Court of Appeal clarifies Māori Land Court jurisdiction over discretionary trusts
27 Jun 2023
In Kruger v Nikora,(1) the Court of Appeal considered jurisdiction over a discretionary trust holding assets for the benefit of Tūhoe iwi members. Conventionally, the High Court has supervisory jurisdiction over trusts. However, the issue was whether the fact that one of the assets held by the trust was land following a settlement of Crown breaches of the Treaty of Waitangi (Te Tiriti) meant that the Māori Land Court had jurisdiction under the Te Ture Whenua Māori Act 1993 (the Act). The decision provides a helpful illustration of the limitation of the jurisdiction of the Māori Land Court over such trusts and, in doing so, highlights the tension between conventional trust law principles and principles under Te Tiriti and the Act.
The Tūhoe Trust was a discretionary trust for the benefit of present and future Tūhoe iwi members. The appellant, Mr Kruger, was one of the current trustees of the trust, which is the post-settlement governance entity (PSGE) established by Ngāi Tūhoe (a Māori tribe) to receive redress from the Crown for breaches of Te Tiriti. The trust's assets included several parcels of freehold land transferred under the Tūhoe Claims Settlement Act 2014.
On behalf of the respondent, Mr Nikora and a group of Ngāi Tūhoe elders, represented through Te Kaunihera Kaumātua o Tūhoe (Te Kaunihera), alleged that there had been breaches of the trust deed regarding the process for electing new trustees, particularly Kruger and Mr McGarvey. They applied to the Māori Land Court for orders to remove Kruger and McGarvey as trustees, and for fresh elections to be held in accordance with the trust deed. The trustees did not accept that the Māori Land Court had jurisdiction over the claim, viewing the trust as a private common law trust, and thus did not appear before the Court.
The Māori Land Court held that it had jurisdiction on the basis that the trust possessed general land owned by Māori under the Act, applying the Māori Appellate Court's decision in Moke.(2) It ordered the trust to undertake new elections for two of its trustees.(3)
The trustees appealed to the Māori Appellate Court, arguing that Moke was wrongly decided, but the appeal was dismissed. The sole issue on appeal to the Māori Appellate Court was whether the Māori Land Court had jurisdiction over the trust, which depended on whether it was a "trust constituted in respect of any General land owned by Māori" under section 236(1)(c) of the Act.
The appeal was allowed, and the Māori Land Court orders were set aside. The Māori Land Court did not have jurisdiction over the trust because the land held by the trust was not "General land owned by Māori" under the Act. Although this was sufficient to dispose of the case, it was also held that the trust was not "constituted in respect of" general land owned by Māori.
General land owned by Māori
The land held was not "General land owned by Māori" under the Act as it was found that the trust's discretionary beneficiaries. The Act defined "general land owned by Māori" as "General land that is owned for a beneficial estate in fee simple by a Māori or by a group of persons of whom a majority are Māori".(4)
The appellant argued that, as the trust was a discretionary trust, the land was not "owned for a beneficial estate" by Māori, as no individual beneficiary, or group of beneficiaries, had beneficial ownership of trust property. The Māori Land Court had recently confirmed this in McCaw Lewis Trustee (No. 1).(5) The respondent argued that the nature of the trust was irrelevant. It claimed that such a narrow approach to jurisdiction would undermine the purpose of the Act and the principles of Te Tiriti, which facilitate and promote the retention, use, development and control of Māori land. This was because the Māori Land Court had a broader, more intensive supervisory jurisdiction than the High Court (including in relation to the removal or appointment of trustees),(6) and it was easier and cheaper for beneficiaries to access the Māori Land Court.
The issue was approached as one of statutory interpretation. Reading the definition, and considering the established legal meaning of the technical terms used, brought into question whether the beneficiaries owned "a beneficial estate in fee simple" in the land. Trust law suggested that they did not. Discretionary beneficiaries had no proprietary interest in the trust assets, and the statutory rights accorded to them under the Trusts Act 2019 (eg, to bring claims for breach of trust or compel due administration of the trust) fell well short of beneficial ownership.
There was no prospect under the trust deed of the beneficiaries obtaining a vested beneficial interest in the trust assets as the trust was not subject to perpetuity rules and would continue indefinitely.(7) The wider statutory context (which used technical legal terms consistent with their technical meaning) supported this orthodox legal reading of the Act's definition and there was nothing in the policy considerations raised by the respondent that supported departing from that approach.
The Act and the broad supervisory jurisdiction of the Māori Land Court primarily concerned Māori land in collective or multiple ownership. Issues raised by that model of ownership (eg, ascertaining and giving effect to the wishes of the owners, and resolving differences between owners) did not arise where land was under an express discretionary trust.
Discretionary beneficiaries were not owners and did not have decision-making powers over the land. There was also no reason to think that the Act's policy of retaining land was a priority of express discretionary trusts, absent anything in the trust deed to this effect. Additionally, it was unlikely that special expertise of the Māori Land Court would be needed to secure the effective use, management and development of land because other mechanisms would exist to do so, including in the trust deed.
Constituted in respect of general land owned by Māori
This issue did not strictly require determination following the above conclusion but was dealt with briefly in deference to the arguments. It was held that the trust was not "constituted in respect of" the general land that it owns. While it was contemplated that the trust would acquire land following a Te Tiriti settlement, it was established for broad purposes including advancing the self-determination (mana motuhake) of Tūhoe and holding a wide range of assets for the long-term benefit of iwi members. The land was transferred after the trust's establishment and was a relatively minor asset of the trust.
This conclusion overturned the Māori Appellate Court's decision in Moke. In Moke, the applicant had sought a review of aspects of the governance of a trust which was a PSGE. At issue was also whether, under section 236 of the Act, the trust had been a "trust constituted in respect of any General land owned by Māori". Although the trust's purpose had been to hold property, money and other assets, it had been held that the trust holding just one parcel of general land owned by Māori was enough to trigger jurisdiction.
The appellant in Kruger supported the overturning of the Moke decision, arguing that this approach was wrong and that a trust is "constituted in respect of" general land owned by Māori only where the primary or dominant purpose of the trust is to hold general land. This was not the case in relation to the Tūhoe Trust, where land was only a minor part of the trust fund and incidental to its broader purposes. The appellant argued that an expansive interpretation of the Māori Land Court's jurisdiction to include PSGEs, like the trust, would be inappropriately authoritarian; autonomy would better reflect the principle of tino rangatiratanga (the highest chieftainship or full authority)(8) in the post-settlement context.
The respondent in Kruger supported the Māori Appellate Court's approach in Moke. It argued that it was sufficient that the trust held land for the benefit of its Māori beneficiaries, as this was consistent with the objectives of the Act, including recognising the special collective relationship Māori have with the land as taonga tuku iho (meaning principles of partnership, participation and protection).
The Māori Land Court jurisdiction existed in parallel with the High Court and having the option to raise issues relating to the trust in the more affordable Māori Land Court would enhance the rangatiratanga of members of the Tūhoe. Section 236 did not require the primary or dominant purpose of a trust to be ownership of general land. This would raise difficult practical issues such as whether to focus on the trust deed provisions, amount of land held by the trust, or relative value of the land and other assets held by the trust.
It was common ground at the hearing that:
- a trust could not be described as "constituted in respect of" general land owned by Māori just because at some point in time the trust held this land; and
- the time that section 236 must be applied is when the trust was first established.
The Court observed that the Māori Land Court had power to constitute five types of trust under part 12 of the Act, but all these trusts had, as their starting point, a specific parcel of land (or interest in a specific parcel of land) and did not hold land generally.
Consistent with this, constituting a trust in respect of land required that the trust be established in respect of one or more identified parcels of land. The broad approach in Moke was difficult to reconcile with the Act, particularly the requirement that the trust be "constituted in respect of" relevant land. However, it was held that, if a trust met this test, it was irrelevant that it held other assets at the time it was established or later, supporting the respondent's argument that the "primary purpose" test contended for by the appellant was unfounded and impractical.
There is tension surrounding the fact that the jurisdiction of the Māori Land Court was clarified by reference to conventional trust law principles deriving from the concept of a discretionary trust, an English law concept unfamiliar to tikanga Māori. The approach is understandable considering the scheme of the Act and the trust law terms deployed. However, against the background of growing judicial recognition of tikanga Māori,(9) there is room for debate about whether a broader reading of section 236 is justified given the wider policy considerations raised by the respondent and the overall objective of the Māori Land Court to facilitate retention and control of Māori land. It remains to be seen whether the dispute will be appealed to the Supreme Court.
It is also worth noting that the trust was not subject to perpetuity rules and that the Court left open whether residual ownership under a discretionary trust would constitute ownership under the Act. Trustees or beneficiaries of a PSGE holding land, which is subject to a perpetuity period following which trust assets vest in the beneficiaries, may have a stronger case for showing that the land is general land owned by Māori under the Act.
On a cautionary note, the Court ordered that the respondent's costs be paid by the appellant although the appeal had been successful. It was observed that the trust deed provided a dispute resolution regime and, if the trustees had followed the provided procedure, court costs would have been avoided. The costs decision highlights that, when disputes arise, trustees should take care to follow any applicable dispute resolution regime in the trust deed.
(1) Tāmati Kruger on behalf of Tūhoe Te Uru Taumatua Trust v Paki Nikora on behalf of Te Kaunihera Kaumātua o Tūhoe  NZCA 179.
(2) Moke v Trustees of Ngāti Tarāwhai Iwi Trust  Māori Appellate Court MB 265 (2019 APPEAL 265),  NZAR 1465.
(3) Nikora (on behalf of Te Kaunihera Kaumātua o Tūhoe) v Trustees of Tūhoe – Te Uru Taumatua (2021) 252 Waiariki MB 157 (252 WAR 157) (Māori Land Court judgment).
(4) Under section 4 of the Act.
(5) McCaw Lewis Trustee (No. 1) Ltd (as trustee of the Tuala-Warren Family Trust) – Rakautatahi 1B2B1A (2022) 97 Tākitimu MB 232 (97 TKT 232).
(6) As observed at paragraphs 54 and 55 of the judgment, the Māori Land Court can require a trustee to file a written report on the administration of the trust and be questioned on that report (which has no equivalent in the Trusts Act) and while the Māori Land Court has broader powers to remove or appoint trustees, the High Court must comply with certain criteria in the Trusts Act to do so.
(7) Section 19 of the Tūhoe Claims Settlement Act provides that limits on the duration of a trust in any rule of law, including section 16 of the Trusts Act (which provides that the maximum duration of a trust is 125 years), do not restrict the period during which the trust could exist in law, or during which the trustees may hold or deal with property or income derived from that property.
(8) Tino rangatiratanga is guaranteed to Māori by article 2 of the Te Tiriti and has been expressed as "the highest chieftainship" and as "full authority". The guarantee imposes a duty on the Crown to fully protect Māori in the use of their lands and waters possible.
(9) For further information please see, "How do the Treaty of Waitangi and tikanga Māori affect statutory decision-makers?".