ACCIDENT COMPENSATION CORPORATION v STAFFORD [2018] NZHC 218 [22 February 2018]

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE WHANGANUI-Ā-TARA ROHE

CIV-2018-485-000047

[2018] NZHC 218

UNDER

The Land Transfer Act 1952 and Part 19 of

the High Court Rules

IN THE MATTER OF

an application under s 143 of the Land

Transfer Act 1952 for an order that a caveat

be removed

BETWEEN

ACCIDENT COMPENSATION

CORPORATION

Applicant

AND

RORE PAT STAFFORD

Respondent

Hearing:

12 February 2018

Counsel:

D A Laurenson QC and R L Roff for Applicant

K S Feint and M S Smith for Respondent

D J Goddard QC and J R Gough for Attorney-General

Judgment:

22 February 2018

JUDGMENT OF COLLINS J

Summary of judgment

[1] The principal issue addressed in this judgment can be distilled to the following

question:

Does Mr Stafford have a reasonably arguable case that he has a caveatable

interest over the title to a property in central Nelson owned by the Accident

Compensation Corporation (ACC)?1

1 Referred to as the ACC property.

[2] The answer to this issue hinges upon how two sub-issues are resolved.

[3] The first of those sub-issues, which is addressed in Part II of this judgment, is

whether it is reasonably arguable that the ACC property may be applied towards

settling any Crown liabilities arising from the Wakatū proceeding,2 the scope of which

is explained in [30]–[49].

[4] The second sub-issue, which is the focus of Part III of this judgment, is whether

it is reasonably arguable Mr Stafford currently has a beneficial interest in the ACC

property, in order to maintain his caveat over the title to that property.

[5] I have concluded that in the context of this case, it is not reasonably arguable

Mr Stafford currently has a caveatable interest in the ACC property. I am, however,

allowing Mr Stafford’s caveat to remain in place until 22 March 2018 to enable

responsible Ministers to consider taking steps which may produce a solution that is

favourable to Mr Stafford.

[6] It is to be stressed this judgment, which has had to be issued urgently, has been

determined solely in the context of an application to remove a caveat, which is a very

unsatisfactory procedural mechanism when difficult and novel constitutional and legal

issues are engaged.

[7] Before addressing the issues I have summarised in [3]–[4], I shall, in Part I,

briefly set out the background to this proceeding by describing the parties, the effect

of the Supreme Court’s judgment in the Wakatū proceeding,3 the history to part of the

title to the ACC property, the law governing the removal of caveats and another case

in which the High Court upheld caveats lodged by interests associated with

Mr Stafford against Crown land in Nelson.

2 Proprietors of Wakatū v Attorney-General HC Wellington CIV-2010-442-181. 3 Proprietors of Wakatū v Attorney-General [2017] NZSC 17, [2017] 1 NZLR 423.

PART I

BACKGROUND

The parties

[8] Mr Stafford is a kaumātua of Ngāti Rārua and Ngāti Tama descent. He is the

second plaintiff in the Wakatū proceeding. Mr Stafford is supported by the Wakatū

Incorporation, a Māori Incorporation under Te Ture Whenua Māori Act 1993 that was

first incorporated by an Order in Council in 1977. Mr Stafford has led a team of

persons who may benefit from the Supreme Court’s decision in the Wakatū

proceeding. He was instrumental in the decision to caveat the title to the ACC

property.

[9] Because land is a “taonga tuku iho of special significance to Māori”,4

Mr Stafford’s focus is on returning the ACC property, and other lands in and around

Nelson, to those whom he maintains are the rightful owners.

[10] ACC is a Crown agent,5 a species of Crown entity defined in s 7 of the Crown

Entities Act 2004.6 There are five categories of Crown entities defined in the Crown

Entities Act. The first category comprises statutory entities that are bodies corporate

established by an Act.7 A statutory entity is “a legal entity separate from its members,

office holders, employees, and the Crown” (emphasis added).8 It continues to exist

until it is dissolved by an Act.9 There are three categories of statutory entities provided

for in the Crown Entities Act, namely Crown agents, autonomous Crown entities and

independent Crown entities.10 Crown agents “must give effect to government policy

when directed by the responsible Minister”.11 Crown entities are quite distinct from

other bodies that are connected to Government. For example, the State-Owned

4 Ririnui v Landcorp Farming Ltd [2016] NZSC 62, [2016] 1 NZLR 1056 at [43], citing from the

preamble Te Ture Whenua Maori Act 1993. 5 Crown Entities Act 2004, Schedule 1, Part 1. 6 Philip A Joseph Constitutional and Administrative Law in New Zealand (4th ed, Thomson Reuters,

Wellington, 2014) at 621; Te Heu Heu v Attorney-General [1999] 1 NZLR 98 (HC). 7 Crown Entities Act 2004, ss 7(1)(a) and 15. 8 Section 15(b). 9 Section 15(c). 10 Section 7(1)(a). 11 Section 7(1)(a).

Enterprises Act 1986 introduced a business model for the trading functions of

Government. A State-Owned Enterprise is a “creature”12 of the Crown that carries out

its commercial operations without being subject to direct ministerial control.

[11] ACC was created as a body corporate by the Accident Insurance Act 1998 and

continued to be a body corporate when the Accident Compensation Act 2001 was

passed.13

[12] The Accident Compensation Act 2001 is the fifth statute to have governed

New Zealand’s no-fault public accident compensation scheme (the scheme). The first

of those statutes was passed in 1972 and created the Accident Compensation

Commission as a statutory body, separate from the Department of Labour, which was

responsible for administering the Accident Compensation Act 1972. Since the

creation of the scheme, ACC and its earlier manifestations have been distinct legal

entities.

[13] The public nature of the scheme is evident in s 3 of the Accident Compensation

Act 2001, which refers to the purpose of that Act as being to enhance the public good

and reinforce the social contract represented by the Accident Compensation Act 1972

under which those injured by accident lost the opportunity to sue for personal injury

in exchange for comprehensive cover and compensation.

[14] The public nature of the scheme is also confirmed by the fact that two of the

accounts administered by ACC are funded, at least in part, by appropriations approved

by Parliament.14 All of ACC’s accounts are funded to varying degrees through returns

on ACC’s investments.

[15] The role of the Minister responsible for ACC (Minister) includes overseeing

and managing the Crown’s interest in, and its relationship with, ACC.15 Those

ministerial roles are discharged in a number of ways. For present purposes, it is

12 New Zealand Māori Council v Attorney-General [1994] 1 NZLR 513 (PC) at 520. 13 Accident Compensation Act 2001, s 259(1). 14 The Non-Earners Account and the Treatment Injury Account. Three other accounts are partially

funded by levies. 15 Crown Entities Act 2004, s 27(1).

sufficient to refer to the following three ways the Minister can assert control over the

ACC Board (the Board).

[16] First, the Minister plays a pivotal role in appointing members to the Board (by

making recommendations to Cabinet, which makes the appointment decision).16 The

Minister may determine the remuneration of Board members17 and he or she “may, at

any time and entirely at his or her discretion, remove a member” of the Board from

office.18 Members of the Board are accountable to the Minister for performing their

duties.19

[17] The power of the Minister to dismiss members of the Board, at will, is

reminiscent of the historic powers of the Crown when it employed its servants “at

pleasure”.20 The power of Ministers to dismiss members of boards of Crown entities

without cause provides Ministers with greater influence over members of the boards

of Crown entities than employees of the departments of the Public Service who have

the protections afforded by the Employment Relations Act 2000, the State Sector Act

1988 and contracts of employment.

[18] Second, through directing the Board to give effect to government policy so far

as it relates to ACC’s functions and obligations. Section 103(1) of the Crown Entities

Act provides:

103 Power to direct Crown agents to give effect to government policy

(1) The responsible Minister of a Crown agent may direct the entity to

give effect to a government policy that relates to the entity’s functions

and objectives.

Any direction given by the Minister to ACC under s 103 of the Crown Entities Act

must be complied with.21

16 Crown Entities Act 2004, s 28. 17 Section 47(1). 18 Section 36(1). 19 Section 26(2). 20 Mitchell v R [1896] 1 QB 121; Dunn v R [1896] 1 QB 116. 21 Crown Entities Act 2004, s 114.

[19] Section 103(1) of the Crown Entities Act is, however, subject to s 113 of that

Act, which puts in place safeguards to protect the independence of Crown entities. In

particular, s 113(1)(b) states that the Crown Entities Act does not authorise a Minister

to direct a Crown entity to perform or refrain from performing “a particular act, or the

bringing about of a particular result, in respect of a particular person or persons”.

Furthermore, no direction can be given under s 103 of the Crown Entities Act without

following the process of consultation between the Minister and ACC set out in s 115

of the Crown Entities Act.

[20] In addition to the powers of direction set out in s 103 of the Crown Entities

Act, the Minister of State Services and the Minister of Finance may jointly direct

Crown entities under s 107 of that Act “to support a whole of government approach

by complying with specified requirements” for a number of purposes, including the

management of “risks to the Government’s financial position”.22

[21] Mr Healy, a senior manager in ACC, annexed to his affidavit a letter from the

Hon Ruth Dyson, a former Minister for ACC. That letter was dated 28 September

2007 and appears to have been a direction given by the Minister to ACC concerning

the “disposal of Crown land”. Regrettably, the speed with which this case has been

presented has meant that the full background of the direction in question has not been

explored. On its face, the direction appears to have been given in the context of the

then Government’s “land of potential interest process”. That process required every

Crown agency to notify its responsible Minister when consideration was being given

to the disposal of “sensitive land”. The then Chief Executive of ACC wrote to the

Minister on 28 November 2007 saying that ACC would comply with the

Government’s “land of potential interest process”. That process was discontinued in

2009.

[22] Third, through the mechanisms of setting ACC’s “strategic direction and

performance expectations and monitoring [ACC’s] performance under [the Crown

Entities Act]”.23 The Minister’s role in setting ACC’s strategic direction and

performance expectations is achieved through the Minister providing letters of

22 Crown Entities Act 2004, s 107(1)(e). 23 Section 27(1)(f).

expectation to the Board and the Board providing the Minister with its statement of

intent, the purpose of which includes “enabling the Crown to participate in the process

of setting [ACC’s] strategic directions and medium term undertakings”. Examples of

ACC’s strategic directions include assurances in its current statement of intent “to

support the Crown in its Treaty of Waitangi relationships and deliver [its] services in

ways that enable equitable outcomes for Māori”.24

[23] Although ACC is subject to a degree of oversight and control by Ministers, the

Crown is not liable to contribute to the payment of any debt or liability of ACC.25

ACC’s independence is reflected in the fact that it can “do anything that a natural

person of full age and capacity may do [for the purpose of performing its functions]”,26

including borrowing, giving security, issuing indemnities,27 entering into contracts and

other enforceable obligations,28 and bringing an action to defend its rights or enforce

its agreements.29

[24] ACC discharges most of its roles through its Chief Executive, who is appointed

by the Board in consultation with the Minister and the State Services Commissioner.30

[25] One of ACC’s important roles concerns the management of investments, which

assumed particular significance when, in 1999, the Government changed the scheme

to a fully-funded model. This means ACC must receive sufficient money each year to

cover the full lifetime costs of every claim that occurs in that year. ACC’s returns on

its investments contribute towards the future costs of claims incurred by clients

suffering long-term injuries. ACC’s investment portfolio is significant. As at

31 March 2017, the investment portfolio was worth $36.9 billion.

[26] Section 275 of the Accident Compensation Act sets out ACC’s broad

investment responsibilities. The relevant parts of that section provide:

24 Statement of Intent 2015-2019 (Accident Compensation Corporation, 23 June 2015) at 29. 25 Public Finance Act 1989, s 49. 26 Crown Entities Act 2004, ss 17 and 18. 27 Accident Compensation Act 2001, s 276. 28 Crown Entities Act 2004, s 127. 29 Accident Compensation Act 2001, s 248(2)(a); Crown Entities Act 2004, s 59(3). 30 Accident Compensation Act 2001, sch 5, cl 17; Crown Entities Act 2004, s 117.

275 Investments

(1) Subject to any policy direction under section 103 of the Crown

Entities Act 2004, the Corporation must invest, in the same manner as

if it were a trustee, all money received by it in respect of any Account

that is not immediately required for expenditure.

(2) Any returns on investments must be apportioned across the Accounts

in a way that reasonably represents the contribution to the investment

of each Account.

(3) The Minister must consult with the Minister of Finance before making

a policy direction under section 103 of the Crown Entities Act 2004

relating to investment.

…

[27] Although the Minister may give an investment policy direction to ACC, the

day-to-day investment decisions of ACC are undertaken by a specialist investment

team operating under the delegated authority of the Board Investment Committee.

[28] All of ACC’s assets are held in the name of ACC and accounted for in its annual

financial statement.31 Land owned by ACC, including property purchased as part of

its investment portfolio, is registered in the name of ACC, including the property that

is the subject of the present application.

[29] Although ACC’s investment properties are held in its name, all of its assets,

including its investment properties, are incorporated into the Crown’s consolidated

accounts. Section 27(3) of the Public Finance Act requires the annual financial

statements of the Government to include the “Government reporting entity’s interests

in … all Crown entities”.32

The Wakatū proceeding

[30] Mr Mokena, the Chair of Wakatū Incorporation, has explained in an affidavit

that the first arrangements between The New Zealand Company (the Company) and

rangatira in Te Tau Ihu o Te Waka-a-Māui concerning the acquisition of land by the

31 Accident Compensation Act 2001, s 278. 32 Government reporting entity is defined in s 2 of the Public Finance Act 1989 to mean–

(a) the Sovereign in right of New Zealand; and

(b) the legislative, executive, and judicial branches of the Government of New Zealand.

Company in the Tasman-Golden Bay area occurred in 1839. Those arrangements pre-

dated the Crown acquiring sovereignty in New Zealand.

[31] The Crown proclaimed sovereignty over New Zealand on 14 January 1840.

The following year an Ordinance was issued that declared all previous purchases of

land from Māori null and void unless confirmed by the Crown.33

[32] The Company intended to give effect to its agreement with Māori by setting

aside, amongst other areas, 100 one-acre allotments in central Nelson that were

surveyed in April 1842. The 100 one-acre allotments included section 443, half of

which now forms part of the ACC property. The Company also intended to set aside

lands in suburban Nelson, Motueka and Moutere.

[33] Mr William Spain was appointed as a Commissioner to investigate the

purchases of land by the Company. In 1845, he concluded the purchases in and around

Tasman and Golden Bay had been equitable and determined a grant of 151,000 acres

be made to the Company that was to include 11,000 acres in the Nelson district that

had already been surveyed (the Spain award). Of crucial importance was that the

Spain award provided for one-tenth of the total area (15,100 acres) to be set aside as a

reserve for Māori (the tenths reserve).

[34] In 1845, the Crown issued a grant to the Company, excluding the 100 one-acre

allotments to Māori in central Nelson. A number of issues emerged, however,

concerning the Crown grant. Some of the suburban and all of the rural area that the

Company intended to set aside had not been surveyed and some reserve land was

found to include lands occupied by Māori that should have been excluded from the

reserve allotments. The Company refused to accept the grant because by this stage it

believed it needed more land for the Nelson settlement.

[35] In 1848, the Crown issued another grant, which was accepted by the Company.

In the meantime, Governor Grey had agreed to a re-distribution of some of the one-

acre allotments in central Nelson so that by 1848 there remained just 53 one-acre

allotments in central Nelson reserved for Māori. Section 443 continued to form part

33 Land Claims Ordinance 1841.

of the land reserved for Māori. Also by this time, the Crown had taken possession of

the land set aside for Māori and proceeded to administer it. In July 1850, the Company

surrendered all of its remaining assets to the Crown.

[36] It is part of Mr Stafford’s case that, by 1850, the Company’s Nelson settlement

comprised approximately 172,000 acres but the Nelson tenths reserve was just 3,953

acres (excluding designated occupation reserves).

[37] A series of Acts were passed, starting in 1856, which formalised the

administration of reserve land under the control of the Crown in the Nelson area. In

1882, another Act was passed that vested in the Public Trustee all of the reserve land

on behalf of those Māori who were held to have beneficial interests in that land. By

this time, the tenths reserve comprised approximately 2,774 acres of the original 5,100

acres that were meant to have been reserved in 1845. In 1892, the Native Land Court

identified 253 beneficiaries of the reserve land. In due course, the Māori Trustee

replaced the Public Trustee as the trustee of these lands.

[38] In 1997, an entity called The Proprietors of Wakatū Inc was established to

represent the descendants of the beneficiaries of lands that were reserved, or should

have been reserved, for Māori. By this time, the residue of the reserved land

comprised just 1,626 acres.

[39] In 1986, Mr Stafford and others filed a claim with the Waitangi Tribunal which

reported in 2008 that there had been a number of breaches of the Treaty of Waitangi

in relation to the lands reserved for Māori in the Nelson region.34 The Crown

responded by signing deeds of settlement with the local iwi. That settlement

culminated in a claims settlement Act in 2014.35 The claims settlement Act, however,

did not address all of the concerns of Mr Stafford and others concerning the

unallocated and lost reserve lands (the “shortfall”).

34 Waitangi Tribunal Te Tau Ihu o te Waka-a-Māui: Report on Northern South Island Claims

(Wai 785, 2008). 35 Ngāti Kōata, Ngāti Rārua, Ngāti Tama Ki Te Tau Ihu, and Te Ātiawa o Te Waka-a-Māui Claims

Settlement Act 2014.

[40] The Proprietors of Wakatū and Mr Stafford commenced proceedings in the

High Court in 2010, claiming the Crown breached its duties as a trustee and fiduciary

duties to the customary owners of the land within the area covered by the Spain award

when it failed to reserve the full allotment that Commissioner Spain had set aside for

Māori.

[41] The third amended statement of claim in the Wakatū proceeding identifies six

causes of action. The essential features of the claim allege the Crown is liable to the

plaintiffs for failing to ensure during the 1845 to 1850 period that the tenths reserve

comprised the full entitlement of 15,100 acres set out in the Spain award.36 It is alleged

that “between 1845 and 1849 the Crown significantly reduced the Nelson tenths

reserves, by removing sections from the existing estate, and further deciding not to

create rural tenths reserves at all”.37

[42] The plaintiffs allege that the Crown had a duty as a trustee and or fiduciary to

ensure that 15,100 acres were reserved from the Crown grant for the Nelson tenths

reserve (together with occupation reserves). The shortfall between the 15,100 acres

set out in the Spain award and the amount actually reserved for Māori is 11,147 acres.

It is pleaded that “the Crown either still holds the shortfall on trust for the tenths’

owners, or, in breach of trust, has converted the shortfall to its own use or sold or gifted

the land to others”.38

[43] No claim is made in the pleadings in relation to the 53 one-acre sections that

were in fact reserved for Māori in Nelson, and were not disposed of prior to vesting in

the Public Trustee in 1882. I will return to that aspect of the case in [89]–[92].

[44] In the High Court, Clifford J dismissed the plaintiffs’ causes of action.39 In

summary, Clifford J concluded the plaintiffs, including Mr Stafford, lacked standing

and that there had been no breach of trust or fiduciary duty on the part of the Crown.

Appeals to the Court of Appeal resulted in findings that Mr Stafford had standing to

36 There is also a claim for an “uplift” to reflect the increase in the size of the lands actually acquired

by the Company and or the Crown in the Nelson area. It is not, however, necessary to refer further

to that aspect of the claim in this judgment. 37 Third Amended Statement of Claim at [54]. 38 At [83]. 39 Proprietors of Wakatū Inc v Attorney-General [2012] NZHC 1461.

bring a claim for breach of fiduciary duty but the other plaintiffs lacked standing. The

Court of Appeal unanimously concluded the Crown owed no fiduciary duty to

Mr Stafford or those whom he represented and that the Crown was not a trustee of the

tenths reserve. Mr Stafford and the other plaintiffs appealed to the Supreme Court.

[45] The essential conclusion of the majority of the Supreme Court was “that the

Crown owed fiduciary duties to reserve 15,100 acres for the benefit of the customary

owners and, in addition, to exclude their pā, urupā and cultivations from the land

obtained by the Crown following the 1845 Spain award”.40

[46] The majority of the Supreme Court was satisfied that, in 1842, 5,100 acres of

land was reserved for Māori, comprising 100 one-acre town lots in Nelson and 100

50-acre lots in Motueka and Moutere. The Supreme Court was satisfied that not all of

this land was in fact retained for Māori and directed the High Court determine the

extent of the lands that should have been but were not reserved for Māori. The

Supreme Court was satisfied that the remaining 10,000 acres in the area covered by

the Spain award were never reserved for Māori – a fact acknowledged by the Crown.

[47] The Supreme Court held that by accepting Commissioner Spain’s award,

customary title was extinguished in relation to the 151,000 acres purchased by the

Company. When this happened the Crown:

(1) held the land actually reserved for Māori in 1842 on trust for the Māori

customary owners; and

(2) held, in relation to the “shortfall” that should have been reserved for

Māori, an equitable obligation with respect to the remainder of the land

in the area covered by the Spain award.

[48] The Supreme Court determined Mr Stafford’s claim could proceed in the High

Court on the basis he was seeking to recover from the Crown, trust property in its

possession. His claim was therefore not barred by the Limitation Act 1950.41 The

40 Proprietors of Wakatū v Attorney-General, above n 3, at [1]. 41 Limitation Act 1950, s 21(2).

reasons for this are explained in the judgment of Arnold and O’Regan JJ, where they

agreed with Elias CJ and Glazebrook J that Mr Stafford could proceed with his claim

to recover, through an institutional constructive trust, “land that came into the hands

of the Crown that should have been part of the tenths reserve”.42 This included the

land that became vested in the Crown as a result of the failure to reserve the “missing”

10,000 acres.

[49] As a result of the Supreme Court decision, Mr Stafford can continue his claim

in the High Court to try to recover lands “in the hands of the Crown” covered by the

Spain award which form part of the shortfall of land that should have been, but was

not, reserved for Māori.

The ACC property

[50] The ACC property comprises 11 parcels of land, including five that were once

part of section 443. It also comprises all of section 442 and part of section 439 that

were never reserved for Māori. The following diagram shows the layout of the

property and the 11 parcels of land derived from sections 443, 442 and 439. The

boundaries of the original section 443 are also marked. As can be seen, approximately

one-third of the ACC property (parcels 1 to 5) is derived from half of section 443.

42 Proprietors of Wakatū v Attorney-General, above n 3, at [815].

[51] Section 443 was subdivided for leasing purposes. A certificate of title was first

raised for section 443 by the Maori Trustee in 1926. Another title was raised in 1940.

The title lists a transfer in 1969 of part of section 443 from the Māori Trustee to the

Nelson Club but that related to a part that does not form part of the ACC property. In

1970, the part of section 443 that forms part of the ACC property was transferred from

the Māori Trustee to Newman Bros Ltd (Newmans). The residue of section 443 was

transferred to the Wakatū Incorporation in 1977, pursuant to the Wakatū Incorporation

Order 1977. There is no evidence before me concerning the Māori Trustee’s decision

to sell section 443 to Newmans. I do not know what consultation was undertaken or

how the proceeds were accounted for.

[52] The Newmans’ part of section 443 was transferred to numerous entities

between 1987 and 2008, which is the year ACC acquired it as part of an investment

property.

[53] There is no information before me concerning the history of sections 442 and

439 other than that they were not reserved for Māori. They were probably sold by the

Company and or the Crown to settlers and are likely to have been in private ownership

since about 1845, before being acquired by ACC in 2008.43

The present proceeding

[54] On 15 September 2017, ACC entered into an agreement for sale and purchase

of the ACC property to Cephas Property No 1 Ltd (Cephas). The settlement date was

originally to be 31 March 2018 but Cephas exercised a right available to it under the

agreement to bring the settlement date forward to 31 January 2018.

[55] On 24 October 2017, Mr Stafford lodged a caveat application pursuant to

s 137(1) of the Land Transfer Act 1952 after learning that it was either for sale or was

already subject to an agreement for sale and purchase.

[56] Initially the Registrar-General refused to register the caveat on the basis that

the caveat did not comply with s 137(2)(c) of the Land Transfer Act because ACC “is

a legal entity separate from the Crown” pursuant to s 15 of the Crown Entities Act and

therefore there was insufficient connection between the registered proprietor and the

claimed beneficial interest.

[57] Mr Stafford then commenced an urgent application for judicial review of the

Registrar-General’s decisions to reject his caveat application, seeking declarations that

it should have been registered. On 29 January 2018, the parties reached an agreement

whereby ACC accepted that the Registrar-General could register the caveat and ACC

would apply under s 143 of the Land Transfer Act to have it removed. The judicial

review proceeding was discontinued.

[58] The appendix to the caveat records that Mr Stafford has a beneficial interest in

the ACC property and that ACC “is subject to a sufficient degree of ministerial control

that it comprises an instrument of executive government and as such [ACC] constitutes

the Crown for the purposes of the beneficial interest the Caveator claims in the land”.

43 Refer Carl Walrond “Nelson Region-European Settlement” (3 August 2015) Te Ara – The

Encyclopaedia of New Zealand https://www.teara.govt.nz/en/zoomify/28951/nelson-town-

blocks.

[59] ACC and Cephas then reached a further agreement deferring settlement until

29 March 2018. Cephas, however, has the option to cancel the agreement if ACC fails

in its proceeding or if judgment is not given by 15 March 2018. The deed of

compromise between ACC and Cephas also contains a mechanism for the parties to

cancel the contract if Mr Stafford appeals this judgment.

The caveating of land

[60] The registered proprietor of any estate or interest in land has, save for limited

exceptions, an indefeasible title.44

[61] Where a person claims to be entitled to, or to be beneficially interested in, the

land, they may then lodge a caveat with the Registrar-General of Land in the

prescribed form. Not all beneficiaries are, however, entitled to lodge a caveat against

a title to land that is held on trust. For example, a beneficiary under a discretionary

trust has only the right to have the trust properly administered and does not have a

caveatable interest in land held by the trust, unless the trustees have resolved to

distribute that land, or part of it, to that beneficiary.45

[62] A caveat lodged under s 137 of the Land Transfer Act must explain how the

land or interest claimed is derived from the registered proprietor.46 The requirement

to explain how the caveator’s beneficial interest is derived from the registered

proprietor appears to be a unique feature of the Land Transfer Act. Equivalent

provisions do not exist in Australian, Canadian or the United Kingdom legislation

governing the lodging of caveats or notices against the title for land. In those

jurisdictions, the caveator is required to simply particularise the interest, lien or charge

claimed without reference to that interest, lien or charge being derived from the

registered proprietor.47

44 Land Transfer Act 1952, s 62. 45 Rutherford v Rutherford [2015] NZHC 878, [2015] NZAR 1303 at [18]; Patchett v Williams

HC Blenheim CIV-2005-406-82, 5 October 2005. See also R & I Bank of Western Australia Ltd

v Anchorage Investments Pty Ltd (1993) 10 WAR 59 (FC). 46 Section 137(2)(c). 47 Refer Real Property Act 1886 (SA), s 39; Land Transfer Act 1893 (WA), s 30; Land Title Act 1994

(Qld), s 121; Real Property Act 1990 (NSW), s 74B; Land Titles Act 1925 (ACT), s 30; Land Title

Act 2000 (NT), s 137; Transfer of Land Act 1958 (Vic), s 89; Land Title Act RSBC 1996 c 250,

ss 282 and 286; Land Title Act RSA 2000 c L-4, s 130; The Land Title Act RSO 1990 c L-5, ss 128

and 131; Land Registration Act 2002 (UK), ss 32–39.

[63] An application to remove a caveat is made under s 143 of the Land Transfer

Act which provides:

143 Procedure for removal of caveat

(1) Any such applicant or registered proprietor, or any other person

having any registered estate or interest in the estate or interest

protected by the caveat, may, if he thinks fit, apply to the High Court

for an order that the caveat be removed.

(2) The court, upon proof that notice of the application has been served

on the caveator or the person on whose behalf the caveat has been

lodged, may make such order in the premises, either ex parte or

otherwise, as to the court seems meet.

[64] The onus is on the caveator to establish that he or she has a reasonably arguable

case for the interest claimed.48 The caveator bears the onus because it is they who

seek to impose their alleged interest over an existing property right. Even if the

caveator establishes a reasonably arguable case to support the continuation of his or

her caveat, the Court has a discretion to make an order removing the caveat. This

discretion will normally not be exercised if the legitimate interests of the caveator will

be compromised by removing the caveat.49

Other caveats

[65] Ms Feint, senior counsel for Mr Stafford, placed reliance on another judgment

of Clifford J in Proprietors of Wakatū v Attorney-General50 (Wakatū caveats

judgment), in which he upheld caveats placed by Wakatū on the titles to three schools

in the Nelson area. That judgment was delivered after Clifford J had dismissed the

claims in the Wakatū proceeding and before the Court of Appeal and the

Supreme Court had delivered their judgments in the Wakatū proceeding. The Wakatū

caveats judgment was delivered after the Settlement Act had been passed.

[66] In the case of two of the schools, the caveated land was part of the original

tenths allotment still owned by the Crown. In the case of the third school, the caveated

land was part of the Matangi Awhio pā as it existed in 1842. Thus, while the land of

48 Paugra Holdings Ltd (in liq) v Harvestfield Holdings Ltd [2014] NZCA 164, (2014) 15 NZCPR

227 at [34]. 49 Pacific Homes Ltd (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA). 50 Proprietors of Wakatū v Attorney-General [2014] NZHC 1785.

the third school was not reserved as a tenths allotment, it was land that should not have

been transferred to the Company. That land was also owned by the Crown.

[67] Clifford J explained that, although he found against the plaintiffs in the Wakatū

proceeding, he was satisfied that the claims advanced by the Proprietors of Wakatū

and Mr Stafford were reasonably arguable.51 He accordingly held the caveats could

remain registered against the titles to all three schools. Of significance is the fact that

the titles to all three schools were, indisputably, in the name of the Crown.

PART II

IS IT ARGUABLE THE ACC PROPERTY CAN BE USED TO SETTLE

POSSIBLE CROWN LIABILITIES?

The concept of the Crown

[68] Wide ranging and at times irreconcilable definitions of “the Crown” can be

found in our statute books, case law and in text books. Dame Alison Quentin-Baxter

and Professor Janet McLean have recently observed that the common law is not settled

about definitions of the Crown. They lament “not only is case law confusing, current

New Zealand legislative usage also appears to be inconsistent”.52

[69] This problem is not unique to New Zealand. Professor Loughlin, writing about

the United Kingdom experience, has said:53

The manner in which the concept of the Crown has been utilised borders on

the incoherent. The judiciary has failed to develop the common law in a

systematic fashion … [and] statutory formulations have, on a charitable

interpretation, been highly confusing.

51 At [39]. 52 Alison Quentin-Baker and Janet McLean The Realm of New Zealand: The Sovereign,

The Governor-General, The Crown (Auckland University Press, Auckland, December 2017) at

41. 53 Martin Loughlin in “The State, the Crown and the Law” in Maurice Sunkin and Sebastian Payne

(eds) The Nature of the Crown: A Legal and Political Analysis (Oxford University Press, Oxford,

2003) at 37.

[70] Statutory definitions of the Crown include the constitutional concept of the

Crown in New Zealand as “Her Majesty the Queen in right of New Zealand”.54 Other

statutory definitions of the Crown are very specific and include, for example, “a

contractor or security contractor” as defined in the Corrections Act 2004 or the Penal

Institutions Act 1954.55

[71] Some statutory definitions of the Crown expressly include Crown entities,56

while others expressly exclude Crown entities.57

[72] Judicial attempts at devising a definition of the Crown have also failed to

produce any uniformity. In Town Investments Ltd v Department of the Environment,

Lord Diplock said:58

… instead of speaking of “the Crown” we [should] speak of “the Government”

–a term appropriate to embrace both collectively and individually all of the

Ministers of the Crown …

In the same case, Lord Simon said:59

The departments of State including the Ministers at their head … are then

themselves members of the corporation aggregate of the Crown.

In M v Home Office,60 Lord Templeman took a bifurcated approach to the meaning of

the Crown when he said “the expression ‘the Crown’ has two meanings; namely the

monarch and the executive”.61

[73] Textbook writers have also proffered suggestions as to what is meant by the

Crown. Professors Hogg, Monahan and Wright, after quoting Professor Maitland’s

54 Crown Forest Assets Act 1989, s 2(1); State-Owned Enterprises Act 1986, s 2; National Provident

Fund Restructuring Act 1990, s 2; Post Office Bank Act 1987, s 2; New Zealand Public Health

and Disability Act 2000, s 6(1); Finance Act (No 2) 1990, s 2; Māori Purposes Act 1993, s 3; Rural

Banking and Finance Corporation of New Zealand Act 1989, s 2(1). 55 Prisoners’ and Victims’ Claims Act 2005, s 6(2). 56 Search and Surveillance Act 2012, s 167(2); Trans-Pacific Partnership Agreement Amendment Act

2016, s 41. 57 Public Finance Act 1989, s 2(1); Copyright Act 1994, s 2(1). 58 Town Investments Ltd v Department of the Environment [1978] AC 359 at 380-381. 59 At 400. 60 M v Home Office [1994] 1 AC 377. 61 At 395.

quip that the Crown is a piece of jewelled headwear in the Tower of London,62 proceed

to say:63

Despite the fact that we now have a “constitutional monarchy”, in which the

role of the Queen [and of her representatives in the commonwealth countries]

has become almost entirely formal, the term ‘the Crown” has persisted as the

name for the executive branch [not the legislative branch] of government.

Executive power is actually exercised by the Prime Minister … and the other

ministers who direct the work of the civil servants in the various government

departments ... This structure … is commonly and accurately described as

“the government”, or “the administration”, or “the executive”, … but lawyers

usually use the term “the Crown”.

[74] Professor Joseph, in Constitutional and Administrative Law in New Zealand,64

has examined the scope of the Crown in the New Zealand context by reference to

“instruments of executive government”. After examining the “umbrella of the Crown”

through the degree of control65 that a Minister or department is legally66 entitled to

exercise over the body in question, Professor Joseph explains that Crown entities

“may, or may not qualify as emanations of the Crown”.67 He then says:68

Crown agents are the only entities that fall squarely under the Crown’s

umbrella. The responsible Minister may direct a Crown agent to give effect

to government policy, and the entity is under a statutory duty to comply. This

power and correlative duty subject Crown agents to the degree of

governmental control needed to satisfy the common law control test. But

questions may still arise. An entity’s Act may supplement or expressly modify

or negate the Crown Entities Act 2004. The Crown Entities Act 2004 is a

generic statute that prevails over an entity’s constituent Act, except to the

extent that an entity’s Act expressly provides otherwise. Thus, a Crown agent

would not qualify as the Crown where its statute expressly negated the

Minister’s power to issue binding directions under the Crown Entities Act

2004. Furthermore, Crown agents may be declared not to be the Crown for

specific statutory purposes. Under the Public Finance Act 1989, for example,

“the Crown” does not include Crown entities for any of the Act’s purposes.

62 Frederic W Maitland The Constitutional History of England (University Press, Cambridge, 1909)

at 418. 63 Peter W Hogg, Patrick J Monahan and Wade K Wright Liability of the Crown (4th ed, Carswell,

Ontario, 2011) at 12-13. 64 Philip A Joseph, above n 6, at 620. 65 While the “public functions” test was once used to delineate the Crown, it is now settled in

New Zealand that the courts should apply the “control test” to determine the scope of the Crown’s

reach in any particular fact situation; Commissioner of Inland Revenue v Medical Council of New

Zealand [1997] 2 NZLR 297 (CA) at 326-327; Miller v New Zealand Railways Corp [2011] NZAR

21 (HC) at 24. 66 Bank voor Handel en Scheepvaart NV v The Administrator of Hungarian Property [1954] AC 584

(HL) at 617. 67 Philip A Joseph, above n 6, at 619. 68 At 620.

[75] This brief summary of authorities leads to the following positions:

(1) First, the effect of s 15(b) of the Crown Entities Act is that all statutory

entities, and therefore Crown entities, are separate legal bodies from

the Crown. The legal distinction between the Crown and Crown agents

such as ACC leads me to the view that it is better to examine the

relationship between the Crown and ACC in terms of agency rather

than as ACC being a “emanation” or “instrument” of the Crown.69 The

concept of agency fits more comfortably with the terminology of the

Crown Entities Act, in which organisations such as ACC are classed as

Crown agents.

(2) Second, it is not particularly helpful to simply ask if ACC is an agent

of the Crown. The reason why this stark question is not particularly

helpful is because the answer is dependent on the circumstances in

which the question is asked. ACC may act on behalf of the Crown for

some purposes but clearly not for others. Thus, for example, a claim

against ACC in relation to a personal injury by accident is not the same

action as a claim against the Attorney-General seeking exemplary

damages arising from the same events. In those circumstances, ACC

“is not the Crown”.70 In other circumstances, for example when

Ministers give lawful policy directions to ACC pursuant to ss 103 or

107 of the Crown Entities Act, it is reasonably arguable ACC gives

effect to those directions on behalf of the Crown.

(3) Third, the appropriate inquiry is whether it is reasonably arguable, in

the context of this case, that responsible Ministers can lawfully exercise

control over ACC in a way that could lead to the ACC property being

applied towards the settlement of any Crown liability arising from the

Wakatū proceeding. Only in those circumstances would ACC hold the

property on behalf of the Crown.

69 Peter J Hogg, Patrick W Monahan and Wade K Wright, above n 63, at 462. 70 Attorney-General v Lamb [2017] NZCA 236, [2017] NZAR 955 at [23](a).

Context

[76] There are three contextual aspects to the issue addressed in this part of my

judgment.

[77] First, Mr Stafford’s application is a further step in a journey motivated by a

conviction that he and other descendants of the original owners of the land

encompassed within the Spain award have been, and are, the victims of a gross

injustice that commenced in about 1845 when the Crown failed to give full effect to

the Spain award. Those injustices have, at least in the eyes of Mr Stafford and his

supporters, been compounded by a succession of decisions since about 1845 that have

resulted in the severe diminution of the lands that either were, or should have been,

reserved for Māori pursuant to the Spain award.

[78] Second, the Supreme Court’s decision in Wakatū is a landmark decision that

illustrates how the common law in this country is continuing to evolve in order to

facilitate the resolution of historic grievances concerning the way the Crown has

deprived Māori of some of their land. In particular, in this case, the Supreme Court

has said Mr Stafford can pursue his claim based upon equitable principles in relation

to the land that came into the hands of the Crown that should have been part of the

tenths reserve.

[79] The Supreme Court’s decision in Wakatū can be viewed in the context of a

series of key cases concerning the development of New Zealand’s law governing the

relationship between the Crown and Māori, starting with the seminal decision of the

Court of Appeal in New Zealand Māori Council v Attorney-General.71 More recently,

in Ririnui v Landcorp Farming Ltd (Ririnui decision),72 the Supreme Court held that

shareholding Ministers could lawfully ask Landcorp Farming, a State-Owned

Enterprise, to refrain from selling a particular farm that was of interest to Māori. While

State-Owned Enterprises are a “creature” of the Crown, the State-Owned Enterprises

Act does not contain provisions similar to ss 103 or 107 of the Crown Entities Act.

There is considerably more legal distance between Ministers and the board of a State-

71 New Zealand Māori Council v Attorney-General [1989] 2 NZLR 142 (CA). 72 Ririnui v Landcorp Farming Ltd (Ririnui decision) [2016] NZSC 62, [2016] 1 NZLR 1056.

Owned Enterprise than between Ministers and the board of a Crown agency. The

Supreme Court was, however, satisfied that the Crown had the ability to exercise a

substantial degree of indirect control over the way in which State-Owned Enterprises

controlled their assets, particularly in relation to lands formerly held by the Crown that

were the subject of a claim by Māori. While there are a number of differences between

the facts in the Ririnui decision and the present case, the Ririnui decision illustrates

that a State-Owned Enterprise may be materially constrained by the legal obligations

the Crown owes to Māori when considering the sale of land that is of importance to

Māori. One important distinction between the Ririnui decision and the application

before me is that the plaintiffs in Ririnui brought an action for judicial review. Their

proceeding did not engage the caveating provisions in the Land Transfer Act.

[80] Third, the Wakatū proceeding has to be viewed in the broader context of the

commitment of successive Governments over recent years to resolve outstanding land

disputes between Māori and the Crown, particularly, but not exclusively, within the

context of Treaty of Waitangi settlements.

Analysis

[81] My analysis of the issues raised in Part II of this judgment is underpinned by

the approach taken by the Supreme Court in Ririnui. As previously noted, Ririnui

concerned the proposed sale of land that was of interest to Māori but which was owned

by a State-Owned Enterprise. The Supreme Court held that responsible Ministers had

the ability to “exercise a substantial degree of indirect control over the manner in

which a State-Owned Enterprise deployed its assets”.73 State-Owned Enterprises are

less subject to ministerial control than Crown agents. If responsible Ministers can

indirectly influence the way a State-Owned Enterprise deals with lands that are of

interest to Māori, then responsible Ministers have, through ss 103 and 107 of the

Crown Entities Act, even greater ability to control the way in which a Crown agent

can dispose of land that is of interest to Māori.

[82] It is therefore reasonably arguable the Minister could, after following the steps

in s 115 of the Crown Entities Act, issue a direction to ACC pursuant to s 103 of the

73 Ririnui decision, above n 72, at [86](b).

Crown Entities Act forbidding the sale of any land held by ACC that is the subject of

a claim by Māori on the basis that such lands may be used by the Crown to settle Māori

land claims. It is reasonably arguable that a general policy direction of that kind is

unlikely to offend s 113(1)(b) of the Crown Entities Act. Such a general direction

would, however, have the indirect effect of preserving the current ownership of the

ACC property until Mr Stafford’s claim is heard and determined. Alternatively, it is

reasonably arguable the Minister of State Services and the Minister of Finance may be

able to give a similar direction under s 107(1)(e) of the Crown Entities Act in order to

assist the Government in managing fiscal risks concerning claims against the Crown

by Māori.

[83] Such a direction or directions would be similar in nature to the instructions

Minister Dyson gave ACC in September 2007 in relation to the then Government’s

“land of potential interest process” and which ACC accepted at the time as being a

lawful instruction.

[84] It is not determinative of the issues addressed in this part of my judgment that

a direction of the kind I have set out in [82] has not yet been given. This is because

the control test focuses upon “the degree of control that is legally entitled to be

exercised [by Ministers over ACC]; not with the degree of control that is in fact

exercised”.74

[85] Nor is it significant that a direction of the kind set out in [82] would have the

indirect effect of the Minister asserting influence over the way ACC manages part of

its investment portfolio. The powers conferred upon the Minister by s 103 of the

Crown Entities Act are reinforced by s 275 of the Accident Compensation Act, which

specifically provides that investment decisions may be “subject to any policy direction

under s 103 of the Crown Entities Act …”.

[86] This analysis leads to the conclusion that it is reasonably arguable the ACC

property may indirectly be the subject of control by the Minister or Ministers when

giving directions concerning government policy for the resolution of land disputes

74 Philip A Joseph, above n 6, at 618, citing Bank voor Handel en Scheepvaart NV v Administrator

of Hungarian Property, above n 66.

between the Crown and Māori, or when managing the Crown’s fiscal risks in relation

to land disputes with Māori.

[87] The answer to the question posed in Part II of this judgment is therefore

answered in favour of Mr Stafford.

PART III

DOES MR STAFFORD CURRENTLY HAVE A CAVEATABLE INTEREST IN

THE ACC PROPERTY?

[88] My conclusion that it is reasonably arguable that the ACC property could be

applied towards settling any liability the Crown may have in relation to the Wakatū

proceeding does not, however, translate automatically into a finding that Mr Stafford

currently has a caveatable interest in the ACC property. The reasons for this can be

explained by exploring in further depth the three-way relationship between the Wakatū

claim, the ACC property, and the Crown. That will be done by first considering the

disconnection between the Wakatū claim and section 443 before turning to the balance

of the ACC property.

Section 443

[89] Mr Parker, an historian, explained in his evidence that section 443 was always

reserved for Māori and sold in two parts by the Māori Trustee in 1969 and 1970. As

previously noted, the part of section 443 that is now part of the ACC property was sold

by the Māori Trustee to Newmans in 1970.

[90] The third amended statement of claim in the Wakatū proceeding makes no

claim with respect to any of the 53 sections that were actually reserved for Māori and

not disposed of by the Company or the Crown to others prior to 1882, when the lands

vested in the Public Trustee. The focus of the Wakatū proceeding is on land that should

have been, but which was not, reserved for Māori and land that was disposed of by the

Crown between 1845 and 1882. There is no suggestion in the pleadings that the

Māori Trustee breached his duty to Mr Stafford or other beneficiaries of the

Tenths Trust when he sold part of section 443 to Newmans.75

[91] If the ACC property only comprised the part of section 443 that the

Māori Trustee sold to Newmans, then Mr Stafford would not have a caveatable interest

in the ACC property. This is because he has not claimed a beneficial interest in the

land actually reserved for Māori but subsequently sold by the Māori Trustee.

[92] A caveat can, however, only be registered against the title of the ACC property

as a whole. If Mr Stafford currently has a caveatable interest in the part of the property

derived from sections 442 and 439, then I would have no hesitation in holding that the

caveat in the present form should remain in force.76

Sections 442 and 439

[93] Mr Stafford claims a beneficial interest in those parts of the ACC property that

he says form part of the original estate held either by the Company or the Crown that

should have been reserved for Māori but which were not. In other words, Mr Stafford

is saying the ACC property, excluding that part derived from section 443, forms part

of the shortfall of land held by the Company or Crown in about 1845 that can now be

the subject of his claim because it is property that has again come under the control of

the Crown.

Analysis

[94] The lacuna in the reasoning advanced on behalf of Mr Stafford is that the ACC

property can only be applied towards addressing any claim Mr Stafford may

successfully pursue against the Crown if Ministers take steps along the lines I have set

out in [82]. The unexercised ministerial powers of direction I have explained in Part II

do not give Mr Stafford a caveatable interest in this case. This is because Mr Stafford

could not establish a beneficial interest in the land unless Ministers assert their control

75 If such a claim were made it would, in all likelihood, be a claim against the Crown, as the Māori

Trustee is defined as a government department in s 2(1) of the Crown Proceedings Act 1950. 76 Howard v Resort Development Ltd (2007) 8 NZCPR 505; Rawat v Melview Featherston Street

Ltd (2006) 7 NZCPR 561; Nicholson v Morning Star (St Luke’s Grand Apartments) Ltd (2008)

9 NZCPR 407.

over ACC. In that respect, Mr Stafford is in much the same position as a discretionary

beneficiary of a trust, who also lacks a caveatable interest in trust property.77

[95] This unfortunate dilemma for Mr Stafford arises because he has endeavoured

to use the blunt caveating provisions of the Land Transfer Act to achieve a short-term

remedy to a very complex constitutional and legal issue. Unfortunately for him,

Mr Stafford cannot circumvent the requirements of s 137 of the Land Transfer Act that

he derive his claimed beneficial interest in the ACC property from the registered

proprietor. Section 137(2)(c) mandates that a caveat contain information on how the

claimed interest is derived from the registered proprietor. This requirement reflects an

underlying principle in the Land Transfer Act that a beneficial interest in land under

s 137(1)(a) must in fact be derived from the registered proprietor.78

[96] I will not comment on whether or not Mr Stafford may have been better to have

followed the lead of Ririnui and sought an interim injunction against ACC and/or a

declaration requiring responsible Ministers to give consideration to issuing directions

of the kind I have set out in [82]. I have been asked to do no more than consider ACC’s

application to have Mr Stafford’s caveats removed from the ACC property.

[97] I do not, however, wish to see Mr Stafford and his supporters deprived of an

opportunity to persuade the Minister or Ministers to issue a direction or directions of

the kind I have described in [82], which may ultimately result in a solution that

achieves for Mr Stafford everything that he is endeavouring to achieve through his

caveat. To achieve this possible outcome, I will exercise the discretion conferred by

s 143 of the Land Transfer Act and keep in force Mr Stafford’s caveat over the ACC

property until 22 March 2018. Although this creates a very tight timeframe for the

Minister or Ministers to make a decision, it would be preferable if this aspect of

Mr Stafford’s dispute were able to be resolved through Ministers exercising their

statutory powers.

77 Rutherford v Rutherford, above n 45, at [18]. 78 See for instance, Pragma Designer Homes Ltd v Jiang [2016] NZHC 677 at [22]; Mahon v The

Station at Waitiri Ltd [2017] NZHC 631 at [39]-[41], affirmed by Mahon v The Station at Waitiri

Ltd [2017] NZCA 387 at [33]-[37]; and Edith Farms Ltd v Providence Lands Ltd [2013] NZHC

3108 at [27]-[29].

Costs

[98] Although ACC and the Attorney-General have substantially succeeded, the

public interest involved in this case is so significant that it is not appropriate for any

award of costs to be made in favour of ACC or the Attorney-General.

_____________________

D B Collins J

Solicitors: Accident Compensation Corporation, Wellington for Applicant Pitt & Moore, Nelson for Respondent Crown Law Office, Wellington for Attorney-General