Upston Louise: Land Transfer Bill — First ReadingText is incorporated into the Bound VolumeUpston Louise: Land Transfer Bill — First Reading[Sitting date: 15 March 2016. Volume:712;Page:9682. Text is incorporated into the Bound Volume.]Hon LOUISE UPSTON (Minister for Land Information): I move That the Land Transfer Bill be now read a first time. I nominate that this bill be referred to the Government Administration Committee for consideration. This bill has been developed in response to the Law Commission’s review of the Land Transfer Act of 1952. That review resulted in the commission’s 2010 report A New Land Transfer Act. The Law Commission’s report showed that the existing land transfer legislation is fundamentally sound but it is well overdue for modernisation simplification and consolidation. The bill will modernise New Zealand’s land transfer legislation to make it clearer more workable and more consistent with modern ways of working. It retains the core principles of the Torrens system of land registration and introduces new measures to improve security of property rights.The Land Transfer Act is over 60 years old and contains provisions from early legislation dating back over 100 years. Much of the language is archaic complex and difficult to understand. The Act is focused on paper-based transactions which is completely at odds with the modern reality of an electronic land title registration system. The Act has to be read alongside two stand-alone amendment Acts. This creates a legislative framework that is difficult to navigate for property owners wanting to understand their rights and obligations. The Land Transfer Bill addresses these problems by replacing all three statutes with a single statute that is clear workable and focused on electronic registration.As land is the principal source of wealth and wealth generation in New Zealand the land transfer system is critical to the ongoing functioning of the economy. Confidence in the certainty of property rights in New Zealand underpins economic growth and attracts overseas investment. A land transfer system that provides people and businesses with secure property rights is essential for a prosperous and sustainable economy. It is still true that for many New Zealanders buying a home is the biggest investment they will ever make. To ensure people continue to be secure in their property ownership the bill retains the principle of indefeasibility of title. This is a fundamental aspect of the Torrens system which provides that in general once registered a transaction cannot be set aside.However the bill also recognises that in some circumstances indefeasibility of title can result in unfair outcomes. For example an owner who is an innocent victim of third-party fraud can lose their home to a registered purchaser. Another example is where Māori freehold land is sold in breach of Te Ture Whenua Maori Act depriving current and future generations of Māori landowners of their ancestral land. To address this problem and improve security of property rights the bill gives the court discretion in limited circumstances to order the alteration of the land title register where necessary to avoid manifest injustice. In situations like the ones that I have just described if the outcome would be manifestly unjust the court would have the power to order ownership to be restored to the previous registered owner. The manifest injustice threshold is intended to balance the need for certainty of property rights with the need to protect against unfair outcomes. The limited judicial discretion is intended for use only in exceptional cases.Another measure aimed at improving security of property rights and addressing mortgage fraud is the new requirement for financial institutions to take reasonable steps to verify the identity of customers taking out mortgages. The bill also makes changes to the Crown compensation scheme for those whose land or an interest in land through the operation of the land transfer system—these changes will make this scheme fairer for landowners and the Crown. Currently compensation is based on land value at the date of loss. This can be unfair. The loss can take some time to discover and the compensation in that case would not cover an increase in property value or improvements made to the property in the interim. The bill addresses this problem by providing for compensation to be based on the value of the land at the date when the claimant discovers or should reasonably have discovered the loss. In most cases the new compensation formula will result in claimants getting more compensation from the Crown.The court will however have discretion to change the valuation date and add a loss adjustment allowance based on property market movement to avoid an unfair outcome. For example the loss adjustment allowance might be necessary when a claim is made in a rising market and land value is appreciating. However it might not be appropriate in a falling market when land value is depreciating.The bill also makes clear that landowners are required to take reasonable care in their land dealings. Compensation can be reduced where the claimant contributes to the loss. The Crown will be able to take proceedings to recover the amount of compensation paid for loss caused by a third party.The bill improves the protection of privacy by extending the Registrar-General of Land’s statutory powers to withhold an individual’s personal information for the protection of their personal safety. The bill also clarifies that the electronic register is subject to the relevant privacy principles under the Privacy Act.A number of measures in the bill will also improve efficiency. These include shifting some certification requirements from the Act to regulations. This makes it easier to automate more transactions and update requirements to keep pace with changing technology. The bill also allows covenants in gross to be noted on the title. This is a new mechanism that offers a cheaper and quicker alternative to the current practice of registering encumbrances which can slow down land development. Another efficiency measure is a simpler process for claiming landownership on a limited title on the basis of adverse possession.This bill has been a long time in the making. I want to thank the Law Commission and in particular to acknowledge the contribution of George Tanner QC the commissioner responsible for the review of the Land Transfer Act. I also want to acknowledge the contribution made by Warren Moyes the former Wellington district land registrar and Land Information New Zealand official. Sadly George and Warren have since passed away.Land underpins everything. The ability to transact in land efficiently and with confidence in the security of property rights is vital for the economic and social well-being of New Zealand. The Land Transfer Bill will deliver long-overdue reforms to New Zealand land law that will enable everyone transacting in land to do so with greater confidence and certainty. I commend this bill to the House.