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Autumn 2013 Newsletter

Guarantees

Acting as a guarantor for someone, often in respect of payment of money, means that you agree to meet their obligations if they do not. Guarantee clauses are common in leases, hire purchase agreements, and in general dealings with a bank. There are potential pit-falls for you to consider when agreeing to be a guarantor.

Signing a Guarantee

A guarantee agreement must be in writing and must be signed by the guarantor. It is advisable that if a party is signing in another capacity as well, that they sign the contract twice, once in their capacity as borrower (e.g. as a director of a borrowing company), and once as a guarantor.

Types of Guarantees

There are many different types of guarantees, varying from a specific guarantee to cover a particular transaction, a continuing guarantee limited to a fixed amount through to a continuing guarantee where the guarantor agrees to meet all obligations of the other party. Many guarantee documents include both a guarantee and an indemnity, which means that not only is the guarantor guaranteeing the obligations will be met, they agree to protect the receiver of the guarantee from any harm or loss.

In most contracts where there is more than one guarantor, they are treated as being “jointly and severally liable”. This means the creditor can choose to pursue whomever they like to recover the debt. Even if you are only one guarantor amongst many, you may find yourself held liable for all of the debt. In this case you may have a right to compensation from co-guarantors, but enforcing this right can be a lengthy and costly process.

Rights and Obligations of the Guarantor

As a guarantor who has been called upon by a creditor to pay a debt, you have a right to require repayment by the original debtor. Of course in practice, this right may not amount to much protection as often the creditor is enforcing the guarantee due to the inability of the debtor to make a payment. A guarantor can however use the securities available to the original creditor. In other words, if a debt secured by a mortgage is paid in full by a guarantor, the guarantor is entitled to take over that mortgage security.

Independent Legal Advice

Creditors rely on a guarantor making an informed decision. To ensure their guarantee is enforceable creditors should disclose to the guarantor information about the obligations they are guaranteeing and be satisfied that the guarantor appreciates the risk they are assuming. The Code of Banking Practice goes further, by requiring that prospective guarantors be advised to seek independent legal advice. The party providing legal advice is then required to confirm the guarantor understood the obligation they were assuming at the time they entered the guarantee.

Diligence Required

If you decide to act as a guarantor for someone, including close friends and family, you should familiarise yourself with their financial position, read the contract very carefully and obtain legal advice to determine what your liability might be. Everyone is naturally optimistic when it comes to their family and friends, but it is vital to be aware of the risk you are assuming and make an informed decision.

Other Options

Entering into a guarantee for someone else’s bank loan (for example providing a guarantee for your son or daughter’s loan) is often a very risky way of achieving you objective. This is because the banks will often request that you give an all obligations guarantee, meaning that you will be liable for all existing and future borrowing of your son/daughter, until you withdraw the guarantee and even then you will be liable for all borrowing up until that point. However there are options available to you.
These include:

• limiting the guarantee – to a fixed amount, a particular loan or to a particular piece of property
• advancing your own funds to your son/daughter
• borrowing the required funds yourself and then on-lending to you son/daughter – usually this will reduce the risk and increase your control over the transaction.

If you are looking at entering into a guarantee, call us to advise you on the pitfalls and options available to you – Louise Smith 09 407 0175, or Graeme McLelland 09 407 0179.

For Richer, For Poorer – Contracting Out of the Property Relationships Act 1976

The Property Relationships Act 1976 (‘the Act’) applies to all relationships including marriages, de facto relationships and same sex relationships.

The defining feature of the Act is that it provides for the equal sharing of the assets and liabilities of the relationship irrespective of the differing financial contributions of either partner throughout the relationship. In many cases this includes situations where one party may have brought significantly more assets into the relationship than the other.
The equal sharing provisions of the Act apply to all relationships exceeding three years duration.

Parties may enter into an agreement to contract out of the equal sharing provisions of the Act (“Contracting Out Agreement”). In order for a Contracting Out Agreement to be enforceable, it must be in writing. Each of the partners must also have obtained legal advice before signing the Contracting Out Agreement. Each lawyer must also sign, certifying that they have provided independent legal advice and witnessed their client’s execution of the document.

Contracting Out of the Act becomes especially important when there is a disparity in the financial positions of the partners. This disparity in the financial positions of the parties arises where one party brings greater net assets into the relationship than the other.

In the absence of a properly signed Contracting Out Agreement the equal sharing provisions of the Act will apply. In the event that the partners separate without entering into a Contracting Out Agreement the effect can be a net transfer of assets from the wealthier partner to the less well off partner.  This can be particularly upsetting for the wealthier partner if that separation occurs close to retirement age where there is limited opportunity to recover financially.

The impact of the equal sharing provisions on the wealthier partner is magnified if that person has the misfortune of experiencing two or more separations without protecting their interests by entering into a Contracting Out Agreement. This can have the effect of halving that person’s net worth each time they separate from a three year relationship.

Inheritances and gifts are generally considered to be the separate property of the partner to whom the gift or inheritance was given. However, when for example this gift or inheritance is applied to repay the loan for the family home and the partners go on to separate, the non inheriting partner is entitled to benefit from half of the inheritance applied to reduce the borrowing for the family.

Assets in a Family Trust are not necessarily protected from potential relationship property claims. In circumstances where the Family Trust was settled during the course of the relationship or where relationship property has been applied to sustain trust assets, the Trust can become tainted as relationship property. This most commonly occurs when the income of one or both partners is used to meet the loan obligations for property owned by the Trust.

A Contracting Out Agreement is fundamental for anyone in a relationship wishing to secure their assets, especially a partner entering into a second or subsequent relationship, or where there is a significant disparity in wealth at the outset of the relationship.

We consider a properly drafted and advised upon Contracting Out Agreement to be a valuable asset protection mechanism, protecting against a significant and common threat.

Contact Sarah Jury on 09 407 0176 to discuss how a Contracting Out Agreement can help protect your assets.

Snippets

New Faces

We are please to welcome Maree Walthall and Eimear Nelley at reception after saying goodbye to Odette Colebrook, who has left us to study at university. Find us on Facebook to learn a bit more about our staff members (hint: Maree is originally from the UK and into motorbikes and Eimear is an Irish-qualified solicitor who has played rugby for the Irish Women’s rugby team),
Kerikeri High School student Aimee Page has also joined us, helping out after school.

Plunket

We are excited to be working with Kerikeri Plunket to provide sponsorship and help to this organisation that is so relevant and helpful to our staff, clients and their families. We will be providing more details of this in the coming months – stay tuned on Facebook.

All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.

Summer 2012/2013 Newsletter

New Auckland District Law Society (ADLS) forms

The Auckland District Law Society periodically updates its legal forms to keep them current and reflect new laws or practices. The legal forms provided by ADLS are used as standard forms throughout New Zealand This year has seen the introduction of a new edition for both the agreement for sale and purchase of real estate and the deed of lease.

ADLS Agreement for the Sale and Purchase of Real Estate

This Agreement is the most common contract used for the sale and purchase of real estate throughout New Zealand.

Building Report Clause

Amendments included the introduction of a pre-prepared clause for the purchaser’s use when making the Agreement conditional upon a satisfactory builder’s report. This clause is included by indicating ‘yes’ on the front page of the Agreement, similar to a LIM report condition.
Previously, specific building report clauses were frequently prepared and inserted by the agent or purchaser’s solicitor. These were contractual terms recommended to a purchaser to benefit them and protect their interests

The New Clause

The details of the building report condition are in clause 9.3 of the Agreement. It records that the Agreement is conditional on the purchaser obtaining a satisfactory building inspection report, with the purchaser to advise within 10 working days if the building report is unsatisfactory. Crucially, the clause contains the requirement that this report be “prepared in good faith by a suitably-qualified building inspector in accordance with accepted principles and methods”.

‘Suitably Qualified’?

The meaning of “suitably qualified building inspector” is vague, with a builder or at least someone experienced

in the building industry envisaged. The ADLS have indicated that in principle this can include an ordinary builder, provided the builder has experience in the particular type of building that is being inspected.

It is in the purchaser’s best interest to obtain a thorough inspection and report from a builder or specialised building inspection company that is experienced in inspecting properties and has appropriate liability insurance in place. A purchaser cancelling the agreement based upon a building report must, if requested, immediately provide a copy of the report.
It is possible that purchasers who attempt to avoid agreements may find themselves being challenged by vendors, as the clause requires an objective assessment of the property. As yet it has not yet been established what issues will be too insignificant to justify cancellation. Regardless of the provisions of the clause, it may still be possible for parties to co-operate and agree for any issues raised in a builders report to be remedied prior to settlement.
The new clause may not always meet your needs. A vendor of a building with identified issues may want the option of undertaking the works prior to settlement, to prevent the sale being cancelled once an inspection has been obtained. It is always prudent to seek legal advice before signing an Agreement, to explore alternative or additional provisions as necessary.

Vendor’s Warranties

The new Agreement also includes a change in the wording to the vendor’s warranties regarding works completed on the property by the vendor.
Clause 6.2 (5) now provides that “to the vendor’s knowledge, the works were completed in compliance with (those) permits or consents”. (the phrase “to the vendor’s knowledge” has been added). This is intended to reduce the liability of a vendor in circumstances where (for example):

• The vendor may not necessarily know all the requirements of the building code and/or Building Act, and whether any particular works do not comply; and
• the vendor has delegated to an architect, builder and/or the council responsibility for completion of the work properly and because of the passage of time has no recourse against these parties.

Electronic Settlement

Settlement of the sale electronically by same day cleared payment (an electronic secure system administered by the banks) is now required by the Property Law Section guidelines and the Agreement except in specific circumstances when it is not possible. This reflects existing procedure.

For advice on the best way of selling or buying your property, before you sign, contact Graeme McLelland (407 0179) or Sarah Jury (407 0176).

Deed of Lease

“Christchurch” Amendments

The earthquake in Christchurch has highlighted several problems with previous versions of the deed of lease. The new deed of lease includes several amendments to address these problems, including:

Access for works:

New clause 15.1 allows the landlord access to the premises to inspect and carry out repairs (on reasonable notice unless it is an emergency). This clause has been drafted with building strengthening works in mind, but will apply in other circumstances.

New clause 15.2 provides for the abatement of a fair proportion of rent and outgoings if the tenant’s business use is materially disrupted due to the landlord’s works under clause 15.1

New clause 15.3 allows the landlord to require the tenant to vacate the whole premises if reasonably required to complete the repairs under clause 15.1

New clause 15.4 requires the landlord to act in good faith and have regard to the nature, extent and urgency of the works when exercising the landlord’s right of access or possession under these clauses.

Please note this is only a brief look at the changes and updates to these forms as we do not have room to cover all of the changes.

For advice on commercial leases please contact Louise Smith (407 0175) or Sarah Jury (407 0176).

Snippets

Merry Christmas in Legal Terms

Please accept without obligation, express or implied, these best wishes for an environmentally safe, socially responsible, low stress, non addictive, and gender neutral celebration of the winter solstice holiday as practised within the most enjoyable traditions of the religious persuasion of your choice (but with respect for the religious or secular persuasions and/or traditions of others, or for their choice not to practise religious or secular traditions at all) and further for a fiscally successful, personally fulfilling, and medically uncomplicated onset of the generally accepted calendar year (including, but not limited to, the Christian calendar, but not without due respect for the calendars of choice of other cultures). The preceding wishes are extended without regard to the race, creed, colour, age, physical ability, religious faith, choice of computer platform, or sexual preference of the wishee(s).

A surgeon, an architect and a lawyer are having a heated barroom discussion concerning which of their professions is actually the oldest profession. The surgeon says: “Surgery IS the oldest profession. God took a rib from Adam to create Eve and you can’t go back further than that.”

The architect says: “Hold on! In fact, God was the first architect when he created the world out of chaos in 7 days, and you can’t go back any further than THAT!”

The lawyer smiles and says: “Gentlemen, Gentlemen…who do you think created the CHAOS??!!”

As the lawyer woke up after surgery, he said” “Why are all the blinds drawn?” The doctor answered: “There’s a big fire across the street, and we didn’t want you to think the operation was a failure.”

Eftpos, Master Card and Visa are now available at our office.

All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.

Spring 2012 Newsletter

The Accident Compensation Corporation

There has been a lot of discussion in the news about ACC recently following the difficulties ACC has experienced with release of personal information, and budgetary issues affecting ACC. New Zealand’s ACC system is unique in the world and means that the culture of suing people for personal injury, as shown in many American, English and even Australian television shows, is not possible here. So why is there no right to sue for personal injury in New Zealand? and how does it work?

What is the ACC?
The Accident Compensation Corporation (‘ ACC’) is a New Zealand Crown Entity set up under the Accident Compensation Act 2001 (‘the Act’) that is responsible for providing accident insurance for all personal injuries. The ACC scheme is administered under a ‘no fault’ system, which means that a person is covered for an accident regardless of how the accident occurred or who caused it. This system effectively means that individuals give up the right to sue others for damages following an injury in return for receiving personal injury cover. ACC’s main purpose is to promote injury prevention measures, provide rehabilitation and compensation to those eligible under the Act.

Eligibility
ACC cover is available for personal injuries ( being physical injury, death due to physical injury and mental injury caused by physical or certain criminal acts) sustained by all New Zealanders and visitors to New Zealand, regardless of the injured person’s employment, status or age. Cover also extends to New Zealand residents returning from overseas with an injury, provided they have not been out of the country for more than six months (some exceptions to the six month rule can apply where an individual has been overseas for work purposes).

Effect of cover
If an injury is covered under ACC there are two consequences:

1. ACC will provide support in respect of the injury. The support may include treatment, ancillary services (such as transport and accommodation), rehabilitation, fair compensation (including weekly compensation for loss of earnings and lump sum payment when permanently impaired), and death benefits.
2. There is no right for the injured person to sue anyone in respect of the injury, no matter how it was caused. There may still be adverse consequences arising from an accident, but these relate to injury that has been deemed to occur to society or other breaches of duty. For example there may be prosecutions under:

• Occupational safety and health legislation – including Health and Safety Employment Act 1992.
• Employment legislation (Employment Relations Act 2000)
• Criminal legislation (if the accident was a result of criminal activity).
• There may also be civil cases in respect of property damage that occurred at the same time as the personal injury but not as a result of the personal injury.
• Land Transport Act 1998.
• Professional disciplinary proceedings, for example, Health Practitioners Disciplinary Tribunal.

For more information about the ACC and its services, please visit the ACC website.

The Rise of Look Through Companies

Background
In 2010, the Look-Through Company LTC was introduced to replace the former Loss Attributing Qualifying Company (‘LAQC’) and Qualifying Company (‘QC’).

What is it?
A LTC is similar to a limited liability company, however its income and losses are treated differently for tax purposes. The tax structure of an LTC allows the company to transfer income and expenditure to its shareholders directly. The shareholders of an LTC become liable for income tax on the company’s profits while also being able to offset the company losses against any other income.

Key Features of the LTC Regime
LTCs are governed by subpart HB of the Income Tax Act 2007 (‘the Act’). Some of the features and requirements for an LTC are:

• Shares can only be held by a natural person, trustee or another LTC. Additionally, all company shares must be of the same class and provide the same rights and obligations to each shareholder,
• An LTC must have five or fewer owners (ownership interests of relatives within two degrees of relationship are combined),
• An LTC’s income, expenses, tax credits, rebates, gains and losses are passed onto its shareholders. Such allocation to the shareholders will usually be in proportion to the number of shares they have in the LTC,
• Any profit is taxed at the shareholder’s own marginal tax rate. The shareholder can use any losses against their other income, subject to the loss limitation rule, and
• The loss limitation rule ensures that the losses claimed by a shareholder accurately reflect the level of that shareholder’s economic loss in the LTC.

Companies can elect to become an LTC, and existing LAQCs and QCs can elect to become an LTC without a tax consequence in the income years commencing 1 April 2011 and 1 April 2012. All shareholders of a company must elect for the LTC rules to apply in order for the conversion to be effective.

Advantages
Some of the advantages of using an LTC as opposed to other business structures (including partnership, sole trading, or trust) are:

• An LTC allows a shareholder to hold an investment in defined shares with other parties. A trust on the other hand (generally a discretionary trust) would not provide for such defined shares to be held,
• Shareholders have the ability to sell their shares or bring other investors into the LTC (provided the relevant LTC disposal provisions are followed under the Act),
• Added creditor protection is offered by the LTCs’ limited liability, and
• An LTC can be particularly useful where investors have different tax positions.

For advice on the best structure for your business please contact Louise Smith (09) 407 0175 or Graeme McLelland (09) 407 0179.

Snippets

McLeods Lawyers is pleased to support Hospice Mid Northland and the valuable work they do in our local community. Hospice Mid Northland wants to get the word out about their exciting new fundraising initiative: maybe you can help? Hospice describes how it works below.

Farming Initiative to Support Hospice
We are very thrilled and fortunate to have two amazing volunteers leading this initiative, Bill King and Terry Nicolle who between them have decades of experience in the farming sector. The programme entails Bill and Terry identifying farmers who are happy to partner with Hospice to “grow” and graze livestock on our behalf. They will purchase the animals on our behalf; the animals are tagged as Hospice animals and are co-mingled with the farmers flock or herd. When the animals are slaughtered or on-sold the proceeds come to Hospice to enable us to continue to provide our free specialist palliative care service to our community. The Board approved the seed funding to kick-start the project but it is hoped that farmers will also donate additional animals. We are pleased that we have already had two steers donated and we have also received financial contributions to purchase additional animals. We will also be encouraging our supporters, members and community groups to “buy an animal” for Hospice. Working with the agricultural sector is not restricted to animals and grazing and we hope that in due time we may also be able to work with horticulturalists and vintners in our region. Our thanks go to all who have worked on this wonderful initiative and we look forward to many more innovative ideas to help us meet with confidence the future requirements and demands on Hospice Mid-Northland. Don’t hesitate to contact one of the Board or our Fundraising & Awareness Manager or General Manager if you would like more information, would like to help, or indeed would like to buy an animal. Phone (09) 407 7799 or email fundraising@hospicemn.org.nz

Staff At McLeods Lawyers
2012 has been a year of change for us at McLeods Lawyers as we have welcomed several new staff members. We also have a Kerikeri High School student, Jackson Lee, helping us in the afternoons (and helping to even up the male to female ratio), Welcome Jackson.

Super Gold Card
McLeods Lawyers now offers 10% off all wills and powers of attorney to Super Gold Card holders.

Website and Facebook
If you haven’t checked out our website, it is worth having a look www.mcleods.co.nz. We are also on Facebook, and make an effort to regularly post links to articles and snippets that may be interesting to our clients. Please like us on Facebook to receive notifications of these links.

All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.

Winter 2012 Newsletter

Defamation

Defamation claims have been a topic of interest lately with high profile figures such as Chris Cairns and Judith Collins taking legal action because they believe their reputations have been attacked.

What is Defamation?
Defamation in New Zealand is governed by the Defamation Act 1992, which is designed to protect a person’s reputation against unjustifiable attack. This requires a fine balance between the protection of reputation and the freedom of expression as contained in Section 14 of the New Zealand Bill of Rights Act 1990.

Proving Defamation
A defamatory statement may be either written or verbal. To be successful, the plaintiff must show she or he has been defamed by proving the following three elements:

• a defamatory statement has been made,
• the statement was about the plaintiff, and
• the statement has been published by the defendant.

Publication is a crucial aspect of this test. It must be proven that the defamatory statement was “published” to at least one person other than the plaintiff. If the statement was “published” to the plaintiff alone then the test for publication will fail. “Publication” of defamatory statements includes the making of verbal as well as written statements to third parties.

Defending Defamation
The four defences in a defamation case are:

• Honest opinion - the defendant must provide the factual basis on which their opinion is based. This defence will not succeed if the defendant simply got the information wrong,
• Truth – a complete defence is provided if the defendant can satisfy the court that the defamatory statement was true, or not materially different from the truth,
• Privilege – privilege provides immunity to certain groups in society for statements or reports made by them. “Absolute privilege” will serve as a complete defence, for example where politicians defame each other in parliament but are protected by parliamentary privilege. Statements made in court are also privileged. Qualified privilege usually attaches to the requirement for fair and accurate reporting by, for example, the media or someone with a social, moral or legal duty or interest to report something. “Qualified privilege” can be defeated if the plaintiff is able to show that the defamatory statements were motivated by malice.
• Consent – a complete defence is available if it can be established that the plaintiff consented to the publication of the material, even if it is found to be defamatory.

Defamation and the Internet
The existence of the internet has created a further medium for publication. The recent English case of Chris Cairns against Lalit Modi was the first of its kind in England where a ‘tweet’ made on the social networking site Twitter was held to be defamation. The resulting award in damages was equal to approximately £3,750 per word for a 24 word publication. Although this case was decided in England, it provides a valuable lesson in terms of publications on social networking sites. Defamation actions are not common in New Zealand and require specialist lawyers with the appropriate experience.

Welcome to Newcomers

A big welcome to Fi Reeves who has joined us as assistant to Graeme, and is a qualified legal executive. Fi has wide experience in the courts, government departments and private practice. Judith Graham, who also works with Graeme McLelland is still on board with us and is available to those clients who know her well.
Also due to join us in August is lawyer Louise Smith, who, with her husband Scott and family has moved back to Kerikeri from Auckland, where Louise worked extensively in commercial law, finance, trusts, wills and property law.

Marriage and Name Changes

Spouses may assume a partner’s name immediately after the wedding without any formal procedure. It is not necessary to register a name change. Both the previous name and new name of a person will be recognised but using two names may cause practical problems.

When changing names on bank statements for example, a marriage certificate will be sufficient evidence to validate the change. Passports can remain unchanged and carry a previous name but any travel document (insurance, tickets) must be in the passport name.

However for those wanting to record a name change formally, an application can be made to the registrar of Births, Deaths and Marriages by making a statutory declaration and completing a name change form. If you were born in New Zealand, changing your name by this method will result in your birth certificate being amended to record the new name.

Provided there is no intention to deceive, a person may adopt a new name for any reason.

It is also important to ensure formal documents and records (land ownership, insurance policies, bank accounts, for example) show names correctly spelt, as discrepancies may cause confusion or delays if you wish to deal with those assets in circumstances where ID is required, or following a death. For advice or help if you want to formalise the use of a name you have used for some time, phone Sarah Jury 4070176 or email sej@mcleods.co.nz

Joint Tenants vs. Tenants in Common

In New Zealand, when purchasing a property with another purchaser you may own the property as joint tenants or tenants in common. Deciding which form of ownership to use depends on your personal circumstances. The differences between joint tenants and tenants in common are significant and the wrong choice may have unexpected consequences.

Joint Tenancy
Joint tenancies occur when two or more people (‘joint tenants’) own land or other assets (such as a car or bank account) together and their shares in the asset are undivided and undefined.

One important feature of a joint tenancy is the right of survivorship. This means when one of the joint tenants dies, their share in the property will transfer to the surviving joint tenant(s). The interest of the deceased owner in the property is not available for disposal under a will or under an intestacy.

Joint tenancy ownership is most commonly seen in purchases by spouses/partners who intend owning the property equally and passing their share to the survivor on death.

Tenants in Common
Tenancy in common allows for owners to hold a distinct share of an asset. There is no requirement that a tenancy in common must result in equal shares of ownership. The amount of a person’s interest in the property will most likely be recorded on the title, for example: “Mark Smith as to a 1/3 share and Jane Brown as to a 2/3 share”.
An advantage of owning property as a tenant in common is that the owners are able to dispose of their share in the property in accordance with the terms of their will. If a person does not have a will, their share in the property will be distributed in accordance with the provisions of the Administration Act 1969. It is important that owners have a valid will which clearly sets out how the asset is to be dealt with after their death.

Severance
A joint tenancy can be severed unilaterally to become a tenancy in common. This may be opportune in a bankruptcy of one of the joint tenants or the breakdown of a relationship. Where a relationship ends, it is often crucial that an existing joint tenancy is severed to prevent a share of the property being transferred to an ex-spouse if either spouse dies before resolution of relationship property division.

Summary
For couples wanting to buy a property together, or in the acquisition of assets by business partners, it is important to consider the effect each type of ownership will have on them. Relationship property and family protection implications on death are significant. We recommend a contracting out agreement under the Property (Relationships) Act 1976 or a property sharing agreement to set out more detailed terms and provisions regarding the ownership of the property.

All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.

Autumn 2012 Newsletter

Changes to road and driving laws

The Land Transport (Road Safety and Other Matters) Amendment Act 2011 (‘the Act’) came into effect last year as a response to public demands for better protection for young drivers. Calls for legal reform were motivated by the over-representation of young drivers in crash statistics.

The 2010 Ministry of Transport ‘Young Driver Crash Facts’ document reported drivers aged 15-24 were involved in 112 fatal crashes, 755 serious injury crashes and 3617 minor injury crashes for the year ending 31 December 2009.

The Act introduces significant changes to our road laws, the blood alcohol concentration level for drivers aged 20 or younger has decreased from 0.03 to zero. The minimum age for obtaining a driver’s licence increases from 15 to 16 years, along with further restrictions on the eligibility criteria for applying for licences in each category. As of 1 August 2011, the minimum criteria for obtaining a licence are as follows: 

Learner licence	16 years old.
Restricted licence	16½ years old.  Must have held a learner licence for at least six months.
Full licence(option 1)	18 years old.  Must have held a restricted licence for at least 18 months.
Full licence(option 2)	17½ years old.  Must have held a restricted licence for at least 12 months, and have completed an approved advanced driving course.

 

Further Changes
Stricter rules on restricted licences came into force 27 February of this year. These include making the practical driving tests more challenging. Learner drivers will also be encouraged to gain at least 120 hours of supervised driving experience before attempting their restricted licence tests. Although no proof is necessary, the challenging practical tests are designed to allow only those with sufficient driving experience to be successful.

Transitional Provisions
The Act provides transitional provisions for drivers who entered the application process prior to the changes taking effect on 1 August 2011.

Exemptions
A driver may be granted an exemption to obtain a restricted licence at an age younger than 16½ if they:

• are at least 16 years old,
• have held a learner licence for at least 6 months, and
• have a clean driving record.

 A driver may be granted an exemption to obtain a full licence at an age younger than 18 if they:

• are at least 16 years old,
• have held a restricted licence for at least 18 months (reduced to 12 months if they have successfully completed an approved advanced driving course), and
• have a clean driving record.

Changes to ‘Give-Way Rules’
Major changes will also take place in March this year to our give-way rules. From 25 March 2012 at 5:00 am, all traffic turning right will be required to give way to a vehicle coming from the opposite direction and turning left at cross-roads, T-intersections and driveways where: 

• both vehicles are facing each other with no signs or signals,
• both vehicles are facing give way signs,
• both vehicles are facing stop signs, or
• both vehicles are facing green traffic signals.

 For further information; please visit the NZ Transport Agency.

Bill introduced to prevent foreign abuse of New Zealand company laws

Despite our notable reputation as one of the least corrupt countries in the world, New Zealand remains subject to criticism for its weak company laws, which are too easily exploited by international crime syndicates. There is  concern that loop-holes in our laws allow foreign fraudsters to set up shell companies in New Zealand, which are then used to conduct fraud such as tax evasion and money laundering overseas.

It has been reported that over the past five years 150 New Zealand registered companies have committed serious offences in overseas jurisdictions, including drug, human and arms trafficking. A further 1000 companies have been identified by the Reserve Bank of New Zealand as potentially being involved in international financial fraud. Late last year 829 separate companies were registered as having the same office in Johnsonville. An investigation by the Ministry of Economic Development has so far seen 1800 companies struck off the Companies Register for failing to provide evidence of legitimacy.

The concern that inadequacies in our domestic legislation could cause serious detriment to our international trade has resulted in a call for law reform. The Companies and Limited Partnerships Amendment Bill (‘the Bill’) was introduced to Parliament on 13 October 2011. Its purpose is to strengthen our company laws. If passed by Parliament, the Bill will amend the Companies Act 1993 (‘the Companies Act’) by:

• requiring each company registered in New Zealand to have a director or agent to be resident in New Zealand,
• granting additional powers to the Registrar of Companies to investigate and manage non-compliant companies,
• banning directors of non-compliant companies from assuming management positions in other companies for up to five years,
• striking companies off the Companies Register for supplying inaccurate information or continued non-compliance with the Companies Act,
• better aligning requirements under the Companies Act with the Limited Partnerships Act 2008 to prevent similar exploitations, and
• classifying serious breaches of directors’ duties as criminal offences.

The Government is also intending to introduce anti-money laundering legislation in 2013 to further safeguard and scrutinise the operation of companies. In a report titled “Strengthening New Zealand’s Resistance to Organised Crime”, the Ministry of Justice also proposes new laws to:

• a improvement of domestic and international information sharing,
• enhance anti-money laundering and crime proceeds recovery measures,
• reduce misuse of current legal arrangements,
• protect against cyber-crime,
• prevent corruption and bribery, and
• disrupt identity crimes.

It is hoped that these initiatives will give greater confidence in our domestic company laws and restore our image as a safe country in which to conduct business.

Snippets:

Join us on  

We have joined Facebook and we want you to join us.  Like our Facebook page ‘McLeods Lawyers’ between 1 March 2012 – 31 March 2012 and you will enter the draw to win a $50.00 gift voucher for Makana Confections.

The draw will be done on 2 April 2012 and the winner will be notified through Facebook.

Our Facebook page has links to articles related to New Zealand law, our past Newsletters and will keep you up to date with what is happening at McLeods Lawyers.

New Year News

In February we welcomed Odette Colebrook at reception and Emma Webb in accounts to our team, which now includes, Stacey Price (Sarah Jury’s assistant), Judith Graham (Graeme McLelland’s assistant) and Simone Scully (Sue Wooldridge’s assistant).

 Also in February Graeme moved the admission to the bar of Kate Eastwood formerly of Kerikeri, following her completion of a law/science degree. Kate now works at Minter Ellison in Auckland.

 

All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter.  It is recommended that clients should consult a senior representative of the firm before acting upon this information.

Summer 2011/2012 Newsletter

Christchurch earthquake to trigger changes to Resource Management Act 1991

The Christchurch earthquakes have resulted in a re-examination of the Resource Management Act 1991, (“RMA”) with the damage caused to thousands of homes by liquefaction being a significant factor in the review.

The purpose of the RMA is to “promote the sustainable management of natural and physical resources”. The catastrophic effects of the earthquakes have highlighted the importance of the RMA as not only protecting the environment from the impact of people and land use, but also to consider the effect of nature on people.

The RMA requires decision makers to consider matters of “national importance” in their determinations. However, natural hazards are not included as a matter of national importance.  As a result it has become clear that the zoning of areas for residential use in district plans, and the consideration of resource consent applications do not sufficiently consider natural hazard risks.

The recent Canterbury Fact Finding Project (‘the Project’) has investigated how much was known about liquefaction and lateral spreading risks in Christchurch, and the impact of this knowledge on zoning and development decisions.  Since 1991 there have been reports available on the significant liquefaction risk in Christchurch, including “clear maps that are uncannily accurate” on the locations where liquefaction would occur.

Hon. Dr Nick Smith, Minister for the Environment, noted recently that resource consents covering about 20% of the severely liquefied properties in Christchurch were approved after the area specific reports funded by the Earthquake Commission (EQC)and GNS Science (GNS) were released, in 1991 and 1992 respectively. If the reports had not been “shelved”, it is likely much of the damage would not have occurred, or would have been greatly reduced.

The Project has found that resource consents issued under the RMA for the development of land in some areas did not take into account identified liquefaction risks.  Even post 2004, consents were being granted without any regard for this significant and, by then, well documented risk. Not only was the information regarding identified risks not introduced into the zoning and consent decision making about development of these areas, but the risk of liquefaction was not clearly identified on Land Information Memorandum Reports (“LIM Reports”) for the affected properties, despite the information being known.

The problems in Christchurch have identified a shortcoming in the current consenting process nationwide.  The Government has indicated that further substantial changes will be proposed to ensure the risks of natural hazards are considered in planning decisions across New Zealand.

The changes aim to make all councils address the risks of natural hazards beyond flooding when approving applications under the Resource Management Act, and be vigilant in protecting residents from real identified risks. These changes may mean land which previously could be developed is in future classed as too risky, or that special development standards must apply.

The inclusion of detailed information in LIM Reports will also help give notice to property owners of the natural hazard risks which may affect properties, allowing them to account for such risks when building on or otherwise developing their property.

Counterfeit and illegal goods – buyers beware!

With the advent of internet shopping, we are now all “importers”, from books, toys and games to car parts and tools.  No longer must purchases be made at the retailer in your community.  Leaving aside the issue of the impact these changed shopping practices are having on “bricks and mortar” retailers, many internet shoppers are unaware of the implications of “buying on the net”.

Purchasers should be aware of the following:

• items purchased by individuals may be subject to GST
• there are no enforceable warranties or consumer guarantees if the goods are defective
• items infringing trademarks and patents will be seized

The Trade Marks Amendment Act 2011 and the Copyright Amendment Act 2011 were passed on 15 September 2011, bringing changes which give powers to enforcement officers, customs and police to crack down on infringements.

The National Enforcement Unit (“NEU”) and Customs officers work together with police private individuals, companies and other entities holding rights under copyright or trade marks to prosecute the criminal offences of importing and selling counterfeit goods and pirated works.

The Government is advising that the NEU and Customs will be focused on counterfeit or other illegal goods.

The Acts will allow Customs greater powers at our country’s borders through their increased rights to seize property, question suspected offenders, and investigate goods entering the country which may be counterfeit.

The aim of the legislation is to restrict the flow of illicit goods into New Zealand, and increase consumers’ confidence that they are buying genuine products.

The Government has said that “illicit traders are moving beyond luxury items and into common everyday household products such as medicines, car parts, electronic equipment, and food products”, and do not concern themselves with health and safety considerations.

Items may be seized from travellers returning to New Zealand, or intercepted in the post.

Enforcement officers will be able to deal with anyone selling goods in public, including markets, stalls and fairs, which are often rife with counterfeit goods, and have the right to enter any public area, including shops, stalls and markets to investigate, without being required to obtain a search warrant.  They may also apply for a search warrant to allow them to enter and search private property to investigate non-compliance with the Acts.

The Trade Marks Act now also provides for greater international protection of trade marks registered in New Zealand, so that our well known (and not so well known) brands may be protected in up to 84 Countries with one trade mark application and one fee.

Snippets

Who says judges are straight laced?

On hearing the parties in the US case of Kissell v Schwartz and others had settled the dispute before the court, the judge’s decision included the following:

“And such news of an amicable settlement having made this court happier than a tick on a fat dog because it is otherwise busier than a one legged cat in a sand box and, quite frankly, would have rather jumped naked off a twelve foot step ladder into a five gallon bucket of porcupines then have presided over a two week trial of the herein dispute, a trial which, no doubt, would have made the jury more confused than a hungry baby in a topless bar and made the parties and their attorneys madder than mosquitoes in a mannequin factory. IT IS THEREFORE ORDERED AND ADJUDGED by the court as follows (inter alia):  

1. The jury trial scheduled herein for July 13, 2011 is hereby CANCELLED.
2. The clerk shall engage the services of a structural engineer to ascertain if the return of this file to the Clerks office will exceed the maximum structural load of the floors of said office.”

 

End of year changes

• Sue has been working part time and also from home because of eyesight problems.  As a result of this difficulty, Sue will leave the partnership with Graeme and Sarah at the end of the year, but will continue to work for them and can be contacted at the office as usual on 407 0174 or email sjw@mcleods.co.nz.
• We have revamped our website. If you are looking for tips on legal matters, the answer may be online – see www.mcleods.co.nz.

 

All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter.  It is recommended that clients should consult a senior representative of the firm before acting upon this information.

Spring 2011 Newsletter

The Coroners Court

Many of us are unfamiliar with what a Coroners Court is or what it does, yet its services are crucial to our community. The Coroners Court has had a high profile lately as it considers the cause of death of the Kahui twins and confirms the deaths of many Christchurch earthquake victims whose bodies have not been found.

What it does

The Coroners Court offers crucial coronial services to the New Zealand Police and other government agencies by investigating circumstances and causes of death. Much emphasis is put on conducting investigations in a professional and respectful manner, having regard to the differing cultural and spiritual requirements of the deceased and their families. The findings of investigations are used to make recommendations to improve public safety and prevent deaths in similar circumstances.

The Coroner

The Coroners Court is part of the Ministry of Justice and there are currently 14 coroners situated in nine locations throughout New Zealand. They are appointed by the Governor General pursuant to the Coroners Act 2006. A coroner will have a legal background and is a judicial officer.

The Coroners Act 2006

The Coroners Act 2006 (“the 2006 Act”) is designed to enhance independence and public confidence in the coronial system after a number of reforms undertaken by the Ministry of Justice in relation to earlier Acts.

Key features of the 2006 Act include:

• appointment of the Chief Coroner
• establishment of the Coronial Services Unit
• training guidelines for coroners
• guidelines for the recognition of the different cultural and spiritual needs of families and those with a close relationship to the deceased.

The 2006 Act contains a requirement (carried over from the 1988 Act) that deaths resulting from the following circumstances must be reported to the coroner:

• suicides
• deaths without a known cause
• unnatural or violent deaths
• where a cause of death cannot be established by a doctor
• where the death occurred while or as a result of:
  - a surgical or dental procedure
  - a woman giving birth
  - while the deceased was in official custody or care.

The services of the Coroners Court are also essential following a natural disaster, especially when identification of victims is difficult. Its services have most recently been utilised following the February earthquake in Christchurch. It has played a critical role in establishing the identities and causes of death for the victims of the earthquake and in facilitating the timely release of the victims back to their families.

For families and friends who have lost loved ones in unfortunate or unknown circumstances, the Coroners Court may provide answers which would otherwise not be available. Their findings following an enquiry are invaluable, especially in the aftermath of a natural disaster and in criminal investigations. They also, to some extent, offer families some form of closure.

For more information on coronial services and procedures, or for information on coroners in relation to the Christchurch earthquake, visit http://www.justice.govt.nz/courts/coroners-court

The Unit Titles Act 2010

The Unit Titles Act 2010 (the ‘2010 Act’) came into force on 20 June 2011 and replaced the Unit Titles Act 1972. The 2010 Act contains significant changes from the 1972 Act and now sets the rules and guidelines for the establishment and management of developments such as apartment blocks, multi-layered commercial spaces and flats. This has a significant impact on us locally as this includes small scale, stand alone residential properties in Kerikeri and Paihia. In addition, many families own apartments in the larger centres offering accommodation for children attending university.

The key changes included in the 2010 Act are:

• All common property (e.g. driveways, lifts and stairwells) is now owned by the body corporate. Previously, ownership of common property was jointly vested in all unit owners. The change now allows the body corporate to more effectively act for the benefit of the entire development by representing all unit owners in relation to the improvement and maintenance of common property. In bigger complexes, this may include swimming pools and gym facilities and other recreational areas.
• Responsibility for the maintenance of building elements and infrastructure affecting more than one unit now lies with the body corporate. This means, for example, that the body corporate will be responsible for repairing a leak from a top floor apartment to a unit below (provided the leak is not attributable to the recklessness or negligence of the unit owner and/or occupier.) Previously, the obligation to remedy the leak would have fallen solely on the owner of the top floor apartment.
• Minor alterations to individual units are now more feasible as the 2010 Act allows for increased flexibility relating to re-developments. Obtaining the consent of a body corporate is no longer required to carry out additions or structural alterations to units, provided the modifications do not materially affect the common property or the property of another owner.
• The subdivision of principal units is also possible under the 2010 Act allowing for the creation of a separate unit title development within the principal title, known as a subsidiary.
• This is known as a layered development and allows for multiple use of a building – such as where a building has car parking, shopping complexes and apartments all within its confines.
• The 2010 Act also allows for the creation of separate bodies corporate which govern subsidiary units, which are also part of the head body corporate responsible for overall management of the development.
• The unanimous consent of the body corporate is no longer required under the 2010 Act and a 75% majority is sufficient for decisions to be made. This change has been welcomed by many as it means decisions will less likely be held up by difficult owners.
• Bodies corporate are also required to develop long term maintenance plans in advance, giving owners the opportunity to pay regular instalments over time. This is to avoid owners having to pay large one off special levies for work required on common property such as lifts.

In the short term, all unit owners should note the need for AGMs to be held by 20 December 2011 and for new committees and chairpersons to be elected by that date.

Pre-existing rules for bodies corporate will lapse on 20 September 2012, but new rules may be adopted earlier if the owners resolve to do so. This is also an important expiry date for the adoption of management plans and other long term compliance. Owners of unit titles are urged to be proactive and to obtain advice if required.

For more information, contact Sue Wooldridge on 407 0174 or Lisa Baker on 407 0175.

Weddings and Wills!

Death and wills – this is not a typical topic of conversation when you are preparing for your wedding, but consideration should to be given to the need for wills and contracting out agreements (i.e. pre-nuptial agreements) as marriage may impose significant obligations in relation to property division and the allocation of assets.

If a person dies intestate (without leaving a will), the allocation of his or her assets is determined by the Property (Relationships) Act 1976 and the Administration Act 1969 and may be distributed differently to the way the deceased person envisioned it would be.

A new marriage also automatically invalidates all wills made prior to the date of the marriage unless a will is made in contemplation of that marriage.

Estate planning should also be reviewed before marriage as it too will be significantly affected. Consideration must be given to those who have a statutory right to benefit from a person’s estate. Failure to make appropriate arrangements to reflect one’s wishes can be costly, result in delays and cause a great deal of distress amongst family members or anyone with an expectation that provision will have been made.

Please also remember that the Property (Relationships) Act 1976 applies to couples living together for three years or more. If you have been living with your partner for two years or more it is a good time to review your arrangements.

For proactive, up to date and sensible advice on these issues, contact Sarah Jury on 407 0176 or Graeme McLelland on 407 0179.

Snippets

We would like to welcome Mana Blackburn who joins us as receptionist. Stacey Price has been promoted to Sarah Jury’s assistant.

 

All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting on this information.

Winter 2011 Newsletter

On 24 March 2011, the Marine and Coastal Area (Takutai Moana) Act 2011 (the “Act”) was enacted to repeal and replace the Foreshore and Seabed Act 2004.

The call for change has been motivated by an independent Ministerial Review of the Foreshore and Seabed Act 2004, which deemed the 2004 Act unfair, as it failed to recognise the rights of all New Zealanders and was discriminatory against Maori.

The new Act is the product of approximately two years of consultation between the Attorney General, on behalf of the Government, and iwi groups.  According to the Attorney General Hon. Christopher Finlayson, the new Act is a “just and durable resolution to the issue, and recognises the rights of all New Zealanders in the common marine and coastal area:”

“Marine and coastal area” is defined in s9 of the Act and broadly encapsulates the area that is bounded by the line of mean high-water springs and the outer limits of the territorial sea.  It also includes the beds of rivers, airspace, subsoil, bedrock and other matter which are part of the coastal marine area.

The new Act repeals the 2004 Act as it grants courts the jurisdiction to recognise customary rights where such rights can be proven under the Act.  However, the granting of a customary title under the Act is distinguished from a private (fee simple) title, as the land comprised under a customary title is subject to public access and cannot be sold.

 

Philip Dickson worked for Idea Services Limited (an IHC subsidiary) as a community service worker providing care and support to people with disabilities living in community homes.  Mr Dickson was required to sleep overnight in the home so he could deal with any issues which arose during the night, and for security purposes.  He was paid $34.00 per sleepover, and $17.66 per hour for any time during which he was required to be actively working and tending to the needs of the residents.  If there were any issues arising during the night Mr Dickson would receive $34.00, which amounted to between $3.40 and $4.30 per hour depending on the length of the sleepover.

Mr Dickson claimed that he was entitled to the minimum wage prescribed under the Minimum Wage Act 1983 (the “Act”) for every hour of his sleepover. This claim was upheld at both the Employment Relations Authority and the Employment Court, but these decisions were appealed.

The Court of Appeal considered whether sleepovers constitute “work” for the purposes of s6 of the Act which states:   “every worker who belongs to a class of workers in respect of whom a minimum rate of wages has been prescribed under this Act, shall be entitled to receive from his employer payment for his work at not less than that minimum rate.”   The Court of Appeal agreed with the Employment Court that three factors must be considered in order to determine whether the sleepover constituted “work”:

• the constraints placed on the employee’s freedom to do as he or she pleases,
• the nature and extent of responsibilities placed on the employee, and
• the benefit the employer receives from having the employee perform the role.

Mr Dickson had significant restraints placed on him when sleeping over, important responsibilities he had to attend to with respect to both the home and the residents, and the employer derived a correspondingly significant benefit.  The Court of Appeal agreed that in this instance all of these factors applied to a significant degree and Mr Dickson’s sleepovers constituted work for the purposes of the Act.

The Court of Appeal rejected Idea Services Limited’s alternative argument that the Act was breached only if the employee’s average rate of pay over a pay period was less than the prescribed minimum.

This decision will have a great impact on the disability services sector. Ralph Jones, chief executive of Idea Services Limited is quoted as saying this decision would cost the organisation about $176 million in back payments. Idea Services Limited has lodged an application for an appeal against the Court of Appeal decision, and the outcome is likely to be newsworthy.

Sarah Jury provides comprehensive legal advice to both employers and employees.  Phone Sarah on (09) 407 0176.

Once upon a time Spam was a food.  Then it was in your inbox.  Now it comes to your mobile phone as well.  Don’t despair!  Just as you can click “unsubscribe” on unwanted emails, you can do the text equivalent on your phone.  Text messages for marketing purposes are covered by the Unsolicited Electronic Mail Messages Act 2007, in the same way email messages are.  Text marketers must include details of who the sender is and you may reply by text to opt out.

However, emergency text messages were sent by Telecom, Vodafone, and 2Degrees to all Canterbury customers at the request of Civil Defence in March.  SMS messaging was similarly used to contact New Zealand customers in Japan when the Sendai earthquake struck, at the request of the New Zealand Ministry of Foreign Affairs and Trade.  Moves are afoot in the USA to allow the sending of emergency warnings nationwide if a terrorist attack or other national emergency is threatened.  These messages override systems and cannot be stopped.

 

Property insurance has been the subject of comment and interest across New Zealand in recent months, largely due to issues highlighted by the Christchurch earthquakes.  It is clear that premiums will rise as the insurance industry (which is a worldwide network to spread the risk) has taken a battering with the seismic events in New Zealand and Japan, the Queensland floods and cyclone, and the damage caused by tornados in the US. If we are all paying more, we should take care to ensure the money is well spent and we have sufficient cover so that the risks we think we are insured for are actually included in our policies.

One of the shortcomings identified by many Christchurch policyholders is the short period of time for which policies reimburse the cost of alternative accommodation (if at all).  Many homeowners will not be able to return to their homes within the three to six months stated as maximum reimbursement periods in their policies and they are now facing the double whammy of rent plus mortgage payments on unsafe and uninhabitable homes.

Business owners are also finding gaps in their  insurance.  Many business interruption policies are for limited periods or provide no insurance where the premises for the insured business are sound but are within the red zone.  Those business owners may be paying rent on premises they cannot access legally, but have found they have no insurance in these circumstances.  The legal issues around insurance of all types are very specialised and complex.  Use a well informed broker and don’t hesitate to ask questions if the small print looks daunting.

For legal advice about insurance, contact Graeme McLelland on (09) 407 0179.

Graeme McLelland and Shirley Rundle and her family joined the enthusiastic crowd of 600 or so cyclists celebrating the opening of the first stage of the coast to coast cycle way on 29 May.  This project will dovetail in with the Okiato to Russell walkway (see boiwalkways.co.nz) giving both locals and visitors a wonderful experience.

 

 

 

Autumn 2011 Newsletter

 

 

 

Summer 2010/2011 Newsletter

 

 

 

 

Our accountant/office manager Yvonne Burgham is leaving us to move to Auckland where she will be closer to her family. We will miss Yvonne and wish her well.

 

 

2012 McLeods Lawyers.

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