In a ruling that defies both common sense and centuries of legal principle, the Supreme Court has just held that deceased tribal ancestors can satisfy the legal requirement of beneficial ownership. The decision has left lawyers wondering whether any established principle is safe from judicial invention.
At the heart of the dispute was whether the Māori Land Court could intervene in a trust managing Treaty settlement assets for Tūhoe. The relevant trust operates like other discretionary trusts. Trustees manage the assets, while beneficiaries have no fixed ownership rights, only a right to be considered for distributions.
The Māori Land Court's jurisdiction extends only to 'land beneficially owned by Māori.' Consequently, the Court of Appeal reached the obvious conclusion. No living person had beneficial ownership, so the Māori Land Court lacked jurisdiction. Simple.
But our Supreme Court had other ideas. Rather than accept this outcome, it conjured up an extraordinary proposition: Tūhoe's deceased ancestors could count as beneficial owners. Never mind that property law has always required ownership rights to be exercisable by the living.
Trust law allows for a few exceptions where trusts can exist without living beneficiaries, like charitable trusts. But the Court's invention goes well beyond these exceptions.
It also creates profound practical problems: How do trustees exercise powers for the benefit of deceased owners? How can third parties assess ownership rights when dealing with trust assets?
The Supreme Court attempts to justify its ancestral-ownership fiction by appealing to tikanga Māori concepts of collective tribal ownership. But however culturally significant, these concepts cannot cure fundamental contradictions in trust law.
As warned in the Initiative's recent report, "Who Makes the Law? Reining in the Supreme Court", no legal rule is safe when our highest court is prepared to discard fundamental legal principles to achieve its preferred outcome. Today it is beneficial ownership by the dead. Tomorrow? The possibilities for judicial invention seem limitless.
Laws developed over centuries provide certainty in commercial dealings. When courts treat these rules as optional, they threaten the very foundations of the rule of law.
Parliament has the tools to rein in an overreaching Supreme Court. It should use them.
Roger Partridge is chairman and a co-founder of The New Zealand Initiative and is a senior member of its research team. He led law firm Bell Gully as executive chairman from 2007 to 2014. This article was first published HERE
The Māori Land Court's jurisdiction extends only to 'land beneficially owned by Māori.' Consequently, the Court of Appeal reached the obvious conclusion. No living person had beneficial ownership, so the Māori Land Court lacked jurisdiction. Simple.
But our Supreme Court had other ideas. Rather than accept this outcome, it conjured up an extraordinary proposition: Tūhoe's deceased ancestors could count as beneficial owners. Never mind that property law has always required ownership rights to be exercisable by the living.
Trust law allows for a few exceptions where trusts can exist without living beneficiaries, like charitable trusts. But the Court's invention goes well beyond these exceptions.
It also creates profound practical problems: How do trustees exercise powers for the benefit of deceased owners? How can third parties assess ownership rights when dealing with trust assets?
The Supreme Court attempts to justify its ancestral-ownership fiction by appealing to tikanga Māori concepts of collective tribal ownership. But however culturally significant, these concepts cannot cure fundamental contradictions in trust law.
As warned in the Initiative's recent report, "Who Makes the Law? Reining in the Supreme Court", no legal rule is safe when our highest court is prepared to discard fundamental legal principles to achieve its preferred outcome. Today it is beneficial ownership by the dead. Tomorrow? The possibilities for judicial invention seem limitless.
Laws developed over centuries provide certainty in commercial dealings. When courts treat these rules as optional, they threaten the very foundations of the rule of law.
Parliament has the tools to rein in an overreaching Supreme Court. It should use them.
Roger Partridge is chairman and a co-founder of The New Zealand Initiative and is a senior member of its research team. He led law firm Bell Gully as executive chairman from 2007 to 2014. This article was first published HERE
3 comments:
Replace the SC - ASAP. Unelected - overreach of power.
Re-assert Parliamentary authority - as per our democracy.
What is wrong with our MPs?
“Parliament has the tools to rein in an overreaching Supreme Court. It should use them”.
New Zealand, as of 1987, is a free-standing (un)constitutional monarchy whose Parliament has “unlimited sovereign power”.
It seems that our corporate state government has used this “unlimited sovereign power” for ill rather than good?
The mind boggles at the degree of stupidity demonstrated by the SC. The fools currently promoting this absurdity must be removed
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