Legal Status of Forrester Height land explained

Parcel 1

Parcel 1 is described in Record of Title OT325/79 and comprises the land highlighted orange on the title map together with the area of land shown as “Existing Public Walkway”.

This land was vested in the Council pursuant to section 7 of the Waitaki District Council Reserves and Other Land Empowering Act 2013 (Empowering Act) as an endowment property for the purposes of aiding Waitaki District Council funds.

The Explanatory Note for the Bill that led to the enactment of the Empowering Act confirms that Parcel 1 was originally set aside in 1885 by Order in Council, as part of a larger block for the purposes of an endowment in aid of the Oamaru Borough Council (a predecessor to the Waitaki District Council).

In 1937, again by Order in Council, Parcel 1 was set apart as reserves for an endowment in aid of the funds of the Oamaru Borough Council and erroneously made subject to a predecessor of the Reserves Act. The current title issued in 1947.

The Empowering Act was enacted to address uncertainty regarding whether Parcel 1 was vested in the Oamaru Borough Council as an endowment and whether it was subject to the Reserves Act 1977.

The Explanatory Note stated:

The Waitaki District Council, the successor to the Oamaru Borough Council, wishes to have the status of the Lookout Point land confirmed as that contemplated in the 1885 Order, namely, as endowment land, so that it may sell the land in accordance with sections 140 and 141 of the Local Government Act 2002.

The specific explanation of clause 7 (now section 7 as enacted without amendment) stated:

Clause 7 declares the land to be vested in the Waitaki District Council as an endowment property for the purposes of aiding Waitaki District Council funds and states the land is an endowment property within the meaning of section 140(2) of the Local Government Act 2002 (and therefore able to be sold in accordance with sections 140 and 141 of that Act).

Parcel 2

Parcel 2 is described in Record of Title OT18D/802 and comprises the land highlighted green on the title map. The Record of Title does not record any particular interests or status affecting the land

Parcel 2 was previously part of the land described in (now cancelled) Record of Title OT241/150. It was previously vested in The Mayor Councillors and Burgesses of the Borough of Oamaru in trust for the purposes of public utility and was subject to The Oamaru Town Reserves Management Act 1869. However, a Gazette Notice published in 1963, and registered against the prior title as Instrument 266381 records that, pursuant to section 20 of the Reserves and Other Lands Disposal Act 1962, all existing trusts affecting Parcel 2 (together with other land) were revoked and the land was declared to be held “by the Corporation of the Borough of Oamaru as endowment land for the general purposes of the Corporation.”

Section 20 of the Reserves and Other Lands Disposal Act 1962 provides that doubt had arisen regarding the validity of leases granted over parts of the land that was the subject of the section, and the intention of section 20 was to resolve those doubts by providing for the land to be held as an endowment and declaring the leases to be lawful. It authorised the Minister of Lands to revoke existing trusts of any part of the land and to declare it to be held as an endowment for general purposes.

The former title was cancelled and the current Record of Title issued in 1999. No subsequent dealings affecting the status of land since the 1963 Gazette Notice have been identified.

Despite the fact that the Registrar-General of Land has not stated in the current Record of Title that the land is endowment, it is considered that the 1963 Gazette Notice still applies and Parcel 2 is vested in the Council as endowment land for the general purpose of the Council.

Parcel 3

Parcel 3 is described in Record of Title OTB1/1222 and comprises the land highlighted blue on the title map. It is stopped road vested in the Council in fee simple. The Record of Title does not record any particular interests or status affecting the land.

A historic search of the title indicates that the title was issued when Parcel 3 was stopped as road in 1962 pursuant to the Municipal Corporations Act 1954. There appear to have been no legal changes or developments affecting Parcel 3 since the road stopping in 1962.

Endowment land is land vested in an entity (including a local authority) that is normally held for revenue gathering purposes. This is confirmed in the 2007 decision Royal New Zealand Foundation of the Blind v Auckland City Council where the Supreme Court acknowledged that the term “endowment” essentially means land held in order to produce income.

Where an endowment has been made on particular terms, for example as to the relevant purposes for which the endowment is held, then it is akin to a trust, and the land and revenue gathered from the land can only be used for those purposes.

If local authority-owned land is held as an endowment then it is subject to sections 140 and 141 of the Local Government Act 2002 (LGA).

Parcel 3 (Blue)

Classifying Parcel 3 as reserve would be reasonably straightforward. Section 14 of the Reserves Act says that the Council can, by resolution (subject to public notification) declare any land vested in it to be a reserve for any of the purposes in sections 17 to 23. The land is deemed to be classified for the relevant purposes following adoption of a resolution under section 14.

Parcels 1 and 2 (Orange and Green)

The position is more complex with respect to Parcel 1 and Parcel 2.

While there does not appear to be any express prohibition in either the Reserves Act 1977, or in the LGA, holding land that is both endowment and subject to the Reserves Act is problematic and would result in land being subject to multiple statutory regimes that are inconsistent.

For example, the Reserves Act requires different processes to revoke and dispose of land to the LGA. Further, while it may be possible to argue generally that endowment land can be classified as Reserve, section 7(2)(b) of the Empowering Act (which applies to Parcel 1) is unhelpful in the present circumstances as it appears to confirm that other Acts, including the Reserves Act, are specifically excluded.

It is considered therefore that there are some fundamental issues with any proposal that would result in Parcel 1 and Parcel 2 being declared to be Reserve, whilst still being held as endowment.

There is no process in the LGA that contemplates endowment status being removed (other than upon a sale of the land in accordance with section 141). Therefore, in order to make the Parcel 1 and Parcel 2 reserve land, the Council should first remove the existing endowment restrictions, which would need to be given effect to by a local Bill that repealed/amended the Waitaki District Council Reserves and Other Land Empowering Act 2013. Council could then classify Parcel 1 and Parcel 2 as Reserve.

In this scenario, ‘payment’ of market value for the land would come from one part of the Council to the other, or involve a sale to a Council Controlled Organisation and subsequent re-acquisition and a declaration and classification of the Land as reserve.

This approach is not appropriate as a technical ‘sale’ by reallocation of funds would not, in our view, satisfy the threshold requirements in section 140(4)(b) which requires a sale or exchange, and therefore a change of ownership. This also does not fit comfortably with the statutory purpose of section 140 and 141 of the LGA.

A Council decision to sell the land to itself could be viewed as circumventing the requirements of section 140(3) and not following the necessary statutory requirements, including the principles in section 14 of the LGA.

If the Council were able to effect an internal exchange of the reserve and endowment land, this would not affect its endowment status.

The effect of section 15 of the Reserves Act 1977 is that:

• the non-reserve land takes on the reserve status of the former reserve; and
• the reserve land is freed from its former reserve status.

Section 15 does not extend to removing any specific statutory status that applies to the new reserve land, nor would it affect existing interests or rights that apply to the land (for example, leases or easements).

A section 15 exchange would result in the Forrester Heights endowment land being both Reserve and endowment, and therefore would not resolve the identified problem.

It is considered the only way to transfer the endowment status to the former reserve land would be to pass a local Bill to that effect that repealed/amended the Waitaki District Council Reserves and Other Land Empowering Act 2013 and transferred the existing endowment status of the Forrester Heights land to reserve land identified as suitable for that purpose.

A resolution or other formal decision by the Council that the endowment land is a ‘park’ as defined in the LGA would present a number of issues and would not provide any particular advantage.

A park is defined in section 138 of the LGA as:

park—

a.     means land acquired or used principally for community, recreational, environmental, cultural, or spiritual purposes; but
b.     does not include land that is held as a reserve, or part of a reserve, under the Reserves Act 1977.

The Council is not required to go through a particular process to ‘declare’ land to be a park, rather it involves a subjective factual assessment of the principal purpose for which the land is acquired or used, at the time of the proposed disposal.

The only specific statutory relevance of a park, as defined in the LGA, is in terms of an obligation to consult with the community prior to its disposal. It does not provide any particular status or protection to the land while it remains in Council ownership. Nor would it affect the endowment status of the land.

There is also a risk that a deliberate decision by the Council to declare the endowment land to be held as a park would be contrary to the revenue gathering functions of the endowments.

The current endowment purposes of Parcel 1 (largest block) and Parcel 2 are, respectively “aiding Waitaki District Council funds” and “for the general purposes of the Corporation [of the Borough of Oamaru]”.

An immediate difficulty in using section 140(4) is that simply changing, or adding, purposes which refer to the land as a reserve do not in fact make the land a reserve. The land would remain endowed land.

At best, it could enable funds to be used for the benefit of open space, or funding or establishing other such purposes. Therefore, asking the Minister to change the purposes of the endowment land to be more ‘Reserve-like’ does not resolve the fact that the land would be held under two different regimes.

Classifying land as reserve does not remove the endowment status and the Minister does not have the ability to remove the endowment status to facilitate a different purpose or status for the land. In the absence of a sale/disposal, that could only be achieved through a local Bill.