Finlayson ChristopherLAND TRANSFER BILLSecond ReadingHon CHRISTOPHER FINLAYSON (Attorney-General) on behalf of the Minister for Land Information: I move That the Land Transfer Bill be now read a second time. This is an exciting piece of legislation that shows the Government's commitment to Kiwi property owners protecting them against injustice and providing for a simpler and a more modern way of undertaking land transactions. Parliament recently passed the Canterbury Property Boundaries and Related Matters Act and the purpose of that legislation was to provide certainty about the exact location of legal property boundaries in areas where the Canterbury earthquakes had triggered significant ground shifts. This legislation gives those transacting in land anywhere in New Zealand greater confidence and certainty by modernising what are really quite outdated provisions in land transfer legislation by making it more accessible and workable and by introducing new measures to improve the security of property rights.Can I commend the good work of the Government Administration Committee for its efforts in considering this bill and I also want to thank those organisations and people who actually made submissions. The committee heard submissions from seven submitters. It had in fact received 13 written submissions. All of the submitters were generally supportive of the provisions in the bill but did have concerns with certain detailed aspects and I will cover some of those matters now.There was strong opposition to the requirements for mortgagees to verify the identity of mortgagors. Some submitters considered the new measures unnecessary because of the low incidence in this country of mortgage fraud and the existing requirements on lawyers and conveyancers to verify identity as part of conveyancing processes. Those submitters also opposed the related penalties where failure to comply results in fraudulent execution of a mortgage. Having been advised of the potential for significant compliance costs for banks the committee recommended removing these requirements and the related penalties from the bill. I still think it is fair and reasonable to expect mortgagees to bear more of the responsibility if through identity fraud one of their customers is able to assume the identity of a registered property owner and unlawfully execute a mortgage over that person's property. Currently the Crown is liable for compensation for the value of the property in that situation even though banks and other financial institutions are in the best position to determine whether a customer taking out a mortgage really is who they say they are. However on balance I agree with the committee that the current low-risk profile for identity-based mortgage fraud does not warrant interventions that would impose significant compliance costs on banks or inevitably their customers through this legislation. If the risk of mortgage fraud in fact does increase we need to be able to respond effectively so I welcome the committee's recommendation for mortgage fraud occurrence to be monitored on an ongoing basis to ensure that the absence of these requirements and penalties do not lead to unintended consequences. When the bill is enacted the Minister is going to be asking officials from Land Information New Zealand to undertake this monitoring work.Another area of concern for submitters was the new judicial discretion enabling the High Court in limited circumstances to order the alteration of the land titles register where necessary to avoid manifest injustice. There was support for this exception to the principle of indefeasibility in situations where a strict application of the principle would result in unfair outcomes—so for example where Māori freehold land is sold outside the whānau or hapū without having followed the requirements under Te Ture Whenua Maori Act 1993 to first offer the land to the preferred classes of alienees. Some submitters thought the bill lacked certainty about when the exception to indefeasibility would apply and were concerned that the discretion might be used more frequently than was intended. The committee's changes have addressed this concern by making it very clear that the threshold for manifest justice is very high and court orders can be made under these provisions only in exceptional circumstances when compensation cannot properly address the injustice. So I think these amendments appropriately balance the need for the certainty of property rights with the need to protect against unfair outcomes.Improvements have also been made to the bill's regulation-making provisions. In addition to the tax statement exemption regulations a requirement has been added for the Minister for Land Information to review the regulations after 5 years. That review must include considering whether the exemptions should be shifted to the primary legislation. This reflects the principle that regulated exemptions should be subject to review.In relation to the court's discretion to adjust compensation for loss of an estate or interest in land the power to regulate a formula to calculate market value increases has been removed and replaced with a discretion to have a second market valuation done at the date of judgment. This will make compensation provisions more workable. A transitional regulation-making power has also been added to the bill to assist the transition to the new land transfer system. This power will expire 3 years after the commencement of the provision. The bill as introduced would reduce the time frame in which a guaranteed title search must be obtained from 2 months to 10 days. In response to concerns from submitters the 10-day period has been increased to 20 days.Several minor technical amendments have been made to the bill to correct minor drafting omissions support alignment of the bill with policy intent and practice and improve clarity and certainty. These include the addition of an explicit reference to the Torrens system principle of maintaining integrity of title to estates and interests in land; amending the definition of land to clarify the policy intent that it should remain consistent with the definition in the Land Transfer Act 1952; adding a definition of paper instrument; amending the definition of electronic instrument to ensure that it covers all instruments in electronic form; and making changes to clarify that a cross-lease should be able to be varied only with the consent of all mortgagees as a variation to one lease may in fact affect others.Finally I share the committee's view that the policy issue of giving appropriately qualified and experienced legal executives the same instrument certification rights as lawyers and conveyancers is outside the scope of the bill. That is really an occupational regulation issue.Hon Ruth Dyson: But do you agree with it?Hon CHRISTOPHER FINLAYSON: Probably. Currently land transfer instrument certification relies heavily on the regulatory oversight of practitioners which is provided by the Lawyers and Conveyancers Act. Extending those certification rights to legal executives should not be considered in isolation from the consideration of the occupational regulation of lawyers and conveyancers.I am confident the amendments recommended by the committee will improve the workability of the bill and clarify its scope and intent. I certainly think this is an important step in progressing the long-overdue update of the land transfer legislation. Before I commend the bill to the House I am sure Mr Cunliffe will agree with me that this is an area that sounds like a geek's paradise but really it is fundamental to the way in which so many people act when purchasing houses or dealing with leases and instruments of that kind. So it is a very important piece of legislation—I see Mr Cunliffe nodding wisely and sagely—and that is why it is important that the legislation be updated on a regular basis and that is why with some joy and excitement I have to say I commend the bill to the House.