General policy statement
The Council currently owns approximately 163.2 hectares of land in Waitara held in various special categories. The land was vested in the Council by virtue of the Local Government (Taranaki Region) Reorganisation Order 1989. For some time, issues surrounding the Council owned land at Waitara have been divisive for the Waitara community. Some leaseholders have sought to freehold the land, and Te Atiawa has argued for the return of the land.
The land was originally confiscated by the Crown from Waitara hapu in 1865 under the New Zealand Settlements Act 1863. Waitara was then surveyed and renamed Raleigh by the Crown.
The Te Atiawa Claims Settlement Bill, which is currently before the House of Representatives, contains an account of the historical relationship between Te Atiawa and the Crown. That Bill also contains factual acknowledgements and an apology from the Crown.
In 1876 the Crown vested land in the Waitara Harbour Board and the Raleigh Town Board for harbour improvement and municipal development. During the next 70 years, further land was vested in the Council’s predecessors for those purposes.
As a consequence of a series of local government amalgamations, the land is now vested in New Plymouth District Council.
The land can be broadly divided into six different categories:
Waitara Harbour Land—land subject to the Waitara Harbour Act 1940 and vested or settled by the Crown or Waitara Harbour Board between 1876 and 1915, and 1.5 hectares purchased by the Waitara Harbour Board in February 1905. The land was initially set aside for the nominated purpose of
“harbour improvement”. The Waitara Harbour Act 1940 expressly repealed various statutory provisions that affected the land dating back to 1879, terminating each of the instruments by which the trusts were created and vested the land in the Council’s predecessor for municipal purposes and subject to section 9 of the Waitara Harbour Act 1940. This land currently is approximately 133.2 hectares.
Subsequently vested Waitara Harbour Land—land vested in the Council’s predecessors between 1953 and 1969 and declared to be subject to the Waitara Harbour Act 1940. This land is approximately 4.8 hectares.
Waitara Public Library Land—land vested by the Waitara Borough Reserves Vesting Act 1909 and held by the Council in trust as an endowment for the maintenance of the Waitara Public Library. This land is approximately 1.9 hectares.
Town Improvement Land—land gazetted at the same time as the initial grant of the Waitara Harbour Land in 1876, and on the same initial terms, but for
“town improvement”. This land is approximately 10.0 hectares.
Mixed Land—The first four categories determine the status of this land, principally because it comprises parcels of land which are held in more than one of the other categories, or where part of the land does not come under any of the other categories. This land is approximately 1.9 hectares comprising 16 titles.
Portfolio Land—sixteen separate parcels of land not held for any of the above purposes, and not subject to any other special purpose or status, but subject to leases and consistently treated for some time as part of the same portfolio as the other categories of land. This land is approximately 1.9 hectares.
The existing statutory restrictions that affect the Waitara Endowment Land are outdated and restrict the ability of the Council to use the land, and any income derived from it.
By the 1930s it was clear that Waitara was not going to be the main regional port for Taranaki, and the Waitara Harbour Act 1940 was passed to disestablish the Waitara Harbour Board and distribute its assets. Some of the Act is still in force.
The Waitara Harbour Board’s land holdings included foreshore, and grazing and town sections in the Waitara township. The Waitara Harbour Act 1940 vested the foreshore between the high and low water marks on the East and West Beaches in the New Plymouth Harbour Board (now Taranaki Regional Council (TRC)) as a foreshore endowment for harbour purposes. The balance of the land was vested in the Waitara Borough Council (now New Plymouth District Council) for municipal purposes subject to section 9 of the Act. The foreshore endowments reverted to the Crown under section 36 of the Local Legislation Act 1952.
While the Waitara Harbour Act 1940 does not prevent the sale of the land subject to that Act, it does restrict the application of any funds received from that land.
Section 9 of the Waitara Harbour Act requires all funds received by the Council in respect of the Waitara harbour land to be placed in a separate account. The Council is authorised to deduct the costs and expenses of collecting, receiving and administering the land, together with the costs incurred in the promotion and passing of the Waitara Harbour Act 1940 (now irrelevant) and maintenance and improvement of that land.
The balance must then be applied in and towards the purposes listed in section 9(1)(a) to (e).
the prevention of erosion by the Waitara River within the Borough of Waitara, with a power to construct and maintain works within and outside the borough for such purpose; and
the maintenance and reconstruction of any bridge over the Waitara River within the Borough; and
the payment of interest and principal on the loans raised in connection with such a bridge; and
the payment of costs and charges incurred in complying with section 6 of the Waitara Harbour Act (which provides for the Council to maintain lights, harbour buoys and beacons); and
the payment of a retiring allowance to the Secretary and Harbourmaster of the Board for a term of 4 years (now expired).
Other than the provision and maintenance of a bridge, the above purposes relate to statutory responsibilities that are carried out by TRC, rather than the Council.
TRC currently funds Waitara flood protection works from a targeted works rate.
Section 9(2) provides that if it appears that there are surplus moneys not required for the above purposes, the Governor-General can appoint a Commission to determine whether the funds are surplus to requirements. Any surplus funds (or any portion determined by the Commission) are then paid to the New Plymouth Harbour Board (now TRC) for general harbour purposes.
Alternatively, the Act envisages an agreement being reached between the Council and the Harbour Board (now TRC) regarding the amount of surplus moneys available and not required by the Council. With the consent of the Governor-General, and an Order in Council, any agreed amount may be paid to the Harbour Board for general harbour purposes.
Unless the Waitara Harbour Act is repealed, it will continue to apply to the application of funds received from Waitara harbour land.
The Waitara Borough Reserves Vesting Act 1909 provides for that part of the Waitara land that is subject to that Act to be held in trust as an endowment for the maintenance of the Waitara Public Library. The Act contains a specific leasing power. It does not prohibit sale of the land subject to it; but does not contemplate that either. It provides that any rental income derived from the land must be kept in a separate account and applied to the purchase of books and periodicals or
“otherwise in and towards the maintenance and equipment of the Waitara Public Library”.
Land administered under the Local Government Act 2002 as endowment or trust land cannot be disposed of unless sections 140 and 141 of that Act are complied with. Sections 140 and 141 impose restrictions on the disposal of property vested in a local authority. Property is defined to mean real property of every type (and includes both fee simple and leasehold estates) and includes every type of interest and estate in property.
Section 141 applies conditions to the sale or exchange of endowment properties and trusts which the Council would need to comply with if it sells any part of the Waitara land, unless the statutory restrictions are first removed.
The conditions relate to:
the use to which the proceeds of sale or exchange may be put (must be consistent with the purpose of the endowment); and
if the Crown was the donor of the property, notification to the Minister for Land Information and the Minister for Treaty of Waitangi Negotiations of the proposal to sell or exchange the land; and
if someone other than the Crown was the donor of the property, the Council has made a reasonable attempt to notify the donor or their successor that the Council intends to sell or exchange the property and provided them with an opportunity to comment on the intended sale or exchange.
Under section 141 of the Local Government Act 2002, if the Waitara land is sold under current law, the proceeds of sale would need to be used in accordance with the existing statutory restrictions, which are too narrow. To use it for broader purposes, more appropriate to today, requires a legislative exclusion of those provisions.
With the exception of some land used as reserve and for other public works, most of the Waitara Endowment Land is leased on perpetually renewable ground leases. The portfolio comprises approximately 770 leases, including approximately 700 residential leases, but also some commercial, industrial and grazing purposes.
All leases, other than registered lease 6411893.1 (Waitara Golf Club), which is not perpetual and not included in the freeholding process, include terms which provide that:
the lessee has the ownership of all the improvements (buildings, driveways, fences, etc):
the lessee has the ability to sell the leasehold interest to any third party:
the lessee has a perpetual right of renewal (where provided for in the lease) with renewals ranging from 7–21 year terms:
lease rentals are determined by independent valuation, with lessees having the right of arbitration if the lessee disputes the Council valuation.
None of the leases contain a right for the lessee to purchase the fee simple (freehold) interest in the land.
Despite this, there has been a long-standing desire amongst Waitara leaseholders to have the right to acquire the fee simple estate, and for some time, lessees have lobbied the Council to allow them to purchase the fee simple estate in their leased land. This dates back to at least 1977, when residents of Waitara petitioned the Waitara Borough Council to enable freeholding of their properties.
In December 1989, the Council resolved to adopt a policy of permitting owners of leasehold property in Waitara to purchase the fee simple estate in their leased land, subject to certain conditions, including that an investigation be undertaken to determine the most satisfactory use of the capital and to provide the greatest benefit to Waitara. As a consequence of such investigations, a further decision was made by the Council on 8 April 1991 to promote local legislation:
“empowering the New Plymouth District Council to offer for sale the freehold of various leasehold properties at Waitara and to enable all funds derived from the sale of such lands to be credited to the General Revenue of the Council.”
In 1992, the New Plymouth District Council (Land Vesting) Bill, was introduced to Parliament, promoted by the Council. It proposed freeing the land from the restrictions applying to it such as the Waitara Harbour Act 1940 and other endowments, and revesting it in the Council in fee simple (subject to the leases and other encumbrances) to enable the Council to deal with the land without the endowment restrictions.
The Bill was referred to the Local Affairs Select Committee and submissions were called for. There was considerable opposition to the Bill from Te Atiawa. The Minister of Justice, (Sir) Douglas Graham, also outlined the Government’s concerns about the Bill. The Government asked the Council to enter into discussions with local Maori about the Bill. Discussions subsequently took place although the issues were not able to be resolved. By the end of 1995, the Council’s position was the Bill should
“lie on the table”. The Council did not wish the Bill to pass while land issues were still being resolved.
On 20 May 2002, the Council commenced a review of the position when it resolved to consider the issue following receipt of submissions during the 2002 Long Term Strategic Plan submission process.
On 20 August 2002, the Council resolved to put the New Plymouth District Council (Land Vesting) Bill on hold until the Council had reconsidered the issue and made a decision.
Over the next 18 months, there were three rounds of consultation and submissions which culminated in a final decision on 30 March 2004 to offer the land (excluding land used for parks and reserves, pensioner and council housing and other local authority purposes) to the Crown for inclusion in the Crown’s offer of settlement to Te Atiawa. The terms of the 2004 resolution included:
that the land could be included in the Crown’s offer to settle Te Atiawa’s historical claims:
that the Council receive a fair market value for the land:
that the rights of leaseholders under the existing leases were preserved:
that the settlement legislation provided for the land to vest free of all statutory trusts, restrictions and other reservations:
that the transfer of the land only occur once the settlement legislation has passed and the Council would continue to own the land and administer the existing leases in the meantime.
The Council also resolved—
to advocate for the significance of the land to be recognised by the Crown and be in addition to any negotiated settlement, and in the interim, to advocate for the Crown and Te Atiawa mandated negotiators to deal with interested leaseholders and consider freeholding after settlement; and
to withdraw the New Plymouth District Council (Land Vesting) Bill.
The Waitara Leaseholders Association challenged the Council’s resolution of 30 March 2004 in the High Court.
While the litigation was proceeding, it was agreed between the Council and the Crown that any negotiations regarding the Council’s resolution of 30 March 2004 would be put on hold.
In an initial decision relating to preliminary points, the High Court concluded that (most of) the Waitara Endowment Land was held on trust according to various specified statutory purposes. In a second High Court decision, it was held that the Council had failed to act in accordance with its duties as a trustee when resolving to offer the land to the Crown.
The Council appealed to the Court of Appeal and the Court of Appeal overturned the declarations made in the High Court and upheld the Council’s decision. The Court of Appeal concluded that, while the land was held on trust according to specified statutory purposes, the trust was not a charitable trust and the Council was not subject to all the obligations of charitable trustees. The court also concluded that the Council did not breach its obligations in making its resolution of 30 March 2004.
The Waitara Leaseholders Association subsequently sought leave to appeal against the decision to the Supreme Court, but leave was denied.
In addition to the Waitara Leaseholders Association litigation, between August and October 2006, 155 claims were issued against the Council in the District Court by individual leaseholders. The proceedings related to the 2004 decision to offer the land to the Crown. They sought to recover damages from the Council for losses allegedly suffered as a result of the Council’s decisions. Although the claims differed slightly, they all originally alleged breach of the Fair Trading Act 1986, promissory estoppel and negligent misstatement.
The Council applied successfully for the claims to be transferred to the High Court and for six of the claims to proceed as test cases. The Council then applied for summary judgement on its defence or to strike out each of the six claims.
The High Court granted summary judgment in favour of the Council. Although the plaintiffs initially appealed the High Court decision, to the Court of Appeal, they abandoned their appeal before the hearing. All litigation by leaseholders has now been disposed of.
It was made clear by the various decisions in the Waitara Leaseholders Association Case that the Council has a statutory power of sale of the land, subject to the restrictions and obligations prescribed in sections 140 and 141 of the Local Government Act 2002.
Following the court decisions summarised above, there was no legal impediment to the Council implementing the decision of 30 March 2004, and negotiations between the Council and the Crown recommenced in September 2009 so that the land could be used for settlement purposes if necessary.
An agreement for sale and purchase between the Council and the Crown was signed on 7 September 2010 for approximately 120 hectares of predominantly leasehold land. The agreement reflected the requirements of the Council resolution of 30 March 2004. At about the same time, the Council signed a deed with TRC providing for the net proceeds of sale of land subject to the Waitara Harbour Act 1940 to the Crown to be distributed equally between the Council and TRC.
The sale and purchase agreement with the Crown provided for the purchase price for the land to be the fair market value, determined by a valuation process set out in the agreement. On 2 October 2013, the Council and the Crown agreed on a provisional transfer price of $23 million. Under the terms of the agreement, the Crown was then required to engage and negotiate with Te Atiawa to confirm whether or not the provisional transfer price was acceptable as a final transfer price for the land. Following its negotiations with Te Atiawa, the Crown did not accept the provisional transfer price as a final transfer price, and did not propose a formal alternative. Te Atiawa Iwi Authority did make a separate approach direct to the Council proposing an alternative offer to purchase the land for $16.3 million. However, that was outside the terms of the Council’s resolution of 30 March 2004, and in its view did not represent fair market value based on valuation advice received by the Council.
On 30 May 2014, representatives of the Office of Treaty Settlements confirmed that the land was, for several reasons, not required by Te Atiawa for settlement purposes and so it was not included in the Deed of Settlement negotiated with Te Atiawa Iwi Authority. The agreement between the Crown and the Council was therefore terminated, and the Council engaged in negotiations direct with Te Atiawa.
The Te Atiawa Claims Settlement Bill, currently before the House contains, at clause 117, a provision dealing with land that is subject to the 1909 or 1940 Acts. The effect of the clause is no more than that if the Council sold the land to the Trust, the restrictions on dealing with the proceeds that are in sections 140 and 141 of the Local Government Act 2002 will not apply. Clause 117 incentivises the Council to sell to the Trust ahead of other potential purchasers (leaseholders or investors); but does not incentivise the Trust to offer full market value. Clause 117 is not affected by this Bill, but if this Bill is passed clause 117 is not likely to be invoked.
The Council and Te Kotahitanga o Te Atiawa Trust (the Trust) entered into a Heads of Agreement in August 2014 to provide for the aspirations of all parties with interests in the various lands and proceeds. The Heads of Agreement provides for the Council to promote the enactment of legislation (with the support of the Trust) to provide for:
the vesting of certain land (part of it as reserve administered by the Council) to the Trust; and
the grant of rights of first refusal to the Trust; and
the establishment of a separate legal entity, with representation from the Trust, to have responsibility for the Council’s net share of income (including sale proceeds) from the Waitara Endowment Land for the benefit of the Waitara community; and
the removal of existing statutory trust and restrictions on the land and on the use of all the Waitara endowment funds; and
the ability for the Council to sell the freehold interest in the balance of the Waitara Endowment Land, including ability to offer leaseholders the option to freehold their properties; and
protection of the contingent interest of TRC under the Waitara Harbour Act 1940.
This Bill gives effect to that Heads of Agreement; with the addition of a right for leaseholders to freehold their properties at any time by purchasing the Council’s interest as lessor.
When the Council entered into the agreement with the Crown in 2010, it also entered into a Deed with TRC, dated 31 August 2010. The Deed was entered into on the basis that, as successor to the New Plymouth Harbour Board, TRC has a contingent entitlement to surplus funds under the Waitara Harbour Act. It does not have any claim to any funds or income generated from any part of the Waitara land that is not subject to the Waitara Harbour Act.
The Deed provided for the balance of the proceeds of a sale to the Crown (after deductions to take account of land not subject to the Waitara Harbour Act and both parties’ costs) would be divided equally between the Council and TRC.
The effect of the Deed was limited to the application of the proceeds of sale of the Waitara Endowment Land to the Crown as contemplated for settlement processes with Te Atiawa in 2010. It did not apply to any accumulated income, or money generated from sale to any other party or parties.
The Deed is no longer relevant since it was predicated on the sale of the freehold of many properties to the Crown for Treaty settlement purposes, and that never occurred.
The Council and TRC have subsequently reached agreement on how they consider all accumulated and ongoing income (including sale proceeds) should be apportioned to recognise the contingent interests of TRC and the terms of this Bill reflect that agreement.
General effects of Bill
This Bill achieves a number of objectives to meet the aspirations of various affected parties.
The restrictions on the application of net proceeds from Waitara harbour land and the trusts and restrictions applying to the Waitara public library land are removed (clause 5). New provisions are substituted, as described below. The land affected is approximately 104 hectares in approximately 770 titles. Most are residential properties occupied by leaseholders but approximately 70 are commercial or industrial. There is also a large block of land to the east of the Waitara River mouth about half of which (17 hectares approximately) is occupied by the Waitara Golf Club.
The leaseholders are given the right to acquire the Council’s interest as lessor of the land they lease (clauses 19 and 21) at the current unimproved value of the land. The right runs with the land, and so passes to any new lessee. The Council has the right to sell the land, but any purchaser will have notice that the lessee’s right to freehold at any time continues. If the Council (or subsequent owner) and the lessee cannot agree on the unimproved value of the land then the valuation goes to arbitration.
Land described as Transfer Land is vested in the Trustees (clause 6). Part of that land (part of Clifton Park) is currently recreation reserve, and the balance will become a recreation reserve (clause 7). Administration will be the responsibility of the Council, but under a memorandum of understanding with the Trustees that requires that the Trustees be consulted on significant proposed decisions and have the right to initiate proposals. The Transfer Land is 30.5905 hectares in total, and consists of West Beach which is the Battiscombe Terrace Grazing Land, Motor Camp and Marine Park west of the Waitara River mouth, a small area on the east side of the river mouth (East Beach), and Clifton Park.
The Brown Road Land is vested in the Trustees without restriction (clause 9). It is considered suitable for housing or other uses. It is 13.3302 hectares between Brown Road and the West Beach Land and is Sections 1 and 2 on SO Plan 496323.
The Trustees are granted a right of first refusal over RFR Land should the Council choose to dispose of the land within 172 years.
The land is Ranfurly Park and the Waitara Golf Club land.
The accumulated net income from land held to which the 1940 Act applies is approximately $864,000.
The Council and TRC have agreed that the accumulated net income and future net income be divided between them.
The accumulated and future net income arising from rental or sales of the 1909 Act (library endowment land) and the 16 titles that are not endowment land but are treated similarly is not to be divided but goes wholly to the Council to be dealt with in the same way as Council’s share of income from 1940 Act land (clause 24).
TRC must apply its share only for its functions within Waitara, for the benefit of all or part of the Waitara community. For example, public transport subsidies could apply outside Waitara, but benefit the Waitara community.
If TRC wishes to apply any of the money for the wider Taranaki community generally then it can include a proposal to that effect in its annual plan (clause 25).
So far as the Council’s share of accumulated and future net income from rent and sales is concerned, an endowment fund and a board are created.
It is intended that the fund be perpetual but that there be an Annual Release of money to be distributed for the benefit of the Waitara community (clause 33).
The Board will comprise an equal number of members appointed by the Council and the Trustees.
The Council must distribute the Annual Release as determined by the Board.
General purpose statement
This Bill broadens the purposes for which net accumulated and future rental income and proceeds of sale of significant amounts of endowment land at Waitara can be applied. TRC receives a half share, and the rest is held in a fund to be applied by a Board with equal Council and Te Atiawa representation. Most of the land is subject to registered leases. The rights of existing leaseholders, and Te Atiawa as the tangata whenua, are not compromised. The Council retains its existing right to sell all, or any part, of the land, but it is not obliged to do so except to leaseholders. Leaseholders gain the right to freehold their land by purchasing the Council’s interest as lessor at market value. The Bill also vests land in the trustees of the Te Kohitanga o Te Atiawa Trust, some as reserves with the trustees being consulted on their future management, and gives the Trustees a right of first refusal over other land, should the Council choose to dispose of it in the next 172 years. Finally, the Bill deals with some other land owned by the Council without restriction. That land is subject to leases and has generally been dealt with on the same basis as endowment land.