64 Tairawhiti MB 102
IN THE MĀORI LAND COURT OF NEW ZEALAND
TAIRAWHITI DISTRICT
A20160003476
UNDER
Sections 231 and 244, Te Ture Whenua Māori
Act 1993
IN THE MATTER OF
Waitangi A1A2 Trust
BETWEEN
PAREKURA ONEROA, SELWYN PARATA,
ANNE MARIE REEDY, SPENCER REEDY
AND W PEWHAIRANGI WALKER AS
TRUSTEES OF THE WAITANGI A1A2
TRUST
Applicants
AND
KO TE TAWERA WHĀNAU TRUST
Objector
Hearing:
2 August 2016, (60 TRW 255)
1 September 2016, (61 TRW 171)
(Heard at Gisborne)
Appearances:
R Revington and M Terekia, for the applicants
N Weatherhead, for the objector
Judgment:
17 January 2017
RESERVED JUDGMENT OF CHIEF JUDGE W W ISAAC
Copies to:
R Revington, PO Box 347, Gisborne, [email protected]
N Weatherhead, DX LP78520, Gisborne, [email protected]
64 Tairawhiti MB 103
Introduction
[1]
On 1 June 2016 the trustees of the Waitangi A1A2 Trust applied to the Māori Land
Court to vary the terms of their trust order pursuant to s 244 of Te Ture Whenua Māori Act
1993. The variations were sought in order to comply with clause 6 of the existing trust
order which provided for a review of the trust order after 20 years, on 1 June 2016.
[2]
[3]
The variations sought by the applicants include:
(i)
That clause 5(iii) and 5(iv) be removed as they are obsolete;
(ii)
That the review date in clause 6 be updated to 1 June 2036;
(iii)
That beneficial owners be allowed to participate in general
meetings by way of proxy; and
(iv)
That the number of trustees at any one time shall not be more than
seven.
An Annual General Meeting (AGM) was scheduled for 20 May 2016 which was
advertised in the Gisborne Herald on 29 April and 4, 6 and 7 May 2016. At this meeting
the variation proposals were discussed and the variations received unanimous support.
[4]
Since the AGM the Ko Te Tawera Whānau Trust (Tawera Trust) have objected to
the proposed variations. The grounds for the objection can be summarised as follows:
[5]
(i)
Clauses 5(iii) and 5(iv) are not obsolete;
(ii)
The Waitangi A1A2 Trust has mixed invoices and it is difficult to
determine the exact financial position of the trust;
(iii)
There has been no distribution of income to the trust beneficiaries
and the management and operation of the trust has marginalised the
Tawera Trust beneficiaries;
(iv)
The Tawera Trust is the largest owner in the Waitangi A1A2 Trust
holding approximately 27% of the shares and removing clause
5(iv) would jeopardise the Tawera whānau entitlement; and
(v)
The Tawera Trust has no representation on the Waitangi A1A2
Trust and it is proposed that the members of the Tawera whānau
should form the majority of the trustees.
This decision will consider whether in the circumstances the application should be
granted.
64 Tairawhiti MB 104
Background
[6]
The Waitangi A1A2 block is located south of Ruatoria in the Tairawhiti Māori Land
Court District. It is one of several blocks of land previously owned by Materoa and John
Marshall Reedy. Ahu whenua trusts have been constituted over many of these blocks
including Waitangi A1A2, Kaharau A1A Trust, Makarika 3B1, Makarika 3B2B Trust,
Tapuaeroa A16B, Tapuaeroa A2B Trust, Totaranui A9 Trust, Wairanga A2C Trust and
Waitangi X2 Trust.
[7]
There are common trustees for these trusts and an overlap in the beneficial owners,
but not all beneficiaries have an interest in each trust. There are also variations as to the
extent of the beneficiaries’ interests in each trust.
The Trust Order
[8]
The current trust order for Waitangi A1A2 was issued by the Court on 27 May 1996
and provides that the trustees shall apply for a review no later than 1 June 2016.1 The
current application has been filed to comply with this provision.
[9]
For the main part, the order is in the standard form used in the Tairāwhiti district for
ahu whenua trust orders. However, clauses 5(iii) and 5(iv) are unique to Waitangi A1A2.
[10]
They read as follows:
5. (iii) That Heneti Tawera and her son or sons shall be entitled to occupy and farm
the “Hill” block, together with access to the river for cattle until 31 August 2015.
5. (iv) That the Trust income for division between the owners shall be made up as
follows:
(a)
The income received from farming the Hill Block by the Tawera Family.
(b)
The income received from farming the flats by the Trust.
(c)
Any other income received by the Trust.
The effect of this is that all Trust income is pooled together and distributed to all
owners in proportion to their shares.
1
44 Ruatoria MB 247-256 and 45 Ruatoria MB 101.
64 Tairawhiti MB 105
Submissions of the applicants
[11]
According to the memorandum of counsel, the trustee applicants have considered
their obligations under clause 6 of the trust order and under s 244 of Te Ture Whenua
Māori Act 1993 and have taken three steps:
(a)
The trustees have reviewed the trust order and have reached an agreement
on the parts of the trust order that might be varied and updated to improve
the administration of the Trust for the benefit of the beneficial owners.
Three variations to the order were proposed:
(i)
The removal of clauses 5(iii) and 5(iv) should be removed in their
entirety as they are obsolete. The review date in clause 6 should be
updated to “1 June 2036”, and any minor and consequential drafting
changes should be made.
(ii)
A clause allowing beneficial owners to participate in general
meetings by way of proxy should be added to acknowledge that
many owners live away from the whenua and that the trust order
should be more enabling of owner participation (although under the
proposal, trustees would not be able to hold proxies); and
(iii)
A new clause should be added to confirm that the number of trustees
at one time shall not be more than seven.
[12]
In addition, the trustees drew two further matters to the Court’s attention. The
Trustees were aware that the Māori Land Court had a new template ahu whenua trust order
and that there was a possibility that the Court would require the adoption of that form. For
this reason, the trustees notified and informed the beneficial owners of the new template.
During the discussion it was noted that there would be no objection to the new template as
long as it reflects the position under the current trust order amended in accordance with the
three proposals.
64 Tairawhiti MB 106
Beneficiary support for the proposed variations
[13]
The process followed by the trustees in making this application involved the
following steps: the trustees have notified and discussed the s 244 process and the
proposed variations with the beneficial owners, and these proposals were discussed and
approved unanimously by the beneficial owners in attendance at the Trust’s AGM on 20
May 2016.
[14]
Counsel for the applicants has filed evidence of this process, including the redacted
minutes from the Trustee meeting held in Gisborne on 8 April 2016. These minutes show
the discussion and resolutions regarding variation to the trust order. It is noted that these
minutes were approved by the trustees at their subsequent meeting on 20 May 2016, but
had not been signed by the chairman. Also filed was the pānui for the AGM that was
published in Gisborne Herald on 29 April and 4, 6 and 7 May 2016. Redacted minutes of a
further trustee meeting held at Gisborne on 20 May 2016 were included, as well as the
minutes and attendance list of the AGM held in Gisborne on Friday 20 May 2016. These
minutes are in draft form until approved by the beneficial owners at the next general
meeting.
Objections by the Tawera Family Trust
[15]
On 30 August 2016, Mr Weatherhead made submissions on behalf of the objectors.
He set out some of the history of the block, including that on 15 March 1993 an order was
made determining that Heneti Tawera and her son Pekama Tawera would have the right to
occupy the “old homestead” situated on the land to the death of the survivor of them or
until 31 August 2015, whichever occurred first.2 They were to keep the homestead insured
and maintain it to a proper and reasonable standard of repair. Also noted is some of the
problematic history of the Waitangi A1A2 Trust and previous comments by Judge Williams
acknowledging that there had been numerous problems over the years including family infighting, lack of financial resources, lack of income, debts including rating arrears and
communication difficulties between the trust and owners.3
2
3
36 Ruatoria MB 24.
60 Ruatoria MB 136.
64 Tairawhiti MB 107
[16]
It was submitted that while there may be some feuding and in-fighting, it is perhaps
the structure and the way the multiple trusts are managed as one that creates tensions
which impose difficulties upon the trustees. The trustees may be in a position where their
duties in respect of each separate trust are blurred because they are effectively managed as
one single trust. It is also submitted that because of the wording of clause 5(iv) (“[t]he
effect of this is that all Trust income is pooled together and distributed to all owners in
proportion to their shares”), that if clauses 5(iii) and 5(iv) are deleted from the Waitangi
A1A2 trust order it would substantially alter the basis of the trust.
[17]
Mr Weatherhead alleges that the financial statements of Waitangi A1A2 Trust for
the year ending 31 March 2016 record and note that:
(a)
The Trust acts as agent for other Incorporations and Trusts;
(b)
It receives rent;
(c)
It pays agreed expenses; and
(d)
The balance of receipts less expenses is held as agent and recorded as a
liability.
[18]
It is noted that the Statement of Financial Position at page 6 records current
liabilities including obligations to the other eight Trusts referred to at paragraph [6] above.
[19]
It is submitted that Tawera Trust is the largest entity holding shares in Waitangi
A1A2 and that if the Trust’s shares are added to those held by other Tawera family
members, their total shareholding would be 45.8 per cent. It is noted that the minutes of the
trustees’ meeting held on 8 April 2016 refer to “apportionment of expenses to be
considered for accounting going forward.” It is suggested that the apportionment of
expenses may not be equitable.
[20]
Mr Weatherhead submits that none of the relevant trust orders authorise the
separate trusts to be effectively treated as one. The minutes of the meeting on 20 May 2016
refer to matters arising from the trustee meeting on 8 April 2016 and at s 3(e) “to make a
dividend to those trusts who can afford it.”
64 Tairawhiti MB 108
[21]
The trustees are obliged to act impartially between the beneficiaries and groups of
beneficiaries, and it is submitted that the current trustees are in a conflict of interest
situation. The Tawera family does not have significant interests in the other blocks, only in
Waitangi A1A2. Overall, the blocks cover an area of about 845 ha. Of that, Waitangi A1A2
is only about 7.8 per cent. If the separate trusts are treated as one, it is submitted that the
trustees can never act impartially between groups of beneficiaries and individual
beneficiaries. Further, the Tawera whānau do not have representation on the Waitangi
A1A2 Trust and the trustees are all associated with the other lands. It is submitted that
there is a long-standing breach in treating all the trusts as one.
[22]
Over recent years, Wi Pewhairangi Reedy and his family occupied Waitangirua and
carried out extensive renovations. It is alleged that the trustees were aware that Wi was
improving this homestead, that the property’s market value had increased and its life had
been extended. The Tawera whānau see this is being the same as the situation that occurred
in relation to the “old homestead” on Waitangi A1A2 more than 20 years ago, and that
there should be provision in any new trust order for Waitangi A1A2 to recognise the
improvements made by their whānau. To fail to do so, they allege, would allow the
beneficiaries of the other Trusts to be enriched to the detriment of one group of
beneficiaries which has improved a trust asset.
[23]
A key aspect of the objectors’ submissions is that the eight separate trusts have had
their funds mixed together and that the trust order does not authorise this. Further, none of
the other trust orders allow for mixing of one trust’s funds with those of another. There was
concern that where funds are mixed in a bank account, “the rules attribute the first drawing
out to the first payment in”, and that this rule can operate unfairly because it can cause the
Waitangi A1A2 Trust to bear the brunt of any losses.
[24]
Further concerns were raised about the trusts’ accounts in that they do not disclose
the value of Waitangi A1A2’s interest in the term deposits or bank account. However, it
appears that liabilities to the other trusts are charged against all the assets held by the
Waitangi A1A2 Trust, which includes the land and buildings. This is a detriment to the
Waitangi A1A2 beneficiaries and a benefit to the beneficiaries of the other eight trusts. It is
also alleged that very little has been distributed to beneficiaries during the term of the
Waitangi A1A2 Trust. While the trustees have the power to determine when to make
64 Tairawhiti MB 109
distributions, it is submitted that this must be done within a reasonable time or the power
will be extinguished. According to the objectors, a reasonable time has passed and that the
beneficiaries are now entitled to have the funds distributed in their entirety.
[25]
The current application asks the Court to remove from the Waitangi A1A2 trust
order the direction in clause 5(iv) to “pool and distribute” trust income to owners in
proportion to their shares. It is submitted that the Court cannot do so unless this variation is
for the benefit of the beneficiaries of Waitangi A1A2, and that it is not clear that this
change would benefit them. Questions regarding the rates arrears were also raised and
concerns expressed as to which blocks were in arrears and the amount for each. If the
arrears were paid from a mixed fund, this could be unfair if, for example, Waitangi A1A2
had no rates arrears. The Tawera whānau believes that if this is the case, a credit should be
given to them for contributions they made to rates arrears on the other blocks.
[26]
The objectors propose that members of the Tawera whānau are appointed to the
Waitangi A1A2 Trust so that they form a majority of the trustees. Regarding the mixing of
trust funds, it is submitted that separate accounts should either be reinstated, or
explanations provided to ensure that the rules concerning the mixing of trust funds have
been followed. The objectors propose that the trustees of all the trusts investigate whether
the land blocks in question can be effectively dealt with together. If they can be dealt with
together, the best option for doing so may be to explore options such as partnership or
incorporation, and an application for such orders filed with the Court in accordance with cl
3(b) of the trust orders.
The Law
[27]
Section 244 of Te Ture Whenua Māori Act 1993 provides:
244 Variation of trust
(1) The trustees of a trust to which this Part applies may apply to the court to
vary the trust.
(2) The court may vary the trust by varying or replacing the order constituting
the trust, or in any other manner the court considers appropriate.
(3) The court may not exercise its powers under this section unless it is
satisfied—
64 Tairawhiti MB 110
(a) that the beneficiaries of the trust have had sufficient notice of the
application by the trustees to vary the trust and sufficient opportunity
to discuss and consider it; and
(b) that there is a sufficient degree of support for the variation among the
beneficiaries.
Discussion
[28]
In terms of clause 6 of the Waitangi A1A2 trust order the trustees were required to
apply to review the trust no later than 1 June 2016. The current application was dated and
filed on 1 June 2016 in compliance with that provision.
[29]
The proposed variations were scheduled for discussion at the Trust’s AGM on 20
May 2016, which was notified in the Gisborne Herald on 29 April, 4, 6 and 7 May 2016. At
the AGM the proposals were put to the owners present, including a considerable number of
the Tawera whānau (including the two objectors, Pekama and Rangi Tawera, who appeared
before the Court at the hearing of this application).
[30]
The minutes of the AGM record discussion of the proposed variation as follows:
Waitangi A1/A2 Trust Order only:
a.
Removal of obsolete clauses.
b.
Proxy votes.
c.
Number of Trustees.
d.
New Maori Land Court template trust order.
Tira was introduced. Tira discussed standard review of trust order based on
last clause of the trust order.
Tira went through procedures.
1. Trustees agreed the changes.
2. Beneficial owners given notice, time to consider, and must give
substantial support in the changes.
3. MLC must approve.
Rangi Tawera:
Question: can owners pass a motion to make a change to the trust order.
Answer: yes.
Question: do the Trustees have to proceed to make the change.
64 Tairawhiti MB 111
Answer: No, but if this was the will of the owners they would likely be
inclined to.
Trustees Propose:
1)
number of trustees as 7.
2)
Trust order become enabling to allow proxy votes.
3)
Delete obsolete provisions.
Trust order and amendment wordings were presented to all owners.
R Tawera questioned the Homestead clause to be removed as an issue as
the whanau would like to remain in the homestead. Trustees advised that
the clause is obsolete and if left it would be equivalent to removed.
Trustees advised that the homestead will be addressed outside of the Trust
order.
Selwyn move that amendments be made to the Trust deed. Second by
Paddy.
S Parata / P Oneroa
All in favour.
None against.
[31]
Whilst the minutes record that questions were raised by Rangi Tawera concerning
the homestead clause, when the proposed variations were voted on the minutes also record
that all were in favour and none were opposed.
[32]
In terms of the provisions of Te Ture Whenua Māori Act 1993 quoted above I have
to be satisfied that the owners had sufficient notice of the meeting and that there was a
sufficient degree of support for the proposed changes.
[33]
The facts speak for themselves. The meeting was advertised on four occasions in
the local newspaper. The meeting was well attended and as pointed out earlier it was
attended by a number of members the Tawera whānau. As a result I am of the view that
owners had sufficient notice of the meeting, and accordingly that s 244(3)(a) has been
satisfied.
[34]
When the proposed variations were voted on the minutes record that all present
were in favour and none were opposed. I note that the accuracy of the AGM minutes on
this point was disputed at hearing by Rangi Tawera, as recorded in the hearing minutes at
64 Tairawhiti MB 112
61 Tairawhiti MB 188-189. However, while Mr Tawera disputed that the motion to vary
the trust deed was unanimously approved at the AGM, he did acknowledge in his evidence
that this motion was carried. The parties are therefore in agreement that, at the very least, a
majority of owners present at the AGM approved the motion to vary the trust order.
[35]
Having regard to this, I am satisfied there is sufficient support amongst the owners
to vary the trust order. Accordingly I am satisfied that s 244(3)(b) has been complied with.
[36]
Having regard to my findings above, I must grant the application for the variation.
[37]
In so doing I am conscious of the unrest with the Tawera family in relation to the
Trust for Waitangi A1A2. I would therefore make the following comments, which may
guide both the trustees and the owners for Waitangi A1A2.
[38]
First, clause 3(iii) for Waitangi A1A2 expired on 31 August 2015 and is obsolete.
[39]
Next, I note the Tawera family’s concern that the removal of cl 3(iv) from the trust
order will remove the direction to the trustees “that all Trust income is pooled together and
distributed to all owners in proportion to their shares”. I agree that such a proportional
division of Trust income is for the benefit of all owners and appears fair and equitable.
The deletion of this clause as a part of the variation of the trust order will remove an
explicit direction to the trustees to ensure proportional distribution of Trust income.
However, it is a well-settled principle of Trust law that trustees must always act fairly by
all beneficiaries, and be even-handed in their treatment of these beneficiaries.
While the
deletion of cl 3(iv) from the trust deed has been approved by Waitangi A1A2’s owners, I
record that this does not remove the duty of the trustees to act fairly and even-handedly in
their dealing with Trust property and funds.
[40]
Finally, I note that there can be no pooling of income from the other land trusts.
The income from Waitangi A1A2 must be treated as separate income for the benefit of the
owners of Waitangi A1A2 only. Although there are common trustees for a number of land
trusts, Waitangi A1A2 is a separate trust.
64 Tairawhiti MB 113
[41]
The concerns the Tawera family have regarding the administration of the Trust is a
matter which should and could be addressed by an application to enforce the obligations of
the trustees pursuant to s 238 of Te Ture Whenua Māori Act 1993, not by the present
application.
[42]
Likewise, the concerns about the makeup of the trustees in not a matter which is the
subject of this present application. If the Tawera family seek to alter the trustees so as to
ensure representation of their whānau on the Trust, they should file an application to
replace trustees pursuant to s 239 of Te Ture Whenua Māori Act 1993.
Decision
[43]
Having regard to the above I now confirm that the application to vary the existing
trust order for the Waitangi A1A2 is granted.
[44]
[45]
The new trust order is therefore to be varied as follows:
(i)
The date for the next review of trust to be on or before 1 June 2036;
(ii)
Clauses 5(iii) and 5(iv) are to be deleted;
(iii)
Provision is to be for proxy voting by the owners; and
(iv)
The number of trustees is to be limited to seven.
Counsel for the applicant filed with the Court a draft trust order on 21 July 2016
making these variations. I have reviewed this draft and approve its terms.
[46]
A copy of this decision is to go to all parties.
Dated at Wellington this 17th day of January 2017.
W W Isaac
CHIEF JUDGE