CLARKE V KARAITIANA CA256/2010

CLARKE V KARAITIANA CA256/2010 26 October 2010IN THE COURT OF APPEAL OF NEW ZEALAND CA256/2010 [2010] NZCA 485BETWEEN PETER TUKITERANGI CLARKE Applicant AND HARVEY KARAITIANA Respondent Hearing: 19 October 2010 Court: Ellen France, Randerson and Stevens JJ Counsel: M A Taylor and N van der Wal for Applicant S Webster for Topia Rameka, Charlotte Severne, Heemi Biddle and John Fenwick, together with certain unnamed beneficial owners as Interveners No appearance for Respondent Judgment: 26 October 2010 Reasons for Judgment: 28 October 2010 at 11.30 amJUDGMENT OF THE COURT A The application for stay is declined. B The application for intervener status is granted for the purposes of the application for a stay only. The application in respect of the appeal is reserved for further consideration. C All questions of costs are reserved.____________________________________________________________________REASONS OF THE COURT(Given by Stevens J)Introduction[1] The applicant, Mr Clarke, has sought a stay of execution of a judgment of the Māori Appellate Court pending the determination of an appeal against the judgment under s 58A of Te Ture Whenua Māori Act 1993 (the Act). The applicant is a current trustee of the Tauhara Middle 15 Trust (the Trust). He contends that the effect of the Māori Appellate Court's judgment is that he is unlikely to be returned as a trustee of the Trust and he will be prejudiced if the appointment of new trustees proceeds before his appeal is heard. [2] We issued a result judgment on 26 October 2010 declining the application for a stay with reasons to follow. These are the reasons.Background[3] The Trust is an Ahu Whenua trust under s 215 of the Act, representing around 3,600 beneficial owners. It is constituted by the Māori Land Court under s 211 and is subject to the powers of that Court set out in the Act. [4] After some irregularities following the Trust's joint purchase with another Māori trust of land from Landcorp, the matter came before Judge Harvey of the Māori Land Court, who gave three judgments on the matter. The first, given on 29 June 2007,1 followed the refusal of one of the trustees, the respondent Mr Karaitiana, to execute a mortgage over the land to secure a loan taken out to fund the purchase. The other trustees sought directions whether they were able to execute the mortgage by a majority of their number. The Judge held that it was possible under the Act to execute a mortgage by majority, but directed a number of questions to the trustees concerning irregularities with the purchase. [5] The second judgment given on 30 July 2008 2 was critical of the decision to buy the land and directed that the current trustees, including the applicant, stand1 Wall v Karaitiana 85 TPO 225, 29 June 2007.2 Wall v Karaitiana 87 TPO 107, 30 July 2008.down at a special meeting of beneficiaries convened by the Registrar of the Māori Land Court. The trustees were able to stand for re-election. [6] The special meeting was held on 28 September 2008 and a vote was held for new trustees, some beneficiaries voting in person and others by power of attorney. The Registrar had advertised the meeting on the basis that five trustees were needed. The applicant was the highest polling candidate. The matter once again came before Judge Harvey. In his third judgment dated 18 December 2008, 3 he criticised the election at the special meeting, noting that no attempt had been made to ascertain the identity of those voting. He further noted that the trust order required that voting was by show of hands and that most of the power of attorney votes were invalid (each attorney being permitted to vote once, either personally or on behalf of someone else). He therefore ordered a further special meeting. He also referred to his findings of breach of trust in the second judgment and directed that, because of their actions, the incumbent trustees could not stand for re-election. [7] The reasoning of the Judge alluded to the provisions of s 222 of the Act under which the Māori Land Court assesses the suitability of trustees and appoints them on that basis. The section relevantly provides:Appointment of trustees (2) The Court, in deciding whether to appoint any individual or body to be a trustee of a trust constituted under this Part of this Act,— (a) Shall have regard to the ability, experience, and knowledge of the individual or body; and (b) Shall not appoint an individual or body unless it is satisfied that the appointment of that individual or body would be broadly acceptable to the beneficiaries. ... (4) Subject to subsection (5) of this section, the Court may appoint any such individual or body as a responsible trustee, or an advisory trustee, or a custodian trustee.3 Wall v Karaitiana 88 TPO 62, 18 December 2008.(5) For every trust constituted under this Part of this Act the Court shall appoint 1 or more responsible trustees, and may appoint 1 or more advisory trustees and 1 or more custodian trustees.[8] The trustees appealed to the Māori Appellate Court. In a judgment delivered on 29 March 2010,4 it considered a number of points. Materially, it rejected an argument that the special meeting was a meeting of assembled owners under Part IX of the Act, and therefore power of attorney voting was permissible under reg 8 of the Māori Assembled Owners Regulations 1995. 5 The Court also held that the issue whether the current trustees were able to stand for re-election was res judicata by the time of the third hearing as it had been dealt with finally in the second judgment, which had not been appealed. 6 The applicant was therefore able to stand for re-election. It also noted that the appointment of the highest polling trustees was not to be taken for granted; the views of the owners were not determinative as the Māori Land Court had to appoint trustees pursuant to the criteria in s 222 and retained a discretion as to whom to appoint.7 The Appellate Court upheld Judge Harvey's finding as to the method of voting, but said that it was unnecessary to hold a further meeting as the proper outcome of the meeting could be ascertained by removing attorney votes and accounting for other irregularities. As information from the meeting could be used to reconstruct the vote, 8 the Court proceeded to calculate a new tally of votes. On this list, the applicant had dropped from first place to sixth place. [9] The Appellate Court directed that the Māori Land Court hold a further hearing to consider the appointment of trustees to the Trust under s 222. That is set down for hearing on 29 October 2010. [10] We record also that the Trust is in negotiations of an urgent nature with Contact Energy over geothermal energy development plans. On 10 May 2010 the Māori Land Court gave directions granting to the five top-polling trustees at the meeting of 28 September 2008, according to the Appellate Court's list, power to act4 Wall v Maori Land Court of New Zealand, Waiariki District A20090002091, 29 March 2010.5 At [63]–[65].6 At [45]–[46].7 At [47]–[52].8 At [90].as trustees alongside the incumbent trustees on this issue only. 9 On all other issues the incumbent trustees remain sole trustees.Appeal[11] Broadly, the applicant's grounds of appeal concern the Appellate Court's determinations on attorney voting, the process to be followed for such meetings, and the scope of the Māori Land Court's discretion under s 222. The applicant contends that either the attorney votes should be counted or a fresh meeting should be called to enable those whose votes are invalid as being cast by attorney to have votes count. Either way, the Court should appoint the top-polling candidates, unless they fail to meet the criteria set out in s 222 of the Act.Application for leave to intervene[12] Mr Webster sought leave to intervene on behalf of four nominees for the position of trustee and certain unnamed beneficial owners opposed to the applicant. This was in the absence of any appearance by the respondent Mr Karaitiana, who, like the applicant, is an incumbent trustee. Counsel for Mr Karaitiana was engaged in an important criminal trial and was unable to attend the hearing. We were advised that the respondent's position was that he relied on the submissions for the interveners. [13] Intervener status, limited to the hearing of the application for stay was not opposed. We agree that it was appropriate that submissions in opposition be presented, particularly in an application for a stay where consideration of the effect of a stay on others is necessary. We granted leave to intervene accordingly. We reserved the position with respect to the hearing of the appeal in March 2010.9 Pursuant to s 237 of the Act.Stay[14] The applicable principles are not in dispute. The test as to whether a stay should be granted is set out in Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd:10The factors to which Courts conventionally address themselves to find this balance include the following: (1) If no stay is granted will the applicants' right of appeal be rendered nugatory? (2) The bona fides of the applicants as to the prosecution of the appeal. (3) Will the successful party be injuriously affected by the stay? (4) The effect on third parties. (5) The novelty and importance of the question involved. (6) The public interest in the proceedings. (7) The overall balance of convenience.Submissions[15] Mr Taylor for the applicant submitted that the effect of the Appellate Court's judgment is that it is unlikely that the applicant will be reappointed as trustee. He argued that the Māori Land Court does not have as wide a discretion under s 222 as the Appellate Court suggested. Rather, the default position is that the top-polling candidates will be appointed, subject to fulfilling the criteria of s 222. This was the case in Pukeroa Oruwhata Trustees v Mitchell.11 Thus the applicant was concerned about possible prejudice arising from a loss of office as trustee. [16] Mr Webster for the interveners submitted that the short answer is that the applicant remains eligible for appointment. The Māori Land Court retains a wide discretion under s 222 as to whom to appoint and the wishes of the owners do not necessarily prevail. The Pukeroa case was one where the relevant trust was running10 Dymocks Franchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC), approved by this Court on appeal: Bilgola Enterprises Ltd v Dymocks Franchise Systems (NSW) Pty Ltd (1999) 13 PRNZ 48.11 Pukeroa Oruwhata Trustees v Mitchell (2006) 11 Waiariki Appellate MB 66 (11 AP 66).smoothly and profitably. Here the case is quite different: there are urgent issues including important commercial negotiations with Contact Energy to be attended to. There needs to be a prompt resolution of the appointment of trustees so that the owners know who represents them. [17] Further, at the s 222 hearing before the Māori Land Court, all interested parties may be heard. This includes the applicant, who may be able to speak to his knowledge, experience, support, and the circumstances in which the election was conducted. Equally, any of his supporters who voted by power of attorney and feel disenfranchised may give their perspectives. Mr Webster pointed to the Māori Land Court's powers to remove, add, replace or reduce the number of trustees under ss 236–245 of the Act, such that even if the s 222 hearing goes ahead and the applicant is not elected, he will in due course following the appeal, if the Court thinks fit, be able to be appointed, for example as an additional trustee or advisory trustee, or in place of an existing trustee. [18] Mr Webster also submitted that, even if the stay were granted and the appeal allowed, there is no guarantee that the applicant would be reappointed. He has, after all, been found to have committed a breach of trust, a fact that was not disputed. [19] In reply Mr Taylor emphasised that there is no fraud in the breach of trust and that the applicant still satisfies the criteria in s 222.Discussion[20] We are satisfied that the balance falls in favour of refusing the application for stay. We accept Mr Webster's submission that the appeal will not be rendered nugatory because of the Māori Land Court's broad powers to remedy the situation if the appeal is successful. This Court also has wide powers to grant relief under s 58A(2) of the Act in the event of a successful appeal. [21] In this case, unlike in the Pukeroa case, the trust appears to be divided by factionalism, the management needs to be regularised without delay and there are pressing business decisions to be made. Importantly, we note that the Trust's currentmanagement structure is unsatisfactory, particularly given that a joint board has power in respect of geothermal issues while the old trustees have power in relation to other issues. To refuse a stay would also perpetuate a situation in which the former and new trustees comprising the joint board are at odds over the proper approach for the Trust to take on the geothermal issues. [22] We consider that the Māori Land Court is best-placed to decide who to appoint as trustees having regard to the s 222 criteria, the views of those who attend the hearing and the results of the vote at the meeting. We give weight to the fact that the Trust has important and urgent business negotiations that need to be taken up immediately by a panel of trustees with a clear mandate. To order a stay could prejudice the interests of the Trust as a whole and its 3,600 beneficial owners. We are satisfied that the balance of convenience therefore falls in favour of refusing such a stay. [23] Nothing we have said in this judgment should be interpreted as commenting on any of the issues to be argued in the appeal.Result[24] The application for stay is declined. [25] As the respondent did not appear at the stay hearing and the status of the interveners was for the limited purpose of the stay hearing, we consider that the appropriate course is to reserve costs.Solicitors: Woodward Law Offices, Lower Hutt for Applicant Jackson Reeves, Tauranga for Intervener