Property Law Bill

Hon CLAYTON COSGROVE (Associate Minister of Justice) Link to this

I move, That the Property Law Bill be now read a first time. At the appropriate time I intend to move that the Property Law Bill be referred to the Justice and Electoral Committee for consideration. Property law governs a wide range of private and commercial property transactions in the day-to-day life of all New Zealanders. The law applies when people create, dispose of, or control property interests, including land. Commonly, the types of dealings affected are residential or commercial transfers, mortgages, and commercial leases. It is important that the law is up to date, clear, and accessible to all people.

The Property Law Bill is significant legislation that updates the general property law rules contained in the Property Law Act 1952, and it includes in legislation for the first time some common law rules. The current Act contains a collection of outdated and piecemeal provisions added over many years and expressed in obscure language. The Act has been in force for over 50 years, and some provisions date, without redrafting, from the conveyancing ordinance of 1842. Some provisions of the Act do not work well with other legislation that applies to property interests. The Property Law Bill will improve the operation of the existing law and make it easier to understand. That will be of benefit to a number of members opposite. It will also ensure that related statutes work together effectively.

The Law Commission in 1994 completed a major review of the current Act and recommended a new Act to make rules more accessible and easier to understand. The Law Commission report, which contained a draft bill, was well received by interested parties when it was published. As the Prime Minister explained in her formal statement to Parliament in February this year, the Government is committed to implementing a number of old Law Commission reports that modernise key areas of law such as property law and succession law. I am grateful to the Law Commission for its assistance in preparing a property law bill for introduction. I particularly acknowledge Justice Blanchard, the author of the Law Commission report, for his invaluable contribution to the Property Law Bill.

The bill is based largely on the recommendations of the Law Commission report. It restates and clarifies the existing Act and includes some rules currently found in the general law or other Acts. There are a large number of small reforms to the rules that collectively will improve the effectiveness of the law. The bill ensures that law relating to property is clear, accessible, and effective, so that it better meets the present and future needs of people such as property owners, lessees, and mortgagees. The bill provides certainty in property dealings and protects people’s property rights—for example, by determining the priority of creditors when there are several securities over the same land.

The Law Commission considered that the provisions governing mortgages and leases most needed reform. A number of small reforms to the law of mortgages will clarify and reform the rules that apply. For example, the bill extends and describes in more detail the notice requirements for mortgagees, such as banks, and will require them to notify other interested parties, such as a friend or relative who guaranteed a mortgage loan, when exercising their rights over properties after borrowers have failed to pay loans. Currently, a mortgagee who sells a mortgaged property after a borrower has defaulted on a loan must take reasonable care to obtain the best possible price for the borrower. Under the bill this duty extends to other interested parties, such as a guarantor.

Other examples of the reforms in this bill include codifying the law governing the cancellation of commercial leases of land and relief against cancellation for lessees. The bill also codifies the rules for the cancellation of an agreement for the sale and purchase of land where a purchaser is in possession. One specific reform proposed in the bill removes a commercial lessee’s liability for unintentional damage to leased premises when the lessor is insured. The Law Commission expressed concern that lessees can be liable under a lease covenant for repairing premises damaged through their negligence even though the lessor is protected by insurance that is directly or indirectly paid for by the lessee. This is a significant change from the existing law and will be a matter of specific interest during the select committee consideration of the bill.

Clearly, the Law Commission reported back some time ago. Some of its recommendations have been superseded. Other reforms that do not originate from the Law Commission report are also necessary to address issues that have arisen since 1994 because of inconsistencies or overlaps with provisions in new or amended legislation. Property law is of practical, day-to-day significance for individuals and businesses in New Zealand. Clear property rules are vital to the operation of society, and this bill ensures that our property law is up to date to better meet people’s needs and protect their property rights. I commend the bill to the House.

Dr RICHARD WORTH (National) Link to this

It is always a pleasure to follow the previous speaker, whose knowledge and depth of legal skill is profound and widely admired. I must say I was disappointed on this particular occasion that he did not draw to the attention of the House what truly are the salient features of this most important legislation. With a crowded gallery and, I am pleased to say, a crowded House, I say how important it is that we are gathered together to look at one of the most significant pieces of legislation to come before the House. Significant, one may ask? Why? Well, I respond to that simply by saying that in the life of this Parliament, in terms of numbers of pages this is in fact the biggest bill the House will have to deal with. More important than that, it is also one of the most important bills.

The previous speaker omitted to say—but I now say—that the law of property is very complex; one needs only to look at legal texts on property to see that that is determinedly so. National supports this bill. We could do nothing else but that; it is important and critical legislation. As the previous speaker said, it replaces the Property Law Act of 1952 in reforming and codifying certain aspects of the law relating to real and personal property. The microphones in this Chamber are selective in what they pick up, and I was disappointed that the Minister in his comments did not respond when I asked him a question as to the difference between real and personal property, because that is a critical difference in this legislation. Real property is concerned with land, and personal property is concerned with non-land issues.

The work that provides the basis for this bill was done by Peter Blanchard, who was a commissioner with the Law Commission. He completed that task in 1994. It is quite shameful, actually, given the importance of this legislation, that the Government has delayed its introduction until this date, 14 November 2006. There was no good reason for that, apart from indolence and inefficiency on behalf of the Crown.

The report on which this work is based was well received by parties when it was published in 1994—[Interruption]—and what we see here, as Mr Brownlee has just affirmed, is that the bill generally follows, very closely, the text of the bill in the commission’s report. Some changes have been made to accommodate refinements in policy and developments in statute and case law since 1994, and some proposals have not been carried forward, including proposals on the release of assignors from liability, the appointment of receivers in respect of mortgaged land, mortgagee sales of goods through the registrar, and of course this very important topic of waiver of contingent conditions in agreements for sale and purchase.

I summarise the comments of other speakers by saying that the 1952 Act contains rules of general law relating to the creation and control of property of all kinds, including land. These rules underpin a vast range of activities and transactions in the day-to-day life of New Zealanders. They are therefore—and I do not think it overstates it to say this—fundamental to the workings of our society. The 1952 Act, the Law Commission noted, was basically a collection of miscellaneous rules. It was not a code but more a repository for legislative supplements or corrections to judge-made law.

As the previous speaker said, the Act is over 50 years old, and it was itself very largely a compilation of provisions introduced many years before, some of them dating way back to the earliest pieces of legislation such as the Conveyancing Ordinance of 1842. So this legislation—the old legislation, the 1952 Act—is long overdue for revision. One needs to look only at the many pages this bill comprises to see how far-reaching the changes are in terms of amending old statutes, like 1267 52 Hen. 3, the Statute of Marlborough. Another statute that Mr Finlayson is well familiar with, an important statute we studied together at law school, is 1289 18 Edw. 1, the Statute of Quia Emptores, which, if my Latin is still with me, roughly translates as “because they are purchasers”. As I said, there are a raft of statutes dating over a time frame of 1267 to 1851—English statutes that were part of our property law in New Zealand.

So what is this bill all about? Well, it includes a number of complex, technical, general property rules. I suppose it is right to say that the provisions governing mortgages and leases were the most in need of reform, and in this bill a large number of reforms are proposed to clarify and reform the rules governing mortgagees in possession, mortgagees in breach of their duty—in the exercise of power of sale—and mortgagee sales. Just to take an example, the procedural requirements for mortgagees, relating to notices to mortgagors of the exercise of the mortgagees’ powers, are to be extended and dealt with in more detail. Now, mortgagees in possession will be required to account to mortgagors for income received from the mortgaged property. The bill also contains detailed and helpful instructions for the application of income, and the priority of distribution for the proceeds of sale received by a mortgagee of a mortgaged property.

I would like to pick up, perhaps, in the short time available to me to look at this complicated legislation, a couple of issues that may be mainstream issues. The first is in the area of mortgages, because a large number of small reforms to the law of mortgages will collectively be of advantage. I pick as one topic, by way of illustration, the covenants implied in mortgages over land. Those have been updated and drafted more clearly in plain language. So that concerns the area of mortgages.

There are big changes in the areas relating to leases. The bill codifies the law relating to the cancellation of leases by lessors, and relief for cancellation. At the moment, the current law is, of course, split between Imperial law, this English law—like the Landlord and Tenant Act of 1730—the rules of equity, and the current Property Law Act 1952, depending upon which covenant is breached. So that concerns the world of leases, and we similarly see that there are significant changes in covenants, conditions empowered, and powers implied in all leases of land.

I am sure other speakers will talk about the right to distrain, because one of the changes that is being made in the legislation is that the right to distrain has been abolished. That was a right to seize goods for unpaid rent. It is appropriate that that be abolished, because there is already a process for the enforcement of judgment debts in the District Courts Act and District Court Rules, and in the High Court Rules. The distress for rent provisions have already been abolished in relation to dwelling houses. There are a whole lot of changes relating to sales of land, and to the assignment of what we used to call choses in action, which are now called things in action.

Then there are some special powers of the court, where the substance of the old law has been re-enacted, but in considerably more detail. Those of us who exercise constituency responsibilities will often be troubled with people who come to talk about the removal or trimming of trees, or the removal or alteration of structures injuriously affecting a neighbour’s land.

These, then, are significant aspects of important legislation. National commends this legislation, but criticises the Government for its indolence and delay in not advancing it in a more timely manner.

PITA PARAONE (NZ First) Link to this

Tēnā koe, Mr Speaker, tēnā tātou. On behalf of New Zealand First, I say from the outset that we too will be supporting the Property Law Bill. This bill is very significant because of the fact that property law is complex. It is important that any bill such as this recognises that complexity. The bill covers a wide range of issues pertinent to commercial and private property.

Any law should be readily accessible and updated. The importance of this bill lies in the fact that it has been some 50-odd years since the whole issue of property law has been addressed. On the suggestion of the Law Commission—albeit some time ago, back in 1994—this bill is a product of that concern. As I said, the principal Act has been in existence since 1952, and since then much water has passed under the bridge, so to speak. So it is important that such a major Act is updated to meet present and future needs.

Some concerns were expressed by the previous speaker. Giving due support to this bill at this stage will ensure that it is referred to a select committee, where the very concerns that have been expressed can be addressed, not only by people from this House but by the wider community, particularly those who are involved in property law.

This bill will provide certainty in regard to a number of issues, particularly mortgages—for example, in terms of mortgagees in possession. During the halcyon days of Māori development, there was a department known as the Department of Māori Affairs, which had the responsibility of providing housing for Māori people. At least 200 Māori families every year could be guaranteed they would move into their own homes. Part of that process, unfortunately, from time to time required the Crown to re-enter properties, due to non-payment of the mortgage by the mortgagee. I know from personal experience that there were times when we tended to forget our responsibilities as mortgagees in possession. I have no doubt that this bill will certainly address those concerns, albeit I am sad to report that the Department of Māori Affairs does not exist any more. It no longer provides for the housing of our people, in spite of the poor record of Māori homeownership in this day and age.

I also want to acknowledge that one group, or one type of property, is exempted from the provisions of this bill: Māori customary land. I am glad that such Māori land is exempted from this legislation. Māori land is usually customary land and therefore a whole raft of different rules apply to it, much of which is determined and controlled by the Māori Land Court.

Having said that, albeit in a short contribution to this debate, I just reaffirm New Zealand First’s support for this bill. We look forward to the opportunity to be part of the discussions when the submissions on this bill are heard by a select committee.

NANDOR TANCZOS (Green) Link to this

I rise just to give a very short speech on behalf of the Green Party in relation to this Property Law Bill, and to indicate that the Green Party will be supporting this bill going to a select committee.

I understand from the debate, and from the explanatory note of the bill, that it sets out to replace the 1952 Act. That replacement was proposed, as has been stated by other speakers, by the Law Commission in its report A New Property Law Act, and I understand that the bill largely follows the proposals set out in that report. The text of the bill was included in that commission report, and the explanatory note notes some exceptions to it. It states: “Proposals not carried forward in this Bill include proposals on release of assignors from liability, appointment of receivers in respect of mortgaged land, mortgagee sales of goods through the Registrar, and waiver of contingent conditions in agreements for sale and purchase.” I am not a lawyer, so am not in a position to give the kind of erudite speech that my learned colleague Mr Worth gave—

TARIANA TURIA (Co-Leader—Māori Party) Link to this

Tēnā koe. Tēnā tātou te Whare. Last Friday at Te Herenga Waka Marae, at the Victoria University of Wellington, Ahorangi Wīremu Parker was remembered in a memorial seminar marking 20 years since his passing. Wīremu Parker had a particular association with this House. It was the Māori members of Parliament who recommended to the Cabinet of 1943 that he be appointed New Zealand’s first Māori news broadcaster. He was well known as a skilled and expert broadcaster, and covered in the course of his career the return home of the 28th Māori Battalion in 1946, and the poroporoaki to Tā Apirana Ngata at his death in 1950. From 1967 Parker worked alongside Te Kapunga Koro Dewes and Professor Hirini Moko Mead, teaching Māori at the Victoria University of Wellington. He was a respected academic, a skilled Māori language expert, a kaumātua, an adviser, and an editorial consultant.

So it seemed apt in considering the Property Law Bill to turn to his words from 1978 included in a collection of essays commemorating the silver jubilee of Queen Elizabeth II. He stated: “For ever so long, land has been central in Maori thought. The source of his physical sustenance, of his very blood from time immemorial, the object of deep emotional attachment in song, poetry and oratory, the prized heritage of tribe and [whānau], and lay at the very core of a people’s mana. Land was for ever.” Parker’s comments, in The Substance That Remains, indicate the strength of association that tangata whenua attribute to being Māori and the inherent relationship with the land. The two are inseparable.

And so it is that when we read in clause 8 of the Property Law Bill the statement that this bill applies to all land in New Zealand, we consider the guardianship, the custodial rights, the stewardship, the ancestral relationship that tangata whenua have with land. Yet, curiously, that statement is later qualified with a rider that this bill “does not apply to Māori customary land”. The Māori Party will be seeking responses during the select committee consideration of this bill as to the inherent contradiction in this one clause as to whether Māori land is marginalised or detached from the whole.

We understand that a fundamental protocol of statutory interpretation is that the specific overrides the general. In effect, this means that the specific rules pertaining to Māori land are contained within Te Ture Whenua Maori Act 1993, and that these specific provisions prevail over the general provisions in the Property Law Bill. Notwithstanding this qualification, we know it to be reasonable to state that approximately 220 pieces of legislation have been passed in this House that have had the intent or effect of taking or weakening Māori land and property rights in some way or another. We can only assume that the devil is in the detail with this bill, as well.

The Property Law Bill seeks to replace the Property Law Act of 1952 by restating, revising, reforming, and codifying particular aspects of the law relating to real and personal property. The Law Commission’s report A New Property Law Act suggested that the 1952 Act was largely a compilation of many outdated and miscellaneous rules, some dating back even to one of New Zealand’s earliest pieces of legislation, the Conveyancing Ordinance of 1842. This infamous piece of legislation was passed to facilitate the transfer of real property from Māori to settlers and missionaries. It specified protocols around the buying, selling, leasing, and mortgaging of land through introducing the deed system. Some Māori called it the beginning of the end in initiating a path of land alienation that made land vulnerable for exploitation and fragmentation. The 1952 Act is therefore well overdue for revision.

Around the same time, in 1953, the Maori Affairs Act brought together related legislation connecting Māori land to the system of property law. Some 25 years later, in 1978, the Government of the day consulted the Māori Council about the adequacy of the legislation, and the council’s conclusions were reported to the Minister of Māori Affairs, the Hon Ben Couch, in a report entitled Wāhanga Tuatahi. The recommendations that were made in this report eventually became Te Ture Whenua Maori Act in 1993. It should be noted for the record that the bill introducing that Act came during the term of a National Government.

I have taken the time to provide a brief background to both the Property Law Bill and Te Ture Whenua Maori Act because the relationship between the two is vital. During the course of the deliberations of the legislative review committee of the New Zealand Māori Council, it issued a statement in 1980 that identified the importance and relevance of land to Māori: “Maori land has several cultural connotations for us. It provides us with a sense of identity, belonging, and continuity. It is proof of our continued existence not only as people, but as tangata whenua of this country.

It is proof of our tribal and kin group ties. … It is proof of our link with the ancestors of our past, and with the generation yet to come. It is an assurance that we shall forever exist as a people, for as long as the land shall last.”

The Māori Party comes to this new bill, the Property Law Bill, with these words in mind. It is vital that the relationship between the Property Law Bill and Te Ture Whenua Maori Act 1993 is understood. This bill is not the place to seek changes or provisions of a specialist nature. If such provisions were to be found in this bill that could engender conflict with the existing provisions of Te Ture Whenua Māori if passed into law, the provisions of Te Ture Whenua Maori Act 1993 must prevail. As a case in point, the Property Law Bill applies to transactions relating to Māori land but, as an overriding requirement, those transactions must be carried out in compliance with Te Ture Whenua Maori Act 1993 or other applicable statutes. We will be watching out at the select committee to ensure that there is nothing in this new bill that appears either to make Māori land vulnerable to sale or to threaten the kotahitanga of whānau.

There has been some suggestion that the tribalisation of whenua Māori may be an aspiration Māori want to explore in further depth. The fragmentation of Māori land under the introduced system inherent in individual land title has not served Māori well in the past or even today. The system of shares and shareholders fragments and disrupts tribal ownership. It may well be that tribalising land, and building on developments such as the whenua tōpū trusts available under section 216 of Te Ture Whenua Maori Act 1993, are ideas outside the scope of this bill, but they certainly are not outside the realms of possibility.

The Māori Party considers that general property law relating to mortgages, leases, deeds of settlement, and suchlike does and will continue to inform Te Ture Whenua Maori Act. As such, the reforms to clarify and codify the law relating to mortgagee sales, cancellation of leases by lessors, purchase breaches, and the creation and delivery of deeds will inevitably be of interest to Māori lawyers, to property owners, to mortgagors, to purchasers, and to trusts. We will be looking particularly to see that the provisions in Te Ture Whenua Maori Act relating to matters of interest in this bill are sufficient on their own to protect Māori land and Māori landowners. If indeed such analysis comes up wanting, we will be asking whether changes are needed to Te Ture Whenua Māori Act to better protect Māori land and Māori landowners.

Our fundamental interest in supporting this new Property Law Bill at its first reading is in providing an opportunity for the people to have access to the debate around issues of such consequence. Our overriding concern will be watching to see what sort of impact the changes proposed to general property laws in this bill will have on how the law is interpreted in relation to Te Ture Whenua Maori Act for Māori land and Māori landowners.

From the burying of the placenta of newborn children, the placement of our whenua with the whenua, through to the burial of the dead, Māori are, in every sense, tangata whenua—people of the land. The spiritual and ancestral connections we have as tangata whenua are vital to our ongoing identity. As the late Ahorangi Wīremu Parker reminds us, land is forever. It is with this in our mind, therefore, that the Māori Party takes a particular interest in the Property Law Bill as affecting values and concepts that are core to our life as tangata whenua. Tēnā koe.