Property Law Bill

Hon CHRIS CARTER (Minister of Conservation) on behalf of the Associate Minister of Justice) Link to this

I move, That the Property Law Bill be now read a second time. The Property Law Bill is significant legislation that rewrites in modern language the existing general rules for real and personal property. These rules underpin the property dealings of New Zealanders and the bill will make them easier to understand. The bill partly codifies some common law principles relating to mortgages, leases, and agreements for sale and purchase. The bill also makes a number of quite important changes to the law.

The Law Commission recommended new property law legislation in its 1994 report after completing a major review. The bill is based on that report and also contains provisions to reflect subsequent case or statutory developments since the report was written.

I would like to thank the Justice and Electoral Committee for its hard work on this rather large bill, which contains many complex, technical, and—some might say—dry rules. These can be difficult rules to understand, and the committee’s work on this bill will help to clarify them. I endorse the committee’s recommended amendments, which are consistent with the purpose of the bill to modernise and simplify the current legislation to better meet people’s needs. Its amendments will improve the bill and the application of the rules in practice.

The bill contains 365 clauses and seven schedules, and the committee’s recommended changes will affect approximately 45 clauses. Many of these changes are of a technical nature, and are intended to clarify the rules and make them consistent with other provisions. Some amendments, however, are more substantive.

Some of the amendments are concerned with the provisions in the bill that apply to commercial leases. The bill re-enacts the current law that lessors cannot unreasonably close their consent to a request from the lessee to transfer, assign, or sublease the premises to someone else. The bill extends this protection to allow requests from lessees who want to change how the premises are used from what was agreed to at the start of the lease. For example, a lessee might need to make this sort of request where a particular business use is no longer viable in that location.

The Justice and Electoral Committee gave considerable thought to the provision in the bill that would have prevented lessors from including in a lease an absolute prohibition on changing the use of the leased premises from that permitted at the start of the lease. The committee recommended allowing lessors to include such an absolute prohibition. However, if lessors do not do this and do not allow a change of use subject to their approval, then they cannot withhold their consent unreasonably. The committee considered that this provision would strike the right balance between the interests of both lessors and lessees.

Cabinet has recommended some changes so that when lessees ask lessors for their permission to do certain things, lessors must decide on the matter without delay. Also, the committee has recommended clarifying that lessors will be able to claim their legal costs and expenses relating to requests for transfers, assignments, subleases, or changes of use only if the lease allows it.

There is also a significant reform in the bill that will release lessees from liability for damage to leased premises where damage results from events such as fire or flood, or from any danger for which the lessors are insured. Lessees will not, however, be exonerated where they have intentionally caused the damage or have caused the insurance moneys to be irrevocable. The committee has recommended adding to these provisions to ensure that lessees who cause damage through committing a serious criminal offence are not released from liability. For example, anyone who is manufacturing P in leased premises will be liable for the damage if his or her activities cause an explosion and a fire. Further, a new provision will provide that lessors can end a lease if a lessee’s negligence affects the insurance cover, and they can recover any additional insurance costs from the lessee.

The committee has also recommended a useful addition to the bill to clarify the rights of people who share the ownership of a piece of land that provides access to their respective properties. This is quite common, and people can have disputes over who is responsible for repair and maintenance costs. The committee has recommended new provisions to address these problems.

The powers of the court are extended to include a power to make an order for compensation when modifying or extinguishing an easement or covenant. An example might be where an owner wants to redevelop land by building several houses on it, but the owner is prevented from doing this by a covenant in the original transfer of the land that restricts further building on the site. Although the owner could apply to the court to modify or extinguish the covenant, other people who benefit from the covenant may have their property rights adversely affected. Compensation may be appropriate in such circumstances. The committee also recommended that the court be able to vary orders requiring the completion of work such as the removal or trimming of trees where circumstances change and the order is no longer appropriate.

The mortgage provisions that make up the largest part of the bill are significant. It is important that their interface with the Personal Property Securities Act of 1999 is clear, as there is a potential overlap relating to the enforcement of a mortgage over goods. The committee has recommended a new provision that confirms that in the event of an inconsistency, the Personal Property Securities Act 1999 will prevail.

The committee has also usefully recommended extending the application of the provision about the discharge of mortgages, when mortgagees cannot be found, to mortgages under other statutory regimes that do not have equivalent provisions—for example, the Radiocommunications Act of 1989, the Fisheries Act of 1996, and the Life Insurance Act of 1908. This means, for instance, that when a mortgagee, or lender, is outside New Zealand, cannot be found, or is dead, or it is uncertain who is entitled to receive the mortgage repayment moneys, then the mortgagor, or borrower, can apply to the court for a discharge of the mortgage.

Finally, I note that the Government expects to introduce a Supplementary Order Paper that makes some further small technical, clarifying amendments to the bill.

I thank the Justice and Electoral Committee again for its careful and thorough work on this sizable bill. I am confident that the committee’s recommendations, which are entirely consistent with the overall policy of the bill, will usefully promote clarity in the law and enhance certainty in property dealings. I commend this bill to the House.

CHRISTOPHER FINLAYSON (National) Link to this

As the Minister of Conservation said, the Property Law Bill is based on work undertaken by the Law Commission many years ago. In 1994 it published a report called A New Property Law Act, and the Property Law Bill is the fruit of that hard work. The National Party is pleased to support the second reading of what is a major and very important piece of black-letter law reform.

The Property Law Bill was derided by the Minister of Conservation as being dry and boring, but it is, in fact, fundamentally important to the running of any 21st century society. We must have our property rules clear and accessible, because they affect every citizen. I acknowledge that aspects of this legislation may appear to be dry and boring to the uninitiated, and it may appear to be boring to a Minister who is used to concentrating his efforts on saving whales or snails on the West Coast, but, as I said, it is of fundamental significance.

The Law Commission and Justice Blanchard of the Supreme Court are to be congratulated on the great work they have done on this bill. Indeed, the quality of the work undertaken by the Law Commission and the Ministry of Justice, which built on the bill with the work it has done, is reflected in the relatively short commentary on this legislation by the Justice and Electoral Committee when reporting back to the House. Indeed, it is fair to say that many of the changes we suggested were in the “very technical” category.

For example, clause 58(3) is deleted; subpart 7 of Part 2 deals with the abolition and modification of common law rules relating to property, and clause 58 deals with the abolition of obsolete estates and rules. Strange things like estates tail and estates by wrong are abolished by this legislation. The doctrine of interesse termini, referred to in clause 60, is abolished. That is the kind of law reform that one is dealing with here, and the technical changes that we recommended were, in fact, few and far between. There was only one substantive issue that we needed to spend a bit of time on, and that concerned an aspect of the law of leases. So it is a good piece of work.

The Justice and Electoral Committee received very few submissions on the legislation, and I want to record in this second reading that the committee was “disappointed at the paucity of submissions we received for the bill, especially from the legal fraternity.”, because it is such a fundamental piece of legislation for the legal fraternity. As noted in the report, the bill represents the largest single change to property law in the past 55 years. I would have thought that some of the large law firms could take a bit of time and trouble to prepare submissions, come before the select committee, and talk about aspects of the legislation.

The Minister of Conservation has accurately summarised the changes. It is good legislation, and the sooner it is passed into law the better. So, as I said, National is pleased to support the second reading of the Property Law Bill.

CHRIS AUCHINVOLE (National) Link to this

Like my colleague Mr Finlayson, I too have found the Property Law Bill to be riveting legislation, and indeed it must be one of the largest bills in the House. It is a very large one indeed. I rise to speak on the second reading of the bill, which is the stage where the House is asked to adopt in principle the bill before it, and, as a National MP, I am pleased to be part of National’s support for this bill. It is a pleasure to speak on it because, as was mentioned by my colleague the honourable Richard Worth during the first reading, it is one of the most important bills that the House will deal with.

This bill replaces the Property Law Act of 1952 in reforming and codifying certain aspects of the law relating to real and personal property. The work behind this bill was done by Justice Peter Blanchard, as was mentioned by my colleague Mr Finlayson. Justice Peter Blanchard is a commissioner with the Law Commission. He completed his work on this bill in 1994. It is significant legislation, and it will touch many people’s lives. It restates and clarifies the existing Act, and includes some rules currently found in general law and in other Acts. There are a large number of small reforms to the rules that collectively will improve the effectiveness of the law. Clarity, accessibility, and effectiveness are features of this new bill. It will provide certainty in property dealings, and it protects people’s property rights. It codifies the law relating to property that was previously set out as rules of general law relating to the creation and control of property of all kinds, including land. Those rules underpin a vast range of activities and transactions in the day-to-day life of New Zealanders. The bill is fundamental to the workings of our society.

However, it is sad that the bill has had to be subject to such delays, by not being advanced earlier by this Government in a timely manner. Once it was introduced and it reached the Justice and Electoral Committee, it benefited from the attention of my colleagues from this side of the House, particularly, and from others, which enhanced the effectiveness of it. It was an interesting bill to have going through the select committee process. It was, however, a big disappointment that it did not include the joint ownership of land, the Unit Titles Act, and the Land Transfer Act in a comprehensive reform of property law overall. That would have been a good thing.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) Link to this

Kia ora, Mr Deputy Speaker. Tēnā tātou katoa e te Whare. Clause 8 of the Property Law Bill explicitly states that “This Act does not apply to Māori customary land…”. So one may be forgiven for thinking that the bill has general application only, and may therefore escape the rigorous scrutiny of analysis that this House has come to associate with the Māori Party. We all know that the specific rules and regulations pertaining to Māori land are contained within Te Ture Whenua Maori Act of 1993. In effect, those provisions prevail over provisions in the Property Law Bill.

Of course, as every good bush lawyer knows, a fundamental protocol of statutory interpretation is that the specific overrides the general, and, as such, any particular changes to better protect Māori land needs to be done through amendments to Te Ture Whenua Maori Act. But that is where we need to have another good look, because, of course, the Māori Party is not here just to pursue the specific—or the general, for that matter—provisions pertaining to Māori land. We are here to defend Māori rights and to uphold Māori aspirations, and to do so for the benefit of all who live in this great land of Aotearoa. It is a logical outcome of our reason for being that we are as interested in the effective management of the law relating to real and personal property as we are in keeping with even the most basic application of Te Tiriti o Waitangi. It is this that gives us reason for great concern in relation to this bill, and to many other bills.

I remind the House of the rulings of Justice Chilwell, in Huakina Development Trust v Waikato Valley Authority some 20 years ago, when he said: “the authorities … show that the Treaty was essential to the foundation of New Zealand and since then there has been considerable direct and indirect recognition by statute of the obligations of the Crown to the Maori people. … There can be no doubt that the Treaty is part of the fabric of New Zealand society.” Such a mandate having been established in the courts, one would therefore have expected to see some recognition—whether direct or indirect—in this new bill, which replaces the Property Law Act of 1952 and restates certain aspects. Yet, hello, it was hardly a great start to learn that there was no Māori involvement in the Law Commission report, and no Māori involvement in the bill drafting process. So much for the principles of participation, partnership, and protection!

It is, of course, fascinating to think that the 1952 Act being replaced by this bill is largely a compilation of provisions introduced many years before—some dating from one of this nation’s earliest pieces of legislation, the Conveyancing Ordinance of 1842. That was the first legislation in this country, and probably deserves mention tonight, in looking at the context of this new bill. The Conveyancing Ordinance was to “facilitate the Transfer of Real Property” from Māori to settlers and missionaries by specifying protocols around the buying, selling, leasing, and mortgaging of land. We cannot, therefore, look at the context of this bill without recognising and acknowledging the denial of Māori property rights, and the systematic imposition of a private property rights—individual land title—regime, that have occurred over subsequent centuries.

Just for the record, I tell members that some of the other background legislation that created the policy foundation for this bill are the Native Lands Act of 1862, which established the Native Land Court to individualise Māori land title and convert such lands into “transferable paper”; the Suppression of Rebellion Act of 1863, which crushed Māori resistance to colonisation and land-grabs, permitted trial by court martial, and suspended the right to be protected from illegal imprisonment or to be released from illegal restraint; the New Zealand Settlements Act of 1863, which authorised land confiscation; the Provincial Compulsory Land Taking Act of 1863, which authorised Provincial Councils to take any land for public works; the Thermal Springs Districts Act of 1881, which expressed the principle of the Crown auctioning land publicly as an agent for Māori; the Native Lands (Validation of Titles) Act of 1893, which was, essentially, the validation of invalid land sales—the “We Will Make Right the Land We Have Ripped Off Act”—and right through to the Foreshore and Seabed Act 2004. These Acts are but a taste of the huge range of Acts of Parliament that have the intent or the effect of taking Māori land—which, as Parliament should be aware, forms the broader context of any legislative proposals introduced in this House.

The justification for the Property Law Bill is that the 1952 Act contains outdated, piecemeal provisions, is not user-friendly, lacks clarity, and does not interact well with other, more modern Acts. But we felt it important to raise in this second reading debate that there is always a history to any law made in this land, and that any law would benefit from both Māori involvement and the Māori world view. On the other hand, we think it is important to note, when making the law clearer and more accessible to a wider audience, that laws talk to each other.

So we want to raise some questions around the capacity of Te Ture Whenua Maori Act of 1993 in relation to mortgages, leases, the needs of property owners and mortgagees, and general property rights. Some of the questions, we hope, may permeate the remaining stages of debate on this bill—and, perhaps, further aspects of legislation. Firstly, are the provisions in Te Ture Whenua Maori Act relating to mortgages, leases, etc., sufficient to protect Māori land and Māori landowners? Secondly, are any changes needed to Te Ture Whenua Maori Act to better protect Māori land and Māori landowners? Thirdly, will the changes to the general property laws proposed in the Property Law Bill have an impact on how the law is interpreted, in terms of Te Ture Whenua Maori Act and Māori land and Māori landowners? Fourthly, is there the possibility of repealing the current land title system?

The Property Law Bill is described as providing a one-stop shop law setting out the general rules relating to property law. The whole thrust of the legislation is to bring together into one Act the 1952 Act and its 18 amendments; relevant property law rules from common law that have developed through case law; and some process-based reforms. We absolutely endorse the intention of clarifying and reforming the law relating to mortgagee sales, leases, sales of land, purchaser agreements, and deeds, and other minor reforms of the law.

That is all well and good, but I bring the House back to the words of Justice Chilwell: “There can be no doubt that the Treaty is part of the fabric of New Zealand society.” We did expect to see the impact and contribution of Māori participation throughout this Property Law Bill, and we did expect to see the relevance of Te Tiriti o Waitangi to the statutory interpretation of this bill. They have not happened, but there may still be an opportunity, at both the Committee stage of the House and the third reading, to remedy this appalling oversight, and we look forward to seeing that happen. Tēnā koe e te Whare. Tēnā tātou katoa.

NICKY WAGNER (National) Link to this

I rise to support the Property Law Bill. This bill replaces the Property Law Act, which was first passed in 1952. It is well over 55 years since the Act has been reviewed, and I think it is time that we did something to change it. It is interesting that such an important Act, which controls property of all kinds—including land—and the rules that underpin most activities and transactions in the everyday lives of New Zealanders, has still been sitting there for 55 years.

The aim of this bill is to simplify and to explain some of the very many technical issues that control property in New Zealand. It is a very complex bill. For an ordinary layperson who deals with property every day and deals with these kinds of transactions, it is important that he or she can understand what is in this law, and I think it is time that we looked at it. Thank you, Mr Speaker.