Final compensation following 180 years of ongoing breaches for a Maori land contract has inched closer with the High Court deciding government stock interest rates should be used as proxy for the opportunity cost on rental income lost because of successive governments’ failures to honour an 1845 South Island agreement to set aside land for local Maori: the ‘Nelson Tenths.’
Failing to honour its contractual promise, colonial governments rode roughshod over an 1845 agreement that promised one tenth of the 151,000 acres sold by iwi for colonial settlement around Nelson would be reserved for local Maori.
Some 5100 acres were allocated for use by local iwi; the remaining 10,000 acres never were, gradually nibbled away for other uses.
Complaints were ignored.
It was not until 2017 that a Supreme Court ruling definitively stated the Crown was in breach of contract.
Levels of compensation are still disputed nearly a decade on from this court decision, compounded by other compensation payouts, for unrelated breaches of the Treaty of Waitangi.
The Nelson Tenths dispute is not a Treaty claim. It is a breach of contract claim. In legal jargon, the Crown is being held liable for breach of fiduciary duty in its failure to properly perform the 1845 agreement.
A fiduciary duty claim contains elements of trust law, and with it a cornucopia of remedies which are primarily at the discretion of the courts.
Local iwi claim they are entitled to between $4.4 billion and $6 billion.
In the High Court, Justice Edwards said payment is likely to be a significant amount of money, but substantially less than one billion dollars.
At issue is the current capital value of land wrongly retained and not transferred to local iwi (valued variously between $264 million and $548 million) and income lost over the last 180 years.
The court ruled compensation for lost income is to be calculated as interest on the rentals which would otherwise have been received if the misapplied land had been left under control of local iwi. This assessment raises economic issues of the opportunity costs of income foregone and the time value of money, given that lost income spans back more than a century.
Justice Edwards ruled interest is to run from only 2010, the date iwi filed their court case.
Nelson Tenths’ success was novel. Successive governments had previously refused direct compensation, relying on past case law precedent holding the Crown immune from equitable claims for breach of fiduciary duty. In government’s view, the Nelson Tenths outcome came as a complete surprise.
Given this change to established legal precedent, it is equitable that interest should run only from the date court proceedings were filed, Justice Edwards ruled.
Assessment of lost income is complicated by the fact not all the misapplied 10,000 acres would have been used to generate commercial income; it would have included future use as roading, schools, medical services, churches and other community assets.
Setting out principles for calculating interest on ‘lost rentals,’ Justice Edwards ruled interest is to be calculated at contemporary government stock rates on a simple interest calculation.
The capital sum on which interest is to be calculated was disputed.
Government said rural land values will suffice. Local iwi said it lost areas of both rural land and land in what became suburban Nelson.
Justice Edwards said government had the chance to dispute this issue at the earlier ‘breach of contract’ hearing. It did not do so. It now had to accept capital values adopted by valuers at that trial, she said.
Where it is proposed government-owned land is to be transferred to local iwi in partial satisfaction of cash compensation, disputes are likely to arise in determining what is being compensated: rural or suburban land lost.
Justice Edwards indicated an appeal is likely over her compensation decisions.
Government also argued allowance should be made for compensation paid to local iwi as part of earlier Treaty land claims, otherwise there would be double-counting of compensation.
Local iwi accepted up to fifty per cent of its earlier Treaty settlement included compensation claimed for shortfalls in the Nelson Tenths land allocation.
To avoid double-counting, Justice Edwards ruled $48 million is to be deducted from the assessed total of Nelson Tenths compensation due local iwi.
Stafford v. Attorney-General – High Court (27.08.25)
25.186