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www.adls.org.nzISSUE 7 20 MARCH 2015

By Geoff Hardy, Principal, Madison Hardy, Auckland

When companies get into financial trouble, their owners obviously know about it long before anyone else does.

So knowing that the future is looking shaky and there might not be enough money to go around, they usually pay themselves and the creditors who they care about the most, in preference to anyone else.

That means that the favoured creditors are laughing all the way to the bank, while the others are left out in the cold.

A couple of centuries ago, the English Parliament decided that was wrong, so the voidable preferences law came into being. Basically, it required the favoured creditors to hand the money back, so it could be shared equally amongst all the creditors, not just the lucky ones. We adopted a similar law in 1883 and it has been with us ever since, although it has proved so problematic, the Government keeps changing it.

The main problem with the original law was that, Continued on page 2

LAWNEWS

THIS ISSUE:

Voidable transactions – some clarity at lastConstruction contracts – building warranties tough

Feedback on legal aid and fixed fees

+ Liquidations, voidable transactions

THE SUPREME COURT CLARIFIES VOIDABLE TRANSACTIONS LAW

before the money could be clawed back from a particular creditor, it was necessary to prove that the company had paid that creditor with the deliberate intention of allowing him to jump the queue.

In practice, it was very hard to prove there was that intention, when there was little evidence available, and the lucky creditor denied it strenuously.

So when our Companies Act 1993 was enacted, Parliament decided to get rid of the “intention” requirement. Instead, the law now said that if the company paid you money in the two years before

it went into liquidation, and that amount was more than you would have got if you had simply waited for the liquidation to run its course, then you had to give the money back to the liquidator to be shared amongst all the creditors. It did not matter whether your customer had intended that you jumped the queue; the mere fact that you had jumped the queue was sufficient.

However, it was recognised that this would be a little unfair if there were not exceptions to the rule. It would be a hopeless situation if every business that provides goods or services on

ADLSI marked the end of a very successful year at its recent Annual General Meeting, at which highlights and key achievements from the Annual Report were recognised. For more, please turn to pages 4 and 5.

PAGE 2 - ISSUE 7, 20 MARCH 2015

credit (which is most businesses) had to wait for two years to find out if they got to keep their money or not.

There has to be a balance between the rights of all creditors to share equally in the assets of the insolvent company, and the rights of individual creditors to do business with some certainty about their cash flow.

So from 1993 to 2006, the Government experimented with a number of different exceptions, and eventually settled on the current version which has been with us since 2007. Despite the fact that it has been in force for eight years, there has been continued debate about its meaning, and that debate has finally been settled by the release of the Supreme Court’s judgment in Allied Concrete Ltd v Meltzer and Hayward [2015] NZSC 7 on 18 February 2015.

This is how our voidable transactions law currently operates:

• Your customer must have paid you at a time when it was unable to pay its due debts (whether you knew it was in trouble or not).

• Your customer must have later gone into liquidation (either voluntarily, or as a result of a court ruling).

• You must have received your payment within the period of two years leading up to your customer’s liquidation (the precise period varies, but it is roughly two years).

• You must be better off as a result of that payment, than you would have been if instead you had claimed for your share of the funds available for creditors in the liquidation (you will almost always be better off).

As you can see, it is not hard to satisfy those criteria. But even if you tick all of the above boxes, a defence is available which (if it applies) can allow you to keep your money. To qualify for this defence, you must satisfy the following criteria:

• You must have acted in good faith.

• A reasonable person would not have suspected that your customer was in financial trouble and you must have had no reasonable grounds for suspecting it.

+ Liquidations, voidable transactions

THE SUPREME COURT CLARIFIES VOIDABLE TRANSACTIONS LAWContinued from page 1

Editor: Lisa Clark

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©COPYRIGHT. Material from this newsletter must not be reproduced in whole or part without permission. Law News is published by Auckland District Law Society Inc., 2 Chancery Street, Auckland.

LAW NEWS is an official publication of Auckland District Law Society Inc. (ADLSI).

The Supreme Court ruling will still not placate those creditors who manage to coerce payment out of debtors who they know or suspect are going down the gurgler. They will still be required to give up the debt recoveries they worked so hard to obtain, ostensibly for the benefit of their fellow creditors.

• You must have given value for the payment or altered your position in the reasonably held belief that the payment was yours to keep.

It is that last criterion that the Supreme Court has clarified for us. It ruled that you do not have to have given something extra to the customer at the time of receiving the payment. It is sufficient if you gave something in the first place in return for the debt (the products or services you supplied, for example). So that basically makes the third criterion irrelevant in the majority of cases.

It is the second criterion that catches creditors out more often, particularly if the customer went on record as admitting that it could not pay its debts – for example if it tried to strike a deal with its creditors, or asked you for additional time to trade out of its difficulties. In that case, you may have a problem on your hands.

The Supreme Court ruling was a complete reversal of the Court of Appeal’s, and their contrasting interpretations illustrate the classic tension between the egalitarian approach and the laissez-faire approach to insolvency law.

However, not even the Supreme Court judgment will placate those creditors who, through their own diligence and superior credit management skills, manage to coerce payment out of debtors who they know or suspect are going down the gurgler. They will still be required to give up the debt recoveries they worked so hard to obtain, ostensibly for the benefit of their fellow creditors.

Furthermore, they will discover to their chagrin that the money they are required to disgorge will in general not be shared pari passu among the unsecured creditors, but instead will be divided up amongst the secured and preferential creditors who rank above them.

In that respect our voidable transactions law still favours the indolent at the expense of the industrious, and it will continue to cause resentment despite the recent Supreme Court judgment.

Geoff specialises in commercial and construction law, and is the proprietor and senior lawyer at Madison Hardy. He was an ADLSI Councillor from 2006-11 and Vice-President from 2009-10, and has been the Convenor of ADLSI’s CPD Committee since 2010. LN

Geoff Hardy


By Janine Stewart, Partner, and Helena Hallagan, Solicitor, Minter Ellison Rudd Watts Lawyers

“Fitness for purpose” warranties can be expressly agreed or implied in construction contracts or consultancy agreements to ensure that, whatever is being designed, built or supplied is fit for its intended purpose. In practice, these warranties can be misunderstood, especially when the contract documents underpinning the project fail to properly define or make known to the warrantor the purpose that their works or materials must meet. This article examines what express and implied fitness for purpose warranties mean for contracting parties, when parties could be caught “unaware” of their fitness for purpose obligations, and other potential risks.

When does a fitness for purpose warranty form part of a contract?

A warranty that building works or materials will be “fit for purpose” can be incorporated into a contract via express agreement or can otherwise be implied by statute or common law. For the warranty to have effect, the principal must have made known to the contractor or consultant (expressly or impliedly) the purpose for which the construction works or materials are required, and there must be reliance by the principal on the other party’s skill and judgment to meet that purpose.

Express fitness for purpose warranties

Express fitness for purpose warranties can be comprehensive and require the works to meet detailed criteria. Conversely, such warranties can be vague and purport to warrant the general “suitability” of the works carried out or materials supplied. The courts will interpret fitness for purpose with reference to what is reasonable in the circumstances and whether or not the matter is “trifling” (Finch Motors Ltd v Quin (No 2) [1980] 2 NZLR 519 at page 524 – while this is a case under the Sale of Goods Act 1908, such cases nevertheless provide guidance for how courts will assess fitness for purpose warranties). For example, if a purchaser has made it explicitly clear to the vendor that he or she is relying on the vendor’s skill and judgment to supply a car fit for the purpose of towing a large boat, the colour of the car is probably a trifling matter; unless the purchaser has made it expressly known that the aesthetic appearance of the car is important.

In the construction context, detailed fitness for purpose warranties that refer to the principal’s requirements or project specifications are likely to be upheld by the courts. This is because the principal can point to specific contract documents, perhaps in the Request for Proposal, Invitation to Tender or Client Brief, that list written objectives that the project (and the warrantor) are expected to meet. Many construction projects do contain high level statements of intent and there are other processes (such as project control group meetings) where particular purposes may be

+ Construction law, contract law

Fitness for purpose – what does it mean?

expressly communicated by the principal to the party providing the warranty.

Fitness for purpose is performance-assessed, meaning that if the works or materials do not meet the required purpose, issues relating to causation or negligence become secondary to that assessment. For example, in Pipes NZ Ltd v Steel Co Ltd [2014] NZHC 1216, the plaintiff relied on the defendant to select a competent manufacturer to produce pipes fit for use in a hydro dam. The defendant had numerous contacts in China and worked with the mills there regularly. When the pipes arrived from China with defects (rendering them unfit for use), Thomas J held that the loss fell on the defendant, regardless of fault (at [85], citing B Bullock & Co Ltd v Matthews CA265/98, 18 December 1998).

Similarly, if construction works or materials do not meet the purpose expressly agreed, the warrantor will be strictly liable under its fitness for purpose warranty, regardless of how much care was taken. For this reason, there are objections to fitness for purpose warranties in the industry, especially from design consultants. Objections also arise due to the difficulty in obtaining insurance for duties that extend beyond the exercise of reasonable skill and care.

Industry standards can be considered by the courts in their assessment of fitness for purpose and a warrantor’s adherence to accepted standards may be persuasive evidence that works or materials are fit for purpose. While industry standards may not be legally binding on the parties due to their contract, there is arguably a commercial expectation that the product will meet the standards set for it (see Herbert Construction Company Ltd v Carter Holt Harvey Ltd [2013] NZHC 780 at [26]). However, breach of a standard does not, in itself, constitute a breach of a fitness for purpose warranty. The courts will look to whether the warrantor was under any obligation to comply with the particular standard (Amcor Trading Pty Ltd v Metal Roofing & Cladding Pty Ltd [1999] QSC 42 at [25]).

Principals should be aware that courts will not interpret ambiguous fitness for purpose warranties as an indemnity against risks that

were not properly identified or allocated in contract. For example, builders who used bricks that deteriorated from exposure to salty and “highly unusual” ground conditions were excused from liability under their broadly-drafted fitness for purpose warranty, due to the unforeseeable conditions (Barton v Stiff [2006] VSC 307). Express warranties would be best qualified by an objective standard of reasonableness, to avoid being read down by the courts.

New Zealand’s standard form design and construct contract (NZS 3916:2013) does not contain a fitness for purpose clause. Contracting parties can nevertheless agree that the works will “be completed in compliance with the principal’s requirements”. The advantage of this wording, from a principal’s perspective, is that it has the same effect as a fitness for purpose clause, without limiting “fitness for purpose” to one provision. Contractors, on the other hand, will want the purpose of the works to be narrowly and precisely defined in one contract clause or one specification. Either way, to be reliably enforceable, fitness for purpose warranties should define the purpose of the project with reference to clearly articulated performance standards or requirements. If the contract is silent on fitness for purpose, parties risk being stung by an implied warranty, especially where one party is relying on the expertise of the other.

Implied fitness for purpose warranties

Fitness for purpose obligations can be implied by statute or common law. Residential building owners benefit from implied fitness for purpose warranties in the Building Act 2004 and the Consumer Guarantees Act 1993. The Sale of Goods Act 1908 does not technically apply to construction contracts. However, due to recognised similarities between the supply of goods and the supply of labour and materials at common law (Young & Marten Ltd v McManus Childs Ltd [1969] 1 A.C. 454), the courts will not necessarily deny parties to a construction contract rights which they would otherwise have if the contract had been a sale of goods, rather than a contract for the supply of materials (Polymer Systems (1999) Ltd v Montgomerie

Helena HallaganJanine Stewart

Continued on page 10


+ Update from ADLSI

ADLSI rounds out a highly successful 2014 ADLSI held its Annual General Meeting (AGM) on Thursday 5 March 2015 and celebrated a year of significant achievements.

ADLSI President Brian Keene QC was confirmed under the organisation’s Rules as President for 2015 (to unanimous applause). He spoke to the Annual Report for the year ended 30 September 2014 (which was approved at the meeting) and drew attention to the pleasing results and progress set out therein.

Elected Council Members Joanna Pidgeon, Stephanie Nicolson, David Roughan, Mary Anne Shanahan, William Spring were confirmed and will continue to serve in 2015, as will Appointed Councillors John Brandts-Giesen, Vikki Brannagan and John Hagen.

A number of key highlights for 2014 were discussed at the AGM and touched on in more details in the Annual Report.

Financial performance

2014 was a successful year for ADLSI - as predicted at the last AGM, a 2013 deficit of $283,923 was turned around and became a surplus of $270,313 for the year ending 30 September 2014. This result supported the investment decisions made in the previous year.

Membership

Brian Keene QC expressed gratitude to the loyalty of ADLSI’s membership. As he noted in the Annual Report, “ADLSI is, at heart, a member benefit organisation. Our members are front and centre to all our activities.” In that vein, it was very pleasing to see significant increases in membership levels last year, due principally to our improved services (particularly CPD) but also recruitment activity both in Auckland and throughout New Zealand.

ADLSI’s target of 3000 members was met in the 2013-2014 year, with close to 700 new members joining the organisation by 30 September 2014 and growth continuing at a good pace in the first half of 2015. It was particularly pleasing to note that a third of all new lawyer members are from outside of Auckland, further consolidating our position as an independent, national society for New Zealand lawyers.

CPD

CPD registrations grew by 100%, which was a huge achievement assisted by the continued growth of participation in online CPD. The implementation of CPD live-streaming was a significant development this year which followed 15 months of research and hard work. Live-streaming allows lawyers throughout New Zealand to engage in meaningful, cost-efficient and compliant CPD and to feel more connected with the profession.

CPD events were held both in Auckland and in other centres, including a half-day property law conference and the annual Cradle to Grave event in Christchurch, and an employment law workshop in Whangarei.

ADLSI was the first to implement CPD-compliant On Demand recorded webinars and seminars with an interactive component. More than 40 titles are now available on demand. The online CPD Plan and Record tool, developed by ADLSI, has also been very well-received and will continue to be available free to all lawyers and law firms in New Zealand.

Key relationships

ADLSI is engaged with the judiciary on a number of levels, including through CPD events, Committees and collegiality events. Likewise, relations with the universities have been significantly strengthened, including support of young people in the law who are involved with the University of Auckland’s Equal Justice Project. ADLSI has also weighed in on the issue of independence and flexibility in the size of university councils, amongst other issues.

Media and communications

Communication with members remains a top priority for the organisation. Engagement with the media has also progressively developed during the year, giving important issues the attention they deserve, and (of course!) ADLSI continues to produce Law News and the Bulletin each week.

Collegiality

In addition to continued membership growth and enhancement of member services, we will be focusing on a number of projects in the coming year, including legal forms, initiatives for our young lawyer members, outreach and social media.

Member Benefits

Our Member Benefits Programme was refreshed and the line-up of partners updated to offer greater relevance and support for a

national membership.

Focuses for the coming year

New initiatives in the collegial, professional development and practice assistance areas are planned for 2014-15 and beyond.

Committees

ADLSI’s Committees continue to attract experts in their fields, positioning ADLSI at the forefront of new legislation and regulations and enabling us to take a stand on the issues that matter. Our Committees also help educate and inform ADLSI members by contributing to CPD events and by publishing regularly in Law News. As noted by Brian Keene QC, “Committees are the legal intellectual life blood of the Society. Without them we would be but a shadow of our present organisation.” Some snapshots of Committee activity for the year are set out below:

• The Technology and Law Committee produced a number of articles, including a Technology & Law Special Edition of Law News. It also made submissions to the Justice and Electoral Committee on the Harmful Digital Communications Bill.

• The Family Law Committee reinstated its Family Law Mentoring Programme. It regularly consults with the Ministry of Justice, Legal Aid Services and court management across the Auckland region on a wide variety of initiatives.

• The Commercial Law Committee engaged with the Ministry of Business, Innovation and Employment’s Companies Office Integrity and Enforcement Team regarding the incorporation of companies with non-resident directors. It made submissions to the Commerce Commission on the draft Unfair Contact Terms Guidelines.

• The Immigration and Refugee Law Committee consulted frequently this year with, amongst others, the Immigration Advisers Authority, Immigration New Zealand and the Ministry of Justice. The Committee hosted the Minister of Immigration at the annual ADLSl lmmigration & Refugee Law Dinner.

• The Criminal Law Committee continues to work to improve the management of professional visits at Mount Eden and other Corrections facilities. It engages regularly with the Auckland Crown Solicitor, the Ministry of Justice, Corrections and the Auckland District Court, successfully resolving significant issues including problems with residential bail conditions.

• The Employment Law Committee has engaged with the Employment Court, WorkSafe New Zealand, and the Employment Relations Authority and continues to administer the Employment Court Pro Bono Scheme. It also hosted

Continued on page 5

Brian Keene QC


ADLSI invites members of the legal profession to come together and honour the Hon Dame Silvia Cartwright at a dinner to be held at the Northern Club on Friday 8 May 2015.

ADLSI would be delighted if you would join us for this convivial evening to honour Dame Silvia Cartwright’s distinguished contribution to law and her rise to the role of Governor-General of New Zealand.

Date: Friday, 8 May 2015Timing: 7.00pm Arrival and drinks 7.30pm DinnerVenue: The Northern Club 19 Princes Street Auckland

+ ADLSI event

Law Dinner to honour the Honourable Dame Silvia Cartwright PCNZM, DBE, QSO

Dress code: Black tie

Tickets: $105.00 + GST ($120.75 incl GST) per ticket for ADLSI members and current and retired members of the judiciary; $135.00 + GST ($155.25 incl GST) per ticket for non-members

To register for this dinner, please visit www.adls.org.nz; alternatively contact [email protected] or 09 303 5287. Spaces are limited so register before 29 April 2015 to secure your space, subject to availability.

ADLSI’s standard cancellation policy applies for this event.

Dame Silvia Cartwright

Continued from page 4

its popular annual Employment Law Dinner and Burning Issues Forum and supported an employment law workshop in Whangarei.

• The Environment and Resource Management Law Committee made submissions to the Environment Court on its recent draft Practice Note and continues to keep members abreast of important case law developments and developments in relation to the Auckland Unitary Plan.

• The Civil Litigation Committee continues to engage with the Rules Committee and the Ministry of Justice, with Committee members also participating in the Auckland District Court Liaison meetings.

• The Public Issues Committee considered issues such as lay advocacy in the Employment Court, concerns for owners of earthquake prone buildings and the teaching of civics in schools.

• The Courthouse Liaison Committee engaged with the Ministry of Justice and the Court managers during the Manukau courthouse rebuild and obtained contact details and other useful information for practitioners.

• The Property Law Committee wrote a number of articles in Law News on topics such as the New Zealand Real Estate Trust and the dangers of properties that may have previously been used as P Labs. It also engaged with Payments NZ, the Ministry of Business, Innovation and Employment, Auckland Council and Land Information New Zealand on the topics including same-day cleared payments and body corporate managers.

• The Property Disputes Committee presided over a matter arising from the sale of a unit title and undertook an extensive review of its Rulings Manual which continues to be an invaluable tool for property lawyers in New Zealand.

• The Documents and Precedents Committee successfully updated the deed of lease suite as well as the business and auction agreements. It released four new documents and updated six chapters of ADLSl’s Legal Practice Manual.

• The Mental Health & Disability Law Committee administered the roster and guidelines for mental health lawyers in Auckland and South Auckland and lobbied to protect the right of mental health patients to be heard in person (rather than by audio-visual link) and for a separate mental health court list.

• The CPD Committee has worked hard to develop a CPD programme that is compelling, varied and responsive to the increasing needs of practitioners. The Committee members have also worked with expert legal presenters to develop individual topics.

• The Members’ Special Fund Committee meets as required to consider the provision of assistance to members in need.

A copy of the Annual Report is available to members through the ADLSI website www.adls.org.nz.

Auckland District Law Society Incorporated Annual Report 2014

SIX ADLSI MEMBERSAPPOINTED AS QUEEN’S COUNSEL

TWO UPDATED EDITIONS OF THE NEW ZEALAND LAWYERS DIRECTORY,

SIX UPDATED CHAPTERS OF THE LEGAL PRACTICE MANUAL

3,007MEMBERS

16 1,400INCREASE IN CPD REGISTRATIONS

ATTENDEES AT 26 COLLEGIAL EVENTS

43 ISSUES OF LAW NEWS AS WELL AS THE MONDAY BULLETIN

A GROWING MEDIA PRESENCE

100%

LAUNCH OF ON DEMAND CPD AND LIVE-STREAMING OF SEMINARS

16 COMMITTEES, 195 COMMITTEE MEMBERS

NEW OR UPDATED LEGAL FORMS

LN


In the 27 February 2015 issue of Law News (Issue 4), barrister Henry (Lapa) Laubscher wrote about what he described as the ethical dilemmas brought about by the criminal legal aid fee schedules. Michele McCreadie, Ministry of Justice General Manager, Legal Aid Services, responds:

We strongly agree with Mr Laubscher’s opening observation about legal aid being introduced to New Zealand to ensure those appearing in our courts who cannot afford their own lawyer, should have access to independent legal advice. Access to justice through the legal aid system remains a fundamental cornerstone of the justice system. Legal aid is designed to meet the needs of people who use the courts and this has not changed.

What has changed is the way we pay legal aid lawyers for the important work they do, with the introduction of fee schedule payments for criminal cases in March 2012. Legal aid lawyers will be familiar with the criminal fee schedules that detail the payments they receive for various steps along the process, from representing a defendant who pleads guilty to an offence and is sentenced straight away, to matters going to

+ Legal aid, fixed fees

Lawyers’ professional duties paramount, says Legal Aid Services

+ Property law

Real Estate watchdog recommends clauses to protect sellers of rural property

The Real Estate Agents Authority (REAA) is recommending that real estate agents selling rural property use new standard clauses in their terms and conditions to better protect consumers. The clauses were developed jointly by the REAA and the Real Estate Institute of New Zealand (REINZ).

As with the clauses for the residential sector that were introduced late last year, the voluntary clauses for rural agency agreements give sellers of rural property more certainty about when an agency agreement ends and which agent can claim a commission when sellers change real estate agencies.

“We are very pleased with the industry’s response to the residential clauses,” said Kevin Lampen-Smith, Chief Executive of the REAA. “Over 700 agences are now using the residential clauses.”

“The rural sector asked for these clauses. This is a great outcome as it means that sellers of rural property can now have the same level of certainty about their agency agreements as their residential counterparts.”

judge-alone or jury trial.

Under the fee schedules it is recognised that some activities and cases will take more time to complete and some will take less time. To support the introduction of the Criminal Procedure Act in July 2013, we consulted with legal aid lawyers and refined some aspects of the schedule. For example, some new fees for new activities were introduced. Legal aid lawyers can also file an amendment seeking additional fees if they believe they are justified for the work they’ve put in. Following a review late last year, we will be making further refinements to the model this year.

Where we disagree with Mr Laubscher is his assertion that the legal aid fee schedules introduce ethical dilemmas for legal aid lawyers, who, he argues, might keep one eye on financial considerations when providing legal advice to their clients.

Lawyers advising their clients will be fully aware of the ‘Rules of conduct and client care for lawyers’ set out in the rules under the Lawyers and Conveyancers Act 2006. One of these is the obligation to protect and promote their client’s interests and act for them free from compromising influences or loyalties.

Remuneration considerations and incentives exist for all lawyers whether working for a private paying client or a legal aid assignment. We would be surprised if financial motivations were to supersede this duty of care to their client and so far we have seen no evidence to suggest this is occurring. The same obligations, of course, apply to the seeking of expert reports.

All lawyers are aware they are unable to act for clients in situations where there is a conflict of interest. It would again be surprising if that conflict was as the result of the lawyer’s own financial gain.

The fee schedule payment model is, as I have said, one we are continually monitoring to ensure payments reflect the work required of a legal aid lawyer. So far reforms to the system have not proven a disincentive for lawyers who want to specialise in criminal legal aid cases. The number of criminal legal aid lawyers has remained steady over the past three years and includes a mix of experienced senior and junior lawyers.

A lawyer’s professional duty is to act in the best interest of their client. The contended ethical dilemma to which Mr Laubscher refers is outweighed by this. LN

“These clauses make it clear who is owed a commission when a rural property sells and will avoid sellers getting the nasty surprise of being asked to pay more than one commission,” said Mr Lampen- Smith.

“Using these clauses is a simple way to avoid confusion, disagreements and complaints to the REAA and REINZ. The clauses provide clarity and protect both the seller and the agent, so everybody wins.”

While these clauses are voluntary, the REAA recommends that sellers wishing to sell their rural property use real estate agencies that include these standard clauses. The REAA is publishing a list of these agencies on their website.

Key aspects of the rural standard clauses include:

• Only one agent can claim a commission, and only when the buyer and seller have signed a sale and purchase agreement (even with conditions) at the time that the agent is acting for the seller.

• If the seller cancels their contract with the agent and then sells privately to a buyer previously introduced, the agent can only claim a commission for 12 months after the contract ended.

This period is six months in the residential clauses and is the main difference between the residential and rural clauses. The extended period in the rural clauses allows for the time it can take to negotiate the sale of a rural property.

Examples of rural property are farms, orchards, forestry plantations and vineyards.

More information is available on the REAA website (www.reaa.govt.nz/) including:

• an information sheet on the rural standard clauses;

• a list of agencies committing to using the rural standard clauses; and

• a copy of the wording of the recommended rural standard clauses. LN


+ Update from ADLSI’s Commercial Law Committee

Engagement with Inland Revenue – related parties’ debt remission

The Commercial Law Committee endeavours to meet regularly with various government departments and other relevant organisations to exchange views and to keep ADLSI members abreast of developments in commercial law and practice.

The March 2015 Commercial Law Committee meeting was attended by Inland Revenue Principal Advisor, Paul Hale. Mr Hale was able to discuss at a relatively high and principled policy level the recently released officials’ issues paper on “Related parties’ debt remission”.

A copy of the paper is available on IR’s PAS webpage:

http://www.ird.govt.nz/technical-tax/questions/questions-general/qwba-1501-tax-avoid.html.

This issues paper invites submissions on debt remission to be directed to the Deputy Commissioner, Policy and Strategy, by 14 April 2015.

The catalyst for the issues paper follows a recent interpretation by Inland Revenue which determined that, in a situation where the capitalisation of debt between associated companies results in no net change to the owner’s wealth, section BG 1 (tax avoidance) of the Income Tax Act 2007 would potentially apply to such an arrangement, unless the tax avoidance purpose or effect is merely incidental to some non-tax avoidance purpose or effect. This interpretation does not turn on whether or not the debtor is solvent or insolvent.

The Committee is always keen to hear from practitioners with comments, questions and suggestions. Practitioners may contact the Committee Secretary, Helen Young by email [email protected] or by writing to the Commercial Law Committee, Auckland District Law Society Incorporated, P O Box 58, Auckland (DX CP24001).

Paul Hale

+ Notice from ADLSI’s Family Law Committee

Re-launch of Family Practitioner mentoring scheme

From Stuart Cummings, on behalf of the ADLSI Family Law Committee

ADLSI’s Family Law Committee is up and running for the year. We have a small but dedicated Committee and already some important agenda items to address.

The first of those is the upcoming re-launch of our successful Family Practitioner Mentoring Scheme. This scheme has been operative for a number of years, but the time has come for new participants, both mentors and mentees.

The re-launch will take place at the ADLSI rooftop at 5.30pm on Thursday 26 March 2015. We are very pleased to have recently retired Judge, His Honour John Adams, as our guest speaker. I have personal experience of involvement in Judge Adams’ initiative in creating a mentoring scheme in the 1990s. I am delighted that the convenor of the mentoring subcommittee, Sonja Clapham, has managed to organise the celebration of the launch for a date that fits in with His Honour’s very busy schedule.

The Family Law Committee is committed to serving the Society’s family law members by providing, among other things, a focus point for concerns relating to family law matters in the wider Auckland region and, in particular, service delivery issues relating to the courts and support for members dealing with difficult or unusual situations. We know they exist – we are already active in respect of one and this article is intended to bring to the attention of the family lawyers our ability to assist and our wish to achieve change where change is needed.

To do this, we need you to make contact with the Committee – we are not mind readers! While getting a gripe off your chest has benefits, that is not the end of it, as more often than not, voicing a complaint does not see a change to the underlying situation nor improvement for those that follow the path you are currently treading.

Please make contact with the Committee via either the Convenor or the Committee Secretary, Helen Young by email [email protected] or 09 306 5744.LN LN

ADLSI invites Newmarket practitioners to come together at an ADLSI Lawyers’ Lunch in Newmarket on 31 March 2015.

The ADLSI Lawyers’ Lunch Series is a great opportunity to meet and network with fellow practitioners in your local area, and to provide feedback to ADLSI on ways in which we can further support you in your professional career.

We hope you can join us at this relaxed and convivial event which will include a short presentation by ADLSI. The lunch will be $30.00 (incl. GST) from a set menu, and we are pleased to offer ADLSI members an exclusive Lawyers’ Lunch rate of $20.00 (incl. GST). Numbers are limited, so register now to avoid missing out.

Time & date: 12pm, Tuesday 31 March 2015

+ ADLSI event

Newmarket Lawyers’ Lunch, 31 March 2015Venue: Nuffield Street Cafe 11a Nuffield Street Newmarket Auckland

Registration: $17.40 + GST ($20.00 incl. GST) per person for ADLSI members;

$26.09 + GST ($30.00 incl. GST) per person for non members

Visit www.adls.org.nz to register and pay for this lunch by 23 March 2015; alternatively, contact [email protected] or 09 303 5287.

ADLSI’s standard cancellation policy applies for this event.


Selected CPD CPDTo view all ADLSI CPD & register: www.adls.org.nz/cpdEmail us: [email protected] Phone us: 09 303 5278

Featured CPD

The CCCFA, Lending & Enhanced Consumer ProtectionThe Credit Contracts and Consumer Finance Act has been significantly amended as part of wider reforms of the financial sector. This seminar will enable you to prepare your clients, whether lenders or consumers, for the amendments coming into force.

Learning Outcomes• Understand the key mechanisms for strengthening consumer protection under the CCCFA as they relate to the life cycle of a loan: disclosures; guarantors; credit fees; unforeseen hardship provisions; break costs; repossession procedures; the new powers and sanctions; and the Commerce Commission’s enforcement approach.

• Learn about the Responsible Lending Principles.

• Gain an overview of the draft Responsible Lending Code and learn how the Code intersects with the Act.

Who should attend?Commercial lawyers, in-house counsel of lending institutions, litigators, consumer law specialists, community law centre lawyers, property lawyers and general practitioners.

Presenters: Brett Carter, Principal Counsel (Consumer), Competition Branch, Commerce Commission; Jonathan Flaws, Partner, Sanderson Weir; Rose Wang, Senior Policy Advisor, MBIE Chair: Gayatri Jaduram, Lawyer and Disputes Tribunal Referee

Wednesday, 25 March 2015 4pm – 6.15pm

Live streamed | Auckland (venue TBC)

2 CPD HOURS

Thursday, 26 March 2015 4pm – 6.15pm

Live streamed | Auckland (venue TBC)

2 CPD HOURS

Criminalisation of Directors’ Duties: The Thin Red LineThe task of advising directors is being made more complex by new Companies Act provisions criminalising certain egregious breaches of directors’ duties. This seminar provides a valuable opportunity to hear from experienced lawyers and an accomplished professional company director.

Learning Outcomes• Gain a better understanding of the recent legislative reforms, including possible defences.

• Receive practical tips on how to advise a director whose company is in financial strife.

• Learn from case studies based on recent New Zealand examples arising out of the finance company crashes during the GFC.

• Gain insights into implications for insurance protection under relevant legislation.

Who should attend?Experienced and intermediate-level lawyers and insolvency practitioners who advise company directors of SMEs and large corporates. Company directors, management consultants and other governance advisers may also benefit from attending.

Presenters: Brian Keene QC; Stephen Layburn, Barrister; Dr Kerry McDonald BCom MCom (Hons) DCom (hc) AFlinstD FAICD FNZIM Professional Director Chair: The Honourable Justice Asher

Wednesday, 1 April 2015 12pm – 1pm

At your desk or on your portable device

1 CPD HOUR

Commercial Law Series: Takeovers Code – Refresher & UpdateCould you ‘take on a takeover’? Would you be able to advise a company, with close to 50 shareholders of the implications of the Takeovers Code? Are you aware of the Takeovers Panel’s attitude to schemes and amalgamations?

This webinar will equip you with information about key takeover issues.

Learning Outcomes• Understand about becoming a “Code company” and the implications of it on shareholder governance arrangements and acquisitions, including what it means for privately held Code companies.

• Become updated on recent regulatory changes and their application to Code companies.

Who should attend?Intermediate to senior commercial lawyers, and in-house counsel.

Investment bankers, accountants and company directors may also benefit from attending.

Presenters: Andrew Matthews, Senior Associate, Simpson Grierson; Joshua Pringle, Senior Associate, Chapman Tripp

Tuesday, 24 March 2015 12pm – 1pm

At your desk or on your portable device

1 CPD HOUR

Intellectual Property Considerations in Sale and Purchase Transactions Intellectual Property is a valuable asset in any business. However, its importance is not always recognised or properly taken into account at the time of sale. This webinar will provide essential information about what actually constitutes IP and how best to deal with it in sale and purchase transactions.

Learning Outcomes• Learn more about what may be considered IP, including registered and unregistered IP.

• Gain insights into the best way to handle IP in a sale and purchase transaction, including confidentiality considerations, the due diligence process and in the sale and purchase agreement.

• Develop an understanding of the ways to protect and manage IP in a newly purchased business.

Who should attend?General practitioners who deal with the sale and purchase of businesses and need to know about the IP implications and those who may have clients with IP issues.

Presenter: David Alizade, Head of Commercial, Baldwins Intellectual Property

7. 10 hour 8. On demands6. Webcast5. Forum

1. Seminar 2. Webinar 3. Workshop 4. Conference

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Selected CPD CPDTo view all ADLSI CPD & register: www.adls.org.nz/cpdEmail us: [email protected] Phone us: 09 303 5278

CPD in Brief

Cradle to Grave Conference 2015 Mon, 20 April 2015 – Auckland | Thurs, 23 April 2015 – Christchurch Register now and save! Early bird rates available A compelling refresher and update for general practitioners and lawyers practising in trust, estate planning, relationship property and elder law. Presenters: Bill Patterson, Partner, Patterson Hopkins; The Honourable John Priestley QC; Sandra Grant, Barrister; Dr Bede McIvor MB ChB FRANZCP, Psychogeriatrician and Psychiatrist; Sonja Clapham, Barrister; Anthony Grant, Barrister; Denham Martin, Barrister; Brian Carter, Barrister; Vanessa Bruton, Barrister; Greg Kelly, Principal, Greg Kelly Law Ltd (Christchurch); Chris Kelly, Consultant, Greg Kelly Law Ltd (Auckland)

In Praise of the Family Court Reforms? Thurs, 30 April 2015 | 5pm – 7pmAround a year on from the reforms, what is the lie of the land? The panellists from the Bench, Bar and Ministry will provide their perspectives.

Panel: Her Honour Judge Rogers; Alan Goodwin, Barrister, Eden Street Chambers; Emma Parsons Barrister, Ponsonby Chambers; Jennie Montague, Service Delivery Manager, Auckland Civil and Family, Ministry of Justice Chair: Brian Carter, Barrister, Bastion Chambers

Courtroom Advocacy – The Essential Skills: Part 2 Tues, 5 May 2015 | 4pm – 6.15pmCase preparation and well-honed advocacy skills are key attributes of all successful litigators. Topics include: leading evidence, cross-examination, re-examination, examining experts, etiquette.

Presenters: Her Honour Judge Inglis; Simon Jefferson QC; Andrea Manuel, Barrister, Shortland Chambers Chair: Michael Fisher, Barrister, Erskine Chambers

Statutory Demands: Use & Abuse Thurs, 7 May 2015 | 4pm – 6.15pmThis seminar will provide practical guidance and insights into substantive and procedural matters relevant to issuing and applying to set aside statutory demands and also managing the resulting situations.

Presenters: Mark Broad, Senior Associate, Kensington Swan; Brent Norling, Senior In-house Counsel, Waterstone Insolvency

Transport Law Update: The Lowdown on Heavy Vehicles Thurs, 14 May 2015 | 4pm – 6.15pmThe law relating to transport services, is becoming increasingly complex and industry members are facing new challenges and risks.

Presenters: Shafraz Khan, Partner, Fortune Manning; Andrew Thompson, Managing Counsel (Regulatory and Commercial), NZTA

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5-hour CPD On Demand packages available. Plus 2 bonus hours of CPD On Demand for you to complete. Visit www.adls.org.nz/cpd

TOP UP YOUR CPD HOURS

CPD On Demand

The Unfair Contract Terms: Taking Standard Form Consumer Contracts to TaskThe new provisions of the Fair Trading Act set out the law relating to unfair contract terms. They substantially change the rules that apply to standard form consumer contracts. This On Demand webinar will provide timely advice on, and practical examples of, both.

Presenters: Brett Carter, Principal Counsel (Consumer), Commerce Commission; Troy Pilkington Senior Associate, Russell McVeagh

Research Skills Refresher The ability to provide up-to-date and reliable legal advice and submissions you and your clients can have confidence in depends to a large extent on your research skills. Advances in technology and internet resources mean now is a good time to update your research skills.

Presenters: Stephanie Carr, Law Library Manager & Melanie Brebner Law Subject Librarian, The University of Auckland

CPD Pricing

Delivery Method Member Pricing Non-Member Pricing

Webinar $75.00 + GST (= $86.25 incl. GST) $95.00 + GST (= $109.25 incl. GST)

Seminar (in person) $125.00 + GST (= $143.75 incl. GST) $180.00 + GST (= $207.00 incl. GST)

Seminar (live stream) $125.00 + GST (= $143.75 incl. GST) $180.00 + GST (= $207.00 incl. GST)

On Demand (1-hour recording) $85.00 + GST (= $97.75 incl. GST) $110.00 + GST (= $126.50 incl. GST)

On Demand (2-hour recording) $95.00 + GST (= $109.25 incl. GST) $130.00 + GST (= $149.50 incl. GST)

For group bookings for webinars & CPD On Demand, see the ADLSI website at: www.adls.org.nz/cpd/help-and-faqs/group-bookings/.











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WILL INQUIRIES LAW NEWSThe no-hassle way to source missing wills for

$80.50 (GST Included)Email to: [email protected]

Post to: Auckland District Law Society Inc.,PO Box 58, Shortland Street, DX CP24001, Auckland 1140

Fax to: 09 309 3726 For enquiries phone: 09 303 5270

+ Wills

Please refer to deeds clerk. Please check your records and advise ADLSI if you hold a will or testamentary disposition for any of the following persons. If you do not reply within three weeks it will be assumed that you do not hold or have never held such a document.

Kimiatu BAKER, late of 197A Captain Springs Road, Onehunga, Auckland, Aged 76 (Died 19’12’2014)

Anthony Lionel BURROWS, late of 186 Beach Haven Road, Beach Haven, Auckland, Retired, Aged 59 (Died 19’02’2015)

Kenneth CHONG, late of 2-42 Felton Mathew Avenue, St Johns, Auckland, Aged 83 (Died 29’01’2015)

Edward John HARRIS, late of Chadderton Rest Home, 28 Alpers Avenue, Retired Seaman, (Died 08’03’2015)

Satendran KESHWAN, late of Ba, Fiji, Aged 58 (Died 13’12’2014)

Myra Mungall OGILVIE, late of 1121 Blue Herron Circle, Sportsylvania, Virginia, United States of America, Retired, Aged 93 (Died 16’03’2012)

Donna Marie SNOWDEN, late of 378 Kaiikanui Road and 70 King Street, Hikurangi, Childcare Worker, Aged 47 (Died between 19 and 20’02’2015)

Authors: Laurence Boulle, Virginia Goldblatt, Phillip Green

Mediation: Skills and Strategies focuses on the practical operation of the mediation process, with particular reference to the skills and techniques which can be used by mediators in their formal and informal roles as helpers, facilitators, and supporters of decision-making.

Recognising that mediation is not only an “art” but also a process that can be “understood, analysed, learned, practiced and improved”, the authors have developed this work to assist practitioners and students of mediation to develop the problem-solving, negotiation and decision-making skills that are so critical for effective mediation.

Price: $108.69 plus GST ($125.00 incl. GST)*

Price for ADLSI Members: $97.83 plus GST ($112.50 incl. GST)*

(* + Postage and packaging)

To purchase this book please visit www.adls.org.nz or contact the ADLSI bookstore by phone: 09 306 5740, fax: 09 306 5741 or email: [email protected].

+ New book

Mediation: Skills and Strategies

[2002] 3 NZLR 383 at [17]). In both circumstances, there is an implied condition that whatever is sold or supplied is fit for the particular purpose made known to the seller or supplier.

Fitness for purpose warranties are most commonly implied where a party has assumed design obligations and/or supplied or specified materials, such that the principal relies on that party’s technical expertise. Warranties will only be implied at common law if it is equitable in the circumstances, necessary to give the contract business efficacy, so obvious that it goes without saying, capable of clear expression and does not conflict with other contract terms (BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] 180 CLR 266).

In a build-only contract, where the contractor’s role is limited to complying with the plans and specifications prepared by the principal or its consultants, an implied fitness for purpose warranty is unlikely. In those circumstances, the principal is relying on the contractor to provide labour and materials, not specialist services. By contrast, if the whole point of engaging the contractor or consultant is to rely on their expertise and experience in design, construction or supply of certain materials, there may be an implication that the overall work completed by that party must be fit for purpose (Viking Grain Storage Ltd v T.H. White Installations Ltd [1985] 33 BLR 103).

The implication of a fitness for purpose warranty will be displaced where it is unreasonable to rely on the other party’s skill and judgment. This occurred in Young & Marten where roofing subcontractors who laid defective tiles were not liable for fitness for purpose because the materials were chosen by the head contractors. No reliance was placed on the subcontractors for the selection of the materials so no fitness for purpose warranty could be implied.

Key outtakes

Ultimately, express or implied fitness for purpose obligations will be subject to a strict performance test, not a fault/negligence test. If parties are expressly agreeing to a fitness for purpose warranty, they should ensure that the “purpose” can be measured against clear criteria set out in the contract or associated documents like the Client Brief. While parties don’t have the option of contracting out of implied statutory warranties, they can avoid being caught unaware by common law implications if they expressly exclude fitness for purpose obligations in their contract.

Attorney-General Christopher Finlayson has announced the appointment of Chief Coroner Deborah Marshall as a District Court Judge. Judge Marshall was appointed Chief Coroner effective from 13 February 2015 following the recent retirement of former Chief Coroner Judge Neil MacLean. Judge Marshall will be sworn in on 27 March 2015 at Auckland.

In addition, Christchurch barrister Marcus Elliott has been appointed a Coroner. Mr Elliott has worked in law firms in Sydney, London and Christchurch and the legal departments of local authorities in London. He was litigation partner at Mortlock McCormack Law in Christchurch until he became a barrister sole and joined Canterbury Chambers in 2008.

Mr Elliott was counsel assisting the Canterbury Earthquakes Royal Commission where his focus was to represent the interests of bereaved families and those injured in the earthquakes. He has also been a member of the Christchurch Crown prosecution panel. Mr Elliott takes up his appointment on 23 March 2015.

+ Appointments

New District Court Judge and a new Christchurch Coroner

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Continued from page 3, “Fitness for purpose – what does it mean?”

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Only 50 metres from Queen Street, Blackstone Chambers at 14 Wyndham Street has been fully refurbished. Constructed in the 1870’s, many of the original features of this Heritage listing building have been retained such as the character light wells, walk-in-safe, ornate fire places and some of the original kauri wood. These are enhanced by new quality carpets, air conditioning, earthquake strengthening, new kitchen, bathrooms, electrical, plumbing and security systems to provide for the expectations of 21st century professionals. Both the interior and exterior of the building have been freshly painted.

There are nine large office/meeting rooms, each set up with multiple plug and data points to allow sharing of rooms if desired. A courtyard area can be accessed from the main meeting room and kitchen.

The building has dual street frontages to Wyndham Street and Durham Lane and comprises approximately 286 square metres over two stories. Two secure on-site car parks can be accessed from Durham Lane. Also conveniently located at the rear of the building are Wilson and Tournament public car park buildings. Britomart is within 5 minutes walking distance.

Further images can be viewed at: www.valourproperties.co.nz

For all enquiries, please contact Rosie Hobbs

021 358 048 or email: [email protected]

For Lease – Blackstone Chambers, Auckland CBD

• Room Available in character building in central city location

• Friendly Chambers’ members• Suitable for Barrister and/or

Solicitor• Reasonable rental• Immediate Occupancy

Inquiries to: MARK EDGAR: - Telephone 021 630 957 orBEV ROBERTS: 09 309 9847- after 11 am

OFFICE FOR RENT1st Floor, 23 Shortland Street

Auckland Central

Booking deadline is 12pm Thursday, 6 working days prior to publication date.

Email [email protected] or call 021 371 302 to book your advertisement.

Get your message in front of 5500 legal professionals.

• Home for lunch every day?• Ski-ing in the morning, relax next to the beach in the afternoon?• Great lifestyle/work balance?

Check out Timaru!

If you’re keen for a change of pace, we’re looking for someone with experience and will talk with anyone who has the right attitude.

Be part of a 21st Century law firm, join Quentin Hix Legal.

Apply to: Quentin Hix, email [email protected] or

PO Box 197, Timaru 7940

Looking for the 5 minute rush hour?

Regular Law News contributor Dr Stephen Winter will be delivering a talk on “A strong case for weak-form judicial review” at an upcoming seminar at the University of Auckland.

The seminar will be held on Tuesday 24 March 2015 from 1-2pm, in the Faculty of Law, Room 220, Building 810 (Corner of Short St and Eden Crescent), University of Auckland.

“Weak-form” judicial review is characterised by two conditions – courts use a bill of rights to make law and parliament can contravene the court through the ordinary course of legislation. Therefore, such judicial review is “weak” in comparison to systems in which parliament cannot revise judicial decisions through normal procedures.

Dr Winter’s paper uses republican theory to argue that weak-form review promotes legitimacy by multiplying sites for accountability. A draft of the paper is available at. https://nzlsp.wordpress.com/.

Dr Winter is a Senior Lecturer in Political Theory at the University of Auckland and Chair of the Auckland branch of the Society for Legal and Social Philosophy.

This seminar will be co-hosted with the Faculty of Law.

+ Event

“Weak-form” judicial review

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