127 Waiariki MB 184

IN THE MĀORI LAND COURT OF NEW ZEALAND

WAIARIKI DISTRICT

A20140008853

UNDER Rule 9.9(1) of the Māori Land Court

Rules 2011

IN THE MATTER OF Matata Parish 39A 2A Ahu Whenua

Trust

BETWEEN SAMUEL KELVIN BARNES, JOHN

TIONGA SAVAGE AND TAMATI

ERNIE LESLEY DRAWBRIDGE as

trustees of the Matata 39A2A Trust

Applicants

AND RAE BEVERLEY ADLAM

First Respondent

AND HELEN MARIA SAVAGE and

RAELYN ARIHIA PEITA as trustees

of the Otonga Whānau Trust

Second Respondents

AND LAWRENCE TE AOKAHARI NIAO

Third Respondent

Hearing: 107 Waiariki MB 1 dated 2 April 2015

125 Waiariki MB 184 dated 5 August 2015

(Heard at Rotorua )

Appearances: Mr D Dowthwaite, for the trustees of Matata 39A 2A Trust

Ms B Arapere, for the trustees of Matata 39A 2B 2B 2A Trust

Ms T Wara, for Helen Savage and Raelyn Peita

Mr M Sharp, for Lawrence Niao and Rihi Niao

Mr D Hughes, for Beverley Adlam

Judgment: 10 September 2015

RESERVED JUDGMENT OF JUDGE C T COXHEAD

Copies to:

Mr D Dowthwaite, DX JP30009, Rotorua 3046 –

Ms B Arapere, DX CP 2053 – benadette@wwandd.co.nz

Ms T wara, DX JP30025, Rotorua 3046 – terena@tupono.co.nz

Mr M Sharp, PO Box 5111 Mount Maunganui – michael@michaelsharp.co.nz

Mr D Hughes, PO Box 2646 Auckland 1140 – dan.hughes@ah.co.nz

127 Waiariki MB 185

Introduction

[1] Despite ongoing litigation, the current beneficiaries of the two trusts in this matter

are seeking a positive pathway forward. That positive pathway includes the appointment

of new trustees. Prior to the appointment of new trustees both trusts have looked to update

their trust orders. This has not been an easy task - but a necessary one.

[2] The trustees of Parish of Matata 39A2B2B2A Trust (“the Farm Trust) and Parish of

Matata 39A2A Trust (“the Bath Trust”) request that the Court appoint new trustees to the

trusts. Both trusts have undertaken to update and vary their outdated trust orders. It is

intended that the trust orders for both trusts will mirror each other. Once the trust orders

have been approved by the Court elections will take place in accordance with the process

as set out in the new trust orders.

[3] Updating the trust orders has involved a detailed process. This has included

obtaining the feedback and support of beneficiaries for the trust orders. Three meetings

have been held to determine support for the new trust orders.1 The trustees have been

assisted by Mr Spencer Webster who has undertaken the role of independent chairperson

for the meetings.

[4] Mr Webster provided reports on each of the meetings. He notes that the

beneficiaries of both trusts have divergent views in relation to the voting method that

should be provided for in each of the trust orders. He also refers to the outstanding issues

regarding dual trusteeship and independent trustees.

[5] A hearing was held on 5 August 2015 to discuss the outcome of the meetings.2 The

three issues set out in Mr Webster’s reports were discussed. At the conclusion of the

hearing I directed that final draft copies of both trust orders were to be filed with the Court

on Friday 7 August 2015. I also directed the parties to file further submissions on the

voting issue.

1 The Bath Trust meeting was held on 23 May 2015. The Farn Trust meetings were held on 23 May 2015

and 25 July 2015. 2 125 Waiariki MB 184 (125 WAR 184).

127 Waiariki MB 186

[6] Submissions were received on Friday 14 August from: Ms Wara on behalf of the

Otonga Whānau Trust; and Mr Dowthwaite on behalf of the majority trustees of the Bath

Trust. Further submissions were received on 17 August from Mr Sharp on behalf of

Lawrence Niao and Rihi Vercoe and then on 19 August Ms Arapere filed on behalf of the

trustees of the Farm Trust. Mr Hugh was granted leave to file out of time and submissions

on behalf of Rae Beverly Adlam were received by the Court on 25 August.

Background

[7] General background relating to these two trusts can be found at Adlam v Savage –

Lot 39A Sec 2A Parish of Matata and Lot 39A Sec No. 2B2A Parish of Matata;3 and

Trustees of the Otonga Whānau Trust v The Trustees of Matata Parish 39A 2A Ahu

Whenua Trust – Lot 39A Sec 2A Parish of Matata and Lot 39A Sec 2B No. 2B No 2A

Parish of Matata.4

Chairpersons report on the meeting of beneficial owners of the Bath Trust

[8] Mr Webster’s report for the meeting of the beneficiaries of the Bath Trust held on

23 May 2015 observes that there was general consensus to the draft trust order subject to

some amendments. The report sets out two outstanding issues for which no consensus was

reached – voting at general meetings and the issue of dual trusteeship. As regards voting

three options were considered and discussed. Those were:

Option 1 - voting by shares only (poll voting).

Option 2 - voting by show of hands only.

Option 3 - a show of hands unless a poll vote by shares is demanded by 25

percent of those present at the meeting.

[9] Mr Webster comments that there was no support for option one. A vote was taken

on whether options two or three were preferred. The minutes record the outcome of the

vote as follows:

The results of the voting on the three options were:

3 Adlam v Savage – Lot 39A Sec 2A Parish of Matata and Lot 39A Sec No. 2B2A Parish of Matata (2015)

2015 Māori Appellate Court MB 59 (2015 APPEAL 59). 4 Trustees of the Otonga Whānau Trust v The Trustees of Matata Parish 39A 2A Ahu Whenua Trust – Lot

39A Sec 2A Parish of Matata and Lot 39A Sec 2B No. 2B No 2A Parish of Matata (2014) 95 Waiariki

MB 176 (95 WAR 176).

127 Waiariki MB 187

Option One: Poll Voting Only

Result 19

Option Two Voting by show of hands only

Result: 25

Option Three Voting by show of hands with Poll voting option if 25% of

those present agree

Result: 0

[10] The vote was undertaken on a show of hands basis no demand was made for a poll

vote and the shareholding was not recorded. The report explains that those whānau or

owners with large shareholdings preferred voting by shares and those with smaller

shareholding preferred voting by show of hands.

[11] The report also remarks on the discussion of dual trusteeship. Some owners

perceived it to be an automatic conflict of interest others considered that an overlap may

assist the orderly management of both trusts. There was no consensus and a vote was

taken. The minutes record 32 owners voting in favour of prohibiting dual trusteeship and

11 owners in favour of allowing dual trusteeship.

[12] As regards the independent trusteeship, the report notes that there was consensus on

this matter to allow for the appointment of an independent trustee which will count as one

of the seven total trustees. The issue of whether or not the owners will select an

independent trustee was recorded as to be dealt with at the next owner hui.

Chairpersons report on the meetings of beneficial owners of the Farm Trust

[13] The first Farm Trust meeting was held, on the afternoon of 23 May 2015, following

the Bath Trust meeting. Mr Webster’s report clarifies that the owners present voted, by

show of hands, on two options for their preferred voting method. A poll vote was

demanded and as such the results based on shareholding were also recorded. The minutes

record the following result:

Option One: Poll Voting only

127 Waiariki MB 188

Result: 10

Option Two: Voting by show of hands

Result: 33

Yes Option Poll voting only

Result: 101 shares (50.57% of overall shareholding for block)

No Option Voting by show of hands

Result: 59.4 shares (29.76% of overall shareholding for block)

[14] There was no support for the draft trust order provision which provided for poll

voting if 25 percent of those present agreed. The report also records that a vote was taken

on the dual trusteeship however the minutes do not disclose those results. In addition, a

clause was included in the trust order providing for the appointment of an independent

trustee at the will of the owners.

[15] Mr Webster’s report for the second Farm Trust meeting, which was held on 25 July

2015, that given the owners still had divergent views on the appropriate voting method for

the trust a further vote was required. The vote results were as follows:

No of Owners Shares

Show of hands 40 47.54289441

Poll Voting 10 100.7661

[16] The report also states that the owners agreed that trustees cannot hold dual

trusteeship.

Issues

[17] Having regard to the matters raised in Mr Webster’s reports the issues for

determination are:

(a) What voting method should be provided for in the trust order?

127 Waiariki MB 189

(b) Should the trust order provide for the election of an independent

trustee?

(c) Should trustees be capable of being elected to both trusts?

Submissions for the trustees of the Bath Trust

[18] Mr Dowthwaite, for the trustees of the Bath Trust submits that:

(a) The importance of voting should be considered with reference to the

fact that it indicates the views of beneficial owners to trustees who are

bound to take those views seriously and in respect of the appointment of

trustees indicates a level of acceptability to the Court which it is bound

to take into account in the appointment of trustees.

(b) The difference between show of hands and poll voting was discussed in

the Māori Appellate Court decision of Samuels v The Proprietors of

Matauri X Incorporation and the Court should have regard to that

decision despite the fact that it involved a company rather than a trust. 5

(c) In the Thomson v Newton the Court highlighted the importance of s

17(2)(c) however s 17(2)(d) is also important as it provides for

protection against an oppressive majority or an unreasonable minority.6

The greatest protection available is to have both forms of voting

available in respect of important issues.

(d) The Court should not follow the approach in Wall v Karaitiana where it

considered that it would be preferable for an advanced ruling to be

made on voting one way or the other. That approach risks the Court not

having the best information in front of it when addressing the issue and

implementing the purposes of the Act under s 16(2)(d).

5 Samuels v The Proprietors of Matauri X Incorporation (2006) 6 Taitokerau Appellate Court MB 332 (6

APWH 332). 6 Wall v Karaitiana – Tauhara Middle 15 Trust (2008) 87 Taupo MB 107 (87 TPO 107).

127 Waiariki MB 190

(e) Show of hands should be available at every meeting to enable efficient

decision making on matters where there is no dispute. It is easier to

count hands rather than go through the more laborious process of

adding up shareholding for votes.

(f) Regard should be had to Stone – Pukepuke Tangiora Estate where the

Court took into account the background of the estate and determined

that a weighted voting system based on share allocations of the original

nine owners was the most appropriate voting method for that case.7 In

the present case, historically there were eight families with equal

ownership. The number of beneficial owners succeeding to the eight

families has varied. The present trustees are seen as being

representative of their specific whānau. A weighted method similar to

Stone may have been a more beneficial option for the beneficiaries.

(g) The Niao whānau have made representations that they will succeed

through show of hands, they have a large number of shareholders in

comparison with other families. Their actions demonstrate the

possibility of show of hands voting alone being potentially open to

abuse, manipulation and tactical manoeuvring.

(h) The comments by the Court in Wall v Karaitiana that if shareholding

owners felt they had been disadvantaged, they could apply to the Court

to amend the trust orders or alternatively vest some of the shares held

by the whānau trust in individuals to make greater use of voting by

show of hands rather than shares cannot have meant to anticipate that

the voting process should be able to be subverted by the divesting of

small shareholdings.

(i) Both forms of voting are appropriate and relevant in these particular

circumstances. Show of hands voting should be available at least for

formal and non controversial resolutions at meetings for efficiency

7 Stone - Pukepuke Tangiora Estate (2013) 26 Takitimu MB 64 (26 TKT 64).

127 Waiariki MB 191

reasons. Poll voting should be available at the request of any one or a

small number (5) of any shareholders at the meeting.

(j) If poll voting is prevented it will discourage the creation of whānau

trusts and penalise families who choose to establish such trusts.

Whānau trusts have one vote despite their being numerous beneficiaries

of whānau trusts. Show of hands voting is prejudicial to whānau trust

owners.

(k) Beneficial owners with a greater shareholding have a greater vested

interest in the best decision being made in the operation of the trust.

There is a greater value to them for their benefit in the trust against a

minority or small shareholding.

(l) It is not unreasonable for a larger shareholder to expect to have a vote

proportionate to their shareholding on matters of importance which

relate directly to their interest. They have more to lose than small

shareholders.

(m) It would be wrong for the Court to create terms in a trust deed that

deliberately prevent measuring the level of acceptability to shareholders

in proportion to their shareholding. The Court should be seeking the

best evidence.

(n) In terms of dual trusteeship, direction is sought affirming the

interpretation of clause 16.11(b) and the Courts comments that existing

trustees may stand for re election for either trust and any other

beneficial owner may stand for election for both trusts and make a

decision prior to appointment as to which trust the nominated trustee

wishes to be appointed to. Both trusts are integrally involved in joint

ventures. It may be appropriate under clause 20 to allow for delegation

to joint subcommittees of both trusts for specific joint ventures.

127 Waiariki MB 192

(o) It is accepted that the Court has already indicated that an independent

trustee be appointed and it has the power to do so per s 222 of the Act

as such there is no requirement for the trust order to contain a specific

provision on this issue.

Submissions for the trustees of the Farm Trust

[19] Counsel for the trustees of the Farm Trust submits that:

(a) The trustees are concerned at the practice of share gifting among some

owners which gives an owner with a very small shareholding the same

voting rights as a larger shareholder such as a whānau trust in a show of

hands voting approach.

(b) The Farm trustees consider this practice to be unfair and say that there

is disenfranchisement of some owners if checks and balances are not in

place.

(c) Poll voting or a mixed show of hands and poll voting, with a

sufficiently low threshold to go to the poll voting model, is the most

equitable voting method.

(d) The trustees support the submissions on the voting process as filed by

counsel for the Bath Trust and counsel for the Otonga Whānau Trust.

(e) The Farm trustees will abide the decision of the Court in terms of the

issues regarding the appointment of an independent trustee.

Submissions for the First Respondent

[20] Counsel for Ms Adlam submits that:

(a) The voting provisions in the trust order are standard provisions applying

to ahu whenua trusts with voting by show of hands with one vote per

person unless a poll is demanded by 25 percent of beneficial

shareholders at the meeting.

127 Waiariki MB 193

(b) Tension arises as a result of how the shareholding interests by the

family owners have been dealt with over time. When the Bath trust was

established there were 23 beneficial owners who have been succeeded

to over time with the result that the shareholding has been diluted.

There is now an increased number of shareholders while the

shareholding itself has decreased. This he says has allowed

shareholders with a smaller shareholding interest to effectively control

the outcome of voting.

(c) The Court must strike a balance between the interests of family lines

with a larger number of shareholders with small interest and those with

a smaller number of shareholders but who proportionally hold a greater

interest in the land.

(d) Ms Adlam opposes clause 14.1 in its current form as it fails to recognise

the interest of larger shareholders. Ms Adlam supports the inclusion of

a term which provides for both show of hands and poll voting with the

latter being triggered at the request of a specified number/percentage of

shareholders. It is submitted that 25 per cent is too high and submits

that poll voting should occur where requested by any member and if

minded to the Court should set a figure of 5 beneficial owners which

would represent 50 per cent of beneficial owners (if the minimum

number required for a quorum were present).

(e) The voting that took place and previous meetings demonstrate why

clause 14.1(a) will not work.

Submissions for the Second Respondent

[21] Counsel for Helen Savage and Raelyn Peita (trustees of the Otonga Whānau Trust)

submits that:

(a) The trust supports the ability for beneficiaries to appoint one or more

independent trustees if they choose to do so and to that extent are in

favour of clause 24.1.

127 Waiariki MB 194

(b) Whether or not an independent trustee is appointed should be a matter

for the beneficial owners and not a compulsory requirement. The

minutes of the 25 July 2015 meeting reflect the owners support to have

the option to appoint an independent trustee but not a compulsory

requirement.

(c) The trust opposes clause 14.1 as it fails to ensure that their interest as a

significant shareholder in the trust blocks are duly provided for. The

Court is required per

s 17(d) to protect a minority interest against an oppressive majority and

protect a majority interest against an unreasonable minority.

(d) Clause 14.1 is the standard for voting for ahu whenua trusts, it does not

strike a balance between minority and majority. The results of the 25

July 2015 meeting illustrate this. Of the beneficial owners present at

that meeting only 20 percent voted in favour of poll voting however

they held over twice the number of shares as the shareholders who

voted in favour of show of hands.

(e) The number of owners who voted in favour of poll voting was not

sufficient to meet the threshold to demand a poll vote. This is not an

isolated incident. This also occurred at the meeting of the Farm Trust

on 23 May 2015 where only 23 percent supported poll voting.

(f) Otonga whānau trust only has one vote despite having a 20 percent

shareholding in the Farm Trust and 15 percent shareholding in the Bath

trust. As such it is at a significant disadvantage when it comes to

voting.

(g) In Far North District Council – Okahu 3B2B2 Judge Ambler

highlighted the need to balance minority and majority interest.8 It flows

that a beneficial owner ought to have the opportunity to vote in

8 Far North District Council – Okahu 3B2B2 (2015) 97 Taitokerau MB 234 (97 TTK 234).

127 Waiariki MB 195

proportion to their interest and that the requisite number of beneficial

owners to demand a poll is not so unachievable that it proves

impossible to occur.

(h) A voting method of poll only would be the only way to ensure that

majority shareholders have a fair opportunity to vote. In the alternative

it is proposed that clause 14.1 should be amended to provide for a 15

percent threshold for the demand of a poll vote.

Submissions for the Third Respondent

[22] Counsel for Lawrence Niao and Rihi Niao submits:

(a) The case-law cited by counsels for the Bath trust and the Otonga

Whānau Trust show that in trying under s 17(2)(d) to protect against the

risks of an oppressive majority or unreasonable minority a balance and

clearly defined voting system needs to be arrived at.

(b) There is a risk of larger owners unreasonably overriding smaller owners

in votes.

(c) Voting should be by show of hands with one vote per person as

determined at the recent hui.

(d) It is accepted that a show of hands only method will protect the

minority but cause concerns about protecting the majority and as such

there should be a right to demand a poll as currently set out in the draft

provision.

(e) If there is to be a threshold it should not be reduced below 25 percent.

It has been the position of the third respondents to increase the

threshold to 51 percent but if the Court does not accept this then the

minimum should be 25 percent.

127 Waiariki MB 196

(f) The trust order does not need to provide for the makeup of trustees to be

elected, the Court has expressed its desire that an independent trustee be

appointed along with other owners.

(g) While the Court has the ability to appoint trustees per s 222 it cannot

appoint an independent trustee who has not been supported at an

owners meeting.9

(h) The Court should indicate what mix of independent trustee and owner

trustees is acceptable and assess whether there is support following the

next owners meeting.

(i) All of the initial trustees should be independent in nature and none of

them should be owners. Seven advisory trustees should also be

appointed. If this is not accepted then there should be at least one

independent trustee should be appointed.

What voting method should be provided for in the trust order?

Legal principles

[23] The leading Māori Appellate Court decision on voting methods and Māori land

trusts is Thomson v Newton – Pokuru 1A1B2 and 1A2D2 which provides:10

Section 222 of Te Ture Whenua Māori Act 1993 provides that the Court in

appointing trustees, must be satisfied inter alia that the trustee/trustees to be

appointed “would be broadly acceptable to the beneficiaries’. The meeting of

beneficial owners was arranged by the Court under the chairmanship of an officer

of the Court. This was a meeting of beneficial owners not a meeting of assembled

owners, summoned in terms of Part IX of the Act. It was sought merely to enable

the owners to decide who should be nominated to the trust for appointment for the

purposes of satisfying the provisions of section 222 of the Act. Such meetings

have no formal requirements as to quorum or voting and since a consensus

only is sought, voting by a show of hands is appropriate. Trustees are appointed

in accordance with statute or the trust document. In this present instance the trust

document is silent as to the matter of appointment of trustees and neither the Trust

Act 1956 nor Te Ture Whenua Māori Act 199[3] make any provision as to the

manner or voting on these matters. A vote by poll is not essential nor warranted

and a consensus is more appropriate and better meets the provisions of section

9 Tito – Mangakahia 2B2 No 2A1A [2011] Māori Appellate Court MB 86 (2011 APPEAL 86).

10 Thomas v Newton Pokuru 1A1B2 and 1A2D2 (1997) 19 Waikato Maniapoto Appellate MB 66 (19

APWM 66).

127 Waiariki MB 197

17 (2)(c) of the Act, whereby a balance is achieved between major and minor

owners.

(Emphasis added)

[24] In Stone - Pukepuke Tangiora Estate Judge Harvey cited Thomson v Newton and

further stated that:11

[13] A counterpoint is s215(5) of the Act which states that the land and assets of a trust

shall be held for the beneficial owners by the trustees in “proportion to their several

interests” in the land. The short point is that either way meetings of owners voting by

shares or by show of hands do not bind the Court or the trustees except where the trust order

makes explicit provision for this. The Court, like the trustees, will take into account a range

of relevant considerations before making a decision including the views of the owners.

[14] It will also be remembered that the Court of Appeal has recently confirmed in its

judgment Clarke v Karaitiana that this Court must fashion its processes to ensure the widest

possible opportunity is accorded the beneficiaries to ensure a high level of participation in

any election process. That Court stated:

[53] It will be plain from these observations that the discretion of the Court is not

broad and unfettered. Of course, the Court may take into account such other

matters as it thinks fit but the exercise of its discretion will be primarily guided by

s 222(2). The importance ordinarily attaching to the views of the owners

highlights the need to design meeting procedures which are likely to secure the

widest possible input from the owners. Given the inconvenience of travelling long

distances to attend meetings, and the number of beneficiaries involved in a trust

such as this, the use of voting under powers of attorney may well be desirable.

(Emphasis added)

[25] Having regard to these authorities I consider that the appropriate voting method for

these trusts must take into account the circumstances of the trusts and the importance of

capturing the widest possible input from the owners. In determining this issue regard must

also be had to the principles of Te Ture Whenua Māori Act 1993 as set out in the preamble

ss 2 and 17 of the Act.

[26] Section 17 of the Act provides:

17 General objectives

(1) In exercising its jurisdiction and powers under this Act, the primary

objective of the court shall be to promote and assist in—

(a) the retention of Māori land and General land owned by Māori in

the hands of the owners; and

11

Stone - Pukepuke Tangiora Estate (2013) 26 Takitimu MB 64 (26 TKT 64).

127 Waiariki MB 198

(b) the effective use, management, and development, by or on behalf of

the owners, of Māori land and General land owned by Māori.

(2) In applying subsection (1), the court shall seek to achieve the following

further objectives:

(a) to ascertain and give effect to the wishes of the owners of any land

to which the proceedings relate:

(b) to provide a means whereby the owners may be kept informed of

any proposals relating to any land, and a forum in which the

owners might discuss any such proposal:

(c) to determine or facilitate the settlement of disputes and other

matters among the owners of any land:

(d) to protect minority interests in any land against an oppressive

majority, and to protect majority interests in the land against

an unreasonable minority:

(e) to ensure fairness in dealings with the owners of any land in

multiple ownership:

(f) to promote practical solutions to problems arising in the use or

management of any land.

(emphasis added)

Circumstances of the trusts’

[27] The draft trust order currently provides for voting in clause 14 of the order as

follows:

14.1 When a Resolution is put to a General or Special Meeting for a vote by the

Beneficial Owners:

(a) voting will be by show of hands provided that if no less than [25 percent]

of the Beneficial Owners present call for a poll, the vote shall be

determined in accordance with the voting Beneficial Owner’s interests in

this Trust;

(b) the Trustees must determine before a General or Special Meeting

commences, which of the people attending the meeting are entitled to vote

(either as a Beneficial Owner entitled to vote or a Proxy), by:

(i) checking that each attendee is entitled to vote;

(ii) where an attendee holds a Proxy, by checking that the Proxy voting

right is validly given and that the Proxy possesses all the necessary

documents to prove this; and

(iii) by formally registering each individual present entitled to vote.

127 Waiariki MB 199

14.2 For the purposes of a vote by show of hands, where the trustees of another trust

are collectively a Beneficial Owner of the Trust (e.g. a Whānau Trust) then only one of

their number may vote on behalf of that trust. Where more than one of the trustees of

that trust are in attendance at the meeting of the Trust they must inform the Trustees

which of them is to exercise the vote of that Trust. In the absence of a Proxy or failing

agreement between them, none of the trustees of that trust is entitled to vote on that

trust's behalf at the meeting of the Trust.

[28] To determine the best voting method for these trusts it is necessary to consider the

circumstances of these trusts. The Bath Trust has 76 beneficial owners with a total

shareholding of 104.5 shares. The largest shareholder of that trust is the Otonga Whānau

Trust which holds 15.48148 shares. The next largest shareholders are Wayne Barns and

Kelvin Barns who each hold 7.74074 shares.12

[29] The Farm Trust has 91 owners with a total shareholding of 269.2375 shares. Again,

the Otonga Whānau Trust is the largest shareholder with 54.214288 shares. The next

largest shareholder is the Pateriki Savage Whānau Trust holding 17.647061706 shares.

[30] According to Mr Dowthwaite, counsel for the Bath Trust, historically there was

eight families who he understands had equal beneficial ownership. He says that the

numbers of beneficial owners succeeding in different family lines has varied.

[31] Ms Adlam submitted that when the Bath trust was established there were 23

beneficial owners who have been succeeded to over time with the result that the

shareholding has been diluted. There is now an increased number of shareholders while

the shareholding itself has decreased.

[32] Clearly some families have chosen to succeed individually to interests, while others

have sought to hold the interests in whānau trusts. Some families may have had more

children than other families and their shares have not fragmented as much as other

families. The point is that there are a number of variables that have contributed to the

current make up of owners and shareholdings.

12

Wayne Barns is listed in the ownership records as Michael Wayne Barns.

127 Waiariki MB 200

Voting by a show of hands

[33] There are a number of judicial decisions by the Māori Land Court which have

expressed support for voting by a show of hands.13

This is not surprising given that voting

by show of hands enables efficient decision making. This is particularly relevant where

there is no dispute and the matters are uncontroversial.14

There is also support for a vote

by show of hands in terms of providing a better means in which to meet the provisions of s

17(2)(d) of the Act.

[34] Mr Dowthwaite has submitted that an increasing number of shareholders are being

created through the divesting of small parcels of shares to other whānau members. Ms

Arapere raised Farm Trust trustees concern at the practice of share gifting among some

owners.

[35] Share gifting among owners for voting purposes is not a new phenomenon within

Māori Land Trusts. It is not uncommon for this Court to receive applications where a

parent will gift to their children a small proportion of their shares that they hold in a land

block. This is done for voting purposes in order that those children can attend meetings

and vote on a show of hands basis. This is not illegal. But it does highlight the possibility

that a show of hands voting process can potentially be open to manipulation.

[36] Voting by a show of hands gives owners with very small shareholdings the same

voting rights as a larger shareholder. In these circumstances voting by a show of hands

will reward those families who have looked to distribute their shares to as many of their

whānau as possible, while disadvantaging those whānau who have looked to retain their

shareholdings within a whānau trust.

13

Thomson - Pokuru 1A1B and 1A2D2 (1997) 19 Waikato Maniapoto Appellate Court MB (19 APWM

66), Parihaka X Trust (2005) 154 Aotea MB 45 (154 AOT 45), Morris - Ngapini and Tarawa Trust

(2014) 36 Takitimu MB 185 (36 TKT 185), Stone - Pukepuke Tangiora Estate (2013) 26 Takitimu MB

64 (26 TKT 64), Bidois v Trustees of Te Rimu Trust - Te Rimu Trust (2013) 31 Tairawhiti MB 95 (31

TRW 95). 14

Samuels v The Proprietors of Matauri X Incorporation (2006) 6 Taitokerau Appellate Court MB 332 (6

APWH 332).

127 Waiariki MB 201

Voting by Poll

[37] While there is a clear line of decisions which support a show of hands I also have

regard to s 215(5) of the Act which provides that beneficial owners ought to have the

opportunity to vote in proportion to their interests. I also have regard to sections 17(2)(a),

(d) and (e) of the Act which specifically direct the Court to be cognisant of the size of

owners’ interest in land when exercising jurisdiction and powers under the Act.

[38] Preventing poll voting will discourage whānau trust and penalise those whānau who

have sought to hold their shares together in whānau trust. Further, preventing poll voting

could increase fragmentation of shares. In the circumstances of these trusts where there are

whānau trusts (such as the Otonga Whānau Trust and the Pateriki Savage Whānau Trust)

who hold significant shares, the fact that the poll voting approach will allow them the

opportunity to vote in proportion to their interests is integral.

Discussion

[39] There is a clear need to strike a workable balance and protect the beneficiaries from

an oppressive majority or an unreasonable minority. To ensure such a balance, a mixed

voting method is the most practical option. Allowing voting by a show of hands with the

ability to demand a poll vote (where the requisite number of beneficial owners required is

achievable) would achieve that balance.

[40] This would ensure that minor shareholders have the opportunity to express their

views while not having total control over large shareholders. Importantly, it would also

allow major shareholders the opportunity to express their views while not oppressing

minor shareholders.

[41] To adopt a show of hands vote only method would only advantage those who have

minor shareholdings and disadvantage those who have major shareholdings (particularly

whānau trusts). For similar reasons a voting by poll only method would advantage those

with major shareholdings and disadvantage those with minor shareholdings.

127 Waiariki MB 202

[42] I therefore find that the best approach is to allow a combination of both. That is,

voting by a show of hands for the one vote per person with provision for a poll vote on

demand.

[43] The recent trust hui underscore the reason why a balance needs to be struck

between voting on a show of hands basis and voting on a poll basis and the need to ensure

the calling of a poll vote is achievable.

[44] As previously discussed at the Farm Trust meeting of 25 July 2015, 20 percent of

the owners present at the meeting voted in favour of poll voting. Not surprisingly 80

percent of owners, not being owners of significant combined shareholders, voted for voting

by a show of hands. At the 23 May 2015 Farm Trust Meeting, 23 percent of owners in

attendance voted for poll voting. Given the circumstances of the Trusts the standard 25

percent of beneficial owners in attendance at a general meeting required to demand a poll

vote is unrealistic. This number is simply too high.

[45] As Mr Dowthwaite notes, this issue is particularly relevant for whānau trusts which

will be stable at one vote as against ongoing continuing division between successors to

other personally held shares. The Trusts’ position will continue to weaken despite their

shareholding and number of beneficiaries.

[46] The effect of putting a poll vote beyond reach would be to discourage the creation

of whānau trust and penalise families of numerous potential beneficial owners who choose

to allow their families shares to be held by the whānau trust. It would also not allow the

protection of majority interest against an unreasonable minority.

[47] Mrs Wara suggests that in the event that the Court disagrees with her approach for

voting method to be by poll vote only, then the Otonga Whānau Trust proposes that the

requisite threshold for the demanding of a poll vote is reduced to 15 percent of the

beneficial owners present at the meeting. This would increase the likelihood of majority

shareholders being able to meet the threshold. Mr Dowthwaite suggests that poll voting

should be available at the request of any one or a small number, five, of any shareholders at

a meeting. Counsel for Ms Adlam suggest that the Court should set a figure of 5 beneficial

127 Waiariki MB 203

owners which would represent 50 per cent of beneficial owners (if the minimum number

required for a quorum were present).

[48] Mr Sharp submits that the requisite threshold for calling for a poll vote should be

raised from 25 percent to 51 percent and at a minimum 25 percent to ensure larger owners

do not dominate smaller shareholders

[49] Based on the current ownership make up of this trust requiring 51 percent of

owners at a meeting to call for a poll vote would make a poll vote impossible to achieve.

[50] Considering all matters and circumstances of both of these trusts, it is my view that

to demand a poll vote there must be support from 15 percent of beneficial owners in

attendance at a general meeting. This will both make a poll vote achievable while still

requiring a significant percentage of those in attendance at a meeting to support the calling

for a poll vote.

[51] While not wanting to play down the importance of a voting process, particularly in

terms of providing the Court with the sufficiency of support in terms of trustee

appointments, it must be noted that either way, meetings of owners voting by shares or by

show of hands do not bind the Court or the trustees except where the Trust Order makes

explicit provision for this. The Court, like the trustees, will take into account a range of

relevant considerations including the views of the owners before making a decision.

[52] Clause 14.1 of both Trust Orders shall therefore read:

14.1 When a Resolution is put to a general or special meeting for a vote by the

Beneficial Owners:

Voting will be by show of hands with one vote per person unless a Poll is

demanded by 15 percent of the Beneficial Owners present at the general meeting in

which case, voting will be in accordance with the voting Beneficial Owners interest

in this Trust

Dual Trusteeship

[53] Both trusts also seek clarification with regards to the issue of dual trusteeship.

Clause 16(11)(b) of the draft trust order states:

127 Waiariki MB 204

16.11 No person shall be eligible for election as a trustee, or may hold the

position of Trustee at any time, if he or she if:

He or she has ever been convicted of an offence involving dishonesty as defined in

section 2(1)(d) of the Crimes Act 1961 or an offence under section 373(4) of the

Companies Act 1993 (unless that person is an “eligible person” for the purposes of

the Criminal Records (Clean Slate) Act 2004).; or

Is a trustee of the Trust over the land known as Matata 39A2B2B2A Ahu Whenua

Trust.

[54] There is general consensus from the beneficial owners for both trust orders to

mirror each other. Directions are sought affirming that any existing trustees of either trust

may stand for election as a trustee for either trust. Further, it is assumed that any one

beneficial owner may stand for election for both trusts in the next election. It is proposed

that if a candidate was successful in gaining support to be a trustee on both trusts then the

Court would be notified of the situation when the appointment application comes before

the Court and the candidate would need to choose which trust they wish to be appointed to.

[55] There is ample evidence, given the recent applications before the Court that in the

case of these two trusts dual trusteeship creates risk of conflict of interest.15

I consider that

there has now been a conscious decision by the beneficiaries of these trusts to ensure that

their trustees are independent of each other in order to better manage conflict of interest

issues. Mr Webster’s Reports of the hui demonstrate the agreement to implement a clause

prohibiting dual trusteeship.

[56] On my reading of clause 16 and taking the circumstances of these trusts into

consideration a person may stand for election for either or both of the Trusts. However, in

accordance with the draft trust order they may not be appointed a trustee of both trusts.

Appointment of Independent Trustees

[57] I have suggested to the parties that there may be benefit in the trusts appointing an

independent trustee with expertise required to manage and administer the significant trust

15

Adlam v Savage – Lot 39A Sec 2A Parish of Matata and Lot 39A Sec No. 2B2A Parish of Matata (2015)

2015 Māori Appellate Court MB 59 (2015 Appeal 59) and Trustees of the Otonga Whānau Trust v The

Trustees of Matata Parish 39A 2A Ahu Whenua Trust – Lot 39A Sec 2A Parish of Matata and Lot 39A

Sec 2B No. 2B No 2A Parish of Matata (2014) 95 Waiariki MB 176 (95 WAR 176).

127 Waiariki MB 205

funds and significant trust assets.16

This was a suggestion and not a compulsory

requirement.

[58] The minutes of the meetings reflect the owners support to have the option of

appointing an independent trustee, but that it is not a compulsory requirement. Clause 24.1

of the draft Trust Order provides that:

An independent trustee (being a person who is not a beneficial owner) may be

appointed and removed in the same manner as a trustee. An independent trustee

will have the powers of the trustees.

[59] The independent trustees would obviously need to be supported by the owners. The

Court has certainly not indicated that it expects all trustees to be independent.

[60] It is not uncommon for company boards and post settlement entity commercial

boards to have independent trustees who bring specific skills to assist the board. The

suggestion of having an independent trustee is so these trust can (if they wish to) seek

people with specific skills to complement the skill set of the trustees or to fill a gap in

terms of skills that may be lacking from those sitting around the trust table. For example,

it may be that a scientist, accountant or geothermal expert would be supported by the

owners to sit as a trustee on either of these trusts - if those skills were not present amongst

the beneficiaries.

[61] I do not think it necessary for the Court to indicate to the owners for the upcoming

election that they must put forward at least one independent person. That is a decision for

the beneficiaries to make. This is entirely for the owners to consider. If an independent

non owner is put forward to the meeting for election and receives the support of the

owners, then the Court will obviously consider that person along with other persons to be

considered for appointment.

Decision

[62] I find that the following clauses be provided for in both trust orders:

16

Trustees of the Otonga Whānau Trust v The Trustees of Matata Parish 39A 2A Ahu Whenua Trust – Lot

39A Sec 2A Parish of Matata and Lot 39A Sec 2B No. 2B No 2A Parish of Matata (2014) 95 Waiariki

MB 176 (95 WAR 176) at 227.

127 Waiariki MB 206

(a) Clause 14.1 is to provide:

14.1 When a Resolution is put to a general or special meeting for a

vote by the Beneficial Owners:

Voting will be by show of hands with one vote per person unless a

Poll is demanded by 15 percent of the Beneficial Owners present at

the general meeting in which case, voting will be in accordance with

the voting Beneficial Owners interest in this Trust

(b) Clause 16 is to provide:

16.11 No person shall be eligible for election as a trustee, or may

hold the position of Trustee at any time, if he or she:

Has ever been convicted of an offence involving dishonesty as

defined in section 2(1)(d) of the Crimes Act 1961 or an offence under

section 373(4) of the Companies Act 1993 (unless that person is an

“eligible person” for the purposes of the Criminal Records (Clean

Slate) Act 2004).; or

Is a trustee of the Trust over the land known as Matata 39A2B2B2A

Ahu Whenua Trust.

[63] I will leave it for the beneficiaries as to whether they decide to nominate an

independent trustee for the forthcoming trustee elections.

Pronounced at 9.05 am in Rotorua this 10th

day of September 2015

C T Coxhead

JUDGE