09 May 2018

Maori: Rotorua District v. Ngati Whakaue Endowment Trust

Over six hectares of prime commercial property in downtown Rotorua transferred to Ngati Whakaue as part of their Treaty settlement are not to be charged full rates by the local Council because of restrictions on ownership.  The properties can never be sold.
Nearly 150 years of local history were traversed by the Court of Appeal determining the status of Ngati Whakaue’s land holdings. Hapu from Te Arawa iwi around Rotorua were adept in accommodating nineteenth century settler encroachment. Negotiations in 1880 acknowledged growing European tourism and settlement in the district.  Land was leased on terms requiring rentals to be used for the benefit of local Maori.  A rating dispute before the Court of Appeal concerned land on perpetual leases with rentals earmarked for education.  Initially, Rotorua High School as the only secondary school in the district was the sole beneficiary.  Subsequent acts of parliament allowed other local schools to benefit.
As part of its Treaty of Waitangi claim, Ngati Whakaue pointed out that successive acts of parliament had removed them from management and control of their own trust lands.  Legislation enacted in 1995 created the Ngati Whakaue Education Endowment Trust.  Control over land first leased over a century ago to benefit education was transferred to the Trust.  It has power to lease the land ‘but shall not sell or otherwise dispose of any part of the land.’
In a test case, Rotorua District Council levied full rates on one of the Trust’s leased properties operating as a lakefront hotel. Council had allowed a ten per cent discount previously, treating the land as Maori freehold.  The Trust objected to paying full rates.  While the land is now recorded in Ngati Whakaue’s name on the general land register rather than the Maori register, it does not have full rights of ownership.  The Rating Valuation Act allows councils to rate properties at their full commercial value, regardless of any restrictive terms in a particular lease which might reduce the rental income stream accruing to a landlord.  The Court of Appeal said there are no restrictions on the Trust’s rights to lease, but there are restrictions on its full rights of ownership since it can never sell.  A rate reduction is appropriate, the Court ruled.
The case has been referred to the Land Valuation Tribunal to assess an appropriate rate.
Rotorua District Council v. Ngati Whakaue Education Endowment Trust Board – Court of Appeal (9.05.18)
18.101