Property rights versus ecological values

Property rights versus ecological values clash head-on within the Crown Pastoral Land Reform Bill

The Crown Pastoral Land Reform (CPLR) Bill has struck rocky ground as it now works its way through the Environment Select Committee stage. The Bill is opposed vigorously by most and perhaps all of the remaining 171 pastoral leaseholders in high-country New Zealand. These are the people who did not reach any settlement with the Crown during Tenure Review over the last two decades.  

The importance of this CPLR Bill extends well beyond the pastoral leaseholders themselves. It is also relevant to any New Zealander who has an interest in land law and the ownership of land.  It is also important to anyone who has an interest in high-country conservation.

There have been 192 submissions to the Bill from interested parties. The submissions fit into two broad categories. The leaseholder submissions argue that the proposed new rules are bureaucratic and unworkable, showing a lack of understanding of high-country realties. However, non-leaseholder submissions strongly support moves to weaken the current leaseholder property rights in the interests of conservation.

 In this article I will focus on one leaseholder submission from the owners of The Lakes Station, which lies between Lake Sumner and Lake Taylor in North Canterbury.

Two of the three joint owners of The Lakes Station are identified in the submission as “Hugh and Sian Fletcher”. What is not explicit, although it would be recognised by most high-country folk, is that Sian Fletcher is the same person as Sian Elias who for many years was Chief Justice of New Zealand.

Reading The Lakes Station submission leads quickly to a conclusion that it has been written by someone with considerable legal expertise. Arguments are developed to demonstrate that the draft bill does “not reflect good legislation practice”. The submission states that, if enacted in its present state, the legislation would inevitably be challenged through the court system.

 The language is polite but the criticisms are withering. The submission even goes as far as rewriting the Draft Bill. That is something I have never before seen in a submission!

But first some recap about what the CPLR Bill is all about.

The pastoral history of most high-country runs goes back to around the 1850s.  However, the key legislation is the 1948 Land Act which gave leaseholders perpetually renewable 33-year leases.  The division of rights between leaseholders and the Crown meant that the leaseholder owned all improvements including soil fertility, improved pastures, fencing, watering systems, tracks and buildings. The Crown retained residual rights in the unimproved value of the land for which it would be paid an annual lease fee.

A fundamental right of the leaseholder is ‘quiet enjoyment’. This right means that the public has no right to enter the land. This allocation of rights has been confirmed in various court cases. The exception is that a designated agent of the Crown may enter the property subject to giving appropriate notice to inspect observance of various land covenants.

Then in 1998 the National Government of the time enacted the Crown Pastoral Land Act (CPLA) which, among other things, codified a process of tenure review. The fundamental principle of tenure review was that the productive lower country should change from lease to freehold and the higher more fragile country should be retired from grazing and revert to the Crown.

As part of tenure review, the principle was that leaseholders would be compensated for retiring land from grazing and the Crown would be compensated for residual rights that it was giving up on land that was converted to freehold.

 A little less than half of the pastoral leases came to agreement with the Government as to the respective transactions. On those properties there are no longer any pastoral leases. However, for a range of reasons, somewhat more than half the pastoral runs were unable to come to an agreement with the Crown as to a fair split and so tenure review processes failed.

Over time, the tenure review processes became embroiled in controversy. Much of this related to misunderstanding by the general public as to what the runholders were buying when freeholding the land.  Most of the public did not understand that leaseholders already owned most of the value of the property and were simply upgrading, for a fee, their leaseholder rights to freehold rights.

At this point it is necessary to highlight that leasehold rights and freehold rights are simply two different bundles of property rights. Land can never be owned in an absolute sense the way that a car, a shirt or a table can be owned.

The way I used to explain it to my students at Lincoln University was that if I wanted to get a hammer and put big dents all over my car, then I had a legal right to do so. That was my right because I owned the car absolutely. It might reflect badly on my mental state, but that was a different matter.

In contrast, there are many restrictions as to what people can do with land that they consider they ‘own’. It is definitely illegal to destroy land. In essence, land ownership, be that leasehold or freehold, involves custodianship. Consequently, many actions require approval from relevant authorities.  Land ownership is always conditional and never absolute.

There is a widespread public perception that under Tenure Review the Government gave away its rights too cheaply. In some cases that may be true. But if under-valuation was a generality, then why did the remaining 171 runholders not take up the supposed gift they were being offered?

The problem now is what should be done to protect ecological values on the remaining 171 pastoral leases?

The CPLR Bill before Parliament, which is currently at the Select Committee stage, does this by introducing a new set of regulatory procedures to constrain what runholders can do. The Lakes Station and other submitters claim that these regulations are impractical and in their current form take away existing property rights. 

The Lakes Station submission draws on the established common-law principle that the Crown has over-riding responsibilities to honour existing property rights. and to provide compensation for any property rights that are removed. This principle relates to both leasehold and freehold ownership systems. It is something that any ‘Government of the day’ is not entitled to legislate away.

The CPLR Bill was first introduced to Parliament in 2020 by Green Party Minister Eugenie Sage. Although the Greens are no longer part of the Government, Ms Sage has continued as Chair of the Environment Select Committee that is responsible for this bill. This situation does not impress pastoral groups.

At some stage, the Government may need to look again at whether the existing bill provides the path forward that it seeks. Although ‘Tenure Review’ has come to the end of its life, at least by that name, the fundamental principles of protecting fragile land and freeholding productive land are hard to argue against.

The much-maligned tenure-review process led to 372,000 ha (3720 square kilometres) entering the conservation estate through to 2017. As a mountain person, I applaud that every time I cross those lands.

 In now moving forward once again, we need to do so within a framework where the Crown honours existing rights and compensates accordingly when these are taken away. That underpins all New Zealand land law.