Source: http://maorilawreview.co.nz/2016/06/review-of-te-ture-whenua-maori-act-1993-te-ture-whenua-maori-bill-management-entities/
Timestamp: 2017-12-15 12:02:24
Document Index: 248886775

Matched Legal Cases: ['art 5', 'art 1', 'art 12', 'art 1', 'art 1', 'art 1', 'art 1']

Review of Te Ture Whenua Māori Act 1993 – Te Ture Whenua Māori Bill – management entities – Māori Law Review
Review of Te Ture Whenua Māori Act 1993 – Te Ture Whenua Māori Bill – management entities
Toni Love has followed the law reform process and has prepared a series of articles examining the most significant components of the new Bill as introduced to the House of Representatives. In this article she examines the provisions relating to management entities for Māori land.
This article is the seventh in a series that considers the substantive changes in the Bill as introduced, Te Ture Whenua Māori Bill (“the Bill”). The Bill was introduced into the House of Representatives on 15 April 2016.
4 Ownership interests in Māori freehold land
7 Management entities (this article)
Submissions received during the consultation process and claimants before the Waitangi Tribunal raised a number of concerns about the new model for governance proposed in the Bill. The new management structures available to land owners represent some of the most dramatic differences between the Act and the Bill.
Part 5 of the Bill is titled ‘Authority to act in relation to Māori freehold land’. It sets out two types of structures. The first is a management structure, a governance body, which is owner appointed. The governance bodies replace ahu whenua trusts, putea trusts, and Māori incorporations, with a more streamlined and standardised form of management structure. The second is the kaiwhakahaere, an externally appointed manager. The kaiwhakahaere is intended to maintain the agency arrangements where they can be appointed for specific, one-off issues, to act as an agent for the owners under the supervision of the court.
The new governance body is closest to the existing Māori incorporation. Māori owners can also choose a governance body in the form of a private trust. The introduction of a new management model potentially enables greater flexibility for Māori land owners to create governance structures that are more culturally aligned as well as promote owner autonomy. Although the structures are heavily prescribed, their potential to be more aligned with tikanga is significant.
The Court’s role has been significantly reduced and the power to establish a governance body now rests with owners. The Court’s role is primarily to be the final check for compliance with the Act, and one of last resort, for particularly serious situations. Overall the effect is the standardisation of the management of Māori freehold land.
The Bill removes all the management entities available under the Act except for the whānau trust. Instead the Bill enables owners to choose a governance body in the form of a rangatōpū (private trust or body corporate) (sch 3, part 1, cl 3).
Under the Act the Court has exclusive jurisdiction to constitute trusts the forms of statutory trusts established by the Act (s 211). This includes setting out the terms of the trust; appointing, removing and conferring powers on trustees; keeping of accounts; reviewing the trust, terminating a trust; and enforcing trust obligations (part 12). Māori incorporations are constituted by the court (s 247). To establish an Incorporation the court must decide it is in the interests of the owners (s 247).
Under the Bill, a governance body is an entity that is authorised by the owners of Māori freehold land to manage the land on behalf of the owners under a governance agreement (cl 155). The body may be a rangatōpū, an existing statutory body, or a representative entity (cl 159). A rangatōpū can include existing trusts or incorporations; however, existing trusts and incorporations do not become rangatōpū unless they choose to (sch 1, cls 2 and 12).
Owners of Māori freehold land may appoint a governance body to manage land and other assets (cl 157). This excludes Māori freehold land held by a sole owner or by joint tenants; or whenua tāpui (cl 157). The governance body holds assets on trust and must manage them in accordance with the governance agreement (cl 155). The owners retain the beneficial ownership of the land only and on cancellation of a governance agreement the legal ownership vests back in the owners (cl 156).
Part One of Schedule Three of the Bill contains the process for appointing a governance body (cl 159). All appointments require the owners to make a decision on the type of governance body they wish to appoint; the form of the governance body if a rangatōpū is chosen; and whether the agreement is separate or combined if the governance body is already party to an agreement (sch 3, part 1, cl 3). The owners are required to approve the governance agreement or a replacement governance agreement; appoint or approve kaitiaki; and the governance body must register the governance agreement (Sch 3, Part 1, cls 5-7).
Governance agreements require the agreement of the owners who together hold more than 50 percent of the participating owners’ total share in the land, while revocation requires agreement of 75 percent or more of the participating owners (Sch 3, Part 1, cls 6 and 10 and cl 174). Revocation that relates to all the land managed under the agreement begins cancellation of that agreement (cl 174). The agreement is cancelled when the Court issues an order cancelling the agreement, a governance body amalgamates, or a governance body is replaced (cls 175 – 178).
The Bill prescribes the set requirements for kaitiaki of a governance body, which includes compulsory rotation (cl 184 and Sch 3, Part 1, cl 6). ‘Kaitiaki’ is defined in the Bill as “a member of the board of the body of a Public Trust, or a Māori Trust Board; the Māori Trustee; a member of the committee of management in a Māori incorporation; a trustee; or a person occupying a position in the body that is comparable with that of a director of a company” (cl 5). Where a governance agreement is silent on the term of office for kaitiaki, the default position is for the term to be for three years. However, a governance agreement cannot appoint kaitiaki for greater than three years. For existing ahu whenua and whenua tōpū trusts there will no longer be life appointments; however they can choose a fixed term of any duration (answers to written question of John Grant, WAI 2478, #A32, 27 November 2015, at 21).
Role of the Māori Land Court
Under the Act, the Court’s jurisdiction in relation to trusts is extensive; however, under the Bill the Court has no role in the appointment and establishment of a governance body. It is the responsibility of the owners to ensure compliance with the legislation, and once established, it is the responsibility of the governance body to finalise its appointment by applying to the chief executive for registration of the agreement (cls 162 and 163). The Court is limited to reviewing the appointment or revocation of a governance body on application only, and its role is to simply check for compliance with the Act of the appointment of the governance body and the governance agreement; or the eligibility of the appointed kaitiaki (cl 188).
Although limited, the court does retain some power to act in relation to governance bodies once they are established. They may appoint or disqualify a kaitiaki in certain circumstances; they may investigate a kaitiaki appointment; and they may investigate a governance body where they are satisfied that a governance body is or may be operating in a manner that creates, or is likely to create, a substantial risk of serious loss to the owners (cls 186, 187, 216, 220).
A kaiwhakahaere is defined in the Bill as “a person appointed by the court to represent owners of Māori freehold land for a specified administrative purpose” (cl 5). A kaiwhakahaere either, oversees a governance body’s preparation and implementation of a full distribution scheme under cl 221; or acts on behalf of owners of Māori freehold land that is not managed under a governance agreement for a purpose specified in cl 190. These purposes largely reflect those for which an agent is appointed under the Act (s 183(6)). The Court may appoint a kaiwhakahaere on its own initiative or on application of an interested person (cl 193). This could include a local authority seeking rate payments or a neighbour owner intending to serve adjoining land owners with applications for resource consent.[4]
A kaiwhakahaere has all the powers necessary to fulfil the purpose for which they were appointed, subject to any conditions imposed by the Court (cl 192). They must consult with the owners about any proposed actions; inform the owners about actions taken; and comply with any owner direction (cl 191). Owners are required to be included in the appointment process, except in certain circumstances (cl 193).
A kaiwhakahaere carries over the agency provisions from the Act. Agents are appointed in cases where owner engagement is difficult to obtain. This provides a mechanism for the courts to intervene where land is not being managed effectively or where the owner or owners, may need further assistance in managing their land.
Whānau Trusts have become the central type of trust under the Bill. The Bill distinguishes between whānau trusts that operate while the owner is living from a whānau trust that is operational on the owner’s death and prescribes the requirements for a whānau trust to be valid (cls 59 and 60). Where there is more than one eligible beneficiary, there is a presumption that favours the establishment of a whānau trust on intestacy (cl 247).
The court has extensive powers in relation to trusts under the Act. However, under the Bill, the Court has only limited jurisdiction to inquire into and determine whether the whānau trust complies with the Bill; whether the beneficiaries are eligible; whether the trustees are eligible; whether the property is capable of being trust property; any question or dispute in relation to the administration of the trust; and any question in relation to the appointment, replacement, or removal of trustees (cl 68). On application, the Court may amend the terms of the trust, which include correcting errors or omissions, and adding, removing, or varying any conditions or restrictions relating to trust property; and it may validate the actions of trustees (cls 68 and 69).
A kaiwhakamarumaru is someone who provides protection or guardianship to another to prevent harm to that person (see the Bill’s Explanatory Note). A kaiwhakamarumaru is not a management structure, but is appointed by the court, on application, in order to assist an owner requiring protection in the management of their land (cl 73).
Land and other property does not vest in the kaiwhakamarumaru; however a kaiwhakamarumaru is entitled to deal with the property in any way necessary to carry out the terms of the order, and while the order remains in force, the owner is not capable of exercising any powers they have in respect of the property (cl 77).
A kaiwhakamarumaru is similar to a property manager under the Protection of Personal and Property Rights Act. Common examples where a kaiwhakamarumaru may be appointed are where persons lack legal capacity (a minor) or mental capacity (illness or disease). The kaiwhakamarumaru is generally appointed for the duration of the incapacity.
Māori Incorporations will continue under the Bill as governance bodies. Each member of the committee of management is a kaitiaki of the governance body, the assets and liabilities become the asset base, the constitution of the incorporation is the governance agreement, and the shares continue to be individual freehold interests (sch 1, cls 2 and 3). Existing ahu whenua trusts or whenua tōpu trusts continue as governance bodies in the form of a private trust. The trustees of the trust are the governance body and where the trustee is an Incorporation the Incorporation may be party to more than one agreement (Sch 1, cls 12 and 13). The terms of the trust are the governance agreement and the trust property is the asset base (sch 1, cl 13).
Existing kai tiaki and whānau trusts of Māori land continue as if the Bill had not been enacted (sch 1, cls 19 and 20).
Governance bodies that are Incorporations or trusts may become rangatōpū; however, there is no requirement to transition (cl 160). The process for transition is detailed in Schedule 3 of the Bill.
The Tribunal considered the ability of a governance body to make decisions without owner agreement problematic because it effectively allows a governance entity to decide on its own to enter into significant decisions that in practical terms are akin to alienation of Māori land (p 299). This is even more problematic because the appointment of a rangatōpū and related governance agreement can occur with the agreement of only 50 per cent of participating owners, and if a second meeting process is used without any quorum requirement, then even quite small numbers of owners can conceivably ‘capture’ and pass on control of decisions like those (p 299). However, such decisions can affect and utilise the land interests of others for long periods, without having to gain their agreement or even the agreement of a reasonable percentage of them, or without an independent check, as currently could occur under the Act. The crucial point from a Treaty perspective is that while the participating owners may be exercising tino rangatiratanga over their own land interests, they are also exercising it in respect of land interests they do not own, and do not necessarily represent, as the ahi kā or home people would in customary terms (p 299).
A governance body must hold the asset base on trust for the owners. The kaitiaki are required to manage the land in accordance with the governance agreement; act honestly and in good faith; and exercise a degree of care and diligence that a reasonable person with the same responsibilities would exercise in the circumstances (cl 203). These duties are more akin to director’s duties as found in the Companies Act rather than trustee’s duties (Companies Act 1993, s 131). The Crown clarified in the Tribunal’s inquiry that trustees of private trusts will continue to be bound by general trust law and as a matter of law all governance bodies owe general fiduciary duties to the beneficial owners, a point the Tribunal accepted (p 317).
The new management model is complex, elaborate and heavily prescriptive. However, the heavily prescriptive nature of the Bill overall reflects the move to use procedural safeguards as opposed to judicial discretion in order to promote owner autonomy and rangatiratanga, while still ensuring the Crown fulfils its duty of active protection. The management framework of trusts and incorporations under the Act was far simpler because the final decision in many cases rested with the Court. However, the Court’s reduced role means that owners can no longer depend on the Court to make decisions in their best interests, because that decision now rests with the owners themselves. The complexity may reflect the drafting style overall and any confusion or uncertainty may be alleviated over time as owners and professionals become familiar with the inner workings of the Bill. Importantly, this will require significant support from the Māori Land Service to ensure the provision of information to owners as well as the training offered for kaitiaki is adequate to enable best practice. The Māori Land Service is thus essential for the effective operation of the Bill (p 340).
One of the issues identified by the Review Panel was that a lack of Māori land title governance is considered to be a major contributor to the underutilisation of Māori land.[5] This assumption has been questioned and the Māori Agribusiness in New Zealand report suggests it was not a major contributor. Overall the report found that delivering the productive potential of Māori freehold land requires a multifaceted approach that involves a range of agencies and entities both within government and within Māoridom. This includes support of social structures and the development of collective approaches to land management and development; all level training; specialist support to assist all levels of development; and the streamlining of the Act’s processes and procedures.[6] Further, the Owner Aspirations report highlighted access to resources being a major barrier to utilisation.[7] This suggests that a complete overhaul of the management structure may not have been necessary and may not achieve the reforms aims if the barriers identified in the reports remain.
Interestingly, the management regime chosen is a structure that most closely reflects the Māori Incorporation under the Act. Given the broad range of trust entities available in the Act, Māori have not preferred the more company-like option of an incorporation (p 280). No new Incorporations have been established since the enactment of the Act, while a number have been terminated or converted into ahu whenua trusts, with a further 1,553 new ahu whenua trusts having been formed since 1993.[8] Many of these trusts and incorporations have flourished under the current regime; however, a new regime has been proposed without investigating the operation or effectiveness of the 1993 Act’s mechanisms.[9] This suggests that legislative change of governance structures may be insufficient to address underutilisation, a concern raised in submissions and during the Tribunal’s inquiry.
Although the Bill reduces the role of the Court significantly, it does retain some residual involvement of the court in respect of some owner decisions. The Tribunal focused on the Court’s supervisory powers over governance bodies under the Bill. In particular the Tribunal considered the ability of the Court to review decisions already made (p 308). Clause 188 of the Bill enables the Court to ‘review certain decisions of owners relating to governance bodies’; however the Tribunal thought it unlikely that it would see much use because it is limited to a process checking exercise and does not enable the court to consider or reject a governance entity or agreement for failings on the merits (p 313).
Clause 216, however, provides the Court a wide power to review a governance body once appointed. Although some limitations existed, the Tribunal considered that it is possible for this clause to be utilised in a range of circumstances, and thus is a very powerful means of review of the actions of governance bodies and the kaitiaki (p 314). For example, the Court can initiate action if it is considering whether to issue an injunction (cl 407; p 314).
Clause 220 gives broad powers for disqualifying kaitiaki who have been shown to be ineligible under the statute or for persistent failure to comply with the governance agreement or any rule of law, or who have been guilty of fraud or importantly who have acted in a ‘reckless or incompetent manner’ (p 315). However, the process is complex and only available in limited circumstances (p 320). Further, the Bill does not state whether kaitiaki appointed as company directors of a governance body can be held accountable by the Court to exercise their decision-making in accordance with tikanga, or to require them to place any weight on the concept of the land being a taonga tuku iho under the company’s management. As the duty is not provided for expressly it seems unlikely. Overall, the Tribunal thought that the Bill reduced the protections of owners because it does not have the same safeguards in respect of kaitiaki or trustees as the existing Act (p 320).
The power to revoke appointments of governance entities is an owners’ decision (cl 174); however, the Court does have considerable discretionary power under cl 175 to make an order to start the owners’ process of revocation of appointments (p 316). Although this is a significant discretionary power for the Court, it is protective only in the sense of it being very much an ambulance at the bottom of the cliff after sufficiently serious misconduct or incompetence has led to a serious situation or a disaster for the rangatōpū (p 316).
The Tribunal considered the Crown’s submission that the Act can constitute a ‘barrier’ to decision-making in respect of utilisation. Although the Tribunal determined that the flexibility of discretions vested in the court in respect of its protective supervisory functions could support such a proposition, without empirical evidence, the actual position remains unknown (p 281 and 288). The Tribunal considered that in this situation, where significant Māori Treaty rights are at stake, the Crown has to ensure that its legislative reform is based on definite fact, not conjecture (p 280).
The Act confirms that the Māori Land Court has the same powers as the High Court in respect of the trusts it has jurisdiction over, regardless of whether those powers were statutory, or inherent, or existed by operation of any rule of law (s 237). The Tribunal considered the Bill’s absence of the specific reference to inherent powers in cl 305 means it is highly likely that it will be interpreted as having purposefully been omitted, intending that the Māori Land Court should not be able to exercise anything other than explicit statutory powers in respect of trusts (p 318). The Crown provided no logical reason for the removal of that jurisdiction and they considered that the reduction of the Court’s equitable relief powers to be inconsistent with Treaty duties on the Crown of providing a court of relief for Māori landowners (pp 318–319). The purpose of the Bill is said to be to remove ‘barriers’ to decision-making in respect of the utilisation of Māori land; however, the Tribunal found that there is no evidence that suggests that the court’s power to grant equitable relief causes any ‘barrier’ to that decision-making process (p 319). Importantly, the ability to grant equitable relief appears to remain available to the Court under cl 375, which expressly allows the Court to make an order for equitable relief if it is satisfied that the order is necessary to achieve a just outcome; and any other available relief is insufficient to achieve a just outcome. This power applies irrespective of the Act the Court is exercising jurisdiction under (cl 375).
Overall the supervisory powers of the Court have been reduced significantly to situations after the fact. That is that after governance bodies have been appointed and problems occur, the Court will provide an ambulance at the bottom of the cliff (p 346). Although the Court will still have significant discretionary powers in the event of disaster or mishap, it is not clear that the Court can require kaitiaki (as company directors) to act in accordance with tikanga or place proper weight on the land under their control as being taonga tuku iho (p 346). Nonetheless, Māori owners will have to rely on the Māori Land Court because the High Court remains difficult to access and there is the additional possibility of an award of costs (p 346). The removal of Court’s power to grant equitable remedies under the new Bill is not consistent with the principle of active protection, and the Waitangi Tribunal found that Māori will be prejudiced if they cannot obtain the same remedies from the Court in future as they can at present (p 346). Importantly, the Tribunal concluded that Treaty principles do not require any one particular form of protective mechanism, so long as the Crown’s duty of active protection is provided for in a form that is effective and is acceptable to Māori (p 343). However, before the current protective powers of the court can be removed, properly-informed, broad-based support from Māori would be essential. The reforms will be Treaty compliant only if Māori agree to them (p 343).
[4] Te Tari o te Kaiwhakawā Matua o te Kooti Whenua Māori: Te Ture Whenua Māori Bill Submission of the Judges of the Māori Land Court 7 August 2015, at [273].
[5] Te Ture Whenua Māori Act 1993 Review Panel Report, Poutū-te-rangi 2014 at 17, 21, 22, and 32.
[6] Māori Agribusiness in New Zealand: A Study of the Māori Freehold Land Resource, Ministry of Agriculture and Forestry (2011) at iv.
[7] Owner Aspirations Regarding Utilisation of Māori Land, Te Puni Kokiri (2011).
[8] Te Tari o te Kaiwhakawā Matua o te Kooti Whenua Māori: Te Ture Whenua Māori Bill Submission of the Judges of the Māori Land Court 7 August 2015, at [256]; 280.
[9] Te Tari o te Kaiwhakawā Matua o te Kooti Whenua Māori: Te Ture Whenua Māori Bill Submission of the Judges of the Māori Land Court 7 August 2015, at [257]; 280.