Failed offsite investment put Maori incorporation’s land at risk
Justice Robert Fisher this week rejected Maori incorporation Matauri X’s attempt to wriggle out of a $3.2 million mortgage to Bridgecorp Finance Ltd after the offsite investment the money was for failed.
Matauri X borrowed the money in 2001 to invest in the Eternal Springs water-bottling plant at Whakatane. Receivers were called into the Eternal Springs business in May 2002.
Matauri X then declined to recognise the mortgage, saying the incorporation didn’t have the power to enter offsite investments in the 1st place and, although Bridgecorp had no way of knowing this, proper authorising procedures hadn’t been followed.
“I have concluded that Matauri X did have the power to borrow the money for the Eternal Springs investment,” Justice Fisher said.
“It is true that 1 of the objects of Te Ture Whenua Maori Act is to halt the dispossession, alienation & fragmentation of Maori land. But another is to place the destiny of Maori land in the collective hands of its owners & their duly appointed representatives.
“In this act, Parliament has recognised Maori as adults capable of coming together to determine the way in which their own land will be dealt with in a modern world. If that includes mortgaging the land, that is their prerogative.
“But everyone knows that if money borrowed on mortgage is not repaid, the mortgagee takes the land. One cannot have it both ways. Matauri X had the power to borrow on mortgage but cannot escape the consequences.”
Justice Fisher said he also concluded that persons dealing with Maori incorporations are entitled to rely upon the normal assumption that a corporate body will carry out its own necessary internal procedures. Otherwise, nobody could afford to extend Maori incorporations credit or join with them in a contract.
Matauri X was incorporated in 1967 to hold the multiple Maori interests in 544.3ha surrounding the beach at Matauri Bay in Northland.
By the time of the 2001 investment decision, Matauri X was asset rich â€“ the land was worth $9 million â€“ but cash poor. The management committee chairman, Hemi-Rue Rapata, was keen to use the land as security to raise funds for offsite business ventures.
Former Maori Development Corp chief executive Waari Ward Holmes and Nathan York’s investment company, Mtech Ltd, was to locate businesses & investments for joint ventures. After the 1st 2 came to nothing, the found Eternal Springs and its developer, engineer Janus Kubs.
Justice Fisher said Mtech had estimated Matauri X would gain $11.5 million within 2 years from an investment of about $2 million.
“As these figures suggest, the investment was a high risk one,” the judge said. “Unfortunately the Eternal Waters project did not prosper. When more cash was needed Matauri X borrowed another $750,000 from Bridgecorp but before long the venture failed altogether. The joint venture company was put into receivership. Matauri X has not repaid the money or interest. Bridgecorp now looks to its mortgage over the Matauri Bay land.”
Matauri X’s future will go before the Maori Land Court in March before the fate of the land is decided.