Land Transfer Bill

This is the second time, but I will start again. I was saying that it is a very good bill, and I too want to commend the Law Commission for producing it. New Zealand First will vote in favour, but we do want to make some constructive suggestions for improvement. Irrespective of whether they pass or not, we will be supporting the bill.

The first is Supplementary Order Paper (SOP) 325, which would insert new clause 9A, for a requirement for the registrar to maintain a register of foreign land ownership. The reason for that is that it is a very important issue for us. It is very important for New Zealand First to understand foreign land ownership in New Zealand and, in particular, how much land is owned by foreigners and who they are. We think that is a matter that the public should be able to discover easily, and that will never happen unless there is a register of foreign land ownership.

There is, actually, currently no easy or accurate way to measure the amount of land under the control of foreign nationals, and that is the point. Unlike other jurisdictions, there is no official database of foreign land in New Zealand. As I understand it, the estimates that some have made about foreign ownership vary from 1 percent to over 3 percent, but even if it is 1 percent, that is still quite a lot of land. There are many people in the community who would have an interest in knowing and understanding that—not just political parties; many others as well.

The Overseas Investment Office, as you know, collects data and it decides on foreign ownership, but its data is not broad enough, not accurate enough, and not complete enough to provide the information that people need. So this SOP would ensure that a comprehensive register of foreign-owned land in New Zealand is available for anyone who needs that information.

The proposed register would record names and nationalities, the amount and value of land involved, and the regions in which the land is situated. Purchasers would actually be obligated, under this provision, upon registering land dealings, to provide information for the register. It would apply to all dealings in land, as that term is defined in section 2 of the Land Transfer Act 1952, including: “messages, tenements, hereditaments, corporeal and incorporeal, of every kind and description,”. There is a substantial penalty also provided for in the bill for deliberate non-compliance, being a fine of up to 25 percent of the value of the land concerned. So there would be quite a heavy penalty, and therefore we think that that would ensure that compliance is achieved.

The register is intended to be a resource for policy makers as well as the general public, who would be able to accurately assess foreign land holdings across New Zealand as well as within particular areas of the country. The register would provide transparency for concerned New Zealanders. Although it would not cover existing foreign land holdings, it would, over time, provide a valuable resource of information without actually incurring any significant costs.

I want to move on now to my second SOP, which is No. 313, and that would delete clause 57(3). When you look at clause 57, 57(1) provides for the cancellation of a registration where it would be manifestly unjust to maintain it, and that, along with clause 57(2) are, we think, good provisions. “Manifestly unjust” is an appropriately high bar, and we approve of that. But clause 57(3), we believe, is wrong and should be deleted. It prevents an order for cancellation unless the court finds in the negative—that compensation could not properly address the injustice. If the high standard of the term “manifest injustice” in clause 57(1) is met, then the applicant should be able to get cancellation, in our view, unless the court finds that it would be unjust to do so for some very good reason that it would judge to be the case. That would mean that a defendant would have the burden of proof to show that resort to cancellation would be unjust, and that is the way it should be.

It should not be necessary for an applicant for such an order to show that compensation would not properly address the injustice. After all, there is another clause, clause 59, that already exists to provide for compensation where that is applied for. It is pretty obvious that if a person is applying on just grounds and meets that high bar for cancellation, then they should be able to get that unless a defendant can prove that they should not. I think that is the fair and proper way that it should be, and that is why we in New Zealand First believe that clause 57(3) needs to be deleted—because it actually works against the whole intent of the clause.

I want to move on now, finally, to my third SOP, which is No. 314. That would reinsert clause 54. It is not a hugely important matter in the great scheme of things, but it is important enough in its own right. What clause 54 provided for, and should still provide for, is imposing new requirements on mortgagees to take reasonable steps—and I want to emphasise the term “reasonable”—to verify the identity of the mortgagor and the authority of the person executing on behalf of the mortgagor.

That is a very sensible and basic requirement that would assist in avoiding both fraud and mistake, and particularly mistake, I believe. That can occur in situations, for example, where a trustee or an agent acts without authority, or when one or more than one interested proprietors purport to sign on behalf of all. In my experience, those are the kinds of situations where this would apply. It is not necessarily deliberate cases of fraud, because they are few and far between, but there are many other cases that this SOP and this clause would cover.

The best time to avoid those improprieties or mistakes is at the time the mortgage is signed—right at the coalface, in other words. Clause 54(1) would require only an ordinary best practice procedure by requiring verification of a mortgagor’s identity and their authority to sign. It is not expensive. It is not difficult to do. It is something you would expect banks, for example, to do anyway.

The reasons given for deletion, in my view, are inadequate and unconvincing. They were, firstly, that sufficient protections already exist—well, where and how; I do not believe they do—and, secondly, that mortgage fraud is unlikely given the Landonline system now used. Well, maybe that is the case, but that does not mean there will never be a fraud, and it certainly does not mean that there will not be any mistakes.

The third reason is that the cost of compliance is too high and disproportionate. I take that with a huge grain of salt. I do not believe for a moment that the cost of compliance of this would be high or disproportionate. So for those reasons I think that it would be best, on the balance of all those considerations, for clause 54 to be reinstated. It is not a big deal, but it is actually just good common-sense stuff. It does not impose huge or expensive or difficult obligations on people dealing with mortgages. It is the sort of stuff, as I said, that is just best practice, and they should be doing it.

I commend all three SOPs to the Committee, for the reasons I have given, and I hope all parties will sincerely consider them and help us to make it a better bill. Thank you.

I thank Mr O’Rourke for those very helpful comments and would respond to his first Supplementary Order Paper (SOP) 325 by saying I think it is probably outside the scope of the bill. This legislation is very technical legislation on the hows and whys and the means by which one registers an interest in land, and so on. It states the fundamental principles about indefeasibility of title. A register of foreign landowners addresses a slightly different point. I hear what the member is saying. Maybe there should be some sui generis legislation, but that can be the subject of a separate debate. It is my belief that what the member is proposing in that SOP is outside the scope of the bill. I just need to give a bit more thought to the second of his SOPs, SOP 313, so that I can give him a reasonably coherent answer, rather than waffle, so I will come back to that.

If I can talk to his third SOP, SOP 314, about whether those clauses 54 and 55 should be reinstated, I think he very accurately summarised the reasons that were advanced as to why the clauses were deleted. First, he talked about the issue of costs, and he said that he did not think that the costs would be insurmountable. He may well be right, but the fact of the matter is that those costs of compliance would, as sure as anything, be passed on to the consumer, because I would not think that the banking institutions would carry them themselves. Then the issue arises about whether that expense is justifiable, given the low level of mortgage fraud in the country.

The second point I would raise, and I think this is a more powerful point, is that existing identity verification requirements appear to be robust. The legislation currently requires both lawyers and conveyancers, all 30 of them, to take reasonable steps to confirm the identity of a person who has given them authority to lodge a transfer instrument on their behalf. The requirement to verify identity for a transaction relating to land also arises in other circumstances. One that I am very familiar with is the protection provided for in the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, which places an obligation on entities to verify a person’s identity. I also refer Mr O’Rourke to Part 2 of the Financial Transactions Reporting Act 1996.

💬 Denis O’Rourke: So it won’t increase costs, then, because they have to do it anyway.

I hear what the member is saying, and we obviously would not want to have a contentious debate on clauses 54 and 55. The view of the department and the Minister for Land Information is that although the risk appears to be currently low, there will be monitoring to ensure that should the situation change, it can be addressed speedily, allowing the clauses to be reinstated should they need to be.

💬 Denis O’Rourke: Do it now.

It may not satisfy the honourable member, but I hope that that answers the position of the Government in relation to the first and third of his SOPs. I think it has picked up the point raised by Mr Huo, who will correct me if I am wrong, and then I will come back to Mr O’Rourke’s second point when I figure out what to say.

I appreciate the comments from the Minister in the chair, Christopher Finlayson, but notwithstanding his opinion about the Supplementary Order Paper of Denis O’Rourke, Supplementary Order Paper 325, which would insert a new clause 9A—notwithstanding the Minister’s view that that is out of scope of this bill, I want to express Labour’s support for this amendment. It deals with a problem that has been the subject of much contentious debate in this Parliament and out in the public sphere over the last few years, as the housing crisis has got worse and worse. It is our view on this side of the Chamber that unchecked demand pressures are causing real problems in the housing market. By no means the biggest pressure, but still a significant one, is the lack of regulation or lack of limits around foreign investment in the residential real estate market. Denis O’Rourke’s amendment seeks to fix one aspect of this problem by inserting in Part 2, in new clause 9A, the requirement for the registrar to keep a foreign ownership of land register. This is, basically, the policy in Australia and in the UK, so it is a very sensible, mainstream proposal. What it would do is establish a transparent register of foreign ownership that would include the person’s name and nationality, the amount and value of the land involved, and the districts in which the land is situated.

What is the problem it is trying to solve? The problem has been a terrible dearth of reliable information about foreign ownership of land. In the case of residential land, the Government has stepped into the vacuum over the last year or two by having Land Information New Zealand (LINZ) run a survey of people buying residential property. It has only recently released the sixth quarterly report of that Land Information New Zealand data. It purports to provide summary information about the extent of foreign buying in the residential real estate market, but on the sixth go, it is still having real problems generating any kind of data that sheds useful light on this issue. In the most recent one it tidied up one of the longstanding problems with the data, and that is that it was treating people who are in New Zealand and buying homes while on either a temporary student visa or a temporary work visa as New Zealanders, which obviously made kind of a mockery of the numbers.

But in the most recent instalment of LINZ data it still included trusts and companies—automatically treating them all as if they were New Zealand residents buying residential property. So you could only conclude from the most recent batch of data that was released that foreign buyers in the residential real estate market were somewhere between 4 percent, which was the absolute number that the data could confirm, and 22 percent, given that a large number of the non-resident foreign buyers buying homes in New Zealand are using trusts and company structures.

So I say all that by way of just saying that this is the problem. It is a real problem—the lack of data. It is a matter of huge public interest. There is very, very strong public support for the idea of putting limits and controls around foreign investment in real estate as they do in Australia, Hong Kong, Singapore, and British Colombia in Canada, most recently. What this would do is provide a source of really good, reliable information in real time about the presence of foreign ownership—in fact, not only in terms of residential property but property more generally. This would be overwhelmingly popular with New Zealanders, this initiative. It is sensible, it would provide good data to support public policy, and Labour will support Denis O’Rourke’s amendment.

Tēnā koe, Mr Chair. Thank you very much for this opportunity. I think it is good timing, with the Minister the Hon Christopher Finlayson in the chair as I read through this particular bill, and, in particular, clause 57, “Court may make order only in cases of manifest injustice”, and, given the Minister in the chair’s role and responsibilities in the House, one particular provision under clause 57(4): “In determining whether to make an order, the court may take into account— … (c) if the estate or interest is in Māori freehold land, failure by a person to comply with Te Ture Whenua Maori Act 1993;”.

Given that Te Ture Whenua Māori Bill is to go through its progression through this House, I wonder whether—and it is good timing that it is Mr Finlayson in the chair—he can provide some sort of commentary, just on that part in particular, with regard to the proposed changes under Te Ture Whenua Māori Bill. Also, in his role as the Treaty Minister, the clause—I was staring at it earlier; it will come to me—I am referring to is around the value of land and the compensation aspects of this particular bill around the value of the land, and what impact this might have on proposed Treaty settlements moving forward. So I guess it is not necessarily a question, but certainly a request as to whether the Minister in the chair would not mind providing some commentary for his thoughts, in particular around that particular clause I raised—clause 57(4)—where it says there: “In determining whether to make an order, the court may take into account— … (c) if the estate or interest is in Māori freehold land, failure by a person to comply with Te Ture Whenua Maori Act 1993;”. Some commentary on that would be much appreciated.

I have just had a text from Mr Williamson, who calls me a very sad puppy for being interested in this stuff. But it is very interesting, and I say to Mr Williamson that he should be ashamed of himself for making such an allegation.

But let me address immediately the very good point made by Mr Henare about clause 57(4)(c), which talks about where manifest injustice may apply in relation to land that comes under Te Ture Whenua Maori Act. The issue he raises is: how does that provision affect Māori land, and does it, in fact, introduce a different standard in respect of land under that Act, compared with other land? The point I would want to make about that is that the manifest injustice provision does not introduce a different standard of conduct in respect of Māori land compared with other land. Māori freehold land will continue to have the same indefeasible protections as for other land.

The point here that needs to be emphasised, though, is that when considering whether to make an order cancelling the registration of land or of an interest in land because the applicant alleges allowing the registration would constitute a case of manifest injustice, clause 57 sets out various factors that the court takes into account. One of those factors where the estate or interest is in Māori freehold land is whether there was a failure by a person to comply with Te Ture Whenua Maori Act.

In other words, in instances where due process was not followed under that Act, resulting in an incorrectly registered title, the manifest injustice provision would allow the court to consider—at least consider—the overturning of the registration to avoid an unfair outcome. So I say to Mr Henare that, if anything, the provision reinforces current protections under the 1993 Act.

Tēnā koe, Mr Chair. Thank you, and I thank the Minister in the chair, Christopher Finlayson, for his active involvement in this debate. It was interesting today—with the good offices of Phil Twyford there was a group of youth leaders from Myanmar who were following MPs for the day. The discussion with Myo Thu, who was working with my office, was very much that in Myanmar there is no Torrens system, so there are great difficulties in terms of customary ownership of land and working out who owns land and therefore how any property taxes should be levied, and the benefits we have in New Zealand from having our Torrens system, the fact that it has been put online, and the fact that it does then provide, as Michael Wood noted, indefeasibility of title and a security when people are engaging in property transactions, which we are very fortunate to have.

I would just like to comment in terms of Mr O’Rourke’s Supplementary Order Papers (SOPs), particularly the one that seeks to reinsert clause 54, SOP 314. Certainly, in the Green Party we are supporting the bill, but we will be voting against this SOP because, with other members of the Government Administration Committee, we were convinced by the evidence that the Law Society and the banks provided that it was going to make the whole system too cumbersome if there was a requirement in the bill, as it was originally introduced, that the mortgagee would have to verify the identity of the mortgagor.

I note in the submissions of the Law Society that it made the point that it thought that this provision, clause 54, had ended up in the bill because of the concern that New Zealand would follow Australia in terms of the increase in incidence of identity and mortgage fraud. But while Australia, as the Minister has noted, was the birthplace of the Torrens system—in South Australia—it seems that New Zealand has subsequently overtaken it and that our electronic Landonline system is now much more robust than the largely papers-based system that operates in many states in Australia.

The point that both the Law Society and the banks made was that Land Information New Zealand already has quite detailed standards, which require evidence about contact details for the physical address of the property and the landowner concerned, and quite a high level of information that is already provided. The other point that was made was that there has been only one known case of identity fraud in New Zealand since Landonline was introduced. So it certainly was not the problem that it was in Australia.

So we will not be supporting that SOP, but we certainly will be supporting Mr O’Rourke’s other SOP, SOP 325, to insert new clause 9A, “Registrar to keep foreign ownership of land register”. The Minister thinks this may be beyond the scope of the bill, but I would encourage him to go to clause 10 of the bill, because that does talk about the purpose of the register: “(a) provide a public record of land that is subject to this Act, including a record of—(i) title to estates and interests in land … and (ii) other information …”. Looking at the contents of the register, we think that Mr O’Rourke’s SOP is perfectly in line with what the register should have in it, as set out in clauses 10 and 11.

There is increasing concern about the extent of foreign overseas ownership of land in New Zealand, and it is very difficult to get accurate information on that. I think the Campaign Against Foreign Control of Aotearoa (CAFCA)—it has fallen on it as a non-governmental organisation, with the limited resources it has, to be the best source of accurate information on the extent of land that has gone into overseas ownership. In 2016, I think, CAFCA calculated that there were at least 362,000 hectares of freehold farm and forestry land and 103,000 hectares of leasehold land. If Mr O’Rourke’s SOP became law, we would have much more accurate information on the extent of land that was in foreign ownership. It is the Green Party’s longstanding view that our laws around overseas ownership in New Zealand are far too lax and that we should actually change the law to put significant restrictions on landownership by non-citizens and non-residents.

I think we have seen that recently with a Landcorp farm, Jericho station, in Southland: there is a significant degree of public concern about this 1,400-hectare property going into overseas ownership. A local New Zealand Southland farmer put in a bid of $8.5 million, but an overseas owner can offer more than that. If we have title laws on foreign ownership—and Mr O’Rourke’s SOP is a step towards actually just providing more accurate information—we can help ensure that the basis of the primary production sector of the economy is maintained in New Zealand ownership. Alienating that alienates the basis of creating wealth in our primary production sector. This is only a very small measure, but I do encourage the Government to consider the purpose of the register, the contents of the register, and the fact that this SOP belongs with this bill and would actually add to the value of the register in providing accurate information to New Zealanders about overseas ownership. Thank you.

I thank the Minister in the chair, Chris Finlayson, for his earlier comments. Basically, the Minister’s view is that any measures that lead up to the registration of foreign ownership of our residential properties are outside of the scope of the bill. Specifically, the New Zealand First member Denis O’Rourke’s Supplementary Order Paper (SOP) 325, according to the Minister, is outside of the scope of the bill. With due respect, it is the Chair, advised by the Clerk, who decides whether—

The CHAIRPERSON (Hon Chester Borrows): That is right.

—amendments are in scope, not the Minister in the chair. So could I ask the Chair whether SOP 325 has been ruled in or out of the scope of the bill? The Chair can answer my question either now or after my contribution.

The CHAIRPERSON (Hon Chester Borrows): Oh, thank you!

That is your call.

The CHAIRPERSON (Hon Chester Borrows): Good! I will get around to it—it is a valid SOP at the moment and it has not been ruled out, so go for it.

Thank you. Thank you very much, Mr Chair. At the moment we do not have any legitimate and reasonably reliable data about the number of foreign purchasers of New Zealand residential properties. Figures released by Land Information New Zealand showed that only 3 percent, for instance, of Chinese non-residents, were responsible for purchasing New Zealand residential properties, but the houses purchased by people with Chinese names were more than four times the level of ethnic Chinese in Auckland’s population.

So here we are—we are talking about the “Chinese names”. One colleague, shortly after I returned to this House, did make a joke that we now have not one but two “Chinese names” in this House. In talking about my Chinese name—you may forget about my first name, because it can be painful even trying to get it pronounced correctly—my last name, spelt H-u-o, is pronounced similar to the word h-a-l-l, with a soft “l”: Huo. Still, people get confused. Some call me Mr Hugh, and some of them call me Mr Hwah, or Mr Who. French people will certainly call me Mr ’uo, because the “h” is silent. If my last name does get pronounced “who”, that can well be my campaign slogan: “Who cares!”

💬 Hon Members: Ha, ha!

And, being light-hearted, we do care.

Now, back to Part 2. Part 2 deals with “Land title and registration”, and clause 9 is “Registrar to keep register” and clause 10 is “Purpose of register”, so that brings us back to SOP 325. We do not have any legitimate and reliable data about the number of foreign purchasers of New Zealand residential properties. What I just outlined just shows that the discrepancy is enormous. On the one hand, we have a housing crisis; on the other, nobody knows about the size and scope of foreign ownership of New Zealand residential properties.

💬 Hon Member: He’ll know.

Well, those National MPs may have a good laugh, but National does operate in such a manner. It is flying a big jumbo jet, but without a working navigation system.

💬 Hon Members: Ha, ha!

Now, back to this bill again. We have three problems with the Land Information New Zealand data. Even the Minister at that time admitted that the data was inconclusive and should not be viewed as a foreign buyers register—here we are; we are back to the SOP again. Those figures were based on the low side of the market. They were collected after the introduction of the new IRD disclosure rule in October 2015, and the data did not and will not include trusts and business purchases. This means that the scale of influence by foreign purchasers in the domestic residential market, at the height of their activity prior to October 2015, will remain unknown for ever.

About US$1 trillion of capital flowed out of China in 2015, and it is reasonable to assume that that movement of money will have had some impact on the New Zealand housing market. As my colleague Phil Twyford said in his contribution earlier, Auckland is not alone with housing problems, despite having the fourth least affordable houses in the world. Hong Kong, Beijing, Vancouver, and other major cities have similar problems too. The Hong Kong Government has widened its property curves by imposing stamp duty, double stamp duty, and buyer’s stamp duty. Now, in Beijing—

💬 Phil Twyford: 15 percent market value.

15 percent—yes, damn right. In Beijing, local authorities applied harsher rules that do not allow non-residents, even Chinese nationals, to buy their residential properties unless they become tax residents for a number of years. Interestingly, the same issue has attracted all sorts of debate there, but race is not part of the argument. The matter is treated as a simple matter of supply and demand, and not race.

Funnily enough, it appears that no one so far has questioned this National Government as to why it has refused to collect any reasonably reliable data to help gauge the size and scope of the problem. At best, it has been in the slow lane; at worst, it has been in denial.

A Kiwi-Chinese investor can buy a property anywhere in New Zealand. But should his family members, such as brothers or sisters living in Beijing, Hong Kong, or Singapore, enjoy the same right? National says yes; Labour says no. Labour’s policy puts the best interests of Kiwis, including Kiwi-Chinese, ahead of foreign buyers, including Chinese nationals. Thank you.

I move, That the question be now put.

That was me—I was the last to my feet, Mr Chair, so I am very flattered and somewhat surprised, but delighted, to take the call.

The CHAIRPERSON (Hon Chester Borrows): The Minister’s pet.

Ha, ha! That is a disturbing comment, Mr Chair, but I will take it in good heart. Ha, ha! I am very happy to rise, and there are a couple of particular clauses I am keen to speak to in this part of the debate. Those are clauses 54 and 57, and I want to talk about some of the alterations made at the Government Administration Committee to these clauses, but also a couple of the Supplementary Order Papers (SOPs) that have been put forward by Denis O’Rourke. Really, Part 1 was a scintillating debate, but it was a mere entrée, and we really are getting to the meat of the matter here, because we are getting into those serious issues about what a manifest injustice is and what the changes are that we are actually looking at making to the Torrens system here. These things potentially do have a significant impact.

I want to come back to that discussion about the importance of indefeasibility, which this whole system rests upon. It rests upon the certainty that we want to have about the identity of the owner of land, and, sitting underneath that, we need to have certainty about the identity of sellers and buyers of land. That comes to the heart of clause 54, which I would like to speak about a little bit here now.

The select committee has struck out clause 54, and when we go through the submissions there are a small number of submissions that encourage this step to be taken. It is probably no surprise that the chief submission that does that comes from the New Zealand Bankers’ Association. I will make sure I retain parliamentary language and am kind, but let me just say that bankers can be bankers, and, in this respect, the New Zealand Bankers’ Association has advanced an understandable argument from its point of view. No industry or sector ever welcomes an additional level of legislative scrutiny or regulation over its activities, but I have to say that I think the select committee may have over overheard the concerns that have been raised by that organisation.

What I can say is that, yes, possibly there are some small compliance costs that would come about as a result of clause 54—and let us just be clear about what clause 54, as it was when it came to the select committee, does: it simply asks that those parties who are lending in a mortgage situation—chiefly but not exclusively the banks—take steps to absolutely ensure that they verify “the identity of the mortgagor or the identity and authority of a person who executes a mortgage”, and I am reading from the struck-out clause 54(2) here. Of course, there will be compliance costs associated with undertaking those steps. When we put protections into our system, there usually are compliance costs. So the question is not whether there are compliance costs, and if the answer is yes we strike it out; the question should be that if there are compliance costs, then, taking into account what we achieve by some public-good regulation, are those compliance costs reasonable?

What I have not come across in either the submission of the New Zealand Bankers’ Association or in the select committee commentary is actually any real quantification or argument that those compliance costs really are excessive or burdensome, given the importance of getting this stuff right, and bearing in mind how bad it is and how many people are potentially very badly damaged, and the processes that we then have to go through to fix it up, if we do not verify correctly the identity of mortgagors. So I am not at all convinced by the arguments around the compliance costs.

There was also an argument put forward, I think, by the Auckland District Law Society, which, of course, has produced many fine contributors to our society—a few National Government Cabinet Ministers, as well. It has got a very, very good submission that it has put forward here. It sort of makes a convenience argument about this as well, and it says, effectively: “This will mean that parties who are providing mortgages will need to attend the legal offices of solicitors to sign the documents.” Certainly, I can see that that is a small inconvenience, but I think that in the greater scheme of things it is not a burdensome one, particularly when we know that when you are buying a house, it is not something you do every week. It is a major transaction; there are going to these things associated with it. So I think taking—

💬 Phil Twyford: There is in Auckland.

In Auckland, that is right. Well, there are some people who are trading them every week, but not most ordinary people. So I do not think that those arguments that have been put up in favour of striking down clause 54 really do stand, and for that reason I certainly stand in support of Denis O’Rourke’s—[Bell rung]

The CHAIRPERSON (Hon Chester Borrows): I will just—[Interruption] Order! I will allow a second call, but I should inform the House that it gives me no small amount of pleasure to overrule my former lecturer from Victoria University—a fine school. However, the Supplementary Order Paper in respect of a register for foreign owners is in scope.

Well, look, this evening just gets better and better. There has been action all over the place—unprecedented things happening in the House this evening, and I hope to improve on it with some comments shortly about clause 57, which I know people have been waiting for all night. So, as I say, I just want to reaffirm that support for Denis O’Rourke’s Supplementary Order Paper 314, for the reasons that I have outlined, which would effectively reinstate clause 54, which was struck out at the select committee.

The other thing I would just note on that is that I have done a number of years working in close association with the banking sector as a union representative of the good folks who actually produce the documentation and sign off on mortgages, and what I do know is that most of the banks do have pretty robust internal procedures, for very obvious reasons—to protect themselves in this area. So I think the argument is somewhat specious that having a legislative confirmation that that is important provides any additional great burden on those very large and very profitable organisations. It simply does not stack up with the experience that I have.

If we move on to clause 57, I just want to talk particularly about clause 57(3). This is another clause where we have a Supplementary Order Paper from Denis O’Rourke, who has been very prolific in this debate, as he is in some others. What Mr O’Rourke suggests is that we strike out clause 57(3). This is actually really important: this relates to what the courts might do when we do find that there is the case of manifest injustice. So, going back to the earlier commentary, manifest injustice is that very high threshold that we have set that means that we have got a narrow way through the Torrens system in terms of the utter integrity and indefeasibility of the land register. Clause 57(3), as it is written, sort of puts an extra test in there, because—I will just read it out so we have got clarity on this: “An order under this section may be made only if the court is satisfied that in the circumstances the injustice could not properly be addressed by compensation or damages”.

That, really, is the point of the SOP from Denis O’Rourke, SOP 313. Effectively, what he is saying is that if there is a manifest injustice—if we have got this wrong, if we have already cleared the hurdle, cleared that very high legal bar that there is a manifest injustice—why would we not just put it right and correct the register? Why would there have to be this additional judicial test to be looked at about whether it is appropriate to first consider compensation or damages. It almost seems to be an additional complication in the system. If we have got it wrong, if there is a manifest injustice, let us simply fix that up in the first place. I think that is what Mr O’Rourke is trying to achieve through his SOP to remove clause 57(3). The Labour Party sees the merit in that and does support that SOP.

I just want to refer to a couple of other submissions that came in in respect of this, and, actually, just to pay some tribute to a very good submission that came through from the Wellington Community Justice Project. I have seen submissions from this group on a number of other bills before; a wide range of bills. The group is, as I understand it, of Wellington law students and recent graduates who submit and engage in the legislative process to make sure that we have good and socially just law. It makes the point—and I am reading from section 9 of its submission here—that “The words ‘manifestly unjust’ indicate an extremely high threshold that naturally promotes caution.” So again, they are sort of reaffirming the point, in respect of this issue with clause 57(3), that it is a very high threshold—a very high threshold—and I think that within the legal system it is going to take a pretty strong case to clear it. If we get there, why are we complicating the matter further by bringing in questions of compensation or damages as well?

While we are on the question of “manifestly unjust”, I do just want to comment on a slight divergence of view that came through between different submissions. The Wellington Community Justice Project addressed the question of whether we should have a definition, in clause 57, of the term “manifest injustice—or, more appropriately, in the interpretation clause. They came down on the side of saying no. There are possibly some reasons of certainty, but actually it is probably better to leave that to the courts. I would note that the Auckland District Law Society came to the opposite view, and actually did call for there to be greater clarity by way of definition in the bill.

The Labour Party thinks that the select committee got this one right, on balance—that it is a complex area, and it is better to let the courts build up a body of jurisprudence around this, through their own interpretation. Thank you very much.

Tēnā koe, Mr Chair. I do want to make a short contribution on Part 2, “Land title and registration”. In my earlier contribution I talked about examining this bill through the lens of Māori land owners. As the proud member for Ikaroa-Rāwhiti, 30 percent of this country’s Māori freehold title land sits in my electorate. Part 2, where we talk about land title and registration—I completely understand that we are modernising the land transfer system in this country, through electronic registration, which, clearly, Part 2 outlines and which we have been doing for some time now. My two questions in relation to Part 2—obviously we are talking about the land registration, the purpose of the registration, and the content of the registration. The Minister in the chair, Chris Finlayson, will also be well aware that we are currently reviewing Te Ture Whenua Maori Act 1993. One of the cornerstones of that piece of legislation is the establishment of a Māori Land Service. Some of the powers in the Māori Land Court will be taken into this yet-to-be-determined service, including registrations. We do not have any detail on that. In fact, last week even Treasury gave that piece of work a red alert in terms of meeting the Government’s own requirements for major works.

Coming back to the bill, Part 2, “Land title and registration”—I want the Minister, if he could, to give assurances, as we debate Part 2, as to whether there is an expectation that Māori land owners’ registration is going to be delivered through Land Information New Zealand. Or perhaps he can give some assurances that the Māori Land Service is still being developed, because I think it is an important point to stand and ask that, on behalf of the constituents within Ikaroa-Rāwhiti. There is huge confusion around the so-called Māori Land Service. So that is one question that I would be interested in the Minister’s view around: what are we debating in Part 2 of this bill, in terms of the registration, its purpose, what it will do, how it will go about it, how it is going to be available, and whether Māori land owners are going to be steered by this part of this legislation that we are debating in the Committee this evening.

I want to thank the Minister for explaining to my colleague Peeni Henare around clause 57—I want to thank the Minister—around the role of the court in terms of clause 57(4)(c), which states: “if the estate or interest is in Māori freehold land, failure by a person to comply with Te Ture Whenua Maori Act 1993;”. Obviously, if we pass Te Ture Whenua Māori Bill that will have to be amended. But a supplementary question in response to the Minister’s explanation is which court we are talking about. Which court, Minister, are we talking about? Are we talking about the Māori Land Court, in relation to clause 57, in so far as Māori land owners are concerned, or are we talking about the High Court? I ask that only because if that is the case, then I want it on the record, because the point that was made in the submissions on Te Ture Whenua Māori Bill was the financial barrier of filing in the High Court for Māori land owners.

So I have two simple questions: are we talking about the Māori Land Service, through Land Information New Zealand, and are we talking about the High Court, in relation to clause 57(4)(c)? Those are two simple questions that, hopefully, the Minister can shed some light on. Kia ora.

I move, That the question be now put.

I raise a point of order, Mr Chairperson.

The CHAIRPERSON (Hon Trevor Mallard): There cannot possibly be a point of order. What possible point of order is there now?

The person who just moved the closure motion has already, previously, moved a closure motion. I understand you cannot do that twice.

The member’s understanding is incorrect. [Interruption] I am sorry; I am considering the calls. We have had quite a few. Mr O’Rourke, do you still want a call?

💬 Denis O’Rourke: Absolutely.

The CHAIRPERSON (Hon Trevor Mallard): I will give it to you.

Thank you very much, Mr Chairman; a very good choice. I just wanted to respond to—

💬 Matt Doocey: That’s just rewarding the behaviour.

The CHAIRPERSON (Hon Trevor Mallard): Order! Sorry, the member should know better. I am not going to say that I am going to punish people for disagreeing with me, because that is not fashionable these days, but the member should take some care when he criticises the Chair’s rulings. Denis O’Rourke, starting again.

Thank you, Mr Chairman. I just wanted to comment on some of the comments made by others concerning the three Supplementary Order Papers (SOPs) that I have proposed. The first one I will not need to take much time on, because it has already been found by the Chairperson that SOP 325 concerning a foreign land-ownership register is within scope. I just wanted to say this: that, really, all it does is ask for some very basic information about nationality, name and address, and so on. That does not seem to me to require a huge effort on behalf of either a purchaser or the land registrar. It is quite simple to do, relatively straightforward, and inexpensive, but the benefits in relation to that small effort, that small cost, would be huge. I do not need to say anything more about that.

I did want to make some brief comments also on SOP 314. I would like to make just two points on that, in relation to what others have said. First of all, it is pretty obvious that just about everybody agrees that those requirements for verification of the identity of a mortgagor already exist. Indeed, Mr Finlayson himself actually cited other legislation that makes that the case. So how on earth could having this clause in this bill add any additional cost? How could it add any additional complexity?

The real point is this: many people forget it is not just about fraud. With respect to Eugenie Sage, who talked only about fraud, remember—mistake. I will tell you of a case that I was involved in, as a very young lawyer, early in my career. It was a case concerning an equitable fraud on a power of appointment. It was a case in which the fraud was alleged to have occurred by a 13-year-old girl who had no idea what she was signing, had not been advised, had no representative, and yet it was she who had allegedly committed this fraud.

The point I am making is this: mistakes and wrong procedures happen. It is not just deliberate fraud. That is why this sort of provision is important in this kind of legislation. It actually, again, does not add any costs to any expense or any difficulty whatsoever. It is stuff that the banks already do. This is the Land Transfer Bill. This, above all, is the legislation in which that provision is necessary. It should not have to rely on codes of practice or other legislation.

Finally, in relation to my SOP 313, that is a very serious issue. If clause 57(3) is not deleted, I believe that serious miscarriages of justice will happen, simply because if that clause continues it will be very difficult for a court to ever be in a position to be able to grant cancellation—very, very difficult indeed. A double hurdle—first, manifest injustice, and secondly, it is the applicant who has to do the proving. The burden of proof is completely wrong. It should be the defendant who does that.

After all, applicants will usually apply for both cancellation and compensation. Why not leave it to the court to decide which of the two is the most appropriate? Why hamstring the court from being able to do justice in the way that that clause would do? It just does not make sense. It will cause injustices. I sincerely suggest to the Government that it looks again at that clause 57(3). It should not be in the bill, and it should be taken out. I urge all parties with any common sense at all, or any sense of justice, or understanding of this legislation, to actually vote in favour of Supplementary Order Paper 313 and remove that clause.

Thank you for allowing this opportunity, Mr Chair. I do not intend on taking up too much time. I just want to say to my colleague that people do care, my friend; they do care. In this particular bill, I want to talk about clause 59(1). The reason I want to talk about this particular clause is due to the response by the Minister who was in the chair, Christopher Finlayson, with regard to Māori land holdings and, in particular, the court—whether the issues that this Land Transfer Bill deals with will then go on and be heard in the High Court. That is certainly what is proposed under Te Ture Whenua Māori Bill.

Clause 59(1) of the Land Transfer Bill says: “A person may bring a proceeding in the court against the Crown for compensation if the person,—(a) by reason of anything in subsection (2), is deprived of an estate or interest in land; and (b) by this Act, is barred from bringing an action for possession or other action for recovery of the estate or interest …”. I bring up that particular clause because the response from the Minister was talking about Māori freehold land, and I wonder whether the Minister actually realises just how many issues have come through the Māori Land Court with Māori freehold land around succession of landownership—around succession of landownership. I wonder whether this particular bill is proposing, as it does in clause 59(1)—are we asking for, or is there going to be, a large fallout of unintended consequences with regard to Māori freehold land? It is a shame Mr Finlayson is no longer in the chair. He answered the previous questions really well, and he also talked about the ture whenua and the ownership of Māori freehold land and what that might mean when an appeal, when the value of the land, or when the ownership of the land are in question.

In these particular clauses, 59(1)(a) and 59(1)(b), I cannot help but think there is going to be a flood of inquiries from Māori freehold land owners, those who have actually felt that they have not had justice served through the Māori Land Court. I can give one very quick example: a whāngai tamaiti of a land actually succeeded the ownership of his whāngai father’s land, despite the four natural kids of the father. The Māori Land Court actually found in favour of this particular whāngai child, and the other actual descendants of the landowner had no recourse to be able to seek justice. I wonder, just in this particular clause, whether or not, as an unintended consequence, there might be a flood of inquiries with regard to this particular clause and all of those Māori land owners who actually do hold Māori freehold land. I wonder whether the Minister can address some of that.

I must say that my comments in this contribution are premised on the response from Minister Finlayson, who was in the chair. I hope that this particular exchange can continue, because I think this is a serious matter—the Māori Land Court, freehold Māori land, and whether or not there is a course here now for justice to be sought by those who have felt that they have not had justice heard through the Māori Land Court.

The question was put that the amendments set out on Supplementary Order Paper 252 in the name of the Hon Louise Upston to Part 2 be agreed to.

Amendments agreed to.

The question was put that the amendment set out on Supplementary Order Paper 325 in the name of Denis O’Rourke to insert new clause 9A be agreed to.