Ririnui v Landcorp Farming Limited [2014] NZHC 1128 (26 May 2014)

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UNDER	the Judicature Amendment Act 1972
BETWEEN	MITA MICHAEL RIRINUI Plaintiff
AND	LANDCORP FARMING LIMITED First Defendant THE MINISTER OF STATE-OWNED ENTERPRISES and THE MINISTER OF FINANCE Second Defendants THE ATTORNEY-GENERAL Third Defendant

Hearing:	15-16 April 2014
Counsel:	A N Isac and J P Koning and G M Richards for Plaintiff S A Barker and L M Brazier for First Defendant J R Gough and S J Humphrey for Second and Third Defendants
_Judgment:	_{26 May 2014}

[1] Landcorp is the vendor in an unconditional agreement for the sale of one of its dairy farms Whārere Farm to a private third party Micro Farms Ltd (Micro Farms). Whārere Farm is a 404 ha operation situated in mid-coastal Bay of Plenty between Te Puke and Matatā. The land title carries a standard resumption memorial pursuant to s 27B of the State-owned Enterprises Act 1986 (the SOE Act). The sale will settle on 30 May 2014.

package, saying this is the only Crown-related land still available within its traditional rohe. They say it is an asset that is not substitutable.

[3] Ngāti Whakahemo has an application for resumption currently before the Waitangi Tribunal. I understand a judicial conference was to be held by the Tribunal on 19 May 2014 in relation to the application but I do not know where matters have got to since. Ngāti Whakahemo wants the proposed Landcorp sale stopped.

Alternatively, it is argued that the factual matrix of the sale process gives rise to a legitimate expectation that while Ngāti Whakahemo was in discussions with Landcorp over the land, Landcorp would not sell to anyone else.

(b) Landcorp’s shareholding Ministers – arguing that: (i) they are unquestionably subject to s 9; and

(ii) they should have used their powers as shareholders to step in to prevent Landcorp from selling;

(c) the Attorney-General on behalf of the Office of Treaty Settlements (OTS) arguing that OTS made an error of law in mistakenly concluding that Ngāti Whakahemo’s claims had been settled. This, the applicant says, is the original sin tainting all subsequent acts and omissions of the Crown Ministers and Landcorp.

(b) discussions between Ngāti Whakahemo and Landcorp at the time of the sale did not provide any basis for the expectation alleged.

(a) decisions around Treaty settlements are political and not amenable to judicial review;

(b) the shareholding Ministers have no power to interfere in operational decisions of Landcorp; and

(c) although OTS does seem to have mistakenly concluded that all of Ngāti Whakahemo claims were settled when at least some were not, that fact could have made no material difference to the Crown’s attitude to sale, even if Ministers did have the power to intervene.

[7] The plaintiff Mita Ririnui, is Chair of the Ngāti Whakahemo Claims Trust. There is no issue in this proceeding in relation to his status as a spokesperson for Ngāti Whakahemo.

[8] Ngāti Whakahemo territory is, he says, situated generally between Pōkare to the east, Pōngākawa to the south, north to Motunau and west to Ngāwhara and Maketū. Whārere is within that broad territory. According to Mr Ririnui’s evidence, Maruāhaira is Ngāti Whakahemo’s founding ancestor. His (that is Maruāhaira’s) whakapapa is Tākitimu, Tainui and Mātātua.

[9] Ngāti Whakahemo is nestled amongst larger kin neighbours who claim descent not from the Tākitimu, Tainui and Mātātua canoes but from the Te Arawa

canoe. These Te Arawa neighbours include Ngāti Mākino whose interests substantially overlap with those of Ngāti Whakahemo, and Ngāti Pikiao whose interests begin at Lake Rotoiti and expand toward the coast.

[10] For reasons I will explain below, Ngāti Mākino was given a special opportunity by Landcorp following consultation with the Minister for Treaty of Waitangi Negotiations, to bid for Whārere Farm even though that tribe’s Treaty claims had already been settled.

[11] Although Ngāti Whakahemo has in the past been listed as a hapū of Ngāti Pikiao, that affiliation seems to have been political rather than genealogical. That distinction is important because in tikanga Māori, land rights are derived by descent, not by political affiliation.

[12] Both Ngāti Pikiao and Ngāti Mākino accept that Whārere Farm is situated generally within Ngāti Whakahemo territory. Whārere Farm was constructed from parts of the former Pukehina A2, Pukeroa 2 and Kaikokopu Māori land blocks. The Pukehina block (or at least significant parts of it) were awarded to Ngāti

small part of the farm sits on Pukehina A2. It is mostly on Pukeroa 2. Other right holders in these blocks included Ngāti Pikiao and Ngāti Mākino among others.

2008. The claim was given the descriptor Wai 1471 by the Tribunal. Ngāti Whakahemo eventually sought to engage directly with the Crown over the settlement of their claim. The Crown refused. On 29 May 2012, OTS wrote to the Ngāti Whakahemo Claims Committee, advising that in the Crown’s view, Ngāti Whakahemo’s claim had been settled by the Affiliate Te Arawa Iwi and Hapū Deed of Settlement signed on 2 June 2008.

[14] The Crown has consistently taken and communicated that view to Ngāti Whakahemo right up until the filing of the Crown’s statement of defence in this proceeding. Thus, by letter of 16 July 2013, the Minister of Treaty of Waitangi

Settlements advised Ngāti Whakahemo’s solicitors that the Te Arawa Affiliate Claims Settlement Act 2008 settled all Ngāti Whakahemo historical claims because Ngāti Whakahemo was specifically listed in the that Act as a hapū of Ngāti Pikiao.

[15] The Crown has now come to accept that since the Ngāti Whakahemo claim in this area is not based on descent from a Te Arawa ancestor, but on descent from Maruāhaira, the claim is not in fact settled. This is because s 13 of the Affiliate Te Arawa Iwi and Hapū Claims Settlement Act 2008 settles only “affiliate historical claims”. By the terms of s 12(2) ‘affiliate historical claims’ do not include a claim of the description set out in cl 1, Part 3, Schedule 2 to the Act. That description is as follows:

A claim that a member of the Affiliate, or an iwi, hapū, whanau or subgroup referred to in any of the definitions of collective groups in Part 1 of Schedule 1, may have that is, or is founded on, a right arising as a result of being descended from an ancestor who is not an Affiliate Ancestor.

[16] Ngāti Whakahemo is in fact included as a “subgroup” of Ngāti Pikiao according to Schedule 1, Part 1.¹But Part 2 of the First Schedule lists the relevant descent line as follows:

[17] Thus, because Maruāhaira’s descent line is separate from that of Pikiao, the

2008 Act does not settle the core Ngāti Whakahemo claims – i.e. those claims derived from its primary descent line through Maruāhaira – despite the fact that Ngāti Whakahemo is listed as a subgroup of Ngāti Pikiao.

[18] Landcorp owns assets valued at nearly $1.7 billion. According to its 2013 annual report, it operates 137 farming properties comprising 376,942 ha. Landcorp

_{farms sheep, beef, deer and dairy cattle. And its lands carry 1.6
million stock units.}

[19] Whārere Farm is one of those 137 properties. The farm comprises 404 ha in a single title of which 360 ha is productive. It is operated as two farms in five separate units. Its strategic deficit from Landcorp’s commercial perspective is that it is geographically isolated from the company’s other Bay of Plenty dairying operations so Landcorp does not obtain the usual economies of scale in the management and operation of this farm.

[20] Thus, on 5 August 2013, Landcorp notified OTS (the agency within the Ministry of Justice tasked with supporting the Minister for Treaty of Waitangi Negotiations) that it was investigating the sale of Whārere Farm. On 12 September

2013, OTS advised that the land was not of potential interest for a future Treaty settlement. That advice meant that OTS was not interested in acquiring the land itself from Landcorp for banking in preparation for any upcoming settlement. OTS nonetheless requested that Landcorp, as a matter of courtesy, advise Ngāti Mākino and Ngāti Whakaue interests should the company decide to proceed to sale. There was no mention of Ngāti Whakahemo or its claims.

[21] It is necessary at this point to pause to explain in more detail, the system by which OTS manages its relationship with Landcorp in the context of land needed for Treaty claims.

[22] All of the titles Landcorp received from the Crown in 1988 carry a resumption memorial under s 27B of the SOE Act. In simple terms the memorial warns any purchaser of such land that it may be resumed by order of the Waitangi Tribunal for transfer to Treaty claimants in settlement of their land claims. The memorial regime was introduced following the famous Lands Case.²The regime was the quid quo pro for the Court of Appeal (and the New Zealand Māori Council) approving the transfer of Crown lands from the Crown to various SOEs of which

[23] In nearly 30 years, the Waitangi Tribunal has never made formal contested orders pursuant to its powers under the regime, although in the Ngāti Turangitukua claim, the Tribunal came very close when it triggered the 90 day cool down period under s 8B of the Treaty of Waitangi Act 1975. Consent orders eventually issued.³

[24] By 2007, the Treaty settlement process had begun to gather real momentum. The pace of settlements up until that point had been modest. In this new era, the memorial regime was, it appeared, not assisting in the efficient negotiation of Treaty claims. On the one hand, claimants wanted access to SOE lands for their settlements and OTS needed certainty over what lands might be available to be offered in the negotiation. On the other hand, Landcorp needed to be free in the ordinary course of business, to sell lands it no longer wished to retain. While the memorial regime facilitated on-sale (as it was designed to do), it did nothing to provide certainty to OTS. This was making OTS’ job difficult.

[25] On 17 September 2007, Landcorp entered into an agreement with its shareholding Ministers whereby, effectively, Landcorp agreed to a four year moratorium on sales of its remaining lands. In return the Crown agreed to purchase a number of listed properties for inclusion in Treaty settlements at agreed or to be agreed values.

[26] In March 2012, after expiry of the 2007 moratorium, OTS and Landcorp agreed on a protocol (the Protocol) that would replace the agreement. The Protocol is designed to make it easier for OTS to achieve its mission of negotiating Treaty settlements while protecting Landcorp’s completely commercial approach to its business. It signalled a return to farm sales provided that, in each case, there was proper consultation with OTS.

Although the protocol is not legally binding, both Parties are committed to following the policies and procedures it defines. This commitment is indicated by the signatures below. The signatures represent each Party’s intention to follow the policies and to maintain a process of consultation about issues which affect each Party’s responsibilities.

[29] The Protocol divided Landcorp’s portfolio into five categories. Whārere Farm is listed in the Protocol as a Schedule D property. Schedule D land in the Protocol relates to:

Landcorp properties located within areas where treaty settlements have not been completed and which may be identified as being of potential interest for future Treaty settlements and are subject to s 27B of the SOE Act.

[30] In the Protocol, Landcorp promised to give OTS early warning of its intention to sell any property listed in Schedule D. On such advice, OTS has three months to indicate an interest in the land for Treaty settlements. If OTS indicates it is not interested or does not reply within the three month timeframe, Landcorp is free to sell. If OTS indicates an interest in the land, Landcorp must set it aside for purchase by the Crown in accordance with the price setting mechanism set out in the Protocol.

[31] It is pursuant to this machinery that OTS indicated in August 2012 it was not interested in acquiring Whārere Farm for future settlements.

[32] Ngāti Whakahemo was unaware of the existence of the Protocol. Nonetheless, the Protocol could have produced a significant advantage to Ngāti Whakahemo if the Crown had given Landcorp an indication that it was interested in acquiring Whārere for Treaty settlement purposes. The most important advantage would have been to obviate the need on Ngāti Whakahemo’s part to apply to the Waitangi Tribunal for resumption, an application that unquestionably would have met obdurate resistance from OTS. And, as I have said, the Waitangi Tribunal has never made a resumption order.

[33] On 30 October 2013, Landcorp decided to sell Whārere Farm by public tender. Interested parties were advised that tenders would close on 4 December

representative of a neighbouring Ngāti Whakahemo related Māori land trust, expressed an interest in jointly acquiring the land. For its part, Ngāti Whakahemo hoped to leverage off its position as an unsettled Treaty claimant – that is to have the Crown contribute to the purchase on account of a Treaty settlement. Ngāti Whakahemo had no success in garnering either OTS or Landcorp’s interest in its proposal for assisted acquisition of the land. As I have said, OTS’ position at that point was that the Ngāti Whakahemo claim had been settled in the large Te Arawa Affiliate Settlement, and there would be no further money forthcoming.

[35] Collaterally, in a process quite unrelated to these developments, the Minister for Treaty of Waitangi Negotiations decided to intervene in the tender process. His concerns related to the position of Ngāti Mākino, Ngāti Whakahemo’s neighbour.

[36] Although Ngāti Mākino is a Te Arawa hapū, it did not join the big Te Arawa Affiliate Settlement in 2008, but negotiated a separate settlement. During the course of those negotiations, Ngāti Mākino had apparently expressed an interest in acquiring Whārere Farm as part of the settlement (remember Ngāti Mākino also has traditional connections to parts of that land). A 2008 non-binding agreement in principle between the Crown and Ngāti Mākino included a clause in which the Crown agreed to explore with Landcorp various mechanisms by which Ngāti Mākino might acquire a present or future interest in the farm. OTS duly made inquiries of Landcorp as promised. At the time, Landcorp responded that Whārere Farm was strategically valuable to the company and it was not interested in offering the land for sale in the Treaty settlement process. Nor was Landcorp interested in giving Ngāti Mākino a more limited right such as a right of first refusal. Formal communications between the Minister for Treaty of Waitangi Negotiations and the Minister for State-owned Enterprises did not advance matters further. The proposal was eventually dropped at the end of 2010. Ngāti Mākino settled its Treaty claims the following April (i.e. in 2011) without Whārere Farm.

[37] When Ngāti Mākino got wind of the Whārere Farm tender two and a half years later in November 2013, they cried foul and wrote to the Minister for Treaty of Waitangi Negotiations. The Minister was understandably sympathetic. It seems that “please explain” discussions took place between the Minister’s office and Landcorp, the result of which was that the tender was cancelled on 14 December 2013.

... For its part Landcorp would only deal with Ngāti Mākino during that [two month] period, which reflected Landcorp’s understanding of the wish of the Crown that Ngāti Mākino (and/or other neighbouring iwi as agreed with Ngāti Mākino) be given this opportunity in light of the fact that Whārere had not been available when Ngāti Mākino had been negotiating its Treaty settlement with the Crown three years earlier.

[40] Ngāti Mākino immediately set about trying to put together a bid. Preliminary discussions were had between Ngāti Mākino and representatives of Ngāti Awa in December 2013. Ngāti Whakahemo attended those discussions. The Minister for Treaty of Waitangi Negotiations was also in attendance at one such meeting on 18

December 2013. Apparently Ngāti Whakahemo advised the parties that, since it had mana whenua in the Whārere land, it expected to take a lead role in the acquisition. Ngāti Whakahemo’s position at that meeting may explain why Ngāti Mākino did not come back to Ngāti Whakahemo for formal talks until nearly two months later on

24 February 2014 – four days before the expiry of Landcorp’s two month purchase window. It does not matter what transpired at the meeting, but the result was that the two parties could not agree on a joint approach. Predictably, the sticking point appears to have been around who would lead the bid.

[41] In the event, and despite a genuine attempt by Ngāti Mākino, the hapū could not obtain sufficient funding on its own to make a competitive bid. Ngāti Mākino withdrew from the process on 27 February 2014 – the day before expiry of the two month period.

[42] According to Mita Ririnui, Ngāti Whakahemo then approached Landcorp directly to try to negotiate the purchase of Whārere Farm in their own right. Whether they were aware at that stage that Ngāti Mākino had withdrawn from the process is unclear. In any event, on 27 February 2014, Mr Willie Te Aho, who appeared to be acting as Ngāti Whakahemo’s negotiator, wrote to Traci Houpapa, the Deputy Chair of Landcorp, advising that Ngāti Whakahemo had approved the issue of injunction proceedings if necessary, but that Ngāti Whakahemo and the Riripeti Timi Waata Lands Trust were “committed to a commercial purchase” if at all possible.

[43] Traci Houpapa replied on 1 March 2014. The response in full was as follows:

The Landcorp board has met and decided not to extend the timeframe. The Landcorp lawyers have been asked to respond to Koning Webster’s letter accordingly.

Steven and I are still available to meet with Mita and Jock to discuss the situation if they would like – unfortunately, prior commitments mean next Friday 7 March is the earliest we could both meet in Wellington or Rotorua (if that was more convenient) so please let us know.

Willie, you and I both know that wise minds around the table make for good outcomes; e hoa I’m sorry that, in this case, timeframes have conspired against us.

On behalf of the Trust and Ngāti Whakahemo, I accept the meeting time for the Friday. Our people have asked for a 10am on Friday in Rotorua and we will confirm the venue later today.

We understand, which was clear from you (sic) email that Landcorp is now re-engaging with the highest bidder for Whārere farm.

As I noted to you at Waitangi on 4 February 2014, my people are keen to do a commercial deal with Landcorp. Unfortunately, we have been shut out of the process through the dealings with Ngāti Mākino to Lancorp (sic). We still want to acquire this land on commercial terms.

[45] The evidence is that Ngāti Whakahemo was unaware of the details of Landcorp’s two month negotiation window, or the fact that the window had closed on 28 February 2014. Ngāti Whakahemo was however aware that, after failure of the Ngāti Mākino negotiations, Landcorp had gone back to Micro Farms Ltd, the highest bidder in the tender process.

[46] Meanwhile, Ngāti Whakahemo’s solicitors were busy seeking undertakings from shareholding Ministers and the Minister for Treaty of Waitangi Negotiations that they would not allow a sale to proceed. The Minister for Treaty of Waitangi Negotiations advised on the morning of 6 March that no such undertaking would be given.

[47] As it turned out, Landcorp had indeed re-engaged with the highest bidder in its aborted tender process. Mr Kennedy-Good’s evidence was that Landcorp felt “ethically bound to re-engage with the highest bidder ...”. Negotiations obviously proceeded with expedition. A final version of an agreement for sale and purchase was sent to Micro Farms Ltd on 3 March and it was executed by the parties over the course of 4 and 5 March 2014.

[48] Meanwhile, Ngāti Whakahemo pressed on with its resumption application, and made a further application for urgency. In a memorandum to the Waitangi Tribunal filed on the afternoon of 6 March 2014 (remember the Minister for Treaty of Waitangi Negotiations had that morning refused to give an undertaking to Ngāti Whakahemo in relation to the sale) Crown counsel formally advised Ngāti Whakahemo and the Tribunal that Whārere had been sold.

[49] I note finally that Landcorp and Micro Farms Ltd were of course very aware of Ngāti Whakahemo’s position by the time they finalised the agreement for sale and purchase on 3 March 2014: the tribe’s resumption application had been lodged with the Waitangi Tribunal the previous December and Landcorp had been advised on

27 February 2014 that injunction proceedings had been authorised by the tribal rank and file. The leadership had advised that they were contemplating taking that step. Undertakings were being sought from Ministers.

[50] It was no doubt that context that caused Landcorp and Micro Farms to agree to include a special clause in the agreement to cover the possibility of a delay in settlement. According to Mr Kennedy-Good:

Under the agreement for Sale and Purchase, if there is an intervening event that prevents registration of a memorandum of transfer in favour of the Purchaser which is unresolved by Settlement Date, the parties have agreed that Landcorp (as the vendor) will lease Whārere to the Purchaser on standard farming terms and conditions to be agreed. If the intervening event is not resolved by 30 May 2015 (or such other date as may be agreed) then either party may cancel the Agreement without recourse to the other except for refund of the deposit plus interest.

[51] These provisions are set out in cl 22 of the agreement for sale and purchase.

22.1 If at any time up until settlement, there is a charging order, caveat, or other encumbrance registered against the title to the Property, or an injunction or court order relating to the Claim (“competing interest”) that would prevent registration of a memorandum of transfer in favour of the Purchaser, and the Vendor is unable, or believes that it will be unable, by the Settlement Date to resolve the competing interest, then the parties agree that the Vendor shall grant to the Purchaser a lease of the Property on standard farming terms and conditions to be agreed between the parties. The Lease shall commence on Settlement Date, being 30 May 2014 and, subject to further term 22.4, shall continue until the settlement date specified in accordance with further term of sale 22.2.

22.2 The Settlement Date shall be deferred to that date being five (5) working days after the Vendor notifies the Purchaser, in writing, that it is willing and able to settle, or such other date as may be agreed between the parties.

22.3 The Vendor will use all reasonable endeavours to pursue withdrawal or resolution of the competing interest by negotiation or litigation, and shall keep the Purchaser fully informed.

22.4 If by 30 May 2015 (or such other date as may be agreed in writing between the parties) the Vendor has not been able to resolve the competing interest, then either party may by notice in writing to the other, cancel the contract evidenced by this Agreement.

22.5 In no circumstances shall the Vendor be liable to the Purchaser for damages or compensation in the event that settlement is delayed pursuant to the provisions of this clause. If either the Vendor or the Purchaser in the exercise of its rights under this clause cancels this Agreement, then the Purchaser shall be entitled to a refund of its deposit and neither the Vendor nor Purchaser shall have any further right or claim against the other.

[52] Mr Kennedy-Good deposes that any forced lease arrangement would involve inconvenience and cost. For Landcorp, the suggestion is that cost may be up to

(c) the requirement to purchase a further 422,000 Fonterra shares costing around $2.5 million if Landcorp is forced to retake possession after a year.

[53] Mr Kennedy-Good says prejudicial impact on the purchaser would include, he says:

(a) if the purchaser has no new sharemilkers lined up, then potential delay in acquiring a herd would produce substantial cost increases;

(b) disruption in production due to difficulty in sorting cows could result in a net daily loss of $4,600; and

(c) if the purchaser does not have a sharemilking agreement, it will need to employ five dairy unit managers and a supervisor in uncertain

circumstances and Landcorp will need to do the same on re-entry if the lease is terminated without settlement.

[54] I turn now to address the plaintiff’s causes of action. I will begin with the application to review OTS’ advice to Landcorp that the Crown was not interested in acquiring Whārere Farm for settlement because it makes sense to deal with that first. That matter is both the first in time of the causes of action and Ngāti Whakahemo argues that all roads in this litigation eventually led to that point. I will then address the application in respect of Landcorp itself in which the plaintiff argues breach of s 9 and legitimate expectation before turning to claims against the shareholding Ministers in relation to their refusal to intervene.

[56] The Crown submits that Ngāti Whakahemo has at least some Te Arawa descent lines, and to the extent that it does, claims based on rights deriving from those lines are settled. If true, that seems generally correct. Just what proportion of Ngāti Whakahemo’s claims meet that description is not yet known. But it must be remembered that Ngāti Whakahemo’s primary descent line – that through Maruāhaira – is non-Te Arawa. It is likely therefore that the core Ngāti Whakahemo claims remain. What is more, it is common ground that the claim in respect of the Pukehina block, a small part of which underlies Whārere Farm, is a Maruāhaira claim.

[57] Ngāti Whakahemo’s solicitors had been in correspondence with OTS over whether the tribe’s claims had been settled from 29 May 2012. It follows that when OTS advised Landcorp on 12 September 2013 that Whārere Farm was not of potential interest for any future Treaty settlement, that advice was given on the

understanding that Ngāti Whakahemo had already received a settlement in 2008 through Ngāti Pikiao.

[58] The plaintiff says this error by OTS, echoed in correspondence from the Minister for Treaty of Waitangi Negotiations, tainted all that followed. The plaintiff says it also affected the attitude of the shareholding Ministers and Landcorp. Ngāti Whakahemo seeks declarations accordingly in these terms:

(a) ... that OTS advice to Landcorp that Whārere Farm was not of potential interest for a future Treaty settlement was materially affected by an error of law;

(c) (in the alternative) certiorari in relation to the decisions challenged. [60] The Crown says the mistake does not invalidate the sale of Whārere Farm

(a) the decision challenged is political or policy-based and not amenable to judicial review. OTS was required to balance a range of complex interests in deciding whether to express interest in Whārere Farm and did so in good faith;

(c) the status of Ngāti Whakahemo’s Wai 1471 claim did not materially affect OTS’ decision to disclaim interest in Whārere Farm for the purpose of settling Treaty claims; and

(d) Ngāti Whakahemo had made no claim in fact to Whārere Farm because it had not particularised Whārere Farm in the Wai 1471 claim document.

[61] The essence of the Crown’s argument in (c) above was set out in the third affidavit of Marian Smith, in which she said:⁴

3 Ngāti Mākino received a total financial redress amount of $9.8 million which included $6.7 million as commercial and financial redress and $3.1 million as recognition for delay in settlement.

4 The CNI Forests Historical Claims of Ngāti Rangitihi and Ngāti Whakaue were settled by the Central North Island Forests Iwi Collective Deed of Settlement. The redress received by those groups under that settlement is on-account of future Ngāti Whakaue and Ngāti Rangitihi’s settlements of historical Treaty claims. The Central North Island Forests Iwi Collective received a redress value of $196 million. Ngāti Whakaue and Ngāti Rangitihi recieved (sic) an apportionment of the value received by the Central North Island Forest Iwi Collective, being 3.6125% each.

5. The context of these existing settlements was relevant to the Crown’s view that Whārere Farm was not of potential interest for any future Treaty settlement with groups identified as not yet settled (or fully settled) being groups with well-founded historical Treaty claims. In coming to this conclusion OTS considered:

5.2 The value of the redress that had already been received by groups with remaining claims to be settled; and

6 I note that in these circumstances, and given my understanding of the nature of any residual Wai 1471 claim not settled by the Affiliate Act, the relative value of other settlements in the area and the likely value of the Whārere Farm, it is in my view unlikely that the Farm would be considered to be of potential interest to any future settlement of any residual elements of the Wai 1471 claim (if there ever were to be such a settlement).

[62] Thus, the Crown argued that the amount of money already spent on iwi in the area meant it was unlikely that it would spend any more money there anyway. In addition, counsel argued that the value of Whārere Farm was out of all proportion to any Ngāti Whakahemo entitlement, even if the first proposition was wrong. And finally, Ngāti Whakahemo had in fact been in discussion with Ngāti Mākino over the inclusion of the former in a purchase of Whārere Farm but those discussions had not borne fruit. Ngāti Whakahemo had had its chance.

[63] The Protocol is a creature of policy. It is expressly stated not to be legally binding on the parties. Decisions under it cannot of course be reviewed under the Judicature Amendment Act 1972 because there is no statutory power of decision involved.

[64] The plaintiff sought leave to amend its statement of claim to take account of that by seeking orders by way of declaration and certiorari. The Crown, quite properly, did not oppose. There is no question that the decision by OTS to clear Whārere Farm for sale was the exercise of a public power having consequences for Ngāti Whakahemo’s interests under the Treaty of Waitangi and the Treaty settlement process. The decision is therefore amenable to the jurisdiction of the Court, all other things being equal.

[65] The Crown then says there is no reference to Whārere Farm in the Wai 1471 claim document so it is not claimed in fact.

[66] The claimants in Wai 1471 are Mihi Anaru and Murray Anaru “for and on behalf of and with the mandate of the Ngāti Whakahemo hapū”. It specifically notes

The estate of Ngāti Whakahemo extends from Owhara/Ngawhara in the west to Pokare in the east. From the further reaches of the Pongakawa Valley in the south and seaward to Motunau in the north and out to Motiti in the west. Including along both the Pongakawa and Waihi Rivers.

[67] Clause 3.2 states that the claim “concerns” certain blocks of land within the

Pursuant to Article 2 of the Treaty of Waitangi the Claimants were and are guaranteed tino rangatiratanga over, and full exclusive and undisturbed possession of all lands, forests and waterways within their rohe including the lands. This guarantee includes the right and obligation of the Crown to act in good faith and actively protect the claimants’ rights and interests with regard to the lands.

roading and railway purposes and inadequate considerations paid. The phrase “the

lands” appears to be a reference to the Pukehina 1A blocks referred to in paragraph 3. But the wording is a little ambiguous because although the focus of the claim is the Pukehina 1A blocks, a much broader area of land is referred to. For example, a finding is sought that the Crown failed to protect the claimants tino rangatiratanga in relation to “the lands and rivers”. This seems to connote a broader area than just the Pukehina 1A blocks. At paragraph 14, the claimants asked “permission to amend this claim, if necessary”. And at paragraph 15, the claimants advised that they do not yet have a lawyer.

[71] I do not accept that Wai 1471 is incapable of including a claim to resumption

[73] Second, it identifies a broad swath of land and water resources as being under claim while particularising some blocks that were taken, presumably by proclamation under the Public Works Act 1981. It would be a quibbling construction of the document, in light of the expertise of its drafters, to treat it as not implicitly covering Whārere Farm itself within the broad description of “lands and rivers”.

[74] Third, even if Whārere Farm is not particularised, that does not exclude its availability by way of relief for the loss of other land particularised in the claim. It is usually a historical accident that particular land remains in Crown (and then SOE) title while others were alienated by the Crown to settlers. The resumption regime does not require the existence of a grievance in relation to the land in question. It is sufficient if it is sought by way of remedy.

[75] Fourth, in this case, there is a grievance in relation to the Pukehina A2 block anyway. From my review of the affidavit of expert historian Bruce Stirling, the claim in that respect appears to be an orthodox late 19^thcentury title individualisation and alienation claim. It is of a kind that has been upheld by the Waitangi Tribunal and accepted by the Crown in other areas.

[76] Fifth, the Treaty settlement process culminates in the comprehensive legislative settlement of all historic claims of any kind whether articulated or not. Once legal counsel and expert witnesses are engaged in the process, a statement of claim is comprehensively reworked and whether the matter is litigated in the Tribunal or negotiated with OTS, extensive research is undertaken in order to unearth matters that could amount to breaches of the Treaty of Waitangi requiring a durable settlement. Inevitably therefore on either track, all of the transfers of the Ngāti Whakahemo estate into Crown or private hands prior to 1992 would be reviewed at some level. To suggest that if Whārere Farm is not mentioned, it is not claimed, is inconsistent with the way in which Treaty claims are processed in the Tribunal and in direct negotiations.

[77] In reality, it is only rarely the case that resumable SOE land of the scale of Whārere Farm will be found within the traditional territory of a tribe seeking to settle its claims – particularly a small tribe like Ngāti Whakahemo. In reality, such assets are always the subject of claim whether by way of direct grievance or for the purposes of remedy. OTS will be well aware of this reality.

[79] I turn now to the first to third of the Crown’s arguments as set out above.

[80] In support of its argument that the OTS decision to clear Whārere Farm for sale is unreviewable, the Crown pointed to the two leading Treaty settlement decisions on reviewavbility – Te Runanga o Wharekauri Inc v Attorney General⁵and Milroy v Attorney-General.⁶It is necessary to review the reach of those authorities before going further.

[81] Wharekauri related to the (then) controversial Sealord settlement of Māori commercial fisheries claims. The proceedings were an attempt by dissentient Māori

_{interests to prevent the Executive from introducing settlement
legislation into the}

House. Unsurprisingly a unanimous Court of Appeal found that the courts cannot prohibit a Minister from introducing legislation.⁷

The point that does matter, in our opinion, is that public policy requires that the representative chamber of Parliament should be free to determine what it will or will not allow to be put before it. Correspondingly Ministers of the Crown must remain free to determine, according to their view of the public interest, what they will invite the House to consider.

[82] In my view, that case does not stand for the much broader proposition that no decisions made by officials or Ministers in relation to historical Treaty settlements are ever justiciable.

[83] Milroy was treated by the panel that heard that appeal as a similar case. There, Tūhoe sued to prevent the government using land over which Tūhoe said it had claims, to settle the separate claims of Ngāti Awa. Tūhoe attacked the advice of OTS officials to their Minister. The advice related to how cross-claimed lands should be treated in the Ngāti Awa deed and ultimately the settlement legislation. The matter arose this way because Ngāti Awa was in negotiations well before the claims of Tūhoe had been heard by the Waitangi Tribunal. The technique proposed by officials, and I think ultimately adopted, was to withdraw 25 per cent of the relevant cross-claimed forestry block from the Ngāti Awa settlement so as to keep that portion ‘on account’ for future settlements with other iwi. Tūhoe was not satisfied.

[84] By the time the matter had reached the Court of Appeal, the applicants had abandoned direct attacks on ministerial and Cabinet decisions. Instead they argued that advice from officials that provided the basis for these political decisions was incorrect or inadequate. A five-Judge bench unanimously rejected this argument:⁸

In reality the argument outlined represents an attempt to draw the Court into an examination of the accuracy and completeness of the advice of officials in the course of the formulation of government policy even though no rights are affected by the advice. It would take the Courts into the very heart of the policy formation process of government. We were not referred to any authority for such a course. ...

However, counsel was driven to accept that the provision of the advice in issue does not affect the rights of any persons or even have the potential to do so. It is the resulting legislation and Executive acts in accordance with it that will have that impact. Counsel acknowledged that the advice “in a sense, drives the legislative process”.

[85] In addressing an argument based on a proposed reviewability test of remoteness from the processes of Parliament, the Court said:⁹

Such an approach is unacceptably vague and is not supported by authority. It would blur the boundaries between the role of the Executive government and that of the Courts. It would invite curial review of research, advice and opinion for which no objective justiciable guidelines are available. As this Court said in Curtis v Minister of Defence [2002] 2 NZLR 744 para [27]:

“A non-justiciable issue is one in respect of which there is no satisfactory legal yardstick by which the issue can be resolved. That situation will often arise in cases into which it is also constitutionally inappropriate for the Courts to embark.”

The established test is not by reference to remoteness in time or evolution but by function. The formulation of legislative proposals is part of the business of government.

[86] In essence, the Court said an essentially political decision cannot be rendered justiciable by attacking it earlier in the decision-making process.

[87] I do not think this decision is on point either. In the present case, OTS had made a call over its interest in Whārere Farm for future settlements. That call, I accept, had to involve an assessment of multiple factors including policy factors such as how much Treaty settlement money had already been committed to iwi and hapū in the area. These considerations are either non-justiciable, or at least likely to be

treated by the Courts with great deference.¹⁰But OTS had also, and necessarily, to

make assessments of law: which tribes had settled and been paid out, and which ones had not. In fact there was a debate going on between OTS and Ngāti Whakahemo over the issue at that very time, although it related to Ngāti Whakahemo’s claims

¹⁰See the Privy Council’s rejection in the Broadcasting Assets Case [1994] 1 NZLR 513 (PC) of the Court of Appeal’s doctrine of absolute unreviewability of the Crown’s policy choices when s 9 of the SOE Act is engaged. Some sort of judicial assessment of policy choices is required by the terms of s 9, even if the assessment is necessarily deferential to political choices made by the Executive.

[88] In argument the Crown accepted that such assessments of mixed fact and law had to be made and were necessarily relevant to the overall decision. That acceptance is both proper and critical.¹¹

(a) before clearing the land for sale, OTS had first to know whether any tribes had claims in the area such that the land might reasonably be used in some way to settle them;

(c) such consideration had a legal component in that OTS had first to have correctly assessed whose claims remain unsettled in law;

(d) the fact that OTS had misinterpreted the law in this respect meant it had failed to take account of that mandatory relevant consideration;

(e) thus, in my view, the clearance decision is justiciable at both the legal interpretation level and the relevant consideration level.

[90] In simple terms, it must have been a precondition of the lawful exercise of OTS’ public power under the Protocol to advise Landcorp that it had no interest in Whārere, to get its law right on the status of the claims of a claimant to that land.

conceptually incorrect to treat OTS’ decision as merely preliminary and having no direct effect on the plaintiffs’ rights or interests. The mistake did directly affect

¹¹I note in passing that the Crown argues that Ngāti Whakahemo had not, at the time, mentioned its interest in acquiring Whārere Farm. It had only mentioned the Wai 1471 claim lodged in 2008. The Crown says it had not been put on notice. I do not accept that this absolves officials from making the necessary legal assessment correctly, even if only as a contributing element to the broader assessment of its interest in obtaining the farm. Officials (and later the Minister for Treaty Settlement Negotiations) treated Ngāti Whakahemo as a subset of Ngāti Mākino and/or Ngāti Pikiao. They must therefore have known in general terms, where Ngāti Whakahemo’s traditional land interests lay. Indeed the Wai 1471 claim document itself described a broad swath of territory (including Whārere) and the particulars of claim makes specific reference to the Pukehina block – one of the underlying blocks of the farm.

Ngāti Whakahemo’s rights or interests. In fact, it was about Ngāti Whakahemo’s rights or interests – that is, the legal status of its Treaty claims. One can perhaps see why the Court of Appeal in Milroy preferred to stay out of the arcane field of cross claims to land especially where some concession (25 per cent) to Tūhoe had been made during consultation. But this case is quite different. Here, OTS has admitted making an error of a fundamental kind. I doubt that the Court in Milroy would have been quite so dismissive of the Tūhoe case if it had been shown that when the Minister declined to further accommodate Tūhoe interests the incorrect advice to her was that Tūhoe’s claims in the area had already been settled. If it could be shown that this advice was relied upon, it would be a very deferential court indeed that would not require the decision to be remade on the correct basis. Remember the Milroy Court cited the principle in Curtis that reviewability depends upon there

being a legal yardstick by which the issue can be resolved.¹²There is a relevant

[92] There is also the fact that, as a result of the decision, Ngāti Whakahemo lost access to such protections as may have been provided to its claims via the Protocol. Loss of access is loss of an interest. I address that question more directly under the “material impairment” test that must be applied in relation to the causes of action in relation to s 9. There is no need for me to further elucidate that issue at this point.

[93] The Crown’s third argument was that in the case of Whārere, wider factors considered by OTS when advising Landcorp of its intention in relation to Whārere, would have so eclipsed OTS’ error it was “unlikely” that OTS would purchase Whārere Farm to settle Ngāti Whakahemo’s claims anyway. The Protocol in this case was only a theoretical option not a realistic one, so Ngāti Whakahemo suffered no real loss. That is primarily because, the Crown said, Ngāti Whakahemo’s claim is never going to settle for a sum equal to or greater than the value of Whārere’s – in short, the likely quantum in settlement of such a claim would be too small to warrant

¹²Milroy v Attorney-General, above n6, at [16], citing Curtis v Minister of Defence [2002]

¹³This in effect is the unrealistic option point discussed by the Supreme Court at [89] of the Water Case: that is that there is no material impairment because the option posited was never in reasonable prospect; see New Zealand Māori Council v Attorney-general [2013] NZSC 60.

[94] That may or may not be so; it is difficult to assess at this remove from the moment of decision. Caution is required in posing a counterfactual constructed by officials in evidence after the event. Remember this is not what OTS or the Minister for Treaty of Waitangi Negotiations actually took into account at the time. They thought Ngāti Whakahemo’s claims had settled and could be set to one side as irrelevant. But an evaluation of the realistic possibilities as required by the Supreme

Court in the s 9 context is instructive here.¹⁴Even if Whārere was too valuable for

Ngāti Whakahemo’s settlement, the Minister for Treaty of Waitangi Negotiations (to his credit) had shown a willingness to be creative and innovative with the available policy mechanisms. His intervention on behalf of Ngāti Mākino at the end of 2013 even though that tribe’s claims were settled, is evidence of that. Had he known of Ngāti Whakahemo’s extant claims, the Minister might have been moved to push for a more equal joint bid by Ngāti Mākino and Ngāti Whakahemo. Both tribes had real Treaty ‘equities’ on their sides: Ngāti Mākino because they so badly wanted to get Whārere in 2008 but were blocked and Ngāti Whakahemo because their claims remained unsettled. A more equal arrangement could well have been acceptable in terms of Ngāti Whakahemo’s sensitivity about recognition of its mana whenua. (In her affidavit, Marian Smith only said acquisition was unlikely. She did not say it was unthinkable). A Crown contribution to Ngāti Whakahemo by way of settlement of its claim could well have been sufficient to get a joint commercial deal over the line. So notification to OTS under the Protocol of Landcorp’s intention to sell could have opened up more creative options for the Crown than simply banking Whārere to settle Ngāti Whakahemo’s claims if OTS had properly understood the status of those claims.

[95] I do not think there is any merit in the Crown’s argument that Ngāti Whakahemo had an opportunity to join in Ngāti Mākino’s attempt to put together a bid but squandered it. At that time Ngāti Whakahemo had no money. As Mr Te Aho indicated, the tribe needed Crown funding to participate. The problem was that the Crown was firmly of the view that no support would be forthcoming because Ngāti

[96] I address the relevance of the resumption alternative in the context of the causes of action against shareholding Ministers, so it is unnecessary to address that matter here.

[97] Having found that OTS failed to take account of a mandatory relevant consideration when it cleared Whārere for sale, the clearance itself must be now considered invalid. I will return to the practical implications of such invalidity both when addressing the claims against the shareholding Ministers and at the end of this judgment,

[98] Under this head, Ngāti Whakahemo makes two arguments. The first, that Landcorp ought to be treated as the Crown in the context of the sale of Whārere such that s 9 applies directly to the company’s decision to sell. The second, that the email exchange between Traci Houpapa and Willie Te Aho at the beginning of March, created a legitimate expectation that no sale to a third party would take place until negotiations with Ngāti Whakahemo had concluded.

[99] On the first issue, Ngāti Whakahemo argues that s 9 is of such broad constitutional importance that the legislation should be interpreted so as to prevent at all costs, and if at all possible, a breach of Treaty principle. Counsel argued further that s 9 requires Landcorp to be treated as if it were the Crown for some purposes even if not for others. Section 9 of course provides that nothing in the SOE Act permits the Crown to act “in a manner that is inconsistent with the principles of the Treaty of Waitangi”.

[101] I do not consider the plaintiff’s argument in this respect has merit. It is therefore unnecessary for me to traverse the detailed submissions of counsel with respect to the general reviewability of commercial decision-making by SOEs including, in this case, Landcorp’s decision to sell Whārere.

[102] The Crown is defined in s 2 of the SOE Act as Her Majesty the Queen in right of New Zealand “unless the context otherwise requires”. The context here obviously means the statutory context, not the circumstances of any particular case. There is no avoiding the conclusion that the broad statutory context of the Act is to separate Executive government from its trading enterprises and to formalise the circumstances in which Ministers retain the prerogative to intervene in those enterprises. Thus, the private company model was adopted as the vehicle for them, subject only to such modifications as are contained in the reforming legislation itself. These modifications are relevantly set out in the Privy Council decision in the

Although, under the Act, a State enterprise is structured so that it is separate from the Crown, as its title indicates, it remains very much the Crown’s creature.

[103] As Mr Barker pointed out in submissions, various provisions of the SOE Act explicitly treat SOEs and the Crown as distinct entities that must necessarily interact. Such provisions include s 27 itself, which provides:

The submission in respect of any land or interest in land of a claim under section 6 of the Treaty of Waitangi Act 1975 does not prevent the transfer of that land or of any interest in that land or of that interest in land–

[104] The amendments in s 27A to s 27D introduced in the Treaty of Waitangi State Enterprises Act 1988 following the Lands Case are all couched in terms that clearly and obviously differentiate between the Crown and the State Enterprise. It could hardly be otherwise given the purpose of the reform.

[105] Mr Barker also referred to the discussion of s 45Q of the Public Finance Act as discussed in the Water Case. This section is the equivalent of s 9 of the SOE Act. It provides:

(1) Nothing in this Act shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi (Te Tiriti o Waitangi).

(2) For the avoidance of doubt, subsection (1) does not apply to persons other than the Crown.

[W]e are satisfied that the only thing that occurs on the commencement of the next ownership model legislation is the transfer of companies from the State enterprise regime to the mixed ownership model regime. Because of the seamless application of ss 9 and 45Q, the mere transfer of the companies from the State enterprise regime to the mixed ownership model regime does not alter the Crown’s obligations to act in accordance with the Treaty.

Section 9 of the State-owned Enterprises Act applies while the companies remain State enterprises and s 45Q, which is in the same terms, applies when they become mixed ownership companies. It is true that s 45Q only applies to Crown acts, and not to acts of the company or any third party shareholders once any sale has taken place. ...

[107] I do not think that passage resolves the ambit of s 9. The introduction of mixed ownership is an element not present in the State enterprise regime. There is high sensitivity around the imposition of Treaty obligations beyond the Crown in the mixed ownership model. Principles arising in that context may or may not have application in the s 9 context. I prefer, for myself, to focus on the internal context of the SOE Act.

[108] That context is, in my view, very clear. I agree with Robertson J in Te Heuheu that to read the Act so as to make an SOE the Crown for the purposes of s 9 would be contrary to the whole philosophy of the Act.¹⁷It would thus take a very significant contextual driver indeed to require the fusion of the two entities the legislation was enacted to split. Section 9, despite its high constitutional importance, is not such a driver.

[109] The protection of the ability to make Treaty claims in respect of assets to be held by State enterprises through the resumption procedure was the means by which Treaty claimants could reach into SOEs. If SOEs were themselves subject to Treaty constraint, there would have been no need for the Lands Case in 1987 in the first

[110] The plaintiff then argued the legitimate expectation point. I do not think that argument can succeed on the facts. It is reasonably clear that Ngāti Whakahemo saw a ray of hope in Ms Houpapa’s email of 1 March – after all she agreed to meet with Mr Te Aho’s group and bring the Chief Executive with her. It can only have been a small ray of hope though because Willie Te Aho (whose role was central for the Ngāti Whakahemo side), acknowledged in his 4 March 2014 reply that Landcorp had gone back to the highest bidder and commenced talks.

[111] Mr Te Aho was clearly unaware of how far the talks with Micro Farms had gone – it will be recalled that a draft agreement had been circulated the day before and was in the process of being executed – but he was aware that talks had commenced.

[112] On an objective reading of the 1 March 2014 email from Ms Houpapa, the best that can be said from Ngāti Whakahemo’s perspective, is that the email was ambiguous. Landcorp’s refusal to extend “the timeframe” had to be contrasted with her agreement to meet Ngāti Whakahemo the following Friday “if they would like”. There was certainly no unequivocal offer to commence negotiations. In short, Traci Houpapa intentionally fudged the issue having been told by the Chair of her Board not to create any expectations about negotiations commencing.

[113] Ms Houpapa may be rightly criticised for being less than candid in her email

– I infer in order not to spook Ngāti Whakahemo into going to Court before the agreement with Micro Farms was executed – but I see no basis for Ngāti Whakahemo confidence that negotiations or consultations over a Ngāti Whakahemo bid would start at the meeting on 7 March 2014.

[114] As the authorities sensibly establish statements giving rise to enforceable legitimate expectation must do so clearly and unequivocally.¹⁸The 4 March email

¹⁸For example, Ronald Young J in Talleys Fisheries Ltd v Cullen (HC Wellington CP287/00,

31 January 2002 at 48) said that to make out a legitimate expectation “the representation must have been clear, unambiguous and unqualified”. More directly in Comptroller of Customs v Terminals (NZ) Ltd ([2012] NZCA 598 at [125]:

Where legitimate expectation is raised, the inquiry generally has three steps. The first is to establish the nature of the commitment made by the public authority whether by a promise or

[115] Ngāti Whakahemo argues that the shareholding Ministers should have intervened to prevent the Whārere sale proceeding, and that their failure to do so was a breach of s 9 of the SOE Act. They say that is because such failure breached the Treaty principles of active protection, utmost good faith, and the duty to provide a remedy to Treaty claimants. Ngāti Whakahemo relies for these contentions either on the ministerial intervention power in s 13 of the SOE Act or on the common law rights of shareholders acting unanimously to direct a company, commonly referred to

[116] The Crown, for obvious reasons, took the burden of responding to this particular head of claim. The Crown argued that:

(a) there was no power in the shareholding Ministers to intervene in the sale of Whārere whether by s 13 of the SOE Act or at common law; and

(b) even if there was, there was no need to intervene in this case because the sale did not amount to a material impairment of Ngāti Whakahemo’s Treaty interests so there was no breach of s 9 requiring interventions.

(1) Notwithstanding any other provision of this Act or the rules of any company,–

(a) The shareholding Ministers may from time to time, by written notice to the board, direct the board of a company named in the Schedule 2 to this Act to include in, or omit

settled practice or policy. This is question of fact to be determined by reference to all the surrounding circumstances. A promise or practice that is ambiguous in nature is unlikely to be treated as giving rise to a legitimate expectation in administrative law terms.

from, a statement of corporate intent for that company any provision or provisions of a kind referred to in paragraphs (a) to (h) of section 14(2) of this Act; and

(b) The shareholding Ministers may, by written notice to the board, determine the amount of dividend payable by any company named in the Schedule 2 to this Act in respect of any financial year or years,–

(b) Consult the board concerned as to the matters to be referred to in the notice.

(3) Within 12 sitting days after a notice is given to a board pursuant to this section, the responsible Minister for the company concerned shall lay a copy of the notice before the House of Representatives.

[119] Thus, Ministers have the power to direct the inclusion of particular content in an SOE’s statement of corporate intent – a very significant governance document controlling the company’s overall policy direction. But Ministers must first have regard to Part 1 of the Act. Part 1 comprises ss 4 to 9. It contains a melange of provisions relating to the commercial and social responsibilities of SOEs, the respective roles of the Board and Ministers, and the Crown’s Treaty responsibilities under the Act. Before making any direction under s 13, the Minister must accordingly consider the Crown’s Treaty responsibilities.

[120] Section 14 relates to statements of corporate intent – the target of any such direction. Subsection (2) provides as follows:

(2) Each statement of corporate intent shall specify for the group comprising the State enterprise and its subsidiaries (if any), in respect of that financial year and each of the immediately following

(e) The performance targets and other measures by which the performance of the group may be judged in relation to its objectives:

(f) A statement of the principles adopted in determining the annual dividend together with an estimate of the amount or proportion of annual tax paid earnings (from both capital and revenue sources) that is intended to be distributed to the Crown:

(g) The kind of information to be provided to the shareholding Ministers by the State enterprise during the course of those financial years, including the information to be included in each half-yearly report:

(h) The procedures to be followed before any member of the group subscribes for, purchases, or otherwise acquires shares in any company or other organisation:

(i) Any activities for which the board seeks compensation from the Crown (whether or not the Crown has agreed to provide such compensation):

[121] Given the terms of s 14(2)(a) to (h), I do not think s 13 can have been intended to allow Ministers by way of a direction to the Board under s 13(1)(a) to issue edicts on matters of day to day management of the company. The list in s 14(2) relates exclusively to matters of broad governance policy. It would look entirely out of place, pursuant to these provisions, to direct the Board to include in its statement of corporate intent, a disclaimer of intention to sell Whārere – one only of its 137 properties.

[122] Although, it must be said, that case very much turned on its own facts, there is support for this policy versus operations interpretation of s 14 in the Vector case.²⁰

A statement of corporate intent which was so specific in its terms as to be prescriptive of the price charged by the State-owned enterprise in carrying on its trading activity would be contrary to the very objective of the Act.

[123] Thus, I cannot see how, even in light of s 9, that s 13 can be construed as empowering Ministers to issue directives via the statement of corporate intent in relation to one off in-the-ordinary-course-of-business transactions. On the other hand a directive to an SOE to enter into a land protection Protocol with OTS does seem to me to be at a level contemplated by s 14. But that is not what we have here. I find that s 13 does not assist the plaintiff in this case.

[124] The second intervention option advanced by the plaintiff is found in the common law. The principle is drawn from the decision of Buckley J in Re Duomatic Limited. At issue in that case were monetary payments to a director of the company where such payments were not authorised by a resolution of the company in general meeting, or a Board meeting as required by the articles. Liquidators wanted the money back to meet the demands of unsatisfied creditors. Buckley J found that all

I proceed on the basis that where it can be shown that all shareholders who have a right to attend and vote at a general meeting of the company assent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be.

[125] This decision has been followed in New Zealand in Levin v Ikiua²³and Nicholson v Permakraft (NZ) Ltd.²⁴Both of these cases applied Duomatic as a ratification mechanism for actions that did not comply with procedural rules of the respective companies.

[126] In the Privy Council decision (on appeal from New Zealand) in Meridian Global Funds Management Asia v Securities Commission, their Lordships were dealing with a different question – when the action of an individual will come to be attributed to the company with which that individual is associated.²⁵In the course of

_{discussing that issue, Lord Hoffman, writing for the Board, reasoned as
follows:}²⁶

²⁵_{Meridian Global Funds Management Asia v Securities
Commission [1995] 3 NZLR 7 (PC).}

The company’s primary rules of attribution will generally be found in its constitution, typically the articles of association, and will say things such as “for the purpose of appointing members of the board, a majority vote of the shareholders shall be a decision of the company” or “the decisions of the board in managing the company’s business shall be the decisions of the company”. There are also primary rules of attribution which are not expressly stated in the articles but implied by company law, such as “the unanimous decision of all the shareholders in a solvent company about anything which the company under its memorandum of association has power to do shall be the decision of the company”: see Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] Ch 258.

[127] This suggests that the principle applies in contexts wider than ratification of procedurally flawed decisions or actions. The principle is stated as one of general applicability in all company business.

[128] Mr Barker then cited Bonham-Carter v Situ Ventures Ltd in support of the proposition that the Duomatic principle does not apply where the requirements in relation to the decision in question are designed wholly or partly to protect to interests of a party other than the shareholders.²⁷

[129] If that is indeed the law in New Zealand (the principle expressed at trial level in England, has not been applied here), then it seems to me that allowing Ministers to avail themselves of an opportunity to ensure that the Crown complies with its Treaty obligations, is in fact for the benefit of the Crown. As is often said in these contexts, the honour of the Crown is in play, and it is in the Crown’s interests that honour may be maintained.

[130] Thus, if Landcorp were a privately owned company, its shareholders could have stepped in and imposed a decision on the Board. Both the Crown and Landcorp argued however that in the case of an SOE, the Duomatic principle is displaced by the terms of s 5 of the SOE Act. Section 5 provides as follows:

(1) The directors of a State enterprise shall be persons who, in the opinion of those appointing them, will assist the State enterprise to achieve its principal objective.

(2) All decisions relating to the operation of a State enterprise shall be made by or pursuant to the authority of the board of the State enterprise in accordance with its statement of corporate intent.

(3) The board of a State enterprise shall be accountable to the shareholding Ministers in the manner set out in Part 3 of this Act and in the rules of the State enterprise.

Minister and Board, that there is no longer room for the Duomatic principle to apply.

[132] The defendants referred to the introductory speech of the Rt Hon Sir Geoffrey Palmer in relation to the legislation when it was first introduced into the House. He noted as follows:²⁸

Clauses 5 and 6 ensure that a clear separation will be maintained between the roles of Ministers who hold shares in the enterprises and who are accountable to Parliament for them, and the role of directors of the State- owned Enterprises who will manage their day to day operations free from detailed control by Ministers and control agencies.

[133] I do not think s 5(2) displaces or was intended to displace the Duomatic principle. Section 128 of the Companies Act 1993 is in broadly similar terms, that is in making it clear that the business and affairs of the company are the province of the Board. Section 128 provides as follows:

(1) The business and affairs of a company must be managed by, or under the direction or supervision of, the board of the company.

(2) The board of a company has all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company.

(3) Subsections (1) and (2) of this section are subject to any modifications, exceptions, or limitations contained in this Act or in the company’s constitution.

principle survived intact despite s 128 of the Companies Act, it would not have been displaced by s 5(2) of the SOE Act.

[135] In any event, it is to be remembered that the SOE reform specifically adopted the company under the Companies Act as its vehicle of choice. The controls that were added to the SOE Act in relation to statements of corporate intent can only have been intended to be additional to the shareholder controls provided by the Companies Act and the general law.²⁹There is no reason to assume they were to take general law powers away that are enjoyed by ordinary shareholders. The separation of the enterprise from State control through to the use of the company vehicle was radical enough.

[136] I find therefore that there was power in the shareholding Ministers to intervene to prevent the sale if to allow it would have been to permit a breach of the principles of the Treaty of Waitangi.

[137] The next question is whether to allow the sale would have created such a breach.

[138] As both the Privy Council decision in the Broadcasting Assets Case³⁰and the more recent New Zealand Supreme Court decision in the Water Case³¹say that question turns as whether the transfer would materially impair the Crown’s ability to provide a durable settlement to Ngāti Whakahemo. The Supreme Court developed

[89] In deciding whether proposed Crown action will result in “material impairment”, a court must assess the difference between the ability of the Crown to act in a particular way if the proposed action does not occur and its likely post-action capacity. So impairment of an ability to provide a particular form of redress which is not in reasonable or substantial prospect, objectively evaluated, will not be relevantly material. To decide what is reasonable requires a contextual evaluation which may require consideration of the social and economic climate. As the Privy Council pointed out:

While the obligation of the Crown is constant, the protective steps which it is reasonable for the Crown to take change depending on the situation which exists at any particular time. For example in times of recession the Crown may be regarded as acting reasonably in not becoming involved in heavy expenditure in order to fulfil its obligations

²⁹In addition to Duomatic, ss 106 and 107 give specific shareholder powers in certain circumstances. There is no suggestion that these powers were intended by the SOE legislation to be excluded in relation to SOEs.

As well, where the capacity to provide a particular form of redress will be materially impaired, the courts must also consider whether the Crown will nonetheless have the capacity to provide other forms of redress which are equally effective.

(a) before intervening, the Court must be brought to the conclusion that the proposed privatisation is inconsistent with Treaty principles;

(b) there will be inconsistency, if the proposed privatisation would “impair, to a material extent, the Crown’s ability to take the reasonable action which it is under an obligation to undertake in order to comply with the principles of the Treaty”; and

[139] The Crown argues that the resumption regime under s 27B of the SOE Act provides a complete answer to the plaintiff ’s case. Even if OTS did make a justiciable error, the plaintiff has suffered no material impairment because Ngāti Whakahemo can still apply for resumption of Whārere – indeed it has done so. There is support for this idea in the Water Case. The removal of one redress option will not be fatal if other, equally effective options remain.

[140] Ngāti Whakahemo argues that the resumption option is more apparent than real. The Waitangi Tribunal has never made a final resumption order in nearly 30 years, the Crown will oppose any such application tooth and nail, and the tribe will be forced into a long drawn out process attracting enormous cost, controversy and public opprobrium.

[141] The Crown calls in aid the decision of Robertson J in Te Heuheu v Attorney- General.³²In Te Heuheu, Ngāti Tuwharetoa applied to set aside four Landcorp sales to the local Taupo District Council. The tribe argued that the s 27B resumption mechanism provided insufficient protection in the particular circumstances of that

There can be no doubting the importance of s 9, which has continued to be affirmed in judgments of this Court and of the Court of Appeal in cases following the historic decision in the Lands case. Of equal importance is the fact that the legislature has made no attempt to repeal the section.

Taking these factors into account, I am satisfied there may be room to argue that ss 27-27D might not always be sufficient to discharge the Crown’s obligations under s 9. I accept, however, that ss 27-27D will be the starting point in all cases. I am not prepared to hold that those provisions constitute a complete code – and that the Crown did not ultimately argue otherwise – but where those provisions do apply there will usually be very little room to argue that s 9 demands something more. Such circumstances will be rare. It will need to be demonstrated, for example, that the Crown was acting in bad faith or contrary to the terms of the settlement which is encapsulated in the [Treaty of Waitangi State Enterprises] Act.

[142] In the present case, the Crown argued, in reliance on the foregoing, that, absent bad faith, the resumption mechanism will always be a complete answer.

[143] I do not think that is so for two reasons. The first, if that was Robertson J’s intention (and I doubt it – bad faith appears to be cited only as an exemplar), then I disagree. Bad faith by a public official exercising public powers is always unlawful. Such a narrowly drawn exception would add nothing to s 9 but rather would treat it as being replaced for all practical purposes by the s 27B mechanism in land claims. The Judge himself pointed to the fact that despite the introduction of the new resumption regime, s 9 had been left in place. So there must be something more there than resumption or bad faith.

[144] The second, and more important reason in the context of this case, is that Robertson J was speaking from the perspective of 1999. Since then the Crown has, with the agreement of Landcorp, introduced a second policy-based protection mechanism in addition to resumption. Although it was designed to make it easier for OTS to protect the ingredients for Treaty settlements, in reality it benefits Treaty claimants too. In fact, as the Crown accepted, the Protocol is the more important protection at the current intensive stage in the history of the Treaty settlement process. Much Landcorp land has been banked by OTS but, as I have said, 15 years on from Te Heuheu, there has still been no resumption order from the Tribunal.

joint venture bird in the hand would have been worth far more to Ngāti Whakahemo than the prospect of a long, expensive and potentially unsuccessful campaign by the litigation route. The loss of the opportunity for the land to be considered for acquisition by some means, wholly or partly under the Protocol, amounts in itself, in my view, to a material impairment. Resumption has not proved to be an “equally effective option” when compared with Protocol based acquisition.

[146] Now I wish it to be clear that I am not saying that OTS was obliged to acquire Whārere pursuant to the Protocol in order to make it available to Ngāti Whakahemo in due course as part of its Treaty settlement package. There are too many steps in that decision-making chain in which officials and Ministers must reach decisions over matters about which I have no detailed evidence and less competence. All I am saying is that the shareholding Ministers ought, in the particular circumstances of this case, to have:

(b) taken the time to explore ways in which those obligations might have been satisfied. The obligation is, in short, to explore that possibility with an open mind and in good faith.

[147] Having identified OTS’ and Ministers’ failure to intervene as justiciable, or (in the case of the latter) potentially justiciable flaws and process, the next question is whether there is jurisdiction to intervene in the sale of Whārere by Landcorp, an independent third party.

[148] The plaintiff argued that the decision to enter into the contract was tainted by Landcorp’s reliance on OTS’ invalid advice. Since, Mr Isac argued, the advice was flawed, the contract ought to be treated as fruit of a poisoned tree.

[149] Landcorp argued that the contract was an independent transaction unconnected to any errors of officials or Ministers. Landcorp argued that it

innocently relied on OTS’ advice and the Court cannot interfere in it. Landcorp pointed to the principle in Mercury Energy v ECNZ narrowing the “likely” ambit of judicial review in relation to commercial contracts entered into by SOEs to cases of fraud, corruption or bad faith.³⁴

A failure by a State enterprise to comply with any provision contained in Part 1 or in any statement of corporate intent shall not affect the validity or enforceability of any deed, agreement, right, or obligation entered into, obtain, or incurred by a State enterprise or any subsidiary of a State enterprise.

[151] In my view, this Court has the power to set aside this contract although, as I

say below, I do not consider it is appropriate to make such an order at this point.

[152] As Asher J found in Diagnostic Medlab Ltd v Auckland District Health Board, a privative clause in terms similar to that in s 21 here did not prevent the Courts making a finding of ultra vires in respect of a tender contract.³⁵

[153] On appeal, Arnold J writing for himself and Ellen France J scribed the ambit of judicial review in contract cases in this way:³⁶

Clearly judicial review will be available where there is fraud, corruption or bad faith. Further, we accept, as a matter of principle, that it may be available in analogous situations, such as where an insider with significant inside information and a conflict of interest has used that information to further his or her interests and to disadvantage his or her rivals in a tender. In such a case it may be that the integrity of the contracting process as being undermined in the same way as in the case of corruption, fraud or bad faith. But, as we have said, the particular statutory context is critical, and in this case the provisions relating to conflict of interest and use of confidential information assume considerable importance.

[154] In this case, Landcorp only entered into the contract with Micro Farms on the basis of the advice from OTS clearing the land for sale. That advice was flawed and

_{invalid for the reasons I have discussed. There are a number of cases
in the core}

³⁵Diagnostic Medlab Ltd v Auckland District Health Board [2007] 2 NZLR 832 (HC) at [341] and

³⁶Lab Tests Auckland Ltd v Auckland District Health Board [2009] 1 NZLR 776 at [91] (CA).

public sector area in which invalid advice has vitiated a later statutory decision. Mr Isac pointed to Air Nelson Ltd v Minister of Transport³⁷, Roussel Uclaf Australia Pty Ltd v Pharmaceutical Management Agency Ltd³⁸and Gall v Chief Executive of the Department of Work and Income³⁹as examples.

[155] It is true that Landcorp does not itself owe Treaty obligations under s 9 and had no reason to believe that the advice from OTS was flawed in any way. But it is the fact that Landcorp would never have entered into the contract without having received such flawed advice. That in my view taints the contract just as it tainted the Ministers’ decisions not to intervene. I consider that reliance on that advice undermined the integrity of the contracting process.

[156] While s 9 does not bind Landcorp, the Treaty context of the Act and the Treaty facts of this case cannot be wholly ignored at this last step, even if they are not determinative (as would have been the case if s 9 applied). The crucial flaw is the taint from reliance on wrong advice. But it must be relevant in terms of assessing “the integrity of the contracting process” that to permit this contract to proceed risks making Landcorp complicit in a breach of the Treaty. That should be avoided if there is a legal basis for so avoiding. To that extent, my conclusion is consistent with the general principle espoused by Arnold J in Diagnostic Medlab.

[157] I find that this Court has the power to set aside the contract. Whether it is appropriate at this stage to do so is a matter of discretion, and I turn now to consider that issue.

[158] Judicial review is always a discretionary remedy as is, effectively, injunctive relief of the kind in contemplation here. In the end, the Court must do what is just balancing the competing interests and impacts between the parties involved. In this

_{case, an actionable error has been made. The matter must go back to the
Ministers}

³⁸Roussel Uclaf Australia Pty Ltd v Pharmaceutical Management Agency Ltd HC Wellington

³⁹Gall v Chief Executive of the Department of Work and Income HC AucklandCP490-SW01,

and they must consult with Ngāti Whakahemo. The result of such consultation is not a foregone conclusion. Ngāti Whakahemo does have an alternative – resumption – albeit an unattractive one.

[159] On the other hand Landcorp and Micro Farms have an agreement for sale and purchase. They too have a plan B in cl 22 of the agreement, but that also is a second best option attendant with risk and potentially cost.

[160] The shareholding Ministers could have intervened, not necessarily to require the land to be transferred to the OTS bank, but to create an opportunity where that question could be resolved between the Minister for Treaty of Waitangi Negotiations and Ngāti Whakahemo. I expect other iwi, including Ngāti Mākino, might also have had an interest in such discussions. It seems to me therefore that a genuine opportunity needs to be provided for those discussions to be had in good faith.

[161] It is also relevant that Landcorp was less than transparent with Ngāti Whakahemo when the agreement with Micro Farms Ltd was resurrected at the beginning of March. While it cannot be said that Landcorp’s actions in this respect were in bad faith, or even lacked good faith, Traci Houpapa’s playing out of Ngāti Whakahemo so as, I infer, to avoid inconvenient injunction proceedings before the agreement with Micro Farms was finalised, must now be relevant in the exercise of my discretion to grant a remedy. At the very least it must mean that Ngāti Whakahemo’s failure to intervene earlier and before the agreement was reached with Micro Farms, cannot be held against them. It will also mean that Landcorp should bear some of the cost and risk of the delay that will follow from my orders.

[162] I have decided that it is not yet appropriate to set aside the agreement for sale and purchase to Micro Farms. That is because it is by no means a foregone conclusion that the consultations between the Crown and Ngāti Whakahemo will produce an agreement to proceed to acquisition and I do not feel it is the role of this Court to do anything more than provide the Crown and Ngāti Whakahemo with space to discuss whether an arrangement over the land is practical. I have decided that the path of least resistance is to leave the agreement in place in the meantime until outcomes of the consultations become clearer. Should the Crown and Ngāti

Whakahemo come to a point where they agree that the land, or some part of it, should be acquired in order to address Ngāti Whakahemo’s claims, then it will be appropriate to make orders setting aside the agreement for sale and purchase, but not until then.

[163] The plaintiff sought to key relief in this case to the resumption application currently before the Waitangi Tribunal. He sought relief that prevented completion of the transfer until the resumption application had been disposed of by the Waitangi Tribunal. I do not consider that is appropriate. On my analysis, the application succeeds because of loss of access to the Protocol, not because Ngāti Whakahemo is entitled to have its resumption application heard before the land is transferred to a private third party. There is thus, on my analysis, no nexus between the basis for the plaintiff’s success and the relief sought. I would therefore decline to order such a remedy.

(b) requiring the Minister for Treaty of Waitangi Negotiations to reconsider whether Whārere Farm should be dealt with wholly or partly under the Protocol in light of the fact that Ngāti Whakahemo has extant Treaty claims in respect of the Whārere Farm land;

(c) requiring the Minister whether personally or through OTS to consult with Ngāti Whakahemo with respect to that tribe’s possible acquisition of Whārere Farm whether outright or in joint venture with other interests;

(d) preventing the completion of the transfer of Whārere Farm to Micro Farms for two months from the date of this judgment to allow such consultations to proceed; and

(e) directing a further hearing in this matter prior to the expiry of the two month period.

[165] Whether further orders are required before the expiry of the two month stand down will depend on the result of the consultations the subject of these orders. This matter will be considered at the further hearing.

[166] Leave is reserved to all parties in the meantime to seek further directions as may be necessary

High Court of New Zealand Decisions

Ririnui v Landcorp Farming Limited [2014] NZHC 1128 (26 May 2014)