IN THE MĀORI LAND COURT OF NEW ZEALAND TAITOKERAU DISTRICT A LEONARD KIDWELL Applicants ORAL JUDGMENT OF JUDGE M P ARMSTRONG

Transcription

1 95 Taitokerau MB 280 IN THE MĀORI LAND COURT OF NEW ZEALAND TAITOKERAU DISTRICT A UNDER Section 19, Te Ture Whenua Māori Act 1993 IN THE MATTER OF BETWEEN Te Komiti 1B2B2 Ahu Whenua Trust MARTHA PAERAU LEONARD KIDWELL Applicants Hearing: 30 January 2015 (Heard at Whangarei) Judgment: 30 January 2015 ORAL JUDGMENT OF JUDGE M P ARMSTRONG

2 95 Taitokerau MB 281 Introduction [1] On 28 January 2014 the trustees of Te Iringa Edith and Bill Kidwell Whānau Trust ( Whanau Trust ) filed an application seeking an urgent interim injunction preventing the trustees of Te Komiti 1B2B2 Ahu Whenua Trust ( Ahu Whenua Trust ) from granting a lease over the Te Komiti 1B2B2 block. The issue in this case is whether an interim injunction should be granted. Background [2] Te Komiti 1B2B2 ( the land ) comprises hectares and there are currently 297 beneficial owners of the land. The current trustees are Connie Watts, Kathleen Popata, William Kidwell, Te Wehi Pairama, Carl Green, Marsh Grey, Matthew Paerau, Wayne Harris and Edie Nielson. 1 [3] Te Tumu Paeroa has been engaged to act as the agent for the responsible trustees with respect to the administration of the Ahu Whenua Trust. [4] The trustees are in the process of granting a lease over the land. The trustees are meeting this Sunday 1 February 2015 where it is anticipated that a lease will be granted to Geoffrey Bowers. [5] The Whānau Trust holds shares in the land. The trustees of the Whānau Trust are Eileen Walker, Isaac Kidwell, Martha Paerau and Walter Kidwell. 2 [6] John Paerau is the son of Martha Paerau one of the trustees of the Whānau Trust. John Paerau is also a beneficiary of the Whānau Trust. Mr Paerau has been nominated by the trustees of the Whanau Trust to talk on their behalf with respect to this application. [7] On 13 November 2014 John Paerau filed an application seeking to enforce the obligations of the trustees as per s 238 of Te Ture Whenua Māori Act 1993 ( the Act ). 3 I heard that application on 27 January During the course of that hearing Mr Paerau advised that he was seeking an urgent interim injunction preventing the trustees from Taitokerau MB 273 (62 TTK 273). 92 Waiariki MB 145 (92 WAR 145). A

3 95 Taitokerau MB 282 granting any lease over the land (including the proposed lease to Mr Bowers) pending the determination of that substantive application. [8] As such, I adjourned the substantive application and directed that Mr Paerau was to file an application seeking an urgent interim injunction and any supporting material by 5:00pm on 28 January Mr Paerau then filed the present application in the name of the trustees of the Whānau Trust. [9] The injunction application was heard in Whangarei on 30 January Mr Paerau appeared at the hearing on behalf of the Whānau Trust. Mr Otene appeared on behalf of the trustees. The Law [10] Section 19 of the Act states: 19 Jurisdiction in respect of injunctions (1) The Court, on application made by any person interested or by the Registrar of the Court, or of its own motion, may at any time issue an order by way of injunction (a) (b) (c) (d) Against any person in respect of any actual or threatened trespass or other injury to any Maori freehold land[, Maori reservation, or wahi tapu]; or Prohibiting any person, where proceedings are pending before the Court or the Chief Judge, from dealing with or doing any injury to any property that is the subject-matter of the proceedings or that may be affected by any order that may be made in the proceedings; or Prohibiting any owner or any other person or persons without lawful authority from cutting or removing, or authorising the cutting or removal, or otherwise making any disposition, of any timber trees, timber, or other wood, or any flax, tree ferns, sand, topsoil, metal, minerals, or other substances whether usually quarried or mined or not, on or from any Maori freehold land; or Prohibiting the distribution, by any trustee or agent, of rent, purchase money, royalties, or other proceeds of the alienation of land, or of any compensation payable in respect of other revenue derived from the land, affected by any order to which an application under section 45 of this Act or an appeal under Part 2 of this Act relates.

4 95 Taitokerau MB 283 (2) Notwithstanding anything in the Crown Proceedings Act 1950, any injunction made by the Court under this section may be expressed to be binding on the Maori Trustee. (3) Any injunction made by the Court under this section may be expressed to be of interim effect only. (4) Every injunction made by the Court under this section that is not expressed to be of interim effect only shall be of final effect. [11] The principles concerning the grant of an interlocutory injunction are settled. The applicant must show that: 4 (a) There is a serious question to be tried; (b) The balance of convenience is in the applicant s favour; and (c) The overall justice of the case supports the grant of an injunction. Submissions for the Whānau Trust [12] Mr Paerau argued that the trustees have not consulted the beneficiaries about the proposal to lease the land to Mr Bowers. Mr Paerau submits that the owners wish to occupy and use the land themselves and the grant of a lease to Mr Bowers will prevent that. [13] Mr Paerau further argued that on 29 June 2014 the trustees passed a resolution inviting Mr Paerau to submit a proposal so that he could lease the land. Mr Paerau submitted a draft proposal to the trustees. On 8 July 2014 he received a letter from Te Tumu Paeroa advising that his proposal had not been accepted. Mr Paerau submits that the beneficiaries he represents, namely the Whānau Trust, would prefer for the lease to be granted to him. [14] Mr Paerau submits that the current proposed lessee, Mr Bowers, is in the process of spending money undertaking repairs and maintenance to the land. Mr Paerau contends that this influenced the trustees into selecting Mr Bowers as the preferred lessee and that this was inappropriate. 4 Lomax v Apatu Awarua o Hinemaru Trust (2013) 22 Takitimu MB 282 (22 TKT 282), see also Klissers Farmhouse Bakeries Limited v Harvest Bakeries Limited [1985] 2 NZLR 129.

5 95 Taitokerau MB 284 [15] Mr Paerau also argued that the proposed lease to Mr Bowers is not at market rates and that the rental is not sufficient. [16] Mr Paerau contends that there are a number of outstanding issues concerning the former lease over the land. He argues that the former lessee breached the terms of that lease and left the land in a state of disrepair. Mr Paerau submits that infrastructure belonging to the Ahu Whenua Trust has also been stolen. Mr Paerau argues that these outstanding issues should be resolved before a new lease is granted to a third party. [17] Mr Paerau submits that there is a lack of proper governance for the Ahu Whenua Trust and that the current trustees are in disarray. He contends that there is no strategic plan in place, no distributions have been paid to the owners, and the trustees are not properly equipped to manage this land. [18] Mr Paerau also argues that the trustees are not acting with a full board. He states that William Kidwell passed away in 2013, Carl Green has resigned, and Kathleen Popata and Matthew Paerau were removed from office by their fellow trustees. As such, he considers that the trustees are not acting properly by failing to convene a full board. Submissions for the Ahu Whenua Trust [19] Mr Otene argues that the trustees have the power to enter into the proposed lease and that they have been acting prudently. He advised that the following steps were taken when deciding who should lease the land: (a) Advertisements were placed in several local newspapers in June 2014 seeking expressions of interest to lease the land. This was also advertised on the Te Tumu Paeroa website. (b) 12 expressions of interest were received. Two of these were shortlisted for consideration. (c) The trustees also invited two further expressions of interest to lease the land. The first was from Mr Bowers given that he was already grazing the land.

6 95 Taitokerau MB 285 The second was from a local couple who had experience in dairy farming as they had previously expressed interest in the land. (d) The trustees considered whether to grant a lease to the applicant however he was not shortlisted as the trustees were of the view that he did not have sufficient experience. (e) The trustees interviewed those who were shortlisted and selected Geoffrey Bowers as the proposed lessee. The reasons for selecting Mr Bowers are: They considered that he had sufficient experience and financial resources to properly manage the land; he had previous experience with this land pursuant to a prior grazing lease granted by the trustees; and Mr Bowers was to provide assistance in order to bring the land back to a productive farming unit. [20] As to the terms of the proposed lease Mr Otene advised that: (a) The lease is for a term of three years with no rights of renewal; and (b) The rent will be $30, per annum. [21] Mr Otene advised that the trustees obtained a valuation from Northland Valuers which valued a market rental at $33, per annum for a dairy unit and $27, per annum for a dry stock unit. Mr Otene also advised that the rental valuation of $33, included two residential dwellings on the property. However, those properties are not included in the proposed lease and are to be rented separately. [22] Mr Otene advised that although this valuation was obtained in 2013 he spoke to the valuer prior to the hearing who confirmed that those valuations are still current. [23] As such Mr Otene contends that the current proposed rental of $30, per annum for a dry stock unit is above the valuation obtained. [24] Mr Otene stated that there is no right of renewal of the lease and that a relatively short-term has been granted with the intention of providing a return to the Ahu Whenua

7 95 Taitokerau MB 286 Trust and to return the land to a productive farming unit. At the expiration of that three year period the trustees will reconsider the future use of the land. That may include granting a separate lease at an increased rental because of the improvements made or may involve proposals for use and occupation of the land by the owners. [25] Mr Otene also argued that while there were initially some internal issues concerning the trustees those matters have largely been resolved and the majority of the trustees are presently working well and are providing stable governance. [26] Mr Otene argued that the trustees have not sought to remove Kathleen Popata or Matthew Paerau as trustees and that they have continued to notify those trustees of trustee meetings. Mr Otene accepted that the trustees have not taken steps to replace Mr Kidwell who has passed away or Mr Green who has failed to attend trustee meetings. Mr Otene advised that the trustees will be attending to this shortly. [27] Finally, Mr Otene argued that if the injunction is granted the Trust may lose the opportunity to grant this lease as the proposed lessee may go elsewhere. He contends that this may prevent a return from being realised and the current proposed maintenance and repairs from being carried out. Mr Otene also argued that in the past when the land has been vacant theft and damage has occurred and an injunction preventing the grant of the proposed lease may result in further damage or theft occurring. Discussion Is there a serious question to be tried? [28] In determining whether there is a serious question to be tried it is necessary to consider the allegations before the Court, the applicable law and whether there is a tenable combination of resolution of the issues of law and fact on which the applicant could succeed. 5 [29] Mr Paerau s primary argument is that the trustees have not consulted with the beneficiaries as to the proposed grant of the lease. He further contends that if the lease is 5 Henry Roach (Petroleum) Pty Limited v Credithouse (Vic) Pty Limited [1976] VR 309, Sutton v The House of Running Ltd [1979] 2 NZLR 750 at p 753.

8 95 Taitokerau MB 287 granted this will prevent the owners from having the opportunity to use and occupy the land themselves which he says is their preference. [30] In Eriwata Waitara SD 6 the Māori Appellate Court found that: [5] When trustees are appointed to an Ahu Whenua Trust, they take legal ownership. The owners in their shares, in the schedule of owners, have beneficial or equitable ownership but do not have legal ownership, and do not have the right to manage the land or to occupy the land. Trustees are empowered and indeed required to make decisions in relation to the land and they are often hard decisions. Their power and obligation to manage the land cannot be overridden by any owner or group of owners or even the Māori Land Court, so long as the trustees are acting within their terms of trust and the general law, and it reasonably appears that they are acting for the benefit of the beneficial owners as a whole. A meeting of owners cannot override the trustees. Decisions to be taken for the land are to be the decision of the trustees. They decide who can enter and who can reside there and how the land is managed. [31] The same applies in the present case. While the owners may have aspirations to occupy and use the land it is for the trustees to decide who should occupy the land and who a lease should be granted to. There is no requirement that the trustees are to consult with the beneficiaries over a grant of the lease and the trustees are not bound by the views of the owners. The trustees have the power to grant a lease pursuant to the Act and the Trust Order and they are acting within those powers. [32] Mr Paerau argues that the proposed lease is not at market rates and that a better rental could be obtained. However, Mr Paerau did not file any evidence which supports this claim. Mr Otene has argued that the trustees have followed a prudent process of advertising, seeking tenders, considering the various tenders received, and selecting a proposed lessee based on experience, financial capability, and the terms of his proposal. Mr Otene also provided a valuation showing that the proposed rent is at market rates. [33] I do not see any substance in the fact that Mr Paerau s draft proposal was not accepted. As set out above, it is for the trustees to decide whether to grant a lease and if so to whom and on what terms. On the evidence before me it appears that the trustees did consider Mr Paerau s proposal but rejected it. Such decisions are for the trustees to make. 6 Eriwata v Trustees of Waitara SD Sections 6 & 91 Land Trust Waitara SD Sections 6 & 91 Land Trust (2005) 15 Aotea Appellate Court MB 192 (15 WGAP 192).

9 95 Taitokerau MB 288 [34] Mr Paerau has not filed any evidence to substantiate the outstanding issues concerning breaches by the previous lessee. Even if there are such issues I do not consider that this is sufficiently connected to the grant of the proposed new lease as to justify an injunction. [35] Neither has Mr Paerau provided sufficient evidence to show that the trustees are in disarray so as to justify the grant of an interim injunction. Mr Otene argues that while there were initially some internal issues those have now been resolved and a majority of the trustees are working together. The steps that the trustees have taken with respect to the grant of the proposed lease appear on the face of it to be prudent and do not show that the trustees are acting improperly or recklessly. [36] While the trustees need to take steps to replace those trustees who have passed away or who have not been actively involved in the Ahu Whenua Trust, that on its own does not justify the grant of an injunction. The trustees can act by majority as per s 227 of the Act. Mr Otene accepted that if a majority of the trustees do not approve the new proposed lease then there will be no lease. [37] For these reasons I do not consider that the applicant has shown that there is a serious question to be tried so as to justify the grant of an interim injunction. Where does the balance of convenience lie? [38] The balance of convenience requires balancing the injustice that will be caused to the applicant if an interim injunction is refused and the applicant s case ultimately succeeds against the injustice to the respondent that will result if the injunction is made but then discharged in a substantive judgment. 7 This has been described as the balance of the risk of doing an injustice. 8 [39] An important consideration is the adequacy of damages available to both the applicant and the respondents to address any injustice that may arise Wellington International Airport Limited v Air New Zealand Limited HC Wellington CIV , 30 July Cayne v Global Natural Resources plc [1984] 1 All ER 225. Wellington International Airport Limited v Air New Zealand Limited HC Wellington CIV , 30 July 2008.

10 95 Taitokerau MB 289 [40] If the allegations made by the applicants are upheld then the trustees could be found to have acted in breach of their duties causing loss to the trust. If such a finding was made it is open to the Court to order that the trustees pay damages to the Ahu WhenuaTrust to compensate for the loss caused. The applicant was unable to show that damages are not an adequate remedy in this case. [41] I accept that the Ahu Whenua Trust would be prejudiced if an injunction is granted. The proposed lessee may withdraw his proposal and the trustees could lose the opportunity of granting the proposed lease. That could prevent a return from being realised and may also result in a lost opportunity concerning the repairs and maintenance to be undertaken to the land. I also accept Mr Otene s submission that based on previous experience having the land vacant would increase the risk of damage or theft. [42] As such I consider that the balance of convenience is in favour of the Ahu Whenua Trust. Does the overall justice of the case support the grant of an injunction? [43] Having considered all these matters I must stand back and consider where the overall justice lies in this case. [44] One relevant factor is whether any prejudice would be caused to third parties by the grant of an injunction. 10 The grant of an injunction in this case would not only impact on the Ahu Whenua Trust as the proposed lessor but also on Mr Bowers as the proposed lessee. As such, there is potential prejudice to a third party by the grant of an injunction. [45] The grant of an injunction is also an equitable remedy. As such the applicant must come to Court with clean hands. 11 In the present case it was Mr Paerau who initially invited Mr Bowers to graze the land. He did so without discussing this with the trustees and without any authority. Mr Bowers was under the impression that Mr Paerau had sufficient authority to do so NZ Forest Products Limited v New Zealand Stock Exchange (1948) 2 NZCLC 99, 051. New Zealand Fire Service Commission v Mitchell CA36-99, 12 October 1999, Unilever Plc v Cussons (NZ) Pty Ltd [1997] 1 NZLR 433.

11 95 Taitokerau MB 290 [46] When the trustees became aware of this they entered into a retrospective grazing arrangement with Mr Bowers which provided for the payment of a grazing rental for the total period that he was in occupation of the land. The trustees now seek to enter into a more formal leasing arrangement with Mr Bowers having taken the steps of advertising, shortlising, interviewing and seeking a valuation as referred to above. [47] Although the trustees addressed the problem created by Mr Paerau by the grant of a retrospective grazing lease, Mr Paerau s actions of inviting Mr Bowers onto the land were without authority and such conduct taints his hands in this application. [48] I also consider that overall the applicant has not shown that the interests of justice support the grant of an injunction. While the applicants may well have unresolved issues concerning the administration of the Ahu Whenua Trust by the trustees, I do not consider that those issues or the applicants right to seek relief would be prejudiced by the grant of this proposed lease. The applicants can still pursue the substantive application and if it is found to be upheld they can seek damages against the trustees for any loss that has been caused. Decision [49] The applicant has failed to establish that an interim injunction is justified in this case and the application seeking an urgent interim injunction is dismissed. [50] I direct the case manager to liaise with the parties as to a suitable date and time for a teleconference to timetable the substantive application towards a hearing. [51] As is the normal course with oral decisions I reserve the right to amend this decision as to form but not as to substance. Pronounced in open Court at 3:20 pm in Whangarei on Friday this 30 th day of January M P Armstrong JUDGE