, cultural and political development of Māori, still encapsulated within a dominant culture in New Zealand society. However, it is critical that Māori also develop proposals which not only identify the differences between tikanga and the existing legal system, but also seek to find some common ground so that Māori development is not isolated from the rest of society. The differences do not need to be seen as overwhelming. Māori and the courts each have a love of law, precedent and forebears, and these are commonalities that can be built upon.
1.2Since then, there have been many developments in the way that tikanga is addressed by state law. Tikanga concepts are prevalent in legislation. Tikanga “has been and will continue to be recognised” in the development of Aotearoa New Zealand’s common law in cases where it is relevant. Tikanga has been judicially described as the first law of Aotearoa New Zealand, a “free-standing legal framework”, and a “third source of law”. The largest cohort of courts, Te Kōti ā Rohe
| District Court, has begun a process of incorporating tikanga into the fabric of its operation.
[61] In Ellis, Glazebrook J set out an extensive history of modern recognition of tikanga in state law,46 and Winkelmann CJ said:47
[175] Looking to tikanga in the development or application of the law is not to break with the continuity of the common law. Tikanga has been applied as a source of enforceable rights by Te Kooti Whenua Māori | Māori Land Court in the exercise of its statutory jurisdiction since the inception of that Court. Tikanga has been applied in other New Zealand courts as the source of enforceable rights — even when invoked by Pākehā in support of their claims. Although these latter cases were initially infrequent, outside of courts of law tikanga continued to shape and regulate social, environmental and economic interactions and values. In the last thirty years the role that tikanga plays in society has been acknowledged by Parliament through the inclusion of tikanga into various statutes as a mandatory or permissible consideration for decision- makers. These statutory frameworks have in turn required courts to apply tikanga concepts and values, this work itself providing content for the common law. Statutory frameworks have of course also shaped attitudes and values within society. Certainly even without express statutory reference to tikanga, the courts have interpreted statutes to take account of tikanga values and interests.
46 At [94]–[105] per Glazebrook J.
47 Footnotes omitted and emphasis added.
[62] In Smith v Fonterra Co-operative Group Ltd the Supreme Court noted that “Tikanga has been applied to tort actions as required by the case and the evidence since the early days of the common law’s operation in this country”.48
[63] Against that background, there is simply no basis to suggest that the numerous lawyers that the plaintiff has engaged, and Mr Huata himself, would not have been aware of the ability to raise tikanga in this case prior to or during the 2014 to 2016 Māori Land Court proceedings or at any time since.
[64] I have no doubt that the overall justice requires this claim to be struck out. Applying Dobson J’s test in EBS v CAS,49 I am satisfied that the plaintiff could have pursued the claim at an earlier stage and should reasonably be expected to have done so. The plaintiff has had numerous opportunities to raise a claim of tikanga over the course of this dispute, including the Māori Land Court and in the previous High Court proceedings. The defendant has expended significant time and resources on the process of removing the plaintiff from the land and is now having to engage in this further litigation.
[65] I also accept the defendant’s submission that, in these circumstances, the claim cannot be allowed to proceed on the basis of alleged harm caused by the defendant exercising its rights in accordance with Grice J’s decision.
[66] In all the circumstances, I am satisfied that the plaintiff is misusing or abusing the process of the court by seeking to raise before it an issue which could, and should, have been raised before.50
[67] It is clearly time that these matters were brought to an end. Like Grice J, I do not question the passion that the plaintiff has for the land,51 but as Grice J found:
[189] … it was a home to them only because they refused to leave it in the face of the trustees’ direct requests to them to leave. The trustees have tried to do things legally throughout. Perhaps they have not been as proactive as
48 Smith v Fonterra Co-operative Group Ltd, above n 13, at [183].
49 EBS v CAS, above n 4, at [57].
50 Johnson v Gore Wood & Co, above n 19, at [55].
51 Mangaroa 26N2 Trust v Huata, above n 1, at [188].
the beneficiaries might have wished but, understandably in the circumstances, they did not relish a confrontation with the Huatas.
Conclusion
[68] I therefore grant the application to strike out the proceedings on the basis that allowing the claim to proceed would be contrary to fundamental principles of state law, namely issue estoppel and the rule in Henderson, and is likely to cause prejudice or delay, or is frivolous or vexatious, or is otherwise an abuse of process of the Court.
[69] It is therefore unnecessary to consider the alternative applications for summary judgment or security for costs.
[70] These conclusions also do not require me to determine whether the courts should generally recognise a novel stand-alone cause of action based on a breach of ea. However, I note in Sweeney v The Prison Manager, Spring Hill Corrections Facility Lang J recently declined to recognise a new stand-alone tort based on damage to mana.52 The reasons for this included:53
[82] Finally, the courts in New Zealand have recognised that tikanga principles may guide the development of the common law in appropriate cases. In other words, recognised causes of action may in appropriate cases be viewed through the lens of tikanga. As the Supreme Court recently said in Smith v Fonterra:
… tikanga was the first law of New Zealand, and it will continue to influence New Zealand’s distinctive common law as appropriate according to the case and to the extent appropriate in the case.
[83] However, on my understanding of the authorities, tikanga principles standing alone do not give rise to distinct causes of action at common law. As the Law Commission has recently stated, “As yet, no case has found tikanga determinative of how a common law rule should be formulated”.
Costs
[71] My preliminary view is that the defendant should be entitled to costs on a 2B basis. This decision may be thought to support an argument for increased costs. But adopting the approach to increased costs of Cooke J in Lepionka & Company
52 Sweeney v The Prison Manager, Spring Hill Corrections Facility [2024] NZHC 1361.
53 Footnotes omitted.
Investments Ltd v Gibson Sheat,54 my preliminary view is that this is not a case where increased costs would be appropriate given tikanga claims are a developing area of law. However, if costs cannot be agreed, the defendant should file a memorandum (not exceeding five pages) within 10 working days of receipt of this decision, the plaintiff should file a memorandum in response (not exceeding five pages) within 10 working days, and the defendant should file a memorandum in reply within five working days (not exceeding three pages). I will then determine costs on the papers.
La Hood J
Solicitors:
McCaw Lewis, Hamilton for Plaintiff Le Pine & Co, Taupō, for Defendant
54 Lepionka & Company Investments Ltd v Gibson Sheat [2023] NZHC 2745.
15
1