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Place: Wellington

Present: J. V. Williams. Chief Judge

M Parker, Clerk of the Court

Date: 15 January 2001

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Minute Book: 28 AT 167-1'8

Subject: Mangamuka West 3B2A & East H5B 0 InJunction: Raymond Harrfs v Wiremu Hams

Section: 19(I)(a)/93

Chief Judge

DECISION

Introduction This Is an application described on the papers as an Interim Injunction application. It was filed In the Court in Whangarei on the 4 November 1999. The application was made in respect of four blocks described (or more accurately misdescribed) In the application as Mangamuka H3A CT 160/665; Mangamuka F5A2 CT 17A/840; Mangamuka 45B; and Mangamuka 3B2A. The application was subsequently amended so that It applied only to Mangamuka West 3B2A and Mangamuka East H5B the two blocks of Maori Freehold land. The H3A and F5A2 blocks are general land owned by fewer than four persons. The Court therefore had no jurisdiction to deal with them (s.129(2)(c». During the COUllle of the substantive hearing counsel for the applicant Raymond Harrfs made an oral application to change the status of Mangamuka East H3A and Mangamuka East F5A2. Counsel was directed to file any such application In writing In the usual way but nothing came of that direction.

The application In Its original form, came before His Honour Judge Spencer on 15 November 1999 In Chambers. For the reasons set out at 89 Whangarei Minute Book 54, His Honour granted an exparte interim injunction pursuant to s.19(1)(b)/93 to prevent any further action being taken by Mr Wiremu Harris pu",uant to the mortgage. There the matter has remained until this decision.

The application Was to prevent the respondent Mr Wiremu Harri. from exercising mortgagee powers under memorandum of mortgage B262940. Th. mortgage related to a number of lan.d blocks but, Insofar as the jurisdiction of this Court Is concerned, It related to the two blocks which remained the subject of this application. That I. Mangamuka West 3B2A and Mangamuka East H5B.

The applicant is Raymond Harris. though he sued on behalf of himself, his two brothers Graham and Orzogna who together were the mortgago", of the lands In question and, at least allegedly, a number of descendants of Mere and Waaka Harns. I therefore refer hereafter to the applicants In the plural. The last mentioned

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were the grandparents of these brothers. It was alleged that the descendants of this couple intended to establish a trust to receive the lands In queStion once the debt had been removed.

The respondent is Wiremu HalTis. Wiremu is an uncie to Raymond and his brothers, and a son of Mere and Waaka HalTis. He acquired the mortgage over the lands In question by purchase on 1 December 1998 from the Crown.

The facts

The factuai background to Ihe applications is as follows. On 10 December 1978,18 separale titles were offered as security for a loan of $29,500. The titles were Mangamuka East F4B2, F4C, F5A 1, F4C2, F5B and Mangamuka West 3A 1, 3A2, 3A3A, 3B1Al, 3B2A, 3FF, 3J3A, 3J3B, 3G, 3l6C, 3l7B3A, 3E and H5B. The mortgagors were HalTis Brothers (Mangamuka) limned, Martha Rea Tamlhana, Helaraka Waaka Haare and Raymond HalTis. The shareholders of HalTis Brothers limited included the Ihree brolhers as far as can be recalled, but that fact, if Indeed it is, is not malerial.

On 11 November 1983 this mortgage was discharged and a new mortgage granted by Ihe brothers Raymond, Graham and Orzogna HalTis in relum for a loan in the sum of $42,566. The mies secured were Mangamuka West 3B2A and H5B as well as 2 general litles Managamuka East F5A2 and H3A. According to counsel for the applicanls, the Maori Affairs Department further Increased Ihe mortgage by $4000 In December 198410 pay for the change of slalus of Ihe 2 Maori land blocks involved 10 General land. However Ihe Harris brolhers refused 10 change Ihat stalus and the increase should have been removed. It appears Ihal it was not.

The lasl paymenl thal the mortgagors made in' respect of the mortgage was on 6 April 1989 according to a leller from Te Punl Kokiri dated 4 December 1998 to Mr Willlam Hams. There is no reason to doubl the veracity of Ihat proposition. As a consequence. the loan account was significantly in arrears by the lime Mr Wiremu Hams acquired the mortgage.

The maller had clearly been the subject of discussions between Te Punl Koklrl and the mortgagors after the dale of the last repayment because on 11 January 1995 Mr 1--' l Bulcher of Te Pun I Koklrl sent a leller to a Mr E T HalTis in the following tenms:

'Thank you for your lel/er of 19 Decamber 1994 in which you wrile on behalf of the H Wand M R Harris whanau trust and offer a sum of $15,000 in full and final selt/ement of the brothers' debt to Ihe Mlnislry. [ThIs Whanau trust was to be fonmed in respect of Ihe Maori land inleresls of Ihe parenls of Raymond and-· his brolhers - Ihat is of Helaraka and Martha Harris. The evidence suggested · that this Trust, though discussed at length, was never finally settled by order of ' ~. -Ihe Maori land Court] . -...... . ; .. ; " .... ..-.,. ..•. ',,.. " .

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Minute Book: 28 AT 167- 116

WI1I7e you write on behalf of Ihe whenau we should poinl oul Ihat Raymond, Orzogna and Graeme are Ihe legal OlW7ers and Ihey wiff personaffy bear Ihe consequences for any lagal procaadings Ihe Minislry is forced 10 lake if Iha deblls not sallied promptly forlhe sum Ihal has now been agreed upon.

11 is importanl Iharefore Ihal you immedialely consull wilh the family 10 ellacl seWamanl, praferably before 31 March 1995.'

little happened after that letter, because on 4 January 1996 Mr Butcher's successor, (Mr Butcher had apparently passed away), lan R Dick sent a further letter to Mr E T Hams In the following tenns:

"Twalve months ago you had correspondence wilh Mr Bulcller bf Ihis omce conceming Ihe mortgage on Ihe family land. Subsequenlly Ihe Ihree brolhars lriad 10 refinance Iha dabl al Iha agreed sall/emenl of $15,000. 11 was not successful bacause of anolher debl owing 10 Auckland Finance and now Ihe bankruplcy of Orzogna.

An oplion Ihal is still avallabla is for Ihe Whanau Trusllo buy Ihe mortgagas from us al Ihe same price. You could Ihen arrenge for Ihe mortgage 10 be discharged possibly In consldaralion of Ihe brolhers lransferring Ihair land inleresls 10 Ihe Trusl.

Ydu wif( need 10 discuss Ihis wilh your solicilor as IlIe bankruplcy and Auckland finance debl wiff complicale mallers. 11 could mean Ihal you lVOuld conlinuelo hold Ihe mortgage and Ihus prevenllhe land being sold by olher perties. AI leasl it would bring Ihe debl back wilhin Ihe family. .

Please consldar l!lis oplion and lel us have your views. '

According to the evidence of R~ymond Hi",s, ·!lie wider Hams whanau had been working on the establishment of an ell encompassing trust for the descendants of Mere and Waaka Hams. Mere and Waaka were the parents of Wiremu Hams and the grandparents of Mr Raymond HalTis. This was the proposed Mere and Waaka Hams trusl. This trust Is not to be confused with the H Wand M R Whanau Trust which as set out above, related to the parents of Raymond and his siblings .. _.

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The-Mere·-';iiCi Waaka- Tru;t~~~~rdl~g- ;;'-Mr Ra~';;;;hiiH~r;IS~ w; . : ~iri~d~ t-~ ·b~ . c established at a meeting of the whan.u on the 28' May 1998. The minutes of that I meeting were attached to his affidavit. The trust was to be known as the Memone Putangarau Taniwe HalTls and Waaka Karani Mltlkakau Hams Whanau Trust. Clea~y the trust was to be a whanau trust under the Ture Whenua Mao~ Act 1993 because the minutes recorded va~ous discussions about a proposed trust order and __ -_ . - - -about the proposed role of the Maori Land Court. It Is Implicit but not expressed that the lands of Mere and Waaka and thair descendants would be vested In the whanau trust, although there was no specific reference to the land tha subject of ·ihls :'. application, In thQse minutes . .. . " . . . . : ~ . . , .. ,..-. . '.- "c. ".-- :1-'

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According to 'Mr Raymond Hams, a number of family meetings were held In 1996 1997 and 1998 with respect to the fonnation of the Mere and Waaka Whanau Trust: His evidence was that all parties (including Mr Wiremu Hams and his whanau) knew that the Mere and Waaka Hams Whanau Trust was the whanau trust which was to receive the land the subject of these proceedings once the reduced debt had been paid to Te Punl Kokiri as agreed. It is appropriate to note for the respondent that Adam Hams (Wiremu Hams' son and interim secretary of the proposed trust) and Roiand Ruha (his grandson) denied that the Trust had been fonnally established at all, and in any event denied that it was intended to be the trust to receive the lands the subject of this proceeding.

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Adam Hams in his evidence (para 19) indicated that from May 1997 on ,

"nc>-one was inferested In fonnlng the Trusf to take over those lands. They ",ere scared off by the size of the debt and there W!1", no further discussions held about these lands or the mortgage after May 1997. 11 became clear Ihal we would not be able to get agreement necessary from 811 families to constitute Ihe Trusl for Iheselands.·

Mr Adam Hams acropted when questioned that in fact' the possibility of these trusts being used to receive the lands was still being discussed in January 1998 at a family wedding. Mr Adam Hams made It ciear however that by the meeting of the 24"' May 1998, the minutes of which were attached to Mr Raymond Hams's evidence, the mortgage in respect of the iands in question in this case had dropped out of the picture. According to Adam Hams, the only issue for discussion at the hul related to the inclusion of Parengaranga incorporation shares into the whanau trusi. it transpired that one family refused to allow their sharas to be included and the Mere and Waaka Trust never proceeded to a fonnal application to the Maori Land Court.

The appllcanl" offered no evidence to conlrovert this evidence.

In the meanlime and by around Christmas of 1997, Mr Roland Ruha (who it will be recalled is the grandson of the applicant, Mr Wiremu Harris) returned to New Zealand after an extended period in Brisbane, Australia. He spent his initiat months in New Zealand working wit~ his grandfather in res~ct of a grievance unretated to the issues in this Case, but affecting some of the land the subject of this proceeding. The grievance related to the compulsory acquisition by the Crown of certain tand Interests·· of Mr Wiremu Harris without his consent or knowledge and without compensation . . This Involved the negotiations directly with the Crown.

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I · . . .. Mr Ruha telephoned Mf LiHI. of Te Punl Koklri on the 15'" of July 1998 to discuss the .... '; _. status of the mortgaged land. It appears that Mr Little had now taken over the / . mortgage portfoliO previously administered by Mr Dick. According to Mr Ruha'$~, ':: . , ___ :.-:._ .. evidence, Mr Little explained the size of the outstanding debt - at that stage over . . $100,000, and the two discussed what Te Puni Kokirl might propose to do with the ",'

mortgage. Mr Ruha enquired as to whether Te Puni Kokiri would consider Selling,iv~:·~· .:-~1~.~~J:if:L~~~~1;i1 mortgage to Mr Wiremu Hams. According to Mr Ruha he "",sponded f8vourably". _ :

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Mr little Indicaled that he thought that Mr Wiremu Harris belonged to the preferred class of alienee sel out in s.4 ofTe Ture Whenua Maori Act. 1993.

Mr Ruha had hoped that the acquisition of the mortgage could be Included as part of the seHlement package for the unrelated grievance mentioned earlier. In the end however, ~ appeared that Intermingling the two Issues was likely to make maHers more difficult because on 22 July Mr Ruha made further contact by telephone with Mr little. He indicated the If necessary the family (Ihat is the family of Wiremu Harris) would be prepared 10 purchase in Its own right without reference to the family's grievance against Ihe Crown ..

On 31 August 1998 following some further discussioris with Mr liHle, Mr Ruha sent an offer to Te Puni Kokiri on behalf of his grandfather. The offer was to purchase the mortgage outright. The offer was for $10,000. Thereafter, Mr Ruha's written brief of evidence read as follows:

I telephoned Mr little on 10 September 199B. He advised that Te Puni Kokiri were now considering all their options as mortgagee and would compare these with my 9randfather's offer. Mr LiHle then asked me if I knew about E T Harris who had represented the Hetaraka \Naaka and Martha Rea HaITis Whanau . Trust and made an offer of $20,000 to payout the mortgage. I had no Idea of who E T HaITis was but said that I would make enquiries through my grandfather and my uncle, Adam Harris. I did explain to Mr lIHle that Hetaraka was my grandfalher's younger brother and that Martha was Hetaraka's wife, and that they were the parenls of Ihe Harris brolhers. Mr liHle was concemed thal these people mighl ask why Te Puni Kokiri had ;'01 sold the mortgage to them. However he said that the offer by E T Harris was old and that they had never followed it through.

I had no knowledge of and had not been advised by Mr liitle of any other party being interested in the mortgage prior to making our offer on 31 August 199B. I also had no knowledge of E T Harris, ihe H Wand M R Whanau Trust or anf other trust associated with the mortgagors prior to making our offer on 31

.. August 199B. Mr Little acknowledged that I had made the offer to purchase for and on behalf of my grandfather and his uri and not on behalf of the mortgagors. I told him WB wanted to take the Crown out of the picture in respect of dealing with this land once the mortgage was in the family's hands then the family would deal wilh the issue of the land in its own time and on its own terms. I explained that my grandfalher is the kaumatua for the enlire extended family which includes Raymond Harris and his brothers. I added that ­the family is the only one that can deal with this land and the govemment '.­should lel them deal with the land in their own way. Mr LIHle. agreed." . . __ . .. . .

.~' . - . - . . ... 'ori 1 Dec'mtJer1998 th~ 'niortgag~ 'w~;tr~n~ie;;'~d 'to Wlremu HarTls. A i~il~r'Of4-' . .. c .. : December 1996 confirmed arrangements . . The relevanl parts of that leHer are as" o.·,·.~.,"·

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to 31 Man;h 1998. As you will see, the last payment made by the Hams Bros. was received on 6 April 1989 aHhough wa did receive grazing fees from the firm of P leigh, In March 1992.

Currently the interest rate Is set at 12.5%, and this is charged at 31 March each year based on the outstanding monthly balance during the year. If no payments are made during the year, the interest charge is simply the previous March baiance multiplied by the interest rate, eg Balance as at 31 March 1997 was $129,389.25 (one hundred and twenty nine thousand, three hundred and eighty nine dollars and twenty flVe cents), no payments ware received, so interest as at 31 Man;h 1998 was simply $129,389.25 (one hundred and twenty nine thousand, three hundred and eighty nine dollars and twenty five cents) by 12.5% or $16,173.60. If no payments are received this year, interest at 31 March 1999, will be $145,582.85 (one hundred and forty five thousand flVe hundred and sixty two dollars and eighty flVe cents) by 12.5% or $18, 195.35.

As you will see from the advice of Annual Mortgage Instaiment, there were arrears 01 payments of $64,460.59 as at 31 March 1998. II this amount had been paid, the monthly balance. would reduce, and interest charges lor the year would reduce. As you can see however no such payment has been received.

For the Ministry's part, we now need to formally advise the Harrls Bros. 01 the fact that the mortgage has been sold to you and that you will advise them of their payment reqUirements. We will also advise Patrick J Kennelly, Barrister and Solicitor, Orewa, of the transfer to you, as he has acted for Auckland Finance Ltd. in regard to the Caveats registered against the two Certificates of TItie."

On 10 December 1998, Adam Hams met with Raymond Hams.' He offered a deal whereby In retum for lorgiveness 01 the debt under the mortgage, the four blocks of land subject to the mortgage together with a block known as Mangamuka 3G (approximately 3 hectares in size) would be translerred to Wiremu Hams. The consideration would be one dollar.

On 15 December 1998 Adam Harris personally deiivered a letter of demand to Raymond Hams requiring payment of the (then) $70,000 in arrears 01 interest. On 16 December 1998 Adam and his father Wiremu met with Raymond. Raymond" confirmed his consent to the agreement subject to obtaining the consent of his two . brothers and co-mortgagors. Roland Ruha prepared the agreement and Wiremu Hams signed it for his part on the 16" December 1998. The agreement was sent to Graham Hams (one of the three brothers) who lived in Westem Australia. He executed It and returned It. The agreement was then given to Raymond Harris for execution by hlmsell and his brother Orzogna.· In mid·January 1999 Raymond c - C" ".'-'

telephoned Adam Hams to indicate that he no ionger wished to enter into the agreement.

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In June 1999 Wiremu Harris' solicitors were instructed to institute recovery proceedings under the mortgage. The land was valued by Moir Valuatlons regIstered valuers. A report was provIded on 30 August 1999 setting the combined value of the two blocks at $84,000. Under forced sale conditions the combIned value would. according to the report, be between $45,000-$55,000. The evidence of Mr Ruha was that the report set a fair market value for the purpose of those recovery proceedings.

Property law Act notices were eventually served by subsmuted service prior to 13 September 1999. They were to expire on 26 October 1999.

On 15 November 1999, the ex parte orders were granted by His Honour Judge Spencer enjoining Wiremu Hams from taking any further action pursuant to his powers under the mortgage purchased from Te Punl Koklri.

The apptlcants' case

The nature of the case for the applicants did not become clear until the end of the case. In opening submissions counsel for the applicants advanced two grounds only. The first was that the letter from Te Puni Koklri to Mr E T Hams on behalf of the H W and M R Hams whanau trust dated 11 January 1995 represented a concluded agreement. That is that by the terms of that letter, ij had been agreed that the debt would be reduced to nil upon payment. The second argument was that Mr Adam Harrls (as Secretary of the Mere and Waaka whanau trust) stood as a fiduciary to the applicant and his whanau and that he used such knowledge as he gained in his role as secretary of that trust to the detriment of that whanau and to his own benefit.

Thou9h counsel advised that there were no other grounds being advanced by the applicants, further grounds were in fact Introduced in closing submissions. In addition, the grounds which wene advanced In opening were expressed In subtly different terms, so that ij Is convenIent simply to nestate in summary form the arguments advanced in closing. They were:

(1) There was a concluded egreement (as above) which wiis acted upon by Raymond, his brothers and the Mere and Waaka trust such that allhough the $15,000 payment pursuant to such agreement had not been made, there was nonetheless consideration for the agreement.

(2) Adam Hams acted fraudulently In that he wrongfully misused his poslllon as interim secretary of the Mere and Waaka Trust to get Information about the mortgage over the land, which information he laler used to his own advantage.

(3) Roland Ruha acted fraudulently In that he told Mr UHle that the transfer to- . .. Wiremu Harrls (his grandfather) would clear the Harrls brothers' debt. Te Puni Kokiri reached tha agreement with Wiremu Hams in reliance upon that representation.

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Te Punl Kokiri on the balance of probabililli; s, were aecelved by the ·slatem-en! ,_ .- -:_ ... . i; by Roland Ruha that Wiremu Herris was lI,e kaumatua for the whole famlly.- - ··· - . ~:

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Including the Hams brothers. This, similariy. Induced Te Puni Koklri to enter into the agreemen!.

(5) The evidence showed that Wiremu Hams did not want to acquire the mortgage and that he was only a figure head for Adam Hams and Roland Ruha. Adam and Roland used their grandfather to procure financial9ain for themselves.

The respondent's case

The respondent'. case may be summarised as follows:

(a) There is no juris9iction to deal with 'this application because under •. 19(1)(a) there is no threatened or actual trespass to tha land.

(b) The alleged agreement recorded In the letter of 11 January 1995 is an agreement to reduce debt The agreement between Wiremu Hams and Ta Puni Kokiri is an agreement to transfer a mortgage. Even If the applicant's case is made out and it Is found that there was a concluded agreement, there is no conflict between the two pariies because they purchased different things.

(c) In order to succeed, the applicant must prove fraud or mistake and there Is no evidence of either in this case.

(c) Even if there was fraud or mistake, the applicant is not a party to the contract between Wiremu Hams and Te Puni Kokiri. He therefore is not in a position to seek to Invalidate the agreemen!. Under the Contracts Privity Act, only Te Punl Kokiri can do tha!.

Dec'.'on

The application was made pennanent injunction -

under s.19(1)(a). That Is it is an application for a

'Ageinst any person in respect of eny ectual or threalened trespess or other Injury 10 eny Meori freehold lend"

In order to succeed under s.19(li(a), the applicants have to show that the tran~fer of . the mortgage from Te Puni Kokiri to Wiremu Harrl. was Invalid. The effect of this toglcally would be that any action taken pursuant to the Invalid transfer to recover the land or to sell It would be an actual or threatened trespass. If Invalidity could be proved, then the Court cleariy has Jurisdiction under •. 19. If It could not be proved, then there is no Jurisdiction.

In effect the only two arguments capable (if made out) of rendering the transfer' Invalid were either that the applicant already had a concluded contract which would ' .

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obtained by Wiremu HaITis by fraud or mistake.' I deal each of these two broad grounds below.

Was there a concluded contract?

The applicant relies upon the lefter from Te Puni Kokiri to Mr E T HaITis of 11 January 1995 In support of this argument. The relevant parts of the leHer are set out above. It will be recalled that, by its terms, Te Puni Koklri indicated it was "prepared to accept" $15,000 in full and final seHlement of the debt. Importanlly, Te Puni Kokiri cautioned Mr HaITis that while he wrote on beha~ of the whanau, it was Raymond, Orzogna and Gmham who would personally barn the consequences for any legal proceedings the Ministry took "if the debt ;s not settled promptly for the sum that has now been agreed upon . •

It is common ground that the $15,000 was never paid. It is, with respect to counsel for the applicants, as plain as day that this leHer is not evidence of a concluded contract. At best it represented, as the respondent argued, a conditional offer to settle. The condition was that the debt had to be settled promptly for the sum there agreed upon.

An offer of this nature is only ever open for a reasonable lime (Kean v Dunfoy [1952) NZLR 611). By 4 January 1996 (one year later) there is incontrovertible evidence that the offer had been withdrawn because a further (though preliminary) offer was made by Te Puni Kokiri in a leHer of that date. The relevant extract from the letter read

"An option that Is still available is for the !M/anau Trust to buy the mO/tgages from us 8t the same price. "

Again it is common 9round that this option was never taken up by the applicants.

I find therefore that there was no concluded contract between the applicant or his representative and the Crown wilh respect to reduction of the mortgage.

Even If the argument was made out, it is plainly misconceived. It there was indeed a concluded conlract between Te Puni Kokiri and the applicants then either Wiremu HalTis bought a debt worth far less than what he thought it was worth and the mortgage could be discharged by payment to him of $15,000, or if that Is not correct, the applicants should have Issued proceedings against Te Puni Koklrl. The applicants did not (even on their own argument) purport to purchase the mortgage. A - - ­prior agreement to reduce the debt secured by the mortgage cannot possibly affect a later Iranster of that mortgage to a third party.

'It fo!lows th'et on either counl, the first ground roi tti~ "piiilc~iiori' iriuitfail:

I As indicated (supra) the respondent ~gued In additl~~ Ih"at"the cohlra"Cls'rriv1tY A·cf:pr~~~·ie(jl~: · ­applicants rrom succeeding even ifthese two grounds were made OUI, but it proved unnecessary 10 explore that argument.

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Was the agreement to transfer the mottgage to Wiremu Hems obtained by fraud?

The applicants argued two counts of fraud. They argued that Adam Hams was constructively fraudulent in utilising confidential Information he had gained as secretary of the soon to be formed Mere and Waak. trust He passed this information on to Roland Ruha who used it to purchase the mortgage on behalf of his grandfather.

I cannot see that this argument has any hope of success. It may have calTied more weight If the alleged conversation between Adam Hams and Roland Ruha had happened within a reasonable time of the conditional offer by Te Puni Kokiri on the· 11 January 1995. That would clearly have raised a question about whether Adam HalTis was using his position to subvert the benefit enjoyed by the applicants of an extant condnional offer on good terms. But that clearly was not what happened. Mr Ruha did not even commence discussions with Te Punl Koklrl until 3% years after the conditional offer was made. By that stage it was very clear that the applicants had nothing. They had no agreement to protect. They did not even have an offer on good terms to protect. If Adam Hams and Roland Ruha had not moved to acquire the mortgage. it could well have been transferred to a large finance company or merchant banker as p.rt of a wider portfOlio at a discounted rate. Any expectation which the applicant and his whanau had that Te Punl Koklri would close the deal with them before looking elsewhere had long since diSSipated.

Since I have found on the facts that the allegation made by the applicants In respect of Adam Hams Is not made out, n is unnecessary for me to delve Into the law relating to breach of fiduciary obligation and constructive fraud in order to determine whether, even If the applicant was right, the transfer of the mortgage to Mr Wiremu HalTis would be Invalidated thereby.

The next argument ·for ccinstructlve freud Is that Roland Ruha represented to Mr LI«Je of Te Punl Kokiri that the transfer of the mortgage to his grandfather would lead to the removal of the debt owed by the applicants. The allegation Is that as a result of that misrepresentation, Te Punl Koklri agreed to transfer the mortgage. Again the evidence does not come close to making out such an allegation. The letter from Te Punl Kokirl to Wiremu HalTis dated 4 December 1998 makes it clear that Te Puni ·. Kokirl fully expected that the repayment obligations which the applicants camed in · respect of the mortgage would continue following the transfer.

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"For the Ministry's pari, we now-need to fo;",ally advise the Hams Bros. of /I,e fact tl,ot the mottgage has been sold to you, and that you will advise them of their payment requirements .•

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The leHer of 20 January 1999 from Te Punl Kokirl to Mr Raymond Hams records the·- --- --...... ·hoc.lb:' ~i)~,,:.' :~ transfer. There Is not a scrap of language to Indicate that the effect at the transfer . would be to free the land of the debt. If that was on Mr Little's mind at the time, he;:: .. ~: .

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would clearly have said so to Mr Hams as the deblor in his letter to him. There Is no communlcallon of that nature.

The appllcanls point to this aspect of the evidence of Mr Ruha

., explained that my grandfather is the kaumatua for the entire extended famity which inctudes Raymond Hams and his brothers .•

this evidence suggests that Mr Ruha sought to obtain some advantage In the deal by emphasising the relallonshlp between his grandfather and the applicanls. Counsel sought to tum that Into a representation that Wiremu Hams was effectively buying the mortgage In order to forgive his nephews their debt. . No matter how well disposed one might be to the plight of Raymond and his brothers, it is not possible to read that scenario into the evidence.

In those circumstances ~ must have been Incumbent upon the applicants to have called Mr Little from Te Puni Koklri as a witness to make out the fraud allegation if it could be made out at all. He was the only one other than Mr Ruha who could shed light on the issue. Mr Little was not called. Without his evidence, the argument stood no prospect of success. This matter was raised with counsel for the applicants during the course of the hearing, but no sleps were taken to remedy the gap in the evidence. I did raise wilh counsel the possibility of myself calling Mr Little to give evidence. I would only however have done that if there was genuine doubt on hearing the evidence about the Ruha's undertakings or Mr Little's expectations at the effect of the transaction. The evidence disclosed no such doubt.

I find therefore that there Is no evidence of fraud, constructive or otherwise, by Mr Ruha in respect of his discussions with Mr Little.

The applicant also argued the flip side of this allegation. That Is that there was sufficient evidence on the balance of probability to indlcate-that Te Punl Koklrl were deceived Into believing that the mortgage was being purchased to clear the applicant's debt. As above, the direct evidence on the point indicates that Te Puni Kokiri were treating this transaction as an orthodox transfer of debt. The letter of 19 January 1999 puts Ihat clearly. In addition on 2 November 1999 (having been wamed of the possibility of litigation) Ta Puni Kokiri dispatched a letter to Mr Roland Ruha. The lelter included Ihe following:. .

We have received a leller from H6fidriil Gi'tiylii rngaiino ihli,inallerand hav;' ­fO/warded an appropriate response.

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/I Is our view that the Ministry acted properiy and legally when It sotd -the "'- . mortgage In question to Mr Will/am Hams. • . ____ , _,,-.-----_ ... __ . - .. --.- -.-~--~-- ... -.. -.

The letter to counsel for the applicants flom Te Pun I Kakiri was never produ~d In the hearing. There Is no indication In the lelter to Mr Ruha that Te Punl Kokiri felt It ha,! -,,-,-, ,_<oc-__ { ,"'"

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been deceived. Again no affempt was made to call Mr Liffle. who was the only one who could counter the inference to be drawn from the correspondence.

I find that the evidence points clearly to the conclusion that Te PUnl Kokiri was not deceived as alleged by the applicants.

The respondent took great exception to the fraud allegations made. The respondent referred to Honal v Neubergor Producls Lld [1957] 1 OB 247 in support of tha proposnion that the allegations were made improperly by counsel for the applicant. Hodson LJ took this view:

7he comparative doarlh of express aufhori/y on Ihls topic Is not surprising. No responsible counsel undertakes to prove a serious accusation without admitting that cogent evidence Is mquire~ and judges approach sen"ous BccusaUons in tlte same way wit/lOut necessarily considering in evel}' case whether or not there is a criminal issue involved .• (at p.260).

In the decision In W V Middleditch & Sons v Hinds [1963) NZLR 570 McGregor J opined

6When in civil proceedings the commission of a crime by the defendant is alleged as pari of Ihe cause of aclion Ihe ordinary civil of slendard proof on a balance of probabilities applies but Ihe gravi/y of the issue necessilales Ihat vel}' groat welghl must be given to the prosumplion of innocence. That is 8 matter which goas Inlo the scales in favour of Ihe defendant and the counterweights nBcessary to lip the scales in favour of the plaintiff must be correspondingly heavy.' (at p.575).

In my view the fraud allegations made Were little more than speCUlative. It Is Incumbent upon counsel to identify evidence of a cogent nature before making allegations of criminal activity in this Court. In this case counsel frankly admitted that she had not even spoken to Mr Little. In the absence 01 Mr Little's evidence, it Is my considered view that the allegations were improperly made.

Conclusion

It follows thal the application under s.19(1)(a) is declined. While I am aware that the applicant Is-legally aided, it doas seem to me that this is a matter In which an award of costs which takes proper account of both the success of the respondent and the modest means of the applicants. would be appropriate. If counsel are unable to - . a9ree a figure, then submissions will be filed by the respondent within one month of the date hereof with the applicant responding within two weeks of that.

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