Presentations text content in Management and Sale of Local Authority Endowment Land
Slide1
Management and Sale of Local Authority Endowment Land
Duncan Laing
7 November 2013
Local Authority Property Association Conference New Plymouth
Slide2Introduction
What is endowment land?
How to establish
if land is endowment
Sale of endowment land
Statutory requirements
Reconciling overlapping / conflicting statutory requirements
Managing expectations of interested parties
Case study Junction Road
Slide3What is endowment land?
A gift or bequest of property
Includes statutory vesting (often by Crown)Commonly derive income from land for application to a particular project or workProblem – inconsistent use of language to create trusts and endowments by Parliament
Slide4How to establish if land is endowment
Current computer register – starting point only
The current computer register will tell you:Current ownersArea and legal description (but be careful)Current memorials and interests (appurtenant and subject)
Slide5Current computer registers cntd…
The current computer register should tell you:
Nature of tenure: fee simple, leasehold, cross lease, unit title or company shareCo-ownershipLimitations on titleThe current computer register will not tell you:Former interests and memorials and past transactions
Former owners
Slide6Current computer registers cntd…
The current computer register
may not tell you about:Purpose or statusAlways make additional checks
Slide7Resources for additional checks and what to look for
Slide8Sale of Endowment LandReconciling legislation
Slide9Local Government Act 2002
Sections 140 and 141
Impose restrictions on the disposal of “property” vested in a local authority, including endowment landStarting point = section 140(3) must retain endowment for the purpose for which it was vestedSection 140(4)(a) = Local Government Minister can approve additional or different purposesSection 140(4)(b) = can sell or exchange and use proceeds for a different purpose unless vesting instrument expressly prohibits sale or exchange
Slide10Local Government Act 2002 cntd…
Must establish the terms of the original vesting instrument to ascertain if sale is prohibited – requires research
Section 141(1)(a) = any sale proceeds must be used for a purpose that is consistent with the purpose of the endowmentIf the Crown was the donor of endowment land, the Minister of Land Information and Minister in Charge of Treaty Negotiations must be notified of the proposed sale or exchange
Slide11Local Government Act 2002 cntd…
Ministers not obliged to take any action and no power to stop sale or exchange or to direct how proceeds are allocated (section 141(2))
If the Crown was not the donor the Council must:Make a reasonable attempt to notify donor or their successor of the intended sale or exchange;Provide them with a reasonable opportunity to commentIn the case of a reorganisation, proceeds applied to the new district or districts of which the former authority formed part
Slide12Public Works Act 1981 and Local Legislation
Offer back obligation in section 40 – doesn’t expressly exclude endowment land
Many endowments result from Local Legislation specific to a particular endowment:Vests the endowment landSets limitations and restrictions on management and saleWording used by Parliament not always clear or consistent Specifically recognised in Waitara Leaseholders Association v New Plymouth District Council
LINZ inconsistencies
Slide13Waitara title examples
Slide14Waitara examples
“upon trust for”
missing
Consistent
Slide15Reconciling legislation
General principles of interpretation
Overlapping statutory provisions – try to give effect to each provision without creating conflictIf conflict cannot be avoided:Must determine which of the conflicting provisions is dominantLater in time may impliedly repeal earlier
But special provision usually prevails over general provision
Slide16Reconciling LGA and PWA requirements on sale
Tasman District Council v The Proprietors of Wakatu
Discussed relationship between LGA and PWAIt was argued that section 40 PWA overrides sections 140-141 LGACourt held:Section 140 of the LGA is a code imposing restrictions on disposalSection 40 does not trump sections 140-141Possible to give effect to both without conflict
Slide17Reconciling LGA and PWA cntd…
Possible to follow requirements to exercise the power of sale in accordance with section 140-141 and also comply with section 40 and offer the land back to the donor (Crown or private party) or consider if exceptions to offer back apply
Sections 140-141 are silent regarding who the purchaser of an endowed property may be, so no obvious direct conflict with the requirements of section 40 to offer back to a previous owner
Slide18Managing expectations of interested parties on disposal
Who are interested parties?
Former owners (Crown or private parties)Need to establish who an offer back (if necessary) might need to be made toPWA offer backs can be made to the CrownAcquisition history and analysis importantHow and why did the Crown acquire the landCurrent lessees – freeholding expectations?
Others?
Slide19Case study – Junction Road
Vested in predecessor under Taranaki County Reserves Act 1966 as an endowment for County purposes
“vested …in fee simple as an endowment for county purposes…”Farm land subject to 25 registered ground leases21 year perpetually renewablePBLA leases
Vast majority of lessees expressed an interest in free-holding
Slide20Junction Road cntd…
LTCCP 2009-2019 Council resolved intention to sell fee simple interest subject to:
Compliance with statutory requirements (including sections 140-141 LGA and section 40 PWA)Compliance with Council’s internal property sales policy
Slide21Junction Road cntd…
Council resolved 2010 to approve sale to lessees with any land not sold in that manner to be sold on open market
24 of 25 lessees purchasedAcquisition historyLand originally confiscated from Maori owners by Crown in 1865 under New Zealand Settlements Act 1863 to quell rebellion and facilitate settlement
Slide22Junction Road cntd…
First public works activity when identified as a reserve for the improvement of roads under Taranaki Waste Lands Act 1874
Vested in Taranaki County Council by Crown by Taranaki County Reserves Act 1877 (TCRA) for a public work (an income stream to fund the improvement of the “junction road”)
Slide23Junction Road cntd…
Section 40 PWA conclusions
Unlikely any of the offer back exceptions would applyOriginally acquired by the Crown as “waste land” rather than a public workSuccessors to former Maori owners not entitled to an offer backLast owner of land before acquired for a public work was Crown so Crown potentially entitled to an offer backHowever, definition of public work at time of transfer to local authority narrower than now and required positive activity
Income generation not a public work at that time so Crown not entitled to an offer back
Slide24Junction Road cntd…
Sections 140-141
No prohibition on sale in the TCRANotification given to Minister for Land Information and Minister in Charge of Treaty of Waitangi Negotiations that the intention to sell was included in the LTCCPNo set form of notification or timeframe in LGANo obligation on Ministers to respond - Ministers confirmed they had no issue with freeholding
Slide25Junction Road cntd…
Use of proceeds of sale
Section 4 of TCRA sets out how income from the endowment land is appliedClear emphasis in section on rental income rather than being wide enough to cover sale proceedsDoes not contemplate sale so does not specifically apply to the proceeds of sale
Slide26Junction Road cntd…
Section 141(1)(a) LGA requires use of sale proceeds to be consistent with purpose of the
endowmentClearest evidence of purpose is section 4 TCRAPurposes (sequential)Firstly, maintenance and improvement of that part of Junction Road located within the boundaries of Taranaki County and Inglewood County
Secondly, surplus applied to “other road works” in respective counties
Slide27Junction Road cntd
Authorised to apply proceeds to periphery roads in vicinity of Junction Road (ie same geographical area of original counties)
Section 141(3) - does not apply retrospectively to reorganisations prior to LGA 02 coming in to forceInappropriate to apply proceeds to road works in wider New Plymouth DistrictNo ability to apply any proceeds to parts of Junction Road located outside New Plymouth District because TCRA limits application to road works within Inglewood and Taranaki Counties
Slide28Junction Road cntd…
Also need to consider section 10 of LGA 02 (subject to relevant terms of the TCRA, LGA 02 and LGA 74)
Ensure that the application of funds comes within the scope of the purpose statement in section 10(b):to meet the current and future needs of communities for good quality local infrastructure, local public services and performance of regulatory functions in a way which is most cost-effective for households and businesses
Slide29Questions
Management and Sale of Local Authority Endowment Land
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