IN THE MĀORI LAND COURT OF NEW ZEALAND … · 155 Taitokerau MB 135 IN THE MĀORI LAND COURT OF...

155 Taitokerau MB 135

IN THE MĀORI LAND COURT OF NEW ZEALAND

TAITOKERAU DISTRICT

A20140003804

UNDER

Section 240, Te Ture Whenua Māori Act 1993

IN THE MATTER OF

Paremata Mokau A7A1 (Mokau Marae)

BETWEEN

DAVE SCOTT AND DONNA TAMAKI

Applicants

A20140003805

UNDER

Regulation 21, Māori Reservation Regulations

1994

IN THE MATTER OF

Paremata Mokau A7A1 (Mokau Marae)

AND BETWEEN

DAVE SCOTT

Applicant

Hearing:

8 and 9 June 2017

(Heard at Whangarei)

Judgment:

27 July 2017

RESERVED JUDGMENT OF JUDGE M P ARMSTRONG


Introduction

[1] Mokau Marae is located on the Paremata Mokau A7A1 block in Oakura. This

block is set apart as a Māori Reservation for the benefit of Te Uriohikihiki, a hapū of Ngāti

Wai.1

[2] In 2005, work began on building a new wharekai for the Marae. By 2009, the

wharekai was partially complete. Sadly, the trustees of the Marae became embroiled in

conflict. More than seven years have passed and no further work has been carried out.

The wharekai is an empty shell and serves as an ongoing reminder of the raruraru that

exists.

[3] Applications have been filed seeking an inquiry into the administration of the

reservation, and seeking the removal and replacement of the trustees.2 The issues in this

case are:

(a) Did the trustees breach their obligations concerning the wharekai project?

(b) Should the trustees be removed?

(c) Should trustee obligations be enforced? and

(d) Should the trustees be replaced?

Accepted facts

[4] Many of the facts are not in dispute. A new wharekai was to be built for the Marae

using funding from ASB Bank Ltd, the New Zealand Lottery Grants Board and the

Department of Internal Affairs. This project was to be carried out in three stages:

(a) Stage one: Laying a concrete slab, erecting the frame and roof, and

installing some plumbing;

1 “Setting Apart Māori Freehold Land as a Māori Reservation” (5 July 1962) 44 New Zealand Gazette

1077 at 1081. 2 A20140003804 and A20140003805. Hepi Haika also filed a separate application seeking the removal

and replacement of trustees. That application was not registered by the Court staff as a separate

application but is considered in this judgment.


(b) Stage two: Closing the structure in, adding exterior walls, cladding and

windows, and making the structure watertight; and

(c) Stage three: Fitting out the building, installing internal walls, partitions,

fixtures and chattels.

[5] Stage one commenced in 2005.3 The trustees at that time were Henry Haika, Marie

Coward, Francine Hauraki, Evelyn Kenwright, Ahitapu Wetere, Eta Haika, Zeniff Haika,

Taylor Moses and David Scott.4 David Scott was the project manager, and Donna Tamaki

applied for the funding, for stage one. Donna was the secretary of the Marae but was not a

trustee. David and Donna were not paid for those roles. Kerr Construction Whangarei Ltd

was engaged as the builder. Stage one was completed in 2006 though some funds were

still owed to Kerr Construction.

[6] Following the completion of stage one, some of the trustees were replaced. The

trustees in office became: Adrianne Taungapeau, Francine Hauraki, Linda Mohi, Tracey

Haika, Albert Sadler, Michael Leuluai, Gina Tamaki, David Scott, Everlyn Houghton,

Richard Paikea, Pere Sadler, Mereana Hoani, Evelyn Kenwright, Eta Haika and Sheryle

Hetaraka.5

[7] The following year, further replacements were made and the trustees became

Adrianne Taungapeau, Evelyn Kenwright, Mereana Hoani, David Scott, Gina Tamaki,

Michael Leuluai, Eta Haika, Linda Mohi, Pere Sadler, Richard Paikea, Sheryle Hetaraka

and Tracey Haika.6

[8] Adrianne Taungapeau became the new project manager. Her mother, Mereana

Hoani, was also a trustee. Kyle Hoani was engaged as the construction manager.7 Kyle

was Adrianne’s brother and Mereana’s son. Justice Builders Ltd was engaged as the

builder to complete stage two. Justin Hoani is the sole director and shareholder of Justice

Builders. Justin is Adrianne’s nephew and Mereana’s grandson. Kyle, Justin and Adrianne

were paid during stage two.

3 The date stage one actually commenced and finished is in dispute but is not material.

4 98 Whangarei MB 131-132 (98 WH 131-132).

5 110 Whangarei MB 166-170 (110 WH 166).

6 115 Whangarei 143-148 (115 WH 143-148).

7 Sadly Kyle has since passed away.


[9] Stage two was completed at the end of 2009. Further funding to complete stage

three was declined. No further work has been carried on out on the wharekai.

[10] In 2012, further trustees were replaced. The trustees in office became: Adrianne

Taungapeau, Evelyn Kenwright, Richard Paikea, Linda Mohi, Gina Tamaki, Mereana

Hoani, David Scott, Pere Sadler, McGraff Leuluai, Opai Haika, Hepi Haika, Donna

Tamaki, Kyle Hoani, Carmen Hetaraka, Secha Alach, Walter Hoori and Clive Stone.8

Those trustees are still in office, but are divided and not working together.9 These

divisions have intensified over the wharekai project and this proceeding.

[11] In 2015, Hepi Haika and other kaumātua called a meeting of the beneficiaries of the

Marae. Resolutions were passed seeking the removal of existing trustees and the

appointment of new trustees.

[12] David Scott and Donna Tamaki have filed applications seeking an inquiry into the

administration of the reservation, and the removal of trustees. These applications focus on

stage two of the wharekai project. This decision also focuses on stage two, and the trustees

in office at that time, though I consider other issues outside of that period where there is

sufficient evidence. Hepi Haika has filed a separate application seeking the removal and

replacement of trustees. Hepi relies on the resolutions passed at the meeting held in 2015.

Did the trustees breach their obligations concerning the wharekai project?

[13] I first consider the general obligations owed by the trustees before turning to the

specific questions that arise in this case.

What are the trustees’ obligations?

[14] Trustees of a Marae must hold and administer the Marae and its assets for the

benefit of the beneficiaries.10

They must act in good faith in the exercise of their powers

and administer the reservation:11

8 42 Taitokerau MB 57-68 (42 TTK 57-68).

9 Some of those trustees have passed away and resigned but have not yet been removed by the Court.

10 Te Ture Whenua Māori Act 1993, s 338(7).

11 Māori Reservation Regulations 1994, reg 6.


(a) To promote the purpose of the reservation;

(b) For the benefit of the persons entitled to use and enjoy the reservation; and

(c) In accordance with Te Ture Whenua Māori Act 1993, the Māori Reservation

Regulations 1994, and any order of the Court.

[15] General principles of trust law also apply including:12

(a) A duty to acquaint themselves with the terms of trust;

(b) A duty to adhere rigidly to the terms of trust;

(c) A duty to transfer property only to beneficiaries or to the objects of a power

of appointment or to persons authorised under a trust instrument or the

general law;

(d) A duty to act fairly by all beneficiaries;

(e) A duty to keep and render accounts and provide information;

(f) A duty to act diligently and prudently;

(g) A duty not to delegate his or her powers not even to co-trustees; and

(h) A duty not to make a profit for themselves out of the trust property or out of

the office of trust.

[16] Trustees have a duty of loyalty to act in the best interests of the beneficiaries.

Trustees must not place themselves in a position where their duty and interest conflict.

Under the “self-dealing” rule, if a trustee sells trust property to themselves, the sale is

voidable as of right at the election of an affected beneficiary, no matter how fair the

12

Rameka v Hall [2013] NZCA 203 at [29]. It should be noted that general trust law only applies to the

extent that those principles are not inconsistent with the statutory and regulatory regime concerning

Māori reservations.


transaction. The self-dealing rule is not restricted to purchases, but extends to any contract

with the trust where a trustee has an interest or duty on both sides of the transaction.13

[17] Transactions between trustees and a close relative do not fall in the same strict

category, but it gives rise to strong grounds of suspicion, which, if not dispelled, is

sufficient to set aside the transaction.14

[18] In New Zealand Maori Council v Foulkes,15

Williams J rejected an argument that

payment to a solicitor, who was the wife of a trustee, breached these principles. That case

turned on specific facts,16

and does not change the general restriction on trustees entering

into dealings with close relatives.

What are the questions in this case?

[19] The following questions arise:

(a) Did the trustees breach their obligations when terminating the contract with

Kerr Construction?

(b) Did the trustees breach their obligations when engaging Justice Builders?

(c) Did the trustees breach their obligations when engaging Kyle as the

construction manager?

(d) Did the trustees breach their obligations when paying Adrianne for work on

stage two?

13

Fenwick v Naera [2015] NZSC 68, [2016] 1 NZLR 354 at [69] – [81]. This is different to the “fair

dealing” rule, where a trustee purchases a beneficiary’s interest. Under the fair dealing rule, the Court

will assess whether the trustee gave full disclosure and value to the beneficiary before voiding the

transaction. The onus is on the trustee to prove transparency and good conscience. New Zealand Māori

Council v Foulkes [2014] NZHC 1225 at [12]. 14

Henderson v Woodroofe [1921] NZLR 411 at 418, Robertson v Robertson [1924] NZLR 552, Re

McNally [1967] NZLR 521, Ormsby v The trustees of Whakaaratamaiti 2B6 (Meeting House) Maori

Reservation - Whakaaratamaiti 2B6 (2009) 12 Waiariki Appellate Court MB 167 (12 AP 167), New

Zealand Maori Council v Foulkes [2014] NZHC 1225. 15

New Zealand Maori Council v Foulkes [2014] NZHC 1225. 16

Williams J had granted an earlier order by consent that legal costs were to be met from trust funds, the

parties were aware of the identity of the solicitor when they agreed with that order, and the Court would

only approve the payment of fair and reasonable costs.


(e) Did the trustees fail to keep and render proper accounts?

(f) Did the trustees breach their obligations concerning the overall management

of the wharekai project?

Did the trustees breach their obligations when terminating the contract with Kerr

Construction?

[20] Kerr Construction was originally engaged to carry out all three stages of the

wharekai project. In 2009, the trustees in office decided not to proceed with Kerr

Construction and engaged Justice Builders to complete stage two. David argues that there

was no need to do so, Kerr Construction was doing a good job, and should have been

retained for stage two.

[21] Adrianne advised that the trustees’ encountered difficulties securing funding for

stage two. She contends that Kerr Construction would not proceed with stage two unless

funding was secured and the outstanding accounts from stage one were settled. Adrianne

states that the framing which had been erected in stage one was exposed, as there were no

external walls, and the materials were starting to deteriorate. She argues that they had to

engage another builder to close in the wharekai, and make it watertight, to prevent any

further damage.

[22] A letter from Kerr Construction dated 17 September 2009 confirms that they would

not proceed with stage two until funding was in place. That letter also refers to the

outstanding accounts owed.

[23] The trustees were in a difficult position. They had an existing contract with Kerr

Construction to complete the wharekai project. The trustees were having difficulty

securing funding for stage two. Kerr Construction was unwilling to do further work until

issues around funding were resolved. That position from a commercial contractor is not

surprising. In the meantime, the framing for the wharekai was exposed to the weather and

was deteriorating. In these circumstances, it was reasonable for the trustees to consider

terminating the contract with Kerr Construction and engaging a new builder.


[24] The problem is that the trustees did not first terminate the contract with Kerr

Construction. They just entered into a new contract with Justice Builders. This meant that

the trustees had two contracts with two different builders at the same time for the same

work.17

If Kerr Construction sought to enforce the contract it had with the trustees, the

Marae may have been liable to pay both builders. This was not a prudent approach.

Although the trustees were under pressure to resolve the issue, they had to first terminate

the contract with Kerr Construction before engaging a new builder. The trustees put the

Marae assets at risk by not doing so.

[25] Fortunately, the trustees were able to resolve the matter. They subsequently

negotiated the termination of the contract with Kerr Construction and settled the

outstanding accounts.

[26] I find that there was a reasonable basis for changing the builder for stage two.

However, the trustees should have first terminated the existing contract with Kerr

Construction before engaging Justice Builders. The failure to do so was not prudent and

put the Marae assets at risk. Ultimately, the trustees were able to resolve this issue and no

loss was incurred.

Did the trustees breach their obligations when engaging Justice Builders?

[27] Justice Builders was engaged as the new builder for stage two. Although this is a

limited liability company, Justin is the sole director and shareholder of the company. Justin

is Adrianne’s nephew and is Mereana’s grandson.

[28] The restriction on trustees entering into dealings with close relatives applied. The

trustees were considering whether to award a significant contract for the wharekai project.

A close family member of two of the trustees had a considerable interest in that contract.

There was a danger that Adrianne and Mereana could be swayed in their decision, not by

personal interest, but by their loyalty to another, Justin. It is this compromise of the duty

of loyalty that is significant.

17

The trustees engaged Justice Builders Ltd on 16 May 2009. They did not terminate the contract with

Kerr Construction until 18 September 2009. See minutes of trustee meeting dated 17 May 2009 and

letters from Kerr Construction dated 17 and 21 September 2009.


[29] Adrianne and Mereana should have avoided this danger by declaring their conflict

and not participating in the deliberations or the vote. Adrianne states that she did declare

her conflict and did not vote. Mereana advised that she did not declare that Justin was her

grandson but that this was known by the other trustees. Mereana confirmed that she did

vote. Mereana could not recall whether Adrianne voted. The other trustees who attended

the relevant meeting did not give evidence.

[30] Minutes of a trustee meeting on 16 September 2009 record the decision engaging

Justice Builders. The minute does not record that Adrianne declared her conflict. The

minute also indicates that Adrianne moved the resolution:

Decision – Preferred Builder

1. Mokau Marae Board of Trustees confirm that the preferred

building contractor is Justice Builders.

Preferred Builder: Adrianne/Tracey Carried

[31] I find that Adrianne and Mereana did not declare their conflict at this meeting. It is

possible that the other trustees were aware of their relationship with Justin but there is

insufficient evidence to determine that. Adrianne and Mereana had to take prudent steps

and should have declared their conflict to put that beyond doubt. I also find that Adrianne

and Mereana voted in favour of Justice Builders. Mereana confirmed that she voted.

Adrianne’s participation is recorded in the minutes of the meeting.

[32] I do not accept Adrianne’s evidence on what occurred at this meeting. As I discuss

below, her evidence on the contracts with, and payments to, herself and her close relatives,

is not credible or reliable. Adrianne’s evidence is not supported by the minutes and no

other trustees have confirmed her evidence. I have relied on the minutes from the meeting

which provide an independent account and which demonstrate that she did vote.

[33] The suspicion surrounding the contract is heightened when examining its terms.

Two quotes were provided, one from Justice Builders at $70,000.00 plus GST and one

from Northland Building Maintenance at $58,000.00 plus GST. Adrianne advised that the

trustees preferred Justice Builders as Justin is whānau and has connections to Mokau

Marae. I understand the sentiments of engaging a whānau member who has the

appropriate skills to undertake work for the Marae. This is a relevant factor for trustees to


consider. However, the decision itself must still be prudent and not based purely on

nepotism.

[34] Justin is a qualified builder and has his own building company. However, his quote

was more expensive, he was not a member of the Registered Master Builder’s

Federation,18

and he was based in Westport in the South Island.19

In these circumstances,

the trustees had to demonstrate that there was a principled basis justifying the decision to

engage his company.

[35] There is some evidence in the minutes from the meeting of 16 May 2009 which

support engaging Justice Builders. The quote from Northland Building Maintenance did

not include scaffolding costs or additional remedial works. The quote from Justice

Builders included scaffolding costs and additional remedial works “subject to a site visit”.

[36] The minute of the trustee meeting also records that Northland Building

Maintenance required ‘downtime payments’ if it was raining, but that Justice Builders

would work “rain, hail or shine”. The actual quote from Northland Building Maintenance

does not refer to downtime payments for bad weather. It does refer to charges for “any

down time due to delays in information or services outside our control…”.20

[37] The extra payment required for scaffolding costs and remedial works may have

resulted in final costs from Northland Building Maintenance being higher than from Justice

Builders. However, there is no evidence to demonstrate that the trustees considered this,

assessed or inquired as to what these extra costs may be, and came to a reasoned and

principled decision on why Justice Builders was preferred. Mereana did say that she

preferred Justice Builders as Justin would work “rain or shine”, but her evidence goes no

further. There is also some doubt as to whether this was a legitimate factor to rely on as

the quote from Northland Building Maintenance does not refer to charges for bad weather.

18

Email from Lisa Kidwell, of the Department of Internal Affairs, to Adrianne Taungapeau, dated 28

September 2009. 19

Search on the Companies Office Register for Justice Builders Ltd, 21 September 2012. 20

Quote from Northland Building Maintenance dated 14 May 2009.


[38] The obligation is on the trustees to show that this contract was in the best interests

of the beneficiaries and was on the best terms available.21

The trustees, particularly

Adrianne and Mereana, have not dispelled the suspicion surrounding this contract.

Did the trustees breach their obligations when engaging Kyle as the construction

manager?

[39] Kyle was appointed as a trustee of the Marae in 2012. He was not a trustee in 2009

when he was engaged as the construction manager, but his mother Mereana, and his sister

Adrianne, were.

[40] Kyle was contracted by the trustees to carry out paid work on the wharekai project.

He was closely related to two of the trustees. A conflict of interest arose. Adrianne and

Mereana should have declared their conflict and not participated in the deliberations or the

vote. The minutes have not been filed which record the trustees’ decision to engage Kyle.

Adrianne advised that she did not vote. Mereana advised that she did vote in favour of

engaging Kyle.

[41] Mereana should not have voted. I have doubts on whether Adrianne did excuse

herself and refrained from voting. There is no objective evidence supporting her position

and I have found that other parts of her evidence are not credible. I also find it difficult to

understand why Adrianne would excuse herself from voting but Mereana would not.

Surely if Adrianne recognised that a conflict existed, and excused herself from voting, then

Mereana would have done the same.

[42] Further issues arise over whether Kyle’s engagement was prudent. Adrianne said

that a contract was signed between Kyle and the trustees. That contract was not produced.

Adrianne advised that the trustees agreed to pay Kyle $2,000.00 a week up to a maximum

of $15,000.00. The invoices provided demonstrate that Kyle charged $1,000.00 a week.22

[43] There was no principled basis upon which the trustees approved this fee. Adrianne

said that this was the minimum amount Kyle charged. It appears that the trustees just

21

Re McNally [1967] NZLR 521 at 523. 22

Invoice No. 25, dated 8 July 2009.


accepted this. There were no competing quotes or independent material that the trustees

relied on to determine whether this fee was reasonable. This was not prudent.

[44] Kyle’s payments were made to the Mohimere Trust. This is not a trust constituted

by this Court. A copy of the trust deed has not been provided. Adrianne advised that she

‘thinks’ she is a trustee. She said the trust was set up for the benefit of her immediate

whānau.23

Mereana advised that this was her children’s trust.24

[45] I find that Adrianne was both a trustee and a beneficiary of this trust. Engaging

Kyle as the construction manager provided an indirect benefit to her as the funds were paid

to that trust.25

Adrianne was also equivocal on whether she approved payments to the trust.

She claimed that she “possibly” approved payments though she considered it was

unlikely.26

[46] The payments to Kyle, via the Mohimere trust, far exceeded what Adrianne

described as the agreed maximum of $15,000.00. A total of $36,202.00 was paid to the

Mohimere trust. There is no proper explanation or accounting for the difference. Part of

this excess relates to funds paid to Adrianne (also via the Mohimere trust) which is

discussed below. Adrianne said that an additional $2,000.00 was paid to Kyle in excess of

the $15,000.00 limit to assist with funding applications. An invoice has been produced

supporting this, but there is no objective evidence that the trustees agreed to pay Kyle

further funds above what Adrianne says was the agreed limit. Funding applications were

also part of Adrianne’s role as project manager. No proper explanation was provided as to

why Kyle undertook this work and was paid for it in excess of his approved limit. Even if

this payment is taken into account, it does not explain the difference between the

$15,000.00 ‘limit’ and the $36,000.00 paid.

[47] When engaging Kyle, the trustees did not manage the conflict of interest that arose

between Kyle, Mereana and Adrianne. Mereana voted in favour of her son. There is no

credible or reliable evidence which demonstrates that Adrianne refrained from voting. The

trustees had no proper basis to determine whether Kyle’s fee was reasonable. Significant

23

154 Taitokerau MB 224-325 (154 TTK 224-325) at 288-289. 24

Ibid at 303. 25

Fenwick v Naera [2015] NZSC 68; [2016] 1 NZLR 354. 26

154 Taitokerau MB 224-325 (154 TTK 224-325) at 292.


funds were paid in excess of the ‘approved’ limit. The funds were also paid to the

Mohimere trust where Adrianne received an indirect benefit as a trustee and beneficiary.

The trustees, and Mereana and Adrianne in particular, have not dispelled the suspicion

surrounding Kyle’s engagement and the payments made.

Did the trustees breach their obligations when paying Adrianne for work on stage two?

[48] A trustee must not make a direct or indirect profit out of the trust property or out of

the office of trust. Generally, trustees are not entitled to remuneration for personal trouble

and loss of time unless authorised by an express power in the trust instrument or by order

of the Court.27

[49] Adrianne was paid during stage two. Her payments were also made to the

Mohimere trust. Adrianne said that she was paid to prepare for negotiations with Kerr

Construction concerning their outstanding accounts. She contends that the trustees

approved payment at $65.00 per hour up to a maximum of 20 hours. Adrianne’s evidence

is not credible or reliable.

[50] No minutes have been filed demonstrating this was approved. No other trustees

have confirmed this evidence. Mereana could not recall payment to her daughter being

discussed or agreed by the trustees. The only evidence on the trustees approving payment

is Adrianne’s oral evidence.

[51] Her evidence is inconsistent with the invoices filed. Invoice No. 26 dated 30

September 2009,28

records charges for preparing documents and negotiating with Kerr

Construction at a rate of $65.00 per hour plus GST at 32 hours, not 20 hours. Adrianne

was unable to explain why the invoice billed in excess of the hours she says was agreed.29

27

New Zealand Māori Council v Foulkes [2014] NZHC 1225, Fenwick v Naera [2015] NZSC 68; [2016]

1 NZLR 354, Rameka v Hall [2013] NZCA 203. 28

There is a duplicate invoice dated 04 November 2009. Ms Gailey, the accountant engaged by the Court

to prepare financial statements for the Marae, confirmed that this invoice was not paid twice. 29

Invoice No. 26 has two entries for the time charged for negotiating with Kerr Construction. The first

entry refers to preparing documents at $65.00 per hour plus GST for 2 days at 8 hours per day and has a

subtotal of $1,188.57. This subtotal is correct arithmetic. The second entry refers to the negotiations

with Kerr Construction also at $65.00 per hour plus GST for 2 days at 8 hours per day with a subtotal of

$2,377.14. This is not correct arithmetic and is at odds with the entry immediately above.


[52] Invoice No. 26 dated 4 August 2009, records a separate payment to Adrianne for 25

hours of work at $140.00 per hour for liaising with building contractors and

subcontractors. This is more than double the rate she says was agreed with the trustees and

does not relate to the negotiations with Kerr Construction. Adrianne was unable to provide

any explanation for this work, the hourly rate charged, or the inconsistencies in her

evidence that she only received payment for the negotiations with Kerr Construction.

[53] Adrianne attempted to explain excess payments to the Mohimere trust as

disbursements for travel and other related costs that she incurred as project manager. The

narrations in the invoices from the Mohimere trust do not support this. The financial

statements for the Marae for this period record that $2,160.00 was paid to trustees to

reimburse travel expenses. Adrianne has not shown that her travel costs are not included in

that entry which is separate to the payments made to the Mohimere trust.

[54] The manner in which Adrianne presented evidence also undermines her credibility.

Her answers were often evasive, vague and required repeated questions from me in order

to elicit a specific response. I set out below an example:30

Court: Were you paid for your role as the project manager?

A Taungapeau: Not for my role as the project manager, no. But I did – I, in July

2009 I spoke to my further trustees and said to them, like, my annual holidays is

five weeks a year and I’d used all of that up and I said, “I can’t afford to do any

work for you right now. And for me it’s about – I have to take leave without pay,

that’s it, I can’t do it otherwise, but I can’t afford that.” So I was really clear about

what I was doing at that point and it was particularly to do with the engagement

with Kerrs and the negotiation because I had to do heaps of paperwork and heaps of

stuff in a really short space of time. So it was about reimbursing me in terms of my

travelling costs although it may look different but that’s really what it was but

anything outside of that, all the funding stuff and everything else, no.

Court: Okay. I am not clear on your answer. Were you paid or were you not

paid?

A Taungapeau: It depends on what you’re asking me. In terms of generically,

like, across the whole job or?

Court: Did you receive any money in relation to the wharekai project?

A Taungapeau: I was reimbursed with my costs, yes.

Court: Okay. So what costs were you reimbursed for?

30

154 Taitokerau MB 224-325 (154 TTK 224-325) at 283-284.


A Taungapeau: Mainly phone charges, travel costs to and from Auckland to

Whangārei and the preparation of the material to – what was it – to go and do the

negotiation with Kerrs.

Court: So travel costs and phone charges, those are reimbursements for costs.

A Taungapeau: Yes.

Court: Presumably that you spent fulfilling your role as a trustee.

A Taungapeau: Yes.

Court: Payment for preparation of material to negotiate with Kerrs, that’s payment

for your time isn’t it?

A Taungapeau: Yes and that’s why I put it to the meeting.

Court: So it was only for that particular matter that you were paid for your time?

A Taungapeau: Yes.

[55] Adrianne initially denied being paid for her role as the project manager. After

much prompting, she eventually admitted to being paid for her time for preparing for

negotiations with Kerr Construction at $65.00 an hour up to a maximum of 20 hours. In

fact she was paid far in excess of this including for unrelated work at a much higher rate.

[56] Adrianne received payment for her time in breach of trust when carrying out work

for the wharekai project. There is no credible evidence which demonstrates that this was

approved by the trustees, that conflicts were avoided, or that the payments were justified or

reasonable.

Did the trustees fail to keep and render proper accounts?

[57] The failure to keep and render proper accounts has been an ongoing issue with this

Marae. An audited financial report was prepared by Adele Maraki, a chartered accountant,

for the year ending 31 March 2009. In a cover letter to those accounts, Ms Maraki advised

that a large number of invoices amounting to $4,799.74 were not available, and of this,

“$2,800 was withdrawn in cash from the branch for ‘Adrian’”. Adrianne advised that this

relates to reimbursement of costs she incurred as a trustee. No documents have been filed

to support this. Ms Maraki also states in her letter that minutes were not signed, and travel

claims were paid, but there were no details concerning the mileage travelled, dates or the

reason for travel.


[58] No financial statements were prepared for the years ending 31 March 2010, 2011

and 2012. The Court engaged Barbara Gailey, from Russell Turner Chartered Accountants,

to prepare financial statements for that period. Ms Gailey advised that payments were

made in the 2011 and 2012 financial years which could not be identified. Those payments

total $2,805.00. Ms Gailey also advised that in the 2010 financial year, a payment of

$15,000.00 was made to Mahu Witehira, and $600.00 to Mereana, but there were no

documents provided supporting payment of those amounts.

[59] Adrianne advised that the $15,000.00 payment to Mahu Witehira was for painting

the wharekai, and the $600.00 payment to her mother was to reimburse her for expenses.

Adrianne further argued that there are documents to support those payments, as well as the

other unidentified payments for the 2009, 2011 and 2012 years. Those documents have not

been filed.

[60] The trustees failed to keep and render proper accounts. An audit was undertaken

for the 2009 financial year, which identified that records were incomplete and payments

were not accounted for. No financial statements were prepared for the 2010, 2011 and

2012 financial years, despite the fact that significant funds were spent on the wharekai

project in 2009.

[61] I do not accept Adrianne’s explanation that documents are available to account for

the unidentified payments. On 19 August 2014, Judge Doogan directed the Registrar to

engage an accountant on behalf of the Court. Judge Doogan directed that:31

2. Both past and present trustees holding any relevant information are to

provide to the Registrar all relevant minutes and related documents

including invoices and related financial records concerning the

Wharekai project from its inception until the end of the 2012 calendar

year;

[62] When Ms Gailey completed the financial statements for the 2010 to 2012 years, I

directed that:32

(a) The Registrar is to send to all parties copies of the reports from Ms Gailey

and Ms Maraki, and the supporting material relied on;

31

87 Taitokerau MB 124-150 (87 TTK 124-150) at 150. 32

Directions dated 6 April 2017.


(b) All parties are to file and serve any further evidence by 18 May 2017; and

(c) The applications are set down for a two day hearing in Whangarei to hear

further evidence from Ms Gailey and the parties concerning the

applications.

[63] I heard the applications on 8 and 9 June and I received further evidence, including

various documents, from all parties who wished to be heard.33

At the conclusion of the

hearing, Adrianne raised whether she could file further evidence if she could locate

supporting documents. I indicated that I would be reluctant to receive further evidence, but

that she could seek leave to file further evidence if those documents were located. No

application was filed seeking leave to adduce further evidence.

[64] Adrianne, and all parties, have had sufficient opportunity to file records accounting

for the expenditure of Marae funds. It is implausible to say that documents exist which

account for these funds when they have not been provided despite the directions from the

Court, and the many opportunities, to do so.

Did the trustees breach their obligations concerning the overall management of the

wharekai project?

[65] The trustees breached their obligations managing stage two of the project. They

failed to properly manage conflicts of interest between Adrianne, Mereana, Kyle and

Justin. They failed to act prudently when terminating the contract with Kerr Construction

and when entering into contracts with Justin and Kyle. They failed to properly scrutinise

invoices for payment to the Mohimere trust. The payments to Kyle exceeded what the

trustees ‘approved’ although there is little credible evidence to suggest that the trustees

capped this at all. Adrianne was paid using trust funds in breach of trust and the trustees

failed to keep and render proper accounts.

[66] The trustees’ conduct also raised serious concerns with the funders. On 06 August

2009, the Lottery Marae Heritage and Facilities Committee wrote to the trustees declining

their request for an extension to the expiry date of an existing grant. They advised that the

Committee would consider a future application provided that a number of conditions were

33

154 Taitokerau MB 224-325 (154 TTK 224-325)


met, including the appointment of an independent professional project manager. This did

not occur and Adrianne remained in that role. The Department of Internal Affairs also

wrote to the trustees by email on 17 July 2009, and 28 September 2009, expressing

concerns over the management of stage two.

[67] On 21 March 2010, the Lottery Marae Heritage and Facilities Committee wrote to

the trustees advising:34

I am sorry to advise the Committee declined your request for funding.

The Committee has raised concerns around the governance of the marae and its

management of the project.

The Committee noted concerns around the financial procedures of the organisation

and conflicts of interest. It was also noted that the conditions of the previous letter

dated 31 July 2009 were not fully met in relation to the requirement to appoint a

Professional Project Manager.

Adrianne accepted that the conflict of interest, and the failure to engage an independent

professional project manager, referred to her and her family.35

Not only did the trustees

breach their obligations concerning stage two, this directly led to further funding to

complete the wharekai project being declined.

[68] The question remains of who was actively involved in stage two, and who should

be held responsible. Not all trustees in office were attending trustee meetings, or

participating in the decisions, that breached these obligations. The lack of supporting

documents over this period makes it difficult to assess who was involved. There is a strong

argument that those who did not attend meetings failed to discharge their duties in any

event. As discussed below, the trustees will have an opportunity to make further

submissions on this.

Should the trustees be removed?

[69] Clear breaches of trust have occurred, some of which are serious and justify

removal for cause. However, there are further factors I have to consider.

34

Letter from Adrienne Darrah on behalf of the Lottery Marae Heritage and Facilities Committee to the

trustees of the Marae dated 21 March 2010. 35

154 Taitokerau MB 224-325 (154 TTK 224-325) at298.


[70] Kyle has passed away. Adrianne, Mereana, Pere Sadler, Linda Mohi, Carmen

Hetakara, Opai Haika and McGraff Leuluai have resigned. They can be removed by

consent.36

If Adrianne had not resigned, I would have granted an order removing her for

cause.

[71] David Scott, Richard Paikea, Evelyn Kenwright and Gina Tamaki are existing

trustees, and were trustees in 2009 during stage two.37

Should they be removed for cause

for their involvement, or inaction, over that period? Their role was not the focus of the

earlier hearing and it may not have been apparent to them that they might be removed over

those issues. To ensure a fair approach, I am going to set this matter down for further

hearing to receive submissions on whether those trustees should be removed.

Should the obligations of the trustees be enforced?

[72] I have found that the trustees breached their obligations in managing stage two.

This includes serious issues such as the payment of trust funds to a trustee in breach of

trust. The parties have not sought an order enforcing the trustees’ obligations. Despite

that, this Court performs an important supervisory function with respect to trusts that come

within its jurisdiction.38

As part of that supervisory role, it is necessary to consider

whether I should exercise my jurisdiction to enforce the obligations that have been

breached, and in particular, whether any funds which have been applied in breach of trust

should be repaid, and if so, by whom.

[73] Again, this was not the focus of the earlier hearings. I will hear further submissions

on whether the trustees’ obligations should be enforced.

Should the trustees be replaced?

[74] Hepi Haika advised that he and other kaumātua became frustrated with the

infighting and lack of progress being made by the trustees. They called a special general

36

Carmen Hetaraka, Opai Haika and McGraff Leuluai were appointed in 2012 and were not in office

during stage two of the wharekai project. 37

Eta Haika, Tracey Haika, Sheryle Hetaraka and Michael Leuluai were replaced in 2012. The other

existing trustees were appointed in 2012 and were not in office during stage two of the wharekai project. 38

The Proprietors of Mangakino Township v Māori Land Court CA65/99, 16 June 1999, Clarke v

Karaitiana [2011] NZCA 154, Mikaere-Toto - Te Reti B and C Residue Trust [2014] Māori Appellate

Court MB 249 (2014 APPEAL 249).


meeting in 2015 where resolutions were passed that all existing trustees should stand down

and new trustees should be elected. Nine people were elected five of whom are existing

trustees.39

The application to appoint those people as trustees is opposed on the basis that

the meeting was not called by the trustees and was not legitimate.

[75] Regulations 14 and 19 of the Māori Reservations Regulations 1994 confirm that it

is the trustees who call meetings of beneficiaries. While Hepi is a trustee, he cannot act

unilaterally, and requires the support of at least a majority of trustees.

[76] When appointing trustees I must be satisfied that the proposed trustees are broadly

acceptable to the beneficiaries. The outcome of an election at a meeting of beneficiaries is

the usual form of evidence relied on to make this assessment. Procedural defects at

meetings do not necessarily prevent me from relying on the outcome of the election.

However, where those defects raise issues of fairness, the result of the election may be

unreliable as evidence of the beneficiaries’ views.

[77] This Marae has been ensnared in conflict and disharmony for some time. I

understand the frustration from Hepi and other kaumātua who want to get on with the

administration of the Marae. Despite that, there is a risk that some beneficiaries may not

have considered that this was a legitimate meeting as it was not called by the trustees. This

could have affected attendance and the outcome of the election. I cannot rely on the

outcome of this election for the appointment of new trustees.

[78] Hepi also seeks the removal of the existing trustees, who were not re-elected. I am

going to remove those trustees who have resigned and passed away. Gina Tamaki, David

Scott and Walter Hoori have not resigned. They want to remain as trustees. Hepi

confirmed that he did not take issue with those persons remaining in office.

[79] Hepi argued that Donna Tamaki has resigned and so should be removed. Donna

has signed a letter of resignation, but she seeks to withdraw that and remain as a trustee.

Donna also advised that when she signed the letter she handed it to Patricia Haika who is

the secretary of the Marae rebuild committee. Patricia is not a trustee. This committee

39

The persons elected were Hepi Haika, Clive Stone, Richard Paikea, Evelyn Kenwright, Secha Alach,

Shane Skelton, Te Warihi Hetaraka, Hare Hepi and Anthony Barber.


was formed by Hepi and other kaumātua to administer the Marae due to the dysfunction

amongst the existing trustees. Regulation 3(e) provides that a trustee may retire by giving

notice to the Court or to the other trustees. Donna did not give notice to the other trustees

but to the secretary of an informal Marae committee. There is no evidence to show that her

resignation was provided to the other trustees. Her resignation was not effective and she is

entitled to withdraw it.

[80] That is not the end of the matter. Removing those trustees who have resigned and

passed away will reduce the number of trustees to nine. This is more practical than the

seventeen currently in place. I am also going to convene a further hearing on whether

some of the remaining trustees should be removed for their involvement, or inaction,

concerning stage two. If further trustees are removed, it will be necessary to consider the

appointment of new trustees. That will require a properly called meeting of beneficiaries

so the beneficiaries can express their views on who should be in office. It may be

appropriate to direct the trustees to call such a meeting. I will consider this at the next

hearing.

Decision

[81] I find that stage two of the wharekai project was not properly managed, decisions

were made, and funds were expended, in breach of trust.

[82] Per ss 37(3) and 239 of Te Ture Whenua Māori Act 1993:

(a) I reduce the number of trustees as Kyle Hoani has died, and Adrianne

Taungapeau, Mereana Hoani, Carmen Hetaraka, Pere Sadler, Opai Haika,

Linda Mohi and McGraff Leuluai have resigned;

(b) I vest the land and assets of the reservation in the remaining trustees Hepi

Haika, Clive Stone, David Scott, Donna Tamaki, Evelyn Kenwright, Gina

Tamaki, Richard Paikea, Secha Alach and Walter Hoori.


[83] I set these applications down for further hearing of one day in Whangarei to

consider:

(a) Whether the remaining trustees in office in 2009, who have not resigned,

should be removed;

(b) Whether orders should be granted enforcing the obligations of the trustees,

and in particular, requiring trustees to repay funds to the Marae, that were

expended in breach of trust; and

(c) Whether I should direct the trustees to call a special general meeting so that

the beneficiaries can vote on who they consider should act as trustees for the

Marae.

Pronounced in open Court in Whangarei at 4.30 pm on Thursday this 27th

day of July 2017.

M P Armstrong

JUDGE

IN THE MĀORI LAND COURT OF NEW ZEALAND … · 155 Taitokerau MB 135 IN THE MĀORI LAND COURT OF...

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