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Letter: ‘Pa Ariki acted in good faith, Crown must follow suit’

Saturday 18 November 2023 | Written by Supplied | Published in Letters to the Editor, Opinion


Letter: ‘Pa Ariki acted in  good faith, Crown  must follow suit’

Dear Editor, In answer to your correspondent’s queries (Ring road compensation – a threat? Cook Islands News, November 16).

First; I act for Pa Ariki; I have done so, continuously, in respect of this land, since 1997. The interests of the Lessee were initially represented by New Zealand solicitors and, more recently, by Mr Tai Nicholas and Mr Brian Mason.

Should compensation become payable – speculative and hypothetical at this stage as the Crown has made its position as to road relocation very clear – I would claim it for Pa Ariki.

On that speculative and hypothetical scenario, one or more of those lawyers would, I assume, act for the interests of the Lessee; it would be for them to decide whether they sue Pa, Government, or both; I think it more likely that Lessor and Lessee would act together in this hypothetical scenario.

As to the basis on which compensation is payable, your readers appear to be unfamiliar with, or have forgotten, the history of this matter.

On 13 December 1989, the High Court was asked, by Government, to confirm a lease in favour of a company wholly owned by the Crown. The Solicitor-General appeared and evidence was given. The Court was advised by the Solicitor-General:

“In searching for the land, the advice government has received is that it should be a substantial block of land having the right character to enable development to be undertaken without going more than two or three stories high. It should enable the rooms to be well spread; it should have a beach cite [sic; emphasis added] and the corner of the island where it is located has always been desired by developers, particularly because it has a view of the sunset.”

The Court was advised as to public consultation as to the layout of the proposed hotel and supporting documentation put before the Court (the relocated road a prominent feature of the proposed improvements to the land). As your own archives should confirm, the proposal from the very start was that the Land would be leased precisely because it would become a beachfront property by way of a relocated main road.

That was the proposition put by the Crown:

  • to Pa Tapaeru;
  • to the Court; and
  • to those advising Pa.

The Crown’s company was allowed to proceed – and the entire hotel site developed, as everyone knows, with the beach as its focal point and outlook.

Any doubt as the legal effect of the Solicitor-General’s assurances from the bar that day were laid to rest by Quilliam CJ in a 1998 declaratory judgment of the High Court; those assurances were given to procure the execution of the lease – to a certain extent and for well understood purposes, they bound, and continue to bind, the Crown in its dealings with the Pa titleholder.

There is more; for some 30 years, successive Governments held Pa to a commitment not to allow the land to be developed in any way other than as a 4/5 star internationally managed property.

Over those years a succession of alternative development proposals were turned down by Pa because the Crown made its expectations around the development clear both to her and to those with other ideas for the land

On one occasion, famously, the Crown intervened at a High Court confirmation to object to a lease because it was not in accord with those Crown expectations for the land.

In fairness to the Crown; in 2010, it confirmed its commitment, by signed Deed, to Pa – to relocate the road; it promised to do so when the Hotel that the Crown wanted built on the site was sufficiently advanced.

That Deed is legal, valid and binding – Pa takes the benefit of its terms.

In the run up to Covid, the Crown expressed doubts about whether it was in the public interest to complete the Hotel as such, at least until island infrastructure was improved. Land banking was proposed by the Crown and preliminary discussions held with Pa around that idea.

However, doubts as to the need/desirability for such a Hotel intensified with the onset of Covid. For obvious reasons, the suggestion of land banking was dropped. By 2021, the Crown was encouraging of Pa finding some alternative development proposal. Pa has done so.

Prior to legal binding commitments being made by Pa or by the Lessee, the Crown assured both that they could move forward with the blessing of the Crown as to an alternative, mixed, development – again, your newspaper featured the news at the time. Specific enquiries were made, and it was confirmed that the 2010 Deed would be honoured for Pa, in respect of the altered nature of the development. It was further agreed that the Deed would be novated so that the Lessee would take its benefit.

In the face of those assurances, the Lessor, the Lessee and the Court all moved ahead – the lease was confirmed; some millions of dollars have now been committed by the Lessee to a project that – as in 1989 – will be financially viable only as a beachfront property.

Your correspondent makes a comment as to sums derived by Pa over the period 1998 to the present; I do not propose to enter into a public debate around that; however, your correspondent is deeply mistaken.

In fact, income derived over that 25 year period – if it were annualised would represent a return considerably lower than the rentals thought appropriate, even some decades ago.

To a very real degree, Pa’s inability to maximise her return reflects Pa’s ongoing agreement, with successive Governments, that she would not develop the property for anything other than a 4/5 star hotel, internationally managed.

She having acted, in good faith, in response to Crown expectations for the Land, the Crown will be held to certain standards of conduct, moving forward. The idea that the Crown could now renege on that ongoing relocation commitment, without paying substantial compensation, is unsupportable.

Yours sincerely

Tim Arnold