IN THE MAORI APPELLATE COURT OF NEW ZEALAND TAKITIMU DISTRICT 2011 Maori Appellate Court MB 55 (2011 APPEAL 55) A20100012737 UNDER Section 58, Te Ture Whenua Maori Act 1993 IN THE MATTER OF Akura Lands Trust BETWEEN AND MANU SHARON TE WHATA Appellant ANDREW PAHORO PAKU Respondent Hearing: 10 February 2011 (Heard at Hastings) Court: Deputy Chief Judge C L Fox Judge S T A Milroy Judge D J Ambler Appearances: Mrs M S Te Whata in person Mr Kershaw for the Respondent Judgment: 23 February 2011 RESERVED JUDGMENT OF THE MAORI APPELLATE COURT Copies to Counsel: J W Kershaw, Gawith Burridge, PO Box 454, Masterton 5840. Email: jock@gawith.co.nz TE WHATA V PAKU MAC 2011 Maori Appellate Court MB 55 [23 February 2011]
Introduction [1] This is an appeal from an order of Judge Coxhead dated 26 October 2010 removing the trustees of the Akura Lands Trust ( the Trust ). [2] We heard the appeal on 10 February 2011. At the conclusion of the hearing we varied Judge Coxhead s order and referred the application back to the lower Court to address the question of the appointment of replacement trustees with our reasons to follow. We now set out our reasons. Background [3] On 6 October 2003 Deputy Chief Judge Isaac (as he then was) made orders under ss 44 and 47 of Te Ture Whenua Māori Act 1993 ( the Act ) amending succession orders made in 1973 and 1974 in respect of the Māori land interests of the late Taawi Takaimaro Pineamine. The effect of the 2003 orders was that the Respondent, Mr Andrew Paku, was recognised as Mr Pineamine s son. As a result, Mr Paku became a significant owner in Akura No 18, Akura 1A1B, Akura 1C3B2 and Akura 4F Section 3, all of which are administered by the Trust. [4] Mr Paku s claim to being the son of Mr Pineamine was opposed by other land owners and their whanau. Some of those persons continue to dispute Mr Paku s whakapapa and entitlement however, no one has challenged the 2003 orders. [5] Subsequent to the 2003 orders Mr Paku did not receive any information from the Trust in relation to its activities, the use of the land, its financial position or the distribution of dividends. On 14 June 2007 Mr Kershaw, the solicitor for Mr Paku and his counsel before us, wrote to the Trust seeking that information. The Trust did not reply. [6] On 3 September 2009 Mr Paku applied to the lower Court for an order under s 238 of the Act requiring the Trust to provide a report on the administration of the Trust and an accounting of rental received and payments made for and on behalf of the Trust. The application was set down for hearing on 19 February 2010 and the Court directed the trustees to file a report addressing the issues raised in Mr Kershaw s letter of 14 June 2007 and other aspects of the Trust s activities and financial position. The trustees or their 2011 Maori Appellate Court MB 56
representative were also directed to appear at Court to answer any questions in relation to the report. [7] The application came before Judge Coxhead on 19 February 2010. The Appellant, Mrs Manu Te Whata, who was also the chairperson of the Trust, produced a report to the Court on the day of the hearing. Among other things, the report explained that the whanau of Akura did not recognise Mr Paku as an owner and for that reason the Trust had not made information available to Mr Paku. During the hearing Mrs Te Whata reiterated the Trust s stance that it did not recognise Mr Paku as an owner. This stance stemmed from the dispute over whether Mr Paku was Mr Pineamine s son. The application was adjourned to enable Mr Kershaw and Mr Paku to have an opportunity to consider the Trust s report. [8] The application came before Judge Coxhead again on 22 April 2010 and 10 June 2010. At both hearings the focus of the discussion was the Trust s unwillingness to recognise Mr Paku as an owner. On both occasions Judge Coxhead indicated that, in light of the Trust s position, one of the options for the Court was to remove the trustees. 1 At the conclusion of the hearing on 10 June 2010 Judge Coxhead adjourned the application to a further hearing to expressly consider the removal of trustees in the following terms: What I am going to do is I am going to adjourn this matter for another hearing and the question at the next hearing will be; (1) Can the trustees tell the Court why they should not be removed? [9] The final hearing took place on 26 October 2010. 2 Three of the trustees appeared, namely, Sandra Reiri, Kempton Tuirirangi and Raewyn Thompson. Mrs Te Whata did not attend though she had provided to the Court a copy of a letter dated 19 October 2010 to Mr Paku. The relevant part of the letter reads as follows:...we are writing this letter to inform you Andrew and your whanau through your lawyer Mr Kershaw, that, we the trustee s of Akura Lands Trust will treat all shareholders/beneficiaries including Andrew as a shareholder/beneficiary of Akura Lands trust whanau/hapu and intend to pay any dividends or beneficial entitlement payable to you in relation to your current shareholdings interests. Although the Maori Land Court has acknowledged Andrew as a natural son and to remove all possible doubts as to Andrews whanau connection to other shareholder/beneficiary, I hereby invite Andrew to take part in a DNA test to produce evidence that Andrew, does, in fact have the whanau toto (blood) connection. 1 2 See 2 Takitimu MB 138 (2 TKT 138), at 142-143; 3 Takitimu MB 124 (3 TKT 124), at 130, 132 and 133. 5 Takitimu MB 163 (5 TKT 163). 2011 Maori Appellate Court MB 57
If agreed to by Andrew and whānau we will offer our own blood for a DNA sample to be matched against Andrew. We also offer to pay for half the expense of the test fees. If however the DNA test results return a negative result then it is expected that Andrew or whoever receives the dividend or beneficial entitlement, this is to be paid back to the Akura Lands Trust whānau/hapū. The result of the DNA test should once and for all sort out any further disputes as to whether Andrew is in fact a blood relative. Assuming the results come back in favour of Andrew and does in fact confirm Andrews Toto to the whānau/hapū. [10] Judge Coxhead asked the trustees to clarify whether the letter meant that the recognition of Mr Paku was conditional upon him undertaking the DNA testing. Mrs Thompson confirmed that that was the case. [11] At the conclusion of the hearing Judge Coxhead issued an oral decision invoking s 240 of the Act and removing the trustees on the primary ground that the trustees were in breach of their duty to act fairly to all beneficiaries. The Court s orders were expressed in the following terms: 3...Therefore I think that that is serious enough for the removal of the trustees, the Court decision therefore is that the trustees will be removed and I will ask the case manager to enquire with the Māori Trustee as to whether they would take up the trusteeship and take up the appointment as the trustee for the Akura Trust Lands... So those are the orders of the Court and the direction is that the case manager is to enquire with the Māori Trustee as whether they will be accepting of this appointment and that is to be done as soon as possible and that is the conclusion of the matter. [12] Mrs Te Whata appeals Judge Coxhead s decision and is supported by her fellow trustees Mrs Reiri, Mr Tuirirangi, Mrs Thompson and Michael Allen Jnr. Of the remaining trustees, Joanne Hayes does not support the appeal and nothing has been heard of Michael Allen Snr. Mrs Te Whata says that these two trustees have in fact resigned. Case for the Appellant [13] Mrs Te Whata did not seek to challenge Judge Coxhead s reasons for removing the trustees. Rather, she sought to explain her non-attendance at the final hearing and to say that the letter of the 19 October 2010 had been misunderstood and that recognition of Mr Paku was not conditional on DNA testing. She said that the trustees were now prepared to abide 3 5 Takitimu MB 163 (5 TKT 163), at 176 and 177. 2011 Maori Appellate Court MB 58
the Court s orders. Furthermore, she referred to a meeting of owners held on 27 November 2010, after Judge Coxhead s decision, which supported the continuation of the trustees. Case for the Respondent [14] Mr Kershaw asked the Court to uphold Judge Coxhead s decision. He argued that the combination of the Trust s report of 19 February 2010, the history of the s 238 application before the Court and the Trust s letter of 19 October 2010 presented Judge Coxhead with sufficient grounds to remove the trustees. In response to issues raised by this Court, Mr Kershaw argued that the trustees had sufficient notice of the possibility that they would be removed and that Judge Coxhead was entitled to move from s 238 to s 240 by reason of s 37(3) of the Act. As for the question of the appointment of the Māori Trustee, Mr Paku was not insisting on that and Mr Kershaw agreed that the owners should have an opportunity to express a view on replacement trustees before the Court makes any appointment. Discussion [15] In Kacem v Bashir 4 the Supreme Court recently commented on Austin Nicholls & Co Inc v Stichting Lodestar 5 and the appellate approach. The Court reiterated the principles that apply to a general appeal and clarified that a general appeal is to be distinguished from an appeal against a decision made in the exercise of a discretion. The Court confirmed that the criteria for a successful appeal against a decision made in the exercise of a discretion are: (1) error of law or principle; (2) taking account of irrelevant considerations; (3) failing to take account of a relevant consideration; or (4) the decision is plainly wrong. 6 [16] The removal of trustees under s 240 is a decision made in the exercise of a discretion. Judge Coxhead was entitled to use the powers under s 240 in accordance with s 37(3) and we are satisfied that he gave sufficient notice to the trustees of his intention to do so. The failure of the trustees to abide the 2003 orders and to act impartially towards Mr Paku were sufficient grounds to warrant their removal. Further, it was open to Judge Coxhead to interpret the letter of 19 October 2010 as meaning that the trustees recognition of Mr Paku was conditional upon him undertaking the DNA testing. 4 5 6 Kacem v Bashir [2010] NZSC 112. Austin Nicholls & Co Inc v Stichting Lodestar [2007] NZSC 103. Kacem v Bashir at para [2]. 2011 Maori Appellate Court MB 59
[17] We do not consider that we can or should take into account Mrs Te Whata s interpretation of the letter as relayed to us at the appellate hearing or the views of the owners meeting of 27 November 2010. First, we must exercise our appellate function on the basis of the material that was before Judge Coxhead unless the grounds are made out to grant leave to adduce further evidence: rule 173 of the Māori Land Court Rules 1994. Mrs Te Whata did not seek leave to adduce further evidence and, in any event, the grounds were not made out to grant leave in terms of the recognised criteria. 7 Second, the meeting was called by Mrs Te Whata and some of her fellow trustees even though they had been removed as trustees and is thereby tainted. [18] Accordingly, there is no basis to interfere with Judge Coxhead s conclusion that the grounds were made out to remove the trustees. [19] However, the effect of Judge Coxhead s decision was to remove the trustees immediately prior to any replacement trustees being appointed. That left the Trust in a hiatus. That aspect of the decision was plainly wrong. The Court should never consciously leave a trust without trustees. [20] In our view, in the absence of suitable replacement trustees being available to be appointed immediately, whether interim or permanent, Judge Coxhead had to adjourn the application to a further hearing to consider the appointment of replacement trustees. Any order removing the trustees should have been subject to the appointment of replacement trustees. If Judge Coxhead considered that the trustees to be removed should be restricted in what they could do in the meantime, then an injunction could have issued. [21] Furthermore, there is the question of the intended appointment of the Māori Trustee. The minute of 26 October 2010 suggests that, provided that the Māori Trustee consented to his appointment, Judge Coxhead intended to appoint the Māori Trustee without a further hearing. In our view that approach was also wrong at law. Section 222(2)(b) provides: 222 Appointment of trustees...(2) The Court, in deciding whether to appoint any individual or body to be a trustee of a trust constituted under this Part of this Act, 7 We rely on Dragevich v Martinovich [1969] NZLR 306; Whareongaonga v Skuse Whareongaonga 5 (1973) 30 Gisborne Appellate Court MB 158 (30 APGS 158); Hoko Papamoa 2A1 (2003) 20 Waikato- Maniapoto Appellate Court MB 167 (20 APWM 167). 2011 Maori Appellate Court MB 60
... (b) Shall not appoint an individual or body unless it is satisfied that the appointment of that individual or body would be broadly acceptable to the beneficiaries. [22] Section 222(2)(b) requires the Court to gauge the views of the owners. Ordinarily, that will be following a meeting of owners. In rare circumstances the Court may gauge the views of the owners during a hearing. But neither occurred here. An argument may be put forward that the Court can invoke s 237 of the Act and the inherent jurisdiction of the High Court to appoint a trustee without first gauging the support of the owners, but that can only be in extraordinary circumstances. After all, such a step would be against the weight of the Preamble and ss 2 and 17 of the Act which promote the views of the owners. In any event, there is no suggestion that extraordinary circumstances existed for the Court to overlook providing the owners with an opportunity to express a view on replacement trustees. Even Mr Kershaw did not advocate that. [23] Accordingly, we conclude that, although the grounds were made out to remove the trustees, Judge Coxhead should have adjourned the application to a further hearing for the owners to express their views on the question of replacement trustees and for the Court to then remove the trustees simultaneously with appointing replacement trustees. Ancillary matters [24] There are two ancillary matters that require comment. [25] First, notwithstanding Judge Coxhead s order removing the trustees on 26 October 2010 the trustees continued to act by convening a meeting of trustees on 27 October 2010, effecting payment of accounts, effecting payment of the security for costs ordered against Mrs Te Whata and convening a purported special general meeting of owners on 27 November 2010. On 7 February 2011 we addressed the trustees actions by issuing an interim injunction. 8 The fact that we have now concluded that Judge Coxhead should not have immediately removed the trustees does not thereby retrospectively validate the trustees subsequent actions. Judge Coxhead s order of 26 October 2010 was effective immediately see s 41(2) and, as per our decision, his order is varied as from 10 February 2011. Therefore, between 26 October 2010 and 10 February 2011 the trustees were removed and some have acted unlawfully. The trustees are by this decision restored but in a caretaker role only and subject to the interim injunction. 8 Te Whata Akura Lands Trust (2011) 2011 Māori Appellate Court MB 39 (2011 APPEAL 39). 2011 Maori Appellate Court MB 61
[26] Second, we are obliged to comment on the manner in which the minute of 26 October 2010 was expressed. Unfortunately, the minute was ambiguous as to whether the order removing the trustees had been made though we resolved that it had, was unclear as to whether or not the appointment of the Māori Trustee was to be made in Chambers or at a further hearing and did not expressly invoke ss 37(3) and 240 in relation to the orders made. Best practice dictates that the Court s minutes clearly set out the statutory provision relied on for any orders, the exact nature of the orders and, if matters remain pending, whether the Court will deal with those matters in Chambers or at a further hearing. Orders [27] Pursuant to ss 56(1)(c) and 73 there is an order varying the order removing the trustees on 26 October 2010 to be conditional on an order of the lower Court appointing replacement trustees. [28] Pursuant to s 56(1)(e) the application is referred back to the lower Court for a rehearing to consider the appointment of replacement trustees following the meeting of owners which is to be held on 19 March 2011. The Registrar is directed to facilitate the meeting of owners and report on the outcome to the lower Court in advance of the rehearing. The meeting of owners will need to consider and vote on replacement trustees, whether that be the Māori Trustee or others. It is a matter for the lower Court whether any of the trustees removed may be reappointed as trustees. [29] Pursuant to s 19(1)(b) the interim injunction made by this Court on 7 February 2011 prohibiting the trustees from paying any funds out of the Trust s bank account is varied to allow for payment of the costs associated with the holding of the meeting of owners on 19 March 2011 but is otherwise continued pending the appointment of replacement trustees and transfer of authorisation for operation of the bank account to the replacement trustees. [30] Pursuant to s 64(1) these orders take effect on 10 February 2011. Costs [31] The appellant and respondent are to file any submissions on costs by 9 March 2011. 2011 Maori Appellate Court MB 62
[32] The security for costs ordered of $750.00 was initially paid out of the Trust s funds. On 7 February 2011 we directed Mrs Te Whata to personally tender the $750.00 on the morning of the hearing, which she did. As a result, the Court now holds $1,500.00 by way of security for costs. That situation needs to be corrected. Accordingly, we direct the Registrar to effect payment of $750.00 to the Trust by way of reimbursement of the first payment. The balance of $750.00 will remain as security for costs pending our decision on costs. Dated this 23 rd day of February 2011. C L Fox S T A Milroy D J Ambler DEPUTY CHIEF JUDGE JUDGE JUDGE 2011 Maori Appellate Court MB 63