January 2011 - McCaw Lewis

Purpose of the new Act

The purpose of the Marine and Coastal Area (Takutai Moana) Act 2011 (“the Act”) is to restore and protect legitimate, customary interests and recognise the mana tuku iho exercised by iwi, hapū, and whānau as tangata whenua. The new Act is an attempt to acknowledge Te Tiriti o Waitangi, which the former Act did not.

Whānau, hapū or iwi groups have until March 2017 to seek Customary Marine Title. This can be done through specific negotiations with the Crown or through an application to the High Court.

Differences from Foreshore and Seabed Act 2004 (“the old Act”)

The Act is innovative but does retain the same structure as the old Act. There are however a few differences, the main ones being that the new Act:

Acknowledges the Treaty of Waitangi;
Restores native title, which was extinguished under the old Act; and
Limits the ability to obtain title through fulfilment of the statutory legal test.

The “common marine and coastal area”

The Act creates a common space in the marine and coastal area called the “common marine and coastal area”. This was previously referred to as the “foreshore and seabed” under the old Act. The new Act guarantees free public access in that area, but it does not affect private titles.

The Crown does not own the common marine and coastal area, nor is it capable of being owned by anyone else (including iwi, hapū or whānau groups).

Protections

Protected customary rights

The Act also provides for the protection of “customary rights”, meaning longstanding rights that continue to be exercised. The Act protects these rights through affording them the status of mana tuku iho, which formalises existing best practice in coastal management and will allow Māori to take part in conservation processes in the area. Customary rights include the collection of hāngi stones and the launching of waka.

Customary rights are not territorial (and therefore the public cannot be excluded). This is because the recognition of customary rights relates primarily to an activity and not an area of marine and coastal space.

Customary rights holders have to give written permission in relation to third party applications for resource consents for activities that will have an adverse impact (more than minor) on the customary activity.

Legal test for obtaining Protected Customary Rights

Under the Act, a “Protected Customary Right” is a right that an applicant group can show that they have exercised since 1840, and continues to do so in accordance with the tikanga of the area.

Customary marine title

Under the Act, Māori can also apply for recognition of “customary marine title” for areas within which whānau, iwi or hapū have a longstanding and exclusive history of use and occupation. Customary marine titles will be subject to the right of public access and they cannot be sold.

Customary marine title is the “stronger” of the two forms of protections available under the Act. It will, among other things, give holders:

The right to permit/withhold permission for activities requiring a resource consent;
The right to permit/withhold permission for certain conservation processes; and
Prima facie ownership of newly found taonga tuturu (historical artefacts).

Legal test for obtaining customary marine title

To gain customary marine title, applicants will have to fulfil the statutory test of showing that they have exclusively used and occupied the area without substantial interruption since 1840.

The “without substantial interruption” test has been altered slightly when compared to the old Act. The new Act allows recognition of a right “whether it continues to be exercised in exactly the same way or a similar way, or evolves over time.” This is an important change, as it allows applicant groups to show that the right has evolved or progressed since 1840. Importantly, there is no longer a need for the right to be exercised in precisely the same way as it was in 1840.

Applying for recognition of customary marine title or protected customary rights

As referred to above, an applicant group can seek recognition of its rights either through:

Notifying the Crown that the applicant group has an intention to seek an agreement with the Crown (i.e. through direct negotiations); or
By filing an application for a recognition order with the High Court.

The notification or application (as desired) must be presented or filed in Court no later than March 2017.

If you would like further information please contact Renika Siciliano on 07 958 7429.

The four heads of charity

It is a basic matter of law that to be able to be registered under the Charities Act (the Act), an organisation (whether a trust, society, or otherwise) must have a charitable purpose within one or more of the following “heads”:

Advancement of education;
Advancement of religion;
Relief of poverty; and
Other benefit to the community.

The principles behind these go as far back as the Statute of Elizabeth 1601 (which also, we might add, lists “marriage of poor maids” as a charitable purpose). The fourth head of charity is widely known as the most difficult “head” to satisfy, as the Court does not presume that there is any charitable benefit. Rather, the charity must show that its purpose is beneficial to the community and within the spirit of the Statute of Elizabeth 1601. It must also be demonstrated that the purpose is of a public nature.

A number of charities have been unable to show their purposes are charitable under this head – the most recent example being a High Court appeal by the Grand Lodge of Antient Free and Accepted Masons in New Zealand.

The Freemasons case

The Grand Lodge was refused registration as a charity by the Charities Commission. The Grand Lodge appealed to the High Court, making two arguments:

First, that the Commission “got it wrong”, or erred in its assessment; and
Second, that Grand Lodge had held charitable status with the IRD for over 50 years, and therefore the Commission could not refuse registration.

The Grand Lodge is the overarching body which administers and governs freemasonry in New Zealand. Freemasonry was described as essentially a male character building organisation. The Grand Lodge had been a tax exempt charity for over 50 years. Like many other charities, however it was required to re-apply for registration to the Charities Commission when the Act came into force. Its application for registration specified “matters beneficial to the community” as its charitable purpose. As noted above, this is the most problematic head, and the application failed.

The assets of the Grand Lodge fell into three groups, which included in short, assets held under the Fund of Benevolence, those held for particular purposes, and those held for general purposes. The Court did not deny that the Grand Lodge’s Fund of Benevolence fell within the charitable purpose definition. However, this was only part of the Lodge’s activities. The Lodge organised training seminars, ceremonial meetings and other activities exclusively for its members. The spending of this money was governed by section 222 of the Constitution. Section 222b provided that any income after such expenses was to be distributed for charitable purposes. Exactly how much the expenses and the income after expenses would be was undeterminable.

The Court therefore held that the main purposes of the Grand Lodge were those listed above and these were not all charitable – in particular, some were instead for the benefit just of members and not the public.

Further, the Court was not satisfied that the above activities were really “ancillary” to charitable purposes, as section 5 of the Act permits.

In relation to the second argument, the High Court found that the Charities Commission was not bound by decisions of the IRD about charitable status. In other words, the Charities Commission makes its own assessment. This could mean there are a number of organisations out there which had previously relied on IRD determinations or “letters of comfort”, which will not be charitable under the Charities Commission regime.

For many of these kinds of organisations, a reassessment of the terms of the constitution/rules will be necessary, and amendment is likely to be required to bring them within the scope of the Charities Act – and so registrable as a charity.

Canterbury Development Corporation

Another recent case was also an appeal against a Charities Commission decision to refuse registration of an organisation as a charity – in this case, Canterbury Development Corporation (CDC). The main purpose of CDC (and its interrelated affiliates) was to promote economic development in the Canterbury region, and this was achieved by promoting the establishment and development of businesses in the region, providing technical and financial advice to businesses and in some cases, providing financial assistance to eligible businesses.

CDC was incorporated and registered as a charitable trust under the Charitable Trusts Act 1957.

The Charities Commission declined the applications of CDC and its affiliates on the grounds that a community development purpose was only charitable where the relevant community was disadvantaged. On appeal, CDC argued that supporting businesses and promoting economic development were beneficial to the community and of public benefit. CDC also argued that the purpose of the organisation was to relieve poverty and to provide education for businesses – with the relief of poverty and providing education being charitable purposes on their own.

However, the High Court took the view that the fourth head of charity required a community benefit to meet an identified need: for example, providing services to a deprived rural community. As CDC could not establish that Canterbury was a disadvantaged region, the Court found CDC had not established that it could fall under the fourth head.

The Court held that the purpose of CDC was not to assist the unemployed and relieve poverty. Rather, the aim of the organisation was to assist businesses to prosper. Creating jobs and decreasing unemployment was seen as ancillary to this purpose and the benefit was indirect.

Therefore, the High Court supported the decision of the Charities Commission to refuse registration.

Conclusion

The Freemasons and the Canterbury Development Corporation are not the only organisations to be “caught out” by having to re-register under the Charities Act, and then being declined registration: it seems many other prominent charities, particularly those that undertake advocacy, are in the same boat.

Organisations that are refused registration as charities lose their tax-exempt status, though they can still apply to Inland Revenue to keep tax deductibility for their donors. Clearly the effects of this are significant. In practical terms:

Being a “charitable trust” under the Charitable Trusts Act does not mean an organisation is a “charitable entity” for the purposes of the Charities Act;
The charitable purpose of an organisation must be obvious;
Many existing “charities” may need to review their documentation to ensure their purposes are properly charitable; and
The Charities Commission and the Courts may also look beyond the wording in the rules of “charities”, to what these organisations do in practice – but getting the purpose and wording right is the essential first step.

If you would like further information please contact Jessica Middleton on 07 958 7436.

Month: January 2011

Marine and Coastal Area (Takutai Moana) Act 2011 replaces Foreshore and Seabed Act