Management and
Sale of Local
Endowment Land
Duncan Laing
7 November 2013
Local Authority Property Association Conference
New Plymouth
What is endowment land?
How to establish if land is
Sale of endowment land
– Statutory requirements
– Reconciling overlapping /
conflicting statutory
– Managing expectations of
interested parties
Case study Junction Road
What 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 work
• Problem – inconsistent use of language to create trusts and
endowments by Parliament
How to establish if land is
• Current computer register – starting point only
• The current computer register will tell you:
– Current owners
– Area and legal description (but be careful)
– Current memorials and interests (appurtenant and subject)
Current computer registers cntd…
• The current computer register should tell you:
– Nature of tenure: fee simple, leasehold, cross lease, unit title or
company share
– Co-ownership
– Limitations on title
• The current computer register will not tell you:
– Former interests and memorials and past transactions
– Former owners
Current computer registers cntd…
• The current computer register may not tell you about:
– Purpose or status
• Always make additional checks
Resources for additional checks and
what to look for
Historical Searches
Titles, transfers,
Gazette notices
Deeds Index
Archived historical material
Institutional knowledge
Minute books,
reports, files
Information held by others
Lawyers, valuers,
accredited agents?
Sale of Endowment Land
Reconciling legislation
Act 2002
Works Act
(section 40)
Local Government Act 2002
• Sections 140 and 141
– Impose restrictions on the disposal of “property” vested in a local
authority, including endowment land
– Starting point = section 140(3) must retain endowment for the
purpose for which it was vested
– Section 140(4)(a) = Local Government Minister can approve
additional or different purposes
– Section 140(4)(b) = can sell or exchange and use proceeds for a
different purpose unless vesting instrument expressly prohibits
sale or exchange
Local 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 endowment
• If 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
Local 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 comment
• In the case of a reorganisation, proceeds applied to the new district or
districts of which the former authority formed part
Public Works Act 1981 and Local
• Offer back obligation in section 40 – doesn’t expressly exclude
endowment land
• Many endowments result from Local Legislation specific to a particular
– Vests the endowment land
– Sets limitations and restrictions on management and sale
– Wording used by Parliament not always clear or consistent
– Specifically recognised in Waitara Leaseholders Association v New Plymouth
District Council
– LINZ inconsistencies
Waitara title examples
Waitara examples
“upon trust for” missing
Reconciling legislation
• General principles of interpretation
– Overlapping statutory provisions – try to give effect to each
provision without creating conflict
– If conflict cannot be avoided:
– Must determine which of the conflicting provisions is dominant
– Later in time may impliedly repeal earlier
– But special provision usually prevails over general provision
Reconciling LGA and PWA
requirements on sale
• Tasman District Council v The Proprietors of Wakatu
• Discussed relationship between LGA and PWA
• It was argued that section 40 PWA overrides sections 140-141 LGA
• Court held:
– Section 140 of the LGA is a code imposing restrictions on
– Section 40 does not trump sections 140-141
• Possible to give effect to both without conflict
Reconciling 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
Managing 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 to
– PWA offer backs can be made to the Crown
– Acquisition history and analysis important
– How and why did the Crown acquire the land
– Current lessees – freeholding expectations?
– Others?
Case 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 leases
– 21 year perpetually renewable
– PBLA leases
• Vast majority of lessees expressed an interest in free-holding
Junction Road cntd…
• LTCCP 2009-2019 Council resolved intention to sell fee simple
interest subject to:
– Compliance with statutory requirements (including sections 140141 LGA and section 40 PWA)
– Compliance with Council’s internal property sales policy
Junction 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 purchased
• Acquisition history
– Land originally confiscated from Maori owners by Crown in 1865
under New Zealand Settlements Act 1863 to quell rebellion and
facilitate settlement
Junction 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”)
Junction Road cntd…
Section 40 PWA conclusions
– Unlikely any of the offer back exceptions would apply
– Originally acquired by the Crown as “waste land” rather than a public work
– Successors to former Maori owners not entitled to an offer back
– Last owner of land before acquired for a public work was Crown so Crown
potentially entitled to an offer back
– However, 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
Junction Road cntd…
• Sections 140-141
• No prohibition on sale in the TCRA
– Notification given to Minister for Land Information and Minister in
Charge of Treaty of Waitangi Negotiations that the intention to sell
was included in the LTCCP
– No set form of notification or timeframe in LGA
– No obligation on Ministers to respond - Ministers confirmed they
had no issue with freeholding
Junction Road cntd…
• Use of proceeds of sale
– Section 4 of TCRA
– sets out how income from the endowment land is applied
– Clear emphasis in section on rental income rather than being
wide enough to cover sale proceeds
– Does not contemplate sale so does not specifically apply to the
proceeds of sale
Junction Road cntd…
• Section 141(1)(a) LGA requires use of sale proceeds to be
consistent with purpose of the endowment
• Clearest evidence of purpose is section 4 TCRA
• Purposes (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
Junction 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 force
• Inappropriate to apply proceeds to road works in wider New Plymouth
• No 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
Junction 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

Management and Sale of Local Authority Endowment Land