Land Transfer Bill

I move, That the Land Transfer Bill be now read a third time. This is a huge milestone in land transfer law reform. For over 60 years New Zealand’s land transfer system has been underpinned by the Land Transfer Act 1952, a piece of legislation containing many archaic provisions, some dating back more than 100 years. But things have moved on. New Zealand boasts a modern, state-of-the-art electronic land transfer system, in which people can buy and sell properties with very little red tape or complication. It is also world renowned, consistently rating highly in World Bank reports on ease of doing business, and in the latest report New Zealand was ranked first in the world for ease of registering property.

The bill will align the legislation with modern practice by simplifying and modernising the language. It also shifts the emphasis from paper-based to electronic transactions. But be assured that we are not throwing the baby out with the bathwater. The bill carries over much of the substance of the current law. It retains the core principles of the Torrens system of land registration and sets these out clearly in the purpose statement. These principles include indefeasibility of title. This is a fundamental aspect of the Torrens system, which provides that, in general, once registered, a transaction cannot be set aside. However, the bill also recognises that in some circumstances, indefeasibility of title can result in unfair outcomes. To address this problem and improve security of property rights, the bill gives the High Court discretion in certain circumstances to order the alteration of the land titles register, to avoid manifest injustice.

I welcome the changes made by the Government Administration Committee, which clarify that the threshold for manifest injustice is very high. They also make it clear that court orders can be made under these provisions only in exceptional circumstances, when compensation cannot properly address the injustice. The bill also improves the Crown compensation scheme for those who lose land, or an interest in land, through the operation of the land transfer system. These changes will make the scheme fairer for landowners and the Crown.

Currently, compensation is based on land value at the date of loss. This can be unfair. Loss can take some time to discover, and the compensation, in that case, would not cover an increase in property value or improvements made to the property in the interim. The bill addresses this problem by providing for compensation to be based on the value of the land at the date when the claimant discovers, or should reasonably have discovered, the loss. In most cases, the new compensation formula will result in claimants receiving more compensation from the Crown. The court will, however, have discretion to change the valuation date, to avoid an unfair outcome. For example, the discretion could be used to value the property at the date of judgment, when the claim is made in a rising market. It allows the valuation at the date of discovery to be used where the claimant unreasonably delays making the claim, or where the claim is made in a falling market.

The bill shifts some certification requirements from the Act to regulations, making it easier to automate more transactions and update requirements to keep pace with changing technology. Another efficiency measure in the bill is a new, simplified process for claiming landownership on a limited title, on the basis of adverse possession. The reforms enable greater efficiency and flexibility for land developments through mechanisms such as land covenants.

Finally, the bill extends the statutory powers of the Registrar-General of Land to withhold an individual’s personal information, for the protection of the personal safety of landowners and their families. I would like to thank again the members of the Government Administration Committee and its chair, the Hon Ruth Dyson, for their work and thorough consideration of the bill. I also want to thank all of those people and organisations that contributed to the development of the bill through various consultation processes at the select committee stage. In particular, I want to thank the New Zealand Law Society and the Auckland District Law Society. I also want to take this opportunity to thank my officials at Land Information New Zealand. Their hard work and commitment to this bill have been greatly appreciated. I wish to thank the Law Commission and particularly acknowledge the contribution of George Tanner QC, the commissioner responsible for the review of the Land Transfer Act. I also want to acknowledge the contribution made by Warren Moyes, former Wellington District Land Registrar and Land Information New Zealand official. Sadly, both George and Warren have since passed away.

As the previous Minister for Land Information said in her first reading speech, land underpins everything. The ability for people to buy and sell land easily, and have confidence in the security of property rights, is vital for economic and social well-being. I am confident that the Land Transfer Bill will enable those transacting in land to do so with greater confidence and certainty, and I commend the bill to the House.

I would like to thank the Hon Mark Mitchell, the new Minister for Land Information, who has just resumed his seat. The Land Transfer Bill is to amend the Land Transfer Act 1952 and other relevant pieces of legislation, and it will become the new principal Act in this area. The law change is well overdue, and the bill will bring the key piece of property legislation into the 21st century.

From the Law Commission issues paper released in 2008 to the Law Commission report A New Land Transfer Act in 2010, followed by consultation with stakeholders, the bill was introduced in February 2016. This is certainly a long time in gestation. For many stakeholders involved, those from either the legal fraternity or banking institutes, the journey is truly a labour of love. For someone like myself who is from a legal background, it is a privilege to get involved in the process of seeing the bill get through the Committee of the whole House process and the current third reading. For someone like myself who has just returned to the House, it is more like that this bill has offered me a great opportunity to exercise the politicians’ art of arriving late but claiming all of the credit. However, I should acknowledge the contributions by previous and current presidents of the Law Commission, Sir Geoffrey Palmer and Professor John Burrows QC. I would also like to acknowledge Land Information New Zealand, which produced such a thoughtful departmental report, and the Hon Ruth Dyson, the able chair of the Government Administration Committee. The committee heard all of the submissions and did a thorough analysis and presented the bill to the House in its current form.

The primary purpose of this bill is to produce a piece of legislation that is centred on electronic registration. The second objective of reform is to ensure that the new Act is acceptable and written in plain, modern English. The bill continues and maintains the Torrens system of land title in New Zealand. The bill also makes changes to land law aimed at improving security of property rights and efficiency, including indefeasibility of title, identity verification, and other issues related to encumbrances and covenants in gross. The bill also introduces a new power for the High Court, to alter the land register in case of manifest injustice, which in turn has the potential for profound impact on banks and other lenders who lend money on the security of land.

During the Committee of the whole House we also looked at some Supplementary Order Papers, with one calling for a mechanism to be established to create a foreign buyers register. The National Government’s current position is not helpful. Listening to the questions and answers during today’s question time between Mr Phil Twyford MP and the honourable Minister Nick Smith, one could not help but wonder for how long the Minister could carry on insisting that the current way of collecting data is good and conclusive.

We have three problems with the Land Information New Zealand data. Even the Minister at the time admitted that the data was not inclusive and should not be viewed as a foreign buyers register. Those figures were based on the low side of the market. They were collected after the introduction of the new IRD disclosure rules in May 2015. The data did not, and will not, include trusts and business buyers.

The dilemma is that, on the one hand, we have a housing crisis and, on the other, nobody knows about the scope and size of foreign ownership of New Zealand residential properties. The population in Auckland has gone up by 45,000 a year. We need about 15,000 or so houses a year, and we are building about half that number. Supply is falling far short of demand, and that puts prices up. But notwithstanding that piece of political context, the substance of this bill heads in the right direction and updates the land transfer law.

Can I commend the good work of the Government Administration Committee again for its efforts in considering the bill. I also want to thank the submitters, such as the New Zealand Law Society, the Auckland District Law Society, the New Zealand Bankers’ Association, and the New Zealand Institute of Valuers, etc., for their thoughts, concerns, and contributions.

This bill is a long overdue update of the land transfer mechanism and is a restatement of the core principles that govern indefeasibility of title and our Torrens system of land registration. As Professor Geoffrey Palmer said, the Land Transfer Act is a basic part of the New Zealand legal infrastructure. An effective system for land transfer is essential for the workings of a modern economy. Much of the bill is technically laden and could be very dry, but detail matters in the land transfer system. The Law Commission and Land Information New Zealand have managed to make this bill clear, modern, and effective. Labour supports this bill.

It is an absolute delight to take a call in this third reading debate on the Land Transfer Bill in the name of my fine and very virtuous colleague the Minister for Land Information, the Hon Mark Mitchell, who I have to say is doing such a magnificent job in this area. I welcome the contribution made by the speaker who resumed his seat, Raymond Huo. He is far more expert than I am, as a practising lawyer prior to coming into this House, but I do want to just, I think, clarify a couple of points that the member did bring up, but perhaps he couched them in language that people such as myself with only a rudimentary and unsophisticated understanding of land transfer law might be able to understand.

As has been mentioned, the Land Transfer Act from 1952 is over 60 years old, and it has to be read in concert with the 1963 amendment Act, but also a 2002 computer registration Act, two of which are administered by the Ministry of Justice and Land Information New Zealand (LINZ)—the latter of which, the 2002 computer registry Act, is administered only by LINZ. So in consolidating these Acts and putting them into one piece of law, it certainly makes it much more efficient and streamlined for people who are dealing in the very important matter of transferring land. This is because, of course, we have to remember that the principal source of wealth in this country is the land.

I think this Government has done an excellent job on taking aboard the constructive suggestions made by groups such as the Bankers’ Association and the Law Society in ensuring that this bill is fit for purpose. I particularly want to congratulate the Minister for Land Information, the Hon Mark Mitchell, on outlining in his Supplementary Order Paper (SOP)—that is, SOP 323—a couple of very important changes that did amend well-intentioned but slightly problematic clauses in the original draft of the legislation.

The areas that I think are particularly important are those around identity verification—so we have seen clauses 54 and 55 of the original bill deleted. This is important as that had the potential, as we were informed on the select committee, to add several thousand dollars of additional and unnecessary legal expenses to the cost of conveyancing a land transfer. Similarly, I welcome the clarification of the intention of Parliament in terms of manifest injustice provisions. It is very clear now to the courts—and I hope that it is recorded on the record tonight—that our intention as a Parliament is that the discretion to set aside a registration of land is something that is to be used only in exceptional circumstances and very, very rarely.

Why is this important? Well, indefeasibility—that is, the surety we have that once land is registered in the Torrens system it is properly registered and it is owned by the person who is registered as owning it—is important for us as a country where many people go and take out mortgages and want to get their mortgages at a reasonable rate. If those who lend us money can have no surety that their loan is going to be protected and that registration is watertight, then we are at risk of paying a lot more for that credit than otherwise we would. So I think it is very important to ordinary New Zealanders who have been enjoying very low interest rates under this National Government that we do not add on extra administration costs for registering land and that we certainly do not do anything to make the cost of securing credit—that is, the cost of people’s mortgages—any higher than it needs to be.

This is something that has certainly been taken on board by this Government, which I have to say is a Government that does listen to the concerns brought to it, and this Government, this National-led Government, certainly has a concern for those who are paying their mortgages, doing the right thing, trying to own a home on behalf of themselves, a place to bring their families up—the vast majority of ordinary New Zealanders—and we are, I think, doing an excellent job of meeting the needs of those ordinary New Zealanders.

A couple of other slightly obscure points. The member mentioned that the bill will allow covenants in gross to be noted on the title. Just to clarify what that precisely means, a covenant in gross is an enforceable agreement related to land use. We can think of lots of examples around covenants or easements. But the new mechanism that has been introduced will allow a much cheaper and quicker alternative than the current practice of registering the encumbrances on a separate register, because we know that this can slow down land developments. So if someone is interested in acquiring a piece of land and they look up the title, they will be able to find any enforceable agreements and encumbrances on that land very clearly registered. That will make for a far easier, more efficient process for land development.

The bill also introduces, for the first time, a definition of fraud, which was not defined in the 1952 Act. As a number of eminent people, including my colleague the Hon Judith Collins, have pointed out, New Zealand has, probably, one of the finest land registry systems in the world. There are almost no cases of mortgage fraud; that is what we were told by the banks in New Zealand. But the Torrens system that we have in New Zealand—it is derived, actually, as others have pointed out, from the system devised by Sir Robert Richard Torrens GCMG, the third Premier of South Australia. It is a system devised in our part of the world, and it is infinitely superior to the old system of actually having titles and deeds locked up in little wooden boxes at home to prove your ownership. It is title by registration, not the registration of title. It is a very secure system, and this bill makes it even better—it futureproofs it, makes it more efficient, and gives people greater surety.

We have had a select committee, the Government Administration Committee, that has worked very hard on this, and I welcome Matt Doocey from Waimakariri to the committee, but I also would note that Brett Hudson, my colleague, the list MP from Ōhāriu, was on the committee throughout the hearings and made ample and fulsome contributions. It is a very good bill, and I commend it fully to the House.

Can I acknowledge the member who has just resumed his seat, Paul Foster-Bell. He is the deputy chair of the Government Administration Committee. He did not praise himself, as I am sure he is not inclined to, but I want to commend his work in that committee on this bill.

I want to commend the Minister for Land Information who introduced the bill—and I am sorry, but that was not the Hon Mark Mitchell; it was actually the Hon Maurice Williamson.

💬 Hon Members: Who?

These new ones are saying “Who?”. That is very unkind. The Hon Maurice Williamson is still a member of this House; he is not due to give his valedictory speech for another 7 or so weeks. He started this process. He welcomed it in 2010, alongside the Hon Simon Power, who has gone on to greater and better things—now working for a bank, I understand.

But what a relief it must be for the National Government to be debating something as dry and technical as the Land Transfer Bill, where everyone is in agreement, after the week it has had. I could not have imagined a better scenario for the Opposition party—for us—going into the National Party’s annual conference, going into its weekend conference. What a week, which was not a good week, did they ever have. Moving on to debate the Land Transfer Bill must be just a blessed relief at this time.

Even though this was a good bill, emanating from a fine piece of collaborative work from the Law Commission, from Crown Law, and from the New Zealand Law Society, it still leaves a big hole in the land registration process unfilled. I want to challenge the new Minister for Land Information, who has made a fine effort to get on top of the details of this bill—in fact, I think he was on the select committee when we heard the submissions, so he may well have had an advantage going into his ministerial role, but, either way, he is on top of the detail; you could tell from his third reading speech. I want to challenge him to fix the hole that has been left unfixed by his predecessor, and that is the absolute shambles in the Overseas Investment Office.

It is just a mess. It has become a laughing stock. If the Minister is not careful, it will drag him down with it, and I do not think that should happen. If the Minister is visionary, and bold, and courageous, he will be able to make something out of the mess that is the current Overseas Investment Office. We have seen where it is not even able to access robust databases in which we can have confidence, and get information for us. The Hon Mark Mitchell’s predecessor decided to respond to the shambles of the Overseas Investment Office by making the shambles work faster—just speeding up the wet-bus-ticket consent process. That is not good enough for a country that prides itself on transparency and openness, and it is not good enough for the Minister to let the Overseas Investment Office get away with this. So that is my challenge. While supporting this legislation, it does not address the biggest problem that that Minister is facing.

As I mentioned earlier, this bill is a result of a very good bit of collaborative work done by the Law Commission, Crown Law, and the New Zealand Law Society. The primary aim was to modernise the legislation—

I am sorry to interrupt the honourable member. The time has come for me to leave the Chair.

Debate interrupted.

The House adjourned at 10 p.m.