Dr RICHARD WORTH (National) Link to this
It is a bit unusual, really, to start off this debate without a prefatory comment from the Minister. I am a bit surprised by that because this is important legislation, which has a history that in recent times has gone back to 1952, but beyond that it goes way, way back to the conveyancing ordinances of 1842. There is a shameful aspect to it, which I would like for just a moment to refer to—that is, we are here faced with legislation that was the basis of a very careful report by the Law Commission some years ago, and it has taken all this time to come to fruition in the parliamentary process. It was, I understand, in 1994 that the Law Commission completed a report on this important topic, yet it was not until 14 November 2006 that the Government introduced this legislation.
One of the current issues in Parliament is this word “property” and the scope of this word, and in the last few days that has been an issue that this Parliament has had to revisit in a number of contexts. But here we have a very broad and sweeping definition. “Property” means everything that is capable of being owned, whether it is real or personal property, and whether it is intangible or tangible property. In the context of some seven parts to this legislation there is an opportunity, of course, to take multiple calls, but I would just say that in respect of Part 1, where we are dealing with preliminary provisions, what is at issue here is the purpose of the legislation and a raft of definition provisions. I notice that the Act will bind the Crown, which is surely appropriate, and there are some other general and enabling provisions.
I commend Part 1 to the Committee.
CHRIS AUCHINVOLE (National) Link to this
I would like to join my colleague Dr Richard Worth in commending Part 1 of the Property Law Bill to the Committee. We spoke at the second reading of this bill last night and, as my colleague has said, this is a very important bill. It probably is, too. I have not weighed it and I have not counted the pages, although I guess they are numbered, but it must be one of the largest bills before the House, as well. Perhaps not—the Minister in the chair, Ruth Dyson, is not sure.
Hon Ruth DysonThe tax bill is larger. OK, that is significant. But this is a substantial bill and, indeed, it is a very important bill, because property, and its correct definition, is something that affects all of us to varying degrees, right throughout our lives. It is interesting to see where the—
Well, an awful lot of people, when we look at the Wills Bill, try to determine how things will happen from the grave.
To give members an instance of how important the definition of “property” is, and how important mortgages and attendant qualifications are, I will tell members about a press release I got from the West Coast today that reflects on the significance of mining licences or permits as property. It was about a case where a West Coast company has received another setback, with the Court of Appeal effectively ruling that the licence the company bought for $45 million in 1997 has a real value of just $290,000. The managing director said that he was totalled by the decision.
It was an interesting case. The genesis of it was, in terms of property, a mining licence that, in 1994, had a value of $100. It was first issued to two partners in one company; it was transferred to a further company for $5,000; it was later transferred to yet another, and another after that for $10,000; and then the value of the resource was put at $45 million to $180 million. The valuer was prepared to go to the larger figure but the value was set at $45 million. It was estimated the extraction value of the stone would be $4,000 a tonne, and there were 15,000 tonnes. A transaction occurred, but all was lost after the settlement. A debenture and mortgage of shares were executed, the trust account of $44,920,000 was delivered to the purchaser, but the Chief Inspector of Mines in January 2000 withdrew a consent for the modified work programme that had been lodged 2 years earlier. By the time the licence expired in 2000, the company, Glenharrow Holdings, had extracted only 3,600 tonnes of stone. So the legal complications go on and on and on.
It was interesting to be part of the select committee that examined the Property Law Bill. I guess the best contribution one can make to this part of the debate is to signify parts of the report of the Justice and Electoral Committee. In the case of Part 1, probably one of the significant things—and it was discussed earlier in the last bill debated, the Protection of Personal and Property Rights Amendment Bill—was the irrevocable powers of attorney. It was recommended that “clause 21 of the bill be amended to make clear that it applies in favour of purchasers. This ensures that the current law contained in sections 136 and 137 of the Property Law Act is retained, and helps to make it clear that third party purchasers are protected.”
This is a long bill—I think there are seven parts. I am sure that those who are in the Chamber are familiar with the bill, and there is little point in talking it to death. So I will restrict myself to that much on Part 1.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to clause 4 be agreed to.
Dr RICHARD WORTH (National) Link to this
Part 2, of course, is concerned with general rules relating to dispositions, instruments, transactions, and property. It has some seven subparts, which separately deal with a range of issues of interest to lawyers but not, I suspect, to the general public. Subpart 1 deals with deeds, powers of appointment, disclaimers, and powers of attorney. Subpart 2, which I wish to deal with at some length, deals with writing required in certain cases. Subpart 3 deals with sales and other similar transactions. Subpart 4 deals with the apportionment of periodical payments between vendors and purchasers. And there are three more subparts, which deal with particular issues.
I was drawn—as I am sure the Minister would similarly have been drawn—to this curious provision in clause 22, which is entitled “Persons between 18 and 20 years may do certain things”. It is, perhaps, a statement of where the Labour Government is that it now is legislating for people in various age ranges as to what particular activities they are permitted to undertake. Clause 22 allows persons between 18 and 20 years of age to carry out a number of activities—some of which it may be that this Parliament would not approve of. But surprisingly clause 22(2) states: “Anything done by a person under subsection (1) has the same effect as if the person were 20 years old.” None of that is terribly clear to anyone interested in these matters.
I also noted, just looking at these technical issues that have so bogged down the Government and have resulted in the incredible delay in the legislation being introduced, that in clause 23(2)(a) it states: “words denoting a gender include every other gender:” Now, that is a very interesting statement, because most of us would have a view that there were two genders—masculine and feminine. But the Government has opened up a new possibility—perhaps more than one—that there may be genders apart from male and female that should be given specific consideration in this legislation. I rather doubt that, but it seems that it was an important point for the Government to make in this legislation.
What I think is probably more significant in Subpart 2 is that it records two obligations that have always been critical from the perspective of property lawyers—that is, that contracts for the sale and purchase of land need to be in writing. The bill makes it clear that a doctrine called the doctrine of part performance still applies. There was an opportunity to make a change there. I am glad that no change has in fact been made, because probably, in the reality of property transactions in the course of a person’s life, the buying and selling of his or her home is the most significant transaction—apart from marriage—that he or she enters into. It is important that there be a clear understanding as to what the terms of the deal are. That is why clause 24 provides that contracts for disposition of land are not enforceable unless in writing.
The other provision, clause 27, is about guarantees. From a practical lawyer’s perspective, it is clearly appropriate that contracts of guarantee be in writing. I also commend that particular provision.
CHRISTOPHER FINLAYSON (National) Link to this
That was what one would expect from Dr Worth—an outstanding contribution. So I do not need to spend long dealing with Part 2 of the Property Law Bill. It is a very interesting part of the bill. Subpart 1 brings together rules about deeds, powers of appointment, and powers of attorney, which may seem to be dry, dusty, and boring, but which are actually very important, indeed. Those changes will result in the repeal of quite ancient legislation.
For anyone who is interested in law reform and in some of the changes that are being made by this legislation, one need go no further than Subpart 7. I am surprised that Dr Worth, who is such an eminent legal historian, did not spend some time looking at Subpart 7, because it deals with the abolition and modification of common law rules relating to property.
CHRISTOPHER FINLAYSON Link to this
I think Dr Worth should take another call, because I very much would like to hear from him about the effect of clause 57 and the abolition of feudal incidents of estate in fee simple. In fact, I would love for the Minister to take a call and explain that to us. That really would be interesting.
I ask members to look at clause 58—and I think Dr Worth could address this as well—which is entitled: “Abolition of obsolete estates and rules”. I ask members to look at what is going as a result of this ground-breaking legislation, constituting such a major reform of property law for the first time in 55 years. Under clause 58(1)(a) estates tail and estates by wrong go. Under clause 58(1)(b) the making of a forfeiture by any conveyance goes. Under clause 58(1)(c) the passing of the legal estate in any land by certain means—a covenant to stand seized, and a contract for the sale and purchase of land—goes.
Indeed, one of the changes that the Justice and Electoral Committee made was to remove the provisions of clause 58(3). Members of the Committee will see that originally this clause, as drafted, would have abolished the rule of law known as the rule in Shelley’s case. I would be most grateful if the Minister could take a call and explain to us what the rule in Shelly’s case was. We took the view that the rule in Shelley’s case had already gone. I refer members to page 2 of the commentary, which talks about the rule in Shelley’s case, and to the fact that section 22 of the Property Law Act 1952 had already abolished that rule. Unless one is a member of New Zealand First—whose members have a tendency to introduce legislation that seeks to repeal or abolish points of law or rules of law that have already been abolished—there would seem to be no point in trying to do that.
This is a very interesting subpart. It is the sort of thing that will interest law students in years to come. These ancient common law rules relating to property all go in this modernising statute. I commend Subpart 7 to members because it does make very interesting reading indeed.
Part 2 is very important. It deals with the general rules relating to dispositions, instruments, transactions, and property—the sorts of things that affect all of us on a day-to-day basis—and as I said, Subpart 7 deals with the modification and abolition of common law rules relating to property. It is very interesting, it is very important, and at the end of the day, it is very practical. That is why National is supporting Part 2.
Dr RICHARD WORTH (National) Link to this
I am glad that Mr Finlayson has drawn our attention to clause 58, “Abolition of obsolete estates and rules”. I think it is important to note—and probably the Minister will speak about this—that we are now seeing abolished some rather critical provisions that, I think, well stood the test of time. I am talking, obviously, of a covenant to stand seized, livery of seisin, and a contract for the sale and purchase of land. But what I would like to direct the attention of the Committee to is not clause 58, which Mr Finlayson has spoken on so well, but, rather, to clause 60 where we see, I think with some sadness, the doctrine of interesse termini abolished.
I hear from members of the Committee, perhaps, rumblings of concern to see that doctrine abolished. It was a seminal part of land law and it certainly, I think, detained many conveyancing practitioners, as with pens poised they looked to see whether changes might be made to a particular conveyancing document. The way that the Justice and Electoral Committee approached the matter has been to strike out that particular provision and substitute what is probably a much more workable framework. So not only is the doctrine of interesse termini abolished but additional provisions of a most helpful nature have been added. I think probably the most helpful is clause 60(2), which states: “A lessee acquires an estate in the land on the date fixed for the commencement of the lease, whether or not the lessee enters into possession of the land on that date.” That is a provision that I think it is worthy of particular note.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to Part 2 be agreed to.
CHRISTOPHER FINLAYSON (National) Link to this
I will take a brief call to talk about Part 3, because again it deals with something that is really very practical for most New Zealanders, and that is mortgages. I think that an excellent job was done by the Law Commission in reporting on this particular area of the law, and I commend the Ministry of Justice, which took the commission’s report and dealt with some very complex issues of law reform in the area of land, and which has done it very well in Part 3.
There are a couple of minor amendments, but again I repeat what I said in the House during the second reading debate yesterday: the quality of work that was done is reflected in what is really the paucity of reports or comments from the Justice and Electoral Committee on this area. I think we recommended that clause 77A be inserted in the bill. The reason for that, as the commentary says, is to clarify the relationship between this bill and the Personal Property Securities Act. But, really, there is not too much of any great moment here that one needs to dwell on. It is one of those areas, as I have said in the House in the last few days in relation to other statutes, that one could spend a lot of time on or briefly summarise.
But the key point that needs to be made is that Part 3 brings together all the rules relating to mortgages and it is a splendid piece of work. That is all I think I need to say.
CHRIS AUCHINVOLE (National) Link to this
I would agree with both my colleagues who have spoken previously, and I say to Dr Worth that I, too, shared his sense of distress initially at seeing the doctrine of interesse termini being abolished. But I daresay it is something that one comes to terms with.
I also shared the views of my colleague Chris Finlayson in recognising that Part 3 is a very useful codification of mortgages, and other things. Just to deal with one particular aspect of that, and not to take the Committee’s time unduly, I bring to the attention of the Committee the terms and conditions of leases, where the Justice and Electoral Committee has recommended that an amendment be made to clause 142(2)(a) to require the inclusion of all renewal terms in the maximum lease term. The clause as introduced requires the term of lease entered into by a mortgagee in possession not to exceed 2 years in a residential tenancy or 15 years in any other case, except with the consent of the mortgagor or a court. The committee considered that the clause as introduced is ambiguous about whether renewal terms are included in the 15-year period, and the last thing one needs in mortgage agreements is ambiguity. Thank you.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to Part 3 be agreed to.
Dr RICHARD WORTH (National) Link to this
In this long-running Committee debate on the Property Law Bill, we see in Part 4 key provisions relating to the leases of land. There is only really one provision that I think is worthy of comment in the Committee stage, although I am sure other members will have other issues that detain them. But I would like to direct the attention of the Minister to clause 265 and ask a number of questions of him, because tricky legal issues arise here. Clause 265 is concerned with the removal of fixtures by the lessee. The lessor is the landlord; the lessee is the tenant. Clause 265 reads in part: “A lessee may remove any trade, ornamental, or agricultural fixture (except a lessor’s fixture) that the lessee has affixed to any leased premises,” but only on two conditions. The first is while the lessee is in lawful possession of the premises; or, during a reasonable period after the lease ceases to apply in the particular case.
I just note the provisions of clause 265(3), that a lessee who exercises a right to remove a fixture has some very precise obligations. The first is to cause as little damage as possible to the leased premises; the second is to make good any damage caused; and, third, to accept a compensation obligation. In that context, I am sure members of the Committee who may have been in the position of being a tenant will know about the disputes that break out between landlord and tenant on fixture removal issues. Here we see a carry-forward of old law and a clarification in plain English of obligations that certainly needed that degree of precision and rewording.
CHRIS AUCHINVOLE (National) Link to this
I selected clause 224 of Part 3 of the Property Law Bill to speak on, because I felt that as a non-practitioner in a legal sense I would find it easier to understand.
It is an interesting point that the Justice and Electoral Committee recommended this particular clause be amended to allow a commercial lease to include an absolute prohibition on changing the use of the leased premises. At first I was struggling to understand why that would be a good idea, but this amendment is particularly relevant to the multi-tenancy permits and premises—for example, malls, where retailers depend on all the premises in the complex being used for their designated purpose. This amendment would ensure that a lessee was limited in the use to which he or she could put a specified lease, and it would protect the interests of the lessor and others in the vicinity of the lease.
The select committee considered the potential interpretation and the effect of this recommendation, and it was one of the very few clauses that attracted a number of submissions. I should say that, being on the select committee, one of the biggest disappointments was the lack of submissions—particularly from the legal fraternity. But the select committee considered that such an amendment would create a workable balance between the interests of lessors and lessees, and would ensure more certainty in practice, while reducing the potential involvement of the courts. So it was recommended that the clause be amended to avoid misinterpretation, and to make it clear that the lessor can claim legal costs and expenses only if entitled to do so under the lease.
The select committee also considered recommending an amendment that would allow all the parties to a commercial lease to agree on the conditions to be satisfied by a lessee before a sublet can be signed, in order to provide greater certainty to parties. However, such an amendment might similarly remove the ability of the court to determine whether a lessor’s consent was unreasonably withheld. It was recognised that this would be a significant change to the current law, and it was considered not to be in the best interests of the parties involved. For those reasons, it was recommended that the existing provision be retained. Thank you, Madam Chair.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to Part 4 be agreed to.
The CHAIRPERSON (Ann Hartley) Link to this
The debate on Part 5 includes debate on schedules 4 and 5.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to Part 5 be agreed to.
CHRISTOPHER FINLAYSON (National) Link to this
So far as I am aware, no changes were recommended by the Justice and Electoral Committee. No, I am wrong; there was one, which related to clause 333—so I will come to that in due course. But I simply say that Part 6 outlines some special powers of the court in various situations, and brings into this legislation some provisions that I think were included in a number of amendments to the Property Law Act 1952. Some of the circumstances in which the court is required to exercise these special powers are interesting, indeed. For example, Subpart 1 deals with entry on to neighbouring land, and Subpart 2 deals with wrongly placed structures—a situation that can occur from time to time.
Subpart 3 is very interesting, and the problem of landlocked land sometimes does arise. When I was in practice I can recall being involved in a number of cases where someone wanted to get access to some land that was landlocked, and needed to apply to the court to enable an order to be made so that the neighbour would be required to grant reasonable access to landlocked land. I am not saying that the issue is an everyday occurrence in the courts, but it is one that does arise from time to time and we need to have clear rules to enable justice to be done in the particular circumstances.
Subpart 4 is one of those areas that causes a great deal of upset between neighbours. The number of times neighbours fall out over trees and unauthorised improvements on neighbouring land is surprising. Indeed, the court may make orders for trimming trees, or for removing and altering structures, if the trees or structures are causing a nuisance or some kind of injurious affection to a neighbour. I have had a number of those cases in my time and I can assure the Committee that nothing creates greater tension between neighbours than a tree that has grown too large. Indeed, I can recall a case in Lower Hutt where there seemed to be a problem with a tree, and when one of the applications was going to the court it was suddenly found that the tree had been poisoned and was dying. That was one way of dealing with the issue, but it was certainly not in accordance with the Property Law Act or, indeed, in accordance with the criminal law.
So Subpart 4 sets out some provisions to deal with this issue, which, as I have said, can cause so much trouble between neighbours, and it is in that context that the select committee recommended a minor change. We recommended that clause 333 be amended so that a party subject to one of these orders can apply to the District Court for a variation of the order if circumstances have changed in such a way that it will result in a different order being made by the court. It is a fairly minor amendment, but it enables the courts to have flexibility to grant orders that are appropriate to particular circumstances.
So Part 6 is about the special powers of the court in particular circumstances, and it provides a reasonably straightforward way in which the court can deal with the kinds of issues I have outlined. Other than that I have nothing further to say on Part 6, because only one change needed to be addressed—the one I have just mentioned—and in all other respects the Justice and Electoral Committee was satisfied that Part 6 was well drafted and workable.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to Part 6 be agreed to.
CHRISTOPHER FINLAYSON (National) Link to this
For the record I will make some brief comments on Part 7, which deals with miscellaneous provisions. The part that interests me is the second part of Part 7, which sets out certain repeals. It is worth referring, for example, to clauses 360 and 361 because they give the Committee an idea of the extent of the changes that are being introduced by this very important legislation. I ask members to go to clause 360(2) where they will see that some very ancient statutes, indeed, are headed for the scrap heap. We start with the 1267 Statute of Marlborough, and move to the 1289-90 Quia Emptores statute, the Partition Act 1539, the Partition Act 1540, and so on. Through the reign of William and Mary some statutes go; some statutes from Queen Anne’s time go; various statutes from George II—one of those Hanoverian kings—go; and then, statutes from more recent Victorian times go. Indeed, that famous statute the Fires Prevention (Metropolis) Act 1774 is affected by this legislation.
All I am trying to emphasise is that, as a result of the passage of this legislation, certain imperial enactments relating to property are no longer to be considered part of the law of New Zealand. It will be very interesting, after this legislation has been passed, to undertake an assessment of just how many imperial enactments are left. I venture to suggest there will not be very many, at all.
So Part 7 is absolutely uncontroversial, and it simply deals with a couple of miscellaneous rules. But, for the record, it is worth considering the far-reaching impact of clause 360, because, as I said, it deals with imperial enactments repeal. So some of those ancient statutes that were brought into New Zealand by virtue of the Imperial Laws Application Act 1988, shall, upon the Governor-General’s assent being given, have no longer any effect in this country.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to Part 7 be agreed to.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to schedule 2 be agreed to.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to schedule 3 be agreed to.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to schedule 4 be agreed to.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to schedule 6 be agreed to.
The question was put that the amendments set out on Supplementary Order Paper 146 in the name of the Hon Clayton Cosgrove to schedule 7 be agreed to.
CHRISTOPHER FINLAYSON (National) Link to this
I am almost completely dumbfounded by the Committee stage of this bill tonight. This bill is the most important reform of property law for 55 years. It has been in gestation for many years indeed, because, as the Justice and Electoral Committee’s commentary on the bill states, it builds on the work of the Law Commission over a lengthy period of time, and, more recently, on the work of the Ministry of Justice. It deals with extremely important rules of law affecting most, if not all, New Zealanders at some time in their lives. Yet what we have seen is not one Government speaker prepared to stand up and say anything about any part of it. Nothing! They were all sitting there, utterly mute. I am simply amazed that on such important legislation they could not get off their chuffs and make at least a brief contribution.
Look at the subject matter we have been studying tonight, and which National members have been addressing—mortgages, powers of attorney, deeds, leases—all the sorts of things that we need to understand, and that we come in contact with time and time again. I go back to the days when I used to sit up in the public gallery when I was a student. In those days, of course, there would have been a clause by clause analysis of the bill, and we would have had the Geoffrey Palmers on their feet debating the clause by clause analysis—a rigid exegetical analysis of the legislation. Look at members opposite now, sitting there in various states of putrefaction, totally unable to make any contribution. I think they are so absorbed in intra-party hatred and fighting that they have no energy left to come down to the Chamber and discuss the Property Law Bill.
I am very, very disappointed, because it is important legislation. It is not every day that the Parliament of this land looks at some of these arcane and important areas of law, and we have had no contribution to the legislative process from Labour at all. I, frankly, am dumbfounded by the failure of the Government to engage in the debate. It is not as though we were working incredibly hard on this side, because all we needed to do was have a part by part analysis. In the time available, given the restrictions on debating bills by parts, all we could do is take one or two subjects and then expand on that.
CHRISTOPHER FINLAYSON Link to this
We were on the committee, we were interested, and we were prepared to play a part—unlike the drones on the other side. I am very disappointed. Thus this legislation passes into law, and one can say, in all honesty, that the Labour members in the Committee have contributed not one jot or tittle.
Hon CLAYTON COSGROVE (Associate Minister of Justice) Link to this
It would be a terrible evening if Mr Finlayson were disappointed. I will take a short call to respond to the load of political bile that emanated from that side of the Chamber. After working jointly in a non-partisan way with the Justice and Electoral Committee, the reason that members of the Government have chosen to allow this bill to go forward is simply a little bit of common sense.
We agree with the Property Law Bill. We do not need to hear hour upon hour of the sound of our own voices and our own legal knowledge of those of us on this side of the Chamber—not including myself—who are lawyers. We do not need to stand up and wax eloquently way back over the centuries of law. Put simply, the taxpayers of New Zealand pay us to pass legislation. The Government agrees with this bill. The Government thanks the Opposition—at least those on the select committee—for the way in which they expedited this non-partisan legislation, as facilitated by the Law Commission.
It is a fact that the legislation makes radical change and improves our property laws. It is significant legislation, as the learned Mr Finlayson said. Therefore, in the view of the Government, instead of puffing up our own egos, taking speech after speech, we agree with and support the legislation—as does the Opposition—and we feel we should pass the legislation, as taxpayers charge us on our large salaries to do.