Summer 2018 Newsletter

Anti-Money Laundering and Countering Financing of Terrorism Act 2009


Why we need to ask you for information

This information has been provided by the New Zealand Law Society

New Zealand has passed a law called the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (“the AML/CFT law” for short).

The purpose of the law reflects New Zealand’s commitment to the international initiative to counter the impact that criminal activity has on people and economies within the global community. Recent changes to the AML/CFT Act mean that from 1 July 2018 lawyers must comply with its requirements.

Lawyers must do a number of things to help combat money laundering and terrorist financing, and to help Police bring the criminals who do it to justice. The AML/CFT law does this because the services law firms and other professionals offer may be attractive to those involved in criminal activity.

The law says that law firms and other professionals must assess the risk they may face from the actions of money launderers and people who finance terrorism and must identify potentially suspicious activity. To make that assessment, lawyers must obtain and verify information from prospective and existing clients about a range of things. This is part of what the AML/CFT law calls “customer due diligence”.

Customer Due Diligence Requirements

Customer due diligence requires a law firm to undertake certain background checks before providing services to clients or customers. Lawyers must take reasonable steps to make sure the information they receive from clients is correct, and so they need to ask for documents that show this. We will need to obtain and verify certain information from you to meet these legal requirements. This information includes: your full name, your date of birth and your address.

To confirm these details, documents such as your passport, driver’s licence or your birth certificate, and documents that show your address – such as a current bank statement – will be required.

If you are seeing us about company or trust business, we will need information about the company or trust including the people associated with it (such as directors and shareholders, trustees and beneficiaries). We may also need to ask you for further information.

We will need to ask you about the nature and purpose of the proposed work you are asking us to do for you. Information confirming the source of funds for a transaction may also be necessary to meet the legal requirements.

If you cannot provide the required information

If we are not able to obtain the required information from you, it is likely we will not be able to act for you. Because the law applies to everyone, we need to ask  for the information even if you have been a client of ours for a long time. Before we start working for you, we will let you know what information we need, and what documents you need to show us and let us photocopy.

Please contact the lawyer who will be undertaking your work, if you have any queries or concerns.


Subdividing Land – What to Expect

If you are considering purchasing land with the intention of subdividing or if you are simply looking to increase the value of your existing property by adding an additional house, there are a couple of things that you will need to understand before taking the leap, so to speak.

A subdivision involves the conversion of one large property, whether it be a parcel of land or a building, into two or more parts, to enable those parts to be sold or split into separate ownership.  To do this, a specific kind of resource consent, called a “subdivision consent”, is required from the relevant local Council.

The statutory requirements governing subdivision are contained in the Resource Management Act 1991 (the Act). This Act enables the district and city councils to oversee and manage all subdivisions through district plans and resource consents, thereby controlling any adverse effects on the community and environment that the subdivision may have.

A range of different subdivisions are possible: fee simple, unit title or cross lease. A fee simple subdivision creates a new allotment from an existing allotment. A new certificate of title is created for this new parcel of land and this is independent of the original parent title. This is the most common form of subdivision and will be the focus of this article.

Anyone that is thinking about subdividing should be aware of the length of time involved in the subdivision process, whether it be in a rural or urban area. The length of time depends on the size and complexity of the subdivision project. The council, surveyors, Land Information New Zealand, and lawyers are each required to provide their input and sometimes this means that the length of time required is longer than anticipated.

Below is a summary of the stages involved in a subdivision process.  The times indicated will vary depending on the complexity and size of the subdivision but a typical subdivision process can take some 5-6 months in total: sometimes, more.  It is essential that whoever is undertaking a subdivision project plans well in advance for matters such as interest rate changes, holding costs, and the need for certificates of title to be issued before mortgages and sales of the new titles can be secured.

The subdivision process can be summarised into five stages.

  1. Subdivision consent
  2. Survey plan approval
  3. Section 224c certification
  4. Lodgement with Land Information New Zealand
  5. Certificate of title

 Stage 1: Obtain Council Approval

Almost always, anyone wishing to subdivide will need to obtain a resource consent. Even in situations where the proposed subdivision is a permitted activity, a certificate of compliance will be required.

 Stage 2 – Approval of Survey Plan

The subdivision consent obtained under Stage 1 above must be ‘given effect to’ within five years of the grant of the consent. This is done by obtaining approval of a survey plan from the relevant city or district council.

The council will assess whether the survey plan conforms with the subdivision consent or certificate of compliance, including determining whether the conditions of consent have been or will be satisfied. If the survey plan is compliant, the council must approve the survey plan. If the survey plan is not compliant, the council must decline to approve the survey plan.

 Stage 3 – Section 224(C) Certification

Before a survey plan can be deposited, a certificate must be lodged with the Registrar-General of Land confirming that the relevant council has approved the survey plan and that all of the conditions of the subdivision consent have been complied with to the satisfaction of the council.

 Stage 4 – Land Information New Zealand

The penultimate stage of the subdivision process requires the lodgement of the legal title documents and the survey plan with Land Information New Zealand for approval.

 Stage 5 – Certificate of Title

Once Land Information New Zealand’s approval under Stage 4 above is received, the subdivision process concludes with the cancellation of the existing title and the issue of new certificates of title for each new parcel of land shown on the survey plan.


When You may have to Pay Tax selling a Property

When the bright-line test commenced, it affected residential land bought and sold from 1 October 2015.   If you sold the property within a two-year period, then depending upon your circumstances residential land tax may have applied.

From 29 March 2018, the two-year period has increased to five years.

Tax may become payable if you have bought property with the intention to re-sell it and the tax paid would be based on any profit you make when it is sold.

Although the bright-line test may not apply when selling the property after the five year period has lapsed, tax may still be payable if the intention test is applied.

Residential land withholding tax will apply to the sale of your property if it is residential land, sold within five years from 29 March 2018, or you are an person buying from offshore.  For more details refer to:



Our office will be closed from 5pm on Friday 21 December 2018

& will reopen at 8:30am on Wednesday 9 January 2019

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 2018 Newsletter

Alternative Dispute Resolution Series: How It can help You – Mediation in Employment Disputes

Alternative Dispute Resolution (“ADR”) methods are alternatives to going directly to court. Using ADR methods instead of pursuing the matter in court is usually more cost effective for all the parties involved, takes less time to resolve the dispute, and also relieves the court of cases they believe can be resolved between the parties without court assistance.  This particular article will focus on mediation in the context of employment law and form a part of our ADR article series which will include articles on formal/informal negotiation and arbitration over the next two newsletters.

Mediation is essentially a voluntary process where an independent person (a “mediator”) assists the parties attending the mediation. This typically involves an employee and employer in an employment dispute, working through legal and emotional issues and developing solutions together to repair the employment relationship problems in a semi-formal and confidential environment.

Attending mediation is not like attending court as you are not under oath and are not cross-examined. Mediation requires the employee and employer (“the parties”) to attend the mediation, or it cannot proceed. Each party is entitled to bring representation and a support person to the mediation. At the beginning of the mediation, the mediator will outline the process of the mediation and ask the parties if they have any questions about the process.  During the mediation, the mediator will ask each party questions to identify and refine the issues. The mediator will give each party the opportunity to speak; interruptions are not permitted. If the parties are not able to adhere to this rule, the mediator may put each party in separate rooms and talk to each party individually to attempt to reach a resolution.

Anything said during mediation and all documents

prepared for the mediation, including the terms of the resolution, if one occurs, are confidential. Because of this, what happens in mediation may not be able to be used as evidence in the Employment Relations Authority (“ERA”) or Employment Court. Confidentiality encourages the parties to be honest and forthcoming with their information to increase the chances of reaching a resolution.

When preparing for mediation, the parties are encouraged to prepare written statements, accounts of events, and collate any evidence and documents such as texts or emails to support their position. To get the most out of mediation parties are encouraged to:

  1. Listen to the other parties’ point of view, even if they do not agree;
  2. Acknowledge anything they may have done differently or better;
  3. Be honest and open;
  4. Have an open mind for resolutions; and
  5. Be willing to bend a little to reach an agreement.

Even if a resolution is not reached between the parties, they can request the mediator to recommend a non-binding solution under section 149A of the Act that the parties can consider. The mediator will make a written recommendation. The recommendation will include a date when the recommendation will become binding; the parties may consider accepting or rejecting the recommendation. Please note that if either party does not reject the recommendation before the specified date, it will become a full and final settlement and enforceable.

The parties also have the option of requesting a binding recommendation under section 150 of the Act.

Some advantages of resolving the dispute at mediation are:

  1. The cost is significantly less than hearing the dispute in court; and
  2. Mediation lets the parties have a degree of control over the agreement reached.

The disadvantages of mediation are that it may not result in a resolution, in which case the process will add to the legal costs.

Where the mediator feels that mediation is unlikely to produce a resolution, the mediator will usually conclude the mediation. The parties’ options at this point are to refer the matter to arbitration or the ERA or to stop pursuing the matter altogether.

If you are an employer or an employee and facing this situation, it is best to seek legal advice.

Watch this space for our article on Arbitration in our next newsletter.

Katherine Taurau, lawyer at McLeods Lawyers, is a trained mediator accredited with LEADR and can assist you with any queries about mediation.

Phone Kath on 09 407 0175.


Proposed changes to the Employment Relations Act 2000 – What you need to be aware of

During Labour’s election campaign, the Party released a plan which detailed their intentions for their first 100 days in office (“100 Day Plan”). Since the campaign, the Labour-led Government has released the proposed changes to the Employment Relations Act 2000 (“ERA”) which are predicted to affect New Zealand’s employment landscape significantly. In this regard, it is important to be aware of what changes

Labour are proposing and how the changes may affect you.

The proposed changes are recorded as:

  1. The amendment of the existing 90-day trial period as implemented by the former National Government (“trial period”);
  2. The doubling of Labour Inspectors (“Inspectors”);
  3. Minimum wage increase from $15.75 to $20.00 by 2021;
  4. Introduction of Fair Pay Agreements;
  5. Extend paid parental leave; Feb 2018 – Apr 2018 Page 4 of 4

Compiled by New Zealand Institute for Business Research © 2018

  1. Changes to redundancy provisions; and
  2. The abolition of youth rates.

Removal of the 90-day trial period

Section 67 of the ERA addresses Probationary Agreements and outlines the particulars of the existing 90-day trial period. Labour is set to change the ERA to allow employees to bring a claim against employers where they feel they have been unfairly dismissed during their trial period. These claims will be heard through short hearings without lawyers. The remedies available to workers may be reinstatement or damages of up to a capped amount. Labour will release more information regarding the trial period reform in the coming months. In the meantime, it is recommended that employers become acquainted with what constitutes unfair dismissal under the current employment legislation.

Doubling of Labour Inspectors

Inspectors monitor and enforce compliance with employment standards. They use investigations and audit programmes to find and investigate potential breaches of employment standards and to enforce compliance.

Currently, only 60 Inspectors are inspecting the entire

country. Labour has proposed to increase the number of inspectors to 110. The increase implies that New Zealand has transitioned out of the education and compliance phase of the implementation of the ERA and into the enforcement phase.

For any businesses that are not fully aware of their

obligations under the ERA, or are not fully compliant, it is recommended to seek the advice of an employment lawyer.

Minimum wage increase

The minimum wage is set to increase from $15.75 to $16.50 per hour by 1 April 2018 with the goal to raise gradually to a minimum wage of $20.00 per hour by 2021.

Fair Pay Agreements

A key and controversial piece of Labour’s workplace relations package has been to develop and introduce a system of collective bargaining for each industry. This system is intended to allow unions and employers, with the assistance of the Employment Relations Authority, to create Fair Pay Agreements that set minimum conditions, such as wages, allowances, weekend and night rates, hours of work and leave arrangements for workers across an industry, based on the employment standards that apply in that industry.

Paid Parental Leave

A commitment was made during the campaign to increase paid parental leave from 18 weeks as it currently stands, to 26 weeks by 2020.

Changes to redundancy provisions

Consultation is to start on changing the minimum

redundancy provision protection for workers.

Recommendations such as the development of initiatives that smooth the transition of people made redundant into alternative jobs, made back in 2008, have been identified as the basis on which to change the provision. However, no further details have been offered by the Labour-led Government.

Abolish youth rates

Labour has also proposed to remove youth pay rates. Youth pay rates are 80% of the adult minimum rates. The proposal has been endorsed by Labour’s coalition partner, NZ First.

A majority of these proposed changes are expected to be passed in Parliament in the coming months. If you are a business owner or an employee, make sure you watch this space.

Contact Kath Taurau (407 0175) or Sarah Wynyard-Davis (407 0178) for advice about employment.


McLeods Lawyers Limited

The start of 2018 brought some background changes to McLeods.

We have now incorporated as McLeods Lawyers Limited and are operating as a company.

Sarah Jury is the director to the new company and Graeme McLelland is enjoying a slight change in role – moving to employed lawyer.

Otherwise it is business as usual.

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 / Spring 2017 Newsletter

Introducing Sarah Wynyard-Davis, Family Lawyer

Welcome to our new team member at McLeods, lawyer Sarah Wynyard-Davis.

Sarah has experience in a range of Family Law matters including disputes related to day to day care and contact, domestic violence matters and issues resulting from the breakup of relationships.  Sarah likes to focus on helping parties come to a mutually agreed upon resolution to their family matters but if this is not possible she has appeared in the Family Court many times and is experienced in resolving matters in this forum also.

Sarah is looking forward to the chance to re-establish her practice here with the team at McLeods.  She will be working on building a strong family practice that will help serve the needs of our community and will also be working alongside the rest of the team at McLeods in other areas of the practice.

Sarah is a Northland local, attending Bay of Islands College before heading away to study at Waikato University and gaining degrees in Law and Psychology.  She was admitted to the Bar in 2003.  After studying she returned home and worked at local firms in Kerikeri.

The last few years has seen her taking time out of the profession to raise her family and milk a few (600) cows with her husband who is a local dairy farmer.  With all of the changes and regulations in the dairy industry she has been kept busy during her time away implementing procedures on farm, looking after employees, and keeping up to date with policy changes. Having this hands on experience in the dairy industry as both an employer and a partner in 50/50 Share milking arrangements she understands the issues that may arise in the industry and within farm working relationships.

Away from work Sarah enjoys spending time with her family and friends, being on the farm, talking to her eldest son who has recently moved to Mt Isa Australia L,  and playing taxi driver/cheerleader to her four younger children delivering them to whichever activity they have next on their calendars!


Health and Safety at Work Act 2015 – Happy First Birthday

Based on the 2011 Australian Model Work Health and Safety Act, New Zealand’s Health and Safety at Work Act 2015 (HSWA) passed into law on 4 April 2016. New Zealand’s historically high rate of workplace deaths and near misses (notably the 2010 Pike River Mine tragedy where 29 miners died due to substantial health and safety failures) was a key motivator for the overhaul of our health and safety laws.

During Parliament’s readings and consultation over the HSWA, business people and the general public voiced concerns that the HSWA was a step too far and would unreasonably and fundamentally affect the way New Zealand businesses operated. However, the lawmakers cited our poor health and safety record in pushing the HSWA through.

Prior to the enactment of the HSWA, between 40 and 60 people were killed in workplace accidents each year. According to Worksafe New Zealand, this number is more than three times the annual workplace deaths in the UK and double those in Australia. The HSWA seems to be having an effect; with the deaths in the agriculture and construction industries dropping during 2016.

 General responsibilities

Under the HSWA, Persons Conducting Business or Undertakings (PCBU) have a duty to ensure that, so far as reasonably practical, the workplace is without risks to the health and safety of any person. PCBU’s are usually business entities such as companies, but also includes sole traders, self-employed persons, contractors and certain volunteer organisations. The HSWA also places obligations on persons to whom responsibility for health and safety has been delegated (Officers) and persons working at a workplace (Workers).

In general terms, a PCBU’s underlying obligation is a duty to ensure that all reasonable measures have been taken to protect the health and safety of Workers and other persons who are at the workplace. Officers (individuals who are in positions that allow them to exercise significant influence over the management of the business or undertaking) are responsible for exercising due diligence to ensure that the PCBU complies with its duties. Workers must take care of themselves and ensure that they do not affect the safety of others and comply with all reasonable directions, policies and procedures.


A Worker who commits an offence of reckless conduct will be liable to pay a maximum fine of $300,000 or serve a maximum term of imprisonment of five years. For the same offence, a PCBU or an Officer may pay a maximum fine of $600,000 or serve a maximum term of imprisonment of five years.

If a Worker is convicted of failing to comply with a duty that exposes an individual to the risk of death, serious injury or illness, they will be liable to pay a maximum fine of $150,000. In the same instance, a PCBU or an Officer will be liable to pay a maximum fine of $300,000.

If a Worker fails to comply with a duty (that does not also expose an individual to a risk of death or serious injury) he or she will be liable to pay a maximum fine of $50,000. In the same instance, a PCBU or Officer will be liable to pay a maximum fine of $100,000.

Decisions by the Courts

The press followed the prosecution of Pike River Coal Limited (PRCL) closely and many considered the sentences to be lenient. In that matter, PRCL was convicted under the old Act and therefore faced lesser penalties than those set out in the HSWA. The Department of Labour brought three charges against PRCL (each carrying a maximum of a fine under the old Act of $250,000) and it pleaded guilty to all three charges. In its judgement, the Greymouth District Court fined PRCL $46,800 in total for unsafe work practices.

Although there have been no convictions under the HWSA yet (as the incidents currently before the Courts and at a stage where decisions are being made occurred prior to 4 April 2016), recent decisions by the Courts under the old Act have suggested that a harder line (than in PRCL) seems to have been taken since the introduction of the HSWA.

In November 2016, the Court was asked to determine penalties relating to an incident that involved an employee who was killed when a substance was being transferred from a transport tank to another tank under pressure. The company involved was charged under the old Act and pleaded guilty. The penalties levied on the defendant in this matter were more severe than those in the PRCL case. Here, the company was ordered to pay $140,319.80 in reparation to the victim’s family. Reparation was ordered instead of fines so that the affected persons were compensated as the company was in liquidation and did not have the resources to pay both reparation and fines. However, the Court found that an appropriate fine, in this case, would have been $73,800.


Building a Boundary Fence

The Fencing Act 1978 prescribes the steps that a person must take before building a fence on or near the boundary with a neighbour. It is a three step process:

  1. Send a fencing notice

The neighbour wishing to build, replace or repair a boundary fence must notify the other neighbour(s) about the type of fence and materials to be used, the cost of the fence and the details of when the work will start and who will do it. The notice must also confirm that the neighbour(s) may object and make a proposal of its own or may refuse to accept liability (if good reasons exist to do so) for the cost of the fence.

  1. Objection

The neighbour(s) to whom the fencing notice is given may object to any element of the proposal and may provide a counter proposal.

  1. Build a fence or negotiate

If there is no objection (either because the neighbour does not respond or accept the proposal) within 21 days of the date of the fencing notice, the process is complete and the fence may be constructed as per the fencing notice and the costs split 50/50. However, if there is an objection, the neighbours must come to an agreement and if they cannot do so, either party may refer the matter to a mediator, adjudicator, the Disputes Tribunal or the District Court


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 2017 Newsletter

Introducing Hanna Devlin Family Lawyer

McLeods Lawyers are pleased to introduce the newest lawyer to our team Hanna Devlin, and an extension to our current family law practice to include family court work. We are now available for enquiries relating to all areas of family law from care of children through to estates.

Hanna has been with us since 2015 as our Trust Account Administrator and assisting our partner Sarah Jury. Hanna, originally from England, has spent this time converting her English legal qualifications allowing her to practice as a New Zealand lawyer.  This included spending the last few months of last year travelling to Auckland most weekends, a commitment and dedication that landed her with 3 awards from the College of Law, Auckland. She was admitted as a New Zealand lawyer on 10 February 2017 with our Partner Graeme McLelland as her moving counsel, at Auckland High Court.

Hanna has experience in a range of family law matters, from relationship property to claims under the Protection of Personal and Property Rights Act 1988.  Family law covers many disputes including those related to day-to-day care and contact with children, dissolution of marriage, domestic violence and relationship property claims.

Hanna qualified as a barrister in England and was called to the bar at Middle Temple in 2011. After qualification she spent time gaining experience in criminal law and family law. This included time spent with a judge in the Crown Court and working with barristers at the Old Bailey in London in the criminal field as well as working with clients in the Family Courts. She also spent time volunteering for CAB and with Victim Support, helping people with domestic violence.

After her time honing her criminal and family law experience Hanna worked in-house for an insurance intermediary, specialising in contracts and employment law.

Outside of work, when she is not studying, Hanna loves going to the gym and is a keen runner, completing the Kerikeri Half Marathon, her first of many, in a time of 2 hours, 6 minutes and 29 seconds. She is keen to beat her time and run it in under 2 hours this year.

Hanna’s other passion is travel.  It was during a 7 month OE with her partner and friends that she fell for New Zealand’s charms and natural beauty.  When she returned to the UK her and her partner immediately set about planning their move to Kerikeri, finally moving more than 11,200 miles from Kent, England to Kerikeri.

In Family Law, often the best results come from people trying to work together towards a resolution.  McLeods can help you work through the issues with the aim of achieving positive results.  If you would like advice regarding a family issue, or advice on any of the services we offer, please call us now 09 407 0170 or email Hanna at


The Bright-line Test

In 2015, the government introduced the “bright-line test”, a method which attempts to tighten the property investment rules.

The bright-line test states that (subject to exemptions) any gain from disposing of residential land within two years of acquiring it will be taxable. The test only applies to residential land. Residential land is land that has a dwelling on it or could have a dwelling on it and does not include farms or business premises.

The bright-line test applies where a person’s “first interest” in residential land is acquired on or after 1 October 2015. Generally, a person acquires their “first interest” on the day they enter into an agreement to purchase residential land. The start and end dates may vary depending on the circumstances of each transaction.

For standard sales, the two year bright-line period starts when title for the residential land is transferred to a person under the Land Transfer Act 1952 and ends when the person signs a contract to sell the land. In other situations, such as gifts, the date of “first interest” is the date the title is registered by the donor and the end date is when the donee acquires registered title.

In simple terms, when a person purchases their main home after 1 October 2015 and then sells it within two years, the income they receive for the sale is not taxable. A person can only have one main home to which the bright-line test does not apply. If a person has more than one home, it is the home that the person has the greatest connection with that is considered the main home for the purposes of the test. Factors to assess when determining what constitutes a main home include; how often a person uses the home, where their immediate family is, where their social and economic ties are and whether their personal property is in the home.

The test is based on actual use of the property and not just a person’s intention to use the property as a main home. This exemption cannot be applied on a proportionate basis; therefore, if a house is used only partly as a main home, the exemption does not apply. Where a main home is held in a trust, the exemption is usually available; however, additional information is required to ensure trusts are not used to avoid tax.

A habitual seller cannot use the main home exemption. If a person has used the main home exemption more than twice in the previous two years at the time of selling their property, they are considered a habitual seller. A habitual seller also includes a person who regularly acquires and disposes residential land.  Where property is inherited by a person as a beneficiary and they subsequently sell the property, the disposal will not be subject to tax under the bright-line test. Where property is transferred between partners or spouses under a property relationship agreement, there are no tax implications. However, if the property is subsequently sold; the bright-line test may apply.

There have been cases where tax obligations arose through the disposal of residential property which did not result in financial gain to the seller. As a result, it is highly recommended that specialist advice is obtained in respect of all property transactions.


I have been named an executor of a will, what do I do now?

When a loved one passes away it can be a stressful time for the family, which can be made more difficult when the deceased has not left a Will. Where the deceased has left a Will they will have named their executor or executors (their representative(s)) in that Will.

The role of an executor is to administer the deceased’s estate. This may include settling outstanding debts owed by the deceased, and distributing the deceased’s estate in accordance with the deceased’s Will.

Before an executor can administer the estate of the deceased, they must first obtain Probate.

What is “probate”?

Probate is a court order determining the Will of the deceased as being true and authentic. The executor(s) is/are appointed in this order.  Upon the making of the order, the executor(s) then has/have the legal authority to deal with the deceased’s estate.

How do I apply for probate?

The executor(s) named in a Will must make an application in writing to the Wellington High Court for probate. The application must be in a specific format, as prescribed by a set of rules called the High Court Rules.

An application for probate may be filed in one of two ways either by way of ‘probate in common form’ or by way of ‘probate in solemn form’.

An application for ‘probate in common form’ is usually made on a ‘without notice’ basis, where the application is made without notifying anyone else, on the basis that no one will contest the Will.

In the event that it is highly likely that someone will contest the Will, an application for ‘probate in solemn form’ will need to be filed. In these circumstances the relevant parties will be notified of the application and a trial at High Court will proceed, for which the parties will probably need legal advice.

What would I need to make an application for Probate?

The High Court application fee for obtaining Probate is currently $200.00; this would need to be paid together with the filing of the following documents:

 How long does this process take?

If the Application has been drafted correctly, in the prescribed from, and filed acceptably with the Wellington High Court, it may take four to six weeks to process the application. However, it could take longer if the High Court is busy or the application is complicated.

This timeframe may also be drawn-out in the event that the application has not been drafted correctly and/or the High Court raises issues with the application.  Delays of this nature have the potential to cause a number of problems between the beneficiaries, and can affect an executor’s ability to administer the deceased’s estate, particularly if immediate action is required (which it often is).

With that in mind, legal advice should obtained when making an application for Probate.  Please call our office on 09 407 0170.

Spring/Summer 2016 Newsletter

How well do you know your lease?

The majority of lease arrangements (commercial leases, not residential tenancies) are entered into using the Deed of Lease provided by the Auckland District Law Society. Whether you are a business owner and tenant, or a landlord, it is important that you understand your rights and obligations. How well do you know your lease?

Tenants right to quiet enjoyment

As a tenant, you will typically hold a right to quiet use and enjoyment of the property. Contrary to the wording, this right does not mean you can pursue the landlord for noisy neighbours, rather, it means that the landlord will not interfere with your possession and use of the property. If the landlord were to breach this term, this could give rise to a claim for damages or you could apply for an injunction to stop the interference.

Tenants’ maintenance obligations

Tenants are often responsible for the maintenance and care of the property. Some of the responsibilities that you may not be aware of include:

Liability on assignment of your lease

There are a number of different reasons that tenants assign their leases, for example on sale of a business. An important part of selling your business is ensuring that it is attractive as possible to a potential purchaser. This means making sure that a new tenant can continue to stay in the business premises long term, either by way of a long lease or by providing several rights of renewal. What many people do not realise however, is that the original tenant’s liability does not necessarily end when they assign the lease (and become an “assignor”) to a new tenant.

If you enter into a lease you will typically still be liable for the full current term of that lease regardless of whether you assign to a new tenant. If the new tenant breaches any of the conditions of the lease, you could still be liable for that breach. For example: if the new tenant fails to pay rent, the landlord can often pursue you for the loss, as even after assignment of the lease you can still retain your original contractual obligation to the landlord.

When liability ends

Your liability as assignor will typically end at the expiry of the current lease term in place at the time of assignment. If the purchaser exercises a right to renew after that term has expired, this would effectively be a new lease and you will not be liable for a breach by the new tenant during the new term.

You can limit your risk when assigning your lease by asking the landlord to agree to limit your liability (although they do not have to agree). You could also require the new tenant to provide you with an indemnity; however this does not prevent the landlord recovering from you for any breach of the lease in the first instance.


Trust law: trustees’ duties – are you at risk?

You might have been asked by a friend or family member to be an independent trustee of a Trust. You may also have been appointed as an executor of someone’s estate, which will often also make you a trustee of the estate assets.

Trustees have strict duties to the beneficiaries of the Trust. Most duties are contained in the Trustee Act 1956. In certain situations trustees can be held personally accountable for their actions or for failing to act, so it is important trustees understand their rights and obligations.

 All trustees must know the terms of the Trust (or the terms of the Will as the case may be), and must ensure the Trust (or Will) is managed in an efficient and economic manner. Trustees should take all precautions that an ordinary prudent business person would take in managing similar affairs of his or her own – a trustee must act with care and diligence. An independent trustee is not a ‘rubber stamp’, meaning they must not blindly agree with and follow the instructions of the remaining trustees or settlors; trustees must carefully consider their decisions.

Trustees have a duty to make prudent investments. This duty applies to the methods trustees use to make the investment, rather than looking at the actual results of that investment. A failed investment is not necessarily a breach of trust as long as the trustees acted prudently when choosing that investment.

Trustees must be impartial. They must consider the needs of each beneficiary and have a duty to manage the Trust assets in the best interests of those beneficiaries in accordance with the terms of the Trust deed or Will. Trustees must avoid being in a position of conflict between their duties to the Trust and its beneficiaries.

Trustees are accountable to beneficiaries. They must keep proper accounting records and may be required to give beneficiaries information and explanations as to the investment of and dealings with the Trust property.

A breach of trust by a trustee can mean he or she is personally liable to the beneficiaries for any loss caused, particularly if it was an intentional breach of trust, dishonesty or negligence that caused loss. If a trustee can demonstrate that he or she acted honestly and in good faith and that the breach of the terms of the Trust was unintentional on their part, that trustee would not ordinarily be liable to the beneficiaries for the consequences of their breach.

When a Trust enters into a contract with a third party the trustees will typically be personally liable to ensure that the contract is completed. They may have a right to be indemnified from the assets of the Trust (meaning the liability they incur will be paid for from the Trust assets); however they will lose that right of indemnity if they act in excess of their Trust powers or in breach of their Trust duties. In addition to this, any right to be indemnified is only useful if the Trust actually has realisable assets. Recent case law has seen an independent trustee personally liable for Trust IRD debt, as the remaining trustees had fled the country. While the independent trustee had the right to be indemnified, there were no Trust assets left to cover the debt. The independent trustee paid the IRD debt using their own funds.


Buying a vehicle – is there money owing?

If you are in the process of purchasing a vehicle privately, it is very important to check that there is no money owing on it.

This can be done by conducting a search of the

Personal Property Securities Register (“PPSR”), preferably on the day you are going to pay for the car. The PPSR will confirm whether a ‘security interest’ is registered against the vehicle.

If there is a security interest registered, another person or company could seize your vehicle to pay off any debt relating to that security interest. Even if this debt was incurred by a previous owner, you could still lose your vehicle if the previous owner has failed to repay the debt in full before selling to you.

If there is money owing on the vehicle, the PPSR will record the details of the creditor, and you should ensure the debt is cleared before you buy. That way you can be sure you are buying your vehicle outright.



McLeods Staff

Welcome back to our Practice Manager Emma Webb, who has now returned from maternity leave and is now proud mother of Mason, a brother to Paige.

Our Reception Team

You will all have been greeted by our friendly and knowledgeable reception team of Margaret McLelland and Shirley Rundle.

Margaret has a very pragmatic, can do attitude, she has lived in Kerikeri with her husband Graeme McLelland (partner at McLeods) for over 30 years.

Shirley Rundle is a rebound staff member and has spent many years working at McLeods in different capacities.  Shirley is originally from Barbados and enjoys craft, design and cycling outside the 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.

Winter 2016 Newsletter

Flat mate or de facto partner?

The Property (Relationships) Act 1976 (“The Act”) provides an equal sharing presumption to relationship property for qualifying relationships. Qualifying relationships are marriages, civil unions or de facto relationships that are a minimum of three years in duration.

Section 2D of the Act defines a de facto relationship as a relationship between two persons who are both aged over 18 years, who “live together as a couple” (either heterosexual or same sex relationships) and are not married or in a civil union to one another.

If the parties are under the age of 18 years, the de facto relationship starts from the time the younger partner turns 18 years old.

In determining whether two persons are “living together as a couple”, all circumstances of the de facto relationship are to be taken into account including the matters recorded at section 2(D)(2), which are:

None of the above factors are essential to determine whether the parties are living together as a couple and the Court is entitled to attach such weight to any matter as is appropriate in the circumstances of that relationship.

Marriages and Civil Unions are legal processes, which require the parties to opt in from an agreed commencement date. However, there is no formal process that records the commencement date of de facto relationships. This can lead to the parties unknowingly entering into a legally defined relationship before they chose to declare their relationship (agree that their relationship is serious enough to commit to one another or tell friends and or family they are in a relationship) leading to the Act applying retrospectively, rather than from an agreed date.

This can be financially crippling to parties that may have amassed assets and property prior to the commencement of the de facto relationship as the partner may be entitled to half the value of those assets and property.

The ending of a de facto relationship is a question of fact and occurs either when one partner regards the relationship as over and has communicated that intent to the other partner or one partner dies.

Parties are also able to enter into contemporaneous relationships (marriage and de facto at the same time).

A remedy available to parties is that they are able to contract out of the terms of the Act by way of s21A of the Act. This type of agreement is called a Contracting Out Agreement or otherwise known as “pre-nup”.

If you find yourself in the above situation, gaining legal advice from a lawyer that deals with relationship property law could save you a lot of money in the future.


Property Purchase – Meth testing

Methamphetamine contamination has been described as being so prevalent that it could be worse than the leaky home crisis that affected New Zealand in the late 1990s and early 2000s.

Ministry of Health guidelines do not identify any safe level of methamphetamine contamination, and guidelines around the world vary. In New Zealand, decontamination is recommended if 0.5 micrograms (0.0005g) are detected in one 10cm by 10cm area. If detected, your local Council has powers under the Health Act 1956 to order cleansing of the property and could place a permanent requisition on your property file.

The chemicals used to cook Methamphetamine and the residue from its use can be highly toxic and can linger for a long time after being absorbed into housing materials. Health risks include burns, respiratory and neurological damage. Decontamination can require complete redecoration to the affected area, including replacement of carpets, curtains, and wall linings.


Reform – Health and Safety at Work Act 2015

The Health and Safety at Work Act 2015 (“the Act”) came into force on 4 April 2016. This Act has significant implications for workers and business owners alike, reforming New Zealand’s health and safety system.

The Act introduces the concept of a “person conducting a business or undertaking” (“PCBU”) and sets out a wide range of PCBU obligations – it is important to note that the PCBU concept also applies to entities running businesses, such as companies. The Act also imposes a positive duty on officers of a PCBU (for example a

director of a company or partner in a partnership) to exercise due diligence in ensuring compliance with health and safety regulations, failing which, officers can be personally liable.

For workers, there is an increased emphasis on worker participation and consultation with PCBUs, as well as an obligation on workers to take reasonable care for their own health and safety and not to affect the health and safety of others.

Buildings and Warrants of Fitness

Many commercial and multi-residential buildings require an annual building warrant of fitness (BWOF) to prove that the building’s safety systems have been maintained and inspected. The BWOF is obtained by the building owner and provided to the Council, and must be displayed in the building in a visible place at all times.

Building Warrant of Fitness

The name “Building Warrant of Fitness” can be misleading, because there is no obligation to inspect the building as a whole, and the document makes no statement as to the fitness of the building itself. Rather, it refers only to procedures listed in the compliance schedule that relate to specified systems in the building.

Compliance Schedule

The Building Act 2004 (“the Act”) provides that a building other than a single household unit requires a compliance schedule if it has one or more specified systems. This means most homes will be exempt, but any building that has more than one household (such as an apartment or townhouse) or any building that includes other non-residential uses must have a compliance schedule and annual BWOF, if it contains a specified system. The compliance schedule will state and describe each of the specified systems, state the performance standards, and describe the inspection, maintenance and reporting procedures to be followed in respect of each of those specified systems.

Specified System

A specified system is a system or feature contained in or attached to the building which contributes to the proper functioning of the building, and has been declared by the Governor General to be a specified system for the purposes of the Act. Specified systems include (amongst other things): fire suppression systems (sprinklers); automatic or manual emergency warning systems for fire or other dangers (alarms); electromagnetic automatic doors or windows; emergency lights; riser mains for use by fire services; lifts, escalators and travellators; air conditioning systems; smoke control systems; cable cars; and in some circumstances that typically relate to fire escape, they include smoke separations; fire separations; final exits and communication signs.

Independently Qualified Person

To complete the BWOF an owner will need to obtain certificates of compliance from an independently qualified person who can certify that the inspection, maintenance, and reporting procedures stated in the compliance schedule have been fully complied with during the previous 12 months. Typically this will include certification that any remedial action that may have been needed has been completed. Larger buildings may require several certificates for different specified systems. In addition to these annual inspections, some owners may still be required to carry out minor inspections that are specified to occur daily, weekly or monthly.


For newer buildings, compliance schedules are typically issued as part of the building consent process, however all buildings must still comply. If a building requires a compliance schedule and does not have one, the owner could be liable for a fine up to $20,000, and further fines of $2,000 per day while that offence continues. If a building owner fails to obtain a required BWOF they could be liable for a fine of up to $20,000.

Finally, it is the building owner’s continuing obligation to ensure that each of the specified systems is performing and will continue to perform.



McLeods Staff

Congratulations and all the best to Emma Webb, our Practice Manager, who is about to go on maternity leave for the birth of her second child, a brother for her daughter Paige (and we know she will be eager to re-join us at the end of the year).

We are lucky to have Law Clerk Sacha Yanke re-join us to cover Emma’s maternity leave.

Our Law Clerk Eimear Nelley  will also be returning to us part-time during this period.

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 2016 Newsletter

The Residential Tenancies Amendment Bill – A look at the changes for landlords and tenants

The Residential Tenancies Amendment Bill was introduced to Parliament on 3 December 2015, and with it came a number of interesting proposed changes to the Residential Tenancies Act 1986. Two of the main aims of the Bill are: to improve the safety of residential rental properties by requiring smoke alarms and insulation in all residential rental properties and to make the process around abandoned rental properties more efficient.

Smoke alarms and insulation requirements

The proposed Bill would require a landlord to ensure that their residential rental property has working smoke alarms while making the tenant responsible for changing the alarm batteries and notifying the landlord of any faulty alarms.

The proposed Bill would further require underfloor and ceiling insulation. The requirement in respect of insulation splits residential rental properties into two categories; income-related rent tenancies and all other tenancies. An income-related rent tenancy generally refers to a property where the rent is based on the tenant’s income under the Housing Restructuring and Tenancy Matters Act 1992, but excludes boarding houses. For these income-related rent tenancies, insulation is required from 1 July 2016, while all other rental properties require insulation from 1 July 2019.

Under the proposed amendments a landlord is also required to provide information about the insulation of the premises in the tenancy agreement for the property.

This will include whether there is insulation and if so, the details of that insulation. The Bill proposes that a landlord commits an unlawful act if this information is omitted from the tenancy agreement or if the landlord knows the information is false or misleading.

Overall, the aim of these two requirements is to ensure the health and safety of the occupiers of a residential rental property without imposing excessive costs on a landlord.

 The process around abandoned rental properties

A rental property is an “abandoned rental property” where the tenant is in arrears and has left the property with no obvious intention of returning to it.

The current process under the Residential Tenancies Act 1986 for abandoned rental property cases can take up to six weeks. The Bill proposes a process which will take ten working days after an application is filed with the Tenancy Tribunal. Reducing the time to confirm abandonment of a tenancy will enable a landlord to re-tenant their property, which reduces the loss of rental income.

The Bill also proposes giving a landlord the right to enter the rental premises where the rent is at least 14 days in arrears and where the landlord has reasonable cause to believe that the tenant has abandoned the property. Furthermore, the Bill proposes that a landlord may enter the premises to confirm abandonment if notice has been given to the tenant no less than 24 hours prior to entry.

The Social Services Committee report on the Bill is due on 8 June 2016 which will take into account public submissions about the proposed changes.


The Health and Safety at Work Act 2015 – In force from 4 April 2016

In New Zealand, more than one in ten workers claim for a workplace injury each year. To address this, the new Health and Safety at Work Act 2015 (“the Act”) aims to make New Zealand’s work places safer, part of wide Health and Safety reforms ultimately hoping to reduce the workplace injury and death toll by 25 per cent by 2020.

What does it mean for workers?

The term “worker” is defined widely and includes, but is not limited to; employees, contractors and sub-contractors and their employees, labour hire company employees who have been assigned, students and volunteers.

Two key features affect workers:

  1. Provisions in the Act protect workers against discrimination and negative actions if they feel the need to raise a health and safety concern.
  2. The Act supports more effective engagement and participation with workers. This begins with consultations surrounding policies, and extends to practical, companywide obligations for every worker to abide by regulations and take reasonable care while in the work place.

What does it mean for business owners?

The Act introduces the term “person conducting a business or undertaking” (“PCBU”). This is another wide term which is intended to apply to a broad range of business arrangements.

Some key obligations of the PCBU are;

  1. To take “reasonably practicable” steps to ensure the health and safety of workers. These steps include ensuring that risks are minimised throughout the business; including the work place itself, its fixtures, materials, workers and tasks.
  2. To support and encourage worker participation in all aspects of the health and safety policies and their enforcement and – if requested by employees – appoint and train safety representatives. (The obligations surrounding representatives vary based on the size and nature of the business).

There will be a growing focus on enforcement, along with increased penalties for non-compliance. Any insurance that a company may hold against fines will also have no effect. No businesses, regardless of the size or level of risk are exempt from the obligations in the Act.

 What does it mean for Officers of PCBU’s?

An “Officer” includes, but is not limited to; directors of a company, partners of a partnership, and any person who

is in a position to exercise significant influence over the management of the business.

Officers will now be personally liable for failing to exercise due diligence in ensuring that the business is complying with health and safety regulations even if they were not directly involved in making the decision which contravenes the Act.

Interestingly, Peter Jackson recently resigned as Director of Weta Workshop, apparently due to the level of director involvement that this new Act will encourage. The increased level of personal liability is daunting for those directors who do not, or cannot take a hands-on approach.

When do the changes come into force?

This Act takes effect on the 4th of April 2016. Work Safe New Zealand will provide information on the new legislation to businesses in an attempt to make the transition as seamless as possible. You may choose to consult a lawyer for more specific advice if you think any of these changes may affect you or your business.

Updated agreement for sale and purchase of real estate

Recent changes to the widely used Agreement for Sale and Purchase of Real Estate prepared by the Auckland District Law Society and the Real Estate Institute of New Zealand include:




McLeods Staff – Hanna Devlin

Hanna joined Mcleods Lawyers as a Trust Account Administrator in June 2015, after moving to New Zealand from Kent in the UK.

Hanna obtained a degree in law and criminology from the University of Manchester and went on to qualify as a barrister in the UK in 2011.

Since moving to Kerikeri in February 2015 she has completed the New Zealand law and practice exam, converting her law degree, and is currently undertaking the professional legal studies course in order to qualify as a New Zealand lawyer.

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 2015 Newsletter

Tax changes for settlements and the proposed “bright-line” test

With effect from 1 October 2015, there are new requirements around disclosure of tax information when buying, selling and transferring New Zealand property. There is also a new proposed “bright-line” test that will apply solely to residential land transactions to clarify and supplement the existing laws around taxation of property transactions.

The disclosure changes (which do not apply when the party is dealing with their “main home”) require parties to a property transaction to provide their IRD numbers, and where applicable, their taxpayer identification number from any overseas countries where they have to pay tax on their worldwide income.

Where a Trust is dealing with property, the IRD number to be supplied must be the IRD number for the Trust itself – not the trustees’ personal IRD numbers.

One effect is that entities involved in property transactions (other than in some specific exempt transactions, for example where the property sold satisfies the requirements of the “main home” exemption) will need an IRD number to complete the transaction. It is therefore advisable to consider the time it may take for you to obtain an IRD number when agreeing to timeframes in any property transaction.

Tying into the new disclosure requirements is the proposed bright-line test that will apply to residential property transactions entered into on or after 1 October 2015. This proposed test (which has not as yet been enacted and may be subject to changes before being passed) is intended to complement our current property tax rules.

The bright-line test is expected to require income tax to be paid on any gains made from the sale of residential property within two years of purchase. The current proposed exceptions are if the transaction relates to the “main home”, to a relationship property transfer, or to inherited property.

Under existing law, gains from the sale of land can already be taxed as income if that land was acquired for the purpose or intention of disposing of the land. This law remains unchanged, but has proved problematic for the IRD to implement as the IRD cannot always prove intention on the part of the taxpayer. The proposed bright-line test was introduced in part to resolve this problem for the IRD.

As the bright-line test is only intended to apply to residential land, there is also an associated definition of residential land. Residential land means land that has a dwelling on it, or for which there is an arrangement to build a dwelling, or bare land that is capable of having a dwelling on it due to its area and nature.

If you are involved in or anticipating entering into a property transaction in the near future it is important that you make sure you can comply with these new disclosure requirements and have considered the bright-line test and its potential effect.


Trust and relationship property – what does Clayton v Clayton mean for me?

Clayton v Clayton [2015] NZCA 30 (‘Clayton’) considers whether property owned by a particular Trust is relationship property for the purposes of the Property (Relationship) Act 1976 (‘the Act’).

Relevant facts

Mr and Mrs Clayton separated in 2006 after 17 years of marriage. During the marriage, Mr Clayton established a number of Trusts, including the Vaughan Road Property Trust (‘the Trust’). The discretionary beneficiaries of the Trust were Mr Clayton and Mrs Clayton, together with their two children, who were also the Trust’s final beneficiaries. The Trust Deed nominated Mr Clayton as the ‘Principal Family Member’, which conferred on him certain powers including: exclusive powers of

appointment and removal of trustees and beneficiaries, wide powers that permitted the Trustees to act contrary to the benefit of the Trust’s beneficiaries, and the power to distribute Trust assets to himself.

Family Court decision

The Family Court held that the Trust’s assets were relationship property for the purposes of the Act, as the Trust was “illusory”. It was held to be an illusory Trust because the powers conferred upon the Trustees hamstrung the ability of the Trust’s beneficiaries to hold the Trustees to account. This type of administration over the Trust was described as a “convenient structure for commercial purposes, carrying few hallmarks of a Trust”.

High Court decision

On appeal, the High Court also held that the Trust was “illusory” but for different reasons. The High Court held that the powers conferred on Mr Clayton were analogous to ownership over the Trust’s assets, allowing Mr Clayton to manage the Trust’s assets, as though the Trust itself did not exist. As a result the High Court held that the Trust’s assets were relationship property for the purposes of the Act.

Court of Appeal decision

On appeal, the Court of Appeal disagreed that the Trust was “illusory” and concluded that the Trust was valid. However, the Court considered the wide definition of property in the Act, which defines property to include “any other right or interest”. The Court held that Mr Clayton’s power to appoint and remove beneficiaries met that definition. As a result the Trust’s assets were relationship property for the purposes of the Act. The Court went on to hold that the value of Mr Clayton’s powers would be equal to the value of the Trust’s assets.

Practical implications

The Supreme Court is yet to deliver its judgement; however, the Family Court, High Court and the Court of Appeal all reached the same conclusion; that the Trust’s assets were relationship property for the purposes of the Act, but for different reasons.

The Court of Appeal’s decision means that Trust powers may now be possibly defined as relationship property for the purposes of the Act, despite being sheltered behind a validly constructed Trust.

While the implications of Clayton are fact specific, it is a current reminder of the critical importance of both effective asset planning and Trust drafting. Clayton compels those drafting Trust Deeds to carefully contemplate the nature and extent of Trust powers. If you think your situation may be effected by the decision of Clayton it is recommended that you seek professional legal advice.


Selling a business – things to consider

Why are you selling? Probably the most important question, this can affect how the transaction is structured and timing.

Finally, when do you need to sell? A common theme here is that there are many things you can do to make your business more attractive (and therefore more valuable and easier to sell), but they can take time. Seek advice early to ensure you are on the right track.

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 2015 Newsletter

Changes to the Companies Act 1993

Company directors should be aware of the changes to the Companies Act 1993 (the Act) that became law on 24 June 2014. Some changes took immediate effect while others will be implemented later this year. This article focuses on two key changes: new criminal offences and registration of companies.

New criminal offences

One change, now in force, was the creation of new criminal offences for serious breaches of directors’ duties. It is now an offence where:

These changes were introduced following the widescale collapse of finance companies between 2006 and 2012. The collapse of these companies left many ‘mum and dad investors’ stripped of their nest eggs. There was concern following the collapse of these companies that it was sometimes not possible to take action against directors for their reckless or dishonest conduct (although many were prosecuted under provisions in the Securities Act, Financial Reporting Act and the Crimes Act). In introducing the new offences, the Government sought to balance the effect of potential criminal liability deterring people from becoming directors or taking business risk, against the need to deter dishonesty and prevent the substantial harm resulting from breaches of directors’ duties.

The new offences require that the mental elements of dishonesty, bad faith, knowledge and belief must be proved beyond reasonable doubt. These are high thresholds, and should put honest directors at ease.

Registration of companies

Other changes to the Act relate to the registration of companies. For companies that were formed before 1 May 2015 (existing companies), these changes are being introduced in a staggered way.

Since 1 July 2015 existing companies have been required to provide the Registrar of Companies the dates and places of birth of all directors and details of any Ultimate Holding Company (if applicable). The personal details of directors will not be publicly available, however details of any Ultimate Holding Company will be publicly available.

From 28 October 2015, existing companies will need to ensure they have at least one director that either lives in New Zealand, or who lives in Australia and is also the director of a company incorporated in Australia. Details of that Australian company must be provided to the Registrar (which includes ACN, name and registered office address). This requirement already applies for all newly incorporated companies.

All this information will be required in order to file an annual return. Failure to file an annual return will result in steps being taken to remove the company from the register.

These changes have been made in an attempt to protect New Zealand’s international reputation, by seeking to reduce the misuse of the New Zealand company registration process by overseas individuals and groups, who have used companies incorporated in New Zealand to facilitate crime.

Other changes include enhancing the powers of the Registrar of Companies and changes to the provisions about changing control of companies, to align the Act with the provisions of the Takeovers Code.

For more information about how these changes might affect you, contact us for advice.

Passing away without a will – what happens to your Estate?

When a person passes away without a Will, the Administration Act 1969 (Act) sets out how the Estate of the deceased will be distributed.

Firstly, the family (or other potential representatives) need to determine the value of the assets in the Estate. Where the value is less than $15,000 the process is more straightforward, and letters of administration are not required. For Estates worth more than $15,000, letters of administration will need to be obtained.

The Act sets out the process for applying for letters of administration including who may apply, who the eventual beneficiaries will be, and what share of the Estate they will receive.

Where the deceased leaves behind a surviving spouse, civil union partner or de facto partner, this person is entitled to a grant of letters of administration. If there is no surviving partner or spouse, the deceased’s children may apply, or, failing children, a grandchild may apply. The Act contains further provisions for circumstances where someone else has to apply.

Once an administrator is appointed by the High Court, that person then has authority to deal with Estate assets, and those assets are then called in. For example, real estate or shares can be sold, and funds in bank accounts in the name of the deceased can be withdrawn so that all liquidated Estate assets are held in the same account in anticipation of distribution. The Administrator is then tasked to ensure that the Estate is distributed in accordance with the Act. Section 77 of the Act provides an exhaustive list that determines who the beneficiaries of the Estate are, and what they are to receive. For example, if the deceased leaves behind a surviving spouse and children, the Estate is divided as follows:

Any jointly owned property (including jointly owned family homes and bank accounts) will pass to the surviving joint owner regardless of the provisions of the Act,

Depending on who does or does not survive the deceased, the beneficiaries of the estate could also include siblings, parents, grandparents, aunts or uncles. Where none of these classes of beneficiaries exist, the Estate vests in the Crown. The Crown has a discretion under the Act to provide for dependants of the deceased, and persons for whom the deceased might reasonably have been expected to make provision.

These guidelines show the importance of executing a Will where the provisions of the Act do not reflect your wishes. For example, you may wish to make direct provision for nieces and nephews who are not explicitly provided for in the Act, or apportionment of assets under the Act may not be in accordance with your wishes.

If you have any concerns please contact us on 09 407 0170 or email


Building contracts & retention sums

Many building contracts will be drafted with progress payments falling due throughout the building process and with the final payment being due on “practical completion”. Practical completion is usually when the job is mostly completed, except for minor cosmetic works, and before the Council issues their Code Compliance Certificate (CCC). A CCC confirms the works have been completed in accordance with the building consent.

To protect your position as owner, we recommend at a minimum that the contract is checked and amended in two ways. Firstly, the progress payments should only be enough to cover the work that had been completed up to the date of that payment. Secondly, the final payment should not be paid until after the Council has issued their CCC. This is because the final inspection can determine that more work is required before the CCC is provided. If your builder has already been paid in full, they can be reluctant (or slow) in completing that final work for you


Building your new home – why include a sunset clause?

When building a new home, there are several important steps in the process that have potential to delay final completion date. In some circumstances for example you may be waiting for a subdivision and new title to issue, or there may be an issue with the build that delays or prevents the issue of the Code Compliance Certificate (CCC).

Delays do not automatically give you a right to cancel a contract. It is important therefore to protect your position in the event of unforeseen delays.

A “sunset clause” sets a date by which something must happen – this may be issue of the certificate of title for the property or the CCC. Where the date set down passes and the title or CCC hasn’t been issued, you can cancel the agreement and avoid being locked into an agreement indefinitely.

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 2015 Newsletter

Property sales – disclosure

The principle of ‘caveat emptor’, or “let the buyer beware”, applies to buying property. Purchasers are always advised to complete their own thorough due diligence investigation before they buy.

It is important however to remember that despite caveat emptor, the people involved in selling a property (i.e. the vendor and in particular, the real estate agent) have significant obligations to disclose information to the purchaser. These requirements are in place to protect the purchaser.

A real estate agent, as a licensee under the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 (the Rules), cannot rely on caveat emptor when involved in the sale of a property. The obligations on a licensee under the Rules require, at a minimum, that an agent discloses known defects to a customer. Clearly, where an agent has knowledge of an issue with a property, the only appropriate course of action is to advise prospective purchasers.

In some situations, the Rules require an agent to go further than simply disclosing known defects. Rule 10.7 states that where it would appear likely to a reasonably competent licensee that land may be subject to a hidden or underlying defect, the licensee must obtain confirmation from their vendor client and expert evidence that the land is not subject to the defect, or ensure the purchaser is informed so that they can commission expert advice should they choose to do so.

An example where rule 10.7 would apply, is where a house was built in a particular time period using particular materials, the combination of which are commonly associated with a risk of weather tightness issues. Regardless of whether a client vendor discusses this issue or not, an agent is expected to take appropriate action as described above to investigate (and possibly disclose) this risk as part of their obligations.

If a situation arose where a vendor directs an agent to withhold information in respect of defects, an agent must stop acting for that vendor as required by rule 10.8. Such an obligation should provide some comfort to purchasers that an agent cannot simply stay silent on any issue, even if that is what their vendor client wants.

The provisions of the Rules only apply to licensees, so obligations on the vendor in a private sale with no vendor’s agent are not as well defined. However, most sales of real estate use as a template the ADLS / REINZ Agreement for Sale and Purchase form. This form includes a comprehensive list of vendor’s warranties, for example the vendor warrants that building works at the property completed by that vendor have been properly consented.

While purchasers must complete their own investigations on a property, they can take some comfort in the obligations around disclosure on the people involved in selling property. A combination of upfront clear questions about a property and an understanding of these disclosure obligations is the best recipe for uncovering any issues and avoiding problems down the line.

Speak no evil – non-disparagement provisions in employment settlement agreements

The media love reporting on salacious details of employment disputes before the Employment Relations Authority (ERA) and Employment Court, by trumpeting headlines like “Sacked worker who took worthless magazine gets $9,000”. Many employers and employees, however, choose to avoid the glare of publicity by resolving employment disputes with settlement agreements.

Settlement agreements are confidential, keeping matters from the glare of publicity. Settlement agreements also often have a term preventing either party from speaking badly of each other, known as a non-disparagement provision. Several recent ERA decisions have examined the issue of breaches of these non-disparagement provisions in settlement agreements.

In Kea Petroleum Holdings Limited v McLeod [2014] NZERA Wellington 113, a settlement agreement between the parties included a term that Ms McLeod would not “disparage or speak ill of the company…or its officers.” However, Ms McLeod posted articles on Facebook, including allegations that Kea’s managing director had made “false statements” and “disrespected shareholders by lying to them.” Kea sought a financial penalty against Ms McLeod for breaching the settlement agreement. The ERA found that Ms McLeod’s statements regarding the managing director were disparaging. The ERA also observed that Kea paid a “substantial sum of money” to Ms McLeod to resolve an employment relationship problem. In return she agreed not to pursue her personal grievance and not to disparage or speak ill of the company. The ERA found Ms McLeod breached the settlement agreement, and ordered her to pay a penalty of $2,000.

In Jacks Hardware and Timber Limited v Beentjes [2015] NZERA Christchurch 29, the parties signed a settlement agreement with a non-disparagement provision. Mr Beentjes then sent text messages to a current employee calling the director of Jacks Hardware a “sociopath”, alleging the current employee was lying, calling another staff member a “sycophantic sociopath” and accused Jacks Hardware of hushing up his allegations. The ERA found the text messages breached the non-disparagement provision and were flagrant, deliberate and ongoing. The ERA imposed a penalty of $2,500 against Mr Beentjes.

In Simpro Software New Zealand Limited v Nuttall [2015] NZERA Auckland 64, the parties entered into a settlement agreement requiring Mr Nuttall to desist from publishing “any statement which would be construed as being degrading, defamatory, negative or disparaging against Simpro and its agents, officers, directors or personnel.” Mr Nuttall published a comment on a Xero blog site that referred to Simpro software as “a pile of crap” and “a waste of space”. Simpro sought an order from the ERA that Mr Nuttall comply with the non-disparagement provision. The ERA found Mr Nuttall in breach of the provision, and ordered he immediately comply. While Simpro did not seek a financial penalty, the ERA noted that Simpro could have asked for a penalty, indicating the ERA would likely have ordered a penalty.

These cases are a clear warning to employees to take settlement agreements seriously, including the requirement not to speak ill of their former employers, and gives hope to employers wanting to enforce settlement agreements when their former employees do not comply.

Building Amendment Act 2013 update

From 1 January 2015 the Building Amendment Act 2013 (the Act) changed the rules around residential building works. These include the following:
• Works worth more than $30,000 now require a written contract including the building timeframe, the process for varying the contract and the dispute resolution process.
• For works worth more than $30,000, or if requested, a prescribed checklist must be provided together with information about the legal status of the builder, their dispute history, their skills, qualifications and licensing status.
• Work done to a household unit may automatically include a one year defect liability period in which the builder can be required to remedy defects.

The Act also provides implied warranties in all works, that:
• the work will be completed within a stated or reasonable time and will be in accordance with the plans, the building consent, all laws and legal requirements and with all reasonable care and skill in a proper and competent manner, and
• supplied materials will be new (unless otherwise agreed) and suitable for the purpose for which they will be used

Should you pay a deposit?

Payment of deposits has become a normal part of everyday business, being commonplace in transactions from house purchases to building work.

However, what is best practice? There is always risk involved when paying money and receiving nothing tangible in return. What happens, for example, if a company or natural person becomes insolvent before completing the work you paid the deposit for? What if a property vendor has spent your deposit but cannot complete settlement on the day, because they owe their bank too much? Typically, you may then find yourself an unsecured creditor and it is quite possible that you will not recover all of your money.

While loss of a deposit happens rarely, you should consider the risk when paying a deposit. For example, is the other party solvent? Always seek to pay the smallest amount possible and consider requiring security to be granted in return. In property transactions you should consider requiring a deposit to be held in trust as stakeholder until risks have been assessed and minimised.

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.