Nz Maori Council v Foulkes

• Jurisdiction: New Zealand
• Judge: Harrison J
• Judgment Date: 18 November 2015
• Neutral Citation: [2015] NZCA 552
• Docket Number: CA247/2014
• Court: Court of Appeal
• Date: 18 November 2015

BETWEEN

The New Zealand Māori Council

First Appellant

And

Sir Edward Taihakurei Durie

Second Appellant

And

Cletus Maanu Paul

Third Appellant

and

Angela Jane Foulkes

First Respondent

And

Alan Parekura Torohina Haronga

Second Respondent

And

Alexander John Wilson

Third Respondent

And

The Federation of Māori Authorities

Fourth Respondent

[2015] NZCA 552

Court:

Harrison, Stevens and Winkelmann JJ

CA247/2014

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal from a High Court (HC) decision that the fourth respondent could not lawfully delegate to a third party its power under a settlement deed to appoint trustees — the appellant and the fourth respondent were jointly responsible for appointing Māori trustees under the Crown Forestry Rental Trust (the Trust) — the parties had exercised the power for 23 years without problem — following dispute about the appointment of several trustees, they entered into a settlement agreement to delegate their power of appointment under the deed to a new body set up for that purpose — the fourth respondent reneged on resolutions made by this body, appointing and extending the terms of certain trustees — it said that it was not lawfully able to fetter or delegate its power of appointment under the trust deed through the agreement — the appellant sought declarations validating the new body's decisions — whether the trust deed authorised the appointors to delegate their powers in the manner provided by the agreement — whether the judge erred in finding that there had been a delegation — whether the costs of the litigation (in excess of &2 million) should be paid by the Trust.

Counsel:

F E Geiringer for Appellants

S Barker for First, Second and Third Respondents

N Burley and L Mckeown for Fourth Respondent

• A The application to adduce further evidence is dismissed

• B The appeal is dismissed.

• C Each of the three parties participating in this appeal is indemnified from the Trust for their costs in the sum of $2,500 plus usual disbursements.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Harrison J)

Introduction

1 This appeal from a judgment of Williams J in the High Court 1 raises two related questions of documentary construction. One is whether a trust deed allowed two parties vested with a joint power of appointment of trustees to delegate that power to a third party. The other is whether an agreement later entered into between the same parties for the purpose of exercising that power was lawful and effective.

2 Sadly, what lies beneath these questions is a divisive and expensive dispute between representatives of the New Zealand Māori Council (the NZMC) and the Federation of Māori Authorities (FOMA), the two bodies jointly responsible for appointing Māori trustees under the Crown Forestry Rental Trust (the CRFT or the Trust).

Crown Forestry Rental Trust

3 The Trust's genesis was authoritatively summarised by Williams J in the judgment under appeal as follows:

• [6] The CFRT was established by deed in 1990 as part of the machinery resulting from the settlement of litigation between Māori interests represented generally by Sir Graeme Latimer and the Council (of which he was then chair) and the Crown over the Crown's proposed sale of cutting rights in Crown-owned exotic forests. Cutting rights could be sold but ground rent would be paid to the new Trust and the land would be subject to resumption by Māori claimants under the Crown Forest Assets Act 1989. Under the settlement, the Trust would hold all rental payments in respect of the forests pending resolution of Treaty claims to the land beneath them. The expectation was that the accumulated rentals relating to the claimed land

• would eventually pass along with the land to the claimants if their claims for resumption of such land succeeded before the Waitangi Tribunal, or revert to the Crown if they were not.

• [7] It was then predicted that all forestry claims would be resolved by the Waitangi Tribunal one way or the other within three years, and that in the meantime, interest on the accumulated rentals would be expended on funding claimant participation in the claim process.

• [8] In hindsight, the three year assessment was hopelessly unrealistic. Twenty-four years later, although real progress has been made, forestry claims remain on the Waitangi Tribunal's books. And perhaps unexpectedly, the Trust has evolved into the primary funder of claimant participation in the processes by which they prosecute all of their historical claims. Without the Trust's interest based distributions, the historical settlements process would eventually grind to a halt. For that reason, it is of the utmost legal, political and social importance that CFRT functions effectively, efficiently and lawfully in discharging its obligations under its trust deed.

• (Footnote omitted.)

4 The Crown settled the deed on 30 April 1990. The deed opened by reciting the Crown's wish to dispose of certain assets including crops, chattels and fixtures, and the existence of claims by Māori to areas of land upon which the assets are located, before noting that:

The Crown and Maori representatives have by an agreement dated 20 July 1989 agreed that the Crown proceed with its disposal programme, subject, inter alia, to the establishment of a trust to:

• (a) receive the Rental Proceeds from the Crown Forestry Assets upon which Crown Forestry Assets are located; and

• (b) make the interest, earned from investment of those Rental Proceeds, available to assist Maori in the preparation, presentation and negotiation of claims before the Waitangi Tribunal which involve, or could involve, certain Crown Forest Land.

5 The trustees are directed to hold all the trust assets including income on trust for certain beneficiaries including the Crown, entities claiming distributions of income under the trust and those who have registered claims under the Treaty of Waitangi Act 1975.

6 There are to be six trustees except when a casual vacancy arises and when an alternate is appointed. Three of the trustees are to be appointed by the Crown; three trustees are to be appointed by Māori. The Minister of Finance has the power of appointment of the three Crown trustees, and: 2

The power of appointment of Trustees to be appointed under Clause 5.3 [ “appointed by Maori”] shall be exercised by the New Zealand Maori Council and the Federation of Maori Authorities Incorporated (the “Maori Appointor”) subject however to clause 6.6. 3 The trustees appointed under this clause 6.2 shall be Maori Trustees.

7 The Māori Appointor has the power to remove or replace any Māori trustee or appoint a new Māori trustee. Every new trustee is obliged to execute upon appointment a deed whereby he or she undertakes to be bound by the covenants imposed on the trustees. Where a trustee has a conflict of interest relating to claims for payments, he or she shall declare that conflict as soon as it arises and the Māori Appointor shall appoint an alternate trustee. Because of the nature of the decisions the trustees must make, such conflicts of interest regularly arise.

8 The deed also:

• (a) prescribes in detail the powers and duties of trustees including the powers to make investments, open bank accounts, employ agents, act on advice, determine questions and hold trust funds on deposit or uninvested; 4

• (b) directs the trustees to accumulate interest earned from investments and apply it at their sole discretion to pay trust expenses and, more importantly, to assist any claimant in preparing, presenting and negotiating claims before the Waitangi Tribunal which involve licensed land; 5

• (c) directs the trustees to decide the criteria for persons applying for distributions of income to qualify as claimants, the basis for allocating funds and the machinery for ensuring confidentiality of information

• supplied by claimants, with payments only to be made in accordance with the decisions of trustees upon delivery of satisfactory evidence and detail about expenditure for reimbursement and of costs incurred for the benefit of claimants. 6

Events since 2013

9 The NZMC and FOMA were able to exercise their joint power of appointment as Māori Appointor without apparent difficulty in the first 23 years of the Trust's operation. In 2013, however, difficulties about the appointments process emerged against the background of conflict within the Trust itself.

10 In March 2013 the NZMC, Sir Edward Durie and Maanu Paul — two of the trustees — issued a proceeding in the High Court, seeking directions on a range of issues relating to the Trust. Kãs J determined the application in a comprehensive judgment delivered in July 2014 7 and has since made orders appointing trustees which are unrelated to this appeal, in circumstances where the NZMC and FOMA have been unable to agree on the exercise of the appointment power. Examples are the appointments of Sir Edward; 8 Ms Raumati-Tu'ua and Mr Majurey; 9 and four alternate trustees. 10 Various appointments were also made in this way prior to July 2014. 11

11 In an attempt to resolve their differences about exercising their joint power of appointment of Māori trustees, FOMA and the NZMC participated in mediation hui in November and December 2013. The result was an agreement signed by the parties on 23 January 2014, creating a “Māori Appointor” to exercise the joint power of appointment vested by cl 6.2 of the trust deed.

12 The new body was to comprise ten members, being five members each from NZMC and FOMA. Clause 2, the operative clause, provided:

• 2. Constitution of the Māori Appointor

• 2.1 The Māori Appointor shall comprise 10 members being 5 from the Council and 5 from the Federation.

• 2.2 The Executive committees of the Council and the Federation respectively may replace members in accordance with their own rules and procedures.

• 2.3 The Council and Federation may at any time agree upon a...