June 2016 Māori Law Review

Review of Te Ture Whenua Māori Act 1993 – Te Ture Whenua Māori Bill – Ownership interests in Māori freehold land

A Bill was introduced into the House of Representatives in April 2016 to further reform Māori land law. This latest reform project has been in train since June 2012 when an independent expert panel was appointed to review the law.

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 ownership interests in Māori land and the associated decision-making processes.

Overview

A review of the Te Ture Whenua Māori Act 1993 (“the Act”) was announced by the Associate Minister of Māori Affairs on 3 June 2012.[1]

A Review Panel was formed to advise on unlocking the economic potential of Māori land for its beneficiaries, while preserving its cultural significance for future generations.[2] The review aimed to provide a recommendation for a form of legislative intervention that would empower Māori land owners to achieve their aspirations while enabling better utilisation of land.

A complete re-write of the current Act was chosen over piecemeal amendment. This culminated in an exposure draft Bill that is markedly different from the Act both in structure and function. The proposed changes are intended to provide a solution to the issues raised by the Review Panel in their report as well as to empower Māori land owners.[3] After consultation, and a Waitangi Tribunal inquiry and report, the draft Bill was revised. A Bill has now been introduced into the House of Representatives.

This article is the fourth 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.

Each article compares the main changes between the Bill and Act, and discusses the most significant issues addressed by the Waitangi Tribunal when it looked at the earlier exposure draft Bill (the Wai 2478 inquiry). The articles also include analysis from the resulting Waitangi Tribunal Report He Kura Whenua Ka Rokohanga (Wai 2478, 2016). The articles do not include a detailed clause by clause analysis.

Te Ture Whenua Māori Bill - articles
1Policy statement and explanatory note
2Preliminary provisions
3Status of land and whenua tāpui
4Ownership interests in Māori freehold land (this article)
5Disposing of interests in Māori land
6Succession
7Management entities
8Registers and the Māori Land Court
9Dispute resolution

Further information relating to specific clauses is available in the materials referenced in this article.

The content contained within this article presents information relating to the Bill as introduced to the House of Representatives. The reform is an ongoing process, with the Bill as introduced going through a number of iterations since its release as an exposure draft in May 2015.

Background

Submissions received during the consultation process and claimants before the Waitangi Tribunal raised a number of concerns about the part 3 of the Bill. Part 3 addresses the ownership interests in Māori freehold land. It contains significant changes to the way interests in land are dealt with, which includes the new collective ownership model, the central role for whānau trusts in the protection of family interests, and the distinctive participating owners’ model for decision making (one of the most controversial changes in the Bill).

The Bill prescribes an elaborate and often complex process for owners to make decisions in relation to their land. It requires tracing through several parts of the Bill and sets out requirements that must be followed if the owners’ decisions are to be valid. There is less flexibility in the Bill than in the Act; a consequence of its overall prescriptive nature.

The new collective ownership model (cl 48-50) and the inability to reverse it has been introduced to reduce further fragmentation of interests as well as to provide an option to rectify past fragmentation.

Collective ownership is a newly defined concept in the Bill and resembles the whenua tōpū trust model under the Act (s 216; cl 48). Title can be converted to collective ownership by a decision agreed to by owners who hold a 75 percent or more share in the land for a parcel owned by tenants in common; or by all of the owners for a parcel owned by joint tenants; by order of the Court in relation to land status; in accordance with an allocation scheme for a partition or an amalgamation; and where a whenua tāpui is set aside for a marae or burial ground (cls 17, 25, 48 and 49). The effect of a conversion is that the beneficial ownership of the parcel is vested in the defined class of collective owners (cl 49).

The Bill does not allow for the reversal of collective ownership back to individual ownership. This changes the position in the Act. It is possible that this is intended to be more compliant with the Treaty of Waitangi and jurisprudence about the principles of the Treaty than the current Act. The inability to reverse collective ownership was not intended to discourage the use of collective ownership; however, due to the implications, it may in practice lessen conversion to collective ownership.[4]

The  new participating owners’ model has been created to address issues relating to utilisation and disengaged owners, thereby enabling development to occur unimpeded by absent owners. This model does reflect some Māori land owners’ concerns about the difficulty of initiating development in certain circumstances under the existing Act. However, it has received considerable criticism because of the potential to disenfranchise some owners.

The whānau trust regime under the Bill has also undergone changes, including its removal from the sections concerning governance of Maori land. Instead it occurs in part 3, which is concerned with protecting interests in Māori Freehold Land and ensuring they remain held by the customary groups with traditional interests in that land.

The Bill also introduces a role called the kaiwhakamarumaru, an appointment to protect the interests of an owner of Māori freehold land who lacks capacity. This is not a separate management structure; the kaiwhakamarumaru acts as if owner. The role is confined to protecting an individual owner's interests in the management of their land. The explanatory note to the Bill says:

The Bill replaces the jurisdiction of the Māori Land Court to establish kai tiaki trusts for owners under a disability with a new jurisdiction to appoint kaiwhakamarumaru to act as managers for owners needing protection, being owners under 18 years of age or owners who, in the opinion of the court, wholly or partly lack the legal capacity or competence to manage their own affairs in relation to their land interests. The new jurisdiction aligns more closely with the provisions for the appointment of managers under the Protection of Personal and Property Rights Act 1988.

The whānau trust and the kaiwhakamarumaru role will be discussed in more detail in the further article in this series examining management entities under the Bill.

Discussion

Decisions of owners

Under the Act, decisions that require assembled owners include alienation of land, vesting of land, variations of a lease, and any other matter of common interest to the owners, or on which the opinion of the owners is sought by the court (s 172).

The purpose of part 10 of the Act is to provide for more effective and direct representation of the owners of Māori land in multiple ownership (s 180). Where representation of owners is impractical, notice may be given to the Registrar who shall as soon as practicable to notify every owner whose address is known to the court, and bring the matter to the court (s 182). The court will decide whether a meeting of owners is required (s 182). The court is also able to appoint an agent where owner representation is impractical (ss 184 and 187).

Under the Bill every owner is entitled to engage in decisions; to be informed about the land; to be heard in any proceedings relating to land; and to be recognised and acknowledged as an owner of the land (cl 47). These rights are subject to any provisions in the Bill that provide otherwise (cl 47).

Parcels managed under a governance agreement must use the decision-making process required by the agreement (cl 51). Decisions made for parcels owned by one person or by joint tenants can be made by whatever process the owners choose; where the parcel is owned by the trustees, the decision-making process in the terms of trust or the constitutional documents of the body must be followed; and in any other case the default decision-making process from Schedule Two applies (cl 51).

Multiple ownership of the beneficial interest in the freehold estate in a parcel of Māori freehold land is presumed to be held by the owners as tenants in common and each owner’s beneficial interest is an equal share of the land, unless there is proof that the presumption does not apply (cl 46).

Schedule two in the Bill sets out the default decision-making process for decisions requiring agreement of owners of Māori freehold land. The decision-making process applies when the Bill or a governance agreement requires a decision be agreed to by a majority of owners (sch 2, cl 1). The decision-making process commences with the notice of proposal (sch 2, cls 2, and 3 – 9). Each notice of proposal has general requirements that are required for the proposal to be valid (sch 2, cls 3 – 9).

A meeting of owners must be arranged by the governance body or chief executive within one month after a decision-making process is commenced (sch 2, cl 11). An owner can attend a meeting in person, via a nominated representative, or via telephone or internet-based communication technology (sch 2, cl 12).

The quorum required for a meeting to consider a proposal affecting Māori freehold land is as follows:

  • All the owners where there are 10 or fewer owners.
  • At least 10 owners who together hold at least 25 percent of the individual freehold interest, where there are more than 10 but no more than 100 owners.
  • At least 20 owners who together hold 25 percent of the individual freehold interest, where there are more than 100 but no more than 500 owners.
  • At least 50 owners who together hold at least 10% of the individual freehold interest where there are more than 500 owners (sch 2, cl 12).

The governance body or chief executive must appoint an independent returning officer to receive and count votes on a proposal (sch 2, cl 13). The decision-making process ends with the notification of the results of the vote, which must be given to the person who arranged the meeting of owners (sch 2, cls 13 and 14).

There are many similarities between the Act and the Bill in relation to the involvement of the owners. However, the Bill details very clearly the set requirements for decision-making and owner engagement for decisions requiring an agreed majority of owners. While the Bill is highly prescriptive owners do have an option for a more flexible approach in that they are able to stipulate their own processes and thresholds in their governance agreements. The processes in the Bill are the default decision-making processes.

The threshold requirements in some circumstances repeat those found in the current Act (such as sale of land), while others introduce new thresholds and procedures.

The most controversial innovation to occur in the Act is the introduction of the “participating owners” model. This model allows decisions to be made by those who participate in the decision (as opposed to all owners). This model essentially introduces new thresholds for some decisions. Although it appears the Bill has attempted to correlate the requisite threshold to the seriousness of the decision, there are some decisions that have particularly low thresholds. These thresholds are discussed in the article in this series about disposing of interests in land.

Notably decisions made under the Bill are binding on all owners. This includes decisions made outside of a framework of governance bodies. The submission made by the Māori Land Court judges described this as problematic because co-owners do not owe any obligations to each other, such as those owed by trustees or company directors.[5] Under the Act land not managed under a governance agreement requires a court order if all owners are to be bound by decisions which alter property rights (part 8). The Māori Land Court judges’ submission on the draft Bill questioned the reasons for allowing one set of owners to deal with another set of owners’ property rights without a court sanction. The judges’ submission suggested this was in conflict with the basic principles of property law as well as being discriminatory in that such a prescription does not apply to general land.[6]

Participating owners

In the Waitangi Tribunal, the claimants argued that the participating owners’ model (“the model”) is in conflict with article three of the Treaty that guarantees all Māori the same rights as all other British subjects.[7] There is no similar regime in general law that allows one group of owners to make a decision that binds their co-owners.[8] The Crown argued that the model is consistent with collective management of land and provides a reasonable policy response to long-identified management issues regarding non-participation, and demands for increased owner autonomy.[9]

‘Participating owners’ is defined as ‘the owners of land who participate in making a decision’ relating to that land (cl 5). The generality of this definition suggests it is not intended to be a static concept that effectively disengages owners from participating in decisions concerning their land. Instead it appears that it is meant to be flexible in that the people who participate in a decision are the participating owner for that specific decision. Thus, the participating owners may change from decision to decision. Owners can restrain or expand this definition in their governance agreement. However, the Bill defines it broadly so it can encompass whatever meaning is favoured by the owners of a specific block of land.

Before the Waitangi Tribunal the Crown disputed the assertion that the model creates in effect a class of owners who will be ahi mātaotao. The Crown argued that the provisions will not disconnect Māori from their land.[10] The customary concept of ahi mātaotao is when the ahi kā or “flames of occupation” become cold meaning a person or group is no longer seen as having rights in the land.[11] The Crown view was that giving participating owners more autonomy is a matter of practicality and principle, and is an approach that is consistent with traditional decision-making regarding land.[12] The idea behind the model being to enable those who wish to utilise land to do so, without being impeded by those who do not engage, but without jeopardising the connection to the land itself.[13] Importantly, the Crown recognised that there are many reasons and factors that contribute to non-participation in decision-making or disconnection from whenua and that one piece of legislation cannot address every challenge faced by Māori.[14]  This highlights that the participation model may not address the underlying problem of owner disengagement alone and there appears no provision in the Bill that is directed at encouraging participation. Although there are provisions that are designed to facilitate participation, such as the decision-making process and access to information provisions, it is not clear whether these will in fact result in greater participation. Instead it appears the Bill seeks to achieve optimal utilisation by circumventing owners who are not engaged.

Waitangi Tribunal comments on ownership model

In its report the Tribunal considered the participating owners’ model an attempt to both revive and empower the meetings of assembled owners system (He Kura, p 289).

The Tribunal noted that the stated purpose of the proposed reforms is to address the problems of disconnection and the likely practical inability to obtain agreement of all owners to form a governance entity (p 290). It was contended that the Bill achieves this purpose through a combination of prescribed participation thresholds (quorum requirements) and voting thresholds (p 290). The thresholds vary depending on the nature of the decision and their direct relationship to alienation; the Crown claiming that the closer the decision is to alienation the higher the threshold ought to be (p 289). However, the Tribunal considered that the amendments to the November 2015 version of the draft Bill did not remove or reduce all the inconsistencies or complexities inherent in the proposed system (p 290).

The Waitangi Tribunal noted that it can be difficult to identify the relevant quorum/threshold levels required in any particular factual situation as they do not appear in one place in the Bill (p 290). Further, great precision and care is required to check whether a particular decision involves a threshold of a percentage of all owners, or only a percentage of participating owners, or for participation thresholds, a combination of both (p 290).

Currently, Māori landowners mostly appear in the court without representation, a situation that is not envisaged as changing in the foreseeable future, so the owners' ability to operate under new legislation depends on the clarity of the statute and the advice of the as-yet unformed Māori Land Service (p 290). The Tribunal took the view that the result of these provisions of the Bill will be a protective mechanism that sets out an unduly complex set of statutory levels and rules for owner meetings being established as a substitute for what are currently discretionary decisions made by the Māori Land Court (p 290).

While the Tribunal acknowledged that the Māori Assembled Owners Regulations also include complex and arbitrary quorum and voting requirements, the difference in terms of final decision outcomes, lies in the fact that discretionary supervisory powers given to the Māori Land Court under the current Act enable greater flexibility than solely the application of complex thresholds (p 290).[15] The decision to remove the supervisory powers of the court means that existing flexibility would disappear and be replaced by a single protection: quorum requirements (p 290). But the threshold requirements are complex and appear to lack logical consistency, which could enable capture of decision-making by small minorities (p 343).

Submissions received during the consultation process and claimants before the Waitangi Tribunal raised considerable concerns about second round decision-making processes. These provisions allow a second decision-making process to be commenced within 20 working days after a decision is made where the participation threshold for that decision is not satisfied (cl 51).

The Tribunal also considered the second-chance meetings problematic because they did not have adequate protections. The process would essentially strip Māori of the intended protections, and thus undermine the purpose and principles of the Bill (p 344). The Tribunal also considered that this provision did not comply with the principles of the Treaty and, further, doubted whether Māori would give broad-based support for these provisions once properly informed of their effect (p 344).

The removal of the quorum requirements in second round decision-making removes one of the Bill’s key protections, opening up the possibility of important decisions being captured by potentially tiny minorities, which may prejudice other owners (p 344). The Tribunal considered this clause inconsistent with Treaty principles as it currently stands and although they acknowledged that an alternative decision-making process will sometimes be necessary; the absence of an independent, impartial protection of all owners’ rights, in the form of a court was stated as being in breach of the principle of active protection and a breach of the non-participating owners’ property and Treaty rights (p 344). The Tribunal also considered that this breached the principle of equity because it provides far less protection for the rights of co-owners than is available under the general law (p 344). Those owners will be significantly prejudiced if no adequate protection is provided in the second-chance provisions. To ensure adequate protection is afforded to these owners, the Tribunal recommended that the court’s discretionary powers be reinstated (p 344).

Second-chance provisions only apply to participating owner decisions and cannot be used for decisions requiring a specified majority of all owners. This excludes sale, gift, exchange, long-term lease, converting to collective ownership, partition, and major boundary adjustments. The provisions also do not apply where there is a governance agreement applying to the land that specifies a different process; or decisions relating to Māori customary land. The Court retains a role in a number of other decisions that the second-chance provisions apply to; however, the extent of that role depends on the specific decision. A number of these decisions only require a compliance check by the Court confirming that the decision complies with the Act. These decisions include minor boundary adjustments, short-term leases, and rent-free leases for residential housing.  Amalgamations and aggregations require the Court to also confirm that the allocation scheme is fair and equitable to all owners, which provides some discretion to the Court. However, this discretion does not extend to the decision itself, being confined to the allocation scheme only, and thus it is unclear how protective this discretion will be in practice.

Owners who are under 18 and who do not have a kaiwhakamarumaru appointed to manage their beneficial interest in the land can participate in the decision-making process by being present and putting forward their views; however they are unable to vote on the decision if no kaiwhakamarumaru has been appointed (cl 49). The kaiwhakamarumaru provisions relate to lack of capacity to act.  The reason for this restriction is because minors have no contractual capacity in general law; however, some submitters consider that the provision is unreasonable, particularly given that minors can often hold substantial interests in land.[16] (A kaiwhakamarumaru appointment does not cover property subject to a property order under the Protection of Personal and Property Rights Act 1988 (cl 73).)

The Tribunal also considered the lack of protections for those who are not legally allowed to participate as further reducing the protections currently available to Māori under the Bill (p 346). With the proposed removal of the court’s discretionary powers, the protection of owners’ interests under the Bill comes mainly from their ability to participate in decision-making processes, with the additional power to have notification and meeting procedures reviewed by the court (p 346). If these persons are excluded from voting then there are no adequate protections available to them. Further, they will no longer have recourse to an impartial court to review and confirm whether decisions are in the overall interests of the owners. The prejudicial effects could be significant, potentially affecting multiple generations (p 346). Overall, the Tribunal considered it constitutes a breach of the Crown’s Treaty duty of active protection (p 346).

Comment

The proposed decision-making provisions are elaborate, comprehensive, and in some cases complex. Potential consequences include time delays, added expense, and uncertainty. It is possible that these consequences will only occur in the transitional phase as the new legislation beds in. The complexity may simply be a reflection of the markedly different drafting style, or it could reflect the difficulty associated with navigating something new, and thus may only be temporary. Consequently, challenges during the transitional stages may be expected as people become accustomed to the inner workings of new legislation. The Crown has promised that the reforms will not come at an increased cost to Māori owners nor will it result in services of lower quality. Although an increased procedural burden, delays, complexity, and expense are in conflict with the reform’s principles of autonomy and simplicity; it is possible that these may only be present in the initial stages. The new Māori Land Service will have a significant role in ensuring that owners are fully informed and that their interests are adequately protected.

Notes

[1] Te Ture Whenua Māori Act 1993 Review Panel Discussion Document, March 2014.

[2] Te Puni Kōkiri Discussion Document: Te Ture Whenua Maori Act 1993 Review Panel (March 2013) at 5; Christopher Finlayson “Te Ture Whenua Maori Act review announced” (3 June 2012) New Zealand Government official website <www.behive.govt.nz>.

[3] Te Ture Whenua Māori Act 1993 Review Panel Report, Poutū-te-rangi 2014.

[4] Answers to written question of John Grant, WAI 2478, #A32, 27 November 2015, at 7.

[5] 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 [151] (see (2015) December Māori LR).

[6] 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 [140] (see (2015) December Māori LR).

[7] Closing submission for Wai 2512 claimants, WAI 2478 #3.3.10, 18 December 2015, at [80].

[8] Closing submission for Wai 2512 claimants, WAI 2478 #3.3.10, 18 December 2015, at [80].

[9] Closing submissions of counsel for the Crown, WAI 2478, #3.3.6, 14 December 2015, at [194].

[10] Closing submissions of counsel for the Crown, WAI 2478, #3.3.6, 14 December 2015, at [190].

[11] Rāwiri Taonui, 'Te ture – Māori and legislation - Laws affecting Māori land', Te Ara - the Encyclopaedia of New Zealand, updated 13-Jul-12.

[12] Closing submissions of counsel for the Crown, WAI 2478, #3.3.6, 14 December 2015, at [186].

[13] Closing submissions of counsel for the Crown, WAI 2478, #3.3.6, 14 December 2015, at [191].

[14] Closing submissions of counsel for the Crown, WAI 2478, #3.3.6, 14 December 2015, at [190].

[15] Māori Assembled Owners Regulations 1995, regs 32–35, 45.

[16] Te Puni Kōkiri, ‘Te Ture Whenua Maori Reform: Summary of Submissions’, September 2015, at [224].

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