Triggs v R [2012] NZHC 543 (21 November 2012)

Last Updated: 3 April 2012

IN THE HIGH COURT OF NEW ZEALAND GISBORNE REGISTRY

CIV 2009-416-000252 [2012] NZHC 543

BETWEEN MARSHALL HUGHES WALKER, BEVAN WIHEKOPA WALKER, EVELYN WAIMARIE WALKER AND JANEEN RITIHIA TATA

Plaintiffs

AND WIREMU LYTTON WALKER First Defendant

AND ALMA RACHEL NGARIMU AS EXECUTOR OF THE ESTATE OF HERBERT WALKER HUGHES WALKER Second Defendant

Hearing: 12 December 2011

Appearances: J Bunbury and N Witters for Plaintiffs

R Barber for First Defendant and Second Defendant in her personal capacity

D Sharp for Second Defendant in her capacity as Executrix of Estate of Herbert Walker

Judgment: 7 March 2012

_{JUDGMENT OF WOOLFORD J}

This judgment was delivered by me on Wednesday, 7 March 2012 at 10:00 am pursuant to r 11.5 of the High Court Rules.

_{Registrar/Deputy Registrar}

Solicitors:

Egan & Kite, DX LP78561, Gisborne.

Wilson Barber & Co, DX LP8520, Gisborne.

Burnard Bull & Co, DX LP78509, Gisborne.

WALKER V WALKER HC GIS CIV 2009-416-000252 [7 March 2012]

Introduction

[1] By way of statement of claim dated 13 November 2009, the plaintiffs seek orders under s 339 of the Property Law Act 2007 that land owned as tenants in common by the plaintiffs and the defendants be sold and the net proceeds of sale be divided according to the parties’ share of the land.

[2] In opening his case for the plaintiffs, Mr Bunbury advised me that he may no longer have instructions from one of the plaintiffs, Marshall Walker. However, Mr Sharp, for the second defendant, indicated he did have an understanding of Marshall Walker’s position. He advised me that Marshall Walker’s withdrawal of instructions from Mr Bunbury should not necessarily be taken as opposition to the sale of the land. He was however concerned about the mechanics of the sale process and how it may affect the parties. I was not, however, advised of Marshall Walker’s particular concerns.

The land

[3] The application relates to an East Cape farm known as Ramoto Station (“the land”). The land is in three titles:

_{Title Block Status Area}

_{GS4B/958 Ngawhakatutu A10B Block General land 156.7776 ha}

_{477368 Ngawhakatutu A8B Block Maori freehold land 1.4875 ha}

_{477314 Ngawhakatutu A9B Block Maori freehold land 9.7270 ha}

_{167.9921 ha}

[4] The land therefore comprises 156.8 hectares of general land and 11.2 hectares of Maori freehold land – effectively in two adjoining blocks within 4 kilometres of Ruatoria. All blocks are zoned “rural general” under the combined Regional Land

and District Plan. Approximately 127 hectares are in medium or steep hills, while 41 hectares are in valley or front flats. Apart from a wool shed, hay barn and garage, there is a derelict two bedroom dwelling on the land together with a relocated former school room. None of the owners live on the land which is leased out for grazing and cropping. I was advised that any income from grazing and cropping is consumed by outgoings on the property. The value of the land assessed by a valuation dated November 2009 is $894,000.

[5] Counsel for the first defendant describes the land as the ancestral land of the Walker family. All the parties to the proceedings are descendants of John Hayes Walker, who was the sole proprietor of the land. When he died he left the land to his three sons, George Walker, Herbert Walker and Wiremu Walker. Of the three sons, only Wiremu Walker is still alive. He is the first defendant. He owns a third share of the land. The second defendant, Alma Ngarimu, is the executor of Herbert Walker’s estate. Under the terms of Herbert Walker’s will, Wiremu Walker’s son, Edward Walker, is the beneficial owner of the third share currently registered in Herbert Walker’s name. The four plaintiffs each have one twelfth share in the land totalling a third share, which they inherited from their father, George Walker.

[6] As noted above, the two smaller blocks are Maori freehold land. Maori freehold land is described by the authors of New Zealand Land Law1 as land where the Maori customary interest has been converted to a fee simple interest after an investigation by the Land Court, and the land has not subsequently been sold or otherwise changed its status.

[7] The major block is general land, which is land in private freehold title. Counsel for the first defendant submitted that it should still be Maori freehold land. He noted that it ceased to be Maori freehold land on 8 May 1970 when the Registrar of the Maori Land Court acting pursuant to s 3, 4 and 7 of the Maori Affairs Amendment Act 1967, without consultation and without consent, registered a status declaration against it.

[8] Counsel’s submissions reflect the change in policy under the Te Ture Whenua

Maori Act 1993. As the authors of New Zealand Land Law state:2

Under the 1993 Act, the emphasis is on the wishes of the owners and the historical importance of the land concerned. Status orders [changing General land to Maori freehold land] may be applied for by the owners or, where the land is beneficially owned by more than 10 Maori, by the Registrar. The court may make the order if either the owners unanimously agree or the court is satisfied that an order should be made in view of historical and personal associations with the land, and a sufficient proportion of owners support the change in status.

In contrast, while changing the status of Maori freehold land to General land was once a matter of course and even automatic in many situations, under Te Ture Whenua Maori Act 1993 it is difficult and may only take place in limited situations. An example is where only a few persons own the land, or a trust or incorporation is involved, and the proposed change in status will rationalise the management of the land, for example by selling the area changed to General land and using the proceedings to buy other land. The Land Court is the final arbiter in the matter and must take into account the provisions of the 1993 Act concerning the retention of Maori freehold land by Maori.

[9] Since the death of Herbert Walker, Wiremu Walker has been in effective control of the land and has received all the income from the grazing and cropping of the land from which the outgoings have been paid. The plaintiffs are, however, unaware whether the income is sufficient to meet all the outgoings, given that there are rate arrears owing on the land.

Family Protection Act judgment

[10] The estate of Herbert Walker has been ordered to pay the sum of $300,000 to James Milner, the only surviving child of Herbert Walker. The Family Court directed that the burden of the judgment was to be shared between Edward Walker as to 37.5% and the plaintiffs as to 62.5%. As noted above, Edward Walker is the beneficial owner of the third share in the land currently registered in Herbert Walker’s name. The plaintiffs have been ordered to pay a 62.5% share of the judgment because they are also the indirect beneficiaries of Herbert Walker’s estate. Herbert Walker left the balance of his estate to his wife, Miria Walker. Miria Walker was the widow of George Walker. She married Herbert Walker, her brother-in-law,

after the death of her husband George Walker. The beneficiaries of the estate of Miria Walker are the plaintiffs, her four children to George Walker. The plaintiffs are therefore not only Herbert Walker’s nieces and nephews but also his step- children.

[11] James Milner has been paid $38,662.80 in partial satisfaction of the judgment. That sum was paid out of the residue of Herbert Walker’s estate and is therefore to the credit of the plaintiffs. Accordingly, the judgment remains to be satisfied as follows:

Edward Walker $112,500

The plaintiffs $148,537

[12] Without the sale of the land, neither Edward Walker nor the plaintiffs are able to satisfy the balance of the judgment.

Property at 500 Nelson Road, Gisborne

[13] The deceased, Herbert Walker, also owned a 162/362 share in a property situated at 500 Nelson Road, Gisborne. One of the plaintiffs, Evelyn Waimarie Walker, owns a 100/362 share while another plaintiff, Janeen Ritihia Tata, owns the remaining 100/362 share jointly with her husband, Robert Tata. Mr and Mrs Tata are in default under loans secured by way of a mortgage against the Nelson Road property. The National Bank has served them with Property Law Act notices relating to the defaults. They are under pressure to sell the Nelson Road property and have been informed by the bank that unless they can do so soon, the bank will proceed to a mortgagee sale.

[14] A conditional sale of the Nelson Road property was entered into on

6 December 2011. Mr and Mrs Tata have, however, been advised by the real estate agent handling the sale that the purchaser is unable to obtain finance and that the sale will not proceed. In the circumstances, Mr and Mrs Tata are attempting to deal with another purchaser who has offered $440,000 for the property. At $440,000 the net

sale price will be approximately $420,000. The co-owners of the Nelson Road property will share the net sale proceeds as follows:

Estate of Herbert Walker $187,955

Evelyn Walker $116,022

Robert and Janeen Tata $116,022

[15] The estate’s share of the net sale proceeds can be used to satisfy the balance of $148,837 which the plaintiffs are to pay James Milner under the Family Court judgment.

[16] The estate’s share of the net proceeds of sale of the Nelson Road property cannot however be used to partially satisfy Edward Walker’s share of the judgment. Janeen Tata states in her affidavit that to the best of her knowledge and belief, Edward Walker will not be in a position to satisfy his share of the judgment otherwise than through a sale of his beneficial interest in the land.

Other relevant financial circumstances

[17] The affidavit of Janeen Tata discloses that she and her husband together with Evelyn Walker jointly owe the National Bank approximately $210,000. Robert Tata also owes the bank an additional $40,000 on a personal guarantee relating to a failed logging business. Mr Tata has other debts to pay related to the failed logging business. As an example, Ms Tata annexes evidence of a debt to Chevron New Zealand Limited of $7,860.10. The share of the net proceeds which Mr and Mrs Tata and Evelyn Walker will receive from the sale of the Nelson Road property will be insufficient to repay the National Bank.

[18] Evidence was also annexed to the affidavit of Janeen Tata showing that there are rate arrears owing on the land of $9,909.98. I was however advised at the hearing that some contribution has now been paid towards these rate arrears.

Past attempts at sale among the co-owners

[19] The plaintiffs negotiated a sale of their interest in the land to the first defendant and owner of a third share, Wiremu Walker, under the terms of a sale and purchase agreement dated 7 November 2008. That agreement was subsequently cancelled.

[20] The plaintiffs then negotiated a sale of their interest in the land to Wiremu Walker as part of a conditional settlement reached in a family settlement conference held on 19 May 2010 before Judge Burns. This sale also did not proceed.

[21] Further attempts have also been made in 2011 to affect a sale of the plaintiffs’ interest in the land to Wiremu Walker as the owner of a third share and Edward Walker as the beneficial owner of another third share. Those attempts have also failed due to the inability of both Wiremu and Edward Walker to raise finance. Counsel for Wiremu Walker acknowledges that finance is now not available since James Milner was successful in his family protection claim against the Estate of Herbert Walker. Prior to that judgment, finance to purchase the plaintiffs’ share was actively being sought.

Submissions

[22] Counsel for the plaintiffs submits that the restrictions on the sale of Maori freehold land contained in the Te Ture Whenua Maori Act do not apply to a Court and any orders it may make and accordingly the Court has jurisdiction to make orders in relation to the land under s 339 Property Law Act.

[23] He also submits that the Court can recognise the legitimate interest of the co- owners in keeping the land within the family by making directions that any order for sale under s 339 is subject to s 147A of the Te Ture Whenua Maori Act and therefore is subject to the “preferred class of alienees” having a first right of refusal to purchase the land.

[24] An order for sale of the land is sought because of the failure of past attempts to sell the plaintiffs’ share of the land to Wiremu and/or Edward Walker. The plaintiffs receive no financial benefit from the land. They are unable to access the capital represented by their shares to meet pressing financial liabilities.

[25] Counsel for the first defendant summarises Wiremu Walker’s position as follows:

9. Wiremu Lytton Walker, the first defendant and Alma Rachel Ngarimu as beneficiary in the Estate of Herbert Walter Hughes Walker and Edward Walker all wish to go on record as being vehemently opposed to any sale of the family land.

10. These objectors are unable to offer any solution to the Court or to the applicants other than the applicants agree that this ancestral land remain in the Walker family.

11. The objectors reiterate their objection to any proposed sale of their family land and rely on the provisions of section 342 of the Property Law Act 2007, particularly in regard to the nature of the property as ancestral land which if sold, is lost to all the parties to these proceedings, forever.

[26] Counsel for the second defendant submitted that an executrix would normally abide the decision of the Court in situations such as the present case. However, without an order under s 339 of the Property Law Act for the sale of the land, the Estate would be unable to settle the Family Court’s judgment in favour of James Milner. In those circumstances, the Estate supports the plaintiffs’ application.

General principles

[27] The plaintiffs seek an order for sale of the land under s 339 of the Property

Law Act 2007. It provides:

339 Court may order division of property

(1) A court may make, in respect of property owned by co-owners, an order—

(a) for the sale of the property and the division of the proceeds among the co-owners; or

(b) for the division of the property in kind among the co- owners; or

(c) requiring 1 or more co-owners to purchase the share in the property of 1 or more other co-owners at a fair and reasonable price.

(2) An order under subsection (1) (and any related order under subsection (4)) may be made—

(a) despite anything to the contrary in the Land Transfer Act

1952; but

(b) only if it does not contravene section 340(1); and

(c) only on an application made and served in the manner required by or under section 341; and

(d) only after having regard to the matters specified in section

342.

(3) Before determining whether to make an order under this section, the court may order the property to be valued and may direct how the cost of the valuation is to be borne.

(4) A court making an order under subsection (1) may, in addition, make a further order specified in section 343.

(5) Unless the court orders otherwise, every co-owner of the property (whether a party to the proceeding or not) is bound by an order under subsection (1) (and by any related order under subsection (4)).

(6) An order under subsection (1)(b) (and any related order under subsection (4)) may be registered as an instrument under—

(a) the Land Transfer Act 1952; or

(b) the Deeds Registration Act 1908; or

(c) Part 1 of the Crown Minerals Act 1991.

[28] The power to order a sale of the land is clearly discretionary. Section 342 lists the factors which the Court must have regard to when considering an application under s 339. It provides:

342 Relevant considerations

A court considering whether to make an order under section 339(1) (and any related order under section 339(4)) must have regard to the following:

(a) the extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made:

(b) the nature and location of the property:

(c) the number of other co-owners and the extent of their shares:

(d) the hardship that would be caused to the applicant by the refusal of the order, in comparison with the hardship that would be caused to any other person by the making of the order:

(e) the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property:

(f) any other matters the court considers relevant.

[29] Fogarty J commented on the meaning of hardship in Holster & Holster v

Grafton3 as follows:

“Hardship” is a value laden criterion. It suggests an adverse effect which is of significant impact to the applicant. It has to be read consistent with the policy of the statute which respects property rights of tenants in common, but seeks to resolve conflicts fairly.

Can s 339 Property Law Act apply to Maori freehold land?

[30] Section 339 refers to “property” owned by co-owners. “Property” is defined

in s 4 of the Act as follows:

4 Interpretation

... property—

(a) means everything that is capable of being owned, whether it is real or personal property, and whether it is tangible or intangible property; and

(b) includes any estate or interest in property; and

(c) in subpart 6 of Part 6, has the extended meaning given to that term in section 345(2)

On its face, the definition of property is a wide one which does not exclude Maori freehold land.

[31] The case of the Solicitor-General v Job4 was cited by counsel for the plaintiffs as authority for the proposition that Maori freehold land can be subject to s

339 Property Law Act. In Solicitor-General v Job, the issue was whether freehold Maori land could be forfeited under the Proceeds of Crime Act 1991. Judge Wolff noted the definition of property in the Proceeds of Crime Act, which is similar to the definition of property in the Property Law Act:

“Property” means real or personal property of any description, whether situated in New Zealand or elsewhere and whether tangible or intangible; and includes an interest in any such real or personal property.

[32] He found that there was no attempt in the Proceeds of Crime Act to limit its application to general land or, for that matter, any specific form of asset. He accepted the proposition that Parliament could not have intended to exclude Maori land from the reach of the Proceeds of Crime Act. Judge Wolff was therefore satisfied that a forfeiture of land under the Proceeds of Crime Act was not an alienation in terms of the Te Ture Whenua Maori Act.

[33] Although the owners of Maori freehold land may sell their land as of right, Parts 7 and 8 of the Te Ture Whenua Maori Act 1993 regulates its sale. Section 146 provides:

146 Alienation of Maori freehold land

No person has the capacity to alienate any interest in Maori freehold land otherwise than in accordance with this Act.

[34] Section 150C prohibits the owners of a block of Maori freehold land from alienating the land by sale unless the sale has the consent of the persons who together own at least 75% of the beneficial freehold interest in the land. Section

147A obliges the owners who seek to alienate Maori freehold land by sale to give the right of first refusal to prospective purchasers who belong to one or more of the preferred class of alienees ahead of those who do not belong to any of those classes. The preferred classes of alienees are defined in s 4 of the Te Ture Whenua Maori Act as follows:

Preferred classes of alienees, in relation to any alienation (other than an alienation of shares in a Maori incorporation), comprise the following:

(a) children and remoter issue of the alienating owner:

(b) whanaunga of the alienating owner who are associated in accordance with tikanga Maori with the land:

(c) other beneficial owners of the land who are members of the hapu associated with the land:

(d) trustees of persons referred to in any of paragraphs (a) to (c): (e) descendants of any former owner who is or was a member of

the hapu associated with the land

[35] Finally, the Maori Land Court also has to confirm the sale. Section 152 lists the matters of which the Court must be satisfied before it can confirm an alienation of Maori freehold land.

[36] I am of the opinion that the word “person” in s 146 of the Te Ture Whenua Maori Act does not apply to a Court acting under s 339 of the Property Law Act. Person is not defined in the Act, but like Judge Wolff in the case of The Solicitor- General v Job, I am of the view its proper interpretation does not include a Court. The short answer is, therefore, that s 339 of the Property Law Act can apply to Maori freehold land.

Relevant considerations under s 342 Property Law Act

[37] As noted earlier, s 342 directs the Court to have regard to a number of factors when considering whether to make an order under s 339. I now turn to these factors.

(a) The extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made:

[38] The four plaintiffs each have a one-twelfth share in the land which together makes up a one-third share. This is a minority share.

(b) The nature and location of the property:

[39] The land comprises 168 hectares of rural land near Ruatoria on the East Coast. There are a number of buildings on the land, which is leased out for grazing and cropping.

(c) The number of other co-owners and the extent of their shares:

[40] Wiremu Walker has a one-third share in the land while Edward Walker is the beneficial owner of another third share currently registered in his uncle’s name. Together they own a majority share.

(d) The hardship that would be caused to the applicant by refusal of the order, in comparison with the hardship that would be caused to any other person by the making of the order:

[41] If an order for sale of the land is not made, neither Evelyn Walker nor Janeen Tata would be able to purchase a new home following the proposed sale of their current residence at 500 Nelson Road, Gisborne. They also have other debts which would be cleared if they were able to sell their shares in the land. The defendants did not file any affidavit evidence relating to any particular hardship that may be caused to them if an order for sale of the land was made. None of the owners live on the land.

(e) The value of any contributions made by any co-owner to the cost of improvements to, or the maintenance of, the property:

[42] No evidence has been filed in relation to any contributions made by any co- owners to the cost of improvements to, or the maintenance of, the land.

(f) Any other matters the Court considers relevant.

[43] I am of the opinion that the scheme and purpose of the Te Ture Whenua Act should be taken into account as a relevant matter. I take as a starting point the

_{comments of Judge Ambler in Re Te Whata.}5 _{In that case, the applicant sought to}

5 Re Te Whata – Waiwhatawhata 1A2B6 (2008) 125 Whangarei MB294.

change the status of Maori freehold land to general land. At [39], Judge Ambler stated:

There is one aspect of the kaupapa of the Act that speaks more profoundly where the change of status is for the purpose of sale. The Preamble and section 2(2) identify Māori land as “taonga tuku iho”, an inheritance. That is not only a statement of aspiration but invariably a statement of fact. It points to three important characteristics of Māori land. First Māori land is not seen as a commodity but a cultural heritage. Second, Māori land is expected to be passed from generation to generation; the current generation is merely a custodian for the next. Third, Māori land is almost always received by the current generation without payment. With limited exceptions, current owners have not invested their personal wealth in purchasing the land. They can hardly complain at not being able to realise the full monetary value of their land by selling it when they received it for free in the first place. Not surprisingly, owners who wish to “cash-up” their inheritance and ask the Court to assist by removing the Māori freehold status face a major hurdle in convincing the Court that such a step is consistent with the kaupapa of the Act.

[44] In the present case, the plaintiffs are unable to alienate the two smaller blocks of land by sale because the requirements of the Te Ture Whenua Act are not met, specifically, the consent of the persons who together own at least 75% of the beneficial freehold interest in the land has not been obtained. The plaintiffs seek to use the provisions of s 339 of the Property Law Act to achieve what they cannot do themselves under the Te Ture Whenua Maori Act. Although I have found that s 339 can apply to Maori freehold land, it seems to me that I should seek to exercise the discretion under s 339 in relation to the two smaller blocks of land in a manner consistent with the kaupapa of the Te Ture Whenua Maori Act.

[45] The major block of land is not Maori freehold land but is general land owned by Maori. To all intents and purposes, the major block is ordinary freehold land but because it is multiply owned by a majority of Maori owners the owners have the option of invoking the provisions of the Te Ture Whenua Maori Act 1993 and the assistance of the Maori Land Court in the legal administration of the land. In the present case, I am advised that Wiremu Walker has made application to the Maori Land Court for the establishment of an ahu whenua trust to promote and facilitate the use and administration of all the land in the interests of the persons beneficially entitled.

[46] The major block only became general land in 1970. I was supplied with historic titles showing that a Maori incorporation was formed in 1926 under which the 12 original owners were incorporated under the name “The Proprietors of the Ngawhakatutu A10B Block”. A Committee of Management was also appointed at the same time. The major block was part of a much larger block of land, of which

225 Maori owners were recorded as tenants in common in a title issued 1909.

[47] Although the major block of land does not have the restrictions on sale that are imposed on the two smaller blocks of Maori freehold land by the Te Ture Whenua Maori Act, it seems to me that I should also exercise the discretion under s 339 in relation to the larger block of land in a manner consistent with the kaupapa of the Te Ture Whenua Maori Act because of its ancestral origin.

[48] The Court of Appeal in Valuer-General v Mangatu Inc6 said of the Te Ture

Whenua Maori Act that it:

imposes very significant constraints on the sale of Maori freehold land, particularly sale to a purchaser who would also seek to change its status from Maori freehold land to general land. Parliament could not have expressed the policy more clearly. Drawing on the Treaty of Waitangi and the special significance of land to Maori people, the 1993 Act reflects as the primary objective to be applied throughout the legislation and by the Maori Land Court the retention of Maori land by Maori and the use, development and control of Maori land by Maori. The machinery provisions allowing for alienation of land are directed and restricted to that end. Preferred classes of alienees have priority. Significant conditions and restrictions limit free alienability. There is no question of majority decisions of owners necessarily carrying the day. Any agreement of the owners is subject to the contingency that the Maori Land Court may in the exercise of its powers and responsibilities refuse to confirm the alienation or to change the status of the land.

[49] Counsel for the plaintiff has recognised to some extent the kaupapa of the Te

Ture Whenua Maori Act by submitting that any order for sale should be subject to s

147A of the Te Ture Whenua Act which provides that the preferred class of alienees has a first right of refusal to purchase the land.

[50] However, the plaintiffs have already offered their share to the first defendant and Edward Walker but finance is not available for them to be able to purchase the

6 Valuer-General v Mangatu Inc [1997] 3 NZLR 641 at 649 - 650.

one-third share of the land they do not already own. A right of first refusal will therefore not assist the owners of a two-thirds share of the land to retain it.

Conclusion

[51] Weighing all the factors in the present case, I am of the opinion that the Court should not exercise its discretion to order a sale of the land. The land can rightly be described as the ancestral land of the Walker family. The plaintiffs did not purchase their share but inherited it from their father. There is no evidence they have ever lived on the land or contributed to improvements to, or the maintenance, of the land. The plaintiffs’ shares amount to one-third of the beneficial interest in the land, a minority interest. Any sale is vehemently opposed by the owners of two-thirds of the beneficial interest in the land, a majority interest.

[52] Although some financial hardship will result to at least two of the plaintiffs, by the dismissal of the application, I am of the view that the kaupapa of the Te Ture Whenua Maori Act should be given considerable weight. Maori land is not a commodity but a cultural heritage. In addition, the basic property rights of Wiremu Walker and Edward Walker who together own two-thirds of the land should be respected.

[53] The application is dismissed. Costs should follow the event. If the parties are unable to agree, I will receive memoranda.

.....................................

Woolford J