Comment: Māori land development does not depend on court reform

John Harbord in “A case for reform of Te Ture Whenua Māori Act” repeats the misinformed commentary of the panel that was established to review the act.

COMMENT

John Harbord in A case for reform of Te Ture Whenua Māori Act repeats the misinformed commentary of the panel that was established to review the act.

The Ministry for Primary Industries report, for example, which asserts 40% of Māori land is under-performing and 40% is under-utilised, is incorrect in significant aspects. No in-depth analysis was undertaken but rather a broad brush and incomplete sample of land use was considered.

Mäori land administrators and their advisers know the report’s assertions are flawed. In Rotorua, Taupō, Whakatane, Gisborne, Hastings, Whanganui and New Plymouth, significant trusts and incorporations holding assets valued in hundreds of millions continue to perform well. The act has not prevented them from functioning successfully in a competitive environment.

Mr Harbord then says the majority of engaged owners should make decisions without the court’s involvement. Anyone with experience of Māori land will know that it is the owners who attend meetings who decide whether to create trusts or incorporations, or lease the land or enter into joint ventures – not disengaged owners or the court.

Unengaged owners are not the problem. They do not impact on the decision making of the “engaged” owners. It would be difficult to produce evidence of any proposal by owners to create a trust or incorporation that has been declined by the court in the past decade.

The court facilitates development of Māori land by encouraging the creation of management structures through its advisory services or the appointment of agents such as the Māori Trustee to effectively retain, manage and utilise the land for the benefit of the owners.

It is not the court, the act or fragmentation that impedes the development of Māori land. The two most significant challenges are the lack of access to development finance and the lack of availability of quality governors with experience in business to develop Māori land.

High-profile cases of mismanagement
The raft of recent high publicity court cases involving poor management and governance from the High Court and the Court of Appeal emphasise that reality.

Mr Harbord says flexibility should be given to enable the appointment of a wider range of external managers. But individuals, Māori trust boards, incorporations, the Māori Trustee, the Public Trust or a trustee company within the meaning of the Trustee Companies Act 1967 can all be appointed trustees or agents under the act.

The difficulty will be where land is simply incapable of producing sustainable income because, for example, of its topography and where land administrators are then expected to subsidise the oversight of non-income producing lands.

Mr Harbord then says that Māori owners should have access to specialists and be able to take advantage of well developed short-to-medium term leasing and share farmer practices. But they do so now. Trusts and incorporations engage professional consultants and managers regularly. The difficulty is where owners have no money to pay because the land is unproductive.

Mr Harbord suggests the law should be changed to allow owners to establish their own governance entities without court oversight, which is a right available to owners of general land. But once again they can do this now and the court endorses their requests while answering their queries on the trust instrument.

It costs $60 to create a trust in the Maori Land Court. The court also has templates terms of trust that are specifically designed for Maori land that the owners can adopt when setting up a trust. What law firm would charge that low figure to prepare a Trust Deed? And what happens when four factions of owners attempt to establish separate entities with separate nominees as trustees?

The owners usually petition the court to convene an independently organised meeting to bring all of the factions together. In this way, the court plays a facilitative and supportive role to ensure the establishment of governance entities for the productive use of the land.

Mr Harbord argues that owners should have a legislative option to transition land into collective ownership without individual shares. They have been able to do this since the act was passed. The whenua tōpu trust does not have shareholdings or succession and some hapū and iwi are now taking advantage of this entity and have transferred settlement land into whenua tōpu trusts, including the Whanganui tribes.

Court compliance costs
Much is made of court compliance costs. Trusts and incorporations are usually required to file their accounts with the registrar but apart from that have few interactions with the court that require payment. More than 90% of court users are lay litigants. The fee for access to the court is $60 or $200. Administrative related fees are $25.

Where can owners of general land go to get a court overseen trust instrument implemented, subject to the owners’ approval, or deal with succession and estate distribution or alter their titles and shareholding including partition and by gift and sale for $60? Or to have judge-led facilitation for $60 or appeal a decision in any court in New Zealand for $350 and appear without counsel? Or to have complex disputes involving tens of millions adjudicated for $200 without the ruinous setting down and daily fees of the higher courts and the costs of counsel?

Even some PSGE managers have been inquiring about having their disputes dealt with in the Mäori Land Court and not the High Court. And the latest edition of Garrow & Kelly on Trust Law comments that it is quicker and cheaper to obtain directions regarding trusts from the Mäori Land Court than the High Court.

Impediments to development
It is unrealistic to expect that reducing the role of the court in either facilitating the creation of management structures or the appointment of trustees is a panacea for under-development. If, as has been assumed, it is the court that is an impediment to development, how is it that so many successful trusts and incorporations have continued year after year to profitably develop land within the existing legislative framework?

The real impediments to the development of Māori land are the quality of governors and their access to finance. Changes such as those proposed will do little to solve these two challenges. Incremental solutions are needed that encompass wider considerations including improving the experience and quality of governance pools, rather than the big bang approach. Something needs to be done to improve unproductive land. But what is proposed, in several key respects, will be doing the wrong thing, which is worse than doing nothing.

Miharo Armstrong is a partner in Aurere Law, Rotorua, and regularly appears before the Maori Land Court, and who acts for a number of Maori land trusts and incorporations

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