Indigenous Peoples and the Law: Article: Brown v Maori Appellate Court

Article: Brown v Maori Appellate Court

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16 November 2000 at 13:45:07
CP428/98. High Court Wellington. 14 September 2000.
Decision by: Chief Judge Elias, Salmon, Wild JJ
Background
This judgment concerns a very long running dispute about the partition of a block of Maori freehold land consisting of 5.8 hectares on the coast at Kairakau, southern Hawkes Bay, a settlement of some 55 holiday homes and a camping ground.
During the 1970s Kapiti Farm Limited bought up 61.6% of the shares in the block from the Maori owners, but ceased operations in the district in the 1980s. All shares in the company and the title to the land were sold. The buyers wanted to dispose of the block. They were opposed by the minority owners, around 10 people who owned the remaining 38.36% of the shares in the block. Several of them had minute interests. They were all gained by inheritance. The minority owners did not want to buy the land, nor did they want it to be partitioned.
There had been ongoing disagreements between the owners. The minority wished to place the land under a trust for use as a marae. Several of the minority owners had occupied the block to the exclusion of the majority. Rates fell into arrears. The minority owners had put forward proposals for a partition which would have given the majority an interest well below their 61.6 % shareholding. Both sides had occupied areas of the block, with the minority owners erecting several buildings on one part and the majority grazing some cattle on another part representing 54.3% of the value of the land (or $10,000 less than the value they would be entitled to receive on partition). An "informal, and uneasy, de facto partition" existed.
Previous court decisions
Kapiti Farms Ltd had first applied to the Maori Land Court (MLC) for partition orders in 1989 and had their application dismissed. That decision was appealed and the Maori Appellate Court (MAC) directed that the matter be reheard. At the rehearing in 1991, the MLC ordered the partition, with the applicants receiving only 54.3% of the value of their shares. However, a minority owner appealed and the MAC found that Kapiti Farm Ltd had been dissolved when the matter was reheard and lacked legal capacity to apply for that rehearing.
In 1994 the new majority owners applied for a partition. The MLC directed that a meeting of owners be held, and a resolution was passed that the partition should proceed. Twelve owners representing 80% of the shareholding voted in favour of partition, six against. The MLC ruled against partition however, on the basis that Te Ture Whenua Maori Act 1993 (TTWM Act 1993) now applied and there was an insufficient degree of support for the application and that the rights of the non-hapü owners (the applicants who had come into the land by buying an interest in Kapiti Farm Ltd) must be subordinate to the rights and desires of hapu owners.
In 1996 that decision was appealed and overturned by the MAC and referred back to the MLC for rehearing. The MLC again refused the partition order. That second decision was appealed once again to the MAC, which, in December 1997 dismissed the appeal by a majority decision 4:1 (see Mäori LR Dec 1997/Jan 1998 p1).
The relevant provisions
Part XIV "Title Reconstruction and Improvement" of TTWM Act 1993 is not a code in itself but is an integral part of the scheme of the Act. It is to be construed and applied in the context of the 1993 Act as a whole including the Preamble, s2 and s17 which refer to the principle of promoting the retention, use and development of Maori land in the hands of its owners , their whanau and hapu.
Part XIV is however concerned principally with rationalisations and arrangements to allow use and development, while the overall objective of retention of land as far as possible by Maori owners and their descendants "is always to be promoted and facilitated, where it is relevant."
The purpose of Part XIV is to facilitate the use and occupation by the owners of land owned by Mäori by rationalising landholdings and providing access and to do this by way of partition, amalgamation or aggregation orders and by granting easements and laying out roadways (s286/1993). The orders available under Part XIV do not include orders for the sale of land, which are dealt with under Parts VII and VIII.
The requirement to give a first right of refusal to preferred classes of alienees before an alienation is an important safeguard. While the 1993 Act does not provide that preferred classes of alienees be notified of a change in status application, it has been suggested that they should be (Cleave and Orokawa 3B Tai Tokerau Registry Appeal 1995/5).
In this case, the intention to sell after partition could be effected either by application for an alienation order - in which case the preferred classes of alienees would have their first right of refusal, or by application for a change of status order to General land - in which case it is not clear whether the non-sellers would have an opportunity to be heard - and then a sale without further court order.
The MLC may not make an order partitioning land unless it is satisfied the owners have had sufficient notice and there is sufficient support among the owners (s288(2)/1993) and the partition is necessary to facilitate the effective operation, development and utilisation of the land (s288(4)/1993). If those requirements are met, then the Court must consider the opinion of the owners or shareholders as a whole, the effect of the partition on the interests of the owners and the best overall use and development of the land (s 288(1)/1993). And then the Court must consider the principal purpose of the 1993 Act (s287(2)/1993).
The statute requires "particular caution in the case of title reconstruction, especially by way of partition." The word "necessary" (in s288(4)/1993) means "reasonably necessary (following Commissioner of Stamp Duties v International Packers Ltd [1954] NZLR 25, 54). The MLC is not required to conclude in an absolute sense that there is "no other way" (as suggested by Spencer J in the MAC). But the test is not a light one and necessity is a strong concept. What is reasonably necessary is closer to what is essential as opposed to what is simply desirable or expedient (Environmental Defence Society v Mangonui County [1989] 3 NZLR 257, 260).
The high threshold is appropriate since partition not only separates land. Nor is it simply about separating people (as suggested by CJ Durie in the MAC). Partition which excludes owners separates those owners and their descendants from the land. Consequently, in a statute which seeks to promote the retention of land as a taonga tuku iho for the owners it is understandable that Parliament should require that the MLC be satisfied that there is a sufficient degree of support and that the proposal is necessary. That the MLC should look at the further matters under s287/1993 and that it should retain a general discretion is also appropriate for that reason, particularly if the court is not satisfied that the principal purpose of Part XIV would be achieved if the order were made in the "manner sought."
The decisions of the MLC and MAC
In the latest decision of the MAC the majority upheld the view of the MLC that there was not sufficient support from the owners having regard to the nature and importance of the matter, and that the number of owners in opposition, rather than the number of shares they held, was important.
The MLC and majority of the MAC also found that the intention of the applicants to sell the land after partition was pivotal, since Part XIV assumes a continuing relationship with the land by owners and not a severance of that status. The majority of the MAC went so far as to find that the application to partition was "doomed" because of the intention to sell the land post-partition. The personal financial situation of the applicants (the need to sell to reduce indebtedness) was irrelevant.
Chief Judge Durie rejected that approach on the basis that Part XIV must anticipate severance and subsequent alienation in some circumstances; the degree of support from the opposing minority owners was not relevant in the case because they could hardly be expected to support the proposal; and the "competing equities" were more relevant than counting heads. He also considered that the key issue was whether the disagreements between the owners were so deep that partition would be the only effective way of utilising the land.
The correct approach
Chief Judge Durie was correct in his view that the majority were wrong to consider that applications for partition under Part XIV may never succeed if they are made in contemplation of a subsequent sale:
"The Act is not predicated on a continuing relationship between the owners and the land. If it were, a partition order could never be granted where the effect would be to exclude some of the owners from part of the land because their continuing relationship with that part of the land would be severed. Even where some owners are not excluded a partition to facilitate sale of part may promote the use and occupation of the balance of the land, perhaps by releasing needed capital. Where owners are at an impasse in the management and development of the land, partition may facilitate overall use and occupation even if some of the land partitioned out is later sold."
All the facts of each situation must be taken into account. The emphasis of the majority on the applicant's stated intention to sell "distracted" the MLC and the majority of the MAC from a full weighing of the circumstances.
The matters to be considered were all those matters under s288/1993 and the policies and objectives of the 1993 Act expressed in the Preamble, and ss2 and 17, but including ss17(2)(c)-(f)/1993 which are concerned with facilitating the settlement of disputes, protecting majority and minority interests against unreasonable positions, ensuring fairness in dealings by the owners and promoting "practical solutions to problems arising in the use or management of any land".
There is no policy in the 1993 Act that requires the retention of land in the hands of non-Mäori owners. The approach to an application should not turn on whether the owners are Maori or not. "Maori owners too may wish to partition with a view to sale. And Maori owners are not to be deprived of the safeguards provided by the Act because some of the owners are non-Maori".
The MLC and majority of the MAC not only erred in considering that the intention to sell was fatal to the application, they also did not assess the question of a sufficient degree of support among the owners against the factual background, because they considered that the preference of the minority owners should be given more weight.
Consequently, the matter would be referred back to the MLC for further consideration.

Matters which had not been considered were:
* A dispute on the facts as to the significance of the land to the Mäori owners.
* The fact that the land was uneconomic as a farm and its only probable use was for houses or a marae, combined with the lack of agreement over whether the partition would facilitate the better use of the land and whether partition was necessary for the effective operation, development and utilisation of the land.
* The fact that since 1994 there had been a de facto partition leaving the two groups of owners in the parts they would retain after partition, and the fact that the Mäori owners had not paid their proportion of the rates. Those present arrangements needed to be assessed to see whether they were impeding the use and occupation of the land and made partition necessary. An assessment of the difficulties between the owners was required.
The desire of the applicants for partition to realise some value from their land was relevant but not determinative either way. The land court must determine, on the facts and circumstances as it finds them, including the significance of the land to the Maori owners, whether the applicants insistence on partition and sale is a reasonable and acceptable stance. "The dispute between the owners as to use and occupation may not be intractable, save on the question of the applicants' preference for partition and sale. Other solutions may be devised to facilitate occupation and use."
The MLC would also have to consider:
* Whether a partition order would achieve fairness between the owners and a practical outcome. In that assessment, some consideration of the history between the parties would be "inescapable".
* Whether a severance between Maori and non-Maori owners would allow better management of the share remaining to the Maori owners. This would include whether the ability to develop communal facilities (eg marae) on the remaining land would be adversely affected if residential subdivision occurred appeared on the area sold (noted by CJ Durie in the MAC decision).
* Given the circumstances, including the significance of the land to the Maori owners, whether 62% was a sufficient level of support for partition, even if the Maori owners would retain land equivalent to their equity in the block. In this respect, CJ Durie was wrong to find that where partition was proposed to sever the block, rather than re-organise it for better use, a lower degree of support would be acceptable. The policy of ss2 and 17/1993 might require more than simple majority support either in terms of shareholding or numbers.
It was not however relevant to consider the fact that, if the land was sold after partition, the Mäori owners would have first right of refusal anyway (because they would fall within the preferred classes of alienees). The exercise of that right might be unrealistic, and if an application were made to first change the status of the land to General land that right would be lost, and it was not certain that the former owners would have to receive notice or could be heard on a change of status application. And there would be no purpose served under the 1993 Act in having land owned by non-Maori remaining in Maori freehold ownership.
Commentary: this has been a very long saga. The fact that the decisions of the MLC and MAC have been overturned does not necessarily deliver mean the application for partition will be approved. The decision does reject the notion that an application for partition in contemplation of sale will never succeed, but otherwise makes it clear that sale will be quite difficult to achieve. The obiter comments suggest that some solution short of selling the land could be devised.
Overall, the history of this matter and this judgment are a considerable disincentive to anyone seeking partition for sale where they are faced by a hostile minority.

Tom Bennion