Matauri X granted rehearing over loan

A Far North Maori group facing the prospect of having to sell coastal tribal land to repay a loan yesterday received a glimmer of hope from the Court of Appeal.

It found the High Court had been wrong when it ruled in late 2003 that Matauri X incorporation had the power to enter into the loan.

A declaration and order for costs made in the High Court were set aside and the matter returned for further consideration to that court, where two issues had not been argued and were left to be dealt with later if needed.

The proprietors of the incorporation had appealed against the initial High Court decision.

But in reserving the issue of costs yesterday, the Appeal Court said the matter was "complicated by the fact that, while Matauri X has had a victory in this battle, it may yet lose the war".

Matauri X owns more than 500ha of land, described by the Appeal Court as "surrounding a beautiful beach at Matauri Bay", on behalf of 430 shareholders. It is facing the mortgagee sale of 246ha, with advertisements appearing early last month.

In its judgment, the Appeal Court said the case raised interesting questions about the powers of a Maori incorporation to borrow money and to mortgage its land.

The committee of management of Matauri X had borrowed more than $3 million from Bridgecorp Finance to invest in Whakatane water bottling business Eternal Springs, the court said.

The project failed and the joint-venture company was put into receivership.

The incorporation, which could not repay the loan, had given as security a mortgage over the land, the court said.

Matauri X now argued that the loan was void, having been beyond its powers.

The Appeal Court ruled that the borrowing for the water project was not for any of the objects for which Matauri X had been established.

- NZPA