Applying well-recognised accountancy rules defining what amounts to ‘control,’ compared with having ‘influence,’ may have helped squabbles over potential conflicts of interest within Tuwharetoa trust activities; a governance issue now common to many iwi as kinship relationships can overwhelm commercial realities.
What to outsiders looks to be an arcane judicial debate in the Maori Land Court about corporate governance was a tricky question over how many hats one person should wear, given that commercial activities for major iwi groups now operate under business structures similarly seen with large corporates: one central holding company with separate activities and interests hived off into a multitude of subsidiary companies, partnerships and trusts.
All these separate entities need policy direction of their own, coupled with general ‘head office’ oversight.
Add to this complexity the overlay of Maori culture; the common kinship shared by those both running and benefitting from iwi commercial operations.
Close family ties, compounded by historical cross-family disputes and jealousies, can led to what might be delicately called sub-optimal decision making.
Seeking to minimise such problems, trust deed for Ngati Tuwharetoa’s Lake Taupo Forest Trust restricts the circumstances in which any trustee can be involved in activities of any subsidiary.
Trust beneficiary Tane Lawless questioned whether a trustee should be allowed to continue with contract work for a Trust subsidiary: New Zealand Forest Managers (2022) Limited Partnership.
His Maori Land Court application continued as a test case after the trustee’s death.
The legal issue boiled down to whether Forest Managers was a ‘trust entity’ as defined by the trust deed. If so, contracting work was disallowed as a conflict of interest.
Forest Managers exists as a partnership, but differs from the norm.
As a limited partnership it is made up of limited partners (who are not involved in management, are not liable for partnership debts, and do share in profits) and a general partner (who makes management decisions, is liable for partnership debts, and shares in profits).
For Forest Managers, decisions made by its general partner lie ultimately with Lake Taupo Forest Trust and a separate trust, Lake Rotoaira Forest Trust. They each get to appoint two of the general partner’s four directors.
Forest Managers is not a ‘trust entity,’ Judge Warren ruled.
Lake Taupo Forest Trust does not have ‘control’ of Forest Managers; it does not appoint a majority of directors.
Neither does it have ‘indirect control’ through appointment of half the directors, he ruled. This ‘limited’ or ‘shared’ control cannot be considered operative control.
It would be more intelligible to utilise accounting terminology: Lake Taupo Forest Trust’s right to appoint half Forest Managers’ board amounts to ‘influence,’ not ‘control.’
Lawless v. Ellis – Maori Land Court (22.01.26)
26.065