i-Taukei Land Developments in Fiji – Amendments creating efficiencies
I-Taukei land makes up 90% of land in Fiji. It is owned by the i-Taukei landowners (the traditional owners) and administered by the I-Taukei Lands Trust Board (the “Board”). To ensure the rights of i-Taukei Fijians are protected, a proscriptive approval process exists to ‘deal’ with i-Taukei land.
The Fijian Government introduced and passed Bill No. 17 to amend section 12 of the I-Taukei Lands Trust Act 1940, removing the requirement to obtain the consent of the Board in certain situations.
The amendments have attracted media and parliamentary attention as there is a general public perception that the amendments will subjugate the rights of i-Taukei landowners.
The Fiji Government’s intention is to remove the bureaucracy involved in making such applications which are granted as a matter of course.
No doubt, Bill No. 17 is welcomed from an investor efficiency point of view.
Bill No.17, amends section 12 of the I-Taukei Lands Trust Act 1940 (the “Act”) by adding two new subsections under it.
Presently, section 12 of the Act prevents a lessee from alienating, or dealing with the land unless the consent of the of the Board has been obtained. This provision has been narrowly construed and applies to any and all ‘dealings’, including selling, leasing, assigning, sub-leasing and creating security interests in respect of an i-Taukei lease. The amendment adds two further subsections, (1A) and (3).
Sub-section (1A) removes the requirement for consent of the Board for any mortgage, charge, pledge, caveat, or any such lease to be dealt with by any court of law or under the process of any court of law. Consent will still be required for any sale, transfer, or sublease under subsection 12(1) of the Act.
However, subsection (3) provides that “for the purposes of this section, any such consent shall only be refused where there is a breach of any lease condition or where such application to deal with the land is not in accordance with the lease”. This has been the more controversial provision as it has arguably reduced the Board’s discretion to refuse consent.
We note these amendments appear to be made in conjunction with the removal of consent applications for connecting water and electricity supply on registered native leases as announced in the 2021-2022 Fiji Annual Budget announcement.
Roles of the Board
The Board manages i-Taukei land (“native land”) on behalf of the i-Taukei landowners. The Board administers native land by way of leases and licenses. The Board then collects rents and premiums from the leases and distributes them to the i-Taukei landowners.
The Board receives its authority to do so from section 4 of the Act which mandates that “the control of all iTaukei Land shall be vested in the Board and shall be administered by the Board for the benefit of the iTaukei owners.”
What does the removal of consent for certain dealings mean for the lessees and i-Taukei land owners?
Under subsection (1A), the removal of the need for consent for any mortgage, charge, pledge, or caveat will allow lessees and other interested parties to deal with the lease more flexibly (provided that it is not prohibited by the lease agreement).
For example, if you entered into a Sale and Purchase Agreement of a native lease as a potential buyer and later on, you found out that the seller intends to sell it to another buyer, this provision would enable you to file a caveat quickly on the strength of the Sale and Purchase Agreement without the need for Board approval.
It will also mean one less consent is required by investors who are looking to lease i-Taukei land and finance the acquisition through debt financing where the debtor takes a security interest over the land.
In respect of subsection (3), it would appear that any ‘dealings’ cannot be refused by the Board unless there is a breach of the lease. As a matter of general practice, consent is rarely refused and is given as a matter of course.
The implication of this provision is that the Board must refuse consent where there is a breach of a lease - for example, if you are sub-letting your property on an i-Taukei lease and have not obtained the consent to do so (which is a legal requirement) and you intend to sell the lease, this provision would require you to correct this before seeking the approval to sell the leasehold interest.
It would appear this is no different to what practically occurs in i-Taukei land dealings where the Board will usually withhold its consent where there are deficiencies in the land dealings, until those have been appropriately rectified. The provision now puts the statutory onus on the Board to do so.
We note, the removal of the need for consent under the Act will only apply to leases that have been properly issued by the Board and registered with the Registrar of Titles.
These amendments will be welcomed by those who are considering entering into dealings with i-Taukei land, but are concerned about the administrative processes in connection with obtaining approvals for a mortgage over the site. This in tandem with the added efficiency of having utility services connected will arguably make i-Taukei land more attractive.
A rigid process for applying for consent has historically contributed to delays and prevented better use of and investments into Fiji’s native lands. It has also been a disincentive for investors to lease i-Taukei land.
The amendments mean that approval by the Board is still required for certain land dealings, such as sales, leasing, sub-leasing and assigning. Removing the need for consent in respect of security interest’s over native leases, is likely to create a more favourable environment for investors and could arguably make i-Taukei land more attractive in future.