IN THE COURT OF APPEAL OF NEW ZEALAND CA241/07 CA246/07 [2007] NZCA 269

IN THE COURT OF APPEAL OF NEW ZEALAND CA241/07 CA246/07 [2007] NZCA 269 BETWEEN AND AND AND AND AND NEW ZEALAND MAORI COUNCIL First Appellant THE FEDERATION OF MAORI AUTHORITIES INCORPORATED Second Appellant TUMU TE HEUHEU, ARIKI OF NGATI TUWHARETOA Third Appellant ATTORNEY-GENERAL First Respondent SIR GRAHAM LATIMER, PAUL MORGAN, KINGI SMILER, JANET MASON, GREGORY FORTUIN AND ANGELA FOULKES Second Respondents TE PUMAUTANGA O TE ARAWA TRUST Third Respondent Hearing: 19 June 2007 Court: Counsel: William Young P, O Regan and Robertson JJ H A Cull QC and K L Ertel for First and Second Appellants C J Hodson QC and K S Feint for Third Appellant D B Collins QC Solicitor-General, H M Aikman QC and H M Carrad for First Respondent S A Barker and B J Shone for Second Respondents M G Colson and H M Brown for Third Respondent A T Sykes and J M Pou for Ngati Makino Heritage Trust (Intervenor) Judgment: 2 July 2007 at 12 noon NEW ZEALAND MAORI COUNCIL AND ORS V ATTORNEY-GENERAL AND ORS CA CA241/07 2 July 2007

JUDGMENT OF THE COURT A The appeal is dismissed. B Costs are reserved. REASONS OF THE COURT (Given by O Regan J) Table of Contents Para No Introduction [1] Appellants [3] Second respondents role [4] Urgency [5] High Court claim [6] Relief now sought [9] Breach of contract/statute [12] Inconsistency with fiduciary duty of the Crown [61] Justiciability [83] Discretionary factors [85] Result [86] Costs [87] Introduction [1] This case raises a number of issues relating to the process for settlement of claims by Maori claimants arising from historical breaches of the Treaty of Waitangi.

[2] It arises from a claim by the New Zealand Maori Council (NZMC) and the Federation of Maori Authorities (FOMA) that the Crown is in breach of its obligations to Maori claimants by entering into a Deed of Settlement of historic Treaty claims with 11 iwi or hapu affiliated with Te Arawa (referred to in the Deed as the Affiliate Te Arawa Iwi/Hapu) and the individuals comprising those groups. The Affiliate Te Arawa Iwi/Hapu are now represented by the third respondent, Te Pumautanga o Te Arawa Trust (TPT), and we will use the term TPT to refer both to the trust and to those whom it represents. We were told that about 24,000 people are represented by TPT, which is about half of Te Arawa. Appellants [3] NZMC and FOMA commenced proceedings on behalf of Maori claimants with an interest in Crown forest land that is subject to the Crown Forests Assets Act 1989 (1989 Act). They are supported by the third appellant, Mr Te Heuheu, on behalf of Ngati Tuwharetoa, which is an alternative claimant of some of the Crown forest land to be acquired by TPT if the Settlement Deed becomes unconditional. We have also received written and oral submissions from the intervenor, Ngati Makino Heritage Trust, representing a hapu affiliated with Te Arawa that is not a participant in the proposed settlement. Ngati Makino also considers its potential claim for Crown forest land will be prejudiced if the Settlement Deed becomes unconditional. We were told that the population of the iwi outside of Te Arawa which have overlapping forestry claims is about 70,000, and that of the iwi within Te Arawa which are not represented by TMT (and which also have claims to central North Island forests) is about 24,000. Second respondents role [4] The second respondents, the trustees of the Crown Forestry Rental Trust (CFRT), did not take an active role in the appeal. This followed a decision in the High Court that the CFRT trustees who are appointed by the Crown and NZMC/FOMA respectively should take this neutral position: Latimer v Attorney-

General HC WN CIV 2007-485-247 16 April 2007. In any event, no relief is now sought against the CFRT trustees. Urgency [5] The matter was accorded urgency in the High Court where Gendall J issued his comprehensive judgment within days of the hearing. We also granted an urgent hearing in this Court, given the imminence of the proposed introduction of legislation to give effect to the Settlement Deed, which was expected to happen before the end of June. On the day before the hearing, the Solicitor-General filed a memorandum in which he advised that the Crown did not intend to introduce the legislation before the end of July. High Court claim [6] The focus of the case in the High Court, as in this Court, was on Part 12 of the Settlement Deed, which deals with commercial redress, particularly Crown forest land. We explain later what Part 12 provides. In the High Court, the appellants initially sought declarations that parts of Part 12 be struck from the Settlement Deed and that the Crown be restrained from acting to implement Part 12. They subsequently amended their pleadings and sought declarations that, in entering into Part 12 of the Settlement Deed, the Crown had acted in breach of the agreements predating the 1989 Act, the Deed of Trust establishing the CFRT (CFRT Deed), the Crown s statutory duties under the 1989 Act and its fiduciary duties to present and future Maori claimants to Crown forest land in the forests affected by the proposed settlement with TPT. In addition, they sought a declaration that the Crown ought not to take any further action which was consequential on Part 12 of the Settlement Deed. They also sought an order restraining the trustees of the CFRT from treating TPT or the Crown as a Confirmed Beneficiary under the CFRT Deed and from distributing any accumulated rentals held by the CFRT to either TPT or the Crown.

[7] Gendall J dismissed the claim, on the basis that it was not proper for the Court to make a declaration impugning future actions of Parliament. He did, however, make the following obiter observation at [94]: I am prepared to express a view which those who may participate in the legislative process may consider, and ignore entirely if they choose. The Crown has a fiduciary duty of good faith to all Maori, and if it were to take for itself accumulated Crown rental funds in relation to Deferred Licensed Land by any process other than by a Waitangi Tribunal declaration or with the consent of Maori claimants to share in such funds, then such would be inconsistent with the Crown s fiduciary duty. Beyond that, the Court cannot go. [8] The Crown takes issue with that view. The appellants argue that Gendall J was wrong to decline relief. Relief now sought [9] In their notice of appeal, NZMC and FOMA reformulated the relief which they seek as a judgment or declaration from this Court that: (a) The transfer to TPT of Crown forest land is inconsistent with the fiduciary duty of the Crown; (b) The transfer to TPT of Crown forest land without a recommendation of the Waitangi Tribunal pursuant to ss 8HB(1)(b), 8HB(1)(c) or 8HC of the Treaty of Waitangi Act 1975 (the 1975 Act) is in breach of the Crown s contractual obligations and statutory duty to the crossclaimants and to Maori; (c) The issues arising from the Settlement Deed are justiciable. They no longer seek a declaration against the CFRT trustees, and no longer seek a declaration aimed specifically at the payment of accumulated rentals to the Crown. [10] Mr Te Heuheu seeks a declaration in similar, but not identical, terms to that sought by NZMC and FOMA.

[11] We will consider the declarations sought separately, starting with that referred to at [9](b) above. Breach of contract/statute [12] The starting point in the consideration of this issue is a brief analysis of the Settlement Deed in its historical context. Historical context [13] Gendall J covered the historical context in terms which the parties agreed were accurate. The following account closely follows his summary. [14] The legal regime relating to Crown forest land which is at the heart of this case can be traced back to the corporatisation of State trading institutions in the 1980s, and the litigation that flowed from it. [15] The State Owned Enterprises Act 1986 (SOE Act) provided for the vesting of the assets of various government departments in companies incorporated under the Companies Act 1955, the shares in which were to be held on behalf of the Crown by two Ministers. Maori were concerned that if Crown land were transferred to state enterprises, it would no longer be available for the settlement of historical Treaty claims. NZMC and FOMA commenced litigation, and this Court ruled in New Zealand Maori Council v Attorney-General [1987] 1 NZLR 641 (the Lands Case) that the transfer of Crown land to state enterprises without safeguarding potential Treaty claims breached the principles of the Treaty and, therefore, s 9 of the SOE Act which provided: Nothing in this Act shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi. [16] This Court left it to the Crown and representatives of Maori, as the Treaty partners, to come to an arrangement as to how Treaty claims were to be safeguarded. An agreement was reached, and the Treaty of Waitangi (State Enterprises) Act 1988 was passed to reflect its terms. This allowed for the transfer of Crown land to state

enterprises subject to provision for the resumption of the land on the recommendation of the Tribunal so that it could be returned to Maori ownership. [17] Subsequently the Crown decided not to transfer Crown forest land to a state enterprise. Instead it decided to dispose of Crown forest assets in a manner which NZMC claimed was inconsistent with the decision of this Court in the Lands Case. Leave had been reserved in the Lands Case for the parties to return to the Court if necessary, and NZMC did so, leading to the decision of this Court in New Zealand Maori Council v Attorney-General [1989] 2 NZLR 142 (the Forests Case). This Court ruled that NZMC was entitled to apply for relief under the leave which had been reserved in the Lands Case, but the matter went no further because the parties entered into negotiations which ultimately resolved the dispute between them, leading to the Court making consent orders reflecting that agreement. July 1989 Agreement [18] The agreement reached as a result of those negotiations was signed on behalf of the Crown, NZMC and FOMA on 20 July 1989. We will call it the July 1989 Agreement. It provided that the Crown would sell cutting rights to trees on Crown forest land, but not transfer title to the land itself. Rent would be charged to the purchaser at market rates. The Crown would not be able to transfer title to Crown forest land until the Tribunal had recommended that the land was no longer liable to resumption for the purpose of transfer to Maori ownership. The parties agreed to jointly use their best endeavours to enable the Tribunal to identify and process all claims relating to forestry lands and to make recommendations within the shortest reasonable period. [19] The July 1989 Agreement provided that the rental to be paid by the purchaser of the cutting rights would be paid to a trust (the CFRT). If land was resumed and returned to Maori, the accumulated rentals would be transferred to the relevant Maori claimant. Conversely, if the Tribunal recommended that land was not required for settlement of a Treaty claim, the accumulated rentals would be paid to the Crown. Interest earned on the accumulated rentals was to be made available to assist Maori in the pursuit of Treaty claims.

[20] Provision was also made for the payment of compensation to Maori in the event that land was resumed and transferred to a successful claimant. This was designed to compensate for the fact that the land would be taken subject to the rights of the party which held the cutting rights. [21] Clause 16 of the July 1989 Agreement provided: The provisions of this agreement are to be reflected and embodied where appropriate in draft legislation and in any event in a trust deed and consent order, the terms of each of which are to be agreed by the parties, in accordance with this agreement. [22] The principles of each of the parties under which the July 1989 Agreement had been negotiated were stated in an annex to the agreement as follows: Maori Principles (i) (ii) (iii) uphold the articles of the Treaty of Waitangi and the protections in current legislation; minimise the alienation of property which rightly belongs to Maori; optimise the economic position of Maori. Crown Principles (i) to safeguard the integrity of the sale by guaranteeing security of tenure to purchasers to avoid discounting and to encourage investment in the forestry industry - security of tenure must involve purchasers having guaranteed access to wood and sufficient control over forest management to assure that wood supply; (ii) honour the principles of the Treaty of Waitangi by adequately securing the position of claimants relying on the Treaty - adequately securing the claimant s position must involve the ability to compensate for loss once the claim is successful. 1989 Deed Poll [23] Sometime after the signing of the July 1989 Agreement, Maori raised with the Crown a concern about land which was not registered under the Land Transfer Act 1952, but held by the Crown, in respect of which Maori customary land claims could be made. This led to the execution of the 1989 Deed Poll by the Ministers of

State Owned Enterprises and of Finance on behalf of the Crown. The 1989 Deed Poll was addressed to NZMC and FOMA, and included the following undertaking: We agree and undertake that, in order to protect Maori customary land claims, the Crown s title to Crown forest land that is not registered under the Land Transfer Act at the date the Crown Forest Assets Act receives the Royal Assent will not be registered under the Land Transfer Act until the land it relates to has been cleared of claims under the provisions of the Treaty of Waitangi Act 1975 and the Waitangi Tribunal has confirmed that the land is not liable to be returned to Maori ownership. [24] The recital which appears immediately before this undertaking states, with what has now turned out to be undue confidence, that it is expected that the Tribunal will have heard most of the claims by Maori relating to forest land by the middle of 1992. 1989 Act [25] As contemplated by cl 16 of the July 1989 Agreement, the provisions of that agreement were reflected and embodied in draft legislation, which when passed became the 1989 Act. [26] The provisions of the 1989 Act with greatest relevance to the present case appear in Part 3 of the 1989 Act. Those of most significance are ss 35 37 which provide: 35 Restrictions on sale of Crown forest land (1) The Crown shall not sell or otherwise dispose of any Crown forest land that is subject to a Crown forestry licence except in accordance with section 8 of this Act. (2) The Crown shall not sell, assign, or otherwise dispose of, or deal with, any rights or interests in any Crown forestry licence unless the Waitangi Tribunal has made, in relation to the licensed land, a recommendation under section 8HB(1)(b) or section 8HB(1)(c) or section 8HE of the Treaty of Waitangi Act 1975. 36 Return of Crown forest land to Maori ownership and payment of compensation

(1) Where any interim recommendation of the Waitangi Tribunal under the Treaty of Waitangi Act 1975 becomes a final recommendation under that Act and is a recommendation for the return to Maori ownership of any licensed land, the Crown shall (a) Return the land to Maori ownership in accordance with the recommendation subject to the relevant Crown forestry licence; and (b) Act. Pay compensation in accordance with the Schedule 1 to this (2) Except as otherwise provided in this Act or any relevant Crown forestry licence, the return of any land to Maori ownership shall not affect any Crown forestry licence or the rights of the licensee or any other person under the licence. (3) Any money required to be paid as compensation pursuant to this section may be paid without further appropriation than this section. 37 Recommendation by Waitangi Tribunal that Crown forest land not liable to return to Maori ownership (1) Where the Waitangi Tribunal makes a recommendation in relation to Crown forest land under section 8HB(1)(b) or section 8HB(1)(c) or section 8HE of the Treaty of Waitangi Act 1975 no person shall be entitled to make any claim under section 6 of that Act in respect of the return of that land. (2) The responsible Ministers may, by notice in the Gazette, declare that Crown forest land to which subsection (1) of this section applies, and which is not licensed land, shall cease to be Crown forest land and on the publication of the notice the land shall be Crown land subject to the Land Act 1948. [27] Section 40 of the 1989 Act provided for the amendment of the 1975 Act by the insertion of ss 8HA 8HI. These provide for the Tribunal to make recommendations that Crown forest land be returned to Maori ownership (ie to a particular claimant group) or, alternatively, that such land not be liable to return to Maori ownership. Provision is made for interim recommendations, further hearings, and then, if considered appropriate, final recommendations, which, by virtue of s 36 of the 1989 Act, are effectively mandatory orders with which the Crown must comply.

CFRT Deed [28] Section 34 of the 1989 Act provided that the Crown should, by deed, establish the CFRT. The CFRT Deed was signed on 30 April 1990. It provides that the contingent beneficiaries of the CFRT are the Crown and Maori claimants to Crown forest land. As noted earlier, the rental payments received by the Crown from Crown forest licence holders is paid over to the Trust, and held by the Trust pending the making of a recommendation by the Tribunal as to whether the land should be returned to Maori or not be liable to be returned to Maori. The interest earned by the CFRT on the accumulated rentals which it holds is made available to assist Maori claimants in pursuing Treaty claims. Three of the trustees are appointed by NZMC and FOMA, and three are appointed by the Crown. [29] Once a recommendation has been made by the Tribunal that land be returned to Maori, or that land not be liable to be returned to Maori, the relevant Maori claimant, or the Crown (as the case may be) becomes a Confirmed Beneficiary. Clause 11 of the CFRT Deed regulates the position of Confirmed Beneficiaries. The relevant provisions of cl 11 provide: 11 ALLOCATION AND DISTRIBUTION OF TRUST FUNDS 11.1 If the Waitangi Tribunal recommends under Section 8HB(1)(a) of the Treaty of Waitangi Act 1975 that any particular Licensed Land be returned to Maori ownership, then: (a) (b) (c) the person or persons to whom ownership of that Licensed Land is to be returned shall from the date of that recommendation be Confirmed Beneficiaries of the Trust; those Confirmed Beneficiaries shall be entitled to receive from the capital of the Trust the amount of the Rental Proceeds received by the Trustees in respect of that Licensed Land since the commencement of the Licence; those Confirmed Beneficiaries shall be entitled to receive the Rental Proceeds in respect of that Licensed Land directly from the licensee for the remaining term of the Licence. 11.2 If the Waitangi Tribunal recommends under Section 8HB(1)(b) or (c) that any particular Licensed Land be not liable to return to Maori ownership, then: (a) the Crown shall from the date of that recommendation be a Confirmed Beneficiary of the Trust;

(b) (c) the Crown shall be entitled to receive from the capital of the Trust the amount of the Rental Proceeds received by the Trustees in respect of that Licensed Land since the commencement of the Licence; the Crown shall be released from the obligation under Clause 2.2 to hold any Rental Proceeds in respect of that Licensed Land for the Trustees. The Crown shall be fully entitled to the benefit of those Rental Proceeds in its own right. Settlement Deed [30] Under the Settlement Deed, the Crown undertakes to introduce legislation to give effect to the settlement described in the Settlement Deed and TPT agrees to support the passing of the settlement legislation. The Settlement Deed, and the settlement it is to effect, are conditional on the settlement legislation coming into force, although some provisions of the Settlement Deed are not conditional. The only relevant unconditional provision is the Crown s covenant to introduce the settlement Bill. The Settlement Deed provides that, if the conditions to which it is subject are not satisfied, either party has a right of termination after a defined period. [31] The Settlement Deed provides for a comprehensive settlement of historical claims, not just those relating to forestry land. It provides for an apology by the Crown, the provision of cultural redress and the provision of financial and commercial redress. The particular controversy arises from the provisions of Part 12 of the Settlement Deed, which deal with the financial and commercial redress to be provided to TPT. The provisions in issue in the present case are those dealing with Crown forest land which is subject to the 1989 Act. Under the Settlement Deed, the Crown and the Affiliate Te Arawa Iwi/Hapu agree that the settlement legislation will provide for the transfer of Settlement Licensed Land to TPT and that certain actions will be deemed to have occurred so that TPT will become a Confirmed Beneficiary under the CFRT Deed, meaning that the accumulated rentals relating to Crown forest licences over the Settlement Licensed Land will become payable to TPT by the CFRT trustees.

[32] In addition the Settlement Deed provides that, if the settlement legislation is passed by Parliament, TPT may purchase further Crown forest land (referred to in the Settlement Deed as Deferred Licensed Land ) on a commercial basis. It is agreed that the settlement legislation will also deem certain events to have occurred in relation to this land, so that the Crown will become a Confirmed Beneficiary under the CFRT Deed. The effect of this is that the CFRT must distribute the accumulated rentals relating to Crown forestry licences over the Deferred Licensed Land to the Crown. The Solicitor-General, Mr Collins QC, said that the Minister in Charge of Treaty of Waitangi Negotiations had indicated to NZMC/FOMA that it was the Crown s intention that the amount received by the Crown from the CFRT would be used by the Crown to further Maori development. [33] NZMC and FOMA, acting as representatives of all Maori who are potential beneficiaries of the protective mechanisms contained in the 1989 Act, argue that if the Settlement Licensed Land and Deferred Licensed Land is transferred to TPT in the manner described in Part 12 of the Settlement Deed, the Maori whom they represent will be adversely affected because the protective regime described in the 1989 Act will be prejudiced. Their principal concerns are that the Crown forest land transferred to TPT will no longer be available to be claimed by others under the 1989 Act regime, that the Crown will be paid accumulated rentals in relation to the Deferred Licensed Land even though that land will be transferred to a Maori claimant group, and that the compensation provisions of the 1989 Act will not apply to the Deferred Licensed Land. Developments since 1989 [34] The Crown submission stated that no binding recommendations for the return of Crown licensed land have ever been made by the Tribunal (the High Court decision at [23] says none has been made since 1994 ). However, there have been a number of settlements between the Crown and Maori claimant groups which have involved Crown forest land, and in a number of these the legislation has deemed such recommendations to have been made, thus authorising the transfer of the

relevant land to the Maori claimant group, and also triggering the operation of cl 11 of the CFRT Deed. [35] In some cases, these settlements have followed reports on the claims by the Tribunal. But in a number of cases the settlements have occurred as a result of negotiations between the Crown and the claimants without any previous involvement of the Tribunal. Thus Maori claimant groups now have two possible methods of pursuing their claims the Tribunal process, leading to a comprehensive historical account and recommendations (normally followed by negotiation with the Crown), or direct negotiation with the Crown with no prior involvement of the Tribunal. Counsel for TPT, Mr Colson, said that TPT had carefully evaluated these two options, and considered the experiences of iwi which had settled under each regime. Having done so, it chose the direct negotiation option. [36] Both the Waikato Raupatu Claim Settlement Act 1995 and the Ngai Tahu Claims Settlement Act 1998 adopted the deemed recommendation approach described at [34] above without apparent opposition from NZMC/FOMA. However, special provision was made for a known cross-claim in the Waikato Tainui legislation, and ultimately the forest to which the cross-claim related was not transferred to Waikato Tainui. A similar approach was adopted in the legislation for the Ngati Awa settlement and this was challenged by cross-claimants in the Tribunal, unsuccessfully. The legislation implementing the settlements with Te Uri o Hau and Ngati Tuwharetoa (Bay of Plenty) also adopted the deemed recommendation approach, notwithstanding overlapping claims. [37] The Tribunal considered the use of this deeming device in the Ngati Maniapoto/Ngai Tama Settlement Cross-Claims Report: Wai 788, 800, 2001, where it observed at 20: If the Tribunal would take the view that the Crown ought not deliver redress to any claimant where there are overlapping or cross-claims, the repercussions for the Crown s settlement policy would be very serious. It would thwart the desire on the part of both the Crown and Maori claimants to achieve closure in respect of their historical Treaty grievances. Indefinite delay to the conclusion of Treaty settlements all around the country is an outcome that this Tribunal seeks to avoid.

[38] Mr Colson submitted that neither the proposal relating to the Settlement Licensed Land nor that relating to Deferred Licensed Land was unprecedented. He referred us to earlier settlement legislation containing similar provisions. He submitted that, as TPT was following precedents set in other settlements, it should not be treated differently from other claimants. Counsel for NZMC and FOMA, Ms Cull QC, said that the Settlement Deed was unprecedented in that it provided for TPT to acquire the Deferred Licensed Land, but for the Crown to receive the accumulated rentals in relation to that land. She acknowledged that receipt by the Crown of accumulated rentals was not unprecedented, but said this had previously occurred only where the Maori claimants had rejected the opportunity of receiving Crown forest land and so the land had remained with the Crown and had been released from the 1989 Act regime. Both Mr Colson and Mr Collins accepted that this feature of the Settlement Deed was an extension of what had been done in previous settlements, but said the arrangements for transfer of Crown forest land to TPT were broadly similar to those adopted in previous settlements. [39] The development of the option of direct negotiation with the Crown postdates the 1989 Act and the agreements leading up to it. The appellants case is that the 1989 Act contemplated only the specially constructed forestry regime in the 1989 Act (and the provisions inserted into the 1975 Act by the 1989 Act) which provides for what is effectively a binding ruling by the Tribunal in relation to all claims involving Crown forest land. The fact that settlement Acts for a number of earlier settlements have provided for a legislated alternative to this regime does not change the fact that the 1989 Act provides only for a process which requires a Tribunal recommendation before a claim to Crown forest land is resolved. The provisions in Part 12 in relation to the Deferred Licensed Land did not have an exact precedent, and both the area of forest covered by the TPT settlement and the scale of the overlapping claims are more significant than in earlier legislated settlements. Mr Colson pointed to the evidence from TPT representatives which confirmed that the ability to purchase Crown forest land over which Te Arawa has a customary rights claim under the deferred purchase arrangement was an essential element of the settlement from the point of view of TPT.

[40] The TPT settlement has, itself, been the subject of an inquiry by the Tribunal. The Tribunal s report was released shortly before the hearing of the present case in this Court: Report on the Impact of the Crown s Treaty Settlement Policy on Te Arawa Waka: Wai 1353, 2007. The Tribunal was very critical of the approach of the Office of Treaty Settlements (OTS), the Crown agency responsible for negotiating Treaty settlements. In particular, it criticised OTS s policy of negotiating with TPT without also engaging with the other iwi/hapu of Te Arawa which did not participate in the TPT negotiations. Some iwi and hapu did not participate because they had never been party to the TPT mandate. Others had withdrawn from the TPT mandate before the Settlement Deed was agreed. However, the Tribunal concluded at xi: We do not think the tribes of the Te Arawa Waka who have supported the settlement should suffer for OTS s failures, so we do not recommend that the settlement not proceed at this stage. But we believe that it must be varied. We will report to you further, assuming we will be given time, following our hearing on forestry issues. [41] The Tribunal has issued a recent report which is, if anything, more critical of OTS s approach to negotiating with one claimant group in isolation from those with overlapping claims: The Tamaki Makaurau Settlement Process Report: Wai 1362, 2007. That report dealt with the proposed settlement with Ngati Whatua o Orakei and recommended that the proposed settlement should not proceed and that OTS should work with other tangata whenua groups to negotiate settlements for them. [42] These reports illustrate the problems which arise when different claimant groups have overlapping or competing claims. We do not make any comment on the Crown s policy or the Tribunal s response to it. We note the evidence adduced by the Crown in the High Court to the effect that the Crown has taken steps to ensure that the transfer of Crown forest land to TPT will not prevent the Crown meeting the claims of other iwi, both within and outside Te Arawa, to Crown forest land in the central North Island. The appellants dispute the adequacy of the process undertaken by the Crown and the correctness of the Crown s assessment. We cannot resolve that dispute in proceedings of this kind. But we make the obvious point that the 1989 Act contemplated that it would be the Tribunal that would make such assessments, not the Crown. We understand that the Tribunal is currently engaged in

a comprehensive inquiry into claims relating to the central North Island. Its initial report has been released since we heard the present case. The iwi and hapu represented by TPT withdrew from that process when they commenced direct negotiations with the Crown. Will the transfer of Crown forest land to TPT involve a breach of contract or statute? [43] We agree with the appellants that the 1989 Act does not contemplate the proposed arrangements in Part 12 of the Settlement Deed. What is proposed is inconsistent with what was agreed in the July 1989 Agreement and provided for in the 1989 Act. That is accepted by the Crown, although Mr Collins said direct negotiation had always been contemplated as an alternative. He pointed to a letter sent by the Deputy Prime Minister to NZMC (and agreed to by NZMC) in 1987, in which reference is made to the possibility of direct negotiations without Tribunal involvement, and a 1999 agreement between the Crown and NZMC/FOMA in which the possibility that Maori claimants might purchase Crown forest land as part of a negotiated settlement is referred to. These do not alter the fact that the 1989 Act provides only for a process involving Tribunal recommendations, as had the July 1989 agreement. Ms Cull urged us to make a declaration that Part 12 is inconsistent with the 1989 Act regime, as an alternative to the relief sought in the appellants notice of appeal, but in our view it is not appropriate for the Court to make a declaration that a future Act of Parliament will, if passed, override an earlier one. That is in effect what Ms Cull was asking us to do. We note that Parliament can, if it wishes to do so, seek a report from the Tribunal as to whether proposed legislation is contrary to the principles of the Treaty: see s 8 of the 1975 Act. [44] The declaration described at [9](b) above refers to the transfer of land by the Crown. It is predicated on the proposition that the Crown has bound itself to do this. In fact, what Part 12 of the Settlement Deed provides for is a proposal for the introduction of legislation, not an agreement by the Crown to take the action described in Part 12. All the provisions of the Settlement Deed are conditional on the passing of the settlement legislation, apart from the provision recording the Crown s agreement to introduce the settlement Bill to Parliament and a few other

minor provisions which are not material. If Parliament does not pass the settlement legislation within a prescribed period, the Settlement Deed comes to an end. Nothing happens. If Parliament does pass the settlement legislation, it will be the settlement legislation that gives effect to the provisions of Part 12. The deviation from the 1989 Act regime will, by definition, be lawful because it will be authorised by an Act of Parliament. [45] The only commitment of the Crown under the Settlement Deed is its commitment to introduce the settlement Bill. Such a commitment is not enforceable in the Courts: Rothmans of Pall Mall (NZ) Ltd v Attorney-General [1991] 2 NZLR 323 (HC). The Settlement Deed is, therefore, a political compact of the same kind as the Deed of Settlement at issue in Te Runanga O Wharekauri Rekohu Inc v Attorney- General [1993] 2 NZLR 301 (the Sealords Case). [46] That case involved a proceeding similar to the present case by Maori opposed to the Maori Fisheries Settlement recorded in a Deed of Settlement between six Maori negotiators and the Ministry of Justice. The Deed reflected a proposal under which the Crown was to provide Maori with sufficient capital to participate in a joint venture to purchase Sealord Products Limited, which owned a significant proportion of the available fishing quota under the Fisheries Act 1983. In return, Maori would, among other things, support the repeal of legislative references to Maori fishing rights and an amendment to the 1975 Act to exclude claims related to commercial fishing from the Tribunal s jurisdiction. This was reflected in cl 3.5 of the Deed of Settlement, which was headed Crown to Introduce Amending Legislation. It became apparent that the six Maori leaders who signed the Deed of Settlement did not represent all Maori, and there was significant Maori opposition. This Court struck out an application for interim relief in respect of the impending introduction by the Minister of the legislation contemplated by the Deed. In delivering the judgment of this Court, Cooke P said at 307 309: There is an established principle of non-interference by the Courts in parliamentary proceedings. Its exact scope and qualifications are open to debate, as is its exact basis However it be precisely formulated and whatever its limits, we cannot doubt that it applies so as to require the Courts to refrain from prohibiting a Minister from introducing a Bill into Parliament.

Surely in a democracy it would be quite wrong and almost inconceivable for the Courts to attempt to dictate, by declaration or a willingness to award damages or any other form of relief, what should be placed before Parliament. Parliament is free to enact legislation on the lines envisaged in the deed or otherwise. Whether or not it would be wise to do so and whether there is a sufficient mandate for any such legislation are political questions for political judgment. The Court is not concerned with such questions. [47] Ms Cull sought to distinguish the Sealords Case on the basis that it involved a political compact purportedly concluded by representatives of all Maori, but in fact in the face of significant Maori opposition. She said that, in the Sealords Case, this Court was influenced by the political nature of the Sealords deal, because it was a matter of political judgement as to whether Parliament was wise to give effect to the agreement. We do not accept that this provides a basis for distinguishing the Sealords Case. The Settlement Deed in the present case is equally a political compact, with the only material unconditional obligation undertaken by the Crown being the introduction of a Bill for consideration by Parliament. The wisdom of proceeding with the settlement with TPT in the face of strong opposition from the appellants, Ngati Makino and others, and in the face of the criticisms expressed by the Tribunal, is like the decision to proceed with the Sealords settlement: a political decision to be made in Parliament. [48] Ms Cull also sought to distinguish the Sealords Case on the basis that the Sealords settlement did not involve any breach by the Crown of a pre-existing commitment, whether of a fiduciary, contractual or statutory nature. She said in this case the July 1989 agreement bound the Crown to the 1989 Act regime for settlements involving Crown forest land, as did the 1989 Act. We do not accept that this provides a basis for distinction. [49] The July 1989 agreement itself appears to be a political compact of the kind described in the Sealords Case. The implementation of the July 1989 agreement could be achieved only by legislation, as cl 16 of that document recognised. That legislation was, of course, subsequently passed, after the form of the legislation had

been agreed with NZMC and FOMA. Ms Cull said there were aspects of the July 1989 agreement that were not covered by the 1989 Act, and that it stood apart as a legally enforceable contract. It is not necessary for us to express a concluded view on that, because the Crown has not acted, and does not propose to act, in a manner which breaches the terms of the July 1989 agreement. Rather, it proposes to introduce legislation to make lawful what is proposed in Part 12 of the Deed, notwithstanding its inconsistency with the 1989 Act regime. It is not unlawful for the Crown to propose legislation to alter its contractual obligations. [50] Thus, if the July 1989 agreement is an enforceable agreement, what the Crown proposes in this case would be, itself, lawful. [51] What is proposed in this case has some similarities to the situation under consideration by the High Court in Comalco Power (New Zealand) Ltd v Attorney- General [2003] NZAR 1. That case involved the electricity supply agreement between the Crown and the proprietors of the Bluff Aluminium Smelter. The Crown sought to increase the price for electricity supplied under that agreement, but Comalco and the other proprietors did not agree to the necessary variation of the supply agreement. The Minister of Energy made a statement to the effect that, if the price increase proposed by the Crown could not be achieved by agreement, it would be obtained by legislation. Comalco sought declarations to the effect that the introduction of such legislation would put the Crown in breach of the supply agreement. Heron J struck out the proceedings. He said at 12: It is Parliament which takes the legally decisive step. Reference to officials and Ministers goes to the question of implementing legislation, but it is Parliament which in fact enacts the legislation, and the legal relationship, whatever it may have been before the passing of the legislation, is affected by the legislation in terms of that legislation. There is no question of wrongdoing in the civil sense. The outcome of the relationship between the parties is determined by nothing other than the legislation itself, and in its terms. [52] That is a correct statement of the law, and it is directly applicable to the present facts. A similar conclusion was reached by McGechan J in Westco Lagan Ltd v Attorney-General [2001] 1 NZLR 40 at [98] (HC).

[53] A parallel can be drawn with the situation considered recently by this Court in New Plymouth District Council v Waitara Leaseholders Association Incorporated [2007] NZCA 80. In that case the Council held land which had been endowed on certain terms. The Council had been asked to transfer the land to the Crown for the purposes of the inclusion of the land in a Treaty settlement package with the local iwi. The Council agreed, subject to authorising legislation being passed by Parliament. This Court ruled that, while the transfer of the land may be inconsistent with the terms on which the land was currently held, an agreement which was conditional on legislation amending those terms and legitimising the transfer was not unlawful. The Council was entitled to seek the removal by Parliament of the restrictions on the transfer of the land. The Court could not prevent the Council from doing so. Nor could it prevent the relevant Minister from promoting a Bill providing for the removal of the restriction. [54] The Leaseholders Association sought leave to appeal to the Supreme Court, and leave was declined: Waitara Leaseholders Association Incorporated v New Plymouth District Council [2007] NZSC 44. The Supreme Court commented at [2]: In our view, whether or not the Court of Appeal was right to conclude that the land was held on a statutory trust, rather than for charitable purposes, there is a fundamental difficulty with the proposed appeal which means that it could not succeed. That difficulty faced by the applicant is that it would be a term of the contract with the Crown that the land would not be transferred by the Council to the Crown until authorising legislation had been passed by Parliament. Even if the land were held upon trust in the way claimed by the applicant, contrary to the view of the Court of Appeal, it would always be open to the Council to approach Parliament for legislation authorising a departure from the terms of the trust. It therefore cannot possibly be unlawful for the Council to resolve to enter into a contract with the Crown which is subject to the passage of legislation of that kind. [55] This statement is applicable by analogy to the facts of the present case. [56] The present case also has a number of similarities with the decision of this Court in Milroy v Attorney-General [2005] NZAR 562. That was also a challenge to a proposed Treaty settlement by Maori who claimed their interests would be adversely affected by the settlement proceeding. Although the Minister had agreed to make some amendments to the proposed settlement to address the concerns of the cross-claimants, they remained unsatisfied and sought further amendments. The

Minister refused, and placed the settlement proposal before Cabinet for approval. The cross-claimants sought judicial review of the Minister s decision, alleging that the advice of OTS to the Minister had prejudiced their rights. This Court refused relief, pointing out that it was the legislation to give effect to the settlement, not OTS s advice, which would impact upon the cross-claimants rights. Having established this, the Court concluded that the Sealords Case was directly on point. Delivering of the judgment of the Court, Gault P said at [18]: The importance of the process for addressing claims in respect of breaches of the Treaty is fully recognised. Where that involves the exercise by the Executive of statutory or prerogative powers, lawfulness can be challenged on established grounds for judicial review. But where the action challenged does not itself affect the rights of any persons and is undertaken in the course of policy formulation preparatory to the introduction to Parliament of legislation, the Courts will not intervene. [57] Ms Cull sought to distinguish Milroy on the basis that it was a judicial review action, unlike the present case which relied on either the direct enforceability of the Treaty or a breach of the July 1989 Agreement and the 1989 Act. We accept that Milroy was an action for judicial review, unlike the present case, but the key finding of the Court in Milroy is that the Courts will not interfere with actions of the executive which are preparatory to the introduction of legislation. Counsel for Mr Te Heuheu, Mr Hodson QC, said Milroy was distinguishable because no Deed of Settlement had been signed in that case. We accept that is so, but in our view it does not alter the precedent value of Milroy in the present case. [58] Ms Cull pointed out that, under Standing Orders, a Select Committee considering a Bill to implement a Treaty settlement cannot substantively amend the Bill without the agreement of the parties to the settlement. She said this meant Parliament was faced with a yes or no choice. We do not see this factor as changing the fundamental point that the decision as to whether the Settlement Deed should become unconditional is one for Parliament, not the executive. [59] In conclusion, we are satisfied that the commitment made by the Crown to TPT under the Settlement Deed is a commitment to introduce legislation which, if passed, will:

(a) Make it lawful for the Settlement Licensed Land and the Deferred Licensed Land to be transferred to TPT; (b) Provide that, notwithstanding the terms of the CFRT Deed, TPT is the Confirmed Beneficiary (and thus entitled to the accumulated rentals) in respect of the Settlement Licensed Land and the Crown is the Confirmed Beneficiary (and thus entitled to the accumulated rentals) in relation to the Deferred Licensed Land. [60] If the legislation is passed, therefore, what is proposed in Part 12 will be lawful. If the legislation is not passed, what is proposed in Part 12 will not happen. Either way, there is no action or proposed action of the Crown, other than the introduction of the legislation, which could be the subject of a declaration. And as both the Sealords Case and Milroy establishes, the courts will not grant relief which interferes or impacts on actions of the executive preparatory to the introduction of a Bill to Parliament, because to do so would be to intrude into the domain of Parliament. For these reasons we decline to make the declaration set out at [9](b) above. Inconsistency with fiduciary duty of the Crown [61] The relief now sought by the appellants (see [9](a) above) includes a declaration that the transfer of Crown forest land to TPT under the Settlement Deed is inconsistent with the fiduciary duty of the Crown. This raises two issues. First, can Maori enforce a Treaty duty in the New Zealand Courts? And secondly, what is the nature of the duty of the Crown under the Treaty? In dealing with this issue, we also address the obiter comment made by Gendall J which we have set out at [7] above. That comment was directed to the fact that Part 12 of the Settlement Deed contemplates that the accumulated rentals relating to the Deferred Licensed Land will be paid to the Crown. It was not directed to the transfer of Crown forest land to TPT, which is the focus of the declaration now sought by the appellants. The Crown argued that Gendall J was wrong if he meant that the Crown s duty to Maori was a private law fiduciary duty which could be enforced in an action in equity in the New

Zealand courts. The Crown s contention also requires us to address the two issues noted above. (i) Enforceability [62] The law is clearly stated in the Lands Case. As noted at [15] above, that case concerned the effect of s 9 of the SOE Act, which provides that nothing in the SOE Act permits the Crown to act in a manner that is inconsistent with the principles of the Treaty, on the transfer of land to state enterprises. This Court held that the Crown was required to ensure that in transferring land pursuant to s 27 of the SOE Act, the principles of the Treaty were not violated. Much of the Court s discussion centered on the principles of the Treaty. However, it is important to remember the ambit of the Lands Case as stated by Cooke P at 655 656: Counsel for the applicants did not go as far as to contend that, apart altogether from the State-Owned Enterprises Act, the Treaty of Waitangi is a Bill of Rights or fundamental New Zealand constitutional document in the sense that it could override Acts of our legislature. Counsel could hardly have done so in face of the decision of the Privy Council in Hoani Te Heuheu Tukino v Aotea District Maori Land Board [1941] AC 308 that rights conferred by the Treaty cannot be enforced in the Courts except in so far as a statutory recognition of the rights can be found. The submissions were rather that the Treaty is a document relating to fundamental rights; that it should be interpreted widely and effectively and as a living instrument taking account of the subsequent developments of international human rights norms; and that the Court will not ascribe to Parliament an intention to permit conduct inconsistent with the principles of the Treaty. I accept that this is the correct approach when interpreting ambiguous legislation or working out the import of an express reference to the principles of the Treaty. But the State-Owned Enterprises Act itself virtually says as much in its own field. The questions in this case are basically about the practical application of the approach in the administration of this Act. [63] Similarly, Somers J stated at 691: The received view of the law is that the Treaty of Waitangi does not form part of the municipal law of New Zealand as administered by its Courts except to the extent it is made so by statute. [64] Somers J also referred to the Privy Council s advice in Hoani Te Heuheu Tukino v Aotea District Maori Land Board [1941] AC 308 where Viscount Simon LC said at 325: