Land Transfer Bill

I would like to take a call on Part 3. I am particularly interested in clause 99, subclauses (3) and (4). Subclauses (3) and (4) of clause 99 refer to encumbrances, while the immediately preceding subclauses (1) and (2) address mortgages. A common example of the use of encumbrance includes the use in a subdivision to require the owners of the lots to join a residents’ association or society, and pay annual fees. The purposes can be various. The common one in Auckland, I guess, is to limit an owner’s ability to, for instance, install a giant satellite dish in the front garden or the backyard. Another example would include the measures to provide for the obligations of a landowner using council land for such matters as building a retaining wall.

Looking at the bill itself, while the term “mortgage” is defined, “encumbrance” is not defined at all. Again, looking at the relevant clauses, it appears that the definition of “mortgage”, which includes a rent charge or annuity, would include an encumbrance. I had a look at the submission from the New Zealand Law Society. In its submission the Law Society said that this would result in a confusing situation. “By way of example, presumably clauses 100 to 105 relating to mortgages would extend also to encumbrances.”

However, the Law Society believes it would be desirable to state this clearly and explicitly. The New Zealand Law Society in its submission noted that it would be desirable in this bill to define the expression “encumbrance”. Clause 99(4)(b) referred to the prescribed form of encumbrance, and the Law Society believed that it would be helpful if the prescribed form in the regulations was available at the same time as the final version of the bill. The end result is what we can see in clause 99(4)(b), which now reads “contain the prescribed information.”, so the wording “be in the prescribed form and” has been deleted.

The population in Auckland has gone up by 45,000 a year. We need about 15,000 extra houses a year and we are building only about half that number. Supply is falling far short of the demand, and that puts prices up. The Auckland Council has addressed the problem of not having enough land to build on with the Auckland Unitary Plan, and once the appeals process has been dealt with, it will enable the construction of close to half a million housing units in brownfield developments and about 15,000 units on greenfield sites.

Back to this bill—I agree with what the Law Society’s submission said, which is that there may be “many redundant encumbrances which could impede the reasonable use of the burdened land. … there is a strong case for extending to encumbrances the powers of a court to modify or extinguish covenants in gross.”, as a whole. Thank you.

I want to make a few comments in relation to the new clause 92A in Part 3, and it has to do with leases. I note that in the commentary there is some discussion about the policy intent of the bill in regard to consent for varying a cross-lease, and there was some discussion, I understand, at the Government Administration Committee about this. It is kind of a clarification, really, and is bringing this bill into line with the policy of the 1952 Act. Essentially, the idea is that the cross-lease should be able to be varied only with the consent of all the parties—so, all of the mortgagees—because a variation to one lease may affect the others. The committee has taken the view that it is important that this intention be made explicit, and so it has added in clause 92A. It has also recommended adding a definition of “cross lease” just to cross the t’s and dot the i’s.

There was also some discussion, I understand, from submitters on this. The Auckland District Law Society was concerned about this gap, and I think it drew the committee’s attention to it, pointing out that clause 92(8) only required consent from a mortgagee for the land subject to the lease. As any kind of variation of one lease would affect the value and potentially the usability of another lease in a cross-lease situation, it proposed the inclusion of what became clause 92A. So it was a pretty useful intervention, I think, and one that was agreed to by the committee.

The officials have said that, essentially, it was the policy intent to align with the 1952 Act. They advised the committee that last year Cabinet rescinded a policy decision from 2010 that had been made to accept the Law Commission’s recommendation, which was to actually remove the requirement to get consent from the mortgagees of all the leases in a cross-lease situation. So I think that has to some extent clarified that. The intervention of the Auckland District Law Society was appreciated in that regard, and I will leave that there.

The question is that the—oh, Michael Wood.

Oh, Mr Chair, I am always delighted to surprise you. I am keen to take a short call on clause 226 of the bill, where I think the Government Administration Committee has actually done some really good work in proposing some quite important changes in respect of the regulation-making powers that are set out in this piece of legislation. It warms the little cockles of my heart—coming from the Regulations Review Committee—to see that scrutiny has been applied in this area. Actually, just looking at the comments in respect of clause 226 and the proposal to insert a new subclause (3), I do note that the Regulations Review Committee does seem to have provided some guidance on this.

So what are we talking about here? If we turn to clause 226, it sets out a very broad range of regulations in respect of the bill. These are measures that by Order in Council can be undertaken in terms of applying this bill. They are not necessarily hugely substantial things, but they are quite important—

The CHAIRPERSON (Hon Trevor Mallard): The member is about two parts premature.

Oh, my apologies.

The CHAIRPERSON (Hon Trevor Mallard): We are currently debating Part 3, clauses 73 to 153.

My apologies, Mr Chair. I will leave it there.

The question was put that the amendments set out on Supplementary Order Paper 252 in the name of the Hon Louise Upston to Part 3 be agreed to.

Amendments agreed to.

Part 3 as amended agreed to.

Part 4 Miscellaneous applications and other matters

The question was put that the amendments set out on Supplementary Order Paper 252 in the name of the Hon Louise Upston to Part 4 be agreed to.

Amendments agreed to.

Part 4 as amended agreed to.

Part 5 Miscellaneous provisions