LawNews - Issue 18

NEWS Jun 10, 2022 Issue 18

Inside ■ TRUSTS

Alternative ways of structuring your affairs P05

■ PEOPLE

Arthur Young, 87, retires from Chapman Tripp P06

Litigation risk and uncertainty

adls.org.nz

BUG INSURANCE CONTRACTS BILL

Contents 03-04

Insurers cry foul over exemption provisions in draft bill

LITIGATION DISCLOSURE CONTRACTS

05 WILLS TAX INHERITANCE

LawNews is an official publication of Auckland District Law Society Inc. (ADLS).

An alternative to trusts

Editor: Jenni McManus Publisher: ADLS

06 RETIREMENT COMMUNITY ADVICE

Arthur Young reflects on more than six decades in the law

08-11 OPINION

“Misguided parliamentarians are seeking to use law-making powers to undermine the principles of a free and democratic society” – Gary Judd QC

12-13 FEATURED CPD

14 Photo: Peter Dazeley / Getty Images

CPD IN BRIEF

15 EVENTS

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Cover: Dean Purcell / Staff / Getty Images

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Jun 10, 2022 Issue 18

INSURANCE

Uptick in litigation predicted if Insurance Contracts Bill passes in current form Exclusion clauses are fundamental to the operation of insurance policies because they are critical in determining the scope of the risk that is being covered

Jenni McManus Insurers and their lawyers are urging the government not to scrap the industry’s exemption from the unfair contract terms provisions of the Fair Trading Act 1986, warning of a higher litigation risk, higher premiums and “significant” uncertainty for both insurers and policyholders if the exemption is removed.

In its submissions on the draft Insurance Contracts Bill, released by the government in late February, Bell Gully says removing the existing exemption would open insurance policies to legal challenge, particularly in the area of exclusions. Even the ability of an insurer to exclude preexisting medical conditions from cover could be jeopardised, the firm says.

“The terms that are currently carved out were considered

by Parliament to be critical to insurers’ assessment of risk and reflect the unique nature of the operation of insurance contracts,” Bell Gully says.

“Insurance contracts differ from other types of contracts in that in order to operate, insurers need to have a clear understanding of the extent of the risk they are taking on.”

This includes exclusions which can be used to ensure insurance covers only unforeseeable claims. “Exclusion clauses are fundamental to the operation of insurance policies because they are critical in determining the scope of the risk that is being covered.”

At present, insurance contract terms which cannot be considered unfair include the subject matter of the policy, the risk, the sum insured, excluded or limited liabilities and the payment of premiums.

If government makes thing too hard and the uncertainty becomes too great, this is likely to be reflected in higher premiums and some insurance products being withdrawn from the market, Bell Gully says. The evidence base for change is weak and MBIE’s own assessment of the

Insurance contract terms which cannot be considered unfair include the subject matter of the policy, the risk, the sum insured, excluded or limited liabilities and the payment of premiums

proposed options is that they are no better than the status quo. Ultimately, the change will be to the detriment of policyholders.

The government has yet to respond to submissions on the bill which modernises New Zealand’s insurance law, some of it drafted in the early part of the 20th century. The new regime will apply to all licensed insurers – life, health, general and travel.

Fundamental change The new bill turns insurance law on its head by reversing the onus of disclosure from the consumer to the insurer – a fundamental shift in policy. As Lloyd Kavanagh, a financial services partner at MinterEllisonRuddWatts observes, “It shifts the power from the insurer to the insured.”

Most of the principles and policy underpinning the bill were hammered out in 2019 in a Cabinet paper in the name of then Commerce and Consumer Affairs Minister Kris Faafoi.

As far as the government is concerned, the fundamental changes are non-negotiable.

The only big issue still up for grabs is the unfair contract terms exemption for insurers. MBIE has offered the sector two options, neither of which insurers find acceptable.

And while the underlying principles and policy are set in stone, this hasn’t prevented insurers and their lawyers from submitting on sections of the bill where they believe tweaks are needed.

Duty to disclose Along with the exemption from unfair contract terms, the other big change is around disclosure. Currently, policyholders are required to disclose all information that might influence the judgment and risk assessment of a prudent underwriter.

Failure to do this – even if the omission is inadvertent – means an insurer can avoid the policy if a claim is made, even if the non-disclosure is irrelevant to the claim.

The new bill requires the insurer to ask the ‘right’ questions to get the information it needs to accurately assess and price risk. Consumers are required only to take reasonable care not to make misrepresentations. Remedies are available to the insurer if consumers misrepresent their

Continued on page 04 03

Continued from page 03

position but only if the misrepresentation is deliberate, reckless or fraudulent. If that can be proven, the insurer can avoid the contract and keep the premium.

The question of reasonableness is likely to become one of the main battle areas in the new regime.

The insurer is also required to inform consumers about their disclosure duty and its consequences before they enter into an insurance contract. Failing to do this means the insurer loses its access to remedies for misrepresentation. If the insurer is seeking permission to access a consumer’s medical (or other third party) records, it must tell the consumer what it is looking for.

Bell Gully says while it generally welcomes many of the changes – particularly the move to consolidate a raft of outdated statutes and modernise important insurance principles – other parts of the draft bill, including the disclosure regime, are potentially problematic. “They have the potential to create significant uncertainty to the detriment of both insurers and the insured,” it says.

For example, the new duty of consumers not to make misrepresentations puts insurers at a disadvantage when compared with contracting parties generally. Under general contract law, parties can be liable for innocent misrepresentations but not under the new Insurance Contracts Bill.

“We remain concerned about this inconsistency,” Bell Gully says. It also points to “ambiguity and gaps” in the drafting, saying a broader range of issues need to be considered when assessing whether a policyholder

has taken reasonable care. “The bill should more directly address the relevance of silence in assessing whether a misrepresentation has been made.”

Hesketh Henry raises concerns about provisions that impose a duty of disclosure on specific intermediaries such as brokers to pass on information or representations to the insurer, regardless of whether the broker is an agent of the insurer.

Cost and complexity Chapman Tripp says the bill is long overdue but adds another layer of pressure to a sector that is already facing significant cost and compliance obligations under COFI (Financial Market (Conduct of Institutions) Bill) and a review of the Insurance (Prudential Supervision) Act. However, the bill reflects the government’s decision that insurance contracts need to be rebalanced in policyholders’ favour to better align New Zealand’s law with that of Australia and the UK. In its current form, the bill will have a “very significant impact on the insurance sector”, Chapman Tripp says. Insurers will need to review their entire businesses – their application and underwriting processes, their contract terms and their policy documentation and collateral. Many have already begun this job.

Chapman Tripp says insurers have raised concerns with MBIE about brokers being able to hold onto premiums for long periods, pocketing any profits made via investments. MBIE is seeking feedback as to whether there should be express limits on brokers’ ability to invest premium payments and keep the returns, such as including financial

penalties in the bill for brokers who fail to pass on premiums promptly to insurers.

Overly prescriptive Another bone of contention is a requirement that insurance contracts be written and presented in a clear, concise and understandable form.

Again, many insurers have already taken this on board and are offering plain-English contracts to consumers. The problem is the level of prescription that may be required, even down to the font size used in the documentation.

The Bill amends the Financial Markets Conduct Act 2013 to create a new power for the GovernorGeneral to issue regulations mandating the form and presentation of insurance contracts.

Insurers who have already upgraded their documentation are concerned about the extra cost they will incur when – or if – regulations are made.

However, the government’s consultation paper says there is no intention “presently” to make regulations “that contain detailed requirements of how each aspect of an insurance contract is to be presented …. or prescribed standard forms”.

Bell Gully says any such regulation “should be framed at a higher level of generality” and questions the need for specifics such as font size to be included.

Dentons Kensington Swan has another concern.

“Overly restrictive requirements have reduced product disclosure statements in the managed fund word to a bland sameness,” it says. “Prescription also removes providers’ ability to easily develop bespoke and innovative products in response to evolving customer needs.” ■

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Jun 10, 2022 Issue 18

TRUST LAW

Trusts, wills and the Law Commission’s proposals for changing inheritance law The courts and Parliament recently changed the law so trusts will be looked through in some circumstances where it is determined inequitable or unjust for the trust to be used as a shield

Tammy McLeod

of means testing for residential care subsidies and relationship property.

So, in many cases we need to look at Advising clients on the appropriate alternate structures and this is where a structure for owing assets is an well-crafted will can come into its own. important, yet often under-valued, role I believe too little value is ascribed to for lawyers. wills. They are often seen as something Over the past 10 years, this area we shouldn’t charge too much for and has become more specialised as you often see fixed-price (cheap) wills family situations become increasingly Tammy McLeod or a freebie will thrown in with some complex. The value of people’s estates conveyancing. has increased significantly as property We are not doing ourselves or our clients any prices rise and changes to the law, both by Parliament favours when we belittle the value of a will. As with and the courts, have changed the way we advise many things in the law, a little bit of cost at the outset clients. can mean massive savings if something goes wrong in Trusts are one of the most flexible ownership the future. vehicles we know. They have been used in myriad When preparing a will, it is important ways since the days of the crusades to take your time and really get to to protect assets from threats. Those We are understand your client’s circumstances. threats can come in the form of not doing Often clients will say they want a simple business risk, relationship risks, wishing ourselves or will but when you start talking, you to treat children unequally or the threat realise that it is anything but simple. to sell an asset which some may want to our clients Take the time to get full instructions hold long-term to benefit the family. any favours and explore different scenarios with Tax flexibility can also be a when we the client. Obtain title searches and consideration. In the past, people often ensure what the client is telling you is used trusts to dispose of assets for belittle the means testing and inheritance tax value of a will correct (for example, often a client will not understand the nuances between purposes but still retain the benefit of jointly-held property and property held those assets. as tenants-in-common).

However, the courts and Parliament Do not forget that our job is to advise, not just to recently changed the law so trusts will be looked through in some circumstances where it is determined draft what the client thinks he or she wants. When thinking about a fee, remember there are five elements inequitable or unjust for the trust to be used as a to will drafting: taking the initial instructions, thinking shield. This has occurred in particular in the areas

or planning time as to how the will should look, the actual drafting (and don’t underestimate the time to do that), discussing the draft with the client and making any changes and arranging execution.

This is a long and time-consuming process and we need to ensure we educate clients on the value of having a will that will do its job.

There has been a huge amount of publicity during the past two weeks about recommended changes to the law around inheritance and wills.

The law commission has made several recommendations to Parliament, the key recommendations being: ■ No ability for children to challenge how their parents leave their estate unless the child is under the age of 25, giving absolute testamentary freedom to those with children over that age limit. Presently, any child can make a claim against a parent’s will if he or she thinks they have not been treated fairly. The current law recognises a “moral duty” to provide at least a portion (in most cases 10%-15%) of your estate to each child.

■ The alternate recommendation is that any child, regardless of age, can contest a will on the basis of financial need.

■ Step-children under the age of 25 will have an absolute right to contest a step-parent’s will. The current law allows only dependent step-children to make a claim.

■ The law covering what happens if you die without a will would be changed so a surviving partner

Continued on page 16 05

PEOPLE

Chapman Tripp’s Arthur Young reflects on more than six decades in the law Jenni McManus

Arthur Young

A lot of the client connections are individuals or business families and virtually all of them of very long standing. So, one does, over time, favour that kind of client

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When LawNews caught up with senior partner Arthur Young three years ago in his office at Chapman Tripp, the then 84-year-old wasn’t thinking of retirement.

He enjoyed the private client work, including family trusts and succession planning, that formed the basis of his practice, with some of these clients being with him for 40 years. And he was in the mood for reminiscing about his early days in the law.

Back then, Young says, when he had his first job as a law clerk, the sale of a corner dairy or grocery store was regarded as a major commercial transaction. Not only was there no internet but no photocopiers or biros either and fax machines were a thing of the future. Young wrote with a fountain pen; his secretary took dictation and worked on a manual typewriter.

Firms were small and there were few women in the profession.

Today, as Young kicks off his retirement with a three-month break near Avignon in the south of France, he says he won’t be giving up work altogether. There is ongoing business with trusteeships and family directorate work, but he will be scaling back in a major way. A priority is to whittle a few shots off his golf handicap.

On the future of the legal profession, Young says it has undergone dramatic change in the past 20 years and he believes it will become even more diverse to reflect the increasing diversity in society.

“I think one of the challenges for the profession is to keep up with the needs of legal education so people can keep themselves current,” he says. “I think there’s a challenge there, there are the precedent systems to help …. but I don’t think [that is] sufficient.”

Mandatory retirement One thing Young would like to see changed is the mandatory retirement age (70) for judges. “With the lengthening spans of life and with the continuing improvements in healthcare, and probably fiscal and wider wellbeing, 70 is too early for a hardand-fast rule,” he says.

“But it depends on the context. It’s not the sort of thing one can generalise about. It varies and there are the challenges, if one doesn’t have a review date, [around] how to go about it.

Who is to initiate it? And if there is to be change, a failure to initiate can create other problems.

“I’d probably be an advocate for milestone review dates and a process for that, rather than absolute hard-and-fast rules to

keep a level of flexibility.” He says Chapman Tripp doesn’t have a mandatory retirement age for partners.

As Young noted three years ago, access to justice remains a major problem. It has been a concern the whole 65+ years he has been in practice, he says, though it might have become more acute, particularly in the court system.

Big law There is still a place for big law firms despite the inroads being made by the legal businesses of the Big Four accounting firms.

While the threat might increase, Young says the Big Four face challenges.

While the accountants might have the advantage of crossreferrals inside their firms, “some established law firms have been going for well over 100 years and to be able to replicate or seriously challenge that – or seriously challenge major elements of that – is not a five-minute task. It probably takes generations”, he says.

Ironically, that same week, US website law.com reported that despite claims by the Big Four that they didn’t want to compete with traditional law firms, EY is (yet again) considering spinning off its global audit businesses to dodge some of the regulatory scrutiny audit businesses attract and to avoid conflicts of interest (the Big Four cannot provide legal services to businesses they audit).

Client care When asked about his favourite type of client, Young said he’d aways gravitated towards people rather than corporate balance sheets.

“Corporates, of course, are run by people and increasingly I’ve found that less personal …. A lot of the client connections are individuals or business families and virtually all of them of very long standing. So, one does, over time, favour that kind of client. The next generations might have been landed with me but then get used to me and seem to want to continue to talk to me.”

Young has sat on some public company boards (“not deep, not major”) but says he prefers private companies and family businesses where the dynamics and governance requirements are different.

His advice for young lawyers? Keep reading, especially judgments, and resist the temptation to specialise too early.

“Young lawyers should have as broad an experience as can be achieved.” ■

Jun 10, 2022 Issue 18

OVERSEAS INVESTMENT

Should your client’s transaction

be notified under the Overseas Investment Act?

Rebecca McAtamney

Rebecca McAtamney Our country and everyone who lives here relies on having stable infrastructure and essential services that enable our economy and society to function smoothly and efficiently.

When we entrust our personal medical and financial information to service providers, we expect it will be protected and respected. We also need to meet our international obligations to manage the development and spread of weapons and ensure we have secure and effective defence and intelligence services to protect our national security.

The National Security and Public Order (NSPO) regime came into effect about a year ago. It applies to overseas investments in businesses that are strategically important because of their role in helping our society and economy run smoothly, safely and securely.

If you are working with a client on a business investment involving an overseas investor and it is below the usual $100 million Overseas Investment Act threshold, it is important to check whether the regime could apply.

The regime The Overseas Investment Act sets out rules and approval requirements for overseas investments into land, businesses, business assets and fishing quota.

The Act sets out different requirements for different types and amounts of investment.

The NSPO regime is in place to assess overseas investments of less than $100m into strategically important businesses or their assets. The regime’s coverage is described in deliberately general terms and captures any overseas investment into a strategically important business or its assets.

This includes investments in businesses holding sensitive health or financial information of 30,000 or more people, important infrastructure systems and facilities and the businesses that operate them, as well as critical direct suppliers to New Zealand’s military

The National Security and Public Order regime is in place to ensure overseas investments in strategically important businesses are in New Zealand’s interest. There is a zero-dollar threshold for most types of business and it is important to check whether any transaction involving an overseas investor is subject to the regime. Toitū Te Whenua LINZ’s Overseas Investment team (LINZ) provides a range of helpful information and is available to answer any questions.

and intelligence agencies.

The regime also applies to businesses that produce, research, develop or maintain military and dual-use technology. A broader range of technology than may be immediately obvious can be dual-use. If you are advising a technology business client about an overseas investment, it pays to check whether the underlying technology has a potential military use. The Ministry of Foreign Affairs and Trade’s Export Controls Office manages the Strategic Goods List and has a tool on its website to help you check.

The NSPO regime gives the Minister of Finance power to, where necessary, call in an investment for closer scrutiny and for the government to act if a foreign investment presents a significant risk to national security or public order. There is a high bar for taking action but there are significant powers to impose conditions and even unwind a transaction or order the disposal of assets.

direction order to proceed, the investment will receive safe harbour status and will not be subject to further overseas investment scrutiny. If no notification is made, the investment can be scrutinised at any point in the future.

It is free to make an NSPO notification and initial assessments are usually completed within 15 working days. Further assessment is needed only if a significant national security or public order risk is identified.

More information on the regime and how to make a notification, as well as other aspects of the Overseas Investment Act, is available on the LINZ website and our team is available to answer questions about whether a proposed investment falls within the NSPO regime.

We recommend contacting us before making a notification so we can help to clarify the information we need and make the process smoother and faster for you and your client. You can get in touch with us via our website ■

Notifications Notifying LINZ of overseas investments is mandatory for businesses that produce, maintain, develop or research military and dual-use technology and for critical direct suppliers to the New Zealand Defence Force and intelligence agencies. The notification must be made and approval to proceed given before any investment takes place.

Notification of overseas investments in other types of strategically important businesses is voluntary but recommended. This can take place before or up to six months after a transaction is completed.

If a voluntary notification is made and LINZ gives a

Rebecca McAtamney is head of regulatory practice and delivery for LINZ ■ Toitū Te Whenua Land Information New Zealand’s Overseas Investment team is responsible for regulating overseas investment into New Zealand. LINZ receives and assesses applications and notifications from overseas investors, supports the Ministers who make decisions on applications, and makes some decisions under delegated authority.

For information on an an upcoming CPD webinar, click here 07

Photo: Chris Jackson / Staff / Getty Images

OPINION/CONSTITUTIONAL LAW

Co-governance is contrary to the treaty, the Bill of Rights and international convention The concern here is that misguided parliamentarians are seeking to use their lawmaking powers to undermine the principles of a free and democratic society. They can do it if they have a majority of votes in the House. That does not make it right

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Gary Judd QC Co-governance based on race is indefensible. Devolving power to govern to the unelected threatens liberty, democracy and human dignity. Even worse when the evil of race-based discrimination is added.

The power to govern is the power to enforce rules of social conduct. It includes the power to take from some and give to others, to decree who may get what from whom and by what means, and to use laws to achieve those and other ends deemed appropriate by the governors of the day. Only the government has the legal power to do such things.

The western world’s political history is a story of attempts to keep the rulers or governors under control. There is something about power which impels some to yearn to have it and once gained to keep it. That’s why Lord Acton said power tends to corrupt and absolute power corrupts absolutely.

In free societies, the evolved method of restraining those who gain power is democracy. It gives the people the ability to peacefully remove them. If democracy is absent, force is the only way, and the use of force tends to perpetuate its continuance.

Devolving power to the unelected is inherently bad. If power is to be devolved (and in some cases it must be – the paradigm example is the devolution of power to judges), the recipients should be chosen solely by reference to their fitness, based on what they say and what they do (especially

the latter). Do they have the character? Do their actions indicate they live by principles befitting them to exercise power? Do they have the necessary skill and expertise?

Using genetic lineage – the identity of ancestors – to determine to whom power is devolved is demonstrably irrational. Intellectual ability and character traits are attributes of the individual. A moron is a moron, and a genius is a genius, irrespective of their ancestry.

Co-governance as propounded by the present government and supported by Baden Vertongen (In defence of co-governance: a response to Gary Judd QC, LawNews issue 15) ascribes political significance to genetic lineage.

Vertongen mischaracterised aspects of my article and adopted the all-too-prevalent ‘I am offended’ approach. He also tried to defend the indefensible. It is indefensible from a moral and intellectual perspective for the reasons given above. It is also indefensible from a legal and constitutional perspective to which I turn after some introductory responses.

I said Chris Trotter’s analysis, if correct, uncovers a sinister and unscrupulous use of the power of express or subtle threat working on the gullible, on those who think what’s happening is advantageous to them and on those who want to feel virtuous. I adhere to that point of view.

I cannot say Trotter has hit upon the right reason. I just

Continued on page 09

Jun 10, 2022 Issue 18

Continued from page 08 don’t know. I suspect agreement to co-governance is more a product of wanting to be liked, abdication of political responsibility by the weak-willed who are capable neither of resisting demands nor of arguing a case one way or the other, and virtue-signaling by those who prefer to elevate emotion and feelings over reason and reflection on the reasons why over centuries the people of England and many other countries rolled back the tyranny of absolute power to substitute political structures which enabled rulers to be peacefully removed from office.

Ukraine is important because tyranny is being enacted before our very eyes. The use of brute force to overthrow free people and put them under the Russian yoke. According to Vertongen, I made an “entirely inappropriate analogy to current events in the Ukraine”.

In fact, I was responding to Trotter’s “ask the Ukrainians” which he gave as a reason for giving in to demands for power-sharing. The point is, of course, that liberty, democracy and human dignity, what the 15 ambassadors and high commissioners to New Zealand said Ukraine was fighting for, are core values of our free and democratic society. They must not be surrendered.

The historical wrongs of O-Rakau and Parihaka have nothing to do with it or, if they have, Vertongen has failed to explain in what way.

If co-governance is legitimate, it must be possible to use reason to demonstrate that legal discrimination on racial grounds, using the law to place power in the hands of a racebased group, is okay. Vertongen has failed to do that.

He says I have overlooked the treaty. I did not. I relied on it. I said that the imperial enactments became part of New Zealand law by Article 3 of the treaty. Instead of trying to advance a credible argument to the contrary, he wrongly claimed I overlooked the treaty.

Does he contend that the imperial enactments are not part of New Zealand’s law? Does he contend that respect for the rule of law and equality under the law are not part of New Zealand’s constitutional heritage brought here through the treaty? Does he not understand and accept that laws must be capable of applying equally to all and that setting up legal structures which are incapable of applying to all offends these principles?

True, I did not refer to He Whakaputanga, but apart from saying I did not refer to it, Vertongen does not advance an argument based on it. Without the benefit of reasons to regard He Whakaputanga as important, I would say that

whatever significance or standing it may have had in 1835, it was displaced by the treaty.

Vertongen argues that “our constitutional beginnings are about how different governance concepts are to be balanced, intertwined, reconciled here in Aotearoa. Talking about cogovernance is at the core of our constitutional whakapapa”.

“It is for this reason,” he says, “that lawyers should embrace discussions about co-governance as being entirely consistent with our constitutional heritage.”

We should certainly embrace discussion, but that’s not what Vertongen is saying here. He is saying we should embrace co-governance as being entirely consistent with our constitutional heritage. He does not explain why.

Co-governance is not consistent with our constitutional heritage, as I shall explain. Even if it were, that would prove nothing for consistency is not the same as validity. The belief that the sun revolves around the earth is consistent with observing that the sun rises in the east and sets in the west, but the theory is false.

In my previous article, I demonstrated why co-governance is inconsistent with what we inherited from England through the treaty. I only touched on the treaty’s promise of equality.

In fact, co-governance is inconsistent with our constitutional heritage.

This is demonstrated by Dame Anne Salmond ONZ DBE FRSNZ, New Zealand anthropologist, historian and New Zealander of the Year in 2013 in a series of articles published in Newsroom late 2021, which are collected here under the heading Dame Anne Salmond: Iwi vs Kiwi.

The thrust of what she says is that the treaty recognised individuals and guaranteed equality between them.

In Part Two Te Tiriti, she says: [By Article 3], in exchange for their agreement to Kāwanatanga, the Queen promised to look after ‘nga tangata maori katoa o Nu Tirani’ (all of the everyday persons (pl.) of New Zealand), and to give to them ‘nga tikanga katoa rite tahi ki ana mea ki nga tangata o Ingarani’ – all the tikanga exactly equal to those of her subjects, the people of England.

According to the Williams dictionary, in 1840 ‘maori’ meant ‘normal, usual, ordinary;’ and ‘nga (pl.) tangata maori o Nu Tirani’ described the normal, usual inhabitants of New Zealand as individuals. The use of ‘Maori’ as a noun to describe an ethnic group came later.

Likewise in the Williams Māori dictionary, ‘rite’ is translated as ‘equivalent, balanced, alike’ – not ‘identical’….

Gary Judd QC

Those who want power who do not just take it by force always justify themselves by insisting that what they will do will produce better outcomes

Continued on page 10 09

Continued from page 09

If co-governance is legitimate, it must be possible to use reason to demonstrate that legal discrimination on racial grounds, using the law to place power in the hands of a racebased group, is okay

10

The third Ture (the ‘Queen’s Promise’) is a pledge of equality (not identity) and balance between the tikanga of the everyday inhabitants of New Zealand and the Queen’s subjects, the people of England (ie, the settlers) as individuals, and of equal return in the exchanges between the rangatira and the Queen.

Dame Anne’s commentary shows that the treaty focuses on individuals – the everyday persons of New Zealand and the settlers, as individuals – and required the Crown to guarantee exact equality in the treatment of all these as individuals.

Dame Anne makes a very important point when she says the Queen’s promise is a pledge of equality, “(not identity)”.

What she is getting at when she says “(not identity)” is shown by her earlier discussion of the European way of looking at things, a way of dividing things and people into mutually exclusive units.

The treaty enshrines a different approach but, she asks, is the old European divided approach asserting itself?

Current debates that seek to revive animosities between ‘iwi’ vs ‘Kiwi,’ for example, are classic Cartesian devices — anachronistic, divisive colonial throwbacks.…

What would a whakapapa-based approach to Te Tiriti look like, in a country where an increasing number of citizens have whakapapa that include Māori, Pākehā, Pasifica and many other non-Māori forebears and whānaunga.

By “not identity” when speaking of the Queen’s promise, she means that the treaty was guaranteeing equality between individuals, individual Māori and individual settlers alike, not between Māori as a collective and settlers as a collective.

“The use of ‘Maori’ as a noun to describe an ethnic group came later.” “Iwi vs Kiwi” was not in the treaty lexicon.

In Part Five, Dame Anne identifies what is happening today when she says: Ironically, in seeking to reshape the future, the government and its advisors have set aside the chance to experiment with whakapapa and ideas of complex systems, turning instead to old colonial habits of mind, including Cartesian dualism with its silo thinking.

And she concludes with these words: The promise of Te Tiriti, couched as it was in the language of chiefly gift exchange, was to enhance the mana of all parties, and to bring people and their tikanga together as equals, as Ture 3 clearly states - a future based on reciprocity and mutual respect.

With He Puapua and its critics, however, the Government has lost sight of this promise - as also happened after Te Tiriti was signed, leading to racial antagonism, violent conflict, and bitter and lasting anger. By focusing debates around Te Tiriti on this document, the Government has gone down a rabbit hole, with no ready exit in sight.

History should teach us not to keep on making the

same mistakes.

Chris Trotter suggested that racial antagonism and violent conflict will arise from resistance to co-governance, whereas Dame Anne’s message is that we must not allow history to repeat. We can do so by bringing people and their tikanga together as equals in a future based on reciprocity and mutual respect which is what the treaty promised.

Some observations of my own support Dame Anne’s analysis of the treaty. Not having her knowledge of te Reo, I (like the Court of Appeal in the lands case) use Professor Hugh Kawharu’s translation to be found on the tribunal’s website.

The three treaty articles usually get the most attention, but they have a textual context. The preamble recites that Hobson was appointed to be “one who will negotiate with the people of New Zealand to the end that their Chiefs will agree to the Queen’s Government being established over all parts of this land and (adjoining) islands and also because there are many of her subjects already living on this land and others yet to come.” The Queen “desires to establish a government so that no evil will come to Māori and European living in a state of lawlessness.”

The “people of New Zealand” are the indigenous of 1840 because they are contrasted with “her subjects” many of whom are “already living on this land and others yet to come.” “[T]hese laws set out here” were presented by Hobson “to the chiefs of the Confederation chiefs of the subtribes of New Zealand and other chiefs.”

The three articles are followed by the attestation. After provision for signature by Hobson it goes on, “So we, the Chiefs of the Confederation of the subtribes of New Zealand meeting here at Waitangi having seen the shape of these words which we accept and agree to record our names and marks thus.”

On the one side there is the Queen represented by her agent, Hobson. On the other side, there are the Chiefs who signify their acceptance and agreement to “the shape of these words” by signing.

Once it is understood as a compact between legal entities – the Queen or the Crown on one side and many individuals on the other (the Chiefs who sign) – there is no reason to suppose it not to be a perfectly valid agreement, although it has no status in domestic law unless expressly made part of domestic law by domestic law.

By contrast, a compact when at least one of the parties is a race is conceptually impossible. A race cannot put its mark on a document.

The treaty’s preamble and the attestation reinforce what Dame Anne says, that it “was negotiated as an alliance between Queen Victoria and the rangatira of various hapū”.

The treaty upholds the rights of individuals and recognises that all are equal in the eyes of the law. It prohibits

Continued on page 11

Jun 10, 2022 Issue 18

Continued from page 10 systems which legally elevate some over others. “Honour the treaty” requires “condemn co-governance,” because co-governance denies equality in the eyes of the law.

Vertongen argues that we should ask whether co-governance would work, whether it would deliver better outcomes.

Those who want power who do not just take it by force always justify themselves by insisting that what they will do will produce better outcomes. That is what political parties do.

The difference is that our political parties must persuade the electors to vote for them and if the electors get sick of them, they can toss them out at the next election.

The co-governance proposed is not governance through election of representatives (which already exists as anyone may be elected if they can get the votes) but co-governance imposed by law by devolving power on racial grounds. That is contrary to the norms of a free and democratic society, contrary to international conventions and our own Bill of Rights and is unconstitutional. We must say so as clearly and as loudly as we can.

Vertongen also downplays the significance of cogovernance, saying it is, simply put, a mechanism for drawing in different voices and different perspectives to how a particular issue or resource might be managed. With respect, this is sophistry.

If hapu or iwi have legally recognised rights and interests in particular resources, creative mechanisms to settle legitimate treaty grievances are perfectly acceptable. I refer here to mechanisms to reflect matters of the type described by the tribunal in the National Freshwater and Geothermal Resources Enquiry (WAI 2358), Report 1, page 69: The Tribunal found that kaitiaki rights exist on a sliding scale. At one end of the scale, full kaitiaki control of the taonga will be appropriate. In the middle of the scale, a partnership arrangement for joint control with the Crown or another entity will be the correct expression of the degree and nature of Māori interest in the taonga (as balanced against other interests). At the other end of the scale, kaitiaki should have influence in decisionmaking but not be either the sole decision-makers or joint decision-makers, reflecting a lower level of Māori interest in the taonga when balanced against the interests of the environment, the health of the taonga, and the weight of competing interests.

Co-governance of a piece of land or a taonga to settle a treaty claim may be appropriate and legitimate as a way of providing redress for the Crown’s wrongful actions in failing to protect lands and taonga over which the Chiefs, subtribes or ordinary indigenous people of New Zealand had chieftainship on 6 February 1840.

Jettisoning equal treatment under the law in connection with things which were not the subject of chieftainship on

6 February 1840 but are aspects of the way all New Zealanders are governed today is quite different.

Vertongen refers to the Māori perspective in areas like health and justice. This comes back to the treaty’s guarantee of equality between individuals whether they be Māori or non-Māori.

Contemporary New Zealand society is pluralistic. We have diverse ethnic, racial, religious and social groups who may choose to celebrate their differences whilst at the same time enjoying equality before the law as individuals and acknowledging that everyone else is entitled to the same equality before the law.

As Dame Anne said, we are a society where “an increasing number of citizens have whakapapa that include Māori, Pākehā, Pasifica and many other non-Māori forebears and whānaunga”. Undoubtedly, our systems must seek to accommodate the diversity and to recognise that individuals, because they are individuals, may be different with different needs, but it is quite a different thing to give a race-based group the legal right to govern aspects of the lives of all.

The concern here is that misguided parliamentarians are seeking to use their law-making powers to undermine the principles of a free and democratic society. They can do it if they have a majority of votes in the House. That does not make it right.

Dame Anne says: Rather than Māori vs non-Māori, could ancestral ideas of lines of descent as strands that remain distinct, while being woven together to create a fine cloak, a meeting house, a family or a nation, provoke new ways of imagining relations within and among individuals and groups across Aotearoa?

That will be really, really difficult but it is the right approach.

Force, the force of law, is creating co-governance. Using law in this way is contrary to the rule of law and our constitutional heritage from England.

It is contrary to the treaty. It is contrary to the Bill of Rights.

It is contrary to international conventions to which New Zealand is party. It is likely to “create racial antagonism, violent conflict, and bitter and lasting anger.”

I conclude with words from nearly 3000 years ago. A fifth-century BCE papyrus fragment, On Truth, attributed to Antiphon, an Athenian orator and thinker, succinctly gives the underlying reason civilised societies make equality before the law a cardinal value: For by nature we all equally, both barbarians and Greeks, have an entirely similar origin: for it is fitting to fulfil the natural satisfactions which are necessary to all men: all have the ability to fulfil these in the same way, and in all this none of us is different either as barbarians or as Greek, for we all breathe into the air with mouth and nostrils. ■

The cogovernance proposed is not governance through election of representatives, but cogovernance imposed by law by devolving power on racial grounds

Gary Judd QC is an Auckland barrister ■

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Jun 10, 2022 Issue 18

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Jun 10, 2022 Issue 18

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Continued from page 05

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would take the whole estate (presently, the estate would be divided unequally between surviving partner and children). If the children were from a previous relationship, they would share equally with the surviving partner.

■ A court may look at assets transferred to a trust or held jointly with another party when deciding what award to make to a claiming party. This means the court could ‘bust’ into a trust if it thought assets had been transferred to defeat rights under the suggested new inheritance laws.

These, of course, are only recommendations. It is important to remember the first Law Commission report and recommendations on trust law occurred in 2002 and the new law wasn’t passed until 2019 and took effect only in January 2021. So, these things take time.

If the recommendations are adopted by Parliament, it will be interesting to see what the draft legislation looks like. I foresee more difficulties rather than fewer and perhaps a resurgence of the use of trusts for asset protection.

Think of the couple with adult children who want to ensure that if one of them dies, the survivor won’t run off with a new partner and disinherit their children. A trust will help with that. In my view, the Law Commission is trying to fix something which isn’t necessarily broken. ■

Jun 10, 2022 Issue 18

3.5 CPD HOURS

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