IN THE MĀORI APPELLATE COURT OF NEW ZEALAND TAITOKERAU DISTRICT A APPEAL 2012/12

Transcription

1 2013 Maori Appellate Court MB 159 IN THE MĀORI APPELLATE COURT OF NEW ZEALAND TAITOKERAU DISTRICT A APPEAL 2012/12 UNDER Section 58, Te Ture Whenua Maori Act 1993 IN THE MATTER OF Waihou Hutoia D2A Block BETWEEN AND MOA HARRIS LARKINS OR MOANANUI HARE LARKINS Appellant TREVOR WI KAITAIA on behalf of Hurae me Ngawaiata Trust Respondents Hearing: 13 November 2012 (Heard at Whāngarei) Court: Appearances: Deputy Chief Judge C L Fox (Presiding), Judge L R Harvey and Judge S F Reeves Mr J P Kahukiwa for the Appellant Mr T J Rainey for the Respondents Judgment: 9 April 2013 RESERVED JUDGMENT OF THE MĀORI APPELLATE COURT Solicitors: Corban Revell, 133A Central Park Drive, Henderson, Auckland jkahukiwa@corbanrevell.co.nz Rainey Law, PO Box 1648, Shortland St, Auckland Tim.Rainey@raineylaw.co.nz MOA HARRIS LARKINS OR MOANANUI HARE LARKINS V TREVOR WI KAITAIA & ORS MAC A [9 April 2013]

2 2013 Maori Appellate Court MB 160 Introduction [1] Moa Larkins appeals a decision of the Māori Land Court dismissing an application for a rehearing in relation to his request for a partial termination of the Hurae and Ngawaiata Whānau Trust ( the trust ). 1 Mr Larkins seeks the return of shares in Waihou Hutoia D2A that he agreed to vest in the trust so that he can gift those interests to his children. He also says that a return of the shares will enable him to administer those interests more effectively. The Appellant also argues that the Respondents have failed to attend to their duties as trustees. [2] The Respondents and other beneficiaries of the trust oppose the application. They contend that the interests should remain in the trust for the benefit of the whole whänau. They also submit that the Appellant has not provided any reasonable grounds for the partial termination other than simply changing his mind. This, they argue, is insufficient as a reason for partial termination of trust. The Respondents also reject the allegations that they have failed to perform their duties as trustees. [3] The narrow issue for determination is whether or not the Māori Land Court was correct in dismissing the application for a partial termination of the trust to enable the Appellant to have the shares he vested in the trust returned to him. We also refer to the question of whether majority or unanimous support is required from beneficiaries of a trust before a termination of trust, in whole or in part, can be contemplated. Finally we make comment on the claims of unsatisfactory performance of the trustees. Background [4] The Hurae and Ngawaiata Whānau Trust was constituted on 20 April 2005 and the six children of Hurae and Ngawaiata were appointed trustees. 2 When the trust was established each sibling put their own land interests into the trust. Moa Larkins vested his interests in Waihou Hutoia D2A in the trust as well as his interests in Kohatutaka 6K3. [5] The Waihou Hutoia D2A interests were derived by Moa Larkins from his mother, Ngawaiata Larkins, who gifted those shares on 24 July Taitokerau MB 139 (6 TTK 139) 101 Whangarei MB 293 (101 WH 293) 11 Kaitaia MB 138 (11 KT 138)

3 2013 Maori Appellate Court MB 161 [6] Relations between the parties deteriorated during 2008 with the result that the Appellant sought to remove the Waihou Hutoia D2A shares from the whānau trust and revest them in his individual ownership. While initially the Respondents supported the request for partial termination, they later withdrew that support and are now opposed to the application and to this appeal. [7] By decision dated 11 June 2010 Judge Spencer determined that the Court would not partially terminate the whānau trust over Mr Larkin s shares for two reasons. The first was that not all affected parties consented to the re-vesting sought. In effect this indicated that the Court required unanimous support of the beneficiaries before any application for partial termination of the trust could be contemplated. 4 The second reason was that others of the whānau had vested shares in the trust. Their decision to do so, he opined, would have been influenced by Mr Larkin s decision to vest his shares. Thus if the Appellant were permitted to withdraw his shares that action may sour the aroha of their vesting. 5 Case for the Appellant [8] Mr Kahukiwa submitted that the decision of the Māori Land Court was incorrect on two principal grounds. First, he contended that the reason provided by the learned Judge that unanimous support or even majority support of the beneficiaries was required for a partial termination of trust under s 241 of Te Ture Whenua Mäori Act 1993 ( the Act ) was wrong in law. [9] Counsel contended that the Mäori Land Court failed to apply the correct legal test, and that to allow the situation to continue will result in injustice. He submitted that there is no requirement for the appellant to show unanimous consent amongst the beneficiaries to his exit. The Māori Land Court also failed to take into account the fact that upon exiting, there will be no material detriment to any other party. [10] After reviewing the particular characteristics of s 241 of the Act, counsel referred us to the decisions of this Court in Rata Te Rongoa A7; 6 Morgan - Tautuku Block XIII and s 13; 7 and Lake v Taylor- Ngārara West B3B. 8 He then submitted that Judge Spencer did not apply the approach therein outlined. Mr Kahukiwa contended that the learned Judge took no Taitokerau MB 139 (6 TTK 139) at 141 Ibid (1991) 13 Aotea Appellate MB 228 (13 WGAP 228) (1998) 83 South Island MB 290 (83 SI 90) (2003) 134 Aotea MB 20 (134 AOT 20)

4 2013 Maori Appellate Court MB 162 account of whether: 9 (a) there would be an unreasonable disadvantage to any other person; (b) the revesting of the shares would be unsuitable; or (c) the revesting sought was ultimately fair. The cases also highlighted that while the Court is bound to consider the support or opposition to the application for termination, this is only one factor to consider. Thus the views of the owners or beneficiaries are not determinative. Finally, the cases indicate that evidence of a dysfunctional trust may be sufficient to satisfy s 241 of the Act. [11] Counsel submitted that Judge Spencer failed to have regard to these considerations, took into account matters that required evidence and failed to apply ss 2 and 17 of the Act. As a consequence he failed to take into account the fact the shares are täonga tuku iho passed down from the Appellant s mother to him by gift. Mr Kahukiwa argued that he should have noted that the Appellant was the original owner and in all the circumstances it was a fair dealing amongst the beneficial owners of the trust. [12] Counsel further submitted that the trustees had failed to fulfil their duties since there was little evidence that they had in fact been attending to them at all, let alone with any diligence. Case for the Respondents [13] Mr Rainey contended that the correct approach to this appeal by way of rehearing is summarised in Austin, Nichols & Co v Stichting Lodestar. 10 That decision makes it clear that this Court must provide judgment on a general appeal in accordance with its own assessment of fact and law. However, that approach comes with an important caveat, concerning appeals from the exercise of a discretion, where the criteria for a successful appeal are stricter. 11 These criteria require an error of law or principle, a failure to take into account relevant considerations, the taking into account of irrelevant considerations, or that the decision is plainly wrong. Counsel also cited authority for the proposition that the failure to expressly name a relevant consideration does not mean that the Court has not taken it into consideration. [14] Counsel contended that the Appellant never provided any adequate reason for seeking termination of the trust and consequently the Māori Land Court was correct in refusing his application. In reaching his decision, Judge Spencer must have had regard to (1991) 13 Aotea Appellate Court MB 228 (13 WGAP 228) [2008] 2 NZLR 141 Kacem v Bashir [2011] 2 NZLR 1

5 2013 Maori Appellate Court MB 163 the scheme of the Act, including ss 2 and 17, and s 214. The scheme indicates that once constituted, land should remain in that trust and that the power to terminate should be used sparingly and only in exceptional circumstances. Counsel submitted that these were all factors, coupled with the particular circumstances of the case, that the Mäori Land Court considered in reaching judgment. Moreover, counsel stressed, this was the exercise of a discretion. [15] Counsel acknowledged that the proposition, that unanimous support or even majority support was required for a partial termination, was incorrect. [16] Counsel also rejected the submission that the Respondents had failed in their duties as trustees. The Law [17] Section 241 of the Act provides: 241 Termination of trust (1) The Court may at any time, in respect of any trust to which this [Part] applies, terminate the trust in respect of (a) The whole or any part of the land; or (b) The whole or any part of any interest in land subject to the trust, by making an order vesting that land or that part of that interest in land in the persons entitled to it in their respective shares, whether at law or in equity, or in such other persons as the beneficial owners may direct. (2) Where a trust terminated under subsection (1) of this section is a whänau trust, the Court shall, notwithstanding anything in subsection (1) of this section, make an order vesting the land or the part of the land or the interest in the land in the persons entitled to it in their respective shares, whether at law or in equity, which persons are (a) The persons who were, at the creation of the trust and are at the date of the order, the beneficial owners of the land or the part of the land or the interest in the land; and (b) Any persons who, at the date of the order, are successors of any of the persons who were, at the creation of the trust, the beneficial owners of the land or the part of the land or the interest in the land.

6 2013 Maori Appellate Court MB 164 Discussion [18] As a starting point, it is trite law that the Act speaks to retention and utilisation by the owners, their whänau and hapū. 12 The Māori Land Court must interpret the Act in a manner that best furthers the principles set out in the Preamble and it must exercise its powers, duties and discretions in a manner that facilitates and promotes the retention, use development and control of Māori land as täonga tuku iho by Māori owners, their whänau, their hapū and their descendents, and that protects wāhi tapu. 13 The Court also has those obligations outlined in s 17, including to ascertain and give effect to the wishes of the owners, to determine or facilitate the settlement of disputes and other matters among the owners of any land, to protect minority interests from an oppressive majority and to protect majority interests from an unreasonable minority, and to ensure fairness in dealings with the owners. Is the unanimous consent of beneficiaries required for termination of trust? [19] Under several parts of the Act, reference is made to the fact that the Court must be satisfied before making orders that there is a sufficient degree of support from the beneficiaries or owners. For example ss and 328, regarding partitions and occupation orders, make it clear that the Court may not exercise its jurisdiction in the absence of sufficient support from the owners or trustees. The need for the Court to ascertain the wishes of the owners is particularly important to the establishment and management of trusts. In relation to ahu whenua trusts and whenua tōpu trusts established under ss 215 and 216 the Court must be satisfied that the owners have had sufficient notice and sufficient opportunity to discuss and consider the matter. [20] In terms of whänau trusts, the owners must consent to their interests being included in such a trust. In addition, before appointing trustees pursuant to s 222, the Court must be satisfied, inter alia, that a nominee is broadly acceptable to the beneficiaries. In the context of variations of trust orders the Court cannot make an order under s 244 unless, from the owners perspective, the three sufficiency tests are satisfied: notice, opportunity for discussion and support for the proposed variation Te Ture Whenua Māori Act 1993, Preamble, ss 2 and 17. Te Ture Whenua Māori Act 1993, s 2.

7 2013 Maori Appellate Court MB 165 [21] We note as well the requirements imposed on trustees under s 150A regarding the alienation of land Māori land vested in them. They may not do so without the consent of at least three quarters of the owners where there is no defined share in the land, or from owners holding 75% of the beneficial freehold interest in the land. Regarding long term leasing of Māori land by trustees, there must be at least half the owners consenting if there is no defined share in the land, or owners holding 50% of the beneficial freehold interest in the land must agree. [22] The short point is that while Parliament has provided for the Māori Land Court to ascertain the wishes of the owners, and in certain circumstances it has required that it assess sufficiency of support or it has imposed a specific percentage of ownership support, it has never required unanimous support. Nothing in the Preamble, s 2 or s 17 changes that position. Accordingly, it would be inconsistent with the legislative scheme to find otherwise. Thus there can be no requirement for unanimous owner or beneficiary support for the termination of a trust under s 241. We accept Mr Kahukiwa s submission on this point. [23] There is no statutory requirement for such a high, and in some instances, impossible threshold. Furthermore, when exercising its discretion whether to grant such an order, the Māori Land Court except in certain limited circumstances, is not bound by the outcome of a majority vote either in favour of or in opposition to an application for termination. That is because that Court must take into account a range of important considerations. [24] An equally critical consideration on an application for termination of trust, for example, will be the impact of any such order on any affected party. In this respect, and although determined under the Māori Affairs Act 1953 and its amendments, the decision in Rata - Te Rongoa A7 is apposite. That is to say, where unreasonable disadvantages would be created for any party, a request of termination of trust should be refused. We note in particular the following quote from that judgment: 14 Jurisdiction to allow withdrawal of participation in a trust is discretionary, to be refused where, in all the circumstances, withdrawal of a party from the trust would create unreasonable disadvantage to either the interests of the public, the other parties, or of other persons interested in the continuance of the trust, and, where any other unreasonable disadvantage exists after a broad overview consideration is had of all other relevant matters. The words unreasonable disadvantage denote unsuitability, a situation non politic rather than unjust, or not having practical wisdom. These definitions promote the idea of fairness. In terms of all classes of unreasonable 14 At 236

8 2013 Maori Appellate Court MB 166 disadvantage that may apply, the requirement is to look at the disadvantages and unsuitability of any request to sever an interest in the trust, and determine its practical wisdom and fairness in all respects relating to the interests of the classes of persons affected. [25] That decision was followed in Morgan - Tautuku Block XIII and s 13 where the Māori Land Court held that the Court will consider any disadvantages to the trust and the suitability or unsuitability of an application for termination. In effect, its role is to determine the wisdom and fairness of a request for termination, having regard to the interests of the persons affected. [26] Another example of the principles set out in Te Rongoa A7 being followed by the Māori Land Court in terms of trusts established under the Act, is the decision Lake v Taylor- Ngārara West B3B. In that case the trust had, over time, become dormant and consequently redundant to the extent that core aspects of the trust order had been ignored including elementary accountability and the failure to hold meetings, to provide and file annual accounts and to consult with the beneficiaries. [27] Three important considerations emerge from these decisions: (a) (b) (c) A change of mind is usually insufficient as a ground for termination unless there is an absence of opposition; Termination should be refused where it is likely to result in detriment or create unreasonable disadvantage to affected parties; Evidence of a trust failing to adhere to their terms of trust and core accountabilities may be sufficient grounds for termination. [28] We consider that there is nothing on the Mäori Land Court record to indicate that the Judge turned his mind to all the factors listed above. Thus he failed to take into account relevant considerations and it appears he applied an irrelevant matter, namely that there must be unanimous consent to the application. While the views of those affected is important, it was also important to consider the impact of the application on them. More critically, the future relations between the Appellant and his siblings, the ongoing viability of the trust, and the risk of affecting the aroha of the original gift and intention, were findings made without sufficient evidence. 15 For these reasons the appeal is allowed Taitokerau MB 139 (6 TTK 139)

9 2013 Maori Appellate Court MB 167 The Way Forward [29] Mr Kahukiwa submitted that if the appeal was upheld, this Court should grant the order under s 56 partially terminating the trust. To assist this Court apply the relevant considerations, he contended that the reasons for the application for termination amounted to more than that the Appellant changed his mind. Counsel argued that there was sufficient evidence before the Māori Land Court to confirm the following two reasons for the application: the Appellant wishes to ensure the shares in Waihou Hutoia D2A may be left by will to his children; and he considers that he can utilise and manage the interests more effectively than the current trustees. Finally, Mr Kahukiwa emphasised that there was no reasonable disadvantage to the affected parties should termination be granted. [30] Having carefully considered the submissions and the evidence on the Court file, our conclusion is that there is insufficient evidence to make the order sought. This means that there must be a rehearing of the application. The Māori Land Court is accordingly directed to conduct a rehearing and in doing so it should consider: (a) (b) (c) (d) (e) the Preamble, s 2, and other matters listed in s 17, including the extent to which partial termination achieves better retention, use, development and control of the land in accordance with the fundamental principles and purposes of the legislation; the purposes of the whānau trust; the extent of beneficiary and trustee consent; the impact of any termination on the remaining beneficiaries and the trust; and any evidence of dysfunction by the whānau trustees to justify the Māori Land Court s intervention. Has the performance of the trustees been unsatisfactory? [31] On the issue of the performance of the trustees, the Appellant s contention was that far from fulfilling their duties, the trustees had simply failed to do anything about their responsibilities. When pressed, Mr Kahukiwa acknowledged that there was no suggestion that the trustees had acted in breach of trust. His point was that there was no real evidence that the trustees were attending to their duties. This view was rejected by counsel for the Respondents. In our assessment there is again insufficient evidence to warrant making orders in the Appellant s favour. In any event, claims concerning the performance of trustees should be the subject of separate proceedings under ss 231 and 238 of the Act.

10 2013 Maori Appellate Court MB 168 Decision [32] The appeal is allowed. The order made by the Māori Land Court dismissing the application for a partial termination of trust pursuant to s 56(1)(b) is revoked. The Māori Land Court is directed to conduct a rehearing of the application in accordance with this Court s directions listed in para [31] as soon as possible. [33] Given the delays to date, we direct the Māori Land Court to hear the application for partial termination of trust on or before 31 May [34] As both parties were assisted by the Special Aid Fund there will be no order as to costs. Judge Reeves concurs with this judgment but is presently overseas. Pronounced at am/pm in on this day of 2013 C L Fox DEPUTY CHIEF JUDGE L R Harvey JUDGE