Ruling allows tribal land to be sold

The Matauri Bay Properties development at Matauri Bay can now be sold as freehold land after the Maori Land Court changed the designation of the land. The sale of the 70 sections will save hapu group Matauri X from having its entire 549ha of tribal being seized to pay a multi-million dollar debt. Photo / File

A court has dismissed an attempt by the man behind an investment disaster, which landed Matauri Bay Maori in a financial quagmire, to block the separation and sale of tribal land to repay the debt.

The Maori Land Court questioned what authority Hemi-Rua Rapata had to enter into a mortgage of $2.5 million from finance company Bridgecorp in 2001 when he was chairman of Matauri X, if he now referred to historical evidence which suggested the mortgage was unlawful.

Mr Rapata was the chairman of Matauri X Incorporation in 2001 which borrowed from Bridgecorp without the approval of shareholders and the loan was secured by way of a mortgage over all incorporation land totalling 549ha. A year later, a further $750,000 was borrowed from Instant Funding.

All the borrowed money was invested in a water bottling plant in Whakatane but the business failed and the debt spiralled. However, both loans were settled for $6.2 million via refinancing of the debt through Strategic Nominees. In May 2007, a loan agreement was entered into with Strategic Nominees to finance a leasehold subdivision over an area of about 70ha owned by the corporation. The idea was that a managed sale by way of leasehold of some of the incorporation's land would raise enough money to clear its debt, and lift the mortgage from all of its land.

In 2011, the total debt was $26.1 million, of which $13.4 million represented principal and the balance consisted of penalty interest and fees.

Earlier this year Matauri Bay Properties applied to the Maori Land Court for the alienation of 70ha of land from Maori leasehold to Maori freehold which was granted despite objections from Nga Uri o Taniwharau ki Ngati Kura hapu and Ngati Kura. Both objectors challenged the court's jurisdiction to hear the application.

Judge Michael Doogan questioned Mr Rapata on what basis he believed he had the authority to enter into the mortgage agreement in 2001 when he now claimed the mortgage was unlawful.

"It became clear to me from Mr Rapana's submissions that his primary purpose was to oppose the application for alienation by any means possible," the judge said.

Having had legal training, he said Mr Rapana should well understand the commercial and legal reality of the situation the corporation and its shareholders found itself in.

"To now seek to oppose, by any and all means possible, an arrangement that may finally resolve the debt issue, lift the security and thereby secure to the incorporation the majority of its lands is a surprising and very high risk approach," Judge Doogan said.

Mr Rapata was a lawyer in 2001 when he has chairman of Matauri X, but he has not practised since 2005.